HR Word of The Day Bean Feast American Melting Pot: Dr. Isa Mishra

HR Word of the Day
BEAN FEAST
AMERICAN MELTING POT
- an annual dinner given by an employer

to his or her employees. By extension,
colloquially, it describes any festive
occasion with a meal and an outing.
- blending diverse people into one

through assimilation, integration and
intermarriage.
Dr. Isa Mishra

Dr. Isa Mishra
Dr. Isa Mishra
Dr. Isa Mishra
Dr. Isa Mishra
From HR to Human capital…
What is Human Capital?
It is the stock of competencies, knowledge, personality, creativity &

social attributes embodied, to perform so as to create economic
value.
It refers to a well employed human resource, that is actively

engaged in meaningful & worthwhile work, to deliver a desired level
of productivity. It is all about practical application of knowledge.
Dr. Isa Mishra

VUCA world for leaders (& HR)
• Globalisation – economic and labour markets, 24 hour pressures

• Geo-political instabilities and conflicts; ‘world order’ challenged
• Societal change – decline in deference, demand for transparency
• Technology acceleration – leaders, strategies, regulators etc struggle
• Poor leadership and governance exposed easier and quicker
Operating in the digital world demands new skills, strategic focus,
organisation models and leadership philosophies
Functions of HR
Strategic HRM
• HR Effectiveness
• Use of HR metrics Equal Employment
Employee & Labor
• Use of HR Opportunity
Relations
Technology
• Employee Rights • Compliance
• HR Planning • Diversity
• HR Policies
• HR Retention • Affirmative Action
• Union Relations
HR
FUNCTIONS Staffing
Risk Mgt. & Worker
Protection • Manpower Planning
• Job Analysis
• Health & Wellness
• Recruiting
• Safety
• Selection
• Security Talent Management
• Disaster & • Orientation
Recovery Planning Total Rewards
• Training
• Compensation • HR Development
• Incentives • Career Planning
• Benefits • Performance
Management
Dr. Isa Mishra

Current & Future HR Challenges…
1. Organizational pressures to reduce cost of all types – financial,

operations, equipment & manpower. This pressure has increased with
the growth of technology, onset of pandemic.
2. Need for human capital with different capabilities
3. HR’s Role in Restructuring – downsizing & rightsizing
4. Impact of economy : A few facts (2020)………………
✔ 20% households with monthly income less than or equal to Rs. 10,000 have bank
account.
✔ 82% workers are from self-employed, 60 % from regular or salaried workers, 87 %
from contract workers, and 96 % from casual workers.
✔ Category of employments having no written contract - 65% regular workers, 68 %
contract workers , 95 % casual workers.
✔ 71.2 % receive no social benefits.
✔ 60% of workforce belongs to just six states, Tamil Nadu, Maharashtra, Andhra
Pradesh, Gujarat, Karnataka and Uttar Pradesh.
Dr. Isa Mishra

Affected areas :
❖ Private sector investment has collapsed
❖ Informal sector employment operating in cash economy
❖ Manufacturing growth was affected because of the slowdown in production
as well as domestic consumption. For example, how will the textile sector,
which employs nearly seven million people as daily labourers, pay to them
in absence of cash supply?
❖ Large sectors like IT, BPOs, automobile, transport, gems & jewelry,
handloom, leather industries are witnessing negative job growth since last
two years. Construction industries affected as they largely employ contract
labor.
❖ Small business establishments are facing great inconvenience leading to job
loss in the unorganised sector.
Dr. Isa Mishra

5. Occupational shifts
There is a growth in jobs by % in occupations that require higher education and

specialized training.
There is a numerical growth in jobs in occupations that require less education

and lower skills.
HR has to understand all these dynamics and check for quality.
Increase in Jobs (In %) Increase in Jobs (In Nos.)

IT 53% Nurses 587000
Health 51% Retail Sales 557000
Financial advisors 41% CR reps 545000
Medical assistants 35% Teachers 382000
Dr. Isa Mishra

5. Workforce Availability & Quality Concerns
The biggest challenge is the shortage of skilled human resource.

This has led to increase in outsourcing.
(Today, maximum shortage exists at all levels in the healthcare delivery system. )
6. Talent Management & Talent Development – a more strategic,

integrated & automated approach required
Imperative for the following reasons:
Impending retirement of baby boomers worldwide

Shortage of skilled workers of certain types & at certain levels
Increasing global competition for HR talent
Growth in technology capable of automating talent management processes
Dr. Isa Mishra

7. Growth in Contingent Workforce
India has emerged as one of the largest countries for flexi-staffing or gig and
platform workers, as e-commerce platforms created massive opportunities amid
the pandemic, according to the Economic Survey 2020-21. Contract employees
account for 34% of the total workforce (contract plus regular) of India’s top
companies. 1 in every 4 workers is a gig worker (ET Survey 2021)
Increasing demand in industries to hire project-specific consultants, logo/content

designers, web designers etc. for the white-collar workers, the delivery boys and taxi
drivers engaged in platforms like Uber/Ola, Swiggy, Big Basket, Pizza Hut etc is now
showing potential as well, the survey observed.
Dr. Isa Mishra

Urban casual workers, who account for 11.2 per cent of the urban workforce (2021). In the
automobile industry, where labour unrest has been more visible in recent years, the ratio
is high at 47% but it’s even higher in sectors such as energy and utilities (54%) and in
cement (52%). In the engineering sector, L&T skews the total both due to its size and the
fact that its engineering services division recruits temporary workers on a project basis.
Excluding it, the sector has a ratio of 22% but including L&T’s figures takes it up to 75%.
Sectors such as pharmaceuticals and consumer goods, too, have relatively lower levels.
As per a survey carried out by the National Sample Survey Organisation (NSSO) in
2019–20, the total employment in the country was of 46.5 crore comprising around 2.8
crore in the organized and the remaining 43.7 crore workers in the unorganised sector.
75% of workers from the unorganized sector lost their livelihood during the lockdown.
Dr. Isa Mishra

Why is there a growth in contingent workforce?
1. To save costs
2. Reduced legal liability for employers, reduced legal cases pertaining to
employee benefits, discrimination, discipline, etc.
3. Shortage of required skill / expertise
4. Duration of a particular project
9. Globalization & HR handling global workers - expatriates, host country

nationals & third country nationals.
Expatriate – citizen of one country, working in second country, employed by
first country
Host country national – citizen of one country, working in same country,
employed by second country
Third country national – citizen of one country, working in second country,
employed by third country
Trans-national HR has to take care of global economic (uniform wage rates

& working conditions), political & legal factors.
Dr. Isa Mishra
Current & Future HR Challenges
9. Workforce Demographics & Diversity
▪ Racial / Ethnic diversity
▪ Women in the Workforce and dual career couples have led to job sharing,
establishment of child care services, increased flexibility in hours, varied
programs aiming at work life balance. (64 percent of the workers are males
and 36 percent females – 77% and 23% in 2020)
▪ Aging Workforce – HR has to ensure knowledge transfer. Baby boomers are
retained as mentors & consultants wherever required. (65% of baby
boomers want to continue working part-time and avoid full time
employment).
10. HR Technology
Use of data for making HR decisions.
Use of wikis – collaborative HR, use of blogs & twitters
HR Metrics – cost of hiring manpower, calculating turnover costs, ROI
analysis of training results & expenses, other metrics to measure HR efforts.
11. Strategic role of HR
Financial acumen of HR executives is a must requirement for this role.
12. “Growing Green” in HRM (the integration of environmental
management into HRM)
Dr. Isa Mishra

Current & Future HR Challenges
13. Renewed Focus on Worker Resilience and Mental Health

14. Managing employee experience to managing life experience of
employees
15. Focus on Training and Up-skilling
16. Build Agile Business Environments and create a more Diverse &
Inclusive work environment
17. Technology-powered solutions will bridge the gap between Human and
Digital teams
Dr. Isa Mishra

HR Word of the Day
DECENTRALIZED WORKSITES
Decentralized site involves redistribution of decision making, people, power and
functions. The organization which deals in service providing
business decentralizes their work site in order to serve to any
specific geographical region. Following are few reasons why decentralized work sites
face problems:-
1. Inconsistent experience - Each department independently decides their needs and
doesn’t consider other units or the entire experience.
2. Inefficient usage of
resources– There are different
needs in different departments
of the sites, usually most of the
operations are directed by the
senior officials of the main
office, the local employees are
treated merely as a facilitators,
which results in the inefficient
3. Slow turnaround time– To establish and usage of resources.
maintain an entirely new and independent
work sites causes much more time than the
centralized office. Dr. Isa
MANPOWER PLANNING
Manpower planning may be defined as a strategy for the acquisition, utilization,

improvement and preservation of an enterprise’s human resources.
Manpower Planning (MPP) which is also called as Human Resource Planning

(HRP) 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.
Dr. Isa
MANPOWER PLANNING – Need
✔ Shortages and surpluses can be identified so that quick action can be taken
wherever required.
✔ All the recruitment and selection programmes are based on manpower
planning.
✔ It also helps to reduce the labour cost as excess staff can be identified and
thereby overstaffing can be avoided.
✔ It also helps to identify the available talents in a concern and accordingly
training programmes can be chalked out to develop those talents.
✔ 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.
✔ It helps the organization to realize the importance of manpower management
which ultimately helps in the stability of a concern.
Dr. Isa
MANPOWER PLANNING – Importance
Key to managerial functions- The four managerial functions, i.e., planning, organizing,
directing and controlling are based upon the manpower.
Efficient utilization- Efficient management of personnel becomes an important function
in the industrialization world of today. Setting of large scale enterprises require
management of large scale manpower.
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.
Better human relations- A concern can stabilize itself if human relations develop and are
strong. Human relations become strong through 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 co-operation and better
human relations.
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 & energies. This is possible through the staffing and it's related activities –
(Performance appraisal, training and development, remuneration)
Dr. Isa
MANPOWER PLANNING – Steps…
A. Analyzing the current manpower inventory
The following matters have to be noted-
▪ Type of organization
▪ Number of departments
▪ Number and quantity of such departments
▪ Employees in these work units
Dr. Isa
MANPOWER PLANNING – Steps…
B. 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:
Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi
technique.
Trend Analysis: Manpower needs can be projected through extrapolation (projecting past
trends), indexation (using base year as basis), and statistical analysis (central tendency
measure). For example, if a business has grown by five percent each year for six years,
managers may anticipate that this trend will continue.
Work Load & Work Force Analysis: It is dependent upon the nature of work load in a
department, in a branch or in a division.
Whenever production and time period has to be analyzed, due allowances have to
be made for getting net manpower requirements.
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.
Dr. Isa
MANPOWER PLANNING – Steps
C. Planning & control of manpower : Forecasts are translated into HR policies like
recruitment, selection, training & development decisions.
This stage involves the following:
1. Determining the time period of recruitment to decide whether to recruit on a

regular basis / outsource, etc.
2. Extent and scope of internal hiring
3. Scope for redeployment through training and retraining
Before any employment program is designed.
E. Utilization of manpower : Success is measured in terms of -
❖ Quantitative achievement visible from PMS, productivity trend, manpower cost,

etc.
❖ Qualitative achievement visible from attainment of organizational objectives
from PMS.
Dr. Isa
WORKLOAD FACTORS’ ANALYSIS – Steps…
A. Job Classification : by identifying job content & time requirement.
Technical job to be divided into different components, time requirement analysis to be

done for each component – this data is available in machine literature.
Time requirement for service jobs, query resolution, managerial jobs, etc. to be based on
past experience & benchmarking with others.
Limitations :
i. All jobs are not quantifiable

ii. Time study is time consuming
iii. Fatigue in a job is not considered in this process.
iv. With the advent of technology, standard time required for a job can vary over a
period of time. Ex. – job of a clerk may change to a computer operator.
Dr. Isa
WORKLOAD FACTORS’ ANALYSIS –
Steps
B. Forecasting the no. of jobs : based on demand projection
C. Converting the projected jobs into man hours :
Man hours for jobs = Time requirement of each job component x no. of
projected jobs
D. Converting the man hours into manpower requirement : This is done considering
fatigue allowance, leave reserve, etc.
Dr. Isa
EXAMPLE – Analysis of Workload factor on a given day in Maintenance
Dept. of Delhi Vidyut Board to attend to customer complaints
A. Job Classification
Job category Hours per job
Related to meters 0.75
Related to installation 2.50
Related to maintenance 1.50
Related to emergency calls 1.10
B. Forecast of jobs in a day for different years

