MB0043-Human Resource Management

MB0043-Unit-01-Human Resource
Management – An Introduction
Unit-01-Human Resource Management – An Introduction
Structure:
1.1 Introduction
Objectives
1.2 Distinction between Personnel Management & Human Resources Management
1.3 Human Resources and its importance
1.4 Evolution of the Human Resource Management
1.5 Human Relations Theory
1.6 Objectives of Human Relation
1.7 Summary
1.8 Caselet
1.9 Terminal Questions
1.10 Answers
1.1 Introduction
As you look around you, you will see that today’s organizations is characterised by constant
changes. These changes relate to global economic factors as well as shifts in kind of people that
are currently employed in organizations. You will agree that the life style of employees has
significantly changed as compared to what you saw 8-10 years ago. The economic changes
sweeping through all countries are significantly impacting work culture, working procedures,
and workplace norms. For example you will find ….
· that people are changing jobs more often
· people work longer and even carry work home
· the hiring process in firms are more elaborate and take longer than it used to, to hire a
employee
· firms today take more care of their employees, lot more facilities and benefits given to
employees
This Unit focuses on introducing you to the most critical success factor for an organization – its
human resource.
Today’s corporation constantly moulds itself to meet the business challenges despite economic,
political and social patterns in which it exists. The efforts made by organizations to sustain
business metrics like revenue, profits and growth, market share is possible only through the
people in the organization who work towards making this happen within the enterprise.
One of the most useful definition of Human Resources Management (HRM) is provided by
Fisher, Schoendfelt and Shaw in their book “Human Resources Management,“ HRM involves all
management decisions and practices that directly affect or influence the people or Human
resources who work for the organization. And yet another simple definition is provided by
Bernardin and Russell in their book ‘Human Resources Management – An Experiential
Approach’, as ”How people are managed is human resources management.”
And to add to the external challenges there are internal challenges, the workforce is constantly
changing their ideas, attitudes and values. Per Dale Yoder observation, employment relationships
in corporate revel the following trends:
1) Increased complexity of organization and employment communication and a distinction

between owners, managers and employees.
2) Decreased number of employers and self-employed and enlarged size of workforce.
3) Enhanced need for training in view of increased requirements of specialised skills.
4) Public interventions and legal complication in employer-employee relationships.
5) Enhanced training and development of managers and professionalization of management

education.
6) Possibility of employment explosion in view of the ever-increasing size of workforce.
7) Rising formal level of education of rank-and-file employees who are becoming increasingly
critical of management malpractices and errors
Rank-and-file employees’ rapidly growing demands in different employment situations.
9) Increased applications of behavioural science by enterprising managers.
10) Recognition of close relationship between profits and earnings and ability to manage human
resources.
These trends help an organization to re-engineer itself to ensure that the business metrics are met
and the organization remains profitable. Although the changes may provide solution to some
problems, they may create several new ones. For example the workforce that constitutes the IT
industry is highly educated and ranks high on intellect which proves a boon to the rapid progress
that technology has brought about in improving the quality of life for people around the world.
This workforce however needs to be managed carefully to deliver the desired results, for
example a poor quality software code can jeopardise the reputation of the entire organization
with its clients and hamper future contracts and projects. Awareness of these challenges enables
the managers as well as the HR teams within the organization to anticipate them and build
necessary policies and procedures to meet them. The ability to find the solutions to these
problems can play a critical role in the organization’s ability to cope with the challenges and be
profitable. Herein the HR department plays the role of a consultant advisor while the manager
owns the responsibility to decide the best course of action and be responsible for execution.
Specifically, the manager’s responsibility is to lead, guide and direct the efforts of his team to
reach the desired goals. Therefore it is a critical competency for every manager in today’s
organization to be effective human resources professional as well and be responsible and
accountable for his ‘people responsibilities’ as much as for the business results.
Objectives:
After studying this unit, you will be able to:
· Distinguish between Personnel Management and Human Resource Management
· Explain Human resources as a function
· Debate the importance and evolution of HRM
· Discuss the Concept of Human Relations and its objectives
1.2 Distinction between Personnel Management & Human Resources Management
The history of Human Resources Management traces its roots to the erstwhile Personnel
Management that was prevalent in the companies of a few decades ago. Though the two terms
‘Personnel Management’ and ‘Human Resources Management’ are interchangeably used by
most of the authors, there are key differentiators that make Personnel Management (PM)
different from Human Resources Management (HRM). HRM is clearly based on the foundation
of behavioural science knowledge relating to the handling of employees to motivate
organizational goals. The focus is more proactive approach and pays attention to employee
satisfaction and delight. Business goals and objectives and the strategies that will enable this to
happen are the foundation for HRM. The basic philosophy is driven by the Theory Y approach
where the belief is that people like to work and do not prefer to be supervised and made to
perform. The employee becomes a champion for the organization and its product/service.
PM is that management style that deals with the control and reactive problem solving approach
to resolve employee issues in a organizations. The philosophy for the PM approach relied on the
Theory X approach that believed that people do not naturally like to work and need to be coerced
to work and often need to be driven to work. Is more the ‘stick’ approach rather than ‘carrot’
approach. Rigid rules of do’s and dont’s exist and these provide the framework for employee’s
behaviour at the workplace. Employee welfare and formal grievance systems play a significant
role here and thereby managing industrial relations with high amount of trade union activity are
highlighted.
Very few organizations today practice this style to people management, as the benefits and the
long term gains from a HRM approach, impact business results far more. HRM emphasizes on
training, as an important area of people management, which covers the following aspects:
1. Increasing productivity
2. Improving quality
3. Improving organisational climate
4. Ensuring personnel growth etc.
Self Assessment Questions
1. Personnel Management is proactive while Human Resources Management is reactive (True /

False)
2. Trade unions influence the HRM policies of a company (True / False)
3. PM practices support business results better than HRM practices (True / False)
4. Career planning and employee growth is a initiative of the HRM philosophy (True / False)
5. A grievance management system is a common HRM function. (True / False)
1.3 Human Resources and its Importance
For any country its human resources can be defined as the sum total of the knowledge, skills,
creative abilities, talents and aptitudes. Similarly, from the viewpoint of an organization, it
represents the sum total of inherent abilities, acquired knowledge and skills, talent and aptitudes
of its employees. The human resources have also been designated as human factors. According
to Julius, ‘the human factor’ refers to a whole consisting of inter-related, interdependent and
inter-acting physiological, psychological, sociological and ethical components.
In order to have healthy human resources there is the need to pay attention to and provide for
physiological components, such as food, rest and environmental conditions to satisfy the
physiological needs of people at the workplace. Also important is focus on protection against
harmful and destructive conditions and attempts to avoid drop in income/benefits or even
employment status (e.g. a demotion from a higher level or role to a lower level or role) so as to
have physiological security.
On the psychological aspects, there is the element of emotions and impulses. These aspects are
far more subjective and to add to the challenge are uniquely different for each individual. While
something can inspire someone the same things can depress and act as a de-motivator for others.
People in the organizational context have numerous psychological needs such as autonomy,
achievement, power, acquisitiveness etc. It is natural for employees to look for the satisfaction of
these needs within the organization. As a social being, each individual looks to satisfy his/her
personal needs and aspirations as also the sense of affiliation, status, recognition, prestige etc.
Another factor that influences individuals at work are ethical in nature and it addresses the right
and wrong-ness of whatever the individual experiences. Conflicts in what the individual
perceives as right or wrong vs. what the organization encourages as right or wrong impacts the
behaviour of the individual and his/her satisfaction /well-being within the organization. It is not
uncommon of people leaving a company because they did not like the policies that they needed
to comply with, e.g. corruption in dealing with certain authorities etc.
There is no doubt that human resources have been critical in organizations since the very
beginning and continue to be critical and significant in today’s organizations. The paradox lies in
the fact that even today the majority of challenges in organizations pertain to the human and
social rather than physical, technical or economic factors. It is a truism that productivity is
associated markedly with the nature of human resources and their total environment consisting of
inter-related, inter-dependent and interacting economic and non-economic (i.e., political,
religious, cultural, sociological and psychological factors. Thus, the significance of human
resources can be examined from at least two standpoints-economic and non-economic. While the
economic factors are easily identifiable and controllable the non-economic factors require keen
observation and listening skills and will need to be redressed differently and sensitively.
6. According to_____________, ‘the human factor’ refers to a whole consisting of inter-related,

interdependent and inter-acting physiological, psychological, sociological and ethical
components.
7. The ______________ elements in managing employees are more challenging as compared to

the physiological ones.
8. Psychologically, it is characterised by ____________ and _____________.
9. Majority of the problems in organizational setting are _________ and _______ rather than
physical, technical or economic.
10. Conflicts in perception w.r.t. __________ also impact employee behaviour at work.
1.4 Evolution of the Human Resource Management

The historical background to the management techniques of human resources are in vogue since
ancient times. It’s only in the past 100 odd years that the techniques and study of human
behaviour at work has become formal and structured with certain basic practices established as
core and a host of other practices left to each organization to design and implement as per their
individual business driven practices. As per Fisher, Schonfeldt and Shaw, in their book titled
Human Resources Management, they have characterised the history of HRM as having evolved
through four broad phases, the Craft system, the scientific system, the human relations approach
and the prevalent organizational science-human resources approach.
The Craft system refers to early trends noticed in Egypt and Babylon, where skills based training
was provided to people to ensure a steady flow of craftsmen required to build huge monuments.
By the 13th century, subsequently the trend was noticed in Europe and later craft guilds evolved
to ensure not only the skill acquisition but regulate the conditions of employment, level of skill
and improved production techniques. Most relevant in the domestic industry where generations
of skilled workers trained and became experts in a particular skill.
The Scientific Management approach was a key part of the industrial revolution typical of the
nineteenth and early twentieth century. It was instilled in the principles of mass production and
organization of work – simple work skills and supervisory/managerial skills. This rapidly
emerged as the assembly line approach to managing workflow, which later Fredrick Taylor
(1856-1915) pioneered based on the philosophy that employees wanted to be used efficiently and
money being the primary motivator. Over a period of time this was proved wrong as employee
dissent grew and union issues surfaced. It was during this phase that employee welfare as a key
HR practice emerged which redressed employee issues like recreational facilities, medical
program and employee grievance systems.
The Human Relations approach was an outcome of the famous studies undertaken by US
social scientist Elton Mayo and Fritz Roethlisberger at the Western Electric’s Hawthorne plant in
Chicago.
The Hawthorne Studies: As described in virtually every book written about management, the
human relations or behavioral school of management began in 1927 with a group of studies
conducted at the Hawthorne plant of Western Electric, an AT&T subsidiary. Curiously, these
studies were prompted by an experiment carried out by the company’s engineers between 1924
and 1932. Following the scientific management tradition, these engineers were applying research
methods to answer job-related problems.
Two groups were studied to determine the effects of different levels of illumination on worker
performance. One group received increased illumination, while the other did not. A preliminary
finding was that, when illumination was increased, the level of performance also increased.
Surprisingly to the engineers, productivity also increased when the level of illumination was
decreased almost to moonlight levels. One interpretation made of these results was that the
employees involved in the experiment enjoyed being the centre of attention; they reacted
positively because management cared about them. The reason for the increase in the production
was not the physical but the psychological impact of the employee’s attitude towards the job and
towards the company. Such a phenomenon taking place in any research setting is now called the
Hawthorne effect.
As a result of these preliminary investigations, a team of researchers headed by Elton Mayo and
F.J. Roethlisberger from Harvard conducted a lengthy series of experiments extending over a six
year period. The conclusions they reached served as the bedrock of later developments in the
human relations approach to management. Among their key findings were the following:
· Economic incentives are less potent than generally believed in

influencing employees to achieve high levels of output.
· Leadership practices and work-group pressures profoundly influence employee satisfaction and
performance.
· Any factor influencing employee behaviour is embedded in a social

system. For instance, to understand the impact of pay on performance, you also have to
understand the climate that exists in the work group and the leadership style of the superior.
Leadership Style and Practices: As a consequence of the Hawthorne Studies, worker attitudes,
morale, and group influences became a concern of researchers. A notable development of the
nature occurred shortly after World War II at the University of Michigan. A group of social
scientists formed an organization, later to be called the Institute for Social Research, to study
those principles of leadership that were associated with highest productivity.
Based upon work with clerical and production employees, an important conclusion was that
supervisors of high-producing units behaved differently from those of low-producing units.
Among the differences in style noted were that supervisors of productive groups in comparison
to their lower producing counterparts were:
· More emotionally supportive of subordinates.
· More likely to pay a differentiated role – plan, regulate, and coordinate

the activities of subordinates, but not become directly involved in work
tasks.
· More likely to exercise general rather than close or light supervision.
· The origin and progress of the human relations movement (particularly in U.S.A.) has been due
to certain social and cultural forces working there, such as Recognition of the dignity of the
individual and his personality. The individual has a lot of freedom of choice and the idea of
decision-making by oneself is deep-rooted in the national tradition.
· A child is brought up to value independence and encouraged to think on his own and not to be
dependent on parents.
· Virtual disappearance of owner managers and the growth of professional managers capable of
managing according to professional code.
· Strong organizations of labour, at all levels, calling for higher skills in communication and
participative behaviour on the part of the management.
· Shortage of labour led to skilled labour being treated as nearly irreplaceable. Hence, much
greater care in utilising this scarce and valuable resource had to be thought of in the form of
"Human Relations."
· Higher standards of living of American labour. Since their physical and security needs were
generally satisfied, increased participation alone could satisfy their emerging social and ego
needs.
· The possible weakening of work ethics, requiring managers to develop new attitudes towards
labour.
· The changing work environment-greater specialization and a large scope of operations – which
require a greater degree of managerial effectiveness with and through employees.
· A significant increase in the general educational level of employees who, as a result, demanded
more from their employers.
Concurrent with the growth of human relations in work organizations, has been the burgeoning
of techniques and programmes to foster human growth off the job. In the last two decades,
millions of people seeking personal growth (or sometimes simply emotional arousal) have
participated in programmes such as encounter groups, marriage enrichment groups, seminar
training, couples groups, and transactional analysis.
During the early 1970s, the human potential (meaning development of one’s potential)
movement began to appear in work settings. Management awareness training and assertiveness
training represent two other techniques related to the development of human potential. Both are
designed to deal with the problem of job discrimination against women. In management
awareness training, managers are made more sensitive to their sexist attitudes (such as thinking
of all engineers are male) and in changing their attitudes.
Assertiveness training has been widely used to help women to be more direct in making known
their demands for equal opportunity.
Career development programmes in industry are more prevalent today than at any time in the
past. Although varying widely in content, all these programmes are designed to help the
individual make career decisions that will move him or her toward self-fulfillment. In the
process, it is assumed that the person will make a better contribution to the organization.
Finally the Organizational Sciences approach to human resources management has brought the
focus to the scientific process within organizations that can impact employee experience, and
less on just the individual. Today’s organizations focus on building their processes and policies
and compete to emerge as ‘preferred employers’ (best employer). It is not uncommon for
competing organizations to woo the employees through advertising more and better employee-
friendly initiatives like work-from-home jobs, careers for married couples, global work
assignments and internal job postings and world class workplace infrastructures from in-campus
cricket grounds to gymnasiums for employee wellbeing. This is the HR that we now see around
us.
Activity 1:
Maintaining a competent and motivated workforce is a difficult task. From

your general observations, list out four major challenges, a HR Manager
faces in maintaining a competent workforce.
11. Leadership practices and work-group pressures profoundly influence employee

__________________________________.
12. Any factor influencing employee behaviour is embedded in a __________. For instance, to
understand the impact of pay on
performance, you also have to understand the __________that exists in the work group and the
____________ of the superior.
13. The origin and progress of the human relations movement (particularly in U.S.A.) has been
due to certain________________________
working there, such as Recognition of the dignity of the individual and his personality.
14. In management awareness training, managers are made more ___________

_____________(such as thinking of all engineers are male) and in ___________
___________________.
1.5 Human Relations Concept
To understand the nature of human relations, we begin with a concise and operational definition
that acts as guidance to what people expect at work.
Human Relations in Management is a process that brings employees into contact with and causes
them to be influenced by their leaders, their jobs, and other aspects of the organizations which
they work in. It includes everything at the workplace that influences the behavior of employees:
their relationships with their mangers, with other employees, the kind of work they do, and the
impact on them of the practices of the organization as a whole. As discussed earlier this
knowledge of the employee’s expectations are critical for the achievement of the business results
of revenue, profit, growth, market share. In the best possible way, "human relations refer to the
interaction of people in all walks of life-in schools, homes, business and government."
Huneryager’ and Heckmann define the expression thus: ”… Human relations are a systematic,
developing body of knowledge devoted to explaining the behavior of individuals in the working
organization." In the opinion of McFarland, "Human Relations is the study and practice of
utilizing human resources through knowledge and through an understanding of the activities,
attitudes, sentiments, and inter-relationships of people at work."
When applied to a business or an industry, it refers to every dimension of interaction that

happens between employee and employee, employee and manager, teams and managers,
employee and customer and employee and vendor (one who provides a support or a service). It is
therefore a key objective of every organization to ensure that all dimensions of the human
relations are redressed appropriately to ensure positive human relations. When a relationship
exists in an organization, it is referred to as ‘employee-human relations’; and when it exists
outside it, it is known as ‘public human relations’. Organizations need to pay due attention to not
just the way it treats employees but also the methods and processes in place to recognize and
reward teams of employees depending on what they achieve and deliver for the organization.
This calls for another dimension in managing human relations that focus on the employee as a
social animal. To place it in perspective, the human relations focus of an organization needs to
have programs in place to take care of:
a) Employee needs
b) Team needs
c) Customer/vendor needs
The challenges in front of the modern organization are therefore many and varied, but have to be
met in order for survival.
15. ______________________________ is a process that brings employees into contact with

and causes them to be influenced by their leaders, their jobs, and other aspects of the
organizations which they work.
16. The decline in popularity of the term “human relations" stems in part from the frustrations
experienced by managers of the fifties and sixties who attempted to use a human relations
concept which was un-realistically limited to ___________________________.
17. In the broadest sense, human relations refer to the _______________ of people in all walks
of life-in schools, homes, business and government.
1.6 Objectives of Human Relations
A human Relations Programme thereby attempts at enhancing employee motivation and

workplace morale through an improved three-way communications and through employee
participation in the decision making processes. Human relations seek to emphasise ‘employee’
aspects of work rather than technical or economic aspects. For example while it might be in the
best interest of an organization to have a employee skilled and completely proficient in one job/
set or responsibilities, today’s organization provides’ opportunities for employees to multi-skill
and acquire knowledge of new yet related jobs/responsibilities. These acts as a motivator for
employees as they benefit by learning new skills / jobs and given an opportunity can perform and
excel in another job. It also seeks to make employment and working conditions less impersonal.
The human relations approach emphasises policies and techniques designed to improve
employee morale and job satisfaction. For example it is common place in organizations to
provide for / encourage employee empowerment where-in the team brings about creative
measures to reduce cost/ improve customer satisfaction. Such teams design and implement self-
driven initiatives to bring about the business result. It is believed that this is accompanied by
increased employee efficiency and reduction in employee dissatisfaction.
An understanding of emerging workplace human behaviour can be summarised as:
i) Assist the manager to develop a better realization of how his own attitudes and behaviour play
a part in everyday affairs of the team and its morale;
ii) Assist the manager to develop a keener sensitivity towards the team members and
interpersonal dynamics
iii) Partner with the managers in helping him drive the business goals and take part ownership of
work challenges and how best to resolve them
iv) Enable him to anticipate and prevent problems, or at least to resolve more effectively those
that he cannot avoid; and
v) Network with other teams with related dependencies and help resolve inter-team business
impacting challenges
This Scope of Human Relations springs up from the problems which have many different causes
and perspectives. Halloran has stated these as:
· Every person brings a unique set of talents, ambitions and work experience to a job. These
personal attributes change over time, often as a result of the degree of success or failure the
person experiences in the work world. Matching so many unique sets of personal qualities to a
standardized technology can create problems.
· The organizational aspects of a company, such as its size, geographic location, economic
health, and degree of automation, define the scope of work and the activity in each work
division. These frequently arbitrary, structural definitions often cause difficulties in human
relations.
· Innovations in technology and production methods generally require the restructuring of job
roles and responsibilities. Radical changes in basic organizational structure can cause severe
strains between employees and management and create intense problems in human relations.
· Promotion of individuals to positions of greater responsibility and authority generally creates a
need for changed behaviour patterns between the new supervisors and their former peers, which
in time, can create human relations problems.
· Inexperienced employees may not be able to perform their roles or tasks in work groups in a
competent manner. The time they take to adjust can not only create problems with production
schedules, but can also create particular kinds of human relations problems between them and
their co-employees and supervisors.
The variety of causes of human relations problems lead to the conclusion that no one programme
or single approach can create conditions for good human relations. Therefore, as shared earlier it
in common for organizations and individuals in organization to constantly innovate and resolve
challenges that will benefit both the organization as well as the employee.
This helps understand the key HR objectives which can be best illustrated by understanding the
functions that HR attempts to fulfil in any organization:
i) Human Resource Planning – estimating the need for resources in order achieve the desired
business results. HR plans can be both short term/immediate as well as long term / strategic. The
HR team partners with the line managers to understand the business goals and targets for the year
and then together plan the HR needs in order to meet the goals.
ii) Acquisition of human resources – staffing the organizations with the right mix of skills and
competencies at the right time. It also includes HR initiatives like promotions and internal job
posting to fulfil this requirement for human resources. Staffing teams in organizations are usually
a separate group of specialists who work closely with the line managers to understand the skills
and competencies needed for the job and engage together to select the best talent for the open
positions.
iii) Training and employee development – focuses on managing training activities to upgrade
skills and knowledge as well as soft skills like team building and leadership. The training team is
again a group of HR specialists who propose the training program and consult with the line
managers to ensure that the program achieves the desired outcomes.
iv) Building performance management systems – focuses on the right processes to set goals
for performance as individuals/teams and related measurement methods. This is a core HR
activity and is supported by the HR generalist.
v) Reward systems – establishing appropriate compensation systems and reward mechanisms

that would reward the desired outcome and results in accordance with the corporate values. This
again forms a part of the HR generalist’s tasks. How employees progress in a organization how
they are paid w.r.t. internal and external market factors, what employee benefits are offered, are
some aspect that this function redresses.
vi) Human Resources Information Systems that would take care of the operational transactions
from the time an employee joins till the time the employee exits, like personnel files,
compensation administration, payroll, benefits administration and issuing letters and
testimonials. This task is supported by as separate HR operations team who act as a HR helpdesk
and provide information to the employees/managers.
Activity 2
Read 2-3 articles and list out few welfare measures e.g. pensions plans etc,
which companies are offering to their employees. Then against each,
mention the reason, why you think the company has provided this benefit.
18. Human relations seek to emphasise ‘_________’ aspects of work rather than technical or
economic aspects.
19. Every person brings a unique set of talents, ambitions and work experience to a job.
Innovations in technology and production methods generally require the restructuring of
__________________________.
20. ____________________may not be able to perform their roles or tasks in work groups in a
competent manner.
21. ___________________________ help determine the correct processes for setting goals and
measuring achievements.
1.7 Summary
· Management of human resources is the essence of being a manager who has to get things done
through others. And in this activity the manager is supported by the HR professionals who act as
the expert providing the right guidance within the framework of the organizations policies and
practices.
· The human resources have also been designated as human factors that need to be managed at
the workplace in order to ensure that the business objectives are met.
· According to Julius, ‘the human factor’ refers to a whole consisting of inter-related,

interdependent and inter-acting physiological, psychological, sociological and ethical
components.
· Majority of the problems in organizational setting are human and social rather than physical,
technical or economic.
· The physical resources will not give results unless the human resources are applied to them.
· Management of human resources is being regarded as a specialised profession such as that of

medicine and law.
· The Human Resources Department is responsible for many varied functions including
employment, safety, training, wage and salary administration and research and development.
· The Head of the Human Resources Department is associated with top management and helps it
in the formulation of Human Resources policies for the company.
· Human Relations in Management is a process that brings employees into contact with and
causes them to be influenced by their leaders, their jobs, and other aspects of the organizations
which they work. It includes everything in the work environment that influences the behaviour of
employees:
· A human relations programme represents an attempt at improving employee morale and

motivation.
· As a consequence of the Hawthorne Studies, worker attitudes, morale, and group influences
became a concern of researchers.
· The terms Personnel Management’ and ‘Human Resources Management’ are interchangeably
used by most of the authors, though there are some differences between them.
· HRM is a broad concept which covers many personnel aspects and includes social, professional
and individual enterprise aspects, whereas Personnel Management focuses only on personnel
aspects such as leadership, justice determination, task specialisation, staffing, performance
appraisal, etc.
· HRM is more growth-oriented whereas Personnel Management is slightly narrow.
1.8 Caselet
Talent management: How to invest in your workforce
By Douglas MacMillan
The war for talent. – The coming brain drain.- Mismanaged succession.
In recent years, judging by steady increases in spending on talent management, workforce

challenges like these have become top of mind for most companies, large and small. But
what is the most productive way to invest in your workforce, and what are the chances you
will see a tangible return?
A new study conducted jointly by IBM’s Institute for Business Value and Washington-based
think tank Human Capital Institute (HCI), and shared exclusively with BusinessWeek.com, has
yielded promising answers to those questions.
Last spring, researchers from IBM and HCI surveyed 1,900 professionals in over 1,000 public-
and private-sector companies, from a range of industries, geographies and organizational sizes.
Respondents scored their companies in 30 specific competencies, which fell into six key
practices of talent management: strategy development, attracting and retaining, motivating and
developing, deploying and managing, connecting and enabling, and transforming and sustaining.
Companies with high scores across the board were more likely to have strong financial
performance, based on reported change in operating profits between 2003 and 2006. "It’s not the
first research to show a correlation between talent management and financial results," admits
Allan Schweyer, executive director of HCI and one of the authors of the report, "but it’s one in a
handful, and I think it really adds to that body of evidence that is helping organizations to build a
solid business case for investments in talent management."
Planning ahead
Organizational size was a main difference-maker between companies that did well on the survey
and those that did poorly. Researchers found that large companies – defined as having 10,000 to
50,000 employees – do not only manage their existing employees more efficiently, but they are
better equipped to plan ahead for the number of people and types of skills they will need to bring
into their organization in the future. "Smaller competitors who haven’t done this work really
scramble in a lot of cases when it comes to filling holes in their workforce," says Schweyer.
Large companies outperformed the total sample by 4 percent in linking workforce-management

strategy to business strategy, and by 7 percent in having metrics that provide input into strategic
workforce planning decisions.
Yet small companies do have the advantage of being nimble and able to manage their workforce
on an intimate, informal level. Organizations with fewer than 1,000 employees were 4 percent
better than the total sample at collaboration and sharing knowledge, 6 percent better at promoting
virtual working, and 4 percent better at identifying relevant skills.
Surprisingly, medium-size companies – between 1,000 and 10,000 employees – were less likely
to have implemented five out of the six talent management practices in the study. At that size,
says IBM associate partner Eric Lesser, "you’re too small to do it by yourself but perhaps
haven’t built the infrastructure or managerial focus" that larger companies have. Lesser and the
other authors of the report termed these companies "organizational adolescents" that have
growing pains because they are unable both to diagnose issues and keep a long-term perspective.
Major differences between industries also emerged in the report: Knowledge-intensive

businesses tended to focus on development and collaboration, while service-intensive ones
emphasized employee attraction and retention. All nonprofit industries studied – government,
education, and health care – lagged behind the private sector in virtually all areas of talent
management.
The best way to invest in talent management depends greatly on the size and industry of a
company. And there is no easy fix for the human resources woes that are becoming more
common in all business.
But for those looking to link talent to profits, there were two competencies that a majority of the
best-performing companies had in common: understanding and addressing workforce attitudes
and engagement levels; and aligning employee incentives with appropriate business goals.
Source : BusinessWeek; Thursday, August 14, 2008
1. What is Human Resources Management? What is its importance in the

Modern world?
2. Bring out with examples the interaction between Economic and Non-
economic factors in Human Resources Management.
3. Enumerate the growth of Human Resources Management in India and

its impact on India’s ethos.
4. Explain the factors responsible for growth of Human Relations.
5. Distinguish between Personnel Management & Human Resources Management.
1.10 Answers
Answers to Self Assessment Questions
1. False
2. False
3. False
4. True
5. False
6. Jucius,
7. psychological,
8. Emotions and impulses,
9. Human and social,
10. Ethics
11. Satisfaction and performance,
12. Social system, climate, leadership style,
13. Social and cultural forces,
14. Sensitive to their attitudes, changing their attitudes
15. Human Relations Management,
16. people-people relationships,
17. Interaction
18. Employee
19. Job roles and responsibilities
20. Inexperienced employees
21. Performance management systems
Answers to Terminal Questions:
1. Refer to 1.3
2. Refer to 1.4
3. Refer to 1.5
4. Refer to 1.5
5. Refer to 1.6
References
1. Human Resources Management by Fisher, Schoenfeldt and Shaw
2. Managing Human Resources – Productivity, Quality of Work Life, Profits by Wayne F.

Cascio
3. International Human Resources Management : Text and Cases by K Aswathappa and Sadhna
Dash
4. Human Resources Management by K Aswathappa
Copyright © 2009 SMU
Powered by Sikkim Manipal University
MB0043-Unit-02-HRM in India
Unit-02-HRM in India
Structure:
2.1 Introduction
Objectives
2.2 HRM in India
2.3 Human Relations Movement
2.4 Cultural dimension of the Indian workforce
2.5 Scope of HR in India
2.6 Summary
2.7 Caselet
2.9 Answers
2.1 Introduction
You will agree that the evolution of the Indian organizations have happened at a different pace as
compared to what happened in the rest of the world. You might have read articles in magazines
and on the web on the challenges that multinational company may face while doing business in a
country like India.. MNC faces difficulty in setting up business in India in terms of paper work
related to registration and due to laws of the land. Organization also faces a lot of challenges in
hiring and retaining its employees. We will spend time in this Unit discussing what India’s
challenges were and how it has overcome them to emerge a winner.
The Indian story for organizational success is one that is deeply rooted in its history and culture.
The Indian value system is rich in terms of joint family system and has respect for elders. The
British rule along with the freedom struggle has strongly impacted the shaping of the Indian
workplace. The largely agrarian nature of the country’s wealth builds hard work, dignity for
labour, saving for the future and shared responsibility these are the key attributes of Indian
workforce. And these attributes even today are the foundation of the success of the Indian firm.
To add on this, the role of the country’s democratic governance framework with its sturdy term
of Five Year Plan have enabled policy makers and the financial institutions to set the stage for
India’s success. The far-sightedness of the government in the area of education, particularly, has
contributed immensely to the control of population. This together with the assistance from the
developed countries helped the country create its own value proposition globally. Unique in its
strengths and its weaknesses India today is identified as among the leading ‘emerging economic’
in the world sharing space with larger countries (both in size and scope) like Russia, China and
Brazil. India continues to climb the curve of success even after 60 years of independence, with
symbiotic trade relations with almost every other country in the world.
Objective:
After studying this unit you will be able to:
· Recall the history of Indian concepts in human resources management
· Identify its uniqueness as compared to the rest of the world
· Evaluate the impact of the country’s culture on the organization’s culture
2.2 HRM in India
As it stands today the Indian organization could not have hoped for more. In addition to being
strategically positioned on the corporate world map as a low-cost, highly skilled destination, the
Indian corporate is emerging as a base for committed, intelligent and a knowledgeable
workforce. This has been achieved by the help of a strong foundation provided by the Indian
education system at the primary, secondary, technical and at professional level. It is a undisputed
fact that the Indian Institute of Technology, the National Institute of Technology and the famed
India Institute of Management are among the world-class institutions to name a few. Quality
education and research are encouraged on these campuses and across the country, which mould
and contribute to the practices in Indian organizations.
The HRM practices in Indian organizations are a parody of sorts. There is a strong foundation
that is a simple extension of the HR practices from the established western organizations and the
developed countries. However there is a equally strong cultural impact on the hiring practices,
compensation standards, benefits and statutory benefits, performance linked rewards and payout,
which though in-step with international HRM practices have a flavour their own. We will discuss
a few distinct differentiators that impact HRM practices in Indian organizations:
· The Indian culture is one that is deeply rooted in its societal and collectivistic values whereby
there is a natural urge to collaborate at the workplace, work in teams and groups with ease.
· The diversity that is seen in the Indian society w.r.t. diverse religions and states are reflected in
the ability of the Indian to accept diversity of views and thought without inhibitions. Not much
effort needs to be expended to practice tolerance towards others points of view.
· The tolerance for ambiguity and uncertainty however is low in the Indian which requires a lot
more detailing of jobs and roles and responsibilities. There is need therefore to establish definite
boundaries of authority and responsibility.
· Work culture-wise, the natural ability to work hard and long hours, perseverance and the need
to earn money impact the way the work is organised in Indian organizations. It is not uncommon
for the Indian to compromise personal time with family / friends to instead attend to work and
satisfy a customer. There is a overwhelming sense of ‘service’ that manifests itself at the
workplace.
· Availability of a large educated group of individuals of different calibre of knowledge and skill
allows the country to undertake different nature of work beginning with lower skilled activities
such as BPO’s(Business Process Outsourcing) and moving up the value curve to far more
advanced activities ….KPO’s (Knowledge Process Outsourcing).
· Compensation and benefits costs continue to provide a competitive advantage for India making
it a preferred business location the world over.
· There is a natural expressed need ‘to belong’. This again is typical of the Indian and has
brought about a significant amount of customisation of the workplace and its norms to allow for
cultural events and activities through the year. There is a lot more scope for socialising that
exists in the Indian organizations.
· Current trend in the over populated urban part of the country are quickly fading out to tire 2 and
tire 3 cities and town where the cost of living and wage levels are not as competitive, further
expanding the Indian resource base for hiring and building talent, contributing to the overall gain
of the country.
HRM in India however is not structurally well-researched and hence a lack of theoretical
information to track and document its progress. Unlike in the emerged countries like the USA
and the UK where the research networks are mature and well established. Research is yet at its
infancy in India and there is a lot of dependence on the emerged countries in emulating best
practices in the way people are hired and managed. Today the organizations of Indian origin
have their unique HR strategies that work best for them. Work more and earn more is a common
and accepted philosophy at the Indian workplace. Work is respected and revered and almost
worshipped in Indian organizations. Benefits are basic yet equitable and adequate. There is a
high focus on cash in hand as opposed to benefits and perks.
Our statutory and legal frameworks, as a result, are a lot more liberal and less restrictive as
compared to the emerged countries. An open society drives openness at the workplace and
hypocrisy is largely discouraged, leading to well structured policies and processes that drive
workplace behaviour. Diversity for India is a challenge very different from its existence in the
rest of the world. Diversity initiatives in India normally focus around challenges related to
gender diversity. It’s only in the past few years that there is a pattern of women in the Indian
corporate. Today this is a key issue. There is a lot of strategising and initiatives in all Indian
MNC’s as well as Indian domestic firms toward wooing this critical potential talent for
organizational advantage.
Activity 1
Speak to your friends or relatives who are working in a public sector

company or in a MNC. Try to compare the HR practices of a public sector
company to a MNC.
1. In India diversity is a concern because we are very conservative and a closed society (True /
False)
2. India is gaining importance because of the quality as well as the cheap cost of living (True /
False)
3. Our legal framework is very advanced, allowing for foreign companies to work easily in India
(True / False)
4. Grievance management systems is a common HRM function (True / False)
2.3 Human Relations Movement
Kautilya provides an account of the techniques of human resources management as early as 4th
century B.C. in the "Artha-Shastra". As per the book, there existed logical procedures and
principles in organizing labour namely the Shreni or guild system and in the principles of the co-
operative sector. The wages were in terms of quantity and quality of work turned out and
punishment for unnecessarily delaying the work or spoiling it. The writing of Kautilya provides
an excellent discussion on staffing and personnel management, including the detailing of what
today are called job descriptions, qualifications for jobs, methods of selection, employee and
supervisor development, formally established incentive methods (Sarasa- saama- daana- bheda-
danda- catura, the Carrot and Stick approach) and even the science of performance evaluation.
The guild system was pioneered and closely followed by the establishment of the co-operative
sector of craftsmen and traders organizing themselves to promote their professional interests.
Numerous professional societies were similarly formed each establishing systematic procedures
and policies to nurture their own interests.
Significantly, these practices also respected the principles of the division of labour, which can
easily be traced to the caste system that even today is a inseparable part of the Indian cultural
system. The society got divided into
· Individuals engaging themselves in activities such as teaching, sacrifice or state management

were designated as Brahmins
· While those specialising in fighting were termed as Kshatriyas.
· Individuals engaged in the areas of trade, business and agriculture were called Vaishyas and
· Those devoting themselves in manual work were known as Shudras.
Herein hereditary facilitated the transfer of skills and training from one generation to another.
Quickly even specialised skills became hereditary suchas goldsmiths, weavers, potters,
blacksmiths, carpenters, hunters, charioteers, snake charmers, architects, sculptors, armourers
identified as separate communities by themselves. Between the employer and employees justice
and equity laid a sound foundation for successful enterprise.
During the medieval period, India experienced aggressions for around 700 years, during the
Mughal rule. While trade and commerce flourished, majority of the artisans and the craftsmen
remained poor and lived simple lives compounded by the large and joint family system that
prevailed. Low wages, oppressive political conditions and poor physique characterised the
workplace. Nothing significantly changed during the British rule. Oppression and poor working
conditions prevailed in all industries and intensified in the tea estates that were the key focus of
the British for obvious reasons that tea was a key export product.
This prevailed till the enactment of the Factory Act of 1881. This coincided with the waves of
industrialization and urban growth that India witnessed. The Act brought about the first set of
formal guidelines and rules that the industries had to comply with. Workers employed in the
factories were allowed a week off-day and provisions were made for supervision, quality and
hours of work. Sadly the act also established the minimum age of children for employment to be
seven years and the maximum working hours for them to not exceed seven hours a day and only
in the day-shift.
This set the stage for the organization of employees to ensure fair work and pay and in 1890, the
first labour organization Bombay Mill Hands Association was established. In 1905, the printers’
Union at Calcutta and in 1907, the Postal Union at Bombay were established. The Madras
Labour Union was organized thereafter in 1918. The Central Labour Board was established in
1922 to bring together the different unions in the Bombay city and the All India Trade Union
Congress was organized. The formal implementation of the Indian Trade Unions Act took place
in 1926, one more landmark in the history of industrial relations in the country. There was a
large scale expansion of the trade union movement after the Second World War – especially after
the independence. The union-government interactions significantly stepped up to accommodate
for the removal of the war-time restrictions on strikes, formation of three more central labour
organizations and the competition among them and the use of adjudication rather than collective
bargaining techniques to resolve issues. In 1960, 45 percent of the total industrial workforce was
claimed to be unionised. Today, the total membership is estimated to be around 4.3 million i.e.,
28 percent of total workforce.
The post-independence period also marked the formation of the Personnel Department in
different public and private sectors. Under the Factories Act, 1948, employers had to employ a
Welfare Officer in a factory employing 500 or more workers. Similarly the Mines Act, 1952,
empowers the Government to specify employment of welfare officer/officers. While welfare
constituted a large part of the responsibilities of the Personnel department, there were other tasks
and responsibilities that were assigned as well.
The responsibilities included other varied functions including the employment of suitable people,
workplace safety and driving awareness, training and wage and salary administration. The
Personnel department however operated in a somewhat isolated manner and executed tasks as
assigned by the head of the organization / core business teams. The interactions with the other
heads of departments were limited and only on a need-based rationale.
In the past two decades the workforce in India has evolved rapidly to emerge as a nation of
intelligent, skilled and highly aware and mature professional, who stand shoulder-to-shoulder
with the professional from the world over. The workplace is an equitable one which believes in
the values of respect for the individual and aspiration to be the best in the world. The role of the
Human Resources function can no longer be ignored or sidelined. It is viewed as a strategic
partner and has found a place at the top management table. The Head of Human Resources
function is selected with as much care and attention as the CEO and is consulted in all business
decisions, irrespective of its direct/ indirect implications to human resources. Being a HR
professional is a conscious decision that a individual takes early in his / her life and pursues it
with dedication and commitment.
5. Kautilya provides a systematic treatment of management of human resources as early as 4th

century B.C. in his treatise titled ………….
6. From the 14th century B.C. to the latter half of the 10th century A.D., the relationships
between the employer and employees were marked by………
7. In "Varnashram" or caste system, those devoting themselves in manual work were known
as…………
8. During early British rule, there prevailed a ………..policy towards the business.
9. The Madras Labour Union was organized in…………..

2.4 Cultural dimension of the Indian workforce
The foundation for understanding the unique work practices at a country level can best be
understood by first understanding the cultural aspects of the country’s workforce. The pioneering
work done by Dutch scientist, Geert Hofstede is a useful tool in understanding the cultural
differences used to differentiate countries. He identified five cultural dimensions around which
countries have been clustered. The dimensions are: power distance, uncertainty avoidance,
individualism, masculinity and long term orientation. Geert Hofstede dimensions are based on
research conducted among over 1000 IBM employees working globally. While there continued
to be other studies like the GLOBE (Global Leadership and Organisational Behaviour
Effectiveness) project and Trompenaars’ Framework, Hofstede’s model is most popular.
Power Distance
Power distance is the extent to which less powerful members of institutions and organisations
accept that power is distributed unequally. Countries in which people blindly obey the orders of
superiors have high power distance.
High power distance countries have norms, values and beliefs that support:
· Inequality is good; everyone has a place; some are high, some are low
· Most people should be dependent on a leader,
· The powerful are entitled to privileges, and
· The powerful should yield their power.
India scores 77 on power distance, indicating high power distance as a result of the inequalities
both at the level of the society as well as the at the workplace. Indian organizations typically
have hierarchical structures, position yields power and subordination is acceptable.
The dimension of high power distance at the workplace can be best understood as:
· People dislike work and try to avoid it.
· Managers believe that they must adopt Theory X leadership style, that is, they must be
authoritarian, and force workers to perform and need to supervise their subordinates closely.
· Organisational structures and systems tend to match the assumption regarding leadership and
motivation
· Decision making is centralised.
· Those at the top make most of the decisions. Organisations tend to have tall structures.
· They will have a large proportion of supervisory personnel, and
· The people at the lower levels often will have low job qualifications
· Such structures encourage and promote inequality between people at different levels.
Uncertainty Avoidance
Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations, and
have created beliefs and institutions that try to avoid these.
India scores 40 indicating low to average uncertainty avoidance characteristics. Countries with
low uncertainty avoidance have people who are more willing to accept that risks are associated
with the unknown, and that life must go on in spite of this.
Specifically, high uncertainty avoidance countries are characterised by norms, values, and beliefs
which accept that:
· Conflict should not be avoided,
· Deviant people and ideas should be tolerated,
· Laws are not very important and need not necessarily be followed,
· Experts and authorities are not always correct, and Consensus is not important
Low uncertainty avoidance societies such as ours have organisation settings with less structuring
of activities, fewer written rules, more risk-taking by managers, higher labour turnover and more
ambitious employees. Such an organisation encourages employees to use their initiative and
assume responsibility for their actions. Denmark and Great Britain are good examples of low
uncertainty avoidance cultures. Germany, Japan, and Spain typify high uncertainty avoidance
societies
Individualism
Individualism is the tendency of people to look after themselves and their family only. The
opposite of this is collectivism which refers to the tendency of people to belong to groups and to
look after each other in exchange for loyalty. India scores 48 on Individualism, indicating
somewhat low scores, therefore tending towards a more collectivistic society.
Collectivist countries believe that:
· One’s identity is based on one’s group membership,
· Group decision making is best, and

· Groups protect individuals in exchange for their loyalty to the group.
Organisations in collectivist societies tend to promote nepotism in selecting managers. In

contrast, in individualistic societies, favouritism shown to friends and relatives is considered to
be unfair and even illegal. Further, organisations in collectivist cultures base promotions mostly
on seniority and age, whereas in individualist societies, they are based on one’s performance.
Finally, in collectivist cultures, important decisions are made by older and senior managers as
opposed to individualist cultures, where decision making is an individual’s responsibility.
Individualism is common in the US, Canada, Australia, Denmark, and Sweden. The people of
India, Indonesia, Pakistan and a number of South American countries exhibit collectivism
Masculinity
Masculinity refers to a situation in which the dominant values in a society are success, money
and other material things. Hofstede measured this dimension on a continuum ranging from
masculinity to femininity. India scores 56 tending to be closed to masculinity than feminity.
In highly masculine societies, jobs are clearly defined by gender. There are men’s jobs and
women’s jobs. Men usually choose jobs that are associated with long-term careers. Women
usually choose jobs that are associated with short-term employment, before marriage.
Ranking of Countries on Hofstede’s Cultural Dimensions
Table 2.1 Comparative table containing the scores
Country Power IndividualismUncertaintyMasculinity

Distance Avoidance
Arab countries 80 38 68 53
Argentina 49 46 86 56
Australia 36 90 51 61
Brazil 69 38 76 49
Canada 39 80 48 52
Denmark 18 74 23 16
East Africa 64 27 52 41
France 68 71 86 43
Germany FR 35 67 65 66
Great Britain 35 89 35 66
Greece 60 35 112 57
Hong Kong 68 25 29 57
India 77 48 40 56
Indonesia 78 14 48 46
Iran 58 41 59 43
Israel 13 54 81 47
Japan 54 46 92 95
Malaysia 104 26 36 50
Mexico 81 30 82 69
New Zealand 22 79 49 58
Pakistan 55 14 70 50
Philippines 94 32 44 64
Singapore 74 20 8 48
South Africa 49 65 49 63
South Korea 60 18 85 39
Spain 57 51 86 42
Sweden 31 71 29 5
Switzerland 34 68 58 70
Taiwan 58 17 69 45
Thailand 64 20 64 34
Turkey 66 37 85 45
USA 40 91 46 62
West Africa 77 20 54 46
Source: http://www.geert-hofstede.com/hofstede_dimensions.php
2.5 Scope of HR in India
Contrary to these forces, in India the owner manager / government/public sector manager was an
industry icon and a national hero of sorts. The Personnel Management practices were dominant
of the ‘brick-and-motor’ industry. Though the approach was largely welfare oriented and
reactive in nature it served effectively for the large PSU organizations that built the country’s
foundation. A large part of the workforce were migrant from the rural parts of the country and
armed with educational qualifications that served as their ‘passport to a secure future’. Many left
the country to study and pursue career overseas. This phenomenon was called ‘brain drain’ and
happened during 1990 through to 2005. The best of the Indian talent left the country. Per present
statistics there are close to 1.7 million people of Indian origin in America according to the US
Census Bureau. The Indian American median family income is $60,093, as against the national
median family income of $38,885., left the country. The estimated buying power of the Indian
Americans in the United States is around US $20 billion. The high income clearly reflects the
advanced educational levels achieved by Indian abroad.
Its only in the past 10-12 years with the immense growth on account of the IT industry that
winds of change began to blow. It was largely the advent of the Information Technology era in
India that brought with it the western management practices. MNC’s (multinational companies)
started up their operations in India. The FDI (foreign direct investment) went up steeply as the
world saw the potential in the country’s human resources. India became a preferred location for
MNC’s primarily from the USA, followed by other developed countries. It was natural for the
MNC’s setting up operations in India to establish their existing and proven management
practices that were successfully working in the organizations back home. It also helped them
manage their business similarly.
This gave birth to a new generation of management as well as HRM practices. New hiring
methods, new ways of paying salaries, new employment terms and most importantly increased
focus on individual performance and outcomes. There was emphasis on deliverables and linking
individual and team performance to business results and success. Given the highly educated
workforce there was a de-emphasis in the role of the trade unions. The era of the trade union
dominance gave way to the new order of individual negotiated salaries and terms and clearly
performance linked assessment systems. Another transformation that the Indian workplace
witnessed was the focus on ethics and ethical practices in doing business. It was only fair to
expect that with the weak legal system, it needed the support of the government policies and the
corporate policies to beat the corruption that existed. This has significantly contributed to India
emerging as a preferred destination for doing business.
All of this has yielded to give way to the birth of the ‘professional manager’. Professional
managers today are a critical and essential part of the Indian corporate. The professional manager
brought about a shift in the culture from a highly authoritarian approach of getting work done, to
a more collaborative and participative approach. In the traditional Indian culture where the child
is brought up to be dependent on parents and superiors this shift was breakthrough and took its
time to manifest. The entrepreneurs who earlier operated in a secure, sheltered market and hardly
face challenges, were challenged by the globalization that swept in with the liberalization
policies and measure brought in by the Indian government late 1995 and onwards. Despite the
challenges, the Indian employee and his manager evolved. Together they stepped up to face the
challenge head-on and to win not only in India but also globally. The levers of (a) low cost, (b)
highly skilled, and (c) English as the medium of education and it being the corporate-language;
were the key drivers that enabled the flow of global business to India. There was exponential
growth in employment both directly (jobs in the international and domestic companies) as well
as indirectly (as support industries like transport, catering and ancillary industries). The
simultaneous investment of the government in building the necessary infrastructure did its share
of providing impetus towards creating more jobs for the people of the country.
Hence, human relations movement in India has evolved very differently as compared to what we
see in the developed economies of the USA and the UK. What is currently acting as a limitation
is the enhanced awareness on the need for research based HRM practices. While there is a lot of
work happening in the Indian education system to promote this, it is going to take a while before
it can create a distinct body of knowledge that is reference-able. For now the industry relies on
emulating westerns HR practices and customizing on a as-needed basis for the Indian
corporation. For the rest the Industry forums and consortiums like the NASSCOM act as a hub
bringing together organizations on a regular basis to discuss challenges and share best practices
and identify ways and means to overcome them together. So far this has been successful and
working to the advantage of the Indian corporate. Leading MNC research and consulting firms
like Mercer and Hewitt too contribute to the industry through carrying out research and sharing
reports on a regular basis. The approach however remains analytical and less prescriptive.
Activity 2
Identify three practices in Indian companies that you know of that are
specific to the Indian culture. Think of festivals and how they are celebrated
in companies.
10. The culture is highly __________________in character.
11. For lack of _________________, the workers cannot and do not have any say in their jobs or
working conditions.
12. ___________________ here means not only the efficient sending and receiving of messages
but also includes sensitivity to the understanding of feelings, attitudes and cognitions of the
subordinate.
13. It was the advent of the Information Technology era in India that brought with it the
_________________________ practices.
14. There was exponential growth in employment both ___________ as well as

______________.
2.6 Summary
· HRM in India has been impacted both by its own history as well as multinational companies
that came and established their operations in the country.
· The country’s culture has played a critical role in building value for the country globally.
· The caste system and the way it was structured to differentiate between different categories of
jobs remains a basic framework for the way work is distributed at the workplace.
· The coming of the British to India and their administrations brought immense insights into the
country on how to manage labour and work.
· It also gave rise to the trade unions and workplace equality issues.
· The impact of the World War I and II made their own impact on the Indian organizations.
· The early days of structured HRM activities were largely ‘hygiene’ related and focused on the
Personnel management principles.
· Human Resources management as it is practiced today is a outcome of the cultural (local) as

well as the global MNC policies.
2.7 Caselet
Indian tech tries to retain top workers
By Jessica Mehroin Irani

