HUMAN RESOURCE MANAGEMENT

HRM


Management of work force of an organisation ie how to manage the different people working together in a organisation. HRM is a management function that helps managers recruit, train and develop members for an organisation.

HRM


HRM is concerned with the people dimension in management. Since every organisation is made up of people, acquiring their services, developing their skills, motivating them to higher level of performance, and ensuring that they continue to maintain their commitment to the organisation are essential to achieving organisational objectives. This is true, regardless of the type of organisation ie government, business, education, health.

Objectives of HRM


Societal objectives To be socially responsible to the needs of the society. Organisational Objective To recognise the role of HRM in bringing about organisational effectiveness. Functional objective To maintain departments contribution at a level appropriate to the organisations needs. Personal Objective To assist employees in achieving their personal goals, at least in so far as these goals enhance the individuals contribution to the organisation.

Objective of HRM


HRM Obj.
Societal Objective

Supporting function
1. Legal compliance 2. Benefits 3. Union Management relations

Organisational Objectives

1. HRP 2. Employee relations 3. Selection 4. Training & Development 5. Appraisal 6. Placement

Objectives of HRM


HRM Obj.
Functional objectives

Supporting function
1. Placement 2. Assessment

Personal Objectives

1.Training & Development 2. Compensation

Competitive challenges and HR

1. 2. 3. 4. 5.

Going global Embracing new technology Managing change and organisation culture Responding to the market Containing costs
  

Downsizing Outsourcing and employee leasing Enhancing productivity

Other challenges faced



Demographic and Employee concerns

    

Demographic changes Diversity of backgrounds Age distributions Gender distribution Rising level of education Concern for employee rights Changing attitude towards work Balancing work and family

Cultural changes
  

Functions of HR
MANAGERIAL FUNCTIONS Planning Organising Directing Controlling OPERATIVE FUNCTIONS Staffing Development Compensation Motivation Maintenance Integration

Operative functions of HR
STAFFING
Job analysis, HRP, Recruitment, Selection, Placement, Induction, Internal Mobility Competency profiling, Training and development, Performance & potential management, Career management, 360 degree feedback Job design, Work scheduling, Job evaluation, Compensation administration, Incentives and benefits

DEVELOPMENT

COMPENSATION & MOTIVATION

Operative functions of HR (contd.)

MAINTENANCE
Health, Safety, Welfare

INTEGRATION

Employment relations, Grievance, Discipline, Trade unions, Participation

Scope of HRM


Labour or Personnel aspect Recruitment, Selection, Transfer, Promotion etc.  Welfare aspect Housing, Lunch room, Health and Safety, Transport, education etc.  Industrial relation aspect Union Management relations, Negotiation, Grievance handling etc.

HRM Environment - External

Technology

Professionalism

Economic

HRM

Social & cultural

Political & legal

Union

HRM Environment - Internal

Policies

HRM

Mission

Organisational Conflict

HRM Policies


Policy is predetermined course of action established to guide the performance of work towards accepted objectives. Importance -:

(1) Clear Thinking (2)Uniformity & Consistency of Admin. (3)Sense of Security (4)Control

Types of HR Policies


Originated policies Made by top Management. Appealed policies Made on request to handle certain situation, or if certain aspects are missing in the main policy. Imposed policies Imposed by Govt & Legal authorities. General policies Do not relate any issue, may represent the priority of Top Mgmt. Specific Policy Related to specific issues like Recruitment, Transfer, Promotion etc.

Strategic Management


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. Strategy has two components -:

1) Planning 2) Action

Strategic Management


Strategic management is understood as the process of formulating, implementing and evaluating business strategies to achieve organisational objectives.  Analysis of the environment, formulation of strategies, and evaluation and control are the phases in the strategic management process.

Human Resource Planning



Meaning Assessment of Human Resource Requirements & also the time & stages of requirement. Right person ---At Right place ---At Right ---At ---At time. Definition HRP is defined as the process by which management determines how an org should move from its current manpower position to its desired manpower position.

Objectives of HRP


To ensure optimum use of existing HR.  To forecast future requirement for HR.  To provide control measures to ensure that necessary HR are available as and when required.  To asses the surplus and shortage of HR. (Downsizing).  To anticipate the impact of technology on jobs and HR.

Objectives of HRP Contd.



To determine the level of Recruitment and Training.  To estimate the cost of HR and Housing needs of employees. (Or HRA).  To provide the basis of MDP.  To meet the needs of expansion and diversification programmes.

Importance of HRP


Future Personnel needs Creating highly talented personnel International Strategies Foundation of personnel function Resistance to change and move

Factors Affecting HRP

Organisational growth cycle & planning

Outsourcing

HRP

Environmental Uncertainties

Strategy of Organisation

Factors Affecting HRP



Organisation growth cycle and planning-: planningHRP is Critical when organisation enters the growth stage. Mature organisations experiences less flexibility and variability, growth slows down. HRP is dominated by Layoffs, Retrenchment, Retirements.

