Human Resource Management - 4 Blocks

Karnataka State Open University
Mukthagangothri, Mysuru - 570 006

commerceksou.stud@gmail.com II SEMESTER M.COM
HUMAN RESOURCE MANAGEMENT
COURSE CODE:MCOHC2.1
Department of Studies and Research in Commerce
BLOCK
1
Page No.
UNIT - 1: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 1-21
UNIT - 2: LINKING CORPORATE STRATEGIES AND POLICIES WITH HRM 22-32
UNIT - 3: ORGANISATION OF HUMAN RESOURCE MANAGEMENT DEPARTMENT 33-47
UNIT - 4: ENVIRONMENTAL CONTEXT OF HUMAN RESOURCE MANAGEMENT 48-71

Credit Page
Programme : M.Com Semester: Second Block No : I
Course : Human Resource Management Credit : 04 Units No :1-4
Course Design Expert Committee
Prof. Vidyashankar Chairman
Vice-Chancellor,
Karnataka State Open University,
Mukthagangotri, Mysuru – 570 006.
Prof. Ashok Kamble Member
Dean (Academic),
Dr. Mahesha V. Member
BOS Chairman,
DOS&R in Commerce, KSOU, Mysuru.
Dr. Chaya R. Member
Assistant Professor and Course Designer,
Smt. Usha C. Member Convener
Chairperson,
Course Writer Course Editor
Dr. Chaya R. Dr. Naveen G.V
Assistant Professor, Assistant Professor,
DOS&R in Commerce, DOS&R in Commerce,
KSOU, Mysuru. KSOU, Mysuru.
Editorial Committee
Dr. Mahesha V. Chairman
BOS Chairman,
Prof. Venkatesh S. External Member
Professor,Department of Commerce,
Kuvempu University, Shivamogga.
Dr. Sukanya R. Internal Member
Assistant Professor, DoS & R in Commerce,
Karnataka State Open University, Mysuru.

Chairperson,
DOS&R in Commerce, KSOU, Mysuru. .
Copy Right
Registrar,
Karnataka State Open University, Mukthagangothri, Mysuru - 570006.
Developed by the Department of Studies and Research in Commerce, KSOU, under the guidance of
Dean (Academic), KSOU, Mysuru. Karnataka State Open University, October - 2022.
All rights reserved. No part of this work may be reproduced in any form, or any other means, without permission in
writing from the Karnataka State Open University. Further information on the Karnataka State Open University
Programmes may obtain from the University’s office at Mukthagangothri, Mysuru - 570006.
Printed and Published on behalf of Karnataka State Open University. Mysuru-570006 by Registrar (Administration) -
2022.
Preface
Dear Learner,
We hope that after reading this study material, you will concur that the topic of human
resource management is exciting. Each unit of this study material demonstrates how a company
can boost productivity by streamlining the procedures it uses to find and retain talented human
resources. As it is sometimes said, "the people create the place," employees are the most valuable
resources for any business. Employers, managers, and supervisors must keep up with current
trends and have a solid theoretical knowledge of human resource practices in order to
successfully manage such a workforce. The fundamentals of human resource management are
covered in this course, including job analysis and job specification, work rotation and job
enrichment, human resource procurement, and human resource management information system.
This course is also updated with human resource development, career planning management,
transfer policy, promotion and demotion, performance appraisal, compensation management and
employee benefits.
The curriculum of "Human Resource Management" has been designed by the

experienced faculty in order to provide students and working managers with all-inclusive,
diverse content in a highly legible and understandable approach. To learn more about the subject,
you can refer further readings available at the end of each unit. You may feel free to get in touch
with the concerned course writer. You can then write up your comments and email them to the
department so that the study material can be further improved.
With best wishes,
Smt. Usha C.
Chairperson
BLOCK – I
INTRODUCTION
Human beings are social beings and hardly ever live and work in an isolation. We always
plan, develop and manage our relations both consciously and unconsciously. The relations are
the outcome of our actions and depend to a great extent upon our ability to manage our actions.
From childhood each and every individual acquire knowledge and experience on understanding
others and how to behave in each and every situations in life. Later, we carry forward this
learning and understanding in carrying and managing relations at our workplace. The whole
context of Human Resource Management revolves around this core matter of managing relations
at work place. The relationship between corporate strategies and human resource management
(HRM), which will first interpret the definitions of those two terms and then describe their
relationships. The concept of organisation in human resources refers to the way the department is
structured and how tasks are distributed among its members. Environment comprises all those
forces which have their bearing on the functioning of various activities, including human
resource activities. This block discuss about the introduction to human resource management,
linking corporate strategies and policies with HRM, organisation of human resource management
department and environmental context of HRM.
This block comprises of 4 units:
Unit-1: Introduction to Human Resource Management

Unit-2: Linking Corporate Strategies and Policies with HRM
Unit-3: Organisation of Human Resource Management Department
Unit-4: Environmental Context of Human Resource Management
BLOCK - I
UNIT-1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Structure:
1.0 Objectives
1.1 Introduction
1.2 Meaning and Definitions of Human Resource Management
1.3 Objectives of Human Resource Management
1.4 Scope of Human Resource Management
1.5 Elements and Emergence of Human Resource Management
1.6 Comparison of Human Resource Management with Personnel Management
1.7 Perspectives of Human Resource Management
1.8 Human Resource Management Models
1.9 Check Your Progress
1.10 Summary
1.11 Keywords
1.12 Questions for Self-Study
1.13 References
1
1.0 OBJECTIVES
After studying this unit, you will be able to;
 Give the meaning and definitions of HRM.

 Explain the objectives and scope of HRM.
 Recognize an elements and emergence of HRM.
 Compare HRM with personnel management.
 Describe perspectives of HRM.
 Provide an overview of HRM models.
1.1 INTRODUCTION
Human beings are social beings and hardly ever live and work in isolation. We always
plan, develop and manage our relations both consciously and unconsciously. The relations are
the outcome of our actions and depend to a great extent upon our ability to manage our actions.
From childhood each and every individual acquire knowledge and experience on understanding
others and how to behave in each and every situations in life. Later we carry forward this
learning and understanding in carrying and managing relations at our workplace. The whole
context of Human Resource Management revolves around this core matter of managing relations
at work place.
Since mid-1980’s Human Resource Management (HRM) has gained acceptance in both
academic and commercial circle. HRM is a multidisciplinary organizational function that draws
theories and ideas from various fields such as management, psychology, sociology and
economics.
There is no best way to manage people and no manager has formulated how people can
be managed effectively, because people are complex beings with complex needs. Effective HRM
depends very much on the causes and conditions that an organizational setting would provide.
Any Organization has three basic components, People, Purpose, and Structure.
In 1994, a noted leader in the human resources (HR) field made the following
observation: Yesterday, the company with the access most to the capital or the latest technology
had the best competitive advantage;
2
Today, companies that offer products with the highest quality are the ones with a leg up
on the competition; but the only thing that will uphold a company’s advantage tomorrow is the
caliber of people in the organization.
The predicted future is today’s reality. Most managers in public- and private sector firms
of all sizes would agree that people truly are the organization’s most important asset. Having
competent staff on the payroll does not guarantee that a firm’s human resources will be a source
of competitive advantage. However in order to remain competitive, to grow, and diversify an
organization must ensure that its employees are qualified, placed in appropriate positions,
properly trained, managed effectively, and committed to the firm’s success. The goal of HRM is
to maximize employees’ contributions in order to achieve optimal productivity and effectiveness,
while simultaneously attaining individual objectives (such as having a challenging job and
obtaining recognition), and societal objectives (such as legal compliance and demonstrating
social responsibility). Thus, this unit focuses on the concepts and models of human resource
management.
1.2 MEANING AND DEFINITIONS OF HUMAN RESOURCE MANAGEMENT

Meaning of Human Resource Management:
Human Resource Management is the process of recruiting, selecting, inducting

employees, providing orientation, imparting training and development, appraising the
performance of employees, deciding compensation and providing benefits, motivating
employees, maintaining proper relations with employees and their trade unions, ensuring
employees safety, welfare and health measures in compliance with labour laws of the land and
finally following the Orders / Judgements of the concern High Court and Supreme Court, if any.
Definitions of HRM:
Human resources management (HRM) is a management function concerned with hiring,

motivating and maintaining people in an organization. It focuses on people in organizations.
Human resource management is designing management systems to ensure that human talent is
used effectively and efficiently to accomplish organizational goals.
3
HRM is the personnel function which is concerned with procurement, development,
compensation, integration and maintenance of the personnel of an organization for the purpose of
contributing towards the accomplishments of the organization’s objectives. Therefore, personnel
management is the planning, organizing, directing, and controlling of the performance of those
operative functions (Edward B. Philippo).
According to the Invancevich and Glueck, “HRM is concerned with the most effective
use of people to achieve organizational and individual goals. It is the way of managing people at
work, so that they give their best to the organization”.
According to Dessler (2008) the policies and practices involved in carrying out the
“people” or human resource aspects of a management position, including recruiting, screening,
training, rewarding, and appraising comprises of HRM.
Generally, HRM refers to the management of people in organizations. It comprises of the

activities, policies, and practices involved in obtaining, developing, utilizing, evaluating,
maintaining, and retaining the appropriate number and skill mix of employees to accomplish the
organization’s objectives. The goal of HRM is to maximize employees’ contributions in order to
achieve optimal productivity and effectiveness, while simultaneously attaining individual
objectives (such as having a challenging job and obtaining recognition), and societal objectives
(such as legal compliance and demonstrating social responsibility).
In short Human Resource Management (HRM) can be defined as the art of procuring,
developing and maintaining competent workforce to achieve the goals of an organization in an
effective and efficient manner.
1.3 OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

The primary objective of HRM is to ensure the availability of competent and willing
workforce to an organization. The specific objectives include the following:
1) Human capital assisting the organization in obtaining the right number and types of
employees to fulfill its strategic and operational goals.
2) Developing organizational climate helping to create a climate in which employees are

encouraged to develop and utilize their skills to the fullest and to employ the skills and
abilities of the workforce efficiently.
4
3) Helping to maintain performance standards and increase productivity through effective job
design; providing adequate orientation, training and development; providing performance-
related feedback; and ensuring effective two-way communication.
4) Helping to establish and maintain a harmonious employer/employee relationship.
5) Helping to create and maintain a safe and healthy work environment.
6) Developing programs to meet the economic, psychological, and social needs of the employees
and helping the organization to retain the productive employees.
7) Ensuring that the organization is in compliance with provincial/territorial and federal laws
affecting the workplace (such as human rights, employment equity, occupational health and
safety, employment standards, and labour relations legislation). To help the organization to
reach its goals.
8) To provide organization with well-trained and well-motivated employees.
9) To increase the employees satisfaction and self-actualization.
10) To develop and maintain the quality of work life.
11) To communicate HR policies to all employees.
12) To help maintain ethical polices and behavior.
The above stated HRM objectives can be summarized under four specific objectives:
societal, organizational, and functional and personnel.
Objective of
HRM
Personnel
Objective
Functional
Objective
Organizational
Objective
Fig 1.1: Social Objectives
5
1) Societal Objectives: Seek to ensure that the organization becomes socially responsible to the
needs and challenges of the society while minimizing the negative impact of such demands
upon the organization. The failure of the organizations to use their resources for the society’s
benefit in ethical ways may lead to restriction.
2) Organizational Objectives: It recognizes the role of HRM in bringing about organizational

effectiveness. It makes sure that HRM is not a standalone department, but rather a means to
assist the organization with its primary objectives. The HR department exists to serve the rest
of the organization.
3) Functional Objectives: It is to maintain the department’s contribution at a level appropriate

to the organization’s needs. Human resources are to be adjusted to suit the organization’s
demands. The department’s value should not become too expensive at the cost of the
organization it serves.
4) Personnel Objectives: It is to assist employees in achieving their personal goals, at least as

far as these goals enhance the individual’s contribution to the organization. Personal
objectives of employees must be met if they are to be maintained, retained and motivated.
Otherwise employee performance and satisfaction may decline giving rise to employee
turnover.
1.4 SCOPE OF HUMAN RESOURCE MANAGEMENT

The scope of HRM is indeed vast. All major activities in the working life of a worker –
from the time of his or her entry into an organization until he or she leaves the organizations
comes under the purview of HRM. The major HRM activities include HR planning, job analysis,
job design, employee hiring, employee and executive remuneration, employee motivation,
employee maintenance, industrial relations and prospects of HRM.
The scope of Human Resources Management extends to:
 All the decisions, strategies, factors, principles, operations, practices, functions, activities and
methods related to the management of people as employees in any type of organization.
 All the dimensions related to people in their employment relationships, and all the dynamics
that flow from it.
6
Labour
Relations
Personnel
Research and Compensation
Information and Benefits
System
Human
Employee
resource
Assistance
planning Human
Resource
Management
Design of the
Organizational
Organization
Development
and Job
Selection and Training and

Staffing Development
Fig 1.2: Scope of HRM
The scope of HRM is really vast. All major activities and the working life of a worker –
from the time of his or her entry into an organization until he or she leaves it comes under the
purview of HRM. American Society for Training and Development (ASTD) conducted fairly an
exhaustive study in this field and identified nine broad areas of activities of HRM.
These are given below:
 Human Resource Planning
 Design of the Organization and Job
 Selection and Staffing
 Training and Development
 Organizational Development
 Compensation and Benefits
7
 Employee Assistance
 Labour Relations
 Personnel Research and Information System
a) Human Resource Planning: The objective of HR Planning is to ensure that the organization
has the right types of persons at the right time at the right place. It prepares human resources
inventory with a view to assess present and future needs, availability and possible shortages in
human resource. Thereupon, HR Planning forecast demand and supplies and identify sources
of selection. HR Planning develops strategies both long-term and short-term, to meet the man-
power requirement.
b) Design of Organization and Job: This is the task of laying down organization structure,
authority, relationship and responsibilities. This will also mean definition of work contents for
each position in the organization. This is done by “job description”. Another important step is
“Job specification”. Job specification identifies the attributes of persons who will be most
suitable for each job which is defined by job description.
c) Selection and Staffing: This is the process of recruitment and selection of staff. This involves
matching people and their expectations with which the job specifications and career path
available within the organization.
d) Training and Development: This involves an organized attempt to find out training needs of
the individuals to meet the knowledge and skill which is needed not only to perform current
job but also to fulfil the future needs of the organization.
e) Organizational Development: This is an important aspect whereby “Synergetic effect” is

generated in an organization, that is, healthy interpersonal and inter-group relationship within
the organization.
f) Compensation and Benefits: This is the area of wages and salaries administration where
wages and compensations are fixed scientifically to meet fairness and equity criteria. In
addition labour welfare measures are involved which include benefits and services.
g) Employee Assistance: Each employee is unique in character, personality, expectation and

temperament. By and large each one of them faces problems everyday. Some are personal
8
some are official. In their case he or she remains worried. Such worries must be removed to
make him or her more productive and happy.
h) Labour Relations: Healthy Industrial and Labour relations are very important for enhancing
peace and productivity in an organization. This is one of the areas of HRM.
i) Personnel Research and Information System: Knowledge on behavioral science and

industrial psychology throws better insight into the workers expectations, aspirations and
behaviour. Advancement of technology of product and production methods have created
working environment which are much different from the past. Globalization of economy has
increased competition many fold. Science of ergonomics gives better ideas of doing a work
more conveniently by an employee. Thus, continuous research in HR areas is an unavoidable
requirement. It must also take special care for improving exchange of information through
effective communication systems on a continuous basis especially on moral and motivation.
HRM is a broad concept; personnel management (PM) and Human resource development
(HRD) are a part of HRM.
1.5 ELEMENTS AND EMERGENCE OF HUMAN RESOURCE MANAGEMENT

An effective human resource management requires many more elements of the business,
including corporate culture, health and safety management. By understanding these elements of
an HR management system, entrepreneurs and managers can design their business processes
effectively.
Organizational Culture
Corporate culture is the combination of values, work rules, corporate vision, traditions
and beliefs that a company has adopted over the years. The personnel management system plays
an important role in the organizational culture of a company. Establishing company policies,
procedures and standards allow employees to understand and learn acceptable behavior at work.
For example, a policy may stipulate that punctuality is important within the organization, which
promotes the improvement of employees’ time management skills, or the HR team may adopt a
more flexible time management policy that values employees’ freedom to manage their own
schedules also called “flexible hours”. Corporate culture, therefore, influences the way people
work and collaborate with each other and with customers.
9
Change Planning
The business world is changing rapidly. Technology is constantly evolving and updating,
people are coming and going, and the company’s finances vary from time to time. It is the
responsibility of the HR team to help stabilize the company for a change, and this cannot be
ignored. Change planning means helping employees understand their roles while taking into
account the overall picture of the company. It is about building bridges between departments and
leaders and getting people to talk about the circumstances of the situation. HR uses this
information and develops a disaster management plan to change the workflow and reassure
employees in the event of a disaster or alarming change.
Training and Development
Almost all employees, including those who are highly skilled, need training at some point
because each organization does things differently from the others. Policies and procedures must
be communicated firmly to all employees as part of their integration process all on the same
page. The human resources management system is also responsible for the ongoing development
of employees. This training makes it possible to update the skills of the employees and to bring
to the company original and modern ideas.
Health and Safety
The human resources management software plays a key role in ensuring health and safety
at work. This can be done through policies and procedures, but Human Resources can go one
step further to ensure that employees understand the risks associated with certain activities. For
example, if there are heavy machines in the office, Human Resources can put up warning signs
and signs to show what to do in an emergency. This minimizes the possibility of an accident and
helps avoid subsequent legal action against the company.
Employee Recruitment and Retention
While recruitment and retention may seem self-evident for HRMS management
systems, it is the central point of contact for all HR policies and systems. Recruiting qualified
employees, retaining them in the company, training them adequately to succeed in their work and
encouraging them to continue their education, qualifications, benefits, and compensation are all
success factors for the company and should always be taken into account by HR managers.
10
It is important to develop and implement the right human resource management system for your
company. While it is possible to perform these functions manually, an automated system ensures
that HR managers have sufficient time to develop and maintain the data that enters these
systems. Remember that a human resources management system is not “universal”, every
company is different, so find the right system that suits you best.
Emergence of HRM
HRM evolved in response to the significantly increasing competitive pressures that

American companies began to face in the late 1970s due to factors such as globalization,
deregulation and rapid technological change. This pressure has led companies to be increasingly
reluctant to participate in strategic planning a process that anticipates future changes in
environmental conditions (type and level of market) and adapts the company’s various
components to effectiveness.
Human Resource Management (HRM), also known as Human Resource Management,

encompasses all the activities of a company to ensure the effective use of employees to achieve
individual, collective and organizational goals.
1.6 COMPARISON OF HUMAN RESURCE MANAGEMENT WITH PERSONNEL

MANAGEMENT
The following are the major differences between Personnel Management and Human
Resource Management:
BASIS FOR HUMAN RESOURCE

PERSONNEL MANAGEMENT
COMPARISON MANAGEMENT
Meaning The aspect of management that is The branch of management that focuses
concerned with the work force and on the most effective use of the
their relationship with the entity is manpower of an entity, to achieve the
known as Personnel Management. organizational goals is known as Human
Resource Management.
Approach Traditional Modern
11
Treatment of Machines or Tools Asset
manpower
Type of function Routine function Strategic function
Basis of Pay Job Evaluation Performance Evaluation
Management Role Transactional Transformational
Communication Indirect Direct
Labor Collective Bargaining Contracts Individual Contracts

Management
Initiatives Piecemeal Integrated
Management Procedure Business needs

Actions
Decision Making Slow Fast
Job Design Division of Labor Groups/Teams
Focus Primarily on mundane activities Treat manpower or the organization as

like employee hiring, remunerating, valued assets, to be valued, used and
training and harmony preserved.
1.7 PERSPECTIVES OF HUMAN RESOURCE MANAGEMENT

Among the different perspectives of the human resource management, the following four
perspectives are most popular. They are explained below:
1. Normative Perspective of Human Resource Management: This approach deals with HRM
from two basic perspectives “hard HRM” and “soft HRM”. “Hard HRM” embraces all those
elements in employment relations laying emphasis on employee's compliance, quantitative
output, managers, task and the development of the organization. "Soft HRM” will tend to
12
favour flexibility, negotiation, performance, quality, recognition of environments and rights in
employment relations. It is more strategic and long term.
2. Critical Perspective of Human Resource Management: The critical perspective of HRM is

an outcome of normative perception. It proposes that organizations maintain their "soft HRM"
approach only to show in their policies but in reality they practice "hard HRM" to extend
management control. They pretend to be concerned for workers and exploit them through
work intensification and downsizing. Thus Critical Perspective proposes that HRM has only
changed organizational rhetoric and reality has not changed since the introduction of
Personnel. However it also argues that HRM uses a unitary, soft HRM rhetoric to obscure
hard reality characterized by increased management control and diminished job security for
employees. The first proposition describes HRM as powerless and the second as powerful.
3. Behavioural Perspective of Human Resource Management: Behavioural perspective of

HRM believes that it is vital for an organisation to control the behaviour of its employees to
bring the desired results from them. Focus is on the identification of desired behaviour,
ensuring availability of opportunities and environment for desired behaviour, developing
employees' skills to bring desired behaviour, and motivating employees to behave as desired.
Different employee behaviours needed for different organisations. Organisations' policies and
practices help in bringing desired employee behaviour and that increases its effectiveness.
4. Strategic Perspective of Human Resource Management: Strategic perspective of HRM

believes that the human resources are valuable in improving an organisation's efficiency or
effectiveness. It provides a strategic framework to support long term business goals and
objectives. The focus is on longer term people issues and macro concerns about structure,
quality, culture, values, commitment and matching resources to future need. It involves
development of consistent practices, programs, and policies to facilitate achievement of
strategic objectives.
1.8 HUMAN RESOURCE MANAGEMENT MODELS

Human resource management models are the human resources management features that
provide a framework for the analysis of the management system. They make it easy to establish
variables and relationships upon which the effectiveness and significance of key HR practices
13
are based. There are several HRM models proposed by different scholars and experts to describe
the HR management practice.
The four HRM models are: (i) The Fombrun, (ii) The Harvard, (iii) The Guest, and (iv) The
Warwick.
1. THE FOMBRUN MODEL
Being the first model (dates back to 1984), this emphasizes just four functions and their
interrelatedness. The four functions are selection, appraisal, development, and rewards. These
four constituent components of human resource management and are expected to contribute to
organizational effectiveness. The Fombrun model is incomplete as it focuses on only four
functions of HRM and ignores all environmental and contingency factors that impact HR
functions.
Fig 1.3 The Forbrun Model
2. HARVARD MODEL
The Harvard model claims to be comprehensive in as much as it seeks to comprise six

critical components of HRM. The dimensions included in the model are stakeholders, interests,
situational factors, HRM policy choices, HR outcomes, long-term consequences, and a feedback
loop through. The outputs flow directly into the organization and the stakeholders.
14
Fig 1.4 The Harvard HRM model
According to Harvard model of HRM, there are basically two characteristic features which
includes
 Line managers accept more responsibility for ensuring the alignment of competitive
strategy and personnel policy.
 Personal has the mission of setting policies that govern how personal activities are
developed and
 Personal has the mission of setting policies that govern how personal activities are
developed and implemented in ways that make them more mutually reinforcing.
3. THE GUEST MODEL
This model was developed by David Guest in 1997 and claims to be much superior to
other models. The details will justify the claim. This model claims that the HR manager has
specific strategies to begin with, which demand certain practices and when executed, will result
in outcomes. These outcomes include behavioral, performance-related, and financial rewards.
The model emphasizes the logical sequence of six components: HR strategy, HR practices, HR
outcomes, behavioral outcomes, performance results, and financial consequences.
15
Fig 1.5 The Guest Model
4. THE WARWICK MODEL
This model was developed by two researchers, Hendry and Pettigrew of the University
of Warwick (hence the name Warwick model). Like other human resource management models,
the Warwick proposition centers around five elements:
16
 Outer Context (macro-environmental forces)
 Inner Context (firm-specific or micro environmental forces)
 Business Strategy Content
 HRM Context
 HRM Content
The strength of the model is that it identifies and classifies important environmental
influences on HRM. It maps the connection between the external and environmental factors and
explores how human resource management adapts to changes in the context. Obviously, those
organizations achieving an alignment between the external and internal contexts will achieve
performance and growth.
Fig 1.6 The Warwick Model
17
1.9 CHECK YOUR PROGRESS
Fill in the blanks with suitable answers:
1. American Society for Training and Development (ASTD) conducted fairly an exhaustive
study in this field and identified which of the below activities of HRM______.
a. Human Resource Planning
b. Design of the Organization and Job
c. Selection and Staffing
d. All of the Above
2. Warwick model was developed by______.
a. Hendry and Pettigrew
b. Hendry
c. Pettigrew
d. Only A
3. Harvard model claims to be comprehensive in as much as it seeks to comprise ______
number critical components of HRM.
a. 8
b. 5
c. 4
d. 6
4. The branch of management, which focuses on the best possible use of the enterprise’s man
power is known as______.
a. Human Resource Management
b. Strategic Management
c. Personnel Management
d. None of the Above
18
5. HRM is a multidisciplinary organizational function of ______.
a. Management,
b. Psychology,
c. Sociology and Economics
d. All of the Above
Answer to Check Your Progress
1. d
2. a
3. d
4. a
5. d
1.10 SUMMARY
So far, we have discussed about the importance of human resource management, its
scope, perspectives and models. It is critical that today’s organizations align their human
resources to better meet strategic objectives. A failure to do so results in wasted time, energy,
and resources. Organizations are more likely to achieve this alignment with their corporate
objectives when they review their recruitment and selection processes for fit, communicate the
mission and vision statements, use joint goal setting, design an appropriate reward system,
empower the workforce, promote and develop from within, and use teams to achieve synergy.
Human Resource Management is the management function that helps the managers to plan,
recruit, select, train, develop, remunerate and maintain members for an organization. HRM has
four objectives of societal, organizational, functional and personal development. An organization
must have set policies; definite procedures and well defined principles relating to its personnel
and these contribute to the effectiveness, continuity and stability of the organization.
19
1.11 KEYWORDS
Human Resource Management : It is the process of recruiting, selecting, inducting
employees, providing orientation, imparting
training and development, appraising the
performance of employees,
Human Resource Planning : HR Planning processes of finding right types of

persons at the right time at the right place.
Corporate Culture : It is the combination of values, work rules,

corporate vision, traditions and beliefs that a
company has adopted over the years.
Personnel Management : The aspect of management that is concerned with

the work force and their relationship with the entity.
HRM Models : These models are the human resources management

features that provide a framework for the analysis of
the management system.
1.12 QUESTIONS FOR SELF-STUDY

1. Define HRM? What are its functions and objectives?
2. Elaborate about the nature of HRM and its relevance in present scenario.
3. Explain the role of HR manager in HRM.
4. Elucidate the HRM Models.
5. Distinguish between Personnel Management and Human Resource Management.
1.13 REFERENCES
1. Aswathappa. K. - Human Resource and Personnel Management - Tata McGraw-Hill
Publishing Company Ltd. - New Delhi – 5th Edition – 2008.
2. Beardwell J and Claydon T. - Human Resource Management: A Contemporary Approach -
Pearson Education Limited, England – Fifth Edition – 2007.
3. Bach, Stephen - Managing Human Resources: Personnel Management in Transition -
Blakenell Publishing – 2005.
20
4. Biswajeet Pattanayak - Human Resource Management, Prentice Hall of India Pvt. Ltd. -
New Delhi – 2001.
5. Michael Armstrong - A Handbook of Human Resource Management Practice - Kogan Page
Limited - 120 Pentonvelle Road, London – 7th Edition – 1999.
6. Lloyed L. Byers and Leslie W. Rue - Human Resource Management - The McGraw-Hill
Companies, USA -5th Edition – 1997.
21
UNIT-2 LINKING CORPORATE STRATEGIES AND POLICIES WITH
HRM
Structure:
2.0 Objectives
2.1 Introduction
2.2 Nature of Relationship between Strategic Planning and Human Resource

Management
2.3 Strategic Human Resource Management
2.4 HR Role in Formulating Strategy
2.5 HR Role in Executing Strategy
2.7 Summary
2.8 Keywords
2.10 References
22
2.0 OBJECTIVES
 Give the meaning of the concept.

 Explain the relationship between strategic planning and HRM.
 Describe perspectives strategic human resources.
 Provide an overview of HR role in formulating strategy.
 Elucidate HR role in executing strategy.
2.1 INTRODUCTION
In this unit, we will discuss the relationship between corporate strategies and its polices
with human Resource Management. The organization invites its HR director to be part of the
senior management group. The organization has HR policies and strategies founded on the
principle of fairness. This means fair rules, procedures and decisions that are applied fairly in
each individual staff member’s case. Interpersonal communication is characterized by honesty,
respect, dignity and politeness. The organization develops implements and evaluates HR
policies and strategies that are intended to create a positive work environment. Leadership
underpinned by effective HR policies and strategies is a driving force in creating a positive
work environment in the organization. The organization promotes the importance of HR
policies and strategies, particularly those relating to work relationships and acceptance of
diversity, to all levels of the organization. The organization regularly monitors and reviews
critical HR performance indicators including the quality of work relationships, staff wellbeing,
organizational justice, openness to diversity and emotional climate. The organization
undertakes research to evaluate, monitor and develop staff.
The Manager’s Role in Human Resource Policies and Strategies
In the ideal situation the Managers implement fair HR policies and strategies with the
support of HR specialists. Managers use the performance management system to develop and
evaluate their team’s ability to form positive work relationships. Managers use training as a
means of cultivating, motivating and retaining quality staff and promoting positive work
relationships, acceptance of diversity and fair practices. Managers interact with their staff
fairly. They are polite, honest and treat staff with respect and dignity.
23
The Individual’s Role in Human Resource Policies and Strategies
In the ideal situation Individuals negotiate flexible work arrangements with their
manager to balance their work and private commitments. They believe processes and decisions
are fair. Individuals conform to the HR policies and procedures that cover interactions with
colleagues and clients, such as the code of conduct. Individuals have trust and confidence in
their colleagues, managers and the organization. They feel included in the team, treated the
same as others, and able to raise their concerns safely. All interactions with colleagues and
managers are respectful. Individuals feel that rewards for good performance are meaningful.
2.2 NATURE OF RELATIONSHIP BETWEEN STRATEGIC PLANNING AND

Strategic planning is a step-by-step process of determining how to pursue the
organization's long-term goals with the resources expected to be available. It is a systematic
approach of analyzing the opportunities and threats in the environment to enhance the
efficiency and organizational productivity. It is the name given to the sense making activity
which includes the function of goal setting and strategy formulation.
On the other hand, Human resource planning is the estimation of future demand for and
supply of human resources for the accomplishment of stated organizational goals. HR planning
consists all the activities of human resource management such as forecasting of HR, collecting
information, policy making, recruitment, training and development, motivation and
development of human resource in the organization. These activities help prepare and HR plan
whereby right number and kind of people are being forecasted. Strategic planning and human
resources planning basically have a symbiotic relationship, in that each function is dependent
on the other. Here are some examples of how the relationship works in practice:
Impact Assessments
When leaders start developing a strategic plan, they will liaise with different
department heads to see how the proposed business strategies might affect them. The human
resources planning team will figure out the financial impact of the initiative based on the
recruiting, training and retention strategies that may be necessary to support the plan. If the
initiative involves downsizing, for example, then human resources managers must look at the
various options for decreasing the labor supply through dismissals, retirements, transfers out of
24
the department, sabbaticals and voluntary quitting. Invariably, there will be a time cost
associated with a new initiative. It is up to HR to feedback how long it will take to hire or
upskill permanent staff members and whether the company can work with contractors in the
interim. This helps senior leaders develop a timescale for the new initiative.
Executing the Plan
As soon as a strategic initiative receives the green light, the human resources team must
ready the company's employees for the changes that are about to ensue. This might include
changing people's job descriptions, moving people between job units, policy making,
motivation strategies, developing training programs, and pinpointing and eliminating labor
shortages through recruitment and outsourcing.
Feedback and Monitoring
Once the strategic initiative is implemented, HR will monitor the changes that are being
made to the workforce to establish whether the policies are sufficient, affordable and
sustainable. Because the strategic plan is a long-term plan, it is crucial for the business to keep
monitoring its talent pipeline, and keep updating its demand forecast, to ensure that the
business always has the right people to meet its objectives.
Because strategic planning and HR planning are interdependent, it really doesn't matter
which plan the leadership team begins to develop first. In fact, they probably should be
developed in conjunction with each other. That's because the strategic plan cannot be finalized
until there are supporting talent strategies in place from human resources, and the human
resources plan cannot be finalized until the long-term goals of the company are clear. The most
effective organizations are those that achieve alignment between the technology, finance and
human resources of the business and the formulation and implementation stages of the strategic
plan. It should be an integrative activity, rather than a leader-follower process.
Follower Relationship of HR Plan
This relationship depicts that an HR plan is an integral part of the overall corporate plan
of the organization. HR plan is based upon the overall objectives and strategies of the
company. It is prepared by following the guidelines by the overall corporate plan of the
organization. Hence, it is tailored to meet the needs of the overall mission, vision and objective
25
of the company. Moreover, this relationship explains that HR plan is derived from the overall
corporate plan of the organization.
Partner Relationship of HR Plan
When the HR plan and strategic plan are formulated simultaneously, it is supposed that
they have partner relationship. Under it, it is assumed that HR and HR manager are considered
as a valuable resource in the organization. And it ensures that the employees are fully
participated in strategy implementation. Moreover, implications of HR are considered in the
formulation stage of strategic plan. The primary purpose of this relationship is to link
HR activities with strategic plan in order to achieve organizational goals. It also ensures
that Human Resource Management (HRM) activities are considered before formulating the
corporate plan.
2.3 STRATEGIC HUMAN RESOURCE MANAGEMENT

Strategic human resource management is important for every company. Company
doesn’t need to employ a specific number of employees before start to consider implementing
strategic human resource management principles. In fact, if we have a plan to grow business,
we should be thinking about linking this growth to strategic human resource management.
Some companies outsource this part of their business because they don’t have an in-house HR
function. Strategic human resource services provide full-service HR functions including
developing a human resource management strategy. Strategic HR services help to take away
the burden of both operational and strategic management to facilitate the growth of your
business. Strategic human resource management is the connection between a company’s
human resources and its strategies, objectives, and goals. The aim of strategic human resource
management is to: (1) Advance flexibility innovation, and competitive advantage, (2) Develop
a fit for purpose organizational culture and (3) Improve business performance.
In order for strategic human resource management to be effective, human

resources (HR) must play a vital role as a strategic partner when company policies are created
and implemented. Strategic HR can be demonstrated throughout different activities, such as
hiring, training and rewarding employees.
26
Strategic HR involves looking at ways that human resources can make a direct impact on a
company’s growth. HR personnel need to adopt a strategic approach to developing and
retaining employees to meet the needs of the company’s long-term plans.
HR issues can be a difficult hurdle to cross for many companies, there are all kinds of
different components that can confuse business owners and cause them to make ineffective
decisions that slow down the operations for their employees as well as their business. HR
departments that practice strategic human resource management do not work independently
within a silo; they interact with other departments within an organization in order to
understand their goals and then create strategies that align with those objectives, as well as
those of the organization. As a result, the goals of a human resource department reflect and
support the goals of the rest of the organization. Strategic HRM is seen as a partner in
organizational success, as opposed to a necessity for legal compliance or compensation.
Strategic HRM utilizes the talent and opportunity within the human resources department to
make other departments stronger and more effective.
2.4 HR ROLE IN FORMULATING STRATEGY

Corporate strategy formulation is a very important process and requires serious and
careful engagement. Any mistake in the first phase of strategic management (formulation) will
result in problems in the next stages such as implementation and control.
Today, organizations of different sizes, small and medium, and large, in the process of strategy
formulation need the involvement of qualified, competent and talented employees that would
influence the creation of a successful strategy.
However, the main problem in designing an unsuccessful strategy lies in the fact that
most companies in the process of strategy development involve high level hierarchical levels
and consultants inside or outside the company, leaving aside most of the human resources that
contribute to the success of the company. Various literatures has emphasized that strategy
formulation is an essential step in turning a company's vision and objectives into reality.
Therefore, the visionary leadership of companies should be oriented towards giving more
importance to human resources during the process of strategy formulation and involve any
team member who can contribute to the realization of organizational goals and organizational
vision.
27
The human resources at a higher level in terms of importance and provide conclusions
and recommendations on how organizations today should value these strategic resources and
achieve competitive advantages in the market. The process of strategy formulation analyzes
how human resources are involved in the process and what importance is given to them by the
organization.
2.5 HR ROLE IN EXECUTING STRATEGY

This is an occasional blog on subjects pertaining to leadership, strategy, coaching,
leadership development, and everything in between. The Leading Strategy Execution, we
describe the key roles that HR not only can but must play to ensure successful execution of
business strategy. The execution can only happen if people are informed, aligned, motivated,
committed and accountable for understanding and implementing their work in line with
strategic priorities.
HR often talks about and seeks to be “strategic business partners” which is both true
and necessary if the workforce is to be enabled to deal with change and direct their work
toward strategic business priorities. HR must be an enabler of strategy and a facilitator of
change if strategy is to be achieved. It all starts with HR’s credibility as business people.
HR of a particular company, asked to assist and the CEO in aligning the HR strategy
with the emerging, and transformational, business strategy. This executive had the foresight to
begin the planning and alignment of the HR strategy in anticipation of the emerging business
strategy. The business strategy called for sweeping changes in organization structure, talent
acquisition and management, workforce realignment and leadership capability. Because the
HR executive already had a close working relationship with his CEO, he has always been “at
the table” during discussions about strategy and its many implications for both the marketplace
and the organization.
In short, this HR leader “got it” and impressed during the first hour or so of our initial
meeting, he never once mentioned HR, but instead spoke articulately, even passionately about
the business. When he turned attention to the organization and workforce, he thought and
spoke about how to engage and motivate employees to achieve specific and bold new strategic
goals and objectives.
28
Then he spoke about how he views his role, in metaphor, as a “four legged stool.” To him, it has
the following components:
1. Deeply know and be able to translate business and strategic priorities to the workforce.
2. Be a genuine business partner with managers as well as his HR cadre not just in the C suite,
but line managers and HR staffs in business operations as well.
3. Function as a “pulse-taker” and advocate for employees and a conduit from the workforce to
leadership.
4. Serve as a “strategic architect” operating as the primary designer of the organization
structure, and key driver behind the development of the required leadership competencies
and workforce performance capabilities.
Most remarkable was the fact that he virtually obsessed over how line managers led and
developed employees. He travelled extensively to field facilities to “take the temperature” of the
local organizational culture and to assess leaders. As importantly, he took it upon himself to
serve, and to have HR staff serve, as “evangelists” for the business strategy, helping managers to
translate strategy into their language and functions, new objectives and design of work. In this
regard he performed a key HR role, which we call “keeping the top connected with the shop.”
From these perspectives he was able to collaborate proactively with the CEO and top team in
formulating business strategy, coaching leaders on the imperatives for execution through
alignment and focused work of the employees, and anticipating and managing the significant
changes involved in strategy execution. In our view, this example defines the meaning of HR as
a strategic business partner in strategy execution.

1. ______the process of linking the human resource functions with the strategic objectives of
the organization to improve performance.
a. Human Resource Planning
b. Design of the Organization and Job
c. Strategic Human Resource Management
d. All of the Above
29
2. ______ is operating as the primary designer of the organization structure, and key driver
behind the development of the required leadership
a. Strategic Architect
b. Strategic Business Partner
c. Leadership
d. None of the above
3. ______of companies should be oriented towards giving more importance to human
resources during the process of strategy formulation.
a. Strategic Architect
c. Leadership
d. Visionary Leadership
4. ______ is an essential influential factor that determines the success of a corporate strategy.
a. HRM
c. Leadership
d. Visionary Leadership
5. ______ must be an enabler of strategy and a facilitator of change if strategy is to be
achieved.
a. Corporate Strategy
c. Leadership
d. HR
1. c
2. a
3. d
4. a
5. d
30
2.7 SUMMARY
The relationship between corporate strategies and human resource management (HRM),
which it will first interpret the definitions of those two terms and then describe their
relationships. The relationship between these two theoretical terms will be that, HRM is an
essential influential factor that determines the success of a corporate strategy. Thus, to ensure
this success, the organization needs to manage HRM strategically, which would evoke the
implementation of strategic human resource management (SHRM) as it integrates strategies and
HRM (Azmi, 2011). The organization invites its HR director to be part of the senior
management group. The organization has HR policies and strategies founded on the principle
of fairness. This means fair rules, procedures and decisions that are applied fairly in each
individual staff member’s case. Interpersonal communication is characterized by honesty,
respect, dignity and politeness. The organization develops implements and evaluates HR
policies and strategies that are intended to create a positive work environment.
2.8 KEYWORDS
Strategic Human Resource : It is the process of linking the human resource function
Management with the strategic objective of the organization to improve
performance.
Strategic Planning : It is the art of creating specific business strategies,

implementing them, and evaluating the results
of executing the plan, in regard to a company’s
overall long-term goals or desires.
Strategy Formulation : Converting the inputs from the strategic analysis

stage into a business plan. Specifically, the plan
involves developing a competitive strategy that best reflects
the organization’s strengths and weaknesses and market
realities and is consistent with its mission and values.
Strategic Architect : It is operating as the primary designer of the

organization structure, and key driver behind the
development of the required leadership competencies and
workforce performance capabilities.
31
Partner Relationship : When the HR plan and strategic plan are
of HR Plan formulated simultaneously, it is supposed that they have
partner relationship.

1. Is the HR Manager a valued member of the senior management group?
2. Do the HR policies and strategies contribute to a positive work environment or have
unintended consequences?
3. Does feedback from managers and staffs help the regular development and review of HR
policies and strategies?
4. Are the HR policies and strategies sufficiently flexible to accommodate differing situations
and circumstances?
5. Explain HR role in executing strategy with an example.
2.10 REFERENCES
New Delhi – 2001.
32
UNIT-3 ORGANISATION OF HUMAN RESOURCE MANAGEMENT
DEPARTMENT
Structure:
3.0 Objectives
3.1 Introduction
3.2 Line and Staff aspects of Human Resource Management
3.3 Organization of the Human Resource Management
3.4 Ways of Organizing the Human Resource Function
3.5 Roles of Personnel in Human Resource Department
3.6 Strategic Future of Human Resource Department
3.8 Summary
3.9 Keywords
3.11 References
33
3.0 OBJECTIVES
 Explain organization of the human resource department.

