Diploma in Human Resource Management

2023
© International Qualifications Network Ltd. 2023

ISBN: 979-8-88940-043-1

IQN Diploma in Human Resource Management, 2023

All rights reserved.

No part of this coursebook may be reproduced, stored in a retrieval system, or published in any form or
by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission
of the copyright owner.

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Table of Contents
MODULE 1 – INTRODUCING HUMAN RESOURCE MANAGEMENT ........................................................ 1

MODULE 2 – WORKFORCE PLANNING AND TALENT MANAGEMENT ................................................ 15

MODULE 3 – RECRUITMENT AND SELECTION ....................................................................................... 25

MODULE 4 – EMPLOYEE ENGAGEMENT, INDUCTION, AND RETENTION ........................................... 45

MODULE 5 – PERFORMANCE MANAGEMENT ........................................................................................ 55

MODULE 6 – MANAGING REWARDS ....................................................................................................... 69

MODULE 7 – LEARNING AND DEVELOPMENT ....................................................................................... 81

MODULE 8 – CAREER DEVELOPMENT ..................................................................................................... 91

MODULE 9 – EMPLOYEE RELATIONS ...................................................................................................... 95

MODULE 10 – WELFARE, HEALTH, AND SAFETY .................................................................................. 103

MODULE 11 – EQUAL OPPORTUNITIES ................................................................................................ 111

MODULE 12 – EXIT MANAGEMENT ....................................................................................................... 117

MODULE 13 – HR ANALYTICS ................................................................................................................. 123

MODULE 14 – HR INFORMATION SYSTEMS ......................................................................................... 129

MODULE 15 – HR AUDIT ......................................................................................................................... 135

MODULE 16 – ISLAMIC HRM .................................................................................................................. 141

MODULE 17 – INTERNATIONAL HRM.................................................................................................... 145

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MODULE 1 – INTRODUCING HUMAN RESOURCE
MANAGEMENT

INTRODUCTION

THE HISTORY OF DEVELOPMENT OF HRM

STRATEGIC HRM

HRM & THE BUSINESS CONTEXT

CONTEMPORARY FEATURES OF HRM

HRM POLICIES & PRACTICES

STRUCTURE & ROLE OF THE HR FUNCTION

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1 INTRODUCTION

What actually is human resource management (HRM)? Every organisation has one thing in
common – they all have people. Simply speaking, HRM is all about managing people. But managing
people is not simple. It requires a lot of planned effort to hire people, develop them, and reward
and retain them.

HRM is the process of employing people, training them, compensating them, developing policies
relating to them, and also developing strategies to retain them. But HRM is not just about
managing relationships with employees. There are two further important stakeholders: the
employer and the manager. So, HRM requires understanding and meeting the needs of the
employer, the manager, and the employees.

• The employer needs a successful and profitable business.

• The manager needs the right people, in the right place, to do the right thing.

• The employee needs a job that pays them well.

1.1 HR POLICIES & HR PRACTICES

For the success of the organisation, we need to understand the needs of the employer, manager,
and employees. But we cannot manage these relationships without proper planning and
coordination. That is the reason we need policies and practices within the organisation to help us
manage people. We call these HR policies and HR practices. We can also combine policies and
practices together and refer to them as HRM strategy.

• We need strategies on how to recruit and select employees. If there are vacancies, we
simply cannot run an organisation without first hiring new employees.

• We also need to decide on the terms and conditions of the job offer and the
employment contracts.

• Equal opportunity is important. So, we need policies in place that treat all employees
equally so that there is no discrimination.

• If any employee breaks an organisational rule, we need policies on how to deal with
disciplinary issue.

• We need policies to determine how to reward and motivate our employees.

• We also need to decide what learning and development opportunities we will provide
for employees.

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1.2 HR PHILOSOPHY

However, the HR practices that we have mentioned so far will not be the same across all
organisations. Each organisation operates in a different context. Sometimes, the views of the
organisations’ owners will determine how HR operates. This is called the HR philosophy of the
organisation.

Different owners will have different HR philosophies. Based on their philosophy, they will decide
different roles for the managers and the employees. As a result, HR philosophy dictates the
organisation’s HRM strategies. This is why we will see different HR practices between
organisations.

1.3 HR FUNCTIONS IN SMALL & LARGE ORGANISATIONS

Not all organisations are of the same size. Some organisations are small, and some are really big.

• A small organisation may not have an HR department. The owner himself may be doing all
the people management work, from hiring new employees to distributing salary cheques.

• On the other hand, in large organisations we will find HR departments employing

hundreds of HR professionals.

But regardless of whether an organisation is small or large, every organisation is bound to manage
people well. Organisations that manage people better prosper and grow more. That is the reason
human resource management has become such an important function for all organisations.

1.4 PERSONNEL MANAGEMENT & HRM

It can be argued that people are an organisation's most important resource. After all,
organisations are made up of people. The way money, technology, information, and other
resources are used depends on human decisions. So, it is generally recognised that the success of
any business is greatly influenced by the calibre and attitude of the people who work for it.

It is therefore also commonly recognised that someone in every organisation will need to be
responsible for the many matters that arise in connection with the recruitment, selection, training,
motivation, payment, and movement of staff throughout the organisation. This is traditionally the
role of the personnel function.

However, as the pace of social and technological change has quickened, there has been a growing
recognition that further thought must be given to managing vital human resources at an earlier
stage, and at a higher level of organisational planning. This has encouraged a longer-term, more
proactive, and strategic approach to people management known as 'human resource
management' or HRM.

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1.5 DEFINING HUMAN RESOURCE MANAGEMENT

Human resource management can be seen as activities related to the management of people in
an organisational setup. HRM may also be defined as a strategic approach to managing
employment relations which emphasises that leveraging people's capabilities is critical to
achieving a sustainable competitive advantage. This can be achieved through a distinctive set of
integrated employment policies, programmes, and practices.

As this definition suggests, the term HRM is often associated with both:

• an orientation towards personnel management, and

• an orientation towards the employment relationship, embracing distinctive people-

centred values such as trust, commitment, involvement, and collaboration.

2 THE HISTORY OF DEVELOPMENT OF HRM

The history of HRM’s development as a field is very interesting. Today’s HRM has evolved in phases
over the last 200 years or more.

2.1 INDUSTRIAL WELFARE

The journey started when the Industrial Revolution took place in England in the nineteenth
century. At that time, working conditions in the factories were very bad, but some employers
started providing workplace facilities such as lunchrooms, medical care, and housing. Employers
created a position known as the ‘welfare officer’, who was dedicated to dealing with employees’
issues. This first phase of HRM’s history is known as the ‘welfare movement’.

2.2 SCIENTIFIC MANAGEMENT

The next phase is known as the ‘scientific management movement’. Scientific management
theory was developed by Frederick Taylor and became popular in the 1880s and 1890s in the US.
Its main objective was improving labour productivity. During this time, trade union membership
started to increase both in the UK and the US, and organisations became busy with industrial
relations. In the 1920s, positions such as ‘labour manager’ and ‘employment manager’ became
popular.

2.3 BEHAVIOURAL SCIENCE

The third phase of the history is linked with the ‘behavioural science movement’ In the late
1920s, Elton Mayo and his colleagues conducted the ‘Hawthorne Studies’ in the USA. The study
emphasised working conditions as a means of motivating employees. During the 1960s and 1970s,
new regulations provided different rights for employees in the US and Europe. During this time,

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the job title ‘personnel officer’ became common, and so did the ‘personnel management’ (PM)
business discipline.

2.4 HRM TODAY

During the 1960s and 1970s, the terms 'PM' and 'HRM' both largely co-existed. But in the 1980s,
there was a move from PM to HRM. This is the fourth phase of HRM’s history; this is when the term
human resource management was strongly established. The recession of the 1980s led to a
focus on productivity. Rapid technological development took place and there was significant
growth in the service sector. This brought about a decline in trade union membership and new
concepts such as working from home, teleworking, and virtual teams emerged. This resulted in
the establishment of the HR function in line with other business functions, such as finance and
marketing, and led to an increase in HR positions. Now, in today’s world, HRM is one of the most
important functions for any organisation.

3 STRATEGIC HRM

There are critics who say traditional HRM functions do not help an organisation to achieve its
business objectives. Marketing helps increase sales; finance helps save money. But HR functions
do not add that much value to the organisation. To address this issue, the concept of strategic
human resource management (SHRM) became important.

HRM operates at the micro-level, but SHRM takes a macro-level approach. The integration
between HRM and business strategy is strategic human resource management. SHRM is believed
to contribute positively and directly to organisational performance.

Every organisation faces challenges and problems. SHRM is about developing and implementing
HR practices and policies that will solve business problems. For example, if the sales team of an
organisation is not performing well, HR needs to investigate the reasons: maybe the sales
commission is not attractive, or the sales team is tired of long working hours. No matter the
reasons behind poor performance, HR needs to coordinate the sales team to solve this issue. Such
an effort is an example of strategic human resource management.

4 HRM & THE BUSINESS CONTEXT

Each organisation is different. Therefore, each organisation's HR activities will also be different.
Even those organisations that produce similar products for the same market segments are
fundamentally different. This distinctiveness is created by the many different factors, internal and
external, of the organisation. Organisations have two types of business contexts: internal
contexts and external contexts. Both contexts impact HR functions, so we need to understand
both.

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4.1 INTERNAL CONTEXTS

The different internal contexts of an organisation will impact its HR functions, as explained below.

• Small organisations will have small numbers of employees, so they will have less formal
HR practices.

• Private organisations will have a different HR approach than government organisations.

• New organisations will have a different HRM approach than older, or mature,
organisations.

• The ideology of the senior management will impact HR practices as well. For example, if
the senior management gives importance to workforce development, they will have a
larger budget for employee training.

• The financial condition of the organisation, characteristics of the workforce, organisational

culture, and specific customs and practices of an organisation also impact the way their
HR functions.

4.2 EXTERNAL CONTEXTS

However, organisations also operate in an external environmental context. This presents further
opportunities and constraints. External contexts also impact an organisation’s HR functions.
External contexts include:

• the level of competition in the market,

• technological advancements,

• labour market conditions,

• government legislations and regulations, and

• ethical environments.

5 CONTEMPORARY FEATURES OF HRM

Having considered their internal and external contexts, organisations must then make some
strategic choices about how they configure their HR function. There are some important features
and concepts that are popular in contemporary HR functions. These features and characteristics
show how the contemporary HRM function aims to enable organisational growth, productivity,
and profitability.

• In today’s world, HRM is explicitly linked with corporate strategy. This means HR
functions need to help an organisation achieve its strategic objectives.

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• Today's HRM does not force employees to comply with the rules of organisation. Rather,
HRM now focuses on commitment from the employees.

• HRM believes employee commitment can be obtained through an integrated approach.

This means all HR policies and practices need to be integrated and consistent with each
other.

• HRM is not just the responsibility of HR specialists. Rather, line managers also have a
responsibility in managing people.

• In today's world, we see HRM as included in the development of business strategy. This
is known as the strategic approach to the management of people.

• Today’s HRM has a unitarist frame of reference. A unitarist frame of reference means
both managers and employees should have a common purpose. They cannot work for two
different goals.

• HRM now prefers a ‘soft’ approach. A ‘soft’ approach means treating employees as
valuable assets. In a ‘hard’ approach, employees are considered resources, like money or
machinery.

• Today's HRM has an evidence-based approach. This means the design of HR practices is
now guided by relevant information, scientific evidence, and critical thinking.

• HR policies and practices need to be consistent with the organisational culture . HR needs
both vertical and horizontal integrations.

Vertical integration means matching HRM policies and practices with business strategy.
For example, if your business strategy is to increase sales by 200%, you will need HR
practices to attract, hire, and retain the best possible sales team.

Horizontal integration is the interconnection between different HRM policies and

practices. Let's say you want to retain at least 95% of your sales team. So, you announce
an increase in their sales commission. You also announce a policy that restricts sales
team members from applying for paternity leave. As a result, your sales team becomes
unhappy. You have decided two things that send two completely different messages to
your sales team. One policy is motivating; the other is demotivating. Your HR policies
and practices should be consistent with each other. This required consistency is known
as horizontal integration.

All of these contemporary HR concepts will help us develop a HRM strategy in line with your
business strategy. HRM strategy will then determine your HR policies and practices, as illustrated
below using an organisational chart.

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Figure 1: Business Strategy, HR Strategy, HRM Policies, and HR Practices

6 HRM POLICIES & PRACTICES

There are many different types of HR policies and practices. One way to examine different HR
policies and practices is to follow the lifecycle of the employee: employees are initially attracted
to an organisation; they are recruited and selected; their performance is managed; they are
developed, rewarded, and engaged over time; then ultimately, they exit the organisation.

6.1 HR PRACTICES & EMPLOYEE LIFECYCLE

There are four stages in the lifecycle of any employee. In each stage of the lifecycle, specific HR
policies and practices become relevant.

The first stage in the employee lifecycle is ‘attract & select’. During this stage, employer branding,
organisational design, organisational structure, recruitment strategy, selection techniques, and
onboarding are important.

The second stage is ‘manage & develop’. At this stage, we are interested in organisational culture,
management style, performance management, motivation, employee participation, discipline,
grievance, learning, and development.

The third stage is ‘reward & retain’. HR policies and practices in this phase are pay and benefits,
recognition, employee engagement, talent management, succession planning, career planning,
employee welfare, and employment relations.

The final stage is ‘separate’. Sadly, all employees will one day leave the organisation. Common HR
practices during this stage include exit interviews, outsourcing, retirement, and redundancy.

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Attract & Manage &

select develop

Reward &
Separate
retain

Figure 2: Employee Lifecycle and HRM Policies

6.2 HR PRACTICES & ORGANISATIONAL OUTCOMES

The marketing department of an organisation aims to increase sales. The production department
aims to manufacture quality products so that customers remain loyal. Similarly, the HR
department also needs to contribute to the organisation. There should be a link between HR
practices and organisational outcomes.

HR develops different HR policies. Based on each HR policy, a number of HR practices will then be
developed. Ideally, HR practices should increase the performance of individual employees, and as
a result, will increase organisational capability. Then, the organisation will be able to achieve its
desired outcomes. To summarise, each HR policy should guide an HR practice that creates an
organisational behaviour and leads to a desired organisational outcome.

If an organisation develops HR practices in such a way, we can say that the organisation has
achieved a high-performance work system (HPWS).

HR policy

HR practices

Organisational capability

Organisational outcome

Figure 3: HR Policy & Practices and Organisational Capability & Outcome

HR develops HR practices that will benefit their organisation. HR should also look after the best
interests of the employees, not just the best interests of the organisation. So, there are sometimes

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debates around this issue – whether HR should serve the organisation first, or its employees.
Employees and organisations need each other. So, one solution to this debate would be focusing
on the common interests between the organisation and its employees.

7 STRUCTURE & ROLE OF THE HR FUNCTION

HR is typically positioned at the same organisational level as finance or marketing. However, the
size of the organisation has an impact on how the HR function is configured.

In many small or new businesses, owners handle HR issues; there may not be an HR department.
Many small business owners use consultants to advise them on specific HR-related issues, or they
outsource the main HR functions. The outsource provider can manage all, or part, of the HR
function, including pay and benefits, administration, and the creation of new organisation-specific
HR policies and practices.

In large organisations, however, such as a multinational corporation (MNC) such as Apple or

Toyota, the HR function will be sizeable and highly structured. It is typically led by an HR director,
who has a seat on the board of directors, where they have access to, and the support of, the senior
management team. This situation provides a real opportunity for the integration of HR strategy
with business strategy.

7.1 LINKAGE BETWEEN HR STRATEGY & BUSINESS STRATEGY

There are different ways HR strategy can be linked to business strategy, as explained below.

• In some organisations, there is no link between the HR strategy and business strategy. This
is known as a separation model.

• In some organisations, HR strategies can influence business strategies to some extent. This
is called a dialogue model.

• In other organisations, business strategy is developed first and then HR strategies are
developed. This is known as a fit model.

• Another is a holistic model. In a holistic model, HR strategy and business strategy are
developed together.

• Finally, the HR-driven model. In an HR-driven model, HR strategies drive the development
of the business strategy.

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7.2 HR GENERALISTS & HR SPECIALISTS

If an organisation's senior management considers human resources as a strategic asset, then it is

more likely that they will engage in HR structure and functions that will be in line with the business
strategy.

How the HR function is configured also often depends on the organisation’s context, needs, and
preferences. Some may organise HR functions around specialist or generalist roles. As a result,
some HR practitioners are HR generalists, and others are HR specialists.

• An HR specialist has expertise in one specific HR area. He is trained to work in a particular

area of human resources. For example, HRIS specialists, payroll specialists, recruiting
specialists, training specialists, etc.

• An HR generalist, on the other hand, performs several HR responsibilities. He is not a

specialist in one area. An HR generalist has a general knowledgebase that covers a variety
of HR areas. His duties may include recruitment, benefits administration, training,
employment relations, workplace safety, etc.

7.3 HR BUSINESS PARTNER

The role of the HR business partner has emerged in recent years to support the alignment of HR
functions with business strategy. In today’s business world, many organisations have a position
known as HR business partner. The HR business partners are usually experienced HR
professionals.

Conventional HR professionals focus on day-to-day HR responsibilities. But HR business partners

focus on strategy. They work directly with the senior management of an organisation just as
consultants do. They also work closely with line managers and ensure that HR policies and
practices help the successful delivery of the business strategy.

For example, if the strategy is to increase market share through increasing sales, HR business
partners may work with the marketing team. HR business partners will propose the people-related
strategies needed to increase the market share of the company. If qualified salespeople need to
be hired, retained, and trained, HR business partners will help the marketing team with these.

7.4 SHARED SERVICE CENTRE

Large organisations, such as MNCs with a presence in multiple countries, prefer to use a shared
services centre in order to increase efficiency and reduce the duplication of repetitive HR
functions. We will explain this concept with the help of a hypothetical example.

Let’s consider the case of a large company with 20,000 employees working in more than 20
worldwide locations. Each day, many employees asked many HR-related questions. Some wanted

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to know how to apply for unpaid leave, and others wanted to know how to get an employee loan
from the company. The HR department of the company remained busy dealing with these routine
and transactional queries.

But thanks to modern technologies, all routine HR functions are now provided centrally to all
locations of the company. Twenty HR teams located in 20 different locations do not separately
handle payroll or benefits administration anymore. All common services are managed from a
single location. This is called a shared services centre.

A shared services centre can have online solutions too. Through a company’s secured online
platform, employees themselves can search for the HR policies they are looking for. By moving to
a shared services centre, a company can reduce the number of HR employees needed at the
operational level. Since the burden of routine and repetitive HR tasks has been reduced, more HR
employees can now focus on strategic issues.

7.5 COMPETENCIES OF HR PRACTITIONERS

HR practitioners need to have some necessary competencies to deliver a successful HR strategy.

These competencies are required to effectively perform the organisation’s HR functions. HR
practitioners have an impact across four different dimensions within the organisation; they work
at the individual level, operate organisationally, and operate contextually and strategically.

HR practitioners try to build effective relationships with individual employees. They operate at an
individual level. HR practitioners also operate organisationally; they design HR practices that
impact the whole organisation. HR practitioners try to understand the situation. Based on given
context, they develop or propose appropriate HR practices that will support the business strategy.
This means they operate at a strategic level.

In order to work across four dimensions, as mentioned above, HR practitioners need some
competencies.

• HR practitioners need to be ‘credible activists’. This means they must deliver on their
promises.

• HR practitioners need to be ‘capability builders’. This means they need to identify and
develop people’s capabilities.

• HR practitioners need to respond to changes. So, they should be ‘change champions’.

• HR practitioners should implement both new and the best HR practices. So, they should
be ‘innovators and integrators’.

• HR practitioners should be ‘technology proponents’. They need to promote the use of

technology within the organisation.

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7.6 THE ROLE OF THE LINE MANAGER: PARTNERSHIP APPROACH

Simply having competence is not sufficient for the success of HR practitioners. The HR department
alone cannot implement the HR practices without the help of the line managers from other
departments. Therefore, line managers need to be included in the design and development of
HR practices.

Line managers are the managers who have employees directly reporting to them.

Let’s say there are three finance executives in your company. They work under a finance manager.
Finance executives are the immediate subordinates of the finance manager. So, the finance
manager is their line manager. The finance manager directs the executives to perform financial
management functions. He also looks after the training, development, and the finance executives’
other HR issues.

Your company also has an HR manager. But the HR manager cannot command the finance
executives. Rather, the finance manager himself will handle the day-to-day HR issues. For example,
if any finance executive enters the office late, the finance manager will not refer this matter to the
HR manager. Day-to-day HR practices are devolved or transferred to the finance manager. This
helps with faster decision-making. But whenever needed, the HR manager will advise the finance
manager on people management issues. There should be a partnership approach.

When line managers and HR managers work together, the organisation will be successful in
managing its people. The move towards a partnership approach between HR and the line manager
will bring success for the entire organisation.

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MODULE 2 – WORKFORCE PLANNING AND TALENT
MANAGEMENT

WORKFORCE PLANNING

WORKFORCE PLANNING CYCLE

WORKFORCE PLANNING TO TALENT MANAGEMENT

WHAT IS TALENT MANAGEMENT?

TALENT IDENTIFICATION

RECRUITING TALENT

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1 WORKFORCE PLANNING

Human resource planning (HRP) or workforce planning is a form of risk management. It involves
realistically appraising the present and anticipating the future (as far as possible) in order to get
the right people into the right jobs at the right time. If the organisation (or a particular area of its
activity) is declining, it may need to plan a reduction or redeployment of its human resources. If
the organisation is growing or moving into new areas of activity, it will need to find and tap into a
source of suitably skilled human resources.

1.1 DEFINITION

Every organisation needs to ensure it has the right number of people with the right skills in the
right roles. Organisations also need to ensure they have the right people not only for the present,
but also for the future. Workforce planning is the process to ensure all of this.

1.2 BUSINESS STRATEGY & WORKFORCE PLANNING

An organisation’s business strategy dictates its workforce planning. If the business strategy
envisages a cut in output, for example, or the closure of a particular plant, then the human
resources plan will need to consider the redeployment of staff, redundancies, and so on. If the
corporate strategy specifies a move into a new product market, the human resources plan will
have to source the required human resources from outside, or within the organisation through
recruitment, training, or sub-contracting.

In turn, the availability of human resources can act as a constraint on, or spur to, the achievement
of business goals. If there are skill shortages and employees cannot be recruited or developed
cost-effectively, plans for expansion or diversification may have to be curtailed. The availability of
multi-skilled or expert teams, on the other hand, may inspire innovative strategies for growth and
change.

Workforce planning is critical to an organisation’s strategy because it is able to identify:

• shortfalls in organisational capability (skills, knowledge, people) which would prevent the
corporate plan from being implemented successfully,

• surpluses in organisational capability which might shape the corporate plan by suggesting
opportunities to capitalise on currently under-utilised resources, and

• poor utilisation of people in the organisation, which would highlight the need to add
value through revised HR practices.

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2 WORKFORCE PLANNING CYCLE

Human resource planning or workforce planning is an open-ended process and a continuous

cycle. It has five stages:

• the 1st stage is known as stocktaking,

• the 2nd stage is forecasting,

• the 3rd stage is developing action plans,

• the 4th stage is implementation, and

• the 5th and final stage is assessment.

Stocktaking

Forecasting

Developing action plans

Implementation

Assessment

Figure 1: Workforce Planning Cycle

2.1 STOCKTAKING

Stocktaking is the first stage in the cycle. At this stage, the organisation explores both external
and internal factors impacting its operations.

External factors include many elements, such as economic conditions, employment laws, and the
technological environment. External forces cannot be controlled by the organisation.

But the organisation may control its internal factors. Internal factors include many components,
such as size and profile of the workforce, skill level of the organisation, working conditions, and
performance level.

2.2 FORECASTING

After stocktaking, the next stage in the workforce planning cycle is forecasting. During forecasting,
the organisation will examine the skills, competencies, motivation, and knowledge of its workforce.

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At this stage, the organisation also develops succession planning. If any employees suddenly
leave the organisation, the organisation must be able to immediately substitute him.

During forecasting, the organisation must predict two things.

1) The supply of labour.

2) The demand for labour.

In other words, the organisation will determine how many people it will have in the future and
how many people it will need.

Let’s consider an example of a new company which recognises the need for more sales executives
to support its growth. So, the company needs to plan how to fulfil this demand. First, it will forecast
the 'supply' of labour. The supply of labour can come from either 'internal' or 'external' sources.
People from other departments of the company can also be transferred to fill the roles. This is an
example of an internal supply of labour. But if there is no internal supply, then the organisation
will need to look outside itself. It will hire salespeople from the external labour market. This is
called an external source of labour supply.

2.3 ACTION PLANS

After forecasting, the third stage of the workforce planning cycle is developing action plans. If
the demand and supply of labour are equal, then there is balance; no action is required. If the
demand of labour is higher than the supply, then this is called a labour shortage. If the demand
of labour is less than the supply, then this is a labour surplus.

If there is a labour shortage, an organisation may recruit more employees and retain current
employees. On the other hand, if there is a labour surplus, then the organisation may lay off some
employees, encourage early retirement, and reduce working hours for employees. More action
plans during shortage or surplus are presented below:

Shortage may be met by: Surplus may be met by:

Internal transfers and promotions, training, Reducing the workforce size through natural
and development. wastage or 'accelerated wastage' (encouraging
labour turnover by withholding incentives for
loyalty: e.g., pay freezes or barriers to
promotion).

