Human Resource Management - Block I PDF

Overview of HRM 1
Notes
Unit 1: Overview of HRM
Structure:
1.1 Introduction
1.2 Meaning and Definitions of HRM
1.3 Objectives of Human Resource Management
1.4 History of HRM
1.5 Scope of Human Resource Management
1.6 Features or Characteristics of HRM
1.7 Importance of HRM
1.8 Evolution of Human Resource Management
1.9 Functions of Human Resource Management
1.10 Principles of HRM
1.11 Responsibilities in HRM
1.12 Theories of Management
1.13 Summary
1.14 Check Your Progress
1.15 Questions and Exercises
1.16 Key Terms
1.17 Check Your Progress: Answers
1.18 Case Study
1.19 Further Readings
1.20 Bibliography
Objectives
After studying this unit, you should be able to understand:

 Meaning and Definitions of HRM
 Nature of HRM
 Objectives of Human Resource Management
 Features or Characteristics of HRM
 Importance of HRM
 Evolution of Human Resource Management
 Functions of HRM
 Principles of HRM
 Responsibilities in HRM
 Theories of Management
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2 Human Resource Management
Notes 1.1 Introduction

Human Resource Management (HRM) is the set of productive activities within an
organization that focuses on transforming human being into useful resources. The activities
include searching right candidate, identifying their knowledge, skills and attitude towards
a specific job, fixing and practicing fair compensation policy, ensure the safety and comfort
in work place, observing the performance of the employees, employee motivation, effective
communication, administration and training for increasing productivity and efficiency.
HRM is a deliberate and widespread approach to managing people and the workplace
culture and environment. Effective human resource management enables employees to
contribute effectively and productively to the overall company direction and the
accomplishment of the organization’s goals and objectives.
HRM is moving away from traditional personnel, administration and transactional roles
which are increasingly outsourced. HRM is now expected to add value to the strategic
utilization of employees and that employee programs impact the business in measurable
ways. The new role of human resource management involves strategic direction and human
resource management metrics and measurements to demonstrate value.
Human Resources
Human resource can be defined as the translating process of human being into a
useful resource. When a human being contributes his/her skills, knowledge and positive
attitude towards productive work in an organization, he/she becomes the human resource
for that organization.
1.2 Meaning and Definitions of HRM
Meaning of Human Resource Management
The human resource management activities include searching right candidate,

identifying their knowledge, skills and attitude towards a specific job, fixing and practicing
fair compensation policy, ensure the safety and comfort in work place, observing the
performance of the employees, employee motivation, effective communication, administration
and training for increasing productivity and efficiency.
1. HRM is a part of general management.
2. The job of HR manager involves the task of managing people at work along with
other organizational assets.
3. All managers are accountable to their organization in terms of the impact of
their HRM activities.
4. Managers are also accountable to their peers and to their subordinates in terms
of the quality of work-life they are providing.
Definitions of Human Resource Management
According to Prof. Thomas G. Spates, “Human Resource administration is a code

of the ways of organizing and treating individuals at work so that they will get the greatest
possible realization of their intrinsic abilities, thus attaining maximum efficiency for
themselves and their group and thereby giving to the enterprise of which they are a part
of its determining competitive advantages and its optimum results”.

Overview of HRM 3
According to Leon C. Megginson, ‘‘HR is the total knowledge, skills, creative Notes
abilities, talents and aptitudes of an organization’s workforce, as well as the value, attitudes
and beliefs of the individuals involved”.
According to Gary Dessler, “Human resource management is the policy and practice
of one need to carry out the people or human resource aspects of a management position,
including recruiting, screening, training, rewarding and appraising”.
According to Edwin B. Flippo, “Human resource management refers to the planning,
organizing, directing and controlling of procurement, development, competition, integration,
maintenance and separation of human resource to the end so that individual, organizational
and social objectives are accomplished”.
According to C.D. Risher and L.F.Schoenfeldt, “Human resource management
involves all management decisions and practices that directly affect or influence the people
or human resources, who work for the organization”.
Nature of Human Resource Management
Human Resource Management is a process of bringing people and organizations

together so that the goals of each are met. The nature of HRM can be summarized as
follows:
i) It is pervasive in nature as it is present in all enterprises.
ii) Its focus is on results rather than on rules.
iii) It tries to help employees develop their potential fully.
iv) It encourages employees to give their best to the organization.
v) It is all about people at work, both as individuals and groups.
vi) It tries to put people on assigned jobs in order to produce good results.
vi) It helps an organization meet its goals in the future by providing for competent
and well-motivated employees.
viii) It tries to build and maintain cordial relations between people working at various
levels in the organization.
ix) It is a multi-disciplinary activity, utilizing knowledge and inputs drawn from
psychology, economics etc.
x) Human resources are multi-dimensional in nature.
1.3 Objectives of Human Resource Management

The main objective of human resource management is to accomplish the
organizational goals. Therefore, the resources are mobilized to achieve such goals. Some
other objectives of human resource management are as follows:
1. To ensure the effective utilization of resources
Human resource management ensures the effective utilization of resources. HRM
teaches how to utilize human and non-human resources so that the goals can be achieved.
Organization aiming to utilize their resources efficiently invites the HR department to
formulate required objectives and policies.
2. To maintain organizational structure
Organizational structure defines the working relationship between employees and
management. It defines and assigns the task for each employee working in the
organization. The task is to be performed within the given constraints. It also defines
Notes positions, rights and duties, accountability and responsibility and other working
relationships. The human resource management system provides required information too
timely and accurately. Hence, human resource management helps to maintain
organizational structure.
3. To develop human resources
Human resource management provides favorable environment for employees so that
people working in organization can work creatively. This ultimately helps them to develop
their creative knowledge, ability and skill. To develop personality of employees, human
resource management organizes training and development campaigns which provide an
opportunity for employees to enhance their caliber to work.
4. To respect for human beings
Another importance objective of human resource management is to provide a
respectful environment for each employee. Human resource management provides with
required means and facilitates employee along with an appropriate respect because the
dominating tendency develops that will result organizational crisis. Hence, all of them
should get proper respect at work. Human resource management focuses on developing
good working relationships among workers and managers in organization. So, good human
resource management system helps for respecting the employees.
5. To maintain goal harmony
Human resource management bridges the gap between individual goal and
organizational goal-thereby resulting into a good harmony. If goal difference occurs, the
employees will not be willing to perform well. Hence, a proper match between individual
goal and organizational goal should be there in order to utilize organizational resources
effectively and efficiently.
6. To ensure employee satisfaction
Human resource management provides a series of facilities and opportunities to
employees for their career development. This leads to job satisfaction and commitment.
When the employees are provided with every kind of facilities and opportunities, they will
be satisfied with their work performance.
7. To ensure employee discipline and moral
Human resource management tries to promote employee discipline and moral
through performance based incentives. It creates a healthy and friendly working
environment through appropriate work design and assignment of jobs.
8. To increase organizational productivity
Human resource management focuses on achieving higher production and most
effective utilization of available resources. This leads to an enhancement in organizational
goals and objectives.
1.4 History of HRM

The early development of the function can be traced back to at least two distinct
movements. One element has its origins in the late 19th century, where organizations
such as Cadburys at its Bourneville factory recognized the importance of looking after
the welfare of the workforce, and their families. The employment of women in factories
in the United Kingdom during the First World War led to the introduction of “Welfare
Officers”. Meanwhile, in the United States the concept of human resources developed as
a reaction to the efficiency focus of Taylorism or “scientific management” in the early
Overview of HRM 5
1900s, which developed in response to the demand for ever more efficient working practices Notes
within highly mechanized factories, such as in the Ford Motor Company. By 1920,
psychologists and employment experts in the United States started the human relations
movement, which viewed workers in terms of their psychology and fit with companies,
rather than as interchangeable parts.
During the middle of the last century, larger corporations, typically those in the United
States that emerged after the Second World War, recruited personnel from the US Military
and were able to apply new selection, training, leadership, and management development
techniques, originally developed by the Armed Services, working with, for example,
university-based occupational psychologists. Similarly, some leading European
multinationals, such as Shell and Phillips developed new approaches to personnel
development and drew on similar approaches already used in Civil Service training.
Gradually, this spread more sophisticated policies and processes that required more
central management via a personnel department composed of specialists and generalist
teams.
The role of what became known as Human Resources grew throughout the middle
of the 20th century. Tensions remained between academics who emphasized either ‘soft’
or ‘hard’ HR. Those professing so-called ‘soft HR’ stressed areas like leadership, cohesion,
and loyalty that play important roles in organizational success. Those promoting ‘hard
HR’ championed more quantitatively rigorous management techniques in the 1960s.
In the later part of the last century, both the title and traditional role of the personnel
function was progressively superseded by the emergence, at least in larger organizations,
of strategic human resources management and sophisticated human resources
departments. Initially, this may have involved little more than renaming the function, but
where transformation occurred, it became distinguished by the human resources having
a more significant influence on the organizations strategic direction and gaining board-
level representation.
1.5 Scope of Human Resource Management

Human resource Management is undoubtedly the key resources in an organization,
the easiest and the most difficult to manage. The purposes of the HRM span right from
the manpower needs assessment to management and retention of the same. To this effect
Human resource management is responsible for effective designing and implementation
of various policies, procedures and programs. It is all about developing and managing
knowledge, skills, creativity, aptitude and talent and using them optimally. Human
Resource Management is not just limited to manage and optimally exploit human intellect.
It also focuses on managing physical and emotional capital of employees. Considering
the intricacies involved, the scope of HRM is widening with every passing day. It covers
but is not limited to HR planning, hiring (recruitment and selection), training and
development, payroll management, rewards and recognitions, Industrial relations,
grievance handling, legal procedures etc. In other words, we can say that it’s about
developing and managing harmonious relationships at workplace and striking a balance
between organizational goals and individual goals.
The scope of human resource management can be summarized as follows:
1. HRM in Personnel Management
This is typically direct manpower management that involves manpower planning,
hiring (recruitment and selection), training and development, induction and orientation,
transfer, promotion, compensation, layoff and retrenchment, employee productivity. The
Notes overall objective here is to ascertain individual growth, development and effectiveness which
indirectly contribute to organizational development. It also includes performance appraisal,
developing new skills, disbursement of wages, incentives, allowances, traveling policies
and procedures and other related courses of actions.
2. HRM in Employee Welfare
This particular aspect of HRM deals with working conditions and amenities at
workplace. This includes a wide array of responsibilities and services such as safety
services, health services, welfare funds, social security and medical services. It also covers
appointment of safety officers, making the environment worth working, eliminating
workplace hazards, support by top management, job safety, safeguarding machinery,
cleanliness, proper ventilation and lighting, sanitation, medical care, sickness benefits,
employment injury benefits, personal injury benefits, maternity benefits, unemployment
benefits and family benefits.
It also relates to supervision, employee counseling, establishing harmonious
relationships with employees, education and training. Employee welfare is about
determining employees’ real needs and fulfilling them with active participation of both
management and employees. In addition to this, it also takes care of canteen facilities,
crèches, rest and lunch rooms, housing, transport, medical assistance, education, health
and safety, recreation facilities etc.
3. HRM in Industrial Relations
Since it is a highly sensitive area, it needs careful interactions with labor or employee
unions, addressing their grievances and settling the disputes effectively in order to maintain
peace and harmony in the organization. It is the art and science of understanding the
employment (union-management) relations, joint consultation, disciplinary procedures,
solving problems with mutual efforts, understanding human behavior and maintaining work
relations, collective bargaining and settlement of disputes.
The main aim is to safeguarding the interest of employees by securing the highest
level of understanding to the extent that does not leave a negative impact on organization.
It is about establishing, growing and promoting industrial democracy to safeguard the
interests of both employees and management.
1.6 Features or Characteristics of HRM

The characteristics of HRM can be summarized as follows:
1. Human Resource Planning
It is understood as a process of forecasting an organization’s future demand and
supply for the right type of people in the right number. It is through this activity, which
helps the organization to know how many employees exist in the organization and how
many are required to perform the current jobs and as to how many are required to perform
the future jobs.
2. Job Analysis
It is the process of studying and collecting information relating to the operations and
responsibilities of a specific job. The immediate products of this analysis are job
description and job specification.
3. Recruitment and Selection
Recruitment is the process of stimulating the candidates to apply for jobs. Selection
is a process of identifying the most eligible candidate for a particular job.
Overview of HRM 7
4. Orientation and Placement Notes

Orientation is a socializing process by which the organization seeks to make the
employee comfortable at the work place. Placement on the other hand is about matching
the requirements of the job with the qualification of the candidate.
5. Training and Development
Training is imparting specific and necessary skills to an employee in order to perform
a particular job/task at present; whereas development of an employee is all about imparting
vast knowledge to an employee in order to equip him/her towards the future job.
6. Performance Appraisal and Job Evaluation
Performance Appraisal is the systematic evaluation of the individual with respect to
his or her performance on the job and his or her potential for development.
Job evaluation is a systematic technique, which aims at determining the worth of
a job. It is rating a job and not an individual performing the job.
7. Employee and Executive Remuneration
Remuneration is a wage or salary or any other compensation paid to employee for
the service they render to the organization.
8. Motivation and Communication
Motivation is the process of channeling a person’s inner drives towards accomplishing
the goals of an organization. Communication is the process of transmission of ideas,
information, orders or instructions to the recipient so that there is an understanding
between the sender and the receiver.
9. Welfare, Safety and Healthy measures
The organization implements various welfare, safety and health measures for the
betterment security and satisfaction of the employees.
10. Better Industrial Relations
Industrial Relations are those relations, which arise at the work place. For example:
relationship between the employer and the employee and between the employee and the
employers. Hence IR is more concerned and strives towards maintaining cordial
relationship between the groups as mentioned above.
1.7 Importance of HRM

Importance of HRM can be discussed at four levels which are as follows:
1. Corporate Level
For an enterprise effective HRM leads to attainment of its goal efficiently and
effectively. HRM helps enterprise in the following ways:
a) Hiring required skill set and retaining them through effective human resource
planning, recruitment, selection, placement, orientation and promotion policies.
b) Development of employees by enhancing necessary skills and right attitude
among employees through training, development, performance appraisals etc.
c) HRM also takes care of optimum utilization of available human resource.
d) HRM also ensures that organization has a competent team and dedicated
employees in future.

Notes 2. Professional Level

a) HRM also leads to improved quality of work life; it enables effective team work
among employees by providing healthy working environment.
b) By providing opportunities for personal development of an employee.
c) Enabling healthy relationships among teams and allocating work properly to
employees as well as teams.
3. Social Level
a) HRM plays important role in the society, it helps labour to live with pride and
dignity by providing employment which in turn gives them social and
psychological satisfaction.
b) HRM also maintains balance between open jobs and job seekers.
4. National Level
a) HRM plays a very significant role in the development of nation. Efficient and
committed human resource leads to effective exploitation and utilization of
nation’s natural, physical and financial resources.
b) Skilled and developed human resource ensures the development of that country.
If people are underdeveloped then that country will be underdeveloped.
c) Effective HRM enhances economic growth which in turn leads to higher standard
of living and maximum employment.
1.8 Evolution of Human Resource Management

The evolution of the concept of Human Resource Management is given below:
1. Period before Industrial Revolution
The society was primarily an agriculture economy with limited production. Number
of specialized crafts was limited and was usually carried out within a village or community
with apprentices assisting the master craftsmen. Communication channel were limited.
2. Period of industrial revolution (1750 to 1850)

Industrial revolution marked the conversion of economy from agriculture based to
industry based. Modernization and increased means of communication gave way to
industrial setup. A department was set up to look into workers wages, welfare and other
related issues. This led to emergence of personnel management with the major task as:
Overview of HRM 9
i) Worker’s wages and salaries. Notes

ii) Worker’s record maintenance.
iii) Worker’s housing facilities and health care.
An important event in industrial revolution was growth of Labour Union (1790) – The
works working in the industries or factories were subjected to long working hours and very
less wages. With growing unrest, workers across the world started protest and this led
to the establishment of Labour unions. To deal with labor issues at one end and
management at the other Personnel Management department had to be capable of politics
and diplomacy, thus the industrial relation department emerged.
3. Post Industrial Revolution
The term Human resource Management saw a major evolution after 1850. Various
studies were released and many experiments were conducted during this period which
gave HRM altogether a new meaning and importance.
A brief overview of major theories release during this period is given below:
(a) Frederick W. Taylor gave principles of scientific management (1857 to 1911)
led to the evolution of scientific human resource management approach which
was involved in:
i) Worker’s training
ii) Maintaining wage uniformity
iii) Focus on attaining better productivity.
(b) Hawthorne studies, conducted by Elton Mayo & Fritz Roethlisberger (1927 to
1940) – Observations and findings of Hawthrone experiment shifted the focus
of Human resource from increasing worker’s productivity to increasing worker’s
efficiency through greater work satisfaction.
(c) Douglas McGregor Theory X and Theory Y (1960) and Abraham Maslow’s
Hierarchy of needs ( 1954) – These studies and observations led to the transition
from the administrative and passive Personnel Management approach to a more
dynamic Human Resource Management approach which considered workers as
a valuable resource.
As a result of these principles and studies, Human resource management became
increasingly line management function, linked to core business operations. Some of the
major activities of HR department are listed as:
(i) Recruitment and selection of skilled workforce.
(ii) Motivation and employee benefits
(iii) Training and development of workforce
(iv) Performance related salaries and appraisals.
4. Strategic Human Resource Management Approach
With increase in technology and knowledge base industries and as a result of global
competition, Human Resource Management is assuming more critical role today. Its major
accomplishment is aligning individual goals and objectives with corporate goals and
objectives. Strategic HRM focuses on actions that differentiate the organization from its
competitors and aims to make long term impact on the success of organization.
1.9 Functions of Human Resource Management

Every manager must get things done from people. Individual goals and aspirations
have to be in alignment with organizational goals for the successful handling of a business.

Notes A manager’s handling of the human assets reflects his managerial capabilities. Managing
people is one of the biggest challenges for any manager. The functions of HRM can be
classified into two categories which are: 1. Managerial Functions 2. Operative Functions.
1. Managerial Functions
Management is the accomplishment of results through the efforts of other people.

Managerial functions of HRM are as follows:
(i) Planning
Planning involves choosing of one of the various alternatives available for
accomplishing the desired result with the greatest economy and certainty through the
process of looking ahead. It also involves planning of human resources, requirements,
recruitment, selection, training etc and also involves determining of strategies, programme,
policies, and procedure to accomplish organization objectives. It involves ability to think,
to predict, to analyze and to take decision.
(ii) Organizing
It involves establishing an intentional structure of roles for people in an organization.
Structural considerations such as the chain of command, division of labor, and assignment
of responsibility are part of the organizing function. Careful organizing ensures effective
use of human resources. According to JL Massie, an organization is a “structure and a
process by which a cooperative group of human beings allocates its task among its
members, identifies relationships and integrates its activities towards a common objective”.
The organizing function establishes relationships among employees so that they can
contribute collectively towards the attainment of organizational goals. It is an activity which
establishes harmonious adjustment among all the factors of production i.e., land; labor,
capital, organization and enterprise. Complex relationships exist between the specialized
departments and the general departments as many top managers are seeking the advice
of HR manager. Organization establishes relationships among the employees so that they
can collectively contribute to the attainment of company goals.
(iii) Directing
Direction is telling people what to do and seeing that they do it to the best of their
ability. It is the process of directing all the available resources towards the common
organizational goals. Direction includes seeing that mistakes are corrected, making
assignments, issuing orders, provided on the job instructions and of course, corresponding
procedures. Thus direction is a vital management function, which ensures maximum
employee contribution and also helps in establishing sound industrial and human relations.
It is a very important managerial function in building sound industrial and human relations
besides securing employee contributions. Directing also involves coordination between
different departments to ensure maximum utilization of all resources including human
resource.
(iv) Co-ordinating
Co-ordination is required in all levels. Human resource department ensures
developing, programmers for better co-ordination, interpreting and reviewing personnel
policies.
(v) Controlling
Controlling is the measuring and correcting of activities of subordinates to ensure
that events conform to plan. Auditing is the training programmers, analyzing labor turnover
records, directly moral surveys are some of the means for controlling the HRM functions.

