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Course Description: INTRODUCTION

H
This course provides an introduction to the various functions of human resource uman Resource Management (HRM) is a relatively new approach to
management, including compensation and benefits, staffing, recruitment and managing people in any organization. People are considered the key
selection, research, labour relations, training and development, health and safety, resource in this approach. it is concerned with the people dimension in
planning, mediation and arbitration, the influence of government legislation on management of an organization. Since an organization is a body of people, their
industry, and human rights legislation and employment equity. acquisition, development of skills, motivation for higher levels of attainments, as well
as ensuring maintenance of their level of commitment are all significant activities.
Learning Outcomes: These activities fall in the domain of HRM
Upon successful completion of this course, the student will have reliably
demonstrated the ability to: Human Resource Management is a process, which consists of four main activities,
namely, acquisition, development, motivation, as well as maintenance of human
1. Explain the various functions of human resource management and identify resources.
their relationship to the workplace from the perspective of both employee and
employer. Scott, Clothier and Spriegel have defined Human Resource Management as that
branch of management which is responsible on a staff basis for concentrating on
2. Apply the principles of human resource management to the industry in the those aspects of operations which are primarily concerned with the relationship of
areas of hiring, compensation and benefits, and government legislation. management to employees and employees to employees and with the development
of the individual and the group.
3. Identify social issues relating to human resource management such as
systemic discrimination and develop approaches to resolving these Human Resource Management is responsible for maintaining good human relations
problems in the workplace through various methods learned in class. in the organization. It is also concerned with development of individuals and
achieving integration of goals of the organization and those of the individuals.
4. Identify and predict human resource management trends in the industry and
develop proactive solutions and techniques of adaptation to changing NATURE OF HUMAN RESOURCE MANAGEMENT
industry demands. The nature of the human resource management has been highlighted in its following
features:
5. Synthesize the depth and breadth of knowledge, knowledge of
methodologies, application of knowledge, and communication skills. 1. Inherent Part of Management: Human resource management is inherent in
the process of management. This function is performed by all the managers
Course Content: throughout the organization rather that by the personnel department only. If a
* Strategic importance of human resources management manager is to get the best of his people, he must undertake the basic
* Job analysis and job design responsibility of selecting people who will work under him.
* Human resource planning
* Recruitment and Selection 2. Pervasive Function: Human Resource Management is a pervasive function of
* Decision making management. It is performed by all managers at various levels in
* Performance appraisal the organisation. It is not a responsibility the manager can leave completely
* Compensation management/Payroll to someone else. However, he may secure advice and help in managing
* Employee benefits people from experts who have special competence in personnel
* Health and safety in the workplace management and industrial relations.

3. Basic to all Functional Areas: Human Resource Management permeates all

the functional area of management such as production management,

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financial management, and marketing management. That is every opportunities for all working for the organization. Human Resource Management
manager from top to bottom, working in any department has to perform the (HRM) differs from Personnel Management (PM) both in scope and orientation.
personnel functions. HRM views people as an important source or asset to be used for the benefit of
organizations, employees and society. It is emerging as a distinct philosophy of
4. People Centered: Human Resource Management is people centered and is management aiming at policies that promote mutuality-mutual goals, mutual
relevant in all types of organisations. It is concerned with all categories of personnel respect, mutual rewards and mutual responsibilities. The belief is that policies of
from top to the bottom of the organisation. The broad classification of mutuality will elicit commitment, which in turn, will yield both better economic
personnel in an industrial enterprise may be as follows: (i) Blue-collar performance and greater Human Resource Development (HRD). Though a distinct
workers (i.e. those working on machines and engaged in loading, unloading philosophy, HRM cannot be treated in isolation. It is being integrated into the overall
etc.) and white-collar workers (i.e. clerical employees), (ii) strategic management of businesses. Further, HRM represents the latest term in the
Managerial and non-managerial personnel, (iii) Professionals (such a s evolution of the subject
Chartered Accountant, Company Secretary, Lawyer, etc.) and non-professional There are several similarities between Human Resource Management (HRM) and
personnel. at a Personnel Management (PM)

5. Personnel Activities or Functions: Human Resource Management involves (a) Both models emphasise the importance of integrating personnel/HRM
several functions concerned with the management of people at work. It practices with organisational goals.
includes manpower planning, employment, placement, training, appraisal (b) Both models vest Personnel/HRM firmly in line management.
and compensation of employees. For the performance of these (c) Human Resource Management (HRM) and Personnel Management (PM)
activities efficiently, a separate department known as Personnel both models emphasize the importance of individuals fully developing
Department is created in most of the organizations. their abilities for their own personal satisfaction to make their best
contribution to organisational success.
6. Continuous Process: Human Resource Management is not a ‗one shot' (d) Both models identify placing the right people into the right jobs as an important
function. It must be performed continuously if the organisational objectives means of integrating personnel/HRM practice with organisational goals.
are to be achieved smoothly.
OBJECTIVES OF HUMAN RESOURCE MANAGEMENT
7. Based on Human Relations : Human Resource Management is concerned The basic objective of human resource management is to contribute to the
with the motivation of human resources in the organization. The human realization of the organisational goals. However, the specific objectives of human
beings can't be dealt with like physical factors of production. Every person resource management are as follows:
has different needs, perceptions and expectations. The managers should give
due attention to these factors. They require human relations skills to deal with To ensure effective utilization of human resources, all other organizational
the people at work. Human relations skills are also required in training resources will be efficiently utilized by the human resources.
performance appraisal, transfer and promotion of subordinates.
(ii) To establish and maintain an adequate organisational structure of relationship
Personnel Management VS Human Resource Management: among all the members of an organization by dividing of organization
Contemporary Human Resource Management, as a part and parcel of management tasks into functions, positions and jobs, and by defining clearly the
function, underscores strategic approach to management in areas of acquisition, responsibility, accountability, authority for each job and its relation with other jobs
motivation, and management of people at work. in the organization.

