Human Resource Management

Kankana Mukhopadhyay
 HUMAN RESOURCE MANAGEMENT

EMPLOYEE
Leads to
HIGHER GREATER
Employee Quality and
Motivation and Quantity of Work
Applicability
Leads to Leads to

GREATER HIGHER
Employee Rewards Organizational
and Recognition Productivity and
Leads to Profit
ORGANIZATION
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 STRATEGIC HRM
Human Resource Management is related to

people’s philosophy. It is based on the belief

that human resources are uniquely important

to sustain business success.

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 COMPETITIVE ADVANTAGE

Rate of Improvement A (t2)

Sustained
Competitive
Advantage

B (t2)
A (t1)
Competitive
Advantage
B (t1)
Time
t1
t2
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DIFFERENCE BETWEEN COMPETITIVE ADVANTAGE
AND SUSTAINED COMPETITIVE ADVANTAGE

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 STRATEGIC IMPACT OF HRM
Human resources have a strategic impact -

• create value

• are rare

• are difficult to imitate

• are organized

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 HUMAN RESOURCE MANAGEMENT

Human Resource Management deals with:

• Acquisition

• Development and

• Retention of Human Resources.

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 OPERATIVE FUNCTIONS OF HRM

ACQUISITION DEVELOPMENT RETENTION

EMPLOYMENT HR DEVELOPMENT COMPENSATION HUMAN RELATIONS

MANAGEMENT

Human
Organizational Resource Performance Appraisal
Analysis and Planning Motivation
Design Job Evaluation
Training & Development

Recruitment Morale
Job Design Wage
Career Planning
Selection Job Satisfaction
Perks
Communication
Induction & Succession Planning
Job Analysis Orientation Grievance
Quality of life

Placement Disciplinary Action

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 Organizational Analysis & Design

• What is to be done?

• Why it is to be done?

• When it is to be done?

• How it is to be done?
• Who will do this?

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 Job Design
Job design is the arrangement of contents (what is to be done),

methods (how and when it is to be done) and establishment of a

relationship between the organizational need from the job

position and the social and personal requirements of

the job holder.

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 Job Analysis

Job analysis is a process of identifying the content of a job

in terms of activities. Job analysis provides information to

organizations which helps to determine which employees

are best fit for specific jobs.

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 Job Analysis
Process of obtaining all pertinent Job Facts

Job Description Job Specification

A proper definition & design of work. A statement of human qualifications

A statement containing: necessary to do the job containing:

 Job Title  Education & Qualifications

 Location
 Job Summary
 Duties and Responsibilities
 Materials, Tools & Equipment used
 Forms & reports handled
 Supervision given/received
 Working conditions
 Hazards & Safety precautions
 Experience & Training
 Knowledge & Skills
 Communication Skills
 Physical requirements – Height,
Weight, Age
 Personality requirements –
Appearance, Judgement,
Initiative, Emotional stability

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Job Description of a
Marketing Manager
Human Resource Planning
 Human Resource Planning
HRP offers an accurate estimate of the number of
employees required with matching skill
requirements to meet organizational objectives.
HRP is a forward looking function as human
resource estimates are made well in advance. It is,
of course, subject to revision.

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 HRP Process
Organizational Objectives & Goals

Human Resource Planning

HR Demand HR Supply
Forecast Forecast

HR Gap Analysis

SURPLUS SHORTAGE

• Restricted • Recruitment
Hiring and
• Reduced Selection
Hours
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 Linking Organizational Strategy to HR
Planning

Demand
for
Human
Resources Outcomes
Assess
current Demand
Establish Human exceeds Recruitment
Define Compare
Corporate Resources Supply
Organization Demand for
Goals -- - - - - - - - - - - - -
Vision and and Supply of
and HRMS: Supply
Mission Human Resources
Objectives Job Analysis exceeds Decruitment
Demand

Supply
of
Human
Resources

Source: Fundamentals of Human Resource Management, 10/e, DeCenzo/Robbins

21
 HR Demand Forecast
• Demand forecasting is the process of estimating
the future quantity and quality of people required.
• The basis of the forecast must be the annual
budget and long-term corporate plan, translated
into activity levels for each function and
department.

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• Demand forecasting must consider several factors
both internal and external.
• Among external factors are competition (foreign and
domestic), economic climate, laws and regulatory
bodies, changes in technology and social factors.
• Internal factors include budget constraints,
production levels, new products and services,
organizational structure and employee separation.

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 Demand Forecasting Techniques
• Ratio-trend analysis

• Work study techniques

• Managerial judgment

• Delphi technique

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 Ratio-Trend Analysis
• This is the quickest forecasting technique.

• This technique involves studying past ratios,

say, between the number of workers and sales
in an organization and forecasting future
ratios, making some allowance for changes in
the organization or its method.
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 An Example of Ratio
Trend Analysis
2014-15 Production of Units : 5,000
2014-15 No. of Workers : 100
Ratio : 100:5000
2015-16 Estimated Production : 8,000
No. of Workers required : 8000 × 100/5000
= 160

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 Example of Trend Analysis of HR Demand
BUSINESS  LABOR = HUMAN RESOURCES
FACTOR PRODUCTIVITY DEMAND
YEAR (SALES IN THOUSANDS) (SALES/EMPLOYEE) (NUMBER OF EMPLOYEES)

2009 $2,351 14.33 164

2010 $2,613 11.12 235
2011 $2,935 8.34 352
2012 $3,306 10.02 330
2013 $3,613 11.12 325
2014 $3,748 11.12 337
2015 $3,880 12.52 310
2016* $4,095 12.52 327
2017* $4,283 12.52 342
2018* $4,446 12.52 355

*Projected figures

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 Work-study Techniques
• Work study techniques can be used when it is

possible to apply work measurement to

calculate the length of operations and the

amount of manpower required.

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 Example
(i) Estimated production = 3,00,000 units
(ii) To produce each unit it requires 2 Hours
(iii) To produce 3,00,000 units it requires = (i) x (ii) i.e., 6,00,000
Hours.

(iv) Work ability/contribution per employee in terms of man-hour

= 1500 Hours.
(v) Estimated no. of workers needed (iii) / (iv) = 600000/1500 =
400

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 An Example of Workload Analysis
Planned output for the year : 10,000 pieces
Standard hours per piece : 3 hours
Planned hours required : 30,000 hours
Productive hours per person per year : 1,000 hours
(estimated on annual basis)
(allowing for absenteeism, turnover, idle time etc.)
No. of workers required : 30
If span of control in the unit is 10 per officer, then 3 officers
are also required.

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 Managerial Judgment
• In this all managers sit together, discuss and
arrive at a figure which would be the future
demand for manpower.
• This technique may involve a ‘bottom-up’ or
‘top-down’ approach. A combination of both
could yield positive results.
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 Delphi Technique
• This technique is the method of forecasting personnel needs.

• It solicits estimates of personnel needs from a group of

experts, usually managers.
• The HRP experts act as intermediaries, summarize the various
responses and report the findings back to the experts.
• Summaries and surveys are repeated until all the experts
agree.

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 HR Supply Forecast
Supply forecasting measures the no. of people
likely to be available from within and outside an
organization, after making allowance for
absenteeism, internal movements and
promotions, wastage and changes in hours and
other conditions of work.

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 Supply Analysis

• Existing human resources

• Internal sources of supply

• External sources of supply

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 Internal supply and techniques
• Inflows and outflows IS=
current supply – outflow + inflow

• Turnover rate
No of separations during one year × 100
Avg. no. of employees during the year

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 Contd…
• Conditions of work and absenteeism.
Absenteeism is given by
no of persons x days lost ×100

Avg no of persons × no of working days

• Productivity level

• Movement among jobs

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 External Supply
• New blood and new experience

• To replenish old personnel

• Organizational growth and diversification

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5-11

Supply Forecasting
Internal Manpower Supply: a manpower inventory in terms of the

size and quality of personnel available (their age, sex, education,

training, experience, job performance, etc) is usually prepared

by HR departments. Several techniques are used while

ascertaining the internal supply of manpower (a supply of

employees to fill projected vacancies can come from within the

firm or from new hires )

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 Estimated Internal Manpower
Supply of a given Firm
S o u r c e s o f In flo w s T h e F ir m P r o j e c t e d O u t f lo w s

 P r o m o t io n s

 T r a n s fe rs  Q u its
C u rr e n t S ta ffin g
 P r o m o t io n s Level  Te r m in a t io n s
E m p lo y e e s I n E m p lo y e e s O u t
 N e w R e c ru its  R e t ir e m e n t s

 R e c a ll s  D e a th s

 L a y o ffs

C u rre n t P r o je c t e d P r o je c t e d F ir m ’s in te r n a l
s ta ffin g – o u tflo w s + in f lo w s = s u p p ly fo r t h is
le v e l th is y e a r t h is y e a r tim e n e x t y e a r

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 Supply Forecasting Techniques
• Staffing Table

• Replacement Chart

• Skill Inventory

• Marcov Analysis

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 Staffing Table
Staffing table: Staffing table is the graphical
arrangement of the jobs in the organization along
with the number of employees currently working on
this position as well as it shows the details of future
vacancy on each job.

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 Staffing Table
For a line worker, for example, there is 20% probability of leaving the
organization, 0% probability of promotion to a manager, 15% probability of
promotion to a supervisor and 65% probability of remaining as a line worker
for the next one year. Such transition matrices form the bases of the internal
flow of people in a large organization over time.

Transition Matrix for Twelve-Month Period

Exit Manager Supervisor Line Worker

Manager 0.15 0.85 0.00 0.00

Supervisor 0.10 0.15 0.70 0.05
Line Worker 0.20 0.00 0.15 0.65

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 Replacement Chart
Replacement Chart: Replacement chart is the
department wise summary of the profile of job
holders that gives a snap shot of who will replace
whom if there is a job opportunity in the
organization.

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 Replacement Chart
G e n e ra l M a n a g e r Key
V. K . G a rg N a m e s g iv e n a r e r e p la c e m e n t
A /2 c a n d id a te s
P A to A . P r o m o t a b le n o w
G e n e ra l M a n a g e r B . N e e d in g d e v e lo p m e n t
L . M a th e w s C . N o t s u it a b le t o p o s it io n
B /1 1 . S u p e rio r p e rfo rm a n c e
2 . A b o v e A v e ra g e p e r fo rm a n c e
A s s is t a n t G e n e r a l M a n a g e r 3 . A c c e p ta b le p e rf o r m a n c e
R .K . A ro ra A /2 4 . P o o r p e rfo rm a n c e
B .K . N e h ru B /3

D iv i s i o n : D iv is io n : D iv is io n :
A c c o u n t in g & P la n n i n g M a n a g e r Te c h n ic a l A d v is o r
H R M anager
Ta x a t io n M a n a g e r A .N . G u p ta A /1 N .R . M u rth y B /3
C .P. T h a k u r A /1
A . T. R o y C /2 K . P. R a o B /1

N o r th e r n R e g io n C e n tr a l R e g io n S o u t h e r n R e g io n M a n a g e r E a s te rn R e g io n
M anager M anager A . S u b ra m a n y a m B /2 M anager
L . C . S r iv a ts a v A / 2 S .P. K u m a r A /1 B .K . M e n o n B /1 R . K r is h n a B /3
A. Thapar C /4 R . P andey B /3

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 Skill Inventory
Skill Inventory: Evaluation of knowledge, skills, abilities and
experience of each and every employee in the organization,
is the purpose of skill inventory. Every firm should keep this
record and update it yearly.