Job Category Year
2002 2003 2004 2005
Meters 15 13 11 8
Installation 85 95 110 125
Maintenance 27 35 41 45
Emergency 10 8 6 4
Calls
Dr. Isa
C. Converting Forecast into Man Hours required per day
Man hours for jobs = Time requirement of each
job component x no. of projected jobs
Job Category Year

2002 2003 2004 2005
Meters 11.25 9.75 8.25 6
Installation 212.5 237.5 275 312.5
Maintenance 40.5 52.5 61.5 67.5
Emergency Calls 11 8.8 6.6 4.4
Total Man 275.25 308.55 351.35 390.4
Hours required
per day
Dr. Isa
D. Converting the man hours into manpower requirement per day
a. 20% fatigue allowance and 20% leave reserve is considered.
b. Out of 8 hours, 4.8 hours is available after giving a 40% reduction in man hours
per employee per day. (40 % of 8 hrs is 3.2 hrs which is deducted)
No. of YEAR
Maintenance
staff required
2002 2003 2004 2005
Employees 57 64 73 84
(275.25/4.8)
Dr. Isa
TOOLS FOR MANPOWER FORECASTS…
A. Time Series Analysis
Trend : Fluctuations in level of employment over a time period

Cyclical effects : Change in employment in relation to some particular event like
demonetization, economic liberalization, etc.
Seasonality : In case employment is relation to seasonal change
Other factors : Change in employment level due to economic environment /
increased market share / procurement of new machines, etc.
B. Normal Budgetary process : Budget of last year is pitched forward with a hike or
reduction as per upcoming situations apprehended / anticipated in the upcoming
financial year.
C. Moving Average Method : Here, average of the combined employment level data
for the recent past is considered as forecasted employment level for the next period.
Dr. Isa
QUANTITATIVE TOOLS FOR MANPOWER FORECASTS
Moving Average Method : Example - Forecasting Manpower reqmt. In 2001 using

manpower data of Godrej for healthcare division for 6 years
Year Manpower Situation 1 : Forecasting manpower reqmt. In 2001 using

(in nos.) 6 point moving average
1995 500
Fm = 500 + 600 + 800 + 1000 + 1100 + 1300 = 5300/6=883
1996 600 6
1997 800 Situation 2 : Forecasting manpower reqmt. In 2001 using
1998 1000 4 point moving average, 1995 & ‘96 data are dropped
1999 1100 Fm = 800 + 1000 + 1100 + 1300 = 4200/4=1050

2000 1300 4
Most Accurate - Situation 3 : Weightages for different periods
Fm = (500)1 + (600)1 + (800)1 + (1000)2 + (1100)3 + (1300)4 =12400/12 = 1033

∑ Weightages
Dr. Isa
DISADVANTAGES of QUANTITATIVE TOOLS
1. Productivity rise is always not due to human effort. It can be due to changes in
technology / sum total of operational & managerial efficiency. All factors have to be
integrated. However, all factors cannot be computed. Managerial judgment is used
then which can be subject to error.
2. Cannot be used in jobs which are not totally quantifiable like Customer Relationship,
Grievance handling.
3. Lack of proper HRIS may give inaccurate data.
4. Unavailability of previous data
5. Extrapolating on previous data can lead to problems as situations may be different.
Here, quantitative tools lose importance.
Dr. Isa
QUALITATIVE TOOLS FOR BETTER MANAGERIAL JUDGMENT
A. DELPHI TECHNIQUE
i. First, the group facilitator selects a group of experts based on the topic being
examined.
ii. Once all participants are confirmed, each member of the group is sent a
questionnaire with the instructions to comment on each topic based on their
personal opinion, experience or previous research.
iii. The questionnaires are returned to the facilitator who groups the comments
and prepares copies of the information.
iv. A copy of the compiled comments is sent to each participant, along with the
opportunity to comment further.
v. At the end of each comment session, all questionnaires are returned to the
facilitator who decides if another round is necessary or if the results are
ready for publishing. The questionnaire rounds can be repeated as many
times as necessary to achieve a general sense of consensus.
Dr. Isa
Benefits :
The Delphi method seeks to aggregate opinions from a diverse set of experts,
and it can be done without having to bring everyone together for a physical
meeting.
Since the responses of the participants are anonymous, individual panelists
don't have to worry about repercussions for their opinions.
Consensus can be reached over time as opinions are swayed.
Disadvantages :
While the Delphi method allows for commentary from a diverse group of
participants, it does not result in the same sort of interactions as a live
discussion.
Response times can be long ,which slows the rate of discussion.
It is also possible that the information received back from the experts will
provide no innate value.
Selection of experts has to be done in the right manner.
Dr. Isa
B. NOMINAL GROUP METHOD
i. First, the group facilitator selects a group of experts based on the topic being
examined.
ii. All experts assemble together to comment on each topic based on their
personal opinion, experience or previous research. In case they cannot be
physically present, they are allowed to discuss amongst themselves.
iii. Experts rank their ideas as per their perceived priority.
iv. All ranked ideas are studied and group consensus is arrived at.
This process facilitates scientific group consensus.

This process takes lesser time than in Delphi method.
Dr. Isa
Wastage Analysis
Manpower wastage is an element of labor turnover. It includes voluntary retirement,

normal exits, deaths, terminations. An absence of wastage analysis can lead to
inaccuracy in MPP / HRP.
Induction Crisis
Differential
Transit
Leaves Settled connection
Time
Weeks Months / Years
Wastage Analysis Curve Dr. Isa

Three Phases in Wastage Analysis
Induction Phase – marginal employees leave

Differential Transit phase – employee learns about the organization and identifies his
role in it.
Settled connection – employee settles down.
Normal observations:
Wastage decreases with the increase in length of service.

Wastage decreases with increased skill exercises.
Wastage varies with the level of employment.
Earlier, wastage was more in female employees.
Dr. Isa
COMMON METHOD to calculate Wastage Analysis…
Labour Turnover Index

In the year beginning, no. of employees = 250.
In the year end, no. of employees = 230.
Recruitments during the year = 0
No. of employees leaving = (250-230)=20

Average no. of employees employed = (250+230)/2 = 240
Labor Turnover = No. of employees leaving x 100
Average no. of employees employed
= (20 / 240) x 100 = 8.33%
In case, Recruitments during the year = 5
No. of employees leaving = (250+5-230)=25

Average no. of employees employed = (255+230)/2 = 243
Labor Turnover = (25/243) x 100 = 10%
Dr. Isa
STABILITY OF WORKFORCE
Stability Index indicates stable workforce % for a given period.
Stable workforce % = No. of employees with more than 1 year of service X 100
Total employed one year ago
ABC Limited had 200 employees on payroll at the beginning of 2014. There
were 180 employees left at end of 2014. The company had recruited 10
employees in March 2014 out of which 5 left. Calculate the stability index.
Dr. Isa
ABC Limited had 200 employees on payroll at the beginning of 2014. There
were 180 employees left at end of 2014. The company had recruited 10
employees in March 2014 out of which 5 left. Calculate the stability index.
Stable workforce % = No. of employees with more than 1 year of service X 100
Total employed one year ago
•Number of employees on payroll with tenure equal to or more than 1 year=

180-5 = 175 (because there are 5 employees left from the group of 10
employees whose tenure will be less than 1 year because they were recruited
during March 2014)
•Number of employees on payroll 1 year ago= 200
•Stability index = (175/200)*100 = 87.5%
Dr. Isa
HR Word of the Day
MOOFER
Moofer stands for “mobile out of office worker”. Coined by

a Microsoft worker. An individual working outside of typical
office setting is called a moofer. Such an employee is on go
and can work in any place as long as there is high tech
equipment connection, or a ready Wi-Fi network. This type
of worker is becoming more common these days with the
improved communication technology.
Companies prefer such arrangements since it reduces their

overhead and also provide flexibility for the employer and
employee. Columnist, bloggers and others who can work
from their laptops are moofers. The term can also refer to
people who travel or are out of office for most part of the
job like reporters, consultants or businessmen who visit
clients to make deals.
Dr. Isa Mishra

What is HRM & what is SHRM?
Human resource management (HRM) is the term used to describe formal
systems devised for the management of people within an organization. It focuses
on recruiting and hiring the best employees and providing them with the
compensation, benefits, training, and development they need to be successful
within an organization.
Strategic human resource management (SHRM) is :

• a proactive approach which takes HR activities one step further by aligning
them with the goals of other departments & overall organizational goals.
• is a function of management which entails development of policies,
programmes and practices related to human resources, which are then
aligned with business strategy, so as to achieve strategic objectives of the
organization.
• Its primary purpose is to improve the performance of the business and
maintain a culture that encourages innovation and works continuously to
gain competitive advantage.
Dr. Isa Mishra

What is HRM & what is SHRM?
Alignm
ent
Emp
HR New
Engag
with Strategic
Vision busine HRM
ement
ss
goals
Dr. Isa Mishra

Traditional HR vs. Strategic HR…
FOCUS TRADITIONAL HR STRATEGIC HR

Responsibility Staff Managers Line Managers
Emphasis Employee Relations Partnerships with Internal &
External Customers
Type of HR Transactional, Change Follower & Transformational, Change
Respondent Leader & Initiator
Role of HR Custodian of HR Policy Implementation Custodian but amenable to
& Compliance needed change
Initiatives Slow, Reactive, Fragmented Fast, Proactive, Integrated

Time Horizon / Short term Short, Medium, Long (as reqd.)
Duration
Control Bureaucratic – rules, policies, Organic – flexible, whatever is
procedures necessary to succeed
Job Design Tight Division of Labor, Specialization Broad, Flexible, Cross training,
Teamwork
Dr. Isa Mishra

Traditional HR vs. Strategic HR
FOCUS TRADITIONAL HR STRATEGIC HR

Critical Skills Organization, Administration, Strategic, Planning, Diagnostic,
Compliance, Transactional, Tactical Analytical (Metrics),
Consultative
HR Systems & Routine, Traditional, Reactive, Adaptive, Innovative,
Practices Responds to stated needs Proactive, Recognizes unstated
needs
View of Head Count, Cost Based, Exploitable Contributors, Asset based,
Employees resource Critical resource
Key Investments Capital, Products People, Knowledge

Accountability Cost Centre Investment Centre
Dr. Isa Mishra

Strategic Planning starts with Environmental
Analysis / Scanning – study of the environment
dynamics so as to understand their impact on
plans. This helps to understand the strengths,
weaknesses, opportunities & threats that an
organization may face during planning.
Dr. Isa Mishra

Strategic Challenges during Planning…
A. Proper Internal Environmental Analysis
By HR SWOT
Strengths
• Intellectual capital Weaknesses
• Loyal, committed employees • Lack of skilled employees
• Innovative, Adaptive • Lack of leadership pipeline
employees • Lack of proper HR practices
• High performance practices
Opportunities Threats
• Market position • Legal mandates & restrictions
• Advent of technology • Competitor power
• Unexplored markets • Internal economic uncertainty
• Global expansion • Talent shortage
Dr. Isa Mishra

B. Proper External Environmental Analysis
By External Scan / Study
Economic Conditions
(State of economy, inflation, consumer prices
leading to downsizing, compensation cuts, etc.)
Legislative & Political