External recruitment or improvement of Redundancies (voluntary resignation and/or

recruitment methods (e.g., diversity compulsory retirements).
programmes to encourage more applicants).

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The extension of temporary contracts, or the Early retirement incentives.

contracts of those about to retire.

Reducing labour turnover (by reviewing Short contracts and flexible hours to cover
possible causes, including pay and conditions) fluctuating demand.
and improving induction/socialisation
measures.

Outsourcing appropriate activities to external Eliminating overtime and ‘peripheral’

contractors. The use of freelance/ temporary/ workforce groups, including freelance and
agency staff to manage shortages. temporary workers.

Encouraging overtime working or offering Retraining and/or redeployment of staff to

bonuses and incentives to increase other areas of skill/ productivity shortage. This
productivity. Review and adjustment of may involve the diversification of business by
corporate culture, management style, and new the organisation in order to utilise existing
technology to increase productivity. skills/ knowledge.

2.4 IMPLEMENTATION

The fourth stage of the workforce planning cycle is implementation. Once an organisation has
made its decision to hire new employees due to a labour shortage, it simply needs to implement
this decision. If an organisation has decided to reduce employees because of labour surplus, it
simply needs to downsize. These are the basics of implementing action plans. During
implementation, if required, there should be constant monitoring and adjustment of the plan.

Let’s take an example of an organisation that decided to develop some young employees and
prepare them for the future. If any senior employees leave the company, the young employees
will replace them. This was the company’s succession planning. But when a senior employee
actually leaves the organisation realises that no one among the young employees is yet ready to
fill up the vacancy. So, it needs to recruit from the external labour market. This is an example of a
scenario in which an organisation was forced to adjust its action plan. Therefore, if the situation
demands it, organisations may revise action plans during the implementation stage.

2.5 ASSESSMENT

The final stage of workforce planning is the assessment stage. At this stage, an organisation will
evaluate whether the action plans so far have helped them achieve strategic goals.

Let’s take the example of an organisation that decided to downsize many of its middle managers
in response to a labour surplus. The organisation may later realise that the economic logic of

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downsizing comes at a cost; not having mid-level management creates chaos in their environment.
The organisation assesses that its decision to terminate mid-level management was not good.

So once an action has been implemented, it needs to be evaluated so that any success of the
workforce planning can be repeated, and any failures can be avoided in the future.

3 WORKFORCE PLANNING TO TALENT MANAGEMENT

Human resource planning is more than just a numbers game. It involves an in-depth assessment
of the profile of the workforce and the evaluation of the skills, experience, and expertise of the
workforce of an organisation.

In today’s business world, there is increasing importance given to the knowledge and talent of
employees. Employee talent has become a means to organisational success, especially in
knowledge-intensive industries such as software development or pharmaceuticals. Organisations
compete against each other to hire rare, inimitable, and valuable intellectual and technical skills.
This is why talent management has been linked with the workforce planning of an organisation. It
is not about how many people you have, or the surplus or deficit level of your workforce. It is now
all about how many talented employees you have, and how many more you need to hire.

As a result, talent management has now emerged as one of the most widely researched topics in
human resource management.

4 WHAT IS TALENT MANAGEMENT?

Talent management is all about attracting, recruiting, engaging, and retaining those employees
who can provide value to the strategic development of an organisation. A talented employee
delivers a high level of performance. A talented employee has the potential to make a valuable
contribution to the organisation. An organisation with more talented employees is likely to be
more successful than others.

What do we mean by Talent is a subjective concept. Talent could mean skills,

talent? behaviours, intrinsic traits, or characteristics of employees.

Is every employee Some organisations only consider a specific person talented. This
talented or only certain is an exclusion approach. Other organisations have an inclusive
employees? approach. In an inclusion approach, organisations consider all
employees as having talent.

Should we focus on the Some organisations focus on a particular 'person' as talent. Other
person or the position? organisations focus on a particular 'position'. For example, the
chief executive role of an organisation can be considered a
talented position.

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Who measures talent? Usually, a line manager or supervisor makes judgements on

whether an employee is talented or not.

Is talent management Some organisations wrongly mix up performance ratings with

different than talent management because talented employees often achieve a
performance ratings? high performance rating. But performance ratings do not always
reflect the talent of employees.

Can we recruit talented Some organisations prefer developing existing employees and
employees? converting them into talented employees. Other organisations do
not wait for the time required to convert an employee into a
talent. They prefer to externally recruit talented employees from
the job market.

How do we develop Talented employees do not lend importance solely to the

talent potential in our financial benefits provided by the organisation. They often give
organisation? importance to the work environment and growth opportunity.
Talented employees need the right environment to utilise their
potential. Organisations should have a talent development policy
as well as a specific or customised talent development plan for
each employee.

5 TALENT IDENTIFICATION

Within an organisation, we can classify all employees into four categories in terms of their
contribution and potential. These four categories of employees are:

• underperformers,

• key performers,

• untapped potentials, and

• high potentials.

Figure 2: Potential-Performance Matrix

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5.1 UNDERPERFORMERS

Underperformers have little potential. Their current level of performance is also poor.
Unfortunately, they become the most obvious candidates when an organisation decides to reduce
its workforce.

5.2 KEY PERFORMERS

Key performers are highly competent in their present roles but they are less suited for further
development. Organisations need to reassure them about their value to the organisation
otherwise they may leave.

5.3 UNTAPPED POTENTIALS

Untapped potentials have capabilities, but they are not contributing to the organisation
according to their potential. Organisations need to investigate the reasons behind their poor
performance and should provide training for untapped potentials, so that their capabilities are
better utilised.

5.4 HIGH POTENTIALS

Employees with high potential and who are also currently achieving excellent performance are
high potentials or ‘stars’. Star employees are rare. They are the 'talent pool' of an organisation.
The more star employees the organisation has, the better their chances of increasing success.

6 RECRUITING TALENT

Some organisations prefer promoting talent from within the organisation. Other organisations,
at some point in the workforce planning process, decide to recruit talent rather than develop from
within. However, in order to hire talent externally, the organisation needs to have the capacity
to attract talented people. The organisation needs to be perceived as a good place to work.

However, just because an employee was successful in one organisation does not guarantee that
they will continue to be a success in the new one. For instance, there are many examples of sports
stars performing at the highest level with one team but then their performance 'flops' following a
move to another team.

Of course, promoting from within does not always work either. Occasionally, employees identified
as star performers or HIPOs do not develop or fulfil their potential as expected. There can be both
individual and organisational reasons for this. For example, even a star employee's motivation can
reduce once in the role. The star employee of an organisation may lose interest in a particular
career path. From an organisational perspective, the individual may have been assigned to the

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wrong projects and their progress stalls as a result of not being given the opportunity to develop
accordingly.

In any case, promoting talent from within the organisation, or sourcing talent externally, does not
always go as planned. In the real world, most organisations remain flexible and open-minded with
regards to either strategy. Depending on the circumstances, successful organisations either recruit
talent from external sources or develop talent from within the organisation.

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MODULE 3 – RECRUITMENT AND SELECTION

STRATEGIC RECRUITMENT & SELECTION

JOB ANALYSIS

RECRUITMENT: DECIDING ON THE METHODS

RECRUITMENT: THE JOB ADVERTISEMENT

RECRUITMENT: SHORTLISTING STAGE

USING THE SELECTION METHODS

MAKING THE FINAL SELECTION DECISION

FINAL PROCEDURES

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1 STRATEGIC RECRUITMENT & SELECTION

Employee resourcing is all about finding the 'right' person for a particular role for the organisation.
The recruitment and selection decision is arguably one of the most important HR functions for any
employer.

People are an organisation's most valued asset and a key source of strategic competitive
advantage. That is why hiring new employees are vital in ensuring the future success of any
organisation. The recruitment and selection process should not operate in isolation. The process
needs to be linked with the strategic goals of an organisation.

There are five stages in the strategic recruitment and selection process:

• the 1st stage is business strategy,

• the 2nd is workforce planning,

• the 3rd stage is job analysis,

• the 4th is recruitment, and

• the final stage is selection.

Business Workforce
Jab analysis Recruitment Selection
strategy planning

Figure 1: Strategic Recruitment & Selection Process

1.1 BUSINESS STRATEGY

The business strategy of an organisation will dictate its workforce planning. For example, if an
organisation has a strategic goal to become the number one construction company in the country,
its strategic goal will dictate workforce planning, which is the next stage of the process.

1.2 WORKFORCE PLANNING

In the previous module, we introduced and discussed workforce planning in detail. Through
workforce planning, for example, a construction company can determine how many engineers
it already has and how many more engineers it needs to recruit. If a company has good engineers,
only then can it become the number one construction company.

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In this module, we will discuss the remaining three steps of the strategic recruitment and selection
process: job analysis, recruitment, and selection.

1.3 JOB ANALYSIS

After workforce planning, the company will conduct a job analysis. Through job analysis, for
example, a construction company can gather detailed information about the various tasks of civil
engineers. The company can then list down the required competencies. Competencies are the
behavioural characteristics required to perform a job. For example, an engineer needs to
cooperate with other team members. He should also have good technical knowledge. So, for a civil
engineer, technical knowledge and teamworking skills are two important competencies.

1.4 RECRUITMENT

After job analysis, the company will start the recruitment process. First, the company will decide
on the recruitment methods. There are multiple recruitment methods available. After choosing
this, the company will advertise the vacancy. The interested candidates will submit CVs or
complete application forms. The company is likely to receive interest from many candidates. From
these applications, the company needs to shortlist the candidates based on the information
provided.

1.5 SELECTION

From the shortlisted candidates, the best need to be identified. This process is known as selection.
There are a number of selection methods available. Organisations will make the final selection
decision based on the performance of the candidates during the selection process. Finally, the
organisation will offer the job to the selected candidate.

2 JOB ANALYSIS

As already discussed, one of the most important stages in the recruitment process is job analysis.
In this section, we will discuss job analysis in detail.

Through the job analysis process, we can uncover the knowledge, skills, abilities, attitudes, and
behaviours needed to successfully perform a job or role.

Information required for job analysis can be gathered from a person already doing the job.
Alternatively, we can observe the employee while they are working or we can ask the employee's
manager, who can explain the key aspects of the role.

At the end of the job analysis process, we will have two outputs: one is the job description and
the other is the person specification.

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2.1 JOB DESCRIPTION

A Job description is a detailed breakdown of the purpose of a role and the various tasks and
responsibilities involved.

A job description should be clear and to the point and should not be too lengthy. The standard
format for a job description would provide the information shown below:

a) Job title, department, and job code number; the person to whom the job holder is
responsible; possibly, the grading of the job.

b) Job summary that includes the major functions and any tools, machinery, and special
equipment used in a few paragraphs; possibly also a small organisation chart.

c) Job scope and content such as a list of the sequence of operations that constitute the job,
noting main levels of difficulty for manual work. In the case of management work, there
should be a list of the main duties and responsibilities of the job, indicating frequency of
performance (typically between 5 and 15 main duties should be listed). This includes the
degree of initiative involved, and the nature of responsibility.

d) The extent (and limits) of the jobholder's authority and responsibility.

e) Statement showing relation of job to other closely associated jobs, including superior and
subordinate positions, and the liaison required with other departments.

f) Working hours, basis of pay and benefits, and conditions of employment, including
location, special pressures, social isolation, physical conditions, and health hazards.

g) Opportunities for training, transfer, and promotion.

h) Possibly, objectives and expected results, which will be compared against actual
performance during employee performance appraisal – although this may be done as a
separate exercise, such as part of the appraisal process.

i) Any formal qualifications required for performing the job/role.

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EXAMPLE

Figure 2: Sample Job Description

2.2 PERSON SPECIFICATION

The person specification should be developed from the job description. This lays out the
qualifications, knowledge, skills, personal attributes, and experience required to match a
particular job.

A person specification can include two types of characteristics.

1) Essential characteristics (E)

2) Desirable characteristics (D)

Essential characteristics are mandatory. Desirable characteristics are NOT mandatory, they
are simply nice to have. Depending on the nature of a job, we can decide whether a characteristic
is essential or desirable.

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Person specification: hair stylist

Skills, knowledge, and ability

Ability to analyse information D
Ability to understand the supply chain in hairdressing D
Ability to handle difficult situations with tact, discretion, and assertiveness E
Ability to handle and accurately account for cash and resources E
Strong interpersonal skills E
Personal attributes and attitudes
Creativity E
Attention to Detail E
Confidentiality E
Professionalism E

Table 1: Sample Person Specification

2.3 COMPETENCY PROFILES

Some organisations also develop competency-based criteria or profiles. Each job will have a
specific set of required competencies. Competencies can include soft skills such as
communication, presentation, leadership, and teamwork.

3 RECRUITMENT: DECIDING ON THE METHODS

Once a job description and person specification are ready, the organisation will begin the process
of recruitment.

Organisations can use a formal or an informal recruitment approach. If the vacancy is officially
advertised through different media (such as print, radio, TV), then it is formal recruitment. If the
candidates become aware of the vacancy through word of mouth, or via informal social media
channels, then it is informal recruitment.

The organisation needs to decide on their recruitment methods. There are four main methods of
recruitment available to any organisation:

• internal recruitment,

• external recruitment,

• e-recruitment, and

• international recruitment.

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3.1 INTERNAL RECRUITMENT

In internal recruitment, a vacancy is advertised only internally within the organisation. As a

result, only current employees who are already working in the organisation can apply.

There are many advantages to internal recruitment. For example, it is cost-effective as the 'new
recruit' is actually an existing employee. He is already familiar with the organisation’s culture,
products, and processes. Internal recruitment practices can increase employee motivation
because existing employees will that feel whenever there are vacancies, existing employees will
be given preference.

However, the internal recruitment method has some disadvantages as well. No one from outside
the organisation can apply, so internal recruitment limits the number of applicants. New
employees from external sources are sources of new thinking. But internal recruitment can limit
innovation and diversity within organisations.

3.2 EXTERNAL RECRUITMENT

For external recruitment, organisations place an advertisement. Many candidates outside the
organisation see the job advertisement and it reaches a large audience. External recruitment will
bring fresh blood, new skills, and new ideas to the organisation; it also promotes diversity. But
the external recruitment method has some disadvantages too. External recruitment involves cost,
such as advertisement costs, or high recruitment consultant fees.

Recruitment consultants search and find candidates for organisations. Recruitment consultants
may even interview potential candidates and match the right candidates for the job. For some
positions, recruitment consultants may already have a database of potential candidates on file. To
hire senior level positions, consultants often directly contact individuals with the skills a client
organisation is looking for. This is known as a 'headhunting' facility.

Sometimes, existing employees recommend someone from outside the organisation for the
vacant position. This is known as employee referrals. Employee referrals are a cost-effective
external recruitment option in comparison to recruitment through external consultants.

Sometimes, organisations go directly to universities and colleges for their recruitment purposes.
This is called a graduate recruitment programme and involves specifically targeting fresh
graduates to join the organisation. The organisation can also attend job fairs. Graduate
recruitment can be cost-effective as well. It can save time, money, and effort.

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Recruitment method Advantages Disadvantages

Internal recruitment Cost-effective Limits pool of applicants

Form of staff development Not suitable where there are skill
shortages
Motivational tool
Can restrict innovation and
Increases probability of
diversity
retention
Training costs may be high
Morale issues for unsuccessful
internal applicants

External recruitment Widens the pool of applicants Expensive to advertise externally

Advocates diversity Candidates unknown to
organisation
Improves employer brand
Demotivating for internal
employees

Table 2: Recruitment Methods: Advantages & Disadvantages

3.3 E-RECRUITMENT

E-recruitment can be used for both internal and external recruitment. E-recruitment is the use of
the internet to help attract candidates to apply for vacancies. Job advertisements can be placed
on the organisation's intranet page (for internal recruitment) or webpage (for external
recruitment).

Social networking sites are also used both by employers and candidates. LinkedIn, Facebook, and
Twitter can be used for e-recruitment. Social networking can offer speed, efficiency, and the ability
to target and attract specific candidates.

During e-recruitment, applicants will be asked to complete an online application. E-recruitment

can reach a huge number of candidates at a relatively low cost and the speed of response from
candidates also tends to be much faster. But since several applications are submitted it becomes
difficult to filter and shortlist. As a solution, CV or resume filtering software is available. Based on
the desired criteria, the software can reduce the number of initial applicants down to a
manageable list.

3.4 INTERNATIONAL RECRUITMENT

When skills or competencies are not readily available locally, international recruitment becomes
important. Let’s look at the IT sector as an example. Organisations may look to India because it
has many IT graduates. Such skills may be in short supply in other countries.

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But the costs associated with overseas recruitment can be high. When the candidates are
shortlisted, the organisation will have to cover transport costs for interviews. There may be also
issues in relation to immigration laws, work visas, and the relocation of foreign employees.

4 RECRUITMENT: THE JOB ADVERTISEMENT

After finalising the recruitment method, the organisation needs to advertise the job. To draft the
job advertisement, an organisation can use the information from the job description and person
specification. The job advertisement should include the name of organisation, job title, duties,
essential skills, desirable competencies, a guideline for making the application, and the closing
date for applications.

As with any other advertisement, a job advertisement should meet the A.I.D.A criteria. A.I.D.A is
short form for attention, interest, desire, and action. The advertisement should:

• gain the attention of potential candidates,

• generate interest among the potential candidates,

• generate a desire to get the job in the potential candidate, and

• motivate the candidate to ultimately take the action to apply for the position.

The organisation can ask candidates to submit their details using an application form. Application
forms are designed by the organisation. An application form includes information about the
candidate’s education and work history.

Application forms can be either electronic or paper based. A standard format is used to collect
the same job-related information from all the candidates. This makes the selection stage easier in
terms of comparing like with like.

This comparison becomes difficult if an organisation asks for CVs instead of an application form,
as one person’s CV will be different from all other people’s CVs, making it difficult to compare
information. But still, CVs are very popular. We see many organisations requiring candidates to
submit CVs, sometimes along with a cover letter. A cover letter is a one-page document that
candidates submit as part of a job application.

Some organisations are considered a dream place for a career because these organisations have
positive employer branding. Let’s think about Google or Microsoft. They have positive images as
employers; they offer attractive financial and non-financial rewards and well-structured career
paths.

If an organisation has a positive reputation as an employer, it can attract the most strong, talented
applicants. On the other hand, some organisations can have a negative brand. A negative
reputation can reduce an organisation’s ability to hire and attract talented employees.

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Organisations with positive branding are more likely to receive job applications than
organisations which have negative branding.

An example of a basic application form is given below.

AOK PLC Page 1

APPLICATION FORM

Post applied for . . . .

PERSONAL DETAILS

Surname Mr/ Mrs/ Miss/Ms

First name

Address

Postcode

Telephone (Daytime) (Mobile)

Date of birth Nationality

Marital status Dependents

Education (latest first)

Date Institution Exams passed/qualifications

From To

TRAINING AND OTHER SKILLS

Please give details of any specialised training courses you have attended.

Please note down other skills such as languages (and degree of fluency), driving licence (with
endorsements if any), keyboard skills (familiarity with software package).

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EMPLOYMENT

Dates Employer Title

From To name and address and duties

Current salary and benefits …

INTERESTS

Please describe your leisure/hobby/sporting interests.

YOUR COMMENTS

Why do you think you are suitable for the job advertised?

ADDITIONAL INFORMATION

Do you have any permanent health problems? If so, please give details.

When would you be able to start work?

REFERENCES

Please give two references. One should be a former employer.

Name Name

Address Address

Position Position

Signed Date

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5 RECRUITMENT: SHORTLISTING STAGE

Once all applications or CVs are received, an organisation starts shortlisting the candidates.
Shortlisting is a sifting process where more suitable candidates are separated from all other
applicants.

Shortlisting takes place once the advertised closing date has passed. Not all applicants will have
the necessary skills, abilities, education, experience, or competencies required for the vacant
position. Engaging with all applications is not practical in terms of time, effort, and money. So, the
shortlisting stage reduces the number of applicants who will be considered for the job. Shortlisting
is a scoring mechanism for placing the candidates in ranking order.

A shortlisting matrix can be used to evaluate each candidate against the job criteria.

Business degree Work experience IT skills Collaboration Total

(x2) (x2) (x2)

Name 1 0 (0×2) 6 (3×2) 10 (5×2) 3 19

Name 2 10 (5×2) 2 (1×2) 6 (3×2) 5 23
Name 3 10 (5×2) 4 (2×2) 2 (1×2) 3 19
Name 4 0 (0×2) 2 (1×2) 10 (5×2) 1 13
Name 5 0 (0×2) 6 (3×2) 6 (3×2) 1 13
Scoring: 0 = No evidence; 1 = Little evidence; 3 = Moderate evidence; 5 = Strong evidence;
Cut-off score: 15

Table 3: Example Shortlisting Matrix

The selection criteria used in the matrix are drawn from the job description and person
specification. The matrix may include two categories of criteria – essential criteria and desirable
criteria. We can give more weight to essential criteria. Normally, essential criteria are more
important than desirable criteria. For example, if you are recruiting for a sales executive position,
experience may be twice as important as collaboration and communication skills, so you would
multiply sales experience by two.

A shortlisting matrix is not the only method to shortlist candidates. With the advancement of
technology, online screening has become very popular. An applicant tracking system (ATS) is
now commonly used for online recruitment processes. An ATS can identify specific keywords on
submitted CVs or application forms. Based on the selection criteria, an ATS can be used to screen
initial applications. Organisations can even use online ability tests and personality
questionnaires as an initial method of screening applications through online systems.

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6 USING THE SELECTION METHODS

After shortlisting the candidates, the organisation needs to pick the right individual. This process
is known as selection.

It is challenging to predict who the most suitable candidate is. We have to predict whether the
candidate and organisation share similar characteristics, and whether they can meet each other's
needs. This is called a person-organisation fit.

We also need to find whether there is a match between the abilities of the candidate and the
demands of the job. This is called a person-job fit.

Organisations use a number of selection methods to decide on the most suitable candidate, such
as interviews, psychometric tests, assessment centres, work sample tests, and graphology.

The selection method chosen should have both high validity and high reliability.

• A method is identified as reliable if it consistently measures what it sets out to measure.

• Validity looks at how closely a selection method measures what it is supposed to

measure. Predictive validity is the extent to which the selection method used can predict
successful performance in the role.

6.1 SELECTION INTERVIEWS

Among all the selection methods, interviews are the most popular. There are different types of
selection interviews. For example, telephone interviews, video interviews, panel interviews, and
one-to-one interviews.

• Telephone interviews are conducted by phone.

• In video interviews, the interviewer and candidate are connected virtually through video
links.

• In one-to-one interviews, the candidate is interviewed by just one person in a face-to-face

setting.

• In panel interviews, the candidate is interviewed by more than one person.

Interviews can be structured or unstructured. Unstructured interviews are informal chats

between the interviewer and the candidate. Structured interviews ensure that interview
questions are based strictly on job-related criteria.

Structured interviews can take three different forms: competency-based interviews, situational-
based interviews, and strength-based interviews.

In competency-based interviews, a series of structured questions are used. Here, questions are
designed to gather information on specific behaviours or competencies. The competency-based

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interview deals with the analysis of past events and emphasises facts and examples from real
situations. The goal is to establish the candidate's ability to perform the role. Employers want to
find out how the candidate behaved in the past in relation to a key competency area.

For example, if the competency is a persuasion/influencing skill, your question might be: “Can
you describe an occasion when you were able to persuade your fellow team members to do
something that they did not really want to do at first?” If the competency is problem-solving
ability, you might say: “Tell me about a problem you have solved recently.”

In a situational-based interview, the interviewer gives the candidate a hypothetical situation and
asks him what he would do in such a situation. Questions in this type of interview focus on the
future. The candidate is provided with a typical situation and is asked how they would respond to
it. For example: “What would you do if your manager presented you with two conflicting
deadlines?” These interviews are particularly common in graduate interviewing where the
individual is unlikely to have past experience of particular situations. The answers to these
questions reveal how the candidate might handle the situation.

Strength-based interviews try to find what the applicant enjoys working with. The principle is
that if you enjoy doing something then it is more likely that you are also good at it. Companies
using this type of approach will look for those who have a natural strength in certain areas.
Examples of questions asked in this type of interview are as below.

• What do you enjoy doing in your spare time?

• What do you feel you are good at?

• Tell me about an achievement you were particularly proud of.

• What kinds of tasks boost your energy?

• What would your closest friends say are your greatest strengths?

Interviews are a very popular selection method. But there are some limitations of selection
interviews.

• Sometimes interviewers make their mind up about a candidate within the first 30 seconds
of the person entering the room. This is referred to as ‘confirmatory bias’ or the ‘first
impression error’.

• Sometimes interviewers become biased based on the attractiveness of the candidate.

• Sometimes one single characteristic of the individual creates an overly positive or negative
impression. If an impression creates any negative effects, these are called 'horns'. On the
other hand, if there is a positive impression, it is known as the 'halo' effect.

• Sometimes an interviewer stereotypes the interviewee. For example, people who are
overweight may be thought of as lazy.

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• Sometimes, the interviewer compares and contrasts one interviewee with other
candidates. This is known as ‘contrast error’.

• Sometimes, an interviewer will see characteristics similar to their own in a candidate, and
it can make the interviewer see this candidate more favourably than the others. This is
called ‘projection error’.

