Human Resource Management

HRM means to Select, Develop, Motivate and Maintain human resources, in the
organisation. It first selects the right human resources or staff (i.e. managers and
employees). It trains and develops them. It motivates them by giving them
recognition and rewards. It also provides them with the best working conditions. HRM
is directly concerned with the "people" of the organisation. It is people oriented
process. That is, it manages people at work.

Features of Human Resource Management

1. HRM as a Process

HRM is a process of four functions : Acquisition of human resources : This function includes Human Resource
Planning, Recruitment, Selection, Placement and Induction of staff.
Development of human resources : This function includes Training and
Development and Career development. The knowledge, skills, attitudes and
social behavious of the staff are developed.
Motivation of human resources : This function includes giving recognition and
rewards to the staff. it also includes Performance Appraisal and handling the
problems of staff.
Maintenance of human resources : This function includes providing the best
working conditions for employees. It also looks after the health and safety of
the staff.
2. Continuous Process
HRM is not a one-time process. It is a continuous process. It has to continuously
change and adjust according to the changes in the environment, changes in the
expectations of the staff, etc. HRM has to give continuous training and development
to the staff due to changes in technology.
3. Focus on Objectives
HRM gives a lot of importance to achievement of objectives.
The four main objectives HRM has to achieve are : Individual objectives of the staff.
Group or Departmental objectives.
Organisational objectives.
Societal objectives.
4. Universal Application
HRM has universal application. That is, it can be used for business as well as for other
organisations such as schools, colleges, hospital, religious organisations, etc.
5. Integrated use of Subsystems
HRM involves the integrated use of sub-systems such as Training and Development,
Career Development, Orgnisational Development, Performance Appraisal, Potential
Appraisal, etc. All these subsystems increase the efficiency of the staff and bring
success to the organisation.
6. Multidisciplinary
HRM is multidisciplinary. That is, it uses many different subjects such as Psychology,
Communication, Philosophy, Sociology, Management, Education, etc.
7. Developes Team Spirit

HRM tries to develop the team spirit of the full organisation. Team spirit helps the
staff to work together for achieving the objectives of the organisation. Now-a-days
more importance is given to team work and not to individuals.
8. Develops Staff Potentialities
HRM develops the potentialities of the staff by giving them training and
development. This will make the staff more efficient, and it will give them more job
satisfaction.
9. Key Elements for solving problems
Today, we have rapid technological, managerial, economic and social changes. These
changes bring many problems. HRM continuously tries to solve these problems.
10. Long Term Benefits
HRM brings many long term benefits to the individuals (staff), the organisation and
the society. It gives many financial and non-financial benefits to the staff. It improves
the image and profits of the organisation. It also provides a regular supply of good
quality goods and services at reasonable prices to the society.

Scope of Human Resource Management HRM

The Scope of Human Resource Management HRM is discussed below :1. Human Resource Planning (HRP)
HRP estimates the manpower demand and manpower supply of the organisation. It
compares the manpower demand and manpower supply. If there is manpower
surplus then it gives voluntary retirement, lay-off, etc. to some employees. If there is
manpower shortage then it hires employees from outside, gives promotion to
employees, etc.
2. Acquisition Function
Acquisition function includes Human Resource Planning, Recruitment, Selection,
Placement and Induction of employees. HRM uses the scientific selection procedure
for selecting the right man for the right post. The "right man" is given proper
placement and induction.
3. Placement Function
HRM also performs the placement function. Placement is done after selection of
employees. It means to put the right man in the right place of work. Proper
placement gives job satisfaction to the employees, and it increases their efficiency.
4. Performance Appraisal
HRM also conducts a performance appraisal. Performance appraisal is a systematic
evaluation of the employees' performance at work. It informs the employees about
their strengths and weakness. It also advises them about how to increase their
strengths and remove their weaknesses.
5. Career Development
HRM also helps the employees in planning and developing their careers. It informs
them about future promotions and how to get these promotions. It helps them to
grow and develop in the organisation.
6. Training and Development
HRM also provides training and development to the employees. Training means to
increase the knowledge and skills of the employee for doing a particular job. Training
given to managers is called development. So, training is given to employees while
development is given to managers.

7. Quality of Work Life (QWL)

HRM also includes Quality of Work Life. QWL is a technique for improving productivity
and quality of work. It involves labour management co-operation, collective
bargaining and participative management.
QWL provides good working conditions, job security, good pay and other facilities
such as flexible working hours, freedom to suggest changes or improvements, etc.
OWL creates a sense of belonging. This benefits the organisation as well as the
individual employees.
8. Employees' Welfare
HRM provides employee's welfare. Welfare measures include paid holidays, medical
insurance, canteen facilities, recreation facilities, rest room, transport facilities, etc.
Proper and timely welfare facilities motivate the employees to work hard in the
organisation.
9. Compensation Function
Employees must be rewarded and recognised for their performance. HRM makes
proper compensation packages for the employees. These packages motivate the
employees and increase their morale. Rewards are given to individuals, and teams.
The rewards may be in the form of higher pay, bonus, other monetary incentives, and
non-monetary incentives such as a certificate of appreciation, etc.
10. Labour Relations
HRM is also includes industrial relations. It includes union management relations,
joint consultations, negotiating, collective bargaining, grievance handling,
disciplinary actions, settlement of industrial disputes, etc.
11. Maintenance Function
HRM also performs the maintenance function. That is, protecting and promoting the
health and safety of the employees. HRM introduces health and safety measures. It
also provides other benefits such as medical aid, provident fund, pension, gratuity,
maternity benefits, accident compensation, etc., to the employees.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT

The main functions of human resource management are classified into two
categories:
(a) Managerial Functions Following are the managerial functions of Human
Resources Management.
1. Planning : The planning function of human resource department pertains to the
steps taken in determining in advance personnel requirements, personnel
programmes, policies etc. After determining how many and what type of people are
required, a personnel manager has to devise ways and means to motivate them.
2. Organisation : Under organisation, the human resource manager has to organise
the operative functions by designing structure of relationship among jobs, personnel
and physical factors in such a way so as to have maximum contribution towards
organisational objectives
3. Directing : Directing is concerned with initiation of organised action and
stimulating the people to work. The personnel manager directs the activities of
people of the organisation to get its function performed properly. A personnel
manager guides and motivates the staff of the organisation to follow the path laid
down in advance.

4. Controlling : It provides basic data for establishing standards, makes job analysis
and performance appraisal, etc. All these techniques assist in effective control of the
qualities, time and efforts of workers.
(b) Operative Functions : The following are the Operative Functions of Human
Resource Management 1. Procurement of Personnel : It is concerned with the
obtaining of the proper kind and number of personnel necessary to accomplish
organisation goals. It deals specifically with such subjects as the determination of
manpower requirements, their recruitment, selecting, placement and orientation, etc.
2. Development of Personnel : Development has to do with the increase through
training, skill that is necessary for proper job performance. In this process various
techniques of training are used to develop the employees. Framing a sound
promotion policy, determination of the basis of promotion and making performance
appraisal are the elements of personnel development function.
3. Compensation to Personnel : Compensation means determination of adequate and
equitable remuneration of personnel for their contribution to organisation objectives.
To determine the monetary compensation for various jobs is one of the most difficult
and important function of the personnel management.
4. Maintaining Good Industrial Relation : Human Resource Management covers a wide
field. It is intended to reduce strifies, promote industrial peace, provide fair deal to
workers and establish industrial democracy. It the personnel manager is unable to
make harmonious relations between management and labour industrial unrest will
take place and millions of man-days will be lost. If labour management relations are
not good the moral and physical condition of the employee will suffer, and it will be a
loss to an organisation vis-a-visa nation. Hence, the personnel manager must create
harmonious relations with the help of sufficient communication system and copartnership.
5. Record Keeping : In record-keeping the personnel manager collects and maintains
information concerned with the staff of the organisation. It is essential for every
organisation because it assists the management in decision making such as in
promotions.
6. Personnel Planning and Evaluation : Under this system different type of activities
are evaluated such as evaluation of performance, personnel policy of an organisation
and its practices, personnel audit, morale, survey and performance appraisal, etc.