(Legislations on tax, safety & health, emplyt.,
impact of election outcomes)
Demographic Changes
(Workforce demographics – increase in medical
services with increase in age of workforce applying)
Geographic & Competitive (do

you have the competitive edge)
Dr. Isa Mishra

C. Managing Talent Supply Imbalance
MANAGING TALENT SURPLUS MANAGING TALENT SHORTAGE

Reduce employee work hours or reduce Increase employee work hours through
compensation (less pay more benefits, overtime
etc.) to avoid layoffs
Attrition followed by Hiring Freezes, no Outsource to a third party
retention of separating employees, no
hiring of replacements
Voluntary Separation Programs Use contingent workers (consultants,
temporary workers, contractual workers)
Downsizing / Reduction in force Implement alternative work
(severance benefits, outplacement arrangements (re-hiring retiring
support) employees, telecommuting, moofers)
Reduce employee turnover
Dr. Isa Mishra

D. Technology Challenges
1. Effect on Organization – reduction in costs, improvement in work process & flow

through BPR (Business Process Re-engineering) but increase in Employee Relations
issues.
2. Effect on Communication – Faster communication through social networking,

intranet portals, watsapp, etc.
3. Effect on Work Processes – Monitoring of work processes, employees’ actions &

performance (through video surveillance, etc.) has become easier & faster. But,
excessive monitoring can lead to distrust.
4. Effect on HR Activities – Recruitment through web-based job boards, online

interviewing; Training with competitive edge through videos, podcasts, webinars,
etc.; easier career & succession planning
Dr. Isa Mishra

E. Measuring Effectiveness of HR Initiatives
1. HR Metrics – measures tied to HR performance indicators. They are used
to assess HR function & results within the organization over time. Analysis
& interpretation of the data leads to improvement in human capital
utilization. Some key HR Metrics :
HR Staff & Expenses Compensation

• Absenteeism rate • Payroll as % of operating
• Hr to employee ratio expenses
• HR expenses per • Annual salary increases
employee Training
Retention • Training hrs per employee
• Average tenure of • Total costs for training
employees • % of employees participating
• % of new hires retained in some program
Staffing
• No. of positions filled Development
• Time to fill vacancies • Positions filled internally
• Cost per hire • % of employees with career
• Annual turnover rate plan
Dr. Isa Mishra

E. Measuring Effectiveness of HR Initiatives
2. HR & Benchmarking / Ranking with other similar organizations
3. HR & the Balanced Scorecard
4. Measuring Human Capital effectiveness :
a. Revenue per employee : If revenue increases with constant

headcount, productivity increases.
b. ROI = C
A+B
where; C = Value of gains from productivity improvements
B = One time cost of acquisition & implementation
A = Operating costs for a new / enhanced system
Dr. Isa Mishra

HR Word of the Day
SELF HANDICAPPING
Self-handicapping is a cognitive
strategy by which people avoid
effort in the hopes of
keeping potential failure from hurting
self-esteem.
For instance, students frequently participate in self-handicapping behavior to avoid

feeling bad about themselves if they do not perform well in class.
If people believe that they are going to fail, they create obstacles and excuses to
justify their failures. There are many real world applications for this concept.
For example, if people predict they are going to perform poorly on tasks, they
create obstacles, such as taking drugs and consuming alcohol, so that they feel that
they have diverted the blame from themselves if they actually do fail. In addition,
another way that people self-handicap is by creating already-made excuses just in case
they fail. Dr. Isa Mishra
WHAT IS PERFORMANCE
Performance is the sum of behavior plus results:
Performance = Behavior + Results
If you only focus on behaviors, you won’t notice if you did not get desired
results
If you only focus on results, you won’t notice if your employees don’t behave
correctly
Overall Performance = Ability + Motivation + Organizational Support + Chance

factors
= Competence + Commitment + Organizational

Support + Chance factors
Dr. Isa Mishra

WHAT IS PERFORMANCE MANAGEMENT
Performance Appraisal is evaluating an employee’s performance on a job

in terms of its requirements.
Performance Management is a process which contributes to the effective

management of individuals and teams in order to achieve high levels of
organizational performance.
- Armstrong & Baron
It encompasses activities such as joint goal setting, continuous progress

review and frequent communication, feedback and coaching for improved
performance, implementation of employee development programmes and
rewarding achievements.
Dr. Isa Mishra

LINKAGE WITH OTHER HR SYSTEMS
•Performance Mgt.
•Rectt. & Selection (Qlty candidates)
•Human Resource Planning (matching orgl. Effectiveness)
•IR
•(improved working relations)
•Mentoring & Counseling
•(leadership skills, employee empowerment, work life balance)
• Reward Mgt.
• (Talent identification, career & succession planning, comp mgt.)
•T&D
•(basis for TNI, perf. Improvement, competency mgt.)
Dr. Isa Mishra

WHY MANAGE PERFORMANCE – Benefits of PM
Seeks employee commitment by sharing the vision and ethical values with all
employees
Establishes performance target as a result of inter linkage between individual
objectives with organizational goals & strategy
Establishes performance standards / criteria against which individual & team
performance is measured.
Provides regular feedback on employee’s performance with respect to the set
performance standards
Reviews performance and identifies areas for training & development as well as
competency improvement
Links rewards with performance thereby increasing motivation
Continuously enhances performance
Allows career planning
Automates mentoring process
Organizations can frame strategies in view of competition, based on
performance track
Is a critical link with other HR functions
Dr. Isa Mishra
Primary Uses of Performance Appraisals
Small Large All

Organizations Organizations Organizations
Compensation 80.2% 66.7% 74.9%
Performance
46.3% 53.3% 48.4%
improvement
Feedback 40.3% 40.6% 40.4%
Documentation 29.0% 32.2% 30.2%
Promotion 26.1% 22.8% 24.8%
Training 5.1% 9.4% 7.3%
Transfer 8.1% 6.1% 7.3%
Discharge 4.9% 6.7% 5.6%
Layoff 2.1% 2.8% 2.4%
Personnel research 1.8% 2.8% 2.2%
Manpower planning 0.7% 2.8% 1.5%
Raters’ Biases
DR. ISA MISHRA

Halo Effect & Horn Effect
Halo Effect : When an employee performs well in a few areas of his work, then
the general tendency of a manager is to rate him well even in un-related areas
where his performance was mediocre. Common examples – less absenteeism, timely
attendance, obedience.
The opposite of Halo effect is called “Horns” Effect in which a manager rates an
employee poorly, when he spots a few areas where he has been not performing
well. It is a perceived negativity. In other words, in this type or rating error, the
overall rating of an employee gets influenced by good or bad performance in a few
areas of his/her work. Common examples – unkempt self, unexpected behaviour in
one instance.
DR. ISA MISHRA

Leniency Error & Strictness / Severity
SCHOOL OF MANAGEMENT Error
Sometimes, managers tend to rate employees leniently or severely. This may be due
to factors like:
❑ Whether managers like an employee or not. Personal bias or preferences creep in

the rating.
❑ Their general style is either lenient or strict.
❑ They compare employee’s performance with their personal standards (instead of
standards expected from the role). This is also called as “Frame of reference”
error.
❑ Sometimes when employees are similar to the manager, it influences the
manager’s rating which will then be lenient.
❑ So in this case the rating is either positively or negatively skewed.
DR. ISA MISHRA

Central Tendency Error
SCHOOL OF MANAGEMENT
Here, raters refer to average scores or mid-value scores.
Sometimes, managers with the intention of avoiding conflict, play it safe,

by rating employees in the middle of the rating scale.
So it might be a “met expectation” for all performance parameters,

irrespective of whether in reality they have not met it or not.
These raters undermine the importance of Performance Appraisal.
DR. ISA MISHRA

Recency Effect
Though performance appraisals are done to rate an employee’s

performance through-out a year (or 6 month period etc.), managers tend to
remember only the past few months performance, and rate the employee’s
performance based on that.
So any performance highs or performance lows of an employee in the

last few months, significantly influences the rating. Some ratees can
deliberately perform high towards the end of the year.
Appraisals conducted at long intervals can cause such errors.
Can be minimized by tracking performance on a continuous basis.
DR. ISA MISHRA

Contrast Error
Managers rate an employee by comparing him with other employees,

who may be perceived as standards themselves.
So, instead of giving rating based on the standards required for the job,
managers rate a person by comparing with other employees performance.
In such cases, a person may be given higher ratings just because he is

better than others, but he may still lag behind when compared to the
standards expected.
This can be avoided by doing random appraisals for employees doing the
same nature of job.
DR. ISA MISHRA

Similarity Effect
“Same as me”
Managers sometimes over-rate an employee who is similar to themselves

in terms of personality, behaviour, background, way of dressing, etc.
Ratees can deliberately ape such raters.
DR. ISA MISHRA

Stereotyping Error
Managers generalize about employee’s performance based on a group.

Grouping can be age-wise, experience-wise, region-wise or university-based
and so on.
For instance, managers may generalize or stereotype saying that all

young employees do not take ownership of their work, or that freshets hired
from a particular university have great technical skills and so on. But actually,
it is important that managers should consider individual differences
DR. ISA MISHRA

Status Error
Employees in higher levels are rated higher & employees in lower levels
are rated lower.
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Initial Impression Error
“First Impression is the Last impression” effect
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Sympathy Effect
Managers can rate employees higher in view of recent hardships faced

by ratee like – death in the family of ratee, broken marriage, family
disturbances, etc.
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Attribution Bias
When managers attribute performance failures to internal factors and

successes to external causes / sources.
DR. ISA MISHRA

Reducing Performance Bias / Error…
1. Complete supervisor training on the fundamentals of performance management,

including your company’s philosophy and practices. Leadership training on
performance management also includes when and how to administer disciplinary
warnings, corrective action and suspensions, how to provide employees with
constructive feedback throughout the evaluation process and how to conduct annual
employee evaluation meetings.
2. Study the types of bias and errors most common in performance appraisals.
3. Review employee documents to gain a complete picture of past performance.

Contact employees’ supervisors in other departments when it’s difficult to piece together
work history and performance for long-term employees. Make note of discrepancies in
earlier performance appraisals that may compound later performance issues.
DR. ISA MISHRA

Reducing Performance Bias / Error…
4. Read the performance standards for all the job duties and tasks for which the
employee is responsible. Look at the performance throughout the entire evaluation
period as objectively as possible. Gather documents that support performance, such as
records, call logs, reports and other materials that measure the employee’s work
quantitatively.
5. Compare the performance standards to the actual work.
6. Draft the performance appraisal form and attach supporting documentation. Read
the evaluation from your perspective and then put yourself in the employee’s position,
reading from his perspective.
DR. ISA MISHRA

Methods of Appraisal
DR. ISA MISHRA

PA – Traditional Methods…
1. Straight Ranking Method

Simplest & oldest method
Numbers are given in order of merit
Blunt quantification of performance
Does not account for behavioral parameters
Only considers an individual’s efficiency in relation to others
Does not provide a scientific basis for appraising performance
DR. ISA MISHRA

2. Grading Method
Widely used in educational institutions where basic evaluation

is required
Grade definitions are laid down
Grades are assigned to the performance dimensions which have
to be measured
Example:
A Excellent
B Very Good
C Good
D Average
E Poor DR. ISA MISHRA
3. Paired Comparison Techniques
Each employee is compared with others in pairs

Not suitable when the number of employees is high
Example:
As compared A B C D E
to
A x
B x
C x
D x
E x
DR. ISA MISHRA
4. Graphic / Linear Rating Scale
Simplest & most widely used

A continuous scale where performance is marked along a continuum
It consists of several numerical scales, each representing a job related
performance criteria
Can have up to 7 points, depending on the measurement dimension
Enables quantification of performance scores & subsequent statistical analysis
Scores are subject to interpretation of raters
Reliability & validity is often questioned
Results from this method may not always be objective
DR. ISA MISHRA