Even with these limitations, selection interviews are the most popular method.

6.2 PSYCHOMETRIC TESTING

Psychometric testing is another popular selection method. Here, candidates complete 'pen and
paper’ tests. 'Psychometric' means 'mental measurement'. The theory is simple – those who do
well in the tests will perform well in the actual job.

There are different types of psychometric tests, such as general intelligence tests, attainment tests,
and cognitive ability tests.

• General intelligence tests measure candidates’ ability to think about ideas, analyse
situations, and solve problems.

• Attainment tests measure candidates’ levels of knowledge and skills.

• Cognitive ability tests measure candidates’ verbal comprehension, numerical ability, and
reasoning ability.

6.3 PERSONALITY PROFILING

Personality is an important determinant of behaviour at work. So, many employers use personality
tests to select the right candidate.

Commonly used personality profiles include The Big Five and OPQ.

The Big Five is based on the five-factor model of personality. It says an individual's personality
can be measured in terms of five factors which have the acronym OCEAN. This stands for:

• openness,

• conscientiousness,

• extraversion,

• agreeableness, and

• neuroticism.

Another tool is the SHL Occupational Personality Questionnaire (OPQ). OPQ32 is the most
comprehensive version of the OPQ. OPQ32 provides an indication of an individual's preferred
behavioural style at work. It helps organisations gauge how a candidate will fit into certain work

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environments, how they will work with other people, and how they will cope with different job
requirements.

6.4 WORK SAMPLE TESTS

In ‘work sample tests’ applicants are asked to complete tasks similar to those involved in the
actual job. This can involve working in the role for a short time. Work sample tests are popularly
used for hiring teachers. Many education institutes ask prospective teachers to take a test class or
make a presentation. This test helps identify whether the candidate has the skills and abilities to
perform the teaching role. Work sample tests have high predictive validity, meaning that if an
applicant is found to be good in his work sample tests, there is a high possibility he will be good in
his future role.

6.5 ASSESSMENT CENTRES

An assessment centre is not actually a place. ‘Assessment centre’ instead describes the process.
It normally lasts for one or two full days. In an assessment centre, a group of assessors identify
the most suitable candidates using a series of exercises and tests. Multiple techniques are used to
assess the candidates, for example work sample tests, psychometric tests, traditional one-to-one
interviews, and leaderless group discussions.

In leaderless group discussions, a group of candidates will discuss an actual job-related problem
and the organisation will observe the behaviour of the candidates. They will try to observe the
leadership and communication skills of each candidate. The objective is to find out which
candidates have the natural ability to lead any discussion.

Candidate timetable
Time 1 2 3 4 5 6
09.00-
Test Test Test Test Test Test
10.00
Coffee
break
10.00-
Role play Role play Role play In-basket In-basket In-basket
12.00
Lunch
13.00-
In-basket In-basket In-basket Presentation Presentation Presentation
15.00
Coffee
break
15.00-
Presentation Presentation Presentation Role play Role play Role play
17.00

Table 4: Example of an Assessment Centre Day

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6.6 GRAPHOLOGY

Graphology or handwriting analysis is the study and analysis of a person's handwriting.

Graphology can reveal a behavioural profile of the individual and indicate their character traits.
Graphology is a popular selection method, particularly in Europe.

7 MAKING THE FINAL SELECTION DECISION

If an organisation is using a single selection method (such as an interview), it is very easy to make
the selection decision. Whoever gets the highest score in the interview will get the job.

But the process can be slightly complex if more than one selection method is used. Let’s consider
an organisation that used psychometric testing, and then panel interviews. Let’s assume there
were only two candidates. Candidate A performed well in psychometric testing but did not do well
in the interview. However, candidate B performed better in the interview but did not do well in the
psychometric test. Let’s assume the organisation has a policy of weighing the interview at 70% and
the psychometric testing at 30%. Since the interview has more weight, candidate B will be selected
as he performed better in the interview.

This was a simple example. In the real world, there will be many candidates, not just two. That is
why organisations use a shortlisting matrix or table to record the performance of candidates in
each selection method. This helps to easily identify the candidate with the highest score.

When making final selection decision, the organisation also needs to be mindful of the country’s
employment regulations. The selection process should be fair, consistent, well-documented,
and free from discrimination. The selection process should ensure equality of opportunity in the
process. Employment legislations require organisations to ensure that there was no
discrimination during the selection process.

8 FINAL PROCEDURES

After making the final selection decision, the following final procedures will take place.

8.1 REFERENCE CHECKING

Once the right candidate has been chosen, the organisation will contact the references provided
by the candidate. The organisation will also check the authenticity of the candidate’s academic
qualifications and other details he shared.

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References provide further confidential information about the prospective employee. A reference
should cover:

• straightforward, factual information confirming the nature of the applicant's previous

job(s), periods of employment, pay, and circumstances of leaving

• opinions about the applicant's personality and other attributes.

Many companies prefer at least two employer references. This practice provides necessary
information, and an opportunity to compare personal views.

If a judgement of character and suitability is desired, the reference will be asked: “Would you re-
employ this individual? (If not, why not?)”. In many cases, telephone references may be time saving,
especially when standard reference letters or forms are not available. Telephone references may
also elicit a more honest opinion than a carefully prepared written statement or form.

8.2 DEALING WITH UNSUCCESSFUL APPLICANTS

At the end of the selection process, only the best candidates will be chosen. Other candidates will
unfortunately be rejected. The organisation should contact the unsuccessful candidates, thank
them for their interest, and gently inform them that they were not selected.

The organisation needs to maintain a positive reputation and employer brand. It also needs to
ensure equitable and supportive treatment of unsuccessful applicants.

• All unsuccessful applicants should be informed as promptly as possible. Candidates who

have been interviewed should be personally informed that their application has not been
successful.

• The 'rejection' should be as positive as possible, bearing in mind the possibility that an
unsuccessful applicant may be eligible for future vacancies: known previous candidates
'kept on file' are a cost-effective recruitment pool.

• Candidates may be offered the opportunity to receive feedback on request as to why their
application was unsuccessful. This demonstrates the employer's transparency (and
compliance with equal opportunity requirements). It also compels selectors to justify their
decisions on objective grounds.

8.3 THE OFFER OF EMPLOYMENT

The organisation will offer the position to successful candidates.

Time may be sensitive, so it is common for an oral offer to be made, with a negotiated period for
consideration and acceptance. This can then be followed up by a written offer, if appropriate.

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• All terms, conditions, and circumstances of the offer must be clearly stated at this point.

• Any provisos ('subject to: satisfactory references, medical examination, negotiation of

contract terms', or such) must also be clearly set out.

• Negotiable aspects of the offer and timetables for acceptance should be set out in order
to control the closing stages of the process.

The organisation should be prepared for its offer to be rejected at this stage. Applicants may have
received and accepted other offers. They may not have been attracted by their first-hand view of
the organisation and may have changed their mind about applying; they may only have been
testing the water in applying in the first place, gauging the market for their skills and experience
for future reference, or seeking a position of strength from which to bargain with their present
employers. A small number of eligible applicants should therefore be kept in reserve.

8.4 CONTRACTS OF EMPLOYMENT

Successful candidates need to accept the offer and agree on a joining date. Once the offer of
employment has been confirmed and accepted, the contract of employment can be prepared and
offered.

A contract of employment is most likely to be written. In some cases, the contract could be oral,
or a mixture of both written and oral. A contract specially drafted for senior employees may
include complex terms on matters such as performance-related pay, professional indemnity,
confidentiality, and restraint of trade. In other contexts, the employee may sign a standard form
contract. Any contract confirms that there is mutual agreement on essential terms.

In addition to a contract, the employer should give an employee a written statement of the
particulars of their employment. The statement should identify the:

• names of the employer and employee

• title of the job the employee is employed to do

• date on which employment began

• pay and hours of work

• holiday entitlement and holiday pay, sick leave, and sick pay entitlements

• pension scheme provisions

• length of notice of termination to be given on either side (or expiry date, if employed for a
fixed term)

• details of disciplinary procedures and grievance procedures, works rules, union of staff
association membership

• rules on health and safety at work

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It is sufficient to refer to separate (employment) booklets or notices (on pension schemes,

disciplinary/grievance procedures, and so on) where the relevant details can be found. Not all the
information needs to go in the written statement! The point is to give new employees clear, precise
information about their employment.

8.5 EVALUATION OF SELECTION PRACTICES

The process of recruitment and selection does not need to end with the signing of an employment
contract. Once the new employees join the organisation, their performance needs to be monitored
so that the organisation can find out whether its recruitment and selection process was effective
enough to hire the best candidate.

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MODULE 4 – EMPLOYEE ENGAGEMENT, INDUCTION, AND
RETENTION

INTRODUCTION

ENGAGEMENT

RETENTION

INDUCTION

EMPLOYEE TURNOVER

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Module 4 – Employee Engagement, Induction, and Retention

1 INTRODUCTION

Within any organisation, we will find a flow of employees entering and leaving the organisation.
Organisations try to retain competent employees, but at least some of them will leave. When
people leave, it is called turnover. When new employees join an organisation, we provide them an
induction. Well-inducted employees are more likely to remain engaged with the organisation.
Engagement is how the employees are connected to the organisation. If employees feel
connected, the organisation will see a reduction in turnover and an increase in retention. So, there
is a link between employee engagement, induction, turnover, and retention. Below, we will
discuss these interrelated topics.

2 ENGAGEMENT

Engagement is more than just the concept of employee satisfaction. To drive high performance,
organisations need engaged employees, not just satisfied employees.

We will explain two key concepts related to engagement:

• work engagement, and

• employee engagement.

2.1 WORK ENGAGEMENT

Work engagement describes how an employee is physically, psychologically, and emotionally

connected to their work or task. An engaged employee works with vigour, absorption, and

dedication.

• Vigour describes how the employee is physically connected to their work. Employees
with vigour demonstrate high levels of energy and mental resilience.

• Absorption describes how the employee is psychologically connected to their work.

Employees with absorption demonstrate a state of full concentration. They remain happy
and engrossed with their work.

• Dedication describes how the employee is emotionally connected to their work.

Employees with dedication demonstrate strong involvement. They feel a sense of
significance, challenge, inspiration, enthusiasm, and pride in their work.

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2.2 EMPLOYEE ENGAGEMENT

Employee engagement is a broader concept than work engagement. It includes two things:

• the connection of the employee to their work, and

• the connection of the employee with the organisation.

So, employee engagement = work engagement + connection with organisation

Employees may feel connected to the organisation because of the support they receive from
management, the rewards they receive, the autonomy they experience in their work, or the values
the organisation promotes.

Engagement has many benefits. It can lead to higher performance, higher personal initiative, more
innovative behaviour, lower absenteeism, lower turnover rates, higher organisation commitment,
and higher retention.

3 RETENTION

Keeping good employees is a challenge for almost all organisations. Employee retention is a
process whereby employees are encouraged to remain with the organisation for the maximum
period. Retention can be explained as a strategic approach that stops employees from leaving the
organisation.

Money is certainly a vital factor, but not the only factor. If people feel they are being paid less, they
are more likely to leave. But if they are paid close to the competitive level, other parts of the job
become more important to them.

Developing skills in employees may enhance their career and marketability, but it also tends to
improve retention. When an employer provides employees with training and development
assistance, their engagement may increase and employees will be more likely to stay – particularly
if they see more internal future opportunities.

An organisation’s retention strategy can start even before an employee joins an organisation.
During the recruitment process, the organisation should look for those behaviours and attitudes
in prospective employees that will make them compatible with the organisation. During the
selection process, the organisation should try to discover whether the prospective employee and
the organisation share the same values. If both parties have a common sense of purpose, there
will be an ‘organisational fit’. The organisation is then more likely to be successful in its retention
process.

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4 INDUCTION

Induction is the whole process whereby new employees in an organisation adjust to their new
roles and responsibilities within a new working environment. Induction is an important
organisational initiative which lays the foundation for employee engagement.

Induction is often confused with 'orientation'. Orientation is a specific course or training event
that new employees attend. The induction process is a much wider concept than orientation.

4.1 SURVIVAL CURVE

We will now discuss a model that explains the duration of employment of new employees. This is
known as the survival curve. It says new employees in an organisation are at greater risk of
leaving a new job within the first six weeks of joining. The likelihood of leaving a job decreases as
the length of employment increases. The survival curve has three distinct phases that employees
go through.

The first phase is the induction crisis. This occurs within a few weeks of a new employee joining
the organisation. This phase carries the highest likelihood of an employee leaving the organisation.
For example, new employees may immediately realise that the job they applied for is not quite
what they thought. They may feel their personal values and work ethics do not align or fit with the
organisation. New employees can sometimes find themselves in a position which is simply beyond
their ability. The stress of being in such a situation can lead to employee burnout. Employee
burnout is the opposite of engagement: it is when the employee disengages and withdraws from
work due to emotional or physical exhaustion.

The second phase of the survival curve is known as differential transit. The differential transit
phase reflects the period when the employee begins to settle into their new work environment
and starts to feel more comfortable in their new role. As this settling process continues, the risk
of an employee leaving the organisation tends to decrease. This phase typically occurs within the
first few months of employment.

The final stage of the survival curve is settled connection. The quicker employees move to the
settled connection phase the better. In this phase, new employees are fully socialised into the
organisation. These employees have adjusted to their new roles. Employees who are connected
to the organisation are more likely to be dedicated to the organisation and less likely to leave.
Their connection to their work will also encourage them to work with energy and concentration.

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4.2 TRADITIONAL APPROACH TO EMPLOYEE INDUCTION

How fast new employees connect to the organisation largely depends on the success of the
induction programme. Induction can be conducted through a traditional administrative approach.
A traditional approach (which is also known as an informational approach) includes:

• a formal welcome from the new employee's supervisor

• an introduction to team members

• possibly a general tour of the office premises

• an overview, which might include information on key strategies, key clients, etc.

• a presentation on administrative arrangements, such as rules related to absence,

discipline, holidays, internet usage, etc.

After receiving pre-set information and going through traditional induction, the new employee is
free to find their own way. A traditional or informational approach requires that new employees
seek out and obtain any information they need. This approach is a case of learning through asking,
despite the new employee not even knowing who to ask.

4.3 RELATIONAL APPROACH TO EMPLOYEE INDUCTION

A relational approach to induction, on the other hand, is based on assisting new employees to
quickly build relationships with co-workers so they can easily access the information they need in
order to perform their roles. This approach has the benefit of ensuring that new employees have
clear guidance on who to approach with any difficulties they encounter. It also ensures that a new
employee quickly feels part of the organisation and is socialised into its systems.

Whether the organisation uses an informational approach, a relational approach, or a

combination of both, we should remember that the line manager of the new employee needs to
be actively involved throughout the induction process. Induction is not the sole responsibility of
the HR department; involvement of both the HR department and line management is the key to a
successful induction.

4.4 ONBOARDING

New employees should be a new source of focus, energy, and creativity. They are an addition to
the human capital pool of the organisation. The human capital pool is the collection of employee
skills that exist within an organisation at any given time.

In the initial stages, new employees spend time understanding their tasks, their colleagues, and
their organisation. At this stage, they do not make any contributions to the organisation. New
employees often even take up the valuable time of older employees. So, it is important that new

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employees become independent and productive as soon as possible. To quickly convert a new
employee into a performing employee, organisations should consider introducing onboarding.

Onboarding is the mechanism through which new employees acquire the necessary knowledge,
skills, and behaviours. Onboarding is sometimes referred to as 'organisational socialisation'. It
is different from traditional induction in terms of its focus. Onboarding is concerned with getting
new employees to feel like they belong in the role, and are a part of their new organisation, as
quickly as possible. Through quick onboarding, a new employee gets support such as training and
development, support from their line manager, and support from their co-workers.

In terms of induction, successful companies are those that strike a balance between information
delivery and relationship development. Organisations that are successful at rapid onboarding use
a combination of approaches: they utilise both informational and relational approaches to
induction.

We will now present a hypothetical example of an induction schedule for rapid onboarding. This
induction programme of a hypothetical organisation has two stages.

In stage 1, there will be a general induction in which the organisation has an informational
approach.

• The mission, nature of business, and the roles of key departments or business units within
the organisation structure will be explained to the new employee.

• The job description, work times, time recording, and issues associated with leave will be
explained.

• The new employee will visit the dining area, washrooms, locker room, and other facilities.

• Pay, allowances, tax, and other deductions will be explained to the new employee.

• Finally, health and safety issues will be explained in detail to the new employee.

In stage 2, onboarding will take place through a relational approach to induction.

• Stage 2 includes an orientation event. The new employee will visit departments or teams
that will be relevant to his work. He will understand each team’s objectives, how each
team’s work relates to organisational goals, each individual’s contribution to the
achievement of these, and the roles and responsibilities of people with whom he will
interact.

• Stage 2 will also include the opportunity to meet people. The new employee will be
introduced to his boss, team members, and relevant individuals outside his own team. He
may visit key customers or suppliers. If the organisation has appointed a ‘buddy’ or
‘mentor’, the new employee will also meet him.

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4.5 ENHANCING THE SOCIALISATION PROCESS

With socialisation, new employees are likely to demonstrate organisational citizenship behaviours.
These behaviours are not explicitly required by an organisation as part of the role, but these
promote the effective functioning of the organisation.

Both the mentoring and buddy approaches are two popular processes used by organisations to
expedite the socialisation process.

A mentor is a more experienced employee within the organisation who acts as a role model for
the new employee. The mentee is a new employee who is being mentored. Mentoring is a
developmental process focused on the personal and professional development of the mentee.

A mentor:

• shares valuable organisation knowledge,

• helps the new employee understand the organisation's culture and history, and

• gives him access to key information he needs to be effective in his role.

The buddy approach, on the other hand, is an informal approach to assisting a new employee to
learn about the organisation and how things work around or within it.

While mentors tend to be more formal, buddies are people who can be approached to ask basic
questions, such as 'where is the paper for the printer kept?' or 'who should I ask about getting
approval of sick leave?'

Buddies do not necessarily have to be senior individuals within the organisation. In fact, buddies
are more likely to be individuals who are at a similar level to the new employee.

5 EMPLOYEE TURNOVER

Employee turnover is the number of people who leave an organisation. Turnover is sometimes
referred to as 'natural wastage’.

Following are all examples of turnover within the organisation:

• employees who join other organisations,

• employees who are dismissed, and

• employees who retire.

5.1 REASONS BEHIND TURNOVER

Some reasons for turnover are beyond the control of the organisation. These are called pull
factors. For example, an employee may move to a new location due to a change in family
circumstances and may consider leaving the organisation, which is far from his new residence.

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There is very little an organisation can do to retain an employee in this type of situation. The
organisation may offer innovative solutions such as a flexible working scheme, so that the
employee can work from home. Alternatively, the organisation could inform the employee that if
he wishes to return to employment in the future, the organisation may consider re-hiring him.

In addition to pull factors, turnover can be caused by push factors. Push factors are those factors
which organisations can control. The main push factors are often dissatisfaction with work, and
lack of promotional and developmental opportunities. These factors make employees consider
leaving the organisation.

Limited opportunity for career progression is damaging to engagement. If an organisation senses

that employees are disengaged, it should try to uncover the feelings of their employees. Employee
engagement surveys are carried out to assess these feelings of employees towards various
aspects of their work, their team, and their organisation. This survey can help organisations
identify factors and rewards that will increase employee dedication.

Employees do not all place equal value on the same type of rewards offered by an organisation.
In fact, different employees will probably value different rewards. As a response, an organisation
may offer employees the option to choose from a selection of reward choices. This idea of
customising benefits is known as ‘flexible benefits’ and allows employees to select the benefits
that best meet their needs. Organisations offering flexible benefits are likely to proactively reduce
unwanted turnover.

5.2 THE IMPACT OF THE EXTERNAL LABOUR MARKET

Turnover can be linked with the external labour market environment.

In a booming economy, job opportunities increase a lot. During booms, the level of turnover
experienced by an organisation may increase. High performers may get many opportunities and
offers. Organisations may be forced to pay higher salaries to good performers simply to prevent
them from leaving for a competing organisation. The focus tends to move towards the retention
of key performers and putting in place attractive salaries and benefits.

In economic downturn, attention tends to focus on downsizing employees. Difficult decisions

have to be made in terms of who stays and who goes. Employees who survive a downsizing
exercise often feel guilty about their former colleagues losing their jobs. Equally, if the workforce
is significantly reduced, additional pressures are taken on by the remaining employees. Less
people have to do more in order to get the work done. Again, this may create bad feelings and
impact the productivity and morale of the employees.

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5.3 BENEFITS AND DRAWBACKS OF TURNOVER

HR turnover is not always bad. A certain level of HR turnover may be considered a good thing for
many organisations.

Sometimes, organisations take pride in their low turnover rate. But low turnover rates are not
necessarily a sign of a productive workforce. We must ask ourselves: is the organisation retaining
its key talents? Is the organisation stuck with a large proportion of underperforming staff?

The employees that an organisation wants to retain are often the very ones most likely to leave. If
you think about it, it makes sense. High-performing employees are more likely to be sought after
by other organisations. An underperforming employee, on the other hand, is unlikely to want to
leave an organisation. But if underperforming individuals eventually leave the organisation, this
type of turnover is not necessarily a negative thing.

A danger for many organisations is the development of 'groupthink’. Groupthink is a situation

where all employees begin to adopt similar thought processes without question or scrutiny. When
turnover happens, new employees replace outgoing employees. New employees bring with them
fresh ideas. They may see things differently and start new discussions. This is how turnover can
break the chain of groupthink.

The following table lists both the advantages and disadvantages of HR turnover.

Potential advantages of HR turnover Potential disadvantages of HR turnover

Opportunities to inject 'new blood' into the Broken continuity of knowledge, relationships,
organisation: new people bringing new ideas culture, and succession, where continuity
and outlooks, new skills, and new experiences would offer stability and predictability.
in different situations.

Balance in the age structure of the workforce. The lead time and lost performance while a
Absence of HR turnover would create an replacement is found and brought 'online' to
increasingly aged workforce, often the level of expertise of the previous jobholder.
accompanied by an increasing wage/salary
cost.

The creation of opportunities for promotion Morale problems. Turnover may be perceived
and succession offers an important incentive by other employees as a symptom of job
to more junior employees. dissatisfaction, causing the problem to
escalate.

The costs of turnover, including:

Replacement costs: recruiting, selecting, and
training; loss of output or efficiency.
Preventive costs: the cost of retaining staff,
through pay, benefits, and welfare provisions,
and maintaining working conditions.

Table 1: HR Turnover – Advantages & Disadvantages

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5.4 MEASURING TURNOVER

Measuring turnover is important for any organisation. The turnover rate is calculated by taking
the number of leavers during a month, dividing by the average number of employees, and then
multiplying by 100.

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑒𝑎𝑣𝑒𝑟𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑚𝑜𝑛𝑡ℎ

𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑒 (%) = × 100
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑖𝑛 𝑡ℎ𝑒 𝑚𝑜𝑛𝑡ℎ

While this may seem like a straightforward calculation, HR professionals need to be cautious. What
if one department was including only those in full-time employment in their calculations, while
another department included both full-time and part-time employees? What if one department
included those employees on maternity leave while another did not? So, a consistent and clear
approach is needed to calculate an accurate turnover rate.

A high employee turnover rate can be an indicator of low levels of employee morale and
engagement. We need to analyse where this is happening within an organisation and why. An
organisation can also compare its turnover rate with the turnover rate of its competitors.

Another useful tool in analysing turnover is cohort analysis. The idea is to analyse the level of
turnover in different cohorts or groups of employees. An organisation may find that people from
a particular department are leaving more often than in other departments. The reasons for this
high level of turnover among a particular group of employees should be examined. Accordingly,
the organisation should put strategies in place to manage turnover.

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MODULE 5 – PERFORMANCE MANAGEMENT

INTRODUCTION

PERFORMANCE & PERFORMANCE MANAGEMENT

ENGAGEMENT & PERFORMANCE MANAGEMENT

PERFORMANCE MANAGEMENT SCHEMES

PERFORMANCE MANAGEMENT PITFALLS

OVERCOMING PERFORMANCE MANAGEMENT PITFALLS

MANAGING UNDERPERFORMANCE

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1 INTRODUCTION

Performance management is important for the organisation in order to track its progress and
ensure it achieves its objectives. Within the organisation, performance management can promote
higher levels of employee engagement and performance. Performance appraisal interviews and
other performance evaluation schemes are used to assess employee performance.
Underperforming employees need to be supported, and high performers should be rewarded
by the organisation. Therefore, performance evaluation and reward are closely linked.

Performance management is a systematic process to measure and improve employee

performance. An organisation can progress towards achieving its objectives by managing the
performance of its employees. Performance management also gives employees a platform to
monitor their own progress.

Managing performance is important for both managers and employees alike. For managers, it
enables them to clarify key organisational goals and priorities, measure subordinates’ work
performance, and motivate them by recognising achievements. For employees, performance
management enables them to learn what is valued by the organisation, to communicate their
views about the job, and to identify any career and training development needs.

2 PERFORMANCE & PERFORMANCE MANAGEMENT

Performance management is concerned with establishing and measuring employee goals and
performance. It is a process for establishing a shared understanding of what is to be achieved (i.e.,
performance goals) and developing people in a way to achieve those goals.

2.1 PERFORMANCE APPRAISAL

In practice, performance management becomes apparent during the performance appraisal. The
performance appraisal usually consists of an interview that takes place between employees and
their managers to review the employees’ performance. This includes an evaluation of past
performance and setting future goals, which can be used to make reward, promotion, and
development decisions.