Overview of HRM 11
It is checking regulating and verifying whether everything occurs as per the standards set Notes
and plans adopted.
2. Operative Functions
The operative functions of HRM are concerned with the activities specially dealing
with employment, human resource development, compensation and human relations.
(i) Procurement
Through the process of recruitment and selection, the HR manager identifies the right
type of people required in the organization and puts in some efforts to develop to get better
performance.
(ii) Maintenance
Maintenance is one of the important functions to perform in HRD. Human Resources
Management undertakes all the activities contributing to maintaining people in the
organization. For examples, Good environment, different facilities like canteen, rest room,
parking facilities, introducing safety measures to avoid accident, introducing incentives
in the form of extra leaves, remuneration for medical expenses etc.
(iii) Development
Through Training and Development the present and future skills required are imparted
to employees.
(iv) Work Culture
HRM introduces to pattern, the procedures in which the organization carries out its
function. It is this definite way of word that creates a definite work culture in the
organization.
(v) Educating the Managerial Personnel
Personnel Development programmes tries to educate the managerial executive of
the market situations and trends which help in forming new plans and strategies of
products.
(vi) Conducting Research
The main focus of human resource management is to come out with different ways
in order to control and regulate the personnel towards the right direction there by achieving
organization’s objectives. In order to attain HRM it should focus towards coming out with
continuous innovative methods in order to communicate, understand and integrate the
workforce, research plays a pivotal role.
(vii) Developing a Communication System
HRM promotes free flow of communication in organization i.e., upwards, downwards
and lateral, which helps in building suitable environment of work and builds culture link
in the organization.
(viii) Compensation
It is concerned with securing adequate and equitable remuneration to persons working
in the organization. Compensation should be fixed in such a way that it is able to attract
and retain suitable persons in the organization.
(ix) Integration
It is an attempt to effect reconciliation of individual, organization, and social interest.

Notes (x) Employment

Employment is concerned with stabling and employing the people possessing
required kind and level of human resources necessary to achieve the organizational
objectives. It includes the functions like job analysis, human resource planning,
recruitment, selection, placement, induction and internal mobility.
(xi) Human Resource Development
Human resource development efforts are described in terms of the training and
educating programs and the number of people who are exposed to these programmes.
Unless a systematic and constant monitoring of these programs and a systematic
appraisal of the actual effect of these programs, in terms of actual results achieved, can
be determined, it may not be possible to understand whether the real purpose is served
by these programs.
(xii) Human Relation
This process leads to the human relations movement with its emphasis on the fact
that employees need to be understood in order to be satisfied and productive. The idea
that good human relations in and of themselves will increase productivity failed to be
consistently supported, and many of the movement’s ideas were abandoned.
1.10 Principles of HRM

It is evident that the human resource management department has to perform a
number of functions such as human resource planning, recruitment, selection, training and
development, performance appraisal and so on for the purpose of achieving operational
efficiency and organizational goals and objectives. In order to execute these functions
effectively and efficiently, so as to facilitate the organizations to achieve its aims, there
is a need for the organizations to observe certain principles of HRM.
The area of HRM has been surfacing ever since it came into existence in1970s. A
number of models have proposed by many human resource professionals to construe and
also promote HR policies and practices in tune with precise thoughts and values. Amongst
this new sort of models, the Ten C’s model of HRM is regarded as all encompassing and
a realistic model. Alan Price is the architect of this model who presented it in his book
titled Human Resource Management in a Business Context, published in 1997. There are
ten essential principles-the Ten Cs-in this model. These are:
1. Comprehensiveness: The HRM strategy of an organization must include all the
aspects of people management, typically starting from recruitment to post
separation programmes.
2. Credibility: The HR practices must build trust between staff and top
management and encourage employees’ belief in HRM strategies.
3. Communication:The objectives of organization and that of HRM must be
understood and accepted by all employees. The operating culture in organization
must encourage openness and be free from all barriers.
4. Cost effectiveness: The reward and promotion system must be fair.
5. Creativity:The competitive advantage of the company must stem from its unique
HR strategies.
6. Coherence: HRM activities and initiatives must from a meaningful whole.
7. Competence: HRM strategy will be crafted in such a way that organization
becomes competent to achieve its objectives with the support of individual
competencies.
Overview of HRM 13
8. Control: HRM policies and practices must ensure that performance of HR is Notes
consistent with business objectives.
9. Change:The basic premise of HRM strategy must be that continuous
improvement and development is essential for survival.
10. Commitment: The last C stresses upon that employee are to be motivated to
achieve organizational goals.
Process of HRM
Human resource management is viewed as a process of sequence of operations and

activities. HRM process starts with the objectives of an organization. HRM objectives are
drawn from the organizational objectives. Similarly HRM objectives are drawn from the
organizational strategies, thus, form the basis for HRM process in an organization. Human
resource management includes the processes that organize and manage the project team.
The project team is comprised of the people who have assigned roles and responsibilities
for completing the project. While it is common to speak of roles and responsibilities being
assigned, team members should be involved in much of the project's planning and decision-
making. Early involvement of team members adds expertise during the planning process
and strengthens commitment to the project. The type and number of project team members
can often change as the project progresses. Project team members can be referred to
as the project's staff.
The Project Human Resource Management processes include the following:
1. Human Resource Planning: Identifying and documenting project roles,
responsibilities and reporting relationships, as well as creating the staffing
management plan.
2. Acquire Project Team: Obtaining the human resources needed to complete
the project.
3. Develop Project Team: Improving the competencies and interaction of team
members to enhance project performance.
4. Manage Project Team: Tracking team member performance, providing
feedback, resolving issues and coordinating changes to enhance project
performance.
1.11 Responsibilities in HRM

The primary responsibilities of HRM are as follows:
(i) To act as an internal change agent and consultant.
(ii) To initiate change and act as an expert and facilitator.
(iii) To actively involve himself in company’s strategy formulation.
(iv) To provide co-ordination and support services for the delivery of HRD programs
and services.
(v) To develop a thorough knowledge of corporate culture plant and polices.
(vi) To keep communication lines open between the HRD function and individuals
and groups both within and outside the organization.
(vii) To evaluate the impact of an HRD intervention or to conduct research as to
identify, develop or test how HRD in general has improved individual or
organizational performance.
(viii) To try and relate people and work so that the organization objectives are
achieved effectively and efficiently.
Notes (ix) To facilitates the development of various organizational teams and their working
relationship with other teams and individuals.
(x) To diagnose problems and to determine appropriate solution particularly in the
human resources areas.
Qualities of HR Manager
The important qualities of HR manager are:

1. Knowledge
HR manager should be good knowledgeable person. A thorough knowledge base is
essential. The knowledge base must be so ingrained and integrated into their being that
they become transparent, focusing on the employee and what s/he needs to learn, versus
focusing on the knowledge base. The excellent manager lives from a knowledge base,
without having to draw attention to it.
2. Creativity
Creativity is what separates competence from excellence. Creativity is the spark that
propels projects forward and that captures peoples' attention. Creativity is the ingredient
that pulls the different pieces together into a cohesive whole, adding zest and appeal in
the process.
3. Structure
The context and structure we work within always have a set of parameters, limitations
and guidelines. A stellar manager knows how to work within the structure and not let the
structure impinge upon the process or the project. Know the structure intimately, so as
to guide others to effectively work within the given parameters. Do this to expand beyond
the boundaries.
4. Intuition
Intuition is the capacity of knowing without the use of rational processes; it's the
cornerstone of emotional intelligence. People with keen insight are often able to sense
what others are feeling and thinking; consequently, they're able to respond perfectly to
another through their deeper understanding. The stronger one's intuition, the stronger
manager one will be.
5. Commitment
HR manager is committed to the success of the project and of all team members.
He holds the vision for the collective team and moves the team closer to the end result.
It's the manager's commitment that pulls the team forward during trying times.
6. Being Human
Employees value leaders who are human and who don't hide behind their authority.
The best leaders are those who aren't afraid to be themselves. Managers who respect
and connect with others on a human level inspire great loyalty.
7. Flexibility
Flexibility and versatility are valuable qualities in a manager. Beneath the flexibility
and versatility is an ability to be both non-reactive and not attached to how things have
to be. Versatility implies an openness - this openness allows the leader to quickly *change
on a time* when necessary. Flexibility and versatility are the pathways to speedy
responsiveness.

Overview of HRM 15
8. Lightness Notes
A stellar manager doesn't just produce outstanding results; s/he has fun in the
process. Lightness doesn't impede results but rather, helps to move the team forward.
Lightness complements the seriousness of the task at hand as well as the resolve of
the team, therefore contributing to strong team results and retention.
9. Discipline/Focus
Discipline is the ability to choose and live from what one pays attention to. Discipline
as self-mastery can be exhilarating. Role model the ability to live from your intention
consistently and you'll role model an important leadership quality.
10. Big Picture, Small Actions
Excellent managers see the big picture concurrent with managing the details. Small
actions lead to the big picture; the excellent manager is skillful at doing both: think big
while also paying attention to the details.
HRM Activities
The various HRM activities are as follows:
1. Leadership
Leadership is stated as the “process of social influence is which one person can
enlist the aid and support of others in the accomplishment of a common task.” Leadership
remains one of the most relevant aspects of the organizational context. However, defining
leadership has been challenging and definitions can vary depending on the situation as
“leadership is about capacity: the capacity of leaders to listen and observe, to use their
expertise as a starting point to encourage dialogue between all levels of decision-making,
to establish processes and transparency in decision-making, to articulate their own value
and visions clearly but not impose them. Leadership is about setting and not just reacting
to agendas, identifying problems and initiating change that makes for substantial
improvement rather than managing change”.
2. Training and Development
It is a learning process that involves the acquisition of knowledge, sharpening of skills,
concepts, rules or changing of attitudes and behaviors to enhance the performance of
employees. Training is an investment because the departments such as, marketing &
sales, HR, production, finance, etc. depends on training for its survival. If training is not
considered as a priority or not seen as a vital part in the organization, then it is difficult
to accept that such a company has effectively carried out HRM. Training actually provides
the opportunity to raise the profile development activities in the organization the
enhancement of the skills, knowledge and experience of employees with the purpose of
improving performance. Employee development, unlike personal development, is usually
coordinated by the employing organization. It can use a variety of training methods and
is usually conducted on a planned basis, perhaps as a result of a performance appraisal.
3. Performance Appraisal
Personnel evaluation method is seeking the measurement of employee work
effectiveness using objective criteria. Performance appraisal systems hope to achieve
higher productivity outcomes by delineating how employees meet job specifications.
Performance appraisal is one of the important components in the rational and systemic
process of human resource management. The information obtained through performance
appraisal provides foundations for recruiting and selecting new hires, training and
development of existing staff and motivating and maintaining a quality work force by
adequately and properly rewarding their performance. Without a reliable performance

Notes appraisal system, a human resource management system falls apart, resulting in the total
waste of the valuable human assets a company has.
4. Staffing
The term staffing may be defined as the managerial function of hiring and developing
the required personnel to fill in various positions in an organization. This function involves
the determination of the size and categories of staff requirement. It is also concerned with
employing the right type of people and developing their skills through training. The staffing
function focuses on maintaining and improving the manpower in an organization. After an
organization’s structural design is in place, it needs people with the right skills, knowledge
and abilities to fill in that structure. People are an organization’s most important resource,
because people either create or undermine an organization’s reputation for quality in both
products and service. Staffing, is the management function devoted to acquiring, training,
appraising and compensating employees .he right staff can carry an organization through
a period of change and ensure its future success. Because of the importance of hiring
and maintaining a committed and competent staff, effective human resource management
is crucial to the success of all organizations.
5. Justice Determination
The quality of being just; conformity to the principles of righteousness and rectitude
in all things; strict performance of moral obligations; practical conformity to human or divine
law; integrity in the dealings of men with each other; rectitude; equity; uprightness.
Generally, maintaining good organizational justice can lead to ideal and favorable
outcomes in the workplace. It is expected that employees will act according to
organizational rules and regulations if they are treating fairly and receive the outcomes
they desire. In research, it has been shown that employees are more committed to the
organization, have more trust and are more satisfied when justice is perceived as being
fair. There is also research that compared organizational justice to various employee
behaviors and elements of interpersonal communication, such as sexual harassment,
ethics, performance, feedback and citizenship behavior
6. Collective Bargaining
Collective bargaining is a process between employers and employees to reach an
agreement regarding the rights and duties of people at work. Collective bargaining aims
to reach a collective agreement which usually sets out issues such as employees pay,
working hours, training, health and safety and rights to participate in workplace or company
affairs. Collective bargaining is process of joint decision making and basically represents
a democratic way of life in industry. It is the process of negotiation between firm’s and
workers’ representatives for the purpose of establishing mutually agreeable conditions of
employment. It is a technique adopted by two parties to reach an understanding acceptable
to both through the process of discussion and negotiation.
7. Organization Development
Organization development is a planned organization-wide effort to increase an
organization’s effectiveness and viability. Warren Bennie, has referred to organization
development as a response to change, a complex educational strategy intended to change
the beliefs, attitudes, values and structure of organization so that they can better adapt
to new technologies, marketing and challenges and the dizzying rate of change itself.
Organization development is neither “anything done to better an organization” nor is it “the
training function of the organization”; it is a particular kind of change process designed
to bring about a particular kind of end result. Organization development can involve
interventions in the organization’s “processes,” using behavioral science knowledge as well
as organizational reflection, system improvement, planning and self-analysis.
Overview of HRM 17
Systems and Techniques of HRM Notes

Systems of HRM
The system has a goal sequence or end oriented. It has been defined as “a particular
linking of inter-related and inter-dependent components having a facilitating effect, on the
carrying out of one and more processes”. This can be further explained as-particular may
be different in some respect from other systems. Components like, raw materials,
techniques, procedures, plans, policies, rules and people, signify interdependent and inter
relation which has a facilitating effect. Considering the various systems and sub-systems
which exist in an organization. HRM is considered as a system which has within it certain
processes and sub systems.
Every functional department in the organization has to achieve its goals and
objectives. HR department of an organization has to develop an appropriate HR structure
and an administrative system. This requires that systematic data should be collected
internally and externally and techniques have to be evolved for systematic development
of HRM structure. These techniques are adapted and reviewed periodically or continuously
to make them as standard techniques applicable to that particular organization. Review
of techniques will facilitate the change made in these techniques as and when the situation
demands. HR manager should assume the responsibility of attaining the requirements of
his enterprise and those imposed upon it by environmental changes.
Therefore HR managers have evolved tools and techniques for the successful
operation of HR division and thereby achieve the goals set by the top management.
A system is a set of comprehensive, interrelated and unified objectives and elements
that interact with each other. These elements receive inputs from the external environment,
process these inputs and produce the output for the external environment.
Thus, system consists of external environmental factors like social factors, technical
factors, economic factors, political factors and neutral factors, inputs, transformation,
output and feedback. Business organizations are regarded as open and adaptive systems
which are influenced by environmental factors and also influence and shape the
environment. The factors underlying business organization as a system include:
i) Business organization as a single entity composed of an interrelated subunits
like production, marketing, human resources and finance.
ii) Organization is closely related to its environment. In other words, environment
influences the organization and the organization also influences the environment.
iii) System is “input-process-output” mechanism. Organization receives raw
material from the environment, converts the raw material into products and
supplies these products to the environment.
iv) Information flows freely in the organization. In addition, information flows from
the external environment to the organization system and from the organization
system to the external environment.
v) System integrates all its internal and external stakeholders like supplying of
inputs, employees, shareholders, customers, government, creditors, bankers,
market intermediaries like wholesalers, retailers and franchisees.
vi) Each system consists of several sub-systems. In fact each of the stakeholders
forms a sub-system.
Thus organizational system consists of several sub-systems which are closely
interlinked and interrelated as shown in the figure. These sub-systems interact with each
other closely. In fact each sub system is a system by itself.
Notes Different systems of human resources management are as follows:

(i) Information management system: Under this method, all policies and
practices are to be well articulated and effectively communicated to the
workforce.
(ii) Discipline management system: Under a discipline management a system of
administering disciplines to foster positive employee behavior that will promote
organizational objectives.
(iii) Recruitment management system: Recruiting is the process by which
organizations locate and attract individuals to fill job vacancies. Most
organizations have a continuing need to recruit new employees to replace those
who leave or are promoted and to permit organizational growth.
(iv) Training management system: Under this system the HR managers identify
of training needs, preparation of a training strategy and an appropriate training
system.
(v) Performance management system: Performance appraisal is the system by
which an employee’s contribution to the organization during a specified period
of time is assessed. Performance appraisal can improve employee motivation
and performance.
(vi) Reward management system: It ensure that people are rewarded in accordance
with their contribution.
(vii) Culture management system: It is a system of thinking and behaving shaped
by the values, attitudes, rituals and sanctions in an organization.
(viii) Health and safety management system: It is a system of maintaining a healthy
and safety system of work in an organization. Most organizations are very much
concerned about providing a safety and healthy work place. Part of this concern
is simple humanitarianism. Few firms would knowingly send unprotected
employees into a dangerous situation.
1.12 Theories of Management
F. W. Taylor’s Scientific Management
Fredrick Winslow Taylor (1856-1915) is considered to be “The Father of Scientific

Management”. He exerted a great influence on the development of management thought
through his experiments and writings. F. W. Taylor not only established the principle of
better management but also spread them throughout and created the revolution in the
techniques of management. Taylor’s principle concern was that of increasing efficiency
in production, not only to lower costs and raise profits but also to make possible increase
in the pay for workers through their higher productivity. His contribution has two
dimensions. They are: (a) Mechanical and (b) Philosophical.
On mechanical side, he introduced time and motion studies, standardization of
condition and appliances and different piece rates for payment of wages. He advocated
planning, use of time saving devices, routine and cost system etc., all to increase the
productivity of worker.
On the philosophical side, he promoted the development of science of the
management, based on investigation and experiments. He prepared for the replacement
of individual opinion or the traditional method by clearly defined universal rules and
principles of management and thus, gave birth to the science of management.

Overview of HRM 19
The basic them of “Taylor” was that managers should study, work scientifically and Notes
in order to identify “One Best Way” to get the job done. Taylor’s scientific management
is also known as Taylor’s Principles or Taylorism. Taylor’s scientific management
consisted of four principles:
(i) Replace rule-of-thumb work methods with methods based on a scientific study
of the tasks.
(ii) Scientifically select and then train, teach and develop the workman, whereas
in the past the employee (or workmen) chose his own work and trained himself
as best he could.
(iii) Provide “Detailed instruction and supervision of each worker in the performance
of that worker’s discrete task”.
(iv) Divide work nearly equally between managers and workers, so that the
managers apply scientific management principles to planning the work and the
workers actually perform the tasks.
According to Taylor, the summary of the fourth element is: Under the management
of “initiative and incentive” practically the whole problem is “up to the workman,” while
under scientific management fully one-half of the problem is “up to the management”.
During his career spanning a period of 26 years, he conducted a series of experiments
in three companies: Midvale Steel, Simonds Rolling Machine and Bethlehem Steel.
While serving as the chief Engineer of Midvale Steel Company, Taylor made several
important contributions which were classified under Scientific Management:
i) Time and Motion Study
Since Taylor had been a machinist himself; he knew how piece-work employees used
to hold back its production to its one-third level because they feared that their employers
would cut their piece rate as soon as there was a rise in production. The real trouble,
Taylor thought was that no one knew how much work it was reasonable to expect a man
to do. He therefore, started time and motion study, under which each motion of a job
is timed with the help of a stop watch and shorter and fewer motions were to be developed.
Thus the best way of doing a job was found. This replaced the old rule-of-thumb-knowledge
of the workman.
ii) Differential Payment
Taylor introduced a new payment plan called the differential piece work, in which
he linked incentives with production. Under this plan a worker received low piece rate if
he produced the standard number of pieces and high rate if he surpassed the standard.
Taylor thought that the attraction of high piece rate would motivate workers to increase
production.
Henry’s 14 Principles of Management
Henry Fayol suggested 14 principles of management for running the business

effectively these principles are studied as follows:
1) Division of Work
The object of division of work is to derive benefits from the principle of specialization.
The various functions of management like planning, organizing, directing, etc., cannot be
performed by a single proprietor and they have to be entrusted to specialists in the related
fields. Division of work in the management process produces more and better work with
the same effort.

