Unit V

1. There are two approaches to HR demand forecasting: quantitative and qualitative. When concentrating on human resources needs, forecasting is primarily quantitative in nature and, in large organizations, is accomplished by highly trained specialists. Quantitative approaches to forecasting can employ sophisticated analytical models, although forecasting may be as informal as having one person who knows the organization anticipates future HR requirements. Organizational demands will ultimately determine which technique is used. Regardless of the method, however, forecasting should not be neglected, even in relatively small organizations. Quantitative Approaches Quantitative approaches to forecasting involve the use of statistical or mathematical techniques; they are the approaches used by theoreticians and professional planners. One example is trend analysis, which forecasts employment requirements on the basis of some organizational index and is one of the most commonly used approaches for projecting HR demand. Following several steps typically does trend analysis: First, select an appropriate business factor. This should be the best available predictor of human resources needs. Frequently, sales or value added (selling price minus costs of materials and supplies) is used as a predictor in trend analysis. Second, plot a historical trend of the business factor in relation to number of employees. The ratio of employees to the business factor will provide a labor productivity ratio (for example, sales per employee). Third, compare the productivity ratio for at least the past five years. Fourth, calculate human resources demand by dividing the business factor by the productivity ratio. Finally, project human resources demand out to the target year. Remember your business economics classes??? Apply the all of its knowledge here. Its an Opportunity!! Other, more sophisticated statistical planning methods include modeling or multiple predictive techniques. Several mathematical models, with the aid of computers are also used to forecast HR needs, e.g., optimization models, budget and planning analysis. Whereas trend analysis relies on a single factor (e.g., sales) to predict employment needs, the more advanced methods combine several factors, such as interest rates, gross national product, disposable income, and sales, to predict employment levels. While the costs of developing these forecasting methods used to be quite high, advances in technology and computer software have made rather sophisticated forecasting more affordable to even small businesses. Qualitative Approaches In contrast to quantitative approaches, qualitative approaches to forecasting are less statistical, attempting to reconcile the interests, abilities, and aspirations of individual employees with the current and future staffing needs of an organization. In both large and small organizations, HR planners may rely on experts who assist in preparing forecasts to anticipate staffing requirements. For example, Expert forecasts: In this method, managers estimate future human resource requirements, their experiences and judgments to good effect. Management forecasts are the opinions (judgments) of supervisors, department managers, experts, or others knowledgeable about the organization's future employment needs. For example, at the Ripe Tomato, a growing family dining chain, each restaurant manager is responsible for employment forecasts. ' Another qualitative forecasting method, the Delphi technique, attempts to decrease the subjectivity of forecasts by involving a group of pre-selected individual and soliciting and summarizing the judgments. Thus a group decision-making process is invoked which in turn, requires a great deal of process orientation to enhance coordination and cooperation

for satisfactory forecasts. This method works best in situation where dynamic technological changes affect staffing levels. Ideally, HRP should include the use of both quantitative and qualitative approaches. In combination, the two approaches serve to complement each other, thus providing a more complete forecast by bringing together the contributions of both theoreticians and practitioners. Whatever technique one might utilize, they need to be done systematically!! HR planners many times go further and analyze the demand on the basis of the following: a. Workforce analysis to determine the rate of influx and outflow of employee. It is through this analysis one can calculate the labor turnover rate, absenteeism rate, etc. Qualitative methods go a long way in analyzing the internal flow created by promotions, transfers etc. b. Workload analysis, with which one can calculate the numbers of persons required for various jobs with reference to a planned output. This takes into consideration factors such as absenteeism, and idle time, etc. Both quantitative and qualitative techniques are utilized for accurate results. c. Job analysis: Job analysis helps in finding out the abilities or skills required to do the jobs efficiently. A detailed study of jobs is usually made to identify the qualifications and experience required for them. Job analysis includes two things: job description and job specification. Job description, thus, is a factual statement of the duties and responsibilities of a specific job. It gives an indication of what is to be done, how it is to be done and why it is to be done. Job specification provides information on the human attributes in terms of education, skills, aptitudes and experience necessary to perform a job effectively. Manpower recruitment planning for sales department Manpower Planning which is also called as Human Resource Planning consists of putting right number of people, right kind of people at the right place, right time, doing the right things for which they are suited for the achievement of goals of the organization. Human Resource Planning has got an important place in the arena of industrialization. Human Resource Planning has to be a systems approach and is carried out in a set procedure. The procedure is as follows: 1. 2. 3. 4. Analysing the current manpower inventory Making future manpower forecasts Developing employment programmes Design training programmes

