Human Resource Management

Human Resource Management- deals with the designs and implementation of systems
in an organization to insure the efficient and effective use of human talent to accomplish
organizational goals. HRM is a proactive approach

The policies and practices involved in carrying out the “people” or human resource
aspects of a management position, including recruiting, screening, training, rewarding, and
appraising.

HRM means employing people, developing their capacities, utilizing, maintaining and
compensating their services in tune with the job and organizational requirement.
Human Resource Management is the organizational function that deals with issues
related to people such as compensation, hiring, appraisal, organization development, safety,
compensation benefits, employee motivation, communication, administration, and training.

Human Resource Management: Nature

Human Resource Management is a process of bringing people and organizations together so that
the goals of each are met.
The various features of HRM include:
• It is pervasive in nature as it is present in all enterprises.
• Its focus is on results rather than on rules.
• It tries to help employees develop their potential fully.
• It encourages employees to give their best to the organization.
• It is all about people at work, both as individuals and groups.
• It tries to put people on assigned jobs in order to produce good results.
• It helps an organization meet its goals in the future by providing for competent and well-
motivated employees.
• It tries to build and maintain cordial relations between people working at various levels in the
organization.

FUNCTION OF HRM

The first step of HRM is developing organization objectives and policies. The
organization frames their long and short goal.
Planning requires that an assessment of present and future needs of the organization be
compared with present resources and future predicted resources.
Strategic Human Resource Planning:
In the human resource planning function, the number and type of employees needed to
accomplish organizational goals are determined. Research is an important part of this function
because planning requires the collection and analysis of information in order to forecast human
resources supplies and to predict future human resources needs. The basic human resource
planning strategy is staffing and employee development.
 ORG:

HRIS PLANNING STRATGIC HR

&
DEVLOPMENT PLANNAING

UNION RELATION JOB

ANALYSIS

STAFFING
EMPLOYEE HRM
RELATION FUNCTION

TRAINING & DEVLOPMENT

HEALTH&
SAFETY

PERFORMANCE APPRAISAL

REWARDS &

Job Analysis:
An analysis of the job to be done (i.e. an analytical study of the tasks to be performed to
determine their essential factors) written into a job description so that the selectors know what
physical and mental characteristics applicants must possess, what qualities and attitudes are
desirable and what characteristics are a decided disadvantage.

Job analysis is the process of describing the nature of a job and specifying the human
requirements, such as skills, and experience needed to perform it. The end product of the job
analysis process is the job description. A job description spells out work duties and activities of
employees. Job descriptions are a vital source of information to employees, managers, and
personnel people because job content has a great influence on personnel programmes and
practices.

Staffing:
Staffing emphasizes the recruitment and selection of the human resources for an
organization. Human resources planning and recruiting precede the actual selection of people for
positions in an organization.
Recruiting is the personnel function that attracts qualified applicants to fill job vacancies.
In the selection function, the most qualified applicants are selected for hiring from among those
attracted to the organization by the recruiting function. On selection, human resource
functionaries are involved in developing and administering methods that enable managers to
decide which applicants to select and which to reject for the given jobs.
Orientation: Orientation is the first steps toward helping a new employee adjust himself to the
new job and the employer. It is a method to acquaint new employees with particular aspects of
their new job, including pay and benefit programmes, working hours, and company rules and
expectations.

Training and Development:

The training and development function gives employees the skills and knowledge to
perform their jobs effectively. In addition to providing training for new or inexperienced
employees, organizations often provide training programmes for experienced employees whose
jobs are undergoing change. Large organizations often have development programmes which
prepare employees for higher level responsibilities within the organization. Training and
development programmes provide useful means of assuring that employees are capable of
performing their jobs at acceptable levels.

Performance Appraisal:
This function monitors employee performance to ensure that it is at acceptable levels. Human
resource professionals are usually responsible for developing and administering performance
appraisal systems, although the actual appraisal of employee performance is the responsibility of
supervisors and managers.
Besides providing a basis for pay, promotion, and disciplinary action, performance appraisal
information is essential for employee development since knowledge of results (feedback) is
necessary to motivate and guide performance improvements. Career Planning: Career planning
has developed partly as a result of the desire of many employees to grow in their jobs and to
advance in their career. Career planning activities include assessing an individual employee’s
potential for growth and advancement in the organization.