2.2 STRATEGIC PERFORMANCE MANAGEMENT

Organisations can create a high-performance culture, which will increase individual

performance. When each individual performs better, it leads to higher organisational
performance. This process is known as strategic performance management, which focuses on
aligning individual goals with goals of the organisation. The strategic performance management

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process ensures that employees act in ways that are beneficial to the organisation, which then
encourages those behaviours that are required for its success.

Performance management enables organisations to identify talented employees so that they can
be effectively rewarded and retained. Similarly, performance management enables
underperformers to be identified so that additional support and training can be provided to
improve their performance.

2.3 ABILITY-MOTIVATION-OPPORTUNITY (AMO) MODEL

Performance management, teamwork, pay for performance, information sharing, etc. – all of
these are considered high-performance work practices (HPWPs). One of the popular
performance related models is the ability-motivation-opportunity (AMO) model. This model
explains how HPWPs impact performance.

According to this model, HR practices play a significant role in increasing an employee’s ability (A),
motivation (M), and opportunity to participate (O) – all of which in turn enable employees to
perform better.

Thus, performance [P] equals A + M + O.

In other words, in order to attain the desired performance, employees must have ability (such as
skills, knowledge, and competency). In addition, an organisation must be able to motivate its
employees to perform better. An organisation should give employees the required opportunities
to contribute through their performance and commitments.

Performance management is about improving individual and organisational performance. A

number of theoretical perspectives and models have emerged to explain how this might be done.
We will now examine three of these theories.

2.4 GOAL-SETTING THEORY

According to the goal-setting theory, specific, challenging, and attainable goals can motivate
employees to increase their performance.

Imagine you are 30 pounds overweight and want to lose some of it. When setting your goal, you
have several options. You could say, “I want to lose weight within the next year. I will go on a diet
to lose the weight.” This goal is vague and poorly defined.

Alternatively, you could say, “I want to lose two pounds a week for the next four months. I will
exercise for at least 30 minutes, five days per week.” This goal is much more specific and includes
actionable, challenging steps. A goal should be attainable based on your self-efficacy. Self-efficacy
is self-confidence in your ability to perform.

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2.5 EXPECTANCY THEORY

Expectancy theory can be explained with the help of three factors: (E) expectancy, (I)
instrumentality, and (V) valence.

Expectancy is the belief that effort will lead to desired performance. For example, if someone
prepares hard for his job interview, is it likely he will perform well?

Instrumentality is the belief that performance will lead to a desired reward. For example, if he
performs well in the job interview, will he get the job?

Valence refers to the value or importance someone gives to the reward. For example, how much
does he value getting that job?

Expectancy theory concludes that the force of motivation in an employee can be calculated using
the formula:

Motivation = Expectancy × Instrumentality × Valence

In the context of the above example, the motivational force is a function of the individual’s effort
toward interview preparation, his performance during the interview, and his level of desire to get
the job.

2.6 EQUITY THEORY

Equity is defined as an individual’s outputs divided by that same person’s inputs. Inputs can be
hard work, commitment, personal sacrifices, etc. Outputs could be salary, bonus, promotion, etc.

In the workplace, we often hear people saying, “I work more than him, but I still get less salary than
him.” That means individuals look around and compare themselves to others.

To understand how this comparison takes place, let’s explore the equity theory equation, which
has two sides:

• Individual’s output divided by individual’s inputs

• Others’ output divided by others’ inputs

𝐼𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙′ 𝑠 𝑂𝑢𝑡𝑝𝑢𝑡 𝑂𝑡ℎ𝑒𝑟𝑠′ 𝑂𝑢𝑡𝑝𝑢𝑡
=
𝐼𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙′ 𝑠 𝐼𝑛𝑝𝑢𝑡 𝑂𝑡ℎ𝑒𝑟𝑠′ 𝐼𝑛𝑝𝑢𝑡

If an individual believes his output to input ratio is equal to other employees’ output to input ratios,
he will feel the organisation is fair and the equity is in balance.

If an individual believes his output to input ratio is less in comparison to other employees’ ratios,
he will become demotivated. Then he may reduce his inputs to balance the equation.

Similarly, if an individual believes his output to input ratio is more in comparison to other
employees’ ratios, then he will remain satisfied and may increase his inputs.

To summarise, an individual within an organisation will always try to balance the equity.

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3 ENGAGEMENT & PERFORMANCE MANAGEMENT

Engagement is the energy, enjoyment, and enthusiasm that employees demonstrate towards
their work and the organisation. A well-designed performance management system can enhance
employee engagement.

A performance management system can include motivating factors, such as rewards for good
performance and the fulfilment of personal goals. The performance management process needs
to create meaning and interest for employees. It should allow for giving feedback on employee
performance. When employees learn about what they are good at and what they can improve
upon, they can build confidence in their abilities, which will enhance performance.

Two key players in the context of performance management are the appraiser and appraisee.
The appraiser is the one who does the performance evaluation or appraisals. The appraisee is the
one who is being appraised or evaluated. In an organisational context, it is typically the manager
who is the appraiser, and the subordinate is the appraisee. If the appraiser is not trusted by the
appraisee, or if the performance review is not conducted in a fair manner, the process will not be
viewed as credible by the employees, thus causing disengagement. On the other hand, if the
performance management process follows the principles of trust and fairness, it will increase the
engagement of the employees.

So, clearly engagement is linked with the fairness and trust of an organisations’ performance
management.

We will now introduce three interrelated concepts linked with the fairness of the performance
management:

• procedural justice,

• distributive justice, and

• interactional justice.

Procedural justice ensures that the process through which performance management is carried
out is transparent and fair, and relevant employees have input in it.

Distributive justice refers to the fairness of the actual performance rating and outcomes. For
example, were employees recognised for their good performance?

lnteractional justice refers to the manner in which employees are treated and communicated
with throughout the performance management process. For example, during the appraisal
interview, was the manager respectful in their interactions with subordinates?

Fairness in performance management is not the only way to enhance employee engagement.
Aspects such as rewards, job design, leadership, coaching, support, and training should
accompany performance management. When the organisation includes these alongside their

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performance management system, employees will return the favour to the organisation through
enhanced engagement.

4 PERFORMANCE MANAGEMENT SCHEMES

The performance appraisal interview is at the heart of performance management. It usually

consists of a discussion between a line manager and his subordinate about performance.
Decisions related to training, promotion, reward, and employment termination often follow the
performance appraisal interview.

The performance appraisal interview was traditionally an annual process. But now, intervals for
performance appraisal interviews are being significantly shortened. The interviews or reviews may
even take place every six months, or quarterly.

Some of the most commonly used metrics or techniques for performance management
include rating, ranking, the critical incident technique, 180-degree feedback, 360-degree feedback,
and a competency-based assessment. Each of these are will be discussed below.

4.1 RATING

Through rating, the appraiser evaluates an employee's performance on a predetermined scale.

Employee performance can be judged using a scale of (1) poor to (5) excellent. A typical example
of a rating scale is the Behaviourally Anchored Rating Scale (popularly known as BARS). BARS
consists of rating points, performance category, and defined activities.

Let’s take the example of a salesperson’s role. ‘Good performance’ here could be providing creative
ideas to increase sales. This will give him a good rating. If the salesperson takes regular breaks
inside normal working hours, this can be considered as ‘extremely poor performance’. So, he will
be awarded the lowest rating. This is how defined activities are linked with performance category
and rating points.

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Performance Points Examples of Activities for Customer Service

Category
Outstanding 7 Suggests and implements valuable approaches for improved
performance sales and builds enduring positive relationships with staff,
customers, and senior management around all stores.

Good 6 Initiates creative ideas for improved sales and is highly effective
performance at building relationships with customers and staff.

Fairly good 5 Regularly takes into consideration stock requirements/makes

performance orders on time and attempts to make small talk and build
relationships with customers.

Acceptable 4 Often positively interacts with customers and ensures stock is

performance delivered when required.

Fairly poor 3 Can manage but finds it difficult to deliver stock on time and
performance interact with customers.

Poor 2 Only greets some customers positively and is often unwilling to

performance directly approach and assist.

Extremely poor 1 Takes regular breaks inside normal working hours and is often
performance impolite with customers.

Table 1: Example of Performance Rating

4.2 RANKING

Ranking involves managers ranking employees from best to worst, based on specific
characteristics or overall job performance. Employees might be categorised as A, B, or C players.
Forced ranking is the most discussed ranking method.

Forced ranking identifies an organisation's best and worst performing employees, using person-
to-person comparisons. The comparison outcome can be presented using a bell curve
distribution.

• The top 10% employees can be categorised as ‘exceptional employees’.

• The middle 55% employees may be consistently strong performers.

• The bottom 3% are ineffective performers.

Ineffective performers can be offered training so that they can improve their performance, or, in
the worst case, they may be asked to leave the job.

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Figure 1: Example of Bell Curve Distribution for Forced Ranking

4.3 CRITICAL INCIDENT TECHNIQUE

The critical incident technique is widely adopted in organisations and focuses on collecting and
analysing reports of incidents of actual behaviour. In this approach, the appraiser will often
observe incidents of good or bad performance of the appraisee. These important incidents are
then used as a basis for assessing performance.

This approach might be considered objective as the behaviours assessed are job-related.
However, such an approach to performance measurement is also cumbersome as it can be costly,
timely, and requires managers to have excellent observation skills.

4.4 UPWARD APPRAISAL/ 180-DEGREE FEEDBACK

Some textbooks have identified upward appraisal as 180-degree feedback. When employees
rate their manager's performance, this is called upward appraisal. Upward appraisal can be
anonymous so that the manager cannot take revenge against subordinates for giving him a bad
rating!

180-degree feedback involves employees rating their manager's performance via, for example, an
anonymous questionnaire. It is important that the questionnaire is anonymous in order to limit
the potential for managerial retribution. The main benefits of an upward appraisal are that it can
improve managerial effectiveness and leadership. It gives employees more voice and
empowerment in the organisation. Counselling or expert coaching is often provided to managers
as a result of the feedback. However, managers might sometimes perceive upward appraisal as a
threat to their own careers.

4.5 360-DEGREE FEEDBACK

360-degree feedback is a combination of ratings from peers, subordinates, supervisors, and

sometimes even customers. Through 360-degree feedback, employees obtain a broader

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perspective of how they are perceived by others. Because the feedback is wide-ranging, it is
considered to be more reliable and supports a climate of continuous improvement.

Such feedback is usually provided using a questionnaire and can be done anonymously or not,
depending on how open the organisational culture is. 360-degree feedback is particularly useful if
the organisation is less hierarchical, more team-based, or more customer-focused.

On the other hand, some potential problems include that people do not always provide honest
feedback and that there is often inaction following feedback provision. 360-degree feedback has
the risk of becoming a bureaucratic process since a variety of sources need to be involved. Careful
design, communication, and adequate training and follow-up can minimise these disadvantages.

4.6 COMPETENCY-BASED ASSESSMENT

A competency-based assessment is another popular performance measurement technique. It is

based on the principle that past behaviour is the best predictor of future behaviour. This is why
competency-based questions in interviews focus on what the employee has done in the past.

A competency-based approach to performance management aims to establish the competencies

and behaviours needed to be successful in the employee’s current roles. Managers set out
different competencies (for example, teamwork and communication skills) which will be important
to perform the role. Competencies are then converted into specific examples of desirable and
undesirable behaviours. Then, the list of desired behaviours and undesired behaviours is used
to compare and evaluate the actual performance of the employee.

A particular strength of the competency-based approach is that it uses a ‘how well it's done’
measure in addition to the traditional ‘what is achieved’ measure.

5 PERFORMANCE MANAGEMENT PITFALLS

There are many benefits derived from performance management, including its potential to
motivate employees and reward them fairly and transparently. Performance management also
helps to objectively make decisions with regard to training, promotion, and termination.

However, performance management practices have attracted a lot of criticism. Critics say
performance monitoring is directly related to stress, mental fatigue, and physical tiredness of
employees.

The aims of performance management are to create a high-performance culture conducive to

individual and organisational growth. But over time, employees may feel that the constant targets
and pressures are too much to cope with. They may even feel burned out.

The feedback provided to employees may also cause more harm than good. While feedback is
generally perceived as a constructive tool, some feedback will not always be accepted and

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embraced. The traditional focus of performance management on deficits or weaknesses can be

frustrating, demoralising, and demeaning for employees. Receiving destructive or negative
feedback may even threaten their self-esteem.

Sometimes performance ratings can be irrelevant if employees have little control over their
performance targets. Sometimes, line managers have a significant degree of discretion in terms
of whether employees are assessed in a lenient or strict manner. Sometimes human errors can
make the performance management a subjective process. In the worst case, a performance
appraisal can create fear, disrupt teamwork, and build rivalry and politics within the organisation.

Out of all performance management schemes, the performance appraisal interview is at the heart
of performance management. Next, we will discuss some performance appraisal interview errors
that are common across organisations.

5.1 CONTRAST EFFECT

Sometimes an appraiser might rate someone superbly on the basis that the previous candidate
performed very poorly. Or it could be the opposite, that your boss gives you poor rating just
because your colleague was so good – this is also the contrast effect.

The contrast effect can be highly demotivating for employees because they are being compared
to an experienced or talented individual. Rather, employees should be compared against their
own performance goals.

5.2 THE FIRST IMPRESSION ERROR

Sometimes an employee shows excellent performance at the beginning of the review period and
the appraiser gives an overall assessment based on this first impression, even though their
subsequent performance is not good. This is called the first impression error. This is obviously
problematic because the entire review period is not taken into account.

5.3 RECENCY EFFECT

The recency effect is simply the opposite of the first impression error. The recency effect occurs
when the appraiser only remembers the performance at the end of review period and fully ignores
the performance at the beginning.

5.4 THE HALO EFFECT

The halo effect occurs when an appraiser lets his overall opinion of an employee influence the
rating. Let’s say a supervisor observes an employee arriving late to work on certain occasions. The
supervisor then develops a negative perception about the performance of the employee. Even
though being late on several occasions might have no relevance on the performance.

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5.5 SIMILAR-TO-ME EFFECT

We will explain the similar-to-me-effect with the help of an example. An employee might have an
interest in football, and the appraiser might also take a lot of interest in football. This positively
influences the appraiser's assessment of the person and his performance. This is the similar-to-
me effect, and it occurs when an employee receives a favourable rating because he has similar
characteristics or qualities to the appraiser.

5.6 CENTRAL TENDENCY BIAS

Sometimes an appraiser gives employees a score in the middle of the rating scale, thus rating all
employees as average. This is central tendency bias. In doing so, the appraiser avoids making
tough decisions about poor performance, or even good performance.

5.7 SKEWING BIAS

The skewing bias occurs when performance results are scored largely to the left or right of the
scale. The appraiser is overly positive or overly negative in their ratings. This distorts the accurate
assessment of performance.

5.8 ATTRIBUTIONAL BIAS

Attributional bias refers to the systematic errors people make when trying to find reasons for
certain behaviours. An appraiser might assume that an employee's performance is poor because
the person is 'lazy', thereby providing them with a low score. However, there may be other
underlying reasons for poor performance, for example, the employee lacks appropriate skills to
perform the job.

5.9 STEREOTYPING

Stereotyping refers to our tendency to make generalisations about particular types of people. For
example, managers may stereotype by saying that all young employees are lazy, or that employees
hired from a particular university have great technical skills. But in actuality, it is important that
managers consider individual differences; they should not make generalised assumptions about
certain groups.

6 OVERCOMING PERFORMANCE MANAGEMENT PITFALLS

As discussed, performance management practices have a number of biases or drawbacks. The HR

department can provide training to the appraiser in overcoming these performance appraisal
biases. The appraiser needs to show the skill of building relationship and trust while conducting
an appraisal interview, and must conduct such in a consistent and fair manner.

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To overcome performance appraisal challenges, organisations can ensure five things:

• Ensure that the appraiser is adequately trained

• Ensure that both the appraisers and appraisees are involved in the appraisal process
design

• Ensure performance management is an open system fully supported by senior

management

• Ensure performance management has easy and simple administration

• Ensure there is always a follow-up on the appraisal actions and decisions

The limitations of traditional performance appraisals are forcing organisations to come up with
innovative alternatives, such as OKR and feed forward interviews.

Google is one such organisation that has paved the way in abolishing the traditional performance
review. Google is well known for being an innovative and creative enterprise. It adopted a system
referred to as objectives and key results (OKRs). Objectives and key result (OKR) is a technique
for setting and tracking objectives and outcomes.

OKR comprises of an objective and one or more key results. Key results can be measured on a 0–
100%, scale or using any other numerical unit. OKR defines how to achieve key results through
concrete, specific, and measurable actions. At the end, employees can look back and ask
themselves: “Did I do that, or did I not do it?” The answer will be simple. Yes or No. And there will
be no pitfalls in it.

A feed forward interview is a performance appraisal guideline designed to improve employee

performance by fostering collaboration between appraisers and subordinates. Through feed
forward interviews, employees are invited to reveal their positive experiences, focusing on their
strengths. Then, the idea is to reflect on the conditions that made this experience possible and
compare this to current conditions and behaviour. This approach enables employees to identify
their own strengths and areas for improvement without an externally imposed standard.

7 MANAGING UNDERPERFORMANCE

Managing performance is critical for organisations. If the organisation does not address
performance issues, good people will leave, and the poor performers will continue to undermine
the success of the entire organisation

A key challenge for organisations is managing underperformers. The impact of a single

underperformer is devastating for individual productivity, team productivity, and line manager
productivity.

Managing underperformance should be about praising success and forgiving failure. Sometimes
we are quick to conclude that an employee is 'lazy' or demotivated. But on some occasions,

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performance problems have little to do with motivation or ability. So, it is important to get into the
'root cause’ of underperformance.

There are many disciplinary situations or performance issues that may require intervention.
For example, excessive absenteeism, repeated poor timekeeping, repeatedly missing deadlines or
targets, and poor attitudes which influence the work of others, or which reflect on the public image
of the organisation. Sometimes, disciplinary procedures may be needed for employee behaviour
off the job, such as in the case of the abuse of alcohol or drugs, or involvement in some form of
law-breaking activity. Many organisations have accepted the idea of progressive discipline, which
allows for increasing the severity of the penalty with each repeated offence: a little like the yellow
card (warning), red card (sent off) system used in football.

If any employee is aggrieved by the disciplinary action, he should be given the opportunity to go
through the organisation’s grievance procedure. A grievance occurs when an individual feels that
he is being wrongly or unfairly treated by a colleague, supervisor, or department, unfairly
appraised or disciplined, discriminated against, and so on. Ideally, grievances should be solved
informally by the individual's manager. However, if this is not possible, a formal grievance
procedure should be followed. Formal grievance procedures, such as disciplinary procedures,
should ideally be set out in writing and made available to all employees.

In fact, many options are available for rectifying performance problems before entering the formal
disciplinary process. Indeed, disciplinary procedures should be considered as the last resort.
There are five basic steps that we can take to manage underperformance:

• Identify and agree on the problem

• Establish the reasons for underperformance

• Decide and agree on the action required to improve performance

• Provide the support and resources required to implement the action

• Monitor the underperformers and provide them with regular feedback

Identifying and correctly diagnosing the problem is important. Then we can more accurately
address the underperformance issue through appropriate solutions. Remember, solutions might
include many options, such as goal setting, coaching, training, role redesigning, and job rotation.
Now let’s discuss them one by one.

7.1 SMART GOALS

Organisations often think they have clear and measurable goals for their employees. But in reality
they tend to set goals which are vague or difficult to measure. Identifying performance problems
involves asking questions about how SMART the goals were.

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SMART goals are Specific, Measurable, Attainable, Realistic and Timed. It is important for
managers to ensure that goals are clear from the beginning. If the performance goals are clear, it
becomes easy for managers to provide feedback on the gap between the actual and desired
performance for each goal.

7.2 COACHING

Coaching is another solution for managing underperformance. A coach can assist and provide
valuable feedback to improve the performance of underperforming employees.

One coaching model that is widely used is the GROW model. It involves setting a goal (G), assessing
the current situation or reality (R), assessing the available options (O), and deciding what you will
do (W).

The GROW model requires the coach to take on the role of a facilitator. The coach will help the
employee choose the best solution for themselves.

7.3 TRAINING & DEVELOPMENT

Another widely adopted strategy for managing underperformance is providing training and
development. Underperformance can sometimes be caused by lack of skills or abilities. In this
case, providing training and development can be one such solution. Training can help poor
performers more effectively perform their tasks.

7.4 ROLE REDESIGNING & JOB ROTATION

A further strategy that can be used to rectify underperformance is redesigning an employee’s

current role. Even the manager can assign a completely new role to the employee. This is known
as job rotation. Such a strategy may be useful when the underperformer is highly qualified, and
the organisation does not wish to lose him. In this regard, job rotation recognises that certain
employees may add value to different functions. Putting the employee in a role that capitalises on
his strengths may be more sensible than losing him altogether.

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INTRODUCTION

REWARD SYSTEM

REWARD PACKAGE

FINANCIAL REWARDS

PERFORMANCE RELATED PAY (PRP)

NON-FINANCIAL REWARDS

DETERMINING THE RELATIVE VALUE OF JOBS

INTERNAL ALIGNMENT: JOB EVALUATION

EXTERNAL COMPARISONS

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1 INTRODUCTION

A critical part of the employment relationship involves the management of rewards. Rewards
are used to attract the quality of applicants required to drive organisational performance and to
retain those employees who contribute to that objective.

Reward management is an important aspect of HRM; an organisation's business strategy and

culture influence this. The reward package of an organisation impacts employee attraction,
motivation, and retention. It is also used to motivate employees to behave in ways that promote
organisational strategy. Reward management has now become significantly more strategic and
complex. However, the fairness of reward policies and practices based on internal and external
comparisons remains important to almost all organisations.

2 REWARD SYSTEM

Employees put in time and effort when working for an organisation. In return, organisations
compensate their employees through rewards. Organisations develop reward systems to manage
pay and benefits for employees. A reward system is the combination of financial and non-
financial elements to compensate the employees.

The core objectives of any reward system are as follows:

• To design rewards policies that are consistent with organisational goals

• To attract and retain employees by offering them attractive reward packages

• To motivate employees to perform effectively

• To integrate the reward system with other HR policies of the organisation

• To develop reward practices that comply with employment laws and regulations

Organisations are increasingly focused on rewarding the jobs and employees who add the most
value. This places considerable pressure on HR departments to align pay policies with the
behaviours required to execute organisational strategy.

Potential and current employees can compare the pay they receive with pay offered by other
similar organisations. As a result, such competition impacts the financial and non-financial
elements with which an employer chooses to reward employees. However, reward management
is an active process. Savvy employers manipulate the elements of their reward system to attract,
motivate, and retain the best employees possible.

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3 REWARD PACKAGE

A reward system is a concept that relates to all employees in an organisation. On the other hand,
a reward package refers to specific elements offered to each employee. Different individuals are
motivated by different reward packages. So, reward packages are likely to vary within the same
organisation.

• A reward package can be primarily classified as either a financial reward or a non-financial

reward.

• Financial rewards can be further categorised as direct pay and indirect pay (benefits).
Direct pay includes base pay, overtime, premium pay, and performance related pay.
Indirect pay (benefits) includes statutory benefits and organisation-specific benefits.

• Non-financial rewards include career development, job-security, work-life balance policies,

and recognition policies and practices, etc.

In the following few sections, we will discuss these in detail.

Figure 1: Elements of a Reward Package

4 FINANCIAL REWARDS

In this section, we will discuss financial rewards: direct pay and indirect pay.

4.1 DIRECT PAY

Direct pay is the financial element of the reward package received by the employees in the form
of cash, cheque, or direct deposit. Direct pay includes base pay, overtime, premium pay, and
performance related pay.

• Base pay is defined as the hourly, weekly, or monthly amount paid to an employee.

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• Employees who are paid on an hourly basis often receive overtime if they work more than
the agreed hours.

• Sometimes, organisations pay employees a shift premium for working during weekends
and night shifts. This is known as premium pay and is also added to the base pay.

• Performance related pay (PRP) is linked to the performance of an individual, team, or

even to the performance of all employees in the organisation. PRP is paid when employees
achieve pre-determined objectives. The next section includes a detailed discussion about
PRP.

4.2 INDIRECT PAY (BENEFITS)

Indirect pay is received by employees in forms other than cash. But indirect pay and benefits do
have financial value. Indirect pay can be divided into two categories:

• statutory benefits, and

• organisation-specific benefits.

Statutory benefits are those benefits organisations need to provide employees as per the legal
requirements of local laws. Holiday pay, maternity leave, paternity leave, disability benefits, etc.
are set by employment laws and are considered statutory benefits.

Organisation-specific benefits, on the other hand, are not made mandatory by law. Rather,
organisations voluntarily offer these benefits to attract and retain competent employees.
Examples of organisation-specific benefits are pension fund contributions, the employee
assistance programme (EAP), free transport, free housing, paid leave on illness, a subsidised
canteen, on-site childcare facilities, etc.

5 PERFORMANCE RELATED PAY (PRP)

There are many different forms of performance related pay (PRP). This section covers different
types of PRPs in detail.

5.1 MERIT PAY

Merit pay rewards high performing employees with additional pay. When the term 'merit pay’ is
used, it generally means that the pay increase is added to the base pay, meaning it is a permanent
addition to an employee's pay. Organisations may give merit pay when an employee achieves his
goals or when they demonstrate desired behaviours.