 Provide an overview of line and staff of HRM.
 Recognize ways of organizing the HR function.
 Describe the role of personnel in HR department.
 Elucidate the strategic future of HR department.
3.1 INTRODUCTION
The concept of organisation in human resources refers to the way the department is
structured and how tasks are distributed among its members. This is a key point, as the
management of staff and the decisions taken in this department have a huge impact on the
company’s operation. Organization charts are often used to show the department’s structure and
the role of each human resources professional. It is an extremely useful way of visually
portraying the organization, what to expect from each team member and who they report to.
Both the functions and power of the office of human resources manager have expanded
as small businesses continue to employ human resources methods as a component of their overall
business strategies. The director of personnel or executive in charge of a company frequently
attends the administrative management meetings where the company establishes its strategies
and procedures. Inside the company, human resources directors hold power over both the
revenue-producing and revenue-consuming departments, as well as having assorted implied
authorities.
The main function of HR department is to oversee department functions and manage
employees by planning, implementing, and evaluating human resources policies, principles, and
programs. Basically, it involves functional activities including hiring qualified employees,
establishing compensation structure, training staffs, addressing employee relations matters, and
maintaining workplace safety.
Therefore, in this unit we shall discuss the concept of organization of human resource
management department and related concepts.
34
3.2 LINE AND STAFF ASPECTS OF HUMAN RESOURCE MANAGEMENT
Authority is the right to make decisions, to direct the work of others, and to give orders.
Authority refers to the rights inherent in a managerial position to give orders and expect the
orders to be obeyed. Authority was a major tenet of the early management writers, the glue that
held the organization together. It was to be delegated downward to lower-level managers. Each
management position has specific inherent rights that incumbents acquire from the position's
rank or title. Authority is related to one's position and ignores personal characteristics. When a
position of authority is vacated, the authority remains with the position. The early management
writers distinguished between two forms of authority. However, let us discuss the important
three forms of authority under human resource management.
a. Line Authority
b. Staff Authority
c. Functional Authority
Let’s have brief view about the different types of authorities.
a. Line Authority in HRM
According to Accounting Tools, line authority proceeds from top to bottom through the
chain of command. Line and staff relationship authority grants a manager or executive a definite
level of power concerning the performance of a specific business task. Human resources
managers have line authority by virtue of their power over the HR department. They consult with
human resources staffers on hiring decisions and dictate policies on acquiring new talent,
creating benefits packages and crafting termination procedures.
Line and staff aspects of HRM dictates when a business is seeking a pool of qualified
candidates, the human resources manager is likely to hand a team member a stack of
applications, along with the minimum qualifications for the job. This team member will them
comb through the applications and pull the most promising ones to follow up with.
Line authority entitles a manager to direct the work of an employee. It is the employer-
employee authority relationship that extends from top to bottom. A line manager directs the work
of employees and makes certain decisions without consulting anyone. Sometimes the term line is
35
used to differentiate line managers from staff managers. Line emphasizes managers whose
organizational function contributes directly to the achievement of organizational objectives.
b. Staff Authority in HRM
Staff managers have staff authority. A manager's function is classified as line or staff
based on the organization's objectives. As organizations get larger and more complex, line
managers find that they do not have the time, expertise, or resources to get their jobs done
effectively. They create staff authority functions to support, assist, advice, and generally reduce
some of the informational burdens they have.
Reference for Business shares that staff authority gives some managers the power to offer
advice or suggestions to those managers with line authority, which includes the right to propose
new ideas in an attempt to make improvements in line operations. While managers with staff
authority do not have the same direct power over subordinates as those with line authority, they
can provide useful propositions. Human resources managers have staff authority in nearly every
department, because they provide advice and proposals on hiring levels, budgets and
qualifications for new employees.
If the marketing department is looking to hire a social media specialist, the human
resources manager will know the industry standards, as well as the budget for hiring that
position. Using this knowledge, they will help guide the hiring manager as they choose the best
candidate for the job.
c. Functional Authority
Functional authority is usually a restricted kind of line authority. It gives a staff person a
type of limited line authority over a given function, such as safety or quality, regardless of where
that function is found in the organization.
For example, a staff safety specialist may have functional authority to insist that line
managers follow standard safety procedures in their departments. The staff safety specialist may
have top management's blessing to dictate to lower-level line managers exactly what they must
and must not do concerning any matter that falls within the realm of safety. A human resources
specialist may say to a line supervisor that the latter cannot fire a certain employee.
36
A cost accountant may notify line departments that certain cost information must be furnished
weekly.
3.3 ORGANIZATION OF THE HUMAN RESOURCES DEPARTMENT

The HR organization and HR departments are evolving from administrative departments
that lead the transactional HR activities of record-keeping, payroll and employee benefits
administration into teams led by C-level executives and directors who report to C-suite
called Human Resources Management Policies and Practices. The process of creating
organization structure is known as organizing. The modern HR Department is organized in a
flexible way with very few management layers in order to facilitate free flow of communication.
The HR professionals play right roles that in order to have an optimal HR operating
model. The HR structure should match business strategy and structure. In many cases where a
diversified business strategy has a divisional, networked, matrix, hybrid, or allied structure, we
have proposed an HR operating model with service centers focused on technology-enabled
transaction capability, centers of expertise with deep specialized HR knowledge and insight,
embedded HR generalists who adapt HR services to deliver business needs, and corporate HR
leaders who set overall policy. With good intent, many keep tweaking these HR roles to help the
HR department and HR professionals deliver increased value to all stakeholders.
The upgradation to the HR operating model will depend more on improved relationships
within and outside the HR department rather than redefined roles based on organization charts.
Imagine a family who is not getting along. They try to get along better by buying new
appliances, chairs, and couches. Most of us recognize that new furnishings won’t help a family
get along better. In HR, new HR tools and technologies are unlikely to improve the operations
within the HR department. The dysfunctional family then tries remodeling their house or buying
a new house with more and larger rooms. Again, most know that new floor plans won’t
necessarily help a family get along better. Likewise, merely changing boxes on organization
charts won’t help HR professionals work better together. For HR operating models to deliver
more value (once the basic roles are satisfied, such as matching HR structure to business strategy
and structure), may be more focused on relationships than roles.
37
3.4 WAYS OF ORGANIZING THE HUMAN RESOURCE FUNCTION
The organization and staffing of the HR function clearly depends on the size of the
business, the extent to which operations are decentralized, the type of work carried out, the kind
of people employed and the role assigned to the HR function.
The general functions of human resource have been designed as follows:
Terminationa
and transition
Legal Issues
and personal Recruitment
policies
HR Functions
Compensatio
Documentation
n and benefits
Training,
Development
and Career
Management
Fig. 3.1: HR Functions
Human Resource Department is an integral part of any organization. Also, the Human
Resource Manager (HRM) is a member of the management. Four basic functions of Human
Resource Management are Planning, Directing, Controlling and Organizing are discussed below:
Functions of Human Resource Management
 Planning
 Organizing
 Directing
 Controlling
38
Planning
A manager must plan ahead in order to get things done by his subordinates. It is also important to
plan in order to give the organization its goals. Also, planning helps establish the best procedures
to reach the goals. Further, some effective managers devote a substantial part of their time to
planning. With respect to the human resource department, planning involves determining the
personnel programs that can contribute to achieving the organization’s goals. These programs
include anticipating the hiring needs of the organization, planning job requirements, descriptions,
and determining the sources of recruitment.
Organizing
After the human resource manager establishes the objectives and develops plans and programs to
achieve them, he needs to design and develop the organization’s structure to carry out the
different operations. Developing the organization’s structure includes:
 Grouping of personnel activity into functions or positions
 Assigning different groups of activities to different individuals
 Delegating authority according to the tasks assigned and responsibilities involved
 Coordinating activities of different employees
Directing
The HR Manager can create plans, but implementing the plans smoothly depends on how
motivated the people are. The directing functions of HRM involve encouraging people to work
willingly and efficiently to achieve the goals of the organization. In simpler words, the directing
functions of HRM entail guiding and motivating people to accomplish the personnel programs.
The HRM can motivate the employees through career planning and salary administration by
boosting the employee’s morale, developing relationships, providing safety requirements, and
looking after the welfare of employees. In order to do this effectively, the HRM must identify the
needs of the employees and the means and methods to satisfy them. Motivation is a continuous
process as employees have new needs and expectations when the old ones are satisfied.
39
Controlling
Controlling is all about regulating activities in accordance with the plans formulated based on the
objectives of the organization. This is the fourth function of the HRM and completes the cycle.
In this, the manager observes and subsequently compares the results with the set standards.
Further, he corrects any deviations that might occur. Controlling is one of the important
functions of HRM as it helps him evaluate and control the performance of the department with
respect to different operative functions. It also involves appraisals, audit, statistics, etc.
3.5 ROLES OF PERSONNEL IN HUMAN RESOURCE DEPARTMENT

An effective human resources department can help provide organizational structure and
the ability to meet business needs by managing your business’s most valuable asset – your
employees. Several disciplines make up the HR department, but HR practitioners might perform
more than one of the six main duties: talent management, compensation and benefits, training
and development, compliance and workplace safety.
Fig. 3.2: Organisation of HR Department
40
1. Talent Management
The talent management team in the HR department covers a lot of ground. What used to
be distinct areas of the department have been rolled up under one umbrella. The talent
management team is responsible for recruiting, hiring, supporting and retaining employees.
Recruiters are the primary players in developing any company’s workforce. They’re responsible
for posting positions on job boards, sourcing candidates through job fairs and social media,
serving as the first-line contacts for screening candidates, conducting the initial interviews, and
coordinating with the hiring manager responsible for making the final selection. A recruiter’s
success is typically determined by two key metrics: the number of positions they fill each year
and the time it takes to get those positions filled.
Employee relations or support is the area of the talent management team that is concerned
with strengthening the employer-employee relationship. HR practitioners in this role study job
satisfaction, employee engagement, organizational culture and resolving workplace conflict. If
the company has a unionized workforce, this team will also work on labor relations, including
negotiating collective bargaining agreements, creating managerial responses to union organizing
campaigns, and interpreting labor union contract questions.
Talent management also has HR managers who focus on workforce planning and
management. This area includes succession planning and retention efforts across the business,
from the C-suite on down. When an employee resigns, retires, is fired or laid off, gets sick, or
dies, the workforce planning team kicks into action.
2. Compensation and Benefits
In smaller companies the compensation and benefits roles can often be handled by a
single HR professional, but companies with a larger workforce will typically split up the duties.
HR functions in compensation include evaluating the pay practices of competitors and
establishing the compensation structure. The compensation department is also responsible for
creating job descriptions in tandem with department managers, as well as succession planning.
On the benefits side, HR practitioners can be responsible for negotiating group health
coverage rates with insurance carriers or coordinating with the company’s administrator. Payroll
is also part of the compensation and benefits area of HR, but many companies choose to
41
outsource this function to a bookkeeper or payroll service provider. Those that don’t generally
put payroll practitioners in a separate team that works on the tactical process of generating
payroll, with the compensation team focusing mainly on planning and strategy.
3. Training and Development
Every company wants to see its employees thrive, which means providing them with all
of the tools they need to succeed. These tools aren’t necessarily physical like laptops, software or
tools for a particular trade; they can include new employee orientation, leadership
training, personal and professional development, and managerial training. Training and
development (sometimes called learning and development) is an integral component of the HR
team. Depending on the type of employee role played at the company, the training team might be
responsible for building out instructional programs that have a direct impact on the success of the
business. Today, many colleges and universities offer degrees in training and development; an
instructional design degree would also be helpful in this role.
4. HR Compliance
Compliance is a critical component of any HR department. Employment and labor laws

can be highly complex, and having a team devoted to monitoring this ever-changing landscape is
essential to keeping companies out of trouble with federal, state and local governments’ laws.
When a business is out of compliance it can result in applicants or employees filing claims based
on discriminatory hiring and employment practices or hazardous working conditions. The
compliance team must fully understand employment laws such as the Fair Labor Standards Act
(FLSA), the Family Medical Leave Act (FMLA), Title VII of the Civil Rights Act of 1964, the
National Labor Relations Act of 1935, and dozens of other rules and regulations.
5. Workplace Safety
Of course, every company wants to provide a safe place to work for its employees, and the
Occupational Safety and Health Act of 1970 (OSHA) actually mandates that employers provide
a safe working environment for its workers. A large focus area for HR is developing and
supporting safety training and maintaining federally mandated logs if injuries or fatalities happen
at work. In addition, this department often works hand-in-hand with benefits specialists to
manage the company’s Workers Compensation filings.
42
3.6 STRATEGIC FUTURE OF HUMAN RESOURCE DEPARTMENT
Since one of the first HR departments was established in 1901, HR has progressed
significantly. The idea of a human resources department to oversee personnel was not widely
accepted until after World War II. A slew of work-related laws, including the Equal Pay Act, the
Civil Rights Act, and the Family and Medical Leave Act, made the presence of HR specialists
even more vital in the later part of the twentieth century. The HR professional's stock is growing
these days, with some practitioners being invited to join the C-suite rather than just visit it. Many
companies are replacing the term "HR manager" with terms like "chief happiness officer,"
"director of talent acquisition strategy," and even "head of positive people." The future of human
capital management is anticipated to mirror the field's rising emphasis on technology and
analytics.
Technology will aid HR in adapting to a shifting workforce that is accustomed to

ordering anything from a date to groceries online. HR teams will need to make more information
and services available to employees 24 hours a day, seven days a week, freeing up time to focus
on business strategy and employee development paths.
Even if your job title or your responsibilities have yet to change, it's imperative to start
adapting to the new reality now. You can begin by enhancing your skills in seven critical areas
that analysts say are key to future success in the profession and likely to be widely practiced by
2025. They include business strategy, analytics and, of course, people. By 2025, we can expect
HR professionals to take on the role of championship coaches, guiding businesses through
expected disruptions and becoming an essential part of HR strategy and planning. Also, HR
departments would become more agile, achieving faster decision-making through
improved collaboration.
With such big changes to make in less than five years, you need to revamp your HR
function right away before it’s too late! We need to have the key aspects covered of the 2025
HR operations model. It will provide a strong vision of the future workforce to help you revamp
your HR functions as per the latest technology trends. Key components of the 2025 HR model to
plan a future-proof HR strategy, it’s essential to have a good understanding of the key
components that will define the HR model of 2025.
43
HR Business Partners
HR business partners are senior HR professionals with experience in creating and

implementing HR strategies to achieve specific business results. These results include but are not
limited to:
 Devising recruitment policies that improve candidate experience
 Developing hassle-free employee onboarding programs
 Remodeling performance management practices
 Revamping talent management practices
 Creating strategies that increase employee retention
HR business partners are usually aligned with the various departments within an
organization, with every department having a dedicated HR partner. The HR partner works with
the department head to guide and improve HR policies and practices (recruitment, retention and
others) for that specific department.
Centers of Excellence (CoEs)
HR CoEs can be defined as virtual knowledge centers comprising teams of HR experts

who provide the best practices around HR processes and assist the leadership team in identifying
and addressing gaps in the HR strategy.
Unlike HR partners who are aligned with departments, CoEs are aligned with HR
functions, such as recruitment or talent management. They focus on particular functions to
identify existing gaps and suggest best practices to improve efficiency.

1. HR business partners are senior HR professionals with experience in creating and ______ to
achieve specific business results.
2. Technology will aid HR in adapting to a shifting ______ that is accustomed to ordering

anything from a date to groceries online.
3. FMLA stands for ______.
44
4. A manager's function is classified as ______ based on the organization's objectives.
5. The concept of organisation in human resources refers to the way the department
is ______and how tasks are distributed among its members.
1. Implementing HR strategies
2. Workforce
3. Family Medical Leave Act
4. Line or staff
5. Structured
3.8 SUMMARY
The concept of organisation in human resources refers to the way the department is
structured and how tasks are distributed among its members. This is a key point, as the
management of staff and the decisions taken in this department have a huge impact on the
company’s operation. Since one of the first HR departments was established in 1901, HR has
progressed significantly. The idea of a human resources department to oversee personnel was not
widely accepted until after World War II. A slew of work-related laws, including the Equal Pay
Act, the Civil Rights Act, and the Family and Medical Leave Act, made the presence of HR
specialists even more vital in the later part of the twentieth century. By 2025, we can expect HR
professionals to take on the role of championship coaches, guiding businesses through expected
disruptions and becoming an essential part of HR strategy and planning. Also, HR departments
would become more agile, achieving faster decision-making through improved collaboration.
With such big changes to make in less than five years, you need to revamp your HR
function right away before it’s too late! We need to have the key aspects covered of the 2025
HR operations model. It will provide a strong vision of the future workforce to help you revamp
your HR functions as per the latest technology trends. Key components of the 2025 HR model to
plan a future-proof HR strategy, it’s essential to have a good understanding of the key
components that will define the HR model of 2025.
45
3.9 KEYWORDS
Authority : Authority is the right to make decisions, to direct the work
of others, and to give orders.
Executives : Executives are top-level managers, who report directly to

the corporation’s chief executive officer or the head of a
major division.
Generalists : Generalists are people who perform tasks in a wide variety

of human resource-related areas. The generalist is involved
in several, or all, of the human resource management
functions.
Line Authority : Line authority entitles a manager to direct the work of an

employee.
Specialist : Specialist may be a human resource executive, manager, or

non-manager who typically is concerned with only one of
the functional areas of human resource management.

1. Explain the organization of Human Resource Department.
2. Discuss the strategic future of Human Resource Department.
3. Describe the ways of organizing the various HR Functions.
4. Explain briefly about role of personnel in HR Department.
5. Discuss about Line and Staff aspects of HR Management.
3.11 REFERENCES
46
New Delhi – 2001.
47
UNIT-4 ENVIRONMENTAL CONTEXT OF HUMAN RESOURCE
MANAGEMENT
Structure:
4.0 Objectives
4.1 Introduction
4.2 Meaning of Environment
4.3 Environmental Context of Organizations Function
4.4 Changing Trends and Role of Human Resources
4.5 New Economic Policy
4.6 Structural Reforms
4.8 Summary
4.9 Keywords
4.11 References
48
4.0 OBJECTIVES
 Explain the meaning of environment.

 Explain the environmental context of organizations function.
 Discuss role of HR as per the changing trends.
 Describe the New Economic Policy and structural reforms.
4.1 INTRODUCTION
So far, we have been discussed the important concepts under human resource
management. In this unit let us discuss the environmental concept of human resource
management.
In simple words, environment means it comprises all those forces which have their
bearing on the functioning of various activities including human resource activities. Environment
scanning helps HR manger become proactive to the environment which is characterized by
change and intense competition. Human Resource Environment is a part of social environment
which includes the concept, viewpoints, work culture, attitudes, efficiency, skills, productivity,
nature and behaviour of HR, employees’ demand and supply, motivational aspects,
compensation methods and industrial relation concerning of HR practices.
4.2 MEANING OF ENVIRONMENT

Environment comprises all those forces which have their bearing on the functioning of
various activities, including human resource activities. Environment scanning helps HR manager
to become pro-active to the environment which is characterized by change and intense
competition. There are two types of environment which operates and have bearing on human
resources.
Within HR scenario, the business environment has focused some new aspects and
avenues with some changing values. Presently the people become the most valuable asset of the
industry and there a requirement to get new talented and technological based persons. The shift
from manual process to machinery process, from unskilled employees to the skilled employees,
from manufacturing economy to a service economy, from machine age to the autocratic age have
been accompanied by many transformations. Within the globalized economy, there are several
49
significant environmental trends and changes faced by HR managers and employees that pose
major challenges. Here, there is need to study the HR environment in order to make proper
awareness in HR practices, to raise skills and efficiency, to uplift HR productivity and to
overcome the problems and challenges.
4.3 ENVIRONMENTAL CONTEXT OF ORGANIZATIONS FUNCTION

The organizational environment is the set of forces surrounding an organization. These
forces may hamper or facilitate the organization’s access to resources, which means they can
both offer opportunities and pose threats. Moreover, while these resources are valuable for the
organization, they are also scarce (Riggio, 2018). The forces encompassed by the concept of the
organizational environment include, among others, competition between rivals to retain
customers, fast-paced changed in technology, and an increase in the price of raw materials. All
these factors may somehow erode an organization’s competitive advantage. Consequently, the
forces at play in the environment can influence the organization’s behavior (Truxillo, Bauer &
Erdogan, 2016).
Environment influences organizations indirectly, facilitating or hampering access to

valuable, scarce resources. Environmental factors or the restrictions imposed by the environment
are, to a certain extent, external to the organization. In other words, these factors are outside the
organization’s and its managers' control. The environment does not just pose threats to an
organization; it can also offer tremendous opportunities, such as the chance to exploit potential
market niches in which to sell its products and services. The environment, therefore, includes all
those factors which, while external to the organization, may provide it with opportunities, while
at the same time posing threats and challenges.
Although the idea of an organization’s environment may at first seem fairly simple, it
includes a number of different levels. Many different factors operate at each level, the most
important being sociocultural, economic, and technological variables, as well as raw material
suppliers, competitors, and, finally, the government. In addition to these factors, over recent
decades, the globalized or international nature of the environment has also become increasingly
important. An organization’s activities, and therefore the responses and practices of its managers,
must adapt in order to survive in a globalized environment.
50
All organizations try to control the forces that operate in their environment. They do so to
obtain the resources they need to produce the goods and services they offer their users,
beneficiaries, or customers. Organizational environments have two planes or levels: a general
one and a specific one (also known as the organizational domain).
 The general environment encompasses the entire political-legal, economic and

sociocultural framework in which the organization operates. Today, this environment can
be extremely broad, since technology and globalization have expanded the boundaries
within which organizations operate. Organizations try to adapt to the general environment
through the transactions and exchanges they carry out with it. Their ultimate aim is to
protect and consolidate their domain (or specific environment).
 The specific environment or organizational domain includes the range of goods and
services produced by the organization that is useful for customers and other stakeholders.
Control of the specific environment is achieved providing the organization has the ability
to create value for its customers, employees, and all other stakeholders. The organization
will only retain its key competencies and remain valuable for all stakeholders for as long
as it continues to demonstrate its ability to provide its goods and services in an effective,
efficient manner. However, if it becomes ineffective, or if another organization emerges
which is capable of providing the same services or manufacturing the same products
more efficiently, then the first organization will lose its domain or specific environment,
which will become the domain of the new arrival.
Environment is an important element in the HRM model and therefore, it is necessary

know what the environment is and how it influences HR functions in an organization.
Environment consists of all those factors which have their bearing on the functioning of the HR
department. These forces are divided into external factors and internal factors. External factor
include political and legal, technological, economic and cultural whereas internal factors include
unions, organizational culture and conflicts and professional bodies. Analysis of the environment
is essential for the HR manager and his/her team in order to be proactive to the environment and
not reactive to the environment.
51
Following are the factors affecting human resource environment:
A. EXTERNAL FORCES:
These factors exist outside the organization and the organization has least control over these
factors.
The external forces mainly include:
1. Political and Legal Environment:
The environment includes the impact of the political institutions on the HRM department. In
a democratic set up like India which together constitute the total political environment:
(a) Legislature – It is also called Parliament at the central level and advisory at the state
level. It is basically a law making body. The various labour laws are enacted by this
institution.
(b) Executive – It is also known as the government and it is a law implementing body. It acts
according to the decisions of the legislature.
(c) Judiciary – It plays the role of watchdog and ensures that both legislature and executive
work in the interest of public.
Political environment affect the labour through the labour laws. There are many labour
laws which are related to terms and conditions of employment, work conditions, payment of
wages, industrial disputes, health, safety and welfare of the labour.
Effect of Political Environment on HRM:
All HR activities are affected in one way or other by the political environment. The
following activities are mainly affected by the constitutional provisions:
(a) HR Planning, b) Recruitment, (c) Selection, (d) Placement, (e) Training and development
(f) Employee Relations, (g) Separations
2. Economic Environment:
Economic environment refers to all the economic factors which directly or indirectly affect
the HRM. The following are the components of economic environment:
52
(a) Suppliers:
Under HRM, the suppliers are the agencies or parties who make available the human
resources to the organization.
These agencies are as follows:
(i) Employment Exchanges, (ii) Universities, (iii) Colleges, (iv) Training Institutes,
(v) Casual Labour Contractors, (vi) Consulting firms
The type of employees received by the organization depends on the suppliers to a large
extent.
(b) Competitors:
Some of the HR functions or activities are influenced by the competitors. This is because
the number of organizations is competing for the human resources, which increases the
importance of staffing function and its appraisal and compensation activities. Now the
individual is offered job by many organizations and the organization which provides him
best terms and conditions wins the competition. Therefore, when the employees from
outside become difficult to obtain, the organizations have to groom its own employees
with help of HR activities.
(c) Customers:
The Company’s personnel function is also influenced by the customers. It is well known
that customers want high quality products at the reasonable prices and therefore,
everybody in the organization should strive to offer such products which provide desired
satisfaction to the customer.
(d) Industrial Labour:
Many changes have been taken place in the industrial labour especially in the organized
sector.
53
Some of these changes are:
(i) Level of Commitment:
Now the labour is committed to the industrial setting which leads to the stabilization
of the work force. The worker who joins the job in an urban undertaking though
linked with his village but it is unlikely that he will go back. Therefore, the present
generation of young workers has accepted the industrial employment as a way of life.
But the true picture is that though the labour is committed to industry but it is not
committed to the work which leads to the low productivity of our industrial labour.
(ii) Protective Legislation:
So many legislations have been enacted by the government from time to time for
protecting the interest of the workers. This has resulted into 51 central acts spread
over 2030 pages, and 103 state laws covering approximately 2970 pages adding a
total of 5000 pages of labour laws. So the working conditions, job security,
compensation, health and safety have been improved considerably over the years.
(iii) Economic and Social Status:
The economic and social status of today’s workers has vastly improved. Improved
skill contents, matching educational and training inputs, and increased emoluments
have made the industrial employment as the first attraction of the young job seekers.
3. Globalisation:
India’s economy is gradually getting integrated with the global economy.
Globalization has considerable influence on the HR function which can explained as

follows:
(a) Employee hiring, training, motivation, compensation, and retaining are guided by the
global perspective.
(b) The department can become the source of competitive advantage for the company by
discharging the HR functions effectively and by helping the best qualified people execute
the company’s strategy on the global scale.
54
(c) A work force that is knowledgeable and skilled at doing complex things keeps the
company competitive and attracts foreign investment.
(d) The benefits between globalization and workers are mutual.
(e) Every advanced nation is increasingly becoming globalized, skills and cumulative
learning of its work force becomes its competitive assets.
4. Technological:
Technology affects the HR function in the following ways:
(a) With the advancement in technology jobs tend to become more intellectual or upgraded.
Now the jobs require the skills of educated and knowledgeable workers.
(b) The introduction of new technology dislocates workers unless they become well
equipped to work on new machines which makes obligatory on the part of HRM to train
workers and to rehabilitate those who are displaced or cannot be trained.
(c) Those employees who pick up and acquaint themselves with new technology, the job will
be challenging and rewarding.
(d) Technology also has its impact on human relations as technology lays down the
requirements for much of the human interactions in the organizations.
5. Cultural Forces:
Culture includes knowledge, belief, art, morals, laws, customs and other capabilities and
habits acquired by an individual as a member of a society.
Culture influences the HR function as follows:
(a) The attitude of the worker towards his work depends upon his cultural background. Our
workers are known to have a deep seated apathy towards work. Tasks are performed
without any interest, dedication, or pride. Further, there is indiscipline at all levels and
poor superior subordinate relationships.
(b) Culture trains people along particular lines, tending to put personality stamp on them.
When people with different cultural backgrounds promote, own and manage
organizations, they themselves tend to acquire distinct culture.
55
(c) Time dimension which affects the HRM has its basis in culture. Time orientation refers to
the people’s orientation – past, present, and future. HRM focuses on present and care
more for employees on the rolls. Employees are hired and maintained as long as they are
useful to the organization and dispensed as they cease to be so.
(d) Work ethics, effort reward expectations, and achievement needs which are significant
inputs determining the employee behaviour at work are the results of the culture.
B. INTERNAL FORCES:
The HR activities are also influenced by the internal forces. They are explained as follows:
1. Unions:
The firm’s personnel activities are influenced by its own union as well as the unions of the
other firms. A trade union is an association of workers or management formed to protect
their own individual interests. The role of a union is too well known. All HR activities –
recruitment, selection, training, compensation, IR and separations are carried out in
consultation with the trade unions.
2. Organisational Culture and Conflict:
Every organization has its own culture. Organisational culture is the result of all the
organization’s features – its people, successes, and its failures. Organisational culture shapes
the future by reflecting the past. Therefore, it becomes necessary for the HR specialists to
adjust proactively to the culture of the organization. The organizational culture is shaped by
its core values and beliefs.
Following dualities are the reasons for conflicts:
(a) Personal Goal vs. Organisational Goals,
(b) Personal Ethics vs. Organisational Ethics,
(c) Rights vs. Duties
(d) Discipline vs. Autonomy
(e) Self Confidence vs. Arrogance
(f) Short Term vs. Long Term
56
(g) Leadership vs. Follower ship
(h) Delegation vs. Abdication
(i) Participation vs. Anarchy
(j) Doing vs. Becoming
(k) Feedback vs. Abuse
(l) Cleverness vs. Wisdom
HR department are required to develop and enforce policies in these areas as these are not
the hypothetical conflicts and they occur daily in organizations.
As individuals have personality, organizations have cultures. Each organization has its
own culture that distinguishes one organization from another. Culture may be understood as
sharing of some core values or beliefs by the members of the organization “Value for time” are
the culture of Reliance Industries Limited. The culture of Tata conglomerate is “get the best
people and set them free”.
3. Professional Bodies:
Like other professional bodies, the NIPM as the HR professional body regulates the
functions of HR practitioners in India. For this the NIPM in of ethics which the HR
practitioners are expected to declare their allegiance to the code. Thus, professional bodies
also influence HR functions of an organization.
4.4 CHANGING TRENDS AND ROLE OF HUMAN RESOURCES

From my perspective, HR has multiple roles in managing change. Sometimes HR has to
implement a change because it is required by outside forces (changes in laws or safety
requirements, for example). Sometimes HR has to facilitate change because it is requested by
other internal stakeholders (changes in IT operations due to efficiency or effectiveness needs, for
example). And sometimes HR enables change because it is the right thing to do to given current
and future organization conditions. Regardless of whether change is required, requested, right or
all three, a key ingredient is to be respectful. And HR has a major role in ensuring that change is
identified, developed and carried out in a respectful way. The behavioral competencies required
by HR professionals allow them, through things like relationship management, critical
57
evaluation, consultation and leadership and navigation, to engage employees in the needed
change at hand.
Understanding these annual shifts is crucial for any industry to keep pace with the rapid
developments taking place, especially in light of the pandemic. To that end, we’ve consulted
industry leaders and experts to learn the top HR trends so you can make informed decisions for
your organization. While 2021 was a year of reinventing HR and solidifying its new role, 2022 is
going to be all about pushing the boundaries of how HR can add value. That’s why it is even
more crucial to be aware of these HR trends and understand how to leverage them to drive
change and add more business value in 2022 and beyond.
1. HR as a Product
One of the most notable HR trends we are seeing right now is the shift away from HR
focused on projects towards HR focused on products. This represents a fundamental change to
how HR operates. Traditionally, HR functioned with a project mindset. A project has a clear
timeline, set deliverables, a predefined set of resources, and is aimed at being run efficiently. A
product, on the other hand, is ongoing. It doesn’t necessarily have an end and aims to provide
value, with (additional) resources being allocated as impact increases. This shift in mindset will
not only increase HR’s service delivery quality, it will also enable HR to better build the
capabilities that help improve the businesses’ bottom line. Such a shift, however, will require an
upgrade on the side of HR professionals. They will need to better understand their company’s
internal customers, their changing habits and preferences. What’s more, they will need to step up
their game in delivering a more personalized and unique employee experience.
2. Collaboration by Design
The role of the office has fundamentally changed. It no longer holds that excellent work
can only happen in the office, let alone inside an office cubicle. In fact, 77 percent of people
have seen their productivity rise during the pandemic. Almost one-third of workers have been
able to do more work in less time. The drawback is that remote work has shrunk employees’
networks and made organizations more siloes. Data from ADP suggest that remote workers have
fewer ad-hoc conversations with colleagues than those working on-site (60 percent vs. 77 percent
respectively). All of this has a negative impact on collaboration and innovation.
58
That’s why in 2022, HR will need to become a lot more deliberate and involved in
helping organizations reshape the way collaboration, co-creation, and innovation happen. HR can
help create conditions that will allow employees (and HR professionals, for that matter) to work
on different projects across the organization or even trans-organizationally (see our next trend on
talent marketplaces).
Human Resources practitioners can do this through:
 Designing a workplace (both physical and digital) that helps teams work together and
connect regardless of where they sit;
 Organizational designs that drive cross-functional teams. These incorporate traditional

employees, gig-workers, and contractors to intentionally drive collaboration and diversity
of thought;
 Talent programs that allow for rotation (see our trend on career experiences);
 Leveraging digital platforms to connect employees asynchronously so that they can work
together anytime, anywhere; And so on.
 By taking a design approach to collaboration, HR can help build an organization that

provides the comforts of working from home while ensuring that collaborative practices
keep delivering value and innovation to the organization. This is an HR trend that we’re
expecting to see much more of in 2022.
3. Talent Marketplaces & Talent Allocation
One of the biggest lessons learned from the pandemic is the fact that companies can no
longer solely rely on buying their talent externally. Instead, the tight labor market has forced
them to make better use of the talent they already have. Cue in our next HR trend which involves
better talent allocation through talent marketplaces. In a word, talents marketplaces help connect
employees within an organization or a sector to internal career opportunities. These include job
openings, but also cross-departmental projects, temporary assignments, and other initiatives.
In some sectors, talent allocation has happened organically.
In the shipbuilding industry, professionals are deployed when a new assignment comes
in, only to ‘jump ship’ when the contract is about to complete, and a competitor company gets
59
the next big contract. This way, the employee works on relevant projects and can build their own
capabilities. Conversely, the company is able to quickly deploy a temporary but skilled
workforce based on the projects available. What has changed is that HR departments are
increasingly conscious of the importance of (planned) skill development. As a consequence,
more and more companies are looking into partnering up with their strategic partners to create
common talent marketplaces.
Recently, Unilever and Vodacom (a Vodafone subsidiary) initiated a digital marketing

exchange program. This initiative not only helps build more diverse capabilities but also
provides the opportunity for cross-pollination of ideas and innovation. But Unilever and
Vodacom are not the only ones. In fact, according to a Harvard Business School report, almost
two-thirds of businesses now prefer to borrow or rent people with certain skills from other
companies, instead of recruiting new full-time staff. Under this model, organizations bring
workers in on an as-needed basis to consult or to work on a specific assignment – one of the HR
trends that we will see much more of in 2022.
4. Career Experiences
Another key trend that addresses the topic of skill building are career experiences.
Traditional life-long career development programs run by companies like IBM, AT&T, and GE,
where talent was identified, developed, and provided the experience needed for career
progression within the organization are now mostly outdated. Workers are now less likely to
dedicate their entire careers to one employer. In fact, on average, people now change jobs every
four years. Employees between the ages of 18 and 24 change jobs 5.7 times in their career. To
adjust to this reality, organizations are increasingly investing in employees’ career experiences.
The goal is for the organization to expand its capabilities while enriching the employee’s career
with new learning opportunities. Companies have defined different experiences: lateral, vertical,
rotational, and boomerang. The latter involves someone leaving the organization for a couple of
years, only to come back with more experience.
Each of these experiences helps enrich the employee, offers them new learning
opportunities, and results in additional capabilities for the organization. In 2022, the focus will
continue to be firmly on employees – and it will be through employees that businesses will be
able to also build organizational capabilities. That is because offering and facilitating career
60
moves for individuals is not only beneficial to employees themselves (as they have the
opportunity to grow professionally), but it is also good for the business as it will improve the
quality of work, delivery, and service. Organizations that support career moves will enjoy more
engaged, experienced, and skilled employees, making themselves more competitive on the
whole. That’s why career experiences will become one of the most important HR trends in 2022.
5. HR owning Business Transformation
When I recently asked a room of ten CHROs to raise their hands if they were in some sort
of transformation, nine hands went up. Afterward, the tenth person told me he had missed the
question. When it comes to HR’s role in transformation, HR is often involved late and mostly for
topics revolving around people management. This limited involvement, however, is unfortunate
because HR has a large set of tools to add tremendous value to these projects. These tools
include skills in organizational design, development, and transformation, expertise in building
culture, and the capability to design collaboration.
With transformation becoming increasingly common, there is a role for HR to take

ownership of these change processes and measure their impact and progress. Given its expertise,
HR should play a key role in leading these change efforts. This will require a much closer
interaction and cooperation with departments across the organization. HR needs to connect the
leadership and business needs with employees’ capabilities. Whether it’s helping create internal
talent marketplaces, ensuring better collaboration in the new hybrid era of work, weaving
purpose through the organization’s business culture and activities, or driving more data-driven
decisions, HR will need to own many of these essential processes going forward because
business and reality demand it.
6. Preparing for Multiple Futures
The future of work, above all else, is flexible and ambiguous. The world has become too
unpredictable to only be prepared for one possible future. Employees increasingly demand more
flexibility around where, when, and how they work. On the other hand, companies themselves
have to learn to become more flexible, agile, and resilient. The same goes for HR. By leveraging
data-driven workforce and scenario planning, among other things, companies can create more
adaptive strategies that develop as the business environment evolves. This won’t happen unless
HR itself and its own strategy become adaptive and agile. Take the example of a major hotel
61
group within the hospitality sector that predominantly caters to business travelers. As the
external environment changed due to COVID-19, the company faced a difficult question: Will
the business traveling volumes return after the pandemic, making it possible for the company to
stay the course? Or should it instead anticipate that the business won’t recover and also prepare
for a different future scenario?
The first scenario might, on balance, appear more likely. However, the mere fact that the
second scenario was possible prompted the leadership and HR into action. They developed a
corresponding strategic response that ensured the group was ready to deal with this eventuality.
Example interventions included preparing to freeze all vacancies, realign existing workforce’s
skills with a new company strategy, and organizational design that relied less on business
travelers and the exploration of other lines of business, such as gaming and conference facilities.
In other words, some previously held truths and beliefs about running companies and
managing employees become redundant due to external circumstances. For this reason, many
companies will have to reinvent themselves oftentimes on the go and without much
warning. And unless companies are prepared for different scenarios and are agile enough to react
swiftly, they will not last long enough to survive the fast-paced reality. That’s why HR needs to
keep its finger on the pulse of its organization and the world beyond it and get ready for multiple
futures. Given that the world is increasingly unpredictable, preparing for multiple futures is
going to be among the key HR trends in 2022.
7. Human Resource tech for good
The list of companies that (unintentionally) misuse technology in managing their talent or
operations grows every year. Whether it is now the infamous case of Amazon’s biased hiring
algorithm or the more recent example of Uber’s facial recognition app feature allegedly
discriminating against drivers from racial or racial-ethnic underrepresented groups, we are
reminded that whenever we use technology, we have a responsibility to use it for good. This
trend also includes more widely accepted HR technologies. According to a 2021 report by
Accenture and the Harvard Business School, there are as many as 27 million so-called hidden
workers in the US alone. These workers do not show up on companies’ radars. It is often because
of inflexible Applicant Tracking Systems (ATS) that automatically exclude them due to missing
credentials (despite having relevant capabilities), skills, or gaps in their employment history.
62
Many of these stories have created awareness and urgency around this topic. Of all the
departments, HR should be the steward of ethical technology. And as more and more HR
departments use technology in the hiring workflow (55 percent of HR leaders in the US already
use predictive algorithms) or other purposes (such as using AI to assess people’s existing skills),
they need to be vigilant and certain that AI and algorithms are delivering their intended goal
instead of shooting past it.
To that end, HR professionals will need to become more tech savvy as HR tech is
evolving fast. They must develop digital proficiency to be able to understand the basics of
algorithms. That will also enable them to ask vendors the right questions when choosing the right
technology for their organizations. Currently, only 41 percent of HR professionals possess these
competencies. The rest need upskilling to be able to use technology as a force for good. As there
remains a lot of work to be done, tech for good is going to be one of the trends that will dominate
the HR world in 2022 and beyond.
8. DEI to DEI&B
One of the benefits of the hybrid era of work where more and more people work remotely
and where geography and physical distance have become less of a factor is easier access for
companies to more qualified and diverse talent. Yes, the field of diversity and inclusion has
never evolved more rapidly than in the past two years. We have learned that more traditional
‘diversity and inclusion’ (or D&I) is not enough in a society that is inherently biased. This has
helped the field move towards ‘diversity, equity, and inclusion’ (or DEI). But, being diverse,
equitable, and inclusive is not enough to create a work environment that helps people get the best
out of themselves and one that will be fit for the new era of work. Even a workplace that intends
to be diverse, equitable, and inclusive sometimes fails to retain employees from underrepresented
groups because they don’t feel like they belong.
Belonging at work adds to the DEI equation. On the one hand, it is about “longing to be”,
while on the other hand, it is about “being for long”, representing an affective and a temporal
dimension. Belonging in the workplace brings a shift towards psychological safety and real
inclusion. DEIB represents being a long-term, integral part of the organization. This is what
organizations and HR teams are increasingly realizing, and it is, therefore, one for our HR trends
list for 2022.
63
9. The shift from People Analytics to Data Literacy
People analytics has made a tremendous impact on the way we manage people in the last
five years. However, while organizations were mostly looking for people analytics expertise only
a couple of years ago, this has now shifted. Increasingly, businesses realize that they need more
to effectively implement people analytics in their (HR) organization.
One of the key bottlenecks is general data literacy among the wider HR professionals.
For example, HR business partners need a better understanding of data to effectively implement
people analytics findings in their organizations. HR managers need to be able to access
dashboards and retrieve relevant data to give better advice. Also, HR analysts will be more
effective when supporting their analyses with business and financial data. That is not to say that
HR professionals will need to become experts in data collection something that is nowadays
done through technology and automation or data analysis swith most companies already having
strong data analytics teams sitting outside of HR. Instead, the added value of HR professionals is
in translating analytical outcomes and insights into actions, so data is put to good use. To that
end, however, the majority of HR professionals will need to improve their capabilities in data
literacy. Currently, only 4 in 10 are able to read, apply, create, and communicate data to
influence decision-making.
10. Impactful Rewards
The pandemic has fundamentally shifted not only where, when, and how people want to
work but also why they want to work and what they value in their jobs.
Before the pandemic, companies’ focus on wellbeing and inclusion was largely seen as
an employee perk. All that changed with COVID-19 as people increasingly demand more from
their work than the 9 to 5 grind.
The employee value proposition has shifted. Employers need to do more to differentiate
and create a compelling employer brand. Moreover, long-term incentives have lost much of their
attraction. Instead, there is more emphasis on flexibility, supporting employees, and creating
purpose. Employers also need to decide how they want to offer inclusive benefits, holistic
employee wellbeing, and mental health support, which might lead to rethinking and overhauling
their rewards policies. Examples include pay for remote workers (location-based or not,
64
with Google’s recent decision being a notable example), increasing base salaries to attract talent
(e.g., Target, Bank of America), and sign-on bonuses. When it comes to inclusive benefits, they
are a crucial part of a company’s broader DEI&B strategy. They specifically focus on the needs
of underrepresented groups something that many organizations have not yet addressed.
Examples of inclusive benefits include:
 Ensuring there are no disparities for race and ethnicity in health care plans.
 Selecting healthcare providers on their culturally and linguistically appropriate care.
 Choosing solutions that address social determinants of health to ensure equitable

outcomes.
11. The Skills Economy
Skills have never been more subject to change. Where the half-life of professional skills
used to be 10 to 15 years, IBM has now estimated it to be about five years, with more technical
skills at just two and a half years. In addition, skills more and more determine how people are
rewarded. A self-taught data analyst without a university degree may earn more than a graduate
in history or law. This has given rise to providers that offer specific upskilling tracks with the
promise of a new career in information technology or other fields after completing the track.
In the European Union, citizens can make use of the Europass. This document contains
the CV, language passport, diplomas, and certificates that a person obtained, as well as proof of
their international work experience. All of this makes it easier to identify specific and relevant
skills.
For organizations, it becomes increasingly crucial to accurately map available internal

skills. The benefits of mapping skills at an organizational level, however, also extend to
employees. The skills one has are more and more tied to remuneration and reskilling and
upskilling initiatives. Knowing what skills you have is a prerequisite to succeeding in a
competitive economy and labor market. When it comes to hiring, we see a clear trend of
organizations moving towards more data-driven skills testing. The relevance of educational
history wanes as people’s work experiences increase. Identifying relevant skills, how and when
they were developed, and how they were put into practice helps companies better allocate people
to roles best suited to their capabilities, and it helps employees navigate their careers.
65
4.5 NEW ECONOMIC POLICY
Economic policy refers to the actions that governments take in the economic field. It
covers the systems for setting levels of taxation, government budgets, the money supply and
interest rates as well as the labor market, national ownership, and many other areas of
government interventions into the economy. Before 1991, the Indian economy was strictly under
the control of the government. It was the public companies that ruled the roost. The very few
private companies that operated those days had to follow myriad government-sanctioned dos and
don'ts. However, as 1991 was approaching, the Indian economy was on the brink of collapse.
The government had to take the help of the IMF and it secured a bailout package from it.
As per the terms and conditions of the bail-out package from the IMF, the Indian
government had to deregulate the domestic market, reduce the import tax and other kinds of
taxes. Further, it had to open its market for foreign players. This policy of opening the market
and liberalizing it is known as the New Economic policy, 1991. The Prime Minister, P.V
Narsimha Rao, the then Finance Minister Manmohan Singh and the minister P. Chidambaram
were the key players in making this policy see the light of the day.
The Features of the New Economic Policy:
The new economic policy of 1991 brought a sea change in the Indian market and
economy. The government, with this policy, did many reforms and went ahead with radical
policy changes. The basic idea that India was a socialist country was challenged by the New
Economic Policy, 1991.
1. The Government gave up monopolistic control over many Industrial Sector
In the pre-1991 era, the key industrial sectors, namely - the iron and steel industry, heavy
machinery industry, air travel sector, shipbuilding sector, telecommunications and the general
communications sector etc. The private players, after the policy, could enter these industries
without many obstacles. The Indian Railways, the army equipment industry, the nuclear energy
industry etc, still remained under the control of the government.
2. The end of License Raj
Previously, the private players had to obtain licenses from the government in order to
start a business in any industrial sector. After 1991, the practice of obtaining a license for starting
66
a business was largely done away with. The sectors where licensing still remained were the
Alcohol sector, dangerous chemicals sector, cigarette sector, drugs and medicines sector,
explosives sector etc.
3. The Government transferred its equity in public sector enterprises to private player
As part of the New Economic Policy, it was mandated that the government would have to
give up control over the commercial enterprises. This led the government to transfer its equities
held in the public sector enterprises to private players. As a result of this privatization, the
government achieved significant monetary gains which helped it to fill the deficits and clear
debts.
4. The Financial Sector Reforms
Just like the industrial sector, in the financial sector too, the central bank - the RBI -
ceded much of the power it held in the financial sector. Private Banks could now operate in the
country. However certain key aspects of the financial sector were kept under the control of RBI
to prevent any unfortunate financial incident happening to the account holders.
5. FDI
The foreign direct investment policy in India also became mature after the NEP. Now,
foreign players could easily enter the Indian Market. It was allowed to buy a 51% stake in a
domestic company.
6. Reforms in Taxation
The NEP reformed the prevailing tax policy. On one hand, it benefited the citizens by
lowering the tax rate and on the other, it benefited the government by bringing many previously
non-taxable sectors under the purview of taxation.
7. Import-Export Reforms
After 1991, the companies were allowed to import a wider range of products. The
outward-looking approach to trade offered the citizens to enjoy high-quality overseas products.
The monopoly of the domestic businesses was over and the price of the commodities went down.
The import taxes were lowered.
67
8. Globalizations
Because of the opening up of the Indian market to foreign players and products, the
Indian society tasted the advantages of globalization. More and more Indian businessmen,
students and politicians came in contact with global powerhouses and the exchange of ideas
proved valuable.
9. Privatization
Due to the disinvestments of the government from many public sector enterprises, the
private players cropped up to gain control of these enterprises. The private players made these
hitherto government-controlled companies disciplined. The common people benefited from the
high-quality service that they got from these private companies.
The preamble to the constitution of India says that India is a socialist country. Yet
socialism failed to lead India towards the light. As a result, the Narasimha Rao government had
to go against the preamble and open up the economy. This led to private companies getting
richer and the government enterprises moving towards the brink of extinction. Many poor people
in the country were not able to get benefited from the NEP. Yet, without NEP, India would have
been just another African country with no power and no say in international politics.
4.6 STRUCTURAL REFORMS

A structural reform refers to a deep and impactful change that completely alters the way
an organization functions: the change in the flow of authority, capital information and
responsibility in the organization. A structural change in an organization shifts the entity’s
parameters, which are identified through the previous changes in the historical data of the
company. Economic structural change is a long term shift in the fundamental structure of an
economy and generally impacts the economy’s growth and development. Structural change is
very critical for an economy’s long term growth. Since an economy is quite flexible and dynamic
due to various influential factors (for example: globalization, changing world economic
conditions, natural events), structural change is quite possible.
All the sustained episodes of growth of an economy are underpinned by fundamental

structural changes over time. Structural change leads to the emergence and expansion of new
industries, which in turn causes the movement of labor from the traditional existing industries to
68
new and modern ones. This improves the income of the economy as well as the productivity
levels also see a considerable increment. But an economy can face many barriers while
undergoing a structural change, for example: reluctance to changes and obsession with a
particular existing ideology. These facets pose a great hindrance for an economy to change their
basic structure. Thus an emerging nation should have a clear idea about identifying and
overcoming these hurdles of structural transformation in order to achieve a long term and
sustainable growth. Example: The Asian countries have undergone structural changes, the
earliest being Japan, followed by Taiwan and China. India too previously was an agriculture
based economy, but its structural change has led it to a service based economy currently.

