Human Resouce Management (SEM - V)

TYBMS

HUMAN RESOURCE PLANNING HUMAN RESOURSE PLANNING (HRP):- DEFINATION 1) According to Geisler:- H.R.Planing is the process- including forecasting, developing and controlling-by which a firm ensures that it has the right number of people and right kind at the right places at the right time doing work for which they are economically most useful 2) According to Wendell French- H.R.Planing may be definied as the process of assessing the organizations human resources needs in the light of organizational goals and making plans to ensure that a competent, stable work force is employed. PROCESS OF H.R.P With you expansion of business adoption of complex technology and professional management techniques, the process of human resource planning has assumed great significance. H.R.P consists of the following stages. 1) Analyzing organizational plans and deciding objectives 2) Analyzing factors for manpower requirements a) Demand forecasting- forecasting the overall human resources requirements in accordance with the organizational plans. b) Supply forecasting- obtaining the data and information about the present inventory of human resources and forecast the future changes in present human resource inventory. 3) Developing employment plans 4) Developing human resource plans

1) Analyzing organizational plans and deciding objectives Before undertaking the human resource planning of an organization the short term and long term objectives should be analyzed. The process of human resources planning should start with analyzing the organizational plans. Analysis of organizational plans and programmers help in forecasting the demand for human resources as it provides the quantum of future work activity.

L.S.Raheja college of Arts and Commerce

Human Resouce Management (SEM - V)

TYBMS

The business plan would be a blue print of desired objectives. This objective stated in economic terms, would incorporate the growth rate of the company, diversification plans, market opportunities and government policies. Therefore, human resource planning should meet two requirements. A) It should be directly related to the essential nature of the organization. b) The changes in the selected factor are proportional to changes in the human resources required in the organizational. In the small organization, a human resource planning could be formulated to cover the whole organizational. However In a large organization, size may necessitate human resource planning by separate departments.

2) Analyzing factors for manpower requirements The existing job design and analysis may thoroughly be reviewed keeping view the future capabilities, knowledge, and skills of present employees. The job generally should be designed and analyzed reflecting the future human resource and based on future organizational plans. The factor for manpower requirements can be analyzed by two ways:a) Demand forecasting and b) Supply forecasting. HR DEMAND FORECASTING: DEMAND FORECASTING (DF) is the process of estimating the future quantity and quality of people required. The basis of the forecast must be the annual budget and long term corporate plan, translated into activity levels for each functions and department, In a manufacturing company , the sales budget would be translated into a production plan giving the number and type of products to be produced in each period. From this information, the number of hours to be worked by each skilled category to make the quota for each period would be computed. Once the hours are available, determining the quality and quantity of personnel will be the logical step. Demand forecasting must consider several factors- both external as well as internal. Among the external factors are competition (FOREIGN & DOMESTIC), economic climate, laws and regulatory bodies, changes in technology, and social factors. Internal factors include budget constraints production levels, new products and services organizational structure, and employee separation. DF is common among organizations, though they may not do personnel supply forecasting.
L.S.Raheja college of Arts and Commerce 2

Human Resouce Management (SEM - V)

TYBMS

DF helps: Quantifying the jobs necessary for producing a given number of goods, or offering a given amount of services; Determining what staff-mix is desirable in the future; Assess appropriate staffing levels in different parts of the organization so as to avoid unnecessary costs; Prevent storage of people where and when they are needed most ; Monitor compliance with legal requirements with regard to reservation of jobs.

FORECASTING TECHINQUES vary from simple to sophisticated ones. It may be stated that organizations generally follow more than one technique. Diagram:-

But as per our study syllabus well study the following techniques in detail:

L.S.Raheja college of Arts and Commerce

Human Resouce Management (SEM - V)

TYBMS

Managerial judgment. Delphi technique. Work study technique. Ratio trend analysis.

(1)MANAGERIAL JUDGMENT: This technique is very simple. In this, managers sit together, discuss and arrive at a figure which would be the future demand for labour. The technique may involve a BOTTOM-UP or a TOP-DOWN approach. In the first, line managers submit their departmental proposals to top managers who arrive at the company forecasts. In the TOP-DOWN approach, top managers prepare company and departmental forecasts. The forecasts are reviewed with departmental heads and agreed upon. Neither of these approach is accurate-a combination of the two could yield positive results. In both the approaches managers are provided with broad guidelines. In consultation of HRM department, departmental heads prepare forecasts for their respective departments. Simultaneously top HR managers prepare company forecasts. This technique is used in smaller organizations or in those companies where sufficient data base is not available. (2)DELPHI TECHNIQUE: Named after the ancient GREEK oracle at the city of DELPHI, the Delphi technique is a method of forecasting personnel needs. It solicits estimates of personnel needs from a group of experts, usually managers. The HRP experts act as intermediary, summaries the various responses and report the findings back to the experts. The experts are surveyed again after they receive this feedback. Summaries and surveys are repeated until the experts opinions begin to agree. The agreement reached is the forecast of the personnel needs. The distinguishing feature of the Delphi technique is the interaction among experts. (3)WORK STUDY TECHNIQUE: it can be used when it is possible to apply work measurement to calculate the length of operation and the amount of labour required. The starting point in a manufacturing company is the production budget, prepared I terms of volumes of budgets of productive hours for the company as a whole, or volumes of output for individual departments. The budgets of productive
L.S.Raheja college of Arts and Commerce 4