At a time when most IT companies are reducing employee numbers to cut costs, tech majors
such as Wipro, TCS and Infosys are rechanellizing their manpower. Sabbaticals are more
common and people on the bench are being asked to undergo longer and more rigorous training
programs.
Wipro has asked some of its non-billable and skilled employees to move to subsidiary Wipro
Infotech on the same pay package as earlier; but they will continue to be on the payrolls of
Wipro Technologies.
"These are not under performers, but talented people we don’t want to lose. The move to
Infotech is currently for a year, and this will give them a chance to be productive," said Pratik
Kumar, Wipro executive vice president of human resources. This will also help the company in
sustaining high utilization rates.
The other option given to employees, who have been on the bench for over six months, is a
special program which allows them to come to work for 10 days a month, at half their salary.
"This allows them to take up certification programs, work on innovation projects and help in
creating question banks for domain specific internal tests," said Kumar. "Once we see an opening
for them on a project, we will transfer them immediately."
TCS has also put its benched employees on high-end training programs in areas such as
enterprise resource planning, business intelligence and analytics. "We are building a larger skill
set as we would like to be ready when the demand picks up," said a TCS spokesperson. The IT
Company has also invited its employees to write research papers on technology that can be used
by the company.
Reducing employee numbers for saving costs is a short-term solution, said Nandita Gurjar, head
of global HR at Infosys. "When demand picks up, we’ll be hiring skill pools at a higher cost;
there will also be the cost of extra training. Weed out non-performers, but retain talent even if
they are not being utilized currently."
While Infosys has said that 50 employees, at any given point of time, can take a year off and
work for an NGO at half their salaries, its peer Wipro has introduced project rejuvenate where
employees, across all levels, can take a year-long sabbatical and pursue their hobbies.
This is not restricted to those on the bench, but also for those working on projects. Even though
these people are asked to take a pay cut, it does not matter.
"As long as you get to keep your job and do fun things to de-stress, a pay cut doesn’t matter,"
said a Wipro employee.
Source: BusinessWeek, Monday, March 30, 2009 09:22 AM

1. HRM Enumerate the growth of Human Resources Management in India and
its impact on India’s ethos.
2. howHow did the India culture impact workplace HR practices?
3. How are the early HRM challenges different from that of the current?
2.9 Answers
1. False,
2. True,
3. False
4. True
5. Artha- Shastra,
6. By justice and equity
7. Shudras,
8. Laissez-faire,
9. 1918
10. Authoritarian,
11. Job-opportunities,
12. Communication,
13. Western management,
14. Directly, indirectly
Answers to Terminal Questions
1. Refer to 2.3
2. Refer to 2.2
3. Refer to 2.4
References
1. Personnel Management by C B Mèmoria
2. Human Resources Management : Text and Cases by K Aswathappa
3.International Human Recoruces Management : Text and cases Aswathappa and Dash
MB0043-Unit-03-Human Resource Planning

Unit-03-Human Resource Planning
Structure:
3.1 Introduction
Objectives
3.2 Human Resource Planning
3.3 Need for Human Resource Planning
3.4 Process of Human Resource Planning
3.5 Human Resource Planning System
3.6 Successful Human Resource Planning
3.7 Summary
3.8 Caselet
3.10 Answers
3.1 Introduction
Planning is considered as the first step for task performance. Whenever there is some work that
needs to be done, at home or at work, the first thing you do is to plan out. For example if you
want to build a custom-fit cupboard for a available space in your bedroom you would seek
recommendations from your friends for good carpenters in the neighbourhood, evaluate them per
your requirements, agree on time and cost and assign the task to them. Similar is the role of the
Human Resource Planning activity in the human resources function. It is the first, most important
and crucial step in building and growing an organization.
Through human resource planning, the management strives to have the right number and the
right kinds of people at the right places, at the right time, to do things which result in both the
organization and the individual receiving the maximum long-range benefit. Human resource
Planning (HRP) constitutes the significant first step in planning for the human resources
requirements of the firm. It is an extremely important step and is closely linked to the business
plan of the organizations. Organization in different stages of their life cycle will have a different
HRPlan. This unit throws light on the process of recruitment.
Objectives:
· Explain Human Resources Planning
· Describe the HRP process
· Evaluate the usefulness of HRP
3.2 Human Resource Planning
Human resource or manpower planning is ‘the process by which a management determines how
an organization should move from its current manpower position to its desired manpower
position. Through planning, a management strives to have the right number and the right kind of
people at the right places, at the right time, to do things which result in both the organization and
the individual receiving the maximum long-range benefit".
The organization’s business plan to invest in a particular product/market or a service will drive
the HRP activity towards hiring to meet the business need. In the event an organization is
divesting or shutting down a particular business unit or a manufacturing division the HRP
activities would focus on the redeployment of the workforce that will be rendered unemployed as
a result of the business decision. An organization wanting to retain its current market share and
revenue projection at status quo would be supported by HRP activities that are limited to only
filling positions falling vacant due to natural organizational attrition. Hence the HRP focus in a
organizations is closely linked to the business plan and acts as a bridge between what an
organization wishes to achieve and how it will go about achieving it w.r.t. the human resources
requirements.
The scope of HRP is futuristic in nature and usually runs parallel to the annual business planning
exercise. It commences prior to the start of the company’s new financial year. For example if the
business year for a company runs April to March. The business planning and the HR planning
activities for the New Year beginning in April is usually completed and in place by the 1st week
of April. Once the HR plan is in place it is broken up into a quarterly or even a monthly plan
which then is the input for the recruitment team to go and hire accordingly.
Steps in Human Resource Planning:
The Human Resource Planning process consists of a set of activities, viz.
a) Forecasting manpower requirements, either by using mathematical tools to project trends in

the economic environment and development in industry, or in by using simple judgemental
estimates based on the specific future business plans of the company;
b) Creating an inventory of present manpower resources and assessing the extent to which these
resources are employed/ optimally;
c) Identifying manpower problems by projecting present resources into the future to determine
their adequacy, both quantitatively and qualitatively; and
d) Planning the necessary programmes of requirement selection, training, development,

utilization, transfer, promotion, motivation and compensation to ensure that future manpower
requirements are properly met.
Thus, it will be noted that ‘manpower planning consists in projecting future manpower
requirements and developing manpower plans for the implementation of the projections’.
Activity 1
A company is being set up by a group of 3 professionals. The business

objective is to sell mobile phones of a Chinese company which has come up
with an inexpensive range of handset ranging from Rs.1200 to Rs.7000. The
plan of the founders is to sell it through dealership with leading mobile sales
stores in the city. They need to submit a human resource plan for the next
18months to their investors. List down all the important steps of HR
planning for this company.
1. Through planning, a management strives to have the right number and the right kind of people
at the right places, at the right time, to do things which result in both the
______________________________ receiving the maximum long-range.
2. Anticipating manpower problems by projecting present resources into the future and
comparing them with the forecast of requirements to determine their adequacy, both
________________________________.
3. Manpower planning consists in _____________________________ and developing

manpower plans for the implementation of the projections’
3.3 Need for Human Resource Planning
Human Resource Planning is a mandatory part of every organization’s annual planning process.
Every organization that plans for its business goals for the year also plans for how it will go
about achieving them, and therein the planning for the human resource:
1. To carry on its work, each organization needs competent staff with the necessary
qualifications, skills, knowledge, work experience and aptitude for work.
2. Since employees exit and organization both naturally (as a result of superannuation) and
unnaturally (as a result of resignation), there is an on-going need for hiring replacement staff to
augment employee exit. Otherwise, work would be impacted.
3. In order to meet the need for more employees due to organizational growth and expansion, this
in turn calls for larger quantities of the same goods and services as well as new goods. This
growth could be rapid or gradual depending on the nature of the business, its competitors, its
position in the market and the general economy.
4. Often organizations might need to replace the nature of the present workforce as a result of its
changing needs, therefore the need to hire new set of employees. To meet the challenge of the
changed needs of technology / product/service innovation the existing employees need to be
trained or new skill sets induced into the organization.
5. Manpower planning is also needed in order to identify an organizations need to reduce its
workforce. In situations where the organization is faced with severe revenue and growth
limitations it might need to plan well to manage how it will reduce its workforce. Options such
as redeployment and outplacement can be planned for and executed properly.
4. Human Resource Planning is essential because of frequent _______________ which is

unavoidable and even beneficial
5. Manpower Planning is required in order to meet the needs of expansion programmes which
become necessary because of increase in the demand for goods and services
_____________________, a rising standard of living
6. Manpower planning is also needed in order to identify areas of ____________ personnel or
areas in which there is a __________ of personnel.
3.4 Process of Human Resource Planning
The process of Human Resource Planning is one of the most crucial, complex and continuing
managerial functions which, according to the Tata Electrical Locomotive Company, "embraces
organization development, management development, career planning and succession planning".
It may be rightly regarded as a multi-step process, including various issues, such as:
1. Deciding goals or objectives;
2. Estimating future organisational structure and manpower requirements;
3. Auditing Human resources both internally and externally
4. Planning job requirements and job descriptions/person specifications; and
5. Building a plan
Human Resource Planning is not only done by organizations and corporate bodies. It is a
prevalent practice at different levels:
i) At the country’s national level, it is generally done by the Government and covers items like
population projections, programme for economic development, basic and advanced educational
infrastructure and opportunities, occupational distribution across urban and rural areas, industrial
and geographical mobility of employable people.
ii) At the state level, it may be done by the state government and would include manpower
planning for the needs of the agricultural, industrial and service sector.
iii) At the specific industry level, it would include manpower needs forecast for specific
industries, such as engineering, heavy industries, consumer goods industries, public utility
industries, etc.
iv) At the level of the individual organization/ unit, it would relate to the planning of manpower
needs for each department and for various types of personnel.
3.5 Human Resource Planning System
The steps in the HRP process is a systematic set of activities carried out in a chronological
manner. Each step needs to be evaluated and debated with all possible information gathered from
the external as well as internal environment. Table 3.1 highlights the steps in the process.
We will attempt to discuss in details the critical steps that are part of the above system.
A. Purpose of Human Resource Planning: Human Resource Planning fulfils individual as well
as organizational goals. What it essentially amounts to is “striking a balance” between the future
human resources needs and the future enterprise needs. And this is done with the clear objective
of maximizing the future return on investment in human resources. And this objective may be
laid down for a short-term (i.e. for one year).
B. Estimating/Forecasting the future Manpower Requirements: the first step in the process is to
arrive at the desired organizational structure at a given point in time. Mapping this structure with
the existing structure helps in identifying the gap in resources requirement. The number and type
of employees needed have to be determined. In addition to the structure there are a number of
external factors that affect this determination. They include business forecasts, competitor
strategy, expansion plans, product/skills mix changes, profit/revenue growth projections, in
addition to management philosophy and government policies. This step also includes an analysis
of the external labour/talent environment, its demographics, demand/supply of the required
talent, and cost considerations.
Forecasting provides the basic premises on which manpower planning is done. Forecasting is
necessary for various reasons, such as:
a) The challenges of the general economic business cycles have an influence on the short-range
and long-run plans of all organizations. These are inflation, wages, prices, costs and raw material
supplies.
b) An expansion / growth initiative might need the business to use additional machinery and
personnel, and a re-allocation of facilities, all of which call for adequate advance planning of
human resources.
c) Changes in management philosophies and top management leadership styles.
d) The use of new technology (such as the introduction of automatic controls, or the
mechanization of materials handling functions) requiring a change in the skills of workers, as
well as a change in the number of employees needed.
e) Very often, changes in the quantity or quality of products or services require a change in the
organization structure. Plans have to be made for this purpose as well.
C. Auditing Human Resources: Once the future human resource needs are estimated, the next
step is to determine the present supply of manpower resources. This is done through what is
called "Skills Inventory". A skills inventory contains data about each employee’s skills, abilities,
work preferences and other items of information which indicate his worth to the company. Skills
inventory are also referred to as competency dictionaries. This information is usually retained as
part of the performance management system with the HR department. This step in the HRP
system helps identify the existing profile of the manpower and its efficiency. It helps highlight
where the organization is vs. where it ought to be. The step concludes with identifying clear gaps
in the skills / manpower mix required to meet the upcoming business objectives.
D. Job Analysis: After having decided how many persons would be needed, it is necessary to
prepare a job analysis. The recorded details of training, skills, qualification, abilities, experience
and responsibilities, etc. as needed for a job are studied. Job analysis includes the preparation of
job descriptions and job specifications.
E. Developing a Human Resource Plan: This step refers to the development and implementation
of the human resource plan, which consists in finding out the sources of labour supply with a
view to making an effective use of these sources. Some important considerations at this point
are:
F.
· Specific roles/disciplines being hired for, of them which roles are pivotal for the business
• Competencies and capabilities needed

• Manager vs. employee hiring
• Hire internally vs. External sourcing
• Planning for new skills through training existing staff vs. hiring new teams
• In case of surpluses, planning for redeployment / reduction in workforce as
required
• Succession planning for key positions in the company
ACTIVITY 2
In Activity 1, List down few external factors which in your opinion might
influence companies hiring strategies. What should they do at the hiring
stage to prevent early attrition?
11. _________________ provides the basic premises on which the manpower planning is built.
12. An expansion following enlargement and growth in business involves the use of additional
machinery and personnel, and a re-allocation of facilities, all of which call for ______________
of human resources.
13. A _________________ contains data about each employee’s skills, abilities, work
preferences and other items of information which indicate his overall value to the company.
3.6 Successful Human Resource Planning
The responsibilities of the HR Department with respect to manpower planning can be

summarised as:
i) To establish HRP as a integral part of the corporate planning activities. Therefore ensure that
they are aware of the company’s corporate and business objectives.
ii) Ensure that the top management supports and recognizes the importance of the HRP process
and drives the senior leaders to participate in it and abide by it.
iii) Set aside funds to provide for technological requirements and other supporting costs such as
the creation and maintenance of the skills inventory, training initiatives etc.
iv) Data collection and analysis to be chosen as best suited to the industry and the economic
environment as well as the organizations’ own plans.
v) Hold the HR department responsible for coordinating the HRP process and tracking progress
with continuous review.
vi) Review the HRP process year on year to identify if there are any changes to be made to the
HRP process itself to make it relevant and useful towards achieving the business goals.
It is not uncommon for there to be resistance to the HRP function. Some common barriers are,
(1) the need to frequently change staffing plans depending on the market situation, (2) does HR
have sufficient knowledge about the business and its objectives to lead the HRP initiative to
successfully contribute to the achievement of business results, (3) financial forecasting tends to
take precedence over HRP as it impacts the organizations profits/losses, (4) balancing long term
vs. short term needs of the business – often what HR might recommend might go contrary to
achieving immediate business results and vice versa, (5) the role of statistical quantitative
information verse qualitative intuitive information – each has its role to play in the HRP process
and this usually is a widely debatable aspect on the projection for human resources requirements,
and (6) soliciting the support of all the business managers and leaders to contribute to the
planning process by providing all the necessary information and actively participating in the
HRP process – this also ensures that the managers remain committed to the human resource plan
through the year.
The responsibility for sound HRP is…
14. To _________________________the operating management to plan and establish objectives;
15. To __________________________in total organizational terms and to ensure consistency

with long-range objectives and other elements of the total business-plan;
16. To ___________________________against the plan and keep the top management informed
about it; and
17. To ____________________________for effective manpower and organizational planning.
3.7 Summary
· Through planning, a management strives to have the right number and the right kinds of people
at the right places, at the right time, to do things which result in both the organization and the
individual receiving the maximum long-range benefit.
· Manpower planning consists in projecting future manpower requirements and developing

manpower plans for the implementation of the projections.
· To carry on its work, each organization needs personnel with the necessary qualifications,
skills, knowledge, work experience and aptitude for work.
· Human Resource Planning is essential because of frequent labour turnover.
· Manpower planning is also needed in order to identify areas of surplus personnel or areas in
which there is a shortage of personnel.
· The process of Human Resource Planning embraces organization development, management
development, career planning and succession planning".
3.8 Caselet
Workers should highlight their value to employers
By Sol E. Solomon
SINGAPORE – Being the quiet achiever can sometimes work against employees in the
workplace, where workers are judged by their achievements and successes, according to a local-
based recruitment expert.
Karin Clarke, general manager of Select Business Services, noted in a recent press statement
how "very innate" it is in the Singaporean culture for employees to be modest and reserved,
preferring not to draw attention to their accomplishments for fear of being seen as arrogant and
pretentious.
According to Richard Talbot, general manager of recruitment company Sapphire Technologies

Singapore, this trait cuts across all professions including the IT sector, in the island-state.
"We find one of the key reasons IT candidates look to change jobs is that they know they can
achieve higher remuneration elsewhere, and their employer has not been forthcoming with a
suitable increment," said Talbot in an e-mail interview.
However, he noted that IT professionals need to also understand how to best present their
achievements to their current employer, in order to secure that promotion or pay increment they
have been eyeing.
Tho Lye Sam, human resource director at IBM Singapore, said in the past, technical individuals
ranging from engineers to programmers, appeared to be less superior in their interpersonal or
written skills compared to their business or sales peers.
"But we’re definitely seeing less of this today," Tho said in an e-mail interview.
Increasingly, she said, employers are witnessing a new breed of employees who bring a mix of
business, technical and people skills.
Tho added: "These knowledge workers will fuel the 21st century economy, and are definitely
capable of presenting the best of their capabilities and competence – with the aim of sharing best
practices, as opposed to being outright showy for personal glory."
Clarke said current global economic pressures make it particularly important now for workers in
Singapore to make their value known in the workplace. This way, they can ensure they are
recognized fairly and reap the rewards of doing their job well, she said.
"It is important that employees realize it may be time to work even harder and then communicate
this success to the right people. Don’t be shy to let relevant colleagues and managers know about
what you have achieved," she added.
Boast the right way
But while employees should draw attention to their achievements, they should not do so
blatantly.
"Some simple, subtle steps can be taken to make sure you receive the recognition you deserve,"
Clarke said. "It will make for a more positive work environment and will contribute to job
security, career progression and show you are willing to take responsibility and ownership for
your work."
"It could be as simple as copying in your manager on positive feedback from customers, or
communicating the successful completion of a project or task. While it is not imperative to tell
your peers unless you want to, making sure you tell the decision makers in your organization is
essential," she said.
Tho said IBM encourages the sharing of best practices, and this involves putting the limelight on
an individual, a team, a country or even a region.
"These are ‘official broadcast’ platforms to share an individual or a team’s winning ways to the
larger IBM community," she explained. "In addition, by celebrating performance and leadership
excellence, we are able to encourage more of such desired behavior."
Talbot suggests employees who fear publicizing their achievements could work against them,
consider taking a "reasoned approach".
"Of course, an employee who constantly talks about personal achievements all the time can be an
annoyance, but conversely, employees that never highlight what they have achieved are easy to
forget," he noted.
The individual should also recognize when to highlight an achievement to the manager, and
when not to raise the issue. Talbot said: "An annual review would be a good time, for example,
to highlight achievements."
IBM’s Tho said: "Our employees are well aware that overstatements may look good in the short
term, but are not sustainable in the longer term."
Clarke recommended that workers keep a record of their achievements, so they have
documentation to support their case when it is time for salary negotiation or formal reviews. "It
can be one of the most difficult conversations of your career, but discussing money with your
employer is much easier if you can clearly demonstrate that your work has contributed to the
success of your organization," she said.
Sources : ZDNet Asia, Thursday, October 02
1. Define Man Power Planning. Discuss the need for Man Power Planning
2. Describe the process of Human Resource Planning.
3. What are the various sources of recruitment?
3.10 Answers
1. Organization and the individual,
2. Quantitatively and qualitatively,
3. Projecting future manpower requirements.
4. Labour turnover,
5. By a growing population,
6. Surplus, shortage.
7. d,
8. b,
9. a,
10. c.
11. Forecasting,
12. Advance planning,
13. Skills inventory.
14. Assist, counsel and pressurise,
15. Collect and summarise data,
16. Monitor and measure performance,

17. Provide the research necessary
1. Refer to 2.1 & 2.2
2. Refer to 2.3
3. Refer to 2.9
References:
MB0043-Unit-04-Recruitment and Selection

Unit-04-Recruitment and Selection
Structure:
4.1 Introduction
Objectives
4.2 Concept of Recruitment
4.3 Factors Affecting Recruitment
4.4 Sources of Recruitment
4.5 Recruitment & Selection Policies
Selection Policy
Recruitment Policy
4.6 Recruitment Practices in India
4.7 Selection Techniques

4.8 Summary
4.9 Caselet
4.11 Answers
4.1 Introduction
Work culture has a large influence on our lives. Most of our daily conversations revolve around
the job. People share opinion about how much they like/dislike their jobs. Our work is at the
centre of our life and it impacts our moods and our life style strongly. Viewed from the
organization’s point, it is equally important to ensure that the employees hired are the right
people for the jobs; a happy employee gives his best to the company. In this Unit we will focus
on understanding the art and the science of recruitment and selection in organizations.
While Human Resources Planning focuses on the planning part of the activity the
implementation of the plans happen with the effective execution of the recruitment and selection
processes. This unit focuses on the need for a structured approach to recruitment and selection
activities. The focus here remains, to ensure that the right number and the right kind of people at
the right places, at the right time. This ensures that both the individual as well as the
organizational succeed.
Objectives:
· Explain the critical role of recruitment
· Identify appropriate recruitment sources
· Discuss the selection tools and methods
4.2 Concepts of Recruitment
The ability to identify the correct talent for not just the role/job but also from the organizational
values perspective can be summarised as the key recruiting challenge. Figure 4.1 below provides
the framework used in organizations to plan and staff the human resources requirements of the
company.
Figure 4.1: Framework design of Procurement
While an organization might have established techniques of their own to hire, there is no easy,
fool-proof method for assessing a candidate even if for the simplest job. The time that today’s
organizations spend on this activity in not just planning for it but also its execution. The length
and complexity of the modern selection procedure are tangible evidence of this fact.
Recruitment or manpower selection process is the first step in the employment of talent and the
methods through which this talent is brought into a job has much to do with the ultimate success
or failure of such employment. It is a strange paradox that on one hand we have a surplus of
educated talent available in the market awaiting employment while on the other hand
organizations struggle to find the right talent. Therefore the employability of the educated talent
is fast emerging as the single largest challenge, for India at least.
Therefore recruitment has been regarded as the most important function of human resources
administration, because unless the right type of people are hired; even the best plans,
organization charts and control systems would be rendered ineffective. Careful recruitment of
employees is particularly important in India for at least two key reasons: (a) it is not easy to fire a
employee. It has both societal as well as legal implications. Labour Court adjudicating such
disputes would determine whether the termination of service was justified and to order
reinstatement if such order was appropriate. Organizations have to maintain clear documentation
of the performance of an employee which is objectively and fairly recorded to ensure that the
employee was given adequate opportunity to do the job and was supported by the employer in
this effort. Failure to carry out this procedure undermines the case if it goes to any judicial court.
(b) the chances of mismatching the job and the person are much higher in India. With resume’s
that carry fictitious information this challenge is compounded. Under these conditions, the
pressure to properly match a candidate to a job is only one-sided, that is, from employer’s side
only.
1. Recruitment or manpower selection process is the first step in the employment of

______________.
2. Since workers were drawn from the __________________, in the early days of industrial
evolution in India, factories found much difficulty in recruiting the necessary talent.
3. Matching the job with the suitable applicant is naturally, a __________.
4.3 Factors Affecting Recruitment
All organizations, whether large or small, do engage in recruiting activity, though not to the same
intensity. Few factors that impact the nature of recruitment:
i. The size of the organization- the smaller the organization the more the need to carefully
scrutinize the candidate for a job and the fitment to the organizational culture. The risk in case of
job-candidate mismatch can prove equally expensive for a smaller organization as compared to
the larger one.
ii. The employment conditions in the country where the organization is located- critically
impacts the recruiting strategy. The methods for recruiting, the selection tools that are most
suited and the legal framework that bear on the employer are some aspects that need to be
considered.
iii. The affects of past recruiting efforts which show the organization’s ability to locate and keep
good performing people- constantly reviewing the effectiveness of the recruiting methods and
the selection tools used, evaluating the success at-work of the new recruits are some methods
used by organizations to ensure that quality hiring practices are in-place.
iv. working conditions and salary and benefit packages offered by the organization – this may
influence turnover and necessitate future recruiting; (v) The rate of growth of organization- the
phase in the life-cycle of the firm is a measure of the recruiting effort
v. The level of seasonality of operations and future expansion and production programmes –
ensuring that the recruitment numbers come form a well-planned Human Resource Plan is
critical to ensure that there is no over-hiring or under-hiring of the required talent to achieve the
organizational objectives.
vi. Cultural, economic and legal factors – these too affect the recruiting and selection methods
that are used.

4.4 Sources of Recruitment
The sources of employees can be classified into two types, internal and external. Filling a job
opening from within the firm has the advantages of stimulating preparation for possible transfer /
promotion, serves as a key motivator for internal employees who are aspiring for a move,
increasing the general level of morale, and provides more information about job candidates
through analysis of work histories within the organization. A job posting has a number of
advantages. From the view point of the employee, it provides flexibility and greater control over
career progress. For the employer, it should result in better matches of employee and job.
However, not all jobs are posted by an organization internally. In opening a job for internal
aspirants an organization make a conscious decision and then moves forward. It is also possible
that organizations might post all job opening internally as well as externally and the internal
candidates compete for the job along with other external candidate. Whatever is the case, the
objective remains to find the ‘best person’ for the job.
In most instances, the jobs are posted on the employee intranet portals/ notice boards, though
some carry listings in the company newspapers. The posting period could be anywhere between
2-3 weeks, with the final decision for hiring being completed within 4-6 weeks. Internal
applications are usually open to all employees with a few restrictions such as tenure within the
company and poor performance issues if any. The present manager must keep in the loop and
usually his or her approval might be required to proceed with the application for the job opening.
Some organizations require immediate notification, while others inform only if the employee
qualifies as a prime candidate for the listed opening. The human resources team acts as a hub in
screening applications that are unrealistic, preventing an excessive number of bids by a single
employee, and counselling employees who are constantly unsuccessful in their attempt to change
jobs.
External recruitment is when the organization clearly prefers to hire from outside the
organization for the job. Organizations most definitely go for external hiring for lower level jobs,
when they are expanding, during phases of rapid growth and for positions whose skills/
experience specifications cannot be met by existing human resources.
Common outside sources available:
1. Advertising: In both the print as well as the web media. Among the best methods when the
organization needs to reach a large audience and usually at least 5-6 or more job openings. First,
advertisements can be placed in the appropriate media to be read by particular media groups.
Secondly, more information about the company, the job, and the job specification can be
included in the advertisement to permit some self-screening. Advertisement invites a fair amount
of poor candidate profiles and therefore a fair amount of time and effort of the firm’s recruitment
team is spent in screening. Often organization that can afford the cost, outsource this to a
placement agency those take care of the first few steps in the screening process.
2. Professional Placement organizations or recruiting firms or executive head-hunters:

maintain complete information about employable candidates, who usually are already employed
elsewhere. These consulting firms therefore maintain a active database of skilled and
experienced resources. They work closely with organizations through contractual agreements to
source appropriate candidates for the firm’s requirements. They recommend persons of high
calibre for almost any job in information technology, managerial, marketing and production
engineers’ posts. They have slowly and steadily emerged as extremely popular and fairly
effective means for find good resources. These firms are looked upon as ‘head hunters’, ‘raiders’
and ‘pirates’ by organizations which lose human resources through their efforts. However, these
same organizations may employ "executive search firms" to help them find talent.
3. Job Portals and Job Sites: Job portals are hosted by a recruitment agency with a large
database of skilled and experienced candidates. An organization looking for a particular skill set
can register on the portal for a monthly/quarterly /annual fee and browse for the desired
candidate profile and obtain a potential list of candidates who fit the profile. That these
candidates would be interested in a new job and would keen to move from the existing role/
organization is another matter all together. A significant amount of time and effort of the
recruitment team goes in reaching out to these candidates and validating that the information on
the resume is accurate and the person matches the requirement and that the candidate is indeed
looking to change the job. This is also a common sourcing method in organizations.
4. Employment Agencies: Additional screening can be affected through the utilization of

employment agencies, both public and private. Today, in contrast to their former un-popular
reputation, the public employment agencies in several States effective, particularly in the fields
of unskilled, semi-skilled and skilled operative jobs. In the technical and professional areas,
however, the private recruiters are doing most of the work.
5. Employee Referrals: Fast emerging as the latest most effective method is the referral route to
staffing. Friends and relatives of present employees are also a good source from which
employees may be drawn. In the current times when the talent market is most challenged, large
employers frequently offer their employees bonus or prizes for any referrals that are hired. This
is usually linked to the referred employee’s stay with the company for a specific length of time.
In these time of talent crunch that the organizations are facing they are constantly coming up
with innovative ways to hire good talent. Some companies maintain details of former employees
whose performance record was good to woo them back when there are new job openings for
which they are qualified.
6. Schools, Colleges and Professional Institutions: Popularly called Campus Recruitment,

organizations engage with education institutions that educate students for ready-to-work jobs,
like engineers and management graduates by offering opportunities for recruiting their students.
These institutions operate (usually annual) placement services / events where complete bio-data
and other particulars of the students are made available along with interviewing opportunities.
The companies that hire such resources maintain contact with Placement Bureaus of these
institutions and enlist with them to showcase the organization and carry out the selection process
for those who fit the organizations’ requirement and are interested. The prospective employers
can review credentials and interview candidates for management trainees or probationers.
Whether the education sought involves a higher secondary certificate, specific vocational
training, or a college background with a bachelor’s, masters’ or doctoral degree, educational
institutions provide an excellent source of potential employees for entry-level positions in
organizations. These general and technical/ professional institutions provide blue-collar
applicants, white-collar and managerial human resources.
7. Casual applicants: Unsolicited applications, both at the gate and through the Career site on
the web page and even on post mail, constitute a much-used source of human resources. But are
fast losing their value and are no longer counted as a valid method. Similarly unsolicited
applications for positions in which large numbers of candidates are not available from other
sources, the companies may gain keeping files of applications received from candidates who
make direct enquiries about possible vacancies on their own, or may send unconsolidated
applications. The information may be indexed and filed for future use when there are openings in
these jobs.
8. Indoctrination seminars for colleges professors are arranged to discuss the problem of
companies and employees. Professors are invited to take part in these seminars. Visits to plants
and banquets are arranged so that the participant professors may be favourably impressed. They
may later speak well of a company and help it in getting the required human resources.
9. Contractual Staffing: To adjust to short-term fluctuations in human resources needs, it is

commonplace in organizations to contract employees of another employer by the hour or day.
While this practice has been particularly well-established in the office administration field today
almost any job can be sub contracted through a third party vendor with whom the firm enters into
a contract. This way the firm not only obtains well-trained and selected human resources while
its liability as a permanent employer of the resources is absolved.
10. Voluntary organizations: such as private clubs, social organizations might also provide
employees – handicaps, widowed or married women, old persons, retired hands, etc., in response
to advertisements.
11. In most instances, the jobs are posted on______________, though some carry listings in the
company newspapers.
12. Friends and relatives of present employees are also a good source from which employees
may be drawn, this is done through ______________________.
13. _______________ are firms that are looked upon as ‘head hunters’, ‘raiders’ and ‘pirates’ by
organizations which lose human resources through their efforts.
14. ____________ is the hiring of relatives which will be an inevitable component of recruitment
programmes in family-owned firms.
Activity 1:
Ask some of your friends or relatives who have attended a job interview and
answer the following questions:
a) What was the method the firm was using to find suitable job candidates?
b) How effective do you think they would be in finding the right candidate
c) What suggestions would you make to the employer of the firm on

choosing a better recruiting method?
4.5 Recruitment & Selection Policies
4.5.1 Selection Policy
The selection procedure is essentially a series of methods of securing pertinent information about
the applicant and qualifying him/her as a potential candidate with as close fit as possible to the
job criteria. At each step in the selection process the objective is to learn more about the
candidate and evaluate him against the job requirements. The information obtained can then be
compared with the job description/specification. If the applicant qualifies, he or she advances to
the next step. Sometimes organizations might evaluate information from multiple selection tools
simultaneously to eliminate of qualify a candidate to the next round in the selection process.
Thus, the job specification and the job applicant are interrelated at each step in the selection
procedure.
4.5.2 Recruitment Policy
Once the HRP process has concluded with the determination of human resources requirements
for the year ahead, the recruitment and selection process can begin. Very often, recruitment is
misunderstood as filling a current vacancy. Increasingly organizations are focusing on
recruitment and selection process to hire a high potential candidate who the management expects
to become important in the future scheme of things. Recruitment is the process of searching for
prospective employees and stimulating them to apply for jobs in the organization. It is often
termed "positive" in that its objective is to increase the selection ratio, that is, the number of
applicants per job opening.
Dale Yoder and others point out: "Recruitment is a process to discover the sources of manpower
to meet the requirements of the staffing schedule and to employ effective measures for attracting
that manpower in adequate numbers to facilitate effective selection of an efficient working
force". In terms of Stahl, recruitment is the corner stone of the whole human resources structure.
Recruiting sources as discussed above should be periodically evaluated. Some common metrics
used are, cost per applicant, the applicant/ hiring ratio, tenure, performance appraisals, etc.
Recruiting should take into consideration ethical practices, such as use of "truth in hiring" i.e.,
telling an applicant all about the firm and its position, both good and bad, to enable him to decide
whether or not to join the firm, is selected.
A successful and effective recruitment programme necessitates a well-defined recruitment
policy, a proper organizational structure, and procedures for locating sources of manpower
resources, suitable methods and techniques for utilizing these and a constant assessment and
consequent improvement. Often organizations have a clearly laid down process document for
recruitment to ensure that quality hiring take place.
15. The selection procedure is essentially a series of methods of securing pertinent information
about the _____________.
16. The real purpose of recruitment is not to fill up a vacancy but to add a person to the staff
whom the management expects to become important in the ____________ of things.
17. Sources for recruiting should be periodically _____________.
18. Recruiting should take into consideration ethical practices, such as use of
_________________
4.6 Recruitment Practices in India
The different sources for recruitment in India have been classified thus:
(i) Within the organization; (ii) Badli or temporary workers; (iii) Employment agencies; (iv)
Casual Callers; (v) Applicants introduced by friends and relatives in the organization; (vi)
Advertisements; and (vii) Talent contractors.
All public sector enterprises are required to consider candidates sponsored by the Employment
Exchanges and, in most cases, confine the selection to these candidates. However, the private
sector is not under any such formal obligation. Under the Apprentices Act, 1961, young
craftsmen having received pre-employment training in Industrial Training Institutes have to be
employed by ’specialized’ industries during training period as a percentage of the total number
of regular employees. Reservation of 25% of vacancies for Scheduled Castes and Scheduled
Tribes candidates and preferential treatment of displaced persons is a part of statutory
requirement of Government and-public sector employment in India.
The question of preference to "Sons of the Soil" i.e., local population in the matter of
employment within the local area has, of late, assumed a complex character. In this connection,
the National Commission on Talent has observed: "The solution has to be sought in terms of the
primary of common citizenship, geographical mobility and economic feasibility of locating
industrial units, on the one hand, and local aspiration on the other."
The recruitment of managerial human resources in most organized industries is generally by

promotion from within the organization. Some industries first recruit a number of young people’s
as management trainees and groom the ones with high talent potential to take on senior roles and
responsibilities. However it is also common in organizations to hire managerial talent from
outside, if sufficient internal candidates are not available. External candidates enable an
organization to bring in more industry knowledge and talent and keep the organization young
and creative. The large and growing organizations enlist with and compete aggressively to woo
talent from premier institutions such as the Indian Institutes of Technology, Indian Institutes of
Management and from Universities offering MBA courses to obtain the best of talent.
In the Indian organization where interviews are one of the most popular methods for selection,
one of the key challenges is the availability of skilled interviewers. Managers are mandated to
undergo training for effective interviewing skills and often need to be certified before they can
interview and qualify candidates for a job/position.
19. All public sector enterprises are required to consider candidates sponsored by the
__________________________.
20. Executives too are mostly ___________ from within.
21. _______________, in other words, local population in the matter of employment within the
local area has, of late, assumed a complex character.
22. In the Indian organization where ________________are one of the most popular methods for
selection
4.7 Selection Techniques
There is no shortcut to fair and accurate evaluation of a candidate. As mentioned earlier, the
hiring procedures are therefore, generally long and multiple. Organizations are constantly
evaluating the selections tools they use to hire and keep innovating to ensure they hire quality
candidates.
The following are popular methods commonly used:
1 Initial or preliminary interview
2 Application blank or blanks.
3 Check of references.
4 Skill / Psychological tests.
5 Employment interview
6 Approval by the manager.

7 Medical examination.
8 Induction or orientation.
4.7.1 Preliminary Interview
The more non-selective the recruitment programme, the more likely it is that a preliminary
interview will be required. This initial interview is usually quite short and has as its object the
elimination of the obviously unqualified. In many instances it is a over-telephone / short face-to-
face interview conducted at a desk. The facts and impressions collected are of the type generally
obtained in an initial interview. Many firms do not bother to initiate any paperwork at this early
stage. If the applicant appears to have some chance of qualifying for existing job openings, he or
she is given the application blank to complete.
4.7.2 Application Blank
An application blank is a traditional, widely accepted template for getting information from a
prospective applicant. This enables the recruiter to qualify the candidate to the next level in the
selection process and is used extensively subsequently during the selection process. The blank
aids in the interview by indicating areas of interest and discussion. It is a good means of quickly
collecting verifiable basic historical data from the candidate. It also is a excellent document to
share with the manager and with the interviewers and is a useful device for storing information
for, later reference. These templates generally carry information on biographical data,
educational attainment, work experience, salary, personal items, and other items such as names
and addresses of previous employers, references etc.
Manual Employees
Figure 4.2: A Specimen of a Short Application Form for Unskilled
Physical disabilities:
Have you ever worked for this concern before? : Yes/No
Engaged/Not Engaged………… Department……………………

Due to Start………………….. …………………………. Interviewer……………………
4.7.3 Check of References
The use of references is common in most selection procedures. It involves minimum of effort
and time/money. The objective is to obtain evaluation of prior employers and professional
colleagues, who have known the candidate in a professional capacity. Checks on references are
made by mail or telephone, and occasionally in person, and by using a reference form.
4.7.4 Skill & Psychological Tests
The next step in the procedures outlined above is that of testing. The use of tests is common and
most popular in the lower levels in an organization. It serves as a excellent qualifying criteria and
in jobs that are dependent on a skill or a specific competency it is very useful. The objectivity of
the test results make it especially popular and a fair assessment of the individual.
Most organizations do not use psychological tests. However, there is a direct relationship
between the size and firm and the use of such tests in hiring. Most of the larger companies that
can afford to have a more detailed and accurate selection procedure do utilize some form of
employment testing. It is the smaller company that frequently does not bother with tests, but
places greater reliance upon the interview.
4.7.5 Interviewing
Interviewing is probably the most widely used single method of selection. A substantial amount
of subjectivity, and therefore, unreliability, is to be expected from interviewing when used as a
tool of evaluation.
The interview consists of interaction between interviewer and applicant. If handled properly, it
can be a powerful technique in achieving accurate information and getting access to material
otherwise unavailable. Organizations aware of the challenges of using interviews have come up
with a variety of ways to overcome the subjectivity. The use of multiple rounds of interview
(even upto 8-10 rounds) and use of panel interviews are some common work-around.
Four kinds of interviews for selection have been identified. These are:
1. Preliminary interview: These interviews are preliminary screening of applicants to decide

whether a more detailed interview will be worthwhile. The applicant is given job details during
the interview to afford him freedom to decide whether the job will suit him. This method saves
the company’s time and money.
2. Stress interview: Stress interviews are deliberate attempts to create pressure to observe how an
applicant performs under stress. Methods used to induce stress range from frequent interruptions
and criticism of an applicant’s opinion, to keeping silent for an extended period of time. The
most important advantage of the stress interview is that helps to demonstrate important
personality characteristics which would be difficult to observe in tension-free situations.
However, stress-inducing must be done carefully by trained and skilled interviewers.
3. Depth interview: Depth interviews cover the complete life history of the applicant and include
such areas as the candidate’s work experience, academic qualifications, health interest, and
hobbies. It is an excellent method for executive selection, performed by qualified human
resources.
4. Patterned interview: Patterned interviews are a combination of direct and indirect questioning
of the applicant. The interviewer has certain clues and guidelines to areas which should be
probed deeply and the interview also encourages the candidate to express the relevant
information freely.
After the patterned interview is complete, the interviewer should evaluate the candidate on the
basis of practical experience. According to R.N. McCurry and others, certain factors lead to
accurate predictions of the candidate’s suitability for a particular position. The factors are: (1)
basic character traits, (2) motivation, and (3) emotional maturity. One advantage of a patterned
interview is that systematic and chronological information is obtained, and hence this yields to
statistical analysis.
Interview Process
Since the interview is one of the most commonly used personal contact methods, great care has
to be taken before, during and after the interview.
Hiring managers/interviewers can prepare to go for a interview by

(1) familiarize oneself with the profile of the candidate by reviewing the resume and to identify
skills, incidents and experiences in the career of the candidate, which may answer questions
raised around the critical areas; and (2) identify and prepare critical areas in which questions will
be asked, depending on the ability and skills required for the job. If there is more than one
interviewer, some practice and mock interviews will help calibrate variations in individual
interviewers’ ratings.
The recommended first step in a interview is establishing "rapport" whereby putting the
Interviewee at ease; conveying the impression that the interview is a conversation between two
friends, and not a confrontation of employer and employee. One way to achieve this is by
initially asking questions not directly related to the job that is, chatting casually about the
weather journey and so on. Once the Interviewee is put to ease the Interviewer starts asking
questions, or seeking information related to the job. After this phase, the interviewers could
move to ask detailed questions around the experiences and the skills, and make a tentative
decision about the candidate.
Characteristics of "good interviewers”, commonly quoted
1. Knowledge of the job and its responsibility

2. Emotional maturity and a stable / unbiased personality.
3. Sensitivity to the interviewee’s feelings, ability to ask questions tactfully rather than directly
4. Extravert behaviour, open and considerable physical stamina.
Activity 2:
Continuing with the Activity 1, what was the experience your friend faced
during the interview process
Now try to find out the Answer for the following:
d) How many rounds of interview did they face and what was being
assessed?
e) Do you think a stress interview serve the purpose of hiring for the job
Some Issues
Despite the almost universal use of the interview for selection, very little information is available
on its reliability and validity. As discussed earlier some of the key challenges are:
1. The most important issue is that of differentiating interview data from interviewer’s data. In
most cases the validity assessed is interviewer’s validity rather than that of interview
information. In the process one evaluates the interviewer’s biases and responses instead of
evaluating the interviewee per se.
2. Inconsistency and lack of standardization in interviewers’ behaviour can make a noticeable

difference in the behaviour of interviewees. Highly structured interviews reduce this variability
and permit little individuality.
3. There is great subjectivity in interviews. In fact most of the objective factors are assessed by
tests and application blanks.
4. The interviewer should possess a level of intelligence which is at least equal to the
interviewee’s. Sheer glorification of the role is unethical because lack of maturity in decision-
making can affect applicants.
5. The length of the interview is important. That is why; many interviews are of predetermined
length due to an appointment schedule.
6. The interviewee is as much entitled to know about the job and his suitability to it as the
interviewer.
4.7.6 Approval by the Manager

Following the outlined procedure, we should now be of the opinion that a candidate who has
successfully completed all steps so far should be hired. In executing the recruitment unit
screening functions, the emphasis tends to be more on formal qualifications and general
suitability. When the manager takes over, the emphasis tends to switch toward more specifically
job oriented worker characteristics such as training and relevant past experience.
4.7.7 Medical Examination
The medical examination is an employment step found in most businesses. It can vary from a
very comprehensive examination and matching of an applicant’s physical capabilities to job
requirements to a simple check of general physical appearance and well-being. In the selection
procedure the physical examination has at least three basic objectives. First, it serves to ascertain
the applicant’s physical capabilities.
The second objective of the examination is to protect the company against unwarranted claims
under workers’ compensation laws, or against lawsuits for damages. And the final objective is to
prevent communicable diseases from entering the organization.
4.7.8 Induction
Induction is concerned with introducing or orienting a new employee to the organization.

Organizations could have induction programs of duration of
1-3 days and even up to 1/3/6 months. Common objectives of an Induction program can be listed
as covering:
1. Overview of the organization, its history, its hero’s and important stories in the life of the firm
so far like mergers, acquisitions, JV’s, expansion in new countries etc…
2. Organization Vision / Mission and Objectives statement, its structure, hierarchy of the top and
the senior management, structure of the teams/divisions, focus on the division the employee/s
is/are joining
3. Overview of the HR policies and processes and introduction to the Facilities team, IT team
and other relevant teams per the location of joining.
4. Handover to the manager and induction at a team level on specificities related to the job and
its responsibilities.
Organizations also build processes by which the new employee provides feedback on the on
boarding experience and use this information to improve the Induction process. In as much as
various firms report that over half of their voluntary resignations occur within the first 6 months,
proper orientation can do much to reduce this problem and its accompanying costs.