Factors Affecting HRP



Environmental Uncertainties -: When Political, Social and other changes affect the organisation, HR planners deal with uncertainties. It can result in Recruitment, Training, Succession Planning, Retrenchment etc.

Factors Affecting HRP



Strategy of Organisation -:
Strategic plan of the organisation defines the organisations HR needs.
Internal Growth Narrow Informal
Growth through Mergers

Broad Formal

Reactive Inflexible

Proactive Flexible

Factors Affecting HRP



Outsourcing -: Most organisations have surplus labour and they do not want to worsen the problem by hiring more people. Outsourcing is the option left.

HRP Process
Environment
Org objectives & policies

HR Need Forecast HR Programming

HRP Implementation Control & Evaluation

HR Supply Forecast

Surplus

Shortage

HRP Process (Contd.)



Environmental Scanning - : Economic factors Technological Changes Demographic changes Political and legislative issues Social concerns

1) 2) 3) 4) 5)

HRP Process (Contd.)



Org objectives and policies-: policiesHR plans need to be based on org objectives, this implies that the objectives of the HR plan must be derived from Org objectives.

HRP Process (Contd.)



HR Demand forecast-: forecastThe process of estimating the future quantity and quality of people required. The basis of forecast will be annual budget and long term corporate plans. Demand forecasting must consider several factors like internal (Budget constraints, employee separations, production level) and external (Competition, laws, change in technology).

HRP Process (Contd.)

    

Demand forecasting techniques are-: areManagerial judgment Ratio trend analysis Delphi technique Regression analysis HR Supply forecasting-: forecastingSupply forecasting measures the number of people likely to be available from within and outside an org.

HRP Process (contd.)



HR Programming-: Programming Once the Orgs HR Demand and Supply are forecast, the two must be reconciled or balanced in order that vacancies can be filled by the right employee at the right time. HR Plan Implementation-: Implementation Implementation requires converting an HR plans into action. (Recruitment, Training, Succession plan etc.)


HRP Process (contd.)



Control and Evaluation -: Critical to have proper control and regular checks to know the achievements of HRP. Surplus Restricted hiring VRS, Lay off Shortage R&S

E-HRM
 

E-HRM is the (planning, implementation and) application of information technology for both networking and supporting at least two individual or collective actors in their shared performing of HR activities.[1] activities. E-HRM is not the same as HRIS (Human resource information system) which refers to ICT systems used within HR departments.[2] Nor is it the same as Vdepartments. HRM or Virtual HRM - which is defined by Lepak and Snell as "...a network-based ...a networkstructure built on partnerships and typically mediated by information technologies to help the organization acquire, develop, and deploy intellectual capital. capital."[3] E-HRM is in essence the devolution of HR functions to management and employees. employees. They access these functions typically via intranet or other webwebtechnology channels. The empowerment of managers and employees to perform channels. certain chosen HR functions relieves the HR department of these tasks, allowing HR staff to focus less on the operational and more on the strategic elements of HR, and allowing organisations to lower HR department staffing levels as the administrative burden is lightened. It is anticipated that, as E-HRM develops and lightened. becomes more entrenched in business culture, these changes will become more apparent, but they have yet to be manifested to a significant degree. A 2007 degree. CIPD survey states that "The initial research indicates that much-commented-on much-commentedservices, development such as shared services, outsourcing and e-HR have had relatively little impact on costs or staff numbers". numbers".

Types of e-HRM e

There are three types of E-HRM. These are HRM. described respectively as Operational, Relational and Transformational. Transformational. Operational E-HRM is concerned with administrative functions - payroll and employee personal data for example. Relational E-HRM is example. concerned with supporting business processes by means of training, recruitment, performance management and so forth. Transformational E-HRM is forth. concerned with strategic HR activities such as knowledge management, strategic re-orientation.[2] An management, re-orientation. organisation may choose to pursue E-HRM policies from any number of these tiers to achieve their HR goals. goals.

Goals of e-HRM e

E-HRM is seen as offering the potential to improve services to HR department clients (both employees and management), improve efficiency and cost effectiveness within the HR department, and allow HR to become a strategic partner

Emerging Trends in Human Resource Management



Human resource management is a process of bringing people and organizations together so that the goals of each other are met. The met. role of HR manager is shifting from that of a protector and screener to the role of a planner and change agent. Personnel directors agent. are the new corporate heroes. The name of heroes. the game today in business is personnel . Nowadays it is not possible to show a good financial or operating report unless your personnel relations are in order. order.

Contd..


Over the years, highly skilled and knowledge based jobs are increasing while low skilled jobs are decreasing. This calls for future skill decreasing. mapping through proper HRM initiatives. initiatives. Indian organizations are also witnessing a change in systems, management cultures and philosophy due to the global alignment of Indian organizations. There is a need for organizations. multi skill development. Role of HRM is development. becoming all the more important

Contd..