Human Resouce Management (SEM - V)

TYBMS

ours are then complied using standard hours for direct labour. The standard hours per unit of output are then multiplied by the planned volumes of units to be produced to give the total number of planned hours for the period. This is then divided by the number of actual working hours for an individual operator to show the number of operator required. Allowance will have to be made for absenteeism and idle time. Following is highly simplified example of this procedure. Example:
1. Planned output for next year 2. Standard hours per unit 3. Planned hours for the year 4. Productive hours per man/year (Allowing normal overtime, absenteeism, and Idle time) 5. Number of direct workers required(4/5) 50 2000 20000 units 5 100000

Work study technique for direct workers can be combined with ratio analysis to forecast for indirect workers, establishing the ratio between the two categories. The same logic can be extended to any other category of employees. (4)RATIO TREND ANALYSIS: this is the quickest forecasting technique. The technique involves studying past ratios, say, between the number of workers and sales in an organization and forecasting future ratios, making some allowance for changes in the organization or its methods. The table given below shows how an analysis of actual and forecast ratios, between the number of routine proposals to be processed by an insurance companys underwriting department and the number of underwriters employed could be used to forecast future requirements.

NO OF EMPLOYEES YEAR -3 ACTUAL -2 PRODUCTION INSPECTOR 1500 150 1800

RATIO INSPECTOR : PRODUCTION 1 1 : : 10 10

L.S.Raheja college of Arts and Commerce

Human Resouce Management (SEM - V)

TYBMS

180 LAST YEAR NEXT YEAR FORECAST +2 +3 2000 180 2200* 200+ 2500* 210+ 2750 230+ 1 1 1 1 : : : : 11 11 12 12

HR SUPPLY FORECASTING:
The next logical step for the management is to determine whether it will be able to procure the required number of personnel and the sourced for such procurement. This information is provided by supply forecasting. Supply forecasting measures the number of people likely to be available from within and outside an organization, after making allowance for absenteeism, internal movements and promotions, wastages and changes in hours and other conditions of work. REASONS FOR SUPPLY FORECAST ARE: Helps in quantify number of people and positions expected to be available in future to help the organization realize its plan and meet its objectives. Helps clarify likely staff mixes that will exist in the future. Assess existing staffing levels in different parts of the organization. Prevents storage of people where and when they are most needed. Monitors expected future compliance with legal requirements of job reservation.

The SF covers:o Existing human resources o Internal supply analysis

L.S.Raheja college of Arts and Commerce 6

Human Resouce Management (SEM - V)

TYBMS

o External supply analysis o EXISTING HUMAN RESOURCES: analysis of present employees is greatly facilitated by HR audits. HR audits summaries each employees skill and abilities. The audits of non-managers are called skills inventories and those of the management are called management inventories. Whatever name is used, an inventory catalogues each employees skills and abilities. This summary gives planners a comprehensive understanding of the capabilities found in the organizations workforce. o INTERNAL SUPPLY ANALYSIS: armed with HR audits, planners can proceed with the analysis of internal supply. The techniques used for the purpose are:
I. II. III. IV. V. Inflow and out flow Turnover rate Conditions of work and absenteeism Productivity level Movement among jobs

INFLOW AND OUT FLOW: It is the simplest method to forecast internal

supply.

Table 4.8 provides an analysis of gains and losses of personnel for a particular job, that of a word processor, in a hypothetical organization. The sources of losses and gains are enumerated and projected for a specific time period(e.g a fiscal year).total losses (42) are then subtracted from the current personnel level(250) and total gains are added(22) to determine the expected level of personnel at the
L.S.Raheja college of Arts and Commerce 7

Human Resouce Management (SEM - V)

TYBMS

end of the planning period(230).this figure must be viewed in conjunction with the anticipated demand for word processor, in order to determine whether or not adjustments will equal the demand. A major concern associated with the approach taken in table 4.8 is how the determination of the number of losses(transfer, resignation, discharges, discharges, promotion, and so forth) and gains (promotion and transfer)is made.

TURNOVER RATE: Turnover rate is the traditional and simple method of forecasting internal supply. Stated algebraically, the turnover rate is; Number of separation during one year ------------------------------------------------------- X 100 Avg number of employees during the year

EXAMPLE; if in a year, 30 out of an average force of 150 skilled fitters of a company left,(20% turnover), and this trend continued, then the company will have to recruit 110 fitters during the following year, in order to increase and hold the labour force at 200 in that year(50 extra fitters, plus 40 to replace 20% separations of the average 200 fitters employed, plus 20% to replace separations of the 90% recruits.)

CONDITIONS OF WORK AND ABSENTEEISM: changes in conditions of work such a normal weekly working hours, overtime policies, the length and timing of holidays, retirement policy, the policy for employing part timers and shift systems need to be assessed. Absenteeism is understood as unauthorized absence from work. Stated differently, it amounts to absenteeism when an employee is scheduled to work but fails to report for the duty. Algebraically, absenteeism is calculated thus:

Number of persons days lost -------------------------------------------------------------------- X 100

L.S.Raheja college of Arts and Commerce 8

Human Resouce Management (SEM - V)

TYBMS

Avg number of persons x no of working days

The effect of absenteeism on future supply of labour should be allowed for, and trends in absenteeism should be analyzed to trace causes and prescribe remedial actions.