Job Analysis is a process to identify and determine in detail the particular job
duties and requirements and the relative importance of these duties for a given job.
Job Analysis is a process where judgements are made about data collected on a job.
Purpose of Job Analysis
1. Determining Training Needs : Job Analysis can be used in training/"needs
assessment" to identify
training content
assessment tests to measure effectiveness of training
equipment to be used in delivering the training
methods of training
2. Compensation: Job Analysis can be used in compensation to identify or
determine:
skill levels

 compensable job factors

work environment (e.g., hazards; attention; physical effort)
responsibilities (e.g., fiscal; supervisory)
required level of education
3. Selection Procedures : Job Analysis can be used in selection procedures to
identify or develop
job duties that should be included in advertisements of vacant positions;
appropriate salary level for the position to help determine what salary
should be offered to a candidate;
minimum requirements (education and/or experience) for screening
applicants;
interview questions
4. Performance Review:Job Analysis can be used in performance review to identify
or develop:
goals and objectives
performance standards
evaluation criteria
length of probationary periods
duties to be evaluated
Process of Job Analysis
Identification of Job Analysis Purpose: Well any process is futile until its purpose
is not identified and defined. Therefore, the first step in the process is to
determine its need and desired output.
Who Will Conduct Job Analysis: The second most important step in the process
of job analysis is to decide who will conduct it. Some companies prefer getting
it done by their own HR department while some hire job analysis consultants.
Job analysis consultants may prove to be extremely helpful as they offer
unbiased advice, guidelines and methods.
How to Conduct the Process: Deciding the way in which job analysis process
needs to be conducted is surely the next step. A planned approach about how
to carry the whole process is required in order to investigate a specific job.
Strategic Decision Making: Now is the time to make strategic decision. Its
about deciding the extent of employee involvement in the process, the level of
details to be collected and recorded, sources from where data is to be
collected, data collection methods, the processing of information and
segregation of collected data.
Training of Job Analyst: Next is to train the job analyst about how to conduct
the process and use the selected methods for collection and recoding of job
data.
Preparation of Job Analysis Process: Communicating it within the organization is
the next step. HR managers need to communicate the whole thing properly so
that employees offer their full support to the job analyst.
Data Collection: Next is to collect job-related data including educational
qualifications of employees, skills and abilities required to perform the job,
working conditions, job activities, reporting hierarchy, required human traits,
job activities, duties and responsibilities involved and employee behaviour.

Documentation, Verification and Review: Proper documentation is done to

verify the authenticity of collected data and then review it. This is the final
information that is used to describe a specific job.
Developing Job Description and Job Specification: Now is the time to segregate
the collected data in to useful information. Job Description describes the roles,
activities, duties and responsibilities of the job while job specification is a
statement of educational qualification, experience, personal traits and skills
required to perform the job.

Objective of job analysis:

Work simplification: - Job analysis provides the information related to job and
this data can be used to make process or job simple. Work simplification means
dividing the job into small parts i.e. different operations in a product line or
process which can improve the production or job performance.
Setting up of standards: -Standard means minimum acceptable qualities or
results or performance or rewards regarding a particular job. Job analysis
provides the information about the job and standard of each can be established
using this information
Support to personnel activities:- Job analysis provides support to various
personnel activities like recruitment, selection, training and development, wage
administration, performance appraisal etc.

Job Design
Job design follows job analysis i.e. it is the next step after job analysis. It aims at
outlining and organising tasks, duties and responsibilities into a single unit of work
for the achievement of certain objectives. It also outlines the methods and
relationships that are essential for the success of a certain job. In simpler terms it
refers to the what, how much, how many and the order of the tasks for a job/s. Job
design essentially involves integrating job responsibilities or content and certain
qualifications that are required to perform the same. It outlines the job
responsibilities very clearly and also helps in attracting the right candidates to the
right job. Further it also makes the job look interesting and specialised.
Benefits of Job Design
The following are the benefits of a good job design:
Employee Input: A good job design enables a good job feedback. Employees
have the option to vary tasks as per their personal and social needs, habits and
circumstances in the workplace.
Employee Training: Training is an integral part of job design. Contrary to the
philosophy of leave them alone job design lays due emphasis on training
people so that are well aware of what their job demands and how it is to be
done.
Work / Rest Schedules: Job design offers good work and rest schedule by clearly
defining the number of hours an individual has to spend in his/her job.
Adjustments: A good job designs allows for adjustments for physically
demanding jobs by minimising the energy spent doing the job and by aligning
the manpower requirements for the same.

Approaches to Job Design

Human Approach:The human approach of job design laid emphasis on
designing a job around the people or employees and not around the
organizational processes. In other words it recognizes the need of designing
jobs that are rewarding (financially and otherwise) and interesting at the same
time.
Engineering Approach: The engineering approach was devised by FW Taylors et
al. They introduced the idea of the task that gained prominence in due course
of time. According to this approach the work or task of each employee is
planned by the management a day in advance. The instructions for the same
are sent to each employee describing the tasks to e undertaken in detail. The
details include things like what, how and when of the task along with the time
deadlines. The approach is based on the application of scientific principles to
job design.
The Job Characteristics Approach:The job characteristics approach was
popularized by Hackman and Oldham. According to this approach there is a
direct relationship between job satisfaction and rewards. They said that
employees will be their productive best and committed when they are
rewarded appropriately for their work. They laid down five core dimensions that
can be used to describe any job - skill variety, task identity, task significance,
autonomy and feedback.
Factors Affecting Job Design
1. Proper scope of job:
The scope of the job should be proper. If the scope is narrow (less), then the job will
not be challenging. It will not give an opportunity for development. The manager will
not get satisfaction after completing an easy job. If the scope of the job is very wide,
then the manager will not be able to handle it properly. This will cause stress,
frustration and loss of control. Therefore, scope of the job must be balanced and
proper.
2. Full-time challenge of the job: The job should be so challenging that it takes up the
full-time and effort of the manager. So, the service of the manager must be fully
utilised. If not, the manager will have a lot of free time. He will use this free time to
interfere in the work of his subordinates. This will cause problems and conflicts
because subordinates do not like unnecessary interference from their superiors.
3. Managerial skills: The skills of the manager should be considered before designing
his job. All managers do not have equal skills. So jobs should be designed after
considering the skills of the manager. So, a manager having a high level of skill
should be given very challenging jobs while a manager having a low level of skill
should be given fewer challenging jobs. Jobs must be made flexible so that it can be
changed according to the skills of the manager.
4. Organisation's requirements: Jobs must be designed according to the requirements
of the organisation. We cannot use the same job design for all organisations.
5. Individual likes and dislikes: People have different likes and dislikes. Some people
like to work alone while some people prefer to work in groups. Some people want to
do only planning and decision making while other people like to implement these
plans and decision. So, individual likes and dislikes must be considered while
designing the job.

6. Organisational structure: Organisational structure also affects the job design.

Individual jobs must fit into the organisation's structure.
7. Technology: The level of technology used by the organisation also affects the job
design. An organisation having a high level of technology will have different job
designs compared to an organisation having a low level of technology.

Job enrichment means a vertical expansion of a job. It is different from job

enlargement. Job enlargement means a horizontal expansion of a job. Job enrichment
makes the job more meaningful, enjoyable and satisfying. It gives the workers more
autonomy for planning and controlling the job. It also gives the workers more
responsibility. Job enrichment gives the workers opportunities for achievement,
recognition, advancement and growth. So, the workers are motivated to work harder.
Features of Job Enrichment
The characteristics or features of job enrichment are: Nature of Job : Job enrichment is a vertical expansion of the job. The workers
are given jobs, which require higher-level knowledge, skills and responsibilities.
Job enrichment improves the quality of the job.
Objective : The objective of Job enrichment is to make the job more lively and
challenging. So, the job is a source of motivation for the workers.
Positive Results : Job enrichment gives positive results if the workers are highly
skilled. This is because workers are given opportunities to show initiative and
innovation while doing their job.
Direction and Control : Job enrichment encourages self-discipline. It does not
believe in external direction and control.
Techniques of Job Enrichment
Increasing the responsibility of the activity
Providing wider scope, more sequence and increased pace of the work
Giving a natural unit of work either to an employee or group of employees
Providing the freedom of work by minimizing controls
Allowing the employees to set their own standards or targets
Providing the employees the control of information and allowing them to
monitor their own performance
Encouraging employee participation in planning, innovations and creation
Steps in Job Enrichment
Selecting those jobs which permit close relation between motivation and job
performance
Introducing a pilot scheme basis
Starting with the assumption that these jobs can be changed
Brainstorming a list of changes that may enrich the jobs
Concentration on motivational factors such as achievement, responsibility, selfcontrol, etc.
Trying to change the content of the job rather than changing the employees
from their jobs
Providing adequate training, guidance, encouragement and help
Introduction of job enrichment programmes with care
Preparing the specific programme for each project and ensuring to control the
information to monitor the performance

