HUMAN RESOURCE MANAGEMENT

Unit I: HUMAN RESOURCE MANAGEMENT

CONCEPT OF HUMAN RESOURCE MANAGEMENT
HRM is the philosophy of people management based on the belief that human resources are extremely
important for sustained business success. An organization acquires competitive advantage by using its
people effectively and utilizing their expertise to meet clearly defined objectives. HRM is aimed at
recruiting capable, flexible and committed people. Managing and rewarding their performance and
developing key competencies.
Meaning and Definition
Human Resource Management is the process of recruitment, selection of employee, providing proper
orientation and induction, providing proper training and the developing skills, assessment of employee
(performance of appraisal), providing proper compensation and benefits, motivating, maintaining proper
relations with labor and with trade unions, maintaining employee’s safety, welfare and health by
complying with labor laws of concern state or country.
Edwin Flippo defines- HRM as “planning, organizing, directing, controlling of procurement,
development, compensation, integration, maintenance and separation of human resources to the end that
individual, organizational and social objectives are achieved.”
The National Institute of Personal Management (NIPM) of India has defined human resources –
personal management as “that part of management which is concerned with people at work and with their
relationship within an enterprise. Its aim is to bring together and develop into an effective organization of
the men and women who make up enterprise and having regard for the well – being of the individuals
and of working groups, to enable them to make their best contribution to its success”.
Scope of Human Resource Management
1. Personnel Aspect
Human Resource Planning – It is the process by which the organization identifies the number of jobs
vacant.

Job Analysis and Job Design – Job analysis is the systematic process for gathering, documenting, and
analyzing data about the work required for a job. Job analysis is the procedure for identifying those duties
or behavior that defines a job.

Recruitment and Selection – Recruitment is the process of preparing advertisements on the basis of
information collected from job analysis and publishing it in newspaper. Selection is the process of
choosing the best candidate among the candidates applied for the job.

Orientation and Induction – Making the selected candidate informed about the organization’s
background, culture, values, and work ethics.

Training and Development – Training is provided to both new and existing employees to improve their
performance.

Performance Appraisal – Performance check is done of every employee by Human Resource

Management. Promotions, transfers, incentives, and salary increments are decided on the basis of employee
performance appraisal.

Compensation Planning and Remuneration – It is the job of Human Resource Management to plan
compensation and remunerate.
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 1
Motivation – Human Resource Management tries to keep employees motivated so that employees put
their maximum efforts in work.

2. Welfare Aspect – Human Resource Management have to follow certain health and safety
regulations for the benefit of employees. It deals with working conditions, and amenities like - canteens,
crèches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety,
recreation facilities, etc.

3. Industrial Relation Aspect – HRM works to maintain co-ordinal relation with the union
members to avoid strikes or lockouts to ensure smooth functioning of the organisation. It also covers -
joint consultation, collective bargaining, grievance and disciplinary procedures, and dispute settlement.

 IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

Human Resource Management is related with effective utilization of human resources. Theimportance
of HRM can be discussed as:
1. Importance concerned with individual organization

Human Resource Management can help an organization to achieve to its objective moreefficiently
and effectively in the followingways:
(a) Procurement of required talents through recruitment, selection, placement, inducting,
training, compensation and promotion policies.
(b) Secures co-operation of all employee of the organization for achieving goals.
(c) Proper utilization of human resources for the success of the enterprise.
(d) Ensure a future team of efficient ancompetent workers required for the organization.
2. Professional Importance
Professional competency among employees can be achieved through the following ways.
(a) Human resource management provides maximum opportunities to employees for their
personnel development.
(b) Providing healthy relationship among employees
(c) Proper allocation of work among employees.
(d) Providing training facilities for the individual development of employees.
3. Social Importance
HRM is important in social perspective also. It includes the following aspects:
(a) Human resource management enhances the dignity of labour.
(b) Provides suitable job to suitable person and it will help to satisfy the psychological and
social satisfaction of employees.
(c) Helps to provide reasonable compensation to workers, which leads them to have a good
standard of living.
(d) Helps to maintain a balance between jobs and job seekers in terms of numbers,
qualification, aptitude etc.
(e) Takes health and safety measures which ensures physical and mental health of the
employees.
4. National Importance