PRODUCTIVITY LEVEL: any change in productivity would affect of persons required per unit of output. Increase in productivity will reduce the requirement and decrease in it would have the opposite effect. Let us assume the average sales per person in a year amounts to rs.500000. Reviews of changes in productivity levels reveal that sales person have been increasing at the rate of 10% per year. If next years projected sales are rs.50000000, there would be no need for 100 sales persons (rs.50000000 / rs.500000), but rafter for only 91 sales persons since we expect an increase of rs.550000 in productivity per person.

MOVEMENT AMONG JOBS: some jobs are personnel for other jobs. For example, secretaries may be obtained by the promotion of typists and branch managers are obtained from a pool of section managers. If , for example we anticipate a need for five new branch managers seven years from now more than five potential branch managers should have entered the company this year, assuming that seven years is the average development time. Obviously, some will quit before the seven years are up and others mat not qualify for promotion.

o EXTERNAL SUPPLY ANALYSIS: the organization needs to look out for prospective employees from external sources. External sources are important for specific reasons;

New blood and new experience will be available Organization needs to replenish lost personnel Organizational growth and diversification creat the needs to use external sources to obtain additional number and type of employees.

L.S.Raheja college of Arts and Commerce

Human Resouce Management (SEM - V)

TYBMS

Sources of external supply vary from industry to industry, organization to organization and also from one geographical location to another. Some organizations ss while others achieved excellent results from consultants, competitors or unsolicited applications.

3) Developing employment plans After determining the number of personnel for each job in the organization, the human resource department has to determine the nature job regarding job description and job specification. a) Job description:- A job description will generally describe the work performed the responsibilities involved, the skill or training required condition under which the job is done, relationship with other job. According to The British institute of management-a job description is not intended to catalogue all duties involved with the result that an employee would feel justified in declining to perform any work not included in description. It should be regarded as an out-line of minimum requirements of the job, thus preserving flexibility of operation b) Job specification:- The job specification is an output of job description, states the minimum acceptable qualifications that the new comer must possess to perform the job satisfactorily and successfully, job specification serve as an important tool in selection process and evaluation. They are developed by the human resource department in consultation with the different line managers. The various elements of job specification are:a) Minimum formal education necessary to perform the job. b) Minimum experience required performing the job. c) Manual/mental skill required performing the job. d) Personality factor such as personal appearance ,emotional stability, maturity, intiative, drive and sociability. e) For high-level jobs, the ability to assume responsibility is an essential pre-requisite. 4) Developing human resource plans Net human resource requirements in numbers and components are to be determined in relation to the overall human resource requirement.
L.S.Raheja college of Arts and Commerce 10

Human Resouce Management (SEM - V)

TYBMS

After estimating the supply and demand of human resource, the management started adjustment when the internal supply of employees is more than the demand human resource surplus exists and the external recruitment is stopped. Besides the existing employees are encouraged to take voluntary retirement. It gradually reduces the surplus. If human resource deficit exists then the planners have to rely on the external sources. They then proceed for scanning of the employment market for recruitment purposes. If future supply of human resources form all the external sources is estimated to be inadequate or less than the requirements, the manpower planner has to suggest the management to alter or modify oirganisational plan. In case of shortage of certain categories of employees, the organizational has to the care not only of recruitment but also retention of existing employees.

L.S.Raheja college of Arts and Commerce

11

Human Resouce Management (SEM - V)

TYBMS

FACTORS AFFECTING HRP

HRP is influenced by several considerations. The more important of them are : i) ii) iii) iv) v) vi) vii) Type and strategy of organization. Organizational growth and planning. Environmental uncertainties Time horizons Type and quality of fore-casting information Nature of jobs being filled Off-loading the work

Diagram:-

Type and strategy of organization:

The type of organization is an important consideration because it determines the production processes involved, number and type of staff needed, and the supervisory and managerial personnel required. Manufacturing organizations are more complex in this respect than those that render services. The strategic plan of the organization defines the organizations HR needs. For eg, A strategy of internal growth means that additional employees must be hired. Acquisitions or mergers, on the other hand, probably mean that the organization will need to plan for layoffs. Since mergers tend to create, duplicate or overlapping positions that can be handled more efficiently with fewer employees. Primarily, the organization decides either to be proactive or reactive in HRP. It can either decide to carefully anticipate the needs and systematically plan them to L.S.Raheja college of Arts and Commerce 12

Human Resouce Management (SEM - V)

TYBMS

fill them far in advance, or it can simply react to needs as they arise ofcourse carefull planning to fill HR needs better helps ensure that the organization obtains the right number of HR people with proper skills and competencies when they are needed. Similarly, the organization must determine the breadth of the plan. Essentially, the organization can choose a narrow focus by planning one or two HR areas such as recruitments o0r selection, or it can choose a broad focus by planning in all areas including training, remuneration and so on. The organization must also decide upon the formality of the plan. It can decide to have an informal plan that lies mostly in the minds of the managers and personnel staff. Alternatively, the organization can have a formalized plan which is clearly spelt out in writing, backed by documentation and data. Finally, the organization must make a decision on flexibility- the ability of the HR plan to anticipate and deal with the contingencies. No organization likes high level of uncertainty. Organizations seek to reduce uncertainties by planning, which includes forecasting and predicting possible future conditions and events HRP can contain many contingencies, which reflect different scenarios thereby assuring that the plan is flexible and adaptable.

