1

Unit - 1 : Introduction to Human Resource

Management
Structure of
Unit:
1.0
Objectives
1.1
Introduction
1.2 Opening Case
1.3 What is Human Resource
Management
1.! "ature o#
HRM
1.$ %cope o#
HRM
1.& Objectives o#
HRM
1.' (unctions o#
HRM
1.) Ro*e o#
HRM
1.+ HRM in the "e,
Mi**ennium
1.10
%ummar-
1.11 %e*# .ssessment
/uestions
1.12 Re#erence
0oo1s
1.0 Objectives
.#ter stud-ing this unit2 -ou ,i** be ab*e
to3
4nderstand the basic concepts o# human resource management 5HRM6.
78p*ain ,hat human resource management is and ho, it re*ates to the management
process.
9rovide an overvie, o# #unctions o# HRM.
:escribe ho, the major ro*es o# HR management are being trans#ormed.
78p*ain the ro*e o# HRM in the present mi**ennium.
1.1 Introduction
Human beings are socia* beings and hard*- ever *ive and ,or1 in iso*ation. We a*,a-s p*an2
deve*op and manage our re*ations both conscious*- and unconscious*-. ;he re*ations are the
outcome o# our actions and depend to a great e8tent upon our abi*it- to manage our actions.
(rom chi*dhood each and ever- individua* ac<uire 1no,*edge and e8perience on understanding
2
others and ho, to behave in each and ever- situations in *i#e. =ater ,e carr- #or,ard this *earning
and understanding in carr-ing and managing re*ations at our ,or1p*ace. ;he ,ho*e conte8t o#
Human Resource Management revo*ves around this core matter o# managing re*ations at ,or1
p*ace.
%ince mid 1+)0>s Human Resource Management 5HRM6 has gained acceptance in both academic
and commercia* circ*e. HRM is a mu*tidiscip*inar- organi?ationa* #unction that dra,s theories and
ideas #rom various #ie*ds such as management2 ps-cho*og-2 socio*og- and economics.
;here is no best ,a- to manage peop*e and no manager has #ormu*ated ho, peop*e can be
managed e##ective*-2 because peop*e are comp*e8 beings ,ith comp*e8 needs. 7##ective HRM
depends ver- much on the causes and conditions that an organi?ationa* setting ,ou*d provide.
.n- Organi?ation has three basic components2 9eop*e2 9urpose2 and %tructure.
In 1++!2 a noted *eader in the human resources 5HR6 #ie*d made the #o**o,ing observation3
@esterda-2 the compan- ,ith the access most to the capita* or the *atest techno*og- had the best
competitive advantageA
3
;oda-2 companies that o##er products ,ith the highest <ua*it- are the ones ,ith a *eg up on the
competitionA 0ut the on*- thing that ,i** upho*d a compan->s advantage tomorro, is the ca*iber
o# peop*e in the organi?ation.
;hat predicted #uture is toda->s rea*it-. Most managers in pub*icB and private sector #irms o# a**
si?es ,ou*d agree that peop*e tru*- are the organi?ation>s most important asset. Having competent
sta## on the pa-ro** does not guarantee that a #irm>s human resources ,i** be a source o#
competitive advantage. Ho,ever in order to remain competitive2 to gro,2 and diversi#- an
organi?ation must ensure that its emp*o-ees are <ua*i#ied2 p*aced in appropriate positions2
proper*- trained2 managed e##ective*-2 and committed to the #irm>s success. ;he goa* o# HRM is
to ma8imi?e emp*o-ees> contributions in order to achieve optima* productivit- and e##ectiveness2
,hi*e simu*taneous*- attaining individua* objectives 5such as having a cha**enging job and
obtaining recognition62 and societa* objectives 5such as *ega* comp*iance and demonstrating socia*
responsibi*it-6.
1.2 Oening !ase
On October 32 20032 .nant :a*vi and .1htar Chan2 ,ho ,or1ed as contract ,or1ers in ;ata
7*ectric Compan- unti* the- ,ere *aid o## in 1++&2 doused themse*ves ,ith 1erosene and set
themse*ves ab*a?e even as their coB,or1ers protested be#ore the compan->s o##ices. Whi*e :a*vi
died on the spot2 Chan died a #e, da-s *ater.
;he ;ata 7*ectric Compan- said the- ,ere no *onger on their pa-ro** and ,ere not permanent
,or1ers. 7mp*o-ees union had ta1en up their case and #i**ed petition in the =abour Court be#ore
their contracts ,ere terminated. ;he court directed the compan- not to terminate their services
,ithout #o**o,ing the due process o# *a,. :espite this their services ,ere terminated on Dune 302
1++&.
;he compan- union promised the ,or1ers that the- ,ou*d renegotiate. @et on the night be#ore
the- 1i**ed themse*ves ,hen Chan and :a*vi spo1e to the union *eader %hinde2 the- ,ere to*d
that nothing more cou*d be done #or them. It is this that *ed them to ta1e their *ives. :a*vi has
been in service as a peon #or1' -ears and Chan had been emp*o-ed #or 1+ -ears. 0ut their
services ,ere not regu*ari?ed. %uch ,or1ers dra, sa*ar- much *ess than the permanent
emp*o-ees.
;his is an e8amp*e o# the prob*em that comes under the purvie, o# Human Resource
ManagementB the main concept e*aborated in this chapter.
1." #$at is Human Resource Management%
HRM is the stud- o# activities regarding peop*e ,or1ing in an organi?ation. It is a manageria*
#unction that tries to match an organi?ation>s needs to the s1i**s and abi*ities o# its emp*o-ees.
1.".1 &efinitions of HRM
Human resources management 'HRM( is a management #unction concerned ,ith hiring2
motivating and maintaining peop*e in an organi?ation. It #ocuses on peop*e in organi?ations.
Human resource management is designing management s-stems to ensure that human ta*ent is
used e##ective*- and e##icient*- to accomp*ish organi?ationa* goa*s.
HRM is the personne* #unction ,hich is concerned ,ith procurement2 deve*opment2
compensation2 integration and maintenance o# the personne* o# an organi?ation #or the purpose
!
o# contributing to,ards the accomp*ishments o# the organi?ation>s objectives. ;here#ore2
personne* management is the p*anning2 organi?ing2 directing2 and contro**ing o# the per#ormance
o# those operative #unctions 57d,ard 0. 9hi*ippo6.
$
)ccording to t$e Invancevic$ and *+uec,- EHRM is concerned ,ith the most e##ective use o#
peop*e to achieve organi?ationa* and individua* goa*s. It is the ,a- o# managing peop*e at ,or12
so that the- give their best to the organi?ationF.
)ccording to &ess+er '200.( the po*icies and practices invo*ved in carr-ing out the Epeop*eF or
human resource aspects o# a management position2 inc*uding recruiting2 screening2 training2
re,arding2 and appraising comprises o# HRM.
Genera**- HRM re#ers to the management o# peop*e in organi?ations. It comprises o# the
activities2 po*icies2 and practices invo*ved in obtaining2 deve*oping2 uti*i?ing2 eva*uating2
maintaining2 and retaining the appropriate number and s1i** mi8 o# emp*o-ees to accomp*ish the
organi?ation>s objectives. ;he goa* o# HRM is to ma8imi?e emp*o-ees> contributions in order to
achieve optima* productivit- and e##ectiveness2 ,hi*e simu*taneous*- attaining individua*
objectives 5such as having a cha**enging job and obtaining recognition62 and societa* objectives
5such as *ega* comp*iance and demonstrating socia* responsibi*it-6.
In short Human Resource Management 5HRM6 can be de#ined as the art o# procuring2 deve*oping
and maintaining competent ,or1#orce to achieve the goa*s o# an organi?ation in an e##ective and
e##icient manner.
1./ 0ature of HRM
HRM is a management #unction that he*ps manager>s to recruit2 se*ect2 train and deve*op
members #or an organi?ation. HRM is concerned ,ith peop*e>s dimension in organi?ations.
;he #o**o,ing constitute the core o#
HRM
1. HRM Invo+ves t$e )+ication of Management 1unctions and 2rinci+es. ;he
#unctions and princip*es are app*ied to ac<uiring2 deve*oping2 maintaining and providing
remuneration to emp*o-ees in organi?ation.
2. &ecision Re+ating to 3m+o4ees must be Integrated. :ecisions on di##erent aspects o#
emp*o-ees must be consistent ,ith other human resource 5HR6 decisions.
". &ecisions Made Inf+uence t$e 3ffectiveness of an Organi5ation. 7##ectiveness o# an
organi?ation ,i** resu*t in betterment o# services to customers in the #orm o# high <ua*it-
products supp*ied at reasonab*e costs.
/. HRM 1unctions are not !onfined to 6usiness 3stab+is$ments On+4 but app*icab*e to
nonB business organi?ations such as education2 hea*th care2 recreation and *i1e.
HRM re#ers to a set o# programmes2 #unctions and activities designed and carried out in order to
ma8imi?e both emp*o-ee as ,e** as organi?ationa* e##ectiveness.
1.7 Scoe of HRM
;he scope o# HRM is indeed vast. .** major activities in the ,or1ing *i#e o# a ,or1er H #rom the
time o# his or her entr- into an organi?ation unti* he or she *eaves the organi?ations comes under
the purvie, o# HRM. ;he major HRM activities inc*ude HR p*anning2 job ana*-sis2 job design2
emp*o-ee hiring2 emp*o-ee and e8ecutive remuneration2 emp*o-ee motivation2 emp*o-ee
maintenance2 industria* re*ations and prospects o# HRM.
;he scope o# Human Resources Management e8tends
to3
.** the decisions2 strategies2 #actors2 princip*es2 operations2 practices2 #unctions2 activities
and methods re*ated to the management o# peop*e as emp*o-ees in an- t-pe o#
&
organi?ation.
.** the dimensions re*ated to peop*e in their emp*o-ment re*ationships2 and a** the
d-namics that #*o, #rom it.
'
4nionI=abour
Re*ations
9ersonne*
Research and
In#ormation
%-stem
Compensation
and 0ene#its
Huma
n
resour
ce
planni
ng
Human
resource
management
7mp*o-ee
.ssistance
:esign o# the
Organi?ation
and Dob
Organi?ationa*
:eve*opment
%e*ection and
%ta##ing
;raining and
:eve*opment
1igure 1.1: Scoe of HRM
;he scope o# HRM is rea**- vast. .** major activities n the ,or1ing *i#e o# a ,or1er H #rom the
time o# his or her entr- into an organi?ation unti* he or she *eaves it comes under the purvie, o#
HRM. .merican %ociet- #or ;raining and :eve*opment 5.%;:6 conducted #air*- an e8haustive
stud- in this #ie*d and identi#ied nine broad areas o# activities o# HRM.
;hese are given
be*o,3
Human Resource 9*anning
:esign o# the Organi?ation and Dob
%e*ection and %ta##ing
;raining and :eve*opment
Organi?ationa* :eve*opment
Compensation and 0ene#its
7mp*o-ee .ssistance
4nionI=abour Re*ations
9ersonne* Research and In#ormation %-stem
a( Human Resource 2+anning: ;he objective o# HR 9*anning is to ensure that the
organi?ation has the right t-pes o# persons at the right time at the right p*ace. It prepares
human resources inventor- ,ith a vie, to assess present and #uture needs2 avai*abi*it- and
possib*e shortages in human resource. ;hereupon2 HR 9*anning #orecast demand and
supp*ies and identi#- sources o# se*ection. HR 9*anning deve*ops strategies both *ongB
term and shortBterm2 to meet the manBpo,er re<uirement.
b( &esign of Organi5ation and 8ob: ;his is the tas1 o# *a-ing do,n organi?ation structure2
authorit-2 re*ationship and responsibi*ities. ;his ,i** a*so mean de#inition o# ,or1 contents
#or each position in the organi?ation. ;his is done b- Ejob descriptionF. .nother important
)
step is EDob speci#icationF. Dob speci#ication identi#ies the attributes o# persons ,ho ,i**
be most suitab*e #or each job ,hich is de#ined b- job description.
c( Se+ection and Staffing: ;his is the process o# recruitment and se*ection o# sta##. ;his
invo*ves matching peop*e and their e8pectations ,ith ,hich the job speci#ications and
career path avai*ab*e ,ithin the organi?ation.
d( 9raining and &eve+oment: ;his invo*ves an organi?ed attempt to #ind out training
needs o# the individua*s to meet the 1no,*edge and s1i** ,hich is needed not on*- to
per#orm current job but a*so to #u*#i* the #uture needs o# the organi?ation.
e( Organi5ationa+ &eve+oment: ;his is an important aspect ,hereb- E%-nergetic e##ectF
is generated in an organi?ation i.e. hea*th- interpersona* and interBgroup re*ationship
,ithin the organi?ation.
f( !omensation and 6enefits: ;his is the area o# ,ages and sa*aries administration ,here
,ages and compensations are #i8ed scienti#ica**- to meet #airness and e<uit- criteria. In
addition *abour ,e*#are measures are invo*ved ,hich inc*ude bene#its and services.
g( 3m+o4ee )ssistance: 7ach emp*o-ee is uni<ue in character2 persona*it-2 e8pectation
and temperament. 0- and *arge each one o# them #aces prob*ems ever-da-. %ome are
persona* some are o##icia*. In their case he or she remains ,orried. %uch ,orries must be
removed to ma1e him or her more productive and happ-.
$( Union-:abour Re+ations: Hea*th- Industria* and =abour re*ations are ver-important #or
enhancing peace and productivit- in an organi?ation. ;his is one o# the areas o# HRM.
i( 2ersonne+ Researc$ and Information S4stem: Cno,*edge on behaviora* science and
industria* ps-cho*og- thro,s better insight into the ,or1ers e8pectations2 aspirations and
behaviour. .dvancement o# techno*og- o# product and production methods have created
,or1ing environment ,hich are much di##erent #rom the past. G*oba*i?ation o# econom-
has increased competition man- #o*d. %cience o# ergonomics gives better ideas o# doing
a ,or1 more convenient*- b- an emp*o-ee. ;hus2 continuous research in HR areas is an
unavoidab*e re<uirement. It must a*so ta1e specia* care #or improving e8change o#
in#ormation through e##ective communication s-stems on a continuous basis especia**- on
mora* and motivation.
HRM is a broad conceptA personne* management 59M6 and Human resource deve*opment 5HR:6
are a part o# HRM.
1.; Objectives of HRM
;he primar- objective o# HRM is to ensure the avai*abi*it- o# competent and ,i**ing ,or1#orce
to an organi?ation. ;he speci#ic objectives inc*ude the #o**o,ing3
16 Human capita* 3 assisting the organi?ation in obtaining the right number and t-pes o#
emp*o-ees to #u*#i** its strategic and operationa* goa*s
26 :eve*oping organi?ationa* c*imate3 he*ping to create a c*imate in ,hich emp*o-ees are
encouraged to deve*op and uti*i?e their s1i**s to the #u**est and to emp*o- the s1i**s and
abi*ities o# the ,or1#orce e##icient*-
36 He*ping to maintain per#ormance standards and increase productivit- through e##ective job
designA providing ade<uate orientation2 training and deve*opmentA providing per#ormanceB
re*ated #eedbac1A and ensuring e##ective t,oB,a- communication.
!6 He*ping to estab*ish and maintain a harmonious emp*o-erIemp*o-ee re*ationship
$6 He*ping to create and maintain a sa#e and hea*th- ,or1 environment
&6 :eve*oping programs to meet the economic2 ps-cho*ogica*2 and socia* needs o# the
emp*o-ees and he*ping the organi?ation to retain the productive emp*o-ees
'6 7nsuring that the organi?ation is in comp*iance ,ith provincia*Iterritoria* and #edera* *a,s
a##ecting the ,or1p*ace 5such as human rights2 emp*o-ment e<uit-2 occupationa* hea*th
and sa#et-2 emp*o-ment standards2 and *abour re*ations *egis*ation6. ;o he*p the
organi?ation to reach its goa*s
)6 ;o provide organi?ation ,ith ,e**Btrained and ,e**Bmotivated emp*o-ees
+6 ;o increase the emp*o-ees satis#action and se*#Bactua*i?ation
106 ;o deve*op and maintain the <ua*it- o# ,or1 *i#e
116 ;o communicate HR po*icies to a** emp*o-ees.
126 ;o he*p maintain ethica* po*ices and behavior.
;he above stated HRM objectives can be summari?ed under #our speci#ic objectives3 societa*2
organi?ationa*2 and #unctiona* and personne*.
2ersonne+
1igure 1.2: Objectives of HRM
1( Societa+ Objectives3 see1 to ensure that the organi?ation becomes socia**- responsib*e to
the needs and cha**enges o# the societ- ,hi*e minimi?ing the negative impact o# such
demands upon the organi?ation. ;he #ai*ure o# the organi?ations to use their resources #or
the societ->s bene#it in ethica* ,a-s ma- *ead to restriction.
2( Organi5ationa+ Objectives3 it recogni?es the ro*e o# HRM in bringing about
organi?ationa* e##ectiveness. It ma1es sure that HRM is not a standa*one department2 but
rather a means to assist the organi?ation ,ith its primar- objectives. ;he HR department
e8ists to serve the rest o# the organi?ation.
"( 1unctiona+ Objectives: is to maintain the department>s contribution at a *eve* appropriate
to the organi?ation>s needs. Human resources are to be adjusted to suit the organi?ation>s
demands. ;he department>s va*ue shou*d not become too e8pensive at the cost o# the
organi?ation it serves.
/( 2ersonne+ Objectives: it is to assist emp*o-ees in achieving their persona* goa*s2 at *east
as #ar as these goa*s enhance the individua*>s contribution to the organi?ation. 9ersona*
objectives o# emp*o-ees must be met i# the- are to be maintained2 retained and motivated.
Other,ise emp*o-ee per#ormance and satis#action ma- dec*ine giving rise to emp*o-ee
turnover.
'
9ab+e 1.1 HRM Objectives and 1unctions
HRM Objectives Suorting 1unctions
1. %ocieta* Objectives =ega* comp*iance
0ene#its
4nionB management re*ations
2. Organi?ationa* Objectives Human Resource 9*anning
7mp*o-ee re*ations
%e*ection
;raining and deve*opment
.ppraisa*
9*acement
.ssessment
3. (unctiona* Objectives .ppraisa*
9*acement
.ssessment
!. 9ersona* Objectives ;raining and deve*opment
.ppraisa*
9*acement
Compensation
.ssessment
1.< 1unctions of HRM
Human Resources management has an important ro*e to p*a- in e<uipping organi?ations to meet
the cha**enges o# an e8panding and increasing*- competitive sector. Increase in sta## numbers2
contractua* diversi#ication and changes in demographic pro#i*e ,hich compe* the HR managers to
recon#igure the ro*e and signi#icance o# human resources management. ;he #unctions are
responsive to current sta##ing needs2 but can be proactive in reshaping organi?ationa* objectives.
.** the #unctions o# HRM are corre*ated ,ith the core objectives o# HRM 5;ab*e 1.16. (or
e8amp*e persona* objectives is sought to be rea*i?ed through #unctions *i1e remuneration2
assessment etc.
1igure 1." : 1unctions of
HRM
)
'
+
HR management can be thought o# as seven inter*in1ed #unctions ta1ing p*ace ,ithin
organi?ations2 as depicted in (igure 1.3 .dditiona**-2 e8terna* #orcesJ*ega*2 economic2
techno*ogica*2 g*oba*2 environmenta*2 cu*tura*Igeographic2 po*itica*2 and socia*Jsigni#icant*-
a##ect ho, HR #unctions are designed2 managed2 and changed. ;he #unctions can be grouped as
#o**o,s3
1.) Strategic HR Management: .s a part o# maintaining organi?ationa* competitiveness2
strategic p*anning #or HR e##ectiveness can be increased through the use o# HR metrics
and HR techno*og-. Human resource p*anning 5HR96 #unction determine the number and
t-pe o# emp*o-ees needed to accomp*ish organi?ationa* goa*s. HR9 inc*udes creating
venture teams ,ith a ba*anced s1i**Bmi82 recruiting the right peop*e2 and vo*untar- team
assignment. ;his #unction ana*-?es and determines personne* needs in order to create
e##ective innovation teams. ;he basic HR9 strateg- is sta##ing and emp*o-ee
deve*opment.
2.) 3=ua+ 3m+o4ment Oortunit4: Comp*iance ,ith e<ua* emp*o-ment opportunit-
577O6 *a,s and regu*ations a##ects a** other HR activities.
3.) Staffing: ;he aim o# sta##ing is to provide a su##icient supp*- o# <ua*i#ied individua*s to
#i** jobs in an organi?ation. Dob ana*-sis2 recruitment and se*ection are the main #unctions
under sta##ing.
Wor1ers job design and job ana*-sis *aid the #oundation #or sta##ing b- identi#-ing ,hat
diverse peop*e do in their jobs and ho, the- are a##ected b- them.
Dob ana*-sis is the process o# describing the nature o# a job and speci#-ing the human
re<uirements such as 1no,*edge2 s1i**s2 and e8perience needed to per#orm the job. ;he
end resu*t o# job ana*-sis is job description. Dob description spe**s out ,or1 duties and
activities o# emp*o-ees.
;hrough HR p*anning2 managers anticipate the #uture supp*- o# and demand #or
emp*o-ees and the nature o# ,or1#orce issues2 inc*uding the retention o# emp*o-ees. %o
HR9 precedes the actua* se*ection o# peop*e #or organi?ation. ;hese #actors are used ,hen
recruiting app*icants #or job openings. ;he se*ection process is concerned ,ith choosing
<ua*i#ied individua*s to #i** those jobs. In the se*ection #unction2 the most <ua*i#ied
app*icants are se*ected #or hiring #rom among the app*icants based on the e8tent to ,hich
their abi*ities and s1i**s are matching ,ith the job.
4.) 9a+ent Management and &eve+oment: 0eginning ,ith the orientation o# ne,
emp*o-ees2 ta*ent management and deve*opment inc*udes di##erent t-pes o# training.
Orientation is the #irst step to,ards he*ping a ne, emp*o-ee to adjust himse*# to the ne,
job and the emp*o-er. It is a method to ac<uaint ne, emp*o-ees ,ith particu*ar aspects
o# their ne, job2 inc*uding pa- and bene#it programmes2 ,or1ing hours and compan-
ru*es and e8pectations.
;raining and :eve*opment programs provide use#u* means o# assuring that the
emp*o-ees are capab*e o# per#orming their jobs at acceptab*e *eve*s and a*so more than
that. .** the organi?ations provide training #or ne, and in e8perienced emp*o-ee. In
addition2 organi?ation o#ten provide both on the job and o## the job training programmes
#or those emp*o-ees ,hose jobs are undergoing change.
=i1e,ise2 HR deve*opment and succession p*anning o# emp*o-ees and managers is
necessar- to prepare #or #uture cha**enges. Career p*anning has deve*oped as resu*t o# the
10
desire o# man- emp*o-ees to gro, in their jobs and to advance in their career. Career
p*anning activities inc*ude assessing an individua* emp*o-ee>s potentia* #or gro,th and
advancement in the organi?ation.
9er#ormance appraisa* inc*udes encouraging ris1 ta1ing2 demanding innovation2
generating or adopting ne, tas1s2 peer eva*uation2 #re<uent eva*uations2 and auditing
innovation processes.
11
;his #unction monitors emp*o-ee per#ormance to ensure that it is at acceptab*e *eve*s. ;his
strateg- appraises individua* and team per#ormance so that there is a *in1 bet,een
individua* innovativeness and compan- pro#itabi*it-. Which tas1s shou*d be appraised and
,ho shou*d assess emp*o-ees> per#ormance are a*so ta1en into account.
5.) 9ota+ Re>ards: Compensation in the #orm o# pa-2 incentives and bene#its are the re,ards
given to the emp*o-ees #or per#orming organi?ationa* ,or1. Compensation management is
the method #or determining ho, much emp*o-ees shou*d be paid #or per#orming certain
jobs. Compensation a##ects sta##ing in that peop*e are genera**- attracted to organi?ations
o##ering a higher *eve* o#pa- in e8change #or the ,or1 per#ormed. ;o be competitive2
emp*o-ers deve*op and re#ine their basic compensation s-stems and ma- use variab*e pa-
programs such as incentive re,ards2 promotion #rom ,ithin the team2 recognition re,ards2
ba*ancing team and individua* re,ards etc. ;his #unction uses re,ards to motivate
personne* to achieve an organi?ation>s goa*s o# productivit-2 innovation and pro#itabi*it-.
Compensation is a*so re*ated to emp*o-ee deve*opment in that it provides an important
incentive in motivating emp*o-ees to higher *eve*s o# job per#ormance to higher pa-ing
jobs in the organi?ation.
0ene#its are another #orm o# compensation to emp*o-ees other than direct pa- #or the
,or1 per#ormed. 0ene#its inc*ude both *ega**- re<uired items and those o##ered at
emp*o-er>s discretion. 0ene#its are primari*- re*ated to the area o# emp*o-ee maintenance
as the- provide #or man- basic emp*o-ee needs.
6.) Ris, Management and #or,er 2rotection: HRM addresses various ,or1p*ace ris1s
to ensure protection o# ,or1ers b- meeting *ega* re<uirements and being more responsive
to concerns #or ,or1p*ace hea*th and sa#et- a*ong ,ith disaster and recover- p*anning.
7.) 3m+o4ee and :abor Re+ations: ;he re*ationship bet,een managers and their
emp*o-ees must be hand*ed *ega**- and e##ective*-. 7mp*o-er and emp*o-ee rights must
be addressed. It is important to deve*op2 communicate2 and update HR po*icies and
procedures so that managers and emp*o-ees a*i1e 1no, ,hat is e8pected. In some
organi?ations2 unionImanagement re*ations must be addressed as ,e**. ;he term *abour
re*ation re#ers to the interaction ,ith emp*o-ees ,ho are represented b- a trade union.
4nions are organi?ation o# emp*o-ees ,ho join together to obtain more voice in
decisions a##ecting ,ages2 bene#its2 ,or1ing conditions and other aspects o# emp*o-ment.
With regard to *abour re*ations the major #unction o# HR personne* inc*udes negotiating
,ith the unions regarding ,ages2 service conditions and reso*ving disputes and
grievances.
1.. Ro+e of HRM
;he ro*e o# HRM is to p*an2 deve*op and administer po*icies and programs designed to ma1e
optimum use o# an organi?ations human resources. It is that part o# management ,hich is
concerned ,ith the peop*e at ,or1 and ,ith their re*ationship ,ithin enterprises. Its objectives
are3 5a6 e##ective uti*i?ation o# human resources2 5b6 desirab*e ,or1ing re*ationships among a**
members o# the organi?ations2 and 5c6 ma8imum individua* deve*opment. Human resources
#unction as primari*- administrative and pro#essiona*. HR sta## #ocused on administering bene#its
and other pa-ro** and operationa* #unctions and didn>t thin1 o# themse*ves as p*a-ing a part in the
#irm>s overa** strateg-.
HR pro#essiona*s have an a** encompassing ro*e. ;he- are re<uired to have a thorough 1no,*edge
12
o# the organi?ation and its intricacies and comp*e8ities. ;he u*timate goa* o# ever- HR person
shou*d be to deve*op a *in1age bet,een the emp*o-ee and organi?ation because emp*o-ee>s
commitment to the organi?ation is crucia*.
13
;he #irst and #oremost ro*e o# HR personne* is to impart continuous education to the emp*o-ees
about the changes and cha**enges #acing the countr- in genera* and their organi?ation in
particu*ar. ;he emp*o-ees shou*d 1no, about the ba*ance sheet o# the compan-2 sa*es progress2
and diversi#ication o# p*ans2 share price movements2 turnover and other detai*s about the
compan-. ;he HR pro#essiona*s shou*d impart such 1no,*edge to a** emp*o-ees through sma**
boo1*ets2 video #i*ms and *ectures.
;he primar- responsibi*ities o# Human Resource managers
are3
;o deve*op a thorough 1no,*edge o# corporate cu*ture2 p*ans and po*icies.
;o act as an interna* change agent and consu*tant
;o initiate change and act as an e8pert and #aci*itator
;o active*- invo*ve in compan->s strateg- #ormu*ation
;o 1eep communication *ine open bet,een the HR: #unction and individua*s and groups
both ,ithin and outside the organi?ationK
;o identi#- and evo*ve HR: strategies in consonance ,ith overa** business strateg-.
;o #aci*itate the deve*opment o# various organi?ationa* teams and their ,or1ing
re*ationship ,ith other teams and individua*s.
;o tr- and re*ate peop*e and ,or1 so that the organi?ation objectives are achieved
e##icient*- and e##ective*-.
;o diagnose prob*ems and determine appropriate so*ution particu*ar*- in the human
resource areas.
;o provide coBordination and support services #or the de*iver- o# HR: programmes and
services
;o eva*uate the impact o# an HR: intervention or to conduct research so as to identi#-2
deve*op or test ho, HR: In genera* has improved individua* and organi?ationa*
per#ormance.
:i##erent management gurus have de*iberated di##erent ro*es #or the HR manager based on the
major responsibi*ities that the- #u** #i** in the organi?ation. (e, o# the common*- accepted mode*s
are enumerated be*o,.
9at Mc =agan has suggested nine ro*es that are p*a-ed b- HR
practitioners
1. ;o bring the issues and trends concerning an organi?ation>s e8terna* and interna* peop*e
to the attention o# strategic decision ma1ers and to recommend *ong term strategies to
support organi?ationa* e8ce**ence and endurance.
2. ;o design and prepare HR s-stems and actions #or imp*ementation so that the- can
produce ma8imum impact on organi?ationa* per#ormance and deve*opment.
3. ;o #aci*itate the deve*opment and imp*ementation o# strategies #or trans#orming one>s
o,n organi?ation b- pursuing va*ues and visions.
!. ;o create a positive re*ationship ,ith the customer>s b- providing them ,ith the best
servicesA to uti*i?e the resources to the ma8imum and to create commitment among the
peop*e ,ho he*p the organi?ation to meet the customers needs ,hether direct*- connected
1!
or indirect*- connected to the organi?ation.
$. ;o identi#- the *earning needs hence to design and deve*op structured *earning
programmes and materia*s to he*p acce*erate *earning #or individua*s and groups.
1ig 1./ !urrent !+assification of HR Ro+es
1$
&. ;o enab*e the individua*s and groups to ,or1 in ne, situations and to e8pend Kand change
their vie,s so that peop*e in po,er move #rom authoritarian to participative mode*s o#
*eadership.
'. ;o he*p emp*o-ees to assess their competencies2 va*ues and goa*s so that the- can
identi#-2 p*an and imp*ement deve*opment p*ans.
). He a*so assists the individua* emp*o-ee to add va*ues in the ,or1p*ace and to #ocus on
the interventions and interpersona* s1i**s #or he*ping peop*e change and sustain change.
+. He assesses the HR: practices and programmes and their impact and to communicate
resu*ts so that the organi?ation and its peop*e acce*erate their change and deve*opment.
.ccording to :ave 4*rich HR p*a->s #our 1e-
ro*es.
1. Strategic 2artner Ro+eBturning strateg- into resu*ts b- bui*ding organi?ations that create
va*ueA
2. !$ange )gent Ro+eB ma1ing change happen2 and in particu*ar2 he*p it happen #ast
". 3m+o4ees !$amion Ro+eJmanaging the ta*ent or the inte**ectua* capita* ,ithin a #irm
/. )dministrative Ro+eJtr-ing to get things to happen better2 #aster and cheaper.
;he ro*e HR in organi?ations has undergone an e8tensive change and man- organi?ations have
gradua**- oriented themse*ves #rom the traditiona* personne* management to a human resources
management approach. ;he basic approach o# HRM is to perceive the organi?ation as a ,ho*e.
Its emphasis is not on*- on production and productivit- but a*so on the <ua*it- o# *i#e. It see1s to
achieve the paramount deve*opment o# human resources and the utmost possib*e socioBeconomic
deve*opment.
!urrent !+assification of HR
ro+es
.ccording to R.= Mathis and D. H. Dac1son 520106 severa* ro*es can be #u*#i**ed b- HR
management. ;he nature and e8tent o# these ro*es depend on both ,hat upper management ,ants
HR management to do and ,hat competencies the HR sta## have demonstrated. ;hree ro*es are
t-pica**- identi#ied #or HR. ;he
#ocus o# each o# them2 as sho,n in (igure 1.is e*aborated
be*o,3
)dministrative
9ersonne* practices
=ega* comp*iance #orms
and paper,or1
Oerationa+
)ctions Managing
emp*o-ee
re*ationship issues
7mp*o-ee advocate
Strategic HR
Organi?ationa*Ibusiness
strategies
HR strategic or p*anning
7va*uation o# HR
e##ectiveness.
1igure 1./ : !urrent !+assification of HR ro+es
1. )dministrative Ro+e of
HR
;he administrative ro*e o# HR management has been heavi*- oriented to administration and
record1eeping inc*uding essentia* *ega* paper,or1 and po*ic- imp*ementation. Major changes
have happened in the administrative ro*e o# HR during the recent -ears. ;,o major shi#ts
1&
driving the trans#ormation o# the
administrative ro*e are3 Greater use o# techno*og- and
Outsourcing.
;echno*og- has been ,ide*- used to improve the administrative e##icienc- o# HR and the
responsiveness o# HR to emp*o-ees and managers2 more HR #unctions are becoming avai*ab*e
e*ectronica**- or are being done on the Internet using WebBbased techno*og-. ;echno*og- is being
used in most HR activities2 #rom emp*o-ment app*ications and emp*o-ee bene#its enro**ments to
eB*earning using InternetBbased resources.
Increasing*-2 man- HR administrative #unctions are being outsourced to vendors. ;his
outsourcing o#HR administrative activities has gro,n dramatica**- in HR areas such as emp*o-ee
assistance 5counse*ing62 retirement p*anning2 bene#its administration2 pa-ro** services2 and
outp*acement services.
2. Oerationa+ and 3m+o4ee )dvocate Ro+e for
HR
HR managers manage most HR activities in *ine ,ith the strategies and operations that have been
identi#ied b- management and serves as emp*o-ee EchampionF #or emp*o-ee issues and concerns.
HR o#ten has been vie,ed as the Eemp*o-ee advocateF in organi?ations. ;he- act as the voice #or
emp*o-ee concerns2 and spend considerab*e time on HR Ecrisis management2F dea*ing ,ith
emp*o-ee prob*ems that are both ,or1Bre*ated and not ,or1Bre*ated. 7mp*o-ee advocac- he*ps
to ensure #air and e<uitab*e treatment #or emp*o-ees regard*ess o# persona* bac1ground or
circumstances.
%ometimes the HR>s advocate ro*e ma- create con#*ict ,ith operating managers. Ho,ever2
,ithout the
HR advocate ro*e2 emp*o-ers cou*d #ace even more *a,suits and regu*ator- comp*aints than the-
do no,.
;he operationa* ro*e re<uires HR pro#essiona*s to cooperate ,ith various departmenta* and
operating managers and supervisors in order to identi#- and imp*ement needed programs and
po*icies in the organi?ation. Operationa* activities are tactica* in nature. Comp*iance ,ith e<ua*
emp*o-ment opportunit- and other *a,s is ensured2 emp*o-ment app*ications are processed2
current openings are #i**ed through intervie,s2 supervisors are trained2 sa#et- prob*ems are
reso*ved2 and ,age and bene#it <uestions are ans,ered. (or carr-ing out these activities HR
manager matches HR activities ,ith the strategies o# the organi?ation.
". Strategic Ro+e for HR
;he administrative ro*e traditiona**- has been the dominant ro*e #or HR. Ho,ever2 as (igure 1.!
indicates that a broader trans#ormation in HR is needed so that signi#icant*- *ess HR time and
#e,er HR sta##s are used just #or c*erica* ,or1.
:i##erences bet,een the operationa* and strategic ro*es e8ist in a number o# HR areas. ;he
strategic HR ro*e means that HR pro#essiona*s are proactive in addressing business rea*ities and
#ocusing on #uture business needs2 such as strategic p*anning2 compensation strategies2 the
per#ormance o# HR2 and measuring its resu*ts. Ho,ever2 in some organi?ations2 HR o#ten does not
p*a- a 1e- ro*e in #ormu*ating the strategies #or the organi?ation as a ,ho*eA instead it mere*-
carries them out through HR activities.
Man- e8ecutives2 managers2 and HR pro#essiona*s are increasing*- seeing the need #or HR
management to become a greater strategic contributor to the EbusinessF success o#
organi?ations. HR shou*d be responsib*e #or 1no,ing ,hat the true cost o# human capita* is #or
an emp*o-er. (or e8amp*e2 it ma- cost t,o times 1e- emp*o-ees> annua* sa*aries to rep*ace them
i# the- *eave. ;urnover can be contro**ed though HR activities2 and i# it is success#u* in saving the
compan- mone- ,ith good retention and ta*ent management strategies2 those ma- be important
contributions to the bottom *ine o# organi?ationa* per#ormance.
;he ro*e o# HR as a strategic business partner is o#ten described as Ehaving a seat at the tab*e2F
and contributing to the strategic directions and success o# the organi?ation. ;hat means HR is
invo*ved in devising strateg- in addition to implementing strateg-. 9art o# HR>s contribution is
to have #inancia* e8pertise and to produce #inancia* resu*ts2 not just to boost emp*o-ee mora*e or
administrative e##iciencies. ;here#ore2 a signi#icant concern #or chie# #inancia* o##icers 5C(Os6 is
,hether HR e8ecutives are e<uipped to he*p them to p*an and meet #inancia* re<uirements.
Ho,ever2 even though this strategic ro*e o# HR is recogni?ed2 man- organi?ations sti** need to
ma1e signi#icant progress to,ard #u*#i**ing it. %ome e8amp*es o# areas ,here strategic
contributions can be made b- HR are3
7va*uating mergers and ac<uisitions #or organi?ationa* Ecompatibi*it-2F structura*
changes2 and sta##ing needs
Conducting ,or1#orce p*anning to anticipate the retirement o# emp*o-ees at a** *eve*s and
identi#- ,or1#orce e8pansion in organi?ationa* strategic p*ans
=eading site se*ection e##orts #or ne, #aci*ities or trans#erring operations to internationa*
outsourcing
*ocations based on ,or1#orce needs
Instituting HR management s-stems to reduce administrative time2 e<uipment2 and sta## b-
using
HR techno*og-
Wor1ing ,ith e8ecutives to deve*op a revised sa*es
compensation and incentives p*an as ne, products
It is the era ,hen #or the competitive triumph o# the organi?ation there is a need to invo*ve HRM
signi#icant*- in an integrated manner2 ,hich demands such capabi*ities #rom the HR specia*ists.
;he ro*e o# HR shi#ted #rom a #aci*itator to a #unctiona* peer ,ith competencies in other
#unctions2 and is ac1no,*edged as an e<ua* partner b- others. ;he HR is motivated to contribute
to organi?ationa* objectives o# pro#itabi*it- and customer satis#action2 and is seen as a vehic*e #or
rea*i?ation o# <ua*it- deve*opment. ;he department has a responsibi*it- #or monitoring emp*o-ee
satis#action2 since it is seen as substitute to customer satis#action.
.ccording to McCinse->s 'B% #rame,or1 mode* HR p*a-s the ro*e o# a cata*-st #or the
organi?ation. .ccording to this #rame,or12 e##ective organi?ationa* change is a comp*e8
re*ationship bet,een seven %>s. HRM is a tota* matching process bet,een the three Hard %>s
5%trateg-2 %tructure and %-stems6 and the #our %o#t %>s 5%t-*e2 %ta##2 %1i**s and %uperBordinate
Goa*s6. C*ear*-2 a** the %>s have to comp*ement each other and have to be a*igned to,ards a
sing*e corporate vision #or the organi?ation to be e##ective. It has to be rea*i?ed that most o# the
%>s are determined direct*- or indirect*- b- the ,a- Human Resources are managed2 and
there#ore2 HRM must be a part of the total business strategy.
1.? HRM in t$e 0e> Mi++ennium
Human Resources have never been more indispensab*e than toda-. ;he competitive #orces that
,e #ace toda- ,i** continue to #ace in the #uture demanding organi?ationa* e8ce**ence. In order to
achieve this e8tended <ua*it-2 organi?ation>s need to #ocus on *earning2 <ua*it- deve*opment2
team,or12 and reengineering. ;hese #actors are driven b- the ,a- organi?ations imp*ement things
and ho, emp*o-ees are treated.
1. HR !an He+ in &isensing Organi5ationa+ 3@ce++ence: ;o achieve this paradigm shi#t in
the organi?ation e8ce**ence there is a need #or organi?ations to re#orm the ,a- in ,hich ,or1 is
carried out b- the Human Resource department. 0- designing an entire*- ne, ro*e and agenda
that resu*ts in enriching the organi?ation>s va*ue to customers2 investors and emp*o-ees2 HR can
he*p in de*ivering organi?ationa* e8ce**ence. ;his can be carried out b- he*ping *ine managers and
senior mangers in moving p*anning #rom the con#erence room to the mar1et p*ace and b-
becoming an e8pert in the ,a- ,or1 is organi?ed and e8ecuted.
HR shou*d be a representative o# the emp*o-ees and shou*d he*p the organi?ation in improving its
capacit-
#or change. HR ,i** he*p the organi?ations in #acing the competitive cha**enges such as
g*oba*i?ation2 pro#itabi*it- through gro,th2 techno*og-2 inte**ectua* capita*2 and other
competitive cha**enges that the companies are #acing ,hi*e adjusting to uncontro**ab*-
cha**enging changes in business environment. ;he nove* ro*e o# HR is to rapid*- turn strateg- into
actionA to manage processes inte**igent*- and e##icient*-A to ma8imi?e emp*o-ee contribution and
commitment and to construct #avorab*e conditions #or #*a,*ess change.
2. Human Resource S$ou+d be a Strateg4 2artner: HR shou*d a*so become a partner in
strateg- e8ecutions b- prope**ing and directing serious discussions o# ho, the compan- shou*d
be organi?ed to carr- out its strateg-.
Creating the conditions #or this discussion invo*ves #our steps. (irst HR need to de#ine an
organi?ationa* architecture b- identi#-ing the compan->s ,a- o# doing business. %econd2 HR
must be he*d responsib*e #or conducting an organi?ationa* audit. ;hird2 HR as a strategic partner
needs to identi#- methods #or restoring the parts o# the organi?ationa* architecture that need it.
(ourth and #ina**-2 HR must ta1e stoc1 o# its o,n ,or1 and set c*ear priorities. In their ne, ro*e
as administrative e8perts the- ,i** need toshed their traditiona* image and sti** ma1e sure a**
routine ,or1 #or the compan- is done ,e**.
". HR )ccountabi+it4 S$ou+d be 1i@ed to 3nsure 3m+o4ee !ommitment: HR must be
he*d accountab*e #or ensuring that emp*o-ees #ee* committed to the organi?ation and contribute
#u**-. ;he- must ta1e responsibi*it- #or orienting and training *ine management about the
importance o# high emp*o-ee mora*e and ho, to achieve it. ;he ne, HR shou*d be the voice o#
emp*o-ees in management discussions. ;he ne, ro*e #or HR might a*so invo*ve suggesting that
more teams be used on some projects or that emp*o-ees be given more contro* over their o,n
,or1 schedu*es.
/. 9$e 0e> HR Must 6ecome a !$ange )gent: ;he ne, HR must become a change agent2
,hich is bui*ding the organi?ation>s capacit- to embrace and capita*i?e on change. 7ven though
the- are not primari*- responsib*e #or e8ecuting change it is the dut- o# the HR manager to ma1e
sure that the organi?ation carries out the changes #ramed #or imp*ementation.
7. Imroving t$e Aua+it4 of HR: ;he most important thing that managers can do to drive the
ne, mandate #or HR is to improve the <ua*it- o# the HR sta## itse*#. %enior e8ecutives must get
be-ond the stereot-pes o# HR pro#essiona*s as incompetent support sta## and un*eash HR>s #u**
potentia*
;. !$ange in 3m+o4ment 2ractices: ;he ba*ance sheet o# an organi?ation sho,s human
resource as an e8pense and not as a Capita*. In the in#ormation age2 it is perceived that the
machines can do the ,or1 more e##icient*- than most peop*e ho,everA techno*og- to ,or1 is
dependent on peop*e.
;he cha**enges #or 7mp*o-ment 9ractice in the "e, Mi**ennium ,i** re<uire that there shou*d be
strategic invo*vement o# the eo+e and +abour-management artners$is as the- both have to
ta1e organi?ation ahead.
<. 6enc$mar,ing 9oo+ Must be Mastered b4 HR 2rofessiona+s: HR pro#essiona*s must
master benchmar1ing2 ,hich is a too* #or continuous improvementB directing the human side
associated ,ith the strategic path adopted b- the organi?ation. ;hrough this2 HR department ,i**
start appreciating thechanges happening ,ithin and outside the environment ,hi*e e8panding the
1no,*edge about ho, to add va*ue to decision ma1ing at the highest *eve* o# the organi?ation.
.. )+igning Human Resources to 6etter Meet Strategic Objectives: ;oo o#ten organi?ations
cra#t their strateg- in a vacuum. %ome organi?ations don>t even inc*ude 1e- peop*e during
strateg- #ormu*ation resu*ting in *acunae bet,een the actua* prob*ems and the so*utions
imp*ementedB as critica* inputs are not sought #rom those individua*s ,ho are supposed to
imp*ement the ne, strategies.
. past C7O o# %on- once said that organi?ations have access to the same techno*og- and the
same in#ormation. ;he di##erence bet,een an- t,o organi?ations is the Epeop*eFB the human
resource. 7mpo,ering the ,or1#orce is an essentia* too* #or a*igning human resources ,ith the
achievement o# corporate objectives. It is the dut- o# HR manager to hire ta*ented human resource
and to provide them ,ith a positive environment ,here the- ,i** be ab*e to uti*i?e their s1i**s and
potentia*s and to create an environment in ,hich these individua*s are com#ortab*e ta1ing ris1s.
?. 2romote 1rom #it$in and Invest in 3m+o4ees: 9romoting emp*o-ees #rom ,ithin sends a
po,er#u* message that the organi?ation>s emp*o-ees are va*ued. "e, b*ood and #resh ideas o#ten
come #rom ne,comers to the organi?ation. ;o avoid stagnation o# the #irm2 ne, ideas and
approaches are critica*. @et to improve emp*o-ee mora*e2 promoting individua*s #rom ,ithin the
organi?ation is essentia*. ;his communicates that the organi?ation va*ues their emp*o-ees and
invests in their human resources.
10. Revie> t$e Recruitment and Se+ection 2rocess: . 1e- e*ement o# human resource
p*anning is ensuring that the supp*- o# appropriate emp*o-ees 5,ith the right s1i** mi86 is on board
,hen needed. ;his re<uires a proactive approach ,hereb- the organi?ation anticipates its needs
,e** in advance. It is important to identi#- the competencies being sought. ;hat is2 the criteria
upon ,hich se*ection decisions are to be made shou*d be decided in advance. . #irm must
identi#- those s1i** sets re<uired b- emp*o-ees to be success#u*. Char*es O>Rei**- suggests that
companies shou*d hire #or attitude 5perhaps even more so than technica* s1i**s6. ;hat is2 the #it o#
the individua* ,ith the va*ues o# the organi?ation and the cu*ture o# the #irm shou*d a*so be
considered ,hen se*ecting emp*o-ees. ;his has been re#erred to as the personBorgani?ationB #it. It
is no *onger enough to simp*- consider the person>s #it 5and technica* s1i** set6 ,ith the job. 9art
o# the emp*o-ee>s #it ,ith the organi?ation shou*d #ocus on the core va*ues and be*ie#s o# the
organi?ation. ;his ,i** increase emp*o-ees> contributions to the overa** success o# the
organi?ation i# the- a*read- embrace the core va*ues o# the organi?ation prior to their se*ection
11. !ommunicate Mission and Bision: I# emp*o-ees are e8pected to contribute to the attainment
o# the organi?ation>s strategic objectives2 the- must understand ,hat their ro*e is. ;his can be
achieved in part b- c*ear*- communicating the mission and vision statements o# the #irm. ;he o*d
adage is certain*- true. I# a person does not 1no, ,here he or she is going2 an- road ,i** get him
or her there.
;he mission communicates the identit- and purpose o# the organi?ation. It provides a statement o#
,ho the #irm is and ,hat their business is. On*- those emp*o-ees ,ho understand this purpose can
contribute to the #u**est e8tent possib*e. ;he vision statement provides a picture o# the #uture state
o# the #irm. It shou*d be a stretch to attain. ;his 1eeps a** the organi?ation>s emp*o-ees pu**ing in
the same direction ,ith a common end point. It is much easier to a*ign human resources ,ith
corporate objectives ,hen these emp*o-ees are #ami*iar ,ith the mission and vision o# the #irm.
.s the mission and vision statements are articu*ated2 organi?ationa* members begin to more
c*ose*- embrace their ver- meaning on an individua* *eve*. ;hese statements provide a road map
*eading emp*o-ees do,n the road to achieve organi?ationa* objectives. 7mp*o-ees then identi#-
ho, the- can contribute their uni<ue ta*ents to,ard the attainment o# these goa*s.
12. Use 9eams to )c$ieve S4nerg4: %-nerg- can be concise*- de#ined as Et,o p*us t,o e<ua*s
#iveF. In other ,ords2 the ,ho*e is greater than the sum o# the parts. %o much more can be
achieved as peop*e ,or1 together. ;hrough the e##ective use o# teams2 organi?ations can o#ten
achieve s-nerg-. ;eam goa*s2 ho,ever2 must be a*igned ,ith the organi?ation>s strategic
objectives. .*igning team objectives ,ithovera** corporate objectives ensures that peop*e are
,or1ing to,ard the same goa*
1.10 Summar4
It is critica* that toda->s organi?ations a*ign their human resources to better meet strategic
objectives. . #ai*ure to do so resu*ts in ,asted time2 energ-2 and resources. Organi?ations are more
*i1e*- to achieve this a*ignment ,ith their corporate objectives ,hen the- revie, their
recruitment and se*ection processes #or #it2 communicate the mission and vision statements2 use
joint goa* setting2 design an appropriate re,ard s-stem2 empo,er the ,or1#orce2 promote and
deve*op #rom ,ithin2 and use teams to achieve s-nerg-. Human Resource Management is the
management #unction that he*ps the managers to p*an2 recruit2 se*ect2 train2 deve*op2 remunerate
and maintain members #or an organi?ation. HRM has #our objectives o# societa*2 organi?ationa*2
#unctiona* and persona* deve*opment. .n organi?ation must have set po*iciesA de#inite procedures
and ,e** de#ined princip*es re*ating to its personne* and these contribute to the e##ectiveness2
continuit- and stabi*it- o# the organi?ation.
1.11 Se+f )ssessment Auestions
1. :e#ine HRM What are its #unctions and
objectives
2. 7*aborate about the nature o# HRM and its re*evance in present
scenario.
3. 78p*ain the ro*e o# HR manager in
HRM.
1.12 Reference boo,s
B .s,athappa. C. 5200)62 Human Resource and Personnel Management 5$
th
edition62
;ata
McGra,BHi** 9ub*ishing Compan- =td.2 "e, :e*hi.
B 0is,ajeet 9attana-a1 5200162 Human Resource Management2 9rentice Ha** o# India
9vt.
=td.2 "e, :e*hi.
B =*o-ed =. 0-ers and =es*ie W. Rue 51++'62 Human Resource Management 5$th
edition62 ;he McGra,BHi** Companies2 4%..
B Michae* .rmstrong 51+++62 A Handbook of Human Resource Management Practice
5'th edition62 Cogan 9age =imited2 120 9entonve**e Road2 =ondon.
Unit - 2 : Human Resource 2+anning
Structure of
Unit:
2.1
Objectives
2.2
Introduction
2.3 Human Resource 9*anning
5HR96
2.! :e#inition o# Human Resource
9*anning
2.$ "ature o#
HR9
2.& Objectives o# Human Resource
9*anning
2.' "eed #or HR9 in
Organi?ations
2.) Importance o#
HR9
2.+ (actors .##ecting
HR9
2.10 HR9 9rocess
2.11 Re<uisites #or %uccess#u*
HR9
2.12 0arriers to Human
HR9
2.13
%ummar-
2.1! %e*# .ssessment
/uestions
2.1$ Re#erence
0oo1s
2.1 Objectives
.#ter stud-ing this unit2 -ou ,i** be ab*e
to3
4nderstand the nature and need o# HR9
.b*e to gain in#ormation about di##erent #actors that a##ect HR9
Rea*i?e the importance o# human resource p*anning in current organi?ationa* scenario
4nderstand the HR9 process and the pre re<uisites #or success#u* HR9 process
2.2 Introduction
.s to*d in the *ast chapter Human resource management has started to p*a- a signi#icant ro*e in
the overa** strategic deve*opment o# the organi?ation. .t present HR strategies are designed in
tune ,ith the overa** business strateg-o# the organi?ation. HR strateg- shou*d sub serve the
interest o# the organi?ation2 trans*ating #irm>s goa*s and objectives into a consistent2 integrated
and comp*imentar- set o# programmes and po*icies #or managing peop*e.
(irst part o# Human resource strateg- is HR9 H Human Resource 9*anning. .** other HR
activities *i1e emp*o-ee hiring2 training and deve*opment2 remuneration2 appraisa* and *abour
re*ations are derived #rom HR9.HR p*anning is important in a ,ide variet- o# industries and
#irms. HR p*anning a##ects ,hat emp*o-ers do ,hen recruiting2 se*ecting2 and retaining peop*e2
and o# course these actions a##ect organi?ationa* resu*ts and success. ;he cha**enges caused b-
changing economic conditions during recent -ear>s sho, ,h- HR ,or1#orce p*anning shou*d
occur.
%ta##ing an organi?ation is an HR activit- that is both strategic and operationa* in nature. .s the
HR Head*ine indicates2 HR p*anning is important in a ,ide variet- o# industries and #irms. HR
p*anning a##ects ,hat emp*o-ers do ,hen recruiting2 se*ecting2 and retaining peop*e2 and2 o#
course these actions a##ect organi?ationa* resu*ts and success. Human Resources p*anning mean
di##erent means to di##erent organi?ations. ;o some companies2 human resources p*anning mean
management deve*opment. It invo*ve he*ping e8ecutives to ma1e better decisions2 communicate
more e##ective*-2 and 1no, more about the #irm. ;he purpose o# HR9 is to ma1e the manager a
better e<uipped #or #acing the present and #uture.
2." Human Resource 2+anning 'HR2(
Human resource p*anning is important #or he*ping both organi?ations and emp*o-ees to prepare
#or the #uture. ;he basic goa* o# human resource p*anning is to predict the #uture and based on
these predictions2 imp*ement programmes to avoid anticipated prob*ems. Ler- brie#*- humans
resource p*anning is the process o# e8amining an organi?ation>s or individua*>s #uture human
resource needs #or instance2 ,hat t-pes o# s1i**s ,i** be needed #or jobs o# the #uture compared to
#uture human resource capabi*ities 5such as the t-pes o# s1i**ed emp*o-ees -ou a*read- have6 and
deve*oping human resource po*icies and practices to address potentia* prob*ems #or e8amp*e2
imp*ementing training programmes to avoid s1i** de#iciencies.
2./ &efinition of Human Resource
2+anning
)ccording to Better- EHR9 is the process b- ,hich management determines ho, the organi?ation
shou*d move #rom its current man po,er position to desired manpo,er position. ;hrough
p*anning2 management strives to have the right time2 doing things ,hich resu*t in both the
organi?ation and individua* receiving ma8imum *ong run bene#itsF.
)ccording to *ordon Mc 6eat$- EHR9 is concerned ,ith t,o things3 9*anning o# manpo,er
re<uirements and 9*anning o# Manpo,er supp*iesF.
)ccording to 6eac$- EHR9 is a process o# determining and assuming that the organi?ation ,i**
have an ade<uate number o# <ua*i#ied persons2 avai*ab*e at proper times2 per#orming jobs ,hich
meet the needs o# the enterprise and ,hich provides satis#action #or the individua*s invo*vedF
%imp*- HR9 can be understood as the process o# #orecasting an organi?ation>s #uture demands
#or and supp*- o# the right t-pe o# peop*e in the right number. In other ,ords HR9 is the process
o# determining manpo,er needs and #ormu*ating p*ans to meet these needs.
HR2 is a 1our-2$ased
2rocess.
9$e first $ase invo*ves the gathering and ana*-sis o# data through manpo,er inventories
and #orecasts2
9$e second $ase consists o# estab*ishing manpo,er objectives and po*icies and gaining
top management approva* o# these.
9$e t$ird $ase invo*ves designing and imp*ementing p*ans and promotions to enab*e
the organi?ation to achieve its manpo,er objectives.
9$e fourt$ $ase is concerned ,ith contro* and eva*uation o# manpo,er p*ans to #aci*itate
progress in order to bene#it both the organi?ation and the individua*. ;he *ong run vie,
means that gains ma- be sacri#iced in the short run #or the #uture grounds. ;he p*anning
process enab*es the organi?ation to identi#- ,hat its manpo,er needs is and ,hat
potentia* manpo,er prob*ems re<uired current action. ;his *eads to more e##ective and
e##icient per#ormance.
2.7 0ature of HR2
Human resource p*anning is the process o# ana*-?ing and identi#-ing the avai*abi*it- and the need
#or human resources so that the organi?ation can meet its objectives. ;he #ocus o# HR p*anning is
to ensure that the organi?ation has the right number o# human resources2 ,ith the right
capabi*ities2 at the right times2 and in the right p*aces. In HR p*anning2 an organi?ation must
consider the avai*abi*it- and a**ocation o# peop*e to jobs over *ong periods o# time2 not just #or the
ne8t month or the ne8t -ear
1
.
HR9 is a sub s-stem in the tota* organi?ationa* p*anning. .ctions ma- inc*ude shi#ting emp*o-ees
to other jobs in the organi?ation2 *a-ing o## emp*o-ees or other,ise cutting bac1 the number o#
emp*o-ees2 deve*oping
present emp*o-ees2 andIor increasing the number o# emp*o-ees in certain areas. (actors to
consider inc*ude the current emp*o-ees> 1no,*edge2 s1i**s2 and abi*ities and the e8pected
vacancies resu*ting #rom retirements2 promotions2 trans#ers2 and discharges. ;o do this2 HR
p*anning re<uires e##orts b- HR pro#essiona*s ,or1ing ,ith e8ecutives and managers.
2.; Objectives of Human Resource
2+anning
1. ;o ensure optimum uti*i?ation o# human resources current*- avai*ab*e in the
organi?ation.
2. ;o assess or #orecast the #uture s1i** re<uirement o# the
organi?ation.
3. ;o provide contro* measures to ensure that necessar- resources are avai*ab*e as and ,hen
re<uired.
!. . series o# speci#ied reasons are there that attaches importance to manpo,er p*anning
and #orecasting e8ercises. ;he- are e*aborated be*o,3
;o *in1 manpo,er p*anning ,ith the organi?ationa* p*anning
;o determine recruitment *eve*s.
;o anticipate redundancies.
;o determine optimum training *eve*s.
;o provide a basis #or management deve*opment programs.
;o cost the manpo,er.
;o assist productivit- bargaining.
;o assess #uture accommodation re<uirement.
;o stud- the cost o# overheads and va*ue o# service #unctions.
;o decide ,hether certain activit- needs to be subcontracted2 etc.
HR9 e8ists as a part o# p*anning process o# business. ;his is the activit- that aims to coordinate
the re<uirements #or the avai*abi*it- o# the di##erent t-pes o# emp*o-ers. ;he major activities are
the#orecasting2 5#uture re<uirements62 inventor-ing 5present strength62 anticipating 5comparison
o# present and #uture re<uirements6 and p*anning 5necessar- program to meet the re<uirements6.
;he HR #orecasts are responsib*e #or estimating the number o# peop*e and the jobs needed b- an
organi?ation to achieve its objectives and rea*i?e its p*ans in the most e##icient and e##ective
manner.
HR needs are computed b- subtracting HR supp*ies or number o# the emp*o-ees avai*ab*e #rom
e8pected HR demands or number o# peop*e re<uired to produce a desired *eve* o# outcome. ;he
objective o# HR is to provide right personne* #or the right ,or1 and optimum uti*i?ation o# the
e8isting human resources.
;he objectives o# human resource p*anning ma- be summari?ed as
be*o,3
Forecasting Human Resources Requirements: HR9 is essentia* to determine the #uture
needs o# HR in an organi?ation. In the absence o# this p*an it is ver- di##icu*t to provide
the right 1ind o# peop*e at the right time.
Effective Management of Change: 9roper p*anning is re<uired to cope ,ith changes in
the di##erent aspects ,hich a##ect the organi?ation. ;hese changes need continuation o#
a**ocationI rea**ocation and e##ective uti*i?ation o# HR in organi?ation.
Realizing the Organizational Goals: In order to meet the e8pansion and other
organi?ationa* activities the organi?ationa* HR p*anning is essentia*.
Promoting Employees: HR9 gives the #eedbac1 in the #orm o# emp*o-ee data ,hich can
be used in decisionBma1ing in promotiona* opportunities to be made avai*ab*e #or the
organi?ation.
Effective tilization of HR: ;he data base ,i** provide the use#u* in#ormation in
identi#-ing surp*us and de#icienc- in human resources. ;he objective o# HR9 is to
maintain and improve the organi?ationa* capacit- to reach its goa*s b- deve*oping
appropriate strategies that ,i** resu*t inthe ma8imum contribution o# HR.
2.< 0eed for HR2 in Organi5ations
Major reasons #or the emphasis on HR9 at the Macro *eve*3
1( 3m+o4ment-Unem+o4ment Situation: ;hough in genera* the number o# educated
unemp*o-ment is on the rise2 there is acute shortage #or a variet- o# s1i**s. ;his
emphasi?es on the need #or more e##ective recruitment and emp*o-ee retention.
2( 9ec$no+ogica+ !$ange: ;he changes in production techno*ogies2 mar1eting methods
and management techni<ues have been e8tensive and rapid. ;heir e##ect has been pro#ound
on the job contents and job conte8ts. ;hese changes have caused prob*ems re*ating to
redundancies2 retention and redep*o-ment. .** these suggest the need to p*an manpo,er
needs intensive*- and s-stematica**-.
"( &emogra$ic !$ange: ;he changing pro#i*e o# the ,or1 #orce in terms o# age2 se82
*iterac-2 technica* inputs and socia* bac1ground has imp*ications #or HR9.
/( S,i++ S$ortage: 4nemp*o-ment does not mean that the *abour mar1et is a bu-er>s
mar1et.
Organi?ations genera**- become more comp*e8 and re<uire a ,ide range o# specia*ist
s1i**s that are rare and scare. . prob*em arises in an organi?ation ,hen emp*o-ees ,ith
such specia*i?ed s1i**s *eave.
7( *overnmenta+ Inf+uences: Government contro* and changes in *egis*ation ,ith regard
to a##irmative action #or disadvantages groups2 ,or1ing conditions and hours o# ,or12
restrictions on ,omen and chi*d emp*o-ment2 causa* and contract *abour2 etc. have
stimu*ated the organi?ations to be become invo*ved in s-stematic HR9.
;( :egis+ative !ontro+: ;he po*icies o# Ehire and #ireF have gone. "o, the *egis*ation
ma1es it di##icu*t to reduce the si?e o# an organi?ation <uic1*- and cheap*-. It is eas- to
increase but di##icu*t to shed the #at in terms o# the numbers emp*o-ed because o# recent
changes in *abour *a, re*ating to *a-Bo##s and c*osures. ;hose responsib*e #or managing
manpo,er must *oo1 #ar ahead and thus attempt to #oresee manpo,er prob*ems.
<( Imact of t$e 2ressure *rou: 9ressure groups such as unions2 po*iticians and persons
disp*aced #rom *and b- *ocation o# giant enterprises have been raising contradictor-
pressure on enterprise management such as interna* recruitment and promotion2 pre#erence
to emp*o-ees> chi*dren2 disp*ace person2 sons o# soi* etc.
.( S4stems )roac$: ;he spread o# s-stem thin1ing and advent o# the macro computer as
the part o# the onBgoing revo*ution in in#ormation techno*og- ,hich emphasis p*anning
and ne,er ,a-s o# hand*ing vo*uminous personne* records.
?( :ead 9ime: ;he *og *ead time is necessar- in the se*ection process and training and
dep*o-ment o# the emp*o-ee to hand*e ne, 1no,*edge and s1i**s success#u**-.
2.. Imortance of HR2
HR9 is the subs-stem in the tota* organi?ationa* p*anning. Organi?ationa* p*anning inc*udes
manageria* activities that set the compan->s objective #or the #uture and determines the appropriate
means #or achieving those objectives. ;he importance o# HR9 is e*aborated on the basis o# the
1e- ro*es that it is p*a-ing in the organi?ation.
1. 1uture 2ersonne+ 0eeds: Human resource p*anning is signi#icant because it he*ps to
determine the #uture personne* needs o# the organi?ation. I# an organi?ation is #acing the
prob*em o# either surp*us or de#icienc- in sta## strength2 then it is the resu*t o# the absence
o# e##ecting HR p*anning. .** pub*ic sector enterprises #ind themse*ves oversta##ed no, as
the- never had an- p*anning #or personne* re<uirement and ,ent o# recruitment spree ti**
*ate 1+)0>s. ;he prob*em o# e8cess sta## has become such a prominent prob*em that man-
private sector units are resorting to LR% Mvo*untar- retirement scheme>. ;he e8cess o#
*abor prob*em ,ou*d have been there i# the organi?ation had good HR9 s-stem. 7##ective
HR9 s-stem ,i** a*so enab*e the organi?ation to have good succession p*anning.
2. 2art of Strategic 2+anning: HR9 has become an integra* part o# strategic p*anning o#
strategic p*anning. HR9 provides inputs in strateg- #ormu*ation process in terms o#
deciding ,hether the organi?ation has got the right 1ind o# human resources to carr- out
the given strateg-. HR9 is a*so necessar- during the imp*ementation stage in the #orm o#
deciding to ma1e resource a**ocation decisions re*ated to organi?ation structure2 process
and human resources. In some organi?ations HR9 p*a- as signi#icant ro*e as strategic
p*anning and HR issues are perceived as inherent in business management.
". !reating Hig$+4 9a+ented 2ersonne+3 7ven though India has a great poo* o#
educated unemp*o-ed2 it is the discretion o# HR manager that ,i** enab*e the compan- to
recruit the right person ,ith right s1i**s to the organi?ation. 7ven the e8isting sta## hope
the job so #re<uent*- that organi?ation #ace #re<uent shortage o# manpo,er. Manpo,er
p*anning in the #orm o# s1i** deve*opment is re<uired to he*p the organi?ation in dea*ing
,ith this prob*em o# s1i**ed manpo,er shortage
/. Internationa+ Strategies: .n internationa* e8pansion strateg- o# an organi?ation is
#aci*itated to a great e8tent b- HR p*anning. ;he HR department>s abi*it- to #i** 1e- jobs
,ith #oreign nationa*s and reassignment o# emp*o-ees #rom ,ithin or across nationa*
borders is a major cha**enge that is being #aced b- internationa* business. With the
gro,ing trend to,ards g*oba* operation2 the need #or HR9 ,i** as ,e** ,i** be the need to
integrate HR9 more c*ose*- ,ith the organi?ations strategic p*ans. Without e##ective HR9
and subse<uent attention to emp*o-ee recruitment2 se*ection2 p*acement2 deve*opment2
and career p*anning2 the gro,ing competition #or #oreign e8ecutives ma- *ead to
e8pensive and strategica**- descriptive turnover among 1e- decision ma1ers.
7. 1oundation for 2ersonne+ 1unctions: HR9 provides essentia* in#ormation #or designing
and imp*ementing personne* #unctions2 such as recruitment2 se*ection2 training and
deve*opment2 personne* movement *i1e trans#ers2 promotions and *a-o##s.
;. Increasing Investments in Human Resources: Organi?ations are ma1ing increasing
investments in human resource deve*opment compe**ing the increased need #or HR9.
Organi?ations are rea*i?ing
that human assets can increase in va*ue more than the ph-sica* assets. .n emp*o-ee ,ho
gradua**- deve*ops hisI her s1i**s and abi*ities become a va*uab*e asset #or the
organi?ation. Organi?ations can ma1e investments in its personne* either through direct
training or job assignment and the rupee va*ue o# such a trained2 #*e8ib*e2 motivated
productive ,or1#orce is di##icu*t to determine. ;op o##icia*s have started ac1no,*edging
that <ua*it- o# ,or1 #orce is responsib*e #or both short term and *ong term per#ormance o#
the organi?ation.
<. Resistance to !$ange: 7mp*o-ees are a*,a-s re*uctant ,henever the- hear about change
and even about job rotation. Organi?ations cannot shi#t one emp*o-ee #rom one
department to another ,ithout an- speci#ic p*anning. 7ven #or carr-ing out job rotation
5shi#ting one emp*o-ee #rom one department to another6 there is a need to p*an ,e**
ahead and match the s1i**s re<uired and e8isting s1i**s o# the emp*o-ees.
.. Uniting t$e Bie>oint of :ine and Staff Managers: HR9 he*ps to unite the vie,points
o# *ine and sta## managers. ;hough HR9 is initiated and e8ecuted b- the corporate sta##2 it
re<uires the input and cooperation o# a** managers ,ithin an organi?ation. 7ach
department manager 1no,s about the issues #aced b- his department more than an-one
e*se. %o communication bet,een HR sta## and *ine managers is essentia* #or the success o#
HR 9*anning and deve*opment.
?. Succession 2+anning: Human Resource 9*anning prepares peop*e #or #uture cha**enges.
;he
Mstars> are pic1ed up2 trained2 assessed and assisted continuous*- so that ,hen the time
comes such trained emp*o-ees can <uic1*- ta1e the responsibi*ities and position o# their
boss or seniors as and ,hen situation arrives.
10. Ot$er 6enefits: 5a6 HR9 he*ps in judging the e##ectiveness o# manpo,er po*icies and
programmes o# management. 5b6 It deve*ops a,areness on e##ective uti*i?ation o# human
resources #or the overa** deve*opment o# organi?ation. 5c6 It #aci*itates se*ection and
training o# emp*o-ees ,ith ade<uate 1no,*edge2 e8perience and aptitudes so as to carr-
on and achieve the organi?ationa* objectives 5d6 HR9 encourages the compan- to revie,
and modi#- its human resource po*icies and practices and to e8amine the ,a- o# uti*i?ing
the human resources #or better uti*i?ation.
2.? 1actors )ffecting HR2
HR9 is in#*uenced b- severa* #actors. ;he most important o# the #actors that a##ect HR9 are 516
t-pe and strateg- o# organi?ation 526 organi?ationa* gro,th c-c*es and p*anning 536 environmenta*
uncertainties 5!6 time hori?ons 5$6 t-pe and <ua*it- o# #orecasting in#ormation 5!6 nature o# jobs
being #i**ed and 5$6 o## *oading the ,or1.
1. 94e and Strateg4 of t$e Organi5ation: ;-pe o# the organi?ation determines the production
processes invo*ve2 number and t-pe o# sta## needed and the supervisor- and manageria* personne*
re<uired. HR need is a*so de#ined b- the strategic p*an o# organi?ation. I# the organi?ation has a
p*an #or organic gro,th then organi?ation need to hire additiona* emp*o-ees. On the other hand I#
the organi?ation is going #or mergers and ac<uisition2 then organi?ation need to p*an #or *a-o##s2
as mergers can create2 dup*icate or over*ap positions that can be hand*ed more e##icient*- ,ith
#e,er emp*o-ees.
Organi?ation #irst decides ,hether to be reactive or proactive in HR9. Organi?ations either
care#u**- anticipate the needs and s-stematica**- p*an to #i** the need in advance 5proactive6 or
can simp*- react to the needs as the- arise 5reactive6. =i1e,ise2 the organi?ation must determine
the ,idth o# the HR p*an. Organi?ation can choose a narro, #ocus b- p*anning in on*- one or t,o
HR areas *i1e recruitment and se*ection or can have a broad perspective b- p*anning in a** areas
inc*uding training and remuneration.
;he nature o# HR p*an is a*so decides upon the #orma*it- o# the p*an. It can decides to have an
in#orma* p*an that *ies most*- in the minds o# the managers and personne* sta## or can have a
#orma* p*an ,hich is proper*- documented in ,riting
;he nature o# HR p*an is a*so depended upon the #*e8ibi*it- that is practiced in the organi?ation.
HR p*an shou*d have the abi*it- to anticipate and dea* ,ith contingencies. Organi?ations #rame
HR9 in such a ,a- that it can contain man- contingencies2 ,hich re#*ect di##erent scenarios
thereb- assuring that the p*an is
#*e8ib*e and
adaptab*e.
Orga ni?
ationa*
Gro,th c -c*e
a nd 9 *anning
HR 2
1igure 2.1 : 1actors )ffecting
HR2.
(igure 2.1 summari?es the #ive #actors that in#*uence an organi?ation ,hi*e #raming its
strategic HR9.
2. Organi5ationa+ *ro>t$ !4c+es and 2+anning: .** organi?ations pass through di##erent
stages o# gro,th #rom the da- o# its inception. ;he stage o# gro,th in ,hich an organi?ation is
determines thenature and e8tends o# HR9. %ma** organi?ations in the ear*ier stages o# gro,th ma-
not have ,e** de#ined personne* p*anning. 0ut as the organi?ation enters the gro,th stage the-
#ee* the need to p*an its human resource. .t this stage organi?ation gives emphasis upon emp*o-ee
deve*opment. 0ut as the organi?ation reaches the mature stage it e8perience *ess #*e8ibi*it- and
variabi*it- resu*ting in *o, gro,th rate. HR p*anning becomes more #orma*i?ed and *ess #*e8ib*e
and *ess innovative and prob*em *i1e retirement and possib*e retrenchment dominate p*anning.
:uring the dec*ining stage o# the organi?ation HR9 ta1es a di##erent #ocus *i1e p*anning to do the
*a-o##2 retrenchment and retirement. In dec*ining situation p*anning a*,a-s becomes reactive in
nature to,ards the #inancia* and sa*es distress #aced b- the compan-.
". 3nvironmenta+ Uncertainties: 9o*itica*2 socia* and economic changes a##ect a** organi?ations
and the #*uctuations that are happening in these environments a##ect organi?ations drastica**-.
9ersonne* p*anners dea* ,ith such environmenta* uncertainties b- care#u**- #ormu*ating
recruitment2 se*ection2 training and
deve*opment po*icies and programmes. ;he ba*ance in the organi?ation is achieved through
care#u* succession p*anning2 promotion channe*s2 *a-o##s2 #*e8i time2 job sharing2 retirement2 LR%
and other personne*re*ated arrangements.
/. 9ime Hori5ons: HR p*ans can be short term or *ong term. %hort term p*ans spans #rom si8
months to one -ear2 ,hi*e *ong term p*ans spread over three to t,ent- -ears. ;he e8tent o# time
period depends upon the degree o# uncertaint- that is prevai*ing in an organi?ations environment.
Greater the uncertaint-2 shorter the p*an time hori?on and vice versa.
9ab+e 2.1 : & egr ee of U ncertai nt4 and :engt$ of 2 +anni ng 2 eriod
S$or t 2+an ning eriod- uncertai
nt4C
:ong + anning eriod- ce rtaint4C stabi +i
t4
M an- ne, compe tit ors
Rapi d changes i n soc ia* and ec
onomic
condi tions
%trong compe tit ive pos it ion
7vo* utionar -2 ra ther t han rapi d soc
ia* 2
po*i tic a* and t echno* ogi ca * chan ge
4 nst ab*e produc tI s ervi ce de mand pat terns
%ma* * organi ?at iona* si ?e2 poor m anage
ment pract ice s 5c risis Ma nagem ent6
%tab* e dema nd patt erns
%trong mana geme nt prac tic es .
%ource3 7*mer H. 0urac1 and "icho*as D. Mathis2 Human Resource Planning- A Pragmatic
approach to manpower Staffing and development2 I**inosis2 0raceB 9ar1 9ress2 1+)'2 p. 12+.
7. 94e and Aua+it4 of information: ;he in#ormation used to #orecast personne* needs originates
#rom a mu*titude o# sources. ;he #orecast depends to a *arge e8tent upon the t-pe o# in#ormation
and the<ua*it- o# data that is avai*ab*e to personne* p*anners. ;he <ua*it- and accurac- o#
in#ormation depend upon the c*arit- ,ith ,hich the organi?ationa* decision ma1ers have de#ined
their strateg-2 structure2 budgets2
production schedu*e and so
on.
9ab +e 2.2 : :e ve+s of HR 2 Infor mati on
S trategic In for mati on *e ne ra+ Or gani 5ation
a+
In formation
S eci fic In formation
0ec essar 4 for HR 2
9 roduct m i8
Custome r mi8
O rgani? ati ona* struc ture
In#orma tion #* o,s
Dob a na*-sis
%1i **s inve ntories
Compe tit ive e mphasis O perat ing and c apit
a*
budget s
( uncti ona* a rea obj ect ives
Mana geme nt inve nt orie s
G eographic * imi ts
o# ma r1et
9 roduct ion sc hedu*e s
: istri bution cha nne*s
.vai *ab* e traini ng a
nd deve*opm ent progra mme
% a* es territ ories
9 roduct ion processes
Recruit ment sourc es
=e ve* o# t echno* og-
9 *a nning hori?ons
=abour ma r1et a
na*-sis
Compensati on programm es
Const itut iona*
provisions and *abour * a, s
Reti re ment p*ans
;urnover dat a.
%ource3 =eapN Crino2 Personnel Human Resource Management2 p.
1&1.
;. 0ature of 8obs 6eing 1i++ed: 9ersonne* p*anners need to be rea**- care#u* ,ith respect to the
nature o# the jobs being #i**ed in the organi?ation. 7mp*o-ees be*onging to *o,er *eve* ,ho need
ver- *imited s1i**s can be recruited hasti*- but2 ,hi*e hiring emp*o-ees #or higher posts2 se*ection
and recruitment need to be carried out ,ith high discretion. Organi?ation need to anticipate
vacancies #ar in advance as possib*e2 to provide su##icient time to recruit suitab*e candidate.
<. Outsourcing: %evera* organi?ations outsource part o# their ,or1 to outside parties in the
#orm o# subcontract. Outsourcing is a regu*ar #eature both in the pub*ic sector as ,e** as in the
private sector companies. Man- o# the organi?ations have surp*us *abour and hence instead o#
hiring more peop*e the- go #or outsourcing. Outsourcing is usua**- done #or non critica*
activities. Outsourcing o# nonB critica* activities through subcontracting determines HR9.
2.10 HR2 2rocess
HR9 e##ective*- invo*ves #orecasting personne* needs2 assessing personne* supp*- and matching
demand H
supp*- #actors through personne* re*ated programmes. ;he HR p*anning process is in#*uenced b-
overa** organi?ationa* objectives and environment o# business.
3nvironmenta+
Scanning:
1igure 2.2 : 9$e HR2 2rocess
It re#ers to the s-stematic monitoring o# the e8terna* #orces in#*uencing the organi?ation. ;he
#o**o,ing #orces are essentia* #or pertinent HR9.
7conomic #actors2 inc*uding genera* and regiona* conditions.
;echno*ogica* changes
:emographic changes inc*uding age2 composition and *iterac-2
9o*itica* and *egis*ative issues2 inc*uding *a,s and administrative ru*ings
%ocia* concerns2 inc*uding chi*d care2 educationa* #aci*ities and priorities.
0- scanning the environment #or changes that ,i** a##ect an organi?ation2 managers can
anticipate their impact and ma1e adjustments ear*-.
Organi5ationa+ Objectives and 2o+icies: HR p*an is usua**- derived #rom the organi?ationa*
objectives. %peci#ic re<uirements in terms o# number and characteristics o# emp*o-ees shou*d be
derived #rom organi?ationa* objectives
Once the organi?ationa* objectives are speci#ied2 communicated and understood b- a** concerned2
the HR
department must speci#- its objective ,ith regard to HR uti*i?ation in the
organi?ation.
HR &emand
1orecast:
:emand #orecasting is the process o# estimating the #uture <uantit- and <ua*it- o# peop*e re<uired
to meet the #uture needs o# the organi?ation. .nnua* budget and *ongBterm corporate p*an ,hen
trans*ated into activit- into activit- #orm the basis #or HR #orecast.
(or eg3 in the case o# a manu#acturing compan-2 the sa*es budget ,i** #orm the basis #or
production p*an giving the number and t-pe o# products to be produced in each period. ;his ,i**
#orm the basis upon,hich the organi?ation ,i** decide the number o# hours to be ,or1ed b- each
s1i**ed categor- o# ,or1ers. Once the number hours re<uired is avai*ab*e organi?ation can
determine the <ua*it- and <uantit- o# personne* re<uired #or the tas1.