Effective management of human resources will speed up the economic growth of nation. This in turn leads
to better standard of living and more job opportunities.
 Human Resource Management: Objectives
• To help the organization reach its goals.
• To ensure effective utilization and maximum development of human resources.
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 2
• To ensure respect for human beings.Toidentify and satisfy the needs of individuals.
• To ensure reconciliation of individual goals with those of the organization.
• To achieve and maintain high morale among employees.
• To provide the organization with well-trained and well-motivated employees.
• To increase to the fullest the employee’s job satisfaction and self-actualization.
• To develop and maintain a quality of work life.
• To be ethically and socially responsive to the needs of society.
• To develop overall personality of each employee in its multidimensional aspect.
• To enhance employee’s capabilities to perform the present job.
• To equip the employees with precision and clarity in transactions of business.
• To inculcate the sense of team spirit, team work and inter-team collaboration.

 Functions
Human Resource Management Functions:
Managerial, Operative and Advisory Function
Some of the major functions of human resource management are as follows: 1. Managerial Functions
2. Operative Functions 3. Advisory Functions.
Human Resource or Personnel Department is established in most of the organizations, under the charge of
an executive known as Human Resource/Personnel Manager. This department plays an important role in
the efficient management of human resources.
The personnel department gives assistance and provides service to all other departments on personnel
matters. Though personnel or human resource manager is a staff officer in relation to other departments of
the enterprise, he has a line authority to get orders executed within his department.
(i) Managerial,
(ii) Operative and
(iii) Advisory functions.
1. Managerial Functions:
The Human Resource Manager is a part of the organisational management. So he must perform the basic
managerial functions of planning, organising, directing and controlling in relation to his department.
There functions are briefly discussed below:
1. Planning:
To get things done through the subordinates, a manager must plan ahead. Planning is necessary to
determine the goals of the organisation and lay down policies and procedures to reach the goals. For a
human resource manager, planning means the determination of personnel programs that will contribute to
the goals of the enterprise, i.e., anticipating vacancies, planning job requirements, job descriptions and
determination of the sources of recruitment.
The process of personnel planning involves three essential steps.
Firstly, a supply and demand forecast for each job category is made. This step requires knowledge toboth
labour market conditions and the strategic posture and goals of the organisation.
Secondly, net shortage and excess of personnel by job category are projected for a specific time
horizon.
Finally, plans are developed to eliminate the forecast shortages and excess of particular categories of
human resources.
2. Organizing:
Once the human resource manager has established objectives and developed plans and programs toreach
them, he must design and develop organisation structure to carry out the various operations.
The organization structure basically includes the following:
(i) Grouping of personnel activity logically into functions or positions;
(ii) Assignment of different functions to different individuals;
(iii) Delegation of authority according to the tasks assigned and responsibilities involved;
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 3
(iv) Co-ordination of activities of different individuals.