Organizational growth cycles and planning:

The stage of an organizations growth can have considerable influence on HRP. Small organizations in the embryonic stage may not have personnel planning. Need for planning is felt when the organization enters the growth stage. HR forecasting becomes essential. Internal development of people also begins to receive attention in order to keep up with the growth. A mature organization experiences less flexibility and variability. Growth slows down .The workforce becomes old as few younger people are hired . Planning becomes more formalized as less flexible and innovative. Issues like and possible retrenchment dominate planning . Finally, in the declining stage ,HRP takes a different focus . Planning is done for layoff, retrenchment and retirement. Since decisions are often made after serious financial and sales shocks are experienced by the organization, planning is often reactive in nature.

Environmental uncertainties:
HR managers rarely have the privilege of operating in a stable and predictable environment.Political,social and economic changes affect all organizations. Personnel deal with environmental uncertainties by carefully formulating recruitment, selection and training and development policies and programmes .Balancing mechanisms are built into L.S.Raheja college of Arts and Commerce 13

Human Resouce Management (SEM - V)

TYBMS

the HRM programme through succession planning, promotion channels, layoffs,flexitime,job sharing ,retirement ,VRS and other personnel related arrangements

Time horizons:
Yet another major factor affecting personnel planning in Time horizon. On one hand, there are short-term plans which spread over six months to year. On the other hand there are long term plans which spread over three to twenty years . The exact time span , however depends on degree of uncertainty prevailing in the environment .Plans for companies operating in an unstable environment, computers for example , must be for a short period. Plans for others were environment is fairly stable, for example a university plan, may be a long-term . In general, the greater the uncertainty ,the shorter the plans time horizon and vice versa

Type and quality of fore-casting information:

The information used to forecast personnel needs originates from multitude of sources. A issue in personnel planning is the type of information which should be used in making forecasts. Closely related to the type of information is the quality of data used. The quality and accuracy listed in table 4.5depend upon the clarity with which the organizational decision makers have defined their strategy , organizational structure , budget. Production schedule and so forth . In addition , the HR department must maintain well-developed job analysis information and Hr information systems (HRIS) that provide accurate and timely data . Generally speaking ,organizations operating in stable environments are in a better position to obtain comprehensive, timely and accurate information because of longer planning horizons , clearer definition of strategy and objectives, and fewer disruptions.

Nature of jobs being Filled :

Personal planners must consider the nature of jobs beings filled in the organization . Job vacancies arise because of separation, promotion and expansion strategies.

It is easy to employ shop-floor workers, but a lot sourcing is necessary for hiring managerial personnel. It is, therefore, necessary for the personnel department to anticipate vacancies , as far in advance as possible, to provide sufficient lead time to ensure that suitable candidates are recruited.

L.S.Raheja college of Arts and Commerce

14

Human Resouce Management (SEM - V)

TYBMS

Outsourcing :
Several organizations outsource part of their work to outside parties either in the form of sub-contracting or ancillarisation. Outsourcing is a regular feature both in the public sector as well as in the private sector . Most organization have surplus labor and they do not want to worsen the problem by hiring more people. Hence, the need for off-loading Some organization are known to carry the concept of off-loading to ridiculous lengths. One of the Bangalore-based public sector undertaking outsources major part of its work, and in the process, regular employees sit idle . kickbacks from owners of ancillary units are the cause for ancillarisation . HRP is rarely required in such circumstances .

HUMAN RESOURCE INFORMATION SYSTEM

A HRIS is a systematic procedure for collecting, storing, maintaining, retrieving and validating data needed by an organization about its human resources. The HRIS is usually a part of the organizations larger management information system (MIS). The HRIS need not be complex or even computerized. But computerization has its own advantage of providing more accurate and timely data for decision making. The areas of application of HRIS are many. Some of them include training management, risk management, turnover analysis succession planning, flexiblebenefits administration, compliance with government and legal requirements, attendance reporting and analysis, HRP, accident reporting and prevention, strategy planning, financial planning and other related areas.

STEPS IN IMPLEMENTING AN HRIS

The steps outlined below describe the specific procedure involved in successfully developing and implementing an HRIS:STEP 1 INCEPTION OF IDEA the idea for having an HRIS must originate somewhere. The originator of the idea should prepare a preliminary report showing the need for an HRIS and what it can do for the organizations. STEP 2 FEASIBILTY STUDY feasibility study evaluates the present system and details the benefits of an HRIS. It evaluates the costs and benefits of an HRIS.
L.S.Raheja college of Arts and Commerce 15

Human Resouce Management (SEM - V)

TYBMS

STEP 3 SELECTING A PROJECT TEAM once the feasibility study has been accepted and the resources allocated, a project team should be selected. The project team should consist of an HR representative who is knowledgeable about the organizations HR functions and activities and about the organization itself and representatives from both management information systems and payroll. As the project progresses, additional clerical people from the HR department will be needed to be added.