Induction
Induction is the process of receiving and welcoming employees when they first join a
company and giving them the basic information they need to settle down quickly and
happily and start work. Induction has the following aims:
to smooth the preliminary stages when everything is likely to be strange and
unfamiliar to the starter;
to establish quickly a favourable attitude to the company in the mind of the
new employee so that he or she is more likely to stay;
to obtain effective output from the new employee in the shortest possible time
OBJECTIVES OF INDUCTION AND ORIENTATION
To facilitate and foster the employees social and professional orientation into
the workplace
To demonstrate to the new employee the companys desire to help in his or her
acclimatization
To bridge the culture gap in a diverse workforce
To enable the employee to obtain answers to his or her questions and to access
relevant information
To support the employee and enable him or her to become effective as quickly
as possible
To determine if the employee clearly understands the expectations with regard
to his or her tasks, roles and responsibilities
To ensure that the employee is familiar with the companys standards and
policies
To familiarize the employee with the organizations culture and values
To increase the companys visibility and contribute to the enhancement of its
image
Steps in the Induction and Orientation Process
STEP 1: PREPARING FOR THE INDUCTION
The immediate supervisor should prepare the contents of the orientation with the
designated mentor. Together, they should ask the following three questions in order
to determine what information to transmit to the newcomer:
1 What should be included in the orientation?
2 What are the objectives?
3 What does the new employee need to know about his or her tasks?
STEP 2: INDUCTION
Reception by the department manager (immediate supervisor)
Word of welcome (presentation of the corporate mission and challenges)
Presentation of the organizations key values and expectations (schedule,
personal and organizational expectations)
Presentation of the employee manual, working conditions and organization
chart
Submission and signing of required documents (employee file, group insurance,
pay sheet, etc.)
Tour of the workplace with the department manager.
Designation of the workspace and tools available (computer, office supplies,
etc.)

STEP

STEP

Tour of the different company departments including rest and recreation areas
(employee cafeteria etc.)
Introduction to staff and the work team.
3: ORIENTATION
Introduction to the mentor
Presentation of mutual expectations
Presentation of the roles, responsibilities and tasks relating to the job
Explanation, observation and experimentation
Presentation of work methods
4: FOLLOW-UP
Evaluation by the immediate supervisor
Evaluation of employee satisfaction
Mentors feedback on the integration (employee strengths, areas requiring
improvement)
Identification of training requirements for the position

Management Development Programme

Management/Executive development involves making exercises in managerial
manpower flows, and future inventories of human skills, abilities and resources to
match the demands of expanding and diversifying operations of the organization,
forecasting of HR balance sheet, and programmes to even out manpower surpluses
and deficits. MD has two main tasks: the improvement of management performance
and the organization of management succession.
Factors Influencing Executive Development
Failure to train the managers will lead to ineffective and inefficient managers
who negatively affect the organizations performance.
In the absence of Trg. & Dev. Avenues, the performing managers may get demotivated and frustrated in leading the organizations.
The organizational performance may be affected by the loss of market shares,
lower sales, reduced profitability, etc.
The absence/shortage of trained and skilled managers makes it important for
the organization to have appropriate retention strategies.
Principles of Management Development
Encouraging growth and career development of employees as per the
philosophy of HRM
Improving skills and knowledge that can be immediately applied at work
Increasing motivation and job satisfaction of managerial personnel
Creating a network of colleagues for problem solving and support
Promoting communication and planning throughout the organization and
department networks.
Strategies to Support Management Development
Modeling and encouraging the desired behaviour that fits well with
organizations mission, vision, values, objectives and culture
Discussing and creating a development plan during the performance planning
cycle
Endorsing executives attending classes and activities that support
development plans and goals

Discussing what the executives learned in classes and support integrating new
ideas/methods to workplace issues
Providing timely behavioural feedback on performance and discussing ways to
improve and develop further
Providing opportunities for executives to develop through mentoring, cross
training, internships, professional associations, committee and task force
assignments, skill assessment programmes, and university extension
programmes
Objectives
To provide effective managerial resources to the business at all levels now and
in the future as well as to provide opportunities for self-development and
career growth
To develop a set of personal attributes which are required to understand
customers present and future needs, create innovative products and services,
mobilize energy and commitment of people and effective strategy execution
and are related to potential such as analytical skills, leadership skills, vision.
To develop managerial talent necessary for meeting present as well as future
organizational manpower needs.
To attract and retain best professionals in the organization
To enable managers to develop management skills and competencies needed
to achieve excellent levels of performance in both present and future jobs
(competencies: Communication, Task effectiveness, People oriented, Strategic
and conceptual)
To develop intrapreneurship and facilitate transfer of skills and learning to other
employees of the organization
Level-wise objectives of the management development
A. Top Management
To improve thought processes and of ability in order to uncover and examine
problems and take decisions
To broaden the outlook of the executive in regard to his role, position and
responsibilities in the organization and outside
To think through problems which may confront the organization now or in the
future
To understand economic, technical and institutional forces in order to solve
business problems
To acquire knowledge about the problems of human relations
B. Middle line management
To establish a clear picture of executive functions and responsibilities
To bring about an awareness of the broad aspects of management problems
and appreciation of inter-departmental relations
To develop the ability to analyze problems and to take appropriate action
To inculcate knowledge of human motivation and human relationships
To develop responsible leadership

Potential Appraisal
The process to identify the latest talent of people to cater to the future needs of the
organization.
Objectives:
To assess an individual in terms of the highest level of work the individual will
be able to handle comfortably and successfully in future without being
overstretched
To identify the potential of a given employee to occupy higher positions in the
organizational hierarchy and undertake responsibilities.
To assist the organization in discharging its responsibility of selecting and
developing managers for the future to ensure its continuous growth.
Aim of Potential Appraisal
Inform employees about their future prospects
Help the organization chalk out of a suitable plan
Update training efforts from time to time
Advise employees about what they must do to improve their career prospects
Process of introducing potential appraisal
Step I:Role Descriptions (preparing job description)
Step II:Qualities needed to perform the roles (technical, managerial jobs and
behavioural dimensions)
Step III: Rating mechanisms
- Rating by others
- Tests (assessment centre, business games, in-basket, role play)
- Games
- Past records
Step IV: Organizing the system
Step V: Feedback

Recruitment and Selection

Selection is the process by which managers and others use specific instruments to
choose from a pool of applicants a person or persons most likely to succeed in the
job(s), given management goals and legal requirements.
Factors to be considered for selection

Physical characteristics
Personal characteristics
Skill & ability
Competency
Temperament and character
Interests
Organizational and social environment

Recruitment is the generating of applicants or applications for specific positions

to be filled up in the organization. It is a process of searching for and obtaining
applicants for jobs. So that the right people in right number can be selected.
Step 1 Recruitment planning
- numbers, types
Step 2 Strategy development
-where, how, when
Step 3 Searching
-internal source or external source
Step 4 Screening
Step 5 Evaluation & Control
Factors impacting recruitment
Economic factors
Social factors
Technological factors
Political factors
Legal factors
The Factories Act
The Apprentices Act

The Employment Exchanges Act

The Contract Labour Act
The Child Labour Act

Sources of Recruitment
Internal Sources
Present employees (promotion, transfer)
Employee referrals
Labour unions
Former employees (retired, retrenched)
Nepotism (family owned firms)
Previous applicants
Job posting (hiring from within: the organization publicises job openings on
bulletin boards, electronic media, etc.)
External Sources
Employment exchanges
Employment agencies
Advertisement
Campus recruitment
Deputation
Professional associations (AIMA, IE)
Labour contractors
Gate recruitment
Employee leasing
Word-of-mouth (information about possible vacancies)
Internet recruiting
Walk-ins
Raiding or Poaching (the rival firms by offering better terms & conditions, try to
attract qualified employees to join them)
Methods of Recruitment
Direct method (campus recruitment)
Indirect method (advertisement, walk-ins)
Third party method (employment agencies, mgt. consultants, trade unions,
labour contractors)
Merits and demerits of hiring people from within
Merit:
Economical: The cost of recruiting internal candidates is minimal. No expenses
are incurred on advertising.
Suitable: The organization can pick the right candidates having the requisite
skills.
Reliable: The organisation has knowledge about the suitability of a candidate
for a position.
Satisfying: A policy of preferring people from within offers regular promotional
avenues for employees. It motivates them to work hard and earn promotions.
Demerit:
Limited choice: The organisation is forced to select candidates from a limited
pool.