Example
DR. ISA MISHRA

Example 2:
Sl. No. Job Dimension Rating Scale
Understands the Has exceptional

Requires guidance
Job knowledge (understands job & can job understanding of job
1 implement such understanding to improve
the job)
Remarks: Employees with exceptional understanding of the job
are rated as exceptionally good in risk taking
Exceptional in taking
Lacks initiative Takes initiative
initiatives
Job Initiative (capable to generate new ideas
2
and is a self starter)
Remarks: When employees are rated as exceptional, they are
capable of taking initiatives & can generate new ideas
Poor in job Capable in job Exceptionally capable

application application in job application
3 Job Application (application minded on job)
Remarks: When employees are rated as exceptional, they can

always take new job challenges
DR. ISA MISHRA

5. Confidential Report
Descriptive report
Prepared by employee’s immediate supervisor
Highlights strengths & weaknesses of employee
Can be subjective
Does not offer any feedback to employee
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6. Free Essay Method
Rater expresses in written form, the strengths & weaknesses of appraisee

Descriptive & written as an essay
Unstructured & open ended
Highly subjective
Prone to biases of rater
Depends on writing skills of the rater, for effective interpretation
DR. ISA MISHRA

7. Critical Incident Technique

Measures performance in terms of certain events / critical incidents
Prepares lists of statements of very effective & ineffective behaviour
Manner of recording incidents need utmost care
Manager has to record the critical incidents of employee’s behaviour
Negative incidents may get more focus than required
Can be useful in a performance review interview
Recording in frequent intervals of time may be perceived as an additional chore
of the rater and this can delay actual performance of the rater recording the
incidents.
Requires very close monitoring which may lead to demotivation
This gives a delayed feedback to employees and not when the incident actually
happens.
DR. ISA MISHRA
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8. Checklist
Checklist of pre-scaled descriptions of behaviour has to be prepared by rater

Yes / no responses are compiled by rater who does not know the pre-assigned
scale values of the behaviour items
Scale values / scores are averaged by the HR department
Not an objective method
Example :
Is employee regular? Y/N

Is employee respected by team members? Y/N
Is employee helpful? Y/N
Does he follow instructions? Y/N
Does he maintain the equipment? Y/N
DR. ISA MISHRA

9. Forced Choice :
Positive and negative statements / phrases are given to the rater to describe
employee’s performance
Rater is forced to select only those statements which are provided – worst or the
best fit
Rater is not aware of the pre-assigned scale values of the behaviour items
Not a popular method as it is forced
There is no discussion, hence this method is redundant as there is no personal
interview
DR. ISA MISHRA

DR. ISA MISHRA

10. Forced Distribution :
Performance is evaluated based on a pre-determined distribution scale

Comparative evaluation by rater in compliance to a specified distribution
Forces discriminating ranking of employees even when performance is very
similar. This itself creates bias.
Some good performers may get demotivated in the process of discrimination.
DR. ISA MISHRA

DR. ISA MISHRA

PA – Traditional Methods
11. Field Review :
An indirect method of appraising performance

HR representative interviews supervisor regarding employee’s performance.
Appraiser has to be equipped with the queries.
May not reflect the true performance level of employees as it is an indirect
method
Is not very accurate, as individual assessors may differ in their standards
Essay & graphic rating techniques can be combined to overcome for a systematic
review
DR. ISA MISHRA

PA – Modern Methods…
1. Management by Objectives / Results or Goal Mgt. (MBO) Peter F. Drucker in 1954
Steps :
✔ Decide mutually set goals, which should be tangible, verifiable &

measureable. These have to be aligned with / to cascade from
organizational goals.
✔ The performance standards for the employee on each job dimension are set.
✔ Actual level of goal attainment / performance is compared with the goals /

performance standards agreed upon
✔ Performance has to be reviewed and results measured.
✔ Establishes new goals & new strategies to achieve goals not achieved
previously
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Advantages :
✔ Management by objectives (MBO) is a result-oriented process and focuses on

settling and controlling goals
✔ It encourages managers to do detailed performance planning
✔ Performance standards are jointly set, hence there is no ambiguity pertaining to
KRAs of each employee.
✔ It clearly establishes the responsibilities and authority of the manager & employee.
✔ Overcomes problems of trait based approaches as it concentrates on actual
outcomes.
✔ Employees feel proud of being part of the organizational goals. This improves their
morale and commitment.
✔ Employees are evaluated as per real outcomes, not on their potential for success or
on the subjective opinion of their abilities.
✔ MBO often highlights the area in which the employees need further training,
leading to career development.
✔ MBO puts strong emphasis on quantifiable objectives, due to which the
measurement and appraisal can be more objective, specific and equitable.
✔ It improves communication between management and subordinates
DR. ISA MISHRA

Disadvantages :
✔ MBO can only succeed if it has the complete support of the top management.
✔ MBO may be resented by subordinates. They may be under pressure to get along
with the management when setting goals and objectives and these goals may be set
unrealistically high. This may lower their morale and they may become suspicious
about the philosophy behind MBO.
✔ As MBO emphasizes on quantifying the goals and objectives, those areas which are
difficult to quantify cannot be easily / accurately evaluated.
✔ Time consuming and increased paperwork
✔ Most managers may not be sufficiently skilled in interpersonal interactions such as
coaching and counseling, which is extensively required.
✔ The emphasis is more on short-term goals. Since the goals are mostly quantitative
in nature, it is difficult to do long-range planning because all the variables affecting
the process of planning cannot be accurately forecast due to the constantly changing
socio-economic and technological environment which affect the stability of goals.
DR. ISA MISHRA

2. Assessment Centre
It is an important tool for selection, training & development and includes:
✔ Different types of Psychological tests.

✔ Management games.
✔ In-Basket exercises where the candidate is asked to solve different management
problems.
✔ Group Discussion (GD) about different management topics.
✔ Oral presentations of management topics
✔ Analysis of real time case studies
✔ Good report writing
DR. ISA MISHRA

Advantages :
✔ Used for selection, training and promotion of candidates as potential can be

studied
✔ Candidate can find out their strengths and weakness
✔ Candidate can improve performance and improve on identified weaknesses
✔ Method is valid as candidate is evaluated by many different experts.
✔ Identification of leaders, self directed team members and followers
✔ Can be used for matching people for jobs
✔ Can be used for competency development
Disadvantages :
✔ Assessment centre is very costly.

✔ Highly experienced managers are required to evaluate the candidates.
✔ The process / evaluation can be questioned in absence of predefined
quantifiable & measurable performance dimensions.
✔ The candidates may not get proper feedback
DR. ISA MISHRA

3. Human Asset Accounting
✔ Money value is attached to human resources

✔ Shows the investment the organization makes in its people and how their values
change over a period of time
✔ Analyses the Human Asset, i.e. whether such assets are conserved, depleted, or
appreciated.
✔ Can be effective to measure collective performance
✔ Aids in the development of management principles and proper decision making
for the future, by classifying financial consequences of various practices.
Disadvantages :
✔ Measures only the costs to the organization, but ignores completely any
measure of the value of the employee to the organization
✔ Too tedious to gather the related information regarding the human values
✔ It may be possible that the employee is already fully trained and there is no need
to employ any development, training, recruitment
DR. ISA MISHRA

4. BARS – Behaviorally Anchored Rating Scales
✔ Examples of effective and ineffective behavior related to job are collected from
people with knowledge of job using the critical incident technique. Alternatively,
data may be collected through the careful examination of data from a recent task
analysis.
✔ For each performance standard, some standard statements are provided. These
are plotted on BARS scales.
✔ Discussions are conducted to identify significant job dimensions that need to be
evaluated.
✔ Relate the identified effective & non-effective behaviour to the required
performance dimensions.
✔ Assign numerical values to each such performance dimension.
DR. ISA MISHRA

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Advantages :
✔ Provides opportunity to both appraiser & appraisee to interact while developing

standards for each performance dimension.
✔ Facilitates more accurate ratings of the target person's behavior or performance
✔ Brings the benefits of both qualitative and quantitative data to the employee
appraisal process
Disadvantages :
✔ Time consuming
✔ Often accused of being subject to unreliability and leniency error
DR. ISA MISHRA

5. 360 Degree Appraisal
A gift - a chance to
see ourselves
as others see us
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360 Degree - Concept
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360 Degree - Concept
Also known as :
Multi-rater feedback
Multi-source feedback
Full-circle appraisal
Group performance review
360° feedback answers three basic questions:

Why should I improve my performance?
What do I need to improve?
How can I improve?
DR. ISA MISHRA
360 Degree - Methodology
Step 1: The Questionnaire served on peer, subordinate & superior
Questionnaire comprises questions on :
- Leadership - Team Player

- Communication - Organisational Skills
- Decision- Making - Adaptability
- Expertise - Vision
Step 2: Collection of ratings
Step 3 : Data Processing
Step 4 : Personal Development Plan for each assessee
DR. ISA MISHRA

360 Degree – Practice at Industry
• Communication of 360 degree assessment to the assessees

• (25th April, 2017)
• Individual questionnaires to assessees
• (25th April, 2017)
• Questionnaires to one superior, 5 peers & 4 direct reports for each assessee
• (26th April, 2017)
• Receipt of filled in questionnaires from all assessors

• (5th May, 2017)
• Generation of Personality Development Plan (PDP) by HR & handing over to Superior
• (31st May, 2017)
• 1-1 Feedback sessions for each assessee by Superior

• (1st June – 7 th June, 2017)
• Completion of PDPs by each assessee and submission to HR & Assessor
• (15th June, 2017)
• Re-evaluation in the next assessment
DR. ISA MISHRA

360 Degree - Benefits
For the organisation:

✔ Promotes constructive feedback and open communication
✔ Develops a culture of continuous performance improvement
✔ Builds leadership/ managerial capability
✔ Embeds values and expected working competencies
✔ Can be a powerful trigger for change
✔ Provides feedback about leadership and management ‘strength’
For the appraisee:
✔ Increased self-awareness
✔ Discovering the blind spots
✔ Understanding the strengths and opportunities for development
✔ Taking ownership and control of own development
✔ Helps managers to know how to get it ‘right’
DR. ISA MISHRA

360 Degree - Disadvantages
✔ Time consuming
✔ Can fail in the hands of untrained facilitators.
✔ Feedback can be useless if it is improperly stated in PDP.
✔ Can impose an environment of suspicion if the information is not openly
and honestly managed.
DR. ISA MISHRA

SCHOOL OF MANAGEMENT Degrees of Appraisal
• A 90 degree performance appraisal would be a single person review. Either a
self evaluation or a boss creates the review.
• A 180-degree feedback, is where your raters are at the same level as you
(peers or colleagues), and a person you report to.
• A 270-degree feedback, is where we utilize only three sources of information,
i.e. superior, peers and the assessed.
• A 360-degree feedback (also known as multi-rater feedback, multi source
feedback, or multi source assessment) is a process through which feedback
from an employee's subordinates, colleagues, and supervisor(s), as well as a
self-evaluation by the employee themselves is gathered.
DR. ISA MISHRA

SCHOOL OF MANAGEMENT Degrees of Appraisal
• A 540 degree appraisal adds an external element as feedback is also

collected from customers or clients. It has 5
dimensions: appraiser/manager, the appraisee (self-appraisal), peers,
subordinates and customer/clients.
• 720 degree performance appraisal is an integrated method
of performance appraisal where, the performance of an employee is
evaluated from 360 degrees(Management, Colleagues, Self and also
customers) and timely feedback is given and performance is evaluated
again based on the targets that are set.
DR. ISA MISHRA

What is a goal?
An observable and measurable end result having one or

more objectives to be achieved within a more or less fixed
timeframe.
Goal is a description of a destination, and an objective is a

measure of the progress that is needed to get to the
destination.
DR. ISA MISHRA

What Do Great Goals Look Like?
1. Goals should be, at a minimum, SMART. SMART is an acronym that stands for
specific, measurable, attainable, relevant, and timely. We’ll look later at ways
to enrich SMART goals and customize this approach for an organization.
2. Goals should be manageable in number. Five or six meaningful stretch goals
are sufficient to challenge employees and keep them engaged in their
contribution to the business. Adding more goals is likely to have a negative
impact on productivity and derail progress toward achieving any of them.
3. Goals should address both business results and personal development. Each
year, the goal-setting process establishes a new contract between employee
and manager; both should be equally invested in achieving the desired results.
Well-written, regularly monitored goals provide the framework for
accountability and the basis for productive performance conversations
between managers and employees.
DR. ISA MISHRA
Goal Setting Examples
To save $10,000 a year for the next ten years.
Specific -
Measurable -
Attainable -
Relevant -
Timely -
DR. ISA MISHRA

