HRM NOTES

Performance Appraisal
An employee performance appraisal system has defined a process in which a predefined
standard of factors such as work knowledge, work performance, work attitude, leadership
quality, team player behaviour, consistency, decision-making abilities, and skills is created
and then actual performance, as well as the personality of employee, is compared with these
expected standards by the organization.
Meaning: A performance appraisal used in the organization is a regular review of
employees’ performance to verify their contribution to the company. It is also known as an
annual review or performance evaluation. It evaluates the skills, growth, achievement, or
failure of the employees. The performance appraisal is often used to justify the decisions
related to promotions, pay hikes, bonuses, and termination of the employee.
Performance Appraisal Definition By Eminent Authors
Edwin B. Flippo “Performance appraisal is a systematic, periodic and so far as humanly
possible, an impartial rating of an employee's excellence in matters pertaining to his
present job and to his potentialities for a better job.”
Gomej-Mejia “Performance Appraisal involves the identification, measurement and
management of human performance in organisation.”
Slabbert and Swanepoel “Performance appraisal is a formal and systematic process by
means of which the relevant strengths and weaknesses of the employees are identified,
measured, recorded and developed.”
Beach “Performance appraisal evaluates systematically performance of individual with
regard to his or her performance on the job and his potential for development.”
Spriegel “performance appraisal is the process of evaluating the employee’s performance on
the job in terms of requirements of the job.”

Types of Employee Performance Appraisal in HRM

Most of the organization's supervisors are in charge of performance appraisal. However, there
are different types of employee performance appraisal in HRM based on the people who
evaluate the performance of the employee.
The four major types of performance appraisal are as follows-
o Self-assessment: Here the employee themselves rate their job performance and work
behaviour
o Peer assessment: Under this assessment, the team members, co-workers, and
workgroup are responsible for the performance rating of the employee.
o 360-degree performance appraisal: In this type of appraisal the performance rating is
collected from the employee, their immediate supervisor, and peers.
o Negotiated appraisal: In order to avoid the conflicts between employee and their
supervisors a new trend of appraisal is utilized. In this type of performance appraisal,
a mediator evaluates the performance of the employee and puts focus on the good side
of performance rather than the criticism.

What are Different Methods of Employee Performance Appraisal?

Employee performance appraisal has two types of methods namely traditional methods and
modern methods used by various organizations. The traditional methods are quite simple and
quick to execute while the modern methods are more focused on covering the overall well-
being of the organization.
Traditional Methods of Employee Performance Appraisal
Here is a list of different traditional methods which can be used for employee performance
appraisal:
Rating Scales: In this scale, the factors such as attitude, initiative, dependability, etc are
quantified. A range of excellent to poor is provided to the rater and based on the rating the
performance of the employee is calculated.
Checklist: A checklist form of performance appraisal consist of a column of ‘Yes’ and ‘No’
for different employee traits. The rater has to put a tick mark based on if the traits exist or do
not exist in the employee.
Forced Choice Method: In this method, different statements about the performance of the
employee are provided to the rater and he/she is forced to answer the ready-made statements
as true or false. Further evaluation of performance is carried on by the Human
Resource department based on the answers of the rater.
Forced Distribution Method: In this method, it is assumed that the performance of an
employee conforms to a bell-shaped curve. Thus, the rater has to put employees on provided
points on the scale.
Critical Incidents Method: Here the critical behaviour of the employee is considered by the
supervisor while evaluating the performance.
Behaviourally Anchored Rating Scale: Different statements which are descriptive in nature
are prepared about the behaviour of the employee. These behaviours are put on the scale
points and the rater has to indicate the points which explain the employee behaviour in a
more exact way.
Field Review Method: In this method, the reviewer of the performance is generally someone
outside the department. The people from the HR department or corporate office do the
performance evaluation of the employee based on the records and interviews.
Performance Tests and Observations: This is a kind of oral test that is conducted to test the
skills and knowledge of the employees in their respective fields. The employees sometimes
receive a situation and are asked to demonstrate their skills and then their performance is
evaluated based on that presentation.
Confidential Reports: Often the government departments follow this method of performance
evaluation. The employees are evaluated based on the parameters such as leadership quality,
teamwork, integrity, technical ability, attendance, etc. The reviewer sends the confidential
review to the concerned authority about the performance of the employee.
Essay Method: Under this method, the detailed description of the employee performance is
written by the rater. The performance of an employee, his relations with other Co-workers,
requirements of training and development programs, strengths and weaknesses of the
employee etc. are some of the points that are included in the essay. The efficiency of this
traditional method of performance appraisal depends on the writing skills of the rater.
Cost Accounting Method: It is a simple method in which the performance of the employee
is linked with the monetary benefits of the organization. The rater checks about the cost to the
company to keep the employee and the contribution of the employee in terms of monetary
business.
Comparative Evaluation Approaches: This approach includes a comparison of the
performance of co-workers with each other. It is of two types namely the ranking method and
paired comparison method. It is a quite popular method of employee performance appraisal in
the corporate world.
Modern Methods of Employee Performance Appraisal
Here is a list of different modern methods which can be used for employee performance
appraisal:
Management by Objectives: In this method, the performance of the employee is assessed
based on the targets achieved by him/her. The management at the beginning of the financial
year conveys the set goals to the employees, at the end of the year the performance of the
employee is compared with the set goals and evaluated for the appraisal.
Psychological Appraisals: Psychologists are invited to the companies for the performance
appraisal of the employees. Here the performance is in the context of the potential future
performance. Psychological tests, in-depth interviews, reviews, and discussions with the
managers are the methods used for the evaluation of the performance.
Assessment Centers: A series of exercises are conducted at the assessment center of the
company to actually evaluate the performance of the employee. The exercises include
discussions, role-playing, computer simulations, and many more. The employees are
evaluated in terms of communication skills, mental alertness, emotional intelligence,
confidence, and administrative abilities. The rater observes the event and evaluates the
performance of the employee at the end.
360-Degree Feedback: It is particularly a 360-degree feedback method in which the
information about the performance of the employee is collected from supervisors, peers,
group members, and self-assessment. All the remarks are considered to evaluate the overall
work performance of the employee.
720-Degree Feedback: In line with the 360-Degree feedback system, here the feedback is
collected from the stakeholders within the company as well as the people linked from outside
the organization. The customers, suppliers, investors, and other financial groups provide
feedback about the performance of the employee.

What are the Objectives of Employee Performance Appraisal?

The main objective of the employee performance appraisal is often termed as a comparison of
the standard performance set by the organization with the actual performance of the
employee. However, there are some other important objectives served by the employee
performance appraisal system as given below-
o The performance appraisal system maintains the records which are used to determine
the compensation and wage structure of the employee.
o It is very useful to determine the strengths and weaknesses of the employees and helps
to place the right person at the right job.
o It provides access to the potential in the person for future growth and development
o It gives the necessary feedback regarding the performance of the employee and their
actual contribution to the growth of the organization.
o It guides the HR department about the training needs of the employees.
o It influences the working habits of the employees and makes them work-oriented.

What are the Advantages and Disadvantages of Performance Appraisal

The employee performance appraisal system is a core part of HR functions and is regularly
used for the benefit of the organization. However, each system has its own benefits and
drawbacks. Here are the advantages and disadvantages of performance appraisal.
Advantages of Performance Appraisal
o It helps the supervisors to chalk out the promotion for performing employees and
dismiss the inefficient workers.
o It helps the organization to decide the compensation of the employee. Also, based on
the performance and the additional efforts put by the employee the extra benefits and
allowances can be decided using records of performance appraisal.
o Special actions can be taken for the development of the employees. The performance
appraisal system will highlight the weakness of the employee based on which the
training program arrangement can be carried out by the organization.
o The performance appraisal further suggests the changes in the selection process which
will help to hire better employees.
o Performance review is an effective way to communicate the status of the performance
of the employee. It is a way to provide feedback about how the employees are doing
on their job.
o The evaluation of the performance can act as a motivational tool. It provides a picture
of the efficiency of the employee and motivates the individual to improve their
performance.
Disadvantages of Performance Appraisal
o Performance appraisal totally depends on the factors used for the evaluation of the
performance. The use of incorrect or irrelevant factors can lead to the failure of
performance appraisal.
o Sometimes the vital factors responsible for the performance are ignored during
performance appraisal.
o The factors like attitude, abilities, and initiative are very vague and difficult to gauge.
o Sometimes the managers who carry out the performance appraisal are not qualified
enough to properly assess the abilities of the employees. Thus, it leads to irrelevant
data collection and failure of performance appraisal.

Performance Management
It is a continuous and systematic approach that ensures the achievement of organizational
business goals by streamlining employee performance and efforts to match the set goals
efficiently. Performance Management builds a communication system between a Manager
and an employee that occurs throughout the year, in support of accomplishing the strategic
objectives of the organization. Performance management is an important aspect in HRM. It is
used to create a work environment where people are motivated to provide their best
performance and do quality work.
In the existing business scenario, the role of Performance Management in HRM is very huge
and important. The Performance Management compiles all the functions such as Goal
Setting, regular performance review in accordance with the set goals, set instant
communication amongst the team member for coaching, providing performance feedback and
its report for creating better employee training and development programs, and finally
connects performance with reward and recognition
Performance Management Definition and Its Meaning in HRM
Managing the Performance of the employee is the most important function of HR (Human
Resources). Performance management is defined as an on-going process of identifying,
measuring, and developing the performance of the employees in the organization. Its main
objective is to focus on employee performance and direct their efforts towards achieving the
business goal of the organization.
Performance management is a tool that is widely used by managers to monitor and evaluate
the work performance of employees.The tools start working from Job design followed by
coaching, training and development and connect performance with reward and recognition
and ultimately result to achieve the organization's goals and objectives
Performance Management Definition by World Renowned Eminent Authors
Please find below that how these eminent authors have defined “Performance
Management”
Armstrong and Baron
“A strategic and integrated approach to increasing the effectiveness of organizations by
improving the performance of the people who work in them and by developing the
capabilities of teams and individual contributors”
Lockett
Performance Management is – ‘The development of individuals with competence and
commitment, working towards the achievement of shared meaningful objectives within an
organization which supports and encourages their achievement’
Mohrman and Mohrman
‘Performance Management is managing the businesses
Performance Management vs. Performance Appraisal
Often people misconstrue performance management with performance appraisal. However,
performance management is quite different than performance appraisal. It is an extension of
performance appraisal after the feedback or review of the performance. The three additional
steps in performance management are:

a) Performance interview
b) Archiving performance data
c) Use of appraisal data.
Types of Performance Management in HRM
The types of performance are determined based on the vertices included in the appraisal or
review system. It can range from the self-assessment of the employee to the review from
different members of the organization such as managers; peers as well sometimes extend to
check the review of customers and investors.
A. General Appraisal- In this type of performance management there is continuous
communication between the manager and employee regarding the performance
throughout the year. They communicate about the pre-set goals, the objectives, the
performance feedback, and set the new goals.
 B. 360-Degree Appraisal- In 360-degree appraisal the feedback about the performance
and behaviour of the employee is provided by peers and the manager of the
employees.
C. Technological Performance Appraisal- This appraisal is totally based on the
technical knowledge of the employee. The technical expertise and capabilities of the
employee are throughput and identified by the manager.
D. Employee Self-Assessment- The employee compares their own performance with the
standard performance expected from them. The manager has discussions with
employees about their performance achievements or failure.
E. Manager Performance Appraisal- This system is designed for the appraisal of the
manager. Here the feedback from the team members and client is collected to evaluate
the performance of the manager.
F. Project Evaluation Review- This is considered the best way to identify the
performance of an employee at work. After completion of each project, the
performance of the employee is evaluated, and based on the review another project is
assigned to the employee.
G. Sales Performance Appraisal- A specific monthly or yearly sale target is assigned to
the employee at the beginning of the year. At the end of the financial year, the
salesperson is judged on the set target and the sales result of the employee. In this
system, it is important to set a realistic sales target for the employee.

Performance Management Purpose & its Objectives in HRM

o It enables the employee to achieve the work performance of set standards
o It helps to identify the skills and knowledge required to perform a job efficiently.
o It is a very important factor to motivate employees and boost employee empowerment
o It provides a communication channel between the team and supervisor. It makes the
goal-setting process more transparent.
o It identifies the issues which leads the low performance and also resolve the issues by
providing suggestion about development interventions.
o It provides data for several important decisions such as promotions, strategic
planning, succession planning, and performance-based compensation.

The purposes of the performance management system are as follows:

1. Feedback Mechanism: The purpose of the performance management system is to
develop a systematic feedback mechanism. It creates a pathway through which the
employees become aware of their contribution to the organization in terms of
performance. It also conveys to the employee the improvement required in the
performance to meet the set standards.
2. Development Concern: It addresses the development issues in the organization. It
recognizes the skill and knowledge development required in the organization and
facilitates the training programs which are appropriate.
3. Documentation Concern: It creates a database for the organization in which all the
information about the employees is collected. The information about the performance
level, skills, knowledge, expertise, and regular rewards received by the employee is
maintained in this database.
4. Diagnoses of Organizational Problems: The up and down in the performance of the
employee is recorded using a performance management system. This record helps to
diagnose the organizational problems. It provides an idea about where the work is
 going wrong and what improvements are required to improve the performance status
of the organization.
5. Employment Decisions: Based on the performance management records various
important decisions are taken by the management. The decision includes an
arrangement of training and development programs, promotion, increase or decrease
in compensation, hiring decisions, and many more.

The advantages of the performance management system are as follows:

1. Documentation: With the help of a performance management system you can
generate a performance document for every employee for the particular financial year.
This paper can be maintained in the employee file to cover the performance graph of
the employee throughout the working years.
2. Structure: It creates a formal structure for communication between supervisor and
employee. It makes it necessary for supervisors and employees to take out time and
discuss the performance as well as bring out a solution to improve performance.
3. Feedback: Employees are often interested to know the feedback about their
performance in the organization. Here performance management system makes it
mandatory for the supervisor to provide timely performance feedback to the
employees.
4. Clarify Expectations: Using performance management system managers can clarify
the performance and behavior expectations that employees should understand.
5. Annual Planning: It plays a vital role in the annual planning of hiring, training and
development practices, and goal settings.
6. Motivation: As a part of a comprehensive compensation strategy the performance
management system is very helpful to motivate the employees to improve their
performance.

