Date 15/09/2010 Hariom

INSTITUTE OF CO-OPERATIVE MANAGEMENT

ASSIGNMENT OF UNIT -IV

HUMAN RESOURCE MANAGEMENT

SUBMITTED TO SUBMITTED BY
Mr. Shaizal Batra Akshay Kirtane
Date 15/09/2010 Hariom

CONTENTS
Topic:- Page no.

 Performance appraisal 3
 Potential evaluation 6
 Job evaluation 8
 Wage determination 12
Date 15/09/2010 Hariom

Performance Appraisal

A performance appraisal, employee appraisal, performance review, or

(career) development discussion is a method by which the job performance of
an employee is evaluated (generally in terms of quality, quantity, cost, and time)
typically by the corresponding manager or supervisor. A performance appraisal
is a part of guiding and managing career development. It is the process of
obtaining, analyzing, and recording information about the relative worth of an
employee to the organization. Performance appraisal is an analysis of an
employee's recent successes and failures, personal strengths and weaknesses,
and suitability for promotion or further training. It is also the judgement of an
employee's performance in a job based on considerations other than productivity
alone.

Definition Performance appraisal is a method of evaluating the behaviour of

employees in the workspot, normally including both and quantitative and
qualitative aspects of job performance.it is a systematic and objective way of
evaluating both work-related behaviour and potential of employees.it is a
process that involves determining and communicating to an employee how the
job and ideally, establishing a plant of improvement.2

Contents
1 Aims

2 Methods

3 Criticism

4 See also

5 References

6 Sources

7 External links
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Aims
Generally, the aims of a performance appraisal are to:

Give employees feedback on performance

Identify employee training needs

Document criteria used to allocate organizational rewards

Form a basis for personnel decisions: salary increases, promotions, disciplinary

actions, bonuses, etc.

Provide the opportunity for organizational diagnosis and development

Facilitate communication between employee and administration

Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.

To improve performance through counselling, coaching and development.

Methods
A common approach to assessing performance is to use a numerical or scalar
rating system whereby managers are asked to score an individual against a
number of objectivesattributes. In some companies, employees receive
assessments from their manager, peers, subordinates, and customers, while also
performing a self assessment. This is known as a 360-degree appraisal and
forms good communication patterns.

The most popular methods used in the performance appraisal process include
the following:

Management by objectives

360-degree appraisal

Behavioural observation scale

Behaviourally anchored rating scales

Trait-based systems, which rely on factors such as integrity and

conscientiousness, are also commonly used by businesses. The scientific
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literature on the subject provides evidence that assessing employees on factors

such as these should be avoided. The reasons for this are twofold:

1) Because trait-based systems are by definition based on personality traits, they

make it difficult for a manager to provide feedback that can cause positive
change in employee performance. This is caused by the fact that personality
dimensions are for the most part static, and while an employee can change a
specific behaviour they cannot change their personality. For example, a person
who lacks integrity may stop lying to a manager because they have been caught,
but they still have low integrity and are likely to lie again when the threat of
being caught is gone.

2) Trait-based systems, because they are vague, are more easily influenced by
office politics, causing them to be less reliable as a source of information on an
employee's true performance. The vagueness of these instruments allows
managers to fill them out based on who they want to/feel should get a raise,
rather than basing scores on specific behaviors employees should/should not be
engaging in. These systems are also more likely to leave a company open to
discrimination claims because a manager can makebiaseddecisions without
having to back them up with specific behavioral information.

Criticism
The neutrality of this section is disputed. Please see the discussion on
the talk page. Please do not remove this message until thedispute is
resolved.
Performance appraisals are an instrument for social control. They are annual
discussions, avoided more often than held, in which one adult identifies for
another adult three improvement areas to work on over the next twelve months.
You can soften them all you want, call them development discussions, have
them on a regular basis, have the subordinate identify the improvement areas
instead of the boss, and discuss values. None of this changes the basic
transaction... If the intent of the appraisal is learning, it is not going to happen
when the context of the dialogue is evaluation and judgment.
Date 15/09/2010 Hariom

Employee Evaluation
An organization needs constantly to take stock of its workforce and to assess its
performance in existing jobs for three reasons:

 To improve organizational performance via improving the performance

of individual contributors (should be an automatic process in the case of
good managers, but (about annually) two key questions should be posed:
o what has been done to improve the performance of a person last
year?
o and what can be done to improve his or her performance in the year
to come?).
 To identify potential, i.e. to recognize existing talent and to use that to fill
vacancies higher in the organization or to transfer individuals into jobs
where better use can be made of their abilities or developing skills.
 To provide an equitable method of linking payment to performance where
there are no numerical criteria (often this salary performance review takes
place about three months later and is kept quite separate from 1. and 2.
but is based on the same assessment).