Goal Setting Examples
To save $10,000 a year for the next ten years.
Specific - Saving money amounting to $10,000 a year
Measurable - Amount of $10,000 a year
Attainable - From previous savings
Relevant - I have saved before and the market favors the

growth
Timely - Saving money amounting to $10,000 a year for the

next ten years
DR. ISA MISHRA

Cascading Goals Example
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JD, KRA Setting and PA

Template
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Balanced Score Card – Major Components
Kaplan & Norton (1992) - Balanced Score Card (BSC) - It is a strategic approach of
performance management system that enables organizations to translate a
company's vision and strategy into implementation.
The idea is to draw a balance Between the outcome measures—the results
from Past efforts---and the measures that drive future performance
KRA / KPA / KSA – general areas of outcomes or outputs for which a role is
responsible.
1.Enlist main day-day responsibilities / activities
2.“Why should I do this?” for each activity.
3.Review of the answers to above question.
4.Identify KRAs from the answers above.
5.Sharing of KRAs with team members, reportees.
KPI – a measurable value / quantitative indicator that demonstrates how

effectively one is achieving key result areas. Organizations use KPIs to evaluate
their success at reaching targets. Are called KSIs also as they are associated with
performance improvement initiatives.
Dr. Isa Mishra

4 perspectives of BSC…
1. Financial perspective as timely and accurate funding data will

always be a priority
- Financial metrics are monitored

- Capability to justify costs
- Financial responsibilities have to be attached with every role
- Traditional financial measures such as profit and loss, operating
margins, utilization of capital, return on investment, and return
on assets have to be monitored.
2. Customer perspective due to the increasing realization of the

importance of customer focus and customer satisfaction
- Captures all that needs to be done for customer retention &

satisfaction
DR. ISA MISHRA
4 perspectives of BSC
3. Business process / Internal process perspective to show the

managers how well their business is running and whether its
products and services conform to customer requirements.
- Product and service quality, efficiency and productivity,

conformance with standards, and cycle times can be measured
4. Learning and growth perspective - both individual and corporate

self-improvement to provide the necessary talent and human
capital pool to ensure the future of the organization. It can be
measured through the quality and conduct of
- Employee training and development

- Mentoring programs
- Succession planning
- Knowledge creation and sharing
DR. ISA MISHRA
Benefits of the BSC
✔ Aligns KPIs with the overall strategy of the organization. In the process, it
facilitates effective measurement of realized strategy vis-à-vis the
performance goals of the organization
✔ Can be used as an organizational health index as it gives a holistic view of
the business results.
✔ Enforces a positive work culture – employees get involved and
communicate with each other
✔ Provides accurate & precise inputs for decision making as it focuses the
whole organization on the few key things needed to create breakthrough
performance
✔ It reduces the time for information search.
✔ It makes the performance assessment process more objective &
transparent.
✔ Breaking down strategic measures towards lower levels, so that unit
managers, operators, and employees can see what's required at their level
to achieve excellent overall performance.
DR. ISA MISHRA

Disadvantages of the BSC
✔ All employees need to understand how the system works, which may
increase training expenses.
✔ An effective balanced scorecard system aligns with your strategic
objectives, breaking them into measurable metrics. If you don't plan and
communicate these elements with and to your stakeholders, the system
may not produce the desired results.
✔ Non-financial Achievements are ignored
✔ The usefulness of the balanced scorecard approach is dependent on the
value of the information that is driving the process
DR. ISA MISHRA

Corporate and Division Scorecard
Sample from GE Lighting Business Group
The above example shows how the scorecard at corporate level is cascaded
to division level, and further to plant level and employee level.
DR. ISA MISHRA
What is Normalization?
Normalization is the process of review of the ratings of all ratees as a whole to

ensure the ratings are as per the recommended norms. The percentages are
generally decided by HR in consultation with top management.
As a general guideline, normalized rating of an employee would be arrived at

taking into account the Difficulty of Assignment and importance of KRA
attached to the individuals. This would be a rating relative to performance of
other employees in the group considering the same factors. Certain parameters
have to be defined to arrive at normalized ratings.
DR. ISA MISHRA

Why Normalization?
Forced ranking is a procedure

that requires managers to assign
employees into predetermined
groups according to their
performance and potential.
Normalization is done :
1. To remove any personal biases from the appraisal scores
2. To rectify any judgmental errors. Managers have a tendency to rate differently –
some are naturally lenient while some fall on the opposite end of the spectrum.
However, more often than not, it is the employees reporting to them that
experience the brunt of these variations.
DR. ISA MISHRA
Normalization - process
▪ It is a major policy issue in any organization and HR will not and should
not do on their own.
▪ Normally a steering committee decides the percentage.
▪ If the ratings are skewed, then the HR shall return all the forms for
reconsideration. They highlight the percentage norms and request the
Managers to correct and send them back.
▪ If the variation is minimal, they sit and resolve. HR s role is to highlight
the Policy and ensure that policy is maintained.
▪ If some variation is to be done, it is referred to the steering committee.
DR. ISA MISHRA

Why Bell Curve?
1. Traditionally applied in performance appraisals as a method of

segregating elite performers from average performers, and further
distinguishing below par employees from the overall average.
2. Typically, the Bell Curve segregates all employees into distinct
baskets — top, average and bottom performers — with the vast
majority being treated as average performers.
3. Bell Curve at some point had helped to work within budgets.
DR. ISA MISHRA

Challenges of PMS with Bell Curve method…
▪ Sense of disengagement amongst employees for not being rated as per their
perception. The bell curve rating system can damage employee morale by
force grouping top and low performers regardless of their actual performance.
▪ It can develop a sense of insecurity amongst managers who fear attrition from
employees
▪ Employees are invariably compared against one another. Can lead to
demotivation in the minds of employees who are at the receiving end of this
process, especially the ones who are just about at the border of “star” and
“solid” performers. Constant comparisons happen with a certain set of
performers
▪ Many times, top performers are rated as average for lack of “quota” which
can lead to detachment and resentment.
DR. ISA MISHRA
Challenges of PMS with Bell Curve method
▪ Companies that have adopted the bell curve method in the past have looked
at the bottom 5-10% of ranked employees as disposable, instead of focusing
on improvement within teams.
▪ Performance appraisals should be conducted on an individual’s performance,
even if the work done is a team work. If not, this can lead to demotivation.
▪ Bell Curves can produce Inaccurate and Unfair Assessments. When teams
exceed performance goals, performance cannot be accurately measured on
the bell curve. The bell curve forces individuals to rank low on the scale, even
though they have surpassed expectations.
▪ Employees who fall in the middle of the curve make up 80% of the team
population, forcing budget management to focus on mid-value employees.
DR. ISA MISHRA

Replacing the Bell Curve
India’s largest IT services company Tata Consultancy Services (TCS) has done
away with the Bell Curve Model of employee appraisal. This was following other
global tech giants like IBM and Accenture who have done away with this model.
✔ Employees are being appraised on individual performances

✔ Appraisals will be more regular than an annual or quarterly feature.
✔ Yearly reviews are now giving way to continuous process of feedback to
employees at regular intervals.
DR. ISA MISHRA

IBM - Checkpoint
IBM has revamped its yearly appraisal process with a new system -
Checkpoint. Unlike annual mechanisms where a yearly review of the
performance is done, Checkpoint looks into continuous feedback.
This mechanism was designed keeping in mind the rigorous feedback and
deliberation on the part of thousands of employees who were invited to
co-create it. The idea behind its genesis was to have a transparent, merit
based assessment of work which was employee friendly.
The new system, Checkpoint, considers different dimensions of an

employee's performance - business results, impact on client success,
innovation, personal responsibility to other, and skills.
DR. ISA MISHRA

9 box grid model to assess employees
Most common
Metric – appraisal
& recording
evaluation
DR. ISA MISHRA

Performance Guide Chart
Name of Performance 1st 2nd Quarter 3rd Quarter 4th

the Rating Quarter Quarter
employees
Mr. A Outstanding 15% 13% 11% 9%
Mr. B Exceeds 13% 11% 9% No
Expectations increase
Mr. C Meets 11% 9% No increase No

Expectations increase
Mr. D Meets Minimum Token No increase No increase No

Expectations raise increase
Mr. E Does Not Meet No No increase No increase No

Expectations increase increase
DR. ISA MISHRA

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HR Word of the Day
GOLDEN
HANDCUFFS - a phrase first recorded in 1976,
refers to financial allurements and
benefits that have the objective to
encourage highly compensated
employees to remain within a
company or organization instead of
moving from company to company
(or organization to organization).
Golden handcuff cab be offered in various ways:

- Different contractual arrangements tailor made for each employee.
- Employee Stock Option which are exercised after certain predetermined period of
employee service.
No immediate lucrative financial gain but if employee retains for long period and performs
well, he can gain from golden handcuff.
There is penalty clause in these contracts which can be leaving stock options offered.
Golden Handcuff on one hand offer big financial benefits such as stock options and on
other side binds employee by non-compete clause, non-disclosure agreement.
Dr. Isa
JOB
EVALUATION
A job evaluation is a systematic way of determining the value/worth of a job in

relation to other jobs in an organization. It tries to make a systematic
comparison between jobs to assess their relative worth for the purpose of
establishing a rational pay structure.
Job evaluation needs to be differentiated from job analysis.

Job analysis is a systematic way of gathering information about a job. Every
job evaluation method requires at least some basic job analysis in order to
provide factual information about the jobs concerned. Thus, job evaluation
begins with job analysis and ends at that point where the worth of a job is
ascertained for achieving pay equity between jobs and different roles.
Dr. Isa
JOB EVALUATION -
Features
✔ Tries to access jobs, not people

✔ Standards of job evaluation are relative, not absolute
✔ Basic information on which job evaluations are made is obtained from job
analysis.
✔ Carried out by groups, not individuals
✔ Some degree of subjectivity is always present.
✔ Does not fix pay scales, but merely provides a basis for a notional wage
structure.
Dr. Isa
JOB EVALUATION –
PROCESS…
✔ Gaining Acceptance – by all employees. Top management have to be

transparent about the process.
✔ Job Evaluation Committee – HR experts, experienced employees, union

representatives wherever required.
✔ Finding the job to be evaluated – Key jobs from every department which
aptly represent the core job of the department.
✔ Analyzing & preparing Job Description – Job Analysis of the job has to be
available.
✔ Selecting the method of evaluation – depending on the organizational

demands.
Dr. Isa
JOB EVALUATION -
PROCESS
✔ Classifying jobs - The relative worth of jobs is ascertained using criteria like :
• skill requirements,
• experience needed,
• conditions under which job is performed,
• type & extent of responsibilities to be shouldered,
• degree of supervision needed,
• amount of stress caused by the job
✔ Weights / Points are assigned to each factor which are converted to

monetary values
✔ Installing the program – Explanation of entire process to all stakeholders.
✔ Periodic review – as and when the JD & JS undergoes / needs change.
Dr. Isa
JOB EVALUATION -
BENEFITS
✔ Tries to link pay with job requirements
✔ Offers a systematic procedure & rational criteria for determining the relative
worth of jobs.
✔ Salary inequities are eliminated if job evaluation is done.
✔ Wage related grievances can be solved quickly as all employees and union
representatives have participated in the process.
✔ Can help in the evaluation of new jobs.
✔ Points out faulty selection of current manpower in case of any mismatching
of job competencies vis-à-vis the job role.
Dr. Isa
JOB EVALUATION –
METHODS…
Qualitative Method (Looks at the entire Job)

• Ranking or Job Comparison
• Grading or Job Classification
Quantitative Method (Looks at Job Factors)

• Point Rating
• Factor Comparison
Dr. Isa
RANKING or JOB COMPARISON
❖ Simplest form
❖ Each job as a whole is compared with another and this comparison of jobs
goes on until all the jobs have been evaluated and ranked.
❖ All jobs are ranked in the order of their importance from the simplest to the
hardest or from the highest to the lowest
Rank Monthly Salaries

1. Accountant Rs. 30000
2. Accounts Clerk Rs. 18000
3. Purchase Asst. Rs. 17000
4. Machine Operator Rs. 14000
5. Typist Rs. 9000
6. Office Boy Rs. 6000
Dr. Isa
ADVANTAGES :
1. Simple
2. Fast
3. Most commonly used
DIS-ADVANTAGES :
4. Comparisons can be problematic depending on number and complexity of

jobs
5. May appear arbitrary to employees
6. Can be legally challenged
7. Unreliable
Dr. Isa
GRADING or JOB CLASSIFICATION
❖ A job grade is defined as a group of different jobs of similar difficulty or

requiring similar skills to perform them.
❖ Job grades are determined on the basis of information derived from job
analysis.
❖ The grades or classes are created by identifying some common denominator
such as skills, knowledge and responsibilities.
Dr. Isa
Class Rank Employees
Class 1 Executives Managers, Supervisors,

Superintendents
Class 2 Skilled Workers Purchasing Asst.,

Cashier, Receipts Clerk
Class 3 Semi-skilled Workers Typists, Operators
Class 4 Lesser skilled / Unskilled Office Boys, Sub-staff

Workers
Dr. Isa
ADVANTAGES :
1. This method is easy to understand and simple to operate.