STEP 4 DEFINING THE REQUIREMENTS a statement of requirements specifies in details exactly what the HRIS will do. A large part of the statement of requirements normally deals with details of the reports that will be produced. Naturally, the statement also describes other specific requirements. This typically includes written description of how users collect and prepare data, obtain approvals, complete forms, retrieve data, and perform other non-technical tasks associated with HRIS use. The key here is to make sure that the mission of the HRIS truly matches managements needs of an HRIS. STEP 5 VENDOR ANALYSIS this step determines what hardware and software are available that will best meet the organizations need for the lowest price. This is a difficult task. The best approach is usually not to ask vendors if a particular package can meet the organizations requirements but how it will meet those requirements. The results of this analysis will determine whether to purchase an off-the-shelf package or develop the system internally. STEP 6 PACKAGE CONTRACT NEGOTIATION after a vendor has been selected, the contract must be negotiated. The contract stipulates the vendors responsibilities with regard to software, installation, service, maintenance, training and documentation. STEP 7 TRAINING training usually begins as soon as possible after the contract has been signed. First, the members of the project team are trained to use the HRIS. Towards the end of the implementation, the HR representative will train managers
L.S.Raheja college of Arts and Commerce 16

Human Resouce Management (SEM - V)

TYBMS

from other departments in how to submit information to the HRIS and how to request information from it. STEP 8 TAILORING THE SYSTEM this step involves making changes to the system to best fit the needs of the organization. A general rule of thumb is not to modify the vendors package because modifications frequently cause problems. An alternative approach is to develop programs that augment the vendors program rather than altering it. STEP 9 COLLECTING THE DATA prior to start-up of the system, data must be collected and entered into the system.

STEP 10 TESTING THE SYSTEM once the system has been tailored to the organizations needs and the data entered, a period of testing follows. The purpose of the testing phase is to verify the output of the HRIS and to make sure it is doing what it is supposed to do. All reports should be critically analyzed for accuracy.

STEP 11 STARTING UP start-up begins when all the current actions are put into the system and reports are produced. It is wise to attempt start-up during a lull period so that maximum possible time can be devoted to the HRIS. Even though the system has been tested, some additional errors often surface during start-up.

STEP 12 RUNNING IN PARALLEL even after the new HRIS has been tested, it is desirable to run the new system in parallel with the old system for a period of time. This allows for the comparison of output of both the system and examination of any inaccuracies. STEP 13

L.S.Raheja college of Arts and Commerce

17

Human Resouce Management (SEM - V)

TYBMS

MAINTENANCE it normally takes several weeks or even months for the HR people to feel comfortable with the new system. During this stabilization period, any remaining errors and adjustments should be handled.

STEP 14 EVALUATION after the HRIS has been in place for a reasonable length of time, the system should be evaluated. Is the HRIS right for the organization and is it being properly used? By following the above mentioned steps an HRIS will not guarantee success , but it will increase the probability.

L.S.Raheja college of Arts and Commerce

18

Human Resouce Management (SEM - V)

TYBMS

VRS (Voluntary Retirement Scheme)

1. It is a type of voluntary separation of old and unproductive employees from the organization. 2. It is also called GOLDEN HANDSHAKE Plan 3. The basic purpose of VRS is to reduce heavy burden of unwanted manpower from the shoulders of the organization 4. VRS is an economical and time saving method for reducing surplus staff. 5. VRS is to pay hefty sums and reduce staff strength than retaining surplus labour and continuing to pay them idle wages. 6. VRS is perceived as a painless and time-saving method of trimming staff strength easing out unproductive older workers. 7. This practice is followed in the public sector as well as in the private sector organization. Here, the company announces VRS and interested employees are asked to submit applications and voluntary retirement from the organization. 8. VRS is different from dismissal, removal and retrenchment of employees. Under VRS, handsome compensation is paid to those who opt to leave / retire. 9. The incentives may be in various forms like; Pension and lump sum gratuity Loyalty bonus Employee stock ownership plans(ESOP) Prize and Rewards

10.EG- TISCO has approved successful to cut its staff to 55,000 from 68,000 in 5years to improve efficiency.

Downsizing: It is a term used to indicate the measure taken for removing /reducing surplus employees. Downsizing means reducing the number of employees and adjusting the manpower as per need so that the problem of excess manpower will be solver smoothly. For reduction of redundant manpower suitable downsizing plan be necessary.

L.S.Raheja college of Arts and Commerce

19

Human Resouce Management (SEM - V)

TYBMS

Such downsizing will be necessary when market demand reduces or when new technology is introduced. E.g.: Automation, extensive use of computer technology.

VRS is a popular method used by managements for downsizing manpower. In some cases, retrenchment, termination or compulsory retirement schemes were used for trimming of employees.

Retrenchment:1. It is a sort of permanent separation by an employer with due notice as per statutory provisions. The employee is also paid compensation. 2. Retrenchment of employees for economic reasons is quite common in India at present. The Industrial Dispute Act 1947 defines retrenchment as the termination by the employer of the service of workmen for any reason it may be noted that termination of service as a punishment given or any disciplinary action or retirement either voluntarily or on reaching the age of superannuation or continued ill-health or on the closure and winding up of a business, does not constitute retrenchment. 3. 4. The term is applied to continuing operations where the part of the workforce is found to be superfluous. The principle in the procedure of retrenchment is that the last person employed in each category must be the first person to be retrenched i.e. last come, first go.

5. As and when the vacancies arise after retrenchment, the employer given an opportunity to the retrenched worker to offer themselves for re- employment; and they are given preference. Such vacancies are generally notified at least 10days before they are filled up. 6. Retrenchment is unfortunate for concerned worker as he becomes unemployed till securing a new job. It creates hardships to him as well as to his family members. However, it is inevitable when the organization is facing serious problems.

Pink Slip:1. It is an American term that is being referred to being fired or laid off from ones job. It is an official notice sent to an employee informing him that you have been fired from your job. Synonyms to pink slip are dismissal. This means the person is removed from his job. It is as good as discharged, dismissal, drooped or terminated from the service.