Some of the recent trends that are being observed are as follows: follows:  The recent quality management standards ISO 9001 and ISO 9004 of 2000 focus more on people centric organizations. organizations. Organizations now need to prepare themselves in order to address people centred issues with commitment from the top management, with renewed thrust on HR issues, more particularly on training. training.

Contd..


To leapfrog ahead of competition in this world of uncertainty, organizations have introduced six- sigma practices. Sixsixpractices. Sixsigma uses rigorous analytical tools with leadership from the top and develops a method for sustainable improvement. improvement. These practices improve organizational values and helps in creating defect free product or services at minimum cost. cost.

Contd..


Human resource outsourcing is a new accession that makes a traditional HR department redundant in an organization. Exult, the organization. international pioneer in HR BPO already roped in Bank of America, international players BP Amoco & over the years plan to spread their business to most of the Fortune 500 companies. companies. With the increase of global job mobility, recruiting competent people is also increasingly becoming difficult, especially in India. Therefore India. by creating an enabling culture, organizations are culture, also required to work out a retention strategy for the existing skilled manpower. manpower.

NEW TRENDS IN INTERNATIONAL HRM



International HRM places greater emphasis on a number of responsibilities and functions such as relocation, orientation and translation services to help employees adapt to a new and different environment outside their own country. country.

Contd..


Selection of employees requires careful evaluation of the personal characteristics of the candidate and his/her spouse. spouse. Training and development extends beyond information and orientation training to include sensitivity training and field experiences that will enable the manager to understand cultural differences better. better. Managers need to be protected from career development risks, re-entry reproblems and culture shock. shock.

Contd..


To balance the pros and cons of home country and host country evaluations, performance evaluations should combine the two sources of appraisal information. information. Compensation systems should support the overall strategic intent of the organization but should be customized for local conditions. conditions. In many European countries - Germany for one, law establishes representation. representation. Organizations typically negotiate the agreement with the unions at a national level. level. In Europe it is more likely for salaried employees and managers to be unionized. unionized.

HR Managers should do the following things to ensure successsuccess   

Use workforce skills and abilities in order to exploit environmental opportunities and neutralize threats. threats. Employ innovative reward plans that recognize employee contributions and grant enhancements. enhancements. Indulge in continuous quality improvement through TQM and HR contributions like training, development, counseling, etc counseling, Utilize people with distinctive capabilities to create unsurpassed competence in an area, e.g. Xerox in photocopiers, 3M in adhesives, Telco in trucks etc. etc. Decentralize operations and rely on self-managed teams to selfdeliver goods in difficult times e.g. Motorola is famous for short product development cycles. It has quickly commercialized ideas cycles. from its research labs. labs. Lay off workers in a smooth way explaining facts to unions, workers and other affected groups e.g. IBM , Kodak, Xerox, etc. etc.

HR Managers today are focusing attention on the followingfollowing 

   

a) Policies- HR policies based on trust, openness, equity and Policiesconsensus. consensus. b) Motivation- Create conditions in which people are willing to Motivationwork with zeal, initiative and enthusiasm; make people feel like enthusiasm; winners. winners. c) Relations- Fair treatment of people and prompt redress of Relationsgrievances would pave the way for healthy work-place relations. workrelations. d) Change agent- Prepare workers to accept technological agentchanges by clarifying doubts. doubts. e) Quality Consciousness- Commitment to quality in all aspects Consciousnessof personnel administration will ensure success. success. Due to the new trends in HR, in a nutshell the HR manager should treat people as resources, reward them equitably, and integrate their aspirations with corporate goals through suitable HR policies. policies.

HRIS


HRIS is a database system that keeps important information about employees in a central and accessible location. The information provided by HRIS can help the organisation to gain competitive advantage. (SWOT of org.)

Information categories of HRIS



Basic non confidential information-: informationEmployee name, Org name, Work location

General non confidential information -: Social security number, Position related information (codes, titles, effective date)

Info categories of HRIS (contd.)



General information with salary -: Current salary, Effective date, Amount of last change, Reason for last change. Confidential information with salary -: Information of previous category, Educational data

Info categories of HRIS (contd.)



Extended information with salary -: Information of previous category, Bonus information, Projected salary increase information, Performance evaluation information.

Job Analysis


Job analysis is the process of collecting job related information. Such information helps in the preparation of job description and job specification. Job Analysis

Job Description

Job Specification

Job Analysis (contd.)



Job description -: A statement containing items such as Job title, Location, Job summary, Working condition etc.  Job specification -: A Statement of human qualifications necessary to do the job. Usually contains items such as Education, Experience, Training, Communication skills etc.