Notes The principle of division of work is the principle of specialization. It emphasizes the
importance of specialization in an organization for promoting efficiency in the utilization
of labor. Division of work or specialization can be applied to all types of work, shop labor
(i.e., labor involved in production work), technical work and managerial work.
Division of work in the management becomes necessary because the various
functions of management likes planning, organizing, staffing, controlling etc. cannot be
performed by a single person or by the board of directors alone. The different managerial
functions have to be entrusted to socialists in the related fields. The division of labor in
the process of management ensures more and better work with the same effort.
2) Authority and Responsibility
As management consists in getting the work done through others, it implies that
the manager should have the right to give orders and the powers to extract obedience.
Authority is the right to extract obedience and get the work done, in other words,
it is the power or right of a person to command his subordinates. Responsibility is the
obligation of a person to perform the task or duties assigned to him; thereby authority
and responsibility are closely related.
Authority is closely related to responsibility, and it arises whenever authority is
exercised. An individual to whom authority is given to exercise power must also be
prepared to bear the responsibility to perform the work. Responsibility without authority
is meaningless.
3) Discipline
Discipline means obedience to authority and observance of rules of service and norms
of performance, respect for agreements, sincere efforts for completing the given job,
respect etc. Discipline is essential for the smooth running of business.
It is a sense of respect fir agreements which are directed at achieving obedience,
application, energy and outward marks of respect. In other words, it is the observance
of the rules of service, norms of performance, sincere efforts for completing the given job,
respect for the superiors etc. in short, it means obedience to authority.
4) Unity of Command
The Principle of Unity of Command means that an employee should receive orders,
instructions, directions and guidance from one superior only for any action or activity. It
states that one person should receive orders from only on superior. In other words one
person should be accountable to only one boss. If two superiors wield authority over the
same person it causes uneasiness, disorder, indiscipline among employees and
undermining of authority. It the principle of unity of command is into observed the authority
there will be confusion and it will be difficult to pin point responsibility on anyone.
5) Unity of Direction
The Principle of Unity of Direction means that there should be one head and one
plan for a group of activities having the same or common objectives. In simple terms, for
every category of work, there should be one plan of action, and it should be executed
under the overall control and supervision of one head (i.e., superior). For instance, all sales
activities having the common objective of promotion of sales should have one plan of action
and should be the responsibility of the manager. Thus it implies that there should be one
head and one plan for a group of activities having same objectives. For every category
of work, there should be one plan of action and it should be executed under the overall
control and supervision of head or superior.

Overview of HRM 21
6) Sub-ordination of Individual interest to General Interest Notes

In a business concern, the interest of one employee or group of employee should
not prevail over the common interest or should not block the fulfillment of general goals
of the business concern. If there is any disagreement among two superiors on any matter,
the management should reconcile the differences so as to conduct the overall operation
of the enterprise smoothly.
This principle implies that, in any organization, the interests of individuals should
be subordinated to the group interests, (i.e., the general or common interests of the
organization) so, when there is a conflict between individual interests and group interests,
the interests of the groups in general should prevail over the interests of individual
employee’s interests. This principle thereby will contribute to unity and will help to avoid
clashes among different workers.
7) Fair Remuneration to Workers
Fayol was of the view that the remuneration paid to worker should always be just
and fair and should afford maximum satisfaction to both employees and the employer.
Employees who are paid decent salary will have a high morale and their efficiency will
be high. The rate of remuneration paid should based on general business conditions, cost
of living, productivity of employees and the capacity of the firm to pay.
8) Centralization
It means concentration of authority in the hands of few. Everything, which goes to
reduce the importance of sub-ordinates role, is known as centralization. Fayol was the
opinion that they should be proportion between centralization and decentralization. The
degree of proportion may differ but the balance must be maintained between centralization
and decentralization of authority to produce better results. Centralization (i.e.,
concentration of authority) gives least or any importance to subordinates in the
management and the organization of an undertaking. On the other hand, decentralization
of authority means giving more role and importance to subordinates in the management
and organization of an undertaking.
Too much of centralization kills the initiative and enthusiasm of the subordinates and
reduces them to mere mechanical tools, while excessive decentralization increases the
importance of the subordinates and reduces the importance of the superiors. So, neither
too much of centralization nor too much of decentralization should be resorted to by any
concern. A proper balance must be maintained between centralization and decentralization
to retain the initiative of the subordinates and to ensure the optimum utilization of all the
personnel in the organization.
9) Scalar Chain
Scalar chain refers to the chain superiors ranging from the highest authority to the
lowest one to ensure unity of command and effective communication. According to this
principle, order or communication should pass through the proper channels of authority.
But in case of swift action a gangplank may be created with due respect to line of authority
to facilitate quick communication.
The above diagram depicts double ladders, showing the hierarchy of authority, one
from A to G, and the other from A to R. If F wants to talk to Q, normally the communication
should go up the ladder from F to A and then, come down the ladder from A to Q, through
M, N, O& P. This is lengthy and time consuming process. So, when there is a need for
swift action. Through the arrangement of gang plank, F and Q may be allowed to have
direct contact to settle the matter.

Notes A
] M
( I
] (
] ]
]
Gang - Plank (
( ]
The principle of scalar chain or line of authority recognizes the necessity for formal
authority in the organization. It suggests that the scalar chain or the line of authority should
be followed ordinarily or normally. That is, normally, orders or communications should pass
through the proper channels of authority along the scalar chain.
Advantages of Scalar Chain
(a) This principle ensures unity of command in the organization.
(b) Because of the scalar principle, every person in the organization knows under
whom he is working and whose orders he has to obey.
(c) This principle facilitates delegation of authority, which is essential for the
successful working of the organization.
Draw Backs/Limitations of Scalar Chain
(a) The scalar chain is a lengthy, tedious and time consuming process. Under the
scalar chain, communication takes too much time, as it has to go from one
level to other in a chain.
(b) Under the scalar chain principle suffers from the above drawbacks, the scalar
chain should not be rigid. There should be provision for short-circuiting the scalar
chain so as to allow quick communication and swift action, where ever desired.
10) Order
Order refers to the systematic arrangement of things and persons in an organization.
Management should observe the principle of ‘right place for everything and every man’.
To observe this principle, there is need for scientific selection of competent personnel,
correct assignment of duties to personnel and good organization. According to Henry
Fayol, order can be divided into two types, viz, (a) Material Order and (b) Social Order.
Material order refers to arrangement of materials at the right place for every
occasion.
Social order refers to the arrangement of persons. In other words, it refers to the
arrangement of people in such a way that there will be a fixed work place for every worker,
and every worker will be available in his workplace during the working hours. Further perfect
social order also implies that the right person is placed on the right job.
Thus, a successful observance of the principle of order requires that (a) There should
be scientific selection of competent personnel, (b) Correct assignment of duties to the
personnel (c) Good Organization.
Overview of HRM 23
11) Equity Notes

It means fair dealings, equality of treatment among the personnel in the undertaking.
The managerial treatment of the subordinates should be free from the influence of
prejudices and personal likes or dislikes. Equity ensures healthy industrial relations.
12) Stability of Staff
In order to motivate the workers and to show keener interest in their work, it is
necessary that they should be assured security of the job by the management. If they
fear of insecurity of job their morale will be low and there cat’s turnout with better work.
Hence, it is very essential to provide security of tenure to the personnel.
13) Initiative
Initiative means freedom to think and execute a plan. Innovation that is a mark of
technological progress is possible only where the employees are encouraged to take
initiative. Employees should be welcomed to make any suggestions regarding the
formulation of objectives and plans.
14) Esprit-de-crops
Since union is strength, the management should create a team spirit among the
employees. Only when all their personnel pull together as a team, there is scope for
realizing the objectives of the concern. Harmony and unity of staff of a concern is a great
source of strength to the undertaking. The management should not follow the policy of
‘divide and rule’ and it should strive to maintain unity among the staff.
Elton Mayo and Hawthorne Experience
Elton Mayo’s team conducted a number of experiments involving six female workers.
These experiments are often referred to as the Hawthorne experiments or Hawthorne
studies as they took place at The Hawthorne Works of the Western Electric Company
in Chicago.
Hawthorne Experiment Details
Over the course of five years, Mayo’s team altered the female worker’s working
conditions and monitored how the change in working conditions affected the workers
morale and productivity. The changes in working conditions included changes in working
hours, rest brakes, lighting, humidity, and temperature. The changes were explained to
the workers prior to implementation.
Hawthorne Experiment Results
At the end of the five year period, the female worker’s working conditions, reverted
back to the conditions before the experiment began. Unexpectedly the workers morale
and productivity rose to levels higher than before and during the experiments. The
combination of results during and after the experiment (i.e., the increase in the workers’
productivity when they were returned to their original working conditions) led Mayo to
conclude that workers were motivated by psychological conditions more than physical
working condition.
Hawthorne Experiment Conclusions
After analysing the results from the Hawthorne experiments Mayo concluded that
workers were motivated by more than self interest and instead the following applied:
i) Psychological Contract
There is an unwritten understanding between the worker and employer regarding what
is expected from them; Mayo called this the psychological contract.

Notes ii) Interest in Workers

A worker’s motivation can be increased by showing an interest in them. Mayo
classified studying the workers (through the experiments) as showing an interest in the
workers.
iii) Work is a Group Activity
Work is a group activity, team work can increase a worker’s motivation as it allows
people to form strong working relationships and increases trust between the workers. Work
groups are created formally by the employer but also occur informally. Both informal and
formal groups should be used to increase productivity as informal groups influence the
worker’s habits and attitudes.
iv) Social Aspect of Work
Workers are motivated by the social aspect of work, as demonstrated by the female
workers socialising during and outside work and the subsequent increase in motivation.
v) Recognise Workers
Workers are motivated by recognition, security and a sense of belonging.
vi) Communication
The communication between workers and management influences workers’ morale
and productivity. Workers are motivated through a good working relationship with
management.
Peter F. Drucker Management as a Profession
Peter Ferdinand Drucker (1909-2005), American economist of Austrian origin, is

considered as the “Father of Modern Management”. Management by Objectives was first
outlined by him in 1954 in his book ‘The Practice of Management’.
Formulated by Peter F. Drucker, Management by Objectives is a process in which
a manager and an employee agree upon a set of specific performance goals or objectives,
and jointly develop a plan for reaching them. The objectives must be clear and achievable
and the plan must include a time frame and evaluation criteria.
Management by Objective is primarily used as a tool for strategic planning, employee
motivation and performance enhancement. It is intended to improve communication
between employees and management, increase employee understanding of company
goals, focus employee efforts upon organizational objectives and provide a concrete link
between pay and performance. An important factor in this system is its emphasis on the
results achieved by employees rather than the activities performed in their jobs.
It also tells about SMART objective, which stands for:
S - Specific M - Measurable
A - Achievable R - Realistic
T - Time-Specific
Peter F. Drucker views on management may be summarized as follows:
a) Management as a Practice: According to Drucker, management has two
important functions, innovation and marketing. He has treated management as
a discipline as well as a profession. For him, management is more of a practice
and is always goal oriented.

Overview of HRM 25
b) Functions of Management: Drucker points out three basic functions of Notes

management. The actions of management should contribute to:
i) The achievement of purpose and mission of the institution.
ii) Make the work productive and the worker achieving.
iii) The effective management of social responsibilities.
c) Objective Setting: Drucker has attached great importance to objective setting.
To make the objectives and their achievements more meaningful, he has given
a new tool, what is popularly known as Management by Objective (MBO).
d) Orientation towards Justice: Drucker is a great visionary and futurologist. He
was visualised the concept of modern organisation. To put is in his own words,
he describes the present ages as the age of discontinuity.
e) Federalism: Federalism according to him involves centralised control in a
decentralised structure. These have certain positive values over other methods
of organising, which are follows:
i) It sets the top management free to devote itself to major policy formulation
and strategy development.
ii) It defines the functions and responsibilities of the employees.
iii) It creates yardsticks to measure twin success and effectiveness in
operating jobs.
iv) It helps resolve the problem of continuity through giving education to the
managers of various units while in an operating position.
1.13 Summary
Human resource can be defined as the translating process of human being into a
useful resource. When a human being contributes his/her skills, knowledge and positive
attitude towards productive work in an organization, he/she becomes the human resource
for that organization.
Human resource management is the policy and practice of one need to carry out
the people or human resource aspects of a management position, including recruiting,
screening, training, rewarding and appraising.
Job Analysis is the process of studying and collecting information relating to the
operations and responsibilities of a specific job. The immediate products of this analysis
are job description and job specification.
Planning involves choosing of one of the various alternatives available for
accomplishing the desired result with the greatest economy and certainty through the
process of looking ahead.
Organizing involves establishing an intentional structure of roles for people in an
organization. Structural considerations such as the chain of command, division of labor,
and assignment of responsibility are part of the organizing function.
Personnel Development programmes tries to educate the managerial executive of
the market situations and trends which help in forming new plans and strategies of
products.
Personnel evaluation method is seeking the measurement of employee work
effectiveness using objective criteria. Performance appraisal systems hope to achieve
higher productivity outcomes by delineating how employees meet job specifications.

Notes Collective bargaining is a process between employers and employees to reach an

agreement regarding the rights and duties of people at work. Collective bargaining aims
to reach a collective agreement which usually sets out issues such as employees pay,
working hours, training, health and safety and rights to participate in workplace or company
affairs.
Organization development is a planned organization-wide effort to increase an
organization’s effectiveness and viability. Warren Bennie, has referred to organization
development as a response to change, a complex educational strategy intended to change
the beliefs, attitudes, values and structure of organization so that they can better adapt
to new technologies, marketing and challenges and the dizzying rate of change itself.
The system has a goal sequence or end oriented. It has been defined as “a particular
linking of inter-related and inter-dependent components having a facilitating effect, on the
carrying out of one and more processes”.
I. Fill in the Blanks
1. Personnel management is __________.

2. HRM aims to maximize employees as well as organizational ____________.
3. ____________ is a process of identifying the most eligible candidate for a
particular job.
4. The term procurement stands for _____________ and selection.
5. Order refers to the systematic arrangement of things and persons in an _______.
II. True or False

1. Human resource can be defined as the translating process of human being into
a useful resource.
2. Decentralization means concentration of authority in the hands of few.
3. Social Order refers to arrangement of materials at the right place for every
occasion.
4. Organizing involves establishing an intentional structure of roles for people in
an organization.
5. Scalar chain refers to the chain superiors ranging from the highest authority
to the lowest one to ensure unity of command and effective communication.
III. Multiple Choice Questions
1. ________ are the resources that provide utility value to all other resources.
[a] Men
[b] Material
[c] Money
[d] Machinery
2. The characteristics of human resources are ________ in nature
[a] Homogeneous
[b] Heterogeneous

Overview of HRM 27
[c] Ductility Notes

[d] None of these
3. Which of the following is an example of operative function of HR managers?
[a] Planning
[b] Organizing
[c] Procurement
[d] Controlling
4. The scope of human resource management includes
[a] Procurement
[b] Development
[c] Compensation
[d] All of the above
5. Human resource management is normally ________ in nature.
[a] Proactive
[b] Reactive
[c] Combative
[d] None of these
I. Short Answer Questions
1. What do you mean by human resources?

2. Give the meaning of human resource management.
3. Define HRM.
4. State any four objectives of HRM.
5. Mention any four functions of HRM.
6. State any four qualities of HR manager.
II. Extended Answer Questions

1. Explain the concept human resource management.
2. Discuss the evolution of HRM.
3. Explain the nature of HRM.
4. What are the objectives of HRM.
5. Explain the features of HRM.
6. Discuss the scope of HRM.
7. Explain the importance of HRM.
8. Discuss various functions of HRM.
9. Explain 10 essential principles HRM.
10. Explain in details the HRM Process.
11. Discuss the resposibilities of HR Manager.
12. Brief on the systems and techniques of HRM.
13. Discuss the theories of management.

Notes 1.16 Key Terms

 HR: Human resource is the total knowledge, skills, creative abilities, talents
and aptitudes of an organization’s workforce, as well as the value, attitudes and
beliefs of the individuals involved.
 HRM: Human resource management involves all management decisions and
practices that directly affect or influence the people or human resources, who
work for the organization.
 Recruitment: Recruitment is the process of stimulating the candidates to apply
for jobs.
 Selection: Selection is a process of identifying the most eligible candidate for
a particular job.
 Human Resource Planning: Identifying and documenting project roles,
responsibilities and reporting relationships, as well as creating the staffing
management plan.
 Staffing: The term staffing may be defined as the managerial function of hiring
and developing the required personnel to fill in various positions in an
organization.
 Collective bargaining: It is a process between employers and employees to
reach an agreement regarding the rights and duties of people at work.

1. Routine
2. Effectiveness
3. Selection
4. Recruitment
5. Organization
II. True or False
1. True
2. False
3. False
4. True
5. True
1. [a]
2. [b]
3. [c]
4. [d]
5. [a]
1.18 Case Study

Case - 1: Paternity Leave
Mr. Kishore, an Andhra boy aged 32, has been working as an officer in the Indian
Bank, Mumbai branch since 1996. He loved Miss. Kiranmayi, a Karnataka girl working
Overview of HRM 29
as an Engineer in Chaitanya Engineering Company, Mumbai and married her on 1/1/2009 Notes
though their parents did not agree to this marriage. They did not have any assistance
from any side. Mrs. Kiranmayi was pregnant and applied for maternity leave on 1/12/2009.
Her employer granted leave an provided her all the benefits to be provided legally and
sanctioned her an additional amount of Rs. 5000 for extra medical care. She faced various
health problems two weeks before and one week after the delivery. Mr. Kishore also applied
for paternity leave on 1/12/2010 for three weeks and required his employer to grand leave
as he ought to help and render physical and psychological support to his wife as there
was none to help his wife. Branch manager of the Indian Bank, Mumbai branch, forwarded
this letter to the head office with adverse comments. The letter was sent to the chief
personnel manager and to the legal adviser of the bank. However, the General Manager
of the bank had to finally settle this issue.
Questions:
1. What is the peculiarity of this case?
2. What would be the comments of the legal adviser and chief personnel manager?
3. How would you settle the issue, if you were the General Manager of the bank?
Case - 2:
HRM - an Integral Part of Strategic Management
The Coca-Cola company is the most successful MNC with operations in as many
as 200 countries and nearly 80 percent of its revenue coming from global operations. Coca-
cola is typically perceived as the quintessential global corporation. The US based company
believes in “thinking global but acting locally” and this strategy guides the Cola giant’s
management of cross border operations. It grants the national business the freedom to
conduct operations in a manner appropriate to the market. At the same time, the company
tries to establish a common mindset that all its employees share.
The corporate HR function is charged with providing the glue that binds all the
divisions (there are 25 operating divisions) into the Coca-Cola family. The corporate HRM
achieves this in two main strategies: (i) by propagating a common HR philosophy within
the company and (ii) by developing a group of internationally minded mid-level executives
for future senior management responsibilities.
The corporate HRM group perceives its mission as one of developing and providing
the underlying philosophy around when local businesses can develop their HR practices.
For example, rather than having a standard salary policy for all its subsidiaries. Coca-
Cola has a common salary philosophy- the local compensation package should be
competitive with the best companies in the local market. Twice a year the corporate HRM
Group conducts a two week HRM orientation session for the HR staff from each of its
25 operating divisions. These sessions give an overview of the company’s HRM philosophy
and talk about how local businesses can translate that philosophy into HR policies. Coca-
Cola has found that information sharing is one of the great benefits of bringing HR
professionals together. For example, tools that have been developed in India to deal with
specific HR issues, might also be useful in Australia. The sessions provide the medium
through which HR professionals can communicate and learn from each other, which
facilitates the rapid transfer of innovative and valuable HR tools from region to region.
Questions:
1. Do you agree with the HR practices of Coca-Cola? If yes, why?
2. In what way does the company seek to integrate HR practices with its corporate
strategic management?
3. Can you name any other company which has similar/better HR practices?
Notes 1.19 Further Readings

1. C.S. VenkatRatnam & B.K.Srivastava, Personnel Management & Human
Resource, TMH.
2. V.S.P. Rao, Human Resource Management, Excel Books.
3. W. F. Cascio, Managing Human Resources, TMH.
4. D. Bhatacharya, Human Resource Management, Excel Books.
5. Aswathapa, Human Resource & Personnel Management, TMH.
6. Gomez Mejia, Balkin & Cardy, Managing Human Resources, Pearson.
7. Mathis and Jackson, Human Resource Management, Thomson.
8. C.B Mamoria, Personnel Management, Himalaya.
9. P. Jyothi & D.N. Venkatesh, Human Resource Management, Oxford.
1.20 Bibliography
1. Elwood F. Holton II, James W. Trott, Jr., 1996, Trends Toward a Closer
Integration of Vocational Education and Human Resources Development,
Journal of Vocational and Technical Education, Vol. 12, No. 2, p7
2. Collings, D. G., & Wood, G. (2009). Human resource management: A critical
approach. In D. G. Collings & G. Wood (Eds.), Human resource management:
A critical approach (pp. 1-16). London: Routledge.
3. Johnason, P. (2009). HRM in changing organizational contexts. In D. G. Collings
& G. Wood (Eds.), Human resource management: A critical approach (pp. 19-
37). London: Routledge.
4. O’Brien, Michael (October 8, 2009). “HR’s Take on The Office”. Human Resource
Executive Online. Archived from the original on 18 December 2011. Retrieved
28 December 2011.
5. lrich, Dave (1996). Human Resource Champions. The next agenda for adding
value and delivering results. Boston, Mass.: Harvard Business School Press.
ISBN 0-87584-719-6. OCLC 34704904.
6. Azhar, Sarwar and ShehzadiIram. “Human Resource Outsourcing.” Proceedings
of 3rd International Conference on Business Management. University of
Management and Technology Lahore, 27-28 February 2013. Lahore: School of
Business and Economics, 2013. 1-14. Print.
7. Charles R. Perry. “Outsourcing and union power.” Journal of Labour Research
18.4 (1997): 521. Springer Link. Web. 20 March 2014.
8. Kenneth L. Deavers. “Outsourcing: A corporate competitiveness strategy, not
a search for low wages.” Journal of Labour Research 18.4 (1997): 504. Springer
Link. Web. 22 April 2014.
9. Murem Sharpe. “Outsourcing, organizational competitiveness, and work.”
Journal of Labour Research 18.4 (1997): 535. Springer Link. Web. 25 March
2014. (E-Journal)
10. Vashistha, A. “Human resource outsourcing: emerging trends.” Global Services.
Global Services 16 April 2007. Web. 13 February 2014.