23. An ……………is a traditional, widely accepted device for getting information from a
prospective applicant
24. ……………… is probably the most widely used single method of selection.
25. ……………… are deliberate attempts to create pressure to observe how an applicant
performs under stress.
26. ……… cover the complete life history of the applicant.
27. ………….. Is a combination of direct and indirect questioning of the applicant?
28. ……….. is concerned with the problem of introducing or orienting a new employee to the
organization.
4.8 Summary
· Recruitment is the process of searching for prospective employees and stimulating them to
apply for jobs in the organization.
· Recruitment or manpower selection process is the first step in the employment of talent
· Sources for recruiting should be periodically evaluated. A successful and effective recruitment
programme necessitates a well-defined recruitment policy, a proper organizational structure, and
procedures for locating sources of manpower resources, suitable methods and techniques for
utilising these and a constant assessment and consequent improvement.
4.9 Caselet
Recruitment sites woo first-time job seekers
By Anjali Prayag
“Travelling across the country for campus hiring has become an expensive process and
companies were looking for alternatives.”
Bangalore, May 11 The campus recruitment process, which had fallen into a pattern in the last
few years, has taken a new turn this year.
While some of last year’s recruits are yet to receive their joining dates, thanks to the slowdown,
students passing out this year will see little activity in the campus placement process.
Turning this slump into a business opportunity, online job sites are focusing their services on this
new category of users.
Naukri.com is beta testing Firstnaukri.com, a job site targeted at graduates ready for the job
market in 2009.
Mr Hitesh Oberoi, COO, Naukri.com, told Business Line that this was in response to clients
requesting Naukri to help them in campus hiring. Moreover, travelling across the country for
campus hiring has become an expensive process and companies were looking for alternatives, he
said. About 25 companies have already registered and 20,000 CVs have been posted on
FirstNaurki.com, said Mr Oberoi. Several institutes are interested in registering their students’
profiles on the site.
“This kind of campus-to-corporate online network will help companies reach out to a greater
number of students,” said Mr Srini Krishnamurthi, Managing Director, Expertus, a training
outsourcing firm that has just launched a job portal for engineering graduates. From a career
point of view, typical job sites do not work well for freshers as their needs are different.
“Seniors have social networking sites that help them in connecting with people. That’s why we
decided to launch c2c.com where students can participate in blogs and forums and get news
about the industry, and who’s hiring.”
To help freshers, JobStreet India is adding a bunch of skill tests in TestBench, a job seeker self-
assessment product in its portfolio, said Mr Anand Iyer, CEO, Jobstreet India.
This product offers aptitude and skill tests which job seekers (most of the time freshers) would
find useful to assess their current competencies at their own pace, and choose to take remedial
measures to become better qualified in the shrunken job market, said Mr Iyer.
Friendly portal for job seekers
By G. Naga Sridhar
Hyderabad, March 23 If you are one of those who lost your job due to recession, here is some
good news. There are “friends” who wish to help you find a job soon.
What you need to do is post your CV on www.asksaurabh.com, a portal set up by Pune-based Mr

Saurabh, who recently lost his job in Yahoo, along with his friends Mr Anthony, Mr Iqbal
Gandham and others.
At the very outset, the portal lists three rules: no job consultants, no fake jobs/profiles and no
charges for matchmaking. It also asks the users upfront to “kindly respect the three rules of this
free service.”
One can post CV and jobs in a wide range of areas such as design, engineering finance, general,
HR, quality assurance, testing and software development, among others.
“Our philosophy is simple, if we can help one person get back into a job, our Web site would
have done its job,” Mr Iqbal told Business Line. Asksaurabh is not allowing recruitment agencies
to post, and there is no charge for posting.”
Besides the concept of “a friend in need is a friend indeed”, what gave birth to the Web site is an
inspiration from Purple People Collective (PPC), a site that helps match up IT professionals who
are looking for people and those who need jobs in the US and Europe.
“It all started when we visited our friend Saurabh in Bangalore who had just been laid off by
Yahoo!, and was looking for a new job,” said Mr Anthony over phone from Pune.
“The Indian IT landscape and talent pool, with its different requirements, offerings and prices,
requires its own dedicated site (like PCC),” he added.
The response has been “amazing” – 60 companies posted their requirements in the last 20 days
while over 500 job seekers signed up for posting their CVs and finding prospective employers.
“The site is still in its infancy. Going forward, we believe the response would be more along with
the number of people benefiting out of this,” said Mr Anthony.
Source : Business line May 12th / May 24th 2009
1. Discuss any 3 common sources of Recruitment
2. Why interviews are considered a common method for selection?
3. Discuss the types of interviews
4. What are some unique challenges that India faces?
5. Why is ‘physical examination’ included as part of selection in some companies?
4.11Answers
1. talent,
2. rural population,
3. two-way process
4. the size of the organization;

5. the employment conditions in the community where the organization is located;
6. the effects of past recruiting efforts which show the organization’s ability to locate and keep
good performing people;
7. working conditions and salary and benefit packages offered by the organization — which may
influence turnover and necessitate future recruiting;
8. the rate of growth of organization;
9. the level of seasonality of operations and future expansion and production programmes; and
10. cultural, economic and legal factors
11. Notice boards
12. Employee referrals
13. Executive search firms
14. Nepotism
15. Applicant,
16. future scheme,
17. evaluated,
18. "Truth in hiring".
19. Employment Exchanges,
20. promoted,
21. "Sons of the Soil"
22. Interviews
23. Application blank
24. Interviewing
25. Stress interviews
26. Depth interviews

27. Patterned interviews,
28. Induction.
1. Refer to 4.4
2. Refer to 4.8
3. Refer to 4.8
4. Refer to 4.6
5. Refer to 4.8.
References:

Cascio
MB0043-Unit-05-Training and Development

Unit-05-Training and Development
Structure:
5.1 Introduction
Objectives
5.2 Meaning of Training
5.3 Objectives of Training

5.4 Importance of Training
5.5 Assessment of Training Needs
Organization Analysis
Task Analysis
Man Analysis
5.6 Execution of Training programs
5.7 Types and Techniques of Training
5.8 Role of Management Development
5.9 Evaluation of Training Effectiveness
5.10 Why Training Fails?
5.11 Summary
5.12 Caselet
5.14 Answers
5.1 Introduction
How did you learn to tie a shoelace? How did you learn to cook? How did you learn about a new
country you are planning to visit? Everything you know in life, almost everything, has been
taught to you at some point of time. Parents, relatives, teachers in schools/colleges, friends and at
work colleagues are usually the ones imparting the knowledge or skill that you need at every
stage in life. In this unit we will spend time understanding the concepts that drive adult learning
and skills training in organizations.
Every organization needs to have well-trained and experienced personnel to perform the tasks
that need to be done. Today’s organizations invest a lot of time, effort and resources on training
the up-skilling (improving the skills) and even multi-skilling (having employee learn multiple
skills). Traditionally training focus in organizations revolved around those employees who could
not do a particular job well, or those planning to change a job. Inadequate job performance or a
decline in productivity or changes resulting out of job redesigning or technological changes
required training to bring about the desired shift in performance/behaviour. As the jobs become
more complex, the importance of employee training also increases. Today increasing
organizations are investing in employee training as a method to facilitate continuous learning,
innovation, creativity and particularly managerial excellence training and development. Training
is as much about employee development and to retain employee motivation and growth within
the firm.
Objectives:
· State the importance of Training.
· List out the types and Techniques of Training and Development.
· Explain the types, methods and procedures of training.
5.2 Meaning of Training
The term, ‘training’ indicates any process by which the aptitudes, skills and abilities of
employees to perform specific jobs are increased. Usually training and development initiative in
organizations have the following intentions:
· To improve skills,
· To add to the existing knowledge so that the employee is better equipped to do his present job,
to innovate,
· To prepare him/her for a higher position, growth within the organization.
· Help organization cope with / adapt itself to a changing environment.
Training refers to the teaching/learning activities carried on for the primary purpose of helping
employees in an organization to acquire and apply the knowledge, skills, abilities and attitudes
needed by that organization. Broadly speaking, training is the act of increasing the knowledge
and skill of an employee for the benefit of both the employee as well as the firm.
1. ___________ indicates any process by which the aptitudes, skills and abilities of employees to
perform specific jobs are increased
2. The concern is for the organization’s variability, that it is should adapt itself to a
______________________.
3. Broadly speaking, training is the act of increasing the knowledge and skill of an employee for
doing a _____________.
5.3 Objectives of Training

The chief aim of learning for the manager is to increase his ability to learn from experience. The
second aim is to increase his ability to help his subordinates learn from experience. According to
Douglas McGregor, there are three different purposes of learning.
1. Acquiring Intellectual / job-related Knowledge: An electrical engineer may need more

knowledge than he now possesses about circuit design. A new employee may require knowledge
about company policies. A shop floor employee may need to be made aware of information
about the new performance appraisal or compensation policy or changes to it. The acquisition of
knowledge therefore is a fairly straight-forward process provided the individual wants the new
knowledge. However, if he does not want the knowledge, there is little doubt that training will
fail. Creating a self-driven need for knowledge is fundamental to employee learning.
2. Acquiring Manual Skills: The acquisition of a manual skill requires practice or experience
along with feedback. While learning can happen in a isolated self-learning mode, it can be
significantly speeded up by guidance and theoretical knowledge imparted by experts. The end
objective remains that the employee be able to execute the skill effectively back on the job.
Learning is enhanced when the employee receives clear feedback which tells him about the
success of his efforts. The necessary effort will be expanded only if there is a felt-need on the
part of the learner.
3. Acquiring Managerial Skills: Much of a manager’s work is managing people and solving
problems. These include organizing his own and his team member’s work activities, and
planning for a wide range of other decision-making responsibilities. These are skills include
diagnosing problems, interpreting relevant data, assessing alternative solutions and getting
feedback concerning the effectiveness of the solution. These skills can be improved through
classroom training.
As with any skill, practice and feedback are essential for learning. The most widely used
classroom method for improving the problem-solving skills is the case method. In the hands of a
skilful teacher, it can be highly effective.
4. According to Douglas McGregor, there are three different purposes of learning

_______________, __________________, ______________.
5. A new employee may require knowledge about __________________.
6. Much of a manager’s work is____________________.
5.4 Importance of Training
Training is an important investment an organization makes for making its employees more
effective and productive. Training is a practical and vital necessity because; it enables employees
to develop and build careers within the organization, and increase their skill levels and market
worth, earning power and enhanced job security. In a way it improves retention as employees
will look internally to build careers by picking up the requisite skills. On the other hand
behavioural training has a significant impact on improving/changing employee’s attitudes and
workplace co-operation including, greater loyalty to the company. Training also influences
employee morale, for it found to help in reducing dissatisfaction, complaints, grievances and
absenteeism, reduces the rate of turnover.
Organizations are increasingly investing more and more in training and development initiatives.
While the direct benefits from training are not specifically measurable there are numerous
research studies that have confirmed positive correlation between organizational success and the
amount of investment in training initiatives.
Given this background, training in organizations is managed scientifically and practiced in the
following 3 key steps:
1. Assessments of Training Requirements
2. Execution of Training Programs
3. Evaluation of Training Effectiveness
The rest of this session focuses on understanding the activities that pertain to these steps.
7. Training is a practical and vital necessity because; _______________
8. It moulds the employee’s ______________ and helps them to achieve a better co-operation
with the company and a greater loyalty to it.
9. Over and under-emphasis on training stems largely from ___________.
5.5 Assessment of Training Requirement
Given the investment that organizations make in training it is critical for organizations to ensure
that the money is rightly spent. Training needs consider both the organization’s demands and that
of the individual’s. Diversification of product lines, new technology, and hence a new kind of
job, or a shift in organizational culture or ways of conducting business are common
organizational needs that cover most employees in the company. On the other hand demands that
pertain to individual’s growth and development, including induction training for new hire’s, or
training necessitated by job rotation due to an organization’s internal mobility policies are
examples of individual need based training.
The model we shall examine here is the Thayer and McGhee model. It is based on the following
three factors:
1. Organization analysis
2. Task analysis
3. Individual analysis
5.5.1 Organization Analysis
Total Organization Analysis is a systematic effort to understand exactly where training effort
needs to be emphasized in an organization. It involves a detailed analysis of the organization
structure, objectives, human resources and future business plans, and an understanding of its
culture.
The first step in organization analysis is establishing a clear understanding of both short-run and
long-run business and people goals. Long-term objectives are the broad directions in which the
organizations would move over a long duration. These long-term objectives are then broken
down into specific strategies and short-term goals for each of the units/departments. In an
organization, the cumulative effect of all these would ultimately lead to the long-term goal.
Short-term goals are constantly in need of adaptation to the changing environment, both external
and internal.
For an organization analysis, there are three essential requirements: (1) an adequate number of
employees available to ensure fulfilment of the business operation; (2) that employee
performance is up to the required standard; and (3) that the working environment in their
units/departments is conducive to fulfilment of tasks.
In order to ensure the first two requirements a human resource inventory needs to be made. Data
regarding positions, qualifications, vacancies, replacements and training time required for
replacements have to be worked out. Job standards must also be worked out.
Various efficiency and productivity indexes, or ratios such a productivity ratios, cost per unit etc,
can be worked out to determine not only efficiency but also adequacy, in terms of under-
manning or over-manning, of the workforce.
An important dimension of organizational need-based analysis, is the diagnosis of the state of the
organization "climate" or “culture”. While rules, procedures, systems and methods all contribute
to the making of the environment, much of it is also determined by the attitude that the "people"
have in the organization-for instance, the attitude that top management has towards its
subordinate staff and the attitudes that members have towards work, Managers and company
procedures. These attitudes are learnt, they result from the person’s experience both within and
outside the organization, and training inputs could be used to effect changes of attitude and
consequently of the organizational climate.
In analyzing the organization climate, both direct and indirect methods could be
used. Direct methods are observation, use of questionnaires, and interviews.
Reliance or indirect methods would not give a clear understanding of the attitudes
and predispositions of employees. In fact, factors such as low absenteeism and low
turnover are not by themselves indicators of positive or negative attitudes, and high
or low morale. It would be better to make a careful analysis and study each
indicator in a particular situation in conjunction with more direct methods like
attitude surveys. Analysis and interpretation of the data may give clear clues not
only to attitudinal training needs but possibly also to kill training needs.
Activity 1:
Name some companies both Indian as well as foreign those are known for
ethical conduct.
5.5.2 Task Analysis
This activity entails a detailed examination of each job, its components, its various operations
and the conditions under which it has to be performed. The focus here is on the "task" itself and
the training required to perform it, rather than on the individual. Analysis of the job and its
various components will indicate the skills and training required to perform the job at the
required standard.
Standard of Performance: Every job has an expected standard of performance (SOP). Unless
such standards are attained, not only will inter-related jobs suffer, but organizational viability
will be affected, and so will the expectations that have been set for that particular job itself. If the
standards set for the performance of a job are known, then it is possible to know whether the job
is being performed at the desired level of output or not. Knowledge of the "task" will help in
understanding what skills, knowledge and attitudes an employee should have.
Methods: If an employee is asked to perform a job, the exact components of the job and the
standard of performance must be known. Task analysis entails not merely a simple listing of the
various job components, but also of the various sub-tasks. Conventional methods of job analysis
are usually suitable for task analysis. They are:
1. Literature review regarding the job.
2. Job performance.
3. Job observation,
4. Data Collection regarding job interviews.
For blue-collar employees, more precise industrial-engineering techniques, like time and motion
studies, could be used, and for white-collar employees, work sampling observation, interviews,
and job performance data analysis could be employed. The focus in task analysis approach to
identifying training needs is with the clear objective of enhancing the performance standard of a
given task. This information is then utilised to establish the training programme for the
employee. It helps identify the skill required, either in terms of education or training, to perform
the job, knowledge, and finally attitudinal pre-dispositions such as the attitudes, towards safety,
or interpersonal competence that will ensure that the job is performed optimally.
5.5.3 Individual Analysis
Individual analysis is the third component in identifying training needs. The focus of individual
analysis is on the individual employee, his abilities, and the inputs required for job performance,
or individual growth and development in terms of career planning.
The common source for this needs analysis usually forms parts of the performance assessment
process. Clues to training needs can also come from an analysis of an individual’s or a group’s
typical behaviour. The primary sources of such information are:
(1) Observation at place or work, examination of job schedules, quantum of spoilage, wastage,
and clues about interpersonal relations of the employees; (2) interviews with superiors and
employees; (3) comparative studies of good vs. poor employees, to identify differences, skills
and training gaps; (4) personnel records; (5) production reports; and (6) review of literature
regarding the job and machines used. Job-knowledge tests, work sampling and diagnostic
psychological tests also provide information about employees.
10. The first step in organization analysis is achieving a clear understanding of both
______________ and ________________.
11. In analyzing the organization climate, both ________________ and ______________ could
be used.
12. Analysis of the job and its various components will indicate the _______________.
13. Man analysis is the third component in identifying _________________.
14. ______________ helps to identify whether the individual employee requires training and if
so, what kind of was training.
5.6 Execution of Training Programs
Training is the responsibility of four key stakeholders:
a. The top management, which commits to the training initiative;
b. The personnel department, which frames the plans, establishes and evaluates training
programmes;
c. Managers, who support and help implement the training plan and apply developmental
procedure that will enable training e3ffectiveness at the workpalce; and
d. Employees, who provide feedback, revision and suggestions for corporate educational
endeavours.
According to Prof John Mee, the work of training should be done at two levels.
1. The training department should assume the primary responsibility for the instruction of
trainees in methods of teaching; for normal orientation; for the training of Managers in human
relations; for the development of executives, for co-operative education in schools and colleges;
and for the general education of employees.
2. Line Managers and employees should carry the bulk of the

teaching load in the following areas; on-the-job instruction of employees; instruction in the
technical and professional aspects of a business; daily development of superiors and executives
through counselling; departmental communication and staff meetings as part of an overall
training programme. It is needless to say that the top line executive has the responsibility for:
I. Authorising basic training policies;
II. Reviewing and approving the broad outlines of training plans and programmes; and
III. Approving training budgets.
There are several administrative aspects that have to be taken into account before launching in-
house training programme, or nominating participants to external programmes.
In-company/External Programmes: The Company needs to formulate its thinking regarding

participation in programmes offered by external agencies like educational management institutes,
government institutions and consultant programmes, vis-à-vis conducting its own in-house
programmes. Where employee numbers are small, it may not be worthwhile to set up a training
establishment and conduct in-house programmes, but as the numbers increase, this option may
offer a distinct possibility. There is the cost aspect to be considered: for the cost of sending a
participant to an external programme, several employees could be trained within an organization.
Yet, the advantage of an external programme would be a breath of fresh air through discussions
with other participants and a fresh approach could be brought into the organization and its
problems. The skills and techniques learnt may also be different from those offered by one’s own
in-house programmes.
Training Budgets: A training budget is usually prepared for a training year. This is the
responsibility of the training department. This would include cost of facilities like training room,
food, transport, trainer/guest faculty, and cost of teaching materials. In fact, the cost to the
organization should also include the wages and salaries of employee participants who would be
temporarily pulled out of their regular jobs and sent for training. The reason for costing the
trainee employee’s salary would be that they would not be making any contribution to the
company during the training period, and that this actually adds to the training costs. However
organizations are increasingly accounting for training man-days as a mandatory part of an
employee’s work life and are treated as investment made in the individual/ organizations’
success.
Once a set of training events are committed to and declared by the training department, the focus
shifts to planning for the program. A trainer needs to plan his training activities well in advance,
be it in-house company programme, in order that the lead time is adequate for preparation, both
for the nominee and the organization, without disruption of normal work. In the case of internal
programmes there is much more background work to be done by the trainer, in terms of course
design, preparation of teaching materials, announcement of the programme, receiving and sifting
of nominations, administrative arrangements such as training room, teaching aids and material,
food, transportation and accommodation arrangements. With regard to external programmes,
there is a need for taking into account organizational factors such as release of the nominee from
the job, temporary replacement and his career plans i.e., to what extent the employee would
benefit from the training programme either in terms of improved job performance, better
interpersonal competence, or preparation in terms of attitudes, concepts and skills for higher
responsibilities in the organization, given the career plans based on performance appraisals that
the employee and his manager have committed to. Career planning would take into account both
external and internal nominations.
Training methods are designed so as to ensure learning effectiveness and application back at
work. In fact, the different training methods are multifaceted in scope and dimension, and each is
suitable for a particular situation. The choice of a method would depend on a wide variety of
factors, such as competence of instructors, relevance to the participants, the programme design,
i.e., a particular method the best vehicle to put across the contents, and finally its cost
implications. The best method for one situation may not be the best for different groups or tasks.
Each method has structured procedures for conduct which offer certain advantages in developing
certain limited facts of a trainee, and suffer from some limitations. In adapting a particular
method, one should know its merits and demerits, given the situation, and analyze its relevance,
its purpose, and if it is useful, how to get the most of it. The trainer should know the rationale of
each of the methods before attempting to use any of them.
15. There are several administrative aspects that have to be taken into account before launching
______________________, or nominating participant’s ______________________.
16. A ________________ for each internal programme has to be prepared, which would include
cost of facilities like training room, food, transport, guest faculty, if any, and cost of teaching
materials
17. Training methods are a means of attaining the desired objective in a ________________.
5.7 Types and Techniques of Training
As discussed above, training methods have a number of overlapping objectives. They have to be
chosen carefully and in relation to the programme design objectives. The main objectives of
individual training methods could be: demonstration of value, developing interest and finally
appeal to senses.
Demonstration of Value: Complete demonstration of job requirements enables the trainee to
grasp the meaning of ideas, concepts, or procedures visually. Such a method can be used
effectively as an aid to overcome the "breakdown of communication". Trainees remember things
that they see and hear, much longer than they do information they receive through talks or
reading alone.
Engaging trainee Interest: One of the important factors to be kept in mind in choosing a
method is its ability to hold and arouse the interest of the trainee in the learning situation. A
trainee has to consider alternative methods of presenting training material to participants in order
to stimulate their interest and facilitate retention of the matter. For instance, if traditionally the
matter has been presented through lectures, perhaps audio visual methods could be used, or
instead project work be assigned which would mean learning by doing or researching the subject
oneself.
Appeal to multiple senses: From the trainer’s point of view, it would be beneficial to utilize as
many of the trainer’s senses as possible, in order to improve retention of learning. The trainer has
to understand and identify the problem area i.e., he has to examine whether there is a problem
with the manner in which the task is done. Secondly, selecting the appropriate method would be
dependent on the level of the trainee in an organization’s hierarchy. Finally, before selecting a
training method, the trainer should keep in mind about cost effectiveness.
Depending on the learning outcome, and the process by which it is attained, it is possible to
categorize the various methods into several groups.
On-the-job trainings: Since most jobs in a organization can be learned in a relatively short
period of time, this method is the most widely used. It has the advantage of strongly motivating
the trainee to learn since it is located in the artificial situation of a classroom. The fact that the
success of the system depends almost entirely upon the immediate supervisor, the trainer, means
that the personnel unit has a major responsibility for making a good, effective teacher out of
every supervisor. The supervisor typically follows a set procedure (as illustrated in the table) in
training an employee to perform a particular task. The suggestions accompanying each step are
general guides evolved from both experience and research.
Table 5.1 Table on Training Procedure
Step Suggestions
Instructor preparation 1. Divide task into logical parts to create lesson plans.
2. Select teaching techniques e.g., demonstration.

Training preparation 1. Place trainee at ease.
2. Relate training to trainee needs e.g. promotion.

Presenting the task 1. Present overview of task.
2. Proceed from known to unknown, easy to difficult.
3. Adjust pace to individual differences.
4. Go through task and explain each step.
5. Have trainee tell instructor what to do.

Tryout Performance 1. Have trainee explain each step prior to execution.
2. Be aware of learning plateaus to sustain motivation.
3. Provide feedback on progress.

Follow-up 1. Positively reinforce continuously at start.
2. Move to variable positive reinforcement schedule

as trainee matures.
Advantages: The main advantage of on-the-job training is that the trainee learns on the actual
equipment in use and in the true environment of his job. Secondly, it is highly economical since
no additional personnel or facilities are required for training. Thirdly, the trainee learns the rules,
regulations and procedures by observing their day-to-day applications. Fourthly, this type of
training is a suitable alternative for a company in which there are almost as many jobs as there
are employees. Finally, it is most appropriate for teaching the knowledge and skills which can be
acquired in a relatively short period i.e., a few days or weeks.
Disadvantages: The principal disadvantage of on-the-job training is that instruction is often

highly disorganized and haphazard and not properly supervised. This is due to such reasons as
the inability of the experienced employee to impart skills to the trainee, the breakdown of the job
for the purpose of instructions, and the back of motivation on the part of the trainee to receive
training. Further, the other drawback is the low productivity, especially when the employee is
unable to fully develop his skills.
Vestibule / Classroom Training: This method attempts to duplicate on-the-job situations in a

company classroom. It is a classroom training which is often imparted with the help of the
equipment and machines which are identical with those in use in the place of work. This
technique enables the trainee to concentrate on learning the new skill rather than performing an
actual job. In other words, it is geared to job duties. Theoretical training is given in the
classroom, while the practical work is conducted on the production line.
The advantages of using the vestibule-training system are the disadvantages of specialization.
The instructor, a specialist, should be more skilled at teaching. The student avoids the confusion
and pressure of the work situation and thus is able to concentrate on learning. One can also often
attain a given level of skill more quickly in the specialized learning situation. We have more
assurance that adequate time and attention will be given to training and that it will not slighted in
favour of other problems. More individualized instruction can be given, and training activities do
not interfere with the regular processes of production. Among the disadvantages are the splitting
of responsibilities leads to organizational problems. Second, an additional investment in
equipment is necessary, though the cost may be reduced by getting some productive work done
by trainees while in the school. Third, this method is of limited value for the jobs which utilize
equipment which can be duplicated and finally the training situation is somewhat artificial.
Apprenticeship programme: Apart from the requirements under Apprenticeship Act, various
industries have their own apprenticeship programme where in the employees are employed on a
small stipend to learn the job first and after satisfactorily completing the training they are
absorbed in the industry.
The advantages of this method are:
1. A skilled work force is maintained;
2. Immediate returns can be expected from training;
3. The workmanship is good;
4. The hiring cost is lower because of reduced turnover and lower production costs; and
5. The loyalty of employees is increased and opportunities for growth are frequent.
Work Simulation Methods: Simulation is a technique which duplicates, as nearly as possible,

the actual conditions encountered on a job. Generally, simulation techniques have been most
widely used in the aeronautical industry.
Knowledge-based Methods: In this method of training, an effort is made to expose participants

to concepts and theories, basic principles, and pure and applied knowledge in any subject area.
Basically, it is aimed at creating an awareness of the knowledge of fundamentals. The focus is
essentially on transmission of knowledge which has been imbibed by the participants. This
knowledge is the base, the foundation, on which further understanding can be built. The
categories of this method are lectures, seminars, workshops, films and training, group
discussions etc.
Experiential Methods: The emphasis in this category is on achieving through group processes
and dynamics, a better understanding of oneself and others. It has been asserted that attitudinal
training helps and individual to improve his comprehension of self, others, group behaviour and
personal interaction. Such knowledge and understanding helps an individual to understand the
problems of human relationships in a work situation, including at times his managerial style.
Such training is imparted on the job by the employees’ immediate Managers. It provides to the
trainees opportunities for getting acquainted with their managers. The managers, too, have an
opportunity to judge the abilities and possibilities of trainees from the point of view of their job
performance.
The success of this method depends upon the fact that:
1. The experienced Managers must be good teachers;
2. They should have incentives and sufficient time for carrying out the training programmes; and
3. They should be provided with an accurate account of the training needs of the trainees they are
to teach.
18. Depending on the __________________, and the process by which it is attained, it is

possible to categorize the various methods into several groups.
19. The main advantage of _____________________ is that the trainee learns on the actual
equipment in use and in the true environment of his job.
20. Theoretical training is given in the ________________, while the practical work is
conducted on the ____________________.
21. ______________ is a technique which duplicates, as nearly as possible, the actual conditions
encountered on a job.
22. The emphasis in __________________ is on achieving through group processes and

dynamics, a better understanding of oneself and others.
5.8 Role of Management Development
Per Dr. B. K. Madan "Management development is the development of management over and
above its science and theory, of its practice and application in organizations, corporations and
institutions, alike in relation to the organization and manager, so as continuously to re-equip both
to fulfil their purposes more effectively and in harmony with each other, and both with the
environment in which they function and have their being and hope to thrive upon and grow."
Executive/Managerial development is an attempt at improving an individual’s managerial

capabilities and effectiveness through a planned and deliberate process of learning. Today’s
organizations are making significant investment in building training infrastructure and
commitment towards this activity. In the famous words of Marcus Buckingham of Gallup,
‘’people don’t leave organizations they leave managers’’, managerial skills have come under the
spotlight and attract a lot of attention in organizations. Employee retention is a key metric to
track managerial effectiveness. Hence organizations are making investment in building capable
managers who will build teams that will drive organizational success. For an individual this
means a change through a process of planned learning.
The organizational aims of management development are to secure the following valuable end-
results:
1. Improvement in technical performance;
2. Improvement in supervision and leadership at each level;
3. Improvement in inter-departmental co-operation;
4. Highlighting an individual’s weaknesses;
5. Attracting good men;
6. Facilitating sound "promotion-from-within" policies and practices;
7. Ensuring that the qualifications of key personnel become better known;
8. Creating reserves in management ranks;
9. Making an organization more flexible by an increased versatility of its members;
10. Improving organizational structure;
11. Stimulating junior executives to do better work;
12. Keeping the company at least of technical and economic conditions; and
13. ‘Broadening’ key men in the middle cadre.
Therefore the anticipated change in the individual must take place in crucial areas which can be
considered as output variables:
1. Knowledge change;
2. Attitude change;
3. Behaviour change;
4. Performance change; and
5. End-operational results (the last two changes being the result of the first three changes)
While training can bring about the desired change in managerial effectiveness they are also
impacted by the following factors …..
a) Formal organization – how is authority and responsibility provided for within the
organization’s structure, how is the manager empowered, how is his/her success measured.
b) Leadership climate – how does the top/senior leadership of the company serve as role models,
do they practice what is being preached, how is good managerial leadership communicated and
reinforced
c) Cultural factors – how is good managerial capability recognised and rewarded, what
expectations are set with the employees/teams, how is leadership success communicated and
shared
In a nutshell, management development aims at securing management improvement not only in

the short run but as a on-going and continuous process of change.
23. Executive development is an attempt at improving an individual’s managerial effectiveness

through a ___________________________.
24. The change in the individual must take place in those crucial areas which can be considered
as output variables (mention any 2) ___________________.
25. The organizational aims of management development are to secure the following valuable
end-results: (mention any 3) ___________________.
Activity 2:
Training is considered as a tool to enhance knowledge and skill. Try to find

out from a person you know and who has attended the training answers to
the following questions:
· Did he learn from the learning?
· Was the training material sufficient enough?
· Did the training was structurally design or there were some loop holes?
5.9 Evaluation of Training Effectiveness
An objective of training evaluation is to determine the payoff from the training investment. It
focuses on the improvement of the participant in the training programme to perform jobs for
which they were trained, what was effective and what was not, whether the trainees required any
additional on the job training, and the extent of training not needed for the participants to meet
job requirements.
There are various approaches to training evaluation. To get a valid measure of training
effectiveness, the manager should accurately assess trainee’s job performance two to four
months after completion of training. However this focus is not easy to establish and track in most
organizations.
Per Kirkpatrick’s study, training effectiveness of outcomes can be measured:
1. Reaction: Evaluate the trainee’s reaction to the programme. Did he like the programme? Did
he think it worthwhile?
2. Learning: Did the trainee learn the principles, skills and fact that the supervisor or the trainer
worked them to learn?
3. Behaviour: Whether the trainee’s behaviour on the job changed because of the training
programme.
4. Results: What final results have been achieved? Did he learn how to work on machine? Did
scrap page costs decrease? Was turnover reduced? Are production quotas now being met? etc.,
Structured interviews with the immediate supervisor of the trainees are acceptable methods for
obtaining feedback in training. The supervisor is asked to rate the former trainee on job
proficiency directly related to the training objectives. Another approach is to involve the use of
experimental and control groups. Each group is randomly selected, one to receive training
(experimental) and the other not to receive training (control). The random selection helps to
assure the formation of groups quite similar to each other. Measures are taken of relevant
indicators of success (e.g. words typed per minute, units of work produced per hour etc.) before
and after training for both groups. If the results shown by the experimental group are
significantly greater than those of the control group, the training can be considered as successful.
Another common method is the longitudinal or time series analysis. A series of measurements
are taken before the programme begins and continues during and post completion of the
programme. The results are then plotted on a graph to ascertain changes if any, have occurred
and continue to remain as a result of the training investment that was made. In addition, pre-and-
post tests are administered to the training groups. Prior to the training, a test related to the
training material is applied, and the results of this pre-test are compared with results on the same
or similar test administered after the programme has been completed.
26. To get a valid measure of__________________, the personnel manager should accurately
assess trainee’s job performance two to four months after completion of training.
27. The _______________________helps to assure the formation of groups quite similar to each
other.
28. Another method involved in obtaining feedback on training effectiveness is
____________________________________analysis.
5.10 Why Training Fails?
The following factors have been considered as the main reasons for failure of training
programmes:
1. The top management is not committed to training and the benefits of training are not clear to
them.
2. The top management hardly rewards Managers for carrying out effective training.
3. The top management rarely plans and budgets systematically for training.
4. The middle management, without proper incentives from top management, does not account
for training in production scheduling.
5. Without proper scheduling from above, first line Managers have difficulty production norms if
employees are attending training programmes.
6. Behavioural objectives are often in precise.
7. Training external to the employing unit sometimes teaches techniques on methods contrary to
practices of the participant’s organization.
8. Timely information about external programmes may be difficult to obtain.
9. Trainers provide limited counselling and consulting services to the rest of the organization.
The training programmes can be made effective and successful if the following hints are
considered;
1. Specific training objectives should be outlined on the basis of the type of performance
required to achieve the specific organizational goals and objectives.
2. Attempt should be made to determine whether the trainee has the intelligence, maturity, and
motivation to successfully complete the training programmes.
3. The trainee should be helped to see the need for training by making him aware of the personal
benefits he can achieve through changes in behaviour.
4. The training programme should be planned so that it is related to the trainee’s previous
experiences and background.
5. Attempts should be made to create organizational conditions that are conducive to a good
learning environment.
6. If necessary; a combination of training methods should be selected so that variety is permitted

and as many of the senses as possible are utilized.
7. It should be recognized that all the trainees do not progress at the same rate. Therefore,
flexibility should be allowed in judging the rates of progress in the training programme.
8. If possible, the personal involvement or active participation of the trainee should be got in the
training programme. He should be provided with opportunity to practice the newly needed
behaviour norms.
9. As the trainee acquires new knowledge, skills or attitudes and applies them in job situations,
he should be significantly rewarded for his efforts.
10. The trainee should be provided with regular, constructive feedback concerning his progress
in training and implementation of the newly acquired abilities.
11. The trainee should be provided with personal assistance when he encounters learning
obstacles.
29. Specific __________________should be outlined on the basis of the type of performance

required to achieve organizational goals and objectives.
30. The training programme should be planned so that it is related to the trainee’s
_______________________and background.
31. If possible, the _______________________of the trainee should be got in the training
programme.
5.11 Summary
• The term, ‘training’ indicates any process by which the aptitudes, skills and abilities of
employees to perform specific jobs are increased.
• According to Douglas McGregor, there are three different purposes of learning.
-Acquiring Intellectual Knowledge
-Acquiring Manual Skills
-Acquiring Problem-Solving Skills

o Training increases the employee’s "market value", earning power and job
security.
o Training needs have to be related both in terms of the organization’s demands and
that of the individual’s.
o In analyzing the organization climate, both direct and indirect methods could be
used. Direct methods are observation, use of questionnaires, and interviews.
Reliance or indirect methods would not give a clear understanding of the attitudes
and predispositions of employees.
o Task Analysis entails a detailed examination of a job, its components, its various
operations and the conditions under which it has to be performed.
o If an employee is asked to perform a job, the exact components of the job and the
standard of performance must be known.
o Task analysis entails not merely a simple listing of the various job components,
but also of the relatively critical nature of the various sub-tasks.
o Training methods are a means of attaining the desired objective in a learning
situation.
o The choice of a method would depend on a wide variety of factors, such as
competence of instructors, relevance to the participants, the programme design,
i.e., a particular method the best vehicle to put across the contents, and finally its
cost implications.
o Structured interviews with the immediate supervisor of the trainees are acceptable
methods for obtaining feedback in training.
5.12 Caselet
Case Studies and Success Stories – Training and Development
A community resource
Multilink Community Services Inc was started in 1988 by a small group of migrants and
refugees who saw a need for English classes and support services for non-English speaking
people. Multilink became incorporated in 1989, took on its first funded program in 1991 and
now it operates 32 program on a weekly basis across six local government areas. The
organisation receives funding from local, state and federal government, but it also owns two
businesses – one that provides an interpreting and translating service; the other, a series of
multicultural card games for children.
Of the 330 people who work for Multilink, nearly all of its staff members are from different
cultural backgrounds and none of them are under 40 years of age. Multilink’s director Lynda
Ford is very happy with the results that have been achieved by these mature age employees.
‘They are honest, hardworking, loyal, insightful and always ready to help others,’ Lynda said.
‘They are happy to be working, taking the opportunities made available to them and they are
great resources, providing us with cultural and religious knowledge, contacts and language
skills.’
Training for its mature age employees remains one of Multilink’s most important issues. While
English literacy will always be a key concern, Lynda Ford has also identified what she calls
‘workplace literacy’ as another area that requires attention. ‘I believe that training issues were
greater for this culturally diverse workgroup as often they need skills, knowledge and experience
of Australian systems (education, employment, medical, drivers’ licences, telephone connections,
etc.) and conceptual skills to establish their programs, collect data, write reports and liaise with
government and other organisations.’
Having identified that there is a great need for it, Multilink encourages and supports continuing
training for its mature age employees. The organisation informs its staff about external training
opportunities, and it provides two hours per week study leave for full-time employees. Multilink
also conducts individual staff appraisals for all staff that identify training needs, and the
organisation has developed a 2005-06 training plan that offers a variety of practical and technical
sessions to staff.
Key to success and fulfillment
Career Keys is a non-profit organisation that provides community-based training and transition
support to young people, parents and socially disadvantaged groups to assist them with gaining
employment. It is the only organisation that is delivering this type of service in the Logan area.
Career Keys is about helping others to develop their confidence, work skills and the ability to
fulfil their career goals successfully, and most of its programmes are available free of charge.
Deidre Foreman, the general manager of Career Keys, has a staff of 20 employees – three
quarters of whom are much valued mature age workers. ‘I wanted to have a balanced workforce
and I have put in place on-going training that has given an opportunity for staff to adapt to new
skills as needed,’ Deidre said.
Because mature age people do not always have the confidence to sell themselves at job
interviews, Deidre believes that employers need to have skills to elicit information from potential
employees so that they can see what skills mature age job seekers may bring to the workplace.
She also has a policy of allowing her staff to work part-time – an arrangement that requires her
staff to share jobs and be multi-skilled.
Deidre Foreman, Marcella Mortimer and Elena Meale at Career Keys
ANZ Bank – Career Extension Program
ANZ Bank has implemented a ‘Career Extension Program’ which seeks to retain mature age
workers who are thinking of retiring by giving them access to options other than full retirement
from work.
This initiative offers flexibility to mature age staff members so they can consider staying with
ANZ beyond the traditional retirement age in a way that works for them as well as the business.
ANZ has a number of options to help mature age employees to reassess their careers, including:
· part-time work
· job-sharing
· mentoring/coaching roles
· working from home
· purchased leave
· career breaks
· ‘Lifestyle’ leave
ANZ also offers an Alumni program which keeps the door open to retired employees and those
enjoying a break from the workforce.
For more information about ANZ Bank’s Career Extension and Alumni programs, click on the
following links:
Source: http://www.deewr.gov.au/Employment/Programs/Jobwise/Employers/Pages/case05.aspx
1. What is Training? What are its objectives?
2. What do you mean by Training Organisation? How organisations design a Training system?
3. Discuss various methods of Training available with their respective limitations.
4. What are the objectives of Training Methods?
5.14 Answers
1. Training,
2. Changing environment,
3. Particular job
4. Acquiring Intellectual Knowledge, Acquiring Manual Skills, Acquiring Problem-Solving

Skills,
5. Company policy,
6. Solving problem
7. "Market value", earning power and job security,
8. Attitudes,
9. Inadequate recognition and determination of training needs and objectives.
10. Short-run and long-run goals,
11. Direct and indirect methods,
12. Skills and training required to perform the job at the required standard,
13. Training needs,
14. Man analysis
15. In-house training programme, to external programmes,
16. Training budget,
17. Learning situation,
18. Learning outcome,
19. On-the-job training,
20. Classroom, production line.
21. Simulation,
22. Experiential Methods
23. Planned and deliberate process of learning,
24. Knowledge change, Attitude change,
25. Improvement in technical performance; Improvement in supervision and leadership at each

level; Facilitating sound "promotion-from-within" policies and practices
26. Training effectiveness,
27. Random selection,
28. longitudinal or time series

29. Training objectives,
30. Previous experiences,
31. Active participation
1. Refer to 5.2 & 5.3
2. Refer to 5.6
3. Refer to 5.7
4. Refer to 5.7 & 5.8
Reference:
Human Resources Management by Fisher, Schoenfeldt and Shaw
MB0043-Unit-06-Employee Growth
Unit-06-Employee Growth
Structure:
6.1 Introduction
Objectives
6.2 Concept of Employee growth
6.3 Career Planning
6.4 Promotions and Internal Job Posting
6.5 Succession Planning
6.6 Other Career Programs

6.7 Summary
6.8 Caselet
6.10 Answers
6.1 Introduction
Business environment is turbulent and complex as never before. While you might find some
speak positively or others might be sceptical and highly pessimistic about it. What therefore
strikes us as corporate professionals is the impact it has on our careers and future at the
workplace. This unit dwells on the provisions for employee growth and development that
organizations provide for.
A few decades ago, the contracting which an employee entering a firm focused on was work
hard, perform well, remain loyal and committed, and thereby receive an even greater reward and
job security. This has swiftly been replaced with a new contract based on continuous learning
and identity change.
Now more than ever, individuals need to develop new and better personal skills of self-
assessment and career planning, especially because the onus for career advancement is
essentially driven by an individual, while the organization supports the process with the required
provisions from a policy and investment perspective. The ideal career is one that is drive by the
individual and not the organization. It can therefore be reinvented by the individual from time to
time, depending on what he/she discovers as new strengths and opportunities that the market
provides.
Objectives:
· List the components of employee growth
· Describe the dimensions of career planning
· Review promotions and internal job postings
· Discuss Succession planning
· Evaluate other programs for special employee growth.
6.2 Concept of Employee growth

Increasingly organizations have become more active in implementing employee growth
programs. Companies are designing employee growth programs to increase employee
productivity, control attrition, prevent job burnout and obsolescence, and improve the quality of
employees’ work lives. Human Resources department of almost all large companies and most
medium sized companies have taken a greater interest in employee development programs.
Human Resources professionals have never before faced so many challenges in meeting the
needs of individual employees and organizations in designing career systems. To cope in
today’s’ turbulent times, it has become increasingly important, as a key talent management
agenda, for both organizations and employees to better redress employee career needs. It is the
employee’s responsibility to manage his or her own career, while it is the employers’
responsibility to provide employees with the tools and opportunities to enhance their skills. The
end objective however remains, for the organizations to have a career-resilient workforce, one
that has self reliant workers who are capable of reinventing themselves to keep up with the fast
pace of organizational changes and fulfil their career aspirations, without feeling the need to
moves companies in search of better career opportunities.
What this essentially means can be summarised under the following key initiatives that are
commonly practiced in organizations today:
• Career Planning and development

• Promotions and Internal Job Postings
• Succession Planning
• Other talent management activities focused on employee growth
While these activities are normally part of the core HR functions often organizations (depending
on the size of the organizations) might have a dedicated individual supported by a small team
leading all of these activities and reporting to the Head of HR or even the CEO/MD.
1. Companies are designing __________________________ to increase employee productivity,

prevent job burnout and obsolescence, and improve the quality of employees’ work lives.
2. To cope in today’s’ turbulent times, it has become increasingly important for both
_____________________________ to better redress employee career needs.
3. The end result for a career-resilient workforce is one that has self reliant workers who are
capable of ____________________.
6.3 Career Planning
A broad view of career is defined as an “individually perceived sequence of attitudes and

behaviour work-related activities and experiences over the span of a person’s life.” In normal
parlance the term career has both an internal and an external focus. An internal focus and refers
to the way an individual views his/her career and the external or objective focus and refers to the
actual series of job positions held by the individual. The dynamics of career development in an
organizational context has two dimensions:
· How individuals plan and implement their own career goals (career planning), and
· How organizations design and implement their career development programs (career
management).
Career planning is a deliberate attempt by an individual to become more aware of their skills,
interests, values, opportunities and constraints. It requires an individual thinking to identify
career-related goals and establishing plans towards achieving those goals. Often it is a self-driven
process, which every professional (irrespective of the nature of employment) spends some time
to dwell on and discuss it with peers or superiors and frame it. It is also viewed from time to time
that the individual looks for possible new career options. Having a career plan builds a
commitment towards achieving it and is viewed as an excellent personal goal-setting exercise for
self motivation.
Career management is considered to be an organizational process that involves preparing,

implementing and monitoring career plans undertaken by an individual alone or within the
organizations career systems. Organizations establish policies that provide for multiple career
path options that an employee can choose from and pursue. This is supported with a lot of
training and development activities that are agreed to with the manager and planned carefully
and executed.
A variety of career development activities and tools exists for use in organizations. HR managers
should be familiar with these components because the managers often serve as internal
consultants responsible for designing the career development systems. Some of the activities
described are individual career planning tools and others are commonly used for organizational
career management. In general the most effective career development programs will use both
types of activities.
A variety of career development activates are available for use. Some of the more popular ones
include:
1. Self assessment tools:- these are usually technology enabled on-line (on the corporate intranet)
tools that form part of the performance appraisal system and allow the individual to identify
areas of strengths and parallelly identify career paths that would leverage these strengths the
best. E.g. Career Planning Workbooks, Career Workshops hosted by the organizations from time
to time.
2. Individual Counselling:- formally the process allows for individuals to discuss this as part of
the performance management process with their immediate managers and share and take
feedback on the appropriateness of the choices and how to go about pursuing it. Often managers
recommend relevant other managers and leaders who the employee can link with to seek advice
and support. Organizations also provide for formal ‘mentoring programs’ to which an employee
can enrol and sign up a mentor who can then provide the support and counselling on the best
career option and how to go about it achieving it.
3. Information Services: organizations have established policies on what skills and experiences
that each job in the organization requires. Jobs with similar skills and experiences are clubbed
together to create parallel career paths. For example in a software development firm the career
path options for the software engineering team can be designed as follows:
Career Paths in a software company
Figure 6.1: Career Paths in a software company
These are typically called career ladders or career paths and they help an employee identify what
his options are for future growth and identify the appropriate one based on his personal skills and
capabilities/ limitations. These career paths would be supplemented with additional information
on skills and experience that one must have for each role/job in the career path. It would also
specify the particular qualification or special certifications that the positions demands. An
employee aspiring to pursue a career option would need to dedicate time and effort and the
expenses towards acquiring the same. Large MNC’s (multinational companies) also encourage
the reimbursement of these expenses as a annual fixed amount on successfully clearing the
exam/certification. The employee however needs to find the time and expend the effort away
from work. The actual move of the employee to the new role would however depend on the
existence of a job vacancy in that role. The employee can also approach career resource / talent
management centres supported by the HR teams for more information on how to plan careers
and apply for new roles sand jobs. Organizations usually have formal job posting systems
through which the employee receives this information and applies for the job after discussing
with his manager.
4. Initial employment Programs Organizations also run internship and apprenticeship programs
wherein the individuals aspiring to do a particular job can spend some time as a temporary
employee to explore interest and skill fitment for the job/role. (e. g. Anticipatory socialization
programs, realistic recruitment, and employee orientation program);
5. Organizational Assessment programs : organizations can proactively establish formal

processes wherein an employee can volunteer to participate and understand himself/herself and
his/her strengths. Through the use of Assessment Centres organizations can help an employee
identify areas for improvement and means of building those skills. So he can achieve his career
plans. Certain organizations offer Psychological Testing instruments which profile the
employee’s strengths and roles and responsibilities he / she will best fit into.
6. Developmental programs focus the effort of the employee towards helping the employee to
achieve his career goals. The Assessment Centres, Job rotation programs, in-house training,
tuition refund plans, and mentoring, all prove effective tools to help the individual along.
No matter what tools are used for career development, it is important that employees develop and
individualised career plan. For example Raychem requires every person to have a learning or
development plan.
4. Career management is considered to be an organizational process that involves preparing,

implementing and monitoring career plans undertaken ______________________.
5. __________________ is a deliberate attempt by an individual to become more aware of his or

her own skills, interests, values opportunities, constraints and consequences.
6. Understanding __________________ in an organization requires an examination of two

processes; how individuals plan and implement their own career goals (career planning), and
how organizations design and implement their career development programs (career
management).
6.4 Promotions and Internal Job Postings
All organizations big and small have established and documented promotion policies. Even as an
employee is being hired he/she is curious and does enquire repeatedly about the organizations’
promotion policies and what growth opportunities it affords. Within a few months of joining a
new company it is natural for an employee to evaluate options for future growth in the form of
promotion that the organization provides. It is therefore a critical retention tool to have
transparent and fair promotion guidelines that the employee can refer to evaluate his/her
suitability for promotion.
In designing promotion guidelines organizations need to take note of the following

considerations:
· Tenure in the organization
· Time spent in the role/job / level
· Performance ratings
· Recommendation of the immediate and skip-level (manager’s manager) managers
· HR records on disciplinary actions/ misconduct of any nature, any negative comments etc…
Despite the existence of formal policies, promotions or rather the absence of it, it is often a key
source of drop in motivation and results in employee exit. The communication of the criteria and
retaining a transparent process can help manage perceptions gaps, but never completely
eliminate dissatisfaction.
Internal Job Posting is another effective method that organization uses to encourage employee
growth. This usually goes together with the career planning initiatives. All or select job openings
in the organization are advertised internally before external applicants are invited. Organizations
might even open all positions to internal as well as external candidates and the best candidate is
given the job. Today’s organizations have established processes of posting jobs using technology
effectively to post jobs across countries and business verticals. In large MNC’s it is common for
organizations to have job portals that an employee can access to view job opening globally.
Based on his/her career plans an employee can choose suitable job openings and in-discussion
with their managers pursues the interviewing process. In Wipro for example anyone who’s been
more than 18months in the same role can begin to explore jobs internally applies and interview
for a new role. Such initiatives significantly impact retention levels in organizations and enhance
employee enhancement.
Activity 1
Speak to a friend or a relative working in a large company and find answers

to the following questions:
1. How do promotions happen in the company?
2. What is the importance given to years of experience in the promotion

process? Why?
3. When promotions happen are they openly communicated to all or kept

confidential? Why?
4. What career planning policies does this company have, if at all?
6.5 Succession Planning
Succession planning involves having senior executives periodically review their top executives
and those in the next-lower level to determine several backups for each senior or key position in
the firm. It takes years of grooming to develop effective senior managers and this is a talent
challenge that all organizations face today. Traditionally succession planning was restricted to
senior-level management positions and this was either an informal or formal process.
Over the years succession planning has established itself as a key HR activity in most
organizations with formal processes that ensure it is reviewed regularly and scientifically. In
smaller organizations it is yet an informal succession planning process where the individual
manager identifies and grooms his or her own successor.
Succession planning involves an examination of strategic (long-range) plans and HR forecasts

for all identified key positions in an organizations. It includes positions that are critical for the
business and for its continuity and not just the senior level positions. It includes a review of the
data on all potential candidates who might be able to move to these positions either right-away or
in the near future. The objective is to identify employees with potential and increase managerial
depth as well as promoting from within the company. This is usually an exercise undertaken one
a year and usually runs parallel to the performance appraisal process. This exercise is carried out
by the senior management team of the unit/subsidiary and facilitated by the HR team. Usually,
committees of top managers’ work together to identify high potential candidates within their
team and then out-line developmental activities for them. They may also include a formal
assessment of the performance and potential of candidates and written individual development
plans for candidates.
All member’s voice opinions about the potential candidates that are proposed and disagreements
are openly debated, before the final document is signed off. The succession planning process
includes determining and clarifying the requirements of the managerial position and
development plans for how these potential candidates can be groomed to occupy these positions
in the eventuality they fall vacant. These development plans then translate into the individual’s
development plan and HR along with the immediate manager work with the individual to
execute the same.
A succession planning exercise concludes with an organization chart of all key positions with
listing of possible potential candidates and the readiness rating for each potential candidate. For
example a position that can immediately be filled is rated higher than a position which does not
have a ready-now candidate. Other components include performance appraisal of these
employees, and individual development plans and management development programs.
Additionally, the factors rated as most important in selecting specific internal/external potential
candidates for grooming includes: past job performance, past positions or prior employment,
perceived credibility, area of expertise and career paths and values and attitudes.
Benefits: There are many benefits of having a formal Succession Planning System:
1. Provides a clear context to strategic business planning as the key positions for the business’s
success are what are being planned for.
2. Provides a more systematic basis to judge the risk of making particular succession and
developmental moves.
3. Bring focus to systematized succession a plan that scientifically identifies potential candidates
to ensure business continuity.
4. Enables the identification of high potential and future leaders, whereby the thereafter the
manager/HR can engage with them for leadership development initiatives.
5. Reduces randomness of managerial movements.
6. Helps anticipate problems before they get started – and thereby avoid dysfunctional situations.
7. Provides scientific approach for arriving at succession decisions as part of the overall human
resource planning exercise – connecting formats (data, timing) with process (judgement,
discussions, analyses)
8. Helps plan for internal promotion opportunity
9. Provides early warning if succession does not exist for a position allowing for lateral hiring
from the market.
Regardless of what type of succession planning program is used (formal or informal); most
successful programs obtain the support of top management.
7. Succession planning is usually restricted to senior-level management positions and can be

___________________.
8. Formal succession planning involves an examination of strategic (long-range) plans and HR

forecasts and a review of the data on all ___________________.
9. Succession planning reduces ___________________ of managerial development movements.
6.6 Other Career Programs
While the general notion is that most Career development programs are often instituted to meet
the unique needs of particular employees, the benefits for the organization are immense. This is
one reason why organizations continue to invest time and resources on it despite the fact that it
does not offer immediate measurable benefits. Although many different groups and issues may
be targeted for career development, some of the more common programs are those that focus on
work-family issues, outplacement, entrenched employees, late-career employee, disadvantages
employees, fast track employees and managers.
· Work-Family Programs focus on supporting employee manages their personal as well as

work related challenges in a balanced manner. Increasing use of flexible work schedules, work
from home options, opening of more on-site or company-sponsored child-care centers, and
greater use of paid leave for fathers and adoptive parents are some common practices in this area.
There are also more focused programs that focus on managing gender diversity at the workplace
and set goals for advancing women into senior management positions. And is truly amazing is
the increasing pattern of companies holding managers accountable for meeting these goals.
There are specific workshops and training programs mandated for managers to help them
initiating and implementing them.
· Relocation Assistance and hiring practices redresses the challenges associated with employee
relocation on account of a career move. The support provided by firms in assisting spouse of
employees with opportunities within the company, linking them with job placement consultants
as well as sponsoring the cost of re-training or picking up a new skill. The amount and nature of
support could vary from company to company. Some firms have altered their policy to allow for
hiring both spouses while they may not be allowed to work in the same department/team.
· Work Life balance Seminars and flexible HR practices wherein organizations design
programs to help employees manage their work-family conflicts and coping strategies.
Especially prevalent in the ITES/BPO organizations where the work-life balance is a concern.
This practice is now part of most organizations where the increasing work pressure is driving
companies to help employees cope with personal pressure. Various stress management
workshops and ‘stretch- exercise schedules’ are practiced to help employees cope with stress.
Lifestyle management workshops too are becoming popular in larger organizations.
Organizations are also changing their practices for recruitment, travel, transfer, promotions,
scheduling hours, and benefits to meet the needs of the larger number of dual career couples.
· Flexible Work schedules are being increasingly instituted at the workplace. These include
flextime, job sharing, part time work, working from home, compressed workweeks, temporary
workweeks etc… Such programs enable employees to address their work and family concerns
and reduce their potential stress or conflicts between their various life roles. Telecommuting has
become very popular. This provides for organizational as well as employee related advantages.
Some difficulties with telecommuting are communication problems with other employees,
limited access to necessary supplies and equipment and family interruption.
· Outplacement Program during retrenchment and downsizing is a professionally managed

process in most organizations. The objective here is to assist the effected employees in making
the transition to new employment. It could involve re-skilling for new, more relevant skills per
market demand so finding a new job is easier. Companies might tie up with training institutes
and provide the skills training. Else the company might prefer to reimburse the cost of re-skilling
directly to the impacted employee for a course of his/her choice. Outplacement services would
also involve working with placement agencies and recruitment firms to provide interviewing
opportunities for the employees. Outplacement programs stress the importance of self confidence
and individual career planning beneficial for middle or late-career employees who are being laid
off.
· Special Programs for Women, Minorities and Employees with Disabilities: With
organizations increasingly tapping into this critical talent pool, more employees in these special
categories are entering the workforce. This calls for special focus on the importance of assisting
these employees with their career needs.
Activity 2
Have you ever thought of your career plans? What exactly you want to
achieve in next 5 years? How are you planning to go ahead? Consult
somebody who can guide you to reach your goals.
· Fast Track employees are now being increasingly identified as ‘stars’ with high potential for
bright future in the organization. The identification and development of these employees requires
organizations to exert efforts to build and monitor special programs that cater to this special
audience. These employees are identified in a formal process and are placed on a fast track
program. The objective here is to enable them to move to senior positions quickly. As is with all
other such initiatives, this initiative helps in retaining this critical talent. Among other activities
that target this group they are offered quicker job changes and more challenging job assignments.
6.7 Summary
Employee growth is a evolving HR activity in today’s corporate. While immediate returns are
not measurable the payoffs from these investments have proven long-term benefits. To
summarize…
· Career development programs must be integrated with and supported by the existing HR
programs if they are to be successful.
· Career development initiatives need to well communicated and supported by the business
leaders and HR to ensure its benefits both for the organization as well as the employee.
· Career or job changes by the employee are a match between what an employee aspires for
professionally and a good understanding of organization’s job description, job posting systems
and selection policies.
· It is however the responsibility of the HR staff to work with management to ensure that career
programs are integrated with the other HR functions and are similarly reviewed.
· Career development programs must positively impact organizational and individual

effectiveness over the short and long term
6.8 Caselet
CWA & AT&T Walking the Talk:

(2800 Century Parkway, Atlanta, Georgia)
The 2800 Century Parkway AT&T building in Atlanta is a hotbed of Alliance activity. Why?
Because The Alliance, CWA Local 3250 and local AT&T Management have found value in
working together. They have banded together to create opportunities in which employees can
gain skills and increase their employment security while improving the efficiency of AT&T in
providing service to its customers. In just the first 7 months of the 2005 Program Year, 2800 has
already exceeded its annual goals.
The picture was not always so rosy at this location. In late 2001 the Alliance Local Committee
(ALC) and Company/Union support for it had virtually disappeared. Layoffs in both the
occupational and management ranks displaced most key supporters and ALC members. A local
CWA election that fall saw most of the Union Leadership at Local 3250 turn over. Without
strong onsite leadership 2800 did not come close to reaching its annual goals for the first time
that year.
The Alliance Associate Director, Jay Ott, saw an opportunity to create a better, stronger
relationship between The Alliance, CWA and AT&T Management. He began by working with
the new CWA Vice President for 2800, Roy Hegenbart (who is now the Local President for
3250) to identify the right occupational employee to promote The Alliance on-site – someone
who understood the joint labor/management concept, who knew the people in the building, and
was respected by both Management and CWA. That person was Chandra Patton, and in May of
2002, Roy convinced the company to assign Chandra as Alliance site coordinator full-time.
Chandra and Jay took a different approach to creating a new Labor/Management team for 2800.
They spent the rest of 2002 meeting, communicating, and building relationships with the local
AT&T management and CWA leadership. Their focus was on the Administrative Supervisors, as
they were the ones who could get the support needed for classroom space, particularly space for
an upgraded computer lab, and for company time when the building was affected by a surplus
declaration. A Leadership Team was formed to support these efforts. It consisted of Chandra
Patton (Alliance Site Coordinator), James Bates, Debbie Shelton, John Bozart, and Alicia Brock
(AT&T Administrative Supervisors), Roy Hegenbart (Local 3250 V.P.), and Jay Ott (Alliance
Associate Director). In order for Jay to fully participate in this team, Christine Deas from The
Insight Group was brought in to facilitate the meetings. The goals of the Leadership Team are:
· Develop a stronger, more viable relationship between AT&T Management, CWA, and The
Alliance at 2800 Century Parkway.
· Work with the Alliance Local Committee to develop training opportunities for the surplused,
represented workforce on company-time.
· Identify and offer training that will enhance employee skills and marketability within as well as
outside of AT&T.
· Reestablish a viable after-hours training schedule that employees would support.
· Encourage more Business Unit Initiatives on company-time.
· Encourage all employees to take advantage of opportunities to grow and develop their shills,
talents and interests.
The everyday work of implementing the program still needed to be addresses. The Leadership
Team appointed ALC members who had the skills and initiative to make the day-to-day
operational decisions (e.g., what classes, when, where, marketing, registration, follow-up, etc.).
By June of 2003, the work of the Leadership Team and the ALC resulted in a huge increase in
Alliance activity. 2800 had surpassed its annual goals in only 9 months! Its success did not go
unnoticed. Chandra Patton, Debbie Shelton and Jay Ott presented the 2800 story to The Alliance
Board of Trustees at their July meeting in New Jersey. This story of cooperation and
achievement was outlined in a unique way. The team developed a series of CD ROM’s explain
who we were and how we achieved some much success in a short period of time. It was
obviously well received.
However, wait! This is only half the story. What happened next is what makes 2800 stand out
from most other Alliance locations in the country. The Leadership Team had always kept the
people to whom they reported informed of the success of The Alliance, and the AD made special
efforts to reach out to those upper level managers and union officers in order to find common
interests and goals. The Board of Trustees presentation was used as a springboard to pitch the
District/Division level managers and CWA leadership on even more opportunities that
potentially could be in the best interest of the Company, the Union and the represented
employees.
Because of those presentations, Sharon Cochrane – District Manager Date Group, Bernie
Ragland – Division Manager and Terry Parr – District Manager Voice Group have supported
many Business Unit Training Initiatives on company-time. Some of the more notable activities
have been Customer Relations Skill Certification, Voice over Internet Protocol (VoIP), CCNA
Certification, CCP@, and Net+ Certification. These programs, along with the more traditional
Alliance programs, helped the 2800 location exceed their annual goals for the third time in as
many years.
Another indication of the strength of the Alliance commitment there is the support that AT&T
provides to CWA represented employees from other Avaya and Lucent. The only Alliance lab
with the equipment to provide high level IT training is at 28000. The Alliance committee works
closely with management (including GRE and Security) to make his lab accessible to all Alliance
participants in the area.
The opportunities available at 2800 Century Parkway are a direct result of Labor and
Management seeing value in creating a more skilled workforce through The Alliance. Together,
they really do “walk the talk”.
Source : http://www.employeegrowth.com/success_stories_6-05.htm
1. What is career planning? Whose responsibility is it?
2. What is succession planning?