Compensation & Benefits:

Human resource personnel provide a rational method for determining how much
employees should be paid for performing certain jobs. Pay is obviously related to the
maintenance of human resources. Since compensation is a major cost to many organizations, it is
a major consideration in human resource planning.
Compensation affects staffing in that people are generally attracted to organizations offering a
higher level of pay in exchange for the work performed.
It is related to employee development in that it provides an important incentive in
motivating employees to higher levels of job performance and to higher paying jobs in the
organization.
Benefits:
Benefits are another form of compensation to employees other than direct pay for work
performed. As such, the human resource function of administering employee benefits shares
many characteristics of the compensation function. Benefits include both the legally required
items and those offered at employer’s discretion.

Employee Relations: The term “Employee relations” refers to interaction with employees who
are represented by a trade union. Unions are organization of employees who join together to
obtain more voice in decisions affecting wages, benefits, working conditions, and other aspects
of employment. With regard to Employee relations, the personnel responsibility primarily
involves negotiating with the unions regarding wages, service conditions, and resolving disputes
and grievances.

HRIS-Record-keeping:
The oldest and most basic personnel function is employee record- keeping. This function
involves recording, maintaining, and retrieving employee- related information for a variety of
purposes. Records which must be maintained include application forms, health and medical
records, employment history (jobs held, promotions, transfers, and lay-offs), seniority lists,
earnings and hours of work, absences, turnover, tardiness, and other employee data. Complete
and up-to-date employee records are essential for most personnel functions. More than ever
employees today have a great interest in their personnel records. They want to know what is in them,
why certain statements have been made, and why records may or may not have been updated.

Personnel records provide the following:

A store of up-to-date and accurate information about the company’s employees
A guide to the action to be taken regarding an employee, particularly by comparing him with
other employees
 A guide when recruiting a new employee, e.g. by showing the rates of pay received by
comparable employees
A historical record of previous action taken regarding employees
 The raw material for statistics which check and guide personnel policies
 The means to comply with certain statutory requirements

RECRUITMENT
Recruitment refers to the process of attracting, screening, and selecting qualified people
for a job at an organization or firm. Recruitment is an important part of an organization’s human
resource planning and their competitive strength.
The objective of the recruitment process is to obtain the number and quality of
employees that can be selected in order to help the organization to achieve its goals and
objectives. With the same objective, recruitment helps to create a pool of prospective employees
for the organization so that the management can select the right candidate for the right job from
this pool at right time.

Recruitment acts as a link between the employers and the job seekers and ensures the
placement of right candidate at the right place at the right time

According to Edwin B. Flippo,

“Recruitment is the process of searching the candidates for employment and stimulating them to
apply for jobs in the organization”

SOURCES OF RECRUITMENT:
Every organization has the option of choosing the candidates for its recruitment
processes from two kinds of sources:
 SOURCES

INTERNAL SOURCES EXTERNAL SOURCES

TRANSFER WALK-INS
PRESS ADVERTISEMENTS
PROMOTION EDUCATIONAL
INSTITUTES
JOB PLACEMENT AGENCIES
ROTATION
UNSOLICITED
REHIRES APPLICANTS
AND RECALLS EMPLOYEE REFERRALS
HEAD-HUNTING

Internal Sources of Recruitment:

Internal sources the sources within the organization itself (like transfer of employees
from one department to other, promotions) to fill a position are known as the internal sources of
recruitment.

PROMOTION
Most of the companies choose to fill vacancies using promotion from-within policy. It
enhances morale and motivation of the employee.

TRANSFER
It is the method of recruiting internally by transferring employees to other department
or project without promotion

JOB ROTATION
Job rotation means moving from one job assignment to another within the same
organization. Job transfer is likely to be permanent, whereas job rotations are temporary in nature

REHIRES AND RECALLS

The rehires of former employees is relatively inexpensive and effective method of
internal recruiting. Since former employees are familiar with job responsibilities and other norms
of company. Its beneficial to organizations that have seasonal fluctuation in the demand for
workers.