2. It is economical and, therefore, suitable for small organizations.
3. The grouping of jobs into classifications makes pay determination problems
easy to administer.
4. This method is useful for Government jobs.
DIS-ADVANTAGES :
5. The method suffers from personal bias of the committee members.

6. It cannot deal with complex jobs which will not fit neatly into one grade.
Dr. Isa
POINT RATING
❖ Jobs are broke down based on various identifiable factors such as skill, effort,
training, knowledge, hazards, responsibility, etc. Thereafter, points are
allocated to each of these factors.
❖ Weights are given to factors depending on their importance to perform the
job.
❖ The sum of points gives an index of the relative significance of the jobs that
are rated.
Dr. Isa
Dr. Isa
FIRST STEP : Assign point values to degrees after fixing a relative value for each key factor
for the job of a Bank Officer.
Degree Define
1 Able to carry out simple calculations
2 Basic MS Office
3 Adept in MS Office
4 Adept in MS Office, Handles mails
5 Adept in MS Office, Handles mails, Does
work independently
Dr. Isa
SECOND STEP : Assign point values to factors along a scale.
Factor Point Values for Degrees Total

1 2 3 4 5 Grade
Points
Skill 10 20 30 40 50 150
Physical effort 8 16 24 32 40 120
Mental effort 5 10 15 20 25 75
Responsibility 7 14 21 28 35 105
Working conditions 6 12 18 24 30 90
Maximum total points of all factors depending on their importance to job = 540
(Bank Officer)
Dr. Isa
THIRD STEP : Conversion of Job Grade Points into Money Value
Point Range Monthly Wage rate Job Grades of key bank officials
(Rs.)
500-599 30000-39999 Officer
600-699 40000-49999 Junior Manager
700-799 50000-59999 Asst. Manager
800-899 60000-69999 Dy. Manager
900-1000 70000-89999 Manager
Dr. Isa
ADVANTAGES :
1. This method is widely used.

2. Forces raters to look into all job factors.
3. It is the most comprehensive and accurate method of job evaluation.
4. Prejudice and human judgment are minimised, i.e. the system cannot be
easily manipulated.
5. Being a systematic method, workers of the organisation favour this
method.
6. The scales developed in this method can be used for long time.
DIS-ADVANTAGES :
7. Rater has to understand the method fully

8. Time consuming as all job factors are captured, as far as feasible.
9. Taxing & difficult for senior level jobs where the job cannot be quantified
fully.
Dr. Isa
% refers to the weightage
Dr. Isa
FACTOR
COMPARISON
❖ Combination of both ranking and point methods

❖ Instead of ranking complete jobs, each job is ranked according to a series of
compensable factors. These factors include mental effort, skill needed,
responsibility, working conditions, etc.
❖ Pay will be assigned in this method by comparing the weights of factors
required for each job.
❖ Wages are assigned to the job in comparison to its ranking on each job factor.
Dr. Isa
FACTOR COMPARISON -
STEPS
❖ Select the key jobs (15 to 20) across the organization, representing all
departments.
❖ Find compensable factors for evaluating the job like skill, physical effort,
mental effort, responsibility, etc.
❖ Rank selected job under each factor (done by job evaluation committee
members).
❖ Assign money value and determine the wage rates
Dr. Isa
The final step in factor comparison method is to compare and evaluate the
remaining jobs in the organisation.
To illustrate, Suppose the job of a ‘Painter’ is found to be similar to Electrician

in skill(15), Fitter in mental effort (10), Welder in physical effort (12), Cleaner
in responsibility (6), Laborer in working conditions (4). The wage rate for this
job would be (15+10+12+6+4) is ….
Dr. Isa
ADVANTAGES :
1. Analytical & objective.

2. Valid as each job is compared with all other jobs.
3. Minimum errors
DIS-ADVANTAGES :
4. Rater has to understand the method fully

5. Time consuming as all job factors are captured, as far as feasible.
6. Taxing & difficult for senior level jobs where the job cannot be quantified
fully.
7. Proficiencies are not taken into account.
Dr. Isa
Method What facet of job How is job Type of Major Major
is to be evaluated? method advantage( disadvantage
evaluated? s) (s)
Ranking Whole job Jobs are subjectively Non-quan Simple, Subjective,
ordered according to titative Good when Not suitable
relative worth no. of jobs for more no.
are less of jobs &
complex jobs
Grading Whole job; Jobs are compared to Non-quan Simple; Cumbersome,
suitable when descriptions of job titative Classifies Cannot grade
accompanied by grades jobs complex jobs
point rating
Point Compensable job Jobs are compared Quantitati Accurate & Complex;
method factors along with with standardized ve stable over Cannot accord
proficiencies descriptions of time; points to jobs
degrees of Analytical; which cannot
compensable factors Systematic be quantified
fully
Factor Jobs graded with Jobs graded by ref to Quantitati Easy to use; Accurate
Comparis reference to market rate data & ve Analytical, market data
on market rate data direct comparison with Realistic, required
and comparison jobs at or near same Practical
with jobs in the level within org
org.
Dr. Isa
WHAT IS
HAY?
Officially known as the Hay Guide Chart-Profile Method of Job Evaluation, this
system utilizes three factors to arrive at a job’s evaluation.
The three main factors are:

❖ Know-How
❖ Problem Solving
❖ Accountability
Dr. Isa
JOB EVALUATION USING HAY SYSTEM
1. Job description questionnaires are completed and signed by the jobholder, the
supervisor, and other managerial staff who have responsibility for the
position.
2. The job description questionnaire is given to each member of the job
evaluation committee for his/her initial evaluation.
3. The committee meets with the jobholder and supervisor to explore questions
and clarify content.
4. The committee members then compare their individual evaluations and
resolve differences that might exist.
Dr. Isa
JOB EVALUATION USING HAY SYSTEM
For example, an insurance clerk and a bus driver have few job
responsibilities that are similar, but might be evaluated in total at the same
point level.
Factor Intermediate insurance School bus driver

clerk
Total Points 155 155
Know how 100 87
Problem solving 19 16
Accountability 25 22
Working conditions Physical effort 2 Physical effort 9
Physical environment 1 Physical environment 7
Sensory attention 6 Sensory attention 9
Mental stress 2 Mental stress 5
Dr. Isa
JOB EVALUATION -
LIMITATIONS
✔ Point allocation is subject to the interpretation of the job evaluation
committee
✔ Conflicts arise amongst employees, management, union representatives,
experts while according weightage / points to compensable job factors
✔ Compensable factors are not exhaustive
✔ Compensable factors change with changes in technology, values, aspirations
of employees, need of organization, etc.
Dr. Isa
HR Word of the Day
COST PER HIRE
Cost per hire is defined as an organization’s talent achievement strategy is calculated as the amount of monetary
investment it takes to attract and recruit new employees. These financial investments include relocation costs,
advertising organization fees, travel cost of applicants and staff, employee referrals, and recruiter pay and benefits
upon the total no. of persons hired in a time period.
CPH = (Internal costs + External costs)/Total No. of Hires in a Time Period

recruitment costs ÷ (compensation cost + benefits cost)
Dr. Isa Mishra
Compensation
Compensation…
Compensation / Remuneration is the total cash and non-cash payments that you
give to an employee in exchange for the work they do for your business.
Compensation = Wage or Salary + Employee benefits + Non-

recurring financial rewards + Non-pecuniary rewards
Compensation Management is a process of establishing

and maintaining an equitable wage & salary structure & an equitable
cost structure. It involves job evaluation, wage & salary survey, profit sharing
&control of pay costs.
Dr. Isa Mishra

Wage Differentials
Wage Differentials Reasons
Interpersonal differentials Differentials in sex, skills, age, knowledge, experience
Inter-occupational differentials Varying requirements of skill, knowledge, demand supply situation
Inter-area differentials Cost of living, ability of employers to pay, demand & supply situation,
extent of unionization
Inter-firm differentials Ability of employer to pay, employees’ bargaining power, degree of

unionization, skill needs, etc.
Dr. Isa Mishra

Factors Affecting Compensation…
✔ Organization’s ability to pay
✔ Supply and Demand of Labour - closely related to the prevailing pay, comparable wage and on-going wage
concepts
✔ Prevailing Market Rate
✔ Trade Union's Bargaining Power
✔ Job Requirements - Jobs are graded according to the relative skills, effort, responsibility, and job conditions
required.
✔ Managerial Attitudes – importance accorded to human resources, weightage to given to merit and / or length of
service, desire to improve or maintain morale, to attract high-caliber employees, to reduce turnover, to provide a
high living standard for employees
Dr. Isa Mishra

Factors Affecting Compensation
✔ Psychological and social Factors – when persons perceive the level of wages as a measure of success, security in
life; socially they do not feel exploited
✔ Skill Levels Available in the Market - technological development, automation have been affecting the skill levels at
a faster rates
✔ Cost of Living – linkage with CPI (consumer price index) measures changes in the price level of consumer goods &
services purchased by households.
✔ Labour Laws - the Payment of Wages Act, 1936; the Minimum Wages Act, 1948. The payment of Bonus Act, 1965;
Equal remuneration Act, 1976; and the Payment of Gratuity Act, 1972
Dr. Isa Mishra

Principles of Compensation
1. To be legal: It must get approval from the govt. or top management in the organization
2. To be adequate: compensation must be sufficient so that needs of the employees are fulfilled
substantially
3. To be Motivational: compensation must increase the level of motivation and job satisfaction of
the employees.
4. To be equitable: compensation policy should be declared in such a way so that no discrimination
can be observed.
5. To provide security: Employees must have guarantee of getting wages or compensation
regularly without any break.
6. To be cost benefit effective: The organization must make a balance between cost for giving
compensation and benefits to be accrued from the employees (ROI).
Dr. Isa Mishra

Types of Compensation – Direct
Dr. Isa Mishra

Direct Compensation
Direct compensation refers to monetary benefits offered and provided to employees in return of the
services they provide to the organization.
The monetary benefits include basic salary, house rent allowance, conveyance, leave travel
allowance, medical reimbursements, special allowances, bonus, PF, Gratuity, incentives, etc. They
are given at a regular interval at a definite time.
Dr. Isa Mishra