:emand #orecasting is in#*uenced b- both interna* #actors and e8terna* #actors3 e8terna* #actors
inc*udeB competition2 economic c*imate2 *a,s and regu*ator- bodies2 changes in techno*og- and
socia* #actors ,hereas interna* #actors are budget constraints2 production *eve*2 ne, products and
services2 organi?ationa* structure and emp*o-ee separations.
:emand #orecasting is essentia* because it he*ps the organi?ation to 1. /uanti#- the jobs2
necessar- #or producing a given number o# goods2 2. ;o determine the nature o# sta## mi8
re<uired in the #uture2 3. ;o assess appropriate *eve*s in di##erent parts o# organi?ation so as to
avoid unnecessar- costs to theorgani?ation2
!. ;o prevent shortages o# personne* ,here and ,hen2 the- are needed b- the organi?ation. $. ;o
monitor comp*iances ,ith *ega* re<uirements ,ith regard to reservation o# jobs.
;echni<ues *i1e manageria* judgment2 ratioB trend ana*-sis2 regression ana*-sis2 ,or1 stud-
techni<ues2 :e*phi techni<ues are some o# the major methods used b- the organi?ation #or
demand #orecasting.
HR Su+4
1orecast:
%upp*- #orecast determines ,hether the HR department ,i** be ab*e to procure the re<uired
number o# ,or1ers. %upp*- #orecast measures the number o# peop*e *i1e*- to be avai*ab*e #rom
,ithin and outside an organi?ation2 a#ter ma1ing a**o,ance #or absenteeism2 interna* movements
and promotions2 ,astage and changes in hours2 and other conditions o# ,or1.
%upp*- #orecast is re<uired because it is needed as it 1. He*ps to <uanti#- the number o# peop*e
and positions e8pected to be avai*ab*e in #uture to he*p the organi?ation rea*i?e its p*ans and meet
its objectives
2. He*ps to c*ari#- the sta## mi8es that ,i** arise in #uture 3. It assesses e8isting sta##ing in
di##erent parts o# the organi?ation. !. It ,i** enab*e the organi?ation to prevent shortage o# peop*e
,here and ,hen the- are most needed. $. It a*so he*ps to monitor #uture comp*iance ,ith *ega*
re<uirements o# job reservations.
%upp*- ana*-sis covers the e8isting human resources2 interna* sources o# supp*- and e8terna*
sources o# supp*-.
HR
2rogramming:
Once an organi?ation>s personne* demand and supp*- are #orecasted the demand and supp*- need
to be ba*anced in order that the vacancies can be #i**ed b- the right emp*o-ees at the right time.
HR 2+an
Im+ementation:
HR imp*ementation re<uires converting an HR p*an into action. . series o# action are initiated as
a part o# HR p*an imp*ementation. 9rogrammes such as recruitment2 se*ection and p*acement2
training and deve*opment2 retraining and redep*o-ment2 retention p*an2 succession p*an etc ,hen
c*ubbed together #orm the imp*ementation part o# the HR p*an.
!ontro+ and
3va+uation:
Contro* and eva*uation represent the #ina* phase o# the HR9 process. .** HR p*an inc*ude budgets2
targets and standards. ;he achievement o# the organi?ation ,i** be eva*uated and monitored
against the p*an. :uring this #ina* phase organi?ation ,i** be eva*uating on the number o# peop*e
emp*o-ed against the estab*ished 5both those ,ho are in the post and those ,ho are in pipe *ine6
and on the number recruited against the recruitment targets. 7va*uation is a*so done ,ith respect
to emp*o-ment cost against the budget and ,astage accrued so that corrective action can be
ta1en in #uture.
2.11 Re=uisites for Successfu+ HR2
1. HR9 must be recogni?ed as an integra* part o# corporate
p*anning
2. %upport o# top management is
essentia*
3. ;here shou*d be some centra*i?ation ,ith respect to HR9 responsibi*ities in order to
have coBordination bet,een di##erent *eve*s o# management.
!. Organi?ation records must be comp*ete2 up to date and readi*-
avai*ab*e.
$. ;echni<ues used #or HR p*anning shou*d be those best suited to the data
avai*ab*e and degree o# accurac- re<uired.
&. :ata co**ection2 ana*-sis2 techni<ues o# p*anning and the p*an themse*ves need to be
constant*- revised and improved in the *ight o# e8perience.
2.12 6arriers to HR2
Human Resource 9*anners #ace signi#icant barriers ,hi*e #ormu*ating an HR9. ;he major
barriers are e*aborated be*o,3
16 HR practitioners are perceived as e8perts in hand*ing personne* matters2 but are not
e8perts in managing business. ;he personne* p*an conceived and #ormu*ated b- the HR
practitioners ,hen enmeshed ,ith organi?ationa* p*an2 might ma1e the overa** strategic
p*an o# the organi?ation ine##ective.
26 HR in#ormation o#ten is incompatib*e ,ith other in#ormation used in strateg- #ormu*ation.
%trategic p*anning e##orts have *ong been oriented to,ards #inancia* #orecasting2 o#ten to
the e8c*usion o# other t-pes o# in#ormation. (inancia* #orecasting ta1es precedence over
HR9.
!6 Con#*ict ma- e8ist bet,een short term and *ong term HR needs. (or e8amp*e2 there can
be a con#*ict bet,een the pressure to get the ,or1 done on time and *ong term needs2 such
as preparing peop*e #or assuming greater responsibi*ities. Man- managers are o# the be*ie#
that HR needs can be met immediate*- because s1i**s are avai*ab*e on the mar1et as *ong
as ,ages and sa*aries are competitive. ;here#ore2 *ong times p*ans are not re<uired2 short
p*anning are on*- needed.
$6 ;here is con#*ict bet,een <uantitative and <ua*itative approaches to HR9. %ome peop*e
vie, HR9 as a number game designed to trac1 the #*o, o# peop*e across the department.
Others ta1e a <ua*itative approach and #ocus on individua* emp*o-ee concerns such as
promotion and career deve*opment. 0est resu*t can be achieved i# there is a ba*ance
bet,een the <uantitative and <ua*itative approaches.
&6 "onBinvo*vement o# operating managers renders HR9 ine##ective. HR9 is not strict*- an
HR department #unction. %uccess#u* p*anning needs a coBordinated e##ort on the part o#
operating managers and HR personne*.
2.1" Summar4
;oda-2 human resource p*anning is vie,ed as the ,a- management comes to grasp the i**B
de#ined and toughBtoBso*ve human resource prob*ems #acing an organi?ation. Human resource
p*anning is the process o# determining the human resources re<uired b- the organi?ation to
achieve its goa*s. Human resource p*anning a*so *oo1s at broader issues re*ating to the ,a-s in
,hich peop*e are emp*o-ed and deve*oped2 in order to improve organi?ationa* e##ectiveness. HR9
is a decision ma1ing process that combines activities such as identi#-ing and ac<uiring the right
number o# peop*e ,ith the proper s1i**s2 motivating them to achieve high per#ormance and
creating interactive *in1s bet,een business objectives are resource p*anning activities. HR9 sets
out re<uirements in both <uantitative and <ua*itative terms. .ccurate manpo,er p*an is a dream.
. common error o# man- managers is to #ocus on the organi?ation>s short term rep*acement
needs. .n- human resource p*an2 i# it is to be e##ective2 must be derived #rom the *ong term p*ans
and strategies o# the organi?ation. ;he various approaches to human resource p*anning under
,hich a number o# major issues and trends in toda->s ,or1 p*an that ,i** a##ect organi?ation and
emp*o-ees are 516 78amine e8terna* and interna* issues2 526 :etermining #uture organi?ations
capabi*ities2 536 :etermining #uture organi?ationa* needs2 and 5!6 Imp*ementing human resources
programmes to address anticipated prob*ems. .*though change is occurring ver- rapid*- in the
,or1 ,or*d it is important #or both organi?ations and emp*o-ees to monitor issues and events
continuous*- and consider their potentia* e##ects.
2.1/ Se+f )ssessment Auestions
1. 78p*ain the ro*e o# HR pro#essiona* in human resource p*anning process in
organi?ations.
2 :escribe the various #orecasting techni<ues and ho, these techni<ues are being
used in human resource p*anning.
3 78p*ain the barriers to HR9. 0ring out the re<uisites #or e##ective
p*anning.
2.17 Reference 6oo,s
B =*o-d =. 0-ars and =es*ie W. Rue 51++'62 Human Resource Management 5$th edition62
;he
McGra,BHi** Companies2 4%..
B Michae* .rmstrong 51+++62 A Handbook of Human Resource Management Practice 5'th
edition62 Cogan 9age =imited2 120 9entonve**e Road2 =ondon.
B 0is,ajeet 9attana-a1 5200162 Human Resource Management2 9rentice Ha** o# India 9vt.
=td.2 "e, :e*hi.
B C. .s,athappa 51+++62 Human Resource and Personnel Management 52nd edition62
;ata
McGra,BHi** 9ub*ishing Compan- =td.2 "e, :e*hi.
B 9. %ubba Rao 5200!62 Management and !rganisational "ehaviour 5(irst edition62
Hima*a-a
9ub*ishing House.
2)
Unit - " : 8ob )na+4sis and 8ob &esign
Structure of
Unit:
3.0
Objectives
3.1
Introduction
3.2 Dob .na*-sis
:e#ined
3.3 4ses o# Dob
.na*-sis
3.! %teps in Dob
.na*-sis
3.$ Methods #or Co**ecting Dob .na*-sis
:ata
3.& Dob
:escription
3.' Writing Dob
:escription
3.) Dob
%peci#ication
3.+ Dob
:esign
3.10 Methods o# Dob
:esign
3.11
%ummar-
3.12 %e*# .ssessment
/uestions
3.13 Re#erence
0oo1s
".0 Objectives
.#ter comp*eting this unit2 -ou ,i** be
ab*e to3
:e#ine job ana*-sis.
4nderstand the basic steps in a Dob ana*-sis.
Identi#- the major methods o# co**ecting Dob ana*-sis data.
Recogni?e the major e*ements o# job descriptions
78p*ain ho, to prepare job descriptions and job speci#ication and their use.
9oint out and e8p*ain job design and its various methods
:istinguish bet,een job en*argement and job enrichment.
".1 Introduction
Manpo,er p*anning is concerned ,ith determination o# <uantitative and <ua*itative
re<uirements o# manpo,er #or the organi?ation. :etermination o# manpo,er re<uirements is one
o# the most important prob*ems in manpo,er p*anning. Dob ana*-sis and job design2 provide this
1no,*edge. 0e#ore going through the mechanism o# job ana*-sis and job design2 it is re*evant to
understand the terms ,hich are used in job ana*-sis and job design.
8ob: . job ma- be de#ined as a Eco**ection or aggregation o# tas1s2 duties and responsibi*ities
,hich as a ,ho*e2 are regarded as a regu*ar assignment to individua* emp*o-ees2F and ,hich is
di##erent #rom other assignments2 In other ,ords2 ,hen the tota* ,or1 to be done is divided and
grouped into pac1ages2 ,e ca** it a Ejob.F 7ach job has a de#inite tit*e based upon standardi?ed
trade speci#ications ,ithin a jobA t,o or more grades ma- be identi#ied2 ,here the ,or1
assignment ma- be graded according to s1i**2 the di##icu*t- o# doing them2 or the <ua*it- o#
,or1manship. ;hus2 it ma- be noted that a position is aEco**ection o tas1s and responsibi*ities
regu*ar*- assigned to one personAF ,hi*e a job is a Egroup o# position2 ,hich invo*ve essentia**-
the same duties2 responsibi*ities2 s1i** and 1no,*edge.F . position consists o#a particu*ar set o#
duties assigned to an individua*.
:ecen?o and 9. Robbins de#ine other terms as
#o**o,s3
9as,: It is a distinct ,or1 activit- carried out #or a distinct purpose.
&ut4: It is a number o# tas1s.
2osition: It re#ers to one or more duties per#ormed b- one person in an organi?ation2 ;here
are at *east as man- positions as there are ,or1ers in the organi?ationA vacancies
ma- create more positions than emp*o-ees.
8ob: It is a t-pe o# position ,ithin the organi?ation.
8ob 1ami+4: It is group o# t,o or more jobs that either ca** #or simi*ar ,or1er characteristics or
contain para**e* ,or1 tas1s as determined b- job ana*-sis.
Occuation: It is a group o# simi*ar jobs #ound across organi?ations.
!areer: It represents a se<uence o# positions2 jobs2 or occupations
that a person has over his ,or1ing *i#e.
;as1
:ut-
9osition
Occupation
Dob (ami*-
Dob
Career
7*ement
1igure ".1: 8ob )na+4sis Information Hierarc$4
')dated from &ecen5o and 2. Robbins- 2ersonne+CHuman Resource Management(
".2 8ob )na+4sis &efined
:eve*oping an organi?ationa* structure2 resu*ts in jobs ,hich have to be sta##ed. Dob ana*-sis is
the procedure through ,hich -ou determine the duties and nature o# the jobs and the 1inds o#
peop*e 5in terms o# s1i**s and e8perience6 ,ho shou*d be hired #or them.> It provides -ou ,ith
data on job re<uirements2 ,hich are then used #or deve*oping job descriptions 5,hat the job
entai*s6 and job speci#ications 5,hat 1ind o# peop*e to hire #or the job6. %ome o# the de#initions o#
job ana*-sis ate given as #o**o,s2 to understand the meaning o# the term more c*ear*-3
)ccording to Mic$ae+ :. 8ucius- EDob ana*-sis re#ers to the process o# stud-ing the operations2
duties and organi?ationa* aspects o# jobs in order to derive speci#ications or as the- ca**ed b-
some2 job descriptions.F
)ccording to &e!en5o and 2. Robbins- E. job ana*-sis is a s-stematic e8p*oration o# the
activities ,ithin a job. It is a basic technica* procedure2 one that is used to de#ine the duties2
responsibi*ities2 and
accountabi*ities o# a job.F
30
31
1igure ".2: Uses of 8ob )na+4sis
)ccording to Herbert * Herman E. job is a co**ection o# tas1s that can be per#ormed b- a
sing*e emp*o-ee to contribute to the production o# some product or service provided b- the
organi?ation. 7ach job has certain abi*it- re<uirements 5as ,e** as certain re,ards6 associated
,ith it. Dob ana*-sis process used to identi#- these re<uirements.F
1+io $as offered a more comre$ensive definition of job ana+4sis as- EDob ana*-sis is the
process o# stud-ing and co**ecting in#ormation re*ating to the operations and responsibi*ities o# a
speci#ic job. ;he immediate products o# the ana*-sis are job descriptions and job speci#icationsF
;hus2 job ana*-sis invo*ves the process o# identi#-ing the nature o# a job 5job description6 and the
<ua*ities o# the *i1e*- job ho*der 5job speci#ication6.
"." Uses of 8ob )na+4sis
.s summari?ed in (igure 3.2 the in#ormation generated b- the job ana*-sis is used as a basis o#
severa* interre*ated personne* management activities3
Organi?ationa* design
O r g a n i? a tion a n d m a n
Dob:escription
p o, e r p*a n n in g
Placement & orientation
Job
Analysis
Recruitment Nse*ection
Dob%peci#ication
;rainingNdeve*opm
ent
Safety and
health
7mp*o-ee
counse*ing
9er#ormance appraisa*
1igure ".2 : Uses of 8ob )na+4sis
1. )c$ievement of *oa+s: Weather and :avis have stated2 EDobs are at the core o# ever-
organi?ation>s productivit-2 i# the- are designed ,e** and done right2 the organi?ation ma1es
progress to,ards itsobjectives. Other,ise2 productivit- su##ers2 pro#its #a**2 and the organi?ation
is *ess ab*e to meet the demands o# societ-2 customer2 emp*o-ees2 and other ,ith a sta1e in its
success.F
2. Organi5ationa+ &esign3 Dob ana*-sis ,i** be use#u* in c*assi#-ing the jobs and the
interre*ationships among the jobs. On the basis o# in#ormation obtained through job ana*-sis2
sound decisions regarding hierarchica* positions and #unctiona* di##erentiation can be ta1en and
this ,i** improve operationa*e##icienc-.
". Organi5ation and Mano>er 2+anning: It is he*p#u* in organi?ation p*anning2 #or it de#ines
*abour in concrete terms and coBordinates the activities o# the ,or1 #orce2 and c*ear*- divides
32
duties and responsibi*ities.
/. Recruitment and Se+ection: Dob ana*-sis provides -ou ,ith in#ormation on ,hat the job
entai*s and ,hat human re<uirements are re<uired to carr- out these activities. ;his in#ormation is
the basis on ,hich -ou decide ,hat sort o# peop*e to recruit and hire.
7. 2+acement and Orientation: Dob ana*-sis he*ps in matching the job re<uirements ,ith the
abi*ities2 interests and aptitudes o# peop*e. Dobs ,i** be assigned to persons on the basis o#
suitabi*it- #or the job. ;he orientation programme ,i** he*p the emp*o-ee in *earning the activities
and understanding duties that are re<uired to per#orm a given job more e##ective*-.
;. 3m+o4ee 9raining and Management &eve+oment: Dob ana*-sis provides the necessar-
in#ormation to the management o# training and deve*opment programmes. It he*ps in to
determine the content and subject matter o# in training courses. It a*so he*ps in chec1ing
app*ication in#ormation2 intervie,ing test resu*ts and in chec1ing re#erences.
<. 8ob 3va+uation and !omensation3 Dob eva*uation is the process o# determining the re*ative
,orth o# di##erent jobs in an organi?ation ,ith a vie, to *in1 compensation2 both basic and
supp*ementar-2 ,ith the ,orth o# the jobs. ;he ,orth o# a job is determined on the basis o# job
characteristics and job ho*der characteristics. Dob ana*-sis provides both in the #orms o# job
description and job speci#ication.
.. 2erformance )raisa+: 9er#ormance appraisa* invo*ves comparing each emp*o-ee>s actua*
per#ormance ,ith his or her desired per#ormance. ;hrough job ana*-sis industria* engineers and
other e8perts determine standards to be achieved and speci#ic activities to be per#ormed.
?. Hea+t$ and Safet4: It provides an opportunit- #or identi#-ing ha?ardous conditions and
unhea*th- environmenta* #actors so that corrective measures ma- be ta1en to minimi?e and avoid
the possibi*it- o# accidents.
10. 3m+o4ee !ounse++ing: Dob ana*-sis provides in#ormation about career choices and persona*
*imitation. %uch in#ormation is he*p#u* in vocationa* guidance and rehabi*itation counse**ing.
7mp*o-ees ,ho are unab*e to cope ,ith the ha?ards and demands o# given jobs ma- be advised
to opt #or subsidiar- jobs or to see1 premature retirement.
"./ Stes in 8ob )na+4sis
;he si8 steps o# job ana*-sis are sho,n in #igure
3.33
:etermination o# uses
o# job ana*-sis
Co**ection o# bac1
ground in#ormation
%e*ection o# job
#or ana*-sis
Co**ection o# job
ana*-sis data
In#ormation processing
Job
Descripti
on
Dob
%peci#ication
1igure "." : 8ob )na+4sis 2rocess
1. &etermine t$e Use of t$e 8ob )na+4sis Information: %tart b- identi#-ing the use to ,hich
the in#ormation ,i** be put2 since this ,i** determine the t-pe o# data -ou co**ect and the
techni<ue -ou use to co**ect them.
2. !o++ection of 6ac,ground Information: .ccording to ;err-2 E;he ma1eBup o# a job2 its
re*ation to other jobs2 and its re<uirements #or competent per#ormance are essentia* in#ormation
needed #or a job eva*uation. ;his in#ormation can be had b- revie,ing avai*ab*e bac1ground
in#ormation such as organi?ation charts 5,hich sho, ho, the job in <uestion re*ates to other
jobs and ,here the- #it into the overa** organi?ation6A c*ass speci#ications 5,hich describe the
genera* re<uirements o# the c*ass o# job to ,hich the job under ana*-sis be*ongs6A and the e8isting
job descriptions ,hich provide a starting point #rom ,hich to bui*d the revised job descriptionF.
". Se+ection of 8obs for )na+4sis: ;o do job ana*-sis is a cost*- and time consuming process. It
is hence2 necessar- to se*ect a representative samp*e o# jobs #or purposes o# ana*-sis. 9riorities o#
various jobs can a*so be determined. . job ma- be se*ected because it has undergone
undocumented changes in job content. ;he re<uest #or ana*-sis o# a job ma- originate ,ith the
emp*o-ee2 supervisor2 or a manager.
When the emp*o-ee re<uests an ana*-sis it is usua**- because ne, job demands have not been
re#*ected in changes in ,ages. 7mp*o-ee>s sa*aries are2 in part2 based upon the nature o# the ,or1
that the- per#orm. %ome organi?ations estab*ish a time cycle for the analysis of each job. (or
e8amp*e3 . job ana*-sis ma- be re<uired #or a** jobs ever- three -ears. "e, jobs must a*so be
subjected to ana*-sis.
/. !o++ection of 8ob )na+4sis &ata: Dob data on #eatures o# the job2 re<uited emp*o-ee
<ua*i#ication and re<uirements2 shou*d be co**ected either #orm the emp*o-ees ,ho actua**-
per#orm a jobA or #rom other emp*o-ees 5such as #oremen or supervisors6 ,ho ,atch the ,or1ers
doing a job and there b- ac<uire 1no,*edge about itA or #rom the outside persons2 1no,n as the
trade job ana*-sis ,ho are appointed to ,atch emp*o-ees per#orming a job. ;he duties o# such a
trade job ana*-st are 5i6 to out*ine the comp*ete scope o# a job and to consider a** the ph-sica* and
menta* activities invo*ved in determining ,hat the ,or1er does.A 5ii6 #ind out ,h- a ,or1er does
a jobA and #or this purpose he studies ,h- each tas1 is essentia* #or the overa** resu*tA and 5iii6 the
s1i** #actor ,hich ma- be needed in the ,or1er to di##erentiate bet,een jobs and estab*ish the
e8tent o# the di##icu*t- o# an- job.
7. 2rocessing t$e Information: Once job ana*-sis in#ormation has been co**ected2 the ne8t step
is to p*ace it in a #orm that ,i** ma1e it use#u* to those charged ,ith the various personne*
#unctions. %evera* issues arise ,ith respect to this. (irst2 ho, much detai* is needed %econd2 can
the job ana*-sis in#ormation be e8pressed in <uantitative terms ;hese must be considered
proper*-.
;. 2rearing 8ob &escritions and 8ob !+assifications: Dob in#ormation ,hich has been
co**ected must be processed to prepare the job description #orm. It is a statement sho,ing #u**
detai*s o# the activities o# the job. %eparate job description #orms ma- be used #or various
activities in the job and ma- be compi*ed *ater on. ;he job ana*-sis is made ,ith the he*p o# these
description #orms. ;hese #orms ma- be used as re#erence #or the #uture.
<. &eve+oing 8ob Secifications: Dob speci#ications are a*so prepared on the basis o#
in#ormation co**ected. It is a statement o# minimum acceptab*e <ua*ities o# the person to be
p*aced on the job. It speci#ies the standard b- ,hich the <ua*ities o# the person are measured. Dob
ana*-st prepares such statement ta1ing into consideration the s1i**s re<uired in per#orming the
job proper*-. %uch statement is used in se*ecting a person matching ,ith the job.
".7 Met$ods for !o++ecting 8ob )na+4sis
&ata
.s discussed ear*ier2 in#ormation is to be co**ected #or job ana*-sis. %uch in#ormation ma- be
co**ected b- the trained job ana*-sis2 superiors concerned and job ho*ders themse*ves. Dob
in#ormation is co**ected through the #o**o,ing methods3
1. 2articiant &iar4C:ogs: Wor1ers can be to 1eep participant diar-I*ong or *ists o# things the-
do during the da-. (or ever- activit- he or she engages in2 the emp*o-ee records the activit-
5a*ong ,ith the time6 in a *og. ;his can provide -ou ,ith a ver- comprehensive picture o# the
job2 especia**- ,hen it>s supp*emented ,ith subse<uent intervie,s ,ith the ,or1er and his or her
supervisor. ;his method provides more accurate in#ormation i# done #aith#u**-. Ho,ever2 it is
<uite time consuming. (urther2 each jobho*der ma- maintain records according to his o,n ,a-
,hich presents prob*ems in ana*-sis at *ater stage. ;here#ore2 it has *imited app*ication.
2. Intervie>: ;here are three t-pes o# intervie,s -ou can use to co**ect job ana*-sis data3
individua* intervie,s ,ith each emp*o-eeA group intervie,s ,ith groups o# emp*o-ees having
the same jobA and supervisor intervie,s ,ith one or more supervisors ,ho are thorough*-
1no,*edgeab*e about the job being ana*-?ed. ;he group intervie, is used ,hen a *arge number o#
emp*o-ees are per#orming simi*ar or identica* ,or12 since this can be a <uic1 and ine8pensive
,a- o# *earning about the job. .s a ru*e2 the ,or1er>s immediate supervisor ,ou*d attend the
group sessionA i# not2 -ou shou*d intervie, the supervisor separate*- to get that person>s
perspective on the duties and responsibi*ities o# the job.
". !ritica+ Incidents3 In this method2 job ho*ders are as1ed to describe incidents concerning the
job on the basis o# their past e8perience. ;he incidents so co**ected are ana*-?ed and c*assi#ied
according to the job areas the- describe2 . #air*- picture o# actua* job re<uirements can be
obtained b- distinguishing bet,een e##ective and ine##ective behaviors o# ,or1ers on the job.
Ho,ever2 this method is time consuming. ;he ana*-st re<uires a high degree o# s1i** to ana*-?e
the contents o# descriptions given b- ,or1ers.
/. 9ec$nica+ !onference Met$od: ;his method uti*i?es supervisors ,ith e8tensive 1no,*edge
o# the job. Here2 speci#ic characteristics o# a job are obtained #rom the Ee8perts.F .*though it is a
good data gathering method2 it o#ten over*oo1s the incumbent ,or1er>s perception about ,hat
the- do on their job.
7. 8ob 2erformance: 4nder this method2 the job ana*-st actua**- per#orms the job under stud-
to get #irstBhand e8perience o# the actua* tas1s2 and ph-sica* and socia* demands o# the job. ;his
method can be used on*- #or jobs ,here s1i** re<uirements are *o, and can be *earnt <uic1*- and
easi*-. ;his is a timeB consuming method and is not appropriate #or jobs re<uiring e8tensive
training.
;. 1unctiona+ 8ob )na+4sis: (unctiona* job ana*-sis 5(D.6 is emp*o-eeB oriented ana*-tica*
approach o# job ana*-sis. ;his approach attempts to describe the ,ho*e person on the job. ;he
main #eatures o# (D. inc*ude the #o**o,ing3
;he e8tent to ,hich speci#ic instruction are necessar- to per#orm the tas1
;he e8tent to ,hich reasoning and judgment are re<uired to per#orm the tas1
;he mathematica* abi*it- re<uired to per#orm the tas1 and
;he verba* and *anguage #aci*ities re<uired to per#orm the tas1.
<. Observation Met$od: 4sing this method2 a job ana*-st ,atches emp*o-ees direct*- on the
job. Observations are made on various tas1s2 activities2 the pace at ,hich tas1s are carried out2
and the ,a- di##erent activities are per#ormed. ;his method is suitab*e #or jobs that invo*ve
manua*2 standardi?ed2 and short job c-c*e activities. ;his method a*so re<uires that the entire
range o# activities be observab*eA possib*e ,ith some jobs.
.. Auestionnaires: ;he method is usua**- emp*o-ed b- engineering consu*tants. 9roper*-
dra#ted <uestionnaires are sent out to jobBho*ders #or comp*etion and are returned to supervisors.
Ho,ever2 the in#ormation received is o#ten unorgani?ed and incoherent. ;he idea in issuing
<uestionnaire is to e*icit the necessar- in#ormation #rom job Hho*ders so that an- error ma- #irst
be discussed ,ith the emp*o-ee and2
a#ter corrections2 ma- be submitted to the job
ana*-st.
Auestionnaire for 8ob )na+4sis
1. @our "ame OOO..OOO..OOO..OOO..OOO..OOO..OOO..
2. ;it*e or :esignation o# -our job OOOOOOOOOOOOOOOO
3. Regu*ar or 78tra OOOOOOOOOOOOOOOOOOOOOO
!. @our :epartment OOOOOOOOOOOOOOOOOOOOO.
$. ;o ,hom do -ou report direct*- 5"ame and ;it*e63 OOOOOOOOO
&. :escription o# ,or13
5a6 :ai*- :uties3
5b6 9eriodica* :uties3
5c6 Occasiona* :uties3
'. @our 1no,*edge Re<uirements3
5.6 %tore 9rocedure and Methods3
506 Merchandise3
). What 7<uipment do -ou use
+. What Materia*s do -ou ,or1 ,ith or se**
10. I# -ou supervise the ,or1 o# others2 state ho, man- and ,hat their jobs are.
11. ;o ,hat job ,ou*d -ou norma**- e8pect to be promoted
12. (rom ,hat job ,ere -ou trans#erred to -our present job
;his techni<ue is time consuming and genera**- does not -ie*d satis#actor- resu*ts because man-
emp*o-ees do not comp*ete the <uestionnaire or #urnish incorrect in#ormation because o# their
o,n *imitations. ;he use o# <uestionnaire is recommended on*- in case o# those technica* jobs
,here the job contents are not comp*ete*- 1no,n to the supervisor or the operation is too
comp*e8 to observe.
;here are certain standardi?ed <uestionnaires deve*oped b- a #e, agencies ,hich are used b-
various organi?ations #or job ana*-sis. Most o# these <uestionnaires are o# t,o t-pes3 position
ana*-sis <uestionnaire and management position description <uestionnaire that are decribed as
#o**o,s3
a. 2osition )na+4sis Auestionnaire. 9osition ana*-sis <uestionnaire 59./6 is a high*-
specia*i?ed instrument #or ana*-?ing a job in terms o# emp*o-ee activities. ;he 9./ deve*oped b-
9urdue 4niversit- is a comprehensive <uestionnaire #or co**ecting in#ormation #or job ana*-sis.
In this <uestionnaire2 various job e*ements have been grouped into si8 categories ,ith each
categor- containing re*evant job e*ements resu*ting into 1+$ e*ements as sho,n in ;ab*e 3.1.
9ab+e ".1 : 2osition )na+4sis Auestionnaire
8ob )sects 0o. of
e+ements
In#ormation input B Where and ho, do emp*o-ee get in#ormation to do
their job
3$
Menta* processesB ,hat reasoning2 p*anning2 organi?ing2 and decision
ma1ing is done
1!
Wor1 output H ,hat ph-sica* activities2 too*s and machines are used !+
Re*ationships H ,hat contact ,ith other peop*e2 both in the compan-
and outside is maintained or deve*oped
3&
Dob conte8tB ,hat is the ph-sica* and socia* conte8t in ,hich the job
is maintained
1+
Other job characteristics H ,hat other activities2 conditions or
Characteristics not covered b- the categories are re*evant
!2
;he advantage o# 9./ is that it provides a <uantitative score or pro#i*e o# an- job in terms o# ho,
that job rates on the basic activities. ;he 9./>s rea* strength is2 thus2 in c*assi#-ing jobs. 9./>s
resu*tscan be used to compare the jobs re*ative to one another and pa- *eve*s can be assigned #or
each job.
;he major prob*em ,ith 9./ is the time it ta1es #or a job ana*-st to #i** out the ratings. Ho,ever2
9./ has been ,ide*- researched and tested and appears to be both re*iab*e and va*id.
b. Management 2osition &escrition Auestionnaire: Management position description is a
high*- structured <uestionnaire containing 20) items re*ating to manageria* responsibi*ities2
restrictions2 demands and other misce**aneous position characteristics. W.W. ;omov and 9.R.
9into have deve*oped the #o**o,ing Management position :escription #actors3
9roduct2 mar1eting and #inancia* strateg- p*anning.
Coordination o# other organi?ation units and personne*
Interna* business Contro*
9roducts and services responsibi*it-
9ub*ic and customer re*ations
.dvanced consu*ting
.utonom- o# actions
.pprova* o# #inancia* commitments
%ta## %ervice
%upervision
Comp*e8it- and stress
.dvanced #inancia* responsibi*it-
0road personne* responsibi*it-
;he above methods are the most popu*ar ones #or gathering job ana*-sis data. ;he- a** provide
rea*istic in#ormation about ,hat job incumbents actua**- do. ;he- can thus be used #or deve*oping
job descriptions and job speci#ications. Caro** =. %hart*e2 Otis and =enhert have provided the
#o**o,ing suggestions #or ma1ing the job ana*-st>s tas1 simp*e.
Introduce -ourse*# so that the ,or1er 1no,s ,ho -ou are and ,h- -ou are there.
%ho, a sincere interest in the ,or1er and the job that is ana*-?edA
:o not tr- to te** the emp*o-ee ho, to do his job.
;r- to ta*1 to the emp*o-ee and supervisors in their o,n *anguageA
:o a comp*ete job stud- ,ithin the objectives o# the programmer3 and
Leri#- the job in#ormation obtained.
".; 8ob &escrition
Dob description is the immediate product o# job ana*-sis processA the data co**ected through job
ana*-sis provides a basis #or job description and job speci#ication.
8ob &escrition: is a ,ritten record o# the duties2 responsibi*ities and re<uirements o# a
particu*ar job. It is concerned ,ith the job itse*# and not ,ith the job ho*ders. It is a statement
describing the job in such terms as its tit*e2 *ocation2 duties2 ,or1ing conditions and ha?ards.
1+io $as &efined 8ob &escrition as- E. job description is an organi?ed2 #actua* statement o#
duties and responsibi*ities o# a speci#ic job. In brie#2 it shou*d te** ,hat is to be done. Ho, it is
done ,h-. It is a standard o# #unction2 in that de#ines the appropriate and authori?ed content o# a
job.
)ccording to 2igors and M4res- EDob description is a pertinent picture 5in ,riting6 o# the
organi?ationa* re*ationships2 responsibi*ities and speci#ic duties that constitutes a given job or
position. It de#ines a scope o# responsibi*it- and continuing ,or1 assignments that are su##icient*-
di##erent #orm that o# other jobs to
,arrant a speci#ic
tit*e.F
)ccording to Derga- ,ho ana*-?ed !01 artic*es on job description about 30 -ears ago. . job
description he*ps us in3
5i6 Dob grading and c*assi#ication
5ii6 ;rans#ers and
promotions. 5iii6
.djustments o# grievancesA
5iv6 :e#ining and out*ining promotiona* steps3
5v6 7stab*ishing a common understanding o# a job bet,een emp*o-ers and
emp*o-eesA 5vi6 Investigation accidents A
5vii6 Indicating #au*t- ,or1 procedures or dup*ication o#
papersA 5viii6 Maintaining2 operating and adjusting
machiner-A
5i86 ;ime and motion studiesA
586 :e#ining the *imits o#
authorit-A 58i6 Indicating case o#
persona* meritA 58ii6 %tudies o#
hea*th and #atigueA
58iii6 %cienti#ic guidanceA
58iv6 :etermining jobs suitab*e #or occupationa*
therap-A 58v6 9roviding hiring speci#icationsA and
58vi6 9roviding per#ormance indicators.
EDob descriptionF is di##erent #rom Eper#ormance assessment.F ;he #ormer concerns such
#unctions as p*anning2 coBordination2 and assigning responsibi*it-A ,hi*e the *atter concerns the
<ua*it- o# per#ormance itse*#. ;hough job description is not assessment2 it provides an important
basis estab*ishing assessment standards and objectives.
".< #riting 8ob &escrition
. Dob description is a ,ritten statement o# ,hat the job ho*der actua**- does2 ho, he or she does
it2 and under ,hat conditions the job is per#ormed. ;his in#ormation is in turn used to ,rite a job
speci#ication. ;his *ists the 1no,*edge2 abi*ities2 and s1i**s needed to per#orm the job
satis#actori*-. Whi*e there is no standard #ormat -ou must use in ,riting a job description2 most
descriptions contain at *east sections on3
1. 8ob Identification: It inc*udes the job tit*e2 a*terative tit*e2 department2 division2 and p*ant
and code number o# the job. ;he job tit*e identi#ies and designates the job proper*-2 the
department2 division2 etc.2 indicate the name o# the department ,here it is situated H ,hether it
is the maintenance department2 mechanica* shop etc. =ocation gives the name o# the p*ace.
;his portion o# job description gives ans,er to t,o important <uestions3 to ,hat higher *eve*
job is this job accountab*e. .nd ,ho is supervised direct*-
2. 8ob Summar4: Dob summar- describes the contents o# the jobs in terms o# activities or
tas1s per#ormed. Dob summar- shou*d c*ear the nature o# the job. 9rimar-2 secondar- and other
duties to be per#ormed on the job shou*d c*ear*- be indicated separate*-.
". &uties and Resonsibi+ities: ;his is the most important phase o# job description and
shou*d be prepared ver- care#u**-. It describes the duties to be per#ormed a*ong ,ith
#re<uenc- o# each major dut-. Responsibi*ities concerning custod- o# mone-2 supervision and
training o# sta## etc. are a*sodescribed
in this
part.
3@am+e of a 8ob &escrition
8ob 9it+e: Record C*er1 8ob 0o. 011
Suervisor: Record %upervisor 8ob *rand HIII
Suervises: "one &ate: 2I21I12
8ob Summar4: Originate2 process2 and maintain comprehensive recordsA imp*ement
re<uired contro*sA co**ect and summari?e data as re<uested.
8ob &uties and Resonsibi+ities 3
Revie, a variet- o# documents2 *istings2 summari?es2 etc2 #or comp*eteness
and accurac-.
Chec1 records against other current sources such as reports or summariesA investigate
di##erences and ta1e re<uired action to ensure that records are accurate and up to
dateA
compi*e and summari?e data report #ormat as re<uired.
Imp*ement contro*s or obtaining2 preserving2 and supp*-ing a variet- o# in#ormation.
9repare simp*e re<uisitions2 #orms2 and other routine memoranda.
9rovide #unctiona* guidance to *o,erB*eve* personne* as re<uired.
#or,ing !onditions: "orma* ,or1ing conditions. 0ut visits sites on average t,ice a ,ee1.
7ight hours per da-
Re+ations$is:
With e<uiva*ent o##icers in other departments.
Maintains #orma* and socia* contacts ,ith *oca* o##icia*s.
8ob !$aracteristics: %1i**ed operation o# computer2 ca*cu*ating machine2 or 1e- punch
machine is not necessari*- a re<uirement o# this job.
;he above in#ormation is correct and approved b-3
5%igned6 5%igned6
Dob .na*-st In charge Manager
/. Suervision: 4nder it is given number o# persons to be supervised a*ong ,ith their job tit*es2
and the e8tent o# supervision invo*ved Hgenera*2 intermediate or c*ose supervision.
7. Re+ation to Ot$er 8obs: It describes the vertica* and hori?onta* re*ationships # ,or1 #*o,. It
a*so indicates to ,hom the jobho*der ,i** report and ,ho ,i** report to him. It gives an idea o#
channe*s o# promotion.
;. Mac$ine- too*s and e<uipment de#ine each major t-pe or trade name o# the machines and too*s
and the ra, materia*s used.
<. #or,ing !onditions: ;he ,or1ing environment in terms o# heat2 *ight2 noise2 dust and #umes
etc2 the job ha?ards and possibi*it- o# their occurrence and ,or1ing conditions shou*d a*so be
described. It ,i** be he*p#u* in job eva*uation.
.. Socia+ 3nvironment: It speci#ies the socia* conditions under ,hich the ,or1 ,i** be
per#ormed. In this part the si?e o# ,or1 group2 interpersona* interactions re<uired to per#orm the
job and deve*opment #aci*ities are mentioned
".. 8ob Secification
;he job speci#ication states the minimum acceptab*e <ua*i#ications that the incumbent must
possess to per#orm the job success#u**-. 0ased on the in#ormation ac<uired through job ana*-sis2
the job speci#ication identi#ies the 1no,*edge2 s1i**s2 and abi*ities needed to do the job
e##ective*-. Individua*s possessing the persona* characteristics identi#ied in the job speci#ication
shou*d per#orm the job more e##ective*- than individua*s *ac1ing these persona* characteristics.
;he job speci#ication2 there#ore2 is a important too* in the se*ection process2 #or it 1eeps the
se*ector>s attention on the *ist o# <ua*i#ications necessar- #or an incumbent to per#orm the job and
assists in determining ,hether candidates are <ua*i#ied.
)ccording to &a+e Eoder- E;he job speci#ication2 as such a summar- proper*- described is thus
a specia*i?ed job description2 emphasi?ing personne* re<uirement and designed especia**- to
#aci*itatese*ection and p*acement.F
1+io $as defined job secification as- EDob speci#ication is a statement o# the minimum
acceptab*e human <ua*ities necessar- to per#orm a job proper*- OOOO.. It is a standard o#
personne* and designates the <ua*ities re<uired #or acceptab*e per#ormance.F
In is c*ear #rom the above de#initions that job speci#ication is a statement o# summar- o#
personne* re<uirements #or a job. It ma- a*so be ca**ed Estandard o# persona* #or the se*ectionF
) 8ob Secification s$ou+d
inc+ude:
'i( 2$4sica+ c$aracteristics- ,hich inc*ude hea*th2 strength2 endurance2 age2 height2 ,eight2
vision2 voice2 e-e2 hand and #oot coBordination2 motor coBordination2 and co*our
discrimination.
'ii( 2s4c$o+ogica+ and socia+ c$aracteristics such as emotiona* stabi*it-2 #*e8ibi*it-2 decision
ma1ing abi*it-2 ana*-tica* vie,2 menta* abi*it-2 p*easing manners2 initiative2 conversationa*
abi*it- etc.
'iii( Menta+ !$aracteristics such as genera* inte**igence2 memor-2 judgement2 abi*it- to
concentrate2
#oresight etc.
'iv( 2ersona+ !$aracteristics suc$ as se82 education2 #ami*- bac1ground2 job e8perience2
hobbies2 e8tracurricu*ar activities etc.
.** these characteristics must be c*assi#ied into three
categories3
7ssentia* attributes ,hich a person must possess.
:esirab*e attributes ,hich a person ought to posses.
Contra indicators ,hich ,i** become a handicap to success#u* job per#ormance.
".? 8ob &esign
Dob design is o# comparative*- recent origin. ;he human resource managers have rea*i?ed that the
design o# a job has considerab*e in#*uence on the productivit- and job satis#actionA poor*-
designed jobs o#ten resu*t in boredom to the emp*o-ees2 increased turnover2 job dissatis#action2
*o, productivit- and anincrease in overa** costs o# the organi?ation. .** these negative
conse<uences can be avoided ,ith the he*p o# proper job design.
)ccording to 8on #erner and &eSimone- EDob design is the deve*opment and a*teration o#
the components o# a job 5such as the tas1s one per#orms2 and the scope o# one>s responsibi*ities6
to improve productivit- and the <ua*it- o# the emp*o-ees> ,or1 *i#e.F
Dob design has been de#ined b- &avis '1?;;( as3 E;he speci#ication o# the contents2 methods2
and re*ationships o# jobs in order to satis#- techno*ogica* and organi?ationa* re<uirements as ,e**
as the socia* and persona* re<uirements o# the jobBho*der.F
Mi+,ovic$ and 6oudreau defined job design as2 EDob design integrates ,or1 content 5tas1s2
#unctions2 and re*ationships62 the re,ards 5e8trinsic and intrinsic6 and the <ua*i#ications re<uired
5s1i**s2 1no,*edge2 abi*ities6 #or each job in a ,a- that meets the needs o# emp*o-ees and the
organi?ation.F
Mic$ae+ )rmstrong $as defined job design as Ethe process o# deciding on the content o# a job
in terms o# its duties and responsibi*ities2 on the methods to be used in carr-ing out the job2 in
terms o# techni<ues2 s-stems and procedures2 and on the re*ationships that shou*d e8ist bet,een
the job ho*der and his superiors2 subordinates and co**eagues.F
Dob design is an attempt to create a match bet,een job re<uirements and human attributes. It
invo*ves organi?ing the components o# the job and the interaction patterns among the members o#
a ,or1 group. It he*ps in deve*oping appropriate design o# job to improve e##icienc- and
satis#action.
2rinci+es of 8ob
&esign:
9rincip*es are the bases o# the approach used in job design. Robertson and %mith 51+)$6 have
suggested the #o**o,ing #ive princip*es o# job design3
;o in#*uence s1i** variet-2 provide opportunities #or peop*e to do severa* tas1s and
combine tas1s.
;o in#*uence tas1 identit-2 combine tas1s and #rom natura* ,or1 units.
;o in#*uence tas1 signi#icance2 #orm natura* ,or1 units and in#orm peop*e o# the
importance o# their ,or1.
;o in#*uence autonom-2 give peop*e responsibi*it- #or determining their o,n ,or1ing
s-stems.
;o in#*uence #eedbac1A estab*ish good re*ationship and open #eedbac1 channe*s.
".10 Met$ods of 8ob &esign
;he various techni<ues o# job design and redesign are discussed
be*o,3
1. 8ob Sim+ification: In job simp*i#ication2 the comp*ete job is bro1en do,n into sma**
subpartsA this is done so that emp*o-ee can do these jobs ,ithout much specia*i?ed training.
Moreover2 sma** operations o# the job can a*so be per#ormed simu*taneous*- so that the comp*ete
operation can be done more <uic1*-. (or job simp*i#ication2 genera**- time and motion studies are
used.
2. 8ob Rotation3 .nother techni<ue designed to enhance emp*o-ee motivation is job rotation2 or
periodica**- assigning emp*o-ees to a*ternating jobs or tas1s. (or e8amp*e2 an emp*o-ee ma-
spend t,o ,ee1s attaching
bumpers to vehic*es and the #o**o,ing t,o ,ee1s ma1ing #ina* chec1s o# the chassis. :uring the
ne8t month2 the same emp*o-ee ma- be assigned to t,o di##erent jobs. ;here#ore2 the emp*o-ee
,ou*d be rotated among #our jobs. ;he advantage o# job rotation is that emp*o-ees do not have
the same routine job da- a#ter da-. Dob rotation on*- addresses the prob*em o# assigning
emp*o-ees to jobs o# *imited scopeA the depth o# the job does not change. ;he job c-c*e o# the
actua* dai*- ,or1 per#ormed has not been *engthened or changed. Instead2 emp*o-ees are simp*-
assigned to di##erent jobs ,ithdi##erent c-c*es.
0ecause job rotation does not change the basic nature o# jobs2 it is critici?ed as nothing more than
having an emp*o-ee per#orm severa* boring and monotonous jobs rather than one. %ome
emp*o-ees dis*i1e job rotation more than being assigned to one boring job because ,hen the- are
assigned to one job the- 1no, e8act*- ,here to report and ,hat ,or1 to e8pect each da-.
Wor1ers <uic1*- rea*i?e that job rotation does not increase their interest in their ,or1.
.*though it se*dom addresses the *ac1 o# emp*o-ee motivation2 it give manages a means o#
coping ,ith #re<uent absenteeism and high turnover. ;hus ,hen absenteeism or turnover occurs
in the ,or1 #orce2 managers can <uic1*- #i** the vacated position because each emp*o-ee can
per#orm severa* jobs.
Dob rotation is o#ten e##ective*- used as a training techni<ue #or ne,2 ine8perienced emp*o-ees.
.t higher organi?ationa* *eve*s2 rotation a*so he*ps to deve*op manageria* genera*ists because it
e8poses them to severa* di##erent operations.
)dvantage of 8ob Rotation
9ec$ni=ue:
;he emp*o-ee e8periences variet- o# ,or12 ,or1p*ace and peer group.
Dob rotation he*ps to broaden the 1no,*edge and s1i**s o# an emp*o-ee.
;he main advantage o# job rotation is that it re*ieves the emp*o-ee #rom the boredom and
monoton- o# doing the same job.
With the he*p o# this method2 peop*e become more #*e8ib*e. ;he- are prepared to
assume
responsibi*it- especia**- at other positions.
Dob rotation broadens the ,or1 e8perience o# emp*o-ees and turns specia*ists into
genera*ists.
It is bene#icia* #or the management a*so as the management gets emp*o-ees ,ho can
per#orm a variet- o# tas1s to meet the contingencies.
;his method improves the se*# image and persona* ,orth o# the emp*o-ee.
&isadvantage of 8ob Rotation 9ec$ni=ue:
Dob rotation a*so creates disruptions. Members o# the ,or1 group have to adjust to the
ne, emp*o-ee.
9roductivit- is reduced b- moving a ,or1er into ne, position just ,hen his e##icienc- at
the prior
job ,as creating organi?ationa* economies.
;raining costs are increased.
;he supervisor ma- a*so have to spend more time ans,ering <uestion and monitoring the
,or1 o# the recent*- rotated emp*o-ee.
It can demotivate inte**igent and ambitious trainees ,ho see1 speci#ic responsibi*ities in
their chosen
specia*t-.
". 8ob 3n+argement3 .nother means o# increasing emp*o-ee>s satis#action ,ith routine jobs is
job en*argement2 or increasing the number o# tas1s per#ormed 5i.e. increasing the scope o# the
job6. Dob en*argement2 *i1e job rotation2 tries to e*iminate short job c-c*es that create boredom.
4n*i1e job rotation2 job en*argement actua**- increases the job c-c*e. When a job is en*arged2
either the tas1s being per#ormed are en*arged or severa* short tas1s are given to one ,or1er.
;hus2 the scope o# the job is increased because there are man- tas1s to be per#ormed b- the same
,or1er. Dob en*argement programs change
man- methods o# operationB in contrast to job rotation2 in ,hich the same ,or1 procedures are
used b- ,or1ers ,ho rotate through ,or1 stations. .*though job en*argement actua**- changes
the pace o# the ,or1 and the operation b- rea**ocating tas1s and responsibi*ities2 it does not
increase the depth o# a job.
;he #ocus o# designing ,or1 #or job en*argement is the e8act opposite o# that #or job
specia*i?ation. Instead o# designing jobs to be divided up into the #e,est o# tas1s per emp*o-ee2 a
job is designed to have man- tas1s #or the emp*o-ee to per#orm. .n en*arged job re<uires a
*onger training period because there are more tas1s to be *earned. Wor1er satis#action shou*d
increase because is reduced as the job scope is e8panded. Ho,ever2 job en*argement programs
are success#u* ,ith jobs ,hat have increased scopeA such ,or1ers are *ess prone to resort to
absenteeism2 grievances2 s*o,do,ns and other means o# disp*a-ing job dissatis#action.
7n*argement is done on*- on the hori?onta* *eve*. ;hus2 the job remains the same2 but becomes o#
a *arger sca*e than be#ore. In the ,ords o# Geroge %trauss and =.R. %a-*es EDob en*argement
imp*ies that instead o# assigning one man to each job2 a group o# men can be assigned to a group
o# jobs and then a**o,ed to decide #or themse*ves ho, to organi?e the ,or1. %uch changes permit
more socia* contacts and contro* over the ,or1 process.F
8ob en+argement $as t$e fo++o>ing
advantages:
Increase in diversit- o# jobs
Dob satis#action
9rovides ,ho*eness and identit- ,ith the tas1 and increases the 1no,*edge necessar- to
per#orm it.
9rovides variet- o# s1i**s.
Reduces tension and boredom.
;rains and deve*ops more versati*e emp*o-ees.
:espite these advantages this is not a comp*ete*- satis#actor- method o# job design as it does not
increase the depth o# a job. 7n*arged jobs re<uire *onger training period as there are more tas1s
to be *earned.
/. 8ob 3nric$ment: ;he concept o# job enrichment has been derived #rom Her?berg>s t,oB#actor
theor- o# motivation in ,hich he has suggested that job content is one o# the basic #actors o#
motivation. I# the job is designed in such a manner that it becomes more interesting and
cha**enging to the job per#ormer and provides him opportunities #or achievement2 recognition2
responsibi*it-2 advancement and gro,th2 the job itse*# becomes a source o# motivation to the
individua*.
)ccording to Ric$ard #. 6eatt4 and *raig 3ric. Sc$neider2 EDob enrichment is a motivationa*
techni<ue ,hich emphasi?es the need #or cha**enging and interesting ,or1. It suggests that jobs
be redesigned so that intrinsic satis#action is derived #rom doing the job. In its best app*ications
it *eads to a vertica**- enhanced job b- adding #unction #rom other organi?ationa* *eve*s2 ma1ing
it contain more variet- and cha**enge and o##er autonom- and pride to the emp*o-ee.F
)ccording to P! Ro""ins# EDob enrichment re#ers to the vertica* e8pansion o# the jobs. It
increases the degree to ,hich the ,or1er contro*s the p*anning2 e8ecution and eva*uation o# his
,or1.F
In t$e >ords of Robert )+banese- EDob enrichment sometimes ca**ed. Evertica* job *eading> is a
job redesign strateg- that #ocuses on job depth.F
)ccording to Mond4. Ho+mes- and 1+io- EDob enrichment re#ers to basic changes in the
content and *eve* o# responsibi*it- o# a job so to provide #or the satis#action o# the motivation
needs o# personne*. Rebert 1ord- ,ho ,as associated ,ith designing o# jobs to ma1e them
more enriched2 has provided some bases 5though not e8haustive6 #or job enrichment as sho,n in
;ab*e 3.3.
9ab+e ".2 : 8ob 3nric$ment 6ases
9as,s Motivator invo+ved
.ssign speci#ic or specia*i?ed tas1 to
individua*s enab*ing them to become e8pert
Responsibi*it-2 gro,th2 advancement
Ma1ing periodic reports direct*- avai*ab*e
to the individua* himse*# rather than to the
supervisor.
Interna* recognition
Giving a person a ,ho*e2 natura* unit o#
,or1 5modu*e2 e8change district2 division2
area2 etc.6
Responsibi*it-2 achievement2 recognition
Increasing the accountabi*it- o# individua*s
#or o,n ,or1
Responsibi*it-2 recognition
9ec$ni=ues of 8ob 3nric$ment: In order to enrich the jobs. ;he management shou*d adopt the
#o**o,ing measures3
(reedom in decisions
.ssign a natura* ,or1 unit to an emp*o-ee.
7ncouraging participation
.**o, the emp*o-ee to set his o,n standards o# per#ormance.
Minimi?e the contro*s to provide #reedom to the emp*o-ees
Ma1e an emp*o-ee direct*- responsib*e #or his per#ormance.
7ncourage participation o# emp*o-ees in deciding organi?ationa* goa*s and po*icies.
78pand job vertica**-
Introducing ne,2 di##icu*t and creative tas1s to the emp*o-ees.
%ense o# achievement.
)dvantages of 8ob 3nric$ment: ;he advantages o# job enrichment are as
#o**o,s3
It enriches the ro*e.
Dob enrichment is the most ,ide*- used o# job design as it provides a meaning#u* *earning
to emp*o-ees.
It ma1es the ,or1 interesting and emp*o-ee get motivated.
It he*ps in reducing the rate o# *abour turnover and absenteeism.
It increases s1i**s o# the emp*o-ees.
It increases mora*e and per#ormance.
Reduce 0oredom and dissatis#action.
Increase in output both <ua*itative and <uantitative.
&isadvantages of 8ob 3nric$ment: :unham and "e,strom state2 E7ven the strongest
supporters o# job enrichment readi*- admit that there are *imitations in its app*ication.F "e,strom
and Ceith :avis a*so ,rite2 E7mp*o-ees are the #ina* judges o# ,hat enriches their jobs. .** that
management can do is to gather in#ormation about ,hat tends to enrich jobs2 tr- these changes in
the job s-stem2 and then determine ,hether emp*o-ees #ee* that enrichment has occurred.F .#e,
*imitations o# or prob*ems ,ith job enrichment are as #o**o,s3
Increase
cost
"eed more emp*o-ee counse*ing2 training2 and
guidance.
"ot app*icab*e to a**
jobs.
"egative impact on
personne*.
Imposed on
peop*e.
Objected b-
unions
9a-
dissatis#action
8O6 30:)R*3M309 vs. 8O6 30RI!HM309
Dob en*argement and job enrichment are both important #orms o# job design in order to enhance
productivit- and satis#action o# the emp*o-ees. ;he- di##er #rom each other in the #o**o,ing
respects3
1. 0ature of 8ob: ;he major di##erence bet,een job enrichment and en*argement *ies in the
nature o# additions to the job. 7n*argement invo*ves a hori?onta* *oading or e8pansion2 or
addition o# tas1s o# the same nature. 7nrichment invo*ves vertica* *oading o# tas1s and
responsibi*it-o# the job ho*derA it improves the <ua*it- o# the job in terms o# its intrinsic ,orth.
2. 2urose: ;he purpose o# job en*argement is to reduce the monoton- in per#orming
repetitive jobs b- *engthening the c-c*e o# operation. On the other hand2 the purpose o# job
enrichment is ma1ing the job *ive*-2 cha**enging and satis#-ing. It satis#ies the higher *eve*
needs such as ego satis#action2 se*# e8pression2 sense o# achievement and advancement o# Dob
ho*ders.
". S,i++ Re=uirement: Dob en*argement ma- not necessari*- re<uire the use o# additiona* s1i**s
,hich the job ho*der ,as using in per#orming the job be#ore the en*argement. ;his is due to
simi*arit- o# additiona* tas1s. 7nrichment ca**s #oe deve*opment and uti*i?ation o# higher s1i**s2
initiative2 andinnovation on the part o# the job ho*der in per#orming the job.
/. &irection and !ontro+: Dob en*argement re<uires direction and contro* #rom e8terna*
sources2 sa- supervisor. In #act2 the job ho*der ma- re<uire more direction and contro* because
o# en*argement o#his responsibi*it-. 7nrichment does not re<uire e8terna* direction and contro*
as these come #rom the job ho*der himse*#. He re<uires on*- #eedbac1 #rom his supervisor.
".11 Summar4
;he purpose o# an organi?ation is to give each person a separate distinct job and to ensure
that these jobs are coordinated in such a ,a- that the organi?ation accomp*ishes its goa*s.
:eve*oping an organi?ation structure resu*ts in jobs that have to be sta##ed. Dob ana*-sis
is the procedure through ,hich -ou #ind out 516 ,hat the job entai*s2 and 526 ,hat 1inds
o# peop*e shou*d be hired #or the job. It invo*ves si8 steps3 516 determine the use o# the job
ana*-sis in#ormationA 526 co**ection o# bac1ground in#ormationA 536 se*ection o# jobs #or
ana*-sisA 5!6 co**ection o# job ana*-sis dataA 5$6 processing the in#ormationA 5&6 preparing
job descriptions and job c*assi#icationsA and 5'6 deve*oping job speci#ications.
;echni<ues o# job ana*-sis are H observation method2 <uestionnaires2 participant
diar-I*ogs2 intervie,2 critica* incidents2 technica* con#erence method2 and job
per#ormance.
Dob description and job speci#ication are products o# job ana*-sis. Dob description shou*d
indicate3 duties to be per#ormed b- the job ho*der and the manner he shou*d comp*ete the
tas1s. Dob speci#ication3 ans,er the <uestion E,hat human traits and e8perience are
necessar- to do the job. It portra-s ,hat 1ind o# person to recruit and #or ,hat <ua*ities
that person shou*d be testedF.
Dob design is an attempt to create a match bet,een job re<uirements and job attribute.
Dob rotation imp*ies trans#er to a job o# same *eve* and status. Dob simp*i#ication enab*es
the emp*o-ees to do the ,ithout much specia*i?ed training
Dob en*argement is the process o# increasing the scope o# job o# a particu*ar b- adding
more tas1s to it. .nd job enrichment imp*ies increasing the contents o# a job or the
de*iberate upgrading o# responsibi*it- scope and cha**enge in ,or1.
Dob en*argement and job enrichment are both important #orms o# job design in order to
enhance the productivit- and satis#action o# the job ho*ders.
".12 Se+f )ssessment Auestions
1. What do -ou understand b- job ana*-sis What is its importance in the management o#
human resources
2. What is job ana*-sis What steps are invo*ved in the preparation o# job ana*-sis
3. What are the b-products o# job ana*-sis :iscuss the techni<ues used #or co**ecting data
#or job ana*-sis
!. What is job description Ho, is it prepared
$. :e#ine job speci#ication Ho, is it di##erent #rom job description
&. Write notes on
3 5i6 Dob
Rotation
5ii6 Dob %imp*i#ication
'. :istinguish bet,een 3
5a6 Dob description and job speci#ication
5b6 Dob en*argement and job enrichment
). EDob ana*-sis is the most basic personne* management #unction.F :iscuss.
+. C*ear*- de#ine and discuss the re*ationship among job ana*-sis2 job description and job
speci#ication.
".1" Reference 6oo,s
B Mamoria C.0.2 Gan1ar %.L.2 5200&62 E.;e8tboo1 o# Human Resource ManagementF2
Hima*a-a
9ub*ishing House2 "e, :e*hi.
B :,ivedi R.%.2 51++'62 E9ersonne* Management in Indian 7nterprisesF2 Ga*gotia 9ub*ising
Compan-2 "e, :e*hi.
B :evid .. :eC7"PO2 %;79H7" 9. RO00I"% 5200262 E9ersonne*IHuman Resource
ManagementF2 9rentice Ha** o# India2 "e, :e*hi.
B 9rasad =.M.2 5200$62 Human Resource Management2F %u*tan Chand N %ons2 "e, :e*hi.
B :ess*er Gar- 5201062 EHuman Resource ManagementF2 9rentice Ha** Internationa* 7ditions2
"e,
Derse-.
B Carre** Michae* R.2 7*bert "orbert (.2 Hat#ie*d Robert :. 51+++62 EHuman Resource
Management2F 9rentice Ha**2 7ng*e,ood C*i##s2 "e, Derse-.
Unit - / :
Recruitment
Structure of
Unit:
!.0
Objectives
!.1
Introduction
!.2 Recruitment3 Meaning and
:e#inition
!.3 9rocess o#
Recruitment
!.! Recruitment
9o*ic-
!.$ (actor .##ecting
Recruitment
!.& %ources o#
Recruitment
!.' Methods o#
Recruitment
!.) 9hi*osophies o#
Recruitment
!.+
%ummar-
!.10 %e*# .ssessment
/uestions
!.11 Re#erence
0oo1s
/.0 Objectives
.#ter comp*eting this unit2 -ou ,i** be
ab*e to3
:e#ine recruitment.
Cite the steps in recruitment process.
4nderstand the prere<uisites o# a good recruitment po*ic-.
:escribe the various sources o# recruitment.
4nderstand the methods through ,hich prospective candidates ma- be recruited.
9oint out the various #actors a##ecting recruitment.
/.1 Introduction
%uccess#u* human resource p*anning shou*d identi#- our human resource needs. Once ,e 1no,
these needs2 ,e ,i** ,ant to do something about meeting them. ;he ne8t step in the ac<uisition
#unction2 there#ore2 is recruitment. ;his activit- ma1es it possib*e #or us to ac<uire the number
and t-pes o# peop*e necessar- to ensure the continued operation o# the organi?ation.
Ha++ett sa4s- EIt is ,ith peop*e that <ua*it- per#ormance rea**- begins and ends.F Robert He**er
a*so sa-s2 EI# peop*e o# poor ca*ibre are hired2 nothing much e*se can be accomp*ished and
Gresham>s *a, ,i** ,or13 the bad peop*e ,i** drive out the good or cause them to deteriorate.F
Recruiting is the discovering o# potentia* candidates #or actua* or anticipated organi?ationa*
vacancies. Or2 #rom another perspective2 it is a *in1ing activit-Bbringing together those ,ith jobs
to #i** and those see1ing jobs.
/.2 Recruitment: Meaning and
&efinition
Recruitment #orms a step in the process ,hich continues ,ith se*ection and ceases ,ith the
p*acement o# the candidate. It is the ne8t step in the procurement #unction2 the #irst being the
manpo,er p*anning. Recruiting ma1es it possib*e to ac<uire the number and t-pes o# peop*e
necessar- to ensure the continued operation o# the organisation. Recruiting is the discovering o#
potentia* app*icants #or actua* or anticipated organisationa* vacancies.
)ccording to 3d>in 6. 1+io- ERecruitment is the process o# searching #or prospective
emp*o-ees and stimu*ating them to app*- #or jobs in the organisation.F
)ccording to :ord- ERecruitment is a #orm o# competition. Dust as corporations compete to
deve*op2 manu#acture2 and mar1et the best product or service2 so the- must a*so compete to
identi#-2 attract and hire the most <ua*i#ied peop*e. Recruitment is a business2 and it is a big
business.F
In t$e >ords of &a+e Eoder- E Recruiting is a process to discover the sources o# manpo,er to
meet the re<uirements o# the sta##ing schedu*e and to emp*o- e##ective measures #or attracting
that manpo,er in ade<uate numbers to #aci*itate e##ective se*ection o# an e##icient ,or1ing #orce.F
Human Resource
9*anning
Dob .na*-sis
Recruitment
%e*ection
9*acement
1igure /.1: Recruitment to Human Resource )c=uisition 2rocess
)ccording to #ert$er and &avis- ERecruitment is the process o# #inding and attracting
capab*e app*icants #or emp*o-ment. ;he process begins ,hen ne, recruits are sought and ends
,hen their app*ications are submitted. ;he resu*t is a poo* o# app*icants #orm ,hich ne,
emp*o-ees are se*ected.F
&a+es S. 6eac$ >rites- ERecruitment is the deve*opment and maintenance o# ade<uate
manpo,er resources. It invo*ves the creation o# a poo* o# avai*ab*e *abour upon ,hom the
organisation can depend ,hen it needs additiona* emp*o-ees.F
;hus2 recruitment process is concerned ,ith the identi#ication o# possib*e sources o# human
resource supp*- and tapping those sources. In the tota* process o# ac<uiring and p*acing human
resources in the organisation2 recruitment #a**s in bet,een di##erent subBprocesses as sho,n in
(igure !.2.
)ccording to Scott- !+ot$ier and Sriege+ the need #or recruitment arises out o# the #o**o,ing
situations3
Lacancies created due to e8pansion2 diversi#ication2 and gro,th o# business.
.n increase in the competitive advantage o# certain concerns2 enab*ing them to get more
o# the avai*ab*e business than #ormer*-.
.n increase in business arising #rom an ups,ing during the recover- period o# a business
c-c*e.
Lacancies created due to trans#er2 promotion2 retirement2 termination2 permanent
disabi*it- or death.
;he norma* popu*ation gro,th2 ,hich re<uires increased goods and services to meet the
needs o# the peop*e.
. rising standard o# *iving2 ,hich re<uires more o# the same goods and services as ,e**
as the creation o# ne, ,ants to be satis#ied.
/." 2rocess of Recruitment
Recruitment process passes through the #o**o,ing
stages3
Recruitment process begins ,hen the personne* department receives re<uisitions #or
recruitment #rom an- department o# the compan-2 ;he personne* re<uisitions contain
detai*s about the position to be #i**ed2 number o# persons to be recruited2 the duties to be
per#ormed2 <ua*i#ications e8pected #rom the candidates2 terms and conditions o#
emp*o-ment and the time b- ,hich the persons shou*d be avai*ab*e #or appointment etc.
=ocating and deve*oping the sources o# re<uired number and t-pe o# emp*o-ees.
Identi#-ing the prospective emp*o-ees ,ith re<uired characteristics.
:eve*oping the techni<ues to attract the desired candidates. ;he good,i** o# an
organisation in the mar1et ma- be one techni<ue. ;he pub*icit- about the compan- being a
good emp*o-er ma- a*so he*p in stimu*ating candidates to app*-. ;here ma- be others o#
attractive sa*aries2 proper #aci*ities #or deve*opment etc.
7va*uating the e##ectiveness o# recruitment process.
)ccording to 1amu+aro- personne* recruitment process invo*ves #ive e*ements2 vi?.2 a recruitment
po*ic-2 a recruitment organisation2 a #orecast o# manpo,er2 the deve*opment o# sources o#
recruitment2 and di##erent techni<ues used #or uti*ising these sources2 and a method o# assessing
the recruitment programme. ;he e8p*anation o# these is described be*o,3
1. Recruitment 2o+ic4: It speci#ies the objectives o# recruitment and provides a #rame,or1 #or
the imp*ementation o# the recruitment programme. It a*so invo*ves the emp*o-er>s commitment
to some princip*es as to #ind and emp*o- the best <ua*i#ied persons #or each job2 to retain the
most promising o#
those hired2 etc. It shou*d be based on the goa*s2 needs and environment o# the
organisation.
Human
Resource
9*anning
Recruitment %e*ection 9*acement
%earch #or
9rospective
7mp*o-ees
7va*uating
Recruiting
7##ectiveness
Interna*
%ources
9ersonne*
Research
Dob 9osting
4pgrading in
%ame 9osition
;rans#erring
to "e, Dob
9rompting to
Higher
Responsibi*ities
7mp*o-ee
Re#erra*s
78terna*
%ources
.dvertising
%couting
7va*uating #or % e*ection
1igure /.2 : 2+ace of Recruitment in Se+ection S4stem
2. Recruitment Organisation: ;he recruitment ma- be centra*ised *i1e pub*ic sector ban1s or
decentra*ised. 0oth practices have their o,n merits. ;he choice bet,een the t,o ,i** depend on
the manageria* phi*osoph- and the particu*ar needs o# the organisation.
". Sources of Recruitment3 Larious sources o# recruitment ma- be c*assi#ied as interna* and
e8terna*. ;hese have their o,n merits and demerits.
/. Met$ods of Recruitment: Recruitment techni<ues are the means to ma1e contact ,ith
potentia* candidates2 to provide them necessar- in#ormation and to encourage them to app*- #or
jobs.
7. 3va+uation of Recruitment 2rogramme: ;he recruitment process must be eva*uated
periodica**-. ;he criteria #or eva*uation ma- consist o# cost per app*icant2 the hiring ratio2
per#ormance appraisa*2 tenure o# sta-2 etc. .#ter eva*uation2 necessar- improvements shou*d be
made in the recruitment programme.
/./ Recruitment 2o+ic4
.s @oder et a* observe recruitment po*ic- spe**s out the objectives o# the recruitment and
provides a #rame,or1 #or imp*ementations o# the recruitment programme in the #orm o#
procedures. It ma- invo*ve a commitment to broad princip*es such as #i**ing vacancies ,ith the
best <ua*i#ied individua*s. ;he recruitment po*ic- ma- embrace severa* issues such as the e8tent
o# promotion #rom ,ithin2 attitudes o# enterprise in recruiting o*d2 handicapped2 and minor
individua*s2 minorit- group members2 partBtime emp*o-ees and re*atives o# present emp*o-ees. In
addition2 the recruitment po*ic- ma- a*so invo*ve the organisation s-stem to be deve*oped #or
imp*ementing the recruitment programme and procedures to be emp*o-ed. 78p*icit*-2 an
organisationa* s-stem is a #unction o# the si?e o# an enterprise. In sma**er enterprises2 there ma-
be mere*- in#orma* recruiting procedures and the *ine o##icia* ma- be responsib*e to hand*e this
#unction a*ong ,ith their usua* responsibi*ities. On the other hand2 in *arger organisations2 there
is usua**- a sta## unit attached ,ith personne* or an industria* re*ations department designated as
emp*o-ment or recruitment o##ice. ;his specia*isation o# recruitment enab*es sta## personne* to
become high*- s1i**ed in recruitment techni<ues and their eva*uation. Ho,ever2 recruitment
remains the *ine responsibi*it- as #ar as thepersonne* re<uisition #orms are originated b- the *ine
personne*2 ,ho have a*so the #ina* ,ord in the acceptance or rejection o# a particu*ar app*icant.
:espite this2 the sta## personne* have ade<uate #reedom in respect o# sources o# manpo,er to be
tapped and the procedure to be #o**o,ed #or this purpose.
Recruitment po*ic- covers the #o**o,ing
areas3
;o prescribe the degree o# emphasis. Inside the organisation or outside the organisation.
;o provide the ,eightage that ,ou*d be given to certain categories o# peop*e such as
*oca* popu*ation2 ph-sica**-Bhandicapped personne*2 personne* #rom schedu*ed castesItribes
and other bac1,ard c*asses.
;o prescribe ,hether the recruitment ,ou*d be centra*ised or decentra*ised at unit *eve*s.
;o speci#- the degree o# #*e8ibi*it- ,ith regard to age2 <ua*i#ications2 compensation
structure and other service conditions.
;o prescribe the personne* ,ho ,ou*d be invo*ved in recruitment process and the ro*e o#
human resource department in this regard.
;o speci#- the budget #or meeting the e8penditures incurred in comp*eting the recruitment
process.
)ccording to Eoder- Ethe recruitment po*ic- is concerned ,ith <uantit- and <ua*i#ications o#
manpo,er.F It estab*ishes broad guide*ines #or the sta##ing process. Genera**-2 the #o**o,ing
#actors are invo*ved in a recruitment po*ic-3
;o provide each emp*o-ee ,ith an open road and encouragement in the continuing
deve*opment o# his ta*ents and s1i**sA
;o provide individua* emp*o-ees ,ith the ma8imum o# emp*o-ment securit-2 avoiding2
#re<uent *a-Bo## or *ost timeA
;o avoid c*i<ues ,hich ma- deve*op ,hen severa* members o# the same househo*d or
communit- are emp*o-ed in the organisationA
;o care#u**- observe the *etter and spirit o# the re*evant pub*ic po*ic- on hiring and2 on the
,ho*e2 emp*o-ment re*ationshipA
;o assure each emp*o-ee o# the organisation interest in his persona* goa*s and emp*o-ment
objectiveA
;o assure emp*o-ees o# #airness in a** emp*o-ment re*ationships2 inc*uding promotions and
trans#ersA
;o provide emp*o-ment in jobs ,hich are engineered to meet the <ua*i#ications o#
handicapped ,or1ers and minorit- sectionsA and
;o encourage one or more strong2 e##ective2 responsib*e trade unions among the
emp*o-ees.
2rere=uisites of a *ood Recruitment 2o+ic4: ;he recruitment po*ic- o# an organisation must
satis#- the #o**o,ing conditions3
It shou*d be in con#ormit- ,ith its genera* personne* po*iciesA
It shou*d be #*e8ib*e enough to meet the changing needs o# an organisationA
It shou*d be so designed as to ensure emp*o-ment opportunities #or its emp*o-ees on a
*ongBterm basis so that the goa*s o# the organisation shou*d be achievab*eA and it shou*d
deve*op the potentia*ities o# emp*o-eesA
It shou*d match the <ua*ities o# emp*o-ees ,ith the re<uirements o# the ,or1 #or ,hich
the- are emp*o-edA and
It shou*d high*ight the necessit- o# estab*ishing job ana*-sis.
/.7 1actor )ffecting Recruitment
;he #actors a##ecting recruitment can be c*assi#ied as interna* and e8terna* #actors.
9$e interna+ factors are:
Wage and sa*ar- po*iciesA
;he age composition o# e8isting ,or1ing #orceA
9romotion and retirement po*iciesA
;urnover ratesA
;he nature o# operations invo*ved the 1ind o# personne* re<uiredA
;he *eve* and seasona*it- o# operations in <uestionA
(uture e8pansion and reduction programmesA
Recruiting po*ic- o# the organisationA
Human resource p*anning strateg- o# the compan-A
%i?e o# the organisation and the number o# emp*o-ees emp*o-edA
Cost invo*ved in recruiting emp*o-ees2 and #ina**-A
Gro,th and e8pansion p*ans o# the organisation.
9$e e@terna+ factors
are:
%upp*- and demand o# speci#ic s1i**s in the *abour mar1etA
Compan->s image perception o# the job see1ers about the compan-.
78terna* cu*tura* #actors3 Obvious*-2 the cu*ture ma- e8ert considerab*e chec1 on
recruitment. (or e8amp*e2 ,omen ma- not be recruited in certain jobs in industr-.
7conomic #actors3 such as a tight or *oose *abour mar1et2 the reputation o# the enterprise
in the communit- as a good pa- master or other,ise and such a**ied issues ,hich
determine the <ua*it- and <uantit- o# manpo,er submitting itse*# #or recruitment.
9o*itica* and *ega* #actors a*so e8ert restraints in respect o# nature and hours o# ,or1 #or
,omen and chi*dren2 and a**ied emp*o-ment practices in the enterprise2 reservation o# Dob
#or %C2 %; and so on.
/.; Sources of Recruitment
.#ter the #ina*isation o# recruitment p*an indicating the number and t-pe o# prospective
candidates2 the- must be attracted to o##er themse*ves #or consideration to their emp*o-ment.
;his necessitates the identi#ication o# sources #rom ,hich these candidates can be attracted.
%ome companies tr- to deve*op ne, sources2 ,hi*e most on*- tr- to tac1*e the e8isting sources
the- have. ;hese sources2 according*-2 ma- be termed as interna* and e8terna*.
Interna+ Sources
It ,ou*d be desirab*e to uti*ise the interna* sources be#ore going outside to attract the candidates.
@oder and others suggest t,o categories o# interna* sources inc*uding a revie, o# the present
emp*o-ees and nomination o# candidates b- emp*o-ees. 7##ective uti*isation o# interna* sources
necessitates an understanding o# their s1i**s and in#ormation regarding re*ationships o# jobs. ;his
,i** provide possibi*ities #or hori?onta* and vertica* trans#ers ,ithin the enterprise e*iminating
simu*taneous attempts to *a- o## emp*o-ees in one department and recruitment o# emp*o-ees ,ith
simi*ar <ua*i#ication #or another department in the compan-. 9romotion and trans#ers ,ithin the
p*ant ,here an emp*o-ee is best suitab*e improves the mora*e a*ong ,ith so*ving recruitment
prob*ems. ;hese measures can be ta1en e##ective*- i# the compan- has estab*ished job #ami*ies
through job ana*-sis programmes combining together simi*ar jobs demanding simi*ar emp*o-ee
characteristics. .gain2 emp*o-ees can be re<uested to suggest promising candidates. %ometimes2
emp*o-ees are given pri?es #or recommending a candidate ,ho has been recruited. :espite the
use#u*ness o# this s-stem in the #orm o# *o-a*t- and its ,ide practice2 it has been pointed out that
it gives rise to c*i<ues posing di##icu*t- to management. ;here#ore2 be#ore uti*ising this s-stem
attempts shou*d be made to determine through research ,hether or not emp*o-ees thus recruited
are e##ective on particu*ar jobs. 4sua**-2 interna* sources can be used e##ective*- i# the numbers o#
vacancies are not ver- *arge2 ade<uate2 emp*o-ee records are maintained2 jobs do not demand
origina*it- *ac1ing in the interna* sources2 and emp*o-ees have prepared themse*ves #or
promotions.
Merits of Interna+ Sources: ;he #o**o,ing are the merits o# interna* sources o#
recruitment3
It creates a sense o# securit- among emp*o-ees ,hen the- are assured that the- ,ou*d be
pre#erred in #i**ing up vacancies.
It improves the mora*e o# emp*o-ees2 #or the- are assured o# the #act that the- ,ou*d be
pre#erred over outsiders ,hen vacancies occur.
It promotes *o-a*t- and commitment among emp*o-ees due to sense o# job securit- and
opportunities
#or advancement.
;he emp*o-er is in a better position to eva*uate those present*- emp*o-ed than outside
candidates.
;his is because the compan- maintains a record o# the progress2 e8perience and service
o# its emp*o-ees.
;ime and costs o# training ,i** be *o, because emp*o-ees remain #ami*iar ,ith the
organisation and
its po*icies.
Re*ations ,ith trade unions remain good. =abour turnover is reduced.
Q .s the persons in the emp*o-ment o# the compan- are #u**- a,are o#2 and ,e** ac<uainted
,it2 its po*icies and 1no, its operating procedures2 the- re<uire *itt*e training2 and the
chances are that the- ,ou*d sta- *onger in the emp*o-ment o# the organisation than a ne,
outsider ,ou*d.
It encourages se*#Bdeve*opment among the emp*o-ees. It encourages good individua*s ,ho
are
ambitious.
It encourages stabi*it- #rom continuit- o# emp*o-ment.
It can a*so act as a training device #or deve*oping midd*e and topB*eve* managers.
&emerits of Interna+ Sources: Ho,ever2 this s-stem su##ers #rom certain
de#ects as3
;here are possibi*ities that interna* sources ma- Edr- upF2 and it ma- be di##icu*t to #ind the
re<uisite personne* #rom ,ithin an organisation.
It o#ten *eads to inbreeding2 and discourages ne, b*ood #rom entering and organisation.
.s promotion is based on seniorit-2 the danger is that rea**- capab*e hands ma- not be
chosen.
;he *i1es and dis*i1es o# the management ma- a*so p*a- an important ro*e in the se*ection
o# personne*.