L.S.Raheja college of Arts and Commerce

20

Human Resouce Management (SEM - V)

TYBMS

In the USA, companies used to dismiss employees by distributing notices printed on pink slips of paper. American workers from all walks of life fear of one day receiving PINK SLIPS from their employers. There are notices printed on pink paper (usually distributed with paychecks) informing employees that their services are no longer required.

Termination:1. It is a permanent separation of an employee from the organizational rules, (dishonesty, carelessness, drunkenness, etc). 2. It is a drastic step and should be taken after careful thought. Such actions need support of sufficient reasons. 3. Appropriate discharge procedure must be followed. The action taken should be a bone fide and should not be a punitive measure or a case of victimization. 4. Dismissal is the termination of service of an employee by way of punishment for some misconduct or for unauthorized and prolonged absence from duty. In voluntary retirement, the employer offers attractive package of compensation to those who are willing for separation from the job. 5. Such separations are painful to both the parties therefore need to be administered carefully and smoothly so that quarrels and dissatisfaction are avoided or minimized. In India, separations take place due to lay- offs voluntary retirement schemes and retrenchment. Separations are common in the case of loss- making and sick industrial units. Even inadequate market demand leads to downsizing of production activities and corresponding separations of employees.

Outsourcing:A trend that is observed newly is outsourcing HR activities. Outsourcing (also called subcontracting) is the process by which employees transfer routine or peripheral work or another organization that specializes in that work and can perform it more efficiently. The activities that are generally outsourced include employee hiring, training and development, payroll preparation, benefits administration statutory records maintenance. The triggers for outsourcing include downsizing, rapid growth or decline of business, globalization, growing competition and restructuring. Some executive assume that outsourcing HR activities offers competitive advantage. It is assumed that outsourcing can reduce costs, improve flexibility and permit the hiring of specialized expertise. Realizing the potential benefits, 72% of the Indian companies are outsourcing their HR activities.

L.S.Raheja college of Arts and Commerce

21

Human Resouce Management (SEM - V)

TYBMS

Advantages of outsourcing
By transferring non- critical HRM functions, the organization can concentrate on critical HRM functions and perform them efficiently. HR professionals will not lose sight of critical HRM functions when routine and non- critical functions are outsourced. Performing non- critical HRM functions internally is not cost effective as such functions prove costly. BPO (HR) vendors with infrastructure and requisite skills can prove efficient services at much less cost. This gives benefit to companies in regard to outsourcing. Outsourcing results in higher return on investment through significant savings on operational and capital costs. In enables organizations to focus oncore activities. They can shift their policies from tactical control to strategic planning. Outsourcing enables organizations to exploit more advance technologies available with the supplies. This improves quality of production and creates market reputation. It helps to undermine the power of trade unions. Outsourcing simplifies organization structures and makes them flatter and more agile.

Disadvantages
Outsourcing leads to job losses in the organization. Large scale outsourcing leads to unemployment to people within the country in the form of fees and services charges. Outsourcing brings creeping privatization in the public sector organization. Difficulty is deciding what and how much to outsource. Dependence on supplier for vital components is undesirable and may prove dangerous to the main organization where outsourcing is substantial. Difficulties in managing new relationships with the outsourcing agencies.

L.S.Raheja college of Arts and Commerce

22

Human Resouce Management (SEM - V)

TYBMS

Promotion
Promotion means an improvement in pay, prestige, position and responsibilities of an employee within his/her organisation. A mere shifting of an employee to a different job which has better working hours , better location and more pleasant working conditions does not amount to promotion. The new job is a promotion for the employee only when it carries increased responsibilities and enhanced pay. Issues relating to employee promotion often figure in the negotiations between employers and union leaders. But promotional matters rarely lead to a major confrontation between them.

Purposes of Promotion
The purposes of promotion may be outlined as follows:

1. To motivate employees to higher productivity. 2. To attract and retain the services of qualified and competent people to recognize and reward the efficiency of an employee. 3. To increase the effectiveness of the employee and 'of the organization. 4. To fill up higher, vacancies from within the organization. 5. To build loyalty morale and a sense of belongingness in the employee. 6. To impress upon others that opportunities are available to them too in the organization, if they perform well. A promotion represents the ultimate accomplishment for some employees. Many achieve it through hard work and good performance. A few follow short cuts to achieve the desired goal.

Besides, there are three main classes of persons to whom a promotion is likely to be, in effect, a psychological disadvantage. First, people who have already achieved a modest rise in status and income, and achieved it painfully, may often feel that it is better to settle for what they already have, than to struggle further. Second, there are some people who cannot easily tolerate the alienation that promotion often produces with former peers who suddenly turn into subordinates.

L.S.Raheja college of Arts and Commerce

23

Human Resouce Management (SEM - V)

TYBMS

Third, there are those who may wish for a promotion, if it could be had on the same terms as everyone else who gets it, but consider it so unlikely to occur or so difficult to handle if it did occur on terms that he/she does not fancy for.2

Principles of Promotion
Promotion is a double-edged weapon. If handled carefully, it contributes to employee satisfaction and motivation. If mishandled, it leads to discontentment, frustration, skepticism and bickering among the employees, and culminates in a high rate of labour turnover. It is the responsibility of the HR department to lay down a sound promotional policy and ensure its implementation. The policy of promotion should be clear on the following matter: (i) The management must make it clear whether to fill up higher positions by internal promotions or recruit people from outside. Generally, top positions in an organization are filled through external recruitment. The lower positions, however, are filled up by promotions from within. (ii) When it has been decided to fill up higher positions with promotions, a further decision on determining the basis of promotion should be made by the management. The basis of promotion may be seniority or merit or both.