Common compensation structure in India
1. Basic salary
2. Dearness allowance (DA) – linked with inflation (Consumer Price Index)
3. House Rent Allowance (HRA) – provided by organizations who do not provide quarters or given to
employees who do not avail quarter facility.
4. Conveyance – Vehicle/ petrol allowances. Not given if company gives a car to the employee.
5. Leave Travel Allowance (LTA) – allowance to visit places with family.
6. Medical Reimbursement
7. Bonus – Given during festivals etc.
8. Special allowances – overtime, mobile allowances, meals etc.
9. Provident fund – deducted from employee salary and same amount contributed by employer.
10. Gratuity
11/9/2020
Direct Compensation…
Basic Salary: It is the “minimum wage” which provides “not merely for the bare sustenance of life but
for the preservation of the efficiency of the workers by providing some measure of education, medical
requirements and amenities.” The basic Pay has been the most stable and fixed as compared to
dearness allowance which usually changes with movements in the cost of living indices and the
performance of the industry. 30-60% of salary(gross pay/take home) is basic pay / 40-50% of CTC.
Dearness Allowance (5% of CTC) : In India, the system of dearness allowance is a special feature of the
wage system for adjustment of the wages when there are frequent fluctuations in the cost of living. One
of the methods of paying dearness allowance is by a flat rate, under which a fixed amount is paid to all
categories of workers, irrespective of their wage scales. The second method is its linkage with
consumer price index numbers published periodically by the government.
Allowances: 1. Fully exempted allowances. 2. Partly exempted allowances. 3. Fully taxable allowances
House Rent Allowance : HRA is generally paid as component of salary package. This allowance is given
by an employer to an employee to meet the cost of renting an accommodation. [50% of (Basic + D.A.)
incase the location is (Mumbai, Kolkata, Chennai, Delhi) or 40% of (Basic + D.A.) incase of other cities].
Dr. Isa Mishra

Most Common Allowances in the Organized Sector
Conveyance Allowance
The conveyance allowance is a type of allowance which is paid to employees in order to meet the
expenses to come to office from the residence of the employees. It varies on the basis of the city of
posting, distance of the employees from the residence to office & type of conveyance used to travel.
Medical Exemption
Maximum Exempted u/s 10 up to Rs.15000 p.a. based on the bills produced by the employee
(i.e. @ Rs. 1250 per month when paid along with the salary)
Leave Travel Allowance

Travel expenses, proof of travel to be submitted, can be claimed twice in a block of 4 years, present
block is 2018-21. Can be set as 10% of basic, but no benchmark
Dr. Isa Mishra

Most Common Allowances in the Organized Sector
Children Education - Paid for education of Employee’s children. Exempt up to Rs. 100/- per month per child
up to maximum of 2 child
Children Hostel Allowance - Paid for education of employee’s children. Exempt up to Rs. 300/- per month
per child up to maximum of 2 child
Tiffin / Lunch – in cash or as coupons. Fully taxable
Books
Uniform - purchase or maintenance of uniforms to wear during the performance of the duties of an office.
Exempted
Non practicing Allowance - to those professionals (like medical doctors, chartered accountants etc.) who
are in government / private service and are banned from doing private practice. Fully taxable
Entertainment Allowance – paid above a certain rank, the least of the following is deductible: Rs. 5,000/-,
20% of basic salary ; or Amount of entertainment allowance granted during the previous year.
Telephone Allowance – depending on rank / grade of employee, type of work
Club membership, Credit card, Computer, Remote Area Allowance, City Compensatory Allowance,
Servant/Sub staff, Relocation
Dr. Isa Mishra
Compensation Terms…
• Basic Salary + Dearness Allowance (DA) = Base Pay
• Base Pay + Fixed allowances (conveyance, HRA etc.) = Fixed cash
• Fixed cash + Retirals (PF, gratuity and superannuation) = Fixed pay
• Fixed Pay + Variable Pay = Total monetary Compensation
• Incentive: An example of incentive is extra money offered to those employees who work extra hours on a project.
Not mandatory. Taxable
• Commission: Commission to managers and employees may be based on the sales revenue or profits of the company. It
is always a fixed percentage on the target achieved. Taxable.
• Fringe benefits constitute indirect compensation as they are usually extended as a condition of employment and not
directly related to performance of concerned employee.
• Total monetary compensation + Other non- monetary benefits that can be monetized (gymnasium facility, club
membership ,etc.) = Total compensation or Cost to Company (CTC). Includes fringe benefits and indirect compensation…
• A flexible benefit plan in India allows employees to structure and modify CTC components based on the
offered benefits like medical expenses and conveyance.
Dr. Isa Mishra

Types of Variable Pay
Dr. Isa Mishra

Types of Incentives
Dr. Isa Mishra

Types of Incentives
Dr. Isa Mishra

Types of Compensation – Indirect
Indirect compensation
refers to non-monetary
benefits offered and
provided to employees in
lieu of the services
provided by them to the
organization.
Dr. Isa Mishra

Fringe Benefits - Types
•Fringe Benefit Types
•Payment for time not worked
•Hours of work
•Paid holidays
•Employee security
•Jobs to employees’ children
•Welfare recreational
•Holiday Homes
•Higher Education
•Old age & retirement

•Medical benefits
•Travelling concessions
Dr. Isa Mishra

Perquisites / Perks / Fringe Benefits
……are the additional benefits & services paid to employees for their contribution, which cannot be measured by the
mere estimation of wages and salaries paid to them.
The characteristics of fringe benefits are:
• Are distinctly additional to the regular wages paid to the workers. As such, they are not provided as a substitute
for wages or salaries of the employees.
• Meant primarily to be of advantage to the employees.
• Only those benefits fall within the purview of fringe benefits which are or can be expressed in cash terms.
• The scope of fringe benefits is different from that of welfare services. Fringe benefits are provided by the
employers alone whereas welfare services may be provided by other agencies as well. Benefits that have no
relation to employment should not be regarded as fringe benefits.
FBT is 30% plus education cess and applicable surcharge.
Dr. Isa Mishra

Legal Aspects of Pay System
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of
the services provided by them to the organization.
Minimum Wages Act, 1948
I. An Act to provide for fixing minimum rates of wages in certain employments. The purpose of
the minimum wage was to stabilize the post-depression economy and protect the workers in the
labor force. The minimum wage was designed to create a minimum standard of living to protect
the health and well-being of employees.
II. The act lays down for fixation of:

a) A minimum time rate of wages
b) A minimum piece rate
c) A guaranteed time rate and
d) An overtime rate
Dr. Isa Mishra

Minimum, Fair & Living Wages
Wages have been classified into three categories:
(1) Minimum wages - The minimum wage may be defined as the lowest wage necessary to maintain a
worker and his family at the minimum level of subsistence, which includes food, clothing and shelter. When
the government fixes minimum wage in a particular trade, the main objective is not to control or determine
wages in general but to prevent the employment of workers at a wage below an amount necessary to
maintain the worker at the minimum level of subsistence. Minimum wage in a country is fixed by the
government in consultation with business organizations and trade unions.
(2) Living wages - The living wage should enable the male earner to provide himself and his family not
merely the basic essentials of food, clothing and shelter but a measure of frugal comfort including
education for the children, protection against ill-health, requirement of essential social needs and
measures of insurance against old age." Thus living wages means the provision for the bare necessities
plus certain amenities considered necessary for the wellbeing of the workers in terms of his social status.
…contd.
DR. ISA MISHRA

Minimum, Fair & Living Wages
(3) Fair wages - Fair wage is a mean between the living wage and the minimum wage. Thus the fair wages
depends upon the following factors :
(1) Minimum Wages

(2) Capacity of the industry to pay
(3) Prevailing rates of wages in the same or similar occupations in the same or neighboring localities
(4) Productivity of labour
(5) Level of national income and its distribution.
(6) The place of the industry in the economy of the country.
DR. ISA MISHRA

Payment of Wages Act, 1936…
I. The main objective of the Act is to avoid unnecessary delay in the payment of wages and to
prevent unauthorized deductions from the wages.
II. The Act does not apply to persons whose wage is Rs. 24,000/- or more per month.
III. Provision for timely payment of wages:
Wages needs to be paid - before the expiry of the 7th day after the last day of the wage
period, where there are less than 1000 workers employed and in rest case on the 10th day;
In current coin or currency notes or by cheque or by crediting the wages in the employee’s
bank account after obtaining his written authority;
On a working day;
DR. ISA MISHRA

Payment of Wages Act, 1936
IV. Deductions from wages allowed under Act:

•Fines; Deduction for absence from duty;
•Deduction for the damage or loss of goods expressly entrusted to the employed person;
•Deduction for house accommodation;
•Deduction for the amenities and service supplied by employer with agreement to the employee;
•Deduction for recovery of advances and interest, and adjustment of overpayment;
•Deductions for recovery of loans from any fund constituted for the welfare of labour as agreed between employer and
employee;
•Deduction for income tax; Deduction on orders of a court or other authority;
•Deduction for subscription and repayment of advance from any Provident Fund;
•Deduction for payments to cooperative societies as agreed between employer and employee;
•Deduction of premium for LIC policy on written authorization of the employed person; or any other investment for Post
Office Saving Schemes
DR. ISA MISHRA

EPF & Misc. Provisions Act, 1952…
I. This Social Security Act provides for the institution of PF, pension fund and deposit linked insurance
fund for employees in factories and all establishments.
II. Constitution of India under “Directive Principles of State Policy” states that the State shall provide
effective provision for securing the right to work, education and public assistance in cases of
unemployment, old age, sickness, disablement and undeserved want. The complete analysis of
employee provident fund is done in the above topic.
III. Eligibility : An employee at the time of joining the employment and getting salary (basic) up to Rs.
15000/-; He/ she is eligible for membership of fund from very first date of joining a covered
establishment.
IV. Pension Fund : Member should have completed 10 years of continuous service (or) attained age of
50 years or more. Will receive pension amount on a monthly basis after attaining the age of 58.
DR. ISA MISHRA

Payment of Gratuity Act, 1972…
I. Purpose : a benefit paid as gratitude to the employees who have rendered a continuous
service for at least five years to incentivize them so that they continue working efficiently. It is
an amount paid to an employee based on the duration of his total service but an employee
becomes eligible only after he has completed 5 years of his service. Can be paid earlier when
employee leaves if this has been mentioned in CTC.
II. Forfeiture – if employee has been terminated for disorderly conduct or any other
misdemeanor or an act tantamount to violence provided that such offense is committed by
him in the course of his employment.
III. Taxability of gratuity depends on the recipient’s job. In case of government employees there
is no tax on the gratuity. In case of private sector employees, the gratuity is exempt from tax
subject to a maximum of Rs 20 lakhs
DR. ISA MISHRA

HR Metrics and Compensation
Most Common Metrics for Compensation Programs
Compensation costs per rupee of profit

Compensation costs per rupee of revenue
Analysis of performance and production levels of employees paid in the top 30 percent of their salary range
Total compensation costs as a percent of total company operating costs
Analysis of compensation levels to the marketplace and key competitors
Forecast of compensation needs based on future plans
Compensation mix, meaning fixed salaries versus performance-driven compensation
Dr. Isa Mishra

Base Pay Structure … Considerations
❖Whether or not the pay structure should lead or lag or lag\lead the market.
❖Design pay grades using pay grade minimum and maximum and desired spreads of the range.
❖Decide whether incumbents can earn rates of pay higher than established maximums and lower
than established minimums
❖Determine overlap between pay grades. Overlap gives managers flexibility to move employees to
higher grades when promoted without an overly generous pay raise.
❖Determine if the organization needs more than one pay structure and why.
❖Decide if the organization wishes to recognize dangerous working conditions in its base pay
schedule
❖Devise how the pay structure will accommodate across-the-board cost-of-living or other
adjustments not related to employee tenure, performance or responsibility
❖Large organizations can have four pay structure lines:
Blue collar workers
White collar salaried workers
Managerial employees
Top management
Dr. Isa Mishra