3. How is career planning different from succession planning?
4. What are some other career planning initiatives that are being practised in the industry these
days?
6.10 Answers
1. Employee growth programs,
2. Organizations and employees,
3. Reinventing themselves to keep up with the fast pace of organizational changes.
4. By an individual alone or within the organizations career systems,
5. Career panning,
6. Career development
7. Informal or formal,
8. Potential candidates,
9. Randomness.
1. Refer to 6.3
2. Refer to 6.4
3. Refer to 6.3 and 6.4
4. Refer to 6.6
Reference:
1. Human Resources Management and Personnel Management by

K Aswathappa

.
MB0043-Unit-07-Performance Appraisal
Unit-07-Performance Appraisal
Structure:
7.1 Introduction
Objectives
7.2 Concept and Need of Employee Review
7.3 Concept of Performance Appraisal
7.4 Types of Appraisal Method
Individual evaluation Methods
Multiple-person Evaluation Methods
360 Degree Appraisal
7.5 Benefits of Performance Appraisal
7.6 Summary
7.7 Caselet
7.9 Answers
7.1 Introduction
“What gets measured gets done”, is a famous quote you might have heard before It is one of the
most discussed dimensions of the various HR activities in an organization. It attracts lot of
employee as well as management attention and serves as a critical linking factor for mapping
individual employees’ performance with organizational results. In this unit we will learn about
the need, design and management of performance management systems in organizations.
To put it simply “It is the means, by which employee’s work behaviour are aligned with the
organizations goals”. The performance evaluation system is an organized set of activities
established to regularly and systematically evaluate employee performance and ensure its
alignment to business metrics. Organizations also link it to rewards and incentives.
Objectives:
· Interpret performance evaluation.
· List the techniques and methods of evaluation.
· Describe the significance of rewards and incentives, promotions.
· Evaluate the concept of 360° Appraisal.
7.2 Concept and need of Employee Review
Performance evaluation is systematic activity by means of which the organization determines the
extent to which the employee is delivering per agreed objectives and this is aligned to business
results. Generally speaking, the HR specialists design and implement the performance
management system (PMS), and then train the line managers in the use the systems, and
maintain the records. Apart from focusing on performance, today’s organizations are
emphasising the need for employee development focus in implementing an effective PMS. The
line managers use the system to review employee performance and the normal steps include:
1. Defining performance: includes setting performance targets and goals (usually for the span of
a year) split into monthly or quarterly targets. These should ideally conform to the SMART
principle of being Specific, Measurable, Achievable, Realistic and Time-bound. These are
agreed to mutually by the manager as well as the employee at the beginning of the performance
period. Most PMS require the employee and manager to enter it into a prescribed performance
appraisal template and signed off by both prior to the commencement of the performance period
or at the start of it.
2. Measuring performance: While it largely involves the assessment of the performance against
the targets at the end of the assessment period/performance period. The focus is here on on-going
review of the employee’s performance by the manager throughout the year. This allows for the
following:
1. Review progress and ascertain help/support the employee might need to complete the task per
agreed standards
2. Recommend training or other on-the job / off-the job assistance that the employee might need
to meet the deadlines.
3. Review the targets and commitments and make changes if required usually influenced by
external factors that are impacting performance and review the targets upwards or even
downwards.
3. Feedback and coaching: focuses on the developmental needs of the employee which the
manager might need to take care to enable the employee to successfully complete the job in the
best possible manner. A proactive approach to ensuring that the employee succeeds and the job is
well done rather than waiting till the end of the assessment period. On-going feedback and
coaching can also ensure that the business goals are not sacrificed. Decision for work to be
reassigned to someone more capable, if the employee is unable to complete it as committed, can
also be taken in-time. This step in the PMS also includes discussion between the employee and
his /her manager on the medium-long term career progression plan for the employee. What does
the employee aspire for professionally and how he plans to go about achieving it within the
organization, what role can the manager play in this carer planning decision are few aspects that
get discussed.
For performance evaluation to be more than a yearly paper-work exercise, top management
along with the HR team encourage its use to encompass all of the above 3 parts. An effective
performance management framework must also establish clear linkage to reward decisions such
as promotions, salary hike and performance-linked-incentives.
1. _____________________ is the HR activity by means of which the organization determines

the extent to which the employee is performing the job effectively.
2. The _______________ do the evaluation of the employees.
3. ______________________ must encourage its use and use it to make reward decisions such
as promotions.
7.3 Concept of Performance Appraisal
Research confirms that effective performance management systems impact corporate

performance and the bottom line positively. To design a system for appraising performance, it is
important to first define what is meant by the term work performance. Although a person’s job
performance depends on some combination of ability, effort and opportunity, it can be measured
in terms of outcomes or results produced. Performance is defined as the record of outcomes
produced on a specific job function or activity during a specific time period. For example a Sales
representative would have some measure of sales as an outcome as a primary function of that
job. Customer service would have very different outcome measures for defining performance. A
College professor is typically evaluated on three work aspects: teaching, research and service.
Performance in each of these three areas is defined with different outcome measures.
Performance on the job as a whole would be equal to the sum (or average) of the performance on
each of the job functions/ activities within the job. Note that the function has to do with the work
that is to be performance and not the characteristics of the person performing. Unfortunately
many performance- appraisal systems confuse measures of performance with measures of the
person. The definition of performance refers to a set of outcomes produced during a certain time
period; it does not refer to the traits, personal characteristics or “competencies” of the performer.
Summarised below are few aspects that need to be considered while establishing a PMS:
1. Validity of the PMS framework
a. It should measure important job characteristics
b. It should encompass the whole job, all parts of it
c. It must measure what it claims to measure
d. It does not assess other constructs besides performance
e. It is based on a sound job analysis of the jobs
2. Reliability of the assessment tool
a. Take care of inter-rater reliability – in other words defines what outcome measure to what
rating or grade
b. Guard against subjective evaluation – clearly identifies the aspect that need to be assessment
to reduce interpretation by different people differently.
3. Freedom from Bias – eliminates bias through objective assessment, by not having too many
open-ended, poorly defines criteria’s for assessment.
4. Practicality – be simple and easy to use/implement. Use technology to reduce paper work and
mover to a on-line workflow based system so not too much time is wasted in managing it.
4. To design a system for appraising performance, it is important to first define what is meant by
the term _____________________.
5. Performance is defined as the record of outcomes produced on a specific job function or

activity during ______________________.
6. Performance on the job as a whole would be equal to the sum (or average) of the
________________________.
7.4 Types of Appraisal Methods

Ideally every individual in any organization needs to be appraised. The appraisal system should
be able to take care of this, and it shall also meet the needs and the objectives of the organization
meet. On broad way to categorise, the type of appraisal template used to assess performance,
focuses on what the organization wishes to measure:
· Trait-based Appraisal: is used to assess personality or personal characteristics, loyalty,

communication skills, level of initiative, decision making etc.. This is common in companies that
are in the business of service, and customer satisfaction. While it is difficult to define the criteria
accurately, rater/manager bias is high, and as the focus is on personal attributes providing
feedback is a challenge.
· Behavior-based Appraisal: focuses on the appraisal of what an employee ‘does’ on the job. It
evaluates behavior and measures what an employee should do differently. This is common in
customer facing organizations, like the hospitality / NGO companies. As the focus is on the
assessment of behavior rater/manager bias remains a challenge here as well.
· Results-based Appraisal: measures objective results of work. The focus is on the

outcome/deliverables from the job, and this alone serves as the measure for success. It may not
be possible to use in jobs which depend on team work or where the job is service / support based.
Most organizations use a combination of trait, behaviour and results in their appraisal systems as
all three are important. It provides for a holistic and fair assessment of the individual.
Activity 1
We discussed here, that every person doing any work can be evaluated.
Think of the helpers in a grocery shop in your neighbourhood. How do you
think the shop owner / supervisor would assess the helpers?
Can you list 3-5 traits, behaviours and results that the shop owner can
possibly use to assess them?
If possible share it with the shop owner and observe his reaction.
The next challenge in evaluation is the method to use. There are three
common methods that are in-use: individual evaluation methods; multiple
person evaluation methods; and other methods.
7.4.1 Individual evaluation Methods
There exists five ways to evaluate an employee individually. Here the employee is evaluated one
at a time without directly comparing him/her with other employees.
Graphic rating scale: The most widely used performance rating technique is a graphic rating
scale (eg. a 3, 4 or 5 or even 10 point rating scale). In this technique, the evaluator is presented
with a list of assessment characteristics and asked to assign a number rating to the employee on
each of the characteristics listed. The number of characteristics might vary from a few to several
dozen. It aims to measure the quality of performance and ability to do the present job.
The ratings can be in a series of boxes, or they can be on a continuous scale (0-9) or so. In the
latter case, the evaluator places a check above descriptive words ranging from none to maximum.
Typically, these ratings are then assigned points. For example, outstanding may be assigned a
score of 4 and unsatisfactory a score of 0. Total scores are then computed. In some plans, greater
weights may be assigned to more important traits. Evaluators are often asked to provide
supporting comments for each rating in a sentence or two.
Forced choice: The forced-choice method of evaluation was developed because other methods
used at the time led to a preponderance of higher ratings, which made promotion decisions
difficult. In forced choice, the evaluator must choose from a set of descriptive statements about
the employee. The two-, three-, or four-statement items are grouped in a way that the evaluator
cannot easily judge which statements apply to the most effective employee.
Typically, HR specialists/consultants prepare the items for the form, and Managers or other HR
specialists rate the items for applicability; that is, they determine which statements describe
effective and ineffective behaviour. The Manager then evaluates the employee. The HR
Department adds up the number of statements in each category (for example, effective
behaviour), and they are summed into an effectiveness index. Forced choice can be used by
superiors, peers, subordinates, or a combination of these in evaluating employees.
Essay evaluation: In the essay technique of evaluation, the evaluator is asked to describe the
strong and weak aspects of the employee’s behaviour. In very few organizations, the essay
technique is the only one used; in others, the essay is combined with another form, such as a
graphic rating scale. The essay summarizes and elaborates on some of the ratings, or discusses
added dimensions which are not captured by the scale. Wherever it is used the essay, the can
either be open ended or as in most cases there are guidelines on the topics to be covered, the
purpose of the essay, and so on. The essay method can be used by evaluators who are superiors,
peers, or subordinates of the employee to be evaluated. It is not a very popular method in the
industry.
Management by objectives: one of the most popular individual evaluation methods in use today
is Management by Objectives (MBO). In this system, the Manager and employee to be evaluated
jointly set objectives/targets in advance for the employee to try to achieve during a specified
period. And usually the objectives framed are of quantitative nature. MBO is a very common
industry practice. At the beginning of the year clear objectives are laid down for achievement
during the course of the year. These objectives are popularly called by the following names:
1. KRA-key result areas
2. KPA -key performance areas
3. Targets
4. Commitments
These objectives are designed using the SMART framework as in… Specific, Measurable,
Achievable, Results oriented and Time bound. All objectives must conform to this framework.
Thereafter the objectives are broken up into half yearly, quarterly and maybe monthly objectives,
again keeping in mind the SMART framework. All along the process both the employee and the
manger are in consensus of the objectives and the timelines as well as the deliverables.
MBO is one of the most effective methods for performance review primarily because it is
identified at the beginning of the review period and is regularly reviewed for achievements and
modified on-going again in consensus between the employee and the manager.
At the end of the review year, the MBO’s are reviewed for completion with the SMART
framework.
In case of a new employee or someone moving jobs/assignments between teams; after about 6-8
weeks of being in the job this process is undertaken and the objectives are set.
The evaluation too is a joint review of the degree of achievement of the objectives. This
approach combines the manager and self-evaluation systems.
Critical incident technique: In this technique, HR specialists and operating managers prepare
lists of statements of very effective and very ineffective behaviour for an employee. These are
the critical incidents. The HR specialists combine these statements into categories, which vary
with the job. Once the categories are developed the statements of effective and ineffective
behaviour are provided to the managers. The manager maintains a log for each employee right
through the evaluation period. The manager "records” examples of critical (outstandingly good
or bad) behaviours in each of the categories, This log is used to evaluate the employee at the end
of the period. The manager can be specific in making positive and negative comments, and it
avoids “recency” bias. The critical incident technique is normally to be used by superiors than in
peer or subordinate evaluations.
Checklists and weighted checklists: Another type of individual evaluation method is the
checklist. In its simplest form, the checklist is a set of objectives or descriptive statements. If the
manager believes that the employee possesses the trait listed, the manager checks the items; if
not it is left blank. A rating score from the checklist equals the number of checks.
A recent variation is the weighted checklist. Managers or HR specialists familiar with the jobs to
be evaluated prepare a large list of descriptive statements about effective and ineffective
behaviour on jobs, similar to the critical incident process. Judges who have observed behaviour
on the job sort the statements into the ones describing behaviour that is scaled from excellent to
poor (usually on a 7-11 scale). When there is reasonable agreement on an item (for example,
when the standard deviation is small), it is included in the weighted checklist. The weight is the
average score of the Raters to the checklist’s use.
The Managers or other Raters receive the checklists without the scores, and they check the items
that apply, as with an un-weighted checklist. The employee’s evaluation is the sum of the scores
(weights) on the items checked. Checklists and weighted checklists can be used by evaluators
who are superiors, peers, or subordinates, or by a combination.
Behaviourally anchored rating scales: the most prevalent technique which is a variation of the
critical incident approach is the behaviourally anchored rating scale (BARS). This technique is
also called the behavioural expectation scale (BES).
Managers give descriptions of actually good and bad performance, and HR

specialists/consultants group these into categories (five to ten is typical). The items are once
again evaluated by managers (often other than those who submitted the items). A procedure
similar to that for weighted checklists is used to verify the evaluations (outstandingly good, for
example) with the smallest standard deviation, hopefully around 1.5 on a 7-point scale. These
items are then used to construct the BARS. The final output is a set of statements for each item
from among which the manager chooses the most appropriate one for the employee based on
his/her performance.
7. In _______________, the evaluator must choose from a set of descriptive statements about the
employee.
8. In the ________________ of evaluation, the evaluator is asked to describe the strong and
weak aspects of the employee’s behaviour.
9. In ________________, HR specialists and operating managers prepare lists of statements of

very effective and very ineffective behaviour for an employee.
7.4.2 Multiple-person Evaluation Methods
While the above techniques are used to evaluate employees one at a time, there are a number of
methods being used in organizations to evaluate an employee in comparison with other
employees.
Ranking: In ranking method, the manager/s is/are asked to rate employees doing similar jobs
from highest to lowest on some overall criterion. This is very difficult to do in groups larger than
20. It is also easier to rank the best and worst employees than it is to evaluate the average ones.
Simple ranking is carried out by first picking the top and bottom employees, and then selecting
the next highest and next lowest, and so on, to move towards the middle.
Paired comparison: This approach makes the ranking method easier and more reliable. First,
the names of the persons to be evaluated are placed on separate sheets (or cards) in a
predetermined order, so that each person is compared to all others to be evaluated. The evaluator
then checks the person he feels is the better of the two on a criterion for each comparison.
Typically the criterion is overall ability to do the present job. The number of times a person is
preferred is tallied, and this develops an index of the number of preferences compared to the
number being evaluated.
These scores can be converted into standard scores by comparing the scores to the standard
deviation and the average of all scores. This method can be used by superiors, peers,
subordinates, or some combination of these groups.
Forced distribution: The forced-distribution system is similar to ‘grading on a curve’. The

evaluator is asked to rate employees in some fixed distribution of categories, such as 10 percent
in low, 20 percent in low average, 40 percent in average, 20 percent in high average, and 10
percent in high. This should be done twice for the two key criteria of job performance and
promotability. Ideally it is used for rating potential. This method is effective in avoiding rating
errors where managers tend to rate employee towards the centre of the scale or at the higher end
of the scale.
7.4.3 360 Degree Appraisal
Typically, performance appraisal has been limited to a feedback process between employees and
Managers. However, with the increased focus on teamwork, employee development, and
customer service, the emphasis has shifted to employee feedback from the full circle of sources
depicted in the diagram below. This multiple-input approach to performance feedback is
sometimes called "360-degree assessment" to connote that full circle.
Figure 7.1: The 360 degree matrix
There are no prohibitions in law or regulation against using a variety of rating sources, in
addition to the employee’s Manager, for assessing performance. Research has shown assessment
approaches with multiple rating sources provide more accurate, reliable, and credible
information. For this reason, HR Management supports the use of multiple rating sources as an
effective method of assessing performance for formal appraisal and other evaluative and
developmental purposes.
The circle, or perhaps more accurately the sphere, of feedback sources consists of Managers,
peers, subordinates, customers, and one’s self. It is not necessary, or always appropriate, to
include all of the feedback sources in a particular appraisal program. The organizational culture
and mission must be considered, and the purpose of feedback will differ with each source. For
example, subordinate assessments of a Manager’s performance can provide valuable
developmental guidance, peer feedback can be the heart of excellence in teamwork, and
customer service feedback focuses on the quality of the team’s or agency’s results. The
objectives of performance appraisal and the particular aspects of performance that are to be
assessed must be established before determining which sources are appropriate.
We shall discuss the contributions of each source of ratings and feedback. In addition,
precautions are listed to consider when designing a performance management program that
includes 360-degree assessment.
Superiors: Evaluations by superiors are the most traditional source of employee feedback. This
form of evaluation includes both the ratings of individuals by Managers on elements in an
employee’s performance plan and the evaluation of programs and teams by senior managers.
What does this source contribute?
1. The first-line Manager is often in the best position to effectively carry out the full cycle of
performance management: Planning, Monitoring, Developing, Appraising, and Rewarding. The
Manager may also have the broadest perspective on the work requirements and be able to take
into account shifts in those requirements.
2. The superiors (both the first-line Manager and the senior managers) have the authority to
redesign and reassign an employee’s work based on their assessment of individual and team
performance.
3. Most Government employees in a national survey felt that the greatest contribution to their
performance feedback should come from their first- level Managers.
What cautions should be addressed?
1. Research demonstrates that appraisal programs that rely solely on the ratings of superiors are
less reliable and valid than programs that use a variety of other rating sources to supplement the
Manager’s evaluation.
2. Superiors should be able to observe and measure all facets of the work to make a fair
evaluation. In some work situations, the Manager or rating official is not in the same location or
is supervising very large numbers of employees and does not have detailed knowledge of each
employee’s performance.
3. Managers need training on how to conduct performance appraisals. They should be capable of
coaching and developing employees as well as planning and evaluating their performance.
Self Assessment: This form of performance information is actually quite common but usually
used only as an informal part of the Manager-employee appraisal feedback session. Managers
frequently open the discussion with: "How do you feel you have performed?" In a somewhat
more formal approach, Managers ask employees to identify the key accomplishments they feel
best represent their performance in critical and non-critical performance elements. In a 360-
degree approach, if self-ratings are going to be included, structured forms and formal procedures
are recommended.
1. The most significant contribution of self-ratings is the improved communication between

Managers and subordinates that result.
2. Self-ratings are particularly useful if the entire cycle of performance management involves the
employee in a self-assessment. For example, the employee should keep notes of task
accomplishments and failures throughout the performance monitoring period.
3. The developmental focus of self-assessment is a key factor. The self-assessment instrument (in
a paper or computer software format) should be structured around the performance plan, but can
emphasize training needs and the potential for the employee to advance in the organization.
4. The value of self-ratings is widely accepted. More than half of government employees felt that
self-ratings would contribute "to a great or very great extent" to fair and well-rounded
performance appraisal.
5. Self-appraisals should not simply be viewed as a comparative or validation process, but as a

critical source of performance information. Self-appraisals are particularly valuable in situations
where the Manager cannot readily observe the work behaviors and task outcomes.
1. Research shows low correlations between self-ratings and all other sources of ratings,
particularly Manager ratings. The self-ratings tend to be consistently higher. This discrepancy
can lead to defensiveness and alienation if Managers do not use good feedback skills.
2. Sometimes self-ratings can be lower than others’. In such situations, employees tend to be
self-demeaning and may feel intimidated and "put on the spot."
3. Self-ratings should focus on the appraisal of performance elements, not on the summary level
determination. A range of rating sources, including the self-assessments, help to "round out" the
information for the summary rating.
Peers: With downsizing and reduced hierarchies in organizations, as well as the increasing use
of teams and group accountability, peers are often the most relevant evaluators of their
colleagues’ performance. Peers have a unique perspective on a co-worker’s job performance and
employees are generally very receptive to the concept of rating each other. Peer ratings can be
used when the employee’s expertise is known or the performance and results can be observed.
There are both significant contributions and serious pitfalls that must be carefully considered
before including this type of feedback in a multifaceted appraisal program.
1. Peer influence through peer approval and peer pressure is often more effective than the
traditional emphasis to please the boss. Employees report resentment when they believe that their
extra efforts are required to "make the boss look good" as opposed to meeting the unit’s goals.
2. Peer ratings have proven to be excellent predictors of future performance. Therefore, they are
particularly useful as input for employee development.
3. Peer ratings are remarkably valid and reliable in rating behaviors and "manner of
performance," but may be limited in rating outcomes that often require the perspective of the
Manager.
4. The use of multiple Raters in the peer dimension of 360-degree assessment programs tends to
average out the possible biases of any one member of the group of Raters. (Some agencies
eliminate the highest and lowest ratings and average the rest.)
5. The increased use of self-directed teams makes the contribution of peer evaluations the central
input to the formal appraisal because by definition the Manager is not directly involved in the
day-to-day activities of the team.
6. The addition of peer feedback can help move the Manager into a coaching role rather than a
purely judging role.
1. Peer evaluations are almost always appropriate for developmental purposes, but attempting to
emphasize them for pay, promotion, or job retention purposes (i.e., the rating of record) may not
be prudent. The possible exception is in an award program as opposed to performance appraisal.
Peer input can be effectively used for recognition and awards.
2. There is a difference of opinion about the need for anonymity of the peer evaluators.
Generally, it is advised that the identities of the Raters be kept confidential to assure honest
feedback. However, in close-knit teams that have matured to a point where open communication
is part of the culture, the developmental potential of the feedback is enhanced when the evaluator
is identified and can perform a coaching or continuing feedback role.
3. It is essential that the peer evaluators be very familiar with the team member’s tasks and
responsibilities. In cross-functional teams, this knowledge requirement may be a problem. In
these situations, the greatest contribution the peers can make pertains to the behaviors and effort
(input) the employee invests in the team process.
4. The use of peer evaluations can be very time consuming. When used in performance ratings,
the data would have to be collected several times a year in order to include the results in progress
reviews.
5. Depending on the culture of the organization, peer ratings have the potential for creating
tension and breakdown rather than fostering cooperation and support. A very competitive
program for rewarding individuals in the agency will often further compromise the value of peer
rating systems.
6. Employees and their representatives need to be involved in every aspect of the design of
appraisal systems that involve peer ratings.
Subordinates: An upward-appraisal process or feedback survey (sometimes referred to as SAM

for a "Subordinates Appraising Managers") is among the most significant and yet controversial
features of a "full circle" performance evaluation program. Both managers being appraised and
their own superiors agree that subordinates have a unique, often essential, perspective. The
subordinate ratings provide particularly valuable data on performance elements concerning
managerial and Managerial behaviors. However, there is usually great reluctance, even fear,
concerning implementation of this rating dimension. On balance, the contributions can outweigh
the concerns if the precautions noted below are addressed.
1. A formalized subordinate feedback program will give Managers a more comprehensive

picture of employee issues and needs. Managers and Managers who assume they will sufficiently
stay in touch with their employees’ needs by relying solely on an "open door" policy get very
inconsistent feedback at best.
2. Employees feel they have a greater voice in organizational decision making and, in fact, they
do. Through managerial action plans and changes in work processes, the employees can see the
direct results of the feedback they have provided.
3. The feedback from subordinates is particularly effective in evaluating the Manager’s

interpersonal skills. However, it may not be as appropriate or valid for evaluating task-oriented
skills.
4. Combining subordinate ratings, like peers rating, can provide the advantage of creating a
composite appraisal from the averaged ratings of several subordinates. This averaging adds
validity and reliability to the feedback because the aberrant ratings get averaged out and/or the
high and low ratings are dropped from the summary calculations.
1. The need for anonymity is essential when using subordinate ratings as a source of performance
feedback data. Subordinates simply will not participate, or they will give gratuitous, dishonest
feedback, if they fear reprisal from their Managers. If there are fewer than four subordinates in
the rating pool for a particular manager, the ratings (even though they are averaged) should not
be given to the Manager.
2. Managers may feel threatened and perceive that their authority has been undermined when
they must take into consideration that their subordinates will be formally evaluating them.
However, research suggests that Managers who are more responsive to their subordinates, based
on the feedback they receive, are more effective managers.
3. Subordinate feedback is most beneficial when used for developmental purposes. It also can be
used in arriving at the performance rating of record, but precautions should be taken to ensure
that subordinates are appraising elements of which they have knowledge. For example, if a
Manager’s performance plan contains elements that address effective leadership behaviors,
subordinate input would be appropriate. It may not be appropriate for the employee to appraise
the Manager’s individual technical assignments.
4. Only subordinates with a sufficient length of assignment under the manager (at least 1 year is
the most common standard) should be included in the pool of assessors. Subordinates currently
involved in a disciplinary action or a formal performance improvement period should be
excluded from the rating group.
5. Organizations currently undergoing downsizing and/or reorganization should carefully balance

the benefits of subordinate appraisals against the likelihood of fueling an already tense situation
with distrust and paranoia.
Customers: Setting Customer Service Standards, requires agencies to survey internal and
external customers, publish customer service standards, and measure agency performance against
these standards. Internal customers are defined as users of products or services supplied by
another employee or group within the agency or organization. External customers are outside the
organization and include, but are not limited to, the general public.
1. Customer feedback should serve as an "anchor" for almost all other performance factors.
Combined with peer evaluations, these data literally "round out" the performance feedback
program and focus attention beyond what could be a somewhat self-serving hierarchy of
feedback limited to the formal "chain of command."
2. Including a range of customers in the 360-degree performance assessment program expands

the focus of performance feedback in a manner considered absolutely critical to reinventing
Government Employees, typically, only concentrate on satisfying the standards and expectations
of the person who has the most control over their work conditions and compensation. This
person is generally their Manager. Service to the broader range of customers often suffers if it is
neglected in the feedback process.

1. With few exceptions, customers should not be asked to assess an individual employee’s
performance. The value of customer service feedback is most appropriate for evaluating team or
organizational output and outcomes. This feedback can then be used as part of the appraisal for
each member of the team. The possible exceptions are evaluations of senior officials directly
accountable for customer satisfaction and evaluations of individual employees in key "front line"
jobs personally serving internal or external customers.
2. Customers, by definition, are better at evaluating outputs (products and services) as opposed to
processes and working relationships. They generally do not see or particularly care about the
work processes, and often do not have knowledge of how the actions of employees are limited by
regulations, policies, and resources.
3. Designing and validating customer surveys are an expensive and time-consuming process. The
time and money are best spent developing customer feedback systems that focus on the
organization or work unit as a whole.
In India the use of the 360 degree as a performance assessment tool has not found many
followers. Companies like Wipro and even IBM use it for middle and senior managers only and
it is used purely for developmental purposes only. The concerned manager receives the feedback
directly and he can then work with a mentor or his own manager to identify development areas
and improve on them.
Activity 2
Why is job evaluation not as pervasive as performance appraisal?
10. In ________________, the evaluator is asked to rate employees from highest to lowest on
some overall criterion.
11. In _______________________ approach first, the names of the persons to be evaluated are
placed on separate sheets in a predetermined order, so that each person is compared to all others
to be evaluated.
12. The __________________________ is similar to ‘grading on a curve’.
7.5 Benefits of Performance Appraisal
When an employee works well, the employee naturally wants it to be praised and recognised by
his/her boss and fellow-workers. "Praise seems to have its greatest value when given and
received as recognition, and is not perceived by either party as an attempt to control the
behaviour of the recipient."
In today’s highly competitive workplace individual seek status and are anxious to excel at what
they do and to achieve their personal aspirations and dreams. The PMS affords a fair process that
allows the employee to benchmark themselves and calibrate performance vs. Relevant others in
the team / organization.
It’s common in all most all organizations to provide for performance linked incentive that serves
to attract employee attention and stimulates him/her to work more effectively and to stretch
beyond the normal expectation. In the words of Burack and Smith, "an incentive scheme is a
plan or programmes to motivate individual or group performance. An incentive programme is
most frequently built on monetary rewards (incentive or a monetary bonus), but may also include
a variety of non-monetary rewards or prizes."
The use of incentives reinforces people’s actions to use their skills and ability to achieve
important longer-run goals. Rewards should be regarded as a "pay off" for performance.
An incentive plan has the following important features:
1. An incentive plan normally consists of ‘monetary’ elements. The rating or score awarded to an
employee per the appraisal process can translate to a 100% incentive or less or even more.
2. The timing, accuracy and frequency of incentive are the very basis of a successful incentive
plans.
3. The incentive plan, in order to be effective, requires that it should be properly communicated
to the employees, to encourage individual performance, provide feedback and encourage
redirection.
Recognition satisfies the basic human need for self-esteem and self worth. This recognition may
be a simple pat on the back of the employee or a recommendation for a pay raise, promotion, or
assignment of more interesting tasks. Awards may be given in the form of articles, banquets
honouring certain individuals, certificates and plaques, too, may be given, or the employee’s
name may be entered on the Honours Board. Where team work is critical collective recognition
may be given by the award of a shield or a banner or a certificate, special privileges or a money
bonus to the group of employees.
Promotion is a term which is essential outcome of successive superior performance. It calls for
greater responsibilities, and usually involves higher pay and better terms and conditions of
service and, therefore, a higher status or rank. Organizations have well documented policies that
articulate the promotion criteria and performance rating are a critical part of the promotability of
an employee.
A promotion may be defined as an upward advancement of an employee in an organization to

another job, which commands better pay/wages, better status/prestige, and higher opportunities/
challenges, responsibility, and authority, better working environment, hours of work and
facilities, and a higher rank. Promotions are usually given:
1. To put the worker in a position where he will be of greater value to the company and where he
may derive increased personal satisfaction and income from his work;
2. To recognize an individual’s performance and reward him for his work so that he may have an
incentive to forge ahead. Employees will have little motivation if better jobs are reserved for
lateral hires:
3. To increase an employee’s organisational effectiveness;
4. To build up morale, loyalty, and a sense of belonging on the part of the employees when it is
brought home to them that they would be promoted if they exhibit the potential;
5. To promote job satisfaction among the employees and give them an opportunity for unbroken,
continuous service;
6. To provide a process of "selective socialization". Employees whose personalities and skills

enable them to fit into an organization’s human relations programme tend to stay on; while those
whose personalities do not fit well with those of the organization tend to leave;
7. To attract suitable and competent workers for the organization;
8. To create among employees a feeling of contentment with their present conditions and
encourages them to succeed in the company.
13. ______________ satisfies human need for esteem by others and for self-esteem.
14. Awards may be given in the form of ___________________.
15. The use of ________________ assumes that people’s actions are related to their skills and
ability to achieve important longer-run goals.
7.6 Summary
· The HR specialists design the performance evaluation system, train the line managers in the use
of the systems, and maintain the records.
· The three categories used here will be; individual evaluation methods; multiple person
evaluation methods; and other methods.
· The following methods help to evaluate an employee individually:
-Graphic rating scale
-Forced choice
-Essay evaluation
-Management by objectives
-Critical incident technique
-Checklists and weighted checklists
· Three techniques that have been used to evaluate an employee in comparison with other
employees being evaluated are
-Ranking
-Paired comparison
-Forced distribution
· Recognition satisfies human need for esteem by others and for self-esteem.
· This recognition may be shown in the form of praise, of a pat on the back of the employee or a
recommendation for a pay raise, promotion, or assignment of more interesting tasks.
· An incentive or reward can be anything that attracts a worker’s attention and stimulates him to
work.
· The use of incentives assumes that people’s actions are related to their skills and ability to
achieve important longer-run goals.
· Performance appraisal is limited to a feedback process between employees and Managers.
· However, with the increased focus on teamwork, employee development, and customer service,
the emphasis has shifted to employee feedback from the full circle of sources. This multiple-
input approach to performance feedback is sometimes called "360-degree assessment" to connote
that full circle.
7.7 Caselet
Employees, key contributors to Indian growth story
David Evans would like to call himself a ‘motivational evangelist’. The founder-chairman of the
$460-million performance improvement solution company Grass Roots, and an associate of the
WPP group, Evans says the Indian growth story has been contributed not just by companies but
its key stakeholders – the employees.
The company, which set up operations in India this month, finds that the country offers immense
scope for ‘Performance Improvement tools’. In a freewheeling interview with The New
Manager, Evans (60), reiterated that investments — the trendiest word globally — should be
applied to employees and not to projects.
You have always said that unappreciated workers vote with their feet and one in four quits if the
trend continues?
For any organisation, the biggest investment is not on projects but on its people. Disgruntled
employees are like stretched out elastic bands. They lose their elasticity and hit back. The
essence of investment is retaining, acquiring or improving assets — items that have a place and a
value on the balance sheet. So if a company has lost an employee, effectively it has lost an
investment.
Indian companies are going global. What global best practices should be followed to survive the
attrition crisis?
Companies, like human beings, are also creatures of habit. If an organisation has built bad habits
into itself and doesn’t change them, these habits could accumulate to become life-threatening.
Employee retention training in the workplace is the buzzword. Motivation, both of the
employees and the company, is essential. Companies do very little to motivate their employees.
This is where Performance Management tools come in handy.
How does Performance Management differ from training?
Training has completely eclipsed learning. Performance Management is all about learning newer
values for achieving long-term goals. While training has always been judged quantitatively,
learning without measurement is like a ship without a sail. When companies are becoming
‘glocal’, it is imperative to measure it qualitatively. The budget was spent, the courses took
place, the trainers imparted their skills, the trainees returned to their offices – but what was the
net outcome? Performance Management, on the other hand, is like a good butler. If a company
has a problem, like a good butler we listen and serve to fix it up. It is more like coaching a
company for bigger responsibilities.
Is there a way to measure Performance Management?
Besides statistical analysis, the best way to measure performance management is through
mystery shopping, a tool to measure how well new knowledge is being applied in practice. The
only difference between mystery shoppers and real client customers is that the mystery shoppers
record and reveal what happened to them. In all other respects they are the genuine article,
meeting the demographic profile and living locally. They can find out exactly what it feels like to
be a customer, and how staff reacts to a given scenario that they convincingly enact.
Indian companies are going global. Does culture diversity come in the way of the employee-
employer relationship?
Culture diversity has to be kept in mind especially following any M&A deals. However, constant
dialogue can be cathartic. It breaks barriers and helps in establishing a foothold in the global
arena.
How important are coaching and mentoring to the managerial cadre?

Coaching can unleash the potential on a one-to-one or person-to-person basis in a non-
threatening manner. It is personal therapeutic counselling. Managers are expected to wear the
coaching hat more often than their managerial hats.
Likewise, CEOs are desperately seeking a sounding board and want to partner with someone,
who can help them navigate their business challenges and realise their full potential.
Organisations need to be hand-held and they must provide platforms for engagements.
Source: Business Line Jan 28, 2008
1. Explain the five ways of evaluating an employee individually.
2. Define performance appraisal.
3. Explain briefly, Multiple-person Evaluation Methods.
4. Write short note on:
a. Rewards and incentives
b. Purpose of promotions
5. Explain the concept of 3600 Appraisal.
7.9 Answers
1. Performance evaluation
2. Line managers
3. Top management
4. Work performance
5. a specific time period
6. Performance on the job functions or activities
7. Forced choice
8. Essay technique
9. Critical incident technique
10. Ranking method
11. Paired comparison
12. forced-distribution system
13. Recognition
14. Articles, banquets honouring certain individuals, certificates and plaques etc.
15. Incentives
1. Refer to 7.4.1
2. Refer to 7.3
3. Refer to 7.42
4. Refer to 7.5
5. Refer to 7.4.3
References
1. Human Resources Management by Fisher, Schoenfeldt and Shaw.

Cascio.
MB0043-Unit-08-Compensation
Management
Unit-08-Compensation Management
Structure:
8.1 Introduction
Objectives
8.2 Wage & Salary Administration
8.3 Managing Wages
8.4 Designing & Administering Compensation
8.5 Managing Benefits in Organizations
8.6 Summary
8.7 Caselet
8.9 Answers
8.1 Introduction
In the end everything we do is for a reason, and whether we admit it or not money is ranked as a
key motivator as well as a reason for us to seek employment. This unit is designed to provide an
understanding of the key challenges that compensation/ salary management poses for the
enterprise.
The terms ‘wage’ / ‘salary’ / ‘compensation’ are often used as synonyms. The term wage is
usually associated with contractual employee whose pay is calculated according to the number of
hours worked/ units produced. The word salary/compensation applies to the remuneration that is
paid for a fixed period and does not depend upon the number of hours worked. It is associated
with the white collar worker. Certain theories were propounded for determination of wages but
these could not stand the test of time. A few labour and wage theories are discussed in this unit.
Objectives:
After studying this unit, you will be able to explain:
· Discuss the concepts in organizational compensation
· Define managing compensation
· Evaluate benefits disbursement

8.2 Wage & Salary Administration
The term compensation management, or alternatively, wage and salary administration revolves
around designing and managing policies and methods of disbursing employee compensation.
Traditionally it includes such areas as job evaluation, maintenance of wage structures, wage
surveys, incentives administration, wage changes and adjustments, supplementary payouts, profit
sharing, control of compensation costs, and other related pay items.
Salaried often implies a status distinction, because those who are on salary are generally white-
collar, administrative, professional, and executive employees, whereas wage-earners are
designated as hourly, non-supervisory, or blue-collar. Wage-earners in some organizations do
receive full wage if they are absent for such reasons as sickness, whereas salaried employees,
especially at the lower levels, often receive overtime pay when they work over the standard work
week.
Compensation/ salary systems are designed to ensure that employees are rewarded appropriately
depending on what they do and the skills and knowledge (intellect) required for doing a specific
job. It must therefore provide for the following key factors in order to be effective: The
following factors may be helpful to raise the effectiveness of employees
— Signal to the employee the major objectives of the organizations – therefore it must link to the
overall goals and objectives of the company. For example if doing a quality job is critical for the
company its compensation system has to ensure that this is adequately rewarded. On the other
hand if a company values productivity and units produced, the compensation system would be
designed such that productivity is rewarded.
— Attract and retain the talent an organization needs – the need to benchmark salaries to the
prevalent market standard for that job /skill so that the company is able to attract the right talent.
If a enterprise pays a salary lower that what the market does for that job/responsibilities, the
probability that suitable candidates would take the job offer and join the company. Even if they
do join subsequently when they find that the market pays more for that job they would quickly
find a more remunerative job and leave the company.
— Motivate employees to perform effectively – as discussed at the outset, money is a key

motivator and it often might be the only motivator for most employees, therefore ensuring that
compensation is appropriately disbursed need to be taken care of while designing the
compensation system. Jobs in the brick and motor, production setups would focus on higher
incentive policies that would motivate the employee to produce more while the base-salary
would be low.
— Create the type of culture the company seeks to engender – compensation systems play a
critical role as sponsors for the organizations culture. A performance driven culture would build
compensation policies that clearly and significantly reward performance. A company that
rewards loyalty would reward employees who stay longer in the company with significantly
better incentive programs.
Hence we see how compensation systems are reflective of the organizations over all philosophy
of what its goals and objectives are and how this can be linked to salary payout.
1. The term ______________ is commonly used for those employees whose pay is calculated
according to the number of hours worked.
2. _________________ often implies a status distinction, because those who are on salary are
generally white-collar, administrative, professional, and executive employees, whereas wage-
earners are designated as hourly, non-supervisory, or blue-collar.
3. A __________ is defined as a collection or aggregation of tasks, duties, and responsibilities

that, as a whole, is regarded as the reasonable assignment to an individual employee.
8.3 Managing Wages
The main purpose of wage and salary administration is to establish and maintain equitable wage
and salary programs. The secondary objective is to design and implement an equitable labour-
cost structure. Therefore payout cannot be out-of-sync with the organizations ability to pay it
needs to be able to satisfy the employees as well as employers, profits maximised and conflicts
minimised.
Wage and salary administration is concerned with the financial aspects of needs, motivation and
rewards. Managers, therefore, analyse and interpret the needs of their employees so that reward
can be suitably designed to satisfy these needs. We will now review a few of the important
theories that support the design of wage systems.
The word ’salary’ is defined in the Oxford Dictionary as ‘fixed periodical payment to a person
doing other than manual or mechanical work’. The payment towards manual or mechanical work
is referred to as wages. The word pay refers to the payment for services done which would
include salary as well as wages.
Wages are commonly understood as price of labour. In ordinary parlance, any remuneration paid
for services is etymological wage. Benham defines wage as “‘a sum of money paid under
contract by an employer to a worker for services rendered.”
Labour was always looked upon as a commodity governed by the law of supply and demand.
Certain theories were propounded for determination of wages but these could not stand the test
of time. A few theories are discussed below:
Subsistence theory: This theory, also known as ‘Iron Law of Wages’, was propounded by David
Ricardo (1772-1823). According to this theory, wages tend to settle at a level just sufficient to
maintain the workers and his family at minimum subsistence levels. The theory applies only to
backward countries where labourers are extremely poor and are unable to get their share from the
employers.
Standard of living theory: This theory is a modified form of subsistence theory. According to
this theory, wages are determined not by subsistence level but also by the standard of living to
which a class of labourers become habituated.
Residual claimant theory: Francis A. Walker (1840-1897) propounded this theory. According to
him, there were four factors of production/ business activity viz., land, labour, capital and
entrepreneurship. Wages represent the amount of value created in the production which remains
after payment has been made for all these factors of production. In other words, labour is the
residual claimant.
The wage fund theory: According to this theory, after rent and raw materials are paid for, a
definite amount remains for labour. The total wage fund and the number of workers determine
the average worker’s share in the form of wages.
Demand and supply theory: According to this theory, wages depend upon the demand and
supply of labour.
Marginal productivity theory: This is an improved form of demand and supply theory. Wages
are determined by the value of the net product of the marginal unit of labour employed.
Purchasing power theory: According to this theory the prosperity, productivity and progress of
industry depend on there being sufficient demand to ensure the sale of its products and pocketing
of reasonable profits. A large pact of the products of industry is consumed by workers and their
families and if wages are high, demand will be good. However, if wages and the purchasing
power of the workers are low, some of the goods will remain unsold; output will go down, which
will result in unemployment.
The bargaining theory of wages: John Davidson propounded this theory. According to him,
wages are determined by the relative bargaining power of workers or trade unions and of
employers. When a trade union is involved, basic wages, fringe benefits, job differentials and
individual differences tend to be determined by the relative strength of the organization and the
trade union.
The Tribunals and Wage Boards have generally followed the-principles laid down in the Fair
Wages Committee’s Report on fixing wages. The Committee, in its report, has focused on wage
differentials and has identified the following factors for consideration for fixation of wages:
1. The degree of skill.
2. The strain of work.
3. The experience involved.
4. The training involved.
5. The responsibility undertaken.