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5.2 PIECEWORK

Piecework is a payment given for each unit of production or 'piece’ produced. Most piecework
schemes guarantee a base pay. As the employee produces more outputs, he gets more pay in
addition to his base pay.

5.3 COMMISSION

Commission is usually paid to sales representatives or the sales staff of an organisation.

Payments are made as a percentage of sales and are generally paid in addition to the base pay.
The percentage of commission may increase with the volume of sales. That means top performers
get higher rates of commission.

5.4 BONUSES

Bonuses can be paid to individuals or divisions when they achieve pre-determined performance
targets. Usually, bonuses are a form of variable pay and must be re-earned each year. Bonus
schemes can be designed for different classifications of employees. For example, in manufacturing
settings, factory workers are often paid bonuses for increased productivity, while senior managers
receive bonuses for improving the profits of the factory.

5.5 TEAM-BASED PAY

Team-based pay is a payment given to members of a formal team linked to their performance.
For example, a research and development team of an organisation may receive a bonus when a
new product is successfully launched. Team-based pay motivates team members to cooperate
each other to enhance team performance.

5.6 PROFIT-SHARING SCHEMES

Profit-sharing schemes are based on organisational performance. These allow employees to

have their part in the profit of the business. A proportion of the company's profits are paid to
employees across the organisation in the form of additional payments.

5.7 EMPLOYEE SHARE OWNERSHIP PLANS

Employee share ownership plans (ESOPs) are used by large companies to distribute shares to
employees. The idea behind this is simple. If employees are shareholders, they will take
shareholders’ interests into account.

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5.8 GAINSHARING SCHEMES

A gainsharing scheme is used to increase profitability by improving performance through

employee involvement and participation. As performance improves, employees share financially
in the gain. Gainsharing’s goal is to improve performance and eliminate waste (in time, energy,
and materials). For example, in the context of a manufacturing company, a reduction in rejected
outputs will result in savings for the organisation. The gain is then shared between the employees
and the organisation.

6 NON-FINANCIAL REWARDS

As already mentioned, rewards can be financial or non-financial. In this part, we will discuss non-
financial rewards.

All financial rewards require organisations to spend money. But non-financial rewards do not
require any financial expenses. Non-financial rewards can be HR practices that support employees
both in their lives and in their careers. Job security, career development, work-life balance policies,
and recognition schemes are examples of non-financial rewards.

• In an increasingly volatile world, job security is especially prized by many employees.

When a job is made 'permanent', the organisation recognises the long-term potential of
the employee.

• Career development is the series of activities or on-going process of developing an

employee’s career. By planning career development, employees’ future job prospects and
earning power are improved by the organisation.

• Work-life balance policies are particularly valued by employees when they face strong
family responsibilities. Examples of this category of policies include flexible working hours
and e-working from home. If employees are given these flexibilities, they often remain
loyal and committed to their organisation.

• Finally, recognition policies and practices are also popular non-financial rewards.
Recognition can be formal or informal. Informal recognition involves a word of thanks for
work well done. It can be the cheapest but most effective form of reward. For formal
recognition, an organisation can award a certificate to the highest performing individual
or team.

7 DETERMINING THE RELATIVE VALUE OF JOBS

An organisation's pay structure is developed using two processes:

• internal alignment, and

• external comparisons.

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7.1 INTERNAL ALIGNMENT

Internal alignment refers to the comparison of all jobs within an organisation. When we do internal
alignment, it helps us create a hierarchy of jobs within an organisation. Hierarchy means putting
the most important job at the top, and the least important job at the bottom. A hierarchy of jobs
is usually determined using a job evaluation method.

7.2 EXTERNAL COMPARISON

Naturally, an organisation will pay the most important jobs better, and pay less important jobs
less. However, internal alignment is not sufficient to determine the pay structure of an
organisation. The organisation needs to know how much other organisations are paying for similar
jobs in the industry. This process is known as external comparison.

External comparisons are used to compare the reward packages of an organisation and its
competitor’s reward packages for similar jobs or positions. If it is found that competitors give
better pay in same jobs, relevant employees may leave the organisation to join them. So, external
comparison helps an organisation find how much competitors are paying. Based on the
comparison, an organisation can consider the right reward packages for its employees.

However, as already mentioned, a pay structure should be developed based on information from
both internal alignment and external comparisons. The combined analysis will help organisations
correctly determine the value and pay structure for each position.

8 INTERNAL ALIGNMENT: JOB EVALUATION

Job evaluation is a technique used by organisations to establish the relative worth of jobs. Job
evaluation techniques can be grouped into two categories:

• non-analytical methods, and

• analytical methods.

Job evaluation brings many benefits to an organisation.

• In some circumstances, someone might legally challenge the reward system of an

organisation. If the organisation has a well-documented job evaluation process, it will be
able to defend itself during such legal challenges.

• Job evaluation ensures that organisations make consistent and systematic decisions on
pay structure.

• Job evaluation helps to establish an equitable hierarchy of jobs that is ‘felt-fair’. If the job
evaluation process is well-defined and fair, then it will be accepted by everyone at the
organisation. Employees will feel that the difference in pay between jobs is based on a fair

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assessment of the work. Employees will look at other positions within the organisation and
understand why those jobs are paid more or less than their own.

In order to conduct job evaluation, organisations will need analysis and descriptions of all jobs. As
mentioned previously, a job description is a written statement regarding the tasks, duties,
responsibilities, and objectives of a job or position.

Job analysis is a process that examines jobs systematically to identify similarities and differences
between them. For example, a job analysis can find the similarities and differences between the
roles of a bookkeeper and a finance manager. The analysis may conclude that a finance manager’s
job requires more diverse tasks and greater responsibility than the bookkeeper's job.

8.1 NON-ANALYTICAL METHODS FOR JOB EVALUATION

Commonly used non-analytical methods include ranking, paired comparison and classification
systems.

Ranking is the simplest non-analytical technique for job evaluation. Through ranking, all jobs
within the organisation are compared to others and then placed in order of importance.

Paired comparison is a slightly more complicated variation of the ranking method. It involves
using a matrix to compare all possible pairs of jobs before placing them in order of importance.

Consider a self-employed accountant who hires a bookkeeper to assist him; he then hires a junior
accountant. Later, a senior accountant is hired to find new clients and manage the junior
accountant and bookkeeper. Finally, a receptionist is hired. Let’s conduct a paired comparison
analysis in the context of these four employees.
Receptionist
accountant

accountant
Senior
Junior

Final ranking
Bookkeeper Junior accountant Senior accountant Bookkeeper Senior accountant [3]
Junior accountant Senior accountant Junior accountant Junior accountant [2]
Senior accountant Senior accountant Bookkeeper [1]
Receptionist [0]

Figure 2: Example of a Paired Comparison Matrix

Start with the bookkeeper (left of matrix) and compare the job with the junior accountant (top of
first column). ‘Junior accountant' is placed in the box because this job ranks higher than the
bookkeeper.

The senior accountant's job is compared to the bookkeeper; the senior accountant ranks higher
than the bookkeeper and therefore appears in the box.

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The senior accountant's job is then compared to the junior accountant’s job. The senior accountant
ranks higher than the junior accountant and therefore appears in the box.

Similarly, the jobs of the bookkeeper, junior accountant, and senior accountant rank higher than
the receptionist – so these jobs appear in respective boxes in the third column. This is because the
receptionist's job is an entry-level position.

Now let’s count the number of times a job receives the highest rating. The senior accountant gets
the highest rating three times, the junior accountant twice, the bookkeeper gets it once, and the
receptionist never got the highest rating.

Based on these ratings, we can finally rank the employees in this organisation. The senior
accountant is the most important position and the receptionist is the least important position in
the organisation.

Classification systems are another popular non-analytical method for job evaluation.
Classification systems begin with a set of similar jobs called a 'job family' or 'class’. Each class is
described using a common set of characteristics. Classifications are then divided into grades using
characteristics such as impact, knowledge, and experience.

Let’s continue our example of the small accounting firm. There will be two classifications: (A)
Accounting Classification, and (B) Administrative Classification. Accounting Classification performs
professional activities and those related to account preparation for clients. The jobs of the senior
accountant, junior accountant, and bookkeeper will be in this classification, however, will have
separate grades based on their impact, knowledge, and experience. On the other hand, the
receptionist's job will fit into the Administrative Classification, and probably at the lowest grade.

8.2 ANALYTICAL METHODS FOR JOB EVALUATION

Analytical methods identify important characteristics of a job and evaluate the extent to which
these characteristics are present in each job.

Developing an analytical job evaluation system internally takes a lot of time. That is why some
organisations buy off-the-shelf systems from different consulting firms. However, many
organisations use a popular analytical job evaluation technique, such as the point method.

We will now discuss how the point method works.

• First, we identify common factors across all the jobs that are being evaluated. For
example, we can identify five factors: experience, education, effort, responsibility, and
ability.

• Next, we will define each factor into different levels and assign points to each level.
For example, we can have three levels for the ‘experience’ factor: (a) No experience, (b) 1–
10 years of experience, and (c) Over 10 years of experience.

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• We may give 10 points to no experience, 50 points to 1–10 years of experience, and 100
points to over 10 years of experience. In the same way, we need to define levels and points
for the other remaining factors, which are education, effort, responsibility, and ability.

• Once we have levels and points for all factors, we then determine which factors are most
important and accordingly assign weight to each factor. For example, if an office
manager position requires 4–6 years of experience, it would be assigned a preliminary
value of 50 points. However, if experience is among the most important factors, it might
be weighted at 1.5. Thus, the office manager job’s final experience factor will be: 50 points
x 1.5 weighting factor = 75 points.

• In the same way, we then calculate the weighted points for all remaining factors of
the office manager’s position.

• In the final step, we total the weighted points from all five factors of the office
manager’s job.

• Then, we group ‘office manager’ with other jobs that scored similar total points. This group
will include jobs that are similar in terms of characteristics required by the organisation.
Eventually, the organisation will have a pay grade for this group of jobs.

9 EXTERNAL COMPARISONS

Information about the pay and benefits of other organisations can help an organisation to
compare its own reward system with others. The objective of the external comparison is to set the
right pay and benefits for the employees of the organisation.

• If pay and benefits are too low, the organisation will not be able to attract and retain
competent employees.

• If pay and benefits are too high, the organisation will incur more labour costs. And more
costs will reduce the profitability and competitiveness of the organisation.

There are two steps in conducting external comparisons:

• first, identifying the competitors, and

• second, collecting information about the reward systems of the competitors.

We commonly know that organisations compete with each other to get more customers. But
organisations also compete with each other to attract and retain employees. As we have already
mentioned, the first task in conducting external comparisons is identifying the organisation's
competitors for employees. For a small corner shop, this is easy. They are competing for
employees with other shops in the same area. However, a large business with several classes of
employees will have many competitors for its employees.

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After identifying the competitors, the organisation needs to obtain information about
competitors’ rewards packages. The goal is to gather information that is sufficient and reliable
to make good decisions about an organisation’s own pay and benefits. At the same time,
organisations should try to minimise the cost of obtaining this information.

Organisations can use three basic strategies to obtain external pay and benefits information:

• Accessing free pay information

• Buying readily available survey data about pay information

• Conducting organisation’s own survey to get pay information

Organisations can access free information from different sources. Government departments in
many countries gather labour market statistics on salaries or earnings of different occupations.
From these statistics, organisations can build an idea of current salary trends. Organisations can
also use free surveys, journals, and articles on wages and benefits. Sometimes, job advertisements
include information about salaries and benefits. When employees leave an organisation, they may
disclose the pay and benefits offered by their new employer. This is also a free source of
information.

In addition to free sources, organisations can buy salary information. Occupational salary
surveys are published and sold by professional associations and consulting firms. Organisations
can buy these surveys according to their requirements.

Sometimes, large organisations do not just depend on buying survey data. They arrange their own
pay and benefits surveys. They often hire external consultants and consulting firms to conduct
these surveys on behalf of their organisation.

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MODULE 7 – LEARNING AND DEVELOPMENT

INTRODUCTION TO LEARNING & DEVELOPMENT

STRATEGIC ROLE OF LEARNING & DEVELOPMENT

LEARNING STYLES

TRAINING

ON-THE-JOB TRAINING

OFF-THE-JOB TRAINING

PLANNING AND DELIVERING TRAINING PROGRAMME

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1 INTRODUCTION TO LEARNING & DEVELOPMENT

Learning and development is a term used to describe everything that an organisation does to
encourage professional development among its employees. Training courses, development
programmes, online learning, learning activities, and much more fall under the bracket of learning
and development (L&D).

Learning, development, training, and education – these terms are often used interchangeably.
However, there are subtle differences between these concepts, as explained below.

• Learning is the process through which an individual acquires and develops knowledge,
skills, capabilities, behaviours, and attitudes. Training, development, and education all
involve learning. Therefore, learning is the broadest concept among all these terms.

• Training is a systematic procedure through which people learn knowledge and/or skills
for a definite purpose. Organisations provide training to their employees so that they
acquire the skills required to perform their jobs better.

• Development is the gradual growth of an individual. It is the growth of a person’s ability

and potential through different learning and educational experiences. While training takes
place over the short-term, development is considered as a long-term process in which the
individual largely takes responsibility for its direction.

• Education is a more formal way to broaden one’s knowledge, often by attending school
or university. Education requires lengthy time commitments, often leading to
qualifications.

L&D is one of the traditional 'core' responsibilities of HR. However, L&D strategies are usually
different from one company to the next.

In large companies, L&D is usually highly structured and more formal. There could be an HR team
in charge of implementing the L&D strategy. Alternatively, there could even be a designated L&D
team made up of specialist learning officers. Learning officers work full time to identify specific
training needs, and arrange the right learning opportunity or development programmes.

In smaller businesses, the L&D strategy is often a little more constrained by the available budget.
Those companies are also less likely to have a fully-fledged HR department. Learning opportunities
offered to employees are less likely to be in the shape of formal training. Instead, it could be much
more unstructured and casual.

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2 STRATEGIC ROLE OF LEARNING & DEVELOPMENT

If an organisation focuses on the development of people, it will acquire strategic benefits. In this
section, we will discuss four key strategic roles and benefits of L&D.

2.1 ATTRACT AND RETAIN TALENT

Traditionally, learning focused solely on improving productivity. Today, learning also contributes

to employability. Over the past several decades, employment practice has shifted from staying

with the same company for a lifetime to a model where workers are retained for only as long as

they add value to an enterprise. Workers are now in charge of their personal and professional

growth and development. People list ‘opportunities for learning and development’ among the top

criteria for joining an organisation.

2.2 DEVELOP PEOPLE CAPABILITIES

Human capital requires ongoing investments in L&D to retain its value. When knowledge becomes

outdated or forgotten, the value of human capital declines. So, there is an ongoing need for new

learning and development initiatives.

2.3 BUILD AN EMPLOYER BRAND

An organisation’s brand is one of its most important assets. An organisation’s brand conveys a

great deal about the company’s success in the market, financial strengths, position in the industry,

and products and services. Investments in L&D can enhance a company’s brand and boost its

reputation as an ‘employer of choice’.

2.4 MOTIVATE AND ENGAGE EMPLOYEES

The most important way to engage with employees is to provide them with opportunities to learn

and develop new competencies. When highly engaged employees are given the skills to grow and

develop within their chosen career paths, they are more likely to be energised by new

opportunities at work and be satisfied with their current organisations.

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3 LEARNING STYLES

Within an organisation, different employees will have different styles and preferences toward
learning approaches. In order to design and deliver learning and development events and
programmes, we need to understand the different learning styles of different people. The most
familiar classifications of learning styles are as proposed by Honey and Mumford (1996). They
identified four styles: activists, reflectors, theorists, and pragmatists.

• Activists like to get fully involved in the action. Activists are enthusiastic and open-minded.
They have a tendency to act first and reflect on the consequences later.

• Reflectors tend to be shy and not necessarily involved in discussions or debate. Reflectors
like to stand back and observe experiences from different angles. They collect data, reflect
on it, and then come to a conclusion.

• Theorists continually focus on analysis and the development of theories based on

multiple observations. They like to think in a logical, step-by-step way. Theorists have a
great capacity to integrate many different facts and observations. They tend to be
perfectionists.

• Pragmatists are focused on trying out new ideas, theories, and techniques to see how
they will work in practice. Pragmatists continually search for new ideas. They may try out
every opportunity.

However, none of these four learning styles is exclusive. It is quite possible that one person could
be both a reflector and a theorist, and someone else could be reflector on one occasion and
pragmatist in other circumstances.

4 TRAINING

As we have already mentioned, learning is a broader term than training. However, the word
‘training’ is frequently used in the corporate world. In this section, we will explore concepts related
to training activities in the organisational context. Training programmes and events can develop
manual skills, IT skills, interpersonal skills (such as leadership, team building, and group dynamics)
and personal skills (such as assertiveness, coaching, communicating, and time management).
Employees can also learn organisational procedures or practices (such as induction, health and
safety, and performance management) through training.

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4.1 TRANSFER OF LEARNING & SYSTEMATIC TRAINING APPROACH

Unfortunately, training can sometimes become remote from the reality. Sometimes the skills and
knowledge acquired from training can prove to be irrelevant to the job. This challenge is known as
the transfer of learning problems.

To tackle this problem, it is necessary to make the training as relevant and realistic as possible.
Individuals are more likely to apply their learning when they do not find it too difficult or when
individuals believe what they have learnt is relevant, useful, and transferable.

The transfer of learning is also more likely if a systematic training approach is used. In this
approach, the training is specifically designed, planned, and implemented to meet the defined
needs. Moreover, training is provided by people who know how to train, and the impact of this
training is carefully evaluated.

4.2 ON-THE-JOB TRAINING & OFF-THE-JOB TRAINING

In the context of any organisation, all learning or training programmes and events can broadly be
divided into two categories: off-the-job training and on-the-job training.

On-the-job training, also known as workplace learning, is experiential learning. It is learning by

doing and by reflecting on experience. Employees receive first-hand experience of performing
tasks related to their role from a co-worker or supervisor. The purpose is to prepare the employees
for their position. The instruction develops the skills, competencies, and knowledge needed to
carry out the role.

Off-the-job training, also known as off-the-job learning, refers to a learning method where
employees learn more about their job, or the latest advancements in their field, at a location away
from their workplace. Off-the-job training can take place near the workplace or somewhere further
away, such as a resort or training centre.

Off-the-job training occurs at a place other In contrast, on-the-job training takes place in
than the job site. the work building or job site.

Off-the-job training provides a distraction-free Since on-the-job training takes place at the
environment for employees. workplace, it often comes with more
distractions, which can hinder an employee's
ability to learn.

Off-the-job training is often more expensive On-the-job training is often less expensive.
than on-the-job training because experts are Companies do not have to incur costs
generally hired to carry it out. associated with the training venue,
accommodation, logistics, refreshments, etc.

Table 1: Differences between On-the-job Training and Off-the-job Training

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5 ON-THE-JOB TRAINING

On-the-job training is largely an informal process. It may involve self-directed learning and is
enhanced by coaching, mentoring, e-learning, and more formal planned experience.

5.1 SELF-DIRECTED LEARNING

Self-directed learning is based on a process of recording achievement, future goals, and learning

plans. Through self-directed learning, individuals review what they have learnt, what they have

achieved, what their goals are, how they are going to achieve those goals, and what new learning

they need to acquire. The learning programme can be ‘self-paced’ – the employee can decide for

themselves the rate at which they will learn.

5.2 INDUCTION TRAINING

Induction training is provided to new employees who have recently joined the organisation.

Induction training helps the new employees to become familiar with the organisation and its

processes. We have discussed induction training in one of the previous modules of this book.

5.3 PLANNED LEARNING EXPERIENCE

Planned learning experience is the process of deciding on a sequence of experience that will

enable people to obtain the knowledge and skills required in their jobs. It is deliberately planned

and presented as a learning event. For example, when a new graduate trainee joins an

organisation, he may be assigned to be attached to different departments over a period of six

months at a pre-determined sequence. The objective is to observe and understand various

functions of the organisation before the trainee takes up his specialised role with a specific team

or department.

5.4 COACHING

On-the-job coaching is a great way to develop employees. Coaching is delivered on a 1-to-1 basis.
For example, a line manager may assign a senior colleague to coach a specific employee. These
coaches support the employees to be accountable for their own learning. Coaches ask questions
and give guidance to help employees learn new skills that will help them perform better at work.

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5.5 MENTORING

While coaching is performance driven, mentoring is more holistic and developmental. Mentoring
is the process in which specially trained individuals (known as mentors) are used to support an
employee in the workplace. The mentor provides guidance, pragmatic advice, and continuing
support so that individuals learn and continually develop.

5.6 E-LEARNING

E-learning involves the use of computer, network, and web-based technology to provide learning
materials and guidance to individual employees. Employees may access e-learning systems while
continuing their roles at the workplace.

6 OFF-THE-JOB TRAINING

Off-the-job training takes many forms depending on the nature of the industry or specific

requirements of the job. In this section, we will discuss some common off-the-job training

methods.

6.1 CLASSROOM LECTURES

This type of off-the-job training takes place in a classroom-like environment. It involves a trainer

providing instruction in a lecture format. Trainees learn crucial skills needed for their jobs and

have the opportunity to get their questions answered by the trainer(s).

6.2 AUDIO-VISUAL

Trainees who receive off-the-job training through an audio-visual method learn the material

through the use of various media such as films, television, video, and presentations. Educational

institutions often use this method to help students remember the learning materials more easily.

In the corporate world, customer care centre employers often administer this type of training for

their employees to teach them how to interact and behave with customers.

6.3 VESTIBULE TRAINING

Technical staff, office staff, and employees who handle tools and machinery typically undergo
vestibule training. Trainees learn about the equipment they will use on the job. Vestibule training
takes place away from the workplace. This means the tools and equipment used for vestibule
training are available at the training location.

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6.4 CASE STUDIES

With this method, trainees receive a situation or problem in the form of a case study that relates
to their field. In other words, they receive a written description of a real situation that previously
occurred. They are then instructed to analyse the situation and provide their conclusions in a
written format. Training instructors then review the pros and cons of each option to help trainees
improve their decision-making skills.

6.5 ROLE-PLAYING

Role-playing involves a trainee taking on roles and acting out certain situations. The trainee acts

as if he is facing a real-life situation and has to quickly respond to the changing conditions. Role-

playing involves realistic behaviour in a hypothetical circumstance. Examples of the situations a

trainee may face include hiring someone for a vacant position and making a sales pitch to a

customer.

6.6 MANAGEMENT GAMES

Unlike role-playing, management games involve multiple trainees simultaneously. Management

games provide trainees with a fun and competitive way to learn. Trainees split up into teams of

approximately five or six people, then each team competes in a simulated marketplace. They may

have to decide how much inventory to maintain or how much to spend on advertising.

Management games help develop problem-solving and decision-making skills. Trainees also learn

leadership, teamwork, and organisation skills as they must organise their groups themselves to

get the job done.

7 PLANNING AND DELIVERING TRAINING PROGRAMME

In order to understand the process of planning and delivering any learning or training events and
programmes, we can use the famous ADDIE model. The ADDIE model has five phases: analysis,
design, development, implementation, and evaluation.

7.1 ANALYSIS PHASE

The first and most important step is to identify the learning needs. Employees should not learn
anything new just for the sake of learning. Instead, employees need to acquire new knowledge,
skills, and attitudes that are relevant to their roles. In this way, learning or training becomes a way
to create new business capabilities.

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In the analysis phase, broad learning goals and objectives are established. In order to identify the
learning goals, HR practitioners analyse where the organisation wants to go and what skills are
missing to get there. HR practitioners also look at what competencies and skills are required to
make employees successful in their jobs. They also identify the most important knowledge, skills,
and attitudes required for the employees.

More importantly, learning needs analysis is often described as the process of identifying the
learning gap – the gap between what is and what should be. Gap analysis involves identifying:

• the gap between what people know and what they should know, and

• the gap between what people can do and what they should be able to do.

Training is then provided to fill these gaps.

7.2 DESIGN PHASE

The design phase deals with subject matter analysis, the programme outline, and the use of
learning aids. In this phase, the teaching materials and learning methods are determined. This is
often done alongside an external trainer or training provider. In addition to learning methods,
techniques, pacing, and setting, many other factors are also determined at this phase. Training
programmes can be trainer-centred or trainee-centred. Trainer-centred methods include
seminars, presentations, lectures, keynotes, and workshops. Trainee-centred methods are more
interactive and include case studies, role-playing, self-directed lessons, simulation, management
games, and so on.

7.3 DEVELOPMENT PHASE

In the development phase, the detailed programme is constructed. This covers the session plan,
the outline content and learning outcomes of each session, the preparation of visual aids,
handouts, supporting material and exercises, the arrangements for administering the programme
(main lecture room, syndicate rooms, projectors, flip charts, etc.), and the final printed version of
the programme for distribution to trainees. The costs of the programme will be calculated to
ensure that they are within budget. Trainers may prepare the detailed contents of their sessions,
decide on their method of delivery, rehearse their sessions, and work out how the exercises will
fit in. In addition, the programme in-charge will ensure that the efforts of all those involved are
coordinated throughout this phase.