If seniority is the basis for promotion, an employee with the longest period of service will get promoted, irrespective of whether he or she is competent to occupy a higher post or not. This is the practice followed in unionized industrial establishments, governmentowned undertakings and educational institutions. A promotion on the basis of seniority has merits and demerits.

Merits: 1. It is easy to administer. 2. There is less scope for subjectivity or arbitrariness in fixing seniority. 3. Labour unions welcome seniority-based promotions. 4. Seniority and experience go hand in hand and, therefore, it is right and proper to make promotions on this basis.

L.S.Raheja college of Arts and Commerce

24

Human Resouce Management (SEM - V)

TYBMS

5. Subordinates are more willing to work under an older boss who has given many years of service to the company. 6. Loyalty is rewarded.

Demerits: Seniority is no indication of competence. 1. Inspite of judicial pronouncement, there is no single criterion for fixing the seniority of an employee. 2. Young and competent people get frustrated and might leave the organization. If competence is the basis for promotion, an employee whose performance is the best, as revealed by performance appraisal, is promoted. He or she beats all the others by his or her merit and is rewarded, just as an athlete is rewarded when he or she touches the tape first in a 100 metre dash. Such a promotion has its own charm because it is won by hardwork and dedication.

The merits of promotion by competence are: 1. Efficiency is encouraged, recognized and rewarded. 2. Competent people are retained because better prospects are open to them. 3. Productivity increases.

The disadvantages of promotion by merit are: 1. Discontentment among senior employees. 2. Scope for favoritism. 3. Loyalty and length of service are not rewarded. 4. Opposition from union leaders.

Competence is the better basis because it rewards those who deserve it, unlike seniority which results in the promotion of a senior employee whose only qualification, often, is that he or she joined the organization earlier than the others. L.S.Raheja college of Arts and Commerce 25

Human Resouce Management (SEM - V)

TYBMS

In non-unionized companies, promotions are made on the basis of merit because the managements of such companies are free from union pressures. Even in unionized organizations, merit is the basis for the promotion of non-productive employees. Seniority for promotion should be considered only when there are more than one aspirant of equal merit. (i) Another point to be made clear about the policy of promotion is whether to promote employees against vacancies or non-vacancies. In many industrial establishments, employees are promoted on a non-vacancy basis after they complete a minimum period of service. Such promotions are time-bound and not based on vacancies or merit. The other practice is to link promotions to vacancies. In many establishments, the administrative staff are promoted against vacancies. Sometimes, these vacancies are created to avoid frustration among the aspirants for promotion. (ii) A promotion policy should establish a well-defined promotion chart, showing who can go up to what 'level in the organisation. The promotion chart is highly useful to the management because it clears any suspicion which the employees may have and enables the aspirants to make themselves eligible for promotion. . To the employer, frequent promotions mean a higher waged salary bill, and a temporary instability in the organisation. (i) A promotion should be preceded by a job analysis, and performance appraisal. (ii) The promotion policy should be discussed with labour unions, and their acceptance should be obtained in the form of an agreement. (iii) When promotions are made on the basis of competence, openings for promotion should be displayed prominently at several places to enable interested people to apply

TYPES OF PROMOTION
As already noted, a promotion involves an increase in status, responsibilities and pay. But, in certain cases, only the pay increases. In other cases, the status only increases without a corresponding increase in pay or responsibilities, Promotions may be classified into the following types: (i) Horizontal Promotion This type of promotion involves an increase in responsibilities and pay, and a change in designation. But the employee concerned does not transgress the job classification. For example, a lower division clerk is promoted as an upper division clerk. This type of promotion is referred to as 'upgrading' the position of an employee. L.S.Raheja college of Arts and Commerce 26

Human Resouce Management (SEM - V)

TYBMS

(ii) Vertical Promotion This type of promotion results in greater responsibility, prestige and pay, together with a change in the nature of the job. A promotion is vertical when a canteen employee is promoted to an unskilled job. the concerned employee naturally transgresses the job classification.

(iii) Dry Promotions Dry promotions are sometimes given in lieu of increases in remuneration. Designations are different but no change in responsibilities. The promotee may be given one or two annual increments.

L.S.Raheja college of Arts and Commerce

27

Human Resouce Management (SEM - V)

TYBMS

Transfer
A transfer involves a change in the job (accompanied by a change in the place of the job) of an employee without a change in responsibilities or remuneration.

A transfer differs from a promotion in that the latter involves a change in which a significant increase in responsibility, status and income occurs, but all these elements are stagnant in the former. Another difference is that transfers are regular and frequent , as in banks and other government establishments , but promotion are in frequent , if not irregular.

Reasons for transfer

The reasons for transfers vary from organisation to organisation, and from individual to individual within an organisation. Broadly speaking, the following are the reasons for transfers:

1. There is a shortage of employees in one department or plant because of a heavy demand which necessitates an increase in the number of shifts or expansion of production capacity. Workers are transferred from the surplus department to another department or plant where there is a shortage of staff. 2. Removal of the incompatibilities between the worker and his or her boss and between one worker and another worker. 3. Correction of faulty initial placement of an employee. 4. A change has taken place in the interests and capacities of an individual, necessitating his or her transfer to a different job. 5. Over a period of time, the productivity of an employee may decline because of the monotony of his or her job. To break this monotony, the employee is transferred. 6. The climate may be unsatisfactory for an employee's health. He or she may request a transfer to a different place where his or her health will not be affected by its climate.