6. The mental and physical requirements.
7. The disagreeableness of the task.
8. The hazard attendant on the work, and
9. The fatigue involved.
Classification of wages: The International Labour Organization (ILO) in one of its publications,
classified wages as under:
1. The amount necessary for mere subsistence;
2. The amount necessary for health and decency; and
3. The amount necessary to provide a standard of comfort.
In India, wages are classified as below :
a. Minimum wage
b. Fair wage; and
c. Living wage
Minimum wage: A minimum wage has been defined by the Committee as "the wage which must
provide not only for the bare sustenance of life, but for the preservation of the efficiency of the
worker. For this purpose, the minimum wage must provide for some measure of education,
medical requirements and amenities". In other words, a minimum wage should provide for the
sustenance of the worker’s family, for his efficiency, for the education of his family members,
for their medical care and for some amenities. It is very difficult to determine the minimum wage
because conditions vary from place to place, industry to industry and from worker to worker.
However, the principles for determining minimum wages were evolved by the Government and
have been incorporated in the Minimum Wages Act, 1948, the important principle being that
minimum wages should provide not only for the bare sustenance of life but also for the
preservation of the efficiency of the workers by way of education, medical care and other
amenities.
Fair Wage: According to the Committee on Fair Wages, "it is the wage which is above the
minimum wage but below the living wage." The lower limit of the fair wage is obviously the
minimum wage; the upper limit is set by the "capacity of the industry to pay". Between these two
limits, the actual wages should depend on considerations of such factors as:
i) The productivity of labour;
ii) The prevailing rates of wages in the same or neighbouring localities;

iii) The level of the national income and its distribution; and
iv) The place of industry in the economy.
Living Wage: This wage was recommended by the Committee as a fair wage and as ultimate
goal in a wage policy. It defined a Living Wage as "one which should enable the earner to
provide for himself and his family not only the bare essentials of food, clothing and shelter but a
measure of frugal comfort, including education for his children, protection against ill-health,
requirements of essential social needs and a measure of insurance against the more important
misfortunes including old age". In other words, a living wage was to provide for a standard of
living that would ensure good health for the worker, and his family as well as a measure of
decency, comfort, education for his children, and protection against misfortunes.
Generally, ascertaining wages and deciding who to pay what is a activity undertaken in the
beginning when a organization is set up. Thereon it is annual reviews to make corrections per the
country’s economic and market/industry trends. The management considers the state of the
labour market and takes into account of what he can afford to pay and the value of the worker to
him. The workers’ willingness for employment at the rate offered implies that they agree to work
at that rate, though they have had no part in fixing it.
1. Collective Bargaining: Collective bargaining is still in the initial stage in India. Although it is
a desirable development in the relations between management and labour, it cannot be imposed
upon either side by compulsion and should evolve naturally from within.
2. Voluntary Arbitration: In voluntary arbitration, both parties agree to refer their dispute to
mutually agreed arbitrator and his award becomes binding on the parties.
3. Wage Legislation: Wages are fixed according to law in some industries. The Central
Government and State Governments may fix minimum wages under the Minimum Wages Act of
1948 for industries in which workers are exploited or too unorganized to protect their own
interests. In order to advise them in the matter of fixing minimum wages, the Governments
appoint Minimum Wages Committees and the Advisory Boards. The Committees and the
Advisory Boards consist of equal number of workers and employers representatives and also
independent members whose number should not exceed one- third of the total number of
members.
4. Conciliation: The Industrial Disputes Act, 1947, provides for consideration in case of disputes
between employers and workers. If an agreement is reached in the course of conciliation
proceedings, it becomes binding on the parties and takes effect from the date agreed upon or
from the date on which it is signed by the two parties. In case no agreement is reached, the
Conciliation Officer sends a full report of the proceedings. On receipt of this report, the
government may decide to refer the case to Industrial Tribunal for award.
5. Adjudication: Labour courts and Industrial Tribunals are set up under the Industrial Disputes
Act, 1947. On studying the awards one gets the impression that the adjudicators are attempting to
justify their decision in social and ethical terms. At the same time, there is a desire to satisfy both
parties to the dispute, and therefore, economic factors such as capacity to pay, unemployment,
profits, condition of the economy or welfare of the industry concerned, are given due
prominence.
6. Wage Boards: The boards are appointed by the Government and usually consist of seven
members – two representatives of management, two of labour, two independent members and a
chairman. The board is expected to take into account the needs of the specific industry in a
developing economy, the special features of the industry, the requirements of social justice, and
the necessity for adjusting wage differential in such a manner as to provide incentives to workers
for advancing their skill. Its recommendations may be accepted by the Government either
completely or partly, and may be statutorily imposed on the industry in question, or may be
rejected.
In a nutshell, wages are influenced both by social and economic factors. In one case, economic
factors may play a major role, whereas in another, social factors may be predominant. Thus,
wages are product of both social and economic factors.
4. The term …………… is commonly used for those employees whose pay is calculated
according to the number of hours worked.
5. The term ………. is defined in the Oxford Dictionary as ‘fixed periodical payment to a person
doing other than manual or mechanical work’.
6. ……….. theory is also known as ‘Iron Law of Wages’,
7. …………….. Theory was propounded by Francis A. Walker.
8. ……………….. Has been defined by the Committee as "the wage which must provide not
only for the bare sustenance of life, but for the preservation of the efficiency of the worker.”
Activity 1:
9. You will benefit from understanding the common Indian statutory laws that
govern compensation. Browse the internet to read up the “Minimum Wages
Act” and make notes of the key points. Read the Provident Fund Act and the
Gratuity Act as well.
8.4 Designing and Administering Compensation
A lot of the design of compensation dispensation in modern times is based on the theoretical
framework provided by the Equity theory. The Equity theory states that satisfaction with pay is
always with reference to relevant others. The following equation provides the details of the
consideration that influence the sense of satisfaction that an employee experiences w.r.t. salary:
The employee very naturally and often unconsciously identifies ‘relevant’ others who are similar
to himself/herself professionally / w.r.t. the job characteristics / the skill-set etc. The employee
then begins to constantly compare and evaluate to retain a state of equilibrium. When the left
hand side of the equation is equal to the right hand side there is no dissonance and the employee
is happy and satisfied in what he’s getting paid.
When the employee perceives a dissonance in the way he is paid vs. what the relevant other is
paid there is discomfort and dissatisfaction at work. If the left side of the equation is lower than
the right hand side of the equation it is a case of the employee under-reward and he/she can opt
to engage in the following course of action:
• Individual could ask for a raise

• Individual could reduce contribution (work less hard)
• Individual could try to get the Other to reduce contribution
• Quit or
• Choose another relevant / comparison other
If the left hand side of the equation is higher than the right hand side it is a case of over-reward
and the employee normally reacts in the following ways:
· Individual could increase contributions (work harder or longer, cultivate additional skills)
· Individual could attempt to get the Other a raise
· Individual could attempt to get Other to increase his/her contribution
· Quit the job as he/she is soon singled out by the others
· Choose another relevant/comparison Other
Therefore in designing pay systems organizations need to pay attention to all three dimensions of
equity; internal Equity:- A pay differential between different jobs, within the organization
either too large or too small. external Equity: comparison of similar jobs in different
organizations and individual Equity: comparison among individuals in the same job with the
same organization. How do organizations achieve this delicate balance among so many
variables?
Internal Equity is best established by ensuring that each and every job internally is appropriately
compared and benchmark. Carrying out job evaluation exercises and reviewing it from time to
time takes care of this challenge. Additionally providing employee transparency in the way jobs
are ranked and aligned to levels within a common hierarchy is critical. We will spend time in the
next chapter understanding this in a detailed manner.
External Equity is established by organizations participating in salary surveys where the
organization’s own salary levels are benchmarked with comparative companies in the same
industry to ascertain how they pay vs. the market. This is usually done by engaging with a third
party consultant specializing in carrying out salary/compensation surveys. The steps in a
compensation survey activity would normally be
· Identify and assign a consultant to carry out the salary survey
· Identify the jobs / roles that the company wants to benchmark – a company might not want all
jobs to be benchmarked as it is expensive, only those jobs that are critical to the business might
be identified for benchmarking against the market.
· Identify the companies in the industry that it wishes to benchmark against – peer / competitor
companies with whom the company competes in the market and with whom the fight for talent is
on are common examples, however companies that pay way above or below the normal market
trends might be eliminated to ensure that more stable data is used for comparison.
· Share all information related to the identified jobs such as job description, job specification,
person specification, level in the organization, salary and benefits and other perquisites provided
· Consultant provides the report. Review the report to ascertain where the company stand w.r.t.
its competitors.
· Take corrective action as required/ as per compensation philosophy and ability to pay
As this is a expensive and time consuming process organizations normally do a survey once in 2-
3 years, however larger MNC’s might want to do one every year. Companies can also purchase
off-the shelf industry specific compensation survey reports that are published by these
consultants and do their own benchmarking with the help of the internal HR teams.
Another important pay level decision is the way the organization wishes to benchmark its pay
level on a overall basis. An organization can decide to lead the market and pay its employees
closer to the top end of the benchmarked salary ranges, else it can lag the market and
intentionally peg itself at the lower end of the salary ranges from the survey results. An
organization can decide to ‘match’ the market and pay salaries at the market average. Therefore,
in keeping with their pay philosophy a company can decide to pay at the 75th percentile of the
market. Therefore it would benchmark itself against the 75th percentile on the survey results
obtained from a custom survey or a off-the-shelf one.
Individual equity is established through having clearly laid down compensation policies and
guidelines. The focus here is on transparency where the employee is satisfied because he knows
that he as well as comparison others are paid similarly and as per the declared compensation
guidelines. Few elements that ensure a fair policy exists:
• Establishing Pay Ranges commensurate with the levels in a organization

• Provide for Broad-banding clubbing levels into few bands that will make promotions
meaningful and relevant
• Ensuring that there are no employees above or below a range, exceptions break the rule
and results in lack of credibility
• Ensure that the criteria for ascertaining individual pay is clearly linked to merit, skill or
seniority, avoid ambiguity for bias that might breed favoritism or nepotism
• Some medium as also most large family-run organizations provide for employee
participation / negotiation of pay terms. Usually this provision is for key and top
performing employees. It is important for a organization to be clear on whether this is
allowable or not. If not clarified this can become a big de-motivator for other employees
and a source of inequity.
• Ensure that compensation system is compliant with the countries statute, like minimum
wages, provident fund, gratuity, paid leave, tax considerations and standard deductions
Compensation design of policy and guidelines is managed by a dedicated Compensation and

Benefits team which is a part of the Human Resources Team. Compensation administration i.e.
payroll processing is however more of a Finance department activity. Often organizations also
outsource this activity. Companies like Accenture, Hewitt, ADP are common payroll processing
consultants.
10. When the employee perceives a _______________in the way he is paid vs. what the relevant
other is paid there is discomfort and dissatisfaction at work.
11. In designing pay systems organizations need to pay attention to all three dimensions of equity
___________, ____________________, and _______________.
12. Compensation design of policy and guidelines is managed by a dedicated

_________________________.
8.5 Managing Benefits in Organizations
Managing employee Benefits is a critical part of the entire compensation policy and particularly
so as the cost is completely borne by the company. There is no scientific way of ascertaining its
impact on factors such as employee satisfaction and employee retention or productivity for that
matter.
In designing Benefits packages organizations need to pay attention to the following aspects:
· Legal and local laws of the land that require statutory compliance
· The positioning of Benefits in the total compensation strategy
· Are the benefits provided consistent with the long term strategic business objectives and plans
· Are our benefits meeting the needs and expectations of the employees and their dependents
· Are we competitive w.r.t. the choice of benefits, adequacy and equity and costs vs. the
industry / our competitors
The components of a benefits package are commonly practiced as; Security and Health Benefits -
which focuses on the provisions made by the employer w.r.t. Life Insurance, Worker
Compensation, Accident Insurance, Medical Insurance for self and dependents (where different
companies could differently categorise dependents, some might include parents as dependents,
some might limit it to spouse and children only), other medical coverage, Provident and Pension
Plans, Severance Pay etc.. Organizations might even have other health benefits programs like
Health Check-up Camps, Dental Camps and other employee wellness initiatives. The modern
organizations of today provide for on-campus gymnasium facilities or the reimbursement of
gymnasium / health club membership. Other reimbursement plans like reimbursement of
telephone bills and broadband bills where these facilities might not be entirely used for business
purposes alone. Reimbursement of conveyance costs including providing for pick-up and drop
facilities for their employees. Also included are catering of lunch and snacks in addition to
sophisticated on-campus food-courts and even departmental stores, all with the objective of
helping the employee manage better work – life balance. Another popular benefit is the provision
for crèche facilities for the infants of employees. While the larger companies can afford a on-
campus or adjacent crèche which is for the children of only the employees, other companies
allow for the reimbursement of the cost of crèche for their employee’s children. Organizations
like Cognizant and IBM go a step further by organizing for Children’s camp during the school
vacations. Organizations also provide for employee counselling/ assistance programs and
facilities. Some might tie-up with professional counsellors to provide remote/ over phone/email
counselling services, while some other companies provide for on-campus employee assistance
kiosks manned by professional counsellors visiting the facility 2-3 times a week. Some
organizations might insist on few benefits to be contributory where the employee might need to
bear part of the cost.
The challenge in managing benefits is that while it costs a lot it is often taken for granted by the
employees. The dilemma of finding the right balance of benefits and cash compensation is a on-
going one. Like for Compensation, Benefits too are benchmarked by organizations and
implemented keeping the market practices and trends in view. The key to leveraging the
investment made by organizations on benefits can be got by adequate communication making
employees aware of them. It includes, providing clarity on how to apply for and claim benefits,
as well as hold road-shows show-casing the benefits and what the employee can avail of. It
focuses on to remind the employees that they are part of the ’total compensation package’.
Most large and medium sized organizations manage compensation and benefits through state-of-
the-art HRMS (Human Resource Management Systems) and the corporate intranet portals.
Employee can enrol on-line for the benefits, ask queries, look up the policies and review the
outstanding and balance status of the various benefits. They can view deadlines, apply for the
various benefit claims and track reimbursement status on-line. This brings a lot of empowerment
to the employee as well as awareness of the total benefits that he/she and their dependents are
eligible for.
Some common metrics used to assess the investments made by a company on Benefits:
a) Annual cost of benefits for all employees
b) Cost per employee per year
c) Percentage cost of payroll
d) Percentage cost of total costs
In these times of economic challenges organizations are closely tracking the investments and
driving efficiency.
Activity 2
Talk to a friend/relative in a corporate and ascertain the different benefits that

the company provides for the employees. Differentiate between the statutory
and the non-statutory ones. Also try and identify the ones that are specific to
the industry and not common to all.
12. There is no scientific way of ascertaining the impact of ___________ on factors such as
employee satisfaction and employee retention or productivity
13. Some organizations might insist on few benefits to be _____________ where the employee
might need to bear part of the cost.
14. The challenge in managing benefits is that while it costs a lot it is often
_________________by the employees.
8.6 Summary
1. In residual theory, there were four factors of production/ business activity viz., land, labour,
capital and entrepreneurship. Wages represent the amount of value created in the production
which remains after payment has been made for all these factors of production.
2. Wage Boards are appointed by the Government and usually consist of seven members – two
representatives of management, two of labour, two independent members and a chairman.
3. Fair wage is the wage which is above the minimum wage but below the living wage.
4. Per the Equity theory satisfaction with pay is always with reference to relevant others.
5. Managing employee Benefits is a critical part of the entire compensation policy

6. The challenge in managing benefits is that while it costs a lot it is often taken for granted by
the employees.
7. The challenge in managing benefits is that while it costs a lot it is often taken for granted by
the employees.
8. The key to leveraging the investment made by organizations on benefits can be got by
adequate communication making employees aware of them
9. In these times of economic challenges organizations are closely tracking the investments and
driving efficiency.
8.7 Caselet
Starlight Achieves Consistency and Transparency in Incentive Planning and Management
Inconsistencies affect goal setting and payouts:
As is typical in the hotel industry, Starlight’s sales people move around a lot. And many of them
move from hotel to hotel across the Starlight portfolio of properties. To track performance,
Starlight relied on a semi-automated, Excel- based process, where each hotel accessed centrally-
stored data and entered those numbers into a spreadsheet.
“It was hard to know if everyone, at each hotel, was using the same calculations or adding their
own calculations into the spreadsheets,” says Rob Peters, Vice President Sales Administration
for Starlight. “The lack of transparency in goal setting also made it difficult to ensure that
individual hotels were rolling up into divisional goals. So it became quite time intensive to
implement the required checks and balances on those processes.”
A new approach to setting goals and modeling plans :
Peters recognized the need for a new solution and chose ServeC after a competitive review. He
was impressed by the technology but also by ServeC’s quick grasp of Starlight’s business
requirements. For Peters, there was a synergy between the companies and personalities, and he
was impressed by ServeC’s eagerness to devise a creative solution that maximized Starlight’s
return on investment for the project.
“We definitely had challenges in the process, but ServeC listened and collaborated with us to
find solutions,” says Peters. “With this type of project, it is critical to have a dedicated business
and IT person on board right at the beginning. And preparation is essential – know what you
want compare and prepare and have a strong sense of your expectations around feel and
functionality.”
Currently, Starlight has more than 2000 ServeC system users. At the beginning of the year,
Starlight uses ServeC to set goals by division, by region, by individual hotel, by business type,
by individual and by line of business/targeted measure. On a monthly basis, users input
performance actuals into the system, which integrates with SAP for reference values and
calculates accurate payouts.
With ServeC, Peters can ensure that sales people are using the most up-todate plans and
documents. He can make plan changes instantly and have immediate insight into the sales people
affected by the change. Eliminating the separate spreadsheets from each location has enabled
more effective modeling as well. Peters can add, modify, pick and choose measures and
understand how they will affect performance.
“When payouts are a significant percentage of a seller’s total compensation, it is critical to

maximize the dollars you put into your plans so you can focus on motivating through promotions
and incentives,” says Peters. “Having automated modeling capabilities enables me to use the data
that we have in our systems strategically to identify the best way to spend our dollars on driving
performance.”
Accuracy and transparency support changing sales strategies:
By replacing the semi-automated, spreadsheet-based process with ServeC,
Peters eliminated his key challenges in incentive planning and management.
“We have total transparency in our goal setting, ensuring that sellers align at the hotel, regional
and divisional level. Each goal and measure must be assigned to a sales manager, and the system
enables simplified checks and balances. With ServeC, we also have the flexibility to change
measures and weightings in our plans to adapt quickly to changing market conditions.”
Peters is also able to track internal turnover more efficiently because each employee has one
system log on, regardless of how many different hotels they sell. In addition, Peters no longer
has to direct time to checking performance numbers from each hotel, freeing him up to complete
higher value activities including business modeling and improved management reporting.
1. Explain Wage Administration Policy. What are the ways by which wages and salaries are
managed in India?
2. Describe the process of Wage Fixation and the machinery available for it.
3. Discuss the workplace implication of the Equity Theory.
4. What are the challenges in Benefits Management and how do organizations cope with it?
8.9 Answers

1. Wage,
2. Salaried,
3. Job
4. Wage
5. Salary
6. Subsistence theory
7. Residual claimant theory
8. Minimum wage
9. Dissonance
10. Internal Equity, external equity, and individual equity
11. Compensation and Benefits team
12. Benefits
13. Contributory
14. Taken for granted
1. Refer to 8.2
2. Refer to 8.3
3. Refer to 8.4
4. Refer to 8.5
Reference:
1. Managing Human Resources-Productivity, Quality of Work Life, Profits by Wayne F.Cascio

.
MB0043-Unit-09-Job Evaluation
Unit-09-Job Evaluation
Structure:
9.1 Introduction
Objectives
9.2 Concept of Job Evaluation
9.3 Objectives of Job Evaluation
9.4 Job Evaluation Methods
9.5 Advantages and Limitations of Job Evaluation
9.6 Introduction to Competency
9.7 Promotion & Transfers
9.8 Summary
9.9 Caselet
9.11 Answers
9.1 Introduction
Research indicates that 50% of job performance problems are due to people being in the wrong
job. And 25% of the on-the-job performance problems are associated with the inability to
identify the ‘gaps’ between the competencies of the person and the job requirements. Given these
statistics the need to understand the requirements for performing a job well and what qualities
the individual must have to do a good job is critical. This Unit focus on understanding the
traditional time-tested approach of ‘Job Evaluation’ which is still practised in most organizations
as well as the emerging ‘competency mapping’ modern approach, prevalent in the larger MNC’s.
Some form of job evaluation is invariably part of a formal compensation management

programme. The objective of job evaluation is to rank and price the job rather than the man. Job
evaluation is concerned with assessing the value of the job in relation to another for it is only
when each job has been properly evaluated that a sound compensation structure can be built. And
the fundamental concept of job evaluation is to be able to objectively assess the worth of the job
w.r.t. the skills and capabilities that is required to execute it. The British Institute of Management
has defined job evaluation as “the process of analysis and assessment of jobs to ascertain reliably
their relative worth, using the assessment as a basis for a balanced wage structure”.
Objectives:
After studying this chapter you will be able to:
1. Discuss the concept of job evaluation.
2. State the objectives of job evaluation.
3. Evaluate the job evaluation methods.
4. Summarize the need to transfer or promote the employees.
5. Evaluate the importance of job evaluation.
9.2 Concept of Job Evaluation
All job evaluation systems depend heavily on job analysis and job description. Job analysis
indicates the specific duties to be performed by the employee and the circumstances under which
these duties are to be performed. A job description is a written record of the duties,
responsibilities and conditions of the job. The job description provides ‘ the essential information
on which each job is evaluated. The resulting measures of values are then translated into wage
and salary rates.
"Job analysis is the process of getting information about jobs; specifically, what the employee
does; how he gets it done; why he does it; skill, education and training required; relationships to
other jobs; physical demands and environmental conditions".
Job analysis and job evaluation do not replace, judgement in the administration of the pay
structure. They merely provide facts in so far as facts can be obtained through observation on
which management and employees may base their decisions.
1. A _____________ is a written record of the duties, responsibilities and conditions of the job.
2. Job analysis is the process of _________________; specifically, what the employee does; how
he gets it done; why he does it; skill, education and training required; relationships to other jobs;
physical demands and environmental conditions
3. Job analysis and job evaluation do not replace, judgment in the …………………
9.3 Objectives of Job Evaluation
The decision to measure or rate jobs should only be made with the intent to reach certain
objectives which are important to both management and the employee. Although there are many
side benefits of job evaluation, the purpose is to work towards a solution of the many wage and
compensation related administrative problems which confront the industry. The below-
mentioned are some of the important objectives of a job evaluation programme:
1. Establishment of sound salary differentials between jobs differentiated on the skills required.
2. Identification and elimination of salary-related inequities.
3. Establishment of sound foundation for variable pay such as incentive and bonus.
4. Maintenance of a consistent career and employee growth policy/ guidelines.
5. In organizations with active unions, creation of a method of job classification, so that

management and union officials may deal with major and fundamental wage issues during
negotiations and grievance meetings.
6. Collection of job facts
a) Selection of employees
b) Promotion and transfer of employees
c) Training of new employees
d) Assignment of tasks to jobs
e) Improving working conditions
f) Administrative organization, and
g) Work simplification.
There are many established methods to carry out job evaluation in a scientific manner. A four-
fold system of classifying evaluation systems is presented here. Two are described as non-
quantitative and two as quantitative.
1. Non-quantitative evaluation measures,
a. The ranking system.
b. The job-classification system.

2. Quantitative evaluation measures.
a. The point system.
b. The factor-comparison system.
Activity 1
Look at people around you that you come in contact with from 6am in the
morning to 10am.
List the jobs these individuals do.
Now spend a few minutes to quickly write down 5 attributes that are required
to do the job
Use this information to rank order the jobs
You must be having an idea of what their monthly income might be(ask
them if you can)
Now compare the job ranking you did with the earnings
What are your observations?
4. ______________________ is the purpose is to work towards a solution of the many wage and
salary administrative problems which confront the industry.
5. _______________________ systems are the ranking system and the job-classification system.
6. Quantitative job evaluation measures are _______________________.
9.4 Job Evaluation Methods
Ranking Method: Jobs are compared one with another and arranged or valued in the order of
their importance or their difficulty or their value to the firm. It is a highly subjective method and
depends upon the experience of the people doing the ranking.
Grade Description Method: This method depends upon recognition that there are differences in
the levels of duties, responsibilities and skills required for the performance of different jobs.
These differences, once recognized, can be expressed as grades or levels. These grades can then
be defined and jobs classified by the selection of a particular grade or each job to correspond to
its worth.
Point Method: Jobs show characteristics which are common to all or most. These
characteristics, called factors, generally fall under the four headings- skill, effort, responsibility
and conditions. To each factor is attached a number of points, the number varying according to
the ‘degree’ of the factor involved. The sum of all the points for a job permits its comparison
with other jobs and thus a scale of pay is arrived at.
Factor-Comparison Method: This is associated with the name of E.J.Benge. Each factor (as in
the point method) is ascribed a money value. Key jobs, representing the various levels or grades
are ranked factor by factor and upon this ranking, a scale of pay/money value is prepared. The
sum of the values for each factor is taken to be the money value of job.
Time-Span Method: It was propounded by Professor Jaques that the higher in the hierarchy of
organizational structure of jobs the longer the period before the results of a decision are
scrutinized for adequacy. An analysis of time-spans for different jobs yields a scale of pay felt to
be fair.
Guide-Chart Profile Method: This is associated with the name of

Dr. E.N.Hay. Three factors, know-how (education/experience), problem-solving, and
accountability (responsibility) are each divided into eight degrees or levels and these, qualified
by a second, or ‘breadth’ dimension, each factor and breadth being concerned with some aspect
of decision-making. Points are awarded for each degree as it is qualified, and the sums for
different jobs are compared.
7. The __________________________ depends upon recognition that there are differences in

the levels of duties, responsibilities and skills required for the performance of different jobs.
8. In the _______________________, each factor (as in the point method) is ascribed a money
value.
9. In the _____________________to each factor is attached a number of points, the number

varying according to the ‘degree’ of the factor involved.
9.5 Advantages and Limitations of Job Evaluation
Advantages:
1. Job evaluation is a logical and an objective method of ranking jobs relatively to each other. It
may thus help in removing inequities in existing wage structures and in maintaining sound and
consistent wage differences in a plant or an industry.
2. The method replaces accidental factors occurring in less systematic procedures of wage
bargaining by more impersonal and objective standards, thus establishing a clearer basis for
negotiation.
3. The method may lead to greater uniformity in wage rates and simplify the process of wage
administration.
4. Information collected in a process of job description and analysis can be used for improvement
of selection, training, transfer and promotion, procedures on the basis of the comparative job
requirement.
Limitations:
1. Though there are many ways of applying job evaluation in a flexible manner, rapid changes in
technology and in the supply of and demand for particular skills, create problems of adjustment
that may need further study.
2. When job evaluation results in substantial changes in the existing wage structure, the
possibility of implementing these changes in a relatively short period may be restricted by the
financial limits within which the firm has to operate.
3. When there are a large proportion of incentive employees, it may be difficult to maintain a
reasonable and acceptable structure of relative earnings.
4. The process of job rating is, to some extent, inexact because some of the factors and degrees
can be measured with accuracy.
5. Job evaluation takes a long time to complete, requires specialized technical personnel and is
quite expensive.
10. _______________ is a logical and an objective method of ranking jobs relatively to each
other.
11. Information collected in a process of _______________ can be used for improvement of

selection, training, transfer and promotion, procedures.
12. When there are a large proportion of incentive employees, it may be difficult to maintain a
reasonable and acceptable structure of __________________.
9.6 Introduction to Competency
First popularised by Boyatiz, competency is defined as “A capacity that exists in a person that
leads to a behaviour that meets the job demands within parameters of organizational and that in-
turn bring about the desired results”; “An underlying characteristic of a person results in
effective and/or superior performance on the job”.
Competency can be thought of a as a tool that can be used to map ‘best-in-class’ performance the
best performer is always called the competent performer. Competencies are based on
Knowledge – information accumulated in a particular area of expertise, Skills – the
demonstration of the expertise, Motive – the recurrent thought that drives behaviour, Attitude-
self-concept, value and self image, Traits – a general disposition to behave in a particular way.
There are two sets of competencies: Threshold competencies – they are the characteristics that
any job holder needs to have to do that job effectively, but do not differentiate between average
and superior performer; Differentiating competencies – are characteristics which superior
performers have but is not present in average performers. This thinking holds the key to
differentiate employees based on competencies they possess and there compensation and growth
within the companies in modern companies.
There are therefore competency frameworks that define the competency requirements that cover
all the jobs in an organization. These consist of the both work specific as well as behavioural
competencies. Each job in the organization is profiled for the competencies needed and these are
then placed on to a common framework. Depending on the value of that competency, the number
of competencies, the proficiency level of the competency and the competency’s’ uniqueness, the
job worth can be assessed in a comparative manner.
Organizations need to invest significantly and usually outsource the activity of competency
mapping. But done it remains relevant and in active use for the next 4-5 years unless there is a
significant change in the way the company conducts its business and its operating practices.
Once established a competency framework helps:
1. One universal set of competencies for all positions and employees in these positions
2. Builds a common language and frame of reference for everyone
3. Merit of each positions / individual
4. Makes it easier to compare positions and employees across the job functions in the
organization
5. It helps align everyone towards a common culture and can support any culture change process
Activity 2
Use the work you did as Activity 1.
For each job list the competencies that are required.
Create a grid of all competencies for all of the positions, as one column each,
don’t repeat common competencies
List the jobs along the rows
Now check box the jobs with the competency and the proficiency
Now place the earning for each job in the last column
What does this data tell you about the jobs and the way they are paid?
Linking Competency to HR Systems –
One of the key benefits of the competency based management approach is its usage to build all
of the other HR systems such as recruitment, performance management, training and
development, career development, compensation management and Succession planning. Let’s
study them one by one.
Recruitment and selection: The Competency profile for a job serves as the reference for the
candidate hunt for the position. It is used at multiple stages in the recruitment and selection
process
· Job Description and competency profile shared with the recruitment consultant as well as
hosted on the company intranet and internet site for prospective applicants to view
· Use the competencies to design the appropriate selection tests and other methods
· Assessment forms for interviewers to contain the competency list and specify the desired
proficiency levels
Performance Management: Increasingly the focus in most organizations using competency

frameworks is to build competency based performance assessment processes. The employees’
performance is assessed on the core tasks and results as well as on the competencies required for
the job he/she is doing. If there are gaps between the desired proficiency and the current
proficiency of the employee the employee is reviewed for development initiatives to improve the
competency. If the employee has competencies above the desired proficiency he is potential
talent and needs to be nurtured for other roles and higher responsibilities.
Training Needs: as explained above the information on gaps in competencies are collated for
employees across the organizations and suitable training interventions are designed. The
methodology used for competency improvement is usually action learning based. Focus is on
internalising the learning by ensuring workplace application projects and activities. Manager
support in making competency training useful is important.
Career Planning: Competency assessments are popularly used for helping an employee discover
his strength competencies and therefore serve as effective means for the employee to identify
what roles/jobs can be best for the competencies the employee possesses. Most career planning
assessment and activities are built on enhancing the employee’s strength areas and indentifying
jobs that match the strengths.
Compensation philosophy: while there is significant work done in researching competency based
compensation, the practical application of competency based compensation system is not as easy.
The competency framework provides a common benchmarking of all jobs across the
organization on the competencies required and the proficiency level for the competency. This
framework is then mapped to levels or grades that create a job to level mapping. The levels have
ranges of compensation that can be paid for any job at a specific level. For example if there are
25 job clusters in a company. Each job cluster can have anywhere between 5 to 17 jobs. Each job
in the job cluster is mapped to a level in the company. So if a particular job cluster has 5 jobs
each job has a set of competencies and proficiency and this determines the level of the job and let
us assumes it maps to Level 42 in the compensation system. All Level 42 jobs are mapped to
compensation range with a Minimum salary of Rs.45,000 and a maximum salary of Rs.1,20,000.
This range specifies the recommended salary range for a employee in this job. Ideally a new
employee being hired to this job should be paid not less than the minimum specified for this job.
A employee doing a extremely good job in the role and has been in the role for close to
3 years should be getting a salary closer to the maximum in the range.
Succession Planning: competency based management is most effective in succession planning

initiatives. Competency assessment is a widely used to identify and nurture talent in
organizations. Most succession planning decisions use the competency assessment data for the
employee and this along with the career planning data are used to ascertain employee readiness
and inclination for new roles and responsibilities in the critical roles identified for succession
planning.
13. Competencies are underlying characteristic of a person which results in effective and/or
____________performance on the job
14. There are two sets of competencies, ___________________________ and

__________________________.
15. The _________________________for a job serves as the reference for the candidate hunt for
the position.
16. The competency framework provides a common benchmarking of all jobs across the
organization on the ____________________________ and
__________________________________________.
9.7 Promotions and Transfers
From a general point of view, selection involves the following types of problems:
1. Selection from within or outside the company

2. Hiring new employees from outside the company.
3. Promotion within the company
4. Discharge of old employees.
Promotion: A few companies do have a clear cut policy while certain organisations issue
circulars as and when they need. Many companies develop policies over a period of time through
settlements and agreements with the employees/unions.
In promoting employees consideration should be given for establishment of the horizontal or

vertical promotion. The desirability of securing assistants who complement rather than
supplement their superiors is the major point in a successive plan which is an integral part of
manpower planning.
Let us understand only two types of promotion – Vertical & Horizontal promotion. In Vertical
Promotion, employees are promoted from one rank to the next higher rank in the same
department or division. This is based on the belief that this leads to effective utilization of
experience gained in the same department. It also gives an opportunity to the employees to go up
while increasing their specialization in their area of operation. However, it has got one
disadvantage. The vacancies may be very few in a department. E.g. In a big University, a
Lecturer working in a particular Department may not become a Professor or the Head of the
Department unless his superiors die/retire/resign. This makes the person frustrated. Besides, this
type of promotion limits a person’s contact with other departments and does not permit him to
enhance his knowledge/expertise with each year’s experience. Because his experience would be
one or two year’s knowledge multiplied by 10 to 15 years rotation. If he does not get his
promotion at the right time since the room at the top is limited he will also start disliking his job /
organisation. As a result, he becomes counter-productive.
Horizontal promotions are considered an alternative to this by certain organisations. Under this
policy, an employee may be transferred from a position in one department to a position of higher
rank in another department or to the same rank in a different department if the transfer gives him
an opportunity to acquire greater knowledge and wider experience. E.g. if a Senior Lecturer
cannot get promotion in a particular Department for obvious reasons, he may be transferred as
Registrar of the University or as Controller of Examinations or Director of Distance Education.
However, there is one difficulty. Unless the person is quite dynamic and intelligent, he may find
the new assignment a tough one and irksome. To some, it may be a cause for frustration.
However, for many, Horizontal promotion even if it is only a paper promotion is a challenge
since it allows them job rotation.
The Next question to be answered is the type of man to be promoted. There is a natural tendency
for an executive to select as his assistant one who has the same or similar abilities as his own.
This may not result in most efficient combination. It is often observed that the assistant may
imbibe the weaknesses of the Boss.
Promotion is a part of the general problem of selection. Promotion is also closely linked with
Training, Post-training Placement, development and incentives. Promotions and transfer make
employees flexible.
Definitions of promotion:
1. PIGORS & MEYERS: Define promotion as "the advancement of an employee to a better job
– better in terms of greater respect of pay and salary. Better houses of work or better location or
better working conditions-also may characterize the better job to which an employee seeks
promotions, but if the job does not involve greater skill or responsibilities and higher pay, it
should not be considered a promotion." This definition takes into consideration only a Vertical
promotion.
2. DALE YODER: According to Dale Yoder, it is a "movement to a position in which

responsibilities and presumably the prestige are increased. Promotion involves an increase in
rank ordinarily; promotion is regarded as a change that results in higher earnings, but increased
earnings are essential in a promotion." This definition talks of both vertical and horizontal
promotions.
3. KOONTZ O’DONNEL observed that promotion is "a change within the organisation to a
higher position with greater responsibilities and used for more advanced skills than in previous
position. It usually involves higher status and increase in pay."
Promotions can be from within or can be from outside depending upon the need of the
organisation as both have certain advantages and disadvantages. So also are the arguments for
and against the concept of promotion on seniority or merit. A wise policy which is followed by
many organizations is a proper blending of both.
Opposite to promotion is demotion. It is more as a punishment. In certain cases it can be on cost

reduction considerations.
Transfers: PIGORS & MEYERS Consider transfer as "the movement of an employee from one
job to another on the same occupational level and at about the same level of wages or salary" No
appreciable change in task or responsibility is expected, SCOTT and others define transfer as
“the movement of an employee from one job to another. It may involve a promotion, demotion
or no change in job status other than moving from one job to another."
Types of Transfer: Transfers are of many types. It may be a reward transfer or a punishment
transfer. Transfers can be classified as production transfers, Replacement transfers, Versatility
transfers, shift transfers or remedial transfers. They can be temporary or permanent.
However, it is better to have a clear-cut and flexible transfer policy. Otherwise, it may lead to a
lot of heart- burning among the affected employees.
9.8 Summary
· The term wage is commonly used for those employees whose pay is calculated according to the
number of hours worked.
· A job is defined as a collection or aggregation of tasks, duties, and responsibilities that, as a

whole, is regarded as the reasonable assignment to an individual employee.
· Job satisfaction is determined by a set of personal and job factors.
· The word ’salary’ is defined in the Oxford Dictionary as fixed periodical payment to a person
doing other than manual or mechanical work.
· According to Subsistence theory, wages tend to settle at a level just sufficient to maintain the
employees and his family at minimum subsistence levels.
· Francis A.Walker propounded Residual claimant theory. According to him, there are four
factors of production/ business activity viz., land, labour, capital and entrepreneurship.
· Purchasing power theory holds that the prosperity, productivity and progress of industry depend
on there being sufficient demand to ensure the sale of its products and pocketing of reasonable
profits.
· A minimum wage has been defined by the Committee as "the wage which must provide not
only for the bare sustenance of life, but for the preservation of the efficiency of the employee.
· Fair Wage is the wage which is above the minimum wage but below the living wage".
· Living Wage is "one which should enable the earner to provide for himself and his family not
only the bare essentials of food, clothing and shelter but a measure of frugal comfort, including
education for his children, protection against ill-health, requirements of essential social needs
and a measure of insurance against the more important misfortunes, including old age".
· Job evaluation is concerned with assessing the value of the job in relation to another.
· Job analysis is the process of getting information about jobs.
9.9 Caselet
The need for competency mapping
By Sheetal Srivastava
The economic downturn has made companies sit up and recognise the need to have the best
quality manpower working with them if they are to tide over the financial crisis looking large
over the industry. This is where competency mapping has risen high up in the priority list for
many organisations. Let’s find out
Finding the right fit for the right job is a matter of concern for most organisations especially in
today’s economic crisis. As meeting an individual’s career aspirations are concerned, once the
organisation gives an employee the perspective of what is required from him/her to reach a
particular position, it drives them to develop the competencies for the same. Competencies
enable individuals to identify and articulate what they offer –regardless of the job. Competency
mapping is a process of identifying key competencies for a particular position in an organisation,
and then using it for job-evaluation, recruitment, training and development, performance
management, succession planning, etc. Introduction of competency mapping has also involved
introducing skill appraisals in performance appraisals.
Need of the hour
“The slowing economy around the world has put new and increased pressure on an
organisation’s capability to get more out of the available resource they have, and this often
translates into pressure on the individual employees. That is where it is important to correlate
performance result with competencies. It is therefore imperative to define a set of core
competencies which corresponds the organisation’s key market differentiator,” says Gyanendra
Acharya, manager – human resources, Hughes Systique Corporation.
The current economic downturn has created a situation for companies to scale down various
overhead costs to meet their growth requirements. “Competency modeling identifies the precise
set of competencies and proficiency levels needed for every role in the organisation. This system
helps identify specific areas of training and maps employee growth to strategic business needs.
During a difficult economic situation, it becomes particularly important for organisations to
sustain their competitive edge in the industry by investing in learning and development programs
that will empower employees to build on their strategic career objectives,” notes Narendra Raje,
director – learning and development, Unisys.
Competency mapping – An important HR tool
Companies have long realised the importance of competency mapping as an important HR

function. This is especially relevant in this recessionary environment where human capital is one
of the most important assets of an organisation and needs to be nurtured. According to Ajay
Trehan, founder, CEO, AuthBridge “There is always a need to have the best quality manpower.
More and more companies are using competency mapping tools to screen and hire people with
specific competencies. There might be a need for a person with excellent writing skills or an
excellent creative mind. When individuals must seek new jobs, knowing one’s competencies can
give one a competitive edge in the market.”
Professional Aptitude Council, a global talent mapping organisation, through its assessment tests
for competency mapping helps companies understand their employees better. PAC has a set of
modules used to help organisations assess their existing talent pool. These tests assess a person
on the basis of Aptitude, Domain Skills, Communication Skills and Personality and
Psychometric fit. "This involves making crucial decisions as to place which employee in which
project, identify core competency area of employees etc. These tools that PAC uses help
organisations plan their traning requirements in the long run," notes Naveen Manjunath,
managing director (India) Professional Aptitude Council.
Unisys India has a comprehensive career management framework that helps employees map
their growth paths, lateral or vertical. Each role has a defined set of competencies aligned to it.
“Employees are expected to first acquire the competencies defined for the current role and then
focus on the competencies for a growth role before they are considered eligible for movement.
Unisys University facilitates the mapping of specific learning activities for each competency
required for a role in the organization and has over 4000 training programs, both e-learning and
instructor-led to help bridge any gaps in employee competencies,” adds Raje.
Adding further to this he says, “Unisys India has a robust and transparent Internal Job Posting
(IJP) process to enable employees to get a complete picture of the opportunities available within
the company. With this information, employees are better equipped to make informed career
decisions and equip themselves with the knowledge and skills they require to move up the career
ladder.”
CBay Systems has the advantage of employees delivering and exceeding requisite performance
levels since the former has mapped out competencies that are required to perform specific roles.
“New hires are pegged against these that are required for the role before being hired to ensure
they fit as per their deliverables. Existing employees are periodically reviewed with the help of
assessment tools and based on the gap analysis we provide them necessary training and
development to hone the requisite competency. The action plans for the competency
development outcome based on such assessments are finalised and the entire initiative is
institutionalised,” confirms Sanjay Shanmugaum, vice president – human resources, CBay
Systems.
Competency mapping not only helps know your competencies but also your weak areas which
can be worked upon. Besides increasing employee morale and enhancing productivity, it induces
fresh thinking, fosters innovation and thereby aims to provide an enriching job experience.
Source : Times Ascent , July 27, 2009 at 12:41:33 PM
1. What is job satisfaction? What are the pre-requisites for job satisfaction?
2. Discuss two popular Job Evaluation methods.
3. Briefly discuss Promotions and how it serves as a job satisfaction method.
9.11 Answers
1. Job description
2. Getting information about jobs
3. Administration of pay structure
4. Job evaluation
5. Non-quantitative job evaluation
6. The point system and the factor-comparison system
7. Grade Description Method
8. Factor-Comparison Method
9. Point Method
10. Job evaluation
11. Job description and analysis
12. Relative earnings
13. Superior
14. Threshold competencies
15. Differentiating competencies
16. Competency profile, competencies required, the proficiency level for the competency
1. Refer to 9.2 & 9.3
2. Refer to 9.4
3. Refer to 9.6 & 9.7
Reference:

MB0043-Unit-10- Employee Satisfaction and

Morale
Unit-10- Employee Satisfaction and Morale
Structure:
10.1 Introduction
Objectives
10.2 Meaning of Morale / employee engagement
10.3 Importance of Morale
10.4 Morale and Productivity
10.5 Measurement of Employee Satisfaction
10.6 Indices of Low Morale
10.7 Improving Morale
10.8 Summary
10.9 Caselet
10.11 Answers
10.1 Introduction
We do things that will keep us happy or satisfied. As human being we are constantly seeing to
satisfy out our needs and wants. We might succeed in being satisfied most of the time but not
always. Any when you speak with family members you will surprisingly find that satisfaction
means different things to each of them. You can therefore guess the implication for managing
‘satisfaction’ in a company with so many different kinds of people who work there for many
different reasons. This unit focuses on understanding employee satisfaction and the
organizational morale. The satisfaction and comfort an employee experiences at the workplace is
termed morale. Morale is a widely used term in organizations. But in general, it refers to esprit
de corps, a feeling of enthusiasm, zeal, confidence in individuals or groups that they will be able
to cope with the tasks assigned to them. The result of high morale generally results in the high
efficiency of the organization. This unit deals with the meaning, importance, measurement and
improvement of morale in an organizational setting.
Objectives:
· Recognise morale / employee engagement and its importance
· Judge employee satisfaction
· Recommend employee morale
10.2 Meaning of Morale / Employee Engagement
Morale is also known as employee engagement in the modern day technology companies.
Morale Defined: Morale has been variously defined by different authors. Professor Ralph C.
Davis says, "Good organizational morale is a condition in which individuals and groups
voluntarily make a reasonable subordination of their personal objectives for their organization".
According to Dale Yoder and Paul D. Standohar, "Morale means evident commitment, that is,
demonstrated spirit, enthusiasm, and confidence in the organization’s policies, programmes, and
accomplishments. Morale is revealed by what individuals and groups say and do to show an
interest in, understanding of, and personal identification with work-team survival and success.”
Edwin B. Filippo has described morale as “a mental condition or attitude of individuals and
groups which determines their willingness to co-operate. Good morale is evidenced by employee
enthusiasm, voluntary conformance with regulations and orders, and a willingness to co-operate
with others in the accomplishment of an organization’s objectives. Poor morale is evinced by
surliness, insubordination, a feeling of discouragement and dislike of the job, company and
associates."
According to Haimann, "It is a state of mind and emotions affecting the attitude and willingness
to work, which in turn, affect individual and organizational objectives." Joseph D. Mooney
describes morale as "the sum total of several psychological qualities which include courage,
fortitude, resolution, and above all, confidence."
1. Good ___________________ is a condition in which individuals and groups voluntarily make

a reasonable subordination of their personal objectives of their organization.
2. ________________ is revealed by what individuals and groups say and do to show an interest
in, understanding of, and personal identification with work-team survival and success.
3. _________________ is evinced by surliness, insubordination, a feeling of discouragement and
dislike of the job, company and associates.
10.3 Importance of Morale
In keeping with the definitions discussed above, morale directly impacts the working of an
individual in a team towards the realisation of common objectives. Morale therefore is individual
specific as well as general. Unfortunately building of morale is not a mechanical problem that
could be solved by either rewards or punishments. The best way to manage it is to proactively do
a lot of employee related interventions that will together impact morale positively. Morale can be
broadly divided into three categories: the first concerns, off-the job satisfaction that is expected
from work such as income, security, and stature in the community, the second concerns on-the-
job satisfaction for example-job interest, opportunity for advancement and status within the
organization, and the third group concern personal satisfaction from the job such as growth,
achievement powers, job expertise etc. Each category has its impact and can damage employee
morale to varying degrees. It can result in employee behaviour that ranges from engaging in
simple gossip to the employee exiting the company. One other ill effect of low employee morale
is the bad-mouthing that the employee might engage in outside the workplace with friends and
might even engage in negative press reporting. This could be very harmful for the market
perception about the company and even impact sales and revenue.
Morale can also be understood as the spirit and confidence with which the employee performs
his job. It is a complex psychological quality that is impossible to force on someone, difficult to
measures, and easily destroyed. The level of morale is a result of the degree to which the overall
needs of the individual are fulfilled.
The important factors which have a bearing on employee’s morale can be classified as relating
to:
1. The employee’s background-which includes his levels of intelligence and education and his
type of personality – largely determines the way in which he seeks to fulfil his needs for
belonging, esteem, and self-realization. Morale hinges on the satisfaction of these needs.
2. An employee’s personal environment encompasses his relations with his family, friends, and
neighbours. The employee brings his thoughts of his home and social life with him when he goes
to work and they influence his thinking and attitudes while on the job.
3. Management practices influencing morale include manager behaviour, company policies and
procedures with respect to salaries, promotion methods, employee services and benefits, working
conditions, handling employee issues etc…
At the bottom of it all, employee morale is all about the perception of the employee’s
expectations vs. reality. The closer the individual’s environment comes to providing the kinds of
rewards he expects; the better will be his morale. And as this is unique to each individual’s
expectations, all of the 3 categories mentioned above need to be proactively redressed in order to
best manage morale.
Activity 1
Interview 5 of your friends or relatives and ask them what they think about
the employee morale in their companies. What makes them happy at work
and what makes them worried when at work.
Find patterns in the response from the 5 of them.
Are there common themes in what they say? How different are the issues?
Can you categorise them into the 3 categories discussed above?
4. The content of morale could be broadly divided into ____________ groups
5. Morale depends upon the relations between _____________________.
6. The _________________________ which includes his levels of indigence and education and
his type of personality-largely determines the way in which he seeks to fulfil his needs for
belonging, esteem, and self-realization.
10.4 Morale and Productivity
It is assumed that high morale and high productivity/ high quality and creative work all go hand
in hand. Since morale manifests itself in the attitudes of employees, it is important to know about
the results of high and low morale. One of the most unpredictable effects of the level of morale is
its impact on employee productivity. The productivity of a group is a composite of many factors,
at least one of which is the general state of mind or the commitment of the group. Formerly it
was thought that high morale resulted in high productivity. Research is repeatedly proving that
this correlation is not as simple. Various studies have revealed that the group having the highest
morale need not always be the highest in productivity. As morale is made up of so many factors,
so is productivity, the result of a series of complex factors. When a group is convinced that high
productivity will result in its getting the things it wants most, it is reasonable to believe that
productivity will be high. It is likewise reasonable to believe that if the group’s satisfactions in
the work situation are high and high productivity will enable it to get the things it wants most,
the productivity may be high.
Though high morale may not be the single cause of the high productivity, a high-producing
group nearly always has a reasonably high morale, in terms of the company as a whole. Morale
development is almost certain to accompany successful operations where the individuals can
relate their respective endeavours and objectives to the success of the enterprise as a whole. "A
morale-building organization tends to utilize fully the skill, initiative, judgement, and training of
its members, and through such utilization succeeds in building up these and other qualities in
everyone, so that the abilities of all constantly expand, and the organization thus is able to
succeed and grow."
7. One of the most unpredictable effects of the level of morale is its impact on employee
_____________________.
8. Various research studies have revealed that the group having the highest morale
__________________.
9. A _______________________ tends to utilize fully the skill, initiative, judgement, and

training of its members and through such utilization succeeds in building up these and other
qualities in everyone.
10.5 Measurement of Employee Satisfaction
Morale can be measured by assessing attitudes and job satisfaction. As it is intangible and
subjective concept, it cannot be directly measured or evaluated. Employees may be unwilling to
express their feelings of satisfaction or dissatisfaction with their job to the management is no
longer a valid assumption. Today’s employees and workplaces allow for a lot more transparency
and open door philosophy seen in most organizations allow for employees to openly voice their
views. Measuring morale ranges all the way from the "hunch" /general "feeling", to more
scientific efforts such as employee satisfaction surveys. Also the liberated employee of today feel
very comfortable looking for a new job in another company rather than be unhappy and work in
a company where he’s unhappy.
It is important to study the commonly used methods for measuring morale, however increasingly
the ‘employee satisfaction survey’ is the most preferred method in most organizations.
1. The manager/executive’s impressions.
2. The guided interview.
3. The unguided interview.
4. A combination of the guided and unguided interview.
5. An analysis of company records.
6. The "listening-in" process.
7. The employee satisfaction survey questionnaire.
8. A combination of any of the foregoing methods.
General Impression of the Manager: Some managers may not be able to tell you how they
know the morale of their men, but they enjoy such an intimate relationship with them that they
do know what their attitudes are. They usually know how to get things done according to the
methods they have been taught, but few of them have had any special training in evaluating
morale as such. Some executives are inspirational leaders and capable of developing a high
morale, but few of these are trained in observing and evaluating morale standards. Executives
should be encouraged to strive to sense the morale situation and should be aided by more
accurate tools that are available.
The Guided Interview: The guided interview is based on the hypothesis that employees’
answers to certain questions will reveal their attitudes. The questions selected are presumed to be
the ones that will call forth a true picture of how the employees feel. This series of questions is
usually rather large. The interviewer seeks to direct the interview in such a manner as to secure
the answers that will reveal the desired information. The guided interview is a useful method of
investigating the morale of managers or other groups that are small in comparison with the
employees as a whole.
The Unguided Interview: This technique for measuring morale is based upon the assumption
that, if employees are allowed to talk freely, they will reveal a true situation not so much by the
exact thing complained of or discussed as by the interviewer’s ability to relate what is said to
basic causes. It is also assumed that, if the employee himself is permitted to talk through a given
problem or work situation without special prompting or questioning by the interviewer, he
usually will become aware of the logic or lack of logic in the situation and choose for himself the
appropriate line of action. This is usually a long and time taking process as all employees need to
be interviewed and the time taken in a un-guided approach is a lot more. Often the employee will
need to be spoken to at-length before the true issues are unearthed. This is one reason this is not a
very popular method.
The method of employee-attitude analysis is designed both to correct an unfavourable situation

and to secure information regarding the status of morale within the group. Though it is an
expensive method of measurement than the questionnaire method, it not only provides a means
of interpreting morale but at the same time is used to build morale.
A Combination of the Guided and Unguided Interview: To combines the two methods, the
interviewer may start with the guided interview, which should be focused around understanding
challenges in specific areas and not be general conversations. The interviewer is then invited to
discuss any subject that he may like to talk about. During the guided interview some persons
tend to bring in material that has no special significance in relation to the information sought.
The interviewer should make note of the key issues that are emerging and then ask focused
questions to better understand the issue. During the guided interviews more details need to be
unearthed. The interviewer must make it a point to validate information received from one
employee with all the others. This is a effective way to ensure that there is no personal
misgivings that is impacting the employees’ morale.
Company Records and Reports: These are usually prepared by the HR Department at regular
intervals with the assistance of managers and Department Heads. Generally, grievances and
complaints tend to reveal the state of morale of a group. Excessive absenteeism or drop in quality
of work and adherence to set quality and process norms are signs of tardiness and serve as an
index of general or specific morale issues. We need to be watchful when there is a sudden drop
in these measures. Employee turnover is a good indicator of employee unrest or morale. This
type of analysis is difficult and is not always reliable as an index of morale because it may not be
possible to reveal the managerial deficiencies that are not directly interpretable in terms of
morale.
Listening-in by a Trained Observer: Whiting Williams of Cleveland, Ohio has developed the
"listening-in" technique to the extent that it would be appropriate to call it the "Whiting Williams
Method". He associated with the porkers at work and during recreational periods. He personally
possessed the ability to make his observations largely objective. But it is difficult to secure
individuals who possess the required scientific approach to do this work. Such observers are
prone to report what they think their employers want them to find rather than the true situation.
As a whole, this type of investigation of the morale status of employees is not satisfactory.
The Survey Questionnaire Method: This method is generally used to collect employee
opinions about the factors which affect morale and their opinion about the leadership. Morale or
employee satisfaction surveys are generally conducted with a view to:
1. Finding out what employees really think;
2. Finding out what, in the company, they think is working well and what is not;
3. Solicit feedback on managerial effectiveness;
4. Determining the clarity of company vision/objectives and the top management commitment to
it; and
5. Finding out what employee is most unhappy about.
This questionnaire is usually a scientifically developed instrument and well tested for validity
and reliability. These include multiple choice, dichotomous (yes or no)" and open-ended
questions.
Conducting the Survey: Organizations often engage outside consultants to conduct the entire
survey. There are a lot of reasons to do this:
· Make the survey credible wherein employees share correct feedback
· As they are experts, they help determine the type of questions to be used depending on the
objectives of the survey.
· The survey itself is carried out anonymously, the employee is not required to divulge his/her
name and personal information
· Analysis and generation of survey report is a specialised activity