Human Capital 31
Notes
Unit 2: Human Capital
Structure:
2.1 Introduction to Human Capital Management
2.2 Significance of Human Capital Management
2.3 Organisational Behavior
2.4 Determinants of Organisational Behaviour
2.5 Approaches to Organisational Behaviour
2.6 Emerging Issues in Organisational Behaviour
2.7 Organizational Development
2.8 Need and Importance of Organisational Development
2.9 Assumptions of Organisational Development
2.10 Benefits and Limitations of Organisational Development
2.11 Organisation Development Values
2.12 Process of Organizational Development
2.13 Steps in Organisational Development
2.14 Job Enrichment
2.15 Job Enlargement and Rotation
2.16 Job Specifications and Descriptions
2.17 Job Evaluation
2.18 Job Evaluation Methods
2.19 Summary
2.22 Key Terms
2.24 Case Study
2.26 Bibliography
Objectives
After studying this unit, you should be able to understand:
 Significance of Human Capital Management
 Concept of Organisational Behavior
 Organisational Behaviour Models
 Techniques of Organizational Development
 Concept of Job Enrichment, Job Enlargement and Rotation
 Concept of Job Specifications and Descriptions
 Job Evaluation Methods
Notes 2.1 Introduction to Human Capital Management

Human capital management (HCM) is the comprehensive set of practices for
recruiting, managing, developing and optimizing the human resources of an organization.
Human Capital management has more to do with how organizations treat their employees?
Do not treat your employees as mere labors. Senior management must ensure timely
growth and development of every individual concerned for him/her to contribute efficiently
when required.
The key objective of every organization should be to train its employees so that they
become efficient resources later on. In human capital management, organizations treat
their employees as important resources that play an instrumental role in productivity of
the organization.
The development and management of individuals in line with their key responsibility
areas not only make them an indispensable resource in the future but also ensure their
hundred percent contribution towards the organization.
The functions of HCM software are generally organized into the following categories:
a) Core HR, including payroll, benefits administration, onboarding, compliance
management and maintenance of employee data.
b) Talent management, the collective term for the process of recruiting, developing
and retaining employees. Talent management suites consist of distinct yet
integrated modules for recruitment, performance management, compensation
management, learning and succession planning.
c) Workforce management, the set of functions for deploying employees with the
necessary skills to particular regions, departments or projects. It includes time
and attendance management, workforce planning, labor scheduling and
budgeting.
d) Service delivery, including HR help desks, intranet portals, employee self-service
and manager self-service.
2.2 Significance of Human Capital Management

The significance of human resource management can be summarized as follows:
I. Successful Utilization of Resources
Human resource management ensures the effective utilization of resources. HRM
teaches how to utilize human and non-human resources so that the goals can be achieved.
Organization aiming to utilize their resources efficiently invites the HR department to
formulate required objectives and policies.
II. Organizational Structure
Organizational structure defines the working relationship between employees and
management. It defines and assigns the task for each employee working in the
organization. The task is to be performed within the given constraints. It also defines
positions, rights and duties, accountability and responsibility, and other working
relationships. The human resource management system provides required information to
timely and accurately. Hence, human resource management helps to maintain
organizational structure.

Human Capital 33
III. Development of Human Resources Notes

Human resource management provides favorable environment for employees so that
people working in organization can work creatively. This ultimately helps them to develop
their creative knowledge, ability and skill. To develop personality of employees, human
resource management organizes training and development campaigns which provide an
opportunity for employees to enhance their caliber to work.
IV. Respect for Human Beings
Another importance of human resource management is to provide a respectful
environment for each employee. Human resource management provides with required
means and facilitates employee along with an appropriate respect because the dominating
tendency develops that will result organizational crisis. Hence, all of them should get proper
respect at work. Human resource management focuses on developing good working
relationships among workers and managers in organization. So, good human resource
management system helps for respecting the employees.
V. Goal Harmony
Human resource management bridges the gap between individual goal and
organizational goal-thereby resulting into a good harmony. If goal difference occurs, the
employees will not be willing to perform well. Hence, a proper match between individual
goal and organizational goal should be there in order to utilize organizational resources
effectively and efficiently.
VI. Employee Satisfaction
Human resource management provides a series of facilities and opportunities to
employees for their career development. This leads to job satisfaction and commitment.
When the employees are provided with every kind of facilities and opportunities, they will
be satisfied with their work performance.
VII. Employee Discipline and Moral
Human resource management tries to promote employee discipline and moral
through performance based incentives. It creates a healthy and friendly working
environment through appropriate work design and assignment of jobs.
VIII. Organizational Productivity
Human resource management focuses on achieving higher production and most
effective utilization of available resources. This leads to an enhancement in organizational
2.3 Organisational Behavior

Organisational behaviour is the study and application of knowledge about how people
as individuals and as groups act within organisations. It can be defined as the
understanding, prediction and management of human behaviour in organisations. OB is
related to other disciplines like Organisations Theory, Organisation Development and
Personnel/Human Resources Management.
The study of Organisational Behaviour (OB) is very interesting and challenging too.
It is related to individuals, group of people working together in teams. The study becomes
more challenging when situational factors interact. The study of organisational behaviour
relates to the expected behaviour of an individual in the organisation. No two individuals
are likely to behave in the same manner in a particular work situation. It is the predictability
of a manager about the expected behaviour of an individual. There are no absolutes in
Notes human behaviour. It is the human factor that is contributory to the productivity hence the
study of human behaviour is important. Great importance therefore must be attached to
the study. Researchers, management practitioners, psychologists and social scientists
must understand the very credentials of an individual, his background, social framework,
educational update, impact of social groups and other situational factors on behaviour.
Managers under whom an individual is working should be able to explain, predict, evaluate
and modify human behaviour that will largely depend upon knowledge, skill and experience
of the manager in handling large group of people in diverse situations. Pre-emptive actions
need to be taken for human behaviour forecasting. The value system, emotional
intelligence, organisational culture, job design and the work environment are important
causal agents in determining human behaviour. Cause and effect relationship plays an
important role in how an individual is likely to behave in a particular situation and its impact
on productivity. An appropriate organisational culture can modify individual behaviour.
Recent trends exist in laying greater stress on organisational development and imbibing
a favourable organisational culture in each individual. It also involves fostering a team spirit
and motivation so that the organisational objectives are achieved. There is a need for
commitment on the part of the management that should be continuous and incremental
in nature.
Meaning of Organisational Behavior
Organisational behaviour is the study of both group and individual performance and
activity within an organisation. The two theories of how the behaviour of the organisation
can be viewed are the Internal and the external theory.
Organisational behaviour studies the impact individuals, groups and structures have
on human behaviour within organisations. It is an interdisciplinary field that includes
sociology, psychology, communication and management. Organisational behaviour
complements organisational theory. This theory mainly focuses on organisational and
intra-organisational topics and complements human-resource studies, which is more
focused on everyday business practices.
Organisational behaviour is field of study that illustrates the impact that individual,
groups and structure have on behaviour within organisation for his purpose of applying
such knowledge towards improving an organisation effectiveness i.e. organisational
behaviour is concerned with the study of what people do in an organisation and how that
behaviour affects the performance of the organisation.
Organisational behaviour is an applied behavioural science that is built on contribution
from a number of behavioural disciplines.
Definitions of Organisational Behavior
Organisational Behaviour (OB) can be defined as the understanding, forecasting and

management of human behaviour. This behaviour can be identifies both individually or in
a group that occurs within an organisation or company.
“Organisational behaviour is a subset of management activities concerned with
understanding, predicting and influencing individual in organisational setting.”
- Callahan, Fleenor and Kudson
“Organisational is a branch of the Social Sciences that seeks to build theories that
can be applied to predicting, understanding and controlling in work organisations.”
- Raman J. Aldag

Human Capital 35
“Organisational Behaviour is the study and application of knowledge of how people Notes
act or behave within organisation”. - Keith Davis and Newstrom
“Organisational behaviour is directly concerned with the understanding, production
and control of human in organisations.” - Fred Luthans
“Organisational behaviour is the study and application of knowledge about how people
act within an organisation. It is a human tool for human benefit. It applies broadly to the
of people in all types of organisation.” - Newsroom and Davis
“Organisational behaviour is a field of study that investigates the impact that
individuals, groups and structure have on within the organisations for the purpose of
applying such knowledge toward improving an organisation’s effectiveness.”
- Stephens P. Robbins
“Organisational behaviour as a systematic study of the actions and attitudes that
people exhibit within the organisations.” - Stephens P. Robbins
Concepts of Organisational Behavior
Organisational Behaviour is field of study that completely finds out the impact and
effects that individuals, groups and structure have on behaviour within organisation, their
reaction in the organisation to different situations etc. It is the study and application of
knowledge about how people act within organisations. Organisational Behaviour is a human
tool for human benefit. It is the behaviour of people in all types of organisations, such
as business, government, schools and services organisations. It covers three determinants
of behaviour in organisations: individuals, groups and structure. Organisational Behaviour
is an applied field. It applies the knowledge gained about individuals and the effect of
structure on behaviour, in order to make organisations work more effectively. Organisational
Behaviour covers the core topics of motivation, leadership behaviour and power,
interpersonal communication, group structure and process, learning, attitude development
and perception, change process, conflict, job design and work stress. Organisation and
management are very different from each other.
Organisation as a purposeful system with several subsystems where individuals and
activities are organized to achieve certain predetermined goals through division of labor
and coordination of activities. Division of labor refers to how the work is divided among
the employees and coordination refers to how all the various activities performed by the
individuals are integrated or brought together to accomplish the goals of the organisation.
The term organizing is used to denote one aspect of the managerial activities when he
or she is preparing and scheduling the different tasks that need to be completed for the
job to be done.
Management refers to the functional process of accomplishing the goals of the
organisation through the help of others. A manager is an individual who is given the
responsibility for achieving the goals assigned to him or her as part of the overall goals
of the organisation and who is expected to get the job done. The terms of top management,
lower management are frequently used to indicate the hierarchical levels of those who
are engaged in the process of getting the goals of the organisation accomplished.
The concept of OB is based on two elements which namely include:
1. Nature of people
2. Nature of the organisation

Notes
1. Nature of People
Nature of people in the organisation includes the basic qualities of a person or the
character that represents an individual. This can either be similar or unique. At the
organisation level, some major factors which affect the nature of people include-
a) Individual Difference: It is the managerial approach towards each employee
individually, that is one-on-one approach. It is not a statistical approach which
includes avoidance of single rule.
Example: The manager of the organisation should not be biased towards any
particular employee. He should treat them equally and try not to judge anyone
on any other factor apart from their work.
b) Perception: It is a unique ability to observe, listen and conclude something.
It means believing in one’s own senses. It is the way we interpret things and
have our point of view is our perception.
Example: Person A thinks that night shift is better for work, while person B
thinks that day shift is better for work. Here we see both person A and B have
different perception about the same thing.
c) A whole person: It is a fact that we cannot employ a person’s skill and brain,
we should appoint the person as a whole. These skills come from environment
and knowledge. An individual’s personal life cannot be separated from his
professional life, just like emotional conditions are not separable from physical
conditions. So, people function is the functioning of a total human being not
a specific feature of human being.
d) Motivated behaviour: It is the behaviour rooted or caused by some inspiration
from some person, group or even a situation which would have arised. In an
organisation or firm, we can see two different types of motivated employees –
one is positive motivation which includes encouraging others to change their
behaviour or say complete a task by luring them with promotions or any other
profits. The other is negative motivation which includes forcing or warning others
to change their behaviour otherwise they should face serious consequences.
e) Value of person: Each and every employee want to be valued and appreciated
for their skills, capabilities and abilities. This is followed by opportunities which
help them develop and improve themselves for the better.
2. Nature of Organisation
Nature of organisation mainly states the motive and goal of the organisation. It refers
to the various opportunities the organisation provides in the global market. It helps in
defining the employees’ standard and the character of the company by acting as a mirror
image of the organisation. To understand the nature of the organisation we should first
be familiar with the social system, the mutual interest it shares and the work ethics.
a) Social system: Every organisation socializes with other firms, their customers,
which includes the outer world and all of its employees i.e. their own social
roles and status. The employee’s behaviour is mainly influenced by their group
Human Capital 37
as well as individual forces. Social system is of two types. The first one is formal Notes
which is formed by people working together in a firm or people who belong to
the same club who are considered as formal social system. The second one
is informal which is formed by a group of friends, people socializing with others
freely, enjoying, partying etc.
b) Mutual interest: An organisation needs people to grow and people need
organisations to survive and prosper. This is called as mutual understanding
between the organisation and the employees that helps both reach their
respective objectives and goals. The best example is the bank where we deposit
money and in return we loan, interest etc.
c) Ethics: They refer to the moral principles of an individual, group and organisation.
In order to attract and retain valuable employees, ethical treatment is necessary
and some moral standards need to be set by the organisation. Most of the
organisation is now establishing and maintaining code of ethics training reward
for ethical behaviour.
Importance of Organisational Behavior
Organisational behaviour offers several ideas to management as to how human factor

should be properly emphasised to achieve organisational objectives. Barnard has observed
that an organisation is a conscious interaction of two or more people. This suggests that
since an organisation is the interaction of persons, they should be given adequate
importance in managing the organisation. Organisational behaviour provides opportunity
to management to analyse human behaviour and prescribe means for shaping it to a
particular direction.
Organisational behaviour provides under-standing the human behaviour in all
directions in which the human beings interact. Thus, organisational behaviour can be
understood at the individual level, interpersonal level, group level and inter-group level.
Organisational behaviour helps to analyse ‘why’ and ‘how’ an individual behaves in
a particular way. Human behaviour is a complex phenomenon and is affected by a large
number of factors including the psychological, social and cultural implications.
Organisational behaviour integrates these factors to provide simplicity in understanding
the human behaviour.
i) Human Behaviour and Human Resources
Human resources play a crucial role in the development process of modern
economics. Arthur Lewis observed "there are great differences in development between
countries which seem to have roughly equal resources, so it is necessary to enquire into
the difference in human behaviour." It is often felt that, though the exploitation of natural
resources, availability of physical and financial resources and international aid play
prominent roles in the growth of modern economies, none of these factors is more
significant than efficient and committed human resource. It is in fact, said that all
development comes from the human behaviour.
ii) Human Behaviour in the Nation's Well-being
A nation with abundance of physical resources will not benefit itself unless human
resources make use of them. In fact human resources are solely responsible for making
use of national resources and for the transformation of traditional economies into the
modern and industrial economies. Lack of organisation of human resources is largely
responsible for the backwardness of the nation. Countries are underdeveloped because
their people's behaviours are inappropriate for economic development. In essence, "the

Notes difference in the level of economic development of the countries is largely a reflection of
the differences in the types of their behaviour. The key element in this proposition is that
the values, attitudes, commitment, aptitude, general orientation and quality of the people
of a country determine its economic development. The shift from manufacturing to service
and from service to knowledge and the increasing pace of technological up-gradation are
making human behaviour the ingredient of the nation's well-being and growth.
iii) Human Behaviour and Organisational Performance
Organisational performance can be measured against organisational objectives like
market share, rate of profit, product innovation, customer satisfaction and employee
satisfaction. Appropriate human behaviour contributes to the employees' commitment
towards organisational goals. In effect, employee values, attitude and other behavioural
issues shape the employee behaviour that would be appropriate for achieving organisational
performance. Thus, appropriate human behaviour contributes for the organisational
performance.
Strategy is a unified, comprehensive and integrated course of plan/action. Crafting
and implementing strategy depend on employee commitment to organisational strategies.
Employee commitment in its turn depends on appropriate leadership style, human values,
self-motivation, appropriate perception and learning. Thus, behavioural issues of employees
determine the level of success in crafting and achieving organisational strategies.
Appropriate and adaptable human behaviour enables the organisation to develop
employee commitment to the organisational strategies. In addition, appropriate behaviour
encourages the employees to acquire and develop required hard skills like technical skills,
knowledge and competency. Organisations do also invest in the development of technical
skills and knowledge of those employees whose behaviour is quite appropriate for the
achievement of organisational strategies. Thus, appropriate behaviour provides an
opportunity for the development of distinctive competence of employees that enable them
to craft and achieve distinctive strategies.
iv) Human Behaviour and Strategic Advantages
Strategic advantages include achieving low cost advantage, high quality, superior
customer service, innovations and superior speed in producing and delivering a product/
service. Committed employees with appropriate technical skills contribute to achieve
highest human efficiency, which in turn makes the operations at the lowest cost. In
addition, the committed minds contribute to innovation and other strategic advantages like
superior customer service and superior speed. Thus, appropriate human behaviour
contributes for building up of strategic advantages of the firms.
v) Human Behaviour and Efficient Human Resource Management
Appropriate human behaviour helps for positive and efficient human resource
management in terms employee satisfaction, fair treatment of employees, training and
continuous learning, performance management, employee counselling, mentoring, building
teams, congenial superior-subordinate relations as well as human relations, sound salary
and benefits. Thus, appropriate behaviour brings about efficient management of human
resources.
Thus, appropriate human behaviour helps not only efficient human resource
management but also envisages strategic management which ultimately leads to achieving
high level of organisational performance.