RIPPLE EFFECT: When one vacancy is filled internally, a second vacancy is created, the
position of individual who was promoted or transferred to fill the first vacancy. If this slot is
also filled internally, then another vacancy occurs. This movement of personal is called ripple
effect
External Sources of Recruitment:
External sources recruitment candidates from all the other sources (like outsourcing
agencies etc.) are known as the external sources of recruitment.
WALK-INS
The job seekers who arrive at the human resource department in search of a job. It is
also known as gate hiring. In this method the individual become applicants by walking to the
organization in search of a job

 PRESS ADVERTISEMENTS
Advertisements of the vacancy in newspapers and journals are a widely used source of
recruitment. The main advantage of this method is that it has a wide reach.

EDUCATIONAL INSTITUTES
Various management institutes, engineering colleges, medical Colleges etc. are a good
source of recruiting well qualified executives, engineers, medical staff etc. They provide
facilities for campus interviews and placements. This source is known as Campus Recruitment.

 PLACEMENT AGENCIES
Several private consultancy firms perform recruitment functions on behalf of client
companies by charging a fee. These agencies are particularly suitable for recruitment of
executives and specialists. It is also known as RPO (Recruitment Process Outsourcing)

UNSOLICITED APPLICANTS
Many job seekers visit the office of well-known companies on their own. Such callers
are considered nuisance to the daily work routine of the enterprise. But can help in creating the
talent pool or the database of the probable candidates for the organization.

HEAD-HUNTING
It is typically a semi-formal search for higher-level executive posts. The top level
professionals hunted through specialized agencies.

EMPLOYEE REFERRALS
Many organizations have structured system where the current employees of the
organization can refer their friends and relatives for some position in their organization. Also, the
office bearers of trade unions are often aware of the suitability of candidates. Management can
inquire these leaders for suitable jobs. In some organizations these are formal agreements to give
priority in recruitment to the candidates recommended by the trade union.

ALTERNATIVE RECRUITMENT
Because if cost and permanency of recruiting individual, several alternatives to
recruiting and hiring employees directly
The four important alternatives to recruiting are
OVER TIME
EMPLOYEE LEASING
TEMPORARY EMPLOYMENT
INDEPENDENT CONTRACTOR
DECRUITMENT
It is the process of reducing the labour supply within the organization. If HR planning
shows a surplus of employees, management may want to reduce the organization’s workforce
through decruitment.

CATAGORY DESCRIPTION
Firing Permanent involuntary termination
Lay off Permanent involuntary termination.
It may last only a few days or
extend to year
Attrition Not filling opening created by
normal retirement or voluntary
resignations
Transfer Moving employees either laterally
or downward
Reduced Having employees work fewer
work weeks hours per week, share job or
perform their jobs on a part-time
basis
Early Providing incentives to older and
Retirement more senior employees for retiring
before their normal retirement date

RECRUITEMNT PROCESS
The various steps in the recruitment process that are usually followed in large
organization. The basic steps of recruitment process are

DETERMINE THE EXACT NEED AND GET APPROVAL

FROM TOP MANAGEMENT

COMBINE OR UBDATE THE JOB DESCRIBTION AND

SPECIFICATION

DETMINE THE KEY PERFORMANCE AREAS OF THE JOB

CONSULT THE RECRUITMENT POLICY AND

PROCEDURE
 CHOOSE THE RECRUITMENT SOURCES AND DESIDE
OPTIMUM METHOD

IMPLEMENT DECISION

ALLOW SUFFICIENT TIME FOR RESPONCE

SCREEN RESPONCES AND DRAW UP A SHORTLIST OF

CANDIDATES

PROVIDE FEEDBACK TO APPLICANTS

PROCEED TO SELECTION AND EVALUATE

RECRUITMENT EFFORT

SELECTION
The Main Objective of a selection procedure is to determine whether an applicant meets
the qualification for a specific job, and then to choose the applicant who is most likely to perform
well in that job.
According to Thomas stone “Selection is the process of differentiating between
applicants in order to indentify and hire those with a greater likelihood of success on the jobs. ”

SELECTION PROCESS
The selection process consists of various steps. At each stage facts may come to light
which may lead to rejection of the applicant

RECEPTION OF APPLICANTS

FAILED TO MEET APPLICATION SHORTING OR

MINIMUM QUALIFICATION INITIAL SCREENING

DEFICIENT
 QUALIFICATION
APPLICATION BLANK

FILE
SHORTED APPLICATION LIST

POOR TEST SCORES

& FAILED TEST
EMPLOYMENT TESTS

FAILED TO IMPRESS
INTERVIEWER OR
POOR INTERPERSONAL
EMPLOYMENT INTERVIEW
QULITIES

PROBLEMS
ENCOUNTERED REFERENCE /BACKGROUND
AND CHECK IF REQUIRED
UNFAVOURABLE
HISTORY

PHYSICALLY MEDICAL/PHYSICAL
UNFIT TO DO EXAMINATION IF REQUIRED
JOB ELEMENTS

REJECT
OFFER EMPLOYMENT

Preliminary interview or Initial screening

Initial screening is done to weed out totally undesirable/unqualified candidates at the
outset. It is essentially a sorting process in which prospective candidates are given necessary
information about the nature of the job and the organization.

Application blank:
Application form is a traditional and widely used device for collecting information from
candidates. The application form should provide all the information relevant to selection. The
application blank is prepared or set by the HR department.

Selection test:
Psychological are being increasingly used in employee selection. A test is sample of
some aspects of an individual’s attitude, behavior and performance. It also provides systematic
basis from comparing the behavior, performance and attitudes of two persons.

Employment interview:
An interview is a conversation between two persons. In selection it involves a personal,
observational and face to face appraisal of candidates for employment.

Medical examination:
Applicants who have crossed the above stages are sent for a physical examination either
to the company’s physician or to a medical officer approved for the purpose.
 Reference checks:
The applicant is asked to mention in his application form the names and addresses of two
or three persons who know him well.

Final approval:
The shortlisted candidates by the department are finally approved by the executives of the
concerned department. Employment is offered in the form of appointment letter mentioning the
post, the rank, the grade, the date by which the candidate should join and other terms and
conditions in brief.

DIFFERENTIATION BETWEEN RECRUITMENT AND SELECTION

Recruitment Selection
It the process of searching theIt the process of at which
candidates for employment the candidates are screened
and stimulating them to apply for choosing the most
for jobs in the organization. suitable persons for vacant
posts.
The basic purpose of The basic purpose of
recruitments is to create a selection process is to
talent pool of candidates to choose the right candidate
enable the selection of best to fill the various positions
candidates for the in the organization.
organization, by attracting
more and more employees to
apply in the organization.
Recruitment is a positive Selection is a negative
process i.e. encouraging more process as it involves
and more employees to apply. rejection of the unsuitable
candidates.
Recruitment is concerned Selection is concerned with
with tapping the sources of selecting the most suitable
human resources. candidate through various
interviews and tests.
There is no contract of Selection results in a
recruitment established in contract of service between
recruitment the employer and the
selected employee.

Orientation
Orientation effectively integrates the new employee into your organization and assists
with retention, motivation, job satisfaction, and quickly enabling each individual to become
contributing members of the work team.
  
Definition
Introductory stage in the process of new employee assimilation, and a part of his or her
continuous socialization process in the organization.
Major objectives of orientation are to
Gain employee commitment,
Reduce his or her anxiety,
Help him or her understand organization's expectations, and
Convey what he or she can expect from the job and the organization.
It is commonly followed by training tailored to specific job positions. See also
acculturation and company orientation.

TRAINING
Training plays a significant role in human resource development. Human resources are
the lifeblood of any organization. Only through trained & efficient employees, can an
organization achieve its objectives.
Training is the process of altering employee behavior and attitudes in a way that increase
the probability of goal attainment

OBJECTIVES
The principal objective of training and development division is to make sure the
availability of a skilled and willing workforce to an organization. In addition to that, there are
four other objectives: Individual, Organizational, Functional, and Societal.
Individual Objectives: help employees in achieving their personal goals, which in turn,
enhances the individual contribution to an organization.
Organizational Objectives: assist the organization with its primary objective by bringing
individual effectiveness.
Functional Objectives: maintain the department’s contribution at a level suitable to the
organization’s needs.
Societal Objectives: ensure that an organization is ethically and socially responsible to the
needs and challenges of the society.

To impart to the new entrants the basic knowledge & skills they need for an intelligent
performance of definite tasks.
To prepare employees for more responsible positions
To bring about change in attitudes of employees in all directions
 To reduce supervision time, reduce wastage & produce quality products.
To reduce defects & minimize accident rate
To absorb new skills & technology
Helpful for the growth & improvement of employee's skills & knowledge

METHODS OF TRAINING
The most widely used methods of training used by organizations are classified into two
categories: On-the-Job Training & Off-the-Job Training.

ON-THE-JOB TRAINING is given at the work place by superior in relatively short period of
time. This type of training is cheaper & less time-consuming. This training can be imparted by
basically four methods
Coaching
It is learning by doing. In this, the superior guides his sub-ordinates & gives him/her job
instructions. The superior points out the mistakes & gives suggestions for improvement.
Job Rotation
 In this method, the trainees move from one job to another, so that he/she should be able
to perform all types of jobs. E.g. In banking industry, employees are trained for both back-end &
front-end jobs. In case of emergency, (absenteeism or resignation), any employee would be able
to perform any type of job.

OFF THE JOB TRAINING

is given outside the actual work place.

Lectures/Conferences
This approach is well adapted to convey specific information, rules, procedures or
methods. This method is useful, where the information is to be shared among a large number of
trainees. The cost per trainee is low in this method.
Films
It can provide information & explicitly demonstrate skills that are not easily presented by
other techniques. Motion pictures are often used in conjunction with Conference, discussions to
clarify & amplify those points that the film emphasized.

Simulation Exercise
Any training activity that explicitly places the trainee in an artificial environment that
closely mirrors actual working conditions can be considered a Simulation. Simulation activities
include case experiences, experiential exercises, vestibule training, management games & role-
play.
Cases
It an in depth description of a particular problem an employee might encounter on the
job. The employee attempts to find and analyze the problem, evaluate alternative courses of
action & decide what course of action would be most satisfactory.
Experiential Exercises
Its usually short, structured learning experiences where individuals learn by doing. For
instance, rather than talking about inter-personal conflicts & how to deal with them, an
experiential exercise could be used to create a conflict situation where employees have to
experience a conflict personally & work out its solutions.
Vestibule Training
Employees learn their jobs on the equipment they will be using, but the training is
conducted away from the actual work floor. While expensive, Vestibule training allows
employees to get a full feel for doing task without real world pressures. Additionally, it
minimizes the problem of transferring learning to the job.
Role Play
Its just like acting out a given role as in a stage play. In this method of training, the
trainees are required to enact defined roles on the basis of oral or written description of a
particular situation. Management Games
The game is devised on a model of a business situation. The trainees are divided into
groups who represent the management of competing companies. They make decisions just like
these are made in real-life situations. Decisions made by the groups are evaluated & the likely
implications of the decisions are fed back to the groups. The game goes on in several rounds to
take the time dimension into account.
In-Basket Exercise
 It’s also known as In-tray method of training. The trainee is presented with a pack of
papers and files in a tray containing administrative problems and is asked to take decisions on
these problems within a stipulated time. The decisions taken by the trainees are compared with
one another. The trainees are provided feedback on their performance.

PROCESS OF TRAINING
ESTABLISHING A NEEDS ANALYSIS.
This step identifies activities to justify an investment for training. The techniques
necessary for the data collection are surveys, observations, interviews, and customer comment
cards. Several examples of an analysis outlining specific training needs are customer
dissatisfaction, low morale, low productivity, and high turnover.
The objective in establishing a needs analysis is to find out the answers to the following
questions:
 “Why” is training needed?
 “What” type of training is needed?
 “When” is the training needed?
 “Where” is the training needed?
 “Who” needs the training?
 "Who" will conduct the training?
 “How” will the training be performed?
By determining training needs, an organization can decide what specific knowledge,
skills, and attitudes are needed to improve the employee’s performance in accordance with the
company’s standards. The needs analysis is the starting point for all training. The primary
objective of all training is to improve individual and organizational performance. Establishing a
needs analysis is, and should always be the first step of the training process.

DEVELOPING TRAINING PROGRAMS AND MANUALS.

This step establishes the development of current job descriptions and standards and
procedures. Job descriptions should be clear and concise and may serve as a major training tool
for the identification of guidelines. Once the job description is completed, a complete list of
standards and procedures should be established from each responsibility outlined in the job
description. This will standardize the necessary guidelines for any future training.

DELIVER THE TRAINING PROGRAM.

This step is responsible for the instruction and delivery of the training program. Once you
have designated your trainers, the training technique must be decided. One-on-one training, off-
the-job training, group training, seminars, and workshops are the most popular methods.
For a training program to be successful, the trainer should be conscious of several
essential elements, including a controlled environment, good planning and the use of various
training methods, good communication skills, and trainee participation.
EVALUATE THE TRAINING PROGRAM.
This step will determine how effective and profitable your training program has been.
Methods for evaluation are pre-and post- surveys of customer comments cards, the establishment
of a cost/benefit analysis outlining your expenses and returns, and an increase in customer
satisfaction and profits.
 The reason for an evaluation system is simple. The evaluations of training programs are
without a doubt the most important step in the training process. It is this step that will indicate
the effectiveness of both the training as well as the trainer.
There are several obvious benefits for evaluating a training program.
Evaluations will provide feedback on the trainer’s performance, allowing them to improve
themselves for future programs.
Evaluations will indicate its cost-effectiveness.
 Evaluations are an efficient way to determine the overall effectiveness of the training program
for the employees as well as the organization.

The need for training your employees has never been greater. As business and industry
continues to grow, more jobs will become created and available. Customer demands, employee
morale, employee productivity, and employee turnover as well as the current economic realties
of a highly competitive workforce are just some of the reasons for establishing and implementing
training in an organization. To be successful, all training must receive support from the top
management as well as from the middle and supervisory levels of management. It is a team effort
and must implement by all members of the organization to be fully successful.

TRAINER
The trainer should have the following characteristics:
A desire to teach the subject being taught
A working knowledge of the subject being taught
 An ability to motivate participants to “want” to learn
A good sense of humor
A dynamic appearance and good posture
 A strong passion for their topic
A strong compassion towards their participants
Appropriate audio/visual equipment to enhance the training session.

CAREER DEVELOPMENT
Career management is an important life skill to develop and cultivate. There are six
stages of modern career development: Assessment, Investigation, Preparation, Commitment,
Retention, and Transition. Planning your career means planning for change. The world of work
is constantly changing, and we must be prepared to meet these changes without letting them get
the best of us. We need to know our strengths and know how to build up our skills.

GROWTH=value of money exceeds value of time

MATURITY= value of money equal to value of time .

DECLINE = value of time exceeds value of money

 GROWTH MATURITY DECLINE
G R
R E
A T
D I
U R
A E
T M
I E
5 5 20 10
O N
YEARS YEARS YEARS YEARS
N T

Growth – The early years (4 to 13 years old) is a time when the individual first becomes aware
of the future.  People start to find ways to develop competencies and to achieve in order to
increase control over their life.

Exploration – From the early teens to mid-twenties, people begin to shape up, specify and
implement an occupational choice.  Different roles are tried and various occupational options are
explored though school, leisure, part-time work and volunteering.  “Trial jobs” may be tested
before more firmly finding a more stable and appropriate fit.

Establishment – In the mid-twenties through mid-forties, typically a suitable field is selected

and efforts are made to secure a long-term place in the chosen career.  Young adulthood tends to
be a time for stabilizing, consolidating, building momentum and moving up.  Obtaining
certifications, credentials, and advanced degrees may be the norm.

Maintenance - This stage usually happens in the mid-forties to mid-sixties and is characterized
by constancy:
1) Holding on (stagnating or plateauing), or
2) Keeping up (updating or enriching). 
Continuity, stress, safety and stability tend to be the standard.  Sometimes people feel risk
adverse with various career options which may lead to frustration or even depression.  In middle
adulthood we may ask ourselves, “What have I done with my life? Or is this all there is? Or even
what do I truly want?”  For men, state of health or career accomplishment may predominate. 
Women sometimes perceive this period as an opportunity to pursue new personal or professional
goals now that their nurturing role has peaked.

Disengagement – The mid-sixties is typically marked by decelerating from formal employment

to finding new roles with a view to retirement.  Baby Boomers are teaching us that this stage
should be more appropriately named “Re-inventment.”  They are completely redesigning the
notion of “retirement” preferring to work in some form while pursuing new or renewed outside
interests.  In later adulthood, there may be a need to assist or mentor younger members of society
or seek self-employment.

PERFORMANCE APPRAISAL
A performance appraisal, is a method by which the job performance of an employee is
evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding
manager or supervisor. A performance appraisal is a part of guiding and managing career
development. It is the process of obtaining, analyzing, and recording information about the
relative worth of an employee to the organization. Performance appraisal is an analysis of an
employee's recent successes and failures, personal strengths and weaknesses, and suitability for
promotion or further training. It is also the judgement of an employee's performance in a job
based on considerations other than productivity alone.

The other names of performance appraisal are Employee appraisal, performance

review, or (career) development discussion, employee rating, merit rating, staff assessment,
employee evaluation, result appraisal.

PERFORMANCE APPRAISAL METHOD

MODERN METHODS
TRADITIONAL METHOD

Critical incident method Management By

Objectives (MBO)
method
Forced ranking (forced
Weighted checklist method distribution)
Paired comparison analysis 360 degree performance
appraisal
Behavioral Observation
Graphic rating scales Scales
Human Resource
Essay Evaluation method Accounting Method

Behaviorally anchored rating

scales

Performance ranking method

TRADITIONAL METHOD
Critical incident method
The critical incidents for performance appraisal is a method in which the manager writes
down positive and negative performance behavior of employees throughout the performance
period
In this method of Performance appraisal, the evaluator rates the employee on the basis of
critical events and how the employee behaved during those incidents. It includes both negative
and positive points. The drawback of this method is that the supervisor has to note down the
critical incidents and the employee behaviour as and when they occur.
Weighted checklist method
This method describe a performance appraisal method where rater familiar with the jobs
being evaluated prepared a large list of descriptive statements about effective and ineffective
behavior on jobs
The rater is given a checklist of the descriptions of the behaviour of the employees on
job. The checklist contains a list of statements on the basis of which the rater describes the on the
job performance of the employees.

Paired comparison analysis

Paired comparison analysis is a good way of weighing up the relative importance of
options.
A range of plausible options is listed. Each option is compared against each of the other options.
The results are tallied and the option with the highest score is the preferred option.
A better technique of comparison than the straight ranking method, this method compares
each employee with all others in the group, one at a time. After all the comparisons on the basis
of the overall comparisons, the employees are given the final rankings.

Graphic rating scales

The Rating Scale is a form on which the manager simply checks off the employee’s level
of performance. This is the oldest and most widely method used for performance appraisal..
In this method, an employee’s quality and quantity of work is assessed in a graphic scale
indicating different degrees of a particular trait. The factors taken into consideration include both
the personal characteristics and characteristics related to the on the job performance of the
employees. For example a trait like Job Knowledge may be judged on the range of average,
above average, outstanding or unsatisfactory.

Essay Evaluation method

This method asked managers / supervisors to describe strengths and weaknesses of an
employee’s behavior. Essay evaluation is a non-quantitative technique .This method usually use
with the graphic rating scale method.
This traditional form of appraisal, also known as "Free Form method" involves a
description of the performance of an employee by his superior. The description is an evaluation
of the performance of any individual based on the facts and often includes examples and
evidences to support the information. A major drawback of the method is the inseparability of
the bias of the evaluator.

Behaviorally anchored rating scales

This method used to describe a performance rating that focused on specific behaviors or
sets as indicators of effective or ineffective performance.
It is a combination of the rating scale and critical incident techniques of employee performance
evaluation.
Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which
combines the graphic rating scale and critical incidents method. It consists of predetermined
critical areas of job performance or sets of behavioral statements describing important job
performance qualities as good or bad (for eg. the qualities like inter personal relationships,
adaptability and reliability, job knowledge etc). These statements are developed from critical
incidents.
In this method, an employee’s actual job behaviour is judged against the desired
behaviour by recording and comparing the behaviour with BARS. Developing and practicing
BARS requires expert knowledge.

Performance ranking method

Ranking is a performance appraisal method that is used to evaluate employee
performance from best to worst.Manager will compare an employee to another employee, rather
than comparing each one to a standard measurement.

MODERN METHODS
Management by Objectives (MBO) method
MBO is a process in which managers / employees set objectives for the employee,
periodically evaluate the performance, and reward according to the result.MBO focuses attention
on what must be accomplished (goals) rather than how it is to be accomplished (methods)

360 degree performance appraisal

360 Degree Feedback is a system or process in which employees receive confidential,
anonymous feedback from the people who work around them. This post also includes
information related to appraisal methods such as 720, 540, 180…
Forced ranking (forced distribution)
Forced ranking is a method of performance appraisal to rank employee but in order of
forced distribution. For example, the distribution requested with 10 or 20 percent in the top
category, 70 or 80 percent in the middle, and 10 percent in the bottom.
To eliminate the element of bias from the rater’s ratings, the evaluator is asked to
distribute the employees in some fixed categories of ratings like on a normal distribution curve.
The rater chooses the appropriate fit for the categories on his own discretion

Behavioral Observation Scales

Behavioral Observation Scales is frequency rating of critical incidents that worker has
performed.

ASSESSMENT CENTRES
An assessment centre typically involves the use of methods like social/informal events,
tests and exercises, assignments being given to a group of employees to assess their
competencies to take higher responsibilities in the future. Generally, employees are given an
assignment similar to the job they would be expected to perform if promoted. The trained
evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated
on job related characteristics.
The major competencies that are judged in assessment centres are interpersonal skills,
intellectual capability, planning and organizing capabilities, motivation, career orientation etc.
assessment centres are also an effective way to determine the training and development needs
of the targeted employees.

HUMAN RESOURCE ACCOUNTING METHOD

 Human resources are valuable assets for every organization. Human resource accounting
method tries to find the relative worth of these assets in the terms of money. In this method the
Performance appraisal of the employees is judged in terms of cost and contribution of the
employees. The cost of employees include all the expenses incurred on them like their
compensation, recruitment and selection costs, induction and training costs etc whereas their
contribution includes the total value added (in monetary terms). The difference between the cost
and the contribution will be the performance of the employees. Ideally, the contribution of the
employees should be greater than the cost incurred on them.

PERFORMANCE APPRAISAL PROCESS

Provide an opportunity for the manager and his/her supervisor to set mutual objectives.
Provide a fair and effective means for making personnel decisions. Recognize the importance of
the manager’s contribution to institutional success. Provide a forum for open discussion of the
manager’s individual strengths and for the identification of areas where improvement is needed.
Improve the performance of the manager and, consequently, of the unit administered. Enhance
the credibility of the management process, including the process by which decisions are made, in
the eyes of those affected by the process.

ESTABLISHING PERFORMANCE STANDARDS

The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the organizational goals and objectives. The
standards set should be clear, easily understandable and in measurable terms. In case the
performance of the employee cannot be measured, great care should be taken to describe the
standards.

ESRABLISHING PERFORMANCE
STANDARDS

COMMUNICATING STANDARD AND

EXPECTATION
 MEASURING THE ACTUAL
PERFORMANCE

COMMUNICATING THE STANDARDS

Once set, it is the responsibility of the management to communicate the standards to all
the employees of the organization.
The employees should be informed and the standards should be clearly explained to the. This
will help them to understand their roles and to know what exactly is expected from them. The
standards should also be communicated to the appraisers or the evaluators and if required, the
standards can also be modified at this stage itself according to the relevant feedback from the
employees or the evaluators.

MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified
period of time. It is a continuous process which involves monitoring the performance throughout
the year. This stage requires the careful selection of the appropriate techniques of measurement,
taking care that personal bias does not affect the outcome of the process and providing assistance
rather than interfering in an employees work.

COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE

The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set. The
result can show the actual performance being more than the desired performance or, the actual
performance being less than the desired performance depicting a negative deviation in the
organizational performance. It includes recalling, evaluating and analysis of data related to the
employees’ performance.

DISCUSSING RESULTS
 The result of the appraisal is communicated and discussed with the employees on one-to-
one basis. The focus of this discussion is on communication and listening. The results, the
problems and the possible solutions are discussed with the aim of problem solving and reaching
consensus. The feedback should be given with a positive attitude as this can have an effect on the
employees’ future performance. The purpose of the meeting should be to solve the problems
faced and motivate the employees to perform better.

DECISION MAKING
The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR decisions
like rewards, promotions, demotions, transfers etc.