In some cases the company’s representatives may give the employees the questionnaires in a
stamped envelope, planning them on a table and permitting the employees to get them if they
wish to, or having a fellow employee distributed them. The stamped envelopes are frequently
addressed to some management consultant or college professor who tabulates the results. The
consultant then analyses the data to generate a number of reports. The reports can be generate for
each department, for manager with more than 20 team members, for the company, etc.. The
management usually shares the findings with all the employees, highlighting the strengths and
the areas for improvement. Action plans for improvement are also shared so employees are
aware of the management’s commitment towards improving workplace morale and employee
engagement.
The survey is usually conducted once a year. The important part of this initiative is the action
that is taken after the survey results come on. Each department head meets with his team of
managers and they together analyse the report and the data for the department and identify areas
of low scores. Brainstorming exercises then help identify what actions can improve employee
morale in these areas. Sometime action-planning teams are formed from among the employees
and they drive the action areas. For example if the report identifies that ‘rewards and recognition’
is a concern area for the team, then the taskforce focuses on establishing ways and means to
improve reward systems and recognition methods. The taskforce would recommend a rhythm for
quarterly or monthly rewards and identify categories for the reward (like quality, productivity,
highest sales, customer appreciation). More and more reward systems encourage employee to
nominate their peers rather than the managers identifying and giving awards away. All
nominations are reviewed finally by a panel and the most deserving nominee is awarded.
Organizations track Survey scores year on year. Most organizations tie the scores to managerial
effectiveness and use it as a measure to assess managers for promotions, potential for future
senior roles etc.
Activity 2
Visit this link, http://gmj.gallup.com/content/20770/gallup-study-feeling-

good-matters-workplace.aspx.
The article talks about current challenges in managing employee morale in

today’s organizations.
Then visit the popular Gallup Organization survey used to measure employee
satisfaction by most companies
http://www.artsusa.org/pdf/events/2005/conv/gallup_q12.pdf .
Review the questions used to measure employee satisfaction.
What do you understand about employee engagement from the above two
readings?
10. Methods of measuring morale range all the way from _____________.
11. Some executives are ________________________ and capable of developing a high morale,
but few of these are trained in observing and evaluating morale standards.
12. ________________________ is generally used to collect employee opinions about the

factors which affect morale and their effect on personnel objectives.
10.6 Measurement of Employee Morale
There are other signs of low morale that an organization can watch out for as indicators that
employees are not happy. Over a period of time certain measures have proven to be early
warning signs of drop in employee morale.
Dale Yoder and others pointed out the following as signals of low morale:
1. Employee unrest – increase in the grapevine gossip and group-ism.
2. High rate of absenteeism – sudden increase in absence in a certain team or a department
3. Tardiness – drop in sales number, productivity or quality of work
4. High employee turnover – increased attrition, usually seen as a pattern in a particular team or a
manager.
5. Grievances – increase in employee complaints and escalation to HR or to the senior

management.
6. Need for discipline – increased incidents of misbehaviour or misconduct where employee is

directing it towards the management or his manager
7. Fatigue and monotony – complaints and general low morale directed towards daily work
responsibilities.
These are early signs of employee disengagement and organizations can easily track these
metrics for teams and identify problem groups early in the process. It is a key responsibility of
the HR team to track these metrics and work with the managers of the respective teams to ensure
that corrective measures are in place. A lot of the workplace morale is the outcome of the
managerial style of the manager and how he/she treats and works with his/her team. A theory X,
authoritative approach usually impacts employee morale negatively.
Managerial coaching is seen as a very effective method for impacting employee morale.
Organizations engage mentors and coaches for managers. They work independently with the
managers and use the survey report results to identify concern areas and focus on developing
manager’s capabilities in these areas.
10.7 Improving Morale
There are a number of measures which can be used to control the warning signals of low morale.
The following are the positive measures to be taken to bring job satisfaction to the employees
and reconcile individual interests with the interests of the organization.
1. Creation of whole jobs – Under this method, complete jobs are assigned to the employees. The
complexity of a job should be increased so that it may appeal to their higher needs.
2. Job enrichment – Job enrichment tries to deal with dissatisfaction by increasing job depth.
Under this, individual employees may be given responsibility for setting their own work pace,
for concerning their own errors, and/or for deciding on the best way to perform a particular task
3. Building responsibility into a job – Employees should be encouraged to participate and if

possible be held responsible for taking decisions. Some delegation of responsibility from the
manager tot he employee could be useful in improving employee ownership
4. Managerial effectiveness – This can be achieved by:
i) Developing work groups;
ii) Improving the social contacts of the employees- time away from work in team building and
fun activities;
iii) Managerial coaching discussed above
iv) Employee stress management activities
5. Flexing working hours – Flex time / work from home provisions allow employees to arrange
their work hours to suit their personal needs and life-styles. This is particularly suited to
situations with fluctuating workloads. Flex time employees are responsible for co-ordinating
their functions with other employees and thereby have more responsibility and autonomy.
6. Rotation of jobs – This reduces employee’s boredom which arises out of the monotonous
nature of his work.
7. Incentive and Profit-sharing plans- Morale can be improved by effective incentive and profit-
sharing schemes. Incentive schemes are effective in improving workplace morale. They need to
carefully designed (preferably by experts) well communicated and implemented to be effective.
In addition to its economic aspects, profit-sharing has also psychological aspects relating to
friendly move by the management in providing the employees an opportunity to participate in the
profits.
Morale can also be improved by adapting several other measures such as employee contest,
special recognition and awards to long service employees and training the managers in how to
manage people.
10.8 Summary
1. Good organizational morale is a condition in which individuals and groups voluntarily make a
reasonable subordination of their personal objectives of their organization.
2. Morale can be measured by assessing attitudes and job satisfaction
3. The guided interview is based on the hypothesis that employees’ answers to certain questions
will reveal their attitudes
4. Questionnaire method is generally used to collect employee opinions about the factors which
affect morale and their effect on personnel objectives
10.9 Caselet
11 Low Cost Ways to Increase Employee Morale
By Darrell Zahorsky
A high morale work place is essential to any business. Low morale can quickly take your
business off the rails and lead ultimately to business failure. The root cause of low employee
morale can be numerous including job security issues, limited upward mobility, lousy
management practices, excessive outsourcing, lack of fair pay and much more. To increase
employee morale, you need to understand that a diversified approach to remove morale blockers
and enhance staff motivators will work best to rid your business of poor morale.
Impact of Low Employee Morale : What does low morale cost to your business?
Like a disease, poor morale can infect every aspect of a business. It can lead to reduced
productivity, reduced revenue, high staff turnover and more. According to Sirota Consulting, the
share price of low morale companies saw only a 3% increase in price versus an industry average
of 16%.
11 Employee Morale Boosters
Morale boosters can take the form of recognition, compensation, special perks or simply
terminating employees. Here are 11 low cost morale boosters:
Welcome Ideas: Employee morale improves when staff feel they are valued. Share and
implement their innovations and ideas.
Keep Score: Mount a large score board in the office to recognize top performers and to motivate
those on the bottom of the list.
Inspect: The old management adage, inspect what you expect is true. Companies with a lack of
focus can confuse staff and lead to less morale.
Thank You Notes: Send a special thank you letter to your staff’s family or spouse, praising their
good work and efforts.
Huddle: Have a daily morning huddle to highlight tasks for the day and to cheer yesterday’s
wins.
Open Up: Provide an open forum or one-on-one time to allow employees to express their
concerns and feelings can be an easy means to boost morale.
Have Fun: Special events and outside work activities can take the pressure off the day-to-day
grind in the office.
Show Charity: Get your staff involved in a bigger cause to help them see there is more to life
than work.
Add Perks: Use low cost perks such as a Foosball table in the lunch room.
Fire Staff: Sometimes the root cause of low employee morale can be a staff member whose
negativity brings down the group. Even a top performer can bring down staff behind your back.
Measure It: Keep tabs on the levels of morale in your business by regularly measuring employee
satisfaction.
The backbone of business success resides in the productivity and output of your employees.
Those companies who remain vigilant to the signs of low morale and who focus on improving
morale can thwart off the impact of a low morale workplace.
Source : About.com
1. Define Morale and discuss its importance.
2. How does morale impact productivity if at all?
3. Describe the various methods of measuring Morale.
4. How can morale be impacted positively?
10.11 Answers
1. Organizational morale
2. Morale
3. Poor morale
4. Three
5. Expectations and reality
6. Employee’s background
7. Productivity
8. Need not always be the highest in productivity,
9. Morale-building organization
10. The "hunch" or general "feeling", appraisal to reasonably scientific efforts
11. Inspirational leaders,
12. The Questionnaire Method
1. Refer to 10.2 & 10.3
2. Refer to 10.4
3. Refer to 10.5
4. Refer to 10.7
References:
1. Personnel Management by C. B. Mamoria.
2. Human Resource Management by Singh and Chaghre.
3.Human Resource Management by Mirza S Saiyadam.

MB0043-Unit-11-Motivation
Unit-11-Motivation
Structure:
11.1 Introduction
Objectives
11.2 Concept of Motivation
11.3 Theories of Motivation
11.4 Employees and Motivation
11.5 Motivation Techniques
11.6 Summary
11.7 Caselet
11.9 Answers
11.1 Introduction
Even as you have enrolled for this course and are studying this material in preparation for
completing the course there is a ‘motivation’ behind why you are doing this. There is nothing we
do as humans that is not driven by ’motivation’ / or the gratification of a personal need. In this
Unit we will be studying the concept of motivation, the theories that support it and its relevance
and application at the workplace.
Man is naturally needs to be constantly motivated. Basic needs of energy such as food, water
etc., serve as outputs of behaviour. His behaviour is determined by what motivates him.
Management largely focuses on the creation and maintenance of an environment which
motivates individuals and groups towards accomplishment of common objectives. A large part of
the responsibility of managers and the HR team is therefore the management of motivation of
people in the organization.
Objectives:
· Define Motivation and its concept
· Discuss the theoretical framework for workplace motivation
· Analyse how it is linked to employee morale
11.2 Concept of Motivation
The large part of HR functions, is to motivate employees and putting in place motivation
programs and techniques to keep them motivated. It is clear that unless individuals are motivated
to make sufficient potential to perform effectively, they may not achieve the level of
performance that is desired from them. Managers are constantly faced with the challenges of
motivating their team members to release their talent as well as potential effectively and enabling
the desired goals of the organization and the needs of employees to be achieved.
Knowledge of the motivational process provides the basis for understanding why people do what
they do. Motivation therefore, according to Michael Jucius, has been defined as the act of
stimulating someone to take a desired course of action to get a desired reaction. It includes a
stimulus and desired results. Motivation concerns itself with the will to work. It seeks to know
the motives for work and to find out ways and means, by which their realization can be helped
and encouraged. James Driver defines it as motivation means the phenomena involved in the
operation of incentives and drives. Motivation can therefore be understood best as a process
An employee’s performance on a assigned task is a function of his skill and motivation.

Therefore, p=f(S,M), where P is for performance,
S for skill and M for motivation. Skill alone does not ensure the best effort towards achieving the
best performance. The other equally critical variable is motivation. Research has clearly
established that difference in motivation affects performance. In laboratory experiments it was
found that other things being equal, performance level is higher if the motivation level is higher.
The key to understand motivation lies in the meaning and relationships between needs, drives
and goals. This demonstrated through ‘the motivation cycle’ given below:
Figure 11.2: Motivation Cycle
1. Needs: Needs are created whenever there is a physiological or psychological imbalance. For
example, a need exists when a cell in the body is deprived of food and water or when the human
personality is deprived of other persons who serve as friends or comparisons.
2. Drives: Drives are action-oriented and provide an energizing thrust toward goal
accomplishment. The examples of the needs for food and water are translated into hunger and
thirst drives, and need for friends becomes a drive for affiliation.
3. Goals: At the end of the motivation cycle is the goal. A goal in the motivation cycle can be
defined as anything which will alleviate a need and reduce a drive.
Motivation may range from a threatening gesture to a traditional inspired activity. Thus the
atmosphere of working situation, the past history of human relations in a company, expectations
about the future as well as an effective compensation incentive plan can be a stimuli to action.
This coupled with employee skill and expertise at work can together blend to deliver high quality
work output. However the challenge in managing motivation at the workplace is the fact that
different things motivate different people, just as the needs and drives are different. Therefore the
approach ‘one size fits all’ brings a very different challenge to managing motivation for the
managers.
1. Unless individuals are motivated to make sufficient potential to perform effectively, they may
not achieve the _________________.
2. When we see someone working hard at some activity, we can conclude that the individual is
driven by a desire to achieve some goal which ____________________.
3. Drives are set up to alleviate___________.
4. A ____________in the motivation cycle can be defined as anything which will alleviate a
need and reduce a drive.
11.3 Theories of Motivation
The importance of motivation to human life and work can be judged by the number of theories
that have been propounded to explain people’s behaviour. There are three categories of
motivation theories and these are per their evolution. The Needs Theories are the earliest ones
and attempt to identify what exactly motivates people at work. The three more prominent ones
are the Maslow’s Need Hierarchy Theory, McGregor’s Theory ‘X’ and Theory ‘Y’ and Fredrick
Herzberg Motivation-Hygiene Theory. The Process Theories are concerned with cognitive
thinking that drives motivation and the effort behind it explained by the Victor Vroom’s
Expectancy Theory. The Contemporary theory of motivation is best discussed through the Equity
theory (already covered in Unit and the Attribution theory.
CONTENT THEORIES
Maslow’s Need Hierarchy Theory
Maslow’s theory of basic needs draws chiefly from human psychology. He arranged the human
needs of an individual in a hierarchical manner. Maslow proposed an individual’s motivation as
a predetermined order of needs which he strives to satisfy. His model of ‘Hierarchy of Needs’
indicates the following propositions about human behaviour.
i) Physiological Needs: These are basic to life, viz., and hunger for ‘food, thirst, shelter and
companionship among others. They are relatively independent of each other and in some cases
can be identified with a specific location in the body. These needs are cyclic. In other words,
they are satisfied for only a short period; then they reappear.
ii) Safety Needs: If the physiological needs are relatively satisfied, a set of needs emerge for
protection against danger and threats. In an ordered society, a person usually feels safe from
extremes of climate, tyranny, violence and so on.
iii) Social Needs: If the physiological and safety needs are fairly satisfied, the needs for love and
affection and belongingness will emerge and the cycle will repeat itself with this new centre. If
he is deprived of these needs he will want to attain them more than anything else in the world.
An individual desires affectionate relationships with people in general and desires to have a
respected place in his group.
iv) Esteem Needs: Everyone has a need for self-respect and for the esteem of others. This results
in the desire for strength, confidence, prestige, recognition and appreciation. These egoistic
needs are rarely completely satisfied. The typical industrial and commercial organization does
not offer much opportunity for their satisfaction to employees at the lower levels.
v) Self-actualization Needs: The term "self-actualization" was coined by Kurt Goldstein and
means, to become actualized in what one is potentially good at. A person may achieve self –
actualization in being the ideal fitter, supervisor, mother or an eminent artist.
People who are satisfied with these needs are basically satisfied people and it is from these that
we can expect the fullest creativeness. A sound motivational system to be successful must take
care of this hierarchy of needs of the team members in order to work efficiently. It must cover
basic as well as higher needs and it must be flexible to cater to changes in the environment.
McGregor’s Theory X and Theory Y (and Theory Z)
This theory depends on the popular assumptions of the management w.r.t. controlling its human
resources. Professor Douglas McGregor presented two opposite sets of assumptions about
employees; and about management views about the nature of people while at work. These have
been represented by Theory X and Theory Y. Theory X stands for the set of traditional beliefs
held, while Theory Y stands for the set of beliefs based upon researches in behavioural science
which is concerned with modern social views on people at work. These two theories represent
the extreme sets of assumptions; and there are a number of possible combinations on the
continuum.
Theory X is based on assumptions and beliefs which are based on the study of many people at
work, in a variety of organizations and with different managerial styles. These assumptions
imply that the manager has a low opinion of the workers and still lower expectations from them.
In order to get good performance, an employee needs to be coerced, closely supervised and told
what needs to be done and how to do it.
Theory Y puts forward the opposite assumptions which provide a totally different picture of
human nature and therefore calls for a different managerial style in dealing with employees.
Theory Y implies that on-the-job need satisfaction is necessary and is driven from within.
Douglas McGregor, with credentials among university scholars equalling his practical
experience as a corporate executive, wrote two books which became classics and still exert a
profound influence upon modern management theory and practice. These books explain his
experience with two utterly different assumptions (operating consciously or subconsciously)
which managers tend to use in dealing with workers. In the interests of objectivity and to avoid
the "complications and prejudice of labels," he dubbed them simply "Theory X" and "Theory Y."
Theory “X” Managers and Theory “X” Workers
Examining the relationship between managers and workers and how they perceive and "view"
each other, McGregor noted that managers throughout history assume, and just take it for
granted, that workers are naturally lazy, hate work, try to avoid it, care not at all about an
organization’s goals and must simply be forced to work against their will by threat and fear. This
assumption by managers he termed "Theory X" ("X" managers) and workers with indeed such
anti-work attitudes "X" workers.
Leadership by "X" managers over "X" workers had to be firmly, even cruelly, autocratic with
tight control and constant supervision over each worker ("supervision" literally means "watching
over," overseeing). Without tight and forceful supervision "X" workers slack off or cease work at
every opportunity. Given the grim and life-threatening conditions of work throughout history, the
natural condition of the workplace was therefore harsh and adversarial, managers against
workers and vice versa, managers forcing work and workers resisting in every way possible. This
ofcourse leads to the "X" work environment where workers do the least they can get away with
and managers get the least of the high human potential of people at work.
Whatever the ‘need’, the power of fear, threat and sometimes money delivers performance and
organizational results. Thus and then the "X" work environment was highly effective because of
the unlimited power of managers over workers.
However, with the passage of time, managers no longer had such unlimited power, employees in
addition to being protected by a host of "workers’ rights laws", began to become more involved
in improving the quality and productivity of work and the work systems began to empower the
employee more and more. This resulted in the birth of a new order of employee behaviour and
managerial style.
Theory “Y” Managers and Theory “Y” Workers
Because an "X" work environment had become powerless to motivate people to high
productivity, McGregor speculated about other means of motivating workers, a different
assumption managers might use, the assumption that under certain circumstances workers
actually like and enjoy working. This assumption by managers he called "Theory Y” ("Y"
managers) and workers with indeed such two-work attitudes "Y workers. In theory, "Y workers
love their work, look forward to it and enjoy it. Clearly, managers are spared all of the
motivational problems of an "X" work environment; "Y’ workers are highly self-motivated.
For ‘Ys" there is no difference between "work" and "play". In a "Y’ work environment, there is
no need for managers to motivate people (it is already there, built in!). Managers of today build
and maintain a healthy "Y" work environment by sensitive awareness of each worker’s
individual needs (as in Maslow’s Needs Hierarchy above), consulting with each worker about his
work ideas, preferences, methods and progress, recognizing and praising good work often,
arranging work assignments to fit the individual as well as the organization’s goals ("Human
Brokerage" again). It is therefore possible for managers to gain their organization goals by
permitting, not forcing, workers to do their best work. McGregor summarized it well:
"Theory X places exclusive reliance upon external control of human behaviour, while Theory Y
relies heavily on self-control and self-direction. It is worth noting that this difference is the
difference between treating people as children and treating them as mature adults."
The following points are important:
1. Both theories X and Y make certain not-so-valid judgements.
2. They may not reflect man’s inherent nature; rather such behaviour in people is in part the
outcome of the management’s philosophy and practices.
3. Theory Y particularly unduly emphasizes that all people naturally seek freedom, while there
are definite indications that all people may not feel comfortable with freedom. Freedom calls for
a lot of responsibility and independent decision-making which not all people may subscribe to.
4. In an organization, depending on the situation, both theory X and theory Y could be

effectively applied by a manager depending on individual’s preference and also the implications
of each. In order to avoid workplace conflict / reduce employee dissatisfaction.
Theory “Z” Managers and Theory “Z” Workers
As McGregor was well aware, theories "X" and "Y" are polarized extremes of workplace
behaviour. This is more representative of the more realistic daily condition among employees.
Let’s conveniently think of such degrees on a scale of "I-to-10," a "1" meaning a pure 100% "X"
and "10" a 100% "Y." Any management trainer or consultant with actual experience in today’s
workplace knows that a pure "10" (100% "V) workplace is idyllic. Few managers, even with the
most sophisticated motivational efforts, will succeed in achieving a "10" (100% "Y’) workplace
for every worker every day and every hour.
Yet a pure "Theory Y’ workplace is intended as idealistic, something rarely fully reachable but
rightly to be sought after by managers, still always aimed at and worked for. But realists know
that true managerial success consists usually in a partial, but high and significant, achievement of
a "Theory Y’ workplace. This is the more realistic "half-way" position about human motivation
now called "Theory Z." As with the now generally accepted "Contingency Theory of
Leadership," Theory Z is equivalent to a "Contingency Theory of Motivation" in which
managers must match and fit the most appropriate motivation method suited to each person and
situation, depending on here-and-now contingencies. As stated earlier motivation means different
thing to different people and hence the need for managers to customise their style depending on
the employee type or the situation.
Herzberg Motivation Hygiene Theory
Fredrick Herzberg built on the works of Maslow and based his theory on the research of over
200 engineers and accountants on when they felt particularly good about the job and when they
felt particularly bad about the job. Herzberg concluded those jobs satisfiers are related to job
content and job dissatisfies are related to job context. In job satisfiers group of needs are such
things as company policy and administration, supervision, working conditions, interpersonal
relations, salary, status, job security, and personal life. These were found by Herzberg and his
associates to be only dissatisfies and not motivators. In other words, if they exist in a work
environment in high quantity, they yield no dissatisfaction. Their existence does not motivate
satisfaction; their lack of existence would, however, result in dissatisfaction. These job satisfiers
were also called Hygiene factors or “maintenance” and are job-context variables. In the second
group, the job dissatisfies and therefore motivators all related to job content. These include the
factors of achievement, recognition, challenging work, advancement, and growth in the job.
Their existence will yield feelings of satisfaction or no satisfaction.
The following points are worth-noting about the motivation-hygiene theory:

1. Job content and job context factors are discrete aspects of work and are neither different points
on the same continuum nor different levels in the motivation hierarchy. Absence of one does not
mean the presence of another.
2. A satisfactory situation can also have elements of job context just as a dissatisfactory situation
can have elements of job content. However, a satisfactory situation will be context-oriented.
3. Some doubts have been raised on the methodology. Since it involves recalling events, how can
we guarantee its authenticity? Despite this drawback, the theory has been supported across
various Kinds of samples, organizations and cultures.
4. The theory implies that to generate satisfaction, attempts have to be made to improve the job
content!
PROCESS THEORIES OF MOTIVATION
Victor Vroom’s Expectancy Theory of Motivation
The model is built around the concept of valence, instrumentality and expectancy and is
commonly called the VIE theory.
The ‘effort’ an individual puts into a task or a activity depends on 3 key factors: a) the effort ->
performance (E->P) expectancy, b) performance -> outcome (P->O) expectancy and c) the
outcome valences (V). This therefore impacts motivation. If any of the 3 is low the motivation is
low. The E->P Expectancy indicates the employees’ perception that his or her effort will result
in a particular level of performance. Its best represented as a probability and ranges from 0.0 to
1.0. When the employee perceives that probability that he/she can do a task well the effort
expended is high and conversely when he/she perceives that the probability that he/she cannot
deliver the desired performance the effort expended is far lower. The P->O Expectancy is the
perceived probability that a specific performance or behaviour will result in a specific outcome.
When an employee perceives that the performance will benefit him with a desirable outcome he
will expand the effort directed towards the performance that will get him/her the desired
outcome. The Outcome Valances is the third element in the expectancy theory. It indicates the
feeling of satisfaction/dissatisfaction that an employee feels towards the outcome. It is impacted
by the perception about how much the outcome will interfere or fulfil the person’s needs and
drives. It ranges from negative to positive, –1 to +1. It also is influenced by our personal values.
For example a company has newly implemented a work from home policy for a particular team.
If one of the employees’ in the team is a extrovert and his need for affiliation is very high, hence
there is positive outcome valence for group activities and other group events that fulfil this need.
As a result of the change in policy the employees’ E->P expectancy relationship and the P->O
expectancy drops and as a result the performance drops. There is no longer a positive valance
towards working in this team and the employee will begin to look for a alternative opportunity
wherein the outcome valence is positive and he can apply the effort and performance to meet that
outcome.
CONTEMPORARY THEORIES OF MOTIVATION
Equity Theory:
Refer to Unit 8
Attribution Theory:
This theory refers to how people attribute the cause of their own or others behaviour. Herein
there are two general types of attribution that people make: dispositional attribution – which
attributes a person’s behaviour or his performance to internal factors such as personality, skills,
aptitude and attitude, and situational attribution – which attributes a person’s behaviour or
performance to external factors such as equipment, work culture, peers and colleagues. In recent
years attribution theories have become significantly important in effectively explaining
workplace interpersonal behaviour and perceptions.
· An employee can attribute his success or failure in a job to internal or external factors which
can influence job performance. For example a employee can attribute his poor quality job to
situational factors such as improper training, lack of supervision, technological issues which are
beyond his control, and therefore he cannot do much about it; else he can attribute it to internal
factors such as lacking aptitude, commitment or understanding which are within his control and
he can seek help / apply the effort to improve his performance.
· Employees usually attribute the success or failure of others at work to internal or external
factors. For example when someone does a good job the individual can attribute it to situational
factors by justifying that the good results are attributable to easy job, supportive manager or
excellent training; and attribute poor job to internal factors like incompetency, lack of
commitment or lack of attitude.
· Employees usually tend to attribute their good job performance to internal factors and poor job
performance to external factors. And in judging others tend to attribute poor job performance to
the individual and good job performance to external factors.
· When employees attribute their success to internal factors rather than external factors, they have
higher motivation for putting in more efforts towards achieving greater success arising from a
greater desire for achievement.
· Employees tend to attribute success or failure to good luck/ bad-luck. Bad-luck attribution (a
external factor) helps reduce the negative effect of failure and good-luck attribution reduces the
joy associated with success.
Motivation is among the most researched subject in understanding human behaviour and human
resources management. It continues to attract a lot of research as well as management attention
in organizations, and there are a number of recent studies that continue to explore the many
facets of motivation at the workplace. The range of stimuli which motivates people is many.
Motivators may be either financial or non-financial. Again non-financial motivators may be

individual based, group or company. As regards individual motivators, it is obvious that as
human beings; people have some basic needs. Unless these are satisfied, life is not worth living.
So in various ways people try to satisfy these needs. Food, shelter, clothing, money are such
basic needs. These needs are served through work. In the second place, equally powerful as
motivators are the stimuli which arise out of social interactions. We are powerfully affected by
what others think of us and our actions. Even the basic wants are affected by group approval or
disapproval. That we are part of a particular society put on particular kinds of clothing and prefer
certain types of occupations are due to our preferences to certain group opinions. This could be
of our family, our friends, and the school we went to, neighbours or working associates.
Motivation therefore changes with time. Different things motivate us at different times in life
based on our life experiences and the impact of the society we are part of. Sometimes the goals
of life may come into conflict with the goals of business. This might require a adjustment, and
the decision he takes will be a clear outcome of what motivates him at that point of time.
5. Maslow views an individual’s motivation as a predetermined order of needs which

___________________.
6. ____________________presented two opposite sets of assumptions about employees; and

about management views about the nature of man at work.
7. McGregor noted that managers throughout history assume, and just take it for granted, that
workers are naturally lazy, hate work, try to avoid it, care not at all about an organization’s goals
and must be ____________________.
11.4 Employees and Motivation
A common question that is raised is whether employees can at all be motivated? It is obvious
that neither coercion nor pressure nor pampering can effectively motivate employees to do a job
satisfactorily. There are no off-the-shelf prescriptions that can help manage motivation. However
certain factors as analyzed by research scientists could be used as guidelines. Firstly, people
naturally are motivated themselves and there is limited scope to impact this. Therefore, instead of
the theory X approach, creation of an atmosphere that will motivate the individual to greater
performance is the key. Secondly, an employee has a self image and this is the chief motivator,
and their expectation of what that image should be drives motivation. A person’s psychological
needs affect his self-image. Thirdly, it is established that achievement and motivation are
closely linked and this determines the ability to achieve. Any motivation initiative must therefore
attempt to link personal desire / aspiration with performance results. Fourthly, once an
organization has hired an individual, it is the responsibility of the manager to help and
understand the individual’s motivational pattern and leverage it for organizational success. The
manager along with support of his manager and HR need to provide the environment in which
this person can achieve his goal along with the organizational goal.
Else an organization owes it to the employee to let him know that he does not fit into the
organization and encourage him to look for alternative roles/job.
8. There are no ready-made remedies for bringing about an effective motivation but certain
factors as analyzed by research scientists, could be used as_________________.
9. A person’s psychological needs affect his_________________.
10. Even if the employees have a high potential for self-motivation, it is the duty of
______________to provide the climate in which it will flourish.
11.5 Motivation Techniques
Some commonly practiced motivation steps are listed below:
1. Clearly analyzing the situation requiring motivation: Every employee needs motivation. It is
the primary responsibility of the manager to work closely with each of his team members and
identify the motivators that drive effort and performance in them. Organizations usually have a
annual process that allows for conversations around career plans and aspirations. Managers need
to use this process effectively and refer to it on-going to ensure that the employee and manager
are aligned in their thinking. Managers need to be aware that personal goals and aspirations
could be selfish. Given that the business cannot be sacrificed at the cost of employee motivation,
a balanced view is important. It is good to involve others in analyzing so the appropriate action
can be taken.
2. Have a motivation toolkit: Managers, supported by HR, must have a list of motivational
initiatives from which she/he could select and apply specific tools of motivation. A manager
from his personal experience should prepare a list of what devices are likely to work with what
type of people and how can he/HR/the organization support it.
3. Selecting and applying the appropriate motivator: Assigning the right motivation technique is
important. It is a good idea to involve the individual and have him decide on what will best
satisfy his needs. Give him an understanding of the organization’s total goals and the part that he
is contributing. Motivation must establish attainable goals, therefore breaking up long terms
goals into smaller and short-time bound goals are recommended. All along the manager needs to
be prepared in-case the employee’s aspirations are contrary or conflicting with the
team/organization’s goals.
4. Follow-up and review: the process usually provides for on-going review. The primary
objective is to ascertain if an employee has been motivated or not. If not, some other technique
could be adopted. Use rewards promptly and apply when results are good. Rewards must be tied
to the specific result and to commensurate with the contribution. A secondary purpose of follow-
up is to evaluate motivation plans for future guidance.
11. Every employee needs motivation, however, all people do not react in exactly the same way
to the same _____________
12. The last stage of motivation is to follow-up the results of the………………..
13. Psychologically speaking, _______________is a part and parcel of life. To deny this is to
build the theory on unrealistic foundation.
11.6 Summary
· Good organizational morale is a condition in which individuals and groups voluntarily make a
reasonable subordination of their personal objectives of their organization.
· The building of morale is not a mechanical problem that could be solved by either rewards or
punishments or by issuing orders regarding morale.
· Morale depends upon the relations between expectations and reality. The closer the individual’s
environment comes to providing the kinds of rewards he expects; the better will be his morale.
· One of the most unpredictable effects of the level of morale is its impact on worker
productivity.
· Morale can be measured by assessing attitudes and job satisfaction.
· The guided interview is a useful method of investigating the morale of supervisors or other
groups that are small in comparison with the employees as a whole.
· Signs of low morale are generally not noticed till it is obviously low or when something goes
amiss.
· Perceptive managers are constantly on the lookout for clues to any deterioration in the morale
of the employees.
· Morale can be improved by adapting several measures such as employee contest, special
recognition and awards to long service employees, film shows to employees during their lunch
hour, free coffee during rest pauses, and training the supervisors in how to handle people.
· The study of human motivation is of great importance in any theory of management.
· Unless individuals are motivated to make sufficient potential to perform effectively, they may
not achieve the level of performance that is desired from them.
· Motivation aims at transforming the ‘ability to do’ into ‘the will to do’.
· The key to understand motivation lies in the meaning and relationships between needs, drives
and goals.
· Motivation may range from a threatening gesture to a tradition inspired activity.
· The importance of motivation to human life and work can be judged by the number of theories
that have been propounded to explain people’s behaviour. They explain human motivation
through human needs and human nature.
· Maslow views an individual’s motivation as a pre-determined order of needs which he strives to

satisfy.
· There are no ready-made remedies for bringing about an effective motivation but certain factors
could be used as guidelines.
· Basically, people are motivated by themselves and are seldom motivated directly by other
people.
· Instead of direct manipulation, creation of an atmosphere that will help individual to greater
achievement is important.
Motivation of people depends on their image of themselves and their expectation of what that
image should be.
· A person’s psychological needs affect his self-image.
· Morale and motivation, even though inter-related, are not synonymous. Motivation is
‘individualistic’ while morale is a ‘group instinct’.
· A careful mix of morale and motivation can take an organization and its members to great
heights.
11.7 Caselet
Employee Motivation the Ritz-Carlton Way

by Carmine Gallo
When I was researching inspiring leaders, I spent time with Ritz-Carlton President Simon
Cooper, who discussed how his company strives to engage its staff to increase employee
satisfaction and improve customer service. I saw his strategies in practice when I attended staff
meetings run by managers at the San Francisco Ritz-Carlton and described a few of them in a
previous column(BusinessWeek.com, 2/13/07). Now, I’ve returned to my notes to expand on
ways you can incorporate techniques from the upscale hotelier in your own company.
Share “wow stories.” Every day, employees of every department in every Ritz-Carlton hotel
around the world gather for a 15-minute staff meeting where they share "wow stories." These are
true stories of employee heroics that go above and beyond conventional customer service
expectations. In one, a hotel chef in Bali found special eggs and milk for a guest with food
allergies in a small grocery store in another country and had them flown to the hotel. In another,
a hotel’s laundry service failed to remove a stain on a guest’s suit before the guest left. The hotel
manager flew to the guest’s house and personally delivered a reimbursement check for the cost
of the suit.
Telling stories in these pep talks accomplishes two goals. It reinforces a customer service skill
the hotel is trying to encourage. Most important, it gives an employee "local fame." Employees
want to be recognized in front of their peers. Giving them public recognition is a powerful
motivator.
Demonstrate passion: Moods are contagious. Managers who walk around with a smile on their
face and demonstrate passion for their jobs have an uplifting effect on others. I attended a staff
meeting for housekeepers at the San Francisco Ritz-Carlton one morning and discovered a group
of employees whose happiness rivaled higher-paid employees in other professions. I quickly
learned the enthusiasm started at the top. The supervisor was dressed impeccably in a three-
button blue suit, white shirt, purple tie, and shined black shoes. His wardrobe communicated
respect. "Good morning, everyone," he said enthusiastically. The housekeepers returned an
energetic greeting. This manager was all smiles and showed respect for his team. He said they
returned his commitment through their hard work.
Sell the benefit: In every daily staff meeting, Ritz-Carlton managers reinforce one of 12 service
values all employees are expected to embody on the job. On the day I attended a meeting in San
Francisco, the theme was service value No.2: "I am always responsive to the expressed and
unexpressed wishes and needs of our guests." The housekeepers were encouraged to discuss how
this value applied to their daily tasks.
"What is an expressed wish?" the supervisor asked the group.
"If a guest asks for extra pillows," a woman said.
"That’s exactly right," he said. "But it’s the unexpressed wishes that create The Ritz-Carlton
mystique," he continued, offering the example of a housekeeper who notices a champagne bottle
sitting in melted ice and replaces the ice before being asked to do so. The question was then
asked: "Why do we do it? Why do we go the extra mile?"
One housekeeper volunteered: "It offers a personal touch that shows we care."
"That’s exactly right," another added. "It reflects our commitment to five-star service."
Employees need to understand how their daily actions have an impact the customer. Use staff
meetings to make the connection.
Ask for feedback: Employees are encouraged to speak up during staff meetings. During a
housekeeping meeting, the employees were debating the benefit of one cleaner over another. It
seemed as they preferred the old product over a new one. At first glance, it was a rather mundane
discussion. But I noticed something about their supervisor. He was listening intently, as if the
discussion were the most important thing in his life at the moment: nodding, maintaining eye
contact, and asking questions. He showed genuine interest in the topic. If it is important to his
staff, it is important to him. "Why do you think you have earned so much respect from your
staff?" I later asked. "Because I listen to their concerns," the supervisor said. "And they know I
will follow up."
Praise effectively: Ritz-Carlton managers don’t focus on what employees have done wrong but
instead seek to help them improve on a given task. Supervisors use staff meetings to publicly
praise employees. Criticism is done in private. One supervisor suggested sandwiching
constructive criticism among the praise. "You did a great job this week cleaning the coffee pot,"
he would say, "but you’re still struggling here. Let’s work together on improving it." By offering
the criticism in the middle of praise, he inspires his employees to exceed the expectations of the
hotel’s guests.
I chose to attend housekeeping meetings to make a key point: Motivation can and should take
place everywhere within an organization. Simon Cooper cannot personally motivate each of his
35,000 employees worldwide, so it’s up to his department managers to reinforce the brand and
its values through daily interactions with their teams. Are your employees engaged? Are they
inspired to follow your vision? Five-star service does not begin with them. It begins with you.
Source Business Week February 29, 2008
1. Define Motivation. Distinguish between Motivation & Morale.
2. Explain the views of Herzberg and Maslow on Motivation.
3. Critically examine Maslow’s Need Hierarchy theory with examples.
4. Critically discuss the McGregor’s Theory X and Y and contrast with the principles of Theory
Z
5. Discuss three motivation techniques that you think are most relevant and explain why you
think so.
11.9 Answers
1. Level of performance that is desired from them
2. Perceives as having value to him
3. Needs
4. Goal
5. He strives to satisfy
6. Professor Douglas McGregor
7. Forced to work against their will by threat and fear.
8. Guidelines,
9. Self-image,
10. The management
11. Stimuli,
12. Application of the plan.
13. Selfishness
Answers to Terminal Question:
1. Refer to 11.2 & 11.6
2. Refer to 11.3
3. Refer to 11.3
4. Refer to 11.3
5. Refer to 11.5
References:
1. Organizational Behavior by Fred Luthans
2. Organizational Behaviour by Steven L Shane, Mary Ann Von Glinow and Radha R Sharma
MH0043-Unit-12-Employee Misconduct and

Disciplinary Procedure
Unit-12-Employee Misconduct and Disciplinary Procedure
Structure:
12.1 Introduction
Objectives
12.2 Meaning and Objectives of Discipline
12.3 Principles for Maintenance of Discipline
12.4 Basic Guidelines of a Disciplinary Policy
12.5 Disciplinary – Action Penalties
12.6 Procedure for Disciplinary Action
12.7 Dismissal and Discharge of an Employee
12.8 Summary
12.9 Caselet
12.11 Answers
12.1 Introduction
During the last couple of decade, the growth of industries has been hampered by many incidents
of indiscipline. You would have read about it in newspaper articles and in magazines. However
you will agree that employee conduct in an organization is of paramount importance for its long
term success and smooth running. This Unit focuses on the understanding the challenges
organizations face and how best they can be managed.
During the early stages of industrialisation, manpower was largely exploited. As we studies in
the earlier Unit the Theory X management style prevailed and practices like child employment,
longer working hours, inhuman and unhealthy working conditions, low wages, absence of safety
and welfare measures were typical of the workplace.
The labour had to seek outside help to solve their problems. The trade unions often failed to
provide the needed help and sometimes tried to fulfil their own needs. Incidents of unlawful
activities (strikes, gheraos) and undisciplined behaviour was commonly resorted to by the
employees in industries.
With the growth of union related empowerment, inter-union rivalry was prevalent in most of the
public and private sector industries. Rapid industrial growth in the country resulted in many
problems arising out immigrant workers from the rural to the urban cities and related social
changes, displacement from familiar environments, lack of adjustment to industrial atmosphere,
changes in living conditions, new stresses and strains of industrial disputes, indiscipline and
violence etc. are responsible for a number of disputes and as a consequence, amount of man-days
lost by such disputes were quite substantial.
Today’s organizations have come a long way from most of these problems. The workforce
employed in today’s organizations is markedly different. The traditional infrastructural as well as
the more emerged information technology, information technology enabled services
organizations, retail and other service based organizations have a new set of employees working
in them. The workforce is characterised by:
• Well educated
• Highly aware of their rights, privileges as well as responsibilities
• Mature and balanced
• Committed to organizational as well as personal success and wellbeing
Employee misconduct however remains a challenge that organizations continue to manage and
control.
Objectives:
· Describe the concept of Employee misconduct at the workplace

· State how discipline is implemented and measured.
· Analyze the techniques to ensure discipline
12.2 Meaning and Objective of Discipline
Discipline is best defined as the observation of principles, rules or any other laid down
procedures, practices, written or otherwise in the organization by the employees or group of
employees, to whom these apply, for smooth and effective functioning of the organization.
Per Dr. Spriegal, "discipline is the force that prompts an individual or a group to observe the
rules, regulations and procedures which are deemed to be necessary to the attainment of an
objective; it is force or fear of force which restrains an individual or a group from doing things
which are deemed to be destructive of group objectives. It is also the exercise of restraint or the
enforcement of penalties for the violation of group regulations". Bremblett, Earl R says that,
"discipline in the broad sense means orderliness-the opposite of confusion…". According to
Calhoon. Richard. D, "discipline may be considered as a force that prompts individuals or groups
to observe the rules, regulations and procedures which are deemed to be necessary for the
effective functioning of an organization.”
Webster’s Dictionary gives the meanings of the word ‘discipline as follows:
"First, it is the training that corrects moulds, strengthens or perfects. Second, it is the control
gained by enforcing obedience. The third meaning is punishment or chastisement".
In its most practical form employee misconduct does not mean strict and technical observance of
rigid rules and regulations. It simply means working, co-operating, and behaving in a normal and
orderly way, as responsible adults.
The 5 key objectives of employee misconduct can be summarised as:
1. Effective attainment of organizational goals by having employees accepts rules, policies and
procedures of the organization.
2. To create an atmosphere of total and absolute respects for one and all at the workplace, with
customers and vendors/clients.
3. To develop among the employees a spirit of tolerance and a desire to comply with established
policies established for the benefit of all
4. To increase the working efficiency and moral of the employees, so that their productivity is
stepped up, the cost of production brought down and the quality of production improved.
Discipline is therefore a measure to not only protect the interests of the organization but also its
employees. A good example is that of the recently implemented Sexual Harassment Guideline
provided for through a Supreme court ruling wherein all organizations must have a policy and a
committee that will look into the gender related harassments at the workplace. Today all
organizations have clearly laid down guidelines that detail un-acceptable behaviour amongst
male-female employees that can merit disciplinary action.
Good employee conduct is usually catalyzed by effective leadership. Leaders by being examples,
prevails upon their teams to willingly follow the applicable policies, rules and procedures.
Similarly employee misconduct exists when employees fail to observe the rules of the
organization or the orders of their supervisors. Conditions contributing to poor discipline can be
caused by weaknesses within the organizational structure or by external factors.
1. ________________ is the observance of principles, rules or any other laid down procedures,
practices, written or otherwise in the organization by the employees or group of employees, to
whom these apply, for smooth and effective functioning of the organization.
2. According to ____________________, "discipline may be considered as a force that prompts

individuals or groups to observe the rules, regulations and procedures which are deemed to be
necessary for the effective functioning of an organization.
3. Conditions contributing to ______________________ can are caused by weaknesses within

the organizational structure or by external factors.
12.3 Principles for Maintenance of Discipline
Since, disciplinary measures have serious implications for employees; they often are based on
the principles of being fair, just and acceptable to employees and, where applicable, the union as
well. It cannot be enforced or imposed on employees, as history has proved, it never benefits
anyone. So one of the most significant transformations that has impacted the workplace in the
past few years is the ‘reinstatement’ of discipline in a positive and employee-supported
environment. The way it is practiced in today’s organizations is extremely well communicated
and adopts a discretionary approach.
The most important principles to be observed in the maintenance of discipline have been outlined
by Yoder. Heneman, Turnball and Harold Stone are:
a) As far as possible, all the rules should be framed in co-operation and collaboration with the
representatives of employees. If the latter have a share in formulating them, will be much more
likely to observe them.
b) All the rules should be appraised at frequent and regular intervals to ensure that they are, and
continue to be, appropriate sensible and useful.
c) Rules should vary with changes in the working conditions of employees. Those framed for
office employees, for example, may very well be different from those that are formulated for
workers in an industrial concern.
d) Rules should be uniformly enforced if they are to be effective. They must be applied without
exception and without bending them or ignoring them in favour of any one worker.
e) Penalties for any violation of any rule should be clearly stated in advance. Employees have the
right to know what to expect in the event of any infringement of a rule or regulation. For this
purpose, it is better to publish them in the employees’ handbook.
f) A disciplinary policy should have as its objective the prevention of any infringement rather
than the simple administration of penalties, however just: it should be preventive rather than
punitive.
g) Extreme caution should be exercised to ensure that infringements are not encouraged. This
should be done as a matter of policy.
h) If violations of a particular rule are fairly frequent, the circumstances surrounding them should
be carefully investigated and studied in order to discover the cause or causes of such violations.
i) Recidivism must be expected. Some offenders would almost certainly violate rules more often
than others. These cases should be carefully considered so that their causes may be discovered.
j) Definite and precise provisions for appeal and review of all disciplinary actions should be
expressly mentioned in the employees’ handbook for collective agreements.
4. As far as possible, all the rules should be framed in co-operation and collaboration with
the___________.
5. ___________ should be uniformly enforced if they are to be effective.
6. A disciplinary policy should have as its objective the prevention of any infringement rather
than the simple administration of penalties, however just.
Activity 1:
Review few recent articles to identify 2-3 incidents of employee indiscipline.

How do think it would have been dealt and resolved by the organization?
12.4 Basic Guidelines of a Disciplinary Policy
As discussed above the modern organization has evolved the way it practices the art of managing
employee misconduct. However the basic principles discussed above remain as the guiding
framework. The principal ingredients of a sound disciplinary system in organizations are:
1. Location of responsibility: The responsibility for generating awareness regarding discipline is
entrusted with every individual in the organization. Particularly it resides with the senior
leadership of the company and will all managers who serve as the ambassadors of discipline. In
the traditional brick-and-motor organizations it is the Personnel Officer who is entrusted with the
responsibility of offering advice and assistance. In case of employee in-discipline, the line
manager issue only verbal and written warnings. In serious cases, which warrant discharge or
suspension, the Industrial Relations Officer and other independent legal consultants need to be
consulted.
2. Proper formulation and communication of rules: The employees are expected to conform to
rules and regulations and behave in a responsible manner; it is essential that these rules and
regulations are properly and carefully formulated and communicated to them. It would be
preferable if a copy of these regulations is included in their handbook; at any rate, they should be
put up on notice boards and bulletin boards. Every organization has a Policy and Guidelines
document, either as hardcopy in the form of the Company’s’ “Policy Handbook” or as soft copy
on the Company’s intranet site. This document elaborates the specific acceptable personal code
of conduct. All new employees are required to read it and acknowledge that they have read it by
signing once they have read it all. In many organizations the employees need to read it and sign
it once every year. This acts as a effective preventive mechanism to ensure that employees are
aware of it and have committed to abide by it.
3. Rules and regulations should be reasonable: today’s organizations pay a lot of attention, and
rightly so, towards formulating equitable polices that protect employee as well as the
organizations values and rights. Often organizations involve employee representatives in
formulating these policies and guidelines. Not only is the formulation of the policy important but
also its communication. Organizations often hold road-shows and workshops that communicate
policies and the reason why these policies are required. In order to make these workshops
interesting and have employees attend it, the communication is often done using innovative
means such as role-play, video-cases of workplace incidents and even build case studies around
how to behave in particular situations.
4. Equal treatment: All defaulters of the acknowledged code of conduct should be treated
equitably, depending of course on the nature of the offence. Identical punishment should be
awarded for identical offences, irrespective of the position or seniority of the employee.
5. Disciplinary action should be taken in private: While the policies’ governing the acceptable
code of conduct is communicated publicly, the reprimand for non-compliance needs to be done
in private. This is to ensure that a wrong behaviour is corrected and not that the wrong-doer be
punished, or ridiculed. At all times the organization needs to be watchful of remaining respectful
of its employee and carry out any action in a respectful and in a confidential manner.
6. Importance of promptness in taking disciplinary action: As goes the popular saying….justice

delayed is justice denied. If the action for review and reprimand is taken long after a violation of
a policy/rule has happened, it loses its positive and corrective influence. The employees loose
trust in the system and assume that the organization lacks commitment to it. It might even lead to
resentment, which may not have developed if the corrective action had been imposed in time.
Also the action taken needs to be compliant with the policy and fair. Most breach of the rules and
policies might lead to employee termination, in such cases appropriate approval of the senior
management should be taken and it should be implemented soon.
7. Innocence is presumed: Again as per the fundamental rights of a human being, an individual is
presumed to be innocent until he is proven to be guilty. It is the organization’s responsibility and
therefore the HR team’s responsibility to prove beyond a reasonable doubt, that a violation or an
offence has been committed before any punishment is awarded. The employee or employees
need to be given the first opportunity to explain himself/herself/themselves. The kind of proof
that would be needed for this purpose would depend on the gravity of the offence that has been
committed.
8. Get the facts: Before taking any disciplinary action, it is important to ensure that records of the
offense and any previous warnings are reviewed closely. It may often be discovered that there
were mitigating circumstances, or that he/she/they were not aware of the rules; or that the person
had conflicting orders or even permission to break the rule for some reason. Getting facts right is
the most credible part of this entire activity.
9. Action should be taken in non-threatening atmosphere: The action should be taken by multiple
people to ensure that is fair and the best course of action. It then needs to be endorsed by a
representative sample of the senior/top management team. Also it is important to be consistent
with earlier decisions taken as therefore a rational and sensible judgement. It ought to be in-step
with the conditions of natural justice. The management must act without bias and without
vindictiveness. Justice and fair play must prevail. Wherever possible and within the framework
of the policy, employee must be given the opportunity to reform himself/herself. And not only
reprimanded.
10. After a disciplinary action has been taken by the manager, he should treat his team member
in a normal manner: The employee has paid the penalty for the violation of a rule. He should,
therefore, be treated as he would have been, had there been no violation and no action.
Remaining respectful and fair is important, and this could be difficult. Therefore the manager
might need to be reminded to be watchful of it. HR can also play a effective rule here by
continuing to remain in touch with the employee and hear out his grievance if any.
11. Negative motivation should be handled in a positive manner: Often any such confrontation
with a erring employees results in a immediate drop in motivation. Employee needs to be
sensitised that a negative approach does not pay. Manager might often try to ‘protect’ their
employees. As far as possible, disciplinary action should deal with specific rule in question,
rather than with the employee in general. Managing the employee needs manager training,
without doubt. The role of HR is critical. HR and the manager spend significant time role-
playing the reactions of the employee and how the manager needs to respond and manage the
employee back at work. The fruit of the pudding is in the preparation.
7. The ___________________ should issue only verbal and written warnings.