Purposes of Job Analysis



HRP  Recruitment & Selection  Training & Development  Remuneration  Safety & Health  Performance Appraisal

Methods of Collecting Job Data



Observation  Interviews  Questionnaire  Technical Conference Method

Process of Job Analysis

Strategic Choices Gather Information Process Information Job Description Job Specification

Process (contd.)
 1. 2. 3. 4.  1. 2. 3.

Strategic Choices : Employee Involvement Level of Details When and How often Past oriented and Future oriented Gather Information : What type of Data to Collected (machine, tools & work activities) Data collection methods Who to collect Data (Trained analyst, Supervisors, Job incumbents)

Process (contd.)


Information Processing -: How collected information will be used in forming Job Description and Job Specification. Job description : Job Specification -:

Problems with Job Analysis



Support from Top management Single Means or Source No Training or Motivation Activities may be Distorted

Job Design


Job Design is defines as -: It integrates work content (tasks, function), the rewards & the qualifications required (skills, knowledge) for each job in a way that meets the need of the employees and the organisation.

Job Design


Job Design involves three steps -: Specification of individual tasks. Specification of the methods of performing each tasks. Combination of tasks into specific jobs to be assigned to individuals.

1)

2)

3)

Methods of Job Design

Job Design Methods -:
Job Rotation

Job Simplification

Job Design

Job Enlargement

Job Enrichment

Recruitment


The process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applicants from which new employees are selected.  Recruitment is a process of inviting applications from prospective employees.  Recruitment is a positive process.

Purpose & Importance of Recruitment



Determine the present and future requirements of the organisation in relation with the HRP and Job Analysis. Increase the pool of job candidates at minimum cost. Meet the organization's legal and social obligations regarding the composition of its workforce.

Sources of Recruitment


Internal Sources -: Transfer , Promotions. External Sources-: SourcesPress Advertisements , Educational Institutions, Placement Agencies, Employment Exchange, Labour Contractors, Recruitment at factory Gate.

Recruitment Process
Recruiting Required Personnel Search for Perspective Employees Internal Sources External Sources Evaluating effectiveness of process

Recruitment Process


Personnel Requisition -: Requisition for recruitment from other deptt., Contains info like no of person required, duties to be performed, desired qualification, time of appointment, info about job.  Locating and developing sources of required no and type of employees.  Identifying the prospective employees with required characteristics.

Process (contd.)


Communicating the info about the org, the job and the terms and condition of service.  Encouraging the identified candidates to apply for jobs in the org.  Evaluating the effectiveness of recruitment process.

Alternatives to Recruitment


Overtime Employee Leasing Temporary Employment

Selection


Selection is the process of picking individuals (out of the pool of job applicants) with requisite qualifications and competence to fill jobs in the organisation. Selection is a negetive process.

Selection Procedure


Preliminary Interview  Application blank  Selection Test  Employment Interview  Reference Check and Background Analysis  Medical Examination  Final Approval  Evaluation

Test and Interview



Psychological tests -: Aptitude test

Informal Interview  Formal Interview  Depth Interview  Stress Interview



Induction Or Orientation


Planned introduction of employees to their jobs, their co workers and the organisation. Orientation also called Induction, is designed to provide a new employee with the information he or she needs to function comfortably and effectively in the organisation.

Objectives of Induction


To help new comer overcome his natural shyness and nervousness in meeting new people in the environment.  To develop among the newcomers a sense of belonging and loyalty to the organisation.  To develop a close and cordial relationship between newcomers and the old employees and their supervisor.

Objectives (contd.)


To ensure that the newcomers do not form negative or false impression and attitude towards the organisation or the job because first impression is the last impression.  To give newcomers necessary information such as leave rules, rest period, locker room etc.

Advantages of Formal Induction



Helps in build up a two way channel of communication between management and workers.  Proper induction facilitates informal relations and teamwork among employees.  Effective induction helps to integrate the new employees into the organisation and to develop the sense of belonging.

Types of Induction Programme



Formal  Informal  Individual  collective

Contents of Induction Programme



History and operation of company  Products and services of company  Policies and procedures of company  Grievance procedure  Benefit and services for employees  Opportunities for training and development, promotion, transfer etc.

Placement


Placement refers to the allocation of people to jobs. It includes initial assignment of new employees and promotion, transfer, or demotion of present employees.

Placement Problems


Difficulty with the placement is that we tend to look at the individual but not at the job. Job in this context may be classified into three categories. Independent Sequential Pooled

1. 2. 3.

Training & Development



Training is an attempt to improve current or future employee performance by increasing an employees ability to perform through learning, usually by changing the employees attitude or increasing his or her skills and knowledge.  Training refers to the process of imparting specific skills. (Employees)

T&D


Development refers to learning opportunities designed to help employees grow. (Executive) Education is theoretical learning in classroom.

T&D


The need for training and development is determined by the employees performance deficiency computed as followsfollows-:

Training & Development need = Standard Performance Actual Performance

Difference between T & Edu

Training -: 1. Application base, 2.Job Experience, 3. Specific Task, 4. Narrow Perspective.


