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centers are given management games, psychological test, puzzles,

questioners about different management related situations etc. based on
their performance in these test an games appraisal is done.

2. Management by objective :-

This method was given by Petter Druckard in 1974. It was intended to be a

method of group decision making. It can be use for performance appraisal
also. In this method all members of the of the department starting from the
lowest level employee to the highest level employee together discus, fix target
goals to be achieved, plan for achieving these goals and work together to
achieve them. The seniors in the department get an opportunity to observe
their junior- group efforts, communication skills, knowledge levels, interest
levels etc. based on this appraisal is done.

3. Behavioral anchored rating scale :- (BARS)

In this method the appraisal is done to test the attitude of the employee
towards his job. Normally people with +ve approach or attitude view and
perform their job differently as compared to people with a –ve approach.

4. Human resource audit/accounting :-

In this method the expenditure on the employee is compared with the

income received due to the efforts of the employee. A comparison is made to
find out the utility of the employee to the organization. The appraisal
informs the employee about his contribution to the company and what is
expected in future.

5. 360 Degree Performance appraisal :-

In this method of appraisal and all round approach is adopted. Feedback

about the employee is taken from the employee himself, his superiors, his
juniors, his colleagues, customers he deals with, financial institutions and
other people he deals with etc. Based on all these observations an appraisal
is made and feedback is given. This is one of the most popular methods.

LIMITATIONS OF PERFORMANCE APPRAISAL

1. Halo effect :- In this case the superior appraises the person on certain
positive qualities only. The negative traits are not considered. Such an
appraisal will no give a true picture about the employee. And in some cases
employees who do not deserve promotions may get it.

2. Horn effect :- In this case only the negative qualities of the employee are
considered and based on this appraisal is done. This again will not help the

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organization because such appraisal may not present a true picture about
the employee.

3. Central tendency :- In this case the superior gives an appraisal by giving

central values. This prevents a really talented employee from getting
promotions he deserves and some employees who do not deserve any thing
may get promotion.

4. Leniency and strictness :- Some bosses are lenient in grading their

employees while some are very strict. Employee who really deserves
promotions may loose the opportunity due to strict bosses while those who
may not deserve may get benefits due to lenient boss.

5. Spill over effect :- In this case the employee is judged +vely or –vely by
the boss depending upon the past performance. Therefore although the
employee may have improved performance, he may still not get the benefit.

6. Fear of loosing subordinates and spoiling relations :- Many bosses do

not wish to spoil their relations with their subordinates. Therefore when
they appraise the employee they may end up giving higher grades which are
not required. This is a n injustice to really deserving employees.

7. Goodwill and techniques to be used :- Sometimes a very strict appraisal

may affect the goodwill between senior and junior. Similarly when different
departments in the same company use different methods of appraisal it
becomes very difficult to compare employees. 8. Paper work and personal
biased :- Appraisal involves a lot of paper work. Due to this the work load of
HR department increases. Personal bias and prejudice result in bosses
favoring certain people and not favoring others.

COMPENSATION MANAGEMENT

Meaning:- Compensation Managemetn is the act of providing monetary

value to an employee for the work they do by means of a company process
or policy. Some types of compensation include salary, bonuses & benefit
packages.

Acc. to D.S. Beach “ the establishment & implementation of sound

policies & practices of employee compensation. It includes such areas as job
evaluation, surveys of wage & salaries, analsis of revelvant organisational
problems, development & maintenance of wage structure, establishing rules
for administrating wages, wage payment incentives, prfit sharing, wage
changes & adjustments, supplementary payments, control of compensation
costs & other related items.

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Importance of Compensation Management

A good compensation is a must for every business organization, as it gives an
employee a reason to stick to the company.
An organization gains from a structured compensation management in the following
ways −
 It tries to give proper refund to the employees for their contributions to the organization.

 It discovers a positive control on the efficiency of employees and motivates them to perform better
and achieve the specific standards.

 It creates a base for happiness and satisfaction of the workforce that limits the labor turnover and
confers a stable organization.

 It enhances the job evaluation process, which in return helps in setting up more realistic and
achievable standards.