8. While finalising the rules, _________________ should be given the opportunity to express
freely his views thereon
9. All _______________should be treated alike, depending on the nature of their offence.

Identical punishment should be awarded for identical offences, irrespective of the position or
seniority of the employee.
Activity 2
You need to find 2-3 samples of ‘Code Of Conduct’ document that

corporate use. Browse the net to find them. Some companies post their Code
of Conduct document on the internet website.
Study the content of these documents to better understand the theory that
you have studied above.
12.5 Disciplinary – Action Penalties
There are varying penalties for first, second, and third offences of the same rule. Following are
the commonly practiced actions in business Organization:
1. Oral reprimand
2. Written reprimand
3. Loss of privileges
4. Fines
5. Lay off
6. Demotion
7. Discharge
The penalties are listed in the general order of severity, from mild to severe. For most cases, an
oral reprimand is sufficient to achieve the desired result. The supervisor must know his or her
personnel in determining how to give a reprimand. For one person, a severe "session" may be
necessary in order to get attention and co-operation; another person may require only a casual
mention of a deficiency. If the offence is more serious, the reprimand may be put in written form.
Since a written reprimand is more permanent than an oral one, it is considered a more severe
offence and the penalty levied accordingly.
For such offences as tardiness or leaving work without permission, fines or loss of various
privileges can be used. The fines usually have some relationship to the work time actually lost.
The loss of privileges includes such items as good job assignments, right to select machine or
other equipment, and freedom of movement about the workplace or company.
The more severe penalties of layoff, demotion, and discharge are usually outside the grant of
authority to the immediate supervisor. Disciplinary layoffs can vary in severity from one to
several days’ loss of work without pay. The use of demotions as a penalty is highly questionable.
If the employee is properly qualified for the present assignment, he or she will be improperly
placed on a lower job. Discharge is the most severe penalty that a business organization can give
and constitutes "industrial capital punishment".
10. The supervisor must know his or her personnel in determining how to ________________.
11. Since a written reprimand is more permanent than ________________, it is considered a

more severe penalty.
12. The use of ______________as a penalty is highly questionable.
12.6 Procedure for Disciplinary Action
Though there is no specific procedure to be followed. Different organizations use a variety of

formal and informal methods to resolve these matters. The following steps are recommended
a) An accurate statement of the disciplinary problem.
b) Collection of data or facts supporting the report of the offence.
c) Review policy and past similar incidents.
d) Identify corrective action to implement; take legal counsel to ensure that the local laws of the
land are not in conflict
e) Apply the action
f) Follow-up on the disciplinary action.
a. Accurate Statement of the Problem: The first step is to ascertain the problem by seeking
answers to the following questions:
1. Does this case call for a disciplinary action?
2. What, exactly, is the nature of the violation or offence?

3. Under what-conditions did it occur?
4. Which individual or individuals were involved in it?
5. When, or how often, did the violation occur?
In other words, an executive must first find out that a violation has occurred and that is entirely
the fault, or at least partially the fault, of one or more subordinates. The next step is to determine
and state the nature of the alleged violation of a rule, a regulation, a policy; to determine whether
a request or order has been ignored or broken, and assess the seriousness of the specific offence
which has been committed. It is also necessary to know exactly who and what was involved in
the violation-whether a particular individual or group. Finally, it is desirable to know when
and/or how often the violation occurred.
b. Collection of data or facts support the report of the offence: Before any action is taken in a
case, it is essential to gather all the facts about it. A thorough examination of the case should be
made within the stipulated time limit. The facts gathered should be such as can be produced
before a higher authority, if and when needed.
c. Review policy and past similar incidents: The kind of penalty to be imposed for an offence
should be determined beforehand. Should it be simple reprimand, a financial or non-financial
penalty? Or should it be demotion, temporary lay-off or outright discharge?
d. Identify corrective action to implement; take legal counsel to ensure that the local laws of the
land are not in conflict: When a decision has been taken to impose a penalty, the punishment to
be awarded should be such as would prevent a recurrence of the offence. If the punishment is
lighter than it should be, it may encourage the violation of the same rule or another; if it is
greater than it should be, it may lead to a grievance.
e. Apply the action: The application of the penalty involves a positive and assured attitude on the
part of the management. "If the disciplinary action is a simple reprimand, the executive should
calmly and quickly dispose of the matter. But when severe action is called for, a fortnight,
serious and determined attitude is highly desirable.
f. Follow-up on Disciplinary Action: The ultimate purpose of a disciplinary action is to maintain

discipline, to ensure productivity, and avoid a repetition of the offence. A disciplinary action
should, therefore, be evaluated in terms of its effectiveness after it has been taken. In other
words, there should be a more careful supervision of the persons against whom a disciplinary
action has been taken.
13. ______________________ is the first step is to ascertain the problem.
14. Before any action is taken in a case, it is essential to _______________.

15. When a decision has been taken to impose a penalty, the punishment to be awarded should be
such as will ________________________.
12.7 Dismissal and Discharge of an Employee
According to Article 311 of the Indian Constitution, which states that “no person shall be
dismissed or removed from service until he has been given a reasonable opportunity to show
cause as to why the proposed action should not be taken against him?"
The Model Standing Orders, similarly states that, "before an employee is dismissed, he should be
given an opportunity to explain the circumstances against him."
The following steps are followed for dismissal of an employee:
a) Charge Sheet is Framed and Issued:
The first step in the procedure is to have in-place a written complaint against the employee in
question, and which contains details of the offence with which he is charged, policy breach and
the allegation of misconduct made against him, and indicating the time limit within which a reply
to the charge sheet should be submitted to the due authorities. The employee is called to put forth
his case why a disciplinary action should not be taken against him.
The contents and implications of the complaint/charge sheet may be explained to him in his own
language and in the presence of some reputable witness, before a copy of it is handed over to
him. If he refuses to accept it, it should be sent to his residential address "registered post with
acknowledgement due". If the employee refuses to take delivery of the registered letter, or when
it has been returned undelivered, it should be published in a local paper to ensure its wide
publicity.
b) Explanation Receipt:
The employee provides his explanation within the scheduled time allotted. He can also ask for an
extension of time for its submission, all in good faith.
c) Issue of Notice of Enquiry:
Upon receipt of the explanation from the employee it is reviewed. If found unsatisfactory, a
notice of enquiry, mentioning the time, date and place, has to be given to him in which the name
of the person or officer conducting the enquiry would also be mentioned. The employee is
required to be present at the appointed time and place, together with his witness, if he has any.
d) Conducting the Enquiry:

On the appointed day and at the appointed place and time, the enquiry is held by the Enquiry
Officer in the presence of the employee. The contents of the charge sheet and an explanation of
the procedure to be followed at the enquiry are communicated to the worker. If he pleads his
innocence, the enquiry proceeds; but if he pleads guilty, unconditionally and in writing, the
enquiry is dropped.
e) Sharing Findings:
Once the enquiry is over, the Enquiry Officer has to give his findings, which should invariably
contain the procedure which was followed, the employee’s statements, all of the documents
produced and examined, the charges made and the explanations given and the evidence
produced. The officer should then record his own findings on each of the charges and the
grounds on which he has come to a particular conclusion. He should specifically mention which
charges have been proved and which have not been proved. He then submits his findings to the
authorities empowered to take the disciplinary action against the employee. He, however, is not
required to make any recommendations.
a) On receiving the report, the executive authorized to take a decision thereon passes an order of
action
b) Communication of the decision
A copy of the orders is then handed over to the employee.
In terminating the employment of a employee the following conditions must necessarily be

complied with for misconduct.
a) The misconduct of the employee is of such a nature as to indicate that his discharge or
dismissal would be an appropriate punishment and that this kind of punishment has been
provided in the companies policies or per statute
b) A fair and open enquiry must be held by the employer into the misconduct which an employee
has been charged with.
c) The enquiry should be held in such a manner as to ensure that it would be fair and proper and
in conformity with the principles of natural justice. The employee must be given an adequate
opportunity to defend himself and to present witness in support of his contention or case.
d) The person holding the enquiry should not be someone who’s known to be biased has
personal/vested interest or was in anyway associated with the misconduct.
e) The order must be sensitively communicated to the employee against who it has been passed.
12.8 Summary
· Good employee conduct might be described as orderly behaviour based on definite standards
catalyzed by effective leadership.
· Disciplinary measures have serious repercussions on employees. Hence they should be based
on certain principles so that they must be fair, just and acceptable to employees and their union.
· As far as possible, all the rules should be framed in co-operation and collaboration with the
representatives of employees.
· All the rules should be appraised at frequent and regular intervals
· Rules should be uniformly enforced if they are to be effective.
· A disciplinary policy should be preventive rather than punitive.
· It is essential that these rules and regulations are properly and carefully formulated and
communicated to employees.
· Identical punishment should be awarded for identical offences, irrespective of the position or
seniority of the employee.
· If the penalty is imposed long after a violation of rules has been committed, it loses its positive
and corrective influence.
· The ultimate purpose of a disciplinary action is to maintain discipline, to ensure productivity,

and avoid a repetition of the offence.
· A disciplinary action should be evaluated in terms of its effectiveness after it has been taken.
12.9 Caselet
HC disallows action against employee under articles of association
Chennai April 13 The Madras High Court has ruled that use of articles of association of a State-
owned transport corporation or clarifications by the State Government cannot be used to persist
with a departmental enquiry against an employee for alleged misconduct.
If an employee had committed a loss or damage to business or property of the corporation, it

could always institute civil proceedings for recovery notwithstanding whether the person was in
service or not, Mr Justice K. Chandru held while allowing a writ petition from R. Balraj,
Managing Director, TN State Transport Corporation.
The petitioner had joined the transport corporation as Works Manager and served in Cheran
Transport Corporation; he was later transferred to TN State Transport Corporation and became a
permanent employee from 1976 as Assistant Manager. He was subsequently promoted as
Managing Director of the corporation in 1987. While serving as MD, in relation to a certain
decision taken by him as part of the purchase committee, two charge memos were served on him
on August 28, 2002, just two days ahead of his retirement, and he was allowed to retire without
prejudice to disciplinary proceedings, and his terminal benefits like pension, gratuity and PF
were withheld. The present petition was against the charge memos.
The petitioner contended that in the absence of any service rule, there was no power vested on
the employer to conduct an enquiry for alleged misconduct even after his superannuation. The
respondents submitted that there were serious charges against the petitioner, and he was allowed
to retire without prejudice to disciplinary action pending against him. They said that though there
was no specific power enjoyed by the corporation, Rule 10 of articles of association of
Corporation provided for the Government to issue instructions.
The Judge said that articles of association of the corporation could not be raised to the level of
any statutory provision to proceed against employees. Also, in the absence of any substantive
power to retain an employee, the corporation could not rely upon articles of association or any
clarification issued by the Government.
Holding that the corporation could always institute civil proceedings for recovery of any loss
allegedly caused by the employee, the Judge said there were also enough provisions in the
Companies Act for making such recoveries from employees of Corporation.
Allowing the petition, the Judge directed the corporation to settle the terminal benefits of the
petitioner within four weeks.
Source : Business Line April 14th 2007
1. Define Discipline. What are its Objectives?
2. What are the basic principles to maintain discipline?
3. Enumerate the steps for disciplinary procedure.
4. State the principal ingredients of a sound disciplinary system.
5. What conditions must necessarily be satisfied before an employee is discharged from service
by way of punishment for misconduct?
12.11 Answers
1. Discipline
2. Calhoon. Richard. D.
3. Poor discipline
4. Representatives of employees
5. Rules
6. It should be preventive rather than punitive
7. Line Executive
8. Everyone
9. Defaulters
10. Give a reprimand
11. An oral one
12. Demotions
13. Accurate Statement of the Problem.
14. Gather all the facts about it.
15. Prevent a recurrence of the offence.
1. Refer to 12.2
2. Refer to 12.3
3. Refer to 12.4
4. Refer to 12.5 &12.6
5. Refer to 12.7
Reference:
1. Human Resources Management and Personnel Management by K Aswathappa

.
MH0043-Unit-13-Grievance and Grievance

Procedure
Unit-13-Grievance and Grievance Procedure
Structure:
13.1 Introduction
Objectives
13.2 Concept of Grievance
13.3 Why do Grievances Arise?
13.4 Importance of Grievance Handling
13.5 Grievance Handling Procedure
13.6 Concept of Arbitration
13.7 Emerging Employee Empowerment Practices
13.8 Summary
13.9 Caselet
13.11 Answers
13.1 Introduction
It is human nature to express discontentment when we feel it. You too would find it easy to
criticise all of what is happening around you, whether it’s the deplorable status of the roads in
your city or the inefficiency of the garbage disposal mechanism of the city corporation.
Wherever we have literate and aware people this is a natural process to find-fault. This unit
focuses on understanding the challenges of how organizations manage employee expectations at
work.
There is hardly any organization where the employees do not have some voice for grievance.
Grievances therefore could range from employees complaining against their employers through
to employers who have grievances against their employees. Often the actual validity of these
grievances can be questioned. They may be real or imaginary, valid or invalid, genuine or false.
Whatever the nature and the cause, it produces unhappiness, frustration, discontent, indifference
and poor morale amongst the employees. Ultimately it ends with an adverse effect on the
efficiency and productivity of an employee at work. This unit explores the reasons as to why
grievances arise. It also deals with grievance machinery and procedure. We will also understand
what today’s organizations are doing to manage this proactively.
Objectives:
· Explain the meaning of ‘grievances’.
· Discuss the importance of grievance handling.
· Describe grievance machinery and its procedure.
13.2 Concept of Grievance
The definition of a grievance often varies from company to company and from author to author.
The broadest interpretation of the term would include any discontent or dissatisfaction that
affects organizational performance. As such, it can be stated or voiced, written or oral, legitimate
or ridiculous.
The word grievance is often used in a generic form to indicate various forms and stages of an
employee’s dissatisfaction while at work. While the dissatisfaction could be defined as anything
that disturbs an employee, a complaint is spoken or written dissatisfaction brought to the
attention of the manager or to the HR department/team member. Often employees view the HR
team as the custodian of employee content/discontent and take up their grievances with the HR
team. Grievance could also be voiced by a group of employees; it need not necessarily be a
single employee with a complaint.
Dale Yoder defines it as "a written complaint filed by an employee and claiming unfair
treatment". Prof. Jucious defines grievance as “any discontent or dissatisfaction, whether
expressed or not and whether valid or not, arising out of anything connected with the company
that an employee thinks, believes or even feels unfair, unjust or inequitable.” Prof. Pigors and
Meyers define grievance as dissatisfaction. According to them, dissatisfaction of an employee is
anything that disturbs the employee, whether expressed or not. The International Labour
Organization (ILO) classifies a grievance as a complaint of one or more workers with respect to
wages and allowances, conditions of work, interpretations of service stipulations, covering such
areas as overtime, leave, transfer, promotion, seniority, job assignment and termination of
service. The National Commission of Labour states that complaints affecting one or more
individual workers in respect of their wage payments, overtime, leave, transfer, promotion,
seniority, work assignment, and discharges would constitute grievances.
Common sources of conflicting situations where the employee feels unfairly treated, harassed, or
overlooked in promotions, or are deserving of a pay hike, need to be redressed. Justice systems
that allow an employee to voice perceived conflicts serve the following purposes:
· Increase organizational commitment and performance by treating employees fairly and by

identifying problem areas
· Avoid expensive and long-drawn lawsuits, which also bring in negative employer branding
· Prevent unionism
The key to employee well-being lies in communicating the process that is provided for seeking
such justice and the management remaining committed to it.
1. The broadest interpretation of the term would include any discontent or dissatisfaction that
affects ______________________________.
2. In the language of the labour management relations, a grievance is a complaint formally

presented by the _______________________.
3. The __________________________ states that complaints affecting one or more individual

workers in respect of their wage payments, overtime, leave, transfer, promotion, seniority, work
assignment, and discharges would constitute grievances.
13.3 Why do Grievances Arise?
Grievances arise due to various factors. It is important from the point of view of the manager to
know the possible causes of the employee’s dissatisfaction. A grievance is usually a symptom of
some malfunctioning or misperception. Often a skilled and watchful manager can quickly find
out the real or submerged reasons for a grievance.
Several studies indicate that there is a pattern in the topics/categories that attract employee
discontent. These can be categorised as under the following major headings. While the top
concerns are mostly money related, workplace facilities and working conditions rank a good 2nd
w.r.t. employee discontent.
1. Promotions, Supersession, growth and internal job opportunities
2. Compensation, increments and Bonus
3. Amenities / office facilities, Conditions of work
4. Transfer / job related relocation,

5. Disciplinary action
6. Acting Promotion
7. Fines
8. Recovery of dues
9. Safety appliance, and
10. Victimization / harassment
The traditional organizations had established policy and process on how grievances need to be
raised and resolved. The era of ‘Personnel Management’ which focused on employee welfare
adopted a more reactive approach to managing employee discontent. The ‘closed door’, highly
hierarchical and autocratic management style did not provide for the employee to openly voice
their opinions. The approach was reactive, time taking and involved senior management approval
for any changes. Therefore, need to have a process for grievance handling aroused. The role of
the unions too was partly responsible for enforcing a structure to ensure that the employee’s
views were heard and adequately responded to.
In past decade however, grievance began to be managed in a more proactive manner. Foremost
the collaborative and the employee empowered work environment itself allows for employees to
openly express their views and seek counsel. The managerial style adopted is more ‘open-door’,
wherein the employee can approach his/her manager with an issue. The need for a formal
structured approach is limited if not existent in most organizations. Many organizations form
committees and involve employees in most employee-impacting decisions, be it choice of a new
office location or what needs to be served for lunch in the cafeteria and other such workplace
hygiene factors. In job-related issues such as promotions, compensation and merit hikes etc,
today’s organizations provide for a transparency in its policies and practices. The increasing
focus on skills and competencies for employee reward and growth do not allow for personal
biases that can lead to grievances.
4. It is important from the point of view of the manager to know the ___________________ of
the employee’s dissatisfaction
5. Some of the causes for grievances in organization are _____________.
6. The role of the _____________ too were partly responsible for ensuring that the employee’s
views were heard and adequately responded to
13.4 Importance of Grievance Handling

What might happen if an organization does not provide some method by which a employee can
voice his complaints and obtain a explanation? The employee will be unhappy, his productivity
is impacted, he openly begins to share his discontent with not just his colleagues but also
outsider’s, friends, relatives, maybe even customers and vendors. Just as the employee has all the
right to voice a grievance, as employer (or the management) owes it to the employee to respond
suitably to the grievance. It is but commonsense that the resolution of a problem rests on
management. The earliest and clearest opportunity for issue resolution is found at the first stage,
before the grievance has left the jurisdiction of the manager. For this reason, many firms have
specifically trained their managers on how to handle a grievance or complaint properly. If the
dispute or grievance constitutes a managerial problem it can often be resolved by the manager
himself with the help of the HR team. The following steps discuss how a grievance can be
redressed:
1. Receiving the grievance: The manner and attitude with which the manager receives the
complaint of grievance is important. The basic premise is that the manager should at the outset
assume that the employee is fair in presenting his/her opinion/complaint. The complaint should
not be prejudged on the basis of past experience with this or other employees. When a employee
approaches the manager with a issue the manager needs to make himself available to listen it all
out and provide him/her the undivided attention. Research confirms that managers who were
more task-oriented, as contrasted with managers who were more people-oriented, tended to
experience a significantly higher number of grievances being filed in their units.
2. Reviewing the grievance: Once a complaint is received all facts supporting the issue needs to
be gathered. Proper record keeping such as performance ratings, job ratings, attending records,
and suggestions are reviewed. In addition, with the increasingly legal implications of modern
labour-management relations, the manager should keep records on each particular grievance. All
action taken, discussions with the employee, summary and what is agreed to all of it needs to be
recorded.
3. Analysis and decision: With the problem defined and the facts in hand, the manager must
now analyze and evaluate them, and come to some decision. It is important for the manager to
involve others in the process to ensure that it is fair and is the best solution. The manager must
include the views of his own manager as he might not be aware of all the implications of the
problem and its resolution. Involving HR too is a recommended process in all organizations. HR
can then seek finance or legal counsel if required, before any decision is taken. All involved in
the decision making process need to be aware that the decision may create an undesirable
precedence within the department as well as the company.
4. Response: Often it might not be possible to provide a positive resolution to the problem. If the
solution decided is adverse to the employee’s views, attention needs to be given to the method of
communication. Employees dislike managers who will take no stand, good or bad. Clearly
communicating the message and sharing as much information as possible about the decision
making process helps in establishing credibility to the process used to make the decision. The
manager can also invite HR or his manager to sit-in on the conversation with the employee. As
far as possible this should happen in a face-to-face meeting. In the event an employee wishes to
take the appeal beyond to the next stage of the procedure he must be allowed to do so. The
manager must have the opportunity to explain his decision to the other members so they can take
a well-informed decision.
5. Follow up: The objective of the grievance procedure is to resolve a disagreement between an
employee and the organization. Open communication is important for this process. The purpose
of phase is to determine whether the employee feels that the problem has been sufficiently
redressed. If follow up reveals that the case has been handled unsatisfactorily, then redefinition
of the problem, further fact-finding, analysis, solution and follow up are required. At this stage
the manager can step aside and allow someone else in a position of authority like the HR or the
manager’s manager to lead the process and close it.
Among the common errors of management encountered in the processing of grievances

are:
1. Lack of in-depth review of the issue and its facts;
2. Expressing policy/management opinion prior to the time when all pertinent facts have been
discovered;
3. Failing to maintain proper records;
4. Resorting to authoritative orders rather than having open conversations with the employee;
and
5. Watch out if making exceptions / setting a precedence which could then become a rule.
Activity 1
Visit the following website and read it.
http://www.indianmba.com/Faculty_Column/FC338/fc338.html
Reflect on what the author is trying to convey. How practical is it?
7. The clearest opportunity for settlement is found at the _____________, before the grievance
has left the jurisdiction of the manager.
8. In gathering facts, one quickly becomes aware of the importance of _______________ such as
performance ratings, job ratings, attending records, and suggestions.
9. In analysing and evaluating a grievance the manager must also be aware that the decision may
constitute a ______________________.
13.5 The Grievance Handling Procedure
Principles suggested by the Indian Institute of Personnel Management for addressing the
grievance are as follows:
a) A grievance should be dealt within the limits of the first line manager.
b) The appellate authority should be made clear to the employee so that if he cannot get
satisfaction from his immediate manager, he should know the next step.
c) The grievance should be dealt with speedily.
d) In establishing a grievance procedure, if the grievance is against an instruction given by a

superior in the interest of order and discipline, the instructions must be carried out first and then
only employee can register his protest.
There should be no recourse to official machinery of conciliation unless the procedure has been
carried out without reaching any solution.
Grievance Machinery
A grievance machinery is usually thought of in connection with a company that deals with a
labour union. Though the union must be given some credit for stimulating the installation of such
procedures, all companies, whether unionized or not, should have established and known
methods of processing grievances.
To establish new grievance machinery, workers in each department and each shift shall select,
from among themselves and for a period of not less than one year at a time, departmental
representatives, and forward the list of persons so selected to the management. Where the unions
in the undertaking are in a position to submit an agreed list of names, recourse to election may
not be necessary. Nor will this be necessary when a Works Committee is functioning
satisfactorily, for the Works Committee’s member of a particular constituency shall act as the
departmental representative.
Grievance Handling
The details of the grievance procedure vary from industry to industry and from trade union to
trade union because of the variations in the size of organizations, trade union strength, the
management philosophy, the company traditions, industrial practices and in the cost factor. An
important aspect of the grievance machinery is the reassurance given to an individual employee
by the mere fact that there is a mechanism available to him which will consider his grievance in a
dispassionate and detailed manner, and that his point of view will be heard and given due
consideration. An employee’s conception of his problem(s) may be quite biased. Venting his
grievance and being heard gives him a feeling of being cared for. He gets it "off his chest", so to
say, and it does a lot of good for his morale as revealed by the famous Hawthorne Studies.
Fig. 13.1: Grievance Handling Procedure
Initial step
The greatest opportunity for the settlement of a complaint or grievance lies in the initial step of
the procedure. If there is no formal procedure and the firm announces an open-door policy, then
it is possible that the manager may get bypassed by the worker who would take his grievance
directly to the higher levels of management. But such bypassing not merely undermines the
manager’s authority, who loses face, but also creates an atmosphere of win-or-loose in which
both the worker and manager will try to prove the other wrong.
Intermediate step
As the figure indicates, the next step on the management side of the procedure is to submit the
dispute to middle management. Involving the manager’s, middle and senior-line managers in the
grievance process helps in two ways. Initially, the social barriers between the various categories
are, to some extent, broken by personal contact and mutual understanding. Secondly, the
problem-solving approach integrates the various levels in the organization into a team to jointly
overcome the problem which concerns not only the worker but the manager as well. However, it
is important to ensure that the line management assumes prime responsibility for the settlement
of a grievance. In many organizations, the Personnel Department is injected into the procedure as
a decision-making power. On the union side, intermediate levels are represented by higher
personnel in the union hierarchy. In most of the organizations, the business agent, a full-time
negotiations specialist of the union, takes over the intermediate and sometimes the final step. The
presence of a business agent may explain why management is often outmanoeuvred by the
union. Business agents are specialists in union-management negotiations, and it is also their full-
time job. The line manager often considers grievance processing a minor, incidental, and
distasteful duty. This lack of specialization and interest on the part of line management has led to
the situation in which the staff personnel department is given authority to make decisions about
grievances.
Final Company-union step
Usually, the final step to be undertaken by the company and union is a discussion of the
grievance between representatives of top management and top union officials. For management,
it may be the President in important grievances, a Vice-president, or a high-level Industrial
Relations Executive but, for the union, it may be the President of the local union, the Union
Executive Committee, or a representative of the International Union. It is difficult to secure an
integration of interests at this high level.
10. A ________________ is usually thought of in connection with a company that deals with a
labour union.
11. The details of the grievance procedure vary from industry to industry and from trade union to
trade union because of the variations in _______________.
12. An employee’s conception of his problem(s) may be quite ________________.
13.6 Arbitration
In case, the grievance has not been settled by top management and top union leadership, three
possibilities remain:
1. The union can temporarily or permanently drop the issue;
2. The union can call a strike if the contract permits;
3. The case may be submitted to an impartial arbitrator.
Arbitration is usually handled by either a single individual or a panel of three, consisting of a

representative of labour, one of management, and an impartial third person. An arbitrator is an
outside third party who is brought in to settle a dispute, and he or she has the authority to make a
decision. The arbitrator may be hired for a particular case or may be appointed as a permanent
official for the industry or the company and the union. Generally, the person may be acceptable
to both union and management. Salary is usually paid by both, since it is important that no undue
influence should have a bearing on his/her deliberations.
13. A grievance should be dealt within the limits of _____________.
14. A _____________ is usually thought of in connection with a company that deals with a
labour union.
15. A ___________ is an outside third party who is brought in to settle a dispute, and he or she
has the authority to make a decision.
13.7 Emerging employee empowerment practices
In today’s organizations the focus is moving towards collaboration at the workplace. One of the
most common instruments established in large organizations has be the Employee Suggestion
Schemes (ESS). The ESS has proved effective in allowing employees a discrete method of
voicing their opinions and suggestion for what can be better managed in the company. The
management invites the employees suggestions on all/any issue that is a source of irritation for
the employees including topics mentioned in 13.3 above are open for comment. What however is
different is that the employee is encouraged to frame it as a suggestion and make a
recommendation for a change, rather than the classic fault finding approach about what is going
wrong or what is not working well. There are ESS forms/ templates that are left in common
places or the employee can download from the company intranet and fill in the suggestion for
change and drop it in boxes left common places like the coffee area or the lunch rooms etc..
These suggestions are then collated by the HR team and on a quarterly basis the Suggestion
Committee meets to review all of the suggestions received. The Suggestion Committee includes
line managers, HR representative and Finance and Facilities & Administration team members
and senior management representative who can provide the necessary guidance for approval of
the suggestions. The committee meets and discusses each suggestion in depth and evaluates the
scope for implementation of the suggestion. The feasibility of implementing the suggestion and
its other implications are evaluated closely and the suggestion accepted/set aside for future
review/rejected. There are awards given away for excellent ideas that help the company optimise
costs, productivity and improve quality, customer satisfaction etc.. The HR then communicates
the suggestion committee report with all employees through a mail or during the employees
Open-house sessions. The employee’s ‘open house’ also called the ‘all hands’ meeting is one
more communication forum effectively used by the senior management of a company to connect
with its employees. This usually is a quarterly or a half-yearly meeting to which all employees
are invited. There is a brief sharing of the company’s performance and the rest of the time
devoted to answering any queries that employees might have on any issue that concerns the
company and its employees. This is often followed with by a informal interactions over
lunch/breakfast, where once again employees can speak to the senior executives and ask general
questions. Often employees might not feel comfortable asking tough questions in a open forum,
hence there are drop-boxes provided where the employee can write and drop a question or a
opinion that he wants the senior management to answer. The employee need not mention his
name on the question slip. If the senior management is unable to answer a question then and
there the same is reviewed subsequently by the senior management and a response shared with
all employees over mail or posted on the notice board or on the intranet site for everyone to read.
Some organizations also operate a email communication method where any employee who has a
query or a observation can write his question to the mail alias and obtain a response. Usually the
HR is the custodian of this mailid and they do the necessary review to suitably answer the
questions and seek the manager’s inputs on a as needed basis. The concept of taskforce is also a
common mechanism that organizations use to build cross-functional teams (with one
representative each from each department) that will work on concerns that are commonly voiced.
For example a leading medical transcription company wanted to review its incentive policy and
in order to have a collaborative approach put together a team of employees one each from each
of the departments including representatives from HR and Finance. The team was provided with
all the historical information they would need and were given all of 6 weeks to work on the
project and make a presentation to the senior management of the company. After the first
presentation to them and having incorporated the feedback received the taskforce then presented
the new scheme to the employees. Finally it was approved as a policy and made effective.
Today’s organizations therefore adopt a collaborative approach to employee issues. While the
technology companies are more informal the traditional brick-and-motor companies have formal
processes. Whatever the approach whether formal or informal employees are encouraged to
open-up and ask questions and perform as contended employees.
Activity 2
Speak to two or three friends/relatives who are working in companies. Ask

them how they express dissatisfaction against an issue at work. What kind of
acceptable formal/informal processes does the company have to take care of
employee complaints/ grievances?
13.8 Summary
· The broadest interpretation of the term ‘grievance’ would include any discontent or
dissatisfaction that affects organizational performance.
· In the language of the labour management relations, a grievance is a complaint formally

presented by the employee or employees to the management.
· The dispute or grievance constitutes a managerial problem and the scientific method is usually
most productive in arriving at a satisfactory solution.
· A grievance is always a symbol of some malfunctioning or maladjustment and an able and

skilful manager can always find out the real or submerged reasons for a grievance.
· The dispute must be handled by some member of management. In the solution of a problem, the
greater burden rests on management.
· The clearest opportunity for settlement is found at the first stage, before the grievance has left
the jurisdiction of the manager.
· The following directions help in handling a grievance:
-Receive and define the nature of the dissatisfaction.
-Get the facts.

-Analyze and divide.
-Apply the answer.
-Follow up.
· A grievance should be dealt within the limits of the first line manager.
· The appellate authority should be made clear to the employee.
· The grievance should be dealt with speedily.
· In establishing a grievance procedure, if the grievance is against an instruction given by a

superior in the interest of order and discipline, the instructions must be carried out first and then
only employee can register his protest.
· In case, the grievance has not been settled by top management and top union leadership, the
same may be submitted to an impartial arbitrator.
13.9 Caselet
Kanika Datta: Handling management grievances

Associations with board-level representation may sound radical but they aren’t such a bad idea.
Workers and clerical staff have unions, the C-suite has the decision-making powers, but how
should the general cadres of white-collar managerial employees express their grievances?
This issue has been starkly highlighted over the last two months when some pilots of, first, Jet
Airways and, this week, of Air India struck work over pay and allowances, holding air travellers
to ransom country-wide. Much opprobrium has been heaped on them, the conventional view
being that pilots, who would broadly correspond to mid-level managers in airlines, are obscenely
overpaid and have no right to protest besides displaying a gross sense of irresponsibility.
In Jet Airways’ case, the point was made with all the maudlin histrionics that Chairman Naresh
Goyal had perfected during an earlier strike by cabin crew last year. This time, it was cabin and
ground crew who held a press conference to beseech their pilot colleagues to abandon the sick-
out and return to work. Otherwise, they said, innocent employees, caught in the middle, would be
in trouble if the airline lost revenue. The implication: the fat cats of the airline were ruining the
livelihood of the toiling lesser mortals.
State-owned Air India played out the drama differently but characteristically with Civil Aviation
Minister Praful Patel, with an anxious eye to impending Assembly elections, telling the pilots to
return or else – even as compromises were feverishly being worked out backstage.
The jury is still out on whether the pilots of India’s largest private and state-owned airlines have
a legitimate case – the fact that both managements backed down doesn’t necessarily suggest the
pilots were right. The bigger question, though, is this: if such a category of employees do think
they have a valid grievance and if negotiations with senior management fail, how should they
react? Is taking mass sick leave or simply not reporting to work – a strike by any other name as
the Mumbai high court ruled in Jet’s case – a justified form of protest by people in positions of
managerial responsibility, especially when their organisations are bleeding profusely?
The short answer from senior managers is that managerial staff who don’t agree with corporate
policy are always free to leave or look elsewhere, a privilege blue-collar labour doesn’t enjoy.
This is a fair argument in the kind of open labour market that India has become. Indeed, pilots
have done just this in the past, exiting with alacrity from state-owned airlines to private
competitors when the industry was booming; their protests now are an indicator of the dire straits
in which the airline business finds itself.
It is telling that in the late eighties, union-style protests for higher pay by mid-level managers in
the public sector proved signal failures precisely because of the lack of job mobility in those pre-
liberalisation days. Around the same time, a strike by Indian Airlines pilots on pay and perks
failed for precisely the same reason.
One of the issues in the pilot-management clash in Jet Airways was over whether pilots had a
right to form a union. They didn’t, according to the airline’s management, which provided it an
excuse not to negotiate – initially, that is; the stance changed later following the widespread
havoc the strike created. Apparently, it was okay for the pilots to have a “welfare organisation”
but not a grievances forum.
In an economy in which quality of talent counts for rather more than just manpower numbers,
viewing the marketplace as an automatic grievance-correcting mechanism could boomerang on
managements. Even if we assume that it is unseemly and undignified for managerial cadres to go
on strike or haggle via employee unions, the truth is that middle managers remain uniquely
disenfranchised.
This is hardly a healthy situation. Forget about the dire predictions about robots replacing middle
managers on the shopfloor. In most organisations, despite successive bouts of “de-layering” and
“right-sizing”, middle management forms a critical element of the employee base – if not always
in numbers, certainly in the nature of the work it performs.
In other words, it makes sense for CEOs to put in place more enlightened “protest management”
mechanisms beyond the standard HR structures – to act as (a) early warning systems and (b)
create a dignified, non-combative negotiation forum for its managerial cadres. Associations with
board-level representation may sound radical but they aren’t such a bad idea – after all, labour
union leaders in the West are represented on corporate board, so why not middle managers.
Some Scandinavian countries have experimented with such structures.
Management gurus, of course, will tell you that transparent decision-making is the ideal – but
experience has shown that most corporations pay lip service to the concept. IT companies,
heavily dependent on talent as they move up the value chain, have cracked the system better than
most. For an emerging economy like India, such mechanisms could bridge the management
deficit that is inevitable in family- and government-owned corporations that currently make up
the vanguard of India’s competitive advantage.
Source : Business Standard, New Delhi October 1, 2009
1. What is Grievance? Why does it arise? What is its importance?
2. Bring out the importance of grievance handling.
3. Explain the grievance handling procedure.
4. Who is an arbitrator? What is his role in grievance handling?
13.11 Answers
1. Organizational performance
2. Employee or employees to the management
3. National Commission of Labour
4. Root cause,
5. Promotions
6. Amenities
7. First stage
8. Keeping proper records,
9. Precedent within the department as well as the company.
10. Grievance machinery.
11. The size of organizations, trade union strength, the management philosophy, the company
traditions, industrial practices and in the cost factor.
12. Biased.
13. The first line manager.
14. Grievance machinery.
15. Arbitrator.
1. Refer to 13.2 &13.3
2. Refer to 13.4
3. Refer to 13.5
4. Refer to 13.6
References:
1. Human Resources Management and Personnel Management by

K Aswathappa

Cascio
MB0043-Unit-14-Groups and Group

Dynamics
Unit-14-Groups and Group Dynamics
Structure:
14.1 Introduction
Objectives
14.2 Meaning and Characteristics of Group

14.3 The Types of Groups
Formal Work Groups
Informal Work Groups
14.4 Group Characteristics
14.5 Group Decision-making
Advantages of Group Decision-making
14.6 Group Dynamics
Principles of Group Dynamics
14.7 Summary
14.8. Caselet
14.10 Answers
14.1 Introduction
‘Man is social animal’ is something we’ve been repeating through the earlier units of this course.
It will be difficult for us to imagine life as single nuclear entities. Imagine virtual classrooms and
workplaces where people don’t physically meet and without even know anything about each
other but log-in into a video or an audio space and study / work independently. It would be
boring and uninteresting, no doubt. The primitive man recognised the importance of group as a
basic unit for his survival. In this unit we will learn about the groups, team and their roles in
building successful organizations.
The evolution of mankind is itself is an excellent example of the need for man to live in groups.
The early man formed groups for hunting and protecting their species from wild beasts, and this
soon proved beneficial when man turned away from his nomadic living and began to settle down
and grow his own food. If we look through the history of each country’s it would be clear that,
despite heavy odds, the culture of different countries is unique to the respective racial group. The
characteristics and functions of group are surely worthy of study. This unit focuses on group
dynamics and principles of group dynamics.
Objectives:

· Define ‘Groups’ and their existence in an organization
· Identify the group characteristics and how they are different from teams
· Explain group dynamics
14.2 Meaning and Characteristics of Group
A group refers to two or more persons, who interact for a common explicit purpose. A mere
collection of people assembled at a place – on the street, at a bus stand, or in railway station
waiting room – do not constitute a group because although people are physically gathered
together, they do not jointly pursue a common objective or share a common feeling. Kimball
Young defines a group as "two or more persons in a state of social interaction." T.M. Newcomb
feels that ‘a group consists of two or more persons who share norms about certain things with
one another and whose social roles are closely interlocking.’ In the words of W.J.H. Sprott, a
group is ‘plurality of persons who interact with anyone else.’ Sherif and Sherif define group as
“a social unit which consists of a number of individuals who stand in definite status and role
relationships to one another and which possesses a set of values or norms of its own regulating
the behaviour of individual members, at least in matters of consequence to the group.”
Characteristics of a Group:
The essential characteristics of a small group are:
1) Two or more people, usually formally established
2) who interact with one another, and
3) share some common goal or have a common purpose
Therefore a group is usually formally established to achieve a common goal and they would
meet to interact, talk, and do things together. They do not all have to meet at the same time, but
in order to be a group member, a person must have occasional contact with one or more of the
others. A good example of a group is a batch of students of a particular class.
The groups can provide, with or without the conscious knowledge of their members, a means of
fulfilling many of the needs of the individuals in them, such as:
1) belongingness needs through friendship between individuals who are part of the group;
2) need for recognition/power which may be fulfilled through the development of self-esteem
and status as the result of membership in the group-through opportunity for individual
contributions to group functioning;
3) Need for achievement being satisfied by motivation in the work that the group is focused on.
4) some functional needs such as aid in daily activities, help in adjustment to work routine, or
even the avoidance of boredom can be met by the group;
In the organizational context groups are the basic unit of an organization. Organizational
members bring with them a variety of needs and because group formation can fulfil many of the
needs mentioned above. Namely they provide:
1. An outlet for affiliation needs i.e. needs for friendship, support and love.
2. A means of developing, enhancing or confirming a sense of identity and maintaining self-

esteem. Through group membership, a person can gain status, and thereby enhance his sense of
self-esteem.
3. A means of establishing and testing reality through developing consensus among group
members, uncertain parts of social environment can be made "real" and parts of social
environment can be made "real" and "stable." Each person can validate his own perceptions and
feelings best by checking them with others.
4. A means of increasing security and sense of power of coping with a common and powerful
enemy or threat.
Groups serve a critical purpose for organizations by helping in achieving the organization’s
goals. This being a primary business objective for the organization the synergy in a group is
important for the organization to retain. Here are few example of how organizations benefit from
groups :
• Enhanced performance – aligning individual and group goals to achieve

business results, increased efficiency, cost control measures
• Employee benefits – fulfilling the human needs of belongingness,
achievement, recognition, power, status etc.
• Quality decisions – as many individuals are able to think differently and
contribute towards making a quality decision in the best interest of work
• Organizational enhancements & Improved processes – innovate together on
improved ways to achieve the outputs in a more optimal method
• Global competitiveness – people like to work with intelligent and challenging
colleagues to build and nurtures world-class talent
1. ________________ feels that ‘a group consists of two or more persons who share norms about
certain things with one another and whose social roles are closely interlocking.
2. People who interact with one another and who share some common ideology are usually
_____________________.
3. Through group membership, a person can gain status, and thereby enhance his sense of
_____________________.
14.3 Types of Groups
Groups are commonly classified on the basis of purpose or goal; extent of structuring; legal
organisation or setting. Classification of group on a very broad basis is done by grouping people
with similar skills or competencies together. What acts as a unifying force are a few fundamental
characteristics that all groups have?
1. All groups have leaders;
2. All groups have followers;
3. They strive toward some goal or goals;
4. They have ideas about what it takes to achieve the goals;
5. They communicate amongst themselves and between group (both within and external to the
organization) to ensure the that the goals are met;
6. Attempt to satisfy some form of member needs
It’s important to note that not all groups might be formally established in an organization. Given
the social nature of the human being there is a strong tendency to form groups that fulfill the
psychological need to an even greater extent. People like to belong to more than just one group
since not all needs can be satisfied in a single group. Herein there are two distinct types of work
groups, formal and informal.
14.3.1 Formal Work Groups
In the previous chapters, we learnt that the organizing nature of organizations arranges work and
people in a pattern so that they can perform the required activities. This ‘Organizing’ bring
together employees executing similar / interrelated tasks. The objective is the creation of
operational relationship among persons that will best enable them to work together productively
and with maximum professional as well as personal satisfaction.
In other words, the end goal of the manager’s organizing responsibility is to create formal work
groups that are necessary to achieve the organisation’s goals. Formal work groups together
constitute the whole organizations. Therefore following are the characteristics of formal work
groups:
1) they are sanctioned by some authority;
2) there is a prescribed division of labour
3) individuals are assigned specific responsibilities,
4) there are stable and consistent personal interactions, and