1. Structural reforms refer to a ______ change that completely alters the way an organization
functions.
2. The new economic policy of 1991 brought a sea change in the ______ and economy.
3. Economic environment refers to all the economic factors which directly or indirectly affect
the ______.
4. Environment means it comprises all those forces which have their bearing on the functioning
of various activities including ______ activities.
5. India’s economy is gradually getting integrated with the ______ economy.
1. Deep and impactful
2. Indian market
3. HRM
4. Human resource
5. Global
69
4.8 SUMMARY
Environment comprises all those forces which have their bearing on the functioning of
various activities, including human resource activities. Environment scanning helps HR manager
to become pro-active to the environment which is characterized by change and intense
competition. There are two types of environment which operates and have bearing on human
resources.
Within HR scenario, the business environment has focused some new aspects and
avenues with some changing values. Presently the people become the most valuable asset of the
industry and there is required to get new talented and technological based persons. The shift from
manual process to machinery process, from unskilled employees to the skilled employees, from
manufacturing economy to a service economy, from machine age to the autocratic age have been
accompanied by many transformations. All the sustained episodes of growth of an economy are
underpinned by fundamental structural changes over time. Structural change leads to the
emergence and expansion of new industries, which in turn causes the movement of labor from
the traditional existing indupstries to new and modern ones. This improves the income of the
economy as well as the productivity levels also see a considerable increment. But an economy
can face many barriers while undergoing a structural change, for example: reluctance to changes
and obsession with a particular existing ideology.
4.9 KEYWORDS
Structural Reforms : It is a deep and impactful change that completely
alters the way an organization functions.
Privatization : Disinvestments of the government from many

public sector enterprises, the private players
cropped up to gain control of these enterprises.
Economic Policy : It is the actions that governments take in the

economic field.
Organizational Environment : It is the set of forces surrounding an organization.
Globalization : Opening up of the Indian market to foreign players

and products.
70
1. What do you mean by environmental context of HRM?
2. Discuss the environmental context of organization’s function.
3. What are the changing trends that occurs and HR’s Role during the circumstances of
changes?
4. Briefly explain New Economic Policy.
5. What do you mean by Structural Reforms? Explain Structural Reforms in Indian Economy.
4.11 REFERENCES
New Delhi – 2001.
71
BLOCK
2
Page No.
UNIT - 5: JOB ANALYSIS AND JOB SPECIFICATION 1-17
UNIT - 6: JOB ROTATION AND JOB ENRICHMENT 18-28
UNIT - 7: PROCUREMENT OF HUMAN RESOURCES 29-46
UNIT - 8: HUMAN RESOURCE MANAGEMENT AND INFORMATION SYSTEM 47-60

Credit Page
Programme : M.Com Semester: Second Block No :II
Vice-Chancellor,
Dean (Academic),
BOS Chairman,
Dr. Chaya R. Member
Chairperson,
Editorial Committee
BOS Chairman,
Professor,Department of commerce,

Chairperson,
Copy Right
Registrar,
writing from the Karnataka State Open University.Further information on the Karnataka State Open University
2022.
Preface
Dear Learner,
employee benefits.

With best wishes,
Smt. Usha C.
Chairperson
BLOCK – II
INTRODUCTION
Job analysis is the process of gathering and analysing information about the content and
the human requirements of job, as well as, the context in which jobs are performed. Job Rotation
is a management approach where employees are shifted between two or more assignments or
jobs at regular intervals in order to expose them to all verticals of an organization. Job
enrichment means a vertical expansion of a job. It is different from job enlargement. Job
enlargement means a horizontal expansion of a job. Procurement is a fancy term meaning “to
get.” To procure something means to find and retrieve something, usually an item or a service.
The information system for human resource management can be viewed as a way for large and
small organizations to take care of a variety of operations, including human resources,
accounting, management, and payroll, using MIS application software. Hence, this block
discusses about the job analysis and job specification, job rotation and job enrichment,
procurement of human resources and human resource management and information system.
Unit-5: Job Analysis and Job Specification

Unit-6: Job Rotation and Job Enrichment
Unit-7: Procurement of Human Resources
Unit-8: Human Resource Management and Information System
BLOCK-II
UNIT-5 JOB ANALYSIS AND JOB SPECIFICATION

Structure:
5.0 Objectives
5.1 Introduction
5.2 Meaning and Definitions of Job Analysis
5.3 Need for Job Analysis
5.4 Application and Uses of Job Analysis
5.5 Process of Job Analysis
5.6 Job Analysis Information
5.7 Sources of Job Analysis Information
5.8 Job Description
5.9 Characteristics and Contents of Job Description
5.10 Job Specification
5.11 Job Evaluation
5.13 Summary
5.14 Keywords
5.16 References
1
5.0 OBJECTIVES
 State the meaning and need for job analysis.

 Discuss the application and uses of job analysis.
 Describe the process of job analysis.
 Provide an overview of the job analysis information.
 Identify the characteristics and contents of job description.
 Discuss about the job specification and employee specification.
 Explain about job evaluation.
5.1 INTRODUCTION
Job analysis is the systematic process of gathering necessary information about a job in
order to make informed decisions and develop defensible processes, such as those for selection
and promotion. While other terms, such as job descriptions and class specifications, are often
used interchangeably with job analysis, it is important to note that “job analysis” is the process of
gathering all important information about a job, and that “job descriptions” and “specifications”
are outcomes of that process and contain the specific information from the job analysis for their
intended purpose(s). For example, a job description would typically list the most important tasks
and knowledge, skills, abilities and other characteristics (KSAOs) associated with a job, while a
thorough job analysis identifies everything that a job may entail, such as the less important tasks
and KSAOs, as well as information about the social context, working conditions and physical
environment of the job. Without the information gleaned from a thorough review of each job or
job family, an employer is vulnerable not only to legal challenges, but also the potential of hiring
candidates who do not have the necessary qualifications to perform the job adequately.
Job analysis is the process of gathering and analyzing information about the content and
the human requirements of jobs, as well as, the context in which jobs are performed. This
process is used to determine placement of jobs. Under organization values the decision-making
in this area is shared by units and human resources. Specific internal approval processes will be
determined by the unit's organizational leadership. Job analysis defines the organization of jobs
within a job family. It allows units to identify paths of job progression for employees interested
in improving their opportunities for career advancement and increasing compensation.
2
A relative value is placed on the differing factors described in the zone placement matrix.
All new and existing positions will be assigned to a job family and zone using the job analysis
process. This process is designed to place positions into families and zones based upon assigned
duties, qualifications and competencies as measured by the five criteria found in the Zone
Placement Matrix. Organizational unit leaders are encouraged to consult with Human Resources
for guidance at any step in the job analysis process.
Thus, this unit deals with job analysis, job description, job specification and job
evaluation.
5.2 MEANING AND DEFINITIONS OF JOB ANALYSIS

In a country like India, jobs are very important to individuals. They help to determine
standards of living, places of residence, status and even one’s sense of self-worth. They are
important to organizations also because they are the means of accomplishing organizational
objectives. Traditionally, organizations used to define jobs in a rigid way.
Job analysis is a systematic and detailed examination of jobs. It is the process of
collecting information about a job that is, the knowledge, skills, and the experience needed to
carry out a job effectively. The jobholder is supposed to possess job-related knowledge useful to
carry out the job easily. He must possess relevant skills to put the knowledge into practice
quickly and effectively. He should have the ability to understand how the tools, equipment,
materials, resources, machines need to be deployed in order to produce results. Only after a
careful examination of the requirements of job, the job incumbent’s qualifications are generally
determined.
In other words, job analysis refers to the anatomy of the job. It is a complete study of job,
embodying every known and determinable factor, including the duties and responsibilities
involved in its performance, the conditions under which the performance is carried on, the nature
of the task, the qualities required in the worker, and such conditions of employment as pay hour,
opportunities and privileges. It also emphasizes the relation of one job to others in the
organization.
Job analysis provides the following information about a job:
i. Nature of jobs required in a concern;
ii. Nature of organizational structure;
3
iii. Type of people required to fit that structure;
iv. The relationship of a job with other jobs in a concern;
v. Kind of qualifications required for a particular job;
vi. Provision of physical condition to support the activities of a concern;
vii. Materials, equipments and methods used in performing the job.
Definitions:
(1) According to Edwin B. Flippo – “Job analysis is the process of studying and collecting
information relating to the operations and responsibilities of a specific job. The immediate
products of this analysis are job descriptions and job specifications.”
(2) Further, David A. De Cenzo and Stephen P. Robbins has defined “job analysis is a
systematic exploration of the activities within a job. It is a basic technical procedure, one
that is used to define the duties, responsibilities and accountabilities of a job.”
(3) Herbert G. Hereman III has said “A job analysis is a collection of tasks that can be
performed by a single employee to contribute to the production of some product or service
provided by the organisation. Each job has certain ability requirements (as well as certain
rewards) associated with it. It is the process used to identify these requirements.”
Job analysis is essentially a process of collecting and analyzing data relating to a job in an
organization. It refers to a scientific and systematic analysis of a job in order to obtain all
pertinent facts about the job. Job analysis has been defined as “the process of determining by
observing and study the tasks, which comprise the job; the methods and equipments used, and
the skills and attitudes required for successful performance of the job.” Therefore, it can be said
safely that “job analysis can be described as a process of collecting information about a job.”
5.3 NEED FOR JOB ANALYSIS
The need for job analysis is to establish and document the 'job relatedness' of
employment. A sound human resource management practice dictates that a thorough job analysis
should be done, as it may provide a deeper understanding of the behavioral requirements of jobs.
This, in turn, creates a solid basis on which to make job-related employment decisions. Job
analysis is used for many purposes:
4
Organizational Structure and Design
By clarifying job requirements and interrelationships among jobs, responsibilities at all

levels can be specified, promoting efficiency and minimizing overlap or duplication.
Human Resource Planning
Job analysis is the foundation of forecasting the needs for human resources and plans for
such activities as training, transfer, or promotion. Job analysis information is incorporated into a
human resource information system.
Work Simplification
Job analysis provides information related to the job, and this data can be used to make the
process or job simple. Work simplification means dividing the job into small parts, that is,
different operations in a product line or process, improving production or job performance.
Setting Up of Standards
Standard means minimum acceptable qualities or results or performance or rewards

regarding a particular job. Job analysis provides information about the job, and the standard of
each can be established using this information.
Support for Personnel Activities
Job analysis supports various personnel activities like recruitment, selection, placement,
training and development, wage administration, performance appraisal and other activities.
Job Description
A job description is a job profile that describes the contents, environment, and condition
of jobs. It is prepared based on data collected through job analysis. It provides information
relating to the activities and duties to be performed in a job. Job description differentiates one job
from another by introducing unique characteristics of each job.
Job Specification
A job specification is another notable objective of job analysis. It includes information

relating to the requirements of skills and abilities to perform a specific task. It states the
minimum acceptable qualifications that an incumbent must possess to perform the assigned duty
5
successfully. The job specification statement identifies the knowledge, skills, abilities needed to
perform that task effectively.
Job Classification System
Selection, training, and pay systems often key to job classification systems. Without job
analysis information, it is impossible to determine the relationships among jobs in an
organization reliably.
Job Evaluation and Compensation
Job analysis also provides the required information that is necessary for evaluating the
worthiness of jobs. After the preparation of job description and job specification statements, it
assists in the evaluation of actual performance against the predetermined standard. Then the
deviation (if any) is found out that has taken place during action.
5.4 APPLICATION AND USES OF JOB ANALYSIS

Job Analysis is an important component of human resource management system. It
provides important information which aids in redesigning jobs and organization structure,
planning staffing procedures, designing training and appraisal programs. Job analysis is
beneficial for the overall management of all HR activities. Information obtained from job
analysis is useful in various personnel activities, such as HRP, employee recruitment, training,
job evaluation, compensation, and performance assessment.
Some of the most important uses of job analysis are:
1. Human resource planning

2. Recruitment
3. Selection
4. Placement and orientation
5. Training
6. Counselling
7. Employee safety
8. Performance appraisal
9. Job design and redesign
10. Job evaluation
6
1. Human Resource Planning:
Job analysis is useful in human resource planning in terms of demand forecasting. It finds
out the requisite knowledge and skills required to perform a job.
2. Recruitment:
Job analysis helps in recruitment in terms of finding how and when people should be hired
for new job openings. It makes the recruitment process easier by highlighting the skills,
knowledge and abilities required to perform a job.
3. Selection:
Job analysis helps in selecting the right person by making the employer understand what is
to be done on a job.
4. Placement and Orientation:
Job analysis is useful in putting the newly selected person at the right place in the
organization.
5. Training:
Job analysis eases the training process by identifying the duties and responsibilities
associated with a job. If the candidate doesn’t have enough knowledge, then training is
provided to make him effective.
6. Counselling:
Proper counselling of the employee is possible only after knowing the details about the
employee’s job. This helps in grooming the career of the employees.
7. Employee Safety:
Through a proper job analysis the analyst can know the health hazards and accidents
associated with a job. By knowing, proper steps can be undertaken to eradicate those
situations.
8. Performance Appraisal:
In case of performance appraisal the appraiser compares the performance of the employee
with the standard performance based on job analysis. It makes the process of performance
appraisal easy and simple.
7
9. Job Design and Redesign:
Through job analysis the details of job are identified. From this the weak areas in a job are
identified. It helps in reducing unnecessary movements, simplify certain steps and improve
the existing ones through continuous monitoring.
10. Job Evaluation:
It is finding the relative worth of a job in relation to other jobs in the organization. This is
done with the help of the job analysis. Job evaluation helps in fixing the pay package of
employees with internal and external pay equity.
Utility of Job/Task Analysis:
The activity of job analysis is noted to serve several purposes in human resource
management. It is useful not only to the organization but also to the individual employees.
(a) In recruitment and selection, task analysis especially competency analysis helps the
organization to place people in jobs in which they can be more effective matching role/job
with the people.
(b) Job analysis helps in work planning in the following respects –
(i) Setting individual tasks,
(ii) Helping the job incumbent to decide priorities of task,
(iii)Minimizing overlaps between jobs, and
(iv) Job enrichment.
(c) In performance appraisal, job analysis helps in identifying the activities to be performed
against which appraisal has to be done.
(d) Analyzing the job helps in performance of the tasks and its evaluation by the supervisor.
(e) In potential appraisal, the exercise of task analysis helps in preparing a system of the
competency analysis and actual potential appraisal work.
(f) In respect of employee development, task analysis provides feedback on strength and
weakness, performance counselling, and training needs of employees.
(g) In team building activity through tasks analysis, better understanding is noted to be
developed among employees, building linkages and mutuality between jobs.
8
5.5 PROCESS OF JOB ANALYSIS
We should perform eight steps as follows for conducting job analysis is explained in
detail:
Fig 5.1: Process of Job Analysis
 Identification of Job Analysis Purpose: Well any process is futile until its purpose is
not identified and defined. Therefore, the first step in the process is to determine its need
and desired output. Spending human efforts, energy as well as money is useless until HR
managers don’t know why data is to be collected and what is to be done with it.
9
 Who Will Conduct Job Analysis: The second most important step in the process of job
analysis is to decide who will conduct it. Some companies prefer getting it done by their
own HR department while some hire job analysis consultants. Job analysis consultants
may prove to be extremely helpful as they offer unbiased advice, guidelines and methods.
They don’t have any personal likes and dislikes when it comes to analyze a job.
 How to Conduct the Process: Deciding the way in which job analysis process needs to
be conducted is surely the next step. A planned approach about how to carry the whole
process is required in order to investigate a specific job.
 Strategic Decision Making: Now is the time to make strategic decision. It’s about
deciding the extent of employee involvement in the process, the level of details to be
collected and recorded, sources from where data is to be collected, data collection
methods, the processing of information and segregation of collected data.
 Training of Job Analyst: Next is to train the job analyst about how to conduct the
process and use the selected methods for collection and recoding of job data.
 Preparation of Job Analysis Process: Communicating it within the organization is the

next step. HR managers need to communicate the whole thing properly so that employees
offer their full support to the job analyst. The stage also involves preparation of
documents, questionnaires, interviews and feedback forms.
 Data Collection: Next is to collect job-related data including educational qualifications

of employees, skills and abilities required to perform the job, working conditions, job
activities, reporting hierarchy, required human traits, job activities, duties and
responsibilities involved and employee behaviour.
 Documentation, Verification and Review: Proper documentation is done to verify the

authenticity of collected data and then review it. This is the final information that is used
to describe a specific job.
 Developing Job Description and Job Specification: Now is the time to segregate the
collected data in to useful information. Job Description describes the roles, activities,
duties and responsibilities of the job while job specification is a statement of educational
qualification, experience, personal traits and skills required to perform the job.
10
Thus, the process of job analysis helps in identifying the worth of specific job, utilizing the
human talent in the best possible manner, eliminating unneeded jobs and setting realistic
performance measurement standards.
5.6 JOB ANALYSIS INFORMATION
Job analysis is a qualitative aspect of manpower needs, as it determines information that
job requirements in terms of skills, qualities and other human characteristics. Internal sources of
information include published information including organizational charts, job announcements,
position descriptions; direct or indirect (example: review of video) observation; input from
management, employees and/or a relevant subject matter expert, obtained through interviews or
via questionnaires.
5.7 SOURCES OF JOB ANALYSIS INFORMATION
According to George R. Terry, the make-up of a job, its relation to other jobs, and its
requirements for competent performance are essential information needed for a job analysis.
Information on a job may be obtained from three principal sources:
(a) From the employees who actually perform a job;

(b) From other employees such as supervisors and foremen who watch the workers doing a job
and thereby acquire knowledge about it; and
(c) From outside observers specially appointed to watch employees performing a job. Such
outside persons are called the trade job analysts. Sometimes, special job reviewing
committees are also established.
5.8 JOB DESCRIPTION

A job description is a functional description of the contents and contexts of the job. Job
description narrates the various features and contents of a job. It is a written statement that
identifies, describes, and defines job’s duties, responsibilities, working conditions etc. It is a
document showing a brief summary of task requirements which explains the constitute elements
of job in an organized way. It may include relationships with other people in the organization:
Supervisory level, managerial requirements, and relationships with other colleagues.
Job description discloses what an incumbent is supposed to do, how the task is to be
done. The data to be included in the job description statement is usually determined by the job
analyst to make the document more reliable and informative. Moreover, the information is, in
11
turn, used to write a job specification statement showing the minimum requirement of skill,
knowledge, and ability to perform a specific task. It generally includes duties, purpose,
responsibilities, scope, and working conditions of a job along with the job’s title, and the name
or designation of the person to whom the employee reports.
Thus, a job description is the listing of job tasks, duties, and responsibilities which
depicts a brief summary of the job in terms of nature and types. Finally, when used as a means to
communicate expectations, job descriptions can also be used as a basis for performance
management. For the employee, having a clear job description allows them to understand the
responsibilities and duties that are required and expected of them.
5.9 CHARACTERISTICS AND CONTENTS OF JOB DESCRIPTION
Characteristics of a Good Job Description are:
1. It should be kept up-to-date necessary amendments and adjustments should be made from
time to time.
2. Job title should be short, definite and suggestive as to indicate the nature of the work.
3. Primary, Secondary and other duties and responsibilities should clearly be defined.
4. Job specifications should clearly be mentioned.
5. It should be descriptive but short.
6. Limitations of each job and sub job should be spelt out clearly in order to meet the
objectives of the job.
7. All employees must know the contents of the job description.
8. Job description should be easily understandable.
9. Special work conditions and special qualifications of the job should be clearly explained in
job description.
Contents of Job Description:
1) Job title: first of all the job description document must describes the job title. It must be
short, definite and suggestive of the nature of job.
2) Job location: it means the name of department where the job exists.
3) Job summary: it means a short summary of the task to be performed by the employee.
12
4) Job duties: job description document should include the percentage of time that is devoted
to the performance of each task.
5) Equipment’s, machines and tools: Equipments, machines and tools to be used in the job
should be written in the job description document.
6) Relation to Other Jobs: relation to other jobs will help the organization to understand the
nature of the job.
7) Nature of Supervision: job description must include the nature of supervision it includes.
8) Working Environment: the working conditions, hazards involve in the job must be
mentioned in the job description document.
5.10 JOB SPECIFICATION

Job Specification also known as employee specifications, a job specification is a written
statement of educational qualifications, specific qualities, level of experience, physical,
emotional, technical and communication skills required to perform a job, responsibilities
involved in a job and other unusual sensory demands. It also includes general health, mental
health, intelligence, aptitude, memory, judgment, leadership skills, emotional ability,
adaptability, flexibility, values and ethics, manners and creativity, etc. Job specification is
another aspect of job analysis. It describes the type of employee required (in terms of skill,
experience, and special attitude, and test scores of various types) and outlines the particular
working conditions that are encountered on the job. It is essentially a set of specification about
people required on the job. The job specification (in the usual form) includes a brief job
summary designed to give the recruiter a feel of the job and to set the stage for greater in detail.
5.11 JOB EVALUATION
Job Evaluation is a systematic process of determining the worth of one job in relation to
another job in the organization. During job evaluation, the relative worth of various jobs are
assessed so that wages can be paid depending upon the worth of the job. To improve the
performance and maintain the high level of efficiency in work, employee should be compensated
with wages and salaries depending upon the job he is performing. Job evaluation is defined as
the systematic process of assessing the value of each job in relation to other jobs in an
organization. It is intended to provide a rational, orderly hierarchy of jobs based on their worth to
13
the company by analyzing the difficulty of the work performed and the importance of the work
to the organization. The factors used to assess a job’s worth are identified, defined, and weighted
in the company’s job evaluation plan.
Hence, it is an accepted tool in the hands of the personnel management for avoiding any
inconsistency in job rates and for achieving uniformity in the entire wage structure is done
through certain processes. The basic objective of job evaluation is to determine the relative
contributions that the performance of different jobs makes towards the realization of
organizational objectives. This basic objective of job evaluation serves a number of purposes
which may be grouped into three categories: wage and salary fixation, restructuring job hierarchy
and overcoming anomalies.
1. ______ is a systematic process of determining the worth of one job in relation to another job
in the organization.
a. Job analysis
b. Job Evaluation
c. Discipline Employees
d. All of the Above
2. The basic objective of job evaluation serves a number of purposes which may be grouped
into ______.
a. Three categories
b. Two categories
c. None of categories
d. All of the Above
3. _____is a functional description of the contents and contexts of the job.
a. Job Description
b. Job Specification
c. Job Analysis
14
4. Some of the most important uses of job analysis are______
a. Human resource planning
b. Recruitment
c. A and B
d. Only A
5. ______ is a systematic and detailed examination of jobs
a. Career Planning
b. Recruitment
c. Job Description
d. Job analysis
1. b
2. a
3. a
4. c
5. d
5.13 SUMMARY
Perhaps, we have discussed an important concept, about job analysis and job
specification in this unit. Job analysis is the process of gathering and analyzing information
about the content and the human requirements of jobs, as well as, the context in which jobs are
performed. This process is used to determine placement of jobs. Under organizations’ values the
decision-making in this area is shared by units and Human Resources. Specific internal approval
processes will be determined by the unit's organizational leadership. Job analysis defines the
organization of jobs within a job family. It allows units to identify paths of job progression for
employees interested in improving their opportunities for career advancement and increasing
compensation. Job analysis is a systematic and detailed examination of jobs. It is the process of
collecting information about a job that is, the knowledge, skills, and the experience needed to
carry out a job effectively. Job analysis information is used for many purposes such as Job
description, Job Evaluation, Job Specification and the like.
15
5.14 KEYWORDS
Job Analysis : It is a systematic and detailed examination of jobs. It is the process
of collecting information about a job that is, the knowledge, skills,
and the experience needed to carry out a job effectively.
Job Description : It is a functional description of the contents and

contexts of the job. Job description narrates the various features
and contents of a job. It is a written statement that identifies,
describes, and defines job’s duties, responsibilities, working
conditions etc.
Job Specification : A job specification is another notable objective of job analysis. It

includes information relating to the requirements of skills and
abilities to perform a specific task.
Job Evaluation : It is a systematic process of determining the worth of one job in

relation to another job in the organization.

1. Do you perform duties that aren't listed in your job description? If any explain with example.
2. Describe the significance of Job Analysis, and its application and uses in an Organization.
3. Explain the various characteristics and contents of Job Description.
4. Explain various process of Job Analysis.
5. Differentiate between Job Specification and Job Evaluation.
5.16 REFERENCES
16
New Delhi – 2001.
17
UNIT-6 JOB ROTATION AND JOB ENRICHMENT
Structure:
6.0 Objectives
6.1 Introduction
6.2 Meaning of Job Rotation
6.3 Purpose of Job Rotation
6.4 Benefits of Job Rotaion
6.5 Concept of Job Enrichment
6.6 Outcomes of Job Enrichment
6.7 Characteristics of Job Enrichment
6.9 Summary
6.10 Keywords
6.12 References
18
6.0 OBJECTIVES
 Give the meaning and purpose of job rotation.

 Explain benefits of job rotation.
 Describe the concept of job enrichment.
 Provide an overview of outcomes of job enrichment.
 Elucidate the characteristics of enriched job.
6.1 INTRODUCTION
Job rotation and job enrichment are the important concepts of HRM which shall be
discussed in this unit. Job Rotation is a management approach where employees are shifted
between two or more assignments or jobs at regular intervals of time in order to expose them to
all verticals of an organization. It is a pre-planned approach with an objective to test the
employee skills and competencies in order to place him or her at the right place. In addition to it,
it reduces the monotony of the job and gives them a wider experience and helps them gain more
insights. Job rotation is a well-planned practice to reduce the boredom of doing same type of job
every day and explore the hidden potential of an employee. The process serves the purpose of
both the management and the employees. It helps management in discovering the talent of
employees and determining what he or she is best at. On the other hand, it gives an individual a
chance to explore his or her own interests and gain experience in different fields or operations.
6.2 MEANING OF JOB ROTATION

It is the process of moving an employee to different activities in the organization so that
he can learn them and become “Jack of all trades" i.e. the employee is able to handle different
activities of the organization. The process is done periodically so that he can specialize in them.
Job rotation involves the movement of employees through a range of jobs in order to increase
interest and motivation. Job rotation can improve "multi-skilling" but also involves the need for
greater training. In a sense, job rotation is similar to job enlargement. This approach widens the
activities of a worker by switching him or her around a range of work. For example, an
administrative employee might spend part of the week looking after the reception area of a
business, dealing with customers and enquiries. Sometime might then be spent manning the
19
company telephone switchboard and then inputting data onto a database. Job rotation may offer
the advantage of making it easier to cover for absent colleagues, but it may also reduce'
productivity as workers are initially unfamiliar with a new task.
Potential of Job Rotation
A well planned job rotation programme in an organization has immense potential of positive
impact on job satisfaction, engagement of people and finally on retention of people. Few of the
outcomes of job rotation with respect to the individual are:
 Job enrichment
 Overall development
 Intrinsic motivation to perform caused by newer challenges
 Career development
 Whereas for an organization, the benefits could include some or all of the following:
 Leadership development
 Aligning competencies with organizational requirements
 Lower attrition rates
 Performance improvement driven by unique viewpoints of new people
6.3 PURPOSE OF JOB ROTATION

The Purposes/ Objectives of Job Rotation are:
 Reducing Monotony of the Job: The first and foremost objective of job rotation is to
reduce the monotony and repetitiveness involved in a job. It allows employees to
experience different type of jobs and motivates them to perform well at each stage of job
replacement.
 Succession Planning: The concept of succession planning is ‘Who will replace whom’.
Its main function of job rotation is to develop a pool of employees who can be placed at a
senior level when someone gets retired or leaves the organization. The idea is to create an
immediate replacement of a high-worth employee from within the organization.
20
 Creating Right-Employee Job Fit: The success of an organization depends on the on-
job productivity of its employees. If they are rightly placed, they will be able to give the
maximum output. In case, they are not assigned the job that they are good at, it creates a
real big problem for both employee as well as organization. Therefore, fitting a right
person in right vacancy is one of the main objectives of job rotation.
 Exposing Workers to All Verticals of the Company: Another main function of job
rotation process is to exposing workers to all verticals or operations of the organization in
order to make them aware how company operates and how tasks are performed. It gives
them a chance to understand the working of the organization and different issues that
crop up while working.
 Testing Employee Skills and Competencies: Testing and analyzing employee skills and
competencies and then assigning them the work that they excel at is one of the major
functions of job rotation process. It is done by moving them to different jobs and
assignments and determining their proficiency and aptitude. Placing them what they are
best at increases their on-job productivity.
 Developing a Wider Range of Work Experience: Employees, usually don’t want to

change their area of operations. Once they start performing a specific task, they don’t
want to shift from their comfort zone. Through job rotation, managers prepare them in
advance to have a wider range of work experience and develop different skills and
competencies. It is necessary for an overall development of an individual. Along with
this, they understand the problems of various departments and try to adjust or adapt
accordingly.
21
Job rotation is a well-planned management approach that is beneficial both for employees and
management.
Fig 6.1: Objectives of Job Rotation
6.4 BENEFITS OF JOB ROTATION

Benefits of Job Rotation are explained below:
 Helps Managers Explore the Hidden Talent: Job Rotation is designed to expose
employees to a wider range of operations in order to assist managers in exploring their
hidden talent. In the process, they are moved through a variety of assignments so that
they can gain awareness about the actual working style of the organization and
understand the problems that crop up at every stage. Through this process, managers
identify what a particular employee is good at and accordingly he or she is assigned a
specific task.
 Helps Individuals Explore Their Interests: Sometimes, employees are not aware of
what would like to do until they have their hands on some specific job. If their job is
rotated or they are exposed to different operations, they can identify what they are good
at and what they enjoy doing. They get a chance to explore their interests and hidden
potential.
 Identifies Knowledge, Skills and Attitudes: Job Rotation helps managers as well as
individuals identify their KSA (Knowledge, Skills and Attitudes). It can be used in
determining who needs to improve or upgrade his or skills in order to perform better.
This helps in analyzing training and development needs of employees so that they can
produce more output.
22
 Motivates Employees to Deal with New Challenges: When employees are exposed to
different jobs or assigned new tasks, they try to give their best while effectively dealing
with the challenges coming their way. It encourages them to perform better at every stage
and prove that they are no less than others. This gives rise to a healthy competition within
the organization where everyone wants to perform better than others.
 Increases Satisfaction and Decreases Attrition Rate: Exposing employees to different

tasks and functions increase their satisfaction level. Job variation reduces the boredom of
doing same task everyday. Moreover, it decreases attrition rate of the organization.
Employees develop a sense of belongingness towards the organization and stick to it till
long.
 Helps Align Competencies with Requirements: Alignment of competencies with

requirements means directing the resources when and where they are required. It assesses
the employees and places them at a place where their skills, competencies and caliber are
used to the highest possible extent.
Job rotation is an alternative to reduce the boredom caused due to repetitiveness of tasks
and revive their willingness to handle a job and challenges involved in it with same excitement
and zeal.
6.5 CONCEPT OF JOB ENRICHMENT

Job enrichment means a vertical expansion of a job. It is different from job
enlargement. Job enlargement means a horizontal expansion of a job. Job enrichment makes the
job more meaningful, enjoyable and satisfying. It gives the workers more autonomy for planning
and controlling the job. It also gives the workers more responsibility. Job enrichment gives the
workers opportunities for achievement, recognition, advancement and growth. So, the workers
are motivated to work harder. Therefore, Job enrichment makes the job a source of motivation.
In this case unrelated task are added to the existing activities of the employee to give him
exposure to different work and increase his efficiency.
Job enrichment means enhancing individual jobs to make them more rewarding and
inspiring. The idea was most notably promoted by psychologist Frederick Herzberg in his classic
article, "One More Time: How Do You Motivate Employees?" Job enrichment expands the task
23
set that you perform, and the skills that you can develop. This makes for more stimulating and
interesting work, and adds variety, challenge and depth to your daily routine. Enriched jobs give
you more freedom, independence and responsibility. You'll also likely receive plenty
of feedback , so that you can assess and improve your performance.
Job enrichment is not just about having a wider range of tasks, or increasing your
workload. Crucially, it should give people more control over their work. Lack of control is a key
cause of stress, and therefore of unhappiness. Where possible, team members should have the
opportunity to take on some tasks traditionally done by managers. These can include planning,
executing and evaluating the jobs they do. This helps to develop initiative, and can also reduce
the pressure on managers who feel like they're being pulled in too many directions. Job
Enrichment is a job design technique that varies the concept of job enlargement. Job enrichment
adds new sources of job satisfaction by increasing the level of responsibility of the employee in
organization. While job enlargement is considered as horizontal restructuring method, job
enrichment is considered as vertical restructuring method of moral excellence of giving the
employee additional authority, autonomy, and control over the way the job is accomplished. Also
called job enhancement or vertical job expansion
Definition:
Job Enrichment is the addition to a job of tasks that increase the amount of employee
control or responsibility. It is a vertical expansion of the job as opposed to the horizontal
expansion of a job, which is called job enlargement. About management.com
A job design technique that is a variation on the concept of job enlargement. Job
enrichment adds new sources of job satisfaction by increasing the level of responsibility of the
employee. While job enlargement is considered a horizontal restructuring method, job
enrichment is a vertical restructuring method by virtue of giving the employee additional
authority, autonomy, and control over the way the job is accomplished. Also called job
enhancement or vertical job expansion. Business Dictionary.com
6.6 OUTCOMES OF JOB ENRICHMENT

Job enrichment is an attempt to motivate employees by giving them the opportunity to
use the range of their abilities. It is an idea that was developed by the American psychologist
24
Frederick Hertzberg in the 1950s. It can be contrasted to job enlargement which simply
increases the number of tasks without changing the challenge. As such job enrichment has been
described as 'vertical loading' of a job, while job enlargement is 'horizontal loading'. An enriched
job should ideally contain: A range of tasks and challenges of varying difficulties (Physical or
Mental)
 A complete unit of work - a meaningful task
 Feedback, encouragement and communication
Job enrichment is a type of job redesign intended to reverse the effects of tasks that are
repetitive requiring little autonomy. Some of these effects are boredom, lack of flexibility, and
employee dissatisfaction (Leach & Wall, 2004). The underlying principle is to expand the scope
of the job with a greater variety of tasks, vertical in nature, that require self-sufficiency. Since the
goal is to give the individual exposure to tasks normally reserved for differently focused or
higher positions, merely adding more of the same responsibilities related to an employee's
current position are not considered job enrichment. Some of the outcomes are listed below:
1. Interesting and challenging job: When a certain amount of power is given to employees it
makes the job more challenging for them, we can say that job enrichment is a method of
employee empowerment.
2. Improves decision making: Through job enrichment we can improve the decision making
ability of the employee by asking him to decide things in his job.
3. Motivation speaks of these higher order needs: Example: Ego and esteemed needs, self-
actualization etc. These needs can be achieved through job enrichment.
4. Reduces work load of superiors: Job enrichment reduces the work load of senior staff.
When decisions are taken by juniors the seniors work load is reduced.
5. The worker gets achievement, recognition and self-actualization.
6. The worker gets a sense of belonging to the organization.
7. The worker finds the job meaningful.
8. Job enrichment reduces absenteeism, labor-turnover and grievances.
9. It motivates the workers to give best performance
25
6.7 CHARACTERISTICS OF JOB ENRICHMENT
The characteristics or features of job enrichment are:
Nature of Job: Job enrichment is a vertical expansion of the job. The workers are given jobs,
which require higher-level knowledge, skills and responsibilities. Job enrichment improves the
quality of the job.
Objective: The objective of Job enrichment is to make the job more lively and challenging. So,
the job is a source of motivation for the workers.
Positive Results: Job enrichment gives positive results if the workers are highly skilled. This is
because workers are given opportunities to show initiative and innovation while doing their job.
Direction and Control: Job enrichment encourages self-discipline. It does not believe in
external direction and control.
Job enrichment is a fundamental part of attracting, motivating, and retaining talented

people, particularly where work is repetitive or boring. In an organization to do it well, you need
a great match between the way your jobs are designed and the skills and interests of the
employees working for you.

1. ______is a management approach where employees are shifted between two or more
assignments or jobs at regular intervals of time in order to expose them to all verticals of an
organization.
2. Job enrichment means a ______ expansion of a job. It is different from job enlargement.
3. The outcomes of job rotation with respect to the individual are______.
4. Job enrichment is a fundamental part of ______ and______.
5. Job enrichment is an idea that was developed by the American psychologist______ in the
year 1950s.
26
1. Job rotation
2. Vertical
3. Job enrichment and overall development
4. Attracting, motivating, retaining talented people
5. Frederick Hertzberg
6.9 SUMMARY
As we have discussed job rotation is a management approach where employees are
shifted between two or more assignments or jobs at regular intervals of time in order to expose
them to all verticals of an organization. Job enrichment means a vertical expansion of a job. It is
different from job enlargement. Job enlargement means a horizontal expansion of a job. Job
enrichment makes the job more meaningful, enjoyable and satisfying. It gives the workers more
autonomy for planning and controlling the job. It also gives the workers more responsibility. Job
rotation is a management approach where employees are shifted between two or more
assignments or jobs at regular intervals of time in order to expose them to all verticals of an
organization. It is a pre-planned approach with an objective to test the employee skills and
competencies in order to place him or her at the right place. In addition to it, it reduces the
monotony of the job and gives them a wider experience and helps them gain more insights. Job
rotation is a well-planned practice to reduce the boredom of doing same type of job every day
and explore the hidden potential of an employee. The process serves the purpose of both the
management and the employees.
6.10 KEYWORDS
Job Rotation : It is a management approach where employees are shifted
between two or more assignments or jobs at regular
intervals.
Lower Attrition Rates : Company can better retain its top talent.
Job Enlargement : It means a horizontal expansion of a job.
Direction and Control : It means encourages self-discipline. It does not believe in

external indication and force.
27
Job Enrichment : It means enhancing individual jobs to make them more
rewarding and inspiring.