Human Resource Management derives its origin from the practices of the earlier (iii) To generate maximum development of human resources within the
personnel management, which assisted in the management of people in an organization by offering opportunities for advancement to employees
organization setup. Human Resource Management leverages setting up the through training and education. (iv) To ensure respect for human beings
systems and procedures for ensuring efficiency, controlling and providing equality of by providing various services and welfare facilities to the personnel.

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(v) To ensure reconciliation of individual/group goals with those of the 2. Organization : Under organization, the human resource manager has to
organization in organise the operative functions by designing structure of
such a manner that the personnel feel a sense of commitment and loyalty relationship among jobs, personnel and physical factors in such a
towards it. way so as to have maximum contribution towards organizational
objectives. In this way a personnel manager performs following
(vi) To identify and satisfy the needs of individuals by offering various monetary functions:
and non- monetary rewards. (a) Preparation of task force;
(b) Allocation of work to individuals;
In order to achieve the above objectives, human resource management (c) Integration of the efforts of the task force;
undertakes the following activities (d) Coordination of work of individual with that of the department.
(i) Human Resource Planning, i.e., determining the number and kinds of
personnel required to fill various positions in the organization. 3. Directing : Directing is concerned with initiation of organized action and
(ii) Recruitment, selection and placement of personnel, i.e., employment stimulating the people to work. The personnel manager directs the activities of
function. people of the organization to get its function performed properly. A
personnel manager guides and motivates the staff of the organization to
(iii) Training and development of employees for their efficient performance and follow the path laid down in advance.
growth.
4. Controlling: It provides basic data for establishing standards, makes job
(iv) Appraisal of performance of employees and taking corrective steps such as analysis and performance appraisal, etc. All these techniques assist in
transfer from one job to another. effective control of the qualities, time and efforts of workers.

(v) Motivation of workforce by providing financial incentives and avenues of (b) Operative Functions: The following are the Operative Functions of Human
promotion. Resource Management

(vi) Remuneration of employees. The employees must be given sufficient wages 1. Procurement of Personnel: It is concerned with the obtaining of the proper kind
and fringe benefits to achieve higher standard of living and to motivate them and number of personnel necessary to accomplish organization goals. It
to show higher productivity. deals specifically with such subjects as the determination of manpower
requirements, their recruitment, selecting, placement and orientation, etc.
(vii) Social security and welfare of employees.
2. Development of Personnel: Development has to do with the increase through
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT. training, skill that is necessary for proper job performance. In this
The main functions of human resource management are classified into two process various techniques of training are used to develop the employees.
categories: (a) Managerial Functions and (b) Operative Functions Framing a sound promotion policy, determination of the basis of promotion
and making performance appraisal are the elements of personnel development
(a) Managerial Functions Following are the managerial functions of Human function.
Resources Management.
1. Planning: The planning function of human resource department pertains 3. Compensation to Personnel: Compensation means determination of
to the steps taken in determining in advance personnel adequate and equitable remuneration of personnel for their contribution to
requirements, personnel programmes, policies etc. After organization objectives. To determine the monetary compensation for
determining how many and what type of people are required, a personnel various jobs is one of the most difficult and important function of the
manager has to devise ways and means to motivate them. personnel management. A number of decisions are taken into the function, viz.,

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job-evaluation, remuneration, policy, inventive and premium p l a n s , 4. It prepares workers according to the changing needs of industry and
bonus policy and co-partnership, etc. It also assists the organization for environment.
adopting the suitable wages and salaries, policy and payment of wages and salaries
in right time. 5. It motivates workers and upgrades them so as to enable them to accomplish
the organization goals.
4. Maintaining Good Industrial Relation: Human Resource Management covers
a wide field. It is intended to reduce strife, promote industrial peace,
provide fair deal to workers and establish industrial democracy. It the 6. Through innovation and experimentation in the fields of personnel, it helps in
personnel manager is unable to make harmonious relations between reducing casts and helps in increasing productivity.
management and labor industrial unrest will take place and millions of man-
days will be lost. If labour management relations are not good the moral 7. It contributes a lot in restoring the industrial harmony and healthy employer-
and physical condition of the employee will suffer, and it will be a loss to an employee relations. 8. It establishes mechanism for the administration of
organization vis-a-visa nation. Hence, the personnel manager must create
harmonious relations with the help of sufficient communication system and co-
partnership.

5. Record Keeping: In record-keeping the personnel manager collects and

maintains information concerned with the staff of the organization. It is
essential for every organization because it assists the management in
decision making such as in promotions.

6. Personnel Planning and Evaluation: Under this system different type of

activities are evaluated such as evaluation of performance, personnel
policy of an organization and its practices, personnel audit, morale,
survey and performance appraisal.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

Importance of personnel management is in reality the importance of labor functions
of personnel department which are indispensable to the management activity itself.
Because of the following reasons human resource management holds a place of
importance.

1. It helps management in the preparation adoption and continuing evolution of

personnel programmes and policies.

2. It supplies skilled workers through scientific selection process. \

3. It ensures maximum benefit out of the expenditure on training and

development and appreciates the human assets.