Education -: 1.Theoretical Orientation, 2. Classroom learning, 3. General Concepts, 4. Broad Perspective.



Inputs in T & D


Skills  Education  Development  Ethics  Attitudinal Changes  Decision making and Problem solving skills

T & D as a source of Competitive Advantage



T & D offer competitive advantage to a firm by removing performance deficiencies, making staff stay long, minimising accidents, Scrap & damage and meeting future employees needs.

Training Program
Need Assessment Deriving Instructional Objectives Designing Training & Development Program Implementation of Training Program Evaluation

Training Process


Need Assessment -: Diagnoses the present problems & future challenges to be met through training and development. Need Assessment Methods -: As follows Group Assessment (intro of new product.) Org goals & objectives. Personnel skill inventories Exit interviews Customers Satisfaction data

  1. 2. 3. 4.

Training Process


Needs Assessment & Remedial measures

Performance Deficiency

Lack of Skill & Knowledge

Other Causes

Training

Non Training Measures

Training process
 1. 2. 3. 4.

Individual Analysis -: Performance Appraisal Interviews Questionnaires Attitude Surveys. Issues in need assessment -: Org Support Org Analysis Task and KSA analysis Person Analysis

 1. 2. 3. 4.

Training Process


Deriving an instructional objectives -: It help to know the inputs for the training program and as well as for the measures of success that would help assess effectiveness of the training program.  Designing training & development program -: 1. Who are the trainees? 2. Who are the trainers? 3. Methods & techniques? 4. Level of training? 5. Learning principles? 6. Where to conduct the program?

Training process


Implementation of training program Evaluation

Types of training


1. 2. 3. 4. 5. 6.

On the job -: Orientation Training ie Induction Job instruction Info about how to conduct the job. Apprentice training - ITI Internship / Assistantship - Doctors Job rotation - Bank Coaching Cricket team

Types of training
 1. 2. 3. 4.

5.

Off the job -: Vestibule Utilisation of actual equipments. Lecture Verbal presentation of information. Role playing is to create realistic situation. Simulation technique that duplicates as nearly as possible actual condition encountered on the job. Laboratory / Sensitivity training smaller group ie 12 or less. Provides awareness about their own behaviour & how other percieve them.

Performance Appraisal


It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development.

Objectives of Performance Appraisal



Promotions based on competence and performance. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. To asses the training and development needs of employees.

Objective of Performance Appraisal



To decide upon pay rise where regular pay scales have not been fixed. Finally, performance Appraisal can be used to determine whether HR programmes such as selection, training and transfers have been effective or not.

Relationship of PA and Job Analysis

Job Analysis Describe work and Personnel requirement of a particular job.  Performance Standards Translate job requirements into levels of acceptable or unacceptable performance.  Performance Appraisal Describes the job relevant strengths and weaknesses of each individual.


PA and Competitive Advantage



Improving Performance Making Correct decisions Minimizing job dissatisfaction and turn over Consistency between organizational strategy

Performance Appraisal process

Objective of Performance Appraisal Establish Job expectations Design an Appraisal Programme Appraise Performance Performance Interview Use Appraisal Data for Appropriate Purposes

P A Process
 

Objective Correct or Improve performance Expectation In forming what is expected from employee Design Appraisal Helps in posing question which needs answers like Formal v/s Informal Appraisal, whose performance should be rated (group, team, individual), Who are Raters, What should be rated (Quality, Quantity, Time, Cost effectiveness, Need For Supervision), When to Evaluate, What Methods to be opted.

P A Process


Appraise the Performance Quantity, Quality and time of Output.  Performance Interview  Use the Appraisal Data HRP, Promotion, Remuneration, Training and Development etc.

Performance Appraisal Methods



90 Degree Only Supervisor is Evaluator.  180 Degree Superior and Peer Group  270 degree Superior, Peer and Subordinates  360 Degree Superior, Peer, Subordinates, Clients and Self  540 Degree - Superior, Peer, Subordinates, Clients and Self  720 Degree - Superior, Peer, Subordinates, Clients, Self and Family

Performance Appraisal Methods

   

Past Oriented Methods - : Rating Scales Excellent-Good-AcceptableExcellent-Good-AcceptableFairFair-Poor (Simplest & most popular) Checklist Yes / No (Is employee interested in job? Does have adequate qualification?) Forced Choice Method Two Choices and no other option (The rater is forced to select statements which are readymade) Learns fast ----- Work hard. Critical Incident Method this approach focuses on certain critical behaviours of an employee

Performance Appraisal Methods



Behaviourally Anchored Rating Scales On the basis of the behavioural criteria of the employee rating is being done by the superior.  Field Review Method Some one outside the assessees own department, usually from corporate office or HR department.