Inbreeding: It discourages entry of talented people, available outside an

organisation.
Inefficiency: Promotions based on length of service rather than merit, may
prove to be a blessing for inefficient candidates.
Bone of contention: Recruitment from within may lead to infighting among
employees aspiring for limited, higher-level positions in an organisation.
Merits and demerits of hiring people from outside
Merits
Wide choice: The organisation has the freedom to select candidates from a
large pool.
Injection of fresh blood: People with special skills and knowledge could be hired
to stir up the existing employees and pave the way for innovative ways of
working.
Motivational force: It helps in motivating internal employees to work hard and
compete with external candidates while seeking career growth.
Long term benefits: Talented people could join the ranks, new ideas could find
meaningful expression, a competitive atmosphere would compel people to give
of their best and earn rewards, etc.
Demerits
Expensive: Hiring costs could go up substantially.
Time consuming: It takes time to advertise, screen, to test and to select
suitable employees.
Demotivating: Existing employees who have put in considerable service may
resist the process of filling up vacancies from outside.
Uncertainty: There is no guarantee that the organisation, ultimately, will be
able to hire the services of suitable candidates. It may end up hiring someone
who does not fit and who may not be able to adjust in the new set-up.

Training Process
Step 1: Needs Assessment
Step 2: Deriving Instructional Objectives
Instructional objectives provide the input for designing the training programme as
well as for the measures of success that would help assess effectiveness of the
training programme
Step 3: Designing Training and Development Programme
Who participates in the programme?
Who are the trainers?
What methods and techniques are to be used for training?
What should be the level of training?
What learning principles are needed?
Where is the programme conducted?
Learning principles (motivation, recognition of individual differences, practice
opportunities, reinforcement, feedback, goals, schedules of learning, meaning of
material, transfer of learning)
Step 4: Implementation of the Training Programme
Step 5: Evaluation of the Programme
Step 6: Feedback

Promotion

Employee movement from current job to another (vertical movement) that is

higher in pay, responsibility and/or organization level is known as promotion.
Promotion has powerful motivational value as it compels an employee to utilize
his talents fully, and remain loyal and committed to his or her job and the
organization.
Promotion brings enhanced status, better pay, increased responsibilities and
better working conditions to the promote.

It is considered good personnel policy to fill vacancies in a higher job through

promotions from within because such promotions provide an inducement and
motivation to the employees and also remove feelings of stagnation and
frustration.
Types of Promotion
Horizontal Promotion (When an employee is shifted in the same category) Ex.
Junior clerk to Senior clerk
Vertical Promotion
Dry Promotion (When promotion is made without increase in salary)
Objectives of Promotion
To recognize an employees skill and knowledge and utilize it to improve the
organizational effectiveness.
To reward and motivate employees to higher productivity.
To develop competitive spirit and inculcate the zeal in the employees to
acquire skill, knowledge, etc.
To promote employees satisfaction and boost their morale
To build loyalty among the employees toward organization
To promote good human relations
To increase sense of belongingness and retain skilled & talented people
To attract trained, competent and hard working people
Promotion Policy: It is just like a double-edged weapon and every organization
needs to evolve and implement a suitable promotion policy for its employees. A
sound and good policy must have the following characteristics:
1. It must provide equal opportunities for promotion across the jobs, departments,
and regions.
2. It must be applied uniformly to all employees irrespective of their background
3. It must be fair and impartial
4. The basis of promotion must be clearly specified and made known to the
employees
5. It must be correlated with career planning. Both quick and delayed promotions
must be avoided as these ultimately adversely affect the organizational effectiveness
6. Appropriate authority must be entrusted with the task of making final decision.
7. The basis of promotion may be seniority or merit or both
8. Seniority for promotion should be considered only when there are more than one
aspirant of equal merit.
9. Employees' are promoted on a non-vacancy basis after they complete a minimum
period of service and such promotions are time bound and not based on vacancies or
merit.

10. A promotion policy should establish a well-defined promotion chart, showing who
can go up to what level in the organization.
11. A promotion should be preceded by a job analysis and performance appraisal.
12. The promotion policy should be discussed with labour unions, and their
acceptance should be obtained in the form of an agreement.
13. 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.

Transfer

A transfer is 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
(Flippo).
A transfer is a change in job assignment. It may involve a promotion or
demotion or no change at all in status and responsibility .
A transfer refers to lateral movement of employees within the same grade,
from one job to another.
Transfer may be initiated either by the company or the employee.
Transfer could be permanent, temporary or ad hoc to meet emergencies
Transfer decisions may be perceived as negative or positive depending upon
an individuals personal preferences, needs and aspirations.

Purposes of transfer
To meet organizational requirements
To satisfy employee needs
To utilize employees better
To make the employee more versatile
To adjust the workforce
To provide relief to overburdened employees
To reduce conflicts
To punish employees
Principles of Transfers

The frequency of transfers and the minimum period between transfers need to
be decided upon and made known to all the employees.
The authority who would handle transfers to be decided upon.
The criteria for entertaining transfers need to be laid down and strictly adhered
to.
The area of the organization over which transfers can be made need to be
defined.
Transfers should be clearly defined as permanent or temporary.
The effect of the transfer on the pay and seniority of the transferred employee
may be clearly evaluated.
The performance of the employee needs to be assessed before transferring
him or her to different job.

The interests of the organization are not be forgotten in framing a policy of

transfers.

Demotion
Employee movement that occurs when an employee is moved from one job to
another that is lower in pay, responsibility and/or organization level is called
demotion. It affects the status, pride, career and income of the employee.
Demotion Policy
A clear and reasonable list of rules should be framed, violation of which would
subject an employer to demotion.
Relevant information should be clearly communicated to employees
Any violation be investigated thoroughly by a competent authority

REWARD MANAGEMENT
Reward management is concerned with the strategies, policies and processes
required to ensure that the value of people and the contribution they make to
achieve organizational, departmental and team goals is recognized and rewarded.
OBJECTIVES OF REWARD MANAGEMENT
Support the organisations strategy
Recruit & retain
Motivate employees
Internal & external equity
Strengthen psychological contract
Financially sustainable
Comply with legislation
Efficiently administered
Aims of Reward Management
Support the achievement of the organizations strategic and short term
objectives
Help to communicate the organizations values and performance expectations
Support culture management and change
Drive and support desired behaviour
Encourage value-added performance
Promote continuous development
Compete in the employment market
Motivate all members of the organization from the shop-floor to the board room
Promote flexibility
Provide value for money
Achieve fairness and equity
PRINCIPLES FOR EFFECTIVE REWARD MANAGEMENT
Guiding principles for effective reward management
Align reward strategies with the business strategy
Align reward policies with the culture of the organization
Value employees according to their competence, skill and contribution

Remember that reward management is about the management of diversity not

the control of uniformity
Ensure that reward processes are transparent
Provide line managers with the authority and skills needed to use rewards to
achieve their goals

DYNAMIC PAY
In 1996, Flannery expounded the concept of dynamic pay and suggested the nine
principles which support a successful pay strategy
Align compensation with the organizations culture, values and strategic
business goals
Link compensation to the other changes
Time the compensation programme to support other change initiatives best
Integrate pay with other people processes
Democratize the pay process
Demystify compensation
Measure results
Refine
Be selective

Sequence for developing reward processes

Step I
Analyze Context
Analyze organization culture, structure, internal and external
environment, business plans
Asses plans or need for change
Conduct diagnostic review of present reward arrangements to determine
strengths and
weaknesses
Step II
Define Issues
Identify issues to be addressed in the light of the contextual analysis and
diagnostic review
Step III
Development of Appropriate Plan
Plan development programme covered:
Areas for development
Objectives to be achieved
Resources to be used (Internal & External Consultants, Project Teams,
Financial budget)
Cost/Benefit analysis
Timetable
Arrangements for communication, consultation and training
Step IV
Develop Process
Develop the preferred alternative, involving employees and keeping them
informed.
Step V
Test Process
Were possible and desirable, pilot test the process and modify as required.
Step VI
Implementation
Develop and execute implementation plan including training.
Step VII Monitoring

Monitoring of implementation.
Step VIII Evaluation
Evaluate impact of new process and amend as necessary.

KNOWLEDGE MANAGEMENT
Blackler (1995) notes that Knowledge is multifaceted and complex, being both
situated and abstract, implicit and explicit, distributed and individual, physical and
mental, developing and static, verbal and encoded. He categorizes forms of
knowledge as:
embedded in technologies, rules and organizational procedures;
encultured as collective understandings, stories, values and beliefs;
embodied into the practical activity-based competencies and skills of key members
of the organization
embraced as the conceptual understanding and cognitive skills of key members.

Ten ways in which HR can contribute to KM.

1. Help to develop an open culture in which the values and norms emphasize the
importance of sharing knowledge.
2. Promote a climate of commitment and trust.
3. Advise on the design and development of organizations which facilitate knowledge
sharing through networks and communities of practice (groups of people who share
common concerns about aspects of their work), and teamwork.
4. Advise on resourcing policies and provide resourcing services which ensure that
valued employees who can contribute to knowledge creation and sharing are
attracted and retained.
5. Advise on methods of motivating people to share knowledge and rewarding those
who do so.
6. Help in the development of performance management processes which focus on
the development and sharing of knowledge.
7. Develop processes of organizational and individual learning which will generate
and assist in disseminating knowledge.
8. Set up and organize workshops, conferences, seminars and symposia which enable
knowledge to be shared on a person-to-person basis.
9. In conjunction with IT, develop systems for capturing and, as far as possible,
codifying explicit and tacit knowledge.
10. Generally, promote the cause of knowledge management with senior managers
to encourage them to exert leadership and support knowledge management
initiatives.

KM Process
Stage I: Identify stage (which competencies are critical to success)
Stage II: Collect stage (acquiring existing knowledge, skills, theories and experiences
needed to create the selected core competencies and knowledge domains)
Stage III: Select stage (continuous stream of collected and formalized knowledge and
assesses its value)

Stage IV: Store stage (knowledge must be organized and represented into different
knowledge structures within a knowledge repository)
Stage V: Share stage (retrieves knowledge from the corporate memory and makes it
accessible to uses)
Stage VI: Apply stage (retrieves and uses the needed knowledge in performing tasks,
solving problems, making decisions, researching ideas and learning)
SUCCESSFUL KM PROGRAMMES
Information is widely disseminated throughout the organization. Wherever it is
needed, it is accessible.
Accessible at a fast rate of speed.
Virtual communities of practice share what is known in a global fashion,
independent of time zones and other geographic limitations.
Business boundaries are broad, and often virtual in nature.
Collaboration to support continuous innovation and new knowledge creation.
Symptoms of KM Diffusion Challenges
No internal learning communities
Lack of psychological safety
Lack of workplace trust
Arrogance of people who believe they know everything, so why try?
Lack of communication within an organization made evident by continually
reinventing the same wheel
Negativity and unrealistic expectations
SUSTAINABILITY OF A KM ENDEAVOR
There are three fundamental processes that sustain profound changes such as the
introduction of a KM system:
developing networks of committed people
improving business results
enhancing personal results
To achieve sustainability, there must be a focus on learning, and learning how to
harness the learning capabilities that lead to innovation
For significant change to lead to sustainability, hierarchical control must be put
aside.
The emergence and development of informal networks must be supported so
that people can share their tacit knowledge and help one another.
Managers need to surrender control.
And mental models need to be examined

COMPENSATION AND REWARDS

Compensation is the sum total of all forms of payments and rewards provided to
employees for performing tasks to achieve organizational objectives. Compensation
and rewards management is a complex process that includes decisions regarding
benefits and variable pay and is one of the most significant and dynamic of HR
practices. It suggests an exchange relationship between the employee and the
organization. The compensation an employee receives determines ones standard of

living and purchasing power. Employees seek to maximize their rewards to meet their
aspirations. Employees also expect to be compensated fairly and rewarded for the
effort, skills and knowledge that they contribute towards the achievement of
organizational goals. For the organization, pay and rewards are important since these
affect its profitability. Compensation constitutes the major cost of doing business,
since it determines the employee cost.
PRINCIPLES OF WAGE AND SALARY ADMINISTRATION
Wage and salary plans should be sufficiently flexible.
Job evaluation must be done scientifically.
Wage and salary administration plans must always be consistent with overall
organizational plans and programmes.
Wage and salary administration plans and programmes should be in conformity
with the social and economic objectives of the country.
Wage and salary administration plans and programmes should be responsive to
the changing local and national conditions.

OBJECTIVES Compensation and Reward Management

Fair treatment of employees in line with effort, skills, or competencies

Attract and retain high-performing employees
Motivate employees towards higher performance
Reinforce desirable employee behaviour
Communicate to the employee his or her worth to the organization
Align employee efforts with achievement of organizational objectives
Enhance co-operation and collaboration among team members
Provide employee social status

TYPES OF COMPENSATION
Financial (Extrinsic rewards):
Direct financial compensation and rewards: These refer to monetary payments made
to employees in exchange for work. These include (Basic salary, DA, Bonus ,
Incentives, Overtime payments, Variable Pay, and Commission). Indirect financial
compensation and rewards: These include benefits such as pensions, gratuity,
insurance, etc. These rewards are received by all employees on the basis of their
membership in the organization. Both direct and indirect financial compensation are
called extrinsic rewards.

Non-financial compensation is the satisfaction that an individual derives from

the job or from the environment in which the employee works.
Factors:
Challenging
job
Autonomy
Responsibility
Recognition
&
Praise
for
good
performance
Personal
growth

Superior-subordinate
Interpersonal
Close friendships with colleagues
Quality of Work life
These are also called intrinsic rewards.

relationship
relations

Quality of Work Life

QWL

Quality of work life (QWL) relates to the overall satisfaction of employees at

their work. Rising levels of education, changing aspirations, shift in values, etc.
have changed the attitude of employees. They are now trying to extract a
sense of maximum personal fulfillment from being part of an organization.
QWL is a way of thinking about people, work and organizations. It creates a
sense of fulfillment in the minds of the employees and contributes to greater
job satisfaction, improving productivity, adaptability and overall effectiveness
of an organization.
Quality of Work Life (QWL) is a philosophy, a set of principles, which holds that
people are the most important resource in the organization as they are
trustworthy, responsible and capable of making valuable contributions and
they should be treated with dignity and respect (Straw and
Heckscher, 1984).
QWL relates to the overall satisfaction of employees at their work. The
elements which are relevant for an individuals quality of work life include the
task, the physical work environment, social environment within the
organization, administrative system and the relationship between life on and
off the job (Cunningham and Eberle, 1990).
Initiatives
Safe and Healthy Work Environment
Promotion
Re Job Design
Employee Welfare
Growth and development
Suggestion System
Adequate and Fair Compensation
Stress Management
Communication
Team Building

Outcomes of QWL
Individual Outcomes
Motivation
Commitment
Satisfaction
Loyal
Higher performance
Organizational Outcomes
Higher profits & productivity

Improved quality
Satisfied/Loyal customers
Less absenteeism
Increased retention
Revenue growth

Talent Management
Talent Management is a set of integrated organizational HR processes designed to
attract, develop, motivate, and retain productive, engaged employees. The goal of
talent management is to create a high-performance, sustainable organization that
meets its strategic and operational goals and objectives.
Talent Management Process
Understanding the Requirement: It is the preparatory stage and plays a crucial
role in success of the whole process. The main objective is to determine the
requirement of talent. The main activities of this stage are developing job
description and job specifications.
Sourcing the Talent: This is the second stage of talent management process
that involves targeting the best talent of the industry. Searching for people
according to the requirement is the main activity.
Attracting the Talent: it is important to attract the talented people to work with
you as the whole process revolves around this only. After all the main aim of
talent management process is to hire the best people from the industry.
Recruiting the Talent: The actual process of hiring starts from here. This is the
stage when people are invited to join the organization.
Selecting the Talent: This involves meeting with different people having same
or different qualifications and skill sets as mentioned in job description.
Candidates who qualify this round are invited to join the organization.
Training and Development: After recruiting the best people, they are trained
and developed to get the desired output.
Retention: Certainly, it is the sole purpose of talent management process.
Hiring them does not serve the purpose completely. Retention depends on
various factors such as pay package, job specification, challenges involved in a
job, designation, personal development of an employee, recognition, culture
and the fit between job and talent.
Promotion: No one can work in an organization at the same designation with
same job responsibilities. Job enrichment plays an important role.
Competency Mapping: Assessing employees skills, development, ability and
competency is the next step. If required, also focus on behaviour, attitude,
knowledge and future possibilities of improvement. It gives you a brief idea if
the person is fir for promoting further.
Performance Appraisal: Measuring the actual performance of an employee is
necessary to identify his or her true potential. It is to check whether the person
can be loaded with extra responsibilities or not.
Career Planning: If the individual can handle the work pressure and extra
responsibilities well, the management needs to plan his or her career so that
he or she feels rewarded. It is good to recognize their efforts to retain them for
a longer period of time.

 Succession Planning: Succession planning is all about who will replace whom in
near future. The employee who has given his best to the organization and has
been serving it for a very long time definitely deserves to hold the top position.
Management needs to plan about when and how succession will take place.
Exit: The process ends when an individual gets retired or is no more a part of
the organization.

Characteristics of Innovative Organization

Open systems focus

Acceptance of ambiguity
Tolerance of the impractical
Tolerance of risk
Tolerance of conflict
Focus on ends
Low external control

INNOVATION MODEL
Model 1: The Suggestion System: Suggestion programs provide employees an
organized system through which to submit ideas and to have those ideas
considered by a panel of dispassionate reviewers, who accept or reject them
depending on pre-established criteria from management.
Model 2: Continuous Improvement Teams: Unlike suggestion programs that
focus on motivating individual contributors to come forward with their ideas,
Continuous Improvement Model systems rely on team collaboration
Model 3: New Venture Teams: The goal of the New Venture Team Model is
decidedly not cost-saving ideas, not incremental improvements, and not
process innovations.
Rather, the goal is more apt to be surfacing (and funding) unconventional
product, service, or strategy ideas that have the potential to be breakthroughs.
Model 4: The Incubator Lab: the basic idea of incubators was not too different
from the skunkworks approach pioneered by Lockheed during World War II to
rapidly develop and launch new aircraft by forming small, dedicated teams
separate from the bureaucracy.
Model 5: Innovation Teams: The gist of this approach is to set up a companywide network of people with demonstrated skills in innovation and give them
very clear marching orders: Go out and find some new ideas that have
promise.

EMPLOYEE ENGAGEMENT
Burke (2005) considered engagement as equivalent to direct assessment of
employees satisfaction with the organization, his job, work group and working
environment.
More commonly, employee engagement has been defined as exhibiting
discretionary effort defined as extra time, brainpower and energy (TowersPerrin, 2003) for accomplishing organizational goals.

 An engaged employee is believed to display voluntary effort in solving

organizational problems without being asked to do so, a behaviour described as
discretionary effort.
Engaged employees and organizations go the extra mile, and both reap mutual
benefits.
Gibson (2006) has defined employee engagement as a heightened emotional
connection that an employee feels for his or her organization, that influences
him or her to exert greater discretionary effort to his or her work.
High levels of employee engagement are associated with high levels of
organizational performance (Soladati, 2007). A lack of employee engagement
can lead to disloyalty and organizational failure (Khan, 2007).
The focus for HR was on improving employee engagement, which was about
creating an emotional connection with employees so that they are passionate,
committed, and long term attachment to the organization (Tomlinson, 2010).

DRIVERS OF EMPLOYEE ENGAGEMENT

Career Development
Empowerment
Equal Opportunities and Fair Treatment
Pay and Benefits
Communication
Performance Appraisal
Co-Operation
Family Wellbeing

Impact of Work Culture on Employee Engagement

Employee Loyalty, Employee
Productivity, Financial Success.

Retention,

Improved

Performance,

Improved

PERFORMANCE MANAGEMENT
A process of designing and executing motivational strategies, interventions and
drivers with an objective to transform the raw potential of human resource into
performance.
A process that consolidates goal setting, performance appraisal, and
development into a single, common system, the aim of which is to ensure that
the employees performance is supporting the companys strategic aims.
PERFORMANCE MANAGEMENT INVOLVES:
Analyzing the objectives and goals for the dept. or work unit and ensuring that
they relate to the overall goals of the organization.
Analyzing the employees skills and assignments as they relate to company,
department, or unit goals.
Clearly communicating performance goals and expectations to each employee
and gaining agreement on those goals and expectations.
Recognizing and acknowledging the good performance of employees.
Recognizing where performance needs to be improved and providing
employees with the necessary support to improve it.

SIGNIFICANCE OF PERFORMANCE MANAGEMENT

Competitiveness
Sustainable Results
Collective Development
Measurable Management
Integrated Motivational tool
Institutionalizing High Performance
Business-Employees Performance
Managerial Equity
Renewal of Competencies
Challenges of Performance Management
Create a culture of excellence that motivates employees at all levels
Match organizational objectives with individual aspirations
Equip people with requisite skills to discharge their duties well
Clear growth path for talented employees
Provide new challenges to rejuvenate flattening corners
Empower employees to take decisions without fear of failing
Encourage teamwork and team spirit and open communication
Objectives of Performance Management
To bring about better operational or business results.
To meet an individuals development needs.
To provide information useful for manpower planning by identifying men with a
potential for advancement and men with abilities not currently being used.
To provide a basis for compensation action.

PERFORMANCE APPRAISAL
Performance appraisal is method of evaluating the behaviour of employees in
the workspot, normally including both the 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 the systematic evaluation of the individual to his or her potential for
development.
PA is a formal & structured system of measuring an employees job related
behaviours and outcomes to discover how and why the employee is presently
performing on the job and how the employee can perform more effectively in
the future so that the employee, organization and society all benefit.
PLANNING THE APPRAISAL
Before the appraisal
Establish key task areas and performance goals
Set performance goals for each key task area
Get the facts
Schedule each appraisal interview in advance
During the appraisal
Encourage two-way communication
Discuss and agree on performance goals for the future

Think about how you can help the employee to achieve more at work
Record notes of the interview
End the interview on an upbeat note
After the appraisal
Prepare a formal record of the interview
Monitor performance

REQUISITES OF AN EFFECTIVE APPRAISAL SYSTEM

Reliability and validity
Job relatedness
Standardizations
Practical validity (Techniques used)
Legal sanction
Training appraisers
Open communication (feedback)
Employee access to results
Due process (ventilation of grievances)
APPROACHES TO PERFORMANCE APPRAISAL
Four basic approaches to performance appraisal.
Personality-based systems: initiative, drive, intelligence, ingenuity, creativity,
loyalty and trustworthiness.
Generalized descriptive systems (Managerial qualities: organizes, plans,
controls, motivates, delegates, communicates, makes things happen)
Behaviour descriptive systems (actual behaviours required from successful
employees)
Result-centred systems: (superior-subordinate interaction for identification of
performance standards)
FEATURES OF PERFORMANCE APPRAISAL
It is a systematic process (involving three steps: set work standards, assess
employee's performance relative to these standards, and offer feedback to
the employee) to improve performance
It tries to find out how well the employee is performing the job and tries
to
establish a plan for further improvement
The appraisal is carried out periodically according to a definite plan
Performance appraisal is not a past-oriented activity
Performance appraisal is not job evaluation
The focus of appraisals is on employee growth and development. It forces
managers to be coaches rather than judges.
COMPONENTS OF PERFORMANCE APPRAISAL
Key Performance Areas (KPAs)/ Key Result Areas (KRAs)
Tasks/targets/objectives; attributes/qualities/traits
Self appraisal
Performance analysis
Performance ratings

Performance review, discussion or counseling

Identification of training/development needs
Ratings/assessment by appraiser
Assessment/review by reviewing authority
Potential appraisal

Objectives OF PERFORMANCE APPRAISAL

Compensation decisions
Promotion decisions
Training and development programmes
Feedback to the employee
Personal growth and development
CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SYSTEM
Reliability and validity
Job relatedness
Standardization (appraisal forms, procedures, administration of techniques,
ratings, etc.)
Practical viability (practically viable to administer, possible to implement and
economical to undertake continuously)
Legal sanction
Training to appraisers
Open communication
METHODS OF PERFORMANCE APPRAISAL
1. Ranking method (performance comparison)
2. Paired Comparison method (man to man ranking) N(N-1)/2
3. Confidential Report (confidential report prepared by employees immediate
superior. It covers the strengths and weaknesses, key achievements and
failure, personality and behaviour of the employee)
4. Essay method (the evaluator writes a short essay on the employees
performance on the basis of overall impression)
5. Forced Distribution Method (the rater is required to distribute his/her ratings in
the form of a normal frequency distribution and to eliminate the raters bias of
central tendency)
6. GRAPHIC RATING SCALE
Graphic Rating Scales (It is a numerical scale indicating different degrees of a
particular trait. The rater is given a printed form for each employee to be rated on
the basis of several characteristics relating to the personality and performance of
employees like intelligence, quality of work, quantity of work, job knowledge,
leadership ability, dependability, attitude, etc. The rater records his judgment on the
employees trait on the scale)
Disadvantages:
Restrictions on the range and type of rater responses
Differences in rater interpretations of scale item meanings and scale ranges
Rating form deficiencies limit effectiveness of the appraisal
Poorly designed scales that encourage rater errors

7. Checklist Method (a list of statements that describe the characteristics and

performance of employees on the job)
8. Critical Incident Method
Manager keeps written record of highly favorable and unfavorable employee
performance.
These critical incidents are identified after thorough study of the job and discussion
with the staff.
Disadvantages
Variations in how managers define critical incident
Time consuming and limited opportunity to observe.
Most employee actions are not observed and may change if observed.
9. Group Appraisal Method:
A group of evaluators assesses employees
Group consists of the immediate supervisor of the employee, other supervisors
having close contact with the employees work, head of the department and
personnel expert.
The group determines the standards of performance for the job, measures
actual performance of an employee, analyses the causes of poor performance
and offers suggestions for improvements in future
Due to multiple evaluators personal bias is minimized
It is a very time consuming process

BEHAVIORALLY ANCHORED RATING SCALE (BARS)

Composed of job dimensions (specific descriptions of important job behaviors)
that anchor performance levels on the scale.
Combines graphic rating scales with critical incidents method
Critical areas of job performance and the most effective behaviour for getting
results are determined in advance
The rater records the observable job behaviour of an employee and compares
these observations with BARS.
Developing a BARS
Identify important job dimensions
Write short statements of job behaviors
Assign statements (anchors) to job dimensions
Set scales for anchors
Behaviourally Anchored Rating Scales
It is a combination of the rating scale and critical incident techniques of employee
performance evaluation. The steps involved in constructing BARS are as follows:
Step 1 Identify critical incidents (both effective and ineffective job behaviours)
Step 2 Select Performance dimensions
Step 3 Reclassification of incidents by another group (reclassify the critical
incidents generated previously and assign each critical incident to the dimension

that it best describes. Incidents for which there is less than 75 per cent agreement
are discarded as being too subjective).
Step 4 Assigning scale value to the incidents (one-to-seven scale).A rating of one
represents ineffective performance while 7 indicates very effective performance.
Means and S.D. are then calculated for the scale values assigned to each incident. If
S.D.s of I.5 or less (on a 7-point scale ) are retained.
Step 5 Develop the final instrument (choose about six or seven of the incidents as
the dimensions behavioural anchors)

HR Audit
HR audit refers to an examination and evaluation of policies, procedures and
practices to determine the effectiveness of personnel management. HR audit is
reflecting the following:
It is a periodic review to measure the effectiveness of personnel management
and to determine the steps required for more effective use of human resources.
Personnel audit involves a formal, systematic and in-depth analysis,
investigation and comparison.
The primary aim of personnel audit is to determine whether the personnel
policies and practices are consistent with organizational objectives.
It also reveals how effectively the personnel policies and programmes have
been implemented.
A human resource audit evaluates the personnel activities used in an organization.
The audit may include one division or entire company. It gives feedback about :
The function of line managers.
The human resource specialists.
How well managers are meeting their human resource duties.

Benefits of HR Audit
Identifies the contribution of the personnel departments to the organization
Improves professional image of the personnel department
Encourages greater responsibility and professionalism among members of the
personnel department
Clarifies the personnel departments duties and responsibilities
Finds critical personnel problems
Scope of HR Audit
Audit of Corporate Strategy: Corporate Strategy concerns how the organization
is going to gain competitive advantage.
Audit of the Human Resource Function: Audit touches on Human Resource
Information System, Staffing and Development, and Organization Control and
Evaluation.
Audit of Managerial Compliance: Reviews how well managers comply with
human resource policies and procedures.
Audit of Employee Satisfaction:To learn how well employee needs are met.
Audit of the Human Resource Function

1. Human Resource Information System

Human Resource Plans : Supply and demand estimates; skill inventories;
replacement charts and summaries.
Job Analysis Information : Job standards, Job descriptions, Job specifications.
Compensation Management : Wage, salary, and incentive levels; Fringe benefit
package; Employer provided services.
2. Staffing and Development
Recruiting: sources of recruits, availability of recruits, employment applications.
Selection : selection ratios, selection procedures, equal opportunity.
Training and development: orientation programme, training objectives and
procedures, learning rates.
Career development: internal placement, career planning programme, human
resource development efforts.
3. Organization Control and Evaluation
Performance appraisals : standards and measures of performance,
performance appraisal techniques, evaluation interview.
Labor-Management Relations : Legal compliance, management rights, dispute
resolution problems.
Human Resource Controls : employee communications, discipline procedures,
change and development procedures.
Tasks of Auditors
Identify who is responsible for each activity.
Determine the objectives sought by each activity.
Review the policies and procedures used to achieve these activities.
Prepare a report commending proper objectives, policies, and procedures.
Develop an action plan to correct errors in each activity.
Follow up the action plan to see if it solved the problems found through the
audit.
Research approaches to audits
1.
Interviews with employees and managers are one source of information about
human resource activity. Employees and managers comments help the audit
team find that need improvement.
Another useful source of information is the exit interview. Exit interview are
conducted with departing employees to learn their views of the organization.
2. Questionnaires/surveys
Because interviews are time-consuming, costly, and often to only few people, many
human resource departments use questionnaires. Through questionnaire surveys, a
more comprehensive picture of employee treatment can be developed.
Questionnaire may also lead to more candid answers than face-to-face interviews.
employee attitude about supervisors
employee attitude about their jobs
perceived effectiveness of human resource department
3. Historical analysis

Not all the issues of interest to human resource audit are revealed through interviews
or questionnaires. Sometimes insight can be obtained by an analysis of historical
records, such as:
Safety and health records
Grievances records
Compensation studies
Scrap rates
Turnover and absenteeism records
Selection records
Training programme record
4. External information
Outside comparisons give the audit team a perspective against which
their
firms activities can be judged.
Through Department of Labor, industry association, professional association
numerous statistics and report are compiled.
These organizations regularly publishes information about future employment
opportunities, employee turnover rates, work force projection, area wage and
salary survey, work force demography, accident rates, and other data that can
serve as benchmark for comparing internal information.

Process of HR Audits
1) Briefing and orientation:
This is a preparatory meeting of key staff members to: discuss particular issues
considered to be significant, chart out audit procedures, and develop plans and
programme of audit.

2) Scanning material information:

This involves scrutiny of all available information pertaining to the personnel,
personnel handbooks and manuals, guides, appraisal forms, material on recruitment,
computer capabilities and all such other information considered material.
3) Surveying employees:
Surveying employees involves interview with key managers, functional executives,
top functionaries in the organisation, and even employees representatives, if
necessary. The purpose is to pinpoint issues of concern, present strengths,
anticipated needs and managerial philosophies on human resources.
4) Conducting interviews: The direction which audit must follow is based on issues
developed through the scanning of information gathered for the purpose. However,
the audit efforts will get impetus if clarity is obtained as to the key factors of human
resource management selected for audit and the related questions that need to be
examined.
5) Synthesizing:
The data thus gathered is synthesized to present the
current situation
priorities
staff pattern, and

 issues identified.
6) Reporting:
Just as the planning meetings of briefing and orientation, the results of the audit are
discussed within several rounds with the managers and staff specialists. In the
process, the issues that get crystallized are brought to the notice of the management
in a formal report. Follow-ups are necessary after an audit to see if the action plan
used to solve problems found this the audit worked or not.
THE AUDIT REPORT
The audit report is a comprehensive description of human resource activities that
includes both commendations for effective practices and recommendations for
improving practices that are less effective.
Audit report often contain several
sections. One part is for line managers, another is for manager of specific human
resource function, and the final part is for the human resource manager.
Report for line managers: How line managers handle their duties such as:
Interviewing applicants
Training employees
Evaluating performance
Motivating workers
Satisfying employee needs
The report also identifies people problems. Violations of policies and employee
relations law are highlighted.
Report for the HR Specialist: The specialists who handle employment training,
compensation, and other activities also need feedback. Such feedbacks are:
Unqualified workers that need for training
Qualified workers that need for development
What others company are doing
Attitude of operating managers toward personnel policies
Workers pay dissatisfaction

HUMAN RESOURCE PLANNING

Human Resource Planning (H RP) is a step in Human Resource Management. The
process of identifying how many people to select, at what job and at what time is
called Human Resource planning. Human Resource Planning is to get the right
number of employees with the right skills, experience, and competencies in the right
jobs at the right time and at the minimum cost. This Human Resource part of an
organization ensures that the business production requirements are met in an
efficient and effective manner.

Objectives of HRP

Optimum use of human resources

Forecasting of future requirements for human resources
Ensuring of adequate supply of manpower as and when required
Assess surplus or shortage
Linking of HRP with organizational planning
Anticipate the impact of technology on job
Needs of expansion and diversification

Promote employees in a systematic manner

Estimation of the cost of human resources
Coping with changes in market conditions, technology, products & government
regulations in an effective way

Process of Human Resource Planning

1. Analysis of Organizational Plans and Objectives: Human Resource planning
is a part of overall plan of a business organisation. Plans relating to technology,
production, marketing, finance, expansion and diversification give an idea about the
volume of future work activity. Each plan can further be analyzed into sub-plans and
detailed programmes. It is also important to decide the time horizon for which
Human Resource plans are to be prepared.
2. Forecasting Demand for Human Resources: Human Resource planning starts
with the estimation of the number and type of Human Resource required at different
levels and in different departments. The main steps involved are
(a) to determine and to identify present and prospective needs of Human Resource.
(b) to discover and recruit the required number of persons.
(c) to select the right number and type from the available people.
(d) to hire and place in the positions for which they are qualified,
(e) to provide information to the selected people about the nature of work assigned
to them,
(f) to Promote or to transfer as per the needs and the performance of employees
(g) to denote if the employees are disinterested or their performance is not up to the
mark,
(h) to terminate employees if they are not needed or their performance is below
standard.
3. Forecasting Supply of Human Resources: One of the important functions of
Human Resources planning is to deal with allocation of persons to different
departments depending upon the work-load and requirements of the departments in
future. While allocating Human Resource to different departments, care should be
taken to consider appointments based on promotions and transfers. Allocation of
Human Resource should be so planned that available manpower is put to full use.
4. Estimating Manpower Gaps; Net Human Resource requirements gaps can be
identified by comparing demand and supply forecasts. Such a comparison will reveal
either deficit or surplus of Human Resources in future. Deficits suggest the number of
persons to be recruited from outside whereas surplus implies
redundant to be redeployed or terminated. Similarly, gaps may occur in terms of
knowledge, skills
and aptitudes. Employees deficient in qualifications can be trained whereas
employees with higher
skills may be given more challenging jobs as a part of job enrichment.
5. Matching Demand and Supply: It is one of the objectives of Human Resource
planning to assess the demand for and supply of Human Resources and match both
to know shortages and surpluses on both the side in kind and in number. This will
enable the Human Resource department to know overstaffing or understaffing. Once
the manpower gaps are identified, plans are prepared to bridge these gaps. Plans to
meet the surplus manpower may be redeployment in other departments and

retrenchment in consultation, with the trade unions. People may be persuaded to quit
voluntarily retirement. Deficit can be met through Human Resource planning
,recruitment, selection, transfer, promotion, and training plans. Realistic plans for the
procurement and development of manpower should be made after considering the
macro and micro environment which affect the manpower objectives of the
organization.
FACTORS AFFECTING HRP
Type and strategy of Organization:- The type of organization is an important
consideration because it determines the production process 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.
Organizational Growth Cycles and Planning:- The stage of an organizations
growth can have considerable influence on HRP. Need for planning is felt when
the organization enters the growth stage. Internal development of people also
begins to receive attention in order to keep up with the growth.
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 planners deal with
uncertainties by carefully formulating recruitment, selection, and training and
development policies and programmes.
Time Horizons:- Yet another major factor affecting personnel planning is the
time horizon. On one hand, there are short-term plans spanning six months to
one year. On the other hand, there are long-term plans which spread over three
to twenty years. In general, the greater the uncertainty, the shorter the plans
time horizon and vice versa.
Type and quality of Information:- The information used to forecast personnel
needs originates from a multiple of sources. A major issue in personnel
planning is the type of information which should be used in making forecasts.
Nature of jobs being filled:- Personnel planners must consider the nature of jobs
being filled in the organization. Job vacancies arise because of separations,
promotions and expansion strategies.
Off-loading the work:- Several organizations off-load part of their work to
outside parties either in the form of sub-contracting or ancillarisation. Offloading is a regular feature both in the public sector as well as in the private
sector. Most organizations have surplus labour and they do not want to worsen
the problem by hiring more people. Hence, the need for off-loading.

HRP PROCESS
1. Assessing Human Resources
The assessment of HR begins with environmental analysis, under which the external
(PEST) and internal (objectives, resources and structure) are analyzed to assess the
currently available HR inventory level. After the analysis of external and internal
forces of the organization, it will be easier for HR manager to find out the internal
strengths as well as weakness of the organization in one hand and opportunities and

threats on the other. Moreover, it includes an inventory of the workers and skills
already available within the organization and a comprehensive job analysis.
2. Demand Forecasting: HR forecasting is the process of estimating demand for and
supply of HR in an organization. Demand forecasting is a process of determining
future needs for HR in terms of quantity and quality. It is done to meet the future
personnel requirements of the organization to achieve the desired level of output.
Future human resource need can be estimated with the help of the organization's
current human resource situation and analysis of organizational plans an procedures.
3. Supply Forecasting: Supply is another side of human resource assessment. It is
concerned with the estimation of supply of manpower given the analysis of current
resource and future availability of human resource in the organization. It estimates
the future sources of HR that are likely to be available from within an outside the
organization. Internal source includes promotion, transfer, job enlargement and
enrichment, whereas external source includes recruitment of fresh candidates who
are capable of performing well in the organization.
4. Matching Demand And Supply: It is concerned with bringing the forecast of future
demand and supply of HR. The matching process refers to bring demand and supply
in an equilibrium position so that shortages and over staffing position will be solved.
In case of shortages an organization has to hire more required number of employees.
Conversely, in the case of over staffing it has to reduce the level of existing
employment. Hence, it is concluded that this matching process gives knowledge
about requirements and sources of HR.
5. Action Plan: It is the last phase of human resource planning which is concerned
with surplus and shortages of human resource. Under it, the HR plan is executed
through the designation of different HR activities. The major activities which are
required to execute the HR plan are recruitment, selection, placement, training and
development, socialization etc. Finally, this step is followed by control and evaluation
of performance of HR to check whether the HR planning matches the HR objectives
and policies. This action plan should be updated according to change in time ans
conditions.
Techniques for HR Demand Forecasting
(a) Managerial Judgement: Managerial judgement technique is very common
technique of demand forecasting. This approach is applied by small as well as large
scale organisations. This technique involves two types of approaches i.e. 'bottom-up
approach' and 'top-down approach'. Under the 'bottom-up approach', line mangers
send their departmental requirement of human resources to top management. Under
the Top-down approach', top management forecasts the human resource requirement
for the entire organisation and various departments. This information is supplied to
various departmental heads for their review and approval. However, a combination of
both the approaches i.e. 'Participative Approach' should be applied for demand
forecasting.
(b) Work-Study Technique: This technique is also known as 'work-load analysis'. This
technique is suitable where the estimated work-load is easily measureable. Under
this method, estimated total production and activities for a specific future period are
predicted. This information is translated into number of man-hours required to
produce per units taking into consideration the capability of the workforce. Thus,

demand of human resources is forecasted on the basis of estimated total production

and contribution of each employee in producing each unit items.
(c) Ratio-Trend Analysis: Demand for manpower/human resources is also estimated
on the basis of ratio of production level and number of workers available. This ratio
will be used to estimate demand of human resources. The following example will help
in clearly understanding this technique.
(d) Econometrics Models: These models are based on mathematical and statistical
techniques for estimating future demand. Under these models relationship is
established between the dependent variable to be predicted (e.g. manpower/human
resources) and the independent variables (e.g., sales, total production, work-load,
etc.). Using these models, estimated demand of human resources can be predicted.
(e) Delphi Technique: Delphi technique is also very important technique used for
estimating demand of human resources. This technique takes into consideration
human resources requirements given by a group of experts i.e. mangers. The human
resource experts collect the manpower needs, summarises the various responses
and prepare a report. This process is continued until all experts agree on estimated
human resources requirement.
(f) Other Techniques: The other techniques of Human Resources demand forecasting
are specified as under:
Organisation-cum-succession-charts
Estimation based on techniques of production
Estimates based on historical records
Statistical techniques e.g. co-relation and regression analysis.
REQUISITES FOR SUCCESSFUL HRP
HRP must be recognized as an integral part of corporate planning
Backing of top management for HRP is absolutely essential
HRP responsibilities should be centralized in order to co-ordinate consultation
between different management levels
Personnel records must be complete, up-to-date and readily available
The time horizon of the plan must be long enough to permit any remedial
action
The techniques of planning should be those best suited to the data available
and the degree of accuracy required
Plans should be prepared by skill levels rather than by aggregates
Data collection, analysis, techniques of planning and the plans themselves
need to be constantly revised and improved in the light of experience.
BARRIERS TO HRP
HR practitioners are perceived as experts in handling personnel matters, but
are not experts in managing business.
HR information is incompatible with the information used in strategy
formulation.
Conflicts may exist between short-term and long-term HR needs
(Promotion/Transfer - Recruitment).
There is conflict between quantitative and qualitative approaches to HRP.
Non-involvement of operating managers renders HRP ineffective.