On-the-spot managers and supervisors, not HR staffs, carry out evaluations. The
personnel role is usually that of:

 Advising top management of the principles and objectives of an

evaluation system and designing it for particular organizations and
environments.
 Developing systems appropriately in consultation with managers,
supervisors and staff representatives. Securing the involvement and
cooperation of appraisers and those to be appraised.
 Assistance in the setting of objective standards of evaluation /
assessment, for example:
o Defining targets for achievement;
o Explaining how to quantify and agree objectives;
o Introducing self-assessment;
o Eliminating complexity and duplication.
 Publicizing the purposes of the exercise and explaining to staff how the
system will be used.
 Organizing and establishing the necessary training of managers and
supervisors who will carry out the actual evaluations/ appraisals. Not only
training in principles and procedures but also in the human relations skills
necessary. (Lack of confidence in their own ability to handle situations of
poor performance is the main weakness of assessors.)
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 Monitoring the scheme - ensuring it does not fall into disuse, following
up on training/job exchange etc. recommendations, reminding managers
of their responsibilities.

Full-scale periodic reviews should be a standard feature of schemes since

resistance to evaluation / appraisal schemes is common and the temptation to
water down or render schemes ineffectual is ever present (managers resent the
time taken if nothing else).

Basically an evaluation / appraisal scheme is a formalization of what is done in

a more casual manner anyway (e.g. if there is a vacancy, discussion about
internal moves and internal attempts to put square pegs into 'squarer holes' are
both the results of casual evaluation). Most managers approve merit payment
and that too calls for evaluation. Made a standard routine task, it aids the
development of talent, warns the inefficient or uncaring and can be an effective
form of motivation.
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Job Evaluation

What is job evaluation? what are the different ways in which a

job evaluation can be carried out?

Job evaluation is a systematic assessment of job content. It establishes the worth

of a job in terms of salary or wage compared to other jobs. Many elaborate
schemes have been developed and applied with varying degrees of success.
While some structure is necessary on a project, pay is more likely to be
governed by market conditions, scarcity, individual knowledge, performance or
trade agreements. Job evaluation is the method of ordering jobs or positions
with respect to their value or worth to the organization, and placing them into
job families and zones. Job evaluation is the A formal process by which
management creates a job worth hierarchy within an organization. The two
basic approaches are the market data approach and the job content approach.

The different ways in which a job evaluation can be carried out is

i)Ranking:
This method is one of the simplest to administer. Jobs are compared to each
other based on the overall worth of the job to the organization. The 'worth' of a
job is usually based on judgements of skill, effort (physical and mental),
responsibility (supervisory and fiscal), and working conditions.

Advantages :
 Simple.
 Very effective when there are relatively few jobs to be evaluated (less
than 30). Disadvantages
 Difficult to administer as the number of jobs increases.
 Rank judgements are subjective.
 Since there is no standard used for comparison, new jobs would have to
be compared with the existing jobs to determine its appropriate rank. In
essence, the ranking process would have to be repeated each time a new
job is added to the organization.
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Ranking Methods :

Ordering Simply place job titles on 3x5 inch index cards then order the titles by
relative importance to the organization Weighting.

Paired Comparison

ii)Classification Jobs are classified into an existing grade/category structure or

hierarchy. Each level in the grade/category structure has a description and
associated job titles. Each job is assigned to the grade/category providing the
closest match to the job. The classification of a position is decided by
comparing the whole job with the appropriate job grading standard. To ensure
equity in job grading and wage rates, a common set of job grading standards
and instructions are used. Because of differences in duties, skills and
knowledge, and other aspects of trades and labor jobs, job grading standards are
developed mainly along occupational lines. The standards do not attempt to
describe every work assignment of each position in the occupation covered. The
standards identify and describe those key characteristics of occupations which
are significant for distinguishing different levels of work. They define these key
characteristics in such a way as to provide a basis for assigning the appropriate
grade level to all positions in the occupation to which the standards apply.

Advantages
 Simple.
 The grade/category structure exists independent of the jobs. Therefore,
new jobs can be classified more easily than the Ranking Method.
Disadvantages
 Classification judgments are subjective.
 The standard used for comparison (the grade/category structure) may
have built in biases that would affect certain groups of employees
(females or minorities).
 Some jobs may appear to fit within more than one grade/category.

iii)Factor Comparison A set of compensable factors are identified as

determining the worth of jobs. Typically the number of compensable factors is
small
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5. Examples of compensable factors are:

Skill
Responsibilities
Effort
Working Conditions Next, benchmark jobs are identified. Benchmark jobs
should be selected as having certain characteristics. equitable pay (not overpaid
or underpaid)
range of the factors (for each factor, some jobs would be at the low end of the
factor while others would be at the high end of the factor). This process
establishes the rate of pay for each factor for each benchmark job. Slight
adjustments may need o be made to the matrix to ensure equitable dollar
weighting of the factors. The other jobs in the organization are then compared
with the benchmark jobs and rates of pay for each factor are summed to
determine the rates of pay for each of the other jobs.

