HUMAN RESOURCE MANAGEMENT

MODULE 1

Definition
Human resource management (HRM) is the practice of recruiting, hiring, deploying
and managing an organization's employees. HRM is often referred to simply as human
resources (HR). A company or organization's HR department is usually responsible
for creating, putting into effect and overseeing policies governing workers and the
relationship of the organization with its employees.
Scope

➢ Human resources planning: the company to try to find the number of jobs
vacancy in which a particular department The number of staff required with the
necessary qualification and experience.

➢ Job analysis design: Job analysis gives detailed information about the job
description and employee specification in the company.

➢ Recruitment and selection: Based on information collected from job analysis the
company prepares advertisements and publishes them in the newspapers,
Employment sites, etc.
➢ Orientation and induction : Once the employees have been selected
an induction or orientation program is conducted. The employees are informed
about companies backgrounds, products, different subsidiaries organizational
culture and values, and work ethics.

➢ Training and development: Training program helps the employees to put up a

better performance on the job. The training program is also conducted for existing
staff that have a lot of experience. This is called refresher training.

➢ Performance appraisal: HR department checks the performance of the employee.

Which helps appraisal future promotions, incentives, increments in salary, etc

➢ Compensation planning and remuneration: There are various rules

regarding compensation and other benefits. It is the job of the HR department to
look into remuneration and compensation planning.

➢ Motivation, welfare, health, and safety: It is the job of the Human Resource
department to look into the different methods of motivating & encourage the
employee. Apart from this certain health and safety regulations have to be followed
for the benefits of the employees.

➢ Industrial relations: Another important area of Human Resource Management is

maintaining co-ordinal relations with the union members with employer-employee,
employee- employee. This will help the organization to coordinate with one another
for smooth working.

Evolution and growth of HRM

Various stages to development and management of HR practices may be

classified as follows:
1. Industrial revolution era— 19th century
2. Trade union movement era — close to the 19th century
3. Social responsibility era — beginning of the 20th century
4. Scientific management era— 1900-1920s
5. Human relations era— 1930s-1950s
6. Behavioural science era— 1950s-1960s
7. Systems and contingency approach era – 1960 onwards
8. Human resource management era — 1980 onwards
 1. Industrial Revolution Era
The industrial revolution consisted, essentially, the development of machinery, the use
of mechanical energy in production processes, and consequently the emergence of the
concept of factory with large number of workforce working together. In order to
manage people in the factory system of industrial revolution, three systems of HRM
were developed- recruitment of workers, training for workers, and control of workers.

2. Trade Union Movement Era

Shortly after the emergence of factory system, workers started to organize themselves
based on their common interests to form workers’ associations which were
subsequently known as trade unions. The basic objectives of these associations were
to safeguard interest of their members and to sort out their problems which arose
primarily because of employment of child labour, long hours of work, and poor
working conditions.

3. Social responsibility era

In the first decade of 20th century, some factory owners started adopting a more
humanistic and paternalistic approach towards workers. Paternalistic approach to
labour management is based on the philosophy that labour is just like a child and
owner is just like a father and the owner should take care of his labour just like a
father takes care of his children.

4. Scientific management era

Around the beginning of 20th century, Taylor started to find out ‘one best way of
doing thing’ based on time and motion studies. On the basis of his experiments, he
was able to increase workers’ productivity considerably and wrote many papers based
on these experiments and a book on scientific management. The main principles of
scientific management are:
a) Replacing rule of thumb with science
b) harmony, not conflict
c) cooperation, not individualism
d) development of each and every person.

5. Human relations era

This brief period was termed as ‘Industrial Psychology Era’. In 1924, a group of
professors from Harvard Business School, USA, began an enquiry into the human
aspects of work and working conditions at Hawthorne plant of Western Electric
Company, Chicago. They conducted researches and arrived at the conclusions that
productivity of workers depended on-
a) social factors at the workplace
b) group formation and group influence
c) nature of leadership and supervision
d) communication.

6. Behavioural science era

The contribution of behavioural scientists to management practices consists primarily
of producing new insights rather than new techniques. It has developed or expanded a
useful way of thinking about the role of the manager, the nature of organizations, and
the behaviour of individuals within organizations. As against human relations model,
they have given the concept of human resource model.

7. Systems and Contigency approach era

Systems and contingency approach has attracted maximum attention of thinkers in
management in the present era. It is an integrated approach which considers
management of human resources in its totality based on empirical data. The basic idea
of this approach is that analysis of any object must rely on a method of analysis
involving simultaneous variations of mutually-dependent variables.

8. Human resource management era

When the factory system was applied in production, large number of workers started
working together. A need was felt that there should be someone who should take care
of recruiting, developing, and looking after welfare of these workers. For this purpose,
industrial relations department came into existence in most of the large organizations
which was concerned mostly with workers.

Significance of HRM
Human Resource Management becomes significant for business organization due to the
following reasons.
Objective :- Human Resource Management helps a company to achieve its objective
from time to time by creating a positive attitude among workers. Reducing wastage and
making maximum use of resources etc.
Facilitates professional growth :- Due to proper Human Resource policies employees
are trained well and this makes them ready for future promotions. Their talent can be
utilized not only in the company in which they are currently working but also in other
companies which the employees may join in the future.
Better relations between union and management :- Healthy Human Resource
Management practices can help the organization to maintain co-ordinal relationship
with the unions. Union members start realizing that the company is also interested in
the workers and will not go against them therefore chances of going on strike are greatly
reduced.
Helps an individual to work in a team/group :- Effective Human Resource practices
teach individuals team work and adjustment. The individuals are now very comfortable
while working in team thus team work improves.
Identifies person for the future :- Since employees are constantly trained, they are
ready to meet the job requirements. The company is also able to identify potential
employees who can be promoted in the future for the top level jobs.
Allocating the jobs to the right person :- If proper recruitment and selection methods
are followed, the company will be able to select the right people for the right job. When
this happens the number of people leaving the job will reduce as the will be satisfied
with their job leading to decrease in labour turnover.
Improves the economy :- Effective Human Resource practices lead to higher profits
and better performance by companies due to this the company achieves a chance to
enter into new business and start new ventured thus industrial development increases
and the economy improves.

Functions and objectives of HRM

➢ Functions
✓ Human resource planning
✓ Recruitment
✓ Performance management
✓ Learning & development
✓ Career planning
✓ Information sharing
✓ Rewards & recognitions
✓ Compensation & benefits
✓ Industrial relations
✓ Policy formulation
✓ Health and safety
✓ Personal well-being
✓ Employee engagement
✓ Compliance
✓ Administrative responsibilities
➢ Objectives
✓ To help the organization reach its goals.
✓ To ensure effective utilization and maximum development of human
resource.
✓ To ensure respect for human beings. To identify and satisfy the needs of
individuals.
✓ To ensure reconciliation of individual goals with those of the organization.
✓ To achieve and maintain high moral among employees.
✓ To provide the organization with well-trained and well-motivated employees.
✓ To increase to the fullest the employee’s job satisfaction and self-
actualization.
✓ To develop and maintain a quality of work life.
✓ To be ethically and socially responsive to the needs of society.
✓ To develop overall personality of each employee in its multidimensional
aspect.
✓ To enhance employee’s capabilities to perform the present job.
✓ To equip the employees with precision and clarity in trans-action of business.

Roles of HR Managers in modern day organisations

1. Recruiting: HR managers serve as gatekeepers between job seekers and their
organizations. They sift through the onslaught of resumes and cover letters —
or at least utilize applicant tracking systems — to find qualified candidates that
appear to meet their company’s needs.
2. Employee Onboarding: Today’s HR managers are also partly responsible
for a smooth employee onboarding process with new hires. They need to make
sure new employees know who their co-workers are, where their work spaces
are, what devices they can use, and the like. They also need to make sure new
hires are familiar with company culture and the company handbook.
3. Employee engagement: HR departments can also play a role in ensuring
employees are engaged. For example, HR professionals who have open-door
policies might hear the same complaints from a number of employees — and
relay that information to their manager, suggesting they change the way things
are done so workers are happier.
4. Compliance: Today’s HR managers are charged with the task of ensuring
compliance across the board. Professionals need to make sure that their
organizations are following the law exactly as it’s written.
5. Employer branding: business needs to attract and hire top talent if it wishes to
succeed. One way to do that is through employer branding — another
responsibility that falls under the purview of HR. employer branding is the sum
 of the HR team’s efforts at promoting their organization to a specific set of
individuals.
6. Organisational change management: HR departments play a huge role when
it comes to change management. When employees are expected to do one thing
one day and then something entirely different the next, not all of them will take
the news well. In these situations, it is imperative that the HR team works its
magic to help assuage concerns and improve morale.
7. Development: HR managers are also responsible for ensuring that employees
have the tools and knowledge they need to succeed at their jobs. Beyond that,
HR workers can keep their eyes open for other professional development
opportunities that may present themselves — and share them with the team.
8. Exit interviews: Today’s HR managers oversee candidates from the first day
they walk through the door until the day they leave. Part of that supervision
includes conducting exit interviews in which HR employees pick the brains of
departing workers.

HRM Vs Personal Management

Basis of Difference Personnel Management Human Resource Management

Meaning It is traditional approach of It is modern approach of managing

managing people at workplace and
is concern of personnel
department.
Nature It is a routine function.
Focus Efficient management is given
priority.
Function Personnel administration, labor
relation and employee welfare are
major functions of personnel
management.
Objective It manages people in accordance
with organization’s goal.
Perspective It regards people as basic input to
make desired output.
Job design Jobs are designed on the basis of
division of labor.
people at workplace and is concern of
managers of all level (from top to
bottom).
It is a strategic function.
Human values and individual needs
are given priority.
Acquisition, development, utilization
and maintenance of human resource
are major functions of human
resource management.
It determines human resource needs
and formulate policies by matching
individual’s needs with
organization’s needs.
It regards people as strategic and
valuable resource to make desired
output.
Jobs are designed on the basis of
teamwork.
Basis of Difference Personnel Management Human Resource Management

Interest Organization’s interest is valued Interest of organization and interest

the most. of employee is harmonized.
Orientation It is discipline, direction and It is development oriented. It provides
control oriented. space for employee involvement,
performance and growth.
Communication Communication is limited, or even Communication is open.
restricted.
Emphasis It emphasizes on adherence of It emphasizes on combination of
rules and regulations and their human energies and competencies.
implementation.
Benefits • Disciplined employees • Committed human resource
• Increased production • Readiness to change
• Increased production
• Increased profit
• Quality of worklife
Result Organizational goal is achieved Organizational goal is achieved and
and employers are satisfied. both employers and employees are
satisfied.

HRM and Human Capital Management

Human resource management Human capital management

Human resource function performs HCM is related to all employees’ issues

work according to the law and company and other elements such as employment,
directives. utilization, compensation and
development.

Uses simple bench marking techniques. Uses complicated evaluation techniques.

Host as default body to all the process Host only default outcome processes.
in group.
 Only expose integration of HRM. Only executes interaction of human
capital management.

Can driven regularly by HR. Can only be driven under some special
case of organization performance.

Never defines its true objectives. Defines its true objective with perfect
reputation.

Hr function often delivers a major Can able to deliver solution for minor
solution with perfect end. instances.

Contemporary HR practices and Challenges

Challenges
➢ Attracting top talent
➢ Embracing
➢ Developing leaders
➢ Fostering a culture of continues learning
 ➢ Managing diversity
➢ Monitoring and safety
➢ Creating a quality employee experience
➢ Adapting to innovation
➢ Compensation
➢ Understanding benefit packages
➢ Recruiting talented employees
➢ Retaining talented employees
➢ Workplace diversity
➢ Compliance with laws and regulation

Introduction to HR analytics
HR analytics is the process of collecting and analysing Human Resource (HR) data in
order to improve an organization’s workforce performance. The process can also be
referred to as talent analytics, people analytics, or even workforce analytics. This
method of data analysis takes data that is routinely collected by HR and correlates it to
HR and organizational objectives. Doing so provides measured evidence of how HR
initiatives are contributing to the organization’s goals and strategies. For example, if a
software engineering firm has high employee turnover, the company is not operating
at a fully productive level. It takes time and investment to bring employees up to a
fully productive level.

Process of HR Analytics
 HR Accounting
Human Resource Accounting is the process of identifying and measuring data
about Human Resources and communicating this information to the interested
parties. It is an attempt to identify and report the Investments made in Human
Resources of an organisation that are currently not accounted for in the
Conventional Accounting Practices.
Benefits

1. HR Accounting helps the company ascertain how much Investment it has made
on its Employees and how much return it can expect from this Investment
2. The Ratio of Human Capital to Non-Human Capital computed as per the HR
Accounting Concept indicates the degree of Labour Intensity of an Organisation.
3. HR Accounting provides a basis for planning of physical assets vis-a-vis Human
Resources
4. HR Accounting provides valuable information to Investors interested in making
Long Term Investments in Service Sector Companies

Basic objectives

➢ HRA facilitates managing the people as one of the resources of the

organization.
➢ To help the management for making decision about acquiring, allocating,
developing and maintaining human resources in order to keep control on
human resource cost as one of the organizational objective.
➢ To provide information to the management regarding human resource cost and
value.
➢ To see whether the human resources are effectively utilized or not
➢ To see whether the human resources are producing a return on investment of
the persons interested in the organization or not.
➢ Provide human resources accounting detail to outsiders like financers such as
bankers, financial institutions and creditors etc.

HR Audit
A Human Resources Audit (or HR Audit) is a comprehensive method (or means) to
review current human resources policies, procedures, documentation, and
systems. This thorough review helps to identify needs for improvement and
enhancement of the HR function. It is the process to evaluate a human resource
department's performance. It examines various aspects of the HR tasks in a company.
These can be policies, processes, procedures, documentation, and systems.

Hr audit areas of review include:

• Hiring and onboarding
• Benefits
• Compensation
• Performance evaluation process
• Termination process and exit interviews
• Job descriptions
• Form review
• Personnel file review

Purpose of HR Audit

• Ensuring compliance of the company's working with the governing laws

• Helping the HR Department understand how to improve itself
• Reviewing and the proper resource allocation for human resources
• Being an act of "due diligence" for potential investors and stakeholders of a
company
• A basis for improvements in the future

Need of HR Audit

➢ The managements of organisations have realized the need for HR audit because
of powerful influence on motivation of employees at work due to participation
of employees in decision making.
➢ Growth of organisation needs HR audit. Large organisation requires continuous
feedback for improvement in performance of its employees.
➢ Mounting pressures from trade unions of employees and their participation in
formulating employment policy and questioning of managerial competence
have raised the need for HR audit.
➢ Many plants are located at large distances. This also made the HR audit
compulsory.
 ➢ The HR audit becomes essential because of delegation of authority and
decentralization of power.
➢ An effective two-way communication system has also facilitated the need for
HR audit.

HRIS (human resources information system)

HRIS, or human resources information system, is software designed to help
businesses meet core HR needs and improve the productivity of both managers
and employees. This is in large part possible because of automation and
synchronized data, which may reduce costly redundancies and provide a trusted
source of decision-making, respectively. HRIS helps businesses use technology to
enhance their people processes and make both HR and their organization as a
whole more efficient. As a result, they may be better able to keep pace with
evolving workplace trends.

Benefits
Make data-driven decisions: Some systems have predictive analytics, including
forecasting and modeling, which can help HR professionals make more informed
decisions.
Enhance user experience: HRIS with user-friendly interfaces and mobile apps
may make it easier to complete job applications, enroll in benefits and per form
other HR tasks.
Reduce time-intensive labor: Common HRIS features – such as automation,
analytics and artificial intelligence – may help cut the labor costs associated with
payroll, time and attendance, and other manual administrative work.
Accommodate business growth: Cloud-based technology is often capable of
handling increasing numbers of employees, transactions and data volume, as well
as expansions to new locations.
Maintain compliance: Some HRIS providers have monitoring capabilities to
stay current with changing regulations and data security measures to help prevent
incidents.

Examples of HRIS systems: ADP Workforce Now, ADP Vantage HCM, ADP
Next Gen HCM etc.
 MODULE 2

JOB ANALYSIS
Definition
Job analysis is the process of studying a job to determine which activities and
responsibilities it includes, its relative importance to other jobs, the qualifications
necessary for performance of the job and the conditions under which the work is
performed.
An example of a job analysis-based form would be one that lists the job's tasks or
behaviors and specifies the expected performance level for each.

Process of job analysis

 1. Organisational analysis: The first step in the job analysis process is to
determine its purpose. This will help determine what kind of data to collect and
how to collect it. The necessary background information for this step can be
collected by using organization charts, process charts and job descriptions.
2. Select representative positions: It will be time consuming and costly to
analyse all jobs in an organization. So, it is essential to select a representative
sample of jobs for detail job analysis.
3. Collect data: The next step is to collect job-related data such as educational
qualification, duties, responsibilities, working conditions, employee behaviour,
skills and abilities. Data is collected by using methods such as observation,
interviews and questionnaire.
4. Review collected data: A job analysis report is prepared by using the gathered
data. The information is then verified with the worker performing the job and
their supervisor.
5. Developing job description: The information collected is used to develop a
written statement known as job description. Job description is a document that
describes the responsibilities, working conditions, locations, risks and tasks
required for effective job performance.
6. Developing job specification: The final step in the process is to develop job
specification. Job specification and job descriptions are two tangible products
of the job analysis process. Job specification is a statement of personal traits,
educational qualification, experience, background and skills needed to perform
a job.

Job description VS Job specification

Job description: A job description is the detailed information of the vacant position
that states the job title, job location, duties, responsibilities, job role, etc. in a written
format. The HR manager creates this document to invite applications from prospective
candidates for the open role.
Job specification: A job specification states the attributes, skills, knowledge,
educational qualification, and experience needed in a candidate to perform a particular
job. The manager drafts the job specification after preparing the job description. While
drafting the job specification, the manager identifies the necessary abilities and
attributes needed for accomplishing the task.
 JOB DESCRIPTION JOB SPECIFICATION

What does it A job description is the detailed A job specification is

mean? information of the vacant the set of specific
position that states the job title, qualities, knowledge,
job location, duties, and experience the
responsibilities, job role, etc. in a candidate must possess
written format. to perform a particular
job.
Origin Based on Job Analysis Based on Job
Description
Elements Includes job title, job location, Includes attributes,
job role, salary, responsibilities, knowledge, skills,
duties, allowances, and experience, and
incentives educational
qualification
Purpose Describes the job profile Specifies the eligibility
criteria
What is it? Company’s offerings to the Company’s
candidate expectations from the
candidate
Use Used to provide relevant and Used to match the right
sufficient information about the candidate with the job
job

JOB DESIGN
Job design is the division of work tasks assigned to an individual in an organization
that specifies what the worker does, how, and why. Effective job design contributes to
the achievement of organizational objectives, motivation, and employee satisfaction.
Design jobs to have a variety of tasks that require changes in body position,
muscles used, and mental activities. For example, if an employee normally
assembles parts, the job may be enlarged to include new tasks such as work planning,
inspection / quality control, or maintenance.
Various methods;
There are broadly 4 types of Job Design method and techniques that are used to bring
some change in the job structure for an employee. They are as follows;
Job rotation: It is the lateral shift of the job role or positions, it happens between the
job levels, and it cannot be mistakenly considered a promotion. As it does not help the
person to move up the ladder of his/her career. It is done on a temporary basis where
employees are moved back to their previous job after a stipulated time.
Job enlargement: Job enlargement as the name suggests is about adding more
responsibilities or activities in the same job of the employee. This means that
employees will do different activities in the job that eliminates the boredom that the
employee was going through, and it also eliminated the monotonous work of the
employee.
Job enrichment: This is the method where the motivators are added to the existing
job. Like adding skill variety, extra tasks, giving feedback, meaning to the job, and
increasing autonomy. Through this method, the job is made more meaningful for the
employee.
Job simplification: It is the process where few tasks are removed from the job to
make the job more focused on the main job. The aim behind this method is to initiate
improved work methods that can maximize the output along with minimizing the
expenses and costs.

HUMAN RESOURSE PLANNING

Human resource planning (HRP) is the continuous process of systematic planning
ahead to achieve optimum use of an organization's most valuable asset—quality
employees. Human resources planning ensures the best fit between employees and
jobs while avoiding manpower shortages or surpluses.
Objectives

➢ Proper assessment of human resources needs in future.

➢ Anticipation of deficient or surplus manpower and taking the corrective action.

➢ To create a highly talented workforce in the organization.

➢ To protect the weaker sections of the society.

➢ To manage the challenges in the organization due to modernization,

restructuring and re-engineering.
 ➢ To facilitate the realization of the organization’s objectives by providing right
number and types of personnel.

➢ To reduce the costs associated with personnel by proper planning.

➢ To determine the future skill requirements of the organization.

➢ To plan careers for individual employee.

➢ Providing a better view of HR dimensions to top management.

➢ Determining the training and development needs of employees.

Factors affecting Human Resource Planning

All human resource management activities start with human resource planning. So we
can say that human resource planning is the primary activity of human resource
management.

A manager should consider the following factors when he or she makes human
resource planning:

1. Employment: HRP is affected by the employment situation in a country. In

countries where there is greater unemployment, there may be more pressure on
the government to appoint more people. For example, public sector enterprises
are highly overstaffed in some countries, while few private enterprises are
understaffed.

2. Technical changes in society: Technology changes quickly, and new people

having the required knowledge are required for the company. In some cases,
the company may retain existing employees and teach them the new
technology, and in some cases, the company has to dismiss existing people and
appoint fresh people.

3. Organisational changes: Changes take place within the organization from

time to time. For example, a company may diversify into new products or close
down businesses in some areas. In such cases, a company may hire or dismiss
people according to the situation.

4. Economic factors: How much money is available for salaries, training, and
equipment is the most immediate concern in human resource planning. For
example, people do not have much money to spend in an economic recession
and tend to be much more selective in what they buy or the services they use.
 This means some industries, such as those producing luxury items or non-
essential services, sell less and may even have to lay off some staff.

5. Social factors: Social factors may influence the organization’s HR planning.

There is a clear discrepancy of one social group. It’s a good idea to build in
ways of opening up new opportunities.

6. Technological factors: New technology brings new skill requirements, so

companies always need to be aware of proficiencies and training needs when
planning human resources. New products and services also may require
recruiting highly skilled employees or training existing employees to meet the
need.

7. Legal factors: New products and services also may require recruiting highly
skilled employees or training existing employees to meet the need. HR
managers must keep themselves up to date and have an employment law
specialist available to consult if necessary. Employment law changes must be
reflected in company policy.

8. Environmental factors: Environmental factors might include where the

business is located about finding sufficient appropriate staff or changes to the
environment that mean a need for more or fewer employees.

9. Labour market: The labor market comprises people with skills and abilities
that can be tapped when the need arises. Although in many 3rd countries with
surplus labor, there is a shortage of skilled people. We should take measures to
make more skilled workers available in the country.

Process of HRP
Analysing Organizational Objectives:
The objective to be achieved in future in various fields such as production, marketing,
finance, expansion and sales gives the idea about the work to be done in the
organization.

Inventory of Present Human Resources:

From the updated human resource information storage system, the current number of
employees, their capacity, performance and potential can be analysed. To fill the
various job requirements, the internal sources (i.e., employees from within the
organization) and external sources (i.e., candidates from various placement agencies)
can be estimated

Forecasting Demand and Supply of Human Resource:

The human resources required at different positions according to their job profile are
to be estimated. The available internal and external sources to fulfill those
requirements are also measured. There should be proper matching of job description
and job specification of one particular work, and the profile of the person should be
suitable to it.

Estimating Manpower Gaps:

Comparison of human resource demand and human resource supply will provide with
the surplus or deficit of human resource. Deficit represents the number of people to be
employed, whereas surplus represents termination. Extensive use of proper training
and development programme can be done to upgrade the skills of employees.