%ince the *earner does not 1no, more than the *ecturer2 no innovations ,orth the name
can be
made. ;here#ore2 on jobs ,hich re<uire origina* thin1ing 5such as advertising2 st-*e2
designing and basic research62 this practice is not #o**o,ed.
;his source is used b- man- organisationsA but a surprising*- *arge number ignore this source2
especia**- #or midd*e management jobs.
3@terna+ Sources
:eCen?o and Robbins remar12 EOccasiona**-2 it ma- be necessar- to bring in some Mne, b*ood>
to broaden the present ideas2 1no,*edge2 and enthusiasm.F ;hus2 a** organisations have to depend
on e8terna* sources o# recruitment. .mong these sources are inc*uded3
7mp*o-ment agencies.
7ducationa* and technica* institutes. and
Casua* *abour or Eapp*icants at the gateF and nai* app*icants.
9ub*ic and private emp*o-ment agencies p*a- a vita* ro*e in ma1ing avai*ab*e suitab*e emp*o-ees
#ordi##erent positions in the organisations. 0esides pub*ic agencies2 private agencies have
deve*oped mar1ed*- in*arge cities in the #orm o# consu*tanc- services. 4sua**-2 these agencies
#aci*itate recruitment o# technica* and pro#essiona* personne*. 0ecause o# their specia*isation2
the- e##ective*- assess the needs o# their c*ients and aptitudes and s1i**s o# the specia*ised
personne*. ;he- do not mere*- bring an emp*o-er and an emp*o-ee together but computerise *ists
o# avai*ab*e ta*ents2 uti*ising testing to c*assi#- and assess app*icants and use advanced techni<ues
o# vocationa* guidance #or e##ective p*acement purposes.
7ducationa* and technica* institutes a*so #orm an e##ective source o# manpo,er supp*-. ;here is an
increasing emphasis on recruiting student #rom di##erent management institutes and universities
commerce and management departments b- recruiters #or positions in sa*es2 accounting2 #inance2
personne* and production. ;hese students are recruited as management trainees and then p*aced
in specia* compan- training programmes. ;he- are not recruited #or particu*ar positions but #or
deve*opment as #uture supervisors and e8ecutives. Indeed2 this source provides a constant #*o, o#
ne, personne* ,ith *eadership potentia*ities. (re<uent*-2 this source is tapped through onBcampus
intervie, ,ith promising students. In addition2vocationa* schoo*s and industria* training institutes
provide specia*ised emp*o-ees2 apprentices2 and trainees #or semis1i**ed and s1i**ed jobs. 9ersons
trained in these schoo*s and institutes can be p*aced on operative and simi*ar jobs ,ith a minimum
o# inBp*ant training. Ho,ever2 recruitment o# these candidates must be based on rea*istic and
di##erentia* standards estab*ished through research reducing turnover and enhancing productivit-.
(re<uent*-2 numerous enterprises depend to some e8tent upon casua* *abour or Eapp*icants at the
gateF and nai* app*icants. ;he candidates ma- appear persona**- at the compan->s emp*o-ment
o##ice or send their app*ications #or possib*e vacancies. 78p*icit*-2 as @oder and others observe2
the <ua*it- and <uantit- o# such candidates depend on the image o# the compan- in communit-.
9rompt response to these app*icants proves ver- use#u* #or the compan-. Ho,ever2 it ma- be
noted that this source is uncertain2 and the app*icants revea* a ,ide range o# abi*ities
necessitating a care#u* screening. :espite these *imitations2 it #orms a high*- ine8pensive source
as the candidates themse*ves come to the gate o# the compan-. .gain2 it provides measures #or
good pub*ic re*ations and according*-2 a** the candidates visiting the compan- must be received
cordia**-.
9ab+e /.1 : Recruiting Sources Used b4 S,i++ and
:eve+
S,i++C:eve+ Recruiting Source 2ercentage of Use
4ns1i**ed and %emis1i**ed In#orma* contacts
Wa*1Bins
9ub*ic 7mp*o-ment .gencies
Want .ds
)$
'!
&&
$2
%1i**ed In#orma* Contacts
Wa*1Bins
9ub*ic 7mp*o-ment .gencies
Want .ds
))
&&
$$
$$
9ro#essiona* 7mp*o-ees Interna* %earch
In#orma* Contacts
Wa*1Bins
9ub*ic 7mp*o-ment .gencies
Want .ds
9rivate 7mp*o-ment .gencies
+!
+2
'1
$2
!)
22
Manageria* =eve* Interna* %earch
In#orma* Contacts
Wa*1Bins
9rivate 7mp*o-ment .gencies
Want .ds
9ub*ic 7mp*o-ment .gencies
100
'1
31
20
1'
12
%ource3 .dapted #rom %tephen =. Mangum2 ERecruitment and job %earch3 ;he Recruitment
;actics o#
7mp*o-ers. E9ersonne* .dministrator2 Dune 1+)22 p. 102.
.s Ducius observes2 trade unions are p*a-ing an increasing*- important ro*e in *abour supp*-. In
severa* trades2 the- supp*- s1i**ed *abour in su##icient numbers. ;he- a*so determine the order in
,hich emp*o-ees are to be recruited in the organisation. In industries ,here the- do not ta1e
active part in recruitment2 the- ma1e it a point that emp*o-ees *aid o## are given pre#erence in
recruitment.
.pp*ication #i*es a*so #orms a use#u* source o# supp*- o# ,or1 #orce. .ttempts ma- be made to
revie, the app*ication to determine jobs #or ,hich the candidates #i*ed #or #uture use ,hen there
are openings in these jobs. ;he candidates ma- be re<uested to rene, their cards as man- times as
the- desire. .** the rene,ed cards ma- be p*aced in EactiveF #i*es and those not rene,ed #or
considerab*e time ma- be p*aced in EinactiveF #i*e or destro-ed. Indeed2 a ,e**Binde8ed
app*ication #i*e provides utmost econom- #rom the standpoint o# a recruiting budget.
7##icac- o# a*ternative sources o# supp*- o# human resources shou*d be determined through
research. .ttempts ma- be made to re*ate the #actor o# success on the job ,ith a speci#ic source o#
supp*-. .*ternative sources can a*so be eva*uated in terms o# turnover2 grievances and
discip*inar- action. ;hose sources ,hich are signi#icant*- positive*- re*ated ,ith job per#ormance
and signi#icant*- negative*- re*ated ,ith turnover2 grievances and discip*inar- action2 can be
e##ective*- used in recruitment programmes. ;he assessment shou*d be periodica**- per#ormed in
terms o# occupations. It ma- be that source E.F is most e##ective #or technica* ,or1ers2 ,hi*e
source E0F #or semis1i**ed ,or1ers.
)dvantages of 3@terna+ Recruitment: 78terna* sources o# recruitment are suitab*e #or the
#o**o,ing reasons3
It ,i** he*p in bringing ne, ideas2 better techni<ues and improved methods to the
organisation.
;he cost o# emp*o-ees ,i** be minimised because candidates se*ected in this method ,i**
be p*aced in the minimum pa- sca*e.
;he e8isting emp*o-ees ,i** a*so broaden their persona*it-.
;he entr- o# <ua*itative persons #rom outside ,i** be in the interest o# the organisation in
the *ong run.
;he suitab*e candidates ,ith s1i**2 ta*ent2 1no,*edge are avai*ab*e #rom e8terna* sources.
;he entr- o# ne, persons ,ith varied e8pansion and ta*ent ,i** he*p in human resource
mi8.
&isadvantages of 3@terna+
Sources:
Orientation and training are re<uired as the emp*o-ees remain un#ami*iar ,ith the
organisation.
It is more e8pensive and timeBconsuming. :etai*ed screening is necessar- as ver- *itt*e is
1no,n about the candidate.
I# ne, entrant #ai*s to adjust himse*# to the ,or1ing in the enterprise2 it means -et more
e8penditure
on *oo1ing #or his rep*acement.
Motivation2 mora*e and *o-a*t- o# e8isting sta## are a##ected2 i# higher *eve* jobs are #i**ed
#rom e8terna* sources. It becomes a source o# heartBburning and demora*isation among
e8isting emp*o-ees.
/.< Met$ods of Recruitment
Methods o# recruitment are di##erent #rom the sources o# recruitment. %ources are the *ocations
,here prospective emp*o-ees are avai*ab*e. On the other hand2 methods are ,a- o# estab*ishing
*in1s ,ith the prospective emp*o-ees. Larious methods emp*o-ed #or recruiting emp*o-ees ma-
be c*assi#ied into the #o**o,ing categories3
1. &irect Met$ods:
;hese inc*ude sending recruiters to educationa* and pro#essiona* institutions2 emp*o-ees2 contacts
,ith pub*ic2 and manned e8hibits. One o# the ,ide*- used direct methods is that o# sending o#
recruiters to co**eges and technica* schoo*s. Most co**ege recruiting is done in coBoperation ,ith
the p*acement o##ice o# a co**ege. ;he p*acement o##ice usua**-provides he*p in attracting
students2 arranging intervie,s2 #urnishing space2 and providing student resumes.
(or manageria*2 pro#essiona* and sa*es personne* campus recruiting is an e8tensive operation.
9ersons reading #or M0. or other technica* dip*omas are pic1ed up in this manner. (or this
purpose2 care#u**- prepared brochures2 describing the organisation and the jobs it o##ers2 are
distributed among students2 be#ore the intervie,er arrives. %ometimes2 #irms direct*- so*icit
in#ormation #rom the concerned pro#essors about students ,ith an outstanding record. Man-
companies have #ound emp*o-ees contact ,ith the pub*ic a ver- e##ective method. Other direct
methods inc*ude sending recruiters to conventions and seminars2 setting up e8hibits at #airs2 and
using mobi*e o##ices to go to the desired centres.
9ab+e /.2: Met$ods of !ontacting 2rosective !andidates
6ased on ersonne+ to be recruited
Manageria+Ctec$nica+ ersonne+ Oerative ersonne+
.dvertisement
Internet
Wa*1Bins
Campus recruitments
Dob #airs
Consu*tanc- #irms
9ersonne* contacts
9oaching and raiding
9ub*ic emp*o-ment e8changes
=abour unions
7mp*o-ee re#erra*s
Gate hiring
=abour contractors
6ased on t$e movement of t$e organisation
&irect met$ods 9$ird art4 met$od
.dvertisement
Internet recruiting
Campus recruitment
Dob #airs
9ersonne* contacts
Gate hiring
Consu*tanc- #irms
9ub*ic emp*o-ment e8changes
=abour unions
7mp*o-ee re#erra*s
=abour contractors
2. Indirect
Met$ods:
;he most #re<uent*- used indirect method o# recruitment is advertisement in ne,spapers2
journa*s2 and on the radio and te*evision. .dvertisement enab*es candidates to assess their
suitabi*it-. It is appropriate ,hen the organisation ,ants to reach out to a *arge target group
scattered nation,ide. When a #irm ,ants to concea* its identit-2 it can give b*ind advertisement
in ,hich on*- bo8 number is given. Considerab*e detai*s about jobs and <ua*i#ications can be
given in the advertisements. .nother method o# advertising is a noticeBboard p*aced at the gate o#
the compan-.
". 9$ird-2art4
Met$ods:
;he most #re<uent*- used thirdBpart- methods are pub*ic and private emp*o-ment agencies.
9ub*ic emp*o-ment e8changes have been *arge*- concerned ,ith #actor- ,or1ers and c*erica*
jobs. ;he- a*so provide he*p in recruiting pro#essiona* emp*o-ees. 9rivate agencies provide
consu*tanc- services and charge a #ee. ;he- are usua**- specia*ised #or di##erent categories o#
operatives2 o##ice ,or1ers2 sa*esmen2
supervisor- and management personne*. Other thirdBpart- methods inc*ude the use o# trade
unions. =abourB management committees have usua**- demonstrated the e##ectiveness o# trade
unions as methods o# recruitment.
%evera* criteria discussed in the preceding section #or eva*uating sources o# app*icants can a*so be
used #or assessing recruiting methods. .ttempts shou*d be made to identi#- ho, the candidate ,as
attracted to the compan-. ;o accomp*ish this2 the app*ication ma- consist o# an item as to ho, the
app*icant came to *earn about the vacanc-. ;hen2 attempts shou*d be made to determine the
method ,hich consistent*- attracts good candidates. ;hus2 the most e##ective method shou*d be
uti*ised to improve the recruitment programme.
/.. 2$i+oso$ies of Recruitment
;here are basica**- t,o phi*osophies o#
recruitment3
;raditiona*
Rea*istic
;he traditiona* phi*osoph- is to get as man- peop*e as possib*e to app*- #or the job. .s a resu*t o#
this2 a *arge number o# job see1ers app*- #or the job2 ,hich ma1es the #ina* se*ection process
di##icu*t and can o#ten resu*t in the se*ection o# ,rong candidates. Wrong se*ection can2 in turn2
*ead to emp*o-ee dissatis#action and turnover in the *ong run.
In rea*istic phi*osoph-2 the needs o# the organisation are matched ,ith the needs o# the app*icants2
,hich enhance the e##ectiveness o# the recruitment process. In rea*istic approach2 the emp*o-ees
,ho are recruited ,i** sta- in the organisation #or a *onger period o# time and ,i** per#orm at
higher *eve* o# e##ectiveness.
9ab+e /." : &ifference bet>een 9raditiona+ and Rea+istic 8ob 2revie>
9raditiona+ 8ob 2revie> Rea+istic 8ob 2revie>
%etting unrea*istic and high job e8pectations. %etting rea*istic job e8pectations.
Dob is vie,ed b- the candidates as high*- attractive .ttractiveness o# job is eva*uated in the
*ight o# rea*istic job e8pectations
High rate o# acceptance o# job o##ers. %ome accept and some reject job
o##ers.
High e8pectation be*ied b- actua* job e8perience 78pectations are con#irmed b- job
e8perience.
Creations o# dissatis#action2 #rustration and
thoughts #or *eaving the job
Creation o# satis#action in the *ight o#
job e8pectations.
High rate o# personne* turnover and *o,er rate o#
job surviva*
High rate o# personne* retention and
high rate o# job surviva*
/.? Summar4
Recruitment #orms a step in the process ,hich continues ,ith se*ection and ceases ,ith the
p*acement o# the candidate. It is the ne8t step in the procurement #unction2 the #irst being the
manpo,er p*anning. Recruiting ma1es it possib*e to ac<uire the number and t-pes o# peop*e
necessar- to ensure the continued operation o# the organisation. ;hus2 recruitment process is
concerned ,ith the identi#ication o# possib*e sources o# human resource supp*- and tapping those
sources.
Recruitment process invo*ves #ive e*ements2 vi?.2 a recruitment po*ic-2 a recruitment
organisation2 the deve*opment o# sources o# recruitment2 and di##erent techni<ues used #or
uti*ising these sources2 and a method o# assessing the recruitment programme. .#ter the
#ina*isation o# recruitment p*an indicating the
number and t-pe o# prospective candidates2 the- must be attracted to o##er themse*ves #or
consideration to their emp*o-ment. ;his necessitates the identi#ication o# sources #rom ,hich
these candidates can be attracted. %ome companies tr- to deve*op ne, sources2 ,hi*e most on*-
tr- to tac1*e the e8isting sources the- have. ;hese sources2 according*-2 ma- be termed as
interna* and e8terna*.
Methods o# recruitment are di##erent #rom the sources o# recruitment. %ources are the *ocations
,here prospective emp*o-ees are avai*ab*e. On the other hand2 methods are ,a- o# estab*ishing
*in1s ,ith the prospective emp*o-ees. Larious methods emp*o-ed #or recruiting emp*o-ees ma-
be c*assi#ied into direct methods2 indirect methods and third part- methods.
/.10 Se+f )ssessment Auestions
1. :e#ine recruitment and identi#- the various #actors ,hich a##ect
recruitment.
2. :iscuss the steps o# recruitment process. Ho, ,i** -ou reconci*e the interna* and e8terna*
sources o# recruitment
3. :iscuss various sources o#
recruitment.
!. What is rea*istic job previe, Ho, does it di##er #rom traditiona* job
previe,
$. What do -ou mean b- recruitment po*ic- 78p*ain the prere<uisites o# a good recruitment
po*ic-.
&. Write short notes on
#o**o,ing.
5i6 .dvantages and disadvantages o# interna* sources o#
recruitment. 5ii6 .dvantages and disadvantages o# e8terna*
source o# recruitment.
'. 78p*ain the direct2 indirect and third part- methods o#
recruitment.
/.11 Reference 6oo,s
B Mamoria C.0.2 Gan1ar %.L.2 5200&62 E.;e8tboo1 o# Human Resource ManagementF2
Hima*a-a
9ub*ishing House2 "e, :e*hi.
B :,ivedi R.%.2 51++'62 E9ersonne* Management in Indian 7nterprisesF2 Ga*gotia 9ub*ising
Compan-2 "e, :e*hi.
B :evid .. :eC7"PO2 %;79H7" 9. RO00I"% 5200262 E9ersonne*IHuman Resource
ManagementF2 9rentice Ha** o# India2 "e, :e*hi.
B 9rasad =.M.2 5200$62 Human Resource Management2F %u*tan Chand N %ons2 "e,
:e*hi.
B :ess*er Gar- 5201062 E9ersonne* ManagementF2 9rentice Ha** Internationa* 7ditions2 "e,
Derse-.
B Carre** Michae* R.2 7*bert "orbert (.2 Hat#ie*d Robert :. 51+++62 EHuman Resource
Management2F 9rentice Ha**2 7ng*e,ood C*i##s2 "e, Derse-.
Unit - 7 :
Se+ection
Structure of
Unit:
$.0
Objectives
$.1 Introduction3
%e*ection
$.2 %e*ection
9rocedure
$.3 %e*ection :ecision
Outcomes
$.! 9*acement H Orientation B
%ocia*i?ation
$.$
%ummar-
$.& %e*# .ssessment
/uestions
$.' Re#erence
0oo1s
7.0 Objectives
.#ter comp*eting this unit2 -ou ,i** be
ab*e to3
4nderstand and de#ine se*ection and its process.
4nderstand the se*ection process so as to ma1e it e##ective.
78p*ain ho, the #ina* se*ection decision is made.
9oint out the outcomes o# se*ection decision.
4nderstand in brie# about p*acement and orientation.
:eve*op a se*ection decision process.
7.1 Introduction: Se+ection
Human resource se*ection is the process o# choosing <ua*i#ied individua*s ,ho are avai*ab*e to
#i**positions in an organi?ation. In the idea* personne* situation2 se*ection invo*ves choosing the
best app*icant to #i** a position. %e*ection is the process o# choosing peop*e b- obtaining and
assessing in#ormation about the app*icants ,ith a vie, to matching these ,ith the job
re<uirements. It invo*ves a care#u* screening and testing o# candidates ,ho have put in their
app*ications #or an- job in the enterprise. It is the process o# choosing the most suitab*e persons
out o# a** the app*icants. ;he purpose o# se*ection is to pic1 up the right person #or ever- job.
It can be conceptua*ised in terms o# either choosing the #it candidates2 or rejecting the un#it
candidates2 or a combination o# both. %e*ection invo*ves both because it pic1s up the #its and
rejects the un#its. In #act2 in Indian conte8t2 there are more candidates ,ho are rejected than
those ,ho are se*ected in most o# the se*ection processes. ;here#ore2 sometimes2 it is ca**ed a
negative process in contrast to positive programme o# recruitment.
)ccording to &a+e Eoder- E%e*ection is the process in ,hich candidates #or emp*o-ment are
divided into t,o c*assesBthose ,ho are to be o##ered emp*o-ment and those ,ho are notF.
)ccording to 9$omas Stone2 E%e*ection is the process o# di##erentiating bet,een app*icants in
order to identi#- 5and hire6 those ,ith a greater *i1e*ihood o# success in a jobF.
In t$e >ords of Mic$ae+ 8ucius2 E;he se*ection procedure is the s-stem o# #unctions and
devices adopted in a given compan- #or the purpose o# ascertaining ,hether or not candidates
possess the <ua*i#ications ca**ed #or b- a speci#ic job or #or progression through a series o# jobs.F
)ccording to Feit$ &avis- E%e*ection is the process b- ,hich an organisation chooses #rom a
*ist o# screened app*icants2 the person or persons ,ho best meet the se*ection criteria #or the
position avai*ab*e.F
;hus2 the se*ection process is a too* in the hands o# management to di##erentiate bet,een the
<ua*i#ied and un<ua*i#ied app*icants b- app*-ing various techni<ues such as intervie,s2 tests etc.
;he cost incurred in recruiting and se*ecting an- ne, emp*o-ee is e8pensive. ;he cost o#
se*ecting peop*e ,ho are inade<uate per#ormers or ,ho *eave the organisation be#ore
contributing to pro#its proves a major cost o# doing business. :ecen?o and Robbins ,rite2
E9roper se*ection o# personne* is obvious*- an area ,here e##ectiveness B choosing competent
,or1ers ,ho per#orm ,e** in their positionBcan resu*t in *arge saving.F .ccording to them2
se*ection has t,o objectives3 516 to predict ,hich job app*icants ,ou*d be success#u* i# hired and
526 to in#orm and se** the candidate on the job and the organi?ation. %atis#action o# emp*o-ee
needs and ,ants as ,e** as the #u**est deve*opment o# his potentia* are important objectives o#
se*ection.
&a+e Eoder sa4s- E%e*ection has *ong he*d a high ran1 in the priorit- o# prob*em areas in
management. Investments in good peop*e produce a ver- high rate o# return. . good choice o#
peop*e can provide a basis #or *ong2 sustained contributions.F
&ifference bet>een Recruitment and Se+ection: :i##erence bet,een recruitment and se*ection
has been described b- (*ippo as2 ERecruitment is a process o# searching #or prospective
emp*o-ees and stimu*ating and encouraging them to app*- #or jobs in an organisation. It is o#ten
termed positive as is stimu*ates peop*e to app*- #or jobs2 se*ection on the other hand tends to be
negative because it rejects a good number o# those ,ho app*-2 *eaving on*- the best to be hired.F
Recruitment and se*ection di##ers in #o**o,ing manner3
1. &ifference in Objective: ;he basic objective o# recruitment is to attract ma8imum number o#
candidates so that more options are avai*ab*e. ;he basic objective o# se*ection is to choose best
out o# the avai*ab*e candidates.
2. &ifference is 2rocess: Recruitment adopts the process o# creating app*ication poo* as *arge as
possib*e and there#ore. It is 1no,n as positive process. %e*ection adopts the process through
,hich more and more candidates are rejected and #e,er candidates are se*ected or sometimes
even not a sing*e candidate is se*ected. ;here#ore2 it is 1no,n as negative process or rejection
process.
". 9ec$nica+ &ifferences: Recruitment techni<ues are not ver- intensive2 and not re<uire high
s1i**s. .s against this2 in se*ection process2 high*- specia*ised techni<ues are re<uired. ;here#ore2
in the se*ection process2 on*- personne* ,ith speci#ic s1i**s *i1e e8pertise in using se*ection tests2
conducting intervie,s2 etc.2 are invo*ved.
/. &ifference in Outcomes: ;he outcome o# recruitment is app*ication poo* ,hich becomes
input #or se*ection process. ;he outcome o# se*ection process is in the #orm o# #ina*ising
candidates ,ho ,i** be o##ered jobs.
7.2 Se+ection 2rocedure
;he se*ection procedure is concerned ,ith securing re*evant in#ormation about an app*icant. ;his
in#ormation is secured in a number o# steps or stages. ;he objective o# se*ection process is to
determine ,hether an app*icant meets the <ua*i#ication #or a speci#ic job and to choose the
app*icant ,ho is most *i1e*- to per#orm ,e** in that job. %e*ection is a *ong process2 commencing
#rom the pre*iminar- intervie, o# the app*icants and ending ,ith the contract o# emp*o-ment
5sometimes6.
;he se*ection procedure consists o# a series o# steps. 7ach step must be success#u**- c*eared
be#ore the app*icant proceeds to the ne8t. ;he se*ection process is a series o# successive hurd*es or
barriers ,hich an app*icant must cross. ;hese hurd*es are designed to e*iminate an un<ua*i#ied
candidate at an- point in the se*ection process. ;hus2 this techni<ue is ca**ed E%uccessive Hurd*es
;echni<ueF. In practice2 the process di##ers among organisations and bet,een t,o di##erent jobs
,ithin the same organisation. %e*ection procedure
Background
#or the senior managers ,i** be *ong dra,n and rigorous2 but it is simp*e and short ,hi*e hiring
*o,er *eve* emp*o-ees.
9$e major factors >$ic$ determine t$e stes invo+ved in a se+ection rocess are as fo++o>s:
%e*ection process depends on the number o# candidates that are avai*ab*e #or
se*ection.
%e*ection process depends on the sources o# recruitment and the method that is adopted
#or ma1ing contact ,ith the prospective candidates.
Larious steps invo*ved in as se*ection process depend on the t-pe o# personne* to be
se*ected. .** the above #actors are not mutua**- e8c*usive2 rather these operate simu*taneous*-. In
an- case2 the basic
objective o# a se*ection process is to co**ect as much re*evant in#ormation about the candidates as is
possib*e so that the most suitab*e candidates are se*ected. . comprehensive se*ection process
invo*ves the various steps as sho,n in (igure $.1.
Application pool from

recruitment process
Primary screening
& interview
Eliminate those who does not
fulfil job requirement
Application
Blank
!nfavourable personnel data
"election tests
Eliminate those who obtain
unfavourable test score
#nterviews
Eliminate those not meeting job
and organisational requirements
investigations
Eliminate those with adverse remarks
Physical e$amination
Eliminate those not meeting physical standards
Approval by appropriate
authority
%inal Employment
decision
Evaluation
Adopt objectivity
&ongratulate
&heck the reliability and validity
1igure 7.1 Stes in Se+ection 2rocess
1. )+ication 2oo+: .pp*ication poo* bui*tBup through recruitment process is the base #or
se*ection process. ;he basic objective at the recruitment *eve* is to attract as much ,orth,hi*e
app*ications as possib*e so that there are more options avai*ab*e at the se*ection stage.
2. 2re+iminar4 Screening and Intervie>: It is high*- noneconomic to administer and hand*e a**
the app*icants. It is advantageous to sort out unsuitab*e app*icants be#ore using the #urther
se*ectionsteps. (or this purpose2 usua**-2 pre*iminar- intervie,s2 app*ication b*an1 *ists and short
test can be used. .** app*ications received are scrutinised b- the personne* department in order to
e*iminate those app*icants ,ho do not #u*#i* re<uired <ua*i#ications or ,or1 e8perience or
technica* s1i**2 his app*ication ,i** not be entertained. %uch candidate ,i** be in#ormed o# his
rejection.
9re*iminar- intervie, is a sorting process in ,hich the prospective candidates are given the
necessar- in#ormation about the nature o# the job and the organisation. "ecessar- in#ormation is
obtained #romthe candidates about their education2 s1i**s2 e8perience2 e8pected sa*ar- etc. I# the
candidate is #ound suitab*e2 he is e*ected #or #urther screening. ;his courtes- intervie,A as it is
o#ten ca**ed he*ps the department screen out obvious mis#its. 9re*iminar- intervie, saves time and
e##orts o# both the compan- and the candidate. It avoids unnecessar- ,aiting #or the rejected
candidates and ,aste o# mone- on #urther processing o# an unsuitab*e candidate. %ince rejection
rate is high at pre*iminar- intervie,2 the intervie,er shou*d be 1ind2 courteous2 receptive and
in#orma*.
". )+ication 6+an, or)+ication 1orm: .n app*ication b*an1 is a traditiona* ,ide*- accepted
device #or getting in#ormation #rom a prospective app*icant ,hich ,i** enab*e the management to
ma1e a proper se*ection. ;he b*an1 provides pre*iminar- in#ormation as ,e** as aid in the
intervie, b- indicating areas o# interest and discussion. It is a good means o# <uic1*- co**ecting
veri#iab*e 5and there#ore #air*- accurate6 basic historica* data #rom the candidate. It a*so serves as
a convenient device #or circu*ating in#ormation about the app*icant to appropriate members o#
management and as a use#u* device #or storing in#ormation #or2 *ater re#erence. Man- t-pes o#
app*ication #orms2 sometimes ver- *ong and comprehensive and sometimes brie#2 are used.
In#ormation is genera**- ta1en on the #o**o,ing items3
'a( 6iogra$ica+ &ata: "ame2 #ather>s name2 data and p*ace o# birth2 age2 se82
nationa*it-2 height2 ,eight2 identi#ication mar1s2 ph-sica* disabi*it-2 i# an-2 marita* status2
and number o# dependants.
'b( 3ducationa+ )ttainment: 7ducation 5subjects o##ered and grades secured62 training
ac<uired in specia* #ie*ds and 1no,*edge gained #rom pro#essiona*Itechnica* institutes or
through correspondence courses.
'c( #or, 3@erience: 9revious e8perience2 the number o# jobs he*d ,ith the same or
other emp*o-ers2 inc*uding the nature o# duties2 and responsibi*ities and the duration o#
various assignments2 sa*ar- received2 grades2 and reasons #or *eaving the present
emp*o-er.
'd( Sa+ar4 and 6enefits: 9resent and
e8pected.
'e( Ot$er Items: "ames and addresses o# previous emp*o-ers2 re#erences2 etc. .n
app*ication b*an1 is a brie# histor- sheet o# an emp*o-ee>s bac1ground and can be used #or
#uture re#erence2 in case needed.
;he app*ication b*an1 must be designed #rom the vie,point o# the app*icant as ,e** as ,ith the
compan->s purpose in mind. It shou*d be re*ative*- eas- to hand*e in the emp*o-ment o##ice.
.pp*ication #orm he*ps to serve man- #unctions *i1e3
Its main use#u*ness is to provide in#ormation #or re#erence chec1ing2 good intervie,ing2
and corre*ation ,ith testing data.
It he*ps to ,eed out candidates ,ho are *ac1ing in education2 e8perience or some other
e*igibi*it- traits.
It he*ps in #ormu*ating <uestions to be as1ed in the intervie,.
:ata contained in app*ication #orm can be stored #or #uture re#erence.
It a*so tests the candidate>s abi*it- to ,rite2 to organi?e his thoughts2 and to present #acts
c*ear*- and succinct*-.
It indicates #urther ,hether the app*icant has consistent*- progressed to better jobs. It
provides #actua* in#ormation.
#eig$ted )+ication
6+an,s
%ome organisations assign numeric va*ues or ,eights to the responses provided b- the app*icants.
;his ma1es the app*ication #orm more job re*ated. Genera**-2 the items that have a strong
re*ationship to job per#ormance are given higher scores. (or e8amp*e2 #or a sa*es representative>s
position2 items such as previous se**ing e8perience2 area o# specia*isation2 commission earned2
re*igion2 *anguage etc. ;he tota* score o# each app*icant is then obtained b- adding the ,eights
o# the individua* item responses. ;he resu*ting scores are then used in the #ina* se*ection. W.0
is best suited #or jobs ,here there are man- emp*o-ees especia**- #or sa*es and technica* jobs. It
can he*p in reducing the emp*o-ee turnover *ater on. Ho,ever2 there are severa* prob*ems
associated ,ith W.0 e.g.
It ta1es time to deve*op such a #orm.
;he W.0 ,ou*d have to be updated ever- #e, -ears to ensure that the #actors previous*-
identi#ied are sti** va*id products o# job success.
;he organisation shou*d be care#u* not to depend on ,eights o# a #e, items ,hi*e #ina**-
se*ecting the emp*o-ee.
/. Se+ection 9ests: Man- organisations ho*d di##erent 1inds o# se*ection tests to 1no, more
about the candidates or to reject the candidates ,ho cannot be ca**ed #or intervie, etc. %e*ection
tests norma**- supp*ement the in#ormation provided in the app*ication #orms. %uch #orms ma-
contain #actua* in#ormation about candidates. %e*ection tests ma- give in#ormation about their
aptitude2 interest2 persona*it-2 ,hich cannot be 1no,n b- app*ication #orms. ;-pes o# tests and
ru*es o# good o# testing have been discussed in brie# be*o,3
). )titude 9ests: ;hese measure ,hether an individua* has the capacit- or ta*ent abi*it- to
*earn a given job i# given ade<uate training. ;hese are more use#u* #or c*erica* and trade
positions.
6. 2ersona+it4 9ests: .t times2 persona*it- a##ects job per#ormance. ;hese determine
persona*it- traits o# the candidate such as cooperativeness2 emotiona* ba*ance etc. ;hese
see1 to assess an individua*>s motivation2 adjustment to the stresses o# ever-da- *i#e2
capacit- #or interpersona* re*ations and se*#Bimage.
!. Interest 9ests: ;hese determine the app*icant>s interests. ;he app*icant is as1ed ,hether
he *i1es2 dis*i1es2 or is indi##erent to man- e8amp*es o# schoo* subjects2 occupations2
amusements2 pecu*iarities o# peop*e2 and particu*ar activities.
&. 2erformance 9ests: In this test the app*icant is as1ed to demonstrate his abi*it- to do the
job. (or e8amp*e2 prospective t-pists are as1ed to t-pe severa* pages ,ith speed and
accurac-.
3. Inte++igence 9ests: ;his aim at testing the menta* capacit- o# a person ,ith respect to
reasoning2 ,ord #*uenc-2 numbers2 memor-2 comprehension2 picture arrangement2 etc. It
measures the abi*it- to grasp2 understand and to ma1e judgement.
1. Fno>+edge 9ests: ;hese are devised to measure the depth o# the 1no,*edge and
pro#icienc- in certain s1i**s a*read- achieved b- the app*icants such as engineering2
accounting etc.
*. )c$ievement 9ests: Whereas aptitude is a capacit- to *earn in the #uture2 achievement is
concerned ,ith ,hat one has accomp*ished. When app*icants c*aim to 1no, something2 an
achievement test is given to measure ho, ,e** the- 1no, it.
H. 2rojective 9ests: In these tests the app*icant projects his persona*it- into #ree responses
about pictures sho,n to him ,hich are ambiguous.
Ru+es of *ood 9esting
"orms shou*d be deve*oped #or each test. ;heir va*idit- and re*iabi*it- #or a given purpose
shou*d be estab*ished be#ore the- are used.
.de<uate time and resources must be provided to design2 va*idate2 and chec1 tests.
;ests shou*d be designed and administered on*- b- trained and competent persons.
;he user o# tests must be e8treme*- sensitive to the #ee*ings o# peop*e about tests.
;ests are to be uses as a screening device.
Re*iance shou*d not be p*aced so*e*- upon tests in reaching decisions.
;ests shou*d minimi?e the probabi*ities o# getting distorted resu*ts. ;he- must be MraceB
#ree>.
;ests scores are not precise measures. ;he- must be assigned a proper ,eightage.
7. Intervie>: .n intervie, is a procedure designed to get in#ormation #rom a person and to
assess his potentia* #or the job he is being considered on the basis o# ora* responses b- the
app*icant to ora*in<uiries b- the intervie,er. Intervie,er does a #orma* inBdepth conversation
,ith the app*icant2 to eva*uate his suitabi*it-. It is one o# the most important too*s in the se*ection
process. ;his too* is used ,henintervie,ing s1i**ed2 technica*2 pro#essiona* and even manageria*
emp*o-ees. It invo*ves t,oB,a-e8change o# in#ormation. ;he intervie,er *earns about the
app*icant and the candidate *earns about the emp*o-er.
Objectives of Intervie>s: Intervie,
he*ps3
;o obtain additiona* in#ormation #rom the candidate.
(aci*itates giving to the candidate in#ormation about the job2 compan-2 its po*icies2
products etc.
;o assess the basic suitabi*it- o# the candidate.
;he se*ection intervie, can
be3
One to one bet,een the candidate and the intervie,er3
;,o or more intervie,ers b- emp*o-ers representativesBse<uentia*A
0- a pane* o# se*ections2 i.e.2 b- more than representative o# the emp*o-er.
;he se<uentia* intervie, invo*ves a series o# intervie,sA each intervie,er meeting the candidate
separate*-. ;he pane* intervie, consists o# t,o or more intervie,s meeting the candidate
together.
94es of intervie>s: Intervie>s can be c+assified in various >a4s according
to:
5.6 :egree o# %tructure
506 9urpose o#
Intervie, 5C6 Content
o# Intervie,
')( &egree of
Structure:
'1( Unstructured or non directive: in ,hich -ou as1 <uestions as the- come to mind.
;here is no set #ormat to #o**o,.
'2( Structured or directive: in ,hich the <uestions and acceptab*e responses are
speci#ied in advance. ;he responses are rated #or appropriateness o# content.
%tructured and nonBstructured intervie,s have their pros and cons. In structured intervie,s a**
app*icants are genera**- as1ed a** re<uired <uestions b- a** intervie,ers. %tructured intervie,s
are genera**- more va*id. Ho,ever structured intervie,s do not a**o, the #*e8ibi*it- to pursue
points o# interests as the- deve*op.
'6( 2urose of Intervie>: . se*ection intervie, is a t-pe o# intervie, designed to predict
#uture job per#ormance2 on the basis o# app*icant>s responses to the ora* <uestions as1ed
to him.
) stress intervie> is a specia* t-pe o# se*ection intervie, in ,hich the app*icant is
made uncom#ortab*e b- series o# a,1,ard and rude <uestions. ;he aim o# stress intervie,
is supposed*- to identi#- app*icant>s *o, or high stress to*erance. In such an intervie, the
app*icant is made uncom#ortab*e b- thro,ing him on the de#ensive b- series o# #ran1 and
o#ten discourteous <uestions b- the intervie,er.
'!( !ontent of Intervie>: ;he content o# intervie, can be o# a t-pe in ,hich individua*>s
abi*it- to project a situation is tested. ;his is a situation t-pe intervie,. In job-re+ated
intervie>- intervie,er attempts to assess the app*icant>s past behaviours #or job re*ated
in#ormation2 but most <uestions are not considered situationa*.
In a be$aviour intervie> a situation in described and candidates are as1ed ho, the-
behaved in the past in such a situation. Whi*e in situationa+ intervie>s candidates are
as1ed to describe ho, the- ,ou*d react to situation toda- or tomorro,. In the behavioura*
intervie, the- are as1ed to describe ho, the- did react to the situation in the past.
2rinci+es of
Intervie>ing
;o ma1e it e##ective2 an intervie, shou*d be proper*- p*anned and conducted on certain
princip*esA 7d,in
0. (*ippo has described certain ru*es and princip*es o# good intervie,ing to this
end3
9rovide proper surroundings. ;he ph-sica* setting #or the intervie, shou*d be both private
and com#ortab*e.
;he menta* setting shou*d be one o# rapport. ;he intervie,er must be a,are o# nonBverba*
behaviour.
9*an #or the intervie, b- thorough*- revie,ing job speci#ications and job descriptions.
:etermine the speci#ic objectives and the method o# the intervie,ing.
In#orm -ourse*# as much as possib*e concerning the 1no,n in#ormation about the
intervie,ee.
;he intervie,er shou*d possess and demonstrate a basic *i1ing and respect #or peop*e.
/uestions shou*d be as1ed in a manner that encourages the intervie,ee to ta*1. 9ut the
app*icant at ease.
Ma1e a decision on*- ,hen a** the data and in#ormation are avai*ab*e. .void decisions that
are
based on #irst
impressions.
Conc*ude the intervie, tact#u**-2 ma1ing sure that the candidate *eaves #ee*ing neither too
e*ated nor #rustrated.
Maintain some ,ritten record o# the intervie, during or immediate*- a#ter it.
=isten attentive*- and2 i# possib*e2 protective*-.
/uestions must be stated c*ear*- to avoid con#usion and ambiguit-. Maintain a ba*ance
bet,een open and overt*- structured <uestions.
M0od- *anguage> must not be ignored.
;he intervie,er shou*d ma1e some overt sign to indicate the end o# the
intervie,. Intervie,ing is *arge*- an art2 the app*ication o# ,hich can be improved
through practice.
;. 6ac,ground Investigation: ;he ne8t step in the se*ection process is to underta1e an
investigation o# those app*icants ,ho appear to o##er potentia* as emp*o-ees. ;his ma- inc*ude
contacting #ormer emp*o-ers to con#irm the candidate>s ,or1 record and to obtain their appraisa*
o# his or her per#ormanceI contacting other jobBre*ated and persona* re#erences2 and veri#-ing the
educationa* accomp*ishments sho,n on the app*ication.
;he bac1ground investigation has major imp*ications. 7ver- personne* administrator has the
responsibi*it- to investigate each potentia* app*icant. In some organi?ation2 #ai*ure to do so cou*d
resu*t in the *oss o# his or her job. 0ut man- managers consider the bac1ground investigation
data high*- biased. Who ,ou*d actua**- *ist a re#erence that ,ou*d not give an-thing but the best
possib*e recommendation ;he seasoned personne* administrator e8pects this and de*ves deeper
into the candidate>s bac1ground2 but that2 too2 ma- not prove to be bene#icia*. Man- past
emp*o-ers are re*uctant to give an- in#ormation to another compan- other than #actua*
in#ormation 5e.g.2 date o# emp*o-ment6.
7ven though there is some re*uctance to give this in#ormation2 there are ,a-s in ,hich
personne* administrators can obtain it. %ometimes2 #or instance in#ormation can be obtained #rom
re#erences once removed. (or e8amp*e2 the personne* administrator can as1 a re#erence ,hose
name has been provided on the app*ication #orm to give another re#erence2 someone ,ho has
1no,*edge o# the candidate>s ,or1 e8perience. 0- doing this2 the administrator can e*iminate the
possibi*it- o# accepting an individua* based on the emp*o-ee>s current emp*o-er>s g*o,ing
recommendation ,hen the motivation #or such a positive recommendation ,as to get rid o# the
emp*o-ee.
<. 2$4sica+ 3@amination: .#ter the se*ection decision and be#ore the job o##er is made2 the
candidate is re<uired to undergo ph-sica* #itness test. Candidates are sent #or ph-sica*
e8amination either to the compan->s ph-sician or to a medica* o##icer approved #or the purpose.
%uch ph-sica* e8amination provides the #o**o,ing in#ormation.
Whether the candidate>s ph-sica* measurements are in accordance ,ith job re<uirements or
not
Whether the candidate su##ers #rom bad hea*th ,hich shou*d be corrected
Whether the candidate has hea*th prob*ems or ps-cho*ogica* attitudes *i1e*- to inter#ere
,ith ,or1 e##icienc- or #uture attendance
Whether the candidate is ph-sica**- #it #or the speci#ic job or not
9o*ic- on these ph-sica* e8ams has changed toda-. :a*e @oder ,rites2 EModem po*ic- used the
ph-sica* e8amination not to e*iminate app*icants2 but to discover ,hat jobs the- are <ua*i#ied to
#i**. ;he e8amination shou*d disc*ose the ph-sica* characteristics o# the individua* that are
signi#icant #rom the standpoint o# his e##icient per#ormance o# the job he ma- enter or o# those
jobs to ,hich he ma- reasonab*- e8pect to be trans#erred or promoted. It shou*d note de#iciencies2
not as a basis #or rejection2 but as indicating restrictions on his trans#er to various positions a*so.F
.. )rova+ b4 )roriate )ut$orit4: On the basis o# the above steps2 suitab*e candidates
are recommended #or se*ection b- the se*ection committee or personne* department. ;hough such
a committee or personne* department ma- have authorit- to se*ect the candidates #ina**-2 o#ten it
has sta## authorit- to recommend the candidates #or se*ection to the appropriate authorit-.
Organisations ma- designate the
=
a
t
e
r

D
o
b

9
e
r
t
o
r
m
a
n
c
e
various authorities #or approva* o# #ina* se*ection o# candidates #or di##erent categories o#
candidates. ;hus2 #or top *eve* managers2 board o# directors ma- be approving authorit-A #or
*o,er *eve*s2 even #unctiona* heads concerned ma- be approving authorit-.
?. 1ina+ 3m+o4ment &ecision: .#ter a candidate is #ina**- se*ected2 the human resource
department recommends his name #or emp*o-ment. ;he management or board o# the compan-
o##ers emp*o-ment in the #orm o# an appointment *etter mentioning the post2 the ran12 the sa*ar-
grade2 the date b- ,hich the candidate shou*d join and other terms and conditions o#
emp*o-ment. %ome #irms ma1e a contract o# service on judicia* paper. 4sua**- an appointment is
made on probation in the beginning. ;he probation period ma- range #rom three months to t,o
-ears. When the ,or1 and conduct o# the emp*o-ee is #ound satis#actor-2 he ma- be con#irmed.
;he personne* department prepare a ,aiting *ist and in#orms the candidates. In case a person
does not join a#ter being se*ected2 the compan- ca**s ne8t person on the ,aiting *ist.
10. 3va+uation: ;he se*ection process2 i# proper*- per#ormed2 ,i** ensure avai*abi*it- o#
competent and committed personne*. .period audit2 conducted b- peop*e ,ho ,or1
independent*- o# the human resource department2 ,i** eva*uate the e##ectiveness o# the se*ection
process. ;he auditors ,i** do a thorough and the intensive ana*-sis and eva*uate the emp*o-ment
programme.
7." Se+ection &ecision Outcomes
Consider2 #or a moment2 that an- se*ection decision can resu*t in #our possib*e outcomes. .s
sho,n in
(igure $.22 t,o o# these outcomes ,ou*d indicate correct decisions2 but t,o ,ou*d indicate
errors.
Correct decisions are those ,here the app*icant ,as predicted to be success#u* and *ater did
prove to be success#u* on the job2 or ,here the app*icant ,as predicted to be unsuccess#u* and
,ou*d have per#ormed according*- i# hired. In the #ormer case2 ,e have success#u**- acceptedA in
the *atter case2 ,e have success#u**- rejected. ;hus the purpose o# se*ection activities is to
deve*op outcomes sho,n as Ecorrect decisionsF in (igure $.2.
9rob*ems occur ,hen ,e ma1e errorsBb- rejecting candidates ,ho ,ou*d *ater per#orm
success#u**- on the job 5reject errors6 or accepting those individua*s ,ho subse<uent*- per#orm
poor*- on the job 5accept errors6. ;hese prob*ems are2 un#ortunate*- #ar #rom insigni#icant. Reject
errors historica**- meant that the costs in per#orming se*ection activities ,ou*d be increased.
.ccept errors2 on the other hand2 have ver- obvious costs to the organi?ation inc*uding the cost
o# training the emp*o-ee2 the costs generated 5or pro#its #orgone6 due to the emp*o-ee>s
incompetence2 the cost o# severance and the subse<uent costs o# #urther recruiting and se*ection
screening. ;he major thrust o# an- se*ection activit-2 there#ore2 is to reduce the probabi*it- o#
ma1ing reject or accept errors ,hi*e increasing the probabi*it- o# ma1ing reject or accept errors
,hi*e increasing the probabi*it- o# ma1ing correct decisions.
.ccept Reject
%uccess#u*
4nsuccess#u*
Correct
decision
.ccept
error
R
e
j
e
c
t

e
r
r
o
r
Correct
decision
1igure 7.2: Se+ection &ecision Outcomes
In summar-2 se*ection have t,o objectives3 516 to predict ,hich job app*icants ,ou*d be success#u*
i# hired and 526 to in#orm and se** the candidate on the job and the organi?ation. 4n#ortunate*-2
these t,o objectives are not a*,a-s compatib*e 9utting a job candidate through hours o# #i**ing
out #orms2 ta1ing tests2 and comp*eting intervie,s rare*- endears the organi?ation to the
candidate. ;hese are tiresome and o#ten stress#u* activities. @et i# the se*ection activities p*ace too
great an emphasis on pub*ic re*ations2 obtaining the in#ormation needed to ma1e success#u*
se*ection decisions ma- be subordinated. Hence a manager>s di*emma in se*ection is ho, to
ba*ance the desire to attract peop*e ,ith the desire to gather re*evant se*ection data.
7./ 2+acement G Orientation - Socia+i5ation
.#ter an emp*o-ee has been recruited he is provided ,ith basic bac1ground in#ormation about the
emp*o-er2 ,or1ing conditions and the in#ormation necessar- to per#orm his job satis#actori*-. ;he
ne, emp*o-ee>s initia* orientation he*ps him per#orm better b- providing him in#ormation o# the
compan- ru*es2 andpractices.
)ccording to 2igors and M4ers- E9*acement consists in matching ,hat the supervisor has
reason to thin1 the ne, emp*o-ee can do ,ith ,hat the job demands 5job re<uirements62 imposes
5in strain2 ,or1ing conditions2 etc.62 and o##ers 5in the #orm o# pa- rate2 interest2 companionship
,ith other2 promotiona* possibi*ities2 etc.6F ;he- #urther state that it is not eas- to match a** these
#actors #or a ne, ,or1er ,ho is sti** in man- ,a-s an un1no,n <uantit-. (or this reason2 the #irst
p*acement usua**- carries ,ith it the status o# probationer.
) fe> basic rinci+es s$ou+d be fo++o>ed at t$e time of +acement of an em+o4ee on t$e
job. 9$ese ma4 be enumerated as be+o>:
;he job shou*d be o##ered to the man according to his <ua*i#ications. ;he p*acement shou*d
neither be higher nor *o,er than the <ua*i#ications.
Whi*e introducing the job to the ne, emp*o-ee2 an e##ort shou*d be made to deve*op a
sense o# *o-a*t- and cooperation in him so that he ma- rea*ise his responsibi*ities better
to,ards the job and the organisation.
;he emp*o-ee shou*d be made conversant ,ith the ,or1ing conditions prevai*ing in the
industr- and a** things re*ating to the job. He shou*d a*so be made a,are o# the pena*ties
i# he commits a ,rong.
Man shou*d be p*aced on the job according to the re<uirements o# the job. ;he job shou*d
not be adjusted according to the <ua*i#ications or re<uirements o# the man. Dob #irstA man
ne8t2 shou*d be the princip*e o# p*acement.
;he p*acement shou*d be read- be#ore the joining date o# the ne,*- se*ected person.
;he p*acement in the initia* period ma- be temporar- as changes are *i1e*- a#ter the
comp*etion o# training. ;he emp*o-ee ma- be *ater trans#erred to the job ,here he can do
better justice.
In t$e >ords of 8o$n M. Ivancevic$2 EOrientation orients2 directs2 and guides emp*o-ees to
understand the ,or12 #irm2 co**eagues2 and mission. It introduces ne, emp*o-ees to the
organisation2 and to his ne, tas1s2 managers2 and ,or1 groups.F
)ccording to 8o$n 6ernardin- EOrientation is a term used #or the organi?ationa**- sponsored2
#orma*i?ed activities associated ,ith an emp*o-ee>s socia*isation into the organisation.F
6i++imoria $as defined orientation as- EInduction 5orientation6 is a techni<ue b- ,hich a ne,
emp*o-ee is rehabi*itated into the changed surroundings and introduced to the practices2 po*icies2
and purposes o# the organisation.F
Orientation is one component o# the ne, emp*o-ee socia*i?ation process. %ocia*i?ation is the
ongoing process o# insti**ing in a** ne, emp*o-ees prevai*ing attitudes2 standards2 va*ues2 patterns
o# behaviour that are e8pected b- the organisation and its departments.
;hus2 orientation is a process through ,hich a ne, emp*o-ee is introduced to the organisation. It
is the process ,herein an emp*o-ee is made to #ee* com#ortab*e and at home in the organisation.
;he ne, emp*o-ee is handed over a ru*eboo12 compan- boo1*ets2 po*ic- manua*s2 progress
reports and documents containing compan- in#ormation ,hich are in#ormationa* in nature. It is
responsibi*it- o# the humanresource department to e8ecute the orientation programme.
7.7 Summar4
%e*ection is the process o# pic1ing up individua*s out o# the poo* o# the job app*icants ,ith
re<uisite <ua*i#ications and competence to #i** jobs in the organisation. 9roper se*ection
can minimi?e the costs o# rep*acement and training2 reduce *ega* cha**enges2 and resu*t in
a more productive ,or1 #orce.
;he discrete se*ection process ,ou*d inc*ude the
#o**o,ing. a. .pp*ication 9oo*2
b. 9re*iminar- %creening and Intervie,2
c. .pp*ication 0*an1 or .pp*ication
(orm2 d. %e*ection ;ests2
e. Intervie,
#. 0ac1ground
Investigation2 g. 9h-sica*
78amination2
h. .pprova* b- .ppropriate
.uthorit-2 i. (ina* 7mp*o-ment
:ecision2
j. 7va*uation
%e*ection process invo*ves mutua* decision ma1ing. ;he organisation decides ,hether or
not to ma1e a job o##er and ho, attractive the job o##er shou*d be. ;he candidate decides
,hether or not the organisation and the job o##er is according to his goa*s and needs.
%e*ection o# proper personne* he*ps the management in getting the ,or1 done b- the
peop*e e##ective*-.
;o be an e##ective predictor2 a se*ection device shou*d
be a. Re*iab*e
b. La*id
c. 9redict a re*evant criterion
In India the se*ection process on hiring s1i**ed and manageria* personne* are #air*- ,e**
de#ined and s-stematica**- practica*.
7.; Se+f )ssessment Auestions
1. What do -ou understand b- se*ection process :iscuss various steps invo*ved
in it.
2. What is app*ication b*an1 What purpose does it serve 78p*ain the contents o# an
app*ication b*an1.
3. :iscuss the characteristics o# a good test. 78p*ain various t-pes o# tests used in the se*ection
process.
!. What is an intervie, What purpose does it serve :iscuss various t-pes o# intervie,s.
$. :iscuss various guide*ines to be #o**o,ed #or an intervie,.
&. 78p*ain various steps invo*ved in the se*ection o# personne*.
'. What do -ou understand b- p*acement and orientation
7.< Reference 6oo,s
B Mamoria C.0.2 Gan1ar %.L.2 5200&62 E.;e8tboo1 o# Human Resource ManagementF2
Hima*a-a
9ub*ishing House2 "e, :e*hi.
B :,ivedi R.%.2 51++'62 E9ersonne* Management in Indian 7nterprisesF2 Ga*gotia 9ub*ising
Compan-2 "e, :e*hi.
B :evid .. :eC7"PO2 %;79H7" 9. RO00I"% 5200262 E9ersonne*IHuman Resource
ManagementF2 9rentice Ha** o# India2 "e,
:e*hi.
B 9rasad =.M.2 5200$62 Human Resource Management2F %u*tan Chand N %ons2 "e, :e*hi.
B :ess*er Gar- 5200162 E9ersonne* ManagementF2 9rentice Ha** Internationa* 7ditions2 "e,
Derse-.
B Carre** Michae* R.2 7*bert "orbert (.2 Hat#ie*d Robert :. 51+++62 EHuman Resource
Management2F 9rentice Ha**2 7ng*e,ood C*i##s2 "e, Derse-.
B Mamoria C.0.2 Rao2 L%9 520126 9ersonna* Management 5;e8t and cases62 Hima*a-s
9ub*ishing2 Mumbai.
Unit - ; : 3m+o4ee 9raining
Structure of
Unit:
&.0
Objectives
&.1 Introduction 3
Concept
&.2 "eed #or 7mp*o-ee
;raining
&.3
Importance
&.! ;-pes o# 7mp*o-ee
;raining
&.$ Objectives and 9rocess o# 7mp*o-ee
;raining
&.& .dvantages o# On the Dob ;raining
Methods
&.'
%ummar-
&.) %e*# .ssessment
/uestions
&.+ Re#erence
0oo1s
;.0 Objectives
.#ter comp*eting this unit2 -ou ,ou*d be ab*e
to3
4nderstand various aspects o# the training design processA
C*assi#- the various training methodsA
9oint out various #actors a##ecting training decisionsA
Cno, about various objectives o# emp*o-ee trainingA
=earn and appreciate the signi#icance o# emp*o-ee trainingA
4nderstand di##erence bet,een on the job and o## the job training.
;.1 Introduction : !oncet
;raining is a process o# *earning a se<uence o# programmed behavior. It is the app*ication o#
1no,*edge N gives peop*e an a,areness o# ru*es N procedures to guide their behavior. It he*ps in
bringing about positive change in the 1no,*edge2 s1i**s N attitudes o# emp*o-ees.
;hus2 training is a process that tries to improve s1i**s or add to the e8isting *eve* o# 1no,*edge so
that the emp*o-ee is better e<uipped to do his present job or to mou*d him to be #it #or a higher
job invo*ving higher responsibi*ities. It bridges the gap bet,een ,hat the emp*o-ee has N ,hat
the job demands.
;raining re#ers to a p*anned e##ort b- a compan- to #aci*itate emp*o-ees>*earning o# job re*ated
competencies. ;hese competencies inc*ude 1no,*edge2 s1i**s2 or behaviors that are critica* #or
success#u* job per#ormance. ;he goa* o# training is #or emp*o-ees to master the 1no,*edge2 s1i**2
and behaviors emphasi?ed in training programs and to app*- them to their da- to da- activities.
;raining is seen as one o# severa* possib*e so*utions to improve per#ormance. Other so*utions can
inc*ude such actions as changing the job or increasing emp*o-ee motivation through pa- and
incentives. ;oda- there is a greater emphasis onB
9roviding educationa* opportunities #or a** emp*o-ees. ;hese educationa* opportunities
ma- inc*ude training programs2 but the- a*so inc*ude support #or ta1ing courses o##ered
outside the compan-2 se*#Bstud-2 and *earning through job rotation.
.n ongoing process o# per#ormance improvement that is direct*- measurab*e rather than
organi?ing one time training events.
;he need to demonstrate to e8ecutives2 managers2 and trainees the bene#its o# training.
=earning as a *i#e*ong event in ,hich senior management2 trainer manager2 and emp*o-ees
have o,nership.
'0
;raining being used to he*p attain strategic business objectives2 ,hich he*p companies2
gains a competitive advantage.
;he term training re#ers to the ac<uisition o# 1no,*edge2 s1i**s2 and competencies as a resu*t o#
the teaching o# vocationa* or practica* s1i**s and 1no,*edge that re*ate to speci#ic use#u*
competencies. It #orms the core o# apprenticeships and provides the bac1bone o# content at
institutes o# techno*og- 5a*so 1no,n as technica* co**eges or po*-technics6. In addition to the basic
training re<uired #or a trade2 occupation or pro#ession2 observers o# the *aborBmar1et recogni?e as
o# 200)
RupdateS
the need to continue training be-ond initia* <ua*i#ications3 to maintain2 upgrade and
update s1i**s throughout ,or1ing *i#e. 9eop*e ,ithin man- pro#essions and occupations ma- re#er
to this sort o# training as pro#essiona* deve*opment.
;raining usua**- re#ers to some 1ind o# organi?ed 5and #inite it time6 event J a seminar2
,or1shop that has a speci#ic beginning data and end date. It>s o#ten a group activit-2 but the ,ord
training is a*so used to re#er to speci#ic instruction done one on one.
7mp*o-ee deve*opment2 ho,ever2 is a much bigger2 inc*usive EthingF. (or e8amp*e2 i# a manager
pairs up a re*ative*- ne, emp*o-ee ,ith a more e8perienced emp*o-ee to he*p the ne, emp*o-ee
*earns about the job2 that>s rea**- emp*o-ee deve*opment. I# a manager coaches and emp*o-ee in
an ongoing ,a-2 that>s emp*o-ee deve*opment. Or2 emp*o-ees ma- rotate job responsibi*ities to
*earn about the jobs o# their co**eagues and gain e8perience so the- might eventua**- have more
promotion opportunities. ;hat>s emp*o-ee deve*opment.
In other ,ords emp*o-ee deve*opment is a broader term that inc*udes training as one2 and on*-
one o#its methods #or encouraging emp*o-ee *earning. ;he important point here is that di##erent
activities are better #or the achievement o# di##erent resu*ts. (or e8amp*e2 i# the desire is provide
an emp*o-ee ,ith a better understanding o# ho, the department ,or1s2 job rotation might ,or1
ver- ,e**. I# the goa* is to improve the emp*o-ee>s abi*it- to use a computer based accounting
pac1age direct training ,ou*d be more appropriate than2 *et>s sa-2 job rotation.
9R)I0I0* )0& &3B3:O2M309
O683!9IB3S
;he principa* objective o# training and deve*opment division is to ma1e sure the avai*abi*it- o# a
s1i**ed and ,i**ing ,or1#orce to an organi?ation. In addition to that2 there are #our other
objectives3 Individua*2 Organi?ationa*2 (unctiona*2 and %ocieta*. ;raining and deve*opment is a
subs-stem o# an organi?ation. It ensures that randomness is reduced and *earning or behavioura*
change ta1es p*ace in structured #ormat.
Individua+ Objectives H he*p emp*o-ees in achieving their persona* goa*s2 ,hich in turn2
enhances the individua* contribution to an organi?ation.
Organi5ationa+ Objectives G assist the organi?ation ,ith its primar- objective b- bringing
individua* e##ectiveness.
1unctiona+ Objectives G maintain the department>s contribution at a *eve* suitab*e to the
organi?ation>s needs.
Societa+ Objectives H ensure that an organi?ation is ethica**- and socia**- responsib*e to the
needs and cha**enges o# the societ-.
;he <ua*it- o# emp*o-ees and their deve*opment through training and education are major
#actors in determining *ongBterm pro#itabi*it- o# a sma** business. I# -ou hire and 1eep good
emp*o-ees2 it is good po*ic- to invest in the deve*opment o# their s1i**s2 so the- can increase their
productivit-.
;raining o#ten is considered #or ne, emp*o-ees on*-. ;his is a mista1e because ongoing training
#or current emp*o-ees he*ps them adjust to rapid*- changing job re<uirements. Reasons #or
emphasi?ing the gro,th
and deve*opment o# personne*
inc*ude
'1
Creating a poo* o# readi*- avai*ab*e and ade<uate rep*acements #or personne* ,ho ma-
*eave or move up in the organi?ation.
7nhancing the compan->s abi*it- to adopt and use advances in techno*og- because o# a
su##icient*- 1no,*edgeab*e sta##.
0ui*ding a more e##icient2 e##ective and high*- motivated team2 ,hich enhances the
compan->s competitive position and improves emp*o-ee mora*e.
7nsuring ade<uate human resources #or e8pansion into ne, programs.
Research has sho,n speci#ic bene#its that a sma** business receives #rom training and
deve*oping its ,or1ers2 inc*uding3
Increased productivit-.
Reduced emp*o-ee turnover.
Increased e##icienc- resu*ting in #inancia* gains.
:ecreased need #or supervision.
7mp*o-ees #re<uent*- deve*op a greater sense o# se*#B,orth2 dignit- and ,e**Bbeing as the-
become more va*uab*e to the #irm and to societ-. Genera**- the- ,i** receive a greater share o#
the materia* gains that resu*t #rom their increased productivit-. ;hese #actors give them a sense
o# satis#action through the achievement o# persona* and compan- goa*s.
;.2 0eed for 3m+o4ee
9raining
;raining o# emp*o-ees ta1es p*ace a#ter orientation ta1es p*ace. ;raining is the process o#
enhancing the s1i**s2 capabi*ities and 1no,*edge o# emp*o-ees #or doing a particu*ar job. ;raining
process mou*ds the thin1ing o# emp*o-ees and *eads to <ua*it- per#ormance o# emp*o-ees. It is
continuous and never ending in nature.
;raining is given on #our basic
grounds3
1. "e, candidates ,ho join an organi?ation are given training. ;his training #ami*iari?es
them ,ith the organi?ationa* mission2 vision2 ru*es and regu*ations and the ,or1ing
conditions.
2. ;he e8isting emp*o-ees are trained to re#resh and enhance their 1no,*edge.
3. I# an- updations and amendments ta1e p*ace in techno*og-2 training is given to cope up
,ith those changes. (or instance2 purchasing ne, e<uipment2 changes in techni<ue o#
production2 computer impartment. ;he emp*o-ees are trained about use o# ne,
e<uipments and ,or1 methods.
!. When promotion and career gro,th becomes important. ;raining is given so that
emp*o-ees are prepared to share the responsibi*ities o# the higher *eve* job.
;raining needs can be assessed b- ana*-?ing three major human resource areas3 the organi?ation
as a ,ho*e2 the job characteristics and the needs o# the individua*s. ;his ana*-sis ,i** provide
ans,ers to the #o**o,ing <uestions3
Where is training needed
What speci#ica**- must an emp*o-ee *earn in order to be more productive
Who needs to be trained
0egin b- assessing the current status o# the compan- ho, it does ,hat it does best and the
abi*ities o# -our emp*o-ees to do these tas1s. ;his ana*-sis ,i** provide some benchmar1s against
,hich the e##ectiveness o# a training program can be eva*uated. @our #irm shou*d 1no, ,here it
,ants to be in #ive -ears #rom its *ongBrange strategic p*an. What -ou need is a training program
to ta1e -our #irm #rom here to there. %econd2 consider ,hether the organi?ation is #inancia**-
committed to supporting the training e##orts. I# not2 an- attempt to deve*op a so*id training
program ,i** #ai*.
"e8t2 determine e8act*- ,here training is needed. It is #oo*ish to imp*ement a compan-,ide
training e##ort ,ithout concentrating resources ,here the- are needed most. .n interna* audit ,i**
he*p point out areas that ma- bene#it #rom training. .*so2 a s1i**s inventor- can he*p determine
the s1i**s possessed b- the emp*o-ees in genera*. ;his inventor- ,i** he*p the organi?ation
determine ,hat s1i**s are avai*ab*e no, and ,hat s1i**s are needed #or #uture deve*opment.
.*so2 in toda->s mar1etBdriven econom-2 -ou ,ou*d be remiss not to as1 -our customers ,hat
the- *i1e about -our business and ,hat areas the- thin1 shou*d be improved. In summar-2 the
ana*-sis shou*d #ocus on the tota* organi?ation and shou*d te** -ou 516 ,here training is needed
and 526 ,here it ,i** ,or1 ,ithin the organi?ation. Once -ou have determined ,here training is
needed2 concentrate on the content o# the program. .na*-?e the characteristics o# the job based
on its description2 the ,ritten narrative o# ,hat the emp*o-ee actua**- does. ;raining based on
job descriptions shou*d go into detai* about ho, the job is per#ormed on a tas1Bb-Btas1 basis.
.ctua**- doing the job ,i** enab*e -ou to get a better #ee* #or ,hat is done. Individua* emp*o-ees
can be eva*uated b- comparing their current s1i** *eve*s or per#ormance to the organi?ation>s
per#ormance standards or anticipated needs.
;." Imortance
;raining is crucia* #or organi?ationa* deve*opment and success. It is #ruit#u* to both emp*o-ers
andemp*o-ees o# an organi?ation. .n emp*o-ee ,i** become more e##icient and productive i# he
is trained ,e**. ;he bene#its o# training can be summed up as3
1. Imroves Mora+e of 3m+o4ees- ;raining he*ps the emp*o-ee to get job securit- and
job satis#action. ;he more satis#ied the emp*o-ee is and the greater is his mora*e2 the
more he ,i** contribute to organi?ationa* success and the *esser ,i** be emp*o-ee
absenteeism and turnover.
2. :ess Suervision- . ,e** trained emp*o-ee ,i** be ,e** ac<uainted ,ith the job and ,i**
need *ess o# supervision. ;hus2 there ,i** be *ess ,astage o# time and e##orts.
". 1e>er)ccidents- 7rrors are *i1e*- to occur i# the emp*o-ees *ac1 1no,*edge and s1i**s
re<uired #or doing a particu*ar job. ;he more trained an emp*o-ee is2 the *ess are the
chances o# committing accidents in job and the more pro#icient the emp*o-ee becomes.
/. !$ances of 2romotion- 7mp*o-ees ac<uire s1i**s and e##icienc- during training. ;he-
become more e*igib*e #or promotion. ;he- become an asset #or the organi?ation.
7. Increased 2roductivit4- ;raining improves e##icienc- and productivit- o# emp*o-ees.
We** trained emp*o-ees sho, both <uantit- and <ua*it- per#ormance. ;here is *ess ,astage
o# time2 mone- and resources i# emp*o-ees are proper*- trained.
;./ 94es of 3m+o4ee
9raining
%ome commentator use a simi*ar term #or ,or1p*ace *earning to improve per#ormance3 Etraining
and deve*opmentF. One can genera**- categori?e such training as onBtheBjob or o##BtheBjob3
OnBtheBjob training ta1es p*ace in a norma* ,or1ing situation2 using the actua* too*s2
e<uipment2 documents or materia*s that trainees ,i** use ,hen #u**- trained. OnBtheBjob
training has a genera* reputation as most e##ective #or vocationa* ,or1.
O##BtheBjob training ta1es p*ace a,a- #rom norma* ,or1 situations J imp*-ing that the
emp*o-ee does not count as a direct*- productive ,or1er ,hi*e such training ta1es p*ace.
O##BtheBjob training has the advantage that it a**o,s peop*e to get a,a- #rom ,or1 and
concentrate more thorough*- on the training itse*#. ;his t-pe o# training has proven more
e##ective in incu*cating concepts and ideas.
;he most #re<uent*- used method in sma**er organi?ations that is on the job training. ;his
method o# training uses more 1no,*edgeab*e2 e8perienced and s1i**ed emp*o-ees2 such as
mangers2 supervisors to give training to *ess 1no,*edgeab*e2 s1i**ed2 and e8perienced emp*o-ees.
OD; can be de*ivered in c*assrooms as ,e**. ;his t-pe o# training o#ten ta1es p*ace at the ,or1
p*ace in in#orma* manner.
On the Dob ;raining is characteri?ed b- #o**o,ing
points
It is done on adBhoc manner ,ith no #orma* procedure2 or content
.t the start o# training2 or during the training2 no speci#ic goa*s or objectives are deve*oped
;rainers usua**- have no #orma* <ua*i#ication or training e8perience #or training
;raining is not care#u**- p*anned or prepared
;he trainer are se*ected on the basis o# technica* e8pertise or area 1no,*edge
(orma* OD; programs are <uite di##erent #rom in#orma* OD;. ;hese programs are carried out b-
identi#-ing the emp*o-ees ,ho are having superior technica* 1no,*edge and can e##ective*- use
oneBtoBone interaction techni<ue. ;he procedure o# #orma* on the job training program is3
1. ;he participant observes a more e8perienced2 1no,*edgeab*e2 and s1i**ed trainer
5emp*o-ee6
2. ;he method2 process2 and techni<ues are ,e** discussed be#ore2 during and a#ter trainer
has e8p*ained about per#orming the tas1s
3. When the trainee is prepared2 the trainee starts per#orming on the ,or1 p*ace
!. ;he trainer provides continuing direction o# ,or1 and #eedbac1
$. ;he trainee is given more and more ,or1 so that he accomp*ishes the job #*a,*ess*-
;he #our techni<ues #or on the job deve*opment
are3
CO.CHI"G
M7";ORI"G
DO0 RO;.;IO"
DO0 I"%;R4C;IO" ;7CH"I/47 5DI;6
1.( !oac$ing is one o# the training methods2 ,hich is considered as a corrective method #or
inade<uate per#ormance. .ccording to a surve- conducted b- Internationa* Coach (ederation
5IC(62 more than
!2000 companies are using coach #or their e8ecutives. ;hese coaches are e8perts most o# the time
outside consu*tants.
. coach is the best training p*an #or the C7O>s
because
It is one to one interaction
It can be done at the convenience o# C7O
It can be done on phone2 meetings2 through eBmai*s2 chat
It provides an opportunit- to receive #eedbac1 #rom an e8pert
It he*ps in identi#-ing ,ea1nesses and #ocus on the area that needs improvement
;his method best suits #or the peop*e at the top because i# ,e see on emotiona* #ront2 ,hen a
person reaches the top2 he gets *one*- and it becomes di##icu*t to #ind someone to ta*1 to. It he*ps
in #inding out the e8ecutive>s speci#ic deve*opmenta* needs. ;he needs can be identi#ied through
&0 degree per#ormance revie,s.
2rocedure of t$e
!oac$ing
;he procedure o# the coaching is mutua**- determined b- the e8ecutive and coach. ;he
procedure is #o**o,ed b- successive counse*ing and meetings at the e8ecutive>s convenience b-
the coach.
1. 4nderstand the participant>s job2 the 1no,*edge2 s1i**s2 and attitudes2 and resources
re<uired to meet the desired e8pectation
2. Meet the participant and mutua**- agree on the objective that has to be achieved
3. Mutua**- arrive at a p*an and schedu*e
!. .t the job2 sho, the participant ho, to achieve the objectives2 observe the per#ormance
and then provide #eedbac1
$. Repeat step ! unti* per#ormance improves
(or the peop*e at midd*e *eve* management2 coaching is more *i1e*- done b- the supervisorA
ho,ever e8perts #rom outside the organi?ation are at times used #or up and coming managers.
.gain2 the persona*i?ed approach assists the manger #ocus on de#inite needs and improvement.
2.( Mentoring is an ongoing re*ationship that is deve*oped bet,een a senior and junior emp*o-ee.
Mentoring provides guidance and c*ear understanding o# ho, the organi?ation goes to achieve its
vision and mission to the junior emp*o-ee.
;he meetings are not as structured and regu*ar than in coaching. 78ecutive mentoring is genera**-
done b- someone inside the compan-. ;he e8ecutive can *earn a *ot #rom mentoring. 0- dea*ing
,ith diverse mentee>s2 the e8ecutive is given the chance to gro, pro#essiona**- b- deve*oping
management s1i**s and *earning ho, to ,or1 ,ith peop*e ,ith diverse bac1ground2 cu*ture2 and
*anguage and persona*it- t-pes.
78ecutives a*so have mentors. In cases ,here the e8ecutive is ne, to the organi?ation2 a senior
e8ecutive cou*d be assigned as a mentor to assist the ne, e8ecutive sett*ed into his ro*e.
Mentoring is one o# the important methods #or preparing them to be #uture e8ecutives. ;his
method a**o,s the mentor to determine ,hat is re<uired to improve mentee>s per#ormance. Once
the mentor identi#ies the prob*em2 ,ea1ness2 and the area that needs to be ,or1ed upon2 the
mentor can advise re*evant training. ;he mentor can a*so provide opportunities to ,or1 on
specia* processes and projects that re<uire use o# pro#icienc-.
%ome 1e- points on
Mentoring
Mentoring #ocus on attitude deve*opment
Conducted #or managementB*eve* emp*o-ees
Mentoring is done b- someone inside the compan-
It is oneBtoBone interaction
It he*ps in identi#-ing ,ea1nesses and #ocus on the area that needs improvement
".( (or the e8ecutive2 job rotation ta1es on di##erent perspectives. ;he e8ecutive is usua**- not
simp*- going to another department. In some vertica**- integrated organi?ations2 #or e8amp*e2
,here the supp*ier is actua**- part o# same organi?ation or subsidiar-2 job rotation might be to the
supp*ier to see ho, the business operates #rom the supp*ier point o# vie,.
=earning ho, the organi?ation is perceived #rom the outside broadens the e8ecutive>s out*oo1
on the process o# the organi?ation. Or the rotation might be to a #oreign o##ice to provide a g*oba*
perspective. (or managers being deve*oped #or e8ecutive ro*es2 rotation to di##erent #unctions in
the compan- is regu*ar
carried
out.
'$
;his approach a**o,s the manger to operate in diverse ro*es and understand the di##erent issues
that crop up. I# someone is to be a corporate *eader2 the- must have this t-pe o# training. . recent
stud- indicated that the sing*e most signi#icant #actor that *eads to *eader>s achievement ,as the
variet- o# e8periences in di##erent departments2 business units2 cities2 and countries.
.n organi?ed and he*p#u* ,a- to deve*op ta*ent #or the management or e8ecutive *eve* o# the
organi?ation is job rotation. It is the process o# preparing emp*o-ees at a *o,er *eve* to rep*ace
someone at the ne8t higher *eve*. It is genera**- done #or the designations that are crucia* #or the
e##ective and e##icient #unctioning o# the organi?ation.
%ome o# the major bene#its o# job rotation
are3
It provides the emp*o-ees ,ith opportunities to broaden the hori?on o# 1no,*edge2 s1i**s2
and abi*ities b- ,or1ing in di##erent departments2 business units2 #unctions2 and countries
Identi#ication o# Cno,*edge2 s1i**s2 and attitudes 5C%.s6 re<uired
It determines the areas ,here improvement is re<uired
.ssessment o# the emp*o-ees ,ho have the potentia* and ca*iber #or #i**ing the position
/.( 8ob Instruction 9ec$ni=ue '8I9( uses a strateg- ,ith #ocus on 1no,*edge 5#actua* and
procedura*62 s1i**s and attitudes deve*opment.
8I9 !onsists of 1our
Stes:
Plan # ;his step inc*udes a ,ritten brea1do,n o# the ,or1 to be done because the trainer and the
trainee must understand that documentation is must and important #or the #ami*iarit- o# ,or1. .
trainer ,ho is a,are o# the ,or1 ,e** is *i1e*- to do man- things and in the process might miss
#e, things. ;here#ore2 a structured ana*-sis and proper documentation ensures that a** the points
are covered in the trainingprogram. ;he second step is to #ind out ,hat the trainee 1no,s and
,hat training shou*d #ocus on. ;hen2 the ne8t step is to create a com#ortab*e atmosphere #or the
trainees> i.e. proper orientation program2 avai*ing the resources2 #ami*iari?ing trainee ,ith the
training program2 etc.
Present # In this step2 trainer provides the s-nopsis o# the job ,hi*e presenting the participants
the di##erent aspects o# the ,or1. When the trainer #inished2 the trainee demonstrates ho, to do
the job and ,h- is that done in that speci#ic manner. ;rainee actua**- demonstrates the procedure
,hi*e emphasi?ing the 1e- points and sa#et- instructions.
1igure ;.1 : Stes in
8I9
$rial # ;his step actua**- a 1ind o# rehearsa* step2 in ,hich trainee tries to per#orm the ,or1 and
the trainer is ab*e to provide instant #eedbac1. In this step2 the #ocus is on improving the method o#
instruction because a trainer considers that an- error i# occurring ma- be a #unction o# training
not the trainee. ;his step a**o,s the trainee to see the a#ter e##ects o# using an incorrect method.
;he trainer then he*ps the trainee b- <uestioning and guiding to identi#- the correct procedure.
Follo%&up # In this step2 the trainer chec1s the trainee>s job #re<uent*- a#ter the training program
is over to prevent bad ,or1 habits #rom deve*oping. ;here are various methods o# training2 ,hich
can be divided in to cognitive and behaviora* methods. ;rainers need to understand the pros and
cons o# each method2 a*so its impact on trainees 1eeping their bac1ground and s1i**s in mind
be#ore giving training.
O11 9H3 8O6 9R)I0I0*
G
;here are man- management deve*opment techni<ues that an emp*o-ee can ta1e in o## the job.
;he #e, popu*ar methods are3
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1.( Sensitivit4 9raining is about ma1ing peop*e understand about themse*ves and others
reasonab*-2 ,hich is done b- deve*oping in them socia* sensitivit- and behaviora* #*e8ibi*it-.
%ocia* sensitivit- in one ,ord is empath-. It is abi*it- o# an individua* to sense ,hat others
#ee*and thin1 #rom their o,n point o# vie,. 0ehaviora* #*e8ibi*it- is abi*it- to behave suitab*- in
*ight o# understanding.
%ensitivit- ;raining 9rogram re<uires three
steps3
Unfree5ing t$e O+d Ba+ues
G
It re<uires that the trainees become a,are o# the inade<uac- o# the o*d va*ues. ;his can be done
,hen the trainee #aces di*emma in ,hich his o*d va*ues is not ab*e to provide proper guidance.
;he #irst stepconsists o# a sma** procedure3
.n unstructured group o# 10B1$ peop*e is #ormed.
4nstructured group ,ithout an- objective *oo1s to the trainer #or its guidance
0ut the trainer re#uses to provide guidance and assume *eadership
%oon2 the trainees are motivated to reso*ve the uncertaint-
;hen2 the- tr- to #orm some hierarch-. %ome tr- assume *eadership ro*e ,hich ma- not
be *i1ed b- other trainees
;hen2 the- started rea*i?ing that ,hat the- desire to do and rea*i?e the a*ternative ,a-s o#
dea*ing ,ith the situation
1igure ;.2 2rocedure of Sensitivit4 9raining
&eve+oment of 0e> Ba+ues G With the trainer>s support2 trainees begin to e8amine their
interpersona* behavior and giving each other #eedbac1. ;he reasoning o# the #eedbac1s are
discussed ,hich motivates trainees to e8periment ,ith range o# ne, behaviors and va*ues. ;his
process constitutes the second step in the change process o# the deve*opment o# these va*ues.
Refree5ing t$e ne> ones G ;his step depends upon ho, much opportunit- the trainees get to
practice their ne, behaviors and va*ues at their ,or1 p*ace.
2.( 9ransactiona+ )na+4sis provides trainees ,ith a rea*istic and use#u* method #or ana*-?ing
and understanding the behavior o# others. In ever- socia* interaction2 there is a motivation
provided b- one person and a reaction to that motivation given b- another person. ;his
motivation reaction re*ationship bet,een t,o persons is a transaction.