The disadvantages of the performance management system are as follows:

1. Creates Negative Experience: The system can create a negative experience for the
employees, if the performance appraisal is not done in a fair way and feedback is
conveyed in a wrong way.
2. Time-Consuming: It is very overwhelming for managers to evaluate and manage the
performance of hundreds of employees working in the organization. The process
becomes time-consuming and not worth it.
3. Natural Biases: As managers are responsible for several steps in the performance
management system a natural bias from the manager's end is expected. The natural
biases can result in rater errors.

Performance management feedback

Performance feedback is the most important part of the performance management system. It
is used by the organization in the following ways:
Areas to Improve: On a timely basis the management and the supervisor provide
information to the employee about the areas in which they can improve their performance. It
includes tips, ways, and coaching for performance improvement.
Game Plan for Improving: Motivation and direction is provided through feedback in order
to create a game plan to improve performance.
Achievements and Accomplishments: In a performance management system, the feedback
includes both positive and negative information about employee performance. Managers can
declare the achievements and accomplishments of the team member in public meetings or on
the common communication platform to motivate the performing employee. A one-to-one
meeting is suggested to convey the negative feedback to the employee.
Attitudes and Behaviours: The attitudes and behaviours of the employee are also addressed
during performance management. Through performance feedback, the managers put forward
the favourable behaviour expected from the employee to make a teamwork success. The
upbeat attitude of the employees keeps the organization thriving and inspired.
Goals for Next Year: In the yearly feedback meetings the managers discuss with the
employee about the upcoming challenges and work responsibilities. New goals and objectives
are set for the employees for the next financial year. The standard performance expected of
the employee is also conveyed in the performance feedback meeting.

Examples of Effective organization performance management

The regular performance management system sometimes does not provide the expected
results. Thus there is a need to innovate in the approach to performance management. Cargill
Inc is one such company that used a creative way to effectively use organizational
performance management for the betterment of the company. Cargill Inc is a food producer
company in Minneapolis. It was very difficult for the company to motivate and engage its
155,000 employees located worldwide. In 2012, the company introduced the ‘everyday
performance management’ system which acted as a turning point for the organization. The
system is used for on job conversation which is a part of the feedback and daily work
encouragement for the employees. The principles of the ‘everyday performance management
system is:
a) Effective performance management is not an annual thing it is an on-going process
b) The quality of the performance can be predicted using day to day activities and not
feedback forms
c) the most important factor of an effective performance management system is the
relationship between employee and their manager
d) It is essential to design a flexible performance management system to meet the different
business needs of the organization.
The leadership team of Cargill recognized that in order to see the visible difference in the
performance dedicated efforts of several performance management cycles are required. The
process of performance management was implemented with the involvement of senior
leaders and the participation of the employee. The HR team of Cargill kept special focus on:
a) Encouraging the managers who carry out day-to-day performance management by regular
rewards
b) Documentation of tips and experiences of implementation of a new performance
management system in the organization
c) The teams were accountable for the implementation of day-to-day performance
management in the organization.
d) Special efforts were taken to build up the skills required to implement the new
performance management system such as skills to deliver feedback and develop effective
two-way communication and coaching.
What is Potential?

Potential can be defined as ‘a latent but unrealised ability’. Potential includes the possible
knowledge, skills, and attitudes the employee may possess for better performance There are
many people who have the desire and potential to advance through the job they are in and
wanting the opportunity to operate at a higher level of competence in the same type of work.
The potential is the one that the appraiser should be able to identify and develop because of
the knowledge of the job. This requires an in-depth study of the positions which may become
vacant, looking carefully at the specific skills that the new position may demand and also
taking into consideration the more subjective areas like ‘qualities’ required. There may be
areas where the employee has not had a real opportunity to demonstrate the potential ability
and there may be areas with which you, as the appraisers are not familiar.

Indicators of Potential

• A sense of reality: This is the extent to which a person thinks and acts objectively,
resisting purely emotional pressures but pursuing realistic projects with enthusiasm.
• Imagination: The ability to let the mind range over a wide variety of possible causes
of action, going beyond conventional approaches to situations and not being confined
to ‘This is the way it is always being done!’
• Power of analysis: The capacity to break down, reformulate or transform a
complicated situation into manageable terms.
• Breadth of vision: The ability to examine a problem in the context of a much broader
framework of reference; being able to detect, within a specific situation, relationships
with those aspects which could be affecting the situation.
• Persuasiveness: The ability to sell ideas to other people and gain a continuing
commitment, particularly when the individual is using personal influence rather than
‘management authority’.

Purpose of Potential Appraisal

• to inform employees of their future prospects

• to enable the organisation to draft a management succession programme;
• to update training and recruitment activities;
• to advise employees about the work to be done to enhance their career Opportunities

Objectives of Potential Appraisal

One of the important objectives of potential appraisal is to help employees to move upwards
in the organization

Advantages of Potential Appraisal

• The organizations are able to identify individuals who can take higher responsibilities.
• It also conveys the message that people are not working in dead-end jobs in the
organization.
• The identification of employee potential to ensure the availability of people to do
different jobs helps to motivate employees in addition to serving organisational needs.
Steps of Potential Appraisal System

1. Role Description: A good potential appraisal system would be based on clarity of

roles and functions associated with the different roles in an organisation. This requires
extensive job descriptions to be made available for each job. These job descriptions
should spell out the various functions involved in performing the job.
2. Qualities Required: Besides job descriptions, it is necessary to have a detailed list of
qualities required to perform each of these functions. These qualities may be broadly
divided into four categories:
1. technical knowledge and skills
2. managerial capabilities and qualities
3. Behavioural capabilities
4. Conceptual capabilities.
3. Indicators of Qualities: A good potential appraisal system besides listing down the
functions and qualities would also have various mechanisms for judging these
qualities in a given individual. Some of the mechanisms for judging these qualities
are:
1. Rating by others
2. Psychological tests
3. Simulation games and exercises
4. Performance appraisal records.
4. Organising the System: Once the functions, the qualities required performing these
functions, indicators of these qualities, and mechanisms for generating these
indicators are clear, the organisation is in a sound position to establish and operate the
potential appraisal system. Such establishment requires clarity in organisational
policies and systematisation of its efforts.
5. Feedback: If the organisation believes in the development of human resources it
should attempt to generate a climate of openness. Such a climate is required for
helping the employees to understand their strengths and weaknesses and to create
opportunities for development. A good potential appraisal system should provide an
opportunity for every employee to know the results of assessment. He should be
helped to understand the qualities actually required for performing the role for which
he thinks he has the potential, the mechanisms used by the organisation to appraise his
potential, and the results of such an appraisal.
A good potential appraisal system provides opportunities continuously for the employee to
know his strengths and weaknesses. These are done through periodic counselling and
guidance sessions by either the personnel department or the managers concerned. This should
enable the employee to develop realistic self-perceptions and plan his own career and
development.

Career Management
Career management is conscious planning of one’s activities and engagements in the
jobs one undertakes in the course of his life for better fulfilment, growth and financial
stability. It is a sequential process that starts from an understanding of oneself and
encompasses occupational awareness.

An individual’s career is the sole source of one’s natural expression of self. One school of
thought describes work as the purpose of life and the source of one’s expression and the
purpose of being or existence. Yet others believe that there is a wide difference between an
individual’s career and his life. In any case, career is an integral component of one’s life and
therefore the need for its management.

Career management is more or less like the organisational management; after all an
organisation is nothing but an assortment of individuals! The process of career management
begins with the formulation of goals and objectives those that are short term or meant to be
achieved in the short run.

This is a tedious task compared to a long term career goal which is more or visionary in
nature. Since the objective is short term or immediate, it is more of action oriented. Second it
demands achievement every day, every moment. Again this step can be very difficult for
those who are not aware of the opportunities available or are not completely conscious of
their talents. However more specific, measurable and achievable the goals greater are the
chances of the management plan bearing fruit.
Achievement of goal requires a well chalked strategy, which implies a plan of action to
achieve the goal. This has to be followed by drafting or establishment of procedures / policies
/ norms or rules that govern action or practice.

The final step in the career management process is evaluation of the career management plan
for ensuring that progress is being made or if there is a need to introduce some changes in the
latter.

Indicators of Career Program Effectiveness

▪ Matching the Standards with the Results: Comparison between already established
goals and objectives and achievement is the biggest indicator of the effectiveness of a
career program. Lesser the difference between the two, more successful the program
is. But before matching the two, HR managers should make sure that the set standards
were feasible to achieve and achieved output is calculated without any bias.
▪ Greater Self Awareness among Employees: The effectiveness of the program can
also be measured by the degree of increase in self awareness among employees. If
they feel that they have achieved greater self awareness and self-determination and
acquired necessary and useful information about their career, the program is definitely
a big success.
▪ Balance between Employee and Organization Requirements and
Objectives: Implementation of a career development program should result in better
communication at all levels within the organization, a balance match between
individual and organizational career and identification of talent pool by HR specialists
are other major indicators that can help you measure the effectiveness of a career
development program.
▪ Changes in Performance Indexes: Improved employee performance ratings,
improved employee morale, reduced turnover rates, reduced employee absenteeism,
increased promotions from within and reduced time to fill job openings are other
positive indicators for measuring the effectiveness of a career program.

Along with this, a positive change in the attitude and behaviour of employees and adequacy
of organizational career information can also be seen as indicators of career program
effectiveness.

Tips for Individuals to Handle Workplace Changes

▪ The main focus of organizations today is on the employability of individuals. They

should not hold on to a specific job. Rather they should focus on developing skills and
competencies that are portable and can be used anywhere and everywhere in the time
crisis.
▪ Individuals must take care of their career needs, desires and aspirations. They need to
take control of their careers and look out for their career interests. After all, they also
have right to look out for their dream jobs.
▪ They must think of developing new and better personal skills in order to achieve their
dream careers. Plus, they should make every effort to assess themselves and their
competencies and plan their careers accordingly. Most organizations lack in employee
career planning. In such a scenario, the entire responsibility comes on individuals to
choose their own direction.
▪ Employees must invest in reputation building, networking, socializing and peer
learning relationships so that they can fulfill their desires and aspirations.
 ▪ Individuals must be committed towards life long learning to keep their skills updated
and relevant to increase their employability.

Recommendations for Organizations

▪ Although it is an employee’s responsibility to manage his or her own career but times
have changed and it is now employer’s responsibility too to provide their employees
with tools and techniques, professional career guidance and opportunities so that they
can enhance their skills and re-invent themselves.
▪ It is employer’s responsibility to create an environment that supports continuous
learning and overall development of individuals. It can be done through professional
training, associations, workshops, etc. Organizations such as Motorola, Intel and Ford
are known as people developers just because they offer supportive environment to
their employees.
▪ The organizations must make arrangements to provide additional training such as
orientation training, core training and computer training in order to increase
employability of the employees. Along with this, they should support this with a
proper reward system.
▪ Before hiring new candidates or outsourcing, organizations must try to redeploy their
already existing employees and teach them new skills.
▪ They should assist employees in striking a balance between their work and non-work
life so that they can produce better output at work.

Organizational Assessment Programs

▪ Assessment Centres: Assessment centres are popular decision-making tools that are
used by most companies including Pratt & Whitney, AT & T, Sears Reobuck & Co.,
TVA, JC Penney, IBM, GE and Bendix. All the individuals (participants) in
assessment centres are engaged in a variety of exercises and put in different situations
including tests, group discussions, interviews, in-baskets and business games. Their
performances are evaluated by the experts. After that a panel of trainers gives them an
in-depth feedback on their strengths and weaknesses. They then are given an
opportunity to improve their skills and set their future career goals.
▪ Psychological Testing: Psychological testing consists of written test that help
individuals as well as organizations understand their personality, career interests,
work attitudes, vocational interests and other personal characteristics. It reveals their
career needs and preferences and then they are given jobs that suit their personality as
well as skills and competencies.
▪ Promotability Forecasts: Promotability forecasting is a tool that helps organizations
is identifying the individuals with exceptionally high potential to perform different
types of jobs. This technique is used in making early forecasts. Once individuals are
identified, they are made to attend conferences and training programs and other
relevant developmental experiences in order to groom them for higher positions.
Several companies have different programs to groom different groups of employees.
Along with this, high potential employees are given developmental assignments that
are a real test for them.
▪ Succession Planning: Succession planning is a formal process with an aim to groom
lower level individuals to replace next-higher level individual in case he or she leaves the
organization or gets retired. The process involves continuous review top executives and the
next lower level employees in order to determine whether he or she is the right backup for the
senior executive or not. This is the most important exercise which often takes several years in
grooming the next person for the senior position. It includes overall development of the
selected individual and continuous review of his or her performance. This is a common
assessment tool in Fortune 500 companies that choose their CEO by the same process.
Organizations create a pool of talented employees who have high leadership potential. They
are put to different jobs in different situations and are evaluated by a panel of experts. The
process is usually restricted to senior level management only.

Job Evaluation

Job evaluation – which is an accepted tool in the hands of the personnel management for
avoiding any inconsistency in job rates and for achieving uniformity in the entire wage
structure – is done through certain processes. The process – elements are its components.
At the outset, job analysis to secure job date or information is necessary. For this purpose, job
description and job specification are undertaken. In job description – duties, responsibilities
and job conditions are described and in job specification – human qualities needed for the job
are described. In the next stage, job rating is done where job description and specification
both on the basis of a pre-determined plan are studied. This study reveals a relative score or
value to each job. Then comes the question of money allocation. As per planned system or
scale, a money rate of pay to each job is allotted.
The main characteristics of job evaluation may be summed up as:
1. It is a method with a systematic approach.
2. It is an analysis of the work involved in its starting point.
3. It is an attempt to determine the requirements of the work involved for any incumbent.
4. It is a process by which jobs in an organisation are appraised.
5. It is a process of analysing and describing positions, grouping them, and determining their
relative value by comparing the duties of different positions in terms of their different
responsibilities and other requirements.
6. It is a system to deal exclusively with assessment of the job and not concerned with
employees assigned to the job.
7. It is designed only to establish wage differentials and is not concerned with the absolute
wage level.

The objectives of job evaluation are enumerated below:

1. To secure and maintain complete, accurate and impersonal descriptions of each distinct job
or occupation in the entire plant.
2. To provide a standard procedure for determining the relative worth or value of each job in
a plant.
3. To determine a rate of pay for each job which is fair and equitable with relation to other
jobs in the plant, community and industry?
4. To ensure that like wages are paid to all qualified employees on like work.
5. To promote fair and accurate consideration of all employees for advancement and transfer.
6. To provide a factual basis for the consideration of wage rates for similar jobs both within
the community and within the industry.
7. To provide information for the work organisation, employee’s selection and training and
numerous other important purposes.

