OBJECTIVE

 To prepare the students to understand the changing

environment and its implications for managing the human
resources to achieve competitive advantage and corporate
excellence.

 To make the students understand the linkages between

corporate mission, vision, strategies, policies and human
resource management.

 To help the students to understand the intricacies of

human resource management and acquire skills in
affectively managing human resources in what ever
functional areas of management they would be engaged
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Best organisations succeed not
because of the people but
because they have right people

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 Context
• People create excellence. They are the
real assets of an organisation. If treated
well, they can take organisations to
commanding heights. HR Managers need
to balance the aspirations of people with
organisational demands carefully.

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 Nature and Scope of
Human Resource Management

After reading this chapter, you should be able to

• Understand the Nature, Scope and Objectives of HRM
• Definition of HRM
• Evolution of HRM
• Difference between PM and HRM
• HRM model
• Function of HRM
• Challenges faced by HRA4professionals
HRM/ EPGP
 Meaning
• HRM is a Process of bringing people and
organisations together so that the goals of
each are met.
• To secure the best from people by winning
their whole hearted co-operation.
• It is defined as the art of procuring,
developing and maintaining competent
workforce to achieve the goals of the
Organisation in an effective and efficient
manner
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 EVOLUTION OF HRM
 The commodity concept : Labor considered as a commodity to
brought and sold.
 The Factor of Production Concept : Better working conditions and
higher earning
 The Paternalistic Concept : Collective Bargaining
 Fatherly and Protective Attitude.
 Welfare Schemes like Health and housing facilities,
Pension Plans Etc
 The Humanitarian Concept : Social and Ethical Satisfaction,
Hawthorne Experiment
 The Behavioral Human Resource Concept : Motivational and Group
Dynamics.
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 Resource : An Asset and an Opportunity
DIFFERENCE BETWEEN HRM AND PM
Dimensions PM HRM
1. Employment Careful delineation of Aim to go beyond
Contract written contracts contract

2. Guide to Procedures Business Needs

Management Action

3. Behavior referent Norms / Customs and Values/mission

practices

4. Key relations Labor Management Customer

5. Speed of Decision Slow Fast

6. Management Role Transactional Transformational

Leadership

7. Communication Indirect Direct

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 Dimensions PM HRM
8. Priced Management Negotiation Facilitation
skills

9. Selection Separate marginal Integrated key tasks

tasks

10. Pay Job Evaluation (Fixed Performance Related

Grades)

11. Conditions Separately negotiated Harmonization

12. Labor Collective bargaining Individual contracts

Management contracts
13. Job categories Many Few
and Grades

14. Job Design Division of Labor Team Work

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 Dimensions PM HRM
15. Conflict Handling Reached Temporary Manage climate and
truce culture
16. Training and Controlled access to Learning companies
development courses
17. Focus of attention Personnel Wide ranging cultural.
for interventions Procedures Structural and
Personnel strategies

18. Respect for Labor is treated as People are treated as

Employees tool which is assets to be used for
expendable and the benefit of the
replaceable organization, its
employees and the
society as a whole.
19. Shared interests Interest of the Mutuality of interests
organization are
uppermost
20. Evolution Precedes HRM Latest in the
Evolution of the
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 Definition
• Human Resource Management is
Planning, Organizing, Directing, and
Controlling of the Procurement,
Development, Compensation, Integration,
Maintenance and Separation of Human
Resources to the end that individual
organizational and Social Objectives are
accomplished.

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HRM model

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 Definition

• Management • Operative • To Achieve

Function Functions – Individual
– Planning – Procurement – Functional
– Organizing – Development – Organisational
– Directing – Compensation – Societal
– Controlling – Integration
– Maintenance
– Separation

Objectives are accomplished

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A4 HRM/ EPGP
HRM Trends in a Dynamic Environment

The job of an HR manager is to balance the

demands and expectations of the external
groups with internal needs and achieve the
assigned tasks in a an efficient way. The
internal environment (such as mission,
policies, culture, structure, etc.) also affects
the job of an HR manager. The HR manager
has to strike a happy balance between these
internal and external demands and emerge as
a ‘winner’.
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Challenges faced by HR Professionals

• Globalisation
• Corporate Reorganisation
• New Organisational forms
• Changing demographics of workforce
• Changing employee expectations
• New Industrial Relations approach
• Renewed focus on people
• Managing the managers
• Interests of the weaker sections of the society
• Talent Management and
• Employee Retention A4 HRM/ EPGP
 CHAPTER: 2
HUMAN RESOURCE PLANNING

After reading this chapter, you will be able to

1. Define HRP

2. Identify the five steps involved in HRP

3. Identify the employee planning process, delineate

different stages in the process and describe each step.

4. Identify pre requisites for successful planning and list

the various barriers which render planning ineffective.

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 Human Resource Planning
• Human Resource Planning aims at getting the
right number of qualified people into the
organisation at the right time at right cost. The
process involves assessing current human
resources, estimating the supplies and demand
for labour and matching demand with current
supplies of labour

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The HRP Process

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 Manpower Planning Process - Corporate Analysis
(a). Objectives and Strategies
(b). Company Organization Plans
(c). Market forecasts and Budegets.
(d). Financial Plans
(e). Production Targets.

Demand Forecast Manpower Gaps Supply Forecast

(a). Numbers
(b). Job Categories
(c ). Skill requirements.
(a). Surplus of Numbers (a). Manpower Inventory
and skills (b). Losses and addition
(b). Shortages (c ).External Supply

Manpower Plans
(a). Recruitment and Selection
(b). Training and Development
(c ). Redeployment/ Retrenchmant
(d). Redundancy
(e). Retention/ Internal Mobility
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(f). Productivity
 Calculating Manpower Requirements
Years
1 2 3 4 5
1. Manpower Demand
a. Numbers required at the beginning of the year
b. Changes forecast during the year
c. Requirements at the end of the year [a+b]
2. Manpower Supply
a. Numbers available at the beginning of the year
b. Additions due to transfers and promotions
c. Losses due to separation, etc.
d. Numbers available at the end of the year
[a+b+c]
3. Requirements
a. Deficit or Surplus (1-2)
b. Loss out of those recruited during the year
c. Additional numbers required during the year
[a+b]
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Importance of HRP:
It is to identify

1. Future Personnel needs.

2. Coping with changes in Technology, Markets, Products &

Government regulations.

3. These changes bring changes in job content, skill

demands, and number and type of personnel.

4. Creating Highly Talented Personnel.

Eg: Organisations perished because they were not able to
attract talented people

5. International Strategies, Expansion strategies depend

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upon HRP
Importance of HRP: (Cont…d)

6. Ability to fill key jobs with foreign nationals and the re-
assignment of employees from within or across national
borders is a major challenge facing international business.

7. Foundation for personnel functions: provides essential

information for designing and implementing personnel
functions such as Recruitment, Promotions, Transfers etc.

8. Increasing investments in HRP because it can increase

value (quality of workforce)

Other benefits:
1. Top Management can take better decision.
2. Better planning of assignment to develop managers can
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be done.
Factors affecting HRP:

1. Type and Strategy of Organisation.

2. Organisational growth cycles and planning.

3. Environmental uncertainties.

4. Time horizons.

5. Type & quality of forecasting information.

6. Nature of Jobs being filled.

7. Off-loading the work

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 PROGRAMME PLANNING OPTIONS

Hire new full-time employees.

Offer incentives for postponing retirement.
Re-hire retired employees on part-time basis.

If a shortage of employees Attempt to reduce turnover.

is expected … Bring in overtime for present staff.
Subcontract work to another company
Hire temporary employees.
Re-engineer to reduce needs

Do not replace employees who leave.

Offer incentives for early retirement.
Transfer or re-assign excess employees.
If a surplus of employees is
expected … Use slack time for employees training or
equipment maintenance.
Reduce work hours
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Lay-off employees
 CHAPTER: 3
JOB ANALYSIS AND DESIGN

After reading this chapter, you will be able to

1. Understand the nature of Job analysis and describe the

process of conducting job analysis.

2. Understand that the next logical step to job analysis is

job design and describe the factors which affect job
design.

3. Identify the various techniques of job design and

explain each of them.
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Information Gathering

This step involves decisions on three issues viz;

1. What type of data is to be collected?

2. What methods are to be employed for data collection.

3. Who should collect the data?

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 Job Analysis
It involves “the identification and precisely
identifying the required tasks, the knowledge and
the skills necessary for performing them and the
conditions under which they must be performed”.

Job analysis is the process of studding and

collecting information relating to the operation and
responsibilities of a specific job.

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 USES OF JOB ANALYSIS

HRP

Recruitment & Selection

Training & Development

Job Description Job Evaluation

Job Analysis

Job Specification Remuneration

Performance Appraisal

Personnel Information

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Safety and Health
A4 HRM/ EPGP
 METHODS OF COLLECTING JOB DATA

Observation Interviews Questionnaire

Job Data

Technical
Check lists Diary
Conference
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 Specimen of Job Description
Title • Compensation manager
Code HR/2310
Department Human Resource Department
Summary Responsible for the design and
administration of employee
compensation programmes.
Duties • Conduct job analysis
• Prepare job descriptions for
current and projected positions
• Relate salary to the performance
of each employee Conduct
periodic salary surveys

Working conditions Normal, Eight hours per day. Five

days a week

Report to Director, Human Resource

Department
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 Job Specification
Education MBA with specialisation in
HRM/MA in social work
Experience A degree or diploma in
Labour Laws is desirable
• At least 3 years experience in a
Skill, Knowledge, Abilities similar position in a large
manufacturing company
• Skill in writing job descriptions,
in conducting job analysis
interviews, in making group
presentations.
• Ability to conduct meetings, to
plan and priorities work.
Work Orientation Factors • The position may require upto
15 percent travel
Age • Preferably below 30 years
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 STRATEGIC CHOICES

Strategic Choices

Gather Information
Uses of Job Description and Job Specification
• Personnel Planning
Process Information • Performance Appraisal
• Hiring
• Training and Development
Job Description
• Job Evaluation and Compensation
• Health and Safety
Job Specification • Employee Discipline
• Work Scheduling
• HRM/
A4 Career Planning
EPGP
Source: Adapted fro Personnel/Human Resource Management by Leap and Crino, p.121
 Sources of Job data

Non-human Sources Human Sources

Existing job descriptions and specifications Job analysts

Equipment maintenance records Job incumbents
Equipment design blueprints Supervisors
Architectural blueprints of work area Job experts
Films of employees working
Training manuals and other job training materials
Popular literature such as magazines and newspapers

Source: Cyntia D. Fisher, et. Al., Human Resource Management, Houghton Miffin, 1997, p. 140.

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Types of Job Analysis information:

I. Work Activities

A. Description of work activities (tasks)

1. How is a task performed?

2. Why is a task performed?

3. When is a task performed?

B. Interface with other jobs and equipment

C. Procedures used

D. Behaviours required on the jobs.

E. Physical movements and demands of the jobs.

A4 HRM/ EPGP Continued…….

Types of Job Analysis information:

II. Machines, Tools, Equipment and Work Aids Used

A. List of machines, tools, etc. used

B. Materials processed with items

C. Products made with items

D. Services rendered with items

III. Job Context

A. Physical working conditions

1. Exposure to heat, dust, toxic substances

2. Indoor versus outdoor environment

B. Organisational context
A4 HRM/ EPGP Continued…….
 Types of Job Analysis information:

C. Social context

D. Work schedule

E. Incentives (financial and non-financial)

IV. Personal Requirements

A. Specific skills

B. Specific education and training

C. Work experience

D. Physical characteristics

E. Aptitudes

Source: Leap and Crino, Personnel/Human Resource

A4 HRM/Management,
EPGP p. 127.
 Job Design

Job design is an attempt to match the job

requirement, with the capabilities of the job holder.

Job Rotation, Job Enlargement & Job Enrichment

are techniques of Job Design.

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A4 HRM/ EPGP
 JOB ENRICHMENT AND ITS OUTCOMES

Job Characteristics Psychological Needs Outcomes

Feedback Knowledge of Results

Motivation,
Performance,
Sense of Responsibility, Satisfaction with
Autonomy Self-control, self-esteem Job, Low
Absenteeism, Job
involvement
Significance, Identity, Meaningfulness,
Skill, Variety Achievement, Variety

A4 HRM/
Source: Adapted from R.J.Hackman and G.R.Oldham, EPGP
Work Redesign, p. 77.
 CHAPTER: 4
RECRUITMENT AND SELECTION

After reading this chapter, you will be able to

1. Understand the Nature, Objective and Importance of

Recruitment.

2. Factors governing recruitment.

3. Sources of Recruitment.

4. Definition of Selection.

5. Types of Interview
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6. Barriers to Effective selection
 Recruitment

Recruitment is the process of searching for

prospective employees and stimulating and
encouraging them to apply for jobs in an
organisation

Recruitment needs are of three types-

• Planned
• Anticipated and
• Unexpected

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 Factors governing Recruitment

External forces Internal forces

• Supply and Demand • Recruitment Policy
• Unemployment rate • HRP
• Labour market • Size of the firm
• Political and social • Cost
environment • Growth and expansion
• Sons of soil
• Image

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 Internal & External sources

Internal Sources External Sources

• Present employees • Professional or Trade
associations
• Employee referral
• Ads in News papers, business
• Former employees journals
• Previous applicants • Blind Ads
• Websites
• Employment exchanges
• Campus recruitment
• Walk-in, write-in, talk-in
• Consultants, Contractors
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• Displaced persons
 Selection
Selection is the process of choosing the most
suitable persons out of all the applications.

Steps in the Selection Process

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 Induction/Orientation

Induction is the process of receiving and

welcoming an employee when we first join the
company and giving him the basic information he
needs, to settle down quickly and start work.

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 Socialization

• It’s a process through which a new recruit begins

to understand and accept the values, norms,
and beliefs held by others in the organization.

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 Assumptions in socialisation process:

1. Socialisation strongly influences employee

performance & organisational stability
2. New member suffer from anxiety-induced
stress
3. Environmental influence of socialisation
4. Employees adjust in similar ways

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 Strategies of socialisation
1. Formal or Informal
2. Individual or Group
3. Fixed or variable time period
4. Investiture or divestiture

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 Placement

Placement is the process of assigning a specific job

to each one of the selected candidates

Placement is the determination of the job to which

an accepted candidate is to be assigned, and his
assignment to that job

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 CHAPTER: 5
TRAINING AND DEVELOPMENT

Need for Training and Development

Training process
Identifying training needs
Principles of training
Executive development
Suitability of ED training
Methods of T&D
Career planning, Stages, Process & Development
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 Training and Development

Training is any process by which the aptitudes,

skills and abilities of employees to perform specific
jobs are increased. On the other hand, education
is the process of increasing the general knowledge
and understanding of employees.

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• Education : is the understanding & interpretation of
knowledge
• Training : is the art of increasing the knowledge
and skill of an employee for doing a particular job
• Development: covers those activities which improve
job performance, but also those which bring about
growth of performance help individuals in the
progress towards maturity actualisation of their
potential capacities

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Need of training & development
To keep pace with:
a) Technological advances.
b) Organisational complexity
c) Organisational tenure
d) Human relations

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• Training process
1.Determining the need &priorities for training
-organisational analysis
-operational analysis
-man analysis
2.Establishing of training goals.
3.Selecting trainees: 4 considerations
-legal requirements & formalities.
-employee needs & motivation.
-skills obsolescence & retraining.
-multi skilling(self managed teams)
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4. Determining the curriculum & choosing training
methods
5. Formulating the budget
6. Selecting & training trainers
7. Presentation or application of selected training
techniques
8. Performance or learning try out
9. evaluation of the training programs

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A4 HRM/ EPGP
 Principles of training
1. Clearly defined objectives
2. Determining training policy
3. Organised material
4. Understanding principles of learning
-trainee readiness
-trainee relevance
-reinforcement
5. Appropriate methods of training
6. Efficient trainers
7. Short learning session
8. Practising sessions
9. feedback A4 HRM/ EPGP
 Executive Development

According to Flippo “Management development

includes the process by which managers and
executives acquire not only skills and competency in
their present jobs but also capabilities for future
managerial task of increasing difficulty and scope”

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 Executive Development

On-the-job Techniques Off-the-job Techniques

Coaching Lectures

Under study Case Studies

Position Rotation Group Discussions

Project Assignment Conferences

Committees Role Playing

Multiple Management Management Games

Selected Readings In basket Exercise

Sensitivity Training

Programmed Instruction
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 Suitability of executive development
techniques

• Understudy - To develop conpetent succesors to senior

executives
• Job rotation - To broaden outlook and to create diversified
skills in an executive
• Committee/ - To provide knowledge and skills in different
multiple mgmt functional areas
• Lectures - To provide conceptual knowledge in a short
period to a large number of persons
• Case study - To develop analytical and decision making
skills
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• Role playing -to develop negotiating and selling
skills
• Inbasket exercise - to develop situational judgement and
• Mgmt games social sensitivity
- to develop quick thinking, organising
ability and leadership skills
• Sensitivity training
- to develop awareness of self and its
impact on others
• conference - To improve attitudes and behaviour

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 Comparative value of different methods

• Explaining facts and -Lectures, guided discussion

procedures, expounding
general principles

• Developing analytical skills -Case method (incident

& ability to ask oneself process)
questions

• Developing awareness of -Sensitivity training (T-groups)

oneself & one’s impact on role playing
others
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• Carry over from class to the -Problem solving , conferences
job (to a lesser extent: role play)

• Inducing change in behavior -Role playing, Problem

solving , conferences , T-
groups

• Oppurtunity for emotional -T-groups, Problem solving

catharsis conferences

• Insuring good training with -Lectures, incident process

unskilled trainers

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 Training and Development Method

On the job method On the job method

On specific job Job rotation Special Projects Vestibule Commitees

nd task forces training and junior
Boards

Experience Coaching Under Study Computer

Programme modeling

Special courses Conferences Case Studies Simulation Sensitivity

And lectures role playing training

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 Types of Training
1. Orientation training
2. Job training
3. Promotional training
4. Refresher training
5. Remedial training

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 Career Planning
• Career is a sequence of positions held by
a person during the course of a life time.

• Career Stages
– Exploration
– Establishment
– Mid career
– Late career
– Decline
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Career Planning Process

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Career Development

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 CHAPTER: 6
WAGE AND SALARY ADMINISTRATION

Job Evaluation
Wage, Salary, Compensation
Factors affecting wages and salary
Types of Fringe benefits

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 Job Evaluation

• Aims at finding the relative worth of a Job.

• Methods of Job Evaluation

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Methods of Job Evaluation

There are Analytical and Non Analytical methods of Job

Evaluation

Analytical Method
1. Point ranking method and
2. Factor comparison method

Non Analytical Method

1. Ranking method
2. Job grading method A4 HRM/ EPGP
 Wage and Salary Administration
• The main objective of salary Administration are to design
a cost effective pay structure that will attract, motivate
and retain competent employees and that will also be
viewed as fair by these employees. Apart from meeting
legal requirements, organization have to take care of
ever rising employee expectations and competitive
pressures while designing an effective compensation
plan

A4 HRM/ EPGP
In this session….
• Evolution of Wages & Salaries
• Concepts of Wages and Salaries
• 3 premises of Wages
• Different types of Wages
• Factors affecting Wages & Salaries
• Labour Laws
• Calculations of Wages
• Theory of Wages
• Pay structure

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Living Standards in India….
• Increasing middle class from 250 mn to 300 mn.
• 1 mn new mobile subscriptions every month
• 10,000 motor cycles purchased everyday
• Banks are making 15 bn a year in home loans
• Average purchase of clothes by a middle class
accounts to Rs 4,000/- every month
• 40.26% of household have television in 2003, as
compared to 31.60 % in 2001
• In India, the salary level of employee increases every
year by 20%.

*Source:- Oct 23, 2003 New York Times

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Evolution of Wages and Salaries

Phase I Phase II

Phase III Phase IV

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Basic definitions…
• Compensation: Consideration for which labour is
exchanged. Wages & Salaries are compensation paid in
form of cash. It consists of Bonus, Allowance, OT, social
security payment benefits etc.

• Wages: are compensation. This includes basic wages,

allowances, bonuses. A cost of production in the view of
employers. Paid to labours who are
involved in production or commercial activities.

• Salaries: Compensation paid to indirect labour involves

supervisors, managers & supporting staffs. Salaries are
mostly in the form of time rate, mostly on monthly basis.
A4 HRM/ EPGP
Basic definitions…contd

• Wage rate: Rate of wage of a worker per unit time.

This does not include any allowance or bonuses or
over-time payment etc.

• Wage Scale: Wage scale is listing of standard wage

rate in a proper sequence, according to the size of
rate.

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Three premises of Wage

• Internal Equity:
More difficult jobs are paid more

• External Equity:
Jobs are fairly compensated in comparison to similar
jobs in the labour market.

• Individual Equity:
Equal pay for equal work

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Different types of Wages

• Minimum Wage: wage level fixed by the government

which it considers adequate taking into account the cost
of living.
• Living Wage: Government defines “Living Wage is one
which should enable the earner to provide himself and
his family not only the bare essentials of food, clothing
and shelter, but also comfort, education, protection
against ill health etc
• Fair Wage: Fixed by employer. It is a wage above the
minimum wage and below the living wage.
• Real Wage: Expressed in terms of goods and services
which can be purchased by dividing nominal wages by
CPI. A4 HRM/ EPGP
Factors affecting Wage and Salary…

• External Factors:
• Government Legislations
• Market Rate
• Labour supply and demand
• Cost of Living
• Labour Unions

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Factors affecting Wage and Salary…

• Internal Factors:
• Ability to pay
• Job Evaluation & PA
• The Employee
– Age, Qualifications, Promotions, Hazards
involved in the job, Industry involved in the job

A4 HRM/ EPGP
Government Legislations…

Minimum Wages Act, 1948

• Minimum wages to certain sweated and
unorganized sectors covered in the act.
• Can be fixed by hour, day, month or any
other longer period.
• Subjected to be revised every 5 years.

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Government Legislations…
The Payment of Wages Act, 1936
• Regular payment without any unauthorised deductions to
persons who are employed in any industrial establishment or
factory or railway or by a railway contractor whose monthly
wages are less than Rs 1600/-
• Permissible deductions to be made from the employee’s
salary:
• Fine
• Deductions for absence
• Deductions for loss of goods entrusted to worker
• House given by employer
• Services provided by employer
• Advance provided by employer
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• PF, Insurance etc.
Government Legislations…

Payment of Bonus Act, 1945

• The important provisions of of the Act are:
• 60% of the surplus (67% of incase of foreign
companies) should be allocated for the payment
of Bonus.
• Salary for the purpose of bonus means Basic
pay+DA
• Employees drawing up to Rs 2500/- are eligible
for bonus.
• Employees dismissed of fraud, theft are
disqualified for bonus
• Minimum of 8.33% or maximum of 20% bonus is
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given
Methods of Wage payment

Time Wage System:

Workers are paid on the basis of the time spent on the work
irrespective of the amount of work done. The basis of time
may be hour, day, week or month.

Differential piece rate system:

In this system, the rater per piece is increased, as the
output level is increased. Increase in rates may be
proportionate to increase in output.
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Theory of Wages…

• Subsistence theory:
• Propounded by David Ricardo
• Proposes “ the labourers are paid to enable
them to subsist and perpetuate the race without
increase or diminution”
• Also known as “Iron Law of Wages

• Wage Fund theory:

• Propounded by Adam Smith
• Wage level is a function of surplus available.
• Higher the fund, higher the pay, Lower the
fund, Lower the pay
• Focus on employer and his capacity to pay
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Theory of Wages…

• Residual Claimant Theory:

• Propounded by Francis A. Walker
• Land, labour, Capital & entrepreneurship add
value to the product.
• Revenue earned is first distributed to land,
capital and entrepreneurship and the remaining
was paid to labour.
• Marginal Productivity theory:
• Propounded by Phillips Henry Wicksteed and
John Bates Clark
• Wage determined by the labour market.
• Employer continues to employ as long as the
value addition by the marginal work is more
than the cost. A4 HRM/ EPGP
Pay structure…

• Basic Pay:
is the basic wage decided with the criteria the skills,
experience needed, difficulty (both physical and
mental) involved, training need, responsibilities
involved and hazardous nature of the job.

• Dearness Allowance (DA):

is paid to employees in order to enable them to face
the increasing dearness of essential commodities.
When prices go down DA can always be cut down to
size.
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Fringe Benefits…

• Refers to the extra benefits paid by the

employers.

• They are the supplementary form of

compensation.

• It is paid to all the employees.

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Types of Fringe Benefits…

• Payment for Time not worked

– Hours of Work
– Paid Holidays
– Shift Premium
– Holiday Pay
– Paid Vacation
• Employee Security
– Retrenchment Compensation
– Lay Off compensation
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Types of Fringe Benefits…

• Safety and Health

– Safety measures
– Workmen’s compensation
– Health benefits
• Welfare Recreational Facilities
– Canteen
– Housing
– Counseling
– Holiday Home
– Education facilities
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– Transportation
Types of Fringe Benefits…

• Old age retirement benefits

– PF
– Gratuity
– Medical benefits
– Pension
– ESI

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Are Wages and Salaries used
as an advantage by the
organisations?

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Facts and Figures…

• 60% of employees consider an organisation good to

work on the basis of their pay scale offered.
• 80% of the organisation say that their main
advantage is the pay scale.
• The benefits and incentives constitute nearly 40 % of
the money earned by an employee

Source: BT-ORG-MARG Survey 2002

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References…

• Personnel Management & Industrial Relations

by Latha Nair & N G Nair

• Dynamic Personnel Administration

by Prof. M N Rudrabasavaraj

• www.nytimes.com

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 Difference between Wage and Salary

• Wage : The amount paid by the employer for the

services of hourly, daily, weekly fortnightly employees
(ILO).

• Salary : Remuneration paid to the clerical and

management personal employed on a monthly or yearly
basis (White Collar Employees).

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A4 HRM/ EPGP
 CHAPTER: 7
PERFORMANCE APPRAISAL

• Definition
• Problems of Performance Appraisal
• Methods

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 Performance Appraisal
PA is the process of assessing the performance
and progress of an employee or of a group of
employees and his potential for future
development.

According to Flippo, “PA is a systematic, periodic

and an impartial rating of an employee’s
excellence in matters pertaining to his present job
and his potential for a better job”

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Performance Appraisal Process

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 PERFORMANCE APPRAISAL

My Company pays for performance. Unfortunately, no one

here knows how to measure it,
---- Anonymous
PA is the Process of assessing the performance and progress
of an employee or of a group of employees and his potential
for future development.
According to Flippo, “PA is a systematic, periodic and an
impartial rating of an employee’s excellence in matters
pertaining to his present job and his potential for a better job.”

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The Process of Performance Appraisal
Problems in PA:

1. Errors in Rating:
(a) Halo Effect
(b) Stereotyping
(c) Central Tendency
(d) Constant Error
(e) Personal Bias
(f) Spill Over Effect
2. Lack of Reliability
3. Incompetence
4. Negative Approach
5. Multiple Objectives.
6. Resistance
7. Lack of Knowledge A4 HRM/ EPGP
 Essentials of an Effective
Performance Appraisal System

1. Mutual Trust
2. Clear Objectives
3. Standardisation
4. Training
5. Job Relatedness
6. Documentation
7. Feedback and Participation
8. Individual Differences
9. Post Appraisal Interview
10. Review and Appeal
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Behaviourally Anchored Rating Scales
(BARS)

This method combines graphic scales with critical incidents

method. BARS are descriptions of various degrees of
behaviour relating to specific performance dimensions. The
steps involved in constructing BARS are as follows:
(a) Identify Critical Incidents
Job holders/ supervisors describe specific eg. Of both
effective / ineffective job behaviours.
(b) Select Performance Dimensions
The behavioral incidents are clustered into smaller set
(usually 5 to 10) of performance dimensions.
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(c) Retranslate the Incidents
Another group of persons assign each incident to the
dimension that it best describes. Incidents for which there is
less than 75% agreement with the first group are not
retranslated.

(d) Assign Scales to Incidents

Rate each incident on 7-9 point scale. Rating is done on the
basis of how well the behaviour described in the incident
represents performance on the appropriate dimensions. S.D
1.5 < on the seven point scale are included in the final
anchored scales.

(e) Develop Final Instrument

One Scale per dimension
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APPRAISAL BY RESULTS OR MBO

Developed by PETER DRUCKER in 1954

Also Known as work planning and review or goal setting
approach to appraisal.
MBO is defined as “a process whereby the superior and
subordinate managers of an organisation jointly identify its
common goals, define each individuals major areas of
responsibility in terms of results expected of him and use
these measures as guides for operating the unit and
assessing the contributions of each of its members.

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 MBO Process
1) Set Organisational goals
Goals of the organisation in key areas of performance are laid
down. Goals are defined in clear, precise and measurable terms.
Analysis of internal and external environment of the organisation is
made to set these goals.

2) Defining Performance Targets

Performance standards for each employee are defined.
Responsibilities based on org. charts and job descriptions. Each
subordinate writes down his own performance goals which are
work related and career oriented. Managers also writes down and
discuss them reach an agreement and put the agreed goals in
writing.
Employees at all levels are actively involved in goal setting.
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3) Performance Reviews
Frequent performance reviews held and progress is assessed,
weaknesses and constraints are identified.

4) Feedback
Feedback on performance is communicated to the employee so
that he can regulate and improve upon his own performance.
Rewards are decided and new goals and targets are determined
for the next period.

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 Advantages of MBO

1. Ends-means Chain
Makes goals more explicit & focuses attention on key result
areas.

2. Role Clarity
Helps to avoid role ambiguity & role conflict.

3. Objective appraisal
Objective criteria for evaluating performance.

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4. Motivation & Commitment
Active participation helps to satisfy ego & self
actualisation needs. Job satisfaction & morale tends to
be high because of close linkage between individual &
organisational goals .

5. Management Development
Continuous feedback & opportunities for self control
help to develop leadership potential of executives.

6. Coordination
Harmony between objectives at different levels
provided a sense of common direction to all.
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Limitations of MBO

Difficulty in goal setting

Managers may ignore qualitative goals. Short Term
measure may override Long Term measure. Blue collar
workers are often unable to set their job goals.

Problems of understanding
Participation may need to “tug of war” where subordinate
tries to set lower targets & superior insists on higher
targets.
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Lack of Understanding
Lack of top management support & hasty implementation
may also cause failure.

Time Consuming & Expensive

A Manager may become so engrossed in performing
assigned activities that he looses the sight of the goal.
This is called “the activity trap”.

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Appraisal Interview
In this Interview feed back on performance is provided. The
rater explains his ratings to the employee and traits taken into
consideration for appraisal.

1. Tell & Sell Interview

The purposes of this interview are
a) To let the employee know how well he is doing.
b) To gain the employees acceptance of the evaluation.
c) To draw up a plan of improvement for him.

2. Tell & Listen Interview

To communicate the appraisal to the employee & Listen
sympathetically to his reactions.

3. Problem Solving Interview

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The aim is not appraisal but development of an employee.
Appraisal of Potential

Appraising potential is different from assessing

performance. Potential refers to the abilities
present but not currently utilised. It can be
judged by
a) Reviewing Present Performance
b) Analysing Personality Traits
c) Relooking at Past Experience
d) Considering Agent Qualification
e) Explaining unused knowledge of & skills of an
employee
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CHAPTER: 8

(“ COLLECTIVE
BARGAINING,
HEALTH &
SAFETY AND
STRATEGIC
HRM

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 “Agenda”

Meaning and Features

Objectives and Types of Bargaining

Process of Collective Bargaining
Collective Bargaining in India
Conditions for Effective Bargaining
Industrial Dispute

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 “MEANING”

• It’s a method by which the

trade unions strive to
protect and improve the
working conditions of the
workers.

• The ongoing process of

negotiation between
representatives of the
workers and employers to
establish the conditions of
employment.

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 FEATURES

• Collective
• Dynamic
• Strength
• Voluntary • Power
Relationship
• Continuous
• Representation
• Flexible

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1. Collective
In 2 ways:
– Workers collectively bargain
– Workers and management jointly arrive at a
solution

2. Strength
Both parties bargain from a position of equal
strength.

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3. Voluntary
Both the parties come to negotiating table
voluntarily for resolving several troubling issues.

4. Continuous
It does not commence with negotiations and end
up with an agreement only, it also includes
implementation of the agreement and further
negotiations.

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5. Dynamic
The way agreements are arrived at, the way they are
implemented, the mental make-up of parties involved
keeps changing.

6. Power relationship
Management tries to retain its control on workplace
matters and unions attempt to strengthen their hold
over workers without any dilution of their powers.

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7. Representation
Employers carries out negotiation with the
representatives of unions.

8. Flexible
It has sufficient flexibility because no party can
afford to be inflexible and rigid in such
situation.It is not a one way street but a give and
take process

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 OBJECTIVES

• To settle disputes/conflicts
• To protect the interests of workers
• To resolve the differences between workers
and management
• To avoid third party intervention

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 TYPES

• Conjunctive/Distributive Bargaining

• Cooperative Bargaining

• Productivity Bargaining

• Composite Bargaining

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PROCESS OF COLLECTIVE BARGAINING

• Identification of the problem

• Preparing for negotiations
• Negotiation of agreement
• Implementation of contract

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 Vs
Collective Bargaining Negotiation Skills

1. Regulation of terms and Settlement of disputes

conditions of employment between two or more parties
of workers between their wherein all modify their
bargaining agent and demands to achieve an
employers. acceptable compromise.

2. It is a kind of rule making It is a deliberate, explicit

exercise. event.

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 Collective bargaining in India

• Roots in Great Britain created by Industrial

Revolution
• Trade unions came to India in 1990s
• Grew at par with the growth of trade unionism

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 INDUSTRY COMMITTEES
•Engineering CII
•SAIL 240 Trade Union
Federations
•TISCO 1 Trade union
•Railways, Post,Telegraph Pay Commission Awards
•Coal, Steel, Ports, Docks Joint Coordination
Committees
•Media, sugar Wage boards
•Cement Cement Industry
Arbitration
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Causes for the limited success of CB
in India

• Problems with the unions

• Legal problems
• Political interference
• Attitude of management

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 Conditions Essential For Effective
Bargaining

• Unanimity among workers

• Strength of both the parties
• Attitude of the parties
• Representative authority

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 Suggestions for Effective
Implementation

• Unions should be made strong

• Inference of political leaders should be avoided
• Govt. should make effort
• Management should develop positive attitude

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 Recommendation of National
Commission

• Govt. intervention to be reduced

• Trade unions to be strengthened
• Legal provision should be made

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 Contd….

• Workers should be made conscious about their

rights

• One union for one plant or industry

• Govt. policy should be declared

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 INDUSTRIAL DISPUTE

“It means any dispute or difference between

employers between employers and workmen and
between workmen and workman, which is
connected with employment or non-employment or
terms of employment or with conditions of labour
of any person.”

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A4 HRM/ EPGP
 HUMAN RESOURCE INFORMATION
SYSTEM

A human resource information system (HRIS) is

a systematic procedure for collecting, storing,
maintaining, retrieving and validating data
needed by an organisation about its human
resources.

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 HRP & Analysis
• Org charts
• Staffing Projections
• Skills Inventories
Equal
Employee and • Job Analysis Employment
Labor Relations Opportunity

Health, Safety HRIS

and Security Staffing

HRD & Career

W&S
and Succession
Administration
Planning
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 HEALTH AND SAFETY

Health is a state of complete physical, mental

and social well being of an individual and not
merely the absence of illness.

What is Safety?
Safety means freedom from the occurance or
risk of injury or loss Industrial safety refers to
the protection of workers from the danger of
industrial accidents.. A4 HRM/ EPGP
An accident is an unplanned and uncontrolled
event in which an action or reaction of an object,
substance, person or a radiation results in
personal injury.
Types of Accidents
1. Internal or External Injury
2. Major or Minor Injury
3. Fatal or Disability

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 Accidents

Internal External

Major Minor

Fatal Disability

Temporary Permanent

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Partial Total Partial Total
 Safety Process

Strategic Development of Organisation

Choices Safety Policy of Safety

Strategic Development of Organisation

Choices Safety Policy of Safety

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 Significance of Industrial Health

• To maintain and improve productivity and quality

of work..
• To minimise absenteeism and labour turnover.
• To reduce industrial unrest, indiscipline and
accidents.
• To improve employee motivation and morale.
• To reduce spoilage and cost of operations.
• To preserve the physical and mental health of
employees. A4 HRM/ EPGP
 Working conditions affecting health

• Cleanliness.
• Lighting.
• Temperature and Ventilation
• Freedom From Noise
• Dust Control
• Working Space and Seating Arrangement.

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 STRATEGIC HRM

A Strategy is a way of doing something It usually

includes the formulation of a goal and set of action
plans for accomplishment of that goal. It is a
process of formulating, implementing and
evaluating business strategies to achieve
organisational objectives.
It is a set of managerial decisions and actions that
determine the long-term performance of a
corporation. It includes environmental scanning,
strategy formulation, strategy implementation and
evaluation and control.A4 HRM/ EPGP
 Steps involved in Strategic Management

• Analyse the opportunities and threats or

constraints that exist in the external
environment.
• Formulate strategies that will match the
organisation’s strengths and weaknesses with
the environmental threats and opportunities.
• Implement the strategies.
• Evaluate and control activities to ensure that the
organisation’s objectives are achieved.
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 Strategic Management Process

Environmental Strategy Strategy Evaluation and

Scanning Formulation Implementation Control

Corporate Strategy
External Formulation
Strategic
Business Unit Programmes
Control
Strategy Formulation Budget
Process and
Procedures
Performance
Internal Functional Strategy
Formulation

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 Corporate level strategies
1. Growth strategies
(a) Internal growth (b) Horizontal integration
(c) Horizontal related (d) Conglomerate
diversification diversification
(e) Vertical integration of (f) Vertical integration of
related businesses unrelated businesses
(g) Mergers

2. Stability strategies

3. Retrenchment strategies
(a) Turnaround (b) Divestment
(c) Liquidation A4 HRM/ EPGP
 Strategy Formulation

Strategies are formulated at three levels:

• Corporate level,
• Business unit level, and
• Functional level

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 CHAPTER: 9

ETHICAL ISSUES IN HRM &

HUMAN RESOURCE AUDIT

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 Ethical Issues in HRM
Ethics refers to a system of moral principles – a
sense of right and wrong, and goodness and
badness of actions and the motives and
consequences of these actions.

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 Ethical Issues in HRM

Cash and Performance Race and

Incentive plans appraisal disability

Ethical
Issues

Employment Privacy Safety and Restructuring

issues issues health And layoffs

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 Human Resource Audit

An HR audit is a tool for evaluating the personnel

activities of an organization. The audit may
include one division or an entire company. It
gives feedback about the HR functions to
operating managers and HR specialists.

The audit is an overall quality control check on

HR activities in a division or company and an
evaluation of how these activities support the
organization’s strategy.
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 Benefits of HRM audit

• Identification of the contributions of the HR

department to the organization
• Improvement of the professional image of the HR
department.
• Encouragement of greater responsibility and
professionalism among members of the HR
department
• Clarification of the HR department’s duties and
responsibilities,
• Simulation of uniformity of HR policies and practices
• Finding critical personnel problems
• Ensuring timely compliance with legal requirements
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Thank You

A4 HRM/ EPGP