1. “Job enrichment is a fundamental part of attracting, motivating, and retaining talented
people, particularly where work is repetitive or boring” -Elucidate with an example.
2. What do you mean by Job Rotation? Explain the various purposes of it in an organization.
3. Explain the various benefits of Job Rotation with an example of an organization.
4. What is Job Enrichment? Explain the various characteristics of job enrichment.
5. Explain various outcomes of job enrichment with an example of an organization.
6.12 REFERENCES
New Delhi – 2001.
28
UNIT-7 PROCUREMENT OF HUMAN RESOURCES
Structure:
7.0 Objectives
7.1 Introduction
7.2 Manpower Planning
7.3 Attrition and Retirement
7.4 Human Resource Recruitment
7.5 Techniques of Recruitment
7.6 Selection
7.7 Purpose of Selection
7.8 Process and Criteria of Selection
7.10 Summary
7.11 Keywords
7.13 References
29
7.0 OBJECTIVES
 Give the meaning of manpower planning.

 Explain attrition and retirement.
 Elucidate human resource recruitment and its technique.
 Explain the purpose of selection.
 Discuss the process and criteria of selection.
7.1 INTRODUCTION
In this unit, we shall discuss various concepts of procurement of human resources
consists of manpower planning, attrition and retirement, recruitment and selection. Procurement
is a fancy term meaning “to get.” To procure something means to find and retrieve something,
usually an item or a service. Plenty of businesses have their own procurement department. This
is usually a group of dedicated employees who make buying decisions for the business. Whether
it is a buying department at a publishing house who decides which printers around the world to
partner with or a procurement officer at a Fortune 500 company who runs a team that’s
responsible for sourcing all the office furniture for thousands of employees, procurement is an
important job.
Procurement of Human Resources means, HRM teams that focus on finding good fits for
the procurement teams mentioned above. Lots of staffing and recruitment groups focus on
finding the right candidates for their clients in one industry whether that is creative, marketing,
sales and others. Therefore, there are lots of staffers looking to find good fits for procurement
jobs like buyer, procurement assistant, supply chain analyst, contract coordinator, and many
more.
In these instances, HR professionals need to really understand the roles they are filling
for, the kinds of industries looking for buyers and procurement specialists, and what kinds of
things are being procured. It is a lot of information, but it’s crucial to finding the right fits for
businesses looking for procurement team members.
30
7.2 MANPOWER PLANNING
Manpower planning is the process of estimating the optimum number of people required
for completing a project, task or a goal within time. Manpower planning includes parameters like
number of personnel, different types of skills, time period, demand and supply trends,
organizational strategy etc. It is a never ending continuous process to make sure that the business
has the optimized resources available when required taking into consideration the upcoming
future projects and also the replacement of the outgoing employees. It is also called as Human
Resource Planning.
Need for Manpower Planning
Large businesses often work on forecasting and upcoming opportunities in the pipeline. If
these opportunities convert into actual business, they would need manpower to start working on
them. But the dilemma is that what if they hired a large number of people to work on an almost
sure project but at the last moment the project didn't start on time. What would the business do
with the additional skilled manpower.
The other dilemma is that if they kept waiting till the last moment for a project and when
the project starts they might not have enough manpower to work and deliver. These questions are
solved by the process of manpower planning.
Manpower planning also includes the details like how and when will new employees be
acquired. This whole process is done keeping in view the goals of the organization, the future
predictions for business and changing technology trends. This helps the organization be prepared
for the future with the correct manpower at their disposal for business prosperity.
31
Process of Manpower Planning:
Fig 7.1: Manpower Planning Process
The above diagram shows the manpower planning process which depends upon the
business objective. The process can be elaborated in detail below.
The process and steps for manpower planning are as below:
1. Understanding the Existing Workforce
The HR department has to thoroughly understand the manpower available with the company.
They should examine the background, skill set, qualification, location and related factors of the
entire work force so that they have a good idea regarding the pool of talent which the company
has.
2. Forecasting for the Future
With constant changes in business requirements, companies must understand the future trend and
which type of employees would be best suited for their organization. Hence, companies must
examine, evaluate and forecast the type of employee workforce they want in the future years.
3. Recruitment and Selection
Depending upon the business requirements, manpower planning leads to a much more well
thought out recruitment and selection pattern. This totally depends upon the forecasts made and
32
the business requirements. Hence, candidates with better qualification, skill set, experience and
other factors are shortlisted as employees to best suit the future needs.
4. Training the Employees
Employees who are a part of the organization are trained to have the best skills, knowledge and
understanding about the current job as well as the future requirements. All these above
mentioned manpower planning steps help organizations become better prepared to adapt to new
technology, future industry developments and even to face off with competitors.
Importance of Manpower Planning
Manpower planning is an essential requirement for any business. It helps the company to
be prepared well in advance for the type of employees they would be requiring in their
organization in the future. With constantly changing business requirements, technological
advancements etc. the skills and knowledge of employees tend to become obsolete over a period
of time. Also, if a business is growing, then the workforce needs to be expanded if the company
wants to have its business at different locations, different business domains etc. If a company
fails to prepare before hand, it can create issues in the future and can collapse the business model
for a company. Hence, timely preparation of manpower planning would always help a business
grow.
Example of Manpower Planning:
IT companies are often faced with the business problem of hiring right people for
upcoming projects as well as the problem of attrition. These companies have multiple projects
going on at a single time and upcoming projects in the pipeline. If they hire more people without
planning they would end up with many resources on the bench which would eat into profits and
if they keep waiting till the last, they would not have enough skilled people to set up the project
and start delivering eventually leading to customer dissatisfaction and losses.
So these companies keep on forecasting and planning as per the market requirements,
latest skill set and their project pipeline. Most of the times, hired resources cannot be productive
straight away so they need to train them which would require further planning and time.
33
7.3 ATTRITION AND RETIREMENT
Employee attrition occurs when the size of your workforce diminishes over time due to
unavoidable factors such as employee resignation for personal or professional reasons.
Employees are leaving the workforce faster than they are hired, and it is often outside the
employer’s control. For example, let us say that you have opened a new office designated as the
Sales Hub for your company. Every salesperson must work out of this office but a few
employees cannot relocate and choose to leave the company. This is a typical reason for
employee attrition. But there are other reasons for attrition as well, including the lack of
professional growth, a hostile work environment, or declining confidence in the company’s
market value. Weak leadership is another factor that often drives attrition among employees.
There are five types of employee attrition that are explained below:
1. Attrition Due to Retirement
If two or three people have retired from your company this year, this is statistically too small
an employee group to count under attrition. However, if a sizable chunk of your workforce
retires at the same time, this can cause attrition.
Attrition due to retirement should not be swept under the rug your senior professionals may
choose to retire early or become independent consultants due to factors other than age.
2. Voluntary Attrition
This is the most common type of attrition, where employees decide to simply quit their jobs.
There can be many reasons for voluntary attrition (more on that later) and most of them are
in your control.
You should proactively try to curb voluntary attrition among high-value talent, as this can
bring down your productivity over time. For example, if a company sees its marketing
experts moving out of different business units, it is a clear cause for concern.
3. Involuntary Attrition
In this scenario, it is the company and not the employee that initiates the exit. For example,
the employee may have shown instances of misconduct in the workplace a common reason
34
for involuntary attrition. Structural reasons could also cause attrition. Mergers and
acquisitions are often followed by a wave of involuntary attrition.
4. Internal Attrition
Here, employees are quitting their jobs in one department to join another department. In
some cases, internal attrition is desirable, as it routes talent towards more profitable areas. It
also ensures better employee job fitment.
But if a specific department has witnessed a high rate of attrition one year, it merits an
investigation. Is there something missing in the job? Is the manager inadequately skilled?
These are questions that HR needs to ask and find answers to.
5. Demographic-Specific Attrition
This is a significant concern for progressive companies trying to build an equal opportunities
workplace. Demographic-specific attrition means that employees from a single group
women, ethnic minorities, people with disabilities, veterans, or older professionals are
leaving the company in droves.
You need to immediately deploy employee surveys to identify the root cause of
demographics based attrition before it affects your workplace culture. A positive culture can
be the antidote to the quitting epidemic.
Retirement
Retirement is when a person stops or retires working after the service of a certain period
of time. Retirement is officially stopping your professional career. It could be because of the age
set by the government or companies, the voluntary retirement due to some health issues, work
conditions or some other issues or the benefits which a person can avail later.
Retirement could be complete when a person stops working completely or partial when a
person reduces working hour in consent with the company. In case of semi-retirement, the
compensation is different from full employment as well as full retirement.
Importance of Retirement
The age of retirement set by the government varies from country to country. It generally
varies from 50 to 70 years. The first country to start this concept was Germany, in 1889. Before
35
that the life expectancy rate was low and people used to work till death also. The age of
retirement was different for male and female employees in the early times when this concept was
brought in by the countries. However later, due to the reduction in manual efforts and
mechanization, the parity in the age limit has been removed in most of the countries as the
productivity of both males and females is similar.
The benefits after retirement also varies from one country to another country. Amount of
pension and other benefits depends upon government as well as companies. The companies
generally take out a part of salary of employees every month and that is saved under retirement
benefits funds. In India, the pension and retirement fund is more common in Public sector than
Private sector. It is also seen a celebration of farewell from the company.
Now a days, retirement planning is itself a business. Many digitalized companies provide
planning offers which illustrate how much funds one should save every month for the age after
retirement. There are planning calendars also. For example, Capital Group of Companies (US
based firm) having online asset management services offers a planning calendar where you enter
your monthly salary and other job related details and it gives the amount to be saved for
retirement every month.
7.4 HUMAN RESOURCE RECRUITMENT

Recruitment Meaning:
Recruitment actually means a way to search the future employees of the organization and
stimulate qualified people to apply for the job. It helps to create a pool of job seekers and
improve the scope of recruitment of better employee.
Recruitment activity brings together the people who are qualified and looking for job and
the organizations which are searching for prospect employees. The properly executed
recruitment process leads to joining and selection of suitable manpower in the organization.
Hence, recruitment is the end-to-end process of effectively and efficiently sourcing,

screening, selecting, and appointing the best-suited candidate to the right role. This entails not
only filling in vacancies but also predicting talent requirements and proactively managing talent.
For example, with succession planning becoming an effective practice across sectors,
especially for senior executives, recruiters today need to be able to build and keep handy a steady
36
talent pipeline to fill in those vacancies that cannot be filled through internal hiring or
promotions.
Fig 7.2: Meaning of Recruitment
Recruitment Definitions:
Recruitment is defined as a process of discovering reliable sources of contacting desirable

employees which meets the staffing requirements of the organization. Through recruitment
process the organization can attract the adequate number of manpower to facilitate the effective
selection process and joining of efficient work force.
Here are some popular definitions of recruitment given by eminent authors:
Edwin Flippo defined, Recruitment is the process of searching for prospective employees and
stimulating them to apply for jobs in the organization.
According to DeCenzo and Robbins, recruitment is the process to discover potential candidates
for future actual or anticipated job vacancies. Another perspective is that it is a linking activity
which brings together organizations those with jobs to fill and people those are seeking jobs.
37
Plumbley defined, recruitment is a process to match the capacities of candidates with the
demands of the organization. The inclination of qualified candidates should also match with the
rewards and benefits the organizations are willing to provide in the job.
As per Dale Yoder, recruitment is way through which the manpower requirements of the
organization can be fulfilled. It employs effective procedure to attract the people in ample
amount to make sure a suitable person is recruited on the available job profile.
Kempner defined recruitment is identified as a first step of the process which persists with
selection and ends with the joining of the suitable candidate in the organization.
7.5 TECHNIQUES OF RECRUITMENT

The general context around recruitment has been evolving in light of newer inclusions of
technology, changing organizational needs, and growing candidate expectations. With that
setting the backdrop, you need fresh recruitment techniques to help you navigate the sea of
talent.
Here are five fresh recruitment techniques to engage with top talent in 2020 and beyond:
1. Quicker Processes: Keep it short and sweet

That we do not have very long attention spans or endless patience is a known fact. With
that in mind, it would be impractical to expect candidates to stick on and stay engaged and
committed to a long-drawn recruitment process.
An important recruitment technique to keep in mind for the near future is to keep
processes as short and meaningful as possible no endless wait for feedback, no time spent in
deciding what the next step is or who will take the next assessment/interview, and no time
invested in admin processes that can easily be managed. A 2016 survey of over 1,000
professionals across fields conducted by recruiting firm Robert Half reported that candidates
lose interest in the job opening if the process and feedback cycle takes longer than two
weeks. The technique to condense the process effectively into an engaging experience is
something that we must strategize.
2. Recruitment Marketing: Engage Passive Candidates
Candidates are customers too, and while some may be on an active job hunt, others may
be passively browsing through. The latter group could also have your ideal employee, and it
38
would be unfortunate to miss an opportunity to get the right candidate on board simply
because they were not as desperate for a job as the others.
Recruitment marketing is as crucial as marketing the products and services that an
organization has on offer. This needs to be focused branded marketing of the organizational
culture, the job, the career path ahead and the promise of an employee experience worth
investing in.
Fig 7.3: Fresh Five Recruitment Techniques

3. Increased visibility: Get seen across portals
As a smart recruiter, engaging top talent would entail making the posting visible across
different mediums and portals. The use of effective SEO strategies would be an added bonus
in ensuring that the job listings rank higher for jobs searched on Google and other relevant
search engines.
4. Engaging job descriptions: Make them want to apply
Creating organic buzz and interest around a job opening is a technique that you need to
invest in. The job description is a tool that serves a dual purpose of informing the candidate
in detail about the job opening, and of piquing the candidates interest in the role and the
organization.
Job descriptions are often the first piece of communication from the organization to a
prospective applicant and should be treated and tools of branded marketing to get the right
39
information across. These intelligent job descriptions also heave to be in a format and
language that resonates with the target talent audience.
5. A well-maintained rejection pile: Re-engage second choices
Re-engaging with rejected candidates is a great technique to save time and effort. All this
data should ideally be easily accessible to you, and you would already know the reason each
candidate was rejected.
Remember that there may be a few candidates who passed most of the rounds of candidate
screening but might not have been selected for some valid reason at the time. This is a useful
repository of screened candidates that could help you skip a few steps in the process. This
also points to the need of effective Candidate Relationship Management (CRM) since
rejected candidates are not only useful talent sources but also channels for propagating the
employer brand.
7.6 SELECTION
Selection is the process of putting right men on the right job. It is a procedure of
matching organisational requirements with the skills and qualifications of people. Effective
selection can be done only when there is effective matching. By selecting best candidate for the
required job, the organisation will get quality performance of employees. Employee Selection is
the process of interviewing and evaluating the candidates for a specific job and selecting an
individual for employment based on certain criteria (qualifications, skills and Experience).
Employee selection can range from a very simple process to a very complicated process
depending on the firm hiring and the position. Certain employment laws such as anti-
discrimination laws must be obeyed during employee selection.
According to Dale Yoder, “hiring (selection) process is one or many ‘go’ on no-‘go’ gangs.
Candidates are screened by the application of these gangs. Qualified applicants go on to the next
hurdle, while in qualified are eliminated”.
Thus, a systematic selection should be done in the organization to avoid wrong

candidate’s selection and loss of time and money incurred on this process. Wrong selection also
leads to absenteeism and retrenchment. Selection is the process of carefully screening the
candidates who offer themselves for appointment so as choose the most suitable persons for the
jobs that are to be filled. It is the process of weeding out unsuitable candidates.
40
Selection is the process of putting right men on the right job. It is a procedure of
matching organisational requirements with the skills and qualifications of people. Effective
selection can be done only when there is effective matching. By selecting best candidate for the
required job, the organisation will get quality performance of employees. Moreover, organisation
will face less of absenteeism and employee turnover problems. By selecting right candidate for
the required job, organisation will also save time and money. Proper screening of candidates
takes place during selection procedure. All the potential candidates who apply for the given job
are tested.
But selection must be differentiated from recruitment, though these are two phases of
employment process. Recruitment is considered to be a positive process as it motivates more of
candidates to apply for the job. It creates a pool of applicants. It is just sourcing of data. While
selection is a negative process as the inappropriate candidates are rejected here. Recruitment
precedes selection in staffing process. Selection involves choosing the best candidate with best
abilities, skills and knowledge for the required job.
Once an adequate number of applicants have been sourced, the process of selection
begins. Selection is the second step in the staffing process. This process involves choosing the
candidates who best meet the qualification and have the greatest aptitude for the job. The main
objective of this process is to match individual characteristics such as ability, experience and so
on with the requirements of the job. Thus, a systematic selection should be done in the
organization to avoid wrong candidate’s selection and loss of time and money incurred on this
process. Wrong selection also leads to absenteeism and retrenchment. Selection is the process of
carefully screening the candidates who offer themselves for appointment so as choose the most
suitable persons for the jobs that are to be filled. It is the process of weeding out unsuitable
candidates.
7.7 PURPOSE OF SELECTION

The purpose of selection process is to pick up the most suitable candidate who would
meet the requirements of the job in an organisation best, to find out which job applicant will be
successful, if hired.
41
To meet this goal, the company obtains and assesses information about the applicants in
terms of age, qualifications, skills, experience and many others, the needs of the job are matched
with the profile of candidates.
The most suitable person is then picked up after eliminating the unsuitable applicants
through successive stages of selection process. How well an employee is matched to a job is very
important because it is directly affects the amount and quality of employee’s work and overall
performance and productivity of the organization.
Any mismatch in this regard can cost an organisation a great deal of money, time and
trouble, especially, in terms of training and operating costs. In course of time, the employee may
find the job distasteful and leave in frustration. He may even circulate ‘hot news’ and juicy bits
of negative information about the company, causing incalculable harm to the company in the
long run. Effective election, therefore, demands constant monitoring of the ‘fit’ between people
the job.
Fig 7.4: Employee Selection Process
7.8 PROCESS AND CRITERIA OF SELECTION

Once you have developed your recruitment plan, recruited people, and now have plenty
of people to choose from, you can begin the selection process. The selection process refers to the
steps involved in choosing people who have the right qualifications to fill a current or future job
opening. Usually, managers and supervisors will be ultimately responsible for the hiring of
42
individuals, but the role of human resource management (HRM) is to define and guide managers
in this process.
The selection process is expensive. The time for all involved in the hiring process to
review résumés, weight the applications, and interview the best candidates takes away time (and
costs money) that those individuals could spend on other activities. In addition, there are the
costs of testing candidates and bringing them in from out of town for interviews.
The Selection Process consists of five distinct aspects:
1. Criteria Development: All individuals involved in the hiring process should be properly
trained on the steps for interviewing, including developing criteria, reviewing resumes,
developing interview questions, and weighting the candidates.
The first aspect to selection is planning the interview process, which includes criteria
development. Criteria development means determining which sources of information will be
used and how those sources will be scored during the interview. The criteria should be related
directly to the job analysis and the job specifications. In fact, some aspects of the job analysis
and job specifications may be the actual criteria. In addition to this, include things like
personality or cultural fit, which would also be part of criteria development. This process usually
involves discussing which skills, abilities, and personal characteristics are required to be
successful at any given job. By developing the criteria before reviewing any resumes, the HR
manager or manager can be sure he or she is being fair in selecting people to interview. Some
organizations may need to develop an application or a biographical information sheet. Most of
these are completed online and should include information about the candidate, education, and
previous job experience.
2. Application and Resume Review: Once the criteria have been developed (step one),
applications can be reviewed. People have different methods of going through this process, but
there are also computer programs that can search for keywords in resumes and narrow down the
number of resumes that must be looked at and reviewed.
3. Interviewing: After the HR manager and/or manager have determined which applications
meet the minimum criteria, he or she must select those people to be interviewed. Most people do
43
not have time to review twenty or thirty candidates, so the field is sometimes narrowed even
further with a phone interview.
4. Test Administration: Any number of tests may be administered before a hiring decision is
made. These include drug tests, physical tests, personality tests, and cognitive tests. Some
organizations also perform reference checks, credit report checks, and background checks. Once
the field of candidates has been narrowed down, tests can be administered.
5. Making the Offer. The last step in the selection process is to offer a position to the chosen
candidate. Development of an offer via e-mail or letter is sometimes a more formal part of this
process. Compensation and benefits will be defined in an offer.

1. The purpose of selection process is to _____ the most suitable candidate who would meet
the requirements of the job in an organization.
2. The selection process consists of ______aspects.
3. Procurement is first operational function of ______or personnel management.
4. The last step in the selection process is to ______to the chosen candidate.
5. The job description is a tool that serves a ______the candidate in detail about the job
opening, and of piquing the candidates interest in the role and the organization.
1. Pick up
2. Criteria development
3. Human resource
4. Offer a position
5. Dual purpose of informing
7.10 SUMMARY
As we learnt, procurement is a fancy term meaning “to get.” To procure something means
to find and retrieve something, usually an item or a service. Plenty of businesses have their own
procurement department. This is usually a group of dedicated employees who make buying
decisions for the business. Whether it’s a buying department at a publishing house who decides
44
which printers around the world to partner with or a procurement officer at a Fortune 500
company who runs a team that’s responsible for sourcing all the office furniture for thousands of
employees, procurement is an important job. Procurement is first operational function of Human
resource or personnel management. Procurement is subjected to procuring and employing people
who fits the position and have necessary skill set, mindset, attitude and knowledge. Manpower
planning is the process of estimating the optimum number of people required for completing a
project, task or a goal within time. Manpower planning includes parameters like number of
personnel, different types of skills, time period, demand and supply trends, organizational
strategy and other parameters. The purpose of selection process is to pick up the most suitable
candidate who would meet the requirements of the job in an organisation best, to find out which
job applicant will be successful, if hired. The selection process is expensive. The time for all
involved in the hiring process to review resumes, weight the applications, and interview the best
candidates takes away time (and costs money) that those individuals could spend on other
activities. The selection process is expensive. The time for all involved in the hiring process to
review resumes, weight the applications, and interview the best candidates takes away time (and
costs money) that those individuals could spend on other activities.
7.11 KEYWORDS
Selection Process : It refers to the steps involved in choosing people who have
the right qualifications to fill a current or future job
opening.
Manpower Planning : It is the process of estimating the optimum number of

people required for completing a project, task or a goal
within time.
Attrition : Reduce in numbers.
Retirement : It is withdrawal from one's position or occupation or from

active working life.
Selection : It is a process to pick up the most suitable candidate.
45
1. When did HR and procurement departments become one and same? What exactly does
‘procurement’ mean? Is it really a feature of human resources?
2. How do you feel about the relationship between HR and procurement? Do you feel like
these functions of business tend to overlap more in the modern workforce?
3. What do you mean by manpower planning? Discuss attrition and retirement.
4. Elucidate the techniques of recruitment with an example of an organization.
5. What is selection? Explain process and criteria of selection.
7.13 REFERENCES
New Delhi – 2001.
46
UNIT-8 HUMAN RESOURCE MANAGEMENT AND INFORMATION
SYSTEM
Structure:
8.0 Objectives
8.1 Introduction
8.2 Challenges of Information Technology and HRM
8.3 Human Resource Information System
8.4 Human Resource Database
8.5 Research in Human Resource Management
8.7 Summary
8.8 Keywords
8.10 References
47
8.0 OBJECTIVES
 Explain HR management information system.

 Discuss the challenges of information technology in HRM.
 Describe human resource database.
 Elucidate the research in HRM.
8.1 INTRODUCTION
An information system that is specially designed to automate human resource activities in
an organization is known as Human Resource MIS. This system is mainly concerned with all
activities related to the organization's staff and future employees. The information system for
Human Resource Management can be viewed as a way for large and small organizations to take
care of a variety of operations, including human resources, accounting, management, and
payroll, using MIS application software. A human resource management information system
makes it possible for an organization to more efficiently plan its strategic HR planning, track and
monitor them without allocating too many resources. In most cases, when it comes to making
HR decisions, a human resource management information system would also contribute to
improved organizational effectiveness. The quality of the decisions taken should also increase
and, as a consequence, the efficiency of both employees and executives should increase and
become more efficient.
In a Human Resource MIS, some of the typical subsystems include design and
engineering, planning of production, inventory management, process control, and quality control.
48
Fig 8.1: Human Resource MIS
8.2 CHALLENGES OF INFORMATION TECHNOLOGY AND HRM

Innovation in this digital era has shot up over all vital business exercises. This article
envisions the role of IT in real-time measurements of the HRM capacity. It additionally
concentrates on the opportunities and difficulties confronted by the organizations in actualizing
IT crosswise over HRM work. A few basic zones of HR capacity are additionally highlighted
where IT has been executed effectively by different organizations.
HRM depicts a procedure of overseeing and using the employees of the organizations. It
involves varied functions, including enrollment and choice of appropriate candidates, providing
opportunities to enhance their KSA (Knowledge, Skills and Abilities), evaluating their skills and
fixing appropriate pay packages, promotion and incentive procedures, guiding in overall
professional success, and in relieving the employees from the company. Essentially there are
three sorts of e-HRM, i.e. operational, social and transformational e-HRM. Operational relates
with the managerial elements of HR division, social relates with giving data to the
representatives and making virtual relationship among them so they can be constantly associated,
while transformational e-HRM centers over the key introduction of the HR work. It connects the
HR work with business system to accomplish the objectives adequately and productively. It also
enables overseeing and sharing the information over virtual systems.
49
Challenges Associated With HR Technology:
1. Fetched:
“Technology pulls cost”. An innovation-based HR framework is expensive, but once

executed, it decreases the operational expenses. Substantial organizations may introduce HR
gateways/bundles, while small- to mid-size organizations find it difficult to bear the cost.
2. Acknowledgment:
Because of IT usage, different issues like skills/knowledge for its utilization, job dangers
and so on dependably ascend in its direction. Acknowledgment from the workforce is
required for using it up to its fullest.
3. Back-Ups and Security:
Maintenance cost is high if we need to prevent hacking/open to all arrangement/illegal acts.

A lot of thought is required on these lines.
4. Increasing Isolation:
Due to the arrangement of virtual networks through intranet or eHR gateways, the individual
collaboration among the representatives has reduced. In the traditional frameworks, they
collaborate with the representatives, and were integral to the organization. They are
disengaged from each other now, and are connected for all intents and purposes through
such entryways only.
8.3 HUMAN RESOURCE INFORMATION SYSTEM

The Human Resource Information System (HRIS) is a software or online solution for the
data entry, data tracking, and data information needs of the Human Resources, payroll,
management, and accounting functions within a business. It is useful for all processes that you
want to track and from which you hope to gather useful and purposeful data. Normally packaged
as a database, hundreds of companies sell some form of HRIS and every HRIS has different
capabilities. Pick HRIS carefully based on the capabilities that need in the company. As HRIS
has become increasingly sophisticated, the choice among the various systems has become
enough to practically paralyze an HR department.
50
Benefits of the HR Information System:
An effective HRIS provides information on just about anything the company needs to
track and analyse about their employees, former employees, and applicants. The company will
need to select a Human Resources Information System and customize it to meet thier needs. If
the company is on a growth path, choose a system that shows growing trend. With an appropriate
HRIS, Human Resources staff enable employees to do their own benefits updates and address
changes, thus freeing HR staff for more strategic functions. Additionally, data necessary for
employee management, knowledge development, career growth and development, and equal
treatment is facilitated. Finally, managers can access the information they need to legally,
ethically, and effectively support the success of their reporting employees. They can run their
own reports and enter plans into the system to help with succession.
The Human Resource Information System (HRIS) is a software or online solution for the
data entry, data tracking, and data information needs of the Human Resources, payroll,
management, and accounting functions within a business.
8.4 HUMAN RESOURCE DATABASE

Data stored in the HR database includes employees details like personal information,
training, salary details, reimbursement, worksheet, time chart and other database.
Secondly, data related to recruitment, transportation, expenses, clients, customer

relationship management, finance, production and other related data.
Human resource databases include any form of data that is needed for the smooth
functioning of human resource management.
Sources of HR Data
Since the HR database is so vast, there are multiple sources for collecting the data. These
data collection sources vary on the type and need of data. Also, categorising and clearing the
source of data helps in data analysing.
Here are the three broad and their subcategories in which sources of human resource
databases can be divided.
51
1. HR Information System
2. Business Data
3. Other HR Data
Fig 8.2: Sources of Human Resource Database
1. HR Information System
The Human Resource Information System (HRIS) contains basic human resource
information related to employees. Although the branches of HRIS will differ from firm to
firm in general some branches will be the same.
52
However, information related to recruitment, employees’ personal, training, job-related data
are the core of HRIS. Here are the different sources for the human resource databases from
HR information system:
 Recruiting
As one of the biggest source and the vast data which a company gathers in its hiring
process. This includes the data gathered from the applicant information system, i:e
information of different applicants from different sources, applicants CVs, number of
candidates. Consequently, these data can be used for future hiring.
 Demographic Data
Demographic data in human resource databases include the employee ID, name, date
of birth, gender, position, residence, cost centre specifications, department, termination date,
and so on.
This type of HR database is essential to know about the employees’ valid and basic
information. Plus, according to the labour laws, it is mandatory to maintain such an HR
database.
 Performance Management
Performance management is one of the HR databases which include the performance

records of employees. It refers to the feedbacks, rating, and achievements of employees.
 Learning Management
Learning management in human resource databases is referred to as training and

development. Also, this type of data includes the data of employees required in training &
development and their progress from these programs.
 Job Architecture
As the name suggests architecture, includes the data related to the designing and
structure of a job in an organization. Plus, it includes the roles and responsibilities included
in every job role.
53
 Compensation & Benefits
To keep employees motivated, organizations provide the benefits and for their
services, they are compensated. So, human resource databases and organizations need to
create data to include each employee’s salary structure and other benefits.
 Succession Planning
Succession planning is mostly included in big cooperation. Because data in this branch
of HR includes future and future leaders.
 Exit Interview
Exit interviews are those which are conducted when employees are leaving. This
interview provides data like feedback, improvements required. Such data is used to
improve employee retention, improving organization etc.
2. Business Data
Business data includes multiple branches depending upon the number of departments and
the size of the organization. This data is required for business analytics. Here the different
sources for business data which is included in human resource databases.
 CRM Data
CRM stands for customer relationship management. Such management includes the
score points, point of contact, target customers and so on. Most importantly CRM holds the
biggest data. And, it is used for creating and analysing policies suitable to customers.
 Sales Data
Another source of measuring organization performance is sales management. Plus it

helps in analysing the performance of individual stores or points. Sales data mostly includes
the sale of each store, product sales. Thus sales data is used to create policies, developing
production plans, supply chain management.
 Financial Data
Data from the finance or accounting department is included from this source in the
human resource database. This data is used to create an analysis of plans and investment.
54
 Production Data
Production management data has information related to product production, product

line, track, and manage data including schedules, number of service calls, delivery rate,
speed of delivery, and much more. Helps, in forming plans for production, delivery,
 Other Data
Other data are from internal and external sources of business. Like, market data, but
also flu rates, weather data, and all other factors that can impact people and productivity.
3. Other Data
Other data is referred to the sources like surveys or some measurements, events etc. Sources
that are different from day to day working of an organization. Here the different sources for
human resource databases.
 Learning
Learning is referred to the training and development programs which are offered by
the organization. So, these programs provide data about different programs, institutes, their
fees, skills to focus on other than the employee’s development data.
 Travel
Travel in an organization occurs when someone goes to some other place form
training, field job and many more. So, the organization needs to keep the data of people who
went on trips, their expenses, places and related data.
 Employee Survey Data
The organization conducts different surveys like employee feedbacks, organization

feedbacks, suggestion surveys and other. These surveys are conducted to analyse and
improve the work environment, maintaining peace among employees etc.
 Wellbeing and Wellness Data
Some organizations maintain the records of their employees’ health. Since these
organizations conduct the health programs and some organization conduct the programs for
their families as well.
55
Absence Data
Another important data required in human resources databases is the employee’s

absence data. This includes the reasons for the employees leave. As a result, it helps in
analysing the reasons and period for leaves.
These are the different sources for human resource databases
8.5 RESEARCH IN HUMAN RESOURCE MANAGEMENT

The study of human resource practices and activities gives the extent of success or failure
of policies and practices. Research on HRM activities provides an understanding of what does
work, what does not work, what needs change, the nature and the extent of change. HR research
is, “the task of searching for, and analysing of facts to the end that HR problems may be solved
or principles and laws governing their solutions derived.”
Everything you need to know about HR research. HR research is, “the task of searching
for, and analysing of facts to the end that HR problems may be solved or principles and laws
governing their solutions derived.” HR research implies searching investigations, re-
examinations, re-assessments and revaluations. In other words, research is a purposive and
systematic investigation designed to test hypothesis through structured questions.
According to Michael J. Jucius, “HR research is the task of searching for and analysing
of facts to the end that HR problems may be solved or principle and laws governing their
solution derived”.
According to Dale Yoder, “HR research is a shortcut to knowledge and understanding

which can replace the slower, more precarious road of trial and error in experience. It implies
searching investigations, re-examinations, reassessments and revaluation. It is a purposive and
systematic investigation designed to test carefully considered hypotheses or thoroughly framed
questions”.
HR research implies searching investigations, re-examinations, re-assessments and

revaluations. In other words, research is a purposive and systematic investigation designed to test
hypothesis through structured questions. It seeks to answer specific questions and is not merely
an accumulation of unstructured observations. It is objective; that is, it recognises and limits bias
and prejudice in every step of the process.
56
a. It is systematic; that is, it begins with a comprehensive designs or plan, and the investigation
is conducted in terms of that design.
b. It is parsimonious; that is, it identifies methods and techniques for the solution of problems
with the minimum cost.
c. It is repeatable; that is, it can be used independently by several researchers at the same time.
d. It is a planned and designed investigation analysis and fact finding. It is conducted to verify
or disapprove certain assumptions or hunches. It supplements existing knowledge.
Research Procedure and Accountability:
A researcher has to follow a certain research procedure. In the first place, he has to define
problem; that is he has to determine the problem that is to be solved by constructing research
design. He has then to state his objective; that is, he has to determine the goal that is to be
reached as a result of his research. E.g. formulates and tests a hypothesis and collects data as a
result of his observation of personnel and following the issue of a questionnaire and the holding
of interviews.
After the data have been collected, classifies, analyses and interprets his information,
draws conclusions, makes generalisations, or develops new hypotheses. Finally, he prepares a
formal report containing statements, tables, charts and other explanatory or illustrative material,
and submits the results of his research to those for whom they are meant.
The results of research projects, plans, findings and experiences are generally reported in
a number of publications brought out by an organisation, and in a number of other journals,
technical or business magazines; they are also covered in seminar reports, conference
proceedings and monographs.
Yoder classifies these into three categories – (a) those professing a major interest in the
field of personnel and labour relations; (b) those having a specialised focus on one or more of
these; and (c) journals covering wider interests, which include reports on research in the
manpower management area.
Research is not the sole responsibility of any one particular group or department in an
organisation. The initial responsibility is that of the personnel department which, however,
should be assisted by line supervisors and executives at all levels of management. The assistance
57
that can be rendered by trade unions and other organisations, for example, educational
institutions, private research groups and governmental agencies should not be ignored, but
should be properly made use of.
Psychologists, sociologists, economists, mathematicians, and specialists in business

administration, political science and other areas should also be laid under contribution insofar as
research is concerned.
Some of the important characteristics of HR research are:
(i) Human resource research is purposive. In other words, it seeks to answer specific
questions.
(ii) HR research is objective. It recognises and limits bias and prejudice in every step of the
process.
(iii) It is systematic. It brings with a comprehensive plan or design. Investigation is conducted

based on that design.
(iv) HR research is parsimonious. It identifies methods and techniques for the solution of the
problems with the minimum cost.
(v) HR research is repeatable. It can be used by different researchers at the same time.
(vi) It is planned and designed investigation and analysis.
(vii) It is conducted in a systematic manner to check or verify or disprove clues, assumptions or

hunches.
(viii) It supplements knowledge and extends the frontiers of understanding.

1. HR research implies searching, investigations, re-examinations, re-assessments and______.

2. An information system that is specially designed to ______in an organization is known
as Human Resource MIS.
3. HRM depicts a procedure of ______and using the employees of the organizations.
4. Human resource research is ______ it seeks to answer specific questions.
58
5. Operational relates with the managerial elements of ______ division.
1. Revaluations
2. Automate human resource activities
3. Overseeing
4. Purposive
5. HR
8.7 SUMMARY
In this unit, we have throw a light on HR information system. The information system for
Human Resource Management can be viewed as a way for large and small organizations to take
care of a variety of operations, including human resources, accounting, management, and
payroll, using MIS application software. A human resource management information system
makes it possible for an organization to more efficiently plan its strategic HR planning, track and
monitor them without allocating too many resources. In most cases, when it comes to making
HR decisions, a human resource management information system would also contribute to
improved organizational effectiveness. Human resource databases include any form of data that
is needed for the smooth functioning of human resource management. A researcher has to follow
a certain research procedure. In the first place, he has to define problem; that is he has to
determine the problem that is to be solved by constructing research design. He has then to state
his objective; that is, he has to determine the goal that is to be reached as a result of his research.
8.8 KEYWORDS
Learning : It is referred to the training and development programs
which are offered by the organization.
HR Research : It is the task of searching for and analyzing of facts to

the end that HR problem.
Human Resource MIS : An information system that is specially designed to

automate human resource activities in an organization.
Other Data : It is referred to the sources like surveys or some

measurements, events etc.
59
HRIS : It is a software or online solution for the data entry,
data tracking, and data information needs of the Human
Resources, payroll, management and accounting functions
within a business.

1. Explain the various challenges of information technology and Human Resource
Management.
2. What do you mean by Human Resource Information System? Explain the various benefits of
HRIS.
3. Elucidate the human resource data base available and explain the various sources of HR
data.
4. Explain research in HRM and write its Procedure and Accountability.
5. What do you mean by Human Resource MIS? Explain its benefits to an organization with
suitable example.
8.10 REFERENCES
New Delhi – 2001.
60
COURSE CODE: MCOHC2.1
BLOCK
3
Page No.
UNIT - 09: HUMAN RESOURCE DEVELOPMENT 1-16
UNIT - 10: HUMAN RESOURCE DEVELOPMENT FOR TOTAL QUALITY MANAGEMENT 17-28
UNIT - 11: CAREER PLANNING MANAGEMENT 29-47
UNIT - 12: TRANSFER POLICY 48-61

Credit Page
Programme : M.Com Semester: Second Block No :III
Course : Human Resources Management Credit : 04 Units No :9-12
Vice-Chancellor,
Dean (Academic),
BOS Chairman,
Dr. Chaya R. Member
Chairperson,
Editorial Committee
BOS Chairman,

Chairperson,
Copy Right
Registrar,
Dean (Academic), KSOU, Mysuru.Karnataka State Open University, October - 2022.
2022.
Preface
Dear Learner,
employee benefits.

With best wishes,
Smt. Usha C.
Chairperson
BLOCK – III
INTRODUCTION
Training is an organised procedure which brings about a semi-permanent change in
behaviour, for a definite purpose. The three main areas involved are skills, knowledge and
attitudes. The significant objectives of training includes meeting manpower needs, reduced
learning time, improved performance, reduced wastage, less absenteeism and fewer accidents.
The relationship between Total Quality Management (TQM) and organizational performance is a
central theme in organizations and areas of management and should be of interest to HRD
professionals. Career development and the career planning process includes a number of specific
steps that help to identify personal skills and attributes. Transfer is a process placing employees
in positions where they are likely to be more effective or where they are likely to get more job
satisfaction. Transfer is a process of employee’s adjustment with the work, time and place.
Hence, this block discuss about the human resource development, HRD for total quality
management, career planning management and transfer policy.
Unit-09: Human Resource Development

Unit-10: Human Resource Development for Total Quality Management
Unit-11: Career Planning Management
Unit-12: Transfer Policy
BLOCK-III
UNIT-9 HUMAN RESOURCE DEVELOPMENT

Structure:
9.0 Objectives
9.1 Introduction
9.2 Meaning and Definitions of Human Resource Development
9.3 Sub Systems of Human Resource Development
9.4 Training
9.5 Purpose of Training
9.6 Imperatives of Audit Learning
9.7 Training and Development System
9.8 Support System for Training
9.10 Summary
9.11 Keywords
9.13 References
1
9.0 OBJECTIVES
 Give the meaning of human resource development.