Human Capital 39
Scope of Organisational Behavior Notes

The scope of OB is the extent to which it can administer or control the operations
and activities of an organisation. The scope of OB combines three different concepts which
includes:
1. Individual Behaviour
2. Inter-individual Behaviour
3. Group Behaviour
1. Individual Behaviour
An Individual’s behaviour includes the study of individual’s personality, knowledge,
outlook, inspiration and job satisfaction. In the study of an Individual’s behaviour, we can
interact with other in order to study about them. This also helps us in making our
observation about them in detail.
Example: In organisations personal interview is mainly conducted to interact with
all the candidates to check their skills. These skills include those which are not mentioned
in the resume of the candidate.
2. Inter-individual Behaviour
Inter-individual behaviour is the study which is conducted through communication
between the employees among themselves. This can also be done with communication
between the employees and their subordinates. This helps in understanding each
individual’s leadership qualities, group dynamics, group conflicts, power and politics,
strengths, weaknesses etc.
Example: An organisation conducts a meeting to decide list of new board members
which have to be appointed.
3. Group Behaviour
Group behaviour is the study of the formation of organisation. It is also the study
of the structure of organisation and efficiency of organisation. Group behaviour helps in
understanding the group efforts made towards the achievement of organisation’s goal and
objectives. It refers to how a group behaves in an organisation.
Example: Strike, rally etc. in an organisation.
Features of Organisational Behavior

Notes The various features of organisational behaviour are discussed as under:

1. Approach to Management
Organisational is that part of whole management. This represents the all approach
to management. Organisational has come out as a separate field of study because of
the importance of human in organisations.
The behaviour of human is considered to be very important in the organisation mainly
for growth, expansion and development.
2. Cause and Effect Relationship
Human is not taken in philosophical terms but is generally taken in terms of cause
and effect relationship. It helps in forecasting the of individuals in the organisation. It helps
in providing a sweeping statement that managers can use to look forward to the effect
of certain activities on human behaviour based on different situations which occur from
time to time in an organisation.
3. Organisation is a Branch of Social Sciences
Organisational is completely influenced by several other social sciences viz.
psychology, sociology and anthropology. It draws a rich selection and collection of
research from all these disciplines.
4. Three Levels of Analysis
Organisational includes the study of three levels of analysis namely individual, inter-
individual and the of organisations themselves. The field of organisational embraces all
these levels as being corresponding to each other.
5. Organisational is a Science as well as an Art
Organisational is considered to be a science as well as an art. It is the systematic
knowledge about human which is termed as science and the application of all knowledge
and skills is an art. One cannot say that organisational is an exact science because it
cannot exactly forecast the of employees and people in the organisations. At best a
manager can generalize to a limited extent. In most of the cases the manager has to
act on the basis of partial information which he has or gets.
6. Organisational is a Body of Theory, Research and Application
Organisational consists of a body of theory, research and application. This helps
in understanding the human of all the people in the organisation. All these techniques
and methods help the managers to solve human problems in organisations. In this way
all tasks can be done on time and in a better way.
7. Beneficial to both Organisation and Individuals
Organisational creates an atmosphere whereby both organisation and individuals are
benefitted by each other. A reasonable climate is created so that employees may get
much needed satisfaction and the organisation may attain its objectives and goals. When
the organisation achieves its goals it can attain profit.
8. Balanced Thinking
Organisational provides a rational thinking about people and their behaviour in the
organisation. The major objective and goal of organisational is to explain, understand and
forecast human in organisations. Through this result yielding situations can be created.

Human Capital 41
Objectives of Organisational Behaviour Notes

The co-operative relationships help the organisation in achieving its objectives.
Organisational behaviour provides means to understand and achieve co-operative group
relationships through interaction, rotation of members among groups, avoidance of win-
lose situation and focusing on total group objectives.
i) Controlling and Directing Behaviour: After understanding the mechanism of
human behaviour, managers are required to control and direct the behaviour so
that it conforms to the standards required for achieving the organisational
objectives. Thus, managers are required to control and direct the behaviour at
all levels of individual interaction. Therefore, organisational behaviour helps
managers in controlling and directing in different areas such as use of power
and sanction, leadership, communication and building organisational climate
favorable for better interaction.
ii) Use of Power and Sanction: The behaviours can be controlled and directed
by the use of power and sanction, which are formally defined by the organisation.
Power is referred to as the capacity of an individual to take certain action and
may be utilized in many ways. Organisational behaviour explains how various
means of power and sanction can, be utilized so that both organisational and
individualobjectives are achieved simultaneously.
iii) Leadership: Organisational behaviour brings new insights and understanding
to the practice and theory of leadership. It identifies various leadership styles
available to a manager and analyses which style is more appropriate in a given
situation. Thus, managers can adopt styles keeping in view the various
dimensions of organisations, individuals and situations.
iv) Communication: Communication helps people to come in contact with each
other. To achieve organisational objectives, the communication must be
effective. The communication process and its work in inter-personal dynamics
have been evaluated by organisational behaviour.
v) Organisational Climate: Organisational climate refers to the total organisational
situations affecting human behaviour. Organisational climate takes a system
perspective that affect human behaviour. Besides improving the satisfactory
working conditions and adequate compensation, organisational climate includes
creation of an atmosphere of effective supervision; the opportunity for the
realisation of personal goals, congenial relations with others at the work place
and a sense of accomplishment.
vi) Organisational Adaptation: Organisations, as dynamic entities are characterized
by pervasive changes. Organisations have to adapt themselves to the
environmental changes by making suitable, internal arrangements such as
convincing employees who normally have the tendency of resisting any changes.
Key Elements of Organisational Behaviour
Organisational behaviour is a broad branch of business study that analyzes how

people in an organisation act and what an organisation can do to encourage them to act
in certain ways beneficial to the company. Organisation behaviour borrows from many
disciplines, including management theory, psychology and efficiency analysis. While
pinning down exactly what organisation behaviour is or how it works can be difficult, several
concepts help define what areas it affects.

Notes The key elements in the organisational behaviour are people, structure, technology
and the environment in which the organisation operates. When people join together in an
organisation to accomplish an objective, some kind of structure is required. People also
use technology to help get the job done.
(i) People: People make up the internal and social system of the organisation.
They consist of individuals and groups. The groups may be big or small; formal
or informal; official or unofficial. Groups are dynamic and they work in the
organisation to achieve their objectives.
(ii) Structure: Structure defines the formal relationships of the people in
organisations. Different people in the organisation are performing different type
of jobs and they need to be elated in some structural way so that their work
can be effectively co-ordinated.
(iii) Environment: All organisations operate within an external environment. It is
the part of a larger system that contains many other elements such as
government, family and other organisations. All of these mutually influence each
other in a complex system that creates a context for a group of people.
(iv) Leadership: Leadership refers to who leads a company and what type of
leadership styles are used, from the lowest managers with only a few direct
reports to founders and CEOs. Leadership styles should fit both the company
and its goals. Some companies benefit most from a forthright leader who
manages by example and can be ruthless when necessary. Other businesses
work best with a leader who shows strong relationship building and emotional
intelligence, taking time to coach each employee in new skills.
(v) Culture: Organisational behaviour is primarily concerned with company culture,
the attitudes and mores that make up how employees are expected to treat
one another, their jobs and customers. Companies should encourage a strong
culture and adopt the values necessary for success in the business and
development of all employees.
(vi) Company structure: The company structure is how the business is actually
built. This is a major factor when it comes to leadership styles and company
culture and is often discussed in detail as part of organisational behaviour
studies. A tall structure has many layers of management and can become very
bureaucratic. A flat structure has only a few layers and tends to be more organic.
Lean organisations reduce waste and increase efficiency whenever possible.
(vii) Tools of communication: Leaders and employees must have ways to
communicate with each other, so another large part of organisational behaviour
involves the study of communication options at a workplace. Body language
and nonverbal cues are important, but technology is also necessary.
Workplaces regularly use email, chat and mobile systems, each of which have
their own effect on how messages are perceived and used.
2.4 Determinants of Organisational Behaviour

The key elements in organisational behaviour are people, structure, technology and
the external elements in which the organisation operates. When people join together in
an organisation to accomplish an objective, some kind of infrastructure is required. People
also use technology to help get the job done, so there is an interaction of people, structure
and technology. In addition, these elements are influenced by the external environment
and they influence it.

Human Capital 43
1. People Notes
The people in an organisation are of different characters, personality, skills, qualities,
interests, background, beliefs, values and intelligence. In order to maintain and keep up
a good and healthy environment, all the employees should be treated equally. They should
be judged according to their work and all other aspects that affect the organisation. In
managing human resources, managers have to deal with:
i) Individual employee who are expected to perform the tasks allotted to them.
ii) Dyadic relationships such as superior-subordinate interactions.
iii) Groups who work as teams and have the responsibility for getting the job done.
iv) People outside the organisation system such as customers and government
officials.
Example: Campus placements are offered by different companies to trainees from
different states. However, during and after training, all trainees are examined only on the
basis of their performance in the tasks or works assigned.
2. Structure
Structure refers to the layout or the design of an organisation or firm. It is the
construction and arrangement of relationships, strategies according to the organisational
goals and objectives. Some of the key concepts of organisation structure are listed as
below:
a) Hierarchy of Authority: This refers to the distribution of authority among
organisational positions and authority grants the position holder certain rights
including right to give direction to others and the right to punish and reward.
b) Division of Labor: This refers to the distribution of responsibilities and the way
in which activities are divided up and assigned to different members of the
organisation is considered to be an element of the social structure.
c) Span of Control: This refers to the total number of subordinates over whom
a manager has authority.
d) Specialization: This refers to the number of specialities performed within the
organisation.
e) Standardization: It refers to the existence of procedures for regularly recurring
events or activities.
f) Formalization: This refers to the extent to which rules, procedures and
communications are written down.
g) Centralization: This refers to the concentration of authority to make decision.
h) Complexity: This refers to both vertical differentiation and horizontal differentiation.
Vertical differentiation: outlines number of hierarchical levels; horizontal
differentiation highlights the number of units within the organisation (e.g.
departments, divisions).
3. Technology
Technology is the implementation of scientific knowledge for practical usage. It
provides the all the resources required by the people. This will have an effect on their
work and task performance in the right direction and path.
Organisations have technologies for transforming inputs and outputs. These
technologies consist of physical objects, activities and process, knowledge, all of which
are brought to bear on raw materials, labour and capital inputs during a transformation
process. The core technology is that set of productive components most directly

Notes associated with the transformation process, for example, production or assembly line in
manufacturing firm.
Classification of Technology: Thomson classified technology into three categories:
Long-linked technology, Mediating Technology and Intensive Technology.
i) Long linked Technology: In this, tasks are broken into a number of sequential
and interdependent steps, where the outputs of one unit become the input of
the next. (e.g. Assembly line) this facilitates to have high volume of output and
efficiency. This technology calls for mechanistic structures with high levels of
specialization, standardization and formalization.
ii) Mediating Technology: This links different parties who need to be brought
together in a direct or indirect way (e.g. Banks – use mediating technology to
lend money to borrowers by taking money from depositors)
iii) Intensive Technology: It is used when a group of specialists are brought
together to solve complex problems using a variety of technologies (e.g..
Hospital – parties are treated with the help of experts drawn from different fields
of specialization). Coordination of the different activities is achieved in the
system primarily through mutual adjustment among those engaged in solving
the problem in the different units. Organic structures would fit in this system
using intensive technology.
4. Environment
Each and every company functions according to the internal and external
environment. Internal environment includes the conditions, factors and all the elements
within an organisation that influences all the activities and functions of the firm, the choices
made by the firm and most importantly the of all its employees.
For example, employee morale, culture changes, financial changes or issues of the
company. While external environment can be defined as outside factors that affect the
company's ability to operate and function. Some of these operations can be manipulated
by the company’s marketing. The others require the company to make different
adjustments. For example political factors, changes to the economy and the company
itself etc.
Two Distinct Sets of Environment:
i) Specific Environment: This includes the suppliers, customers, competitors,
governments agencies, employees, unions, political parties etc.
ii) General Environment: It includes the economic, political, cultural, technological
and social factors in which the organisation embedded.
Limitations of Organisational Behaviour
Some of the limitations of organisational behaviour are:

(i) Organisational behaviour cannot abolish conflict and frustration but can only
reduce them. It is a way to improve but not an absolute answer to problems.
(ii) It is only one of the many systems operating within a large social system.
(iii) People who lack system understanding may develop a ‘behavioural basis’, which
gives them a narrow view point, i.e., a tunnel vision that emphasizes on satisfying
employee experiences
(iv) The law of diminishing returns also operates in the case of organisational
behaviour. It states, that at some point increase of a desirable practice produce

Human Capital 45
declining returns and sometimes, negative returns. The concept implies that for Notes
any situation there is an optimum amount of a desirable practice. When that
point is exceeded, there is a decline in returns. For example, too much security
may lead to less employee initiative and growth. This relationship shows that
organisational effectiveness is achieved not by maximizing one human variable
but by working all system variables together in a balanced way.
(v) A significant concern about organisational behaviour is that its knowledge and
techniques could be used to manipulate people without regard for human welfare.
People who lack ethical values could use people in unethical ways.
2.5 Approaches to Organisational Behaviour

Organisational behaviour is the study of the way individuals and groups behave within
organisations. It is a mixed field of various psychological and sociological concepts, having
a great deal to do with the way people are motivated and how they act on those motivations.
There are many different approaches to organisational behaviour; however, four are used
most frequently.
1. Maslow's Hierarchy
Perhaps the most famous theorist on the topic of human behaviour was Abraham
Maslow, who developed his theory on the hierarchy of needs in 1943. Essentially, Maslow
proposed that humans attempt to satisfy their needs beginning with the most basic and
do not move ahead to more complex needs until satisfying the basic needs first. The
hierarchy of needs progresses from the most basic needs for food and shelter to the need
for safety, the need for belonging and acceptance, the need for esteem and finally, the
need for self-actualization. To understand organisational behaviour, many look to Maslow's
hierarchy, particularly the last three levels, to help understand why individuals and groups
behave the way they do within organisations.
Abraham Maslow developed a theory of personality that has influenced a number
of different fields, including education. This wide influence is due in part to the high level
of practicality of Maslow's theory. This theory accurately describes many realities of
personal experiences. Many people find they can understand what Maslow says. They
can recognize some features of their experience or behaviour which is true and identifiable
but which they have never put into words.
Maslow is a humanistic psychologist. Humanists do not believe that human beings
are pushed and pulled by mechanical forces, either of stimuli and reinforcements or of
unconscious instinctual impulses. Humanists focus upon potentials. They believe that
humans strive for an upper level of capabilities. Humans seek the frontiers of creativity,
the highest reaches of consciousness and wisdom. This has been labeled "fully functioning
person", "healthy personality" or as Maslow calls this level, "self-actualizing person."
Maslow has set up a hierarchic theory of needs. All of his basic needs are instinctual,
equivalent of instincts in animals. Humans start with a very weak disposition that is then
fashioned fully as the person grows. If the environment is right, people will grow straight
and beautiful, actualizing the potentials they have inherited. If the environment is not "right"
(and mostly it is not) they will not grow tall and straight and beautiful.
Maslow has set up a hierarchy of five levels of basic needs. Beyond these needs,
higher levels of needs exist. These include needs for understanding, aesthetic appreciation
and purely spiritual needs. In the levels of the five basic needs, the person does not feel

Notes the second need until the demands of the first have been satisfied or the third until the
second has been satisfied and so on. Maslow's basic needs are as follows:
(i) Physiological Needs
These are biological needs. They consist of needs for oxygen, food, water and a
relatively constant body temperature. They are the strongest needs because if a person
is deprived of all basic needs, the physiological ones which would come first in the person's
search for satisfaction, he would not search for the second one i.e., safety needs.
(ii) Safety Needs
When all physiological needs are satisfied and are no longer controlling thoughts
and behaviours, the needs for security can become active. Adults have little awareness
of their security needs except in times of emergency or periods of disorganisation in the
social structure. Children often display the signs of insecurity and the need to be safe.
(iii) Needs of Love, Affection and Belongingness
When the needs for safety and for physiological well-being are satisfied, the next
class of needs for love, affection and belongingness can emerge. Maslow states that
people seek to overcome feelings of loneliness and alienation. This involves both giving
and receiving love, affection and the sense of belonging.
(iv) Esteem Needs
When the first three classes of needs are satisfied, the needs for esteem can become
dominant. These involve needs for both self-esteem and for the esteem a person gets from
others. Humans have a need for a stable, firmly based, high level of self-respect and respect
from others. When these needs are satisfied, the person feels self-confident and valuable
as a person in the world. When these needs are frustrated, the person feels inferior, weak,
helpless and worthless.
(v) Self-Actualization Needs
When all of the foregoing needs are satisfied, then and only then are the needs for
self-actualization activated. Maslow describes self-actualization as a person's need to be
and do that which the person was "born to do." "A musician must make music, an artist
must paint and a poet must write." These needs make themselves felt in signs of
restlessness. The person feels on edge, tense, lacking something, in short, restless. If
a person is hungry, unsafe, not loved or unaccepted or lacking self-esteem, it is very easy
to know what the person is restless about. It is not always clear what a person wants
when there is a need for self-actualization.
The hierarchic theory is often represented as a pyramid, with the larger, lower levels
representing the lower needs and the upper point representing the need for self-
actualization. Maslow believes that the only reason that people would not move well in
direction of self-actualization is because of hindrances placed in their way by society.
He states that education is one of these hindrances. He recommends ways education
can switch from its usual person-stunting tactics to person-growing approaches. Maslow
states that educators should respond to the potential an individual has for growing into
a self-actualizing person of his/her own kind.
Ten points that educators should address are listed:
1. We should teach people to be authentic, to be aware of their inner selves and
to hear their inner-feeling voices.
2. We should teach people to transcend their cultural conditioning and become
world citizens.

Human Capital 47
3. We should help people discover their vocation in life, their calling, fate or destiny. Notes
This is especially focused on finding the right career and the right mate.
4. We should teach people that life is precious, that there is joy to be experienced
in life and if people are open to seeing the good and joyous in all kinds of
situations, it makes life worth living.
5. We must accept the person as he or she is and helps the person learn their
inner nature. From real knowledge of aptitudes and limitations we can know
what to build upon, what potentials are really there?
6. We must see that the person's basic needs are satisfied. This includes safety,
belongingness and esteem needs.
7. We should refresh consciousness, teaching the person to appreciate beauty
and the other good things in nature and in living.
8. We should teach people that controls are good and complete abandon is bad.
It takes control to improve the quality of life in all areas.
9. We should teach people to transcend the trifling problems and grapple with the
serious problems in life. These include the problems of injustice, of pain,
suffering and death.
10. We must teach people to be good choosers. They must be given practice in
making good choices.
2. Herzberg's Approach
According to Frederick Herzberger, two basic types of motivation drive employees.