The significance of job evaluation can be determined through the following points:
i. Taking account of all the factors that are useful in determining wages and salaries
ii. Maintaining harmony between the union and the management.
iii. Standardizing the wage determination process
iv. Compensating the employees as per the requirements of the job to avoid biasness and
promote equality in payment of wages
v. Minimizing the cost of recruitment.
These requisites are as follows:
i. Determining the job system and design
ii. Facilitating participation of recognized unions
iii. Ensuring simplicity in job evaluation system
iv. Ensuring that market surveys are carried out successfully before job evaluation
v. Assuring that the committee has representatives from all the parties, labour, staff, and
management
vi. Encouraging active participation from each member
vii. Communicating clearly the objectives of job evaluation process
viii. Facilitating the hiring of outside professionals to bring expertise to the process.
ix. Availability of job analysis information, i.e. job description and job specification.
x. Job evaluation system should be simple and easy to understand.
xi. The job evaluation system should be taken as an adjustment to collective bargaining.
xii. Active involvement of a trade union and employees is essential.
xiii. Availability of industry rates (through labour market survey) to know the prevailing
salary rates.
xiv. Selection of groups of employees and jobs to be covered by the evaluation system.
xv. Proper communication of objectives and implication of job evaluation to employees and
unions to avoid any misunderstanding.
xvi. Involvement of outsider experts/consultants such as specialists from National
Productivity Council, administrative staff college of India, etc. These people have a rich
experience in job evaluation.

Job evaluation typically, involves four steps:

1. Job analysis;
2. Job documentation;
3. Job rating using the organisation’s job evaluation plan; and
4. Creating the job hierarchy.
Step # 1. Job Analysis:
Job analysis is the process of collecting and evaluating relevant information about jobs. The
data collected should clarify the nature of the work being performed (principal tasks, duties,
and responsibilities) as well as the level of the work being performed. Information should
include the types and extent of knowledge, skill, mental and physical efforts required, as well
as the conditions under which the work is typically performed.
Step # 2. Job Documentation:
Job documentation is the process of recording job content information, usually in the form of
a written job description, one of the most important products of job analysis. Most job
description of the duties, examples of work typically performed, and a statement identifying
the knowledge, abilities, skills, and other characteristics (KASOCs) that are required to
satisfactorily perform the duties. The ideal job description for compensation reflects not just
information concerning “what” a job does, but also the “how” and “why” the duties.
Step # 3. Rating the Job:
In the third step, a job’s assigned duties are assessed using the job evaluation plan, or
instrument selected by the organisation.
Job evaluation approaches focus attention on three basic models:
a. Job ranking,
b. Job classification, and
c. Point factor plans.
Each of these methods is described and explained below:
a. Job Ranking:
The oldest, fastest, and simplest method of job evaluation, job ranking involves ordering jobs
from highest to lowest based on some definition of value or contribution. The job that
evaluators believe to be the most valuable is placed first, the job that evaluators believe to be
the least valuable is placed last and other jobs are ranked in a similar fashion in between,
producing a hierarchy.
This method typically looks at whole jobs, rather than their component parts, and gives little
attention to the particular collection of tasks that comprise any single job. In addition, the
basis for comparison is limited to the other jobs in the organisation. No attempt is outside the
organisation.
Two approaches to this method are most common – (i) alternation ranking; and (ii) paired
comparison. Alternation ranking involves ordering the positions alternatively each extreme.
For example, beginning with a list of 15 jobs, evaluators try to agree on which is the most
valuable among the collection of jobs, then which job is the least valuable. In the next round,
evaluators will try to agree on which of the remaining 13 jobs is the most valuable, then
which is the least valuable. This alternating process continues until all jobs have been ranked
and a hierarchy of jobs has been developed.
In the paired comparison approach, each job is evaluated by comparing it with every with
other job (one at a time). For each two position comparison, the more valuable job is given a
score of and when all the possible comparisons have been made, the hierarchy of jobs is
developed by counting the number of times that a job was awarded.
Although it is the simplest method, ranking is seldom the recommended approach. The
ranking criteria are usually inadequately defined so that the resultant hierarchy is difficult to
explain to employers. In addition, since the approach focuses on the total job, often the
highest level duty becomes the basis for the evaluation.
Finally, the ranking approach yields limited information concerning how much more valuable
one job is over another, or how the KASOC of one job relate to those of another. This could
be a key drawback for an organisation that is committed to employee development and
profitability or to creating cross-training opportunities and career ladders.
b. Job Classification:
This method was originally developed, and continues to be used by the government. Within
this approach, each job is measured against a pre-existing set of job classes that have been
designed to cover the full range of possible positions that would be employed by the
government. Broad descriptions or specifications are designed in advance to delineate the
characteristics of the jobs that would be placed within that category, within this method, job
evaluation involves comparing a position with these generic descriptions and deciding where
it fits best; that is, which job level of responsibility assigned to the job under review.
The classification System is relatively inexpensive and easy to administer. But as the number
and diversity of position grow, it is increasingly difficult to write level descriptors in advance
that will cover the full range of jobs. Without this specificity, the classification method
becomes ambiguous and difficult to communicate to workers. In addition, like the ranking
method, it is difficult to know how much difference exists between job levels.
Finally, in any whole job rating system, one must be cautious about the same type of rather
errors that can creep into performance appraisal. For example, a halo-type error might be one
particular component of a position such that he or she assigns the entire job to a grade level
 that might not be warranted, particularly if the job involves considerable work of a routine
nature.
c. Point Factor Method:
Under a point factor plan, various factors are the basis for determining relative worth. Factors
are the specific characteristics of jobs that will be measured. In choosing factors, the
organisation decides – “what particular job components do we value? What job
characteristics will we pay for?” Mental effort, responsibility, complexity of works physical
demands, skill required, and working conditions are the most common factors. Factors
chosen by a company for use in a job evaluation plan should be for four characteristics.
First, they should represent the job characteristics for which the company is willing to pay.
Second, they should be present to varying extent in the jobs to be evaluated. Unless they vary
across the population of jobs, there is no point in viewing them as distinguishing features of
jobs. Third, they should represent factors that comply with the equal pay act’s skill, effort,
responsibility, and working conditions framework. Finally, the factors should be business
related; that is, they should support the organisation’s culture and values, its chosen strategy
and direction.

Compensation Management

Compensation is referred to as money and other benefits received by an employee for

providing services to his employer.

Compensation refers to all forms of financial returns: tangible services and benefits
employees receive as part of an employment relationship, which may be associated with
employee’s service to the employer like provident fund, gratuity, insurance scheme, and any
other payment which the employee receives or benefits he enjoys instead of such payment.

According to Dale Yoder, “Compensation is paying people for work.”

“Compensation is what employees receive in exchange for their contribution to the

organization.” – Keith Davis.

In the words of Edwin B. Flippo, “The function compensation is defining as adequate and
equitable remuneration of personnel for their contributions to the organizational objectives.”

Different Types of Compensation

There are different types of compensation. Schuler identified three major types of
compensation, which are mentioned below;

1. Non-monetary Compensation.
2. Direct Compensation.
3. Indirect Compensation.

Non-monetary Compensation

The non-monetary compensation includes any benefit that an employee receives from
an employer or a job that does not involve tangible value. Examples are career
development and advancement opportunities, opportunities for recognition, and work
environment and conditions.

Direct Compensation

Direct compensation comprises the salary that is paid to the employees along with the other
health benefits. Money is included under direct compensation. An employee’s base wage can
be an annual salary or hourly wage and any performance-based pay that an employee
receives. Direct compensation consists of pay received in wages, salaries, bonuses, and
commissions provided at regular and consistent intervals. These include the basic salary,
house rent allowances, medical benefits, city allowances, conveyance, provident funds, etc. It
also includes bonuses, payments for holidays, etc.

Indirect Compensation

Indirect compensation can be thought of as the nonmonetary benefits an employee gets from
the organization. It includes everything from legally required public protection programs such
as Social Security to health insurance, retirement programs, paid leave, childcare, or moving
expenses. While benefits come under indirect compensation and may consist of life, accident,
health insurance, the employer’s contribution to retirement, pay for a vacation, and
employers’ required payment for employee welfare as social security.

Rewards and recognitions, promotions, responsibility, etc., are factors that induce
confidence in the employees and motivate them to perform better. It also instills the faith in
them that their good work is being recognized, and they can boost their career opportunities if
they continue to work harder.

Objectives of Compensation Management

The basic objective of compensation management can be briefly termed as meeting the needs
of both employees and the organization. Employers want to pay as little as possible to keep
their costs low. Employees want to get as high as possible.

1. Acquire qualified personnel.

Compensation needs to be high enough to attract applicants. Pay levels must respond to the
supply and demand of workers in the labour market since employees compare for workers.
Premium wages are sometimes needed to attract applicants working for others.

2. Retain current employees

Employees may quit when compensation levels are not competitive, resulting in higher
turnover. Employees serve organizations in exchange for a reward. If pay levels are not
competitive, some employees quit the firm. To retain these employees, pay levels must be
competitive with that of other employers.

3. Ensure equity
To retain and motivate employees, employee compensation must be fair. Fairness requires
wage and salary administration to be directed to achieving equity. Compensation
management strives for internal and external equity. Internal equity requires that pay be
related to the relative worth of a job so that similar jobs get similar pay. External equity
means paying workers what other firms in the labour market pay comparable workers.

Reward desired behaviour

Pay should reinforce desired behaviours and act as an incentive for those behaviours to occur
in the future. Effective compensation plans reward performance, loyalty, experience,
responsibility, and other behaviours. Good performance, experience, loyalty, new
responsibilities, and other behaviours can be rewarded through an effective compensation
plan.

Control costs

A rational compensation system helps the organization obtain and retain workers’ reasonable
costs. Without effective compensation management, workers could be overpaid or underpaid.

Comply with legal regulations

A sound wage and salary system considers the legal challenges imposed by the government
and ensures employers comply.

Facilitate understanding

The compensation management system should be easily understood by human resource

specialists, operating managers, and employees.

Further administrative efficiency

Wage and salary programs should be managed efficiently, making optimal use of the HRIS,
although this objective should be a secondary consideration with other objectives.

Motivating Personnel

Compensation management aims at motivating personnel for higher productivity.

Monetary compensation has its own limitations in motivating people for superior
performance. Besides money, people also want praise, promotion, recognition,
acceptance, status, etc., for motivation.

Consistency in Compensation

Compensation management tries to achieve consistency-both internal and external in

compensating employees. Internal consistency involves a payment based on the criticality of
jobs and employees’ performance on jobs.
 Pre-requisites for Effective Compensation Management

An effective compensation system should fulfil the following criteria:

1. Adequate: The compensation system must meet minimum governmental, union, and
managerial pay level positions.
2. Equitable: Care should be taken so that each employee is paid fairly, in line with his/her
abilities, efforts, education, training, experiences, competencies, and so on.
3. Balanced: Pay, benefits, and other rewards must provide a reasonable compensation
package.
4. Secure: The compensation package must adequately cover employees’ security needs.
5. Cost-Effective: Pay must be neither excessive nor inadequate, considering what the
enterprise can afford to pay.
6. Incentive Providing: The compensation package should be such that it generates motivation
for effective and productive work.
7. Acceptable to all Employees: All employees understand the pay system well and feel it is
reasonable for the enterprise and the individual.

Importance of Sound Wage Structure

A sound wage policy is to adopt a job evaluation program to establish fair differentials in
wages based upon differences in job contents.Besides the basic factors provided by a job
description and job evaluation, those that are usually taken into consideration for wage and
salary administration are;

1. The organizations’ ability to pay

Wage increases should be given by those organizations which can afford them.

Companies that have good sales and, therefore, high profits tend to pay higher those running
at a loss or earning low profits because of a higher cost of production or low sales. In the
short run, the economic influence on the ability to pay is practically nil.

Regardless of their profits or losses, all employers must pay no less than their competitors
and need to pay no more if they wish to attract and keep workers. In the long run, the ability
to pay is important.

2. Supply and demand of labor

If the demand for certain skills is high and supply is low, the result is a rise in the price to be
paid to these skills. The other alternative is to pay higher wages if the labor supply is scarce
and lower wages when it is excessive.

Similarly, if there is a great demand for labor expertise, wages rise; but if the demand for
workforce skills is minimal, the wages will be relatively low.

3. Prevailing market rate

This is known as the ‘comparable wage’ or ‘going wage rate’ and is the widely used criterion.
An organization’s compensation policy generally tends to conform to the wage rate payable
by the industry and the community. This is done for several reasons.

First, competition demands that competitors adhere to the same relative wage level. Second,
various government laws and judicial decisions make the adoption of uniform wage rates an
attractive proposition. Third, trade union encourages this practice so that their members can
have equal pay, equal work, and geographical differences may be eliminated. Fourth, a
functionally related firm in the same industry requires essentially the same quality of
employees with the same skill and experience. This results in a considerable uniformity in
wage and salary rates. Finally, if the same or about the same general rates of wages are not
paid to the employees as are paid by the organizations’ competitors, it will not attract and
maintain a sufficient quantity and quality of the workforce.

4. Cost of living

The cost of living pay criterion is usually regarded as an automatic minimum equity pay
criterion. This criterion calls for pay adjustments based on increases or decreases in an
acceptable cost of living index. When the cost of living increases, workers and trade unions
demand adjusted wages to offset the erosion of real wages.

5 Living wage

The living wage criterion means that wages paid should be adequate to enable an employee to
maintain himself and his family at a reasonable level of existence. However, employers do
not generally favour using the concepts of a living wage as a guide to wage determination
because they prefer to base an employee’s wages on his contribution rather than on his need.

6. Psychological and Social Factors

Psychologically, persons perceive the level of wages as a measure of success in life; people
may feel secure; have an inferiority complex, seem inadequate, or feel the reverse of all these.
They may not take pride in their work or in the wages they get. Therefore, these things should
not be overlooked by the management in establishing a wage rate. Sociologically and
ethically, people feel that “equal work should carry equal that wages should be commensurate
with their efforts, that they are not exploited, and that no distinction is made based on caste,
colour, sex or religion.”

Challenges or Problems of Compensation Management

Even the most rational methods of determining pay must be tempered by good judgment
when challenges arise. The implications of these demands may cause analysts to make further
adjustments to compensation.

1. Strategic Objectives

Compensation management is not limited to internal and external equity. It also can be used
to further an employer’s strategy. Employee compensation might have been initially anchored
by the relative worth of jobs and the prevailing wage rates in the local market.
2. Prevailing Wage Rates

Market forces may cause some jobs to be paid more than their relative worth. Demographic
shifts and relative supply and demand relationships affect compensation.

