Chapter 1

Changing Perspectives of Human Resource Management

Evolution of Human Resource Management (Atty. Arnulfo Rayoso)

Depending upon the culture and focus of the company and the degree of importance that the
position and function of the HRM head is viewed by top management, the title may vary from
personnel officer, personnel manager, industrial relations officer, vice president (VP), or senior
vice president (SVP) for personnel administration or industrial relations. Whatever the job title
is, the implication is that the position functions within a whole range of personnel-related
activities. Changes in terminologies reflect the significance associated with the management of
people in the organization as well as the broader perspective from which the field is currently
viewed.
As the business environment and the profit opportunities grew increasingly large, organizations
began to create specialized units to cope with their hiring needs. During the 1930s and the 1940s,
these units gradually began to be called personnel departments (the word personnel is from an
old French word that means “person”). Such departments were usually set up as special self-
contained departments charged with the responsibility of hiring new workers and administering
basic HR activities like determining the appropriate pay and benefits. The recognition that HR
needed to be managed separately and the creation of personnel departments also gave rise to a
new type of management function-personnel management. The manager who headed the
personnel department was called personnel manager.3 Still, from its inception until the 1990s,
personnel management was not seen as a particularly important critical function in most business
organizations. Although many other managers appreciated personnel management as a
necessary vehicle for hiring new employees, it was also seen primarily as a routine clerical and
bookkeeping function—placing newspaper ads to recruit new employees, filling out paperwork
on those employees after they were hired, and seeing that everyone got paid on time. Over the
years, however, the role of HRM changed dramatically and became much more important in most
organizations."
Human resource management emerged in the late 70s as a reaction against the more functional
approach embodied in personnel management. The change was also accompanied by a
fundamental shift in management's view of its employees. Employees were no longer viewed as
a group of individuals who needed to be closely supervised and managed, but rather, as a
collection of human resource to be valued as a distinctive source of competitive advantage. Rapid
advances in technology.
and communication also dictated that managers carefully assess every facet of their operation
to ensure that employees were being as efficient and as productive as possible. While managers
were becoming increasingly concerned with ways to improve productivity and competitiveness,
they also began to realize that workers needed to feel that their jobs were sources of personal
satisfaction and growth. Given the shift in competitiveness, top executives in most firms began
to see that HRM practices and policies significantly affected their ability to formulate and
implement strategy in any area and that other strategic decisions significantly affected the firms'
HR as well. Top HR executives in most companies today have vice presidential or executive vice
presidential status and are fully contributing members of the firms' executive committee a group
composed of key managers who make major policy decisions and set corporate strategy.
Today, most employee handbooks or declarations of philosophy and principle of companies
specifically state that "human resources are the greatest assets of the company."
An important by-product of this change is management behavior that no longer treats employees
as mere costs but assets. To achieve success, organizations must maximize competencies—those
underlying attributes or characteristics that can predict superior performance. These
competencies range from tangible attributes, such as skills and knowledge, technical know-how,
to intangible attitudes and values such as teamwork and flexibility.
In recent years, however, human resources as assets have been assailed by management experts
led by Thomas Davenport in his 1999 book Human Capital. Davenport bristles that "assets are
passive - bought, sold and replaced at the whim of their owners, workers in contrast take
increasingly active control over their lives. Human capital in reference to workers now takes the
place of human resources.” Human capital refers to the attributes gained by a worker through
education and experience. These can help the worker develop competencies, knowledge, and
personality attributes that in turn could help him/her perform and produce economic value for
his/her employer.
With all these changes, HRM becomes even more complex because of the need to go beyond the
borders which have become "borderless" because of technological innovations. All of these have
raised the issues of global competition, communication, outsourcing, and downsizing which
present a number of challenges and opportunities for human resource management.

Main Trends in the HR Profession

Human Resource and Information Technology (IT)
The advent of the "computer age" has greatly altered not only the availability of information but
also the manner in which it is identified and acquired. Information technology deals with how
information is accessed, gathered, analyzed, and communicated. Because IT is used today in
almost all phases of the HR work, it is discussed early in this book.
:

1. Use of job boards and other similar web-based recruitment (e-recruitment) - provides
accessibility to a wider range of applicants for the job and usually communicates job vacancies
and application procedures. Web recruitments include resume The use of information
technology in HR started four decades ago. In the sixties. HR information systems were in place
and payroll administration was computerized as well. The seventies introduced the use of more
powerful databases. In the eighties, we saw a greater integration of HR applications, which has
increased the popularity and number of organizations using information technology in the HR
functions especially as the cost of computerization dropped dramatically. The advent of the
Internet and the Web generated an explosion of HR systems and applications. The increase in the
use of information technology can be seen as not only driven by the need to automate HR
processes and services, but actually influenced by a realization that improved delivery of HR
services can become a competitive advantage of the enterprise. Organizations over the past
years, as reflected in the study conducted by Fortune Magazine, show that competitive
advantage will no longer be defined by better business processes but will be determined by the
quality of the workforce. This has increased and intensified the war for talent.

Applications of Information Technology (IT) in HR

The Philippines has all the potential to be an active player in the digital domain. At present, joint
government and private sector groups are unified in pushing for the development of e-commerce
in the Philippines. It is seen as an important driving force that could fuel the country's economic
growth and development. Moreover, the government is positioning the country to serve as host
to various service-oriented businesses particularly in the IT and related industries. This only
implies that HR should not be left behind.
The HR plan should be aligned with the business plan of the organization. It is then critical for HR
people to understand and initiate useful IT applications in HR aligned with the company goal of
efficiency and profitability. Some of these are the following submission, quick interactive
screenings methodologies, and in some cases, online testing and experience profiling. Applicants
get instant feedback on the status of their employment application.
Its advantages include an improvement in recruiting efficiency, a reduction of costs, increase
quality and quantity of applicants, establish, communicate and expand brand identity and more
convenient on the part of the applicants.
The disadvantages include an increase in application quantity, but not necessarily the quality of
the applicants, and losing personal relationship with the applicants.
This simply means that headhunters from companies like the Ayala Group, San Miguel
Corporation, John Clements, and SGV can, by a single
click of a mouse, scan the global arena and precisely pinpoint at any particular point in time where
the best qualified candidate is located. The latest technology can locate a candidate from so many
job sites that post resumes of online application. This is because many companies nowadays use
the Internet's World Wide Web to post job openings and to search for possible recruits. An
interested applicant can now apply for a job online.
Companies agree that they can save money by relying on the Internet rather than on recruiters
or newspaper ads to hire new employees for their firms. There is a reduction of recruitment
advertising cost by reformatting the advertising and placing ads on the Internet via the
companies' web sites and recruitment sites.
2. E-selection uses technology to help organizations more efficiently manage the process of
identifying the best job candidates-those who have the right knowledge, skills, and abilities for
each job and who may best fit the organization. This technology can reduce the time and effort
involved in selecting the most qualified applicant for the job including the use and interpretation
of test results.
3. Employment kiosk provides updates on employee status and other pertinent information
initiated and made by the employees themselves. This employee self-service delivery system
ensures that the employee data is updated. An alternative to this web-based employee self-
service application is the use of interactive voice response (IVS) systems. This service is a web
delivered application, so if the employees have access to the Internet, they can enter changes in
their address, marital status, phone numbers; answer their own questions; and resolve their own
issues quickly, easily, and conveniently. Passwords, document approval, and role assignments
ensure that only authorized employees and personnel have access to the records to ensure
confidentiality.
4. E-learning facilitates the learning process by providing just-in-time learning opportunities. The
use of a Learning Management System (LMS) will allow HRD managers to focus on the more
important aspects of their job rather than being concerned with course registration and following
up attendance to training programs. Online multi-rater assessment tools can help managers
provide immediate feedback to their team members and link feedback to development
opportunities.
This is a big leap and transformation in the way employees are trained and developed. The whole
concept of HR training is changing due to the rise of technology-enabled webinars. Employers
are saving thousands of pesos in employee travel. Digital tools are used to convert paper
processes in orthodox training technologies into visual interactions with simulated realities.
There are even digital feedback loops where self-trained HR trainees will know, in a blink of an
eye, the feedback of their learning pace. This is the period where employers use classroom
training in a virtual world.
The advantages include an increase in employee flexibility, control over learning, reduction of
training costs, and better tracking and management of employee training.
Disadvantages include isolating the trainee that can reduce career enhancement through
networking and linkages.
5. Electronic Performance Support System (EPSS) provides online coaching and mentoring
services. Managers and employees can access organizational information through an EPSS
application. Online performance management systems also provide managers a very effective
tool to communicate and establish key result areas (KRAs), objectives, and required
competencies for employees. This can make performance appraisals (PA) more objective and less
biased.
6. Salary and payroll administration, for most companies, is now linked to performance
management systems, time and attendance, and other employee benefits, and pay systems. This
ensures timely release of salaries, wages, bonuses, and other similar compensation. An example
of this is the use of time sheets. Employees can record the number of hours spent to perform a
job the moment they complete their work, or whenever it is most convenient. Managers can
review and approve time sheets with just a few clicks. Payroll batches are created automatically
reducing data entry and ensuring timely and accurate pay processing.
7. Growth of social networking sites like Facebook and Twitter. One of the next challenges for
HR executives is learning to integrate information from social networking sites. Potential benefits
must be balanced with issues of privacy and data accuracy. HRM is evolving into a more
technology-based profession. Technology has transformed the way in which HR offices manage
and communicate with employees. In big organizations, employees see the face of HR as a portal
rather than a person. With the increasing popularity of the use of intranets, wikis, webinars,
blogs, and social networking sites like Facebook and Twitter, among others, employees now use
these to stockpile information, work collaboratively, and share opinion and project progress.
Employees can even work virtually and with teams all over the world simultaneously. This
transformation of HR service delivery is known as “e-HR," and this requires a fundamental change
in the way HR professionals view their roles. Vital questions at this point include how to use social
networking data to support recruitment, internal communications, employee knowledge sharing,
collaboration, and training.
8. Use of email or electronic mail has emerged as the heart and soul of corporate communication.
Because of inbox overload and spams, it became difficult to track messages efficiently. With this
development, HR department with the help of their IT experts should develop unified messaging
that will allow workers to check and store emails related to work in one single inbox.
9. Use of IT to foster customer involvement. Because of the popularity of social media,
companies started using different social networking sites where they can post company updates,
service offerings, or just to let the users of the account know their company exists. With this
development, HR departments should also start thinking how to use these social media to
improve and enhance employee services and employee relations.
10. Telecommuting/Teleworking is any form of substituting information technologies (such as
telecommunications and/or computers) to establish remote or virtual office the act of moving
the work to the workers instead of moving the workers to work. It allows employees to work in
a place with access to the Internet. With this, people will no longer have to commute every day.
They will be able to send their work along "electronic highways" to their organization's main
office. Teleworking closes the gap between "where people live and work." It provides jobs near
homes or transforms homes into virtual office extensions.
Benefits of Teleworking/Telecommuting
1. Employer Benefits
a. Increased productivity, stimulated by lower absenteeism, higher employees' concentration on
work, and fewer distractions
b. Less travel time and better use of employees' peak efficiency time
c. Decreased turnover because employee morale is higher and more work options such as job or
office sharing become possible once long commutes are eliminated
d. Hiring incentive to new employees
e. An opportunity to tap new labor pools such as parents with young children, persons with
disabilities, and the like
2. Employee Benefits
a. They save money on fuel, car maintenance, and insurance.
b. A large reduction of stress
c. More time for their families; more participation in their communities
d. Fewer distractions on the job, greater work autonomy, and more relaxed work environment
e. Closer to their workplaces and thus can save hours each day on their commute to work

Human Resource Information System (HRIS)

According to the book Fundamentals of Human Resource Management by DeCenzo and Robbins
(2005), HRIS is a database system that keeps important information about employees in a central
and accessible location. It merges HRM as a discipline and, in particular, its basic HR activities and
processes with the IT field. It is an integrated system designed to provide information used in HR
decision making. It is a system for gathering and maintaining data that describe the HR;
transforming data into information; and reporting the information to users.
Purposes of HRIS
a. To improve the efficiency with which data on employees and HR activities are compiled
b. To provide HR information more rapidly and more easily to be used in management's decision
making
HRIS Applications
The following are examples of organizations who made successful use of HRIS to deal with
problems related to HR and IT:10
1. IBM
IBM Europe utilized HRIS in order to connect their 340,000 global employees through
revolutionary and engaging new company-oriented social media.
HRIS has saved IBM $1.2 million per year simply by mitigating the company's printing and mailing
costs through the implementation of an online enrollment system. The online system has been
tremendously well received by employees who can now research program information and
access decision support tools from their own homes.
2. Toshiba America Medical Systems Inc. (TAMS)
By manipulating a streamlined and functional HRIS, Toshiba America Medical Systems
Inc., moved all of their benefit information online. TAMS has created a library of documents and
forms on its Human Resources portal, including the benefits guide, which earned a 2004 APEX
Award for Publication Excellence. TAMS also received the 2004 Electronic Benefit
Communication award given by Business Insurance Magazine for outstanding achievement in
communicating employee benefits programs over the Web.
Some of the Benefits of HRIS Solutions
1. Salary and Payroll Administration
Payroll management is often a tedious process that requires a high level of accuracy, timeliness,
and effective financial controls. Aligned with local statutory standards and regulatory
specifications, HRIS can help keep work flow costs in check and ensure that all employees are
paid on time in any circumstances.
2. HR Training
It provides control of internal organizational training from delegating participants to projecting
training budget, course scheduling and enrollment, to training assessments and individual
performance appraisals. There is an HRIS software that can match the right individuals to specific
training programs that will enhance their knowledge and skills set to add value to the company.
3. Self-service Benefits Transactions
Employees can gain online access to their benefits package at their own leisure so they can focus
on more demanding tasks at hand during office hours. They can easily understand entitlements
because all back pay and auto-prorated amount concerning overtime, salary, and other financial
matters are clearly stated for easy reference.
Examples of HR Data Accessed by Various Stakeholders Using HRIS

POSITION ONLINE SELF-SERVICE

Applicants Job openings
Employees Benefits enrollment and claims
Print pay slips for past and current months
Enroll for training and check training schedule
Dependent Data
Download forms and templates for HR administration
Retirement planning scenarios
Provide feedback and vies latest company news and announcement
Managers Training investment factor
Cost per hire
Turnover costs
Executives Data for HR forecasting and costing
Succession plans
External Groups Time and attendance data
Dependent health insurance status
Payroll Information

Example of Software
Jeonsoft Payroll Suite 200611 is a client-server-based integrated personnel and payroll system
specifically designed for Philippine use. It is composed of three major modules, namely: time
attendance system, payroll system, and HRIS system all rolled into one complete system. The
system automates payroll computation while making recording and retrieval of employee
records fast and easy.
These illustrations are not all-encompassing. This is just to show the many changes taking place
in HR because of changes in technology. As pointed out by Magdaraog from SVG Development
Dimension International, the HR workscape is changing and HR cannot avoid it. We can only be
prepared for IT. Now, what concerns us the most is whether HR practitioners are prepared for
the "e-age" or electronic age HR management or not. The answer is inevitable. We have to be
prepared.
Going into the e-age is no longer an option; it is a reality. E-age can also be referred to as age of
connectivity. It is a situation where we find ourselves in every day. The advent of the computer
age has greatly altered, not only the availability of information, but also the manner in which it
is identified and acquired. New technologies and management approaches have added to the
challenges facing HR managers.
While the technological changes affecting HR managers are widespread, none are more dramatic
than those related to information systems. Information systems are being used in HR particularly
in employee training, succession planning, and compensation management. Because information
technology is used today in almost all phases of human resource work, it is a must for HR
personnel to keep up. The advent of the Internet and the Web has ushered in a whole new range
of HR applications.
Electronic performance support systems are also making the work of HR specialists a lot easier.
Learning management systems and e-learning offerings have also changed the way employees
learn. Employee self-service applications are also improving the way organizations deliver
employee benefits. Thus, to be able to survive in this electronic age or e-age, we have to upgrade
and equip ourselves with what technology has to offer. It is a must that we keep up with
technology.
Many management theorists suggest that for a firm to be successful in the 21st century, changes
will be required. These theorists suggest that predictability is a thing of the past and that the
shape of tomorrow's winning organization is becoming increasingly clear, based upon quality,
innovation, and flexibility.12 Modern businessmen today embrace the reality of technological
changes that revolutionize all ways of doing business. HR, as a strategic partner of every CEO,
must become at pace, if not ahead, so that all HR systems and subsystems, hardware and
software, plans and interventions, tools and techniques are compatible with the speed and the
intensity of customer needs.
According to Johnson and Gueutal13 HR is evolving into a more technology based profession
because organizations need to:
• streamline HR processes and reduce administrative burdens; • reduce HR administration
and compliance costs;
• compete more effectively for global talent;
• improve service and access to data for employees and managers;
• provide real-time metrics to allow decision-makers to spot trends and manage the
workforce more effectively; and
• Enable HR to transform so it can play a more strategic role in the business.

Labor Relations
Unionization and labor action have dwindled. According to the Bureau of Labor and Employment
Statistics, one of the department bureaus of the Department of Labor and Employment or DOLE,
if one will look at the percentage of labor union members to total wage and salary workers, there
is a notable decline from 30.7% in 1982 to 29.5% in 1993 down to 10.6% in 2009. In addition, our
country's major labor groups signed a Social Accord with employers in 2004 pledging to work
together
and minimize strikes. Strikes with and without notice have steadily declined from 260 strikes with
98,585 workers involved in 1981 to 182 strikes with 55,390 involved workers in 1991, down to
43 strikes and 7,919 involved workers in 2001 and for 2009. According to the latest data available,
there were only four strikes with only 1,610 workers involved, a far cry from the data from
previous years. This means developing new partnerships particularly in the labor management
arena significantly reduce strikes.14

Increase in Social Contribution

Employees pay mandatory contributions in proportion to their salary. The first one is
Social Security System (SSS) which takes contributions of 10.4% of monthly salary. This is less
than half of the rate in the public sector under the Government Service Insurance System (GSIS)
which is 21% of the monthly salary. To equalize the two, there is a proposed plan from SSS to
raise its contribution rate by 0.6 percent to 11 percent of the monthly salary, to be equally shared
by employers and workers. This would mean an increase in the maximum salary credit-the ceiling
that serves as basis for contribution payments. It will be increased to P20,000 from the present
P15,000 to enable workers with bigger salaries to save up for retirement through higher
contributions. The increase would allow a P500 onetime grant to pensioners, a 10% across the
board increase in pension, and higher computed benefits for active members. 15
There is also a National Health Insurance Program to make sure that employees are
adequately covered by a health insurance. It will enable them to manage the rising costs of
hospitalization. This, according to PhilHealth, is a sure way to lessen the impact of medical costs
that can affect a company's finances. The premium stands at 2.5% of the salary which is equally
divided between the employee and the employer.
Another mandatory contribution with the issuance of R.A. 9679 is the PAGIBIG
(Pagtutulungan sa kinabukasan, Ikaw, Bangko, Industriya at Gobyerno) Fund. The contribution
rates for all mandatory-covered members including OFWs are stated as follows: for those with
monthly compensation of P1,500 and below, the employee share is 1% of their salary and 2%
from their employer; while for those with over P1,500 monthly compensation, the share is 2%
for both the employees and the employers. The fund offers its members various benefits such as
savings, short-term loans, and access to housing programs.16
Application, inquiries, and processing of benefits and claims for the mentioned insurance
and funds are all under the jurisdiction of HR. Even with the use of IT, there are still issues and
concerns about their social security benefits that employees prefer to discuss with HR. The
human resource information system should include storage and sorting of data pertinent to their
membership and contribution to these different government agencies.
Business Process Outsourcing (BPO) in the Philippines and HR
Outsourcing is a proven tool that can help companies improve service and better manage
their operating costs and cash flow.
The business process outsourcing industry or BPO is considered as one of the fastest
growing business sectors in the world including the Philippines. It is an economic force that
propels our country to be considered as one of the emerging global leaders in the BPO industry.
The strong demand for outsourcing services is predicted to employ 1.3 million workers and
generate $25 billion in export revenue br 2010 according to the Business Process Association of
the Philippines (BPAP) with finance and accounting customer support, human resource
management, and back-end support services getting the biggest shares."
Aside from being established as an ideal destination for voice outsourcing, due to the
country's largest pool of English-speaking workers, affinity with Western culture, IT
infrastructure, government support, and lower operational costs, our country is poised to tap the
knowledge process outsourcing (KPO) sector and become an excellent alternative for KPO tasks.
However, in the 2007 Philippines HR Update written by Amess Gross and John Minot, they noted
that HR managers still have trouble in recruiting qualified personnel for BPO operations due to
insufficient language skills. Although half of the population speaks it actual ability to speak the
language varies.
While the Philippines produces a lot of graduates annually, most of them do not have the
skills needed in higher value business processes. This is considered a major stumbling block for
the country. Findings show that the major problem area of BPO is its attrition rate which entails
higher recruitment costs, training costs, higher productivity costs and new hire costs. This is due
to BPO being considered as a part-time engagement, with no specialized skills required, high job
stress, and working hour problem.
Considering these are major concerns of BPO. HR department needs to formulate
strategies to control its human resource for BPO. With regards to language proficiency. HR needs
to design training programs that would enhance the communication skills of prospective recruits
who wish to enter the field of business process outsourcing and increase sources of applicants
for the job.
One specific example is the case of Unilever who teamed up with Accenture HR services
to provide a broad range of HR services including payroll administration. Reward administration,
performance management, workforce reporting, and core HR administration in 100 countries
including the Philippines
Leading companies know that human and organizational performance are key
determinants to high performance and more and more organizations are using outsourcing to
help them gain the most business advantage from their HR functions to high performance-and
more and more organizations are using outsourcing to help them gain the most business
advantage from their HR functions
HR Departments' Organization Charts and Sh.
Organizations historically divided the staff management, and HRM was traditio Line managers
were directly responsible for while staff managers were responsible for an in have costs but
whose bottom line was less direct have blurred this distinction. Existing f organizational design
and gravitate toward sm arrangements.20
No two HR departments have exactly the As many as 30 or 40 separate functions me staff,
depending on the size and location of the organization, the makeup of the workforce, the type
of industry, and the value system of top management. For some functions, the HR department
may have full responsibility: For others, it may share responsibility with supervisors of other
departments. In the case of a franchised operation such as single McDonald’s the store manager
generally hires new employees, and schedules and tracks working hours for employees. The
franchiser or home office in turn, generally suggests or mandates hourly wages, provides
performance appraisal forms for local use, and may handle payroll services as well.
A small independent business is generally operated in the same way, with the owner or
general manager handling human resource duties. As the firm grows beyond a certain size,
however, a separate HR unit becomes a necessity. In some organizations, the department is
strictly a service and advisory operation. In others, the department director may have far-
reaching decision-making authority.
Centralization
Some organizations centralize HR. A centralized strategy locates the design and
administration responsibility in a single organizational unit. Administration generally will fall to
those working in various units who are often HR generalist. Generalists handle all HR activities
rather than specializing in a single area such as compensation or recruiting.
Decentralization
Decentralization gives each unit the responsibility to design and administer its own
personnel system.
Organization Chart
Organization can use charts for a number of purposes. For example, HR administrations,
as well as chief executive officers, corporates planners, marketing representatives, and others,
can use such organization chart to:
1. Design their department or division:
2. Monitor reporting relationship:
3. Gain access to information about newly created job titles, staff, duties, and reporting
relationships:
4. Find out how leading agencies organize their management teams and workforces.
 5. Assess industry patterns;
6. Examine the competition; and
7. Use in business presentations and to facilitate placement decision.
Suggested Web Sites for HR-related Information
• International Association for Human Resource Information Management, Inc. or IHRIM
http://www.ihrim.org/
• Society for Human Resource Management or SHRM
http://www.shrm.org/Pages/default.aspx
• People Management Association of the Philippines or PMAP
http://www.pmap.org.ph/
• Human Resource Executive Online
 Seatwork
I. Modified True or False. Write TRUE if the statement is correct; If it is FALSE underline
the incorrect word/phrase and write its corrected equivalent in the space before the
number.