9ransactiona+ ana+4sis can be done b- the ego states o# an individua*. .n ego state is a s-stem
o# #ee*ings accompanied b- a re*ated set o# behaviors. ;here are basica**- three ego states3
!$i+d: It is a co**ection o# recordings in the brain o# an individua* o# behaviors2 attitudes2 and
impu*ses ,hich come to her natura**- #rom her o,n understanding as a chi*d. ;he characteristics
o# this ego are to be spontaneous2 intense2 uncon#ident2 re*iant2 probing2 an8ious2 etc. Lerba* c*ues
that a person is operating #rom its chi*d state are the use o# ,ords *i1e EI guessF2 EI supposeF2 etc.
and non verba* c*ues *i1e2 gigg*ing2 co-ness2 si*ent2 attention see1ing etc.
2arent: It is a co**ection o# recordings in the brain o# an individua* o# behaviors2 attitudes2 and
impu*ses imposed on her in her chi*dhood #rom various sources such as2 socia*2 parents2 #riends2
etc. ;he characteristics o# this ego are to be overprotective2 iso*ated2 rigid2 boss-2 etc. Lerba*
c*ues that a person is operating #rom its parent states are the use o# ,ords *i1e2 a*,a-s2 shou*d2
never2 etc and nonBverba* c*ues such as2 raising e-ebro,s2 pointing an accusing #inger at
somebod-2 etc.
1igure ;."
)du+t: It is a co**ection o# rea*it- testing2 rationa* behavior2 decision ma1ing2 etc. . person in this
ego state veri#ies2 updates the data ,hich she has received #rom the other t,o states. It is a shi#t
#rom the taught and #e*t concepts to tested concepts. .** o# us evo1e behavior #rom one ego state
,hich is responded to b- the other person #rom an- o# these three states.
".( :ecture is te**ing someone about something. =ecture is given to enhance the 1no,*edge o#
*istener or to give him the theoretica* aspect o# a topic. ;raining is basica**- incomp*ete ,ithout
*ecture. When the trainer begins the training session b- te**ing the aim2 goa*2 agenda2 processes2 or
methods that ,i** be used in training that means the trainer is using the *ecture method. It is
di##icu*t to imagine training,ithout *ecture #ormat. ;here are some variations in =ecture method.
;he variation here means that some #orms o# *ectures are interactive ,hi*e some are not.
Straig$t :ecture: %traight *ecture method consists o# presenting in#ormation2 ,hich the trainee
attempts to absorb. In this method2 the trainer spea1s to a group about a topic. Ho,ever2 it does
not invo*ve an- 1ind o# interaction bet,een the trainer and the trainees. . *ecture ma- a*so ta1e
the #orm o# printed te8t2 such as boo1s2 notes2 etc. ;he di##erence bet,een the straight *ecture
and the printed materia* is the trainer>s intonation2 contro* o# speed2 bod- *anguage2 and visua*
image o# the trainer. ;he trainer in case o# straight *ecture can decide to var- #rom the training
script2 based on the signa*s #rom the trainees2 ,hereas same materia* in print is restricted to ,hat
is printed. . good *ecture consists o# introduction o# the topic2
purpose o# the *ecture2 and priorities and pre#erences o# the order in ,hich the topic ,i** be
covered. %ome o# the main #eatures o# *ecture method are3
Inabi*it- to identi#- and correct misunderstandings
=ess e8pensive
Can be reached *arge number o# peop*e at once
Cno,*edge bui*ding e8ercise
=ess e##ective because *ectures re<uire *ong periods o# trainee inactivit-
/.( *ames and Simu+ations are structured and sometimes unstructured2 that are usua**- p*a-ed
#or enjo-ment sometimes are used #or training purposes as an educationa* too*. ;raining games
and simu*ations are di##erent #rom ,or1 as the- are designed to reproduce or simu*ate events2
circumstances2 processes that ta1e p*ace in trainees> job.
. ;raining Game is de#ined as spirited activit- or e8ercise in ,hich trainees compete ,ith each
other according to the de#ined set o# ru*es. %imu*ation is creating computer versions o# rea*B*i#e
games. %imu*ation is about imitating or ma1ing judgment or opining ho, events might occur in a
rea* situation. It can entai* intricate numerica* mode*ing2 ro*e p*a-ing ,ithout the support o#
techno*og-2 or combinations. ;raining games and simu*ations are no, seen as an e##ective too*
#or training because its 1e- components are3
Cha**enge
Ru*es
Interactivit-
;hese three components are <uite essentia* ,hen it comes to *earning. %ome o# the e8amp*es o#
this techni<ue are3
1igure ;./
;rainees can there#ore e8perience these events2 processes2 games in a contro**ed setting ,here
the- can deve*op 1no,*edge2 s1i**s2 and attitudes or can #ind out concepts that ,i** improve their
per#ormance. ;he various methods that come under Games and %imu*ations are3
07H.LIORBMO:7==I"G
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RO=7 9=.@%
;.7 Objectives and 2rocess of 3m+o4ee
9raining
;he training design process re#ers to a s-stematic approach #or deve*oping training programs. It
inc*udes the seven steps in this process. ;raining is one o# the most pro#itab*e investments an
organi?ation can ma1e. "o matter ,hat business or industr- -ou are in the steps #or an e##ective
training process are the same and ma- be adapted an-,here. I# -ou have ever thought about
deve*oping a training program ,ithin -our organi?ation consider the #o**o,ing #our basic training
steps. @ou ,i** #ind that a** #our o# these steps are mutua**- necessar- #or an- training program to
be e##ective and e##icient.
Ste1 is to conduct a needs assessment2 ,hich is necessar- to identi#- ,hether training is needed.
;his step identi#ies activities to justi#- an investment #or training. ;he techni<ues necessar- #or the
data co**ection are surve-s2 observations2 intervie,s2 and customer comment cards. %evera*
e8amp*es o# an ana*-sis out*ining speci#ic training needs are customer dissatis#action2 *o, mora*e2
*o, productivit-2 and high turnover.
;he objective in estab*ishing a needs ana*-sis is to #ind out the ans,ers to the #o**o,ing
<uestions3
EWh-F is training needed
EWhatF t-pe o# training is needed
EWhenF is the training needed
EWhereF is the training needed
EWhoF needs the training and EWhoF ,i** conduct the training
EHo,F ,i** the training be per#ormed
0- determining training needs2 an organi?ation can decide ,hat speci#ic 1no,*edge2 s1i**s2 and
attitudes are needed to improve the emp*o-ee>s per#ormance in accordance ,ith the compan->s
standards.
;he needs ana*-sis is the starting point #or a** training. ;he primar- objective o# a** training is to
improve individua* and organi?ationa* per#ormance. 7stab*ishing a needs ana*-sis is2 and shou*d
a*,a-s be the #irst step o# the training process.
Ste 2 is to ensure that emp*o-ees have the motivation and basic s1i**s necessar- to master
training content. ;his step estab*ishes the deve*opment o# current job descriptions and standards
and procedures. Dob descriptions shou*d be c*ear and concise and ma- serve as a major training
too* #or the identi#ication o# guide*ines. Once the job description is comp*eted2 a comp*ete *ist o#
standards and procedures shou*d be estab*ished #rom each responsibi*it- out*ined in the job
description. ;his ,i** standardi?e the necessar- guide*ines #or an- #uture training.
Ste " is to create a *earning environment that has the #eatures necessar- #or *earning to occur.
;his step is responsib*e #or the instruction and de*iver- o# the training program. Once -ou have
designated -our trainers2 the training techni<ue must be decided. OneBonBone training2 onBtheBjob
training2 group training2 seminars2 and ,or1shops are the most popu*ar methods.
0e#ore presenting a training session2 ma1e sure -ou have a thorough understanding o# the
#o**o,ing characteristics o# an e##ective trainer. ;he trainer shou*d have3
)0
B . desire to teach the subject being taught.
B . ,or1ing 1no,*edge o# the subject being taught.
B .n abi*it- to motivate participants to E,antF to *earn.
B . good sense o# humour.
B . d-namic appearance and good posture.
B . strong passion #or their topic.
B . strong compassion to,ards their participants.
B .ppropriate audioIvisua* e<uipment to enhance the training session.
(or a training program to be success#u*2 the trainer shou*d be conscious o# severa* essentia*
e*ements2 inc*uding a contro**ed environment2 good p*anning2 the use o# various training methods2
good communication s1i**s and trainee participation.
Ste / is to ensure that trainees app*- the training content to their
jobs.
;his step ,i** determine ho, e##ective and pro#itab*e -our training program has been. Methods #or
eva*uation are preBand postB surve-s o# customer comments cards2 the estab*ishment o# a
costIbene#it ana*-sis out*ining -our e8penses and returns2 and an increase in customer satis#action
and pro#its. ;he reason #or an eva*uation s-stem is simp*e. ;he eva*uations o# training programs
are ,ithout a doubt the most important step in the training process. It is this step that ,i** indicate
the e##ectiveness o# both the training as ,e** as the trainer.
;here are severa* obvious bene#its #or eva*uating a training program. (irst2 eva*uations ,i**
provide #eedbac1 on the trainer>s per#ormance2 a**o,ing them to improve themse*ves #or #uture
programs. %econd2 eva*uations ,i** indicate its costBe##ectiveness. ;hird2 eva*uations are an
e##icient ,a- to determine the overa** e##ectiveness o# the training program #or the emp*o-ees as
,e** as the organi?ation.
;he importance o# the eva*uation process a#ter the training is critica*. Without it2 the trainer does
not have a true indication o# the e##ectiveness o# the training. Consider this in#ormation the ne8t
time -ou need to eva*uate -our training program. @ou ,i** be ama?ed ,ith the resu*ts.
;he need #or training -our emp*o-ees has never been greater. .s business and industr- continues
to gro,2 more jobs ,i** become created and avai*ab*e. Customer demands2 emp*o-ee mora*e2
emp*o-ee productivit-2 and emp*o-ee turnover as ,e** as the current economic rea*ities o# a high*-
competitive ,or1#orce are just some o# the reasons #or estab*ishing and imp*ementing training in
an organi?ation. ;o be success#u*2 a** training must receive support #rom the top management as
,e** as #rom the midd*e and supervisor- *eve*s o# management. It is a team e##ort and must be
imp*emented b- a** members o# the organi?ation to be #u**- success#u*.
;.; )dvantages of On t$e 8ob 9raining
Met$ods
On the job training method has the #o**o,ing advantages that can be
considered3
Genera**- most costBe##ective
7mp*o-ees are actua**- productive
Opportunit- to *earn ,hi*st doing
;raining a*ongside rea* co**eagues.
;raining can be de*ivered on time and at the optimum time.
;he trainee ,i** have the good opportunities to practice and imp*ement.
;he trainee ,i** have #eedbac1s.
;rainee bui*ds con#idence b- ,or1ing ,ith o,n speed and productivit-.
;.< Summar4
;he unit begins ,ith an introduction o# the concept and e8p*ains the importance o# training. It
e8p*ains the di##erence bet,een training and deve*opment and de#ines the uti*it- and purpose o#
training2 the *eve*s o# training2 the need and importance o# training2 and the bene#its o# training to
the individua* and the organi?ation. It e8pounds on the phi*osoph- o# training2 process o# training
and purpose or objectives o# training.
;.. Se+f )ssessment Auestions
1. 78p*ain the term training and the need o# training #or
organi?ations.
2. :istinguish bet,een training and
deve*opment.
3. 78p*ain the methods and approaches to
training.
!. 78p*ain various On the job and o## the job training methods in
detai*.
;.? Reference 6oo,s
B .s,athappa C.5200+6 EHuman Resource and 9ersonne* ManagementF H ;e8t and Cases2
;ata
McGra, Hi** 9ub*ishing Compan- =td.2 "e, :e*hi.
B Chhabra ;.". EHuman Resources Management H Concepts and Issues2 (ourth 7ditionF-
%hampat
Rai N Co.2 :e*hi.
B Gupta2 C. 0. 5200!62 EHuman Resource ManagementF2 %i8th 7dition2 %u*tan Chand N
%ons2 "e, :e*hi.
B :ess*er2 G. 520006A MHuman Resource Management>A 9rentice Ha**2 "e,
@or1.
B Grund-2 ;. and 0ro,n2 =.520036A MLa*ueBbased Human Resource %trateg-A 7*sevier2
0oston.
B Mabe-2 C. and %a*aman2 G. 520006A M%trategica**- Managing Human Resources>A In#init-
0oo1s2 "e, :e*hi.
B Rao2 L.%.9. 520016A MManaging Human ResourcesB ;e8t and Cases2 78ce* 0oo1s2 "e,
:e*hi.
B ;hite2 M. 5200!6A Managing 9eop*e in the "e, 7conom-2 %age 9ub*ications2 "e,
:e*hi.
Unit - < : 3@ecutive &eve+oment
Structure of Unit:
'.1 Objectives
'.2 Introduction
'.3 Importance and (actor In#*uencing 78ecutive :eve*opment
'.! 9rocess
'.$ Methods o# 78ecutive :eve*opment
'.& Career 9*anning and :eve*opment
'.&.1 Objective
'.&.2 9rocess
'.' %ummar-
'.) %e*# .ssessment /uestions
'.+ Re#erence 0oo1s
<.1 Objectives
.#ter comp*eting this unit2 -ou ,ou*d be ab*e to3
4nderstand the methods o# e8ecutive deve*opmentA
9oint out various career p*anning processesA
Cno, about various pros and cons o# these processesA
=earn and appreciate the signi#icance career p*anning to societ-A
<.2 Introduction
It is a*so 1no,n as Mmanagement deve*opment> or Me8ecutive deve*opment>. It is one o# the
#astestB deve*oping areas in personne*. It is rea*i?ed that an e##ective management team ma- be as
important to the surviva* o# an organi?ation as an- tangib*e item on the ba*ance sheet. Interest in
management deve*opment is great part*- due to the shortage o# ,e**Btrained managers. 78ecutive
deve*opment or management deve*opment is a s-stematic process o# *earning and gro,th b-
,hich manageria* personne* gain and app*- 1no,*edge2 s1i**s2 attitudes and insights to manage the
,or1 in their organi?ation e##ective*- and e##icient*-.
;he program o# e8ecutive deve*opment aims at achieving #o**o,ing
purposes3 B
;o sustain good per#ormance o# managers throughout their careers b- e8p*oiting their #u**
potentia*.
;o understand economic2 technica*2 and institutiona* #orces in order to so*ve business
prob*ems.
;o ac<uire 1no,*edge about prob*ems o# human resources.
;o thin1 through prob*ems this ma- con#ront the organi?ation no, or in the #uture.
;o deve*op responsib*e *eaders.
;o incu*cate 1no,*edge o# human motivation and human re*ationships.
;o increase pro#icienc- in management techni<ues such as ,or1 stud-2 inventor- contro*2
operations research and <ua*it- contro*.
8o$nson and Sorc$er >rite- EManagement deve*opment #ocuses on deve*oping in a s-stematic
manner2 the 1no,*edge base2 attitudes2 basic s1i**s2 interpersona* s1i**s and technica* s1i**s o# the
manageria* cadre.F
)3
)ccording to 1+io Ee8ecutive deve*opment inc*udes the process b- ,hich managers and
e8ecutives ac<uire not on*- s1i**s and competenc- in their present job but a*so capabi*ities #or
#uture manageria* tas1s o# increasing di##icu*t- and scope.F
;he characteristics o# e8ecutive deve*opment are as
#o**o,ing3 B
78ecutive deve*opment is a p*anned and organi?ed process o# *earning.
It is an ongoing and never ending e8ercise.
78ecutive deve*opment is a *ong term process as manageria* s1i**s cannot be deve*oped
overnight.
It aims at preparing managers #or managers.
;oda-2 it is the gro,th that ma1es one person sta- at the compan-. ;he opportunit- and
cha**enges is,hat 1eeps a person satis#ied and charmed ,ith his job. Companies have understood
this #act and there#ore are #orming po*icies and procedures to deve*op their emp*o-ees.
78ecutive deve*opment 9rogram 57:96 is one such program. With Human resource ma1ing a
move #rom a ,e*#are department to a strategic partner2 more and more companies are underta1ing
this program. We at Career %o*utions provide -ou the opportunit- o# deve*oping a speci#ic 7:9
#or -our compan-. ;here are #our major steps to be covered during the 7:9B
1( 2rob+em )ssessment: the e8perts a*ong ,ith the concerned emp*o-ees and C7O sha**
begin ,ith an assessment o# the compan->s current prob*em and o,ner>s p*ans o# the
#uture.
2( Management )udit and )raisa+: there sha** be regu*ar #eedbac1 sessions to chec1 as
to ,hether ,e are reaching ,here ,e are supposed to reach.
"( )na+4sis of &eve+oment 0eeds: here the prob*em that has been uncovered sha** be
tried to and remedied via a deve*opment program.
/( Identif4 Re+acement 0eeds: the assessment ma- uncover a need to recruit and se*ect
ne, management ta*ent. ;he #ormat o# 7:9 ,i** var- ,ith compan->s si?e and nature o#
operation so as to provide optimum resu*t.
<." Imortance and 1actors Inf+uencing 3@ecutive
&eve+oment
78ecutive deve*opment is more #uture oriented. It is more concerned ,ith education than is
emp*o-ee training. In toda->s competitive environment2 an organi?ation has to be concerned about
the deve*opment o# supervisors2 midd*e *eve* managers and topB*eve* e8ecutive.
78ecutive deve*opment is important #or the #o**o,ing
reasons3 B
78ecutive deve*opment programmes are re<uired to train and deve*op pro#essiona*
managers.
It he*ps managers to deve*op s1i**s to #ace cut throat competition.
It enab*es managers to #ace prob*ems re*ated to techno*og- and institution.
It he*ps in deve*oping better re*ations ,ith the *abors.
78ecutives need training and education to understand and adjust to changes in socioB
economic changes.
78ecutive deve*opment is re<uired to broader the out*oo1 o# managers.
1actors Inf+uencing 3@ecutive
&eve+oment
. host o# #actors in#*uencing the e8ecutive deve*opment processes in organi?ations are as
#o**o,s3B
(ai*ure to train the managers ,i** *ead to ine##ective and ine##icient managers ,ho
negative*- a##ect the organi?ation>s per#ormance.
In the absence o# training and deve*opmenta* avenues2 the per#orming managers ma- get
deB motivated and #rustrated in *eading the organi?ations. ;his ,ou*d *ead to severe
*osses #or the organi?ation in #inancia* parameters2 in terms o# the cost o# recruiting and
training the ne, incumbent.
;he organi?ationa* per#ormance ma- be a##ected b- the *oss o# mar1et shares2 *o,er sa*es2
reduced pro#itabi*it-2 etc.
;he absenceI shortage o# trained and s1i**ed managers ma1e it important #or the
organi?ations to have appropriate retention strategies. ;raining and deve*opment is being
used b- organi?ations as a part o# their retention strateg-.
;he competitive pressures ma1e it necessar- #or organi?ations to continuous*- ro** out ne,
products and services2 and a*so maintain the <ua*it- o# the e8isting ones. ;he training and
deve*opment o# managers ,ou*d he*p them in deve*oping the competencies in these areas.
;he competitive environment is ma1ing it imperative #or the organi?ations to continuous*-
restructure and reBengineer2 and to embar1 upon these processes2 it is essentia* #or the
organi?ations to train the managers #or the ne, scenarios.
<./ 2rocess
Contemporar- organi?ations have rea*i?ed the importance o# human capita* and increasing*-
#inding its necessar- to continuous*- train and deve*op human resources. ;he training and
deve*opment needs o# the emp*o-ees cannot be *oo1ed at in iso*ationA an- proactive organi?ation
has to vie, the individua* training needs in the overa** organi?ationa* conte8t. ;he training and
deve*opment processes are not *onger adjunct to other departments but have become a part o#
organi?ationa* strateg- and one o# the 1e- organi?ationa* objectives. ;he process o# arriving at
the deve*opment needs o# the e8ecutives can be comprehensive*-
vie,ed through the process given in
(ig.B
C om pet iti ve 7n vi ronm
ent
O rgan i? ati o na* % trat eg-
% tage I
%t ag e II
Organi ?at ion a* Obj ecti ves
C om p etenc - Ma
pping
Id enti# - C o m pete nc- G
ap s
C areer 9 *a n nin g
; raini ng ne ed s as se ss me
nt
. n nu a* ; raini ng 9* an
% tage III
C o ndu ct o# ;rai
ning
R ev ie, o# ;ra ining . cti v iti
es
1igure <.1 : 3@ecutive &eve+oment 2rocess
9$e 2rocess of 3@ecutive &eve+oment
Stage I: In the %tage I2 at the macro *eve*2 there are three 1e- e*ements are considered as
competitive advantage2 organi?ationa* strateg- and organi?ationa* objectives. ;he ana*-sis o#
competitive environment he*ps the organi?ation to decide its competitive positioning in the
mar1et p*ace2 based on ,hich the organi?ationa* strateg- is dra,n out in an attempt to trans#orm
or reposition o# the organi?ation. ;he macro vie, is bro1en do,n into speci#ic organi?ationa*
objectives #or #urther dissemination to #unctiona*I departmenta*2 and individua* *eve*.
Stage II: ;his stage is most important and crucia* phase o# e8ecutive deve*opment process. ;his
stage dea*s ana*-sis on the competenc- mapping2 identi#ication o# competenc- gap and career
p*anning. In the competenc- stage ,hich he*ps to capture the competencies o# a** the emp*o-ees
o# the organi?ation ,hich inc*udes the capacities o# the management a*so. In the second stage2 the
organi?ationa* re<uirements and competenc- gap to be ana*-?ed. In the third phase2 this dea*s
,ith identi#-ing and veri#-ing the organi?ationa* needs2 individua* gro,th and a*ong ,ith career
p*anning o# the e8ecutives.
Stage III: ;his stage is consisting o# three *eve*s. ;he #irst *eve* o# this stage dea*s ,ith the
activities invo*ving training need assessment o# individua*s and o# a** emp*o-ees based on ,hich
.nnua* ;raining 9*an 5.;96 is dra,n. 0ased on the annua* training p*an the emp*o-ees are
chosen to e8pose to either corporate training program2 #or interna* training programs and e8terna*
organi?ations. Whi*e deciding the venue and t-pes and nature o# the training program the
personne* department and training #aci*itator shou*d consider the various issues *i1e no o#
e8ecutives2 cost2 outsourcing and avai*abi*it- o# technica* e8pertise in the organi?ations. In case o#
organi?ationa* deve*opment re*ated e8ercises2 the combination o# interna* and e8terna* training
programs shou*d be arrange #or the a** emp*o-ee o# the organi?ation.
;hough the mone-2 in#rastructure and #ina**- the manpo,er to be uti*i?ed in the ,ho*e process
1eeping into this2 the top management has to ta1e decision in this regard. ;he training
department2 management and HR :epartment shou*d ,or1 in union. It is a co**ective
phenomenon2 ,hich is most*- initiatives2 motives o# the top management. I# entire process o#
e8ecutive deve*opment is most*- determined b- its e##icac-and its e##ectiveness.
.part #rom this the process o# e8ecutive deve*opment can be de#ined in severa* other ,a-s ,ith
s*ight di##erence.
;he process o# e8ecutive deve*opment is as
#o**o,s3
1. )na+4sis of &eve+oment 0eeds: (irst o# a** the present and #uture deve*opment needs
o# the organi?ation are ascertained. It is necessar- to determine ho, man- and ,hat t-pe
o# e8ecutives are re<uired to meet the present and #uture needs o# the enterprise.
2. )raisa+ of t$e 2resent Manageria+ 9a+ent: . <ua*itative assessment o# the e8isting
e8ecutives is made to determine the t-pe o# e8ecutive ta*ent avai*ab*e ,ithin the
organi?ation.
". 2+anning Individua+ &eve+oment 2rogrammes: 7ach one o# us has a uni<ue set o#
ph-sica*2 inte**ectua* and emotiona* characteristics. ;here#ore2 deve*opment p*an shou*d
be tai*orBmade #or each individua*.
/. 3stab+is$ing 9raining and &eve+oment 2rogramme: ;he HR department prepares
comprehensive and ,e** conceived programmes.
7. 3va+uating &eve+oing 2rograms: Considerab*e mone-2 time and e##orts are spent on
e8ecutive deve*opment programmes. It is there#ore natura* to #ind out to ,hat e8tent the
programme>s objective has been achieved.
3va+uation of 3@ecutive
&eve+oment
In the competition scenario2 ,here the #ocus is on e##icienc- and pro#itabi*it- and the return on
investment 5ROI6 on a** the activities o# the organi?ation2 e8ecutive deve*opment cannot be an
e8ception to the phenomenon. ;he eva*uation o# the process assumes importance #rom the
#o**o,ing perspectives3
Improving the <ua*it- o# the training and deve*opment process.
Improving the e##icienc- and competenc- o# the trainers.
Ma1ing improvements in the s-stem to ma1e it more responsive and rea*istic.
.*igning the training activities to the organi?ationa* objectives.
0ui*ding the cost imp*ications o# the training into the organi?ationa* budget.
7va*uating the ROI on account o# training and deve*opment to justi#- #urther investments.
Changing the perception o# the management on training as e8penditure to more as an
investment #or the #uture gro,th o# the organi?ation.
;he *eve*s o# eva*uation inc*ude the reaction *eve*2 immediate *eve*2 intermediate *eve*2 and
u*timate *eve*. (or the purpose o# eva*uation2 it is essentia* to co**ect the data #or ,hich there
shou*d be appropriate measures #or data co**ection2 both during the course o# the training
programme and a#ter the training programme. %ome o# the methods being used b- e8perts are
se*#Bcomp*ete <uestionnaires2 intervie,s2 observations2 and des1 research. ;he des1 research
invo*ves *o, cost and *ess amount o# time.
<.7 Met$ods of 3@ecutive
&eve+oment
Management deve*opment programs he*p in ac<uiring and deve*oping manageria* s1i** and
1no,*edge. . Larit- o# methods o# management deve*opment have come into prominence these
da-s. :i##erent t-pes o# techni<ues are used to ac<uire and deve*op various t-pes o# manageria*
s1i** and 1no,*edge as given in the tab*e be*o,3
S.
0o.
!ometenc4 &eve+oment )rea Met$ods
1. :ecisionBma1ing s1i** InBbas1et2 0usiness games2 Case stud-
2. Interpersona* s1i** Ro*e p*-ing2 %ensitivit- ;raining
3. Dob Cno,*edge OnBtheBDob e8periences2 Coaching2 4nderstud-
!. Organi?ationa* Cno,*edge Dob Rotation2 Mu*tip*e Management
$. Genera* Cno,*edge %pecia* course2 %pecia* Meeting2 %peci#ic Reading
&. %peci#ic Individua* "eeds %pecia* 9rojects2 Committee .ssignments
Manageria+ 9raining C Management deve+oment: ;he #o**o,ing diagram sho,s the stages
invo*ved in the manageria* training.
)'
Or gani?ationa*
9*anning
%tage I
9rogram ;argeting
%tage II
:iscovering the 1e-
position
%tage III
.ppraisa*
%tage IL
Rep*acement s1i**
abi*ities
%tage L
Individua* dev
e*opment
%tage LI
7va*uation
%tage LII
1igure <.2 : Stages of Manageria+ 9raining
In a** above stages2 ,e shou*d satis#- the #o**o,ing essentia* aspects in order to ma1e the
programmes a success3
1. 9o*ic- decisions
2. .cceptance
3. .ppreciation
!. %upport
$. Conductive atmosphere
&. %trong urge #or *earning
'. 9articipation
). Identi#ication o# strength and ,ea1ness
+. Invo*vement
10. %e*#Bdeve*opment
. number o# e8ecutive deve*opment methods are avai*ab*e. Genera**- these methods are used in
combination o# t,o or more.
;he various techni<ues o# e8ecutive deve*opment ma- be c*assi#ied into t,o broad categories3 B
1. On t$e 8ob 9ec$ni=ues: It is de*ivered to emp*o-ees ,hi*e the- per#orm their regu*ar jobs. In
this ,a-2 the- do not *ose time ,hi*e the- are *earning. .#ter a p*an is deve*oped #or ,hat shou*d
be taught2 emp*o-ees shou*d be in#ormed o# the detai*s. . timeBtab*e shou*d be estab*ished ,ith
periodic eva*uations to in#orm emp*o-ees about their progress. OnBtheBjob techni<ues inc*ude
orientations2 job instruction training2 apprenticeships2 internships and assistantships2 job rotation
and coaching. It consists o#3 B
!oac$ingBCoaching is a oneBtoBone re*ationship bet,een trainees and supervisors ,hich
o##ers ,or1ers continued guidance and #eedbac1 on ho, ,e** the- are hand*ing their tas1s.
;he coach assigns the tas12 monitors the trainee behavior2 and provides rein#orcement and
#eedbac1. Coaching is common*- used #or a** 1inds o# trainees2 #rom uns1i**ed to
manageria* position. ;his method is critica**- depends on the <ua*it- o# the coach.
Under Stud4- .n understud- ma- be assistant to someone or specia* assistant to some
supervisor- or e8ecutive positions. He *earns b- e8perience2 observation2 guidance and
coaching.
2osition RotationB;his invo*ves the movement o# the trainee #rom one job to another.
;his he*ps him to have a genera* understanding o# ho, the organi?ation #unctions. .part
#rom re*easing boredom2 Dob rotation a**o,s ,or1ers to bui*d rapport ,ith a ,ide range o#
individua*s ,ithin the organi?ation2 #aci*itating #uture cooperation among various
departments. %uch crossBtrained personne* o##er a great dea* o# #*e8ibi*it- #or
organi?ations ,hen trans#ers2 promotions or rep*acement become inevitab*e.
Mu+ti+e ManagementB It provides 1no,*edge about the organi?ation to the junior and
midd*e manageria* personne*. Here the members are e8posed to a** t-pes o# the decision
ta1en at higher *eve*.
2. Off-t$e-8ob 9ec$ni=ue: It consists
o# 3
:ecturesB It is a traditiona* and direct method o# instruction. ;he instructor organi?es the
materia* and gives it to a group o# trainees in the #orm o# a ta*1. ;o be e##ective2 the
*ecture must motivate and create interest among the trainees. .n advantage o# this method
is that it is direct and can be used #or a *arge group o# trainees. ;he major *imitation o# this
method is that it does not provide#or the trans#er o# training e##ective*-.
!ase Studies- It presents the trainees ,ith a ,ritten description o# a business or
organi?ationa* prob*em. ;he object o# the case method is to teach the trainees ho, to
ana*-?e in#ormation2 generate a*ternative decisions2 and eva*uate the a*ternatives. Cases
can be ana*-?ed b- individua*s or sma** groups. (eedbac1 and rein#orcement are provided
through ora* discussion or ,ritten comments #rom the instructor.
*rou &iscussions- ;his method is a direct discussion on a speci#ic topic conducted
,ith a re*ative*- sma** group o# trainees. ;his method is use#u* #or teaching and e8p*oring
di##icu*t conceptua* materia*s2 and #or changing attitudes and opinions. It provides
opportunit- #or #eedbac12 rein#orcement practice2 motivation2 and trans#er2 *arge*- due to
the active interchange o# ideas bet,een the participants.
Ro+e 2+a4ing- In most o# ro*eBp*a-ing assignments2 each o# the student ta1es the ro*e o# a
person a##ected b- an issues on human *i#e and e##ect the human activities a** around us
#rom the perspective o# that person.
Management *amesB Lerities o# business and management games have been devised
and are being used ,ith the var-ing degree o# success in the deve*oping programmes. .
management game is c*assroom e8ercise in ,hich a number o# team o# trainees competes
against each other to achieve certain objectives.
Sensitivit4 9raining- It has been success#u**- emp*o-ed b- behaviora* scientists over the
past thirt- -ears. %ensitivit- to the circumstances and #ee*ing o# others is the cornerstone
o# human re*ationships. It is important to note that sensitivit- is not just an emotionA it
must e8press itse*# in actions as ,e**2 especia**- ,hen peop*e ,e 1no, are e8periencing
pain and di##icu*ties.
<.; !areer 2+anning and &eve+oment
Career deve*opment is an organi?ed approach used to match emp*o-ee goa*s ,ith the business
needs o# the agenc- in support o# ,or1#orce deve*opment initiatives. ;he purpose o# career
deve*opment is to3
7nhance each emp*o-ee>s current job per#ormance.
7nab*e individua*s to ta1e advantage o# #uture job opportunities.
(u*#i* agencies> goa*s #or a d-namic and e##ective ,or1#orce.
Career deve*opment invo*ves managing -our career either ,ithin or bet,een organi?ations. It a*so
inc*udes *earning ne, s1i**s2 and ma1ing improvements to he*p -ou in -our career. Career
deve*opment is an ongoing2 *i#e*ong process to he*p -ou *earn and achieve more in -our career.
Whether -ou are *oo1ing at ma1ing a career change2 or moving up ,ithin a compan-2 p*anning
-our o,n career deve*opment ,i** he*p -ou succeed. 0- creating a persona* career deve*opment
p*an2 -ou can set goa*s and objectives #or -our o,n persona* career gro,th. :on>t ma1e the
mista1e o# *eaving -our career deve*opment #uture in the hands o# -our emp*o-er2 hoping that
-ou ,i** get the ne8t promotion or pa- raise. ;his misconception can *ead to job dissatis#action
and resentment. Career p*anning is a *i#e*ong process2 ,hich inc*udes choosing an occupation2
getting a job2 gro,ing in our job2 possib*- changing careers2 and eventua**- retiring. ;he Career
9*anning %ite o##ers coverage o# a** these areas. ;his artic*e ,i** #ocus on career choice and the
process one goes through in se*ecting an occupation. ;his ma- happen once in our *i#etimes2 but it
is more *i1e*- to happen severa* times as ,e #irst de#ine and then rede#ine ourse*ves and our
goa*s.
Managers are responsib*e #or *in1ing the organi?ation>s needs to emp*o-ee career goa*s2 and can
assist emp*o-ees in the career p*anning process. Human Resources is responsib*e #or designing
career paths and emp*o-ee deve*opment programs that he*p emp*o-ees reach their goa*s. 7ach
emp*o-ee is responsib*e #or p*anning and managing hisIher career.
<.;.1 Objective
Career Management is the combination o# structured p*anning and the active management choice
o# one>s o,n pro#essiona* career. ;he outcome o# success#u* career management shou*d inc*ude
persona* #u*#i**ment2 ,or1I*i#e ba*ance2 goa* achievement and #inancia* assurance.
;he ,ord career re#ers to a** t-pes o# emp*o-ment ranging #rom semiBs1i**ed through s1i**ed2 and
semi pro#essiona* to pro#essiona*. ;he term career has o#ten been restricted to suggest an
emp*o-ment commitment to a sing*e trade s1i**2 pro#ession or business #irm #or the entire ,or1ing
*i#e o# a person. In recent -ears2 ho,ever2 career no, re#ers to changes or modi#ications in
emp*o-ment during the #oreseeab*e #uture. ;here are man- de#initions b- management scho*ars
o# the stages in the manageria* process. ;he #o**o,ing c*assi#ication s-stem ,ith minor variations
is ,ide*- used3
1. :eve*opment o# overa** goa*s and objectives2
2. :eve*opment o# a strateg- 5a genera* means to accomp*ish the se*ected goa*sIobjectives62
3. :eve*opment o# the speci#ic means 5po*icies2 ru*es2 procedures and activities6 to
imp*ement the strateg-2 and
!. %-stematic eva*uation o# the progress to,ard the achievement o# the se*ected
goa*sIobjectives to modi#- the strateg-2 i# necessar-.
;he career management process begins ,ith setting goa*sIobjectives. . re*ative*- speci#ic
goa*Iobjective must be #ormu*ated. ;his tas1 ma- be <uite di##icu*t ,hen the individua* *ac1s
1no,*edge o# career opportunities andIor is not #u**- a,are o# their ta*ents and abi*ities. Ho,ever2
the entire career management process is based on the estab*ishment o# de#ined goa*sIobjectives
,hether speci#ic or genera* in nature. 4ti*i?ing career assessments ma- be a critica* step in
identi#-ing opportunities and career paths that most resonate ,ith someone. Career assessments
can range #rom <uic1 and in#orma* *i1e those on Career0ui*der or ma- be more in depth *i1e
those such as M-ersB0riggs and Career =eader supported assessments #ound on M- 9ath.
Regard*ess o# the ones -ou use2 -ou ,i** need to eva*uate them. Most assessments #ound toda-
#or #ree 5a*though good6 do not o##er an inBdepth eva*uation.
;he time hori?on #or the achievement o# the se*ected goa*s or objectives B short term2 medium
term or *ong term B ,i** have a major in#*uence on their #ormu*ation.
1. %hort term goa*s 5one or t,o -ears6 are usua**- speci#ic and *imited in scope. %hort term
goa*s are easier to #ormu*ate. Ma1e sure the- are achievab*e and re*ate to -our *onger
term career goa*s.
2. Intermediate goa*s 53 to 20 -ears6 tend to be *ess speci#ic and more open ended than short
term goa*s. 0oth intermediate and *ong term goa*s are more di##icu*t to #ormu*ate than
short term goa*s because there are so man- un1no,ns about the #uture.
3. =ong term goa*s 5more than 100 -ears62 o# course2 are the most #*uid o# a**. =ac1 o# *i#e
e8perience and 1no,*edge about potentia* opportunities and pit#a**s ma1e the #ormu*ation
o# *ong term goa*sI objectives ver- di##icu*t. =ong range goa*sIobjectives2 ho,ever2 ma-
be easi*- modi#ied as additiona* in#ormation is received ,ithout a great *oss o# career
e##orts because o# e8perienceI1no,*edge trans#er #rom one career to another.
!. Ma1ing career choices and decisions H the traditiona* #ocus o# careers interventions. ;he
changed nature o# ,or1 means that individua*s ma- no, have to revisit this process more
#re<uent*- no, and in the #uture2 more than in the past.
$. Managing the organi?ationa* career H concerns the career management tas1s o# individua*s
,ithin the ,or1p*ace2 such as decisionBma1ing2 *i#eBstage transitions2 dea*ing ,ith stress
etc.
&. Managing Mboundar- *ess> careers H re#ers to s1i**s needed b- ,or1ers ,hose
emp*o-ment is be-ond the boundaries o# a sing*e organi?ation2 a ,or1 st-*e common
among2 #or e8amp*e2 artists and designers.
'. ;a1ing contro* o# one>s persona* deve*opment H as emp*o-ers ta1e *ess responsibi*it-2
emp*o-ees need to ta1e contro* o# their o,n deve*opment in order to maintain and
enhance their emp*o-abi*it-.
Career deve*opment2 as both a #ie*d o# stud- and a practica* #orm o# training #or ,or1ers2 is
primari*- concerned ,ith producing better emp*o-ees and ma8imi?ing emp*o-ee potentia*.
Career deve*opment programs can he*p the unemp*o-ed #ind jobs or provide ,or1ers ,ith the
s1i**s and too*s the- need to advance ,ithin a government agenc-2 corporation or organi?ation.
Se+f-)>areness- One o# the major objectives o# an- career deve*opment program is a heightened
sense o# se*#Ba,areness #or participants. 7mp*o-ees shou*d be ab*e to identi#- their strengths and
,ea1nesses2 in order to app*- their s1i**s more e##ective*-. 4nderstanding shortcomings is a*so
use#u* in teachingemp*o-ees ,here to #ocus e##orts to,ard improvements. %e*#Ba,areness is a*so
re*ated to understanding the di##erence
bet,een rea* and perceived career advancement *imitations. 0- e8amining avai*ab*e opportunities
and ma1ing an honest assessment o# an emp*o-ee>s s1i**s2 career deve*opment see1s to give ever-
emp*o-ee a rea*istic out*oo1 on the #uture.
1+e@ibi+it4- Career deve*opment a*so sets enhanced #*e8ibi*it- as a goa*. 7mp*o-ees ,or1 in a
changing ,or*d and adaptation is an essentia* s1i**. ;his ma- mean abandoning practices that
have ,or1ed in the past2 or devoting time to education and ne, training. 7mp*o-ees ,ho #ind
themse*ves unab*e to adapt in a changing ,or1p*ace ma- su##er #rom decreased productivit- or be
unab*e to compete ,ith ,or1ers ,hose s1i**s are more #*e8ib*e and easier to app*- across a range
o# tas1s.
3ducation- 7ducation is among the more straight#or,ard objectives o# career deve*opment. %uch
programs attempt to give emp*o-ees2 or prospective emp*o-ees2 access to in#ormation about job
opportunities and options #or s1i**s training. (o**o,ing up ,ith such emp*o-ees is an important
objective as ,e**2 since this gives those ,ho ,or1 in career deve*opment a ,a- o# measuring the
program>s e##ectiveness.
Sensitivit4 to &iversit4- Man- career deve*opment programs ma1e sensitivit- to diversit- in
the ,or1p*ace a top priorit-. With everBincreasing g*oba*i?ation2 ,or1ers are #re<uent*- put into
contact ,ith members o# di##erent bac1grounds and cu*tures. 4nderstanding the va*ue o# diverse
,or1 habits and vie,points can prevent this #rom becoming a point o# con#usion or
misunderstanding. .t the same time2 educating ,or1ers about the customs and concerns o#
others can he*p prevent socia* prob*ems or embarrassment in a diverse ,or1p*ace.
<.;.2 2rocess
Career deve*opment and the career p*anning process inc*ude a number o# speci#ic steps that he*p
to identi#- persona* s1i**s and attributes. (inding out ho, those s1i**s can be uti*i?ed in the job
mar1et is accomp*ished b- researching a number o# career #ie*ds that are o# interest to -ou and
then b- gaining e8perience in those #ie*ds andIor spea1ing to peop*e current*- ,or1ing in the
#ie*d. 9articipating in some #orm o# e8perientia* education ,i** he*p -ou to identi#- i# the #ie*d is
the right choice #or -ou.
Ste H1: Se+f-)ssessment
7va*uating ,ho -ou are as a person. ;his invo*ves ta1ing a persona* inventor- o# ,ho -ou are and
identi#-ing -our individua* va*ues2 interests2 s1i**s2 and persona* <ua*ities. What ma1es -ou tic1 as
a person @ou ,i** *oo1 at those persona* attributes under a microscope and come up ,ith 1e-
<ua*ities -ou can identi#- and use in -our search #or the per#ect career. Career assessments ma-
be re<uired to promote a better understanding o# persona* attributes and s1i**s. Contact -our
Career %ervices O##ice at -our co**ege to discuss i# a career assessment ma- be right #or -ou.
%e*#B.ssessment Rea*it- Chec1 Goa* %etting .ction
9*anning
1igure <." : 9$e !areer Management 2rocess
Ste H2: Researc$ '!areer
3@+oration(
Obtain an insider>s perspective about the career #ie*d -ou are considering. Conduct In#ormationa*
Intervie,s in person2 phone2 or b- emai*. 9ro#essiona*s enjo- sharing their e8pertise ,ith peop*e
interested in the
#ie*d. 9er#orm in#ormationa* intervie,s ,ith a*umni #rom -our co**ege to gain their perspective o#
the #ie*d and to *isten to ,hat the- have to sa-. ;his strateg- provides #irsthand 1no,*edge #rom
someone current*- ,or1ing in the #ie*d and gives -ou an opportunit- to as1 about their
e8periences as ,e** as potentia* jobs and ,hat one might e8pect i# just entering the #ie*d. Gain
e8perience through internships or b- jobshado,ing #or one to severa* da-s to see ,hat a t-pica*
,or1 da- entai*s and to gain perspective o# ,hat the environment is *i1e and the t-pica* job
responsibi*ities o# someone ,or1ing in the #ie*d. Research ,hat t-pes o#jobs are avai*ab*e in -our
area o# interest b- chec1ing out Majors to Career Converter2 ;he Occupationa* Out*oo1 Handboo1
and ;he Career Guide to Industries. ;he Occupationa* Out*oo1 Handboo1 o##ers a ,ea*th o#
in#ormation #or those current*- just entering the job mar1et and #or those anticipating ma1ing a
career change.
Ste H": &ecision-Ma,ing
Once -ou>ve made a thorough se*#Bassessment and have done some research o# career options2
it>s time to ma1e a decision. ;his can be di##icu*t since there ma- sti** be man- un1no,ns and a
#ear o# ma1ing the ,rong choice. One thing #or sure is that a*though ,e can do a** the necessar-
steps to ma1ing an in#ormed decision2 there is no abso*ute certaint- that ,e are
un<uestioning*-ma1ing the right decision. ;hisuncertaint- is easier #or some peop*e than others
but a 1e- point to remember is that -ou can a*,a-s *earn #rom an- job -ou have and ta1e those
s1i**s and app*- them at -our ne8t job.
SteH/: Searc$ '9a,ing
)ction(
It>s no, time to *oo1 #or prospective jobs andIor emp*o-ers2 send out cover *etters and resumes2
and begin net,or1ing ,ith peop*e in the #ie*d. Ceep in mind that cover *etters and resumes are
designed to ma1e a #avorab*e impression on emp*o-ers 5i# done proper*-6 and the intervie,
process is ,hat ,i** u*timate*- *and -ou the job. In other ,ords2 ma1e sure -our cover *etter and
resume high*ight -our s1i**s and strengths based on the emp*o-er>s needs and that -ou are #u**-
prepared to 1noc1 their soc1s o## at the intervie,. ;a1e time to research the emp*o-er>s ,ebsite
prior to the intervie,2 and be prepared to as1 thought#u* <uestions based on -our research.
Ste H7:
)ccetance
Wo,U @ou>ve comp*eted a** o# the steps above and -ou>ve been accepted into a ne, and
e8citing or di##erent job. Congratu*ationsU .ccording to the 0ureau o# =abor %tatistics2 &!.1V o#
peop*e change jobs bet,een $ and 1! times in their *i#etime. Conse<uent*-2 *earning the s1i**s
above ,i** increase -our chances o# gaining meaning#u* and satis#actor- ,or1 as ,e** as he*p -ou
to avoid man- o# the stresses that occur ,ith changing jobs. 0- recogni?ing that change is good
5even advantageous62 changing jobs can be vie,ed as a positive e8perience and need not be as
an8iet- provo1ing as it ma- initia**- seem. @ou ,i** continue the process o# se*#Bassessment2
research2 decisionBma1ing2 and job searching in order to ma1e e##ective and #u*#i**ing career
changes throughout -our *i#etime.
It is a 1no,n #act that most pro#essiona*s *eave an organi?ation due to *ac1 o# career gro,th.
.ctive career deve*opment initiatives b- a compan- are a 1e- retention too* to 1eep the best ta*ent
,ithin its #o*d. It is one o# the greatest motivators to 1eep an emp*o-ee happ- and engaged. 0ut
does career p*anning and deve*opment o# emp*o-ees actua**- ma1e a di##erence to the
productivit- o# a ,or1er Most organi?ations thin1 so2 and consider it a part o# their critica*
human resource strateg-. (rom the emp*o-ees>point o# vie, career deve*opment initiatives gives
them a c*ear #ocus about their career trac12 the b*ind spots that the- have to overcome and the
#ina* goa* to be reached. ;his #ocused approach ,or1s to their advantage #rom their ever-da-
,or1 to *ongBterm aspirations.
;he impact o# career deve*opmentI succession p*anning programmes can be seen through the
productivit- indicator2 engagement surve-s and reduction in attrition rate. It is in #act a ,inB,in
situation #or a**.
<.< Summar4
78ecutive deve*opment p*a-s a crucia* ro*e in HRM. It is the managers I e8ecutives ,ho can
determine the destin- o# the organi?ation b- strategi?ing2 imp*ementing the strategies2 and more
important*-2 *eading the emp*o-ees to higher *eve*s o# e##icienc- and per#ormance. ;he unit
begins ,ith an introduction to the emerging scenario2 e8p*ains the process o# the e8ecutive
deve*opment programme 57:96 in the overa** organi?ationa* conte8t and a*so the various stages
invo*ved. It e8p*ains the #actors in#*uencing e8ecutive deve*opment. 78ecutive deve*opment and
its interBre*ationship ,ith eB*earning2 and the methods and techni<ues invo*ved in e8ecutive
deve*opment have been discussed. ;he #actors invo*ved in the designand deve*opment o# 7:9
have been discussed in brie# and the 7:9 has been vie,ed in the conte8t o# organi?ation
deve*opment. ;he process o# p*anning #or the emp*o-ee #rom the time o# joining to the time o#
retirement. It a*so he*ps in understanding career management #rom the organi?ation and individua*
prospective. It a*so attempts to bring out the di##erences bet,een career and job2 identi#ies the
steps in career p*anning2 and ana*-ses the steps that need to be ta1en #rom the individua* and
emp*o-ee>s point o# vie, #or career success.
<.. Se+f )ssessment Auestions
1. What do -ou mean b- the importance o# e8ecutive
deve*opment
2. .na*-se the process invo*ved in the designing and deve*opment
programmes
3. 78p*ain the importance and process o# career
p*anning
!. 0rie#*- e8p*ain the advantages o# career p*anning in
detai*
$. 78p*ain the methodo*ogies o# ma1ing the eva*uation process more
objective.
<.? Reference 6oo,s
B 0ee2 (. and 0ee2 R. 51++!6A M;raining "eeds .na*-sis and 7va*uation>A Chartered
Institute o#
9ersonne*.
B :ess*er2 G. 520006A MHuman Resource Management>A 9rentice Ha**2 "e,
@or1.
B Grund-2 ;. and 0ro,n2 =.520036A MLa*ueBbased Human Resource %trateg-A 7*sevier2
0oston.
B Mabe-2 C. and %a*aman2 G. 520006A M%trategica**- Managing Human Resources>A In#init-
0oo1s2 "e, :e*hi.
B Rao2 L.%.9. 520016A MManaging Human ResourcesB ;e8t and Cases2 78ce* 0oo1s2 "e,
:e*hi.
B ;hite2 M. 5200!6A Managing 9eop*e in the "e, 7conom-2 %age 9ub*ications2 "e,
:e*hi.
B .s,athappa C.5200+6 EHuman Resource and 9ersona* ManagementF H ;e8t and Cases2
;ata
McGra, Hi** 9ub*ishing Compan- =td.2 "e, :e*hi.
B Chhabra ;.". EHuman Resources Management H Concepts and Issues2 (ourth 7ditionF-
%hampat
Rai N Co.2 :e*hi.
B Gupta2 C. 0. 5200!62 EHuman Resource ManagementF2 %i8th 7dition2 %u*tan Chand N
%ons2 "e, :e*hi.
Unit - . : 2erformance )raisa+
Structure of
Unit:
).0
Objectives
).1
Introduction
).2 Meaning o# 9er#ormance
.ppraisa*
).3 "eed and Importance o# 9er#ormance
.ppraisa*
).! Objectives o# 9er#ormance
.ppraisa*
).$ Methods o# 9er#ormance
.ppraisa*
).& ;he 9er#ormance .ppraisa*
9rocess
).' (actors .##ecting 9er#ormance
.ppraisa*
).) 0ene#its o# 9er#ormance
.ppraisa*
).+ 9rob*ems o# 9er#ormance
.ppraisa*
).10 9er#ormance .ppraisa* 9ractices in
India
).11 7##ective 9er#ormance
.ppraisa*
).12
%ummar-
).13 %e*# .ssessment
/uestions
).1! Re#erence
0oo1s
..0 Objectives
.#ter comp*eting this unit2 -ou ,i** be ab*e
to3
4nderstand the concept o# per#ormance appraisa*A
%tate the meaning and importance o# per#ormance appraisa*A
:iscuss the bene#its and prob*ems o# appraisa*A
7numerate the steps in per#ormance appraisa* processA
Out*ine the objectives o# per#ormance appraisa*A
:escribe various appraisa* methodsA
Out*ine #e, per#ormance appraisa* practices in India3
..1 Introduction
In a casua* sense2 per#ormance appraisa* is as o*d as man1ind itse*#. In an o##icia* sense2
per#ormance appraisa* o# an individua* began in the Wei d-nast- 5.:. 2&1B2&$6 in China2 ,here
an Imperia* Rater appraised the per#ormance o# the o##icia* #ami*->. In 1))32 the "e, @or1 Cit-
Civi* %ervice in 4%. introduced a o##icia* appraisa* programme short*- be#ore Wor*d War .
Ho,ever2 o##icia* appraisa* o# emp*o-ees> per#ormance is thought to have been started #or the
#irst time during the (irst Wor*d War2 ,hen at the instance o# Wa*ter :i** %cott2 the 4% .rm-3
adopted the EManBtoBman> rating s-stem #or eva*uating personne*. (or being #air and unbiased2
in judging the emp*o-ee it is necessar- to revie, the per#ormance o# the person in the
organi?ation. ;his is no, done in a s-stematic ,a- in most countries o# the ,or*d. ;he
eva*uation o# an individua*>s per#ormance in the organi?ation is ca**ed 9er#ormance .ppraisa*.
;he2 s-stem o# per#ormance appraisa* compe*s the management to have a promotion po*ic-
,ithin the organi?ation. It a*so gives motivation to those emp*o-ees ,ho are e##icient and are
capab*e o# ,or1ing in a best ,a-. .n organi?ation>s goa*s can be achieved on*- ,hen peop*e
,ithin the organi?ation give their best e##orts. Ho, to 1no, ,hether an emp*o-ee has sho,n his
or her best per#ormance on a given job ;he ans,er is per#ormance appraisa*.
In the organi?ation conte8t per#ormance appraisa* is an eva*uation o# personne* in a s-stematic
,a- b- superiors or others #ami*iar ,ith their per#ormance. It is a*so described as merit rating in
,hich one individua* is ran1ed as better or ,orse in comparison to others. ;he basic purpose in
this merit rating is to determine an emp*o-ee>s e*igibi*it- #or promotion. Ho,ever2 per#ormance
appraisa* is a broad term and it ma- be used to ascertain the need #or training and deve*opment2
sa*ar- increase2 trans#er2 discharge2 etc. besides promotion.
In simp*e terms2 per#ormance appraisa* ma- be understood as the revie, o# an individua*>s
per#ormance in an order*- ,a-2 the per#ormance is measured b- considering #actors *i1e job
1no,*edge2 <ua*it- and <uantit- o# output2 initiative2 *eadership abi*ities2 supervision2
dependabi*it-2 coBoperation2 judgment2 versati*it-2 hea*th2 and the *i1e. 7va*uation shou*d not be
restricted to past per#ormance a*one but2 the #uture per#ormances o# the emp*o-ee shou*d a*so be
assessed.
..2 Meaning of 2erformance )raisa+
9er#ormance appraisa* s-stem has been de#ined in man- ,a-s. ;he easiest ,a- to understand the
meaning o# per#ormance appraisa* is as #o**o,s3
It is the s-stematic assessment o# an individua* ,ith respect to his or her per#ormance on the job
and his or her potentia* #or deve*opment in that job. ;hus2 per#ormance appraisa* is a s-stematic
and objective ,a- o# eva*uating the re*ative ,orth or abi*it- o# an emp*o-ee in per#orming his
job. ;he t,o aspects o# per#ormance appraisa* considered to be important are3 s-stematic and
objective. ;he appraisa* is said to be s-stematic ,hen it eva*uates a** per#ormances in the same
manner2 b- app*-ing the same approach2 so that appraisa* o# di##erent persons are comparab*e.
%uch an appraisa* is ta1en #rom time to time according to p*anA it is not *e#t to probabi*it-. ;hus2
both raters> and ratees 1no, the s-stem o# per#ormance appraisa* and its timing. .ppraisa* has
objectivit- a*so. It>s important aspect is that it attempts at precisemeasurement b- tr-ing to
remove human biases and prejudices.
)ccording to 1+io2 a prominent persona*it- in the #ie*d o# Human resources2 Eper#ormance
appraisa* is the s-stematic2 periodic and an impartia* rating o# an emp*o-ee>s e8ce**ence in the
matters pertaining to his present job and his potentia* #or a better job.F
In t$e >ords of Eoder- E9er#ormance appraisa* re#ers to a** #orma* procedures used in ,or1ing
organi?ations to eva*uate persona*ities and contributions and potentia* o# group members.F ;hus
per#ormance appraisa* is a #orma* programme in an organi?ation ,hich is concerned ,ith not on*-
the contributions o# the members ,ho #orm part o# the organi?ation2 but a*so aims at spotting the
potentia* o# the peop*e.F
It is a s-stematic ,a- o# judging the re*ative ,orth o# an emp*o-ee ,hi*e carr-ing out his ,or1
in an organi?ation. It a*so he*ps recogni?e those emp*o-ees ,ho are per#orming their tas1s ,e**
and a*soB ,ho are not per#orming their tas1s proper*- and the reasons #or such 5poor6
per#ormance.
)ccording to Internationa+ :abor Organi5ation- E. regu*ar and continuous eva*uation o# the
<ua*it-2 <uantit- and st-*e o# the per#ormance a*ong ,ith the assessment o# the #actors in#*uencing
the per#ormance and behavior o# an individua* is ca**ed as per#ormance appraisa*.F
In short2 ,e can sa- that per#ormance appraisa* is e8pected to resu*t in an assessment o#3
deve*opment potentia* o# the emp*o-ees2 training needs #or the emp*o-eesA capabi*ities o#
emp*o-ees being p*aced in higher posts2 behavior and obedience o# the emp*o-eesA and the need
o# the organi?ation to evo*ve a contro* mechanism.
.." 0eed and Imortance of 2erformance )raisa+
9er#ormance is a*,a-s measured in terms o# outcome and not e##orts. 9er#ormance .ppraisa* is
needed in most o# the organi?ations in order3
516 ;o give in#ormation about the per#ormance o# emp*o-ees on the job and give ran1s on the
basis o# ,hich decisions regarding sa*ar- #i8ation2 demotion2 promotion2 trans#er and
con#irmation are ta1en.
526 ;o provide in#ormation about amount o# achievement and behavior o# subordinate in
their job.
;his 1ind o# in#ormation he*ps to eva*uate the per#ormance o# the subordinate2 b-
correcting *oopho*es in per#ormances and to set ne, standards o# ,or12 i# re<uired.
536 ;o provide in#ormation about an emp*o-ee>s jobBre*evant strengths and N
,ea1nesses.
5!6 ;o provide in#ormation so as to identi#- shortage in emp*o-ee regarding abi*it-2
a,areness and #ind out training and deve*opmenta* needs.
5$6 ;o avoid grievances and in discip*inar- activities in the
organi?ation. 5&6 It is an ongoing process in ever- *arge sca*e
organi?ation.
9er#ormance appraisa*s in an organi?ation provide emp*o-ees and managers ,ith an opportunit-
to converse in the areas in ,hich emp*o-ees do e8treme*- ,e** and those in ,hich emp*o-ees
need improvement. 9er#ormance appraisa*s shou*d be conducted on a #re<uent basis2 and the-
need not be direct*- attached to promotion opportunities on*-. It is important because o# severa*
reason s such as3
1. 2ersona+ )ttention: 9er#ormance appraisa* eva*uation2 gives emp*o-ee to dra, persona*
concern #rom supervisor and ta*1 about their o,n strengths and ,ea1nesses.
2. 1eedbac,: 7mp*o-ees on a regu*ar basis get #eedbac1 o# their per#ormances and issues in
,hich the- *ac12 ,hich needs to be reso*ved on a regu*ar basis.
". !areer 2at$: It a**o,s emp*o-ees and supervisors to converse goa*s that must be met to
gro, ,ithin the compan-. ;his ma- encompass recogni?ing s1i**s that must be ac<uired2
areas in ,hich improvement is re<uired2 and additiona* <ua*i#ication that must be ac<uired.
/. 3m+o4ee )ccountabi+it4: 7mp*o-ees are ac<uainted that their eva*uation ,i** ta1e p*ace
on a regu*ar basis and there#ore the- are accountab*e #or their job per#ormance.
7. !ommunicate &ivisiona+ and !oman4 *oa+s: It not on*- communicates emp*o-ees>
individua* goa*s but provides an opportunit- #or managers to e8p*ain organi?ationa* goa*s
and in the manner in ,hich emp*o-ees can contribute in the achievement o# those goa*s.
../ Objectives of 2erformance )raisa+
9er#ormance appraisa* in an- organi?ation is underta1en to meet certain objectives ,hich ma- be
in the #orm o# sa*ar- increase2 promotion2 recogni?ing training and deve*opment needs2 providing
#eedbac1 to emp*o-ees and putting stress on emp*o-ees #or better per#ormance.
.n emp*o-ee in an organi?ation ma- thin1 that per#ormance appraisa* is basica**- used b- the
organi?ation to b*ame emp*o-ees and to ta1e corrective actions. .n emp*o-ee ma- #ee* that
per#ormance appraisa* is
introduced in an organi?ation #or punishment in such a case ,e** thought out per#ormance
appraisa* ma- resu*ts into #ai*ure. I# the objectives set in a more positive2 prob*ems ma- arise as
the- ma- not a** be achievab*e and the- ma- cause con#*ict. (or 78amp*e2 an emp*o-ee ,ho is
*i1e*- to be appraised ,i** never disc*oses his *oopho*es as it ma- a##ect his appraisa*. ;hus the
objective o# per#ormance appraisa* shou*d e c*ear and speci#ic. ;hus inc*uding objectives into the
appraisa* s-stem ma- dra, attention to areas #or improvement2 ne, directions and opportunities.
1. Sa+ar4 Increase: 9er#ormance appraisa* p*a-s an important ro*e in ma1ing decision about
increase in sa*ar-. Increase in sa*ar- o# an emp*o-ee depends on ho, he is per#orming his
job. 7va*uation o# an emp*o-ee ta1es p*ace on a continuous basis ,hich ma- be #orma**-
or in#orma**-. In a *arge as ,e** as in sma** organi?ations per#ormance appraisa* ta1es
p*ace but it ma- be in a #orma* or in#orma* ,a-. It sho,s ho, ,e** an emp*o-ee is
per#orming and to ,hat e8tent a hi1e in sa*ar- ,ou*d ta1e p*ace in comparison to his
per#ormance.
2. 2romotion3 9er#ormance appraisa* gives an idea about ho, an emp*o-ee is ,or1ing in his
present job and ,hat his strong and ,ea1 points are. In comparison to his strength and
,ea1nesses it is decided ,hether he can be promoted to the ne8t higher position or not. I#
necessar- ,hat additiona* training is re<uired. %imi*ar*- it cou*d be used #or demotion2
discharge o# an emp*o-ee and trans#er.
". 9raining and &eve+oment: 9er#ormance appraisa* gives an idea about strengths and
,ea1nesses o# an emp*o-ee on his present job. It gives an idea about the training re<uired
b- an emp*o-ee #or overcoming the *imitations that an emp*o-ee is having #or better
per#ormance in #uture.
/. 1eedbac,: 9er#ormance appraisa* gives an idea to each emp*o-ee ,here the- are2 ho,
the- are ,or1ing2 and ho, are the- contributing to,ards achievement o# organi?ationa*
objectives. (eed ,or1s in t,o ,a-s. (irst2 the person gets vie, about his per#ormance
and he ma- tr- to con<uer his ,ea1nesses ,hich ma- *ead to better per#ormance. %econd2
the person gets satis#ied a#ter he re*ates his ,or1 ,ith organi?ationa* objectives. It gives
him an idea that he is doing a meaning #u** ,or1 and can a*so contribute in a better ,a-.
7. 2ressure on 3m+o4ees3 9er#ormance appraisa* puts a sort o# stress on emp*o-ees #or
better per#ormance. I# the emp*o-ees are a,are that the- are been appraised in
comparison to their per#ormance and the- ,i** have positive and acceptab*e behaviour in
this respect
)ctivit4
):
1. Current*- -ou are ,or1ing in a manu#acturing organi?ation. Write the objectives o#
per#ormance appraisa* o# -our organi?ation in the *ight o# those mentioned above.
..7 Met$ods of 2erformance )raisa+
9er#ormance appraisa* methods are categori?ed in t,o ,a-s traditiona* and modern methods.
7ach organi?ation adopts a di##erent method o# per#ormance appraisa* according to the need o#
organi?ation. In sma** organi?ation2 it ma- be on an in#orma* basis ,here persona* opinion o# a
superior about his subordinates ma- consider #or appraisa*.
++
9ab+e ..2 Met$ods of 2erformance )raisa+
9raditiona+ Met$ods Modern Met$ods
Ran1ing method Management b- Objectives 5M006
9aired comparison 0ehaviora**- anchored rating sca*es
Grading method .ssessment centers
(orced distribution method 3&0Bdegree appraisa*
(orced choice method Cost accounting method
Chec1*ist method
Critica* incidents method
Graphic sca*e method
7ssa- method
(ie*d revie, method
1. Ran,ing Met$od: It is the o*dest and simp*est method o# per#ormance appraisa* in ,hich
emp*o-ees> are ran1ed on certain criteria such as trait or characteristic. ;he emp*o-ee is ran1ed
#rom highest to *o,est or #rom ,orst to best in an organi?ation. ;hus i# there are seven emp*o-ees
to be ran1ed then there ,i** be seven ran1s #rom 1 to '.
Rating sca*es o##er the advantages o# #*e8ibi*it- comparative*- eas- use and *o, cost. "ear*-
ever-t-pe o# job can be eva*uated ,ith the rating sca*e2 the on*- condition being that the DobB
per#ormance criteria shou*d he changed> .In such a ,a-2 a *arge number o# emp*o-ees can be
eva*uated in a shorter time period.
;hus2 the greatest *imitation o# this method is that di##erences in ran1s do not indicate ho, much
an emp*o-ee o# ran1 1 is better than the emp*o-ee ,hose ran1 is *ast.
2. 2aired !omarison: In method is comparative*- simp*er as compared to ran1ing method. In
this method2 the eva*uator ran1s emp*o-ees b- comparing one emp*o-ee ,ith a** other
emp*o-ees in the group. ;he rater is given s*ips ,here2 each s*ip has a pair o# names2 the rater
puts a tic1 mar1 ne8t those emp*o-ee ,hom he considers to be the better o# the t,o. ;his
emp*o-ee is compared number o# times so as to determine the #ina* ran1ing.
;his method provides comparison o# persons in a better ,a-. Ho,ever2 this increases the ,or1
as the *arge number o# comparisons has to be made. (or e8amp*e2 to ran1 $0 persons through
paired comparison2 there ,i** be 1222$ comparisons. 9aired comparison method cou*d be
emp*o-ed easi*- ,here the numbers o# emp*o-ees to be compared are *ess.
;his ma- be ca*cu*ated b- a #ormu*a " 5" J 1612 ,here " is the tota* number o# persons to be
compared. Where " is the tota* number o# persons to be eva*uated.
(or
e8amp*e
I# the #o**o,ing #ive teachers have to be eva*uated b- the Lice Chance**er o# a 4niversit- 3
Chinma-5 c62 Mohan 5M62 Rohit 5R62 Lisha* 5L62 and 0asanti 5062 the above #ormu*a gives
100
$ 5$J 16I2 or 10 pairs. ;hese
areA
101
C,ithM2
C,ithR M,ithR
C,ithL M,ithL R,ithL
C,ith0 M,ith0 R,ith0 L,ith
0
;hus2 the pairs to be compared give the ma8imum possib*e combinations in ,hich an emp*o-ee
cou*d be compared ,ith one another. I# an emp*o-ee sores better number o# times as compared to
other emp*o-ee is considered better2 ma1es hisIher score. %uch scores are considered #or each
,or1er and heIshe is ran1ed according to hisIher score. ;his method cannot ,or1 ,hen *arge
number o# emp*o-ee is compared.
". *rading Met$od: In this method2 certain categories are de#ined ,e** in advance and
emp*o-ees are put in particu*ar categor- depending on their traits and characteristics. %uch
categories ma- be de#ined as outstanding2 good2 average2 poor2 ver- poor2 or ma- be in terms o#
a*phabet *i1e .2 02 C2 :2 etc. ,here . ma- indicate the best and : indicating the ,orst. ;his t-pe
o# grading method is app*ied during %emester pattern o# e8aminations. One o# the major
*imitations o# this method is that the rater ma- rate man- emp*o-ees on the better side o# their
per#ormance.
/. 1orced &istribution Met$od: ;his method ,as evo*ved to abo*ish the trend o# rating most o#
the emp*o-ees at a higher end o# the sca*e. ;he #undamenta* assumption in this method is that
emp*o-ees> per#ormance *eve* con#orms to a norma* statistica* distribution. (or e8amp*e2 10 per
cent emp*o-ees ma- be rated as e8ce**ent2 !0 per cent as above average2 20 per cent as average2
10 per cent be*o, average2 and 20 per cent as poor. It e*iminates or minimi?es the #avoritism o#
rating man- emp*o-ees on a higher side. It is simp*e and eas- method to appraise emp*o-ees. It
becomes di##icu*t ,hen the rater has to e8p*ain ,h- an emp*o-ee is p*aced in a particu*ar
grouping as compared to others.
7. 1orced-c$oice Met$od: ;he #orcedBchoice rating method contains a se<uence o# <uestion in
a statement #orm ,ith ,hich the rater chec1s ho, e##ective*- the statement describes each
individua* being eva*uated in the organi?ation. ;here ma- be some variations in the methods and
statements used2 but the most common method o# #orced choice contains t,o statements both o#
,hich ma- be positive or negative. It ma- be both the statement describes the characteristics o#
an emp*o-ee2 but the rater is #orced to tic1 on*- one i.e the most appropriate statement ,hich ma-
be more descriptive o# the emp*o-ee. (or e8amp*e2 a rater ma- be given the #o**o,ing t,o
statements3
5i6 ;he emp*o-ee is hard ,or1ing.
5ii6 ;he emp*o-ee gives c*ear instructions to his subordinates.
;hough both o# them describe the characteristics o# an emp*o-ee2 the rater is #orced to tic1 on*-
one ,hich appears to be more descriptive o# the emp*o-ee. Out o# these t,o statements2 on*- one
statement is considered #or #ina* ana*-sis o# rating. (or e8amp*e2 a rater ma- be given the
#o**o,ing t,o statements3
5i6 ;he emp*o-ee is ver- sincere.
5ii6 7mp*o-ee gives c*ear and #ast instructions to his subordinates.
0oth o# the above statements are positive but the rater is supposed to rate on*- one ,hich is
more appropriate o# subordinate>s behavior. (or ran1ing on*- one statement is considered ..s
the rater is not a,are about the statement to be considered the resu*t ,ou*d be #ree #rom bias.
;his method ma- be more objective but it invo*ves *ot o# prob*ems in #raming o# such sets o#
statements.
;. !$ec,-+ist Met$od: ;he main reason #or using this method is to reduce the burden o#
eva*uator. In this method o# eva*uation the eva*uator is provided ,ith the appraisa* report ,hich
102
consist o# series o# <uestions ,hich is re*ated to the appraise. %uch <uestions are prepared in a
manner that re#*ects the behavior o# the concerned appraise. 7ver- <uestion has t,o a*ternatives2
-es or no2 as given be*o,3
1. Is heIshe respected b- hisIher subordinates @esI"o
2. Is heIshe read- to he*p other emp*o-ees @esI"o
103
3. :oes her behavior remain same #or ever-one in the organi?ation @esI"o
;he concerned raterIeva*uator has to tic1 appropriate ans,ers re*evant to the
appraises.
When the chec1B*ist is #inished2 it is sent to the personne* department to prepare the #ina* scores
#or a** appraises based on a** <uestions based on -es or no. Whi*e preparing <uestion e##ort is
made to estab*ish the *eve* o# consistenc- o# the rater b- as1ing the same <uestion t,ice but in a
di##erent manner. ;his method is considered to be eas- i# <uestions are #ramed proper*- #or
di##erent categories o# emp*o-ees.
Ho,ever2 one o# the disadvantages o# the chec1B*ist method is that it is ver- di##icu*t to
accumu*ate2 ana*-?e and eva*uate a number o# statements about emp*o-ee characteristics and
contributions. It is even cost*- method ,ith *ot o# time and e##orts re<uired b- the organi?ation.
<. !ritica+ Incidents Met$od: ;his method is ver- use#u* #or #inding out those emp*o-ees ,ho
have the highest potentia* to ,or1 in a critica* situation. %uch an incidence is ver- important #or
organi?ation as the- get a sense2 ho, a supervisor has hand*ed a situation in the case o# sudden
troub*e in an organi?ation2 ,hich gives an idea about his *eadership <ua*ities and hand*ing o#
situation. It is a*so said to bea continuous appraisa* method ,here emp*o-ees are appraised
continuous*- b- 1eeping in mind the critica* situation. In this method2 on*- the case o# sudden
troub*e and behavior associated ,ith these incidents or troub*e are ta1en #or eva*uation.
;his method is categori?ed in three steps. (irst2 a *ist o# notab*e 5good or bad6 onBtheBjob
behavior o# speci#ic incidents or sudden troub*e is prepared. %econd2 se*ected e8perts ,ou*d then
assign ,eightage or score to these incidents according to ho, serious a particu*ar incident is and
their degree o# ,i**ingness to per#orm a job. ;hird2 #ina**- a chec1B*ist indicating incidents that
i**ustrate ,or1ers as good or EbadF is #ormed. ;hen2 the chec1*ist is given to the rater #or
eva*uating the ,or1ers.
;he strong point o# critica* incident method is that it #ocuses on behaviors and2 thus2 judge>s
per#ormance rather than persona*ities.
Its dra,bac1s are that too #re<uent*- the- need to ,rite do,n the critica* incidents ,hich is ver-
timeB consuming and burdensome #or eva*uators2 i.e.2 managers. Genera**-2 negative incidents are
more noticeab*e than positives.
.. *ra$ic Sca+e Met$od: It is one o# the simp*est and most popu*ar techni<ues #or appraising
per#ormances o# emp*o-ee. It is a*so 1no,n as *inear rating sca*e. In graphic rating sca*e the
printed appraisa* #orm is used to appraise each emp*o-ee.
%uch #orms contain a number o# objectives2 and trait <ua*ities and characters to be rated *i1e
<ua*it- o# ,or1 and amount o# ,or12 job 1no,ho, dependabi*it-2 initiative2 attitude2 *eadership
<ua*it- and emotiona* stabi*it-.
;he rater gives an estimate the e8tent to ,hich subordinates possess each <ua*it-. ;he e8tent to
,hich <ua*it- is possessed is measured on a sca*e ,hich can var- #rom three points to severa*
points. In genera* practice #iveBpoint sca*es is used. %ome organi?ations use numbers in order to
avoid the propensit-o# the rater to tic1 mar1 centra* points. It ma- be numbered or de#ined. ;hus
numbers *i1e $2 !2 32 2 and 1 ma- denote points #or various degrees o# e8ce**entBpoor2 highB*o,2
or goodBbad2 and so on. %uch numbers ma- be e8pressed in terms *i1e e8ce**ent2 ver- good2
average2 poor and ver- poorA or ver- high2 high2 average2 *o, and ver- *o,.
Graphic sca*e method is good #or measuring various job behaviors o# an emp*o-ee. 0ut2 it is
10!
bound to *imitations o# rater>s bias ,hi*e rating emp*o-ee>s behavior at job.
10$
?. 3ssa4 Met$od: In this method2 the rater ,rites a detai*ed description on an emp*o-ee>s
characteristics and behavior2 Cno,*edge about organi?ationa* po*icies2 procedures and ru*es2
Cno,*edge about the job2 ;raining and deve*opment needs o# the emp*o-ee2 strengths2 ,ea1ness2
past per#ormance2 potentia* and suggestions #or improvement. It is said to be the encouraging and
simp*e method to use. It does not need di##icu*t #ormats and speci#ic training to comp*ete it.
10. 1ie+d Revie> Met$od: In this method o# appraisa* direct superior is not going to appraise
an emp*o-ee but appraised b- another person2 usua**-2 #rom personne* department .;he rater2 in
such a case2 appraises the emp*o-ee on the basis o# his past records o# productivit- and other
in#ormation such as absenteeism2 *ate corning2 etc. It is more suitab*e in a situation ,here an
organi?ation ,ants to provide promotion to an emp*o-ee. It a*so gives in#ormation #or comparing
emp*o-ees #rom di##erent *ocationsand units. It reduces partia*it- to some e8tent as personne*
department person is supposed to be trained in appraisa* mechanism. ;his method su##ers #rom
t,o *imitations3
1. .s emp*o-ees are not rated b- immediate boss2 the rater #rom other department ma- not
be #ami*iar ,ith the conditions in an emp*o-ee>s ,or1 environment ,hich ma- hamper his
abi*it- and ,or1 motivation to per#orm.
2. ;he rater #rom other department do not get a chance to scrutini?e the emp*o-ee>s
behavior or per#ormance ,ith di##erent time interva* and in a variet- o# situations2 but
on*- in an unnatura**- structured intervie, situation ,hich is #or a ver- short period o#
time.
Modern Met$ods
1. Management b4 Objectives 'M60(: ;he concept o# MManagement b- Objectives> 5M0O6
,as coined b- 9eter :ruc1er in 1+$!. It is a process ,here the emp*o-ees and the superiors come
together to identi#- some goa*s ,hich are common to them2 the emp*o-ees set their o,n goa*s to
be achieved2 the benchmar1 is ta1en as the criteria #or measuring their per#ormances and their
invo*vement is there in deciding the course o# action to be #o**o,ed.
;he basic nature o# M0O is participative2 setting their goa*s2 se*ecting a course o# actions to
achieve goa*s and then ta1ing decision. ;he most important aspect o# M0O is measuring the
actua* per#ormances o# the emp*o-ee ,ith the standards set b- them. It is a*so said to be a
process that integrates organi?ationa* objectives into individua* objectives.
7ntire program me o# M0O is divided in #our major steps i.e setting up o# goa*2 action p*anning2
comparison
and time*-
revie,.
%etting up o# goa*BIn goa* setting superior and subordinate together set certain goa*s2 i.e the
e8pected outcome that each emp*o-ee is supposed to achieve.
In action p*anning2 the manner in ,hich goa*s cou*d be achieved is determined i.e. identi#-ing the
activities ,hich are necessar- to per#ormA to achieve pr determined goa*s or standards. When the
emp*o-ees start ,ith their activities2 the- come to 1no, ,hat is to be done2 ,hat has been done2
and ,hat remains to be done and it a*so gives an idea about the resources to be achieved.
In the third step2 the goa*s set b- the individua* emp*o-ee are compared ,ith the actua* goa*s
achieved. It gives an idea to the eva*uator as ,h- there is a variation in desired outcome and
actua* outcome .%uch a comparison he*ps create need #or training so as to enhance emp*o-ees>
per#ormance. (ina**-2 in the time*- revie, step2 corrective actions are ta1en so that actua*
10&
per#ormances do not deviates #rom standards estab*ished in beginning.
;he main reason #or conducting revie,s is not to humi*iate the per#ormer but to assist him in
better per#ormances in #uture. (e, advantages o# M0O are a6 it is outcome Horiented. It coB
ordinates the
10'
p*anning and contro* #unctions and provides motivation6 7mp*o-ees are c*ear about the tas1 that
the- are e8pected to per#orm and a*so ho, the- ma- be eva*uated.M0O do have certain
*imitations such as it is time consuming2 emp*o-ees and the superiors joint*- setting the goa*s
ma- *ead to con#*ict as emp*o-ee ,ou*d a*,a-s *i1e to set *o,er goa* and the superior ,ou*d *i1e
to set it on the higher side2 *ac1 o# con#idence in emp*o-ee b- management.
2. 6e$aviora++4 )nc$ored Rating Sca+es: ;his method is a combination o# traditiona* rating
sca*es and critica* incidents methods. It consists o# preset critica* areas o# job per#ormance or
sets o# behaviora* statements ,hich describes the important job per#ormance <ua*ities as good or
bad 5#or e.g. the <ua*ities *i1e inter persona* re*ationships2 #*e8ibi*it- and consistenc-2 job
1no,*edge etc6. ;hese statements are deve*oped #rom critica* incidents.
;hese behaviora* e8amp*es are then again trans*ated into appropriate per#ormance dimensions.
;hose that are se*ected into the dimension are retained. ;he #ina* groups o# behavior incidents are
then sca*ednumerica**- to a *eve* o# per#ormance that is perceived to represent. . rater must
indicate ,hich behavior on each sca*e best describes an emp*o-ee>s per#ormance. ;he resu*ts o#
the above processes are behaviora* descriptions2 such as anticipate2 p*an2 e8ecutes2 so*ves
immediate prob*ems2 carries out orders2 andhand*es urgent situation situations. ;his method has
#o**o,ing advantages3 a6 It reduces rating errors6 0ehavior is assessed over traits. c6 It gives an
idea about the behavior to the emp*o-ee and the rater about ,hich behaviors bring good
9er#ormance and ,hich bring bad per#ormance.
". )ssessment !entres: It is a method ,hich ,as #irst imp*emented in German .rm- in 1+30.