The first he named "hygiene factors," which include working conditions, quality of
supervision and the nature of the job, among other things. Hygiene factors can detract
from an employee's level of motivation. The second group of factors is called "motivation
factors," which include growth, recognition and achievement, among others. Motivation
factors add to an employee's motivation. Essentially, Herzberg believed that employees'
behaviour is based primarily on these two sets of motivations.
Fig: Herzberg’s view of satisfaction and dissatisfaction

In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or
the motivator-hygiene theory. According to Herzberg, there are some job factors that result
in satisfaction while there are other job factors that prevent dissatisfaction. According to
Herzberg, the opposite of “Satisfaction” is “No satisfaction” and the opposite of
“Dissatisfaction” is “No Dissatisfaction”.
Herzberg classified these job factors into two categories:
(i) Hygiene factors
Hygiene factors are those job factors which are essential for existence of motivation
at workplace. These do not lead to positive satisfaction for long-term. But if these factors
Notes are absent / if these factors are non-existent at workplace, then they lead to dissatisfaction.
In other words, hygiene factors are those factors which when adequate / reasonable in
a job, pacify the employees and do not make them dissatisfied. These factors are extrinsic
to work. Hygiene factors are also called as dissatisfiers or maintenance factors as they
are required to avoid dissatisfaction. These factors describe the job environment / scenario.
The hygiene factors symbolized the physiological needs which the individuals wanted and
expected to be fulfilled. Hygiene factors include:
• Pay: The pay or salary structure should be appropriate and reasonable. It must
be equal and competitive to those in the same industry in the same domain.
• Company Policies and administrative policies: The company policies should
not be too rigid. They should be fair and clear. It should include flexible working
hours, dress code, breaks, vacation, etc.
• Fringe benefits: The employees should be offered health care plans
(mediclaim), benefits for the family members, employee help programmes etc.
• Physical Working conditions: The working conditions should be safe, clean
and hygienic. The work equipments should be updated and well-maintained.
• Status: The employees’ status within the organisation should be familiar and
retained.
• Interpersonal relations: The relationship of the employees with his peers,
superiors and subordinates should be appropriate and acceptable. There should
be no conflict or humiliation element present.
• Job Security: The organisation must provide job security to the employees.
(ii) Motivational factors
According to Herzberg, the hygiene factors cannot be regarded as motivators. The
motivational factors yield positive satisfaction. These factors are inherent to work. These
factors motivate the employees for a superior performance. These factors are called
satisfiers. These are factors involved in performing the job. Employees find these factors
intrinsically rewarding. The motivators symbolized the psychological needs that were
perceived as an additional benefit. Motivational factors include:
• Recognition: The employees should be praised and recognized for their
accomplishments by the managers.
• Sense of achievement: The employees must have a sense of achievement.
This depends on the job. There must be a fruit of some sort in the job.
• Growth and promotional opportunities: There must be growth and
advancement opportunities in an organisation to motivate the employees to
perform well.
• Responsibility: The employees must hold themselves responsible for the work.
The managers should give them ownership of the work. They should minimize
control but retain accountability.
• Meaningfulness of the work: The work itself should be meaningful, interesting
and challenging for the employee to perform and to get motivated.
Limitations of Two-Factor Theory
The two factor theory is not free from limitations:
1. The two-factor theory overlooks situational variables.
2. Herzberg assumed a correlation between satisfaction and productivity. But the
research conducted by Herzberg stressed upon satisfaction and ignored
productivity.
Human Capital 49
3. The theory’s reliability is uncertain. Analysis has to be made by the raters. The Notes
raters may spoil the findings by analyzing same response in different manner.
4. No comprehensive measure of satisfaction was used. An employee may find
his job acceptable despite the fact that he may hate/object part of his job.
5. The two factor theory is not free from bias as it is based on the natural reaction
of employees when they are enquired the sources of satisfaction and
dissatisfaction at work. They will blame dissatisfaction on the external factors
such as salary structure, company policies and peer relationship.
6. The theory ignores blue-collar workers. Despite these limitations, Herzberg’s
Two-Factor theory is acceptable broadly.
Implications of Two-Factor Theory
The Two-Factor theory implies that the managers must stress upon guaranteeing
the adequacy of the hygiene factors to avoid employee dissatisfaction. Also, the managers
must make sure that the work is stimulating and rewarding so that the employees are
motivated to work and perform harder and better. This theory emphasize upon job-
enrichment so as to motivate the employees. The job must utilize the employee’s skills
and competencies to the maximum. Focusing on the motivational factors can improve
work-quality.
2.6 Emerging Issues in Organisational Behaviour

Emerging Challenges in the Field of organisational behaviour:
1. Workforce Diversity
Organisations are becoming increasingly multinational in nature. Organisation
specialist must learn to live with diverse behaviours. Managers must learn to respect
diversity. Diversity if managed positively enhances creativity and innovation in organisation
as well as ensures better decision making by providing different perspectives on problems.
When not managed, diversity leads to increased turnover, heightened inter-personal
conflict and more strained communication.
2. Changed Employee Expectation
Traditional allurements such as job security, attractive remuneration housing does
not attract, retain and motivate today’s workforce. Employees demand empowerment and
expect equality of status with the management. Empowerment results in redefining jobs,
both from the shop floor as well as the boardrooms. Expectations of equality break up
the traditional relationship between employer and employee top to bottom.
3. Globalization
Growing internationalization of business has its impact on people management.
Managements are required to cope with the problems of unfamiliar laws, languages,
practices, competitors, attitudes and management styles, work ethics and more. To face
this challenge the management must be flexible and pro-active. Being flexible and pro-
active the management can make significant contribution to the company’s growth.
(i) Internationalization makes managers to increase their competencies.
(ii) Globalization increases the number of managers and professions.
4. Improving Productivity and Quality
As organisations are exposed to competition, managers are seriously thinking of
improving quality and productivity. In this context managers are implementing programmes

Notes like TQM (Total Quality Management) and Re-engineering programmes that requires
employee involvement. TQM is a philosophy of management that is inspired by constant
attainment of customer satisfaction of all organisational process. Re-engineering means
radically re-building and redesigning those processes by which we create value for
customers.
5. Changing Demographics of Workforce
Major challenges from changing demographics of workforce relate to dual-career
couples. Couples where both partners are actively pursuing professional careers. The
increase in number of dual career profession limits individual flexibility and may hinder
organisation flexibility in acquiring and developing talent. Another change in the workforce
demographics relates to the growing number of employees who are young.
2.7 Organizational Development

The term organisation development is used to capture the developmental efforts or
the planned changes that are made in organisations on an on-going basis to improve the
vitality of the organisation and its members. Organisational development is a planned,
systematic, organised and collaborative effort where behavioural science and organisation
theory principles and practices are continuously applied in order to increase the quality
of life which is reflected in increased organisational health and vitality, enhanced individual
and group members’ competence and self-worth, and the general overall well-being of
society. In a sense, organisational development makes the difference between being and
becoming the former term reflecting a static state of things as they currently are and the
latter denoting a developmental aspect constantly experiencing a state of growing,
developing and reaching new heights. Organisations develop and grow; and so do
individuals, groups and society itself. Thus, organisational development signifies a planned
growth and developmental strategy for organisations, making use of behavioural science,
organization theory, comparative management and other fields of scientific knowledge.
Currently, more behavioural science knowledge and techniques are used as intervention
mechanisms, that is, techniques to bring about the desired changes. However, as more
and more technological and demographic changes take place in the environment, the
technical, structural, cultural and behavioural aspects have to be simultaneously explored
and more comprehensive intervention mechanisms will have to be used. This calls for a
good knowledge of the relevant cross-disciplines such as sociology, psychology,
anthropology, mathematics and decision sciences (for model building), general systems
theory, socio-technical systems, and even theology to some extent, since we are now
becoming cognizant of the fact that interventions such as meditation help to reduce stress
at the workplace and is especially useful for managers.
Organisational development is an educational strategy which focuses on the whole
culture of the organization in order to bring about planned change. It seeks to change
beliefs, attitudes, values and structures, in fact, the entire culture of the organization so
that the organization may better adapt to technology and live with the pace of change.
Thus, organisation development may be defined as a technique for bringing change in the
entire aspects of the organization so that change is easily absorbed.
According to Beckhard, “Organisational development is an effort: (i) planned (ii)
organisation-wide and (iii) managed from the top to (iv) increase organization effectiveness
and health through (v) planned interventions in the organisation’s ‘processes’, using
behavioural science knowledge”. The elements of this definition are examined below:

Human Capital 51
1. Planned change: Organisational development is planned evolution and Notes

improvement. This planning includes examining the present and systematically
diagnosing the organisation’s needs, formulating specific plan for improvement,
and mobilising the organisational resources needed to carry out the change.
2. Organisation wide: The goal of organisational development is to improve the
effectiveness of the total organisation, although specific aspects may focus on
subsystems. The underlying view is that an organisation is a system of inter-
related parts.
3. Managed from the top: In an organisational development effort, the manger
is a key element to success. Of the change to work well, commitment from
top management is crucial because it serves as a standard for the rest of the
organisation’s members.
4. Organisational effectiveness: The object of organisational development is to
increase the health and effectiveness of the organisation. According to
Beckhard, the healthy organisation manages in terms of established goals; the
organisation is properly designed; decisions are made at the appropriate level;
communications are relatively undistorted; win/lose activities are minimised;
there is high ‘conflict’ regarding projects and the tasks (clash of ideas), but
relatively little clash over interpersonal difficulties; there is emphasis on helping
each person grow and develop and the organization is open and adaptive in an
‘action-research’ way.
5. Planned interventions: These are the strategies an organisation develops for
using behavioural science knowledge to help it better understand its current
methods of work, its norms and values and to help it examine alternative
methods of relating and rewarding its members.
Meaning of Organization Development
“Organization development is a system-wide application of behavioral science

knowledge to the planned development and reinforcement of organizational strategies,
structures and processes for improving an organization’s effectiveness”.
Definitions of Organisational Development
Organisational development can be defined as a “Planned and sustained effort to

apply behavioral science for system improvement using reflexive, self-analytical methods”.
(Schmuck and miles, 1971)
Bennis, 1969, “Organizational development is a response to change, a complex
educational strategy intended to change the beliefs, attitudes, values and structure of
organizations so that they can better adapt to new technologies, markets and challenges
and the dizzying rate of change itself ”.
Cummings and Worley, 1993, “Organizational development is a systematic
application of behavioral science to the planned development and reinforcement of
organizational strategies, structures and process for improving an organization’s
effectiveness”.
Porras and Robertson state: “Organisational development is a practical application
of the science of organization. Drawing from several disciplines for its models, strategies
and techniques, organisation development focuses on the planned change of human
systems and contributes to organization science through the knowledge gained from its
studies of complex change dynamics”.

Notes Goals of Organisational Development

Organisation development seeks to change the organisational environment in which
a manager works. It aims at the improvement of the total system to ensure that the full
potential of a manager’s abilities is utilised and there is a sustained change in his behaviour
which is condusive to better organisational performance.
Some of the common goals of organisation development programmes are to:
(i) Develop a self-renewing, viable system which can be reorganized in a variety
of ways, depending on the tasks that are to be performed;
(ii) Increase the level of trust and support among an organization’s members;
(iii) Create the environment in which authority-assigned role in augmented by
authority based on knowledge and skill.
(iv) Increase the openness an authenticity of communications laterally, vertically
and diagonally;
(v) Increase the level of self and group responsibility in planning and implementation;
(vi) Optimise the effectiveness of both the stable (the basic organization chart) and
the temporary systems (the many projects, committees, etc.) through which
much of an organization’s work is accomplished by built-in and continuous
improvement mechanisms; move towards high collaboration and low competition
between interdependent units;
(vii) Create conditions in which conflict is effectively managed;
(viii) Reach the point where decisions are taken on the basis of an information source
rather than an organisational role;
(ix) Enhance the identification of members and groups with the organization as a
whole; and
(x) Assist managers setting challenging but realistic goals for themselves.
(xi) Develop a good organizational culture and processes by constant interaction
between members irrespective of levels of hierarchy.
(xii) Focus on employee participation, problem solving and value development in
employees.
(xiii) Evaluate present systems and introduce new systems thereby achieving total
system change if required.
(xiv) Transform and achieve competitive edge for the organization.
(xv) Achieve organizational growth by total human inputs by way of research and
development, innovations, creativity and exploiting human talent.
The emphasis on the ‘people’ aspects of organizations does not mean that
organisation development practitioners do not try to bring about changes in organization
structure, practices or policies. But the typical organisation developmentprogramme is
aimed at changing the attitudes, values and beliefs of the employees, so that they
themselves can identify and implement such organisational changes. Organization
development is the discipline directed towards using behavioural science knowledge to
assist organizations adjusts more rapidly to change. Using a system approach,
organisation developmenthas grown rapidly in response to remain viable and to survive
in the world of change.
Characteristics of Organisational Development
Organizational development focuses on culture and process. Individual group
operates under a particular process and develop social relationship. Decision making and
problem solving is at all levels. Organizational development relies on action research and
Human Capital 53
focuses on total system change on a long term basis. Organizational development relies Notes
on continuous change and development of individual employee and organization as a
whole.
Organization development “is a long term philosophy based on collective
commitment, vision, empowerment, problem solving and employee welfare where the latest
technology and organizational processes are used to create quality of work life to achieve
organizational effectiveness and transformation into a vibrant, competitive and growth
oriented learned organization.”
The characteristics of organisation development implied in its definition and practice
are discussed below:
1. System Orientation: Organization development is system oriented. It is
concerned with the interactions of the various parts of the organization which
affect each other. It lays stress on inter-group and interpersonal relationship.
It is concerned with structure and process as well as attitudes. The basic issue
to which it is directed is: How do all of these parts work together to be effective?
Emphasis is on how the parts relate, not on the parts themselves.
2. Use of Change Agent: Organization development is generally implemented with
the help of one or more change agents, whose role is to stimulate, facilitate
and co-ordinate change. The change agent usually acts as a catalyst, creating
change within the system while remaining somewhat independent of it. Although
change agents may be either external or internal, they are usually consultants
from outside the company. Advantages of using external change agents are that
they are more objective and have diverse experiences. They are also able to
operate independently without ties to the hierarchy and politics of the firm.
3. Problem Solving: Organization development is concerned with problem solving.
It seeks to solve the problems through practical experiences gained on the work
and not merely through theoretical discussion as in a class room. These
problems mainly occur at the time of working on the job; hence the
organisational members. This focus on improving problem-solving skills by
discussing data-based system problems is called action research. In other
words, employees are “learning how to learn” from their experiences, so they
can solve new problems in the future.
4. Experimental Learning: Organisational development provides experimental
learning to help the participants learn new behaviour patterns through
experience. They can discuss and analyse their own immediate experience and
learn from it. This approach tends to produce more changed behaviour than the
traditional lecture and discussion, in which people talk about abstract ideas.
Theory is necessary and desirable, but the ultimate test is how it applies in
a real situation.
5. Human Values: Organisational development programmes are often based on
humanistic values. The values are positive beliefs about the potential and desire
for growth among employees. To be effective and self-reviewing, an organization
needs employees who want to increase their skills and contributions. The best
environment for this to happen is one that creates opportunities for growth by
stressing collaboration, open communication, interpersonal trust, shared power
and constructive conformation. They all provide a value base for organisational
development efforts and help ensure that the organization will be responsive to
human needs.

Notes 6. Contingency Orientation: Organisational development is situational and

contingency oriented. As people learn to develop their behavioural concepts
through experience, they can suggest various ways to solve a particular problem
and to adapt any of them most suited in the present circumstances. Thus,
organisational development is flexible and pragmatic, adapting actions to fit
particular needs.
7. Levels of interventions: Organisational development programmes are aimed
at solving problems that may occur at the individual, interpersonal group, inter-
group and total organisational level. Organisational development interventions
are designed for each level, for instance, career planning at the individual level,
team building at the group level etc.
8. Feedback: Organisational development supports feedback to participants so
that they may be able to collect the data on which decisions are based. For
this purpose participants may be divided into several groups according to the
functions. Each such group takes its own decision on the subjects referred to
it, and then, the decisions are forwarded to the other group for feedback. Each
group comes to know the impression of other groups about it and then groups
meet together to thrash out any misunderstanding developed among them. In
this way, decisions of each group are checked by other groups and the final
decision is reached.
2.8 Need and Importance of Organisational Development

The field of organisational development is extremely broad one of the problems in
communicating clearly what the field entails. Organisational development is not a
technique or a group of tools, though some organisational development professionals
practice as if it were. Rather, organisational development can be applied any time an
organization wants to make planned improvements using the organisational development
values.
Organisational development might be used in any of the following situations:
1. To develop or enhance the organization’s mission statement (statement of
purpose) or vision statement for what it wants to be.
2. To help align functional structures in an organization so they are working
together for a common purpose.
3. To create a strategic plan for how the organization is going to make decisions
about its future and achieving that future.
4. To manage conflict that exists among individuals, groups, functions, sites, and
so on, when such conflicts disrupt the ability of the organization to function in
a healthy way.
5. To put in place processes that will help improve the ongoing operations of the
organization on a continuous basis.
6. To create a collaborative environment that helps the organization be more
effective and efficient.
7. To create reward systems that are compatible with the goals of the organization.
8. To assist in the development of policies and procedures that will improve the
ongoing operation of the organization.
9. To assess the working environment, to identify strengths on which to build and
areas in which change and improvement are needed.

Human Capital 55
10. To provide help and support for employees, especially those in senior positions, Notes
who need an opportunity to be coached in how to do their jobs better.
11. To assist in creating systems for providing feedback on individual performance
and on occasion, conducting studies to give individuals feedback and coaching
to help them in their individual development called on to assist an organization.
Organisational development as a field has thrived because of the value-added
concepts and tools that it has brought to organizations and its stakeholders (those
concerned with how the organization operates), including customers, stockholders,
employees, management, the community and even the nation. Through organisation
development. An atmosphere can be established which will support more innovation and
creativity, increase job satisfaction, develop more positive interpersonal relationships and
foster greater participation in creating plans and defining organizational goals. All of this
will create a more effective and efficient organization that will, consequently, provide higher-
quality goods and services at a reasonable price, increase profitability, improve stock
values, improve the work environment and support management in its leadership role.
2.9 Assumptions of Organisational Development

Organisational development is based on certain assumptions which are as follows:
a) Most individuals have drives towards personal growth and development. However,
the work habits are a response to work environment rather than personality traits.
Accordingly, efforts to change work-habits should be directed towards changing
how the person is treated than towards attempting to change the person.
b) Highest productivity can be achieved when the individual goals are integrated
with the organisational goals.
c) Co-operation is more effective than conflict. Conflict tends to erode trust, prohibit
collaboration and eventually limit the effectiveness of the organization. In healthy
organizations, efforts are made at all levels to treat conflict as a problem subject
to problem solving methods.
d) Suppression of feelings adversely affects problem solving, personal growth and
satisfaction with one’s work. Accordingly, free expression of feelings is an
important ingredient for commitment to work.
e) Growth of individuals is facilitated by relationships which are open, supportive
and trusting. Accordingly, the level of interpersonal trust, support and
cooperation should be as high as possible.
f) The difference between commitment and agreement must be fully understood;
agreeing to do something is totally different from being committed to do
something. Sense of commitment makes it easier when this commitment is
based upon participation in the process.
g) Organisational development must be reinforced by the organization’s total
human-resources system.
2.10 Benefits and Limitations of Organisational Development
Benefits of Organisational Development
The following are the benefits of organization development:

1. Provides opportunities for people to function as human beings rather than mere
resources in the productive process.
Notes 2. Gives each member of the organization opportunities to develop to his full
potential.
3. Seeks to make the organization more effective in meeting all its goals.
4. Tries to create an environment in which exciting and challenging work can be
found.
5. Gives people in organizations the chance to influence how they relate to work,
the organization and the work environment.
6. Treats each human being as a person with a complex set of needs, all of which
are important in his or her work and life.
Limitations of Organisational Development
Organizational development is an important technique of inducing change. It has

certain limitations also which are listed below:
1. Organizational development can be no more powerful than the behaviourial
science concepts on which it is based. Behavioural science has many
limitations which are applicable to organization development also.
2. Organizational development requires use of certain persons who can take
initiative to bring about change. Complacent people cannot be helpful in
implementing organisational development.
3. Organizational development cannot be applied without giving due consideration
to the local circumstances existing within the organization. The local
circumstances may pose a problem in adapting to change.
2.11 Organisation Development Values

Organisation development constitutes various people, professionals, technocrats,
researchers, managers and a host of other employees working in the organisation
contributing to the accomplishment of organisational objectives. They behave differently.
Authority and power, conflicts, control takes backseat during OD process.
The following are the values in OD efforts:
1. Respect People
People are the raison d’etre of organisation and they are responsible for creating
opportunities for growth. They must, therefore, be treated with respect and dignified
manners.
2. Confidence and Support
Organisations are made up of people and they are to be believed and supported in
order to have effective organisation. The healthy environment prevails when people are
trusted and taken into confidence and a necessary support is extended to them as and
when needed.
3. Confrontation
Any conflict on any issue should not be suppressed. It should be dealt with openness.
Suppression leads to dampening of morale. Identifying the problem and its causes,
discussing it openly and finding out feasible solution leads to boosting up morale of the
employees and creating good environment.