Steps in Manpower Planning 1. Analysing the current manpower inventory- Before a manager makes forecast of future manpower, the current manpower status has to be analysed. For this the following things have to be noted Type of organization Number of departments Number and quantity of such departments Employees in these work units Once these factors are registered by a manager, he goes for the future forecasting.

2. Making future manpower forecasts- Once the factors affecting the future manpower forecasts are known, planning can be done for the future manpower requirements in several work units. The Manpower forecasting techniques commonly employed by the organizations are as follows: i. Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi technique. ii. Trend Analysis: Manpower needs can be projected through extrapolation (projecting past trends), indexation (using base year as basis), and statistical analysis (central tendency measure). iii. Work Load Analysis: It is dependent upon the nature of work load in a department, in a branch or in a division. iv. Work Force Analysis: Whenever production and time period has to be analysed, due allowances have to be made for getting net manpower requirements. v. Other methods: Several Mathematical models, with the aid of computers are used to forecast manpower needs, like budget and planning analysis, regression, new venture analysis. 3. Developing employment programmes- Once the current inventory is compared with future forecasts, the employment programmes can be framed and developed accordingly, which will include recruitment, selection procedures and placement plans. 4. Design training programmes- These will be based upon extent of diversification, expansion plans, development programmes,etc. Training programmes depend upon the extent of improvement in technology and advancement to take place. It is also done to improve upon the skills, capabilities, knowledge of the workers. Importance of Manpower Planning 1. Key to managerial functions- The four managerial functions, i.e., planning, organizing, directing and controlling are based upon the manpower. Human resources help in the implementation of all these managerial activities. Therefore, staffing becomes a key to all managerial functions. 2. Efficient utilization- Efficient management of personnels becomes an important function in the industrialization world of today. Seting of large scale enterprises require management of large scale manpower. It can be effectively done through staffing function. 3. Motivation- Staffing function not only includes putting right men on right job, but it also comprises of motivational programmes, i.e., incentive plans to be framed for further participation and employment of employees in a concern. Therefore, all types of incentive plans becomes an integral part of staffing function. 4. Better human relations- A concern can stabilize itself if human relations develop and are strong. Human relations become strong trough effective control, clear communication, effective supervision and leadership in a concern. Staffing function also looks after training and development of the work force which leads to cooperation and better human relations. 5. Higher productivity- Productivity level increases when resources are utilized in best possible manner. Higher productivity is a result of minimum wastage of time, money, efforts and energies. This is possible through the staffing and its related activities (Performance appraisal, training and development, remuneration)

Need of Manpower Planning Manpower Planning is a two-phased process because manpower planning not only analyses the current human resources but also makes manpower forecasts and thereby draw employment programmes. Manpower Planning is advantageous to firm in following manner: 1. Shortages and surpluses can be identified so that quick action can be taken wherever required. 2. All the recruitment and selection programmes are based on manpower planning. 3. It also helps to reduce the labour cost as excess staff can be identified and thereby overstaffing can be avoided. 4. It also helps to identify the available talents in a concern and accordingly training programmes can be chalked out to develop those talents. 5. It helps in growth and diversification of business. Through manpower planning, human resources can be readily available and they can be utilized in best manner. 6. It helps the organization to realize the importance of manpower management which ultimately helps in the stability of a concern. ORGANIZATION FOR RECRUITING AND SELECTION The organization for recruiting and selection of sales personnel varies from company to company. Companies with a small sales force sometimes assign the sole responsibility for recruitment and selection of sales personnel to the companys personnel manager. This responsibility is the concern of regional or district sales offices but it may vary from one company to another. Sources within the Organization Many individuals apply for sales jobs because they know the companys sales personnel; and sales peoples recommendations may constitute an excellent source. Often such applicants already know something about the job and about company policies, and the fact that they apply indicates a favourable disposition toward the company. Company executives Recommendations by the sales manager, the president, and other company executives are frequently an important source of recruitment. Internal transfers Two additional internal sources are other departments and the non-selling section of the sales department. Sources outside the Company: Direct Unsolicited Application Most companies receive some unsolicited walk-in and write-in applications for sales positions. Placement agencies Sales managers traditionally regard employment agencies as unpromising sources but certain organizations do take the help of these agencies. Sales people making calls on the company The purchasing manager is in contact with sales personnel from other companies and is in a strategic position to evaluate their on-the-job performances. The purchasing manager meets high-caliber sales people for whom jobs with the company would be attractive both

financially and in other respects. In well-managed companies the purchasing manager, serves as a centre of influence. Employees of customers Some companies regard their customers as a recruiting source. Customers recommend people in their organizations who have reached the maximum potential of their existing jobs. Such transfers may have a favourable effect upon morale in the customers organization. Sales executives clubs Many sales executives clubs operate placement services. Salespersons seeking new positions submit personal data sheets that are duplicated and forwarded to members. At club meetings, sales executives have opportunities for informal discussion and exchange of placement information. Sales forces of non-competing companies Individuals currently employed as salespersons for non-competing companies are often attractive recruiting prospects. Sales forces of competing companies Because of experience gained in selling similar products to similar markets, personnel recruited from competitors sales forces may require only minimal initial training. Educational institutions This source includes colleges and universities, community colleges, vocational-technical institutes, business colleges. Colleges and universities have become increasingly important points of recruitment of sales and management trainees, and competition for their graduates is keen. 4.4 SELECTION OF THE SALESPERSON Selection systems are simple one-step systems consisting perhaps of nothing more than an informal personal interview, to a complex multiple-step system incorporating many diverse mechanisms desired to gather information about applicants for sales jobs. Initial screening before the first formal interview is for the purpose of eliminating obviously unqualified applicants, thus saving the time both of the interviewers and applicants. During pre-interview screening, the applicant is provided information about the company and general details about selling positions in it a well-prepared recruiting brochure does this effectively and does not require an employees time for anything other than to hand it to the applicant. Also, during the pre-interview screening, most organizations ask applicants to complete interview application forms, which are designed to obtain information on the applicants basic qualifications, education, and experience. Figure 4.1 Depicts the steps in the selection process in a simple manner.

Formal Application Form The formal application form serves as a central record for all pertinent information collection during the selection process. A formal application is filled after a preliminary interview. The application form may be filled by the applicant personally or by an interviewer who records the applicants responses. Sometimes, sections are reserved for later recording of the results of such selection steps as reference and credit checks, testing, and physical examinations. Included are present job, dependents, education, employment status, time with last employer, membership in organizations, previous positions, records of earnings, reason for leaving last job. The Interview The interview is the most widely used selection step and in some companies it comprises the entire selection system. Some personnel experts criticize the interview as an unreliable tool, but it is an effective way to obtain certain information. No other method, for instance, is quite so satisfactory in judging an individuals ability in oral communication, personal appearance and manners, attitude toward selling and life in general, reaction to obstacles presented face-to-face and personal impact upon others. Interviewing Technique Interviews based on a Pattern Here the interviewer uses a prepared outline of questions designed to elicit basic information from the applicant. Interviews without an Outline In this technique the applicant is encouraged to speak freely about his or her experience, training, and future plans. The interviewer asks a few direct questions and says only enough to keep the interviewer talking. Some personal experts say that a non-directive technique yields maximum insight into an individuals attitude and interests. Check Your Progress 1. What is the key responsibility of a sales manager? 2. What happens during the pre-interview screening? Stress Interview

The stress interview simulates the stresses the applicant would meet in actual selling situations and provides a way to observe the applicants reactions to them. Recently, stress interviewing has become a more complex and sophisticated, technique. In this situation, two interviewers are required one uses psychological techniques to set up the simulated situations while the other observes and records the applicants reactions. Rating Scales: Likert and Semantic Differential Scales Personal interviews have a tendency to lack objectivity, an error that can be corrected through rating scales. These are so constructed that interviewers ratings are channeled into limited choice responses. The Likert Scale is based on agreement and disagreement of the interviewer while interviewing. Semantic scales are based on two opposite traits, e.g., does the interviewee show interest in sports? The choice that the scale would give is yes, partially yes, no, completely no. The Likert Scale is a five-point scale and the Semantic Scale can be a five-, seven- or eleven-point scale, as shown in Figures 4.2 and 4.3 respectively.

References References are used to secure information about the applicant not available from other sources. Personal contact is the best way to obtain information from references, for most people are more frank orally than in writing. When a reference is located at a distance, a telephone call may substitute for personal contact. References fall in the following categories: present or former employers, former customers, reputable citizens, mutual acquaintances. Different Types of Tests Administered on Recruitment of Sales People Three types of psychological tests are used in selection systems for sales personnel: tests of ability, of habitual characteristics and of achievement. He diagrammatic representation of these can be seen in Figure 4.4. Tests of ability These measure how well a person can perform particular tasks with maximum motivation. Tests of habitual characteristics gauge how a prospective employee performs in his/her daily work. Achievement tests measure how much individuals have learned from their experience, training or education.

Tests of ability include tests of mental ability (intelligence tests) and tests of special abilities (aptitude tests). Tests of mental ability or intelligence tests are used satisfactorily in a wide range of applications. Certain tests are designed to measure special abilities or aptitudes such as spatial and perceptual abilities, speed and reaction time, mechanical comprehension, and artistic abilities. There is some evidence that the existence of two basic qualities, empathy and ego drive, are essential in good sales people. Empathy is the ability to feel as others do, to put oneself in another persons shoes. The empathetic salesperson senses the reactions of customers and adjusts to these reactions, achieving real interaction with customers. The second basic qualityego drivemakes the salesperson want to make the sale in a personal way, not merely for the money to be gained. The salesperson feels that he has to strike a deal with the customer. Tests of habitual characteristics These include attitude, personality, and interest tests. Attitude tests are more appropriate as morale-measuring techniques than as selection aids. They are used to ascertain employees feelings toward working conditions, pay, advancement opportunities, and the like.

Projective tests Projective tests, of which the Rorschach test is the best known, are a promising technique for personality measurement. They are mind-probing tests. However, they must be administered by skilled testers, and their results represent a subjective option rather than an objective measure. Further, refinements of projective techniques may eventually provide useful personality measurements. Interest tests A basic assumption implicit in the use of interest tests are that a relationship exists between interest and motivation. Hence, if two persons have equal ability, the one with the greater interest in a particular job should be more successful in that job. A second implicit

assumption is that interests are constant, that those of a person at age forty are the same as they were at twenty-one. Achievement tests Achievement tests seek to determine how much individuals know about a particular subject. Physical examination Since good health is important for anybodys success, most companies require physical examinations of all applicants being seriously considered for sales positions. Because of their relatively high cost, the physical examination is generally one of the last steps in the selection system.

Motivational Factors / Incentives:

(A) Monetary or Financial Incentives Monetary incentives are offered in terms of money. Such incentives provide more cash or purchasing power to employees. Monetary incentives are extremely attractive to employees (particularly those working at lower levels) as they get the benefit quickly and in concrete terms. At the higher levels of management, non-monetary incentives are more important than monetary incentives. Workers prefer monetary incentives as compared to nonmonetary incentives. Managements also offer liberal monetary incentives to all categories of workers. Monetary incentives may be further classified as following:Individual Monetary Incentives: The benefit of individual monetary incentive is available to concerned worker only. For example, F. W. Taylor suggested differential piece rate system which offers different wage rates to different workers as per their production efficiency. Different incentive wage plans are the examples of individual monetary incentives as the benefit is offered individually to every worker. Here, a worker is paid as per his efficiency, productivity or as per the production given by him. Efficient/sincere workers give more production and get higher reward in terms of wage payment. Group Monetary Incentives: In the group monetary incentives, the monetary benefit is not given individually but to a group of workers or to all workers in the Organisation. Workers have to work jointly/collectively as a team in order to secure the benefits of group monetary incentives. Bonus payment, pension, P.F, production/productivity bonus, profit sharing, etc. is the examples of group monetary incentives. For the employer/management, group incentives are more important as they offer many benefits to the management.

(B) Non-monetary Incentives for Employee Motivation Job security and job enrichment: Job security is useful for the motivation of employees. Such security keeps the employee away from the tension of becoming unemployed. Job enrichment provides an opportunity for greater recognition and advancement. Job enrichment refers to redesign of jobs. Fair treatment to employees: Employer should give attention to the needs, difficulties and grievances of employees. Small work groups and effective communication are useful for solving the problems of workers. Employees must be given decent treatment. They will be co-operative only when they are treated with sympathy and love, affection and dignity. Employees should also be given help in personal matters. Recognition of good work: Recognition of good work at an appropriate time gives encouragement to employees to show better performance in future. As an appreciation of good work, prizes, rewards, promotions, etc. should be given. Encouragement to self-development and career development: Employees should be given varied training facilities. Training facilitates self-development and also provides opportunities for career development. Every employee has a desire to grow, develop and rise higher. This desire should be exploited fully for motivating employees. For this, training as well as management development programmes should be introduced. Delegation of authority: Due to delegation of authority, a subordinate employee feels that superior has faith in him and also in his ability to use authority in a proper manner. Employees get mental satisfaction when authority is given to them. They take interest and initiative in the work and try to prove that they are competent to work at the higher levels. Thus, delegation of authority becomes a motivating factor. Congenial working conditions: It is a non financial incentive for motivation. Employees should be given various facilities and conveniences at the work place. The work environment should be pleasant and safe. This creates desire to work efficiently. Helpful attitude of management: The helpful attitude of management towards its employees creates a sense of affinity for the Organisation. Fair treatment to workers creates better understanding among workers. Cordial industrial relations also motivate employees. Thus, enlightened and pro-employee attitude of management acts as a motivating factor. Fair opportunity of promotion: Fair opportunity of promotion to all eligible workers is one more method useful for motivating employees. They take interest in the work as they feet that they will be rewarded in the form of promotions. Training facility should be provided to employees in order to make them eligible for promotion. Labour participation in management: Labour participation in management is useful for the motivation of employees. Workers get higher status and better scope for expressing their views through such participation. Even the formation of quality circles or joint management councils is useful for motivating employees.