Advantages :

The value of the job is expressed in monetary terms.

Can be applied to a wide range of jobs.
Can be applied to newly created jobs. Disadvantages
The pay for each factor is based on judgements that are subjective.
The standard used for determining the pay for each factor may have build in
biases that would affect certain groups of employees (females or minorities).

iv) Point Method A set of compensable factors are identified as determining the
worth of jobs. Typically the compensable factors include the major categories
of:

Skill
Responsibilities
Effort
Working Conditions
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These factors can then be further defined.

1. Skill
 Experience
 Education
 Ability

2. Responsibilities
 Fiscal
 Supervisory

3. Effort
 Mental
 Physical

4. Working Conditions
 Location
 Hazards
 Extremes in Environment

The point method is an extension of the factor comparison method. Each factor
is then divided into levels or degrees which are then assigned points. Each job is
rated using the job evaluation instrument. The points for each factor are
summed to form a total point score for the job. Jobs are then grouped by total
point scores and assigned to wage/salary grades so that similarly rated jobs
would be placed in the same wage/salary grade.

Advantages :

The value of the job is expressed in monetary terms.

Can be applied to a wide range of jobs.
Can be applied to newly created jobs. Disadvantages
The pay for each factor is based on judgements that are subjective.
The standard used for determining the pay for each factor may have build in
biases that would affect certain groups of employees.
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Wage & Salary Determination:-

Definition :-

“A wage payment is essentially the price for a particular commodity .”

By: - Rothschild.

“Wages is the payment to the labour for its assistance to production.”

By: - Harrison.

Principles of wage & salary determination:-

(1). It should be developed keeping in view the interest of the employee

,employer, consumer, community .

(2). It should be stated clearly in writing.

(3). It should be consistent.

(4). It must be sufficiently flexible.

(5). Management should be in use that employees know & understood the wage
policy of the company.

(6). It should be formed in such a manner that it should simply administrate

activity.

(7). It should be reviewed & revised periodically.

Objectives:-

(1). To establish focus & equitable remuneration.

(2). To attract competent personnel.

(3). To retain the present employee.

(4). To improve union management relations.

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(5). To improve public image with company.

Factors affecting wages:-

(2). Ability to pay.

(3). Labour unions.

(4). Productivity.

(5). Cost of living.

(6). Prevailing the wages rates.

(7). Job requirements.

(8). Individual difference in wage rules .(i.e., work experience ,workers age &
potential ,education qualification, hazards involve in the jobs etc,.)

(9). State regulations (Norms & Regulations) .

Method of Wage payment:-

There are two types of method for calculation of wage payment, they are as
follows :-

(1). Time Rate system : formula- Wages = Time taken * Rate prescribed

Advantages :-

(i). Simplicity.

(ii). Certainty of wages.

(iii). Useful in non-standard works.

(iv). Top quality of production.

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Disadvantages :-

(i). Lack of incentive for efficiency.

(ii). Need for more supervision .

(iii). Loss of efficiency.

(iv). Difficult assessment of individual’s work .

(2) Piece Rate system :- formula : Wages = No. of units produced * Rate per
unit .

Advantages :-

(i). Increased production .

(ii). Better employer-employee relationship .

(iii). Maximum utilization of tools & equipment .

(iv). Rise in the standard of living .

Disadvantages :-

(i). Misuse of machine & tools .

(ii). Uncertainty of remuneration .

(iii). Loss of health .

(iv). Loss of the quality of goods .

Process of Wage determination :-

(1). Job analysis.

(2). Job evaluation.

(3). Wage survey .

(4). Developing Wage structure

(5). Wage administration rule

(6). Employee appraisal

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State regulation for wages:-

Minimum wages act 1948

The payment of wage act 1936

Equal remuneration act 1976

Industrial dispute act 1976

Section 529(A) of companies act 1956

Executive compensation:-

(1)straight salary

(2) bonus

(3)employee stock option plan(ESOP)

(4)fringe benefits

Factors for executive compensation:-

(1)complexity of the job

(2)capacity to pay

(3)education and experience

(4)performance

(5)economic environment

(6)legislation
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Essentials for sound wage and salary system:-

(1)internal equity

(2)external competitiveness

(3)built in incentive

(4)link with productivity

(5)maintaining real wages

(6)increment