Future Oriented Methods

360 Degree Appraisal  Assessment Centers (Potential Appraisal)  Psychological Counseling


Problems in Performance Appraisal



Leniency or Severity  Central Tendency  Halo Error  Rater Effect Rating based on raters attitude towards ratee  Primacy or Recency effects  Perceptual Set Raters perception

Job Evaluation


Job evaluation seeks to determine the relative worth of each job so that salary differentials can be established. In job evaluation only jobs are rated unlike in performance appraisal where only job holders are rated.

Job Evaluation Process

Objectives of Job Evaluation Job Analysis Job Description Job Specification

Job Evaluation Programme Wage Survey Employee Classification

Methods of Job Evaluation



Non Analytical Methods  Analytical Methods

Non Analytical method



Ranking Method The evaluation committee assesses the worth of each job on the basis of its title or on its contents, if the later is available. Job Grading Method There is a yardstick in the form of job classes or grades.

Compensation


Remuneration is the compensation an employee receives in return for his or her contribution to the organisation.  Society Some people see pay as a measure of justice.  Stockholders To stockholders, executive pay is of special interest, as linking executive pay to company performance is supposed to increase stockholders wealth.

Compensation


Managers Compensation influences their success in two ways. First, it is a major expense. In addition to treating it as an expense, a manager also uses it to influence employee behaviour and improve organisation performance.  Employees The pay individuals receive in return for the work they perform is usually the major source of their financial security.

Components of Compensation


1. 2. 3. 4.

Financial : Hourly and monthly rated wage and salary. Incentives ie individual plans and group plans. Fringe benefits ie PF , Gratuity, Medical care, Group Insurance. Perquisites are Company car, furnished house (Offered to retain competent executives)

Components of Compensation


Non Financial -: Recognition, Growth Prospects.

Factors Influencing Employee Remuneration



1. 2. 3. 4.

5.

External -: Labour Market Demand & Supply, Going Rate Cost of Living Escalatory clause Labour Unions Labour Laws Payment of wages act1936, Minimum wages act 1948, Payment of Bonus act 1965, Equal remuneration act 1976, Payment of gratuity act 1972. Society

Factors Influences Employee Remuneration



Internal -: Business Strategy Rapid growth = High Pay Job Evaluation and Performance Appraisal Employee Performance , Experience, Seniority

1. 2. 3.

Devising a Remuneration Plan

Job Description Job Evaluation Job Hierarchy Pay Survey Pricing jobs

Challenges of Remuneration
Salary reviews  Pay secrecy  Skill based pay  Employee Participation  Above Market or Below Market Rates  Monetary V/S Non Monetary Rewards  Comparable Worth


Concept of Wages


Minimum Wage Wage for sustenance of life plus for preservation of the efficiency of worker. (Determined through Legislation) Fair Wage Equal to the rate prevailing in the same trade and in the neighborhood or equal to the predominant rate for similar work throughout the country. Living Wage Higher than fair wage. Provides for bare essentials plus frugal comforts.

Incentives


Incentives are variable rewards granted to employees according to variations in their performance. The other name for incentives is Payments by results. But the word Incentives is most appropriate because of its motivational content.

Importance of Incentives
Motivation of worker for higher efficiency and greater output.  Earning of employees would be enhanced due to incentives.  Increased earning helps employee to improve standard of living.  Other advantages Reduced Supervision, better utilisation of equipments, reduced lost time, reduced absenteeism and turnover and increased output.


Disadvantages of Incentives


Deteriorate the quality of product as employee want to earn more by producing more quantity of products. When job is restudied there are chances that it may yield in lower earning in terms of earning incentives as new and high challenging jobs offers more scope for earning as compared to old jobs. Increases jealousy among the workers as the person earning less is jealous of the person earning more.

Employee benefits


Employee benefits and services include any benefits that the employee receives in addition to direct remuneration. Employee benefits and services are alternatively known as fringes or hidden payroll.

Types of employee benefits



1) 2) 3)

For fringe benefits three criterias are needed to be fulfilled. It should be computable in terms of money. The amount of benefit is not generally predetermined. No contract, indicating when the sum is payable, should exists.

Fringe benefits


Legally required payments -: Old age, survivors, disability and health insurance.  Contingent benefits -: pension plans, group life insurance, group health insurance, maternity leave, sick leave, service awards.  Other benefits -: payments for the time not worked like holidays, leaves.

Benefits and services



Treats -: free lunches, festival bashes, dinner for the family.  Awards -: trophies, certificates, letter of appreciation.  Office environment -: flexible hours.  Tokens -: movie tickets, vacation trips.  On the job -: job rotation, representing the company at public meetings.