L.S.Raheja college of Arts and Commerce

28

Human Resouce Management (SEM - V)

TYBMS

7. Family related issues cause transfers, especially among female employees. When they get married, the female employees want to join their husbands, and this fact necessitates transfers or resignations.

Principles of transfer
The management must frame a policy on transfer and apply it to all the transfers instead of treating each case on its own merits. Such a policy must be based on the following principles: 1. The frequency of transfers and the minimum period between transfers need to be decided upon and made known to all the employees. Defence personnel and government employees, for example, are subjected to transfer once in three years. 2. The authority which would handle transfers is to be decided upon. (Whether HR or the Central HOD). 3. The criteria for entertaining transfers need to be laid down and strictly adhered to. 4. Policy of the organization over which transfers can be made need to be defined. 5. The effect of the transfer on the pay and seniority of the transferred employee may be clearly evaluated. 6. Transfers should be clearly defined as permanent or temporary. 7 .The performance of the employee needs to be assessed before transferring him or her to a different job. 8. The interests of the organization are not be forgotten in framing a policy of transfers.

Types of Transfer
Broadly speaking, transfers may be classified into three types: 1. Those designed to enhance training and development. 2. Those making possible adjustment to varying volumes of work within the firm. 3. Those designed to remedy the problem of poor placement. L.S.Raheja college of Arts and Commerce 29

Human Resouce Management (SEM - V)

TYBMS

Specifically, transfers may be production, replacement. versatility, shift and remedial.

(i) Production Transfers: As mentioned earlier, a shortage or surplus of the labour force is common in different departments in a plant or several plants in an organisation. Surplus employees in a department have to be laid off, unless they are transferred to another department. Transfers effected to avoid such imminent lay-offs are called production. transfers.

(ii) Replacement Transfers: Replacement transfers, too, are intended to avoid imminent layoffs, particularly, of senior employees. A junior employee may be replaced by a senior employee to avoid laying off the latter. A replacement transfer programme is used when all the operations are declining, and is designed to retain long-service employees as long as possible.

(iii) Versatility Transfers: Versatility transfers are effected to make employees versatile and competent in more thali one skilL Clerical employees in banks, for example, are transferred from one section to another over a period of time so that they may acquire the necessary skills to attend to the various activities of the bank. Versatile operations are valuable assets during rush periods and periods when work is dull. Versatile transfers may be used as a preparation for production or replacement transfers. .

(iv) Shift Transfers : Generally speaking, industrial establishments operate more than one shift. Transfers between shifts are common, such transfers being made mostly on a rotation basis. Transfers inay also be effected on special requests from employees. Some request a transfer to the second shift or the night shift in order to avail the free time during the day to take up part time jobs, although this is not permitted by law.

(v) Remedial Transfers : Remedial transfers are effected at the request of employees and are, therefore, called personal transfers. Remedial transfers take place because the initial placement of an employee may have been faulty or the worker may not get along with his or her supervisor or with other workers in the department. He or she may be getting too old to continue in his or her regular job, or the type of job or worki(l.g conditions may not be well-adapted to his or her present health or accident record. If the job is repetitive, the worker may stagnate and would benefit by transfer to a different kind of work.

L.S.Raheja college of Arts and Commerce

30

Human Resouce Management (SEM - V)

TYBMS

Contracting & Sub- Contracting

Just like outsourcing, contracting and sub-contracting are 2 techniques used for transferring certain jobs to outside agencies on contractual basis. The core purpose is to reduce the cost and to get the routine and simple type of work done from other agencies so that the time of interval will not be used for such less important and repetitive type of work.

Contractors may operate as Independent Contractors, General contractors or Sub-contractors:

An Independent Contractor is a natural person, business or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlink an employee, an independent contractor does not work regularly for an employer but works as and when required, basically like a freelancer. A General Contractor is a group or individual that contracts with another organisation or individual for the construction, renovation or demolition of a building, road or other structures. A Sub-Contractor is an individual or an agency which signs a contract to perform part or all obligations of anothers contract. They are hired by a general contractor to perform a specific task as part of the overall project.

Advantages
Reduces costs Division of work Specialisation of work Work is completed faster Makes the work more convenient

For example,
A builder may give the contract of colouring or tiling work or plumbing work to a contractor, who has to finish the work as per specification and will be paid as per the amount fixed. Furthermore, suppose the contractor has taken the plumbing contract of 10 identical buildings. He may hire a sub-contractor to do the work partly. In this case the amount paid will be decided between the contractor and sub-contractor.

L.S.Raheja college of Arts and Commerce

31

Human Resouce Management (SEM - V)

TYBMS

Conclusion
The concepts of contracting, sub-contracting and outsourcing are more or less identical. Human Resource Outsourcing (HRO) is gaining ground among Indian corporate who are looking at expanding their scope of their service. HR is getting outsourced to third party providers who offer the benefit of their special skills.

L.S.Raheja college of Arts and Commerce

32

Human Resouce Management (SEM - V)

TYBMS

QUESTIONS

L.S.Raheja college of Arts and Commerce

33