7.4 IMPLEMENTATION PHASE

The implementation phase is all about the delivery of the training. Key elements may include
project management, communication with participants, logistics, data collection, assessment,
feedback, etc. The delivery of the actual training itself is the key element in this phase. This also

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includes the delivery of materials (such as guides, manuals, or FAQs). The correct learning
environment is important for increasing the effectiveness of the training programme. That is why
the organisers (or programme in-charge) need to ensure the logistics and facilities are well-
managed.

If the training programme or event includes any assessment, the trainees may need to take an
assessment or examination. At the end of the training programme, training evaluation forms may
be distributed among participants. Commonly-used feedback instruments include questionnaires,
interviews, observation records, etc. Feedback from the participants may be safely retained for
next phase of the process (i.e., the evaluation phase).

7.5 EVALUATION PHASE

Evaluation can take place at different levels of the learning or training programme. It can start with
immediate reactions to the learning event, and end with an assessment of the impact it has had
on organisational performance. The Kirkpatrick Model is a popular standard for evaluating the
effectiveness of training. It considers the value of any type of training across four levels.

Level 1 Reaction- evaluates how The degree to which participants find the training
participants respond to the training. favourable, engaging, and relevant to their jobs.

Level 2 Learning- measures if they The degree to which participants acquire the
actually learnt the material. intended knowledge, skills, attitude, confidence, and

commitment based on their participation in the

training.

Level 3 Behaviour- considers whether The degree to which participants apply what they
they are actually using what they learnt during training when they are back on the job
learnt through their training in real-
life.

Level 4 Results- evaluates whether The degree to which targeted outcomes were
the training positively impacted the achieved as the ultimate result of the training.
organisation.

Table 2: The Kirkpatrick Model

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MODULE 8 – CAREER DEVELOPMENT

INTRODUCTION

CAREER DEVELOPMENT PROGRAMMES

CAREER OPPORTUNITIES DEVELOPMENT

EMPLOYEES NEEDS & CAREER OPPORTUNITIES

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1 INTRODUCTION

A ‘career’ refers to an individual’s relevant work-related experiences and is unique to them. Career
development is the lifelong process of managing learning, work, leisure, and transitions in order
to move toward a personally determined and evolving future. Employees want the chance to
progress in their careers, therefore opportunity is the top reason for employee engagement –
career development programmes can enhance this.

2 CAREER DEVELOPMENT PROGRAMMES

If an organisation lacks career development programmes, it may lose talented employees.

Therefore, implementing a career development programme will increase retention, which is why
career development programmes are essential for all organisations. The components of career
development are learning, capability, and experience.

2.1 LEARNING

The first element of career development is learning. Learning includes both education (degrees,
certificates, and classes) as well as training and development. Successful careers start with
education. While it is crucial to get an education to understand broad concepts, you should not
over-invest in education without also gaining experience. How you invest your education is more
important than the certificate itself. Although a bachelor’s degree is sometimes essential,
vocational training, professional courses, and applied courses have become equally as important
in today’s world.

2.2 CAPABILITY

The next component of career development is capability. Capabilities are the raw skills needed
to complete jobs: these can include data, developing strategies, project management, software
management, programming, or a wide range of knowledge working.

Some important skills that can enhance management and leadership capability are listed below.

• Knowing how to prioritise is a key skill. Knowing when you need to be involved is another
vital skill. Leaders do not need to engross themselves in everything; they need to know
when to remove themselves from the picture and let their team run things.

• One of the most important skills is to know how to manage workloads. Leaders do not say
‘yes’ all the time. They push back on people when they need to and say ‘no’.

• Handing over is not only about tasks; you need to delegate responsibility. Not only does
this provide growth chances for your team, but it also frees your time.

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• Knowing how to resource your team properly is also important. Having the right people in
your team is a key skill. If you do not have the right skills in your team, you will never be
able to take advantage of opportunities.

• Leaders with good strategic skills understand what is going on around them. Keeping an
eye out for industry trends or emerging technologies is important.

• A great leader learns to delegate. It is important to evaluate or measure these delegated

tasks. If there is no attempt to measure, no one will know whether the work meets
standards for timeliness, quality, or the vision of the leader.

• Simply delegating will not be sufficient in most, if not in all, cases. A leader’s obligation is
to make sure that he increases the chances of success by providing the resources required
to perform the job when delegating to a subordinate or the team. Resources may include
funding, people, training, or facilities.

• People naturally work for rewards, from simple recognition to financial incentives. It’s
essential to know when, and how, to reward effective achievement throughout all levels of
the organisation.

2.3 EXPERIENCE

The third and last component of career development is experience. Solid careers may have a
chain of job positions that affiliate around a common career theme, such as marketing,
management, software, HR, supply chain, etc. Also, having a solid track record is key. Getting a
paid full-time job is not the only way you can source experience, you could also volunteer, intern,
or attend local networking events.

3 CAREER OPPORTUNITIES DEVELOPMENT

Career opportunities are identified through job analysis. Job analysis is a process to identify and
determine in detail certain job duties and requirements. Job analysis data may be collected from
executives through interviews or questionnaires, but it is important to note that the result of the
analysis is a description or specification of the job, not a description of any person.

Organisations should identify career paths for employees and line managers. HR managers should
then discuss jobs available in the organisational hierarchy with employees, and where they might
want to go in the organisation in future. Then, employees should be provided information
regarding available job postings in the organisation and what requirements are needed in order
to achieve the promotion they aspire for. Often, career paths start with the most junior positions
and end with the most senior positions. It is important to start thinking of career paths promptly;
decisions made early on in your career can influence the opportunities available in the future.

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4 EMPLOYEES NEEDS & CAREER OPPORTUNITIES

It is required to align the needs and ambitions of employees with career opportunities in order to
ensure the right people will be available to meet organisational manpower needs. Therefore,
emphasis is placed on training, and on- and off-the-job counselling and coaching by supervisors.
It is also important to include planned rotations in positions, which will provide employees with
different functions and locations, and periodic performance appraisals. Training and career
counselling can help an employee to make progress in his career path. In career counselling, the
manager discusses the strengths and weaknesses of the employee to better help him identify
areas of development so he can meet the future challenges of the job.

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MODULE 9 – EMPLOYEE RELATIONS

INTRODUCTION

THE PSYCHOLOGICAL CONTRACT

EMPLOYEE VOICE

PRACTICES OF INDUSTRIAL RELATIONS

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1 INTRODUCTION

Employee relations is the term used to describe the relationship between employers and
employees. Employee relations is a much wider concept than industrial relations and it has
replaced the latter as the term for the relationship between employers and employees.

Employee relations is seen as focusing on both individual and collective relationships in the
workplace. It means dealing with employees either collectively through their trade unions, or
individually. However, in today’s world, employers’ attentions have shifted increasingly from
collective to individual relationships, and employee engagement has become a key part of the
employment relationship.

The objective of an employee relations strategy is to build stable and cooperative relationships
with employees. Through employee relations, an organisation aims to develop a common interest
with employees to achieve the organisation’s goals. It also involves providing employees with a
voice, communicating with them, and an organisational attempt to develop a culture based on the
shared values found between management and employees.

1.1 THE IMPORTANCE OF CULTURE

Employee relations is about creating and maintaining a positive working relationship between an
organisation and its people. An important part of that relationship is the culture, which HR
professionals have an important role in setting.

When relationships break down, it’s also important for HR professionals to know how to deal with
disputes. HR professionals need to understand the different ways in which the organisation can
resolve conflict through consultation and negotiation with individuals and representative bodies,
such as trade unions. A positive employee relations climate – with high levels of employee
involvement, commitment, and engagement – can improve business outcomes as well as
contribute to employees' wellbeing.

1.2 EMPLOYEE RELATIONS CLIMATE

The employee relations climate of an organisation refers to perceptions of management,

employees, and their representatives in regard to how employee relations are conducted and how
the various parties (managers, employees, and trade unions) behave when dealing with one
another. Organisations must strive to develop a climate of trust among employees.

A climate of trust is an essential ingredient in a positive employment relationship. An

organisation will benefit immensely through developing this. The benefits of increased trust could
include:

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• improved employee performance,

• higher levels of motivation and positive attitudes,

• reduced costs due to higher productivity, less wastage, lower staff turnover, and so on,

• enhanced pro-social behaviour at work, including desirable work-related behaviour,

• enhanced knowledge-sharing and increased innovation, and

• improved cooperative working.

A high-trust organisation exists when management is honest with people, keeps its word, and
practices what it preaches. Trust is created and maintained by managerial behaviour and through
the development of better mutual understanding of expectations.

1.3 APPROACHES TO EMPLOYEE RELATIONS

Not all employers are interested in developing a high trust organisation. Some employers may
prefer a different approach to employee relations. Broadly, there are four main approaches:

a) Adversarial: In an adversarial approach, the organisation decides what it wants to do, and
employees are expected to fit in. Employees only exercise power by refusing to cooperate.

b) Traditional: In a traditional approach, there is a reasonably good day-to-day working

relationship. When the management proposes something, the employees react through
their elected representatives, such as trade unions.

c) Partnership: In a partnership approach, the organisation involves employees in the

development and implementation of organisational policies.

d) Power sharing: In a power sharing approach, employees are involved in both the day-to-
day and strategic decision-making of the organisation.

2 THE PSYCHOLOGICAL CONTRACT

The term 'psychological contract' emerged in the early 1960s and is core to understanding the
employment relationship. The psychological contract provides a powerful rationale for employers
to pay attention to the ’human’ side of the employment relationship.

2.1 DEFINITION

The psychological contract forms the basis of the employment relationship. A psychological
contract is a set of unwritten expectations that exist between individual employees and their
employers. The concept of the psychological contract highlights the fact that employee/employer
expectations take the form of unarticulated assumptions.

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2.2 LEGAL CONTRACT VS PSYCHOLOGICAL CONTRACT

The psychological contract differs from a legal contract of employment. The legal contract refers
to an agreement, usually written and signed, about the mutual formal obligations of the employer
and the worker. The psychological contract, on the other hand, describes how the parties
themselves understand their relationship, their own views of commitment, and what they can
expect to receive in return.

2.3 WHAT IS COVERED IN A PSYCHOLOGICAL CONTRACT?

As already indicated, a psychological contract includes both:

• the employer’s expectations of the employees, and

• the employee’s expectations of the employer.

From the employer’s point of view, the psychological contract covers such aspects of the
employment relationship as competence, effort, compliance, commitment, and loyalty.

From employees’ points of view, the aspects of the employment relationship covered by the
psychological contract will include:

• how they are treated in terms of fairness, equity, and consistency,

• security of employment (job security),

• scope to demonstrate competence,

• career expectations and the opportunity to develop skills (career prospects),

• manager support,

• training and development,

• involvement and influence, and

• trust in the management of the organisation to keep its promise.

Interestingly, an employee’s perceptions of employer obligations are often informal. Employees

may develop expectations based on an employer’s actions, or on what has happened in the past.
For example, if an employee observes his manager allowing one of his colleagues a flexible
working schedule, the employee may also expect to receive similar flexibility.

2.4 POSITIVE PSYCHOLOGICAL CONTRACT

A positive psychological contract is linked to higher commitment to the organisation, higher

employee satisfaction, and better employee relations. Both the employer and employee need to
define their expectations during the recruitment and induction programmes. Afterward, there
should be continuing dialogue between the two parties, and transparency on company policies

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and procedures. The employer should treat people as stakeholders, relying on consensus and
cooperation over control and coercion.

3 EMPLOYEE VOICE

The employee voice is the means by which people communicate their views to their employer. It
helps to build open and trusting relationships between employers and their people. For
employers, effective use of voice contributes to building trust with employees, innovation,
productivity, and organisational improvement. For employees, this often results in feeling valued,
increased job satisfaction, greater influence, and better opportunities for development. Employee
voice is important in creating inclusive and safe working environments, too.

Employees can have their say through individual and collective channels, by speaking directly to
management, or indirectly through representatives. Voice can be formally expressed, for example
through suggestion schemes and attitude surveys, as well as informally, such as in team meetings
or through intranets and online platforms. People are unlikely to effectively use their voice as a
result of any one single initiative, and so senior management should support complementary
channels within the organisation. Senior managers and line managers are all important in eliciting
employee voice. HR professionals have a key role in generating and embedding employee voice
as an integral part of organisational culture and working practices.

4 PRACTICES OF INDUSTRIAL RELATIONS

Employee relations is replacing the term ‘industrial relations’, however industrial relations is still
used to describe the relationships and interactions between the employer and collective employee
representation (such as trade unions). Industrial relations (IR) regards collective agreements,
collective bargaining, disputes resolution, and dealing with issues concerning the employment
relationship and the working environment between management and trade unions.

4.1 MANAGING WITHOUT TRADE UNIONS

Smaller organisations simply deal with employees individually – sometimes well, other times not.
They make no attempt to provide alternative arrangements. In many cases, small organisations
also have a small number of employees. So, it may not be feasible for employees to gain collective
representation. In small organisations, we see more direct interaction between each individual
employee and their employer.

Some large organisations even try to manage without trade unions through adopting a union
substitution policy. Under this strategy, the employer offers employment policies and pay
packages to employees as an attractive alternative to trade union membership. Through this, the
employer will essentially deal with people individually rather than collectively.

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4.2 TRADE UNIONS

Trade unions are organisations generally consisting of workers or employees and represent the
views of these members. They exist to protect the interests of their members through negotiating
and consulting with employers over working conditions and wages. Union members elect
representatives to represent them as a body, and as individuals in disputes – such as in disciplinary
cases.

4.3 COLLECTIVE BARGAINING

Discussing with unions involves collective bargaining, which is the negotiation and discussion of
agreements on matters of mutual concern.

According to the 1998 International Labour Organization (ILO) Declaration on Fundamental

Principles and Rights at Work, collective bargaining is a fundamental right. International Labour
Organization (ILO) Convention No. 154 defines collective bargaining as referring to:

‘All negotiations which take place between an employer, a group of employers or one or more
employers' organisations, on the one hand, and one or more workers' organisations, on the other,
for:

a) determining working conditions and terms of employment; and/or

b) regulating relations between employers and workers; and/or

c) regulating relations between employers or their organisations and a workers' organisation

or workers' organisations.’

Collective bargaining is a key means through which employers and their organisations and trade
unions can establish fair wages and working conditions. Other issues on the bargaining agenda
include working time, training, occupational health and safety, and equal treatment. The objective
of these negotiations is to arrive at a collective agreement that regulates the terms and conditions
of employment.

4.4 COLLECTIVE AGREEMENTS

The formal outcome of collective bargaining is agreement between management and unions. The
agreements deal with the terms and conditions of employment or other aspects of the
relationship between the two parties.

4.5 NEGOTIATION

In many cases, to reach collective agreements, negotiation takes place between unions and
employers. Negotiation is a process used to resolve disputes and disagreements between the

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employees/union and an organisation. During negotiation, two parties come together and confer
to reach a jointly acceptable agreement.

The general purpose of negotiation is to resolve differences between and within themselves and
to maintain cooperation in the pursuit of shared or superordinate goals.

Negotiation is basically a problem-solving technique, enabling parties to meet their own needs (as
far as possible) without breaking the relationship or cooperation between them.

There are two basic approaches to negotiation.

• Distributive bargaining, where negotiation is about the distribution of finite resources.

One party’s gain is another’s loss: a ‘win-lose’ or ‘zero sum’ equation. If a pay increase of,
say, 10% is gained, where the management budget was 5%, the extra must be funded from
elsewhere – profits, investments, other groups (such as shareholders), increased prices,
increased productivity, cuts in training, and so on.

• Integrative bargaining is a ‘win-win’ approach. This is a process by which the needs and
fears of all parties are explored and defined with a view of not just getting the best
outcome for one party (win-lose), or even a compromise (lose-lose), but to fulfil the needs
of all parties: a ‘win-win’ solution. But if a ‘win-win’ solution is not available, then both
parties should at least get as close as possible to their desired outcomes.

4.6 DISPUTE RESOLUTION

During collective bargaining, there may not always be agreement. In many cases, negotiation may
fail, and disputes may continue. Industrial dispute is common in real world situations. The aim
of dispute resolution is to resolve differences between management and a trade union.

The aim of collective bargaining is, of course, to reach agreement, preferably to the satisfaction of
both parties. But if there are still disputes, there needs to be a resolution. Forms of dispute
resolution include conciliation, arbitration, and mediation.

• Conciliation: the process of reconciling parties in disagreement. It is merely the bringing

together of the two parties in disputes by a third party, known as the conciliator.
Conciliators only help the parties to come to an agreement; they do not make
recommendations on what that agreement should be.

• Mediation: an attempt to settle disputes with the help of an outsider. The outsider, known
as a mediator, attempts to stimulate labour union and management to reach some type
of agreement. The mediators do not decide the issue or solution. He listens, suggests,
communicates, and persuades.

• Arbitration: if employer and union fail to arrive at a settlement, they may consider
arbitration. Both parties appoint an arbitrator. Arbitration is the process of settling
disputes using a third party: the arbitrator. The arbitrator reviews and discusses the

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negotiation stances of the disagreeing parties and makes a recommendation on the terms
of the settlement. The terms of the settlement will typically be binding for both the
employer and employees’ representation (trade unions).

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MODULE 10 – WELFARE, HEALTH, AND SAFETY

THE TRADITIONAL WELFARE FUNCTION

ACCIDENTS AT WORK

NEW APPROACHES TO WELFARE

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1 THE TRADITIONAL WELFARE FUNCTION

1.1 WHAT IS WELFARE?

Welfare is a state of doing well, freedom from calamity, and enjoyment of health. In HRM terms,
this implies efforts to improve living conditions for a group of employees or workers.

Employers might want to provide welfare:

• because of a genuine sense of corporate social responsibility towards employees,

• to improve the morale and loyalty of employees,

• because work (and non-work) problems impact on the 'steady-state' performance of

employees, or

• because other companies and organisations are offering similar services/benefits, and
they need to do the same in order to attract and retain the calibre of staff they require.

Welfare may not have a demonstrable positive effect on morale and productivity – but anxiety and
stress have an invariable negative effect that should be alleviated where possible to improve
effectiveness. In other words, welfare is a hygiene factor.

The more recent orientation of HRM towards welfare speaks to the health of the individual (in the
broadest sense) representing the health of the organisation: if employees can be helped not just
to avoid accidents and illnesses, but to become more resilient to stress, healthier, physically fitter,
mentally more flexible, and emotionally more stable, they are more likely to consistently perform
at a high level on behalf of the organisation.

1.2 OCCUPATIONAL HEALTH

Occupational health programmes are largely concerned with the effects of the working
environment on workers. This may involve:

a) Identifying substances, conditions, or processes that are actually or potentially hazardous,

and in what circumstances.

b) Identifying the effect of methods and processes of work on the human body and mind.

c) Exercising control over the working environment and substances used in the course of
work, so as to minimise risk.

Thus, occupational health is often concerned with toxic substances (such as lead oxide, chlorine,
asbestos, and radiation), which may be encountered in the workplace, and protective measures
against all of these. Additionally, occupational health also includes less obvious sources of ill health
at work, such as noise, fatigue, and physical and mental stress (excessive demands on the body

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and mind). Increasingly, it is also concerned with personal substance abuse and other fitness and
mental well-being factors that might have a direct or indirect effect on the workplace and work
performance.

Some of the key traditional causes of ill-health at work are as follows.

• Noise – industrial hearing impairment has long been recognised as a problem for factory
workers and machine operators. Recently, the more stressful and distracting effects of
noise have also been identified. Continuous loud noise can be protected against by
soundproofing and personal ear protection. Soundproofing (e.g., acoustic hoods over
noisy office printers) and broadcasting 'white noise' (soft, constant, featureless sound) are
methods often used in office environments to reduce noise irritation.

• General environmental ‘hygiene’ –

i. Ventilation. Air should be fresh or purified.

ii. Temperature levels must be 'reasonable' inside buildings during working hours.

iii. Lighting should be suitable and sufficient, and natural if practical. Windows should
be clear and unobstructed.

iv. Cleaning and decoration. Premises must be kept clean.

v. Space. Each person should have a reasonable space.

vi. Sanitary conveniences and washing facilities must be suitable and sufficient:
properly ventilated and lit, properly cleaned, separate for men and women – and
enough of them to avoid undue delay!

vii. Drinking water should be available in adequate supply, with suitable drinking
containers.

viii. Rest facilities and eating facilities must be provided unless the employees'
workstations are suitable.

ix. First aid equipment should be provided, under the charge of a responsible person
who is trained in first aid.

• Hazardous substances and work-related diseases. Warning signs and labels should be
in place to identify toxic or hazardous chemicals and other substances. Staff should also
be trained in handling and storing substances, in first aid treatment, and in reporting
incidents of exposure. There should also be secure storage of substances, protective
clothing and equipment for handling substances, and so on. Hazards include not only
burns, blinding, respiratory dysfunction, poisoning, and other 'immediate' effects of
substances exposure, but work-related diseases.

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2 ACCIDENTS AT WORK

2.1 INDUSTRIAL ACCIDENT INCIDENTS

Accident rates vary substantially by industry, with a high proportion of work-related deaths
occurring in the construction industry, for example.

Working conditions (outdoor versus indoor) and tools and technology (heavy machinery versus
computers) have the greatest impact on incident rates. There are suggestions that some people
are more prone to accidents than others due to poor vision, stress, depression, alertness,
immaturity, and so on. However, accident proneness is also related to the working patterns,
responsibility, and safety awareness of individual employees: joking around or cutting corners on
safety measures are frequent causes of accidents.

Apart from the obviously dangerous equipment in factories, construction sites, and even offices,
there are many other hazards to be found in the modern working environment. Many accidents
could be avoided by the simple application of common sense. Safety should be enforced through
a widely accepted and well-published safety policy.

2.2 ACCIDENT PREVENTION

The prevention of accidents requires integrated HR-led policies and practices, including attention
to workplace design, communication of health and safety rules and values, training, and so on.
Some of the steps which might be taken to reduce the frequency and severity of accidents are as
follows.

a) Developing safety awareness among staff and workers and encouraging departmental
pride in a good safety record.

b) Developing effective consultative participation between management, workers, and

unions so that health and safety rules are accepted and followed.

c) Appropriately training new/transferred workers in safety measures, and ensuring training

is given where working methods or speeds of operation have changed.

d) Materials handling, a major cause of accidents, should be minimised and designed as far
as possible for safe working and operation.

e) Temporary equipment used to keep production going should not compromise safety.

f) Safety inspections should be carried out as a comprehensive audit, by working through a

checklist, or by using random spot checks (or regular checks) of particular risk points.
Checklists used in the inspection process should identify corrective action to be taken and
should allocate responsibility for it.

g) Compliance with legislation and industry/work environment codes of practice.

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3 NEW APPROACHES TO WELFARE

3.1 A SHIFT IN PERSPECTIVE

This new orientation toward welfare activities is based on the recognition that healthy and focused
individuals are likely to perform better at work, be more flexible (physically, mentally, and
emotionally), and be adaptable to change.

The new model of welfare is, therefore:

• pro-active in its attempt to address potential health and safety issues, rather than reacting
to regulation, complaint, or crisis,

• positive in its attempt to promote health and well-being rather than focusing solely on ill-
health, injury, and crisis,

• holistic in its definition of health and well-being, including emotional and even spiritual
factors, and

• wide-ranging in its attention to diverse issues, rather than being led by legislative
agendas.

3.2 WORK-LIFE BALANCE AND STRESS CONTROL

Overworking is frequently associated with poor diet, lack of exercise, inadequate relaxation time,
stress, and relationship difficulties.

Despite the desire to increase productivity or enhance performance, many companies are
realising that increasing workloads and working hours is in fact counter-productive – potentially
encouraging absenteeism, ill-health, accidents, and poor-quality work.

Stress is a term that is often loosely used to describe feelings of tension – usually associated with
too much, or overly demanding, work. In fact, stress is the product of high demands placed on an
individual's physical and mental energies. Monotony and feelings of failure or insecurity are main
sources of stress, as well as pressure, overwork, and so on.

It is worth remembering, too, that demands on an individual's energy may be stimulating as well
as harmful: many people, especially those suited to managerial jobs, work well under pressure,
and even require some form of stress to bring out their best performance. It is excessive stress
that can be damaging; this can be called strain. Therefore we discuss managing stress, not
eliminating it entirely. It is instead a question of keeping stress proportional and helpful.

Harmful stress can be identified through symptoms such as nervous tension, irritability, sensitivity,
sleeplessness, withdrawal (reluctance to communicate and absenteeism), depression, substance
abuse, and a variety of physical symptoms (such as skin and digestive disorders and tension

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headaches). Some symptoms of stress – for example, absenteeism – may or may not be correctly
identified with stress. There are many other possible causes of such problems, both at work (lack
of motivation) and outside (personal problems).

All these things can, however, adversely affect performance, which is why stress management has
become a major workplace issue.

Stress can be caused or aggravated by:

• personality: competitive, sensitive, and insecure people feel stress more acutely

• ambiguity or conflict in the demands made on an individual in their various roles

• insecurity, risk, and change

• management style, including unpredictability, destruction of workers’ self-esteem, and

setting up win/lose situations

Greater awareness of the nature and control of stress is a feature of the modern work
environment. Stress management techniques are increasingly taught and encouraged by
organisations and include:

• counselling (to air and resolve conflicts)

• time off or regular rest breaks

• relaxation techniques (breathing exercises)

• physical exercise and creative self-expression (as a safety valve for tension)

• delegation and planning (to avoid work-load related stress)

• assertiveness (to control stress-related to insecurity in interpersonal relations)

3.3 ERGONOMICS

Ergonomics is the scientific study of the relationship between people and their working
environment. This sphere of scientific research explores the demands that can arise from a
working environment and the capabilities of people to meet these demands.