 Discuss the sub systems of HR development.
 Describe the training and purpose of training.
 Provide an overview of the training and development system.
 Explain the support system for training.
9.1 INTRODUCTION
The effective performance of an organisation depends not just on the available resources,
but its quality and competence as required by the organisation from time to time. The difference
between two nations largely depends on the level of quality of human resources. HRD concept
was first introduced by Leonard Nadler in 1969 in a conference in US. He defined “HRD as
those learning experience which are organized, for a specific time, and designed to bring about
the possibility of behavioral change”. Human Resource Development (HRD) is the framework
for helping employees develops their personal and organizational skills, knowledge, and abilities.
Human resource development includes such opportunities as employee training,
employee career development, performance management and development, coaching, mentoring,
succession planning, key employee identification, tuition assistance, and organization
development. The focus of all aspects of human resource development is on developing the most
superior workforce so that the organization and individual employees can accomplish their work
goals in service to customers. Human resource development can be formal such as in classroom
training, a college course, or an organizational planned change effort. In other words, human
resource development can be informal as in employee coaching by experts in the industry or by a
manager. Healthy organizations believe in human resource development and cover all of these
bases.
Human resource development in the organisation context is a process by which the

employees of an organization are helped, in a continuous and planned way to:
 Acquire or sharpen capabilities required to perform various functions associated with their
present or expected future roles;
2
 Develop their general capabilities as individuals and discover and exploit their own inner
potentials for their own and/or organizational development purposes; and
 Develop an organizational culture in which supervisor-subordinate relationships, teamwork

and collaboration among sub-units are strong and contribute to the professional well-being,
motivation and pride of employees.
This definition of HRD is limited to the organizational context. In the context of a state or
nation it would differ. HRD is a process, not merely a set of mechanisms and techniques. The
mechanisms and techniques such as performance appraisal, counselling, training, and
organization development interventions are used to initiate, facilitate, and promote this process in
a continuous way. Because the process has no limit, the mechanisms may need to be examined
periodically to see whether they are promoting or hindering the process. Organizations can
facilitate this process of development by planning for it, by allocating organizational resources
for the purpose, and by exemplifying an HRD philosophy that values human beings and
promotes their development. Thus, there is a need to study human resource development. This is
discussed in this unit.
9.2 MEANING AND DEFINITIONS OF HUMAN RESOURCE DEVELOPMENT

Human Resource Development (HRD) is that part of Human Resource Management
which specifically deals with the training and development of employees. It helps the employees
in developing their knowledge, skills and abilities to achieve self-fulfillment and aid in the
accomplishment of organizational goals. Development of human resources is essential for any
organization that would like to be dynamic and growth-oriented. Unlike other resources, human
resources have rather unlimited potential capabilities. The potential can be used only by creating
a climate that can continuously identify, bring to surface, nurture and use the capabilities of
people. Human Resource Development (HRD) system aims at creating such a climate. A number
of HRD techniques have been developed in recent years to perform the above task based on
certain principles. This unit provides an understanding of the concept of HRD system, related
mechanisms and the changing boundaries of HRD.
3
Definitions of HRD:
HRD (Human Resources Development) has been defined by various scholars in various
ways. Some of the important definitions of HRD (Human Resources Development) are as
follows:
According to Leonard Nadler, "Human resource development is a series of organized

activities, conducted within a specialized time and designed to produce behavioural changes."
In the words of Prof. T.V. Rao, "HRD is a process by which the employees of an
organization are helped in a continuous and planned way to (i) acquire or sharpen capabilities
required to perform various functions associated with their present or expected future roles; (ii)
develop their general capabilities as individual and discover and exploit their own inner potential
for their own and /or organizational development purposes; (iii) develop an organizational
culture in which superior-subordinate relationship, team work and collaboration among sub-units
are strong and contribute to the professional well-being, motivation and pride of employees." .
According to M.M. Khan, "Human resource development is the across of increasing

knowledge, capabilities and positive work attitudes of all people working at all levels in a
business undertaking."
Hence, human resource development refers to the training that organizations provide to
their employees so that they can develop the skills needed to be successful. Learn about the types
of human resource development, like job shadowing and education, and why they are important.
9.3 SUB SYSTEMS OF HUMAN RESOURCE DEVELOPMENT

HRD mechanisms or subsystems are explained as follows:
 Career Planning.
 Performance Appraisal.
 Feedback and Performance Coaching.
 Potential Appraisal and Development.
 Training.
 Organizational Development.
4
 Rewards.
 Employee Welfare and Quality of Work Life
 Career Planning
Career planning is a lifelong process, which includes choosing an occupation, getting

a job, growing in our job, possibly changing careers, and eventually retiring. One might seek
the services of a career development professional to help facilitate his or her journey through
this process. Whether or not you choose to work with a professional, or work through the
process on your own is less important than the amount of thought and energy you put into
choosing a career. It is very important to have information about ones interests, values, roles,
aptitudes, preferred environments, developmental needs and realities.
 Performance Appraisal
Performance appraisal of employees are necessary’ to understand each employee’s

abilities, competencies, relative merit and worth for the organization. Performance appraisal
rates the employees in terms of their performance. Performance appraisals are an
indispensable part of performance measurement.
 Feedback and Performance Coaching
The supervisor must learn how to direct discussions with employees regarding work
performance, in particular those techniques required channeling the employee’s energies
toward improved performance. The key to the performance coaching and feedback approach
is getting the employee to take personal accountability for his or her own behavior.
 Potential Appraisal and Development
Potential appraisal may thus be defined as a process of determining an employee’s

strengths and weaknesses with a view to use this as a predictor of his future performance.
 Training
The term training refers to the acquisition of knowledge, skills, and competencies as
a result of the teaching of vocational or practical skills and knowledge that, relate to specific
useful competencies. It forms the core of apprenticeships and provides the backbone of
content at institutes of technology. Effective training imparts a way of thinking. A well
5
trained person when faced with a problem should is able to respond quickly and wisely.
Appropriate training leads to a better and happier person on the job, an individual who is
able to function as part of the organizations team.
 Organizational Development
The term ‘Organization Development’ is often used interchangeably with

Organizational Effectiveness. Organizations always aim to increase the effectiveness and
efficiency of their actions. Organization Development is a growing field that is responsive
to many new approaches. One need to improve greatly in these areas until this is done one
cannot achieve the ambitious business goals set for oneself. Attracting talent, developing
good leaders and creating competent organizations will be regarded as a strategic area that
requires time, resources and prioritization by top management.
 Rewards
In today’s scenario the quality of talent has increased manifold, the need to retain the
best employee’s remains vital to any company’s viability. Keeping them healthy, building a
better benefits experience and providing a clear vision of benefits as part of a total rewards
package is important in any economic climate.
 Employee Welfare and Quality of Work Life
Welfare includes anything that is done for the comfort and improvement of
employees and is provided over and above the wages. Efforts are done to provide employees
with opportunity to balance career and family.
Various programs help employees cope with balancing the dynamic complexities of
today’s work and family life, including flexible work schedules, family friendly leave, on-
site child development center, on-site fitness center, on-site health clinic, on-site eating
establishments, transportation fringe benefit, additional benefits for the employees and much
more.
Welfare helps in keeping the morale and motivation of the employees high so as to
retain the employees for longer duration. The welfare measures need not be in monetary
terms only but in any kind or forms. The very logic behind providing welfare schemes is to
create efficient, healthy, loyal and satisfied labor force for the organization.
6
The purpose of providing such facilities is to make their work life better and also to
raise their standard of living.
9.4 TRAINING
Training is the process for providing required skills to the employee for doing the job
effectively, skillfully and qualitatively. Training of employees is not continuous, but it is
periodical and given in specified time. Generally training will be given by an expert or
professional in related field or job. Training constitutes a basic concept in human resource
development. It is concerned with developing a particular skill to a desired standard by
instruction and practice. Training is a highly useful tool that can bring an employee into a
position where they can do their job correctly, effectively, and conscientiously. Training is the
act of increasing the knowledge and skill of an employee for doing a particular job. Training is
concerned with the teaching/learning carried on for the basic purpose of enabling the employees
to acquire and apply the knowledge, skills, abilities and attitudes needed by that organization.
Training is required at every stage of work and for every person at work. To keep one-
self updated with the fast changing technologies, concepts, values and environment, training
plays a vital role. Training programmes are also necessary in any organisation for improving the
quality of work of the employees at all levels. It is also required when a person is moved from
one assignment to another of a different nature. Taking into account this context, this unit aims at
providing insight into the concept, need and methods of training, also areas of evaluation of
training, retraining and dimensions of organizational learning. The objective of training is to
develop specific and useful knowledge, skills and techniques. It is intended to prepare people to
carry out predetermined tasks in well-defined job contexts. Training is basically a task-oriented
activity aimed at improving performance in current or future jobs.
Training is a process of learning a sequence of programmed behavior. It is the application

of knowledge & gives people an awareness of rules & procedures to guide their behavior. It
helps in bringing about positive change in the knowledge, skills & attitudes of employees.
Training is investment in getting more and better quality work from your talent. Thus, training is
a process that tries to improve skills or add to the existing level of knowledge so that the
employee is better equipped to do his present job or to mould him to be fit for a higher job
involving higher responsibilities. It bridges the gap between what the employee has & what the
7
job demands. Since training involves time, effort & money by an organization, so an
organization should to be very careful while designing a training program.
Definition of Training:
Dale S. Beach defines training as ‘the organized procedure by which people learn knowledge
and/or skill for a definite purpose’. Training refers to the teaching and learning activities carried
on for the primary purpose of helping members of an organization acquire and apply the
knowledge, skills, abilities, and attitudes needed by a particular job and organization.
According to Edwin Flippo, ‘training is the act of increasing the skills of an employee for doing
a particular job’.
9.5 PURPOSE OF TRAINING

We are aware that the modern organization is forced to operate in a volatile, uncertain,
complex and ambiguous business climate. In this context, it is important that if an organization is
to invest in training, the skills and learning acquired stimulate relevant productivity, so the
business maintains a competitive edge in this competitive global market.
Purpose of Training:
1. To prepare the employee, both new and old to meet the present as well as the changing
requirements of the job and the organization.
2. To develop the potentialities of the people for the next level job.
3. To ensure smooth and efficient working of a department.
4. To ensure economical output of required quality.
5. To build up a second line of competent officers & prepare them to occupy more responsible
position.
6. To prevent obsolesce.
7. To increase overall productivity and performance
Training should be top priority to organizations because the benefits to employees are
numerous. According to Steptoe-Warren (2013) these benefits include:
 Reduction in poor quality and defective products and services
 Reduced waste (for example, materials in the process of production)
8
 Reduction in absenteeism
 Reduction in staff turnover
 Reduction in customer complaints and customer turnover
 Increased staff loyalty/feelings of obligation (Shore et al. 2006) and motivation (Grant
2008)
 A more flexible, empowered and adaptable workforce (Pfeffer 1998)
 Enhanced company image
These benefits are only realized when a comprehensive training programme is implemented.
9.6 IMPERATIVES OF AUDIT LEARNING

Internal audit is playing an important role in helping businesses succeed in an
environment where technological innovation and global interconnectedness present rapidly
moving challenges and opportunities. Organizations rely on internal auditors for insight on
operational, business, and strategic risks that are emerging at an accelerating rate. Internal
auditors can keep pace by developing new skills, improving relationships, and leaning on
technology.
The Institute of Internal Auditors (IIA) Research Foundation recently released a

report, Driving Success in a Changing World: 10 Imperatives for Internal Audit. The report
reviews responses to key questions such as; “How frequently do you update your audit plan,”
“What kinds of training do you provide for your staff,” and “Have you ever felt pressure to
suppress or modify a valid audit finding or report. The report identifies 10 areas where internal
auditors can focus to keep up with the pace of new challenges as they emerge.
A. Communications
1. Anticipate the Needs of Stakeholders: The board, management, and other stakeholders
often have a broad range of constantly shifting, sometimes competing, and typically
poorly communicated needs that internal auditors should seek to understand and
ultimately serve. To do this, it’s important to consult with management, audit
committees, and business line heads to incorporate their feedback into your audit plans.
9
By improving communication channels, you’ll be better able to anticipate – and meet –
stakeholder expectations.
2. Continually Advice the Board and Audit Committee: Keep the board up to speed and
be their leading source of information on risks they should be most concerned about on a
regular basis such as emerging risks, risk management, internal audit, and the IIA’s
Standards. You have the unique position of understanding both these risks and the
business operations and strategic goals, so exhibit your credibility by being their primary
source for information, advice, and answers to their questions via formal communication
channels and as a willing advisor in informal conversations.
3. Be Courageous: You must be willing to engage in straight talk and handle potential
conflict by telling the truth about the organization’s internal audit findings. In certain
cases, audit findings are tied to compensation in some way. Counter this by encouraging
a culture where proactivity is rewarded in equal amounts to results so management is
persuaded to be involved in the identification and mitigation of risk and less likely to
suppress negative findings.
B. Analyze and Update Frequently
4. Enhance Audit Findings Through Greater Use of Data Analytics: Make use of
available data mining or data analytics technology that allows analysis of complete data
sets instead of samples with continuous or real-time auditing technology. This will help
improve efficiency and enable auditing of data-rich areas with more sophisticated
methods for greater accuracy.
5. Identify, Monitor and Deal with Emerging Technology Risks: IT is among the top
five risks on which internal auditors are focusing the greatest level of attention for 2016.
Because technology risks are constantly evolving, it’s essential to stay ahead of the curve
by engaging in audit activities for the organization’s social media and cybersecurity
systems.
6. Develop Forward-Looking Risk Management Practices: Just 34% of internal audit

plans are updated three or more times a year, according to the survey results. Internal
auditors should reassess and update their plans regularly to deal with fast-moving
10
emerging risks. Failure to update plans frequently may put internal audit at risk of
overlooking important changes in the business environment.
C. Educate and Evaluate
7. Invest in Yourself: Put in the extra time needed to understand business operations so
you are prepared to conduct internal audits even beyond what the organization may
outlay for internal training or orientation. In addition, depending on the size of your
internal audit department, you may need outside training to receive the necessary
technical and leadership skills and certifications needed to elevate your value to the
organization and do your job to the best of your ability.
8. Go Beyond the IIA’s Standards: While the standards are a good framework for a
quality assurance and improvement program, you can go beyond the standards to deliver
specific, high-value activities for the organization. Ask stakeholders what activities
would provide the most value, and consider an external audit periodically to check your
progress.
D. Support
9. Recruit, Motivate and Retain Great Team Members: First, get the right kind of
support you need internally to make a difference for the organization. Individuals must
have the right mix of analytical, communicative, and technology skills along with
industry-specific knowledge. Some skills can be taught, so focus on those with the innate
skills you can’t always learn (for instance, critical thinking and communication) and
make training and education readily available for the rest. Once you have the right team
in place, work to keep them there with things like bonuses to provide motivation and
retention.
10. Support the Business’s Objectives: Just over half (57%) of the survey respondents said
their internal audit department is fully or almost fully aligned with the strategic plan of
their business which means that the remaining 43% (a large number) are not confident in
their alignment. Work to thoroughly understand the business objectives, identify and
manage the key risks facing those objectives, and create specific performance measures
for each area of the strategic plan. Aligning your internal audit goals with the strategic
11
objectives of the company is the surest way to demonstrate real value on an ongoing basis
for your organization and help the organization achieve its goals, so don’t miss this
important step in your plan.
By focusing on these 10 essential elements, internal auditors can demonstrate their

willingness and ability to overcome challenges posed by today’s dynamic business environment
and increase their value by improving internal communication, using technology, developing
new skills, and supporting the overall business objectives.
9.7 TRAINING AND DEVELOPMENT SYSTEM

Training and development refers to educational activities within a company created to
enhance the knowledge and skills of employees while providing information and instruction on
how to better perform specific tasks. Training is a short-term reactive process meant for
operatives and process while development is designed continuous pro-active process meant for
executives. In training employees' aim is to develop additional skills and in development, it is to
develop a total personality. In training, the initiative is taken by the management with the
objective of meeting the present need of an employee. In development, initiative is taken by the
individual with the objective to meet the future need of an employee.
Training and development is one of the main functions of the human resource
management department. Training refers to a systematic setup where employees are instructed
and taught matters of technical knowledge related to their jobs. It focuses on teaching employees
how to use particular machines / software's or how to do specific tasks to increase efficiency.
Whereas, the development refers to the overall holistic and educational growth and maturity of
people in managerial positions. Training and development in human resource management is the
foundation for getting the best out of each and every employee. Training and development are
different from each other. The focus of training is short term while for development, it is long
term. The utilization of work experience is low in training and high in development. The aim of
training is preparation for current assignment while development looks at upcoming assignment.
Employee participation is voluntary in training while it is mandatory in development.
12
The key features of training system are as follows:
 Training management systems is developed to ensure that all training requirements of

organization are effectively managed.
 Employee management modules of the system help manager design and develop a
training calendar as per the employee’s requirement.
 Employee management module automatically prepares a list of employees as per
upcoming development sessions.
 Employee management module also helps in preparing the progress sheet for employees.
The development system is not only restricted to online tools but also includes various
policies and procedures. The comprehensive development system helps the coaching staff
continuously asses’ progress of employee but also effectiveness of the development session. The
development system consists of software, hardware and company’s development policies.
9.8 SUPPORT SYSTEM FOR TRAINING

Implementing an evidence-based treatment includes tracking fidelity and outcomes so
that one can know if they are having the desired effect and to track, monitor, and enhance the
reliability and validity of interventions. In essence, treatment fidelity means implementing the
interventions the way they were designed to be implemented. It is necessary to ensure that the
staffs are up-to-date on training and interventions so that the objectives can be achieved with
greatest success. The Training Support System (TSS) provides everything that will need to
support individual or group which provides Contingency Management as a treatment for youth
addictions such as comprehensive training, access to a lead trainer and e-library and networking
and many more.

1. Training is an organised procedure which brings about a ______ change in behaviour, for a
definite purpose.
2. The three main areas involved in training are skills, knowledge and ______.
3. For all practical purposes training is aimed at specific, job-based objectives rather than the
______ aims of education.
13
4. ______ is now becoming a core driver of learning systems and development of employees.
5. Training and development professionals need to consider their beliefs about HRD’s role in a
______ context, particularly if their individual focus has been more local or national.
1. Semi-Permanent
2. Attitudes
3. Broader Society-Based
4. Technology
5. Global
9.10 SUMMARY
So far in this unit we have covered the concepts of human resource development consists
of training, audit learning, support system and many more. Training is an organised procedure
which brings about a semi-permanent change in behaviour, for a definite purpose. The three
main areas involved are skills, knowledge and attitudes. The significant objectives of training
includes Meeting manpower needs, Reduced learning time, Improved performance, Reduced
wastage, Less absenteeism and Fewer accidents. The beneficiaries of training are Organization,
Employees, Personnel and human relations. All the industrial organisations realised the
importance of training their employees for better production and for improved productivity. With
the introduction of computers there is a need for training, retraining and redeploying employees
in industrial establishments. The role of Trainer and the trainee is the most important for the
success of any training programme, The trainee is a major stakeholder in a training programme.
Training is influenced by trends in other disciplines, demographics, politics, technology and a
number of other domains. Training and development professionals need to consider their beliefs
about HRD’s role in a global context, particularly if their individual focus has been more local or
national.
14
9.11 KEYWORDS
Development : The activity that focuses upon the activities that the
organization employing the individual, or that the
individual is part of, may partake in the future, and
is almost impossible to evaluate.
Training : Training is an organized procedure which brings

about a semi-permanent change in behaviour, for a
definite purpose and focus upon the job that an
individual currently holds.
Welfare : It includes anything that is done for the comfort and

improvement of employees and is provided over
and above the wages.
Human Resource Development : It is the framework for helping employees develops
(HRD) their personal and organizational skills, knowledge,

and abilities.
Potential Appraisal : A process of determining an employee’s strengths

and weaknesses with a view to use this as a
predictor of his future performance.

1. What is the best practice for training and development of employees?
2. In the changed economic scenario of the country, why has training assumed importance?
Elucidate.
3. There is a view that training is a waste of money. Do you agree with this view? Discuss.
4. “Employee training has become increasingly important as jobs have become more
sophisticated and influenced by technological changes” - comment.
5. HRD department should work for realizing the business goals with the tools of training and
development. Discuss.
15
9.13 REFERENCES
New Delhi – 2001.
16
UNIT-10 HUMAN RESOURCE DEVELOPMENT FOR TOTAL
QUALITY MANAGEMENT
Structure:
10.0 Objectives
10.1 Introduction
10.2 Evolution of HRM in India
10.3 Rethinking about the Business Processes
10.4 Benchmarking
10.5 Total Quality Management (TQM)
10.6 Quality Circles
10.8 Summary
10.9 Keywords
10.11 References
17
10.0 OBJECTIVES
 Discuss the HRD for total quality management.

 Explain development of HRM in India.
 Describe rethinking about the business processes.
 Provide an overview of benchmarking.
 Elucidate the total quality management.
 Write a note an quality circles.
10.1 INTRODUCTION
The relationship between total quality management (TQM) and organizational
performance is a central theme in organizations and areas of management and should be of
interest to HRD professionals. TQM is popular around the world due to its impact on key
business results. There is very little empirical information on HRD quality management. It is
introduced in this text because the training aspect of HRD is embedded in all of the TQM,
International Organization for Standardization (ISO), Six Sigma, lean manufacturing, and other
quality management system processes employed by an organization. However, HRD had not
integrated its program functions within an HRD quality management system. The need is
imminent for HRD professionals to understand and use quality management processes within all
of their programs and projects.
Using processes and methods that include quality management principles into HRD
programs and projects will help to foster a culture of quality into the HRD function. Integrating
documented quality management concepts will allow HRD professionals to be assured
throughout their activities that quality is embedded and confirmed. HRD professionals can use
traditional HRD techniques to align their program function with quality system processes,
specifically within the key quality management areas of quality planning, quality control, and
quality improvement.
Therefore, this unit concentrates on the concept and importance of HRM for total quality
management.
18
10.2 EVOLUTION OF HUMAN RESOURCE MANAGEMENT IN INDIA
In Western countries Human Resource Management (HRM) had its primitive beginning
in 1930s. Not much thought was given on this subject in particular and no written records or
document existed on this subject even as a philosophy in the Western ancient literature. The
philosophy of managing human being, as a concept was found developed in ancient literatures in
general in Indian philosophy in particular. In the ancient times, the labourers were looked down
upon. It was considered menial to work for a livelihood. But gradually the factory system came
into existence and later industrialisation followed by urbanisation.
This led to a greater emphasis on’ labour management’. Earlier it was known as
‘Personnel Management’, then ‘Human Resource Management’ and in recent times as ‘ Human
Resource Development’. In ‘Personnel Management’, the employees were treated as mere
labourers who required constant supervision. The human element was not given due importance.
Later Elton Mayo’s “Hawathorne Experiments’ gave rise to “Human Resource Management’.
Here the ‘Human element’ was emphasized. The workers were treated not merely as “cogs in the
machine” but as human beings, as individuals and as a social being. In HRM, the main aim was
to encourage and motivate the employees to identify their capabilities and use them efficiently.
But the buzz word today is ‘Human Resource Development’. Unlike HRM, here the main
objective is not just identifying an individual employee’s existing potentials but also those
capabilities innate in him. HRD aims at bringing out the hidden potentials of an employee and
help him develop as an individual.
19
The evolution of HRM in India can be shown briefly in the below Table.
Table-10.1: Evolution of HRM in India
Period Development Outlook Emphasis Status

Status
1920s Beginning Pragmatism of Statutory Clerical

to1930s capitalists welfare
paternalism
1940s Struggling for Technical Introduction Administrative

to1960s recognition legalistic Of Techniques
1970s Achieving Professional Regulatory Managerial

conforming
imposition of
1980s Sophistication Legalistic Standards on Managerial

promising impersonal other function
1990s Philosophical Human values, Executive

productivity
through people
Evolving along the years, the approach has shifted to human values and productivity
through people. It is against such a shift in managing people, in the 1990s, a new approach has
emerged, that is, human resource management (HRM). This approach focuses more on
20
development aspects of human resource, that is, human resource development (HRD). HRM is,
no doubt, an outgrowth of older process and approach. But it is much more than it's parent
disciplines viz., personnel management and behavioral science. HRM or human resource
management has been widely defined by scholars as a strategic function that encompasses
management of its critical human assets for gaining competitive advantage in a dynamic business
environment.
10.3 RETHINKING ABOUT THE BUSINESS PROCESSES

Business processes need to be redesigned because market, especially consumers (even
patients) are changing expectations all the time, once people use to handle technology and
incredible features start to look for new experiences connected with this, so every day we deal
with innovations, the question is Are companies redesigning processes to adapt itself to a new
environment? The answer is, companies need to be immersed early, the experience tells me that
big organizations takes too much time to change, because structure, because people and because
culture.
“Radical redesign” of organizations with the aim to achieve huge improvements needs a
strategic path thinking in “future consumers’ experience with products”, also thinking in current
performance, in cost of quality and levels of service. Value generation process for customers
must be the foundational factor, and Business sustainability and business future environment
adaptation, the content concept for all around creation. The last two decades, leaders were trying
to define when process redesign must be applied, when is it appropriate? We are going to
immerse the company in a huge stress so productivity could be affected negatively and at the
same time we are urged to gain better profit, then, it is something to consider.
Therefore, we have to analyze if we have a need, a threat or an opportunity, checking

customers, market, regulations, technologies, competitors, old paradigms and reviewing tons of
data to support the decision to go. Business processes redesign is a concept that need expertise to
put into practice considering all the aspects to take into account, but we can name some
important issues that impede a successful implementation, lack of adequate knowledge and
training, (hard and soft skills), limited management support and lack of Human Resources
(internal or external) involvement.
21
10.4 BENCHMARKING
Benchmarking is the process of comparing similar characteristics between businesses,
identifying the most successful practices, and integrating them into the company procedure.
After collecting data for comparison purposes, HR professionals can better determine
the benchmark the target that they want to shoot for. Companies usually benchmark against
similar competitors of the same size or industry, intending to incorporate better practices into
their routines. HR benchmarking again is a process that is used in order to compare similar
characteristics across organizations in order to identify milestones. It’s sort of a compare and
contrast system of determining success and best practices. When HR professionals have data for
comparison purposes, they are better able to set goals and objectives for their own company.
Benchmarking for specifically HR purposes involves looking at the policies and practices
of one organization, then comparing and contrasting those with another similar organization. A
benchmarking approach should focus on best practices or the things organizations are doing that
consistently lead to successful results. In order for an understanding of best practices to be
obtained, benchmarking activities must be planned strategically with particular goals in mind. By
identifying in advance the types of patterns and data they are seeking, HR professionals can then
create a benchmarking system that is more reliable and valuable.
HR professionals can reap valuable information from benchmarking. They can use
benchmarking to identify the gap between techniques in their own company, and similar
practices in more successful companies. Through analyzing the reasons for these gaps, HR
leaders can determine which practices and policies are effective, and which need adjustment.
Studying competing company practices can also keep HR leaders informed regarding the
constantly changing landscape of customer demands. HR leaders can use benchmarking to
improve:
 Recruitment
 Engagement
 Retention
 Training
22
 Compensation planning
 Budgeting
 Turnover rate
10.5 TOTAL QUALITY MANAGEMENT (TQM)

Total Quality management is a continuous effort by the management as well as
employees of a particular organization to ensure long term customer loyalty and customer
satisfaction. Remember, one happy and satisfied customer brings ten new customers along with
him whereas one disappointed individual will spread bad word of mouth and spoil several of
your existing as well as potential customers. The business need to their something extra to their
customers to expect loyalty in return. Quality can be measured in terms of durability, reliability,
usage and so on. Total quality management is a structured effort by employees to continuously
improve the quality of their products and services through proper feedbacks and research.
Ensuring superior quality of a product or service is not the responsibility of a single member.
Every individual who receives his/her paycheck from the organization has to contribute
equally to design foolproof processes and systems which would eventually ensure superior
quality of products and services. Total Quality management is indeed a joint effort of
management, staff members, workforce, suppliers in order to meet and exceed customer
satisfaction level. one can’t just blame other person for not adhering to quality measures. The
responsibility lies on the shoulder of everyone who is even remotely associated with the
organization.
W. Edwards Deming, Joseph M. Juran, and Armand V. Feigenbaum jointly developed

the concept of total quality management. Total Quality management originated in the
manufacturing sector, but can be applied to almost all organizations. Total quality management
ensures that every single employee is working towards the improvement of work culture,
processes, services, systems and so on to ensure long term success. Total Quality management
can be divided into four categories such as Plan, Do, Check and Act.
A core definition of total quality management (TQM) describes a management approach

to long-term success through customer satisfaction. In a TQM effort, all members of an
organization participate in improving processes, products, services, and the culture in which they
23
work. TQM can be summarized as a management system for a customer-focused organization
that involves all employees in continual improvement. It uses strategy, data, and effective
communications to integrate the quality discipline into the culture and activities of the
organization. Many of these concepts are present in modern quality management systems, the
successor to TQM. Here are the 8 principles of total quality management:
1. Customer-Focused: The customer ultimately determines the level of quality. No matter

what an organization does to foster quality improvement—training employees, integrating
quality into the design process, or upgrading computers or software—the customer
determines whether the efforts were worthwhile.
2. Total Employee Involvement: All employees participate in working toward common goals.
Total employee commitment can only be obtained after fear has been driven from the
workplace, when empowerment has occurred, and when management has provided the
proper environment. High-performance work systems integrate continuous
improvement efforts with normal business operations. Self-managed work teams are one
form of empowerment.
3. Process-Centered: A fundamental part of TQM is a focus on process thinking. A process is

a series of steps that take inputs from suppliers (internal or external) and transforms them
into outputs that are delivered to customers (internal or external). The steps required to carry
out the process are defined, and performance measures are continuously monitored in order
to detect unexpected variation.
4. Integrated System: Although an organization may consist of many different functional

specialties often organized into vertically structured departments, it is the horizontal
processes interconnecting these functions that are the focus of TQM.
5. Strategic and Systematic Approach: A critical part of the management of quality is the
strategic and systematic approach to achieving an organization’s vision, mission, and goals.
This process, called strategic planning or strategic management, includes the formulation of
a strategic plan that integrates quality as a core component.
24
6. Continual Improvement: A large aspect of TQM is continual process improvement.
Continual improvement drives an organization to be both analytical and creative in finding
ways to become more competitive and more effective at meeting stakeholder expectations.
7. Fact-Based Decision Making: In order to know how well an organization is performing,

data on performance measures are necessary. TQM requires that an organization continually
collect and analyze data in order to improve decision making accuracy, achieve consensus,
and allow prediction based on past history.
8. Communications: During times of organizational change, as well as part of day-to-day

operation, effective communications plays a large part in maintaining morale and in
motivating employees at all levels. Communications involve strategies, method, and
timeliness.
10.6 QUALITY CIRCLES

The Quality Circle refers to the group of individuals who meet on a regular basis to
discuss the work-related problems. Generally, the quality circles are small group gatherings, led
by the supervisor or the manager who presents the solutions to the management. Conceptually
Quality Circles can be described as a small group of employees of the same work area, doing
similar work that meets voluntarily and regularly to identify, analyse and resolve work related
problems. This small group with every member of the circle participating to the full carries on
the activities, utilising problem solving techniques to achieve control or improvement in the
work area and also help self and mutual development in the process.
The concept of the Quality Circle is based on “respect for the human individual” as
against the traditional assumption based on suspicion and mistrust between management and its
employees. Quality circles built mutual trust and create greater understanding between the
management and the workers. Cooperation and not confrontation is the key element in its
operation. The Quality circles aims at building people, developing them, arousing genuine
interest and dedication to their work to improve quality, productivity, cost reduction and much
more.
The purpose behind the formation of a quality circle is to motivate employees to share the
problems affecting their work area and help in improving the performance of the organization as
25
a whole. Generally, the quality circles focus on issues such as occupational health and safety,
improvement in the working environment and manufacturing processes, and related issues.
The quality circles are formed to fulfill any of the following objectives:
 To contribute towards the development of an organization.
 To create a healthy work environment such that employees find the place worthwhile to work
 To explore the hidden potential of the individuals and drawing out the infinite possibilities.
 To improve the product quality and the productivity of the organization.
 To improve the team skills, capabilities, confidence and creativity through education, training,
and participation of volunteers in the circles.
 Often, six to twelve personnel from the same work area come together to form these circles.
These members receive proper training in problem solving, group process and statistical
processes.
The Quality Circle concept provides an opportunity to the circle members to use their
wisdom, creativity and experience in bringing about improvements in the work they are engaged
in by converting the challenging problems into opportunities and it contributes to the develop-
ment of the employees and in turn benefits the organization as well. The concept encourages the
sense of belongingness in circle members and they feel that they have an important role to play
in the organization.

1. The ______ refers to the group of individuals who meet on a regular basis to discuss the
work-related problems.
2. W. Edwards Deming, Joseph M. Juran, and Armand V. Feigenbaum jointly developed the
concept of______.
3. The labour management earlier it was known as______.
4. ______ is the process of comparing similar characteristics between businesses, identifying
the most successful practices, and integrating them into the company procedure.
5. Elton Mayo’s “Hawathorne Experiments’ gave rise to______.
26
1. Quality Circle
2. Total Quality Management
3. Personnel Management
4. Benchmarking
5. Human Resource Management
10.8 SUMMARY
The relationship between total quality management (TQM) and organizational
performance is a central theme in organizations and areas of management and should be of
interest to HRD professionals is discussed in detail in this unit. TQM is popular around the world
due to its impact on key business results. There is very little empirical information on HRD
quality management. Benchmarking is the process of comparing similar characteristics between
businesses, identifying the most successful practices, and integrating them into the company
procedure. Total Quality management is a continuous effort by the management as well as
employees of a particular organization to ensure long term customer loyalty and customer
satisfaction. The Quality Circle refers to the group of individuals who meet on a regular basis to
discuss the work-related problems. Generally, the quality circles are small group gatherings, led
by the supervisor or the manager who presents the solutions to the management.
10.9 KEYWORDS
Quality Circle : It refers to the group of individuals who meet on a
regular basis to discuss the work-related problems.
Total Quality Management : It is a continuous effort by the management as well

as employees of a particular organization to ensure
long term customer loyalty and customer
satisfaction.
Benchmarking : It is the process of comparing similar characteristics

between businesses, identifying the most successful
practices, and integrating them into the company
procedure.
27
HR Benchmarking : It is a process that is used in order to compare
similar characteristics across organizations in order
to identify milestones.

1. What is benchmarking? What is the need of benchmarking in your business?
2. Define Total Quality? Give the principles of TQM?
3. What is a Quality Circle? Is this concept still relevant in Organizations practicing Lean Six
Sigma? Explain.
4. Explain the need for Business processes redesign along with the challenges faced by an
organization with a suitable example.
5. Describe the relationship between total quality management, human resources and
competiveness with an example.
10.11 REFERENCES
New Delhi – 2001.
28
UNIT-11 CAREER PLANNING MANAGEMENT
Structure:
11.0 Objectives
11.1 Introduction
11.2 Meaning and Definitions of Career Planning
11.3 Misconceptions and Clarifications on Career Planning
11.4 Steps Involved in Career Planning
11.5 Career Development Model
11.6 Need for Career Development
11.7 Career Development Process
11.8 Conditions for Successful Career Development Program
11.10 Summary
11.11 Keywords
11.13 References
29
11.0 OBJECTIVES
 Give the meaning and definitions of career planning.

 Explain misconceptions and clarifications on career planning.
 Describe steps involved in career planning.
 Provide an overview of a model career planning.
 State the need for career development.
 Describe career development process.
 Discuss the conditions for successful career development program.
11.1 INTRODUCTION
This unit has been prepared with the object of explaining the concept and management
technique of career planning. Why should be considered as an essential aspect of managing
personnel and for obtaining optimum performance from them is also discussed in Unit. One should
also appreciate that achievement of organisational development, increased productivity and
fulfilment of corporate objectives can be possible only if the employees of the organisation get a
feeling of satisfaction and achievement, and feel part of that organisation. Normally, in all
organisations, whatever may be their structure, employees have aspirations to advance and grow
in their organisation, and also a desire to achieve a sense of fulfilment. Unless these aspirations
and desires of employees are taken care of, the organisation cannot be taken to higher levels of
efficiency and productivity. The strength and vitality of any organisation depends on the fact that
whether its employees are convinced that they will also stand to gain thereby, not only in financial
and other tangible terms but also emotionally and mentally. One way to achieve all this is a well
thought-out system of career planning. Career development refers to a set of programmes designed
to match an individual’s needs, abilities, and career goals with current and future opportunities in
the organization. Since career development focuses on future opportunities, it has essentially a
long-term orientation.
30
11.2 MEANING AND DEFINITIONS OF CAREER PLANNING
Career planning is an individual’s lifelong process of establishing personal career
objectives and acting in a manner intended to bring them about.
Are you not satisfied with the way your career is moving? Don't know in which way you
should direct your career? Long past are the days of lifetime employment and now you need to
plan careers as how to shift from one organization to another for gaining maximum industry
experience. The task of career planning is quite a laborious one and it requires systematic
planning of every step and a calculated execution. Take the onus of planning your own career.
The term 'career denotes all the jobs that are held during one's working life. It is viewed
as a sequence of positions held by an individual during the course of his lifetime. Edwin B.
Flippo defined a career as a sequence of separate but related work activities that provide
continuity, order and meaning in a person's life. This is the objective career. A career may be
viewed as amalgam of the changes in values, attitudes and motivation that occurs as a person
grows older. This is a subjective element in the concept of a career.
Definitions of Career Planning:
Career Planning is an ongoing process through which an individual sets career goals and
identifies the means to achieve them. The process by which individuals plan their life’s work is
referred to as career planning.
"Career Planning is a process of systematically matching career goals and individual

capabilities with opportunities for their fulfilment"(Schermerhorn: 2002)
"Career Planning is a deliberate process of becoming aware of self, opportunities, constraints,

choices, and consequences; identifying career-related goals; and "career pathing" or
programming work, education, and related developmental experiences to provide the direction,
timing, and sequence of steps to attain a specific career goal" (McMahon and Merman: 1987).
Career planning means know about yourself, explore your options, make decisions and move
towards your goal.
31
1) Self
Evaluate who you are as a person. This involves taking a personal inventory of which you are
and identify your individual values, interests, skills, and personal qualities. What makes you tick
as a person? You will look at those personal attributes under a microscope and come up with key
qualities you can identify and use in your search for the perfect career. Career assessments may
be required to promote a better understanding of personal attributes and skills. The individual
should gather information about oneself. That is self-assessment in terms of their interests,
values, roles, skills / aptitudes, preferred environments, developmental needs and their realities.
2) Options
The individual should be able to explore the various occupations in which they are interested.
The exploration should be in each and every field the individual is interested and keen. After the
area of occupation is chosen, the research or a survey on industries and labor market should be
done to see in which they would like to work. Once the individual is clear about the specific
information on the area to be chosen, he / she can go in for part time work, internships and can
also go in for volunteering jobs or opportunities.
3) Match
After the option is clear to the individuals, they will be able to identify the possible occupations
and evaluate the opportunities within that occupation. The individual can explore the alternatives
available, and thus chose both a short term and long term option.
4) Action
The individuals in order to reach and achieve their goal have to explore and investigate the
sources for additional training and education. They would have to develop a job search strategy,
write an effective resume, gather information regarding company and prepare themselves for job
interviews.
11.3 MISCONCEPTIONS AND CLARIFICATIONS ON CAREER PLANNING

Sometimes we assume that choosing a major/career is an easy process, but actually
deciding on a major/career is actually an involved process, and you should give it the time it
deserves. Career planning is a multi-step process that involves learning enough about yourself
and the occupations that are considering in order to make an informed decision.
32
A career "test" or counselor will inform exactly what is right, but actually career
assessment tools and qualified counselors can help to guide in the major/career decision.
However, it cannot just rely on one test or one meeting with a counselor to decide what to do
with the rest of the life. Ultimately, that are the “career decision maker” and need to consider
your values, experience, and any number of practical considerations (expenses, opportunities,
training requirements, family issues, geographical location, etc.) to come up with a good career
match.
 The choice of major/career should influence the parents, friends, neighbors, etc., actually the
approval of others is not essential for the career choice. People who know and care about
one will be happy if the career brings self-fulfilment. It may take a little time to recognize
that the choice is right, but eventually they will be delighted when they see career success.
 There is something wrong if it is not known today what is required to do with the rest of the
life. Whereas, the career decision making is a process and not an event. Deciding
prematurely based on inaccurate or insufficient information is always a mistake. People may
vary on the amount of time they need to make career decisions. The important thing is to
engage in activities that helps to learn about one self and career options.
 It will not be successful if the major or career choice is changed but the reality is the average
college student can change his/her major up to three times while in college. It is better to
change a major than staying in a path that is not right. College life will help to grow and
expand as a person. The more it is learnt about oneself and the occupations they are
considering, the more likely it is to make a wise career decision.
 The major will totally determine the career, unless they are planning to enter an area that
requires specific technical skills, one major can lead to many different careers. In fact, many
people find themselves working in fields that are only remotely related to their majors.
 A college degree will assure a successful future. It is vital that combines the college degree
with good career planning. This greatly increases the chances of having a rewarding career
and successful future.
 The grades alone will determine the employability. Each profession is a little different.
Most employers focus on a well-rounded individual who, in their eyes, has a higher value
than one with only good grades. Employers may want their candidates to have some work
and volunteer experience; outside interests and activities; personal, professional, and
33
academic references; leadership qualities; communication and interpersonal skills; and good
character.
 The money will make happy. Money doesn't necessarily lead to job satisfaction. Surveys
show that people who do not enjoy what they are doing will eventually become dissatisfied
regardless of the money they are making. However, they should consider earnings, among
other things, when evaluating an occupation.
 Only one career will make happy. That is once the career is choosed, it will stuck the life to
that. Many fields have the potential to satisfy the career goals because most people derive
satisfaction from a variety of activities. The average adult doesn't settle on a career until the
age reaches to 30's. the interests, values, abilities, and aspirations may be different at
different ages. If so, the change or modify the career accordingly. Changing careers is only a
problem if one think it is a problem.
11.4 STEPS INVOLVED IN CAREER PLANNING

Steps for successful career planning is explained as follows:
1. Self-Assessment
The first step to successfully plan your career is to understand your own interests, strengths,
weaknesses, and goals. Begin by asking yourself the following questions –
 What do I enjoy doing?
 What motivates me?
 What am I good at? What are the things I am bad at?
 What kind of lifestyle do I want in the future?
 What are my personal goals?
 What are my biggest achievements and failures?
 What qualifications and experience do I have?
 What do I want to be known for?
There are various online tools that help you find your own interests and what type of job will be
suitable for you.
34
 Career Quiz - This quiz will give you a short summary of your personality and the kind of
work that you will fit into.
 Personality Test - This test gives you a comprehensive summary of your personality. It is
also used by recruiters and counselors across the world.
 Career Test - This test will allow you to figure out what sort of environments and
occupations suit you the most.
Spend some time on self-introspection and write down your long-term and short-term
career goals. Think about the kind of work-life balance you want to achieve. This is one of the
most difficult in career planning but it sets the foundation for the next steps.
2. Market Research
Once you have discovered your own interests and strengths, it is time to figure out what
is out there. Make a list of job profiles that align with your goals, interests, and strengths.
Conduct a thorough research about market trends and read company reviews to get details about
salary, work culture, growth opportunities, etc. Talk to professionals working in different fields
to get an on-ground perspective. Conduct informational interviews or try job shadowing a
professional. During informational interviews, a job seeker seeks information from a
professional about a job or career. Job shadowing means observing someone on the job. It could
be for an hour or even for a week. Reach out to professionals within your network for these.
Make a list of job roles that you find interesting and would like to pursue. Once the list is
ready for each of the job roles, ask yourself the following questions –
 Does this match my interest?
 Will this help me achieve my goals?
 What type of industry appeals to me the most?
 What type of job roles would suit me?
 Are my qualifications and abilities aligned with these jobs?
 Market research helps you in making an informed decision about your career. Once you
answer these questions, you have your list ready and it is time to move on to the next step.
35
3. Identify the Gap
For all the desirable job roles that you have added to your list, write down skills,
experience, and resources needed for each one of them.
Identify the gap between what you have and what you need to get these jobs. These could
be skill gaps, experience gaps, qualification gaps, etc.
Talk to professionals and get an idea about the qualifications, experience, and skill
requirements. You can also find job descriptions for various roles online.
4. Fill the Gap
Once you have assessed the gap between what you have and what you need to for the
shortlisted careers, find different ways of filling the gap. For instance, take up online courses to
learn new skills or apply for an internship to gain relevant experience. This will give you a feel
of the job role as well.
If you are serious about a job role, you may even consider going back to college for a
full-time course. There is no age for learning and changing your career track. For example, if you
think that MBA will give you a career boost then do not hesitate to enroll yourself in a business
school. Make a practical choice, keeping in mind your personal circumstances. However, leaving
a job and spending 2 years in an expensive business school may not be possible for everyone.
Look for alternatives such as correspondence course or part-time courses.
5. Make a Choice
Out of all the options that you have listed, it is time to narrow down your options. Assess
the cost you need to incur for each of the roles. Go for the role that fits in well with your
interests, goals, and abilities. In the earlier stages of a career, it is advisable to narrow down to 2-
3 options. If you have done your research and evaluation diligently, you will be more confident
about the choice you will make.
6. Create an Action Plan
Now that you have finalized your career goal, create an action plan to achieve them. By
now you should be clear about where you are and where you want to be. A career plan should be
time-bound and practical to achieve.
36
From taking up a course to writing your cover letter and updating your resume, plan out
each step in detail. Assign timelines for every step. Check off the tasks as you complete them. Be
open to improvising along the way as and when needed.
7. Review Cdhoices
In this fast-changing world, it is possible that the market or individual goals may also
change. It is important to go back and evaluate your career plan. You may want to learn new
skills or completely change your career path. It is important to stick to something that you truly
like and are happy doing.
11.5 CAREER DEVELOPMENT MODEL