5) Provisions are made for rewarding the group membership.
All formal work groups have a designated leader who supervises the work of the group members,
monitors performance, provides feedback and training and is responsible for group performance
to a higher authority in the organization. He holds both the responsibility as well as the authority
to deliver the expectations from the group. How the leader goes about executing this depends on
the leadership style of the person. It would span from a completely autocratic to a completely
collaborative approach. No style can be discarded. As the nature of work, the amount of
supervision and the skills required in the work assigned to the group differs the style would
differ. Sometimes group members may or may not have a say in the objectives, rules of
behaviour, task assignments, or performance standards of the group. Examples of formal work
groups are: the professors in an academic department of a college, a surgical team in a hospital,
and the two partners in a police patrol car.
14.3.2 Informal Work Groups
Informal work groups exist in formal as well as informal organizations.. Informal groups are
loosely organized groups such as cricket teams and social clubs that arise apart from the formal
organization to which members of the informal group may belong. They exist because the formal
groups established within the organization often fail to satisfy ‘all’ of the human needs to a
sufficient degree. This could also be because the organizational structure rarely anticipates
everything that must be done if the organization is to meet all of its objectives. From the
perspective of the employee, informal work groups provide a source of satisfaction for security
needs, social needs, and esteem needs.
Informal Work Groups and Security Needs: Informal groups help to support their members and
to protect them from outside pressure and authority. The group insulates the individual from a
hostile work environment. For example there might be an informal group of ‘south Indian’s’ in
an organization. When people first enter an organization, they may feel considerable anxiety.
Their surroundings are unfamiliar, the job is new, and the future is uncertain. New employees
often seek out an existing group to join for help in the orientation process.
Informal Work Groups and Social Needs: Many jobs restrict communication and interaction
among workers. This makes it difficult for people to form work friendships and to satisfy their
need for companionship. People want to feel they belong, and it is easy to feel such identification
with a small social group in which relationships are based on shared interests and values. In most
offices, social groups are an inevitable occurrence. Social group members enjoy each other’s
company as the work is performed. They may also eat lunch as a group, take breaks at the same
time, or share a social life outside the organization.
Informal Work Groups and Esteem Needs: Beyond providing a sense of belonging, the informal
group can also be a source of status or prestige for its membership. This is especially true if the
group is well-known in the larger organization, if outsiders are anxious to join the group, and if
acceptance into the group is difficult to achieve. To the extent that it provides an opportunity for
assumption of leadership, the informal group is a source of egoistic need satisfaction. A good
example is the corporate cricket team. Finally, the need for achievement can be partially satisfied
by the informal group.
Why Informal groups exist?
As discussed in the paragraphs above the employee’s sense of security, belonging and esteem,
make an employee happy and contended and this in turn enables the work to be done more
effectively. Another advantage, not previously mentioned, is that the informal group can assist
the manager in providing discipline. For instance, group members who notice that an individual
is taking advantage of a situation in a way that could cause them all to lose a prized benefit may
step in to correct the problem before the manager is even aware that it exists. In one office, the
boss has for years successfully maintained a "no time clock" policy, in which employees are
allowed to work an eight-hour day as per their convenience. If someone comes in half an hour
late, takes a long lunch, or leaves early one day, it is presumed the person will make up the time
as he or she sees fit. In another office working from home is provided as a policy. This freedom
actually helps the employee take care of personal alongside professional needs. Another reason it
works is because there is a great deal of peer pressure (informal group norms) exerted on any
individual who appears to be taking advantage of the policy.
Disadvantages:
The disadvantages of informal work groups can interfere with organizational effectiveness to the
same degree that the advantages can contribute to it. Sometimes the goals of the group could run
contrary to those of the established organization. This problem is especially evident whenever an
attempt is made to implement planned change. Often the protection and social relationships
provided by informal groups are threatened by new plans that disrupt order and stability.
Organizations could create new procedures and standards of production, and interrupt the pattern
of personal interactions on the job. The existence of informal groups can block worker co-
operation with planned change by encouraging outright resistance, foot-dragging, or "malicious
compliance."
Since the informal group emerges whenever the formal group does not sufficiently satisfy on-
the-job needs, it could be either beneficial or detrimental depending on the degree to which
employees agree with the policies of management. Managers should always be alert to the
formation of informal groups because they are usually an indication that employee needs are not
being met through the established structure. Although the manager should not try to object to
informal groups, he or she should try to ascertain impact on the organization. The best approach
is to be reasonable with employees and to consider their needs. Informal groups will emerge
even where human relations are sound, but their presence will not be as disruptive as when they
exist primarily in response to management insensitivity. Hence the way to eliminate the negative
consequences of informal groups is to make the formal group more effective in meeting both the
needs of workers and the goals of the organization.
The informal organization has its own goals, objectives, and authority patterns. The design and
actions of the informal organization could be either supportive or detrimental to the goals of the
formal organization. Since the informal organization exists to provide psychological security,
rewards, protection and preservation of other values for its members, formal and informal
organization perceive benefits from working in a unified way with formal structure.
4. The end goal of the manager’s organizing responsibility is to create formal work groups that
are necessary to achieve the ______________.
5. ________________ exist because the formal groups established within the organization
frequently fail to satisfy human needs to a sufficient degree, and also because the organizational
structure rarely anticipates everything that must be done if the organization is to meet all of its
objectives.
6. Informal work groups increase the employee’s ___________________

and often enable the work to be done more effectively.
14.4 Stages of group formation
Group behaviour is best understood by studying the lifecycle of a group through the various
stages of its formation. These are popularly summarised as :
1. Forming – this is the initial stage of group formation. It is characterised by uncertainty and
confusion. There is usually a lack of clarity on the purpose, structure and task that the group
needs to execute. This stage is also characterised by leadership challenges, as the leader tries to
establish stability and try and bring the group together under a common goal.
2. Storming – this stage as the name denotes is when the group is in a state of conflict and
confrontation. The group members are getting to know each other and there are personal as well
as professional ‘assessment’ that happens. This usually is a emotionally charged phase as the
leader establishes his/her place and the group assesses the leader as well as other members. The
emotions are paramount as group members are looking to satisfy their needs are uncertain that
the needs can be met. There is also conflict on the task and purpose that group members might
interpret/perceive differently.
3. Norming – this is the stage when the group finally settles down after the period of uncertainty.
The group is in a state of cooperation and collaboration. There is clarity and focus on what the
group needs to achieve and roles (both formal and informal) are clear. There is a clear ‘we’
feeling as the purpose, task, leadership is a lot more clear. The leader is setting the expectation
on the task and the time. Open communication is the key to this phase.
4. Performing – this is the stage where the group is finally well on its way to executing the task
and is fully functional. Roles and responsibilities are in-place and the focus of the group is on
achievement. Relationship needs within the groups have been positively established. Both the
formal and the informal leaders in the group are fully functional.
5. Adjourning – this is representative of the end of the group, which the normal work groups
never reach. This is common in case of project teams and task forces. Again there is a emotional
atmosphere where the group members feel the stress of disbanding. The stage will start all over
again when a new team is formed.
Whenever a new member is introduced in the team there is brief phase when the group goes
through the steps 1-4. It might not be as complex as the formation of a whole new team but the
steps that the group undergoes / experiences remain the same.
Activity 1:
Think of a recent group you were part of. Relate the above 5 phases of group
formation with your experience.
What stage you find easier to relate with?
Group Norms: Each group characteristically establishes group behaviour standards or norms,
beliefs, traditions and attitudes to which it expects its members to conform. They are
prescriptions for acceptable behaviour determined by a group, institution, or society. In the
opinion of Argyle, "Group norms are rules or guidelines of accepted behaviour which are
established by a group and used to monitor the behaviour of its members." In a very structured,
formalised group, these norms may become institutionalised into laws or operation laws. In other
words, norm is an agreement among group membership as to how members in the group should
behave. The more an individual complies with norms, the more one is accepting the group
standards of behaviour. These standards are designed to achieve the goals of the group and to
preserve and protect its value.
i) Group Cohesiveness: Cohesiveness is the degree of attraction that the group has for each of its
members. It is exemplified by such attitudes as loyalty to the group, a feeling of responsibility
for group efforts, defending against outside attractions, friendliness, and congeniality. Cohesive
work groups are powerful instruments that can be used for or against the formal organization.
ii) Member Satisfaction: The end result of group membership is satisfaction of members. In a
survey of 37 studies, Heslin and Dumply have shown specific relationship between work group
member satisfaction and i) perceived freedom to participate,
ii) perceived goal attainment and iii) status consensus.
i) Perceived Freedom to Participate: A members’ perception of freedom to participate influences

need satisfaction. Individuals who perceived themselves as active participators reported to be
more satisfied while those who perceive their freedom to participate to be insignificant typically
were least satisfied members in a work group.
ii) Perceived Goal Attainment: A group member’s perception at progress towards the
achievement of desired goals is an important factor which is related to member satisfaction.
Groups which progressed towards goals attainment showed higher levels of member satisfaction
while members of groups not adequately progressing towards the attainment of group goals
showed a lower satisfaction level.
iii) Status Consensus: It is an agreement about the relative status of all group members. When the
degree of status consensus within the group is low, member satisfaction tends to be low.
iii) Social Loafing: a recognised dysfunctional behaviour commonly associated with groups is
social loafing. This is characterised by one or more team members reducing their efforts and
performance level when in the group. The individual/s are not wanting to do more than the
perception of effort being given by others. They ride on the success of the effort of the rest of the
group members. This is more common in large teams where individual
contributions are more difficult to identify. Smaller size teams are the suggested way to deal with
this.
7. __________________ insulate the individual from a hostile work environment.
8. _______________ is based upon reason and seeking and processing information, and on
factual discussion.
9. Persons interacting with a ______________ are protective, dogmatic, evaluative and

righteous.
10. ________________ is the degree of attraction that the group has for each of its members.
14.5 Group Decision-making
Most decisions in organizations are made by groups rather than individuals. While it might not
be a formally declared decision making activity, group members commonly provide input to any
major decision. In general, decision-making by groups has proved superior to individual
decision-making. Given the nature of groups, techniques like brainstorming, critiquing, etc.
prove to be an effective approach to decision making. However, many talented and imaginative
individuals do not require group discussion to make an effective decision.
Advantages of Group Decision-making
Firstly, groups allow for a greater variety of alternatives and solutions to be discussed /
considered. Assume that your employer is forced to relocate because your present building is to
be demolished. You would want to examine a wide variety of possibilities. If several
knowledgeable people were brought into the decision-making process, you would uncover a
number of worthwhile possibilities.
Secondly, group decision-making is effective in gaining acceptance and commitment. If a group

in office decides to go bowling to a particular bowling lounge and this decision was made by just
two people. Upon reaching the venue if it turned out to be crowded with waiting time in long
queues. There would be a lot of bickering by the team members on the wrong choice of lounge.
Had more of them been involved in the decision regarding the lounge to go to, there would have
been far less discontent expressed for waiting in long queues. People tend to accept a decision
when they have contributed to its making.
Potential Problems with Group Decisions: Group decisions take longer than individual decisions
and sometimes lead to a compromise decision of little value. For example, in deciding where to
relocate an office, one faction might endorse a move to an industrial park in suburbs. Another
faction might urge that the company stay downtown. A compromise decision might be to stay on
the edge of town which would be a poor decision in terms of attracting clerical employees.
Grouping might be classified as a potential problem with group decision-making. So might

individual dominance – the tendency for one person in a group to dominate over the other
members.
In the process, the potential benefits of input from the other members are negated. The person of
high organizational rank often dominates because lower ranking group members consider it
politically unwise to criticize that person. If you are the head of a group, or a high-status
participant, four things can be done to circumvent the problem of individual dominance.
· Refrain from announcing your preferred solution while the group is working through the
problem.
· Listen carefully to suggestions from every group member.
· Encourage every group member to participate.
· Demonstrate concern for achieving a high-quality solution.
11. Even if a group of people do not formally sit together to thrash out a decision,
12. Group decision-making is helpful in gaining _____________ and ______________.
13. ________________ take longer than individual decisions and sometimes lead to a
compromise decision of little value.
14.6 Group Dynamics
Group dynamics is concerned with the interactions and forces between group members in a
social situation. When the concept is applied to the study of organizational behaviour, the focus
is on the dynamics of members of formal or informal groups in the organization, i.e., it is
concerned with gaining knowledge of groups, how they develop, and their effect on individual
members and the organisations in which they function.
Thomas Harrell has defined group dynamics as “an expression that describes the situation in
which people acting together in a group accomplish certain thing, either positively or negatively
in a way that cannot be explained adequately in terms of the individual acting separately.”
Dorwin Cartwright has stressed the importance of group dynamics particularly in the context of
bringing about a change. According to him, the problems of 20th century are essentially the
problems of human relations.
The word ‘dynamics’, is derived from a Greek word which means ‘force’. Group dynamics
refers to the forces operating in groups. Investigation of group dynamics consists of a study of
these forces such as what gives rise to them, what conditions modified them, what consequences
they have, etc. The practical application of group dynamics consists of the utilization of
knowledge about these forces for the achievement of some purpose. Group dynamics, is not
particularly novel. It goes back at least to the outstanding work of men like Simmel, Freud, and
Cooley.
Study of team work and groups continue to be a subject on continued research. Several countries
are carrying out substantial programmes of research designed to reveal the nature of groups and
their functioning. The works of Kurt Lewin is significant. Lewin became convinced of society’s
urgent need for a scientific approach to the understanding of the dynamics of groups. In 1945, he
established the Research Centre for Group Dynamics to meet this need. The Centre has been
devoting its efforts to improving the scientific understanding of groups through laboratory
experiments, field studies, and the use of action research.
Various factors in the work environment affect group behaviour. The two broad aspects of the
environment which affect group behaviour are:
a) the physical environment, e.g., plant, equipment, layout, and
b) the psycho-social environment, e.g., worker needs reward systems, work group structure,
supervisory practices, work group norms, worker roles and attitudes.
14.6.1 Principles of Group Dynamics
A group can work effectively only if its members remain committed to certain desired norms,
which Cartwright has termed principles of group dynamics. These principles are:
i) If a group is to be used effectively as a medium of change, those who are to be changed and
those who are to wield an influence for change must have a strong sense of belonging to the
same group, i.e., the barriers between the leaders and the led should be broken down.
ii) The more attractive a group is to its members, the greater the influence it would exercise on
its members. If attitudes, values or behaviour, are relevant as a basis of attraction to the group,
the group will wield a tremendous influence over them.
iii) The higher the prestige of a group member in the eyes of other members, the greater the
influence he will exercise on them.
iv) Successful efforts to change individuals or sub-parts of a group would result in making them
conform to the norms of the group.
v) Strong pressure for changes in a group can be established by creating a shared perception by
members for the need for change, thus making the source of pressure for change lie within the
group itself.
vi) Information relating to the need for change, plans for change, and the consequence of change
must be shared by all the members of a group.
vii) Changes in one part of a group produce a strain in other related parts which can be reduced
only by eliminating the change or by bringing about readjustments in the related parts.
Activity 2
Think of a group you belong to either at work or as a community/with a

particular group of friends. Carry out the following activities:
1. List the names of all the group members
2. Briefly outline some basic information about them eg. state, age, collage
passed out from, companies worked in, marital status, children
information.
3. Why do you think each of them is in the group?
4. What keeps you’ll together?
5. Are there sub-groups within the large group?
6. Why is it so, what is the common thread within the sub-group?
Reflect on what you have written.
Groups represent an important dynamic in the study and application of organizational behaviour.
Research indicates the following four ways to enhance team effectiveness; (1) Team building –
organizations need to understand that teams need time and training so they can develop into
productive and cohesive units. There is a learning curve that every team must go through. A
sense of ownership and partnership and empowerment is what finally makes the group effective.
Quality team building programs have proved very effective method to enhance team
effectiveness. Here again organizations need to be careful that the program is customised to the
team’s specific requirement, the corporate culture and values and forces the group members to
stretch outside their comfort zone. (2) Collaboration – leveraging the capability of each
individual in the group to effectively channelize it towards the group’s goals, is something that
organizations do to enhance group effectiveness. (3) Group Leadership – the critical role of the
leader in selecting the right talent and then using the right tactic to motivate them to reach the
group goal is important. Team leaders need to engage in many different kinds of behaviours in
order to foster team effectiveness. Positive leaders nurture positive teams has been proven by
research. (4) Cultural/Global Issues – the emerging workplace and its global teams pose different
challenges for group effectiveness. Guidelines to such teams should include tips on adapting to
each culture and respecting local laws.
The study of teams and performance remains an important area of research and is still the most
effective way to achieving organizational results.
14.7 Summary
· A group refers to two or more persons who interact for a common explicit purpose.
· Kimball Young defines a group as "two or more persons in a state of social interaction."
· The essential characteristics of a small group are:
1) two or more people,
2) who interact with one another,
3) share some common ideology, and
4) See themselves as a group.
· Groups may be classified in many different ways: the basis for differentiation may be purpose
or goal; extent of structuring; legal organisation or setting.
· The end goal of the manager’s organizing responsibility is to create formal work groups that are
necessary to achieve the organisation’s goals.
· Membership in the group is a selective process in which individuals are granted membership
primarily on the basis of commonality of interests and willingness to be co-operative and to
conform to the group norms.
· Cohesiveness is the degree of attraction that the group has for each of its members.
· Group dynamics is concerned with the interactions and forces between group members in a
social situation.
14.8 Caselet
The Geese Story:
Team Building & Leadership Lessons from Nature
By: Shamim Rafeek
Yesterday evening I was enjoying the weather (finally it was raining for a moment in the mid of
summer) from my backyard and I could hear a funny sound coming from the big pond behind
my house compound wall. So like any curious person I rushed out to see what the sound was.
Sure enough there was a family of Geese trying to cross the pond. It was so beautiful to see the
Geese in the evening sunshine and I have never seen them so close.
This group of Geese reminded me the wonderful story which I use for training to learn the basics
of Team building & Leadership. Well, is there any link between the Geese & Teambuilding?
We know Team building skills are critical for our effectiveness as a Manager or Entrepreneur.
People in every workplace talk about building the team, working as a team, but few understand
how to create the experience of team work or how to develop an effective team. Belonging to a
team, in the broadest sense, is a result of feeling part of something larger than you.
We do have some lessons from Geese which provide a perfect example of the importance of
team work and how it can have a profound and powerful effect on any form of personal or
business endeavor. Geese take full advantage of the power of their group, sharing leadership
responsibilities and flying in a structure that enables the flock to leverage the strength and power
of its individual members, sometimes numbering in to thousands. It is said that the Geese can
make an annual round trip journey of more than 5,000 miles at a speed of50mphormore! I am
sure the Team building & Leadership lessons from the geese can be helpful in our workplaces.
Lessons from Geese was originally transcribed from a speech given by Angeles Arrien and was
based on the work of Milton Olson. We can use the following five lessons in our personal and
business life and it will help us to foster and encourage a level of passion and energy in
ourselves, as well as those who are our friends, associates or team members.
Lesson 1 – The Importance of Achieving Goals
As each goose flaps its wings it creates”UPLIFT" for the birds that follow. By flying in a ‘V’
formation the whole flock adds 71 percent extra to the flying range.
Outcome: When we have a sense of community and focus, we create trust and can help each
other to achieve our goals.
Lesson 2 – The Importance of Team Work
When a goose falls out of formation it suddenly feels the drag and resistance of flying alone. It
quickly moves back to take advantage of the
lifting power of the birds in front.

Outcome : If we had as much sense as geese we would stay in formation with those headed
where we want to go. We are willing to accept their help and give our help to others.
Lesson 3 – The Importance of Sharing
When a goose tires of flying up front it drops back into formation and another goose flies to the
point position.
Outcome: It pays to take turns doing the hard tasks. We should respect and protect each other’s
unique arrangement of skills, capabilities, talents and resources.
Lesson 4 – The Importance of Empathy and Understanding

When a goose gets sick, two geese drop out of formation and follow it down to the ground to
help and protect it.
Outcome: If we have as much sense as geese we will stand by each other.

in difficult times, as well as when wear strong
Lesson 5 – The Importance of Encouragement
Geese flying in formation ‘HONK’ to encourage those up front to keep up with their speed.
Outcome : We need to make sure our honking is encouraging. In groups and teams where there is
encouragement, productivity is much greater. ‘Individual empowerment results from quality
honking’.
I’m quite sure our fine feathered friends, the geese don’t spend a millisecond thinking about the
Team building & Leadership lessons they provide. They teach us that we can accomplish more
when we work together as a team. Individual talent, as impressive as it may be, will only be
multiplied when that person joins forces with others.
People who share a common vision, mission, and purpose, like the geese, attain that goal faster
and more efficiently when they work together. Just as the geese generate thrust as they travel
together, our team’s thrust will allow us to accomplish more when we stay together. The geese
also teach us that staying in formation gives a bonding and makes it better than going alone.
Unity in the workplace is defined not by a pat on the back when we succeed, but in lifting up a
team member’s hand when he is down. A unified team wants everyone to succeed.
Finally, the geese teach us that someone has to take the lead and someone has to honk from
behind. Each team member brings different skills and abilities to accomplish the goals.
Sometimes, we may be the person to bring the team to victory. At times, someone else may have
the right talent and skills to accomplish the mission, and therefore we must fly information from
the back; honking our support with enthusiasm.
So, the next time you see geese flying above, take a moment to remind yourself just how smart
they are, and what we can learn from them. The geese teach us to work as a team, work together
in unity, share the hard jobs when it comes to leading, and honk from behind to encourage
others.
What does your honk say about you?
Source: http://shamimrafeek.blogspot.com/2009/03/geese-story-team-building-leadership.html
1. What is a Group? What are its basic characteristics?
2. Distinguish between formal and informal groups.
3. Enumerate the advantages and disadvantages of an informal group.
4. What are the major principles on which group dynamics function?
14.10 Answers
1. Newcomb,
2. Attracted to one another.
3. Self-esteem
4. Organisation’s goals
5. Informal Groups
6. Sense of security and belonging
7. Informal groups
8. The adult ego state
9. Parent ego,
10. Cohesiveness
11. Several people usually provide input to any major decision

12. Acceptance, commitment
13. Group decisions
1. Refer to 14.2
2. Refer to 14.4
3. Refer to 14.4.2
4. Refer to 14.7
References:
2. Organizational Behavior by Steven L McShane, Mary A V Glinow and Radha R Sharma.
MB0043-Unit-15-Leadership
Unit-15-Leadership
Structure:
15.1 Introduction
Objectives
15.2 Concept of Leadership
15.3 Theories of Leadership
15.4 Classification of Leadership
15.5 Functions of a Leader
15.6 Managerial Grid

15.7 Differences between ‘Managers’ and ‘Leaders’
15.8 Summary
15.9 Caselet
15.11 Answers
15.1 Introduction
There is no end to the number of articles in magazines, on the web, in the newspaper, and one
can’t even being to count the books written on the subject of leaders and leadership. And when
you look around, there are ample examples of different kinds of leaders. Some are outspoken and
dynamic; some are quiet and have a charisma. In this unit the focus is on leadership, the theories
that supports it, types of leaders, qualities and functions.
A good leader is someone we popularly describe as possessing great ability, creativity, initiative
and confidence. He naturally gets co-operation, willingness of his followers and builds
employees’ morale and motivation effortlessly. It evident that leaders are of a different breed and
class .They are ordinary people, who can rise above the rest and do extra-ordinary things.
Objectives:
· Define leadership
· Discuss the theoretical framework for leadership
· Distinguish between different types of leaders
· Evaluate how Managers are different from Leaders
15.2 Concept of Leadership
A common definition of Leadership is "the relationship in which one person influences others to
work together willingly on related tasks to attain that level which he desires." So, if there is no
follower, there is no leader.
Haiman defined Leadership as "the process by which an executive or a manager imaginatively

directs, guides and influences the work of others in choosing and attaining specified goals by
mediation between the individual and organisation in such a manner that both will obtain the
maximum satisfaction.”
A good leader therefore….
1. Has foresight.
2. Has influence.
3. Communicates effectively
4. Naturally commands attention and respect.
5. Ultimate responsibility for achieving task objectives.
6. Commands trust and confidence.
7. Has ‘concern’ regarding the needs of his group.
8. Is sensitive to the task, people and environment.
9. Builds and manages effective teams
10. Role models team player attributes
11. Has the ability to take decisions with vision
Basically a leader should have the skills of inspiring confidence in his followers and to manage
differences. Sometimes he should be a good follower of group decisions. A successful leader is
one who establishes the right balance between focus on organizational goals as well as the
people goals.
According to Douglas McGregor, the major variables of leadership are:
a) The characteristics of the leader.
b) The attitudes, needs and personal characteristics of followers.
c) The culture of the organisation
d) The environment – Socio-economic – political set up – both Micro and Macro.
1. A leader is concerned both with the task / goals of the organization, as well as the
_________________.
2. A leader should have the skills of _________________ in his followers and to manage
differences.
3. Some managers are self-oriented, some of them are people-oriented and some of them are
__________________.
15.3 Theories of Leadership
Initial research in leadership theories emphasised more on the personal attributes and
competencies of leaders and followers, with the popular belief that leaders are born and not
made. Subsequently theories were put forth that looked at other influencers such as situational
factors and skills. While many different leadership theories have emerged, the more popular
theories are the following:
1. “Great Man” Theories: Great Man theories assume – that great leaders are born not made.
These theories often showcase successful leaders as people with inherent qualities as heroic,
mythical, and destined to rise to leadership. The term “Great Man” was used because, at the time,
leader was thought of only as a male. The focus was on military leadership.
2. Trait Theories: Similar to “Great Man” theories, the trait theory focuses on identifying a set
of characteristics and assumes that people inherit certain qualities and traits that make them
better suited to be leaders. Trait theories often identify specific personality or behavioural
characteristics that leaders possessed. Effective leaders normally possessed competencies such as
emotional intelligence, Integrity, commitment, motivation, Self–confidence, Intelligence and
Knowledge of the business. But if particular traits are key features of leadership, how do we
explain people who possess those qualities but are not leaders?
3. Behavioural Theories: Behavioural theories of leadership are based premise that great
leaders can be made, not necessarily born. Rooted in concepts of behaviourism, these leadership
theories focuses on the actions and behaviour of leaders, not on mental qualities or internal
states. Research work done by scholars from Ohio, University of Michigan and Harvard
University, distilled two categories of leadership behaviour; people-oriented behaviour – focused
more the people management aspect, showing trust in and respect for subordinates, genuine
concern for their needs, desire for their welfare; and task-oriented leadership style-focused more
on the task completion, on the structure for work, clarifying duties for the subordinates, ensuring
compliance, and push them to reach their performance capacity. Leaders can therefore be of
many different combinations, high or low on one or the other style of low on both or high on
both. Per this theory, people can learn to become leaders and can be trained.
4. Situational Leadership Model : Developed by Paul Hersey and Ken Blanchard the
Situational Leadership Model suggests that effective of leaders can assess a situation and change
style with the (1) readiness of followers – ability/willingness of employees to execute a specific
task, (2) Ability – the extent to which the employees have the necessary skill and knowledge to
perform the task without the leaders guidance, and
(3) Willingness refers to the follower’s motivation and commitment to perform the assigned task.
The situational leadership model identifies 4 leadership styles of ‘telling, selling, participating
and delegating, each of which is appropriate under different circumstances of the situation.
5. Transformational Perspective of Leadership: The term transformational leadership was
first coined by J.V. Downton in 1973. James MacGregor Burns (1978) first introduced the
concepts of transformational and transactional leadership in his treatment of political leadership,
but this term is now used in organizational psychology as well. According to Burns, the
difference between transformational and transactional leadership is what leaders and followers
offer one another. This is a leadership perspective that explains how leaders change teams or
organizations by creating, communicating and modelling a vision for the organization or work
unit, and inspiring employees to strive for that vision. This is best understood then compared
with the transactional leadership, which is defined as leadership that helps organization achieve
their current objectives more efficiently such as linking job performance to valued rewards and
ensuring that employees have the resources needed to get the job done. Transformational leaders
are change agents who energize and direct employees to a new set of corporate values and
behaviours. These leaders steer the organization onto a better course of action. It si best suited in
organizations that need significant alignment with the external environment. Key elements of
transformational leadership include (1) Creating a Strategic Vision – reflect a future for the
company or work unit that is accepted and valued by organizational members, creating a higher
purpose/super-ordinate goal that energizes and unifies employees, (2) Communicating the Vision
– elevating the importance of visionary goals to employees, by bring it to life through symbol,
metaphors, stories and other vehicles that go beyond plain language and where the leader ‘walks
the talk’ and model the visionary behaviour that is expected from the employees, and (3)
Building Commitment to the Vision – such leaders create in employees’ a ‘can do’ attitude by
including them in the vision process. Their persistence and consistency reflects an image of
honesty, trust and integrity.
6. Charismatic Leadership points out that charisma is a personal trait. Often it is confused and
interpreted as the highest form of transformational leadership, but increasing research supports a
different thought. Charismatic or ‘heroic’ leaders easily build allegiance in followers but do not
necessarily change the organization.
(1) Inspirational motivation: the degree to which the leader articulates a vision that is appealing
and inspiring to followers. Leaders with inspirational motivation challenge followers with high
standards, communicate optimism about future goals, and provide meaning for the task at hand.
(2) Intellectual stimulation: The degree, to which the leader challenges assumptions, takes risks
and solicits followers’ ideas. Leaders with this trait stimulate and encourage creativity in their
followers. (3) Individualized consideration or Individualized attention: The degree to which
the leader attends to each follower’s needs, acts as a mentor or coach to the follower, and listens
to the follower’s concerns and needs. This also encompasses the need to respect and celebrate the
individual contribution that each follower can make to the team (It is the diversity of the team
that gives it its true strength).
Transformational leadership and charismatic leadership theories have a lot in common and
complement each other in important ways. Another research however suggests that charismatic
leaders create dependent followers, whereas transformational leaders support follower
empowerment, which reduces leader dependency.

4. Early leadership theories focused on what __________ distinguished between leaders and
followers
5. _______________ assume that the capacity for leadership is inherent – that great leaders are
born not made.
6. ____________________Model suggests that effective of leaders to vary their style with the
(1) readiness of followers, (2) Ability, and
(3) Willingness.
7. ________________________________are change agents who energize and direct employees

to a new set of corporate values and behaviours.
8. Research suggests that charismatic leaders create ______________ followers, whereas

transformational leaders support follower _____________.
15.4 Classification of Leadership
According to the Personnel Research Board of Ohio University leaders were classified as
follows:
a) THE BUREAUCRAT – who sticks to routine, pleases his superiors, avoids subordinates and
he is contemptuous to them.
b) THE AUTOCRAT – He is directive and expects obedience from followers. (Do as I say –
Not, as I do) Hence, subordinates do not like him.
c) THE DIPLOMAT – He is an opportunist who exploits subordinates. Hence, he is not trusted

by his subordinates. (He is interested Not in the Flock but in the Fleece)
d) THE EXPERT – He is an over-specialised man. He is self-centred and interested in his own

narrow field. He treats his subordinates only as fellow- workers without any feelings. He always
finds himself along.
e) THE QUARTER BACK – He identifies himself with his subordinates even at the risk of
incurring displeasure of his superiors and subordinates at times. However, he is generally liked
by his followers.
Another classification given by Chris Argyris is as follows:
a) The Directive type
b) The Permissive type
c) The participative type

There are other types such as Positive and Negative. Positive is Power THROUGH the people
and Negative is Power OVER the people.
In 1939, a group of researchers led by psychologist Kurt Lewin set out to identify different styles
of leadership. While further research has identified more specific types of leadership, this study
was useful in establishing three major leadership styles.
Authoritarian Leadership (Autocratic)
Authoritarian leaders are those who provide clear expectations of what needs to be done, when it
should be done, and how it should be done. Authoritarian leaders usually make decisions
independently with little or no input from the rest of the group. Very evidently decision-making
was less creative under authoritarian leadership. Lewin also found that it is more difficult to
move from an authoritarian style to a democratic style than vice versa. The leader was viewed as
controlling, bossy, and dictatorial.
Authoritarian leadership is best applied to situations where there is little time for group decision-
making or where the leader is the most knowledgeable member of the group.
Participative Leadership (Democratic)
Lewin’s study found that participative (democratic) leadership is generally the most effective
leadership style. Democratic leaders offer guidance to group members, but they also participate
in the group and allow input from other group members. While it is possible that this style
productivity is lower than the that in the authoritarian group, but the contributions were of a
much higher quality. This could also be more time taking. Participative leaders encourage group
members to participate, but retain the final say over the decision-making process. Group
members feel engaged in the process and are more motivated and creative.
Delegative (Laissez-Fair)
Delegative leaders offer little or no guidance to group members and leave decision-making
entirely to group members. While this style can be effective in situations where group members
are highly qualified in an area of expertise, it often leads to poorly defined roles and a lack of
motivation.
Transformational Leader
Transformational leaders offer a purpose that transcends short-term goals and focuses on higher
order intrinsic needs (as discussed above). This results in followers identifying with the needs of
the leader. The four dimensions of transformational leadership are:
Charismatic Leader
Charismatic Leader is the degree to which the leader behaves in admirable ways that cause
followers to identify with the leader. Charismatic leaders display convictions, take stands and
appeal to followers on an emotional level. This is about the leader having a clear set of values
and demonstrating them in every action, providing a role model for their followers.
Activity 1
Reflect on your experiences so far. For the 5 types of leaders that have been
discussed by Kurt Lewin, find one example of a person you can relate with
the style. Briefly point out why you chose this person for this style.
Discuss with a friend or a colleague and see if they agree or disagree with
you.
Match the following
9. The Bureaucrat a) Who sticks to routine, pleases his superiors,

avoids subordinates and he is contemptuous to them.
10. The Autocrat – b) He is an opportunist who exploits subordinates.
Hence, he is not trusted by his subordinates. (He is
interested Not in the Flock but in the Fleece)
11. The Diplomat – c) He is directive and expects obedience from
followers. (Do as I say – Not, as I do) Hence,
subordinates do not like him
12. The Expert – d) He identifies himself with his subordinates even
at the risk of incurring displeasure of his superiors
and subordinates at times. However, he is generally
liked by his followers
13. The Quarter Back – e) He is an over-specialised man. He is self-centred
and interested in his own narrow field. He treats his
subordinates only as fellow- workers without any
feelings. He always finds himself along.
15.5 Functions of a Leader
A leader has the following functions to perform:
a) Maintenance of employee membership: i.e. to be close to the group.
b) Organizational goals attainment: To achieve the targets set.
c) Positive team interaction: To provide the climate for effective interaction i.e. Less of distrust
amongst followers.
PETER DRUCKER says, "An effective leader is one who can make ordinary people do
extraordinary things, make common people do uncommon things. Leadership is a lifting of a
man’s sights to a higher vision, the raising of a man’s standard to a higher performance, the
building of a man’s performance beyond its normal limitations."
KILLIAN stated the functions of a leader in the following way:
a) To render a service (by multiplying the contribution of every individual who is its beneficiary)
b) To take decision (calculated)
c) To elicit response
d) To achieve results
e) To maintain discipline, to have a standard of performance
f) To have himself a higher standard of discipline and performance also to take initiative, to
bring in team (group) spirit / activity.
Qualities of a Leader:
VISCOUNT SLIM has enumerated the following qualities.
a) Courage
b) Will-power
c) Judgement
d) Flexibility
e) Knowledge
f) Integrity
Ten Commandments of Leadership
a) Physical and nervous energy
b) Enthusiasm
c) Sense of Purpose/Direction
d) Technical Mastery
e) Friendliness and affection
f) Decision- making
g) Integrity
h) Intelligence
i) Faith
j) Effective Communication – both oral & written.
Leadership also depends on the environment both Macro and Micro. All the above may be
shown in the following diagram.
Figure 15.1: Framework for Situational Leadership
Situational Leadership is described as having four components:
a) The Task Attributes
b) The Leader’s personal attributes
c) The Micro organizational attributes
d) The Macro external cultural Attributes
According to Douglas McGregor, Theory X and Theory Y are relevant. We covered this in depth
in Unit 8.
Leadership Styles: The opinions, attitudes and assumptions people make regarding the
accomplishment of goals through others may be considered to reflect a general leadership
philosophy. Leadership behaviour changes from individual to individual on the following
parameters – viz., philosophy, planning and goal setting, implementation, evaluation etc. Robert
Tannenbaum and Warren H.Schmidt in HBR classics discussed the issue whether a manager
(leader) should be democratic or autocratic or something in between? They have exhibited it on a
continuum as shown below:
Figure 15.2: The Leadership Continuum
Source:http://www.thebeechconsultancy.co.uk/upload/files/18/Tannenbaum_and_Schmidt.pdf
The Leadership Continuum Model of Tannebaum and Schmidt (1973) suggest that autocratic
leaders tend to make their own decisions and give instructions, as opposed to a democratic leader
(laissez-faire manager) gives subordinates a greater degree of delegation in decision-making.
In 1938, Lewin and Lippitt proposed classifications of leaders based on how much involvement
leaders placed into task and relationship needs. This range of leadership behaviours was
expressed along a continuum by Tannebaum & Schmidt in 1973, ranging from leader-centred
(task) to team member-centred (relationship).
To appropriate style depends on:
i) Forces in the manager: Belief in team member participation and trust in capabilities of
members.
ii) Forces in the subordinate: Subordinates who are independent, tolerant of ambiguity,
competent, identify with organizational goals.
iii) Forces in the situation: Team has the knowledge, team commits to organizational values
and traditions, and teams work effectively.
iv) Time pressure: Need for immediate decision under time pressure eliminates participation.
Advantages of the Leadership Continuum Model include:
i) Gives managers a range of choices for involvement.
ii) Presents criteria for involvement and delegation.
iii) Focuses decision maker on relevant criteria (e.g., forces & time).
iv) Emphasizes employee development and empowerment.
v) Is heuristic – encourages research to see how effective delegation may be under the model.
Some limitations of the Leadership Continuum theory:
i) Involves only the initial step of assigning a task lacks attention to execution processes that is
equally important for quality and timely completion.
ii) Assumes the manager has maturity and knowledge to determine disposition of self as well as
team.
iii) Attention to external factors missing.
iv) Simplifies the leadership challenges, more theoretical, not based on reality.
14. If there is no ____________ there is no ‘leader’.
15. Basically a leader should have the skills of ___________ in his followers and to manage
differences.
16. _____________ assume that the capacity for leadership is inherent – that great leaders are
born, not made.
17. ____________ assumes that people inherit certain qualities and traits that make them better
suited to leadership.
18. _____________ focus on particular variables related to the environment that might determine
which particular style of leadership is best suited for the situation.
15.6 Managerial Grid
Robert Blake, an eminent behavioural scientist differentiated the leaders on the basis of their
concern to people and concern to task. He along with Jane Mouton conducted study on 5000
managers. He puts it on a grid called Managerial Grid as follows:
Figure 15.3: Managerial Grid: Blake and Mouton
Source: Debra L Nelson and James C Quick, Organizational Behaviour Pg 397
The Managerial Grid Model (1964) is a behavioural leadership model developed by Robert
Blake and Jane Mouton. This model identifies five different leadership styles based on the
concern for people and the concern for production.
As shown in the figure, the model is represented as a grid with concern for production as the X-
axis and concern for people as the Y-axis; each axis ranges from 1 (Low) to 9 (High). The five
resulting leadership styles are as follows:
1. The impoverished style (1, 1). The indifferent Leader (Evade & Elude)
In this style, managers have low concern for both people and production. Managers use this style
to avoid getting into trouble. The main concern for the manager is not to be held responsible for
any mistakes, which results in less innovative decisions.
A leader uses a "delegate and disappear" management style. Since they are not committed to
either task accomplishment or maintenance; they essentially allow their team to do whatever they
consider important and appropriate and prefer to detach themselves from the team process by
allowing the team to suffer from a series of power struggles.
Features
1. Does only enough to preserve job and job seniority.
2. Gives little and enjoys little.
3. Protects himself by not being noticed by others.
Implications
1. Tries to stay in the same post for a long time.
Examples of Leader speak:
“I distance myself from taking active responsibility for results to avoid getting entangled in
problems.”
“If forced, I take a passive or supportive position.”
2. The country club style (1, 9). The accommodating Leader (Yield & Comply)
This style has a high concern for people and a low concern for production. Managers using this
style pay more attention to the security and comfort of the employees, in hopes that this would
increase performance. The resulting atmosphere is usually friendly, but not necessarily that
productive.
This person uses predominantly reward power to maintain discipline and to encourage the team
to accomplish its goals. Conversely, they are almost incapable of employing the more punitive
coercive and legitimate powers. This inability results from fear that using such powers could
jeopardize relationships with the other team members.
“I support results that establish and reinforce harmony.”
“I generate enthusiasm by focusing on positive and pleasing aspects of work.”
3. The produce or perish style (9, 1). The Controlling Leader (Direct & Dominate)
With a high concern for production, and a low concern for people, managers using this style find
employee needs unimportant; they provide their employees with money and expect performance
back. Managers using this style also pressure their employees through rules and punishments to
achieve the company goals. This dictatorial style is based on Theory X of Douglas McGregor,
and is commonly applied by companies on the edge of real or perceived failure. This is used in
case of crisis management.
People who get this rating are very much task-oriented and are hard on their workers (autocratic).
There is little or no allowance for co-operation or collaboration. Heavily task-oriented people
display these characteristics: they are very strong on schedules; they expect people to do what
they are told without question or debate; when something goes wrong they tend to focus on who
is to blame rather than concentrate on exactly what is wrong and how to prevent it; they are
intolerant of what they see as dissent (it may just be someone’s creativity), so it is difficult for
their subordinates to contribute or develop.

“I expect results and take control by clearly stating a course of action.”
“I enforce rules that sustain high results and do not permit deviation.”
4. The middle-of-the-road style (5, 5). The Status –Quo Leader. (Balance & Compromise)
Managers using this style try to balance between company goals and workers’ needs. By giving
some concern to both people and production, managers who use this style hope to achieve
acceptable performance.
“I endorse results that are popular but caution against taking unnecessary risk.”
“I test my opinions with others involved to assure ongoing acceptability.”
5. The team style (9, 9). The Sound / Team Leader (Contribute & Commit)
In this style, high concern is paid both to people and production. As suggested by the
propositions of Theory Y, managers choosing to use this style encourage teamwork and
commitment among employees. This method relies heavily on making employees feel as a
constructive part of the company.
This type of person leads by positive example and endeavours to foster a team environment in
which all team members can reach their highest potential, both as team members and as people.
They encourage the team to reach team goals as effectively as possible, while also working
tirelessly to strengthen the bonds among the various members. They normally form and lead
some of the most productive teams.
“I initiate team action in a way that invites involvement and commitment.”
“I explore all facts and alternative views to reach a shared understanding of the best solution.”
Grid Relationship Skills
The Grid theory translates into practical use through Grid style relationship skills that people
experience day in and day out when they work together. These relationship skills depict the
typical and vital behaviours for each style that make relationships effective or ineffective. Some
behaviour strengthens and motivates teams while others obstruct progress.
· Critique – Learning from experience by anticipating and examining how behaviour and actions
affect results.
· Initiative – Taking action to exercise shared effort, drive, and support for specific activities.
· Inquiry – Questioning, seeking information, and testing for understanding.
· Advocacy – Expressing attitudes, opinions, ideas, and convictions.
· Decision-making – Evaluating resources, criteria, and consequences to reach a decision.
· Conflict Resolution – Confronting and working through disagreements with others toward
resolution.
· Resilience – Reacting to problems, setbacks, and failure, and understanding how these factors
influence the ability to move forward.
Grid theory makes behaviours as tangible and objective as any other corporate commodity. By
studying each of the seven Leadership Grid styles and the resulting relationship skill behaviours,
teams can examine, in objective terms, how behaviours help or hurt them. They can explore
types of critique that work best for them and why. They can openly discuss how to improve
decision-making and conflict resolution skills. These and other subjects usually considered "off
limits" in terms of productivity are the very subjects that usually impede productivity. The Grid
approach makes these subjects not only "discussable" but measurable in objective terms that
generate empathy, motivation to improve, and creativity.
The most desirable place for a leader to be along the two axes at most times would be a 9 on task
and a 9 on people – the Team Leader. However, do not entirely dismiss the other three. Certain
situations might call for one of the other three to be used at times. For example, by playing the
Impoverished Leader, you allow your team to gain self-reliance. Be an Authoritarian Leader to
instil a sense of discipline in an unmotivated worker. By carefully studying the situation and the
forces affecting it, you will know at what points along the axis you need to be in order to achieve
the desired result.
Activity 2
Leadership Exercise:
How to check what type of leader you are? Do the following exercise?
This is a quick self-quiz to give you some feedback on your predominant

leadership style.
Instructions: Read each item carefully. Rate yourself on how frequently you engage in this
behaviour.
Scale: 4 = Always 3 = Often 2 = Occasionally 1 = Seldom 0 = Never
1. Finds time to listen to group members.
43210
2. Makes sure group members are working up to their fullest capacity.
43210
3. Directs the activities of group members on particular tasks.
43210
4. Looks out for group members’ personal welfare.
43210
5. Shows willingness to make changes in leadership approach (es).
43210
6. Emphasizes the meeting of deadlines.
43210
7. Solicits group input in important decisions.
43210
8. Emphasizes the maintenance of definite standards or performance.
43210
9. Supports group members in their actions.
43210
10. Makes personal position clear.
43210
Scoring:
· Add items 1, 4, 5, 7, 9 Total Relationship Score ___________
· Add items 2, 3, 6, 8, 10 Total Task Score _____________
Plot the intersection of your total relationship and total task scores on the grid below.
Relationship Dimension is the vertical rating
Task Dimension is the horizontal rating
19. The Managerial Grid Model (1964) is a behavioural leadership model developed by
___________________________
20. A leader uses a "________________________" management style, when they are not
committed to either task accomplishment or maintenance; they essentially allow their team to do
whatever it wishes and prefer to detach themselves from the team process
21. With a high concern for production, and a low concern for people, managers using this style
find employee needs unimportant; they provide their employees
____________________________________.
22. The _______________________, use this style to try to balance between company goals and
workers’ needs.
23. Grid theory makes behaviors as tangible and objective as any other _______________.
15.7 Differences between ‘Managers’ and ‘Leaders’
At the work place there is a clear distinction between management and leadership. A manager
and a leader are actually two very different kinds on individuals. One clear distinction could
provide the following definition:
· Management involves power by position.
· Leadership involves power by influence.

Abraham Zaleznik (1977), delineated differences between leadership and management. He saw
leaders as inspiring visionaries, concerned about substance; while managers are viewed as
planners who have concerns with process. Warren Bennis (1989) further explained a dichotomy
between managers and leaders. He drew twelve distinctions between the two groups:
· Managers administer, leaders innovate.
· Managers ask how and when, leaders ask what and why.
· Managers focus on systems, leaders focus on people.
· Managers do things right, leaders do the right things.
· Managers maintain, leaders develop.
· Managers rely on control, leaders inspire trust.
· Managers have a short-term perspective, leaders have a longer-term perspective.
· Managers accept the status-quo; leaders challenge the status-quo.
· Managers have an eye on the bottom line, leaders have an eye on the horizon
· Managers imitate, leaders originate.
· Managers emulate the classic good soldier, leaders are their own person.
· Manager’s copy, leaders show originality.
Therefore managers subscribe and conduct themselves as transactional leaders while leaders are
more transformational in their style. In a normal organization we need both types of individuals
as they each serve a unique purpose. Managers help take care of the day to day efficiency
focused set of activities and bring in the operational excellence that helps the organization
prepare itself for the leader who then builds the long term, strategic and transformational
initiatives.
15.8 Summary
· Leadership behaviour changes from individual to individual on the following parameters – viz.,
philosophy, planning and goal setting, implementation, evaluation etc.
· A leader is concerned both with the task (also goals of the organization) as well as the people
with whom he is working.
· The Leadership Continuum Model of Tannebaum and Schmidt (1973) suggests that autocratic
leaders are more likely to make their own decisions and not engage their subordinates, whereas a
more democratic leader (laissez-faire manager) gives subordinates a greater degree of delegation
in decision-making.
· The Managerial Grid Model (1964) is a behavioural leadership model developed by Robert
Blake and Jane Mouton. This model identifies five different leadership styles based on the
concern for people and the concern for production.
· Grid theory makes behaviours as tangible and objective as any other corporate commodity.
· Authoritarian leaders provide clear expectations for what needs to be done, when it should be
done, and how it should be done.
· Democratic leaders offer guidance to group members, but they also participate in the group and
allow input from other group members.
· Delegative leaders offer little or no guidance to group members and leave decision-making up
to group members.
· The term transformational leadership was first coined by J.V. Downton in 1973.
· Transformational leaders offer a purpose that transcends short-term goals and focuses on higher
order intrinsic needs.
15.9 CASELET
Making Paper Airplanes Fly
By Melanie Hoff
Leadership training is an important aspect of career development for young professionals in both
the private and public sectors. While this training is memorable for many, the leadership story of
retired Environmental Protection Agency (EPA) executive Mike Cook offers one valuable lesson
that carried over throughout his very successful career.
As a fairly new and young branch chief in a federal agency tasked with developing the
infrastructure for issuing municipal wastewater permits under the 1972 Clean Water Act, Mike
was sent to a management training course. His experience during an exercise framed his
leadership style and provided the single most important leadership insight he gained from
training during his career.
During this one exercise, he and his co-students were split up into several groups and each group
was given the instructions to build paper airplanes. His group worked diligently over the next
hour or so to build as many paper airplanes as they could. When the time allotted was up they
felt pretty good about their efforts, as the team had built 8 airplanes. Most of the other groups
built a similar number of airplanes.
The next part of the exercise had the instructors test each airplane against the instructions (ie.
specifications). To everyone’s surprise, only one airplane out of the 40 met the specifications.
Mike took away a single lesson from this – “The leader’s job is to ensure the goal is achieved.”
And indeed, Mike followed this approach in 1974 when his branch was tasked with the goal of
developing and implementing a permitting system for regulating municipal and industrial point
sources of pollution as required by the 1972 Clean Water Act (CWA). With his goal clear – issue
permits to all (several hundred thousand) municipal and industrial dischargers – Mike and his
staff worked to define permitting parameters, resolve complex policy issues, develop boilerplate
language for permits, make regulatory interpretations for secondary water treatment, and
establish relationships with Regional and State permitting offices. By the end of 1974, the
Agency and states had issued permits to 90% of all municipal dischargers.
During this time, Mike developed a results-based and open leadership style. In order to achieve
his permit project goal, he capitalized on the high interest of EPA’s senior leaders, including
EPA’s Deputy Administrator (DA), who was briefed every two weeks on the progress of the
project. This visibility and importance of the effort encouraged a “let’s get this done attitude”
within Mike’s sphere of influence. At times, the DA also became actively involved in the project
by using the position’s ‘bully pulpit’ to encourage regional action or to take other high level
management action.
The leadership approach of his office director also played a significant role in how Mike
managed his own staff during the project and how he approached future leadership roles. His
director encouraged open communications, provided well-deserved recognition of individual and
group efforts, built strategic partnerships with stakeholders, did not ‘second guess’ nor
micromanage workgroup recommendations, and followed the strategic plan that was established.
The office director issued regular memos that outlined both the good work and accomplishments
on the project while also acknowledging the challenges that Mike and his team faced. Learning
from a role model, Mike adopted many of these leadership practices and was grateful for the
leadership lessons learned.
Mike also noted that an organizational construct must sometimes be adjusted to support the
mission. A good example of this was how his direct supervisor at the division level allowed
direct access to the office director when needed for time-critical decisions and actions. This
“little” empowerment played a key role in ensuring project success. By streamlining the
management decision chain, Mike’s branch had the flexibility to take work and decisions directly
the top as needed (while keeping his boss informed). While this did leave some colleagues a bit
disgruntled, it helped move efforts forward in a timely manner.
Recognizing the necessity to establish relationships with key stakeholders, Mike also actively
sought the involvement of other EPA offices, regional offices, and state agencies. In particular,
he needed to demonstrate to other stakeholders that his office and branch did, indeed, have the
lead role in developing and implementing the permitting process and that “we knew what we
were doing and that we were going to get it done.”
Mike attributes some of the success to the nature and culture of the agency at that time. In 1973,
the EPA was only two years old and filled with an exited staff ready to “protect human health
and the environment.” The staff across the entire agency set about to, as Mike puts it, “make
things happen.” He did not need to spend much effort motivating his staff – it was part of the
culture. Mike even incorporated his commitment to the environment into his daily commute by
riding his bike to work every day, something he did during his entire EPA career. While getting
wastewater permits issued by 1974 was only one of the many early successes of the agency, it
was a big step forward for the EPA and the nation’s environment.
Mike’s work on this project was the beginning of a lifelong career with the EPA where he led
many environmental protection efforts and influenced the leadership style of many current EPA
staff and managers. He retired from EPA in 2006 with 41 years of federal service with 28 years
as a senior executive at EPA. Although Mike was not successful with the paper airplanes in a
leadership exercise as a young leader, he learned his lesson and eventually made those
“airplanes” soar!
Source : http://govleaders.org/midlevel-stories-cook.htm
1. What is leadership? List the characteristics of a good leader.
2. Briefly explain the different theories of Leadership.
3. Explain the functions of a leader.
4. What are the essential differences between Leaders and managers?
5. Differentiate between Transformational Leaders and Charismatic Leaders.
15.11 Answers
1. People with whom he is working
2. Inspiring confidence
3. Task-oriented
4. Qualities
5. Great Man theories
6. Situational Leadership,
7. Transformational leaders
8. Dependent, empowerment
9. a
10. c
11. b
12. d
13. e
14. Follower
15. Inspiring confidence
16. Great Man theories
17. Trait theory,
18. Contingency theories of leadership
19. Robert Blake and Jane Mouton,
20. Delegate and disappear,
21. Money and expect performance back,
22. Status – Quo Leader,
23. Corporate commodity.
1. Refer to 15.2
2. Refer to 15.3
3. Refer to 15.5
4. Refer to 15.7
References:
2. Organizational Behavior by Steven L McShane, Mary A V Glinow and Radha R Sharma.

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MB0043-Unit-01-Human Resource

1.2 Distinction between Personnel Management & Human Resources Management

1.3 Human Resources and its importance

1.4 Evolution of the Human Resource Management

1.5 Human Relations Theory

1.6 Objectives of Human Relation

1.9 Terminal Questions

· that people are changing jobs more often

· people work longer and even carry work home

1) Increased complexity of organization and employment communication and a distinction

2) Decreased number of employers and self-employed and enlarged size of workforce.

3) Enhanced need for training in view of increased requirements of specialised skills.

4) Public interventions and legal complication in employer-employee relationships.

5) Enhanced training and development of managers and professionalization of management

6) Possibility of employment explosion in view of the ever-increasing size of workforce.

Rank-and-file employees’ rapidly growing demands in different employment situations.

9) Increased applications of behavioural science by enterprising managers.

After studying this unit, you will be able to:

· Distinguish between Personnel Management and Human Resource Management

· Explain Human resources as a function

· Debate the importance and evolution of HRM

· Discuss the Concept of Human Relations and its objectives

1.2 Distinction between Personnel Management & Human Resources Management

3. Improving organisational climate

4. Ensuring personnel growth etc.

Self Assessment Questions

1. Personnel Management is proactive while Human Resources Management is reactive (True /

2. Trade unions influence the HRM policies of a company (True / False)

5. A grievance management system is a common HRM function. (True / False)

1.3 Human Resources and its Importance

Self Assessment Questions

6. According to_____________, ‘the human factor’ refers to a whole consisting of inter-related,

7. The ______________ elements in managing employees are more challenging as compared to

8. Psychologically, it is characterised by ____________ and _____________.

1.4 Evolution of the Human Resource Management

· Economic incentives are less potent than generally believed in

· Any factor influencing employee behaviour is embedded in a social

· More emotionally supportive of subordinates.

· More likely to pay a differentiated role – plan, regulate, and coordinate

· More likely to exercise general rather than close or light supervision.

Maintaining a competent and motivated workforce is a difficult task. From

Self Assessment Questions

11. Leadership practices and work-group pressures profoundly influence employee

14. In management awareness training, managers are made more ___________

1.5 Human Relations Concept

When applied to a business or an industry, it refers to every dimension of interaction that

Self Assessment Questions

15. ______________________________ is a process that brings employees into contact with

1.6 Objectives of Human Relations

A human Relations Programme thereby attempts at enhancing employee motivation and

An understanding of emerging workplace human behaviour can be summarised as:

v) Reward systems – establishing appropriate compensation systems and reward mechanisms

Self Assessment Questions

· According to Julius, ‘the human factor’ refers to a whole consisting of inter-related,

· Management of human resources is being regarded as a specialised profession such as that of

· A human relations programme represents an attempt at improving employee morale and

· HRM is more growth-oriented whereas Personnel Management is slightly narrow.

Talent management: How to invest in your workforce

In recent years, judging by steady increases in spending on talent management, workforce

Large companies outperformed the total sample by 4 percent in linking workforce-management

Major differences between industries also emerged in the report: Knowledge-intensive

Source : BusinessWeek; Thursday, August 14, 2008

1.9 Terminal Questions

8. Psychologically, it is characterised by and _.