Whenever a firm has any job opening, the management can

first search the skill inventory to close this job opening from
within the organization. It works as a motivational factor for
the employees.

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 Skill inventories – info about non-managers.
1. Personal data
2. Skills
3. Special qualifications
4. Salary and job history
5. Company data
6. Capacity of individual
7. Special preference of individual

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 Skills inventory: an example
N a m e : A .K . S e n D a te p r in te d : 1 -4 -2 0 0 4
N um ber : 429 D e p a r tm e n t : 41

K e y w o rd s W o rk e x p e rie n c e
W o rd D e s c r ip tio n A c t iv ity F ro m To
A c c o u n tin g Ta x S u p e r v is io n 1998 2000 Ta x c le r k A B C C om pany
a n d a n a ly s is
B o o k K e e p in g Ledger S u p e r v is io n 2000 2002 A c c o u n ta n t X Y Z C o.
A u d itin g C o m p u te r A n a ly s is 2002 2003 C h ie f A c c o u n ts T T B a n k
re c o rd s O ffic e r

E d u c a t io n S p e c ia l Q u a li f ic a t i o n s M e m b e r s h ip s

D e g re e M a jo r Ye a r C o u rs e D a te 1 . A IM A

M B A F in a n c e 1998 D B F 1996 2 . IS T D
B .C o m A c c o u n ts 1995 R is k M a n a g e m e n t 1999 3 . IC A

C o m p u te r L a ng u a g e s P o s it io n L o c a tio n H o b b ie s
L ite r a c y p re fe re n c e c h o ic e

 Ta ll y F re n c h A c c o u n tin g K o lk a t a C hess
 B a n k in g A u d it in g D e lh i F o o t b a ll
S o ftw a re B a n g a lo r e B o a t in g

E m p lo y e e s S ig n a tu r e _ _ _ _ _ _ _ _ _ _ H R D e p a r tm e n t_ _ _ _ _ _ _ _
D a te _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ D a te _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

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 Management Inventory
1. Work history
2. Strengths
3. Weakness
4. Promotion potential
5. Career goals
6. Personal data
7. Number and types of employees supervised
8. Total budget managed
9. Previous management duties.
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 Markov Analysis
Markov analysis: Uses historical information from
personnel movements of the internal labour
supply to predict what will happen in the future.
 Andrei Markov, a Russian Mathematician
developed the technique to describe the
movement of gas in a closed container in 1940
 In 1950s, management scientists began to
recognize that the technique could be adapted
to decision situations
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Markov Analysis for a Hypothetical Retail Firm

4/20/18 50
 Markov Analysis for a Hypothetical
Telecommunication Company

Year 2015
Director Senior Manager Regional Exit
Marketing Marketing Manager
Marketing

Director 3 (75%) - 1 (25%)

Marketing (n = 4)
Year
2016 Senior 2 (33%) 1 (17%) 1 (17%) 2 (33%)
Manager
Marketing (n=6)
Regional - 2 (40%) 1 (20%) 2 (40%)
Manager
Marketing (n=5)

Supply (n=15) 5 3 2 5

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 Supply Forecasting
External Manpower Supply: External hires need to be explored

when suitable internal replacements are not available. A growing

number of firms are now using computerized human resource

information systems to track the qualifications of hundreds or

thousands of employees. HRIS can provide managers with a listing of

candidates with required qualifications after scanning the data base.

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The HR Strategies …
If Shortage of employees

• Hire new full-time employees

• Offer incentives for postponing retirement
• Re-hire retired employees on part-time basis
• Attempt to reduce turnover
• Bring in over-time for present employees
• Subcontract work to another company
• Hire temporary employees
• Re-engineer to reduce needs
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The HR Strategies …
If surplus of employees is expected

• Do not replace employees who leave

• Offer incentives for early retirement
• Transfer or reassign excess employees
• Use slack time for employees training or equipment
maintenance
• Reduce work hours
• Pay off employee

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 Business Strategy & HRP
Business strategy
focus (Porter)
Cost leadership
Cost control
Stable business environment
Efficiency & quality
Differentiation
Long term focus
Growth
Creativity in job behaviour
Decentralization
HR strategy
Job & employee
specialization
Employee efficiency
Long HR planning scope
Shorter HR planning scope
Hire HR capabilities required
Flexible jobs & employees
HRP activities
Internal promotions
Emphasis on training
Hiring & training for specific
capabilities
External staffing
Hire & train for broad
competencies
55
 Business Strategy & HRP
Business strategy
focus (Miles &
Snow)
Defender
Finds change threatening
Favors strategies which
encourage continuity &
security
Prospector
Succeed on change
Favors strategies of product
& / or market development
HR strategy HRP activities
Bureaucratic approach Build HR
Planned & regularly Likely to emphasize training
maintained policies to provide programs & internal
for lean HR promotion
Creative & flexible Acquire HR
management style Likely to emphasize
Have high quality HR recruitment, selection &
Emphasize redeployment & performance base
flexibility of HR compensation
Little opportunity for long-
term HRP
56
Recruitment &
Selection
 BUSINESS OBJECTIVES

HR PLANNING

JOB ANALYSIS

JOB DESCRIPTION JOB SPECIFICATION

RECRUITMENT

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 Recruitment
The Process of attracting and generating a pool of applicants for a
particular job position.

OR

The Process of discovering potential candidates.

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 Recruitment is a TWO way traffic

Applicants are Looking

Organization is Looking for the Potential
for Qualified Applicants RECRUITMENT Employment
Opportunities

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 Recruitment Process
ORGANIZATION CANDIDATE

Receive Education and choose

Vacant or New position occurs
Occupation

Generate candidate pool via internal or

Acquire Employment Experience
external recruitment methods

Evaluate Candidates via Selection

Search for Job Openings
process

Impress Candidates Apply for jobs

Impress Company during Selection

Make Offer
process

Evaluate Jobs and Companies

Accept or Reject Job Offers

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 Sources of Recruitment

SOURCES OF
RECRUITMENT

INTERNAL EXTERNAL
SOURCES SOURCES

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 Sources of Recruitment

Job Posting &

Bidding

Promotions and
Transfers

INTERNAL Employee
SOURCES Referrals

Re-recruiting former Employees &

Applicants

Internal Recruiting
Data base

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 Internal Sources
Advantages Disadvantages

 Morale of Promotee  Inbreeding

 Better assessment of abilities
 Lower cost for some jobs
 Motivator for good performance
 Causes a succession of promotions
 Have to hire only at entry level
 Possible morale problems of those not
promoted
“Political” infighting for Promotions
 Need for management-Development
program

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 Schools Colleges &
Universities

Labor
Unions
EXTERNAL
SOURCES
Media Sources

Employment Agencies

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 External Sources
Disadvantages
Advantages

 New “blood” brings new perspectives
 Cheaper and faster than training
 Professionals
 No group of political supporters in
company
 May bring new industry insights
 May not select someone who will “fit” the
job or organization
 May cause morale problems for internal
employees
 Longer “adjustment” or orientation time

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 Internet Recruiting Methods

Internet Recruiting Methods

1. Job Boards

2. Employer Web
Sites

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 Advantages Disadvantages
 Cost savings  More unqualified applicants
 Time savings  Many applicants are not seriously
 Expanded pool of applicants seeking employment
 Access limited or unavailable to some
applicants

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 Recruiting Evaluation
Quantity of Applicants
As the goal of a good recruitment
program is to generate a large pool of
applicants from which to choose,
quantity is a natural place to begin
evaluation
Yield Ratio
A comparison of the number of
applicants at one stage of the
recruiting process to the number at
the next stage.
4/20/18
Quality of
Applicants
In addition to quantity, the issue arises as to
whether or not the qualifications of the applicant
pool are sufficient to fill the job openings. Do the
applicants meet job specification and do they
perform the jobs well after hire?
Evaluating Recruiting
Costs and Benefits
In a cost/benefit analysis to evaluate recruiting
efforts, costs may include both direct costs
(advertising, recruiters’ salaries, travel, agency
fees, telephone) and the indirect costs
(involvement of operating managers, public
relations, image).
69
 Recruiting Evaluation

Using Yield Ratios to Determine Needed Applicants:

300 Applicants
Initial Contacts/Final Interview
(Yield ratio = 3:1)

100 Final Interviews

Final Interview/Offers
(Yield ratio = 2:1)

50 Offers

Offers/Hires
(Yield ratio = 2:1)
25 Hires

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 RECRUITMENT POLICY

4/20/18 71
 Constraints of Recruitment

Image of the Company

Attractiveness of Job

Internal Organizational
Policy

Recruitment Cost

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 BUSINESS OBJECTIVES

HR PLANNING

JOB ANALYSIS

JOB DESCRIPTION JOB SPECIFICATION

RECRUITMENT

SELECTION
4/20/18 73
 Selection

1
• The Process of making a “Hire” or “No Hire”
decision regarding each applicant for a job.

Or
2
• Selection is the process of choosing qualified
individuals who are available to fill the
positions in organization.

4/20/18 74
 Basic Selection Criteria

Formal Education

Experience and Past Performance

Basic Selection
Criteria
Physical Characteristics

Personality Characteristics

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 Selection Process
Fail to meet minimum qualification
Failed to complete job application
or failed job specification
Failed Test
Failed to impress
interviewer and / meet job
expectations
Background Examination if
Problem
encountered
Reject Applicant
Unfit to do essential
elements of job
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Initial screening
Passed
Completed application
Passed
Employment test
Passed
Passed Conditional job
Comprehensive interview
offer
required
Passed
Medical/physical examination if
required (conditional job offer
Able to perform
essential elements
of job
Permanent job offer
76
 Selection Methods

The Three most Common Methods used are:

1. Testing

2. Gathering Information

3. Interviewing

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 1. Testing
Tests measure Knowledge (K), Skill (S),
and Ability (A), as well as other
characteristics, such as personality
traits.

Testing Types

Cognitive Personality Physical Integrity Work Sample

Ability Test Ability Test
Drug Test Testing
Test Test

4/20/18 78
1. Cognitive Ability Testing 2. Physical Ability Testing

It measures the learning,

It assesses muscular
understanding, and ability to
strength, cardiovascular
solve problems. e.g. TESTING endurance, and
Intelligence Tests. TYPES
coordination.

3. Personality Testing

It measures the patterns of

thought, emotion, and
behavior.

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 4. Integrity Testing 6. Drug Testing

Normally requires
It is designed to assess the
TESTING applicants to provide
likelihood that applicants TYPES required sample that is
will be dishonest or engage
tested for illegal substances.
in illegal activity.

5. Work Sample Testing

Measures performance on
some element of the job.

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 2. Information Gathering:
Common methods for gathering information include application
forms and résumés, biographical data, and reference checking.

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 3. Interviews:

 The interview is the most frequently used selection

method.
 Interviewing occurs when applicants respond to
questions posed by a manager or some other
organizational representative (interviewer).
 Typical areas in which questions are posed include
education, experience, knowledge of job
procedures, mental ability, personality,
communication ability, social skills.

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 Situational Interview
1. Structured
Interviews
Behavioral Interview

Types of
Interviews

2. Unstructured
Interviews

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 1. Structured 2. Unstructured
Interviews Interviews

Uses a list of predetermined

Interviews-open ended questions
questions. All applicants are asked
are used such as “Tell me about
the same set questions. There are
yourself”
two types of structured interviews.

SITUATIONAL BEHAVIORAL
INTERVIEW INTERVIEW • This allows the interviewer to
probe and pose different sets
• In which the • In which the of questions to different
interviewer asks questions focus
questions about applicants.
on the
what the applicant
would do in a applicant’s
hypothetical behavior in past
situation situations.

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Induction and Orientation
 Induction
The act or process of inducting or bringing in, introduction;
entrance; beginning; commencement.
 Orientation
It is the process of introducing a new situation or environment
Need to conduct Induction and Orientation

 To familiarize new employee to the organization, people,

departments, work, teams, organization chart, designation,
hierarchies and company Process and Policies.

 Orient new employee to work protocols, work

environment, team culture, how to behave in situations,
escalation modes, detailed process familiarization.
 Objectives
 To cut down recruitment cost
 To Improve job satisfaction, morale and motivation
 To ensure that new people become independent sooner on routine
operations so that other members of staff don’t have to spend
much time on formal guidance.
 To Reduce absenteeism and staff turnover
 To Promote a safe and equitable work environment through an
awareness of policies and responsibilities in these areas
 To aid the staff member in establishing effective working
relationships and social networks
 To Create a positive attitude and commitment to the organization
Performance Management
 Performance Feed
back

4/20/18 91
4/20/18 92
 Performance Appraisal

Performance Appraisal (PA) is a process of

evaluating employee’s performance on the

basis of pre-defined standards.

4/20/18 93
 Performance Management
Performance Management (PM) includes

activities which ensure that goals are

consistently being met in an effective and

efficient manner.

4/20/18 94
Differences Between Performance Appraisal and Performance Management

Performance Appraisal Performance Management

Top-down assessment Joint process through dialogue

Annual appraisal meeting Continuous review with one or more

formal reviews

Use of ratings Ratings less common

Monolithic system Flexible process
Focus on quantified objectives Focus on values and behaviours as well
as objectives

Often linked to pay Less likely to be directly linked to pay

Bureaucratic - complex paperwork Documentation kept to a minimum

Owned by the HR department Owned by line managers

4/20/18 95
 Introduction to Performance Management

The term Performance Management gained its

popularity in early 1980’s when Total Quality
Management programs received utmost
importance for achievement of superior
standards and quality performance.

4/20/18 96
 First Phase
The origin of Performance Management can be traced in the
early 1960’s when the performance appraisal systems were in
practice. During this period, Annual Confidential Report (ACR)
was also known as Employee Service Records were
maintained for controlling the behaviours of the employees
and these reports provided substantial information on the
performance of the employees.

4/20/18 97
 Second Phase
This phase continued from late 1960’s till early 1970’s,
and the key hallmark of this phase was that whatever
adverse remarks were incorporated in the performance
reports were communicated to the employees so that
they could take corrective actions for overcoming such
deficiencies.

4/20/18 98
 Third Phase
In this phase the term ACR was replaced by Performance
Appraisal. One of the key changes that were introduced in
this stage was that the employees were permitted to
describe their accomplishments in the confidential
performance reports, several new components were
considered by many organizations which could measure the
productivity and performance of an employee in
quantifiable terms such as targets achieved, etc.
4/20/18 99
 Fourth Phase
This phase started in mid 1970’s and its origin was in India as
great business tycoons like Larsen & Toubro, followed by State
Bank of India focused on performance planning, review and
development of an employee by following a methodical
approach. In this process, the appraisee (employee) and the
reporting officer mutually decided upon the Key Result Areas
(KRAs) in the beginning of a year and reviewed it after every six
months.

4/20/18 100
 Fourth Phase
In the review period various issues such as factors affecting the
performance, training needs of an employee, newer targets and
also the ratings were discussed with the appraisee in a
collaborative environment.

This phase was a welcoming change in the area of performance

management and many organizations introduced a new HR
department for taking care of the development issues of the
organization.

4/20/18 101
 Fifth Phase
This phase was characterized by maturity in approach of
handling peoples’ issues. It was more performance driven and
emphasis on development, planning and improvement. Utmost
importance was given to culture building, team appraisals and
quality circles were established for assessing the improvement
in the overall employee productivity.

4/20/18 102
 Methods of Performance Appraisal

4/20/18 103
 Methods

Past–oriented Graphic Scales Future-oriented

Rating Scales

Non-graphic Scales MBO

Comparative Method

Ranking

Forced Distribution 360 Degree Appraisal

Paired Comparison

Critical Incidents Method

Annual Review Psychological Appraisal

Checklist

BARS
Assessment Center
Essay Method

4/20/18 104
 Rating Scales

4/20/18 105
 Graphic Rating Scale
The graphic rating scale rates the employees on some standard or
attribute of work.

Traditionally, the focus was on personal traits (e.g., friendliness

and cooperation), but, more recently, it has been on work
behaviors and outcomes. (e.g., greets every customer who enters
into the store).

The rating is often done on some 1-3 or 1-5 scale, with 1

representing “very unsatisfactory” and 5 representing “excellent”.

It is one of the oldest and most common methods.

It considers the factors like attendance, safety etc.

4/20/18 106
 Non-graphic Rating Scale

A non-graphic scale is usually more valid than a

graphic scale because the former contains a brief
description of each point on a scale rather than
simply low and high points of a scale.

The rater can give a more accurate description

clarifies each level of the rating scale.

4/20/18 107
 Source: Willam B. Werther and Keith Davis, Human Resources and Personnel Management, p. 349.
4/20/18 108
 Ranking

Comparative Forced
Distribution
Methods

Paired
Comparison

4/20/18 109
 Ranking Method
Ranking employees from most effective to least effective is
another appraisal method.

Problems of central tendency and leniency are eliminated by

forcing raters to evaluate employees over a predetermined
range.

The advantage of this method is it is fast and easy to

complete.

Ranking is seldom developmental because employees do not

receive feedback about performance strengths and
weaknesses or any future direction.
4/20/18 110
 Sales Office Warehouse Delivery

1. R. Mondal 1. R. Kothari 1. J. Mukherjee 1. B. Gupta

2. P. K. Verma 2. K. Konar 2. P. Roy 2. F. Sen

3. L. Mohanty 3. D. Sarkar 3. T. Ghosh

4. J. Thomson 4. U. Karmakar

5. A. Basu

4/20/18 111
 Forced Distribution Method
Similar to ranking, forced distribution requires that supervisors
spread their employees evaluations in a pre-described
distribution.

Supervisor places employees in classifications ranging from

poor to excellent.

Often administrators use forced distribution method to

compare employees from different departments.

However, it is valid only if each department has an equal

number of excellent employees, average employees and so on.
4/20/18 112
 Forced Distribution on a Bell-shaped curve

Excellent (10)%
Above Average (20)%
Average (40)%
Below Average (20)%
Poor (10)%

4/20/18 113
 An example of Forced Distribution

Poor Below Average Average Above Excellent

(10)% (20)% (40)% Average (10)%
(20)%
D. Sarkar L. Mohanty P. Roy F. Sen J. Mukherjee
T. Ghosh K. Konar R. Kothari

4/20/18 114
 Paired Comparison

In this method raters pair employees and choose one as superior in

overall job performance.

Paired comparison does not force the distribution of employees in

each department. For example, if a department has two outstanding
employees and six average employees and paired comparison is
correctly used, then those two employees will receive a much
higher percentage of positive comparison that the other six.

4/20/18 115
 Alternatively, if all employees have about the same performance except for
one poor performer, that employee may have a much lower total
percentage of positive comparisons than the other employees in the
department. Thus, the actual distribution of employees in the department
is based on performance.

The number of comparisons required equals N(N-1)/2. Therefore, for 20

employees, 190 comparisons would be necessary.

One disadvantage of paired comparison is that employees are compared to

each other on overall performance rather on specific job criteria.

4/20/18 116
 Instructions: Assign each employee’s name a different capital letter on a
separate sheet of paper. Example: A - P. Roy, etc. Then, develop a chart
such as one below and, for each plotted pair, write in the letter of the
employee who, in your opinion, has one superior job overall.

Example:

A B C D E

A A A A A

B C D E

C C E

D E

E
4/20/18 117
 To compute employee’s performance level:

(Number of positive evaluations)/(Total number of

evaluations) x 100 = Employee’s % of Total Positive
Evaluations.

Employee A = 4/4 x 100 = 100%

Employee B = 0/4 x 100 = 0%
Employee C = 2/4 x 100 = 50%
Employee D = 1/4 x 100 = 25%
Employee E = 3/4 x 100 = 75%

4/20/18 118
 Critical Incidents

Several modern PA methods employ the use of critical

incidents to make the appraisal process more job related
than some of the other methods. The critical-incident
methods of PA use specific examples of job behavior that
have been collected from supervisors or employees or both.
Once a list of critical incidents is finalized, a particular
method of using these incidents is chosen.

4/20/18 119
 Critical Incidents

The term critical incident refers to a communication

situation, which the participants (or one participant)
consider as problematic and confusing, even amusing.
Critical incidents are occasions that stay in mind. Typically,
critical incidents consists of examples of cultural clash
events - situations where unexpected behavior occurs - with
suggestions on how to solve these situations.

4/20/18 120
 Critical Incident Method

A set of procedures for collecting direct observations of

human behaviour in such a way as to facilitate their
potential usefulness in solving practical problems and
developing broad psychological principles.

4/20/18 121
 Critical Incident Examples
• An aspect of your project or group work that went
particularly well
• An aspect of your project or group work that proved difficult
• A piece of work that you found particularly demanding
• A piece of work which increased your awareness, or
challenged your understanding, of social justice issues; or
• An incident involving conflict, hostility, aggression or criticism

4/20/18 122
 BARS

Critical Incident
Methods

Annual
Check List
Review

4/20/18 123
 Annual Review File or Calendar

• One form of the method is for the supervisor or appraiser to

keep an ongoing record of his or her employee’s critical

incidents during the period of appraisal.

• If the review period is for one year, the supervisor can keep a

file or calendar in which the outstandingly good or bad

examples of subordinates’ performance are entered.

4/20/18 124
• The supervisor would then make an annual review of this file or

calendar before preparing for the PA.

• Employees who have little or no record during the year are doing their

jobs satisfactorily, not performing much above or below job

expectations.

• The advantage of the annual review file is that it is usually very job

specific. With specific dates and incidents included in the PA, the

supervisor is less affected by bias.

• The main disadvantage of using an annual review file is the difficulty of

keeping an accurate record.

4/20/18 125
 Check List

• Critical incidents may also be used in PA by developing a

checklist or critical behavior related to an employee’s
performance.

• Such an appraisal may have twenty or thirty critical items

for one specific job.

4/20/18 126
 The supervisor simply checks whether the employee has
performed in a superior manner in any of the incidents.

Outstanding employees would receive many checks,

indicating that they performed very well during the appraisal
period.

The checklist method of critical incidents often involves

giving different weights to different items in the checklist to
indicate that some are more important than others.

This method is evaluative as well as developmental.

4/20/18 127
 Behaviorally Anchored

Rating Scale

4/20/18 128
 BARS
• BARS compares an individual’s performance against specific
examples of behaviour that are anchored to numerical ratings.
• The BARS (behaviorally anchored rating scales) method of
evaluating employees carries typical job appraisals one step
further: Instead of relying on behaviors that can be appraised
in any position in a company, the BARS method bases
evaluations on specific behaviors required for each individual
position in an individual company.

4/20/18 129
• For example, in a hypothetical position of human resources coordinator,
one of the job holder’s responsibilities is to complete status change
notices, which update the personnel system regarding changes in
employee pay, position, title, supervisor, and personal data. The BARS
method for this specific task in this specific job could read as follows:

5: Exceptional performance: Accurately completes and submits all

status change notices within an hour of request.
4: Excellent performance: Verifies all status change notice information
with requesting manager before submitting.
3: Fully competent performance: Completes status change notice forms
by the end of the workday.
2: Marginal performance: Argues when asked to complete a status
change notice.
1: Unsatisfactory performance: Says status change notice forms have
been submitted when they haven’t.

4/20/18 130
 MBO

360
Degree
Future Oriented Appraisal
Methods

Assessment
Centre

Psychological
Appraisal
4/20/18 131
 Definition
Management By Objectives (MBO) can be defined as a

process whereby the employees and the superiors come

together to identify common goals, the standards to be taken

as the criteria for measurement of their performance and

deciding the course of action to be followed.

4/20/18 132
Management By Objectives (MBO)
Goal Setting

Periodic Action
Review MBO Planning

Self-Control

The term “Management by Objectives" was first popularized by Peter

Drucker in his book 'The Practice of Management‘ published in 1954 .
4/20/18 133
 Principles of MBO

• Cascading of organizational vision, goals and objectives

• Specific objectives for each member

• Participative decision making

• Explicit time period

• Performance evaluation and feedback

4/20/18 134
 Advantages of MBO
• Both supervisor and the employee participate in the appraisal
process.
• The focus of the appraisal process is on specific goals and not
on broad personality traits such as “dependability” or
“cooperation”.
• Goals and objectives are determined before the appraisal
process.

4/20/18 135
4/20/18
360 Degree Appraisal 136
 360-degree feedback is an appraisal or
assessment process used to improve 360
managerial effectiveness by providing the
Degree
manager with a more complete
Feedback
assessment of the employee’s
effectiveness, his performance and
development needs.

360 degree feedback is also known as

Multi-rater feedback, Multi-source
feedback, Full-circle appraisal or Group
performance review.
4/20/18 137
 Traditional Feedback
360 Degree Feedback

Supervisor
Me
Skip - Level Others
Reportees

ME
ME
Direct Supervisor
Reportees

External Internal
Customers Customers
Co-workers
4/20/18 138
 360 Degree Appraisal

Peer/Co-workers Manager

1800 900

2700 3600

Customer Direct Reports/Subordinates

4/20/18 139
 Level4: Minimal Impact Level1: Maximum Impact

Group4: Peer/Co-worker Group1: Manager

Weight: (0.00 – 0.25) Weight: (0.75 – 1.00)

Group3: Customers Group2: Direct

Weight: (0.25 – 0.50) Reports/Subordinates
Weight: (0.50 – 0.75)

Level3: Reasonable Impact Level2: Moderate Impact

4/20/18 140
 Degree Example

900 (Assessment by Manager) Most companies with a performance

management system in place use
this mode of feedback
1800 (Assessment by Manager and • Tata Communications
Peer) • ICICI
• Coca Cola

2700 (Assessment by Manager, Peer • Wipro InfoTech

and Direct Report)

3600 (Assessment by Manager, • ITC

Peer, Direct Report and Customer) • Motorola

4/20/18 141
 Assessment Centre
An assessment center consists of a standardized evaluation of

behavior based on multiple inputs. Multiple trained observers

and techniques are used. Judgments about behaviors are made,

in major part, from specifically developed assessment

simulations. These judgments are pooled in a meeting among

the assessors or by a statistical integration process.

4/20/18 142
 Characteristics of Assessment Centre

• It must measure multiple factors.

• It must use multiple techniques.

• It must have multiple observers or assessors.

4/20/18 143
 Stage-wise Implementation of Assessment Centre
Stage 1 • Assessment Centre should be run for only those who have volunteered to be
participants.
• Data should be used only for developmental purposes.
• Data not to be shared with the organization.
Stage 2 • Assessment Centre should be made compulsory.
• Individual feedback should be given.
• Data should be used only for developmental purposes.
• Data should be shared with the organization so that necessary developmental inputs
are provided to the participants.

Stage 3 • Assessment Centre should be made compulsory.

• Individual feedback should be given.
• Data should be used only for developmental purposes.
• Data should be shared with the organization and used both for providing developmental
inputs to the participants as well as for using data as inputs for promotion decisions.

4/20/18 144
 Assessment Center Exercises
Sample Individual Exercises
• Interview Simulation
• Role Play
• In-Tray

Sample Group Exercises

• Leaderless Group Discussion
• Business Game

4/20/18 145
 Assessor Assessor Assessor Final
Dimension
#1 #2 #3 Rating
Decisiveness
Initiative
Judgment
Leadership
Assessment Management Control
Center Oral Communication
Planning &
Sample Final Organization
Rating Form Problem Analysis
Resilience
Sensitivity
Written
Communication
Overall Score

4/20/18 146
 Development Centre
During the course of an Assessment Centre,
each participant gets the opportunity to see
himself performing the same task as his peers in
exactly the same circumstances. Thus,
assessment centre which is used for
developmental purpose i.e., the ideal platform
to base a Management Development
Programme (MDP) is called the development
centre.
4/20/18 147
 Assessment Centre Vs. Development Centre
Assessment Centre Development Centre
Have pass/fail criteria. Do not have pass/fail criteria.
Are geared towards filling a job vacancy.
Are geared towards developing an
individual.
Addresses an immediate organizational Addresses a longer term need.
need.
Have fewer assessors and more Have a 1:1 ratio of assessor to participant.
participants.
Involve line managers as assessors. Do not have line managers as assessors.
Have less emphasis placed on self- Have a greater emphasis placed on self-
assessment. assessment.
Focus on what the candidate can do now. Focus on potential.

4/20/18 148
 Psychological Appraisals
Large organizations employ industrial psychologists to do this task. The

appraisal normally consists of in-depth interviews, psychological tests,

discussions with supervisors and a review of other evaluations. The

psychologists then write an evaluation report of the employee’s

intellectual, emotional, motivational and other related characteristics that

suggest individual potential and may predict future performance. The

evaluation by the psychologist may be for a specific job opening for which

the person is being considered. As this approach is slow and costly, it is

usually required for bright young members who are considered as

potential employees for the organization.

4/20/18 149
 Psychometric Test

Aptitude Test
Ability Test Personality Test

4/20/18 150
• Ability Test – Attempt to measure awareness, knowledge and

other such aspects.

• Aptitude Test – Attempt to evaluate verbal and numerical

reasoning ability.

• Personality tests - are those tests which are aimed at studying

various dimensions of personality rather than the ability.

4/20/18 151
Measurement Errors in
Performance Appraisal
 Halo Error
Raters evaluate ratees’ performance on several different
dimensions and give a similar rating for each dimension.
For example, if a chef is famous for making one particular
dish, then the halo effect allows people to assume that he
can cook anything with equal proficiency.

4/20/18 153
 Leniency Error
• Raters tend to give everyone relatively high ratings.

• Inexperienced or poor supervisors appraise performance by

giving everyone a high evaluation, sometimes called the
“Lake Wobegon Effect”.
• For example, if after interviewing five candidates, the
manager rates all candidates with an “Excellent” rating, one
might suspect the leniency error has taken place.

4/20/18 154
 Strictness Error
• Raters tend to give everyone relatively low ratings.

• Sometimes supervisors consistently give low ratings even

though some employees may have achieved an average or
above-average performance level.
• For example, if after interviewing five candidates, the
manager rates all candidates with a “Poor” rating, one might
suspect the strictness error has taken place.

4/20/18 155
 Central Tendency Error
• Raters lump everyone together around the
average or middle.
• For example, if after interviewing five
candidates, the manager rates all candidates
with an “Average” rating, one might suspect
the leniency error has taken place.
4/20/18 156
 Low Differentiation Error

• Raters restrict themselves to a small part of the rating scale.

• Examples include leniency, strictness, and central tendency

errors.

4/20/18 157
 Recency Error
• Raters allow recent events to exercise undue influence on

ratings.

• When organizations use annual or semiannual performance

appraisals, there may be a tendency for supervisors to

remember more about what their employees have done just

before the appraisal than in prior months.

4/20/18 158
 Personal Bias Error

• Raters let personal biases, such as

stereotypes, unduly influence the ratings.

4/20/18 159
 Cultural Bias Error
• Raters allow cultural differences of

employees to influence the performance

appraisal.

4/20/18 160
 Stereotype
A type of schema built around some

distinguishing, often highly visible

characteristic such as race, gender, or

age.

4/20/18 161
 Stereotype - Example
A 35-year-old supervisor gives a 60-year-old

engineer a negative performance appraisal that

indicates that the engineer is slow and unwilling

to learn new techniques although this is not

true.

4/20/18 162
 Primacy Effect

The initial pieces of information that

people have about a person have an

inordinately large effect on how that

person is perceived.

4/20/18 163
 Primacy - Example

A subordinate who made a good first

impression on his supervisor receives a better

performance appraisal than he deserves.

4/20/18 164
 Contrast Effect
People’s perceptions of a person are

influenced by their perception of others in

an organization.

4/20/18 165
 Contrast - Example
A subordinate’s average level of
performance is appraised more harshly
than it should be by her supervisor because
all the subordinate’s coworkers are top
performers.

4/20/18 166
 Knowledge of Predictor Bias
Perceptions of a person are influenced by

knowing the person’s standing on a

predictor of performance.

4/20/18 167
 Knowledge of Predictor Bias - Example

A programmer who scored highly on

cognitive and numerical ability tests
receives a more positive performance
appraisal than she deserves.

4/20/18 168
 Case I

An Employee with 23 years of service at Bazare Corporation, was

fired because of his poor attitude, lack of cooperation, and lack of
leadership. The company’s own policy said that discharge could
occur only if an employee was given notice of performance
deficiencies and then was given a chance to improve. The
performance appraisal given immediately before the termination
did not indicate any dissatisfaction even though the employee’s
supervisor was considering discharging him at that time. The court
held that he could sue his former employer for “Negligent
Evaluation” as described by a Law.

4/20/18 169
Case II

In another case, Mr. Dixit complained to his immediate supervisor that

he was the victim of age discrimination. A few months later, the
supervisor fired Dixit for unsatisfactory job performance. Just before
Dixit’s termination, his supervisor gave him a negative PA, causing the
company to believe that it would have an ironclad defense in an age
discrimination suit. At the trial, testimony revealed that the supervisor
had lowered Dixit’s PA deliberately, without his knowledge, after Dixit
complained about age discrimination. Just after Dixit’s complaint, the
supervisor deluged Dixit with job assignments. The Judge let stand a Rs.
4,50,000/- verdict against the employer.
4/20/18 170
 SKILL

Individual’s ability to accomplish any task.

4/20/18 171
 TALENT

Inherent ability.

4/20/18 172
 KNOWLEDGE

Facts, information, and

skills acquired through
experience or education;
the theoretical or practical
understanding of a
subject.

4/20/18 173
 COMPETENCY
ATTITUDE
IS !
EVERYTHING
But, I can
whether I reach the
should go goal.
for it…

I know
how to
set the
path.

4/20/18 174
 HOW MUCH DO YOU SEE OF AN ICEBERG?

4/20/18 175
 THE ICEBERG

Only 10% of any

ICEBERG is
visible. The
remaining 90% is
below sea level.

4/20/18 176
 I
C Visible above sea
level. 10 %
E
SEA
LEVEL

Invisible below

B sea level.

E 90 %
R
G
4/20/18 177
The Iceberg KNOWLEDGE
Known to others &
phenomen SKILLS SEA
LEVEL
a is also
Unknown to
applicable others

to human
beings … ATTITUDE

4/20/18 178
 Known to others BEHAVIOR
SEA
LEVEL

In Unknown to
IMPACT
others
other
words,
VALUES – STANDARDS – JUDGMENTS

ATTITUDE
MOTIVES – ETHICS - BELIEFS

4/20/18 179
4/20/18 180
 WHAT MAKES YOUR LIFE 100% ?
Let each letter of the alphabetic has a value equals to it
sequence of the alphabetical order…
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

S K I L L S
19 11 9 12 12 19 = 82
K N O W L E D G E
11 14 15 23 12 5 4 7 5
= 96
H A R D WO R K
8 1 12 4 23 1518 11 = 98
A T T I T U D E
1 20 20 9 20 21 4 5 = 100
4/20/18 181
 ATTITUDE

Great Attitude - an inspirational video_(360p).mp4

4/20/18 182
 COMPETENCY RE-DEFINED …
I can
But, whether reach the
I should go goal.
for it…

I know
how to set
the path.

It is a combination of Knowledge, Skill and Attitude (KSA).

4/20/18 183
4/20/18 184
 COMPETENCY vs. COMPETENCE

Competence Competency

Skill-based Behaviour-based
Standard attained Manner of behavior
What is measured? How the standard is achieved?

4/20/18 185
 COMPETENCY CLASSIFICATIONS

Competencies

Surface Self-Concept Core

Knowledge & Skill Motive & Trait

Competencies Competencies

4/20/18 186
 MOTIVE
• Motive is a reason for doing something.
• It is the internal state that arouses and
directs behavior toward a specific
objective or goal.
• Motive is caused by a deficit, a lack of
something.
• Motives differ from each other in type and
amount.

4/20/18 187
 TRAIT
A character trait focuses on a person’s personality (the way they
act). Example: funny

adventurous unhappy graceful intelligent careless

greedy fearful shy helpful clean

4/20/18 188
 SELF CONCEPT
I can do I have Why try? I I am
Positive Self-Concept

anything I definite could not

Negative Self-Concept
really strengths never do it nearly
want to and anyway. as good
do. abilities. as my
friends.
I am an I am
okay a
person jerk.
.
I knew my I cannot
I see There are
plans do
myself as many ways
would not anything
being as to solve a
work. right.
good as problem.
my
friends.

4/20/18 189
 COMPETENCY ATTRIBUTES

4/20/18 190
 COMPETENCY CLASSIFICATIONS

Not easy
Easy to
to Develop
Develop Competencies

and
and Surface Self-Concept Core
Manage as
Manage as
Knowledge & Skill Motive & Trait
Competencies Competencies it is
it is VISIBLE
HIDDEN

4/20/18 191
 THRESHOLD AND DIFFERENTIATING
COMPETENCIES
Threshold Competencies: The characteristics required by a job

holder to perform a job effectively, i.e., as per the pre-defined

requirements are called threshold competencies.

Differentiating Competencies: The characteristics which

differentiate superior performers from average performers come

under this category; such characteristics are not found in average

performers.

4/20/18 192
ORDINARY RESOURCES AND COMPETENCIES

- 25 % for junior level.

- Those currently at per
with competitor’s
resources and
competencies, there is
nothing special about
them that can be
identified right now.

4/20/18 193
 IMPORTANT RESOURCES AND
COMPETENCIES
- 50 % for middle
vel.
- Usually refers to
ose which are
rrently a source of
mpetitive advantage
r an organization.

4/20/18 194
 PRIMARY RESOURCES AND CORE
COMPETENCIES
- 25% for Top Level

- Usually refers to high

competence activities important in a

firm’s corporate level which are key to

the firm’s survival and are central to its

strategy and a potential source of

sustained competitive advantage.

4/20/18 195
DIFFERENCE BETWEEN COMPETITIVE ADVANTAGE
AND SUSTAINED COMPETITIVE ADVANTAGE

4/20/18 196
 APPLICATIONS OF COMPETENCIES IN
ORGANIZATIONS
• Competency Framework: Defines the structure of competencies
that covers all the key jobs in an organization. This consists of
generic competencies.
• Competency Maps: Defines the process of mapping and locating
the relevant competencies that are present in or are utilized by the
organization.
• Competency Profiles: A set of competencies that are required to
perform a specific role.

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 Principle 1 Involve
people.

KEY Principle 2 Keep people

informed.
PRINCIPLES
TO DEVELOP
Principle 3 Create
COMPETENCY competencies
that are
FRAMEWORK relevant.

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 DIFFERENT APPROACHES TO DEVELOP
COMPETENCY FRAMEWORK
• Use a pre-set list of common, standard competencies, and

then customize it to the specific needs of your organization.

• Use outside consultants to develop the framework for you.

• Create a general organizational framework, and use it as the

basis for other frameworks as needed.

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 Step 1. Prepare

Step 2. Collect Information

STEPS TO

DEVELOP A Step 3. Build the Framework

COMPETENCY Step 4. Implement

FRAMEWORK

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 STEP ONE: Prepare
• Define the purpose
• Create a
competency
framework team

4/20/18 201
 STEP TWO: Collect Information

• Observe

• Interview people

• Create a questionnaire

• Analyze the work

4/20/18 202
 STEP THREE: Build the Framework
Validate and
Create and Identify and revise the
Group the refine the name the competencies
statements subgroups competencies as necessary

4/20/18 203
 STEP FOUR: Implement

1. Link to 2. Reward the 3. Provide 4. Keep 5. Communicate

business competencies coaching and it
objectives training simple

4/20/18 204
 Why use Competency Framework?

Medium
Business

Small
Business

Enterprise
4/20/18 205
 Competency Mapping
Competency Mapping is a process of identifying key
competencies for an organization and/or a job and
incorporating those competencies throughout the
various processes (i.e. job evaluation, training and
development, recruitment and selection and other
HR functions) of the organization.

4/20/18 206
 Steps involved in Competency
Mapping process
1. Conduct a job analysis by asking incumbents to complete
a Position Information Questionnaire(PIQ). (PIQ 1, PIQ 2,
PIQ 3)
2. Using the results of the job analysis, a Competency B
ased Job Description is developed.
3. With a competency based job description, competency
mapping is done.
4. Using the competency mapping results, the performance
gaps are identified.

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 Instruments used for Competency
Mapping
1) Assessment Centre
2) Critical Incidents Technique

3) Interview Techniques

4) Questionnaires

5) Psychometric Tests

4/20/18 208
 Mapped Competencies in
Competency Framework through
Assessment Centre Approach
 Exercises Group
In Tray Role Plays Case Studies
Exercises
Competencies
Communication √√ √ √√ √
√√ - Competencies
Teamwork √√ √ √ most frequently
observed in
Leadership √ √√ √ √√ exercises of this
type.
Customer focus √ √ √

Influencing √ √ √ - Competencies
frequently
Problem √ √√ √ observed in
solving exercises of this
type.
Achieving √√ √√ √√ √
results

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 Selected Position Profile
Profile Positions
Profile
Profiling Criteria 1 2 3 4 5
– Attention to Detail X
– Broad Perspective X
– Creativity X
– Interpersonal Skills X Position:
– Knowledge Transfer X
– Leadership X Finance
Manager
– Ownership X
– Adaptability X
– Commitment X
– Diplomacy X
– Independence X
– Initiative X

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 Person Profile
Profile Persons
Profile
Profiling Criteria 1 2 3 4 5
– Attention to Detail O
– Broad Perspective O
– Creativity O
– Interpersonal Skills O Person:
– Knowledge Transfer O
John
– Leadership O Davis
– Ownership O
– Adaptability O
– Commitment O
– Diplomacy O
– Independence O
– Initiative O

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 Person VersusMatch
Position Profile
Person vs. Position
Profile Scor
Profiling Criteria 1 2 3 4 5 Person P
– Attention to Detail O X 6
– Broad Perspective O X 3
– Creativity X
O 2
– Interpersonal Skills X O 8
– Knowledge Transfer X
O 4
– Leadership O X 9
– Ownership O
X 6
– Adaptability O X 4
– Commitment O
X 4
– Diplomacy X O 12
– Independence X O 3
– Initiative O X 6
67
Position: Finance Manager Person: John Davis Person / Position Ratio 85

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 Competency Ratio
Match Person vs. Position
Profile Score
Profiling Criteria 1 2 3 4 5 Person Position
– Attention to Detail (3 O X 6 12
– Broad Perspective )(3 O X 3 69
– Creativity )(2 X
O 2 2
– Interpersonal Skills )(3 X O 8 6
– Knowledge Transfer (1 ) X
O 4 4
– Leadership )(3 O X 9 12
– Ownership )(2 O
X 6 6
– Adaptability )(2 O X 4 6
– Commitment )(1 O
X 4 4
– Diplomacy )(3 X O 12 9
– Independence )(1 O 3 2
X
– Initiative )(2 6 10
O X
) 67 79
Position: Finance Manager Person: John Davis Person / Position Ratio 85

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 Analysis
Person vs. Position Competency ratio.

If the Ratio is significantly below 100 (below 80) , it might

be considered that the person should not be assigned to
this position or a transfer may be considered.

If the Ratio is between 80 to 100, the person may be

assigned to, or confirmed in the position and the person
needs to be trained to catch up with the position
requirements.
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Training and Development
 Training - Definition
Training is a systematic process

through which an organization’s

human resources gain knowledge

and develop skills by instruction

and practical applicability that

result in improved corporate

performance.

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 Development - Definition

It is the process of
systematic usage of
knowledge to meet
specific objectives or
requirements. It is
sustained by nature.

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 Differences between Training, Education &
Development

• Training is short term, task oriented and targeted

to achieve a change in Attitude (A), Skills (S) and
Knowledge (K) in a specific area. It is usually job
related.
• Education is a lifetime investment. It tends to be
initiated by a person in the area of his/her interest.
• Development is a long term investment on human
resources.

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 Training Development

1. Short-term focus/Task Oriented Long-term focus/Outcome

oriented

2. Group based Individually based

3. Focuses on “today” needs Leads to “tomorrow” results

4. 5% 95%

5. Means End

6. Knowledge Expansion

7. Piece of development Holistic

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 Importance of Training
1. Respond to technology changes affecting job requirements.

2. Respond to organizational restructuring.

3. Adapt to increased diversity of the workforce.

4. Support career development.

5. Fulfill employee need for growth.

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4/20/18 222
 O
N

T
H
E

J
O
B

4/20/18 223
 On-the-job training Methods
• Inexperienced employees learn through observing peers or
managers performing the job and trying to imitate their
behaviour.
• Training cost is low.

• Less disruptive as employees are always on the job, training is

given on the same machines and experience would be on
already approved standards.
• The trainee is learning while earning.

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 On-the-job Training Methods:
1. Coaching

2. Mentoring

3. Job Rotation

4. Job Instruct Technology (JIT)

5. Apprenticeship

6. Understudy
4/20/18 225
 C
O
A
C
H
I
N
G

4/20/18 226
 1. Coaching
• Coaching is a one-to-one training.

• It helps in quickly identifying the weak areas and tries to

focus on them.

• It offers the benefit of transferring theory learning to

practice.

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 M
E
N
T
O
R
I
N
G

4/20/18 228
 2. Mentoring
• The focus in this training is on the development
of attitude.
• It is used for managerial employees.

• Mentoring is always done by a senior person.

• It is also one-to-one interaction, like coaching.

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 J
O
B

R
O
T
A
T
I
O
N

4/20/18 230
 3. Job Rotation
• It is the process of training employees by rotating
them through a series of related jobs.
• Rotation not only makes a person well
acquainted with different jobs, but it also reduces
boredom and allows to develop rapport with a
number of people.
• Rotation must be logical.

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 JOB

INSTRUCTION

TECHNIQUE

4/20/18 232
4. Job Instructional Technique (JIT)
This is known as JIT which is used to teach workers how to do their current
job in four steps:

a) The trainee receives an overview of the job, its purpose and desired
outcomes.
b) The trainer demonstrates the job in order to give the trainee a model to
copy.

c) The trainee is then asked to copy the demonstration and practice them till
he/she becomes master to it.
d) Finally the trainee performs the job independently without any
supervision.

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 A
P
P
R
E
N
T
I
C
E
S
H
I
P

4/20/18 234
 5. Apprenticeship
• This method of training is applicable to those trades, crafts and technical fields
in which a long period is required for gaining proficiency.
• The trainees serve as apprentices to experts for long periods. They have to
work in direct association with and also under the direct supervision of their
masters.
• The objective of such training is to make the trainees all-round craftsmen. It is
an expensive method of training.
• Also, there is no guarantee that the trained worker will continue to work in the
same organization after securing training.
• The apprentices are paid remuneration according the apprenticeship
agreements.

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 U
N
D
E
R

S
T
U
D
Y

4/20/18 236
 6. Understudy
• In this method, a superior gives training to a subordinate
as his understudy like an assistant to a manager or
director (in a film).
• The subordinate learns through experience and
observation by participating in handling day to day
problems.
• Basic purpose is to prepare subordinate for assuming the
full responsibilities and duties.

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 Off-the-job Training Methods
• Off-the-job training methods are conducted
in separation from the job environment.
• Study material is supplied.

• There is full concentration on learning

rather than performing.
• There is freedom of expression.

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 Off-the-job Training Methods:
1. Lectures and Conferences
2. Vestibule Training
3. Simulation Exercises
a) Management Game
b) Case Study
c) Role Playing
d) In-Basket Exercise
4. Sensitivity Training
5. Transactional Analysis
4/20/18 239
 L
E
C
T
U
R
E

4/20/18 240
 1. Lectures and Conferences
• Lectures and conferences are the traditional and direct
method of instruction.
• It’s a verbal presentation for a large audience. However,
the lectures have to be motivating and creating interest
among trainees.
• The speaker must have considerable depth in the subject.
In the colleges and universities, lectures and seminars are
the most common methods used for training.

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 V
E
S
T
I
B
U
L
E

T
R
A
I
N
I
N
G

4/20/18 242
 2. Vestibule Training
• Vestibule Training is a term for near-the-job training.

• In vestibule training, the workers are trained in a prototype environment on

specific jobs in a special part of the plant.

• An attempt is made to create working condition similar to the actual workshop

conditions.

• After training workers in such condition, the trained workers may be put on similar

jobs in the actual workshop.

• This enables the workers to secure training in the best methods to work and to get

rid of initial nervousness.

• It prevents trainees to commit costly mistakes on the actual machines.

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 3. Simulation Exercises
• Simulation is any artificial environment exactly

similar to the actual situation.

• There are four basic simulation techniques used

for imparting training: management games, case

study, role playing, and in-basket training.

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 M
A
N
A
G
E
M
E
N
T

G
A
M
E

4/20/18 245
 (a) Management Games
• Properly designed games help to ingrain thinking habits, analytical,
logical and reasoning capabilities, importance of team work, time
management, to make decisions lacking complete information,
communication and leadership capabilities.
• Use of management games can encourage innovative mechanisms for
coping with stress.
• Management games orient a candidate with practical applicability of the
subject.
• These games help to appreciate management concepts in a practical way.

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 C
A
S
E

S
T
U
D
Y

4/20/18 247
 (b) Case Study
• Case studies are complex examples which give an insight into the
context of a problem as well as illustrating the main point.
• Case Studies are trainee centered activities based on topics that
demonstrate theoretical concepts in an applied setting.
• A case study allows the application of theoretical concepts to be
demonstrated, thus bridging the gap between theory and practice,
encourage active learning, provides an opportunity for the
development of key skills such as communication, group working and
problem solving, and increases the trainees” enjoyment of the topic
and hence their desire to learn.

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 R
O
L
E

P
L
A
Y
I
N
G

4/20/18 249
 (c) Role Playing
• Each trainee takes the role of a person affected by an issue and

studies the impacts of the issues on human life and/or the effects of

human activities on the world around us from the perspective of

that person.

• It emphasizes the “real- world” side of science and challenges

students to deal with complex problems with no single “right”

answer and to use a variety of skills beyond those employed in a

typical research project.

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 I
N

B
A
S
K
E
T

4/20/18 251
 (d) In-Basket Training
• In-basket exercise, also known as in-tray training,

consists of a set of business papers which may include

e-mail SMSs, reports, memos, and other items.

• The trainee is asked to prioritize the decisions to be

made immediately and the ones that can be delayed.

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 S
E T
N R
S A
I I
N
T I
I N
G
V
I

T
Y
4/20/18 253
 4. Sensitivity Training
• Sensitivity training is also known as laboratory or T-group training. This training is

about making people understand about themselves and others reasonably, which

is done by developing in them social sensitivity and behavioral flexibility.

• It is ability of an individual to sense what others feel and think from their own

point of view.

• It reveals information about his or her own personal qualities, concerns, emotional

issues, and things that he or she has in common with other members of the group.

• It is the ability to behave suitably in light of understanding.

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Sensitivity training Program comprises three steps

4/20/18 255
 T
R
A
N A
S N
A A
C L
T Y
I S
O I
N S
A
L

4/20/18 256
 5. Transactional Analysis
• It provides trainees with a realistic and useful method for analyzing
and understanding the behavior of others.
• In every social interaction, there is a motivation provided by one
person and a reaction to that motivation given by another person.
• This motivation reaction relationship between two persons is known
as a transaction.
• Transactional analysis can be done by the ego (system of feelings
accompanied by a related set of behaviors states of an individual).

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4/20/18 258
 Child
• It is a collection of recordings in the brain of an individual of
behaviors, attitudes, and impulses which come to him/her
naturally from his/her own understanding as a child.
• The characteristics of this ego are to be spontaneous, intense,
unconfident, reliant, probing, anxious, etc.
• Verbal clues that a person is operating from its child state are
the use of words like “I guess”, “I suppose”, etc. and non verbal
clues like, giggling, coyness, silent, attention seeking etc.

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 Parent
• It is a collection of recordings in the brain of an individual of
behaviors, attitudes, and impulses imposed on her in her childhood
from various sources such as, social, parents, friends, etc.
• The characteristics of this ego are to be overprotective, isolated,
rigid, bossy, etc.
• Verbal clues that a person is operating from its parent states are
the use of words like, always, should, never, etc. and non-verbal
clues such as, raising eyebrows, pointing an accusing finger at
somebody, etc.

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 Adult
• It is a collection of reality testing, rational behaviour, decision
making, etc.
• A person in this ego state verifies, updates the reaction which
she has received from the other two states.
• It is a shift from the taught and felt concepts to tested concepts.

• All of us show behaviour from one ego state which is responded

to by the other person from any of these three states.

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 Kirkpatrick's Four-Level Training Evaluation Model
Donald Kirkpatrick, Professor Emeritus at the University of Wisconsin and past president of the

American Society for Training and Development (ASTD), first published his Four-Level Training

Evaluation Model in 1959, in the US Training and Development Journal.

The model was then updated in 1975, and again in 1994, when he published his best-known work,

"Evaluating Training Programs."

The four levels are:

1. Reaction

2. Learning

3. Behavior

4. Results

4/20/18 262
 Level 1: Reaction
• This level measures how your trainees (the people being trained),
reacted to the training. Obviously, you want them to feel that the
training was a valuable experience, and you want them to feel good
about the instructor, the topic, the material, its presentation, and
the venue.
• It's important to measure reaction, because it helps you understand
how well the training was received by your audience. It also helps
you improve the training for future trainees, including identifying
important areas or topics that are missing from the training.

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 Level 2: Learning
• At level 2, you measure what your trainees have learned. How much
has their knowledge increased as a result of the training?
• When you planned the training session, you hopefully started with a
list of specific learning objectives: these should be the starting point
for your measurement. Keep in mind that you can measure learning in
different ways depending on these objectives, and depending on
whether you're interested in changes to knowledge, skills, or attitude.
• It's important to measure this, because knowing what your trainees are
learning and what they aren't will help you improve future training.

4/20/18 264
 Level 3: Behavior
• It can be challenging to measure behavior effectively. This is a longer-term
activity that should take place weeks or months after the initial training.
• Consider these questions:
• Did the trainees put any of their learning to use?
• Are trainees able to teach their new knowledge, skills, or attitudes to
other people?
• Are trainees aware that they've changed their behavior?
• One of the best ways to measure behavior is to conduct observations and
interviews over time.

4/20/18 265
 Level 4: Results
• Of all the levels, measuring the final results of the training is likely to be the
most costly and time consuming. The biggest challenges are identifying which
outcomes, benefits, or final results are most closely linked to the training, and
coming up with an effective way to measure these outcomes over the long
term.
• Here are some outcomes to consider, depending on the objectives of your
training:
o Increased employee retention
o Increased production
o Higher morale
o Reduced waste
o Increased sales
o Higher quality ratings
o Increased customer satisfaction
o Fewer staff complaints

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Compensation Management
 Compensation
Compensation is the
benefit extended to the
employees for their
contribution to achieve
business success.

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4/20/18 269
 Indirect Compensation
Indirect Compensation
are the non-monetary
benefits provided to the
employees in addition to
the monetary benefits as
per the company policies.

4/20/18 270
 Direct Compensation
Direct Compensation are
the monetary benefits
provided to the employees
for their contribution in the
organization. A part of
which is fixed.

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 Salary
A fixed regular payment, typically paid on a
monthly basis but often expressed as an
annual sum, made by an employer to an
employee, especially a professional or white-
collar employee.

4/20/18 272
 Salary Break-up

Salary = [(1) + (2) + (3) + (4)] – (5)

1 = Basic
2 = Dearness Allowance
3 = House Rent Allowance
4 = Other Allowances
5 = Deductions

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Component of Salary (per annum or p.a) Amount
Basic Salary 480,000
Dearness Allowance 48,000
House Rent Allowance 96,000
Conveyance Allowance 12,000
Entertainment Allowance 12,000
Overtime Allowance 12,000
Medical Reimbursements 15,000
Gross Salary 6,75,000
Tax 57,103
Employee PF contribution(12% of Basic) 57,600
Professional Tax 2400
Total Deductions 1,17,103
Net Salary = Gross Taxable Salary – Tax =6,07,200- 1,17,103=4,90,097
Net Monthly Salary =490097/12=40,841.41

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 Wage
A wage is monetary compensation (or
remuneration) paid by an employer to a
worker in exchange of work done, especially
for manual or unskilled work.

4/20/18 275
 Minimum Wage
Minimum wage is the lowest hourly, daily or
monthly remuneration that employers may
legally pay to workers. Equivalently, it is the
lowest wage at which workers may sell their
labor.

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 Living wage
• Living wage is defined 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 comfort, including
education for his children, protection against ill-health,
requirements of essential social needs and a measure of insurance
against more important misfortunes, including old age.
• Living wage is more than the concept of minimum wage. Such a
wage is determined keeping in view the national income and paying
capacity of industrial sector.

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 Fair Wage
• The concept of fair wage is linked with the capacity of the industry to
pay. 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 to be set by the capacity of the industry to pay. Thus, fair
wage depends on different variables affecting wage determination.
Such factors are labor productivity, prevailing wage rates, the level of
national income and its distribution and the capacity of industry to pay.

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 Factors Affecting Wages
• Demand for and supply of labor
• Labor unions
• Cost of living
• Prevailing wage rates
• Ability to pay
• Job requirements
• State regulation
• Increment system

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 Minimum Wages Act, 1948
• The Minimum Wages Act 1948 sets the minimum wages

that must be paid to skilled and unskilled workers.

• Varied from 118 rupees per day in Bihar to 1000 rupees per

day in Kerala (with local cost of living allowance included).

• State governments set a separate minimum wage for

agricultural workers.

4/20/18 280
 Example in West Bengal

Scheduled Area Unskilled Semi- Skilled

Employments Rs. skilled Rs.
Rs.

Agriculture WB 5347.00 5882.00 6471.00

(206.00) (226.00) (249.00)
(without food); (without (without food);
4966.00 (191.00) food); 6084.00 (234.00)
(with food) 5486.00 (with food)
(211.00)
(with food)

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 Equal Pay Act of 1963
Requires that men and women be paid the

same for performing substantially similar

jobs with limited non-gender exceptions

(e.g., merit & seniority).

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 Payment of Bonus Act, 1965
Every employee shall be entitled to be paid
by his employer in an accounting year, bonus,
provided he has worked in the establishment
for not less than thirty working days in that
year.

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 Payment of Gratuity, 1972
The Payment of Gratuity Act 1972 is a social
security enactment.

Gratuity shall be paid to an employee on the

termination of his employment after she/he has
rendered continuous service of not less than 5
years i.e. on superannuation, retirement,
resignation, death or disablement due to accident
or disease.

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 Gratuity Calculation
Calculation: W x Y x 15/26 where W = Last Wage
drawn i.e., basic + DA
Y = number of completed years of continuous
service (six months or less to be ignored and
more than six months to be counted as full year.
15 = 15 days salary
26 = No. of working days in a month.

Maximum Limit: Rs.3.5 lacs. (w.e.f 24-09-1997)

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 Incentives
Incentives are the additional payment to employees
besides the payment of wages and salaries. Often
these are linked with productivity, either in terms of
higher production or cost saving or both. These
incentives may be given on individual basis or group
basis.

4/20/18 286
 Types of incentive scheme

• Piece rate
• Profit sharing
• Profit-related pay
• Share-related pay
• Performance-related pay

4/20/18 287
 Each unit produced over

the target is rewarded

Piece Rate
System with a bonus or

commission payment.

4/20/18 288
 Profits are shared

Profit Sharing
equally or as agreed

by partners.

4/20/18 289
 Employees are paid a

bonus as a percentage
Profit
Related of the profit amount
Pay
made by a company.

© PhotoDisc
4/20/18 290
 Employees are offered
some shares or the
Share possibility of purchasing
Ownership
some shares as an
incentive.

© PhotoDisc
4/20/18 291
 Employees’ annual salary
is linked to their
performance in the job.
Performance The size of payment is
Related Pay
determined by the
achievement of the set
target.

© PhotoDisc
4/20/18 292
 Fringe Benefits
Fringe benefits include such benefits which are
provided to the employees either having long-term
impact like provident fund, gratuity, pension; or
occurrence of certain events like medical benefits,
accident relief, health and life insurance; or
facilitation in performance of job like uniforms,
Canteens, recreation, etc.
4/20/18 293
 Perquisites
These are normally provided to managerial
personnel either to facilitate their job performance
or to retain them in the organization. Such
perquisites include company car, club membership,
free residential accommodation, paid holiday trips,
stock options, etc.

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 CASE STUDY 1

4/20/18 295
XYZ organization is a medium sized company which produces electrical
components. The performance management policy of the company is
based on the principle of rewarding the efficient employees and
churning and eliminating the incompetent employees. When the
performance declines beyond permissible levels, a warning is issued to
him/her and is usually asked to explain the reason for decline. In the
absence of any convincing reply or significant improvement within a
reasonable time frame, the company decides to transfer. If the poor
performance continues, his/her services are terminated after due
notice. This is followed for all levels of employees. With the current
system, the company has succeeded in maintaining quality of the
products.
4/20/18 296
 Questions
a)Comment on the practice of the organization.

b)In case, one of your friends who works as a

supervisor needs to be terminated because of
poor performance, how will you tell this to
him?

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 CASE STUDY 2

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A recent campaign by organized labour unions brought the issue of
executive compensation into the public eye. Media coverage of
executive compensation concerns has been extensive over the last few
weeks with articles in national publications and a featured story on a
television special, in addition to stories on local news stations. This
extensive coverage has highlighted public concerns of the high level of
pay that top executive receive. The union promotes an executive
compensation awareness campaign every year as a strategy to build
awareness of perceived inequities between the pay of CEOs and the
frontline employees. Such awareness often prompts employees to
consider forming a union, resulting in the growth of national unions.

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 The publicity has caused some turmoil at Oakwood lawns.
For the first time, the company’s CEO Pay is featured as an
example of perceived excesses in the executive suite. Several
field managers have been in touch with Don Henry, the
director of human resources, to report that employees are
outraged at the rate of pay of the company CEO and other
top executives. In addition to their desire to remain union
free, Don also knows that such outrage could lead to low
morale and other problems at Oakwood.

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The union targeted Oakwood because it is a big company that has faced some
financial challenges. The landscaping company has more than 15000
employees in offices throughout the Midwest and most of their employees are
frontline labourers. The media coverage has been extensive in the area and
many company employees who viewed the story were surprised to learn the
CEO is among the highest paid in the United States. The news was especially
difficult to hear as the company recently announced that employees would
not receive an annual pay increase due to the financial challenges the
company is facing. The Oakwood CEO’s annual salary is $975000. Add in a
bonus, stock awards, retirement benefits, and other benefits and his total
compensation is close to $10 million a year. The average landscaping
technicians is paid $28000 annually. The disparity is clear and Don must now
plan a response to address the employees’ concerns.

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 Questions
• What additional information about the CEO’s pay
package should Don identify to potentially share with
the employees?
• How can Don explain the pay disparity to the
employees to ease their concerns about the fairness
of the CEO’s pay?

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 What is IR ?
• refers to all types of relationships between employer and
employees, trade union and management, works and union
and between workers and workers.
• the complex interrelations among managers, workers and
agencies of the governments.
• the process of management dealing with one or more unions
with a view to negotiate and subsequently administer
collective bargaining agreement or labour contract.
 Characteristics of IR in India
• Employer/Management in Retrospect and Historically used to consider
Trade Unions as a necessary evil of the Industrial System
• The trade union perceive their main task is to challenge and oppose
decisions of employer/management
• Trade unions are poorly organized in the country
• The parties are largely in disagreement over the cope of collective
bargaining and various issues to their negotiation process
• Bargaining between employers and unions is very much centralized
• The employers are highly organized
• The Indian Industrial Relations is changing over time

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 Evolution of IR in India

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 First Phase ( 1947-66; 1st & 2nd five-year plans):
• Import-Substitution Industrialization

• National Capitalism

• Formation of large employment-intensive public enterprises

• Largely centralized bargaining with static real wages.

• Relative industrial peace

• Growth of public sector unionism.

• Government controlled & regulated IR.

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 Second Phase ( 1967-80; 4th & 5th five-year plans):

• Considerable slowdown in employment growth & declining

real wages.

• Crisis in IR system : massive strikes & industrial conflict,

multiple unionism & decline in strength.

• Government loosing control over the IR system.

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Third Phase ( 1981-91; 6th & 7th five-year plans):

• Variation in wage growth: skilled versus unskilled, labour

productivity increases, period of “jobless” growth.

• Rise of ‘independant enterprise unionism, several

city/regional IR systems operating

• Government slowly withdrawing from IR system

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 Central Labour Acts

Laws related to Industrial Relations Laws related to Equality and Empowerment of Women

The Trade Unions Act, 1926 The Maternity Benefit Act, 1961
The Trade Unions (Amendments) Act, 2001 The Equal Remuneration Act, 1976
The Industrial Employment Act, 1946
The Industrial Disputes Act, 1947

Laws related to Deprived and Disadvantaged Sections of the Society

Laws related to Wages

The Bonded Labour System (Abolition) Act, 1976

The Payment of Wages Act, 1936 The Child Labour (Prohibition & Regulation) Act, 1986
The Payment of Wages (Amendment) Act, 2005
The Working Journalist Act, 1958
The Minimum Wages Act, 1958 Laws related to Social Security
The Payment of Bonus Act, 1965

The Employees’ State Insurance Act, 1948

Laws related to Working Hours, Conditions The Unorganised Worker’s Social Security Act, 2008
of Services and Employment

Laws related to Employment and Training

The Factories Act, 1948
The Plantation Labour Act, 1951
The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
The Mines Act, 1952
The Apprentices Act, 1961
The Contract LabourAct, 1970
The Sales Promotion Employees Act, 1976
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 IR Acts and Laws

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 Trade Unions Act, 1926:
• Till 2001, any 7 workers can form a union; amended in 2001;
10% or 100 workers in a unit, whichever is less, minimum still 7
• Distinction between ‘registration’ (with the government) &
‘recognition’ (by the employer as bargaining agent); neither
mandatory under this Act, (but some states have laws).
• Bargaining agent: ‘secret ballot’ versus ‘check off’ (government
verifies membership)

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 Industrial Disputes Act, 1947:
Objective: To settle industrial disputes & secure industrial peace

Problems:

1. No procedures to determine the ‘representative’ union within

a single bargaining unit

2. Employers not legally obliged to bargain with unions

3. Thus, no incentives for either party to engage in collective

bargaining

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Most contentious issue:

1. Firm employing more than 100 (reduced form 300) will need
state government’s ‘prior permission’ before any prposed
layoffs

2. Since nearly impossible to downsize during downturns, firms

reluctant to hire permanent employees during upturns

3. These laws partly responsible for pushing newly created jobs

into low productivity firms

4. Recent OCED computation (2007): India’s laws more stringent

than Brazil, China & all but two OCED countries.

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 Trade Union

• According to Lester, a trade union is “an association of

employees designed primarily to maintain or improve the

condition of employment of its members”.

• A trade union performs two types of functions-

militant(strikes,lockouts,gheraos) and ministrant (to provide

the employees with benefits in times of need).

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 Evolution of Trade Union in India
• Trade unions were largely sectarian in character, they lacked definite aim and had no striking power.
1890-
1918

• During this period many ad hoc unions disappeared and several large and medium sized unions came into
1919- existence.
• India’s first central organisation of labour, the AITUC was set up in 1920
1923
• This period saw the rise of Left-wing Trade unions as the political situation in India was favourable for the
reception of Communist ideology.
1924-
• Number of Acts like Mines Act,Trade Unions Act,Workmen’s Compensation Act were passed
1935

• There was phenomenal increase in the number of trade unions and their members due to the passing of
1936- the Government of India Act which gave increased representation of labour in the Legislative Assemblies.
1939

• Second World War started in 1939 and it led to a rift in AITUC leadership wherein many leaders in AITUC
1940- wanted to form a seperate Union thus giving rise to INTUC in May 1947
1946
• There was large-scale unionisation of white-collar workers whereby white collar workers joined the
already existing unions of blue-collar workers.
After • National Commission on Labour was set up in 1966.
1947
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 Case Study : Heavy Engineering Corporation
• This case represented a typical problem on the crucial issue of recognition and the inadequacy of legal provisions
on recognition

Summary

• A new tripartite wage agreement was signed between the management of HEC,
the Bihar Labour Commission and the Hatia Project Workers’ Union
• The other agreement rejected the agreement and declared a strike till the agreement
was abrogated and few others terms and conditions were granted
• Then strike, lockout and confining followed claiming a complete disruption of
normal functioning
• Then the CE justified the signing of the agreement with the HPWU and the
production resumed after a long settlement
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 Case Study : Bharat Heavy Electricals Ltd.
• This case upsets the traditional view of industrial relations as one between management and labour
and how the lack of recognition affected the organisation

Summary

• Initially there was a single union, BHEL Employees’ Association affiliated to the INTUC
• A union representative was elected and all the elected persons formed the union executive
• A split occured in the union and by 1986 six unions emerged in the plant and it was decided that the
voting became based on the maximum numer of votes for a union
• A year later INTUC split causing major problems and the recognised union was reduced to less then
the majority, but still INTUC refused to concede
• The AITUC was joined by other non-recognised unions in feelings of frustration at the
management’s refual to listen to their grievances, who appeared to discuss issues with the INTUC
union
• The execcutive’s association organise a meeting of all unions but the INTUC unions refused to attend
and claimed that the executives couldnot enforce discipline because of their corruption
• Although the association got some recognition form the top management, the feelings of frustration
and insecurity continued to haunt the managers

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 Collective Bargaining
What is Collective Bargaining
• a method by which problem of wages and conditions of
employment are resolved peacefully and voluntarily between
labour and management
• a process of bargaining between the employers and their workers
by which they settle their disputes among themselves relating to
employment or non-employment or terms of employment or
conditions of labour of the workmen

Collective Bargaining has two pronged concerns

• Chalking out a broad contract of employment relationship between
employers and workers
• The administration of the contract

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 Pre-requisites for Collective Bargaining:
• Effective negotiations and enforcement requires a systematic
preparation of the base or ground for bargaining which involves
the following steps
• Recognition of the Bargaining Agent

• Deciding the Level of Bargaining

• Determining the Scope and Coverage of Bargaining

• Spirit of Give and Take

• Good Faith and Mutual Agreement

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 History of Collective Bargaining in India
• Bargaining was in the stage of infancy
• It was not a very common method of regulating labour-management
relations in India
1920-1950

• In this period actual emergence of bargaining was witnessed

• It was established as a method of settlement of industrial disputes and
determination of terms and conditions of employment
1951-1969

• Collective bargaining took a more general form

• It widened its scope from plant or enterprise level to the industry or the
national level
1970 • During this period some new trends in Collective Bargaining also developed
onwards

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 Collective Bargaining with all Unions of AI
 8 recognized unions , Major problem with pilot guild but other
unions entangled in it
 Govt. intervention, allocate negotiator (N.I.T)
 Pilot guild negotiation success but other unions revolted against
it
 High court intervention and negotiation completed after C.B.
with all other unions
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 What are Industrial Disputes ?
• Any disputes or differences between employers and
employees, or between employers and workmen, or between
workmen and workmen, which is connected with the
employment or non-employment or the terms of
employment or with the conditions of labour, of any person
• It is disagreement and difference between two disputants,
labour and management, on any matter concerning them
individually or collectively

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 Industrial Disputes
Weapons used by labour and management during times of industrial disputes

Industrial Disputes

Weapons of Labour Weapons of

Management
Strikes Boycott Picketing Gherao

Primary Secondary
Economics
Employers’s Lock Termination of
General
Association Out Service
Stay-in
Slow down

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Percentage Distribution of Industrial Disputes by Causes
35

30

25

20

15
1963
1973
10 1983
1991
1992
5

0
s s t k nd s
nce onu en wor e use
wa B ch
m f vid Ca
lo n ro di r
al tre u d he
nd Re ho an Ot
s a
and lin
e
age e ip
w av sc
y Le di
la ar In
S
 Case Study : Reliance Industries
• This case study depicts that how a single and simple decision can create an
foreseen reaction in the company

Summary

• The company’s leading organiser was transferred from the regional office to
company’s godown
• As a result the workers get very agitated and were pressurized to resign
• The union protested and the dispute thus raised was referred to conciliation
• After several meetings and reference to the indsutrial tribunals, the
problems was solved with the intervention of the Labour Secretary and
Ministry of State for Labour
 Employee Grievances
• A grievance means any sort of discontentment or
dissatisfaction arising in an employee related to the
enterprise where he is working. It happens when an
employee feels something that has happened or is
going to happen is unfair,unjust or inequitable.

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 Case Study : Indian Oil Corporation
This case revealed that politicalisation was a result more of an abdiction of responsibility by the management in
the matter of industrial relations

Summary

• The first recognised union demanded and signed an agreement with the management for
payment of bonus based on profits and was not affiliated to any central organisations
• The dismissed employees formed another union affiliating to CITU, demanded
recognition form the management, which was refused
• Elections were conducted, indicating the majority for the first union, but the second
union claimed that the results were manipulated
• Following this, several troubles and agitations broke out again and the first union changes
its affiliation form AITUC to INTUC
• The managemnt agreed to secret ballot elections once again but the corruption and
collusion with agencies, serious violations of the promotion policy were in the list of
grievances.
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 Worker’s Participation in Management
• Workers Participation in Management is a system of communication and

consultation, either formal or informal, by which employees of an

organisation are kept informed about the affairs of the undertaking and

through which they express their opinion and contribute to management

decisions.

• It is distribution of social power in industry so that it tends to be shared

among all who are engaged in the work rather than concentrated in the

hands of minority.

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 Case Study : Fertilizers and Chemicals Travancore Ltd.
This case reveals that how several enterprises inroduced suggestions’ schemes or minor consultation with
the unions and held these up as examples of participative cultute

Summary

• The managers were easily accessible to employees and discussions were held with
them without any formal agreements
• The management decided to open up organisational system, conducting sessions
with senior managers, middle managers and employees – this increased the man
power
• Several joint management action groups were constituted, persisted in bringing up
new ideas related to grievances and conditions of service
• In complex issues, study teams comprising union office-bearers together with the
management were established to collect data, analyse report, before decisions
were taken
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 Case Study : Jaipur Metals and Electricals Ltd.
This case depicts that how the agendas of workers and their committees and their proceedings
became beneficial for the enterprise in aparticular context

Summary

• In 1923 the company flourished in the manufacture of house service metres inspite of the
restriction on the raw materials
• In the mid 1940s the company made losses, a special scheme to rationalise employment was
adopted to make partial recovery
• The government of Rajasthan took over its management and financial institutions, which had
acquired majority share-holding in the undertaking through debt onversions and a marginal
profit was earned
• Then new chief executive began negotiations with the workers which culminated the
agreement – a majority of the equity was passed to the workers through a credit operative
• A major financial restructuring was achieved with highest-ever turnover of Rs 11 crore
• The management created several other commitees for planning, production, sales and the
suggestions were made by the committee and was approved by the managing director
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 Labour Welfare
What is Labour Welfare?

• Labour welfare activity in India was largely influenced by

humanatarian principles and legislation.
• During early period of industrial development, efforts
towards worker’s welfare was made largely by social
workers, and other religious leaders, mostly on
humanatarian grounds.

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 Case Study : Durgapur Steel Plant
This case discusses how the representatives of the union discusses with the
management the varuous problems facing the industry

Summary

• The participation by the worker’s representatives before the reconstitution had

not been of much significance
• The worker’s representative from Durgapur Steel Plant has been complaining
that he has not been receiving notices and agenda of the meetings in time
• In 1972 Joint Consultative Machinery was established and it functioned for
one year satisfactorily
• The Joint Consultative Machinery suggested that in view of the difficulty of
the State Level Committee operating effectively, the Plant Level Commitee
itself should be converted into tri-partite body with the Government
participating in it in addition to the management and unions.
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 Case Study : Tata Iron and Steel
Company
This case discusses how the committees operate within defined
areas and how they have helped in settlement of disputes

Summary
• The first committee, Joint Works Commitee ceased to function in
1919 due to the fact that the company felt that an increasing
measure of association of employees with the management is
desirable
• In 1957 the two committees were decentralized into five zonal
committees each covering production problems
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 Future of IR in India
• In our presentation we have discussed Industrial Relation
Strategy vide which we could know different strategies for
industrial relations and could also know how the Industrial
Disputes aree settld under the provisions of Acts as applicable
to the concerned dispute.
• In our discussions “Future of Industrial Relation in India”, we
shall discuss the current scenario of industrial relation in India
and how workers influence such relations

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• From the various reports certain issues are emerging which are posing
challenges to the three factors viz., the employer, the employee and the
government
- Strengthening collective bargaining by trying to determine a sole bargaining
power for negotiation

- Gaps that are occurring as a result of the variations act as enacted by State
and Central Government

- Workers participation in management and failure of these schemes to be

looked into.
• Keeping in mind the above issue and the three factors we have to evaluate and
decide future strategy, which is to be adopted in managing personnel and
industrial relations. The strategy will depend on the values, objectives,
structures available and the environment in which they have to work

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