The 5-STEP Career Development Model provides a comprehensive framework for
assessing skills and establishing learning outcomes that demonstrate knowledge of self, career
paths, and academic and career opportunities. Career decision-making is a process, and you can
set your own pace in pursuing career development accordingly. If you work with a career coach
and take advantage of the CEC's programs and resources you will be better prepared to make
informed and meaningful career decisions.
Fig 11.1: Career Development Model
37
Step 1: Assessment
Get to know yourself - Begin to identify your values, interests, skills, personal traits and
career satisfiers in order to identify the ingredients of a good career "fit":
 Take self and personality assessments
 Meet with a career coach for help with assessments and early planning
 Begin to identify career fields and/or academic programs that fit your interests and
abilities
 Create a draft resume and have a career coach review it
 Complete your Handshake profile
Step 2: Exploration
Explore and research career possibilities - Learn the connections between academic
programs, experiential learning, previous professional experiences, and careers:
 Conduct career research and gather information from valuable online resources
 Gather information on different fields, industries and companies
 Decide on a major and learn what career paths a major can offer
 Conduct informational interviews with people in fields that interest you
 Explore opportunities to gain relevant work experience, such as internships, summer jobs,
or volunteer work
 Attend career and networking events
Step 3: Preparation
Develop your resume and cover letter writing skills; refine your career goals and strategy
- Through informational interviewing, internships, and part-time/temporary or summer jobs, "test
the waters" and determine a potential career direction:
 Create an effective resume and cover letter
 Research graduate schools and visit campuses
 Learn to present your goals and skills in an elevator pitch
38
 Conduct informational interviews and build your network
 Develop and practice your interview skills
 Test it out – for example, Obtain an internship. Internships may be limited to

undergraduate and graduate students, or recent graduates. Other populations can consider
doing volunteer or temporary positions.
 Develop a Career Action Plan
Step 4: Implementation
Develop and implement your job search or graduate school strategy - Develop the skills
you need to accomplish your goals:
 Sharpen your job search skills and develop a list of potential employers
 Prepare for interviews and practice interviewing skills with a mock interview
 Network with friends, parents, faculty, alumnae/i and others
 Gather graduate school application materials and write a personal statement
 Attend events such as career fairs, company presentations and career-related forums with
alumnae
Step 5: Decision-Making
Make an informed and meaningful career decision - Gain insight into necessary
professional development skills to be successful:
 Refer back to your career goals, interests, strengths, and values for guidance
 Analyze job offers/graduate school admissions and weigh your options
 Meet with a career coach to walk through your decision-making
 Consider the practical aspects of life after Simmons, and attend the senior series in the
spring to help make this transition
 Join the Simmons alumnae/i network
 Learn and practice the basics of negotiating
 Assess Your Career Readiness
39
11.6 NEED FOR CAREER DEVELOPMENT
Career development is essential for implementation of career plan. While career plan sets
career path for an employee, career development ensures that the employee is well developed
before he moves up the next higher ladder in the hierarchy. The main objective of career
development is to ensure that people with appropriate qualifications and experiences are
available when needed. Career development is an integral aspect of career management with
major emphasis being on the enhancement of employees’ career which commensurate with the
requirements of the organization.
Need for Career Development
 When students complete their college education; they advance further into their maturity,
and explore all possibilities to put themselves into a good position. They have to ready
themselves by preparing a good resume, plan and attend job interviews, prove themselves
that they are worthy to be hired.
 When they are placed on the job, they enjoy their responsibilities, position at work and in
life, make plans to move on. During this process they have their own intrinsic and
extrinsic enjoyments. Then the time comes for retirement for which they have to plan
also. Although the explanation looks simple and easy to accomplish, in real life, it is not
so simple and easy to achieve or attain all those things mentioned earlier. Examine
yourself and see what obstacles are there in going through this cycle of life and even plan
to overcome the obstacles. Thus, ready yourself.
 Generally organizations assess the annual performance of their employees for a number
of reasons. These include, reward them for good performance or reprimand them for
failing to meet their set standards. In addition to exercising these judgments, the
employees are also taken through the promotional, de-motional, re-arrangement and
replacement exercises. Some creative organizations engage in other kinds of exercises
such as working out career plans, strategies, and development plans for their employees
who indicate potential in order to keep their motivation sustained.
 When it comes to whether retaining people or letting them go, organizations must engage
in cost-benefit analysis. A section of human resource specialists may argue that it doesn’t
40
worth keeping the dead wood and it is better to let them go elsewhere. Instead, they can
find better people in the market place.
 On the other hand, there are some human resource executives who strongly feel that it is
worth spending time, money, and effort to set up plans for developing their current
employees who are already cultured into their organizations. The approach may very well
depend on the labor market situation and the availability of needed human resources.
 When we look at the cost and benefit of these two choices, companies are more inclined
towards retaining and developing their existing employees whose background is known
and they are already cultured into the organization.
 But the challenge remains as to how companies grow them to develop their potential or
overcome their weaknesses. This is where career plans and development come handy.
Companies may have to spend time and effort to design and develop such plans. These
efforts are important ingredients in the human resource activities of World-class
organizations.
 Their performance and accomplishments have proven that such attitude helps them to
produce the best results. Whether it is Hewlett-Packard, Microsoft, IBM, Tata, Siemens
or General Electric, one may find the importance given to the career development of their
personnel. A special kind of culture exists in these companies which nurtures the growth
and development of personnel.
The Japanese companies have a different kind of culture and the breed of people which
make the career development a way of life. When employees join an organization after their
education, it is for life. When they make a choice to join an organization they take time. Once
they join an organization, they have to stay with that organization for life. If they keep changing
organizations, they will be looked down by their neighbours and society. The Japanese culture
and the corporate culture provide a background for fostering life-long career for the employee
with the company. The employer and the employee understand this relationship and the rewards,
promotions and retirement plans are all based on this understanding. Whether it is Western or
Japanese companies, retaining, grooming, and sustaining the motivation of their employees
occupy an important part of these organizations.
41
11.7 CAREER DEVELOPMENT PROCESS
Career development is seen as a process of individual development rather than just
getting employment or a job as it was perceived before two decades according to many
literatures. As a organization, support the employees engaging in diverse career development-
related activities to help them discover potential career paths that capitalize on their unique
passions, talents, and interests. Career development should be an exciting journey for each
employee. The view of organization employees’ career development journey as a progression
composed of experiences both inside and outside of the concern, which enable them to decide
who they are, who they want to be, and what careers might best suits their personal needs. While
each employee is unique, here is a general process we encourage them to engage in to help them
discover potential career paths that might be viable for them once they get experience.
Step 1: Self-Assessment
Self-assessment is the first step in the process. This involves employees identifying their
values, interests, skills, and personality.
Step 2: Exploration
Exploration is the second step and involves conducting research, such as using career
library resources, to discover potential careers of interest. Informational interviews are a great
way to start building a network of people in jobs and industries they are considering.
Step 3: Reality Testing
Reality testing is the third step and provides an opportunity for students to job shadow,
find an internship, or volunteer to “test the waters.” It is also an opportunity to conduct more
informational interviews with professionals at work. During this very important stage, students
should start understanding how their preferences adn skills relate to certain career paths, work
environments, etc, and begin making realistic decisions on next potential steps in their career
journeys.
Step 4: Implementation
Implementation is the last step in the process. This can include preparation for a job
interview or completing applications to graduate school. This process involves practicing
interviewing, networking, revising resumes, and writing cover letters.
42
11.8 CONDITIONS FOR SUCCESSFUL CAREER DEVELOPMENT PROGRAM
Career development for individual employees does far more than enhance the person’s
skills. If effectively implemented, the end result of such a programme is a transformation in the
employee’s perception of work from “just a job” to “a job that I enjoy and excel in.” While the
onus for career development traditionally falls on the employer’s shoulders, the employee must
also play an active part by making the most of the opportunities provided. A successful career
development strategy first requires a foundation that focuses on various alignments —between
employer and employee goals and desires, between employees and their jobs, between company
strategy and employer goals, and between employee performance and practical outcomes. Upon
this base, HR professionals can build four pillars that support an effective and efficient career
development programme.
Pillar 1: Self-Knowledge help employees to learn about themselves without self-knowledge,

people live and work with their eyes closed and their senses deadened. Those who strive to
achieve self-knowledge take a number of paths—perhaps inspired by a role model, coerced by
family pressure, or the need to follow their own passion. Yet, others passively wait for someone
else to discover their talents and skills and finally realise their dreams for them. Those
individuals who consider their path haphazardly, attempt various endeavours and fail to realise
any satisfactory outcome. Unhappy people become and remain unproductive and inefficient with
everyone paying the price, including the employer. Only when employees comprehend what
makes them tick as individuals will they be able to successfully play their part in an engaged and
motivated workforce. To assist their efforts to acknowledge such an active role, leaders need to
ask employees these questions: What do they, as employees, desire in the workplace? What type
of work and environment are they enthusiastic about? How do they envision their future?
What skills and know-how do they need to acquire in order to achieve what they desire?
How does their desire match the company’s desires and overall mission? If they are at odds,
what steps do both parties need to take to align their desires? Despite some skeptics’ viewpoint,
self-knowledge is not simply a “feel good” factor. Self-aware employees gain the ability to
discover the best job for their talents, thereby achieving satisfaction in meeting their own goals,
as well as what the company requires of their efforts.
43
Pillar 2: Career Strategy help employees to identify the right approach possessing self-
knowledge is only one piece of the puzzle. The employer needs to encourage these self-aware
and motivated individuals to identify the right approach to their work life. Hand-in-hand with the
employee, HR can guide them toward the career path that offers optimal use of their skills and
knowledge, the potential for advancement (whether related to finance, status, or knowledge), and
professional accomplishment of their jobs.
The right approach may involve a combination of steps, which employers can offer, such as:
 Appropriate training: Employees can access this education in diverse ways: through
internal seminars, external conferences and associations, on-the-job practical training, job
sharing, and other methods.
 The right transitions: Not every job change needs to be promotional. In many cases, a
lateral move may serve best as a way to broaden the employee’s skill base by placing the
individual in relevant positions. For example, when grooming talented employees for
management spots, lateral moves that enable them to understand (and be able to perform)
the jobs for which they would be responsible offers an excellent strategy. Promotions can
then follow when the individual is qualified.
 Potential relocation: Moving an employee to another office or plant may be appropriate
to fill a key vacancy or skill gap. The transfer is not simply change for the sake of
offering the individual something new, but change that will result in an advantage for
both the employee and the company
Whatever approach proves to be the most effective and attractive need not be the most
expensive. In fact, it may benefit the company in a multitude of ways, simply by retaining
valuable talent.
Pillar 3: Career Opportunities help employees to select the right career paths having a detailed
strategy is all well and good, but if there are no opportunities for advancement in position or
knowledge, employees will not be inclined to stay with the company. Common sense holds that
motivated individuals will not be happy with stagnation, but will seek better and more satisfying
jobs elsewhere often, with the company’s competitors. Such moves would be a severe loss to the
employer in terms of the cost of hiring and training a new employee, lost knowledge and
experience of the company’s operations and culture, disruption of productivity, and so on.
44
To develop viable career paths, and match employees’ skills with the right positions, HR
professionals should consider the following elements:
 An inventory of skills and descriptive job descriptions that accurately reflect

responsibilities and requirements, without which the match between employee and
position is doomed to failure or lacklustre results.
 A mentoring system that allows give-and-take between an experienced person who is not
the individual’s immediate supervisor or manager, thereby injecting objectivity into the
workplace dynamic
 Open and timely communication about job openings, without which employees lack the
knowledge of possibilities within the organisation
To encourage progress and then not provide practical opportunities—can only lead to a
drop in morale, motivation, and productivity.
Pillar 4: Career Performance help employees to maximise their efforts all of the above points are
meaningless without honest and open dialogue about the employer’s expectations vs. the
employee’s performance on the job. Periodic discussion should include feedback from the
manager, mentor, colleagues and team partners, and the employee, too. The resulting well-
rounded and objective view of the individual’s standing can uncover what works, what doesn’t
work, and what’s next. Going forward, the conversation should develop future steps, in
partnership with the employee, that continue to align the employee’s efforts with the company’s
mission.

1. Career development refers to a ______ designed to match an individual’s needs, abilities,

and career goals with current and future opportunities in the organization.
2. Career planning is an individual’s lifelong process of ______ career objectives and acting in
a manner intended to bring them about.
3. Steps for successful career planning is ______.
45
4. ______ test will allow you to figure out what sort of environments and occupations suit you
the most.
5. Career development is essential for implementation of______.
1. Set of Programmes
2. Establishing Personal
3. Self-Assessment
4. Career Test
5. Career Plan
11.10 SUMMARY
We have learnt in this unit that career development and the career planning process
include a number of specific steps that help to identify personal skills and attributes. Career
counselors provide mainly career counseling outside the school setting. Their chief focus is
helping individuals with career decisions. In addition, career counselors provide support to
people experiencing job loss, job stress, or other career transition issues. Career guidance can
help you in pursuing the right courses, in the right colleges or institutes and can guide you in
choosing a suitable career. Career guidance refers to services and activities intended to assist
individuals of any age and at any point throughout their lives, to make educational, training and
occupational choices and to manage their careers. Career planning is an individual’s lifelong
process of establishing personal career objectives and acting in a manner intended to bring them
about. The term 'career denotes all the jobs that are held during one's working life. It is viewed as
a sequence of positions held by an individual during the course of his lifetime. Edwin B. Flippo
defined a career as a sequence of separate but related work activities that provide continuity,
order and meaning in a person's life. This is the objective career. A career may be viewed as
amalgam of the changes in values, attitudes and motivation that occurs as a person grows older.
This is a subjective element in the concept of a career. This unit will also discuss about the
Model of career planning, need for career development, process and conditions for a successful
career development program.
46
11.11 KEYWORDS
Career Development : It refers to a set of programmes designed to match an
individual’s needs, abilities, and career goals with current
and future opportunities in the organization.
Career Planning : It is an ongoing process through which an individual sets

career goals and identifies the means to achieve them.
Career Strategy : Identify the Right Approach Possessing of self-knowledge.
Career Opportunities : Any opportunities that take you closer to your career goals.
Exploration : The activity of searching and finding out about something

1. What is career planning? Explain various misconceptions of career planning.
2. Write a model of career planning and explain steps involved in it.
3. What do you mean by career development? Write about the need for career development.
4. Elucidate the conditions for a successful career development program along with the various
process.
11.13 REFERENCES
New Delhi – 2001.
47
UNIT- 12 TRANSFER POLICY
Structure:
12.0 Objectives
12.1 Introduction
12.2 Meaning and Definitions of Transfer
12.3 Purpose of Transfer
12.4 Types of Transfer
12.5 Benefits and Problems of Transfer
12.6 Procedures for Transfer
12.8 Summary
12.9 Keywords
12.11 References
48
12.0 OBJECTIVES
 Give the meaning and definitions of transfer.

 Explain the purpose and types of transfer.
 Discuss the benefits and problems of transfer.
 Explain the procedures involved in transfer.
12.1 INTRODUCTION
Transfer is a process placing employees in positions where they are likely to be more
effective or where they are likely to get more job satisfaction this transfer is a process of
employee’s adjustment with the work, time and place. In transfers there is change in
responsibility, designation and pay, etc. A transfer implies a lateral or horizontal movement of an
employee in the hierarchy of positions with the same pay and status. Transfers may be either
company initiated or employee-initiated. A company may initiate a transfer to place employees
in positions where they are likely to be more effective or where they are likely to get greater
satisfaction or where they are better able to meet the work schedules of the organizations.
In seeking to foster an open and supportive environment which will assist personal
growth, the Institute takes the position that individuals are responsible for the planning and
management of their own careers. To facilitate this individual responsibility, the Institute has
established a wide range of policies and programs, including the serious search policy, job-
sharing and part-time employment, and tuition assistance.
Transfer policy in HRM is a document which consists of all the important information
related to the job transfer of the employee. It has list of types of job transfer which can took place
in the organization along with the terms and conditions which has to be followed while
transferring the employee. The Institute encourages employees to take advantage of development
opportunities whether they lead to careers inside or outside the Institute. Transfer from one
position to another at the Institute is a part of this process. Available positions are listed online.
Employees are welcome to discuss opportunities in confidence with their Human Resources
Officer. The following procedures should be followed when an employee decides to investigate a
job transfer within the Institute. Every organisation should have a fair and impartial transfer
49
policy which should be known to each employee. For successful transfer policies, it is necessary
to have a proper job description and job analysis. Care should be taken to ensure that frequent or
large scale transfers are avoided by laying down adequate selection and placement procedures
for the purpose. Because of an every transfer involves some description and cost and hence this
will ensure uniformity of treatment and avoid transfers for petty reasons.
Proper administration of the transfer programme is highly useful not only in adjusting to
varying situations, but also in placing individuals gainfully in different economic and personal
situations. Therefore let us discuss the concept of transfer and transfer policy in this unit.
12.2 MEANING AND DEFINITIONS OF TRANSFER

Transfer is a movement of the employee from one job to another job or some other place
without change in status, responsibilities and salary. Transfer means a change in job assignment.
It refers to a horizontal or lateral movement of an employee from one job to another in the same
organization without much change in his status or pay package. Transfer causes a shift of
individual from one job to another without there being any marked change in his responsibilities,
skills and other benefits. Transfers must be ordered based on certain company-specific principles
or dogma. Transferring an employee without adhering to policies or norms may lead to
deteriorated industrial relations. The management might think of issuing transfer orders, treating
each case on its own merit.
According to Edwin Flippo, “it is a change in job where the new job is substantially equal to
the old in terms of pay, status, and responsibilities”.
According to Yoder and Associates, transfer as, “a lateral shift causing movement of
individuals from one position to another usually without involving any marked change in duties,
responsibilities, skills needed or compensation”.
People may be transferred either because of the needs of the organization or at their own
request. Quite often, the management makes remedial transfers because an individual is not
performing satisfactorily in his/her present assignment, and his/her qualifications are that,
management feels, would be more suitable for a different job. Sometimes, the employees request
a transfer because they do not like their present work situation or because they feel that the
opportunity for advancement is better in some other job/ department.
50
Transfer policy in HRM is a document which consists of all the important information
related to the job transfer of the employee. It has list of types of job transfer which can took place
in the organization along with the terms and conditions which has to be followed while
transferring the employee. It provides the information about the officers who are given authority
to initiate and implement the job transfer in the organization. The basis on which the decision of
transfer should be taken is given in the employee transfer policy. It conveys the factors such as
seniority or skill set requirement based on which the transfer can be initiated. Employee transfer
policy has specified the frequency of transfers that may occur in the organization. It also includes
the transfer documents which are used to communicate with employee.
A sound transfer policy must be clear on the following points:
(a) Circumstances under which transfers can be made.
(b) The area or unit over which transfer will take place.
(c) The basis of transfer, seniority or ability or both.
(d) Responsibility of initiating and approving the transfers.
(e) Type of training to be imparted on the new job.
(f) The pay to be received by the transferee on the new job.
(g) Assurance about keeping employee’s seniority intact.
12.3 PURPOSE OF TRANSFER

Companies design the transfer policy to make sure that employee job transfer took place
in the organization in order to build up more skillful, satisfied and motivated work force. The
general purpose of the employee job transfer are listed below:
51
Fig 12.1: Purpose of Transfer
 To improve the effectiveness of company
 To increase the competence and versatility of the key position in the organization.
 To deal with changes in work requirement based on the change in market or technology.
 To maintain healthy employee relations.
 To correct the error in the initial placement of the employee.
 To provide relief from the job monotony
 For the adjustment of workforce in the organization in order to reduce the chances of lay-
off.
 Sometimes to punish the employees for misuse of the authority or position.
52
Transfers are made mainly by the organisations for achieving the following purposes:
1) For Fulfilling the Organisational Requirements
Transfers are required for filling the vacancies created in the organisation due to the following
changes:
(i) Change in volume of production
(ii) Change in technology
(iii) Production schedule
(iv) Quality of product
(v) Product line
(vi) Job pattern
(vii) Fluctuations in market conditions
(viii) Reallocation or reduction in workforce
2) For Meeting Employees’ Requests
Transfers are made in the organizations for meeting the requests made by the employees in order
to satisfy their desire to work under a different superior, different department/region where
prospects of growth are high or the place is near to their hometown.
3) Proper Utilization of Employees
Sometimes, management feels that the capacities of employees can be better utilized at some
other place or he is not performing satisfactorily or adequately at the present place, and he can
perform better at the other place.
4) Making Employees more Versatile
Transfers are made by the management for expanding the capabilities of the employees. They
can be prepared for more important assignments for future through job rotation. Transfer of the
employees to different jobs widens their knowledge and skills.
53
5) To Accommodate Family Related Issues
Especially among women employees, family- related issues are the main reasons for transfer. On
most occasions, after marriage, women like to join a job in the city of their husband. This fact
necessitates the transfers or resignations.
6) To Maintain a Tenure System
In government or administrative services, transfer is necessary to provide a wide variety of

experiences to the employee. In such jobs, an employee holds the job for fixed tenure and after
completing it he is transferred to another job. It also reduces the involvement of the employees in
politicising informal groups.
7) To Penalise the Employees
Employees indulging in undesirable activities may be transferred to remote places. It is a form of

disciplinary action, which is mainly followed in the government offices. Employees who create
problems at the workplace are transferred to other places.
8) To Reduce Conflicts and Incompatibility
Employees are transferred for reducing conflicts and incompatibilities between employees.
Sometimes an employee the finds it difficult to adjust with his colleagues in a particular section
or department could be shifted to another place. It will reduce the conflicts in the organisation.
9) To Provide Relief to the Employees
Transfers are made in the organisations for relieving the employees who are overburdened or
doing risky work for a long period. This breaks the monopoly of the employee. The employee
can also make a request for transfer, if the climate of a place is not suitable for him.
10) To Adjust the Workforce
Workers or employees are transferred from the place where there is less work to the place of
more work. This is the way of adjustment of employees in the organisation, so that they cannot
be discharged from their duty if the work at their workplace is less.
54
12.4 TYPES OF TRANSFER
There are six types of transfer which can be implemented in the organization based on the
purpose of the transfer. The reason behind the transfer helps to figure out the type of the
employee transfer.
Fig 12.2: Types of Transfer
1) Production Transfer
Sometimes in few production jobs the requirement of labor gets declined. In order to avoid
the lay-off of the efficient employees due to reduction in the manpower requirement,
organization often transfers the employees to alternative position. This transfer is known as
production transfer.
2) Replacement Transfer
Due to change in technology or market some operations in the organization get shut down.
Now in order to retain the long-service employee the organization replaces them with a new
employee with shorter service. This is known as replacement transfer. The long-service
employee are assigned new job in another department of the organization.
55
3) Rotation Transfer
Enhancement of job experience is the reason behind rotation transfer. It is also called as
versatility transfer. The management improves the versatility of the employees by their
lateral movement from one job to another. This transfer helps in job enlargement of the
employee.
4) Shift Transfer
It is not a part of rotational shift but it is actual transfer of employees from one shift to
another. Employees working in second shift often complain about the lack of social life.
Thus, in order to maintain work life balance organization transfer the employee to another
shift to help them in participates in their private and social life.
5) Remedial Transfer
Sometimes the initial placement of the employee on particular job might be faulty. To
correct the mistake, remedial transfer is carried out. It is often the situation in which due to
some health issues the employees are not able to continue the given job. Thus they are
replaced with other suitable employees who take a remedial transfer at the position.
6) Penal Transfer
Here the example of Bangladesh Company is perfect. In this type of transfer the employee is
used as a concealed penalty. When trade union activist or a trouble maker employee is
located in the organization, this employee is transferred to a remote branch of the
organization to make sure he/she will not be able to continue the destructive activities. Such
transfer is also known as downgrading as it may include reduction in authority,
compensation and duties.
12.5 BENEFITS AND PROBLEMS OF TRANSFER

Benefits of Transfer:
Transfers benefit both the employees and the organisation. Transfers reduce employees’
monotony, boredom etc. and increase employees’ job satisfaction. Further, they improve
employees’ skills, knowledge etc. They correct erroneous placement and interpersonal conflicts.
Thus, they improve employees’ morale. Further, they prepare the employee to meet
organisational exigencies including fluctuations in business and organisational requirements.
Thus, they enhance human resources contribution to organisational effectiveness.
56
Transfer does not imply any promotion or demotion of an employee, yet they are very
often done in all organizations for the benefits that they have for organizations as well as
employees –
(a) To meet the organizational needs:

Organizations have to keep up with the changes in technology, changes in demand, changes
in organizational structure, government policies etc. They transfer employees to adjust to
these changes because these changes bring about changes in job assignments. It is important
thus, to have right man in the right job.
(b) To meet employee needs:
Transfers are also done at the request of employees. Employees request for transfer on
account of better opportunities in some departments, or because of personal/family reasons.
Organizations, if feel that the transfer would not lead to any major imbalance, do allow such
transfers. Sometimes, they encourage it because of reasons of employee’s adaptability in
new set up.
(c) To make optimum use of employee’s talent:
An employee’s transfer makes his talents and skills get used optimally on other jobs. Some
jobs become monotonous for an employee after a while. To encourage him or motivate him
not to leave the organization, he is asked to use his talents in some other department.
(d) To avoid conflicts:
Some employees find it difficult to work with their colleagues in a particular department.
They could be transferred to another department to reduce conflicts.
(e) To take punitive action against employees:
Organizations have behavioural norms for all employees. If some employees refute them,
they are transferred to less important jobs. It is a punitive measure taken up against an
employee to maintain discipline in the organization.
Main Benefits of transfer are highlighted as under:
1. Increases Motivation: It increases motivation and productivity through avoidance of

monotony.
2. Relations Improvement: It improves supervisor-employee relations.
3. Ensures Future Promotions: It develops the employees for future promotions.
57
4. Increases Productivity: It increases the productivity and effectiveness of the organisation
overall.
5. Improvement: It improves the skills of the existing employees.
6. Provides Job Satisfaction: It provides greater job satisfaction to the existing employees.
7. Stabilisation: It helps to stabilise fluctuating work requirements.
8. Remedial: It remedies faulty placements.
Problems of Transfer:
Transfer process is having problems on the following grounds:
1. Adjustment Problems:
Adjustment problems to the employee to the new job, place, environment, superior and
colleagues.
2. Inconvenient:
Transfers from one place to another is caused much of inconvenience and cost to the
employee and his family members relating to housing, education to children, etc.
3. Loss of Time:
Transfer from one place to another result in loss of many days.
4. Reduces Contribution of Employees:
Company initiated transfers result in reduction in employee contribution.
5. An Adverse Effect:
Discriminatory transfers affect employee morale, job satisfaction, commitment and
contribution.
12.6 PROCEDURES FOR TRANSFER

The procedure of the employee job transfer depends on who has requested or initiated the
transfer process. Either manager/management or employee can initiate the transfer process. Here
are two different employee transfer procedures followed in the organization.
58
Manager/Management Initiated Employee
Employee Initiated Job Transfer
Job Transfer
 Employee check the open job position in
 Manager or Management convey to HR
the organization through internal portal
department about a requirement of the
and apply for it.
position.
 HR department verify that the skills and
 The HR department checks the skills and
competence of the employee matches to
competence required for the job profile
the job he/she applied.
and later recognizes the employee who can
fulfill the job requirement within the
organization.
 The HR department calls the employee for
 The employee is conveyed about the open
interview and to check the suitability of
position in the organization and his/her
the employee for new job position.
willingness to join the new job position is
checked by HR department.
 Once HR department confirms the
 Sometimes the new manager or
employee is suitable for new job, the
department takes interview of the
current manager of the employee is
employee to ensure the best fit for the new
contacted and HR department ensure that
job position.
the employee is properly relived form the
old job.
 After selection in the interview transfer
 The transfer form is issued to the
form is issued to the employee along with
employee along with the details of the new
the details of the new job to be joined.
job to be joined.
 After the approval of the employee the
 After the approval of the employee the
transfer order is issued.
transfer order is issued.

1. The procedure of the employee job transfer depends on who has ______ or ______ the
transfer process.
2. Every organization should have a fair and impartial ______which should be known to each
employee.
59
3. ______ is a movement of the employee from one job to another job or some other place
without change in status, responsibilities and salary.
4. Companies design the transfer policy to make sure that employee job transfer took place in
the organization in order to build up more ______, ______and ______ work force.
5. A sound transfer policy must be clear on the following point______.
1. Requested or Initiated
2. Transfer Policy
3. Transfer
4. Skillful, Satisfied and Motivated
5. Employee’s Seniority Intact
12.8 SUMMARY
So far we have gone through the concept of transfer policy in this unit. Transfer is a
process placing employees in positions where they are likely to be more effective or where they
are likely to get more job satisfaction this transfer is a process of employee’s adjustment with the
work, time and place. Transfer policy in HRM is a document which consists of all the important
information related to the job transfer of the employee. It has list of types of job transfer which
can took place in the organization along with the terms and conditions which has to be followed
while transferring the employee. It provides the information about the officers who are given
authority to initiate and implement the job transfer in the organization. Transfers are made
mainly by the organisations for achieving the following purposes, for Fulfilling the
Organisational Requirements, for Meeting Employees’ Requests, Proper Utilization of
Employees, Making Employees more Versatile, To Accommodate Family Related Issues, To
Maintain a Tenure System, To Penalise the Employees, To Reduce Conflicts and
Incompatibility, To Provide Relief to the Employees and To Adjust the Workforce. The
procedure of the employee job transfer depends on who has requested or initiated the transfer
process. Either manager/management or employee can initiate the transfer process. There are six
types of transfer which can be implemented in the organization based on the purpose of the
transfer. The reason behind the transfer helps to figure out the type of the employee transfer.
60
12.9 KEYWORDS
Transfer : It means a change in job assignment.
Transfer Payment : It is a one-way payment to a person or organization

which has given or exchanged no goods or services for it.
Rotation Transfer : Transfer of Sorts, From One Department to Another.
Adverse Effect : A harmful or abnormal result.
Job Transfer : An employee moves from one job to another with equal
pay, responsibility, and status.

1. What do you mean by Transfer? Explain the purposes of transfer.
2. Explain various types of employee transfer and its process and procedures in HRM.
3. Explain in detail the various procedures of transfers.
4. Discuss the various benefits and problems of transfer.
5. ‘Transfers are made mainly by the organizations for achieving certain purposes’-Elucidate.
12.11 REFERENCES
New Delhi – 2001.
61
BLOCK
4
Page No.
UNIT - 13: PROMOTION AND DEMOTION 1-13
UNIT - 14: PERFORMANCE APPRAISAL 14-33
UNIT - 15: COMPENSATION SYSTEM 34-51
UNIT - 16: EMPLOYEE BENEFITS 52-72

Credit Page
Programme : M.Com Semester: Second Block No :IV
Vice-Chancellor,
Dean (Academic),
BOS Chairman,
Dr. Chaya R. Member
Chairperson,
Dr. Chaya R. Dr. Naveen G.V.
Editorial Committee
BOS Chairman,

Chairperson,
Copy Right
Registrar,
2022.
Preface
Dear Learner,
employee benefits.

With best wishes,
Smt. Usha C.
Chairperson
BLOCK – IV
INTRODUCTION
Promotion means an advancement of an employee to a higher job involving more work,
greater responsibility and higher status. Compensation refers to the rewards, an employee gets
after offering his/her mental and physical efforts, wherein he/she compares his/her worth. This
block is also attempted to underline the importance of employ compensation system through
welfare measures and social security benefits. Performance appraisal is a formal system of
review and evaluation of individual or team task performance. Hence, this block discuss about
the promotion and demotion, performance appraisal, compensation system and employee
benefits.
Unit-13: Promotion and Demotion

Unit-14: Performance Appraisal
Unit-15: Compensation System
Unit-16: Employee Benefits
BLOCK-IV
UNIT-13 PROMOTION AND DEMOTION

Structure:
13.0 Objectives
13.1 Introduction
13.2 Meaning and Definitions of Promotion
13.3 Purpose of Promotion
13.4 Principles of Promotion
13.5 Promotion Policy
13.6 Types of Promotion
13.7 Demotion
13.8 Demotion Policy
13.9 Causes of Demotion
13.11 Summary
13.12 Keywords
13.14 References
1
13.0 OBJECTIVES
 Give the meaning and definitions of promotion.

 Explain the purpose and the principles of promotion.
 Describe the promotion and demotion policy. .
 Explain the causes of demotion.
13.1 INTRODUCTION
In the previous unit, we had throw a light on important concepts under human resource
management including job analysis and specification, job rotation and enrichment, procurement
of HRs, HRIS, HRD, TQM, transfer policy and others. In this unit let us discuss the concept of
promotion and demotion. Promotion is the movement of an employee from current job to another
that is higher in pay, perquisites, prestige, privileges, authority and power, wider in jurisdiction
and responsibility with a likelihood of increase in the level a person is occupying presently in the
organizational hierarchy. A mere shifting of an employee to a different job which has better
working hours, better office space or more pleasant location would not be called promotion. A
promotion process begins with the screening of a number of possible candidates for promotion
and culminates in the official notification of the elevation of an employee to a higher rank within
the establishment. Promotions could be used as a motivational tool as it brings enhanced working
conditions for the promoted persons. Promotions that merely increase job complexity without
any real improvement in jurisdiction could be called as Pseudo-promotions and are resented by
employees. Decisions to promote might be based on 360 degree appraisals of performance and
potentials. Job knowledge tests could also be applied for promotions.
Promotion may be based on seniority or merit. Using merit as the sole basis for
promotion is subject to criticism because determining merit criteria often lacks reliability and
objectivity. Most organizations try to combine seniority and merit in a formula called seniority-
cum-merit. Under this formula, a certain number of years of service are taken as the cut-off level
initially. Then, if there are more persons than required for promotion in that level, merit is given
consideration. Some organizations are engaged in promotion forecasts that allow them to identify
people with high advancement potential. The high-potential employees are then given special
kinds of developmental experiences.
2
13.2 MEANING AND DEFINITIONS OF PROMOTION
Promotion is an upward movement of employee in the organization to another job, higher
in organization’s hierarchy. In the new job, the employee finds a change in salary, status,
responsibility and grade of job or designation. As a whole, the organization perceives the staffing
of vacancy worth more than the employee’s present position. In contrast to promotion when the
salary of an employee is increased without a corresponding change in the job-grade, it is known
as ‘upgrading’. But when promotion does not result in change in pay, it is called ‘dry
promotion’. Promotion is a method of internal mobility. Promotion involves the coordinated
attempts to establish information channels for presenting its services or goods to the targeted
customer base. It is understood to be the communication of the organization with the
marketplace through planned and controlled programs.
Definitions of Promotion:
According to Paul Pigors and Charles A. Myers, “promotion is advancement of an

employee t a better job-better in terms of greater responsibility, more prestige or status, greater
skill and especially increased rate of pay salary”.
Arun Monnapa and S. Saiyadain defined promotion as “the upward reassignment of an

individual in an organization’s hierarchy, accompanied by increased responsibilities, enhanced
status and usually with increased income though not always so”.
Edwin B. Flippo, “a promotion involves a change from one job to another that is better
in terms of status and responsibilities.”
Promotion is the reassignment of a higher level job to an internal employee (which is

supposed to be assigned exclusively to internal employee) with delegation of responsibilities and
authority required to perform that higher level job and normally with higher pay.
13.3 PURPOSE OF PROMOTION

Promotion stimulates self-development and creates interest in the job. According to
Yoder, “promotion provides incentive to initiative, enterprise and ambition; minimizes
discontent and unrest; attracts capable individuals; necessitates logical training for advancement
and forms an effective reward for loyalty and cooperation, long service etc.”
3
The purposes of promotions are listed as:
 Recognize employee’s performance and commitment.

 Motivate him towards better performance.
 Develop competitive spirit among employees for acquiring knowledge and skills for higher
level jobs.
 Retain skilled and talented employees.
 Reduce discontent and unrest.
 To fill up job’s vacant position that is created due to retirement, resignation or demise of an
employee. In this case next senior employee will be promoted to the vacant job.
 Utilize more effectively the knowledge and skills of employees.
 Attract suitable and competent employees.
 To utilize the employee’s skills, knowledge at the appropriate level in the organizational
hierarchy resulting in organizational effectiveness and employee satisfaction.
 To develop competent spirit and inculcate the zeal in the employees to acquired the skills,
knowledge and other requirements needed by higher level jobs.
 To develop competent internal source of employees ready to take up jobs at higher level in
the changing environment.
 To promote employee’s self-development and make them await their turn of promotions. It
reduces labour turnover.
 To promote a feeling of content with the existing conditions of the company and a sense of
belongingness.
 To promote interest in training, development programmers and in team development areas.
 To build loyalty and to boost morale.
 To reward committed and loyal employees.
 To get rid of the problems created by the leader of workers’ unions by promoting them to
the officer’ levels where they are less effective in creating problems.
4
13.4 PRINCIPLES OF PROMOTION
There are certain principles of promotion which must be observed in framing promotion
policy and making promotion decisions. These principles are as follows:
1. Uniformity:
Promotion policy must provide for a uniform distribution of promotional opportunities
throughout the organization. As far as possible, the ratio of internal promotions to external
recruitment must be the same in all the departments. In absence of this, morale of employees
will be seriously impaired in the departments in which rate of promotions is lower.
2. Consistency:
Promotion should have consistency, that is, it must be applied to all personnel concerned.
Consistency demands that promotion is linked with career planning of all individuals and
promotion is not a sudden spurt and ad hoc to benefit a few individuals.
3. Fair and Impartial:
Promotion policy should be fair and impartial. Fairness and impartiality in promotion ensure
that only right personnel are promoted, and other factors such as family connection, caste
connection, etc. do not play their role. Further, fairness and impartiality in promotion should
not be only for communication but these must be followed in practice, otherwise, promotion
may create more conflicts and politics in the organization.
4. Planned Activity:
Promotion policy should ensure that promotion is undertaken as a planned activity and as a
regular process, rather than ad hoc process. Promotion must be seen as a backward linkage
with assessment of the promotion opportunities on the one hand, and forward linkage with
the development of personnel to make them promotable, on the other hand.
5. Sound Basis of Promotion:
There should be sound basis of promotion and it must be made known to the employees. In
the light of this, the employees develop their promo ability. In absence of sound basis of
promotion, organizational politics is heightened because every aspirant for promotion may
try for promotion and is likely to use all possible tricks for promotion.
6. Sanction:
All promotions should be finally sanctioned by the concerned authority. Generally,
organizations make a provision that HR department proposes the names of potential
5
candidates and send their records to the department making the requisition to fill vacancies
through promotion. In this way, the staff authority of HR department does not intrude upon
the authority of the department served.
7. Follow-Up:
There should be a suitable system of follow-up to assess the how the promoted employee is
working in his new position. The HR department should hold a brief interview with the
promoted employee and his new superior to determine whether everything is going well.
Many organizations make provision that the promoted employees should be kept on
probation for a specified period. If their performance during period is not satisfactory, they
may be reverted back to their previous positions. In this case, follow-up action is necessary.
13.5 PROMOTION POLICY

A sound promotion policy means a policy, which is fair, impartial and enjoys
consistency. It should state management’s intention regarding filling of vacancies from within
the organization (i.e. by promotions) or recruiting from outside or from both. In most cases, the
superior/higher vacancies in an organization are filled through external recruitment, while the
lower level vacancies are filled by promotions.
A promotion policy should provide a well-defined and clear-cut promotion chart.
Management should state clearly the base of promotion, i.e. whether seniority is considered or
merit, or both. Seniority means the length of service and is counted from the date of employee’s
appointment in the organization. Merit refers to a person’s qualifications and his competence.
There has always been a great controversy with regard to the question whether promotions
should be based on seniority or merit, or both. Each base has its own advantages/ merits and
disadvantages/demerits.
The usual policy is to take merit into consideration. Sometimes length of service,
education, training courses completed, previous work history, etc., are factors which are given
weight while deciding on a promotion. Although promotions are made on the basis of ability,
hard work, co-operation, merit, honesty, many informal influences are powerful determinants of
a promotional policy.
6
13.6 TYPES OF PROMOTION
The three important types of promotion are stated below:
(i) Vertical Promotion:
Under this type of promotion, employee is moved to the next level, in the organization
hierarchy with greater responsibility, authority, pay and status.
(ii) Up-Gradation:
Under this type of promotion, the job is upgraded in the organizational hierarchy.
Consequently, the employee gets more salary, higher authority and responsibility. For
example, the job of medical officer in Railways which was in Group C is upgraded as
Group B position.
(iii) Dry Promotion:
Under this promotion, the employee is moved to the next higher level in the organizational
hierarchy with greater responsibility, authority and status without any increase in salary.
13.7 DEMOTION
Demotion is the reverse of promotion. It is the downward movement of an employee in
hierarchy with lower status, salary and decreased responsibilities. It is generally used as a
punitive measure for incompetence or a preliminary step to dismissal. It is a downgrading
process where the employees suffer considerable emotional and financial loss.
It is a diametric opposite process of promotion. It is a course of action by which an

employee is assigned a downward assignment in the organizational hierarchy to a different job
with lesser pay, inferior designation, lower category, reduced status and responsibility. An
organization uses demotion less frequently than the other aspects of mobility, primarily because
of its serious negative implications on the employee’s career and morale. An employee is likely
to accept a demotion rather than lose the job altogether if the employment opportunities in the
job market outside are less.
Every manager is said to rise to his or her level of incompetence. In that case, demotion
would be one of the consequences arising out of an employee’s inability to match the
requirements of the present job, or when a promotion has been made provisionally. Demotion
7
may also occur as a disciplinary measure owing to the acts of commission of malpractice by the
employees. In the context when employee turnover is high and organizational structures are
flattering, demotion could be losing its significance and impact. Demotion would be less
frustrating to an employee if the placement in a particular position had been notified as
temporary and revocable.
13.8 DEMOTION POLICY

A demotion policy lays out the different actions that will lead to a demotion and then
details the steps the company must take when the event occurs. Clearly defining these actions is
crucial for the employees and managers. If a manager does need to demote someone, they don’t
want the employee saying the policy was unclear, which could lead to feelings of unfairness that
will sour their perception of the company and lead to productivity issues.
This written policy helps employees understand why their manager demoted them or
someone else. It outlines clear rationales for your decision to give less responsibility and most
likely, pay to a staff member.
As the document will help employees understand what can get them demoted, workers
throughout a company should be able to readily access and read over it so that they can avoid
demotion. If you don’t have the policy written down and stored somewhere with easy access, an
employee will have more room for grievances. They could claim they did not know the
expectations they failed to meet.
Without a demotion policy, you can open yourself to various issues ranging from legal
risk to productivity losses and dissatisfied employees. Though it’s always good to have a plan in
place for these situations, you should still be aware of the disadvantages of demoting an
employee so that you are not caught off guard.
13.9 CAUSES OF DEMOTION

As your company puts policy into place, you’ll need to know when it’s appropriate for
you to demote employees. Employees can become dissatisfied with their organization after a
demotion, so it’s important you only do so when it’s justified and needed.
8
The following are valid reasons for a company to demote an employee:
1. Lack of Ability
It’s common practice for companies to promote employees to help them see how the
organization works and give them a better understanding of all operations. When an employee
cannot adequately handle their position’s requirements, you may need to demote them. Demoting
someone who has been promoted into a position beyond their capabilities can help them improve
and be better prepared for the position in the future.
A demotion based on ability is most common with people in their first management
position. Often, the responsibility of monitoring their own work along with the work of others
can be overwhelming.
In a situation where an employee can’t handle the expectations of their new position,
companies should remember there was a reason they promoted the employee in the first place.
Instead of firing them, a demotion will place the employee back into a position where they
previously excelled. While some employees might be upset by this, many will likely welcome
the reduced responsibility if they’ve been feeling overwhelmed.
Though a demotion is completely opposite a promotion, you can present it as a chance for
the employee to improve and work for a second chance in the position or explore other
promotion opportunities in the organization.
2. Retain Talent
When a company is downsizing or reorganizing, it might be necessary to demote a high-

quality employee to keep them. During a rough patch in a company’s finances, they may need to
reduce expenses like employee salaries.
For example, a high-performing manager’s salary might be too high to justify during a
downturn, but their performance is too good to lay them off. In these situations, you might ask an
important employee for a voluntary demotion to help take some of the financial stress off during
a hard time. A voluntary donation will take some of the bad taste out of an employee’s mouth, as
they have made the choice themselves.
To keep talented employees and restructure your company’s financial sustainability, you
can demote them involuntarily. In this case, you’ll need to give them a full explanation.
9
Otherwise, they may feel angry at the change of position and salary. In your discussion with
them, underscore how they’re a critical asset to your company and why you want to keep them as
long as possible. Explaining the reason for the demotion can leave the employee feeling valued
rather than upset.
3. Discipline Employees
Though companies don’t commonly use this option, it is still appropriate in some
situations for a business to demote an employee as a disciplinary action. A detailed handbook
that explains where the employee went wrong and what actions they are being disciplined for
will be crucial here.