Base Pay Structure … Considerations
❖In identifying the lowest rate of pay it is important to pay attention to:
Legal requirements.
The prevailing pay scales in local markets / similar industries.
❖The number of pay grades to be included within a pay structure varies with the circumstances--there
is no right number.
Dr. Isa Mishra

Compa Ratio
“Compensation” or “comparison” ratio, the “compa-ratio” is the percentage obtained by dividing the
actual salary (AS) paid to an employee by the midpoint (MP) of the salary range for that position.
CR (Compa-ratio) = [AS (actual salary) / MP (midpoint of pay range)] X 100
This allows an organization to understand how an individual’s pay relates to the organization’s pay ranges and the
market. So, if the individual’s compa-ratio comes out to 100%, then the individual is already being paid what a
competent performer should be.
Dr. Isa Mishra

Compa Ratio
Let’s say the market pay range for the average receptionist position is between Rs. 20,000 and Rs. 28,000 per year,
with the midpoint being Rs. 24,000 per year.
If there are five actual receptionists who earn (respectively) 21K, 23K, 24K, 26K, and 28K/per year, then the
compa-ratios would be as follows:
Receptionist A – 21/24 = .875 x 100 = 87.5%
Receptionist B – 23/24 = .958 x 100 = 95.8%
Receptionist C – 24/24 = 1 x 100 = 100%
Receptionist D – 26/24 = 1.083 x 100 = 108.3%
Receptionist E – 28/24 = 1.167 x 100 = 116.7%
The first two compa-ratios are below what a fully competent solid performer should be paid, the middle figure is
exactly at midpoint, and the latter two are above the midpoint for the given position.
There are usually five zones of compa-ratio, each associated with a pre-defined level of performance. A commonly
accepted range for compa-ratios is 80% to 120%, which divided into 5 zones are:
80-87% – new, inexperienced, or unsatisfactorily-performing incumbents.
88-95% – those gaining experience but not yet fully competent in the job.
96-103% – fully competent performers performing the job as defined.
104-111% – those consistently performing the job at a level higher than what the job definition requires.
112-120% – those universally recognized as outstanding performers, both inside and outside the organization.
Dr. Isa Mishra
HR Word of the Day
BOOMERANG EMPLOYEE
A Boomerang Employee is defined as

any employee who returns to work for a former
employer.
“76% of HR professionals say they are

more accepting of hiring boomerang employees
today than in the past.” It of course depends on the
reason why an employee left .
Dr. Isa Mishra

JOB
ANALYSIS
Job analysis is a procedure to determine the duties & responsibilities, nature of
the jobs and finally to decide qualifications, skills & knowledge required for an
employee to perform a particular job.
It involves three questions :
What is a job?
It is a group of tasks, duties & responsibilities that constitute the work

assignment of an employee.
What should be analyzed?
What methods of analysis should be used?
Dr. Isa Mishra

Activity
SCHOOL OF MANAGEMENT Identification of JD and JS
DR. ISA MISHRA

Activity
SCHOOL OF MANAGEMENT Identification of JD and JS
DR. ISA MISHRA

JOB ANALYSIS – an overview
JOB ANALYSIS
Methods Sources of Data Conducted By
Questionnaires Employees Job Analyst (Cons.)
Interviews Supervisors Consultant
Observations Managers Supervisor / Mgr.
Logs / Diaries Job Analyst (Int.)
Used For
Job Description Job Specification
Used For
HR Planning Performance Management

Recruitment Health, Safety & Security
Selection Employee / Labor Relations
Compensation Training
Dr. Isa Mishra
What should be analyzed?
1. Fundamental purpose of the job.
2. Work elements in the job – specific tasks and areas of responsibility.
3. General importance of each job element and relationship to the total
operation.
4. Approximate time spent on each task.
5. Scope of the job and its impact on the operation.
6. Inherent authority associated with the job
7. Working relationships including supervision
8. Specific methods, equipment or techniques that are required for the job.
9. Job climate including objectives & work environment
10. Job conditions like physical effort, hazards, discomfort, chasing of deadlines,
travel requirement, creativity & innovation required, etc.
Dr. Isa Mishra

Job Analysis - Steps
1. Collection of background information
2. Selection of representative job to be analyzed
3. Collection of job analysis data
4. Job Description
5. Developing job specification
Dr. Isa Mishra

Job Analysis – Components
1. JOB DESCRIPTION (JD)
Edwin Flippo: “Job Description is an organized factual statement of the

duties and responsibilities of a specific job. It should tell what is to be done, how
it is done and why.” JD is prepared before a vacancy is advertised. It emphasizes
the job requirements.
2. JOB SPECIFICATION (JS)
Edwin Flippo: “Job Specification is a statement of minimum acceptable

human qualities necessary to perform a job properly”. It is based on job
description. It is a written statement of qualifications, traits, physical and mental
characteristics that an individual must possess to perform the job duties and
discharge responsibilities effectively.
Dr. Isa Mishra

Details Covered in JD
Job title
Organizational location of the job
Supervision given and received
Designation of the immediate superiors and subordinates
Primary & Secondary Responsibilities
Competencies required
Salary levels
Hours of work, shift, etc.
Dr. Isa Mishra

Details Covered in JS
Educational and professional qualifications
Skills – behavioral & functional
Practical experience
Physical fitness
Special qualities / competencies required for performing the job
Sample JD format 1
Sample JD format 2
Dr. Isa Mishra
Methods of Job Analysis
Observation
Direct or through video / camera
Useful in routine jobs
Through work sampling by observing few workers randomly
Interview
Individual – for routine jobs
Group / Panel – for highly technical & complex jobs; however, group conflict may
cause this method to be ineffective
Questionnaires
PAQ – Position Analysis Questionnaire – concentrates on work oriented elements
that describe behaviors necessary to do a job, rather than the job oriented technical
competencies.
MPDQ – Management Position Description Questionnaire – concentrates on
managerial dimensions like decision making, supervising.
Diary - By mandating employee logs / diary which is cumbersome
Critical Incident Technique - Takes past incidents of good and bad behavior, organizes
incidents into categories that match the job they are related to
Dr. Isa Mishra
JOB DESIGN
Job Design is the process of deciding on the contents of a job in terms of its duties
and responsibilities, on the methods to be used in carrying out the job, in term of
techniques, systems and procedures and on the relationships that should exist
between the jobholder and his superiors, subordinates and colleagues.
Proper Job Design aims :

To meet the organizational requirements such as higher productivity,
operational efficiency, quality of product/service etc. and
To satisfy the needs of the individual employees like interests, challenges,
achievement or accomplishment, etc.
Dr. Isa Mishra

JOB DESIGN – Approaches / Techniques
A. Job Rotation
✔ This refers to the movement of an employee from one job to another over a
designated period of time.
✔ Jobs themselves are not actually changed, only the employees are rotated
among various jobs.
✔ This would relieve the employee from boredom and monotony, improves the
employee’s skills regarding various jobs and prepares the employee to meet
the contingencies.
✔ This is also intended to improve worker’s self-image and provides personal
growth.
✔ Frequent rotation of employees may cause interruptions in the work routine
of the organization.
Dr. Isa Mishra

B. Job Enlargement
✔ It involves the addition to or expansion of tasks in the job.

✔ It is the strategy adopted by many organizations to combat the ill-effects of
division of labour.
✔ Its focus is on enlarging the contents of jobs by adding tasks and
responsibilities.
✔ It involves expansion of the scope and width of the job by means of assigning
certain closely related operations. E.g. a clerk in an office doing typing work
may be also assigned tasks of drafting simple letters, sorting mail and filling
of papers.
- Reduces boredom, monotony

- Increases efficiency
- Employee develops more no. of skills in a particular job
Dr. Isa Mishra

C. Job Enrichment
✔ It is based on the assumption that in order to motivate personnel, the job

itself must provide opportunities for achievement, recognition, responsibility,
advancement and growth.
✔ It involves the vertical expansion of jobs by increasing the amount of worker
responsibilities associated with the positions. E.g. a worker who previously
only loaded boxes for delivery into a trailer may be given the responsibility of
verifying that the customer order is correct.
✔ Through job enrichment, autonomy, responsibility and control becomes part
of a worker’s job.
✔ This leads to greater feelings of satisfaction, higher motivation and increased
productivity.
Dr. Isa Mishra

D. Job Simplification
This requires that jobs be broken down into their smallest units and then
analyzed. Each resulting subunit typically consists of relatively few operations.
These subunits are then assigned to workers as their total job. This is done so
that employees can do these jobs without much specialized training. Many small
jobs can also be performed simultaneously, so that the complete operation can
be done more quickly. Time and motion studies are often used for work
simplification.
- Requires less training

- Less costly unskilled labour
- Increase in speed
Work simplification was popularized by Frederick Taylor. He advocated that

complex jobs should be broken down into simple components. In Taylor’s
approach, workers become specialists in their specific area. This approach was
implemented first by Henry Ford, who was able to mass-produce cars at a much
cheaper rate than any of his competition.
Dr. Isa Mishra

HR Word of The Day Bean Feast American Melting Pot: Dr. Isa Mishra

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HR Word of the Day

- an annual dinner given by an employer

- blending diverse people into one

Dr. Isa Mishra

It is the stock of competencies, knowledge, personality, creativity &

It refers to a well employed human resource, that is actively

Dr. Isa Mishra

• Globalisation – economic and labour markets, 24 hour pressures

Dr. Isa Mishra

1. Organizational pressures to reduce cost of all types – financial,

Dr. Isa Mishra

Dr. Isa Mishra

There is a growth in jobs by % in occupations that require higher education and

There is a numerical growth in jobs in occupations that require less education

HR has to understand all these dynamics and check for quality.

Increase in Jobs (In %) Increase in Jobs (In Nos.)

Dr. Isa Mishra

5. Workforce Availability & Quality Concerns

The biggest challenge is the shortage of skilled human resource.

6. Talent Management & Talent Development – a more strategic,

Imperative for the following reasons:

Impending retirement of baby boomers worldwide

Dr. Isa Mishra

7. Growth in Contingent Workforce

Increasing demand in industries to hire project-specific consultants, logo/content

Dr. Isa Mishra

Dr. Isa Mishra

Why is there a growth in contingent workforce?

9. Globalization & HR handling global workers - expatriates, host country

Trans-national HR has to take care of global economic (uniform wage rates

Dr. Isa Mishra

13. Renewed Focus on Worker Resilience and Mental Health

Dr. Isa Mishra

Manpower planning may be defined as a strategy for the acquisition, utilization,

Manpower Planning (MPP) which is also called as Human Resource Planning

A. Analyzing the current manpower inventory

The following matters have to be noted-

This stage involves the following:

1. Determining the time period of recruitment to decide whether to recruit on a

Before any employment program is designed.

E. Utilization of manpower : Success is measured in terms of -

❖ Quantitative achievement visible from PMS, productivity trend, manpower cost,

Technical job to be divided into different components, time requirement analysis to be

i. All jobs are not quantifiable

C. Converting the projected jobs into man hours :

B. Forecast of jobs in a day for different years

Job Category Year

a. 20% fatigue allowance and 20% leave reserve is considered.

A. Time Series Analysis

Trend : Fluctuations in level of employment over a time period

Moving Average Method : Example - Forecasting Manpower reqmt. In 2001 using

Year Manpower Situation 1 : Forecasting manpower reqmt. In 2001 using

1999 1100 Fm = 800 + 1000 + 1100 + 1300 = 4200/4=1050

Most Accurate - Situation 3 : Weightages for different periods

Fm = (500)1 + (600)1 + (800)1 + (1000)2 + (1100)3 + (1300)4 =12400/12 = 1033

B. NOMINAL GROUP METHOD

This process facilitates scientific group consensus.

Manpower wastage is an element of labor turnover. It includes voluntary retirement,

Leaves Settled connection

Wastage Analysis Curve Dr. Isa

Induction Phase – marginal employees leave

Wastage decreases with the increase in length of service.