Formulating the Human Resource Action Plan:

The human resource plan depends on whether there is deficit or surplus in the
organization. Accordingly, the plan may be finalized either for new recruitment,
training, interdepartmental transfer in case of deficit of termination, or voluntary
retirement schemes and redeployment in case of surplus.

Monitoring, Control and Feedback:

It mainly involves implementation of the human resource action plan. Human

resources are allocated according to the requirements, and inventories are updated
over a period. The plan is monitored strictly to identify the deficiencies and remove it.
Comparison between the human resource plan and its actual implementation is done to
ensure the appropriate action and the availability of the required number of employees
for various jobs.
 METHODS OF DEMAND AND SUPPLY FORECASTING

Demand forecasting

Demand forecasting is a quantitative aspect of human resource planning. It is the

process of estimating the future requirement of human resources of all kinds and types
of the organisation.

There are three major methods for demand forecasting. They are;

1. Executive judgement: Executive or Managerial Judgment method is the most

suitable for smaller enterprises because they do not afford to have work study
technique. Under this method the executives sit together and determine the
future manpower requirements of the enterprise and submit the proposal to the
top management for approval. This approach is known as ‘bottom up’
approach.

2. Work load forecasting: It is also known as work load analysis. Under this
method the stock of workload and the continuity of operations are determined.
Accordingly the labour requirement is determined. The workload becomes the
base for workforce analysis for the forthcoming years. Here due consideration
is given to absenteeism and labour turnover. This method is also known as
work study technique. Here working capacity of each employee is calculated in
terms of man-hours. Man-hours required for each unit is calculated and then
number of required employees is calculated.

3. Statistical techniques: Long range demand forecasting for human resources is

more responsive to statistical and mathematical techniques. With the help of
computers any data is rapidly analyzed. The following are the methods of
forecasting used under this category:

• Ratio trend analysis

• Econometric models
• Bureks Smith model
• Regression analysis

Supply forecasting

Supply forecasting means to make an estimation of supply of human resources taking

into consideration the analysis of current human resources inventory and future
availability.

The first step in supply forecasting is to take a stock of existing HR inventory as

follows.
Head Count: Count of the total number of people available department-wise, sex-
wise, designation-wise, skill-wise, pay roll-wise etc.

Job Family Inventory: It consists to number and category of employees of each job
family i.e. the jobs related to same category like office staff, sales and marketing staff,
production staff, maintenance and industrial engineers, quality control engineers etc.

Age Inventory: It consists of age-wise number and category of employees. This gives
us age composition of human resources. Dynamism, creative abilities innovativeness
is present in young employees while making of proper judgment and display of
maturity is shown by elderly employees.

Inventory of skill, experience, values and capabilities: Organisation should take a

stock of present inventory of skill, employees with number of years of experiences (10
yrs, 15-yrs, 20 yrs and more etc.), values and capabilities.

Inventory of Qualifications and Training: This consists of educational

qualifications of the employees academic and technical and special qualifications if
any and the training received by the employees.

Inventory of Salary grades: This includes pay and allowance-wise and total
emoluments-wise stock taking.

Sex wise Inventory: Inventory of male and female employees of the organisation.

Local and Non-Local-wise Inventory: It includes the stock of local employees and
the employees belonging to other areas such as different states of India.

RECRUITMENT

Definition

Recruitment refers to the process of identifying, attracting, interviewing, selecting,

hiring and onboarding employees. In other words, it involves everything from the
identification of a staffing need to filling it.

Depending on the size of an organization, recruitment is the responsibility of a range

of workers. Larger organizations may have entire teams of recruiters, while others
only a single recruiter. In small outfits, the hiring manager may be responsible for
recruiting. In addition, many organizations outsource recruiting to outside firms.
Companies almost always recruit candidates for new positions via advertisements, job
boards, social media sites, and others. Many companies utilize recruiting software to
more effectively and efficiently source top candidates. Regardless, recruitment
typically works in conjunction with, or as a part of Human Resources.
Methods of recruitment

There are three significant methods of recruitment which are regularly used in the
corporate world namely:
1. Direct Recruitment Methods
2. Indirect Recruitment Methods
c. Third Party Recruitment Methods

➢ Direct recruitment method: The campus recruitment is a major part of

recruitment carried out using direct method. The organization sends a
representative from HRM department in educational institutes to interact with
potential candidates. The candidates who are seeking for jobs are explained
about the job vacancy in the organization and the skills which are required to
perform the job. The representative interacts with the candidates with the help
of placement cells of the institutions. A briefing session is conducted before the
actual screening and interview process.

➢ Indirect recruitment method: In the indirect method of recruitment the

organization use the advertisement channel such as news papers, radio, job
sites, radio, television, magazines and professional journals to reach the
potential candidates. The advertisement provides information about the job
requirement, the range of salary offered, the type of job (full time or part time)
and job location. The candidates who are interested in the job apply for it and
share their resume with the organization.

➢ Third party recruitment method: The third party method of recruitment

includes the helping hands which are outside the organization. The Recruitment
Consultant or Employment Agencies, Search & Select Companies, Employee
Referral, Voluntary Organization, Data Banks, Trade Unions and Labor
Contractors are different channels which help the organization to establish
contact with the potential candidates.

Process of recruitment
Recruitment Process can be defined as “it is a way to attract and find potential
manpower to fill up the vacant post in the company”. The HR Recruitment Process
helps to hire candidates based on their ability to work and attitude which is essential
for accomplishment of organizational goals.
The recruitment process is the most important function of HRM department. The
Human Resource Manager use different tactics to reach the potential candidate. The
recruitment method used to contact the candidates differs based on the source of
recruitment. Following are the recruitment process

1. Recruitment Planning
2. Strategy development
3. Searching
4. Screening
5. Evaluation and control

➢ Recruitment Planning: It is the first step of HR Recruitment Process in which

the job vacancies in the organization are analyzed and relevant job description is
prepared. It also includes preparation of job specification and details about
qualification and skills needed to perform the job.

➢ Strategy Development: After the job description and job specification is

prepared the organization decides the number of recruits needed to work on the
profile to close the vacancy as soon as possible. The recruiter decides the strategy
that should be adopted for successful recruitment of employee.

➢ Searching: The searching step is divided into two parts that is :

o Source activation

o Selling.

➢ The activation took place when the department which has vacancy confirms it to
the HR manager about the requirement; also approve the draft of job description
as well as specification. Under selling the organization selects the channel of
communication to reach the prospective candidates.

➢ Screening: Once the job applications are received by the HR Recruiter it starts
the screening process. It is a step in which the application are shortlisted for the
further selection process. After short-listing of application based on the job
specification the selection process begins. At the early stage the recruiter has to
 remove the applications which are clearly under qualified and not suitable for
the job.

➢ Evaluation and Control: The validity and effectiveness of HR Recruitment

Process is assessed in this step. The step is essential as organization has to check
the cost incurred during recruitment and the output in terms of selection of
suitable candidates and their joining. The cost of recruitment includes the time
spent by the management by involving in the recruitment process, the cost of
advertisement, selection, consultant fees in case of recruitment outsourcing and
also the salaries of recruiter.

YIELD RATIO

Yield ratio is a recruiting metric that indicates the percentage of candidates’

movements from one part of the hiring process to the next. The ratio measures
movements between each stage (e.g., from application to screening calls) but
also from start to finish (number application to a number of hires).
 SELECTION
Selection is the process of choosing the most suitable candidates from those who
apply for the job. It is a process of offering jobs to desired candidates.
Once the potential applicants are identified, the next step is to evaluate their
qualification, qualities, experience, capabilities, etc. & make the selection. It is the
process of offering jobs to the desired applicants.

Process of selection

1. Initial Screening

The selection process often begins with an initial screening of applicants to remove
individuals who obviously do not meet the position requirements. At this stage, a few
straight forward questions are asked. An applicant may obviously be unqualified to fill
the advertised position, but be well qualified to work in other open positions. The
Purpose of Screening is to decrease the number of applicants being considered for
selection.
 2. Completion of the application form

The next step in the selection process may involve having the prospective employee
complete an application for employment. This may be as brief as requiring only an
applicant’s name, address, and telephone number. In general terms, the application
form gives a job-performance-related synopsis of applicants’ life, skills and
accomplishments.

3. Employment tests

Personnel testing is a valuable way to measure individual characteristics. The tests

measure mental abilities, knowledge, physical abilities, personality, interest,
temperament, and other attitudes and behaviors. Tests are used more in the public
sector than in the private sector and in medium-sized and large companies than in
small companies.

4. Job interview

An interview is a goal-oriented conversation in which the interviewer and applicant

exchange information. The employment interview is especially significant because the
applicants who reach this stage are considered to be the most promising candidates.

5. Conditional job offer

Conditional job offer means a tentative job offer that becomes permanent after certain
conditions are met. If a job applicant has passed each step of the selection process so
far, a conditional job offer is usually made. the conditional job offer implies that if
everything checks out – such as passing a certain medical, physical or substance abuse
test – the conditional nature of the job offer will be removed and the offer will be
permanent.

6. Background investigation

This step is used to check the accuracy of application form through former employers
and references. Verification of education and legal status to work, credit history and
criminal record are also made. Personal reference checks may provide additional
insight into the information furnished by the applicant and allow verification of its
accuracy. Background investigations primarily seek data from references supplied by
the applicant including his or her previous employers.

7. Medical/physical examination

This is an examination to determine an applicant’s physical fitness for essential job

performance. Typically, a job offer is contingent on successfully passing this
examination. For example, firefighters must perform activities that require a certain
physical condition. Whether it is climbing a ladder, lugging a water-filled four-inch
hose or carrying an injured victim, these individuals must demonstrate that they are fit
for the job.

8. Permanent job offer

Individuals who perform successfully in the preceding steps are now considered
eligible to receive the employment offer. The actual hiring decision should be made
by the manager in the department where the vacancy exists.

Methods of selection

1. Preliminary selection

Once an employer has received what it considers sufficient interest in the position, the
recruiter starts screening the applications or resumes to determine which applicants to
contact for the preliminary screening interview. Employers determine sufficient
interest based on the number of applications or the amount of time the job is posted.
Small businesses that don’t have a lot of time to devote to screening applicants should
screen based on discrete criteria, such as minimum number of years’ experience or
verifiable credentials. Preliminary screening is an effective method for narrowing the
selection to candidates who meet the basic requirements for the job.

2. Telephonic interview

Used as a first-round interview, telephone interviews give recruiters an opportunity to

find out whether an applicant is still interested in the job. It also saves small
businesses the money and time of conducting face-to-face interviews immediately
after the preliminary screening step. A telephone interview also confirms whether the
applicant has the requisite qualifications. Following the telephone interview, the
recruiter typically selects the candidates who were able to articulate their skills and
qualifications in a manner that meets the company’s staffing needs.

3. In-person interviews

Face-to-face interviews take time, which is one of the reasons the applicant pool
should be narrowed by conducting preliminary screening and telephone interviewing.
The recruiter is a conduit for providing the hiring manager with the best-suited
candidates, a process that streamlines the selection process. For example, out of 10
applicants interviewed by phone, the recruiter should select three to four candidates.
The hiring manager further narrows the selection to two finalists. In a small business,
although the hiring manager may be doing the work of a recruiter, best practices for
HR selection methods dictate that at least one face-to-face interview be conducted
before making a decision.

4. Cultural fit selection

In the third-round interview, often the decision round, the hiring manager asks
questions that will help him determine which candidate fits the organisational culture.
Qualifications aside, an important factor in the hiring decision is cultural fit. Cultural
fit means the candidate’s values align with the organisation’s values. It’s a subjective
analysis, and one that hiring managers can only attribute to being a gut feeling, not
objective criteria.

5. Vetting candidates

the vetting process consists of pre-employment matters, such as background checks

and drug testing. Even small businesses should invest in the time and expense of
background checks — doing so can reduce the likelihood of hiring mistakes.
Background checks verify information provided by the candidate and are an exercise
in due diligence.

SELECTION TESTS AND ITS IMPORTANCE

A selection test is a systematic and standardized procedure of sampling human

behavior in order to obtain qualified applicants for organizational activities.It is used
to assess the ability, aptitude and personality of prospective candidates. Selection test
is conducted in order to select a right person for the right job who will be capable of
performing organizational activities if hired. Selection test is a device that reveals the
information about the candidate which is not obtained through other steps of selection.
It screens the employee's ability, knowledge, and decides whether he/she can perform
well in the organization.

Selection test can be used to weed out a large number of candidates who may not be
considered for the employment. This test is a device that reveals the information about
the candidate which is not obtained through other steps of selection. Normally
organization receives a large number of applications so these tests help to find out the
suitable candidates having required characteristics for the position. It screens the
employee’s ability, knowledge, and decides whether he/she can perform well in the
organization.

Selection test will provide cut off point above which candidates may be called for the
interview.
Employee Selection tests have following benefits:

1. Selection test avoids biases in the selection procedure.

2. This test helps to minimize the cost and time to be taken by selection procedure.
3. Selection test can provide the information about the qualities and potential of the
prospective employees which cannot be known through other methods including
personal interviews. These tests also help for the promotion of the potential
candidates.
4. This test helps to estimate the candidate’s ability, knowledge, and other
proficiency.
5. This test provides the guideline for reference evaluation.
6. This test compares different candidates on the basis of skills, knowledge and
special abilities possessed by them.
7. This test provides a basis for selecting the most likely candidate as per the
requirement of job specifications.
8. Selection tests are a standardized and unbiased method of selecting the
candidate. Thus a person who is not selected on the basis of test cannot argue for
the partiality in the selection process. Impartiality is very important for
organizations like the public sector.

INTERVIEWS

The interview is a formal meeting between two people (Interviewer and interviewee).
The interview is conducted to ask questions and obtain information from the
interviewee. An Interviewer is the one who asks questions and an interviewee is who
answers the questions. I The interview is a formal meeting between two people
(Interviewer and interviewee). The interview is conducted to ask questions and obtain
information from the interviewee. An Interviewer is the one who asks questions and
an interviewee is who answers the questions.

Virtual interviews

A virtual interview is an interview that takes place remotely, sometimes over the
phone, but often using technology like video conferencing and other online
communication platforms. Virtual interviews are often conducted much the same way
as face-to-face interviews. Virtual communication requires special considerations and
adjustments due to the limited ability to read body language and facial expressions.

Placement

Placement refers to the process of connecting the selected person and the employer in
order to establish an ongoing employment relationship. Placement refers to the
process of connecting the selected person and the employer in order to establish an
ongoing employment relationship. In this step the employee is given the activities
he/she needs to perform and is told about his/her duties. Placement is usually followed
by the orientation process.

Induction/Orientation

Induction basically refers to welcoming a new employee in the organization. This

process officially introduces a fresh recruit in the organization so that
they formally take charge of their position. In this process, the newcomers are
provided an opportunity to learn about the organization and get to known their co-
workers as well as the workplace. The induction process is usually of a short duration
and may be carried out on the day the employee joins the organization. The employee
is explained the main things that he/she needs to know about the organization so that
they can quickly adjust to the new settings.

The orientation process is carried out to assist the new employees in adjusting to their
position, department, responsibilities and the work environment. This process is more
formal in nature and extends over a longer time period as organizations spend a few
weeks or often, even a month on the orientation of their new employees. In the
orientation period, the employee will be explained about the assignments allocated to
them, their team members and the different systems and processes of the organization.
The new recruit is helped in becoming familiar with the work setting and the tasks
he/she is supposed to carry out.

INDUCTION VS ORIENTATION

Meaning

The process of introducing new employees The process of making new employees
and welcoming them into the organization familiar with the work environment so that
they can adjust to their new position and
work environment

Duration

Short-duration Long-duration

Order

Occurs first Occurs after induction

 Includes

Preview of company, organizational Employees are explained about the work

hierarchy, policies, etc. given to the processes, team members, tools and
employees equipment they may have to use

Kind of process

One-way process; carried out in the form of Two-way process; carried out as a training
a presentation program

Level of formality

Informal Formal

TRANSFER

Transfer is a process of placing employees in positions where they are likely to be

more effective or where they are to get more job satisfaction. In transfers, there is no
change in the responsibility, designation, status or salary. It is a process of employee’s
adjustment with the work, time and place. Transfer may also be made as a disciplinary
action.

According to Edwin Flippo, a transfer, “is a change in job where the new job is
substantially equal to the old in terms of pay, status and responsibilities”.

Objectives of transfer

➢ To meet or fulfill organizational needs

➢ To satisfy employee needs
➢ To adjust the workforce
➢ To reduce monotony and to make the employees versatile
➢ For effective use of employees
➢ To punish Employees
➢ To give the relief to the employees
 ➢ To improve employees background by placing them in different jobs of various
departments and units.

PROMOTION AND DEMOTION

Promotion: It refers to the upward movement of an employee from his currect job
position to another that is higher in pay, responsibility and hierarchy within an
organisation. Promotion has an inbuilt motivational value i.e. it elevates the status and
power of an employee within an organisation

Purpose of promotion

✓ To utilize the skills and knowledge of an employee at an appropriate level in

the organisation’s hierarchy
✓ To develop a competitive spirit amoung the employees to aquire skills and
responsibilities required for higher level jobs
✓ To develop competent workforce inorder to create an effective organisational
environment
✓ To promote self development of employees and reduce labor turnover
✓ To boost confidence, loyalty and morale of the employee
✓ To achieve employee satisfaction by rewarding commited and hardworking
employees

Types of promotion

1. Horizontal: It involves movement of employee from its current job position to

another job which is higher in pay and responsibility and designation, however
the job classification remains the same
2. Vertical: It involves movement of employee from its current job position to
another which is higher in pay, status, responsibility, designation an job
classification
3. Dry promotion: It refers to an increase in responsibilities and status of the
employee without any increase in pay or other financial benefits
4. Open/Closed: When a company announces vacancies and opens the job
position to all employees in an organisation, they have a chance of being
selected for that job, it is an open promotion. A closed promotion is, when an
organisation does not announce any vacancies and the job position is not open
to all employees of the organisation

Demotion: It is the downward movement of an employee in an organisation’s

hierarchy with lower status and pay. It is a downgrading process where the employee
suffers from emotional and financial loss in terms of rank, power, status, pay etc.
Types of demotion

1. Compulsory demotion: It involves lowing of job title, authority, status or

salary of an employee as a disciplinary tool or due to adverse business
condition by the organisation

2. Voluntary demotion: If an employee requests the organisation to lower his

work load so that he can manage his personal life, it is the case of voluntary
demotion

Reasons for demotion

➢ Inadequacy on the part of the employees in terms of job performance, attitude

and capability. It happens when an employee finds it difficult to meet job
requirement standards, following his promotion.

➢ Demotion may result from organisational staff reductions. Due to adverse

business conditions, organisations may decide to lay off some and downgrade
some jobs.

➢ Demotions may be used as disciplinary tools against errant employees.

➢ If there is a mistake in staffing i.e., a person is promoted wrongly.

➢ When, because of a change in technology, methods and practices, old hands are
unable to adjust or when employees because of ill health or personal reasons,
cannot do their job properly.
 MODULE 3

PERFORMANCE ASSESSMENT AND HUMAN RESOURCE

DEVELOPMENT

Performance appraisal

The term performance appraisal refers to the regular review of an employee's job
performance and overall contribution to a company. Also known as an annual review,
performance review or evaluation, or employee appraisal, a performance appraisal
evaluates an employee’s skills, achievements, and growth, or lack thereof.
Companies use performance appraisals to give employees big-picture feedback on
their work and to justify pay increases and bonuses, as well as termination decisions.
They can be conducted at any given time but tend to be annual, semi-annual, or
quarterly.

Process of performance appraisal

Establishing performance standards
The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees.
This step requires setting the criteria to judge the performance of the employees as
successful or unsuccessful and the degrees of their contribution to the organizational
goals and objectives. The standards set should be clear, easily understandable and in
measurable terms. In case the performance of the employee cannot be measured,
great care should be taken to describe the standards.
Communicating the standards
Once set, it is the responsibility of the management to communicate the standards to
all the employees of the organization. The employees should be informed and the
standards should be clearly explained to the employees. This will help them to
understand their roles and to know what exactly is expected from them. The standards
should also be communicated to the appraisers or the evaluators and if required, the
standards can also be modified at this stage itself according to the relevant feedback
from the employees or the evaluators.
Measuring the actual performance
The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the
specified period of time. It is a continuous process which involves monitoring the
performance throughout the year. This stage requires the careful selection of the
appropriate techniques of measurement, taking care that personal bias does not affect
the outcome of the process and providing assistance rather than interfering in an
employees work.
Comparing actual performance with desired performance
The actual performance is compared with the desired or the standard performance.
The comparison tells the deviations in the performance of the employees from the
standards set. The result can show the actual performance being more than the desired
performance or, the actual performance being less than the desired performance
depicting a negative deviation in the organizational performance. It includes recalling,
evaluating and analysis of data related to the employees’ performance.
Discussing results [Feedback]
The result of the appraisal is communicated and discussed with the employees on one-
to-one basis. The focus of this discussion is on communication and listening. The
results, the problems and the possible solutions are discussed with the aim of problem
solving and reaching consensus. The feedback should be given with a positive attitude
as this can have an effect on the employees’ future performance. Performance
appraisal feedback by managers should be in such way helpful to correct mistakes
done by the employees and help them to motivate for better performance but not to
demotivate. Performance feedback task should be handled very carefully as it may
leads to emotional outburst if it is not handing properly.
 Methods of performance appraisal

1. Management by Objectives (MBO)

Management by objectives (MBO) is the appraisal method where managers and
employees together identify, plan, organize, and communicate objectives to focus on
during a specific appraisal period. After setting clear goals, managers and subordinates
periodically discuss the progress made to control and debate on the feasibility of
achieving those set objectives

2. 360-Degree Feedback
360-degree feedback is a multidimensional performance appraisal method that evaluates
an employee using feedback collected from the employee’s circle of influence namely
managers, peers, customers, and direct reports. This method will not only eliminate bias
in performance reviews but also offer a clear understanding of an individual’s
competence.

3. Assessment Centre Method

The concept of assessment centre was introduced way back in 1930 by the German
Army but it has been polished and tailored to fit today’s environment. The assessment
centre method enables employees to get a clear picture of how others observe them and
the impact it has on their performance. The main advantage of this method is that it will
not only assess the existing performance of an individual but also predict future job
performance.

4. Behaviorally Anchored Rating Scale (BARS)

Behaviorally anchored rating scales (BARS) bring out both the qualitative and
quantitative benefits in a performance appraisal process. BARS compares employee
performance with specific behavioral examples that are anchored to numerical ratings.
Each performance level on a BAR scale is anchored by multiple BARS statements
which describe common behaviors that an employee routinely exhibits. These statements
act as a yardstick to measure an individual’s performance against predetermined
standards that are applicable to their role and job level.

5. Psychological Appraisals
Psychological appraisals come in handy to determine the hidden potential of employees.
This method focuses on analyzing an employee’s future performance rather than their
past work. These appraisals are used to analyze seven major components of an
employee’s performance such as interpersonal skills, cognitive abilities, intellectual
traits, leadership skills, personality traits, emotional quotient, and other related skills.

6. Human-Resource (Cost) Accounting Method

Human resource (cost) accounting method analyses an employee’s performance through
the monetary benefits he/she yields to the company. It is obtained by comparing the cost
of retaining an employee (cost to company) and the monetary benefits (contributions) an
organization has ascertained from that specific employee.
 Past oriented and future oriented performance appraisal

Past oriented:

1. Rating Scales:

Rating scales consists of several numerical scales representing job related

performance criterions such as dependability, initiative, output, attendance, attitude
etc. Each scales ranges from excellent to poor. The total numerical scores are
computed and final conclusions are derived. Advantages – Adaptability, easy to use,
low cost, every type of job can be evaluated, large number of employees covered, no
formal training required. Disadvantages – Rater’s biases

2. Checklist:

Under this method, checklist of statements of traits of employee in the form of Yes or
No based questions is prepared. Here the rater only does the reporting or checking and
HR department does the actual evaluation. Advantages – economy, ease of
administration, limited training required, standardization. Disadvantages – Raters
biases, use of improper weighs by HR, does not allow rater to give relative ratings

3. Forced Choice Method: The series of statements arranged in the blocks of two
or more are given and the rater indicates which statement is true or false. The rater is
forced to make a choice. HR department does actual assessment. Advantages –
Absence of personal biases because of forced choice. Disadvantages – Statements may
be wrongly framed.
4. Forced Distribution Method:

Here employees are clustered around a high point on a rating scale. Rater is compelled
to distribute the employees on all points on the scale. It is assumed that the
performance is conformed to normal distribution. Advantages – Eliminates
Disadvantages – Assumption of normal distribution, unrealistic, errors of central
tendency.

5. Critical Incidents Method:

The approach is focused on certain critical behaviors of employee that makes all the
difference in the performance. Supervisors as and when they occur record such
incidents. Advantages – Evaluations are based on actual job behaviors, ratings are
supported by descriptions, feedback is easy, reduces recency biases, chances of
subordinate improvement are high. Disadvantages – Negative incidents can be
prioritized, forgetting incidents, overly close supervision; feedback may be too much
and may appear to be punishment.
6. Behaviorally Anchored Rating Scales:

Statements of effective and ineffective behaviors determine the points. They are said
to be behaviorally anchored. The rater is supposed to say, which behavior describes
the employee performance. Advantages – helps overcome rating errors. Disadvantages
– Suffers from distortions inherent in most rating techniques.

7. Field Review Method:

This is an appraisal done by someone outside employees’ own department usually
from corporate or HR department. Advantages – Useful for managerial level
promotions, when comparable information is needed, Disadvantages – Outsider is
generally not familiar with employees work environment, Observation of actual
behaviors not possible.

Future oriented:

1. Management By Objectives:

It means management by objectives and the performance is rated against the

achievement of objectives stated by the management. MBO process goes as under.

• Establish goals and desired outcomes for each subordinate

• Setting performance standards

• Comparison of actual goals with goals attained by the employee

• Establish new goals and new strategies for goals not achieved in previous year.

2. Psychological Appraisals:
These appraisals are more directed to assess employees potential for future
performance rather than the past one. It is done in the form of in-depth interviews,
psychological tests, and discussion with supervisors and review of other evaluations.
It is more focused on employees emotional, intellectual, and motivational and other
personal characteristics affecting his performance. This approach is slow and costly
and may be useful for bright young members who may have considerable potential.
However quality of these appraisals largely depend upon the skills of psychologists
who perform the evaluation.

3. 360-Degree Feedback:

It is a technique which is systematic collection of performance data on an individual

group, derived from a number of stakeholders like immediate supervisors, team
members, customers, peers and self. In fact anyone who has useful information on
how an employee does a job may be one of the appraisers. This technique is highly
useful in terms of broader perspective, greater self-development and multi-source
feedback is useful.

Employee training

Employee training is a program that is designed to increase the technical skills,

knowledge, efficiency, and value creation to do any specific job in a much better way.
Employee training program is periodical and given at regular intervals, it is never
continuous. Employee training increases the needed skill set and helps in development
of an employee as well as overall growth of the organization.

Importance of employee training

1. New candidates who join an organization are given training. This training
familiarize them with the organizational mission, vision, rules and regulations
and the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updations and amendments take place in technology, training is given to
cope up with those changes. For instance, purchasing a new equipment,
changes in technique of production, computer implantment. The employees are
trained about use of new equipments and work methods.
4. When promotion and career growth becomes important. Training is given so
that employees are prepared to share the responsibilities of the higher level job.

The benefits of training can be summed up as:

1. Improves morale of employees- Training helps the employee to get job

security and job satisfaction. The more satisfied the employee is and the greater
is his morale, the more he will contribute to organizational success and the
lesser will be employee absenteeism and turnover.
2. Less supervision- A well trained employee will be well acquainted with the
job and will need less of supervision. Thus, there will be less wastage of time
and efforts.
3. Fewer accidents- Errors are likely to occur if the employees lack knowledge
and skills required for doing a particular job. The more trained an employee is,
the less are the chances of committing accidents in job and the more proficient
the employee becomes.
4. Chances of promotion- Employees acquire skills and efficiency during
training. They become more eligible for promotion. They become an asset for
the organization.
 5. Increased productivity- Training improves efficiency and productivity of
employees. Well trained employees show both quantity and quality
performance. There is less wastage of time, money and resources if employees
are properly trained.

Training Need Assessment/Identification (TNA/TNI)

A training needs assessment (TNA) is an assessment process that companies and

other organizations use to determine performance requirements and the knowledge,
abilities and skills that their employees need to achieve the requirements. There are
three key areas that are considered accurate assessors of those needs:

• Skill proficiency of employees

• Employees' frequency of skill usage
• Level of employees' skills crucial to job performance

One of the outputs of the training needs assessment is a list of who needs what kind of
training. TNA aims to answer some familiar questions: why, who, how, what and when.

Training need identification is a tool utilized to identify what educational courses or

activities should be provided to employees to improve their work productivity. Here the
focus should be placed on needs as opposed to desires of the employees for a
constructive outcome.
Inorder to emphasize the importance of training need identification we can focus on the
following areas:-

• To pinpoint if training will make a difference in productivity and the bottom line.
• To decide what specific training each employee needs and what will improve his or
her job performance.
• To differentiate between the need for training and organizational issues and bring
about a match between individual aspirations and organizational goals.

On Job VS Off Job training

While on-the-job training is provided at the workplace itself, the trainees produce
things while learning. In off-the-job training, the trainiees are away from the work
environment, that eliminates stress, frustration and bustle of day-to-day job.

ON THE JOB OFF THE JOB

 Meaning On the job training refers to a form When the employees are given
of training which is provided at the training outside the actual work
work place during the performance location, such a type of training is
of the actual job. termed as off the job training.

Approach Practical Theoretical

Active Yes No
participation

Location At the workplace Away from the workplace

Principle Learning by performing Learning by acquiring knowledge

Work No, because trainees produce the Yes, because first training is
disruption products during learning. provided which is followed by a
performance.

Carried out Experienced employees Professionals or experts.

by

Cost Inexpensive Expensive

Suitable for Manufacturing firms Non-manufacturing firms

Evaluation of Training

Training evaluation can be defined as any attempt to obtain information (feedback) on

the effects of training program and to assess the value of training in the light of that
information for improving further training. Evaluation of training can be viewed as a
method of measuring change in knowledge, skills, attitudes, job performance, costs
and the quality of the training facilities.

Various reasons for evaluation training

➢ The evaluation enables the effectiveness of an investment in training to be

appraised which can help to justify expenditure on future programmes.
 ➢ It allows the effectiveness of differing approaches to be compared.

➢ It provides feedback for the trainers about their performance and methods.

➢ It enables improvements to be made, either on the next occasion, or if the

evaluation is ongoing, as the training proceeds.

➢ Recording learning achievements can be motivational for learners.

➢ The evaluation indicates to what extent the objectives have been met and
therefore whether any further training needs remain.

Training Vs Development

Training: Training is a process in which the trainees get an opportunity to learn the
key skills which are required to do the job. Learning with earning is known as
training. It helps the employees to understand the complete job requirements. Training
also helps the employees to change the conduct towards their superior, subordinates
and colleagues. It helps to groom them for their prospective jobs.

Development: The training for the top level employees is considered as development,
also known as management or executive development. It is an on-going systematic
procedure in which managerial staff learns to enhance their conceptual, theoretical
knowledge. It helps the individual to bring efficiency and effectiveness in their work
performances.

TRAINING DEVELOPMENT

Meaning Training is a learning process in which Development is an educational

employees get an opportunity to process which is concerned
develop skill, competency and with the overall growth of the
knowledge as per the job requirement. employees.

Term Short Term Long Term

Focus on Present Future

 Orientation Job oriented Career oriented

Motivation Trainer Self

Objective To improve the work performances of To prepare employees for

the employees. future challenges.

Number of Many Only one

Individuals

Aim Specific job related Conceptual and general

knowledge

Management Development

“Executive or management development is a planned process of learning and growth

designed to bring behavioural change among the executives.”
It is continuous process of learning. It implies that there will be a change in
knowledge and behavior of the individuals undergoing development programme. The
employee will be able to perform his present job better and will increase his potential
for future work.

Process of Management Development

1. Identifying Development Programmes: First, an organization has to critically

examine the organization’s developmental needs, present as well as future.
Then, it should decide on what types of managers/executives are needed to
achieve such needs. An examination of the organizational structure in the light
of future plans helps the organization know what the organization requires in
terms of functions, departments and executive positions.
2. Appraisal of Current Pool of Management Talent: The performance
appraisal of present executives shows the respective performance of each
executive in the current position. This discloses the strength and weakness of
the existing executives. Besides, the organization should conduct a potential
appraisal either formally or through feedback provided by superiors, peers and
the HR department. Thus both the current as well as potential appraisal
indicates the type of development exposure needed for an executive.
3. Defining Parameters: Parameters for development needs to be identified in
the light of overall developmental needs. These parameters need to be defined
in terms of various skills required at different levels of the career for a
manager.
4. Inventory of Executives Manpower: Inventory of executive’s age, education,
experience, health record, psychological test result and performance appraisal
data has to be prepared. An analysis of the inventory discloses the strength and
weakness of executives in certain functions relative to the future needs of the
organization. This step gives vital input for developing programmes for
executives.
5. Developing Executive Development Programmes: This programmes should
be tailored to address the deficiency of executives. The individual differences
like age, physique, emotional intelligence, intelligence quotients, etc., should
be factored in designing the programme.

6. Conducting Development Programmes: The organization has to choose

appropriate programmes like leadership courses, soft-skill development,
sensitivity training, team building, problem-solving, management games and so
on to address the needs of the executives relative to the current and future
needs of the organization.
7. Programme Evaluation: Since the management programme involves
investment of money, time and energy resources, top management intends to
measure the impact of the programme. The pre and post programme survey
would help in measuring its effectiveness and on deciding the continuity of
various programmes.
 MODULE 4

WAGES AND SALARY ADMINISTRATION

Job evaluation

A job evaluation is a systematic way of determining the value/worth of a job in

relation to other jobs in an organization. It tries to make a systematic comparison
between jobs to assess their relative worth for the purpose of establishing a rational
pay structure.

Process of Job evaluation

The Job evaluation program is a process involving a few steps.

These are listed below;

1. Gaining acceptance
2. Creating a job evaluation committee
3. Finding the jobs to be evaluated
4. Analyzing and preparing a job description
5. Selecting the method of evaluation
6. Classifying jobs.
Gaining acceptance: Before undertaking job evaluation, top management must
explain the aims and uses of the program to the employees and unions. To elaborate
on the program further, oral presentations could be made. Letters, booklets could be
used to classify all relevant aspects of the job evaluation program.

Creating a job evaluation committee: A single person can’t evaluate all the key jobs
in an organization. Usually, a job evaluation committee consisting of experienced
employees, union representatives, and HR experts is created to set the ball rolling.

Finding the jobs to be evaluated: Every job need not be evaluated. This may be too
taxing and costly. Certain key jobs in each department may be identified. While
picking up the jobs, care must be taken to ensure that they represent the type of work
performed in that department.

Analyzing and preparing a job description: This requires the preparation of a job
description and also an analysis of job needs for successful performance.

Selecting the method of evaluation: The most important method of evaluating the
jobs must be identified now, keeping the job factors and organizational demands in
mind.

Classifying jobs: The relative worth of various jobs in an organization may be found
out after arranging jobs in order of importance using criteria such as skill
requirements, experience needed under which conditions job is performed, type of
responsibilities to be shouldered degree of supervision needed, the amount of stress
caused by the job, etc. Weights can be assigned to each such factor.

Methods of Job Evaluation:

There are four widely used job evaluation methods.
1. Ranking System: The ranking method is one of the simplest methods of job
evaluation. Under this system, the job raters rank one job against another
without assigning point values. Jobs within the organization are arranged from
the most difficult to the simplest or in the reversed order. It does not measure
the value of jobs but establishes their ranks only. When this method is
employed, the job rater compares two jobs, one against another, and asks which
of the two is more difficult.

2. Job classification or grading method: Job grading or job classification is

slightly more sophisticated than job ranking but still not very precise. It begins
with an overall classification of all jobs based on common sense, skill,
responsibilities, and experience. The job structure is divided into several
classes. according to this system, the clerks may be put into one class,
supervisors in a higher class and higher executives in the top class. This
method is relatively simple to operate and to understand

3. Points rating system: The point method is more sophisticated than the ranking
and classification methods. This method is analytical because it breaks down
jobs into various compensable factors and places weights or points on them. A
compensable factor is used to identify a job value that is commonly present
throughout a group of jobs. This method is quantitative as each of the
compensable factors is assigned a numerical value.
 4. Factor comparison system: Thomas E. Hitten was the first to originate factor
comparison method of job evaluation. This method determines the relative rank
of the jobs is evaluated with the monetary scale. It is often used in evaluating
managing administrative and white-collared jobs. It is essentially a
combination of the ranking and point systems.

Basics of Compensation

Compensation refers to the remuneration that an employee receives in return for

his/her services to the organization. It is a comprehensive term which includes
everything an employee receives in return for his work such as wages, salaries,
allowances, benefits and services.
The term compensation refers to reimbursement, disbursement of incentives, and a
strategic issue with regards to salary and wage administration. Direct financial
payments include pay in the form of salary, wages, incentives, commissions, and
bonuses. Indirect financial payments are given in the form of insurances.

Types of Compensation

1. Direct
2. Indirect
3. Fixed
4. Variable
1. Direct Compensation: Direct compensation is a financial (or monetary) form
of compensation. Here are the four main types of direct compensation. They
are;
i. Hourly: Hourly wages are often provided to unskilled, semi-skilled,
temporary, part-time, or contract workers in exchange for their time and
labor.
ii. Salary: Annual salaries are typically provided to most full-time
employees or skilled employees and those who fill management
positions. A salary often indicates that the organization has invested in
this employee for the long-term future.
iii. Commision: Commission is a common form of compensation provided
to employees in sales roles. It will usually be based on a predetermined
quota or target. The higher the quota reached, the higher the commission
will be.
 iv. Bonuses: Companies often offer bonuses to employees based on year-
end business results or the individual meeting their set goals.
Sometimes, the decision is at the manager’s discretion. Bonuses can be
paid annually, quarterly, or even after the completion of each project.

2. Indirect Compensation: It is still a financial form of compensation since it has

a financial value. However, employees do not directly receive it in cash form.
That’s why certain types of indirect compensation are viewed as monetary,
while others are deemed non-monetary. This often varies between
organizations.
Some examples of indirect compensations are;

i. Equity package: Equity as part of a compensation package essentially

means the employee is offered equity (ownership) in the company,
either through shares of stock or the option to buy such shares.
ii. Stock options: This form of compensation entitles employees to
purchase a set number of shares at a fixed price after a certain period.
This is different from an equity package because the employee will not
have any ownership in the company.
iii. Benefits: Typical employee benefits usually include health insurance,
life insurance, retirement plans, disability insurance, legal insurance, and
pet insurance.

3. Fixed Compensation: Fixed compensation refers to an employee's regular

gross salary or wages. This topic describes the components that must be set up
before you can create a fixed compensation plan and enroll employees. The
various components of fixed compensation are;

i. Compensation levels: It can be used to set compensation for various

jobs, to help guarantee that the employees who hold those jobs are paid
fairly. On the Compensation levels page, we can set up the
compensation levels that are required for each step, grade, and band
plan.
ii. Reference points: Reference points are the columns in the grid that
define the compensation ranges for each level. The compensation level
is the row in the grid. Typical reference points for a plan of the grade
type are a minimum, a midpoint, and a maximum.
iii. Compensation grids: On the Compensation grids page, define
information about the grid. For example, specify what the grid designed
 to be used for, what type of plan it will be used with, and which
reference points or columns are required in the grid.
iv. Pay frequencies: Pay frequencies are used to define how an employee's
wage or salary is being specified

Salary VS Wages

• Salary: Salary is the cost of acquiring or retaining human resources that are deployed
by the organization for running the business. A salary is generally offered to white-
collar employees like Managers, Directors, or highly skilled and licensed
professionals. The amount is dependent on the skillsets they offer and what value they
add to the organization. Salary also acts as a benchmark for the market to compare the
competitiveness and demand in the job market.

• Wages: Wages are generally paid depending on the amount of time worked, mostly it
is hourly and hence the term hourly worker. The type of job which is paid hourly or
wage driven are unskilled and lower level; jobs like a security guard, parking garage
guard, librarian, and so on are paid on an h Variable Compensation: Variable
compensation is pay given to an employee based on the results they produce. It is
usually offered on top of a fixed salary and comes in various forms.
o Commission: This is a portion of revenue given to the sales employee
as part of an official compensation plan.
o Profit-Sharing Plan: This plan gives employees a portion of the
company’s quarterly or annual profit in addition to their base salary.
o Bonus: This is an extra lump sum given to employees based on the
company’s performance. It’s often an unspecified amount on an annual
basis and will vary depending on the year’s results.
o Stock Option: This option gives employees the right to purchase shares
in the company under certain circumstances. They are sometimes
offered as an alternative to cash compensation.
o hourly basis depending on the hours they clock in.

Differences Salary Wages

Unskilled or semi-skilled
Skills
High skill set, Licensed workers, often known as
Required
Professionals such as lawyers, Blue collared employees.
Differences Salary Wages

doctors also termed as white-

collared employees.

Cost structure Paid at a fixed rate Rate is variable

Monthly at a predetermined annual

Frequency of amount, which is equally Daily or weekly, depending
payment distributed in 12 months throughout upon the employment.
the year.

A fixed amount is paid as decided,

Basis of The hourly rate is decided
and the variable factor depends on
Payment as per the industry trends.
the performance.

Salaried workers are generally Waged workers are referred

Recipients
referred to as employees. to as Labor.

Nature/Type Manufacturing or process-

Office and administrative jobs
of jobs related work;

Most salaried guys have their No performance review

Performance performance reviewed at periodic system here; labor works
review intervals, which decide on their correctly on an hourly rate
increment of salary. basis.

The wage rate can change

Salary once decided stays the same any time, and it can be
Duration
throughout the year. effective as per the
prevailing rate.
 Differences Salary Wages

A salaried class generally has a There is no such thing as a

notice period to serve, which will notice period here since the
Resignation
allow the employer to find the labor worker is easily
replacement with the same skillset. replaceable.

Wage workers don’t need to

In exchange for salary an individual
generate any revenue; they
Purpose is expected to increase the revenue
just need to get the work
of the firm directly or indirectly
done.

A wage worker has no such

A salaried worker has a predefined
Leaves schedule, and every day off
schedule of the paid leaves.
is a day without any wage.

Construction workers, Bus

Examples of driver, Delivery services,
Doctors, Lawyers, Bankers
profession Carpenter, Welder,
Electrician

Wage Determination

Wage determination is a complex process. It shows the relationship between the value
of the job and the average wage paid for this job. It is a two- dimensional graph on
which job evaluation points for key jobs are plotted against actual amounts paid or
against desired level.

The process of determining wages involves a series of interrelated steps. They are;

✓ Job Analysis
✓ Job Evaluation
✓ Job Design
✓ Job Description
✓ Job Assessment
 ✓ Wage Survey
✓ Wage Curve
✓ Group Similar Jobs into Pay Grades
✓ Price Each Pay Grade
✓ Fine-Tune Pay Rates
✓ Conduct the Salary Survey
✓ Relevant Organisational Problems
✓ Wage Administration Rules
✓ Explaining about Wage and Salary Programme to the Employees.

Wage theories and Concepts

Some of the most important theories of wages are;

1. Wages fund theory: This theory was developed by Adam Smith (1723-1790).
His theory was based on the basic assumption that workers are paid wages out
of a pre-determined fund of wealth. This fund, he called, wages fund created as
a result of savings. According to Adam Smith, the demand for labour and rate
of wages depend on the size of the wages fund. Accordingly, if the wages fund
is large, wages would be high and vice versa.

2. Subsistence theory: This theory was propounded by David Recardo (1772-

1823). According to this theory, “The labourers are paid to enable them to
subsist and perpetuate the race without increase or diminution”. This payment
is also called as ‘subsistence wages’. The basic assumption of this theory is that
if workers are paid wages more than subsistence level, workers’ number will
increase and, as a result wages will come down to the subsistence level.

3. Surplus value theory: This theory was developed by Karl Marx (1849-1883).
This theory is based on the basic assumption that like other article, labour is
also an article which could be purchased on payment of its price i e wages. This
payment, according to Karl Marx, is at subsistence level which is less than in
proportion to time labour takes to produce items. The surplus, according to
him, goes to the owner. Karl Marx is well known for his advocation in the
favour of labour.

4. Marginal productivity theory: This theory was propounded by Phillips Henry

Wick-steed (England) and John Bates Clark of U.S.A. According to this theory,
 wages is determined based on the production contributed by the last worker,
i.e. marginal worker. His/her production is called ‘marginal production’.

5. Behavioural theory: Based on research studies and action programmes

conducted, some behavioural scientists have also developed theories of wages.
Their theories are based on elements like employee’s acceptance to a wage
level, the prevalent internal wage structure, employee’s consideration on
money or’ wages and salaries as motivators.

Some of the concepts of wages are as follows;

1. Statutory wages: It is the wage determined according to the procedure

prescribed by the relevant provisions of the Minimum Wages Act, 1948. Once
the rates of such wages are fixed, it is the obligation of the employer to pay
them, regardless of his ability to pay. Such wages are required to be fixed in
certain employments where “sweated” labour is prevalent, or where there is a
great chance of exploitation of labour.

2. Basic wages: This minimum wage is fixed through judicial pronouncement,

awards, industrial tribunals and labour courts. The employers are essentially to
give this minimum wage to the workers. Bare or Basic Minimum Wage is the
wage, which is to be fixed in accordance with the awards and judicial
pronouncements of Industrial Tribunals, National Tribunals and Labour Courts.
They are obligatory on the part of employers.

3. Minimum wages: A minimum wage is one which has to be paid by an

employer to his workers irrespective of his ability to pay. According to the Fair
Wage Committee, “Minimum wage is the wage which must provide not only
for the bare sustenance of life, but for the preservation of the efficiency of the
workers.

4. Fair wages: The Government of India appointed a Fair Wages Committee in

1948 to determine the principles on which fair wages should be based and to
suggest the lines on which those principles should be applied. The concept of
fair wage is linked with the capacity of the industry to pay.

5. Living wages: According to the report of Fair Wage Committee, “The living
wage should enable the male earner to provide for himself and his family not
 merely the bare essentials of food, clothing and shelter, but also a measure of
frugal comfort including education for children, protection against ill health,
requirements of essential social needs and a measure of insurance against the
more important misfortunes including old age.”

6. Need based wages: minimum wage fixation should be need based. In the
absence of any criteria stipulated for fixing the minimum wage in the Minimum
Wages Act, the Indian Labour Conference in 1957 had said that the following
norms should be taken into account while fixing the minimum wage.

7. Money wages and real wages: There are two types of wages that can be paid
viz. Money Wage and Real Wage. Money wages or nominal wages are wages
that are paid to a person regardless of the inflation rate in the market. Many
companies use this method to pay their employees. Real wages are wages that
take into consideration the inflation rate. Real wages are wages that determine
the purchasing power of the individual or how much goods the salary can buy.
 MODULE 4

Industrial relations

Industrial relations may be defined as the relations and interactions in the industry
particularly between the labour and management as a result of their composite
attitudes and approaches in regard to the management of the affairs of the industry, for
the betterment of not only the management and the workers but also of the industry
and the economy as a whole. The term industrial relations explains the relationship
between employees and management which stem directly or indirectly from union-
employer relationship.

Objectives of IR

The primary objective of industrial relations is to maintain and develop good and
healthy relations between employees and employers or operatives and management.
The same is sub- divided into other objectives.

➢ Establish and foster sound relationship between workers and management by

safeguarding their interests.
➢ Avoid industrial conflicts and strikes by developing mutuality among the
interests of concerned parties.
➢ Keep, as far as possible, strikes, lockouts and gheraos at bay by enhancing the
economic status of workers.
➢ Provide an opportunity to the workers to participate in management and
decision making process.
➢ Raise productivity in the organisation to curb the employee turnover and
absenteeism.
➢ Avoid unnecessary interference of the government, as far as possible and
practicable, in the matters of relationship between workers and management.
➢ Establish and nurse industrial democracy based on labour partnership in the
sharing of profits and of managerial decisions.
➢ Socialise industrial activity by involving the government participation as an
employer.
Accordingly, Kirkaldy has identified four objectives of industrial relations as
listed below:

➢ Improvement of economic conditions of workers.

➢ State control over industrial undertakings with a view to regulating production
and promoting harmonious industrial relations.
➢ Socialisation and rationalisation of industries by making the state itself a major
employer.
➢ Vesting of a proprietary interest of the workers in the industries in which they
are employed.
Parties in IR

Primary Parties

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

Employees

• Employees share their views, suggestions, ideas with the management to

improve the business operations and become a part of organizational decision-
making, and ensuring the betterment of the working conditions

Employers

They are responsible for:

• Providing a good work environment for the employees and taking strategic
decisions such as mergers, acquisitions, or shutting down of the organization,
etc.
• Motivating the employees to give their best and gaining their trust and
commitment.
• Improving the overall efficiency and ensuring effective communication among
the employees and the management.

Government

Government started regulating the industrial relations through labour courts and
tribunals, for the following reasons:

• Safeguarding the interest of both the parties.

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

The parties which impact the industrial relations within an organization are as follows:

Employers’ Association

• Employers Association refers to an authoritative body, formed to protect the

interest of the industrial owners.
• They represent the owners in collective bargaining with the employees or
government, national issues, and provide insight into employee relations in an
organization.

Trade Unions

• Trade Unions mean when the workers unite together to form an association and
elect a representative among themselves and to raise their demands in front of
the management.
• They demand better working conditions and higher job security for the workers
by safeguarding the interest of the employees by demanding control over the
decision-making at various levels.

Courts and Tribunals

The judiciary includes the ‘courts’ to resolve the legitimate conflicts and the ‘judicial
review’ to administer the justice of the constitution. These courts and tribunals play an
essential role in the settlement of industrial disputes by eliminating the possibilities of
Judicial flaws, conflicting judgment, poor evaluation of penalty, and Confusing terms
and conditions.

International Labor Organization (ILO)

International Labor Organization aimed to look into matters like Worker’s

compensation, employee’s work duration and days, women employment, employee’s
safety, security, and medical facilities with maternity protection.

Human Resource Function

The human resource department or team acts as a mediator between the organization
and its employees for dealing with personnel issues and conflicts. HR professionals
address the disputes at the initial level, act as a change agent by bringing a mental
revolution and perform the role of an administration expert and a strategic partner.
Trade Unions in India

Labour unions or trade unions are organizations formed by workers from related fields
that work for the common interest of its members. They help workers in issues like
fairness of pay, good working environment, hours of work and benefits. They
represent a cluster of workers and provide a link between the management and
workers. The purpose of these unions is to look into the grievances of wagers and
present a collective voice in front of the management. Hence, it acts as the medium of
communication between the workers and management.

Workers' Organizations

• Bharatiya Mazdoor Sangh (BMS)

• Indian National Trade Union Congress (INTUC)
• All India Trade Union Congress (AITUC)
• Hind Mazdoor Sabha (HMS)
• Centre of India Trade Unions (CITU)
• All India United Trade Union Centre (AIUTUC) – formerly UTUC (LS)
• Self Employed Women’s Association (SEWA)
• All India Central Council of Trade Unions (AICCTU)
• Labour Progressive Federation (LPF)
• United Trade Union Congress (UTUC)
• National Front of Indian Trade Unions – Dhanbad (NFITU-DHN

Participative Management

Participative Management refers to as an open form of management where employees

are actively involved in organization’s decision making process. The concept is
applied by the managers who understand the importance to human intellect and seek a
strong relationship with their employees. Participative Management can also be
termed as ‘Industrial Democracy’, ‘Co-determination’, ‘Employee Involvement’ as
well as ‘Participative Decision Making’. The concept of employee participation in
organization’s decision making is not new. However, the idea couldn’t gain that much
popularity among organizations.

Methods of WPM (Workers Participative Management)

Most important Forms / Methods of Workers Participation in Management are:

 Participation at the Board level: This would be the highest form of industrial
democracy. The workers’ representative on the Board can play a useful role in
safeguarding the interests of workers. He or she can serve as a guide and a control
element.

• He or she can prevail upon top management not to take measures that would be
unpopular with the employees.
• He or she can guide the Board members on matters of investment in employee benefit
schemes like housing, and so forth.

The Government of India took the initiative and appointed workers’ representatives on
the Board of Hindustan Antibiotics (Pune), HMT (Bangalore), and even nationalized
banks. Tata, DCM, and a few others have adopted this practice.

Participation through ownership: This involves making the workers’ shareholders of

the company by inducing them to buy equity shares.

• In many cases, advances and financial assistance in the form of easy repayment options
are extended to enable employees to buy equity shares. Examples of this method are
available in the manufacturing as well as the service sector.
• Advantage: Makes the workers committed to the job and to the organization.
• Drawback: Effect on participation is limited because ownership and management are
two different things.

Participation through complete control: Workers acquire complete control of the

management through elected boards. The system of self-management in Yugoslavia is
based on this concept. Self-management gives complete control to workers to manage
directly all aspects of industries through their representatives.

• Ensures identification of the workers with their organization.

• Industrial disputes disappear when workers develop loyalty to the organization.
• Trade unions welcome this type of participation.

Participation through Staff and Works Councils : Staff councils or works councils
are bodies on which the representation is entirely of the employees. There may be one
council for the entire organization or a hierarchy of councils. The employees of the
respective sections elect the members of the councils. Such councils play a varied role.

• Their role ranges from seeking information on the management’s intentions to a full
share in decision-making.

Such councils have not enjoyed too much of success because trade union leaders fear
the erosion of their power and prestige if such workers’ bodies were to prevail.
 Participation through Joint Councils and Committees: Joint councils are bodies
comprising representatives of employers and employees. This method sees a very loose
form of participation, as these councils are mostly consultative bodies. Work
committees are a legal requirement in industrial establishments employing 100 or more
workers. Such committees discuss a wide range of topics connected to labour welfare.
Examples of such committees are welfare committee, safety committee, etc. Such
committees have not proven to be too effective in promoting industrial democracy,
increasing productivity and reducing labour unrest.

Participation through Job Enlargement and Job Enrichment: Excessive job

specialization that is seen as a by-product of mass production in industries, leads to
boredom and associated problems in employees. Two methods of job designing — job
enlargement and job enrichment — are seen as methods of addressing the problems.

• Job enlargement means expanding the job content — adding task elements horizontally.
• Job enrichment means adding `motivators’ to the job to make it more rewarding. This
is WPM in that it offers freedom and scope to the workers to use their judgment.

Participation through Suggestion Schemes: Employees’ views are invited and reward
is given for the best suggestion. With this scheme, the employees’ interest in the
problems of the organization is aroused and maintained. Progressive managements
increasingly use the suggestion schemes. Suggestions can come from various levels.
The ideas could range from changes in inspection procedures to design changes, process
simplification, paper-work reduction and the like. Out of various suggestions, those
accepted could provide marginal to substantial benefits to the company. The rewards
given to the employees are in line with the benefits derived from the suggestions.

Participation through Quality Circles: Concept originated in Japan in the early 1960s
and has now spread all over the world. A QC consists of seven to ten people from the
same work area who meet regularly to define, analyze, and solve quality and related
problems in their area. These circles require a lot of time and commitment on the part
of members for regular meetings, analysis, brainstorming, etc.

Empowered Teams: Empowerment occurs when authority and responsibility are

passed on to the employees who then experience a sense of ownership and control over
their jobs. Employees may feel more responsible, may take initiative in their work, may
get more work done, and may enjoy the work more.
Collective bargaining

Collective bargaining is the process where a group of employees ‘collectively’ negotiate

with the employer. This is generally to negotiate pay, working conditions, benefits, and
other factors regarding the employees compensation package and rights. The term
collective bargaining is made up of two words, ‘collective’ – which means a ‘group
action’ through representation and ‘bargaining’, means ‘negotiating’, which involves
proposals and counter-proposals, offers and counter-offers.

Types

1. Distributive bargaining: Distributive bargaining is defined as a

negotiation process by which one party benefits at the others expense.
This usually refers to the redistribution of income in the form of higher
wages, higher bonuses, or higher financial benefits. Simply put; anything
related to the transfer of money.

2. Integrative bargaining: Integrative bargaining is whereby both sides

aim to benefit in what is seen as ‘win-win’ bargaining. Both parties may
bring together a list of demands by which an agreement is reached that
benefits both parties.

3. Productivity bargaining: Productivity bargaining involves both parties

negotiating around productivity and pay. So unions may suggest that
higher salaries would boost productivity. However, this is unknown to the
business. So target-orientated bonuses may be suggested, or new ways of
improving the process.

4. Composite bargaining: Composite bargaining refers to a negotiation that

focuses on a number of elements that are not related to pay. They are
generally related to employee welfare and job security. For instance, it
covers factors such as working conditions, policies, recruitment, and
disciplinary processes.

5. Concessionary bargaining: Concessionary bargaining is based on

unions giving back previous benefits to the employer. For instance, trade
unions may agree to lower wages in return for job security.
Process of Collective bargaining

➢ Preparation: At the very first step, both the representatives of each party
prepares the negotiations to be carried out during the meeting. Each member
should be well versed with the issues to be raised at the meeting and should
have adequate knowledge of the labor laws.

➢ Discuss: Here, both the parties decide the ground rules that will guide the
negotiations and the prime negotiator is from the management team who will
lead the discussion. Also, the issues for which the meeting is held, are
identified at this stage.

➢ Propose: At this stage, the chief negotiator begins the conversation with an
opening statement and then both the parties put forth their initial demands. This
session can be called as a brainstorming, where each party gives their opinion
that leads to arguments and counter arguments.

➢ Bargain: The negotiation begins at this stage, where each party tries to win
over the other. The negotiation can go for days until a final agreement is
reached. Sometimes, both the parties reach an amicable solution soon, but at
times to settle down the dispute the third party intervenes into the negotiation
in the form of arbitration or adjudication.

➢ Settlement: This is the final stage of the collective bargaining process, where
both the parties agree on a common solution to the problem discussed so far.
Hence, a mutual agreement is formed between the employee and the employer
which is to be signed by each party to give the decision a universal acceptance.
Employee Discipline and Grievance

Discipline means the situation in which all the workers and employees follow the
rules, regulations and procedure of the organization. A disciplined work force can
meet the challenges of the organizations and contribute to the organizational
objectives in a better way. Discipline can pave the way for co-operation among the
task force and result in good human relations. Discipline is essential for the smooth
running in an organization and for the maintenance of industrial peace, which is very
foundation of industrial democracy.

Grievance is the feeling of dissatisfaction among the employees, working in the

organization. Grievance, whether real or imaginary, valid or invalid, genuine or false,
is a complaint affecting one or more workers within the organization. Dissatisfaction
or discontent expressed by employees brought to the notice of management, it
becomes grievance.

Settlement of grievance
1. Timely Action:
The first and foremost requisite in grievance handling is to settle them immediately as
and when they arise. Or say, grievances need to be nipped in the bud. Sooner the
grievance is settled, lesser will be its effects on employees’ performance. This requires
the first line supervisors be trained in recognizing and handling a grievance properly
and promptly.

2. Accepting the Grievance:

The supervisor should try to recognize and accept the employee grievance as and
when it is expressed. It must be noted that acceptance does not necessarily mean
agreeing with the grievance, it simply shows the willingness of the supervisor to look
into the complaint objectively and dispassionately to deal with the grievance.
Evidences suggest that more the supervisor shows his or her concern for the
employees, lesser is the number of grievances raised by the employees.

3. Identifying the Problem:

The grievance expressed by the employee maybe at times simply emotionally, over-
toned, imaginary or vague. The supervisor, therefore, needs to identify or diagnose the
problem stated by the employee.

4. Collecting the Facts:

Once the problem is identified as a real problem, the supervisor should, then, collect
all the relevant facts and proofs relating to the grievance. The facts so collected need
to be separated from the opinions and feelings to avoid distortions of the facts. It is
useful to maintain the facts for future uses as and when these are required.
 5. Analysing the cause of the Grievance:
Having collected all the facts and figures relating to the grievance, the next step
involved in the grievance procedure is to establish and analyse the cause that led to
grievance. The analysis of the cause will involve studying various aspects of the
grievance such as the employees past history, frequency of the occurrence,
management practices, union practices, etc.. Identification of the cause of the
grievance helps the management take corrective measures to settle the grievance and
also to prevent its recurrence.

Open door vs Step ladder technique

Grievance procedure is a formal communication between an employee and the

management designed for the settlement of a grievance. The grievance procedures
differ from organization to organization.
1. Open door policy
2. Step-ladder policy

Open door policy: Under this policy, the aggrieved employee is free to meet the top
executives of the organization and get his grievances redressed. Such a policy works
well only in small organizations. However, in bigger organizations, top management
executives are usually busy with other concerned matters of the company. Moreover,
it is believed that open door policy is suitable for executives; operational employees
may feel shy to go to top management.
Step ladder policy: Under this policy, the aggrieved employee has to follow a step by
step procedure for getting his grievance redressed. In this procedure, whenever an
employee is confronted with a grievance, he presents his problem to his immediate
supervisor. If the employee is not satisfied with superior’s decision, then he discusses
his grievance with the departmental head. The departmental head discusses the
problem with joint grievance committees to find a solution. However, if the committee
also fails to redress the grievance, then it may be referred to chief executive. If the
chief executive also fails to redress the grievance, then such a grievance is referred to
voluntary arbitration where the award of arbitrator is binding on both the parties.

Industrial Disputes – Definition – Dispute settlement machinery

An industrial dispute is defined as a conflict or a difference in opinion between

management and workers regarding employment. It is a disagreement between an
employer and employees representative i.e. trade union. The issue of disagreement is
usually pay or other working conditions.
Dispute settlement machinery

the Industrial Disputes Act, 1947 provides for four major industrial dispute settlement
machinery:

1. Conciliation
2. Court of Inquiry
3. Voluntary Arbitration
4. Adjudication

Conciliation: Conciliation, a form of mediation refers to the act of making a passive

and indirect effort in order to bring two conflicting parties to a compromise. It is the
“practice by which the services of a neutral party are used in a dispute as a means of
helping the disputing parties to reduce the extent of their differences and to arrive at
an amicable settlement of agreed solution.”

Court of Inquiry: If there should be an occurrence of the disappointment of the

conciliation procedure to settle a question, the administration can choose a Court of
Inquiry to enquire into any matter associated with or significant to debate. The court is
mandated upon to present its report inside of six months and may comprise of at least
one people to be chosen by the proper government.

Voluntary Arbitration: On the disappointment of placation procedures, the

conciliation officer may persuade the parties to refer the dispute to a voluntary
arbitrator wherein the arbitrator alludes to getting the question settled since he is an
autonomous individual picked by the parties included commonly and willfully.

Adjudication: A definitive solution for the settlement of industrial disputes is its

reference to arbitration by a labour court or tribunals when conciliation fails to
achieve a settlement with respect to the dispute or conflict. Arbitration comprises of
settling debate through intercession by the outsider delegated by the legislature. The
law gives the mediation to be directed by the Labour Court, Industrial Tribunal of
National Tribunal.

Bipartite and Tripartite bodies in India

Tripartite bodies involve employee, employer and Government. Bipartite committee
comprises of employer and employee. Tripartite committee includes committees on
Conventions, steering committee on wages, central implementation and evaluation
machinery, Central Board of Worker’s Education and National Productivity Council.
Workers committee is an example for Bipartite committee. This committee is
represented by employer and employees. It is established through legislation. Method
of constitution of this committee is specified in the enactment.
Employee separation methods
1. Retirement:
Retirement is the major cause of separation of employees from the organisation. It can
be defined as the termination of service of an employee on reaching the age of
superannuation. Retirement may be of two types:

• Compulsory retirement
• Voluntary retirement

2. Resignation:
Resignation is termination of service by an employee by serving a notice, called
‘resignation’ on the employer. Resignation may be voluntary or involuntary. A
voluntary resignation is when an employee himself/herself decides to resign on the
grounds of ill health, marriage, better job prospects in other organisations, etc.

3. Layoff:
Layoff implies denial of employment to the employees for reasons beyond the control
of employer. Breakdown of machinery, seasonal fluctuations in demand, shortage of
power, raw materials, etc. are the examples of reasons leading to layoff.

4. Retrenchment:
Retrenchment means permanent termination of an employee’s services for economic
reasons. Retrenchment occurs on account of surplus staff, poor demand for products,
general economic slowdown, etc. It’s worth noticing that termination of services on
account of retirement, winding up of a business, illness or on disciplinary grounds
does not constitute retrenchment.

5. Dismissal:
Dismissal is termination of service of an employee as a punitive measure. This may
occur either on account of unsatisfactory performance or misconduct. Persistent
failure on the part of employee to perform up to the expectations or specified standard
is considered as unsatisfactory performance. Wilful violation of rules and regulation
by the employee is treated as misconduct. Dismissal is a drastic step seriously
impairing the earnings and image of the employee.

Unethical practices in HR

1. Misusing company time: Employees have been observed altering a time

sheet, misusing company time as well as conducting personal business on
company time. Absenteeism and tardiness can become a major problem in the
workplace if left unchecked. A manager may not be able to identify that an
employee is struggling with attendance issues. The reason for this is because
those absences and late arrivals may be a legal right for employees who have
medical conditions—or have family members with medical conditions
 2. Abusive behaviour: Abusive conduct may include repeated infliction of
verbal abuse, such as the use of derogatory remarks, insults, and epithets,
verbal or physical conduct that a reasonable person would find threatening,
intimidating, or humiliating, or the gratuitous sabotage or undermining of a
person's work performance.

3. Employee theft: Employees may steal large amounts of money, workplace

supplies, equipment or intellectual-property. Just as serious are employees
who steal by completing inaccurate timesheets, claiming reimbursement for
items not purchased, fraudulently transferring funds or misusing a corporate
credit card, cheques or taxi vouchers.

4. Lying to employees: One of the most common occurrences of dishonesty on

the job involves lying. Employees may lie to each other, to their superiors, or
even to customers. A lot of damage can occur when bosses lie to employees,
as employees often tend to mimic the behavior of those in charge, which
creates an even bigger problem.

5. Violating company internet policies: Cyberslackers, Cyberloafers.

These are terms used to identify people who surf the Web when they
should be working. It's a huge, multi-billion-dollar problem for
companies.

6. Discrimination: Discrimination in the workplace is based on certain

prejudices and occurs when an employee is treated unfavourably because
of gender, sexuality, race, religion, pregnancy and maternity or disability.

Industrial disputes act (1947)

The Industrial Disputes Act defines "Industrial dispute" as a dispute or difference
between workmen and employers or between workmen and workmen, which is
connected with employment or non-employment or the terms of employment or with
the conditions of labour. Dismissal of an individual workman is deemed to be an
industrial dispute.
The main purpose of the Industrial Disputes Act, 1947 is to ensure fair terms between
employers and employees, workmen and workmen as well as workmen and
employers.. The objective of the Industrial Disputes Act is to secure industrial peace
and harmony by providing machinery and procedure for the investigation and
settlement of industrial disputes by negotiations.
Objectives of Indian Industrial Disputes Act
• To encourage good relations between labor and industries, and provide a
medium of settling disputes through adjudicator authorities.
 • To provide a committee for dispute settlement between industry and labor with
the right of representation by a registered trade union or by an association of
employers.
• Prevent unauthorized strikes and lockouts.
• Reach out to labor that has been laid-off, unrightfully dismissed, etc.
• Provide labor the right to collective bargaining and promote conciliation.
Main features
1. Strike and lock-outs are prohibited during the pendency of conciliation,
adjudication settlement preceding.
2. Any industrial dispute may be referred to an industrial tribunal by an agreement
of parties to dispute or by State Government.
3. An award shall be binding on both the parties to the dispute for a specified period
not exceeding one year enforced by the government.
4. In public interest or emergency, the appropriate government has the power to
declare the transport, coal, iron and steel industry to be public utility services for
the purpose of The Industrial Dispute Act, for a maximum period of six months.
5. In case of lay off or retrenchment of workmen, the employer is required to pay
compensation.
6. Provision has also been made for payment of compensation to workmen.
7. A number of authorities such as works committee, Conciliation Officer, Board
of Conciliation, Labour court, Tribunal are provided for settlement of industrial
disputes.

Factories act (1948)

The Factories Act, 1948 is a social legislation which has been enacted for
occupational safety, health and welfare of workers at work places. The objective of
the Act is to regulate the conditions of work in manufacturing establishments coming
within the definition of the term 'factory' as used in the Act.
Main features
1. Working hours: According to the provision of working hours of adults, a worker
cannot be allowed to work in a factory for more than 48 hours in a week. A weekly
holiday is mandatory.
2. Health: In order to protect the health of workers, Factories Act 1948 has laid down
the rules that every factory must be kept neat & clean and all necessary precaution
should be taken in this regard. The factories should have adequate lighting, drainage
system, temperature, ventilation etc.
The arrangement for drinking water must be made. Also, urinals and sufficient latrine
spaces should be provided at convenient places. These places must be kept clean and
accessible by the workers.
3. Welfare: The Factories Act 1948 mentions that every factory must provide suitable
facilities for washing. Apart from that, facilities for storing & drying clothing and
facilities for sitting should be properly provided. The provision of first- aid appliances,
rest rooms, shelters, crèches and lunch rooms should be there.
4. Safety: In order to provide safety to the workers, the Act says that the machinery
should be fenced. No young person should be allowed to work at any dangerous
machine and a provision for manholes of adequate size should be provided, so that in
case of emergency the workers can escape.

The trade union act (1926)

A trade union is such an organisation which is created voluntarly on the basis of
collective strength to secure the interests of the workers. This act provides for the
registration of trade unions and in certain respects in defining the law related to
registered trade unions.
Main features
➢ It is an association either of employers or employees or of independent
workers. They may consist of; Employers’ association (eg. Employer’s
Federation of India, Indian paper mill association, etc.) General labor unions
Friendly societies Unions of intellectual labor
➢ It is formed on a continuous basis. It is a permanent body and not a casual or
temporary one. They persist throughout the year.
➢ It includes federations of trade unions also.
➢ It is formed to protect and promote all kinds of interests -economic, political
and social-of its members. The dominant interest with which a union is
concerned is, however, economic.
➢ It achieves its objectives through collective action and group effort.
Negotiations and collective bargaining are the tools for accomplishing
objectives.
➢ Trade unions have shown remarkable progress since their inception; moreover,
the character of trade unions has also been changing

Objective
➢ Workers organize themselves in the form of a union to achieve the following
goals
➢ To improve the economic lot of employees by securing for them better wages.
➢ To secure better working conditions for the workers.
➢ To secure bonus for the employees from the profit of the concern,
➢ To resist schemes of the management which reduce employment, e.g.,
rationalization and automation.
➢ To secure welfare of employees through group schemes which give benefit to
every employee.
➢ To protect the interests of employees by taking active participation in the
management.
➢ To secure social welfare of the employees.
➢ To secure organizational stability, growth, and leadership.