Human Capital 57
4. Employee Participation Notes

The participation of employees who will be affected by the OD should be sought in
decision-making.
5. Expression
Human beings differ in experience, maturity, ideas, opinions, and outlook. The
organisation is at the receiving end. It gains from the differences in quality, ideas, opinions
and experiences of its people. Human beings are social animals; they have feelings,
emotions, anger and sentiments etc. They should be allowed to express their feelings
and sentiments. This will result in building up high morale and the people will be motivated
towards hard work ultimately resulting in increased efficiency.
6. Seeking Co-operation
Managers should learn to seek co-operation from each of the employees working
under him in his department. This will develop in creating the atmosphere of cooperation
leading to organisational effectiveness and willingness to accept change in the event of
organisation development process.
2.12 Process of Organizational Development

The process of Organizational Development comprises of follows steps and they are:
1) Initial Diagnosis: The initial diagnosis refers to finding the inadequacies within
the organisation that can be corrected by organisational development activities
then it is necessary to find out the professionally competent persons within
organisation to plan and execute organisational development activities. The
outside consultants can be also employed to help in diagnosing the problems
and diagnosing organisational development activities. The consultants adopt
various methods and that primarily includes interviews, questionnaires, direct
observation, analysis of documents and reports for diagnosing the problem.
2) Data Collection: The survey method is employed to collect the data for
determining organizational climate. It also helps in identifying the behavioural
problems that are rising in the organisation.
3) Data Feedback: The collected data are analyzed and reviewed by various work
groups that are formed for this purpose. It is done in order to intervene in the
areas of disagreement or confrontation of ideas or opinions.
4) Selection of Interventions: The interventions can be described as the planned
activities that are introduced into the system to achieve desired changes and
improvements. The suitable interventions are to be selected and designed at
this stage.
5) Implementation of Interventions: The selected intervention should be
implemented progressively as the process is not a one shot, quick cure for
organizational problems. Consequently, it achieves real and lasting change in
the attitudes and behaviour of employees.
6) Action Planning and Problem Solving: To solve the specific and identified
problems by using the collected data, groups prepare recommendations and
specific action planning.
7) Team Building: The consultants explain the advantages of the teams in
organisational development process and encourage the employees throughout
the process to form into groups and teams.
8) Inter-group Development: After the formation of groups/teams, the consultants
encourage the inter-group meetings, interaction etc.
Notes 9) Evaluation and follow up: The organisation should evaluate the organisational
development programmes and should find out their utility, and develop the
programmes further for correcting the deviations. The consultants make great
significance to the organisation in this respect. The entire steps in the
organisational development processes should be followed by the organisation
in order to derive full range of organisational development benefits.
2.13 Steps in Organisational Development

The steps in organisational development are explained below:
1. Diagnosis of Problem
Organisational development programme starts with the identification of the problem
in the Organization. Analysis of various symptoms-both overt and covert-may help in
identifying the problem. Diagnosis of a problem will provide its causes and determine the
nature of future action needed. A lot of bad decisions are taken because the decision-
maker does not have a good grasp of the problem. Therefore, adequate information should
be gathered to identify the real problem. If proper care is not taken at this stage, what
may appear at first sight to be the real problem may ultimately turn out to be a mere
symptom. The manager should try to have an overall view of the situation to find the real
problem.
2. Planning Strategy for Change
Many firms employ management consultants to suggest strategies for change. The
management consultants or organisational development practitioners should analyse the
need for change and plan strategies of change.
3. Collection of Data
Surveys may be made to determine organisational climate and behavioural problems.
The consultant usually meets with groups away from work to develop information from
questions such as these:
(a) What kinds of conditions contribute most to your job effectiveness?
(b) What kinds of conditions interfere with your job effectiveness?
(c) What would you most like to change in the way this organization operates?
4. Action Planning and Problem Solving
Work groups are assigned to review the data collected, to mediate among themselves
areas of disagreement and to establish priorities for changes. Groups use the data to
develop specific recommendations for change. Discussion focuses on actual problems in
their organization. Plans are specific, including who is responsible and when the action
should be completed.
5. Evaluation
Organisational development is generally a long process. Therefore, it is essential to
carefully monitor the program and get feedback regarding what is going on after the
initiation of the organisational development program. This will help in introducing
modifications, wherever necessary. For effective appraisal of organisational development
programme, the use of critique sessions, systematic appraisal of change efforts, and the
comparison of pre-and post-training behavioural pattern is very effective.
If the evaluation indicates that the objectives of the intervention were accomplished,
then the change that was implemented becomes institutionalized; that is, it becomes a
Human Capital 59
part of the way in which business is done in the organization. If the evaluation indicates Notes
that desired objectives were not met, then this phase is skipped. In both cases, the
process begins all over again. At some point, the consultant will withdraw from the
intervention process, having transferred his or her skills to the client organization (again,
whether the organisational development professional is internal or external). This may
occur because additional change is no longer a priority to the client organization or that
it is not ready for the next stage of change. It may be because organisational development
skills are needed that the current organisational development consultant does not possess.
It may be that the consultant has been co-opted by the organizational culture and is no
longer able to maintain objectivity. For whatever reason, separation should occur
intentionally and not by just letting it happen.
2.14 Job Enrichment

Job enrichment, as currently practiced in industry, is a direct outgrowth of Herzberg's
Two Factor Theory of motivation. It is, therefore, based on the assumption that in order
to motivate personnel, the job itself must provide opportunities for achievement recognition,
responsibility, advancement and growth. The basic idea is to restore to jobs the elements
of interest that were taken away under intensive specialization. Job enrichment tries to
embellish the job with factors that Herzberg characterized as motivators: achievement,
recognition, increased responsibilities, opportunities for growth, advancement and
increased competence.
Job enrichment implies the deliberate upgrading of the responsibility, scope and
challenge in work. “Job enrichment is a motivational technique which emphasises the need
for challenging and interesting work. It suggests that jobs be redesigned, so that intrinsic
satisfaction is derived from doing the job. In its best application, it leads to a vertically
enhanced job by adding functions from other organisational levels, making it contain more
variety and challenge and offer autonomy and pride to employee”. The job holder is given
a measure of discretion in making operational decisions concerning his job. In this sense,
he gains a feeling of higher status influence and power. Job enrichment is an attempt
to motivate employees by giving them the opportunity to use the range of their abilities.
It is an idea that was developed by the American psychologist Frederick Herzberg in the
1950s. It can be contrasted to job enlargement which simply increases the number of
tasks without changing the challenge. As such job enrichment has been described as
'vertical loading' of a job, while job enlargement is 'horizontal loading'.
An enriched job should ideally contain:
1. Range of tasks and challenges of varying difficulties (Physical or Mental).
2. Complete unit of work - a meaningful task.
3. Feedback, encouragement and communication.
2.15 Job Enlargement and Rotation

Job Enlargement
Job enlargement expands a job horizontally. It increases job scope; that is, it
increases the number of different operations required in a job and the frequency with which
the job cycle is repeated. By increasing the number of tasks an individual performs, job
enlargement increases the job scope, or job diversity. Instead of only sorting the incoming
mail by department, for instance, a mail sorter's job could be enlarged to include physically

Notes delivering the mail to the various departments or running outgoing letters through the
postage meter.
Efforts at job enlargement have met with less than enthusiastic results. As one
employee who experienced such a redesign on his job remarked, "Before I had one lousy
job. Now, through enlargement, I have three!" So while job enlargement attacks the lack
of diversity in over specialized jobs, it has done little to provide challenge or meaningfulness
to a worker's activities.
Job Rotation
Job rotation refers to the movement of an employee from one job to another. Jobs
themselves are not actually changed, only the employees are rotated among various jobs.
An employee who works on a routine job moves to work on another job for some hours/
days/months and returns back to the first job. This measure relieves the employee from
the boredom and monotony, improves the employee's skills regarding various jobs and
prepares worker's self-image and provides personal growth. However, frequent job rotations
are not advisable in view of their negative impact on the organization and the employee.
2.16 Job Specifications and Descriptions
Job Specifications
Job specification defines the knowledge, skills and abilities that are required to
perform a job in an organization. Job specification covers aspects like education, work-
experience, managerial experience etc. which can help accomplish the goals related to
the job. Job specification helps in the recruitment & selection process, evaluating the
performance of employees and in their appraisal & promotion. Job specification, along with
job description, is actually derived from job analysis. Collectively, job specification and
job description help in giving a overview of the job in terms of its title, position, roles,
responsibilities, education, experience, workplace etc.
Importance of Job Specification
The importance and purpose of job specification is a thoroughly understand the
specific details of a job. Jobs can be of different types and can require a different skill
sets to get the maximum output from a particular. Job specification gives important details
related to the job like education & skills, prior work experience, managerial experience,
personality traits etc. which would help an employee accomplish the objectives of a job.
For a recruiter, job specification lays down the guidelines basis of which the company
can recruit and select the best possible candidate who would be best suited for the job.
Apart from actually finding the right candidate or employee, job specification can be used
for screening of resumes and shortlist only those candidates who are the closest fit to
the job. Hence, a job specification gives specific details about a job and what kind of
skill sets are required to complete the job.
Components of Job Specification
There are many parameters which are considered while giving the job specification
for a certain profile:
1. Educational Qualification: This parameter gives an insight on how qualified
a certain individual is. It covers their basic school education, graduation,
master’s degree, other certifications etc.

Human Capital 61
2. Experience: Job specification clearly highlights the experience required in a Notes

particular domain for completing a specific job. It includes work experience which
can be from a specific industry, position, duration or in a particular domain.
Managerial experience in handling and managing a team can also be a job
specification criteria required for a particular position
3. Skills & Knowledge: This is an important parameter in job specification
especially with knowledge and skill based profiles. The higher the position in
a company, the more niches the skills become and more is the knowledge
required to perform the job.
4. Personality traits and characteristics: The way in which a person behaves
in a particular situation, handles complex problems, generic behaviour etc. are
all covered in the characteristics of a job description. It also covers the emotional
intelligence of a person i.e., how strong or weak a person is emotionally.
Advantages of Job Specification
There are several benefits of having a comprehensive job specification. Some
advantages are listed below:
1. Job specification highlights all the specific details required to perform the job
at its best.
2. It gives the HR managers a threshold and a framework on the basis on which
they can identify the best prospects.
3. Helps in screening of resumes and saves time when there are multiple
applications by choosing those who are closest to the job specification.
4. HR managers can used job specification as a benchmark to evaluate employees
and give them required trainings.
5. It also helps companies during performance appraisal and promotions
Disadvantages of Job Specification
There are certain limitations of job specification. Some of the disadvantages are
mentioned below:
1. It is a time consuming process as it has to be very thorough and complete
2. Job description is time bound and changes with changing technology and
changing knowledge and skill requirements
3. It can only give a framework of emotional characteristics and personality traits
but cannot specify the experience or forecast complex issues is any
Hence, this concludes the definition of Job Specification along with its overview.
Job Descriptions
A job description is an internal document that clearly states the essential job
requirements, job duties, responsibilities, and skills required to perform a specific role.
A more detailed job description will cover how success is measured in the role so it can
be used during performance evaluations.
Job Description practical application and use in legal issues.
Writing job descriptions is an important step in planning your staffing programs. They
form the foundation for many important processes such as job postings, recruitment, and
selection, setting expectations, compensation, training and performance management.
Every employee must be provided with his job description as to how to perform his duties,
limitations or boundaries in his duties, to whom he has to report and answerable, code
Notes of conduct, punctuality and discipline and safety procedure that is to be followed in case
of Performing hazardous jobs. Having a job description document with employee, helps
employer in dealing with employees especially in the circumstances when an employee
proceed legally against employer for rejecting his/her claiming of compensation for the
accident happened during the course of employment or for taking disciplinary action
against employees who committed wrong.
Circumstances could be like; employees especially who does hazardous jobs, must
follow safety measures which are framed by the safety officer to avoid accidents. To those
employees if any accident happens, he may claim for compensation on the statutory
grounds framed by the Legislature. Here it is the task of HR manager to crosscheck with
actual safety measures to be followed and safety measures followed at the time of
occurrence of accident. If it is found that the victim did not follow actual safety measures
to be followed, he may not be eligible to claim the compensation. The victim of accident
cannot claim that he was not aware of safety measures to be followed while performing
such job, since he was already provided with job description document having all details
of his job as to how to be in his job. If it is found that the victim followed actual and safety
measures to be followed, the victim has right to claim compensation in accordance with
the statutory provisions framed by the Legislature (labour laws). (In India, Workmen's
Compensation Act, 1923 is the law that deals with claiming of conversation by employees
who succumbed to accident during the course of their employment likewise; when an
employee proceed legally against employer for taking disciplinary action against
employee, it is a task of HR manager to crosschecks with predefined in-disciplinary
activities mentioned in the job description which was already provided to that employee.
2.17 Job Evaluation

Job evaluation is an assessment of the relative worth of various jobs on the basis
of a consistent set of job and personal factors, such as qualifications and skills required.
The objective of job evaluation is to determine which jobs should get more pay than others.
Several methods such as job ranking, job grading and factor comparison are employed
in job evaluation. Research indicates, however, that each method is nearly as accurate
and reliable as the other in ranking and pricing different jobs. Job evaluation forms the
basis for wage and salary negotiations. Every job evaluation method requires at least some
basic job analysis in order to provide factual information about the jobs concerned. Thus,
job evaluation begins with job analysis and ends at that point where the worth of a job
is ascertained for achieving pay equity between jobs.
Job evaluation developed out of civil service classification practices and some early
employer job and pay classification systems. Whether formal job evaluation began with
the United States Civil Service Commission in 1871 or with Frederick W. Taylor in 1881,
it is now over 120 years old and still of great value. The first point system was developed
in the 1920s. Employer associations have contributed greatly to the adoption of certain
plans. The spread of unionism has influenced the installation of job evaluation in that
employers gave more attention to rationalized wage structures as unionism advanced.
During World War II, the National War Labour Board encouraged the expansion of job
evaluation as a method of reducing wage inequities.
As organizations became larger and larger and more bureaucratized the need for
a rational system of paying employees became evident. Wage structures became more
complex and needed some way to bring order to the chaos perpetuated by supervisors
setting pay rates for their employees on their own. Job evaluation became a major part
of the answer. The techniques and processes of job evaluation were developed and

Human Capital 63
perfected during this time period of the late 1950s. With the advent of the Civil Rights Notes
movement, job evaluation literally got written into the law. The Equal Pay Act of 1963
required jobs to be compared on the basis of skill, effort, and responsibility to determine
if they were or were not equal. A 1979 study of job evaluation, as a potential source of
and/or a potential solution to sex discrimination in pay, was made by the National
Research Council under a contract from the Equal Employment Opportunity Commission.
The study suggested that jobs held predominantly by women and minorities could be
undervalued. Such discrimination resulted from the use of different plans for different
employee groups, from the compensable factors employed, from the weights assigned
to factors, and from the stereotypes associated with jobs. Although the preliminary report
failed to take a position on job evaluation, the final report concluded that job evaluation
holds some potential for solving problems of discrimination.
Job Evaluation involves determination of relative worth of each job for the purpose
of establishing wage and salary differentials. Relative worth is determined mainly on the
basis of Job Description and Job Specification only. Job Evaluation helps to determine
wages and salary grades for all jobs. Employees need to be compensated depending on
the grades of jobs they perform. Remuneration must be based on the relative worth of
each job.
Meaning of Job Evaluation
A job evaluation is a systematic way of determining the value/worth of a job in relation

to other jobs in an organization. It tries to make a systematic comparison between jobs
to assess their relative worth for the purpose of establishing a rational pay structure.
Nature of Job Evaluation
The systematic process of job evaluation includes an in-depth analysis of all positions
based on a specific, common set of factors that can include skill, education, experience,
responsibility, decision-making, problem-solving, mental demand, physical demand and
complexity. The technique of ranking jobs through job evaluation is used to determine the
appropriate compensation to offer. Using a systematic process for determining the pay
grade for different jobs helps to take the subjectivity out of compensation decisions and
increases employee compliance.
Job evaluation reclassifications are often required when the requirements of a
position, usually regarding either tasks or responsibilities or changes due to downsizing
or expansion. Job evaluations are not assessments of employee performance, rather an
analysis of what a competent employee in the job position should be paid.
Objectives of Job Evaluation
The main objectives of job evaluation are as follows:

1. To determine the hierarchy and place of various jobs in an organisation.
2. Together data and information relating to job description job specification, and
employeespecification of various jobs in an organisation
3. To minimise wages discrimination based on sex, age to region, religion etc
4. To ensure fair and equitable wages on the basis of relative worth or value of
jobs.
5. To compare the duties, responsibilities and demands of a job with that of other
job.

Notes 6. To determine the ranks or grades of various jobs.
Features of Job Evaluation
The purpose of job evaluation is to produce a defensive ranking of jobs on which

a rational and acceptable pay structure can be built. The important features of job
evaluation may be summarised thus:
i) It tries to assess jobs, not people.
ii) The standards of job evaluation are relative, not absolute.
iii) The basic information on which job evaluations are made is obtained from job
analysis.
iv) Job evaluations are carried out by groups, not by individuals.
v) Some degree of subjectivity is always present in job evaluation.
vi) Job evaluation does not fix pay scales, but merely provides a basis for evaluating
a rational wage structure.
Process of Job Evaluation
The process of job evaluation involves the following steps:

Step-1: Gaining acceptance: Before undertaking job evaluation, top management
must explain the aims) and uses of the programme to the employees and unions. To
elaborate the programme further, oral presentations could be made. Letters, booklets could
be used to classify all relevant aspects of the job evaluation programme.
Step-2: Creating job evaluation committee: It is not possible for a single person
to evaluate all the key jobs in an organisation. Usually a job evaluation committee
consisting of experienced employees, union representatives and HR experts is created
to set the ball rolling.
Step-3: Finding the jobs to be evaluated: Every job need not be evaluated. This
may be too taxing and costly. Certain key jobs in each department may be identified.
While picking up the jobs, care must be taken to ensure that they represent the type
of work performed in that department.
Step-4: Analysing and preparing job description: This requires the preparation
of a job description and also an analysis of job needs for successful performance.
Step-5: Selecting the method of evaluation: The most important method of
evaluating the jobs must be identified now, keeping the job factors as well as organisational
demands in mind.
Step-6: Classifying jobs: The relative worth of various jobs in an organisation may
be found out after arranging jobs in order of importance using criteria such as skill
requirements, experience needed, under which conditions job is performed, type of
responsibilities to be shouldered, degree of supervision needed, the amount of stress
caused by the job, etc. Weights can be assigned to each such factor. When we finally
add all the weights, the worth of a job is determined. The points may then be converted
into monetary values.
Benefits of Job Evaluation
The pay offs from job evaluation may be stated thus:

i) It tries to link pay with the requirements of the job.

Human Capital 65
ii) It offers a systematic procedure for determining the relative worth of jobs. Jobs Notes
are ranked on the basis of rational criteria such as skill, education, experience,
responsibilities, hazards, etc., and are priced accordingly.
iii) An equitable wage structure is a natural outcome of job evaluation. An unbiased
job evaluation tends to eliminate salary inequities by placing jobs having similar
requirements in the same salary range.
iv) Employees as well as unions participate as members of job evaluation
committee while determining rate grades for different jobs. This helps in solving
wage related grievances quickly.
v) Job evaluation, when conducted properly and with care, helps in the evaluation
of new jobs.
vi) It points out possibilities of more appropriate use of the plant's labour force by
indicating jobs that need more or less skilled workers than those who are
manning these jobs currently.
Advantages of Job Evaluation
1. Adjust the Salary Structure

According to the Management Study Guide, the company can use employee
evaluations to determine if the corporate salary structure is set up properly. Evaluations
can help identify the high-achieving employees and help raise company productivity. By
using the results of job evaluations, an executive team can determine where pay raises
are necessary and where it may also be necessary to adjust pay downward based on
employee performance.
2. Training
An employee job evaluation needs to be an interactive process between the manager
and the employee. By evaluating employee performance, managers can help identify areas
where each employee needs improvement. Using this information, the company can
develop a training schedule that will help strengthen employee skills to the point where
each employee is able to competently perform his job. Job evaluations can also identify
exceptional employees, and they can be placed in training programs that can help to
accentuate their above-average skills.
3. Managerial Candidates
A successful company needs competent leaders, and job evaluations can serve to
help identify those employees who could be management prospects. By identifying
potential managerial candidates, a company can develop a personnel plan that will include
internal promotions and the utilization of talent that has experience with the company.
4. Talent Pool
Job evaluations help to identify employees who have abilities beyond their current
job functions. This allows the company to get a better idea of what level of talent is in
house and what range of jobs employees can cover. When the company is considering
opening a new department, it can look to its evaluations of current employees to find
experienced talent to populate the new department before spending the money to hire
and train new employees. This is also useful when departments are being closed and
the company needs to determine which employees to keep and which employees to let
go.