3. Union Power

When unions represent a portion of the workforce, they may obtain wage rates that are out of
proportion to the relative worth of the jobs.

Unions may also limit management’s flexibility in administering merit increases since unions
often argue for raises based on seniority and are applied across the board equally.

4. Government Constraints

The government sets minimum wage, overtime pay, equal pay, child labour, and record-
keeping requirements. The minimum-wage and overtime provisions require employers to
pay at least a minimum hourly rate regardless of the job’s worth.

5. Comparable Worth and Equal Pay

Beyond “equal pay for equal work” is the idea of “comparable pay for comparable work”
called comparable worth. It requires employers to pay equal wages for jobs of comparable
values. Comparable worth is used to eliminate the historical gap between the incomes of men
and women.

6. Compensation Strategies and Adjustments

Most organizations have compensation strategies and policies that cause wages and salaries
to be adjusted. A common strategy is to give non-union workers the same raises given to
unionized employees; this is often done to prevent further unionization.

7. International Compensation Challenges

The globalization of business affects compensation management. Compensation analysts

must focus not only on equity but on competitiveness too. The growing globalization of
business also means a greater movement of employees among countries. As employees are
relocated, compensation specialists are challenged to make fair adjustments to the employee
and the company while keeping competitiveness in mind.

8. Productivity and costs

Regardless of the company or social policies, employers must make a profit to survive.
Without profits, they cannot attract enough investors to remain competitive. Therefore, a
company cannot pay its workers more than the workers give back to the firm through their
productivity. The company needs some creative techniques for compensation.
Rewards and Recognition

Rewards and Recognition is a system where people are acknowledged for their performance
in intrinsic or extrinsic ways. Recognition & Reward is present in a work environment where
there is appropriate acknowledgement and appreciation of employees’ efforts in a fair and
timely manner. This includes appropriate and regular financial compensation, as well as
employee or team celebrations, recognition of years served, and/or milestones reached.

Employee rewards and recognition system is not just a positive action towards employees. If
it is implemented effectively, it proves to be an efficient tool in encouraging the employees to
create and bring business for the company. Recognizing the efforts of employees and
encouraging their morale results in increased productivity and decreased attrition rate. It is a
documented fact that an encouraged and dedicated workforce can change the fate of a
company. Establishing and executing a reward system needs careful analysis of the company
policies and procedures. Deciding how to recognize employees’ efforts and what to provide
them needs thorough analysis of duties and risks involved in a particular job.
Types of Rewards
Reward system of a company should also be in alignment with its goals, objectives, mission
and vision. On the basis of the job profile, both monetary and non-monetary rewards can
motivate employees to contribute more to the organization.
Monetary Rewards
A hike in salary, incentives, movie tickets, vacation trips, monetary allowances on special
occasions, redeemable coupons, cash bonuses, gift certificates, stock awards, free or
discounted health check-ups for the complete family and school/tuition fees for employees’
children come under this category.
Non-monetary Rewards

Non-monetary rewards include awards, certificates, letters of appreciation, dinner with boss,
redecoration of employee cabin, membership of recreation clubs, perks, use of company
facilities, suggestion awards, tie-pins, brooches, diaries, promotion, a say in management, etc.
A mixture of monetary and non-monetary rewards works wonders and drive employees to act
competently continuously. A proper and efficient employee reward and recognition program
creates harmonious relationships between employees and the employer.
Flexible Pay
The practice of relating pay to performance has been around for a while. However, what’s
new is that the percentage of pay that is related to performance and the way in which the
same is structured around different elements of performance.
One of the key elements of this flexible pay plan is the strategy of relating pay to
performance. This strategy has been followed by many multinational companies worldwide
and consists of the overall pay structure being broken down into elements.
The variable pay would be paid out as a percentage of the complete package, subject to the
performance of the employee. For instance, if the employee gets a grade of 3 on a scale of 1
to 5 (with 1 as the highest and 5 and the lowest grade), the variable pay would be 60-70% of
the eligible amount and if the employee gets a grade of 2, the variable pay would be 110-
120% of the eligible amount. The variable component of the salary is determined according
to the performance of the employee.
The international practice is to increase the element of the variable pay more than the
hierarchy. This would state that at senior levels of the employee hierarchy, the variable
component can be as high as 50-60% of the overall pay.

Employee Separation Practices

Employee Separation is the discontinuation of his employment contract with the company.
The termination of employee’s services can be voluntary or involuntary. This can take the
form of Retirement, Resignation, Discharge, Layoff, etc.
The companies and employees must specify valid reasons behind separation. The process
may be upsetting for both, company and its employees. Hence, the employee separations
should be planned and reasonable.
The employer should provide the required guidance to employees. The firms may conduct
discussions and counselling sessions during separation. Exit Interviews of the separated
employee are conducted. It helps to gather in-depth information about company’s strengths
and weaknesses.

Types of Employee Separation

Either employer or employee may propose separation due to several reasons. The employee
separation can be classified into:

• Voluntary Separations
• Involuntary Separations
Voluntary Separations

Here, the employee discontinues his services on his own consent in the organization. The
most common forms of voluntary separation are:

1. Resign or Quit
2. Retirement

Resign or Quit

The employee may quit his job due to personal or professional reasons. It may affect the
goodwill of the company when it occurs often. The employee may leave because of reasons
like:

• Better Career Opportunities

• Company Policy
• Health
• Relocation
• Job Dissatisfaction, etc.

Retirements

Retirement is the completion of employees occupational tenure. This involves

discontinuation of service as the employee reaches the age of retirement.
The employees themselves take retirement from the organization through voluntary
retirement. Generally, the age of retirement is 60 years. Unlike resignation in retirement,
employees gain certain benefits like:-

• Lump-Sum Payment
• Pension
• Leave Encashment
• Gratuity, etc

Retirement can be of two types:

Compulsory Retirement

When employees reach the age of superannuation, they have to retire compulsorily. The
retirement age varies in different sectors.

In the government sector, the retirement age is 58 or 60 years. Whereas there is no fixed age
of retirement in the private sector. It depends on the person capabilities of working.

Voluntary Retirement Scheme(VRS)

The employees can opt for retirement before reaching retirement age. It is also known as
the Golden Handshake Scheme. The organization offers VRS to its employees.

The companies offer VRS to cut costs, get a manageable workforce or face business losses.

Note:- Both the employees and the organization can propose VRS and Resignation.

Involuntary Separations

Here, the employer terminates the services of their employees due to organizational reasons.
The organizations may opt for employee separation because:

• They may face ups and downs in the business cycle

• Difficulty in handling the workforce
• Unprofessional behaviour of the employees

The different types of involuntary separation are:

1. Discharges and Dismiss

2. Layoffs
3. Retrenchment
4. Downsizing and Rightsizing
5. Compulsory Resignation

Discharges and Dismiss

Discharge is an involuntary separation in which the organization ceases employee services.

The discharge of the employee might be due to his non-productivity. While discharging, an
employee may get offended. It must be a thoughtful decision and adopted in only extreme
cases. It may be a product of:

• Job Misfit
• Bad Organizational Behaviour
• Absenteeism

Dismissal is the termination of the employee resulting from his non-performance or

misconduct. It is the last step the management take as a punishment to the employee. It may
impose adverse effects on employees career opportunities in future.

Layoffs

A Layoff is when an organization separates their employees for a short stretch of time. The
organization recalls the employees after the layoff period is over. The objective of laying off
the workforce is to make the firm lean in shape and remain competitive.

The organization carries out layoff of employees based on their excellence or seniority. The
reasons behind layoffs can be:

• Merger
• Acquisition
• Competitive Environment
• Changes in Technology
• Downsizing, etc

The management must specify and communicate the reasons and basis of layoff. It has a
negative impact on the victims, survivors and managers involved in the layoff process.

Points to Remember

• The employee must receive compensation during the tenure of layoff. It can be half the
remuneration paid to the employee.
• Organizations might follow the Last-In-First-Out approach.
• The employer should convey the period of layoff if possible.
• Management should recall productive employees first.

Retrenchment

In this, organizations need to separate employees permanently due to economic reasons. The
organizations may not recall employees. But they can prefer retrenched workers at the time of
vacancies. The following can be the economic reasons behind retrenchment:-

• Surplus Staff
• Machinery Installation
• Rationalization
• Department Closure
• Decreasing Demand for Products
• Economic Slowdown
The firm has to seek approval from the government. Along with that, it provides a notice to
the employees beforehand. Like layoff, the organization must pay compensation to its
workforce.

Downsizing and Rightsizing

The organizations restructure themselves by downsizing and rightsizing their workforce.

Rightsizing includes cost-saving and adjusting the crew to exact fit. The organization may cut
costs by part-time work, reduced wages, reduced workweeks, etc.

Downsizing refers to making the organization lean by reducing the force. Layoffs are
mandatory in Downsizing, whereas Rightsizing may adjust the existing workforce.

Compulsory Resignation

The employer may ask its employee to leave the organization or resign. The organizations opt
for obligatory resignation in critical situations and avoid dismiss.

Compulsory Resignation is a better option than Dismissal or Discharge. The organization’s

goodwill remains unaffected. As well as it does not affect the employee’s career too.

Benefits of Employee Separation

To Organizations

• It enables a reduction in labour costs

• Replacement of the poor performers
• It increases opportunities for diversification and enhancement
• New recruits bring synergy within the organization
• Results in a disciplined work environment
• Reshape organization into the right size

To Employees

• Better career opportunities

• Get away from a troublesome workplace
• Enjoy benefits associated with retirement schemes

Employee Separation Procedure

 1. Notification: Both the company and the employee may send a notification to the HR
department. The notification addresses the request or decisions about separation. It
specifies the following details:
o Identity of the employee
o A valid reason for separation
o The final day of work
2. Termination Checklist: The manager must collect data, documents, and properties
from the employee. He must complete and submit the termination checklist.
The manager handovers the collected stuff to the respective departments. This process
takes place on the employee’s final working day.
3. Final Payment: Employee submits no dues to the finance department, after completing
the necessary documentation. The finance department will disburse the final payment
to the employee.

Cost and Separation

There are certain costs associated with employee separation. The separation involves the
elimination or replacement of the employee. It consists of both cost-cutting as well as cost-
addition, depending on the two factors:-

1. Elimination of employee position

2. Replacement of employee

Eliminating the employee’s position reduces cost in the long run. The firms can save the
cost involved in paying compensation and add-on benefits.

Replacement of employees results in the cost addition. The replacement involves employee
separation and recruitment. It involves the appointment of another employee for the same
position. The recruitment process involves several costs like:

• Recruitment Cost
• Selection Cost
• Training and Development Cost
• Compensation Pay and Benefits

Managing Separation

Separation takes place in every organization, either voluntary or involuntary. It possesses

certain benefits and carries some costs. The organizations must aim to reduce costs and
amplify the associated benefits.

Any separation relies upon employee’s performance and replaces ability. The preparation
of the Performance-Replace ability Strategy Matrix depends on the above elements.
This model places employees in six cells depending on their performance and replaceability.
These cells show problematic or fruitful turnover. Also, they display suitable strategies for
managing each turnover. The strategies may include Retention or Termination.

Organizations usually retain high performing employees. Formulation of retention strategies

for such employees are:

1. More career development opportunities

2. Customized incentives based on performance
3. Backup for the employees who are hard to replace

The organization terminates the employee with low performance and easy replacement. It
results in cutting costs and a leaner organizational structure.

Conclusion

Employee separation is the discontinuation of employee’s services from his workplace. The
reasons are personal or organizational factors.

Employee separation has several benefits. But it has adverse effects on the mental health of
the departing and existing employees. Firms should manage separations strategically and try
to minimize their impact.

Industrial Relations

Industrial relations is that field of study which analyzes the relationship among the
management and the employees of an organization at the workplace and also provides a
mechanism to settle down the various industrial disputes. This concept evolved in the late
19th century because of the industrial revolutions.
It is made up of the following two terms:
‘Industry‘ can be viewed as an economic activity (i.e., manufacturing, producing or
processing of goods or services) which is performed by a group of individuals.

‘Relations‘ here refers to the connection and communication which pertains between the
employer and the employees within a workplace.

Factors Affecting Industrial Relations

Industrial relations deal with human behaviour and management of personnel in an

organizational setup. The various factors that influence the relationship between the
administration and the employees in an organization are as follows:

Individual Behaviour

Every person has a different perception, background, skills, knowledge, experience and
achievements which influences an individual’s behaviour. The employees, therefore, behave
differently in different situations, thus impacting the work environment in the organization.

Organizational Structure

The hierarchical structure creates more formal relationships among the employees belonging
to different hierarchical levels in an organization. Also, the delegation and execution of
decision-making power by the superior influences the industrial relations between the
managers and the employees.

Psychological Factors
An employee’s attitude and mentality towards the employer and the given task; and the
employer’s psychology towards the workers can be positive or negative, which ultimately
impacts the employee-employer relationship.

Leadership Style

Every manager possesses certain leadership traits and different style to function even in a
formal organization. Through his/her formal or informal ways of generating team spirit and
motivating the employees, he/she impacts the organization’s industrial relations.

Economic and Technical Environment

To cope up with the changes in the economic conditions or technology, organizations need to
restructure the task of the employees including their work duration, conditions and wages;
which leads to a difference in their behaviour, attitude, adapting spirit, etc. towards the
organization and its people.

Legal and Political Environment

The legal framework and political circumstances influence the organization and its industrial
relations. It contributes to the framing of rules, rights, authority, powers, roles and
responsibilities of all the parties of the organization.

Parties Involved in Industrial Relations

To understand the concept of industrial relations, we should know that; who all are
responsible for developing cordial relationships in the organization?

The different persons holding distinct positions in the organization and the external or
internal associations involved in the process of building strong industrial relations can be
bifurcated into the following two categories:

Primary Parties

Those persons or associations which are directly associated with or influenced by the
functions of industrial relations are as follows:
Employees

The workers who provide their services to the organization are an essential resource and
contribute to generating the desired output.

Following are some of the reasons for which employees find maintaining sound industrial
relations to be useful for them:

• Sharing their views, suggestions and ideas with the management to improve the
business operations;
• becoming a part of organizational decision-making and ensuring the betterment of the
working conditions;
• Speaking out their problems and grievances and seeking for the redressal of the same.

Employers

Employers are responsible for providing a favourable work environment for the employees.
They have many rights and powers like laying off inefficient employees, taking strategic
decisions such as mergers, acquisition or shutdown of the organization and adapting
technological changes in the operations.