1. ______are the following causes of demotion
a. Lack of Ability
b. Retain Talent
d. All of the Above
2. Demotion is the reverse of ______
a. Promotion
b. Retain Talent
3. ______ is an upward movement of employee in the organization
a. Promotion
b. Demotion
c. Transfer
4. ______ could also be applied for Promotion
a. Job knowledge tests
b. Consistency
10
c. Transfer
5. Employee is moved to the next level, in the organization hierarchy with greater
responsibility, uthority, pay and status called______.
a. Dry promotion
b. Up-gradation
c. Vertical promotion

1. d
2. a
3. a
4. a
5. c
13.11 SUMMARY
Perhaps, we have gone through the important concepts of promotion and demotion in this
unit. Promotion means the advancement of an employee to a higher job involving more work,
greater responsibility and higher status. It may or may not be associated with the increment in
salary. Promotion is one of the best forms of incentives and it provides higher responsibilities,
better salary, high morale and job satisfaction to the employees. Practically, all the employees
aspire for career advancement and promotion is an advancement of the employee in the
organisational hierarchy. Opportunities for advancement in service are one of the best incentives
an organisation can provide to its employees. Practically, in all organizations, there are only a
few employees who are always satisfied with their existing jobs. The desire to advance and
increase one’s status is a basic urge in all human beings.
11
13.12 KEYWORDS
Promotion : It means the advancement of an employee to a higher job
involving more work, greater responsibility and higher
status.
Demotion Policy : It lays out the different actions that will lead to a demotion
and then details the steps the company must take when the
event occurs.
Vertical Promotion : Employee is moved to the next level, in the organization

hierarchy with greater responsibility, authority, pay and
status.
Up-Gradation : The job is upgraded in the organizational hierarchy.

Consequently, the employee gets more salary, higher
authority and responsibility. For example, the job of
medical officer in Railways which was in Group C is
upgraded as Group B position.
Dry Promotion : Under this promotion, the employee is moved to the next
higher level in the organizational hierarchy with greater
responsibility, authority and status without any increase in
salary.

1. Define Promotion. What are the purposes of promotion?
2. Elaborate about the nature of promotion policy.
3. Explain the principles of promotion.
4. Elucidate the demotion policy.
5. Distinguish between promotion and demotion.
12
13.14 REFERENCES
New Delhi – 2001.
13
UNIT-14 PERFORMANCE APPRAISAL
Structure:
14.0 Objectives
14.1 Introduction
14.2 Meaning of Performance Appraisal
14.3 Purposes of Performance Appraisal
14.4 Reasons for Failure of Performance Appraisal Program
14.5 Developing an Effective Appraisal Program
14.6 Sources of Appraisal
14.7 Performance Appraisal Methods
14.8 Effective Performance Appraisal Interview
14.9 Basis of Appraisal and Pay Revise
14.11 Summary
14.12 Keywords
14.14 References
14
14.0 OBJECTIVES
 Give the meaning and purpose of performance appraisal.

 Describe the reasons for failure of appraisal performance program.
 Provide an overview of the developing an effective appraisal program.
 Explain the performance appraisal methods.
 Analyze the effective performance appraisal interview.
14.1 INTRODUCTION
Performance management system is one of the most important aspects of an organization.
HR managers are usually the one who carry out the performance management process in an
organization. Performance appraisal is especially critical to the success of performance
management. Although performance appraisal is but one component of performance
management, it is vital, in that it directly reflects the organization’s strategic plan. Therefore, we
shall discuss the important concepts of performance appraisal in this unit.
14.2 MEANING OF PERFORMANCE APPRAISAL

Performance Appraisal is the systematic evaluation of the performance of employees and
to understand the abilities of a person for further growth and development. Performance
appraisal (PA) is a formal system of review and evaluation of individual or team task
performance. A critical point in the definition is the word formal, because in actuality, managers
should be reviewing an individual’s performance on a continuing basis. PA is especially critical
to the success of performance management. Although performance appraisal is but one
component of performance management, it is vital, in that it directly reflects the organization’s
strategic plan. Although evaluation of team performance is critical when teams exist in an
organization, the focus of PA in most firms remains on the individual employee. Regardless of
the emphasis, an effective appraisal system evaluates accomplishments and initiates plans for
development, goals, and objectives.
Performance appraisal is often a negative, disliked activity and one that seems to elude
mastery. Managers do not like giving them and employees do not like receiving them. In fact, in
one survey, almost 80 percent of workers stated dissatisfaction with their PA process. If this is
15
so, why not just eliminate it? Actually, some managers might do just that if they did not need to
provide feedback, encourage performance improvement, make valid decisions, justify
terminations, identify training and development needs, and defend personnel decisions.
Performance appraisal serves many purposes, and improved results and efficiency are
increasingly critical in today’s globally competitive marketplace. Therefore, abandoning the only
program with performance in its name and employees as its focus would seem to be an ill-
advised overreaction. On top of these considerations, managers must be concerned about legal
ramifications. Developing an effective performance appraisal system has been and will continue
to be a high priority for management. Hence, Performance appraisal is generally done in
systematic ways which are as follows:
1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance.
14.3 PURPOSES OF PERFORMANCE APPRAISAL

The performance appraisal evaluates the contribution of each employee to the
accomplishment of company’s goals. Other than this, performance appraisal has several other
purposes, which are as follows.
Evaluation
The major purpose of performance appraisal is to evaluate how well employees have
conducted their duty. Performance appraisal helps to keep a record of each employee’s job
performance, including what efforts they have made and what have they achieved. Evaluation
differentiates employees on the basis of their job performance, along with other factors like
personality, behaviour and other factors.
Provide Continuous Feedback
It is essential for the employers to know what performance and achievements have been
made by their employees. But, it is also equally important for an employee to know where they
stand, where they are going and how they are going to get there. Thus, giving feedback to
employees is also a major purpose of performance appraisal.
16
Measure Performance Accurately
Every company has to set mutually acceptable criteria or performance standards so that it
could compare employee’s performance with it. This helps in accurate measurement of
employee’s job performance which is necessary for the company to know where it is heading
towards.
Provide Clarity of Expectation and Actual Result
Every employee wants them to be told about their duties; what the organization really
wants them to do. However, this is not enough to get good output from them.
They should also be told how well they have done their duties and how can they improve their
performance. They should be made clear about how near they are to do their expectation.
Identify Area of Weakness of Employees
All employees may not be an all-rounder. Some employees may have weak points as
well, which if not sorted out in time, might be a liability for the company. Performance appraisal
helps in identifying such weak points.
Determine Training and Developmental Needs
Only determining weak points is not enough. A company should also make efforts to
abolish them. A properly carried out performance appraisal is a tool to determine what necessary
steps are to be taken in order to help the employees in improving their performance. The
increment in skills and knowledge develop an overall personality, attitude and behavior of the
employees.
Provide Career Path
Performance appraisal works as a mirror to employees and it clearly shows what they are
professionally and where they stand. On the other hand, it helps the company in recognizing
employees with potential. Companies provide career development opportunities to such
employees and pave their way to a successful and stable career.
17
Determine Promotion of Employees
Performance appraisal helps in charting progress of employees. Such charts can be used
by the employers to determine whether or not to promote their employees. They also help in
identifying the employees who most deserves to be promoted.
Take Corrective Actions
Performance appraisal distinguishes excellent and poor performing employees. Results of

performance appraisal help the employers in taking corrective actions. Such actions may be
counseling or warning the poor performers to improve performance and to prevent the
occurrence of undesirable results.
Decide Retention and Termination of Employees
Progress report of employees does not only help in determining promotion but also in
determining termination. Employees, with poor reports, are at first consulted. But, if the
supervisors don’t find any growth, they will be forced to take severe action like termination.
Evaluate Effectiveness of HRM Functions
Recruitment, selection, employee training, rewarding and other functions are some
functions of human resource management whose effectiveness can only be analyzed when the
performance of employees are appraised.
Decide Salary and Rewards
Performance appraisal of employees helps the supervisors in knowing their job

performance and the right amount to pay them. The employees will receive wages as per the
contribution they have made. The impressive contributors are also rewarded by the company as
per the organization’s policy.
Reduce Grievances
Grievances may occur in the company when employees feel unfairly treated or biased.
For an instance, an employee might feel that his co-worker is being paid more by the company
even though both of them are posted at the same job level. During such situation, employers can
use the reports of performance appraisal to clarify the employees that they are being paid on the
basis of their job performance, rather than the position they hold.
18
Keep Communication Lines Open
The complete process of performance appraisal includes continuous feedback from the
supervisors. This way, performance appraisal works as a bridge of communication between the
employers and employees. Also, open communication helps in strengthening the employer-
employee relationship or superior-subordinate relationship.
Motivate Superior Performance
When performances of employees are timely appraised, they are motivated to make the
superior performance. It is because they want to enjoy the perk of being an excellent employee
or they fear negative reactions from the supervisors. When employees know that they are
heading in right direction, it develops a sense of satisfaction in them.
Improve Decision Making Ability
It becomes easier for the organization to take right decision when it has complete
knowledge about what’s going on in their company. Performance appraisal works as a helping
hand to the company in making the right decision as it is a source of the company’s complete
statistical data.
14.4 REASONS FOR FAILURE OF PERFORMANCE APPRAISAL PROGRAM

Performance management system is one of the most important aspects of an organization.
HR managers are usually the ones who carry out the performance management process in an
organization.
Most organizations already have a performance management system, but if you are
planning to implement a performance management system in your organization or to improve the
existing one, here’s a list of common reasons for the failure of the performance management
system that you might need to avoid.
1. The Process is not structured
One reason why performance management fails is that the process lacks structure. It is not a
one-time process and needs to be repeated more often. It is not possible if you don’t have a
well-designed structure for performance management. Because the main reason behind
19
having a performance management process in an organization is to improve overall
performance of the employees in the organization.
2. Goals are not in the Picture
In many organizations, employee goals aren’t in the picture when the performance review
process is on. Sometimes performance management also fails because wrong goals are
chosen to optimize the performance of the employees. In short, goals are important to keep
employees motivated and perform better.
3. Lack of Communication
Sometimes, managers aren’t able to communicate what they expect from their employees. It
is important for them to communicate properly with the employees about the benefits of
performance management. Employees should be provided with necessary resources to
improve themselves constantly and should know the importance of continuous learning and
a performance management system.
4. Overemphasizing Recent Performances
This is one of the most common mistakes that managers/ HRs make. Performance
management processes are plagued with various biases in general. This is an unconscious
bias, since part of the problem can be attributed to memory and the way the mind makes
associations. But it is a dangerous bias all the same. Very simply, it is because decency bias
can make or break a performance review. So overemphasizing recent performance can result
in failure of the performance management system.
5. Annual Performance Evaluation
Performance evaluation is valuable only when done on a regular basis. Annual performance
review is not enough for any organization. Some managers claim that, it consumes a major
portion of their time. But if performance evaluation is annual, employees have to wait for a
year to give or receive feedback. It is not good for the organization’s productivity. So,
annual performance evaluation is one reason why your performance management system
could fail.
20
6. No Recognition/ Rewards
Appreciation and recognition are very important to keep your employees inspired and to
drive productivity. A performance management system that doesn’t include recognition and
rewards for employee performance tends to fail more easily. It is important to keep track of
employee performance and appreciate their good work. According to a report in
psychometrics, 58% HRs agree that recognition and praise drive employee engagement and
satisfaction.
14.5 DEVELOPING AN EFFECTIVE APPRAISAL PROGRAM

Employees and employers often think of the performance appraisal as a once a year, one
hour long (or less) meeting. However, the most effective program is one that is administered
throughout the year and is a process rather than just a review.
The performance appraisal process will be more effective if you understand its underlying
purpose to provide feedback to employees. Yes, performance appraisals are important for
documenting performance history. Many organizations also use appraisals as the basis for
compensation decisions. But its primary purpose and value is to provide performance feedback.
I. Performance Appraisal Process
 Performance Planning is the first step in an effective performance appraisal process.

Simply stated, performance planning is setting guidelines and clarifying expectations for
the employee. After all, if an employee does not know your expectations, how can he be
expected to perform up to your standards? And how can you successfully appraise her
performance when you have no basis for comparison?
 Performance Management is ongoing. As the employee completes job assignments or

works toward goals, the supervisor leads and directs these efforts by providing feedback
and additional direction or clarification, if necessary.
 Performance Assessment occurs just prior to the formal performance review. At this
time, the employee’s supervisor gathers the documentation generated throughout the
review period. This documentation could include positive feedback, such as a “job well
done” letter from a customer or notes from ongoing performance discussions, to name a
few.
21
 Performance Review is the formal process of reviewing performance with the employee.
The employee and supervisor meet to review and discuss the formalized assessment and
then begin the process again by setting goals and standards for the next year.
There are several advantages for establishing a performance appraisal process rather than
merely reviewing performance annually or only when there is a problem:
 It can reduce or eliminate common appraiser errors such as:
(i) Recently occurs when recent performance becomes the basis of the review as
opposed to evaluating performance for the entire year
(ii) Halo Effect where the appraiser ranks an employee high in all categories
regardless of actual performance, and
(iii) Horn Effect which results in ranking a less productive employee low in all
categories.
 It encourages an objective review process.
 It can boost employee motivation, enhance job satisfaction, and improve

performance. This creates a win/win situation for your company by increasing
productivity and, ultimately, profits.
II. Regular Feedback
Regular feedback is also important because, for many employees, the absence of feedback
creates ambiguity, uncertainty, and anxiety. However, to encourage good performance and
effectively develop people, it is important to understand the proper use of feedback. In its
simplest form, feedback may be viewed as one of two types. Taken together, these two types of
feedback help the employee achieve their performance goals.
a. Supportive Feedback reinforces and encourages your employees to continue doing what
they are doing well.
b. Corrective Feedback points out behavior that needs to be changed.
Many managers think that good performance and appropriate behavior are to be expected
and the only time employees need feedback is when they are doing something wrong. Corrective
feedback is necessary at times. In fact, a good manager addresses inappropriate and ineffective
22
behavior and work performance issues in a timely fashion. However, an effective manager also
provides supportive feedback and focuses on what employees are doing well. Behavior that is
reinforced and encouraged tends to be repeated and become stronger.
Effective feedback is specific and observable. Have you ever told an employee “you have
a bad attitude”? This corrective feedback will be far more effective if you said “your behavior
was inappropriate when you yelled at Bob.” You can then focus on what steps must be taken to
correct the behavior and clarify your performance expectations. Supportive feedback could be a
statement as simple as “I appreciate the way you handled that unhappy customer by quickly
solving his problem”.
Both forms of feedback are necessary and are important for encouraging effective
employee performance. Continue to provide corrective feedback when necessary but increase
your use of supportive feedback. Your employees will appreciate it and will repay you with
successful performance. Throughout the year, look for something your employees are doing right
and tell them so.
Finally, the formal performance review meeting should not be the time to surprise your
employee with a litany of performance issues. To the contrary, it should be a mutually beneficial
discussion that summarizes the review period’s events, improves or encourages continued good
performance, identifies areas that need development or improvement, sets goals for the future,
and validates the fact that your employee is an important part of your organization.
14.6 SOURCES OF APPRAISAL

As you can see from the measures used in the elements and standards described above,
there may be situations when multiple sources of information are needed in order to fully
appraise performance. There are no prohibitions in law or regulation against using a variety of
sources of information for performance appraisals. A team environment lends itself to including
team members in the appraisal process. A team member’s peers have a unique perspective on his
or her job performance. Experience has shown that employees on teams are generally very
receptive to the concept of appraising each other, or at least providing feedback on performance.
A multi-rater appraisal and/or development process can be designed to fit the work climate,
technology, and development of the team. Some organizations use a computerized process that
calculates appraisal averages and assigns those averages to summary levels for ratings of record.
23
Other organizations use the information for developmental purposes only and do not use the data
for assigning summary levels. Still other organizations with highly-developed, mature self-
directed teams use face-to-face feedback and/or peer panels to determine summary levels. There
are many issues to consider when designing multi-rater appraisal programs. Generally four
common sources are used by appraiser to measure actual performance, personal observation,
statistical reports, oral reports and written reports. Some of the typical sources of appraisal
information available include, previous appraisal forms, Training assessment reports, Agreed
objectives and standards of performance and Company published performance statistics or
measurements kept.
14.7 PERFORMANCE APPRAISAL METHODS

A more widely used classification of appraisal methods into two categories, viz.,
traditional methods and modem methods, is given by Strauss and Sayles”. While traditional
methods lay emphasis on the rating of the individual’s personality traits, such as initiative,
dependability, drive creativity, integrity, intelligence, leadership potential, and other traits the
modem methods, on the other hand, place more emphasis on the evaluation of work results, that
is job achievements than the personal traits. Modem methods tend to be more objective and
worthwhile. The various methods included in each of the two categories are listed in Table.
Methods of Performance Appraisal
Traditional Method Modern Method

1. Ranking Method 1. Management By Objectives (MBO)
2. Paired Comparison 2. Behavioral Anchored Rating Scale
3. Grading 3. Assessment Centers
4. Forced Distribution Method 4. 360-Degree Appraisal
5. Forced Choice Method 5. Cost Accounting Method
6. Checklist Method
7. Critical Incidents Method
8. Graphical Scale Method
9. Essay Method
10. Field Review Method
11. Confidential Report
24
Traditional Methods:
1. Ranking Method:
It is the oldest and simplest formal systematic method of performance appraisal in which
employee is compared with all others for the purpose of placing order of worth. The
employees are ranked from the highest to the lowest or from the best to the worst.
2. Paired Comparison:
In this method, each employee is compared with other employees on one- on one basis,
usually based on one trait only. The rater is provided with a bunch of slips each coining pair
of names, the rater puts a tick mark against the employee whom he insiders the better of the
two. The number of times this employee is compared as better with others determines his or
her final ranking.
3. Grading Method:
In this method, certain categories of worth are established in advance and carefully defined.
There can be three categories established for employees: outstanding, satisfactory and
unsatisfactory. There can be more than three grades. Employee performance is compared
with grade definitions. The employee is, then, allocated to the grade that best describes his
or her performance.
4. Forced Distribution Method:
This method was evolved by Tiffen to eliminate the central tendency of rating most of the
employees at a higher end of the scale. The method assumes that employees’ performance
level confirms to a normal statistical distribution i.e., 10,20,40,20 and 10 per cent. This is
useful for rating a large number of employees’ job performance and promo ability. It tends
to eliminate or reduce bias. It is also highly simple to understand and easy to apply in
appraising the performance of employees in organizations. It suffer from the drawback that
improve similarly, no single grade would rise in a ratings.
5. Forced-Choice Method:
The forced-choice method is developed by J. P. Guilford. It contains a series of groups of

statements, and rater rates how effectively a statement describes each individual being
25
evaluated. Common method of forced-choice method contains two statements, both positive
and negative.
6. Check-List Method:
The basic purpose of utilizing check-list method is to ease the evaluation burden upon the
rater. In this method, a series of statements, that is, questions with their answers in ‘yes’ or
‘no’ are prepared by the HR department. The check-list is, then, presented to the rater to tick
appropriate answers relevant to the appraise. Each question carries a weight-age in
relationship to their importance.
7. Critical Incidents Method:
In this method, the rater focuses his or her attention on those key or critical behaviours that
make the difference between performing a job in a noteworthy manner (effectively or
ineffectively). There are three steps involved in appraising employees using this method.
First, a list of noteworthy (good or bad) on-the-job behaviour of specific incidents is

prepared. Second, a group of experts then assigns weightage or score to these incidents,
depending upon their degree of desirability to perform a job. Third, finally a check-list
indicating incidents that describe workers as “good” or “bad” is constructed. Then, the
check-list is given to the rater for evaluating the workers.
8. Graphic Rating Scale Method:
The graphic rating scale is one of the most popular and simplest techniques for appraising
performance. It is also known as linear rating scale. In this method, the printed appraisal
form is used to appraise each employee.
The form lists traits (such as quality and reliability) and a range of job performance
characteristics (from unsatisfactory to outstanding) for each trait. The rating is done on the
basis of points on the continuum. The common practice is to follow five points scale.
9. Essay Method:
Essay method is the simplest one among various appraisal methods available. In this
method, the rater writes a narrative description on an employee’s strengths, weaknesses, past
26
performance, potential and suggestions for improvement. Its positive point is that it is simple
in use. It does not require complex formats and extensive/specific training to complete it.
10. Field Review Method:
When there is a reason to suspect rater’s biasedness or his or her rating appears to be quite
higher than others, these are neutralized with the help of a review process. The review
process is usually conducted by the personnel officer in the HR department.
11. Confidential Report:
It is the traditional way of appraising employees mainly in the Government Departments.

Evaluation is made by the immediate boss or supervisor for giving effect to promotion and
transfer. Usually a structured format is devised to collect information on employee’s
strength weakness, intelligence, attitude, character, attendance, discipline, etc. report.
Modern Methods:
1. Management by Objectives (MBO):
Most of the traditional methods of performance appraisal are subject to the antagonistic
judgments of the raters. It was to overcome this problem; Peter F. Drucker propounded a
new concept, namely, management by objectives (MBO) way back in 1954 in his book. The
concept of MBO as was conceived by Drucker, can be described as a “process whereby the
superior and subordinate managers of an organization jointly identify its common goals,
define each individual’s major areas of responsibility in terms of results expected of him and
use these measures as guides for operating the unit and assessing the contribution of each its
members”.
2. Behaviourally Anchored Rating Scales (BARS):
The problem of judgmental performance evaluation inherent in the traditional methods of

performance evaluation led to some organisations to go for objective evaluation by
developing a technique known as “Behaviourally Anchored Rating Scales (BARS)” around
1960s. BARS are descriptions of various degrees of behaviour with regard to a specific
performance dimension.
27
It combines the benefits of narratives, critical incidents, and quantified ratings by anchoring
a quantified scale with specific behavioural examples of good or poor performance. The
proponents of BARS claim that it offers better and more equitable appraisals than do the
other techniques of performance appraisal we discussed so far.
3. Assessment Centers:
The introduction of the concept of assessment centres as a method of performance method is

traced back in 1930s in the Germany used to appraise its army officers. The concept
gradually spread to the US and the UK in 1940s and to the Britain in 1960s. The concept,
then, traversed from the army to business arena during 1960s. The concept of assessment
centre is, of course, of a recent origin in India. In India, Crompton Greaves, Eicher,
Hindustan Lever and Modi Xerox have adopted this technique of performance evaluation.
In business field, assessment centres are mainly used for evaluating executive or supervisory
potential. By definition, an assessment centre is a central location where managers come
together to participate in well-designed simulated exercises. They are assessed by senior
managers supplemented by the psychologists and the HR specialists for 2-3 days. Assessee
is asked to participate in in-basket exercises, work groups, simulations, and role playing
which are essential for successful performance of actual job. Having recorded the assessee’s
behaviour the raters meet to discuss their pooled information and observations and, based on
it, they give their assessment about the assesee. At the end of the process, feedback in terms
of strengths and weaknesses is also provided to the assesees.
4. 360 – Degree Appraisal:
Yet another method used to appraise the employee’s performance is 360 – degree appraisal.
This method was first developed and formally used by General Electric Company of USA in
1992. Then, it travelled to other countries including India. In India, companies like Reliance
Industries, Wipro Corporation, Infosys Technologies, Thermax, Thomas Cook etc., have
been using this method for appraising the performance of their employees. This feedback
based method is generally used for ascertaining training and development requirements,
rather than for pay increases.
28
Under 360 – degree appraisal, performance information such as employee’s skills, abilities
and behaviours, is collected “all around” an employee, i.e., from his/her supervisors,
subordinates, peers and even customers and clients. In other worlds, in 360-degree feedback
appraisal system, an employee is appraised by his supervisor, subordinates, peers, and
customers with whom he interacts in the course of his job performance. All these appraisers
provide information or feedback on an employee by completing survey questionnaires
designed for this purpose.
5. Cost Accounting Method:

This method evaluates an employee’s performance from the monetary benefits the employee
yields to his/her organisation. This is ascertained by establishing a relationship between the
costs involved in retaining the employee, and the benefits an organisation derives from
Him/her.
14.8 EFFECTIVE PERFORMANCE APPRAISAL INTERVIEW

A performance appraisal interview is the first stage of the performance appraisal process
and involves the employee and his or her manager sitting face to face to discuss threadbare all
aspects of the employee’s performance and thrash out any differences in perception or
evaluation. The performance appraisal interview provides the employee with a chance to defend
himself or herself against poor evaluation by the manager and also gives the manager a chance to
explain what he or she thinks about the employee’s performance.
In a nutshell, the performance appraisal interview precedes the normalization process and
is subsequent to the employee filling up the evaluation form and the manager likewise doing so.
The interview is the stage where both sides debate and argue the employees’ side of the story as
well as the manager’s perception.
Start by explaining the goals of the meeting. Let your employee know just what the
appraisal is and what is going to be discussed. Encourage a dialogue with the employee and
listen to anything they have to say. Make sure to discuss any significant achievements with them.
You are there to appraise the good as well as the bad. It shouldn’t be all negative. Of course, you
must also discuss any unsatisfactory performance. An employee cannot improve if they don’t
know the areas they need improvement. After this you should mutually discuss any plans for
development and training. If you feel the employee would benefit from training – or they have
29
something they want to learn – then discuss their options with them and make arrangements if
necessary. Finally, close the meeting properly and try to end on an as upbeat a note as possible.
Employees should leave the appraisal hopeful about the future.
14.9 BASIS OF APPRAISAL AND PAY REVISE

Performance Appraisal is to reward employees for their good work. The Appraisal will
assist employees to develop in their career and enable them to reach their full potential.
The Performance Appraisal process involves discussion on the previous year’s employee
achievements and identifying an area for improvement. This will help employees develop clear
performance objectives for the next review period. For companies that have a yearly appraisal
system, the Performance Appraisal process begins a month before the end of each financial year.
For an appraisal to be successful, the manager and team member must contribute equally to the
outcome. The appraisal should be a two-way discussion, with the appraise participating actively
and feeling properly valued.
This allows you to develop a shared understanding of what's expected from both parties,
and to establish a plan to monitor and evaluate performance against agreed goals.
Here are some key points that you need to study before asking for a Promotion and pay rise:
1) Your previous year’s top Achievements: You should be ready with a list of key projects
you have done in the past year. What was the overall quality of work during this period?
Note down some examples, which will illustrate your contribution to company growth.
2) Positive Attitude: Management likes employees with a positive attitude. Management will
think about your leadership qualities before promoting you.
3) Your relationship with your boss and co-workers: This is a crucial point. Make sure that
you don’t have any disputes between you and your boss or co-workers. You should be a fair
team player.
4) Any major work issue in the previous year? You should be aware of project issues
created by you. If these issues are major then think twice before asking for a promotion or
pay raise.
30
5) If the issue is minor and if you were not directly responsible for those issues, then you can
give an explanation of these issues, if the management raised these negative points in your
Appraisal meeting. Make sure that you don’t blame any of your co-workers for any issue.
6) Explain why you deserve a promotion: You need a solid work portfolio to explain this.
Put forward your contribution to the company and explain how this helped to improve the
company.
7) Are you prepared to handle the challenges of senior-level positions? Senior-level
positions involve more responsibilities. You need to have both technical as well as
management skills to handle such positions. Explain how you are the best fit for the new
position.
8) Be prepared to present the exact amount to be raised in your salary: If management is
ready to promote you then you might get this question: How much pay rise do you expect?
So do a little study of the current market salary range for your new position.
9) Come up with some exact figures by doing the analysis of your current salary, the
company’s previous salary hike records and your accomplishments for the appraisal period.
10) Know the exact time for getting a pay rise: If you got promotion in the last performance
appraisal then ask for a promotion in the current appraisal only if you did some outstanding
work. If the company is in some financial problems then wait until the company gets out of
this situation. (But don’t wait too much)

State true or False:
1. The annual performance evaluation process is naturally motivational because the company
identifies each employee’s weaknesses.
True /False
2. In performance appraisals, the word specific means that the form provides enough
information for everyone to understand what level of performance has been achieved by a
particular person within a well-identified job.
True /False
3. As a manager, an important part of your job is to make sure that your employees know
exactly what is expected of them the standards.
True /False
31
4. The basic performance appraisal is very simple to carry out.
True /False
5. To meet the communication purpose of performance appraisals, managers have to allow the
employee the opportunity to speak to them concerning factors that inhibit their ability to
succeed.
True /False

1. False
2. True
3. True
4. False
5. True
14.11 SUMMARY
Performance appraisal (PA) is a formal system of review and evaluation of individual or
team task performance. A performance appraisal used in the organization is a regular review of
employee’s performance to verify their contribution to the company. It is also known as annual
review or performance evaluation. It evaluates the skills, growth, achievement or failure of the
employees. The performance appraisal is often used to justify the decisions related to
promotions, pay hike, bonuses and termination of employee. Performance appraisal is a system
of review and evaluation of an individual’s or team’s job performance. It is a within human
resources management, a set of procedures for assessing the work performance of individual
employees, according to pre-determined criteria, usually including personal objectives and,
where existing, competency frameworks. Performance appraisals usually also consider the
official’s learning and development needs, in the context of their performance, prospects and
ambitions.
14.12 KEYWORDS
Performance appraisal (PA) : It is a formal system of review and evaluation of
individual or team task performance.
BARS : It is a descriptions of various degrees of behavior

with regard to a specific performance dimension.
32
360 Degree Appraisal : It is information collected all-around of an
employee, i.e., from his/her supervisors,
subordinates, peers and even customers and clients.
Performance Review : It is the formal process of reviewing performance

with the employee.
Graphic Rating Scale Method : The graphic rating scale is one of the most popular
and simplest techniques for appraising performance.

1. Explain the effective performance appraisal methods.
2. Many different people can conduct performance appraisals. What are the various
alternatives?
3. What are the various problems associated with performance appraisal? Briefly describe
each.
4. Explain the reasons for failure of performance appraised program.
5. Briefly explain various methods of performance appraised.
14.14 REFERENCES
New Delhi – 2001.
33
UNIT-15 COMPENSATION SYSTEM
Structure:
15.0 Objectives
15.1 Introduction
15.2 Meaning and Definitions of Compensation
15.3 Types of Compensation
15.4 Wages
15.5 Significance of Compensation Administration
15.6 Principles of Compensation Administration
15.7 Wage Incentive Plans
15.8 Factors Determining Employee Compensation
15.10 Summary
15.11 Keywords
15.13 References
34
15.0 OBJECTIVES
 Give the meaning and definitions of compensation system.

 Explain the types of compensation.
 Write a note on wages.
 Describe the principles of compensation administration. .
 Provide an overview of the significance of compensation administration.
 Explain the wage incentive plans.
 Discuss factors determining employee compensation.
15.1 INTRODUCTION
Generally the term compensation refers to compensating any damage, loss or mental
harassments, wages or salaries as reward for physical and/or mental efforts to perform any
agreed task or job. But the concept of equity in remunerating any work or task has forced us to
perceive wages and salaries as compensation, because people work efficiently only when they
are paid according to their worth or feel satisfied with the remunerations. Compensation is a
systematic approach to providing monetary value to employees in exchange for work performed.
Compensation may achieve several purposes assisting in recruitment, job performance, and job
satisfaction. Compensation refers to any payment given by an employer to an employee during
their period of employment. In return, the employee will provide their time, labor, and skills.
This compensation can be in the form of a salary, wage, benefits, bonuses, paid leave, pension
funds, and stock options, and more. Besides basic salaries or wages, companies are forced to
view the benefits and services to justify the positional and esteem needs of employees and to
provide adequate cushion for inflations.
15.2 MEANING AND DEFINITIONS OF COMPENSATION
Compensation may be viewed as a system of reward that motivates an employee to
perform better.
The term compensation is used to mean employees’ gross earnings in the form of
financial rewards and benefits as part of employment relationship. In terms of human resource
management, compensation is referred to as money and other benefits received by an employee
for providing services to his employer. Compensation management, also known as wage and
35
salary administration, remuneration management, or reward management, is concerned with
designing and implementing total compensation package or salary structure.
Compensation may also be viewed as:
(a) A system of rewards that motivates employees to perform the assigned task,
(b) A tool used by organizations to foster the values, culture and the behavior they
require, and
(c) An instrument that enables organizations to achieve their business goals.
DEFINITIONS:
According to Cascio (1995), the “Compensation includes direct cash payments and
indirect payments in form of employees benefits and incentives to motivate employees to strive
for higher levels of productivity”.
According to Milkovitch and Newman (2005), the “Compensation is all forms of
financial returns, tangible services and benefits employees receive as part of an employment
relationship.” The phrase “financial returns” refers to an individual's base salary, as well as short-
and long-term incentives. “Tangible services and benefits” are such things as insurance, paid
vacation and sick days, pension plans, and employee discounts.
According to Dale Yoder, “Compensation is paying people for work.”
15.3 TYPES OF COMPENSATION
Everyone involved in creating an employee compensation plan and pay structure must
first understand the different types of compensation. This is because it is the organization’s
responsibility to explain the compensation plan to all candidates and employees. It is especially
important during the hiring process, and performance and salary reviews. With so many different
options available within the main two types of compensation, employees can easily become
confused.
36
Source: AIHR
Fig 15.1: Types of Compensation
There are two main types of compensation:
(1) Direct compensation (financial)

(2) Indirect compensation (financial & non-financial)
1. Direct Compensation (Financial): Includes direct compensation and Indirect compensation.
The direct compensation is used to describe financial remuneration usually cash and includes
such elements as basic pay, dearness allowance, overtime pay, shift allowance, incentive,
bonus, profit sharing bonus and commissions and any other financial benefits. Direct
compensation is a financial (or monetary) form of compensation. Here are the four main types
of direct compensation:
a. Hourly wages
Hourly wages are often provided to unskilled, semi-skilled, temporary, part-time, or

contract workers in exchange for their time and labor. Jobs where some employees
receive hourly wage include the retail, hospitality, and construction industries.
Employees who receive hourly wages are usually able to earn overtime pay. This pay
37
consists of any additional hours worked outside of their set contract. When setting your
employees’ wages, you need to be compliant with the local minimum wage legislation.
b. 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. Examples of employees who
receive a salary include teachers, accountants, doctors, and retail and hospitality
managers. Both hourly wages and salary make up an employee’s base pay or base salary.
c. Commission
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. Commission rates are often based on various specified
factors, including revenue and profit margins. Some employees will work on
commission only or obtain a salary with commission.
d. Bonus
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.
Both commission and bonuses fall under incentive pay, along with piece rate, profit
sharing, stock options, and shift differentials.
However, bonuses can also be paid without an employee meeting a particular target. For
example, if the business has had a great year and decides to reward everybody. In this
case, the bonus would be classified as variable pay. Tips are also a common form of
compensation in people-based industries, particularly hospitality. Another umbrella of
direct compensation is deferred pay which includes savings plans and annuity. Merit
pay is often given to an employee who meets their targets or performs well in their role.
38
2. Indirect Compensation (financial & non-financial)
Indirect compensation 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. Indirect compensation is often known as employee
benefits or perks of the job. Here are some common examples of indirect compensation.
a. 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. An equity package is common at start-up companies. These businesses may
be low on cash or funding and need other incentives to attract and retain employees.
b. 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. Many stock options require
employees to work between three to five years before they can access this
compensation.
c. Benefits
Typical employee benefits usually include health insurance, life insurance, retirement
plans, disability insurance, legal insurance, and pet insurance. Healthcare is a common
benefit in many advanced countries. Retirement funds and pension plans are also
common benefits that employees look for when considering a new role at a new
organization.
3. Non-monetary Compensation:
Non-monetary compensation includes benefits like: paid or non-paid time off, flexi-time,
learning and development opportunities, parental leave, childcare, company cars, phones or
laptops, and meals.
39
15.4 WAGES
However, labour alone cannot produce as most of the production is the result of joint
efforts of different factors of production. Therefore, the share of the produce paid to labour for its
production activity is called wage.
“A wage may be defined as the sum of money paid under contract by an employer to
worker for services rendered.” Benham.
“Wages is the payment to labour for its assistance to production.” -A.H. Hansen.
‘Wage rate is the price paid for the use of labour.” -Mc Connell.
A wage is price, it is the price paid by the employer to the worker on account of labour
performed.” -J.R. Turner.
15.5 SIGNIFICANCE OF COMPENSATION ADMINISTRATION

Compensation administration refers to the tasks of compensation managers in designing
and implementing a pay program. Taking into consideration the policies, compensation
managers must choose the components that they will include in a company’s compensation
program, that is, the kinds of base pay, wage and salary, incentives, and benefits they will offer
employees with different jobs and skill levels. Smart employers know that keeping quality
employees requires providing the right compensation and benefits package. Compensation
includes wages, salaries, bonuses and commission structures. Employers shouldn't ignore the
benefits portion of employee compensation and benefits, because the benefits sweeten
employment contracts with the priorities that most employees need.
1. Compensation Consistency
There should be internal and external consistency in compensation. Internal compensation

involves a payment based on the job role of the employees. External compensation means
higher compensation and benefits is related to the best performing employees.
2. Additional Administrative Efficiency
All the salaries and wages need to be managed effectively, making sure that there is the
optimal use of HRIS.
40
3. Adherence to All the Laws
A well-balanced salary and wage structure take into consideration all the legal compliances
of the organization. They make sure that the employers adhere to all the legalities involved
in handing out the compensation.
4. Rewards Induced Behavior
The payment structure of the organization should motivate induced behaviors of the
employees. In this way, employers can cultivate a good work ethic and attitude among the
employees. This method is proven to increase the output of the employees.
5. Current Employee Retention
If the compensation of the organization is not up to the mark, then employees are bound to
quit the job. This equals a high turnover rate of employees in the organization that is not at
all ideal. To retain employees, the compensation has to be competitive and at least on par
with the industry standards.
6. To be Sufficient
The compensation package of the employee must be satisfactory at all levels. This means
that a low job profile employee must never be overlooked to please a high job profile.
7. Personnel Motivation
The compensation package is directly in proportion to motivating the employees for higher
productivity. Employees also demand praise, status, acceptance, recognition, and promotion.
8. Better Understanding
The compensation package should be designed in a manner that the employees understand
easily. There is no point in making a complicated compensation package as employees
might end up feeling anxious.
9. Costs Control
A well-constructed compensation plan helps the organization to control costs as the

organization has to spend less on hiring new employees.
41
10. Equity Maintenance
The worth of the job should be in direct relation to the internal equity of the job. External
equity refers to the compensation of other organizations in the job market.
11. Hire Qualified Employees
The compensation of the job must be high enough to attract high profile applicants to the
organization. This is the primary reason the compensation package needs to be designed
precisely.
15.6 PRINCIPLES OF COMPENSATION ADMINISTRATION

Principles of Compensation Administration are stated below:
 Compensation policy should be developed by taking into consideration of the

views of employers, the employees, the consumers and the community.
 The compensation policy or wage policy should be clearly defined to ensure
uniform and consistent application.
 The compensation plan should be matching with overall plans of the company.
Compensation planning should be part and parcel of financial planning
 Management should inform the wage/salary related policies to their employees.
Workers should be associated in formulation and implementation of wage policy
15.7 WAGE INCENTIVE PLANS

Wage incentive refers to performance linked compensation paid to improve motivation
and productivity. It is the monetary inducements offered to employees to make them perform
beyond the acceptance standards.
The three important plans of wage incentive are explained below:
1. Time Based Plan
(i) Halsey Plan:
This plan was first designed by Halsey in 1890. Under this plan a standard time is fixed
for completing a work in advance. A person taking standard or more time is paid for the
time taken by him.
42
A worker completing his task in less than the standard time is paid for some of the time
saved. The payments for time saved vary from 33 ⅓% to 66⅔% but generally wages for
one half of time saved are paid. The wage of a worker is given by
W = T x R + (S – T/2) R
Where S= Standard time or allowed time to complete the job.
T = Time taken
R = Hourly wage rate
(ii) Rowan Plan:
This system is similar to that of Halsey plan. A worker is guaranteed minimum wages for
time spent on the job. He gets bonus for completing the job in less than the standard time.
The only difference between Halsey and Rowan Plans is the method of calculating bonus
is that proportion of the wages of the time taken which he saved bears to the standard
time allowed.
Wages are calculated by the following relations:
W = T x R + (S-T/S) x T x R
(iii) Emerson Plan:
Emerson, an associate of F.W. Taylor, developed this efficiency plan in 1910. A standard
output is fixed for determining the efficiency of workers. A worker reaching up to 66⅔%
of efficiency is paid only minimum wages and bonus is paid only when his efficiency
crosses this limit. The rate or bonus increases with the increase in efficiency.
(iv) Bedeaux Plan:
This plan was devised by Charles E. Bedeaux in 1911. It provides comparable standards
for all workers. The benefit of time saved goes both to the worker and his supervisor in
the ratio of 3/4 and 1/4th respectively. A supervisor also helps a worker in saving his time
so he is also given some benefit in this method.
The standard time for each job is determined in terms of minutes which are called
Bedeaux points or B’s. Each B represents one minute through time and motion study. A
43
worker is paid time wages up-to standard B’s or 100% performance. Bonus is paid when
actual performance exceeds standard performance in tenns of B’s.
2. Production Based Plans:
(i) Taylor’s Differential Piece-Rate Plan:
F.W. Taylor started this method as a part of the scheme of scientific management. The
underlying principle of this system is to reward an efficient worker and penalise the
inefficient person. In Taylor’s system, inefficient persons have no place in his
organization.
The standard time was fixed for completing a task with the help of time and motion
study. If a worker completes the task in the standard time he is paid at higher rate and
lower rate is paid if more than the standard time is taken.
(ii) Gantt’s Task and Bonus Plan:
This method is named after H. L. Gantt, a close associate of F.W.T. Taylor. He tried to
improve Taylor’s method of wage payment. The workers are guaranteed minimum wages
for taking standard time or more. A person taking less than the standard time gets time
wages plus bonus.
3. Group Incentive Plans:
Under individual incentive system workers are paid on the basis of their personal
performance. Their wages will be directly linked to their efforts. A worker may improve his
remuneration by raising the level of output. There may be circumstances when individual
performance may not be measurable. A number of persons may be associated in completing
a task. The work of one person may be influenced by the work of the other. Under such
conditions, incentives may be offered for raising group performance.
The industry engaged on assembly type of work as in computers, washing machines and
Televisions etc. group incentive plan may be practicable. The performance depends upon the
group effort rather than on individual initiative. The incentives are given for raising output
beyond a certain level of output. The amount of bonus is divided among all persons
associated in completing the task.
44
15.8 FACTORS DETERMINING EMPLOYEE COMPENSATION
A number of factors influence the remuneration payable to employees. They can be
categorized into (i) external and (ii) internal factors.
1. Internal Factors:
Ability to pay this is one of the most significant factors influencing employee compensation.
Generally, a firm, which is prosperous and successful, has the ability to pay more than the
competitive rate. This way it can attract a superior caliber of personnel. Often the labour unions
also demand an increase in compensation on the grounds that the organisation is prosperous and
is able to pay more. Employee numerous employees related factors also influence his or her
compensation. These include the following:
a. Performance
It is always rewarded with pay increase and as a result it motivates the workers to do
better in future.
b. Experience
This makes a person perfect by providing valuable insights and thus rewarded also.
Today companies are demanding for 10 to 20 years’ experience candidates especially for
the executive positions. The companies presume that experience candidate possess
leadership skills which influence the other behaviour and performance. Generally
experience candidate perform the job without need of training which is time consuming
and deals with matter of cost to company. Hence the experience candidates demand more
pay than an unexperienced candidate.
c. Seniority
In today's environment seniority of employee is making a difference in payment of

compensation compared to junior employees. Naturally senior employees demands for
more salary than fresher because of their hold on related job and its functions. Today
many companies are demanding senior employees for key positions by offering fat pay
and even sometimes retired employees are offered with handsome salary for key
45
positions which deals with multitasking in organisation. Trade unions always prefer this
objective criterion for pay rises.
d. Potential
Firms also pay their employees, especially young ones on the basis of their potential.
Software companies are very good example for this, IT graduate just who completed his
education having potential in the subject can gain a good job with high payment
anywhere in the world. Good example, student of Indian Information Technology (IIT)
from Delhi had bagged job of payment 7 million (70 lakhs) Indian rupees per year in
Twitter Inc famous social networking website
e. Job Requirements
Wages are also influenced by the requirements of a job such as physical and mental
requirement. Jobs, which demand more skill, responsibility, efforts and are of hazardous
in nature, will carry high wage tag with them.
f. Job Evaluation
Job evaluation establishes a consistent and systematic relationship among base

compensation rates for all jobs. In other words, it establishes the satisfactory wage
differentials.
g. Organization’s Strategy
The organisation's strategy regarding wages also influences employee compensation. For
example, an organisation, which wants rapid growth, will set higher wages than
competitors. On the other hand, organisations that want smooth going and just maintain
the current earning will pay average or below average.
2. External Factors:
These factors include the following: Laws and Regulations
Laws and regulations impact the remuneration of employees in many areas, such as:
 Work hours and compulsory time-off (paid and unpaid)
 Minimum wage
46
 Overtime
 Compulsory bonuses
 Employment at will
Countries like India have a Plenty of labour laws at the central level as well as at the state
levels. Some of the central laws which have a bearing on employee remuneration are the
Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act. 1965;
Equal Remuneration Act, 1976; and the Payment of Gratuity Act, 1972. The Payment of Wages
Act was passed to regulate payment of wages to certain classes of persons employed in the
industry. It also seeks to protect workers against irregularities in payment of wages and
unauthorised deductions by the employers. In addition, the Act ensures payment of wages in a
particular form and at regular intervals. The Minimum Wages Act enables the central and the
state governments to fix minimum rates of wages payable to employees in sweated industries.
The Payment of Bonus Act provides for payment of a specified rate of bonus to employees in
certain establishments.
a. Labour Market
 Official laws on wage and salary, labour contract, payment time, wage payment delay,
working insurance, and so on.
 People’s standard of living in the areas where the offices of the company are.
 People’s living and consuming customary.
 The average wage rate in the labour market of similar work.
b. Economy
The state of economy also influences the wage and salary-fixation. Wage rates will he
different in a stable economy than in a depressed economy. In case of depressed economy
there may be increase in supply of labour and these results in the fixation of lower wage
rates.
c. Inflation
Increase in the prices of commodities and decrease in value of the money is called as
inflation. The causes of inflation are many which are raising costs, fall in the currency
value in international markets, raising taxes by government and stagnation in the
47
development of economy, etc. In India year 2012, due to the inflation nearly 22 listed
companies had increased salary of its employees ranging between 12% to 27% compared
to last year. Example Reliance Industries Ltd had paid nearly13% increase in salaries to
its employees compared to last year salaries and HDFC (Housing Development Finance
Corporation) Bank had paid nearly 21% increase in salaries to its employees compared to
last year salaries.
d. Technological Changes
Technological changes also influence the fixation of wage levels. Due to the
advancements in the technology there may be shortage of skilled manpower in that area.
So, the organisation will provide high wages for skilled personnel. For example,
information technology (IT) industry in India and abroad is suffering from the shortage of
IT experts.
e. Academic Institutions
Having good academic qualifications from Reputed and standard educational institution
influence the compensation of the potential candidate in their recruitment in companies.
Example, Indian Top Business schools like Indian Institute of Management, and IIT
(Indian Institute of Technology) graduates demands higher pay packages compared to
other normal institutions. Candidates seeking admission into theses institution requires
qualifying tests conducted on domain knowledge. Candidates those who admit in these
institutions are determined, having competence and good domain knowledge which
companies require.