Ergonomics supports the design of machines and working conditions which function well and are
best suited to the capacities and health requirements of the human body. In homes for the elderly
and hospitals, for example, switches are placed according to chair height and arm reach
measurements. In the same way, computer consoles and controls, office furniture, factory layout
and so on can be designed so that the individual expends minimal energy and experiences
minimal physical strain in any given task.

More recently, ergonomics has developed into a field that embraces a whole range of
psychological factors that affect people at work. Aside from purely mechanical considerations –
for example, in what position should a worker be sitting in order to exert maximum force over a

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long period of time without physical strain or fatigue? – the ergonomist must now take into account
the increasing problems of the worker as an information processor. The perceptual limitations of
the worker can also be measured, which do not make unreasonable demands on the worker's
attention span or capacity to absorb information.

3.4 WORKPLACE COUNSELLING

Appropriate use of counselling tools can prevent underperformance, reduce labour turnover and
absenteeism, and increase commitment from employees. Unhappy employees are far more likely
to seek employment elsewhere.

Effective counselling demonstrates an organisation's commitment to and concern for its

employees and so is liable to improve loyalty and enthusiasm across its workforce.

The development of employees is of value to the organisation, and counselling can give employees
the confidence and encouragement necessary to take responsibility for self and career
development.

Managers may be called on to use their expertise to help others make informed decisions or solve
problems by:

a) Advising: offering information and recommendations on the best course of action. This is
a relatively directive role and may be called for in areas where you can make a key
contribution to the quality of the decision. For example, advising an employee about the
best available training methods, or on appropriate workplace behaviours.

b) Counselling: facilitating others through the process of defining and exploring their own
problems and coming up with their own solutions. This is a relatively non-directive role
and may be called for in areas where you can make a key contribution to an employee’s
ownership of the decision, such as helping employees to formulate learning goals, or cope
with work problems.

The counselling process has three key stages:

Stage 1 Reviewing the current scenario: helping people to identify, explore, and clarify
their problems and unused opportunities. This is done mostly by listening,
encouraging them to tell their 'story', and questioning/probing to help them to see
things more clearly.

Stage 2 Developing the preferred scenario: helping people identify what they want in
terms of clear goals and objectives. This is done mostly by encouraging them to
envisage their desired outcome, and what it will mean for them (in order to motivate
them to make the necessary changes).

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Stage 3 Determining how to get there: helping people to develop action strategies that will
let them accomplish goals. This is done mostly by encouraging people to explore all
options and available resources, to select the best option, and to plan their next
steps.

Confidentiality is central to the counselling process. There will be situations when employees
cannot be completely open unless they are sure that their comments will be treated confidentially.
However, certain information, once obtained by the organisation, will call for action, such as that
regarding fraud, sexual harassment, or criminal activity.

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MODULE 11 – EQUAL OPPORTUNITIES

DISCRIMINATION IN EMPLOYMENT

EQUAL OPPORTUNITIES IN PRACTICE

MANAGING DIVERSITY

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1 DISCRIMINATION IN EMPLOYMENT

1.1 EQUAL OPPORTUNITIES

Equal opportunities is an approach to people management at work based on equal access and
fair treatment irrespective of gender, race, ethnicity, age, disability, or religious belief.

Equal opportunities employers will seek to redress imbalances based around differences where
they have no relevance to work performance. Certain aspects of equal opportunities are enshrined
in law; others rely upon models of good practice and have no legislative foundation.

1.2 WOMEN IN EMPLOYMENT

Despite the fact that women have contributed directly to economies since medieval times, the
acceptance of women in paid employment has been a slow process, which even now has to be
enforced by law.

Many assumptions about women's attitudes to work, and capability for various roles, are being
re-examined.

Meanwhile, the pay divide between men and women has remained an issue, despite equal pay
legislation in different parts of the world.

1.3 DISABLED PEOPLE IN EMPLOYMENT

Disability is a physical or mental impairment which has a substantial and long-term adverse effect
on a person's ability to carry out normal day-to-day activities.

Disability covers a wide range of impairments, including restricted mobility, speech impediments,
poor hearing or eyesight, learning disabilities, and disfigurement. Disabled people often have a
restricted choice of jobs, resulting in higher and longer unemployment rates than the able-bodied
population. Jobs are concentrated around plant/machine operative roles, which tend to be low
paid. Disabled people are furthermore underrepresented in professional and managerial jobs.

1.4 AGE DIVERSITY IN EMPLOYMENT

Despite demographic and educational changes, and associated skill shortages, among the
younger population, discrimination has continually been directed at more mature workers.
Negative perceptions of older workers impacts recruitment, selection for promotion, selection for
redundancy, access to training opportunities, and so on.

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However, the fact is that older workers:

• have developed experience and skills in the job that may counteract any age-related loss
of performance

• tend to stay in the job, reducing turnover and associated costs, and have better attendance
and disciplinary records

• experience some loss of strength and stamina. However, this is unlikely to be relevant to
performance in most modern jobs, and older workers typically understand and work
within their physical limitations

• do experience some loss of mental functioning (short-term memory, for example) but
retain – or even gain – in other cognitive functions

• are no more likely to be either flexible or inflexible in relation to learning and change than
younger employees

• do not necessarily cost the organisation more, as age-based reward systems are being
replaced by performance-related ones

1.5 BASIC TYPES OF DISCRIMINATION

There are four basic types of discrimination.

Direct discrimination occurs when one interested group is treated less favourably than another
(except for exempted cases). An example of direct discrimination would be failing to select or
promote a woman because she is pregnant, or because a person is of a particular nationality or
race.

Indirect discrimination occurs when an employer applies a provision, criterion, or practice to

men and women equally, but it has the effect of putting one sex at a particular disadvantage
without justification. An example of indirect discrimination is changing shift patterns to include an
early morning start, as women are more likely to be responsible for childcare.

Victimisation occurs when an employer disadvantages workers because they have sought to
exercise their legal rights or assisted others in doing so. An example of victimisation would be
passing an employee over for promotion because he had recently threatened to take the firm to
an Employment Tribunal over discriminatory practices.

Harassment occurs when an employee is subjected to conduct that violates his dignity, or creates
an intimidating, hostile, degrading, humiliating, or offensive environment for him. Examples of
harassment include racial abuse, unwanted sexual advances – or even putting vital objects on a
high shelf (as women are typically shorter).

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2 EQUAL OPPORTUNITIES IN PRACTICE

It is often suggested that many organisations make minimal efforts to avoid discrimination. They
pay lip-service to the idea, to the extent of claiming 'We are an Equal Opportunities Employer' in
advertising literature. A number of measures are necessary to establish equal opportunity in
reality.

The following are key steps in implementing a diversity policy, considering all equal opportunity
requirements.

Step 1 Analyse your business environment

• Internally: does the organisation’s diversity reflect the population in its
labour market?
• Externally: does the diversity of the workforce mirror that of the customer
base?
Step 2 Define diversity and its business benefits
• Business benefits: better understanding of market segments; positive
employer branding; attraction and retention of talent
• Employee benefits: a more representative workforce; value and respect
for people; opportunity to contribute fully; enhanced creativity
Step 3 Introduce diversity policy into corporate strategy
• Weave diversity into corporate values and mission
Step 4 Embed diversity into core HR processes and systems
• Review and refocus recruitment and selection, induction, reward and
recognition, career management, and training and development
Step 5 Ensure leaders implement policy
• Leaders and top management need to provide long-term commitment
and resources
• Use diversity as a key factor in coaching, awareness training, and
development of managers
Step 6 Involve staff at all levels
• Educate the workforce through awareness training
• Create a 'diversity handbook'
Step 7 Communicate, communicate, communicate
• Communicate diversity policies and initiatives clearly
• Through updates, briefings, training, intranet pages
Step 8 Understand your company's needs
• Match resources to the size of the organisation and the scale of change
required
• Consider using diversity consultants to provide advice, support, and training
Step 9 Evaluate
• Benchmark progress at regular intervals
• Internally: conduct employee climate surveys
• Externally: conduct customer/supplier surveys

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3 MANAGING DIVERSITY

Managing diversity is based on the belief that the individual differences we currently focus on
under equal opportunities (gender, race, age, etc.) are crude and irrelevant classifications of the
most obvious differences between people; they should be replaced by a genuine understanding
of the ways in which individuals differ.

In the workplace, people are meaningfully different from one another in their personality,
preferred working style, and individual needs and drives – aspects that do not necessarily correlate
with racial or gender differences in any way. For example, it would be a gross oversimplification
to say that all women in your organisation require assertiveness training; it may be the case that
more male employees require this instead. Therefore, effective managers seek to understand the
ways their staff differ in the workplace, and should aspire to manage their performance in ways
that recognise these differences as far as possible. Managers need to understand the unique
contribution each person – not each 'category or person' – can make to the organisation.

Outside of equal opportunity and discrimination, a 'managing diversity' orientation implies the
need to be proactive in managing the needs of a diverse workforce in areas such as:

• Tolerance of individual differences

• Communicating effectively with culturally diverse workforces

• Managing workers with diverse family structures and responsibilities

• Managing the adjustments to be made for the ageing workforce

• Managing diverse career aspirations and paths

• Managing cooperative working in ethnically diverse teams

There are major differences between an ‘equal opportunities’ approach and a ‘management of
diversity’ approach. This is demonstrated below.

Equal opportunities Managing diversity

Purpose Reduce discrimination Utilise employee potential

to the maximum advantage
Case argued Moral and ethical Business objectives:
improve profitability
Responsibility HR/personnel function All managers
Focuses on Groups Individuals
Benefits for employees Improved opportunities for Improved opportunities for
disadvantaged employees all employees
Focus on management Recruitment Managing
activity
Remedies Changing systems and Changing corporate culture
practices

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MODULE 12 – EXIT MANAGEMENT

EXIT MANAGEMENT: AN OVERVIEW

REDUNDANCY

DISMISSALS

RETIREMENT

RESIGNATION

EXIT INTERVIEW

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Module 12 – Exit Management

1 EXIT MANAGEMENT: AN OVERVIEW

So far, we have covered many of the processes through which people are managed as they move
into, through, or within the organisation. In this module, we will look at some of the ways people
must be managed on their way out of the organisation. Careful management is needed for the
exit of employees from the organisation due to the need for compliance with legal frameworks,
and the need for sensitivity to the human issues involved in the process.

The exit management process may vary as an employment contract commonly comes to an end
following:

• termination by the employer (dismissal),

• termination by the employee (resignation),

• redundancy resulting from negative business circumstances,

• retirement, or

• mutual agreement or the end of the contracted period between the employer and the
employee.

There are also several situations where the contract ends automatically, these are less common
but include circumstances such as an impossibility to fulfil the employment contract due to serious
illness. Legally, this situation is defined as frustration of contract.

No matter how an employment contract comes to an end, the process must be managed. Exit
management is also known as employee offboarding and is the process through which
employees exit an organisation. Organisations should have a termination policy in place which
dictates the grounds and procedure for termination. When an employee leaves an organisation,
organisations need to do some paperwork and formalities. This process needs to be systematic.

Termination is one of the most dreadful moments in anyone’s professional life. Although it is to
be expected that emotions will be stirred by this, the role of HR is to ease the process as much as
possible. Additionally, the employee would also need clearance from relevant departments, and
the full and final settlement of employee dues needs to be provided. Depending on the
termination circumstances, organisations may provide a severance package – an unemployment
compensation an employer pays to the leaving employee, often a lumpsum payment.

Once these termination steps are complete, the organisation should give the employee a proper
send-off. Organisations should bid the employee farewell with constructive feedback and farewell
messages. At the end, it is also vital to conduct an exit interview beforehand to get effective
feedback from the employee who is leaving the organisation.

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2 REDUNDANCY

Redundancy takes place when an organisation reduces the number of employees (downsizing),
when making structural changes following mergers and acquisitions, or when individual jobs are
no longer needed. If unfortunately, redundancy needs to take place, it is necessary to plan ahead,
such as seeking and implementing methods to avoid redundancy as far as possible, making
arrangements for voluntary redundancy, and helping people find jobs (outplacement). HR usually
has the onerous responsibility of handling redundancy.

2.1 PLANNING AHEAD

Planning ahead means that requirements for future reductions in people are anticipated and
steps are taken to minimise compulsory redundancies. This can be done by freezing recruitment
and allowing the normal flow of leavers (natural wastage) to reduce or even eliminate the need
for redundancy, reducing outsourced work, reducing or eliminating overtime, reducing the
number of part-timers and temporary staff, work-sharing (two people splitting one job between
them) or, more reluctantly, reduction in working hours or temporary layoffs.

2.2 VOLUNTARY REDUNDANCY

Asking for volunteers – with a suitable payoff – is another way of reducing compulsory
redundancies. The disadvantage is that the wrong people might go, i.e., the good workers who
find it easy to get another job.

2.3 OUTPLACEMENT

Outplacement regards helping redundant employees find other work and to cope with any
problems they face. This can take place through specialised outplacement consultants and
counselling.

2.4 REDUNDANCY DECISION

A fair redundancy process should be followed whenever a genuine redundancy situation arises. If
an organisation faces redundancy and employees are laid off unfairly due to downsizing decisions,
then the whole process becomes unfair. Hence, an organisation needs to be ethical in their
redundancy dismissal decisions. If an employee has been laid off, he may be entitled to a statutory
redundancy payment, as per the policy of the organisation and in accordance with relevant laws.
Employers should fully consult with the affected employees prior to making any redundancy
selections. Employees who are put at risk of redundancy must be given reasons why they were
selected.

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3 DISMISSALS

An individual can be legally dismissed in two ways.

• Employer terminates employment with or without notice (e.g., dismissal for gross
misconduct).

• Employment under a fixed-term contract comes to an end and is not renewed on the same
terms.

Dismissals should be handled in accordance with the following principles of natural justice.

• Individuals should know the standards of performance they are expected to meet and the
rules to which they are expected to conform.

• They should be given a clear indication of where they are failing or what rules they have
broken.

• Other than in cases of gross misconduct, employees should be given an opportunity to

improve before disciplinary action is taken.

These principles should form the basis of a disciplinary procedure, which is staged as follows:

a) An informal discussion about the problem

b) A first written warning

c) A final written warning

d) Dismissal

Disciplinary procedures (such as a disciplinary interview or disciplinary hearing) take place

following poor employee conduct or after unsatisfactory performance. During the disciplinary
hearing, employees may be allowed to be accompanied by a colleague or employee
representative. Similarly, managers may also have a relevant colleague with them when issuing a
warning and should make a note to file what was said on the spot – this ensures a written record.
Managers and team leaders should be made aware of the procedure and should know what
authority they have when taking action.

Subject to an organisation’s policy, it is advisable to have all written warnings and any final action
approved by a higher authority. In cases of gross misconduct, managers and team leaders may be
given the right to suspend the employee in the case that the higher authority is not immediately
available. It is important to obtain and record all key facts and developments in writing.

At the end of the procedure, if the organisation finally decides to dismiss the employee, they must
ensure that the termination process and the steps taken were consistent with their written policy,
and in compliance with applicable employment regulations of the country. No matter the reasons
for termination, whether for low performance, violation of a rule, or insubordination, the

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termination notice should be given as soon as the final dismissal decision has been made. This will
give the ex-employee more time to look for jobs elsewhere.

4 RETIREMENT

There are two common approaches to retirement.

(a) Flexible retirement. In this case there is a minimum retirement age at which the contract
can be ended for retirement purposes. However, fit and capable employees are allowed
to continue to work after this age.

(b) Fixed retirement. This is when retirement is enforced at a stated age.

Retirement is a major change and should be prepared for. An organisation’s retirement policies
therefore need to specify:

• when people are due to retire,

• the circumstances, if any, in which they can work beyond their normal retirement date,

• the provision of pre-retirement training on such matters as finance, pension rights, and
other benefits, and

• the provision of advice for people about to retire.

5 RESIGNATION

When an employee resigns voluntarily, we call it employee resignation. Employee resignations

happen for many reasons.

Employees may feel there are no opportunities ahead in their current organisation, or they may
view a job change as an opportunity to start over. Sometimes, employees leave if they are not
happy with their immediate supervisor or line manager. Employees tend to leave organisations
that lack ethical standards or have poor working environments. Other reasons for leaving a job
can include inadequate compensation, insufficient training, monotonous work, personal issues,
or a change in family circumstances.

Employee resignations should ideally be given to employers in written form as difficulties may
arise in organisations where verbal notification of resignation is accepted. This is particularly true
where resignations are given in the heat of the moment following a disagreement. To avoid
ambiguity, organisations should have a procedure in place to process any employee resignations.

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6 EXIT INTERVIEW

An exit interview is a conversation that takes place between a company and an employee who is
leaving the organisation. It can be seen as the opposite of a job interview. Job interviews take
place before an employee joins an organisation and exit interviews take place when an employee
leaves.

It is particularly important to find out reasons for leaving the organisation in cases of employee
resignation, as this aids the organisation to develop and implement corrective measures to retain
existing employees. In an exit interview, the organisation will ask the leaver why they have decided
to exit the organisation. Sometimes people do not quit jobs, they quit bosses! The interview’s
outcome will help the organisation improve its work environment and any employment issues.
Learning from the exit interview should ideally stop talented employees from leaving the
organisation.

Every person that leaves an organisation deserves an exit interview, no matter who has initiated
the termination process. Exit interviews exist to allow a clear oversight of everything happening
inside the organisation. Some examples of exit interview questions are follows:

• What do we need to improve as an organisation?

• What would it have taken to convince you to stay? (In the case of employee resignation)

• What do we do well?

• Did you feel properly supported by your manager?

• Do you feel you received good learning and development opportunities?

• What’s the hardest thing about working here?

• What are your final thoughts?

Exit interviews should be as relaxed as possible to support an amicable, two-way conversation

between ex-colleagues. Organisations should learn as much as possible through this interview;
the goal is to hear what the leaver has to say. The organisation should treat the leaver with respect
and gratitude for the work they have done. The leavers will go on to work at many other places,
so they should want them to leave as an advocate and ambassador of the organisation.

On many occasions, exit interviews become uncomfortable. It might be difficult listening to

negatives about the organisation or its people or environment. But if an organisation is serious
about improving, it will commit to making necessary changes. The outcomes or notes from exit
interviews can be shared with the relevant team within the organisation, which helps ensure
leadership has a clear understanding of how every side of the business is performing.

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MODULE 13 – HR ANALYTICS

WHAT IS HR ANALYTICS?

SCOPE OF HR ANALYTICS

HR ANALYTICS APPLICATION: EXAMPLE I

HR ANALYTICS APPLICATION: EXAMPLE II

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Module 13 – HR Analytics

1 WHAT IS HR ANALYTICS?

HR analytics is relatively a new field in human resource management and relates to collecting and
interpreting human resource (HR) data to support informed and intelligent business decisions.

HR analytics can be defined as the process of collecting and analysing HR data to improve an
organisation’s performance. HR analytics is also known as people analytics, workforce analytics,
or talent analytics.

HR analytics is a data-driven approach to managing people at work, revolving around analysing

people-related problems in the workplace and then using data to find an answer to the problems
or critical questions. Data itself does not tell a story; we need to process and analyse it first. If
processing and analysing data leads to meaningful information that informs decision-making, only
then does the data become useful. HR analytics provides meaningful information that helps us
make better (i.e., data-driven) decisions.

2 SCOPE OF HR ANALYTICS

As already mentioned, HR analytics enables HR professionals to make data-driven decisions. This

can even help us reduce employee turnover, develop competitive pay structures, boost employee
performance, improve workforce planning, reduce costs, and increase profit.

A number of ratios, metrics, and predictive analytics are used to process the data. HR analytics
can start from simple ratio calculations (such as HR turnover) to complex predictive analytics.

HR analytics is like a ‘continuum’. On one end, there are basic ratios and metrics; and on the other
are complex algorithm-based predictive analytics. An organisation can fall anywhere on the
spectrum, based on its capabilities and circumstances.

Figure 1: HR Analytics Continuum

Predictive HR analytics is the tool that HR uses to analyse past and present data to forecast
future outcomes. Predictive HR analytics digitally digs through data to extract and categorise
information, and then identifies patterns and correlations. For example, through statistical
analysis, predictive analytics can even identify those employees most likely to quit!

It is outside the scope of this book to explore complex predictive HR analytics. However, in the
following two sections, we will explore two simple examples of HR analytics application. The first
example relates to an analysis of the cost and value resulting from HR turnover. In the second

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example, we will see how HR analytics practices can help us evaluate the effectiveness of an
organisation’s training and development activities.

3 HR ANALYTICS APPLICATION: EXAMPLE I

HR turnover does have some opportunity costs for organisations. When an employee decides to
leave his organisation, his workload and duties are distributed among his colleagues, and so he
may work with reduced efficiency, as he may not feel as obliged and accountable. Then, although
a new recruit will replace him, the new recruit will need time to understand the organisation, the
new environment, and the tasks – no matter how well-qualified he is.

Let’s quantify the HR turnover circumstances for an organisation with the help of a simplified data
analysis. An employee is salaried $5,000 per month. Let’s assume he delivers equivalent value each
month. He performs as usual in April, but at the end of the month he decides to resign from his
job. So, the organisation decides to recruit someone new as his replacement. Since the new
recruitment process takes some time, the organisation immediately distributes or reassigns some
of his work to existing employees. The employee has a two-month notice period, so he may deliver
at half of his effectiveness in May, and nearly at zero during June. At the same time, the new
replacement recruit joins the organisation on 1 June. The new recruit is hired at the same salary
level (i.e., $5,000 per month) but it will take another two months for him to deliver his tasks
optimally. The following table presents the monthly HR costs and value generated over a period
of five months (from April to August).

Month Cost Explanation Value Explanation of Value

of Cost
The The individual is performing well and
April 5,000 individual’s 5,000 is delivering value equivalent to his
salary salary.
The The individual has given his
May 5,000 individual’s 2,500 resignation notice and is delivering
salary value equivalent to half of his salary.
The Both the individual and new recruit
individual’s contribute absolutely nothing.
June 10,000 0
salary + new
recruit’s salary
New recruit’s New recruit contributes equivalent to
July 5,000 2,500
salary half of his salary value.
New recruit’s New recruit starts performing at
August 5,000 salary 5,000 optimal level. He delivers value
equivalent to his salary.
Total 30,000 15,000

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Over the period of five months, the organisation incurs a total cost of $30,000, but sees
contribution equivalent to only $15,000. This means that 50% of costs were just loss! However, this
does not mean that it is okay to let the job remain vacant. There is an opportunity cost in not
replacing a given vacancy. In the case of staff shortage, a business may not achieve its sales target
or customers may not get the service they paid for. So, it is a natural and logical choice in business
to ensure a replacement for the employee who is leaving the organisation.

Avoiding filling vacancies during shortages is not a solution to avoiding the financial loss described
in the above table. Instead, it is a more proactive and practical solution to ensure the organisation
upholds effective retention strategies. Organisations should try to retain their key employees, so
that their turnover does not lead to loss of value or disruptions.

4 HR ANALYTICS APPLICATION: EXAMPLE II

Organisations invest in training and development programmes and events. HR analytics can help
us evaluate the effectiveness of the training and development initiatives. Let’s explain this with an
example below.

ABC Construction Materials Ltd. hired 300 new engineers. Out of 300 new engineers, 140
engineers were given the opportunity to participate in a two weeks’ training programme.

Every training event has some cost involved, however the company invests in training as it is
beneficial to them. ABC Construction Materials Ltd. can measure the return on investment (ROI)
from this training programme using A/B group testing. In this technique, the group (of 140
engineers) who underwent training are called control group (A), and the group who did not receive
training are called the non-control group (B). In this example, if the training objective was to
increase sales, and if data then showed higher increases in sales figures for Group A when
compared to Group B, then we may conclude that the training has contributed to desired business
outcomes (i.e., increased sales).

We can also measure whether the training programme has benefitted the individual participant.
Using analytics, we can find out whether the training programme is able to enhance career growth
(such as through promotion) to the participants. Assume that one year after attending the training
programme, 80 out of 140 engineers are promoted to the next level.

The Bayesian theorem can be used to find out the predictive effectiveness of training for those
who attended the training programme. First, we will put relevant data in a matrix form. We already
know that 140 engineers received training (Group A) and 160 engineers did not (Group B). Out of
these 140 engineers (who got the training), 80 engineers (57.14%) were promoted, and 60 (42.86%)
were not. Out of the 160 engineers who did not get the training, 55 engineers (34.37%) were
promoted, and 105 engineers (65.63%) were not.

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Training attended Promoted Not promoted Total

80 60
140
Yes (80 divided by 140 = (80 divided by 140 =
(100%)
57.14%) 42.86%)
55 105
160
No (55 divided by 160 = (105 divided by 160 =
(100%)
34.37%) 65.63%)
135 165 300
Total
(45%) (55%) (100%)

Table 1: Applying Bayesian Theorem to Training Impact Evaluation

Next, we must calculate the probability of being promoted after training using the formula below:

Probability of being promoted after training (p)

Odds of being promoted after training

= × 100
Probability of not being promoted after attending training

57.14
=
42.86
= 1.33 or 133%

Then, we calculate the probability of being promoted without training using the formula below:

Probability of being promoted without training (p)

Odds of being promoted without training

= × 100
Probability of not being promoted without training
34.37
=
65.63
= 0.5237 or 52.37%

We can then calculate the predictive effectiveness of training using the formula below:

Predictive Effectiveness of Training

Odds of being promoted after training

= × 100
Odds of being promoted without training

Therefore, for our example the predictive effectiveness of training

133
= 𝑥 100
52.37
= 2.54 or 254%

A predictive effectiveness of training calculation shows that the chances of being promoted are
254% higher for those who attended training against those who did not, everything else being
equal. Hence, training is beneficial as it improves an individual’s chances of being promoted, and
for the organisation, it indicates that the use of training leads to better future outcomes.