Following are the different ways in which managers can benefit from sound industrial
relations in the organization:

• Motivating the employees to give their best and gaining their trust and commitment;
• improving the overall efficiency and ensuring effective communication among the
employees and the management;
• Dealing with problems of trade union along with negotiation of employment terms and
conditions with such employee representative.

Government

Before the 19th century, the government didn’t use to intervene in the conflicts between the
employer and the employee. However, later on, there was a change in the attitude of the
government bodies; they started regulating the industrial relations through labour courts and
tribunals, for the following reasons:

• Safeguarding the interest of both the parties;

• Ensuring that both the employer and the employee, abide by the legal terms and
conditions.

Other Parties

The parties (especially the internal or external bodies or associations) which impact the
industrial relations within an organization are as follows:

Employers’ Association

It is an authoritative body, formed to protect the interest of the industrial owners. It performs
the following functions to safeguard the rights of the employers:
 • Representing the owners in collective bargaining with the employees or government
and also in case of national issues;
• creating a proper mechanism to resolve industrial disputes;
• Giving an insight into the employee relations in an organization and providing
suggestions accordingly.

Trade Unions

When the workers unite together to form an association and elect a representative among
themselves; for the protection of their rights and to raise their demands in front of the
management; it is named as a trade union. Listed below are the objectives of such
associations:

• Negotiating collectively with the administration for meeting the individual interest of
an employee;
• upgrading the status of the employees in the organization;
• demanding better working conditions and higher job security for the workers;
• Safeguarding the interest of the employees by demanding a higher level of democratic
control over the decision-making at the organizational, corporate and national levels.

Courts and Tribunals

The judiciary includes the ‘courts’ to resolve the legitimate conflicts and the ‘judicial review’
to administer the justice of the constitution. These courts and tribunals play an essential role
in settlement of industrial disputes by eliminating the possibilities of the following:

• Judicial flaws;
• conflicting judgment;
• poor evaluation of penalty;
• Confusing terms and conditions.

International Labor Organization (ILO)

On the international grounds, an association was formed under the name of International
Labor Organization in the year 1919 to set up international norms and standards for dealing
with industrial disputes and issues of the workers.

Simultaneously, an International Labor Code (ILC) was set up to establish the

recommendations and conventions for minimum international labour standards.
The ILC aimed to look into matters like:

• Worker’s compensation, i.e., minimum wages;

• employee’s work duration and number of holidays;
• women employment;
• employee’s safety, security and health in the work environment;
• industrial relations;
• medical facilities and examination along with maternity protection.
Human Resource Function

The human resource department or team acts as a mediator between the organization and its
employees for dealing with the personnel issues and conflicts. It is their responsibility to
ensure the maintenance of harmonious industrial relations in the company.

Following are the various other functions of the HR professional in the organization:

• Addressing the disputes at the initial level;

• acting as a change agent by bringing a mental revolution in case of any conflict
between the workers and the management;
• Performing the role of an administration expert and a strategic partner by ensuring the
implementation of the policy decisions taken at the top level.

Scope of Industrial Relations

When we talk about industrial relations, it covers a vast arena, including all kinds of formal
relationships existing in an organization.

The scope of industrial relations can be briefly classified into the following four dimensions:

Employer-Employee Relations

The relationship that pertains between the business owner and the employees of a particular
company is known as the employer-employee relationship. To maintain sound relations, the
employer must treat the employees fairly and should value their efforts.
Also adopting the various human resource strategies like employee relations program,
performance-based promotions and even making the productive employees the stakeholders
of the company.

Group Relations

The interactions and communication between the workers belonging to different workgroups
are studied under group relations.

Labour Relations

In an organization, the relationship shared by the managers and the workers is termed as
labour relations. It includes their behaviour, thoughts, actions and perception against each
other.

Public Relations

It is also termed as community relations. The interaction and relationship of the organization
(i.e., its owner, management and employees) with the society or external bodies is termed as
public relations. For long-term existence in the business, every organization needs to
maintain cordial public ties.

Objectives of Industrial Relations

Industrial relations hold a high significance in the context of human resource

management about addressing the industrial disputes in an organization.

The various other goals of carrying out such practices are as follows:

• Handling Grievance: Industrial relations aim to maintain cordial relationship between

the management and the employees by resolving the disputes and setting up a
mechanism to address the grievances of both the parties.
• Mental Revolution: It emphasizes on transforming the way of thinking of both the
management and the workers. The employer must value the worker’s contribution
 towards the organization, and at the same time, the employees must respect the
authority of the management.
• Employees’ Rights Protection: Under industrial relations, various acts (like in India
National Labor Relations Act) and associations were formed to safeguard the rights and
interests of the employees (irrespective of their membership of the labour union).
• Contract Interpretation: Industrial relations emphasizes on providing proper training
to the supervisors and the managers on the labour law contracts to clarify any
misunderstanding.
• Boosting Morale: The motivated workforce is the most efficient resource of the
organization. Therefore, industrial relations emphasizes on building employee’s
confidence and boosting their morale to perform better than before.
• Collective Bargaining: The worker’s representative and the management put up their
proposals in front of each other and negotiate over the same. This is to reach a mutual
decision which is written down in a collective bargaining agreement.
• Increasing Productivity: Industrial relations aim at improving the efficiency and
productivity of the organization by ensuring employees’ long-term retention and
minimizing the rate of their absenteeism.

Role of Industrial Relations

Before the industrial revolutions, organizations paid very less attention to the workers’
relationship with the management and with each other. They treated the labour as machines
and concentrated on their production capability and efficiency.

Later, in the year 1920, John R. Commons introduced the concept of industrial relations,
which emphasized the impact of labour relations with the management and the employer on
the productivity of the organization.

In the modern-day business world where the companies are becoming more people-oriented
and work continuously for achieving employee satisfaction and retention, the study of
industrial relations plays a significant role in the organizations.

Industrial relations is that part of human resource management which studies the formal
relationship of the workers with the administration and the employers and ensuring a proper
mechanism to manage the industrial disputes and conflicts.

In the present scenario, the relationship between the employer and the employees has
changed to a great extent what it used to be in the 1900s. The industries today are becoming
more of technology-oriented, which has generated the need for skilled and educated
personnel in the organizations.

Different scholars and experts have given various views in the context of industrial relations.
To understand each of these approaches in details,
:

Systems Approach

John Dunlop gave the systems theory of industrial relations in the year 1958. He believed that
every human being belongs to a continuous but independent social system culture which is
responsible for framing his or her actions, behaviour and role.

The industrial relations system was based on three sets of different variables:

1. Actors: By actors here we mean that the individuals or parties involved in the process
of developing sound industrial relations. This variable is denoted by ‘A’.
2. Contexts: The contexts refer to the setup in which the actors perform the given tasks. It
includes the industry markets (M), technologies (T) and the power distribution in the
organization and labour unions (P).
3. Ideology: The similar ideas, mentality or beliefs shared by the actors helps to blend the
system. It can be expressed by the initial (I)

Based on these variables, the following formula was derived by Dunlop:

John Dunlop’s Systems Approach Formula:

This formula represents that the industrial relations system can be seen as a joint function of
all the elements mentioned above.

Unitary Approach

As the name suggests, the unitary approach can be seen as a method of bringing together the
teamwork, common objective, individual strategy and mutual efforts of the individuals.

This theory believes that the conflicts are non-permanent malformations, which are a
result of improper management in the organization.

Moreover, if everyone works towards the achievement of the common goals by maintaining
peace and cooperation in the workplace, it will tend to benefit everyone associated with the
organization. It also considered the organizational conflicts resulting in strikes to be useless
and destructive.

The other aims of the unitary approach are as follows:

• To create a productive, effective and harmonious work environment;

• to develops a trustworthy, open, fair and transparent work culture;
• to create a cordial work environment;
• to restrict the role of the tribunals and other government associations like the trade
unions and initiates direct negotiation between the management and the employees.

Pluralist Approach

The pluralist theory also called the ‘Oxford Approach’, was proposed by Flanders in the year
1970. This approach explained that the management and the trade unions are the different
and robust sub-groups which unanimously form an organization.

Collective bargaining was considered to be a useful technique for resolving organizational

conflicts. Due to this, the management’s role has transformed from imposition and control; to
influencing and coordinating with the workers.

Following are some of the highlights of this approach:

• The organization should appoint personnel experts and industrial relations specialists to
act as mediators between the management and trade unions. They need to look into
the matters of staffing, provide consultation to the managers and the unions, and
negotiate with both the parties in case of conflicts.
• The organization should ensure that the trade unions get recognized and the union
leaders or representatives can perform their duties freely.
• In the case of industrial disputes, the organization can avail the services of the external
agent for settlement of such issues.
• The managers should resolve to a collective bargaining agreement when there is a
need for negotiation and settlement with the trade unions.

The following formula denotes the Flanders pluralist theory

Where,

‘R‘ is the rules of industrial relations;

‘b‘ is collective bargaining;
‘c‘ is resolving conflicts through collective bargaining.

It depicts that the rules of industrial relations are a function of collective bargaining, or in
other words, it is a function of handling conflicts through collective bargaining.
Marxist Approach

Lenin came up with the concept of a Marxist approach in the year 1978, where he
emphasized the social perspective of the organization.

This theory perceived that the industrial relations depend upon the relationship between the
workers (i.e., employees or labour) and the owners (i.e., employer or capital). There exists
a class conflict between both the groups to exercise a higher control or influence over each
other.

The assumptions of this approach are as follows:

• Industrial relations are a significant and never-ending source of conflicts under

capitalism which cannot be avoided. However, cases of open disputes are quite
unusual.
• Understanding the conceptions of capitalized society, capital accumulation process and
the pertaining social relations, give a better overview of the industrial relations.
• The Marxist theory assumed that the survival of the employees without any work is
more crucial than the survival of the employer without the labours.

Sociological Approach

The industries comprise of different human beings who need to communicate with the
individuals of other organizations.

Due to the difference in their attitude, skills, perception, personality, interests, likes and
dislikes, needs, they are usually involved in one or the other conflict. Even the social
mobility and other aspects including transfer, default, group dynamics, stress, norms,
regulations and status of the workers influence their output and the industrial relations.

This theory also emphasizes on the impact of various changes in the work
environment (i.e., economic, technical and political) on the interactions and relationship
shared by the employer, employees, institutions and the government bodies.

Gandhian Approach

The Gandhian approach to industrial relations was proposed by the father of our
nation, Mahatma Gandhi or Mohandas Karamchand Gandhi, who was also a well-known
labour leader.

Following are the various features of the trusteeship or Gandhian theory:

1. Gandhi Ji was not against strikes; instead, he gave the following conditions to carry
out a favourable strike:
o The workers or labours can go on a strike only if there is a specific grievance.
o There should be complete non-violence while carrying out strikes.
o The ones who are not involved in the strikes should not be tormented.
2. Though Gandhi Ji was not against carrying out strikes, he believed that it should be
the last option to which the labour should resort to, after the failure of all the
 constitutional and peaceful ways of resolving conflicts and negotiating with the
employer.
3. The Gandhian approach illustrated that nature had provided us with human capabilities
and different kinds of property. Thus, such nature’s gift belongs to the whole
society and cannot be considered as of personal possession by anyone.
4. The objective of this theory is to adopt non-violent ways to bring in economic parity
and material enhancement in a capitalist society.
5. Gandhi Ji perceived that every organization is a joint venture, and the labour should
be treated as associates or co-partners with the shareholders. Moreover, the workers
should have proper knowledge of all the business transactions as it is their right.
6. He focussed on increasing the production and believed that the gains should be shared
with the employees because of whom it has been possible.
7. He also emphasized that the industrial disputes and conflicts between the parties should
be resolved healthily through interactions, arbitration and bilateral negotiations.

This theory gained massive popularity and is applied to address disputes and
misunderstandings in the organizational setup even today.

Psychological Approach

The psychologists perceived the problem of the industrial relations as a result of the varying
perception and mind-set of the key participants, i.e., the employees and the management.

The ‘thematic application test’ was conducted by Mason Harie to understand the behaviour,
mind-set and perception of the two significant workgroups, i.e., executive and the union
leaders, in a particular situation.

In this test, both the groups were asked to rate and interpret the photograph of an ordinary
middle-aged person, and the results were drastically contrasting. The union leaders perceived
the person to be a ‘manager‘whereas, the executives thought that the person was a ‘union
leader‘.

The major interpretations of this test were as follows:

• The general belief of a management representative is entirely different from that of a

labour representative.
• Both the management and labour do not consider each other to be trustworthy.
• Even each of these groups considers that the other one lacks emotional and
interpersonal attributes.

These contrasting impressions are a result of certain economic as well as non-economic

factors, like values, power, position, personal objectives, recognition, beliefs, education,
social security and income of the individuals.

Also, each of these parties forms a negative image or perception of each other. Due to
which they always find fault in the actions and behaviour of one another.

As a result of the factors mentioned above, there remains a tensed interpersonal relation
leading to conflicts which ultimately hinders the image and interest of the individuals
involved.

Human Relations Approach

The person behind the concept of the human relations approach is Keith Davis. The
organization and the society comprise of human beings who vary in various aspects as their
behaviour, emotions, attitude, mind-set and personality. But, they have come together to
achieve common organizational goals and objectives.

The concept of human relations approach underlines the need for making the individuals
familiar with the work situations of the organization and uniting the efforts of the workers.
The purpose is to meet the social, psychological and economic objectives, by enhancing the
overall productivity.

Some of the primary objectives of the human relations approach are as follows:

• To ensure cooperation by promoting the mutual interest of the organization;

• To enhance the productivity of the individuals;
• To satisfy the psychological, social and economic needs of the employees.

This theory focused on enhancing the level of efficiency, worker’s morale and job
satisfaction by applying specific techniques or tools and policies.

The human relations approach highlighted a technique for enforcing proper control over the
work environment by forming small workgroups and at the same time eliminating the
hurdles of sound labour-management relations.

Industrial Disputes
An industrial dispute can be viewed as friction or disagreement between two or more parties
involved, due to the difference in their perceptions, opinions, mindsets, attitudes and values.
In an organization, the parties engage in such disputes can be:

• Employer and employee;

• Employee and employee or;
• Employer and employer.

On a massive level, conflicts can even arise between the government and the public.

Industrial disputes are sometimes observed as a result of poor industrial relations in the
organization.