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 LESSON ONE
HUMAN RESOURCE
personnel services that PLANNING
are delegated to the personnel department manpower to suit the changing needs of the organization from time to time, and
foresees how to monitor and evaluate the future performance. It also includes the
Questions: replacement plans and managerial succession plans.
1. Examine the concept of Human Resource Management. Also discuss its Human Resource planning is the process by which a management determines how
Nature (Features). an organization should move from its current manpower position to its desired
2. Compare and Contrast between Personnel Management and Human manpower position. Through planning a management strives to have the right
Resource Management. number and the right kinds of people at the right places, at the right time, to do things
which result in both the organization and the individual receiving the maximum long-
3. Discuss the Objectives of Human Resource Management. range benefit.
4. What are the Functions of Human Resource Management?
5. Explain the legacy of Human Resource Management. Definitions of Human Resource Planning:
6. Discuss the Issues Facing Human Resource Management in the changing 1. Coleman has defined Human Resource Planning as the process of
determining manpower requirements and the means for meeting those
Business Environment. requirements in order to carry out the integrated plan of the organization.
7. Discuss some of the Emerging Issues in HRM. Also explain the New Role and
Directions in HRM. 2. According to Wikstrom, Human Resource Planning consists of a series of
8. Elaborate some of the main challenges which might be faced by the Managers activities, viz.,
(a) Forecasting future manpower requirements, either in terms of
in future in the management of people in Business and Industry. mathematical projections of trends in the economic environment
9. What is the importance of Human Resource Management? and developments in industry, or in terms of judgemental
10. Examine the Functions and Role of Human Resource Manager in Industrial estimates based upon the specific future plans of a company
Organizations.
(b) Making an inventory of present manpower resources and assessing the
extent to which these resources are employed optimally;
(c) Anticipating manpower problems by projecting present resources into
the future and comparing them with the forecast of requirements to
determine their adequacy, both quantitatively and qualitatively; and
(d) Planning the necessary programmes of requirements, selection,
training, development, utilization, transfer, promotion, motivation
and compensation to ensure that future manpower requirements are
properly met.
Coleman has defined Human Resource Planning as ―the process of determining
manpower requirements and the means for meeting those requirements in order to
carry out the integrated plan of the organization.
Objectives of HR Planning

The major objectives of Human Resource Planning in an organization are to:

INTRODUCTION (i) ensure optimum use of human resources currently employed;

H uman Resource Planning is concerned with the planning the future

manpower requirements are the organization. HR manager ensures that the
company has the right type of people in the right number at the right time and
place, which are trained and motivated to do the right kind of work at the right time.
Obviously, human resource planning primarily makes appropriate projections for
(ii)
(iii)
avoid balances in the distribution and allocation of human resources;
assess or forecast future skill requirements of the organization's overall
objectives;
(iv) provide control measure to ensure availability of necessary resources when
required;
future manpower needs of the organization envisages plan for developing the

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 LESSON TWO
RECRUITMENT AND SELECTION
(v)
(vi)
control the cost aspect of human resources;
Formulate transfer and promotion policies.

STEPS IN HUMAN RESOURCE PLANNING

R ecruitment means search of the prospective employee to suit the job
requirements as represented by job specification–a technique of job
analysis. It is the first stage in selection which makes the vacancies known to
a large number of people and the opportunities that the organization offers. In
1. Analysis of Organizational Plans and Objectives: Human resource planning is response to this knowledge, potential applicants would write to the organization. The
a part of overall plan of organization. Plans concerning technology, process of attracting people to apply in called recruitment.
production, marketing, finance, expansion
Sources of Recruitment:
2. Forecasting Demand for Human Resources: Human resource planning starts The various sources of recruitment are generally classified as internal source and
with the estimation of the number and type of personnel required at different external source.
levels and in different departments. and diversification give an idea about the (a) Internal Sources: This refers to the recruitment from within the company. The
volume of future work activity. various internal sources are promotion, transfer, past employees and
internal advertisements.
3. Forecasting Supply of Human Resources: One of the important areas of
human resources planning is to deal with allocation of persons to different (b) External Sources: External sources refer to the practice of getting suitable
departments depending upon the work-load and requirements of the persons from outside. The various external sources are advertisement,
departments. employment exchange, past employees, private placement agencies
and consultants, walks-ins, campus recruitment, trade unions, etc.
4. Estimating Manpower Gaps: Net human resource requirements or manpower
gaps can be identified by comparing demand and supply forecasts. Such The following external sources of recruitment are commonly used by the big enterprises:
comparison will reveal either deficit or surplus of human resources in future. 1. Direct Recruitment
Deficits suggest the number of persons to be recruited from outside 2. Casual Callers or Unsolicited Applications
whereas surplus implies redundant to be redeployed or terminated. 3. Media Advertisement
Similarly, gaps may occur in terms of knowledge, skills and aptitudes. 4. Employment Agencies
Employees deficient in qualifications can be trained whereas 5. Management Consultants
employees with higher skills may be given more enriched jobs. 6. Educational Institutions
7. Recommendation
5. Matching Demand and Supply : It is one of the objectives of human resource 8. Labor Contractors
planning to assess the demand for and supply of human resources and 9. Telecasting
match both to know shortages and surpluses on both the side in kind and 10 Raiding
in number. This will enable the human resource department to know
overstaffing or understaffing. Selection:
To select means to choose. Selection is a part of the recruitment function. It is the
process of choosing people by obtaining and assessing information about the
applicants (age, qualification, experience and qualities) with a view of matching
these with the job requirements and picking up the most suitable candidates. The
choices are made by elimination of the unsuitable at successive stages of the
selection process.
Purpose of Selection
The purpose of selection is to pick up the most suitable persons who would match
the requirements of the job and the organization. The emphasis in selection is,
therefore, on the optimal match between the person and the job.