1. ______ is referred to as money and other benefits received by an employee for providing
services to his employer.
a. Compensation
b. Salary
c. Bonus
48
2. The objectives of compensation management are to ______.
a. Attract
b. Engage
c. Retain employees
d. All of the above
3. Good compensation management should be______.
a. Attract and recruit talent
b. Motivate employees
c. Only A
d. Both A and B
4. Compensation management can achieve its objectives by ______ offering.
a. Attractive salaries
b. Useful benefits
c. Only A
d. Both A and B
5. Maintaining excellent employee compensation can lead to an increase in______.
a. Engagement
b. Retention
c. Productivity
d. All of the above
1. a
2. d
3. d
4. d
5. d
49
15.10 SUMMARY
As we discussed in this unit, compensation refers to the rewards, an employee gets after
offering his/her mental and physical efforts, wherein he/she compares his/her worth. Any
dissatisfaction may result into a conflict or a dispute. This dissatisfaction not only affects the
performance of the employee but also imbalances the equity between human capital investment
and expected returns to the organization. Compensation decisions have become more complex in
this competitive age because of an unbalanced demand and supply ratio. The HRM of every
organization is required to make some systems to scrutinize the wage and salary differentiation
or disparities to ensure a motivated environment in the organization. Compensation
administration is a strategic management tool of compensation management and HR
management to match productivity with cost of labour and employees to get satisfaction of their
worth and values. Compensation Administration then fulfils the objectives of both the employers
and the employees. Thus, Karl Marx termed labour as the “creator of all value”.
15.11 KEYWORDS
Compensation : The rewards, an employee gets after offering his/her
mental and physical efforts.
Wage Incentive : Refers to performance linked compensation paid to

improve motivation and productivity.
Direct compensation : Direct compensation is a financial (or monetary) form of

compensation.
Hourly Wages : These wages are often provided to unskilled, semi-skilled,

temporary, part-time, or contract workers in exchange for
their time and labor.
Creator of All Value : Mental and physical efforts of employees.

1. Explain the concept and meaning of compensation.
2. Describe the various types of compensation in detail.
3. What is the basic purpose behind the establishment of a sound compensation system in the
organizations?
50
4. Explain factors determining employee compensation.
5. Write about various wage incentive plans in India.
15.13 REFERENCES
New Delhi – 2001.
51
UNIT-16 EMPLOYEE BENEFITS
Structure:
16.0 Objectives
16.1 Introduction
16.2 Meaning of Compensation system
16.3 Supplementary Payment Benefits
16.4 Employee Security Benefits
16.5 Welfare and Recreational Facilities
16.6 Old age and Retirement Benefits
16.6.1 Kinds of Pension
16.6.2 Quantum of Pension
16.6.3 General/Contributory Fund
16.6.4 Gratuity
16.6.5 Medical Allowance
16.7 Non-Monetary Rewards
16.9 Summary
16.10 Keywords
16.12 References
52
16.0 OBJECTIVES
 State the meaning of compensation system.

 Explain the supplementary payment benefits.
 Describe the employee security benefits.
 Provide an overview of the welfare and recreational facilities.
 Explain the old age and retirement benefits.
16.1 INTRODUCTION
We shall discuss the compensation system and its benefits in this unit. Compensation
system tries to ensure fairness in deciding the worth of the workers and considering promotions
or increments. In designing a compensation system, an organization must value the equity
concept clearly define the wage and salary differentiations and career growth plans, is as to
motivate and encourage the human resource to perform better. Non-monetary incentives can be a
good way to reward your employees for a job well done. However, they will only work in
combination with a reasonable compensation package. That way, a variety of non-monetary
incentives can help turn a good team into a great one.
16.2 MEANING OF COMPENSATION SYSTEM

Compensation is a systematic approach to providing monetary value to employees in
exchange for work performed. Compensation may achieve several purposes assisting in
recruitment, job performance, and job satisfaction. Compensation system plays a very vital role
in a business organization. Since, among four Ms., i.e. Men, Material, Machine and Money, Men
has been the most important factor. It is impossible to imagine a business process without Men.
In any organization, the compensation system is designed and incorporated to streamline the
activities. The activities performed by the human resources earn income to the organization and
the organization in turn would reward the efforts of the human resources in terms of monetary
gains or in kind.
Compensation system tries to ensure fairness in deciding the worth of the workers and
considering promotions or increments. In designing a compensation system, an organization
must value the equity concept clearly define the wage and salary differentiations and career
53
growth plans, is as to motivate and encourage the human resource to perform better. It is not
uncommon for organizations to establish specific objectives for compensation program me.
Formalized compensation goals serve as guidelines for managers to ensure that the compensation
system achieves its intended purpose.
16.3 SUPPLEMENTARY PAYMENT BENEFITS

Employers typically offer various pay for time not worked (also called supplemental pay)
benefits, as well as insurance benefits.
Supplemental pay benefits time not worked such as unemployment insurance, vacation and
holiday pay, and sick pay.
1. Leave Policy It is the right of employee to get adequate number of leave while working with
the organization. The organizations provide for paid leaves such as, casual leaves, medical
leaves (sick leave), and maternity leaves, statutory pay, etc.
2. Overtime Policy Employees should be provided with the adequate allowances and facilities
during their overtime, if they happened to do so, such as transport facilities, overtime pay,
etc.
3. Hospitalization The employees should be provided allowances to get their regular check-
ups, say at an interval of one year. Even their dependents should be eligible for the medi-
claims that provide them emotional and social security.
4. Insurance Organizations also provide for accidental insurance and life insurance for
employees. This gives them the emotional security and they feel themselves valued in the
organization.
5. Leave Travel The employees are provided with leaves and travel allowances to go for
holiday with their families. Some organizations arrange for a tour for the employees of the
organization. This is usually done to make the employees stress free.
6. Retirement Benefits Organizations provide for pension plans and other benefits for their
employees which benefit them after they retire from the organization at the prescribed age.
7. Holiday Homes Organizations provide for holiday homes and guest house for their
employees at different locations. These holiday homes are usually located in hill station and
other most wanted holiday spots.
54
8. Flexible Timings Organizations provide for flexible timings to the employees who cannot
come to work during normal shifts due to their personal problems and valid reasons.
16.4 EMPLOYEE SECURITY BENEFITS

Apart from welfare measures provided under both statutory and voluntary schemes, there
are other benefits the employee is entitled to under the scheme of social security. The concept of
social security is essentially related to the high ideals of human dignity, and social justice. It is in
a way one of the pillars of the Welfare State. Social Security measures have introduced an
element of stability and protection in the midst of the stresses and strains of modem life.
Social security programmes are increasingly being accepted as useful and necessary
instruments for the protection and stability of the work force. They are primarily an instrument of
social and economic justice and a dynamic concept. Its content changes with the social and
economic system obtaining a certain standard in a given time and space. The ILO defines social
security as "the protection which society provides for its members through a series of public
measures, against the economic and social distress that otherwise would be caused by the
stoppage or substantial reduction of earnings resulting from sickness, maternity, employment
injury, unemployment, invalidity, old age, and death, the provision of medical care; and the
provision of subsidies for families with children:" The term social security came into popularity
after the US Government passed the Social Security Act in 1935, introducing the old age pension
system. The formation of ILO in 1919 to promote social justice through (i) international
standards; (ii) providing information; (iii) technical assistance and guidance; and (iv) cooperation
with other international organisations, provided the impetus and direction needed by most
countries in this area. In India over the years a number of legislative measures have been adopted
to ensure benefits to employees of industrial undertakings under the scheme of social security.
Let us have a look at some of these important rules and regulations.
Employee Benefits and Welfare Schemes the Employees' State Insurance Act, 1948
This is a pioneering attempt to provide medical facilities and unemployment insurance

during illness to the workers. The Act covers smaller factories using power and employing 10 or
more persons and those not using power but employing 20 or more people. The Act has also
been extended to the new classes of establishments, shops, hotels, restaurants, cinemas, theatres,
motor transport, building construction, and newspaper establishments employing 20 or more
55
persons. It covers all employees, manual, clerical and supervisory and employees engaged by or
through contractors, whose remuneration does not exceed Rs.1600 per month. The definition of
"employee" includes administrative staff and persons engaged itbconnection with purchase of
raw materials or sale or distribution of products and related functions. The State Government is
empowered to extend the Act to cover other establishments or class of establishments. The
scheme is administered by an autonomous corporation with the Minister of Labour at the Centre
as its Chairman, the Union Health Minister as the Vice-Chairman, and representatives of State
Governments, employers and the medical profession nominated by the Central Government. The
scheme is financed by contribution from employers and employees, with the State Governments
sharing one-eighth of the cost of medical care. In order to qualify for the benefit the worker
should have contributed to the scheme for a minimum period of 12 weeks. The benefits provided
under the scheme include: (i) Sickness and extended sickness benefit, (ii) Maternity benefit, (iii)
Disablement benefit, (iv) Dependent’s benefit, (v) Funeral benefit, and (vi) Medical benefit.
i) Sickness and extended sickness benefit: For sickness occurring during any benefit period,
an insured person is entitled to receive sickness cash benefits at the standard benefit rate for a
period of 91 days in any two consecutive benefit periods. Cash benefits are subject to
contributory conditions. An insured person suffering from long term ailments like
tuberculosis, leprosy, mental diseases, is eligible for extended sickness benefit at a rate of 25
per cent more than the sickness benefit rate rounded to the next higher multiple of 5 paise for
a period of 124/309 days. Contributions are calculated with reference to average daily wages,
and wages have been classified into t nine groups for the purpose of fixing the contribution.
ii) Maternity benefit: An insured woman is entitled to maternity benefit, at double the standard
benefit rate. This is practically equal to full wages for a period of 12 weeks.
iii)Disablement benefit: If a member of the scheme suffers an injury in the course of his
employment, he will receive free medical treatment and temporary disablement benefit in
cash. The temporary disablement benefit is About 70 per cent of the wages as long as the
temporary disablement lasts, provided that it lasted for not less than 3 days, excluding the day
of accident. In case of permanent disablement, the insured person will be given life pension at
full rate, i.e., about 70 per cent of his wages.
iv) Dependents’ benefits: This provides timely help to the eligible dependants of an insured
person who dies as a result of an accident or an occupational disease arising out of and in the
56
course of employment. Pension at the rate of 40 per cent more than the standard rate will be
paid periodically to widows and children in accordance with the prescribed share. The benefit
also accrues to parents and grandparents and other dependent up to the age of 18 where the
deceased has no surviving widow or child.
v) Funeral benefit: This benefit was introduced in 1968. An amount of not exceeding Rs.100 is
payable as funeral benefit to the eldest surviving member of the family of the deceased
insured person. If the insured person did not have a family or was not living with his family at
the time of death, it is payable to the person who actually incurs the expenditure on the
funeral of the deceased insured person.
vi) Medical benefit: The major attraction of the ESI scheme is medical benefit. Medical benefit
has been divided into three parts:
a) Restricted Medical Care: It consists of out-patient medical care at dispensaries or panel
clinics. Facilities of consultation with medical officers, supply of drugs, pre-natal and
post-natal care, family planning and immunization services are available in these
institutions. The beneficiaries are also entitled to call a doctor to their house to see a
serious case.
b) Expanded Medical Care: This consists of consultation with specialists and supply of
special medicines and drugs as may be prescribed by them. Facilities for special
laboratory tests and X-ray examinations are also available under this scheme.
c) Full Medical Care: Hospitalization facilities, services of specialists and drugs and diet
as are required for in-patients are available under this scheme.
The Employees' Provident Funds and Miscellaneous Act, 1952
The Act was passed in 1952 with the objective of making some provisions for the future
of the employees after he or she retires, for the dependents in case of his or her early death, and
to cultivate a spirit of saving among the workers. The Act applies to all employer establishments
falling under any notified industry and employing 20 or more employees. Once the Act is
applied, it does not cease to be applicable even if the number of employees falls below 20. The
Act extends to the whole of India except Jammu and Kashmir and the Assam Tea Plantations
both of which had a separate Act and Scheme. The Central Government is empowered to apply
the provisions of the Act to any establishment employing Less than 20 persons, after giving not
less than two months' notice of its intention to do so by a notification in the Official Gazette.
57
However, please note that the Act does not apply to cooperative societies employing less than 50
persons and units working without the aid of power.
Workers in establishments employing 20-50 persons pay 6.25 per cent of their earnings
and those with a larger strengthtpax8 per cent. Employers make an equal contribution. The
Provident Fund is refunded with interest in the event of death, permanent disability,
superannuation, retrenchment, migration .or on leaving service. On retirement or after 15 years
of service a worker receives his own share and the employer's contribution. For shorter periods
of membership, the proportion of employer's contribution varies according to the length of
service.
Employees' Family Pension Scheme, 1971
A Scheme of Family Pension-cum-Life Assurance was instituted in 1971 with the

objective of providing long-term recurring financial benefit to the family of the member in the
event of his or her premature death while in service. Under the Act, the word "family" means (i)
wife in the case of a male member of the family pension fund; (ii) husband in the case of a
female member of the family pension fund; (iii) minor sons and unmarried daughters of a
member of the family pension fund. Under the scheme, a family pension fund is created by
diverting 1 116 per cent of pay and an equal amount each from the employer and the State
Government. The Central Government pays the administrative cost of the scheme.
The Employees' Deposit-linked Insurance Scheme, 1976
The Act is applicable to all factories/establishments to which the Employees' Provident

Funds Act applies. Where the monthly pay of an employee exceeds ` 1600 per month the
contribution payable in respect of him or her by the employer and the State Government will be
limited to the amount payable on a monthly pay of ` 1600. The special feature of the scheme is
that only the employer and the government make contributions to the scheme and not the
employee himself or herself. The employer is required to contribute to the Insurance Fund at the
rate of 0.5 per cent of the ‘pay of the employees who are provident fund subscribers. The Central
Government also contributes to the Insurance Fund an amount representing one half of the
amount contributed by the employer. The above three schemes, namely, the Employees'
Provident Funds Scheme, the Employees' Family Pension Scheme, and the Employees' Deposit-
linked Insurance Scheme are administered by the Employees' Provident Fund Organization. The
58
administration of these schemes is in the hands of the Central Board of Trustees, a tripartite body
consisting of a Chairman, nominees of the Central and State Governments and employers' and
employees' organizations.
The Maternity Benefit Act, 1961
The Act is applicable to all establishments not covered under the ESI Scheme. The Act
was amended in 1976 to extend the benefits to all women workers earning more than Rs.1600
per month in establishments covered by the ESI Act. Under the Act, a woman can get maternity
leave up to 12 weeks. Of this, 6 weeks must be taken prior to thebe livery of the child and 6
weeks immediately following that date. During the period of leave the employee is entitled to
full wages salary. The employee is also entitled to a medical bonus of ` 25 if no pre-natal
confinement and post-natal care has been provided by the employer free of charge. To avail of
the leave and benefits, the employee should have put in 160 working days of service in the 12
months immediately preceding the date of expected delivery. However, from 1996 certain new
provisions have been introduced and it is suggested that a manager of an organization must keep
oneself updated in this regard as ignorance of law is no excuse. For example now maternity leave
is four and half months and paternity leave for 15 days.
The Payment of Gratuity Act, 1972
Gratuity is an additional retirement benefit. The Act is applicable to all ports, railways,
shops or establishments in which 10 or more workers are employed. The Central Government
can bring in any establishment by notification under the provisions of the Act. According to the
Act, an employee is entitled to 15 days wages for every year's continuance in service. Seasonal
workers should be paid gratuity at the rate of 7 days wages per season. The, total gratuity
payable shall not exceed more than 20 months wages. The act applies to workers who do not
have any managerial or administrative capacity or are employed under the government and do
not draw wages of more than ` 1600 per month. Gratuity is payable on termination of
employment after the completion of at least five years of continuous service. This is relax able in
the case of death or disablement.
59
16.5 WELFARE AND RECREATIONAL FACILITIES
The terms ’employees’ welfare’ and ‘workers’ welfare’ are used interchangeably to
denote various services provided by the employers to the employees in addition to wages.
According to Arthur James Todd, “Employee welfare means anything done for the comfort and
improvement, intellectual or social of the employees over and above the wages paid which is not
a necessity of the industry”.
Enterprise-based welfare services not only include directly work-related services, but also
those aimed at amenities for everyday life outside working hours. They include child care
facilities, recreational facilities and transport. What an enterprise can do in these respects may be
limited, but these facilities, if available, can greatly help create the feeling that management is
interested in the workers as people. In fact, not only large enterprises but also many small and
medium-sized enterprises provide these facilities in various forms.
As an example of such facilities available at very low cost, recreational facilities may be
mentioned. Many workers enjoy spending their time in sports or other recreational activities
during their lunch break or after work. This is healthy and increases the spirit of friendship. It
helps workers feel that they are attached to the enterprise and have common interests as fellow
workers. Recreational facilities are often very inexpensive. A basketball hoop or volleyball net in
a courtyard, or board games, may be all that is necessary. Smaller enterprises can benefit perhaps
even more from these facilities as a greater proportion of the workers can participate.
16.6 OLD AGE AND RETIREMENT BENEFITS
Most of the employees join government service at a young age and retire at the age
decided by the government. The fifth central pay commission has fixed 60 years for retirement of
central government employees and 62 years for university teachers. Most of them serve the
government for thirty to forty years till retirement. It becomes incumbent on government to look
after their retired employees when they are not in a position to work. They need be compensated
during this period decently, so that they securely discharge their duties during active job span. In
fixing of the retirement age of employees, some of the important factors, which are taken into
account, are life expectancy, health and morbidity, labour market conditions, stage of economic
development, financial implications, social dimensions, etc. The age at which the productivity,
efficiency and health of an employee begins to decline can be considered as the appropriate age
60
for retirement. There are three forms of retirement benefits: (a) non- contributory wherein the
government is responsible for the retirement benefit; (b) partly contributory wherein the
government and employee share the cost of retirement; wholly contributory wherein the
employees contribute. In India, there are two main schemes for retirement benefits for
employees, namely, the Pension Scheme and the Contributory provident Fund.
PENSION SCHEME
The pension scheme involves cash disbursement to the retired employees in fixed
monthly amounts. It provides them a safe source of living as long as they survive. There is
provision for extraordinary pension like injury pension or family pension. The injury pension is
paid to the employee in case of injury received in the course of duty while family pension is
payable to the widow or minor children or in some cases to the parents of an employee if he is
killed in the course of the discharge of his duties.
Central government employees on retirement are entitled to superannuation or retiring

pension, retirement gratuity, encashment of earned leave and the facility to commute up to 1/3rd
of their pension. The significant features of retiring or superannuation pension are that it is non-
contributory and is subject to future good conduct of the pensioner. Pension can also be withheld
under certain circumstances.
Pension is computed on the basis of length of qualifying service, reckonable emoluments

and the pension formula. There are also orders prescribing minimum and maximum pension. The
rules and regulations governing the above aspects are contained in the central civil services
(pension) rules, 1972 (hereafter referred to as pension rules which have been modified from time
to time with a view to bringing about improvements in the pension benefits of the employees).
As per article 366(17) of the constitution of India, pension means a pension, whether
contributory or not, or any kind whatsoever payable to or in respect of any person, and includes
retired pay so payable, a gratuity so payable and any sum or sums so payable by way of the
return, with or without interest thereon or any other addition thereto, of subscriptions to a
provident fund.
The Supreme Court of India has, in the landmark judgment of D.S. Nakara and others vs.
Union of India (AIR 1983, SC 130) clarified all the issues relating to pension. While examining
61
the goals that a pension scheme should seek to achieve the Apex Court held that; a pension
scheme consistent with available resources must provide that the pensioner lives:
(i) Free from want, with decency, independence and self-respect; and
(ii) At a standard equivalent at the pre-retirement level.
The Court felt that since determining the minimum amount required for living decently
was difficult, selecting the percentage representing the proper ratio between earning and the
retirement income was harder. We owe it to the pensioners that they live and not merely exist.
The Court also held that pension is neither a bounty nor a matter of grace depending upon the
sweet will of the employer. It is not an ex-gratia payment, but a payment for past services
rendered. It is a social welfare measure, rendering socioeconomic justice to those, who is in the
heyday of their life, ceaselessly toiled for the employer, on an assurance that in their old-age,
they would not be left in the lurch.
The Central fifth pay commission honored the observations of the Honourable Court in
the Nakara case. It needs to be averred emphatically that pension is not in the nature of alms
being doled out to beggars. The senior citizens need to be treated with dignity and courtesy
befitting their age. Pension is their statutory, inalienable, legally enforceable right and it has been
earned by the sweat of their brow. As such it should be fixed, revised, modified and changed in
ways not entirely dissimilar to the salaries granted to serving employees.
Central fifth pay commission started to build these bridges when for the first time in the
history of the services, it was suggested in their report submitted in October, 1994 that an interim
relief be granted to pensioners. When no action was taken on the same, it was followed up in
their report presented in May, 1995 and suggested another installment of interim relief to
pensioners. Fortunately, this time the government relented and granted both the installments of
interim relief to pensioners. This established a principle and the grant of a third installment to
pensioners consequent upon their report of August, 1996 evoked no surprise. It is hoped and
trusted that this parity between the serving employees and pensioners with regard to grant of
interim relief is now firmly established and will continue.
62
16.6.1 Kinds of Pension
As per 1972 Central Civil Services Rules, the following are the different types of Pensions
(1) Superannuation Pension: It is pension granted to a person who retires on attaining the age
of superannuation or compulsory retirement (rule 35)
(2) Retiring Pension: It is pension granted to a public servant who retires voluntarily or is
retired in advance of the age of compulsory retirement by giving the prescribed notice, and
who on being declared surplus, opts for voluntary retirement (rule 36)
(3) Invalid Pension: It is pension granted to a public servant who retires from service because
of any bodily or mental infirmity, which permanently incapacitates him for the service, if so
certified by the appropriate medical authority (rule 38)
(4) Compensation Pension: It is pension granted to a government servant who is discharged
owing to the abolition of his permanent post, while a suitable post of equal rank cannot be
found for him or when such post is offered to him but not accepted by him. (rule 39)
(5) Compulsory Retirement Pension: It is pension granted to a government servant when he is
compulsorily retired as a penalty (rule 40)
(6) Compassionate Allowance: When a government servant is dismissed or removed from
service, he may if he so deserves, be given compassionate allowance on a special
consideration, as he forfeits on dismissal or removal, his pension and gratuity (rule 41)
(7) Extraordinary Pension: The central civil service extraordinary pension rules provide for:
Disability Pension: When he is permanently incapacitated on account of injury or disease
attributable to government service.
Family Pension: To the widow and allowance to children if the death of the government servant
is accepted due to government service. Reduction of pension for unsatisfactory service: Rule 6
provides for such reduction by the appointing authority after giving opportunity to the employee
to make his representation against the proposed reduction (Hidaytullah, 1986)
Proceedings can be instituted under Article 226 of the Indian Constitution in case of non-
compliance with the rules on the part of government.
63
16.6.2 Quantum of Pension
Quantum of Pension is based on the qualifying service of the government servant and his
or her average emoluments for six months immediately preceding the date of retirement. Pension
under government is payable to those who have rendered a minimum of ten years qualifying
service.
With regard to the quantum of pension, there is no universally acceptable formula.

Different countries give pensions ranging between 50 and 100% of last pay drawn. Some
consultants have suggested that 67% of last pay drawn should suffice. The fifth pay commission
felt that it would not be possible for government to fund this sudden increase in the quantum of
pension from 50% to 67%. It was therefore suggested that while retaining the government's
contribution of 50% the balance should be funded by employee's contributions. There would be
some relief to pensioners by the reduction of the period over which emoluments are averaged
towards the end of the career from ten to six months. Pensioners who have served the
government for more than thirty -three years would also benefit if 0.5% additional pension is
granted for every six months of additional service, over and above thirty three years.
With regard to family pensions, fifth pay commission has retained the quantum of 30% of
reckonable emoluments as at present but this has been made uniform for all categories of
employees. The ceiling has also been removed.
Fifth pay commission have attempted a major policy thrust, by suggesting a complete
parity between past and present pensioners, while recommending a modified parity between pre-
1996 and post-1996 pensioners. The formula will ensure total equity between persons who
retired before 1996 and those who retired later. It also gives all pensioners at least the minimum
pension appurtenant to the post-1996 revised scale of pay of the post they held at retirement.
16.6.3 General / Contributory Fund
Under this scheme there is a provision for employees to contribute to the provident fund
to which government contributes an equal share. The employee gets the money at the time of
retirement and has also the facility to draw loans out of it from time to time.
64
16.6.4 Gratuity
According to the definition in rule 3(1) of the 1972 central civil service rules, the term
‘pension’ includes gratuity except when the term pension is used in contradistinction to gratuity.
Payment of Gratuity Act, 1972 provides for the payment of gratuity to employees with five years
continuous service working in factories, mines, oilfields, plantations, and other establishments
including piece-rate and seasonal workers where there are ten or more employees.
For the purposes calculating the period of employment, periods of maternity leave are
included provided that the total period of such maternity leave does not exceed twelve weeks.
The Payment of Gratuity Act, 1972 is applicable to factories, mines, oil fields, plantations, ports,
railways, motor transport undertakings, companies, and to shops and other establishments
employing ten or more workmen. The act provides for payment of gratuity at the rate of fifteen
days wages for each completed year of service subject to a maximum of rupees two lakh. In the
case of seasonal establishment, gratuity is payable at the rate of seven days wages for each
season. The act does not affect the right of an employee to receive better terms of gratuity under
any award or agreement or contract with the employer.
Gratuity has also been unnecessarily subjected to three kinds of ceilings. First is the rate
of gratuity which is half-a-month's emoluments for every year of service put in. This is subject to
a second ceiling of 16.5 months, irrespective of number of years of service. There is also a cash
ceiling on top of the other two.
The Fifth Pay Commission has tried to bring about greater equity in the system, between
past and present retirees by making two suggestions; 1) removal of the cash ceiling and 2)
computation of gratuity on pay plus the Dearness Allowance on the date of retirement. The Fifth
Pay Commission found considerable ad hocism in the treatment of employees dying while in
service, with different departments treating their employees through varying formulae. The pay
commission has tried to bring some uniformity in the exgratia rewards according to the nature of
death in five different sets of circumstances, with the amount reaching up to Rs. 7.5 lakhs.
16.6.5 Medical Allowance
For pensioners not covered by the Central Government Health Scheme (CGHS), the Fifth
Pay Commission suggested a medical allowance of Rs. 100 per month. It has also recommended
65
a comprehensive medical scheme, providing complete health insurance both to employees and
pensioners in non-CGHS areas.
16.7 NON-MONETARY REWARDS

Non-monetary incentives can be a good way to reward your employees for a job well
done. However, they will only work in combination with a reasonable compensation package.
That way, a variety of non-monetary incentives can help turn a good team into a great one.
1. Time to Work on their Own Projects:
This is one of my favorite non-monetary incentives. The idea behind it is very simple:
people are motivated by the things they are passionate about and (hugely) appreciate it when the
company they work for stimulates this. Probably the best-known example of a company giving
its employees time to work on their personal projects is Google. There exists, however, some
debate as to whether or not this so-called 20% Time scheme is still in place – or ever really was.
Let me give you the details anyway. At Google, employees are (were) encouraged to
spend 20% of their time on their own projects. Interestingly, many successful Google products
such as Google Maps, Gmail, and AdSense, started as 20% time projects.
In other words, these ‘personal’ projects turned into some of Google’s most profitable
products. This is a good example of how a non-monetary benefit can lead to innovation, highly
engaged employees, and great business results.
2. Flexible Working
Unsurprisingly, this is one of the most popular non-cash benefits among employees. Even
before covid, people already attached great importance to flexible working. However, not
everyone wants to work from home a couple of days a week or switch their working hours.
Some people much rather spend their working day in the office, for instance, because
they don’t have a suitable space at home to work, or because they prefer having colleagues
around to talk with and learn from. I believe that the key here is to look at flexible working in the
broadest sense of the term. This means that, as much as possible, employees get to choose
what they prefer. At Salesforce, for example, this is what they decided to do. Employees in roles
that allow them to work remotely can choose to 1) work remotely 2) come to the office a few
days a week 3) work from the office full time. Other companies, such as Eventbrite, give
66
candidates the option to choose between roles that are fully remote or (partially) office-based
when they apply.
3. Public Recognition
As cliché as it may sound, when it comes to non-monetary incentives, a simple (public)

thank you can go such a long way. Creating a culture of recognition that is embraced by
everyone in the organization (from top to bottom and vice versa) supported by a successful peer
recognition program is an excellent way to ensure that people hear ‘thank you’ right when they
need it. Peer recognition can come in many shapes and sizes; from simply saying thank you and
post-it notes to custom emojis on Slack to (virtual) points or badges and so much more. As an
added bonus, it’s also a great way to encourage people to live the company’s values.
4. Additional Time Off
Offering an extra day or a birthday off, a longer lunch break, an early finish on Friday or
a later start on Monday are all examples of rewarding employees with additional time off. Many
employers have also established so-called Mental Health days to encourage their people to
unplug, a development that only accelerated during and after c
5. Extra Opportunities for Professional and Personal Development
Randstad’s Employer Brand Research 2020 showed that 49% of candidates find career
progression opportunities an important factor when they choose an employer.
One way to offer your people these opportunities are by helping them to upskill or reskill.
There are, of course, various ways to go about this. The good news is that this doesn’t
necessarily require a big budget. Think for instance of setting up a peer mentoring and/or peer
coaching program. Both can be great ways for employees to learn from each other, expand their
skill sets, and build stronger relationships.
6. Experiential rewards
Experiential rewards have the benefit of being more memorable than transactional
rewards. They also allow you to make an emotional connection between your people and your
brand. The sky literally is the limit here with some companies offering their people a once-in-a-
lifetime trip when they’ve achieved a certain milestone. The nice thing about experiential
rewards though is that you can tailor them into something that makes sense
67
for your brand, your employees, and your budget. Other examples of experiential rewards
include taking your employees to a local sporting event, a pottery class, or a celebratory night out
with one of the company’s founders.
7. Time for volunteering
In a way, you could say that ‘Volunteer Time Off’ or VTO is also a type of experiential
reward. After all, working for a charity is for most of us an entirely different experience from
what we are used to. In any case, giving your employees time to volunteer for a charity of their
choice is a non-monetary incentive that many of them appreciate and that also gives back (to the
community, the world, etc.).
8. Fringe Benefits
Fringe benefits are another type of non-monetary incentive. Basically, they are additional
perks provided to your employees. There are heaps of different fringe benefits that you can offer
people, including wellness programs, free meals at work or restaurant vouchers, commuter
incentives, cinema tickets, and traveler cheques, etc.
9. One-On-Ones
One-on-one time with their manager can be super valuable for people. Especially for
managers who lead a relatively small team, scheduling either a weekly or bi-weekly meeting
with each of their team members is something to seriously consider.
Having one-on-ones makes people feel included and gives them a set time to discuss
whatever it is that’s on their mind with their manager. These kinds of meetings create a more
continuous dialogue and are a good way to build trust between employees and managers. A
regular 1-on-1 between a manager and their employees can also be an ideal moment to ask
people for their feedback, discuss performance and projects.
10. Ask Your People
Think about it, who better to ask about non-monetary incentives examples than your own
employees? They may have great ideas you hadn’t even thought about. Besides, if you end up
implementing one (or more) of the benefits your employees suggested, the fact that you listened
to them will positively affect their engagement and job satisfaction: win-win!
68
11. Tangible Rewards and Gifts
A tangible gift is, just like an experiential award, more memorable than a cash incentive.
They are also easy to personalize according to your employees’ preferences. Tangible rewards
and gifts can also come in the form of company swag; t-shirts, mugs, pens, water bottles,
hoodies, you name it. Branded swag is often given to new hires during their onboarding period or
during a company offsite in the form of a goodie bag, but it can boost employee morale at any
time.

Fill the blanks with suitable answers:
1. Employees Benefits are an ______ part of the salary system.

a. External
b. Integral
c. Both
2. Employees’ benefits take care of the employees of their ______ as well as ______ needs.
a. Present
b. Future
c. A and B
3. Employees’ benefits raise ______ of employees.
a. Productivity
b. Creativity
c. Manufacturing
4. Employees’ benefits keep employees ______ as they feel relaxed and secure.
a. Productivity
b. Encouraged
c. Demotivated
d. Motivated
69
5. Non-Monetary Rewards are ______.
a. Time to work on their own projects
b. Tangible rewards and gifts
c. One-on-ones
d. All of the Above
1. b
2. c
3. a
4. d
5. d
16.9 SUMMARY
In this Unit we attempted to underline the importance of employee compensation system
through welfare measures and social security benefits. It has also tried to familiarize you with the
important laws and rules governing the welfare programs and employee benefit schemes. It has
highlighted the need of these benefits and welfare measures from the viewpoint of the employee
and the advantages that they may bring to enhance the efficiency, morale and productivity. It is'
emphasized that one must update the information and-knowledge regarding the Welfare and
Recreational Facilities, Old Age and Retirement Benefits, Payment for time not Worked
Benefits, and Non-Monetary Rewards etc.
16.10 KEYWORDS
Compensation : It is a systematic approach to providing monetary
value to employees in exchange for work
performed.
Compulsory Retirement Pension : It is pension granted to a government servant when

he is compulsorily retired as a penalty (rule 40).
Fringe Benefits : Fringe benefits are another type of non-monetary

incentive. Basically, they are additional perks
provided to your employees.
70
Employee Benefits : Salary and perquisites may not be enough to elicit
desired behaviour from employees. Fringe Benefits
are added benefits, like travel concession, leave,
commutation of leave, provision of creches for
female employees etc., which are given for a
worker’s facility to enable him to perform
comfortably and with convenience.
Retirement : An employee retires after reaching the age of

superannuation. The age of superannuation is fixed
in each country by legislation. The demographic
profile of the country and, life expectancy, climate,
work culture and general health levels are some of
the factors determining the retirement age in a
country.

1. How is compensation used in an organization? Explain.
2. What are the components of a compensation system?
3. List and discuss the main pay for time not worked and insurance benefits.
4. What are the four major types of employee security benefits?
5. Explain briefly the tangible rewards and gifts of employees with suitable example.
16.12 REFERENCES
New Delhi – 2001.
71
72

Human Resource Management - 4 Blocks

Uploaded by

Copyright:

Available Formats

You might also like

Human Resource Management - 4 Blocks

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Human Resource Management - 4 Blocks

Uploaded by

Copyright:

Available Formats

Karnataka State Open University

Mukthagangothri, Mysuru - 570 006

Department of Studies and Research in Commerce

UNIT - 1: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 1-21

UNIT - 2: LINKING CORPORATE STRATEGIES AND POLICIES WITH HRM 22-32

UNIT - 3: ORGANISATION OF HUMAN RESOURCE MANAGEMENT DEPARTMENT 33-47

UNIT - 4: ENVIRONMENTAL CONTEXT OF HUMAN RESOURCE MANAGEMENT 48-71

Smt. Usha C. Member Convener

The curriculum of "Human Resource Management" has been designed by the

With best wishes,

This block comprises of 4 units:

Unit-1: Introduction to Human Resource Management

UNIT-1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

1.2 Meaning and Definitions of Human Resource Management

1.3 Objectives of Human Resource Management

1.4 Scope of Human Resource Management

1.5 Elements and Emergence of Human Resource Management

1.6 Comparison of Human Resource Management with Personnel Management

1.7 Perspectives of Human Resource Management

1.8 Human Resource Management Models

1.9 Check Your Progress

1.12 Questions for Self-Study

 Give the meaning and definitions of HRM.

1.2 MEANING AND DEFINITIONS OF HUMAN RESOURCE MANAGEMENT

Human Resource Management is the process of recruiting, selecting, inducting

Human resources management (HRM) is a management function concerned with hiring,

Generally, HRM refers to the management of people in organizations. It comprises of the

1.3 OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

2) Developing organizational climate helping to create a climate in which employees are

4) Helping to establish and maintain a harmonious employer/employee relationship.

5) Helping to create and maintain a safe and healthy work environment.

8) To provide organization with well-trained and well-motivated employees.

9) To increase the employees satisfaction and self-actualization.

10) To develop and maintain the quality of work life.

11) To communicate HR policies to all employees.

12) To help maintain ethical polices and behavior.

Fig 1.1: Social Objectives

2) Organizational Objectives: It recognizes the role of HRM in bringing about organizational

3) Functional Objectives: It is to maintain the department’s contribution at a level appropriate

4) Personnel Objectives: It is to assist employees in achieving their personal goals, at least as

1.4 SCOPE OF HUMAN RESOURCE MANAGEMENT

The scope of Human Resources Management extends to:

Selection and Training and

Fig 1.2: Scope of HRM

These are given below:

 Human Resource Planning

 Design of the Organization and Job

 Selection and Staffing

 Training and Development

 Compensation and Benefits

 Personnel Research and Information System

e) Organizational Development: This is an important aspect whereby “Synergetic effect” is

g) Employee Assistance: Each employee is unique in character, personality, expectation and

i) Personnel Research and Information System: Knowledge on behavioral science and

1.5 ELEMENTS AND EMERGENCE OF HUMAN RESOURCE MANAGEMENT

Training and Development

Health and Safety

Employee Recruitment and Retention