Notes Limitations of Job Evaluation
i) Job evaluation is not exactly scientific.

ii) The modus operandi of most of the techniques is difficult to understand, even
for the supervisors.
iii) The factors taken by the programme are not exhaustive.
iv) There may be wide fluctuations in compensable factors in view of changes in
technology, values and aspirations of employers, etc.
v) Employees, trade union leaders, management and the programme operators
may assign different weight to different factors, thus creating grounds for dispute.
2.18 Job Evaluation Methods

There are three basic methods of job evaluation: (1) ranking, (2) classification, (3)
factor comparison. While many variations of these methods exist in practice, the three
basic approaches are described here.
1. Ranking Method
Perhaps the simplest method of job evaluation is the ranking method. According to
this method, jobs are arranged from highest to lowest, in order of their value or merit to
the organization. Jobs can also be arranged according to the relative difficulty in performing
them. The jobs are examined as a whole rather than on the basis of important factors
in the job; the job at the top of the list has the highest value and obviously the job at
the bottom of the list will have the lowest value. Jobs are usually ranked in each department
and then the department rankings are combined to develop an organizational ranking. The
variation in payment of salaries depends on the variation of the nature of the job performed
by the employees. The ranking method is simple to understand and practice and it is
best suited for a small organisation. Its simplicity however works to its disadvantage in
big organisations because rankings are difficult to develop in a large, complex organisation.
Moreover, this kind of ranking is highly subjective in nature and may offend many
employees. Therefore, a more scientific and fruitful way of job evaluation is called for.
2. Classification Method
According to this method, a predetermined number of job groups or job classes are
established and jobs are assigned to these classifications. This method places groups
of jobs into job classes or job grades. Separate classes may include office, clerical,
managerial, personnel, etc. Following is a brief description of such a classification in an
office.
Class I - Executives: Further classification under this category may be Office
Manager, Deputy office manager, Office superintendent, Departmental supervisor, etc.
Class II - Skilled workers: Under this category may come the Purchasing assistant,
Cashier, Receipts clerk, etc.
Class III - Semiskilled workers: Under this category may come Stenotypists,
Machine-operators, Switchboard operator etc.
Class IV - Unskilled workers: This category comprises Daftaris, File clerks, Office
boys, etc.
The job classification method is less subjective when compared to the earlier ranking
method. The system is very easy to understand and acceptable to almost all employees
Human Capital 67
without hesitation. One strong point in favour of the method is that it takes into account Notes
all the factors that a job comprises. This system can be effectively used for a variety of
jobs. The weaknesses of the job classification method are:
Even when the requirements of different jobs differ, they may be combined into a
single category, depending on the status a job carries.
It is difficult to write all-inclusive descriptions of a grade.
The method oversimplifies sharp differences between different jobs and different
grades.
When individual job descriptions and grade descriptions do not match well, the
evaluators have the tendency to classify the job using their subjective judgements.
3. Factor Comparison Method
A more systematic and scientific method of job evaluation is the factor comparison
method. Though it is the most complex method of all, it is consistent and appreciable.
Under this method, instead of ranking complete jobs, each job is ranked according to
a series of factors. These factors include mental effort, physical effort, skill needed,
responsibility, supervisory responsibility, working conditions and other such factors (for
instance, know-how, problem solving abilities, accountability, etc.). Pay will be assigned
in this method by comparing the weights of the factors required for each job, i.e., the
present wages paid for key jobs may be divided among the factors weighted by importance
(the most important factor, for instance, mental effort, receives the highest weight). In other
words, wages are assigned to the job in comparison to its ranking on each job factor.
The steps involved in factor comparison method may be briefly stated thus:
Select key jobs, representing wage/salary levels across the organisation. The
selected jobs must represent as many departments as possible.
Find the factors in terms of which the jobs are evaluated (such as skill, mental effort,
responsibility, physical effort, working conditions, etc.).
Rank the selected jobs under each factor (by each and every member of the job
evaluation committee) independently.
Assign money value to each level of each factor (example: consider problem solving
is one of the factors, what level of problem solving is required {basic, intermediate or
advance}) and determine the wage rates for each key job. The wage rate for a job is
apportioned along the identified factors.
All other jobs are compared with the list of key jobs and wage rates are determined.
An example of how the factor comparison method works is given below:
After the wage rate for a job is distributed along the identified and ranked factors,
all other jobs in the department are compared in terms of each factor. Suppose the job
of a 'painter' is found to be similar electrician in skill (15), fitter in mental effort (10), welder
in physical effort (12) cleaner in responsibility (6) and labourer in working conditions (4).
The wage rate for this job would be (15+10+12+6+4) is 47.
4. Point Method
This method is widely used currently. Here, jobs are expressed in terms of key
factors. Points are assigned to each factor after prioritizing each factor in order of
importance. The points are summed up to determine the wage rate for the job. Jobs with

Notes similar point totals are placed in similar pay grades. The procedure involved may be
explained thus:
1. Select key jobs. Identify the factors common to all the identified jobs such as
skill, effort, responsibility, etc.
2. Divide each major factor into a number of sub factors. Each sub factor is defined
and expressed clearly in the order of importance, preferably along a scale.
The most frequent factors employed in point systems are (i) Skill (key factor);
Education and training required, Breadth/depth of experience required, Social skills
required, Problem-solving skills, Degree of discretion/use of judgment, Creative thinking
(ii) Responsibility/Accountability: Breadth of responsibility, Specialized responsibility,
Complexity of the work, Degree of freedom to act, Number and nature of subordinate staff,
Extent of accountability for equipment/plant, Extent of accountability for product/materials;
(iii) Effort: Mental demands of a job, Physical demands of a job, Degree of potential stress.
The educational requirements (sub factor) under the skill (key factor) may be
expressed thus in the order of importance.
3. Find the maximum number of points assigned to each job (after adding up the
point values of all sub-factors of such a job).
This would help in finding the relative worth of a job. For instance, the maximum
points assigned to an officer's job in a bank come to 540. The manager's job, after adding
up key factors + sub factors points, may be getting a point value of say 650 from the
job evaluation committee. This job is now priced at a higher level.
4. Once the worth of a job in terms of total points is expressed, the points are
converted into money values keeping in view the hourly/daily wage rates. A wage survey
is usually undertaken to collect wage rates of certain key jobs in the organization.
2.19 Summary
Human capital management refers to the planning, organizing, directing and
controlling of procurement, development, competition, integration, maintenance and
separation of human resource to the end so that individual, organizational and social
objectives are accomplished.
Organisational behaviour can be defined as the understanding, forecasting and
management of human behaviour. This behaviour can be identifies both individually or in
a group that occurs within an organisation or company.
An Individual’s behaviour includes the study of individual’s personality, knowledge,
outlook, inspiration and job satisfaction. In the study of an Individual’s behaviour, we can
interact with other in order to study about them. This also helps us in making our
observation about them in detail.
Inter-individual behaviour is the study which is conducted through communication
between the employees among themselves. This can also be done with communication
between the employees and their subordinates. This helps in understanding each
individual’s leadership qualities, group dynamics, group conflicts, power and politics,
strengths, weaknesses etc.
Group behaviour is the study of the formation of organisation. It is also the study
of the structure of organisation and efficiency of organisation. Group behaviour helps in
understanding the group efforts made towards the achievement of organisation’s goal and
objectives. It refers to how a group behaves in an organisation.
Human Capital 69
Structure refers to the layout or the design of an organisation or firm. It is the Notes
construction and arrangement of relationships, strategies according to the organisational
Organization development is a system-wide application of behavioral science
knowledge to the planned development and reinforcement of organizational strategies,
structures and processes for improving an organization’s effectiveness.
MBO is, a system wherein superior and subordinate managers of an organisation
jointly identify its common aims, define each individual’s major areas of responsibility in
terms of the results expected of him and use these measures as guides for operating
the unit, assessing the contribution benefits of its members.
Job enrichment, as currently practiced in industry, is a direct outgrowth of Herzberg's
Two Factor Theory of motivation. It is, therefore, based on the assumption that in order
to motivate personnel, the job itself must provide opportunities for achievement recognition,
responsibility, advancement and growth.
Job enlargement expands a job horizontally. It increases job scope; that is, it
increases the number of different operations required in a job and the frequency with which
the job cycle is repeated. By increasing the number of tasks an individual performs, job
enlargement increases the job scope, or job diversity.
A job evaluation is a systematic way of determining the value/worth of a job in relation
to other jobs in an organization. It tries to make a systematic comparison between jobs
to assess their relative worth for the purpose of establishing a rational pay structure.
1. Human capital management is the comprehensive set of practices for recruiting,

managing, developing and optimizing the human resources of an ______________.
2. ______________ defines the working relationship between employees and
management.
3. _____________ defines the knowledge, skills and abilities that are required to
perform a job in an organization.
4. ________________ involves determination of relative worth of each job for the
purpose of establishing wage and salary differentials.
5. Organisational behaviour can be defined as the understanding, forecasting and
management of ______________.
II. True or False
1. Organisational behaviour is the study and application of knowledge about how

people as individuals and as groups act within organisations.
2. Organisational development is a practical application of the management of
organization.
3. A job description is an internal document that clearly states the essential job
requirements, job duties, responsibilities and skills required to perform a specific
role.
4. Job rotation refers to the movement of an employee from one job to another.
5. Structure refers to the layout or the design of an organisation or firm.
Notes III. Multiple Choice Questions

1. Human capital management functions does not involve
[a] Selection
[b] Recruitment
[c] Cost control
[d] Training
2. Which one is not the specific goals of human capital management?
[a] Attracting applicants
[b] Separating employees
[c] Retaining employees
[d] All the above
3. Human capital management helps improve
[a] Production
[b] Productivity
[c] Profit
[d] Power
4. Identify the managerial function out of the following functions of HR managers.
[a] Procurement
[b] Development
[c] Organizing
[d] Performance appraisal
5. Fast decisions can be taken when the organization practices
[a] SHRM
[b] HRD
[c] HRM
[d] All of the above
6. Which is a factor of job evaluation?
[a] Skill
[b] Efforts
[c] Working condition
[d] All of these
I. Short Answer Questions
1. What is human capital management?

2. What is Organizational Behavior?
3. What is Organizational Development?
4. Give the meaning of Job Enrichment.
5. What is job Enlargement?
6. What is job Rotation?
7. What do you mean by Job Specifications?

Human Capital 71
8. What is Job Descriptions? Notes

9. What do you mean by Job Evaluation?
II. Extended Answer Questions
1. Explain the Significance of Human Capital Management.

2. Discuss the Importance and Scope of Organisational Behavior.
3. What are the Features and Objectives of Organisational Behaviour?
4. Discuss the determinants of Organisational Behaviour.
5. Explain the Organisational Behaviour Models.
6. Briefly explain the approaches and goals of Organisational Development.
7. Explain the Need and Importance of Organisational Development.
8. Explain the Benefits of Organisational Development.
9. Discuss the techniques of Organizational Development.
10. Explain the process of Organizational Development.
11. What are the steps in Organisational Development?
12. Explain the models for Organisational Development.
13. Write short note on Job Enrichment.
14. Write short note on Job Enlargement and Rotation.
15. Explain the Components of Job Specification.
16. What are the advantages of Job Specification?
17. Write short note on Job Descriptions.
18. What are the objectives and benefits of Job Evaluation?
19. Explain the process of Job Evaluation.
20. Discuss the Job Evaluation Methods.
2.22 Key Terms

 Organizational structure: It defines the working relationship between
employees and management. It defines and assigns the task for each employee
working in the organization.
 Organisational behaviour: is the study of both group and individual
performance and activity within an organisation. The two theories of how the
behaviour of the organisation can be viewed are the Internal and the external
theory.
 Psychology: is the science that seeks to measure, explain and sometimes
change the behaviour of humans and other animals. It may be the mental and
behaviour characteristic of an individual or group.
 Organisational development: It can be defined as a planned and sustained
effort to apply behavioral science for system improvement using reflexive, self-
analytical methods.
 MBO: Management by Objectives is a technique designed to (i) increase the
precision of the planning process at the organisational level and (ii) reduce the
gap between employee and organisational goals.
 Job rotation: It refers to the movement of an employee from one job to another.
Jobs themselves are not actually changed, only the employees are rotated
among various jobs.
Notes  Job evaluation: Job evaluation is an assessment of the relative worth of various
jobs on the basis of a consistent set of job and personal factors, such as
qualifications and skills required.

1. Organization
2. Organizational structure
3. Job specification
4. Job evaluation
5. Human behaviour
II. True or False

1. True
2. False
3. True
4. True
5. True

1. [c]
2. [b]
3. [b]
4. [c]
5. [c]
6. [d]
2.24 Case Study

CEO Succession Planning Issues at Citigroup
In November 2012, Citigroup Inc. (Citigroup) in its filing with the US Securities and
Exchange Commission (SEC), declared that it would pay US$6.65 million in incentive
awards to its former CEO Vikram Pandit (Pandit), who had unexpectedly resigned from
his position in October 2012. The company also mentioned that it would pay its former
President and COO, John Havens, US$6.79 million. According to Michael O'Neill (O'Neill),
Chairman of Citigroup, Vikram steered Citi through the financial crisis, realigned its
strategy, bolstered its risk management processes and returned it to profitability.
John's focus on our institutional businesses increased our capabilities and helped
steer our clients through volatile times. Based on the progress this year through the date
of separation, the board determined that an incentive award for their work in 2012 was
appropriate and equitable.
In December 2007, Pandit was named as the CEO of Citigroup. He was credited
with successfully guiding the once struggling company during the financial crisis. Pandit
focused on rebuilding capital and restructuring the company. During his tenure, Citigroup
became profitable and was able to repay approximately US$45 billion in federal bailout.
Human Capital 73
However, Pandit's efforts were not sufficient to convince regulators, shareholders, or Notes
the board members to retain him in the top position. According to media reports, the
Citigroup board was not pleased with Pandit's strategy and performance. On October 16,
2012, just a day after Citigroup reported strong quarterly results, Pandit resigned. He was
replaced by Michael L.Corbat (Corbat), Citigroup's former Chief of Operations in Europe,
the Middle East, and Africa. "Mike Corbat has demonstrated outstanding leadership
qualities and the ability to sharpen our focus on achieving strong, sustained operating
performance," said O'Neill.
Pandit's sudden departure came as a shock to the financial world. "I'm just as
surprised as anybody else. This may be a sign that he wants to move on and maybe
a sign that they're ready for the next era of leadership," said Robert Benmosche, CEO
at AIG . However, Pandit had few supporters who believed that he was the right person
for the job. According to Matthew H. Burrell, analyst at Wells Fargo & Company, "Corbat's
elevation strikes us as a positive for Citi, as it brings an experienced banker into the CEO's
role. We believe investors and possible regulators will benefit in the intermediate term from
their background as traditional bankers."
Question:
Do you think the CEO Succession Planning Issues at Citigroup is correct? Discuss.

1. C.S. VenkatRatnam & B.K.Srivastava, Personnel Management & Human
Resource, TMH.
2. V.S.P. Rao, Human Resource Management, Excel Books.
3. W. F. Cascio, Managing Human Resources, TMH.
4. D. Bhatacharya, Human Resource Management, Excel Books.
5. Aswathapa, Human Resource & Personnel Management, TMH.
6. Gomez Mejia, Balkin & Cardy, Managing Human Resources, Pearson.
7. Mathis and Jackson, Human Resource Management, Thomson.
8. C.B Mamoria, Personnel Management, Himalaya.
9. P. Jyothi & D.N. Venkatesh, Human Resource Management, Oxford.
2.26 Bibliography
1. Elwood F. Holton II, James W. Trott, Jr., 1996, Trends Toward a Closer
Integration of Vocational Education and Human Resources Development,
Journal of Vocational and Technical Education, Vol. 12, No. 2, p7
2. Collings, D. G., & Wood, G. (2009). Human resource management: A critical
approach. In D. G. Collings & G. Wood (Eds.), Human resource management:
A critical approach (pp. 1-16). London: Routledge.
3. Johnason, P. (2009). HRM in changing organizational contexts. In D. G. Collings
& G. Wood (Eds.), Human resource management: A critical approach (pp. 19-
37). London: Routledge.
4. O’Brien, Michael (October 8, 2009). “HR’s Take on The Office”. Human Resource
Executive Online. Archived from the original on 18 December 2011. Retrieved
28 December 2011.

Notes 5. lrich, Dave (1996). Human Resource Champions. The next agenda for adding
value and delivering results. Boston, Mass.: Harvard Business School Press.
ISBN 0-87584-719-6. OCLC 34704904.
6. Azhar, Sarwar and ShehzadiIram. “Human Resource Outsourcing.” Proceedings
of 3rd International Conference on Business Management. University of
Management and Technology Lahore, 27-28 February 2013. Lahore: School of
Business and Economics, 2013. 1-14. Print.
7. Charles R. Perry. “Outsourcing and union power.” Journal of Labour Research
18.4 (1997): 521. Springer Link. Web. 20 March 2014.
8. Kenneth L. Deavers. “Outsourcing: A corporate competitiveness strategy, not
a search for low wages.” Journal of Labour Research 18.4 (1997): 504. Springer
Link. Web. 22 April 2014.
9. Murem Sharpe. “Outsourcing, organizational competitiveness, and work.”
Journal of Labour Research 18.4 (1997): 535. Springer Link. Web. 25 March
2014. (E-Journal)
10. Vashistha, A. “Human resource outsourcing: emerging trends.” Global Services.
Global Services 16 April 2007. Web. 13 February 2014.
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Overview of HRM 1

Unit 1: Overview of HRM

After studying this unit, you should be able to understand:

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Notes 1.1 Introduction

1.2 Meaning and Definitions of HRM

Meaning of Human Resource Management

The human resource management activities include searching right candidate,

Definitions of Human Resource Management

According to Prof. Thomas G. Spates, “Human Resource administration is a code

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Nature of Human Resource Management

Human Resource Management is a process of bringing people and organizations

1.3 Objectives of Human Resource Management

1.4 History of HRM

1.5 Scope of Human Resource Management

1.6 Features or Characteristics of HRM

4. Orientation and Placement Notes

1.7 Importance of HRM

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Notes 2. Professional Level

1.8 Evolution of Human Resource Management

2. Period of industrial revolution (1750 to 1850)

i) Worker’s wages and salaries. Notes

1.9 Functions of Human Resource Management

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Management is the accomplishment of results through the efforts of other people.

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Notes (x) Employment

1.10 Principles of HRM

Human resource management is viewed as a process of sequence of operations and

1.11 Responsibilities in HRM

The important qualities of HR manager are:

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Systems and Techniques of HRM Notes

Notes Different systems of human resources management are as follows:

1.12 Theories of Management

F. W. Taylor’s Scientific Management

Fredrick Winslow Taylor (1856-1915) is considered to be “The Father of Scientific

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Henry’s 14 Principles of Management

Henry Fayol suggested 14 principles of management for running the business

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6) Sub-ordination of Individual interest to General Interest Notes

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11) Equity Notes

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Notes ii) Interest in Workers

Peter F. Drucker Management as a Profession

Peter Ferdinand Drucker (1909-2005), American economist of Austrian origin, is

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b) Functions of Management: Drucker points out three basic functions of Notes

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Notes Collective bargaining is a process between employers and employees to reach an

1.14 Check Your Progress

I. Fill in the Blanks

1. Personnel management is __________.

II. True or False

III. Multiple Choice Questions

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