Designation and status: When an employee is provided with a better designation, it adds to his status. Employees are proud to reveal their attractive and high-sounding designations. Various Compensation Systems There are basically two compensation system viz. Basis Time Rate and Piece Rate. These two systems are devised to make payment to workers of different skills, efficiency levels. It is meant for making payment, which should adequate compensate the worker for his efforts. The Compensation System

Time Rate Incentive

Piece rate

Bonus

Profit sharing

Indirect Monetary

1. Time Rate System: This system is divided into three categories. Time Rates

Ordinary level Ordinary Level:

High Wage Level

Graduated Time Rates

It is calculated on time (daily, monthly, weekly etc.)The formula for calculation of salary is Rate per hour X Hours worked = Earnings (RPH X HW=E). High Wage Level: It is calculated on hourly basis put over time is not paid. The formula for calculation of salary is RPH X HW = E Graduate System: Payment: the basis is linked with dearness cost of living. The index of cost of living is varying and that is considered for calculating the remuneration. Formula: Basic Salary is Rs. 2,000/- and Cost of living Index (D.A) is 100% then, Rs 2000+100% of Rs 2000 as cost of living is added, thus total remuneration is Rs. 4000/-. It after 6 months, cost of living index change 15%. Then basic salary + 150% of basic salary i.e Rs 3,000/- will make it Rs, 5000.

2. Piece Rate/ Payment Rate ( Payment by Results) System of Piece Rate ( Payment by Results)

Straight Piece Rate

Piece & Time Combination

Differential Piece Rate

Taylor System Straight Piece Rate:

Merrick System

Gantt Task System

Payment: Flat rate is applicable per unit, which is predetermined. The time spent is not considered. Formula: PPR X O = Earnings. Piece Rate and Time Rate Combinations: Payment: It is a dual rate system, designed to perfect inefficient workers. The worker is ensured to get the mi9nimum payment. If the payment is calculated on the basis of piece rate guarantees and number of pieces fall below the minimum wages guaranteed, he is paid by time Rate. Differential Piece rate: Payment: In favour of piece rate system, minimum wages were assured. However, under this system, instead of combining time-rate and piece-rate, there are dual rates for different efficiency level. The purpose behind keeping high piece rate for higher efficiency is as the level of production increases, the cost per unit falls. 4. Bonus: Bonus is given by the company to their employees as a reward. It is been fixed by the government i. e 8.33%. Bonus encourages the employees to work hard. It is a motivating factor for the employees to improve their efficiency. 5. Profit Sharing: Profit Sharing is the most motivating factor. When the company makes profit it gives some kind of share to their employees as an Annual increment. This helps to motive employees to work hard and get more increment. 6. Indirect Monetary Incentive: Indirect Monetary Incentives like traveling allowance, HRA, Dearness allowance, medical facility, etc are very motivating for the employees. Distinguish between of Time rate and piece rate system No. Particular Time Rate System Piece Rate System 1. Definition When the payment of wages is made to employees irrespective of the production the system is called Time Rate System. When the employee is paid on the basis of output/units produced/completed and predetermined rate for the same irrespective of spent for the work is called piece rate system.

2. 3.

Significant factor Additional payment component Formula

Attendance time Overtime at higher rate

Production /Output Additional output at higher piece rate

4.

Hours worked x rate Units produced x Piece rate = per Hour= Earning (HW Earning (UP X PR = E) X RPH = E) The work is of the nature, which cannot be measured, in quantitative terms, e.g. Preparing engineering drawing of a job. Supervision of the wok. The work should be measurable in quantitative terms. E.g. winding of transformers, packing articles in plastic bags.

5.

Pre-requisite

6.

Suitability Industries

to Performance is not Where precisely the work can possible to measure be measured. Where the job accurately. Where jobs is to stereotype nature involves art and skill, (Assembly of parts). like ornament making, fashion designing, furniture making etc. To be performed with Generally machines and intervals. equipments, without intervals Low Unskilled Low manually, with

7.

Work nature

8.

9. 10. 11. 12.

Workers a. Literary level High b. Skill Highly Skilled c. Need of managerial ability d. Creativity e. Tenure f. Job Satisfaction g. Responsibility Incentive paid by Higher tome rate Benefits Cost Advantages Of all these High cost, fixed cost Consistency, integration

High rate output Very low

for

additional

Low cost, variable cost with

loyalty Speedy work adjustments.