With the passage o# time industria* houses and business started using this method. ;his is a
s-stem o# assessment ,here individua* emp*o-ee is assessed b- man- e8perts b- using di##erent
techni<ue o# per#ormance appraisa*. ;he techni<ues ,hich ma- be used are ro*e p*a-ing2 case
studies2 simu*ation e8ercises2 transactiona* ana*-sis etc.
In this method emp*o-ees #rom di##erent departments are brought together #or an assignment
,hich the- are supposed to per#orm in a group2 as i# the- are ,or1ing #or a higher post or
promoted. 7ach emp*o-ee is ran1ed b- the observer on the basis o# merit .;he basic purpose
behind assessment is to recogni?e ,hether a particu*ar emp*o-ee can be promoted2 or is there
an- need #or training or deve*opment. ;his method has certain advantages such as it he*ps the
observer in ma1ing correct decision in terms o# ,hich emp*o-ee has the capabi*it- o# getting
promoted2 but it has certain disadvantages a*so it is cost*-and time consuming2 discourages the
poor per#ormers etc.
/. ";0 &egree 2erformance )raisa+s: ;his method is a*so 1no,n as Mmu*tiBrater #eedbac1>2 it
is the appraisa* in a ,ider perspective ,here the comment about the emp*o-ees> per#ormance
comes #rom a** the possib*e sources that are direct*- or indirect*- re*ated ,ith the emp*o-ee on his
job.
In 3&0 degree per#ormance appraisa* an emp*o-ee can be appraised b- his peers2 managers 5i.e.
superior62 subordinates2 team members2 customers2 supp*iersI vendors B an-one ,ho comes into
direct or indirect contact ,ith the emp*o-ee and can provide necessar- in#ormation or #eedbac1
regarding per#ormance o# the emp*o-ee the EonBtheBjobF.
;he #our major component o# 3&0 degree per#ormance appraisa*
are
1. 7mp*o-ees %e*# .ppraisa*
10)
2. .ppraisa* b- %uperior
3. .ppraisa* b- %ubordinate
!. 9eer .ppraisa*.
10+
7mp*o-ee se*# appraisa* gives an option to the emp*o-ee to 1no, his o,n strengths and
,ea1nesses2 his achievements2 and judge his o,n per#ormance. .ppraisa* b- superior #orms the
traditiona* part o# the 3&0 degree per#ormance appraisa* ,here the emp*o-ees> responsibi*ities and
actua* per#ormance is judged b- the superior.
.ppraisa* b- subordinate gives a chance to eva*uate the emp*o-ee on the basis o# communication
and motivating abi*ities2 superior>s abi*it- to de*egate the ,or12 *eadership <ua*ities etc. It is a*so
1no,n as interna* customersA the correct opinion given b- peers can aid to #ind emp*o-ees> ,ho
are coBoperative2 emp*o-ees ,ho read- to ,or1 in a team and understanding to,ards others.
7. !ost )ccounting Met$od: In this method per#ormance o# an emp*o-ee is eva*uated on the
basis o# monetar- returns the emp*o-ee gives to his or her organi?ation. . re*ationship is
recogni?ed bet,een the cost inc*uded in 1eeping the emp*o-ee in an organi?ation and the bene#it
the organi?ation gets #romhim or her. ;he eva*uation is based on the estab*ished re*ationship
bet,een the cost and the bene#it. ;he #o**o,ing #actors are considered ,hi*e eva*uating an
emp*o-ee>s per#ormance3
1. Interpersona* re*ationship ,ith others.
2. /ua*it- o# product produced or service given to the organi?ation.
3. Wastage2 damage2 accidents caused b- the emp*o-ee.
!. .verage va*ue o# production or service b- an emp*o-ee.
$. Overhead cost incurred.
)ctivit4 6:
1. In the *ight o# above mentioned methods o# 9er#ormance .ppraisa* se*ect an-
compan- o# -our choice and identi#- the method used b- that compan-.
..; 9$e 2erformance )raisa+ 2rocess
;he per#ormance appraisa* s-stem o# one organi?ation ma- var- #rom other organi?ations2 though
someo# the speci#ic steps that an organi?ation ma- #o**o, are as #o**o,s3
1. 3stab+is$ 2erformance Standards: It begins b- estab*ishing per#ormance standards i.e.
,hat the- e8pect #rom their emp*o-ee in terms o# outputs2 accomp*ishments and s1i**s
that the- ,i** eva*uate ,ith the passage o# time. ;he standards set shou*d be c*ear and
objective enough to be understood and measured. ;he standards ,hich are set are evo*ved
out o# job ana*-sis and job descriptions. %tandards set shou*d be c*ear and not the vague
one. ;he e8pectation o# the manager #rom his emp*o-ee shou*d be c*ear so that it cou*d be
communicated to the subordinates that the- ,i** be appraised against the standards set #or
them.
2. !ommunicating t$e Standards Set for an 3m+o4ee: Once the standards #or
per#ormance are set it shou*d be communicated to the concerned emp*o-ee2 about ,hat it
e8pected #rom them in terms o# per#ormance. It shou*d not be part o# the emp*o-ees> job
to estimate ,hat the- are e8pected do. Communication is said to be t,o ,a-s street2
mere passing o# in#ormation to subordinate does not mean that the ,or1 is done.
Communication on*- ta1es p*ace ,hen the in#ormation given has ta1en p*ace and has
been received and understood b- subordinate. . I# necessar-2 the standards ma- be
tai*ored or revised in the *ight o# #eedbac1 obtained #rom the emp*o-ees.
". Measuring of t$e )ctua+ 2erformances: It is one o# the most crucia* steps o#
per#ormance appraisa* process. It is ver- important to 1no, as ho, the per#ormance ,i**
be measured and ,hat shou*d be measured2 thus #our important sources #re<uent*- used
110
b- managers are persona* observation2 statistica* reports2 ora* reports2 and ,ritten reports.
Ho,ever2 combination o# a**
111
these resources gives more re*iab*e in#ormation. What ,e measure is probab*- more
critica* to the eva*uation process than ho, ,e measure. ;he se*ection o# the incorrect
criteria can resu*t in serious conse<uences. What ,e measure gives an idea about ,hat
peop*e in an organi?ation ,i** attempt to achieve. ;he criteria ,hich are considered must
represent per#ormance as stated in the #irst t,o steps o# the appraisa* process.
/. !omaring )ctua+ 2erformance >it$ Standards Set in t$e 6eginning: In this step o#
per#ormance appraisa* the actua* per#ormance is compared ,ith the e8pected or desired
standard set. .comparison bet,een actua* or desired standard ma- disc*ose the deviation
bet,een standard per#ormance and actua* per#ormance and ,i** a**o, the eva*uator to
carr- on ,ith the discussion o# the appraisa* ,ith the concerned emp*o-ees.
7. &iscussion >it$ t$e !oncerned 3m+o4ee: In this step per#ormance o# the emp*o-ee
is communicated and discussed. It gives an idea to the emp*o-ee regarding their strengths
and ,ea1nesses. ;he impact o# this discussion ma- be positive or negative.
;he impression that subordinates receive #rom their assessment has a ver- strong impact
on their se*# esteem and2 is ver- important2 #or their #uture per#ormances.
;. Initiate !orrective )ction: Corrective action can be o# t,o t-pesA one is instant and
dea*s primari*- ,ith s-mptoms. ;he other is basic and dea*s ,ith the causes. Instant
corrective action is o#ten described as Eputting out #iresF2 ,here as basic corrective action
gets to the source #rom ,here deviation has ta1en p*ace and see1s to adjust the
di##erences permanent*-. Instant action corrects something right at a particu*ar point and
gets things bac1 on trac1. 0asic action as1s ho, and ,h- per#ormance deviated. In some
instances2 managers ma- #ee* that the- do not have the time to ta1e basic corrective action
and thus ma- go #or Eperpetua**- put out #ires.
;hus the appraisa* s-stem o# each organi?ation ma- di##er as per the re<uirement o# that
Organi?ation. )ctivit4 !:
1 .ssume -ou are current*- operating an appraisa* s-stem in -our organi?ation. Ho, ,i**
-ou carr- out the appraisa* process in -our organi?ation
..< 1actors )ffecting 2erformance )raisa+
;here are various #actors ,hich ma- in#*uence the per#ormance appraisa* s-stem in an-
organi?ation. ;here are some #actors ,hich introduce bias ,hereasA some other #actors hinder
purpose#u* assessment. %uch #actors are as #o**o,s3
1. Ba+ue S4stem of 3va+uator: ;he tas1 o# eva*uator is to assess the ,or1 o# subordinate
and ,rite reports o# the same. ;he- are projected to do this #or some purpose#u*
assessment. It happens that eva*uator sometime judges the per#ormance on the basis o#
their o,n va*ue s-stem. 7ach person has his o,n va*ue s-stem and socioBcu*tura*
environment. Most*-2 it is #ound that the reports are in#*uenced b- the eva*uator>s va*ueB
s-stem. ;his subjective e*ement has *ot o# impact on #ina* report.
2. &ominant #or, Orientation: ;he per#ormance .ppraisa* Report o# a subordinate is
prepared b- a superior is #ound to have an impact b- the dominant ,or1 orientation o# the
superior o##icer. %ometimes there is more emphasis on certain aspect o# the ,or1 as
compared to other aspect ,hich ma- be e<ua**- important b- the superior. It introduces
subjectivit- per#ormance appraisa* s-stem. . superior ma- eva*uate the subordinate on the
112
basis o# #o**o,ing e*ements3
113
a6 Inc*ination #or ,or1 o# d-namic nature.
b6 =i1ing #or routine ,or1 and strict
maintenance o#. c6 Importance on interBpersona*
re*ations and ran1.
d6 7mphasis on <ua*ities ,hich do not have much #unctiona*
uti*it-A and e6 7mphasis on consistenc- to some phi*osoph-.
;hese e*ements bring subjectivit- in the process o# eva*uation2 in#*uence the judgment o#
the superior and distort the eva*uation o# per#ormance o# the subordinates.
". :o4a+t4: It p*a-s a vita* ro*e in eva*uating emp*o-ee. .n 7mp*o-ee sho,s *o-a*t- due to
man- reasons such as common va*ues2 objectives2 emotiona* needs2 interests2 caste2
re*igion2 *anguage or region. =o-a*t- brings the superior and the *o-a* subordinate c*oser
and c*oser to each other2 and creates distance bet,een those emp*o-ee ,ho are not *o-a*
to their superior. ;his ma1es assessment o# superior to be biased.
/. :eve+ of )c$ievement3 %ubordinates eva*uation ma- a*so depend on the *eve* o#
achievement o# the superior. I# there is a vast di##erence bet,een the *eve* o# achievement
o# the superior and
%ubordinate2 then it can create prob*ems o# adjustment and purpose #or ,hich eva*uation
is done is not achieved.
7. 1actors Hindering Objective )ssessment: ;here are various #actors ,hich obstruct
the objective appraisa* o# the per#ormance o# the subordinates. ;hese #actors are as
#o**o,s3
a6 %uperiorit- comp*e8 o# the superior reporting o##icer.
b6 Overa** per#ormance assessment do not ta1e p*ace on*- certain incidence are
assessed. c6 9astBrecord o# the subordinate.
d6 9ersona*it- o# the subordinate.
g6 .bi*it- o# the subordinate to e8ercise in#*uence at higher *eve*.
... 6enefits of 2erformance )raisa+
.n e##ective per#ormance appraisa* s-stem can be o# bene#it to three parties the- are #or
organi?ation2 #or appraiser and #or appraisee.
1( 1or t$e Organi5ations: (o**o,ing are the bene#its o# an organi?ation.
It *eads to better per#ormance throughout the organi?ation2 due to success#u*
communication o# the objectives and va*ues o# the organi?ations2 sense o# being c*ose to
the organi?ation2 *o-a*t- and improved re*ationships bet,een managers and sta##.
Overa** improvement in the duties per#ormed b- each emp*o-ee o# the organi?ation.
:ue to per#ormance appraisa* o# emp*o-ee ne, ideas #or improvement in their ,or1 is
generated.
=ongBterm p*ans can be generated.
;he need #or training and deve*opment can be identi#ied more c*ear*-.
. traditions o# nonstop improvement and success in the organi?ation can be #ormed and
maintained.
Career deve*opment p*ans can be cha*1ed out #or capab*e emp*o-ee to enhance their
per#ormance in #uture.
2( 1or t$e araiser: (o**o,ing are the bene#its to the appraiser3
11!
It gives an opportunit- to the appraiser to deve*op a genera* idea o# individua* jobs and
departments.
(or ever- ne, or di##icu*t situation ne, idea is generated #or improvement or #or
overcoming that prob*em.
It gives an opportunit- to integrate team and individua* objectives and targets ,ith
departmenta* and organi?ationa* objectives.
It gives an opportunit- to e8p*ain the amount o# ,or1 e8pected b- manager #rom teams
and
individua*s.
It gives an opportunit- to #ocus more on targets.
It enab*es to #orm more productive re*ationship ,ith sta## based on mutua* trust and
understanding.
"( 1or t$e )raisee: (o**o,ing are the bene#its #or the
appraisee3
Increased motivation.
Increased job satis#action.
Increased sense o# persona* va*ue.
Increase in mora*e o# an emp*o-ee.
It gives an opportunit- to 1no, their strength and ,ea1nesses.
It gives an idea about areas o# their improvement.
;here ,i** be a chance to subordinate to e8press his vie,s even a#ter per#ormance
appraisa*
.n emp*o-ee shou*d e8press his emotiona* needs and his va*ue s-stem ,hich is
considered to be important toda-.
)ctivit4 &:
1 %uppose -ou are an eva*uator 5superior6 in -our organi?ation. =ist out the bene#it
that -ou ,ou*d *i1e to get as an appraiser .
..? 2rob+ems of 2erformance )raisa+
9er#ormance appraisa* techni<ue is ver- bene#icia* #or an organi?ation #or ta1ing decisions
regarding sa*ar- #i8ation2 demotion2 promotion2 trans#er and con#irmation etc.0ut2it is not #reed
#rom prob*em In spite o# recognition that a comp*ete*- errorB#ree per#ormance appraisa* can on*-
be idea*i?ed a number o# errors that e8tensive*- hinder objective eva*uation. %ome o# these
prob*ems are as #o**o,s3
1. 0iasness in rating emp*o-ee3 It is the prob*em ,ith subjective measure i.e. the rating
,hich ,i** not
be veri#ied b- others. 0iasness o# rater ma- inc*ude3
5a6 Ha*o 7##ect3 It is the propensit- o# the raters to rate on the basis o# one trait or
behaviora* consideration in rating a** other traits or behaviora* considerations. One ,a-
o# minimi?ing the ha*o e##ect is appraising a** the emp*o-ees b- one trait be#ore going to
rate on the basis o# another trait.
5b6 ;he Centra* ;endenc- 7rror3 It is the error ,hen rater tries to rate each and ever-
person on
the midd*e point o# the rating sca*e and tries not to rate the peop*e on both ends o# the
sca*e that is rating too high or too *o,. ;he- ,ant to be on the sa#er side as the- are
ans,erab*e to the management.
5c6 ;he =enienc- and %trictness 0iases3 ;he *enienc- biasness e8ists ,hen some raters
have a
tendenc- to be generous in their rating b- assigning higher rates constant*-. %uch ratings
do not serve an- purpose.
5d6 9ersona* prejudice3 I# the raters do not *i1e an- emp*o-ee or an- group2 in such
circumstances he ma- rate him on the *o,er side o# the sca*e2 the ver- purpose o# rating
is distorted ,hich might a##ect the career o# emp*o-ees a*so.
5e6 ;he Recent 7##ect3 ;he raters usua**- retain in#ormation about the recent actions o#
the emp*o-ee
at the time o# rating and rate on the basis o# recent action ta1en p*ace ,hich ma- be
#avorab*e or un#avorab*e at that point o# time.
2. ;he superiors ma- be unsuccess#u* in conducting per#ormance appraisa* o# emp*o-ees
and post
per#ormance appraisa*
intervie,s.
10'
10)
3. ;he per#ormance appraisa* is most*- based on subjective
assessment.
!. ;he per#ormance appraisa* techni<ues have a *o, re*iabi*it- and va*idit- in terms o#
resu*t.
$ Ratings an emp*o-ee on the negative side ma- disturb interpersona* re*ations and
industria* re*ations s-stem.
&. .ppraisers opinion on the per#ormance o# the emp*o-ee ma- *ead to setbac1 on
production.
'. .n organi?ation ma- give emphasis to punishment i# an emp*o-ee has not done a good job
rather than providing training.
). (e, ratings are based on guess
,or1.
Larious other prob*ems o# per#ormance appraisa*
are3
;here ,as a signi#icant re*ationship bet,een rating b- superior and per#ormance a#ter
promotions.
.ppraisa* reports ,ere comp*eted ,ithin a short period o#
time.
;he circumstances ,ere ver- unp*easant in #eedbac1
intervie,.
;he %ubordinates ,ere not given suggestion in a manner ,hich ma- be he*p#u* to
them.
)ctivit4
3:
1 =ist out the prob*em #aced b- -ou as a subordinate in -our organi?ation in
appraising -ou.
..10 2erformance )raisa+ 2ractices in India
;he s-stematic stud- o# per#ormance appraisa* practices in India is ver- *imited. .ccording to #e,
studies in India the per#ormance appraisa* is main*- underta1en #or three objectives such as 5i6 to
determine increments in sa*ar-A 5ii6 to assist organi?ationa* p*anning2 p*acement2 or suitabi*it-A and
5iii6 #or training and deve*opment purposes. Other objectives o# appraisa* ,ere3 in#orming
emp*o-ee ,here the- stand in organi?ation2 #o**o,Bup intervie,s2 etc.
7ver- compan- uses di##erent criteria to eva*uate their emp*o-ees. ;here are basica**- three
groups o# criteria being used #or appraisa* purpose3 5i6 eva*uation o# <ua*itative characteristics2
such as2 inte**igence2 re*iabi*it-2 honest-2 *eadership and attitudes2 abi*ities2 etc.2 eva*uation o#
actua* per#ormanceB <ua*itative*- and <uantitative*-A and eva*uation o# deve*opment and #uture
potentia* and deve*opment b- an emp*o-ee during the period under consideration. 7va*uation
criteria var- #rom compan- to compan-. ;here is vast deviation in periodicit- o# appraisa* o#
emp*o-ees. (e, companies appraise annua**-2 some appraise ha*#B -ear*-2 and a #e, <uarter*-A
ho,ever2 annua* appraisa* is most common among man-.
(e, innovative per#ormance appraisa* practices
are3
Manageria* personne* are a**o,ed to cha**enge or appea* appraisa* decisions made b-
eva*uator.
10+
7mp*o-ee management s1i**s are important in per#ormance appraisa*.
9ersonne* department gives a c*ear instruction o# po*ic- and its imp*ementation.
7va*uation to be made on*- on the basis o# per#ormance o# emp*o-ee at ,or1.
It has a*so enhanced ro*e c*arit- in the Organi?ation.
;he per#ormance appraisa* practice b- :abur India =imited is as #o**o,s3 ;he main purpose o#
per#ormance appraisa* s-stem is to eva*uate the per#ormance o# emp*o-ee2 promote their
emp*o-ees and to ma1e necessar- arrangement #or their training needs i# re<uired.
7mp*o-ees are eva*uated b- ho, ,e** the- accomp*ish a speci#ic set o# objectives that have been
determined to be critica* in the success#u* comp*etion o# their job. ;his approach is #re<uent*-
re#erred to asManagement b- objectives.
110
;he *atest mantra being #o**o,ed b- organi?ations across the ,or*d being H Eget paid according
to ,hat -ou contributeF H the #ocus o# most o# the organi?ations is turning to per#ormance
management and speci#ica**- to individua* per#ormance.
1. ;he #ocus o# the per#ormance appraisa*s practice in toda-s environment is changing b-
concentrating more on career deve*opment re*-ing on the dia*ogues and discussions ,ith
the superiors.
2. 9er#ormance measuring2 rating and revie, s-stems have become more thorough2
structured and individua* emp*o-ee speci#ic than be#ore.
3. .ppraisa* through a 3&0Bdegree #eedbac1 s-stem ta1es
p*ace
!. In India2 the per#ormance appraisa* processes are #aced ,ith a *ot o# pob*ems2 the most
important is the need o# <uanti#iab*e indicators o# the per#ormance.
;he emergence o# #o**o,ing trends re*ated to 9er#ormance appraisa* practices can be seen in the
g*oba* scenario3 3&0 degree #eedbac12 ;eam per#ormance appraisa*2 Ran1 and -an1 strateg-.
1( ";0 &egree 1eedbac,: It is a*so 1no,n as Mmu*tiBrater #eedbac1>2 ,here the #eedbac1
about the emp*o-ees> per#ormance comes #rom a** the sources that come in contact ,ith
the emp*o-ee on his job.
2( 9eam 2erformance )raisa+: In this method each emp*o-ee per#ormance is measured
as a team member as ,e** as individua**-.
"( Ran, and Ean, Strateg4: It is a*so 1no,n as up or out po*ic- ,here the per#ormance
appraisa* mode* is prepared in ,hich bestBtoB,orst ran1ing methods are used to identi#-
and separate the poor per#ormers #rom the good per#ormers. ;hen certain p*ans are
cha*1ed out #or improvement. %ome o# the organi?ations #o**o,ing this strateg- are (ord2
Microso#t and %un Micros-stems.
..11 3ffective 2erformance )raisa+
;he per#ormance appraisa* s-stem is a*,a-s <uestioned in terms o# its e##ectiveness and the
prob*ems o# re*iabi*it- and va*idit-. It is a*,a-s di##icu*t to 1no, ,hether ,hat is appraised is
,hat ,as supposed to be appraised. .s *ong as subjective judgment is there this <uestion cannot
be ans,ered perhaps2 the #o**o,ing steps can he*p improve the s-stem.
a6 ;he supervisors shou*d be to*d that the- themse*ves ,i** be eva*uated on the basis o# ho,
serious*- the- are per#orming their duties.
b6 ;o per#orm assigned tas1 o# eva*uation in a better ,a- superior shou*d be provided ,ith
better training o# ,riting report.
c6 ;o carr- out job eva*uation studies and prepares job descriptionsIro*es and prepares
separate #orms #or various positions in the organi?ation.
d6 ;he s-stem shou*d be designed in such a ,a- that it is neither di##icu*t to understand nor
impossib*e to practice.
e6 ;he supervisor shou*d monitor ,hether the improvement in per#ormance in the areas
#ound ,ea1 is ta1ing p*ace or not and2 i# not2 he*p the emp*o-ee to achieve the re<uired
improvement.
111
#6 (ina**-2 revie,ing2 the appraisa* s-stems ever- no, and then he*p updating it2 and ma1ing
appropriate changes in it. ;his is the most important #actor in ma1ing per#ormance
appraisa* e##ective2 ,ith the passage o# time necessar- changes in tas1s2 abi*ities and s1i**s
to per#orm has to be made. I#
112
changes in the #ormat are not considered the reports ma- not generate the 1ind o# resu*t
needed to satis#- appraisa* objectives.
;he #o**o,ing measures cou*d a*so be adopted #or improving the e##ectiveness o# an
appraisa*3
a( 6e$aviora++4 6ased Measures: ;he research strong*- #avors behaviora**- based measures
over those deve*oped around traits. b( Ongoing 1eedbac,: 7mp*o-ees *i1e to 1no, ho, the- are
per#orming the duties assigned to them. c( Mu+ti+e Raters: I# a person is eva*uated b- a *arge
no o# superior then chance o# getting more #re<uent in#ormation increases d( 2eer 3va+uations:
9eer eva*uations are conducted b- emp*o-ees> coB,or1ers2 peop*e e8p*icit*- #ami*iar ,ith the
jobs invo*ved main*- because the- too are doing the same thing2 the- are the person ,ho 1no,
the coB,or1ers> da- toBda- ,or1 behavior and
shou*d get a chance to provide the management ,ith some
#eedbac1.
..12 Summar4
In the organi?ationa* conte8t per#ormance appraisa* is an eva*uation o# personne* in a s-stematic
,a- b- superiors or others #ami*iar ,ith their per#ormance. It is a*so described as merit rating in
,hich one individua* is ran1ed as better or ,orse in comparison to others. ;he basic purpose in
this merit rating is to determine an emp*o-ee>s e*igibi*it- #or promotion. Ho,ever2 per#ormance
appraisa* is a broad term and it ma- be used to ascertain the need #or training and deve*opment2
sa*ar- increase2 trans#er2 discharge2 etc. besides promotion. It is the s-stematic assessment o# an
individua* ,ith respect to his or her per#ormance on the job and his or her potentia* #or
deve*opment in that job.
9er#ormance appraisa*s shou*d be conducted on a #re<uent basis2 and the- need not be direct*-
attached to promotion opportunities on*-. It is important because o# severa* reason s such as3
9ersona* .ttention2 (eedbac12 Career 9ath2 7mp*o-ee .ccountabi*it-2 Communicate :ivisiona*
and Compan- Goa*s. ;hus2 objectives into the appraisa* s-stem ma- dra, attention to areas #or
improvement2 ne, directions and opportunities. ;he methods o# per#ormance appraisa* are
categori?ed in t,o ,a-s traditiona* and modern methods. 7ach organi?ation adopts a di##erent
method o# per#ormance appraisa* according to the need o# organi?ation2 ,ith each method having
its o,n advantages and dra,bac1s. ;he per#ormance appraisa* s-stem o# one organi?ation ma-
var- #rom other organi?ationsA this ma- *ead to #e, changes in appraisa* process. %ome o# the
prob*ems #aced in appraising emp*o-ees are biasness o# rater ,hich ma- inc*ude3 5a6 ha*o e##ect2
5b6 centra* tendenc- error2 5c6 the *enienc- and strictness biases2 5d6 persona* prejudice2 and 5e6
the recent e##ect etc.
;he s-stematic stud- o# per#ormance appraisa* practices in India is ver- *imited.(e, innovative
per#ormance appraisa* practices are3 16 Manageria* personne* are a**o,ed to cha**enge or appea*
appraisa* decisions made b- eva*uator.26 7mp*o-ee management s1i**s are important in
per#ormance appraisa*.36 9ersonne* department gives a c*ear instruction o# po*ic- and its
imp*ementation. !6 7va*uation to be made on*-on the basis o# per#ormance o# emp*o-ee at
,or1.$6 It has a*so enhanced ro*e c*arit- in the Organi?ation.
;he *atest mantra being #o**o,ed b- organi?ations across the ,or*d being H Eget paid according
to ,hat -ou contributeF H the #ocus o# most o# the organi?ations is turning to per#ormance
113
management and speci#ica**- to individua* per#ormance. It is a*,a-s <uestioned in terms o# its
e##ectiveness and the prob*ems o# re*iabi*it- and va*idit- e8ist ,hich cou*d be improved i# the
supervisors are to*d that the- themse*ves ,i** be eva*uated on the basis o# ho, serious*- the- are
per#orming their duties2 ;o per#orm assigned tas1 o# eva*uation in a better ,a- superior shou*d
be provided ,ith better training o# ,riting report. ;hus2 per#ormance appraisa* is the techni<ue
,hich is essentia* #or ever- organi?ation.
11!
..1" Se+f )ssessment Auestions
1 E9er#ormance appraisa* is the s-stematic eva*uation o# the individua* ,ith respect to his
per#ormance on the job and his potentia* #or deve*opment>>. What are the options open to
-ou in the design o# a per#ormance appraisa* s-stem to achieve this goa*
2 78p*ain the 9er#ormance .ppraisa* %-stem. 7ither suggests improvements to an e8isting
appraisa* s-stem in -our organi?ation or design an appraisa* s-stem ,hich ,ou*d meet the
objectives out*ines in this chapter.
3 :oes current thin1ing indicates that appraisa* #or training shou*d be conducted separate*-
#rom appraisa* #or promotion
! 78p*ain in detai* the process o# per#ormance appraisa*.
$ Write short notes o#3
a6 Management b- objectives
b6 0ehaviora**-.nchored Rating %ca*e
& 78p*ain the methods o# per#ormance appraisa* in detai*.
' E9er#ormance appraisa* is not on*- #or appraisa* but is #or achievement and improvement
o# per#ormanceF. 78p*ain.
) .ccording to -ou ,hat shou*d be done to have an e##ective per#ormance appraisa* s-stem
in -our organi?ation.
+ Write short notes on3
a6 (ie*d revie, method3
b6 Critica* incidents method
..1/ Reference 6oo,s
Q 9rasad =.M2 5200$6A M9rincip*es and 9ractices o# Management>A %u*tan Chand and %ons
9ub*isher2 "e, :e*hi.
Q 9.%ubba Rao2 5200'6A 7ssentia*s o# Human Resource Management and Industria*
Re*ations>A Hima*a-a pub*ishing House2 Mumbai.
Q %.%.Chan1a2 5200)6A Human Resource ManagementA %.ChandN Compan- *imited>A "e,
:e*hi.
Q C .s,athappa 520036A Human Resource and 9ersonne* Management>A ;ata McGra,BHi**
9ub*ishing Compan- *imited2 "e, :e*hi.
11$
111
11&
Unit - ? : #age and Sa+ar4 )dministration
Structure of
Unit:
+.0
Objectives
+.1
Introduction
+.2 9rincip*es o# Wage and
%a*ar-.dministration
+.3 7ssentia*s o# %ound Wage and
%a*ar-.dministration
+.! (actors .##ecting Wage and
%a*ar-.dministration
+.$ Methods o# Wage
9a-ments
+.& 9rocess o# Wage
:etermination
+.'
%ummar-
+.) %e*# .ssessment
/uestions
+.+ Re#erence
0oo1s
?.0 Objectives
.#ter Comp*eting the unit -ou ,ou*d be ab*e
to3
4nderstand the signi#icance o# Wage and %a*ar-.dministration in the organi?ation3
=earn about princip*es o# Wage and %a*ar- .dministrationA
Cno, some o# the prere<uisites #or sound compensation managementA
4nderstand major #actors a##ecting Wage and %a*ar- determination in an organi?ationA
Cno, in detai* methods o# ,age pa-mentsA
=earn ho, ,ages are determined in an organi?ation.
?.1 Introduction
7mp*o-ees> compensation is one o# the major determinants o# emp*o-ee satis#action in an
organi?ation. ;he compensation po*ic- and the re,ard s-stem o# an organi?ation are vie,ed b-
the emp*o-ee as a indicators o# the management>s attitude and concern #or them. It is not just the
compensation in tote2 but its #airness as perceived b- the emp*o-ees that determines the success
o# a ,age and sa*ar- administration s-stem. Hence2 it ver- important #or the management to
design and imp*ement its compensation s-stem ,ith utmost care and tact. . good ,age and
sa*ar- administration shou*d be ab*e to attract and retain emp*o-ees2 give them #air dea*2 1eep the
organi?ation competitive and motivate emp*o-ees to per#orm their best.
Wage and sa*ar- determination and its administration has a*,a-s remains sensitive issue #or an
organi?ationa* management2 since emp*o-ees mora*2 motivation2 productivit- and their
11'
re*ationship ,ith the management more or *ess associated ,ith the compensation management
s-stem. (urthermore compensation has a*,a-s remain as a major -ardstic1 #or the success or
#ai*ure or concern #or the emp*o-ees b- an organi?ation. ;raditiona**-2 pa- sca*es in companies
re#*ected the importance o# the ,or1 and the responsibi*it- *eve*. ;oda- organi?ation tries more
to assess the ,orth o# an individua* in terms o# his per#ormance and contribution to the
organi?ation. With the gro,ing demands o# the ,or1#orce and the constant cha**enges in the
business environment2 organi?ations have to evo*ve an accurate s-stem #or eva*uating jobs and
assessing their ,orth. Dob eva*uation he*ps to determine the re*ative ,orth o# job in an
organi?ation in a s-stematic2 consistent and accurate manner. It a*so he*ps in estimating the basic
pa- #or each job in accordance ,ith the importance o# the job in the organi?ationa* hierarch-.
Once basic pa- is determined2 the re,ards2
incentives and bene#its attached ,ith the pa-2 position and per#ormance are a*so determined. ;he
basic ,age2 incentives and re,ards and bene#its2 together #rom compensation pac1age o# an
emp*o-ee.
11)
?.2 2rinci+es of #age and Sa+ar4
)dministration
%ince the issue o# ,age and sa*ar- determination has a*,a-s enjo-ing the major consideration #or
an- organi?ation2 it shou*d be deve*op and maintain based on sound princip*es 2 some o# them
are narrated be*o,2 attempt shou*d be made to incorporate them as #ar as possib*e ,hi*e
designing the compensation s-stem.
16 ;here shou*d be a de#inite p*an and s-stem to ensure that di##erences in pa- #or jobs are
based upon variations in job re<uirements2 means maintaining e<uit- in the distribution o#
,ages and sa*aries in the organi?ation.
26 Maintaining competitiveness in the ,age mar1et means the genera* *eve* o# ,age and
sa*ar- shou*d be reasonab*- in *ine ,ith that prevai*ing in the mar1et.
36 Matching emp*o-ees> e8pectations and it shou*d avoid unjusti#ied discrimination b-
providing e<ua* pa- #or e<ua* ,or1.
!6 Rein#orcing positive emp*o-ee behavior and contribution to the organi?ation2 di##erences
in the compensation pac1age shou*d be based on contribution2 productivit-2 job
per#ormance2 achievement etc.
$6 :evising a s-stem that is the most e##icient #or the organi?ation2 as #ar as possib*e it must
e*iminate an- discrepancies or e8p*oitation o# the emp*o-ees.
&6 ;he compensation s-stem shou*d #ormu*ate and de#ine ru*es and regu*ations #or
determining2 changing2 adjusting ,ages in the organi?ation.
'6 ;he compensation pac1age must ensure #airness2 shou*d maintain harmonious re*ationship
bet,een the emp*o-ee and emp*o-er.
)6 Compensation s-stem shou*d be #*e8ib*e enough so that #uture changes can be
incorporated.
+6 ;he ,age and sa*ar- administration shou*d ta1e care o# and comp*- a** the ru*es and
regu*ations *aid do,n b- the *egis*ator #or protecting the emp*o-ees> interest.
106 Optimi?ation o# management and emp*o-ee interests.
?." 3ssentia+s of Sound #age and Sa+ar4
)dministration
%ound Wage and sa*ar- administration demands some essentia*s to satis#-2 so that one ,ho is
shou*der ,ith the responsibi*it- o# designing administrative aspects ,ith this regards2 ma- come
out ,ith e##icient s-stem #or managing the issues re*ated ,ith it. %ome o# the pre re<uisites #or
the sound compensation s-stem are3
I. Rationa+ 8ob )na+4sis: It is an important e8ercise ,ith regards to each categor- o# jobs.
It revea*s detai*ed aspects o# the job2 *i1e duties2 responsibi*ities associated ,ith the
per#ormance2 per#ormance standards as a #air parameter #or eva*uation o# the
per#ormance. It gives #air idea about job speci#ication i.e. <ua*i#ication2 e8perience2 s1i**
and other essentia* re<uirements that job per#ormer must satis#-. ;hus rationa* job ana*-sis
a*,a-s put po*ic- decider in a better condition to *a- do,n appropriate content in po*ic-
design.
II. 2roer 8ob 3va+uation: Dob eva*uation is a s-stematic process o# ana*-?ing and
eva*uating jobs to determine the re*ative ,orth o# job in an organi?ation. It #orms the basis
11+
#or designing the sound compensation s-stem in an organi?ation. %ince ,age and sa*ar-
administration and the perceived #airness o# approach adopted under it have a immense
in#*uence on emp*o-ee mora*e2 motivation and satis#action2 proper job eva*uation e8ercise
demands sensib*e consideration.
120
III. In &et$ Fno>+edge )bout an Organi5ation and Mar,et 1actors: .part #rom job
eva*uation2 the various other #actors that determine the administrative aspects #or ,age and
sa*ar- administration are the si?e and structure o# the organi?ation and the industr- in
,hich it operates2 the strength o# emp*o-ees union2 position o# a person and his
importance to the organi?ation2 demand and supp*- #or particu*ar s1i** sets in the industr-2
organi?ationa* abi*it- and capacit- to pa- and its economic condition *i1e pro#itabi*it-2 and
*egis*ative aspects re*ated ,ith ,age determination. %ound s-stem #or compensation
management demands detai* 1no,*edge about a** these #actors in order to its sound
#rame,or1 and operation in the organi?ation.
IB. !+arit4 of Objectives or 2uroses of #age and Sa+ar4 )dministration : =ast but not
the *east in terms o# its signi#icance2 in order to have e##ective and e##icient
administration o# compensation as an area in the organi?ation2 one must have accurate
c*arit- about the purposes that it ma- tries to satis#- through po*ic- decisions .objectives
ma- be attracting ta*ented resourcesA retaining and motivating emp*o-eesA #inancia*
management o# an organi?ationA satis#-ing *ega* re<uirementA and man- more. %ometimes
these objectives are con#*icting in nature a*so. %o it is ver- essentia* that one2 ,ho is going
to carr- out this responsibi*it- o# designing the compensation s-stem in the organi?ation2
shou*d have reasonab*e c*arit- #or objectives to be satis#ied ,ith the design.
?./ 1actors affecting #age and Sa+ar4
)dministration
;he term emp*o-ees remuneration inc*udes both ,ages and sa*aries. Wages are common*-
considered as the price o# *abor paid to the ,or1ers #or the services rendered to the organi?ation
emp*o-ing them. Where <uantum o# services rendered is di##icu*t to measure the pa-ment is ca**ed
sa*ar-. "orma**-2 pa-ment made to ,or1ers is re#erred to as ,ages2 and remuneration paid
periodica**- to persons ,hose output cannot be measured such as c*erica*2 supervisor- and
manageria* sta##2 is ca**ed sa*ar-. Wage and sa*ar- administration is a##ected b- so man- #actors
and most o# them are uncontro**ab*e in nature so probab*-2 this decision is more crucia* and
critica*. Major #actors a##ecting ,age and sa*ar- administration are discussed as under3
& em a n d I S u + 4 o f S
,i + + o r : a b o ur
Or g a ni 5a t i o n Js ) b i + i
t4 to
2 a 4
Rate
:e g i s+ a t iv e c o ns i de ra t
io n s
2 r ev a i+i n g M a r, e t R a
r e o r K * o i ng # a g e R
a teL
2 s 4 c$ o +o g i c a + a nd S o
ci a +
1 a ct o
rs
! o m e ns a t io
n
2 ro d uc ti v it 4
M a n a g em e nt ) t ti tu
de
! o s t o f : i v i ng
121
8 o b R e =u ir em ent
s
9 ra d e U n i o n Js 6 a rg a i n
in g
2 o > er
1igure ?.1 : 1actors )ffecting #age and Sa+ar4 )dministration
1( &emand and Su+4: :emand #or and supp*- o# *abor and its avai*abi*it- ,i** have great
in#*uence on the determination o# ,age rates. I# there is a shortage o# *abor2 the ,ages
demanded ,i** be high. I#2 on the other hand *abor is p*enti#u*2 ,or1ers ,i** be too ,i**ing
to ,or1 at *o, rates o# ,ages. Ho,ever2 ,ages cannot be regarded toda- mere*- a price
#or services rendered. In recent -ears there#ore2 both management and *abor has been
becoming *ess and *ess dependent on this #actor as a basic #actor. .n emp*o-ee ,i** not
hesitate to accept *o,er ,ages i# he has opportunities #or gro,th in the organi?ation.
;oda-2 the mone- ,hich is paid as compensation shou*d enab*e a ,or1er to bu- goods
and services ,hich ,i** enab*e him and his #ami*- to *ive a better and #u**er *i#e and satis#-
his hierarchica* needs.
2( Organi5ationJs )bi+it4 to 2a43 ;his is a major a##ecting #actor in determining ,age and
sa*ar- structure o# an organi?ation. (inancia* position and soundness o# an organi?ation
can put it in a position to o##er attractive compensation pac1age. %ome o# the reputed
economica**- sound organi?ations are o##ering good compensation pac1age and thereb-
success#u* in obtaining and maintaining ta*ented ,or1#orce. Good compensation pac1age
he*ps in attracting and retaining <ua*it- ta*ent in an organi?ation. Genera**- ,ages in most
o# the organi?ation decide through co**ective bargaining and 2 organi?ation>s abi*it- and
capacit- to pa- attractive ,ages depends upon over a** #inancia* soundness and economic
condition o# an organi?ation.
"( 2revai+ing Mar,et Rate or K*oing #age RateL3 ;his is practica**- the major #actor
that induces an- organi?ation to ta1e it as a base ,hi*e determining ,age and sa*ar-
structure #or it. 9revai*ing mar1et rate is a*so 1no,n as Mmost comparab*e rate o# ,age>2
and most popu*ar method #or ,age rate determination2 especia**- #or *o,er cadre
positions. ;here are man- reasons #or an organi?ation to pa- ,ages at a mar1et rate *i1e
competition and a practice o# M0rain :rain> prevai*s in the mar1et. (urther more certain
*a,s #ramed *aid do,n principa* o#>minimum ,ages>2 Me<ua* ,age #or e<ua* ,or1>. In
addition to this trade unions are a*so pre#er to bargain upon and in accordance ,ith
mar1et rate o# ,ages.
/( 2roductivit4: 9roductivit- is measured in terms o# output per man hour. It a resu*t o#
severa* #actors such as techno*og-2 *abor e##orts2 method o# doing ,or12 management
contribution and support and so on. Ho,ever2 productivit- has a*,a-s remained as base
#or ,age di##erences since it a base ,hich is apparent*- justi#iab*e and acceptab*e to a** in
the organi?ation. Man- a time this as base is not acceptab*e to man- trade unions as it is
ver- di##icu*t to have accurate measurement and is has a*,a-s remain at a discretion o#
management po*icies.
7( !ost of :iving: It is a*,a-s e8pected that there has to be adjustment in pa- rates in
accordance ,ith prevai*ing cost o# *iving. ;he changes in the cost o# *eaving a##ect
purchasing po,er o# the person. ;rade union a*so considers this as a base #or co**ective
bargaining on ,age issues.
;( 9rade UnionJs 6argaining 2o>er: Genera**- the mechanism #or #i8ing o# ,ages #or
majorit- o# ,or1ers is co**ective bargaining or negotiation2 and co**ective bargaining and
negotiations depends upon the trade union>s strength. I# there is a strong union operates
in the organi?ation2 it ma- dictate its terms on ,age #i8ation and revision over a period o#
time and vice versa. ;he strength and po,er o# the trade union depends upon its
membership2 #inancia* strength and *eadership it ma- have2 #or its #unctioning.
<( 8ob Re=uirements: (rom the organi?ationa* perspective appropriate job ana*-sis and
job eva*uation e8ercise is a base #or the ,age determination and revision. It is <uite
obvious a*so that ,ages to be paid to the ,or1ers shou*d be in accordance ,ith the duties2
responsibi*ities and the
e##orts *i1e*- to be put #or job per#ormance. Wage or compensation pac1age ver- in
accordance ,ith job description and job speci#ication.
.( Management )ttitude: .ttitude o# emp*o-er or management to,ers the ,or1ing
communit- o# the organi?ation does in#*uence in ,age determination and revision at an
appropriate time. %ome reputed and pro#essiona* organi?ation does pre#er to pa- ,age in
accordance ,ith their reputation or prestige o# an organi?ation in the mar1et. ;he- ma-
give participation to ,or1ers in sharing pro#its. On the other hand conservative
organi?ations do not pre#er to go #or such pro#it sharing.
?( 2s4c$o+ogica+ and Socia+ 1actors: 9s-cho*ogica**- person perceive ,ages and
compensation pac1age as so*e parameter #or success or #ai*ure in the *i#e. Compensation
pac1age p*a-s signi#icant ro*e in the emp*o-ees pride2 mora*2 motivation and ps-cho*ogica*
engagement and invo*vement in the ,or1. ;here#ore such variab*e shou*d not be
over*oo1ed b- the organi?ation ,hi*e determining ,age and sa*ar- structure. %ocia**- and
ethica**- a*so peop*e #ee*s that Ee<ua* ,or1 shou*d carr- e<ua* pa- E i.e. ,age shou*d be
in accordance ,ith e##orts and ,or1ers shou*d not be #e*t *i1e being cheated.
Compensation po*ic- shou*d not ma1e an- discrimination on the basis o# caste2 co*or2 %e8
or region2 and must tr- to satis#- condition #or #airness e<uit- and justice.
10( :egis+ative !onsiderations: =egis*ative provisions do provide protection to the
,or1ing communit- b- #i8ing bottom *ine #or ,age pa-ments. Man- a time it ,as #ound
that the bargaining po,er o# the ,or1ers ,as not strong enough to ensure #air ,ages.
Conse<uent*-2 the state *egis*ative #rame ,or1 stepped in to regu*ate ,ages and provide
#or certain bene#its to the ,or1ers. =egis*ation *i1e Minimum Wages .ct2 1+3&2 provides
#or statutor- minimum ,ages to be prevai*s in the industria* organi?ation so that ,or1ers
can satis#-their bare re<uirements and maintain their minimum *iving standard. ;hese
aspects are a*so considered ,hi*e deciding compensation po*ic- #or an organi?ation.
?.7 Met$ods of #age 2a4ments
Wage p*ans are main*- micro p*ans and each compan- ma- devise an- o# the ,age p*ans.
0asica**- there are t,o methods #or ,age pa-ments2 vi?. 516 ;ime rate ,age s-stemA and 526 9iece
rate ,age s-stem. ;he ,age paid to *abor has to per#orm important #unctions in the economic
s-stem. It shou*d be such as to ma1e the ,or1er capab*e and ,i**ing to be e##icient and invo*ved in
the job. ;here shou*d be *in12 ,herever #easib*e bet,een emo*uments and productivit-A and #air
parit- bet,een ,age di##erentia*s and s1i** di##erentia*. ;he p*an shou*d act as an incentive to
improve the e##icienc-2 and it shou*d attract the ,or1er ,herever demanded or needed. Whatever
ma- be the method o# ,age pa-ment but the ,age p*an shou*d contain #o**o,ing ingredients3
It shou*d be simp*e and understandab*e
It shou*d be capab*e o# eas- computation
It shou*d be capab*e o# motivating the emp*o-ees
It shou*d be attractive enough #or ne, ta*ent in the organi?ation.
It shou*d be #air2 just and stab*e to a** the
emp*o-ees. ;he #undamenta* p*ans o# ,age pa-ment are3
I. 9ime Rate #age S4stem: It is the o*dest and the simp*est #orm o# ,age #i8ing. 4nder
this s-stem2 ,or1ers are paid according to the ,or1 done during a certain period o# time
at a rate o# per hour2 per da-2 per ,ee12 per #ortnight2 or per month or an- other #i8ed
period o# time. .ccording
to the section! o# the 9a-ments o# Wages .ct21+3&2 not more than one month must e*apse
bet,een t,o ,age period. ;ime ,age s-stem adopts time as the basis o# ,or1er
remuneration ,ithout ta1ing in to account the units produced. ;he ,or1er is guaranteed a
speci#ied sum o# mone- #or a #i8ed period o# his time ta1ing no account o# the <ua*it- or
<uantit- o# the ,or1 done. 7va*uation on the basis bene#its and ,ea1nesses is as under3
Merits:
It is simp*e and understandab*e and eas- #or ca*cu*ation o# ,ages2 since ,ages under this
s-stem is e<ua* to,age per hourW numbers o# hours ,or1ed b- an emp*o-ee.
;here is no time *imit #or comp*etion o# job2 ,or1man are not in hurr- to #inish it and this
ma- mean that the- ma- pa- p enough attention to the <ua*it- o# ,or12 e##ective hand*ing
o# machiner- and uti*i?ation o# resources in an optimum manner.
.** ,or1ers are given same treatment in terms o# e<ua* ,age pa-ment2 so grievances2 i**
,i**A
jea*ous- can be avoided among
them.
;ime rate s-stem provides regu*ar and stab*e income to ,or1ers2 so the- can adjust and
manage their budget according*-.
It re<uires *ess administrative attention as this s-stem provide good #aith and mutua*
understanding and trust bet,een emp*o-er and emp*o-ee.
&emerits:
It does not ta1e in to account the abi*it- and capacit- o# the ,or1ers so the s1i*#u* and
more capab*e ,or1ers ,ho have higher production e##icienc- ,i** demora*i?e.
;ime rate s-stem is unre*ated to the productivit- and does not provide e8tra motivation
#or e8tra e##orts b- the ,or1ers.
;he *abor charges #or a particu*ar job do not remain constant. ;his put the management
in a di##icu*t position in the matter o# <uoting rates #or a particu*ar piece o# ,or1.
;here is a possibi*it- o# s-stematic evasion o# ,or1 b- the ,or1ers2 since there is no
speci#ic target or demand #or speci#ic <uantit- o# ,or1 b- the management.
;ime rate s-stem does not as1 #or maintaining individua* ,or1ers record2 it becomes
di##icu*t #or the emp*o-er to determine his re*ative e##icienc- #or the purpose o#
per#ormance eva*uation #or #uture promotion or re,ards. ;hus it does injustice to the
outstanding emp*o-ees.
Suitabi+it4: ;ime rate s-stem is suitab*e ,hen the output contributed b- the ,or1er is di##icu*t to
measure and cannot be recorded in an individua* basis. It is a*so suitab*e ,hen b- cu*tivating
mutua* trust and con#idence and b- giving #air and e<ua* treatment to a** the emp*o-ees2
management can get the ,or1 done in an appropriate manner
II. 2iece Rate #age S4stem: 4nder this s-stem2 ,or1ers are paid according to the amount
o# ,or1 done or numbers o# units produced or comp*eted2 the rate o# each unit being
sett*ed in advance2 irrespective o# the time ta1en to do the ,or1. ;his does not mean that
the ,or1ers can ta1e an- time to comp*ete a job because o# his per#ormance #ar e8ceeds
the time ,hich his emp*o-er e8pects he ,ou*d ta1e2 the overhead charges #or each unit o#
artic*e ,i** increase. ;here is an indirect imp*ication that a ,or1er shou*d not ta1e more
than average time.
Merits:
;he main advantage o# this s-stem is recognition o# merit2 as e##icient is re,arded2 It is
there#ore more e<uitab*e then time rate s-stem.
It pa-s ,or1ers as per their e##iciencies2 abi*it-2 capacit- or per#ormance2 so it gives direct
stimu*us and motivation to the emp*o-ees #or e8tra e##orts2 ,hich ma- resu*t into more
productivit-.
It re<uires *ess manageria* supervision as tota* remuneration depends upon units produced2
and not on time spent in an organi?ation.
0eing interested in continuit- o# his ,or12 a ,or1man is *i1e*- to ta1e greater care to
prevent brea1do,n in the machiner- or in the ,or1 shop. It is a gain to the management
since it reduces maintenance e8penditure in an organi?ation.
.s the direct *abor cost per unit o# production remains #i8ed and constant2 ca*cu*ation o#
cost ,hi*e #i**ing tenders and estimates becomes easier.
It resu*ts in to not on*- increase in the output and ,ages 2but the methods o# production
too are a*so improved2 as ,or1ers demand materia* and too*s #ree #rom de#ects and
machiner- in per#ect operating condition.
&emerits:
I# rates o# ,ages are not scienti#ica**- #i8ed and acceptab*e to the ,or1ers2 ,ou*d resu*t
into ,or1ers e8p*oitation and ma- prove counterproductive
.s ,or1ers are interested in comp*etion o# the job ,ith a greatest speed2 ma- damage the
machiner-2 <ua*it- o# output or ma- increase rate o# ha?ards in an organi?ation.
;rade unions genera**- do not *i1e this s-stem o# ,age pa-mentA the- ma- not have #u**
support and acceptance. It ma- be the major issue #or industria* dispute.
Suitabi+it4: It can be introduced genera**- in jobs o# a repetitive nature2 ,hen tas1 can be easi*-
measured2 inspected and counted. It is practica**- suitab*e #or standardi?ed processes2 and it
appea*s to s1i**ed and e##icient ,or1ers ,ho can increase their earnings b- ,or1ing to their best
capacit-.
III. 6a+ance and &ebt S4stem: ;his s-stem combines time rate and piece rate. 4nder it a
minimum ,ee1*- ,age is guaranteed #or a #u** ,ee1s> ,or12 ,ith an a*ternative pieceB
rate determined b- the rate #i8ed on the assumption that the ,or1er ,ou*d put enough
e##ort to earn his minimum ,age. I# the ,ages ca*cu*ated on piece bases are in e8cess o#
the time rate2 the ,or1er earns the e8cess. I# the piece rate ,ages are *ess than the timeB
rate earnings2 he ,ou*d sti** get ,ee1*- ,age2 but on the condition that he sha** have to
ma1e good the e8cess paid to him out o# the subse<uent ,age he ,ou*d earn. %uppose a
,or1er is e8pected to comp*ete at *east 10 pieces during the ,ee1 in order to earn the
minimum ,age o# rs.&02 the piece rate has been #i8ed at a rate o# Rs.& per unit. I# the
,or1er produces 12 units ,ithin the ,ee12 his earning ,i** be Rs.'2. I# on the other hand
he produces on*- + units 2 he ,i** sti** be paid Rs. &0 his minimum ,ee1*- ,age but as on
the basis o# piece rate his earning shou*d amount to on*- Rs. $!2 the sum o# Rs. & paid in
e8cess ,i** be debited to him to be deducted out o# his subse<uent earnings. ;hus under
this s-stem ,or1ers> ,ages are determined2 b- both the number o# hours he ,or1s and
the pieces he produces. %o it a h-brid s-stem producing the same bene#its and *imitations
o# both the time rate and piece rare s-stem.
?.; 2rocess of #age &etermination
9ractica**- ho, ,ages are determined and maintained or administered in an organi?ation is ver-
organi?ation to organi?ation. Idea**- spea1ing it depends upon so*e discretion that ,hat
procedure an organi?ation #o**o,s #or ,age and sa*ar- administration. More or *ess an attempt is
made b- ever- organi?ation to #o**o, the princip*es suggested #or sound compensation
management. Organi?ation tries to incu*cate s-stematic procedure #or ,age determination and
their revision at an appropriate time. 9rocess o# ,age determination inc*udes job ana*-sis and job
eva*uation2 surve- o# ,ages in the environment2 determining
,age structure2 and deciding ru*es #or ,age administration. 0rie#*- these steps are discussed as
under3
8ob
)na+4si s 8ob
3va+ uation
&etermining
2erformance
Standard
Ru+ es-
2o+icies for
#age I
Sa+ar4
&eciding
#age
Structure
#age
Surve4
1igure ?.2: 8ob )na+4sis
1. 8ob )na+4sis and 8ob 3va+uation: ;his ma- be the primar- e8ercise that an organi?ation
needs to care#u**- carr- out ,ith an intention to create base #or ,age determination. Dob
ana*-sis revea*s in#ormation about tas1s2 duties2 responsibi*ities and standards ,ith
proposed job is to be per#ormed b- the emp*o-ees. It a*so guides in terms o# job
speci#ication i.e. s1i**s2 abi*it-. /ua*i#ication and e8periences needed to per#orm the job
,ith re<uisite per#ormance standards. Dob ana*-sis gives enough in#ormation about the
job and the pro#i*e o# the per#ormer in order to per#orm that job. .nother important
e8ercise that an organi?ation needs to carr- out is MDob 7va*uation>. It is nothing but
#inding out re*ative ,orth o# a job2 in terms its contribution and signi#icance to the
overa** organi?ationa* objectives.
2. &etermining 2erformance Standard and #age Surve4s: Having understood the job
in considerab*e detai* an attempt is made to determine e8pected per#ormance standard to
be carried out b- the per#ormer. ;hen2 an organi?ation must surve- ,age rates prevai*s in
the mar1et #or the same job or its simi*ar t-pe2 so that attractive compensation pac1age
can be designed to induce good <ua*it- o# candidature to app*- #or the job in an
organi?ation. Here care shou*d be ta1en that ,age structure shou*d be in accordance ,ith
the comp*e8it- and e##orts needed in the per#ormance.
". &eciding #age Structure and Ru+es for Its )dministration: 0ased on co**ection o#
re*evant in#ormation and ta1ing in to account some o# the in#*uencing #actors2 an
organi?ation shou*d design ,age structure ,hich inc*udes s*ab #or basic or minimum
,ages2 incentives2 andIor increment over a period o# time to gather ,ith other #inancia*
and non#inancia* per<uisites to be o##ered to an emp*o-ee. .ttempt shou*d be made to
#o**o, princip*es o# #airness2 e<uit- and justice to gather ,ith transparenc- ,hi*e
designing ,age structure and deciding ru*es #or its administration. ;he ru*es shou*d not
provo1e un justi#ied discriminations and e8p*oitation o# ,or1ers other,ise it ma- prove
counterproductive and ma- give rise to grievance2 and industria* disputes.
?.< Summar4
Compensation pac1age is one o# the most signi#icant decisions o# the modern Human Resource
Management2 since it is carr-ing great in#*uence as a maintenance #actor as ,e** as a means #or
emp*o-ee>s motivation a*so. ;here#ore organi?ation needs to pa- attention on Wage and %a*ar-
.dministration in order to maintain organi?ationa* e##icienc- #or maintaining and motivating
emp*o-ees. ;here are some o# the major considerations based on ,hich it can go #or
compensation determination *i1e demand and supp*- o# s1i**2 organi?ationa* abi*it- to pa-2
prevai*ing mar1et rate2 emp*o-ees productivit-2 cost o# *iving2 trade union>s bargaining po,er2 job
re<uirements management attitude2 productivit-2 ps-cho*ogica* and socia* #actors and *egis*ative
considerations. Organi?ation can adopt either M;ime Rate> or M9iece Rate> method #or ,age
pa-ments2 both are having their o,n merits and demerits and suitabi*it-. Organi?ation can go #or
combination o# the both a*so. ;here ma- be s standard scienti#ic process a*so #or ,age
determination2 ,hich consists o# steps *i1e job ana*-sis and job eva*uation2 determination o#
per#ormance standards and ,age surve-s and deciding ,age structure and ru*es and po*ic- #or
e##ective ,age administration.
?.. Se+f )ssessment Auestions
1. Wh- Wage and %a*ar-.dministration is considered as a signi#icant Human Resource
Management #unction What princip*es an organi?ation is re<uire 1eeping in mind ,hi*e
deciding compensation po*ic-
2 :iscuss in detai* di##erent #actors that genera**- a##ect compensation decision o# an
organi?ation.
3 What are the methods genera**- avai*ab*e to an organi?ation #or ma1ing ,age pa-ments
:iscuss their suitabi*it- together ,ith their merits and demerits.
! 7*aborate standard procedure or mechanism that an organi?ation #o**o,s #or determining
Wage and sa*ar- structure together ,ith the rationa*it- attached ,ith each step.
?.? Reference 6oo,s
B 9rincip*es o# personne* ManagementB7d,in
#*ippo
B 9ersonne* Management NIndustria* Re*ationsB@oder 59rentice Ha** o# India =td. "e,
:e*hi6
B 9ersonne* ManagementB
C.7."rothcott
B 9ersonne* Management H
C.0.Mamoria
B 9ersonne* ManagementB
:r.9.C.;ripathi
B :-namic 9ersonne* .dministrationBManagement O( Human ResourcesB
M.".Rudrabasavaraj
Unit - 10 3 !omensation and Incentives
Structure of
Unit:
10.0 Objectives
10.1
Introduction
10.2 Meaning and :e#inition o#
Compensation
10.3 Objectives o# Compensation
9*anning
10.! (actors .##ecting Compensation
9*anning
10.$ Larious Modes o#
Compensation
10.&
Incentives
10.' Cinds o#
Incentives
10.) (ringe
0ene#its
10.+ Cinds o# (ringe
0ene#its
10.10
%ummar-
10.11 %e*# .ssessment
/uestions
10.12 Re#erence
0oo1s
10.0 Objectives
.#ter reading this chapter2 -ou ,i** be ab*e to
understand3
;he objective o# compensation p*anning.
Larious #actors a##ecting compensation p*anning.
Larious modes o# compensation.
Concept o# Incentives.
What are #ringe 0ene#its and its t-pe.
10.1 Introduction
One o# the most di##icu*t #unctions o# personne* management is that o# determining rates o#
monitor- compensation. It is not on*- dut- #or organisation but a*so e<ua**- important to both the
organisation and the emp*o-ee. It is signi#icant to organisation2 because ,ages and sa*aries
constitute the greatest sing*e cost o# doing business and it important to the emp*o-er because the
earning is the on*- means o# economics surviva*A it is the mean that in#*uence the standard o#
*iving2 status in societ-2 ,or1 as motivationa* #actor2 *o-a*t- and productivit-.
Compensation is a too* used b- management #or a variet- o# purpose to #urther the e8istence o#
the compan-. It is a remuneration that an emp*o-ee receives in return #or his or her contribution
in theorganisation. %o2 the emp*o-ee compensation programs are designed to attract capab*e
emp*o-ees to the organisation2 to motivate them to,ards superior per#ormance and to retain their
services over an e8tended period o# time.
10.2 Meaning and &efinition of
!omensation
In *a-man>s *anguage the ,ord Mcompensation> means something2 such as mone-2 given or
received as pa-ment #or service. ;he ,ord compensation ma- be de#ined as mone- received in
the per#ormance o# ,or12 p*us the man- 1inds o# bene#its and services that organi?ation provides
their emp*o-ee. It re#ers to ,ide range o# #inancia* and nonB#inancia* re,ards to emp*o-ee #or
their service rendered to the organi?ation. It is paid in the #orm o# ,ages2 sa*aries 2 specia*
a**o,ance and emp*o-ee bene#its such as paid vacation2 insurance2 maternit- *eaves2 #ree trave*
#aci*it- 2 retirement bene#its etc.
)ccording to #ende++ 1renc$-F Compensation is a comprehensive term ,hich inc*udes ,ages2
sa*aries and a** other a**o,ance and bene#its.F
Wages are the remuneration paid #or s1i**ed2 semiBs1i**ed and uns1i**ed operative ,or1#orce.
%a*ar-is the remuneration o# those emp*o-ees ,ho provides menta* *abour to the emp*o-er such
as supervisor2 o##ice sta##2 e8ecutive etc ,ages are paid on dai*- or hour*- basis ,here as sa*ar-
is paid on month*- basis.
10." Objectives of !omensation 2+anning
;he basic purpose or objective o# estab*ishing sound compensation is to estab*ish and maintain an
e<uitab*e re,ards s-stem. ;he other aim is the estab*ishment and maintenance o# an e<uitab*e
compensation structure i.e an optima* ba*ancing o# con#*icting personne* interest so that the
satis#action o# emp*o-ees andemp*o-ers is ma8imised and con#*icts minimi?ed2 the compensation
management is concerned ,ith the #inancia* aspect o# emp*o-ees need2 motivation and re,ards.
. sound compensation structure tries to achieve these
objectives3
;o attract manpo,er in a competitive mar1et.
;o contro* ,ages and sa*aries and *abour costs b- determining rate change and #re<uenc-
o# increment.
;o maintain satis#action o# emp*o-ees b- e8hibiting that remuneration is #air ade<uate and
e<uitab*e.
;o induce and improved per#ormance2 mone- is an e##ective motivator.
a( 9o
3m+o4ees3
i. 7mp*o-ees are paid according to re<uirement o# their jobs i.e high*- s1i**ed jobs are paid
more compensation than *o, s1i**ed jobs. ;his e*iminates ine<ua*ities.
ii. ;he chances o# #avouritism are minimised.
iii. Dobs se<uence and *ines o# promotion are estab*ished ,herever the- are app*icab*e.
iv. 7mp*o-ee>s mora* and motivation are increased because o# the sound compensation
structure.
b( 9o
3m+o4ers:
i. ;he- can s-stematica**- p*an #or and contro* the turnover in the organi?ation.
ii. . sound compensation structure reduces the *i1e*ihood o# #riction and grievance over
remunerations. iii. It enhance an emp*o-ee mora*e and motivation because ade<uate and
#air*- administrative incentives
are basis to his ,ants and need.
iv. It attracts <ua*i#ied emp*o-ees b- ensuring and ade<uate pa-ment #or a** the jobs.
v. In dea*ing ,ith a trade union2 the- can e8p*ain the basis o# their ,ages programme
because it is based upon a s-stematic ana*-sis o# jobs and ,ages #acts.
10./ 1actors )ffecting !omensation 2+anning
(actors determining compensation o# an emp*o-ee considerab*e amount o# guess ,ord and
negotiation are invo*ved. 0ut #o**o,ing are the certain #actors ,hich have been e8tracted as
having an important bearing upon the #ina* decision3
a( Su+4 and &emand of :abour3 Whatever the organi?ation produces as commodit- the-
desire services and it must pa- a price that o# ,or1ers acting in concert. I# more the
*abour is re<uired2 such as at ,ar time prosperit-2 there ,i** be tendenc- to increase the
compensationA ,hereas the situation ,hen an-thing ,or1s to decrease the supp*- o#
*abour2 such as restriction b- a particu*ar
*abour union2 there ,i** be a tendenc- to increase the compensation. ;he reverse o# each
situation is *i1e*- to resu*t in a decrease in emp*o-ee compensation2 provided2 *abour
union2 abi*it- to pa-2 productivit-2 government do not intervene.
b( )bi+it4 to 2a43 =abour 4nions has o#ten demanded an increase in compensation on the
basis that the #irm is prosperous and ab*e to pa-.
c( ManagementJs 2$i+oso$4: Management>s desire to maintain or improve mora*2 attract
high ca*ibre emp*o-ees2 reduce turnover2 and improve emp*o-ees standard o# *iving a*so
a##ect ,ages2 as does the re*ative importance o# a given position to a #irm.
d( :egis+ation: =egis*ation re*ated to p*a-s a vita* ro*e in determining interna* organi?ation
practices.
Larious acts are prescribed b- government o# countr- #or ,age hours *a,s. WageBhour
*a,s set *imits on minimum ,ages to be paid and ma8imum hours to be ,or1ed. In India
minimum ,ages act 1+!) re#*ecting the ,age po*ic- #or an organi?ation and #i8ation o#
minimum rates o# ,ages to ,or1ers in s,eated industries. In 1+'& e<ua* remuneration act
,as enacted ,hich prohibits discrimination in matters re*ating to remuneration on the
basis o# re*igion2 region or gender.
10.7 Barious Modes of
!omensation
Larious modes o# compensation are as
#o**o,sB
a( #ages and Sa+ar4- Wages represent hour*- rates o# pa- and sa*ar- re#ers to month*- rate
o# pa- irrespective o# the number o# hours ,or1ed. ;he- are subject to annua* increments.
;he- di##er #rom emp*o-ee to emp*o-ee and depend upon the nature o# jobs2 seniorit- and
merit.
b( Incentives- ;hese are a*so 1no,n as pa-ment b- resu*ts. ;hese are paid in addition to
,ages and sa*aries. Incentive depends upon productivit-2 sa*es2 pro#it or cost reduction
e##orts. Incentive scheme are o# t,o t-pes3
Individua* incentive
schemes.
Group incentive
schemes.
c( 1ringe 6enefits- ;hese are given to emp*o-ees in the #orm o# bene#its such as provident
#und2 gratuit-2 medica* care2 hospita*i?ation2 accident re*ie#2 hea*th insurance2 canteen2
uni#orm etc.
d( 0on- Monetar4 6enefits- ;he- inc*ude cha**enging job responsibi*ities2 recognition o#
merit2 gro,th prospects2 competent supervision2 com#ortab*e ,or1ing condition2 job
sharing and #*e8i time.
10.; Incentives
Incentives are monetar- bene#its paid to ,or1men in *ieu o# their outstanding per#ormance.
Incentives var- #rom individua* to individua* and #rom period to period #or the same individua*.
;he- are universa*and are paid in ever- sector. It ,or1s as motivationa* #orce to ,or1 #or their
per#ormance as incentive #orms the part tota* remuneration. Incentives ,hen added to sa*ar-
increase the earning thus increase the standard o# *iving. ;he advantage o# incentive pa-ment are
reduced supervision2 better uti*isation o# e<uipment2 reduced scrap2 reduced *ost time2 reduced
absenteeism and turnover N increased output.
)ccording to 6urac, I Smit$2 E.n incentive scheme is a p*an or programme to motivate
individua* or group on per#ormance. .n incentive programme is most #re<uent*- bui*t on monitor-
re,ards 5 incentive pa- or monetar- bonus 62 but ma- a*so inc*ude a variet- o# non monetar-
re,ards or pri?es.F
123
10.< Finds of Incentives
Incentives can be c*assi#ied under the #o**o,ing
categories3
1. Individua* and Organi?ationa*
Incentives
2. (inancia* and "onB(inancia*
Incentives
3. 9ositive and "egative
Incentives
1( Individua+ and Organi5ationa+ IncentivesB .ccording to =.G. Magginson2 EIndividua*
incentives are the e8tra compensation paid to an individua* #or a** production over a speci#ied
magnitude ,hich stems #rom his e8ercise o# more than norma* s1i**2 e##ort or concentration ,hen
accomp*ished in a predetermined ,a- invo*ving standard too*s2 #aci*ities and materia*s.F
Individua* per#ormance is measured to ca*cu*ate incentive ,here as organi?ationa* or group
incentive invo*ve cooperation among emp*o-ees2 management and union and purport to
accomp*ish broader objectives such as an organi?ationB,ide reduction in *abour2 materia* and
supp*- costs2 strengthening o# emp*o-ee *o-a*t- to compan-2 harmonious management and
decreased turnover and absenteeism
I( Individua+ Incentive S4stem is of t>o
t4es:
a6 ;ime based %-stemB It inc*udes Ha*se- 9*an2 Ro,an 9*an2 7merson 9*an and
0edeau8 9*an
b6 9roduction based %-stemB it inc*udes ;a-*or>s :i##erentia* 9iece Rate %-stem2
Gantt>s
;as1 and 0onus 9*an
II( *rou Incentive S4stem is of fo++o>ing
t4es
a6 %ca*on 9*an
b6 9riestman>s 9*an
c6 CoB9artnership
9*an d6 9ro#it %haring
%ome important these p*ans o# incentive ,age pa-ments are as
#o**o,s3
Ha+se4 2+an- 4nder this p*an a standard time is #i8ed in advance #or comp*eting a ,or1.
0onus is re,arded to the ,or1er ,ho per#orm his ,or1 in *ess than the standard time and
paid ,ages according to the time ,age s-stem #or the saved time.
9$e tota+ earnings of t$e >or,er M >ages for t$e actua+ time N
bonus
0onus X 33.$V o# the time saved 5standard time set on past
e8perience6 Or
$0V o# the time saved 5standard are scienti#ica**-
set6 78amp*e3 ;ime re<uired to comp*ete job 5%6 X 20 hours
.ctua* ;ime ta1en 5;6 X 1$ hours
Hour*- Rate o# 9a- 5R6 X Rs 1.$
Ca*cu*ate the ,age o# the
,or1er. %o*ution3 ; T R Y 5% B ; 6 T
R
2
1$ T 1.$ Y 520 B 1$ 6 T 1.$ X 22.$ Y 3.'$ X 2&.2$ Rs
2
In this e<uation 3.'$ Rs are the incentives #or saving $ hours.
Ro>an 2+an G 4nder this method minimum ,ages are guaranteed given to ,or1er at the
ordinar- rate #or the time ta1en to comp*ete the ,or1. 0onus is that proportion o# the
,ages o# the time ta1en ,hich the time saved bears to the standard time a**o,ed.
Incentive M #ages for actua+ time for com+eting t$e >or, N 6onus
,here2
6onus M S - 9 T 9 T R
%
3merson 2+an G 4nder this s-stem2 ,ages on the time basis are guaranteed even to those
,or1ers ,hose output is be*o, the standard. ;he ,or1ers ,ho prove e##icient are paid a
bonus. (or the purpose o# determining e##icienc-2 either the standard output per unit o#
time is #i8ed2 or the standard time #or a job is determined2 and e##icienc- is determined on
the basis o# a comparision o# actua* per#ormance against the standard.
6edeau@ 2+an G It provide comparab*e standards #or a** ,or1ers. ;he va*ue o# time
saved is divided both to the ,or1er and his supervisor in the ratio o# Z and [
respective*-. . supervisor a*so he*ps a ,or1er in saving his time so he is a*so given some
bene#it in this method. ;he standard time #or each job is determined in terms o# minutes
,hich are ca**ed 0edeau8 points or 0>s. each 0 represents one minute through time and
motion stud-. . ,or1er is paid time ,ages upto standard 0>s or 100V per#ormance.
0onus is paid ,hen actua* per#ormance e8ceeds standard per#ormance in terms o# 0>s.
9a4+orJs &ifferentia+ 2iece Rate S4stem - (.W. ;a-*or2 #ounder o# the scienti#ic
management evo*ved this s-stem o# ,age pa-ment. 4nder this s-stem2 there is no
guarantee o# minimum ,ages. %tandard time and standard ,or1 is determined on the basis
o# time stud-. ;he main characteristics o# this s-stem is that t,o rates o# ,age one *o,er
and one higher are #i8ed. ;hose ,ho #ai* in attaining the standard2 are paid at a *o,er rate
and those e8ceeding the standard or just attaining the standard get higher rate. 4nder this
s-stem2 a serve pena*t- is imposed on the ine##icient ,or1ers because the- get the ,ages
at *o,er rates. ;he basic idea under*-ing in this scheme is to induce the ,or1er at *east to
attain the standard but at the same time i# a ,or1er is re*ative*- *ess e##icient2 he ,i** *ose
much. (or e8amp*e2 the standard is #i8ed at !0 units per da- and the piece rate are !0 9.
and $0 9. per unit. I# a ,or1er produces !0 units or more in a da-2 he ,i** get the ,ages
at the rate o# $0 9 per unit and i# he produces 3+ units ,i** get the ,ages at !0 paise per
unit #or the tota* output.
*anttJs 9as, and 6onus 2+an - In this2 a minimum ,age is guaranteed. Minimum
,age is given to an-bod-2 ,ho comp*etes the job in standard time. I# the job is
comp*eted in *ess time2 then there is a hi1e in ,ageBrate. ;his hi1e varies bet,een 2$V to
$0V o# the standard rate.
2rofit S$aring G It is a method o# remuneration under ,hich an emp*o-er pa- his
emp*o-ees a share in #orm o# percentage #rom the net pro#its o# an enterprise2 in addition
to regu*ar ,ages at #i8ed interva*s o# time.
2( 1inancia+ and 0on-financia+ Incentives- Individua* or group per#ormance can be measured
in #inancia* terms. It means that their per#ormance is re,arded in mone- or cash as it has a great
impact on motivation as a s-mbo* o# accomp*ishment. ;hese incentives #orm visib*e and tangib*e
re,ards provided in recognition o# accomp*ishment. (inancia* incentives inc*ude sa*ar-2
premium2 re,ard2 dividend2 income on investment etc. On the other hand2 nonB#inancia* incentives
are that socia* and ps-cho*ogica* attraction ,hich encourages peop*e to do the ,or1 e##icient*-
and e##ective*-. "onB#inancia* incentive can be de*egation o# responsibi*it-2 *ac1 o# #ear2 ,or1er>s
participation2 tit*e or promotion2 constructive attitude2 securit- o# service2 good *eadership etc..
"( 2ositive and 0egative Incentives- 9ositive incentives are those agreeab*e #actors re*ated to
,or1 situation ,hich prompt an individua* to attain or e8ce* the standards or objectives set #or
him2 ,here as
negative incentives are those disagreeab*e #actors in a ,or1 situation ,hich an individua* ,ants to
avoid and strives to accomp*ish the standards re<uired on his or her part. 9ositive incentive ma-
inc*ude e8pected promotion2 ,or1er>s pre#erence2 competition ,ith #e**o, ,or1ers and o,n Ms
record etc. "egative incentives inc*ude #ear o# *a- o##2 discharge2 reduction o# sa*ar-2 disapprova*
b- emp*o-er etc.
10.. 1ringe 6enefits
7mp*o-ees are paid severa* bene#its in addition to ,ages2 sa*ar-2 a**o,ances and bonus. ;hese
bene#its and services are ca**ed M#ringe bene#its> because these are o##ered b- the emp*o-er as a
#ringe. 7mp*o-ees o# the organi?ation are provided severa* bene#its and services b- the emp*o-er
to maintain and promote emp*o-ee>s #avorab*e attitude to,ards the ,or1 and ,or1 environment.
It not on*- increases their mora*e but a*so motivate them. ;hese provided bene#its and services
#orms the part o# sa*ar- and are genera**- re#ereed as #ringe bene#its.
)ccording to &. 6e+c$er2 E (ringe bene#its are an- ,age cost not direct*- connected ,ith the
emp*o-ees productive e##ort2 per#ormance2 service or sacri#iceF. )ccording to #ert$er and
&avis2 E(ringe embrace a broad range o# bene#its and services that emp*o-ees receive as part o#
their tota* compensation2 pac1ageB pa- or direct compensation and is based on critica* job #actors
and per#ormanceF.
)ccording to !oc,man2 E 7mp*o-ee bene#its are those bene#its ,hich are supp*ied b- an
emp*o-er to or #or the bene#its o# an emp*o-ee and ,hich are not in the #orm o# ,ages2 sa*aries
and time rated pa-mentsF. ;hese are indirect compensation as the- are e8tended condition o#
emp*o-ment and are not re*ated to per#ormance direct*-.
10.? Finds of 1ringe 6enefits
;he various organi?ations in India o##ers #ringe bene#its that ma- be categori?ed as
#o**o,s3
1( O+d )ge and Retirement 6enefits B these inc*ude provident #und schemes2 pension
schemes2 gratuit- and medica* bene#its ,hich are provided to emp*o-ee a#ter their
retirement and during o*d age as a sense o# securit- about their o*d age.
2( #or,manJs !omensation B these bene#its are provided to emp*o-ee i# the- are got
ignored or
die under the ,or1ing conditions and the so*e responsibi*it- is o# the emp*o-er.
"( 3m+o4ee Securit4- Regu*ar ,age and sa*ar- is given to emp*o-ee that gives a #ee*ing o#
securit-.
Other than this compensation is a*so given i# there is *a-Bo## or retrenchment in an
organi?ation.
/( 2a4ment for 9ime 0ot #or,ed G 4nder this categor- o# bene#its2 a ,or1er is provided
pa-ment #or the ,or1 that has been per#ormed b- him during ho*ida-s and a*so #or the
,or1 done during odd shi#ts. Compensator- ho*ida-s #or the same number in the same
month are given i# the ,or1er has not avai*ed ,ee1*- ho*ida-s.
7( Safet4 and Hea+t$ G 4nder this bene#it ,or1ers are provided conditions and
re<uirements regarding ,or1ing condition ,ith a vie, to provide sa#e ,or1ing
environment. %a#et- and Hea*th measures are a*so ta1en care o# in order to protect the
emp*o-ees against unhea*th- ,or1ing conditions and accidents.
;( Hea+t$ 6enefits G 7mp*o-ees are a*so provided medica* services *i1e hospita* #aci*it-2
c*inica*
#aci*it- b- the organi?ation.
10.10 Summar4
Compensation are monetar- and nonBmonetar- bene#its design to attract2 retain and
motivate ,or1ers o# the organisation.
Compensation are depend on *abour mar1et conditions2 *egis*ations2 management
phi*osoph- and organisations abi*it- to pa-.
0road objectives o# the compensation p*anning is to assign a monetar- va*ue to each job
or s1i** set in the organisation.
Incentive p*ans and #ringe bene#its are the modes o# compensation.
Incentive p*ans used in industries are both #or individua* and group. Individua* incentives
are based on individua* per#ormance and group incentives re,ards emp*o-ees #or their
co**ective per#ormance.
Compensation in addition to direct ,ages or sa*aries such as compan- car2 paid ho*ida-s2
retirement bene#its2 hea*th and sa#et- bene#its2 ,or1man>s compensation are 1no,n as
#ringe bene#its. 9urpose o# #ringe bene#its is to increase the economic securit- o#
emp*o-ees.
10.11 Se+f )ssessment Auestions
1 :escribe compensation and its various modes
2 78p*ain various #actors a##ecting compensation p*anning
3 What do -ou understand b- individua* and group incentive :iscuss them ,ith their
re*ative advantage and demerits
! What do -ou understand b- #ringe bene#its What are its essentia* #eatures
$ Write %hort "otes on3
i. Ha*se- 9remium 9*an
ii. %a#et- N Hea*th
measures. iii. Ro,an 9*an.
10.12 Reference 6oo,s
:avid a. :ecen?o and %tephen 9. Robbins E 9ersonne* I Human Resource ManagementF2
9rentice
Ha** o# India 9rivate =td2 "e, :e*hi 3
rd
edition 200!
C..s,athappaAFHuman Resource and 9ersonne* ManagementB ;e8t and casesFA;ata
Mcgra,
Hi** 9ub*ishing compan- =td2 "e, :e*hi2 !
th
edition 200$
7d,in 0. (*ippoAF9ersonne* managementFA McGra, Hi** 0oo1 Compan-2%ingaporeA
Internationa* edition 1+)!
Wa-ne (.CasicoA EManaging Human ResourceB 9roductivit-2 /ua*it- o# Wor1 =i#e2
9ro#itsF 2;ata
Mcgra, Hi** 9ub*ishing Compan- =td2 "e, :e*hi '
th
edition 200&.
G.%. %udhaA EHuman Resource ManagementFA 9ro#essiona* 9ub*ications2 Daipur>3
rd
revised
edition
200+
%hashi 1. Gupta and Ros- Doshi A EHuman Resource ManagementFA Ca*-ani 9ub*ishing 2
"e,
:e*hi 2011
C.0. Mamoria and %.L. Gan1arAF 9ersonne* ManagementB ;e8t and CasesFA Hima*a-a
9ub*ishing
House2 22
nd
edition 2002.
Unit - 11 : Industria+ Re+ation
Structure of
Unit:
11.0
Objectives
11.1
Introduction
11.2 ;he Concept o# Industria* Re*ation or Meaning and :e#inition o# Industria*
Re*ation 5IR6
11.3 Objective o# Industria*
Re*ation
11.! .pproaches to
IR
11.$ %uggestions and Measures to Improve
IR
11.& %igni#icance o# Good
Re*ations
11.' Industria*
:isputes
11.) (orms o# Industria*
:isputes
11.+ Causes o#
:isputes
11.10 9revention o# Industria*
:isputes
11.11 %ett*ement o# Industria*
:isputes
11.12
%ummar-
11.13 %e*# .ssessment
/uestions
11.1! Re#erence
0oo1s
11.0 Objectives
.#ter comp*eting this unit2 -ou ,ou*d be ab*e
to3
4nderstand the concept o# industria* re*ation
Cno, about objective and approaches o# industria* re*ation
=earn ho, to measures o# improving industria* re*ation
9oint out various industria* disputes
Cno, about causes o# industria* disputes
=earn ho, to prevent and sett*e do,n industria* disputes
=earn ho, to reso*ve industria* re*ation.
11.1 Introduction
Industria* re*ation is not a ver- ne, concept but it has become one o# the most de*icate and
comp*e8 prob*em o# modern Indian societ-. Industria* 9rogress is impossib*e ,ithout *abour
management cooperation and industria* harmon-. ;he concept o# Industria* re*ation has a ,ide
meaning and connotation. In the narro, sense2 the term EIndustria* Re*ationF re#ers to the nature
o# re*ationship bet,een the emp*o-ers and emp*o-ees in an Industria* enterprise. In the broad
sense2 industria* re*ation re#ers to a** t-pes o# re*ationship bet,een a** the parties concerned ,ith
the industr-. 3@am+es are:
Individua* re*ations
Re*ationship bet,een emp*o-ers and ,or1ers at the p*ace o# ,or1 or ,or1ers
participation in management.
Co**ective bargaining
;rade union
Machiner- #or sett*ement o# industria* disputes
4n#air *abor practices
Individua* grievance and discip*inar- po*ic- and practice.
12+
Industria* re*ation training.
%tate participation in industria* Re*ation.
.nother re*ated term is Memp*o-ee re*ations> or Mhuman re*ation>.
11.2 9$e !oncet of Industria+ Re+ation or Meaning and &efinition of
Industria+ Re+ation 'IR(
;he term EIndustria* Re*ationF re#ers to a** t-pes o# re*ationship bet,een a** the parties
concerned ,ith industr-. )ccording to 3nc4c+oaedia 6ritannica- it denotes re*ations o# a**
those associated in productive ,or12 inc*uding industr-2 agricu*ture2 mining2 commerce2 #inance2
transport and other services.
)ccording to &a+e in his boo1 9ersonne* Management and Industria* Re*ation2 de#ines Industria*
re*ations are re*ationship bet,een management and emp*o-ees or among emp*o-ee and their
organi?ation that arise out o# emp*o-ment.
)ccording to R.).:ester Industria* re*ations invo*ves attempts to have ,or1ab*e so*utions
bet,een con#*icting objectives and va*ues2 bet,een incentive and economic securit-2 bet,een
discip*ine and the industria* democrac-2 bet,een authorit- and #reedom and bet,een bargaining
and cooperationF.
In modern usage2 the phrase EIndustria* Re*ationF inc*udes the ,ho*e gamut o# matters that arise
due to the continuing re*ationship bet,een the emp*o-ers and the ,or1ers.
Its scope inc*udes three rare*- distinct
areas3
Re*ations bet,een mangers and individua* ,or1ers.
;he co**ective re*ations bet,een emp*o-ers and *abor 5trade6 union.
;he ro*e o# government in the regu*ation o# these
re*ationships. ;hese three c*ose*- associated areas are o#ten re#erred
to respective*- as
9ersonne* Management
Co**ective 0argaining
=abor =egis*ation
2arties invo+ved in industria+
re+ations:

7mp*o-ers
7mp*o-ee
Government
1igure 11.1
130
)ctivit4
):
1. Co**ect the data to tri parties at *east o# #ive industries about their industria* re*ation
,ithin the organi?ation.
11." Objective of Industria+ Re+ation
;he primar- objectives o# Industria* Re*ation at nationa* *eve* are that to improving the economic
condition o# ,or1ers2 increasing productivit- and achieving industria* democrac- in industria*
enterprise. ;he *abor management committee o# the .sian Regiona* Con#erence o# the
Internationa* =abor Organi?ation 5I=O6 has recogni?ed certain #undamenta* objectives o#
Industria* re*ations are to maintain sound and harmonious re*ations bet,een emp*o-ees and
emp*o-ers. ;he other objectives dra,n #rom this objective are3
1. Industria* Re*ation sa#eguards the interest o# *abor and management through mutua*
understanding and good,i** among those parties in the industr- ,hich active*-
participates in the process o# production.
2. ;o raise productivit- o# the industr- at a higher *eve* this is the need o# the da- to
contribute to the economic deve*opment o# the countr-.
3. ;o avoid a** #orms o# industria*
con#*ict
!. ;o minimi?e *abour turnover and absenteeism b- providing job satis#action to the
,or1ers and increasing their mora*e.
$. ;o minimi?e the occurrence o# stri1es2 *oc1outs and
gheraos.
&. ;o encourage and deve*op trade unions in order to improve ,or1ers co**ective strength
and reso*ving their prob*ems through co**ective bargaining.
'. ;o estab*ish2 deve*op and maintain industria* democrac- based on emp*o-ee>s
participation in management and pro#it o# the industr-.
). ;o #aci*itate government contro* over industries in regu*ating production and #or
protecting emp*o-ment or ,here production needs to be regu*ated in pub*ic interest.
+. ;o chec1 and ensure a hea*th- and ba*anced socia* order in the
industr-.
11./ )roac$es to IR
Industria* Re*ation is perceived b- di##erent*- b- di##erent peop*e. %ome o# the approaches to
industria* re*ations are as #o**o,s. ;here are three popu*ar approaches to IR3 Unitar4- 2+ura+istic
and Mar@ist. %ome others are ps-cho*ogica* approach2 socio*ogica*2 L.L.Giri2 Gandhian 2 HR:
and %-stem .pproach. Here ,e are discussing on main*- popu*ar approaches.
Unitar4 2ersective: In unitar-2 the organi?ation is perceived as an integrated and harmonious
s-stem2 vie,ed as one happ- #ami*-. . core assumption o# unitar- approach is that management
and sta##2 and a** members o# the organi?ation share the same objectives2 interests and purposesA
thus ,or1ing together2 handBinBhand2 to,ards the shared mutua* goa*s. (urthermore2 unitar- has a
paterna*istic approach ,here it demands *o-a*t- o# a** emp*o-ees. ;rade unions are deemed as
unnecessar- and con#*ict is perceived as disruptive.
131
(rom emp*o-ee point o# vie,2 unitar- approach means
that3
Wor1ing practices shou*d be #*e8ib*e. Individua*s shou*d be business process improvement
oriented2 mu*tiBs1i**ed and read- to tac1*e ,ith e##icienc- ,hatever tas1s are re<uired.
132
I# a union is recogni?ed2 its ro*e is that o# a #urther means o# communication bet,een
groups o# sta## and the compan-.
;he emphasis is on good re*ationships and sound terms and conditions o# emp*o-ment.
7mp*o-ee participation in ,or1p*ace decisions is enab*ed. ;his he*ps in empo,ering
individua*s in their ro*es and emphasi?es team ,or12 innovation2 creativit-2 discretion in
prob*emBso*ving2 <ua*it- and improvement groups etc.
7mp*o-ees shou*d #ee* that the s1i**s and e8pertise o# managers supports their endeavors.
(rom emp*o-er point o# vie,2 unitar- approach means that3
%ta##ing po*icies shou*d tr- to uni#- e##ort2 inspire and motivate emp*o-ees.
;he organi?ation>s ,ider objectives shou*d be proper*- communicated and discussed ,ith
sta##.
Re,ard s-stems shou*d be so designed as to #oster to secure *o-a*t- and commitment.
=ine managers shou*d ta1e o,nership o# their teamIsta##ing responsibi*ities.
%ta##Bmanagement con#*icts B #rom the perspective o# the unitar- #rame,or1 B are seen as
arising #rom *ac1 o# in#ormation2 inade<uate presentation o# management>s po*icies.
;he persona* objectives o# ever- individua* emp*o-ed in the business shou*d be discussed ,ith
them and integrated ,ith the organi?ation>s needs
2+ura+istic-2ersective: In p*ura*ism the organi?ation is perceived as being made up o# po,er#u*
and divergent subBgroups B management and trade unions. ;his approach sees con#*icts o#
interest and disagreements bet,een managers and ,or1ers over the distribution o# pro#its as
norma* and inescapab*e. Conse<uent*-2 the ro*e o# management ,ou*d *ean *ess to,ards
en#orcing and contro**ing and more to,ard persuasion and coBordination. ;rade unions are
deemed as *egitimate representatives o# emp*o-ees. Con#*ict is dea*t b- co**ective bargaining and
is vie,ed not necessari*- as a bad thing and i# managed cou*d in #act be channe**ed to,ards
evo*ution and positive change. Rea*istic managers shou*d accept con#*ict to occur. ;here is a
greater propensit- #or con#*ict rather than harmon-.
;he- shou*d anticipate and reso*ve this b- securing agreed procedures #or sett*ing disputes.;he
imp*ications o# this approach inc*ude3Q
;he #irm shou*d have industria* re*ations and personne* specia*ists ,ho advise managers
and provide specia*ist services in respect o# sta##ing and matters re*ating to union
consu*tation and negotiation.
Independent e8terna* arbitrators shou*d be used to assist in the reso*ution o# disputes.
4nion recognition shou*d be encouraged and union representatives given scope to carr- out
their representative dutiesQ
Comprehensive co**ective agreements shou*d be negotiated ,ith unions
Mar@ist 2ersective: ;his vie, o# industria+ re+ations is a b- product o# a theor- o# capita*ist
societ- and socia* change. Mar8 argued that3
Wea1ness and contradiction inherent in the capita*ist s-stem ,ou*d resu*t in revo*ution
and the ascendanc- o# socia*ism over capita*ism.
Capita*ism ,ou*d #oster monopo*ies.
133
Wages 5costs to the capita*ist6 ,ou*d be minimi?ed to a subsistence *eve*.
Capita*ists and ,or1ers ,ou*d competeIbe in contention to ,in ground and estab*ish their
constant ,inB*ose strugg*es ,ou*d be evident
13!
;his perspective #ocuses on the #undamenta* division o# interest bet,een capita* and *abor2 and
sees ,or1p*ace re*ations against this bac1ground. It is concerned ,ith the structure and nature o#
societ- and assumes that the con#*ict in emp*o-ment re*ationship is re#*ective o# the structure o#
the societ-. Con#*ict is there#ore seen as inevitab*e and trade unions are a natura* response o#
,or1ers to their e8p*oitation b- capita*.
11.7 Suggestions and Measures to Imrove IR
Good industria* re*ation re#er to harmonious re*ations bet,een the trade union and the
management in an organi?ation2 but it is not eas- to promote and maintain sound and harmonious
industria* re*ations in an organi?ation but there are some suggestions ,hich are he*p to maintain
sound and cordia* re*ation bet,een the *abor and the management.
1. Suort of 9o Management: ;op management action a*,a-s be proactive and geared
to prob*em so*ving and its action and decision must be in #avour o# an organi?ation and
emp*o-ees.
2. Sound 2ersonne+ 2o+icies: personne* po*icies constitute the business phi*osoph-o# an
organi?ation and guide it in arriving at human re*ations decisions. %ound po*icies and
ru*es are o# *itt*e he*p un*ess the- are e8ecuted objective*- and e<uitab*- at a** the *eve*s
o# an organi?ation. 9ositive .ttitudes3 0oth top management and trade union shou*d
adopt positive attitudes to,ards each other2 the- he*p them to understand prob*em o#
each and ,hich can be so*ved b- co**ective bargaining.
". !o++ective 6argaining: Co**ective bargaining is an instrument ,hich he*ps to maintain
industria* peace in an organi?ation .such co**ective bargaining agreements and association
o# emp*o-ees in decision ma1ing process ,i** bring about cooperation bet,een *abour and
management.
/. Strong 9rade Union and Sound 3m+o4ersJ Union: Industria* re*ations can be sound
on*- ,hen the bargaining po,er o# the emp*o-ees> union is strong and e<ua* to that o#
management. .nd emp*o-ers> union shou*d a*so be sound and ,e** organi?ed. %ound
management are he*p#u* #or the maintenance and promotion o# uni#orm personne* po*icies
among various organi?ations and to protect the interest o# ,ea1 emp*o-ers.
7. 9$ere are a+so some ot$ers suggestions but the- are some e8pensive because the-
,ant some research ,or1 on them3
;here shou*d be ,e** estab*ished and proper*- administered grievance redress
machiner-2 sometimes ,hich provides an out*et #or tensions and #rustrations o# ,or1ers.
%imi*ar*-2 a suggestions scheme ,i** he*p to satis#- the creative urge o# ,or1ers.
Dob supervisors shou*d be trained thorough*- to ensure that organi?ationa* po*icies and
practices as ,e** as *eadership and communication s1i**2 ,hich he*p them too proper*-2
imp*emented and carried into e##ect.
. regu*ar #o**o, up o# IR programmed is essentia* so that e8isting practice ma- be
proper*- eva*uated and a chec1 ma- be e8ercised on certain undesirab*e tendencies2
shou*d the- mani#est themse*ves.
11.; Significance of *ood Industria+ Re+ations
I# the objective o# the nation is rapid nationa* deve*opment and increased socia* justice are to be
13$
achieved2 there must be harmonious re*ationship bet,een management and union. %uch re*ations
,i** *ead to the #o**o,ing bene#its3
13&
1. Industria+ 2eace: Good industria* re*ations bring harmon- and remove causes o#
disputes. ;his *eads to industria* peace2 ,hich is an idea* situation #or an industria* unit to
concentrate on productivit- and gro,th.
2. Hig$ Mora+e: Cordia* industria* re*ations improve the mora*e o# the emp*o-ee. It imp*ies
the e8istence o# an atmosphere o# cooperation2 con#idence2 and respect ,ithin the
enterprise. In such an atmosphere2 there are common goa*s2 ,hich motivate a** members
o# the organi?ation to contribute their best. Conse<uent*-2 there is higher productivit-2
higher income2 and increased job satis#action H a** resu*ting in higher mora*e o# the
,or1#orce.
". Menta+ Revo+ution: %ound industria* re*ation comp*ete*- trans#orms the out*oo1 o#
emp*o-ers and emp*o-ee. It is based on consu*tation bet,een the ,or1ers and the
management. ;his motivates the ,or1ers to give their best to the organi?ation and share
the #ruits o# progress joint*- ,ith the management.
/. Reduced #astage and Increased 2roductivit4: It he*ps in increasing production.
Wastage o# man2 materia* and machines are reduced to the minimum and thus nationa*
interest is protected. ;hus2 the- ,i** contribute to the economic gro,th o# the countries.
7. 2rogrammes for #or,ers &eve+oment: "e, programmes #or ,or1ers deve*opment
are introduced in an atmosphere o# peace such as training #aci*ities2 *abor ,e*#are #aci*ities
etc. Hence2 #u** advantage o# *atest inventions2 innovations and other techno*ogica*
advancement can be obtained. ;hrough these emp*o-ee deve*opment programme2
,or1#orce easi*- adjust itse*# to re<uired changes #or betterment.
)ctivit4 6:
1 :iscuss the present position o# industria* re*ations in the countr-2 in -our OpinionA ,hat
steps shou*d be ta1en to improve it.
11.< Industria+ &isutes
Industria* :isputes .ct 1+!' de#ines an- dispute or di##erence bet,een emp*o-ers and
emp*o-ers or bet,een emp*o-ers and ,or1ers2 or bet,een ,or1ers and ,or1ers2 ,hich is
connected ,ith the emp*o-ment or nonBemp*o-ment or terms o# emp*o-ment or ,ith the
conditions o# *abor o# an- person.
Industria* :isputes are #re<uent*- c*ouded b- a sense o# e8p*oitation2 distrust and discontent
bet,een emp*o-ee and emp*o-ers. In simp*e *anguage2 the disputes bet,een emp*o-ers and
emp*o-ees on an- Industria* matters are 1no,n as industria* disputes. ;he term Mdispute> is
characteri?ed b- the #o**o,ing #actors 3
1. :ispute main*- re*ate to the stri#e bet,een emp*o-ers and their emp*o-ees.
2. ;here must actua**- be a di##erence.
3. Its ,or1 re*ated or industria* matter issues.
!. :isputes must be raised b- group or c*ass o# ,or1men.
$. :isputes bet,een one or t,o ,or1men and their emp*o-ers are not an industria* dispute.
11.. 1orms of Industria+ &isutes
Industria* dispute can ta1e p*ace in an- o# the #o**o,ing
#orms3
13'
1( Stri,es: . stri1e means a cessation o# ,or1 b- a bod- o# persons emp*o-ed in an-
industr- acting in combination or a concerted re#usa* under a common understanding o# a
number o#
13)
persons ,ho are or have been so emp*o-ed to continue ,or1 or to accept emp*o-ment.
%tri1es are o# severa* t-pes3
7conomic %tri1e
%-mpathetic %tri1e
Genera* %tri1e
%et do,n %tri1e
%*o, :o,n %tri1e
=ightening %tri1e
Hunger %tri1e
2( :oc, Out: *oc1 out is the counterpart o# stri1e. =oc1 outs bring ps-cho*ogica* pressure
on the ,or1ers to agree to his conditions or #ace c*osure o# the units. . *oc1out is deca*ed
as a tria* o# strength bet,een the management and its emp*o-ees. =oc1outs means the
emp*o-er c*oses do,n his #actor- ,here his ,or1ers are emp*o-ed because he ,ants to
#orce them to agree to his terms and conditions o# service during the pendenc- o# a
dispute.
"( *$erao: Its means Eto surroundF. .ccording to "ationa* Commission on =abour E Gherao
tend to in#*ict ph-sica* duress on the persons a##ected and endanger not on*- industria*
harmon- but a*so create prob*ems o# *a, and orderF.
/( 2ic,eting: It is primari*- a method o# dra,ing pub*ic attention to,ards the disputes and it
is *ega* so there is no vio*ence is invo*ved. In pic1eting2 ,or1ers are dissuaded #rom
reporting #or ,or1 b- certain persons stationed at the gate o# the #actor-.
7( 6o4cott: 0o-cott aims at disrupting the norma* #unctioning o# an enterprise2 through
#orce#u* appea*s and negative behavioura* acts.
11.? !auses of &isutes
1( #ages and )++o>ances3 ;he most important cause #or disputes re*ates to ,ages. ;he
demand #or increase in ,ages and a**o,ances is the most important cause o# industria*
disputes. ;he demand #or ,ages and a**o,ances has never been #u**- met because o#
in#*ation and high cost o# *iving. High in#*ation resu*ts in increased cost o# *iving resu*ting
in never ending demands #rom unions. ;here are some more economic reasons ,ho are
the cause o# industria* disputes are bonus2 ,or1ing conditions and ,or1ing hours2
moderni?ation and automation and demand #or other #aci*ities.
2( Union Riva+r4: Most organi?ations have mu*tip*e unions. Mu*tip*icit- o# unions *eads to
interB union riva*ries. I# one union agrees to a ,age sett*ement2 another union ,i** oppose
it.
"( 2o+itica+ Interference: Major trade unions are a##i*iated to po*itica* parties. 9o*itica*
a##i*iated is not pecu*iar to our countr- a*one. 7ven a cursor- assessment o# *abour
movements around the ,or*d ,ou*d sho, that trade unions are2 b- their ver- nature2
po*itica* and that po*itici?ation o# the ru*e rather than the e8ception. 7ver-,here trade
union have been compe**ed to engage in po*itica* action to obtain enough #reedom #rom
*ega* restraint to e8ercise their main industria* #unctions.
/( Manageria+ !auses: ;hese causes inc*ude autocratic manageria* attitude and de#ective
*abour po*icies. In this inc*udes #ai*ures o# recogni?e the trade union2 de#ective recruitment
po*icies2 irregu*ar *a-o## and retrenchment2 de#iance o# agreements and codes2 de#ective
*eadership2 ,ea1 trade unions.
13+
7( Unfair +abour 2ractices: ;he Industria* :ispute .ct2 1+!' is more speci#ic about the
un#air *abour practices. .ccording to the .ct2 the #o**o,ing constitute un#air *abour
practices3
1!0
;o inter#ere ,ith2 restrain #rom or coerce ,or1men in the e8ercise o# their right to
organi?e2 #orm2 join or assist a trade union or to engage in concerted activities #or the
purpose o# co**ective bargaining or other mutua* aid or protection2 that is to sa-2
;hreatening ,or1men ,ith discharge i# the- join a trade
union
;hreating a *oc1out or c*osure2 i# a trade union is
organised
Granting ,age increases to ,or1men at crucia* periods o# the trade union organi?ation2
,ith a vie, to undermine the e##orts o# the trade union at organi?ation.
;o2 dominate2 inter#ere ,ith or contribute support2 #inancia* or other,ise2 to an- trade
union.
&6 ;o encourage or discourage membership in an- trade union b- discriminating against
,or1men.
'6 ;o discharge or dismiss ,or1men.
)6 ;o indu*ge in acts o# #orce or vio*ence.
+6 ;o re#use to bargaining co**ective*-2 in good #aith ,ith the recogni?ed trade unions.
106 ;o insist upon individua*s ,or1men2 ,ho are on a *ega* stri1e2 to sign a good conduct
bond as a precondition to a**o,ing them to resume ,or1
11.10 2revention of Industria+
&isutes
It is ver- #amous sentences prevention is a*,a-s better than cure. 9revention steps shou*d2
there#ore2 be ta1en so that reduced industria* disputes and sometimes tr- to do not occur the
industria* disputes in the organi5ations.
1( !o++ective 6argaining: Co**ective 0argaining is the most e##ective method o# reso*ving
industria* disputes. ;he ro*e o# co**ective bargaining in so*ving the prob*ems arising
bet,een the management and the ,or1er has been ,ide*- recogni?ed. Co**ective
bargaining not on*- inc*udes negotiation2 administration and en#orcement o# the ,ritten
contracts bet,een the emp*o-ees and the emp*o-ers but a*so inc*udes the process o#
reso*ving *abour management con#*icts.
Co**ective bargaining o##ers the #o**o,ing bene#its to both o# the emp*o-ees and
emp*o-ers 3
It he*ps increase economic strength o# both the parties at the same time protecting their
interest.
It he*ps reso*ve disputes ,hen it is occur in the
organi?ation.
It a*so he*p to estab*ish uni#orm conditions o# emp*o-ment ,ith a vie, to avoid
occurrences o# industria* disputes.
It *a-s do,n ru*es and norms #or dea*ing ,ith
*abour.
2( 0ationa+ )rbitration 2romotion 6oard: ;he ;ruce Reso*ution 1+&2 and the code o#
1!1
:iscip*ine as evo*ved in 1+$) recogni?ed the princip*e o# vo*untar- .rbitration. ;he
Government o# India too1 note o# the intention o# both the industria* partners and set up
the "ationa*.rbitration 9romotion 0oard in Du*- 1+&' to promote arbitration.
.rbitration is a procedure in ,hich a neutra* third part- studies the bargaining situation2
*istens to both the parties and gathers in#ormation2 and then ma1es recommendations that
are bui*ding on the parties. .rbitration is e##ective because it is estab*ished b- the parties
themse*ves and the decision is acceptab*e to them and it a*so de*a-s are cut do,n2
sett*ement are speeded up and *ess e8pensive ,hen compared to courts or tribuna*s.
1!2
"( *rievance Redresa+ 2rocedure: .grievance ma- be understood as an emp*o-ee>s
dissatis#action or #ee*ing o# persona* injustice re*ating to his or her emp*o-ment
re*ationship. .grievance is genera**- ,e**B de#ined in a co**ective bargaining agreement.
;he Indian =abour Con#erence inn1+$) evo*ved a code o# discip*ine ,hich ,as rati#ied b-
the nationa* trade union and emp*o-ers> organi?ation. 4nder this code2 both the parties
vo*untari*- agree to maintain and create an atmosphere o# mutua* trust and cooperation in
the #actor- and to sett*e a** the disputes and grievance b- mutua* negotiation2 conci*iation
and vo*untar- arbitration and avoid direct action.
/( 9$e Im+ementation Mac$iner4: ;he centra* organi?ations o# ,or1ers and emp*o-ers
have set up machiner- to screen cases o# industria* disputes be#ore the- are ta1en to courts
,ith a vie, to reducing *itigation. ;he main #unction o# consu*tative machiner- is to bring
the parties together #or mutua* sett*ement o# di##erence in a spirit o# coBoperation and
good,i**. Consu*tative machiner- operates at the p*ant2 industr-2 nationa* and state
*eve*s. .t the p*ant *eve*2 there are ,or1s committees and joint management counci*s.
0eing essentia**- bipartite in character2 Wor1 committee are constituted as per the
provisions o# the Industria* :isputes .ct2 1+!' and joint management counci*s are set up
#o**o,ing the trust *aid do,n in the Industria* 9o*ic- Reso*ution2 1+$&. .t the industr-
*eve*2 there are Wage 0oards and Industria* Committees. Imp*ementation ce**s have been
set up in a*most a** the states and their activities are coordinated b- the centra*
Imp*ementation and 7va*uation Ce** ,ith a vie, to ensure uni#orm po*icies and action.
7( #or,ers 2articiation in Management: It is a method ,hereb- the ,or1ers are
a**o,ed to be consu*ted and to have a sa- in the management o# the unit. ;he important
schemes o# ,or1ers participation are3
#or, !ommittees consisting o# representatives o# emp*o-er and emp*o-ee ,here ever-
industria* underta1ing emp*o-ing 100 or more ,or1ers is under an ob*igation to set up. Its
main purpose to promote industria* re*ations.
8oint Management !ounci+s3 Government suggested setting up joint management
counci* to ma1e a start in *abour participation in management.
S$o counci+: it have been set up in the manu#acturing and mining industries emp*o-ing
$00 or more ,or1ers in private2 pub*ic and joint sectors. Its main #unction to assist the
management in achieving production targets2 improving production2 productivit-
e##icienc-2 e*iminating ,astage and in achieving optimum uti*i?ation o# machiner- and
manpo,er.
8oint !ounci+ : joint counci* have been estab*ished #or the ,ho*e unit and dea*s ,ith
matters re*ating to optimum production and e##icienc- and the #i8ations o# productivit-
norms #or man and machine #or the unit as a ,ho*e.
;( 9riartite 6odies: ;ripartite bodies composed o# emp*o-er2 emp*o-ee and government
have been set up #or consu*tation and discussion on prob*ems o# *abour to so*ve it out.
<( Mode+ Standing Orders: Government enacted the Industria* 7mp*o-ment 5%tanding
Order6 .ct
1+!& #or to avoid #rictions amongst emp*o-ers and ,or1men over the terms o#
emp*o-ment. ;his .ct is re<uiring emp*o-ers in the estab*ishment to de#use ,ith su##icient
precision2 the condition o# emp*o-ment under him and to ma1e them 1no,n to a** the
,or1ers. %uch conditions inc*ude conditions o# recruitment2 discharge2 discip*inar-
action2 ho*ida-s2 *eave etc o# the ,or1ers. ;hus2 the main object o# the act is to prevent the
dispute as soon as it arises b- #raming mode* ru*es #or maintaining discip*ine and better
13&
1!3
11.11 Sett+ement of Industria+
&isutes
I# dispute cou*d not be prevented on vo*untar- basis and do arise2 steps have to be ta1en #or their
sett*ement. Industria* :ispute .ct 1+!' as amended in 1+)2 provides severa* provisions #or
sett*ing the disputes. Larious methods and provision are #or reso*ving disputes. More important
o# them are as #o**o,s3
16 .rbitration
26 Conci*iation
36 Co**ective 0argaining
!6 Code o# :iscip*ine
$6 Grievance 9rocedure
&6 .djudication
'6 Consu*tative machiner-
1( )rbitration: it is a procedure in ,hich a neutra* third part- studies the bargaining situation
*isten to both the parties and gathers in#ormation and then ma1e recommendation that are
binding the parties. It is e##ective because estab*ished b- the parties themse*ves and the decision is
acceptab*e to them and re*ative*- e8peditious ,hen compared to courts or tribuna*s. :e*a-s are
cut do,n and sett*ements are speeded up. 0ut it has some ,ea1ness a*so are it is e8pensive. ;he
e8penditure needs to be shared b- the *abour and the management and judgment become arbitrar-
i# there is a mista1e in se*ecting the arbitrator.
2( !onci+iation: It is a process b- ,hich representatives o# ,or1ers and emp*o-ees are brought
together be#ore a third part- ,ith a vie, to persuading them to arrive at an agreement b- mutua*
discussion bet,een them. ;he third part- ma- be one individua* or a group o# peop*e. ;he
a*ternative name #or the third part- is mediators.
;he conci*iation o##icer can be appointed b- the centra* and state government to mediate in a**
disputes brought to his notice. ;he o##icer enjo-s the po,er o# civi* courts. He can ca** and
,itness disputing parties on oath and interpret the #acts o# the case. He is e8pected to give
judgment ,ithin 1! da-s o# the commencement o# the conci*iation proceedings. His judgment is
binding on a** the parties to the disputes. When the conci*iation o##icer #ai*s to reso*ve the disputes
bet,een the parties2 the government can appoint a 0oard o# Conci*iation. It is not a permanent
0oard. It consists o# a chairman and t,o or #our other members nominated in e<ua* numbers b-
the parties to the disputes.
"( !o++ective 6argaining: it is a process b- ,hich emp*o-ers on the one hand and representative
o# the emp*o-ees on the other2 attempt to arrive at agreements covering the conditions under
,hich emp*o-ees ,i** contribute and be compensated #or their services. We a*read- discuss on it.
/( !ode of &isci+ine: ;he code o# discip*ine evo*ved b- the Ministr- o# =abour and
7mp*o-ment. ;he code o# discip*ine de#ines duties and responsibi*ities o# emp*o-ers and ,or1ers.
;he objectives o# promoting constructive coBoperation bet,een their representatives at a** *eve*s2
avoiding stoppage as ,e** as*itigation2 securing sett*ement o# grievance b- mutua* negotiation2
conci*iation and vo*untar- arbitration2 #aci*itating the gro,th o# trade union and e*iminating a**
#orms o# coercion and vio*ence o# Industria* Re*ation.
7( *rievance 2rocedures: . grievance ma- be understood as an emp*o-ee>s dissatis#action or
#ee*ing o# persona* injustice re*ating to his or her emp*o-ment re*ationship. ;here are some
condition ,hich ma- give rise to a grievance are *i1e a vio*ation o# *a,2 a vio*ation o# the intent
1!!
o# the parties as stipu*ated during contract negotiation 2 a vio*ation o# compan- ru*es2 a change
in ,or1ing conditions or past compan- practices and a vio*ation o# hea*th and Ior sa#et-
standards.
It is reso*ved b- set procedure
3
13'
1!$
Ho, the grievance ,i** be imitated
;he number o# steps in the process.
Who ,i** represent each part-
;he speci#ied number o# ,or1ing da-s ,ithin ,hich the grievance must be ta1en on the
ne8t step in the hearing.
;( )djudication: it is means a mandator- sett*ement o# an industria* dispute b- a *abour court or
a tribuna*. Whenever an industria* dispute remains unreso*ved b- the conci*iation o##icer and the
board o# conci*iation2 the matter is re#erred in a court o# in<uir-. . court o# in<uir- ma- consist
o# one independent person or such numbers o# independent persons as the appropriate government
ma- thin1 #it and submit its report to the government ,ithin si8 months #rom the date o# the
commencement o# the in<uir-. I# sett*ement is not arrived at b- the e##orts o# the above
machiner-2 three t-pes o# semiBjudicia* bodies are #ormed i.e. *abour court2 industria* tribuna*s
and nationa* tribuna*s.
:abour !ourt sha** consist o# one person on*- to be appointed b- the appropriate
government.
=abor court #or adjudication o# industria* disputes re*ating to disputed orders o# the
emp*o-ers. e.g. dismissa*2 discharge and suspensions o# emp*o-ees2 app*ication and
interpretation o# standing orders2 ,ithdra,* o# an- concession or privi*ege2 *ega*it- or
other,ise o# an- stri1e or *oc1out etc.
Industria+ 9ribuna+s: the tribuna*s ,i** consist o# one person o# the ran1 o# a high court
judge b- state government. ;his tribuna*s so*ve out the disputes re*ating to ,ages2 hour o#
,or1 and rest2 interva*s2 *eave ,ith pa-2 ho*ida-s2 compensator- and other a**o,ances2
bonus2 pro#it sharing2 provident #und2 retrenchment2 gratuit- and etc.
0ationa+ 9ribuna+: "ationa* ;ribuna*s are set up b- the Centra* Government #or the
adjudication o# the industria* disputes ,hich invo*ves the <uestion o# nationa* importance
or ,hich a##ect industria* estab*ishment situated in more than one state. It gives decisions
on matters re#erred to it b- the Centra* Government ,hich matter is re#erred to the
nationa* tribuna* b- the centra* government2 the *abour courts and industria* tribuna*s are
barred #rom entertaining such disputes and i# an- such dispute is be#ore *abour court or
tribuna*s. %ha** be deemed to be <uashed.
<( !onsu+tative Mac$iner4: It is set b- the government to reso*ve disputes. ;he main #unction
o# this machiner- is to bring the parties together #or mutua* sett*ement o# di##erences in a spirit o#
coBoperation and good,i**. Consu*tative machiner- operates at the p*ant2 industr-2 state and the
nationa* *eve*. .t the p*ant *eve*2 there are ,or1s committees and joint management counci*s
being bipartite in character and at the industr- *eve* there are ,age boards and industria*
committees.
)ctivit4
!:
1 Management is bound #or =abour
We*#areB 5a6 Within the #actor- on*-
5b6 Outside the #actor-
on*-
5c6 0oth o#
above
5d6 "one o# the
above
1!&
11.12 Summar4
Industria* unrest is simi*ar to a disease that demands cure and prevention rather than suppression.
;he emergence o# the concepts o# human re*ations2 human resources management and human
resource deve*opment has raised some hopes o# #indings so*ution to the prob*ems o# industria*
re*ations through app*ied behaviora* science interventions. Industria* re*ation re#ers to a** t-pe o#
re*ationship bet,een a** the parties concerned ,ith the industr-. ;he #undamenta* objectives o#
industria* re*ations are to maintain
13)
1!'
sound and harmonious re*ations bet,een emp*o-ers and emp*o-ees. ;he HR: Manager shou*d
tr- to bui*d *abour management re*ations around mutua* trust2 understanding and cooperation. ;he
con#*icts and disputes bet,een emp*o-er and emp*o-ees on an- industria* matter are 1no,n as
Industria* :isputes. It is the most acute prob*em in an- organi?ation because it endangers peace
in the industr-. .ccording to ECode o# Industria* Re*ations2 4.C. disputes are o# t,o t-pesB o#
right and o# interest. ;he main causes o# industria* disputes are economic2 po*itica*2 manageria*2
se*#Brespect2 ego and etc.
9revention is a*,a-s better than care. 9revention steps shou*d2 there#ore2 be ta1en so that
individua* disputes do not occur. I# the disputes cannot be prevented on vo*untar- basis and do
arise2 steps have to be ta1en #or their sett*ement. Industria* :isputes .ct2 1+!' as amended in
1+)22 provides severa* provisions #or setting the disputes.
11.1" Se+f )ssessment Auestions
1. 78p*ain the concept o# Industria* Re*ations. What is the signi#icance o# good industria*
re*ations and ,hat are its objectives
2. 0ring out the causes and conse<uences o# industria* disputes. :iscuss e8isting machiner-
#or the sett*ement o# industria* disputes in India.
3. :iscuss the steps -ou ,ou*d suggest to promote industria* harmon- in
India.
!. What do -ou mean b- industria* re*ations :iscuss the ro*e o# various participants in
industria* re*ations.
$. 78p*ain the machiner- #or prevention and sett*ement o# industria* disputes in
India.
11.1/ Reference 6oo,s
B Industria* Re*ation and =egis*ative H ;.".Chabbra and
%uri
B Industria* Re*ation B
"o*a1ha
B :-namics o# Industria* Re*ations in IndiaB C.0. and %.
Mamoria
B Management o# Industria* Re*ationsB Lerma2
9ramod
B Industria* Re*ations Machiner-B
C.%.%rivastava
1!)
13+
1!+
Unit - 12 : 9rade
Unions
Structure of
Unit:
12.0 Objectives
12.1
Introduction
12.2 What is ;rade
4nion
12.2.1 Objectives o# ;rade 4nion
12.2.2 Ro*e o# ;rade 4nion
12.2.3 (unctions o# ;rade
4nion
12.3 ;-pes o# ;rade
4nion
12.! Importance o# ;rade
4nion
12.$ Rights and =iabi*ities o# ;rade
4nion
12.& 9hases o# Gro,th o# ;rade 4nion in
India
12.' Mu*tip*icit- and 7##ectiveness o# ;rade
4nion
12.)
%ummar-
12.+ %e*# .ssessment
/uestions
12.10 Re#erence
0oo1s
12.0 Objectives
.#ter comp*eting this unit2 -ou ,ou*d be ab*e
to3
4nderstand the meaning o# ;rade 4nionA
4nderstand the di##erent t-pes o# ;rade 4nionA
=earn about the di##erent gro,th phases o# ;rade 4nionA
Cno, about the duties and responsibi*ities o# ;rade 4nionA
=earn about the e##ectiveness o# ;rade 4nion in 9resent %cenario.
12.1 Introduction
. trade union is an organi?ation o# ,or1ers that have banded together to achieve common goa*s
such as better ,or1ing conditions. ;he trade union2 through its *eadership2 bargains ,ith the
emp*o-er on beha*# o# union members 5ran1 and #i*e members6 and negotiates *abor contracts
5co**ective bargaining6 ,ith emp*o-ers. ;his ma- inc*ude the negotiation o# ,ages2 ,or1 ru*es2
comp*aint procedures2 ru*es governing hiring2 #iring and promotion o# ,or1ers2 bene#its2
1$0
,or1p*ace sa#et- and po*icies. ;he agreements negotiated b- the union *eaders are binding on the
ran1 and #i*e members and the emp*o-er and in some cases on other nonB member ,or1ers.
12.2 #$at is 9rade Union%
9rade union as er 9rade Union )ct 1?2; H E.n- combination #ormed primari*- #or the
purpose o# regu*ating the re*ations bet,een ,or1men and emp*o-ers or ,or1men and ,or1men
or emp*o-ers and emp*o-ers or #or imposing restrictive conditions on the conduct o# an- trade or
business and inc*udes an- #ederation o# t,o or more trade unions.F
1rom t$e above definition it is c+ear t$at 9rade union is not just an association of t$e
>or,men of a factor4 or a trade or a business but a+so can be formed b4 officers and
managers.
Under t$e 9rade Unions )ct- 1?2;- the e8pression trade union inc*udes both emp*o-ers and
,or1ers in
1$1
organi?ations. ;he term trade union ho,ever is common*- used to re#er to the organi?ation o#
,or1ers #ormed to protect their rights and enhance their ,e*#are.
)ccording to B.B. *iri- E;rade unions are vo*untar- associations o# ,or1ers #ormed together to
promote and protect their interests b- co**ective action.F
12.2.1 Objectives of 9rade
Union
;rade unions are #ormed to protect and promote the interests o# their members. ;heir primar-
#unction is to protect the interests o# ,or1ers against discrimination and un#air *abor practices.
;rade unions are #ormed to achieve the #o**o,ing objectives3
Reresentation : ;rade unions represent individua* ,or1ers ,hen the- have a prob*em at
,or1.
I# an emp*o-ee #ee*s he is being un#air*- treated2 he can as1 the union representative to
he*p sort out the di##icu*t-,ith the manager or emp*o-er. 4nions a*so o##er their members
*ega* representation. "orma**- this is to he*p peop*e get #inancia* compensation #or ,or1B
re*ated injuries or to assist peop*e ,ho have to ta1e their emp*o-er to court.
0egotiation : "egotiation is ,here union representatives2 discuss ,ith management2 the
issues ,hich a##ect peop*e ,or1ing in an organi?ation. ;here ma- be a di##erence o#
opinion bet,een management and union members. ;rade unions negotiate ,ith the
emp*o-ers to #ind out a so*ution to these di##erences. 9a-2 ,or1ing hours2 ho*ida-s and
changes to ,or1ing practices are the sorts o# issues that are negotiated. In man-
,or1p*aces there is a #orma* agreement bet,een the union and the compan- ,hich states
that the union has the right to negotiate ,ith the emp*o-er. In these organi?ations2 unions
are said to be recogni?ed #or co**ective bargaining purposes.
Boice of &ecision 3ffective #or,ers : ;he economic securit- o# emp*o-ees is
determined not on*- b- the *eve* o# ,ages and duration o# their emp*o-ment2 but a*so b-
the management>s persona* po*icies ,hich inc*ude se*ection o# emp*o-ees #or *a-o##s2
retrenchment2 promotion and trans#er. ;hese po*icies direct*- a##ect ,or1ers. ;he
eva*uation criteria #or such decisions ma- not be #air. %o2 the intervention o# unions in
such decision ma1ing is a ,a- through ,hich ,or1ers can have their sa- in the decision
ma1ing to sa#eguard their interests.
Member Services : :uring the *ast #e, -ears2 trade unions have increased the range o#
services the- o##er their members. ;hese inc*ude3
3ducation and 9raining : Most unions run training courses #or their members on
emp*o-ment rights2 hea*th and sa#et- and other issues. %ome unions a*so he*p members
,ho have *e#t schoo* ,ith *itt*e education b- o##ering courses on basic s1i**s and courses
*eading to pro#essiona* <ua*i#ications.
:ega+ )ssistance : .s ,e** as o##ering *ega* advice on emp*o-ment issues2 some unions
give he*p ,ith persona* matters2 *i1e housing2 ,i**s and debt.
1inancia+ &iscounts : 9eop*e can get discounts on mortgages2 insurance and *oans #rom
unions.
#e+fare 6enefits : One o# the ear*iest #unctions o# trade unions ,as to *oo1 a#ter
members ,ho hit hard times. %ome o# the o*der unions o##er #inancia* he*p to their
members ,hen the- are sic1 or unemp*o-ed.
1$2
12.2.2 Ro+e of 9rade
Union
;rade unions are uni<ue organisations ,hose ro*e is various*- interpreted and understood b-
di##erent interest groups in the societ-. ;raditiona**- trade unions ro*e has been to protect jobs
and rea* earnings2
1$3
secure better conditions o# ,or1 and *i#e and #ight against e8p*oitation and arbitrariness to ensure
#airness and e<uit- in emp*o-ment conte8ts. In the ,a1e o# a *ong histor- o# union movement
and accumu*ated bene#its under co**ective agreements2 a p*ethora o# *egis*ations and industria*
jurisprudence2 gro,ing *iterac- and a,areness among the emp*o-ees and the spread o# a variet-
o# socia* institutions inc*uding consumer and pub*ic interest groups the protective ro*e must have
undergone2 a <ua*itative change. It can be said that the protective ro*e o# trade unions remains in
#orm2 but varies in substance.
;here is a considerab*e debate on the purposes and ro*e o# trade unions. ;he predominant vie,2
ho,ever2 is that the concerns o# trade unions e8tend be-ond Mbread and butter>issues. ;rade
unions through industria* action 5such as protests and stri1es6 and po*itica* action 5in#*uencing
Government po*ic-6 estab*ishminimum economic and *ega* conditions and restrain abuse o#
*abour ,herever the *abour is organised. ;rade unions are a*so seen as mora* institutions2 ,hich
,i** up*i#t the ,ea1 and do,ntrodden and render them the p*ace2 the dignit- and justice the-
deserve.
12.2." 1unctions of 9rade
Union
;rade unions per#orm a number o# #unctions in order to achieve the objectives. ;hese #unctions
can be broad*- c*assi#ied into three categories3
1. Mi*itant (unctions
2. (raterna* (unctions
1. Mi+itant
1unctions
One set o# activities per#ormed b- trade unions *eads to the betterment o# the position o# their
members in re*ation to their emp*o-ment. ;he aim o# such activities is to ensure ade<uate ,ages
secure better conditions o# ,or1 and emp*o-ment get better treatment #rom emp*o-ers2 etc. When
the unions #ai* to accomp*ish these aims b- the method o# co**ective bargaining and negotiations2
the- adopt an approach and put up a #ight ,ith the management in the #orm o# goBs*o, tactics2
stri1e2 bo-cott2 gherao2 etc. Hence2 these#unctions o# the trade unions are 1no,n as mi*itant or
#ighting #unctions. ;hus2 the mi*itant #unctions o# trade unions can be summed up as3
;o achieve higher ,ages and better ,or1ing conditions
;o raise the status o# ,or1ers as a part o# industr-
;o protect *abors against victimi?ation and injustice
2. 1raterna+
1unctions
.nother set o# activities per#ormed b- trade unions aims at rendering he*p to its members in times
o# need2 and improving their e##icienc-. ;rade unions tr- to #oster a spirit o# cooperation and
promote #riend*- industria* re*ations and di##use education and cu*ture among their members.
;he- ta1e up ,e*#are measures #or improving the mora*e o# ,or1ers and generate se*# con#idence
among them. ;he- a*so arrange #or *ega* assistance to its members2 i# necessar-. 0esides2 these2
the- underta1e man- ,e*#are measures #or their members2 e.g.2 schoo* #or the education o#
chi*dren2 *ibrar-2 readingBrooms2 inBdoor and outBdoor games2 and other recreationa* #aci*ities.
%ome trade unions even underta1e pub*ication o# some maga?ine or journa*. ;hese activities2
,hich ma- be ca**ed #raterna* #unctions2 depend on the avai*abi*it- o# #unds2 ,hich the unions
raise b- subscription #rom members and donations #rom outsiders2 and a*so on their competent
1$!
and en*ightened *eadership. ;hus2 the #raterna* #unctions o# trade unions can be summed up as3
;o ta1e up ,e*#are measures #or improving the mora*e o# ,or1ers
;o generate se*# con#idence among ,or1ers
;o encourage sincerit- and discip*ine among ,or1ers
1$$
;o provide opportunities #or promotion and gro,th
;o protect ,omen ,or1ers against discrimination.
12." 94es of 9rade
Union
;rade 4nion.ct ,as estab*ished in the -ear 1+2&. ;4 is an- association 5temporar- Ipermanent6
#or the purpose o# regu*ating the re*ationship bet,een emp*o-ersB,or1ers2 emp*o-erBemp*o-er2
,or1erB,or1er #or imposing restrictive conditions on trade practices. It a*so inc*udes #ederation
o# unions re#erred as association o# pro#essiona* persons. In countries *i1e 7ng*and2 trade union
is re#erred as association o#
pro#essiona* person. In India it is considered as cursi B union IsemiB union. In .merica2 ;4 is
considered as the association o# a** persons in a trade. (unctions o# ;43 #unctions can be
categori?ed into3 1. Mi*itant
Iprotective 2. 9ositiveI#raterna*. 3.
Intramura*Ie8tramura*
1 ) Mi+itant Crotective: as the name suggests it protects their members2 aims at securing
better conditions o# ,or12 emp*o-ment #or members. It uses instruments *i1e stri1es2
*oc1outs etc. #or protecting the interest o# their members.
2 ) 2ositiveCfraterna+3 It provides #inancia* support to their members during time o#
temporar- unemp*o-ment.
3 ) Intramura+Ce@tramura+3 intramura* re#ers to ,e*#are schemes N activities ,ithin the
#rame,or1 o# #actor-premises 5sa#et-2 secure ,or1ing environment2 minimum ,ages2
minimum ,or1ing hours2 and *eave ,ith ,ages6 78tramura* re#ers to the ,e*#are schemes
outside the #actor- premises 5medica* assistance2 hea*th care2 education etc.6
;4 are born out o# the necessities o# the ,or1ers to protect and de#end them #rom injustice2
encroachment and ,rong. 4nions c*assi#ied according to urose3 4nder this head2 norma**- t,o
t-pes o# unions have been 1ept 16 Re#ormist 26 Revo*utionar-
1 ) Reformist Unions3 ;hese unions are those ,hich aim at the preservation o# the capita*ist
societ- and maintenance o# the usua* emp*o-erBemp*o-ee re*ationship2 e*imination o#
competitive s-stem o# production. ;he re#ormist unions have been subdivided b- ho8ie
according to the objectives3 into business unions and up*i#t unionism.
2 ) Revo+utionar4 Unions3 ;hese unions aim at destro-ing the present structure comp*ete*-
and rep*acing it ,ith ne, and di##erent institution according to the ideas that are regarded
as pre#erab*e. ;he revo*utionar- unionism is a*so o# t,o t-pes name*-2 anarchist and
po*itica*. :r horie a*so enumerates a third t-pe o# unionism name*- predator- unions and
gori**a union.
.ccording to membership structure there are #our t-pes o# ;rade unions3 1.Cra#t unionism2 2. sta##
unionism2
3. Industria* union and !.genera*
union.
1 ) !raft Union3 Wor1ers2 those are ,or1ing in same as simi*ar t-pe o# ,or1ItradeIbusiness.
;he- have simi*ar s1i**s2 specia*i?ation. Members are most*- non manua* ,or1ers.
Members are cra#t conscious than c*ass conscious .;he- ta1e the membership on the basis
o# simi*ar t-pe o# ,or1. ;he- strengthen their union b- integration o# their members.
1$&
2 ) Staff Union3 Organi?ation2 those are basing upon a sense o# common status2 same t-pe o#
need.
;he- tr- to see1 their membership #rom non manua* sectors o# the econom- *i1e c*erica*2
supervisors2 operators2 technicians2 cra#tsmen etc. 4ni<ue #eature o# sta## union ,as
,omen ,or1ers ,ere a*so members o# sta## union. %ta## union gained popu*arit- b-
ta1ing ,omen ,or1ers as their
members
.
1!3
1$'
3 ) Industria+ Union3 Irrespective o# cra#ts2 s1i**2 grade2 position2 gender etc. ;he ,or1ers
,or1ing in one industr- ,ere members o# industria* union. ;his union is more c*ass
conscious than trade conscious.
4 ) *enera+ union3 It covers a** t-pes o# industries. =abor c*ass peop*e #rom an- t-pe o#
industr- can be members o# genera* union. It is more open than the industria* unions.
;heir numerica* strength is high.
12./ Imortance of 9rade
Union
;he e8istence o# a strong and recogni?ed trade union is a preBre<uisite to industria* peace.
:ecisions ta1en through the process o# co**ective bargaining and negotiations bet,een emp*o-er
and unions are more in#*uentia*. ;rade unions p*a- an important ro*e and are he*p#u* in e##ective
communication bet,een the ,or1ers and the management. ;he- provide the advice and support
to ensure that the di##erences o# opinion do not turn into major con#*icts. ;he centra* #unction o#
a trade union is to represent peop*e at ,or1. 0ut the- a*so have a ,ider ro*e in protecting their
interests. ;he- a*so p*a- an important educationa* ro*e2 organi?ing courses #or their members on a
,ide range o# matters. %ee1ing a hea*th- and sa#e ,or1ing environment is a*so prominent #eature
o# union activit-.
;rade unions he*p in acce*erated pace o# economic deve*opment in man- ,a-s as
#o**o,s3
0- he*ping in the recruitment and se*ection o# ,or1ers.
0- incu*cating discip*ine among the ,or1#orce
0- enab*ing sett*ement o# industria* disputes in a rationa* manner
0- he*ping socia* adjustments. Wor1ers have to adjust themse*ves to the ne, ,or1ing
conditions2 the ne, ru*es and po*icies. Wor1ers coming #rom di##erent bac1grounds ma-
become disorgani?ed2 unsatis#ied and #rustrated. 4nions he*p them in such adjustment.
;rade unions are a part o# societ- and as such2 have to ta1e into consideration the nationa*
integration as ,e**. %ome important socia* responsibi*ities o# trade unions inc*ude3
9romoting and maintaining nationa* integration b- reducing the number o# industria*
disputes
Incorporating a sense o# corporate socia* responsibi*it- in ,or1ers achieving industria*
peace.
12.7 Rig$ts and :iabi+ities of 9rade
Union
1. &isabi+ities of Unregistered Union: . trade union sha** not enjo- an- o# the rights2
immunities or privi*eges o# a registered trade union un*ess it is registered.
2. Immunit4 from !ivi+ Suit in !ertain !ases: "o suit or other *ega* proceeding sha** be
maintainab*e in an- civi* court against an- registered trade union or an- o##icer or member
thereo# in respect o# an- act done in contemp*ation or in #urtherance o# a trade dispute to ,hich a
member o# the trade union is a part- on the ground on*- that such act induces some other person
to brea1 a contract o# emp*o-ment2 or that it is an inter#erence ,ith the trade2 business or
emp*o-ment o# some other person or ,ith the right o# some other person to dispose o# his capita*
1$)
or o# his *abour as he ,i**.
". :iabi+it4 in
9ort:
516 . suit against a registered trade union or against an- members or o##icers thereo# on
beha*# o# themse*ves and a** other members o# the trade union in respect o# an- tortuous
act a**eged to have been committed b- or on beha*# o# the trade union sha** not be
entertained b- an- court.
1!!
1$+
526 "othing in this section sha** a##ect the *iabi*it- o# a trade union or an- trustee or o##icers
thereo# to be sued in an- court touching or concerning the speci#ic propert- or rights o# a
trade union or in respect o# an- tortuous act arising substantia**- out o# the use o# an-
speci#ic propert- o# a trade union e8cept in respect o# an act committed b- or on beha*# o#
the trade union in contemp*ation or #urtherance o# a trade dispute.
/. :iabi+it4 in !ontract: 7ver- registered trade union sha** be *iab*e on an- contract entered into
b- it or b- an agent acting on its beha*#3 9rovided that a trade union sha** not be so *iab*e on an-
contract ,hich is void or unen#orceab*e at *a,.
7. Objects in Restraint of 9rade 0ot Un+a>fu+ in !ase of Registered 9rade Union: ;he
objects o# a registered trade union sha** not2 b- reason on*- that the- are in restraint o# trade be
deemed to be un*a,#u* so as to render an- member o# such trade union *iab*e to crimina*
prosecution #or conspirac- or other,ise or to render void or voidab*e an- agreement or trust.
;. 2roceedings 64 and )gainst 9rade
Unions:
1. . registered trade union ma- sue and be sued and be prosecuted under its registered name.
2. .n unregistered trade union ma- be sued and prosecuted under the name b- ,hich it has
been operating or is genera**- 1no,n.
3. . trade union ,hose registration has been cance**ed or ,ithdra,n ma- be sued and
prosecuted under the name b- ,hich it ,as registered.
!. 78ecution #or an- mone- recovered #rom a trade union in civi* proceedings ma- issue
against an- propert- be*onging to or he*d in trust #or the trade union other than the
benevo*ent #und o# a registered trade union.
$. .n- #ine ordered to be paid b- a trade union ma- be recovered b- distress and sa*e o#
an- movab*e propert- be*onging to or he*d in trust #or the trade union in accordance ,ith
an- ,ritten *a, re*ating to crimina* procedure.
&. In an- civi* or crimina* proceedings in ,hich a registered trade union is a part- such trade
union ma- appear in such proceedings b- an-one o# its o##icers or b- an advocate and
so*icitor.
<. Stri,es and :oc,-
outs:
1. "o trade union o# ,or1men sha** ca** #or a stri1e2 and no member thereo# sha** go on stri1e2
and no trade union o# emp*o-ers sha** dec*are a *oc1Bout H
a6 in the case o# a trade union o# ,or1men2 ,ithout #irst obtaining the consent b- secret
ba**ot o# at *east t,oBthirds o# its tota* number o# members ,ho are entit*ed to vote and in
respect o# ,hom the stri1e is to be ca**edA and in the case o# a trade union o# emp*o-ers2
,ithout #irst obtaining b- secret ba**ot the consent o# at *east t,oBthirds o# its tota*
number o# members ,ho are entit*ed to voteA
b6 be#ore the e8pir- o# seven da-s a#ter submitting to the :irector Genera* the resu*ts o# such
secret ba**ot in accordance ,ith section !0 5$6A
c6 i# the secret ba**ot #or the proposed stri1e or *oc1Bout has become inva*id or o# no e##ect b-
virtue o# section !0 5262 5362 5&6 or 5+6A
d6 in contravention o#2 or ,ithout comp*-ing ,ith2 the ru*es o# the trade unionA
e6 in respect o# an- matter covered b- a direction or decision o# the Minister given or made
in an- appea* to him under this .ctA or
1&0
#6 in contravention o#2 or ,ithout comp*-ing ,ith2 an- other provision o# this .ct or an-
provision o# an- other ,ritten *a,.
1&1
2. .n- trade union ,hich2 and ever- member o# its e8ecutive ,ho2 commences2 promotes2
organises or #inances an- stri1e or *oc1Bout ,hich is in contravention o# subsection 516 sha** be
gui*t- o# an o##ence and sha**2 on conviction2 be *iab*e to a #ine not e8ceeding t,o
3. .n- member o# a trade union o# ,or1men ,ho commences2 participates in2 or other,ise acts
in #urtherance o#2 an- stri1e ,hich is in contravention o# subsection 516 sha** #orth,ith cease to be
a member o# the trade union2 and therea#ter such member sha** not be e*igib*e to become a
member o# an- trade union e8cept ,ith the prior approva* o# the :irector Genera* in ,ritingA and
the trade union o# ,hich he has so ceased to be a member sha** #orth,ith H
a6 remove the name o# such member #rom its membership registerA
b6 in#orm the :irector Genera* and the member concerned o# such remova*A and
c6 e8hibit conspicuous*- in its registered o##ice in a p*ace ,here it ma- be easi*- read a *ist
o# members ,hose names are so removed.
!. ;he :irector Genera* ma-2 ,here he is satis#ied that subsection 516 has been contravened b-
an- person and the trade union concerned has #ai*ed to carr- out the provisions o# subsection 5362
or ,here there is undue de*a- in so doing2 a#ter such investigation as he deems necessar-2 order
the trade union to remove #orth,ith the names o# the members concerned #rom its membership
register.
$. ;he satis#action o# the :irector Genera* under subsection 5!6 that subsection 516 has been
contravened b- an- person ma- be arrived at regard*ess as to ,hether or not there is an-
prosecution o# an- person #or contravention o# the said subsection 516.
&. .n- registered trade union ,hich2 and ever- member o# its e8ecutive ,ho2 #ai*s to comp*- ,ith
subsection 536 or ,ith an order o# the :irector Genera* under subsection 5!6 sha** be gui*t- o# an
o##ence and sha**2 on conviction2 be *iab*e to a #ine not e8ceeding one thousand ringgit2 and a
#urther #ine o# one hundred ringgit #or ever- da- during ,hich such o##ence continues.
'. In ever- proceeding #or an o##ence under this section the onus o# proving that the re<uirements
speci#ied in subsection 516 have been comp*ied ,ith sha** be on the trade union2 the member o# its
e8ecutive or the member o# the trade union2 as the case ma- be.
;housand ringgit2 or to imprisonment #or a term not e8ceeding one -ear2 or to both2 and a #urther
#ine o# one hundred ringgit #or ever- da- during ,hich such o##ence continues.
12.; 2$ases of *ro>t$ of 9rade Union in
India
;rade union is a direct product o# Industria*i?ation and a ver- recent deve*opment. In India2 the
#oundation o# modern industr- ,as *aid bet,een 1)$0 and 1)'0. 9rior to that trade ,as con#ined
to individua*s and #ami*ies *i1e cra#tsmen and artisans. ;he- had e8pertise and specia*i?ed s1i**s
,hich ,as inheritedb- their o## springs. .#ter Industria* revo*ution2 these peop*e started *osing
their individua* identities and had to join #actories to earn their *ive*ihood and compete ,ith mass
production. ;here ,as a ps-cho*ogica* dis*ocation as the- ,ere *osing their identities.
Indian trade union movement can be divided into three
phases.
9$e first $ase #a**s bet,een 1)$0 and 1+00 during ,hich the inception o# trade unions too1
p*ace. :uring this period o# the gro,th o# Indian Capita*ist enterprises2 the ,or1ing and *iving
conditions o# the *abour ,ere poor and their ,or1ing hours ,ere *ong. Capita*ists ,ere on*-
1&2
interested in their productivit- and pro#itabi*it-. In addition to *ong ,or1ing hours2 their ,ages
,ere *o, and genera* economic conditions ,ere poor in industries. In order to regu*ate the
,or1ing hours and other service conditions o# the Indian
1&3
te8ti*e *abourers2 the Indian (actories .ct ,as enacted in 1))1. .s a resu*t2 emp*o-ment o# chi*d
*abour ,as prohibited. Mr. " M =o1hande organi?ed peop*e *i1e Ric1sha,a*as etc.2 prepared a
stud- report on their ,or1ing conditions and submitted it to the (actor- =abour Commission. ;he
Indian (actor-.ct o#
1))1 ,as amended in 1)+1 due to his e##orts. Guided b- educated phi*anthropists and socia*
,or1ers *i1e
Mr. =o1hande2 the gro,th o# trade union movement ,as s*o, in this phase. Man- stri1es too1
p*ace in the t,o decades #o**o,ing 1))0 in a** industria* cities. ;hese stri1es taught ,or1ers to
understand the po,er o# united action even though there ,as no union in rea* terms. %ma**
associations *i1e 0omba-Mi**B Hands .ssociation came up.
9$e second $ase o# ;he Indian trade union movement #a**s bet,een 1+00 and 1+!'. this phase
,as characteri?ed b- the deve*opment o# organi?ed trade unions and po*itica* movements o# the
,or1ing c*ass. It a*so ,itnessed the emergence o# mi*itant trade unionism. ;he (irst Wor*d War
51+1!B1+1)6 and the Russian revo*ution o# 1+1' gave a ne, turn to the Indian trade union
movement and organi?ed e##orts on part o# the ,or1ers to #orm trade unions. In 1+1)2 0 9 Wadia
organi?ed trade union movements ,ith ;e8ti*e mi**s in Madras. He served stri1e notice to them
and ,or1ers appea*ed to Madras High Court because under MCommon =a,>2 stri1e is a breach o#
*a,. In 1+1+2 Mahatma Gandhi suggested to *et individua* strugg*e be a Mass movement. In
1+202 the (irst "ationa* ;rade union organi?ation 5;he .** India ;rade 4nion Congress
5.I;4C66 ,as estab*ished. Man- o# the *eaders o# this organi?ation ,ere *eaders o# the nationa*
Movement. In 1+2&2 ;rade union *a, came up ,ith the e##orts o# Mr. " " Doshi that became
operative #rom 1+2'.
9$e t$ird $ase began ,ith the emergence o# independent India 5in 1+!'62 and the Government
sought the cooperation o# the unions #or p*anned economic deve*opment. ;he ,or1ing c*ass
movement ,as a*so po*itici?ed a*ong the *ines o# po*itica* parties. (or instance Indian nationa*
trade 4nion Congress 5I";4C6 is the trade union arm o# the Congress 9art-. ;he .I;4C is the
trade union arm o# the Communist 9art- o# India. 0esides ,or1ers2 ,hiteBco**ar emp*o-ees2
supervisors and managers are a*so organi?ed b- the trade unions2 as #or e8amp*e in the 0an1ing2
Insurance and 9etro*eum industries.
:)6OUR
:)#S
:a>-F=a, is a ru*e or a s-stem o# ru*es recogni?ed b- a countr- or a communit- as regu*ating the
actions o# its members and en#orced b- the imposition o# pena*ties.F
(actors responsib*e #or deve*opment o# =abor
*a,s
78p*oitation o# the ,or1men b- the capita*ists
%ocia* pressure and pressure #rom trade unions
Government po*icies based on Government phi*osoph- ,hich in turn ,as based on the
po*itica*
ideo*ogies
Constitution o# India 5:irective 9rincip*es o# state po*ic-6
%upreme Court>s recommendations on the cases that came up in the courts
Recommendations o# various commissions and committees set up b- government #rom
time to
time
1&!
Conventions and recommendations o# Internationa* *abor organi?ation 5I=O6
.,areness about environment
!ommon 1eatures of )++
:a>s
%hort tit*e and commencement
9reamb*e i.e. purpose o# the *a,
:e#initions
1&$
%ubstantive provisions
9ena*t- provisions
RecordsI RegistersI Returns
InspectorateI 7n#orcement authorit-
!ategories of :abor :a>s
Regu*ator- *egis*ations to oversee the conditions o# ,or1 at ,or1p*ace
7g. Machiner- arrangement2 spittoons2 ,or1ing hours2 *eave ,ith ,ages etc.
=egis*ations re*ated to ,ages
7g. 9a-ment o# Wages .ct2 1+3&2 Minimum Wages .ct2 1+!)
=egis*ations re*ated to socia* securit-
7g. 7%I .ct2 1+!)2 7mp*o-ees 9rovident (und .ct2 1+$2
=egis*ations re*ated to Industria* Re*ations 5IR6
7g. Industria* disputes .ct2 1+!'2 Industria* 7mp*o-ments 5%tanding Orders6 .ct2 1+!&2
;rade
4nion .ct2 1+2&
=egis*ations re*ated to service conditions
7g. Regu*ations o# environment .ct 5#or :oc1 ,or1ers62 Conditions o# %ervice .ct 5#or
%a*es
9romotion emp*o-ees6
Misce++aneous:
7g. .pprentices .ct2 1+&12 7nvironment protection.ct2 1+)&
;he trade unionism in India deve*oped <uite s*o,*- as compared to the ,estern nations. Indian
trade union movement can be divided into three phases.
;he Indian ,or1#orce consists o# !30 mi**ion ,or1ers2 gro,ing 2V annua**-. ;he Indian *abor
mar1ets
consist of t$ree sectors:
1. ;he rura* ,or1ers2 ,ho constitute about &0 per cent o# the ,or1#orce.
2. Organi?ed sector2 ,hich emp*o-s ) per cent o# ,or1#orce2 and
3. ;he urban in#orma* sector 5,hich inc*udes the gro,ing so#t,are industr- and other
services2 not inc*uded in the #orma* sector6 ,hich constitutes the rest 32 per cent o# the
,or1#orce.
)t resent t$ere are t>e+ve !entra+ 9rade Union Organi5ations in India:
1. .** India ;rade 4nion Congress 5.I;4C6
2. 0harati-a Ma?door %angh 50M%6
3. Centre o# Indian ;rade 4nions 5CI;46
!. Hind Ma?door Cisan 9ancha-at 5HMC96
$. Hind Ma?door %abha 5HM%6
&. Indian (ederation o# (ree ;rade 4nions 5I((;46
1&&
'. Indian "ationa* ;rade 4nion Congress 5I";4C6
). "ationa* (ront o# Indian ;rade 4nions 5"(I;46
+. "ationa* =abor Organi?ation 5"=O6
1!)
1&'
10.;rade 4nions CoBordination Centre 5;4CC6
11.4nited ;rade 4nion Congress 54;4C6 and 4nited ;rade 4nion Congress B =enin %arani
54;4C
B =%6
12.< Mu+ti+icit4 and 3ffectiveness of 9rade
Union
Mu*tip*e unionism *eads to mu*tip*e enro*ment in unions and no subscribing members2 causing
de*a- or #ai*ure to get recognition. ;his restrains a union>s bargaining po,er during a period o#
pro*onged stri#e ,hi*e the unions are s<uabb*ing among themse*ves #or dominance2 the ,or1ers
are deprived o# their ,ages and the p*ant su##ers a *oss o# production. Mu*tip*e unionism
<ua*itative*- ,ea1ens the movement resu*ting in the #ormation o# sma**B si?ed unions ,ithout
e##ective organi?ation.
Ho,ever it must be noted that in spite o# #oregoing there are man- organi?ations ,here mu*tip*e
unions e8ist and the management does e##ective*- negotiate2 and conc*ude agreements. In man-
p*ants2 ,or1ers are unioni?ed Hon a cra#t basis Htheir specia* s1i**s or training bonding them
together. Mu*tiBunionism is more a prob*em ,here genera* unions e8ist2 #or ,hom a** categories
can be organi?ed in one genera* union.
)ctivit4
):
1. Lisit an- organi?ation and discuss the #easibi*it- o# re*evance o# ;rade 4nion in g*oba*
econom-.
12.. Summar4
;he trade unions are organi?ed b- ,or1ers to so*ve their prob*ems created b- modern industr-.
;he- are vo*untar- associations o# ,or1ers #ormed to promote and protect their interests b-
co**ective action. ;he- p*a- di##erent ro*esA #or e8amp*e2 the- act as agents o# the government
and he*p in maintaining socia* discip*ine and administering its po*icies.
;o achieve their objectives2 trade unions ma- emp*o- Lariet- o# means H depending on the
attitude o# the unions regarding the economic s-stem in ,hich the- operateA the degree o# group
and c*ass consciousness among ,or1ers2 the nature o# po*itica* organi?ationA and the nature and
t-pe o# trade union *eadership.
;rade unionism in India su##ers #rom a variet- o# prob*ems2 such as po*itici?ations o# the unions2
mu*tip*icit- o# unions2 inter and intraBunion riva*r-2 sma** si?e and *o, membership2 #inancia*
,ea1ness2 and *ac1 o# #inancia* ,ea1ness2 and *ac1 o# ,e*#are #aci*ities #or the members2 ,ea1
bargaining po,er2 re*iance on *itigation and stri1es2 and dependence on outside *eadership. ;his
vicious circ*es has adverse*- a##ected their status and bargaining po,er2 and must be bro1en at as
man- points as possib*e.
;he #actors that ma1e a trade union strong and hea*th- and un#*inching adherence to the union>s
constitution and ru*es2 regu*ar pa-ment o# dues2 #u**- representative character o# the union2 coB
operation ,ith sister unions and a sound *eadership. .methodo*ogica* organi?ation ,ith an
en*ightened *abor #orce is essentia*.
12.? Se+f )ssessment Auestions
1&)
1. :e#ine ;rade
4nions
2. :escribe di##erent gro,th phases o# trade union in
India.
3. 78p*ain the characteristics o# ;rade
4nion
!. 78p*ain ;rade 4nion
objectives
1&+
12.10 Reference 6oo,s
B Mamoria C.0.5200)6A E :-namics o# Industria* Re*ationsFA Hima*a-a 9ub*ishing House2
Mumbai.
B (*anders2 .*an251+&36A$rade %nions.2 pp.!&B!'.
B 9une1ar2 %.:. and Madhuri 51+&'6A E$rade %nion &eadership in 'ndia( A surveyF2
0omba-.
B Crouch2 Haro*d 51+&&62 E;rade 4nions and 9o*iticism in IndiaF2 9re#ace.
B @oder2 :a*e2 51+'26A EPersonnel Management and 'ndustrial RelationsF2 pp.1$+B1&0.
B Ghosh2 %.;.2 E$rade %nionism in %nderdeveloped )ountriesF2 p.13.
B Doshi2 ".M. E$rade %nionism in 'ndiaF2 9.+.
B Wor*d =abor Report 51++)6A I.=.O.2 2 p.&!.
1'0
Unit - 1" : !o++ective 6argaining
Structure of Unit:
13.0 Objectives
13.1 Introduction
13.2 ConceptI:e#inition o# Co**ective 0argaining
13.2.1 Wh- Wor1ers Doin 4nions
13.2.2 .dvantages o# Co**ective 0argaining
13.3 Objectives and (eatures o# Co**ective 0argaining
13.! ;-pes o# Co**ective 0argaining
13.$ 9rocess o# Co**ective 0argaining
13.$.1 :eve*oping a 0argaining Re*ationship
13.$.2 9reparation #or "egotiation
13.$.3 "egotiation %tage
13.$.! Co**ective .greements
13.& Co**ective 0argaining 9ractice in India
13.' %ummar-
13.) %e*# .ssessment /uestions
13.+ Re#erences 0oo1s
1".0 Objectives
.#ter comp*eting this unit2 -ou ,ou*d be ab*e
to3
4nderstand the concept o# co**ective bargainingA
4nderstand the #eatures and objectives o# co**ective bargainingA
=earn about the di##erent t-pes o# co**ective bargainingA
=earn the process o# co**ective bargainingA
4nderstand the co**ective bargaining practices in India.
1".1 Introduction
Co**ective bargaining is speci#ica**- an industria* re*ations mechanism or too*2 and is an aspect
o#negotiation2 app*icab*e to emp*o-ment re*ationship. .s a process2 the t,o are in essence the
same2 and the princip*e app*icab*e to negotiations is re*evant to co**ective bargaining as ,e**. In
co**ective bargaining the union a*,a-s has a co**ective interest since the negotiations are #or the
bene#it o# severa* emp*o-ees. Where co**ective bargaining is not #or one emp*o-er but #or severa*2
co**ective interests become a #eature #or both parties to the bargaining process. In co**ective
bargaining certain essentia* conditions need to be satis#ied2 such as the e8istence o# #reedom o#
association and a *abor *a, s-stem. (urther2 since the bene#iciaries o# co**ective bargaining are in
dai*- contact ,ith each other2 negotiations ta1e p*ace in the bac1ground o# a continuing
re*ationship ,hich u*timate*- motivates the parties to reso*ve the speci#ic issues.
Co**ective bargaining is a process o# negotiations bet,een emp*o-ers and the representatives o# a
unit o# emp*o-ees aimed at reaching agreements that regu*ate ,or1ing conditions. Co**ective
agreement usua**- set out ,age sca*es2 ,or1ing hours2 training2 hea*th and sa#et-2 overtime2
grievances2 mechanisms and rights to participate in ,or1p*ace or compan- a##airs. 4*timate*- the
1'1
term EbargainingF imp*ies that the process is one o# hagg*ing2 ,hich is more appropriate to oneB
time re*ationships such as a onetime purchaser
1'2
or a c*aimant to damages. Whi*e co**ective bargaining ma- ta1e the #orm o# hagg*ing2 idea**- it
shou*d invo*ve adjusting the respective positions o# the parties in a ,a- that is satis#actor- to a**.
1".2 !oncetC&efinition of !o++ective 6argaining
!o++ective bargaining is a process ,hereb- organi?ed *abor and management negotiate the terms
and the conditions o# emp*o-ment. =et us e8p*ore some de#initions #rom di##erent sources3
ECo**ective bargaining is a method b- ,hich trade unions protect and improve the condition o#
their member>s ,or1ing *ives.F
)ccording to 1+anders ECo**ective 0argaining as a means o# joint
regu*ationF
)ccording to I:O- 'convention no: .<( ECo**ective 0argaining is a #undamenta* right. ;he
right to
Co**ective 0argaining #orms an integra* part o# the I=O dec*aration on #undamenta* 9rincip*es
51++)6.F
O7C: 5Organi?ation #or 7conomic CoBoperation and :eve*opment62 W;O 5Wor*d ;rade
Organi?ation6 and the 4nited "ations advocates Co**ective 0argaining in simi*ar tones. Co**ective
0argaining is apart o# ECore =abor %tandards2 %ocia* c*ause and G*oba* Compact respective*-F
;his means #uture that Co**ective 0argaining shou*d be considered as a (undamenta* Right.
;oda- co**ective bargaining has assumed a comp*e8 nature2 conducted in the most #orma*
environment2 associating the services o# a *arge number o# e8perts2 *ega* practitioners2
consu*tants and specia*i?ed personne*. ;oda- it is regarded as a socia* process2 because it occurs
in a socia* setting.
In majorit- o# the cases co**ective bargaining process dea*s ,ith issues
*i1e3
Rate o# ,ages2 pa-.
Hours o# emp*o-ment2 ,or1ing conditions
7mp*o-ment po*icies
9roductivit- sett*ement
1".2.1 #$4 #or,ers 8oin
Unions%
It is essentia* to understand ,h- ,or1ers join unions to understand the importance o# co**ective
bargaining2 these are3
:issatis#action ,ith ,or1ing environment2 inc*uding ,or1ing conditions2 compensation2
and supervision
. desire to have more in#*uence in a##ective change in the ,or1 environment
7mp*o-ee be*ie#s regarding the potentia* bene#its o# unions.
1".2.2 )dvantages of !o++ective
6argaining
;o understand the co**ective bargaining it is necessar- to 1no, about the various advantages o#
1'3
co**ective bargaining2 these are3
Co**ective bargaining has the advantage o# sett*ement through dia*ogue and consensus
rather than through con#*ict and con#rontation. .greement resu*ting #rom co**ective
bargaining usua**- represents the choice or compromise o# the parties themse*ves.
Co**ective bargaining agreements o#ten institutiona*i?e sett*ement through dia*ogue. (or
instance2 a
1'!
co**ective agreement ma- provide #or methods b- ,hich disputes bet,een the parties ,i**
be sett*ed. In that event parties 1no, be#orehand that i# the- are in disagreement there is
an agreed method b- ,hich such disagreement ma- be reso*ved.
Co**ective bargaining is a #orm o# participation because it invo*ves a sharing o# ru*e
ma1ing po,er bet,een ru*e ma1ing po,er bet,een emp*o-ers and unions in the areas
,hich in ear*ier times ,ere regarded as management prerogative e.g. trans#er2 promotion2
redundanc-.
Co**ective bargaining agreements sometimes renounce or *imit the sett*ement o# disputes
through trade union action.
Co**ective bargaining is an essentia* #eature in the concept o# socia* partnership to,ards
,hich *abor re*ations shou*d strive. %ocia* partnership in this conte8t ma- be described as
a partnership bet,een organi?ed emp*o-er institutions and organi?ed *abor institutions
designed to maintain nonB con#rontationa* process in the sett*ement o# disputes ,hich
ma- arise bet,een emp*o-ers and emp*o-ees.
Co**ective bargaining has a va*uab*e b-B products re*evant to the re*ationship bet,een the
t,o parties.
In societies ,here there is a mu*tip*icit- o# unions and shi#ting union *o-a*ties2 co**ective
bargaining a conse<uent agreements tend to stabi*i?e union membership.
Co**ective bargaining is the most important and e##ective in improving industria* re*ations.
1"." Objectives and 1eatures of !o++ective 6argaining
;here are some basic objectives o# co**ective bargaining on that basis ,ho*e process genera**-
,or12 these are3
%ett*e the con#*icts re*ated to ,or1ing conditions and ,ages.
;o protect the interest o# the ,or1ers through co**ective action.
;o reso*ve the di##erence bet,een the ,or1ers and management through vo*untar-
negotiations and to arrive at a consensus.
;o avoid third part- intervention in matters re*ating to emp*o-ment.
9ractica**- spea1ing an- issues that has an- re*evance to management and ,or1ers
becomes the subject matter o# bargaining.
1eatures of !o++ective
6argaining
ECo**ective 0argaining is a mutua* ob*igation on the emp*o-er and emp*o-ee to bargain in good
#aith to,ards the sett*ementF. Ceeping this statement in mind *et>s e8p*ain the #eatures o#
co**ective bargaining in detai*3
!o++ective3 It>s co**ective in t,o
,a-s3
16 .** the ,or1ers co**ective*- bargain #or their co**ective interest2 because the- do not
have individua* capacit-.
26 Wor1ers and the management joint*- arrive at an amicab*e so*ution through
1'$
negotiations. ;he 4nion is e8pected to bring out the common consensus on co**ective
issues rather than individua* issues.
1'&
6argaining 2o>er3 In co**ective bargaining the bargaining strength o# both the parties
across the tab*e is e<ua*. Idea**- it is industria* democrac- at ,or1. It ,i** on*- be
democratic on*- i# both the parties are e<uipped ,ith 1no,*edge and s1i**. ;he strength
o# the union a*so depends on the demand and supp*- o# ,or1ing #orce. %imi*ar*- ho,
much capita* is invested upon one ,or1er a*so determines the ratio o# bargaining po,er.
(or e8amp*e3 . pi*ots union ,ou*d have more bargaining po,er than the union o# road
transport. 0ecause the capita *and sta1e invested on the pi*ot is much higher than the
drivers.
1+e@ib+e3 In co**ective bargaining both the parties shou*d have to #*e8ib*e menta* set up to
arrive amicab*- at a common consensus.
Bo+untar43 0oth the parties come in #ront o# each other vo*untar- in order to arrive at a
vo*untar- agreement2 ,hich is mutua**- acceptab*e to both the parties.
!ontinuous3 Co**ective bargaining not on*- commences ,ith negotiation and ends in
argument2 but it>s a continuous process that inc*udes imp*ementation o# the agreement
and a*so #urther negotiations.
&4namic3 It>s a d-namic process because it invo*ves the
#o**o,ing3
16 . process o# agreement ,hich itse*# contains various concepts ,hich ma- change
and a*ter time to time.
26 ;he imp*ementation process is a*so on going.
36 ;he menta* ma1eup o# the parties 1eeps on
changing.
!6 Larious strategies used b- both the parties 1eeps on changing based on the
demand o# the situation.
$6 We a** are a part o# the g*oba* econom- and the product2 consumer>s tasteA mar1et
p*ace etc 1eeps on changing. ;his has tremendous e##ect on companies. ;he same has
impact on the bargaining as ,e**.
2o>er re+ations$i3 0oth the parties ,ant to e8tract the ma8imum #rom each other. 0ut to
reach a consensus both the parties have to retreat #rom their positions in order to reach a
common consensus. In such an attempt both the parties tr- to reach on a common ground
,ithout an- serious di*ution o# their po,er. 78amp*e3 I# the job o# the ,or1er is not
s1i**ed and he is being easi*- rep*aceab*e2 he ,ou*d have *esser bargaining po,er.
0ecause2 there is a huge mass o# unemp*o-ed -outh ,aiting to be rep*aced.
Reresentation3 ;he Co**ective 0argaining process must be represented b- those ,ho
have the capacit- to ta1e decisions.
6iartite 2rocess3 ;he emp*o-ees and the emp*o-ers negotiate the issue direct*- across
the tab*e. .nd there is no third part- intervention *i1e pressure groups2 *ega* consu*tants.
*ood 1ait$ 6argaining 2rocess3 Good #aith bargaining is characteri?ed b- the #o**o,ing
events3
16 Meeting #or the purposes o# negotiations2 the contract is used schedu*ed and
conducted ,ith the union o# responsib*e time and p*ace.
26 Rea*istic proposa*s are submitted.
1''
36 Reasonab*e counter proposa* shou*d be o##ered.
!6 7ach part- has to sign once it has been comp*eted.
1')
1"./ 94es of !o++ective 6argaining
In bargaining situations2 demands are pitched higher than ,hat one ,ou*d rea**- sett*e #or and
o##ers are initia**- made *o,er than ,hat one is rea**- prepare to give. On the other hand it>s a
charter in ,hich some major and some minor demands consist. .** these variations in bargaining
can be divided in three t-pes2 theses are3
1. &istributive 6argaining3 :istributive bargaining is the most common t-pe o# bargaining
and invo*ves ?eroBsum negotiation. In other ,ords2 one side ,ins and other side *oses.
4nion emp*o-ees ma- tr- to convince management that the- ,i** stri1e i# the- don>t get
the ,ages or ,or1ing conditions the- desire. Management2 in turn ma- be ,i**ing to tr-
to ride the stri1e out2 especia**- i# the- have crossBtrained other ,or1ers or have e8terna*
rep*acements to #i** in #or those on stri1e. In this bargaining2 union and management have
initia* o##ers or demands2 target points2 resistance points and sett*ement ranges.
2. Integrative 6argaining3 Integrative bargaining is simi*ar to prob*emB so*ving sessions in
,hich both sides are tr-ing to reach mutua**- bene#icia* a*ternatives. 0oth the emp*o-er
and union tr- to reso*ve the con#*ict to the bene#it o# both parties.
". !oncessionar4 6argaining3 It invo*ves a union>s giving bac1 to management some o#
,hat it has gained in previous bargaining. Wh- ,ou*d *abor be ,i**ing to give bac1 ,hat
it ,or1ed so hard to obtain 4sua**- such a move is prompted b- *abor *eader ,ho
recogni?e the need to assist emp*o-ers in reducing operating cost in order to prevent
*a-o##s and that motivates concessionar- bargaining.
1".7 2rocess of !o++ective 6argaining
1".7.1 &eve+oing a 6argaining
Re+ations$i
One o# the ver- important #acets ,hich need to be considered be#ore stud-ing the process o#
co**ective bargaining is E4nderstanding and deve*oping o# a good 0argaining re*ationshipF. ;his
step consists o# these activities main*-A
1. Recognition of t$e 6argaining )gent: In those organi?ations ,here there is a sing*e trade
union2 that union is genera**- granted recognition to represent the ,or1ers. 0ut ,here there is
more than one union2 an- o# these criteria ma- be used #or identi#-ing the representative union2
name*-3
%e*ection o# the union b- a secret ba**ot.
%e*ection through veri#ication o# membership b- some government agenc- i# re<uired.
0argaining ,ith a joint committee o# a** major unions.
0argaining ,ith a negotiation committee in ,hich di##erent unions ,ou*d be represented in
proportion to their veri#ied membership
0argaining ,ith a negotiation committee ,hich consists o# e*ected representative o#
ever- department o# the organi?ation se*ected b- secret ba**ot2 irrespective o# their union
a##i*iations.
2. :eve+s of bargaining. Co**ective bargaining is possib*e at a** *eve*s2
such as3
.t the *eve* o# the enterprise2
1'+
It ma- be at the *eve* o# the industr- in a particu*ar region.
.t the *eve* o# the entire industr- in the countr-2 that is2 at the nationa* *eve*.
1$$
1)0
(rom the point o# vie, o# an individua* estab*ishment2 enterpriseB*eve* bargaining is genera**-
use#u* in the sense that the sett*ement is tai*ored to the conditions o# that organi?ation.
". Scoe and !overage of !o++ective 6argaining: ;hough in man- organi?ations bargaining is
struc1 on*- b- speci#ic issues *i1e ,age increase2 bonus2 or seniorit-2 promotion2 etc.2 -et it is
considered advantageous2 both #or the management and the trade unions2 to cover as man- issues
o# interests to both parties as possib*e. "o, a da-s the orientation o# co**ective bargaining is
changing #rom con#*ict to cooperation and there b- bui*ding an atmosphere o# trust2 progress and
socia* ,e*#are. (or e8amp*e3 union must strive #or *arger scope and coverage *i1e ,ages and
service conditions #or contract *abor2 temporar-2 part time emp*o-ees2 trainees etc.
/. 2rocess Bariation of !o++ective 6argaining: ;he negotiation process has been visua*i?ed in
di##erent ,a-s. Co**ective bargaining procedure can be compared ,ith the simi*ar to an e8ercise
in po*itics ,here the re*ative strength o# the parties stems #rom decisiveness and that it resemb*es
,ith a debate. ;he- are a*so o# the vie, that both the parties on the bargaining tab*e become
entire*- #*e8ib*e and ,i**ing to be persuaded on*- ,hen a** the #acts have been presented.
Ho,ever ,ith the increasing maturit- o# co**ective bargaining2 there has been en*argement o# the
rationa* process. In addition severa* other #actors a*so in#*uence the negotiation process. .mong
these #actors some are mentioned be*o,3
Objectives o# the parties.
Cind o# e8perience2 1no,*edge the parties have.
;he Industria* *egis*ation o# the concerned countr-.
;he persona*ities and training o# the negotiators.
;he histor- o# the *abor re*ations in the enterprise.
;he si?e o# the bargaining unit and
;he economic environment.
.*though severa* negotiators ma- attempt to b*u## or outsmart the opposite group2 others se*dom
thin1 o# using these tactics. Whi*e some bargainers ma- attempt to dictate the contract on a
uni*atera* ground2 others visua*i?e that this process is eventua**- se*# de#eating. Whi*e some
negotiators ma- come together ,ith e8cessive unrea*istic proposa*s2 others ma- have <uite
rea*istic ones. In some negotiations2 there ma- be in each side imp*icit #aith in the counterpart
,hi*e in others there ma- prevai* a c*imate o# mutua* distrust2 suspicion and even hatred2 in vie,
o# the past adverse *abor re*ations. Moreover i# the objective is to obtain so*ution to their mutua*
prob*ems2 the parties are *i1e*- to conduct the negotiation on the ground o# rationa*it- and
#airness. Ho,ever i# the objective is to Eput management in its p*aceF or to E,ea1en or to even
destro- the unionF2 the process o# negotiation ma- ta1e <uite di##erent #orms. ;hus severa*
#actors operate causing variations in the conduct o# co**ective bargaining negotiations. EMi*itant
unions vs. irrationa* managementF2 ERationa* unions vs. oppressive managementF2 E9rogressive
union and progressive managementFB;here can be man- permutations and combinations and
resu*ts o# the bargaining process
,ou*d var- depending on
these.
1".7.2 2rearation for
0egotiation
1)1
9rior to the actua* bargaining sessions2 enough care shou*d be ta1en b- both the parties to have a
thorough preparation #or the negotiations. ;his has become a pre H re<uisite to co**ective
bargaining in vie, o# severa* reasons. Consu*tation ,ith the *o,er *eve* members o# their
respective organi?ations can he*p both
1$&
1)2
the parties to obtain va*uab*e in#ormation and evo*ve speci#ic bargaining tab*e approaches. ;he
consu*tation process a*so increases the mora*e o# the t,o organi?ations. .gain the technica*
assistance o# *ega* and pub*ic re*ations e8perts can a*so be uti*i?ed gain#u**- in the co**ective
bargaining process. (ina**- care shou*d be ta1en to prep*an ,ith mutua* consent the meeting
p*aces2 ground ru*es re*ating to transcripts o# the sessions 2 pub*icit- re*eases2 the pa-ment s-stem
o# union representatives and a**ied issues.
1".7." 0egotiation Stage
Methodo*og- #or bargaining is ver- important in negotiating process. It ,i** he*p the negotiator to
deve*op those persona* and manageria* 5administrative6 <ua*ities o# preparedness2 1no,*edge2
abi*it-2 sensitivit-2 timing2 ana*-tica* abi*ities2 composure and patience. ;hese <ua*ities deve*op
as a resu*t o# observation2 e8perience invo*vement and conscious individua* e##ort and
e8perience.
.s a bargaining methodo*og- it is desirab*e to *ist a** the bargaining items2 ,hether introduced
b- the emp*o-er or the emp*o-ee that the parties ,i** consider during the course o# the co**ective
bargaining negotiations. ;hese bargaining items cou*d be separated into t,o parts H
;he cost or #inancia* items
;he other #or non cost or non #inancia* items.
.#ter *isting the items priorit- rating can be determined #or these items based on its va*ue or
importance re*ative to a** other items on the agenda. ;he range o# the objectives cou*d be
decided. ;his methodo*og- provides a s-stematic #rame,or1 #or approaching co**ective
bargaining negotiations. %ome advantages to co**ective bargaining negotiations resu*t #rom the use
o# the methodo*og- b- objectives.
Management Strategies:
9rior to the bargaining session2 management negotiators prepare b- deve*oping the strategies and
proposa*s the- ,i** use. ;hree major areas o# preparation have been identi#ied3
:etermination o# the genera* si?e o# the economic pac1age that the compan- anticipates
o##ering during the negotiations.
9reparation o# statistica* disp*a-s and supportive data that the compan- ,i** use during
negotiations.
9reparation o# a bargaining boo1 #or the use o# compan- negotiators2 a compi*ation o#
in#ormation on issues that ,i** be discussed2 giving an ana*-sis o# the e##ect o# each
c*ause2 its use in other companies2 another #act.
.n important part o# this ca*cu*ation is the cost o# various bargaining issues or demands. ;he
re*ative cost o# pa- increases2 bene#its2 and other provisions shou*d be determined prior to
negotiations. Other costs shou*d a*so be considered. (or instance2 ,hat is the cost to
management2 in terms o# its abi*it- to do its job2 o# union demands #or changes in grievance and
discip*ine procedures or trans#er and promotion provisions ;he goa* is to be as ,e** prepared as
possib*e b- considering the imp*ications and rami#ications o# the issues that ,i** be discussed and
b- being ab*e to present a strong argument #or the positionmanagement ta1es.
Union
Strategies:
1)3
=i1e management2 unions need to prepare #or negotiations b- co**ecting in#ormation. More and
better in#ormation gives the union the abi*it- to be more convincing in negotiations. %ince
co**ective bargaining is the major means b- ,hich the union can convince its members that it is
e##ective and va*uab*e2 this is a critica* activit-. 4nion shou*d co**ect in#ormation in at *east three
areas3
1)!
;he #inancia* situation o# its compan- and its abi*it- to pa-A
;he attitude o# management to,ards various issues2 as re#*ected in past negotiations o#
in#erred #rom negotiations in simi*ar companiesA and
;he attitudes and desires o# the emp*o-ees
;he #irst t,o areas give the union an idea o# ,hat demands the management is *i1e*- to accept.
;he third area is important but is sometimes over*oo1ed. ;he union shou*d be a,are o# the
pre#erences o# the membership. (or instance2 is a pension pre#erred over increased vacation or
ho*ida-bene#its ;he pre#erences ,i** var- ,ith the characteristics o# the ,or1ers. @ounger
,or1ers are more *i1e*- to pre#er more ho*ida-s2 shorter ,or1 ,ee1s2 and *imited overtime2
,hereas o*der ,or1ers are more interested in pension p*ans2 bene#its and overtime. ;he union can
determine these pre#erences b- using a <uestionnaire to surve- its members.
1".7./ !o++ective )greements
Co**ective agreements are common*- c*assi#ied under t,o headings HMprocedura*> and
Msubstantive>.
'a( 2rocedure )greements: 9rocedure agreements spe** out the steps b- ,hich the industria*
re*ations processes are carried out. 9rocedure agreements are co**ective agreements ,hich re*ate
to3
516 Machiner- #or consu*tation2 negotiation or arbitration on terms and conditions o#
emp*o-ment or #or an- other matters ,hich arise bet,een trade unions and emp*o-ers.
526 "egotiating rights
536 (aci*ities #or trade union o##icia*s and
5!6 :iscip*inar- matters and individua* ,or1ers> grievances.
'b( Substantive )greements: ;hese contain the Msubstance> o# an- agreement on terms and
conditions o# the emp*o-ment. ;he- cover pa-ments o# a** 1inds2 i.e. ,age rates2 shi#t a**o,ances2
incentive pa-ments a*so ho*ida-s and #ringe bene#its such as pensions and sic1 pa- and various
other a**o,ances.
'c( Mi@ed 2rocedura+C Substantive )greements: ;he distinction bet,een Mprocedura*> and
Msubstantive>
agreements ,hi*e use#u*2 does not a*,a-s app*- in practice. It is possib*e to have both
>substantive> and
Mprocedura*> e*ements in the same agreement. ;here is2 ho,ever2 a tendenc- #or procedura*
agreements to have a separate and *ong term e8istence and conse<uent*- the- are not subject to a
great dea* o# a*teration. On the other hand2 substantive agreements are a*tered #rom time to time
to ta1e account o# onBgoing negotiations.
"ot,ithstanding the variations in co**ective bargaining process2 in recent da-s it is characteri?ed
b- rationa* discussions based on #acts. In modern co**ective bargaining process the *o, *eve* o#
behaviora* patterns such as emotiona* outburst2 tric1s2 distortion o# #acts2 misrepresentations and
deceit are *arge*- avoided. ;he *abor and management representatives have rea*i?ed that these
e*ements cause unhea*th- *abor re*ations and increase the possibi*it- o# industria* con#*ict.
Imp*icit*-2 one o# the goa*s o# co**ective bargaining is to promote a rationa* and harmonious
re*ationship in the organi?ation. .ccording*-2 the negotiators shou*d have <ua*ities o# patience2
trust,orthiness2 #riend*iness2 integrit- and #airness. 7ach part- shou*d share the attitude o# se*#
assessment and consider that the other part- ma- not necessari*- be ,rong a** the time. I# such an
open attitude is deve*oped in both the parties2 the negotiation process is *i1e*- to
becomesuccess#u*.
1)$
Harvard =a, %choo*>s 9rogram on "egotiation describes the co**ective bargaining process as
comprising #ive core phases3
1. 2rearation and 1raming. In this phase both the schoo* board and the union e8amine
their o,n situation in order to deve*op the issues that the- be*ieve ,i** be most important2
inc*uding assessing
M-ou>re interests as ,e** as the interests o# the other side>A
1)&
2. 6argaining Over Ho> to 6argain. Here2 the parties decide the ground ru*es that ,i**
guide the negotiations. ;his is ,here the *ogistics are determined2 such as the ru*es #or
secrec- and the #re<uenc- o# negotiating meetingsA
". Oening and 3@+oring. ;his phase invo*ves the initia* opening statements and the
possib*e options that e8ist to reso*ve them. In a ,ord2 this phase cou*d be described as
Mbrainstorming>A
/. 1ocusing and )greeing. ;his stage comprises the time ,hen M,hat i#s> and Mproposa*s>
are set #orth and the dra#ting o# agreements ta1e p*aceA and
7. Im+ementation and )dministration. ;his stage is described as consisting o# Me##ective
joint imp*ementation through shared visions2 strategic p*anning and negotiated change.>
1".; !o++ective 6argaining 2ractices in India
Co**ective bargaining in India has been the subject matter o# industria* adjudication since *ong
and has been de#ined b- our =a, Courts .Co**ective bargaining is a techni<ue b- ,hich dispute as
to conditions o# emp*o-ment is reso*ved amicab*- b- agreement rather than coercion. Co**ective
0argaining machiner- essentia**- is a re#*ection o# a particu*ar socia* and po*itica* c*imate. ;he
histor- o# the trade union movement sho,s that union is a##i*iated to one or the other po*itica*
parties. .s a resu*t most o# the trade unions are contro**ed b- outsiders. Critic sa-s that the
presence o# outsiders is one o# the important reasons #or the #ai*ure o# co**ective bargaining in
India.
;he ;rade 4nions .ct2 1+2&2 permits outsiders to be the o##ice bearers o# a union to the e8tent o#
ha*# the tota* number o# o##ice bearers. %o2 it permits one to be the *eader o# the union ,ho does
not actua**- ,or1 in the industr-. %ometimes a dismissed emp*o-ee ,or1ing as a union *eader
ma- create di##icu*ties in the re*ationship bet,een the union and the emp*o-er. "everthe*ess2
e8perience sho,s that outsiders ,ho have *itt*e 1no,*edge o# the bac1ground o# *abor prob*ems2
histor- o# *abor movement2 #undamenta*s o# trade unionism and the techni<ue o# the industr- and
,ith even *itt*e genera* education assume the charge o# *abor union and become the se*#Bappointed
custodian o# the ,e*#are o# ,or1ers. ;he emp*o-ers2 there#ore2 have been re*uctant to discuss and
negotiate industria* matters ,ith outsiders2 ,ho have no persona* or direct 1no,*edge o# da- to
da- a##airs o# the industr-.
;he process o# co**ective bargaining is not *i1e*- to succeed un*ess the threat o# stri1eI*oc1out is
there in the bac1Bground. %tri1e and *oc1Bout are the ,eapons used b- both the parties daring the
co**ective bargaining process. Without having these ,eapons at hands2 neither o# the part- to the
dispute can de#eat the c*aim o# the other. ;he pecu*iar #eature o# our countr- ,hi*e compared to
the advanced nations o# the ,or*d is that the economic condition o# the ,or1ers is ver- poor and
as a resu*t the- cannot a##ord a *ongB standing stri1e.
In Indian *abor arena ,e see2 mu*tip*icit- o# unions and InterBunion riva*r-. %tatutor- provisions
#or recogni?ing unions as bargaining agents are absent. It is be*ieved that the institution o#
co**ective bargaining is sti** in its pre*iminar- and organi?ationa* stage. %tate2 there#ore2 must p*a-
a progressive and positive ro*e in removing the pit#a**s ,hich have stood in the ,a- o# mutua*2
amicab*e and vo*untar- sett*ement o#*abor disputes. ;he *abor po*ic- must re#*ect a ne,
approach. Hitherto the %tate has been p*a-ing a dominant ro*e in contro**ing and guiding *aborB
management re*ation through its *opsided adjudication machiner-. ;he ro*e o# the industria*
adjudicator virtua**- di##ers #rom that o# a judge o# ordinar- civi* court. ;he judge o# a civi* court
has to app*- the *a, to the case be#ore him and decide rights and *iabi*ities according to its
1)'
estab*ished *a,s2 ,hereas industria* adjudicator has to adjust and reconci*e the con#*icting c*aims
o# disputants and rights and ob*igations o# the disputants. In deciding industria* disputes the
adjudicator is #ree to app*- the princip*e o# e<uit- and good conscience.
1))
(or an e##ective Co**ective 0argaining in India2 recognition o# trade union has to be determined
through veri#ication o# #ee membership method. ;he union having more membership shou*d be
recogni?ed as the e##ective bargaining agent. ;he %tate shou*d enact suitab*e *egis*ation providing
#or compu*sor- recognition o# trade union b- emp*o-ers. ;he provision #or po*itica* #und b- trade
unions has to be done a,a- ,ithB since it invariab*- encourages the po*iticians to pre- upon the
union. %tate has to p*a- a progressive ro*e in removing the pit#a**s ,hich stand in the ,a- o#
mutua*2 amicab*e and vo*untar- sett*ement o# *abor disputes.
)ctivit4
):
1. Lisit an organi?ation and tr- to #ind out practica* co**ective bargaining process bet,een
management and trade unions.
1".< Summar4
Co**ective bargaining emerged initia**- has been pure*- Metter bet,een the p*ant *eve* union and
the p*ant management. ;he negotiations either at the state or at the industr- *eve* are -et not
#re<uent. ;heco**ective bargaining has not decentra*i?ed be-ond the p*ant *eve* because cra#ts
unions are absent. ;here are three important reasons as to ,h- co**ective bargaining has not gone
be-ond the p*ant *eve*3 a6 the var-ing si?es not permit uni#orm emp*o-ment conditionsA b6 the
absence o# homogeneous *abor mar1et o,ing to *ac1 o# uni#orm s1i**s and pattern o# training
,hich does not promote #ree mobi*it- o# *abor mar1et o,ing to *ac1 o# uni#orm s1i**s and pattern
o# training ,hich does not promote #ree mobi*it- o# *abor so that uni#orm emp*o-ment
conditions cou*d be evo*ved #or the industr- as a ,ho*e. c6 the p*ant union *eadership ,hich at
present enjo-s enormous po,ers and #aces prospects o# po*itica* c*imb is re*uctant to get
integrated into an industr- ,ise union ,here its po,er are *i1e*- to be restricted.
1".. Se+f )ssessment Auestions
1. What do -ou mean b- ECo**ective 0argainingF
78p*ain
2. What are the advantages o# co**ective
bargaining
3. What are the *eve*s o# co**ective
bargaining
!. What are the current trends o# co**ective bargaining in
India
1".? References 6oo,s
B Mamoria C.0.5200)6A E :-namics o# Industria* Re*ationsFA Hima*a-a 9ub*ishing House2
Mumbai.
B Webb2 %-den- and 0eatrice251+026A E Industria* :emocrac-F
Ap.1)$.
B Richardson2D.H251+&!6 E.n Introduction to the stud- o# industria* re*ationsFA
p.22.
B :un*op2Dohn D.251+$!6 ECha**enges to co**ective 0argainingFp.1'0B
1'!.
1)+
B I=OAFCo**ective
0argainingF.p.'0.
1+0
Unit - 1/ :
&isci+ine
Structure of Unit:
1!.0 Objectives
1!.1 Introduction
1!.2 Meaning N :iscip*ine
1!.3 Concept o# :iscip*ine
1!.3.1 .spects o# :iscip*ine
1!.3.2 Main Characteristics o# :iscip*ine
1!.3.3 .ims N Objectives o# :iscip*ine
1!.3.! Importance o# :iscip*ine in Industr-
1!.! Indiscip*ine
1!.$ Misconduct
1!.& Causes N .pproaches ;o,ards :iscip*inar- .ction
1!.&.1 Causes #or In#ringement o# :iscip*ine
1!.&.2 9rincip*es o# Industria* :iscip*ine
1!.&.3 Guide*ines o# a :iscip*inar-.ction
1!.&.! Mc Gregor>s Hot %tove Ru*e
1!.&.$ 9rocedure #or :iscip*inar- .ction
1!.' Code o# :iscip*ine in Indian Industr-
1!.) %ummar-
1!.+ %e*# .ssessment /uestions
1!.10 Re#erence 0oo1s
1/.0 Objectives
.#ter stud-ing this unit2 -ou ,ou*d be ab*e to 3
4nderstand the #undamenta* nature o# Industria* discip*ine
Recogni?e di##erence bet,een traditiona* and modern aspects o# discip*ine.
9oint out the nature and major aims N objectives o# discip*ine.
%tud- and appreciate the signi#icance o# discip*ine in Industr-.
Cno, about various princip*es #or maintenance o# discip*ine.
4nderstand the concepts o# Indiscip*ine and misconduct.
Cno, about the causes o# 0reach o# discip*ine.
Cno, about the guide*ines governing the discip*inar- action.
=earn about the Mc Gregor>s hot stove ru*e.
=earn about the code o# discip*ine in Indian Industr-.
1/.1 Introduction
:iscip*ine ma- be de#ined as an approach ,hich aims at insti**ing order*- behaviour and respect
#or ,i**ing obedience to a recogni?ed authorit-. Industria* discip*ine is crucia* #or hea*th-
industria* environment and #or esca*ating production N productivit-. ;he promotion and
maintenance o# emp*o-ee discip*ine brings mu*ti#arious bene#its to the organisation and its
1+1
emp*o-ees in #orm o# sa- A goa* attainment 2 smooth #unctioning o# the organi?ation etc.
1&1
1+2
1/.2 Meaning I &efinition of
&isci+ine
#$at does &isci+ine
means%
:iscip*ine means getting obedience to ru*es and regu*ations o# the organi?ation. :iscip*ine is
abso*ute*- essentia* #or the smooth running o# business. (a-o*2 stated that discip*ine is obedience2
app*ication2 energ- and out,ard mar1 o# respect. .ccording to Webster>s :ictionar-2 the ,ord
discip*ine has three meanings E(irst2 its is the training that corrects mou*ds 2 strengthens or
per#ects individua* behavior. %econd2 it is contro* gained b- en#orcing obedience. ;he third
meaning2 it is punishment or chastisement.
&efinition of
&isci+ine
.ccording to :r. %priege*2 E:iscip*ine is the #orce that prompts an individua* or a group to
observe the ru*es2 regu*ations and procedures ,hich are deemed to be necessar- to the attainment
o# an objectiveA it is #orce or #ear o# #orce ,hich restrain an individua* or a group #rom doing
things ,hich are deemed to be destructive o# group objectives. It is a*so the e8ercise o# restraint
or the en#orcement o# pena*ties #or the vio*ation o# group regu*ations.F
;hus discip*ine can be regarded as a #orce that re<uires emp*o-ees to #o**o, the ru*es and
regu*ations o# an organi?ation considered vita* #or its e##icient ,or1ing.
In brie#2 discip*ine is an emp*o-ee>s se*# contro* ,hich motivates him to comp*- ,ith the
organi?ation>s goa*s and objectives.
1/." !oncet of &isci+ine
;he dia*ogue bet,een the ,or1ers and managers in a ,or1 setting pave ,a- to the emergence o#
the concept o# discip*ine.
1/.".1 )sects of &isci+ine
0egative )sect B ;his aspect uses E#earF as a #orce to en#orce discip*ine in the organi?ation. I#
an- emp*o-ee or ,or1er de#ies the ru*es and regu*ation strict punishment is *evied on them. ;his
is categori?ed as traditiona* concept o# discip*ine.
2ositive &isci+ine H "o, a da-s the management o# various organi?ations have adopted
positive progressive out*oo1 #or discip*ining the emp*o-ees. With the ever increasing a,areness
among the ,or1ers concerning their rights and responsibi*it-2 it ,as re<uired on the part o#
management to reconsider the negative approach o# #ear used b- them so #ar.
;hus management emphasi?ed on the concept o# se*# H discip*ine. ;his approach o# se*# contro*
asserts on cooperative e##orts o# emp*o-ees to abide b- the ru*es o# the organi?ation. ;hus positive
aspect o#discip*ine p*a-s a much greater ro*e in sa#eguarding industria* peace and prosperit-.
)ctivit4
):
1 .ccording to -ou ,hat is discip*ine Ho, does traditiona* concept o# discip*ine di##er
1+3
#rom the modern concept
1/.".2 Main !$aracteristics of
&isci+ine
;he main characteristics o# :iscip*ine can be summed up as
#o**o,s 3B
1&2
1+!
5i6 ;o guarantee success#u* #u*#i*ment o# organi?ationa* goa*s it motivates ,or1ers to abide
b- the instructions issued b- the management or superiors.
5ii6 It is a negative approach in the sense that it discourages emp*o-ees in under ta1ing some
activities ,hi*e encouraging to underta1e the #e, others.
5iii6 On Lio*ation or disobedience o# organi?ation ru*es it imposes #ine or reprimand2
there#ore2 it is a*so ca**ed as punitive or big stic1 approach.
1/."." )ims I Objectives of
&isci+ine
;he aims and objectives o# discip*ine are as
#o**o,s3B
5i6 (or the achievement o# organi?ationa* goa*s it tries to earn the ,i**ing approva* o#
emp*o-ees. 5ii6 ;o introduce the component o# uni#ormit- and assurance despite the
numerous di##erence
despite the numerous di##erences in in#orma* behaviour patterns in the organi?ation.
5iii6 (or improving the <ua*it- o# production b- enhancing the mora*e and ,or1ing e##icienc-
o# the emp*o-ees.
5iv6 ;o generate respect #or human re*ations in the
organi?ation. 5v6 ;o con#er and see1 direction and
responsibi*it-.
1/."./ Imortance of &isci+ine in
Industr4
:iscip*ine acts as a cornerstone #or the smooth #unctioning o# an- enterprise. .bsence o#
discip*ine in an- industr- can create a great amount o# commotion and con#usion thereb-
decreasing its productivit-. (or an- enterprise ho,ever big or sma** manpo,er is the most pivota*
resource and thereb- a** e##orts shou*d be made to discip*ine them.
.** steps shou*d be ta1en to encourage mutua* trust and con#idence bet,een the ,or1ers and the
management ,hich is indispensab*e to bring about needed discip*ine at the ,or1p*ace.
Maintenance o# discip*ine is a precondition #or attaining the aims and purposes o# the organi?ation
s,i#t*-. :iscip*ined emp*o-ers ,i** assist in creation o# p*easant industria* environment ,hich ,i**
be bene#icia* #or the industr- and the nation both.
)ctivit4 6:
1 .na*-?e the critica* ro*e o# discip*ine in toda->s modern2 comp*e8
organi?ations.
1/./ Indisci+ine
Meaning
1+$
Indiscip*ine ma- be e8pressed as non H comp*iance to #orma* and in#orma* ru*es and regu*ations
o# an organi?ation. Indiscip*ine ma- prove to have detrimenta* e##ects on the mora*e and
motivation o# the emp*o-ees as ,e** as on the organi?ation as a ,ho*e. ;here are various socioB
economic and cu*tura* #actors that p*a- a ro*e in creating indiscip*ine in an organi?ation ,hich
can be summed up in #o**o,ing
#igure 3
B
1&3
1+&
4"(.IR =.0O4R W.G7 WRO"G WORC
9R.C;IC7% :I((7R7";I.=% .%%IG"M7";%
:I(7C;IL7
GRI7L."C7
(.C;OR%
R7%4=;I"G
9.@M7";
O(
9ROC7:4R7 I"
I":I%CI9=I"
7
L7R@ =OW
W.G7%
9OOR LIC;IMI%.;IO" I"7((7C;IL7
COMM4"IC.;IO" 0@ MG;. =7.:7R%HI9
1igure 1/.1 Barious 1actors Resonsib+e for Indisci+ine
#a4s to !oe #it$ Indisci+ine
Management can adopt various strategies as mentioned in the #igure be*o, to 1eep a chec1 on
indiscip*ine in the organi?ation.
.
CO4"%7==I"G DO0 B
7"RICHM7";
N
7:4C.;IO
"
.99RO.CH7%
;O M.".G7
I":I%CI9=I"7
GRI7L."C7 H.":=I"G 9RO97R I":4C;IO"
N ;R.I"I"G 9ROGR.MM7
1igure 1/.2 Means to !oe #it$ Indisci+ine
1+'
1&!
1+)
1/.7 Misconduct
Meaning I
&efinition
.n action or t-pe o# behaviour can be de#ined as misconduct i# it is prejudicia* to the interests o#
the emp*o-er and other emp*o-ees2 inconsistent ,ith the norms set #or discharging duties2 unsa#e
or un#aith#u* to such a degree that it becomes incompatib*e to continue emp*o-er H emp*o-ee
re*ationships.
!ategories of
Misconduct
:iscip*inar- acts o# misconduct can be categori?ed on the basis o# the severit- o# the
conse<uences.
'i( Minor !ontraventionH resu*ts in #e, serious
conse<uences.
78amp*e H neg*igence2 minor disobedience to ru*es2 care*essness.
'ii( Major !ontravention H 9artia**- hinders the ,or1ing o# the
organi?ation.
78amp*e H *-ing2 cheating2 stea*ing
'iii( Into+erab+e Offences H are o# un*a,#u* and severe nature ,hich
endanger emp*o-ment re*ationship.
78amp*e H threat to use ,eapon2 use o# drugs on the job2 smo1ing near in#*ammab*es.
Misconduct Stated In Mode+ Standing
Orders
Here is an i**ustrative *ist o# acts constituting misconduct under Mode* %tanding Orders .ct 2
1+!&. 5i6 Wi*#u* insubordination or disobedience o# an- *a,#u* and reasonab*e order 2
ru*e or
regu*ation.
5ii6 Re#usa* to ,or1 on a job or a machine ,hich has been assigned to
him.
5iii6 Re#usa* to accept or rep*- to a charge sheet ,ithin the prescribed period o#
time. 5iv6 ;he#t 2 #raud 2 or dishonest- in connection ,ith the propert- o# the
compan-.
5v6 ;he#t o# another emp*o-ee>s propert- inside the industria* area or compan-
premises. 5vi6 Causing ,i**#u* damage to 2 or *oss o# 2 the emp*o-er>s goods or
propert-.
5vii6 Causing damage to a product in process or to an-
propert-.
5viii6 Inter#erence ,ith 2 sa#et-
devices.
5i86 "onBobservance o# sa#et- precautions and
ru*es. 586 ;a1ing or giving a bribe or an- i**ega*
grati#ication. 58ii6 .cceptance o# gi#ts #rom
subordinates.
58iii6 Habitua* *ate
1++
coming.
58iv6 .bsence #rom dut- ,ithout
*eave.
58v6 Oversta- ,hen on *eave ,ithout prior authori?ed
permission.
58vi6 7ntering or *eaving 2 or attempting to enter or *eave 2 the ,or1 premises e8cept through
authori?ed entrance and e8its.
1/.; !auses I )roac$es 9o>ards &isci+inar4
)ction
1/.;.1 !auses for Infringement of
&isci+ine
;he main reasons #or breach o# discip*ine in an- organi?ation ma- be stated under #o**o,ing
heads
'I( !auses Re+ated 9o t$e #or,er
5a6 I**iterac- and *o, inte**ectua* *eve* o# ,or1ers.
5b6 Wor1ers persona* prob*ems *i1e their #ears2 hope2 aspirations etc.
200
5c6 Inborn tendencies o# ,or1ers to #*out ru*es.
'II( !auses Re+ated 9o t$e Socio G !u+tura+ 1actors -
5a6 Misunderstanding and riva*r- among ,or1ers.
5b6 :iscrimination based on caste2 co*our2 se82 p*ace in imposing pena*ties.
'III( !auses Re+ated 9o t$e #or, 3nvironment G
5a6 0ad ,or1ing
conditions. 5b6 :e#ective
supervision
5c6 "onBp*acement o# right person on the right job.
'IB( !auses Re+ated 9o t$e Management 2ractices G
5a6 =ac1 o# c*arit- in ru*es N regu*ation as *aid out b- the top management.
5b6 (au*t- per#ormance appraisa* s-stems *eading to #avoritism thereb- generating
indiscip*ine. 5c6 .bsence o# s-mpathetic and scienti#ic management.
1/.;.2 2rinci+es of Industria+ &isci+ine
Industria* :iscip*ine shou*d be based on certain just and #air princip*es to be accepted b- the
emp*o-ees. ;he basic 9rere<uisites or princip*es to be observed are3B
5i6 ;he ver- objectives o# industria* discip*ine shou*d be c*ear*- *aid out
5ii6 ;he code o# conduct shou*d be #ramed ,ith consu*tation N co**aboration o# the ,or1ers
or their representatives.
5iii6 ;he code o# conduct must be communicated to a** concerned in the
organi?ation. 5iv6 ;he ru*es and regu*ation concerning the discip*ine shou*d
understandab*e b- a**.
5v6 ;he ru*es o# conduct must ab*e to sett*e the grievances i# an- arising during the period be
o# emp*o-ment.
5vi6 ;he approach o# discip*ine po*ic- shou*d be preventive i.e. stress be *aid on prevention o#
vio*ation o# discip*ine rather than on the administration o# pena*ties.
5vii6 ;he <uantum o# reprimand #or each case o# misconduct shou*d be speci#ied c*ear*- in
advance b- pub*ishing them in emp*o-ee>s handboo1.
5viii6 ;he en#orcement authorit- must be speci#ied.
5i86 :iscip*ine po*ic- shou*d not discriminate against the emp*o-eesA it shou*d be uni#orm #or
a** emp*o-ees ,ithout #avoring an- one ,or1er or emp*o-ee.
586 . discip*inar- committee in the advisor- capacit- be constituted to *oo1 into the matters
o# indiscip*ine and put #orth the necessar- suggestions.
1/.;." *uide+ines of a &isci+inar4 )ction
'a( 1i@ation of Resonsibi+it4 H the responsibi*it- #or sustaining discip*ine in the organi?ation
shou*d be given to a responsib*e person2 sa- personne* o##icer.
'b( 2roer 1raming I !ommunication of Ru+es H the ru*es and regu*ations shou*d be
cautious*- and accurate*- #ormu*ated and pub*ished in emp*o-ee handboo1s.
'c( Ru+es and Regu+ations S$ou+d be Reasonab+e H the ,or1 standards set %hou*d be
201
attainab*e b- the emp*o-ees and the ru*es be modi#ied at #re<uent interva*s to suit the
changing organi?ationa* circumstances.
202
'd( 3=ua+ 9reatment G Ru*es and pena*ties shou*d be app*ied e<uitab*-. Identica* punishment
shou*d be granted #or identica* o##ences.
'e( 2romt )ction H care shou*d be ta1en to ma1e sure that the pena*t- is imposed soon
a#ter the vio*ation o# a ru*e has occurred.
'f( Searc$ for t$e 1acts H be#ore proceeding to ta1e an- action against an emp*o-ee 2 provide
him
,ith su##icient time to present his side o# the case i.e. What and ,h- it
Happened O.
'g( 0atura+ 8ustice H the punishment or pena*t- imposed on the indiscip*ined ,or1er must
satis#- the princip*e o# natura* justice. ;he punishment shou*d a*,a-s justi#- ,ith the
gravit- o# the o##ence.
1/.;./ Mc *regorJs Hot Stove Ru+e
;he mode* method #or en#orcement o# discip*ine shou*d have the #our important characteristics
o# a red
H hot H stove.
'i( )dvance #arning H a red H hot stove te**s us2 Edon>t touch me2 -ou ,i** su##erF
%imi*ar*- a ,or1er 1no,s ,hat is e8pected o# him and ,hat ,i** be the resu*t i# he #ai*s to
*ive up to those e8pectations.
'ii( Immediate 3ffect B i# one over*oo1s the advance ,arning and touches the stove2 gets
immediate resu*t 5#ingers ma- su##er burns6 *i1e,ise ,or1ers ma- get instantaneous e##ect
on committing an- act o# indiscip*ine.
'iii( !onsistenc4 H ever- time ,e touch a red H hot stove ,e get the same resu*t. 7ver- time
a ,or1er commits the insu##icient act 2 he shou*d be pena*i?ed.
'iv( Imersona+)roac$ H red H hot stove #unctions uni#orm*- #or a**2 doing a,a-,ith an-
#avoritism.
In the same ,a-2 management shou*d not discriminate in imposing punishment on basis
o# caste2 creed2 co*our2 se8 etc. It shou*d guarantee the #undamenta* right to e<ua*it-.
;hus these #our characteristics shou*d be 1ept in mind be#ore administrating an-
discip*inar- action.
1/.;.7 2rocedure for &isci+inar4 )ction
;he #o**o,ing steps shou*d be ta1en care o# ,hi*e administrating a discip*inar- action.
'a( )scertaining t$e Statement of t$e 2rob+em B (irst *oo1 into the vio*ation o# ru*e and
the number o# emp*o-ees invo*ved in the matter. ;hen ascertain the gravit- o# the
vio*ation and the conditions under ,hich it occurred.
'b( Searc$ing for t$e Under+4ing 1acts H ;his ca**s #or thorough e8amination o# the case
together the re*evant #acts.
'c( &eciding uon t$e 94e of 2ena+t4 H ;he pena*t- or punishment shou*d be such ,hich
discourages #uture reoccurrence o# the o##ence or vio*ation. 0ut it shou*d a*,a-s re*ate to
the gravit- o# the o##ence.
'd( )+ication of 2ena+t4 H ;he se*ected pena*t- ma- be imposed on the ,rong doers and
i# the o##ence is not o# a serious nature then it ma- be disposed o## <uic1*-.
'e( 1o++o>-u on &isci+inar4 )ction H Ligi*ant supervision o# the person against ,hom a
203
discip*inar- action is ta1en shou*d be done.
)ctivit4 !:
1 ,ith the he*p o# an imaginar- case e*aborate the procedure o# discip*inar- action.
1/.< !ode of &isci+ine in Indian
Industr4
;he Indian *abour con#erence he*d in "e, :e*hi in Du*- 1+$'2 discussed discip*ine in Indian
Industries2 and *aid do,n certain princip*es governing it2 these ,ere
5a6 It is a %tate H induced vo*untar- agreement bet,een *abour unions and management to
abide b- certain se*#Bimposed ru*es o# behavior in order to ensure that disputes do not
arise A and that 2 i# the- do2 to promote and order*- sett*ement through negotiation 2
conci*iation and vo*untar- arbitration.
5b6 ;he Code enjo-s upon the parties to accord due recognition to each other>s just rights
and responsibi*ities.
5c6 It enjoins upon the parties to re#rain #rom ta1ing an- uni*atera* action in connection ,ith
an- industria* matters A to uti*i?e the e8isting machiner- #or the sett*ement o# disputes ,ith
the utmost e8pedition A and to abjure stri1es and *oc1Bouts ,ithout notice and ,ithout
#irst e8p*oring a** possib*e avenues o# a sett*ement.
5d6 It discourages *itigation and *a-s emphasis on a mutua* sett*ement o# disputes through
negotiation2 conci*iation and vo*untar- arbitration rather than through adjudication.
5e6 It enjoins that neither part- shou*d resort to demonstration 2 intimidation 2 victimi?ation 2
vio*ence2 coercion 2 discrimination 2 or inter#ere in union activities or ,ith the norma*
,or1 o# emp*o-ees 2 or indu*ge insubordination or ,i*#u* damage to propert-.
5#6 ;he code re<uires the emp*o-ers to recogni?e the majorit- union in their estab*ishments or
industries2 and set up a ,e**Bde#ined and mutua**- agreed grievance redressa* procedure. It
re<uires ,or1ers not to adopt goBs*o, tactics 2 or indu*ge in sta- in or sitBdo,n stri1es
,hi*e the- are on dut-.
5g6 It emphasi?es that a,ards 2 decisions 2 agreements and sett*ements shou*d be prompt*- and
readi*- imp*emented A and that an- act ,hich disturbs or impairs the cordia* re*ations
bet,een emp*o-ees and management 2 or ,hich is contrar- to the spirit o# the Code 2 is
care#u**- avoided.
5h6 It directs emp*o-ees and their trade unions to ta1e appropriate action against their
o##icers and members ,ho indu*ge in activities ,hich are contrar- to the spirit and *etter
o# the code.
1/.. Summar4
Industr- discip*ine is vita* #or creation and maintenance o# hea*th- N peace#u* industria*
environment. It brings numerous bene#its to the organi?ation and its emp*o-ee as ,e**. :iscip*ine
has t,o aspects i.e. positive N negative. Indiscip*ine N misconduct can surge #rom number o#
#actors *i1e un#air *abour practices2 ,age di##erentia*s2 poor communication2 ine##ective
*eadership etc. Indiscip*ine N misconduct are t,o evi*s that can hamper the smooth #unctioning
o# an organi?ation so the- shou*d be curbed at an- cost. Mode* standing orders and the code o#
discip*ine as stated b- the Indian =abour Con#erence can he*p in *ong term to 1eep a chec1 on the
Indiscip*ine in the Industr-.
1/.? Se+f )ssessment Auestions
1. What do -ou mean b- E:iscip*ineF %tate its major characteristics and
objectives.
2. :iscuss the signi#icance o# discip*ine in
Industr-
3. Write short notes
on
1&)
5a6 Indiscip*ine N 5b6 Misconduct
!. 78p*ain in brie# the guide*ines o# a discip*inar- action.
$. %tate the characteristics o# Red Hot stove in conte8t o# discip*inar- action.
1/.10 Reference 6oo,s
B %priege*2 Wi**iam R.2 and %chu*t? 2 7d,ard 2 Industria* Management 2 1+$'.
B Webster>s2 "e, Co**egiate :ictionar-2 1+$32 p.23&
B .run Monappa 5200!6A Industria* Re*ationsA ;ata Mc Gra,BHi** 9ub*ishing Compan-
=imited2 "e, :e*hi.
B ..M. %arma 5200)6A Industria* Re*ations 5Conceptua* and =ega* (rame,or16A Hima*a-an
9ub*ishing
House2 "e, :e*hi.
B C.0. Mamoria N %.L. Gan1ar 520106A 9ersonne* Management 5;e8t N Cases6A
Hima*a-an
9ub*ishing House2 "e, :e*hi.
B ;.". Chhabra N R.C. %uri 5200'6A Industria* Re*ations 5Concepts and
Issues6A :hanpat Rai N Co. 59vt.6 =tdA :e*hi
B 9R" %inha 520006A Industria* Re*ations2 ;rade 4nion and =abour =egis*ationA 9earson
7ducationsA "e, :e*hi.
Unit - 17 : Human Resource )ccounting
Structure of
Unit:
1$.0 Objectives
1$.1
Introduction
1$.2 Gro,th N :eve*opment o# Human Resource
.ccounting
1$.3 Concept o# Human Resource
.ccounting
1$.3.1 Meaning N :e#inition
1$.3.2 "eed and Importance o# Human Resource .ccounting
1$.3.3 Objectives o# Human Resource .ccounting
1$.! Human Resource La*uation
Mode*s
1$.$ Human Resource Reporting in
India
1$.$.1 9rob*ems in HR. Reporting
1$.$.2 %uggestions
1$.&
%ummar-
1$.' %e*# .ssessment
/uestions
1$.) Re#erence
0oo1s
17.0 Objectives
.#ter comp*eting this unit -ou shou*d be ab*e
to 3
4nderstand Meaning N :e#inition o# Human Resource .ccounting
C*assi#- the various deve*opment stages o# Human Resource .ccounting
=earn the need N importance o# Human Resource .ccounting
9oint out the major objectives o# Human Resource .ccounting
4nderstand the various HR La*uation mode*s
17.1 Introduction
Human resources is an o*d #ie*d o# research in economics. Without human resources 2 the other
resources cannot be e##ective 2 thus ,e can sa- human resources mobi*i?es a** the other resources.
;he evo*ution o# service based economies #rom the past #e, decades has shi#ted the importance
#rom ph-sica* assets to 1no,*edge N attitudes o# emp*o-ees ,or1ing in service providing #irms.
;he tota* va*ue o# an- organi?ation depends essentia**- on the s1i** set o# its emp*o-ees and the
services the- de*iver. ;here#ore2 the surviva* o# these organi?ation is dependent on the <ua*it- o#
their human resources2 its 1no,*edge2 e8pertise2 capabi*it- and perception o# the organi?ationa*
cu*ture.
Hence in toda->s g*oba*i?e 1no,*edge driven economies 2 it is crucia* that the humans be
recogni?ed as an centra* part o# the tota* ,orth o# an organi?ation ;hus2 the importance o#
human resources cannot be ignored and at this juncture2 it becomes necessar- to give due
consideration to the deve*opment and gro,th o# such an important resource o# the organi?ation.
17.2 *ro>t$ I &eve+oment of Human Resource
)ccounting
Research into Human Research accounting began in the 1+&0>s b- Rensis =i1ert. It supported
*ong term p*anning on diverse <ua*itative human resource variab*es -ie*ding superior bene#its in
*ong run. Human resource .ccounting is the outcome o# numerous research studies conducted in
the #ie*d o# accounting and #inance. Human resource as an asset i# positioned N nurtured in the
right direction ma- rea*i?e its #u** potentia*.
=ate*-2 the 0ehaviora* scientists critici?ed the conventiona* accounting practice o# va*uing human
resource a*ong ,ith ph-sica* resources and stressed on the concept o# assigning monetar- va*ue to
human resource o# the organi?ation. ;he- advocated that an- e8penses incurred on the
deve*opment o# human resources shou*d be treated as capita* e8penditure as in the *ong run it
gives bene#its ,hich can be measured in monetar- terms.
3ric 1a+m$o+t5 divided the deve*opment o# Human Resource .ccounting into #ive stages2 ,hich
can be summed up as #o**o,s3B
1irst Stage '1?;0 G ;;( G ;his s-mbo*i?es the beginning o# Human Resource .ccounting ,here
the #ocus ,as to derive the concepts o# Human Resource .ccounting #rom other studies *i1e
economics etc.
Second Stage G '1?;; G <1( G ;he objective here ,as to assess some mode*s that ,ou*d cover
both costs mode*s N monetar- N non H monetar- va*ue o# Human Resource .
9$ird Stag - '1?<1 G <;( G Here noticeab*e signi#icance in the #ie*d o# Human Resource
.ccounting gre, *eading to number o# researches in the #ie*d. ;he #oca* point ,as the
app*ication o# Human Resource .ccounting in business organi?ations.
1ourt$ Stage - '1?<; G .0( G ;his period sa, the co**apse o# the concept o# Human Resource
.ccounting as the organi?ations ,ere not prepared to invest time 2 energ- and most important*-
the #unds needed to research #urther deep into the concepts o# Human Resource .ccounting.
1ift$ Stage B '1?.0 On>ards( H ;he e8p*osion o# service economies in deve*oped countries
brought about a rene,a* o# interest in Human Resource .ccounting. .nd #urther in mid +0>s the
app*ication o# Human Resource .ccounting to business management gained greater impetus.
17." !oncet of Human Resource
)ccounting
17.".1 Meaning I
&efinition
;he concept o# human resource accounting can be better understood b- #o**o,ing important
de#initions given b- eminent authors in the accounting #ie*d.
M.0. 6a,er defines2 EH.R... is the term app*ied b- the accountanc- pro#ession to <uanti#- the
cost and va*ue o# emp*o-ees to their emp*o-ing organi?ationF.
F.1o+e4 :e#ined EHuman Resource .ccounting is the measurement o# the cost and va*ue o#
peop*e #or organi?ation.F
2rof. &avidson :e#ined EHuman Resource .ccounting is the term used to describe a variet- o#
proposa*s that see1 to report and emphasi?e the importance o# human resource 1no,*edgeab*e 2
trained and *o-a* emp*o-ees in a compan- earning process and tota* assetsF.
9$e )merican )ccounting Societ4 !ommittees on Human Resource .ccounting de#ined it as
#o**o,s3B
EHuman Resource .ccounting is the process o# identi#-ing and measuring data about human
resources and communicating this in#ormation to interested parties.F
1+am$o+t5 de#ines EHuman Resource .ccounting as the measurement and reporting o# the cost
and va*ue o# peop*e in organi?ationa* resources.F
In short2 the de#inition o# Human Resource .ccounting brings out #o**o,ing characteristic
#eatures3
a ct>s La*uation o# Human Resource s Rec ording it in boo1s o#
.ccount
:isc*osure o# this in#orma
tion
in
#in
1
an
i
c
g
ia
u
*
r
s
e
ta
1
te
7
m
.
e
1
nt
17.".2 0eed and Imortance of Human Resource
)ccounting
;he need #or Human Resource .ccounting #e*t *arge*- as a resu*t o# the emerging concern #or
human re*ations management in industr-. ;he ver- importance o# Human Resource .ccounting
can be summed up through #o**o,ing major points H
5a6 Human Resource .ccounting he*ps management in ac<uiring p*acing and in
ma1ing e##ective uti*i?ation o# human resources.
5b6 ;o retain the <ua*i#ied emp*o-ees
5c6 It aids in deciding the trans#ers 2 promotion 2 training etc o# human resources.
5d6 It serves as a too* to measure and compare the e8penditure incurred #or
imparting the training to emp*o-ees and in turn the bene#its derived b- the #irm.
5e6 Human Resource .ccounting he*ps to improve the pro#i*e o# the enterprise and its
image.
17."." Objectives of Human Resource
)ccounting
9utting in a capsu*e the main objectives o# Human Resource .ccounting
are to3
Improve Mgt b - investment in H.R. Consider peop*e as its asset
O0D7C;IL7%
.ttract N Retain <ua*i#ied peop*e 9ro#i*e the
organi?ation in
#inancia* terms
1igure 17.2
17./ Human Resource Ba+uation
Mode+s
Human Resource .ccounting can be e8p*ained in three
,a-s 3B
1. MO039)RE MO&3:S G ;he Mode*s ,hich are created using monetar- variab*e are ca**ed
monetar- mode*s.
')( !OS9 6)S3&
MO&3:S
'i( Historica+ !ost Mode+ :- ;his Mode* ,as deve*oped b- Wi**im C. 9.-*e 2 R. =ee 0rummet
and 7ric. G. (*amho*t?. ;his is a*so ca**ed origina* cost method or out*a- cost method. In this
method actua* cost incurred on recruiting 2 se*ecting 2 hiring 2 training and deve*oping the human
resource o# the organi?ation are capita*i?ed and amorti?ed over the e8pected use#u* *i#e o# human
resources. I# the human assets are *i<uidated preBmature*- the ,ho*e o# the amount not ,ritten
o## is charged to the income o# the -ear in
1'2
,hich -ear the assets is *i<uidated. I# the use#u* *i#e is recogni?ed to be *onger than origina**-
e8pected revision are a##ected in the amorti?ation schedu*e. ;he unBe8pired va*ue is sho,n in
ba*ance sheet as investment in human assets.
Merits:
5i6 it is a simp*e method.
5ii6 ;his method can be used #or eva*uating return on investment in human
resources. 5iii6 ;his method is objective rather than being subjective.
:imitations
:
5i6 .ccurate measurement not possib*e.
5ii6 It is di##icu*t to estimate the number o# -ears an 7mp*o-ee is going to be ,ith the
#irm. Hence there is a prob*em o# estimate the number o# -ears over ,hich the capita*
e8penditure is to be amorti?ed.
'ii( Re+acement !ost Mode+: ;he rep*acement cost method o# va*uation o# human resource has
been deve*oped b- 7ric G. (*amho*t?. 4nder this method va*ue to an organi?ation o# an
individua*>s services is re#*ected b- the amount that the organi?ation ,ou*d have to pa- to
rep*ace these services.
Merits : -
5i6 It considers the current va*ue o# the human
resource. 5ii6 Rep*acement cost are present oriented.
5iii6 Rep*acement cost is better than historic cost.
:imitations
:
5i6 ;here ma- be no identica* rep*acement o# the e8isting human resources.
5ii6 ;he va*uation o# human resources based on rep*acement cost is a##ected b-
subjective consideration.
'iii( Oortunit4 !ost Mode+: ;his method ,as suggested b- He1imian and Dones ;his method
is based on economist>s concept o# opportunit- cost. 4nder opportunit- cost method 2 the va*ue
o# an emp*o-ee in his a*ternative use is determined. ;his va*ue is ta1en as the basis #or
estimating the va*ue o# human resources emp*o-ed b- the organi?ation.
Merits 3
5i6 Opportunit- cost approach gives more optimum a**ocation o#
personne*. 5ii6 It provides <uantitative base #or eva*uating human
assets.
:imitation
:
5i6 ;his method is e8pensive.
5ii6 ;he measure o# re*iabi*it- o# opportunit- cost is *ess.
'iv( Standard !ost Met$od: :avid Watson suggested this approach. 4nder this method 2
emp*o-ees o# an organi?ation are categori?ed into di##erent groups as per their hierarchica*
positions. ;he standard cost is #i8ed #or each categor- and then their va*ue is ca*cu*ated. ;he
standard cost o# recruiting2 p*acing2 training and deve*oping per grade o# emp*o-ee is deve*oped
and estab*ished and made up to date ever- -ear 2 %tandard method provides eas- imp*ementation.

Re+acement !ost !$art

.c<uisition Cost = earnin g Cost %eparation Cost
W Recruitment W ; raining W %eparation pa-
W %e*ection W :eve*op ment W *oss o# e##icienc-
W Hiring due to vacant post
W 9*acement
W 9romotion
during search
W ;rans#er
'6(. B):U3 6)S3& MO&3:S
5i6 =ev and %ch,art? 9resent La*ue o# (uture 7arning Mode*. s
5ii6 (*amho*t? %tochastic Re,ards La*uation Mode*.
'i( 2resent Ba+ue of 1uture 3arnings Mode+: ;his mode* is suggested b- 0ranch =ev and .ba.
%ch,art?. ;his mode* is a*so 1no,n as compensation mode*. What is the present va*ue o# an
emp*o-ee In orders to #ind out the present va*ue ,e ta1e the discount rate. ;his discount rate is
norma**- that rate ,hich is cost o# capita*. 7ach and ever- emp*o-ee is c*assi#ied according to his
age and e##icienc-. ;hen ,e #ind out ,hat is average income o# an emp*o-ee in di##erent groups.
;hen ,e ca*cu*ate the income o# ever- group up to the date o# retirement. ;hen ,e app*- the
cost o# capita* rate. ;hen ,e arrive at va*ue o# human assets o# the group.
=ev and %ch,art? has given the #o**o,ing
#ormu*as
*
+
= $
' 5 t 6
51 + r6 5t
+6
t = +
Where
*
+
X ;he human capita* va*ue o# a person T -ear
o*d. I5Y6 X ;he person>s annua* earnings up to the
retirement r X . discount rate speci#ic to the person
; X Retirement age
Merits :-
5i6 ;his method depends upon #uture earnings capacit- o# an emp*o-ee.
5ii6 ;his method is depending upon the present va*ue o# #uture earnings capacit-
so this method appears to be most *ogica*.
5iii6 :iscount rate is based on cost o# capita*2 ,hich appears to be #air.
&emerits :-
5i6 ;he method does not ta1e in to consideration that the emp*o-ees *eave the
organi?ation due to number o# reason other than death N retirement.
5ii6 ;his method ignores change in the pro#ession o# an emp*o-ee due to age 2 hea*th etc.
'ii( 1+amtt+t5Js Stooc$astic Re>ars Ba+uation Mode+: ;he mode* is based on the presumption
that a person>s va*ue to an organi?ation depends upon the position he ho*ds in the organi?ation.
;his mode*gives #ive steps #or va*uing an individua* in an organi?ation.
5i6 (ind out the e8pected service *i#e o# an individua* in an-
organi?ation. 5ii6 Identi#- ho, much time he ,i** remain on
particu*ar status.
5iii6 7stimate the va*ue derived b- the organi?ation ,hen a person ho*ds a
particu*ar position.
5iv6 7stimate the probabi*it- o# occup-ing each possib*e mutua**- e8c*usive
status at speci#ied #uture time.
5v6 :iscount 5at a predetermined rate6 the e8pected service re,ards to their present
va*ue. ;he Mode* has used the #o**o,ing #ormu*ae.
n m

5R* 6

Ri P 5 Ri 6S
t =1
i
= 1
51+ r 6t

5RL6
Ri
78p
X
ected Rea*i?ed va*ue
.mount o# service received
5R6 at ever- possib*e state or status
95Ri6 X %tatus 9ossib*e e8pected service to be received b- the
organi?ation
t X time period.
m X Retirement %tage
51Y r6 X Rate o# :epreciation #or mone-
Merits :-
5i6 ;his method ta1es into account the probabi*it- o# a person>s carrier movement and
o# his *eaving the organi?ation prior to his retirement or death.
5ii6 ;he mode* combines both monetar- and nonBmonetar- variab*es.
&emerits :
5i6 It is e8pensive.
5ii6 It is ver- di##icu*t to estimate that #or ho, much period an emp*o-ee ,i**
continue in an organi?ation.
&r. S.F. !$a,rabort4Js Mode+ of Human Resource
Ba+uation: -
.ccording to :r. Cha1rabot- human assets shou*d be inc*uded in 0a*ance sheet on assets side
under the heading EInvestmentsF He is o# the opinion that i# ,e inc*ude it in the heading #i8ed
.ssets it ,i** create prob*ems *i1e depreciation2 capita* gains or *osses 2 etc. ;he va*ue o# human
resources on a group basis can be #ound out b- mu*tip*-ing the average sa*ar- o# the group ,ith
the average tenure i# emp*o-ment o#
the emp*o-ee in that group. He has suggested that recruitment 2 hiring 2 se*ection 2 deve*opment
and training costs o# each emp*o-ee shou*d be recorded separate*- 2 it can be treated as de#erred
revenue e8penditure to be ,ritten o## over the e8pected average sta- o# the emp*o-ee in the
organi?ation and the de#erred position shou*d be sho,n in ba*ance sheet o# the organi?ation. I#
there is a premature e8it on account o# death 2 retirement etc then the ba*ance on the de#erred
revenue account #or the -ear attributab*e to that person shou*d be ,ritten o## against the income o#
the -ear o# e8it itse*#.
2. 0O0-MO039)RE
MO&3:
')( :i,ertJs !asua+- Intervening and 3ndGResu+t Bariab+e Mode+
:-
;his mode* is based on behavioura* variab*e. ;his mode* ,as deve*oped b- Rensis =i1ert and
:avid G. 0o,ers o# 4.%... ;he mode* is comprised o# three variab*es H Casua* 2 intervening and
end resu*ts.
'i( !asua+ Bariab+e G ;he casua* variab*es are independent variab*es ,hich can be direct*-
changed b- the organi?ation and its management and ,hich in turn determine the course
o# deve*opments ,ithin an organi?ation.
5ii6 ;he intervening variab*es re#*ect the interna* state2 hea*th and per#ormance capabi*ities
o# the organi?ation e.g. the *o-a*ties2 attitudes2 motivation2 per#ormance goa*s and
perceptions o# a** members and their co**ective capacit- #or e##ective action 2 interaction 2
communications and decision
H
ma1ing.
5iii6 ;he end resu*t variab*es are the dependent variab*e2 ,hich re#*ect the resu*t achieved b-
the organi?ation such as its productivit- costs2 scrap *oss2 gro,th2 share o# mar1et N
earnings.
Merits :-
5i6 Mode* is based on nonBmonetar- variab*es.
5ii6 ;he mode* is high*- use#u* in decision
ma1ing.
&emerits :-
5i6 ;he degree o# objectivit- is
*ess 5ii6 ;he degree o# re*iabi*it-
is *o,. 5iii6 ;he method is
e8pensive.
". S9)9IS9I!): 6)S3&
M39HO&S
4nder statistica* based method o# Human resources no according is invo*ved. ;he statistica*
in#ormation regarding human resource is co**ected and the- are presented in annua* reports. ;he-
ma- be o# #o**o,ing t-pes3B
5i6 Month*- %tatistics
on.
5a6 Recruitment
Costs
5b6 %e*ection
Costs
5c6 ;raining
Costs
5d6 %pecia* :eve*opment programme
costs
5e6 Wor1er>s education
programmes
5#6 .u8i*iar- costs such as canteen2 medica* and other #ringe
bene#its
5ii6 ;ota* Human Resource Investment ana*-?ed ,or1men
into
5a6 9ersonne* O##icers2 sta## and ,or1men
5b6 :epartment ,ise
5c6 78penses Categor- ,ise
5iii6 9eriodica* change in Human Resources
Investment.
5iv6 %tatement o# contribution #actor separate*- #or o##icers2 sta## and
,or1men.
5v6 %tatement on human resource cost coBe##icient 5human resource investment human
resource current cost6 separate*- #or o##icers2 sta## N Wor1men.
5vi6 ;imes rate o# return
ana*-sis.
5vii6 %tatement o# human resource per#ormance inde8 sho,ing separate*- #or o##icers 2
sta## N
,or1men.
5viii6 %tatement o# per capita* Human Resource per#ormance inde8 sho,ing separate*- #or
o##icers2 sta## N ,or1men and a*so tota*.
5i86 .ge ,ise %ervice
%tatus
586 Monetar- va*ue o# service
statutor-
58i6 %tatistics on emp*o-ee
turnover.
58iii6 .n- other statistics re*evant to the
organi?ation.
17.7 Human Resource Reorting in India
In India2 reporting practices o# Human Resource .ccounting is e8treme*- *o,. . #e, companies
do report in their annua* reports. ;he reporting o# Human Resource .ccounting is in some
sentences. %ome Companies #urnish in#ormation about number o# emp*o-ees ,or1ing in the
organi?ation2 ho, man- ,or1ing hours have *ost2 ,hat is the situation o# industria* re*ation etc.
0oth 9ub*ic sector and private sector companies have used economic va*ue approach instead o#
cost approach. Most o# the companies have used =ev and %ch,art? mode*. ;he- have =ev and
%ch,art? mode* in modi#ied ,a-2 ,hich is simi*ar to (*amho*t? mode*. It has been discovered
that most *i1e*-variet- o# the companies is rep*acement cost mode*2 Human resources reporting is
not because their is no *ega* compu*sion b- Indian Companies .ct 1+$&. ;here is a*so prob*em in
measuring Human Resources.
Human Resource .ccounting has been reported b- above H mentioned companies as a
supp*ementar- in#ormation in their annua* reports 2 such reporting b- companies are audited. ;he
companies have c*assi#ied their emp*o-ees2 age ,ise2 the- have #urther c*assi#ied them in
managers2 e8ecutives2 supervisors2 .rtisans2 c*erica* sta## etc.
%ome Companies in India sho,s human Resource deve*opment cost i.e. training and deve*opment
cost in detai* ,hi*e some corporation are sho,ing them in short2 some sho,s them in
E:irector>s Report or chairman speech.F
9roductivit- I per#ormance statistics o# human resource have been presented b- some companies
in detai*. .verage emp*o-ee cost is sho,n b- #e, companies on*-.
.ppreciations and .,ards received b- the companies have been sho,n b- the companies under
the heading EHigh *ightF or :irector>s Report or e*se,here in the annua* reports o# the Companies
High*ight>s.
(or purpose o# ca*cu*ating the present va*ue o# #uture earning o# emp*o-ees 2 a** the companies
have adopted a discount rate 2 ,hich is not common. Majorit- o# the companies adopted 12V.
1''
%ome o# the companies have not mentioned the purpose #or ,hich the- are reporting HR.
in#ormation in their annua* reports. Whereas some companies have c*ear*- mentioned their
objective o# reporting human resource data. It seems that some companies report HR. #or image
bui*ding purposes. %ome companies have a*so given additiona* in#ormation as regarding number
o# emp*o-ees 2 average sa*ar- 2 average age o# emp*o-ees 2 average production per emp*o-ee etc.
17.7.1 2rob+ems in HR)
Reorting
1. Human Resource .ccounting is sho,n as supp*ementar- in#ormation in the annua* reports
2 ,hich has no signi#icance.
2. .** the companies ,ho are reporting Human Resource .ccounting have used =ev and
%ch,art? mode* but this mode* is su##ering #rom some dra,bac1s. One it has assured
state promotion po*ic- and consistent average sa*ar- to a** the emp*o-ees in a particu*ar
group. ;hese t,o assumptions are #ar #rom rea*it- 2 di##erence in s1i** 2 e8perience
<ua*i#ications and increasing importance o# emp*o-ees union o#ten *ead to change in these
po*icies.
3. ;hough human capita* p*a-s an important ro*e in an- organi?ation 2 there is a ,ide spread
2 disagreement regarding the reorgani?ation and va*uation o# human resource as assets on
genera**- the assets is one ,hich #u*#i**s the #o**o,ing three criteria. ;he- are 5i6 the entit-
shou*d have *ega**- en#orceab*e c*aim to it. 5ii6 It shou*d be o,ned b- the entit- 5iii6 the
entit- shou*d posses it ,ith the e8pectation o# deriving services #rom it in #uture HR are
not #u*#i**ing an- criteria. .s such there is a prob*em in recogni?ing human resources as
assets.
!. 9roper matching o# costs ,ith revenue is not possib*e un*ess the costs on the recruitment
training and deve*opment o# personne* are capita*i?ed over their e##ective service *ives. It
is so because the bene#its #rom such e8penses are usua**- derived over a period be-ond
the -ear o# pa-ment. Ho,ever in a number o# cases2 the earnings potentia* o# emp*o-ees
ma- not depend upon the e8penditure incurred b- the #irms #or the purpose. 0ut it depends
upon behaviour aspects *i1e s1i**
2 motivation group *o-a*t- capacit- #or e##ective interaction and decision ma1ing etc 2 to
in#*uence
the end resu*ts o# an enterprises e##ective*-.
$. ;he ver- idea o# sho,ing human resource as an asset on the ba*ance sheet o# a #irm tends
to be arbitrar- #or this purpose as per the methods avai*ab*e 2 human resource are to be
va*ued either on the basis o# cost incurred b- a #irm on recruitment trainings etc or
rep*acement cost. In both the methods cost is ta1en as the va*ue o# human assets. 0ut this
hard*- represent the rea* va*ue o# personne* in particu*ar and the #irm in genera*. ;he other
method *i1e discounted ,age2 and sa*aries method 2 economic va*ue method 2 and
opportunit- cost method 2 invo*ves the e*ement o# subjectivit- in va*uing the human
resources.
&. @et another di##icu*t- regarding HR. is /uanti#ication and pricing o# emp*o-ees in respect
o# jobs ,hich do not -ie*d an- ph-sica* output. :etermination o# probabi*ities o# the
e8pected services o# the emp*o-ees is a*so a di##icu*t tas1. ;hese practica* di##icu*ties are
subject to the in#*uence o#age <ua*i#ication 2 the previous e8perience point o# #irst entr- 2
emp*o-ment period and turn over as ,e** as the organi?ationa* pu**s and pressures on
di##erent categories o# emp*o-ees.
'. In a** the methods 2 the sa*aries earned b- the emp*o-ees are ta1en as the basis #or va*uing
human resources. ;hus the career movement o# emp*o-ees either ,ithin the organi?ation
or e*se,here in the other organi?ation is 1ept outside the purvie, o# va*uation. %ince the
emp*o-ees ma1e constant
1')
tria*s to occup- higher position during their e##ective service *i#e 2 an- va*uation process
,ithout considering this ,a- tend to be *ess meaning#u*.
). ;he provision o# e8isting ta8 *a,s 2 do not recogni?e the amorti?ed portion o# capita*i?ed
human resource va*ue as deductib*e e8penses #or computing income. 7ven i# attempts are
made to amend the e8isting provision o# ta8 *a,s there is a greater amount o# scope to
misuse the #aci*it- as the emp*o-ers ma- adopt #ictitious method to underta1e the
pro#itabi*it- o# their business and ma- sho, unrea*istic va*ue o# the #irm.
17.7.2 Suggestions
In India2 human resource accounting has not been introduced so #ar as a s-stem. ;he companies
.ct
1+$&2 does not re<uire 2 #urnishing o# an- signi#icant in#ormation about human resource in
#inancia*statement o# the Companies. ;he Institute o# Chartered .ccountant o# India has a*so
deve*oped 1) .ccounting %tandards. ;he accounting standards are app*icab*e to pub*ic and
private sector companies N *arge borro,ers o# #unds #rom ban1s and #inancia* institutions in the
corporate sector. It is the dut- o# the members Institute o# Chartered .ccountants o# India to
ensure that the accounting standards are imp*emented in the presentation o# #inancia* statements
covered b- their audit report. .** these accounting standards are <uite important #rom point o#
vie, o# measurement and disc*osure o# accounting in#ormation.
17.; Summar4
In toda->s g*oba*i?ed ,or*d it has become imperative to give necessar- consideration to the
Human Resource o# the organi?ations. Without human resource no other resource can #unction
e##ective*-2 there#ore Human Resource has been recogni?ed as a crucia* part o# tota* organi?ation
,orth. Human Resource .ccounting #aci*itates the management o# peop*e as organi?ationa*
Resources. Human Resource .ccounting in app*ication o# accounting concepts N methods to
management o# Human Resources it dea*s ,ith investments in peop*e and ,ith economic resu*ts
o# those investments. Human Resource .ccounting #ie*d under,ent a number o# stages beginning
#rom 1+&0 to ti** date to assume the status o# a #u**- #*edged subject. It great*- he*ps the
management o# the business organi?ations in ac<uiring2 p*acing and inma1ing e##ective uti*i?ation
o# human resources. Human Resource .ccounting has its number o# mode*s under the purvie, o#
monetar- 2 non B monetar- and statistica* methods. 0ut the p*ight o# Human Resource.ccounting
in India is e8treme*- poor and both pub*ic and private sector companies do not pa- much head to
Human Resource Reporting. ;here#ore2 the government needs to ta1e steps in the right directions
#or promotion
o# Human Resource .ccounting 9ractices in
India.
17.< Se+f )ssessment Auestions
1. What do -ou mean b- EHR. E. 78p*ain N :etai*.
2. C*assi#- the various stages in deve*opment o# Human Resource .ccounting.
3. :iscuss the importance o# HR. in toda->s g*oba*i?ed ,or*d.
!. Write short note on Human Resource Reporting in India.
$. What are the di##erent va*uation mode*s o# HR. %tate their merits and demerits.
1'+
17.. Reference 6oo,s
B ..M. %arma 5200+6 A 9ersonne* N Human Resource Management A Hima*a-a
9ub*ishing
House 2 "e, :e*hi.
B 9. %ubba Rao 5200)6 A 9ersonne* N Human Resource Management A Hima*a-a
9ub*ishing
House A "e, :e*hi.
B :r. G. =. :ave 520016 A %ocia* .ccounting A Renu1a 9ub*isher A Dodhpur.
B Ravi M. Cishore 5200)6 A .dvanced Management .ccounting A ;a8mann 9ub*ication A
"e,
:e*hi.
B 7ric. G. (*amho*t? 51+++6 A .dvances in concepts 2 methods and app*ications A C*u,er
.cademic 9ub*ishers.
1)0
Unit - 1; : Managing 3t$ica+ Issues in
HRM
Structure of
Unit:
1&.0 Objectives
1&.1
Introduction
1&.2 "ature o#
7thics
1&.3 "eed o# 0usiness
7thics
1&.! %ources o#
7thics
1&.$ Importance o#
7thics
1&.& 7thica*
:i*emmas
1&.' Ho, to Manage 7thics at
Wor1p*ace
1&.) 7thica* :ecision
Ma1ing
1&.+ (ive %ources o# 7thica*
%tandards
1&.10 %ummar-3 . (rame,or1 #or 7thica* :ecisionB
Ma1ing
1&.11 %e*# .ssessment
/uestions
1&.12 Re#erence
0oo1s
1;.0 Objectives
.#ter comp*eting this unit2 -ou ,i** have good
understanding o#3
;he nature2 need and sources o# business ethics
;he importance o# ethics
7thica* misconduct in personne* #unction
Ho, to manage ethics
7thica* decision ma1ing
1;.1 Introduction
7thics re#ers to the stud- o# good and evi*2 right and ,rong2 and just and unjust actions o# business
peop*e. 0usiness ethics is the same as the genera**- accepted norms o# good or bad practices.
Human resource management 5HRM6 is the science o# managing peop*e s-stematica**- in
organi?ations. ;he uni<ue individua* actor in the organi?ation B a given e8ecutive2 manager2 *ine
,or1er B is not the #ocus o# HRM2 rather2 human resources practices and po*icies concerning
recurring c-c*es o# sta##ing2 re,ard and compensation2 and per#ormance management in#orm ho,
an-person or group o# peop*e is introduced into the organi?ation2 managed ,hi*e there2 and e8ited
#rom the organi?ation. When these three overarching aspects o# human resource management are
designed e##ective*-2 the organi?ation bene#its #rom a management s-stem that enhances the
sustained competitive advantage o# the organi?ation. . critica* part o# designing theseaspects
e##ective*- re<uires consideration o# ethica* concerns at each stage. %ta##ing is comprised o#
s-stems designed to recruit and se*ect emp*o-ees to underta1e re<uired ro*es in the organi?ation.
;he purpose o# recruiting is to provide the organi?ation ,ith a group o# candidates *arge enough
#or the organi?ation to se*ect the <ua*i#ied emp*o-ees that it needs. "eeds are #orma*i?ed b- 516
job or position descriptions2 ,hich are ,ritten statements o# content and organi?ationa* *eve* o#
the jobA and 526 hiring speci#ication2 ,hich detai*s bac1ground2 e8perience2 and s1i**s re<uirements.
1;.2 0ature of 3t$ics
0usiness ethics does not di##er #rom genera**- accepted norms o# good or bad practices. I#
dishonest- is considered to be unethica* and immora* in the societ-2 then an- business person
,ho is dishonest ,ith his
1)1
or her emp*o-ees2 customers2 shareho*ders or competitors is an unethica* and immora* person. I#
protecting others #rom an- harm is considered to be ethica*2 then a compan- ,hich reca**s a
de#ective or harm#u* product #rom the mar1et is an ethica* compan-. ;,o theories are important
,hen one considers nature o# ethics.
;he theor- o# mora* unit- essentia**- advocates the princip*e that business actions shou*d be
judged b- the genera* ethica* standards o# the societ-. ;here e8ists on*- one set o# ethica*
standards ,hich app*ies to business and nonBbusiness situations.
Opposite to this is the theor- o# amora*it-2 ,hich argues that a business can be amora*2 and
actions o# business peop*e need not be guided b- genera* ethica* standards. Managers ma- act
se*#ish*- because the mar1et mechanism disti**s their actions into bene#its to shareho*ders and the
societ- at *arge.
)ctivit4
):
1 0rea1 -our c*ass into groups o# three and give each group a stac1 o# 3Bb-B$ inde8 cards
,ith an unethica* situation ,ritten on it. (or e8amp*e2 -ou ma- ,rite2 \@ou have #ound a
ban1 error on -our business]s *ine o# credit and -ou have been charged ^102000 *ess than
-ou shou*d have been.\
One person in the group is the persuader2 tr-ing to convince another person 5the decider6 to
ma1e the unethica* choice. ;he third person is the observer2 ,ho ,atches ho, the
persuader persuades and the decider decides. .#ter a #e, minutes2 have the groups dra,
another card and s,itch ro*es.
;his activit- ,i** teach the subjective nature o# ethics2 emphasi?ing through discussion that
unethica* behavior can be spun as ethica* and vice versa.
1;." 0eed of 6usiness 3t$ics
;he need o# business ethics can be e8p*ained ,ith the he*p o# the #o**o,ing
points3B
'1( Introducing Socia+ism in 6usiness: ;his means the gains o# business must be shared b-
a** concerned and not just b- o,ner o# business. 9ro#it is the resu*t o# group e##orts and
hence a** concerned must share the same. In other ,ords2 the concept o# socia*ism in
business sa- that ,or1ers2 shareho*ders2 consumers a** others ,ho contribute to the
success o# the business must share its gain.
'2( Interest of Industr4: 0usiness ethics are re<uired to protect the interest o# sma** business
#irms.
0ig #irms norma**- tr- to dominate and eradicate sma** #irms. I# industr- #o**o,s code o#
conduct2 sma** #irms can #ight #or their e8istence and sta- in the business #or *ong.
'"( 6u4ers Mar,et: In recent times2 structura* changes have ta1en p*ace in the concept o#
business.
In case o# man- products2 se**ers mar1et has been converted into bu-ers mar1et. 4nder
such changed business conditions business ethics is needed to stress the importance o#
consumer satis#action and service orientation in p*ace o# pro#it orientation.
'/( 6etter Re+ations >it$ Societ4: Code o# conduct resu*ts in better re*ations bet,een
business and societ-. It ,i** reconci*e con#*icting interest o# various sections o# the societ-
such as ,or1ers2 shareho*ders2 consumers2 distributors2 supp*iers2 competitors and
government.
'7( )dvantages to 6usiness and Societ4: 7thics point out ,hat is good and bad2 so a*so
,hat is
1)2
right or ,rong. It brings to the notice o# the business communit- the importance o#
honest-2 sincerit-2 #airness ,hich ma1es them a*ert and socia**- conscious.
In the #ina* ana*-sis2 business ethics he*p the business and societ- at *arge. It ensures hea*th-
atmosphere in business ,hich ensures improvement in socia*2 economic and cu*tura* va*ues o# the
societ-.
1;./ Sources of 3t$ics
HR managers in ever- societ- are in#*uenced b- three repositories o# ethica* va*uesBre*igion2
cu*ture and *a,. ;hese repositories contain uni<ue s-stems o# va*ues that e8ert var-ing degrees o#
contro* overmanagers. . common thread BBB idea o# reciprocit- or mutua* he*p BBB runs through
a** the va*ue s-stems. ;his idea re#*ects the centra* purpose o# a** ethicsB,hich is to bind the vast
majorit- o# individua*s in the societ- into a cooperative ,ho*e. 7thica* va*ues constitute a
mechanism that contro*s behavior in HR situations and in other ,a*1s o# *i#e. 7thics driven
restraints are more e##ective than restrictive contro*s such as po*ice2 *a, suits or economic
incentives. 7thica* va*ues channe*i?e the individua* energies into pursuits that are benign to others
and bene#icia* to the societ-.
It is a code o# conduct that is supposed to a*ign behaviors ,ithin an organi?ation and the socia*
#rame,or1. 0ut the <uestion that remains is2 ,here and ,hen did business ethics come into
being
It is #or this reason ,e do not have uni#orm or comp*ete*- simi*ar standards across the g*obe.
;hese three #actors e8ert in#*uences to var-ing degrees on humans ,hich u*timate*- get re#*ected
in the ethics o# the organi?ation. (or e8amp*e2 ethics #o**o,ed b- In#os-s are di##erent than those
#o**o,ed b- Re*ianceIndustries or b- ;ata group #or that matter. .gain ethica* procedures var-
across geographic boundaries.
Re+igion
It is one o# the o*dest #oundations o# ethica* standards. Re*igion ,ie*ds var-ing in#*uences across
various sects o# peop*e. It is be*ieved that ethics is a mani#estation o# the divine and so it dra,s a
*ine bet,een the good and the bad in the societ-. :epending upon the degree o# re*igious
in#*uence ,e have di##erent sects o# peop*eA ,e have sects2 those ,ho are re#erred to as orthodo8
or #undamenta*ists and those ,ho are ca**ed as moderates. "eed*ess to mention2 re*igion e8erts
itse*# to a greater degree among the orthodo8 and to *esser e8tent in case o# moderates.
(undamenta**- ho,ever a** the re*igions such as Hinduism2 0uddhism2 Christianit-2 Is*am2
Dudaism and Con#ucianism2 operate on the princip*e o# reciprocit- to,ards ones #e**o, beings.
!u+tur
e
Cu*ture is a pattern o# behaviors and va*ues that are trans#erred #rom one generation to another2
those that are considered as idea* or ,ithin the acceptab*e *imits. "o ,onder there#ore that it is
the cu*ture that predominant*- determines ,hat is ,rong and ,hat is right. It is the cu*ture that
de#ines certain behavior as acceptab*e and others as unacceptab*e. Cu*ture determines ,hat is
ethica* and ,hat is not. Cu*tura*norms p*a- important ro*e in determining va*ues because
individua*s anchor their conduct in the cu*ture o# the group in ,hich the- be*ong.
Human civi*i?ation in #act has passed through various cu*tures2 ,herein the mora* code ,as
redra#ted depending upon the epoch that ,as. What ,as immora* or unacceptab*e in certain
cu*ture became acceptab*e *ater on and vice versa.
:uring the ear*- -ears o# human deve*opment ,here ones ,ho ,ere the strongest ,ere the ones
,ho survivedU Lio*ence2 hosti*it- and #erocit- ,ere thus the acceptab*e. .ppro8imate*- 102000
-ear ago ,hen human civi*i?ation entered the sett*ement phase2 hard ,or12 patience and peace
,ere seen as virtues and the ear*ier ones ,ere considered other,ise. ;hese va*ues are sti** pt in
practice b- the managers o#toda-U
%ti** #urther2 ,hen human civi*i?ation ,itnessed the industria* revo*ution2 the ethics o# agrarian
econom- ,as rep*aced b- the *a, pertaining to techno*og-2 propert- rights etc. 7ver since a
tuss*e has ensued bet,een the va*ues o# the agrarian and the industria* econom-U
:a>
=a,s are procedures and code o# conduct that are *aid do,n b- the *ega* s-stem o# the state.
;he- are meant to guide human behavior ,ithin the socia* #abric. ;he major prob*em ,ith the
*a, is that a** the ethica* e8pectations cannot be covered b- the *a, and specia**- ,ith ever
changing outer environment the *a, 1eeps on changing but o#ten #ai*s to 1eep pace. In business2
comp*-ing ,ith the ru*e o# *a, is ta1en as ethica* behavior2 but organi?ations o#ten brea1 *a,s b-
evading ta8es2 compromising on <ua*it-2 service norms etc.
1;.7 Imortance of 3t$ics
Have -ou ever given a thought as to ,h- societies #unction Wh- is it that since ages2 human
beings are ab*e to *ive ,ith each other peace#u**- @es2 there have been certain incidences such
as crimes and ,ars ,hich do disturb the de*icate #abric o# the societ- once in a ,hi*e2 but sti**2 on
a ,ho*e2 peop*e have coB e8isted and survived #or so man- -ears. ;he main reason ,h- humanit-
has survived #or so *ong is due to certain ru*es2 va*ues2 mores and ethics2 ,hich a** o# us abide b-.
Dust imagine2 ,hat ,ou*d happen i# sudden*- ,e ,ere *e#t ,ithout an- sense o# mora*it- or
va*ues. In such a scenario2 no doubt2 chaos ,i** prevai* ever-,here. ;hus2 ethics and va*ues are
the ver- #oundations on ,hich this societ- is standing.
%ame is the case in business. Organi?ations ,hich #o**o, certain business ethics have better
chances o# surviva*2 compared to the ones ,hose on*- goa* is to ma1e pro#its2 even i# the- have to
compromise on a *ot o# things #or that. %o ,hat is the importance o# business ethics Ho, does it
bene#it the business
2rofit
Ma@imi5ation
;he importance o# ethics in business can be understood b- the #act that ethica* businesses tend to
ma1e much more pro#its than the others. ;he reason #or this is that customers o# businesses ,hich
#o**o, ethics are *o-a* and satis#ied ,ith the services and product o##erings o# such businesses.
=et us ta1e an e8amp*e. %uppose2 there is an organi?ation named T@P ,hich manu#actures
cosmetics. T@P great*- be*ieves in the importance o# business ethics. When T@P advertises its
cosmetics in the mar1et2 being an ethica* organi?ation2 it ,i** be ver- truth#u* and honest in its
communication ,ith the probab*e customers.It ,i** te** correct*- about the 1ind o# ingredients it
has used ,hi*e manu#acturing the cosmetics. It ,i** not *ie or e8aggerate about the bene#its or
uses o# its products either. %o the customers2 ,ho bu- its cosmetics2 1no, precise*- ,hat the-
are bu-ing and ho, use#u* that product is going to be #or them. ;his ,a-2 the product ,i** meet
their e8pectations and thus2 satis#- the customers. When customers are satis#ied2 the- ,i**
become *o-a* to the compan- and come bac1 again #or reBpurchasing. ;his ,i** sure*- increase
the pro#its o# the organi?ation. ;hus2 the importance o# business ethics is that it creates *o-a*t- in
customers and ma8imi?es the pro#its.
3fficient Uti+i5ation of 6usiness
Resources
In an organi?ation2 peop*e ,or1ing at the junior *eve*s o#ten emu*ate the ones ,or1ing at the top.
;he same app*ies ,ith ethics too. I# the management or seniors o# an organi?ation #o**o, ethica*
business practices2 i.e2 the- do not bribe to get their ,a- or the- do not cheat the customers2
investors2 supp*iers2 etc.2 the emp*o-ees ,i** #o**o, suit. ;he emp*o-ees too ,i** re#rain #rom
using the o##ice propert- or resources #or persona* bene#its. ;his ,i** resu*t in better and e##icient
uti*i?ation o# the business resources.
!reates *ood>i++ in t$e
Mar,et
.n organi?ation2 ,hich is ,e** 1no,n #or its ethica* practices2 creates good,i** #or itse*# in the
mar1et. Investors or venture capita*ists are more ,i**ing to put their mone- in the businesses
,hich the- can trust. %hareho*ders too2 remain satis#ied ,ith the practices o# ethica* businesses.
;hus2 the importance o#business ethics in creating good,i** and bui*ding *ong term re*ationships2
cannot be denied. .*so2 an ethica*business puts greater va*ue on its emp*o-ees and thus2
emp*o-ees remain *o-a* to such an organi?ation too.
;he chie# goa* o# an- organi?ation is to ma8imi?e its pro#its. ;he importance o# business ethics
can be understood #rom the #act that it he*ps the businesses in achieving its goa* o# pro#it ma1ing
b- creating good,i** #or the business in the mar1et2 increasing its *o-a*t- among the customers2
b- aiding in emp*o-ee retention and b- ma8imum uti*i?ation o# its resources.
1;.; 3t$ica+ &i+emmas
.n ethica* di*emma is a situation ,herein mora* precepts or ethica* ob*igations con#*ict in such a
,a- that an- possib*e reso*ution to the di*emma is mora**- into*erab*e. In other ,ords2 an ethica*
di*emma is an- situation in ,hich guiding mora* princip*es cannot determine ,hich course o#
action is right or ,rong.
%evera* ethica* di*emmas con#ront an HR manager. ;he ethica* di*emmas arise #rom three
sourcesBBB #ace to #ace ethics2 corporate po*ic- ethics2 and #unctiona* area ethics.
1ace -to-face 3t$ics
;hese arise main*- because there is a human e*ement in most business transactions. (or e8amp*e2
a purchasing agent o# a compan- deve*ops persona* re*ationship ,ith sa*es representative ,ho
se**s supp*ies to the compan-. ;he- ma- address one another on #irst name basis2 have *unch
together2 and ta*1 o#ten on phone. . compan-]s best customers ma- be ,e** 1no,n to peop*e in
the production department as it he*ps to ensure that the compan-]s products #it the customer
needs.
!ororate -o+ic4
3t$ics
Companies are o#ten #aced ,ith ethica* di*emmas that a##ect their operations across a**
departments and divisions. (o**o,ing con#*icting situations are t-pica*3
1. @our R N : department has moderni?ed one o# -our products. It is not rea**-] ne, and
improved].
0ut -ou 1no, printing these statements on the pac1age and using it in advertisement ,i**
increase its sa*es. What ,ou*d -ou do
2. @ou have a chance to ,in a big account that ,i** mean a *ot to -ou and -our compan-
assistant recommends sending a co*or te*evision set to his home. What ,ou*d -ou do
.nother issue re*ates to the resu*ts o# emp*o-ment contraction in *abour intensive basic industries
because o# the improved methods o# production. Modern techno*og- has rep*aced o*der methods
o# production ,hich has in turn resu*ted in hundreds being rendered job*ess. ;he issue there#ore
is B g*oba* economic competitiveness or *oca* socia*Bps-cho*ogica* stabi*it-
;he ethica* burden o# deciding corporate po*ic- matters norma**- rests upon a compan-]s HR
management. ;he HR managers and directors are responsib*e #or ma1ing po*icies and
imp*ementing them too.
1unctiona+ -)rea
3t$ics
(unctiona* area o# a business are *i1e*- to con#ront ethica* issues. .ccounting is a critica* #unction
o# an- business. .ccounting statements revea* to the manager and o,ners the #inancia* soundness
o# a compan-.
1)$
Managers2 investors2 regu*ating agencies2 ta8 co**ectors2 and trade unions re*- on accounting data
to ma1e decisions. Honest-2 integrit- and accurac- are abso*ute re<uirements o# the accounting
#unctions.
Mar1eting *ends itse*# to severa* ethica* issues. 9ricing2 promotions2 advertising and product
in#ormation are the areas o# unethica* practices.
7thica* di*emmas crop up in purchasing departments ,here strong pressures are #e*t to obtain the
*o,est possib*e prices #rom supp*iers and ,here supp*iers too #ee* a simi*ar need to bag *ucrative
contracts. 0ribes2 1ic1bac1s2 and discriminator- pricing are temptations to both the parties.
1;.< Ho> to Manage 3t$ics at #or,+ace
;he e##ective management o# ethics is sound business practice. 7mp*o-ees] mora*e is raisedA
bottomB*ine per#ormance is improved2 -our corporate image is enhancedA and customers choose
to #orm business re*ationships ,ith companies that adhere to high standards o# ethica* conduct.
One o# -our 1e- management tas1s is to persuade emp*o-ees to accept -our organi?ation]s ethica*
va*ues. (o**o,ing are some points to consider in managing ethics3
1. Understand t$e 6enefits of 3t$ica+
!onduct.
.** 1e- parties bene#it #rom ethica* conduct ,ithin the organi?ation. 7mp*o-ees ,ho have
con#idence in their management contribute to their organi?ation]s prosperit-. Converse*-2 in an
unethica* c*imate2 emp*o-ee productivit- dec*ines2 creativit- is channe**ed into see1ing ,a-s to
pro#it persona**- #rom the business2 *o-a*t- diminishes2 and absenteeism and sta## turnover
increase. Customers pre#er to be associated ,ith and remain *o-a* to companies that adhere to
codes o# ethica* behavior. %hareho*ders derive up to #i#teen times greater return #rom companies
,ith a dedicated commitment to ethica* conduct.
2. 1ocus on 3t$ica+
!onduct.
When re#erring to codes o# behavior2 the term ]ethica* conduct] is more comprehensive and more
meaning#u* than ]ethics]. ;he best ethica* va*ues and intentions are re*ative*- meaning*ess un*ess
the- generate #air2 just2 and observab*e behaviors in the ,or1p*ace. 7thica* conduct #ocuses on
demonstrated behaviorBdoing2 not just sa-ing.
". &eve+o a !ode of 3t$ica+
!onduct.
;he best ,a- to hand*e ethica* di*emmas is to avoid their occurrence in the #irst p*ace. ;he
process invo*ved in deve*oping a code o# ethica* conduct he*ps to sensiti?e emp*o-ees to ethica*
considerations and minimi?es the *i1e*ihood that unethica* behavior ,i** occur.
/. 2romote 2rocess.
When it comes to managing ethics and2 in particu*ar2 deve*oping a code o# ethica* conduct2 the
journe- is just as important as the destination. Codes2 po*icies2 procedures2 and budgets are
important. %o2 too2 is the process o# re#*ection and dia*ogue that produces those de*iverab*es.
Where possib*e use group decision ma1ing to active*- invo*ve participation in2 and o,nership o#2
the #ina* outcome.
7. :in, 3t$ics to Ot$er Management
2ractices.
;he deve*opment o# a code o# ethica* conduct shou*d not occur in iso*ation. ;he creation o# a
va*ues statement2 #or e8amp*e2 shou*d occur as part o# a strategic p*anning process. . *in1 to
ethica* conduct #its
1)&
idea**- ,ith this process. %imi*ar*-2 an- discussion about personne* po*icies cou*d a*so re#*ect
ethica* va*ues as the- app*- to the organi?ation]s cu*ture.
;. &emonstrate 3t$ica+
2ractices.
;he best ,a- #or an organi?ation to gain a reputation #or operating ethica**- is to demonstrate that
behaviorB the most important ,a- to remain ethica* is to be ethica*. .nd the best advertisement
-our ethics management program can have is ever-one]s commitment to it. 0e prepared #or an
increase in the number o# ethica* issues to be dea*t ,ith. .s sta## becomes increasing*- a,are o#
the importance o# ethics management2 it is to be e8pected that more issues ,i** be identi#ied. ];he
most damaging thing is #or management to come out ,ith a code o# ethics2 or a va*ue statement2
and mode* a di##erent t-pe o# behavior.]
<. )++ocate Ro+es and
Resonsibi+ities.
;he approach ,i** var- according to the organi?ation2 but an appropriate structure cou*d inc*ude
the #o**o,ing3
.n ethics management committee2 representing the entire organi?ation2 ,ith
responsibi*ities to inc*ude imp*ementing and administering an ethics management
program. ;he creation and monitoring o# a code o# ethica* conduct ,ou*d be part o# that
overa** program.
.n ethics o##icer ,ho idea**- shou*d be a senior e8ecutive but not #rom HR or the =ega*
:epartment.
He or she must be trained in matters o# ethics in the ,or1p*ace and have u*timate
responsibi*it- #or managing the program.
:emonstrated invo*vement and support o# top management. %ta## and 0oard must see that
senior management ta1es ethica* conduct serious*-.
.. Identif4 and Mode+ Industr4
6enc$mar,s.
.n increasing number o# companies strive to match practices ,ith espoused va*ues. ;he %ou* o# a
0usiness2 #or e8amp*e2 is an account o# the ,a- in ,hich ethica* considerations guided the da-BtoB
da- operations o# the .merican compan-2 ;om]s o# Maine. One o# the compan-]s stated va*ues
,as its commitment to the hea*th o# the environment. ;he compan-2 there#ore2 used g*ass
containers instead o# p*astic2 even though p*astic ,as cheaper to purchase2 *abe*2 and ship. ;om]s
o# Maine ,as a*so committed to supporting its regiona* econom-. On*- ,hen it cou*dn]t purchase
a resource in its *oca* area ,ou*d ;om]s go #arther a#ie*d. ;his demonstrated commitment to
espoused va*ues contributed to the compan-]s gro,th and pro#itabi*it- and inspired others to
#o**o, its *ead.
1;.. 3t$ica+ &ecision-Ma,ing
Here is a short guide to he*p -ou thin1 through ethica* issues and ma1e e##ective
decisions.
1. Is it an 3t$ica+ Issue%
0eing ethica* does not a*,a-s mean #o**o,ing the *a,. .nd just because something is possib*e
doesn]t mean it is ethica*2 hence the g*oba* debates about bioBtechno*og- advances such as
c*oning. .nd ethics and re*igion do not a*,a-s concur.
;his is perhaps the tric1iest stage in ethica* decision ma1ing2 as sometimes the subt*eties o# the
issue are above and be-ond our 1no,*edge and e8perience. =isten to -our instincts B i# it #ee*s
uncom#ortab*e ma1ing the decision on -our o,n2 get others invo*ved and use their co**ective
1no,*edge and e8perience
to ma1e a more considered
decision.
1)'
2. *et t$e 1acts
What do -ou 1no,2 and just as important*-2 ,hat don]t -ou 1no, Who are the peop*e a##ected
b- -our decision Have the- been consu*ted What are -our options Have -ou revie,ed -our
options ,ith someone -ou respect
". 3va+uate )+ternative
)ctions
;here are di##erent ethica* approaches ,hich ma- he*p -ou ma1e the most ethica*
decision. a. 4ti*itarian .pproach B ,hich action resu*ts in the most good and
*east harm
b. Rights 0ased .pproach B ,hich action respects the rights o# ever-one invo*ved
c. (airness or Dustice .pproachB ,hich action treats peop*e #air*-
d. Common Good .pproach B ,hich action contributes most to the <ua*it- o# *i#e o# the
peop*e a##ected
e. Lirtue .pproach B ,hich action embodies the character strengths -ou va*ue
/. 9est Eour
&ecision
Cou*d -ou com#ortab*- e8p*ain -our decision to -our mother ;o the man in the street On
te*evision I# not2 -ou ma- have to reBthin1 -our decision be#ore -ou ta1e action.
7. 8ust &o It - but >$at did 4ou
+earn%
Once -ou]ve made the decision2 then don]t ,aste time in imp*ementing it. %et a date to revie,
-our decision and ma1e adjustments i# necessar-. O#ten decisions are made ,ith the best
in#ormation to hand at the time2 but things change2 and -our decision ma1ing needs to be #*e8ib*e
enough to change too.
1;.? 1ive Sources of 3t$ica+
Standards
1. 9$e Uti+itarian
)roac$
%ome ethicists emphasi?e that the ethica* action is the one that provides the most good or does
the *east harm2 or2 to put it another ,a-2 produces the greatest ba*ance o# good over harm. ;he
ethica* corporate action2 then2 is the one that produces the greatest good and does the *east harm
#or a** ,ho are a##ectedB customers2 emp*o-ees2 shareho*ders2 the communit-2 and the
environment. 7thica* ,ar#are ba*ances the good achieved in ending terrorism ,ith the harm done
to a** parties through death2 injuries2 and destruction. ;he uti*itarian approach dea*s ,ith
conse<uencesA it tries both to increase the good done and to reduce the harm done.
2. 9$e Rig$ts
)roac$
Other phi*osophers and ethicists suggest that the ethica* action is the one that best protects and
respects the mora* rights o# those a##ected. ;his approach starts #rom the be*ie# that humans have
a dignit-based on their human nature per se or on their abi*it- to choose #ree*- ,hat the- do ,ith
their *ives. On the basis o# such dignit-2 the- have a right to be treated as ends and not mere*- as
means to other ends. ;he *ist o# mora* rights Binc*uding the rights to ma1e one]s o,n choices
about ,hat 1ind o# *i#e to *ead2 to be to*d the truth2 not to be injured2 to a degree o# privac-2 and
so onBis ,ide*- debatedA some no, argue that nonB humans have rights2 too. .*so2 it is o#ten said
that rights imp*- dutiesBin particu*ar2 the dut- to respect others] rights.
". 9$e 1airness or 8ustice
)roac$
.ristot*e and other Gree1 phi*osophers have contributed the idea that a** e<ua*s shou*d be treated
e<ua**-.
1))
;oda- ,e use this idea to sa- that ethica* actions treat a** human beings e<ua**-Bor i# une<ua**-2
then #air*- based on some standard that is de#ensib*e. We pa- peop*e more based on their harder
,or1 or the greater amount that the- contribute to an organi?ation2 and sa- that is #air. 0ut there
is a debate over C7O sa*aries that are hundreds o# times *arger than the pa- o# othersA man- as1
,hether the huge disparit- is based on a de#ensib*e standard or ,hether it is the resu*t o# an
imba*ance o# po,er and hence is un#air.
/. 9$e !ommon *ood
)roac$
;he Gree1 phi*osophers have a*so contributed the notion that *i#e in communit- is a good in itse*#
and our actions shou*d contribute to that *i#e. ;his approach suggests that the inter*oc1ing
re*ationships o# societ- are the basis o# ethica* reasoning and that respect and compassion #or a**
othersBespecia**- the vu*nerab*eB are re<uirements o# such reasoning. ;his approach a*so ca**s
attention to the common conditions that are important to the ,e*#are o# ever-one. ;his ma- be a
s-stem o# *a,s2 e##ective po*ice and #ire departments2 hea*th care2 a pub*ic educationa* s-stem2 or
even pub*ic recreationa* areas.
7. 9$e Birtue
)roac$
. ver- ancient approach to ethics is that ethica* actions ought to be consistent ,ith certain
idea*virtues that provide #or the #u** deve*opment o# our humanit-. ;hese virtues are dispositions
and habits that enab*e us to act according to the highest potentia* o# our character and on beha*#
o# va*ues *i1e truth and beaut-. Honest-2 courage2 compassion2 generosit-2 to*erance2 *ove2
#ide*it-2 integrit-2 #airness2 se*#Bcontro*2 and prudence are a** e8amp*es o# virtues. Lirtue ethics
as1s o# an- action2 \What 1ind o# person ,i** I become i# I do this\ or \Is this action consistent
,ith m- acting at m- best\
2utting t$e )roac$es
9oget$er
7ach o# the approaches he*ps us determine ,hat standards o# behavior can be considered ethica*.
;here are sti** prob*ems to be so*ved2 ho,ever.
;he #irst prob*em is that ,e ma- not agree on the content o# some o# these speci#ic approaches.
We ma- not a** agree to the same set o# human and civi* rights.
We ma- not agree on ,hat constitutes the common good. We ma- not even agree on ,hat is a
good and ,hat is a harm.
;he second prob*em is that the di##erent approaches ma- not a** ans,er the <uestion \What is
ethica*\ in the same ,a-. "onethe*ess2 each approach gives us important in#ormation ,ith ,hich
to determine ,hat is ethica* in a particu*ar circumstance. .nd much more o#ten than not2 the
di##erent approaches do *ead to simi*ar ans,ers.
Ma,ing 3t$ica+ &ecisions
Ma1ing good ethica* decisions re<uires a trained sensitivit- to ethica* issues and a practiced
method #or e8p*oring the ethica* aspects o# a decision and ,eighing the considerations that
shou*d impact our choice o# a course o# action. Having a method #or ethica* decision ma1ing is
abso*ute*- essentia*. When practiced regu*ar*-2 the method becomes so #ami*iar that ,e ,or1
through it automatica**- ,ithout consu*ting the speci#ic steps.
;he more nove* and di##icu*t the ethica* choice ,e #ace2 the more ,e need to re*- on discussion
and dia*ogue ,ith others about the di*emma. On*- b- care#u* e8p*oration o# the prob*em2 aided b-
the insights and di##erent perspectives o# others2 can ,e ma1e good ethica* choices in such
situations.
We have #ound the #o**o,ing #rame,or1 #or ethica* decision ma1ing a use#u* method #or
e8p*oring ethica* di*emmas and identi#-ing ethica* courses o# action.
1;.10 Summar4: ) 1rame>or, for 3t$ica+ &ecision-Ma,ing
Recogni5e an 3t$ica+ Issue
1. Cou*d this decision or situation be damaging to someone or to some group :oes this
decision invo*ve a choice bet,een a good and bad a*ternative2 or perhaps bet,een t,o
\good\ or bet,een t,o \bad\
2. Is this issue about more than ,hat is *ega* or ,hat is most e##icient I# so2 ho,
*et t$e 1acts
3. What are the re*evant #acts o# the case What #acts are not 1no,n Can I *earn more
about the situation :o I 1no, enough to ma1e a decision
!. What individua*s and groups have an important sta1e in the outcome .re some concerns
more important Wh-
$. What are the options #or acting Have a** the re*evant persons and groups been consu*ted
Have
I identi#ied creative options
3va+uate )+ternative )ctions
&. 7va*uate the options b- as1ing the #o**o,ing <uestions3
Which option ,i** produce the most good and do the *east harm 5;he 4ti*itarian
.pproach6
Which option best respects the rights o# a** ,ho have a sta1e 5;he Rights .pproach6
Which option treats peop*e e<ua**- or proportionate*- 5;he Dustice .pproach6
Which option best serves the communit-
as a ,ho*e2 not just some member 5;he Common Good .pproach6
Which option *eads me to act as the sort o# person I ,ant to be 5;he Lirtue .pproach6
Ma,e a &ecision and 9est It
'. Considering a** these approaches2 ,hich option best addresses the situation
). I# I to*d someone I respectBor to*d a te*evision audienceB,hich option I have chosen2 ,hat
,ou*d the- sa-
)ct and Ref+ect on t$e Outcome
+. Ho, can m- decision be imp*emented ,ith the greatest care and attention to the concerns
o# a** sta1eho*ders
10. Ho, did m- decision turn out and ,hat have I *earned #rom this speci#ic situation
1;.11 Se+f )ssessment Auestions
1. :e#ine the term 7thics. ;race the sources o# ethics. Wh- is ethics important
2. What are ethica* di*emmas 78p*ain each.
3. Wh- is ethica* decision ma1ing di##icu*t :iscuss.
!. Ho, does HR #unction become invo*ved ,ith business ethics in the organi?ation
$. 78p*ain the various HR ethica* issues
&. What are the di##erent points to be considered in managing ethics in a ,or1p*ace
1;.12 Reference 6oo,s
B C .s,athappa2 Human Resource Managemnet2 ;MH2 (i#th edition.
B (isher2 choen#e*dt2 %ha,.2 Managing Human Resource2 Cengage =earning
B %.%. Chan1a2 Human Resource Managemnet 5;e8t and Case62 %.Chand 9ub*ications.
Unit - 1< : 9$e 1uture of HRM
Structure of
Unit:
1'.0 Objectives
1'.1
Introduction
1'.2 %igni#icance o# Human Resource
Management
1'.3 Ro*e o# HR Managers in 9resent
;imes
1'.! Recent ;rends In
HRM
1'.$ (orces Changing
HRM
1'.& 7merging
Concepts
1'.' Impact o# ;echno*og- on
HRM
1'.) Wor1#orce
;rends
1'.+ 7BHuman Resource
Management
1'.10 Cha**enges be#ore
HRM
1'.11 HRM 9ractices In
India
1'.12 %e*# .ssessment
/uestions
1'.13 Re#erences
0oo1s
1<.0 Objectives
.#ter comp*eting the unit -ou ,i** be ab*e
to3
4nderstand the importance o# HRM in the emerging scenario.
Ro*e o# HR manager in modern time.
(orces a##ecting HRM
Cha**enges #aced in the changed business scenario
Current practices o# HRM in India
1<.1 Introduction
;he importance o# Human Resource Management can be traced bac1 to Ledic agesU @es2 in$he
"hagavad ,ita2 =ord Crishna not on*- ma1es .rjuna spiritua**- en*ightened2 but a*so teaches
him the art o# se*# management2 anger management2 stress management2 con#*ict management2
trans#ormationa* *eadership2 motivation2 goa* setting and man- other aspects ,hich are no,
essentia* parts o# an- HRM curricu*um. Human resource management is a process o# bringing
peop*e and organi?ations together so that the goa*s o# each other are met. ;he ro*e o# HR manager
is shi#ting #rom that o# a protector and screener to the ro*e o# a p*anner and change agent.
9ersonne* directors are the ne, corporate heroes. ;he name o# the game toda- in business is
9ersonne*. "o,ada-s it is not possib*e to sho, a good #inancia* or operating report un*ess -our
personne* re*ations are in order.
1<.2 Significance of Human Resource Management
;he Human Resources 5HR6 #unction provides signi#icant support and advice to *ine
management. ;he attraction2 preservation and deve*opment o# high ca*ibre peop*e are a source o#
competitive advantage #or our business2 and are the responsibi*it- o# HR. Industries in India in
genera* and Human Resources #unction in particu*ar2 ,i** open ne, avenues in #uture. One c*ear
trend concerns joint decision ma1ing. (rom *arge*- paterna*istic e##orts to he*p need- emp*o-ees
so*ve their personne* prob*ems2 industria* organi?ations in India have moved to a joint
consu*tative process o# decision ma1ing ,hich in#*uences emp*o-ees.
;he scope o# Human Resource #unction depends2 to a *arge e8tent2 on its importance in the
organi?ation and the attitude o# the top management to e8ecutives in the HR department. ;he
basic objectives o# Human Resource :epartment o# an organi?ation are an e##ective and e##icient
uti*i?ation o# human resources2 harmonious re*ations among a** emp*o-ees and ma8imum
deve*opment o# individua*s. ;hese objectives are genera**- achieved b- hiring capab*e peop*e2
using their e##orts e##ective*- and encouraging a ,i**ingness to ,or1 1ind o# environment to
achieve organi?ation>s goa*s.
Human Resources manager>s st-*e o# supervision2 his p*ans2 po*icies and procedures have a
signi#icant impact on an individua*>s per#ormance. Changes in HR #unction2 to a *arge e8tent
re#*ect changing needs o# the organi?ation. Changes in the organi?ationa* atmosphere2 hopes and
aspirations o# the ,or1#orce2 and the e8terna* environment a** demand an innovative prob*emB
so*ving approach #rom the personne* department.
;he #unctions o# HR manager in #uture ,i** de#inite*- be enhanced #rom traditiona* areas such as
management o# manpo,er p*anning2 recruitment2 se*ection2 training2 interna* mobi*it- and
,e*#are.
1<." Ro+e of HR Managers in 2resent 9imes
HR Managers toda4 are focusing attention on t$e
fo++o>ing-
a( 2o+iciesB HR po*icies are based on trust2 openness2 e<uit- and consensus.
b( MotivationB Create conditions in ,hich peop*e are ,i**ing to ,or1 ,ith ?ea*2 initiative
and enthusiasmA ma1e peop*e #ee* *i1e ,inners.
c( Re+ationsB (air treatment o# peop*e and prompt redress o# grievances ,hich ,ou*d pave
the ,a- #or hea*th- ,or1Bp*ace re*ations.
d( !$ange )gentB 9repare ,or1ers to accept techno*ogica* changes b- c*ari#-ing doubts.
e( Aua+it4 !onsciousnessB Commitment to <ua*it- in a** aspects o# personne*
administration ,i** ensure success.
:ue to the ne, trends in HR2 in a nutshe** the HR manager shou*d treat peop*e as resources2
re,ard them e<uitab*-2 and integrate their aspirations ,ith corporate goa*s through suitab*e HR
po*icies.
;raditiona**-2 the ro*e o# the Human Resource pro#essiona* in man- organi?ations has been to
serve as the s-stemati?ing2 po*icing arm o# e8ecutive management.
In this ro*e2 the HR pro#essiona* served e8ecutive agendas ,e**2 but ,as #re<uent*- vie,ed as a
road b*oc1 b- much o# the rest o# the organi?ation. ;he ro*e o# the HR manager must para**e* the
needs o#his or her changing organi?ation. %uccess#u* organi?ations are becoming more adaptive2
resi*ient2 <uic1 to change direction and customerBcentered. Within this environment2 the HR
pro#essiona*2 ,ho is considered necessar- b- *ine managers2 is a strategic partner2 an emp*o-ee
sponsor or advocate and a change mentor.
Strategic
2artner
In toda->s organi?ations2 to guarantee their viabi*it- and abi*it- to contribute2 HR managers need
to thin1 o# themse*ves as strategic partners. In this ro*e2 the HR person contributes to the
deve*opment o# and the accomp*ishment o# the organi?ationB,ide business p*an and objectives.
;he HR business objectives are estab*ished to support the attainment o# the overa** strategic
business p*an and objectives. ;he tactica* HR representative is deep*- 1no,*edgeab*e about the
design o# ,or1 s-stems in ,hich peop*e succeed and contribute. ;his strategic partnership
impacts HR services such as the design o# ,or1 positionsA hiringA re,ard2 recognition and
strategic pa-A per#ormance deve*opment and appraisa* s-stemsA career and succession p*anningA
and emp*o-ee deve*opment.
3m+o4ee )dvocate
.s an emp*o-ee sponsor or advocate2 the HR manager p*a-s an integra* ro*e in organi?ationa*
success via his 1no,*edge about and advocac- o# peop*e. ;his advocac- inc*udes e8pertise in ho,
to create a ,or1 environment in ,hich peop*e ,i** choose to be motivated2 contributing2 and
happ-.
(ostering e##ective methods o# goa* setting2 communication and empo,erment through
responsibi*it-2 bui*ds emp*o-ee o,nership o# the organi?ation. ;he HR pro#essiona* he*ps
estab*ish the organi?ationa* cu*ture and c*imate in ,hich peop*e have the competenc-2 concern
and commitment to serve customers ,e**.
In this ro*e2 the HR manager provides emp*o-ee deve*opment opportunities2 emp*o-ee assistance
programs2 gain sharing and pro#itBsharing strategies2 organi?ation deve*opment interventions2 due
process approaches to prob*em so*ving and regu*ar*- schedu*ed communication opportunities.
!$ange
)gent
9eop*e o#ten resist change. .signi#icant change occurs ,hen an individua* moves #rom his home
environment to ,or1 environment2 or ,hen there is a transition #rom a traditiona* ,or1 method
to an advanced techno*ogica* method. ;echno*ogica* advancement brings about changes ,hich a
,or1er ma- resist. .t this point2 the personne* manager has a crucia* ro*e to p*a-. He has to
convince ,or1ers o# the need #or automation and prepare them to accept changes ,e** be#ore the-
are introduced. Imp*ementation is main*- a method o# getting ne, methods and ideas accepted
and used ,ith the *east #riction but ,ith amp*e scope o# improvement. Hence changes shou*d be
phased gradua**- and thought#u**- ,ithout provo1ing negative reactions #rom the ,or1ers.
;he constant eva*uation o# the e##ectiveness o# the organi?ation resu*ts in the need #or the HR
pro#essiona* to #re<uent*- support change. 0oth 1no,*edge about and the abi*it- to e8ecute
success#u* change strategies ma1e the HR pro#essiona* e8ceptiona**- va*ued. Cno,ing ho, to *in1
change to the strategic needs o#the organi?ation ,i** minimi?e emp*o-ee dissatis#action and
resistance to change.
;he HR pro#essiona* contributes to the organi?ation b- constant*- assessing the e##ectiveness o#
the HR #unction. He a*so sponsors change in other departments and in ,or1 practices. ;o
promote the overa** success o# his organi?ation2 he supports the identi#ication o# the
organi?ationa* mission2 vision2 va*ues2 goa*s and action p*ans. (ina**-2 he he*ps determine the
measures that ,i** te** his organi?ation ho,,e** it is succeeding in a** o# this.
)ctivit4 ):
9repare the activit- report o# an HR manager o# a compan- 1no,n #or its proactive HR
9ractices.
1<./ Recent 9rends In HRM
Over the -ears2 high*- s1i**ed and 1no,*edge based jobs are increasing ,hi*e *o, s1i**ed jobs are
decreasing. ;his ca**s #or #uture s1i** mapping through proper HRM initiatives. Indian
organi?ations are a*so ,itnessing a change in s-stems2 management cu*tures and phi*osoph- due
to the g*oba* a*ignment o# Indian organi?ations. ;here is a need #or mu*ti s1i** deve*opment. Ro*e
o# HRM is becoming a** the more important.
%ome o# the recent trends that are being observed are as
#o**o,s3
;he recent <ua*it- management standards ISO ?001 and ISO ?00/ o# 2000 #ocus more
on peop*e centric organi?ations. Organi?ations no, need to prepare themse*ves in order to
address peop*e centered issues ,ith commitment #rom the top management2 ,ith rene,ed
thrust on HR issues2 more particu*ar*- on training.
;o move ahead o# competition in this ,or*d o# uncertaint-2 organi?ations have introduced
si@- sigma ractices. %i8B sigma uses rigorous ana*-tica* too*s ,ith *eadership #rom the
top and deve*ops a method #or sustainab*e improvement. ;hese practices improve
organi?ationa* va*ues and he*ps in creating de#ect #ree product or services at minimum
cost.
Human resource outsourcing is a ne, accession that ma1es a traditiona* HR
department redundant in an organi?ation. 78u*t2 the internationa* pioneer in HR 09O has
a*read- roped in 0an1 o#.merica2 internationa* p*a-ers 09.moco N over the -ears p*an
to spread their business to most o# the (ortune $00 companies.
With the increase o# g*oba* job mobi*it-2 recruiting competent peop*e is a*so increasing*-
becoming di##icu*t2 especia**- in India. ;here#ore b- creating an enab+ing cu+ture2
organi?ations are a*so re<uired to ,or1 out a retention strateg4 #or the e8isting s1i**ed
manpo,er.
1<.7 1orces !$anging HRM
In the 1++0s severa* #orces ,ere shaping the broad #ie*d o# HRM. ;he #irst 1e- #orce2 ne,
techno*ogiesJ particu*ar*- in#ormation techno*og-Jbrought about the decentra*i?ation o#
communications and the sha1eB up o# e8isting paradigms o# human interaction and organi?ationa*
theor-. %ate**ite communications2 computers and net,or1ing s-stems2 #a8 machines2 and other
devices ,ere #aci*itating rapid change. Moreover2 since these techno*ogies he*ped b*ur the *ines
bet,een ,or1 time and persona* time b- enab*ing emp*o-ees to ,or1 at home2 Human Resource
Management pro#essiona*s began adopting EManagement b4 ObjectiveF approaches to human
resources instead o# the traditiona* Emanagement b4 Sig$tF method.
. second important change a##ecting HRM ,as ne, organi?ationa* structures that began to
emerge during the 1+)0s and continued through the 1++0s. 0ecause man- companies began
e8panding their operations and diversi#-ing their products and services2 the centra* decision-
ma,ing s-stem #ai*ed to respond <uic1*- enough to managers> needs and concerns. ;here#ore2
companies started scrapping traditiona*2 hierarchica* organi?ationa* structures in #avor o# #*atter2
decentra*i?ed management s-stems. Conse<uent*-2 #e,er managers ,ere invo*ved in the
decisionBma1ing process and companies ,ere adopting more o# a team approach to management.
HRM pro#essiona*s2 as the agents o# change2 ,ere charged ,ith reorgani?ing ,or1ers and
increasing their e##icienc-. ;hese e##orts a*so resu*ted in the pro*i#eration o# partBtime2 or
contract2 emp*o-ees2 ,hich re<uired human resource strategies that contrasted ,ith those
app*icab*e to #u** time ,or1ers.
. third change #actor ,as acce*erating mar1et g+oba+i5ation- ,hich ,as increasing competition
and demanding greater per#ormance out o# ,or1ers2 o#ten at diminished *eve*s o# compensation.
;o compete abroad2 companies ,ere *oo1ing to their HRM pro#essiona*s to enhance initiatives
re*ated to <ua*it-2 productivit-2 and innovation.
Other #actors changing HRM inc*ude3 an acce*erating rate o# change and turbu*ence2 resu*ting in
higher emp*o-ee turnover and the need #or more responsive2 openBminded ,or1ersA rapid*-
changing demographicsA and increasing income disparit- as the demand #or high*- educated
,or1ers increases at the e8pense o# *o,erB,age emp*o-ees.
1<.; 3merging !oncets
O# *ate2 a number o# ne, concepts have emerged in the management #ie*d to improve the overa**
e##ectiveness o# the organi?ations. ;he HR manager not on*- has to 1no, them ,e** but has to
prepare himse*#Iherse*# to imp*ement some o# these ne, ideas.
1. 9ota+ Aua+it4
Management
9$e concet of ;/M is based on the 1! princip*es o# :eming that dea* ,ith this subject.
:eming ,as born and brought up in 4%.and migrated to Dapan in the ear*- $0>s2 ,here he
evo*ved these tota* <ua*it- princip*es. ;/M is a cu*ture based on the rea*i?ation that the high
<ua*it- o# products and services and associated customer satis#action are the 1e-s to
organi?ationa* surviva*.
.t its core2 ;ota* /ua*it- Management 5;/M6 is a management approach to *ongBterm success
through customer satis#action.
In a ;/M e##ort2 a** members o# an organi?ation participate in improving processes2 products2
services and the cu*ture in ,hich the- ,or1.
;he methods #or imp*ementing this approach come #rom the teachings o# such <ua*it- *eaders as
9hi*ip 0. Crosb-2 W. 7d,ards :eming2 .rmand L. (eigenbaum2 Caoru Ishi1a,a and Doseph M.
Duran.!
. core concept in imp*ementing ;/M is :eming>s 1! points2 a set o# management practices to
he*p companies increase their <ua*it- and productivit-3
1. Create constanc- o# purpose #or improving products and services.
2. .dopt the ne, phi*osoph-.
3. Cease dependence on inspection to achieve <ua*it-.
!. 7nd the practice o# a,arding business on price a*oneA instead2 minimi?e tota* cost b-
,or1ing ,ith a sing*e supp*ier.
$. Improve constant*- and #orever ever- process #or p*anning2 production and service.
&. Institute training on the job.
'. .dopt and institute *eadership.
). :rive out #ear.
+. 0rea1 do,n barriers bet,een sta## areas.
10. 7*iminate s*ogans2 e8hortations and targets #or the ,or1#orce.
11. 7*iminate numerica* <uotas #or the ,or1#orce and numerica* goa*s #or management.
12. Remove barriers that rob peop*e o# pride o# ,or1manship2 and e*iminate the annua* rating
or merit s-stem.
13. Institute a vigorous program o# education and se*#Bimprovement #or ever-one.
1!. 9ut ever-bod- in the compan- to ,or1 accomp*ishing the trans#ormation.
2. )ssessment !entres
.n assessment centre is a comprehensive2 standardi?ed procedure in ,hich mu*tip*e assessment
techni<ues such as situationa* e8ercises and job simu*ation 5business games2 discussions2 reports2
and presentations6 are used to eva*uate emp*o-ees #or a variet- o# manpo,er decisions.
E.n assessment centre consists o# a standardi?ed eva*uation o# behaviour based on mu*tip*e
inputs. %evera* trained observers and techni<ues are used. Dudgments about behaviour are made b-
these specia**- trained observers. .t the end o# the assessment the assessors get together to share
their data ,hich is scienti#ica**- recorded on a set o# eva*uation #orms. ;he- come to a consensus
on the assessments o# each candidate. Most #re<uent*- the approach has been app*ied to
individua*s being considered #or se*ection2 promotion2 p*acement2 or specia* training and
deve*opment in management.
1+&
Histor4 of )ssessment !entres: .ssessment centres methodo*og- is 1no,n to have been used
or recommended at *east 1$00 -ears ago in India as mentioned in Cauti*-a>s .rthashastra.
:i##erent methods o# assessing a candidate #or ministeria* positions have been spe*t out in the
.rthashastra inc*uding3 observation2 per#ormance appraisa*2 assessment b- those ,ho 1ne, him2
intervie,ing2 and other #orms o# testing.
7ar*- app*ication o# assessment centres can be traced to the German mi*itar- assessment
programme deve*oped #or se*ection o# o##icers #or the German .rm-. 0oth mu*tip*e assessment
techni<ues and mu*tip*e assessors to eva*uate comp*e8 behaviour ,ith specia* #ocus on *eadership
,ere used. .ssessment ,as based on subjective opinions and ver- *itt*e rating ,as done.
Ho> are )ssessment !entres &ifferent 0o>%: 7ar*- assessment centres ,ere used essentia**-
#or se*ection purposes since the traditiona* methods ,ere thought to be inade<uate. ;he
assessment centre method since then has been subjected to scrutin- and research much more
than an- other personne* practice.$ 0ecause o# the high <ua*it- research and high reported
va*idit-2 the methodo*og- #inds ,idespread use in a number o# organi?ations. 0esides se*ection2 it
is used #or ear*- identi#ication o# management ta*ent2 promotion2 and diagnosis o# deve*opmenta*
needs.
;he basic purpose o# .ssessment Centre
is3
5a6 Ma1ing se*ection and promotion decisionsA
and
5b6 Identi#- the strengths and ,ea1nesses o# an individua* #or deve*opment
purposes. ;he re<uirements o# .ssessment Centre are *isted be*o,3
1. Mu*tip*e assessment techni<ues must be used *i1e in bas1et e8ercises2 management games2
*eader*ess group discussions2 tests2 persona*it- inventories etc.
2. Mu*tip*e assessors must be used. ;he- can be *ine managers ,ho are t,o to three *eve*s
senior to
the candidate and or pro#essiona* ps-cho*ogists.
3. Dudgment shou*d be based on poo*ing o# in#ormation among assessors.
!. .n overa** eva*uation o# behavior shou*d be made2 separate #rom the observation o#
behavior.
$. %imu*ation e8ercises must be
used.
". Aua+it4
!irc+es
/ua*it- Circ*es are 5in#orma*6 groups o# emp*o-ees ,ho vo*untari*- meet together on a regu*ar
basis to identi#-2 de#ine2 ana*-?e and so*ve ,or1 re*ated prob*ems.
4sua**- the members o# a particu*ar team 5<ua*it- circ*e6 shou*d be #rom the same ,or1 area or
,ho do simi*ar ,or1 so that the prob*ems the- se*ect ,i** be #ami*iar to a** o# them. In addition2
interdepartmenta* or cross #unctiona* <ua*it- circ*es ma- a*so be #ormed.
.n idea* si?e o# <ua*it- circ*e is seven to eight members. 0ut the number o# members in a <ua*it-
circ*e can var-.
9$e Main Objectives of Aua+it4 !irc+es
are
9romote job invo*vement
Create prob*em so*ving capabi*it-
Improve communication
9romote *eadership <ua*ities
9romote persona* deve*opment
:eve*op a greater a,areness #or c*ean*iness
:eve*op greater a,areness #or sa#et-
Improve mora*e through c*oser identit- o# emp*o-ee objectives ,ith organi?ation>s
objectives
Reduce errors.
7nhance <ua*it-
Inspire more e##ective team ,or1
0ui*d an attitude o# prob*em prevention
9romote cost reduction
:eve*op harmonious manager2 supervisor and ,or1er re*ationship
Improve productivit-
Reduce do,ntime o# machines and e<uipment
Increase emp*o-ee motivation
2rob+em So+ving 9oo+s and 9ec$ni=ues Used b4 Aua+it4 !irc+es: Given be*o, are the most
common*- used too*s and techni<ues. ;hese are ca**ed the o*d /C too*s3
0rainstorming.
9areto ana*-sis.
Cause and e##ect diagram 5or #ish bone diagram or Ishi1a,a diagram6.
Histogram.
%catter diagram
%trati#ication
Chec1 sheet
Contro* charts and graphs
0e> A! 9oo+s: /ua*it- circ*es started using additiona* seven too*s as the- started maturing.
;hese are3
1. Re*ations diagram.
2. .##init- diagram.
3. %-stematic diagram or ;ree diagram.
!. Matri8 diagram.
$. Matri8 data ana*-sis diagram.
&. 9:9C 59rocess :ecision 9rogram Chart6.
'. .rro, diagram.
6enefits of A!:
%e*# deve*opment.
9romotes *eadership <ua*ities among participants.
Recognition.
.chievement satis#action.
9romotes groupIteam ,or1ing.
%erves as cementing #orce bet,een managementInonBmanagement groups.
9romotes continuous improvement in products and services.
0rings about a change in environment o# more productivit-2 better <ua*it-2 reduced costs2
sa#et- and corresponding re,ards.
Whi*e some o# the organi?ations have started practicing these ideas2 a *arge number are sti**
,aiting to see the e##ects e*se,here.
Given their signi#icance in <ua*it- improvement and invo*vement o# peop*e2 these ideas sho,
tremendous potentia* #or ,idespread acceptance. ;he HR managers have the responsibi*it- to
educate other managers about bene#its coming #rom them and he*p them imp*ement these ideas.
;he HR manager #aces cha**enge to invo*ve himse*# in a** #unctiona* areas o# an organi?ation. He
,i** need training not on*- in human resources but in production2 mar1eting2 #inance2 etc.2 to
give him a greater understanding o# the prob*ems o# emp*o-ees in various #unctiona* areas.
1<.< Imact of 9ec$no+og4 on
HRM
;echno*ogica* advances in o##ice e<uipment over the past thirt- -ears have enab*ed organi?ations
to improve operating e##iciencies2 improve communications2 reduce costs2 increase their g*oba*
presence2 and gain competitive advantage through the imp*ementation o# in#ormation techno*og-
s-stems.
%ince the 1+&0>s2 In#ormation ;echno*og- has dramatica**- changed the *andscape o# the
,or1p*ace through advances in o##ice e<uipment2 speed o# in#ormation transmission and methods
o# communication. (rom a human capita* perspective2 In#ormation ;echno*og- has a**o,ed
companies and their emp*o-ees to increase e##iciencies2 communicate more rapid*-2 and ,or1
#rom remote *ocations. ;he abi*it- o# the ,or1#orce to per#orm organi?ationa* tas1s #rom a
remote *ocation a*so 1no,n as E;e*ecommutingF has enab*ed emp*o-ees to improve <ua*it- o#
*i#e and manage the pro#essiona* and persona* aspects o# their *ives.
(rom an operationa* perspective2 investments in In#ormation ;echno*og- b- organi?ations ,i**ing
to embrace techno*og- have resu*ted in increased e##iciencies2 cost reductions2 g*oba* e8pansion2
improved intraB compan- and customer communications2 improved reporting and trac1ing
methods2 and increased competitive advantage in the mar1et p*ace.
Computers *oaded ,ith ,ord processing2 spreadsheet ana*-sis and presentation so#t,are programs
have become standard #i8tures on each emp*o-ee>s des1. %ome o# the ,or1#orce became mobi*e2
conducting business outside o# the traditiona* o##ice settings through the use o# 9ersona* :igita*
.ssistants 59:.s62 ce**u*ar phones and *aptop computers. ;he initia* users o# mobi*e techno*og-
,ere sa*espeop*e and e8ecutive managementA ho,ever2 easier access to the internet a**o,ed more
emp*o-ees to become E;e*ecommuters2F ,ho conducted ,or1Bre*ated activities either #rom their
homes or #rom some other remote *ocation.
;echno*ogica* advances in e*ectronic communication ma- continue to decrease the need #or
traditiona* o##ice setting ,hi*e increasing the number o# te*ecommuters. 7*ectronic capabi*ities
,i** a*so continue to a##ect outsourcing2 o##Bshoring and g*oba*i?ation e##orts b- man-
organi?ations.
Co**aboration techno*ogies2 current*- being enhanced b- Microso#t and I0M2 enab*es companies
to conduct Evirtua* meetingsF . In a virtua* meeting2 emp*o-ees #rom remote *ocations conduct
rea*Btime meetings #rom their o,n computers using peerBtoBpeer so#t,are. 9articipants can see one
another on computer screens2 share computer space and ma1e to product designs or contract
documents via a Evirtua* ,hiteboard.F
1<.. #or,force 9rends
a. 9e+ecommuting: ;e*ecommuting is ,or1ing #rom one>s home or some other remote *ocation
outside the compan->s o##ice. ;e*ecommuting o##ers bene#its to both emp*o-ees and companies.
(or emp*o-ees2 te*ecommuting increases <ua*it- o# *i#e b- enab*ing a meshing o# persona* and
pro#essiona* *ives. ;he abi*it- to ,or1 #rom home can assist ,or1ers ,ith chi*dIe*der care issues2
transportation restrictions2 or emp*o-ees ,ho ma- be ph-sica**- unab*e to report to ,or1 on a
dai*- basis due to hea*thBre*ated issues 5e.g.2 need #or regu*ar medica* treatments such as dia*-sis
or chemotherap-6. Other economic bene#its that companies can rea*i?e #rom te*ecommuting
inc*ude productivit-gains2 reduced absenteeism2 reduced emp*o-ee turnover costs2 reduced rea*
estate costs2 and reduced re*ocation costs to name a #e,.
1++
b. *+oba+i5ation: In the #uture2 mu*tinationa* companies 5corporations operating in more than one
countr-6 ma- uti*i?e te*ecommuting to attract *oca* ta*ent that can ,or1 e##ective*- across
internationa* borders through e*ectronic communication. ;raining such Ehome gro,n ta*entF can
a**o, companies to reduce internationa* re*ocation e8penses2 manage competition *eve*s #or
ta*ented resources2 and reduce issues re*ated to ,or1ing in #oreign countries such as persona*
sa#et-2 securit-2 po*itica*2 and regu*ator-issues.
Reducing g*oba*i?ation e##orts through te*ecommuting can he*p to address some o# the issues
re*ated to dea*ing ,ith internationa* ,or1#orces2 such as *anguage barriers2 cu*tura* re*ationship
di##erences2 and time ?one di##erences that o#ten *ead to companies needing to maintain
continuous operations 1no,n as E2!I'F.
c. OutsourcingCOff-s$oring: Outsourcing is de#ined as Eturning over a** or part o# an
organi?ation>s in#ormation s-stems operation to outside contractors or service providersF.
Outsourcing seems to be the ,ave o# the #uture. Man- companies are outsourcing parts o# their
operations in order to move parts o# their businesses o## site in order to #ocus on their core
competencies and tr- to give them an advantage over their peers. One o# the more popu*ar
departments ,hich are outsourced is the Human Resources :epartment. ;his is because most
companies aren>t #ocused on HR and their needs might be better served b- an outside compan-.
;here are advantages and disadvantages to outsourcing this vita* department.
O##shoring re#ers to outsourcing in another countr-. Conceptua**-2 outsourcing and o##Bshoring
can be vie,ed together2 since both invo*ve emp*o-ing individua*s outside o# the organi?ation to
hand*e operationa* ,or1.
;here are some major dra,bac1s to sending operations overseas2 such as a *oss o# domestic
ta*ent2 *oss o# inte**ectua* assets2 decreased *eve*s o# customer satis#action resu*ting #rom
diminished organi?ationa* va*ues that do not trans*ate across cu*tures2 and threats to
organi?ationa* per#ormance
)dvantages of
Outsourcing
a( !ost Savings: ;he main bene#it to outsourcing the HR department is the cost savings
,hich ,i** be associated ,ith such a move. ;hese cost savings can mani#est themse*ves in
severa* ,a-s. Man- times a compan- can get the same *eve* o# service #or *ess cost. ;he-
can then use the savings to reinvest in their business. 0- doing this2 the- might be ab*e to
hire more peop*e or operate more e##icient*- ,hich might put them a step above their
competitors.
b( Regaining 2rimar4 1ocus: Outsourcing a*so a**o,s a compan- to regain its primar-
#ocus. When there is an interna* HR department2 senior management ma- have to spend
some time dea*ing ,ith that department>s issues. ;his is time ,hich might be better spent
on ,hatever business the compan- is in. ;he compan- as a ,ho*e ,i** begin to shi#t
to,ard its primar- business.
&isadvantages of
Outsourcing
a( 3m+o4ee Mora+e: ;here are some dra,bac1s to outsourcing2 ho,ever. ;he biggest
o# these is the mora*e o# the emp*o-ees o# the outsourcing compan-. EOutsourcingF is a
*oaded ,ord ,hich brings connotations o# sending jobs overseas and the *oss o# income.
I# the emp*o-ees aren>t behind the move to an o##site HR department2 there ma- be *ess
productivit- #rom them. .n- compan- considering moving the HR department o## site
shou*d care#u**- gauge the attitude o# the emp*o-ees to get a #ee* #or ho, this ,i** a##ect
them.
b( :oss of 3@ertise: .nother disadvantage to this process is a *oss o# inBhouse
e8pertise. When there is an inBhouse HR department2 an- <uestions re*ated to *abor *a,s
or bene#its can be ans,ered <uic1*- and su##icient*-. I# the HR is done o##Bsite2 it can
cause a de*a- in 1no,ing ho, to proceed in an emp*o-ee issue2 or ,orse2 a manager ma-
act in con#*ict ,ith the *a,2 opening the
compan- up to bigger issues in
the
200
c( Issues >it$ t$e #or,+ace of t$e 1uture: %ecurit- is the main issue #acing
companies ,ith mobi*e ,or1#orces. 7mp*o-ees in the #ie*d2 such as sa*espeop*e or
te*ecommuters2 have access to Emission critica*F data and pose a signi#icant threat to
organi?ationa* s-stems securit-. ;here are numerous potentia* breaches o# securit- re*ated
to mobi*e e*ectronic devices such as 9:.s and *aptop computers that can be misp*aced2
sto*en or damaged. ;he cha**enge #acing I; departments is to protect sensitive compan-
data2 enab*e secure remote access2 and provide userB#riend*- and productive e*ectronic
too*s #or its mobi*e ,or1#orce. I; departments must a*so imp*ement an education process
#or training emp*o-ees not to use unauthori?ed devices or insta** an- unauthori?ed
programs that might threaten the integrit- o# compan- data.
1<.? 3-Human Resource Management
0ature of e-HRM
7BHRM is the re*ative*- ne, term #or this I; supported HRM2 especia**- through the use o# ,eb
techno*og-. ;he major goa*s o# eBHRM are main*- to improve HR>s administrative e##icienc-Ito
achieve cost reduction. "e8t to these goa*s2 internationa* companies seem to use the introduction
o# eBHRM to %tandardi?eI harmoni?e HR po*icies and processes.
;hough eB HRM hard*- he*ped to improve emp*o-ee competences2 but resu*ted in cost reduction
and a reduction o# the administrative burden.
;here is a #undamenta* di##erence bet,een HRI% and eBHR in that basica**- HRI% are directed
to,ards the HR department itse*#. 4sers o# these s-stems are main*- HR sta##. ;hese t-pes o#
s-stems aim to improve the processes ,ithin the HR departments itse*#2 a*though in order to
improve the service to,ards the business. With eBHR2 the target group is not the HR sta## but
peop*e outside this department3 the emp*o-ees and management.
HRM services are being o##ered through an intranet #or use b- emp*o-ees. ;he di##erence bet,een
HRI% and eBHR can be identi#ied as the s,itch #rom the automation o# HR services to,ards
techno*ogica* support o# in#ormation on HR services.
eBHRM is a ,a- o# imp*ementing HR strategies2 po*icies2 and practices in organi?ations through a
conscious and directed support o# andIor ,ith the #u** use o# ,ebBtechno*og-Bbased channe*s. ;he
,ord Mimp*ementing> in this conte8t has a broad meaning2 such as ma1ing something ,or12
putting something into practice2 or having something rea*i?ed. eBHRM2 there#ore2 is a concept B a
,a- o# Mdoing> HRM.
;he eBHRM business so*ution is designed #or human resources pro#essiona*s and e8ecutive
managers ,ho need support to manage the ,or1 #orce2 monitor changes and gather the
in#ormation needed in decisionBma1ing. .t the same time it enab*es a** emp*o-ees to participate
in the process and 1eep trac1 o# re*evant in#ormation.
;he eBHRM business so*ution e8ce*s
in3
Modu*arit-
;he so*ution can be accessed and used in a ,eb bro,ser
%ecurit- o# data2 protected *eve*s o# access to individua* modu*es2 records documents and
their component parts
9arametric and customi?abi*it-
.ccess to archived records and documents
4serB#riend*- inter#ace
Connectivit- ,ith the c*ient>s e8isting in#ormation s-stem 5pa-ro** accounting2 7R92
attendance registration2 document s-stemsO6
Mu*tiB*anguage support
)dvantages o# the eBHRM business
so*ution3
Gradua* imp*ementation
.daptabi*it- to an- c*ient
Co**ection o# in#ormation as the basis #or strategic decisionBma1ing
Integra* support #or the management o# human resources and a** other basic and support
processes ,ithin the compan-
9rompt insight into reporting and ana*-sis
. more d-namic ,or1#*o, in the business process2 productivit- and emp*o-ee satis#action
. decisive step to,ards a paper*ess o##ice
=o,er business costs
e-HR )ctivities
We ta*1 about using techno*og- in HR #unctions. Here ,e #ocus on recruitment2 se*ection2
training2 per#ormance management and compensation.
1. e- Recruitment: eB recruitment strateg- is the integration and uti*i?ation o# internet
techno*og- to improve e##icienc- and e##ectiveness o# the recruitment process. Most companies
understand this and have begun the evo*ution b- integrating eBrecruitment strateg- into their
hiring process.
e-Recruitment Met$ods: Methods o# 7Brecruitment are man-2 among those the more important
ones are3
8ob 6oards: ;hese are the p*aces ,here the emp*o-ers post jobs and search #or
candidates. Candidates become a,are o# the vacancies. One o# the disadvantages is2 it is
generic in nature.
3m+o4er #ebsites: ;hese sites can be o# the compan- o,ned sites2 or a site deve*oped
b- various emp*o-ers. (or an e8amp*e2 :irectemp*o-ers.com is the #irst cooperative2
emp*o-erB o,ned eBrecruiting consortium #ormed b- :irect 7mp*o-ers .ssociation. It is
a non pro#it organi?ation #ormed b- the e8ecutives #rom *eading 4.% corporations.
2rofessiona+ #ebsites: ;hese are #or speci#ic pro#essions2 s1i**s and not genera* in
nature. (or an e8amp*e2 #or HR jobs Human Resource Management sites to be visited *i1e
, , , .s h r m .o r g. ;he pro#essiona* associations ,i** have their o,n site or societ-.
)dvantages of e-Recruitment: eBrecruiting o##ers severa* bene#its to the #irms
practising it
16 Centra*ised
9*at#orm
Co**ects candidate in#ormation in a standard #ormat.
Conso*idate data #rom mu*tip*e recruitment sources.
26 %tream*ine
Wor1#*o,
.utomates ,or1#*o, #rom job re<uisition to comp*etion o# the hiring process.
Captures and #i*es candidate in#ormation and histor- #or #uture retrieva* b- a** users o# the
s-atem.
36 0etter Communication and Increased
9roductivit-
%hares 1no,*edge and in#ormation bet,een hiring team members on*ine in rea* time.
Co**aboration ,ith co**eagues to increase productivit-.
!6 =ess Wastage o#
9aper
7*ectronica**- co**ects and #i*es in#ormation to reduce paper usage.
Reduces manua* administrative ,or1*oad.
$6 Candidates
9oo*
=ocates <ua*i#ied candidates ,ithin a private poo* o# ta*ent ,ith precision.
Centra*i?ed database co**ects and provides candidate in#ormation #or various units and
*ocation.
&6 Centra*ised
Reports
9rovides conso*idated HR reports #or the entire organi?ation.
'6 %ave Cost and
;ime
Improves productivit- and reduces hiring e8penses in the *ong run.
&ra>bac,s of 3-
Recruitment
1( Re=uire being !omuter Savv4: ;he process is restricted ,ithin computer savv-
candidates.
2( :ega+ !onse=uences: .*i1e other recruitment sources this source a*so shou*d be a,are o#
the ,ords used in the advertisements other,ise it ma- *ead to the charge o#
discrimination.
"( Bast 2oo+ of )+icants: ;his bene#its the Organi?ations as ,e** as it is disadvantage to
them a*so. 0ecause the huge database cannot be scanned in depth. 7ither #irst #e,
candidates are ca**ed #or intervie, or the resumes are screened based on some 1e- ,ords.
/( 0on-serious )+icants: =ot o# app*icants #or,ard their resumes just to 1no, their
mar1et va*ue.
7( &isc+osure of Information: Candidates pro#i*e and compan- detai*s are avai*ab*e to
pub*ic. ;he app*icants do not ,ant their emp*o-er to 1no, that the- are *oo1ing #or a
change. 9hone number2 address in#ormation has *ead to man- securit- prob*ems. .gain
the companies do not ,ant their competitors a*,a-s to 1no, the current scenario.
)ctivit4 6:
1. .na*-se the emerging trends in eBrecruitment and prepare the report detai*ing the
cha**enges and opportunities #or the organi?ation.
2. e- Se+ection: 4sua**- it is di##icu*t to decide ,here recruiting ends and se*ection begins. ;he
main purpose o# se*ection process is to distinguish individua*s on the basis o# important
characteristics. In a changing environment2 the speed o# se*ection process becomes ver-
important. ;here are man- #orma* se*ection too*s avai*ab*e to measure app*icants on the
characteristics3
Wor1 %amp*es
%tructured Intervie,s
9ersona*it- inventories
%ituationa* Dudgment ;ests
Cognitive .bi*it- ;ests
eBse*ection process is a paper*ess process ,here e*ectronic documents and in#ormation can be
<uic1*- disseminated nation,ide or ,or*d,ide.
". e- 2erformance Management: eBper#ormance management a*so 1no,n as 0usiness
Inte**igence 50I6 or 0usiness 9er#ormance Management is a gro,ing #ie*d. 4se o# techno*og- in
per#ormance management *eads to increment in productivit-2 enhances competitiveness2 and
motivates emp*o-ees. ;his is possib*e through t,o ,a-s3
5i6 ;echno*og- become a too* to #aci*itate the process o# ,riting revie,s or generating
per#ormance #eedbac1.
5ii6 ;echno*og- ma-#aci*itate measuring individua*>s per#ormance via computer
monitoring activities. 78amp*es here inc*ude mu*tirater appraising that supervisors or team
members generate on*ine2 as ,e** as o#Bthe Hshe*# appraisa* so#t,are pac1ages that a
construct an eva*uation #or a manager.
;echno*og- can be app*ied in severa* ,a-s in per#ormance management. In the #irst p*ace 2
routine jobs can be subject to computeri?ed per#ormance monitoring 5C9M6 s-stem that he*ps
generate per#ormance data. %econd 2 so#t,ares are avai*ab*e that he*ps generate appraisa* #orms.
;hird2 per#ormance management s-stem can be integrated ,ith an overa** enterprise resource
p*anning s-stem 57R96 so#t,are s-stem. ;his he*ps HR pro#essiona* to identi#- high per#ormers2
spot s1i** and competenc- gaps and to ana*-?e pa- re*ative to per#ormance. With this in#ormation
being avai*ab*e2 HR manager can p*an #or training2 coaching and education. (orth2 #irm intranets
and internet ma- a*so he*p per#ormance management process. (i#th2 standBa*one so#t,are
pac1ages are a great he*p in per#ormance management s-stem. ;he greatest bene#its o# appraisa*
so#t,are are the e*imination o# paper,or1 and simp*i#ication o# the *ogistics #or eva*uators2
,or1ers and administrators.
/. e-:earning: eB=earning is the use o# techno*og- to enab*e peop*e to *earn an-time and
an-,here. eB =earning can inc*ude training2 the de*iver- o# justBinBtime in#ormation and guidance
#rom e8perts. 13
eB=earning is *earning that ta1es p*ace in an e*ectronica**- simu*ated environment. eB=earning2
,ebBbased training2 internetBbased training and computerBbased training are the ne8tBgeneration
instruction methods being deve*oped toda-. With eB=earning2 users can immerse themse*ves in a
threeBdimensiona* environment to #urther enhance their *earning e8perience. Moreover2 eB
=earning can be done an-,here and an-time as *ong as the user has the proper hard,are. ;oda-2
eB=earning is #ast becoming a rea*it- through companies *i1e ;rainerso#t and others.
eB=earning can be done using an internet connection2 a net,or12 an intranet2 or a storage dis1. It
uses a variet- o# media *i1e audio2 te8t2 virtua* environments2 video2 and animation. eB=earning2 in
some ,a-s2 is even better than c*assroom *earning methods as it is a oneBonBone *earning method2
it is se*#Bpaced and it has an e8perientia*B*earning #ormat.
.s ,ith an- other #orms o# *earning2 eB=earning depends on its de*iver- method and content to
ensure its success. (or this reason2 eB=earning modu*es have to be interesting2 interactive and
in#ormative inorder to be e##ective. 0ecause it is computerIso#t,are based ho,ever2 eB=earning
has the capabi*it- o# immersing its students comp*ete*- ,ithin an environment most conducive to
*earning. ;his sets it apart #rom c*assroomB st-*e *earning..
)dvantages of e-
:earning
1( :o>er !osts and :arger
!aacit4
With eB=earning2 students don>t have to ph-sica**- attend c*asses2 seminars or training
programs. eB=earning is ,ebBbased and dis1Bbased so participants don>t have to spend a
*ot o# time a,a- #rom their ,or1. ;he- can choose ho, much time or ,hat speci#ic time
to devote to *earning the subject matter o##ered.
. ,ebBbased eB=earning program is a *ot *ess e8pensive to maintain. eB=earning program
operators need on*- maintain the net,or1ing in#rastructure that ,i** de*iver their eB
=earning content to their students and participants. ;his is a sma** investment compared
to ,hat is re<uired to pa- #or instructors and training personne* in c*assroomBst-*e
*earning. Moreover2 participants need not spend mone- on trave* and other e8penses just
to attend seminars and training courses.
eB=earning a*so a**o,s #or more participants than traditiona* *earning methods since the
number o# participants is not constrained b- venue *imitations.
2( !onvenient
:earning
%tudents can #it their *earning activities easi*- ,ith their dai*- routine. ;he- need not *eave
home to participate in an eB=earning program and *earning does not re<uire comp*e8
*ogistics..** a participant needs is a computer2 internet connectivit-2 access to the ,ebB
based server2 and i# necessar-2 the specia* eB=earning so#t,are provided b- the eB=earning
program operators.
"( 3asi+4 Udated and
Ugraded
eB=earning modu*es can be easi*- revised. .ctivities can be easi*- added and incorporated.
;he eB=earning so#t,are can a*so be automatica**- updated b- connecting to the server.
;his is de#inite*- a *ot #aster than retraining pro#essors and reprinting boo1s and
manua*s.1!
C*ass ,or1 can be schedu*ed around persona* and pro#essiona* ,or1
Reduces trave* cost and time to and #rom schoo*
=earners ma- have the option to se*ect *earning materia*s that meets their *eve* o#
1no,*edge and interest
=earners can stud- ,herever the- have access to a computer and Internet
%e*#Bpaced *earning modu*es a**o, *earners to ,or1 at their o,n pace
(*e8ibi*it- to join discussions in the bu**etin board threaded discussion areas at an-
hour2 or visit ,ith c*assmates and instructors remote*- in chat rooms
:i##erent *earning st-*es are addressed and #aci*itation o# *earning occurs through varied
activities
:eve*opment o# computer and Internet s1i**s that are trans#erab*e to other #acets o#
*earner>s *ives
%uccess#u**- comp*eting on*ine or computerBbased courses bui*ds se*#B1no,*edge and
se*#B con#idence and encourages students to ta1e responsibi*it- #or their *earning
&isadvantages of e-:earning
4nmotivated *earners or those ,ith poor stud- habits ma- #a** behind
=ac1 o# #ami*iar structure and routine ma- ta1e getting used to
%tudents ma- #ee* iso*ated or miss socia* interaction
Instructor ma- not a*,a-s be avai*ab*e on demand
%*o, or unre*iab*e Internet connections can be #rustrating
Managing *earning so#t,are can invo*ve a *earning curve
%ome courses such as traditiona* handsBon courses can be di##icu*t to simu*ate
Cno,ing eB*earning advantages and disadvantages he*ps ,ith *earning so#t,are se*ection as ,e**
as on*ine distance *earning programs structure and se*ection. It is important to 1no, the merits
and demerits o# eB *earning to ma1e a decision..
1<.10 !$a++enges before HRM
;he HR Managers o# toda- ma- #ind it di##icu*t because o# the rapid*- changing business
environment and there#ore the- shou*d update their 1no,*edge and s1i**s b- *oo1ing at the
organi?ation>s need and objectives.
1. Managing t$e Bision: Lision o# the organi?ation provides the direction to business
strateg- and he*ps managers to eva*uate management practices and ma1e decisions. %o
vision management becomes the integra* part o# the process o# Man management in times
to come .
2. Interna+ 3nvironment: Creating an environment ,hich is responsive to e8terna* changes2
providing satis#action to the emp*o-ees and sustaining through cu*ture and s-stems is a
cha**enging tas1.
". !$anging Industria+ Re+ations: 0oth the ,or1ers and managers have to be managed b-
the same HRM 9hi*osoph- and this is going to be a di##icu*t tas1 #or the managers o#
tomorro,.
/. 6ui+ding Organi5ationa+ !aabi+it4: 7ven in the adverse circumstances the emp*o-ees
have to be made to *ive in ps-cho*ogica* state o# readiness to continua**- change.
7. 8ob &esign and Organi5ation Structure: Instead o# depending on #oreign concepts ,e
need to #ocus on understanding the job2 techno*og- and the peop*e invo*ved in carr-ing
out the tas1s.
;. Managing t$e :arge #or, 1orce: Management o# *arge ,or1#orce poses the biggest
prob*em as the ,or1ers are conscious o# their rights.
.. 3m+o4ee Satisfaction: Managers shou*d be a,are o# techni<ues to motivate their
emp*o-ees so that their higher *eve* needs can be satis#ied.
?. Modern 9ec$no+og4: ;here ,i** be unemp*o-ment due to modern techno*og- and this
cou*d be corrected b- assessing manpo,er needs and #inding a*ternate emp*o-ment.
10. !omuteri5ed Information S4stem: ;his is revo*utionar- in manageria* decision ma1ing
and is having impact on coordination in the organi?ation.
11. Managing Human Resource Re+ations: .s the ,or1#orce comprises o# both educated
and uneducated2 managing the re*ations ,i** be o# greatcha**enge. One o# the cha**enges
HR managers #ace is issues of u gradation o# the s1i** set through training and
deve*opment in the #ace o# high attrition. Indian companies are recogni?ing their
responsibi*ities to enhance the emp*o-ee>s opportunit- to deve*op s1i**s and abi*ities #or
#u** per#ormance ,ithin the position and #or career advancement.
1<.11 HRM 2ractices In India
IndiaJs !$anging HRM
Hori5on
;he out*oo1 to Human Resource Management in India has ,itnessed seaBchange in *ast t,o
decades. 7conomic *ibera*i?ation in 1++1 created a h-perBcompetitive environment. .s
internationa* #irms entered the Indian mar1et bringing ,ith them innovative and #ierce
competitiveness2 Indian companies ,ere #orced to adopt and imp*ement innovative changes in
their HR practices. Increasing demand #or s1i**ed per#ormers #orced the companies to shi#t #ocus
on attracting and retaining highBper#orming emp*o-ees in a competitive mar1etp*ace.
3m$asis on 3m+o4ees: Human Resource po*icies2 #orming the #rame,or1 #or the cu*ture in the
business management2 create a,areness to,ards the need to achieve the business goa*s in the best
possib*e and
ethica* manner. Indian companies have rea*i?ed that in toda->s competitive business mi*ieu2 the
<ua*it- o# peop*e -ou emp*o- can ma1e a** the di##erence. In the *ast #e, -ears2 the Human
Resource has become a 1e- p*a-er in strategic p*anning H it has come a *ong ,a- #rom traditiona*
HR operations *i1e managing the recruitment process2 hand*ing sta## appraisa*s.
HRM !$a++enges: One o# the cha**enges HR managers #ace is issues o# up gradation o# the s1i**
set through training and deve*opment in the #ace o# high attrition. Indian companies are
recogni?ing their responsibi*ities to enhance the emp*o-ee>s opportunit- to deve*op s1i**s and
abi*ities #or #u** per#ormance ,ithin the position and #or career advancement.
2rogressive HR 2o+icies: ;oda-2 most Indian companies are committed to providing e<ua*
emp*o-ment opportunities #or both men and ,omen. ;he emp*o-ers are increasing*- rea*i?ing
the va*ue o# trained human resource2 especia**- ,omen in India. %ome organi?ations are
changing their HR po*icies to stic1 ,ith their va*uab*e emp*o-ees. M"Cs *i1e 9epsico are
providing #*e8ibi*it- so that #ema*e emp*o-ees at various *i#e stages cou*d bene#it #rom these
po*icies *i1e ,or1ing #rom a di##erent cit-2 sabbatica* #rom corporate *i#e2 and e8tended maternit-
*eave.
3ntrereneurs$i b4 3m+o4ees: India Inc. is encouraging Mintrapreneurs> or emp*o-ees ,ho
have ideas that cou*d potentia**- become a venture. Companies *i1e 9epsico2 "II;2 and .dobe
are active*- promoting practice o# entrepreneurship b- emp*o-ees ,ithin the organi?ation. Human
Resource Management has ta1en a *eading ro*e in encouraging corporate socia* responsibi*it-
activities at a** *eve*s. Companies *i1e Wipro incu*cate corporate socia* responsibi*it- va*ues
amongst its ,or1#orce right at the beginning during the induction process. Corporate
presentations and 1eeping emp*o-ees updated through regu*ar ne,s*etters are the instruments
used b- HR to 1eep emp*o-ees energi?ed about the organi?ation>s socia**- responsib*e initiatives.
Over the *ast decade2 India>s vast manpo,er has p*a-ed an instrumenta* ro*e in its economic
success stor-. Indeed2 the success o# Indian companies is not based on superior access to ra,
materia*s or techno*og- or patents2 but #undamenta**- upon human s1i**s. ;he s-nerg- bet,een
the strategic p*anning and innovative HRM practices ,i** be important as Indian Industries
embar1s itse*# on the g*oba* journe-.
1<.12 Se+f )ssessment Auestions
1. What do -ou understand b- human resource management Wh- is it
needed
2. 78p*ain the ro*e o# HR manager in present
times
3. :iscuss the recent trends or emerging issues in
HRM
!. :iscuss the changing ro*e o# HRM. In ,hich particu*ar business areas HR can p*a- its
ro*e
$. What are the cha**enges #aced b- HR managers in present
time
1<.1" Reference 6oo,s
B .s,athapa.C2 Human Resource Management2 ;MH2 200'2
p.&+$
B Rao2;.L.200!2 9er#ormance Management and .ppraisa* %-stemsJHR ;oo*s #or
G*oba*
Competitiveness2 %age 9ub*ications2 =ondon2 4C2 pp.1'3B++.
B Marchand2:...2 Ciettinger2W.D. and Ro**is2 D.:.2 In#ormation OrientationB;he *in1 to
0usiness
9er#ormance2 O492 O8#ord2 4C2 pp.1'3B+0