Types of Industrial Disputes

How can we categorize the industrial disputes depending upon its purpose?
Based on the objective behind an industrial dispute, we can distinguish it into the following
four broad categories:

Interest Disputes

The interest here refers to gains. Therefore, the conflicts concerning the economic or non-
economic interests of the employees, such as increasing the remuneration, working
conditions, job security and other benefits are called interest disputes.

Recognition Disputes

The trade unions often enter into a dispute with the management during negotiation or
collective bargaining for the benefit of its member employees.

Sometimes, for these negotiations, the management denies identifying the trade unions. Even
when there are many trade unions in an organization, each one of them struggles to get
recognized by the management.

Grievance Disputes or Rights Disputes

The conflicts concerning the employee’s rights and legal issues with the management are
termed as grievance disputes. It includes promotions, work duration, leaves allowed, over
time, fringe benefits, safety and security.

Unfair Labour Practices Disputes

The disputes over the unethical treatment of the management towards the labour such as
discriminating them for holding membership of trade union, restricting communication,
employing new workers during strikes and denial to bargain are called unfair labour practices
disputes.

Causes of Industrial Disputes

What are the reasons behind industrial disputes?

Even the smallest of the reasons can contribute to the raising of conflicts in an organizational
setup if it impacts the respondent to a great extent.

Let us have an in-depth analysis of each of these causes by reaching out to the roots of
industrial disputes:

Economic Causes

The ultimate aim of the labour is to earn their livings and meet their economic ends. Whereas,
for the business, it is generating profits. Therefore, on the non-fulfilment of these needs,
industrial disputes can take place between the management and the labour.

It includes demanding a higher wage, increasing the profits, bonus and allowances, replacing
machinery, improving working conditions, duration and other necessary facilities.

Managerial Causes

Lack of administrative support and attention towards labour leads to industrial disputes.
Following are the various managerial causes of industrial disputes:

• Retrenchment or layoff of the workers without any reason;

• the inefficiency of the management to initiate leadership in the organization;
• poorly built and dissatisfying recruitment policies and practices;
• the employer does not comply with the agreement and codes such as code of discipline
and collective bargaining;
 • the management does not acknowledge the trade unions as a representative of the union
members, i.e., the workmen.

Government Machinery

At times, the government lacks a suitable strategy to address industrial disputes. Some of the
drawbacks of the government machinery which lead to industrial conflicts are as follows:

• The need for growth and development is not considered seriously;

• difficulties in dealing with industrial culture and climate challenges;
• the employers meagrely apply this settlement machinery;
• There is a low level of trust of the employers and the employees, over the
government’s settlement machinery.

Voluntary Arbitration

The word arbitration refers to the settlement of any dispute mutually with the help of an
arbitrator.

Thus, in voluntary arbitration, there is a third party involved in the settlement process. Its
decision can be biased or unacceptable by either of the parties, which can result in further
conflicts.

Wage Boards

The Indian government has set up wage boards for determining the suitable wages of the
workmen or labourers.

When the workmen are dissatisfied with their remuneration, there arises a condition of an
industrial dispute.

Joint Management Councils (JMC)

The government created Joint Management Councils, which consist of equal representatives
of both the parties to deal with the worker’s problems, but the idea failed due to lack of
efficiency and progress.

Other Causes

The various other causes of industrial disputes are stated below:

• Weak and multiple trade unions result in more conflicts;

• influence of the political party in power, supporting a particular trade union leads to
conflicts;
• the adverse effect of the relationship with the central and state governments, unstable
political conditions and everyday responsibilities results in industrial disputes;
• in some organizations, collective bargaining is not allowed since the workmen are not
even permitted to make trade unions;
• other reasons can be corruption, apparent consumption, role conflicts, etc.
Outcomes of Industrial Disputes

The consequences of an industrial dispute are hazardous to the employer, employees,

organization, society and the economy.

However, it is taken as a useful tool by the workers, to raise their voice and put up their
demands in front of the management or employers. It empowers the labours and protects their
rights of speech in the organization.

Following are some of the essential ways in which the industrial disputes takes shape in the
organization and are carried out by the employees as well as the employer sometimes:

Strikes

It is a way through which a group of workmen exercise pressure on the management by

stopping the work and protesting against the employers to get their demands fulfilled.

Following are the different types of strikes:

Primary Strikes: The strikes which are directly projected against the employers are called as
primary strikes. Some of the most common primary strikes are as follows:

Gherao: Gherao refers to physically encircling the managers by the workmen to create a
restricted area where no one can move in or out. The targeted managers are humiliated
through; abuses also they are restricted move in or out.

• Picketing: Picketing is the process of putting up signboards, play cards and banners by
the workmen to display their protest or dispute in front of the public. To involve
maximum workers in the strike, some union members are made to stand at the factory
gate to influence others too.
 • Boycott: As the name suggests, boycott refers to interrupting business operations. It
requests the other labourers to temporarily pull back their co-operation with the
management and contribute to the strike.
• Stay Away Strike: In a stay-away strike, the workmen organize a protest in the form
of demonstrations, marches, rallies, apart from the workplace.
• Pen Down Strike: It is also known as the sit-down strike or tools down strike. Though
the workmen come to the workplace daily and also avails the work facilities, they sit
idle and stop working.
• Token Strike: A token strike is a short form of protest where the workmen stop their
work for a definite period. It is usually for as short as 24 hours, to hamper a day’s
production or so and get their demands fulfilled by the management.
• Lightning Strike: The lightning strike is that form of strikes where the workmen call
off the work immediately without giving any prior information or warning to the
management. It is also termed as a catcall strike.
• Go Slow Strike: This is another harmful way of protesting against the management
where the workmen secretly plan to decrease their work speed so that the production is
hampered. However, in front of the management, they pretend to be highly committed
towards their job.
• Work to Rule: In this type of strike, the employees strictly follow their job rules or
contract and stops performing any additional task, other than what all is mentioned in
their agreement.
• Hunger Strike: One of the most common forms of a strike is the hunger strike. The
workmen go on fasting for an indefinite period and sit nearby the workplace or the
employer’s house to project their demands.

Secondary Strikes: The other name for the secondary strike is the sympathy strike. In this,
the force is applied against the third person having sound trade relations with the organization
to indirectly incur a loss to the employer and the business. The third person does not have any
other role to play in such a strike.

Other Strikes: There are undoubtedly other forms of strike too, which takes place on a vast
level involving and affecting a large number of people. These are as follows:

• General Strike: The strikes which are conducted on a mass level, i.e., in the whole
country or state or city instead of just a single organization for fulfilment of a demand
unanimously like job permanency or an increase in pay, etc.
• Political Strike: Any law or act proposed by the government for making changes to the
working terms or conditions when unaccepted by the workers is protested through
political strike on a massive level.
• Particular Strike: The protest against a specific issue or person within a city, state or
country and take up a colossal form is termed as a particular strike.
• Bandhs: Bandh is adopted in countries like Nepal and India where a specific
community or a political party calls for a general strike across the city or state or
country. It is a form of civil disobedience and sometimes become violent, even
involving stone attacks or arson attacks at times.

Lockouts

This form of an industrial dispute is raised by the employers to impose specific terms and
conditions on the workers. It is very different from layoff, retrenchment, termination or
prohibition of employees.In lockouts, the employer temporarily closes down the workplace or
stops the work or takes action like suspending the workers to force them to follow the new
terms and conditions.

What is Conflict?

A conflict situation exists when there are: at least two parties involved who are
interdependent, who are experiencing strong emotions, who seemingly hold incompatible
outcomes or beliefs, and at least one of the parties recognize the incompatibility and
perceives this to be problematic. In conflict parties perceive themselves to have incompatible
outcomes. The word outcome in this context refers to what an individual wants: their
preferred solution or position. Underlying these positions are interests, the reasons why an
individual wants to achieve a specific outcome in the first place. Interests are an individual’s
perceptions and feelings about what is desirable or useful. Interests are central to an
individual’s behaviour and are rooted in human needs and beliefs.
Consequences of Conflict

Conflict per se is neutral, neither good nor bad. It can have positive as well as negative
consequences for the parties involved and for the larger social system of which the disputing
parties are members. Positive Results of Conflict On the positive side, conflict can bring
opportunity, drama, development, and growth to individuals, groups, and organizations,
resulting in increased cohesion and trust. It can lead, as well, to more effective personal and
organizational performance.
Positive consequences for individuals involved in conflict can include:
1. Reconciliation of the interests of the disputing parties: Most conflicts can end with at least
some satisfaction of the legitimate interests of the parties involved, usually through some
integrative agreement of mutual benefit. Rarely do conflicts have to end in clear-cut win/lose
outcomes.
2. A sharpened sense of identity and solidarity: As individuals engage in conflict, their sense
that they are as persons, with unique needs tends to be sharpened. As they differentiate
themselves from one another, they uncover ways in which they are similar and different. The
similarities enhance rapport and a sense of solidarity, the difference help to sharpen a sense of
identity.
3. Interaction: Conflict tends to promote interaction at an interpersonal level and create a new
system of which all parties are instantly a part. As one party change, all the other parties must
then change to restore the equilibrium.
4. Internal change: As disputing parties experience conflict and engage in dialogue with
others of differing needs and beliefs, they are confronted with the prospect of making
adjustments in their positions. The pressure to explore new ideas and feelings can challenge
an individual to move from rigidity to flexibility, with consequent internal change.
5. Clarifying the real problem: Conflicts often emerge around different solutions to a
particular problem shared by the disputing parties. As dialogue is conducted and the parties
begin to explore the interests underlying the contrary positions, the real problem can be
identified and addressed. Conflicts often involve groups and occur between group members.
Conflict can have positive consequences for all group members that are parties to the dispute.
Some of them include:
1. Increased trust: As individuals enter into any experience with one another in group setting,
trust is low, resulting in defending behaviours on the part of group members. In conflict
situations this tendency is exacerbated, since the disputing parties perceive the possibility of
their failing and being hurt. As individuals share their thoughts and feelings with one another
in the group, trust builds, freeing energy previously spent in defending

3. Incensed productivity and results: As conflict is exposed and the parties involved
express their thoughts and feelings, the group can be healed of some of the negative
feelings that tend to prevail in conflict situations. As the group is freed of diverting
emotions and discovers new solutions, its productivity can increase.
4. Group unity: Conflict fosters a sense of group unity and identity as disputing parties
reconcile individual differences. Without conflict, groups become stagnant and
uncreative.
Negative Results of Conflict: Often the positive benefits of conflict are overshadowed by
harmful consequences that result when disputing parties attempt to achieve their goals at the
expense of others. Such forcing exchanges often bring about an escalation of the conflict that
is difficult to reverse. When forcing methods are used, any of the following negative
consequences can follow:
1. Minor differences can escalate into major conflicts involving actions imposed by a power
person or group on another, resulting in greater loss to the system as a whole.
2. The number of issues in the conflict can increase, resulting in greater complexity and
greater difficulty in managing the situation.
3. Specifics can give way to global concerns, which often cause the person to be equated with
and confused with the issue at stake or the entire relationship between the disputing parties to
be called into question.
4. The intention can shift from getting a specific interest satisfied to beating the other parties
at all costs.
5. The number of parties can increase, making it even more difficulty to de-escalate the
conflict. Conflict Outcomes Conflict always manifests itself in some specific outcomes.
Three possible outcomes can emerge:
1. Dominance or imposition, resulting in resentment and sometimes destructive
consequences.
2. Withdrawal or avoidance, resulting in resentment and lowered self-image.
3. Compromise of resolution, resulting in at least some of the beneficial consequences being
achieved. These outcomes are dependent on the approach or strategy used to deal with the
conflict. The choice among alternative strategies can spell the difference between resentment
and mutual respect. These outcomes result from five basic approached, or strategies,
available to address the conflict situation:
Collaboration: A win/win strategy based on problem solving where the interests of all
parties can be met. This approach results in maintaining strong interpersonal or intergroup
relationships while ensuring that all parties achieve their interests.
Compromise: A mini-win/mini-lost strategy based on a solution that partially satisfies the
interests of the parties involved. This approach results in the parties’ attempting to win as
much as possible while preserving the interpersonal or inter-group relationships as much as
possible.
Accommodation: A yield-lose/win strategy wherein one party yields to the other party (or
parties) to protect and preserve the relationships involved.
Controlling: A win/lost strategy based on imposing a particular preferred solution on the
other party (or parties). This approach results in sacrificing the interpersonal or intergroup
relationship to achieve a desired outcome, regardless of the consequences to the other party
(or parties).
Avoiding: A lose/lose strategy based on withdrawing and choosing to leave the conflict. This
approach results in abandoning both the desired outcome and the relationships involved. The
win/win approach to conflict management is one in which the problem is viewed as external
to the persons involved. The opposing parties collaborate to seek a high-quality solution that
meets their mutual needs while preserving their relationship. The win/win strategy involves
the use of problem solving methods and is general the ideal approach for managing both
conflicts of needs and conflict of beliefs, since it resolves the conflict and results in mutual
respect between the conflicting parties. The other strategies for conflict management, which
as a group are called forcing strategies or approaches, are those in which each party tackles
the problem separately. When the problem comes between the parties and distances them,
one or both parties end up settling for a solution that does not meet their interests. The forcing
approaches generally represent less-than-optimal methods for managing conflicts, since they
result in resentment and continue to distance the disputing parties from one another.
Emergence of grievance is a natural outcome of interaction among people, whether in
organizational context or in other context. In the organizational context, employees may have
some grievances against employer; in the same way, employer may have grievances, against
employees. Grievance is a state of dissatisfaction over some issues related to employment.
Generally, expression of this dissatisfaction-is known as grievance.

National Commission on Labour (India) has taken the view that “complaints affecting one or
more individual workers in respect of wage payments, overtime, leave, transfer, promotion,
seniority, work assignment, and other discharges constitute grievances.”
While dealing with grievances of subordinates, it is necessary to understand the nature of
grievances.
(i) Expressed or Implied:
Expressed grievances are comparatively easy to recognize and are manifested in several
ways, e.g., gossiping, jealousy, active criticism, argumentation, increased labor turnover,
carelessness in the use of tools and materials, untidy housekeeping, poor workmanship, etc.
Indifference to work, day-dreaming, absenteeism and tardiness are indicators of unexpressed
grievances. The executive must recognize not only expressed grievances but also notice
unexpressed ones. In fact, unexpressed or implied grievances are more serious than the
expressed ones because it is not known when they may explode.

(ii) Valid Legitimate and Rational or Untrue and Irrational or Completely Ludicrous:
When a grievance of an employee comes to the notice of the management it cannot usually
dismiss it as irrational or untrue. Such grievances also have to be attended to by the
management in the same way as rational grievances.
The following are the proactive methods of addressing grievances:
1. Exit Interview
Information collected from the exiting employee on various aspects of working conditions
forcing him to quit is supposed to be more credible than those expressed by the existing
workers.
2. Gripe Box System:
Employees may be encouraged to drop anonymous complaints as they may fear that their
identity may invite victimisation especially when they complain against the management.
This method is more appropriate when there is lack of trust and understanding between
employees and their supervisors.
3. Opinion Survey:
Various surveys line morale survey, attitude survey, job satisfaction survey, grievance survey
or comprehensive survey comprising all the above aspects, reveal vital inputs about the
negative aspects of functioning of the organization. Since the survey is conducted by persons
other than the supervisor and the respondent’s identify is not insisted upon, information
collected is likely to be reliable.
4. Meetings:
Group meeting, periodical interviews, collective bargaining sessions, informal get-togethers
may be used to collect information about grievances.
5. Open-Door Policy:
Under this policy any employee can lodge complaint or file his grievance with the manager
designated for this purpose. The very objective of this policy is to encourage upward
communication.
In brief, the following are the causes of grievances in industrial organizations:
(i) Grievances Resulting from Personal Maladjustment:
(a) Over-ambition
(b) Excessive self-esteem
(c) Impractical attitude to life.
(ii) Grievances Arising from Management Policy:
(a) Wage payment
(b) Job rates
(c) Leave and overtime
(d) Seniority and promotion
(e) Role ambiguity
(f) Disciplinary action
(g) Absence of employee development plan
(h) Transfer.
(iii) Grievances Resulting from Working Conditions:
(a) Strained employer-employee relationship.
(b) Unfavourable physical conditions such as excessive heat, low temperature, excessive
humidity etc.
(c) Tight production standards.,
(d) Non-availability of proper tools, machines and equipment for doing the job.
(e) Changes in schedules or procedures.
(f) Mismatch between the job and the worker.

OCCUPATIONAL HEALTH AND SAFETY DEVELOPMENT

The health status of the workforce in every country has an immediate and direct impact on
national and world economies. Total economic losses due to occupational illnesses and
injuries are enormous (WHO 1999). The International Labor Organization (ILO) has
estimated that in 1997, the overall economic losses resulting from work-related diseases and
injuries were approximately 4-5 % of the world’s Gross National Product. Workforce is a
backbone of a country development. A healthy, well-trained and motivated workforce,
increases productivity and generates wealth that is necessary for the good health of the
community at large.
Why Occupational Health and Safety is Important
Occupational Health and Safety (OHS) focuses primarily on protecting employees in the
workplace from accidents, injuries, and exposure to harmful substances. While accidents can
happen at any time, it is still the employer’s responsibility to ensure that they take steps to
reduce the risk of incidents and maintain a safe working environment. Prioritizing OHS at
your business has several key benefits, including:

• Reduced risk or accidents or injuries by identifying and mitigating hazards

 • Improved efficiency and productivity due to fewer employees missing work from
illness or injury
• Improved employee relations and morale (a safer work environment is a less stressful
work environment)
• Reduced costs associated with accidents or injuries (healthcare and rehabilitative
costs, losses in productivity, impact on employees’ well-being)
• Lower insurance premiums resulting from fewer workplace incidents and workers’
compensation claims

It’s no secret that all industries have safety hazards of some sort. The most important aspect
of a good Occupational Health and Safety policy is identifying these hazards and ensuring
that employees have the training, safety equipment, and other resources needed to work
safely. Failure to implement effective policies and precautions can lead to injuries, reduced
productivity due to the absence or loss of skilled labor, workers’ compensation claims, and
possible penalties from the Occupational Safety and Health Administration (OSHA).

There are several types of hazards employees may be exposed to depending on their industry

• Physical hazards are environmental factors that can lead to injuries. These include
exposed electrical wiring, falling objects, wet floors, and other conditions that can
cause slips, falls, cuts, or other injuries. Some physical hazards don’t necessarily need
to make physical contact to cause harm, such as excessive noise levels, heat, and
pressure.
• Biological hazards can lead to diseases, infections, and other serious health
conditions. Mold and fungi, blood and other bodily fluids, bacteria, viruses, sewage,
and vermin are all examples of biological hazards. Using Personal Protective
Equipment (PPE) is vital to preventing exposure to biological hazards and protecting
your health.
• Chemical hazards can be inhaled as gases or vapours, or come in contact with skin
as a liquid or solid. They can cause skin irritation, burns, respiratory problems,
blindness, or other serious health complications. Chemicals such as cleaning products,
acids, pesticides, and petroleum products need to be handled responsibly with proper
PPE to prevent exposure.
• Ergonomic hazards put strain on muscles, tendons, and other connective tissues of
the body. They can result from bad posture, not using dollies other mechanical
assistance, and repetitive or awkward lifting/movement. They can lead to
musculoskeletal injuries such as muscle sprains, ruptured or herniated discs, and
carpal tunnel.
• Psychological hazards can lead to depression, concentration problems, inattention, or
negligence. This type of hazard includes work-related stress, fatigue, harassment, and
violence. These conditions can, in turn, lead to morale issues, reduced productivity
and quality of work, and increased risk of injury.

How to Promote Occupational Health and Safety in Your Workplace

1. Make sure that your OHS policies comply with all federal and/or state laws and
regulations
2. Ensure that your staff is properly trained on all machinery and equipment they may
use in the workplace and are certified to operate them if required
 3. Keep Safety Data Sheets (SDS or MSDS) for all chemical products in use at your
workplace, and make sure that they are easily accessible by your employees
4. Have all necessary Personal Protective Equipment (PPE) such as hard hats, eye
protection, and respirators readily available to all employees
5. Use tools and other equipment correctly and only for their intended purpose
6. Use mechanical assistance such as carts, dollies, or pallet jacks when lifting or
moving heavy objects
7. Maintain good posture when sitting, standing, or lifting, especially when doing so for
extended periods of time

What Ethics in HR?

Ethics in HR is responsible for channelizing the human resources of an organization via a

code of ethical and professional standards to get immaculate solutions to all ethical issues and
ensure the ethical success of the organization.Ethics in Human Resource Management is a
subset of business ethics, and it is dedicated to professional development, professional
responsibility, ethical leadership, fairness, justice, ethical handling of conflicts of interests,
the right use of information sorts of practices.

Role of Ethics in Human Resource Management

Today, Human Resource teams are tasked with several responsibilities to maintain a smooth
fostering of good diversity at the workplace, setting the proper standards for people in the
organization, etc. Such practices have to strictly follow the ethical rule motivation, as they are
necessary for the organization’s positive drive. These professionals have to go after a good
working environment for everyone in the company and raise the bars for the current and
upcoming employees.

HR people are the company’s moral heart and brain, and they have to play their role
following an established set of moral ethics and standards. Ethics in Human Resources
basically deals with the affirmative moral obligations of the employer towards employees for
ensuring equality and equity justice.

HRM ethics is responsible for-

• Basic human rights

• Civil and employment fight
• Safety in the workplace
• Privacy
• Justifiable treatment to employees like equity and equal opportunity
• Respect, fairness, and honesty based process
How HRM can Promote HR Ethics?

Some of the easy steps of promoting ethics in human resource management of an

organization include a few basic but mandatory steps

1. Improving recruitment and selection tests

HRs should follow the recruitment policy that identities recruitment needs along with
monetary aspects, preference, criteria of selection, and so forth.

HRs should also make sure that situational factors like economic, social, technological factors
are followed. The process of selection should be done in a planned manner and illegal
questions should be avoided.

2. Channelizing ethics training

Training should be given to the HR of the organization to do their HR work as per the HR
ethics.HRs should also offer training to the employees about the business ethics that are
strictly followed by the whole organization.HR managers should also ensure that there are no
pitfalls in the performance appraisal system.

3. Incorporating rewards, disciplinary, fair, and transparent system

HRs should have proper reward management programs. They should also facilitate and
improve two-way communication. Human resource managers should avoid any kind of
discrimination among the employees based on specific factors such as colour, caste, culture,
appearances, religion, etc.
Human resource management should ensure equal opportunities for every employee for their
effective development and advancement. Measuring the effectiveness of employee safety is
also part of HR ethics.

How to Implement Ethics in Human Resources?

Ethics in HR is responsible for supporting and striving for better ethical standards in every
activity related to human resources. It works for an environment that will maintain the
confidence of employees and attract exciting new prospects. Various organizations face
problems due to illegal behaviour and ethical misconduct from managers and employees
daily. Several employees devise schemes that look legal but are flawed ethically, thereby
resulting in legal entanglements and scandals.

Some of the steps that HRs can take to implement ethics in Human Resource are-

1. Stay informant of the laws

As a responsible representative of an organization, you must differentiate between right and

wrong and make tough decisions whenever required. HR professionals have to know to make
tough decisions and hold some people accountable whenever necessary, and doing so will
require a tremendous amount of confidence and courage. This, however, requires a
tremendous amount of innate authority and confidence.

By staying up-to-date with all the labour laws, you can be easier on top of such issues
whenever they come up. For instance, consider a situation where someone asks for a short-
term disability. In such a case, the HR professional is expected to know the right insurance
laws, understand the benefits that are to be provided to the individual, and has to explain
these to the person. If you have a familiar hold of such laws beforehand, it will help you go
after such challenges in the future without discomfort.

2. Give professional development a priority

This is a dynamic field in operation; it is integral to be versatile and open to challenges your
way for maximum development. There is a constant need for knowledge and skills to stay up-
to-date with such dynamics. One way you can stay ahead of the competition is by
participating in practical training programs. These can include things like HR certifications
and degrees, specializations in workshops, etc.

People in the HR domain have to be on their feet and consult their managers before choosing
any career path that suits them.

3. Be an ethical leader in the organization

Sometimes, conflicts between different employees cannot be taken care of. Hence, being a
leader in this industry will require you to display confidence and practical communication
skills through your overall behavior and interaction with others.
As per Josephson Institute of Ethics at UC San Diego, the following components are
instrumental in a proper decision-making process-

Competency: The way of collecting and evaluating information, come up with alternatives,
keep potential risks and consequences at bay

Consciousness: Awareness to consistently act and apply different moral convictions to

regular behaviour

Commitment: Going for the right thing despite the cost it comes with

4. Understand the various conflict of interest that arise

These company conflicts are significant for the organization since the wrong turn can derail
the company from fulfilling its objectives. HRs should adhere to and advocate the use of
published policies on conflicts of interest within the organization and they should prioritize
their obligations toward identifying conflicts of interest they arise to disclose them to the
associated stakeholders.

5. Implementation of inclusion and diversity principles

Today, most discussions of inclusion are based on talks regarding class, gender, and race.
These are essential parts of the given principle and have to be taken care of accordingly. This
can be quickly done by communicating with company colleagues to understand the
company’s morals and values.

6. Keep company information safe and confidential

HR professionals have access to various statistics and records of the company. They have to
comply with moral and ethical norms to safeguard and protect the company’s interests in
the market. HRs should Acquire and disseminate information via ethical and responsible
means. some of the most recent trends in human resource management that can change the
overall working scenario of a daily office.

1. Employee experience

More than the engagement of employees at workplace, the focus has shifted to employee
experience. More than mere engagement, concentration is now given to enhancement of
company culture, and performance management.

The main roles of the HR department now covers enhancing employee’s journey map and
giving a greater exposure to feedback tools, employee wellness apps, productivity tools and
advanced communication tools.

2. Advanced people analytics

Companies have moved far ahead from just the back office data to utilizing the best of people
analytics. Reporting through the dashboards has out-dated in most of the companies and
focus is more on predictive models.

Companies have moved far ahead from just the back office data to utilizing the best of people
analytics. Reporting through the dashboards has out-dated in most of the companies and
focus is more on predictive models.

3. Learning management systems

Despite the position of the employees or their experience, learning new skills is important to
stay updated. That is why constant learning is now a novel trend in the HR sector. Providing
learning opportunities to employees is the key for any company that is eyeing for progress.

An improved skill set can help employees to deliver their best at workplace that reflects in the
overall productivity of the enterprise. Learning management systems are playing the crucial
part in tracking the employees learning process and even to collaborate between various
departments effectively.

4. Augmented reality

One can undoubtedly say that VR and AR are the key trends in today’s HR market which
offers an upper hand for learning market and performance support for organizational staff.
The simulation process is the highlighted feature that aids employees in preparing themselves
to how to respond to real life situations. It has a huge influence on proper recruitment process
as candidates are given exposure to real-life work situation.

5. Productivity of HR process

Earlier the focus was covering the automation of areas like record keeping, performance
appraisal, resume capture, interview and hiring, compensation and assessment. However, the
focus is now shifted to productivity of the overall HR process than just automating sections.

6. Digitized rewards and recognition

Receiving praise and recognition is the key to help employees to trigger their performance
level and these are undoubtedly true motivators for most of them. However, the present trend
has taken this a step forward as rewards and recognition is now becoming digitised.

7. Online skill assessments

The trend of using online skill assessments is now seen in companies as it is proving effective
as an optimal talent management tool. It comes in the form of surveys, quizzes, tests, and
exams that offers a platform for companies to learn what their employees actually know and
even a chance for self- assessment for employees.

8. Biometric time tracking and security

This is another recent trend in human resource management that offers a lot of room for
minimizing attendance fraud risk by using biological markers to recognize employees.
Companies are now using facial or iris recognition and fingerprint scanning.

9. Enhanced employee engagement

When it comes to employee engagement, it has moved forward a lot from mere basic
activities. The scenario is now digitized and employees are offered lots of wellness and
fitness apps. The goal is to ensure proper work and life balance.

Building a sustainable workforce by balancing professional and personal lives helps them to
be more productive and then end result will be a profitable enterprise. Companies are now
taking initiatives to set up seminars and sessions like yoga, dietary counselling, and
counselling on improved work-life balance.

10. Transformation of leadership

Unlike in the past, leadership is not always about leading a team or managing them. The
digitalised world has put forward possibilities of networked organisations than bring more
success than with just delegation of authority.

Generally speaking, employee engagement is a workplace method designed to improve an

employee’s feelings and emotional attachment to the company, their job duties, position
within the company, their fellow employees, and the company culture. HR departments can
use employee engagement tactics to boost wellbeing and productivity across all company
levels. Through various measures, initiatives, and approaches, employee engagement
encourages all members of a company to put their best foot forward, day in and day out.
Employee engagement in HR also helps to ensure that each and every employee is fully committed to
the company’s mission, goals, and values and that they remain encouraged and inspired to contribute
the overall success of the business. At the foundation of all employee engagement tactics is the intent
to enhance the well-being of each and every employee.

What is Employee Engagement in HR?

While all departments throughout the company can and should execute various employee
engagement measures, HR departments are particularly vital for employee engagement
approaches to be successful. The impact of employee engagement on employee retention, as
well as wellbeing and productivity, is something which HR departments must keep at the
forefront of their initiatives. There are five key roles that every HR department should fulfill
when it comes to improving employee engagement.

1. Executive Leadership: As the employee engagement champions, the HR department

should take an executive leadership role when it comes to identifying and investing in
ways to improve engagement tactics. The HR department is also responsible for
ensuring transparency and understanding in regards to the company expectations for
each employee.
 2. Employee Engagement: HR professionals within the company should be experts in
what employee engagement is. They are the ones who understand the importance of
employee engagement in HR, what methods best drive employee engagement, how
these tactics can be measured, and what steps must be taken to continuously improve
engagement approaches.
3. Training: HR is also responsible for training, guiding, and coaching department
managers in how they can better engage their staff. As employee engagement
consultants, HR needs must also lead by example when it comes to maintaining an
open dialog, regularly addressing causes deterring the success of employee engagement
approaches, pointing out and applauding progress, and looking past scores and metrics
to focus on the betterment of the employee.
4. Activities: Though employee engagement is a serious element of business success in
which HR plays an important role, it’s also their duty to fulfil the role of engagement
humourist by bringing enthusiasm, excitement, and inspiration to the process. By
introducing, implementing, and organizing employment engagement activities, HR
can foster a stimulating workplace that values the individual contributions of each
employee and recognizes productive collaboration.
5. Measurement Lastly, the HR department must play the role of gatekeeper for
employment engagement. Regular surveys, department check-ins, and other means of
measurement, help HR pros develop and implement specific action plans that can be
frequently discussed and addressed with team managers. Instead of focusing solely on
data, analytics, benchmark goals, and ranking numbers, the HR department must
place strict emphasis on the specific dialog and methods that positively influence
employee engagement.
All in all, employee engagement in HR helps to ensure that all employees feel engaged
and empowered to put their best foot forward. Employees who feel engaged are proven
to not only be more productive and content in their job role, but they are also more
loyal to the company and more driven to contribute to overall business success.

Social Media and HR

Social media as a digital platform has had a tremendous impact on how we communicate and
maintain dialogue with friends, family and colleagues. The advent of social media sites like
Facebook, Twitter, Instagram and others have presented to us a democratic platform where
everyone has an opinion and an equal chance of being heard. Social media, in the way it is
structured, allows people to share their life events, their opinions on matters of political or
social significance and their feelings. The hallmark of this medium is in the two-way, instant
communication that it offers vis-à-vis other traditional media channels like television print,
where the communication is only one-way.
Because of these very benefits of the digital platform, it has become a rudimentary practice
for every organization to have a social media presence for marketing or for corporate HR
engagement. In any organization, HR is the function that deals with all the employees related
matters like payroll, recruitments, employee engagement, learning and skill development,
work environment etc. It is also the responsibility of the HR function to communicate and
generate conversations about various HR practises such as talent acquisition, leadership,
employee communication as well as attracting future employees. Social Media as a tool helps
them do just that.
Through social media, conversations have changed both internally and externally in
organizations. There is a need to create an engaging two-way dialogue between the company
and the employees. HR uses social media to create this dialogue. As we are aware, the main
task of any HR personnel goes beyond filling up excel sheets with employee details. There
main job lies with knowing the pulse of the employees – what works for them, what doesn’t?
With this tool, all the employees can engage, collaborate and react in a public forum in the
presence of HR. These online conversations around an organization are very critical for
building a company’s image as an employer of choice. This makes social media an apt tool
for corporate branding and engagement.
Another critical aspect of an HR personnel’s life is their visibility in the organization. If the
HR are not visible, then they are not involved with the employees. They do not have the
employee related insights needed to take important HR decisions. Social media provides HR
an opportunity to create a relationship with every employee in the organization, irrespective
of their location. As employees become aware that there is a window where they can go for a
resolution to any issue, the visibility and credibility of HR as a function increases. It is also a
great platform to get a general feel of how an organization is perceived by its employees and
potential recruits.
Recruitments is one of the most sought-after areas of HR on social media platforms. These
platforms have accelerated the speed of recruitment process which involves steps like posting
a job, getting resumes, taking interviews, making offers and so on.
In addition to that, social media can also be used for taking a 360-degree feedback from
employees. It can drive collaboration between different stakeholders of the company and the
employees. It can also aid learning and development through real-time, on-the-go access to
training.
While the benefits of social media to HR are many, the implementation of social media in the
functioning of HR is not an easy task. This is so because any employee engagement requires
the involvement of all other business and support functions. It also requires HR to be adept
with handling of digital media skills and competencies.
HR needs to develop the right mix of tools for its social media presence. Having a page on
key social media portals is not enough. With a right mix, they will be able to engage with the
right audience at the right time. Some channels will target external audience while others will
target internal employees. The purpose of some interactions might be corporate brand
building and talent acquisition, while for other channels; the purpose could be dissemination
of valuable information regarding employee benefits. Hence, knowledge and skill are
important aspects while developing the HR strategy on social media. The right strategy also
takes into account different facets of social media campaign execution such as deciding the
media mix, content type, channels, target audience and tools.
Social media also allows for an informal way of interaction compared to official meetings
and emails. HR emails often get lost in the barrage of emails employees receive every day.
On a social network, it is easier to stay abreast with topics that an employee may follow. HR
may make employees follow relevant topics and pages related to the organization on social
media to ensure no one misses out.
HR personnel need to ensure administration of social media forums as well. As employees
interact outside of their offices about their organization, a social media policy needs to be set
in place and employees need to be educated on it.
As social media is a vivid and highly interactive platform, the onus of engagement lies with
employees to act as influencers and make it count. While it is easy to get oneself engrossed in
the daily chores at work, it is helpful to follow and learn from the leading industry thought
leaders who are making a profound difference in their respective fields by voicing their
thoughts through their blogs, pages and articles.
Every year, Society of Human Resource Management (SHRM) India recognises Top 30 HR
influencers who have created a digital impact through their social media presence. Released
by SHRM India, the objective of the report is to appreciate and recognize the contribution
that the best and most effective Indian HR professionals are making in their specific
industries. The list includes thought leaders from all over the country such as Abhijit Bhaduri,
Gautam Ghosh, Achyut Menon, Prabir Jha, Ruchi, Dr. NS Rajan, Kunjal Kamdar, Gurprriet
Singh, Ashish Gakrey and Anil Dagia.
These influencers have created a distinct name for themselves through social media and enjoy
the support of a steady social media following on various networks like Twitter, LinkedIn,
Blogs and Klout.
Social Media plays more than a supporting role in HR. It redefines employee engagement,
communication and recruitment for the organizations. As we can learn from the
commendable work that the influencers in SHRM India’s report have done, a mere presence
of HR on social media is not sufficient. The need of the hour is to set yourself apart from
others through a valuable and meaningful presence.

What is HR Analytics?

HR analytics is the process of collecting and analysing Human Resource (HR) data in order
to improve an organization’s workforce performance. The process can also be referred to as
talent analytics, people analytics, or even workforce analytics. This method of data analysis
takes data that is routinely collected by HR and correlates it to HR and organizational
objectives. Doing so provides measured evidence of how HR initiatives are contributing to
the organization’s goals and strategies.

For example, if a software engineering firm has high employee turnover, the company is not
operating at a fully productive level. It takes time and investment to bring employees up to a
fully productive level. HR analytics provides data-backed insight on what is working well
and what is not so that organizations can make improvements and plan more effectively for
the future. As in the example above, knowing the cause of the firm’s high turnover can
provide valuable insight into how it might be reduced. By reducing the turnover, the company
can increase its revenue and productivity.

Need of HR Analytics

Most organizations already have data that is routinely collected, so why the need for a
specialized form of analytics? Can HR not simply look at the data they already have?
Unfortunately, raw data on its own cannot actually provide any useful insight. It would be
like looking at a large spread-sheet full of numbers and words. Without organization or
direction, the data appears meaningless. Once organized, compared and analysed, this raw
data provides useful insight.
They can help answer questions like:

• What patterns can be revealed in employee turnover?

• How long does it take to hire employees?

• What amount of investment is needed to get employees up to a fully productive

speed?

• Which of our employees are most likely to leave within the year?

• Are learning and development initiatives having an impact on employee performance?

Having data-backed evidence means that organizations can focus on making the necessary
improvements and plan for future initiatives. With the ability to answer important
organizational questions without any guesswork, it is not surprising that many businesses
using HR analytics are attributing performance improvement to HR initiatives.

Examples in HR Analytics

Let’s take a look at a few examples using common organizational issues:

1. Turnover

When employees quit, there is often no real understanding of why. There may be collected
reports or data on individual situations, but no way of knowing whether there is an
overarching reason or trend for the turnover. With turnover being costly in terms of lost time
and profit, organizations need this insight to prevent turnover from becoming an on-going
problem.

HR Analytics can:

• Collect and analyse past data on turnover to identify trends and patterns indicating
why employees quit.

• Collect data on employee behaviour, such as productivity and engagement, to better

understand the status of current employees.

• Correlate both types of data to understand the factors that lead to turnover.

• Help create a predictive model to better track and flag employees who may fall into
the identified pattern associated with employees that have quit.

• Develop strategies and make decisions that will improve the work environment and
engagement levels.

• Identify patterns of employee engagement, employee satisfaction and performance.

Understanding the process of HR Analytics

HR Analytics is made up of several components that feed into each other.

1. To gain the problem-solving insights that HR Analytics promises, data must first
be collected.

2. The data then needs to be monitored and measured against other data, such as
historical information, norms or averages.

3. This helps identify trends or patterns. It is at this point that the results can
be analysed at the analytical stage.

4. The final step is to apply insight to organizational decisions.

Competency based Human Resource Management (HRM) has become a significant area
in HR. Competency-Based Human Resource Management details the way to transform the
human resource department with the intention that job competencies – instead of job
descriptions – become the building blocks for all HR efforts. Competency mapping is not just
about choosing the best individuals for the right job, it is a lot more complex than it
appears. Competency-Based Management demands the management of key HR functions
like learning, performance management & staffing, around a competency profile for the work
to be completed.
A variety of human resource processes could be included in one integrated system by
relating each to a common group of defined job competencies. Despite the fact that human
resource activities need to be built around competencies, only a handful of companies have
done so. Below are a few fundamental reasons why they should:
• Competencies are the standard link between the most human resource processes.
• The human resource processes, like selection, training, development and performance
management, relevant to job related behaviours are frequently discovered to be
functioning at cross purposes in companies.

Competency based HR Processes

Competency Based Job Analysis

It finds the competencies essential for becoming successful in a job by detailing the jobs in
terms of quantifiable, observable, and behavioural competencies which workers need to show
to complete the job.

Competency Based Selection

The main purpose of Competency Based Selection is to bring the HR managers fairly close to
moving forward and backward in time to make efficient forecast about candidate’s
performance at work by recreating earlier performance, determining personality patterns, and
imagining future performance.
Competency Based Training & Development

Competency Based Training is an organized method of training and assessment which is

targeted at accomplishing certain results. The focus is on performing as opposed to just
knowing.

Competency Based Performance Management

Competencies depict the language of performance. They are able to state both the predicted
results from an individual’s efforts and the procedure by which these functions are
performed. Competency Based Performance Management System focuses on the “how” of
performance.

Advantages of Competency based Human Resource Management (HRM)

• It requires lower communication, training, and management time. Managers need to

master just one group of competencies for each and every position. It requires less
training time to set up a new program as the competencies are fully understood, and
key concepts, like centering on organizing behaviour into competencies, are employed
throughout the company.
• Information from various sources could be easily compared and evaluated. Data from
one process enables you to examine the potency of the others. For instance,
performance review rankings could be employed to validate the strength of a selection
or training process.
• Making use of the definitions and rating scales effectively in one HR process reminds
managers of the significance of utilizing them in other functions. By way of example,
successfully employing a performance management system structured around
competencies will certainly support employing a selection system structured around
competencies.
• The complete system and each subsystem could be authenticated employing a
content-oriented validation strategy (for example, the subsystem could very well be
associated with described job requirements)
• Six Sigma is a data-driven framework for improving the quality of HR processes, a
process being any repetitive business function pertaining to HR. Six Sigma
accomplishes this by reducing the variation around the mean of the process.
• In simple words, Six Sigma ensures that critical HR functions fall within the
acceptable quality/performance level. This is typically referred to as the “HR process
entitlement level”

How does Six Sigma actually reduce variation? What is the process (very briefly)?
Six Sigma unearths the cause of the variation via a single-pronged attack, “the root cause
analysis (RCA)”. RCA is simply a cocktail of basic statistical analytics, problem-solving and
brainstorming techniques. However, the specific tools employed within RCA can be very
organization specific.
Why do we need Six Sigma for HR?
Through the use of statistical hypothesis testing Six Sigma delivers evidence before
substantiating claims – the first time and every time. This makes it extremely reliable and
universally applicable. However, the data sampling rules need to be rigidly followed.

Six Sigma unearths obfuscation, repetition and unsubstantiated claims early on. It also helps
to identify gap analysis, recommends optimization models for business processes, suggests
optimal budgets and required training/ orientation.

What challenges does it address and what opportunities does it present?

In terms of opportunities, there literally are a hundred, but let’s identify three key reasons
spontaneously:

A. Six Sigma is a strategic process improvement framework which starts and ends with the
quantification of HR processes data. It begins via measuring a sigma score (of the HR process
under improvement) and ends with an improved sigma score (i.e improved quality) of the HR
process. In layman’s terms: the sigma score provides a unified point of reference and clear,
“quantifiable evidence” of sustained HR process improvement.

B. Six Sigma is an “all-encapsulating” quality control and process improvement umbrella. It

has around 4-5 extremely well-documented frameworks that can be seamlessly adopted and
applied across the entire spectrum of HR process design and improvement, often producing
results after less than 48 hours of analysis.

C. Six Sigma has a repository of over 100 well-documented tools. These include free flow
and sequential brainstorming, problem identification tools, tools for the strategic alignment of
HR, descriptive and inferential insights on HR process data, the controlled design of
experiments in HR processes, etc. The adoption and use of these tools depend on the scope of
the adaptability and the particular mechanics in question.