Administration of fringe benefits

Establish benefits objectives Assess environmental factors Access competitiveness Communicate benefit information Control benefit cost and evaluation

Executive remuneration


1) 2) 3) 4) 5)

Components of remuneration -: Salary Bonus Commission Long term incentives Perks

Industrial Relations


IR is concerned with the system , rules and procedures used by unions and employers to determine the reward for effort and their conditions of employment, to protect the interest of the employed and their employers, and to regulate the ways in which employers treat their employees.

IR contd


IR is concerned with the relationship between management and workers and the role of regulatory mechanism in resolving any industrial dispute. IR specially covers the following areas-: areasCollective bargaining Role of management , unions and govt. Machinery for resolution of industrial dispute Individual grievance and disciplinary policy and practice

 1) 2) 3) 4)

Approaches to IR


Unitary Approach Direct negotiation with employee and participation of Govt. Tribunals, and unions are not sought.  Pluralistic Approach (a) org as coalitions of competing interest, where the managements role is to mediate amongst the different interest group. (b) TU are legitimate representatives of employee interest. (c) Stability in IR is a product of concession and compromises between management and unions.

Approaches to IR


Marxist Approach same as Pluralistic but feels conflict arises not because of rift between management and workers, but because of the division in the society between those who own resources and who have only labour to offer.

Parties to IR


Employees  Employee Associations  Government Employer Employee Relations Employers  Employer Associations  Courts and Tribunals


Trade Unions


TU are voluntary organisations of employees or employers formed to promote and protect their interest through collective action. Though the terms employees and employers are used, when we say trade unions they generally refer to employees.

Why do employees join unions?



Dissatisfaction Lack of power Union Instrumentality

Union Tactics


Unions employ several tactics to deal with management are-: areStrike Invoking political patronage Blackmailing Unionising

1) 2) 3) 4)

Strategic choices before Management



Mgmt must decide whether the org should remain union free or allow unionisation. If mgmt decide company should remain union free then they must take steps to keep union away from the org. If unionisation should be allowed, managers must decide what type of union mgmt relations they want. Mgmt must also choose the type of tactic to use while negotiating a new wage settlement.

Strategic choices before Unions



Bread and Butter V/S Political objective Adversarial V/S Co operative role Traditional issues V/S New services

Strategies and Tactics for remaining Union - Free

Effective supervision  Open communication  Effective personnel search  Healthy and Safe working environment  Effective Employer and Employee relations  Effective remmuneration


Some of the major Trade Unions



INTUC Indian National Trade Union Congress  CITU Centre of Indian Trade Unions  HMS Hind Mazdoor Sabha  AITUC All India Trade Union Congress  BMS Bhartiya Mazdoor Sangh  UTUC United Trade Union Congress

Disputes and Their Resolution



Acc to Industrial Dispute Act, 1947, industrial dispute mean any dispute or difference between employers and employers or between employers and workmen, workmen and workmen, which is connected with the employment or non employment or terms of employment.

Causes of Disputes


Wage Demands Union Rivalry (Singareni Collieries - 445 TU loss 3.12 million tones) Political Interference (ideology differs, union works on party lines, CITUCITUCommunist love to fight but hate to win so they have not signed any settlement in last 15 years)

Causes of Disputes


a) b)

Unfair Labour Practice - : Management unwillingness to recognise a particular TU and dilatory tactics. Negotiation of settlement of dispute the representatives of employers take the side of management which results in disputes. Multiplicity of Labour Laws

Settlement of Disputes


 a) b) c) d) e) f)

Collective Bargaining (reps of employees & employers meet to solve the issue) Collective Bargaining Process-: ProcessPreparing for negotiation Identifying bargaining issues Negotiations Reaching the agreement Ratifying the agreement Administration of agreement

Settlement Contd.


Collective Bargaining takes place when representatives of trade union meet management representatives to determine employee wages and benefits and to solve other issues. Collective Bargaining is the most effective method of resolving industrial disputes.

Settlement of Disputes


Grievance Procedure  Arbitration  Conciliation  Adjudication  Consultative Machinery

Settlement Contd.


Grievance Procedure -: Stage One (Sectional Head) 5 days Stage two (Deptt Head) 5 days Stage Three (Divisional Head) 10 days Fourth Stage (Union)

Settlement Contd


Arbitrations refers to the procedure in which a neutral third party studies the dispute, listen to both the parties and collects the information , and make recommendations which are binding on both the parties. Conciliation -: As per the Industrial Dispute act 1947, Sec 4, says that the govt shall appoint conciliation officers and their main duty is to mediate and promote settlement of Industrial Dispute.

Settlement Contd


Adjudication a mandatory settlement of Industrial Dispute by a labour court or Tribunal. Consultative Machinery

Safety and Health

There is a saying

Precaution is always better than cure.

Safety and Health

Bhopal Gas Tragedy 23 years ago, there was a gas leak from a Union Carbide plant which led to killing over 20000 thousands of people in Bhopal and become the worst industrial accident in India due to negligence of proper safety features. Survivors still suffer from various diseases and battling for life and waiting for their turn to get compensated.