 It is designed to abide with the various labor acts and thus does not result in conflicts between the
employee union and the management. This creates a peaceful relationship between the employer
and the employees.

 It excites an environment of morale, efficiency and cooperation among the workers and ensures
satisfaction to the workers.

COMPONENTS OF COMPENSATIOIN MANAGEMENT

1. Wage:- wage is general term referring to direct monetary

compensation. It is also used specifically to refer to payments to
service workers on the basis of hourly rated production.
2. Salary:- salary refers to weekly or monthly rates paid to clerical,
administrative & professional employees.

3. Allowances:- Allowances can be defined as the amount of something

that is allowed, especially within a set of rules and regulations or for a
specified purpose. Various allowances are paid in addition to basic
pay.
Some of these allowances are as follows −
 Dearness Allowance − This allowance is given to protect real income
of an employee against price rise. Dearness allowance (DA) is paid as
a percentage of basic pay.

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 House Rent Allowance − Companies who do not provide living

accommodation to their employees pay house rent allowance (HRA) to
employees. This allowance is calculated as a percentage of salary.
 City Compensatory Allowance − This allowance is paid basically to
employees in metros and other big cities where cost of living is
comparatively more. City compensatory allowance (CCA) is normally
a fixed amount per month, like 30 per cent of basic pay in case of
government employees.
 Transport Allowance/Conveyance Allowance − Some companies
pay transport allowance (TA) that accommodates travel from the
employee’s house to the office. A fixed amount is paid every month to
cover a part of traveling expenses.
Incentives and Performance Based Pay
Incentive compensation is performance-related remuneration paid with a
view to encourage employees to work hard and do better.
Both individual incentives and group incentives are applicable in most
cases. Bonus, gain-sharing, commissions on sales are some examples of
incentive compensation.

Fringe Benefits/Perquisites
Fringe benefits include employee benefits like medical care, hospitalization,
accident relief, health and group insurance, canteen, uniform, recreation
and the likes.
FACTORS AFFECTING WAGES & SALARY
The factors can be catergorised into
I.External Factors:-
External factors are
1.Demand & Supply:- the labour market conditions or demand & supply
forces operate at the national & local leels & determine organisational wage
structure. When the demand for a particular type of labour is more &
supply is less then the wages will be more. On the other hand, if supply of
labour is more & demand on the other hand is less rhen persons will be
available at lower wage rates.
2. Cost of Living:- the wage rates are directly influenced by cost of living of
a place. The workers will accept a wage which may ensure them a minimum
standard of living. Wages will also be adjusted according to price index
number. The increase in price index will erode the purchasing power of
workers & they will demand higher wages. Wen the prices are stable then
frequent may not be undertaken.
3.Trade Union’s Bargaining Power:- the wage rates are also influenced by
the bargaining power of trade unions. Stronger the trade union higher will

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be the wage rates. The strength of a trade union is judged by its

membership, financial position & type of leadership. Union’s last weapon is
strike which may also be used for getting wage increases.
4.Government Legislation:- to improve the working conditions of workers,
government may pass a legislation for fixing minimum wages of workers.
This may ensure them a minimum level of living. In underdeveloped
countries bargaining power of labour is weak & employers try to exploit
workers by paying them low wages.
5.Psychological & social factors:- psychologically the level of
compensation is perceived as a measure of success in life. Management
should take into consideration the psychological needs of the employees
while fixing the wage rates so that the employees take pride in their work.
Sociologically & ethically, the employees want that the wage system should
be equitable. Sociologically & ethically, the employees want that the wage
system should be equitable, just & fair.
6.Economy:- economy also has its impact n wage & salary fixation. Whilc
it may be possible for some organisations to thrive in a recession, there is
no doubt that economy affects remuneration decisions. A depressed
economy will probably increase the labour supply. This, in turn should
lower the going wage rate.
7.Technonological Development:- with the rapid growth of industries,
there is a shortage of skilled resources. The technological developments
have been affecting skill levels at faster rates. Thus, the wage rates of skilled
employees constantly change & an organisation has to keep its level upto
the mark to suit the market needs.
8.Prevailing Market Rates:- No enterprise can ignore prevailing or
comparative wage rates. The wage rates paid in the industry or other
concerns at the same place will form a base for fixing wage rates. If a
concern pays rates then workers leave their jobs whenever they get a job
somewhere else. It will not be possible to retain good workers for long.
II. INTERNAL FACTORS
1.Ability to pay:- the ability to pay of an enterprise will influence wage
rates to be paid. If the concern is running into losses then it may not be
able to pay higher wage rate. A profitable concern may pay more to attract
good workers. During the period of prosperity, workers are paid higher
wages because management wants to share the profits with labour.
2.Job Requirements:- Basic wages depend largely on the difficulty level &
physical & mental effort required in a particular job. The relative worth of a
job can be estimated through job evaluation. Simple, routine tasks that can
be done by many people with minimum skills receive relatively low pay. On
the other hand, complex, challenging tasks that can be done by few people
with high skill levels generally receive high pay.