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MODULE 14 – HR INFORMATION SYSTEMS

WHAT IS AN HRIS?

BENEFITS OF HRIS

HRIS FUNCTIONS

HRIS SUPPLIERS

HRIS IMPLEMENTATION

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Module 14 – HR Information Systems

1 WHAT IS AN HRIS?

HRIS stands for human resources information system, which is used to collect and store data
on an organisation’s employees. In most cases, an HRIS encompasses the basic functionalities
needed for end-to-end human resources management (HRM). It is a system for recruitment,
performance management, learning and development, and more.

An HRIS is also an HR software package which can either run on the company’s own technical
infrastructure, or as is more common nowadays, be cloud-based. This means that the HR software
is run outside of the company’s premises, making it much easier to update.

Other commonly used names are HRIS system and HRMS, or a human resources management
system. These systems are also collectively called human capital management systems, or HCM.

2 BENEFITS OF HRIS

Using an HRIS has a number of clear benefits, which is why companies of all sizes implement HRIS
tools to support their human resource functions. Centrally, HRIS holds employee information. A
wide range of employee data is then easily accessible in one system.

1) Record-keeping. An HRIS is a record-keeping system that keeps track of any changes

related to all employees of the organisation. HRIS is a single source of data for all
employees in a place or system.

2) Compliance. Some people-related data is collected and stored in HRIS for compliance
reasons. This includes the identification details of each employee in case of fraud or other
misbehaviours, first contact information in case of accidents, and personal identification
information for the tax office.

3) Efficiency. Storing all this information in one place not only benefits accuracy but also
saves time. Some companies still use physical paperwork to record employee data,
however locating the right folder and sheet can take up a lot of staff time. HRIS, on the
other hand, saves both time and storage space.

4) HR strategy. To decide HR strategies, we need information related to HR. We cannot

decide or implement any strategy if we do not have information. HRIS helps track HR data
and summarise information so that at the end, the correct HR and business strategy can
be implemented.

5) Self-service HR. A final benefit is the ability to offer self-service HR, which enables
employees to manage their own affairs. Self-service is an available feature with most
modern HRIS. It allows employees to take care of many human resources-related and job-
related tasks that would otherwise need to be completed by the HR department. Self-

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service HR is a software portal accessible by all employees, who can then access their
payroll, schedule and benefits information, make updates to their own details, and more.

Working with an HRIS has multiple benefits for an organisation, HR department, and the
employee. Using an HRIS is interesting for small organisations with between thirty to fifty
employees, however an HRIS is especially beneficial for larger organisations which typically use
more advanced HRIS systems to support varying HR functions. Small businesses would suit a more
basic HRIS.

3 HRIS FUNCTIONS

There can be different kinds of modules or systems within an HRIS. Because an HRIS encompasses
all HR functionalities, all separate functionalities are part of the system. These functionalities
include:

• Applicant tracking systems (ATS). This software handles all the company’s recruiting
needs. It tracks job applicants’ information and CVs, enables organisations to compare job
applicants, and shortlists the right candidates for future interviews. ATS thus saves
organisations a lot of time each time they decide to hire new employees.

• Payroll. Payroll automates the payment process of employees, and the salary and wages
calculations. Even data of contractual staff is often entered into a payroll system –
sometimes combined with time and attendance data – and at the end of the month,
payment orders are created.

• Benefits administration. Another functionality of HRIS is benefits

management. Employee benefits are an important aspect of compensation and are also
managed through an HRIS. More advanced systems offer employees a self-service model
to access their benefits. In this case, employees can select the benefits they are looking for
themselves. One employee may want more paternity leave, another might want a more
expensive company car. All they need to do is access the self-service portal and select the
benefits based on their positions and privileges.

• Time and attendance. This module gathers time and attendance data from employees.
In times gone by, employees wrote down their working hours on a piece of paper which
the manager then manually entered into a time tracking system. Based on this data,
payment orders or pay-slips were generated. Nowadays, employees generally check into
work using their fingerprint or a card synced with an HRIS. This gives an exact time for
arrival and departure.

• Training. Learning and development is a key element when it comes to employee

management. Training modules in an HRIS allow HR to track an employee’s qualifications,

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certifications, and skills. This module is often referred to as an LMS, or learning

management system. An LMS usually includes e-learning courses available to employees.

• Performance management. Performance management is a key part of managing

people. Performance ratings are generated either once or multiple times a year by the
direct manager or peers of the employee. HRIS can record all performance ratings and
appraisal information.

• Employee self-service. Employee self-service has already been mentioned. Organisations

are focusing increasingly on allowing employees and their direct supervisors to manage
their own data, meaning requests such as holidays can be asked for by the employee
himself. The supervising manager can then check the system to find which of the
employees have requested for leave or holidays. The manager can easily approve or reject
any requests through the online system, which will then instantly notify employees.

• Reporting and analytics. A modern module in HRIS systems is reporting and analytics.
This system enables the creation of automated HR reports on various topics such as
employee turnover, absence, sick-leave, performance, and more. Analytics involves the
analysis of these insights for better-informed decision-making.

4 HRIS SUPPLIERS

HRIS software market is fiercely competitive; there are thousands of HRIS suppliers to choose
from. These include Workday, Oracle, SAP, ADP, Ceridian, Kronos, Cornerstone, and Ultimate
Software among others. Listing all HRIS suppliers or declaring the best HRIS would be impossible.

5 HRIS IMPLEMENTATION

HRIS implementation can be divided into six stages.

1) Search. Start your implementation by finding out what your different stakeholders need
from an HRIS. Based on these requirements, create a list of potential software providers.
You can then invite these software providers to make proposals. Ideally, at the end of this
phase, you will have chosen a suitable HRIS provider.

2) Plan and align. In this phase, you choose an implementation partner, and create a
steering committee and implementation team. The steering committee usually consists of
senior delegates from your chosen HRIS provider, your organisation’s HR director, the
internal project manager, and preferably a senior user of the future system.

3) Define and design. At this point, you need to specify your user groups and map out your
processes and workflows. You need to define the functional and technical requirements
for your HRIS infrastructure, system, and security. Also, note that you might need to build
integration between your HRIS with other existing systems during this phase.

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4) Configure and test. In this phase, you need to create a core test team to test your new
HRIS and provide feedback for potential improvements. After this, you should also create
a user acceptance test where you can ask a number of users to provide final feedback.

5) Train and communicate. Before you go live, you will need to prepare a training
programme for your technical staff, a communication plan, a frequently asked questions
page, and any other support documents.

6) Deploy and sustain. Once all your support processes are in place, you can officially launch
your HRIS. Remember to constantly collect feedback and update your training material in
line with the evolving systems. Constant, accurate communication is key here.

By following these six steps, you can select and implement the best HRIS for your organisation.

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MODULE 15 – HR AUDIT

INTRODUCTION

WHO CONDUCTS THE HR AUDIT?

FREQUENCY OF HR AUDIT

HR AUDIT PHASES

CHALLENGES OF HR AUDIT

SCOPE OF HR AUDIT

FUNCTION-SPECIFIC HR AUDIT

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1 INTRODUCTION

Auditing financial accounts are common in most organisations. Financial auditing is usually a
statutory obligation, however there is no legal binding to conduct auditing in the case of HR
functions. Despite this, many organisations still opt to conduct human resource audits which are
considered to be internal whereas financial audits are external.

HR audits evaluate the human resource activities of an organisation and provide insights into
possible causes for both current and future people-related problems. Just as with any other
internal audits, the findings of HR audits help with decision-making. HR audit outcomes or reports
are usually considered internal documents and do not need to be shared with the public.

An HR audit can be defined as the process of evaluating the HR policies, procedures, and every
HR practice of an organisation. It can also be defined as a systematic assessment of the strengths,
limitations, and developmental needs of its existing human resources in the context of
organisational performance.

Furthermore, an HR audit may involve anywhere from one division to an entire organisation. This
process provides insightful feedback about HR functions, as well as feedback on how well
managers are meeting their HR duties. In short, an HR audit is an overall quality control check for
all HR activities within a division, or throughout the entire organisation.

2 WHO CONDUCTS THE HR AUDIT?

An HR audit can be carried out by the internal HR specialists of an organisation, or by external

specialists or consultants. HR auditors must have the required skills, competence, and experience
to accurately perform the assessment.

Regardless of whether an organisation appoints an internal or external auditor; it needs to check

the background of the auditor before assigning any tasks. The auditor should enjoy full
independence in conducting the audit activities – there should be no external interference.

3 FREQUENCY OF HR AUDIT

There are no fixed rules regarding how often HR audits should be conducted. Frequency will
depend on each organisation’s circumstances. Management can arrange an annual audit of HR
policies and practices, however certain indicators or analytics (such as absenteeism and
employees’ grievances) can be audited at the end of every month or quarter depending on the
circumstances.

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4 HR AUDIT PHASES

The HR audit process can be conducted in three sequential phases, as discussed below.

4.1 PRE-AUDIT INFORMATION

This phase involves gathering and reviewing HR manuals, all HR policies and procedures,
employee handbooks, relevant forms, reports, and other related information.

4.2 PRE-AUDIT SELF-ASSESSMENT

This is the second phase of the HR audit process. To save time, it may be helpful to conduct a pre-
audit self-assessment form or questionnaire, which can be prepared by HR auditors who then ask
relevant individuals or teams to complete it. The questionnaire will include a number of questions
about current HR policies and practices. Information gathered through this phase will help the HR
auditors to plan and execute on-site audit.

4.3 ON-SITE REVIEW OR AUDIT

This phase involves interviewing the employees of an organisation in order to gain feedback on
the organisation’s different HR policies, practices, and functions. The auditor will conduct in-depth
reviews in the light of information gathered during previous phases and employee files and
records will be randomly examined. Depending on the scope of the audit, the auditor may also
review the compensation, employee claims, disciplinary actions, grievances, and other relevant HR
functions of the organisation.

5 CHALLENGES OF HR AUDIT

HR audit practices vary across organisations as there is no globally accepted standard format or
approach. Rules and procedures for HR audits are not specific in the same way they are for
financial audits. Due to this, there are a number of challenges that may arise during an HR audit.
These include:

• a general reluctance from employees to voice their opinions due to fear of reprisals,

• employees fearing that the audit is an assessment of their individual performance,

• employees fearing that the outcome of the audit may cause job loss or a change in their
current job roles,

• employees perceiving the audit as an opportunity to raise other business issues that are
not related to the HR audit in hopes that they can be addressed during the process, and

• employees attempting to influence the outcome of the audit through providing incomplete
or incorrect subjective information.

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6 SCOPE OF HR AUDIT

The scope of the HR audit will depend on the time available, the budgets, and staff. An HR audit
can be conducted to find out whether the organisation is complying with the employment
regulations, standards, and labour laws of the country. In large organisations, an HR audit can be
utilised as a tool to evaluate whether HR activities support the organisation’s business strategy.
However, it’s more common for HR audits to be function specific.

7 FUNCTION-SPECIFIC HR AUDIT

An HR audit can be structured to be either comprehensive (covering all HR functions) or specifically

focused on just a few. In order to carry out a function-specific HR audit, you must first identify the
areas to be audited. Afterwards, a list of the indicators that will serve to analyse the function must
then be made. These indicators can be either quantitatively or qualitatively derived through
different phases of the HR audit process. This list of indicators will correspond to the different
areas of HR functions.

The following discussion will briefly identify the indicators and analytics that are common to some
function-specific HR audits.

7.1 AUDITING HR PLANNING / WORKFORCE PLANNING

Auditing the human resource planning function of an organisation is important. Here, the auditor
will evaluate the methods used by the organisation to forecast the organisation’s future HR
demand.

The HR auditor will also evaluate the process through which the organisation has forecasted their
future supply of human resources and will evaluate the strategy and actions taken by the
organisation to address the gap between the supply and demand of HR.

7.2 AUDITING RECRUITMENT AND SELECTION ACTIVITIES

Auditing the recruitment and selection functions of an organisation will include analysis of some
interesting indicators. For example, the auditor might try to find out:

• the number of days the organisation takes to fill a vacancy,

• the number of applications received in comparison to different job vacancies,

• the average cost of recruitment and selection per job post,

• the average number of candidates that do not pass selective tests,

• a study of the reliability and validity of selection tests, and

• the degree to which current recruitment practices fit the company's business plan.

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7.3 AUDITING LEARNING AND DEVELOPMENT ACTIVITIES

While auditing learning and development activities, HR auditors may try to find and analyse key
indicators such as:

• the procedures through which an organisation analyses employee training needs,

• the criteria used by an organisation to define the content of their training programmes,

• the evaluation criteria used by an organisation to identify the efficacy of their training
programmes,

• the percentage of the HR budget dedicated to training, and

• the average number of hours of training per employee.

7.4 AUDITING THE REWARD FUNCTION

While auditing the reward function, HR auditors may try to estimate and evaluate indicators such
as:

• the average salary per employee,

• salary differences across employees/positions,

• the fixed and variable components of rewards,

• the percentage of remuneration linked to an employee’s productivity or performance,

and

• the internal equity and external competitiveness of the reward system.

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MODULE 16 – ISLAMIC HRM

INTRODUCTION

INTENTION (NIYA)

FOREVER MINDFUL OF THE ALMIGHTY ALLAH

(TAQWA)

KINDNESS & CARE (IHSAN)

JUSTICE (ADL)

TRUST (AMANA)

TRUTHFULNESS (SIDQ)

CONSCIENTIOUS OF SELF-IMPROVEMENT (ITQAN)

SINCERITY (NASIHA)

KEEPING PROMISES (WAFA)

CONSULTATION (SHURA)

PATIENCE (SABAR)

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1 INTRODUCTION

Islamic HRM is one of the most recent concepts in the management field. The value of one’s work
and career is in utilising and enjoying the bounties of Allah for the benefit of oneself and the
community. Therefore, the work ethic in Islam is related to striving for perfection, seeking rewards
in both life and the afterlife, and in exerting effort without excess.

All tasks a Muslim performs should be carried out with the intention of pleasing Allah. Values such
as trustworthiness, responsibility, sincerity, discipline, dedication, diligence, cleanliness,
cooperation, good conduct, gratitude, and moderation guide the principles by which human
resources should be managed. In this module, we will discuss core principles of Islamic human
resource management.

2 INTENTION (NIYA)

In Islam, every act should be accompanied by intention and all actions should be for the sake of
seeking the pleasure of Allah. The Prophet Mohammed (PBUH) said: ‘Actions are recorded
according to intention and a person will be rewarded or punished accordingly’.

One of the many implications of this principle in human resource management is that employees
should be evaluated on the basis of their intended objectives, ideas, plans, and strategies.

3 FOREVER MINDFUL OF THE ALMIGHTY ALLAH (TAQWA)

When filled with Taqwa, a person will refrain from committing wrong behaviour. Taqwa leads to
steadfastness in seeking truth and justice because people should fear no one other than the one
and only God.

In the context of HR management, a manager should not hesitate to provide constructive criticism
and advice if any wrong activities take place within the organisation.

4 KINDNESS & CARE (IHSAN)

Ihsan has several meanings including helpfulness, perfection, improvement, forgiveness,

completeness of faith, and, most important of all, doing good deeds. Ihsan is also a continuous
struggle to work towards attaining Allah’s satisfaction and to worship Allah as if you see Him and
He sees you.

This feeling ensures a person behaves at their best without the need for any human supervision.
Managers with a high level of Ihsan promote the training and development of their employees and
encourage employees’ involvement and participation in decision-making.

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5 JUSTICE (ADL)

Justice is a virtue everyone should develop regardless of whether they are a leader or a
subordinate. The Holy Quran says: ‘O you who have believed, be constantly upright for Allah,
witnesses with equity, and let not antagonism of a people provoke you not to do justice’ (Al-Quran,
Chapter 5, verse 8).

In Islam, justice is never to be affected by personal interests or antagonism. Therefore, employees

should be treated and rewarded equally and fairly in organisations where justice prevails.
Managers should treat their subordinates with respect and courtesy, and never look down on
them or ignore their views and suggestions. The laws, regulations, policies, and procedures should
be clearly followed and effectively implemented.

6 TRUST (AMANA)

Trust is a core value that governs social relationships. Every person is held accountable for their
actions in the community. The Holy Quran states: ‘O you who have believed, do not betray Allah
and the Messenger, or knowingly betray [other people’s] trust in you’ (Al-Quran, Chapter 8, verse
27).

The manager is ‘ameen’ or a trustee. A manager should respect the trust bestowed on him by his
superiors and subordinates and so any act of misuse of resources or mismanagement should be
seen as a violation of trust. An organisation is made up of the trust of those who own it, and those
who work in it.

7 TRUTHFULNESS (SIDQ)

The concept of Sidq implies doing and saying what is right to the best of one’s knowledge. It is
forbidden in Islam to lie or to cheat under any circumstances.

Managers must not to be guided by personal feelings that might divert them from the right path
of justice, care, or trustworthiness. They are asked to be patient, to fulfil their contractual duties,
to be honest, and to work hard while seeking Allah’s love and mercy. Honesty and trustworthiness
are central to effective management. The love for truth should reflect the notion of personal
responsibility in every uttered word.

8 CONSCIENTIOUS OF SELF-IMPROVEMENT (ITQAN)

This value implies the continuous struggle within oneself for self-betterment. Striving to do better
all the time requires humans to work harder and improve the quality of their services. This value
is related to a state of passion for excellence (Alfalah) and perfection. Creativity therefore becomes

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an indispensable value in one’s life because of the desire to perfect and excel in doing what is good
for oneself and good for the community.

In an organisational context, striving to do better all the time requires managers and employees
to work harder and improve the quality of their products and services through the promotion of
learning, training, innovation, and creativity.

9 SINCERITY (NASIHA)

A Muslim must be a sincere well-wisher for others. Sincerity, therefore, creates a culture of trust
and cooperation between employees and employers within an organisation.

10 KEEPING PROMISES (WAFA)

Keeping promises is a moral obligation for every Muslim. It is a big sin to intentionally break any
promises. Breaking one’s word characterises a person as a hypocrite. Allah says, ‘O you who
believe! fulfil (all) obligations’ (Al-Quran, Chapter 5, Verse 1).

11 CONSULTATION (SHURA)

Pride and arrogance are not the behaviour of a true Muslim. In organisations, managers should
seek advice and consult with their subordinates before making decisions. Taking part in
discussions and making suggestions are key management values in Islam.

The right way to make the best decisions on worldly matters, in the absence of a prescribed text,
is consultation or Shura. The principle of Shura teaches Muslim managers to value the views of
their subordinates and to be humble in their dealings with other people.

12 PATIENCE (SABAR)

Patience has a very high position in Islam. At the organisational level, patience and humility go
hand in hand. Being patient in making decisions reduces the possibility of making mistakes and
increases the chances of success in negotiations.

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INTERNATIONAL HRM

CONVERGENCE AND DIVERGENCE IN HRM

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1 INTERNATIONAL HRM

1.1 WHAT IS INTERNATIONAL HRM?

International HRM is the process of employing and developing people in international

organisations. It means working across national boundaries to formulate and implement
strategies, policies, and practices which can be applied to an international workforce.

People are increasingly more likely to work in an organisation that has multinational or multi-
ethnic elements, whether based on their own national culture, or in another culture at home or
abroad.

1.2 HR AND INTERNATIONALISATION STRATEGY

HR issues have crucial influence on the strategic management of multinational organisations. The
choice of base for foreign operations, the decision of whether to set up a foreign subsidiary, or the
move to enter a joint venture or strategic alliance with foreign partners, for example, might be
influenced by a number of HR factors. These include:

a) Labour costs

b) Skills available in the local or national labour market, such as government policy on
education and training, available recruitment avenues and media, and so on

c) Employment legislations and control over employment relationships (e.g., health and
safety regulation, minimum wage)

d) Industrial relations culture and trade union power

e) Language, cultural, and social differences that would make the transfer of HR practices
difficult to implement

1.3 HUMAN RESOURCING STRATEGY

Multinationals will have to develop specific human resourcing strategies about whether to use
'local' labour or labour from the 'parent' (head office) country, especially in regard to:

• managerial staff, to transfer consistent HR (and business) culture and practices to the
international operation, and

• technical and professional staff since equivalent skills or qualifications may not be
available in all nations in which the firm wishes to operate.

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The range of strategies may be broadly summarised as follows.

Strategy Advantages Disadvantages

Key positions are filled with Facilitates the transfer of the • Expatriates find it difficult
nationals of the 'parent' distinctive culture and to adjust to the
country. practices of the parent environment and culture of
company to the overseas work/management in a
E.g.: a US multinational
subsidiary especially where foreign country.
transfers US employees to
straightforward overseas
key positions in foreign • May alienate local
expansion is involved.
subsidiaries. employees due to reward
disparity or lack of
promotion opportunities.

Key positions are filled Avoids difficulties of • May be

by local nationals, although expatriate employment. cultural/linguistic/priority
overall control is retained by barriers to cooperation
senior management in the between local and 'parent'
'parent' country. country management.

E.g.: a US multinational • Little genuine cross-cultural

recruits within Italy to find experience on either side.
managers for its Italian
subsidiary.

Key positions are filled Develops genuine cross- • Difficult to implement,

by the best available cultural experience. given 'protectionist'
people, regardless of employment policies.
nationality.
• Requires strong corporate
E.g.: a US multinational culture, communication,
recruits a German to and coordination.
manage a UK subsidiary.

'Offshoring' is a major globalisation trend whereby organisations in developed countries

outsource functions to another group, company, or third-party provider overseas in order to take
advantage of large, low-cost, and increasingly well-educated labour forces in countries such as
India and China. This is traditional in areas such as manufacturing and printing but has more
recently spread to financial services and other service industries. Call centres, research, and 'back-
office' operations are extensively off-shored, using IT developments such as the Internet to
coordinate and control operations.

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2 CONVERGENCE AND DIVERGENCE IN HRM

There have been attempts to 'harmonise' HRM policy for greater consistency and fairness across
national borders – this process is known as 'convergence'. However, there is also 'divergence':
differentiation in response to local conditions and requirements.

Individual transnational organisations face the same pressures to standardise their HR policies as
far as possible in the various countries in which they operate (in order to preserve their distinctive
organisation culture, operating style, and internal equity) while recognising the need for
divergence in the face of environmental differences. The classic challenge is to 'think global, act
local': to achieve consistency and equity in core activities and values while allowing flexibility in
non-core activities and values.

2.1 CONVERGENCE

It can be argued that HRM 'activities' – HR planning, recruitment and selection, appraisal and
reward, training and development, welfare, discipline, employee exits, and employee relations –
are common to organisations everywhere. The need to attract, retain, motivate, and develop
employees (the 'aims' of HRM) are universal.

The globalisation of business and communications has also encouraged:

• exchanging and sharing certain technical terms, theories, and practices: for example, the
widespread adoption of Swedish-style autonomous working groups or Japanese-style
quality circles,

• the standardisation of certain HR techniques, such as job evaluation and 360-degree

appraisal, and

• placing national culture and national employment practices beneath corporate culture
and HRM practices, which is a recognised tendency of international HRM.

In this sense, there seems to be a convergence of HR policy and practice, and a belief in the
convergence of management practices and competence. According to this belief, 'management is
management', and principles and techniques (such as performance management) can be effective
anywhere. Alongside economic, technological, and managerial developments, business cultures
worldwide can also be brought into line.

Extensive international research does not, however, exclude the idea of a common culture of
management. While structures and technologies may converge, there is still enough diversity to
encourage divergence. The fact is that although everybody 'does' HRM – they all seem to do it
differently!

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2.2 DIVERGENCE

There are significant differences between Asian, European, and North American companies with
regard to HR strategies. The employment relationship is shaped by national systems of
employment legislation and the cultural contexts in which it operates. Thus, as the world of
business becomes more globalised, variations in national regulatory systems, labour markets, and
institutional and cultural contexts are likely to constrain any tendency towards ‘convergence’
model of best HRM practices.

A number of factors contribute to divergence.

a) Cultural factors, arising from the history, traditions, language, social development and
values, and religious beliefs of different countries and ethnic groups. Culture amounts to
a national way of doing and perceiving things. Cultural factors influence
management/worker models, career expectations, perceptions and attitudes to work,
education and training needs, and so on, and are reflected in an organisations’ culture.

b) National legal frameworks. Specific laws and regulations, and the systems by which they
are derived, vary markedly from state to state. The extent of political/legal intervention in
employment underscores the cultural dimension.

c) Structural factors. Education and training systems influence the skills available in the
labour pool, and therefore affect HRP, recruitment, and development policies.
Demographic factors likewise affect the structure of the labour market. Technological and
communication infrastructures affect the way work is performed and structured, since
work organisation and employment policies will differ in a fast-changing high-tech market
compared to a low-tech industrial market. Political factors also influence HRM via
government intervention.

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