Safety and Health



Major Accident in last decade (India)-: (India)1) Bhopal gas leak in December 1984. 2) Delhi gas leak from Sriram foods and fertilizers in December 1985. 3) Gwalior blast at a dyeing department of GRASIM in December 1991. 4) Khalgaon boiler explosion in NTPC in October 1992. 5) Mumbai ONGCs helicopter crash in the offshore Heera Panna oilfields Neelam area in August 2003.

Safety and Health



Major International accident-: accident-

1) NASA Columbia space shuttle broke apart during reentry on Feb 1, 2003. Wing damage sustained during launch by a chunk of fuel tank insulation was cited as the accident cause.

Safety and Health



Safety -: refers to the absence of accidents. Stated differently, safety refers to the protection of workers from the danger of accidents. Research says Every twenty seconds of working minute of every hour throughout the World, someone dies as a result of an industrial accident.

Safety and Health



Types of accidents -: Accidents Internal

Major

External
Minor

Fatal

Disability

Safety and Health

Disability Temporary
Partial Total

Permanent
Partial Total

Safety and Health



Internal If a bone is fracture which cant be seen and judged from open eyes.  External wounds which are seen through our open eyes.  Major Accidents results in death or results in prolonged injury.  Minor A scratch or injury does not seriously disable.  Temporary If a person recovers disability from which he can recover fully after certain period.

Safety and Health



Permanent Any injury which permanently disabled the person.

Safety and Health



1)

2)

Need for safety -: Cost saving Direct cost ie compensation and Indirect cost ie loss of production, damages of equipment, wastage of time. Increased productivity Safety promotes productivity, employees feel safe and produce good quality and quantity.

Safety and Health

3) Moral Providing safety to the employee has moral dimension, in addition to being a legal requirement. An employer has no right to cause accident to an employee which might kill the person. Monetary compensation does not bring the person back as a healthy individual. Can monetary compensation be a substitute for person?

Safety and Health

4) Legal Supreme court says An enterprise which is engaged in a hazardous dangerously industry which poses a potential threat to the health and safety of the persons working in the factory or industry must ensure that neither the workers nor the society suffers any kind of damages . All safety related requirements to be fulfilled by the industry as legal requirement before start of work.

Safety and Health



Safety Program -: Safety program deals with the prevention of accidents and with minimising the resulting loss and damage to person and property. Five principles that govern the safety program of an organisation are -: 1) Industrial accidents are a the result of multiple factors. So these factors have to be traced to their root causes, which are usually falls in the management system arising from poor leadership from top, inadequate supervision, no attention to design safety system.

Safety and Health

2) The most important function of safety programmes is to identify potential hazards, provide effective remedial actions. This is possible only if there are -: a) Effective system for reporting all accidents causing damage or injury. b) Adequate accidents records. c) Systematic procedures for carrying out safety checks, inspections. d) Methods of ensuring that safety equipment is maintained.

Safety and Health

3) Safety policy of the organisation should be determined by the top management and it must continuously involved in monitoring safety performance. 4) The management and supervision must be made fully accountable for safety performance in the working areas they control. 5) All employees should be given thorough training in safe methods of work and they should get regular guidance on eleminating safety hazards.

Safety and Health



Safety Process -: Strategic choices development of safety policy Organisation for safety Analysis of causes of accidents Implementation of program Evaluation of effectiveness

Safety and Health



1)

2)

Strategic choices Management must make decision regarding safety of their workers. Some strategic choices are-: areMust determine the level of protection. Some co because of financial constraints prefer low level. Must decide whether a safety program will be formal or informal. Formal have written regulation & carefully monitored. Informal are enforced because of pressure and include good training.

Safety and Health

3) Management can be proactive or reactive. 4) Management can use safety of workers as a marketing tool of the organisation.

Safety and Health



 1) 2) 3) 4) 5)

Health - : The well being of the employees in an industrial establishment is affected by accidents and by ill health physical as well as mental. Health in Industry can be discussed through following angles-: anglesPhysical health Mental health Noise control Stress management Violence at work place

Safety and Health



Health hazards -: Health hazards

Causes

Lung cancer oven emissions, smokes Leukemia Radiation Reproductive problems Radiation Vision Chemical fumes, Office equip. Hearing High noise level

Safety and Health



Mental health -: Specially at executive cadre. Three reasons for this development are mental breakdowns because of pressure & tensions. Mental disturbances because of reduced productivity & lower profits. Mental illness alcoholism & poor human relations.

Safety and Health



Noise Control -: Noise can only be minimised but can not be totally eliminated. Constant exposure to noise not only effects hearing ability but also effect the general health of the employees.

Safety and Health



Work stress -: refers to an individuals response to a disturbing factor in the environment . Stress is mostly understood to be negative, but it has positive dimension also. When stress brings out something better from an individual, it is called eustress.  Violence at work place -: