Hrm notes
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This document provides an introduction to human resource management (HRM). It defines HRM and discusses its objectives, nature, scope and key functions. The scope of HRM is vast, covering all activities from hiring employees to their departure from an organization. Some of the major HRM functions mentioned include human resource planning, job analysis, recruitment and selection, training and development, compensation and benefits administration. The goal of HRM is to maximize employee and organizational effectiveness.
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Training being used to help attain strategic business objectives, which help companies, gains a
competitive advantage.
The term training refers to the acquisition of knowledge, skills, and competencies as a result of the
teaching ofvocationalor practical skills and knowledge that relate to specific useful competencies. It
forms the core ofapprenticeships and provides the backbone ofcontent at institutes oftechnology(also
knownastechnicalcollegesorpolytechnics).Inadditionto thebasictrainingrequiredforatrade,occupation
or profession, observers of the labor-marketrecognize as of 2008[update]
the need to continue training
beyond initialqualifications:to maintain, upgradeandupdate skills throughout workinglife. People within
manyprofessions andoccupations mayrefer to this sort oftrainingas professionaldevelopment.
Training usuallyrefersto some kind oforganized (and finite it time)event — a seminar, workshop that has
a specificbeginning data and enddate. It’s oftenagroup activity, but theword training is also used to refer
to specific instructiondone one onone.
Employee development, however, is a muchbigger, inclusive “thing”. Forexample, ifa managerpairsup
a relativelynew employee witha more experienced employee to help the new employee learns about the
job, that’s reallyemployee development. Ifa manager coaches and employee in an ongoing way, that’s
employee development. Or, employees may rotate jobresponsibilities to learn about the jobs of their
colleaguesandgainexperienceso theymighteventuallyhavemorepromotionopportunities.That’semployee
development.
In other wordsemployee development is a broader termthat includes trainingas one, and onlyone ofits
methods for encouragingemployee learning. The important point here is that different activities arebetter
for the achievement ofdifferent results. For example, ifthe desire is provide an employee with a better
understanding ofhowthe department works, jobrotationmight work verywell. Ifthe goalis to improve
the employee’s ability to use a computer based accounting package direct training would be more
appropriate than, let’s say, job rotation.
TRAININGAND DEVELOPMENT OBJECTIVES
The principalobjectiveoftraining anddevelopment divisionis to makesure the availabilityofa skilled and
willing workforce to an organization. In addition to that, there are four other objectives: Individual,
Organizational, Functional, and Societal.Training anddevelopment is asubsystemofanorganization. It
ensures that randomnessis reduced and learning or behaviouralchange takes place instructured format.
Individual Objectives – help employees in achieving their personalgoals, which inturn, enhances the
individualcontributionto anorganization.
Organizational Objectives – assist the organization with its primaryobjective bybringing individual
effectiveness.
FunctionalObjectives –maintainthe department’s contribution at a levelsuitable to the organization’s
needs.
Societal Objectives – ensure that an organization is ethically and sociallyresponsible to the needs and
challenges ofthe society.
The quality of employees and their development through training and education are major factors in
determining long-termprofitability ofa smallbusiness. Ifyou hire and keep good employees, it isgood
policyto invest inthe development oftheir skills, so theycanincrease their productivity.
Training oftenis consideredfor newemployeesonly. This isa mistake becauseongoingtrainingforcurrent
employees helps themadjust to rapidlychanging job requirements. Reasons for emphasizing the growth
and development ofpersonnelinclude](https://image.slidesharecdn.com/hrmnotes-210704033655/85/Hrm-notes-71-320.jpg)
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Demerits :-
(i) The method does not take into considerationthat the employees leave the organization
due to number ofreason other thandeath &retirement.
(ii) This method ignores change inthe profession ofanemployee due to age , health etc.
(ii) Flamttltz’s Stoochastic Rewars Valuation Model: The modelis based on thepresumption that a
person’s valueto anorganizationdependsuponthe positionheholdsinthe organization.This modelgives
five stepsfor valuing anindividualinanorganization.
(i) Find out the expected service lifeofanindividualinanyorganization.
(ii) Identifyhow muchtime he willremainonparticular status.
(iii) Estimate thevalue derived bythe organizationwhena personholds a particular
position.
(iv) Estimate the probabilityofoccupying eachpossible mutuallyexclusive status at
specified future time.
(v) Discount (at a predetermined rate) the expected service rewards to their present
value. The Modelhas usedthe following formulae.
1
( )]
( ) [
1
(1 )
n m
t i
Ri P Ri
RV
r t
(RV) Expected Realized value
Ri = Amount of service received
(R) at everypossible state or status
P(Ri) = Status Possible expected service to be receivedbythe organization
t = time period.
m = Retirement Stage
(1+ r) = Rate ofDepreciationfor money
Merits :-
(i)Thismethod takes into account the probabilityofa person’s carrier movement and ofhis
leaving theorganizationprior to hisretirement or death.
(ii) The modelcombines bothmonetaryandnon-monetaryvariables.
Demerits :
(i) It is expensive.
(ii) It isverydifficult to estimatethat for how muchperiod anemployee willcontinue in an
organization.
Dr. S.K. Chakraborty’s Model of Human Resource Valuation: -
According to Dr. Chakrabotyhumanassets should be included inBalance sheet on assetsside under the
heading “Investments” He is ofthe opinion that ifwe include it in the heading fixedAssets it willcreate
problems like depreciation, capitalgains or losses , etc. The value ofhuman resources ona group basis
can be foundout bymultiplying theaverage salaryofthe groupwiththe average tenureifemployment of](https://image.slidesharecdn.com/hrmnotes-210704033655/85/Hrm-notes-175-320.jpg)
Hrm notes
- 1. 1 Unit - 1 : Introduction to Human Resource Management Structure of Unit: 1.0 Objectives 1.1 Introduction 1.2 Opening Case 1.3 What is HumanResource Management? 1.4 Nature ofHRM 1.5 Scope of HRM 1.6 Objectives ofHRM 1.7 Functions ofHRM 1.8 Role ofHRM 1.9 HRM inthe New Millennium 1.10 Summary 1.11 SelfAssessment Questions 1.12 Reference Books 1.0 Objectives After studyingthis unit, you willbe able to: Understand thebasic concepts ofhumanresource management (HRM). Explain what humanresource management is and how it relates to the management process. Provide anoverview offunctions ofHRM. Describe how the major roles ofHR management are being transformed. Explaintherole ofHRM inthe present millennium. 1.1 Introduction Human beings aresocialbeings and hardlyever live and work in isolation. We always plan, develop and manage our relations both consciouslyand unconsciously. The relations are the outcome ofour actions and depend to a great extent upon our ability to manage our actions. From childhood each and every individual acquire knowledge and experience on understanding others and how to behave ineach and everysituations in life. Later wecarryforward this learningand understanding incarrying and managing relations at our workplace. The whole context of Human Resource Management revolves around this core matterofmanaging relations at work place. Since mid 1980’s Human Resource Management (HRM) has gained acceptance inboth academic and commercialcircle. HRMis a multidisciplinaryorganizationalfunctionthat draws theoriesand ideasfrom various fields suchas management, psychology, sociologyand economics. There is no best way to manage people and no manager has formulated how people can be managed effectively, because peopleare complex beings withcomplexneeds. Effective HRMdepends verymuch on the causes and conditions that an organizationalsetting would provide. AnyOrganizationhas three basic components, People, Purpose, and Structure. In1994, a noted leader inthe human resources (HR) field made the followingobservation:Yesterday,the companywiththeaccess most to the capitalor the latest technologyhad the best competitive advantage;
- 2. 2 Today, companiesthat offerproducts withthehighest qualityaretheoneswithaleg uponthecompetition; But the only thing that will uphold a company’s advantage tomorrow is the caliber of people in the organization. That predicted future is today’s reality. Most managers in public- and private sector firms of all sizes would agreethat people trulyarethe organization’s most important asset. Having competent staffonthe payroll does not guarantee that a firm’s human resources will be a source of competitive advantage. However in order to remain competitive, to grow, and diversify an organization must ensure that its employees are qualified, placed in appropriate positions, properly trained, managed effectively, and committed to the firm’s success. The goalofHRM is to maximize employees’contributions in order to achieve optimalproductivityand effectiveness, while simultaneouslyattainingindividualobjectives(such as having a challenging job and obtainingrecognition), and societalobjectives (suchas legalcompliance and demonstratingsocialresponsibility). 1.2 Opening Case On October 3, 2003, Anant DalviandAkhtar Khan, who worked as contract workers in Tata Electric Company untiltheywere laid offin 1996, doused themselves with kerosene and set themselves ablaze even as their co-workers protested before the company’s offices. While Dalvi died on the spot, Khan died a few days later. The Tata Electric Companysaid theywere no longer ontheir payrolland were not permanent workers. Employees unionhad taken up their case and filled petitionin the Labour Court before their contracts were terminated. Thecourt directed thecompanynot to terminatetheir services without followingthedue process oflaw. Despite this their services were terminated onJune 30, 1996. The companyunionpromised the workersthat theywould renegotiate.Yet onthe night before theykilled themselves when Khan and Dalvi spoke to the union leader Shinde, they were told that nothing more could bedone for them. It is this that ledthemto take theirlives. Dalvihas beeninservice as apeonfor17 years and Khan had been employed for 19 years. But their services were not regularized. Such workers draw salarymuch less than the permanent employees. This is an example ofthe problemthat comes under the purview ofHumanResource Management- the main concept elaborated inthis chapter. 1.3 What is Human Resource Management? HRMis thestudyofactivities regardingpeople working inanorganization. It isamanagerialfunctionthat tries to matchanorganization’s needs to the skills and abilitiesofits employees. 1.3.1 Definitions of HRM Human resources management (HRM) is amanagement function concerned withhiring, motivating and maintaining people in an organization. It focuses on people in organizations. Human resource managementisdesigningmanagementsystemstoensurethathumantalent isusedeffectivelyandefficiently to accomplishorganizationalgoals. HRMisthepersonnelfunctionwhichisconcernedwithprocurement,development,compensation,integration and maintenance of the personnel of an organization for the purpose of contributing towards the accomplishments of the organization’s objectives. Therefore, personnelmanagement is the planning, organizing, directing, andcontrollingoftheperformanceofthoseoperativefunctions(EdwardB. Philippo).
- 3. 3 According to the Invancevich and Glueck,“HRM is concerned withthe most effective use ofpeople to achieve organizationaland individualgoals. It isthe wayofmanagingpeople at work, so that theygive theirbest to the organization”. According to Dessler (2008) the policies and practices involved in carrying out the “people” or human resource aspects ofa management position, including recruiting, screening, training, rewarding, and appraising comprisesofHRM. GenerallyHRMrefers to themanagementofpeople inorganizations.It comprises oftheactivities, policies, andpracticesinvolvedinobtaining,developing,utilizing,evaluating,maintaining,andretainingtheappropriate number and skill mix ofemployees to accomplish the organization’s objectives. The goalofHRM is to maximize employees’ contributions in order to achieve optimal productivity and effectiveness, while simultaneouslyattainingindividualobjectives(suchashaving a challengingjoband obtainingrecognition), and societalobjectives (suchas legalcompliance and demonstrating socialresponsibility). In short Human Resource Management (HRM) can be defined as the art ofprocuring, developing and maintaining competent workforce to achieve the goals of an organization in an effective and efficient manner. 1.4 Nature of HRM HRM isa management functionthat helps manager’s to recruit, select, train and develop members foran organization. HRMis concerned withpeople’s dimensioninorganizations. The following constitutethe core ofHRM 1. HRM Involves theApplication of Management Functions and Principles.The functions and principles are applied to acquiring, developing, maintaining and providing remuneration to employees inorganization. 2. Decision Relating to Employees must be Integrated. Decisions on different aspects of employees must be consistent withother humanresource (HR) decisions. 3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an organizationwillresult inbetterment ofservices to customers inthe formofhighqualityproducts supplied at reasonable costs. 4. HRM Functions are not Confined to Business Establishments Onlybut applicable to non- business organizations suchas education, healthcare, recreationand like. HRM refers toa set ofprogrammes, functionsandactivities designedandcarried out inorderto maximize both employee as wellas organizationaleffectiveness. 1.5 Scope of HRM The scope ofHRM is indeed vast.Allmajor activities inthe working life ofaworker – fromthetime ofhis orherentryinto anorganizationuntilheor she leaves theorganizationscomes underthepurviewofHRM. The major HRM activities include HRplanning, job analysis, jobdesign, employee hiring, employee and executive remuneration, employeemotivation, employee maintenance, industrialrelations and prospects ofHRM. The scope ofHuman Resources Management extends to: All the decisions, strategies, factors, principles, operations, practices, functions, activities and methods related to the management ofpeople as employees inanytype oforganization. Allthe dimensionsrelated to people intheir employment relationships, and allthe dynamics that flowfromit.
- 4. 4 Figure 1.1: Scope of HRM The scope ofHRM isreallyvast.Allmajor activities nthe working life ofa worker – fromthe time ofhis or her entryinto an organization untilhe or she leaves it comes under the purview ofHRM.American Society for Training and Development (ASTD) conducted fairly an exhaustive studyin this field and identified nine broad areas ofactivities ofHRM. These aregivenbelow: HumanResource Planning Designofthe Organizationand Job Selectionand Staffing TrainingandDevelopment OrganizationalDevelopment Compensationand Benefits EmployeeAssistance Union/Labour Relations PersonnelResearchandInformationSystem a) Human Resource Planning: The objectiveofHR Planningisto ensure that theorganizationhas theright typesofpersons at theright time at theright place. It prepareshumanresources inventory withaviewto assesspresentandfutureneeds,availabilityandpossibleshortagesinhumanresource. Thereupon, HR Planning forecast demand and supplies and identify sources of selection. HR Planning developsstrategies bothlong-termandshort-term, to meet theman-power requirement. b) DesignofOrganizationandJob:Thisisthetaskoflayingdownorganizationstructure, authority, relationship and responsibilities. This willalso meandefinitionofwork contentsfor eachposition intheorganization.Thisisdone by“jobdescription”.Another important stepis“Jobspecification”. Jobspecificationidentifies the attributesofpersons who willbe most suitable for each job which is defined byjob description. Personnel Research and Information System Human resource planning Design of the Organization and Job Selection and Staffing Training and Development Organizational Development Employee Assistance Compensation and Benefits Union/Labour Relations Human resource management
- 5. 5 c) Selection and Staffing: This is the process ofrecruitment and selection ofstaff. This involves matching people andtheir expectations withwhichthe jobspecifications andcareer pathavailable withintheorganization. d) Training and Development:This involvesanorganized attempt to findout training needsofthe individuals to meet the knowledge and skillwhich is needednot onlyto performcurrent job but also to fulfilthe futureneedsofthe organization. e) Organizational Development: This is an important aspect whereby “Synergetic effect” is generated in an organization i.e. healthyinterpersonal and inter-group relationship within the organization. f) Compensation and Benefits:This isthe area ofwages and salaries administrationwhere wages and compensations are fixed scientificallyto meet fairness and equitycriteria. In additionlabour welfare measures are involved which includebenefits and services. g) Employee Assistance: Each employee is unique in character, personality, expectation and temperament. Byand large each one ofthemfaces problems everyday. Someare personalsome are official. Intheir case he orshe remains worried. Suchworries must be removedto make him or her more productive and happy. h) Union-LabourRelations:HealthyIndustrialandLabourrelationsareveryimportant forenhancing peace and productivityin an organization. This is one ofthe areas ofHRM. i) PersonnelResearch andInformation System:Knowledge onbehavioralscience and industrial psychology throws better insight into the workers expectations, aspirations and behaviour. Advancementoftechnologyofproduct andproductionmethodshavecreatedworkingenvironment which are much different from the past. Globalization of economyhas increased competition many fold. Science of ergonomics gives better ideas of doing a work more convenientlybyan employee. Thus, continuousresearchinHRareasis anunavoidable requirement. It must also take specialcareforimproving exchange ofinformationthrougheffective communicationsystems ona continuous basis especiallyonmoraland motivation. HRM is a broad concept;personnelmanagement (PM)and Human resource development (HRD) are a part ofHRM. 1.6 Objectives of HRM The primary objective of HRM is to ensure the availability of competent and willing workforce to an organization. The specificobjectives include the following: 1) Humancapital:assistingthe organizationinobtaining the right numberand typesofemployees to fulfillits strategicand operationalgoals 2) Developing organizationalclimate: helpingto createa climateinwhichemployees are encouraged to developandutilizetheirskillsto the fullestandto employtheskillsandabilities oftheworkforce efficiently 3) Helpingtomaintainperformance standardsandincreaseproductivitythrougheffectivejobdesign; providingadequateorientation, traininganddevelopment;providingperformance-relatedfeedback; and ensuringeffective two-waycommunication. 4) Helping to establishand maintainaharmonious employer/employee relationship 5) Helping to createand maintain a safe andhealthywork environment
- 6. 6 6) Developing programs to meet the economic, psychological, and socialneeds of the employees and helping theorganizationto retaintheproductive employees 7) Ensuringthatthe organizationisincompliancewithprovincial/territorialandfederallawsaffecting the workplace (such as human rights, employment equity, occupational health and safety, employment standards, andlabourrelationslegislation).To help the organizationto reachits goals 8) To provideorganizationwithwell-trained andwell-motivated employees 9) To increase theemployees satisfaction and self-actualization 10) To developand maintainthe qualityofwork life 11) To communicate HR policiesto allemployees. 12) To help maintainethicalpolices and behavior. TheabovestatedHRMobjectivescanbesummarizedunderfourspecificobjectives:societal,organizational, and functionaland personnel. Figure 1.2: Objectives of HRM 1) Societal Objectives: seek to ensure that the organization becomes sociallyresponsible to the needs and challenges ofthe societywhileminimizing the negative impact ofsuch demands upon the organization. The failure ofthe organizations to use their resources for thesociety’s benefit in ethicalways maylead to restriction. 2) Organizational Objectives: it recognizes the role of HRM in bringing about organizational effectiveness. It makes sure that HRMis not a standalonedepartment, but rather ameans to assist the organization with its primary objectives. The HR department exists to serve the rest ofthe organization. 3) FunctionalObjectives:is to maintainthe department’s contributionat a levelappropriateto the organization’s needs. Humanresources are to beadjusted to suit theorganization’s demands. The department’s value should not become too expensive at the cost ofthe organizationit serves. 4) PersonnelObjectives:it is to assist employees in achievingtheir personalgoals, at least as far as these goals enhance the individual’s contribution to the organization. Personal objectives of employees must bemet iftheyareto be maintained, retained andmotivated. Otherwise employee performance and satisfaction maydeclinegiving rise to employee turnover. Personnel
- 7. 7 1.7 Functions of HRM Human Resources management has an important role to play in equipping organizations to meet the challenges ofan expanding and increasinglycompetitive sector. Increase in staffnumbers, contractual diversificationand changesindemographicprofilewhichcompelthe HRmanagersto reconfigure therole and significance ofhumanresources management. The functions are responsive to current staffing needs, but canbe proactive inreshaping organizationalobjectives.Allthefunctions ofHRM are correlatedwith the core objectives of HRM (Table 1.1). For example personal objectives is sought to be realized throughfunctions likeremuneration, assessment etc. Figure 1.3 : Functions of HRM Table 1.1 HRM Objectives and Functions HRM Objectives Supporting Functions 1. Societal Objectives Legal compliance Benefits Union- management relations 2. Organizational Objectives Human Resource Planning Employee relations Selection Training and development Appraisal Placement Assessment 3. Functional Objectives Appraisal Placement Assessment 4. Personal Objectives Training and development Appraisal Placement Compensation Assessment
- 8. 8 HR management canbe thought of as seven interlinked functions taking place within organizations, as depicted inFigure1.3Additionally, externalforces—legal, economic,technological, global, environmental, cultural/geographic, political, and social—significantlyaffect how HR functionsare designed, managed, and changed. The functions canbe groupedas follows: Strategic HR Management: As apart ofmaintaining organizationalcompetitiveness, strategic planning forHR effectiveness canbeincreased throughtheuseofHR metrics andHRtechnology. Humanresourceplanning(HRP) functiondetermine thenumber andtypeofemployeesneeded to accomplishorganizationalgoals. HRP includes creatingventure teams witha balanced skill-mix, recruiting theright people, and voluntaryteamassignment. This functionanalyzes and determines personnelneeds inorder to create effective innovation teams. The basic HRP strategyis staffing and employee development. EqualEmployment Opportunity:Compliance withequalemployment opportunity(EEO)laws and regulations affectsallother HR activities. Staffing: The aimofstaffingisto provideasufficient supplyofqualified individualsto filljobsinan organization. Jobanalysis, recruitment and selectionare the mainfunctions under staffing. Workers job designand job analysis laid the foundation for staffing byidentifying what diverse people do in their jobs and how theyare affected bythem. Jobanalysisis the process ofdescribingthe nature ofajoband specifyingthe humanrequirements such as knowledge, skills, and experience needed to perform the job. The end result of job analysis is jobdescription. Job description spells out work duties and activities ofemployees. ThroughHR planning, managers anticipate the future supplyofand demand for employees and the nature ofworkforce issues, including theretentionofemployees. So HRPprecedes the actual selection of people for organization. These factors are used when recruiting applicants for job openings. The selectionprocess is concerned withchoosing qualified individuals tofillthose jobs. In the selection function, the most qualified applicants are selected for hiring from among the applicants based on the extent to which their abilities and skills are matching withthe job. Talent Management and Development: Beginning withthe orientation ofnew employees, talent management and development includes different types oftraining. Orientationis the first step towards helping a new employee to adjust himself to the new job and the employer. It is a method to acquaint new employees with particular aspects oftheir new job, including pay and benefit programmes, working hours and companyrules and expectations. Training and Development programs provide usefulmeans ofassuring that the employees are capable ofperforming their jobs at acceptable levels and also more thanthat.Allthe organizations provide training for new and in experienced employee. In addition, organization often provide bothonthejobandoffthejobtrainingprogrammesforthoseemployeeswhosejobsareundergoing change. Likewise, HRdevelopment and succession planning ofemployees and managersis necessaryto prepare for future challenges. Career planning has developed as result of the desire of many employees to grow in their jobs and to advance intheir career. Career planningactivities include assessing anindividualemployee’s potentialforgrowthand advancement inthe organization. Performance appraisalincludes encouraging risk taking, demanding innovation, generating or adopting new tasks, peer evaluation, frequent evaluations, and auditing innovation processes.
- 9. 9 This functionmonitorsemployeeperformance to ensurethat it is at acceptablelevels. Thisstrategy appraisesindividualandteamperformanceso thatthere is alinkbetweenindividualinnovativeness and companyprofitability. Which tasks should be appraised and who should assess employees’ performance are also taken into account. Total Rewards: Compensation inthe formofpay, incentives and benefits arethe rewards given to theemployees for performing organizationalwork. Compensationmanagement isthe method for determining how muchemployees shouldbe paid for performing certainjobs. Compensation affects staffinginthat people aregenerallyattracted to organizationsoffering a higher levelofpay inexchange for the work performed. To be competitive, employers develop andrefine their basic compensationsystems and mayuse variable payprograms suchas incentive rewards,promotion fromwithintheteam, recognitionrewards, balancingteamandindividualrewardsetc. Thisfunction uses rewardsto motivate personnelto achieve an organization’s goalsofproductivity, innovation and profitability. Compensationis also related to employee development in that it provides an important incentive inmotivating employees to higher levels ofjobperformanceto higher paying jobs inthe organization. Benefits are another form of compensation to employees other than direct pay for the work performed. Benefitsinclude bothlegallyrequireditemsandthoseofferedat employer’s discretion. Benefits areprimarilyrelated to thearea ofemployee maintenanceas theyprovide for manybasic employee needs. Risk Management and Worker Protection: HRM addresses various workplace risks to ensureprotectionofworkersbymeeting legalrequirementsandbeing moreresponsiveto concerns for workplace healthand safetyalong with disasterand recoveryplanning. Employee and Labor Relations: The relationship between managers and their employees must be handled legallyand effectively. Employer and employee rights must be addressed. It is important to develop, communicate, and update HR policies and procedures so that managers and employeesalike know what isexpected. In some organizations, union/management relations must beaddressed as well. The termlabour relationrefers to the interactionwithemployees who are represented by a trade union. Unions are organization of employees who join together to obtainmore voiceindecisions affecting wages, benefits, working conditions andother aspects of employment.WithregardtolabourrelationsthemajorfunctionofHRpersonnelincludesnegotiating with theunions regarding wages, service conditions and resolving disputesand grievances. 1.8 Role of HRM The role ofHRM is to plan,develop andadminister policiesand programs designed to make optimumuse ofan organizationshumanresources. It is that part ofmanagement whichis concerned withthe people at work and withtheir relationship within enterprises. Its objectives are: (a) effective utilization ofhuman resources, (b) desirable workingrelationships among allmembers oftheorganizations, and (c)maximum individualdevelopment. Humanresources functionas primarilyadministrative and professional. HR staff focused onadministeringbenefitsandotherpayrollandoperationalfunctionsanddidn’tthinkofthemselves as playing a part in the firm’s overallstrategy. HR professionalshave anallencompassingrole. Theyare required to have a thoroughknowledge ofthe organization and its intricacies and complexities. The ultimate goal of every HR person should be to develop a linkage between the employee and organization because employee’s commitment to the organizationiscrucial.
- 10. 10 The first and foremost role ofHR personnelis to impart continuous educationto theemployees about the changes and challenges facing the countryingeneraland their organization inparticular. The employees should know about the balance sheet ofthe company, sales progress, and diversification ofplans, share price movements, turnover and other details about the company. The HR professionals should impart suchknowledgeto allemployees throughsmallbooklets, video filmsand lectures. The primaryresponsibilities ofHuman Resource managers are: To develop a thoroughknowledge ofcorporateculture, plans and policies. To act as an internalchange agent and consultant To initiate change and act as anexpert and facilitator To activelyinvolveincompany’s strategyformulation To keep communicationline open between the HRD function and individuals and groups both withinandoutside the organization To identifyand evolve HRD strategiesinconsonance with overallbusiness strategy. To facilitatethe development ofvariousorganizationalteams and theirworking relationship with other teamsand individuals. To tryand relate people andwork so that theorganizationobjectives are achievedefficientlyand effectively. To diagnose problems and determine appropriate solution particularly in the human resource areas. To provide co-ordinationand support services forthe deliveryofHRDprogrammes and services To evaluate theimpact ofanHRDinterventionor to conduct researchso as toidentify, develop or test how HRD Ingeneralhasimproved individualandorganizationalperformance. Different management gurus have deliberated different roles for the HR manager based on the major responsibilities that theyfullfillinthe organization. Few ofthe commonlyaccepted modelsareenumerated below. Pat Mc Lagan has suggested nine roles that are playedbyHR practitioners 1. To bring the issues and trends concerning an organization’s external and internalpeople to the attention of strategic decision makers and to recommend long term strategies to support organizationalexcellenceand endurance. 2. To design and prepare HR systems and actions for implementation so that they can produce maximumimpact onorganizationalperformance and development. 3. To facilitate the development and implementation of strategies for transforming one’s own organizationbypursuingvalues andvisions. 4. To createa positive relationship withthe customer’s byproviding themwith the best services; to utilize theresources to the maximumand to create commitment among the people who help the organization to meet the customers needs whether directlyconnected or indirectlyconnected to theorganization. 5. To identifythe learning needs hence to design and develop structured learning programmes and materials to help accelerate learning forindividuals and groups.
- 11. 11 6. To enable the individuals and groups to work in new situations and to expend and change their views so that people inpower move fromauthoritarian to participative models ofleadership. 7. To help employees to assess their competencies, values and goals so that theycanidentify, plan and implement development plans. 8. He also assists the individual employee to add values in the workplace and to focus on the interventions and interpersonalskills for helping people change and sustainchange. 9. He assesses the HRD practices and programmesand their impact and to communicate results so that the organizationand its people accelerate their change and development. According to Dave Ulrich HR play’s four keyroles. 1. Strategic PartnerRole-turning strategyinto results bybuilding organizationsthat create value; 2. ChangeAgent Role- making change happen, and in particular, help it happen fast 3. Employees Champion Role—managing the talent or the intellectualcapitalwithina firm 4. Administrative Role—trying to get things to happen better, faster and cheaper. The role HRinorganizations has undergone anextensive change and manyorganizations have gradually orientedthemselvesfromthetraditionalpersonnelmanagement toahumanresourcesmanagement approach. The basic approach of HRM is to perceive the organization as a whole. Its emphasis is not only on productionandproductivitybut also onthe qualityoflife. It seeks to achievethe paramount development ofhumanresources and the utmost possible socio-economic development. Current Classification of HR roles According to R.L Mathis and J. H. Jackson (2010) severalrolescan be fulfilled byHR management. The nature and extent ofthese roles depend on both what upper management wants HR management to do and what competencies the HR staffhave demonstrated. Three roles are typicallyidentified forHR. The focus ofeach ofthem, as shown in Figure 1.is elaborated below: 1. Administrative Role of HR Theadministrative roleofHR management hasbeenheavilyoriented to administrationand recordkeeping including essential legalpaperwork and policy implementation. Major changes have happened in the administrative role ofHR during the recent years. Two major shifts driving the transformation of the administrative roleare: Greater use oftechnologyand Outsourcing. Technologyhas beenwidelyused to improvethe administrative efficiencyofHR and the responsiveness ofHR to employees and managers, more HR functions arebecoming available electronicallyorare being done onthe Internet usingWeb-based technology. Technologyis being used in most HR activities, from employment applications andemployee benefitsenrollmentsto e-learningusing Internet-based resources. Fig 1.4 Current Classification of HR Roles Administrative Personnel practices Legal compliance forms and paperwork Operational Actions Managing employee relationship issues Employee advocate Strategic HR Organizational/business strategies HR strategic or planning Evaluation of HR effectiveness. Figure 1.4 : Current Classification of HR roles
- 12. 12 Increasingly, manyHRadministrative functions are beingoutsourced to vendors. Thisoutsourcing ofHR administrative activities has grown dramaticallyinHR areas such as employee assistance (counseling), retirement planning, benefits administration, payrollservices, andoutplacement services. 2. Operational and EmployeeAdvocate Role for HR HRmanagersmanagemost HRactivitiesinline withthestrategies and operations that havebeenidentified bymanagement and serves as employee “champion” for employee issues and concerns. HRoftenhasbeenviewedasthe“employee advocate”inorganizations. Theyact as thevoice foremployee concerns, and spendconsiderable time onHR“crisis management,” dealing withemployee problems that are both work-related and not work-related. Employee advocacy helps to ensure fair and equitable treatment for employees regardless ofpersonalbackground or circumstances. Sometimes the HR’s advocate role maycreate conflict with operating managers. However, without the HR advocaterole, employers could face evenmore lawsuits andregulatorycomplaints than theydo now. The operationalrole requires HR professionals to cooperate with various departmentaland operating managers and supervisors in order to identify and implement needed programs and policies in the organization. Operationalactivities are tacticalinnature. Compliance withequalemployment opportunity and other laws is ensured, employment applications are processed, current openings are filled through interviews, supervisors are trained, safety problems are resolved, and wage and benefit questions are answered. Forcarrying out these activities HR manager matches HR activities with the strategies ofthe organization. 3. Strategic Role for HR The administrativerole traditionallyhas beenthe dominant role for HR. However, as Figure1.4 indicates that a broader transformationin HR isneeded so that significantlyless HR time and fewer HR staffsare used just for clericalwork. Differences betweenthe operationaland strategic roles exist in a number ofHR areas. The strategicHR role means that HR professionals are proactive in addressing business realities and focusing on future businessneeds, suchasstrategic planning, compensationstrategies, theperformanceofHR, and measuring its results. However, insome organizations, HRoftendoes not playa keyrole informulating the strategies for the organizationas a whole;insteadit merelycarries themout throughHR activities. Manyexecutives, managers, and HR professionals are increasinglyseeing the needfor HR management to become a greater strategic contributor to the “business” success of organizations. HR should be responsible for knowing what the true cost ofhumancapitalis for an employer. For example, it maycost two timeskeyemployees’annualsalariesto replace themiftheyleave. Turnover canbe controlled though HRactivities, andifit issuccessfulinsavingthecompanymoneywithgoodretentionandtalent management strategies, those maybe important contributions to thebottomline oforganizationalperformance. The role of HR as a strategic business partner is often described as “having a seat at the table,” and contributing to the strategic directions and success ofthe organization. That means HR is involvedin devising strategy in addition to implementing strategy. Part of HR’s contribution is to have financial expertise andto produce financialresults, not just to boost employeemoraleor administrativeefficiencies. Therefore, a significant concernfor chieffinancialofficers(CFOs) is whetherHRexecutives areequipped to help themto planand meet financialrequirements.
- 13. 13 However, even though this strategic role of HR is recognized, many organizations stillneed to make significant progress towardfulfilling it. Someexamples ofareas where strategiccontributionscanbe made byHR are: Evaluating mergers and acquisitions for organizational“compatibility,” structuralchanges, and staffing needs Conducting workforce planningto anticipate the retirement ofemployees at alllevels and identify workforce expansioninorganizationalstrategic plans Leadingsiteselectioneffortsfornewfacilitiesortransferringoperationsto internationaloutsourcing locations based on workforce needs Instituting HR management systems to reduceadministrative time, equipment, and staffbyusing HRtechnology Working withexecutives to develop a revised sales compensationand incentives planas new products It istheerawhenforthecompetitivetriumphoftheorganizationthereisaneedto involveHRMsignificantly in anintegrated manner, whichdemandssuchcapabilities fromthe HR specialists. The role ofHR shifted fromafacilitator to a functionalpeerwith competencies in other functions,and is acknowledged asanequalpartnerbyothers. TheHRismotivatedto contributetoorganizationalobjectives ofprofitabilityand customer satisfaction, and is seen as a vehicle for realization ofqualitydevelopment. The department has a responsibilityfor monitoring employee satisfaction, sinceit is seenassubstitute to customer satisfaction. According to McKinsey’s 7-S framework model HR plays the role of a catalyst for the organization. According to this framework, effective organizationalchange is a complex relationship between seven S’s. HRMis a totalmatching process between the three Hard S’s (Strategy, Structureand Systems) and the four Soft S’s (Style, Staff, Skills and Super-ordinate Goals). Clearly, allthe S’s have to complement each other andhave to be alignedtowards a single corporate visionfor the organizationto be effective. It has to be realized that most ofthe S’s are determined directlyor indirectlybythe wayHuman Resources are managed, and therefore, HRM must be a part of the total business strategy. 1.9 HRM in the New Millennium Human Resources have never been more indispensable than today. The competitive forces that we face today willcontinue to face in the future demanding organizationalexcellence. In order to achieve this extended quality, organization’s need to focus on learning, quality development, teamwork, and reengineering. Thesefactorsare drivenbythewayorganizations implement thingsandhow employeesare treated. 1. HR Can Help in Dispensing Organizational Excellence: To achieve this paradigm shift in the organizationexcellencethereis a need fororganizations to reformthe wayinwhichwork iscarriedout by the HumanResource department. Bydesigning an entirelynew roleand agenda that results in enriching the organization’s value to customers, investors and employees, HR canhelpin delivering organizational excellence. Thiscan be carried out byhelping line managersand senior mangers inmoving planning from the conference roomto the market place and bybecoming an expert in the way work is organized and executed. HR shouldbe a representative ofthe employeesand shouldhelp the organizationinimproving its capacity
- 14. 14 for change. HR will help the organizations in facing the competitive challenges such as globalization, profitabilitythroughgrowth, technology, intellectualcapital, and other competitive challenges that the companies are facingwhile adjusting to uncontrollablychallenging changes inbusinessenvironment. The novelrole ofHR is to rapidlyturnstrategyinto action;to manage processes intelligentlyand efficiently;to maximizeemployeecontributionandcommitmentandto construct favorableconditionsforflawlesschange. 2. Human Resource Should be a Strategy Partner: HR should also become a partner in strategy executions bypropelling and directing serious discussions ofhow the companyshould be organized to carryout its strategy. Creating the conditions for this discussioninvolves four steps. First HR need to define an organizational architecture byidentifying the company’s wayofdoing business. Second, HR must be held responsible for conducting an organizational audit. Third, HR as a strategic partner needs to identifymethods for restoring the partsofthe organizationalarchitecturethat needit. Fourthand finally, HR must take stock of its ownwork and set clearpriorities. Intheir newrole as administrative expertstheywillneed toshed their traditionalimage and stillmake sure allroutine work for the companyis done well. 3. HR Accountability Should be Fixed to Ensure Employee Commitment: HR must be held accountableforensuringthat employeesfeelcommittedto the organizationandcontributefully. Theymust take responsibility for orienting and training line management about the importance ofhigh employee morale and howto achieve it. Thenew HR should be the voice ofemployeesinmanagement discussions. The new role for HR might also involve suggesting that more teams be used on some projects or that employees be givenmore controlover their own work schedules. 4. The New HR Must Become a ChangeAgent: The new HR must become a change agent, which is building the organization’s capacityto embrace and capitalize onchange. Even though theyare not primarilyresponsibleforexecutingchangeitisthedutyoftheHRmanagerto makesurethattheorganization carries out thechanges framed for implementation. 5. Improving the Quality of HR: The most important thing that managers can do to drive the new mandate for HR is to improve the qualityof the HR staffitself. Senior executives must get beyond the stereotypes ofHR professionals as incompetent support staffand unleashHR’s fullpotential 6. Change in Employment Practices: The balance sheet ofan organization shows human resource as an expense and not as aCapital. Inthe informationage, it is perceived that the machines cando the work more efficientlythan most people however;technologyto work is dependent onpeople. The challengesforEmployment Practice inthe New Millenniumwillrequire that there shouldbe strategic involvement ofthepeopleandlabour-managementpartnershipsastheybothhaveto takeorganization ahead. 7. Benchmarking Tool Must be Mastered by HR Professionals: HR professionals must master benchmarking, whichis a toolfor continuousimprovement- directing the humansideassociated withthe strategicpathadoptedbythe organization. Throughthis, HRdepartment willstart appreciatingthechanges happening withinand outside the environment while expanding the knowledgeabout how to addvalue to decisionmakingat the highest levelofthe organization. 8.Aligning Human Resources to BetterMeet Strategic Objectives: Too oftenorganizations craft their strategyinavacuum. Someorganizations don’t eveninclude keypeopleduringstrategyformulation resulting inlacunae betweenthe actualproblems and the solutionsimplemented- as criticalinputsare not sought fromthose individuals who aresupposed to implement the new strategies.
- 15. 15 A past CEO of Sony once said that organizations have access to the same technology and the same information. Thedifferencebetweenanytwoorganizationsisthe“people”-thehumanresource.Empowering theworkforceisanessentialtoolforaligninghumanresourceswiththeachievement ofcorporateobjectives. It isthedutyofHRmanagertohiretalentedhumanresourceandtoprovidethemwithapositiveenvironment where they willbe able to utilize their skills and potentials and to create an environment in whichthese individuals arecomfortable taking risks. 9. Promote FromWithin andInvestinEmployees: Promoting employeesfromwithinsendsapowerful message that the organization’s employees are valued. New blood and fresh ideas often come from newcomers to theorganization. To avoidstagnationofthefirm, new ideas and approachesare critical.Yet to improve employee morale, promoting individuals from within the organization is essential. This communicates that the organizationvalues theiremployees and invests intheir humanresources. 10. Review the Recruitment and Selection Process: Akey element of human resource planning is ensuring that thesupplyofappropriate employees(withthe right skillmix) is onboardwhenneeded. This requires aproactiveapproachwherebythe organizationanticipatesitsneedswellinadvance. Itisimportant to identifythe competencies being sought. That is, the criteria upon which selection decisions areto be made should be decided in advance. Afirm must identify those skill sets required by employees to be successful. Charles O’Reillysuggests that companies shouldhire for attitude (perhaps evenmore sothan technicalskills).That is, thefitoftheindividualwiththevaluesoftheorganizationandthecultureofthefirm should also beconsidered whenselecting employees. This hasbeenreferred to asthe person-organization- fit. It isno longer enoughto simplyconsider theperson’s fit(and technicalskillset)withthe job. Partofthe employee’s fit withthe organization should focus onthe core values and beliefs ofthe organization. This willincrease employees’contributions to the overallsuccess ofthe organizationiftheyalreadyembrace the core valuesofthe organizationpriorto their selection 11. Communicate MissionandVision:Ifemployees areexpected to contribute to theattainment ofthe organization’s strategicobjectives, theymust understandwhat their role is.This canbe achievedinpart by clearlycommunicating the mission and vision statementsofthe firm. The old adage is certainlytrue. Ifa person does not know where he or she is going, anyroad willget himor her there. Themissioncommunicates theidentityandpurpose oftheorganization. It providesa statementofwho the firmis andwhat their business is. Onlythose employees whounderstand thispurposecancontributeto the fullest extent possible. The visionstatement provides a picture ofthe futurestate ofthe firm. Itshould be a stretchto attain.This keeps allthe organization’s employeespulling inthesame directionwitha common end point. It is mucheasierto alignhumanresourceswithcorporate objectives whenthese employeesare familiar withthe missionand visionofthe firm. Asthemissionandvisionstatementsarearticulated, organizationalmembersbegintomorecloselyembrace their verymeaning on anindividuallevel. These statements providea road map leadingemployees down the roadtoachieveorganizationalobjectives. Employeesthenidentifyhow theycancontribute theirunique talents toward theattainment ofthese goals. 12. Use Teams toAchieve Synergy: Synergycan be concisely defined as “two plus two equals five”. In other words, the whole is greater than the sumofthe parts. So much more can be achieved as people work together. Throughthe effective use ofteams, organizations can often achievesynergy. Teamgoals, however, must bealignedwiththeorganization’sstrategicobjectives.Aligning teamobjectiveswithoverall corporate objectives ensuresthat people are working toward the same goal
- 16. 16 1.10 Summary It is criticalthat today’s organizations align their human resources to better meet strategic objectives.A failure to do so results inwasted time, energy, and resources. Organizationsare more likelyto achieve this alignment withtheircorporate objectives when theyreview their recruitment and selection processesfor fit, communicate themission and vision statements, use joint goalsetting, designan appropriate reward system, empower the workforce, promote and develop fromwithin, and use teams to achieve synergy. HumanResource Management isthemanagement functionthat helpsthe managers toplan, recruit, select, train, develop, remunerateandmaintainmembersforanorganization. HRM hasfourobjectivesofsocietal, organizational, functionaland personal development.An organization must have set policies; definite procedures and welldefinedprinciples relating to its personnelandthese contribute to theeffectiveness, continuityand stabilityoftheorganization. 1.11 Self Assessment Questions 1. Define HRM?What are its functions and objectives? 2. Elaborate about the nature ofHRM and its relevance inpresent scenario. 3. Explain the role ofHR manager inHRM. 1.12 Reference books - Aswathappa. K. (2008), Human Resource and Personnel Management (5th edition), Tata McGraw-HillPublishing CompanyLtd., New Delhi. - Biswajeet Pattanayak (2001), Human Resource Management, Prentice HallofIndia Pvt. Ltd., New Delhi. - Lloyed L. Byers and Leslie W. Rue (1997), Human Resource Management (5th edition), The McGraw-HillCompanies, USA. - MichaelArmstrong (1999), A Handbook of Human Resource Management Practice (7th edition), KoganPage Limited, 120 PentonvelleRoad, London.
- 17. 17 Unit - 2 : Human Resource Planning Structure of Unit: 2.1 Objectives 2.2 Introduction 2.3 HumanResourcePlanning (HRP) 2.4 DefinitionofHumanResource Planning 2.5 Nature ofHRP 2.6 Objectives ofHumanResource Planning 2.7 Need for HRP in Organizations 2.8 Importance ofHRP 2.9 FactorsAffecting HRP 2.10 HRP Process 2.11 Requisites for SuccessfulHRP 2.12 Barriers to Human HRP 2.13 Summary 2.14 SelfAssessment Questions 2.15 Reference Books 2.1 Objectives After studyingthis unit, you willbe able to: Understand the nature and need ofHRP Able to gaininformationabout different factors that affect HRP Realize the importanceofhumanresource planning incurrent organizationalscenario Understand the HRP process and the pre requisites for successfulHRP process 2.2 Introduction As told inthelast chapter Humanresource management has started to playasignificant role inthe overall strategic development ofthe organization.At present HR strategies are designed in tune withthe overall businessstrategyoftheorganization. HRstrategyshouldsubservetheinterestoftheorganization,translating firm’s goals andobjectivesinto aconsistent,integrated and complimentaryset ofprogrammes and policies for managing people. First part of Human resource strategyis HRP – Human Resource Planning.Allother HR activities like employee hiring, training and development, remuneration, appraisaland labour relationsare derivedfrom HRP.HRplanningisimportant inawidevarietyofindustriesandfirms. HRplanningaffectswhat employers do whenrecruiting,selecting, andretaining people,andofcourse these actionsaffect organizationalresults and success. Thechallenges caused bychangingeconomic conditions during recent year’sshow whyHR workforce planningshould occur. Staffing an organization is an HR activity that is both strategic and operational in nature. As the HR Headline indicates, HR planning is important ina wide varietyofindustries andfirms. HR planningaffects what employers do when recruiting, selecting, and retaining people, and, ofcourse these actions affect organizational results and success. Human Resources planning mean different means to different organizations. Tosome companies, humanresourcesplanningmeanmanagement development.It involve helping executives to make better decisions, communicate more effectively, and know more about the firm. The purpose ofHRP is to makethe manager a better equipped for facing the present and future.
- 18. 18 2.3 Human Resource Planning (HRP) Human resource planning is important for helping both organizations and employees to prepare for the future. The basic goalofhumanresourceplanning is to predict the future and based onthese predictions, implement programmesto avoidanticipatedproblems.Verybrieflyhumans resource planningisthe process ofexamining anorganization’s or individual’s future human resource needs for instance, what typesof skills will be needed for jobs ofthe future compared to future human resource capabilities (such asthe types ofskilled employees you already have) and developing human resource policies and practices to address potentialproblems for example, implementing trainingprogrammes to avoidskilldeficiencies. 2.4 Definition of Human Resource Planning According toVetter, “HRPisthe process bywhichmanagement determines howthe organizationshould movefromitscurrent manpower positionto desired manpower position.Throughplanning, management strives to have the right time, doing things which result in both the organizationand individualreceiving maximumlongrunbenefits”. AccordingtoGordonMcBeath,“HRPisconcernedwithtwo things:Planningofmanpowerrequirements and PlanningofManpower supplies”. According to Beach, “HRP isa process ofdetermining and assuming that the organization willhave an adequate numberofqualified persons, availableat proper times, performingjobs whichmeet the needs of the enterprise andwhichprovides satisfactionforthe individuals involved” Simply HRPcan be understood as the process of forecasting an organization’s future demands for and supplyofthe right type ofpeople in the right number. In other words HRPis the process ofdetermining manpower needs and formulating plans to meet these needs. HRP is a Four-Phased Process. The first phase involves the gathering and analysis of data through manpower inventories and forecasts, The second phase consists ofestablishing manpower objectives and policies and gaining top management approvalofthese. The third phase involves designing and implementing plans and promotions to enable the organizationto achieve its manpower objectives. Thefourthphaseisconcernedwithcontrolandevaluationofmanpowerplanstofacilitateprogress in order to benefit both the organization and the individual. The long run view means that gains may be sacrificed in the short run for the future grounds. The planning process enables the organizationtoidentifywhatitsmanpowerneedsisandwhatpotentialmanpowerproblemsrequired current action. Thisleads to more effectiveand efficient performance. 2.5 Nature of HRP Humanresourceplanningistheprocessofanalyzing and identifyingtheavailabilityandtheneedforhuman resources so that the organization canmeet its objectives. Thefocus ofHR planning is to ensure that the organizationhas theright number ofhumanresources, withthe right capabilities, at the right times, and in the right places. InHR planning, anorganizationmust considerthe availabilityand allocationofpeople to jobs over long periods oftime, not just for the next month or the next year1 . HRPisa subsysteminthe totalorganizationalplanning.Actions mayinclude shiftingemployees toother jobsintheorganization, layingoffemployeesorotherwisecuttingbackthenumberofemployees,developing
- 19. 19 present employees, and/or increasing the number of employees in certain areas. Factors to consider include the current employees’knowledge, skills, and abilitiesand the expected vacanciesresulting from retirements, promotions, transfers, and discharges. To do this, HR planning requires efforts by HR professionals working withexecutives and managers. 2.6 Objectives of Human Resource Planning 1. To ensureoptimumutilizationofhumanresources currentlyavailable inthe organization. 2. To assess orforecast the future skillrequirement ofthe organization. 3. To providecontrolmeasuresto ensure thatnecessaryresourcesare availableasand whenrequired. 4. A series of specified reasons are there that attaches importance to manpower planning and forecasting exercises. Theyare elaborated below: To link manpower planningwiththeorganizationalplanning To determinerecruitment levels. To anticipate redundancies. To determineoptimumtraininglevels. To providea basis for management development programs. To cost the manpower. To assist productivitybargaining. To assessfuture accommodationrequirement. To studythe cost ofoverheads and value ofservice functions. To decide whether certain activityneeds to be subcontracted, etc. HRP exists as a part of planning process of business. This is the activity that aims to coordinate the requirementsforthe availabilityofthedifferent typesofemployers. The majoractivities aretheforecasting, (future requirements), inventorying (present strength), anticipating (comparison ofpresent and future requirements) and planning (necessaryprogramto meet the requirements). TheHRforecastsareresponsibleforestimatingthenumberofpeopleandthejobsneededbyanorganization to achieve its objectives and realize its plans in the most efficient and effective manner. HR needsare computed bysubtracting HR supplies or numberofthe employees available fromexpected HR demands or number ofpeople required to produce a desired levelofoutcome. The objective ofHR is to provideright personnelfor the right workand optimumutilizationoftheexisting humanresources. The objectives ofhumanresource planning maybe summarized as below: Forecasting Human Resources Requirements: HRP is essentialto determine the future needs ofHRinan organization. Inthe absence ofthis plan it is verydifficult to provide theright kindof people at the right time. Effective Management of Change: Proper planning is required to cope with changes in the different aspects which affect the organization. These changes need continuationofallocation/ reallocationand effectiveutilizationofHRinorganization.
- 20. 20 Realizing the Organizational Goals: In order to meet the expansion and other organizational activities the organizationalHR planning is essential. Promoting Employees: HRP gives the feedback in the form of employee data which can be used indecision-making in promotionalopportunitiesto be made availablefor the organization. Effective Utilization of HR: The data base will provide the usefulinformation in identifying surplus anddeficiencyinhuman resources. The objective ofHRP is to maintainandimprove the organizationalcapacitytoreachits goals bydeveloping appropriatestrategies that willresult inthe maximumcontributionofHR. 2.7 Need for HRP in Organizations Major reasons for the emphasis on HRP at the Macro level: 1) Employment-Unemployment Situation: Though in general the number of educated unemployment is onthe rise, there isacute shortage for avarietyofskills. Thisemphasizes onthe need for more effective recruitment and employee retention. 2) Technological Change: The changes in production technologies, marketing methods and management techniques havebeenextensive and rapid. Their effect has beenprofoundonthe job contents andjobcontexts. Thesechangeshavecaused problemsrelatingto redundancies, retention andredeployment.Allthesesuggest theneedto planmanpowerneedsintensivelyandsystematically. 3) Demographic Change: The changing profile of the work force in terms ofage, sex, literacy, technicalinputsand socialbackground hasimplications for HRP. 4) Skill Shortage: Unemployment does not mean that the labour market is a buyer’s market. Organizations generallybecome more complex and requirea wide range ofspecialist skills that are rare and scare. Aproblem arises in an organization when employees with such specialized skills leave. 5) Governmental Influences: Government control and changes in legislation with regard to affirmative actionfor disadvantages groups, workingconditions and hours ofwork, restrictions onwomenandchildemployment, causalandcontract labour, etc. havestimulatedtheorganizations to be becomeinvolved in systematic HRP. 6) Legislative Control: The policies of “hire and fire” have gone. Now the legislation makes it difficult to reducethe size ofanorganizationquicklyandcheaply. It is easyto increase but difficult to shed thefat interms ofthe numbers employed becauseofrecent changes inlabour law relating to lay-offs andclosures. Those responsible formanaging manpower must look farahead and thus attempt to foresee manpower problems. 7) Impact ofthePressureGroup:Pressuregroupssuchas unions, politiciansandpersons displaced fromland bylocation ofgiant enterpriseshave been raising contradictorypressure onenterprise management suchasinternalrecruitmentandpromotion,preferenceto employees’children,displace person, sons ofsoiletc. 8) SystemsApproach: The spread of system thinking and advent ofthe macro computer as the part ofthe on-going revolution ininformation technology which emphasis planning and newer ways ofhandlingvoluminous personnelrecords.
- 21. 21 9) Lead Time: The log lead time is necessaryinthe selection process and training and deployment ofthe employee to handle new knowledge and skills successfully. 2.8 Importance of HRP HRP is the subsystemin the totalorganizationalplanning. Organizationalplanning includes managerial activitiesthatset the company’sobjectiveforthe futureanddeterminesthe appropriatemeansforachieving those objectives. The importance ofHRPis elaborated onthebasis ofthe keyroles that it is playing inthe organization. 1. Future Personnel Needs: Human resource planning is significant because it helps to determine the future personnelneeds ofthe organization. Ifan organizationis facing the problemofeither surplus or deficiencyinstaffstrength, thenit is the result ofthe absence ofeffecting HR planning. Allpublic sectorenterprises find themselves overstaffed now as theynever had anyplanning for personnelrequirement and went ofrecruitment spree tilllate 1980’s. The problemofexcess staff hasbecomesuchaprominentproblemthat manyprivatesectorunitsareresortingtoVRS‘voluntary retirement scheme’. The excess oflabor problemwould have been there ifthe organization had goodHRPsystem.Effective HRPsystemwillalso enable theorganizationtohavegoodsuccession planning. 2. Part of StrategicPlanning: HRPhas become an integralpart ofstrategic planning ofstrategic planning. HRP providesinputs instrategyformulationprocess in terms ofdeciding whether the organizationhas got theright kind ofhumanresources to carryout the givenstrategy. HRPis also necessaryduring the implementation stage in the formofdeciding to make resource allocation decisions relatedto organizationstructure, process and humanresources. Insome organizations HRP play as significant role as strategic planning and HR issues are perceived as inherent in business management. 3. Creating Highly Talented Personnel: Even though India has a great pool of educated unemployed, it is the discretion ofHR manager that willenable the companyto recruit the right personwithright skills to the organization. Eventhe existing staffhope the jobso frequentlythat organization face frequent shortage of manpower. Manpower planning in the form of skill development is requiredto help the organizationindealing withthis problemofskilled manpower shortage 4. InternationalStrategies:An internationalexpansionstrategyofanorganizationis facilitated to a great extent byHR planning. The HR department’s abilityto fillkeyjobswith foreignnationals and reassignment ofemployees fromwithinor across nationalbordersis a major challengethat is being faced byinternationalbusiness. Withthegrowing trend towards globaloperation, the need for HRPwillas wellwillbetheneed to integrateHRPmore closelywiththeorganizations strategic plans. Without effective HRP and subsequent attention to employee recruitment, selection, placement, development, and career planning, the growing competitionfor foreign executives maylead to expensive and strategicallydescriptive turnover among keydecisionmakers. 5. Foundation for Personnel Functions: HRP provides essentialinformation for designing and implementing personnel functions, such as recruitment, selection, training and development, personnelmovement like transfers, promotions and layoffs. 6. Increasing InvestmentsinHumanResources:Organizationsaremakingincreasinginvestments inhumanresourcedevelopment compellingtheincreasedneedforHRP.Organizationsarerealizing
- 22. 22 that humanassets canincrease invalue more thanthephysicalassets.Anemployeewho gradually develops his/ her skills and abilities becomea valuable asset for the organization. Organizations can make investments in its personnel either through direct training or job assignment and the rupee value ofsuch a trained, flexible, motivated productive workforce isdifficult to determine. Top officials have started acknowledging that qualityofwork force is responsible for both short termand long termperformance ofthe organization. 7. Resistance to Change: Employees are always reluctant whenever theyhear about change and evenabout jobrotation. Organizationscannot shift oneemployee fromonedepartment to another without anyspecificplanning. Evenfor carryingout jobrotation(shifting oneemployee fromone department to another) there is a need to plan well ahead and match the skills required and existing skillsofthe employees. 8. Uniting theViewpoint ofLine andStaffManagers:HRPhelps to unite the viewpointsofline and staffmanagers. Though HRP is initiated and executed bythe corporate staff, it requires the input and cooperation ofallmanagers within an organization. Eachdepartment manager knows about the issues faced byhis department more thananyone else. So communication betweenHR staffand line managers is essentialfor the success ofHRPlanning and development. 9. Succession Planning: Human Resource Planning prepares people for future challenges. The ‘stars’ are picked up, trained, assessed and assisted continuously so that when the time comes such trained employeescan quicklytake the responsibilities and position oftheir boss or seniors as andwhensituation arrives. 10. OtherBenefits: (a)HRPhelpsinjudgingtheeffectivenessofmanpowerpoliciesandprogrammes of management. (b) It develops awareness on effective utilization ofhuman resources for the overall development of organization. (c) It facilitates selection and training ofemployees with adequate knowledge, experience and aptitudes so as to carryon and achieve the organizational objectives (d) HRP encourages the companyto review and modify its human resource policies and practices andto examine the wayofutilizing the human resources for better utilization. 2.9 Factors Affecting HRP HRP is influencedbyseveralfactors. The most important ofthe factors that affect HRP are (1) typeand strategyoforganization(2) organizationalgrowthcyclesand planning (3)environmentaluncertainties (4) time horizons (5) type and quality offorecasting information (4) nature ofjobs being filled and (5) off loading the work. 1.TypeandStrategy oftheOrganization: Typeoftheorganizationdeterminestheproductionprocesses involve, number and type of staff needed and the supervisory and managerialpersonnel required. HR need is also defined bythe strategicplanoforganization. Iftheorganizationhas a planfor organic growth then organizationneed to hire additionalemployees. On the other hand Ifthe organization is goingfor mergers and acquisition, then organization need to plan for layoffs, as mergers can create, duplicate or overlap positions that can be handled more efficientlywithfewer employees. Organization first decides whether to be reactive or proactive in HRP. Organizations either carefully anticipate the needs and systematicallyplan to fillthe need inadvance (proactive) or cansimplyreact to the needs as theyarise (reactive). Likewise, the organization must determine the width ofthe HR plan. Organization can choose a narrow focus byplanning in onlyone or two HR areas like recruitment and selection or can have a broadperspective byplanning inallareas including training and remuneration.
- 23. 23 The nature ofHR plan is also decides upon the formalityofthe plan. It can decides to have an informal plan that lies mostlyin the minds ofthe managers and personnelstaff or can have a formalplan which is properlydocumentedinwriting The nature ofHR plan is also depended uponthe flexibilitythat is practiced in the organization. HR plan should have the abilityto anticipate and dealwith contingencies. Organizations frame HRP insuchaway that it can contain manycontingencies, which reflect different scenariostherebyassuring that theplan is flexible and adaptable. Figure 2.1 : FactorsAffecting HRP. Figure 2.1 summarizesthe five factors that influence anorganizationwhile framingits strategic HRP. 2. Organizational Growth Cycles and Planning: Allorganizations pass through different stages of growthfromthedayofits inception.Thestageofgrowthinwhichanorganizationisdetermines thenature andextendsofHRP. Smallorganizationsintheearlier stages ofgrowthmaynot havewelldefined personnel planning. But asthe organizationenters thegrowthstage theyfeeltheneed to planitshumanresource.At this stage organizationgives emphasis upon employee development. But as theorganization reaches the mature stageit experience less flexibilityand variabilityresultinginlow growthrate. HRplanningbecomes moreformalized andless flexibleandlessinnovative andproblemlikeretirementand possible retrenchment dominateplanning. During the declining stage ofthe organizationHRP takes a different focus like planning to do the layoff, retrenchment and retirement. Indeclining situationplanning always becomes reactiveinnature towards the financialand sales distress faced bythe company. 3. Environmental Uncertainties:Political, socialand economic changesaffect allorganizationsand the fluctuations that are happening in these environments affect organizations drastically. Personnelplanners dealwithsuch environmentaluncertainties bycarefullyformulating recruitment, selection, trainingand HRP Organizational Growth cycle and Planning Environmental Uncertainties Outsourcing Nature of jobs being filled Type and quality of forecasting information Time horizons Type and Strategy of Organization.
- 24. 24 Table 2.2 : Levels of HRP Information Strategic Information General Organizational Information Specific Information Necessary for HRP Product mix Customer mix Organizational structure Information flows Job analysis Skills inventories Competitive emphasis Operating and capital budgets Functional area objectives Management inventories Geographic limits of market Production schedules Distribution channels Available training and development programmes Sales territories Production processes Recruitment sources Level of technology Planning horizons Labour market analysis Compensation programmes Constitutional provisions and labour laws Retirement plans Turnover data. developmentpoliciesandprogrammes.Thebalanceintheorganizationisachievedthroughcarefulsuccession planning, promotionchannels,layoffs, flexitime, jobsharing, retirement, VRS andother personnelrelated arrangements. 4. Time Horizons: HR planscan be short termor longterm. Short termplans spans fromsixmonths to one year, while long term plans spread over three to twentyyears. The extent oftime period depends uponthe degreeofuncertaintythat isprevailing inanorganizations environment. Greater the uncertainty, shorter theplan time horizonandvice versa. Source: Elmer H. Burack and Nicholas J. Mathis, Human Resource Planning- A Pragmatic approach to manpower Staffing and development, Illinosis, Brace- Park Press, 1987, p. 129. 5. Type andQuality ofinformation:The informationused to forecast personnelneeds originates from a multitude ofsources. The forecast dependsto a large extent uponthe type ofinformationand thequality ofdata that is available to personnelplanners. The qualityand accuracyofinformationdepend uponthe clarity with which the organizational decision makers have defined their strategy, structure, budgets, production schedule and so on. Source: Leap& Crino, Personnel/ Human Resource Management, p. 161. 6. Nature ofJobs Being Filled: Personnelplanners need to be reallycarefulwith respect to the nature ofthe jobsbeing filled intheorganization. Employees belongingto lower levelwho needverylimited skills can berecruited hastilybut, whilehiring employees for higherposts, selectionand recruitment need to be carried out with high discretion. Organizationneed to anticipate vacancies far inadvance as possible, to provide sufficient timeto recruit suitable candidate. Table 2.1 : Degree of Uncertainty and Length of Planning Period Short Planning period- uncertainty/ instability Long planning period- certainty/ stability Many new competitors Rapid changes in social and economic conditions Strong competitive position Evolutionary, rather than rapid social, political and technological change Unstable product/ service demand patterns Small organizational size, poor management practices (crisis Management) Stable demand patterns Strong management practices.
- 25. 25 7. Outsourcing: Several organizations outsource part of their work to outside parties in the form of subcontract. Outsourcing is a regular feature both in the public sector as well as in the private sector companies. Manyofthe organizations havesurplus labour and hence instead ofhiring more people they go for outsourcing. Outsourcing is usuallydone for non criticalactivities. Outsourcing of non- critical activities throughsubcontractingdeterminesHRP. 2.10 HRP Process HRP effectivelyinvolves forecasting personnelneeds, assessing personnelsupplyandmatching demand– supplyfactors throughpersonnelrelated programmes. The HR planning process is influenced byoverall organizationalobjectives andenvironment ofbusiness. Figure 2.2 : The HRP Process EnvironmentalScanning: It refers to the systematic monitoring ofthe externalforces influencing the organization. The following forces are essentialfor pertinent HRP. Economicfactors, includinggeneraland regionalconditions. Technologicalchanges Demographic changes includingage, compositionand literacy, Politicalandlegislative issues, including lawsand administrative rulings Socialconcerns, including child care, educationalfacilities and priorities. Byscanning the environment for changes that willaffect an organization, managers can anticipate their impact and make adjustments early. OrganizationalObjectivesand Policies:HR planis usuallyderived fromthe organizationalobjectives. Specific requirements in terms of number and characteristics of employees should be derived from organizationalobjectives Once the organizationalobjectives are specified, communicatedand understood byallconcerned, theHR department must specifyits objective withregard to HR utilizationinthe organization.
- 26. 26 HR Demand Forecast: Demand forecastingis the process ofestimating the future quantityand qualityofpeoplerequired to meet the future needs of the organization.Annualbudget and long-termcorporate planwhen translated into activityinto activityformthe basis for HR forecast. For eg: inthe case ofa manufacturing company, the sales budget willformthe basis for productionplan giving thenumber andtype ofproductsto be producedineachperiod. Thiswillformthe basisuponwhich the organizationwilldecide the number ofhours to be workedbyeachskilled categoryofworkers. Once the number hours required is available organizationcan determine the qualityand quantityofpersonnel required for the task. Demand forecasting is influenced byboth internalfactors and externalfactors: externalfactors include- competition, economic climate, laws and regulatorybodies, changes in technologyand social factors whereasinternalfactorsarebudget constraints,productionlevel, newproductsandservices, organizational structure and employee separations. Demand forecasting is essentialbecause it helps the organization to 1. Quantify the jobs, necessaryfor producing agiven number ofgoods, 2. To determine the nature ofstaffmixrequired in the future, 3. To assessappropriatelevelsindifferentpartsoforganizationso asto avoidunnecessarycoststo theorganization, 4. To prevent shortages ofpersonnelwhereand when, theyare neededbythe organization. 5.To monitor compliances withlegalrequirements with regard to reservation ofjobs. Techniques like managerialjudgment, ratio- trend analysis, regression analysis, work studytechniques, Delphitechniques aresome ofthe majormethods used bythe organizationfor demand forecasting. HR Supply Forecast: Supplyforecast determines whether the HR department willbe able to procure the required number of workers. Supplyforecast measures the numberofpeople likelyto be available fromwithinand outside an organization, aftermaking allowance for absenteeism, internalmovements and promotions, wastage and changes inhours, and other conditions ofwork. Supply forecast is required because it is needed as it 1. Helps to quantify the number of people and positions expected to be available infutureto help the organizationrealizeits plans andmeet itsobjectives 2. Helpsto clarifythe staffmixes that willariseinfuture 3. It assesses existing staffing indifferent parts of the organization. 4. It willenablethe organizationto prevent shortageofpeople whereandwhentheyare most needed. 5. It also helpsto monitor future compliancewith legalrequirements ofjob reservations. Supplyanalysis covers the existing human resources, internalsources ofsupplyand externalsourcesof supply. HRProgramming: Once an organization’s personneldemand and supplyare forecastedthe demand and supplyneed to be balanced inorder that the vacanciescan be filled bythe right employees at the right time. HR Plan Implementation: HR implementationrequiresconverting an HR planinto action.Aseries ofactionare initiated asapart of HR plan implementation. Programmes such as recruitment, selection and placement, training and development, retraining and redeployment, retention plan, succession plan etc whenclubbed together formtheimplementationpart oftheHR plan.
- 27. 27 Controland Evaluation: Controlandevaluation represent the finalphase ofthe HRPprocess.AllHR planinclude budgets, targets and standards. The achievement ofthe organizationwillbe evaluated and monitored against the plan. During this final phase organization willbe evaluating on the number of people employed against the established (boththose who are inthe post and those who are in pipe line) and on the number recruited against the recruitment targets. Evaluation is also done with respect to employment cost against the budget and wastage accrued so that corrective action can be taken infuture. 2.11 Requisites for Successful HRP 1. HRP must berecognized as anintegralpart ofcorporate planning 2. Support oftopmanagement is essential 3. There should be some centralization with respect to HRP responsibilities inorder to have co-ordinationbetweendifferent levels ofmanagement. 4. Organization records must be complete, up to date and readilyavailable. 5. Techniques used for HR planning should be those best suited to the data available and degree ofaccuracyrequired. 6. Data collection, analysis, techniques ofplanning and the planthemselves needto be constantly revised and improved inthe light ofexperience. 2.12 Barriers to HRP Human Resource Planners face significant barriers while formulating an HRP. The major barriers are elaborated below: 1) HR practitioners are perceived as experts in handling personnelmatters, but are not experts in managing business. The personnelplanconceivedand formulated bythe HR practitioners when enmeshed with organizational plan, might make the overall strategic plan of the organization ineffective. 2) HRinformationoftenisincompatiblewithotherinformationusedinstrategyformulation. Strategic planning efforts have long been oriented towardsfinancialforecasting, oftento the exclusion of other types ofinformation. Financialforecasting takes precedence over HRP. 4) Conflict may exist between short term and long term HR needs. For example, there can be a conflict betweenthepressureto get thework done ontimeand longtermneeds,suchaspreparing people for assuming greater responsibilities. Manymanagers are ofthe beliefthat HR needs can be met immediately because skills are available on the market as long as wages and salaries are competitive. Therefore, long times plans are not required, short planningare onlyneeded. 5) There is conflict between quantitative and qualitative approaches to HRP. Some people view HRP asa number game designedto track the flowofpeople across the department. Others take a qualitative approachand focus onindividualemployee concerns such as promotionand career development. Best result can be achieved if there is a balance between the quantitative and qualitative approaches. 6) Non-involvement of operating managers renders HRP ineffective. HRP is not strictly an HR department function. Successful planning needs a co-ordinated effort on the part of operating managers andHR personnel.
- 28. 28 2.13 Summary Today, humanresource planning is viewed as the way management comes to grasp the ill-defined and tough-to-solve humanresource problems facinganorganization. Humanresource planningisthe process ofdetermining the human resources required bythe organization to achieve its goals. Human resource planning also looks at broader issues relating to the waysin which people are employed and developed, inorderto improveorganizationaleffectiveness. HRPisa decisionmakingprocessthat combinesactivities such as identifying and acquiring the right number ofpeople with the proper skills, motivating themto achieve highperformance and creatinginteractivelinks betweenbusiness objectivesare resource planning activities. HRPsets out requirements inbothquantitative and qualitative terms.Accurate manpowerplan is a dream.Acommon error ofmanymanagers is to focus on the organization’s short termreplacement needs. Any human resource plan, if it is to be effective, must be derived from the long term plans and strategiesoftheorganization. The various approachesto humanresource planning underwhicha number ofmajor issuesandtrends intoday’swork planthat willaffect organizationand employeesare(1)Examine externaland internal issues, (2) Determining future organizations capabilities, (3) Determining future organizationalneeds, and(4)Implementinghumanresourcesprogrammesto addressanticipated problems. Although change is occurring veryrapidlyin the work world it is important for both organizations and employees to monitor issues andevents continuouslyand consider their potentialeffects. 2.14 Self Assessment Questions 1. Explaintherole ofHR professionalinhuman resource planning process in organizations. 2 Describe the various forecasting techniques and how these techniques arebeing used in humanresource planning. 3 Explainthebarriers to HRP. Bring out the requisites foreffective planning. 2.15 Reference Books - Lloyd L. Byars and Leslie W. Rue (1997), Human Resource Management (5th edition), The McGraw-HillCompanies, USA. - Michael Armstrong (1999), A Handbook of Human Resource Management Practice (7th edition), KoganPage Limited, 120 PentonvelleRoad, London. - Biswajeet Pattanayak (2001), Human Resource Management, Prentice HallofIndia Pvt. Ltd., New Delhi. - K. Aswathappa (1999), Human Resource and Personnel Management (2nd edition), Tata McGraw-HillPublishing CompanyLtd., New Delhi. - P. Subba Rao (2004), Management and Organisational Behaviour (First edition), Himalaya PublishingHouse.
- 29. 29 Unit - 3 : JobAnalysisand Job Design Structure of Unit: 3.0 Objectives 3.1 Introduction 3.2 JobAnalysis Defined 3.3 Uses ofJobAnalysis 3.4 Steps inJobAnalysis 3.5 Methods for CollectingJobAnalysis Data 3.6 Job Description 3.7 Writing JobDescription 3.8 JobSpecification 3.9 JobDesign 3.10 Methods ofJob Design 3.11 Summary 3.12 SelfAssessment Questions 3.13 Reference Books 3.0 Objectives After completingthis unit, you willbe able to: Define jobanalysis. Understand the basic steps in a Job analysis. Identifythe major methods ofcollectingJobanalysis data. Recognize the major elements ofjob descriptions Explain how to prepare job descriptions and job specification and their use. Point out and explainjob design and its various methods Distinguish between jobenlargement and job enrichment. 3.1 Introduction Manpower planning is concerned with determination of quantitative and qualitative requirements of manpower for theorganization. Determinationofmanpower requirements is one ofthe most important problems in manpower planning. Job analysis and job design, provide this knowledge. Before going through the mechanismof job analysis and job design, it is relevant to understand the terms which are used in jobanalysis and job design. Job:Ajobmaybe defined as a “collection or aggregation oftasks, duties and responsibilitieswhich asa whole, are regarded as a regular assignment to individualemployees,” and whichis different fromother assignments, In other words, whenthe totalwork to be done is divided and grouped into packages, we callit a “job.” Each job hasa definite title based uponstandardized trade specifications withinajob;two or more grades may be identified, where the work assignment may be graded according to skill, the difficultyofdoingthem, orthequalityofworkmanship. Thus, it maybenoted that apositionisa“collection o tasks and responsibilities regularlyassigned to one person;”while a job is a “group ofposition, which involve essentiallythesameduties, responsibilities, skillandknowledge.”Apositionconsistsofa particular set ofduties assigned to anindividual.
- 30. 30 Decenzo and P. Robbinsdefine other terms as follows: Task: It is a distinct work activitycarried out for a distinct purpose. Duty: It is a number oftasks. Position: It refers to one or more duties performed byone person in anorganization, There are at least as manypositions as there are workers in the organization;vacancies maycreate more positions thanemployees. Job: It isa type ofpositionwithinthe organization. Job Family: It isgroup oftwo ormore jobs that eithercallfor similar workercharacteristics orcontain parallel work tasks as determined byjob analysis. Occupation: It is agroup ofsimilar jobs found across organizations. Career: It represents a sequence ofpositions, jobs, or occupations that a person has over hisworking life. 3.2 Job Analysis Defined Developinganorganizationalstructure, resultsinjobswhichhavetobestaffed. Jobanalysisistheprocedure throughwhichyou determine the dutiesand nature ofthe jobs and the kinds ofpeople (in terms ofskills and experience) who should be hired for them.’It provides youwithdata onjobrequirements, whichare then used for developing job descriptions (what the job entails) and job specifications (what kind of people to hire for the job). Some ofthe definitions ofjobanalysis ategiven as follows, to understand the meaning ofthetermmore clearly: According to Michael L. Jucius, “Jobanalysis refers to the process ofstudying the operations, duties and organizational aspects of jobs in order to derive specifications or as they called by some, job descriptions.” According to DeCenzo and P. Robbins, “Ajob analysis is a systematic exploration of the activities within a job. It is a basic technicalprocedure, one that is used to define the duties, responsibilities, and accountabilities ofa job.” Figure 3.1: Job Analysis Information Hierarchy (Adapted from Decenzo and P. Robbins, Personnel/Human Resource Management) Element Task Duty Position Job Job Family Occupation Career
- 31. 31 According to Herbert G Herman “A job is a collection of tasks that can be performed by a single employee to contribute to the productionofsome product or service provided bythe organization. Each job has certain ability requirements (as well as certain rewards) associated with it. Jobanalysis process used to identifythese requirements.” Flippo has offered a more comprehensive definition ofjob analysis as, “Job analysis is the process ofstudying and collecting informationrelatingto the operations andresponsibilities ofa specificjob. The immediate products ofthe analysis are job descriptions and job specifications” Thus, jobanalysisinvolves the process ofidentifying the nature ofa job(jobdescription) and thequalities ofthe likelyjob holder (jobspecification). 3.3 Uses of Job Analysis As summarized inFigure 3.2 the informationgenerated bythe job analysis is used as a basis ofseveral interrelatedpersonnelmanagement activities: 1.Achievement ofGoals:Weather and Davis have stated, “Jobs are at the core ofeveryorganization’s productivity,iftheyaredesignedwellanddoneright,theorganizationmakesprogresstowardsitsobjectives. Otherwise, productivity suffers, profits fall, and the organization is less able to meet the demands of society, customer, employees, and other with a stake inits success.” 2. Organizational Design: Jobanalysis will be usefulin classifying the jobs and the interrelationships among the jobs. On the basis ofinformation obtained through job analysis, sound decisions regarding hierarchicalpositionsandfunctionaldifferentiationcanbetakenand this willimproveoperationalefficiency. 3. OrganizationandManpowerPlanning: It is helpfulinorganizationplanning, for itdefines labour in concretetermsandco-ordinatestheactivitiesoftheworkforce, andclearlydividesdutiesandresponsibilities. 4. Recruitment and Selection: Jobanalysis provides you with information onwhat the jobentails and what humanrequirements are required to carryout these activities. This informationis thebasis onwhich you decide what sort ofpeople to recruit and hire. JobDescription JobSpecification Organizationaldesign Organization and m an power planning Recruitment&selection Placement&orientation Training&development Safetyandhealth Employeecounseling Job Analysis Performanceappraisal Figure3.2:UsesofJobAnalysis Figure 3.2 : Uses of Job Analysis
- 32. 32 5. Placement and Orientation: Job analysis helps in matching the job requirements with the abilities, interests and aptitudes ofpeople. Jobs willbe assigned to persons on the basis ofsuitabilityforthe job. The orientationprogrammewillhelp the employeeinlearning the activities andunderstanding dutiesthat are required to performa givenjob more effectively. 6. EmployeeTrainingandManagement Development:Jobanalysisprovidesthenecessaryinformation to the management oftraining and development programmes. It helps in to determine the content and subject matter ofin training courses. It also helps in checking applicationinformation, interviewing test results andin checking references. 7. JobEvaluation andCompensation: Jobevaluationis theprocessofdetermining therelativeworthof different jobsinanorganizationwitha view to link compensation, bothbasic andsupplementary, withthe worth of the jobs. The worth of a job is determined on the basis of job characteristics and job holder characteristics. Job analysis provides both in the forms ofjob descriptionand jobspecification. 8. Performance Appraisal: Performance appraisal involves comparing each employee’s actual performance with his or her desired performance. Through job analysis industrialengineers and other experts determine standards to be achieved and specific activities to be performed. 9. Health and Safety: It provides an opportunityfor identifying hazardous conditions and unhealthy environmentalfactors so that corrective measures maybe taken to minimize and avoid the possibilityof accidents. 10. EmployeeCounselling: Jobanalysisprovidesinformationabout careerchoicesandpersonallimitation. Suchinformationishelpfulinvocationalguidanceandrehabilitationcounselling. Employeeswho areunable to cope with the hazards and demands ofgiven jobsmaybe advised to opt for subsidiaryjobs or to seek prematureretirement. 3.4 Steps in Job Analysis The sixsteps ofjob analysis are shownin figure 3.3: Collection of back ground information Selection of job for analysis Collection of job analysis data Information processing Job Description Job Specification Determination of uses of job analysis Figure 3.3 : Job Analysis Process
- 33. 33 1. Determine the Use of the Job Analysis Information: Start by identifying the use to which the informationwillbe put, since thiswilldetermine the type ofdata you collect and the technique youuse to collect them. 2. Collection ofBackground Information: According to Terry, “The make-up ofa job, its relation to other jobs, and its requirements for competent performance are essentialinformation needed for a job evaluation. Thisinformationcanbehadbyreviewingavailablebackgroundinformationsuchasorganization charts (which show how the job in question relates to other jobs and where they fit into the overall organization);classspecifications (whichdescribe thegeneralrequirementsoftheclassofjobtowhichthe jobunderanalysis belongs);and theexisting jobdescriptions whichprovide a starting point fromwhichto build the revised jobdescription”. 3. Selection of Jobs for Analysis: To do job analysis is a costly and time consuming process. It is hence, necessaryto select a representative sample ofjobs for purposes of analysis. Priorities of various jobs canalso be determined.Ajob maybe selected because it has undergone undocumented changes in jobcontent. The request for analysis ofa job mayoriginate with the employee, supervisor, or a manager. Whenthe employee requests an analysis it is usuallybecause new job demands have not been reflectedin changes in wages. Employee’s salaries are, inpart, based uponthenature ofthe work that theyperform. Some organizations establish a time cycle for the analysis of each job. For example:Ajobanalysis may be required for alljobs everythree years. New jobs must also be subjected to analysis. 4. Collection of JobAnalysis Data: Job data on features of the job, requited employee qualification and requirements, should be collected either formthe employees who actuallyperforma job; or from other employees (such as foremen or supervisors) who watch the workers doing a job and there by acquireknowledge about it;orfromthe outsidepersons, knownasthetradejobanalysiswho areappointed to watchemployees performing a job. The duties ofsucha trade jobanalyst are (i) to outlinethe complete scope of a job and to consider all the physical and mental activities involved in determining what the worker does.; (ii) find out why a worker does a job; and for this purpose he studies why each task is essentialfor theoverallresult;and (iii) the skillfactor whichmaybe needed inthe worker to differentiate between jobs and establish the extent ofthe difficultyofanyjob. 5. Processing the Information: Once job analysis information has been collected, the next step is to place it in a formthat willmake it usefulto those charged with the various personnelfunctions. Several issuesarise withrespect to this. First, how muchdetailisneeded?Second, canthejobanalysis information be expressed inquantitative terms?These must be considered properly. 6. Preparing Job Descriptions and Job Classifications: Job information which has been collected must be processed to prepare the jobdescriptionform. Itis astatement showing fulldetails oftheactivities of the job. Separate job description forms may be used for various activities in the job and may be compiled later on. The job analysis is made withthe help ofthese description forms. Theseforms maybe used as reference for the future. 7. Developing Job Specifications: Job specifications are also prepared on the basis of information collected. It is a statement of minimum acceptable qualities of the person to be placed on the job. It specifies the standard by which the qualities of the person are measured. Job analyst prepares such statement taking into consideration the skills required inperforming the job properly. Such statement is used inselecting a person matchingwith the job.
- 34. 34 3.5 Methods for Collecting Job Analysis Data As discussedearlier, informationis to be collected for jobanalysis. Such information maybe collected by the trained job analysis, superiors concerned and job holders themselves. Job information is collected throughthefollowingmethods: 1. Participant Diary/Logs: Workers can be to keep participant diary/long or lists of things they do during the day. For everyactivityheor she engages in, theemployee records the activity(along withthe time) in a log. This can provide you with a very comprehensive picture of the job, especially when it’s supplementedwithsubsequent interviews withthe workerand his orhersupervisor.This methodprovides more accurateinformationifdonefaithfully. However, it isquitetime consuming. Further, eachjobholder maymaintainrecordsaccordingto hisownwaywhichpresentsproblemsinanalysisatlaterstage. Therefore, it haslimited application. 2. Interview: There are three types of interviews you can use to collect job analysis data: individual interviews with each employee; group interviews with groups of employees having the same job; and supervisor interviews withone or more supervisors who are thoroughly knowledgeable about the job being analyzed. The group interview isused whena largenumber ofemployees areperforming similaror identical work, since this can be a quick and inexpensive way of learning about the job. As a rule,the worker’simmediatesupervisorwould attendthe groupsession;ifnot, you shouldinterview the supervisor separatelyto get that person’s perspective onthe duties and responsibilities ofthe job. 3. Critical Incidents: In this method, job holders are asked to describe incidents concerning the job on the basis oftheir past experience. The incidents so collected are analyzed and classifiedaccordingto the job areas they describe, Afairly picture of actual job requirements can be obtained by distinguishing betweeneffectiveand ineffectivebehaviorsofworkersonthejob.However, thismethodistimeconsuming. The analyst requires a highdegree ofskillto analyze the contents ofdescriptions given byworkers. 4. TechnicalConference Method: This method utilizes supervisors with extensive knowledge of the job. Here, specific characteristics of a job are obtained from the “experts.”Although it is a gooddata gathering method, it often overlooks theincumbent worker’s perceptionabout what theydo ontheir job. 5. Job Performance: Under this method, the job analyst actuallyperforms the job under studyto get first-hand experience ofthe actualtasks, andphysicaland socialdemands ofthe job. This method can be used onlyfor jobs where skillrequirements are low and can be learnt quicklyand easily. This is atime- consuming method andis not appropriate for jobsrequiring extensive training. 6. Functional JobAnalysis: Functionaljobanalysis (FJA) isemployee- oriented analyticalapproach of job analysis. This approach attempts to describe the whole person onthe job. The mainfeatures ofFJA includethefollowing: The extent to which specific instructionare necessaryto performthe task The extent to which reasoning andjudgment are required to performthe task The mathematicalabilityrequired to performthe task and The verbaland language facilities required to performthe task. 7. Observation Method: Using this method, a job analyst watches employees directly on the job. Observations are made on various tasks, activities, the pace at whichtasks are carried out, and theway different activities areperformed. This method is suitable for jobs that involvemanual, standardized, and short job cycle activities. This method also requires that the entire range of activities be observable; possible withsome jobs.
- 35. 35 8. Questionnaires: The method is usually employed by engineering consultants. Properly drafted questionnaires are sent out to job-holders for completion and are returned to supervisors. However,the informationreceived is often unorganized and incoherent. The idea inissuing questionnaire is to elicit the necessaryinformationfromjob –holders so that anyerror mayfirst be discussed withthe employee and, after corrections, maybe submitted to the job analyst. This techniqueistimeconsuming andgenerallydoesnotyield satisfactoryresults becausemanyemployees do not completethe questionnaire or furnishincorrect informationbecause oftheir own limitations.The use ofquestionnaire is recommended onlyincase ofthose technicaljobs where the jobcontents arenot completelyknownto the supervisor or the operation is too complexto observe. There are certain standardized questionnaires developed bya few agencies which are used by various organizationsfor jobanalysis. Most ofthesequestionnairesareoftwo types:positionanalysisquestionnaire and management positiondescriptionquestionnaire that are decribed as follows: a. Position Analysis Questionnaire. Position analysis questionnaire (PAQ) is a highly specialized instrument for analyzing a jobinterms ofemployee activities.The PAQ developed byPurdue University is a comprehensivequestionnaire for collecting informationfor jobanalysis. In this questionnaire, various job elements have been grouped into six categories with each category containing relevant jobelements resulting into 195 elements as showninTable 3.1. Questionnaire for Job Analysis 1. Your Name ………..………..………..………..………..………..……….. 2. Title or Designation of your job ………………………………………… 3. Regular or Extra ………………………………………………………… 4. Your Department ………………………………………………………. 5. To whom do you report directly (Name and Title): ……………………… 6. Description of work: (a) Daily Duties: (b) Periodical Duties: (c) Occasional Duties: 7. Your knowledge Requirements: (A) Store Procedure and Methods: (B) Merchandise: 8. What Equipment do you use? 9. What Materials do you work with or sell? 10. If you supervise the work of others, state how many and what their jobs are. 11. To what job would you normally expect to be promoted? 12. From what job were you transferred to your present job?
- 36. 36 Table 3.1 : PositionAnalysis Questionnaire The advantage ofPAQ is that it provides a quantitative scoreor profile ofanyjobinterms ofhowthat job rates onthebasic activities. The PAQ’srealstrengthis, thus, inclassifying jobs. PAQ’s resultscanbe used to compare the jobs relative to one another and paylevels can be assigned for each job. The major problemwithPAQ is thetime it takes fora jobanalyst to fillout the ratings. However,PAQ has been widelyresearched and tested and appears to be both reliable and valid. b. Management Position Description Questionnaire: Management position description is a highly structured questionnaire containing208items relatingto managerialresponsibilities, restrictions,demands and other miscellaneouspositioncharacteristics.W.W.TomovandP.R. Pinto havedevelopedthe following Management positionDescriptionfactors: Product, marketing andfinancialstrategyplanning. Coordinationofotherorganizationunits and personnel Internalbusiness Control Products andservices responsibility Public andcustomer relations Advanced consulting Autonomyofactions Approvaloffinancialcommitments StaffService Supervision Complexityand stress Advanced financialresponsibility Broad personnelresponsibility The above methods are the most popular ones for gathering job analysis data. Theyallprovide realistic informationabout what jobincumbentsactuallydo. Theycanthusbe used for developingjobdescriptions and job specifications. Caroll L. Shartle, Otis and Lenhert have provided the following suggestionsfor making the jobanalyst’s task simple. Job Aspects No. of elements Information input - Where and how do employee get information to do their job? 35 Mental processes- what reasoning, planning, organizing, and decision making is done? 14 Work output – what physical activities, tools and machines are used? 49 Relationships – what contact with other people, both in the company and outside is maintained or developed? 36 Job context- what is the physical and social context in which the job is maintained? 19 Other job characteristics – what other activities, conditions or Characteristics not covered by the categories are relevant? 42
- 37. 37 Introduce yourselfso that the worker knows who you are and whyyou are there. Show a sincere interest in the worker and the jobthat is analyzed; Do not tryto tellthe employee how to do his job. Tryto talk to the employee and supervisors in theirownlanguage; Do a complete job studywithinthe objectives ofthe programmer: and Verifythejob informationobtained. 3.6 Job Description Job descriptionis the immediate product ofjob analysis process;the data collected throughjob analysis provides a basis for job descriptionand job specification. Job Description: is awritten record ofthe duties, responsibilities and requirements ofa particular job. It is concerned with the job itselfand not withthe jobholders. It is a statement describing the job in such terms as itstitle, location, duties, workingconditions and hazards. Flippo has DefinedJob Description as, “A jobdescriptionis an organized, factualstatement ofduties and responsibilities of a specific job. In brief, it should tellwhat is to be done. How it is donewhy. It is a standard offunction, inthat defines the appropriate and authorized content ofa job. According toPigors and Myres,“Jobdescriptionis a pertinent picture (inwriting) ofthe organizational relationships, responsibilitiesand specific duties that constitutes a givenjobor position. It definesa scope ofresponsibilityand continuing work assignmentsthat are sufficientlydifferent formthat ofotherjobs to warrant aspecific title.” According to Zerga, who analyzed 401 articles on jobdescriptionabout 30 years ago.Ajobdescription helps usin: (i) Jobgradingand classification (ii) Transfers and promotions. (iii) Adjustments ofgrievances; (iv) Defining andoutliningpromotionalsteps: (v) Establishing a commonunderstanding ofa job betweenemployers and employees; (vi) Investigationaccidents ; (vii) Indicating faultywork procedures or duplicationofpapers; (viii) Maintaining, operatingand adjusting machinery; (ix) Time andmotionstudies; (x) Defining thelimitsofauthority; (xi) Indicating caseofpersonalmerit; (xii) Studies ofhealthand fatigue; (xiii) Scientific guidance; (xiv) Determining jobs suitablefor occupationaltherapy; (xv) Providing hiringspecifications;and (xvi) Providing performance indicators. “Job description” is different from“performance assessment.” The former concerns such functions as planning, co-ordination, and assigning responsibility;while the latter concerns the qualityofperformance itself. Though jobdescription is not assessment, it provides an important basis establishing assessment standards and objectives.
- 38. 38 3.7 Writing Job Description A Jobdescription is a writtenstatement ofwhat the job holder actuallydoes, how he or she does it, and under what conditions the job is performed. This information is inturn used to write a job specification. This lists the knowledge, abilities, and skills needed to performthe job satisfactorily. While there is no standard format you must use inwriting a job description, most descriptions contain at least sections on: 1. Job Identification: It includes the job title, alterative title, department, division, and plant and code numberofthe job. Thejobtitleidentifies anddesignates the jobproperly, thedepartment, division, etc., indicate thenameofthe department where it issituated– whetherit isthemaintenancedepartment, mechanicalshopetc. Locationgives thenameoftheplace.This portionofjobdescriptiongives answer to two important questions: to what higher level job is this job accountable.And who is supervised directly? 2. Job Summary: Job summary describes the contents of the jobs in terms of activities or tasks performed. Jobsummaryshould clear the nature ofthe job. Primary, secondaryand other duties to be performed onthe job should clearlybe indicated separately. 3. Duties and Responsibilities: This is the most important phase ofjob description and should be prepared verycarefully. It describes the duties to be performed along with frequencyofeach major duty.Responsibilitiesconcerningcustodyofmoney, supervisionandtrainingofstaffetc.arealsodescribed inthis part. 4. Supervision: Under it is givennumber ofpersons to be supervised along withtheir job titles, and the extent ofsupervisioninvolved –general, intermediateor close supervision. Example of a Job Description Job Title: Record Clerk Job No. 011 Supervisor: Record Supervisor Job Grand –III Supervises: None Date: 2/21/12 Job Summary: Originate, process, and maintain comprehensive records; implement required controls; collect and summarize data as requested. Job Duties and Responsibilities : Review a variety of documents, listings, summarizes, etc, for completeness and accuracy. Check records against other current sources such as reports or summaries; investigate differences and take required action to ensure that records are accurate and up to date; compile and summarize data report format as required. Implement controls or obtaining, preserving, and supplying a variety of information. Prepare simple requisitions, forms, and other routine memoranda. Provide functional guidance to lower-level personnel as required. Working Conditions: Normal working conditions. But visits sites on average twice a week. Eight hours per day Relationships: With equivalent officers in other departments. Maintains formal and social contacts with local officials. Job Characteristics: Skilled operation of computer, calculating machine, or key punch machine is not necessarily a requirement of this job. The above information is correct and approved by: (Signed) (Signed) Job Analyst In charge Manager
- 39. 39 5. Relation to Other Jobs: It describes the vertical and horizontal relationships f work flow. It also indicates to whomthe jobholder willreport and who willreport to him. It gives an idea ofchannelsof promotion. 6. Machine, tools andequipment define each majortype or trade nameofthe machines andtools and the raw materials used. 7. Working Conditions:The working environment interms ofheat, light, noise, dust and fumesetc, the jobhazardsand possibilityoftheiroccurrence and working conditionsshould also be described. Itwillbe helpfulinjobevaluation. 8. SocialEnvironment: It specifies thesocialconditions underwhichthework willbeperformed. Inthis part the size of work group, interpersonal interactions required to perform the job and development facilities are mentioned 3.8 Job Specification The job specificationstates the minimum acceptable qualifications that the incumbent must possess to performthejobsuccessfully. Based ontheinformationacquired throughjobanalysis, the jobspecification identifies the knowledge, skills, and abilities needed to do the job effectively. Individuals possessing the personalcharacteristics identified in the job specification should performthe jobmore effectivelythan individuals lacking thesepersonalcharacteristics. Thejobspecification, therefore, is aimportanttoolinthe selectionprocess,for it keeps theselector’sattentiononthelist ofqualificationsnecessaryforanincumbent to performthe job and assists in determining whether candidates are qualified. According to Dale Yoder, “The job specification, as such a summary properly described is thus a specializedjobdescription, emphasizingpersonnelrequirementanddesignedespeciallytofacilitateselection and placement.” Flippo has defined job specification as, “Job specificationis a statement ofthe minimumacceptable humanqualitiesnecessaryto performajobproperly………….. Itisastandardofpersonnelanddesignates the qualities requiredfor acceptable performance.” In is clear from the above definitions that job specification is a statement of summary of personnel requirements for a job. It mayalso be called “standard ofpersonalfor the selection” A Job Specification should include: (i) Physicalcharacteristics, whichincludehealth, strength, endurance, age, height, weight, vision, voice, eye, hand and foot co-ordination, motor co-ordination, and colour discrimination. (ii) Psychologicaland socialcharacteristicssuchas emotionalstability, flexibility, decisionmaking ability, analyticalview,mentalability, pleasing manners, initiative, conversationalabilityetc. (iii) MentalCharacteristicssuchasgeneralintelligence, memory, judgement, abilityto concentrate, foresight etc. (iv) Personal Characteristics suchas sex, education, familybackground, job experience, hobbies, extracurricular activities etc. Allthese characteristics must be classifiedinto three categories: Essentialattributes whicha person must possess. Desirable attributes which a person ought to posses. Contra indicators whichwillbecome a handicap to successfuljob performance.
- 40. 40 3.9 Job Design Job designis ofcomparativelyrecent origin. The human resourcemanagers have realized that the design ofa job has considerable influence on the productivity and job satisfaction; poorly designed jobs often result inboredomto theemployees, increasedturnover, jobdissatisfaction, lowproductivityandanincrease in overall costs of the organization. All these negative consequences can be avoided with the help of proper job design. According to Jon Werner and DeSimone, “Job design is the development and alteration of the components ofa job (such as the tasks one performs, and the scope ofone’s responsibilities) to improve productivityandthe qualityoftheemployees’work life.” Job design has been defined by Davis (1966) as: “The specification of the contents, methods, and relationships ofjobs in order to satisfytechnologicaland organizationalrequirements as wellasthe social and personalrequirementsofthe job-holder.” Milkovich and Boudreaudefined job design as, “Jobdesignintegrates work content (tasks, functions, and relationships), the rewards (extrinsic andintrinsic) and the qualificationsrequired (skills, knowledge, abilities) for eachjob ina waythat meets the needs ofemployees and the organization.” Michael Armstrong has defined job design as “the process of deciding on the content of a job in terms of its duties and responsibilities, on the methods to be used in carrying out the job, in terms of techniques, systemsand procedures, and onthe relationships that shouldexist betweenthe jobholder and his superiors, subordinates and colleagues.” Job designis an attempt to create a match between job requirements and humanattributes. It involves organizing the componentsofthe jobandthe interactionpatterns amongthe members ofawork group.It helps indeveloping appropriate design ofjob to improve efficiencyand satisfaction. Principles of Job Design: Principles are the bases ofthe approach used injobdesign. Robertson and Smith(1985) have suggested the following fiveprinciples ofjobdesign: To influence skill variety, provide opportunities for people to do several tasks and combine tasks. To influence taskidentity, combine tasks and fromnaturalwork units. To influence task significance, formnaturalworkunits and informpeople ofthe importance of theirwork. To influenceautonomy, give people responsibilityfor determining their ownworking systems. To influence feedback;establish good relationship andopenfeedback channels. 3.10 Methods of Job Design The various techniques ofjob design and redesignare discussed below: 1. Job Simplification: In jobsimplification, the complete jobis brokendowninto smallsubparts;this is doneso that employeecando these jobswithout muchspecializedtraining. Moreover, smalloperations of the jobcan also be performed simultaneouslyso that the complete operation can be done more quickly. For job simplification, generallytime and motionstudies are used. 2. JobRotation:Anothertechniquedesignedtoenhanceemployeemotivationisjobrotation, orperiodically assigningemployeesto alternatingjobsortasks. Forexample, anemployeemayspendtwoweeksattaching
- 41. 41 bumpers to vehicles and the following two weeks making finalchecks of the chassis. During the next month, the same employee may be assigned to two different jobs. Therefore, the employee would be rotated among four jobs. The advantage ofjob rotation is that employees do not have the same routine job day after day. Job rotation only addresses the problem of assigning employees to jobs of limited scope; the depth of the jobdoes not change. The job cycle ofthe actual dailywork performed has not beenlengthened orchanged. Instead, employees are simplyassignedto different jobs withdifferent cycles. Because jobrotationdoes not change the basic nature ofjobs, it is criticized as nothing more thanhaving an employee performseveralboring and monotonous jobs rather than one. Some employees dislike job rotationmore thanbeing assigned to oneboring jobbecause whentheyare assigned to onejobtheyknow exactlywhere to report and what workto expect each day.Workers quicklyrealize that jobrotationdoes not increase their interest in their work. Although it seldomaddresses the lack of employee motivation, it give manages a means ofcoping with frequent absenteeismand high turnover. Thus when absenteeismor turnover occurs inthe work force, managers can quicklyfillthe vacated positionbecause each employee canperformseveraljobs. Job rotationis ofteneffectivelyused as a training technique for new, inexperienced employees.Athigher organizational levels, rotation also helps to develop managerial generalists because it exposes themto severaldifferent operations. Advantage of Job Rotation Technique: The employee experiences varietyofwork, workplace and peer group. Job rotationhelps to broaden the knowledge and skills ofan employee. Themainadvantageofjobrotationisthat it relievestheemployeefromtheboredomandmonotony ofdoing the same job. With the help of this method, people become more flexible. They are prepared to assume responsibilityespeciallyat other positions. Jobrotationbroadens the work experienceofemployees and turnsspecialists into generalists. It is beneficialfor the management also as the management gets employees who can performa varietyoftasksto meet the contingencies. This methodimproves the selfimageand personalworth ofthe employee. Disadvantage of Job Rotation Technique: Job rotation also creates disruptions. Members of the work group have to adjust to the new employee. Productivityisreduced bymoving aworker into new positionjust whenhis efficiencyat the prior jobwas creating organizationaleconomies. Training costs are increased. The supervisormayalso haveto spend more time answeringquestionand monitoring thework of the recentlyrotated employee. It candemotivateintelligent andambitioustraineeswho seekspecificresponsibilitiesintheirchosen specialty. 3. Job Enlargement: Another means of increasing employee’s satisfaction with routine jobs is job enlargement, or increasing the number of tasks performed (i.e. increasing the scope of the job). Job enlargement, likejob rotation, tries to eliminate short job cyclesthat create boredom. Unlikejobrotation, job enlargement actuallyincreases the jobcycle. Whena jobis enlarged, either the tasks being performed are enlarged or several short tasks are given to one worker. Thus, the scope of the job is increased because there are manytasks to be performed by the same worker. Job enlargement programs change
- 42. 42 manymethods ofoperation- in contrast to job rotation, in whichthe same work procedures are used by workers who rotate through work stations. Althoughjob enlargement actually changes the pace ofthe work and the operation byreallocating tasks and responsibilities, it does not increase the depthofa job. The focus of designing work for job enlargement is the exact opposite of that for job specialization. Instead ofdesigning jobs to be divided up into thefewest oftasks peremployee, a job isdesignedto have manytasksfor the employee to perform.Anenlarged jobrequires a longer training period because there are more tasks to be learned. Worker satisfaction should increase because is reduced as the job scope is expanded. However, job enlargement programs are successful with jobs what have increased scope; suchworkersareless prone toresort to absenteeism, grievances,slowdownsand othermeansofdisplaying jobdissatisfaction. Enlargement is doneonlyonthe horizontallevel. Thus, the jobremainsthe same, but becomesofa larger scale thanbefore. Inthe words ofGeroge Strauss and L.R. Sayles “Job enlargement implies that instead ofassigningone man to eachjob, a group ofmen can be assigned to a groupofjobs and thenallowed to decide for themselves how to organize the work. Suchchangespermit more socialcontacts and control over the work process.” Job enlargement has the following advantages: Increase indiversityofjobs Jobsatisfaction Provides wholeness andidentitywiththe taskand increases the knowledgenecessaryto perform it. Provides varietyofskills. Reduces tensionand boredom. Trains and develops more versatile employees. Despite these advantagesthis is not acompletelysatisfactorymethod ofjob design as it does not increase the depth ofa job. Enlarged jobs require longer training period as there are more tasks to be learned. 4. Job Enrichment: The concept ofjobenrichment has beenderived fromHerzberg’stwo-factor theory ofmotivationinwhichhe hassuggestedthat jobcontent isone ofthebasic factors ofmotivation.Ifthe job is designed in such a manner that it becomes more interesting and challenging to the job performer and provideshimopportunitiesfor achievement, recognition, responsibility, advancement and growth, thejob itselfbecomesa source ofmotivationto the individual. AccordingtoRichardW.BeattyandGraigEric. Schneider, “Jobenrichment isamotivationaltechnique which emphasizes the need for challenging and interesting work. It suggests that jobs be redesignedso that intrinsic satisfaction is derived from doing the job. In its best applications it leads to a vertically enhanced job byadding function from other organizational levels, making it containmore varietyand challenge and offer autonomyand pride to the employee.” According to P. Robbins, “Job enrichment refers to the verticalexpansion of the jobs. It increases the degree to whichthe worker controls theplanning, executionand evaluationofhis work.” In the words of Robert Albanese, “Job enrichment sometimes called. “vertical job leading’is a job redesign strategythat focuses on jobdepth.” According to Mondy. Holmes, and Flippo, “Jobenrichment refers to basic changes inthe content and level of responsibility of a job so to provide for the satisfaction of the motivation needs of personnel. Rebert Ford, who was associated with designing ofjobs to make them more enriched, has provided some bases (thoughnot exhaustive) for job enrichment as showninTable 3.3.
- 43. 43 Table 3.2 : Job Enrichment Bases Techniques ofJobEnrichment:Inorderto enrichthejobs.Themanagement should adoptthe following measures: Freedomindecisions Assign anaturalwork unit to an employee. Encouragingparticipation Allow the employee to set his ownstandards ofperformance. Minimize the controls to provide freedomto the employees Make anemployee directlyresponsible for his performance. Encourage participationofemployees indeciding organizationalgoals and policies. Expand job vertically Introducing new, difficult and creative tasksto the employees. Sense ofachievement. Advantages of Job Enrichment: The advantagesofjobenrichment are as follows: It enriches the role. Job enrichment is the most widely used of job design as it provides a meaningful learning to employees. It makesthe work interesting and employee get motivated. It helps inreducing the rate oflabour turnover and absenteeism. It increases skills ofthe employees. It increases morale and performance. Reduce Boredomand dissatisfaction. Increase inoutput bothqualitative and quantitative. Disadvantages ofJob Enrichment: Dunhamand Newstromstate, “Even the strongest supporters of job enrichment readilyadmit that thereare limitations inits application.” Newstromand KeithDavis also write, “Employees arethe finaljudges ofwhat enriches their jobs.Allthat management cando is togather information about what tends to enrich jobs, try these changes in the job system, and then determine whetheremployeesfeelthat enrichment hasoccurred.”Afewlimitationsoforproblemswithjobenrichment are as follows: Tasks Motivator involved Assign specific or specialized task to individuals enabling them to become expert Responsibility, growth, advancement Making periodic reports directly available to the individual himself rather than to the supervisor. Internal recognition Giving a person a whole, natural unit of work (module, exchange district, division, area, etc.) Responsibility, achievement, recognition Increasing the accountability of individuals for own work Responsibility, recognition
- 44. 44 Increase cost Need more employeecounseling, training, and guidance. Not applicable to alljobs. Negative impact onpersonnel. Imposed on people. Objected by unions Paydissatisfaction JOB ENLARGEMENT vs. JOB ENRICHMENT Jobenlargementandjobenrichment arebothimportant formsofjobdesigninorderto enhanceproductivity and satisfactionofthe employees. Theydifferfromeachother inthe following respects: 1. Nature of Job: Themajor difference betweenjobenrichment and enlargement lies in the nature of additions to thejob. Enlargement involvesa horizontalloading orexpansion, or additionoftasksofthe samenature.Enrichment involvesverticalloadingoftasksandresponsibilityofthejobholder;itimproves the qualityofthe jobin terms ofits intrinsic worth. 2. Purpose: The purpose ofjobenlargement is to reduce the monotonyin performingrepetitive jobs bylengthening thecycle ofoperation. Onthe other hand, thepurpose ofjob enrichment is making the job lively, challenging and satisfying. It satisfies the higher levelneeds such as ego satisfaction, self expression, sense ofachievement and advancement ofJob holders. 3. SkillRequirement: Job enlargement maynot necessarilyrequire theuse ofadditionalskills which the job holder was using in performing the job before the enlargement. This is due to similarity of additionaltasks.Enrichmentcallsfoedevelopment andutilizationofhigherskills,initiative, andinnovation on the part ofthe job holder inperforming the job. 4. Direction and Control:Jobenlargement requires directionand controlfromexternalsources, say supervisor. Infact, the jobholdermayrequiremore directionandcontrolbecause ofenlargement ofhis responsibility. Enrichment does not require externaldirectionand controlas these come fromthe job holder himself. He requires onlyfeedback fromhis supervisor. 3.11 Summary The purpose ofan organization is to give each person a separate distinct job and to ensure that these jobs arecoordinated in such awaythat the organizationaccomplishes its goals. Developing an organization structure results injobs that have to be staffed. Job analysis is the procedure through which you find out (1) what the job entails, and (2) what kinds of people shouldbehiredforthejob. Itinvolvessixsteps:(1)determinetheuseofthejobanalysisinformation; (2) collection ofbackground information; (3) selectionofjobs for analysis; (4)collection ofjob analysisdata;(5) processing theinformation;(6)preparing jobdescriptionsandjobclassifications; and (7) developing jobspecifications. Techniques of job analysis are – observation method, questionnaires, participant diary/logs, interview, criticalincidents, technicalconference method, and jobperformance. Jobdescriptionandjobspecificationare productsofjobanalysis. Jobdescriptionshould indicate: duties to be performed by the job holder and the manner he should complete the tasks. Job specification: answer the question“what humantraitsand experience are necessaryto do the job. It portrays what kind ofpersonto recruit and forwhat qualities that personshould be tested”.
- 45. 45 Job design is an attempt to create a match between job requirements and job attribute. Job rotationimpliestransfer to a jobofsame levelandstatus. Jobsimplificationenables theemployees to do thewithout muchspecializedtraining Job enlargement isthe process ofincreasingthe scope ofjobofa particular byadding more tasks to it.And job enrichment implies increasing the contents ofa job or the deliberate upgrading of responsibilityscope and challenge in work. Job enlargement and job enrichment are both important forms ofjob design in order to enhance the productivityand satisfactionofthejobholders. 3.12 Self Assessment Questions 1. What do you understand by job analysis? What is its importance in the management of human resources? 2. What is jobanalysis? What steps are involved in the preparationofjob analysis? 3. What are the byproducts ofjobanalysis? Discuss the techniques used for collecting data for job analysis? 4. What is job description? How is it prepared? 5. Define jobspecification?How is it different fromjobdescription? 6. Write noteson: (i) Job Rotation (ii) JobSimplification 7. Distinguishbetween: (a) Job descriptionand job specification (b) Job enlargement and job enrichment 8. “Jobanalysis isthe most basic personnelmanagement function.” Discuss. 9. Clearlydefine anddiscussthe relationshipamongjobanalysis, jobdescriptionandjobspecification. 3.13 Reference Books - Mamoria C.B., Gankar S.V., (2006), “ATextbook ofHumanResource Management”, Himalaya Publishing House, New Delhi. - DwivediR.S., (1997),“PersonnelManagement inIndianEnterprises”,GalgotiaPublisingCompany, New Delhi. - Devid A. DeCENZO, STEPHEN P. ROBBINS (2002), “Personnel/Human Resource Management”, Prentice HallofIndia, New Delhi. - Prasad L.M., (2005), Human Resource Management,” Sultan Chand & Sons, New Delhi. - DesslerGary(2010),“HumanResource Management”, Prentice HallInternationalEditions, New Jersey. - CarrellMichaelR., Elbert Norbert F.,HatfieldRobert D. (1999),“HumanResourceManagement,” Prentice Hall, Englewood Cliffs, New Jersey.
- 46. 46 Unit - 4 : Recruitment Structure of Unit: 4.0 Objectives 4.1 Introduction 4.2 Recruitment: MeaningandDefinition 4.3 Process ofRecruitment 4.4 Recruitment Policy 4.5 FactorAffectingRecruitment 4.6 Sources ofRecruitment 4.7 Methods ofRecruitment 4.8 Philosophies ofRecruitment 4.9 Summary 4.10 SelfAssessment Questions 4.11 Reference Books 4.0 Objectives After completingthis unit, you willbe able to: Definerecruitment. Cite the steps in recruitment process. Understand theprerequisites ofa goodrecruitment policy. Describe the varioussources ofrecruitment. Understand the methodsthroughwhich prospective candidates maybe recruited. Point out thevariousfactorsaffectingrecruitment. 4.1 Introduction Successfulhuman resource planning should identify our human resource needs. Once we know these needs, wewillwant todosomethingabout meetingthem. Thenextstepintheacquisitionfunction, therefore, is recruitment. This activitymakes it possiblefor us to acquirethe number and types ofpeople necessary to ensurethe continued operationofthe organization. Hallett says, “It is withpeople that qualityperformance reallybegins and ends.” Robert Heller also says, “Ifpeople ofpoorcalibre are hired, nothing muchelse canbe accomplished and Gresham’slaw willwork: the bad people willdrive out the good or cause themto deteriorate.” Recruiting is thediscoveringofpotentialcandidatesfor actualor anticipatedorganizationalvacancies. Or, fromanother perspective, it is alinking activity-bringing together thosewith jobs to filland those seeking jobs. 4.2 Recruitment: Meaning and Definition Recruitment forms a stepin the processwhich continues withselectionand ceases with the placement of the candidate. It is the next step in the procurement function, the first being the manpower planning. Recruiting makesit possible to acquirethe number and typesofpeople necessaryto ensure the continued operationoftheorganisation. Recruiting is thediscoveringofpotentialapplicants foractualor anticipated organisationalvacancies.
- 47. 47 According to EdwinB. Flippo,“Recruitment is theprocess ofsearching forprospective employees and stimulating themto applyfor jobsinthe organisation.” According to Lord, “Recruitment is a form ofcompetition. Just as corporations compete to develop, manufacture, and market the best product or service, so theymust also compete to identify, attractand hire the most qualified people. Recruitment is a business, and it is a big business.” In the words of DaleYoder, “ Recruiting is a process to discover the sources ofmanpower to meet the requirements ofthe staffing schedule and to employeffective measures for attracting that manpowerin adequate numbers to facilitate effective selectionofanefficient working force.” According to Werther and Davis, “Recruitment is the process of finding and attracting capable applicantsforemployment.Theprocessbeginswhennewrecruitsaresoughtandendswhentheirapplications are submitted. The result is a poolofapplicants formwhich new employees are selected.” Dales S. Beach writes, “Recruitment is the development and maintenance of adequate manpower resources. It involves the creationofa poolofavailable labour uponwhomthe organisation can depend whenit needs additionalemployees.” Thus, recruitment process is concerned with the identification of possible sources ofhuman resource supply and tapping those sources. In the total process ofacquiring and placing human resources in the organisation, recruitment falls in between different sub-processes as shown inFigure 4.2. According to Scott,Clothierand Spriegelthe needforrecruitment arisesout ofthefollowing situations: Vacancies created dueto expansion, diversification, and growth ofbusiness. An increase in the competitive advantage of certain concerns, enabling themto get more ofthe available businessthanformerly. An increaseinbusiness arising froman upswing during the recoveryperiod ofa business cycle. Vacancies created due to transfer, promotion, retirement, termination, permanent disabilityor death. The normalpopulationgrowth, whichrequires increased goodsand services to meet the needs of the people. A rising standard ofliving, which requires more of the same goods and services as wellas the creation ofnewwants to be satisfied. Human Resource Planning Job Analysis Recruitment Selection Figure 4.1: Recruitment to Human Resource Acquisition Process Placement
- 48. 48 4.3 Process of Recruitment Recruitment process passesthroughthe following stages: Recruitment process begins whenthe personneldepartment receivesrequisitions for recruitment fromanydepartment ofthe company, Thepersonnelrequisitions containdetailsabout theposition to befilled, number ofpersonsto be recruited, theduties to be performed, qualifications expected from the candidates, terms and conditions of employment and the time by which the persons should be available for appointment etc. Locating and developing the sources ofrequired number and type ofemployees. Identifying the prospectiveemployees withrequired characteristics. Developing the techniquesto attract the desiredcandidates. The goodwillofanorganisationinthe market maybe one technique. Thepublicityabout the companybeing a good employer mayalso help instimulatingcandidates to apply. Theremaybe others ofattractivesalaries, proper facilities for development etc. Evaluating the effectivenessofrecruitment process. According to Famularo, personnelrecruitment process involves five elements, viz., arecruitment policy, arecruitment organisation,aforecastofmanpower,thedevelopment ofsourcesofrecruitment, anddifferent techniques used for utilising these sources, and a method ofassessing the recruitment programme. The explanation ofthese is described below: 1. Recruitment Policy: It specifies the objectives of recruitment and provides a framework for the implementation of the recruitment programme. It also involves the employer’s commitment to some principles as to find and employthe best qualified persons for each job, to retain the most promising of those hired, etc. It should be based on the goals, needs and environment ofthe organisation. Human Resource Planning Recruitment Selection Placement Search for Prospective Employees Evaluating Recruiting Effectiveness Internal Sources Personnel Research Job Posting Upgrading in Same Position Transferring to New Job Prompting to Higher Responsibilities External Sources Employee Referrals Advertising Scouting Evaluating for Selection Figure 4.2 : Place of Recruitment in Selection System
- 49. 49 2. Recruitment Organisation: The recruitment may be centralised like public sector banks or decentralised. Both practices have their own merits. The choice between the two will depend on the managerialphilosophyand the particular needsofthe organisation. 3. Sources of Recruitment: Various sources of recruitment maybe classified as internaland external. These have their own merits and demerits. 4. Methods of Recruitment: Recruitment techniques are the means to make contact with potential candidates, to provide themnecessaryinformation and to encourage themto applyfor jobs. 5. Evaluation of Recruitment Programme: The recruitment process must be evaluated periodically. Thecriteriafor evaluationmayconsist ofcost perapplicant, the hiring ratio, performanceappraisal, tenure ofstay, etc.After evaluation, necessaryimprovements should be made inthe recruitment programme. 4.4 Recruitment Policy As Yoder et al observe recruitment policy spells out the objectives of the recruitment and providesa framework forimplementations ofthe recruitment programme inthe formofprocedures. It mayinvolvea commitment to broadprinciplessuchasfillingvacancieswiththebest qualifiedindividuals. Therecruitment policymayembrace severalissues suchas the extent ofpromotion fromwithin, attitudes ofenterprise in recruiting old, handicapped, and minor individuals, minoritygroup members, part-time employees and relativesofpresentemployees. Inaddition, therecruitment policymayalso involvetheorganisationsystem to be developedfor implementing the recruitment programme and procedures to be employed. Explicitly, an organisational systemis a function ofthe size of an enterprise. In smaller enterprises, there may be merelyinformalrecruiting procedures and theline officialmayberesponsible to handle thisfunctionalong with their usual responsibilities. On the other hand, in larger organisations, there is usuallya staffunit attached withpersonnelor an industrialrelations department designated as employment or recruitment office. This specialisationofrecruitment enables staffpersonnelto become highlyskilled in recruitment techniques andtheirevaluation. However, recruitment remainsthe lineresponsibilityas faras thepersonnel requisitionforms are originated bythe line personnel, who have also the finalword inthe acceptance or rejection ofa particular applicant. Despite this, the staffpersonnelhave adequate freedominrespect of sources of manpower to be tapped and the procedure to be followed for this purpose. Recruitment policycoversthefollowingareas: To prescribe the degree ofemphasis. Inside the organisation or outside the organisation. To provide the weightage that would be given to certain categories of people such as local population, physically-handicapped personnel, personnelfromscheduled castes/tribes and other backward classes. To prescribe whether the recruitment would be centralised or decentralisedat unit levels. To specifythedegree offlexibilitywithregard to age, qualifications, compensationstructure and other service conditions. To prescribe the personnelwho would be involved inrecruitment process and the role ofhuman resource department in this regard. To specifythebudget formeeting theexpenditures incurredincompletingthe recruitment process. AccordingtoYoder, “the recruitmentpolicyisconcernedwithquantityand qualificationsofmanpower.” It establishesbroad guidelines for the staffing process. Generally, thefollowing factors are involved in a recruitment policy:
- 50. 50 To provide eachemployee with anopenroad and encouragement inthe continuing development ofhis talents and skills; To provideindividualemployees with the maximumofemployment security, avoiding, frequent lay-offor lost time; To avoidcliqueswhichmaydevelop whenseveralmembers ofthesamehousehold orcommunity are employedinthe organisation; To carefullyobservethe letter and spirit ofthe relevant public policyonhiring and, onthe whole, employment relationship; To assureeachemployeeoftheorganisationinterest inhispersonalgoalsandemployment objective; To assureemployeesoffairnessinallemployment relationships, includingpromotionsandtransfers; To provide employment in jobs which are engineered to meet the qualifications ofhandicapped workers and minoritysections; and To encourage one or more strong, effective, responsible trade unions among the employees. Prerequisites of a Good Recruitment Policy: The recruitment policyof an organisationmust satisfy thefollowingconditions: It should beinconformitywith itsgeneralpersonnelpolicies; It shouldbe flexible enough to meet the changing needsofan organisation; It shouldbe so designed asto ensure employment opportunitiesfor its employees ona long-term basissothat thegoalsoftheorganisationshouldbeachievable;andit shoulddevelopthepotentialities ofemployees; It should match the qualities ofemployees with the requirements ofthe work for which theyare employed;and It shouldhighlight the necessityofestablishing jobanalysis. 4.5 Factor Affecting Recruitment The factors affecting recruitment can beclassified as internalandexternalfactors. The internal factors are: Wage and salarypolicies; The age compositionofexisting working force; Promotionandretirement policies; Turnoverrates; The nature ofoperations involved the kindofpersonnelrequired; The leveland seasonalityofoperations inquestion; Future expansionand reductionprogrammes; Recruiting policyoftheorganisation; Human resource planningstrategyofthe company; Size oftheorganisation and the numberofemployees employed;
- 51. 51 Cost involved inrecruiting employees, and finally; Growthand expansionplans ofthe organisation. The external factors are: Supplyand demand ofspecific skills inthe labour market; Company’s image perception ofthe job seekers about the company. Externalculturalfactors: Obviously, the culturemayexert considerable checkonrecruitment. For example, womenmaynot be recruited in certainjobs inindustry. Economic factors: such as a tight or loose labour market, the reputation ofthe enterprise in the communityasa good paymasteror otherwise and suchallied issues whichdetermine the quality and quantityofmanpowersubmitting itselffor recruitment. Politicaland legalfactors also exert restraints in respect ofnature and hours ofwork for women and children, and allied employment practicesin the enterprise, reservationofJobfor SC, ST and so on. 4.6 Sources of Recruitment After the finalisationofrecruitment plan indicating the number and type ofprospective candidates,they must be attracted to offer themselves for consideration to their employment. This necessitates the identification ofsources fromwhich these candidates can be attracted. Some companies tryto develop new sources,while most onlytryto tackle the existingsources theyhave. Thesesources, accordingly, may be termed asinternaland external. Internal Sources It would be desirable to utilise the internalsources before going outside to attract the candidates.Yoder and others suggest two categories ofinternal sources including a review ofthe present employees and nominationofcandidatesbyemployees. Effectiveutilisationofinternalsourcesnecessitatesanunderstanding oftheir skillsand informationregarding relationships ofjobs. This willprovidepossibilities forhorizontal and verticaltransfers within the enterprise eliminating simultaneous attempts to layoffemployeesinone department andrecruitmentofemployees withsimilarqualificationforanotherdepartment inthecompany. Promotion and transfers within the plant where an employee is best suitable improves the morale along withsolvingrecruitmentproblems. These measurescanbe takeneffectivelyifthecompanyhas established jobfamiliesthroughjobanalysisprogrammescombining together similar jobsdemanding similar employee characteristics.Again,employeescanberequestedto suggest promisingcandidates.Sometimes, employees are given prizes for recommending a candidate who has beenrecruited. Despite the usefulness ofthis systemintheformofloyaltyandits wide practice, ithas beenpointed out that it gives riseto cliques posing difficultyto management. Therefore, before utilising this systemattempts should be made to determine throughresearchwhetheror not employees thusrecruitedare effectiveonparticularjobs. Usually,internal sourcescanbe used effectivelyifthenumbers ofvacanciesare not verylarge, adequate, employeerecords are maintained,jobs do not demandoriginalitylacking intheinternalsources, and employeeshaveprepared themselves for promotions. Merits of Internal Sources: The followingare the meritsofinternalsources ofrecruitment: It createsasenseofsecurityamong employees whentheyare assuredthat theywouldbe preferred infillingup vacancies.
- 52. 52 It improves themorale ofemployees, fortheyare assured ofthe fact that theywould be preferred over outsiderswhen vacancies occur. It promotesloyaltyandcommitmentamongemployeesduetosenseofjobsecurityandopportunities for advancement. The employer isina better positionto evaluate those presentlyemployedthanoutside candidates. This is because the company maintains a record of the progress, experience and service of its employees. Time andcostsoftrainingwillbelowbecauseemployeesremainfamiliar withtheorganisationand its policies. Relations withtradeunions remain good. Labourturnover is reduced. · As the personsinthe employment ofthe companyare fullyaware of, and wellacquainted wit, its policies and know its operating procedures, theyrequire little training, and the chances are that theywould staylonger inthe employment ofthe organisationthananew outsider would. It encourages self-development among the employees. It encourages good individuals who are ambitious. It encouragesstabilityfromcontinuityofemployment. It can also act as a training device for developing middle and top-levelmanagers. Demerits ofInternal Sources: However, this systemsuffers fromcertaindefects as: Therearepossibilitiesthat internalsourcesmay“dryup”, anditmaybedifficult tofind therequisite personnelfromwithinanorganisation. It oftenleads to inbreeding, anddiscourages new blood fromentering and organisation. As promotionis based on seniority, the danger is that really capable hands maynot be chosen. The likes and dislikes of the management may also play an important role in the selection of personnel. Since the learner does not know more than the lecturer, no innovations worth the name can be made. Therefore, onjobs whichrequire originalthinking(suchas advertising, style, designing and basic research), this practice is not followed. This source is used bymanyorganisations; but a surprisinglylarge number ignore this source, especially for middle management jobs. External Sources DeCenzo and Robbins remark, “Occasionally, it may be necessary to bring in some ‘new blood’ to broadenthepresentideas, knowledge, andenthusiasm.”Thus, allorganisationshavetodependonexternal sources ofrecruitment.Among these sourcesare included: Employment agencies. Educationalandtechnicalinstitutes. and Casuallabour or “applicants at the gate”and nailapplicants. Publicandprivateemployment agenciesplaya vitalroleinmakingavailablesuitableemployeesfordifferent positions intheorganisations. Besides public agencies, private agencies have developedmarkedlyinlarge cities in the formofconsultancyservices. Usually, these agencies facilitate recruitment of technicaland professionalpersonnel. Because oftheir specialisation, theyeffectivelyassess the needs of theirclients and aptitudes and skills of the specialised personnel. They do not merely bring an employer and an employee together butcomputeriselists ofavailabletalents, utilisingtestingto classifyand assessapplicants and use advanced techniques ofvocationalguidance foreffective placement purposes.
- 53. 53 Educationalandtechnicalinstitutesalso formaneffectivesourceofmanpowersupply.Thereisanincreasing emphasis on recruiting student from different management institutes and universities commerce and management departmentsbyrecruitersforpositionsinsales, accounting, finance,personnelandproduction. These students are recruited as management trainees and then placed in special company training programmes. Theyarenot recruited for particularpositionsbut fordevelopment asfuture supervisors and executives. Indeed, this source provides a constant flow ofnew personnelwith leadership potentialities. Frequently, thissourceistappedthroughon-campusinterviewwithpromisingstudents.Inaddition,vocational schools and industrial training institutes provide specialised employees, apprentices, and traineesfor semiskilled andskilled jobs. Persons trainedinthese schools andinstitutes canbe placedonoperative and similar jobswith a minimumofin-plant training. However, recruitment ofthese candidates must be based on realistic and differential standards established through research reducing turnover and enhancing productivity. Frequently, numerous enterprises depend to some extent upon casuallabour or “applicants at the gate” and nailapplicants. The candidates mayappear personallyat the company’s employment office or send their applications forpossible vacancies. Explicitly, asYoder and others observe, the qualityandquantity ofsuchcandidatesdependontheimageofthe companyincommunity. Prompt responseto theseapplicants proves very useful for the company. However, it may be noted that this source is uncertain, and the applicants reveala wide range ofabilities necessitating a carefulscreening. Despite these limitations, it forms ahighlyinexpensive source as the candidates themselves cometo the gate ofthe company.Again, it provides measures for good public relations and accordingly, all the candidates visiting the company must bereceived cordially. Table 4.1 : Recruiting Sources Used by Skill and Level Source:Adapted fromStephenL. Mangum, “Recruitment and jobSearch:TheRecruitmentTactics of Employers. “PersonnelAdministrator, June 1982, p. 102. Skill/Level Recruiting Source Percentage of Use Unskilled and Semiskilled Informal contacts Walk-ins Public Employment Agencies Want Ads 85 74 66 52 Skilled Informal Contacts Walk-ins Public Employment Agencies Want Ads 88 66 55 55 Professional Employees Internal Search Informal Contacts Walk-ins Public Employment Agencies Want Ads Private Employment Agencies 94 92 71 52 48 22 Managerial Level Internal Search Informal Contacts Walk-ins Private Employment Agencies Want Ads Public Employment Agencies 100 71 31 20 17 12
- 54. 54 As Jucius observes, trade unions are playing an increasinglyimportant role in labour supply. In several trades, theysupplyskilled labour insufficient numbers. Theyalso determine the orderinwhichemployees are to berecruited inthe organisation. Inindustries where theydo not take active part inrecruitment, they make it a point that employees laid offare givenpreference in recruitment. Application files also forms a usefulsourceofsupplyofwork force.Attempts maybe madeto reviewthe applicationto determinejobs for whichthecandidates filed for futureuse whenthere areopeningsinthese jobs. The candidatesmaybe requested to renew their cards as manytimes as theydesire.Allthe renewed cards may be placed in “active” files and those not renewed for considerable time may be placed in “inactive” file or destroyed. Indeed, a well-indexed application file provides utmost economy fromthe standpoint ofa recruiting budget. Efficacy of alternative sources of supplyofhuman resources should be determined through research. Attemptsmaybemadeto relatethefactorofsuccessonthe jobwitha specificsourceofsupply.Alternative sources can also be evaluated in terms of turnover, grievances and disciplinaryaction. Those sources which are significantlypositivelyrelated withjob performance and significantlynegativelyrelatedwith turnover, grievances and disciplinary action, canbe effectively used in recruitment programmes. The assessment should be periodicallyperformed interms ofoccupations. It maybe that source “A” is most effective for technicalworkers, while source “B” for semiskilled workers. Advantages ofExternal Recruitment: Externalsources ofrecruitment are suitable for the following reasons: It willhelp inbringing new ideas, better techniques and improved methods to the organisation. The cost of employees will be minimised because candidates selected in this method will be placed in the minimumpayscale. The existingemployees willalso broadentheir personality. The entryofqualitative persons fromoutside willbe in theinterest ofthe organisationin the long run. The suitablecandidates with skill, talent, knowledge are available fromexternalsources. The entryofnew persons withvaried expansionand talent willhelp inhumanresource mix. Disadvantages of External Sources: Orientationandtraining are required asthe employees remain unfamiliarwiththe organisation. It is more expensive and time-consuming. Detailedscreening is necessaryas verylittle is known about the candidate. Ifnewentrantfails to adjust himselfto theworkingintheenterprise, it meansyet more expenditure onlookingfor his replacement. Motivation, morale and loyalty ofexisting staffare affected, ifhigher level jobs are filled from external sources. It becomes a source of heart-burning and demoralisation among existing employees. 4.7 Methods of Recruitment Methods ofrecruitment are different fromthe sources ofrecruitment. Sources are the locations where prospective employees are available. On the other hand, methods are wayofestablishing links with the prospective employees. Various methods employed for recruiting employees may be classified into the followingcategories:
- 55. 55 1. Direct Methods: These include sending recruiters to educationaland professionalinstitutions, employees, contacts with public, and manned exhibits. One of the widely used direct methods is that of sending ofrecruitersto colleges and technicalschools. Most college recruitingis done inco-operationwiththe placement office ofacollege.Theplacementofficeusuallyprovideshelpinattractingstudents,arranginginterviews, furnishing space, and providing student resumes. For managerial, professionaland sales personnelcampus recruiting is anextensive operation. Persons reading for MBAor other technicaldiplomas are picked up in this manner. For this purpose, carefully prepared brochures, describing the organisation and the jobs it offers, are distributed among students, before theinterviewer arrives. Sometimes, firmsdirectlysolicit informationfromtheconcerned professors about students with an outstanding record. Manycompanies have found employees contact with the publicaveryeffectivemethod. Otherdirectmethodsincludesendingrecruiterstoconventionsandseminars, setting up exhibits at fairs, and using mobile offices to go to the desired centres. Table 4.2: Methods of Contacting Prospective Candidates 2. Indirect Methods: The most frequentlyused indirect method ofrecruitment is advertisement innewspapers, journals, and on the radio and television. Advertisement enables candidates to assess their suitability. It is appropriate whenthe organisationwants to reachout to a large target groupscattered nationwide. Whena firmwants to concealits identity, it can give blind advertisement in which onlybox number is given. Considerable details about jobs and qualifications canbe givenin the advertisements.Another method ofadvertising is a notice-board placed at the gate ofthe company. 3. Third-Party Methods: The most frequently used third-party methods are public and private employment agencies. Public employment exchanges have been largelyconcerned with factoryworkers and clericaljobs. They also provide help in recruiting professionalemployees. Private agencies provide consultancyservices and charge a fee. Theyare usuallyspecialisedfor different categories ofoperatives, office workers, salesmen, Based on personnel to be recruited Managerial/technical personnel Operative personnel Advertisement Internet Walk-ins Campus recruitments Job fairs Consultancy firms Personnel contacts Poaching and raiding Public employment exchanges Labour unions Employee referrals Gate hiring Labour contractors Based on the movement of the organisation Direct methods Third party method Advertisement Internet recruiting Campus recruitment Job fairs Personnel contacts Gate hiring Consultancy firms Public employment exchanges Labour unions Employee referrals Labour contractors
- 56. 56 supervisoryandmanagementpersonnel. Otherthird-partymethodsincludetheuseoftradeunions. Labour- management committees have usually demonstrated the effectiveness of trade unions as methods of recruitment. Severalcriteriadiscussed intheprecedingsectionfor evaluating sourcesofapplicants canalsobeused for assessing recruitingmethods.Attempts should bemade to identifyhowthe candidate was attractedtothe company. To accomplishthis, the applicationmayconsist ofanitemasto how the applicant came tolearn about the vacancy. Then, attempts should be made to determine the method which consistentlyattracts goodcandidates.Thus, themost effectivemethodshouldbeutilisedto improvetherecruitment programme. 4.8 Philosophies of Recruitment There are basicallytwo philosophies ofrecruitment: Traditional Realistic The traditionalphilosophyis to get as manypeople as possible to applyfor the job. As a result ofthis, a large number ofjob seekers apply for the job, which makes the finalselection process difficult andcan oftenresultintheselectionofwrongcandidates.Wrongselectioncan,inturn,leadto employeedissatisfaction and turnover inthe long run. In realistic philosophy, the needs ofthe organisation are matchedwith the needs ofthe applicants,which enhancethe effectivenessofthe recruitment process.Inrealisticapproach, the employeeswho arerecruited willstayinthe organisation for a longer period oftime and willperformat higherlevelofeffectiveness. Table 4.3 : Difference between Traditional and Realistic Job Preview 4.9 Summary Recruitment formsa step intheprocess whichcontinues withselectionand ceases withthe placementof the candidate. It is the next step in the procurement function, the first being the manpower planning. Recruiting makesit possible to acquirethe number and typesofpeople necessaryto ensure the continued operation ofthe organisation. Thus, recruitment process is concerned withthe identificationofpossible sources ofhuman resource supplyand tapping those sources. Recruitment process involves five elements, viz., a recruitment policy, a recruitment organisation,the development ofsources ofrecruitment, and different techniques used for utilising these sources, and a method ofassessingthe recruitment programme.Afterthe finalisation ofrecruitment plan indicatingthe Traditional Job Preview Realistic Job Preview Setting unrealistic and high job expectations. Setting realistic job expectations. Job is viewed by the candidates as highly attractive Attractiveness of job is evaluated in the light of realistic job expectations High rate of acceptance of job offers. Some accept and some reject job offers. High expectation belied by actual job experience Expectations are confirmed by job experience. Creations of dissatisfaction, frustration and thoughts for leaving the job Creation of satisfaction in the light of job expectations. High rate of personnel turnover and lower rate of job survival High rate of personnel retention and high rate of job survival
- 57. 57 number and type ofprospective candidates, theymust be attracted to offer themselves for consideration to their employment. This necessitates the identificationofsources fromwhich these candidates canbe attracted. Somecompanies tryto develop new sources, while most onlytryto tacklethe existing sources theyhave. These sources, accordingly, maybe termed as internaland external. Methods ofrecruitment are different fromthe sources ofrecruitment. Sources are the locations where prospective employees are available. On the other hand, methods are wayofestablishing links with the prospective employees.Various methods employed for recruiting employees maybeclassified into direct methods, indirect methods and third partymethods. 4.10 Self Assessment Questions 1. Define recruitment andidentifythe various factorswhichaffect recruitment. 2. Discuss the stepsofrecruitment process. Howwillyou reconcile the internaland externalsources ofrecruitment? 3. Discuss varioussources ofrecruitment. 4. What isrealistic job preview? How does it differ fromtraditionaljob preview? 5. What do youmeanbyrecruitment policy?Explainthe prerequisites ofagood recruitment policy. 6. Write short notes onfollowing. (i) Advantages anddisadvantages ofinternalsources ofrecruitment. (ii) Advantages and disadvantages ofexternalsource ofrecruitment. 7. Explainthe direct, indirect and third partymethods ofrecruitment. 4.11 Reference Books - Mamoria C.B., Gankar S.V., (2006), “ATextbook ofHumanResource Management”, Himalaya Publishing House, New Delhi. - DwivediR.S., (1997),“PersonnelManagement inIndianEnterprises”,GalgotiaPublisingCompany, New Delhi. - Devid A. DeCENZO, STEPHEN P. ROBBINS (2002), “Personnel/Human Resource Management”, Prentice HallofIndia, New Delhi. - Prasad L.M., (2005), Human Resource Management,” Sultan Chand & Sons, New Delhi. - Dessler Gary(2010), “PersonnelManagement”, PrenticeHallInternationalEditions, New Jersey. - CarrellMichaelR., Elbert Norbert F.,HatfieldRobert D. (1999),“HumanResourceManagement,” Prentice Hall, Englewood Cliffs, New Jersey.
- 58. 58 Unit - 5 : Selection Structure of Unit: 5.0 Objectives 5.1 Introduction:Selection 5.2 SelectionProcedure 5.3 SelectionDecisionOutcomes 5.4 Placement –Orientation - Socialization 5.5 Summary 5.6 SelfAssessment Questions 5.7 Reference Books 5.0 Objectives After completingthis unit, you willbe able to: Understand and defineselection and its process. Understand the selectionprocess so as to make it effective. Explainhowthe finalselectiondecisionis made. Point out the outcomes ofselectiondecision. Understand inbriefabout placement and orientation. Develop a selection decision process. 5.1 Introduction: Selection Humanresourceselectionisthe processofchoosingqualified individualswho areavailable to fillpositions in anorganization. In the idealpersonnelsituation, selectioninvolves choosing the best applicantto filla position. Selection is the process ofchoosing people by obtaining and assessing information about the applicants with a view to matching these with the job requirements. It involves a carefulscreeningand testing ofcandidates who have put in their applications for any job in the enterprise. It is the process of choosing themost suitable personsout ofallthe applicants. Thepurpose ofselectionis to pick uptheright person for every job. It canbeconceptualised interms ofeither choosing the fit candidates, or rejecting the unfit candidates, or a combinationofboth. Selectioninvolves bothbecause it picks up the fits andrejects the unfits.Infact, in Indian context, there are more candidates who are rejected than those who are selected in most ofthe selectionprocesses. Therefore,sometimes, it iscalleda negativeprocessincontrast to positiveprogramme ofrecruitment. According to DaleYoder, “Selectionis the process inwhichcandidates for employment are divided into two classes-those who are to be offered employment and those who are not”. According toThomas Stone, “Selectionis the processofdifferentiatingbetween applicants inorder to identify(and hire) those with a greater likelihood ofsuccess in a job”. In the words of Michael Jucius, “The selection procedure is the system of functions and devices adopted in a given company for the purpose of ascertaining whether or not candidates possess the qualifications called for bya specific jobor for progressionthrough a series ofjobs.” According to Keith Davis, “Selection is the process by which an organisation chooses from a list of screened applicants, the personor personswho best meet theselectioncriteria for thepositionavailable.”
- 59. 59 Thus, the selectionprocess is a toolinthe hands ofmanagement to differentiate betweenthe qualified and unqualified applicants byapplying various techniques suchas interviews, tests etc. The cost incurred in recruiting andselecting anynew employeeis expensive. The cost ofselecting people who are inadequate performers or who leave the organisation before contributing to profits proves a major cost of doing business. Decenzo and Robbins write, “Proper selection of personnel is obviously an area where effectiveness- choosingcompetent workers who performwellintheir position-canresult inlarge saving.” According to them, selectionhas two objectives: (1) to predict which job applicants wouldbe successful ifhired and(2) to informandsellthe candidate on thejoband the organization. Satisfactionofemployee needs andwants as wellasthe fullest development ofhis potentialare important objectives ofselection. Dale Yodersays, “Selectionhas long held a high rank in the priorityofproblem areas in management. Investments in good people produce a veryhigh rate of return. Agood choice ofpeople can provide a basis forlong, sustained contributions.” Difference between Recruitment and Selection: Difference between recruitment and selection has been described by Flippo as, “Recruitment is a process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organisation. It is often termed positive as is stimulates people to applyfor jobs, selectionon the other hand tends to be negative because it rejects a good number ofthose who apply, leaving onlythe best to be hired.” Recruitment and selection differs in followingmanner: 1. Differencein Objective:Thebasic objectiveofrecruitment isto attract maximumnumberofcandidates so that more options are available. The basic objective ofselection is to choose best out ofthe available candidates. 2. Difference is Process:Recruitment adopts the processofcreating applicationpoolas largeas possible and therefore. It is known as positive process. Selection adopts the process through which more and more candidates are rejected and fewer candidates are selected or sometimes evennot a single candidate is selected. Therefore, it is knownas negative process or rejection process. 3. Technical Differences:Recruitment techniques are not veryintensive, and not require high skills.As against this, inselection process, highly specialised techniques are required. Therefore, in the selection process, onlypersonnelwith specific skills like expertise inusing selectiontests, conducting interviews, etc., are involved. 4. Difference in Outcomes: The outcome ofrecruitment is applicationpoolwhich becomes input for selection process. The outcome ofselection process is in the formoffinalising candidates who willbe offered jobs. 5.2 Selection Procedure Theselectionprocedureisconcernedwithsecuringrelevant informationaboutanapplicant.Thisinformation is secured in a number ofsteps or stages. The objective ofselection process is to determine whether an applicant meets the qualification for a specific job and to choose the applicant who is most likelyto performwellin that job. Selectionis a long process, commencing fromthe preliminaryinterview ofthe applicants and ending withthe contract ofemployment (sometimes). The selectionprocedure consists of a series ofsteps. Eachstep must be successfullycleared beforethe applicant proceeds to the next. The selectionprocess is a seriesofsuccessive hurdles orbarrierswhichan applicant must cross. These hurdles are designed to eliminate anunqualified candidate at anypointin the selectionprocess. Thus, this technique is called“Successive HurdlesTechnique”. Inpractice, the process differsamongorganisationsandbetweentwo differentjobswithinthesameorganisation. Selectionprocedure
- 60. 60 for thesenior managers willbelong drawn and rigorous, but it is simpleand short while hiringlower level employees. The major factors which determine the steps involved in a selection process are as follows: Selection process depends on the number ofcandidates that are available for selection. Selection process depends on the sources of recruitment and the method that is adopted for making contact withthe prospective candidates. Various steps involved in as selectionprocess depend on the type of personnelto be selected. Alltheabovefactorsare notmutuallyexclusive, rather theseoperatesimultaneously. Inanycase,thebasic objective of a selection process is to collect as much relevant information about the candidates asis possible so that the most suitable candidatesare selected.Acomprehensive selectionprocess involves the various steps as shown in Figure 5.1. Application pool from recruitment process Primary screening & interview Eliminate those who does not fulfil job requirement. Application Blank Unfavourable personnel data Selection tests Eliminate those who obtain unfavourable test score Interviews Eliminate those not meeting job and organisational requirements Background investigations Eliminate those with adverse remarks Physical examination Eliminate those not meeting physical standards Approval by appropriate authority Adopt objectivity Congratulate Check the reliability and validity Final Employment decision “ Evaluation Figure 5.1 Steps in Selection Process
- 61. 61 1. Application Pool: Application poolbuilt-up through recruitment process is the base for selection process. The basic objective at the recruitment level is to attract as much worthwhile applicationsas possible so that there are more options available at the selection stage. 2. Preliminary Screening and Interview: It is highlynoneconomic to administer and handle all the applicants. It is advantageous to sort out unsuitable applicants beforeusing the furtherselectionsteps. For thispurpose,usually,preliminaryinterviews, applicationblanklistsandshorttestcanbeused.Allapplications received are scrutinised bythe personneldepartment in order to eliminate those applicants who do not fulfilrequired qualifications or work experience or technicalskill, his application willnot be entertained. Such candidate willbe informed ofhis rejection. Preliminary interview is a sorting process in which the prospective candidates are giventhe necessary informationabout the nature ofthejoband the organisation. Necessaryinformation is obtainedfromthe candidates about theireducation, skills, experience, expectedsalaryetc. Ifthe candidate is foundsuitable, he is electedfor further screening. Thiscourtesyinterview;as it isoftencalled helpsthe department screen out obviousmisfits. Preliminaryinterview savestime andefforts ofboththe companyandthecandidate. It avoids unnecessarywaiting for the rejected candidates and waste ofmoneyon further processing ofan unsuitable candidate. Since rejection rate is highat preliminaryinterview, the interviewershouldbe kind, courteous, receptiveand informal. 3.Application BlankorApplication Form:Anapplicationblank is a traditionalwidelyaccepted device for gettinginformation froma prospective applicant whichwillenablethe management to makea proper selection. Theblank provides preliminaryinformationas wellas aidinthe interview byindicatingareas of interest anddiscussion. It is a good means ofquicklycollecting verifiable (and therefore fairlyaccurate) basic historicaldata fromthe candidate. It also serves asa convenient device for circulating information about theapplicant to appropriate membersofmanagement and asa usefuldevice forstoring information for, later reference. Many types of application forms, sometimes very long and comprehensive and sometimes brief, areused. Informationisgenerallytakenonthe following items: (a) Biographical Data: Name, father’s name, data and place of birth, age, sex, nationality, height, weight, identification marks, physical disability, if any, marital status, and number of dependants. (b)EducationalAttainment:Education(subjectsoffered and gradessecured), trainingacquired in special fields and knowledge gained from professional/technical institutes or through correspondence courses. (c) Work Experience: Previous experience, the number of jobs held with the same or other employers, includingthenatureofduties, andresponsibilitiesandthedurationofvariousassignments, salaryreceived, grades, and reasons for leaving the present employer. (d) Salary and Benefits: Present and expected. (e) Other Items: Names and addresses ofprevious employers, references, etc.An application blank is a briefhistorysheet ofan employee’s background and can be used for future reference, in case needed. The applicationblankmust be designed fromthe viewpoint ofthe applicant as wellaswith the company’s purpose inmind. It should be relativelyeasyto handle inthe employment office.Applicationformhelps to servemanyfunctionslike:
- 62. 62 Its main usefulness is to provide information for reference checking, good interviewing, and correlationwithtestingdata. It helpsto weed out candidateswho are lacking ineducation, experience or someother eligibility traits. It helps informulating questions to be askedin the interview. Data contained inapplication formcanbe stored for future reference. It also tests the candidate’s abilityto write, to organize his thoughts, and to present facts clearly and succinctly. It indicates further whether the applicant has consistentlyprogressed to better jobs. It provides factualinformation. WeightedApplication Blanks Some organisations assignnumeric values or weights to the responses provided bythe applicants. This makes the application formmore job related. Generally, the items that have a strong relationship tojob performance are given higher scores. For example, for a sales representative’s position, items suchas previous selling experience, area ofspecialisation, commission earned, religion, language etc. Thetotal score of each applicant is then obtained by adding the weights of the individual item responses. The resulting scores are then used in the final selection. WAB is best suited for jobs where there are many employees especiallyfor sales and technicaljobs. It can help in reducing the employee turnover later on. However, there are severalproblems associated withWAB e.g. It takes time to develop sucha form. TheWABwouldhave to beupdated everyfew yearsto ensurethat thefactors previouslyidentified are stillvalid products ofjob success. The organisationshould be carefulnot to depend onweightsofa few items while finallyselecting the employee. 4. Selection Tests: Many organisations hold different kinds ofselection tests to know more about the candidates or to reject the candidates who cannot be called for interview etc. Selection tests normally supplement the informationprovided intheapplicationforms. Suchformsmaycontainfactualinformation about candidates. Selection tests maygive information about their aptitude, interest, personality,which cannot be knownbyapplication forms. Types oftests and rules ofgood oftesting havebeendiscussed in briefbelow: A. AptitudeTests:These measurewhether an individualhasthe capacityor talent abilityto learna given job ifgiven adequate training. These aremore usefulfor clericaland trade positions. B. Personality Tests:At times, personalityaffects job performance. These determine personality traits ofthe candidate such as cooperativeness, emotionalbalance etc. These seek to assess an individual’smotivation,adjustment tothestressesofeverydaylife, capacityforinterpersonalrelations and self-image. C. Interest Tests: These determine the applicant’s interests. The applicant is asked whether he likes, dislikes, or is indifferent to many examples ofschoolsubjects, occupations, amusements, peculiarities ofpeople, and particular activities.
- 63. 63 D. Performance Tests:Inthis test the applicant is asked to demonstrate his abilityto do the job. For example, prospective typists are asked to type severalpages withspeed and accuracy. E. Intelligence Tests:Thisaimat testing the mentalcapacityofa person with respect to reasoning, wordfluency, numbers, memory, comprehension, picturearrangement, etc. It measuresthe ability to grasp, understandand to make judgement. F. Knowledge Tests: These are devised to measure the depth ofthe knowledge and proficiencyin certainskillsalreadyachieved bythe applicants such as engineering, accounting etc. G. AchievementTests:Whereasaptitudeis acapacityto learninthe future, achievement is concerned withwhat onehas accomplished. Whenapplicantsclaimto know something, anachievement test is givento measure how welltheyknow it. H. Projective Tests: In these tests the applicant projects his personality into free responses about pictures shownto himwhichare ambiguous. Rules of Good Testing Norms should be developed for eachtest. Their validityandreliabilityfor a givenpurpose should be established before they are used. Adequate time and resources must be provided to design, validate, and check tests. Tests should be designed and administered onlybytrained andcompetent persons. The user oftests must be extremelysensitive to the feelings ofpeople about tests. Tests are to be uses as a screening device. Reliance should not be placed solelyupon tests in reaching decisions. Tests shouldminimize the probabilities ofgetting distorted results. Theymust be ‘race-free’. Tests scores are not precise measures. Theymust be assigned a proper weightage. 5. Interview: An interview is a procedure designed to get information froma person and to assess his potentialfor the jobhe isbeing considered onthebasis oforalresponses bythe applicant to oralinquiries bythe interviewer. Interviewer does a formalin-depth conversation with the applicant, to evaluatehis suitability. It isoneofthe most important tools inthe selectionprocess. This toolisusedwheninterviewing skilled, technical,professionalandevenmanagerialemployees.It involvestwo-wayexchangeofinformation. The interviewerlearns about the applicant and the candidate learns about the employer. Objectives of Interviews: Interview helps: To obtainadditionalinformationfromthe candidate. Facilitates giving to the candidate information about the job, company, its policies, products etc. To assess the basic suitabilityofthe candidate. The selectioninterview canbe: One to one betweenthe candidate and the interviewer: Two or moreinterviewers byemployers representatives-sequential; Bya panelofselections, i.e., bymore than representative ofthe employer. Thesequentialinterviewinvolvesa series ofinterviews;eachinterviewermeetingthe candidate separately. The panelinterview consists oftwo or more interviews meeting the candidate together. Types of interviews: Interviews can be classified in various ways according to: (A) Degree ofStructure (B) Purpose ofInterview (C) Content ofInterview
- 64. 64 (A) Degree of Structure: (1) Unstructured or non directive:inwhichyou ask questions as theycome to mind. There is no set format to follow. (2) Structured ordirective: inwhich the questions and acceptable responses are specified in advance. The responses are rated for appropriateness ofcontent. Structured and non-structuredinterviews have their prosand cons. Instructuredinterviews allapplicants are generallyasked allrequired questions byall interviewers. Structured interviews are generallymore valid. However structured interviews do not allow the flexibility to pursue points of interests as they develop. (B) Purpose of Interview:Aselectioninterview is a type ofinterview designed to predict future job performance, on the basis ofapplicant’s responses to the oralquestions asked to him. A stress interview is a special type of selection interview in which the applicant is made uncomfortablebyseriesofawkward and rudequestions. Theaimofstressinterviewis supposedly to identifyapplicant’s low or high stress tolerance. In such an interview the applicant is made uncomfortablebythrowinghimonthedefensivebyseriesoffrankandoftendiscourteousquestions bythe interviewer. (C) Content of Interview:The content ofinterview can be ofa type in whichindividual’s abilityto project asituationis tested.Thisisasituationtypeinterview.Injob-related interview,interviewer attempts to assessthe applicant’s past behavioursfor jobrelated information, but most questions are not considered situational. In a behaviour interview a situation in described and candidates are asked how theybehaved in the past in sucha situation. While insituationalinterviews candidates are asked to describe how theywould react to situationtodayor tomorrow. Inthe behaviouralinterview theyare asked to describehow theydid react to the situation inthe past. Principles of Interviewing To makeit effective, aninterviewshould be properlyplannedand conducted oncertainprinciples; Edwin B. Flippo hasdescribed certainrules andprinciples ofgood interviewing to this end: Provide proper surroundings. The physical setting for the interview should be both private and comfortable. Thementalsettingshouldbeoneofrapport.Theinterviewermust beawareofnon-verbalbehaviour. Planforthe interview bythoroughlyreviewing jobspecifications andjobdescriptions. Determine the specificobjectives and the method ofthe interviewing. Informyourselfas muchas possibleconcerning the known informationabout the interviewee. The interviewer should possess and demonstrate a basic liking and respect for people. Questions should be asked ina manner that encourages theinterviewee to talk. Put the applicant at ease. Make a decision only when allthe data and information are available.Avoid decisions that are based onfirst impressions. Conclude the interview tactfully, making sure that the candidate leaves feelingneither too elated norfrustrated. Maintainsomewrittenrecord oftheinterview during or immediatelyafter it. Listenattentivelyand, ifpossible, protectively.
- 65. 65 Questions must be stated clearlyto avoid confusion and ambiguity. Maintaina balance between open andovertlystructured questions. ‘Bodylanguage’must not be ignored. The interviewer shouldmake some overt signto indicate the endofthe interview. Interviewing is largelyanart, the applicationofwhichcan beimproved throughpractice. 6. Background Investigation: The next step in the selectionprocess is to undertake aninvestigation of those applicantswhoappearto offerpotentialasemployees. Thismayincludecontactingformeremployers to confirmthe candidate’s work record and to obtain theirappraisalofhis orher performance/ contacting other job-relatedand personalreferences, and verifying the educationalaccomplishmentsshown on the application. Thebackgroundinvestigationhas major implications. Everypersonneladministratorhasthe responsibility to investigate eachpotentialapplicant. Insomeorganization, failure to do so could result intheloss ofhis or her job. But manymanagers consider the background investigation data highlybiased. Who would actuallylist a reference that wouldnot give anything but the best possible recommendation?Theseasoned personneladministrator expects this and delves deeper into the candidate’s background, but that, too, may not prove to be beneficial. Many past employers are reluctant to give anyinformation to another companyotherthanfactualinformation(e.g., date ofemployment). Even though there is some reluctance to give this information, there are ways in which personnel administrators can obtainit. Sometimes, for instance information can be obtained fromreferences once removed. For example, the personneladministrator canask a reference whose name has been provided on the application formto giveanother reference, someone who has knowledge ofthe candidate’s work experience. Bydoingthis, the administrator caneliminate the possibilityofacceptingan individualbased on the employee’scurrent employer’s glowing recommendationwhenthe motivation for such a positive recommendation was to get rid ofthe employee. 7. PhysicalExamination: After theselection decision andbefore the job offer is made, the candidate is required to undergo physical fitness test. Candidates are sent for physical examination either to the company’sphysicianorto a medicalofficerapprovedforthe purpose. Suchphysicalexaminationprovides thefollowinginformation. Whether the candidate’s physicalmeasurements are in accordance withjobrequirements or not? Whether the candidate suffers frombad health whichshould be corrected? Whetherthe candidatehas healthproblems orpsychologicalattitudes likelytointerfere withwork efficiencyorfuture attendance? Whether the candidate is physicallyfit for the specific jobor not? Policyonthese physicalexams has changed today. DaleYoder writes, “Modempolicyusedthe physical examinationnot to eliminateapplicants, butto discover what jobstheyare qualifiedtofill. The examination should disclosethe physicalcharacteristics ofthe individualthat aresignificant fromthe standpoint ofhis efficient performance ofthe job he may enter or ofthose jobs to whichhe may reasonablyexpect tobe transferredorpromoted. It shouldnotedeficiencies, not asabasisfor rejection, butas indicatingrestrictions onhis transferto various positions also.” 8. Approval by Appropriate Authority: On the basis of the above steps, suitable candidates are recommendedfor selectionbythe selectioncommitteeorpersonneldepartment. Thoughsucha committee or personneldepartment mayhave authorityto select the candidatesfinally, oftenit hasstaffauthorityto recommend the candidates for selection to the appropriate authority. Organisations may designate the
- 66. 66 variousauthorities forapprovaloffinalselectionofcandidates for different categoriesofcandidates. Thus, for top levelmanagers, board ofdirectors maybe approving authority; for lower levels, even functional heads concerned maybe approving authority. 9. Final Employment Decision:After a candidate is finally selected, the humanresource department recommends his namefor employment. The management or board ofthe companyoffers employment in the formofan appointment letter mentioning the post, the rank, the salarygrade, the date bywhichthe candidate should join and other terms and conditions of employment. Some firms make a contract of service onjudicialpaper. Usuallyanappointment is made onprobation in the beginning. The probation period mayrange fromthree months to two years. When the workand conduct ofthe employee is found satisfactory, he may be confirmed. The personnel department prepare a waiting list and informs the candidates. In case a person does not join after being selected, the company calls next person on the waitinglist. 10. Evaluation: The selection process, ifproperlyperformed, willensure availabilityofcompetent and committed personnel.Aperiod audit, conductedbypeople who work independentlyofthehumanresource department, willevaluate the effectiveness ofthe selection process. The auditors willdo a thoroughand the intensiveanalysis and evaluate theemployment programme. 5.3 Selection Decision Outcomes Consider, for a moment, that anyselection decision can result in four possible outcomes.As shown in Figure 5.2, two ofthese outcomes would indicate correct decisions, but two would indicate errors. Correct decisions are those where the applicant was predicted to be successfuland later did prove to be successfulonthe job, or where the applicant was predictedto be unsuccessfulandwould have performed accordinglyifhired. Intheformercase, wehavesuccessfullyaccepted;inthelattercase, wehavesuccessfully rejected. Thus the purpose ofselectionactivities is to developoutcomes shown as “correct decisions” in Figure 5.2. Problems occur whenwe make errors-byrejecting candidates who would later performsuccessfullyon the job(reject errors) or accepting those individuals who subsequentlyperformpoorlyonthejob(accept errors). These problems are, unfortunatelyfar frominsignificant. Reject errors historicallymeantthat the costs inperforming selection activities would be increased.Accept errors, on the other hand, havevery obvious costs to the organization including the cost of training the employee, the costs generated (or profits forgone)due to the employee’s incompetence, the cost ofseverance and thesubsequent costsof furtherrecruitingand selectionscreening.Themajor thrust ofanyselectionactivity, therefore, isto reduce the probability of making reject or accept errors while increasing the probability of making reject or accept errors whileincreasing the probabilityofmaking correct decisions. Correct decision Reject error Accept error Correct decision Successful Unsuccessful Accept Reject Later Job Pertorma nce Figure 5.2: Selection Decision Outcomes
- 67. 67 Insummary, selectionhave two objectives:(1) to predict whichjobapplicants would besuccessfulifhired and (2) to informandsellthecandidateonthejoband the organization. Unfortunately, thesetwo objectives are not always compatible Putting a job candidate through hours of filling out forms, taking tests,and completing interviews rarelyendears the organization to the candidate. These are tiresome and often stressfulactivities.Yet ifthe selectionactivities place too great anemphasis on publicrelations, obtaining the information neededto make successfulselectiondecisions maybe subordinated. Hence a manager’s dilemma in selection is how to balance the desire to attract people with the desire to gather relevant selectiondata. 5.4 Placement – Orientation - Socialization Afteranemployeehasbeenrecruitedhe isprovidedwithbasicbackgroundinformationabout theemployer, working conditions and the information necessaryto performhis job satisfactorily. The new employee’s initialorientationhelpshimperformbetterbyprovidinghiminformationofthecompanyrules,andpractices. According to Pigors and Myers, “Placement consists in matching what the supervisor has reason to think the newemployeecando with what the jobdemands(jobrequirements), imposes(instrain, working conditions, etc.), and offers (in the formof pay rate, interest, companionship with other, promotional possibilities, etc.)”Theyfurther state that it is not easyto matchallthesefactors for a new worker who is stillinmanywaysanunknownquantity.For this reason, thefirstplacement usuallycarrieswithitthe status ofprobationer. A few basic principles should be followed at the time of placement of an employee on the job. These may be enumerated as below: The jobshould beoffered to the manaccording tohis qualifications. The placement should neither be higher norlower thanthe qualifications. While introducing the job to the new employee, an effort should be made to develop a sense of loyaltyandcooperationinhimso that he mayrealisehis responsibilities better towardsthejoband theorganisation. The employee should be made conversant withthe working conditions prevailing in the industry and allthings relating to the job. He should also be made aware ofthe penalties ifhe commits a wrong. Manshould be placed onthe jobaccording to the requirements ofthe job. The jobshould not be adjusted accordingto the qualifications orrequirements ofthe man. Jobfirst;mannext, should be the principleofplacement. The placement should be readybefore thejoining date ofthe newlyselected person. The placement inthe initialperiodmaybe temporaryas changes are likelyafterthe completionof training. The employee maybe later transferred to the jobwhere he can do better justice. In the wordsofJohn M. Ivancevich, “Orientationorients, directs, and guidesemployees to understand the work, firm, colleagues, and mission. It introduces new employees to the organisation, and to hisnew tasks, managers, and work groups.” AccordingtoJohn Bernardin,“Orientationisatermusedfortheorganizationallysponsored, formalized activities associatedwithan employee’s socialisationinto the organisation.”
- 68. 68 Billimoria has definedorientation as,“Induction (orientation) isa technique bywhicha new employee is rehabilitated into the changed surroundings and introduced to the practices, policies, and purposes of theorganisation.” Orientation is one component ofthe new employee socialization process. Socialization is the ongoing process ofinstillinginallnew employeesprevailing attitudes, standards, values, patternsofbehaviour that are expected bythe organisationand its departments. Thus, orientation is a process through whicha new employee is introduced to the organisation. It isthe process wherein an employee is made to feel comfortable and at home in the organisation. The new employee is handedover a rulebook, companybooklets, policymanuals, progressreports and documents containingcompanyinformationwhichareinformationalinnature. It isresponsibilityofthehumanresource department to executethe orientationprogramme. 5.5 Summary Selectionistheprocess ofpickingupindividuals out ofthepoolofthe jobapplicants withrequisite qualifications and competence to filljobs inthe organisation. Proper selectioncan minimize the costs ofreplacement and training, reduce legalchallenges, and result ina more productive work force. The discrete selectionprocess would includethe following. a.ApplicationPool, b. PreliminaryScreening and Interview, c.ApplicationBlank orApplication Form, d. SelectionTests, e. Interview f. BackgroundInvestigation, g. PhysicalExamination, h.ApprovalbyAppropriateAuthority, i. FinalEmployment Decision, j. Evaluation Selection process involves mutualdecision making. The organisation decides whether or not to make a job offer and how attractive the job offer should be. The candidate decides whether or not the organisation and the job offer is according to his goals and needs. Selection of proper personnelhelpsthe management in getting the work done bythe people effectively. To be aneffective predictor, a selectiondevice should be a. Reliable b. Valid c. Predict a relevant criterion InIndiathe selectionprocess onhiring skilled and managerialpersonnelare fairlywelldefined and systematicallypractical. 5.6 Self Assessment Questions 1. What do you understand byselectionprocess?Discuss various stepsinvolved in it. 2. What is applicationblank?What purpose does it serve? Explain the contents ofan application blank.
- 69. 69 3. Discuss thecharacteristics ofagoodtest. Explainvarioustypesoftests usedintheselectionprocess. 4. What is aninterview? What purpose doesit serve? Discuss various types ofinterviews. 5. Discuss variousguidelines to be followedfor aninterview. 6. Explainvarioussteps involved in theselectionofpersonnel. 7. What do you understand byplacement and orientation? 5.7 Reference Books - Mamoria C.B., Gankar S.V., (2006), “ATextbook ofHumanResource Management”, Himalaya Publishing House, New Delhi. - DwivediR.S., (1997),“PersonnelManagement inIndianEnterprises”,GalgotiaPublisingCompany, New Delhi. - Devid A. DeCENZO, STEPHEN P. ROBBINS (2002), “Personnel/Human Resource Management”, Prentice HallofIndia, New Delhi. - Prasad L.M., (2005), Human Resource Management,” Sultan Chand & Sons, New Delhi. - Dessler Gary(2001), “PersonnelManagement”, PrenticeHallInternationalEditions, New Jersey. - CarrellMichaelR., Elbert Norbert F.,HatfieldRobert D. (1999),“HumanResourceManagement,” Prentice Hall, Englewood Cliffs, New Jersey. - Mamoria C.B., Rao, VSP(2012) PersonnalManagement (Text and cases), Himalays Publishing, Mumbai.
- 70. 70 Unit -6 :Employee Training Structure of Unit: 6.0 Objectives 6.1 Introduction: Concept 6.2 Need forEmployeeTraining 6.3 Importance 6.4 Types ofEmployeeTraining 6.5 Objectives and Process ofEmployee Training 6.6 Advantages ofOnthe JobTraining Methods 6.7 Summary 6.8 SelfAssessment Questions 6.9 Reference Books 6.0 Objectives After completingthis unit, you wouldbe able to: Understand various aspects ofthe training designprocess; Classifythevarious training methods; Point out variousfactors affecting training decisions; Know about various objectives ofemployee training; Learnandappreciate the significance ofemployee training; Understand difference between onthe job and offthe job training. 6.1 Introduction : Concept Training is a processoflearning asequence ofprogrammed behavior. It is the applicationofknowledge & gives people anawareness ofrules&proceduresto guide theirbehavior. It helps inbringing aboutpositive change inthe knowledge, skills &attitudes ofemployees. Thus, trainingis a process that tries to improve skills or add to theexisting levelofknowledgeso that the employee is betterequippedto do hispresent jobor to mould himto befit for ahigherjobinvolvinghigher responsibilities. It bridges the gap between what the employee has & what the job demands. Trainingrefersto aplannedeffortbyacompanytofacilitateemployees’learningofjobrelatedcompetencies. Thesecompetencies includeknowledge, skills, or behaviorsthat arecriticalforsuccessfuljobperformance. The goaloftraining is foremployees to master theknowledge, skill, and behaviorsemphasized intraining programs and to apply them to their day to day activities. Training is seen as one of several possible solutionstoimproveperformance. Othersolutionscanincludesuchactionsaschangingthejoborincreasing employee motivationthrough payand incentives. Todaythere is a greater emphasis on- Providingeducationalopportunitiesforallemployees. Theseeducationalopportunitiesmayinclude training programs, but theyalso include support for taking courses offeredoutside the company, self-study, and learningthroughjobrotation. Anongoingprocess ofperformanceimprovementthat isdirectlymeasurableratherthanorganizing onetimetraining events. The needto demonstrate to executives, managers, and trainees the benefits oftraining. Learning as a lifelong event in whichsenior management, trainer manager, and employees have ownership.
- 71. 71 Training being used to help attain strategic business objectives, which help companies, gains a competitive advantage. The term training refers to the acquisition of knowledge, skills, and competencies as a result of the teaching ofvocationalor practical skills and knowledge that relate to specific useful competencies. It forms the core ofapprenticeships and provides the backbone ofcontent at institutes oftechnology(also knownastechnicalcollegesorpolytechnics).Inadditionto thebasictrainingrequiredforatrade,occupation or profession, observers of the labor-marketrecognize as of 2008[update] the need to continue training beyond initialqualifications:to maintain, upgradeandupdate skills throughout workinglife. People within manyprofessions andoccupations mayrefer to this sort oftrainingas professionaldevelopment. Training usuallyrefersto some kind oforganized (and finite it time)event — a seminar, workshop that has a specificbeginning data and enddate. It’s oftenagroup activity, but theword training is also used to refer to specific instructiondone one onone. Employee development, however, is a muchbigger, inclusive “thing”. Forexample, ifa managerpairsup a relativelynew employee witha more experienced employee to help the new employee learns about the job, that’s reallyemployee development. Ifa manager coaches and employee in an ongoing way, that’s employee development. Or, employees may rotate jobresponsibilities to learn about the jobs of their colleaguesandgainexperienceso theymighteventuallyhavemorepromotionopportunities.That’semployee development. In other wordsemployee development is a broader termthat includes trainingas one, and onlyone ofits methods for encouragingemployee learning. The important point here is that different activities arebetter for the achievement ofdifferent results. For example, ifthe desire is provide an employee with a better understanding ofhowthe department works, jobrotationmight work verywell. Ifthe goalis to improve the employee’s ability to use a computer based accounting package direct training would be more appropriate than, let’s say, job rotation. TRAININGAND DEVELOPMENT OBJECTIVES The principalobjectiveoftraining anddevelopment divisionis to makesure the availabilityofa skilled and willing workforce to an organization. In addition to that, there are four other objectives: Individual, Organizational, Functional, and Societal.Training anddevelopment is asubsystemofanorganization. It ensures that randomnessis reduced and learning or behaviouralchange takes place instructured format. Individual Objectives – help employees in achieving their personalgoals, which inturn, enhances the individualcontributionto anorganization. Organizational Objectives – assist the organization with its primaryobjective bybringing individual effectiveness. FunctionalObjectives –maintainthe department’s contribution at a levelsuitable to the organization’s needs. Societal Objectives – ensure that an organization is ethically and sociallyresponsible to the needs and challenges ofthe society. The quality of employees and their development through training and education are major factors in determining long-termprofitability ofa smallbusiness. Ifyou hire and keep good employees, it isgood policyto invest inthe development oftheir skills, so theycanincrease their productivity. Training oftenis consideredfor newemployeesonly. This isa mistake becauseongoingtrainingforcurrent employees helps themadjust to rapidlychanging job requirements. Reasons for emphasizing the growth and development ofpersonnelinclude
- 72. 72 Creating a poolofreadilyavailable and adequate replacements for personnelwho mayleave or moveupintheorganization. Enhancing thecompany’sabilityto adopt anduseadvancesintechnologybecauseofa sufficiently knowledgeable staff. Building amore efficient, effective and highlymotivated team, whichenhances the company’s competitive position andimproves employee morale. Ensuring adequatehumanresources for expansioninto new programs. Research has shownspecific benefits that a smallbusinessreceives fromtraining anddeveloping its workers, including: Increased productivity. Reduced employee turnover. Increasedefficiencyresultinginfinancialgains. Decreased needfor supervision. Employees frequentlydevelop a greater sense ofself-worth, dignityand well-being astheybecome more valuable to the firmand to society. Generallytheywillreceive a greater share ofthe materialgains that result from their increased productivity. These factors give them a sense of satisfaction through the achievement ofpersonaland companygoals. 6.2 Need for Employee Training Training ofemployees takes place after orientation takes place. Training is the process ofenhancing the skills, capabilities and knowledge ofemployees for doing a particular job. Training process mouldsthe thinking ofemployees and leads to qualityperformance ofemployees. It is continuousandnever ending in nature. Training isgivenonfour basic grounds: 1. Newcandidates whojoinanorganizationaregiventraining. Thistraining familiarizesthemwiththe organizationalmission, vision, rules and regulations andthe working conditions. 2. The existing employeesare trained to refresh and enhance their knowledge. 3. Ifanyupdations and amendments takeplace intechnology, trainingis givento copeup withthose changes. Forinstance, purchasing new equipment, changes intechnique ofproduction, computer impartment. The employees are trained about use ofnew equipmentsand work methods. 4. Whenpromotion and career growthbecomes important.Training is given so that employees are prepared to share the responsibilities ofthe higher leveljob. Training needs can be assessed by analyzing three major human resource areas: the organization as a whole, the job characteristics and the needs ofthe individuals. This analysis willprovide answersto the followingquestions: Where istraining needed? What specificallymust an employee learnin order to be more productive? Who needs to be trained? Beginbyassessing the current statusofthecompanyhowit does what it does best and theabilitiesofyour employees to do these tasks. This analysiswillprovide some benchmarks against whichthe effectiveness ofatraining programcanbeevaluated. Your firmshouldknow where it wantsto be infive years fromits long-range strategic plan. What you need is a training program to take your firm from here to there. Second, consider whether the organization is financiallycommitted to supporting the training efforts. If not, anyattempt to develop a solid training programwillfail.
- 73. 73 Next, determineexactlywhere training isneeded. It is foolishto implement a companywidetrainingeffort without concentrating resources where theyareneeded most.An internalaudit willhelp point out areas that may benefit from training. Also, a skills inventory can help determine the skills possessed bythe employeesingeneral. Thisinventorywillhelp theorganizationdetermine what skills are availablenowand what skills are needed for future development. Also, intoday’s market-driveneconomy, you would be remiss not to ask your customers what theylike about yourbusiness and what areastheythink should beimproved. Insummary, theanalysis should focus onthetotalorganizationand shouldtellyou (1) wheretraining is needed and(2) where it willwork within the organization. Once you have determined where training is needed, concentrate on the content ofthe program.Analyzethe characteristics ofthe job based onitsdescription, the written narrativeofwhat the employee actuallydoes. Training based on job descriptions should go into detail about how the job is performed on a task-by-task basis.Actually doing the job willenable you to get a better feelfor what is done. Individualemployees canbe evaluatedbycomparing their current skilllevels or performanceto the organization’s performance standards or anticipated needs. 6.3 Importance Trainingiscrucialfororganizationaldevelopmentandsuccess. It isfruitfulto bothemployersandemployees of an organization. An employee will become more efficient and productive if he is trained well. The benefits oftraining canbe summedup as: 1. Improves Morale of Employees- Training helps the employee to get job security and job satisfaction. The more satisfied the employee is and the greater is his morale, the more he will contribute to organizationalsuccess and thelesser willbe employee absenteeismand turnover. 2. Less Supervision-Awelltrained employee willbe well acquainted with the joband will need less ofsupervision. Thus, there willbe less wastage oftime and efforts. 3. FewerAccidents- Errors arelikelyto occur ifthe employees lack knowledge and skills required for doingaparticular job. The moretrained anemployee is, the lessare thechances ofcommitting accidents in joband the more proficient the employee becomes. 4. Chances of Promotion- Employees acquire skills and efficiencyduring training. Theybecome more eligible forpromotion. Theybecome anasset for the organization. 5. IncreasedProductivity-Training improvesefficiencyandproductivityofemployees.Welltrained employees show bothquantityand qualityperformance. Thereis less wastage oftime, moneyand resources ifemployees are properlytrained. 6.4 Types of Employee Training Some commentator use a similar term for workplace learning to improve performance: “training and development”. One cangenerallycategorize such training as on-the-job or off-the-job: On-the-jobtraining takesplace in a normalworking situation, using the actualtools, equipment, documents or materialsthat trainees willusewhenfullytrained. On-the-jobtraininghas a general reputationas most effective for vocationalwork. Off-the-jobtraining takesplace awayfromnormalwork situations — implyingthat the employee does not countas adirectlyproductiveworker whilesuchtraining takesplace. Off-the-jobtraining has the advantagethat it allows people to get awayfromwork andconcentrate more thoroughly on the training itself. This type oftraining has provenmore effective in inculcating concepts and ideas.
- 74. 74 The most frequently used method in smaller organizations that is on the job training. This method of training uses more knowledgeable, experienced and skilled employees, suchas mangers, supervisors to givetrainingtolessknowledgeable, skilled, andexperiencedemployees. OJT canbedeliveredinclassrooms as well. This type oftraining often takes place at the work place ininformalmanner. On theJobTraining is characterized byfollowing points It is done on ad-hoc manner with no formalprocedure, or content At the start oftraining, or during the training, no specific goals or objectivesare developed Trainers usuallyhaveno formalqualificationor trainingexperience for training Training is not carefullyplanned or prepared The trainer are selected on the basis oftechnicalexpertise or area knowledge FormalOJTprograms are quitedifferentfrominformalOJT. Theseprogramsare carried out byidentifying theemployees who are having superior technicalknowledge and caneffectivelyuseone-to-oneinteraction technique. The procedureofformalonthe jobtraining programis: 1. The participant observes a more experienced, knowledgeable, andskilled trainer (employee) 2. The method, process, and techniques are well discussed before, during and after trainer has explained about performing the tasks 3. When the trainee is prepared, the trainee starts performing onthe work place 4. The trainer provides continuing direction ofwork and feedback 5. The trainee isgiven more and more work so that he accomplishes the job flawlessly The four techniques for on the job development are: COACHING MENTORING JOB ROTATION JOB INSTRUCTION TECHNIQUE (JIT) 1.) Coaching is one ofthe training methods, whichis considered as a corrective method for inadequate performance. According to a survey conducted by International Coach Federation (ICF), more than 4,000 companiesare using coachfortheir executives. These coachesare experts most ofthe time outside consultants. Acoach is the best training plan for the CEO’s because It is one to one interaction It canbe done at the convenience of CEO It can be done on phone, meetings, throughe-mails, chat It provides anopportunityto receive feedback froman expert It helps in identifying weaknesses andfocus onthe areathat needs improvement This method best suits for the people at the top because if we see on emotional front, when a person reaches the top, hegets lonelyand it becomesdifficult to find someoneto talk to. It helps infindingout the executive’s specific developmentalneeds. The needs can be identified through 60 degree performance reviews.
- 75. 75 Procedure ofthe Coaching The procedure of the coaching is mutually determined by the executive and coach. The procedure is followed bysuccessive counseling and meetings at the executive’s conveniencebythe coach. 1. Understand the participant’s job, the knowledge, skills, and attitudes, and resources required to meet the desired expectation 2. Meet the participant and mutuallyagree onthe objective that has to be achieved 3. Mutuallyarrive at a plan and schedule 4. At the job, show the participant how to achieve theobjectives, observe the performanceand then provide feedback 5. Repeat step 4 untilperformance improves For the people at middle levelmanagement, coaching is more likely done by the supervisor; however expertsfromoutsidetheorganizationareat timesusedforupandcomingmanagers.Again, thepersonalized approach assists the manger focus on definiteneeds and improvement. 2.)Mentoringisanongoingrelationshipthat isdevelopedbetweenaseniorandjunioremployee.Mentoring provides guidanceand clear understanding ofhow the organizationgoesto achieve its visionand mission to thejunior employee. The meetingsare not as structuredand regular thanincoaching. Executive mentoring isgenerallydone by someone inside the company. The executive can learn a lot from mentoring. By dealing with diverse mentee’s, the executiveis given the chance to grow professionallybydeveloping management skills and learning how to work withpeople withdiverse background, culture, and language and personalitytypes. Executives also have mentors. In caseswhere the executive isnew to the organization, a senior executive could be assigned as a mentor to assist the new executive settled into his role. Mentoring is one ofthe important methodsforpreparingthemtobefuture executives. Thismethodallows thementorto determine what is required to improve mentee’s performance. Once the mentor identifies the problem, weakness, and the area that needs to beworked upon, the mentor canadvise relevant training. The mentor can also provide opportunities to work on specialprocessesand projects that requireuse ofproficiency. Some keypoints onMentoring Mentoring focusonattitude development Conducted formanagement-levelemployees Mentoring is done bysomeone insidethe company It isone-to-one interaction It helps in identifying weaknesses andfocus onthe areathat needs improvement 3.) For the executive, job rotation takes ondifferent perspectives. The executive is usually not simply going to anotherdepartment. Insome verticallyintegrated organizations, for example, where the supplier is actuallypart ofsame organization or subsidiary, job rotation might be to the supplier to see how the business operatesfromthe supplier point ofview. Learning how the organization is perceived fromthe outside broadens the executive’s outlook on the process ofthe organization. Or the rotationmight be to a foreign office to provide a globalperspective. Formanagersbeing developedfor executiveroles, rotationto differentfunctions inthe companyisregular carried out.
- 76. 76 This approachallows the manger to operate in diverse roles and understand the different issues thatcrop up. Ifsomeone is to be a corporate leader, theymust have this type oftraining. Arecent studyindicated that thesingle most significant factor that leads to leader’sachievement was the varietyofexperiences in different departments, businessunits, cities, and countries. Anorganizedand helpfulwayto develop talent for themanagement or executivelevelofthe organization is jobrotation. It is the process ofpreparing employees at a lower levelto replace someone at thenext higherlevel. Itisgenerallydoneforthedesignationsthat arecrucialfortheeffectiveandefficient functioning oftheorganization. Some ofthe major benefits ofjob rotation are: It provides the employees with opportunities to broaden the horizon ofknowledge, skills, and abilities byworkingindifferent departments, business units, functions, and countries IdentificationofKnowledge, skills, and attitudes (KSAs) required It determines the areas where improvement is required Assessment oftheemployees who have the potentialand caliber for filling the position 4.) Job InstructionTechnique (JIT)uses a strategywithfocus onknowledge (factualand procedural), skills andattitudes development. JIT Consists of Four Steps: Plan – This stepincludes a written breakdownofthe work to be done because the trainerand the trainee must understand that documentation is must and important for the familiarityofwork.Atrainer whois aware ofthe work wellislikelyto do manythings and in theprocess might miss few things. Therefore, a structuredanalysisandproperdocumentationensuresthat allthepointsarecoveredinthetrainingprogram. The second step is to find out what the trainee knows and what training should focus on. Then, the next step is to create a comfortable atmosphere for the trainees’i.e. proper orientation program, availing the resources, familiarizingtraineewiththetrainingprogram, etc. Present – In this step, trainer provides the synopsis of the job while presenting the participants the different aspects ofthe work. When the trainer finished, the trainee demonstrates how to do thejob and whyis that done inthat specific manner. Trainee actuallydemonstrates theprocedure while emphasizing the keypoints and safetyinstructions. Figure 6.1 : Steps in JIT Trial – This step actually a kind of rehearsal step, in which trainee tries to perform the work and the trainer is ableto provide instant feedback. Inthis step, the focusis onimproving themethod ofinstruction because a trainer considers that anyerror ifoccurring maybe a function oftraining not the trainee. This step allows the trainee to see the after effects of using an incorrect method. The trainer then helps the trainee byquestioningand guiding to identifythe correct procedure.
- 77. 77 Follow-up – Inthis step, the trainer checks the trainee’s jobfrequentlyafter the training programis over to prevent bad work habits fromdeveloping. There are variousmethods oftraining, whichcanbe divided in to cognitive and behavioralmethods. Trainers need to understand the pros and cons ofeach method, also its impact ontrainees keeping theirbackground and skills inmindbefore giving training. OFF THE JOB TRAINING – There aremanymanagement development techniques that an employee cantake in offthe job. The few popular methods are: SENSITIVITY TRAINING TRANSACTIONALANALYSIS STRAIGHT LECTURES/LECTURES SIMULATION EXERCISES 1.) Sensitivity Training is about making people understand about themselves and others reasonably, which isdone bydeveloping inthemsocialsensitivityandbehavioralflexibility. Socialsensitivityin one word is empathy. It is abilityofan individualto sense what others feeland think fromtheirown point ofview. Behavioralflexibilityis abilityto behave suitablyinlight ofunderstanding. SensitivityTrainingProgramrequiresthree steps: Unfreezing the Old Values – It requiresthat the trainees become aware ofthe inadequacyofthe old values. This can be donewhen the traineefaces dilemmainwhichhis oldvalues is not able to provide proper guidance. Thefirst stepconsists ofasmallprocedure: An unstructuredgroup of10-15 peopleis formed. Unstructured groupwithout anyobjective looksto the trainer for its guidance But the trainerrefuses to provide guidanceand assume leadership Soon, thetrainees are motivated to resolve the uncertainty Then, theytryto formsome hierarchy. Some tryassume leadership role which maynot be liked byother trainees Then, theystarted realizing that what theydesire to do and realize the alternativeways ofdealing withthesituation Figure 6.2 Procedure of Sensitivity Training Development of NewValues –Withthe trainer’s support, trainees begin to examinetheir interpersonal behavior and giving eachother feedback. Thereasoning ofthe feedbacks are discussed which motivates trainees to experiment withrange ofnew behaviors and values. This process constitutes the second step in the change process ofthe development ofthese values.
- 78. 78 Refreezing the new ones – This step depends upon how much opportunitythe trainees get to practice their new behaviors and values at their work place. 2.) Transactional Analysis provides trainees with a realistic and useful method for analyzing and understanding the behavior ofothers. In everysocial interaction, there is a motivation provided byone person and a reaction to that motivationgiven byanother person. This motivation reaction relationship between two persons is a transaction. Transactional analysis can be done by the ego states of an individual. An ego state is a system of feelings accompanied bya related set ofbehaviors. There are basicallythree ego states: Child: It is a collection ofrecordings in the brain ofan individualofbehaviors, attitudes, and impulses which come to her naturallyfromher own understanding as a child. The characteristics ofthis ego are to be spontaneous, intense, unconfident, reliant, probing, anxious, etc. Verbalclues that apersonisoperating fromitschild stateare theuse ofwords like“Iguess”, “I suppose”, etc. and nonverbalclues like, giggling, coyness, silent, attentionseeking etc. Parent: It is a collectionofrecordings in the brainofan individualofbehaviors, attitudes, and impulses imposed on her in her childhood from various sources such as, social, parents, friends, etc. The characteristics ofthisego are to beoverprotective, isolated, rigid, bossy, etc. Verbalclues thata personis operating fromitsparent states are the use ofwords like, always, should, never, etc and non-verbalclues suchas, raising eyebrows, pointing an accusing finger at somebody, etc. Figure 6.3 Adult: It is acollectionofrealitytesting, rationalbehavior, decisionmaking,etc.Apersoninthis ego state verifies, updatesthe data whichshehas received fromtheother two states. It is a shift fromthetaught and felt conceptsto tested concepts.Allofus evoke behaviorfromone ego statewhich is responded tobythe other personfromanyofthese three states. 3.) Lectureistelling someone about something. Lecture is givento enhance the knowledge oflistener or to give himthe theoreticalaspect ofa topic. Training is basicallyincomplete without lecture. When the trainer begins the training sessionbytellingthe aim, goal, agenda, processes, or methods that willbe used intrainingthat meansthetrainerisusingthelecturemethod. It is difficult to imaginetrainingwithout lecture format. Thereare somevariations inLecture method. Thevariationhere means that someformsoflectures are interactive while some are not. Straight Lecture: Straight lecture method consists ofpresenting information, whichthetrainee attempts to absorb. In this method, the trainer speaks to a group about a topic. However, it does not involveany kind ofinteractionbetween the trainer and the trainees.Alecture mayalso take the formofprinted text, such as books, notes, etc. The difference between the straight lecture and the printed material is the trainer’s intonation, controlofspeed, bodylanguage,and visualimage ofthe trainer. The trainerincase of straight lecture candecide to varyfromthe training script, basedonthe signals fromthe trainees, whereas same materialin print isrestricted to what is printed.Agood lecture consists ofintroductionofthe topic,
- 79. 79 purpose of the lecture, and priorities and preferences of the order in which the topic will be covered. Some ofthe mainfeatures oflecture method are: Inabilityto identifyand correct misunderstandings Less expensive Can be reached large number ofpeople at once Knowledge building exercise Less effective because lectures require long periods oftrainee inactivity 4.) Games and Simulations are structured and sometimes unstructured, that are usually played for enjoyment sometimesareusedfortrainingpurposesas aneducationaltool. Traininggames andsimulations are different fromwork as theyare designed to reproduce or simulate events, circumstances, processes that take placein trainees’ job. ATraining Game is defined as spirited activity or exercise in which trainees compete with each other accordingtothedefinedset ofrules. Simulationis creatingcomputer versionsofreal-lifegames.Simulation is about imitatingor making judgment or opining how events might occur ina realsituation. It canentail intricate numericalmodeling, role playingwithout the support oftechnology, or combinations. Training games and simulations are nowseen as an effectivetoolfor training because its keycomponents are: Challenge Rules Interactivity These three components are quite essential when it comes to learning. Some of the examples of this techniqueare: Figure 6.4 Trainees can therefore experience these events, processes, games in a controlled settingwhere theycan developknowledge, skills, and attitudes orcanfind out conceptsthat willimprove theirperformance. The various methods that come underGames and Simulations are: BEHAVIOR-MODELLING BUSINESS GAMES CASE STUDIES
- 80. 80 EQUIPMENT STIMULATORS IN-BASKET TECHNIQUE ROLE PLAYS 6.5 Objectives and Process of Employee Training The training design processrefersto a systematicapproachfor developing training programs. It includes the sevensteps in this process. Training is one ofthe most profitable investments an organizationcan make. No matter what business or industryyou are in the steps for an effective training process arethe same andmaybe adapted anywhere. Ifyou have everthought about developing atraining programwithin your organizationconsiderthe following four basictraining steps.You willfind that allfourofthese steps are mutuallynecessaryfor anytraining programto be effectiveand efficient. Step1 is to conduct a needs assessment, which is necessaryto identifywhether training is needed. This stepidentifiesactivitiesto justifyaninvestment fortraining. Thetechniquesnecessaryforthedata collection are surveys, observations, interviews, and customer comment cards. Several examples of an analysis outliningspecifictrainingneedsarecustomerdissatisfaction,lowmorale,lowproductivity,andhighturnover. The objectivein establishing a needs analysis is to findout the answers to the following questions: “Why” istraining needed? “What” type oftraining is needed? “When” is the training needed? “Where” is the training needed? “Who” needs the training? and “Who” willconduct the training? “How” willthetraining be performed? Bydetermining trainingneeds, anorganizationcandecide what specific knowledge, skills, and attitudes are needed to improve the employee’sperformance in accordance withthe company’s standards. The needs analysis is the starting point for alltraining. The primaryobjective ofalltraining isto improve individualand organizationalperformance. Establishing a needs analysis is, and should alwaysbe the first step ofthe training process. Step 2 is to ensure that employees have the motivation and basic skills necessary to master training content. This stepestablishes the development ofcurrent jobdescriptions andstandards and procedures. Job descriptions shouldbe clear and concise and mayserve as a major training toolfor the identification ofguidelines. Once the job descriptionis completed, a completelist ofstandards andprocedures should be established fromeach responsibilityoutlined inthe jobdescription. This willstandardize the necessary guidelines foranyfuturetraining. Step 3 is to create a learning environment that has the features necessaryfor learning to occur. This step is responsible for the instruction and delivery of the training program. Once you have designated your trainers, thetraining technique must bedecided. One-on-one training, on-the-jobtraining, group training, seminars, and workshops are the most popular methods. Before presenting a training session, make sure you have a thorough understanding of the following characteristics ofaneffective trainer. Thetrainer should have:
- 81. 81 - A desire to teach the subject being taught. - Aworkingknowledge ofthe subject being taught. - Anabilityto motivate participants to “want” to learn. - Agoodsense ofhumour. - A dynamic appearance and good posture. - Astrong passionfor their topic. - Astrong compassiontowards their participants. - Appropriate audio/visualequipment to enhance thetraining session. For a training programto be successful, the trainer should be conscious of severalessential elements, includingacontrolledenvironment, goodplanning,theuseofvarioustrainingmethods, goodcommunication skills andtrainee participation. Step 4 is to ensure that trainees applythe training content to their jobs. Thisstepwilldeterminehoweffectiveandprofitableyourtrainingprogramhasbeen.Methodsforevaluation arepre-andpost-surveys ofcustomercommentscards, the establishment ofacost/benefit analysis outlining yourexpensesandreturns, andanincreaseincustomer satisfactionandprofits. Thereasonforanevaluation systemis simple. The evaluations oftrainingprograms are without adoubt the most important step inthe training process. It is this stepthat willindicate theeffectiveness ofboththe training as wellasthe trainer. Thereareseveralobviousbenefitsforevaluatingatrainingprogram. First, evaluationswillprovidefeedback onthetrainer’sperformance, allowingthemtoimprovethemselvesforfutureprograms.Second,evaluations will indicate its cost-effectiveness. Third, evaluations are an efficient way to determine the overall effectiveness ofthe training programfor the employees as wellas the organization. The importance ofthe evaluationprocess afterthe training is critical.Without it, the trainerdoes not have a true indicationofthe effectiveness ofthe training. Consider thisinformation the next time youneed to evaluate your trainingprogram.You willbe amazed withthe results. The needfor training your employeeshas never been greater.As business and industrycontinues to grow, morejobswillbecomecreatedandavailable. Customerdemands, employeemorale, employeeproductivity, and employeeturnover as wellasthe current economicrealitiesofa highlycompetitiveworkforce are just some ofthe reasons for establishing and implementing training inan organization. To be successful,all training must receive support fromthetop management as wellas fromthe middleand supervisorylevels ofmanagement. It is a teameffort and must beimplemented byallmembersofthe organizationto befully successful. 6.6 Advantages of On the Job Training Methods On the jobtraining method hasthe following advantages that canbe considered: Generallymost cost-effective Employeesare actuallyproductive Opportunityto learnwhilst doing Trainingalongsiderealcolleagues. Training can bedelivered ontime and at the optimumtime. The trainee willhave the good opportunities to practice and implement. The traineewillhave feedbacks. Trainee builds confidence byworking withownspeed and productivity.
- 82. 82 6.7 Summary The unit beginswithanintroductionofthe concept and explainsthe importance oftraining. It explains the difference betweentraining and development anddefines the utilityand purpose oftraining, the levels of training,theneedandimportanceoftraining,andthebenefitsoftrainingtotheindividualandtheorganization. It expoundson the philosophyoftraining, process oftrainingand purpose or objectivesoftraining. 6.8 Self Assessment Questions 1. Explainthetermtraining and theneed oftraining for organizations. 2. Distinguishbetweentraining anddevelopment. 3. Explainthe methodsand approaches to training. 4. Explain variousOnthe job andoffthe jobtrainingmethods in detail. 6.9 Reference Books - Aswathappa K.(2009) “Human Resource and PersonnelManagement” – Text and Cases, Tata McGraw HillPublishingCompanyLtd., New Delhi. - ChhabraT.N. “HumanResources Management– Conceptsand Issues, FourthEdition”, Shampat Rai&Co., Delhi. - Gupta, C. B. (2004), “Human Resource Management”, Sixth Edition, Sultan Chand & Sons, New Delhi. - Dessler, G. (2000);‘Human Resource Management’;Prentice Hall, NewYork. - Grundy, T. and Brown, L.(2003); ‘Value-based HumanResourceStrategy; Elsevier, Boston. - Mabey, C. and Salaman, G. (2000);‘StrategicallyManaging Human Resources’;InfinityBooks, New Delhi. - Rao, V.S.P. (2001); ‘Managing Human Resources- Text and Cases, ExcelBooks, New Delhi. - Thite, M. (2004); Managing People inthe New Economy, Sage Publications, New Delhi.
- 83. 83 Unit - 7 : Executive Development Structure of Unit: 7.1 Objectives 7.2 Introduction 7.3 Importance and FactorInfluencing Executive Development 7.4 Process 7.5 Methods ofExecutive Development 7.6 Career Planning and Development 7.6.1 Objective 7.6.2 Process 7.7 Summary 7.8 SelfAssessment Questions 7.9 Reference Books 7.1 Objectives After completingthis unit, you wouldbe able to: Understand the methods ofexecutive development; Point out various career planning processes; Know about various pros and cons ofthese processes; Learn and appreciate the significance career planning to society; 7.2 Introduction It is also known as ‘management development’ or ‘executive development’. It is one of the fastest- developing areas inpersonnel. It is realizedthat aneffective management teammaybe asimportantto the survivalofanorganizationas anytangible itemonthebalance sheet. Interest inmanagement development is great partly due to the shortage of well-trained managers. Executive development or management development isa systematic process oflearningand growthbywhichmanagerialpersonnelgainandapply knowledge, skills, attitudesand insights to managetheworkintheir organizationeffectivelyand efficiently. The programofexecutive development aims at achievingfollowing purposes: - To sustaingoodperformanceofmanagersthroughouttheircareersbyexploitingtheirfullpotential. To understandeconomic, technical, and institutionalforces in order to solve business problems. To acquireknowledge about problems ofhumanresources. To think throughproblems this mayconfront the organizationnow orinthe future. To develop responsible leaders. To inculcateknowledge ofhumanmotivationand humanrelationships. To increaseproficiencyinmanagement techniquessuchasworkstudy,inventorycontrol, operations research andqualitycontrol. Johnson and Sorcherwrite,“Management development focuses ondeveloping ina systematic manner, theknowledgebase, attitudes, basicskills, interpersonalskillsandtechnicalskillsofthemanagerialcadre.”
- 84. 84 According to Flippo “executive development includes the process bywhichmanagers and executives acquire not onlyskills and competencyintheir present jobbut also capabilities forfuture managerialtasks ofincreasingdifficultyand scope.” The characteristicsofexecutive development are as following: - Executive development is a planned and organized process oflearning. It is an ongoing and never ending exercise. Executive development isalong termprocessasmanagerialskills cannot be developedovernight. It aims at preparing managers for managers. Today, it isthe growththat makesonepersonstayat thecompany. The opportunityandchallenges iswhat keeps apersonsatisfied and charmedwith his job. Companieshave understood this fact and thereforeare forming policies and procedures to develop their employees. Executive development Program(EDP) is one suchprogram. WithHumanresource makinga move from a welfaredepartment to a strategic partner, more and morecompanies are undertaking this program. We at Career Solutions provide you the opportunityofdeveloping a specific EDPfor yourcompany. There are four major steps to be covered during the EDP- 1) ProblemAssessment: the experts along with the concerned employees and CEO shall begin with an assessment ofthe company’s current problemand owner’s plansofthe future. 2) ManagementAudit andAppraisal: there shall be regular feedback sessions to check as to whether we are reaching where we are supposed to reach. 3) Analysis of Development Needs: here the problem that has been uncovered shall be tried to and remedied viaa development program. 4) Identify Replacement Needs: the assessment may uncover a need to recruit and select new management talent.The format ofEDPwillvarywith company’s size and nature ofoperation so as to provide optimumresult. 7.3 Importance and Factors Influencing Executive Development Executive development is more future oriented. It is more concerned with education than is employee training. Intoday’s competitive environment, anorganizationhas to be concerned about the development ofsupervisors, middle levelmanagers andtop-levelexecutive. Executive development is important for thefollowing reasons: - Executive development programmes are required to trainanddevelop professionalmanagers. It helps managers to develop skills to facecut throat competition. It enables managers to face problems related to technologyand institution. It helpsin developing better relationswith the labors. Executives need training and education to understand and adjust to changes in socio-economic changes. Executive development is required to broader the outlook ofmanagers. Factors Influencing Executive Development Ahost offactors influencing the executivedevelopment processes inorganizationsare as follows:- Failure to trainthe managerswillleadto ineffective and inefficient managerswho negativelyaffect the organization’s performance.
- 85. 85 In the absence of training and developmental avenues, the performing managers may get de- motivated and frustrated in leading the organizations. This would lead to severe losses for the organizationinfinancialparameters, intermsofthecost ofrecruitingandtrainingthenewincumbent. Theorganizationalperformancemaybe affected bythelossofmarket shares,lower sales, reduced profitability, etc. The absence/ shortage oftrained and skilled managers make it important for the organizations to have appropriateretentionstrategies. Training anddevelopment is being usedbyorganizations as a part oftheir retentionstrategy. Thecompetitivepressuresmakeit necessaryfororganizationsto continuouslyrollout newproducts and services, and also maintain thequalityofthe existing ones. The training and development of managers would helpthemin developing the competenciesin these areas. Thecompetitiveenvironmentismakingitimperativefortheorganizationstocontinuouslyrestructure and re-engineer, and to embark uponthese processes, it is essentialfor the organizations to train the managers forthe new scenarios. 7.4 Process Contemporaryorganizations have realized the importance ofhuman capitaland increasinglyfinding its necessaryto continuouslytrainand develop humanresources. The training and development needs ofthe employees cannot be looked at inisolation; anyproactive organizationhas to view theindividualtraining needs intheoverallorganizationalcontext. Thetraining and development processes arenot longer adjunct to otherdepartments but have become a part oforganizationalstrategyand one ofthe keyorganizational objectives. The process ofarriving at the development needs ofthe executives can be comprehensively viewed throughthe process given inFig.- Figure 7.1 : Executive Development Process Competitive Environm ent Organizational Strategy Organizational Objectives Id entify Com petency Gaps Training needs assessment Annual Training Plan Conduct of Training Review of Training Activities Career Planning Com petency Mapping Stage I Stage II Stage III
- 86. 86 The Process of Executive Development Stage I: In the Stage I, at the macro level, there are three key elements are considered as competitive advantage, organizationalstrategyandorganizationalobjectives. The analysisofcompetitive environment helps the organization to decide its competitive positioning in the market place, based on which the organizationalstrategyisdrawnout inanattempt to transformor repositionoftheorganization. Themacro view is broken down into specific organizational objectives for further dissemination to functional/ departmental, andindividuallevel. Stage II: This stage is most important and crucialphase of executive development process. This stage deals analysis onthe competencymapping, identificationofcompetencygap and career planning. Inthe competencystagewhichhelps to capturethecompetencies ofallthe employeesoftheorganizationwhich includes the capacities ofthe management also. Inthe second stage, the organizationalrequirementsand competencygapto beanalyzed. Inthethirdphase, thisdealswithidentifyingandverifyingtheorganizational needs, individualgrowthand along withcareer planningofthe executives. Stage III: This stage is consisting of three levels. The first level of this stage deals with the activities involving training need assessment ofindividuals and ofallemployees based onwhichAnnualTraining Plan (ATP) is drawn. Based on the annual training plan the employees are chosen to expose to either corporate trainingprogram, for internaltrainingprograms and externalorganizations. While deciding the venueandtypes and nature ofthe trainingprogramthepersonneldepartment andtrainingfacilitatorshould consider thevarious issues like noofexecutives, cost, outsourcingand availabilityoftechnicalexpertise in theorganizations. Incase oforganizationaldevelopment relatedexercises, the combinationofinternaland externaltrainingprograms should be arrangefor the allemployeeofthe organization. Thoughthemoney, infrastructureandfinallythe manpower to beutilized inthe wholeprocess keeping into this, the top management has to take decision in this regard. The training department, management and HRDepartmentshouldwork inunion. It isacollectivephenomenon, whichismostlyinitiatives, motivesof the topmanagement. Ifentire processofexecutive development ismostlydetermined byits efficacyand its effectiveness. Apart fromthis the process ofexecutive development can be defined in severalother ways with slight difference. The process ofexecutive development is as follows: 1. Analysis of Development Needs: First of allthe present and future development needs of the organization are ascertained. It is necessaryto determine how manyand what type ofexecutives are required to meet the present and future needs ofthe enterprise. 2. AppraisalofthePresentManagerialTalent: Aqualitativeassessment oftheexisting executives is madeto determine the type ofexecutive talent availablewithinthe organization. 3. Planning IndividualDevelopment Programmes: Eachone ofus hasa unique set ofphysical, intellectualand emotionalcharacteristics. Therefore, development planshouldbe tailor-made for eachindividual. 4. Establishing Training and Development Programme: The HR department prepares comprehensiveand wellconceived programmes.
- 87. 87 5. Evaluating Developing Programs:Considerable money, timeand efforts arespent onexecutive development programmes. It is therefore natural to find out to what extent the programme’s objective has been achieved. Evaluation of Executive Development Inthe competitionscenario, wherethe focus is onefficiencyand profitabilityand thereturnoninvestment (ROI) on all the activities of the organization, executive development cannot be an exception to the phenomenon. Theevaluationofthe processassumes importance fromthefollowing perspectives: Improving thequalityofthe trainingand development process. Improving theefficiencyand competencyofthe trainers. Making improvements in the systemto make it more responsiveand realistic. Aligningthetraining activities to theorganizationalobjectives. Buildingthe cost implications ofthe training intothe organizationalbudget. Evaluating theROI onaccount oftraining and development to justifyfurther investments. Changing the perceptionofthe management ontraining as expenditure to more as an investment forthefuturegrowthoftheorganization. The levels ofevaluationinclude the reactionlevel, immediate level, intermediate level, and ultimate level. For the purpose of evaluation, it is essential to collect the data for which there should be appropriate measures for data collection, both during the course of the training programme and after the training programme. Some ofthe methods being used by experts are self-complete questionnaires, interviews, observations, and desk research. The desk researchinvolves low cost and less amount oftime. 7.5 Methods of Executive Development Management development programs help inacquiring and developingmanagerialskillandknowledge.A Varityofmethodsofmanagement development havecome into prominence these days. Different types of techniques are used to acquire and develop various types ofmanagerialskilland knowledge as givenin the table below: ManagerialTraining / Management development:The following diagramshows thestages involved inthemanagerialtraining. S. No. Competency Development Area Methods 1. Decision-making skill In-basket, Business games, Case study 2. Interpersonal skill Role plying, Sensitivity Training 3. Job Knowledge On-the-Job experiences, Coaching, Understudy 4. Organizational Knowledge Job Rotation, Multiple Management 5. General Knowledge Special course, Special Meeting, Specific Reading 6. Specific Individual Needs Special Projects, Committee Assignments
- 88. 88 Figure 7.2 : Stages of Managerial Training In allabovestages, we should satisfythe following essentialaspects in order to make the programmes a success: 1. Policydecisions 2. Acceptance 3. Appreciation 4. Support 5. Conductive atmosphere 6. Strongurgefor learning 7. Participation 8. Identificationofstrengthand weakness 9. Involvement 10. Self-development Anumberofexecutivedevelopment methodsareavailable. Generallythesemethodsareusedincombination oftwo or more. The various techniquesofexecutive development maybe classified into two broad categories: - Organizational Planning Program Targeting Discovering the key position Appraisal Replacement skill abilities Individual development Evaluation Stage I Stage II Stage III Stage IV Stage V Stage VI Stage VII
- 89. 89 1. On the Job Techniques: It is delivered to employees while they performtheir regular jobs. In this way, theydo not lose time while theyare learning.After a plan is developed for what should be taught, employees should beinformed ofthe details.Atime-table should be establishedwithperiodic evaluations to informemployees about their progress. On-the-job techniques include orientations, job instruction training, apprenticeships, internships and assistantships, jobrotation and coaching. It consists of: - Coaching-Coaching is aone-to-one relationship between trainees andsupervisors which offers workers continued guidanceand feedback on how welltheyare handling their tasks. The coach assignsthetask, monitorsthetraineebehavior, and provides reinforcementand feedback. Coaching is commonlyused for allkinds oftrainees, fromunskilledto managerialposition. Thismethod is criticallydependsonthe qualityofthe coach. UnderStudy-Anunderstudymaybe assistant to someoneorspecialassistantto somesupervisory or executive positions. He learns byexperience, observation, guidance and coaching. Position Rotation-This involves themovement ofthe traineefromone jobto another. This helps himtohaveageneralunderstandingofhowtheorganizationfunctions.Apartfromreleasingboredom, Jobrotationallowsworkerstobuildrapport withawiderangeofindividualswithintheorganization, facilitating future cooperationamong various departments. Such cross-trainedpersonneloffer a great deal offlexibility for organizations when transfers, promotions or replacement become inevitable. Multiple Management- It provides knowledge about theorganizationto the juniorand middle managerialpersonnel. Here the members are exposed to alltypes ofthe decision takenat higher level. 2. Off-the-JobTechnique: It consists of: Lectures- It isa traditionaland direct method ofinstruction. The instructororganizesthe material and givesit to a group oftrainees in theformofa talk.To be effective, thelecture must motivate and create interest among the trainees.Anadvantage ofthis method is that it is direct and can be used foralarge groupoftrainees. Themajor limitationofthismethodisthat it doesnotprovidefor the transferoftraining effectively. Case Studies- It presents the trainees with a written description ofa business or organizational problem. The object of the case method is to teach the trainees how to analyze information, generate alternativedecisions, and evaluate thealternatives. Cases canbeanalyzed byindividuals or smallgroups. Feedback and reinforcement are provided through oraldiscussion or written commentsfromthe instructor. Group Discussions- This method is a direct discussion on a specific topic conducted with a relativelysmallgroupoftrainees. Thismethodisusefulforteachingandexploringdifficultconceptual materials, and for changing attitudes and opinions. It provides opportunity for feedback, reinforcement practice, motivation, and transfer, largelydue to the active interchange ofideas betweenthe participants. Role Playing- Inmost ofrole-playing assignments, each ofthe student takes the role ofa person affectedbyanissuesonhumanlifeandeffect thehumanactivitiesallaroundusfromtheperspective ofthat person. Management Games- Verities ofbusiness and management games have been devised and are being used with the varying degree of success in the developing programmes.Amanagement game isclassroomexercise inwhicha number ofteamoftrainees competes against eachother to achieve certainobjectives.
- 90. 90 Sensitivity Training- It has been successfullyemployed bybehavioralscientists over the past thirtyyears. Sensitivityto the circumstances and feeling ofothers is the cornerstone of human relationships. It is important to note that sensitivityis not just anemotion; it must express itselfin actions as well, especiallywhen peoplewe know are experiencing painand difficulties. 7.6 Career Planning and Development Career development is an organized approachused to match employeegoals with the business needs of the agencyinsupport ofworkforce development initiatives. The purpose ofcareer development is to: Enhance each employee’s current job performance. Enable individuals to take advantage offuture jobopportunities. Fulfilagencies’goals for a dynamicand effective workforce. Careerdevelopment involvesmanagingyourcareereitherwithinorbetweenorganizations.It also includes learning new skills, and making improvements to help you in your career. Career development is an ongoing, lifelong processto help you learnand achieve more inyour career. Whether youare lookingat makingacareer change, or movingup withina company, planning yourowncareerdevelopment willhelp you succeed. Bycreating a personalcareer development plan, you can set goals and objectives for your own personalcareer growth. Don’t make the mistake ofleaving your career development future in the hands ofyouremployer, hoping that youwillget the next promotionor payraise.This misconceptioncan lead to jobdissatisfaction and resentment. Career planning is a lifelong process, which includes choosing an occupation, getting a job, growing in our job, possiblychanging careers, and eventuallyretiring. The Career Planning Site offers coverage of allthese areas. This article will focus on career choice and the process one goesthroughinselecting anoccupation. This mayhappenonceinour lifetimes, but it is more likelyto happen severaltimes as we first define and then redefine ourselves andour goals. Managers are responsible for linking the organization’s needs to employee career goals, and can assist employees inthecareer planning process. HumanResources is responsible for designingcareer pathsand employee development programsthat help employees reachtheir goals. Eachemployeeis responsible for planning andmanaging his/her career. 7.6.1 Objective Career Management isthecombinationofstructuredplanningand the activemanagement choiceofone’s ownprofessionalcareer.Theoutcomeofsuccessfulcareermanagement shouldincludepersonalfulfillment, work/life balance, goalachievement and financialassurance. The word career refers to alltypes ofemployment ranging fromsemi-skilled through skilled, and semi professionalto professional. Thetermcareerhasoftenbeenrestrictedtosuggest anemploymentcommitment to a single trade skill, professionor business firmfor the entire working life ofa person. Inrecent years, however, career now refers to changes or modifications in employment during the foreseeable future. There aremanydefinitionsbymanagementscholars ofthestagesinthemanagerialprocess. The following classificationsystemwithminor variationsiswidelyused: 1. Development ofoverallgoals and objectives, 2. Development ofa strategy(a generalmeans to accomplishthe selected goals/objectives), 3. Development ofthe specific means (policies, rules, procedures and activities) to implement the strategy, and
- 91. 91 4. Systematic evaluationofthe progress towardthe achievement oftheselected goals/objectives to modifythestrategy, ifnecessary. The career management process begins withsetting goals/objectives.Arelativelyspecific goal/objective must be formulated. This task may be quite difficult when the individual lacks knowledge of career opportunities and/oris not fullyawareoftheirtalentsandabilities. However, theentirecareer management process is based on the establishment ofdefined goals/objectives whether specific or generalin nature. Utilizing careerassessments maybe a criticalstep in identifyingopportunities and career paths that most resonatewithsomeone. Career assessments canrangefromquickandinformallikethose onCareerBuilder or may be more in depth like those such as Myers-Briggs and Career Leader supported assessments found on MyPath. Regardless of the ones you use, you will need to evaluate them. Most assessments found todayfor free (althoughgood)do not offer anin-depthevaluation. Thetime horizonfor the achievement ofthe selectedgoalsor objectives- short term, mediumtermorlong term- willhave a major influenceontheir formulation. 1. Short termgoals(one or two years)are usuallyspecific andlimited inscope. Short termgoals are easier to formulate. Make sure theyare achievable andrelate to your longer termcareer goals. 2. Intermediate goals (3 to 20 years) tend to be less specific and more open ended than short term goals. Bothintermediate and long termgoals aremore difficult to formulate thanshort termgoals because there are so manyunknowns about the future. 3. Long termgoals(more than100years), ofcourse, are the most fluid ofall. Lackoflifeexperience andknowledge about potentialopportunities andpitfallsmakethe formulationoflong termgoals/ objectivesverydifficult. Longrangegoals/objectives,however, maybeeasilymodifiedasadditional information is received without a great loss ofcareer efforts because ofexperience/knowledge transfer fromone career to another. 4. Making career choicesand decisions – thetraditionalfocus ofcareersinterventions. The changed nature ofwork means that individualsmaynow have to revisit this process more frequentlynow and inthe future, more thanin the past. 5. Managing theorganizationalcareer – concernsthe career management tasksofindividuals within the workplace, suchas decision-making, life-stage transitions, dealing with stress etc. 6. Managing ‘boundary less’ careers – refers to skills needed by workers whose employment is beyond the boundariesofa single organization,a work style commonamong, for example, artists and designers. 7. Taking controlofone’s personaldevelopment – as employers takeless responsibility, employees needto takecontroloftheirowndevelopmentinorder to maintainandenhancetheiremployability. Career development, as both a field ofstudy and a practicalform of training for workers, is primarily concerned with producing better employees and maximizing employee potential. Career development programs can help the unemployed find jobs or provide workers with the skills and tools they need to advance withina government agency, corporationor organization. Self-Awareness- One ofthemajor objectives ofanycareer development programis a heightened sense ofself-awareness forparticipants. Employees should beable to identifytheir strengthsandweaknesses, in order to applytheirskillsmoreeffectively.Understanding shortcomings isalso usefulinteachingemployees whereto focusefforts toward improvements. Self-awarenessis also relatedtounderstandingthe difference
- 92. 92 between realand perceived career advancement limitations. Byexamining available opportunities and making an honest assessment ofanemployee’s skills, career development seeks to give everyemployee a realistic outlookonthe future. Flexibility- Career development also sets enhanced flexibilityas a goal. Employees work in a changing world and adaptation is an essentialskill. This may mean abandoning practices that have worked in the past, or devotingtime to educationandnew training. Employees who find themselves unable to adaptina changing workplacemaysuffer fromdecreased productivityorbe unable to competewithworkers whose skills are more flexible and easier to applyacross a range oftasks. Education-Educationisamongthemorestraightforwardobjectivesofcareerdevelopment.Suchprograms attempt to giveemployees, or prospective employees, access to information about job opportunities and options for skills training. Following up with suchemployees isanimportant objective aswell, since this gives those who work in career development a wayofmeasuring the program’s effectiveness. Sensitivity to Diversity- Many career development programs make sensitivity to diversity in the workplace a toppriority. Withever-increasing globalization, workers are frequentlyput into contact with members of different backgrounds and cultures. Understanding the value of diverse work habits and viewpoints canprevent this frombecoming a point ofconfusionor misunderstanding.At the same time, educating workers about the customs and concerns of others can help prevent social problems or embarrassment ina diverse workplace. 7.6.2 Process Career development and the career planning process include a number of specific steps that help to identify personalskills and attributes. Finding out how those skills can be utilized in the job market is accomplished by researching a number of career fields that are of interest to you and then by gaining experience inthose fields and/or speaking to people currentlyworkinginthe field. Participating in some formofexperientialeducationwillhelp youto identifyifthefield is the right choice for you. Step #1: Self-Assessment Evaluatingwhoyouareasaperson.Thisinvolvestakingapersonalinventoryofwho youareandidentifying your individualvalues, interests, skills,and personalqualities. What makes you tick as a person?You will look at those personalattributes under a microscope and come upwithkeyqualities youcanidentifyand use in your search for the perfect career. Career assessments may be required to promote a better understanding of personalattributes and skills. Contact your Career Services Office at your collegeto discuss ifa career assessment maybe right for you. Self-Assessment RealityCheck GoalSetting ActionPlanning Figure 7.3 : The Career Management Process Step #2: Research (Career Exploration) Obtainaninsider’sperspectiveabout thecareerfieldyouareconsidering.Conduct InformationalInterviews in person, phone, or by email. Professionals enjoy sharing their expertise with people interested inthe
- 93. 93 field. Performinformationalinterviews withalumnifromyour college to gaintheir perspective ofthe field and tolistento what theyhave to say. Thisstrategyprovides firsthandknowledgefromsomeone currently working in thefield and gives youanopportunityto ask about their experiences as wellas potentialjobs andwhat onemightexpect ifjustenteringthefield. Gainexperiencethroughinternshipsorbyjobshadowing foroneto severaldaystoseewhat atypicalworkdayentailsandto gainperspectiveofwhat theenvironment is like andthe typicaljob responsibilitiesofsomeone working inthe field. Researchwhat typesofjobs are available inyour area ofinterest bychecking out Majorsto Career Converter, TheOccupationalOutlook Handbook and The Career Guide to Industries. The OccupationalOutlook Handbook offers a wealth of information for those currentlyjust entering the job market and for those anticipating making a career change. Step #3: Decision-Making Once you’ve made a thorough self-assessment and have done some research ofcareer options, it’s time to makea decision. This canbe difficult since there maystillbe manyunknowns and a fear ofmaking the wrong choice. One thing for sureis that althoughwe cando allthenecessarysteps to makinganinformed decision, thereisno absolutecertaintythat weareunquestioninglymakingtherightdecision.Thisuncertainty is easier for some people than others but a keypoint to remember is that you can always learnfromany job you have and take those skills and applythem at your next job. Step#4: Search (TakingAction) It’s now time to look for prospective jobs and/or employers, send out cover letters and resumes, and begin networking with people in the field. Keep in mind that cover letters and resumes are designedto make a favorable impression on employers (if done properly) and the interview process is what will ultimatelyland youthe job. In other words, make sure yourcover letter and resumehighlight your skills and strengths based on the employer’s needs and that you are fullyprepared to knock their socks offat the interview. Taketime to researchtheemployer’s website prior to the interview, and bepreparedto ask thoughtfulquestions based onyour research. Step #5:Acceptance Wow! You’ve completed all of the steps above and you’ve been accepted into a new and exciting or different job. Congratulations!According to the BureauofLabor Statistics, 64.1% ofpeople changejobs between5and 14 times intheir lifetime. Consequently, learningthe skillsabove willincrease yourchances ofgaining meaningfuland satisfactorywork as wellas help you to avoid manyofthe stresses that occur withchangingjobs. Byrecognizingthatchange isgood(evenadvantageous), changing jobs canbeviewed asapositive experience and neednot be asanxietyprovoking as it mayinitiallyseem.You willcontinuethe process ofself-assessment, research, decision-making, and jobsearching in order to make effectiveand fulfillingcareerchangesthroughout yourlifetime. It isaknownfact that most professionals leaveanorganizationdueto lack ofcareergrowth.Activecareer development initiatives bya companyare a keyretention toolto keep the best talent within its fold. It is one ofthe greatest motivators to keep an employee happyand engaged. But does career planning and development ofemployeesactuallymakea differenceto theproductivityofaworker?Most organizations thinkso, andconsiderit a partoftheircriticalhumanresourcestrategy. Fromthe employees’point ofview career development initiatives gives thema clear focus about theircareer track, the blind spots that they have to overcomeand the finalgoalto be reached. Thisfocused approachworks to their advantage from their everydaywork to long-termaspirations. The impact ofcareerdevelopment/ successionplanningprogrammes canbeseenthroughtheproductivity indicator, engagement surveys and reductioninattrition rate. It isinfact a win-winsituationforall.
- 94. 94 7.7 Summary Executive development playsa crucialrole inHRM. It isthemanagers / executiveswho candeterminethe destinyoftheorganizationbystrategizing, implementingthe strategies, and moreimportantly, leading the employees to higher levels of efficiencyand performance. The unit begins with an introductionto the emerging scenario, explains the process ofthe executive development programme (EDP) in the overall organizationalcontext and also the various stages involved. It explains the factors influencing executive development. Executive development and its inter-relationship with e-learning, and the methods and techniques involvedinexecutive development have beendiscussed. The factors involved inthe designand developmentofEDPhavebeendiscussedinbriefandtheEDPhasbeenviewedinthecontextoforganization development. The processofplanning for theemployee fromthe timeofjoining to thetime ofretirement. It also helpsinunderstandingcareer managementfromtheorganizationandindividualprospective. It also attempts to bring out the differences between career and job, identifies the steps incareer planning, and analyses the steps that need to be taken from the individual and employee’s point of view for career success. 7.8 Self Assessment Questions 1. What do youmeanbythe importance ofexecutive development? 2. Analyse the processinvolved inthe designingand development programmes? 3. Explain the importance and process ofcareer planning? 4. Brieflyexplainthe advantages ofcareerplanning indetail? 5. Explainthe methodologies ofmaking the evaluationprocess more objective. 7.9 Reference Books - Bee, F. and Bee, R. (1994); ‘Training NeedsAnalysis and Evaluation’; Chartered Institute of Personnel. - Dessler, G. (2000);‘Human Resource Management’;Prentice Hall, NewYork. - Grundy, T. and Brown, L.(2003); ‘Value-based HumanResourceStrategy; Elsevier, Boston. - Mabey, C. and Salaman, G. (2000);‘StrategicallyManaging Human Resources’;InfinityBooks, New Delhi. - Rao, V.S.P. (2001); ‘Managing Human Resources- Text and Cases, ExcelBooks, New Delhi. - Thite, M. (2004); Managing People inthe New Economy, Sage Publications, New Delhi. - Aswathappa K.(2009) “Human Resource and PersonalManagement” – Text and Cases, Tata McGraw HillPublishingCompanyLtd., New Delhi. - ChhabraT.N. “HumanResources Management– Conceptsand Issues, FourthEdition”, Shampat Rai&Co., Delhi. - Gupta, C. B. (2004), “Human Resource Management”, Sixth Edition, Sultan Chand & Sons, New Delhi.
- 95. 95 Unit - 8 : PerformanceAppraisal Structure of Unit: 8.0 Objectives 8.1 Introduction 8.2 Meaning ofPerformanceAppraisal 8.3 Need and Importance ofPerformanceAppraisal 8.4 Objectives ofPerformanceAppraisal 8.5 Methods ofPerformanceAppraisal 8.6 The PerformanceAppraisalProcess 8.7 FactorsAffecting PerformanceAppraisal 8.8 Benefits ofPerformanceAppraisal 8.9 Problems ofPerformanceAppraisal 8.10 PerformanceAppraisalPractices in India 8.11 Effective PerformanceAppraisal 8.12 Summary 8.13 SelfAssessment Questions 8.14 Reference Books 8.0 Objectives After completing this unit, you willbe able to: Understand the concept ofperformance appraisal; State the meaning and importance ofperformance appraisal; Discuss the benefits and problems ofappraisal; Enumerate the steps inperformance appraisalprocess; Outline the objectives ofperformance appraisal; Describe various appraisalmethods; Outline few performanceappraisalpractices in India: 8.1 Introduction In a casual sense, performance appraisal is as old as mankind itself. In an official sense, performance appraisal ofan individual began in the Wei dynasty (AD. 261-265) in China, where an Imperial Rater appraised the performance of the official family’. In 1883, the New York City Civil Service in USA introduced a official appraisal programme shortly before World War . However, official appraisal of employees’performance is thought to have been started for the first time during the First World War, when at the instance ofWalter Dill Scott, the USArmy: adopted the “Man-to-man’rating system for evaluating personnel. For being fair and unbiased, in judging the employee it is necessaryto reviewthe performance ofthe personinthe organization. This is now done ina systematic wayinmost countries of theworld.Theevaluationofanindividual’sperformanceintheorganizationiscalledPerformanceAppraisal. The, systemofperformance appraisal compels the management to have a promotion policy within the organization. It also gives motivation to those employees who areefficient and are capableofworking in a best way.An organization’s goals canbe achieved onlywhen people within the organization give their best efforts. How to know whether anemployee has shown his or her best performance ona given job? The answer is performanceappraisal.
- 96. 96 In the organization context performance appraisalis an evaluation ofpersonnelin a systematic wayby superiorsorothersfamiliarwiththeirperformance.It isalso describedasmerit ratinginwhichoneindividual is rankedas better or worseincomparisonto others. The basic purpose inthis merit rating isto determine an employee’s eligibility for promotion. However, performance appraisalis a broad termand it maybe used to ascertainthe need for training and development, salaryincrease, transfer, discharge, etc.besides promotion. Insimpleterms, performance appraisalmaybe understood as thereview ofanindividual’sperformance in an orderly way, the performance is measured by considering factors like job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility, health, and the like. Evaluation should not be restricted to past performance alone but, the future performances ofthe employee should also be assessed. 8.2 Meaning of Performance Appraisal Performance appraisalsystemhas beendefined inmanyways. The easiest wayto understand the meaning ofperformance appraisalis as follows: It is the systematicassessment ofanindividualwithrespect to hisor her performance onthe jobandhis or her potentialfor development inthat job. Thus, performance appraisalis a systematic and objectiveway of evaluating the relative worth or ability of an employee in performing his job. The two aspects of performance appraisalconsidered to be important are: systematic and objective. The appraisalis said to be systematicwhen it evaluates allperformances inthe samemanner, byapplying the same approach,so that appraisalofdifferent persons are comparable. Suchanappraisalistaken fromtime to time according to plan; it is not left to probability. Thus, both raters’ and ratees know the system of performance appraisal and itstiming.Appraisalhas objectivityalso. It’s important aspect is that it attemptsat precisemeasurement bytrying to remove human biases and prejudices. According to Flippo, aprominent personalityinthefield ofHumanresources, “performance appraisalis the systematic, periodic and animpartialrating ofanemployee’sexcellenceinthe matterspertaining to his present joband his potentialfor a better job.” InthewordsofYoder,“Performanceappraisalreferstoallformalproceduresusedinworkingorganizations to evaluatepersonalities and contributions andpotentialofgroup members.”Thus performance appraisal isaformalprogrammeinanorganizationwhichisconcernedwithnot onlythecontributionsofthemembers who formpart ofthe organization, but also aims at spotting the potentialofthe people.” It is a systematic way of judging the relative worth of an employee while carrying out his work in an organization. It also helps recognize those employees who are performing their tasks wellandalso-who are not performing their tasks properlyand the reasons for such (poor) performance. According to InternationalLaborOrganization,“Aregular and continuous evaluationofthe quality, quantityandstyleoftheperformancealong withtheassessment ofthe factors influencingtheperformance and behavior ofan individualis called as performance appraisal.” In short, we can say that performance appraisal is expected to result in anassessment of: development potential of the employees, training needs for the employees; capabilities ofemployees being placedin higher posts, behavior and obedience of the employees; and the need of the organization to evolve a controlmechanism.
- 97. 97 8.3 Need and Importance of Performance Appraisal Performance isalways measured intermsofoutcome and not efforts. PerformanceAppraisalisneededin most oftheorganizations inorder: (1) To give informationabout theperformance ofemployees onthe jobandgive ranks onthebasis of which decisions regarding salaryfixation, demotion, promotion, transfer and confirmation are taken. (2) To provide informationabout amount ofachievement and behavior ofsubordinate in their job. This kind of information helps to evaluate the performance of the subordinate, by correcting loopholes inperformances and to set new standards ofwork, ifrequired. (3) To provide informationabout anemployee’s job-relevant strengthsand &weaknesses. (4) To provide informationso as to identifyshortage in employee regarding ability, awareness and find out trainingand developmentalneeds. (5) To avoid grievancesand indisciplinaryactivitiesinthe organization. (6) It is anongoing process ineverylarge scale organization. Performanceappraisalsinanorganizationprovideemployeesandmanagerswithanopportunityto converse in the areas in which employees do extremely well and those in which employees need improvement. Performance appraisals should be conducted ona frequent basis, and theyneed not be directlyattached to promotion opportunities only. It is important because ofseveralreasons suchas: 1. PersonalAttention: Performanceappraisalevaluation, gives employee todraw personalconcern fromsupervisor andtalk about their ownstrengths and weaknesses. 2. Feedback: Employees on aregular basis get feedback oftheir performances andissues inwhich theylack, whichneeds to be resolved ona regular basis. 3. Career Path: It allows employees and supervisors to converse goals that must be met to grow withinthe company.This mayencompass recognizingskills that must be acquired, areas inwhich improvement is required, and additionalqualificationthat must be acquired. 4. EmployeeAccountability: Employees are acquainted that their evaluation willtake place on a regular basis and therefore theyare accountable fortheir job performance. 5. CommunicateDivisionalandCompanyGoals:It not onlycommunicatesemployees’individual goals but providesanopportunityfor managersto explainorganizationalgoals andinthe manner in which employeescan contribute in the achievement ofthose goals. 8.4 Objectives of Performance Appraisal Performance appraisalin anyorganization is undertaken to meet certainobjectives which maybe in the formofsalaryincrease, promotion, recognizing training and development needs, providing feedback to employees and putting stress onemployees for better performance. Anemployeeinanorganizationmaythink that performance appraisalis basicallyused bythe organization to blame employees and to take corrective actions.An employee mayfeelthat performance appraisalis
- 98. 98 introduced in an organizationforpunishment in sucha case wellthought out performance appraisalmay results into failure. If the objectives set in a more positive, problems may arise as they may not all be achievable and they may cause conflict. For Example, an employee who is likely to be appraised will never discloses his loopholes as it mayaffect his appraisal. Thus the objective ofperformance appraisal should e clear and specific. Thus including objectives into the appraisal systemmay draw attentionto areas for improvement, new directions and opportunities. 1. SalaryIncrease: Performanceappraisalplays animportantroleinmaking decisionabout increase in salary. Increase in salaryofanemployee depends onhow he is performing his job. Evaluation ofan employeetakes place on acontinuous basis whichmaybe formallyor informally. Ina large as well as in small organizations performance appraisal takes place but it maybe in a formalor informalway. It shows how wellanemployee is performing and to what extent a hike in salary would take place incomparisonto his performance. 2. Promotion: Performance appraisal gives an idea about how an employee is working in his present job and what his strong and weak points are. In comparisonto his strength and weaknesses it is decidedwhetherhecanbepromotedtothenext higherpositionornot. Ifnecessarywhat additional trainingisrequired. Similarlyit couldbe usedfordemotion, discharge ofanemployeeandtransfer. 3. TrainingandDevelopment:Performanceappraisalgivesanideaaboutstrengths andweaknesses ofanemployeeon his present job. It gives anidea about the training required byan employee for overcoming thelimitations that anemployeeis having for betterperformance infuture. 4. Feedback: Performance appraisalgives an idea to each employee where theyare, how theyare working, and how are theycontributingtowards achievement oforganizationalobjectives. Feed works intwo ways. First, the persongets view about his performance and he maytryto conquer his weaknesses which maylead to better performance. Second, the person gets satisfied after he relates his workwithorganizationalobjectives. It gives himanideathat he is doinga meaning full work and can also contribute ina better way. 5. Pressure on Employees: Performance appraisal puts a sort of stress on employees for better performance. If the employees are aware that they are been appraised in comparison to their performance and theywillhave positive and acceptable behaviour inthis respect ActivityA: 1. Currentlyyou are working in amanufacturing organization. Write theobjectives ofperformance appraisalofyour organization inthe light ofthose mentionedabove. 8.5 Methods of Performance Appraisal Performance appraisal methods are categorized in two ways traditional and modern methods. Each organizationadoptsadifferent method ofperformanceappraisalaccording to the needoforganization. In small organization, it may be on an informal basis where personal opinion of a superior about his subordinates may consider for appraisal.
- 99. 99 1. Ranking Method: It is the oldest and simplest method ofperformance appraisalinwhichemployees’ are ranked oncertaincriteria suchastrait or characteristic. Theemployee is ranked fromhighestto lowest or fromworst to best inan organization. Thus ifthere are sevenemployeesto be ranked thentherewillbe seven ranks from1 to 7. Rating scalesoffer the advantages offlexibilitycomparativelyeasyuseand low cost. Nearlyeverytype of job can be evaluated with the rating scale, the only condition being that the Job-performance criteria should hechanged’.Insuchaway, a large numberofemployees canbeevaluated ina shortertime period. Thus, the greatest limitation of this method is that differences in ranks do not indicate how much an employee ofrank 1 is better than the employee whose rank is last. 2. Paired Comparison: In method is comparativelysimpler as compared to ranking method. In this method, the evaluator ranks employees by comparing one employee with all other employees in the group. The rater is given slips where, each slip has a pair ofnames, the rater puts a tick mark next those employee whomhe considers to be thebetter ofthe two. This employee is compared number oftimes so as to determinethe finalranking. This method provides comparison of persons in a better way. However, this increases the work as the large number of comparisons has to bemade. For example, torank50persons throughpairedcomparison, there willbe1,225 comparisons. Paired comparisonmethod could be employed easilywhere the numbers ofemployees to be compared are less. This maybecalculated bya formulaN (N — 1)12where N is thetotalnumber ofpersonsto be compared. Where N is the totalnumber ofpersons to be evaluated. For example Ifthe following five teachers have to be evaluated bythe Vice Chanceller ofa University: Chinmay( c), Mohan (M), Rohit (R), Vishal(V), and Basanti(B), theabove formula gives 5 (5— 1)/2 or 10 pairs. These are; Table 8.2 Methods of Performance Appraisal Traditional Methods Modern Methods Ranking method Management by Objectives (MB0) Paired comparison Behaviorally anchored rating scales Grading method Assessment centers Forced distribution method 360-degree appraisal Forced choice method Cost accounting method Checklist method Critical incidents method Graphic scale method Essay method Field review method
- 100. 100 CwithM, CwithR MwithR CwithV MwithV RwithV CwithB MwithB RwithB VwithB Thus, the pairs to be comparedgive the maximumpossiblecombinations inwhich anemployee could be compared withone another. Ifanemployee sores better number oftimes as comparedto other employee is considered better, makes his/her score. Such scores are considered for each worker and he/she is rankedaccordingto his/her score. Thismethodcannot workwhenlarge numberofemployeeis compared. 3. Grading Method: Inthis method, certaincategories are defined wellin advance andemployees are put inparticular categorydepending ontheir traits and characteristics. Such categories maybedefined as outstanding, good, average, poor, verypoor, or may be interms ofalphabet likeA, B, C, D, etc. where Amayindicatethebest andDindicatingtheworst. Thistypeofgrading method isappliedduring Semester pattern of examinations. One of the major limitations of this method is that the rater may rate many employees on the better side oftheir performance. 4. Forced Distribution Method: This method was evolved to abolish the trend ofrating most of the employees at a higher end ofthe scale. The fundamentalassumption in this method is that employees’ performance levelconformsto a normalstatisticaldistribution. For example, 10 per cent employeesmay be rated as excellent, 40 per cent as above average, 20 per cent as average, 10 per cent below average, and 20 per cent as poor. It eliminates or minimizes the favoritismofrating many employees on a higher side. It is simple and easy method to appraise employees. It becomes difficult when the rater has to explain whyanemployee is placed ina particular grouping as compared to others. 5. Forced-choice Method: The forced-choice rating method contains a sequence of question in a statement formwithwhichthe rater checkshow effectivelythe statement describeseachindividualbeing evaluated in the organization. There may be some variations in the methods and statements used, but the most commonmethod offorced choicecontainstwo statementsbothofwhichmaybepositive or negative. It maybe both the statement describes the characteristics ofan employee, but the rater is forced to tick onlyonei.e themost appropriatestatement whichmaybemore descriptiveoftheemployee. For example, a ratermaybe giventhe following two statements: (i) The employeeis hard working. (ii) Theemployee gives clear instructions to his subordinates. Though both of them describe the characteristics of an employee, the rater is forced to tick only one whichappearsto be more descriptiveofthe employee. Out ofthese two statements, onlyone statement is considered for finalanalysis ofrating. For example, a ratermaybe given the following two statements: (i) The employeeis verysincere. (ii) Employee givesclear and fast instructionsto his subordinates. Both of the above statements are positive but the rater is supposed to rate only one which is more appropriate ofsubordinate’s behavior. Forranking onlyone statement is considered .As the rater is not aware about thestatement to be consideredthe result would be freefrombias. This method maybe more objective but it involves lot ofproblemsin framing ofsuchsets ofstatements. 6. Check-list Method: The main reason for using this method is to reduce the burden ofevaluator. In this method ofevaluation the evaluator is provided with the appraisal report which consist ofseries of questions which is related to the appraise. Such questions are prepared in a manner that reflects the behavior ofthe concerned appraise. Everyquestion has two alternatives, yes or no, as given below: 1. Is he/she respected by his/her subordinates?Yes/No 2. Is he/she ready to help other employees? Yes/No
- 101. 101 3. Does her behavior remainsamefor everyone inthe organization?Yes/No The concerned rater/evaluator has to tick appropriate answers relevant to the appraises. When the check-list is finished, it is sent to the personnel department to prepare the finalscoresfor all appraises based onallquestions based onyes or no. While preparing questioneffort is made to establish the level of consistency of the rater by asking the same question twice but in a different manner. This method isconsidered to be easyifquestions are framed properlyfor different categories ofemployees. However, one of the disadvantages of the check-list method is that it is very difficult to accumulate, analyze and evaluatea number ofstatementsabout employee characteristics and contributions. It iseven costlymethodwithlot oftime and efforts required bythe organization. 7. CriticalIncidents Method:This method is veryusefulfor finding out those employees who have the highest potentialtoworkinacriticalsituation. Suchanincidenceis veryimportant fororganizationas they get a sense, how a supervisor has handled a situation in the case of sudden trouble in an organization, which gives an idea about his leadership qualities and handling of situation. It is also said to be a continuous appraisalmethod whereemployeesare appraised continuouslybykeeping inmind thecriticalsituation. In this method, onlythe case ofsudden trouble and behaviorassociated with these incidents or troubleare takenfor evaluation. This method is categorized in three steps. First, a list ofnotable (good or bad) on-the-job behavior of specific incidents orsuddentrouble is prepared. Second, selected experts would thenassignweightage or score to theseincidents according to howserious a particular incident is and their degreeofwillingness to performa job. Third, finallya check-list indicating incidents that illustrate workers as good or “bad” is formed. Then, the checklist is givento the rater forevaluating the workers. The strongpoint ofcriticalincident method is that it focuses onbehaviors and, thus, judge’s performance rather thanpersonalities. Its drawbacks are that too frequentlytheyneed to write down the critical incidents which is verytime- consumingandburdensomeforevaluators, i.e.,managers. Generally, negativeincidentsaremorenoticeable than positives. 8. Graphic Scale Method: It is one of the simplest and most popular techniques for appraising performances of employee. It is also known as linear rating scale. In graphic rating scale the printed appraisalformis used to appraise each employee. Such forms contain a number ofobjectives, and trait qualities and characters to be rated like qualityof workandamountofwork, jobknowhowdependability, initiative, attitude, leadershipqualityandemotional stability. The rater gives an estimate the extent to which subordinates possess each quality. The extent to which qualityis possessed is measured ona scale which can varyfromthree points to severalpoints. In general practice five-point scales is used. Some organizations use numbers inorder to avoid thepropensityofthe rater to tick mark centralpoints. It maybe numbered or defined. Thus numbers like 5, 4, 3, 2 and 1may denote points for various degrees ofexcellent-poor, high-low, or good-bad, and so on. Suchnumbers may be expressed in terms like excellent, very good, average, poor and very poor; or veryhigh, high, average, low and verylow. Graphic scale method is good for measuring various job behaviors ofan employee. But, it is bound to limitations ofrater’s bias whilerating employee’s behaviorat job.
- 102. 102 9. Essay Method: Inthis method, therater writes a detailed descriptiononanemployee’s characteristics and behavior, Knowledge about organizationalpolicies, procedures and rules, Knowledgeabout the job, Training anddevelopment needs ofthe employee, strengths, weakness, past performance, potentialand suggestions for improvement. It is said to be the encouraging and simple method to use. It does notneed difficult formatsand specific training to complete it. 10. Field Review Method: In this method of appraisal direct superior is not going to appraise an employee but appraised by another person, usually, from personnel department .The rater, in such a case, appraises the employee onthebasis of his past records ofproductivityandother informationsuch as absenteeism, late corning, etc. It is more suitable in a situation where an organization wants to provide promotionto anemployee. It also givesinformationfor comparing employees fromdifferent locationsand units. It reduces partialityto some extent as personnel department person is supposed to be trainedin appraisalmechanism. This method suffers fromtwo limitations: 1. As employees are not rated by immediate boss, the rater from other department may not be familiar withtheconditions inanemployee’swork environment whichmayhamperhis abilityand work motivationto perform. 2. The rater from other department do not get a chance to scrutinize the employee’s behavior or performance withdifferent time intervaland in a varietyofsituations, but onlyinan unnaturally structured interview situationwhich is for a veryshort periodoftime. Modern Methods 1. Management by Objectives (MB0): The concept of ‘Management by Objectives’ (MBO) was coined byPeter Drucker in 1954. It is a process where theemployees and the superiorscome togetherto identify some goals which are common to them, the employees set their own goals to be achieved, the benchmark is taken as the criteria for measuring their performances and their involvement is therein deciding thecourse ofactionto be followed. The basic natureofMBO is participative, setting their goals, selectinga course ofactionsto achieve goals and thentaking decision. The most important aspect ofMBOis measuring the actualperformances ofthe employee with the standards set by them. It is also said to be a process that integrates organizational objectives into individualobjectives. Entire program me of MBO is divided in four major steps i.e setting up of goal, action planning, comparison and timelyreview. Setting up ofgoal-In goalsetting superior and subordinate together set certain goals, i.e the expected outcome that each employee is supposed to achieve. Inactionplanning, the manner inwhichgoals could beachieved is determined i.e. identifying the activities whichare necessaryto perform;to achieve pr determined goals or standards. When the employees start with their activities, theycome to know what is to be done, what has been done, and what remains tobe done and it also gives anidea about the resources to be achieved. In the thirdstep, the goals set bythe individualemployee arecompared withthe actualgoals achieved. It gives anidea to the evaluator as whythere is a variation indesired outcome and actualoutcome.Such a comparison helps create need for training so as to enhance employees’performance. Finally, inthe timely review step, corrective actions are taken so that actual performances do not deviates from standards establishedinbeginning. The main reason for conducting reviews is not to humiliate the performer but to assist him in better performances in future. Few advantages of MBO are a) it is outcome –oriented. It co-ordinates the
- 103. 103 planning andcontrolfunctions and providesmotivation) Employees are clearabout the task that theyare expected to performand also how theymaybe evaluated.MBO do have certain limitations such as it is time consuming, employees and the superiors jointlysetting the goals maylead to conflict as employee would always like to set lower goal and the superior would like to set it on the higher side, lack of confidence inemployee bymanagement. 2. BehaviorallyAnchored Rating Scales:Thismethod is a combinationoftraditionalratingscales and critical incidents methods. It consists of preset criticalareas of job performance or sets of behavioral statements whichdescribes the important jobperformance qualities as good or bad (for e.g. the qualities like inter personalrelationships, flexibilityand consistency, job knowledge etc). These statements are developed fromcriticalincidents. Thesebehavioralexamplesare thenagaintranslated into appropriate performancedimensions. Those that areselectedintothedimensionareretained.Thefinalgroupsofbehaviorincidentsarethenscalednumerically to a levelof performance that is perceived to represent. Arater must indicate which behavior on each scale best describes an employee’s performance. The results of the above processes are behavioral descriptions, suchasanticipate, plan, executes, solvesimmediateproblems, carries out orders, andhandles urgent situationsituations. This method has following advantages: a) It reduces ratingerrors) Behavior is assessed over traits. c) It gives an idea about the behavior to the employee and the rater about which behaviors bringgood Performance and whichbring bad performance. 3.Assessment Centres: It is a method whichwas first implemented inGermanArmyin 1930. With the passage oftime industrialhouses and businessstarted using this method. This is a systemofassessment where individual employee is assessed by many experts by using different technique of performance appraisal. The techniques which may be used are role playing, case studies, simulation exercises, transactionalanalysis etc. In this methodemployees fromdifferent departmentsare brought together for anassignment whichthey are supposed to performin a group, as iftheyareworking fora higherpost or promoted. Eachemployee is ranked by the observer on the basis of merit .The basic purpose behind assessment is to recognize whether a particular employee can be promoted, or is there any need for training or development. This method has certainadvantages such as it helps the observer inmaking correct decision interms ofwhich employee has thecapabilityofgetting promoted, but it has certaindisadvantages also it iscostlyand time consuming, discourages the poor performers etc. 4. 360 Degree PerformanceAppraisals:This method is also knownas ‘multi-rater feedback’, it is the appraisalin a wider perspective where the comment about the employees’ performance comes fromall the possible sources that are directlyorindirectlyrelated withthe employee on his job. In360degree performanceappraisalanemployee canbe appraisedbyhis peers, managers (i.e. superior), subordinates, teammembers, customers, suppliers/ vendors - anyone who comes into direct or indirect contact with theemployee and can providenecessaryinformationor feedbackregarding performance of the employeethe “on-the-job”. The four major component of360 degree performance appraisalare 1. Employees SelfAppraisal 2. AppraisalbySuperior 3. AppraisalbySubordinate 4. PeerAppraisal.
- 104. 104 Employee selfappraisalgives an optionto the employee to know his own strengths and weaknesses, his achievements, andjudge his ownperformance.Appraisalbysuperior formsthe traditionalpart ofthe360 degree performanceappraisalwhere the employees’responsibilities and actualperformanceis judgedby the superior. Appraisal bysubordinate gives a chance to evaluate the employee on the basis ofcommunication and motivating abilities, superior’s abilityto delegate the work, leadership qualities etc. It is alsoknown as internalcustomers;the correct opinion givenbypeers can aid to find employees’ who are co-operative, employees who readyto work ina teamand understanding towards others. 5. CostAccounting Method: In this method performance ofanemployee is evaluated on the basis of monetaryreturnsthe employee gives to his or her organization.Arelationship is recognizedbetweenthe cost included inkeeping the employee inanorganizationand thebenefit the organizationgetsfromhimor her.Theevaluationis basedonthe established relationship betweenthe cost and thebenefit.The following factors areconsidered while evaluating anemployee’s performance: 1. Interpersonalrelationship withothers. 2. Qualityofproduct produced or service givento the organization. 3. Wastage, damage, accidents caused bythe employee. 4.Average value ofproduction or service byan employee. 5. Overhead cost incurred. Activity B: 1. In thelight ofabove mentioned methods ofPerformanceAppraisalselect anycompany ofyour choice and identifythemethod used bythat company. 8.6 The Performance Appraisal Process Theperformanceappraisalsystemofone organizationmayvaryfromotherorganizations, thoughsomeof the specific stepsthat an organization mayfollow are as follows: 1. Establish Performance Standards: It begins byestablishing performance standards i.e. what they expect fromtheir employee in terms ofoutputs, accomplishments and skills that they will evaluate withthe passage oftime. The standards set should be clear and objective enough to be understood and measured. The standards whichare set are evolved out ofjob analysis and job descriptions. Standardsset shouldbe clearandnot thevagueone. Theexpectationofthe manager fromhisemployee should be clear so that it couldbe communicated to thesubordinates that they willbe appraised against the standards set for them. 2. Communicating the Standards Set for an Employee: Once the standards for performance are set it should be communicatedto the concerned employee, about what it expectedfromthem in terms ofperformance. It should not be part of the employees’ job to estimate what theyare expected do. Communication is said to be two ways street, mere passing of information to subordinate does not mean that the work is done. Communication only takes place when the information given has taken place and has been received and understood by subordinate. . If necessary, the standards may be tailored or revised in the light of feedback obtained from the employees. 3. Measuring of theActual Performances: It is one of the most crucial steps of performance appraisal process. It is very important to know as how the performance will be measured and what should be measured, thus four important sources frequentlyused bymanagersarepersonal observation, statisticalreports, oral reports, and written reports. However, combinationofall
- 105. 105 these resourcesgivesmore reliable information. What we measure is probablymorecriticalto the evaluation process than how we measure. The selection of the incorrect criteria can result in serious consequences. What we measure gives anidea about what people inan organizationwill attempt to achieve. The criteria whichareconsidered must represent performance asstated inthe first two steps ofthe appraisalprocess. 4. Comparing Actual Performance with Standards Set in the Beginning: In this step of performance appraisalthe actualperformance is compared withthe expected or desired standard set.Acomparisonbetweenactualordesiredstandardmaydisclosethedeviationbetweenstandard performance and actualperformance and willallow the evaluator to carryonwiththe discussion ofthe appraisalwith the concerned employees. 5. Discussion with the Concerned Employee: In this step performance of the employee is communicated and discussed. It gives an idea to the employee regarding their strengths and weaknesses. The impact ofthis discussion maybe positive or negative. The impression that subordinates receive fromtheir assessment has a verystrong impact ontheir selfesteemand, is veryimportant, for their future performances. 6. Initiate Corrective Action: Corrective action can be of two types; one is instant and deals primarilywithsymptoms. The other isbasic and deals withthe causes. Instant corrective actionis often described as “putting out fires”, where as basic corrective action gets to the source from where deviation has taken place and seeks to adjust the differences permanently. Instant action corrects somethingright at a particularpoint and gets thingsback ontrack. Basicactionasks how and whyperformance deviated. In some instances, managers mayfeelthat theydo not have the time to take basic corrective action and thus maygo for “perpetuallyput out fires. Thus the appraisalsystemofeachorganization maydiffer as per the requirement ofthat Organization. Activity C: 1 Assume you arecurrentlyoperating anappraisalsysteminyour organization. Howwillyou carry out the appraisalprocess inyour organization? 8.7 Factors Affecting Performance Appraisal There are various factors which may influence the performance appraisalsystemin any organization. There are some factors whichintroduce bias whereas; someother factors hinderpurposefulassessment. Suchfactorsare as follows: 1. Value System of Evaluator: The task of evaluator is to assess the work of subordinate and write reports of the same. They are projected to do this for some purposeful assessment. It happens that evaluator sometime judges the performanceon the basis oftheir own value system. Eachpersonhas his ownvaluesystemand socio-culturalenvironment. Mostly, it is foundthat the reports are influenced bythe evaluator’s value-system. This subjective element haslot ofimpact onfinalreport. 2. DominantWorkOrientation:The performanceAppraisalReport ofa subordinate is prepared bya superioris found to havean impact bythedominant work orientationofthe superior officer. Sometimes there is more emphasis oncertain aspect of the work as compared to other aspect whichmaybe equallyimportant bythe superior. It introduces subjectivityperformance appraisal system.Asuperior mayevaluate the subordinate onthe basisoffollowing elements:
- 106. 106 a) Inclinationforwork ofdynamic nature. b) Liking for routine work andstrict maintenance of. c) Importance oninter-personalrelations and rank. d) Emphasisonqualities whichdo not have muchfunctionalutility;and e) Emphasis onconsistencyto some philosophy. Theseelementsbringsubjectivityintheprocessofevaluation, influencethejudgmentofthesuperior and distort the evaluation ofperformanceofthe subordinates. 3. Loyalty: It plays a vitalrole in evaluating employee. An Employee shows loyalty due to many reasons suchas commonvalues, objectives, emotionalneeds, interests, caste, religion, language or region. Loyaltybrings the superior and the loyalsubordinate closer and closer to each other, and creates distance between those employee who are not loyal to their superior. This makes assessment ofsuperior to be biased. 4. LevelofAchievement: Subordinatesevaluationmayalso dependon the levelofachievement of the superior. Ifthere is a vast difference between thelevelofachievement ofthe superior and Subordinate, thenit can create problems ofadjustment and purpose for whichevaluationis done is not achieved. 5. Factors Hindering Objective Assessment: There are various factors which obstruct the objective appraisalofthe performance ofthe subordinates. These factors are as follows: a) Superioritycomplexofthe superior reporting officer. b) Overallperformance assessment do not take place onlycertainincidence are assessed. c) Past-record ofthe subordinate. d) Personalityofthe subordinate. g)Abilityofthe subordinate to exercise influence at higher level. 8.8 Benefits of Performance Appraisal An effectiveperformance appraisalsystemcanbe ofbenefit to three parties theyarefor organization, for appraiser and for appraisee. 1) For the Organizations:Following are the benefits ofan organization. It leads to better performance throughout the organization, due to successfulcommunication of the objectivesand values oftheorganizations, sense ofbeingclose to the organization, loyaltyand improved relationships betweenmanagers and staff. Overallimprovement in the duties performedbyeachemployee ofthe organization. Due to performanceappraisalofemployee newideas for improvement intheirwork is generated. Long-termplanscan be generated. The need for training and development canbeidentified more clearly. Atraditionsofnonstopimprovementandsuccessintheorganizationcanbeformedandmaintained. Career development planscanbe chalked out for capable employee to enhance their performance infuture. 2) For the appraiser: Following are the benefits to the appraiser: It givesanopportunityto theappraiserto developageneralideaofindividualjobsanddepartments. For everynew or difficult situationnew idea isgeneratedfor improvement or forovercoming that problem.
- 107. 107 It gives anopportunityto integrate teamand individualobjectives andtargets withdepartmental and organizationalobjectives. It gives an opportunity to explain the amount of work expected by manager from teams and individuals. It gives anopportunityto focusmore on targets. It enablestoformmoreproductive relationshipwithstaffbased onmutualtrust andunderstanding. 3) FortheAppraisee: Following are the benefits for the appraisee: Increasedmotivation. Increased job satisfaction. Increased sense ofpersonalvalue. Increase in morale ofan employee. It gives anopportunityto know theirstrength and weaknesses. It gives an idea about areasoftheir improvement. There willbe a chance to subordinate to express his views evenafter performance appraisal An employee should express his emotionalneeds and his value systemwhich is considered to be important today. Activity D: 1 Suppose you are anevaluator (superior) inyour organization. List out thebenefit that you would like to get as an appraiser . 8.9 Problems of Performance Appraisal Performance appraisaltechniqueisverybeneficialforanorganizationfor takingdecisions regarding salary fixation, demotion, promotion, transferand confirmation etc.But,it isnot freed fromproblemIn spite of recognitionthat a completelyerror-free performance appraisalcan onlybe idealized a number oferrors that extensivelyhinder objective evaluation. Someofthese problems are as follows: 1. Biasness inrating employee:It isthe problemwithsubjectivemeasure i.e. theratingwhichwillnot be verified byothers. Biasness ofrater mayinclude: (a) Halo Effect: It is the propensityofthe raters to rate on the basis ofone trait or behavioral consideration in ratingallother traits orbehavioralconsiderations. One wayofminimizing the halo effect isappraising allthe employeesbyonetrait before goingto rate onthebasis ofanother trait. (b) The CentralTendencyError: It is the error when rater triesto rate eachandeverypersonon the middlepoint ofthe ratingscale and tries not to rate the peopleonbothends ofthe scale that is rating too high or too low. They want to be on the safer side as they are answerable to the management. (c) The Leniencyand Strictness Biases: The leniencybiasness exists when some raters have a tendencyto be generous intheirrating byassigning higherrates constantly. Such ratingsdo not serve anypurpose. (d)Personalprejudice: Iftheratersdo not likeanyemployeeor anygroup,insuchcircumstances hemayrate himonthelower side ofthescale, theverypurposeofratingis distortedwhichmight affect the career ofemployees also. (e)TheRecentEffect:Theratersusuallyretaininformationabouttherecentactionsoftheemployee at thetime ofrating and rate on the basis ofrecent actiontakenplace whichmaybefavorable or unfavorable at that point oftime. 2. The superiors maybe unsuccessfulinconducting performance appraisalofemployees and post performance appraisalinterviews.
- 108. 108 3. The performance appraisalis mostlybased onsubjective assessment. 4. The performance appraisaltechniques have a lowreliabilityand validityinterms ofresult. 5 Ratingsanemployeeonthenegativesidemaydisturbinterpersonalrelationsand industrialrelations system. 6. Appraisers opinion onthe performance ofthe employee maylead to setback on production. 7. Anorganizationmaygive emphasis to punishment ifan employeehas not done a good jobrather thanprovidingtraining. 8. Few ratings are based on guess work. Various other problemsofperformance appraisalare: There wasasignificant relationshipbetweenratingbysuperiorand performanceafterpromotions. Appraisalreports were completed within a short period oftime. The circumstanceswere veryunpleasant infeedback interview. The Subordinates were not given suggestion ina manner whichmaybehelpfulto them. Activity E: 1 List out the problemfaced byyou as a subordinate in your organization inappraising you. 8.10 Performance Appraisal Practices in India The systematic studyofperformanceappraisalpractices inIndiais verylimited.Accordingto few studies in India the performance appraisal is mainly undertaken for three objectives such as (i) to determine increments insalary;(ii)to assist organizationalplanning, placement, orsuitability;and(iii)fortrainingand development purposes. Other objectives of appraisal were: informing employee where they stand in organization, follow-upinterviews, etc. Every company uses different criteria to evaluate their employees. There are basicallythree groups of criteria being usedfor appraisalpurpose: (i)evaluationofqualitative characteristics, suchas, intelligence, reliability, honesty, leadership and attitudes, abilities, etc., evaluationofactualperformance- qualitatively and quantitatively;andevaluationofdevelopment andfuture potentialand development byan employee during the period under consideration. Evaluation criteriavaryfromcompanyto company. There is vast deviation inperiodicityofappraisalofemployees. Few companies appraise annually, some appraise half- yearly, and a few quarterly; however, annualappraisalis most common among many. Few innovative performance appraisalpractices are: Managerialpersonnelare allowed to challengeor appealappraisaldecisionsmade byevaluator. Employee management skills are important inperformance appraisal. Personneldepartment givesa clear instruction ofpolicyand its implementation. Evaluation to be made onlyon the basis ofperformance ofemployee at work. It has also enhanced role clarityin the Organization. TheperformanceappraisalpracticebyDaburIndiaLimitedisasfollows:Themainpurposeofperformance appraisal system is to evaluate the performance of employee, promote their employees and to make necessaryarrangement for their training needs ifrequired. Employeesareevaluatedbyhowwelltheyaccomplishaspecificset ofobjectivesthathavebeendetermined to becriticalinthesuccessfulcompletionoftheirjob. Thisapproachisfrequentlyreferredto asManagement byobjectives.
- 109. 109 The latest mantra being followed byorganizations across the world being – “get paid according to what you contribute” – the focus of most of the organizations is turning to performance management and specificallyto individualperformance. 1. Thefocusoftheperformanceappraisalspracticeintodaysenvironment ischangingbyconcentrating more oncareer development relying onthe dialogues and discussions with the superiors. 2. Performance measuring, rating and review systems have become more thorough, structured and individualemployeespecific thanbefore. 3. Appraisalthrougha 360-degree feedback systemtakes place 4. InIndia, the performance appraisalprocessesare faced witha lot ofpoblems, the most important is the need ofquantifiable indicatorsofthe performance. The emergence offollowing trends related to Performance appraisalpractices can be seen inthe global scenario: 360 degree feedback, Teamperformance appraisal, Rank and yank strategy. 1) 360 Degree Feedback: It is also known as ‘multi-rater feedback’, where the feedback about the employees’ performance comes fromallthesources that come in contact withthe employee on his job. 2) Team PerformanceAppraisal: In this method each employee performance is measured as a teammember aswellas individually. 3) Rank andYankStrategy:It is also knownasup or out policywhere the performance appraisal model is prepared in whichbest-to-worst ranking methods areused to identifyand separate the poor performers fromthegood performers. Thencertainplans are chalked out for improvement. Some ofthe organizations following thisstrategyare Ford, Microsoft and SunMicrosystems. 8.11 Effective Performance Appraisal The performance appraisalsystemis always questioned in terms ofits effectiveness and theproblemsof reliabilityand validity. It is always difficult to know whether what isappraised is what wassupposed to be appraised.Aslongas subjectivejudgment is there this questioncannot beanswered perhaps, the following steps can helpimprove the system. a) Thesupervisorsshould betold that theythemselves willbeevaluated onthe basisofhowseriously theyareperforming their duties. b) To performassigned task ofevaluationin a better waysuperior should be provided with better trainingofwriting report. c) To carryout job evaluation studies and prepares job descriptions/roles and prepares separate formsfor variouspositions inthe organization. d) The systemshouldbe designedinsucha waythat it isneitherdifficult to understandnorimpossible to practice. e) The supervisor shouldmonitor whether the improvement inperformance intheareas found weak is taking place or not and, ifnot, help the employee to achieve the required improvement. f) Finally,reviewing, theappraisalsystemseverynowandthenhelpupdatingit,andmakingappropriate changes init. This is themost important factor inmaking performanceappraisaleffective, withthe passage of time necessary changes in tasks, abilities and skills to perform has to be made. If
- 110. 110 changes intheformat are not consideredthe reports maynot generate the kind ofresult needed to satisfyappraisalobjectives. The following measurescould also be adopted forimproving the effectiveness ofanappraisal: a) Behaviorally Based Measures: The research strongly favors behaviorally based measures over those developedaround traits.b) OngoingFeedback:Employees liketo knowhow theyare performing the duties assigned to them. c) Multiple Raters: Ifa person is evaluated bya large no ofsuperior then chanceofgettingmorefrequent informationincreasesd)PeerEvaluations:Peerevaluationsareconducted byemployees’ co-workers, people explicitlyfamiliar withthe jobs involved mainlybecause theytooare doing the same thing, they are the person who know the co-workers’ day to-day work behavior and should get a chance to provide the management withsome feedback. 8.12 Summary In theorganizationalcontext performance appraisalis anevaluation ofpersonnelin a systematicwayby superiorsorothersfamiliarwiththeirperformance. It isalso describedasmeritratinginwhichoneindividual is ranked as better or worse in comparisonto others. The basic purpose inthismerit rating isto determine an employee’s eligibility for promotion. However, performance appraisalis a broad termand it maybe used to ascertainthe need for training and development, salaryincrease, transfer, discharge, etc.besides promotion. It is the systematic assessment ofan individualwith respect to his or her performance onthe job and his or her potentialfor development in that job. Performance appraisals should be conducted ona frequent basis, and theyneed not be directlyattached to promotion opportunities only. It is important because ofseveralreasons such as:PersonalAttention, Feedback, Career Path, EmployeeAccountability, Communicate Divisionaland CompanyGoals. Thus, objectives into the appraisalsystem may draw attentionto areas for improvement, new directions and opportunities. The methodsofperformance appraisalarecategorized intwo waystraditionaland modern methods. Eachorganizationadopts adifferent method ofperformanceappraisalaccording to theneedof organization, with eachmethod having its ownadvantages and drawbacks. The performance appraisal systemofone organizationmayvaryfromother organizations; thismaylead to few changes in appraisal process. Some ofthe problemsfaced inappraising employees arebiasness ofrater whichmayinclude: (a) halo effect, (b) centraltendencyerror, (c) the leniencyand strictness biases, (d) personalprejudice, and (e) the recent effect etc. ThesystematicstudyofperformanceappraisalpracticesinIndiaisverylimited.Fewinnovativeperformance appraisalpractices are: 1) Managerialpersonnelare allowed to challenge or appealappraisaldecisions made byevaluator.2) Employee management skills are important in performance appraisal.3) Personnel department gives aclear instructionofpolicyandits implementation. 4)Evaluationto be madeonlyonthe basis ofperformance ofemployee at work.5) It has also enhanced role clarityinthe Organization. The latest mantra being followed byorganizations across the world being – “get paid according to what you contribute” – the focus of most of the organizations is turning to performance management and specificallyto individualperformance. It isalways questionedintermsofitseffectivenessandtheproblems ofreliabilityandvalidityexist whichcouldbe improved ifthe supervisorsare told thattheythemselves will be evaluated onthe basis ofhowseriouslytheyare performing their duties, To performassigned task of evaluation in a better way superior should be provided with better training of writing report. Thus, performance appraisalisthe technique whichis essentialfor everyorganization.
- 111. 111 8.13 Self Assessment Questions 1 “Performanceappraisalisthesystematicevaluationoftheindividualwithrespectto hisperformance on the joband his potentialfordevelopment’’. What are the options opento you inthe design of a performanceappraisalsystemto achievethis goal? 2 ExplainthePerformanceAppraisalSystem. Eithersuggests improvements to anexistingappraisal systeminyourorganizationordesignanappraisalsystemwhichwould meet theobjectivesoutlines inthis chapter. 3 Does current thinking indicates that appraisalfor training should be conducted separatelyfrom appraisalfor promotion? 4 Explain indetailthe process ofperformance appraisal. 5 Write short notes of: a) Management byobjectives b) BehaviorallyAnchored Rating Scale 6 Explain the methods ofperformance appraisalin detail. 7 “Performance appraisal is not only for appraisal but is for achievement and improvement of performance”. Explain. 8 According to you what should bedone to have aneffective performance appraisalsysteminyour organization. 9 Write short notes on: a) Field review method: b) Criticalincidents method 8.14 Reference Books · Prasad L.M, (2005);‘Principles andPracticesofManagement’;SultanChandand Sons Publisher, New Delhi. · P.Subba Rao, (2007); Essentials of Human Resource Management and Industrial Relations’; HimalayapublishingHouse, Mumbai. · S.S.Khanka, (2008);HumanResource Management; S.Chand&Companylimited’;New Delhi. · K Aswathappa (2003); Human Resource and Personnel Management’; Tata McGraw-Hill Publishing Companylimited, New Delhi.
- 112. 112 Unit -9 : Wage andSalaryAdministration Structure of Unit: 9.0 Objectives 9.1 Introduction 9.2 Principles ofWageand SalaryAdministration 9.3 Essentials ofSoundWage and SalaryAdministration 9.4 FactorsAffecting Wage and SalaryAdministration 9.5 Methods ofWage Payments 9.6 Process ofWage Determination 9.7 Summary 9.8 Self Assessment Questions 9.9 Reference Books 9.0 Objectives After Completingthe unit you wouldbe able to: Understand the significanceofWage and SalaryAdministrationinthe organization: Learn about principles of Wageand SalaryAdministration; Know someofthe prerequisites forsound compensation management; Understand major factors affecting Wageand Salarydeterminationinan organization; Know in detailmethods ofwage payments; Learnhowwages are determined inan organization. 9.1 Introduction Employees’compensation is one ofthe major determinants ofemployee satisfactioninan organization. The compensation policy and the reward system of an organization are viewed by the employee as a indicators ofthemanagement’sattitudeandconcernfor them. It is notjust thecompensationintote, but its fairness as perceived bythe employees that determines the success ofa wage and salaryadministration system. Hence, it veryimportant for themanagement to design and implement its compensation system with utmost care and tact. Agood wage and salary administration should be able to attract and retain employees, give themfair deal, keep the organization competitive and motivate employees to perform their best. Wageandsalarydeterminationanditsadministrationhasalwaysremainssensitiveissue foranorganizational management, sinceemployees moral, motivation, productivityand their relationshipwiththe management moreorlessassociatedwiththecompensationmanagement system. Furthermorecompensationhasalways remain as a major yardstick for the success or failure or concern for the employees by an organization. Traditionally, payscales in companies reflected the importance ofthe work and the responsibilitylevel. Todayorganizationtriesmoretoassesstheworthofanindividualintermsofhisperformanceandcontribution to theorganization.Withthegrowingdemandsoftheworkforceand theconstant challengesinthe business environment, organizations have to evolve an accurate system for evaluating jobs and assessing their worth. Job evaluation helps to determine the relative worth of job in an organization in a systematic, consistent and accurate manner. It also helps in estimating the basic payfor each jobin accordancewith the importance of the job in the organizational hierarchy. Once basic pay is determined, the rewards, incentives and benefits attached with the pay, position and performance are also determined. The basic wage, incentives and rewards and benefits, together fromcompensation package ofan employee.
- 113. 113 9.2 Principles of Wage and Salary Administration Since the issue of wage and salarydetermination has always enjoying the major consideration for any organization, it should be develop and maintain based on sound principles , some ofthemare narrated below, attempt should be made to incorporate themas far as possible while designing the compensation system. 1) There should be a definite plan and system to ensure that differences in pay for jobs are based upon variations injob requirements, means maintaining equity in the distribution of wages and salaries inthe organization. 2) Maintainingcompetitiveness inthe wagemarket meansthegenerallevelofwageand salaryshould be reasonablyinline with that prevailingin the market. 3) Matching employees’ expectations and it should avoid unjustified discrimination byproviding equalpayfor equalwork. 4) Reinforcing positive employee behavior and contributionto the organization, differences in the compensation package should be based on contribution, productivity, job performance, achievement etc. 5) Devising a systemthat is the most efficient for the organization, as far as possibleit must eliminate anydiscrepancies or exploitation ofthe employees. 6) The compensation system should formulate and define rules and regulations for determining, changing, adjustingwagesinthe organization. 7) Thecompensationpackagemust ensurefairness, shouldmaintainharmoniousrelationshipbetween the employee and employer. 8) Compensation systemshould be flexible enoughso that future changescan be incorporated. 9) The wage and salaryadministration should take care ofand complyallthe rules and regulations laid down bythe legislator for protecting the employees’ interest. 10) Optimizationofmanagement and employee interests. 9.3 Essentials of Sound Wage and Salary Administration Sound Wage and salaryadministration demands some essentials to satisfy, so that one who is shoulder withthe responsibilityofdesigning administrative aspects with this regards, maycomeout with efficient system for managing the issues related with it. Some ofthe pre requisites for the sound compensation systemare: I. Rational Job Analysis: It is an important exercise with regards to each category of jobs. It reveals detailed aspects ofthe job, like duties, responsibilities associated with the performance, performance standards as a fair parameter for evaluation of the performance. It gives fair idea about jobspecificationi.e. qualification, experience, skilland other essentialrequirementsthatjob performer must satisfy. Thus rationaljobanalysis always put policydecider ina betterconditionto laydownappropriate content in policydesign. II. Proper Job Evaluation: Jobevaluation is a systematicprocess ofanalyzing and evaluating jobs to determinetherelative worthofjobinanorganization. It forms thebasis fordesigning thesound compensation systemin anorganization. Sincewage and salaryadministrationand the perceived fairness ofapproachadopted under it havea immense influence onemployee morale, motivation and satisfaction, proper job evaluationexercisedemands sensible consideration.
- 114. 114 III. InDepthKnowledgeAboutanOrganization andMarketFactors:Apart fromjobevaluation, thevariousotherfactorsthat determinetheadministrativeaspectsforwageandsalaryadministration are the size and structure oftheorganizationand the industryin whichit operates, the strengthof employeesunion, positionofa personandhis importance to the organization, demandand supply for particularskillsets in the industry, organizationalabilityand capacityto payandits economic conditionlikeprofitability, and legislative aspectsrelatedwithwage determination.Sound system for compensation management demands detailknowledge about allthese factors inorder to its sound framework andoperationinthe organization. IV. Clarity of Objectives or Purposes of Wage and Salary Administration : Last but not the least in terms of its significance, in order to have effective and efficient administration of compensation as anarea in the organization, one must have accurate clarityabout the purposes that it maytries to satisfythroughpolicydecisions .objectives maybeattractingtalentedresources; retaining and motivating employees; financialmanagement ofanorganization; satisfying legal requirement; and manymore. Sometimes these objectives are conflicting in nature also. So it is veryessentialthat one, who isgoingto carryout this responsibilityofdesigningthecompensation systemin the organization, should have reasonable clarityfor objectives to be satisfied with the design. 9.4 Factors affecting Wage and Salary Administration The termemployeesremuneration includes bothwages and salaries. Wages are commonlyconsidered as the price of labor paid to the workers for the services rendered to the organization employing them. Wherequantumofservicesrendered isdifficult to measurethepayment iscalledsalary.Normally, payment made to workers is referred to as wages, and remuneration paid periodically to persons whose output cannot be measured such as clerical, supervisoryand managerialstaff, is called salary. Wage and salary administration is affected byso manyfactors and most ofthemare uncontrollable innature so probably, thisdecisionismorecrucialandcritical.Majorfactorsaffectingwageandsalaryadministrationarediscussed as under: Figure 9.1 : FactorsAffecting Wage and SalaryAdministration Deman d & Su pp ly of S kill or L ab our Prevailing Market R are or “Going W age R ate” Prod uctivit y Cost of Living Job Requ ir em ent s Man agement At titu de Psych ological and S ocial Fact ors Legislative consideration s C ompe nsation Organizat ion’s Ability to Pay T rad e Union ’s B argain in g P ower Rate
- 115. 115 1) Demandand Supply: Demand forandsupplyoflaboranditsavailabilitywillhavegreat influence on the determinationofwage rates. Ifthere is a shortage oflabor, the wages demanded willbe high. If, on the other hand labor is plentiful, workers willbe too willing to work at low rates of wages. However, wagescannot be regarded todaymerelya price for servicesrendered. In recent years therefore, bothmanagement and labor has been becoming less and less dependent on this factoras abasic factor.Anemployeewillnot hesitate to accept lowerwages ifhe has opportunities for growthin the organization. Today, the moneywhich is paid as compensation should enable a worker tobuygoodsand serviceswhichwillenable himandhis familyto live a betterandfuller life and satisfyhis hierarchicalneeds. 2) Organization’sAbility to Pay: This is a major affecting factor in determining wage and salary structure ofan organization. Financialposition and soundness ofanorganization can put it in a position to offer attractive compensation package. Some of the reputed economically sound organizations are offering good compensation package and therebysuccessfulinobtaining and maintaining talented workforce. Good compensation package helps in attracting and retaining qualitytalentinanorganization.Generallywagesinmostoftheorganizationdecidethroughcollective bargaining and, organization’s abilityandcapacityto pay attractive wages depends uponover all financialsoundnessand economic conditionofanorganization. 3) Prevailing Market Rate or “Going Wage Rate”: This is practically the major factor that induces anyorganization to take it as a base while determining wage and salarystructure for it. Prevailingmarket rate is also knownas ‘most comparable rateofwage’, andmostpopularmethod for wage rate determination, especiallyfor lower cadre positions. There are manyreasons for an organizationtopaywages at amarket rate likecompetitionanda practice of‘BrainDrain’prevails in the market. Further more certain laws framed laid downprincipalof’minimumwages’, ‘equal wage for equal work’. In addition to this trade unions are also prefer to bargain upon and in accordance with market rate ofwages. 4) Productivity: Productivity is measured in terms ofoutput per man hour. It a result of several factors suchas technology, labor efforts, method ofdoing work, management contribution and support and so on. However, productivity has always remained as base for wage differences since it abase whichis apparentlyjustifiable and acceptable to allinthe organization. Manya time thisasbaseisnot acceptabletomanytradeunionsasitisverydifficult tohaveaccuratemeasurement and is has always remain at a discretionofmanagement policies. 5) Cost of Living: It is always expected that there has to be adjustment in payrates in accordance with prevailing cost ofliving. The changes in the cost of leaving affect purchasing power ofthe person. Trade unionalso considers this as a base for collective bargaining onwage issues. 6) Trade Union’s Bargaining Power:Generallythe mechanismforfixing ofwages formajorityof workers iscollectivebargainingornegotiation,andcollectivebargaining andnegotiations depends upon the trade union’s strength. Ifthere is a strong union operates in the organization, it may dictate its termsonwage fixationand revisionover a period oftime and vice versa. The strength and power ofthe trade union depends upon its membership, financialstrengthand leadership it mayhave, for its functioning. 7) Job Requirements: From the organizational perspective appropriate job analysis and job evaluationexercise is a base for the wage determinationand revision. It is quiteobvious also that wages to be paid to the workers should be inaccordance with the duties, responsibilities and the
- 116. 116 efforts likelyto be put for job performance. Wageor compensation package veryin accordance with jobdescription and jobspecification. 8) ManagementAttitude:Attitude ofemployer ormanagement towerstheworking communityof the organization does influence in wage determinationand revision at anappropriate time. Some reputed and professionalorganizationdoesprefer to paywageinaccordancewiththeirreputation or prestige of an organization in the market. They maygive participation to workers in sharing profits. Onthe other hand conservativeorganizations do not preferto go for suchprofit sharing. 9) Psychological and Social Factors: Psychologicallyperson perceive wages and compensation package assoleparameterforsuccessorfailureinthelife. Compensationpackageplays significant role inthe employees pride, moral, motivationand psychologicalengagement and involvement in the work. Thereforesuchvariableshould not be overlookedbytheorganizationwhile determining wage and salarystructure. Sociallyand ethicallyalso people feels that “equalwork should carry equalpay “ i.e. wage should be in accordance with efforts and workers should not be felt like being cheated. Compensationpolicyshould not make any discrimination on the basis ofcaste, color, Sex or region, and must tryto satisfyconditionfor fairness equityand justice. 10) Legislative Considerations: Legislative provisions do provide protection to the working communitybyfixingbottomline forwage payments. Manyatime it was foundthat the bargaining poweroftheworkerswasnotstrongenoughto ensurefairwages.Consequently, thestatelegislative frameworksteppedinto regulatewagesandprovideforcertainbenefitstotheworkers. Legislation like Minimum Wages Act, 1936, provides for statutory minimum wages to be prevails in the industrialorganizationsothatworkerscansatisfytheirbarerequirementsandmaintaintheirminimum living standard. These aspects are also considered while deciding compensation policy for an organization. 9.5 Methods of Wage Payments Wage plans are mainlymicro plans and each companymaydeviseanyofthe wage plans. Basicallythere are two methodsfor wage payments, viz. (1)Time rate wage system;and (2) Piece ratewage system. The wage paid to labor has to performimportant functions in the economic system. It should be such as to makethe workercapable andwillingto beefficient and involvedinthejob. There shouldbe link, wherever feasiblebetweenemolumentsandproductivity;andfairparitybetweenwagedifferentialsandskilldifferential. The plan should act as an incentive to improve the efficiency, and it should attract the worker wherever demanded or needed. Whatever maybe the method ofwage payment but the wage plan should contain followingingredients: It should be simple and understandable It should be capable ofeasycomputation It shouldbe capable ofmotivatingthe employees It should beattractive enoughfor new talent inthe organization. It should be fair, just and stable to allthe employees. The fundamentalplans ofwage payment are: I. Time Rate Wage System: It is the oldest and the simplest form of wage fixing. Under this system, workers are paid according to the work done during a certainperiod oftime at a rate of perhour, perday, perweek, perfortnight, orper monthoranyotherfixed periodoftime.According
- 117. 117 to thesection4 ofthe PaymentsofWagesAct,1936, notmore thanone monthmust elapsebetween two wage period. Time wage system adopts time as the basis ofworker remuneration without taking into account the units produced. The worker is guaranteeda specified sumofmoneyfor a fixed period ofhis time taking no account ofthe qualityor quantityofthe work done. Evaluation on the basis benefits and weaknesses is as under: Merits: It is simple and understandable and easyfor calculationofwages, since wages under this system is equaltowage per hour* numbers ofhours worked byan employee. Thereisno timelimit forcompletionofjob, workmanare not inhurryto finishit andthismaymean that theymaypayp enoughattention to the qualityofwork, effective handlingofmachineryand utilizationofresourcesinanoptimummanner. All workers are given same treatment in terms of equalwage payment, so grievances, ill will; jealousycan be avoided among them. Time rate systemprovides regular and stable income to workers, so theycanadjust and manage their budget accordingly. It requiresless administrativeattentionasthis systemprovidegoodfaithandmutualunderstanding and trust betweenemployer and employee. Demerits: It does not take in to account the ability and capacity of the workers so the skilful and more capable workers who have higher productionefficiencywilldemoralize. Time ratesystemis unrelated to the productivityand does not provide extra motivationfor extra efforts bythe workers. The labor charges for a particular job do not remain constant. This put the management in a difficult position inthe matter ofquoting rates for a particular pieceofwork. There is a possibility of systematic evasion of work by the workers, since there is no specific target or demand for specific quantityofworkbythe management. Time rate systemdoes not ask for maintaining individualworkers record, it becomes difficult for the employer to determine his relative efficiencyfor the purpose ofperformance evaluation for future promotionor rewards. Thus it does injustice to theoutstanding employees. Suitability: Timeratesystemis suitable whentheoutput contributedbytheworkeris difficultto measure and cannot be recorded in an individual basis. It is also suitable when by cultivating mutual trust and confidence and by giving fair and equaltreatment to allthe employees, management can get the work done inanappropriate manner II. Piece Rate Wage System: Under this system, workers are paid according to the amount of work done or numbers of units produced or completed, the rate of each unit being settled in advance, irrespective ofthe time takento do the work. This does not mean that the workers can take any time to complete a job because of his performance far exceeds the time which his employer expectshe would take, theoverhead charges for eachunit ofarticle willincrease. There is an indirect implicationthat a worker should not take more thanaverage time.
- 118. 118 Merits: The main advantage ofthis systemis recognitionofmerit, as efficient is rewarded, It is therefore more equitable thentime rate system. It paysworkersas per theirefficiencies, ability, capacityorperformance, so it givesdirect stimulus and motivationto the employees for extraefforts, whichmayresult into more productivity. It requires less managerialsupervision as totalremuneration depends uponunits produced, and not ontimespent inanorganization. Being interested in continuity of his work, a workman is likely to take greater care to prevent breakdown in the machineryor inthe work shop. It is a gain to the management since it reduces maintenance expenditureinanorganization. As the direct labor cost per unit ofproduction remains fixed and constant, calculation of cost while filling tendersand estimates becomes easier. It results into not onlyincrease in the output and wages ,but the methods ofproduction too are also improved, asworkers demand materialandtools free fromdefects and machineryin perfect operating condition. Demerits: If rates of wages are not scientifically fixed and acceptable to the workers, would result into workers exploitationandmayprove counterproductive Asworkersareinterestedincompletionofthejobwithagreatest speed, maydamagethemachinery, qualityofoutput or mayincreaserate ofhazards inan organization. Trade unions generallydo not like this systemofwage payment; theymaynot have fullsupport and acceptance. It maybe the major issue for industrialdispute. Suitability: It canbe introduced generallyinjobs ofarepetitivenature, whentask canbe easilymeasured, inspected and counted. It is practicallysuitable for standardized processes, and it appeals to skilled and efficient workers who can increase their earnings byworking to their best capacity. III. Balance andDebt System: This systemcombines time rate andpiece rate. Under it a minimum weeklywage is guaranteed for a fullweeks’ work, with an alternative piece-rate determined by the rate fixed on the assumption that the worker would put enough effort to earn his minimum wage. Ifthe wages calculated on piece bases are in excess ofthe time rate, the worker earns the excess. If the piece rate wages are less than the time-rate earnings, he would still get weekly wage, but on the condition that he shall have to make good the excess paid to him out of the subsequent wage he would earn. Suppose a worker is expected to complete at least 10 pieces during theweek inorder to earnthe minimumwageofrs.60, the piecerate has beenfixedat a rate ofRs.6per unit. Ifthe worker produces 12 unitswithinthe week, his earning willbe Rs.72. Ifon the other hand he produces only9 units , hewillstillbe paidRs. 60 his minimumweeklywage but as on the basis of piece rate his earning should amount to only Rs. 54, the sum ofRs. 6 paid in excess will be debited to him to be deducted out of his subsequent earnings. Thus under this systemworkers’ wages are determined, byboththe number ofhourshe works and the pieces he produces. So it a hybrid systemproducing the same benefitsand limitations ofboththe time rate and piece rare system.
- 119. 119 9.6 Process of Wage Determination Practicallyhowwagesaredeterminedandmaintainedoradministeredinanorganizationisveryorganization to organization. Ideallyspeaking it depends upon sole discretion that what procedure an organization follows for wage and salary administration. More or less an attempt is made byevery organization to follow the principles suggested for sound compensation management. Organization tries to inculcate systematic procedure for wage determinationand their revision at an appropriate time. Process ofwage determination includes jobanalysis and job evaluation, surveyofwages inthe environment, determining wage structure, anddeciding rules for wageadministration. Brieflythese steps arediscussed as under: Figure 9.2: Job Analysis 1. JobAnalysis and Job Evaluation:Thismaybe the primaryexercise that anorganizationneeds to carefullycarryout withanintentionto create basefor wage determination. Jobanalysis reveals informationabout tasks, duties, responsibilitiesandstandardswithproposedjobisto be performed bythe employees. It also guides in terms ofjobspecification i.e. skills, ability. Qualification and experiences needed to performthe jobwithrequisite performance standards. Job analysis gives enough information about the job and the profile ofthe performer in order to perform that job. Anotherimportantexercisethat anorganizationneeds to carryout is ‘JobEvaluation’. Itisnothing but finding out relative worth ofa job, in terms its contribution and significance to the overall organizationalobjectives. 2. Determining Performance Standard and Wage Surveys: Having understood the job in considerable detailanattempt is made to determine expected performance standardto be carried out bythe performer. Then, anorganization must surveywagerates prevails inthe market for the same jobor its similar type, so that attractive compensationpackage can be designed to induce good qualityofcandidature to applyforthe jobinanorganization. Here care shouldbe takenthat wagestructure shouldbeinaccordancewiththecomplexityandeffortsneededintheperformance. 3. Deciding Wage Structure and Rules forItsAdministration:Basedon collectionofrelevant informationandtakinginto account someoftheinfluencingfactors, anorganizationshoulddesign wage structure whichincludesslabfor basicor minimumwages, incentives, and/or increment over a period of time to gather with other financialand nonfinancial perquisites to be offered to an employee.Attempt should be made to follow principles offairness, equityand justice to gather with transparencywhile designing wage structure and deciding rules for its administration. The rulesshould not provoke unjustified discriminationsandexploitationofworkersotherwise it may prove counterproductive andmaygive rise to grievance, and industrialdisputes. Job Analysis Job Evaluation Determining Performance Standard Rules, Policies for Wage & Salary Administrati Deciding Wage Structure Wage Survey
- 120. 120 9.7 Summary Compensation package is one of the most significant decisions of the modern Human Resource Management, since it is carrying great influenceas a maintenancefactoras wellas ameansfor employee’s motivation also. Therefore organization needs to payattention on Wage and SalaryAdministration in order to maintainorganizationalefficiencyfor maintainingand motivating employees. Thereare someof the major considerations based on which it can go for compensation determination like demand and supplyofskill, organizationalabilityto pay, prevailing market rate, employees productivity, costofliving, trade union’s bargainingpower, job requirements management attitude, productivity, psychologicaland socialfactors and legislative considerations. Organization canadopt either ‘Time Rate’or ‘Piece Rate’ method for wage payments, both are havingtheir own merits and demerits and suitability. Organization can go for combination of the both also. There may be s standard scientific process also for wage determination, whichconsistsofsteps like jobanalysis and job evaluation, determinationofperformance standards and wage surveys and deciding wage structure and rules and policy for effective wage administration. 9.8 Self Assessment Questions 1. WhyWageand SalaryAdministrationisconsidered asa significantHumanResourceManagement function?What principlesanorganizationisrequire keeping inmindwhile deciding compensation policy? 2 Discuss indetaildifferent factors that generallyaffect compensationdecisionofanorganization. 3 What are themethods generallyavailable to an organizationfor makingwage payments?Discuss their suitabilitytogether withtheir meritsand demerits. 4 Elaborate standard procedure or mechanismthat anorganization follows fordetermining Wage and salarystructuretogether withthe rationalityattachedwith eachstep. 9.9 Reference Books - Principles ofpersonnelManagement-Edwinflippo - PersonnelManagement &IndustrialRelations-Yoder (Prentice HallofIndia Ltd. New Delhi) - PersonnelManagement-C.E.Nrothcott - PersonnelManagement –C.B.Mamoria - PersonnelManagement-Dr.P.C.Tripathi - Dynamic PersonnelAdministration-Management OFHumanResources-M.N.Rudrabasavaraj
- 121. 121 Unit - 10 : Compensationand Incentives Structure of Unit: 10.0 Objectives 10.1 Introduction 10.2 Meaning andDefinitionofCompensation 10.3 Objectives ofCompensation Planning 10.4 FactorsAffectingCompensationPlanning 10.5 Various Modes ofCompensation 10.6 Incentives 10.7 Kinds ofIncentives 10.8 FringeBenefits 10.9 Kinds ofFringe Benefits 10.10 Summary 10.11 SelfAssessment Questions 10.12 Reference Books 10.0 Objectives After reading this chapter, you willbeable to understand: The objectiveofcompensationplanning. Various factorsaffecting compensationplanning. Various modesofcompensation. Concept ofIncentives. What are fringeBenefits and its type. 10.1 Introduction One ofthe most difficult functions of personnel management is that of determining rates of monitory compensation. It is not onlydutyfor organisationbut also equallyimportant to boththe organisationand the employee. It is significant to organisation, because wages and salaries constitute the greatest single cost ofdoingbusinessandit important to the employer because theearningis the onlymeans ofeconomics survival; it isthe mean that influencethe standard ofliving, status insociety, workas motivationalfactor, loyaltyand productivity. Compensation is a tool used by management for a variety of purpose to further the existence of the company. Itisaremunerationthatanemployeereceivesinreturnforhisorhercontributionintheorganisation. So, the employee compensationprograms are designed to attract capable employees to the organisation, to motivate themtowards superior performance and to retain their services over an extended period of time. 10.2 Meaning and Definition of Compensation In layman’s language the word ‘compensation’means something, such as money, givenor received as payment for service. The word compensation maybe defined as moneyreceived inthe performance of work, plusthe manykinds ofbenefits and services that organizationprovides their employee. It refers to widerangeoffinancialandnon-financialrewardsto employeefortheirservicerenderedto theorganization. It is paid in the formofwages, salaries , specialallowance and employee benefits suchas paid vacation, insurance, maternityleaves, free travelfacility, retirement benefits etc.
- 122. 122 According toWendellFrench,” Compensationis a comprehensivetermwhichincludeswages, salaries and allother allowance and benefits.” Wages are theremuneration paid for skilled, semi-skilled and unskilled operative workforce. Salaryis the remunerationofthose employees who provides mentallabour to the employer suchas supervisor, office staff, executive etc wages are paid ondailyor hourlybasis where as salaryis paid on monthlybasis. 10.3 Objectives of Compensation Planning Thebasicpurpose or objectiveofestablishingsound compensationisto establishand maintainanequitable rewardssystem.Theotheraimistheestablishment andmaintenanceofanequitablecompensation structure i.eanoptimalbalancing ofconflictingpersonnelinterest so thatthesatisfactionofemployeesandemployers ismaximisedandconflictsminimized, thecompensationmanagement isconcerned withthefinancialaspect ofemployees need, motivation and rewards. Asoundcompensationstructure tries to achieve these objectives: To attract manpower ina competitive market. To control wages and salaries and labour costs by determining rate change and frequency of increment. To maintainsatisfactionofemployeesbyexhibitingthat remunerationisfairadequateandequitable. To induce andimproved performance, moneyisan effective motivator. a) To Employees: i. Employees are paid according to requirement oftheir jobs i.e highly skilled jobs are paid more compensationthanlow skilled jobs. Thiseliminates inequalities. ii. The chances offavouritismare minimised. iii. Jobs sequence and lines ofpromotionare established wherever theyare applicable. iv. Employee’s moraland motivationare increased because ofthe soundcompensation structure. b) To Employers: i. Theycansystematicallyplan for andcontrolthe turnover inthe organization. ii. Asoundcompensationstructurereducesthelikelihoodoffrictionandgrievanceoverremunerations. iii. It enhanceanemployeemoraleandmotivationbecauseadequateandfairlyadministrativeincentives are basis to his wants and need. iv. It attracts qualified employees byensuringand adequate payment for allthe jobs. v. In dealing witha trade union, theycan explain the basis oftheir wages programme because it is based upon a systematic analysis ofjobs and wages facts. 10.4 Factors Affecting Compensation Planning Factors determining compensation ofan employeeconsiderable amount ofguess word and negotiation are involved. But following are the certain factors which have been extracted as having an important bearing uponthefinaldecision: a) Supply andDemand ofLabour: Whateverthe organizationproducesascommoditytheydesire services and it must paya price that ofworkers acting inconcert. Ifmore the labour is required, such as at war time prosperity, there willbe tendencyto increase the compensation;whereas the situationwhenanything works to decreasethe supplyoflabour, suchas restrictionbya particular
- 123. 123 labour union, there willbe atendencyto increase thecompensation. The reverse ofeachsituation is likelyto result in adecrease inemployee compensation, provided, labour union, abilityto pay, productivity, government do not intervene. b) Ability to Pay: Labour Unions has often demanded an increase in compensationon the basis that the firmis prosperous and able to pay. c) Management’s Philosophy: Management’s desire to maintain or improve moral, attract high calibre employees, reduce turnover, and improveemployees standard oflivingalso affect wages, as does the relative importance ofa given position to a firm. d) Legislation: Legislationrelatedto playsavitalroleindetermininginternalorganizationpractices. Various acts are prescribed bygovernment ofcountryfor wage hours laws. Wage-hour laws set limits onminimumwages to bepaid and maximumhoursto be worked. InIndia minimumwages act 1948reflecting the wage policyfor anorganizationandfixationofminimumratesofwages to workers in sweated industries. In 1976 equal remuneration act was enacted which prohibits discriminationinmattersrelating to remunerationonthe basis ofreligion, regionor gender. 10.5 Various Modes of Compensation Various modes ofcompensation are as follows- a) Wages and Salary-Wages represent hourlyrates ofpayand salaryrefers to monthlyrate ofpay irrespective ofthe number ofhours worked. Theyare subject to annualincrements. Theydiffer fromemployee to employee and depend uponthe nature ofjobs, seniorityand merit. b) Incentives- These are also known as payment byresults. These are paid in addition to wages and salaries.Incentive depends uponproductivity, sales, profit or cost reductionefforts. Incentive scheme are oftwo types: Individualincentive schemes. Group incentive schemes. c) Fringe Benefits- These are given to employees in the formofbenefits such as provident fund, gratuity, medicalcare, hospitalization, accident relief, healthinsurance, canteen, uniformetc. d) Non- Monetary Benefits- Theyinclude challenging job responsibilities, recognition of merit, growthprospects, competent supervision, comfortable working condition, jobsharing and flexi time. 10.6 Incentives Incentivesare monetarybenefitspaidto workmeninlieu oftheir outstandingperformance. Incentives vary fromindividualto individualand fromperiodto period for thesame individual. Theyareuniversaland are paid in everysector. It works as motivationalforce to work for their performance as incentive forms the part totalremuneration. Incentives whenaddedto salaryincrease theearning thus increase thestandard of living. Theadvantageofincentivepayment arereducedsupervision, betterutilisationofequipment,reduced scrap, reduced lost time, reduced absenteeismand turnover & increased output. According to Burack& Smith, “Anincentive scheme is a plan or programme to motivate individualor group onperformance.Anincentive programme is most frequentlybuilt onmonitoryrewards ( incentive payor monetarybonus ), but mayalso include a varietyofnonmonetaryrewards or prizes.”
- 124. 124 10.7 Kinds of Incentives Incentives canbe classified under thefollowing categories: 1. IndividualandOrganizationalIncentives 2. Financialand Non-FinancialIncentives 3. Positive andNegative Incentives 1) Individualand OrganizationalIncentives-Accordingto L.G. Magginson, “Individualincentives are the extra compensation paid to anindividualfor allproductionover a specified magnitude which stems fromhisexercise ofmore thannormalskill, effort orconcentrationwhenaccomplished inapredetermined wayinvolving standard tools, facilities and materials.” Individualperformance is measured to calculate incentive whereas organizationalor groupincentive involve cooperationamongemployees, management and unionandpurport to accomplishbroaderobjectives suchas anorganization-widereductioninlabour, materialandsupplycosts, strengthening ofemployee loyaltyto company, harmonious management and decreased turnoverand absenteeism I) IndividualIncentive System is of two types: a) Time based System- It includes HalseyPlan, Rowan Plan, Emerson Plan and BedeauxPlan b) Productionbased System- it includesTaylor’s DifferentialPiece Rate System, Gantt’s Task and Bonus Plan II) Group Incentive System is of following types a) Scalon Plan b) Priestman’s Plan c) Co-Partnership Plan d) Profit Sharing Some important these plans ofincentive wage payments are as follows: Halsey Plan- Under this plan a standard timeis fixed in advance for completing a work. Bonus is rewarded to the worker who performhis work in less than the standard time and paid wages according to the time wage systemforthe saved time. The total earnings of the worker = wages for the actual time + bonus Bonus = 33.5% ofthe time saved (standard time set on past experience) Or 50% ofthe time saved (standard are scientificallyset) Example: Time required to complete job (S) = 20 hours ActualTime taken (T) = 15 hours Hourly Rate of Pay (R) = Rs 1.5 Calculate the wage ofthe worker. Solution: T X R + (S-T ) X R 2 15 X 1.5 + (20-15 ) X 1.5 = 22.5 + 3.75 = 26.25 Rs 2 In this equation3.75 Rs are the incentives for saving5 hours. Rowan Plan– Underthismethodminimumwagesare guaranteed givento worker at the ordinary rate for the time taken to complete the work. Bonus is that proportion of the wages of the time taken which the time saved bears to the standard time allowed.
- 125. 125 Incentive = Wages for actual time for completing the work + Bonus where, Bonus = S-T X T X R S EmersonPlan–Underthis system, wagesonthetimebasis are guaranteed evento thoseworkers whose output is below the standard. The workers who prove efficient are paid a bonus. For the purposeofdeterminingefficiency, eitherthestandardoutput perunitoftimeisfixed,orthestandard time for a job is determined, and efficiencyis determined onthe basis ofa comparision ofactual performance against the standard. Bedeaux Plan – It provide comparable standards for all workers. The value of time saved is divided both to the worker and his supervisor in the ratio of¾ and ¼ respectively.Asupervisor also helpsa worker insavinghis time so heis also givensomebenefit inthis method. The standard time for eachjob is determined interms ofminutes whichare called Bedeaux pointsor B’s. each B represents one minute through time and motion study. A worker is paid time wages upto standard B’s or 100% performance. Bonus is paid when actualperformance exceeds standard performance interms ofB’s. Taylor’s Differential Piece Rate System - F.W. Taylor, founder ofthe scientific management evolved thissystemofwage payment.Underthis system, thereis no guarantee ofminimumwages. Standard timeand standard work isdetermined onthe basisoftime study.Themaincharacteristics of this system is that two rates of wage one lower and one higher are fixed. Those who fail in attaining the standard, are paid at a lower rate and those exceeding the standardor just attaining the standard get higher rate. Under this system, a serve penalty is imposed on the inefficient workers because theyget the wages at lower rates. The basic idea underlying inthisscheme is to induce theworker at least to attainthe standard but at the same time ifa worker is relativelyless efficient, he willlose much. For example, the standard is fixed at 40 units per dayand the piece rate are 40 P. and 50 P. per unit. Ifa worker produces 40 units or more in a day, he willget the wages at the rate of50 P per unit and if he produces 39 units willget the wages at 40 paise per unit forthetotaloutput. Gantt’s Task and Bonus Plan - In this, a minimum wage is guaranteed. Minimum wage is given to anybody, who completes the jobin standard time. Ifthe job is completed in less time, then there is a hike in wage-rate. This hike varies between25% to 50% ofthe standard rate. Profit Sharing – It is a method ofremuneration under which anemployer payhis employees a share in formofpercentage fromthe net profits ofanenterprise, in addition to regular wages at fixedintervalsoftime. 2) Financial and Non-financial Incentives- Individual or group performance can be measured in financialterms. It means that their performance is rewarded inmoney or cashas it has a great impact on motivationas asymbolofaccomplishment. Theseincentivesformvisible and tangiblerewardsprovided in recognition ofaccomplishment. Financialincentivesinclude salary, premium, reward, dividend, income oninvestment etc. Onthe other hand, non-financialincentives are that socialand psychologicalattraction whichencouragespeopleto do theworkefficientlyandeffectively. Non-financialincentivecanbedelegation ofresponsibility, lackoffear, worker’s participation, title or promotion, constructive attitude,securityof service, good leadership etc.. 3) Positive and Negative Incentives- Positive incentives are those agreeable factors related to work situation which prompt an individualto attainor excelthe standards or objectives set for him, where as
- 126. 126 negative incentives are those disagreeable factors ina work situation whichanindividualwants to avoid andstrivesto accomplishthe standardsrequiredonhis orherpart. Positiveincentivemayincludeexpected promotion, worker’s preference, competition with fellow workers and own ‘s record etc. Negative incentives include fearoflayoff, discharge, reduction ofsalary, disapprovalbyemployer etc. 10.8 Fringe Benefits Employees are paid severalbenefits inaddition to wages, salary, allowances and bonus. These benefits and servicesare called ‘fringe benefits’because these are offered bythe employer as a fringe. Employees ofthe organization are provided severalbenefits and services bythe employer to maintainand promote employee’s favorable attitudetowards the work andwork environment. It not onlyincreases their morale but also motivate them. These provided benefits and services forms the part ofsalaryand are generally refereed as fringe benefits. According to D. Belcher, “Fringe benefits areanywage cost not directlyconnected withthe employees productive effort, performance,service orsacrifice”.AccordingtoWertherand Davis,“Fringeembrace a broadrange ofbenefitsandservices that employeesreceiveas part oftheirtotalcompensation, package- payor direct compensation and is based on criticaljobfactors and performance”. According to Cockman, “Employeebenefits are those benefits whichare supplied byanemployer to or for thebenefits ofanemployeeand whichare not inthe formofwages, salaries and timerated payments”. These are indirect compensation as theyare extended condition ofemployment and are not related to performance directly. 10.9 Kinds of Fringe Benefits The various organizationsin India offers fringebenefits that maybecategorized as follows: 1) OldAge and Retirement Benefits - these include provident fund schemes, pension schemes, gratuityand medicalbenefits whichareprovidedto employee aftertheir retirementand during old age as a sense of securityabout their old age. 2) Workman’s Compensation- thesebenefits are provided to employee iftheyaregot ignored or die under the working conditions andthe sole responsibilityis ofthe employer. 3) Employee Security- Regular wageand salaryisgivento employeethatgivesa feelingofsecurity. Other thanthis compensation is also givenifthere islay-offor retrenchment inanorganization. 4) Payment forTimeNotWorked –Under thiscategoryofbenefits, a workeris provided payment for the work that has been performed byhimduring holidays and also for the work done during odd shifts. Compensatoryholidaysfor thesamenumber inthesame monthare giveniftheworker has not availed weeklyholidays. 5) Safety and Health – Under this benefit workers are provided conditions and requirements regarding working conditionwitha view to provide safe working environment. SafetyandHealth measures are also taken care of in order to protect the employees against unhealthy working conditions and accidents. 6) Health Benefits – Employees are also provided medicalservices like hospitalfacility, clinical facilitybythe organization. 10.10 Summary Compensation are monetary and non-monetary benefits design to attract, retain and motivate workers ofthe organisation. Compensationare dependonlabour market conditions, legislations, management philosophyand organisations abilityto pay.
- 127. 127 Broad objectives ofthe compensation planning is to assign a monetaryvalue to eachjob or skill set inthe organisation. Incentive plans and fringe benefits are the modes ofcompensation. Incentiveplans usedinindustries are bothforindividualand group. Individualincentivesare based onindividualperformanceandgroupincentivesrewardsemployeesfortheircollectiveperformance. Compensationinadditionto direct wagesorsalariessuchascompanycar,paidholidays, retirement benefits, healthandsafetybenefits, workman’scompensationare knownasfringebenefits. Purpose offringe benefits isto increase the economicsecurityofemployees. 10.11 Self Assessment Questions 1 Describe compensation and its various modes? 2 Explainvarious factorsaffecting compensationplanning? 3 What do youunderstand byindividualandgroup incentive? Discuss themwith their relative advantage and demerits? 4 What do you understand byfringe benefits? What are itsessentialfeatures? 5 Write Short Notes on: i. HalseyPremiumPlan ii. Safety& Health measures. iii. RowanPlan. 10.12 Reference Books David a. Decenzo andStephenP. Robbins“Personnel/HumanResource Management”, Prentice HallofIndia Private Ltd, New Delhi3rd edition 2004 K.Aswathappa;”Human Resource and PersonnelManagement- Text and cases”;Tata Mcgraw HillPublishing companyLtd, New Delhi, 4th edition 2005 EdwinB.Flippo;”Personnelmanagement”;McGrawHillBookCompany,Singapore;International edition1984 Wayne F.Casico;“Managing HumanResource- Productivity, QualityofWork Life, Profits” ,Tata Mcgraw HillPublishing CompanyLtd, New Delhi7th edition2006. G.S. Sudha;“HumanResourceManagement”;ProfessionalPublications, Jaipur’3rd revisededition 2009 Shashi k. Gupta and Rosy Joshi ;“Human Resource Management”; KalyaniPublishing , New Delhi2011 C.B. Mamoriaand S.V. Gankar;” PersonnelManagement-Text andCases”;Himalaya Publishing House, 22nd edition 2002.
- 128. 128 Unit -11 :Industrial Relation Structure of Unit: 11.0 Objectives 11.1 Introduction 11.2 The Concept ofIndustrialRelationorMeaning and Definition ofIndustrialRelation(IR) 11.3 Objective ofIndustrialRelation 11.4 Approaches to IR 11.5 Suggestions and Measuresto Improve IR 11.6 Significance ofGood Relations 11.7 IndustrialDisputes 11.8 Forms ofIndustrialDisputes 11.9 Causes ofDisputes 11.10 PreventionofIndustrialDisputes 11.11 Settlement ofIndustrialDisputes 11.12 Summary 11.13 SelfAssessment Questions 11.14 Reference Books 11.0 Objectives After completingthis unit, you wouldbe able to: Understand the concept ofindustrialrelation Know about objective and approaches ofindustrialrelation Learnhowto measures ofimprovingindustrialrelation Point out variousindustrialdisputes Know about causesofindustrialdisputes Learnhowto prevent and settle down industrialdisputes Learnhow to resolve industrialrelation. 11.1 Introduction Industrial relation is not a very new concept but it has become one of the most delicate and complex problemofmodernIndiansociety. IndustrialProgressisimpossiblewithoutlabourmanagementcooperation and industrial harmony. The concept of Industrial relationhas a wide meaning and connotation. In the narrow sense,the term“IndustrialRelation”refersto the natureofrelationship betweentheemployersand employeesinanIndustrialenterprise. Inthebroad sense, industrialrelationrefersto alltypes ofrelationship between allthe parties concerned with the industry. Examples are: Individualrelations Relationship between employers and workers at the place of work or workers participation in management. Collective bargaining Trade union Machineryfor settlement ofindustrialdisputes Unfair labor practices Individualgrievance and disciplinarypolicyand practice.
- 129. 129 Industrialrelationtraining. StateparticipationinindustrialRelation. Another relatedtermis ‘employee relations’or ‘human relation’. 11.2 The Concept of Industrial Relation or Meaning and Definition of Industrial Relation (IR) The term“IndustrialRelation” refers to all types ofrelationship between all the parties concernedwith industry.AccordingtoEncyclopaediaBritannica,itdenotesrelationsofallthoseassociatedinproductive work, including industry, agriculture, mining, commerce, finance, transport and other services. Accordingto DaleinhisbookPersonnelManagementandIndustrialRelation, definesIndustrialrelations arerelationship betweenmanagement andemployees oramong employeeand theirorganizationthat arise out ofemployment. According to R.A.Lester Industrialrelations involves attempts to have workable solutions between conflicting objectives and values, between incentive and economic security, betweendiscipline and the industrialdemocracy, betweenauthorityand freedomand betweenbargaining and cooperation”. Inmodernusage, the phrase“IndustrialRelation”includesthe wholegamutofmatters that arisedueto the continuing relationship between the employers andthe workers. Its scope includesthree rarelydistinct areas: Relations between mangers and individualworkers. The collective relations betweenemployers andlabor (trade) union. The role ofgovernment inthe regulationofthese relationships. These three closelyassociated areas are often referred to respectivelyas PersonnelManagement CollectiveBargaining LaborLegislation Parties involved in industrial relations: Employers Employee Government Figure 11.1
- 130. 130 ActivityA: 1. Collect the data to triparties at least offiveindustries about their industrialrelationwithin theorganization. 11.3 Objective of Industrial Relation TheprimaryobjectivesofIndustrialRelationat nationallevelarethat to improvingtheeconomic condition ofworkers, increasing productivityand achievingindustrialdemocracyinindustrialenterprise. Thelabor management committeeoftheAsianRegionalConference ofthe InternationalLabor Organization(ILO) has recognized certainfundamentalobjectivesofIndustrialrelations are to maintainsound andharmonious relations betweenemployees and employers. The other objectives drawn fromthis objective are: 1. IndustrialRelationsafeguards the interest oflaborandmanagement throughmutualunderstanding and goodwill among those parties in the industry which actively participates in the process of production. 2. To raiseproductivityofthe industryat a higher levelthis is the needofthe dayto contribute tothe economic development ofthe country. 3. To avoid allforms ofindustrialconflict 4. To minimize labour turnover and absenteeismbyproviding job satisfaction to the workers and increasing their morale. 5. To minimizethe occurrence ofstrikes, lockouts and gheraos. 6. To encourage and develop trade unions in order to improve workers collective strength and resolvingtheir problemsthroughcollective bargaining. 7. To establish, develop and maintain industrialdemocracy based on employee’s participation in management and profit ofthe industry. 8. To facilitate government control over industries in regulating production and for protecting employment or whereproductionneeds to be regulatedin public interest. 9. To check and ensure a healthyand balanced socialorder in the industry. 11.4 Approaches to IR IndustrialRelation is perceived bydifferentlybydifferent people. Some ofthe approaches to industrial relations are as follows. There are three popular approaches to IR:Unitary, Pluralistic and Marxist. Some othersare psychologicalapproach, sociological,V.V.Giri, Gandhian, HRDand SystemApproach. Here we are discussing on mainlypopular approaches. Unitary Perspective: In unitary, the organizationisperceived as anintegrated and harmonious system, viewed as one happyfamily.Acoreassumptionofunitaryapproachis that management and staff, andall members ofthe organization share the same objectives, interests and purposes; thus working together, hand-in-hand, towardsthe shared mutualgoals. Furthermore, unitaryhas apaternalistic approachwhere it demands loyaltyofallemployees. Trade unions are deemed as unnecessaryand conflict is perceived as disruptive. Fromemployeepoint ofview, unitaryapproach means that: Workingpracticesshouldbeflexible. Individualsshould bebusinessprocessimprovement oriented, multi-skilled and readyto tackle with efficiencywhatever tasks are required.
- 131. 131 Ifa unionis recognized, its role is that ofa further means ofcommunicationbetween groups of staffand the company. The emphasis isongood relationships and sound terms and conditions ofemployment. Employee participationinworkplacedecisions isenabled. This helpsinempowering individuals in their rolesandemphasizesteamwork, innovation, creativity, discretioninproblem-solving, quality and improvement groups etc. Employees should feelthat the skillsand expertise ofmanagers supports their endeavors. Fromemployer point ofview, unitaryapproachmeans that: Staffing policies shouldtryto unifyeffort, inspire and motivate employees. The organization’s wider objectives should be properlycommunicated and discussedwith staff. Reward systems shouldbe so designed as to foster to secure loyaltyand commitment. Line managersshould take ownership oftheir team/staffing responsibilities. Staff-management conflicts -fromthe perspective ofthe unitaryframework - are seenas arising fromlack ofinformation, inadequate presentationofmanagement’s policies. The personalobjectives ofeveryindividualemployed in the businessshould be discussed withthemand integrated withtheorganization’s needs Pluralistic-Perspective: In pluralismthe organization is perceived as being made up of powerful and divergent sub-groups - management and trade unions. This approach sees conflicts of interest and disagreements between managers and workers over thedistribution ofprofits asnormaland inescapable. Consequently, theroleofmanagement wouldleanlesstowardsenforcingandcontrollingand moretoward persuasionandco-ordination.Tradeunionsaredeemedaslegitimaterepresentativesofemployees. Conflict is dealt bycollective bargaining andis viewed not necessarilyas a bad thing and ifmanaged couldin fact be channelled towardsevolutionand positive change. Realistic managers should accept conflict to occur. There is agreater propensityfor conflict rather than harmony. Theyshouldanticipateandresolvethisbysecuringagreedproceduresforsettling disputes.Theimplications ofthisapproachinclude:· The firmshould have industrialrelationsand personnelspecialistswho advisemanagersandprovide specialist services inrespect ofstaffing andmatters relating to unionconsultationand negotiation. Independent externalarbitrators shouldbe used to assist in the resolutionofdisputes. Unionrecognitionshould be encouraged andunionrepresentatives given scope to carryout their representativeduties· Comprehensivecollective agreements should benegotiated withunions Marxist Perspective: This view ofindustrialrelationsis a byproduct ofa theoryofcapitalist society and socialchange. Marxargued that: Weakness and contradictioninherent in the capitalist systemwould result inrevolution and the ascendancyofsocialismover capitalism. Capitalismwouldfoster monopolies. Wages (coststo the capitalist) would be minimized to a subsistence level. Capitalistsand workerswouldcompete/be incontentionto winground andestablishtheirconstant win-lose struggles wouldbe evident
- 132. 132 This perspective focuses on the fundamental division of interest between capital and labor, and sees workplace relations against this background. It is concerned withthestructure and nature ofsocietyand assumes that the conflict inemployment relationship is reflective ofthe structure ofthesociety.Conflict is therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by capital. 11.5 Suggestions and Measures to Improve IR Good industrialrelationreferto harmonious relations betweenthe trade unionand themanagement inan organization, but it is not easyto promote and maintain sound and harmonious industrialrelations in an organizationbut thereare some suggestionswhichare help tomaintainsoundand cordialrelationbetween the laborand the management. 1. Support of Top Management: Top management action always be proactive and geared to problemsolving and its action and decision must be infavour ofan organizationand employees. 2. SoundPersonnelPolicies:personnelpoliciesconstitutethebusinessphilosophyofanorganization and guide it in arriving at human relations decisions. Sound policies and rules are of little help unless they are executed objectivelyand equitablyat all the levels ofan organization. Positive Attitudes: Bothtop management and trade union should adopt positive attitudes towards each other, they help them to understand problem of each and which can be solved by collective bargaining. 3. Collective Bargaining:Collective bargainingis an instrument which helpsto maintain industrial peace inanorganization .such collective bargaining agreements and associationofemployees in decisionmaking process willbring about cooperation betweenlabour and management. 4. Strong Trade Union and Sound Employers’Union: Industrial relations can be sound only when the bargaining power ofthe employees’ union is strong and equalto that ofmanagement. And employers’ unionshould also be soundand wellorganized. Soundmanagement are helpful for themaintenanceandpromotionofuniformpersonnelpoliciesamongvariousorganizations and to protect the interest ofweak employers. 5. There are also some others suggestions but they are some expensive because they want some researchwork on them: There should be well established and properly administered grievance redress machinery, sometimeswhichprovidesanoutletfortensionsandfrustrationsofworkers.Similarly, asuggestions scheme willhelpto satisfythe creativeurge ofworkers. Jobsupervisorsshouldbe trained thoroughlyto ensure that organizationalpoliciesand practices as wellas leadership and communication skill, which help themtoo properly, implemented and carried into effect. Aregular follow up ofIR programmed is essential so that existing practice maybe properly evaluated and acheck maybe exercised on certain undesirable tendencies, should theymanifest themselves. 11.6 Significance of Good Industrial Relations Ifthe objectiveofthe nationisrapid nationaldevelopment andincreased socialjustice areto beachieved, there must be harmonious relationship between management and union. Such relations willlead to the followingbenefits:
- 133. 133 1. IndustrialPeace: Good industrialrelations bringharmonyand remove causes ofdisputes. This leadstoindustrialpeace, whichisanidealsituationforanindustrialunittoconcentrateonproductivity andgrowth. 2. High Morale: Cordialindustrial relations improve the morale of the employee. It implies the existence ofanatmosphere ofcooperation, confidence, and respect withintheenterprise. Insuch an atmosphere, there are common goals, which motivate all members of the organization to contribute theirbest. Consequently, there ishigher productivity, higher income, and increased job satisfaction– allresulting in higher moraleofthe workforce. 3. Mental Revolution: Sound industrialrelation completelytransforms the outlook ofemployers andemployee. Itisbasedonconsultationbetweentheworkersandthemanagement. Thismotivates the workers to give their best to the organization and share the fruits ofprogress jointlywiththe management. 4. Reduced Wastage and Increased Productivity: It helps in increasing production. Wastage of man, materialand machines are reduced to the minimumand thus nationalinterest is protected. Thus, theywillcontribute to the economic growthofthe countries. 5. Programmes for Workers Development: New programmes for workers development are introduced inanatmosphere ofpeace suchas training facilities, labor welfarefacilities etc. Hence, fulladvantageoflatestinventions, innovationsandothertechnologicaladvancementcanbeobtained. Through these employee development programme, workforce easily adjust itself to required changes for betterment. Activity B: 1 Discuss the present position ofindustrial relations in the country, in your Opinion; what steps should be takento improve it. 11.7 Industrial Disputes Industrial Disputes Act 1947 defines any dispute or difference between employers and employers or between employers and workers, or between workers and workers, which is connected with the employment or non-employment or terms ofemployment or withtheconditions oflabor ofanyperson. Industrial Disputes are frequently clouded bya sense ofexploitation, distrust and discontent between employee and employers. In simple language, the disputes between employers and employees on any Industrialmatters are known as industrialdisputes. The term‘dispute’ is characterized bythe following factors : 1. Dispute mainlyrelate to the strife betweenemployers and their employees. 2. There must actuallybe a difference. 3. Its work relatedor industrialmatter issues. 4. Disputes must be raised bygroup or class ofworkmen. 5. Disputes between one or two workmenand their employers are not an industrialdispute. 11.8 Forms of Industrial Disputes Industrialdispute cantake place inanyofthe following forms: 1) Strikes: A strike means a cessation of work by a body of persons employed in any industry acting in combination or a concerted refusal under a common understanding of a number of
- 134. 134 persons who are or have beenso employed to continue work or to accept employment. Strikes are ofseveraltypes: Economic Strike Sympathetic Strike GeneralStrike Set down Strike Slow Down Strike LighteningStrike Hunger Strike 2) Lock Out: lock out is the counterpart ofstrike. Lock outs bring psychologicalpressure on the workers to agree to his conditions or face closure ofthe units.Alockout is decaled as a trialof strengthbetweenthe management and itsemployees. Lockouts means theemployer closes down his factorywherehis workers are employedbecause he wants to force themto agreeto his terms and conditions ofservice during the pendencyofa dispute. 3) Gherao: Its means “to surround”.According to NationalCommissionon Labour“Gherao tend to inflict physicalduress onthepersonsaffected and endangernot onlyindustrialharmonybut also create problems oflaw and order”. 4) Picketing: It is primarilya methodofdrawing public attentiontowards the disputes andit is legal so there is no violence is involved. In picketing, workers are dissuaded fromreporting for work bycertain persons stationed at the gate ofthe factory. 5) Boycott: Boycott aims at disrupting the normalfunctioning of an enterprise, through forceful appeals and negative behaviouralacts. 11.9 Causes of Disputes 1) Wages andAllowances: The most important cause for disputes relates to wages. The demand for increase in wages and allowances is the most important cause of industrial disputes. The demand forwages and allowances hasnever been fullymet because ofinflation and high cost of living. High inflation results in increased cost ofliving resulting in never ending demands from unions. There are some more economic reasons who are the cause of industrial disputes are bonus, working conditions and working hours, modernization and automation and demand for otherfacilities. 2) Union Rivalry: Most organizations have multiple unions. Multiplicityofunions leads to inter- unionrivalries. Ifone unionagrees to a wage settlement, another unionwilloppose it. 3) PoliticalInterference: Majortrade unions are affiliated to politicalparties. Politicalaffiliated is not peculiar to our countryalone. Even a cursoryassessment oflabour movements around the world wouldshowthat trade unionsare, bytheirverynature, politicaland that politicizationofthe rule rather thantheexception. Everywhere tradeunionhave beencompelled to engage inpolitical actionto obtainenoughfreedomfromlegalrestraint to exercise theirmainindustrialfunctions. 4) Managerial Causes: These causes include autocratic managerialattitudeand defective labour policies. Inthisincludesfailuresofrecognizethetradeunion, defectiverecruitment policies, irregular layoff and retrenchment, defiance of agreements and codes, defective leadership, weak trade unions. 5) Unfair labour Practices: The Industrial DisputeAct, 1947 is more specific about the unfair labour practices.According to theAct, the following constitute unfair labour practices:
- 135. 135 To interfere with, restrain fromor coerce workmen in the exercise of their right to organize, form, joinorassist a trade unionor to engage inconcerted activities for the purpose ofcollective bargaining or othermutualaid or protection, that is to say, Threatening workmenwithdischarge iftheyjoina trade union Threating a lockout or closure, ifa trade unionis organised Granting wage increases to workmenat crucialperiods ofthe trade union organization, with a view to underminethe efforts ofthe tradeunionat organization. To, dominate, interfere with or contribute support, financialor otherwise, to anytrade union. 6) To encourageor discourage membership inanytrade unionbydiscriminating against workmen. 7) To discharge or dismiss workmen. 8) To indulgein acts offorce or violence. 9) To refuse to bargaining collectively, ingood faithwiththerecognized trade unions. 10) To insist uponindividuals workmen, who are on a legalstrike, to sign a good conduct bond as a preconditionto allowing themto resumework? 11.10 Prevention of Industrial Disputes It is veryfamous sentences preventionis always better thancure. Prevention steps should, therefore, be takenso that reduced industrialdisputes and sometimes tryto do not occur the industrialdisputesin the organizations. 1) Collective Bargaining:CollectiveBargainingisthemost effective methodofresolvingindustrial disputes. Theroleofcollectivebargaining insolving theproblemsarisingbetweenthemanagement and the worker has beenwidelyrecognized. Collective bargaining not onlyincludes negotiation, administrationandenforcement ofthewrittencontracts betweentheemployeesandtheemployers but also includesthe process ofresolving labour management conflicts. Collective bargaining offersthe following benefits to both ofthe employees and employers : It helpsincrease economic strengthofboththe parties at the same time protectingtheir interest. It helps resolve disputes whenit is occur in the organization. It also help to establish uniformconditions ofemployment witha view to avoid occurrences of industrialdisputes. It lays downrules and norms for dealing with labour. 2) NationalArbitrationPromotion Board:TheTruceResolution1962and thecode ofDiscipline as evolved in1958 recognized the principle of voluntaryArbitration. The Government ofIndia tooknoteoftheintentionofboththeindustrialpartnersandsetuptheNationalArbitrationPromotion Board in July1967 to promote arbitration. Arbitrationisa procedure in whicha neutralthird partystudies the bargaining situation, listensto both the parties and gathers information, and then makes recommendations that are building on the parties. Arbitration is effective because it is established by the parties themselves and the decision is acceptableto themand it also delays are cut down, settlement are speededup and less expensive whencompared to courts or tribunals.
- 136. 136 3) Grievance RedresalProcedure:Agrievancemaybeunderstoodasanemployee’sdissatisfaction orfeelingofpersonalinjusticerelatingtohisorheremployment relationship.Agrievanceisgenerally well- definedinacollective bargainingagreement. TheIndianLabourConferenceinn1958evolved a code ofdiscipline which was ratified bythe nationaltrade unionand employers’ organization. Under thiscode, boththe partiesvoluntarilyagree to maintainandcreateanatmosphereofmutual trust andcooperationinthefactoryandto settleallthedisputesandgrievancebymutualnegotiation, conciliationandvoluntaryarbitration and avoiddirect action. 4) The Implementation Machinery: The central organizations ofworkers and employers have set up machineryto screencases ofindustrialdisputes before theyare takento courtswith a view to reducing litigation. The mainfunctionofconsultative machineryis to bringthe parties together for mutualsettlementofdifferenceinaspirit ofco-operationandgoodwill. Consultativemachinery operates at the plant, industry, national and state levels. At the plant level, there are works committeesandjoint management councils. Beingessentiallybipartiteincharacter,Workcommittee are constituted as per the provisions ofthe IndustrialDisputesAct, 1947 and joint management councils areset up following the trust laid down inthe IndustrialPolicyResolution, 1956.At the industrylevel, there areWage Boardsand IndustrialCommittees. Implementationcells have been set upinalmost allthestates andtheir activitiesare coordinated bythecentralImplementationand EvaluationCellwitha view to ensure uniformpolicies and action. 5) Workers Participation in Management: It is a method wherebythe workers are allowed to be consulted and to have a sayinthe management ofthe unit. The important schemes ofworkers participationare: WorkCommitteesconsistingofrepresentativesofemployer andemployeewhere everyindustrial undertaking employing100 or more workersis under anobligationto set up. Its mainpurpose to promoteindustrialrelations. Joint Management Councils: Government suggested setting up joint management councilto make astart inlabour participationinmanagement. Shop council: it have been set up inthe manufacturing and mining industries employing 500 or more workers in private, public and joint sectors. Its mainfunction to assist the management in achieving productiontargets, improving production, productivityefficiency, eliminating wastage and inachieving optimumutilizationofmachineryand manpower. Joint Council : joint councilhave been established for the whole unit and deals with matters relating to optimumproductionandefficiencyandthe fixationsofproductivitynormsfor manand machine for the unit as a whole. 6) Tripartite Bodies: Tripartite bodies composed of employer, employee and government have been set upfor consultationand discussionon problems oflabour to solve it out. 7) ModelStanding Orders:Government enactedthe IndustrialEmployment (StandingOrder)Act 1946 for to avoid frictions amongst employersand workmenover the termsofemployment. This Act is requiringemployersinthe establishment to defusewithsufficient precision, theconditionof employment under him and to make them known to all the workers. Such conditions include conditions ofrecruitment, discharge, disciplinaryaction, holidays, leave etc ofthe workers. Thus, the mainobject ofthe act is to prevent the dispute as soon as it arises byframing modelrules for maintaining disciplineand better relations.
- 137. 137 11.11 Settlement of Industrial Disputes Ifdisputecouldnot bepreventedonvoluntarybasisanddo arise, stepshaveto betakenfortheirsettlement. Industrial DisputeAct 1947 as amended in 1982 provides severalprovisions for settling the disputes. Various methodsand provision are for resolving disputes. More important ofthemareas follows: 1) Arbitration 2) Conciliation 3) CollectiveBargaining 4) Code ofDiscipline 5) Grievance Procedure 6) Adjudication 7) Consultative machinery 1)Arbitration: it isaprocedure inwhicha neutralthirdpartystudiesthe bargainingsituationlistento both the parties and gathers information and then make recommendation that are binding the parties. It is effectivebecauseestablished bythepartiesthemselves andthe decisionis acceptable to themand relatively expeditious whencompared to courts ortribunals. Delays are cut downand settlements arespeeded up. But it has some weakness also are it is expensive. The expenditure needs to be shared bythe labourand the management andjudgment become arbitraryifthere is a mistake inselecting the arbitrator. 2) Conciliation: It is aprocess bywhichrepresentativesofworkers and employeesare brought together beforea thirdpartywitha viewto persuading themto arriveat anagreement bymutualdiscussionbetween them. Thethird partymaybeone individualor a group ofpeople. Thealternative name for thethirdparty is mediators. The conciliationofficer can be appointed bythe centraland state government to mediate in alldisputes brought to hisnotice. The officerenjoysthepowerofcivilcourts. He cancallandwitness disputing parties on oath and interpret the facts of the case. He is expected to give judgment within 14 days of the commencement ofthe conciliationproceedings. Hisjudgment is binding onallthe parties to the disputes. Whentheconciliationofficer fails to resolve the disputes betweenthe parties, the government canappoint a Board of Conciliation. It is not a permanent Board. It consists of a chairman and two or four other members nominated inequalnumbers bythe partiesto the disputes. 3) Collective Bargaining: it isa process bywhichemployers on the one hand and representative ofthe employees ontheother, attempt to arriveat agreements covering the conditionsunder whichemployees willcontribute and be compensated for their services. We alreadydiscuss on it. 4) Code ofDiscipline: The codeofdiscipline evolved bythe MinistryofLabour and Employment. The codeofdisciplinedefinesdutiesandresponsibilitiesofemployersandworkers. Theobjectives ofpromoting constructiveco-operationbetweentheir representatives at alllevels, avoidingstoppageaswellaslitigation, securing settlement ofgrievance bymutualnegotiation, conciliationand voluntaryarbitration, facilitating the growthoftrade unionandeliminating allforms ofcoercionand violence ofIndustrialRelation. 5) Grievance Procedures:Agrievance maybe understoodas anemployee’s dissatisfactionorfeeling of personalinjusticerelatingto his orher employment relationship. Thereare some conditionwhichmaygive rise to a grievance are like a violation of law, a violation ofthe intent ofthe parties asstipulated during contract negotiation , a violation ofcompany rules, a change in working conditions or past company practices and a violation ofhealth and /or safetystandards. It is resolved by set procedure :
- 138. 138 How the grievancewillbe imitated? The number ofsteps in the process. Who willrepresent each party? The specifiednumber ofworking dayswithinwhichthe grievancemust be takenonthe next step inthehearing. 6)Adjudication: it ismeans amandatorysettlement ofanindustrialdisputebyalabour courtora tribunal. Whenever anindustrialdisputeremainsunresolvedbythe conciliationofficerandtheboard ofconciliation, the matter is referred in a court of inquiry. Acourt of inquirymayconsist ofone independent person or suchnumbersofindependent persons astheappropriate government maythink fit and submit itsreport to the government withinsix months fromthedate ofthe commencement ofthe inquiry. Ifsettlement isnot arrived at bythe efforts ofthe above machinery, three typesofsemi-judicialbodies areformed i.e. labour court, industrialtribunalsand nationaltribunals. Labour Court shallconsist ofone person onlyto be appointed bythe appropriate government. Labor court for adjudication ofindustrialdisputes relating to disputed orders ofthe employers. e.g. dismissal, discharge and suspensions ofemployees, applicationand interpretationofstanding orders, withdrawlofanyconcessionorprivilege, legalityor otherwiseofanystrike orlockout etc. IndustrialTribunals:thetribunals willconsist ofone personoftherank ofa highcourt judge by state government. This tribunals solve out the disputes relating to wages, hour ofwork and rest, intervals, leave with pay, holidays, compensatoryand other allowances, bonus, profit sharing, provident fund, retrenchment, gratuityand etc. NationalTribunal: NationalTribunalsare set up bythe CentralGovernment forthe adjudication oftheindustrialdisputeswhichinvolvesthequestionofnationalimportanceorwhichaffect industrial establishment situated in more than one state. It gives decisions on matters referred to it by the CentralGovernment whichmatter is referred to the nationaltribunalbythe centralgovernment, thelabourcourts andindustrialtribunalsare barred fromentertainingsuchdisputesand ifanysuch dispute is before labour court or tribunals. Shallbe deemed to be quashed. 7) Consultative Machinery: It is set bythe government to resolve disputes. The mainfunction ofthis machineryis to bring the parties together for mutualsettlement ofdifferences in aspirit ofco-operation and goodwill. Consultative machineryoperates at the plant, industry, state and the nationallevel.At the plant level, there are works committeesand joint management councilsbeing bipartite incharacterand at the industrylevelthere are wage boards and industrialcommittees. Activity C: 1 Management is boundfor Labour Welfare- (a) Withinthefactoryonly (b) Outside thefactoryonly (c) Both ofabove (d) None ofthe above 11.12 Summary Industrialunrest is similar to a disease that demands cure and prevention rather than suppression.The emergence of the concepts of human relations, human resources management and human resource development has raised some hopes of findings solution to the problems ofindustrial relations through applied behavioralscienceinterventions. Industrialrelationrefersto alltype ofrelationshipbetweenallthe parties concerned withthe industry. The fundamentalobjectives ofindustrial relations are to maintain
- 139. 139 sound and harmonious relations between employers and employees. The HRD Manager should tryto buildlabourmanagement relations around mutualtrust, understanding andcooperation. Theconflictsand disputes betweenemployer and employees onanyindustrialmatter areknownas IndustrialDisputes. It is the most acute problem in any organization because it endangers peace in the industry. According to “Code ofIndustrialRelations, U.K. disputes are oftwo types- ofright and ofinterest. Themaincauses of industrialdisputes are economic, political, managerial, self-respect, ego and etc. Prevention is always better than care. Prevention steps should, therefore, be taken so that individual disputes do not occur. Ifthe disputescannot be prevented on voluntarybasis and do arise, steps have to betakenfortheirsettlement. IndustrialDisputesAct, 1947 asamended in1982, providesseveralprovisions for settingthe disputes. 11.13 Self Assessment Questions 1. Explainthe concept ofIndustrialRelations. What is the significance ofgood industrialrelations and what are its objectives? 2. Bring out thecauses and consequences ofindustrialdisputes. Discuss existingmachineryfor the settlement ofindustrialdisputes inIndia. 3. Discuss the steps you would suggest to promote industrialharmonyinIndia. 4. What do you mean byindustrial relations?Discuss the role ofvarious participants in industrial relations. 5. Explain themachineryfor preventionandsettlement ofindustrialdisputesin India. 11.14 Reference Books - IndustrialRelationand Legislative –T.N.Chabbra and Suri - IndustrialRelation- Nolakha - Dynamics ofIndustrialRelations inIndia- C.B. and S. Mamoria - Management ofIndustrialRelations-Verma, Pramod - IndustrialRelationsMachinery- C.S.Srivastava
- 140. 140 Unit - 12 :Trade Unions Structure of Unit: 12.0 Objectives 12.1 Introduction 12.2 What isTrade Union? 12.2.1 Objectives ofTrade Union 12.2.2 Role ofTrade Union 12.2.3 Functions ofTrade Union 12.3 Types ofTrade Union 12.4 Importance ofTrade Union 12.5 Rights and LiabilitiesofTrade Union 12.6 Phases ofGrowth ofTrade Unionin India 12.7 Multiplicityand EffectivenessofTrade Union 12.8 Summary 12.9 SelfAssessment Questions 12.10 Reference Books 12.0 Objectives After completingthis unit, you wouldbe able to: Understand the meaningofTrade Union; Understand the different types ofTrade Union; Learn about the different growth phasesofTrade Union; Know about the duties and responsibilities ofTrade Union; Learn about theeffectiveness ofTrade Unionin Present Scenario. 12.1 Introduction A trade union isan organizationofworkers that havebanded together to achieve common goalssuchas better workingconditions. The tradeunion, throughitsleadership, bargainswiththeemployeronbehalfof unionmembers(rankandfilemembers)andnegotiateslaborcontracts(collectivebargaining)withemployers. This mayincludethenegotiationofwages,work rules, complaint procedures, rulesgoverning hiring,firing and promotion ofworkers, benefits, workplace safetyand policies. The agreements negotiated bythe unionleadersare binding ontherank and file membersand the employer andin some cases onother non- member workers. 12.2 What is Trade Union? Trade union as perTrade UnionAct 1926 – “Anycombination formed primarilyfor the purpose of regulating the relations between workmen and employers or workmen and workmenor employers and employers or for imposing restrictive conditionsonthe conduct ofanytrade or businessand includes any federationoftwo or more trade unions.” From the above definition it is clearthat Trade union is not just an association of the workmen of a factory or a trade or a business but also can be formed by officers and managers. UndertheTradeUnionsAct, 1926,the expressiontrade unionincludes bothemployersand workers in
- 141. 141 organizations. The termtrade union however is commonlyused to refer to the organizationofworkers formed to protect their rights andenhance their welfare. AccordingtoV.V. Giri, “Tradeunionsare voluntaryassociations ofworkers formedtogetherto promote and protect theirinterests bycollective action.” 12.2.1 Objectives of Trade Union Trade unionsare formed to protect and promote the interestsoftheir members. Theirprimaryfunctionis to protect the interests of workers against discrimination and unfair labor practices. Trade unionsare formed to achievethe following objectives: Representation : Trade unionsrepresent individualworkers whentheyhave a problemat work. Ifan employee feels he is being unfairlytreated, he canask the union representative to help sort outthedifficultywiththemanageroremployer. Unionsalso offertheirmemberslegalrepresentation. Normally this is to help people get financialcompensation for work-related injuries or to assist people who have to take their employer to court. Negotiation : Negotiation is whereunionrepresentatives, discuss withmanagement, the issues which affect people working in an organization. There may be a difference ofopinion between management and unionmembers. Trade unionsnegotiatewiththeemployersto findout asolution to these differences. Pay, working hours, holidaysand changes to working practicesare the sorts ofissues that are negotiated. Inmanyworkplaces there is a formalagreement betweenthe union and the companywhichstates that the unionhas the right to negotiate withtheemployer. Inthese organizations, unions aresaid to be recognized for collective bargaining purposes. Voice of Decision Effective Workers : The economic securityofemployees is determined not onlybythelevelofwagesanddurationoftheiremployment, but also bythemanagement’spersonal policies whichinclude selection ofemployees for layoffs, retrenchment, promotionand transfer. These policies directlyaffect workers. The evaluationcriteria for such decisions maynot be fair. So, theinterventionofunions insuch decisionmaking isa waythrough whichworkers can have their sayinthe decision making to safeguard their interests. MemberServices : During the last few years, trade unions have increased the range ofservices theyoffer theirmembers. These include: Education and Training : Most unionsrun training courses for theirmembers on employment rights, healthand safetyand other issues. Some unions also help members who have left school with little education by offering courses on basic skills and courses leading to professional qualifications. LegalAssistance :As wellas offering legaladviceonemployment issues, someunions give help withpersonalmatters, like housing, willsand debt. FinancialDiscounts : Peoplecanget discounts onmortgages, insurance and loansfromunions. Welfare Benefits : One ofthe earliest functions oftrade unions was to look after members who hit hard times. Some ofthe olderunions offer financialhelp to theirmembers whentheyare sick or unemployed. 12.2.2 Role of Trade Union Trade unions are unique organisations whose role is variouslyinterpreted and understood bydifferent interest groups inthe society. Traditionallytrade unions role has beento protect jobs and realearnings,
- 142. 142 secure betterconditions ofwork andlife and fight against exploitationand arbitrariness to ensurefairness and equityin employment contexts. Inthe wake ofa long historyofunionmovement and accumulated benefitsundercollectiveagreements, aplethoraoflegislationsandindustrialjurisprudence, growingliteracy and awarenessamong the employees andthe spread ofavarietyofsocialinstitutions including consumer and public interest groups the protective role must have undergone, a qualitative change. It can besaid that the protectiverole oftrade unionsremains inform, but varies in substance. There is a considerable debate onthe purposes and roleoftrade unions. Thepredominant view, however, isthattheconcernsoftradeunionsextendbeyond ‘breadandbutter’issues.Tradeunionsthroughindustrial action(suchasprotestsandstrikes)andpoliticalaction(influencingGovernmentpolicy)establishminimum economic andlegalconditions and restrainabuse oflabourwhereverthe labouris organised.Tradeunions are also seenas moralinstitutions, whichwilluplift the weakand downtroddenand renderthemtheplace, the dignityandjustice theydeserve. 12.2.3 Functions ofTrade Union Trade unions performa number offunctions in order to achieve the objectives. These functions can be broadlyclassifiedinto three categories: 1. Militant Functions 2. FraternalFunctions 1. Militant Functions One set ofactivities performed bytrade unions leads to the betterment ofthe positionoftheirmembers in relationto theiremployment. The aimofsuchactivitiesisto ensureadequatewagessecurebetterconditions ofwork and employment get better treatment fromemployers, etc. When the unions failto accomplish these aims bythe method ofcollectivebargaining and negotiations, theyadopt anapproach and put up a fight withthemanagementintheformofgo-slowtactics,strike, boycott, gherao, etc.Hence, thesefunctions ofthe tradeunions are knownasmilitant or fightingfunctions. Thus, the militant functionsoftrade unions can be summed up as: To achievehigher wages and betterworking conditions To raise the status ofworkers as a part ofindustry To protect laborsagainst victimizationand injustice 2. Fraternal Functions Another set ofactivities performed bytradeunions aims at rendering helpto its members intimes ofneed, and improving their efficiency. Trade unions try to foster a spirit of cooperation and promote friendly industrialrelationsanddiffuse educationand cultureamongtheirmembers. Theytakeupwelfaremeasures forimprovingthe moraleofworkersand generate selfconfidenceamong them. Theyalso arrangefor legal assistance to its members, if necessary. Besides, these, theyundertake manywelfare measures for their members, e.g., schoolfor the educationofchildren, library, reading-rooms, in-door and out-door games, and other recreational facilities. Some trade unions even undertake publication of some magazine or journal. Theseactivities, whichmaybecalled fraternalfunctions, dependontheavailabilityoffunds, which the unionsraise bysubscriptionfrommembers and donations fromoutsiders, and also ontheir competent and enlightened leadership. Thus, the fraternalfunctionsoftrade unions can besummed up as: To take upwelfare measures for improving themorale ofworkers To generate selfconfidence among workers To encourage sincerityand discipline among workers
- 143. 143 To provide opportunitiesfor promotionand growth To protect womenworkers against discrimination. 12.3 Types of Trade Union Trade UnionAct was established inthe year 1926. TU is anyassociation (temporary/permanent) for the purpose ofregulating the relationship betweenemployers-workers, employer-employer, worker-worker for imposing restrictive conditions on trade practices. It also includes federation ofunions referred as association ofprofessionalpersons. In countries like England, trade union is referred as association of professionalperson. In India it is considered ascursi- union/semi- union. InAmerica, TU is considered as the associationofallpersons ina trade. Functions ofTU: functions canbe categorizedinto: 1.Militant /protective 2. Positive/fraternal. 3. Intramural/extramural Militant /protective: as the name suggests it protects their members, aims at securing better conditions ofwork, employment for members. It uses instruments like strikes, lockouts etc. for protecting the interest oftheir members. Positive/fraternal: It provides financial support to their members during time of temporary unemployment. Intramural/extramural: intramuralrefersto welfare schemes &activitieswithinthe framework offactorypremises(safety,secureworkingenvironment, minimumwages,minimumworkinghours, and leave withwages) Extramural refers to the welfare schemes outside the factory premises (medicalassistance, healthcare, education etc.) TU are bornout ofthe necessitiesoftheworkersto protect anddefendthemfrominjustice, encroachment and wrong. Unionsclassified according topurpose: Under this head, normallytwo typesofunions have beenkept 1) Reformist 2) Revolutionary Reformist Unions: These unionsare those whichaimat the preservationofthe capitalist society and maintenance ofthe usualemployer-employee relationship, eliminationofcompetitive system ofproduction. The reformist unions have beensubdivided byhoxie according to the objectives: into business unionsanduplift unionism. Revolutionary Unions: These unions aim at destroying the present structure completelyand replacingitwithnew and different institutionaccording to theideas that areregardedas preferable. The revolutionary unionismis also of two types namely, anarchist and political. Dr horie also enumerates athird type ofunionismnamelypredatoryunions and gorilla union. AccordingtomembershipstructuretherearefourtypesofTradeunions:1.Craft unionism, 2.staffunionism, 3. Industrialunionand 4.generalunion. Craft Union: Workers, those are working insame as similar type ofwork/trade/business. They have similar skills, specialization. Members are mostlynon manualworkers. Members are craft conscious thanclass conscious .Theytake the membership on the basis ofsimilar type ofwork. Theystrengthentheir unionbyintegrationoftheir members. Staff Union: Organization, thoseare basing upon asense ofcommon status, same type ofneed. Theytryto seektheirmembershipfromnonmanualsectorsoftheeconomylikeclerical,supervisors, operators, technicians, craftsmen etc. Unique feature of staff union was women workers were also members ofstaff union. Staff union gained popularity by taking women workers as their members.
- 144. 144 IndustrialUnion: Irrespectiveofcrafts, skill, grade, position, gender etc. Theworkers working in one industrywere members ofindustrialunion. This unionis more class conscious than trade conscious. General union: It covers alltypes ofindustries. Labor class peoplefromanytype ofindustrycan be members ofgeneralunion. It is more openthanthe industrialunions. Theirnumericalstrength ishigh. 12.4 Importance of Trade Union The existenceofa strong andrecognized trade unionisa pre-requisite to industrialpeace. Decisionstaken through the process of collective bargaining and negotiations between employer and unions are more influential. Trade unions playan important role and are helpfulin effective communication betweenthe workers and the management. They provide the advice and support to ensure that the differences of opinion do not turn into major conflicts. The centralfunction ofa trade union is to represent people at work. But theyalso have a widerrole inprotecting theirinterests. Theyalso playanimportant educational role, organizing coursesfor theirmembersona widerange ofmatters. Seeking ahealthyand safe working environment isalso prominent feature ofunionactivity. Trade unions help in accelerated pace ofeconomic development in manyways as follows: Byhelping inthe recruitment and selectionofworkers. Byinculcating disciplineamong the workforce Byenabling settlement ofindustrialdisputes ina rationalmanner Byhelpingsocialadjustments. Workers have toadjust themselves to thenew working conditions, the newrulesand policies.Workerscomingfromdifferent backgroundsmaybecomedisorganized, unsatisfied and frustrated. Unions help themin suchadjustment. Trade unions are a part ofsocietyand as such, have to take into considerationthe nationalintegration as well. Someimportant socialresponsibilities oftrade unions include: Promotingand maintaining nationalintegrationbyreducing the numberofindustrialdisputes Incorporatinga sense ofcorporatesocialresponsibilityin workersachieving industrialpeace. 12.5 Rights and Liabilities of Trade Union 1. Disabilities of Unregistered Union: Atrade union shall not enjoyany of the rights, immunities or privileges ofaregistered trade unionunless it is registered. 2. Immunity fromCivilSuit inCertain Cases:No suit or other legalproceedingshallbe maintainable in anycivilcourt against anyregistered tradeunionor anyofficer or memberthereofin respect ofanyact done incontemplationor infurtherance ofa trade disputeto which a memberofthe trade unionis aparty on the ground onlythat suchact induces some otherperson to break a contract ofemployment, orthat it is an interference with the trade, business or employment ofsome other personor with theright ofsome other person to dispose ofhis capitalor ofhis labour as he will. 3. Liability in Tort: (1) A suit against a registered trade union or against anymembers or officers thereofon behalf of themselves and allother members ofthetrade unioninrespect ofanytortuous act alleged to have been committed byor on behalfofthe trade unionshallnot be entertained byanycourt.
- 145. 145 (2) Nothing inthis sectionshallaffect theliabilityofa trade unionor anytrustee orofficers thereofto be sued inanycourt touching or concerning the specific propertyor rights ofa trade union or in respect ofanytortuous act arising substantiallyout ofthe use ofanyspecific propertyofa trade unionexcept inrespect ofanact committed byor onbehalfofthe trade unionincontemplationor furtherance ofa trade dispute. 4. Liability in Contract:Everyregisteredtrade unionshallbeliable onanycontract entered into byit or byanagent acting on its behalf: Provided that a tradeunion shallnot be so liable on anycontractwhich is void or unenforceable at law. 5. Objects in Restraint of Trade Not Unlawfulin Case of RegisteredTrade Union: The objects of a registered trade union shall not, by reason only that they are in restraint of trade be deemed to be unlawfulso as to render anymemberofsuch trade unionliable to criminalprosecutionfor conspiracyor otherwise or to render void or voidable anyagreement or trust. 6. Proceedings By andAgainst Trade Unions: 1. A registered trade union may sue and be sued and be prosecuted under its registered name. 2. An unregistered trade union may be sued and prosecuted under the name bywhich it has been operating oris generallyknown. 3. A trade unionwhose registration has beencancelled or withdrawn maybe sued and prosecuted under the name bywhichit was registered. 4. Executionforanymoneyrecovered froma trade union incivilproceedings mayissueagainst any property belonging to or held in trust for the trade union other than the benevolent fund of a registered trade union. 5. Any fine ordered to be paid by a trade union may be recovered by distress and sale of any movable propertybelonging to or held intrust for the trade unioninaccordancewithanywritten law relatingto criminalprocedure. 6. In anycivilor criminalproceedings inwhich a registered trade union is a partysuch trade union mayappear in such proceedings byanyone ofits officers or byan advocate and solicitor. 7. Strikes and Lock-outs: 1. No trade union of workmen shall call for a strike, and no member thereofshall go on strike, andno trade union ofemployers shalldeclare a lock-out – a) in the case ofatrade unionofworkmen, without first obtaining the consent bysecret ballot ofat least two-thirds ofits totalnumber ofmembers who are entitled to vote and inrespect ofwhom the strike is to be called;and inthe case ofa trade unionofemployers, without first obtaining by secret ballot the consent ofat least two-thirds ofits totalnumber ofmembers who are entitled to vote; b) before theexpiryofseven days after submitting to theDirector Generalthe resultsofsuchsecret ballot in accordance with section40 (5); c) ifthe secret ballot for the proposedstrike or lock-out has become invalid or ofno effect byvirtue ofsection40 (2), (3), (6) or (9); d) incontraventionof, or without complyingwith, the rules ofthe trade union; e) in respect ofanymatter covered bya direction or decision ofthe Minister given or made in any appealto himunder thisAct; or f) incontraventionof, or without complyingwith, anyother provisionofthisAct oranyprovisionof anyotherwrittenlaw.
- 146. 146 2.Anytrade union which, and everymember ofits executive who, commences, promotes, organises or finances anystrikeor lock-out whichisincontraventionofsubsection(1) shallbe guiltyofan offence and shall, on conviction, be liable to a fine not exceeding two 3. Any member of a trade union of workmen who commences, participates in, or otherwise acts in furtherance of, anystrikewhichis in contraventionofsubsection(1) shallforthwithcease to be a member of the trade union, and thereafter such member shall not be eligible to become a member of any trade unionexcept withthe priorapprovalofthe Director Generalinwriting;and thetrade unionofwhichhehas so ceased to be a member shall forthwith – a) remove the nameofsuch member fromits membership register; b) informthe Director Generaland themember concerned ofsuchremoval;and c) exhibit conspicuouslyinits registered officeinaplacewhere it maybeeasilyread alist ofmembers whose names are so removed. 4. The Director General may, where he is satisfied that subsection (1) has been contravened by any person and the trade union concerned has failed to carryout the provisions of subsection(3), or where there is undue delayinso doing, after such investigation as hedeems necessary, order the trade union to remove forthwiththe names ofthemembers concerned fromitsmembership register. 5. Thesatisfactionofthe DirectorGeneralunder subsection (4)that subsection(1) hasbeen contravened byanyperson maybe arrived at regardless as to whether or not there is anyprosecutionofanypersonfor contravention ofthesaid subsection(1). 6. Anyregisteredtradeunionwhich,andeverymemberofitsexecutivewho, failstocomplywithsubsection (3) orwithan order ofthe Director Generalundersubsection(4) shallbeguiltyofanoffence andshall, on conviction, be liableto a fine not exceeding one thousand ringgit, anda further fine ofone hundred ringgit for everydayduring whichsuchoffence continues. 7. Ineveryproceeding for anoffenceunderthis sectiontheonus ofprovingthat the requirements specified in subsection(1) have been complied with shallbe onthe trade union, the member ofits executiveor the member ofthe trade union, as the case may be. Thousand ringgit, or to imprisonment for a termnot exceeding one year, or to both, and a further fine of one hundred ringgit for everydayduring whichsuch offence continues. 12.6 Phases of Growth of Trade Union in India Trade unionis a direct product ofIndustrializationand averyrecent development. InIndia, thefoundation ofmodern industrywas laid between 1850 and 1870. Prior to that trade was confined to individuals and families like craftsmenand artisans. Theyhad expertise and specializedskills whichwas inheritedbytheir offsprings.After Industrialrevolution, thesepeople started losing theirindividualidentities and hadto join factoriesto earntheir livelihoodand competewithmassproduction. There wasapsychologicaldislocation as theywerelosing their identities. Indiantrade unionmovement can be divided into three phases. The first phase falls between 1850 and 1900 during which the inception of trade unions took place. During thisperiod ofthe growthofIndianCapitalist enterprises, the working and livingconditionsofthe labour werepoor and their workinghours were long. Capitalistswere onlyinterested intheir productivity and profitability.Inadditionto longworking hours, their wageswere low and generaleconomicconditions were poor inindustries. Inorder to regulate the working hours and other service conditions oftheIndian
- 147. 147 textile labourers, the Indian FactoriesAct was enacted in 1881.As a result, employment ofchild labour was prohibited. Mr. N M Lokhande organized people like Rickshawalas etc., prepared a studyreport on their workingconditions and submitted it to the FactoryLabourCommission. The Indian FactoryAct of 1881 wasamended in 1891 dueto his efforts. Guidedbyeducated philanthropists and socialworkers like Mr. Lokhande, the growth oftrade unionmovement was slow inthis phase. Manystrikes took place in the two decades following 1880 in all industrialcities. These strikes taught workers to understand the power ofunitedactioneventhoughtherewas no unioninrealterms. Smallassociationslike BombayMill- HandsAssociationcame up. The second phase ofThe Indian trade union movement falls between 1900 and 1947. this phase was characterized bythedevelopment oforganized tradeunions andpoliticalmovements ofthe working class. It also witnessed the emergence ofmilitant trade unionism. The First World War (1914-1918) and the Russianrevolutionof1917 gave a newturnto the Indiantrade unionmovement andorganized effortson part of the workers to form trade unions. In 1918, B PWadia organized trade union movements with Textile mills in Madras. He served strike notice to themand workers appealed to Madras High Court because under ‘Common Law’, strike is a breach of law. In 1919, Mahatma Gandhi suggested to let individualstruggle be a Mass movement. In 1920, the First NationalTrade union organization(TheAll India Trade Union Congress (AITUC)) was established. Manyofthe leaders ofthis organization were leaders ofthe nationalMovement. In1926, Trade union law came up with the efforts ofMr. N N Joshi that became operative from1927. The third phasebegan withthe emergence ofindependent India (in1947), and the Government sought the cooperationofthe unions for plannedeconomic development. The working classmovement was also politicizedalong thelines ofpoliticalparties. Forinstance IndiannationaltradeUnionCongress(INTUC) is thetrade unionarmofthe Congress Party. TheAITUC is the trade union armoftheCommunist Party ofIndia. Besides workers, white-collar employees, supervisors and managers are also organized bythe trade unions, as for example inthe Banking, Insurance and Petroleumindustries. LABOUR LAWS Law-”Law isarule or asystemofrules recognizedbya countryora communityas regulatingthe actions ofits members and enforced bytheimposition ofpenalties.” Factors responsible for development of Labor laws Exploitation of the workmen by the capitalists Social pressure and pressure from trade unions Government policies based on Government philosophy which in turn was based on the political ideologies Constitution of India (Directive Principles of state policy) Supreme Court’s recommendations on the cases that came up in the courts Recommendations of various commissions and committees set up by government from time to time Conventions and recommendations of International labor organization (ILO) Awareness about environment Common Features ofAll Laws Short title and commencement Preamble i.e. purpose of the law Definitions
- 148. 148 Substantive provisions Penalty provisions Records/ Registers/ Returns Inspectorate/ Enforcement authority Categories of Labor Laws Regulatory legislations to oversee the conditions of work at workplace Eg. Machineryarrangement, spittoons, working hours, leavewithwages etc. Legislations related to wages Eg. Payment ofWagesAct, 1936, MinimumWagesAct, 1948 Legislations related to social security Eg. ESIAct, 1948, Employees Provident FundAct, 1952 Legislations related to Industrial Relations (IR) Eg. IndustrialdisputesAct, 1947, IndustrialEmployments (Standing Orders)Act, 1946, Trade UnionAct, 1926 Legislations relatedto service conditions Eg. Regulations ofenvironmentAct (for Dock workers), Conditions of ServiceAct (for Sales Promotionemployees) Miscellaneous: Eg.ApprenticesAct, 1961, Environment protectionAct, 1986 The trade unionism in India developed quite slowly as compared to the western nations. Indian trade union movement can be divided into three phases. The Indian workforce consists of430 millionworkers, growing 2% annually. The Indian labor markets consist of three sectors: 1. The ruralworkers, who constitute about 60 per cent ofthe workforce. 2. Organized sector, whichemploys 8 per cent ofworkforce, and 3. The urbaninformalsector (whichincludes the growing software industryand other services, not included in theformalsector) which constitutes the rest 32 per cent ofthe workforce. At present there are twelve Central Trade Union Organizations in India: 1. AllIndia TradeUnion Congress (AITUC) 2. Bharatiya Mazdoor Sangh(BMS) 3. Centre ofIndianTrade Unions (CITU) 4. Hind Mazdoor Kisan Panchayat (HMKP) 5. Hind Mazdoor Sabha (HMS) 6. Indian Federation ofFree Trade Unions (IFFTU) 7. Indian NationalTradeUnion Congress (INTUC) 8. NationalFront ofIndianTrade Unions (NFITU) 9. NationalLabor Organization(NLO)
- 149. 149 10.Trade UnionsCo-ordination Centre (TUCC) 11.UnitedTrade UnionCongress (UTUC) and UnitedTrade UnionCongress-LeninSarani(UTUC - LS) 12.7 Multiplicity and Effectiveness of Trade Union Multiple unionismleads to multiple enrolment in unions and no subscribing members, causing delayor failure to get recognition. This restrains a union’s bargaining power during a period ofprolonged strife while the unions are squabbling among themselves for dominance, the workers are deprived of their wages and theplant suffers a lossofproduction. Multiple unionismqualitativelyweakens the movement resultingintheformationofsmall- sizedunionswithout effective organization. However it must be noted that in spite offoregoing there are manyorganizationswhere multiple unions exist and themanagement does effectivelynegotiate, and conclude agreements. Inmanyplants, workers are unionized –on a craft basis –their specialskills or training bonding themtogether. Multi-unionismis more a problem where general unions exist, for whom all categories can be organized in one general union. ActivityA: 1. Visit anyorganization anddiscuss the feasibilityofrelevance ofTrade Unioninglobaleconomy. 12.8 Summary The tradeunions areorganized byworkers to solve their problems created bymodernindustry. Theyare voluntaryassociations ofworkers formed to promoteand protect theirinterestsbycollective action. They play different roles; for example, they act as agents of the government and help in maintaining social discipline andadministering its policies. To achieve theirobjectives, trade unions mayemployVarietyofmeans– depending onthe attitude ofthe unions regardingthe economic systeminwhichtheyoperate;thedegree ofgroup andclass consciousness among workers, the nature ofpoliticalorganization; and the natureand type oftradeunion leadership. TradeunionisminIndia suffers froma varietyofproblems,suchaspoliticizations oftheunions, multiplicity ofunions, inter and intra-union rivalry, smallsize and low membership, financialweakness, and lack of financialweakness, and lack ofwelfare facilities for the members, weak bargaining power, relianceon litigation and strikes, and dependence on outside leadership. This vicious circles has adverselyaffected their status and bargaining power, and must be broken at as manypoints as possible. Thefactorsthat makeatradeunionstrongandhealthyandunflinchingadherencetotheunion’sconstitution and rules, regular payment ofdues, fullyrepresentative character ofthe union, co-operation with sister unions and a sound leadership.Amethodologicalorganizationwithanenlightened laborforceis essential. 12.9 Self Assessment Questions 1. Define TradeUnions? 2. Describe different growthphases oftradeunion in India. 3. Explainthe characteristicsofTrade Union? 4. ExplainTrade Unionobjectives?
- 150. 150 12.10 Reference Books - Mamoria C.B.(2008);“Dynamics ofIndustrialRelations”;HimalayaPublishing House, Mumbai. - Flanders,Alan,(1963);Trade Unions., pp.46-47. - Punekar, S.D. and Madhuri (1967); “Trade Union Leadership in India: A survey”, Bombay. - Crouch, Harold (1966), “Trade Unions and PoliticisminIndia”, Preface. - Yoder, Dale, (1972); “Personnel Management and Industrial Relations”, pp.159-160. - Ghosh, S.T., “Trade Unionism in Underdeveloped Countries”, p.13. - Joshi, N.M. “Trade Unionism in India”, P.9. - World Labor Report (1998); I.L.O., , p.64.
- 151. 151 Unit - 13 : Collective Bargaining Structure of Unit: 13.0 Objectives 13.1 Introduction 13.2 Concept/DefinitionofCollectiveBargaining 13.2.1 WhyWorkers Join Unions? 13.2.2Advantages ofCollective Bargaining 13.3 Objectives and FeaturesofCollective Bargaining 13.4 Types ofCollective Bargaining 13.5 Process ofCollective Bargaining 13.5.1 Developinga Bargaining Relationship 13.5.2 Preparationfor Negotiation 13.5.3 NegotiationStage 13.5.4 CollectiveAgreements 13.6 Collective BargainingPractice inIndia 13.7 Summary 13.8 SelfAssessment Questions 13.9 References Books 13.0 Objectives After completingthis unit, you wouldbe able to: Understand the concept ofcollective bargaining; Understand thefeatures and objectives ofcollective bargaining; Learn about the different types ofcollective bargaining; Learnthe processofcollective bargaining; Understand the collectivebargaining practices inIndia. 13.1 Introduction Collectivebargainingisspecificallyanindustrialrelationsmechanismortool,and isanaspectofnegotiation, applicable to employment relationship.As a process, the two are in essence the same, and the principle applicable to negotiations is relevant to collective bargaining as well. In collective bargaining the union always has a collective interest since the negotiations are for the benefit of severalemployees. Where collective bargainingis not for oneemployer but forseveral, collective interests become afeaturefor both parties to the bargaining process. Incollectivebargaining certainessentialconditions needto besatisfied, suchas the existence offreedomofassociationand a laborlaw system. Further, since the beneficiaries of collective bargaining are indailycontact with each other, negotiations take place in the background ofa continuing relationshipwhichultimatelymotivates theparties to resolve thespecific issues. Collective bargaining is a process ofnegotiations between employers and the representatives ofaunit of employees aimedat reaching agreements that regulate working conditions. Collective agreement usually set out wage scales, working hours, training, health and safety, overtime, grievances, mechanisms and rights to participate in workplace or companyaffairs. Ultimatelythe term“bargaining” implies thatthe processis oneofhaggling, whichismoreappropriateto one-timerelationshipssuchasaonetimepurchaser
- 152. 152 or a claimant to damages. While collective bargaining may take the form of haggling, ideallyit should involve adjusting the respective positions ofthe parties in awaythat is satisfactoryto all. 13.2 Concept/Definition of Collective Bargaining Collectivebargaining isa process wherebyorganized laborand management negotiate the terms and the conditions ofemployment. Let us explore some definitionsfromdifferent sources: “Collective bargaining is a method by which trade unions protect and improve the condition of their member’s working lives.” According to Flanders“CollectiveBargaining as a means ofjoint regulation” According to ILO, (convention no: 87) “Collective Bargaining is a fundamental right. The right to Collective Bargaining formsanintegralpart ofthe ILO declarationonfundamentalPrinciples (1998).” OECD (OrganizationforEconomic Co-operationand Development), WTO(WorldTrade Organization) and theUnited Nations advocates CollectiveBargaining insimilar tones.Collective Bargaining is apart of “Core LaborStandards, Socialclause andGlobalCompact respectively” This meansfuture that Collective Bargaining should be considered as a FundamentalRight. Todaycollective bargaining has assumed a complexnature, conducted in themost formalenvironment, associating the services of a large number of experts, legal practitioners, consultants and specialized personnel. Todayit is regarded as a socialprocess, because it occurs in a socialsetting. In majorityofthe cases collectivebargaining process deals withissues like: Rate ofwages, pay. Hours ofemployment, working conditions Employment policies Productivitysettlement 13.2.1 Why Workers Join Unions? It isessentialto understand whyworkers joinunionsto understand theimportance ofcollective bargaining, these are: Dissatisfaction with working environment, including working conditions, compensation, and supervision Adesire to have more influence inaffective change inthe work environment Employee beliefsregarding the potentialbenefitsofunions. 13.2.2Advantages of Collective Bargaining To understandthe collective bargaining it is necessaryto knowabout the various advantagesofcollective bargaining, these are: Collective bargaininghas theadvantage ofsettlement throughdialogue andconsensus rather than throughconflictandconfrontation.Agreement resultingfromcollectivebargainingusuallyrepresents the choice or compromise oftheparties themselves. Collectivebargaining agreementsofteninstitutionalize settlement throughdialogue.Forinstance, a
- 153. 153 collective agreement may provide for methods by which disputes between the parties will be settled. In that event parties know beforehand that iftheyare in disagreement there is an agreed method bywhich such disagreement maybe resolved. Collective bargainingisa formofparticipationbecause it involvesa sharing ofrulemaking power between rule making power between employers and unions in the areas which in earlier times were regardedas management prerogative e.g. transfer, promotion, redundancy. Collective bargainingagreements sometimes renounce orlimit the settlement ofdisputes through trade unionaction. Collective bargaining is an essential feature inthe concept of socialpartnership towards which labor relations should strive. Socialpartnership inthis context maybe described as a partnership between organized employer institutions and organized labor institutions designed to maintain non- confrontationalprocess in the settlement ofdisputes which mayarise between employers and employees. Collective bargaining has a valuable by- products relevant to the relationship between the two parties. Insocietieswherethere isa multiplicityofunionsandshifting unionloyalties, collective bargaining a consequent agreements tend to stabilizeunionmembership. Collective bargainingis the most important and effectiveinimprovingindustrialrelations. 13.3 Objectives and Features of Collective Bargaining There are some basic objectives of collective bargaining on that basis whole process generally work, these are: Settle the conflictsrelated to working conditions and wages. To protect theinterest ofthe workersthroughcollective action. To resolvethe difference between the workers and management throughvoluntarynegotiations and to arrive at a consensus. To avoid thirdpartyinterventioninmattersrelating to employment. Practicallyspeaking anyissues that has anyrelevance to management andworkers becomes the subject matterofbargaining. Features of Collective Bargaining “Collective Bargaining is a mutual obligation on the employer and employee to bargain in good faith towards thesettlement”. Keeping thisstatement inmind let’sexplainthefeatures ofcollectivebargainingin detail: Collective: It’s collective intwo ways: 1) All the workers collectively bargain for their collective interest, because they do not have individualcapacity. 2) Workers and the management jointlyarriveat an amicable solutionthrough negotiations. The Union is expected to bring out thecommonconsensus on collective issuesrather than individual issues.
- 154. 154 Bargaining Power: Incollective bargaining the bargainingstrengthofboththeparties across the table is equal. Ideallyit is industrialdemocracyat work. It willonlybe democratic onlyifboththe parties are equipped with knowledge and skill. The strength ofthe union also depends on the demand and supplyof working force. Similarlyhow much capitalis invested upon one worker also determines the ratio of bargaining power. For example:Apilots union would have more bargaining power than the unionofroad transport. Because the capita land stake invested on the pilot is muchhigher thanthe drivers. Flexible: Incollective bargaining both the parties should have to flexible mentalset up to arrive amicablyat a common consensus. Voluntary: Boththeparties come infront ofeachother voluntaryinorder to arriveat a voluntary agreement, whichis mutuallyacceptable to boththe parties. Continuous: Collectivebargaining not onlycommences withnegotiationand endsin argument, but it’s a continuous process that includes implementation of the agreement and also further negotiations. Dynamic: It’s a dynamic process because it involves the following: 1) Aprocess ofagreement whichitselfcontains variousconcepts which maychange and alter time to time. 2) The implementationprocess isalso on going. 3) The mentalmakeup ofthe partieskeeps onchanging. 4) Various strategies used byboth the parties keeps on changing based on the demand of the situation. 5) We allare a part oftheglobaleconomyandthe product, consumer’s taste;market place etc keeps on changing. This has tremendous effect oncompanies. The same has impact on the bargaining as well. Powerrelationship: Boththeparties want to extract themaximumfromeachother. But to reach a consensus both the parties have to retreat from their positions in order to reach a common consensus. In such an attempt both the parties try to reach on a common ground without any serious dilution oftheir power. Example: Ifthe job of the worker is not skilled and he is being easily replaceable, he would have lesser bargaining power. Because, there is a huge mass of unemployed youthwaitingto be replaced. Representation: TheCollective Bargaining process must be represented bythose who have the capacityto take decisions. Bipartite Process: The employees and the employers negotiate the issue directly across the table.Andthere is no thirdpartyinterventionlike pressure groups, legalconsultants. GoodFaithBargaining Process: Goodfaithbargaining ischaracterized bythefollowing events: 1) Meeting for the purposes ofnegotiations, the contract is usedscheduled and conducted withtheunionofresponsible time and place. 2) Realistic proposalsare submitted. 3) Reasonable counter proposalshould be offered. 4) Each partyhas to sign once it has been completed.
- 155. 155 13.4 Types of Collective Bargaining In bargaining situations, demands arepitched higherthanwhat one would reallysettle for and offers are initiallymade lower than what one is reallyprepare to give. On the otherhand it’s a charterinwhich some major and some minor demands consist.Allthese variations inbargaining can be divided in three types, theses are: 1. Distributive Bargaining: Distributive bargaining is the most common type of bargaining and involveszero-sumnegotiation.Inotherwords, onesidewinsandothersideloses. Unionemployees may try to convince management that they will strike if they don’t get the wages or working conditions theydesire. Management, in turnmaybe willing to tryto ride thestrike out, especially iftheyhave cross-trained otherworkersor have externalreplacementsto fillinforthose onstrike. Inthis bargaining, unionand management haveinitialoffers or demands, target points, resistance points andsettlement ranges. 2. Integrative Bargaining: Integrative bargaining is similar to problem- solving sessions in which both sidesare trying to reachmutuallybeneficialalternatives. Boththe employer and uniontryto resolve theconflict to the benefit ofbothparties. 3. Concessionary Bargaining: It involves a union’s giving back to management some ofwhat it has gained in previous bargaining. Whywould labor be willing to give back what it worked so hard to obtain?Usuallysucha move is prompted bylabor leaderwho recognize the need to assist employers inreducingoperating cost inorderto prevent layoffs andthat motivatesconcessionary bargaining. 13.5 Process of Collective Bargaining 13.5.1 Developing a Bargaining Relationship One ofthe very important facets which need to be considered before studying the process of collective bargaining is “Understanding and developing ofa good Bargaining relationship”. This step consists of these activities mainly; 1. Recognition ofthe BargainingAgent:Inthose organizations where thereis a single tradeunion, that unionisgenerallygranted recognition to represent the workers. But where there is more thanone union, anyofthese criteria maybeused for identifying therepresentative union, namely: Selection ofthe union bya secret ballot. Selectionthroughverificationofmembership bysome government agencyifrequired. Bargaining witha joint committee ofallmajor unions. Bargainingwithanegotiationcommitteeinwhichdifferentunionswouldberepresentedinproportion to theirverified membership Bargaining with a negotiation committee which consists of elected representative of every department ofthe organizationselected bysecret ballot, irrespective oftheir union affiliations. 2. Levels of bargaining. Collective bargaining is possible at alllevels, such as: At the levelofthe enterprise, It maybe at the levelofthe industryina particular region. At thelevelofthe entire industryinthe country, that is, at thenationallevel.
- 156. 156 Fromthepoint ofview ofanindividualestablishment, enterprise-levelbargaining is generallyusefulinthe sense that the settlement is tailoredto the conditions ofthat organization. 3. Scope and Coverage of Collective Bargaining: Thoughinmanyorganizations bargaining is struck only by specific issues like wage increase, bonus, or seniority, promotion, etc., yet it is considered advantageous, bothforthe management and the trade unions, to coveras manyissues ofinterests toboth parties as possible. Now a days the orientation of collective bargaining is changing from conflict to cooperationandthere bybuildinganatmosphere oftrust, progressand socialwelfare. Forexample:union must strivefor larger scope andcoverage like wages andservice conditions for contract labor, temporary, part timeemployees, trainees etc. 4. ProcessVariation ofCollective Bargaining:The negotiationprocess has beenvisualizedindifferent ways. Collectivebargaining procedure can be compared with the similar to anexercise inpolitics where the relative strengthofthe parties stems fromdecisiveness and that it resembles with a debate. Theyare also of the view that both the parties on the bargaining table become entirely flexible and willingto be persuaded onlywhen allthe facts have been presented. However withthe increasing maturityofcollectivebargaining, there has beenenlargement ofthe rational process. In addition severalother factors also influence the negotiation process.Among these factors some are mentioned below: Objectives ofthe parties. Kind ofexperience, knowledge the parties have. The Industriallegislationofthe concerned country. The personalities andtraining ofthe negotiators. The historyofthe labor relationsin the enterprise. The size ofthe bargaining unit and Theeconomicenvironment. Althoughseveralnegotiators mayattempt to blufforoutsmart theopposite group, others seldomthink of using these tactics. While some bargainers may attempt to dictate the contract on a unilateral ground, others visualize that this process is eventuallyselfdefeating. While some negotiatorsmaycome together withexcessive unrealisticproposals, others mayhavequite realistic ones. Insomenegotiations, there may beineachsideimplicit faithinthe counterpart whileinothersthere mayprevailaclimateofmutualdistrust, suspicion and even hatred, in view of the past adverse labor relations. Moreover if the objective isto obtainsolutionto their mutualproblems, thepartiesare likelyto conduct the negotiationonthe ground of rationalityand fairness. However ifthe objective is to “put management inits place” or to “weakenor to even destroythe union”, the process ofnegotiation maytake quite different forms. Thus severalfactors operatecausingvariationsintheconduct ofcollectivebargainingnegotiations. “Militantunionsvs. irrational management”, “Rational unions vs. oppressive management”, “Progressive union and progressive management”-There canbe manypermutations and combinations and results ofthe bargaining process would varydepending on these. 13.5.2 Preparation for Negotiation Prior to theactualbargaining sessions,enoughcareshould be takenbyboththe parties tohave a thorough preparation for the negotiations. This has become a pre – requisite to collective bargaining in viewof severalreasons. Consultationwiththe lowerlevelmembers oftheir respective organizationscanhelpboth
- 157. 157 the parties to obtainvaluableinformationandevolvespecific bargaining tableapproaches. Theconsultation process also increases the morale ofthe two organizations.Again the technicalassistance oflegaland public relations experts can also be utilized gainfully in the collective bargaining process. Finally care should betakento preplanwithmutualconsent the meetingplaces, ground rules relatingto transcripts of the sessions , publicityreleases, the payment systemofunionrepresentatives and allied issues. 13.5.3 Negotiation Stage Methodologyforbargaining isveryimportantinnegotiating process. It willhelp thenegotiatortodevelop those personaland managerial(administrative) qualities ofpreparedness, knowledge, ability, sensitivity, timing, analyticalabilities, composure and patience. These qualities develop as a result ofobservation, experience involvement and conscious individualeffort and experience. As a bargaining methodology it is desirable to list allthe bargaining items, whether introduced bythe employer or the employee that the parties will consider during the course of the collective bargaining negotiations. These bargainingitems could be separated into two parts – The cost or financialitems The otherfor noncost or non financialitems. After listing the items priorityrating canbe determined for these items based on its value or importance relative to allother items on theagenda. The range ofthe objectives could bedecided. This methodology provides asystematic frameworkfor approachingcollective bargainingnegotiations. Someadvantagesto collective bargainingnegotiations result fromtheuse ofthe methodologybyobjectives. Management Strategies: Prior to thebargainingsession, management negotiatorspreparebydevelopingthestrategiesandproposals theywilluse. Three major areas ofpreparationhave been identified: Determinationofthegeneralsize ofthe economicpackage that the companyanticipates offering duringthenegotiations. Preparationofstatisticaldisplaysandsupportivedatathat thecompanywilluseduringnegotiations. Preparationofa bargaining bookfortheuse ofcompanynegotiators, acompilationofinformation on issues that will be discussed, giving an analysis of the effect of each clause, its use in other companies, another fact. Animportant part ofthis calculationisthe cost ofvariousbargaining issues or demands. The relative cost ofpayincreases, benefits, and other provisions should be determined prior to negotiations. Other costs should also be considered. For instance, what is the cost to management, in terms ofits abilitytodo its job, of union demands for changes in grievance and discipline procedures or transfer and promotion provisions?Thegoalisto beaswellprepared aspossiblebyconsidering theimplications andramifications oftheissuesthat willbediscussedandbybeingableto presentastrongargument forthepositionmanagement takes. Union Strategies: Like management, unions need to prepare for negotiations by collecting information. More and better informationgivestheunionthe abilityto bemore convincinginnegotiations. Since collectivebargaining is the major means by which the union can convince its members that it is effective and valuable, this is a criticalactivity. Unionshould collect informationinat least three areas:
- 158. 158 The financialsituationofits companyand itsabilityto pay; The attitude ofmanagement towards various issues, as reflected in past negotiations ofinferred fromnegotiations insimilar companies;and The attitudes and desires ofthe employees The first two areas give theunionan idea ofwhat demands the management is likelyto accept. The third area is important but is sometimes overlooked. The union should be aware of the preferences of the membership.Forinstance,isapensionpreferredoverincreasedvacationorholidaybenefits?Thepreferences willvarywiththe characteristicsofthe workers.Younger workersare more likelyto prefermore holidays, shorter work weeks, and limited overtime, whereasolder workers are more interested inpension plans, benefits and overtime. The union candetermine these preferences byusing a questionnaire to surveyits members. 13.5.4 Collective Agreements Collective agreements are commonlyclassified under two headings–‘procedural’ and ‘substantive’. (a) ProcedureAgreements: Procedure agreementsspellout the steps bywhich theindustrialrelations processes are carried out. Procedure agreementsare collective agreements whichrelate to: (1) Machineryforconsultation, negotiationor arbitrationon terms and conditions ofemployment or for anyother matters which arise between trade unions and employers. (2) Negotiatingrights (3) Facilities for trade unionofficials and (4) Disciplinarymatters andindividualworkers’grievances. (b) SubstantiveAgreements: These containthe ‘substance’ofanyagreement ontermsand conditions oftheemployment. Theycover paymentsofallkinds, i.e.wage rates, shift allowances,incentive payments also holidays and fringe benefits such as pensions and sick payand various other allowances. (c) MixedProcedural/SubstantiveAgreements:The distinctionbetween‘procedural’and ‘substantive’ agreements while useful, does not always apply in practice. It is possible to have both ’substantive’and ‘procedural’elements inthe same agreement. Thereis, however, a tendencyforproceduralagreementsto have a separateand long termexistenceand consequentlytheyare not subject to a great dealofalteration. On the other hand, substantive agreements are altered from time to time to take account of on-going negotiations. Notwithstandingthevariationsincollective bargaining process,inrecent days it ischaracterizedbyrational discussions based onfacts. In modern collective bargaining process the low levelofbehavioralpatterns suchas emotionaloutburst, tricks, distortion offacts, misrepresentations and deceit are largelyavoided. Thelabor andmanagement representativeshaverealizedthat theseelementscauseunhealthylabor relations and increasethe possibilityofindustrialconflict. Implicitly, one ofthe goals ofcollective bargaining is to promote a rationaland harmonious relationshipinthe organization.Accordingly, the negotiators should have qualities ofpatience, trustworthiness, friendliness, integrityand fairness. Eachpartyshouldshare the attitude ofselfassessment and consider that the other partymaynot necessarilybe wrong allthe time. If suchanopenattitudeisdevelopedinboththe parties, thenegotiationprocessis likelyto becomesuccessful. Harvard LawSchool’s ProgramonNegotiationdescribes the collective bargainingprocess as comprising five core phases: 1. Preparation and Framing. Inthisphase boththe schoolboard and the unionexamine their own situationinorderto developthe issues that theybelievewillbemostimportant, including assessing ‘you’re interests as wellas the interests ofthe other side’;
- 159. 159 2. Bargaining OverHow to Bargain. Here, the parties decide theground rules that willguide the negotiations. This is where the logistics are determined, such as the rules for secrecy and the frequencyofnegotiatingmeetings; 3. Opening and Exploring. This phase involves the initial opening statements and the possible options that exist to resolve them. In a word, this phase could be described as ‘brainstorming’; 4. Focusing andAgreeing. This stage comprises the time when ‘what ifs’and ‘proposals’are set forth and the drafting ofagreements take place;and 5. Implementation andAdministration. This stage is described as consisting of‘effective joint implementationthroughshared visions, strategic planningand negotiatedchange.’ 13.6 Collective Bargaining Practices in India Collective bargaining in India has beenthe subject matter ofindustrial adjudication since long and has beendefined byour Law Courts .Collectivebargaining is a techniquebywhichdispute asto conditions of employment is resolved amicablyby agreement rather than coercion. Collective Bargaining machinery essentiallyisareflectionofaparticularsocialandpoliticalclimate. Thehistoryofthe tradeunionmovement shows that union is affiliated to one or the other politicalparties.As a result most ofthe tradeunions are controlled byoutsiders. Critic says that the presence ofoutsiders is one ofthe important reasonsfor the failureofcollectivebargaining inIndia. The Trade UnionsAct, 1926, permits outsidersto bethe office bearers ofa unionto the extent ofhalfthe totalnumberofoffice bearers. So, it permits one to be the leader ofthe unionwho does not actuallywork in the industry. Sometimes a dismissedemployee working as a union leader maycreatedifficulties inthe relationship between the union and the employer. Nevertheless, experience shows that outsiders who have little knowledge ofthe background oflabor problems, historyoflabor movement, fundamentals of trade unionismand the technique ofthe industryand witheven little generaleducationassume the charge oflaborunionandbecometheself-appointedcustodianofthewelfareofworkers. Theemployers, therefore, have beenreluctant to discuss and negotiate industrialmatters with outsiders, who have no personalor direct knowledge ofdayto dayaffairs ofthe industry. The process ofcollective bargaining is not likelyto succeed unlessthe threat ofstrike/lockout isthere in the back-ground. Strike and lock-out are the weapons used by both the parties daring the collective bargaining process. Without having these weapons at hands, neither of the party to the dispute can defeat the claimofthe other. The peculiarfeature ofour countrywhile compared to the advancednations ofthe world isthat the economic conditionofthe workers isverypoor and asa result theycannot afforda long- standingstrike. In Indian labor arena we see, multiplicity of unions and Inter-union rivalry. Statutory provisions for recognizing unionsasbargainingagentsareabsent. It isbelievedthat theinstitutionofcollectivebargaining is stillinits preliminaryandorganizationalstage. State, therefore, must playaprogressiveandpositiverole inremoving thepitfalls whichhave stoodinthe wayofmutual, amicable and voluntarysettlement oflabor disputes. The labor policymust reflect a new approach. Hitherto the State has beenplaying a dominant roleincontrollingandguidinglabor-management relationthroughits lopsidedadjudicationmachinery. The role ofthe industrialadjudicator virtuallydiffers fromthat ofa judge ofordinarycivilcourt. The judgeofa civil court has to apply the law to the case before him and decide rights and liabilities accordingto its established laws, whereas industrial adjudicator has to adjust and reconcile the conflicting claimsof disputants and rights and obligations ofthedisputants. Indeciding industrialdisputes the adjudicator is free to applythe principle ofequityand good conscience.
- 160. 160 For aneffective Collective Bargaining inIndia, recognition oftrade union has to bedetermined through verification offeemembership method. The unionhaving more membership should be recognized as the effectivebargainingagent. TheStateshouldenact suitablelegislationprovidingfor compulsoryrecognition oftrade unionbyemployers. The provisionfor politicalfund bytrade unions has to be done awaywith- since it invariablyencourages the politicians to preyuponthe union. Statehas to playa progressive role in removingthepitfallswhichstand inthe wayofmutual,amicable andvoluntarysettlementoflabordisputes. ActivityA: 1. Visitanorganizationandtrytofindout practicalcollectivebargainingprocessbetweenmanagement and trade unions. 13.7 Summary Collective bargaining emerged initiallyhasbeenpurelyMetter betweenthe plant levelunionand the plant management. Thenegotiationseither at thestateorat theindustrylevelareyet notfrequent. Thecollective bargaining hasnot decentralized beyond theplant levelbecause craftsunions are absent. There arethree important reasons as to whycollectivebargaining hasnot gone beyondthe plant level: a)the varyingsizes not permituniformemployment conditions;b)the absenceofhomogeneouslabormarket owingto lack of uniformskills andpattern oftraining whichdoes not promote free mobilityoflabor market owing to lack ofuniformskills and pattern oftraining which does not promote free mobilityof labor so that uniform employment conditionscould be evolved for the industryas a whole. c) the plant unionleadership which at present enjoys enormous powersandfaces prospects ofpoliticalclimbis reluctant to get integrated into an industrywise union where its power are likelyto be restricted. 13.8 Self Assessment Questions 1. What do you meanby“CollectiveBargaining” Explain? 2. What are the advantages ofcollective bargaining? 3. What are the levels ofcollective bargaining? 4. What are thecurrent trends ofcollective bargaining in India? 13.9 References Books - Mamoria C.B.(2008);“Dynamics ofIndustrialRelations”;HimalayaPublishing House, Mumbai. - Webb, Sydenyand Beatrice,(1902); “ IndustrialDemocracy” ;p.185. - Richardson,J.H,(1964) “AnIntroductionto the studyofindustrialrelations”; p.22. - Dunlop,JohnJ.,(1954) “Challengesto collective Bargaining”p.170-174. - ILO;”CollectiveBargaining”.p.70.
- 161. 161 Unit -14 : Discipline Structure of Unit: 14.0 Objectives 14.1 Introduction 14.2 Meaning &Discipline 14.3 Concept ofDiscipline 14.3.1Aspects ofDiscipline 14.3.2 MainCharacteristics ofDiscipline 14.3.3Aims & Objectives ofDiscipline 14.3.4 Importance ofDiscipline in Industry 14.4 Indiscipline 14.5 Misconduct 14.6 Causes &ApproachesTowards DisciplinaryAction 14.6.1 Causes forInfringement ofDiscipline 14.6.2 PrinciplesofIndustrialDiscipline 14.6.3 Guidelines ofa DisciplinaryAction 14.6.4 Mc Gregor’s Hot Stove Rule 14.6.5 Procedure for DisciplinaryAction 14.7 Code ofDiscipline inIndian Industry 14.8 Summary 14.9 SelfAssessment Questions 14.10 Reference Books 14.0 Objectives After studying thisunit, you would be able to : Understand the fundamentalnatureofIndustrialdiscipline Recognize difference betweentraditionaland modernaspects ofdiscipline. Point out the nature and major aims &objectives ofdiscipline. Studyandappreciate the significance ofdiscipline inIndustry. Know about various principles for maintenance ofdiscipline. Understand the concepts ofIndiscipline and misconduct. Know about the causes ofBreachofdiscipline. Know about the guidelines governing thedisciplinaryaction. Learnabout the Mc Gregor’s hot stove rule. Learn about the code ofdiscipline inIndian Industry. 14.1 Introduction Discipline maybedefined as anapproachwhichaimsat instilling orderlybehaviour andrespect for willing obedience to arecognized authority. Industrialdisciplineis crucialfor healthyindustrialenvironment and for escalatingproduction & productivity. Thepromotionand maintenance ofemployee discipline brings multifariousbenefitstotheorganisationanditsemployeesinformofsay;goalattainment,smoothfunctioning oftheorganizationetc.
- 162. 162 14.2 Meaning & Definition of Discipline What does Discipline means? Discipline means getting obedience to rules and regulations ofthe organization. Discipline is absolutely essentialfor thesmoothrunning ofbusiness. Fayol, stated that discipline isobedience, application, energy and outward markofrespect.According to Webster’s Dictionary, the word disciplinehas three meanings “First, its is the training that corrects moulds , strengthens or perfects individualbehavior. Second, it is controlgainedbyenforcing obedience. The third meaning, it is punishment or chastisement. Definition of Discipline According to Dr. Spriegel, “Discipline is the force that prompts an individualor a group to observethe rules, regulations and procedures which are deemed to be necessaryto the attainment ofan objective; it is force or fear offorcewhich restrain anindividualor a group fromdoing things which are deemedto be destructive ofgroup objectives. It is also the exercise ofrestraint or the enforcement ofpenalties for the violationofgroup regulations.” Thusdisciplinecanbe regarded asaforce that requires employees to follow the rules andregulationsofan organizationconsidered vitalfor its efficient working. In brief, discipline is an employee’s selfcontrolwhich motivates himto complywiththe organization’s goals and objectives. 14.3 Concept of Discipline The dialogue between the workers and managers in a work setting pave way to the emergence of the concept ofdiscipline. 14.3.1 Aspects of Discipline Negative Aspect - This aspect uses “fear” as a force to enforce discipline in the organization. If any employee orworker defies the rulesand regulationstrict punishmentis levied onthem. This is categorized as traditionalconcept ofdiscipline. Positive Discipline – Now a days the management of various organizations have adopted positive progressive outlookfordiscipliningtheemployees. Withtheever increasing awarenessamong the workers concerning their rights and responsibility, it was required on the part ofmanagement to reconsiderthe negative approachoffear used bythemso far. Thus management emphasized onthe concept ofself– discipline. This approach ofselfcontrolasserts on cooperativeeffortsofemployeesto abide bytherulesof theorganization. Thuspositiveaspect ofdiscipline plays a muchgreater role in safeguarding industrialpeace and prosperity. ActivityA: 1 According to you what is discipline?How does traditionalconcept ofdiscipline differ from the modern concept? 14.3.2 Main Characteristics of Discipline The maincharacteristics ofDiscipline canbe summed up as follows :-
- 163. 163 (i) To guarantee successfulfulfilment oforganizationalgoals it motivates workers to abide by the instructions issued bythe management or superiors. (ii) It isa negative approachinthe sense that it discourages employees inundertaking some activities while encouraging to undertake the few others. (iii) OnViolationor disobedience oforganizationrules it imposes fineor reprimand, therefore, it is also called as punitive or bigstick approach. 14.3.3Aims & Objectives of Discipline The aims and objectives ofdiscipline are as follows:- (i) For the achievement oforganizationalgoals it tries to earn the willing approvalofemployees. (ii) To introducethe component ofuniformityand assurance despite thenumerous difference despite the numerous differences ininformalbehaviour patterns inthe organization. (iii) For improving the qualityofproduction byenhancing the morale and working efficiencyofthe employees. (iv) To generaterespect for humanrelationsinthe organization. (v) To confer andseek directionand responsibility. 14.3.4 Importance ofDiscipline in Industry Discipline actsas a cornerstone forthe smoothfunctioning ofanyenterprise.Absence ofdisciplinein any industrycan create a great amount ofcommotionand confusiontherebydecreasing its productivity. For anyenterprise however big or smallmanpower is the most pivotalresource and therebyallefforts should be madeto discipline them. Allstepsshouldbetakentoencouragemutualtrustandconfidencebetweentheworkersandthemanagement whichis indispensable to bring about needed discipline at the workplace. Maintenance ofdiscipline is a preconditionfor attaining the aimsand purposes oftheorganizationswiftly. Disciplined employers willassist increationofpleasant industrialenvironment whichwillbe beneficialfor the industryandthe nationboth. Activity B: 1 Analyze the criticalrole ofdiscipline intoday’smodern, complexorganizations. 14.4 Indiscipline Meaning Indiscipline maybe expressed as non– compliance to formaland informal rules and regulations of an organization. Indiscipline may prove to have detrimentaleffects on the morale and motivation of the employees as well as on the organization as a whole. There are various socio-economic and cultural factors that playa role in creating indiscipline in an organization which can be summed up in following figure:-
- 164. 164 Ways to Cope With Indiscipline Management canadopt various strategies asmentioned inthe figurebelow to keep acheck onindiscipline intheorganization. UNFAIR LABOUR WAGE WRONG WORK PRACTICES DIFFERENTIALS ASSIGNMENTS DIFECTIVE FACTORS PAYMENT GRIEVANCE RESULTING OF PROCEDURE IN VERY LOW INDISCIPLINE WAGES POOR VICTIMISATION INEFFECTIVE COMMUNICATION BY MGT. LEADERSHIP Figure 14.1 Various Factors Responsible for Indiscipline . COUNSELLING JOB - ENRICHMENT & EDUCATION APPROACHES TO MANAGE INDISCIPLINE GRIEVANCE HANDLING PROPER INDUCTION & TRAINING PROGRAMME Figure 14.2 Means to Cope With Indiscipline
- 165. 165 14.5 Misconduct Meaning & Definition An action or type of behaviour can be defined as misconduct if it is prejudicial to the interests ofthe employer and otheremployees, inconsistent withthenorms set for discharging duties,unsafe or unfaithful to such adegree that it becomes incompatible to continue employer– employee relationships. Categories of Misconduct Disciplinaryacts ofmisconduct can be categorized on the basis ofthe severityofthe consequences. (i) Minor Contravention– results infew serious consequences. Example – negligence, minor disobedience to rules, carelessness. (ii) MajorContravention –Partiallyhinders the workingofthe organization. Example –lying, cheating, stealing (iii) Intolerable Offences – are ofunlawfuland severe nature which endanger employment relationship. Example – threat to use weapon, use ofdrugs on the job, smoking near inflammables. Misconduct Stated In Model Standing Orders Here isanillustrative list ofacts constituting misconduct under ModelStanding OrdersAct , 1946. (i) Wilfulinsubordinationor disobedience ofanylawfuland reasonable order, rule or regulation. (ii) Refusalto work on a job or a machine which has beenassigned to him. (iii) Refusalto accept or replyto a charge sheet within the prescribed period oftime. (iv) Theft , fraud, or dishonestyinconnectionwith the propertyofthe company. (v) Theft ofanother employee’s propertyinside the industrialarea or companypremises. (vi) Causing willfuldamage to , or loss of, the employer’s goods or property. (vii) Causing damage to a product in process or to anyproperty. (viii) Interference with, safetydevices. (ix) Non-observance ofsafetyprecautions and rules. (x) Takingor giving a bribe oranyillegalgratification. (xii) Acceptance ofgifts fromsubordinates. (xiii)Habituallatecoming. (xiv)Absence fromdutywithout leave. (xv) Overstaywhenonleave without prior authorized permission. (xvi)Entering orleaving, or attemptingto enter or leave, thework premisesexcept throughauthorized entrance and exits. 14.6 Causes & Approaches Towards Disciplinary Action 14.6.1 Causes for Infringement of Discipline The mainreasons for breachofdiscipline inanyorganizationmaybe stated under following heads (I) Causes Related To the Worker (a)Illiteracyand lowintellectuallevelofworkers. (b)Workers personalproblems like their fears, hope, aspirations etc.
- 166. 166 (c)Inborntendencies ofworkers to flout rules. (II) Causes Related To the Socio – Cultural Factors - (a)Misunderstanding andrivalryamong workers. (b)Discrimination based oncaste, colour, sex, place inimposing penalties. (III) Causes Related To the Work Environment – (a)Bad working conditions. (b)Defectivesupervision (c)Non-placement ofright persononthe right job. (IV) Causes Related To the Management Practices – (a)Lack ofclarityin rules ®ulationas laid out bythe top management. (b)Faultyperformance appraisalsystems leading to favoritismtherebygenerating indiscipline. (c)Absence ofsympathetic and scientific management. 14.6.2 Principles of Industrial Discipline IndustrialDiscipline should be based oncertain just and fair principles to be acceptedbythe employees. The basic Prerequisites or principles to be observed are:- (i) The veryobjectives ofindustrialdiscipline should beclearlylaid out (ii) The code ofconduct should beframed with consultation&collaboration ofthe workers or their representatives. (iii) The codeofconduct must be communicated to allconcerned inthe organization. (iv) The rules andregulationconcerning the discipline shouldunderstandable byall. (v) The rules of conduct must able to settle the grievances if any arising during the period be of employment. (vi) The approachofdiscipline policyshould bepreventivei.e. stress belaidonpreventionofviolation ofdisciplinerather than ontheadministrationofpenalties. (vii) The quantumofreprimand foreachcase ofmisconduct should be specified clearlyinadvance by publishing theminemployee’s handbook. (viii) The enforcement authoritymust be specified. (ix) Disciplinepolicyshouldnot discriminateagainsttheemployees;it shouldbeuniformforallemployees without favoring anyone worker or employee. (x) A disciplinary committee in the advisory capacity be constituted to look into the matters of indiscipline and put forth the necessarysuggestions. 14.6.3 Guidelines of a DisciplinaryAction (a) Fixation ofResponsibility– theresponsibilityfor sustainingdiscipline intheorganizationshould be givento a responsible person, saypersonnelofficer. (b) ProperFraming &Communication ofRules– the rules and regulations should be cautiously and accuratelyformulated and published inemployee handbooks. (c) Rules and RegulationsShould be Reasonable– the work standards set Should be attainable bytheemployeesand the rulesbe modified at frequentintervalsto suit thechanging organizational circumstances.
- 167. 167 (d) EqualTreatment –Rules and penaltiesshould be applied equitably. Identicalpunishment should be granted for identicaloffences. (e) PromptAction – care should be taken to make sure that the penaltyis imposed soon after the violationofa rule has occurred. (f) Search for the Facts– before proceeding to take anyaction against an employee , provide him with sufficient time to present his side ofthe case i.e. What and whyit Happened ….? (g) Natural Justice – the punishment or penaltyimposed on the indisciplined worker must satisfy theprincipleofnaturaljustice. Thepunishment shouldalways justifywiththegravityoftheoffence. 14.6.4 Mc Gregor’s Hot Stove Rule The modelmethod for enforcement ofdisciplineshould have thefour important characteristics ofa red – hot – stove. (i) Advance Warning – a red – hot stove tells us, “don’t touch me, you will suffer” Similarly a worker knows what is expected ofhim and what willbe the result ifhe fails to live up to those expectations. (ii) Immediate Effect - ifone overlooks the advancewarning and touches thestove, gets immediate result (fingers maysufferburns)likewise workersmayget instantaneous effect oncommittingany act ofindiscipline. (iii) Consistency – every time we touch a red – hot stove we get the same result. Every time a worker commits theinsufficient act , he should be penalized. (iv) ImpersonalApproach–red–hot stovefunctionsuniformlyforall,doingawaywithanyfavoritism. In the sameway, management should not discriminate inimposing punishment onbasis ofcaste, creed, colour, sexetc. It shouldguarantee the fundamentalright to equality. Thusthesefourcharacteristicsshouldbekeptinmindbefore administratinganydisciplinaryaction. 14.6.5 Procedure forDisciplinaryAction The following steps shouldbe takencareofwhileadministrating adisciplinaryaction. (a) Ascertaining the Statement of the Problem - First look into the violation of rule and the number ofemployees involved in the matter. Then ascertain the gravity ofthe violationand the conditions underwhichit occurred. (b) Searching forthe Underlying Facts– This calls forthoroughexaminationofthe case together the relevant facts. (c) Deciding upon the Type of Penalty – The penalty or punishment should be such which discourages future reoccurrence of the offence or violation. But it should always relate to the gravityofthe offence. (d) Application of Penalty – The selected penaltymaybe imposed on the wrong doers and if the offence is not ofa serious naturethen it maybe disposed offquickly. (e) Follow-uponDisciplinaryAction–Vigilant supervisionofthepersonagainstwhomadisciplinary action is takenshould be done. Activity C: 1 with the help ofanimaginarycase elaborate the procedure ofdisciplinaryaction.
- 168. 168 14.7 Code of Discipline in Indian Industry The Indianlabour conference held in New Delhiin July1957, discussed discipline inIndian Industries, and laiddowncertainprinciples governingit, these were (a) It is a State – induced voluntaryagreement between labour unions and management to abide by certain self-imposed rules ofbehavior in order to ensure that disputes do not arise ; and that , if they do, to promote and orderly settlement through negotiation , conciliation and voluntary arbitration. (b) The Code enjoys upon the parties to accord due recognition to each other’s just rights and responsibilities. (c) It enjoins upon the parties to refrain from taking any unilateral action in connection with any industrialmatters; to utilize the existing machineryfor thesettlement ofdisputes withthe utmost expedition ; and to abjure strikes and lock-outs without notice and without first exploring all possible avenuesofa settlement. (d) It discourages litigationand laysemphasis onamutualsettlement ofdisputes throughnegotiation, conciliationandvoluntaryarbitrationratherthanthroughadjudication. (e) It enjoins that neither partyshould resort to demonstration, intimidation, victimization, violence, coercion, discrimination, or interfere inunionactivities orwiththe normalworkofemployees ,or indulgeinsubordinationorwilfuldamage to property. (f) Thecoderequirestheemployerstorecognizethemajorityunionintheirestablishmentsorindustries, and set upa well-defined and mutuallyagreed grievance redressalprocedure. It requires workers not to adopt go-slow tactics , or indulge in stayin or sit-downstrikes while theyare on duty. (g) It emphasizes that awards , decisions , agreements and settlements should bepromptlyand readily implemented ;andthat anyact whichdisturbs or impairs the cordialrelations betweenemployees and management , or which is contraryto the spirit ofthe Code , is carefullyavoided. (h) It directs employees and their trade unions to take appropriate action against their officers and members who indulge in activities whichare contraryto the spirit and letter ofthe code. 14.8 Summary Industrydiscipline is vitalfor creationand maintenance ofhealthy& peacefulindustrialenvironment. It brings numerous benefits to the organizationand its employee as well. Discipline has two aspects i.e. positive&negative. Indiscipline&misconductcansurgefromnumberoffactorslikeunfairlabourpractices, wage differentials, poor communication, ineffective leadership etc. Indiscipline & misconduct are two evils that can hamper the smooth functioning ofan organization so they should be curbed at any cost. Modelstanding orders and the code ofdiscipline as stated bythe Indian Labour Conference can helpin long termto keep a check on the Indiscipline inthe Industry. 14.9 Self Assessment Questions 1. What do you mean by“Discipline”?State its major characteristics and objectives. 2. Discuss the significanceofdiscipline inIndustry? 3. Write short notes on
- 169. 169 (a) Indiscipline & (b) Misconduct 4. Explaininbriefthe guidelines ofa disciplinaryaction. 5. State the characteristics ofRed Hot stove incontext ofdisciplinaryaction. 14.10 Reference Books - Spriegel, WilliamR., and Schultz , Edward , IndustrialManagement , 1957. - Webster’s, New Collegiate Dictionary, 1953, p.236 - Arun Monappa (2004);IndustrialRelations;Tata Mc Graw-HillPublishing CompanyLimited, New Delhi. - A.M. Sarma(2008);IndustrialRelations(ConceptualandLegalFramework);HimalayanPublishing House, New Delhi. - C.B. Mamoria & S.V. Gankar (2010); Personnel Management (Text & Cases); Himalayan Publishing House, New Delhi. - T.N. Chhabra &R.K. Suri(2007); IndustrialRelations (Concepts and Issues); Dhanpat Rai&Co. (Pvt.) Ltd; Delhi - PRNSinha(2000);IndustrialRelations,TradeUnionandLabour Legislation;PearsonEducations; New Delhi.
- 170. 170 Unit - 15 : HumanResourceAccounting Structure of Unit: 15.0 Objectives 15.1 Introduction 15.2 Growth&Development ofHumanResourceAccounting 15.3 Concept ofHumanResourceAccounting 15.3.1 Meaning&Definition 15.3.2 Need and ImportanceofHumanResourceAccounting 15.3.3 Objectives ofHumanResourceAccounting 15.4 HumanResourceValuationModels 15.5 HumanResourceReporting inIndia 15.5.1 Problemsin HRA Reporting 15.5.2 Suggestions 15.6 Summary 15.7 SelfAssessment Questions 15.8 Reference Books 15.0 Objectives After completing this unit you should be able to : Understand Meaning &DefinitionofHumanResourceAccounting Classifythevarious development stages ofHumanResourceAccounting Learntheneed &importance ofHuman ResourceAccounting Point out the major objectives ofHumanResourceAccounting Understand the various HRValuationmodels 15.1 Introduction Humanresources isan old fieldofresearch ineconomics. Without humanresources , theother resources cannot be effective , thus we cansayhumanresources mobilizesallthe other resources. The evolution of service based economies from the past few decades has shifted the importance fromphysicalassets to knowledge & attitudesofemployees working inservice providing firms. The totalvalue ofanyorganization depends essentiallyon the skillset ofits employees and the services they deliver. Therefore, the survival ofthese organization is dependent on the qualityof their human resources, its knowledge, expertise, capabilityand perceptionofthe organizationalculture. Hence intoday’sglobalize knowledge driveneconomies, it is crucialthat the humans berecognizedas an central part of the total worth of an organization Thus, the importance of human resources cannot be ignored and at this juncture, it becomes necessary to give due consideration to the development and growthofsuch animportant resourceofthe organization. 15.2 Growth & Development of Human Resource Accounting Researchinto HumanResearchaccounting began inthe1960’s byRensis Likert. It supported long term planning on diverse qualitative human resource variables yielding superior benefits inlong run. Human resourceAccountingistheoutcome ofnumerousresearchstudies conductedinthefieldofaccountingand finance. Human resource as an asset ifpositioned & nurtured in the right direction mayrealize itsfull potential.
- 171. 171 Lately, theBehavioralscientists criticized theconventionalaccounting practiceofvaluing humanresource along withphysicalresources andstressed onthe concept ofassigning monetaryvalueto humanresource ofthe organization. Theyadvocated that anyexpenses incurred onthe development ofhumanresources should be treated as capital expenditure as in the long run it gives benefits which can be measured in monetaryterms. Eric Falmholtz divided the development ofHuman ResourceAccounting into five stages, whichcanbe summed up as follows:- First Stage (1960 – 66) – This symbolizes the beginning ofHuman ResourceAccounting where the focus wasto derive the concepts ofHuman ResourceAccountingfromother studies likeeconomics etc. Second Stage – (1966 – 71) – The objective here was to assess some models that would cover both costs models & monetary& non– monetaryvalue ofHuman Resource . Third Stag - (1971– 76) –Herenoticeable significance inthefield ofHumanResourceAccounting grew leading to number of researches in the field. The focal point was the application of Human Resource Accounting inbusiness organizations. Fourth Stage- (1976– 80)–Thisperiod saw thecollapseoftheconcept ofHumanResourceAccounting as the organizationswere not prepared to invest time , energyand most importantlythe funds neededto researchfurther deep into the concepts ofHuman ResourceAccounting. Fifth Stage - (1980 Onwards) – The explosion ofservice economies indeveloped countries brought about a renewalofinterest in Human ResourceAccounting.And further in mid 90’s the application of HumanResourceAccounting to business management gained greater impetus. 15.3 Concept of Human Resource Accounting 15.3.1 Meaning & Definition The concept ofhuman resource accounting canbe better understood byfollowing important definitions givenbyeminent authors intheaccounting field. M.N. Bakerdefines, “H.R.A. isthe termapplied bythe accountancyprofessionto quantifythe cost and valueofemployeesto their employing organization”. K.Foley Defined “Human ResourceAccounting is the measurement ofthe cost and value ofpeople for organization.” Prof. Davidson Defined“HumanResourceAccounting is the termusedto describea varietyofproposals that seek to report and emphasize the importance ofhumanresource knowledgeable , trained and loyal employees ina companyearning processand totalassets”. TheAmericanAccountingSociety CommitteesonHumanResourceAccountingdefinedit as follows:- “Human ResourceAccounting is the process ofidentifying and measuring data about human resources andcommunicatingthisinformationto interested parties.” Flamholtzdefines“HumanResourceAccounting as the measurement andreporting ofthe costand value ofpeopleinorganizationalresources.” Inshort, the definitionofHumanResourceAccounting brings out following characteristic features:
- 172. 172 Figure 15.1 15.3.2 Need and Importance of Human ResourceAccounting The need for Human ResourceAccounting felt largely as a result of the emerging concern for human relations management inindustry. The veryimportance ofHuman ResourceAccountingcanbe summed up throughfollowingmajor points – (a) HumanResourceAccounting helps management inacquiring placing andinmaking effective utilizationofhumanresources. (b) To retainthe qualified employees (c) It aidsindeciding the transfers , promotion, training etc ofhumanresources. (d) It serves as a toolto measure and compare the expenditure incurred for imparting the training to employees and inturnthe benefits derived bythe firm. (e) HumanResourceAccounting helps to improve the profile ofthe enterprise and its image. 15.3.3 Objectives ofHuman ResourceAccounting Putting ina capsule the mainobjectives ofHumanResourceAccounting are to: Figure 15.2 15.4 Human Resource Valuation Models Human ResourceAccounting can be explained inthree ways :- 1. MONETARYMODELS–TheModelswhicharecreatedusingmonetaryvariable arecalledmonetary models. (A) COST BASED MODELS (i) Historical Cost Model :-This Modelwas developed byWillimC. P.yle , R. Lee Brummet and Eric. G. Flamholtz. This is also called originalcost method or outlaycost method. In this method actualcost incurred onrecruiting , selecting , hiring , training anddeveloping the humanresourceofthe organization are capitalized and amortized over the expected usefullife ofhuman resources. Ifthe human assetsare liquidated pre-maturelythe whole ofthe amount not written offis charged to the income ofthe year in Valuation of Human Resources Recording it in books of act’s Disclosure of this information in financial statement Improve Mgt byinvestment in H.R. Consider people as its asset OBJECTIVES Attract & Retain qualified people Profile the organization in financial terms Account
- 173. 173 which year the assets is liquidated. Ifthe usefullife is recognized to be longer than originally expected revision are affected in the amortization schedule. The un-expired value is shown in balance sheet as investment inhumanassets. Merits: (i) it isa simple method. (ii) This methodcanbe used for evaluating returnoninvestment inhuman resources. (iii) Thismethod is objective ratherthanbeing subjective. Limitations : (i)Accuratemeasurement not possible. (ii) It isdifficult to estimate thenumber ofyears an Employee is going to bewiththe firm. Hence there is a problemofestimate the number ofyears over which the capitalexpenditure is to be amortized. (ii) Replacement Cost Model: The replacement cost method ofvaluation ofhumanresource has been developed byEric G. Flamholtz. Underthis method value to anorganization ofanindividual’s services is reflected bythe amount that the organizationwould have to payto replace these services. Merits : - (i) It considers the current value ofthe humanresource. (ii) Replacement cost are present oriented. (iii) Replacement cost is better thanhistoric cost. Limitations : (i) There maybeno identicalreplacement oftheexisting human resources. (ii) The valuationofhuman resources based on replacement cost is affected bysubjective consideration. (iii) Opportunity Cost Model: This method was suggested by Hekimian and Jones This method is based on economist’s concept of opportunity cost. Under opportunity cost method , the value of an employee in his alternative use is determined. This value is taken as the basis for estimating the value of human resources employedbythe organization. Merits : (i) Opportunitycost approach gives more optimumallocationofpersonnel. (ii) It provides quantitative base forevaluating humanassets. Limitation: (i) Thismethod is expensive. (ii) The measureofreliabilityofopportunitycost is less. (iv) Standard Cost Method:David Watsonsuggested this approach. Under this method , employees of anorganizationarecategorized into different groups as per their hierarchicalpositions. The standard cost is fixed for each category and then their value is calculated. The standard cost of recruiting, placing, training and developing per grade ofemployee is developed and established and made up to date every year , Standard method provides easyimplementation.
- 174. 174 (B). VALUE BASED MODELS (i) LevandSchwartz Present Value ofFuture Earning Model. (ii) Flamholtz StochasticRewardsValuation Model. (i) PresentValueofFutureEarningsModel:ThismodelissuggestedbyBranchLevandAba. Schwartz. This modelis also known as compensationmodel. What isthe present value ofan employee ?In orders to findout the present valuewetake thediscount rate. This discount rateis normallythat ratewhichiscost ofcapital. Each and everyemployee is classified according to his age and efficiency. Then we findout what is average income ofanemployeeindifferent groups. Thenwe calculate the income ofeverygroup up to the date of retirement. Then we apply the cost of capital rate. Then we arrive at value of human assets ofthe group. Levand Schwartz has giventhefollowing formulas ( ) (1 )( ) x V T I t r t x t x Where x V = The human capitalvalue ofa person X year old. I(+) =Theperson’s annualearnings up to the retirement r =Adiscount rate specific to the person T = Retirement age Merits :- (i) This methoddepends uponfuture earnings capacityofan employee. (ii) This method is depending uponthepresent value offuture earnings capacityso this method appears to be most logical. (iii) Discount rate is based on cost ofcapital, which appears to be fair. Replacement Cost Chart Acquisition Cost Learning Cost Separation Cost * Recruitment * Training * Separation pay * Selection * Development * loss of efficiency * Hiring due to vacant post * Placement during search * Promotion * Transfer s
- 175. 175 Demerits :- (i) The method does not take into considerationthat the employees leave the organization due to number ofreason other thandeath &retirement. (ii) This method ignores change inthe profession ofanemployee due to age , health etc. (ii) Flamttltz’s Stoochastic Rewars Valuation Model: The modelis based on thepresumption that a person’s valueto anorganizationdependsuponthe positionheholdsinthe organization.This modelgives five stepsfor valuing anindividualinanorganization. (i) Find out the expected service lifeofanindividualinanyorganization. (ii) Identifyhow muchtime he willremainonparticular status. (iii) Estimate thevalue derived bythe organizationwhena personholds a particular position. (iv) Estimate the probabilityofoccupying eachpossible mutuallyexclusive status at specified future time. (v) Discount (at a predetermined rate) the expected service rewards to their present value. The Modelhas usedthe following formulae. 1 ( )] ( ) [ 1 (1 ) n m t i Ri P Ri RV r t (RV) Expected Realized value Ri = Amount of service received (R) at everypossible state or status P(Ri) = Status Possible expected service to be receivedbythe organization t = time period. m = Retirement Stage (1+ r) = Rate ofDepreciationfor money Merits :- (i)Thismethod takes into account the probabilityofa person’s carrier movement and ofhis leaving theorganizationprior to hisretirement or death. (ii) The modelcombines bothmonetaryandnon-monetaryvariables. Demerits : (i) It is expensive. (ii) It isverydifficult to estimatethat for how muchperiod anemployee willcontinue in an organization. Dr. S.K. Chakraborty’s Model of Human Resource Valuation: - According to Dr. Chakrabotyhumanassets should be included inBalance sheet on assetsside under the heading “Investments” He is ofthe opinion that ifwe include it in the heading fixedAssets it willcreate problems like depreciation, capitalgains or losses , etc. The value ofhuman resources ona group basis can be foundout bymultiplying theaverage salaryofthe groupwiththe average tenureifemployment of
- 176. 176 the employee in that group. He has suggested that recruitment , hiring , selection , development and training costs of each employee should be recorded separately , it can be treated as deferred revenue expenditure to be writtenoffover theexpected average stayofthe employee in the organization andthe deferred position should be shown in balance sheet of the organization. If there is a premature exit on account ofdeath, retirement etc thenthebalance onthedeferredrevenue account fortheyear attributable to that personshould be writtenoffagainst the incomeofthe year ofexit itself. 2. NON-MONETARY MODEL (A) Likert’s Casual, Intervening and End–Result Variable Model :- This modelis based on behaviouralvariable. This model was developed byRensis Likert and David G. Bowers ofU.S.A. The modelis comprised ofthree variables – Casual, intervening and end results. (i) CasualVariable –Thecasualvariables are independent variables whichcanbedirectlychanged bythe organizationand its management andwhichinturndetermine the course ofdevelopments withinanorganization. (ii) The intervening variables reflect the internal state, health and performance capabilities of the organization e.g. the loyalties, attitudes, motivation, performance goals and perceptions ofall membersandtheircollectivecapacityforeffectiveaction, interaction,communicationsanddecision – making. (iii) The end result variables are the dependent variable, which reflect the result achieved by the organizationsuch as its productivitycosts, scraploss, growth, share ofmarket & earnings. Merits :- (i) Modelis based on non-monetaryvariables. (ii) Themodelis highlyusefulindecisionmaking. Demerits :- (i) The degree ofobjectivityis less (ii) The degree ofreliabilityis low. (iii) Themethod is expensive. 3. STATISTICALBASED METHODS Under statisticalbasedmethod ofHumanresourcesno according is involved. The statisticalinformation regarding humanresource is collected andtheyare presented inannualreports. Theymaybe offollowing types:- (i) MonthlyStatistics on. (a) Recruitment Costs (b) Selection Costs (c)Training Costs (d) SpecialDevelopment programme costs (e) Worker’s educationprogrammes (f)Auxiliarycostssuch as canteen, medicaland other fringe benefits (ii)TotalHumanResource Investment analyzedworkmeninto
- 177. 177 (a) PersonnelOfficers, staffand workmen (b) Department wise (c) Expenses Categorywise (iii) Periodicalchange inHumanResources Investment. (iv) Statement ofcontributionfactor separatelyfor officers, staffand workmen. (v) Statement onhumanresource cost co-efficient (humanresourceinvestment humanresource current cost) separatelyfor officers, staff&Workmen. (vi) Times rateofreturnanalysis. (vii) Statement ofhuman resource performance indexshowing separatelyfor officers, staff& workmen. (viii) Statement ofper capitalHumanResourceperformance index showing separatelyfor officers, staff& workmenand also total. (ix) Age wise Service Status (x) Monetaryvalueofservice statutory (xi) Statistics onemployee turnover. (xiii) Anyother statisticsrelevant to the organization. 15.5 Human Resource Reporting in India InIndia, reporting practicesofHumanResourceAccounting isextremelylow.Afew companiesdo report intheirannualreports.ThereportingofHumanResourceAccountingisinsomesentences.SomeCompanies furnish information about number ofemployees working in the organization, how manyworking hours have lost, what is the situationofindustrialrelationetc. Both Public sector and private sector companies have used economic value approach instead of cost approach. Most of the companies have used Lev and Schwartz model. They have Lev and Schwartz modelinmodifiedway, whichis similarto Flamholtzmodel. Ithas beendiscovered that most likelyvariety ofthe companies is replacement cost model, Human resources reporting is not because their is no legal compulsion byIndianCompaniesAct 1956. There is also probleminmeasuring Human Resources. Human ResourceAccounting has been reported byabove – mentioned companies as a supplementary informationintheirannualreports,suchreportingbycompaniesare audited. Thecompanieshaveclassified their employees, agewise, theyhavefurtherclassified theminmanagers, executives, supervisors,Artisans, clericalstaffetc. Some Companies inIndia shows humanResourcedevelopment cost i.e. training anddevelopment cost in detail while some corporation are showing them in short, some shows them in “Director’s Report or chairman speech.” Productivity/ performancestatistics ofhumanresourcehavebeenpresented bysomecompanies indetail. Average employee cost is shown byfew companies only. Appreciations and Awards received by the companies have been shown by the companies under the heading“Highlight”or Director’sReport orelsewhere intheannualreportsoftheCompaniesHighlight’s. For purpose of calculating the present value of future earning of employees , all the companies have adopted a discount rate , whichis not common. Majorityofthe companies adopted 12%.
- 178. 178 Some ofthe companies have not mentioned the purpose forwhichtheyare reportingHRAinformationin their annualreports. Whereas some companies haveclearlymentioned their objectiveofreporting human resource data. It seems that some companies report HRA for image buildingpurposes. Some companies have also givenadditionalinformationasregarding number ofemployees, average salary, average age of employees , average production per employee etc. 15.5.1 Problems in HRA Reporting 1. HumanResourceAccounting isshownassupplementaryinformationintheannualreports , which has no significance. 2. Allthe companies who are reporting HumanResourceAccounting have used Lev and Schwartz model but this model is suffering from some drawbacks. One it has assured state promotion policy and consistent average salary to all the employees in a particular group. These two assumptions are far from reality , difference in skill , experience qualifications and increasing importance ofemployeesunion often lead to changeinthese policies. 3. Though human capital plays an important role in any organization , there is a wide spread , disagreement regardingthe reorganizationand valuationofhumanresource asassetsongenerally theassets isonewhichfulfillsthefollowingthree criteria. Theyare (i) theentityshouldhavelegally enforceable claimto it. (ii) It should be owned bythe entity(iii) theentityshould posses it withthe expectationofderivingservices fromit infuture HR are not fulfilling anycriteria.Assuchthereis a problemin recognizing human resourcesas assets. 4. Proper matchingofcosts with revenue is not possible unless the costs onthe recruitment training and development ofpersonnelare capitalizedover their effective servicelives. It is so because the benefits from such expenses are usually derived over a period beyond the year of payment. However in a number of cases, the earnings potential ofemployees may not depend upon the expenditure incurredbythe firms forthe purpose. But it depends uponbehaviour aspectslike skill , motivationgrouployaltycapacityfor effective interactionand decisionmaking etc, to influence the end results ofanenterprises effectively. 5. The veryidea of showing humanresource as an asset on the balance sheet ofa firmtends to be arbitraryfor thispurpose as per themethods available , humanresource are to bevalued either on the basis ofcost incurred bya firmon recruitment trainings etc or replacement cost. In both the methods cost is taken as the value of human assets. But this hardly represent the real value of personnelinparticularand the firmingeneral. Theothermethod likediscountedwage,andsalaries method,economicvaluemethod,andopportunitycostmethod, involvestheelementofsubjectivity invaluingthehumanresources. 6. Yet another difficultyregarding HRAis Quantificationand pricing ofemployees inrespect ofjobs whichdo not yield anyphysicaloutput. Determinationofprobabilities oftheexpected services of the employeesis also a difficult task. These practicaldifficultiesare subject to theinfluence ofage qualification , the previous experience point offirst entry, employment period and turnover as wellas the organizationalpulls andpressures ondifferent categoriesofemployees. 7. In allthemethods , the salariesearned bythe employees aretaken as the basis for valuing human resources. Thus thecareer movement ofemployeeseither withinthe organizationor elsewhere in the other organizationiskept outsidethepurviewofvaluation. Since theemployeesmakeconstant
- 179. 179 trials to occupyhigher position during theireffective service life , anyvaluation process without considering thiswaytend to beless meaningful. 8. The provisionofexisting tax laws , do not recognize the amortized portionofcapitalized human resource value asdeductibleexpenses for computingincome. Evenifattempts aremade to amend the existing provisionoftax laws there is a greater amount ofscope to misuse the facilityas the employers mayadopt fictitious method to undertake the profitabilityof their business and may show unrealisticvalueofthe firm. 15.5.2 Suggestions In India, human resource accounting has not been introduced so far as a system. The companies Act 1956,doesnot require, furnishingofanysignificant informationabouthumanresourceinfinancialstatement of the Companies. The Institute of CharteredAccountant of India has also developed 18Accounting Standards. The accounting standards are applicable to public and private sector companies & large borrowers of funds from banks and financial institutions in the corporate sector. It is the duty ofthe members Institute of Chartered Accountants of India to ensure that the accounting standards are implemented inthepresentationoffinancialstatementscovered bytheir audit report.Allthese accounting standardsare quiteimportant frompoint ofview ofmeasurementanddisclosureofaccountinginformation. 15.6 Summary In today’s globalized world it has become imperative to give necessary consideration to the Human Resourceoftheorganizations.Without humanresourceno otherresourcecanfunctioneffectively, therefore Human Resource has been recognized as a crucial part of total organization worth. Human Resource Accountingfacilitatesthemanagement ofpeopleasorganizationalResources. HumanResourceAccounting in application of accounting concepts & methods to management of Human Resources it deals with investments inpeopleandwitheconomic resultsofthose investments. HumanResourceAccounting field underwent a number of stages beginning from1960 to till date to assume the status ofa fully fledged subject. It greatlyhelps the management ofthe business organizationsinacquiring, placingand inmaking effective utilizationofhumanresources. HumanResourceAccounting has its number ofmodels under the purviewofmonetary, non-monetaryandstatisticalmethods.Buttheplight ofHumanResourceAccounting in India isextremelypoor and bothpublic and private sector companies do not paymuchhead to Human Resource Reporting. Therefore, the government needs totake steps inthe right directions for promotion ofHumanResourceAccounting Practices inIndia. 15.7 Self Assessment Questions 1. What do you mean by“HRA “. Explain & Detail. 2. Classifythe variousstages indevelopment ofHumanResourceAccounting. 3. Discuss the importance ofHRAintoday’s globalized world. 4. Write short note onHumanResourceReporting inIndia. 5. What are the different valuationmodels ofHRA ?State their merits and demerits.
- 180. 180 15.8 Reference Books - A.M. Sarma (2009) ;Personnel&Human Resource Management ;Himalaya Publishing House , New Delhi. - P. Subba Rao (2008) ; Personnel& HumanResource Management ; Himalaya Publishing House ;New Delhi. - Dr. G. L. Dave (2001) ;SocialAccounting ; Renuka Publisher ; Jodhpur. - RaviM. Kishore (2008) ;Advanced ManagementAccounting ;TaxmannPublication ; New Delhi. - Eric. G. Flamholtz (1999) ;Advances in concepts , methods and applications ; Kluwer Academic Publishers.
- 181. 181 Unit - 16 : Managing Ethical Issues in HRM Structure of Unit: 16.0 Objectives 16.1 Introduction 16.2 Nature of Ethics 16.3 Need ofBusiness Ethics 16.4 Sources ofEthics 16.5 ImportanceofEthics 16.6 EthicalDilemmas 16.7 How to Manage Ethics at Workplace 16.8 EthicalDecisionMaking 16.9 Five SourcesofEthicalStandards 16.10 Summary:AFrameworkfor EthicalDecision-Making 16.11 SelfAssessment Questions 16.12 Reference Books 16.0 Objectives Aftercompleting thisunit, youwillhavegood understanding of: The nature, need and sources ofbusiness ethics The importanceofethics Ethicalmisconductinpersonnelfunction How to manage ethics Ethicaldecisionmaking 16.1 Introduction Ethics refers to the studyofgoodand evil,right andwrong, and just and unjust actionsofbusinesspeople. Business ethics is the same as the generally accepted norms ofgood or bad practices. Human resource management(HRM)isthescienceofmanagingpeoplesystematicallyinorganizations.Theuniqueindividual actor in the organization - a given executive, manager, line worker - is not the focus of HRM, rather, humanresourcespractices andpolicies concerningrecurring cycles ofstaffing, rewardand compensation, andperformancemanagement informhowanypersonorgroupofpeopleisintroducedintotheorganization, managed while there, and exited fromthe organization. When these three overarching aspects ofhuman resource management are designed effectively, theorganization benefits fromamanagement systemthat enhances thesustainedcompetitiveadvantage oftheorganization.Acriticalpart ofdesigning theseaspects effectivelyrequiresconsiderationofethicalconcernsateachstage. Staffingiscomprisedofsystemsdesigned to recruit and select employees to undertake required roles inthe organization. The purpose ofrecruiting is to provide the organization with a group ofcandidates large enough for the organizationto select the qualified employees that it needs. Needs are formalized by (1) job or position descriptions, which are writtenstatementsofcontent and organizationallevelofthejob;and (2)hiring specification, whichdetails background, experience, and skills requirements. 16.2 Nature of Ethics Business ethics does not differ fromgenerallyaccepted norms ofgood or bad practices. Ifdishonestyis considered to be unethicaland immoralinthe society, thenanybusiness person who isdishonest with his
- 182. 182 orher employees, customers, shareholdersorcompetitorsis anunethicaland immoralperson. Ifprotecting others fromanyharmis considered to be ethical, then a company which recalls a defective or harmful product fromthe market is anethicalcompany. Two theories are important when oneconsiders natureof ethics. The theoryofmoralunityessentiallyadvocates the principle that business actions should bejudgedbythe generalethicalstandards ofthe society. There exists only one set of ethical standards which applies to business andnon-business situations. Opposite to this is the theory ofamorality, which argues that a business can be amoral, and actionsof business people need not be guidedbygeneralethicalstandards. Managers mayact selfishlybecausethe market mechanismdistills their actions into benefitsto shareholders and thesocietyat large. ActivityA: 1 Break your class into groups ofthree and give each group a stack of3-by-5 indexcards with an unethicalsituationwritten on it. For example, you maywrite, "You have found a bank error on your business's line of credit and you have been charged $10,000 less than you should have been." One personinthe group isthe persuader, trying to convince another person(thedecider) to make the unethicalchoice.The third personis the observer, who watches howthe persuader persuades and the decider decides. After a few minutes, have the groups draw another card and switch roles. Thisactivitywillteachthesubjectivenatureofethics, emphasizingthroughdiscussionthat unethicalbehavior can be spun as ethical and vice versa. 16.3 Need of Business Ethics The need ofbusiness ethics can be explained with the help ofthe following points:- (1) Introducing Socialism in Business: This means the gains of business must be shared by all concerned and not just by owner ofbusiness. Profit is the result of group efforts and hence all concerned must share the same. In other words, the concept of socialism in business say that workers, shareholders, consumers allothers who contribute to the success ofthe business must share its gain. (2) Interest of Industry: Business ethicsare required to protect theinterest ofsmallbusiness firms. Big firmsnormallytryto dominateand eradicate smallfirms. Ifindustryfollows codeofconduct, smallfirms canfight for their existenceand stayin thebusiness for long. (3) Buyers Market: In recent times, structuralchanges have takenplace in theconcept ofbusiness. In case of many products, sellers market has been converted into buyers market. Under such changed business conditions business ethics is needed to stress the importance of consumer satisfactionandservice orientationinplaceofprofit orientation. (4) Better Relations with Society: Code ofconduct results in better relations between business and society.It willreconcile conflictinginterest ofvarious sectionsofthe societysuchas workers, shareholders, consumers, distributors, suppliers, competitors and government. (5) Advantages to Business and Society: Ethics point out what is good and bad, so also what is
- 183. 183 right or wrong. It brings to the notice of the business community the importance of honesty, sincerity, fairnesswhich makes themalert and sociallyconscious. Inthe finalanalysis, business ethics helpthe business and societyat large. It ensureshealthyatmosphere in business whichensures improvement in social, economic and culturalvaluesofthe society. 16.4 Sources of Ethics HR managers ineverysocietyare influencedbythree repositories ofethicalvalues-religion, culture and law.Theserepositoriescontainuniquesystemsofvaluesthat exertvaryingdegreesofcontrolovermanagers. A common thread --- idea ofreciprocityor mutualhelp --- runs through allthe value systems. Thisidea reflects the centralpurpose ofallethics-whichis to bind the vast majorityofindividuals inthesocietyinto a cooperativewhole. Ethicalvalues constitutea mechanismthat controlsbehavior inHR situationsand in other walks oflife. Ethics drivenrestraints are more effective than restrictive controls suchas police, law suitsor economicincentives. Ethicalvalues channelizethe individualenergies into pursuitsthat arebenign to others and beneficialto the society. It is acode ofconduct that issupposed to alignbehaviorswithinanorganizationandthe socialframework. But the questionthat remains is, whereand whendid business ethics come into being? It is forthis reason we do not have uniformor completelysimilar standards across theglobe. Thesethree factors exert influences to varying degrees on humans which ultimatelyget reflected in the ethics ofthe organization.Forexample,ethicsfollowedbyInfosysaredifferent thanthosefollowedbyRelianceIndustries or byTata group for that matter.Againethicalprocedures varyacross geographic boundaries. Religion It is one ofthe oldest foundations ofethicalstandards. Religionwields varying influencesacross various sects ofpeople. It is believed that ethics is a manifestationofthe divine and so it draws alinebetween the good and thebad inthe society. Depending uponthe degreeofreligious influence wehave differentsects ofpeople; we have sects, those who are referred to as orthodox or fundamentalists and those who are called as moderates. Needless to mention, religion exerts itselfto a greater degree among the orthodox and to lesser extent in case of moderates. Fundamentally however all the religions such as Hinduism, Buddhism, Christianity, Islam, Judaismand Confucianism, operateonthe principleofreciprocitytowards ones fellow beings. Culture Culture is apatternofbehaviors andvalues that are transferredfromone generationto another, those that are considered as ideal or within the acceptable limits. No wonder therefore that it is the culturethat predominantlydetermines what is wrong and what is right. It isthe culture that definescertainbehavior as acceptable andothers as unacceptable. Culturedetermines what is ethicaland what is not. Culturalnorms playimportant role in determining values because individuals anchor their conduct in the culture ofthe group inwhich theybelong. Human civilization in fact has passed through various cultures, wherein the moralcode was redrafted dependingupontheepochthat was.What wasimmoralorunacceptableincertainculturebecameacceptable later onand vice versa. During the earlyyears of human development where ones who were the strongest were the ones who survived!Violence, hostilityand ferocitywere thusthe acceptable.Approximately10,000year ago when human civilization entered thesettlement phase, hard work,patience and peace were seenasvirtues and the earlier ones were considered otherwise. Thesevalues are stillpt in practice bythemanagers oftoday!
- 184. 184 Stillfurther, whenhuman civilizationwitnessed the industrialrevolution, the ethicsofagrarianeconomy was replaced by the law pertaining to technology, property rights etc. Ever since a tussle has ensued between the values ofthe agrarian and the industrialeconomy! Law Laws are procedures and code ofconduct that are laid down by the legalsystem ofthe state. Theyare meant to guide human behavior within the social fabric. The major problemwith the law is that allthe ethicalexpectationscannot be covered bythe law and speciallywithever changing outerenvironmentthe law keeps onchanging but oftenfails to keep pace. Inbusiness, complying withthe rule oflawis takenas ethicalbehavior, but organizations often break lawsbyevading taxes, compromising onquality, service norms etc. 16.5 Importance of Ethics Have you ever given a thought as to whysocieties function? Whyis it that since ages, humanbeingsare able to live with each other peacefully?Yes, there have been certain incidences such as crimes andwars which do disturb the delicate fabric ofthe societyonce in a while, but still, on a whole, people have co- existed andsurvived for so manyyears. The main reasonwhyhumanityhas survivedfor so long isdueto certain rules, values, mores and ethics, which all of us abide by. Just imagine, what would happen if suddenlywe were left without anysense ofmorality or values. In such a scenario, no doubt, chaos will prevaileverywhere. Thus, ethics and values are the veryfoundations on whichthis societyis standing. Same is the case in business. Organizations which follow certainbusiness ethics have better chancesof survival, compared to the ones whose onlygoalis to make profits, even iftheyhave to compromise on a lot ofthingsfor that. So what is the importance ofbusiness ethics? How does it benefit the business? Profit Maximization The importance ofethics in business canbe understood by the fact that ethicalbusinesses tend to make muchmore profits thanthe others. Thereasonfor this isthat customers ofbusinesseswhichfollowethics are loyaland satisfied withthe services and product offerings ofsuchbusinesses. Let ustake an example. Suppose, thereisanorganizationnamed XYZwhichmanufactures cosmetics. XYZ greatlybelieves inthe importance of business ethics. When XYZ advertises its cosmetics in the market, being an ethical organization, it willbeverytruthfulandhonest initscommunicationwiththeprobablecustomers.It willtell correctlyabout the kind of ingredients it has used while manufacturing the cosmetics. It willnot lie or exaggerate about the benefits or uses of its products either. So the customers, who buy its cosmetics, know preciselywhat theyare buying and how usefulthat product is going to be for them. This way, the product willmeet their expectations and thus, satisfythe customers. When customers are satisfied,they willbecome loyalto the companyand come back againfor re-purchasing. This willsurely increase the profits ofthe organization. Thus, theimportance ofbusiness ethics is that it creates loyaltyin customers and maximizesthe profits. Efficient Utilization of Business Resources Inanorganization, peopleworkingat thejunior levels oftenemulatetheones working at thetop. The same applies withethics too. Ifthemanagement or seniors ofanorganization follow ethicalbusiness practices, i.e, theydo not bribe to get their wayor theydo not cheat the customers, investors, suppliers, etc., the employees willfollow suit. The employeestoo willrefrainfromusing the office propertyor resources for personalbenefits. This willresult inbetterand efficient utilizationofthe business resources.
- 185. 185 Creates Goodwill in the Market An organization, which is wellknownfor its ethicalpractices, creates goodwillfor itselfin the market. Investors or venturecapitalists are more willingto put their moneyinthe businesses whichtheycantrust. Shareholderstoo, remainsatisfiedwiththepracticesofethicalbusinesses. Thus, theimportanceofbusiness ethics increating goodwilland buildinglong termrelationships, cannot be denied.Also, anethicalbusiness puts greatervalue on its employeesand thus, employees remainloyalto suchanorganizationtoo. The chief goalofany organization is to maximize its profits. The importance ofbusiness ethics canbe understood from the fact that it helps the businesses in achieving its goal of profit making bycreating goodwillforthe business inthemarket, increasing its loyaltyamong the customers, byaiding inemployee retentionandbymaximumutilizationofits resources. 16.6 Ethical Dilemmas An ethicaldilemma is a situationwhereinmoralprecepts or ethicalobligations conflict insuchawaythat any possible resolution to the dilemma is morallyintolerable. In other words, an ethicaldilemma isany situationinwhichguiding moralprinciplescannot determine whichcourseofactionis right or wrong. Severalethicaldilemmas confront anHR manager.The ethicaldilemmas arise fromthree sources--- face to face ethics, corporate policyethics, and functionalarea ethics. Face -to-face Ethics Thesearisemainlybecausethereisahumanelement inmost businesstransactions. Forexample, apurchasing agent of a company develops personal relationship with sales representative who sells supplies to the company. They may address one another on first name basis, have lunch together, and talk often on phone. Acompany's best customers may be well known to people in the production department as it helps to ensure that the company's products fit the customer needs. Corporate -policy Ethics Companies are oftenfaced withethicaldilemmas that affect their operations across alldepartmentsand divisions. Followingconflictingsituationsare typical: 1. Your R &D department has modernizedoneofyour products. It is not really'new and improved'. But youknow printing these statementsonthe package andusing it inadvertisement willincrease its sales. What would you do? 2. You have a chance to win a big account that willmean a lot to you and your company assistant recommends sending a color television set to his home. What would you do? Another issue relatesto the results ofemployment contractioninlabour intensivebasic industriesbecause ofthe improved methods ofproduction. Moderntechnologyhas replaced older methods ofproduction which has in turn resulted in hundreds being rendered jobless. The issue therefore is - globaleconomic competitiveness orlocalsocial-psychologicalstability? The ethicalburdenofdeciding corporate policymattersnormallyrestsuponacompany'sHRmanagement. The HR managersand directors are responsible for making policies and implementing themtoo. Functional -Area Ethics Functionalarea ofa business are likelyto confront ethicalissues.Accounting is a criticalfunction ofany business.Accounting statementsrevealto the managerand owners the financialsoundness ofa company.
- 186. 186 Managers, investors, regulatingagencies, taxcollectors, andtrade unionsrelyonaccountingdata to make decisions. Honesty, integrityand accuracyareabsolute requirements oftheaccounting functions. Marketing lendsitselfto severalethicalissues. Pricing, promotions, advertisingand product information are the areasofunethicalpractices. Ethicaldilemmascrop up inpurchasing departments where strong pressures are felt to obtainthe lowest possible prices from suppliers and where suppliers too feel a similar need to bag lucrative contracts. Bribes, kickbacks, and discriminatorypricing are temptations to boththe parties. 16.7 How to Manage Ethics at Workplace The effective management ofethics is sound business practice. Employees'morale israised;bottom-line performance is improved, your corporate image is enhanced; and customers choose to form business relationshipswithcompaniesthat adheretohighstandardsofethicalconduct. Oneofyourkeymanagement tasks isto persuade employees to accept your organization's ethicalvalues. Following are somepoints to considerinmanaging ethics: 1. Understand the Benefits of Ethical Conduct. Allkeyparties benefit fromethicalconduct within the organization. Employees who have confidencein theirmanagementcontributeto theirorganization'sprosperity. Conversely,inanunethicalclimate,employee productivity declines, creativityis channelled into seeking ways to profit personallyfromthe business, loyaltydiminishes, and absenteeismand staffturnover increase. Customers prefer to be associated with and remainloyalto companies that adhere to codes ofethicalbehavior. Shareholders derive up to fifteen times greaterreturnfromcompanies witha dedicated commitment to ethicalconduct. 2. Focus on Ethical Conduct. Whenreferringto codesofbehavior,theterm'ethicalconduct'ismorecomprehensiveandmoremeaningful than'ethics'.The best ethicalvaluesand intentions are relativelymeaningless unless theygeneratefair, just, and observable behaviors in the workplace. Ethicalconduct focuses ondemonstrated behavior-doing, not just saying. 3. Develop a Code of Ethical Conduct. The best way to handle ethical dilemmas is to avoid their occurrence in the first place. The process involved indevelopinga code ofethicalconduct helps tosensitizeemployees to ethicalconsiderations and minimizes thelikelihood that unethicalbehaviorwilloccur. 4. Promote Process. Whenit comesto managing ethics and, inparticular, developing acode ofethicalconduct, the journeyis just as important as the destination. Codes, policies, procedures, and budgets are important. So, too, is theprocess ofreflectionanddialogue thatproduces those deliverables. Where possibleuse group decision making to activelyinvolve participationin, and ownership of, thefinaloutcome. 5. Link Ethics to Other Management Practices. The development of a code of ethical conduct should not occur in isolation. The creation of a values statement, for example, should occur as part ofa strategic planningprocess.Alink to ethicalconduct fits
- 187. 187 ideallywiththisprocess. Similarly, anydiscussionabout personnelpolicies could alsoreflect ethicalvalues as theyapplyto the organization's culture. 6. Demonstrate Ethical Practices. Thebest wayforanorganizationtogainareputationforoperatingethicallyis todemonstratethatbehavior- themost importantwaytoremainethicalistobeethical. Andthebest advertisementyourethicsmanagement program can have is everyone's commitment to it. Be prepared for an increase in the number of ethical issues to bedealt with.As staffbecomes increasinglyaware ofthe importance ofethicsmanagement,it is to be expected that more issues willbe identified. 'The most damaging thing is for management to come out witha code ofethics, or a value statement, and modela different type ofbehavior.' 7. Allocate Roles and Responsibilities. The approach willvary according to the organization, but an appropriate structure could include the following: An ethics management committee, representing the entire organization, withresponsibilities to includeimplementingandadministeringanethicsmanagement program. Thecreationandmonitoring ofa code ofethicalconduct would be part ofthat overallprogram. Anethicsofficerwho ideallyshouldbeaseniorexecutivebutnot fromHRortheLegalDepartment. He or shemust be trained inmattersofethics inthe workplaceand haveultimate responsibilityfor managingtheprogram. Demonstrated involvement andsupport oftop management. Staffand Board must see that senior management takesethicalconduct seriously. 8. Identify and Model Industry Benchmarks. Anincreasingnumberofcompaniesstriveto matchpracticeswithespousedvalues. The SoulofaBusiness, for example, is anaccount ofthe wayinwhichethicalconsiderations guided theday-to-dayoperations of theAmericancompany, Tom's ofMaine. One ofthe company's stated values was its commitment to the health oftheenvironment. The company, therefore, used glass containers instead ofplastic, even though plastic was cheaper to purchase, label, and ship. Tom's ofMaine was also committed to supporting its regional economy. Only when it couldn't purchase a resource in its local area would Tom's go farther afield. This demonstrated commitment to espoused values contributed to the company's growth and profitabilityandinspired others to follow its lead. 16.8 Ethical Decision-Making Here isa short guide to help you think throughethicalissues and makeeffective decisions. 1. Is it an Ethical Issue? Being ethicaldoes not always mean following the law. And just because something is possible doesn't mean it is ethical, hence the globaldebates about bio-technologyadvances such as cloning.And ethics and religiondo not always concur. This is perhaps the trickiest stage inethicaldecision making, as sometimes the subtleties ofthe issue are above and beyond our knowledge and experience. Listen to your instincts - if it feels uncomfortable making thedecisiononyour own, get others involved and use their collective knowledge and experience to make a more considered decision.
- 188. 188 2. Get the Facts What do you know, and just as importantly, what don't you know?Who are the people affectedbyyour decision? Have they been consulted? What are your options? Have you reviewed your options with someone you respect? 3. EvaluateAlternativeActions There are different ethicalapproaches whichmayhelp you make the most ethicaldecision. a. UtilitarianApproach- which action results in the most good and least harm? b. Rights BasedApproach - which actionrespects the rights ofeveryone involved? c. Fairness or JusticeApproach- whichactiontreats people fairly? d. Common Good Approach - which action contributes most to the quality of life of the people affected? e. VirtueApproach -whichactionembodies the characterstrengths you value? 4. Test Your Decision Could you comfortablyexplainyour decisionto your mother?To themaninthe street?Ontelevision?If not, you mayhave to re-think your decision before you take action. 5. Just Do It - but what did you learn? Once you've made the decision, then don't waste time in implementing it. Set a date to review your decision and make adjustments ifnecessary. Often decisions are madewiththe best informationto hand at the time, but things change, and your decisionmaking needsto be flexible enoughto change too. 16.9 Five Sources of Ethical Standards 1. The UtilitarianApproach Some ethicists emphasize that the ethicalactionis the one that providesthe most good or does theleast harm, or, to put it another way, produces the greatest balanceofgood over harm. The ethicalcorporate action, then, is the one that produces the greatest good and does the least harmfor allwho are affected- customers, employees, shareholders, the community, andthe environment. Ethicalwarfarebalances the goodachievedinendingterrorismwiththe harmdonetoallpartiesthroughdeath,injuries, and destruction. The utilitarianapproachdeals withconsequences;it tries bothto increasethe good done andto reduce the harmdone. 2. The RightsApproach Other philosophers and ethicists suggest that the ethicalaction is the one that best protects and respects the moralrightsofthose affected. Thisapproachstarts fromthe beliefthat humanshave adignitybased on their humannature per se or ontheir abilityto choose freelywhat theydo with their lives. Onthebasis of such dignity, theyhave a right to be treated as ends and not merely as means to other ends. The list of moralrights-including the rights to make one's ownchoicesabout what kind oflife to lead, to betold the truth, not to be injured, to a degree ofprivacy, and so on-is widelydebated; some now argue that non- humans have rights, too. Also, it is often said that rights implyduties-in particular, the duty to respect others'rights. 3. The Fairness or JusticeApproach Aristotle andother Greek philosophers havecontributed the idea that allequals should betreated equally.
- 189. 189 Todaywe usethis idea to saythat ethicalactions treat allhumanbeings equally-or ifunequally, thenfairly based on some standard that is defensible.We paypeople more basedontheir harder workor the greater amount that theycontributeto anorganization, and saythat is fair. But thereis a debate overCEOsalaries that are hundreds oftimes largerthan the payofothers; manyask whetherthe huge disparityis based on a defensible standard or whether it is the result ofanimbalance ofpower and hence is unfair. 4. TheCommon GoodApproach The Greek philosophershave also contributed the notionthat life incommunityis a good initselfand our actions should contributeto that life. Thisapproachsuggests that the interlocking relationships ofsociety are thebasis ofethicalreasoningand that respect andcompassionfor allothers-especiallythe vulnerable- are requirementsofsuchreasoning. Thisapproach also calls attentionto the commonconditions thatare important to thewelfare ofeveryone. Thismaybe a systemoflaws, effective policeand fire departments, health care, a public educationalsystem, or evenpublic recreationalareas. 5. TheVirtueApproach Averyancient approachto ethicsisthat ethicalactions ought to beconsistent withcertainidealvirtues that provide forthe fulldevelopment ofour humanity. These virtues are dispositions and habitsthat enable us to act according to the highest potentialof our character and onbehalf ofvalues like truth and beauty. Honesty, courage, compassion, generosity, tolerance, love, fidelity, integrity, fairness, self-control, and prudence are allexamples ofvirtues. Virtueethics asks ofanyaction, "What kind ofpersonwillIbecome ifI do this?" or "Is this action consistent with myactingat mybest?" Putting theApproaches Together Each ofthe approaches helps us determine what standards ofbehavior can be considered ethical. There are stillproblems to be solved, however. The first problemis that wemaynot agree onthe content ofsome ofthese specific approaches. We may not allagree to the same set ofhuman andcivilrights. We maynot agree onwhat constitutes the common good. We maynot evenagree on what isa good and what isa harm. The second problemis that the different approaches maynot allanswer the question"What is ethical?" in the same way. Nonetheless, eachapproachgivesus important informationwith whichto determine what is ethicalina particular circumstance.And much more often thannot, the different approachesdo lead to similaranswers. Making Ethical Decisions Making good ethicaldecisions requires a trained sensitivityto ethicalissues and a practiced method for exploring the ethicalaspects ofadecisionand weighing theconsiderations that should impact our choice ofacourse ofaction. Havinga method for ethicaldecisionmaking is absolutelyessential. Whenpracticed regularly, the methodbecomes so familiar that we work throughit automaticallywithout consulting the specific steps. The more novel and difficult the ethical choice we face, the more we need to rely on discussion and dialogue withothers about the dilemma. Onlybycarefulexplorationofthe problem, aidedbythe insights and different perspectivesofothers, can we make good ethicalchoices in such situations. We havefound the following frameworkfor ethicaldecisionmakinga usefulmethod forexploring ethical dilemmas andidentifying ethicalcourses ofaction.
- 190. 190 16.10 Summary: A Framework for Ethical Decision-Making Recognize an Ethical Issue 1. Could this decision or situation be damaging to someone or to some group? Does this decision involve achoice between a goodand bad alternative, orperhaps betweentwo "good"or between two "bad"? 2. Is this issue about more thanwhat is legalor what is most efficient?Ifso, how? Get the Facts 3. What are the relevant facts of the case? What facts are not known? Can I learnmore about the situation? Do I know enoughto make a decision? 4. What individuals and groups have an important stake in the outcome?Are some concerns more important?Why? 5. What are the options for acting?Have allthe relevant persons and groups beenconsulted?Have I identifiedcreative options? EvaluateAlternativeActions 6. Evaluatetheoptions byasking thefollowingquestions: Whichoption willproduce the most good and do the least harm? (The UtilitarianApproach) Whichoption best respects the rights ofallwho have a stake? (The RightsApproach) Which optiontreats people equallyor proportionately?(The JusticeApproach) Which optionbest serves the community as a whole, not just some member? (The Common GoodApproach) Which option leads me to act as the sort of person I want to be? (The VirtueApproach) Make a Decision and Test It 7. Considering allthese approaches, which optionbest addresses the situation? 8. IfI told someone I respect-ortold a televisionaudience-whichoptionI have chosen, what would theysay? Act and Reflect on the Outcome 9. How canmydecision be implemented with the greatest care and attention to the concerns ofall stakeholders? 10. How did mydecision turnout andwhat have I learned fromthis specific situation? 16.11 Self Assessment Questions 1. Define thetermEthics. Trace thesources ofethics. Whyis ethics important? 2. What are ethicaldilemmas? Explain each. 3. Whyis ethicaldecisionmaking difficult?Discuss. 4. How doesHR functionbecome involved with business ethics inthe organization? 5. Explain the various HR ethicalissues? 6. What are thedifferent points to be considered in managing ethics ina workplace?
- 191. 191 16.12 Reference Books - KAswathappa, Human Resource Managemnet, TMH, Fifth edition. - Fisher, choenfeldt, Shaw., Managing HumanResource, Cengage Learning - S.S. Khanka, HumanResource Managemnet (Text and Case), S.Chand Publications.
- 192. 192 Unit -17 : The Future of HRM Structure of Unit: 17.0 Objectives 17.1 Introduction 17.2 Significance ofHumanResource Management 17.3 Role ofHRManagers inPresent Times 17.4 Recent Trends InHRM 17.5 Forces Changing HRM 17.6 Emerging Concepts 17.7 Impact ofTechnologyon HRM 17.8 WorkforceTrends 17.9 E-HumanResource Management 17.10 Challenges before HRM 17.11 HRM Practices In India 17.12 SelfAssessment Questions 17.13 References Books 17.0 Objectives After completing the unit you willbe able to: Understand theimportance ofHRM inthe emerging scenario. Role ofHRmanager in moderntime. Forces affecting HRM Challenges faced inthe changed business scenario Current practices ofHRM in India 17.1 Introduction The importance ofHumanResource Management canbetraced backto Vedic ages!Yes, inTheBhagavad Gita, Lord Krishna not only makesArjuna spiritually enlightened, but also teaches him the art of self management, angermanagement, stress management, conflict management, transformationalleadership, motivation, goalsetting and manyother aspects which are now essentialparts ofanyHRM curriculum. Humanresourcemanagement is a processofbringing people andorganizations together so that the goals ofeachotherare met. The roleofHR manager isshifting fromthat ofa protector and screener to the role ofa planner and change agent. Personneldirectors are the new corporate heroes. The nameofthe game todayin business is Personnel. Nowadays it is not possible to show a good financialor operating report unless your personnelrelations are in order. 17.2 Significance of Human Resource Management The Human Resources (HR) function provides significant support and advice to line management. The attraction, preservationanddevelopment ofhighcalibrepeople are a source ofcompetitive advantage for our business,andaretheresponsibilityofHR. Industries inIndia ingeneralandHumanResources function in particular, will open new avenues in future. One clear trend concerns joint decision making. From largelypaternalisticefforts to helpneedyemployeessolvetheirpersonnelproblems, industrialorganizations in India havemoved to a joint consultative process ofdecision making whichinfluences employees.
- 193. 193 The scope ofHumanResource functiondepends, to a large extent, on its importanceinthe organization and the attitude of the top management to executives in the HR department. The basic objectives of HumanResourceDepartmentofanorganizationareaneffectiveandefficientutilizationofhumanresources, harmonious relations among allemployees and maximumdevelopment ofindividuals. These objectives are generallyachievedbyhiringcapable people,usingtheir effortseffectivelyandencouragingawillingness to workkind ofenvironment to achieve organization’s goals. Human Resources manager’s style ofsupervision, his plans, policies and procedures have a significant impact onanindividual’sperformance. ChangesinHRfunction, to alargeextent reflectchanging needs of the organization. Changesin the organizationalatmosphere, hopes and aspirations ofthe workforce,and theexternalenvironment alldemandaninnovativeproblem-solvingapproachfromthepersonneldepartment. ThefunctionsofHRmanagerinfuturewilldefinitelybeenhancedfromtraditionalareassuchasmanagement ofmanpower planning,recruitment, selection, training, internalmobilityandwelfare. 17.3 Role of HR Managers in Present Times HR Managers today are focusing attention on the following- a) Policies- HR policies are based on trust, openness, equityand consensus. b) Motivation- Create conditions in which people are willing to work with zeal, initiative and enthusiasm; make people feellike winners. c) Relations- Fair treatment of people and prompt redress of grievances which would pave the wayforhealthywork-place relations. d) ChangeAgent- Prepare workersto accept technologicalchanges byclarifying doubts. e) Quality Consciousness- Commitment to qualityin allaspects ofpersonneladministration will ensure success. Due to the new trends inHR, ina nutshellthe HR manager shouldtreat people as resources, reward them equitably, andintegrate their aspirations withcorporate goals throughsuitableHR policies. Traditionally, therole ofthe HumanResource professionalinmanyorganizations has beento serve as the systematizing, policingarmofexecutive management. In this role, the HR professional served executive agendas well, but was frequently viewed as a road block bymuchofthe rest ofthe organization. The roleoftheHR managermust parallelthe needsofhis or herchangingorganization. Successfulorganizationsarebecomingmoreadaptive, resilient,quicktochange directionandcustomer-centered.Withinthisenvironment,theHRprofessional,whoisconsiderednecessary byline managers, is a strategic partner, an employee sponsor or advocate and a change mentor. Strategic Partner Intoday’sorganizations, to guarantee theirviabilityandabilitytocontribute, HRmanagersneedto thinkof themselves as strategic partners. In this role, the HR person contributes to the development of andthe accomplishment ofthe organization-wide business planand objectives. The HRbusiness objectives are establishedto support the attainment ofthe overallstrategicbusiness plan and objectives. ThetacticalHR representative isdeeplyknowledgeable about the designofwork systems inwhichpeople succeed and contribute. This strategic partnership impactsHR services suchasthe design ofworkpositions;hiring;reward, recognitionand strategic pay;performancedevelopment and appraisal systems; career and successionplanning; and employee development.
- 194. 194 EmployeeAdvocate As anemployee sponsor or advocate, the HR manager plays anintegralrole inorganizationalsuccessvia his knowledge about and advocacyofpeople. This advocacyincludesexpertise in how to create a work environment inwhichpeople willchooseto be motivated, contributing, and happy. Fosteringeffectivemethodsofgoalsetting,communicationandempowerment throughresponsibility, builds employee ownership ofthe organization. The HR professionalhelps establishthe organizationalculture and climate inwhichpeople have thecompetency, concernand commitment to serve customers well. Inthisrole, theHRmanagerprovidesemployeedevelopment opportunities,employeeassistanceprograms, gainsharingandprofit-sharing strategies, organizationdevelopment interventions,dueprocessapproaches to problemsolving and regularlyscheduledcommunicationopportunities. ChangeAgent Peopleoftenresist change.Asignificantchangeoccurswhenanindividualmovesfromhishomeenvironment to work environment, or when there is a transition from a traditional work method to an advanced technologicalmethod. Technologicaladvancement brings about changes which a worker mayresist.At this point, the personnelmanager has a crucial role to play. He has to convince workers of the needfor automationand preparethemto accept changeswellbeforetheyare introduced.Implementationis mainly a method ofgetting new methodsandideas accepted and used withthe least frictionbut withample scope ofimprovement. Hence changes should bephased graduallyandthoughtfullywithout provoking negative reactions fromthe workers. The constant evaluationofthe effectivenessofthe organizationresultsinthe needforthe HR professional to frequentlysupportchange. Bothknowledge about andthe abilityto executesuccessfulchangestrategies make theHR professionalexceptionallyvalued. Knowing how to linkchange to the strategicneeds ofthe organizationwillminimize employee dissatisfactionandresistance to change. The HR professionalcontributes to the organizationbyconstantlyassessing the effectivenessoftheHR function. He also sponsors change in other departments and inwork practices. To promote the overall success ofhis organization, he supports the identification of the organizationalmission, vision, values, goals and actionplans. Finally, he helpsdetermine themeasures that willtellhis organizationhowwellit is succeeding inallofthis. Activity A: Prepare the activityreport ofanHR manager ofa companyknownfor its proactive HR Practices. 17.4 Recent Trends In HRM Overtheyears, highlyskilledandknowledgebasedjobsareincreasingwhilelowskilledjobsaredecreasing. This calls forfuture skillmapping throughproperHRM initiatives.Indianorganizationsarealso witnessing achangeinsystems, managementculturesandphilosophyduetotheglobalalignmentofIndianorganizations. There is a need for multiskilldevelopment. Role ofHRM is becoming allthe more important. Some ofthe recent trends that are being observed are as follows: The recent quality management standards ISO 9001 and ISO 9004 of 2000 focus more on people centricorganizations. Organizations now need to prepare themselves inorder to address people centered issues withcommitment fromthetop management, withrenewed thrust on HR issues, moreparticularlyontraining.
- 195. 195 To move ahead ofcompetition in this world ofuncertainty, organizations have introducedsix- sigma practices. Six- sigma uses rigorous analytical tools with leadership from the top and develops a methodfor sustainable improvement. These practices improve organizationalvalues and helpsincreating defect freeproduct or services at minimumcost. Human resource outsourcing is a new accession that makes a traditional HR department redundant in an organization. Exult, the internationalpioneer in HR BPO has already roped in Bank ofAmerica, internationalplayers BPAmoco & over theyears planto spreadtheir business to most ofthe Fortune 500 companies. Withtheincreaseofglobaljobmobility, recruiting competent people isalso increasinglybecoming difficult, especiallyin India. Therefore bycreating anenabling culture, organizations are also required to work out a retentionstrategyfor the existing skilled manpower. 17.5 Forces Changing HRM Inthe 1990sseveralforces were shapingthe broadfield ofHRM. The first keyforce, new technologies— particularlyinformationtechnology—broughtabout thedecentralizationofcommunicationsandtheshake- upofexistingparadigmsofhumaninteractionandorganizationaltheory.Satellitecommunications,computers and networking systems, faxmachines, and otherdevices were facilitating rapidchange. Moreover, since these technologies helped blur the linesbetween work time and personaltime byenabling employees to workat home, HumanResourceManagement professionalsbeganadopting“ManagementbyObjective” approaches to human resourcesinstead ofthe traditional“management by Sight”method. AsecondimportantchangeaffectingHRMwasnew organizationalstructures that beganto emergeduring the 1980s andcontinued through the 1990s. Because manycompanies beganexpanding their operations anddiversifyingtheirproductsandservices, thecentraldecision-makingsystemfailedto respondquickly enoughto managers’needsand concerns. Therefore, companies started scrappingtraditional, hierarchical organizational structures in favor offlatter, decentralized management systems. Consequently, fewer managers were involved in the decision-making process and companies were adopting more ofateam approach to management. HRM professionals, as theagents ofchange, were charged with reorganizing workers and increasing their efficiency. These efforts also resulted in the proliferation ofpart-time, or contract, employees, whichrequired human resource strategies that contrasted withthose applicableto fulltimeworkers. A third change factor was accelerating market globalization, which was increasing competition and demanding greater performanceout ofworkers, oftenat diminished levels ofcompensation. To compete abroad, companies were looking to their HRM professionals to enhance initiatives related to quality, productivity, and innovation. Other factors changingHRM include: anacceleratingrate ofchange and turbulence, resulting in higher employee turnoverand the need for more responsive, open-minded workers;rapidlychanging demographics; and increasing income disparityas thedemand for highlyeducatedworkers increases at the expense oflower-wage employees. 17.6 Emerging Concepts Oflate, anumberofnewconceptshaveemergedinthemanagement fieldto improvetheoveralleffectiveness ofthe organizations.TheHR managernotonlyhasto know themwellbut has toprepare himself/herselfto implement some ofthese new ideas.
- 196. 196 1. Total Quality Management The concept of TQM is based on the 14 principles of Deming that dealwith this subject. Deming was bornandbrought up inUSAand migrated to Japanin the early50’s, where he evolved thesetotalquality principles. TQM is a culture based onthe realization that the high quality ofproducts and servicesand associated customersatisfaction are the keysto organizationalsurvival. At its core, TotalQualityManagement (TQM) is a management approachto long-termsuccess through customer satisfaction. In a TQM effort, allmembers ofan organization participate in improving processes, products, services and the culture inwhichtheywork. The methodsfor implementing this approachcome fromthe teachingsofsuchqualityleadersas PhilipB. Crosby, W. Edwards Deming,Armand V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran.4 Acore concept in implementing TQM is Deming’s 14 points, a set of management practices to help companies increase theirqualityand productivity: 1. Create constancyofpurpose for improvingproducts and services. 2. Adopt thenew philosophy. 3. Cease dependence oninspection to achieve quality. 4. Endthepractice ofawarding businessonprice alone;instead, minimizetotalcost byworkingwith a single supplier. 5. Improve constantlyandforever everyprocess for planning, production and service. 6. Institute trainingonthe job. 7. Adopt andinstitute leadership. 8. Drive out fear. 9. Break down barriers between staffareas. 10. Eliminate slogans, exhortations and targets forthe workforce. 11. Eliminate numericalquotasfor the workforce and numericalgoals for management. 12. Remove barriersthat robpeople ofpride ofworkmanship, andeliminate the annualratingormerit system. 13. Institute a vigorousprogramofeducationandself-improvement for everyone. 14. Put everybodyinthe companyto workaccomplishing the transformation. 2. Assessment Centres Anassessmentcentreisa comprehensive,standardized procedure inwhichmultiple assessment techniques suchassituationalexercises and jobsimulation(business games, discussions, reports, and presentations) are used to evaluate employees for a varietyofmanpower decisions. “Anassessment centreconsists ofa standardizedevaluationofbehaviourbased onmultipleinputs. Several trainedobservers andtechniquesare used. Judgmentsabout behaviour are made bythese speciallytrained observers.At theend oftheassessment the assessors get togetherto share theirdatawhichis scientifically recorded on a set ofevaluation forms. Theycome to a consensus onthe assessments ofeach candidate. Most frequentlytheapproach has beenappliedto individuals being considered for selection, promotion, placement, or specialtraining and development inmanagement.
- 197. 197 History of Assessment Centres: Assessment centres methodology is known to have been used or recommended at least 1500 years ago inIndia as mentioned inKautilya’sArthashastra. Different methods ofassessingacandidateforministerialpositionshavebeenspeltout intheArthashastraincluding:observation, performance appraisal, assessment bythose who knew him, interviewing, and otherforms oftesting. Early application ofassessment centres can be traced to the German military assessment programme developedforselectionofofficersfor theGermanArmy. Bothmultipleassessmenttechniquesandmultiple assessors to evaluate complex behaviour with specialfocus on leadership were used. Assessment was based onsubjective opinions and verylittle rating was done. How areAssessment Centres Different Now?: Early assessment centres were used essentially for selection purposes since the traditionalmethods were thought to be inadequate. The assessment centre method since then has been subjected to scrutiny and research much more than any other personnel practice.5Becauseofthehighqualityresearchandhighreportedvalidity, themethodologyfindswidespread useina number oforganizations. Besides selection, it isused forearlyidentificationofmanagement talent, promotion, and diagnosis ofdevelopmentalneeds. The basic purpose ofAssessment Centre is: (a) Making selectionandpromotiondecisions; and (b) Identifythe strengths and weaknesses ofan individualfor development purposes. The requirements ofAssessment Centre arelisted below: 1. Multipleassessmenttechniquesmustbeusedlikeinbasket exercises,management games, leaderless group discussions, tests, personalityinventories etc. 2. Multiple assessors must be used. Theycanbe line managers who are two to three levels senior to the candidate and or professionalpsychologists. 3. Judgment should be based on pooling ofinformationamong assessors. 4. An overallevaluationofbehavior should bemade, separate fromthe observation ofbehavior. 5. Simulationexercises must be used. 3. Quality Circles Quality Circles are (informal) groups ofemployees who voluntarilymeet together on a regular basisto identify, define, analyze and solve work related problems. Usuallythe members ofa particular team(qualitycircle) should be fromthe same work area or who do similar work so that the problems theyselect willbe familiarto allofthem. In addition, interdepartmental or cross functionalqualitycircles mayalso be formed. Anidealsize ofqualitycircleis sevento eight members. But the numberofmembers inaqualitycircle can vary. The Main Objectives of Quality Circles are Promote jobinvolvement Create problemsolving capability Improvecommunication Promote leadership qualities Promote personaldevelopment Develop a greater awareness for cleanliness Develop greaterawareness for safety
- 198. 198 Improve morale throughcloser identityofemployee objectiveswithorganization’s objectives Reduce errors. Enhancequality Inspire more effective teamwork Build anattitudeofproblemprevention Promote cost reduction Develop harmonious manager, supervisor and worker relationship Improveproductivity Reduce downtime ofmachines and equipment Increase employee motivation ProblemSolvingTools andTechniquesUsed byQualityCircles:Givenbelowarethemost commonly used tools and techniques. These are called the old QC tools: Brainstorming. Pareto analysis. Cause and effect diagram(or fish bone diagramor Ishikawa diagram). Histogram. Scatter diagram Stratification Check sheet Controlcharts and graphs New QC Tools: Qualitycircles started using additionalseven tools astheystarted maturing. These are: 1. Relations diagram. 2. Affinitydiagram. 3. Systematic diagramorTree diagram. 4. Matrixdiagram. 5. Matrixdataanalysis diagram. 6. PDPC (ProcessDecision ProgramChart). 7. Arrow diagram. Benefits of QC: Selfdevelopment. Promotes leadershipqualities among participants. Recognition. Achievement satisfaction. Promotesgroup/teamworking. Serves as cementing force betweenmanagement/non-management groups. Promotes continuous improvement inproducts and services. Brings about a change inenvironment ofmore productivity, better quality, reduced costs, safety and corresponding rewards. While some ofthe organizations have startedpracticing these ideas, alarge number are stillwaiting to see the effects elsewhere. Giventheir significanceinqualityimprovement andinvolvement ofpeople, theseideas show tremendous potentialfor widespreadacceptance. The HR managershavethe responsibilityto educate other managers about benefits coming fromthemand help themimplement theseideas.
- 199. 199 The HR managerfaces challenge to involvehimselfinallfunctionalareas ofan organization. He willneed training not only in human resources but in production, marketing, finance, etc., to give him a greater understanding oftheproblems ofemployees invarious functionalareas. 17.7 Impact of Technology on HRM Technologicaladvancesinofficeequipment overthepast thirtyyearshaveenabledorganizationstoimprove operating efficiencies, improvecommunications, reduce costs, increase their globalpresence, andgain competitive advantagethroughtheimplementationofinformationtechnologysystems. Since the 1960’s, Information Technology has dramatically changed the landscape of the workplace throughadvancesinoffice equipment, speedofinformationtransmissionandmethods ofcommunication. Froma human capitalperspective, InformationTechnologyhas allowed companies and their employees to increase efficiencies, communicate more rapidly, and work from remote locations. The abilityofthe workforce to performorganizationaltasks froma remote location also knownas “Telecommuting” has enabled employees to improve qualityoflife and manage the professionaland personalaspects of their lives. Fromanoperationalperspective, investmentsinInformationTechnologybyorganizationswillingtoembrace technology have resulted in increased efficiencies, cost reductions, globalexpansion, improved intra- company and customer communications, improved reporting and tracking methods, and increased competitive advantage inthe market place. Computers loadedwithword processing, spreadsheet analysis and presentationsoftwareprograms have become standard fixtures on each employee’s desk. Some ofthe workforce became mobile, conducting business outside ofthe traditionaloffice settings through the use ofPersonalDigitalAssistants (PDAs), cellularphonesandlaptopcomputers. Theinitialusersofmobiletechnologyweresalespeopleandexecutive management;however, easieraccess to theinternet allowedmoreemployeesto become“Telecommuters,” who conducted work-related activities either fromtheir homes or fromsome other remote location. Technologicaladvances in electronic communication maycontinue to decrease the need for traditional office setting while increasing the number oftelecommuters. Electronic capabilities willalso continue to affect outsourcing, off-shoringand globalizationeffortsbymanyorganizations. Collaborationtechnologies,currentlybeingenhancedbyMicrosoft andIBM, enablescompaniesto conduct “virtualmeetings”. Inavirtualmeeting, employeesfromremotelocations conduct real-timemeetingsfrom their owncomputers using peer-to-peer software. Participantscansee one another oncomputer screens, share computerspace and make to product designs or contract documents via a “virtualwhiteboard.” 17.8 Workforce Trends a. Telecommuting: Telecommuting isworking fromone’s home or some otherremote locationoutside the company’soffice. Telecommuting offers benefitsto both employees andcompanies. For employees, telecommutingincreasesqualityoflifebyenabling ameshing ofpersonaland professionallives. Theability to workfromhome canassist workerswithchild/eldercareissues, transportationrestrictions, oremployees who maybe physically unable to report to work on a dailybasis due to health-related issues (e.g.,need for regular medicaltreatmentssuchasdialysisor chemotherapy). Other economicbenefits that companies canrealizefromtelecommutingincludeproductivitygains, reducedabsenteeism, reducedemployeeturnover costs, reduced realestate costs, and reduced relocationcosts to name a few.
- 200. 200 b. Globalization:Inthefuture, multinationalcompanies(corporationsoperatinginmorethanonecountry) may utilize telecommuting to attract localtalent that can work effectivelyacross international borders through electronic communication. Training such “home grown talent” can allow companies to reduce international relocation expenses, manage competition levels for talented resources, and reduce issues related to workinginforeigncountries suchas personalsafety, security, political, and regulatoryissues. Reducing globalization efforts through telecommuting can help to address some ofthe issues relatedto dealing withinternationalworkforces, suchaslanguage barriers, culturalrelationshipdifferences,and time zone differencesthatoftenlead to companiesneedingto maintaincontinuous operationsknownas“24/7”. c. Outsourcing/Off-shoring: Outsourcing is defined as “turning over all or part ofan organization’s informationsystems operationto outside contractors or service providers”. Outsourcing seems to bethe wave ofthe future. Manycompanies are outsourcing parts oftheir operations in order to move partsof their businesses offsite in order to focus on their core competencies and tryto give theman advantage over their peers. One ofthe more popular departments which are outsourced is the Human Resources Department. This is because most companies aren’t focused on HR and their needs might be better servedbyanoutsidecompany.Thereareadvantagesanddisadvantagesto outsourcingthisvitaldepartment. Offshoring refers to outsourcing in another country. Conceptually, outsourcing and off-shoring can be viewed together, sincebothinvolveemployingindividualsoutside ofthe organizationto handleoperational work. There are some major drawbacks to sending operations overseas, suchas a loss ofdomestic talent, loss ofintellectualassets, decreased levels ofcustomer satisfaction resulting fromdiminished organizational values that do not translate acrosscultures, and threats to organizationalperformance Advantages of Outsourcing a) Cost Savings: The mainbenefit to outsourcing the HR department is the cost savings which willbeassociated with sucha move. These cost savingscanmanifest themselves inseveralways. Many times a company can get the same level of service for less cost. They can then use the savings to reinvest in their business. By doing this, they might be able to hire more people or operate moreefficientlywhich might put thema step above their competitors. b) Regaining Primary Focus: Outsourcing also allows a companyto regain its primaryfocus. When there is an internal HR department, senior management may have to spend some time dealing withthat department’sissues.Thisistimewhichmightbe better spent onwhateverbusiness the companyis in. The companyas a whole willbegin to shift toward its primarybusiness. Disadvantages of Outsourcing a) Employee Morale: There are some drawbacks to outsourcing, however. The biggest of these isthe morale oftheemployees ofthe outsourcingcompany. “Outsourcing” is aloaded word which brings connotations of sending jobs overseas and the loss of income. If the employees aren’t behind the move to anoffsite HR department, there maybe less productivityfrom them. Anycompanyconsideringmoving the HR department offsite should carefullygauge the attitude oftheemployees to get a feelfor how this willaffect them. b) Loss of Expertise: Another disadvantage to this process is a loss of in-house expertise. Whenthereis an in-house HR department, anyquestions related to labor laws or benefits can be answered quicklyand sufficiently. Ifthe HRis done off-site, it can cause a delayinknowing how to proceed inanemployee issue, orworse, amanager mayact inconflict withthelaw, opening the companyup to bigger issues inthe
- 201. 201 c) Issues with the Workplace ofthe Future: Securityis the main issue facing companies with mobile workforces. Employeesinthe field, suchas salespeople or telecommuters, have access to “mission critical” data and pose a significant threat to organizationalsystems security. There are numerous potentialbreaches ofsecurityrelated to mobile electronic devices such as PDAs and laptop computers that canbe misplaced, stolenor damaged. The challengefacing IT departments is to protect sensitive companydata, enable secure remote access, and provide user-friendlyand productive electronic tools for its mobile workforce. IT departments must also implement an educationprocessfortrainingemployeesnot touseunauthorizeddevicesorinstallanyunauthorized programs that might threatenthe integrityofcompanydata. 17.9 E-Human Resource Management Nature of e-HRM E-HRMistherelativelynewtermforthisITsupportedHRM,especiallythroughtheuseofwebtechnology. The majorgoalsofe-HRM are mainlyto improveHR’s administrativeefficiency/toachievecost reduction. Next to these goals, international companies seemto use the introduction ofe-HRM to Standardize/ harmonize HRpolicies and processes. Though e- HRM hardlyhelped to improve employee competences, but resulted in cost reductionand a reductionofthe administrative burden. There is a fundamentaldifference between HRIS and e-HR in that basicallyHRIS are directed towards the HR department itself. Users of these systems are mainly HR staff. These types of systems aim to improve theprocesses withinthe HRdepartments itself, althoughinorder to improve theservice towards the business. With e-HR, the target group is not the HR staff but people outside this department: the employees and management. HRM servicesare being offered throughan intranet for use byemployees. The differencebetween HRIS and e-HR can be identified as the switch from the automation of HR services towards technological support ofinformationonHR services. e-HRMisawayofimplementingHRstrategies, policies, andpracticesinorganizationsthroughaconscious anddirectedsupportofand/orwiththefulluseofweb-technology-basedchannels.Theword‘implementing’ in this context has a broadmeaning, suchas makingsomething work, putting something into practice,or having something realized. e-HRM, therefore, is aconcept - a wayof‘doing’ HRM. The e-HRM business solution is designed for human resources professionals and executive managers who need support to manage the work force, monitor changes and gather the information needed in decision-making.At thesame time it enables allemployees to participate inthe process and keep track of relevant information. The e-HRM businesssolution excels in: Modularity The solution canbe accessed and used in a web browser Securityof data, protected levels ofaccess to individualmodules, records documents and their component parts Parametric andcustomizability Access to archived records and documents
- 202. 202 User-friendlyinterface Connectivitywiththe client’s existing informationsystem(payrollaccounting, ERP, attendance registration, document systems…) Multi-language support Advantagesofthe e-HRM business solution: Gradualimplementation Adaptabilityto anyclient Collectionofinformationas the basisfor strategic decision-making Integralsupport forthe management ofhumanresources and allotherbasicand support processes withinthe company Prompt insight into reporting and analysis Amore dynamic workflow inthebusiness process, productivityandemployee satisfaction A decisive step towards a paperless office Lower business costs e-HR Activities We talk about using technology in HR functions. Here we focus on recruitment, selection, training, performance management and compensation. 1. e- Recruitment: e- recruitment strategyis the integrationand utilization of internet technology to improve efficiencyand effectiveness of the recruitment process. Most companies understand this and have begunthe evolutionbyintegratinge-recruitment strategyinto theirhiring process. e-Recruitment Methods: Methods ofE-recruitment are many, among those the more important ones are: Job Boards: These are the places where the employers post jobs and search for candidates. Candidates become aware ofthe vacancies. One ofthe disadvantages is, it is generic in nature. Employer Websites: These sites can be of the company owned sites, or a site developed by various employers. For an example, Directemployers.com is the first cooperative, employer- owned e-recruiting consortium formed by Direct Employers Association. It is a non profit organizationformedbythe executives fromleading U.S corporations. ProfessionalWebsites: These are for specific professions, skills and not generalin nature. For an example, for HR jobs Human ResourceManagement sites to be visited like www.shrm.org. The professionalassociationswillhave their ownsite or society. Advantages of e-Recruitment: e-recruiting offers severalbenefits to the firms practising it 1) Centralised Platform Collects candidate information ina standard format. Consolidate data frommultiple recruitment sources. 2) Streamline Workflow Automates workflow fromjobrequisitionto completionofthe hiring process. Captures andfiles candidate informationandhistoryfor future retrievalbyallusers ofthe syatem.
- 203. 203 3) Better CommunicationandIncreased Productivity Shares knowledgeand information betweenhiringteammembers online inrealtime. Collaborationwithcolleaguesto increase productivity. 4) Less Wastage of Paper Electronicallycollectsand files informationto reduce paper usage. Reduces manualadministrative workload. 5) Candidates Pool Locates qualified candidateswithin a private pooloftalent withprecision. Centralized database collects and provides candidate informationfor various unitsand location. 6) Centralised Reports Provides consolidatedHR reports for theentire organization. 7) Save Cost and Time Improves productivityandreduces hiring expenses inthe long run. Drawbacks of E-Recruitment 1) Require being Computer Savvy: The process is restricted within computer savvycandidates. 2) Legal Consequences:Alike other recruitment sources this source also should be aware of the words used inthe advertisements otherwise it maylead to the charge ofdiscrimination. 3) Vast Pool ofApplicants: This benefits the Organizations as well as it is disadvantage to them also. Because the huge database cannot be scanned in depth. Either first few candidates are called for interview or the resumes are screened based onsome keywords. 4) Non-serious Applicants: Lot of applicants forward their resumes just to know their market value. 5) Disclosure of Information: Candidates profileand companydetails are available to public. The applicants do not want their employerto know that theyare looking for achange. Phone number, address information has lead to manysecurityproblems.Again the companies do not want their competitors always to know the current scenario. Activity B: 1. Analyse the emerging trends ine-recruitment andprepare the report detailingthe challenges and opportunitiesfortheorganization. 2. e- Selection: Usually it is difficult to decide where recruiting ends and selection begins. The main purpose ofselection process is to distinguish individuals on the basis ofimportant characteristics. In a changing environment, the speed of selection process becomes veryimportant. There are manyformal selection toolsavailable to measure applicantsonthe characteristics: Work Samples Structured Interviews Personalityinventories SituationalJudgmentTests CognitiveAbilityTests
- 204. 204 e-selection process is a paperless process where electronic documents and information canbe quickly disseminated nationwideor worldwide. 3. e- Performance Management: e-performance management also known as Business Intelligence (BI) or Business Performance Management is a growing field. Use of technology in performance management leadsto increment inproductivity, enhances competitiveness, and motivatesemployees.This is possiblethroughtwo ways: (i)Technologybecomeatoolto facilitatetheprocessofwritingreviewsorgenerating performance feedback. (ii)Technologymayfacilitatemeasuringindividual’sperformanceviacomputermonitoringactivities. Examples hereinclude multirater appraising thatsupervisors or teammembersgenerate online, as wellas of-the –shelfappraisalsoftware packages that a construct an evaluationfor a manager. Technologycanbe applied in severalways in performance management. In the first place , routine jobs can besubject to computerized performancemonitoring (CPM) systemthat helps generate performance data. Second ,softwares areavailablethathelpsgenerateappraisalforms.Third, performancemanagement systemcanbe integratedwithanoverallenterprise resourceplanningsystem(ERP)software system.This helps HR professional to identify highperformers, spot skilland competency gaps and to analyze pay relative to performance.Withthis informationbeingavailable, HRmanagercanplanfortraining, coaching and education. Forth, firmintranets and internet mayalso help performance management process. Fifth, stand-alonesoftware packagesare a great helpinperformance management system. The greatest benefits ofappraisalsoftware are the elimination ofpaperwork and simplification ofthe logistics for evaluators, workers and administrators. 4. e-Learning: e-Learning is the use of technologyto enable people to learn anytime and anywhere. e- Learning canincludetraining, the deliveryofjust-in-time informationand guidancefromexperts. 13 e-Learning islearning that takes placeinan electronicallysimulatedenvironment. e-Learning, web-based training, internet-based trainingand computer-basedtraining are thenext-generationinstructionmethods beingdevelopedtoday. Withe-Learning, userscanimmersethemselvesinathree-dimensionalenvironment to further enhancetheir learning experience. Moreover, e-Learning canbe done anywhereand anytimeas long as the user has theproper hardware. Today, e-Learningis fast becoming arealitythroughcompanies like Trainersoft and others. e-Learning can be done using an internet connection, a network, an intranet, or a storage disk. It uses a varietyofmedia like audio, text, virtualenvironments, video, andanimation. e-Learning, insomeways, is even better thanclassroomlearning methods as it is a one-on-one learning method, it is self-pacedand it has anexperiential-learning format. As with anyother forms oflearning, e-Learning depends onitsdeliverymethod and content to ensureits success. Forthis reason, e-Learning moduleshave to be interesting, interactive and informative inorder to be effective. Becauseit is computer/software basedhowever, e-Learning has the capabilityofimmersing itsstudentscompletelywithinanenvironmentmost conduciveto learning.Thissetsit apartfromclassroom- stylelearning.. Advantages of e-Learning 1) Lower Costs and Larger Capacity With e-Learning, students don’t have to physicallyattend classes, seminarsor training programs. e-Learning is web-based and disk-based so participants don’t have to spend a lot oftime away fromtheir work. Theycanchoose howmuchtime or what specific time to devoteto learning the subject matter offered.
- 205. 205 Aweb-basede-Learningprogramisalot less expensiveto maintain.e-Learning programoperators need onlymaintainthe networking infrastructure that willdeliver their e-Learningcontent to their students and participants. This is a small investment compared to what is required to pay for instructors and training personnelin classroom-style learning. Moreover, participants need not spend moneyontraveland other expenses just to attend seminars and training courses. e-Learningalso allowsfor moreparticipants thantraditionallearning methods sincethe number of participants is not constrained byvenue limitations. 2) Convenient Learning Students canfit their learningactivitieseasilywiththeir dailyroutine. Theyneednot leave hometo participateinane-Learningprogramandlearningdoesnot requirecomplexlogistics.Allaparticipant needs is a computer, internet connectivity, access to the web-based server, and ifnecessary, the speciale-Learning software provided bythee-Learning programoperators. 3) EasilyUpdated and Upgraded e-Learning modules canbe easilyrevised.Activities can be easilyadded and incorporated. The e-Learningsoftwarecanalso be automaticallyupdatedbyconnectingto theserver.Thisisdefinitely a lot faster than retraining professors and reprinting books and manuals.14 Class work can be scheduled around personaland professionalwork Reduces travelcost and time to and fromschool Learners mayhave the optionto select learning materialsthat meets their levelofknowledge and interest Learners canstudy wherever theyhave access to a computer and Internet Self-paced learning modules allow learners to work at their own pace Flexibilityto joindiscussions in the bulletin board threaded discussion areas at anyhour, or visit withclassmates and instructorsremotelyinchat rooms Different learningstylesareaddressedandfacilitationoflearningoccursthroughvariedactivities Development ofcomputer and Internet skills that are transferable to otherfacets oflearner’s lives Successfullycompleting online or computer-based courses builds self-knowledge and self- confidence and encouragesstudents to take responsibilityfor their learning Disadvantages of e-Learning Unmotivated learners orthose with poor studyhabitsmayfallbehind Lack offamiliarstructure and routine maytakegetting used to Students mayfeelisolated or miss socialinteraction Instructor maynot always be available on demand Slow orunreliable Internet connections canbe frustrating Managing learningsoftware caninvolve alearning curve Some courses such as traditionalhands-oncourses can be difficult to simulate Knowinge-learning advantagesand disadvantages helps withlearningsoftware selectionaswellas online distance learning programs structure and selection. It is important to know the merits and demeritsofe- learning to make a decision..
- 206. 206 17.10 Challenges before HRM The HR Managersoftodaymayfindit difficult because ofthe rapidlychanging businessenvironment and thereforetheyshouldupdatetheirknowledgeandskillsbylookingat theorganization’sneedandobjectives. 1. Managing theVision: Vision ofthe organizationprovidesthe directionto businessstrategyand helps managers to evaluate management practices and make decisions. So vision management becomes the integralpart ofthe process ofManmanagement in timesto come . 2. InternalEnvironment:Creatinganenvironmentwhichisresponsivetoexternalchanges, providing satisfactionto theemployees and sustaining throughculture and systems isa challenging task. 3. Changing Industrial Relations: Both the workers and managers have to be managed bythe same HRM Philosophyand this is going to be a difficult task for themanagers oftomorrow. 4. Building OrganizationalCapability:Eveninthe adversecircumstances the employeeshave to be madeto live inpsychologicalstate ofreadiness to continuallychange. 5. Job Design andOrganization Structure:Instead ofdepending onforeignconceptswe need to focus onunderstanding the job, technologyandthe people involved incarrying out the tasks. 6. Managing the LargeWork Force:Management oflarge workforce poses thebiggest problem as the workers are conscious oftheir rights. 8. Employee Satisfaction: Managers should beaware oftechniques to motivate their employees so that their higher levelneeds canbe satisfied. 9. ModernTechnology: There willbe unemployment due to modern technologyand thiscould be corrected byassessing manpower needs and finding alternate employment. 10. Computerized Information System:This isrevolutionaryinmanagerialdecisionmakingand is having impact oncoordinationinthe organization. 11. Managing Human Resource Relations: As the workforce comprises of both educated and uneducated, managingtherelationswillbe ofgreatchallenge. One ofthechallenges HR managers face isissues ofup gradationoftheskillset throughtrainingand development intheface ofhigh attrition. Indian companies are recognizing their responsibilities to enhance the employee’s opportunityto developskills and abilities for fullperformance withinthe positionand for career advancement. 17.11 HRM Practices In India India’s Changing HRM Horizon The outlook to Human Resource Management in India has witnessed sea-change in last two decades. Economic liberalizationin 1991 created a hyper-competitive environment.As internationalfirms entered the Indianmarketbringing withtheminnovativeandfierce competitiveness, Indiancompanies wereforced to adopt andimplement innovative changesintheirHRpractices. Increasing demandforskilled performers forcedthecompaniesto shift focusonattractingandretaining high-performing employeesinacompetitive marketplace. EmphasisonEmployees:HumanResourcepolicies, formingtheframeworkfortheculture inthebusiness management, create awareness towards the need to achieve the business goals in the best possible and
- 207. 207 ethicalmanner. Indiancompanies have realized that in today’s competitive business milieu, the qualityof people you employcanmake allthe difference. Inthe last few years, the HumanResourcehas becomea keyplayer instrategic planning – it has come a long wayfromtraditionalHR operationslike managing the recruitment process, handling staffappraisals. HRM Challenges: One of the challenges HR managers face is issues of up gradation of the skill set through training and development in the face of high attrition. Indian companies are recognizing their responsibilities to enhancethe employee’s opportunityto develop skills and abilities for fullperformance withinthe positionand for career advancement. Progressive HR Policies:Today, most Indiancompanies are committed to providingequalemployment opportunities for both men and women. The employers are increasingly realizing the value of trained human resource, especiallywomen in India. Some organizations are changing their HR policies to stick with their valuable employees. MNCs like Pepsico are providing flexibility so that female employeesat various life stages could benefit fromthese policies like working from a different city, sabbaticalfrom corporate life, and extended maternityleave. Entrepreneurship by Employees: India Inc. is encouraging ‘intrapreneurs’ or employees who have ideas that could potentiallybecome a venture. Companies like Pepsico, NIIT, andAdobe are actively promotingpracticeofentrepreneurshipbyemployeeswithintheorganization.HumanResourceManagement has taken a leading role in encouraging corporate socialresponsibilityactivities at alllevels. Companies like Wipro inculcate corporate socialresponsibilityvalues amongst its workforce right at the beginning during theinduction process. Corporate presentations and keeping employees updated through regular newsletters are theinstruments usedbyHRto keep employees energized about theorganization’ssocially responsibleinitiatives. Over the last decade, India’s vast manpower has played an instrumental role in its economic success story. Indeed, the success of Indian companies is not based on superior access to raw materials or technologyor patents, but fundamentallyuponhumanskills. The synergybetweenthe strategic planning and innovative HRMpractices willbe important asIndian Industries embarksitselfonthe globaljourney. 17.12 Self Assessment Questions 1. What do you understand byhumanresource management? Whyis it needed? 2. Explaintherole ofHR manager in present times? 3. Discuss the recent trends or emerging issues in HRM? 4. Discuss the changing role ofHRM. In whichparticular business areas HR can playits role? 5. What are the challenges faced byHR managers in present time? 17.13 Reference Books - Aswathapa.K, Human Resource Management, TMH, 2007, p.695 - Rao,T.V.2004, Performance Management andAppraisalSystems—HRTools for Global Competitiveness, Sage Publications, London, UK, pp.173-99. - Marchand,D.A., Kiettinger,W.J. and Rollis, J.D., InformationOrientation-The link to Business Performance, OUP, Oxford, UK, pp.173-90