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3. Management Strategy:- the overall strategy which a company pursues

should determine the remuneration to its employees. Where the strategy of
the organisation is to achieve rapid growth, remuneration should be higher
than what competitors pay. Where the strategy is to maintain & protect
current earnings, because of the declining fortunes of the company,
remuneration level needs to be average or even below average.
4. employees :- several employee related factors interact to determine his
remuneration these are
i. Performance:- or Productivity is always rewarded with a pay increase .
rewarding performance motivates the employees to d better in future.
ii. Seniority:- unions view seniority as the most objective criteria for pay
increases whereas management prefers performance to effect pay increases.
iii. Experience:- Makes an employee gain valuable insignts & is generally
rewarded.
iv. Potential:- Organisation do pay some employees based on their potential.
Young managers are paid more because of their potential to perform even if
they are short of experiences.

FRINGE BENEFITS
Meaning:- Fringe benefits is a benefit which supplements the employee’s
ordinary wages & which of value to them & their families is so far as it
materially increases their retirement benefits.
Definition
Acc. to D. Belcher “ Fringe benefits are any wage cost not directly
connected with the employees productive effort, performance, service or
sacrifice”.
Kinds of Fringe Benefits
1.Payment for time not worked:- this category includes the following:
a) Paid Holiday:- According to factories act 1948 an adult worker shall
have weekly paid holidays, preferably Sunday. When a worker is deprived of
weekly holidays, he is eligible for compensatory holidays of the same
number in the same month.
b) Shift premium:- companies operating second & third shifts, pay a
premium to the workers who are required to work during the night shift.
c) Holiday Pay:- generally organisation offer double the normal rate of the
salary to those workers who work during holidays.
d) Paid Vacation:- worker in manufacturing mining & plantations who had
worked for 240 days during a calendar year are eligible fro paid vacation at
the rate of one day for every 20 days worked in case of adult workers & one
day fro every 15 days worked in the case of child workers.

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2. Employee Security:- a minimum & continuous wage or salary gives a

sense of security to the employees. The payment of wages act 1936, The
Minimum Wages act 1948, the payment of Bonus act 1965, provide income
security to the employees. In addition to this, the Industrial Disputes Act
1947, provides for the payment f compensation in case of lay off &
retrenchment.
3. Safety & Health:- employee’s safety & health should be taken care of in
order to protect the employees against accidents, unhealthy working
conditions & to protect the workers productive capacity.
4. Workmen’s Compensation:- in addition to health & safety measures,
provision for the payment of compensation has also been made under
Workmen’s Compensation Act, 1923. The act is intended to meet the
contingency of invalidity & death of a worker due to an employment injury
or an occupational disease specified under the act as the sole responsibility
of the employer.
5. Health Benefits:- Organisations provide various medical services like
hospital, clinical & dispensary facilities to employees & their family
members. As per Employees State Insurance Act 1948 provides
 Sickness benefits
 Maternity benefit
 Disablement benefit
 Dependent benefit
 Medical benefit
6. Voluntary Arrangement:- Most of the large organisations provide
health service over & above the legal requirements free of cost tot heri
employees by setting up hospitals, clinics, dispensaries &
homeopathic dispensaries.
7. Welfare & Recreation Facilities:- welfare & recreational benefits
include canteens, consumer societies, credit societies, Housing, Legal
aid, Employee counselling, welfare organisation, holiday homes,
Educational Facilities , Transportation parties & picnics,
miscellaneous.
8. Ole Age & Retirement Benefits:- employers provide some benefits
to the employees, after retirement & during old age, with a view to
create a feeling of security about the old age. These benefits are called
old age & retirement benefits include Provident Fund, Pension,
Deposit Linked scheme, Gratuity , Medical benefits.

INTERNAL MOBILITY
PROMOTION

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Meaning;- Promotion is a term which covers a change & calls for greater
responsibilities & usually involves higher pay & better terms & conditions of
service and therefore, a higher status or rank.
Acc. to Scott & Clothier : “ A promotion is the transfer of an employee to a
job which pays more money or one that carries some preferred status”.
Types of Promotion
1.Vertical Promotion:- under this type of promotion, employee is moved to
the next higher level in the organisational hierarchy with greater
responsibility, authority pay & status.
2.Upgradation:- under this type of promotion, the job is upgraded in the
organisational hierarchy . consequently, the employee gets more salary,
higher authority & responsibility.
3. Dry Promotion:- under this promotion, the employee is moved to the
nest higher level in the organisational hierarchy with greater responsibility,
authority & status without any increase in salary.
Bases of Promotion
1.Merit as a basis of Promotion:- merit is taken to denote an individual
employee’s skill, knowledge, ability, efficiency & aptitude as measure from
educational, training & past employment record.
2.Seniority as a Basis of Promotion:-
Seniority refers to relative length of service in the same job & in the same
organisation . & the amount of knowledge & the level of skill acquired by an
employee in an organisation.
3.Seniority –cum-Merit:-
A combination of both seniority & merit can be considered as the basis for
promotion satisfying the management for organisational effectiveness & the
employees & trade unions for respecting the length of service. A balance
between seniority & merit should be struck & a new basis developed.

TRANSFER
Transfer is defined as “ a lateral shit causing movement of individuals from
one position to another usually without involving any marked change in
duties, responsibilities, skills, needed or compensation”.
Transfer also defined as the moving of an employee from one job to another.
It may involve a promotion, demotion or no change in job status other than
moving from one job to another.
Types of Transfer
1.Production Transfer:- transfer caused due to changes in production.

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2.Replacement Transfer:- transfers caused due to initiation or

replacement of a long standing employee in the same job
3. Rotation Transfer:- transfer initiated to increase the versatility of
employees.
4. Shift transfer:- transfer of an employee from one shift to another.
5. Remedial transfer:_ transfers initiated to correct the wrong placements.
6.Penal transfer:- transfers initiated as a punishment for indisciplinary
action of employees.

SEPERATION

Separation of an employee exists when the service of an employee comes to

an end because of one reason or other. Separation arises due to
resignation; lay off, dismissal and retirement.

Types of separation:

i) Resignation: when the employee himself initiates the

separation then it is termed as separation. There are some resignation
which are avoidable and others which are unavoidable. It is the
responsibility of the management to look out the real reason of the
resignation. In such a cases the exit interview is better to conduct to find
out the reason of resignation.

ii) Lay off: lay off is generally done to reduce the financial
burden of the organization by temporary removing the surplus employees.
This is done due to inability of the employee to recruit them due to shortage
of sufficient resources. Lay off results in a great loss to the organization as
they had to suffer all the expenses of selection, placement and training.

iii) Dismissal: dismissal or discharge means separating the

employee from the payroll due to unsatisfactory performance where the
employee fails to perform his duties well and he is not properly skilled to
perform his job or due to violation of organizational rules it means
indiscipline, dishonesty. What ever is the cause of dismissal but it should be
done at the last stage.

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iv) Retirement: number of separation in the organization happen

due to retirement. There must be clear rules of retirement there may be
compulsory retirement where an employee has to retire after attaining a
particular age. Forced retirement means when a person is found guilty in
the court of law or breaks any service agreement then has to retire forcibly
irrespective of his age. Premature retirement means that the employee
becomes disable to perform the job in that case he may be given the option
to take retirement before his retirement age.

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UNIT V

HR IN NEW ERA

HR IN VIRTUAL ORGANISATION

A virtual organisation a is group of people that relies primarily or

exclusively on electronic form of communication to work together in
accomplish organisational goals.

HR IN KNOWLEDGE INDUSTRY

It is the practice of centralizing all HR documents, policies, information,

and knowledge, and making that vital information easy for anyone in the
company to access and update from anywhere.

HR ACCOUNTING & AUDITING

“Human Resource Accounting is the process of identifying and measuring

data about human resources and communicating this information to
interested parties.”
In simple terms, it is an extension of the accounting principles of matching
costs and revenues and of organizing data to communicate relevant
information in financial terms.

HR Audit:-
HR audit is an important management control device. It is a tool to judge
organisations performance and effectiveness of HR management. According
to Dale Yoder, “Personnel audit refers to an examination and evaluation of
policies, procedures and practices to determine the effectiveness of
personnel management.”

It is an analytical, investigative and comparative process. It gives feedback

about HR functions to operating managers and HR specialists. It enables to
know about the effectiveness of personnel programmes. It further provides
feedback about how well managers are meeting their HR duties. It provides
quality control check on HR activities. It refers to determine the effectiveness
and efficiency of HRM.

HUMAN RESOURCE INFORMATION SYSTEM(HRIS)

HRIS stands for Human Resources Information System. The HRIS is a

system that is used to collect and store data on an organization's employees.
This often includes an Applicant Tracking System (ATS), payroll, benefits,

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time & attendance, training, performance management, employee self-

service, and so on

DUAL CAREER

a situation in which both people in a marriage or relationship have a job:

Employees are increasingly turning down overseas posts, citing family
concerns, including dual careers and elder-care responsibilities. ... a
situation in which someone has two jobs: At only 18, he has dualcareers as
a singer and actor.

FLEXI TIME

Meaning: Flex or flexi time Is non traditional approach to select work hour
scheduling . This employees to selecting their work Hours on their own.
There is ,however, a particular core period for which all employees have to
be work.

EMPLOYEES ENGAGEMENT
Meaning: The employee engagement activities is important because it helps
not only the company to growth but also is very useful for the overall growth
of the employees. When the subordinates are a given a chance to get
involved in a process of making decisions at all levels is known as employees
participation or employee engagement

GLASS CEILING OF EMPLOYEES

The Glass ceiling is a very common term used in the HRM. It is an unseen
barrier which do not allow the women & minorities to rise to the higher
ranks of the corporation irrespective of their qualities.
In other words the Glass ceiling is a metaphor referring to an artificial
barrier that prevents women & minorities from being promoted to
managerial & executive level positions within an organization
Glass ceiling is used to describe the difficulties faced by women. When
trying to move to higher roles in a male dominated society. The invisible
artificial barriers that block women from senior executives jobs .

MOONLIGHTING OF EMPLOYEES

Moonlighting refers to the practice of working a second job outside normal

business hours. Therefore, an employee may work a normal 9-to-5 job as a
primary source of income but work nights at a different job in order to earn
extra money.

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EMPLOYEE WELL BEING

Employee well being or Workplace Wellbeing relates to all aspects of

working life, from the quality and safety of the physical environment, to how
workers feel about their work, their working environment, the climate at
work and work organization. Workers well-being is a key factor in
determining an organisation's long-term effectiveness.

EMPLOYEE ENGAGEMENT

Employee engagement is a property of the relationship between an

organization and its employees. An “engaged employee” is one who is fully
absorbed by and enthusiastic about their work and so takes positive action
to further the organization’s reputation and interests.

Employee engagement is the extent to which employees feel passionate

about their jobs, are committed to the organization, and put discretionary
effort into their work. Employee engagement is not the same
as employee satisfaction. Employee Satisfaction only indicates how happy
or content your employees are.

EMPLOYER BRANDING

Employer Brand describes an employers reputation as a place to work , and

their employee value Proposition , as opposed to the more general corporate
brand reputation and value proposition to customers.

In other words, Employer brand is a term referred to describe the companies

reputation and popularity from a potential employees

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