________________1. HRM is a relatively new field in the Philippines.

________________2. HRM today is mainly concerned with the recruitment and selection of
people with the right qualifications.

________________3. HRM functions should be exclusively performed by the HR department.

________________4. The increasing IT applications in HR would eventually lead to the demise of

HR or decrease the role of HRM in the organization.

________________5. Learning about IT should be reserved for computer specialists.

II. Essay
1. Discuss some of the IT applications in HR. Explain how IT can help managers fulfill their
HR responsibilities.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2. Discuss the pros and cons of using HRIS.
________________________________________________________________________
________________________________________________________________________
3. As future employers, are you in favor of using teleworking? Why or why not?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
4. With the growth of the different IT applications in HR, discuss the changing role of the
HR manager in any business organization.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
 Case Study
Keeping Up with IT
Samuel is in his mid-40s and has worked for Andres Enterprises for almost 20 years.
Samuel has seen the enterprise grow from just over 20 employees when he started to work for
the enterprise to over 200 today. Even though Samuel has been promoted over the years and his
responsibility has increased, he has recently become worried about his future at the enterprise.
This has something to do with his uneasiness in the use of computers. For the past five years, this
was not much of a concern since computers were not used in any HR applications. But with
Internet gaining so much popularity especially in its application in the field of HR, Samuel is
starting to be restless. He feels he is no longer young to learn the new technology aside from the
fact that he is having a hard time understanding the system. Because Samuel is so far behind his
colleagues when it comes to using the new technology, he is shy to ask for help. To make matters
worse, a memo was issued by the head of HR informing everyone to actively use the HRIS in the
different HR functions, including the processing of applicants, payroll computations, and the
employees' benefits administration
Based on the article "Keeping up with IT Training" by Marianne Cherney, http://www.astd.org/
Publications/Newsletters/Learning-Circuits/Learning-Circuits-Archives/2010/02/Keeping-Up-
withIT-Training.aspx

Help Samuel solve his problem by following the steps below:

1. State Samuel's main problem. __________________________________________________

2. Discuss the areas of consideration following the guide below
Samuel's Strengths: ____________________________________________________________
Samuel's Weaknesses: __________________________________________________________
Possible Opportunities for Samuel: ________________________________________________
Possible Threats for Samuel: ______________________________________________________
3. Your proposed solutions/alternative courses of action or ACA (minimum of three) to help
Samuel overcome his problem.
a. __________________________________________________________________________
b. __________________________________________________________________________
c. __________________________________________________________________________
__________________________________________________________________________

4. State your recommendation based on your ACA.

_____________________________________________________________________________
_____________________________________________________________________________
5. Discuss the implementation of your chosen recommendation following the guide below:
Budgetary
Specific activity Person Responsible Time Frame Requirements
CHAPTER 2 JOB ANALYSIS
Job analysis is conducted to determine the responsibilities inherent in the position as well as the
qualifications needed to fulfill its responsibility individual having the requisite capabilities
essential when recruiting to locate an individual having the requisite and education.

Importance of Job Analysis (JA)

Successful HRM practices can lead to outcomes that create competitive advantage. When
properly performed, job analyses can enhance the success of HRM practices by laying the
required foundation.

Definition of Different Job Terms

a. Position - consists of the responsibility and duties performed by an individual.
There are as many positions in a firm as there are employees.
b. Job - group of positions that are similar in their duties. In some instances, only one position
may be involved, simply because no other similar position exists. For example, the position of the
chief accountant also constitutes a job since there is only one chief accountant in the
organization.
C. Occupation - group of jobs that are similar as to kind of work and are found throughout an
industry. An occupation is a category of work found in many firms.
d. Job analysis – the procedure used for determining/collecting information relating to the
operations and responsibility of a specific job. The end results are job description and job
specifications. e. Job description-organized, factual statements of the duties and responsibilities
of a specific job. It tells what is to be done, how it is done, and why. It is a list of job duties,
responsibilities, reporting relationships, working conditions, and supervisory responsibilities.
f. Job specifications - a written explanation of the minimum acceptable human qualities
necessary for effective performance of a given job. It designates the qualities required for
acceptable performance, which are requisite education, skills, personality, and so on.
g. Job classification-grouping of jobs on some specified basis such as kind of work or pay. It can
refer to a grouping by any selected characteristics but preferably used most often in connection
with pay and job evaluation.
h. Job evaluation - systematic and orderly process of determining the worth of a job in relation
to other jobs. The objective is to determine the correct rate of pay.
i. Tasks - coordinated and aggregated series of work elements used to produce an output
j. O'Net - online resource which has replaced the Dictionary of Job Titles: list of job requirements
for a very large number of jobs
k. Functional job analysis - task-based or work-oriented technique describing the work
performed.
l. Position analysis questionnaire (PAQ) - an example of a job analysis method.

Job analysis provides information in several cases including the following:

1. How much time is taken to complete basic tasks?
2. How are tasks grouped together into a job?
3. How can a job be designed so that employee performance can be improved?
4. What kind of skills is needed to perform a given job?
5. What kind of person is best suited to perform a certain type of job? All these information
provides a foundation for other HR activities.
Specific Information Provided by Job Analysis
1. Job title and location
2. Organizational relationship - brief explanation of the number of persons supervised (if
applicable) and job title of the position supervised. It also reflects supervision received.
3. Relation to other jobs - describes and outlines the coordination required by the job.
4. Job summary - condensed explanation of the content of the job.
5. Information concerning job requirements - usually provides information about machines,
tools, materials, mental complexity and attention required, physical demands, and working
conditions. It varies from job to job.
Uses of Job Analysis Information
1. Preparing the job description and writing the job specifications
The result of job analysis provides a complete description that contains job summary, the
job duties and responsibilities, machine and equipment used, and some indications of the
working conditions. It is also used to describe the individual traits and characteristics required in
performing the job well.
2. Recruitment and selection
Job analysis information is useful when searching for the right person to fill the job. It
helps to seek and find the type of people that will contribute to and suit the needs of the
organization.
3. Determining the rate of compensation
Job analysis information is also essential for estimating the value of and appropriate
compensation for each job. This is because compensation usually depends on the job's required
skill and educational level, safety hazards, degree of responsibility, and so on, all of which are
assessed through job analysis
4. Performance appraisal
It involves comparison of actual versus planned output. Job analysis information is used
to identify the standards and performance objectives and specific activities to be performed
against which employees are evaluated. It is used to acquire an idea of acceptable level of
performance for a job.
5. Training
Job analysis information is used to design training and development programs because
the analysis and resulting job description show the skills and therefore the kind of training that
is required. Training and development are conducted to satisfy these skills and competency
requirements.
6. Career planning and development - flexible The movement of individuals into and out of
positions, jobs, and occupation is a common procedure in organizations. JA provides clear and
detailed information to employees on career movement.
7. Safety
The safety of a job depends on the proper layout, standards, equipment, and other
physical conditions. What a job entails and the type of people needed contribute information to
establish safe procedures so that unsafe practices can either be changed or discontinued.
8. Labor relations
An attempt of an employee to add or subtract from the duties listed, as a result of job
analysis, is already a violation of this standard. The labor union as well as the management is
interested in this matter. Controversies often result and a written record of the standard job
jurisdiction is valuable in resolving such disputes.
Methods Used in Job Analysis
1. Interview
Job analysis information can be obtained by interviewing the job incumbent or by group
interviews with group of employees doing the same job or by interviewing the supervisor who
is knowledgeable about the job. Interview information is particularly valuable for professional
and technical jobs that mainly involve thinking and problem solving.
2. Observation
Direct observation is especially useful when jobs consist mainly of observable physical
activity. Jobs like those of a janitor, production workers, and drivers are examples of these. On
the other hand, observation is usually not appropriate when the job entails significant amount
of mental activity, such as the work of the lawyer, financial analyst, and the like.
3. Questionnaires
The use of questionnaires is usually the least costly method for collecting large amount
of information in a short period of time. Advantages of using the questionnaire method include
the information gathered is quantitative in nature and can be easily updated as the job changes.
It usually includes questions asking the worker to describe the kinds of experiences,
qualifications, and attitudes needed to perform the job. It also includes a detailed list of activities
performed and the importance of each activity or the percentage of time spent in performing it.
4. Employee recording/use of log book
This is a recording by job incumbents of job duties, frequency of the duties, and when the
duties are accomplished. This can produce a complete picture of the job, especially when
supplemented with subsequent interviews with the worker and the supervisor.
STEP 1 STEP 4
STEP 2 STEP 3
Examine the Collected data
total by using
organization Determine the Selected to be acceptable JA
and the fit of purpose of JA. analyzed techniques
each job

STEP 7 STEP 6 STEP 5

Use information from step 1-6 for job design,
planning. Selection and training,
compensation. etc Prepared JS Prepared JD

Figure 2. Recommended Steps In Conducting Job Analysis

Step 1 - Provide a broad view of how each job fits into the total fabric of the organization. This is
to determine how the data will be used in HRM planning. HR managers should decide what data
needs to be collected, the best method of collection, and the uses of the information in a
comprehensive HRM strategy.

Step 2 - Identify the use to which the information will be put, since this will determine the type
of data to be collected and how to collect data. This requires studying the organization charts,
job descriptions, and work process charts.
Step 3 - Since it is usually too costly and time consuming to analyze every job, a representative
sample of jobs needs to be selected. Review relevant background formation such as
organization charts, process chart, and existing job descriptions. Organization chart shows how
the job in question relates to other robe and where it fits in the overall organization. It should
identify the title of each positron and, by means of interconnecting lines, show who reports to
whom in the hierarchy
Process charts show the flow of inputs to and outputs from the job under study. Existing job
description can provide a starting point for building the revised job
Step 4 - This involves the actual analysis of job by collecting data on job activities, required
employee behavior, education, training experience requirements, working hours, equipment
used. Required job duties, process workflow. Working conditions, and human traits and abilities
needed to perform the job. This is done through the use of acceptable job analysis techniques.
The information collected in Step 4 is then used in Step 5 and Step 6 to develop the job
description and job specifications. A job description and a job specification are usually two
concrete products of the job analysis

Writing the Job Description

The original purpose of job description is to establish the level of difficulty of a specific
position for the purpose of establishing pay levels. Over the years, new directions in
management thinking point to a move from duty-fomented job description to role and
competency-oriented descriptions. This does not become outdated as quickly and provides
both supervisor and employees clarity on the what, how, and even why of the position. In
addition, it is easier to alter as the technologies, strategies, or customers' needs change
One was to begin creating role and competency description statement is to cluster
related skills like customer service competency, which may include the following entries:
anticipate customer needs deliver on time, show are and concern: and help customer evaluate
needs. Converted into behavioral statements for job description, it may be stated as: "Deliver
commitments or service to meet or exceed customer satisfaction or Show care and concern to
demonstrate customer importance and value.* The value of utilizing the role and competency
model is that these behaviors seldom change, even as the means of executing them evolve with
modern technology or company strategy. In addition, if an employee has an objective standard
to measure the performance of the job, it will be known whether or not the standards are being
met.21
The first and immediate product of job analysis is the job description. As indicated. This
is basically descriptive and constitutes a record of existing and pertinent job facts. These facts
must be organized in some fashion in order to be usable. Suggested contents are given as
follows:
1. Date written
2. Job status - full-time/part-time including salary
3. Job identification - The identification section includes such information as job title,
department, division, plant and code number of the job.
4. Job summary - A brief one or two-sentence statement describing the purpose of the job and
what outputs are expected from job incumbents.
5. Working relationship, responsibilities, and duties performed – Relationship statement shows
the jobholder's relationship with others inside and outside the organization. These include
supervision received (to whom the job incumbent reports) and supervision exercised (who
reports to the employee).
Below is an example of a job description:
Job Title: HR Manager
Reports to: Vice President of HR
Supervises: HR Assistant, Compensation, Analyst, and Benefits Clerk
Coordinates with: All department managers and executive management
Outside the Company: Recruitment agencies, DOLE, union representative

Responsibilities and duties should be presented in clear and precise statements and
should include essential functions and major tasks, duties and responsibilities performed. The
function of each job should be identified and explained for the benefit of the jobholder.
6. Authority of incumbent - defines the limit of the jobholder's authority, including his/her
decision-making authority, direct supervision of other personnel, and budgetary limitation.
7. Competency requirements – education and experience including special skills required to
perform a given job.
8. Working conditions - a list of the general working conditions involved with the job, location of
the job, and other relevant characteristics of the immediate work environment such as hazards
and noise levels.
Below is an example of a job specification.
Position Title: Chief Accountant Division/
Accounting Department Department: Reports to:
General Manager Coordinates with: All Department Heads Supervises:
All Accounting Personnel
 SUMMARY OF DUTIES
Apply principles of accounting to analyze financial Information and prepare financial reports by
compiling information, preparing profit and loss statements, and utilizing appropriate accounting
control procedures
PRIMARY RESPONSIBILITIES
1. Prepare profit and loss statements and monthly closing and cost accounting reports
2. Compile and analyze financial information to prepare entries to accounts, such as general
ledger accounts, and document business transactions
3. Establish, maintain, and coordinate the implementation of accounting and accounting control
procedures
4. Analyze and review budgets and expenditures
5. Monitor and review accounting and related system reports for accuracy and completeness
6. Prepare and review budget, revenue, expense, payroll entries, invoices, and other accounting
documents
7. Analyze revenue and expenditure trends, recommend appropriate budget levels, and ensure
expenditure control
8. Explain billing invoices and accounting policies to staff, vendors, and clients
9. Resolve accounting discrepancies
10. Recommend, develop, and maintain financial databases, computer software systems, and
manual filing systems
11. Supervise the input and handling of financial data and reports for the company's automated
financial systems
12. Interact with internal and external auditors in completing audits
13. Perform other duties as maybe assigned by the general manager from time to time
KNOWLEDGE AND SKILL REQUIREMENTS
1. Knowledge of finance, accounting, budgeting, and cost control principles including generally
accepted accounting principles; knowledge of financial and accounting software applications;
ability to analyze financial data and prepare financial reports, statements, and projections. This
is normally acquired through a combination of the completion of a bachelor's degree in
Accounting, three to five years of accounting experience, and successful completion of CPA
exams.
2. Work requires willingness to work a flexible schedule.

WORKING CONDITIONS
Working conditions are normal for an office environment Work may require occasional weekend
and/or evening work.
New Jobs and Hot Jobs for the 21st Century23
New job descriptions are appearing with increasing frequency. A cursory scan of company
openings being advertised in Job Street Philippines, an online recruitment center, gives a sense
of what is happening in the job market. Of more than 700 positions listed on the site, there are
several new titles including chart/board coordinator, configuration manager, device driver
engineers, network administrator, network engineer, page publisher, web developer and web
publisher, java programmer, e-business manager, and e-consultant to name a few. The Internet
has changed the way people do things. More online shopping, for example, means more jobs in
package delivery services. With more young people online, the Internet is also seen as a key
venue for reaching the coveted youth market.
Those who seek work in e-commerce would be wise to seek out hot sectors such as the
wireless and fiber optics industries, writes Dori Jones Yang in U.S. News and World Report.
Wireless services, in fact, is one of the world's hottest sectors, according to Employment Review
Online.
Rapid advances in computers and telecommunications technology are the main drivers
behind the emergence of new job titles. An "auditor" is now called an "e-commerce accountant."
Apparently, e-commerce accountants are those who advise companies on whether they make
financial sense to sell goods and services online. The job still requires traditional accounting
training and license, but to keep abreast with the times, they also need to be familiar with
software and Internet technologies.
In the Philippines, a number of major private and government agencies have already
Employed web designers, content producers, and other Internet professionals.
Employment prospects and career advancement are affected by the choice of course and
school, as well as academic achievement, individual aptitude, and so on. Both the academe and
industry leaders agree in emphasizing the primacy of engineering and technical fields, including
information technology, if one wishes to be ahead in the race for jobs years from now.
Writing the Job Specifications
The job specification uses the job description to define the kind of human traits and experience
required to do a specific job well. It shows what kind of person to recruit and for what qualities
that person should be tested. Job specifications identify the minimum acceptable qualifications
required for an employee to perform the job adequately. The job specification may be a separate
section on the job description, a separate document entirely, or at the concluding part of the job
description.
The information contained in a job specification usually includes the following basic criteria:
1. Knowledge - body of information one needs to perform the job;
2. Skills - the capability to perform a learned motor task such as word processing skills;
3. Ability - the capability needed to perform non-motor tasks such as communication abilities;
4. Personal characteristics-individual’s traits such as tact, assertiveness concern for others etc.
5. Credentials-proof or documentation that an individual possess certain competencies:
6. Technical requirements- include criteria such as educational background work experience,
and training.
 Seatwork
I. Fill in the blanks.
1. The one in charge of conducting job analysis is what we call _______________.
2._______________is conducted to determine the responsibility of the job as well as the
qualifications needed to fulfill its responsibility.
3._______________refers to the minimum qualifications necessary for effective performance of
a given job.
4. Some of the uses of job analysis information include________________:________________
_______________________:__________________.
6. Examples of new job titles as a result of e-commerce include _______________________
___________________:_____________________:_______________
6. Give examples of job specifications for the following positions:
a. Secretary to the general manager: b. Human resource manager: _________________
C. Job analyst: ______________________________
7. Prepare the job description of the job analyst. _____________________________
II. Essay
1. Job analysis is often referred to as the "cornerstone" of HR management. Do you agree? Why
or why not?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. What method of job analysis do you think would be most applicable for jobs in a food chain or
a mall/department store?

______________________________________________________________________________
______________________________________________________________________________
 Case Study

Reyes Department Store

Based on the review of the store, Nicole, the general manager concluded that one of the
first things she has to attend involves developing the job description of her store supervisors.
During her first few weeks on the job, Nicole found herself asking one of her supervisors, Jet, why
he was violating what she knew to be part of the company policies and procedures. Jet's only
response was that he was not aware of that policy and was not aware it was part of his job.
Nicole knew that a job description, along with a set of standards and procedures that
specify what was to be done and how to do it, will go a long way toward alleviating the problem,
Discuss the process that Nicole should follow to solve this problem.
Chapter 3
Recruitment of Employees
Once there is an approved request to fill up a position, the next step 18 HR to develop
an applicant pool using either internal or external recruiting. An organization needs to hire the
most qualified people it can at the most competitive price. Before an organization is able to hire
an individual, it must locate quailed applicants who are looking for jobs-known as establishing
an applicant pool an effective employee selection procedure is limited by the effectiveness of
the recruitment process. Outstanding job candidates cannot be selected if they are not included
in the applicant pool.
Attracting qualified people refers to recruitment and it represents one of the major
responsibilities of the HR manager. In an era when the focus of most organizations is on
efficiently and effectively running the organization, recruiting the right person for the right job
is a top priority.

Recruitment on the Internet

The Internet has truly changed the way we conduct business today. We now have the
ability to do virtually everything from our computers and recruiting is one of them.
Using the Internet is the fastest, simplest, and most convenient or most cost effective
'way to reach hundreds of thousands of qualified candidates, 24 hours a day, and 7 days a
week. Responses occur instantly and the results are measurable. Different recruitment sites can
provide you with statistics such as how many people looked at your job posting, how many
people submitted their resumes, as well as where your job ranked with other organizations
recruiting for the same position.
Jobseekers have always wanted detailed job descriptions. They want to know what the
job entails, the qualifications for the job that are more important, and what you can offer them
as an organization. Recruitment sites can provide job seekers with detailed information on the
qualifications you are looking for in a candidate. You can even create a customized response
form to help filter your applicants further.
Picking Employment Sites26
Job-Hunt.Org can be a big help to recruiters. Considering there are literally thousands of
Web employment sites and most of the time there is information overload, as employer, where
should you post your jobs? Job-Hunt.Org provides a list of employment sites with different
categories.
a. Job Sites by Location - job sites with a geography focus to help you find an
Appropriate kcal resource for your posting
b. Employment Super Sites-sites that provide visibility in all kinds of media.
c. Specialty Employment Sites-sites that provide category listing depending on the vacant
position.
Using Employment Sites to Post Your Job Openings
a. Job postings on a Web site are very different from typical newspaper ads where you are paying
per word posted in the spread.
b. You are not restricted by the number of words you can use in your description, and most
employment sites have search engines for applicants to use in finding job postings.
c. You can offer as many ways as possible for the applicant to reach you, e.g., phone, fax, email,
and snail mail" with your complete address.
d. You can respond immediately with an acknowledgment, personalized if possible, to the
applicant via email
Online Job Search for Applicants
1. Identify the jobs, employers, and locations that interest you, and then find
Out where you can submit your application based on your qualifications. The Web is a treasure
of useful information Job-Hunt's "Pick Your Next Employer" section has links to how-to articles,
directories of employer Web sites, and list of potential employers.
2. Read the "Know BEFORE You Go (or Apply" series of articles by Job-Hunt's
Research expert Par melee Eastman about choosing the best potential employers, and gathering
necessary information to prepare a cover letter, and how to Impress interviewers with your
knowledge of them and their organization
3. Once you know the job you want and have collected the necessary information about the job
and your prospective employer. You need to create your resume, learn how to complete online
forms, and customize your LinkedIn Profile or your personal resume Web page with "keywords
for recruiters to find.
4. Establish an email account, different from the one you use in your job or your school. Use this
personal account that your current employer cannot read and enable potential employers and
other job search contacts to stay in touch with you easily and safely.
Tips to Job Applicants to avoid illegal Recruitment26
1. Do not apply at recruitment agencies not licensed by POEA or the Philippine
Overseas Employment Administration
2. Do not deal with licensed agencies without job orders.
3. Do not deal with any person who is not an authorized representative of licensed agency.
 4. Do not transact business outside the registered address of outside the registered address of
the agency. If recruitment is conducted in the province, check if the agency recruitment authority
5. Do not pay more than the allowed placement fee. It should be one-month salary, exclusive of
documentation and processing
6. Do not pay any placement fee unless you have a valid employment and an official receipt.
7. Do not be enticed by ads or brochures requiring you to reply to a post office
(P.O.) box, and to enclose payment for processing of papers. 8. Do not deal with training centers
and travel agencies, which promise overseas employment.
9. Do not accept a tourist visa.
10. Do not deal with fixers.
Recruitment Process/Recruitment Plan
This plan is an effort to quickly fill the HR request with an individual who first satisfies the
job specifications.
1. Formulating a recruiting strategy
This is a choice between internal and external recruiting strategy.
Comparison of Promotion from Within (Internal Hiring) versus External Hiring
Promotion from Within

Advantages
Provide greater motivation for good performance
Provides greater promotion opportunities for present
employees
Improves morale and organizational loyalty
Enables employee to perform the new job with little
loss of time
Familiar with the organization on how it operates
Disadvantages
Promotes inbreeding(narrowing of thinking and stale ideas)
Creates political in-fighting and pressures to compete
Requires a strong management development program
Creates a homogenous workforce

External Hiring

Advantages Disadvantages
Provides new ideas and new insights Loss of time due to adjustment
Allows employee to make changes without having to Destroys incentive of present employees to strive for
please constituent groups promotions
Does not change the present organizational hierarchy No information is available if the applicant can blend with the
rest of the group
2. Searching for job applicants
The applicant search may involve traditional recruiting methods or through the use of e-
recruitment.
3. Screening applicants
Applicants should be screened to eliminate individuals who are obviously unqualified.
4. Maintaining an applicant pool
Applicant pool consists of individuals who have expressed an interest in pursuing a job
opening and who might be feasible candidates for the position.
Sources of Applicants
A. Internal Sources - the use of promotion from within taking into consideration the advantages
and disadvantages. Companies use job posting and job bidding to inform employees of job
vacancies. For companies using IT, they have portals which are accessible to all employees.
Although the use of portals may not be applicable for small organizations, one has to always take
note that to fill an opening, it is better to look at the current employees first.
B. Referrals - present employees are asked to encourage friends and relatives to apply. This is
the most often used recruiting tool in small organizations.
C. External Sources
1. Job advertisement - placement of help-wanted advertisements in newspapers, trade
and professional publications, or on radio and television.
2. Employment centers or agencies - agencies that charge a fee for each applicant they
place.
3. Campus recruitment - a primary source for entry-level job candidates.This is usually
coordinated with the university or college placement center.
4. Internships - for students with practicum or on-the-job training, this can help them in
honing their business skills, check out potential employers, and learn more about their likes and
dislikes when it comes to choosing careers. For employers, they can use their interns to make
useful contribution while they are being evaluated as possible full-time employees.
5. Job fairs/special events recruiting - joining or sponsoring employment fairs. 6. Online
recruitment/e-recruitment
Alternatives to Recruiting
1. Subcontracting/outsourcing -
Subcontract work to another organization wherein the organization loses some of its control
over work that is outsourced. The company takes full operational responsibility for
performing that function rather than just supplying the personnel. This is now the trend for
most companies to avoid recruitment of additional employees.
2. Overtime - used to avoid the incremental cost additional employees for a short period of time.
Id the incremental costs of recruiting and hiring
3. Temporary help - use of temporary help service companies on a temporary basis. When the
In - use of temporary help services to fill the needs of temporary employees create a flexible staff
that temporary basis. When the company is downsizings create a flexible staff that can be laid
off easily and recalled when necessary.
4. Employee leasing - similar to temporary help agency but employees are
ovary Leasing companies issue the workers' paychecks, take care of personnel matters, ensure
compliance with work provide the required employee benefits.
Writing a Resume
A curriculum vitae is a document that describes your qualifications, including but not
limited to your profile, goals, skills, education, and professional experience. An employer mostly
sees a preview of how you can contribute to their company. A brief resume gives your employer
what you can offer them if they hire you
For employers, the resume is a screening device. Big corporations get thousands of them every
year so you have to get their attention and show your prospective employer that your resume is
worth a second look.
Resume writing is a critical task. People are always confused about resume writing. They
don't know what to write in a resume and what not to write. To get the attention of those in
charge with recruitment, you need to use words that would highlight what you do best since your
resume is the first step in "marketing" yourself to your perspective employer. In terms of style
and format, keep in mind the position and the company where you are applying.
Different Parts of Your Resume
1. Name, Address, and Telephone Number - These should be on top for companies to remember
your name. If possible, use a font size larger than what is used on the rest of your resume.
Example:
DR. CRISPINA RAFOL CORPUZ Ambid St. Biluso, Silang, Cavite
09228155973 fenny104@yahoo.com
crcorpuz@dlsd.edu.ph

2. Job Objective - This is crucial because it informs the employer if there is a match between the
job vacancy and what you can offer. If you can offer what the employer is looking for, he/she will
read on.
Example:
Seek a position as an HR manager using my Ph.D. in HRM and proven tr record in human
resource management in hot industry and the academe. Seek a position as an advertising sales
representative using my academic background, proven sales skills, and retail experience.

3. Education - List your educational experience in reverse chronological order. Include a high GPA
and any honors and awards received. List the key courses relevant to the job you are seeking.
Example:
University of Santo Tomas Ph.D. in HRM GPA: 1.25 MS in HRM GPA: 1.5
Coursework: Compensation and Benefits Administration, Training and Development,
Performance Appraisal, Labor Relation, Career Development. Management Research,
Cooperative Management.
Honors and Awards Received:
Magna cum Laude (Ph.D. HRM, UST)
College and Deans List Scholar (UP Baguio)
Regional Finalist, Metro bank Outstanding Teacher
CHIMES Awa, dee, De La Salle University-Dasmariñas
4. Skills - Employers want to know what skills you have. Highlight the main skills required of the
position you are seeking. By doing so, you increase your chances of creating a match in the
employer's mind. Use STAR Situation, Technique, Action, Results—as a guide and template.
Positive results create positive reactions. If you can quantify your results, you are talking in a
language employers understand.
Example:
Prepared the Personnel Policy Manual of Caffmaco and the Personnel Policy Manual for
Silang Municipal Employees. Prepared a textbook in Human Resource Management (1st,
2nd, and 3rd edition) and the Human Resource Manual for Cooperatives. Organizational
Ability: Actively involved in arranging and initiating leadership and research conferences;
responsibilities include massive information campaign to ensure maximum attendance,
preparing and coordinating the different activities involved.

.
5. Work Experience -List in reverse chronological List in reverse chronological order. Play up your
work if it is career-related or requires skills you want to emphasize. Whenever possible, use job
descriptions that are results.
Example:
Employment Background: Caffmaco Feeds Inc. Personnel Officer
Duties: Prepared the personnel policy manual
Updated the company's job description
Initiated training programs to enhance the skills of the employees
Revised and updated the performance appraisal methods and the salary scale by
means of conducting wage and salary survey
6. Communication Skills
Example:
Reinforced and interpreted company procedures and policies to newly hired employees
during orientation.
7. References - Choose them carefully. The trend is not to include the references on the resume.
It is better to use every precious inch of space to promote yourself. Initially, you can just place
there that references are available upon request.
Web Sites for Philippine and Overseas Jobs
esljobsworld.com
Excellent web site for Filipinos to find English teaching jobs abroad
WorkAbroad.ph
Overseas jobs for Filipinos posted by Philippine recruitment agencies licensed by POEA
poea.gov.ph
The official web site of the Philippine Overseas Employment Administration which
contains overseas job vacancies
jobstreet.com.ph
The site of Job Street Philippines which is part of Job Street Network. You can expand your
job search out of Philippines by going to other Job Street sites.
bestjobsph.com
Best Jobs Philippines, a Philippine job listing site with mostly local, but also overseas jobs
Phil-job.net
The official government site for Philippine jobs sponsored by Department Philippines of
Labor and Employment, with significant number of job listings in the
Monster.com
This job site mostly posts U.S. jobs. Occasionally, it post professional jobs in the
Philippines recruited by multinational companies.
GoAbroad.com
This job site includes teaching jobs, jobs in hospitality industry, and other entry-level
professional jobs.
www.bayt.com
It is the top source for jobs in the Middle East. The job site has sections like My Workspace,
Find Jobs, Post CV. Career Resources, Employers, etc.
www.naukrigulf.com
A leading Dubai job site which has categories like Search Jobs, Job Seekers Login, Career
Tools, and Post resume. Browse jobs by keyword. Experience, location, and functional area. It is
among the fastest growing job web sites in the gulf.
GulfTalent.com
Professional jobs in Dubai and other Middle East regions jobs.theemiratesnetwork.com
It is a one-stop destination for the job seekers and the employers across Emirates and Middle
East. The site is divided into sections: Job Search by Company, Advanced Job Search, My Account,
Career Tools, etc.
jobsindubai.com
It is a premier job site of Dubai and claims to be the largest e-race t service. Browse the
jobs and also go through the categories featured in the web site like Employers, Career Centre,
Login, etc.
www.uaedubaijobs.com
This is a leading job site of Dubai. The job seeker can browse jobs by industries like
banking, customer service, finance, healthcare technology and many others. The site features
Your Searches, Your Jobs, and Resources Link to Us, etc.
RecruitGulf.com
It lists the job openings in Dubai and Gulf. You can search jobs bar company or agency.
The section of Hot Jobs is very helpful to the users or the job seekers.
DubaiJobs.Net
This job site has categories like Urgent Jobs, Jobs in Dubai Search, etc. It offers job listings
in the categories like Information Technology, Hospitality Administration, Accounting, and etc.
uaestaffing.com
 It is the largest job site in UAE. It features the latest jobs in Dubai which include IT,
Marketing, Administration, and many more.
www.gulfconstructionjobs.com
Current construction job vacancies in the Gulf region
 Seatwork
I. Modified True or False. Write TRUE if the statement is correct; if it is FALSE, underline the
incorrect: word/phrase and write its corrected equivalent in the space before the number.
_________________1. Applicants with strong recommendations should be given priority in the
hiring of employees.
_________________2. Campus recruitment is a good source of applicants for managerial and
supervisory jobs.
_________________3. It is better to use online recruitment than newspaper ads.
_________________4. The use of “padrino" system is the easiest way to get a job.
_________________5. One way to avoid illegal recruitment is to check the web site of Philippine
Overseas Employment Administration (POEA) about licensed recruitment agencies.

II. Essay
1. Considering the growth of outsourcing HR functions, where do you need to focus if you want
a career in HR?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. Under what set of conditions is external recruitment recommended?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3. Employees often have negative views on the policy of hiring outside rather than promoting
from within. Employees believe they should always be given preference for promotion before
outsiders are hired. Do you think this is in the best interest of the company? Explain your answer.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

4. As a potential recruit who will probably be looking for a job after graduation explain the
method of recruiting that you think would be most effective in attracting you.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 Case Study
Recruiting a New Production Manager
Javier's Enterprises manufacture a variety of food products. Analisa Rafol had been the
production manager for the past two years after h position. Unfortunately, she is failing in her
job. She has been with the company since it started 18 years ago and because of her exceptional
she had been promoted many times.
Javier's Enterprises started as a family business and has followed a policy of promotion
from within to motivate employees and give them new opportunities to learn and grow.
The company is continuing to expand into foreign markets and it is essential that the
production department adopts the latest technology and production processes.
Top management is convinced that the job demands someone who has been educated in
manufacturing technology and who has at least two years of experience.
They are divided, however, on how to handle this problem.
One executive thinks the job should be given to one of the production supervisors who is
bright and capable and could probably acquire the knowledge and skills needed to be a good
production manager and still preserve the company's tradition of promoting from within.
Another executive thinks the company should advertise the job to solicit a large number
of applicants with excellent qualifications.
Answer the following questions:
1. How valuable is the tradition of promotion from within and how disruptive will it be to deviate
from the tradition? What are the advantages and risks of promoting from within in this situation?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. As head of HR, how are you going to handle the problem of the incumbent production
manager, Analisa Rafol, considering she rose from the ranks because of exceptional performance
record?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3. If the company decides to recruit from outside, what are the best external recruiting sources
for finding a new production manager?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Chapter 4
Selection of Employees

Job analysis. Human resource planning, and recruitment are necessary prerequisites to
the selection process. The selection process programs have developed a number of applicants
for available in
Before the selection process begins, a profile of characteristics required for successful
performance should be developed for the job specification these include the technical,
interpersonal, and personal requirements of the job discussed earlier in this book.
Why Selection Process is Important
1 Performance always depends in part on employees. Those who do not have the right skills will
not perform effectively and the overall performance in turn will suffer. The time to screen out
undesirable performers is before they become part of the organization, not after.
2. It is costly to recruit and hire employees. 3. Company objectives are better achieved by workers
who have been properly selected based on their qualifications.
4. An incompetent worker is a liability to the company causing direct losses in terms of
substandard performance and low productivity, and sometimes a potential source of problems
to management, his/her coworkers, and customers.
5. Applicants have varying degree of intelligence, aptitudes, and abilities. 6. Labor laws protect
employees making it difficult to terminate or dismiss an incompetent employee.
Selection Process27
1. Define the job before hiring an employee. This is where job analysis will come in handy. This
will help you prepare the job description and job specifications which in turn will define the
recruitment strategy.
2. Review application form and credentials carefully. This provides basic employment
information that can be used to screen out unqualified applications. Screen all applicants against
a list of qualifications, skills, experience, and characteristics required by the job. Take note of the
following information during your review of application form:
a. Employment gaps. These gaps include dates of employment listed only in years so that the
actual day and month of employment ending are masked.
b. Spelling, grammar, and punctuation. Attention to details such as appropriate grammar,
spelling, and punctuation do set a candidate above the pack. Failure to shine in these details on
their resume and application should be noted by the employer.
c. Evidence that a career has gone backwards or plateaued. In a career that is progressing
successfully, an applicant's resume should show evidence that job titles and job description have
improved as the year progresses.
d. Failure to follow directions. Failure to follow directions is not just a waste of time but it can
be harmful especially to job applicants because the employer might think the applicant does not
have the ability to work in an organized and effective manner. e. Failing to include a cover letter.
Submitting a high-quality cover letter with your resume can spell the difference. Failing to include
one would entail failing to demonstrate how you stand out from the rest of the applicants.
Resume
Reviewing a resume starts with a job description or role profile so you know broadly what
the job entails. It should show details about the qualifications and experience of the candidate
you seek to fill the job.
Cover Letters
Job searching specialists and career counselors recommend that job applicants write a
customized cover letter to accompany each resume sent to an employer. A cover letter saves you
time, connects the candidate's relevant experience to the advertised job, and provides insight
into the candidate's skills, characteristics, and experience.
Employment Application
Employers use the employment application to gather consistent data about prospective
employees. While the format for resumes and cover letters changes from person to person, the
employment application collects consistent information in a uniform format from every
applicant.
3. Employment interview. This provides the hiring supervisor the opportunity to review
candidates' qualifications and determine their suitability for the position. It also provides
candidates with the chance to learn about the position and its requirements and present
information on their skills and experience.
Preparation for the Interview
Supervisors and other personnel in the departments who are involved in the interview
should prepare in advance for the interview by:
• developing a list of core questions which will be asked of all candidates interviewed;
• reviewing the requirements for the position and comparing them with the applications
and resumes of candidates; and
• taking note of areas in the person's job history where clarification is needed.
Interview Format
• The interview format should be the same for all candidates.
• The same basic questions relating to the job should be asked.
• Candidates should be allowed to see the workplace if that is relevant.
• The essential functions and other requirements for the position should be
describe to each candidate; candidates should be asked if they can perform those
functions.
• If at all possible, all candidates should be interviewed by the same people
4. Employment testing. Employers often use tests and other selection procedures to screen
applicants for hiring and employees for promotion. There are many different types of tests and
selection procedures, including cognitive tests, personality tests, medical examinations, credit
checks and criminal background checks.
The use of tests and other selection procedures are very effective means of determining
which applicants or employees are most qualified for a particular job.
• Cognitive tests assess reasoning memory, perceptual speed and accuracy, and skills in
arithmetic and reading comprehension, as well as knowledge of a particular function or
job.
• Physical ability tests/test of motor and physical abilities measure the physical ability to
perform a particular task or the strength of specific muscle groups, as well as strength and
stamina in general.
• Sample job tasks (e.g., performance tests, simulations, work samples, and realistic job
previews) assess performance and aptitude on particular tasks.
• Medical inquiries and physical examinations, including psychological tests, assess
physical or mental health.
• Personality tests and integrity tests assess the degree to which a person has certain traits
or dispositions (e.g., dependability, cooperativeness, safety) or aim to predict the
likelihood that a person will engage in certain conduct (e.g., theft, absenteeism).
• English proficiency tests determine English fluency.
5. Background investigation/reference checking. This is done to verify the accuracy of factual
information previously provided by the applicant to uncover damaging background information
such as criminal records and violent behavior. More employers get these information from the
following:
a. Personal references
b. School records
c. Previous employment records
The verification of the information provided by the applicant is important because in some cases,
information supplied on the application form may be false or misleading.
6. Final interview
7. Selection decision
8. Physical examination. It determines if the applicant qualifies for the physical requirements of
the position and to discover any medical limitations that should be taken into account in placing
the applicant.
9. Final employment decision/placement on the job. This is the decision to accept or reject the
applicant based on the results of the physical examination and a value judgment based on all the
information gathered in the previous steps.

Step 1 - Job Analysis to Prepare Job Description and Job Specification

Step 2 - Preliminary Screening. Application Blank, and Interview
Step 3 - Employment Interview
Step 4 - Employment Testing
Step 5 - Background Investigation/Reference Checks
Step 6 - Final Interview
Step 7 - Selection Decision
Step 8 - Physical Examination
Step 9 - Placement on the Job

Figure 4. Steps in the Selection Process

 Seatwork

I. Identification: Fill in the blanks with the correct answer,

______________________________1. Type of test that reveals the applicant's emotional
maturity and other personal characteristics
______________________________2. Document that describes the applicant's qualifications
and gives the employer information about what the applicant can offer if hired for the position
______________________________3. The final activity in the acquisition of employees which
signifies decision to hire the applicant
_______________________________4. This type of test measures the applicant's knowledge of
a particular function or job.
_______________________________ 5. Type of test that measures the applicant's physical
ability to perform a particular task as well as strength and stamina in general
II. Essay
1. Give examples of how selection techniques are used in some organizations that you
know.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. “Tests often do not reflect an individual's true ability.” Explain your views on this
statement.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3. Why is it important to conduct reemployment background investigations?
How would you go about doing this?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
4. As an employer, discuss the things to consider when reviewing the resume of the
applicants.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
 Case Study
Test Scores versus Letter of Recommendation
Vangie Villela, the personnel officer of Caffmaco Feeds. Qui personnel officer of Caffmaco
Feeds, quickly realized the dilemma she faced as she received the application file of Angela Jov
applied for a position at the sales and marketing department because several openings in that
department still remained. However, Vangie was unsure whether Angela Joy would be able to
learn the job and do it well.
Angela Joy's application indicated that she was a recent commerce graduate who never
had a full-time job. Her best recommendation was a letter from Mr. Max Ditangan, the general
manager of the company. Max described Angela Joy as an excellent worker and “the kind of
person our company ought to employ." Angela Joy had been a babysitter for the Ditangan family
and lived on the same street.
Although Angela Joy's application and letter of recommendation were very positive,
Vangie doubted that she would succeed at the department. Her test scores were way below the
normal cutoff levels.
Angela Joy probably would be a very pleasant and cooperative employee and hiring her
would please Mr. Ditangan. But could she do the job?
Inspired by the case study found in www.scribd.com/doc/21791869/Recruitment-Selection-
ProcessProject-Report
1. Should Vangie disregard the test scores and hire Angela Joy? Explain your decision.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. Would it be kind to hire or not to hire Angela Joy?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3. What is your recommendation to help Vangie solve this problem?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Useful web sites:

Employee Selection and Development Inc.

http://www.employeeselect.com/ Staffing-and-Recruiting-Essentials.com
http://www.staffing-and-recruiting-essentials.com/
Chapter 5
Training and Development of Employees
Employee Orientation
Noe et al. (2007), in the book Fundamentals of Human Resource Management, aptly said
that employees today receive their first training during their first day on the job. This is the
orientation of employees for them to become familiar with assigned tasks, the organization's
practices, policies, and procedures.
This is the procedure for providing new employees with some basic background
information about the firm, its culture, and the job. It is similar to what sociologists refer to as
socialization. Socialization is a process when a new employee learns the norms, values, goals,
work procedures, and patterns of behavior that are expected by the organization.28
The initial period in an organization is also a critical point in determining whether a new
employee will become a high performer or simply perform at a minimum or mediocre level.
Regardless of the type of organization, orientation should be conducted at two levels:
1. Organizational/overview orientation - topics discussed include overview of the company, key
policies and procedures, compensation, benefits, safety and accident prevention, employees and
union relation if there is any, physical facilities, and the like.
2. Departmental and job orientation - topics about the department function and the duties and
responsibilities of the newly hired employee, policies, procedures, rules and regulations, tour of
the department, and introduction to department employees.
The HR department and the new employee's immediate supervisor normally share the
responsibility for the orientation.
Training Defined
It is a learning process that involves the acquisition of knowledge, sharpening of skills,
concepts, rules, or changing of attitudes and behaviors to enhance the performance of
employees.
Objectives of Training and Development
1. Improve productivity and the quality and quantity of output. This can lead to an increase in an
individual's skills in one or more areas of expertise.
2. Effectiveness in the present job. This involves increasing an individual’s motivation to perform
his/her job well.
3. Create more favorable attitudes such as loyalty and cooperation
4. Help employees in their personal development and advancement by helping them acquire
additional qualifications for a better job
5. Help organization respond to dynamic market conditions and changing customer demands 6.
Satisfy human resource planning requirements
Using Training to Deal with Competitive Challenges
1. Global challenge - In the advent of a borderless society, cross-cultural training is important to
prepare employees and their families for possible overseas assignments.
2. Quality challenge - The emphasis on quality is seen in the establishment of the Malcolm
Baldrige Quality Award and the ISO quality standards. As a result of these, the quality challenge
has forced employers to train their employees to create high-quality products and services.
3. High performance work system challenge - New technology causes changes in skill
requirements and work roles, and often results in redesigning work structures. Through new
technology, the information needed to improve customer service and product quality becomes
more accessible to employees.
What role does training play? Employees need job-specific knowledge and basic skills to
work with the equipment created with the new technology. Because technology is often used as
a means to achieve product diversification and customization, employees must have the ability
to listen and communicate with customers.
The Training Process
1. Training Needs Analysis (TNA)/Needs Assessment
This refers to the process used to determine if training is necessary. It identifies specific
job performance deficiencies and increases productivity. Training is needed when significant
differences exist between actual performance and prescribed standards. It refers to a systematic,
objective identification of training needs. Consulting the supervisor can determine areas of need,
revealed through performance appraisal, as well as the manager's concerns for specific training
needs to improve bottom-line performance. If such needs can be pinpointed by hard data and
survey information, training can lead to an increase in employee efficiency.
Five Methods Used to Gather Needs Assessment Information
a. Interviews - can be used to take note of the problem of the employee in relation to the job,
additional skills or knowledge the employee needs to better perform the job, and what training
the employee believes is needed.
b. Survey questionnaire - involves developing a list of skills required to perform particular jobs
effectively and asking employees to check skills in which they believe they need training on.
c. Observation - specialists in the HR department who have been trained to conduct job analysis
are usually adept at observing to identify training needs.
d. Focus groups - employees from various departments who conduct focus group sessions to
determine skills and knowledge needed by employees for the organization to stay competitive
and identify problems of the organization that can be solved by training.
e. Documentation examination - this involves examining records like absenteeism, turnover,
accident rates, and performance appraisal information to determine if problem exists and
whether any problems identified can be addressed through training.
Regardless of the methodology employed, a systematic and accurate need assessment
should be undertaken before any training is conducted.
Needs Assessment Process
a. Organizational analysis – involves determining the appropriateness of training, given the
company's business strategy, its resources available for training, and support by managers and
peers for training activities.

b. Person/performance analysis – determining the training needs of current employees. This

means verifying that there is a significant performance deficiency and whether that deficiency
should be rectified through training. It involves determining whether performance deficiencies
result from a lack of knowledge, skill, ability, or from a motivational or work design problem. It
also involves identifying who needs training and determining employees' readiness for training.

c. Task analysis - assessing training needs of new employees. This is a detailed study of the job
to determine what specific skills are required. It includes identifying the important tasks and
knowledge, skills, and behaviors that need to be emphasized in training for employees to develop
the skills and knowledge required for effective performance and for the employees to complete
their tasks.
 Behavior discrepancy or lack of experience

Cost value analysis

Is it a can’t do or a won’t do problem?

Can’t do Knows what to do?

Won’t do
Could do if wanted to? Employee wants
to do best?

Set standard Motivate

employee

Eliminate obstacle

PRACTICE

TRAIN

TRANSFER OR
CHANGE THE JOB
TERMINATE

Figure 5. Steps in Using Performance Analysis to Determine Training Needs

Step 1 - Appraise employee performance to determine how employees are doing and how they
should be doing their assigned task to take note of behavior discrepancy or lack of experience.
Step 2 - Determine cost of value of correcting identified behavioral discrepancy to find out if it
is worth the cost, time, and expense involved.
Step 3 – It is important to determine if the employee could do the expected
Step 4 - Performance standards should be clearly communicated to improve performance of
those who cannot do the job. For those who will not do the job, try to motivate them to change
their attitude. Rewards, punishments, sanctions, or some combination may be needed to create
a positive climate that employee utilizing his/her skills optimally.
Step 5 - Eliminate obstacles by determining other factors that can hinder performance such as
time, equipment, and other people.
Step 6 - Practice can help to improve performance.
Step 7 - If performance analysis indicates the need to acquire skills, training is a viable
consideration.
Step 8 - In redesigning through job enrichment, job simplification may be the best solution.
Step 9 - Last resort is either transfer or termination if performance is still a failure after exhausting
all means to help the employee improve his/her performance.
2. Designing the Training Programs/ Training Objectives
After determining training needs, objectives must be established to meet those needs.
Effective training objectives should state the benefit to the different stakeholders in the
organization. The outcome of the training or learning objectives can be categorized as follows:
a. Instructional objectives - What principles, facts, and concepts should be, learned in the
training program taking into consideration the positions of the participants?
b. Organizational and departmental objectives - What impact will the training have on
organizational and departmental outcomes such as absenteeism, turnover, reduced costs,
improved productivity, accident rate, and the like?
c. Individual and growth objectives - What impact will the training have on the behavioral
and attitudinal outcomes of the individual trainee and on the personal growth of the trainee?
Importance of Training Objectives
a. Considering that resources are always limited, the training objectives actually lead the design
of training. It provides the clear guidelines and develops the training program in less time because
objectives focus specifically on needs. It helps in adhering to a plan.
b. It tells the trainee what is expected out of him/her at the end of the training program. If the
goal is set to be challenging and motivating, then the likelihood of achieving those goals is much
higher than the situation in which no goal is set. Therefore, training objectives help in increasing
the probability that the participants will be successful in training.
 • remembering their first names; .
• pairing up the learners and have them get familiarized with one another; · listening carefully
to trainees' comments and opinions;
• telling the learners by what name the trainer wants to be addressed;
• getting to class before the arrival of learners; · starting the class promptly at the scheduled
time;
• using familiar examples;
• varying the instructional techniques; and
• using the alternate approach if one seems to bog down.

d. Reviewing the agenda - At the beginning of the training program, it is very important to
review the program objective. The trainer must tell the participants the goal of the program,
what is expected of the trainers, the flow of the program, and how the program will run. The
following information needs to be included:
• Kinds of training activities Schedule
• Setting group norms
• Housekeeping arrangements
• Flow of the program
• Handling problematic situations
5. Training Evaluation
This will help check whether training has had the desired effect. Training evaluation ensures that
candidates are able to implement their learning in their respective workplaces, or to the regular
work routines.
Purposes of Training Evaluation
a. Feedback. Giving feedback helps the candidates define the objectives and link them to learning
outcomes.
b. Research. It helps in ascertaining the relationship between acquired knowledge, transfer of
knowledge at the workplace, and training.
Process of Training Evaluation
Before the Training
The learner's skills and knowledge are assessed before the training because this can help
determine whether the actual outcomes are aligned with the expected outcomes of training.
During the Training
This is the phase at which instruction is started. This usually consists of short tests at
regular intervals.
After the Training
This phase is designed to determine whether training given had the desired effect at
individual departments and organizational levels. Observation, questionnaire, and interview are
some of the techniques used for evaluation.
One can also measure the success of the training program according to:
a. Reaction of the learner
The learners' immediate reactions to the training can determine if they are already bored
while the training is ongoing. Reaction level should include measuring of trainees' reactions to
program content, format, instructional techniques, abilities and style of trainer, extent to which
the training objectives were met, and the like.
b. Learning level
This refers to how well the trainees understood and absorbed the principles, facts, and
skills taught. To obtain an accurate picture of what was learned, trainees should be tested before
and after the program or through feedback devices using pretests and posttests to measure what
learners have actually learned.
c. Behavior of the learner
Supervisor's reaction to learners' performance following completion of the training
should also be documented. This is to measure the degree to which learners apply newly acquired
skills and knowledge to their jobs. To evaluate behavioral change, a systematic appraisal should
be made including statistical analysis of on-the-job performance on a before-and-after basis and
to relate changes to the training program. This should be made at least after six months after the
training so that the trainees will have an opportunity to put what they learned into practice.
d. Results
Determine the level of improvement in job performance and assess needed maintenance
to ensure continuous good performance. This is an attempt to measure changes in variables such
as reduced turnover, reduced costs, improved efficiency, reduction in grievance, and increase in
quality and quantity of production. Pretests, posttests, and controlled group's experimentation
are also required to come up with accurate results in the evaluation of the given training.
Training Options
There are 4 training options that an organization can consider before providing training to their
employees:
1. Outsourcing: Outsourcing allows organizations to concentrate on their core business. With the
availability of sufficient amount of know-how and proficiency in the market, it does not make
business sense for organizations
to have a separate training division. One approach is to tie up with some reputed training or
educational institutes and send employees for training. This way, a company gets to avail the
required expertise and high-quality training programs and saves money on content development,
recruiting, and maintaining training team. The only issue in outsourcing training is that the quality
of training has to be frequently tracked so as to ensure the trainer's performance and training
effectiveness.
2. Internal Training: A lot of questions has been raised whether to go in for outsource training or
setting up an internal division for training. Some outsource companies recruit external trainers
and call them to the company site to train employees. This alternative is generally for the new
employees who are given the fundamental or job-related training in-house and then send outside
for higher training.
3. Product-related Training: The dealer who delivers the apparatus or installs the system offers
the initial training. The user may negotiate with the dealer for regular updates and upgrades of
product-related know-how or expertise in place of a one-time training. The apparatus dealer may
choose to send their trainers or recruit outside trainers.
4. Independent Professionals: Considering the emerging threats and opportunities,
professionals need to keep themselves updated of the developments. In this option, the
responsibility of training is entirely on the individual and a better-trained professional will always
have better market worth than others.
Outsourcing the Training of Employees
The prospective benefits of outsourcing trainings are well-recognized. Organizations go
for outsourcing to save training costs, gain access to practical and technical proficiency,
concentrate on core competencies, and offer an overall enhanced training to their employees.
Outsourcing also allows companies to deliver the best training to their employees so they
can get the clients to the best of their abilities. With rapid globalization, increase in competition,
technological innovation, increase in access to information, and improved customer services, the
customer loyalty programs have become an integral part of organizations.
But if an organization lacks the resources, expertise, and finances, then there is a need to
outsource. Outsourcing is a competent tool that ensures and offers convincing return on
investment (ROI). Outsourcing subtracts the risk in setting up a complicated function that is not
a core competency. If outsourced to competitive and right consultancy, then the savings could
be as high as 50%. In addition to that, outsourcing leads to customer retention, customer loyalty,
customer satisfaction, and greater efficiencies on the part of employees.
 TABLE 1
S. No. COMPANY NAME
1 Accenture Learning
2 RWD Technologies
3 Geo Learning
4 General Physics –GP
5 NIIT, LTD
6 Element K
7 Adayana
8 IBM Leaning Solutions
9 Delta College
10 Raytheon Professional Services
11 Affiliated Computer Services. Inc. (ACS)
12 Convergys
13 Global Knowledge
14 Intrepid Leaning Solutions
15 Innovatia
16 Skills soft
17 Lion Bridge
18 Experts
19 Knowledge Pool
20 Development Dimensions International

TABLE 2
Top specialized Training Providers
S No. Company Name
1 Hewlett-Packard
2 Trifus
3 Siennax
4 Edista Learning
5 Harbinger Knowledge Products
6 Sify eLearning
7 LIQVID eLearning Services
8 IntroPro Learning INC
9 Enhance Systems
10 MountainTop Technologies, Inc.
Training Methods
There are various methods of training, which can be divided into cognitive and behavioral
methods. Trainers need to understand the pros and cons of each method and its impact on
trainees keeping their background and skills in mind before giving the training.
A. Cognitive methods dwell on giving theoretical training to the trainees. The various methods
under cognitive approach provide the rules on how to do specific tasks such as written or verbal
information and demonstrate relationships among concepts. These methods are associated with
changes in knowledge and attitude by stimulating learning.
The various methods that come under cognitive approach are:
1. Lecture/Discussion Approach
It involves transmitting large amount of factual information to a large number of people
at a given time. It is the traditional method of teaching and it is used in many training programs.
It is primarily one way - from the trainer to the audience.
A good lecture consists of introduction of the topic, purpose of the lecture, and priorities
and preferences or the order in which the topic will be covered. Main Features:
• Inability to identify and correct misunderstandings
• Less expensive
• Can reach large number of people at once
• Knowledge-building exercise
•Less effective because lectures require long periods of trainee inactivity
TABLE 3

Variation of the Lecture Method

Method Description
Standard Lecture Trainer Talks while trainees listen and absorbs information
Team Teaching Two or more trainers present different topics or alternative views of the
same topic
Guest Speakers Speakers visit the session for a predetermined time period Primary
instruction is conducted by the guest speaker.
Panels Two or more speakers presented information and ask questions
Student Presentation Groups of trainees present topics to the class.
2. Demonstrations/Hands-on Method
This requires the trainee to be actively involved in learning. This is ideal for developing
specific skills, understanding how skills can be transferred to the job, and experiencing all aspects
of completing a task,
This method is a visual display of how something works or how to do something. As an example,
a trainer shows the trainees how to perform or how to do the tasks of the job. In order to be
more effective, demonstration method should be accompanied by discussion or lecture method.
Main Features:
• Demonstrates the task by describing how to do, while doing
• Helps the trainees focus their attention on critical aspects of the task
• Explains why procedures should be carried out in a certain way
The difference between the lecture method and the demonstration method is the level of
involvement of the trainee.
3. Computer-based Training (CBT)
This is an interactive training experience in which the computer provides the learning
stimulus where the trainee must respond. The computer analyzes the responses and provides
feedback to the trainee. CBT was one of the first new technologies to be used in training.
Some of the benefits of computer-based training are shown in Figure 6.

Provides the
Reduces the Reduces
intructional
cost of trainee’s
consistency
training
learning
time

Allows the
trainee to Increases
.
master acces to
learning training

Allows Afford
learning at
an individual Privacy of
pace learning
4. Virtual Reality
Virtual reality is a training method that puts the participant in a 3-D environment. The
three dimensional environment simulates situations and events that are experienced in the job.
The participant interacts with 3-D images to accomplish the training objectives. This type of
environment is created to give the trainee an impression of physical involvement in an
environment. To experience virtual reality, the trainee uses devices like headset, gloves, and
treadmills.
One advantage of virtual reality is that it allows the trainee to practice dangerous tasks
without putting himself/herself or others in danger. The virtual reality environment can be
identical to the actual work environment. This method is appropriate in the training of pilots and
other airline crews. Devices include the following:
• Headset – provides audio and visual information
• Gloves – provide tactile information
• Treadmill – used for creating a sense of movement
Sensory devices – transmit how the trainees are responding in the virtual
•
workplace to the computer
This allows the virtual reality (VR) system to respond by changing the environment
appropriately.
Features of Virtual Reality (VR) System
• It is poorly understood and requires technical understanding.
• It is expensive. . It is time consuming.
• It is flexible in nature. . It does not incur traveling, lodging, or food cost.
• It requires excellent infrastructure.
B. Behavioral methods are more of giving practical training to the trainees. These methods are
best used for skills development.
The various methods that come under behavioral approach are:
1. Games and Simulations
This method stimulates learning because participants are actively involved and they
mimic the competitive nature of business. The decisions that participants make in games include
all aspects of management practice: labor relations (agreement in contract negotiation),
marketing (the price to charge for a new product), and finance (financing the purchase of new
technology).
A training game is defined as an activity or exercise in which trainees compete with each
other according to the defined set of rules. Simulation is creating computer versions of real-life
games. It is about imitating or making judgment or opining how events might occur in a real
situation.
2. Case Studies and Role Playing
In this type of training, participants assume specific characterizations and act out a
particular situation or problem. Rather than simply talking about what the solution should be,
the participants attempt to solve the situation as if they were the real individuals involved. This
method facilitates attitude change since the best procedure for changing attitude is to have
participants play roles in which they are asked to express attitudes that are opposite to their own
personal feelings.
This is an effective training technique for reducing role conflict between a supervisor and a union
steward. A good training activity can have those reverse roles and allow them to resolve their
differences.
3. On-the-Job Training (OJT) ·
OJT involves having a person learn a job by actually performing it. The employee is shown
how to perform the job and is allowed to do it under a trainer's supervision. The length of the
training will vary with the complexity of the job and the specific skills to be learned.
Although OJT is simpler and less costly, if it is not handled properly, the costs can be high
in terms of possible damage to machinery, unsatisfied customers, misfiled forms, and poorly
taught workers. It is then a must to carefully select and train the trainer to use the most effective
technique.
Advantages of OJT
a. No special space or equipment required
b. Provides immediate transfer of training
c. Allows employee to practice what they are expected to do after their training ends
Techniques for on-the-job development
a. Coaching/Mentoring
The coaches or mentors act as consultants who assist companies to prepare for
succession by identifying and training future top executives. This involves coaching the employee
through the use of periodic reviews of performance. Coaching lets subordinates know what their
supervisors think about how they do their jobs, enables supervisors and employees to work
together on ways in which employees can improve their performance, improves communication
and collaboration between supervisors, and provides framework for establishing short and long
term personal career goals.
b. Job Rotation
Movement from one position to another provides employees with exposure to a number of
different job functions and a broad grasp of the. Overall purpose of an organization. If directed
by a skilled manager, the trainees can obtain valuable knowledge about diverse operations and
can practice the different management skills that are required.
 It is the process of preparing employees at a lower level to replace someone at the next
higher level. It is generally done for designations that are crucial for the effective and efficient
functioning of the organization.
This makes flexibility possible in the department especially when there are unexpected
transfers, absences, promotions, or other replacements. Here, the employee benefits from
learning a variety of skills while the company benefits from having a group of experienced
candidates from whom to choose when vacancies occur.
C. Job Instruction Technique (JIT)
This technique uses a strategy with focus on knowledge (factual and procedural), skills,
and attitudes development. Before the actual learning occurs, it requires a careful analysis of the
job to be performed, an assessment of what the trainee knows about the job, and a training
schedule. In some cases, written instruction may be provided to serve as basis in completing a
procedure or to operate a machine. This is effective for repetitive situations.
Distance Learning or E-Learning in the Philippines
A study conducted by the group of Arimbuyutan (2007) noted that e-learning can still be
regarded as a new concept in the Philippines although open and distance learning has been
documented to be introduced in the Philippines way back in 1952 through the Farmers' School-
on-the-Air program over a one kilowatt radio station in the province of Iloilo. This, according to
them, is due to lack of infrastructure and access to technology such as computers, Internet
connection, investment, and propensity of the Filipinos to maintain the status quo instead of
implementing changes in training and learning system and processes.
Based on the study, the first to adopt online corporate training methods in the Philippines
as expected were the multinationals followed by local corporations that include the Philippine
Long Distance Telephone Company (PLDT), Manila Electric Company (MERALCO), the Aboitiz
Group, and Unilab.
Findings include an account of how PLDT was able to benefit using distance learning. PLDT
used e-learning techniques to significantly increase its number of certified CISCO network
associates and to train employees across various operational functions. Using their customized
solution or Smart force as its packaged software, they were able to encourage employees to
pursue training in any area of the business they had interest in and blend e-learning with hands-
on projects. PLDT estimated that this kind of “e-cross training has saved the company over
US$400,000 in training expenses over the past five years.
Benefits of E-Learning
Unilab HR and Organizational Development (OD) head Marne Amelia Dioquino
enumerated three main benefits of e-learning, namely:
 • reduced logistics and administration cost, compared to training under a
conventional class mode;
• wider variety of program offerings since courses can be recycled or adjusted to form
a new module; and
• Availability of courses at all time.
Despite the benefits mentioned, she also emphasized that e-learning is not for all
companies because of the high investment. Unilab has developed and deployed an e-learning
facility, called U-learn, a Web-based system that offers 90 courses for employees. Unilab
contracted a global provider of Web-based training, Skill Soft, to develop the facility, which
includes an online library with about 4,000 books.
Employees can access the online library after paying a one-time fee of US$100, which is
used to help maintain the facility.
In the case of SGV, the firm offers Web-based courses to constantly retool employees.
These courses cover subjects on the firm's audit methodology like sampling, audit risk
assessment, and substantive testing. Completion of courses forms part of promotion criteria.
Employees can take courses either with supervision of an SGV industry specialist or just
by themselves in the comfort of their homes. 38
Problems in the Use of E-Learning
1. Poor telecommunication infrastructure - Despite the efforts of various ICT driven government
agencies, a typical Filipino school still does not have enough access to computers and the
Internet. The level of “teledensity” has not reached the stage where the Internet can function
efficiently. Coupled to this is a lack of access to "bandwidth.”
2. Cost of appliance-It is said that problems of access to telecommunications are aggravated by
lack of access to a working computer capable of connecting to the Internet. The high student-to-
computer ratio and the limited use of ICT in the public schools are major problems in the
widespread implementation of e-learning.
3. Cost of Services - In the Philippines, the trends include the use of prepaid
Internet cards, use of mobile phones, iPod, and tablet that are all Wi-Fi ready, where the use of
Internet is based on usage per minute.
4. Teachers' fear of the technology because of limited know-how
5. Maintenance of ICT resources and lack of technical staff
6. Limited availability of education software and courseware
 Seatwork
I. Identification
_____________________1. Refers to training while actually working on the job
_____________________2. In charge in the orientation of newly hired employees
_____________________3. Cite two major problems in the use of e-learning.
_____________________4. A training option that can help the company save on training costs
while providing the best training available 5. Refers to the process used to determine if training
is necessary
_____________________6. Training method that can transmit large amount of factual
information to a large number of people at the same time and is considered less costly compared
to other means
_____________________7. Training method used by pilots and other airline crews
_____________________8. Training method where trainees are expected to analyze complex
problems faced by employees, their managers, and supervisors in the organization
_____________________9. and _____________________10. Are benefits of computer-based
training.

II. Essay
1. Orientation program is important to all newly hired employees. Explain why you agree or
disagree with this statement.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
2. Given the different OJT techniques, which do you prefer to use and why?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
3. Why is training expensive? What are the costs involved in giving a training?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
4. Why should Training Needs Analysis or TNA be performed before any formal training is
initiated?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
5. What do you think is the future of e-learning in the Philippines taking into consideration the
problem in its implementation?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
 Case Study
On-the-Job Training at Buenaobra's Machine Shop
Buenaobra's Machine Shop employs about 300 people. During the summer months,
production volume significantly increases and the company needs to hire about 40 new
employees to handle the heavy workload. Most of these new employees are college and high
school students who are on summer vacation.
All newly hired employees are asked to fill up the company's application form then
instructed to go directly to the manufacturing site ready to start in their first day of work. They
receive no orientation. The workers are shown to a workstation and after a minimum amount of
on-the-job training, they are expected to start performing the jobs. Most of the jobs are quite
simple and hence, training is completed within 5 to 10 minutes.
The company has had excellent experience with the students over the years. Much of the
success can be attributed to the older workers coming to the aid of the new employees when
trouble or difficulties arise.
One summer, the company experienced a rash of injuries to its employees. Although most
of the injuries were minor, the company felt it imperative to conduct a series of short training
programs on safe material-handling techniques. The company was at a loss as to who should
conduct the training. Out of desperation, the president asked Jonathan Andres, one of the first
line supervisors to conduct the training. Jonathan had recently attended a training program on
safety and was active in the Red Cross. Jonathan reluctantly agreed to conduct the training.
In the first training session, Jonathan nervously stood up in front of employees, many of
whom were college students and read his presentation in a monotone voice. His entire speech
lasted about 7 minutes.
After Jonathan's speech, the employees immediately returned to work. By the end of the
day, however, everyone in the plant had heard about the training fiasco and all, except the
president, were laughing about it.
Inspired by the article about OJT for new workers found in www.calswec.berkeley.edu/calswec/ Alameda
Co_OJT_FullCurriculum.doc

Help the company president solve the problem by following the steps below:
1. State the main problem of Buenaobra's Machine Shop.
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
2. State the different areas of consideration following the guide below:
Strengths of the Company
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Weakness of the Company
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________

Opportunities
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________

Threats
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3.Give your proposed solutuins/alternative courses of action or ACA (Minimum of three) to help
the company president overcome the problem.
Don’t forget to state the advantages and disadvanteges of each solution.
a. ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
b. ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
c. ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
4. State your recommendation based on your ACA.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________

5. Provide a conclusion or detailed action plan to implement your recommendation using the
guide below:
Specific Activity Person Responsible Time Frame Budgetary Requirements
Chapter 6
Performance Review and Appraisal
One of the most important activities of an HR manager is maintaining and enhancing the
workforce. With all the efforts and costs that recruiting and selection entail, it is important to
develop employees for them to use their fullest capabilities, thus, improving the effectiveness of
the organization. Performance review is the ongoing process of evaluating and improving
employees' performance.40 it is a process by which an individual's work performance is assessed
and evaluated. It answers the question, "How well has the employee performed during the
period of time in question?"
It also entails determining and communicating to an employee how he/she is performing
on the job and ideally, establishing a plan of improvement. Performance is often confused with
the effort that refers to energy expended.
Performance is measured in terms of result. Performance may be defined then as the
accomplishment of an employee or manager's assigned duties and outcomes produced on a
specified job function or activity during a specified time period.
Performance review or evaluation, on the other hand, refers to a systematic description
and review of an individual's job performance. The major contribution of performance
management is its focus on achieving results-useful products and services for customers inside
and outside the organization. Performance management redirects efforts away from business
toward effectiveness. It is an HRM activity where the individual worker's efficiency is observed
and appraised during a given period on the basis of a systematic uniform performance standard.
It helps in identifying, collecting, sharing, and using information about the performance of people
at work.
Performance management is an ongoing communication process, undertaken in
partnership between an employee and his/her immediate supervisor. It involves establishing
clear expectations and understanding about the following:
a. The essential job functions the employee is expected to do
b. How the employee's job contributes to the goals of the organization
c. What "doing the job well” means in concrete terms
d. How the employee and supervisor will work together to sustain, improve, or build on existing
employee performance
e. How job performance will be measured
f. Identifying barriers to performance and removing them
g. Refers to the total system of gathering information, the review and feedback to the individual,
and storing information to improve organization effectiveness
 The primary goal of performance management is to improve organizational performance.
But one must take note that performance appraisal is not performance management. Evaluating
performance is just one part of performance management system.
Why Measure Performance
1. Managers cannot manage and define what is expected and gives feedback and recognition
without defining the basis or performance measures. It allows management to specify what must
be done and to combine feedback with goal setting.
2. On the part of the employee, he/she cannot improve on what he/she is supposed to do without
the necessary data before and after to see if performance is actually improving.
3. Creating high performance requires a definition of clear goals so you will know. It when you
see it. In addition, all high performers get there because they have a clear picture of where they
are going.
4. Pay for performance requires metrics. If the organization will be giving pay based on
performance, there is a need to have some way of knowing when the payout has been earned.
Early Approaches to Performance Appraisal
1. Focusing on the employees' past performance - this is more on management of results.
2. Focusing on the employees' development - In here, results become the driving force for
management development. These two approaches are not without difficulties that is why
modern approaches to performance review takes a much more strategic posture to link personal
development with organizational development and continuous improvement measures.

Common Flaws Identified with Performance Review System Design

1. Organizations limit performance review to make employees accountable for past endeavor.
This takes the view that making people accountable for poor performance will automatically
generate improvement.
2. Tying performance review to employee salary review. This is trying to reinforce the power of
management to decide who are those entitled to receive increases, showing who is boss, with
the use of stick and carrot.
These flaws point to the fact that companies must not only look at performance review
as the mechanical administration of personnel evaluation forms. The evaluator must be able to
inform an employee that his/her performance is less than the required standard and less than
what he/she is capable of giving, or that he/she has an attitude or behavior problem that is
limiting his/her contribution or adversely affecting his/her colleagues. This is why there is a need
to focus on performance management rather than just evaluating the employees' performance.
Managing performance is done with the employee because it benefits the employee, the
manager, and the organization, and is best done in a collaborative, cooperative way.
Objectives of Performance Appraisal
1. It provides information upon which promotion, transfer, demotion, layoff, discharge, and
salary decisions can be made. It could justify reward decisions including merit increases,
promotions, and other forms of rewards.
2. It provides an opportunity for the supervisor and his/her subordinates to review and identify
their strengths and weaknesses or work-related behavior. This in turn allows both of them to
develop a plan for correcting any deficiencies that the appraisal might have unearthed or
reinforce the things the subordinate does right. This feedback clarifies for employees the job
expectations held by their supervisor.
3. It forms the basis in identifying the training needs of employees as well as evaluating the
success of training, thus, development initiatives are not based on opinions but rather on results.
4. It helps in the firm's career planning process because it provides a good opportunity to review
the person's career plans in light of his/her exhibited strengths and weaknesses. Thus, it could
produce evidence and/or opportunity for career progression.
5. It allows easy monitoring and supervision.
6. It helps evaluate the individual's share relative to the team's contribution in achieving the
organization's goal.
7. It provides information to evaluate effectiveness of selection and placement decisions.
Performance Criteria
Deciding what to evaluate reflects the personal values of the individuals who design the
evaluation system. Most people agree that quality and quantity of performance are important
dimensions to evaluate but there is less agreement about traits such as appearance, initiative,
enthusiasm, and the like. Three criteria are suggested here to be included in the construction of
performance evaluation:
1. Relevance - relevant performance dimensions are determined by the duties and
responsibilities contained in the job description.
2. Reliability - produced consistent and repeatable evaluation.
3. Freedom from contamination - should measure each employee's performance without
being contaminated by factors that an employee. Cannot control such as economic conditions,
material shortage, or poor equipment.
Indicators or Matrix that Can Help Measure Employee Performance43
According to Hakala (2008), a manager or supervisor can use the following indicators of
performance to appraise subordinates.
1. Quantity: The number of units produced, processed, or sold is a good objective
indicator of performance.
2. Quality: The percentage of work output that must be redone or is rejected is one
indicator of quality. In a sales environment, the percentage of inquiries converted to sales is an
indicator of salesmanship quality.
3. Timeliness: How fast work is performed; it might be the number of units produced per
hour.
4. Cost-effectiveness: The cost of work performed should be used as a measure of
performance only if the employee has some degree of control over costs.
5. Absenteeism/Tardiness: An employee is obviously not performing when he or she is
not at work.
6. Creativity: Supervisors and employees should keep track of creative work C examples
and attempt to quantify them.
7. Adherence to Policy: This may seem to be the opposite of creativity, but it is merely a
boundary on creativity. Deviations from policy indicate an employee whose performance goals
are not well-aligned with those of the company.
8. Gossiping and other Personal Habits: They may not seem performance related to the
employee, but some personal habits, like gossiping or rumor mongering, can disrupt job
performance and interfere with the performance of others. The specific behaviors should be
defined, and goals should be set for reducing their frequency.
9. Personal Appearance/Grooming: Most people know how to dress for work, but in many
organizations, there is at least one employee who needs to be told. Examples of inappropriate
appearance and grooming should be spelled out, their effects upon the employee's performance
and that of others explained, and corrective actions defined.
Who Should Evaluate Performance?
1. Manager/Supervisor Appraisal - Hierarchical arrangement of formal authority in most
organizations gives the supervisor or the manager legitimate authority to evaluate subordinates.
They are in the best position to observe employees, and they should have a better understanding
of the job being performed.
2. Self-appraisal - The employee appraises his or her own performance, in many cases comparing
the self-appraisal to management's review. Often. Self-appraisals can highlight discrepancies
between what the employee and management think are important performance factors and
provide mutual feedback for meaningful adjustment of expectations,
 This is considered valuable for personal development and the identification of training
needs, but not for evaluative purposes. This is useful when combined with other forms of
appraisal.
3. Subordinates Appraisal - Provides unique information because subordinates know better than
anyone else whether leadership is good or bad. It makes the workplace more democratic and
responsive to human needs and it increases the flow of communication as well.
Subordinates can also provide useful insights in the appraisal of their seniors, particularly in
identifying developmental needs. Usually, such inputs are used by companies which have
instituted 360-degree appraisal for their middle and senior-level managers.
4. Peer Appraisal - Research on peer evaluation has found to be predictive of success and yielded
good reliability and validity. This method is based on the assumption that coworkers are most
familiar with an employee's performance. Peer appraisals are often effective at focusing an
employee's attention on undesirable behaviors and motivating change. This method often places
greater emphasis on team performance and team rewards.
5. Customer/Supplier – Customers, vendors, or suppliers can be potential evaluators. This kind
of appraisal would be more relevant for service-oriented companies such as banks, where the
inputs provided by external customers can be useful for staffing.
6. Team Appraisal - Similar to peer appraisal in that members of a team, who may hold different
positions, are asked to appraise each other's work and work styles. This approach assumes that
the team's objectives and each member's expected contribution have been clearly defined.
7. Assessment Center - The employee is appraised by professional assessors who may evaluate
simulated or actual work activities. Objectivity is one advantage of assessment centers, which
produce reviews that are not clouded by personal relationships with employees.
8. 360-Degree or "Full-Circle” Appraisal - The employee's performance is appraised by everyone
with whom he or she interacts, including managers, peers, customers, and members of other
departments. This is the most comprehensive and expensive way to measure performance, and
it is generally reserved for key employees.
Remember, performance appraisal program can never be perfect. It would depend much
on the evaluator or on the employee, to be effective and responsive in meeting the dynamic and
changing organizational and employee needs.
 GOAL SETTING
I
PERFORMANCE STANDARD SETTING
I
INFORMATION DISSEMINATION
I
ACTUAL PERFORMANCE MEASUREMENT
I
FEEDBACK EVALUATION RESULTS
I
REWARDING EXEMPLARY PERFORMANCE
I
CORRECTING SUBSTANDARD PERFORMANCE
Figure 7. Process Involved in Performance Evaluation
Sources of Data in Appraisal
1. Production Data - evaluate the degree of dependable task accomplishment by measuring
quantity and quality of performance. Examples include number of units produced per hour, peso
volume of sales, profit, return on investment, and the like. These are considered the best
measures of performance because they are directly observable and they can be counted.
2. Personnel Data – type of information found in an individual's personnel files.
Examples include absenteeism, tardiness, training program completed, and critical incidents.
Except for critical incidents, these data are directly observable and can be reliably measured. 3.
Judgment of Others – Many of the spontaneous and innovative behaviors that are important to
organizational effectiveness can only be assessed by the judgments of others and ought to be
obtained in every evaluation.
Performance Appraisal Methods
Multiple Person Evaluation Methods
1. Ranking Method - ranking the employee from the most efficient to the least capable on each
trait or quality to be used in judging the employees' performance or just simply ranking the
employee from best to worst.
This can be very difficult to do if the supervisor is asked to rank a large number of
subordinates and many traits are involved.
Ranking system has also the potential to cause unwanted side effects.
Because ranking method compares colleagues in a very real sense, it pushes people to compete
with each other. It can encourage people to work harder to come out on top but it can also
encourage people to passively interfere with the work of others.
2. Paired comparison method - consists of asking an evaluator to consider only two individuals
at one time and to decide who is better. Then another pair of names is presented to the evaluator
for another evaluation. An employee's position in the final ranking is determined by the number
of times that employee is chosen over the other employees. With large number of subordinates,
this can be very tedious. A supervisor with 20 employees to evaluate will have to process 190
3. Forced distribution - Forced ranking is a method of performance appraisal that ranks
employees through forced distribution. The rater is asked to rate employees in some fixed
distribution of categories such as superior, above average, average, below average, and poor. It
assumes that the relative percentages would be approximately 10%, 20%, 40%, 20%, and 10%
respectively. This system is based on social science statistics of the normal curve, which presents
a bell-shaped graph where one end of the scale represents the best job performance and the
other end represents the worst performance.
The top-ranked employees are considered "high-potential” employees and are often
targeted for a more rapid career and leadership development programs.
In contrast, those ranked at the bottom are denied of bonuses and pay increases. They
may be given a probationary period to improve their performance.
Individual Evaluation Methods
1. Critical Incident Method
The critical incident for performance appraisal is a method in which the manager writes
down positive and negative performance behavior of employees throughout the performance
period. This requires recording of eve represent either effective or ineffective performance for
each employee being rated. An incident is critical when it illustrates what the employee has done
or failed to do. At the end of the rating period, these recorded critical incidents are used in the
evaluation of the workers' performance.
Recorded incidents can help avoid many common rating errors and help facilitate discussions
about how an employee's performance can be improved. Its main drawback is that the rater is
which can be burdensome and time consuming. To add, there is danger that negative incidents
may be more noticeable than positive incidents.
2. Checklist and Weighted Checklist Method
Checklist is a set of objectives or descriptive statements. If the rater believes that the employee
possesses a trait listed, the rater checks the item; if not, the rater leaves it blank. This method
describes a performance appraisal method where the rater, familiar with the jobs being
evaluated, prepares a large list of descriptive statements about effective and ineffective behavior
on jobs. The employee's evaluation is the sum of the scores (weights) on the items checked.
Drawback of this method is that it is time consuming to prepare the questions or checklist for
each job category and the checklist questions can have different meanings for different raters.
Check all statements that are accurate decriptions of the behavior and activities of
______________for the period _______________________________________________.
Name: _________________________________________Data: ______________________
Chech as many or as few as applied Weights
___Is a decisive descion-maker 10.0
___Seems to be focused in addressing pressing problems 8.7
___Is concerned about the quality of work completed 10.0
___Reviews carefully the work of mechanics who report to him 7.4
___Is able to delegate a job to subordinate mechanics 6.5
___Is easy to work with 6.3
___Is able to clearly communicate guideline for improving work 8.2
___Is sensitive to the needs of fellow workers 8.0
___Gives credit freely to those who deserve recognition 7.9
___Works well with people outside the work team 6.1
Note: Weights are not included on the actual weighted checklist to be completed. The items
Checked are added together to derive an overall score. A higher score indicated better performance. (Adapted with
modifications from “Performance Appraisal: An Unnerving Yet Useful Process" by Robert M. Glen, Public Personnel
Management Journal, Spring 1990)
3. Graphic Rating Scales
• This is the oldest and most widely used method for performance appraisal.
• The scales may specify five points, so a factor such as job knowledge might be rated from
1 (poorly informed about work duties) to 5 (has complete mastery of all phases of the
job).
Using this technique, the rater is presented with a set of traits such as those shown in Figure
10. The rater is asked to rate employees on each of the characteristics listed. Its main advantage
is that the method allows quantitative comparison
Employee Name ____________________________Position Title_________________________ Department
_______________________________________
Reason for Review // Annual // Promotion // Merit 17
//End of Probation Period // Unsatisfactory Performance
// Others
Date of Last Appraisal: _____________ Scheduled Appraisal _____________________
Date: (Adapted with modification from "Link Job Descriptions to Performance Appraisals" by James Buford et al.,
Personnel Journal)
Instructions: Carefully evaluate employee's work performance in relation to current job requirements. Check
rating box to indicate the employee's performance. Indicate NA if not applicable. Assign points for
each rating within the scale and indicate in the corresponding point box. Points will be totaled and
averaged for an overall performance score.
Rating Identification
O-Outstanding Performance is exceptional in all areas and is recognizable as being far superior
to others. (100-90)
V - Very Good Results clearly exceed most position requirements. Performance is of high
quality and is achieved on a consistent basis. (89-80)
G – Good Competent and dependable level of performance. Meets performance
standards of the job. (79-70)
I - Improvement Needed Performance is deficient in certain areas. Improvement is necessary. (69-60)
U-Unsatisfactory Results are generally unacceptable and require immediate improvement. (Below
60)

Sample Items on a Graphic Rating Scale Evaluation Form

General Factors
a. Quality - the accuracy, thoroughness, and acceptability of work performed.
( ) Does not meet the minimum acceptable quality requirements, with frequent errors
( ) Careless, often makes errors
( ) Quality of work is satisfactory.
( ) Quality is above standard, exact, and precise most of the time. O Produced item is of superior quality,
b. Productivity - the quantity and efficiency or work produced in a specified period of time.
( ) Does not meet the minimum requirements
( ) Does just enough to be get by
( ) Volume of work is satisfactory
( ) Very industrious, does more than what is required
( ) Has a superior production record
c. Job knowledge - the practical and technical skills and information needed to perform the job.
( ) is poorly informed about work assignment
( ) Lacks knowledge of some phases of the job
( ) is moderately informed and can answer most questions about the job
( ) Understands all phases of the job
( ) Has complete mastery of all phases of the job
d. Dependability - the ability to do the required jobs well with a minimum supervision.
( ) Requires close supervision, unreliable
( ) Sometimes requires prompting
( ) Usually completes necessary tasks with reasonable promptness
( ) Requires little supervision
( ) Very reliable, with little or no supervision required
e. Attendance - measures tardiness and absenteeism of employees.
( ) is often absent without any valid reason
( ) Sometimes absent or late
( ) Usually present and on time
( ) With regular attendance
( ) Always present, volunteers for overtime when needed
Figure 10. Performance Appraisal Form Using Graphic Rating Scale
This method permits commenting on the employee's unique characteristics. It is more effective when
specific examples of employee behavior are cited, along with objective facts supported by any quantitative
information. Its main drawback is that it is time consuming when describing all of the individual's characteristics and
that it may be unfair since the quality may depend upon the writing skills of the rater. A busy rater may write the
essay hurriedly without properly assessing the actual performance of the rate.
4. Behaviorally Anchored Rating Scales (BARS)
This method is used to describe a performance rating that is focused on specific behaviors or sets as
indicators of effective or ineffective performance. It is a combination of the rating scale and critical incident
techniques of employee performance evaluation.
This method evaluates observable behavior rather than subjective perceptions but it requires a lot of time
and effort to develop the scales. It is designed to assess specific behavior required to successfully perform a job. The
assumption is that these functional behaviors will result in effective job performance.
Excellent 7 Always responds appropriately, even with the most irate customers;
continually presents a friendly, helpful image to the outside public
Good Performance 6 Sometimes uses poor grammar, but usually responds well
Slightly Good Performance 5 Does the job well but does not go out of the way to be helpful
Average Performance 4 occasionally becomes flustered with irate customers and has difficulty
solving problems or thinking clearly
Slightly Poor Performance 3 Responds matter-of-factly; performs in a mechanical and
disinterested way
Poor Performance 2 normally acts courteously when others are nice, but responds poorly
and loses composure when others get nasty
Unacceptable Performance 1 occasionally acts crudely, abrasively, or offensively when responding
to others even when there is no apparent provocation or reason
Figure 11. Behaviorally Anchored Rating Scale: Contact with Customers or Clients
5. Management by Objective (MBO)
MBO is a process in which managers and their subordinates sét objectives for the employee to achieve
within a specific rating period.
MBO focuses attention on what must be accomplished (goals) rather than how it is accomplished
(methods). Reward is given based on the result or output.
MBO allows easy linking of individual objectives to work unit objectives. It reduces the likelihood of
disagreement during appraisal meetings if standards and targets were written well during the performance planning
process and considering employees were involved in the preparation and identification of targeted outcomes.
For MBO to be effective, it must be SMART—the objective must be specific, measurable, attainable, results-
oriented, and time-bound.
6. Multi-rater Assessment or the 360-degree Performance Feedback
The 360-degree feedback is a system or process in which employees receive confidential, anonymous
feedback from people who work around them, their immediate superior, peers, customers, or suppliers.
Traditionally, companies evaluate employee performance by relying almost exclusively on the supervisor's
ratings.
The strength of this method lies on the fact that more people are involved in the evaluation instead of just
relying on the supervisor, hence, bias is prevented.
Possible advantages of this method:
a. Provides evaluation from different stakeholders which may help reduce performance appraisal errors
and biases
b. Increases employee and possibly customer involvement
c. Increases management responsiveness to employee concerns
d. Its statistical record provides good documentation for possible legal action.
Seven Tips for Creating a World-class Appraisal System“
1. Design the form first. The appraisal form is a lightning rod that will attract everyone's
attention. Design the form early and get a lot of feedback on it.
2. Build your company's values into your form. Performance appraisal is a means, not an end.
Values become real only when people are held accountable for living up to them.
3. Assure ongoing communication during development. Circulate drafts and invite users to make
recommendations. Keep the development process visible through announcements and house-
organ bulletins. Use surveys, and request suggestions. Remember the cardinal principle that
people support what they help create.
4. Train all appraisers. Performance appraisal (PA) requires a multitude of skills-behavioral
observation and discrimination, goal-setting people, confronting unacceptable performance,
persuading, problem-solving, and planning. Unless appraiser training is universal and
comprehensive, the program would not produce much.
5. Orient all appraises. The program's purposes and procedures must be explained in advance to
all who will be affected by it. Specific training should be provided if the performance
management procedure requires self-appraisal, Multi-rater assessment, upward appraisal, or
individual development planning.
6. Use the results. If the results of the performance appraisal are not visibly used in making
promotion, salary changes, employee movement, training, and termination decisions, people will
decide that it is merely an exercise and therefore is just a waste of time.
7. Monitor and revise the program. Audit the quality of appraisals, the extent to which the system
is being used, and the extent to which the original objectives have been met. Provide feedback
to management, appraisers, and appraises. Actively seek and incorporate suggestions for
improvement. Train new appraisers as they are appointed to supervisory positions.
Performance Appraisal Problems and Solution
1. Halo Effect
The Problem: A manager or supervisor allows a general favorable impression of an
employee to influence his or her judgment on each separate factor in the performance appraisal
process. An unfriendly employee will often be rated unsatisfactory for all traits rather than just
for the trait pertaining to interpersonal relation.
The Solution: The rater should consider each factor independently of all other factors,
rather than rating the employee at the same level on all (or most) factors in an appraisal. Being
aware of this problem is a major step toward avoiding it.
2. Recency Effect
The Problem: Recent events tend to have an unusually strong influence on performance
evaluation. Outstanding contribution or untimely mistake just prior to a performance review
colors the manager's perception of the employee's performance for the entire appraisal period.
(A similar pitfall, the unforgettable effect, occurs when an employee does something so
extraordinary, either positively or negatively, that its impressions last for a long time, to the
advantage or disadvantage of the employee.)
The Solution: An alert manager compensates for lack of perspective by careful
documentation and to make refinements in the design of the appraisal method, as well as
improving the skills of the raters.
3. Previous Performance Bias
The Problem: The employee who has performed well in the distant past is assumed to be
acceptable in the recent past also. Previous good work tends to carry over into the new period
being appraised.
The Solution: Once again, observation and documentation of the employee's
performance will give an accurate account of the performance period under scrutiny.
4. Leniency/Harshness/Strictness Error
The Problem: Some managers tend to give mostly favorable ratings while others tend to
evaluate the same performance levels unfavorably. This error is usually committed when
managers feel uncomfortable about communicating negative feedback or do not want to hurt
the employee's feelings.
The Solution: Understanding the constructive purposes of performance appraisal and
acquiring effective skills in giving negative feedback should reduce the tendency to commit this
error. Raters can assess their own harsh and lenient rating tendencies by examining or
distributing ratings forcing a normal distribution to avoid this error.
5. Central Tendency
The Problem: Central tendency occurs when a manager rates all employees as average by
choosing the middle rating. The central tendency closes the door to an employee's growth and
improvement on a job, because no strengths or weaknesses are identified.
The Solution: Ranking employees can avoid this error because all employees must be
ranked and, thus, cannot all be rated average.
6. Carelessness
The Problem: Managers make quick guesses based on first impressions of an employee's
performance.
The Solution: Managers commit significant time observing staff members and forming
judgments based on their observations. Major decisions are often based on performance rating,
and ill-considered ratings will contribute unreliable information and detract from the
organization's goals.
7. Bias
• The Problem: Individual differences among ratees in terms of characteristics like age,
race, sex, and religious and political affiliations. Evaluations are dependent on the rater's
personal preferences, prejudices, and biases. The rater who has a biased or prejudiced
attitude toward certain groups of people looks for behavior in these groups that confirms
his or her prejudices.
The Solution: When rating employees, the manager must consider the same relevant
behaviors for all employees supervised. Individual differences and other nonperformance factors
should not affect performance appraisal ratings Careful observation, description, and
documentation of actual performance on an ongoing basis reduce the tendency for bias by
emphasizing job performance over a period of time.
Feedback or Appraisal Interview
This is an interview in which the supervisor and subordinates review the appraisal and
make plans to remedy deficiencies and reinforce provides an opportunity to identify the
subordinate's feelings more thoroughly and thus improve communication between supervisor
and the employee.
Annual discussions of performance should include:
1. Review of overall progress;
2. Discussion of problems that were encountered;
3. Discussion of sources of ineffective performance;
4. Agreement about how performance can be improved;
5. Discussions on how current performance fits with long-range career goals;
 Seatwork
I. Modified True or False. Write TRUE if the statement is correct; if it is FALSE, underline the
incorrect word/phrase and write its corrected equivalent in the space before the number.
__________________1. Halo effects occur when the rater is influenced by the dominant
characteristics of the rate.
__________________2. Appraisal or feedback interview is no longer required if performance
appraisal is above average or outstanding.
__________________3. The choice of method in evaluating an employee's performance will
depend on the HR department.
__________________4. The immediate supervisor is the best person to evaluate employees'
performance.
__________________5. MBO is popularly used by most companies because it focuses on the
methods used to accomplish assigned task.
II. Essay
1. Explain the problems to be avoided in appraising performance.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
2. Discuss the importance of appraisal or feedback interview to the employee.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________

3. What criteria should be used in evaluating the performance of your professor inside the
classroom?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
 Case Study
Why the Need to Change
Artermio was appointed CEO of Rafol's Enterprises upon the death of his father.
The company went public under the leadership of Artemio and had to adapt to being open
and transparent to outside investors. There were pressures from the shareholders to reduce
costs and increase profits. In response, Artemio implemented cost-cutting measures including
downsizing by means of enforcing early retirement of employees who he felt could not cope in
the move to digitize the operation of the business.
As expected, most of the employees were not happy and this affected the morale of their
employees. Artemio sought the assistance of Ely Buenaobra, the VP of HR. Ely suggested a
comprehensive program wherein it is not just the managers who would be evaluated based on
achieving results but even the employees by means of demonstrating to their employees that
their performance affects company results. This in turn will show to the shareholders that the
company's primary objective is to increase performance.
Inspired by the case entitled "A Time for Change” from the book Human Resource Management by Wendell French,
Houghton Mifflin Company, 2007.
• Do you agree with the proposal of Ely? Explain your answer.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
• If you were an employee of Rafol's Enterprises, how would you react to the new
evaluation system that will measure your performance vis-à-vis predetermined outcomes
or objectives?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
• Who should be involved in developing employee outcomes/objectives?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
Chapter 7
Changes in Personnel Status
Changes in employment status are bound to take place during the period of employment.
There is a continuous movement of employees in the form of promotion, transfer, demotion, or
separation. This movement is the function of placement wherein the objective is to find or assign
the right person to the right job.
A change in employment status is effected by a personnel action generated by the HR
department upon receipt of a written request from an authorized representative of a department
expressing the intended change in employment status.
Promotion
It involves the reassignment of an employee to a higher job position. This also refers to
the upward or vertical movement of employees in an organization from lower level jobs to higher
level jobs involving increases in duties and responsibilities, higher pay, and privileges. Promotion
serves as encouragement and inspiration to other employees to exert their maximum effort. This
can also help instill loyalty to the firm.
Approaches to Recruit Employees for Promotion
1. Closed promotion system - the responsibility of the supervisor to identify promotable
employees for the job to be filled.
2. Open promotion system also known as job posting - enhance participation and the
achievement of equal opportunity goals.
Criteria Used in Promoting Employees
1. Seniority - length of service
a. Straight seniority - the length of service of an employee is the sole basis for determining
who gets the promotion.
b. Qualified seniority - the more competent employee as compared to another employee
with longer service will be the one promoted.
2. Current and past performance - promotion is based on previous job performance and
evaluation.
"Unofficial” Promotion Criteria
1. Personal characteristic
2. Nepotism - showing of favoritism or patronage to relatives
3. Social factors/friendship
Remember that when an employee accepts a job, he/she does not expect to stay in the same job
throughout his/her working life. It is normal for all employees to expect promotion in exchange for a job
well done. As pointed out by Herzberg's Motivation Hygiene Theory (F. Herzberg et al. The Motivation to
Work), giving recognition related to the job can create high levels of motivation.
Demotion
This is the reassignment of an employee to a lower job involving fewer skills and responsibilities.
It is also the movement of an employee to a less important job from a higher-level job in the organization.
It may not involve a reduction in pay but a reduction in status or privileges.
As a general rule, demotion should be cautiously resorted to for it badly affects individual and
group morale and productivity. The alternative to demotion should be re-training or reorientation on the
job and attitude toward work, or as a last resort, termination of employment if no improvement is
achieved.
Reasons behind Demotion
1. Reorganization, company merger, or business reverses resulting to fewer jobs, forcing some employees
to accept demotion
2. Inability of employees to perform their job based on acceptable standards
3. As a form of disciplinary action or a way to handle disciplinary problems, also viewed as a routine form
of punishment for wrongdoing
4. The tool used to inform the employee concerned that he or she is beginning to be a "liability” rather
than an “asset” to the organization
-
Transfer
This is the reassignment of an employee to a job with similar pay, status, duties, and
responsibilities or to another work shift, or from one unit to another in the same company just like being
an invoice clerk to a sales clerk. The right to transfer an employee is part of management's inherent power
or prerogatives.
Reasons for Transfer
1. Due to job dissatisfaction
2. In conflict with supervisor or coworkers
3. For employee's convenience
4. Organizational needs may require transfer due to business expansion, retrenchment, erroneous
placement, or to meet departmental requirements during peak season.
5. For an employee to be better suited or adjusted to the job (remedial transfer)
Employee Separation
Different kinds of separation occur depending on whether the employee or the employer
decides to terminate the employment relationship.
Termination of Employment in the Philippines
Terminating an employee in the Philippines is a complex process, especially if the
employee subject for termination is already a regular employee. The following are governing laws
regarding separation from the service.
Governing Laws Regarding Separation from the Services
1. Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or authorize cause and only after due process
of law.
An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full back wages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.61
2. Art. 282. Termination by employer (Dismissal) (See chapter about employee discipline.) An
employer may terminate an employment for any of the following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
d. Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
3. Art. 283. Closure of Establishment and Reduction of Personnel/Layoffs
The employer may also terminate the employment of any employee due to the following
authorized causes:
a. Installation of labor-saving devices;
b. Redundancy;
c. Retrenchment to prevent losses; and
d. Closure or cessation of business
Factors behind Downsizing Leading to Layoff
Management as a temporary measure during periods of business recession, industrial
depression, or seasonal fluctuation, resorts to layoff or downsizing. The recent trends toward
downsizing leading to massive layoffs have been triggered by three factors:
a. Decline or crisis in the firm - there is a decrease in the demand for the firms' products or
services due to a recession in business climate and increased international competition.
b. Technological advances - enabling many companies to produce more with fewer people.
c. Organizational restructuring - modification of the firm's structure to become less hierarchical
by cutting out the layer of middle management.
To help employees who have lost their jobs, employers can provide services such as
outplacement or helping employees find a new job, or providing relocation assistance and family
counseling.
The following are some of the alternatives to layoff:
a. Freeze hiring
b. Restrict overtime
C. Re-train/redeploy
d. Switch to job sharing
e. Use unpaid vacations
f. Use a shorter workweek
g. Use pay reductions
h. Use sabbaticals
i. Implement early retirement programs
Separation Pay
In authorized cause terminations, separation pay is the amount given to an employee
terminated due to retrenchment, closure or cessation of business, or incurable disease. The
employee is entitled to receive the equivalent of onemonth pay or one-half month pay,
whichever is higher, for every year of service.
In just cause terminations, separation pay is also the amount given to employees who
have been dismissed without just cause and could no longer be reinstated.
4. Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-
employees.
5. Art. 285. Termination by employee (Resignation)
The Philippine. Constitution says no involuntary servitude in any form shall exist except
as punishment for a crime whereof the party shall have been duly convicted. In view of the
prohibition on involuntary servitude, an employee is given the right to resign under Art. 285 of
the Labor Code. This provision recognizes two kinds of resignation - without cause and with
cause.
 • If the resignation is without cause, the employee is required to give a 30day advance
written notice to the employer, to enable the employer to look for a replacement to
prevent work disruption. If the employee fails to give a written notice, he or she runs the
risk of incurring liability for damages.
• An employee may terminate, without just cause, the employee-employer relationship by
serving a written notice (resignation letter) on the employer at least one (1) month in
advance. The employer upon whom no such notice was served may hold the employee
liable for damages.
• An employee may put an end to the relationship without serving any notice on the
employer for any of the following causes:
a. Serious insult by the employer or his representative on the honor and person of the
employee;
b. Inhuman and unbearable treatment accorded the employee by the employer or his
representative;
C. Commission of a crime or offense by the employer or his representative against the
person of the employee or any of the immediate members of his family; and
d. Other causes analogous to any of the foregoing.
Article 280. SECTION 9. Termination pay.53 (a) An employee shall be entitled to termination pay
equivalent to at least one month's salary for every year of service, a fraction of at least six (6)
months being considered as one whole year, in case of termination of his employment due to the
installation of labor-saving devices or redundancy.
SECTION 10. Basis of termination pay. The computation of the termination pay of an employee
as provided herein shall be based on his latest salary rate, unless the same was reduced by the
employer to defeat the intention of the Code, in which case the basis of computation shall be the
rate before its deduction.
6. Art. 287. Retirement. Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or more,
but not beyond sixty-five (65) years which is the compulsory retirement age, who has served at
least five (5) years, may retire and shall be entitled to retirement pay equivalent to at least one-
half (1/2) month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.
Article 280. SECTION 14. Retirement benefits.64 (a) An employee who is retired pursuant to a
bona fide retirement plan or in accordance with the applicable individual or collective agreement
or established employer policy shall be entitled to all the retirement benefits provided therein or
to termination pay equivalent to at least one-half month salary for every year of service,
whichever is higher, a fraction of at least six (6) months being considered as one whole year.
For the purpose of computing retirement pay, “one-half month salary" shall include all of
the following:
a. Fifteen (15) days salary based on the latest salary rate;
b. Cash equivalent of 5 days service incentive leave; and
c. One-twelfth (1/12) of the thirteenth-month pay. The computation should be as follows:
(1/12 x 365/12) = 0.083 x 30.41 = 2.52 thus, "one-half month salary" is equivalent to 22.5 days.
Minimum retirement = daily rate x 22.5 days x number of years in
Service the retirement benefits under R.A. 7641 and R.A. 8558 are separate and distinct from
those granted by the Social Security System.
Under the law, upon optional or compulsory retirement, the employee is also entitled to
the proportionate thirteenth-month pay for the calendar year and to the cash equivalent of
accrued leave benefits.
Contractual Employees
Those hired on a temporary basis, that is, for a "term" or "fixed period” are not regular
employees, but are “contractual employees.” Consequently, there is no illegal dismissal when
their services are terminated by reason of the expiration of their contracts. Lack of notice of
termination is of no consequence, because a contract for employment for a definite period
terminates by its own term at the end of such period.
Job Service/Labor Contracting
Job or service contracting exists when a principal employer enters an agreement with a
contractor or subcontractor for the latter to perform a job or service. The contractor or
subcontractor supplies the employees who will perform such particular job or service. The most
common example of this is the engagement of a security agency to secure the premises of the
company.
Labor contracting, on the other hand, refers to a situation where the principal employer
concludes an agreement with a manpower agency for the supply of manpower. The essential
requisites for a valid labor contracting are: (a) such contractor must be engaged in business of
supplying manpower; and (b) he must have substantial capital.
Labor-Only Contracting
"Labor-only contracting" is prohibited by law. There is labor-only contracting where: (a)
the contractor or subcontractor merely recruits, supplies, or places workers to perform a job,
work, or service for a principal; (b) he does not have substantial capital or investment to actually
perform the job, work, or service under its own account and responsibility; and (c) the employees
recruited, supplied, or placed by such contractor or subcontractor are performing activities which
are directly related to the main business of the principal.56
Types of Employment
Regular employment is a type of employment where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual. business or trade of the
employer except where the employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
Probationary employment refers to the services of an employee who has been engaged
on probationary basis. He/she may be terminated only for a just cause or when authorized by
existing laws, or when he/she fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer. The probationary employment period shall not exceed six
(6) months reckoned from the date the employee actually started working.
Part-time employment refers to workers employed to render work for a period less than
the normal eight-hour working day or those who work less than the normal six working days in a
week. This type of worker often maintains more than one employer to earn more.
Commission-paid employment is when workers are paid depending on the income they
brought in for their employer. They earn a percentage of the income they derived for their
employer.
Casual employment happens when employees are hired for a particular period or season.
They may be hired as temporary replacements of on-leave regular employees or are hired during
peak seasons when more workers are needed.
Contractual employment is the state when workers are employed at any time but for a
definite period not exceeding six (6) months. This type of employment is the most commonly
used by the employers in the Philippines today in an effort to achieve more flexible work force
as a key factor for survival in the situation of heightened competition.
 Seatwork
I. Modified True or False. Write TRUE if the statement is correct; if it is FALSE, underline the
incorrect word/phrase and write its corrected equivalent in the space before the number.
_______________________1. All employees do not expect to stay in the same job throughout
their working life.
_______________________2. Nepotism and social factors such as friendship should be
considered part of the criteria in promoting an employee.
_______________________3. Termination should be the last resort in enforcing employee
discipline.
_______________________4. Employers are allowed to terminate an employee if there is just
cause or authorized cause and only after due process of law.
_______________________5. Dismissed employees are entitled to a separation pay.
_______________________6. A fast-food chain has the right to terminate the services of any
employee afflicted with tuberculosis.
_______________________7. The reason behind the 30-day notice prior to resignation is to give
the employee the chance to look for another job.
_______________________8. In computing retirement pay, 42 month salary is equivalent to 15
days’ pay.
_______________________9. Retirement benefit is the same retirement benefit granted by SSS
to all retired employees in the private sector.
_______________________10. Labor contracting is allowed by law.
II. Problem Solving
Compute the retirement pay of an employee who has served for 15 years and 7 months
and with a monthly salary of P32, 000.00 III
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
III. Essay
1. As an employer, which is preferable in case of vacancy, promotion from
Within or external recruitment? Explain your answer.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. What should be the basis in promoting or demoting an employee?
______________________________________________________________________________
_____________________________________________________________________________
 Case Study
Employee Layoffs at the University Medical Center
The University Medical Center is a medium-sized, 300-bed capacity hospital in
Dasmariñas City. The facilities have grown gradually over the years and considered one of the
largest in the city. Although it is unionized, it has never experienced an employee layoff since its
inception.
Sister Lallaine Buenaobra, the Chief Executive Officer of the hospital for eight years,
presented a rather bleak financial picture during the most recent quarterly meeting of the
board of directors or BOD. This, according to her, is the result of the declining occupancy rate
brought about by the opening of the biggest government hospital in the province. This has
affected the income of the hospital posting a net loss in its latest income statement. Such
declines have not been unusual for this industry because of increasing competition. So far, the
only response to these changes has been a tightening of requirements for equipment and
supply purchases. The projected deficit for the coming year is around P1,300,000.00 unless
some additional revenues are identified or some additional savings found. The BOD's
recommendation is employee layoffs, which according to the board is the only realistic
alternative. They recommend laying off up to 25% of the hospitals employees.
Melinda Dumael, the HR director of the hospital was given the task to implement the
recommendation of the board.
Inspired by the article about Banco Filipino employees protest against illegal layoff written by Ina Ableco Silverio in
bulatlat.com
Help Melinda and Sister Lallaine solve this problem by following the steps:
1. State the main problem of the hospital.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. State the different areas of consideration following the guide below.
______________________________________________________________________________
______________________________________________________________________________
Strengths of the hospital:
______________________________________________________________________________
______________________________________________________________________________
Weaknesses of the hospital:
______________________________________________________________________________
______________________________________________________________________________
Opportunities:
______________________________________________________________________________
______________________________________________________________________________
Threats:
______________________________________________________________________________
______________________________________________________________________________
3. Give your proposed solutions/alternative courses of action or ACA (minimum of three) to
help the hospital overcome this problem.
a. _____________________________________________________________________
_____________________________________________________________________
b. _____________________________________________________________________
_____________________________________________________________________
c. _____________________________________________________________________
_____________________________________________________________________
4. State your recommendation based on your ACA.
______________________________________________________________________________
______________________________________________________________________________

5. Provide a conclusion/detailed action plan to implement your recommendation using the

guide below.
Specific Activity Person Responsible Time Frame Budgetary Requirements
Chapter 8
Compensating Human Resources

Objectives of Compensation
Compensation is the set of rewards that organizations provide to individuals in return for
their willingness to perform various jobs and tasks within the organization. It includes all forms
of financial returns and tangible services and benefits employees receive as part of an
employment relationship.57 It also includes various elements such as base salary, incentives,
bonuses, benefits, and other rewards.
Base wages and salaries are the hourly, weekly, or monthly pay that employees receive
in exchange for their work. In most situations, these make up the largest portion of an employee's
total compensation. These form the foundation for most employees' total perceptions of the
fairness or equity of the pay system. If the base wage or salary system is perceived as being fair
and equitable, the organization is usually viewed in the same light. Of course, the reverse is also
true. It is therefore critical that organizations develop and maintain a sound base wage and salary
system.
The primary objective of any base wage and salary system is to establish a structure for
the equitable compensation of employees, depending on their jobs and their level of
performance in their jobs. This simply means that if the base wage and salary system are
effective, a firm's compensation system can improve cost efficiency, ensure legal compliance,
enhance recruitment efforts, and reduce morale and turnover problems.
People are willing to work in exchange for inducements or rewards they receive from
working. The inducements include both financial compensation and nonfinancial compensation.
The objective of compensation is to create a system of rewards that is equitable to the
employer and employee alike. The desired outcome is an employee that is attracted to the work
and motivated to do a good job for the employer. The following are suggestions to make the
compensation policy more effective. Compensation should be:
1. Adequate to meet the needs of the employees and to acquire and retain qualified
personnel.
2. Equitable - Each person should be paid fairly, in line with his/her efforts, abilities, and training.
Employees will believe their pay is equitable when they perceive the following circumstances:
 a. It is fair relative to the pay coworkers in the same organization receive.
b. It is fair relative to the pay received by coworkers in other organizations who hold
similar positions.
c. It fairly reflects their input or contribution to the organization.
3. Balanced - Pay benefits and other rewards should provide a reasonable total reward package.
4. Cost-effective - taking into consideration the company's ability to pay.
5. Secure - Pay should be enough to help an employee feel secure and aid him/her in satisfying
basic needs.
6. Incentive-providing - Pay should motivate effective and productive work or reward desired
behavior.
7. Acceptable to the employee - The employee should understand the pay system being followed
by the company and should feel it is reasonable for the organization and for him/her.
8. Compliant with legal regulation.
Main Components of Compensation
Direct compensation consists of cash directly paid to the employee in exchange for
his/her work. Included in this category are:
a. Base pay – the hourly wage or weekly/monthly salary earned.
The current daily minimum wage for employees in the National Capital Region (NCR) is
P426.00, per Wage Order No. NCR-16.
B. Premium pay – refers to the additional compensation required by law for work
performed within eight (8) hours on nonworking days, such as rest days and special days.
C. Base pay progression - movement of base pay overtime, from year to year.
D. Variable pay - incentive or bonus pay that does not fall into base pay; such earnings
may be based on performance against preset goals incentives) or pay at the discretion of
the company (bonuses); may be paid at the individual, team, group, or organizational
level.
Wages vs. Salaries
Fundamental to compensation understands the distinction between wages and salaries.
Wages generally refer to hourly compensation paid to skilled and unskilled workers or those
performing blue-collar jobs, with time as the basis in the computation.
Salary, on the other hand, is income paid to an individual not on the basis of time but on
the basis of performance. Salaries are usually given to professional and managerial employees or
those who are performing white collar jobs. A salary compensates an individual not for how much
time he/she spends in the organization, but for his/her overall contribution to the organization's
performance.
Base pay, base pay progression, and variable pay add up to total cash compensation paid in any
given year.
• Benefits and perquisites or perks - In addition to direct cash, compensation is also paid in
the form of indirect cash or benefits that have monetary value. This will be discussed in
details in the next chapter.
• Indirect compensation - quality of work life. Total rewards also include
a broad array of nonmonetary, but extremely important, rewards that we place under the general
umbrella of quality of work life. These rewards include:
a. Organizational culture - the norms and values defining appropriate behavior in the
organization. One of the single, most important cultural expectations we encounter today is
employees' confidence in the business and its leaders. Quality of leadership and supervision are
also defining elements of culture.
b. Intrinsic values – rewards inherent in the work itself. These rewards come from the act of
performing. Among such outcomes are how interesting one's work is, the degree of variety
experienced, the degree of autonomy and control over one's work, and the significance of the
work to the business and the customers.
c. Career opportunities – the prospects for development and growth. For organizations, careers
represent the most efficient way to grow the talent they will need to compete; while for
employees, careers represent valued opportunities to grow and achieve professional and
occupational goals.
Determining Pay Rates
Most wage and salary systems establish pay ranges for certain jobs based on the relative
worth of the job to the organization. An employee's performance on the same job should then
determine where that employee's pay falls within the job's range. The key here is the
establishment of different pay ranges for the various jobs within the organization. A pay range
for a given job establishes a range of permissible pay, with a minimum and a maximum.
Establishing pay ranges involves two basic phases:
1. Determining the relative worth of the different jobs to the organization (thereby
ensuring internal equity)
2. Pricing the different jobs (thereby ensuring external equity)
Job evaluation is the primary method used to determine the relative worth of jobs to the
organization. Wage surveys represent one of the most commonly used methods for pricing jobs.
The following are some of the basic determinants of pay,
I. External factors
A. Market Factors
1. Supply and demand for labor
2. Economic conditions and unemployment
B. Existing pay level in the community
C. Government regulations and laws, i.e., minimum wage law
II. Organizational Factors
A. Type of industry
B. Profitability and company's ability to pay
C. Unionized or nonunionized
D. Size of the company
E. Capital or labor intensive
F. Value of the job - contribution to the company
III. Job Factors
A. Skill
1. Mental requirements
2. Complexity of duties
3. Personal qualifications needed
4. Ability to make decisions, judgments
5. Preparation for the job - education, training, and knowledge
B. Responsibility
1. Money, commitments
2. Decision making
3. Supervision – work of others
4. Quality of work
5. Materials, equipment, property
6. Confidential information C. Effort
1. Physical and mental effort required 2. Attention to details
3. Pressure of work
D. Working conditions
1. Job conditions
2. Physical hazards
IV. Individual Factors
A. Performance, productivity
B. Experience C. Seniority, length of service.
D. Potential, portability
These are the major factors influencing pay. These factors are divided into four. Categories: external,
organizational, job, and individual factors. All of these should be taken into consideration to determine
the proper compensation to be given to each employee.
Establishing Pay Rates
1. Conduct the salary survey (aimed at determining prevailing wage rates) for the following
reasons:
a. Price benchmark jobs
b. Majority of the positions found in the company are usually priced directly in the marketplace.
C. To collect data on benefits so as to provide a basis on which to make decisions regarding
employee benefits
2. Determining the worth of each job through job evaluation
Job evaluation refers to a systematic comparison done in order to determine the worth
of one job relative to another. The basic procedure is to compare the content of jobs in relation
to one another, like in terms of their effort, responsibility, and skills. This process is used for
designing a pay structure, not for appraising the performance of employees holding the job. The
general idea is to enumerate the requirements of a job and the job's contribution to the
organization and then classify it according to its importance. For instance, a web designer's job
would involve more complex requirements and with a potentially greater contribution to an
organization than that of a person who simply weighs raw materials.
Job Evaluation Methods
A. Ranking Method
This is the simplest and oldest method and the least often used job evaluation technique.
It involves ranking each job relative to all other jobs, usually based on overall difficulty rather
than on a number of compensable factors. Often, the evaluator prepares cards with basic
information about the jobs and then arranges the cards in the order of importance of the
positions. The job ranking method produces only an ordering of jobs and does not indicate the
relative degree of difference among them. For example, a job with a ranking of four is not
necessarily twice as difficult as a job with a ranking of two.
Advantages:
• Simplest and easiest to explain
• Takes less time to accomplish than other methods
Disadvantages:
• Provides no yardstick for measuring the value of one job relative to another
• It is limited to smaller organizations where employees are very familiar
With various jobs.
• The method is highly subjective.
B. Job Classification or Job Grading Evaluation Method
This is a simple, widely used method in which jobs are categorized into groups. The groups
are called classes if they contain similar jobs, or grades if they contain jobs that are similar in
difficulty but otherwise different. These sets of jobs are ranked on levels of difficulty or
sophistication. Certain classes or grades of jobs are defined on the basis of differences in duties,
responsibilities, skills, working conditions, and other job-related factors.
Advantages:
• Provides specific standards for compensation and accommodates any changes in the
value of individual jobs
• Can be constructed simply, quickly, and cheaply
• Easy to understand and explain to employees
Disadvantages:
• Jobs are forced to fit into categories that are not entirely appropriate and feelings of
inequity can result.
• Problems may arise in deciding how many classifications there should bebecause too few
classes will make it difficult to differentiate job value while too many classes make writing
definitions almost impossible.
Table 4.
Clerical Worker Classification System 58
Class I Simple work, no supervisory responsibility, no public contact
Class II Simple work, no supervisory responsibility, with public contact
Class III Work of medium complexity, no supervisory responsibility, with public contact
Class IV Work of medium complexity, with supervisory responsibility, and with public
Class V Complex work, with supervisory responsibility, and with public contact
c. Point System
Point system requires evaluators to quantify the value of the elements of a job. On the
basis of the job description or interviews with job occupants, points are assigned to the degree
of various compensable factors to do the job. For example, points are assigned based on skill
required, physical and mental effort needed, working condition, and amount of responsibility
involved in the job. When these points are summed, the job has been evaluated.
Steps:
1. Selection of key jobs. This represents jobs that are common throughout the industry. The
goal here is to select enough key jobs to represent each major internal variable in the pay
structure for all the jobs being evaluated. A full and detailed job description is necessary
for each job.
 2. Selecting compensable factors. Compensable factors are factors or characteristics of jobs that
are deemed important by the organization to the extent that it is willing to pay for them. The
degree to which a specific job possesses these compensable factors determines its relative worth.
For example, the compensable factors selected for evaluating production jobs might include skill,
effort, and working condition whereas compensable factors for evaluating managerial and
professional jobs might include knowledge, responsibility, and decision-making requirements.
For companies with recognized labor union, compensable factors selected must be
acceptable to both management and the union. In this method, job sub factors are used to
describe compensable factors in more detail. For instance, the compensable factor of knowledge
might include sub factors such as education, experience and training, job complexity, and manual
skills. Knowledge here is defined as the familiarity or level of education or skill that must either
be possessed or acquired by an individual to be able to discharge the duties of the job.
Degree statements describe the specific requirements of each sub factor.
Table 5
Possible degrees and sub factors for the compensable factor of knowledge. Breaking
Sub factors 1st degree 2nd degree 3rd degree 4th degree
Education College level College graduate With MA/MS With Ph.D
Experience Less than 1 year 1 year or more 2 years or more 3 years or more
Job Complexity Diversified Work of a Difficult or involves work Difficult or involves work Unusual work of complex
routine nature requiring note necessarily new comprising new problems nature requiring the use of
considerable care and requiring considerable care requiring the use of judgment
attention and attention judgement.
Manual Skill Able to operate simple Able to operate or apply Able to set up, operate, Able to machine manipulate
office equipment like various kinds of management drive and handle office and tend office machinery
telephone, fax machine, and systems in the effective machinery needed in including tools company
typewriter, calculator, performance of job performing job and vehicles and laboratory
and computer whenever necessary equipment needed in
performing job requiring the
use of judgment

Assigning Weights to Factors

Weights are assigned to each of the factors, sub factors, and degrees to reflect their
relative importance. Naturally, the weight assigned varies from job to job. For
example, skill might be the most important factor used in evaluating a machinist's job, while
responsibility might be more critical to a supervisor's job. Table 6 presents a possible point
breakdown that totals 1,000 points. In this example, the compensable factor of responsibility was
deemed tɔ be the most important factor and was awarded 360 points.
Table 6.
Sample Point Values
Compensable Factor Maximum points Sub factors Assigned points per degree
1st 2nd 3rd 4th
skill 260 Job Knowledge 35 70 105 140
Experience 20 40 60 80
Job Complexity 10 20 30 40
Responsibility 360 For Company
Policy 20 40 80 80
Work of Others 40 80 120 160
External Contract 20 40 60 80
Money Matter
Equipment 10 20 30 40
Effort 240 Mental Extension 40 80 120 160
Physical Demand 20 40 60 80
Working Conditions 140 Working Condition 20 40 60 80
Hazard 15 30 45 80
Total Possible points 1000

Assigning Points to Specific Jobs

After the point scale has been agreed on, point values are derived for key jobs using the following
steps:
1. Examine the job descriptions.
2. Determine the degree statement that best describes each sub factor for
eachcompensable factor.
3. Add the total number of points.
The point totals should present the same general relationships that the actual pay scales
show for the key jobs. That is, a rank ordering of the key jobs according to point totals should be
approximately equivalent to a rank ordering of key jobs according to pay. Table 7 presents
another example of point assignment for four. Compensable factors to evaluate the job of a
machine operator. Regardless of the technique used, both past experience and judgment play
major roles in assigning weights. Generally, weights are assigned on the basis of a maximum
number of points for any job; this number is often decided arbitrarily.
Advantages:
• Can be easily interpreted and explained to employees because of its mathematical nature
• Detailed and specific - Jobs are evaluated on a component basis and compared against a
predetermined scale.
• The system is easy to keep current as jobs change.
• Because of its quantitative nature, it is easy to assign monetary values to jobs.
Disadvantages:
• Time consuming and costly to develop
• Requires significant interaction and decision-making by the differentparties involved in
conducting job evaluation
Table 7.
Points Assignment for Four (4) Compensable Factors
Compensable factor Weighted Degree/Points
% 1 2 3 4 5
Skill 40% 20 32 48 72 100
Responsibility 30% 15 24 36 54 75
Effort 20% 10 16 24 36 50
Working condition 10 5 8 12 18 25
Example Compensable factor Degree Points
Machine Operator Skill 3 466
Responsibility 2 24
Effort 4 36
Working Condition 4 18
Total Points 126

D. Factor Comparison Method

This method is similar to the point method but slightly more complex, and it involves a monetary
scale instead of a point scale, thus, not as popular as the point method. It is absolutely essential
that the rates of pay of key jobs be viewed as reasonable and fair to all those making evaluations.
Compensable factors are then identified. Typically, the number of compensable factors is small
(4 or 5). Examples of compensable factors are:
1. Skills
2. Responsibilities
3. Effort
4. Working conditions
Unlike the point system, however, the factor comparison method does not break down the compensable
factors into sub factors and degrees. It requires that each job be compared and ranked with their jobs
under each separate factor.
Steps:
1. Identify key (benchmarks) jobs.
2. Identify job factors.
3. Rank jobs with respect to each of the factors independently.
4. Assign monetary amounts to each job on each factor.
5. Compare unique jobs with key jobs. This should be done factor by factor, to determine how much each
unique job should be paid.
6. Group similar jobs into pay grades. A pay grade is comprised of jobs of approximately equal difficulty
or importance as determined by job evaluation.
7. Price each pay grade. The jobs are then priced and the total pay for each job is divided into pay for each
factor. See example matrix below.
Table 8.
Example of Job Evaluation Using Factor Comparison Method
Job Hourly Pay for Pay for Pay for responsibilities Pay for working condition
Rate Skill Effort
Secretary 52.00 26.00 12.00 12.00 2.00
Admin Asst 62.50 30.00 15.00 15.00 2.50
Supervisor 105.00 50.00 25.00 25.00 5.00
Manger 200.00 100.00 45.00 45.00 10.00

This process establishes the rate of pay for each factor of each benchmark job.
Advantages:
• Relatively detailed and specific - jobs are evaluated on a component basis and compared against
other jobs.
• Usually easier to develop than the point method
• Value of the job is expressed in monetary terms.
• Can be applied to a wide range of jobs
• Can be applied to newly created jobs
Disadvantages:
• Relatively difficult to explain to employees since the pay for each factor is based on judgments
that are subjective. The standards used to determine the pay for each factor may have built in
biases that would affect certain groups of employees like females or minorities. In conducting job
evaluation, the following must be taken into consideration:
1. Consistency - This is to establish reliability. It is achieved when two people evaluating the same jobs
provide similar ratings made by one person on two different occasions.
2. Freedom from bias - The process should be free from political considerations or personal
biases. Those making the evaluations should be objective.
3. Correct ability - Firms should provide mechanisms to modify inaccurate or out-of-date
evaluations, thus, the need to periodically review and update job evaluation results. Employees
should also be allowed to review the evaluation of their jobs and to appeal the ratings if
dissatisfied.
4. Representativeness - All employees affected by the process should have their concerns
represented.
5. Accuracy of information - Ratings must be based on accurate information, that is, those making
the evaluations should be quite knowledgeable of the jobs being rated.
Different forms of Compensation
Employees can be paid for the time they work, the output they produce, or a combination
of these two factors.
1. Payment for Time Worked
Pay surveys are used to establish competitive pay for the industry and job evaluation is
the principal method for setting time-pay schedules. This method has no direct relation to the
workers' output.
Pay is usually adjusted upward through six types of increases: ‘
a. General – across-the-board increase for all employees
b. Merit increases – paid to employees based on some indicator of job performance
C. Cost of living adjustment
d. Reclassification increase e. Level adjustment
f. Promotional increase
2. Incentive Forms of Compensation
This is a method of compensating employees on the basis of output which means, more
production, more earnings. The organization first establishes performance standards to
determine the quantity a person can be expected to produce in a given period of time. The firm
sets wages based on how well workers perform relative to that standard; their pay typically
equals the market rate for the job, and if they exceed the standard, they receive higher than
market wages.
Classification
a. Piecework or payment by results - This is a system of pay based on the number of items
produced or processed by each individual worker in a unit of time such as items per hour or items
per day. Since individual output can be easily quantified, peso value for each unit or item
produced is also given a fixed rate or amount. This provides a strong incentive to the worker to
produce more.
b. Individual incentive plans - This rewards individual performance on a real-time basis for
meeting a goal or hitting a target rather than increasing a person's base salary at the end of the
year. An individual receives some level of salary increase or financial rewards in conjunction with
demonstrated outstanding performance. This is used when performance can be quantified in
terms of number of units of output or similar measures, i.e., sales commissions (salary is not
guaranteed and paid only if sales reach some target level).
• Advantage: simple to calculate, and easily understood by employees
• Disadvantage: tendency of employer to raise production standards whenever workers are
found earning “excessive” wages
c. Group incentives - These are given when it is difficult to measure individual output or when
cooperation is needed to complete a task or project. The Japanese used group cohesiveness to
reduce jealousy. They assume that rewarding only an individual or a few workers will discourage
a sense of teamwork.59
An example of this is the gain-sharing program. This is designed to share with employees
the savings from productivity improvements. This is based on the belief that employer and
employees have the same goals and thus should approximately share in incremental economic
gains.co
Gain-sharing program also measures team or group level activity. The team or work group
is given the responsibility for attempting to lower costs or improve productivity through any
measure.
3. Performance-based Rewards
Organizations want employees to perform at relatively high levels and need to make it
worth their efforts to do so. It is believed that when rewards are associated with higher levels of
performance, it will presumably motivate the employees to work harder to achieve awards. In
this manner, their own self-interest coincides with the organization's interests.61 Thus, managers
who truly want to motivate people to perform at their highest level should structure a reward
system that engages in such behavior.
4. Spot Bonuses
These are spontaneous incentives awarded to individuals for accomplishments not readily
measured by a standard. An example is to "recognize exemplary customer service each month to
identify employee of the month awardee."
5. Skill and Knowledge-based Pay/Competency-based Pay
This sets pay levels on the basis of how many skills an employee has or how many jobs
he/she can do. This emphasizes the importance of an employee's ideas, growth, and
development. Rewards are based on acquisition of and proficiency in new skills and knowledge
regardless of the employee's length of service. Thus, this system rewards employees for the
acquisition of more skills or knowledge instead of for increased performance.
This plan is advantageous for companies that face intense competitive pressure, companies that
are downsizing, or companies that want to encourage involvement. 62
6. Merit Pay Plans
Merit pay is usually awarded to employees on the basis of the relative value of their
contributions to the organization. Employees who make greater contributions are given higher
pay than those who make lesser contribution.
Merit pay plans are compensation plans that base compensation on merit, e.g., giving employees
pay raise with the use of valid and reliable measures of what merit entails.
7. Profit Sharing
At the end of the year, some portion of the company's profits is paid into a profit sharing
pool, which is then distributed to all employees. The rationale behind this scheme is that
everyone in the organization can expect to benefit when the company does well.
8. Stock Ownership Plans
Employees are gradually given a minor stake in ownership of a corporation. Employees
receive a claim of ownership of some portion of the stock held by the company based on seniority
and perhaps performance. Eventually, even an individual becomes an owner of the company.
9. Executive Compensation :
a. Base pay – guaranteed amount of money that the executive will get from the company.
b. Incentive pay/executive perquisites or perks, e.g., stock option plan-an incentive plan
established to give company executives the option to buy company stocks in the future at a
predetermined fixed price. This is over and above the other executive perks solely given to
executives.
 Seatwork
I. Identification
____________________1. Refers to the set of rewards that organizations provide to individuals
in return for their willingness to perform various tasks within the organization
____________________2. Consists of cash directly paid to employees in exchange for their work
3. The hourly wage or weekly/monthly salary earned by employees.
____________________4. Additional compensation required by law for work performed within
8 hours on nonworking days such as rest days and holidays
____________________5. Systematic comparison done in order to determine the worth of one
job relative to another.
____________________6. Job evaluation method which is considered the simplest but provides
no yardsticks for measuring the value of one job relative to another
____________________.__________________.___________________7. Possible sub factors
for knowledge as compensable factor using point system method
____________________._________________.___________________._______________8.
Compensable factors using factor comparison method
____________________9. Type of wage and salary adjustments given to employees to increase
their pay.
____________________10. System of pay based on the number of items produced

II. Essay
1. What are the bases of pay differentials when employers decide to pay individuals doing
the same jobs with different rates of pay?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
2. Compare and contrast individual incentive pay to a group incentive pay system.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________________
3. What are the major factors influencing pay? What sort of advice would you give to someone
whose goal is to earn a great deal of money?
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________________
4. Assume you are the head of the public relations office of GSIS that just game its CEO a huge
bonus. Outline a plant to be presented to the press justifying the bonus given to the CEO.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
 Case Study.

The Unsatisfied Department Chair

Dr. Ronald Pancho is chairperson of Business Management Department in the College of
Business Administration at a large university in Dasmariñas City. He has been a member of the
department for 15 years and a full professor for 10 years. Last summer, he was asked to assume
the position of the chair after a greening committee conducted interviews and reviewed resumes
of all the prospective candidates for the position.
Dr. Pancho was very excited about the new challenge and has begun several innovative
projects to enhance faculty research. The teaching function in the department has always been
first rate while research has been weak. Dr. Pancho has continued to be very productive,
publishing three articles for a national journal and two books.
The university's policy is that salary increases are based on length of service and merit.
Dr. Pancho had developed a very sophisticated performance appraisal system for his faculty to
help him quantify salary recommendations. His point system considers and weighs different
items in the areas of teaching, research, and service. Teaching and research were given weights
of 40% each, with service at 20%. Dr. Pancho felt he had good documentation for all his
recommendations.
Dr. Pancho submitted his recommendation to Dean Lacap and was pleased when all these
recommendations were accepted.
Dr. Pancho then submitted his own annual report detailing his accomplishments as chair, as well
as his more personal accomplishments. From his perspective, he felt he deserved at least a 15%
increase since his department had made major strides in a number of areas while the other
departments had been standing still in status quo. Moreover, none of the other chairs were
professionally active on the national level and none had published in the past year. His teaching
evaluations were also outstanding for the past five years.
Dean Lacap sent out letters to all department chairs in May and Dr. Pancho was shocked
to learn that his salary increase was just 7%. He received information through the "grapevine”
that all the chairs had received the 7% increase. He also learned from one of the other chairs that
the dean always gives the chairs equal percentage increases each year. Contrary to the official
university policy, there were no distinctions based on merit.
Dr. Pancho was visibly upset about what he considered to be a major inequity. He then
called the dean's secretary to schedule an appointment to discuss the situation with Dean Lacap.
Help Dean Lacap and Dr. Pancho solve this problem by following the steps below:
1. State the main problem of Dr. Pancho.
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
2.State the different areas of consideration following the guide below strengths of Dr.Pancho
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
Weaknesses of Dr. Pancho
______________________________________________________________________________
______________________________________________________________________________
Opportunities
______________________________________________________________________________
______________________________________________________________________________
Threats
______________________________________________________________________________
______________________________________________________________________________
3. Give your propose solutions/alternative courses of action or ACA (minimum of three) to help
Dean Lacap solve the problem raised by Dr. Pancho. State also the advantages and disadvantages
of each ACA.
a.____________________________________________________________________________
_____________________________________________________________________________
b.____________________________________________________________________________
______________________________________________________________________________
c.____________________________________________________________________________
______________________________________________________________________________
4. State your recommendation based on your ACA.
______________________________________________________________________________
______________________________________________________________________________
5. Provide a conclusion/detailed action plan to implement your recommendation using the guide
below.

Specific Activity Person Responsible Time Frame Budgetary Requirements

Chapter 9
Employee Benefits and Services
Indirect financial compensation is called benefits and services. It represents an important
part of just about every employee's pay. Benefits are generally available to all the firms and
include such things as time off with pay, health and life insurance, and retirement funds.
Employees should take note of the fact that these benefits are not free, even if workers
are not charged for them. Employee benefits are substantial cost to employers. Most employees
do not realize the market value and high cost of their benefits to the employers, so the latter only
gives benefits that are mandated by law. Benefits are given over and above the basic
compensation to serve as employee's rewards for belonging to an organization. These are given
not based on performance but intended to augment employees' income especially in cases of
sickness, injury, death, or calamity.
Snell and Bohlander (2011) in the book Principles of Human Resource Management aptly
described benefit as an indirect form of compensation given to help improve the quality of work
and personal lives of employees. The concept of giving employee benefits voluntarily has
changed in recent years when the government through legislation required private firms to give
certain benefits to their employees. These benefits have been expanded in scope, by means of
including the members of the employees' families.
Today, employee benefits fall under two categories:
1. Benefits voluntarily given by the company depending on management generosity
2. Benefits required by government legislation
Tax Advantages of Benefits
One of the major driving forces behind the growth of employee benefits is the tax
advantage. The Bureau of Internal Revenue or BIR ruled that employers could deduct the costs
of benefits as a business expense and the employees do not need to include the value of health
benefits in their taxable income. Hence, employers provided benefits that are much less costly
than the benefits workers could purchase on their own because of tax exemptions of benefits
which can also serve as incentives for employers to give more benefits. Today, benefits constitute
a major portion of labor costs.
Nontaxable Benefits under the Code
1. Compensation for sickness or injury
2. . 13th month pay and other bonuses not to exceed P30, 000.00 per year
3. Allowances and benefits given for the convenience of the employer
4. Allowances and benefits given which are in the nature of or necessary to the taxpayer's
business, trade, or profession
5. SSS, PhilHealth, and Pag-IBIG contributions, as well as union dues
6. Contributions of the employer for the benefit of the employee including retirement,
hospitalization, and health insurance
The BIR sets a limit on the value of tax-exempt de minimis benefits. Under RR 8-2000, as
amended by RR 10-2000, the BIR considers the following as de minimis benefits:
De minimis benefits are benefits which are in the nature of facilities or privileges furnished
or offered by an employer to his/her employees that are of relatively small value, and are offered
or furnished by the employer merely as a means of promoting the health, goodwill, contentment,
or efficiency of its employees.
De minimis benefits are excluded from the gross income of employees for incomes. The
benefits are also excluded in the computation of the P30, 000.00 ceiling of other benefits which
are exempt from income tax. This means that de minimis benefits are neither subject to
withholding tax on compensation nor to the fringe benefits tax.
The following are considered as de minimis benefits:
a. Monetized unused vacation leave credits of employees not exceeding 10 days during the year
and the monetized value of leave credits paid to government officials and employees;
b. Medical cash allowance to dependents of employees not exceeding P750.00 per employee per
semester or P125.00 per month;
C. Rice subsidy of P1, 500.00 or one sack of 50-kg rice per month amounting to not more than
P1,500.00;
d. Uniforms and clothing allowance not exceeding P4, 000.00 per annum;
e. Actual yearly medical benefits not exceeding P10, 000.00 per annum;
f. Laundry allowance not exceeding P300.00 per month;
g. Employees achievement awards, e.g., for length of service or safety achievement, which must
be in the form of a tangible personal property other than cash or gift certificate, with an annual
monetary value not exceeding P10,000.00 received by the employee under an established
written plan which does not discriminate in favor of highly paid employees;
h. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000.00 per
employee per annum;
i. Flowers, fruits, books, or similar items given to employees under special circumstances, e.g., on
account of illness, marriage, birth of a baby, etc; and
j. Daily meal allowance for overtime work not exceeding 25 percent of the basic minimum wage.
Indeed, the huge effect of taxes on the employees' take home pay has forced many employers
to take a hard look at the compensation package of employees with the view of maximizing
employees' enjoyment of the benefits within the parameters of Philippine tax laws.
Employee Allowance
"Employee allowance is a universal benefit awarded to employees in the various levels in an
organization."64
1. They are nontaxable. Allowances for employees, such as clothing, mileage, or meal allowances
are exempt from tax.
2. They come in different forms. Among the most common are clothing allowances, meal
allowances, and transportation allowances, while extravagant companies can offer discounts on
health insurances, and give fringe benefits to executives, such as private use of the company jet,
grand. Vacations, use of company fitness facilities, and other such privileges.
3. Employee allowances are exempt from tax if they do not exceed the price ceilings set by law.
4. Fringe benefits that exceed the price limit on benefits are no longer tax-exempt, and the
benefactor will shoulder the tax imposed on it.
5. Only the "de minimis” benefits with small value and limited only to facilities and privileges
furnished by companies to promote goodwill, health, efficiency, and contentment to employees
are exempt from tax.
6. Employee allowance is given at a company's discretion and goodwill.
It is not a law-mandated benefit. Thus, one cannot demand it from the - company if it does not
provide any to its employees. Many companies, on the other hand, use employee allowance to
compensate for lower pays and to appease employee demands for higher wages. Not all
companies furnish employees with employee allowance, and other companies use it as a scheme
to delay or forestall any wage increases. There should be a clear distinction between mandated
benefits and employee allowances.
Classification of Employee Benefits and Services
A. Mandatory Employee Benefits/Legally Required Benefits in the
Philippines
1. Social Security System (SSS)65 – The SSS was created to provide private employees and their
families with protection against disability, sickness, old age, and death. Benefits Given to SSS
Members
a. Sickness Benefit
• Daily cash allowance paid for the number of days a member is unable to work due to
sickness or injury
 • Confinement either in a hospital or at home for at least four days
• At least three months of contributions within the 12-month period immediately before the
semester of sickness has been paid
b. Maternity Benefit
• Daily cash allowance granted to a female member who was unable to work due to childbirth or
miscarriage
• Failure to observe the rule on notification may result to the denial of the maternity claim
• The maternity benefit is equivalent to 100 percent of the member's average daily salary credit
multiplied by 60 days for normal delivery or miscarriage and 78 days for caesarean section delivery
• The maternity benefit shall be paid only for the first four (4) deliveries or miscarriages.
C. Retirement Benefit
• Cash benefit either in monthly pension or lump sum paid to a member who can no longer work
due to old age
• A member, who is 60 years old, must be separated from employment or ceased to be self-
employed, and has paid at least 120 monthly contributions prior to the semester of retirement.
• A member who is 65 years old whether employed or not must have paid at least 120 monthly
contributions prior to the semester of retirement.
• Monthly pension depends on the member's paid contributions, including the credited years of
service (CYS) and the number of dependent minor children but not to exceed 5. 40 percent of the
average monthly salary credit; or
• P1,200.00, provided that the credited years of service (CYS) is at least 10 or more but less than
20, and P2,000.00 if the CYS is 20 or more. The monthly pension is paid for not less than 60
months.
d. Disability Benefit
The World Health Organization defines disability as any “restriction or lack (resulting from
impairment) of ability to perform an activity in the manner or within the range considered normal for a
human being."
A member who suffers partial or total disability with at least one monthly contribution paid to the
SSS prior to the semester of contingency is qualified.
Permanent total disabilities include:
• complete loss of sight of both eyes;
• Loss of two limbs at or above the ankles or wrists;
• Permanent complete paralysis of two limbs;
• Brain injury resulting to incurable imbecility or insanity; and
• Such cases as determined and approved by the SSS.
e. Death Benefit
This includes cash benefit either in monthly pension or lump sum paid to the beneficiaries
of a deceased member.
f. Funeral Grant
A funeral grant of P20,000.00 (effective September 1, 2000) is given to whoever pays the
burial expenses of the deceased member or pensioner.
2. Government Service Insurance System (GSIS) - The Government
Service Insurance System (GSIS) is the equivalent of SSS for Philippine government employees.
Benefits Given to GSIS Members.
➢ Life insurance
➢ Retirement benefits
➢ Disability benefits - granted to a member due to the loss or reduction in earning capacity
caused by a loss or impairment of the normal functions of the employee's physical and/or
mental faculties as a result of an injury or disease.
➢ Beneficiaries are entitled to a P20, 000.00 funeral benefit payable upon the death of a
member or old age pensioner.
➢ Survivorship benefit – When a member or pensioner dies, his or her beneficiaries are
entitled to cash and/or pension benefits. Beneficiaries who qualify for survivorship
pension are entitled to fifty percent (50%) of the basic monthly pension of the member or
pensioner.
3. Home Development Mutual Fund (HDMF) 67 – The HDMF is a provident savings system
providing housing loans to private and Philippine government employees, and to self-employed
persons who elect to join the fund. This is through the Pag-IBIG Program of the government. Pag-
IBIG stands for Pagtutulungan sa kinabukasan, Ikaw, Bangko, Industriya at Gobyerno. Employers
are also required to contribute, on behalf of their employees, to the Home Development Mutual
Fund based on R.A. 7835. This provides the lowest interest housing and land acquisition loans to
its members that are payable for up to 30 years. This gives every Filipino worker an opportunity
to own a house in easy payment plans that can directly be deducted from their monthly wages.
Services
a. Multi-Purpose Loan
This program aims to provide financial assistance to Pag-IBIG members for purposes of minor
home improvement, livelihood, medical, educational, purchase of appliance and furniture, and
other needs.
b. Calamity Loan
This program aims to provide financial assistance to Pag-IBIG Fund members who are victims in
calamity-stricken areas, as declared by the
Office of the President or the Sangguniang Bayan.
c. Housing loan
4. Philippine Health Insurance Corporation (PhilHealth) – PhilHealth is administered by the
Philippine National Health Corporation, which is designed to provide employees with a practical
means of paying for adequate medical care in the Philippines. All employees are required to be
contributors of this service based on R.A. 7875. Members are given health and hospitalization
subsidies should they or a dependent be hospitalized. Monthly contributions are based on actual
employee monthly salaries and the amount of employee contribution is matched equally by the
employer.
Benefits
a. Inpatient benefits - Subsidy for room and board, drugs and medicines, laboratories, operating
room, and professional fees for confinements of not less than 24 hours.
b. Outpatient benefits - Day surgeries, dialysis, and cancer treatment procedures such as
chemotherapy and radiotherapy in accredited hospitals and free-standing clinics.
c. Lifetime membership - After having reached the age of retirement and have paid at least 120
months premium to the program (including those made during the former Medicare Program),
PhilHealth members are granted lifetime coverage. As lifetime members, they are also entitled
to full benefits together with their qualified dependents.
Dependents of a PhilHealth member include the following:
• Legal spouse
• Child/children - legitimate, legitimated, acknowledged and illegitimate
(As appearing in birth certificate), adopted, or below 21 years of age, unmarried and unemployed
• Parents (non-members or membership is inactive) who are 60 years old, including
stepparents (biological parents already deceased) and adoptive parents (with adoption
papers)
5. Employees' Compensation - The employees' compensation (EC) benefits or disability benefits
is a compensation package for public and private sector employees and their dependents in the
event of work-related injury, sickness, disability, or death. The EC is a purely employer-based
contribution benefit. Thus, the employee is not required to contribute any amount to the
program. The employee compensation benefits are in the following options:
a. Cash income benefits for disability or death
b. Medical and related services for injury or sickness
c. Rehabilitation services (in addition to monthly cash income benefit) for permanent disability
The benefits given to employees or their beneficiaries are in the form of:
a. Daily cash income benefit for temporary total disability (TTD)
b. Monthly cash income benefit for permanent total disability (PTD) on a lifetime basis
c. Monthly cash income benefit for permanent partial disability (PPD).
d. Monthly cash income benefit for death, also on a lifetime basis, except for benefit paid to
secondary beneficiaries, which is a monthly pension not to exceed 60 months but not less than
fifteen thousand pesos
e. Medical services, appliances, and supplies for injury or sickness f. Rehabilitation services for
permanent disability
g. Career allowance for permanent disability
Benefits under the employees' compensation program include:
a. Temporary total disability or sickness. An income cash benefit equivalent to 90 percent
of the average daily salary credit with a minimum of P10.00 and a maximum of P200.00
(effective November 1, 1996). It is payable for a period not longer than 120 consecutive
days. If the injury requires more treatment, the period may be extended up to 240 days.
If it persists after this period, the injury will be considered as permanent total disability.
This benefit is advanced by the employer every regular payday. The amount legally paid
by the employer is reimbursed 100 percent by the SSS in the form of check or through the
bank.
b. Permanent total disability (loss of two limbs, permanent complete paralysis of two
limbs, etc.). This benefit is a monthly pension paid for as long as the injured lives plus 10
percent for each of the five dependent children beginning with the youngest and without
substitution.
c. The monthly pension is guaranteed for five years but will be suspended
if the employee is gainfully employed, recovers from permanent total disability, or fails to
present himself/herself for examination at least once a year upon notice by the SSS or
fails to submit a quarterly medical report certified by the attending physician as required
under Section 5, Rule IV of the EC law.
d. The minimum monthly income benefit is P2, 000.00. From May 1,
1993, the supplemental allowance is P575.00 a month. Upon the death of a permanent
total or permanent partial disability pensioner, the SSS will pay to the primary
beneficiaries 100 percent of the monthly pension. In addition, the dependents will be paid
the dependent's pension. If the deceased pensioner has no primary beneficiaries, the SSS
will pay to the secondary beneficiaries the remaining balance of the five-year guaranteed
period, excluding the dependent's pension.
e. Permanent partial disability (such as loss of one thumb, finger, or leg). A monthly
pension is provided to the member equivalent to the pension for permanent total
disability but limited to the number of months designated by law for a particular disability.
The minimum monthly pension is P2, 000.00. However, if the period of permanent partial
disability pension is less than a year, the benefit may be paid in lump sum.
e. Death. A monthly pension is provided to the deceased member's primary beneficiaries, plus
10 percent of such benefit for each of five dependent children, subject to some limitations.
In the absence of primary beneficiaries, the secondary beneficiaries are entitled to the
monthly pension but not to exceed 60 months. The minimum monthly pension for the death
benefit is P2,000.00. Under the EC program, a funeral benefit of P10,000.00 will also be paid
to any person who actually shouldered the burial expenses of the deceased member
The compensability conditions are the following:
a. Injury must be the result of accident arising out of and in the course of employment.
b. Sickness must be listed/considered an "occupational disease"; or even if not listed as
one, it must be shown that the risk of contracting the sickness is increased by the working
conditions.
c. Disability/death is caused by work-connected injury or sickness.
6. 13th Month Pay - Based on P.D. 851, all Filipino employees are entitled to a year-end bonus
equivalent to one (1) month salary regardless of the nature of their employment. The 13th month
pay is to be given not later than December 24 of every year a worker is employed. To compute
for 13th month pay, the following formula must be used: Basic Monthly Pay = 12 x Number of
Months worked within the Calendar Year
Assuming the employee's basic monthly pay is P25,000.00 and the employee has only
worked for 8 months due to being on leave without pay for 4 months, his/her 13th month pay is
computed as follows:
P25,000.00 + 12 x 8 = P16,666.67 (computed 13th month pay)
8. Service Incentive Leave (SIL) - Based on the Labor Code, an employee who has worked for at
least one (1) year in a company is entitled to five (5) days leave of absence, with pay, every
year. If the employee does not avail of these paid leaves, the company may opt to have them
do a mandatory leave of absence, with pay, or convert these un-availed paid leaves to their
cash equivalents, to be given at the end of each year.
Illustration
An employee who is hired on January 1, 2010 and resigned on March 1, 2011, assuming
he has not used or commuted any of his accrued SIL, is entitled upon his resignation to the
commutation of his accrued SIL as follows:
SIL earned as of December 31, 2010 = 5 days Proportionate SIL for January and February
1998 = (2/12) x 5 days = 0.833 day
Total as of March 1, 2011 = 5.833 days
8. Paternity Leave - Paternity leave is described by law through R.A. 8187
granting every married male employee seven (7) working days of leave after his legitimate wife's
childbirth, or any miscarriage. Paternity leave shall be paid in full, equivalent to seven days, up
to the first four deliveries.
9. Meal and Rest Periods - Based on Article 83 of the Labor Code, employees are entitled to one
(1) hour break for meals on an eight-hour workday. Employees are also entitled to adequate rest
periods in the morning and afternoon, of short durations, that will be counted as hours worked.
These rest periods normally last for 15 minutes and can be used by employees as coffee or snack
breaks.
10. Right to Holiday Pay under Article 94 of the Labor Code
a. Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10) workers;
b. The employer may require an employee to work on any holiday but such employee shall be
paid a compensation equivalent to twice his regular rate; and
c. The following are the 11 regular holidays in the Philippines under
Executive Order 292 as amended by R.A. 9492:
• New Year's Day - January 1
• Araw ng Kagitingan – April 9
• Maundy Thursday - movable date
• Good Friday - movable date
• Labor Day - May 1
• Independence Day - June 12
• National Heroes Day - last Monday of August :
• Bonifacio Day - November 30
• Christmas Day - December 25
• Rizal Day - December 306
• Observance of Eid'l Fitr and Eidul Adha - movable date determined in accordance with the
Islamic calendar
Special Days
During special days, the principle of “no work, no pay” applies and on such other special
days as may be proclaimed by the President or by the Congress.
Workers who were not required or permitted to work on those days are not by law
entitled to any compensation. This, however, is without prejudice to any voluntary practice or
provision in the Collective Bargaining Agreement (CBA) providing for payment of wages and other
benefits for days declared as special days even if unworked.
Executive Order No. 203 as amended by Republic Act No. 9492 lists, down three (3) special days
that shall be observed in the country:
• Ninoy Aquino Day - August 2
• All Saint's Day - November 1
• Last day of the year - December 31
The EDSA Revolution Anniversary on February is a special holiday for all schools.
11. Premium Payment - compensation for work hours rendered exceeding the maximum number
of working hours which is normally 8 hours per day.
Companies are obliged by law to pay premiums when employees work on holidays, on
their rest day, and when they render extra hours on any day (overtime). Premium pays are,
however, mandated by law. In most cases, only regular employees are entitled to holiday
premiums, while other companies may pay overtime premiums to probationary or contractual
employees.
Computing Premium Pay
The Labor Code of the Philippines sets premium rates at 25% of employees' regular wage
on regular days. This is increased to 30% if they render overtime on their rest day or on a holiday.
Holidays, meanwhile, are categorized into special and legal holidays-different rates apply to each
category.
The law mandates that employees be paid an additional 30% on their regular daily wage
on special holidays. An additional 100% premium (equivalent to 100% of their daily wage) is given
to qualified employees. Computations are done as follows:
• A special holiday (130% X basic pay)
• A special holiday that falls on a rest day (150% X basic pay)
• A regular holiday (200% X basic pay)
• A regular holiday that falls on a rest day (260% X basic pay)
12. Night Shift Differential – According to Article 86 of the Labor Code, every employee shall be
paid a night shift differential of not less than ten percent (10%) of his/her regular wage for each
hour of work performed between ten o'clock in the evening and six o'clock in the morning.
B. Benefits Given Because of Management Generosity
Other company benefits that are not government mandated, but are usually given to
employees are the following:
1. Holiday/Christmas Bonus - This is given in December, on top of the 13th month pay. This is
considered as the company's Christmas gift to their employees.
2. Midyear Bonus - This is given in June, when the country's school year starts. This is to assist
employees in school enrollment fees for their children.
This is also known as an educational assistance plan.
3. Cost of Living Allowances - Some companies provide their employees with yearly rice,
medicine, and clothing allowances.
4. Paid Holiday and Vacation Leaves - On top of the mandated 5 days per year leave with pay,
some companies give their employees additional paid holiday and vacation leaves. The number
of days allocated for these leaves usually varies from company to company and depends on the
number of years an employee has been of service to the company.
5. Sick Leave-Some companies grant sick leave aside from service incentive leave when an
employee cannot report for work due to illness or injury.
6. Emergency/Bereavement Leave - This provides the employee with time off from work to plan
and attend a funeral and to deal with family matters surrounding a death.
7. Birthday Leave – There are already companies that started giving their workers a present on
their birthdays such as giving day off during the actual birth date of the worker.
8. Healthcare/HMO Coverage - Aside from PhilHealth coverage, most companies provide
additional healthcare benefits through selected HMO.
9. Group Life Insurance - This provides lower rates for both the employer and the employee than
if they bought such insurance as individuals. Insurance coverage is not mandated but has become
such a standard benefit that most organizations elect to provide.
10. Pension Plans – These refer to the periodic payments to workers who are retired from the
company because of old age, illness, or other reasons as determined by the employer and as
provided for in the plan.
C. Executive Compensation
Types of Executive Compensation to
1. Cash Compensation - This is the sum of all standard cash salary compensation that the
executive receives for the year.
2. Long-term Incentive Plans (LTIPs) - Long-term incentive plans encompass all compensations
that are tied to performance for tax purposes. Current tax laws favor pay for performance-type
compensation,
3. Retirement Packages - These are packages given to executives after they retire from the
company. These are important to watch because they can contain so-called "golden parachutes”
for corrupt executives,
4. Executive Perks - These are various other perks given to executives, including the use of a
private jet, travel reimbursements, and other rewards.
D. Employee Services
1. Personal services benefits such as credit union, counseling service, and legal service
2. Job-related services benefits such as free uniforms, food services or cafeteria,
educational subsidies or grants, and stock ownership options
All these benefits are equivalent to 30-50% of an employee's yearly wage, sometimes
more. In the end, companies who know how to take good care of their employees will have a
lower employee turnover rate than those that give no more than government-required benefits.
The main body of labor laws and social legislation is found in the Labor Code of the
Philippines (Presidential Decree 442). Although employment laws are supposed to be balanced
both for labor and management, such is not the case in the Philippines. Labor laws and
procedures are tilted in favor of the worker under the social justice principle that those who have
less in life should have more in law. For this reason, employers must act with caution in hiring,
supervision, imposing discipline, and firing of workers.
 Seatwork
I. Modified True or False. Write TRUE if the statement is correct; if it is FALSE, underline the
incorrect word/phrase and write its corrected equivalent in the space before the number.
____________________________1. Benefits are supplemental compensation which employees
are entitled to receive aside from their basic pay.
____________________________2. Benefits granted to employees can no longer be reduced or
removed.
____________________________3. A female pregnant employee can't avail of the maternity
leave benefit of SSS if unmarried.
____________________________4. Paternity leave benefit is granted to a male married
employee whose wife is going to give birth.
____________________________5. 13th month pay is given to all employees regardless of
tenure.
____________________________6. De minimis benefits are nontaxable benefits under the
Labor Code. 7. Christmas bonus is mandated by law.
____________________________8. SSS provides the same benefits as GSIS.
____________________________9. PhilHealth dependents include parents of a PhilHealth
member.
____________________________10. Providing housing loans is the main program of Pag-IBIG
II. Essay
1. Why do employers need to offer benefits and services?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. At the point of negotiating salary and benefits, what questions would you ask your prospective
employer concerning benefits? Describe the benefit package you would try to negotiate for
yourself if you are applying as a manager.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3. You are the HR consultant to a small business with about 50 employees. Develop a list of
another benefits you believe it should offer, along with your reasons for suggesting them.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
4. Putting yourself in the role of an employee either in your present job or the next you anticipate
having, identify the benefits that are most important to you and how you think you can attain
them.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
 Case Study
The Employees' Pregnancy
Cristina Andres is the supervisor of a department in a small manufacturing company of
precision tools. Four operators who are mostly men, except Ching who is five months pregnant,
competently operate the machinery at the production department. She had been there when
Cristina was hired and has maintained an excellent work record
The job requires very little physical exertion and most of the time, employees simply have
to push buttons. Occasionally, however, it is necessary to lift boxes associated with work. Ching's
fellow workers had been doing this for her during most of her pregnancy but one day, all were
extremely busy and no one had time to help her. Thus, a bottleneck was created. Cristina Andres
reprimanded Ching for not keeping the work flowing steadily.
On the next day, Ching walked into the office of the supervisor and told her that she had
read that lifting heavy objects might cause a miscarriage. She requested that the supervisor
assign another worker to do all of the lifting for her. She also wanted other workers to refrain
from smoking for fear it might harm her baby. The supervisor was caught off-guard by her request
and did not know who to follow. Perhaps she should be sent home on an unpaid leave of absence,
or maybe, she could transfer her to another job where lifting was not required, but this would
mean a reduction in Ching's pay by P35.00 per hour. All of these thoughts raced through her head
as she stared up at the ceiling in her office hoping a solution would magically appear. After a few
more moments of silence, Cristina Andres looked at Ching and said “I better check with my boss
on this one."
Help Cristina Andres and Ching solve this problem the steps below:
1. State the main problem of Cristina Andres as supervisor of the company.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. State the different areas of consideration following the SWOT matrix:
______________________________________________________________________________
______________________________________________________________________________
Strengths of the company
______________________________________________________________________________
______________________________________________________________________________
Weaknesses of the company
______________________________________________________________________________
______________________________________________________________________________
Opportunities
______________________________________________________________________________
______________________________________________________________________________
Threats
______________________________________________________________________________
______________________________________________________________________________
3.Give your propose solutions/alternative courses of action or ACA(minimum of there) to help
Christina ANdres overcome this problem. State also the advantages and disadvantages of each.
a.____________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
b.____________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
c.____________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
4. State your recommendation based on your ACA.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
5. Provide a conclusion/detailed action plant to implement your recommendation using the guide
below.

Specific Person Responsible Time Frame Budgetary requirements