Criteria of Selection

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 LESSON FOUR
Selection decisions are usually based on how an applicant is rated (rather, PERFORMANCE APPRAISAL
Interview is an oral examination of candidates for employment. No selection process
predicted) in terms of the likelihood of success on the job. The information used is complete without one or more interviews. Interview is the most common and core
found in the application blanks, performance in one or more tests and the method of both obtaining information from job-seekers, and decision-making on
interview(s). The criteria of selection need to be critical to the job. their suitability or otherwise.
The key job dimensions identified in job analysis and job description provide the Organizations may seek to make their selection process as objective as possible.
basis for determining relevant criteria. Frequently educational qualifications, But interview which is an essential element of the process, by and large still remains
technical skills and achievements are used as the basis for selection. But is there a subjective.
statistical relationship between such requirements and job performance? It appears
that certain job requirements can be measured more easily and accurately than
certain others. The core job skills like sensory motor'skills and manipulative skills Interviews usually take place at two crucial stages in the selection process, i.e., at
and achievement can be measured relatively more accurately than one's aptitude, the beginning and in the end. Interviews can differ in terms of their focus and format.
interest and personality traits.
Interviewing is both an art and a science. The effectiveness of the interview as a
Integrity loyalty, initiative/drive/resourcefulness and intelligence/mental alertness screening device can be improved by taking care of certain aspects like the
are the key attributes influencing the selection of managerial employees. All these following:
attributes being subjective are hard to assess accurately, yet are widely attempted. 1. The interview should be based on a checklist of what to look for in a candidate.
Perhaps it is so because managements and employers in India have relatively less Such a checklist could be based on proper job analysis. Each critical
pressure to defend the criteria. attribute which the interview seeks to evaluate may be assigned a
specific weight age.
SELECTION PROCESS
The selection process covers the period from the job specification and initial contact 2. It is desirable to prepare a specific set of guidelines for the interview.
with the applicant to his final acceptance or rejection. The successive stages in the 3. The interviewers need to train to evaluate performance in the interview
selection process are referred to as hurdles that the applicants should cross. Not all objectively. Also, all interviewers need to develop common
selection processes, however, include all these stages. The complexity of the understanding about the criteria measures, their purposes and weight
selection process usually increases with the increase in the skill level and job level ages.
(responsibility and accountability) of the position for which selection is being made.
The sequencing of the hurdles also may vary from job to job and organization to
organization. 4. The interviewers may use past behavior to predict future behaviors and obtain
additional information to attempt such linkages more
Initial Screening: The initial screening and/or preliminary interview is done to limit the meaningfully.
costs of selection by letting only suitable candidates go through the further stages in
selection. 5. There should be proper coordination between the initial and succeeding
interviews.
Application Form: The application form is usually designed to obtain information on
various aspects, of the applicant's social, demographic, academic and work-related Questions:
background and references. The forms may vary for different positions some 1. What do you mean by recruitment? Explain the external sources of
organizations may not have any form specially designed instead, ask the candidates recruitment of Managerial Personnel.
to write applications on a plain sheet. 2. Discuss the external sources of recruitment that are commonly used by the big
enterprises. Also discuss the merits and demerits of external
Tests: A test is a sample of an aspect of an individual's behavior, performance or sources of recruitment.
attitude. It also provides a systematic basis for comparing the behavior, performance 3. Carefully describe the selection procedure in a big industrial concern or what
or attitude of two or more persons. could be the basis of identifying the criteria for selection how can its validity and
reliability be established.
INTERVIEW

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 3. Main Objective: The main objective of it is to know how well an employee is
going for the organization and what needs to be improved in him.

4. Scientific Evaluation: It is an objective, unbiased and scientific evaluation

through similar measure and procedures for all employees in a formal
manner.

5. Periodic Evaluation: Although informal appraisals tend to take place in an

unscheduled manner (on continuous) basis with the enterprises a
supervisors evaluate their subordinates work and as subordinates appraise
each other rand supervisors on a daily basis, yet the systematic (i.e.,
formal) appraisal of an individual employee is likely to occur at certain
intervals throughout that person's history of employment (say q u a r t e r l y, s i x
monthly, annually, etc.

6. Continuous Process: In addition to being periodic performance usually is an

ongoing process. It means that appraisals are regularly scheduled and are not
dumped on the employee on whimsical dates without relevance. The
process has not been broken in person's history of employment however,
INTRODUCTION the periodicity of appraisal may be changed as per needs of the situation.
Performance appraisal or Performance evaluation is a method of evaluating the 7 Employee Feedback: Performance appraisal system provides information to
behavior of employees in a work place, normally including both the quantitative and employees on how well they are doing their jobs, and this feedback is
qualitative aspect of job performance. Performance here refers to the degree of provided to them when it is relevant.
accomplishment of the tasks that makeup an individual'job. It indicates how well an
individual fulfilling the job demands. Performance is measured in terms of results. PURPOSE OF PERFORMANCE APPRAISAL
Thus, Performance appraisal is the process of assessing the performance or
progress of an employee, or a group of employees on th given job, as well as his The following are the main purposes of performance appraisal.
potential for future development. Thus, performance appraisal comprises all formal 1. Appraisal Procedure: It provides a common and unified measure of
procedures used in organizations to evaluate contributions, personality, and performance appraisal, so that all employee are evaluated in the same
potential of individual employees. In other words, performance appraisal includes manner. It gives an in discriminatory rating of all the employees.
the comparison of performance scales of different individuals holding similar areas
of work responsibilities and relate to determination of worth of the scales for the 2. Decision Making: Performance appraisal of the employees is extremely useful
achievement of organization objective. in the decision making process of the organization. In selection, training,
promotion, pay increment and in transfer, performance appraisal is very
Characteristics of Performance Appraisal: useful tool.
The following are the characteristics of Performance Appraisal
1. A Process: Performance appraisal is not a one-act play. It is rather a process
3. Work Performance Records: Performance appraisal gives us a complete
that involves several acts or steps.
information in the form of records regarding every employee. In the case
of industrial disputes even arbitrator accepts these records in the course
2. Systematic Assessment: Performance appraisal is a systematic assessment
of an employee's strengths and weakness in the context of the given job. of grievance handling procedure.

4. Employees Development: Performance appraisal guides the employees in

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removing their defects and improving their working. The weaknesses of the justified on the basis of the result of performance appraisal.
employee recorded in the performance appraisal provide the basis for an
individual development programme. If properly recorded and 3. Help in Wage and Salary Administration: The wage increase given to some
used, the performance appraisal gives the fair opportunities to employees to employees on the basis of their performance may be justified by the
correct and rectify their mistakes performance appraisal results. In some cases appraisal, i.e., merit and
seniority are combined for higher salaries on better positions.
5. Enables Supervisors to be More Alert and Competent: Performance appraisal
enables supervisor to be more alert and competent and to improve the 4. Help in Training and Development: An appropriate system of performance
quality of supervision by giving him a complete record of employee's appraisal helps the management in devising training and development
performance. He can guide an employee, where he is prone to commit programmed and in identifying the areas of skill or knowledge in which
mistakes. several employees are not at par with the job requirements. Thus the appraisal
system points out the general training deficiencies which may be
6. Merit Rating: Merit rating is another name of performance appraisal, it gives corrected by additional training, interviews, discussions or counseling. It
supervisors a more effective tool for rating their personnel. It enables helps in spotting the potential to train and develop them to create an inventory of
them to make more careful analysis of employee's performance and make executives.
them more productive and useful.
5. Aid to Personnel Research: Performance appraisal helps in conducting
research in the field of personnel management. Theories in personnel field
7. Improves Employer Employee Relations: Performance appraisal is not only a
are the outcome of efforts to find out the cause and effect relationship
useful guide for the supervisors and employees but it improves the employer-
between personnel and their performance. By studying the various
employee relations by creating a more conductive and amicable problems which are faced by the performance appraiser, new areas of
atmosphere in the organization. It also stimulates free exchange of research may be developed in personnel field.
thoughts and ideas between the supervisor and his men. In this way
performance appraisal bridges the emotional gap between the employer 6. Help in Self Evaluation: Performance appraisal helps the employee in another
and employee by bringing them more close and by reducing man-to- way also. Every employee is anxious to know his performance on the job and
man differences in the organization. his potentials for higher jobs so as to bring himself to the level of that position.
USES OF PERFORMANCE APPRAISAL
1. Help in Deciding Promotion: It is in the best interest of the management to 7. Help in Creating Healthy Competition: Performance appraisal brings out the
promote the employees to the positions where they can most effectively deficiencies and shortcomings of the employees.
use their abilities. A well-organized, development and administered
performance appraisal programme may help the management in determining METHODS OR TECHNIQUES OF PERFORMANCE APPRAISAL
whether an individual should be considered for promotion because the
system not only appraises the worth of the employee on the present job but
also evaluates his potentialities for higher job.

2. Help in Personnel Actions: Personnel actions such as lay-offs, demotions,

transfers and discharges etc. may be justified only if they are based on
performance appraisal. While in some cases, actions are taken because
of unsatisfactory performance of the employee, in some other cases it
may be called for due to some economic conditions beyond control such as
changes in production process. In former case, the action can only be

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 LESSON FIVE
Traditional Methods PAY ROLL aged 39, said that he has received complaints that training was not relevant and was
1. Ranking Method generally dull. He explained that various persons in the firm who worked with training
2. Grading Method from time to time acted mainly on guidance from Delhi. Radha, aged 35, said she
3. Man-to-Man Comparison Method believed that the root of the problem is the absence of an HR department. However,
4. Graphic Rating Scale Method she said that when the idea was mentioned to the managing partner in Delhi, it was
completely rejected.
Modern Methods
1. Management by Objective (MBO) Questions :-
2. Assessment Centre Method (a) Do you think that CIC Logistics Pvt. Ltd. needs an HR Department ? Justify.
3. Human Asset Accounting Method (b) What Role does an HR Department play ?
4. Behaviorally Anchored Rating Scales (c) How would you sell the idea of the HR Department to the Managing Partner ?
5. 360o Appraisal (d) What type of Organisational Structure would you recommend ?

Questions:
1. Define Performance appraisal. How is performance appraisal useful?
2. Discuss the meaning and purpose of Performance Appraisal.
3. What are the main objectives/purposes of performance Appraisal? Discuss
the important reasons of benefits which justify the existence of a
system of performance appraisal in an enterprise.
4. Discuss the role of a Performance Appraisal System in an Organization.
5. Explain the importance

Case Study : 1
Sinha is a senior employee of CIC Logistics Pvt. Ltd. having its headquarters at Delhi
and branches at all major cities in the country. The managing partner of the firm
asked Sinha to head its Southern branch at Bangalore. The firm has been quite
successful since its inception in 1950's, but has witnessed high turnover among its
younger staff in the last five years. The managing partner is convinced that the
problem is not salary, because a recent survey indicated that the firm's salary
structure is competitive with that of other major firms. Driven by this What Is Payroll? – Definition and Component
incomprehension, the managing partner wanted Sinha to find out the real reasons. If your business has employees, you'll have to do payroll. There's no way to avoid it,
but what is payroll?
Having settled in Bangalore, Sinha met the four Senior Managers to determine why
the branch has had such a high attrition rate amongst the younger staff. Krishna, age
46, stated that the younger staff lacked dedication and failed to appreciate the career Well, payroll can mean a few different things:
opportunities provided by the firm. Gowda, age 52, said the younger employees 1. Payroll refers to the employees you pay, along with employee information.
were always complaining about the lack of meaningful feedback on their 2. Payroll is also the amount you pay employees during each pay period.
performance, and many mentioned that they would like to have a mentor in the 3. Or payroll can refer to the process of actually calculating and distributing
organization to assist with their development. wages and taxes.
Gowda further explained that the firm does provide performance rating to its staff
and the previous Manager had always maintained an open-door policy. Manohar,
Let's dive deeper into the parts of payroll.

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 LESSON SIX
What is payroll, and what parts are included in a payroll program? HEALTH AND SAFETY IN THE WORKPLACE
What is payroll composed of on a micro-level? In this section, I'll break down
employee information, hours worked, salaries and wages, deductions, and net and
gross pay.

Employee information
Before you can begin to run payroll, you need to collect some information from your
employees. Every employee needs to fill out Form W-4. This form will provide you
with information about each employee's federal income tax withholding exemptions,
along with their names, addresses, and Social Security numbers. You need all of this
information to properly run and distribute payroll.
Every time you hire a new employee, they will need to fill out a Form W-4.
Hours worked Being safe at work is important. It is a responsibility shared by both the employer and
the employee.
If you have hourly employees, you have to keep track of the hours they work. This will
ensure you pay your employees the proper amount. For employers, one of the fundamental principles of workplace health and safety is
risk assessment which identifies all the hazards and potential for harm whilst
If you have salary employees, you may want to track the hours they work to make working.
sure they are putting in all of their time.
Employers must provide information and training on risk at work and on safe working
practices. Employees must comply with safety requirements at work and take all
Time Off reasonable precautions to keep safe.
You may also want to track the time your employees take off work for vacation, sick Find out more about:
time, and holidays. What is sick pay like at your company? This is important if you
have a policy that says how much time employees are allowed to take off. • Control of Substances Hazardous to Health (COSHH)
Salaries and wages • Manual handling
A salary is a fixed amount that you can pay an employee. Typically, an employee is • Pregnancy and work
given a yearly salary, which is then divided by the number of pay periods in the year.
• Working with computers
For example, you give an employee a yearly salary of $28,600. You pay the
employee every week, which means the weekly paycheck will be $550 before • Occupational dermatitis and latex allergy
deductions ($28,600 / 52 weeks).
A wage is what you pay an employee based on the hours worked. You will set a Control of Substances Hazardous to Health (COSHH)
specific rate of pay for each hourly employee. To calculate an employee's total
wages, you will multiply the rate of pay by the number of hours the employee works. The Control of Substances Hazardous to Health (COSHH) regulations require
employers to assess and manage risk relating to chemicals, dusts and
For example, you pay an employee $12 per hour. The employee worked 34 hours microbiological or infectious hazards.
this week. You will owe the employee $408 before deductions ($12 x 34 hours).
Full risk assessments must be completed to identify risk and measures taken to
Overtime pay reduce any risk as far as possible.
All nonexempt employees should receive overtime pay. This includes both none Where a significant risk is identified, the following steps have to be considered:
xempt hourly and salary workers. Overtime hours typically begin after an employee

23 24
• Elimination 1. Physical effort:
• Substitution Employers should reduce heavy physical activities and lifting for pregnant
workers where possible, particularly in late pregnancy. However, if a
• Containment pregnant worker who has been informed of the possible risk wishes to
• General ventilation continue then there are insufficient grounds to impose restrictions
against her will.
• Local exhaust ventilation
2. Working hours
• Personal protective equipment
Employers should reduce long working hours for pregnant workers,
• Immunization particularly in late pregnancy. Where possible, hours should be limited to
about 40 per week. Again, if a pregnant worker who has been informed of
Employers must provide their staff with information and training about these risks the possible risk wishes to continue then the employer cannot enforce these
and how to manage them. restrictions.
Where appropriate, regular health checks may be needed to ensure any health 3. Shift work
effects are identified as soon as possible.
There is insufficient evidence of a risk to pregnant women to make
We can advise on health surveillance and immunization programmes if needed. recommendations to restrict shift work, including rotating shifts or night
and evening work.
Manual handling
Manual handling is a common cause of workplace injuries. It can include lifting,
pushing, pulling, lowering and carrying. The regulations for manual handling at work Working with computers
require employers to assess and manage risk relating to the moving and handling of
loads. Any risk assessment for manual handling must include the following If you use a computer and monitor regularly, you should ensure you understand how
considerations: to adjust the equipment to provide a comfortable way of working. Your workstation
should be assessed; in most workplaces you carry out this assessment yourself
• Load: loads may include animals and people, such as patients in hospital. For using your Trust or company policy for guidance.
inanimate objects it may be possible to reduce the load by dividing it into
smaller loads. Ensuring an ergonomic workstation – tips for staff
• Task: what we do with the load. It is this that can create the risk of injury. It is As you turn on our computer, stop and think:
usually how we move the load that causes the problem rather than the
load itself. Often, basic equipment, such as a trolley, is sufficient but • Check your posture
sometimes much more specialised equipment is required. • Sit back in your chair and use the back rest for support
• Environment: includes how we place ourselves within the environment. It is • Raise your seat to allow you to keep your forearms horizontal and your
important to make sure that there is sufficient space to move the load safely. shoulders relaxed
• Individual capability: an individual's capability may add to the risk in manual • Your wrists should be straight when your hands are on the keyboard?
handling. This may be to do with the general physique of the individual or
if they have an illness, physical injury or disability which affects their • Are your feet comfortable on the floor or do you need a footrest?
physical capability.
• Remove all obstacles under or around your desk, to avoid awkward postures
• Ensure your work area is tidy and well organised
Pregnancy and work
• Can you read the screen? Ensure the viewing distance is comfortable and that
Managers should perform a risk assessment of a woman's work when she informs there are no problems with glare or reflections
them that she is pregnant.

25 26
• Adjust your screen brightness and contrast controls to suit the office lighting
level
• Position your copy stand at the same height and viewing distance as your
screen
• Ensure you stretch and change your posture frequently and use your breaks
effectively to perform other tasks
• If you expect to use a computer regularly, you should have your vision
assessed when you start work if you have not seen an optician in recent
years
You may be entitled to an eyesight check paid for by your employer to determine the
need for special lenses when using the computer. For example, some people,
usually those who need reading glasses, may need to have special glasses to use a
computer. Check your employer's policy on the arrangements for this before
purchasing any special glasses.

Occupational dermatitis and latex allergy

Work-related skin problems are common, especially on the hands. These can be
caused by frequent hand-washing and contact with soaps and chemicals. If you are
concerned about your skin and have symptoms, such as redness, dryness or
cracking, ask your manager to seek advice from your occupational health service.

27 36
 LESSON THREE
PROCESS AND DECISION MAKING criterion, the reasons for the final agreed score are also recorded on this form.
4. The final scores for all applicants are summarising to aid decision making.
Decisions about which applicants are invited to proceed to the next stage of
selection are based on the decision rules agreed in advance .
5. Any applicants who fail to meet all the essential criteria are rejected if they
have not already been eliminated through a long-listing exercise. Desirable
criteria are used only when there is a need to distinguish between candidates
who appear equally suited to the vacancy.
Please note: if members of the Appointing Body are conducting short-listing as
applications are submitted rather than reviewing all applications together, it is
particularly important that benchmarking of scores is carried out before applicants
are notified of any decisions. This means that Appointing Body members must
review the scores that they have allocated to each applicant and the reasons why,
then check that they have been consistent in the way that they have made their
assessments/decisions.
If the HR Division's templates for recording short-listing scores, decisions and
reasons are not used, it is important that some other documentation captures this
information. Short-listing records should also show that the same agreed selection
criteria have been applied to all candidates.

How to short-list This will help ensure that you can justify your decisions, explain the process by which
they were reached and respond to any claims of discrimination. In addition, if the
Assessors are required to carry out short-listing objectively and consistently by person who is eventually offered the position requires a Certificate of Sponsorship
comparing each application against the selection criteria being assessed at this (CoS), evidence of why he/she was the best candidate will be required, along with
stage. Short-listing and notification of the results to applicants should, ideally, be details of why applicants/candidates not subject to immigration control were not
completed within two weeks of the closing date of the vacancy. appointable (i.e. why they did not meet all the essential criteria).
A suggested process for short-listing is provided below: If you are using Web Recruitment, you should ensure that the outcomes of each
1. Each assessor reviews applications independently of the other assessors in selection stage are recorded by changing the status/stage of applicants within the
the first instance. For each application, the assessor evaluates how system. For example, after short-listing has been completed, you should record
effectively the facts and evidence provided meet the requirements of which applicants have been rejected and which will be invited to interview/selection
each selection criterion, using the relevant positive indicators as a events.
guide. Factors to use and not to use in decision making
2. The assessor allocates each applicant with a provisional score for each 1. Short-listing decisions should be made solely on the basis of facts and
selection criterion, using the scoring system which has been agreed in evidence presented in applications which are relevant to the selection
advance. The scores for each applicant, along with reasons for the criteria.
scores given,.
2. Generalised assumptions and stereotypes about applicants should be
3. The assessors meet to discuss each application and the provisional scores avoided.
that they have each allocated. Where any differences in the scores arise,
these are discussed and a decision reached on an agreed final score. 3. You should also take care to avoid taking into account any factors which could
The final scores for each applicant are recorded on an HR10 Assessment have a disproportionate impact on people with a particular characteristic,
Record. Where assessors initially gave a different provisional score for a unless this can be objectively justified. In addition, making decisions

14 15
 LESSON SEVEN
RISK MANAGEMENT
Risk management is the process of identifying, quantifying, and managing the risks
that an organisation faces. As the outcomes of business activities are uncertain, they
are said to have some element of risk. These risks include strategic failures,
operational failures, financial failures, market disruptions, environmental disasters,
and regulatory violations. Risk is a statistical concept that is measured using
statistical concepts that are related to the unknown future. Almost all investments
are exposed to it.
Risk management involves identifying the types of risk exposure within the
company, measuring those potential risks, proposing means to hedge, insure or
mitigate some of the risks and estimatin the impact of various risks on the future
earnings of the company.
While it is impossible that companies remove all risk from the organisation, it is
important that they properly understand and manage the risks that they are willing to
accept in the context of the overall corporate strategy. The management of the
company is primarily responsible for risk management, but the board of directors,
internal auditor, external auditor, and general counsel also play critical roles.
Risk can be managed in a number of ways: by the buying of insurance, by using
derivative instruments as hedges, by sharing risks with others, or by avoiding risky
positions altogether.
Different Types of Risk Management
The first step in the risk management process is to acknowledge the reality of risk.
Denial is a common tactic that substitutes deliberate ignorance for thoughtful
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planning.
Types of Risk Management
\ Assessment of the risk, obtaining options for handling the risk, and analyzing the
risks in order to determine the ways in which the same may change are some ways
to deal with risk. There are different types of risks and management must be aware
of all the kinds. The risks can be financial risks, process risks, intangible risks, time
risks, human risks, legal risks, and physical risks. Brief notes on various types of
risks;
Financial Risk: Financial risk is the loss of key resources like funding, etc. In this
case the company will not have adequate cash flow to meet financial obligations.
Credit risk, liquidity risk, market risk, operational risk are different types of financial
risks.
Credit Risk and Investment Risk: When the borrower becomes default and was
unable to make payments as promised it is said to be Credit risk, also called default
risk. Investment risk was associated with this where the investor losses his principal
and interest too.
Liquidity Risk: Sometimes due to lack of liquidity in the market an asset cannot be
sold to make the profit or to prevent a loss this is what called as Liquidity risk.
Market Risk: Due to the change in value of the market risk factors value of
investment portfolio or the value of a trading portfolio will decrease. Foreign
exchange rates, stock prices, interest rates, and commodity prices are the standard
Market risk factors.
Operational Risk: A risk arising from execution of an organisation's business
functions is Operational risk. Risks arising from the people, systems and processes
through which an organisation operates. Fraud risks, legal risks, physical or
environmental risks are other categories included under this.
Process Risk: Risky business processes that could lead to project failure are
Process risks.
Intangible Risk: Those risks that are often associated with damage to the reputation
of an organisation or its brand are Intangible risks.
Time Risk: Risks which often involve things connected to time are Time risks.
Human Risk: Loss of critical employees or knowledge which are connected to
manpower are Human risks.
Legal Risk: Losses include government regulations and the same having an impact
on the operations of the company are Legal Risks.
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Physical Risk: Physical risks are those loses of physical resources such as
equipment, buildings, land, etc due to natural disasters or man made.
Risk management process begins when somebody asks what kind of events can
damage the business and how much damage can be done. Identifying and
measuring the potential loss exposures, choosing the most efficient methods of
controlling and financing loss exposure and implementing them and finally
Monitoring all the out comes are the main steps involved in Risk Management
Principles and Process of Risk Management
Principles of Risk Management
The principles of risk management have been set by several organizations. These
principles are set by the Project Management Body of Knowledge and the
International standardization Organization.
The Project management body of knowledge has set down some principles. This
article is a combination of the principles laid down by both the bodies. The principles
are as follows:
Risk Management Principles
Organizational Context: Every organization is involved by different degrees and
aspects in the social, legal, political, societal and technological environments. For
example, an organization may be unaffected to any changes taking place in import
duty while another organization who is working in the same environment and
industry may be severely affected. There are also some noticeable differences in the
channels of communication, procedures of risk management and the in-house
culture. Hence, organizational process must be given additional value and also be
an important part through the use of risk management.
Involvement of Stakeholders: Stakeholders must be fully involved in every level of
making decisions in the process of risk management. They must be fully alert even
while making small decisions. Hence, the stakeholders can play an important role in
every step and the organization must understand that this is in their own interest.
Organizational Objectives: Keeping the organizational goals in perspective is very
vital when dealing with risk factors. The process of risk management must clearly be
able to tackle even the uncertain issues. Hence, it is necessary to be very thoroughly
prepared keeping the master plan in mind.
Reporting: Risk management involves the use of communication. The genuineness
of the information has to be determined. Decisions must be prepared based on
readily available information and it must be clear and lucid.
Roles and Responsibilities: Risk Management has to be clear and all
encompassing. It must involve the human aspects and make sure that all the
members are aware of their role at every step of this process.
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Support Structure: The significance of the risk management team is emphasized by
the support structure. The members of the team must be energetic, industrious and
highly receptive to any new changes made. All the members must be aware of his
role at every step of the project management life cycle.
Early Warning Indicators: It is important to keep a sharp eye on untimely signs of any
risks which may become a real problem. This can be tackled by continuous
communication by everyone at all the levels. It is also vital to facilitate and authorize
all the members to deal with the risk at his/her stage.
Review Cycle: It is important to continue assessing all the inputs at every level of the
process of risk management – Identification, assessment, respond and evaluate.
Each cycle has visibly different observations and the realistic interferences must be
identified and the needless ones must be removed.
Supportive Culture: Devise a brainstorm and permit asking questions and
discussions as a routine culture. This will encourage the members to take an active
part.
Continual Improvement: You must be able to progress and augment all the
approaches and schemes of your risk management. You must use your knowledge
to focus your methods of viewing and managing the continuing risk.
Risk Management Process
There are many associations and bodies which set down the guidelines and
principles in the risk management process. The steps are more or less similar and
may have some minor changes in the cycle in various types of risk.
The various risks that are involved, for instance, in project management differ when
compared to financial risks. This is the reason for some changes taking place in the
whole process of risk management. On the other hand, the ISO set down some
steps for these processes and they are generally valid for almost all types of risks.
These guidelines are applicable for any organization forever and even for many
various activities which include operations, functions, products, processes,
decisions, services, projects and even assets.
According to the ISO 31000 (Risk Management - Principles and Guidelines on
Implementation), the process of risk management has the below mentioned steps
and sub-steps: Setting up/establishing the context, Identification and Evaluation.
Establishing the Context in Risk Management
This is the first step in the Risk Management process. Establishing the Context
means recognizing and analyzing all the likely risks and its consequences. Some
various schemes are mentioned below along with the decisions in order to deal with
the risk. The various activities are divided during this level is as follows:
*· Identifying a risk in any specific domain.
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*· Preparing the complete process of management.
* Making a chart of the risk signs, identifying the goals of risk etc.
* Demarcating a framework.
*· Designing an evaluation of the risks that are involved at every stage.
*· Choosing the solution/s for the risks.
Creation of Risk Management Plan
Projects are prone to risk irrespective of the size of the project. Hence the first logical
move is to have a risk management plan to achieve success in a project. Examples
of some projects are financial, legal, physical or non-financial. The main aim is to
predict risks much before implementing the project.
An ideal risk management plan consists of several utilities and plans to lower risks.
The plan must be such that the risk is either evaded or a part of it is transferred to
other projects to reduce its full effect.
A systematic cost benefit analysis is done and on the basis of this other risk
management plans could offer accepting the risk. Risk management plans depend
on the way they are given priority in an organization. Comparative priority risks are
allotted some emphasis. As an example, for some companies, operative or strategic
risks are of greater importance and for other companies it could be legal or physical
risks. Hence prioritizing the risk is what should be the final aim and plan.
A final draft is made considering the risk management process. To make this draft,
the risk management plan may go through the following:
· Make a List: Identifying potential risks is of utmost importance before anything
can be started or decided. It is important that even the smallest of details should not
be neglected as these could at some point in time lead to potential risks. This fact is
relevant especially where project management is concerned. Risks can be handled
by first acquiring the categories of the project and then risks can be estimated for
each category. For instance, for a cost category, find out the factors that could
increase cost and then list them out.
· Prioritize the Risks: Risks are arranged according to priority. The priority refers
to the impact it can have and its chances of recurrence. Higher priority risks are
handled first.
· Developing and Action Plan: Action Plans are developed alongside each risk,
which shows how to handle them when they occur, who is responsible for it and what
the consequences are for it. Therefore, plans are proposed to reduce the effect of
the risks and to avoid recurrence.
· Human Resource Deployment: People are designated at specific points
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having specific roles. They are designated specifically to carry out action plans when
the predicted risks occur and for this, they work together with the whole team. The
actions are carried out at certain points in time with a certain time frame.
· Communication: The plan has to be communicated to the people concerned
(both internal and external). It also has to be explained to people who are primarily
involved in the process along with the time frame, action and responsibilities.
The plan is formed keeping in mind the risk management process that forms the
basic guideline and work together as a whole. Hence, the process discussed in step
three goes alongside a complete understanding of the risk management process.
What are the 5 Risk Management Steps in a Sound Risk Management Process?
As a project manager or team member, you manage risk on a daily basis; it's one of
the most important things you do. If you learn how to apply a systematic risk
management process, and put into action the core 5 risk management process
steps, then your projects will run more smoothly and be a positive experience for
everyone involved.
A common definition of risk is an uncertain event that if it occurs, can have a positive
or negative effect on a project's goals. The potential for a risk to have a positive or
negative effect is an important concept. Why? Because it is natural to fall into the trap
of thinking that risks have inherently negative effects. If you are also open to those
risks that create positive opportunities, you can make your project smarter,
streamlined and more profitable. Think of the adage –“Accept the inevitable and turn
it to your advantage.” That is what you do when you mine project risks to create
opportunities.
Uncertainty is at the heart of risk. You may be unsure if an event is likely to occur or
33