3. Directing:
The plans are to be pure into effect by people. But how smoothly the plans are implemented depends on
the motivation of people. The direction function of the personnel manager involves encouraging people to
work willingly and effectively for the goals of the enterprise.
In other words, the direction function is meant to guide and motivate the people to accomplish the
personnel programs. The personnel manager can motivate the employees in an organisation through career
planning, salary administration, ensuring employee morale, developing cordial relationships and provision
of safety requirements and welfare of employees.
The motivational function poses a great challenge for any manager. The personnel manager must have
the ability to identify the needs of employees and the means and methods of satisfy those needs.
Motivation is a continuous process as new needs and expectations emerge among employees when old
ones are satisfied.
4. Controlling:
Controlling is concerned with the regulation of activities in accordance with the plans, which in turn have
been formulated on the basis of the objectives of the organisation. Thus, controlling completes the cycle
and leads back to planning. It involves the observation and comparison of results with the standards and
correction of deviations that may occur.
Controlling helps the personnel manager to evaluate the control the performance of the personnel
department in terms of various operative functions. It involves performance appraisal, critical examination
of personnel records and statistics and personnel audit.
2. Operative Functions:
The operative functions are those tasks or duties which are specifically entrusted to the human resource or
personnel department. These are concerned with employment, development, compensation, integration
and maintenance of personnel of the organisation.
The operative functions of human resource or personnel department are discussed below:
1. Employment:
The first operative function of the human resource of personnel department is the employment of proper
kind and number of persons necessary to achieve the objectives of the organisation. This involves
recruitment, selection, placement, etc. of the personnel.
Before these processes are performed, it is better to determine the manpower requirements both in terms of
number and quality of the personnel. Recruitment and selection cover the sources of supply of labour and
the devices designed to select the right type of people for various jobs. Induction and placement of
personnel for their better performance also come under the employment or procurement function.
2. Development:
Training and development of personnel is a follow up of the employment function. It is a duty of
management to train each employee property to develop technical skills for the job for which he has been
employed and also to develop him for the higher jobs in the organisation. Proper development ofpersonnel
is necessary to increase their skills in doing their jobs and in satisfying their growth need.

For this purpose, the personnel departments will device appropriate training programs. There are several
on- the-job and off-the-job methods available for training purposes. A good training program should
include a mixture of both types of methods. It is important to point out that personnel department arranges
for training not only of new employees but also of old employees to update their knowledge in the use of
latest techniques.
3. Compensation:
This function is concerned with the determination of adequate and equitable remuneration of the
employees in the organisation of their contribution to the organisational goals. The personnel can be
compensated both in terms of monetary as well as non-monetary rewards.
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 4
Factors which must be borne in mind while fixing the remuneration of personnel are their basic needs,
requirements of jobs, legal provisions regarding minimum wages, capacity of the organisation to pay,
wage level afforded by competitors etc. For fixing the wage levels, the personnel department can make use
of certain techniques like job evaluation and performance appraisal.
4. Maintenance (Working Conditions and Welfare):
Merely appointment and training of people is not sufficient; they must be provided with good working,
conditions so that they may like their work and workplace and maintain their efficiency. Working
conditions certainly influence the motivation and morale of the employees.
These include measures taken for health, safety, and comfort of the workforce. The personnel department
also provides for various welfare services which relate to the physical and social well- being of the
employees. These may include provision of cafeteria, rest rooms, counseling, group insurance, education
for children of employees, recreational facilities, etc.
5. Motivation:
Employees work in the organisation for the satisfaction of their needs. In many of the cases, it is
found that they do not contribute towards the organisational goals as much as they can. This happens
because employees are not adequately motivated. The human resource manager helps the various
departmental managers to design a system of financial and non-financial rewards to motivate the
employees.
6. Personnel Records:
The human resource or personnel department maintains the records of the employees working in the
enterprise. It keeps full records of their training, achievements, transfer, promotion, etc. It also preserves
many other records relating to the behaviour of personnel like absenteeism and labour turnover and the
personnel programs and policies of the organisation.
7. Industrial Relations:
These days, the responsibility of maintaining good industrial relations is mainly discharged by the human
resource manager. The human resource manager can help in collective bargaining, joint consultation and
settlement of disputes, if the need arises. This is because of the fact that he is in possession of full
information relating to personnel and has the working knowledge of various labour enactments.
The human resource manager can do a great deal in maintaining industrial peace in the organisation as
he is deeply associated with various committees on discipline, labour welfare, safety, grievance, etc. He
helps in laying down the grievance procedure to redress the grievances of the employees. He also gives
authentic information to the trade union leaders and conveys their views on various labour problems to the
top management.
8. Separation:
Since the first function of human resource management is to procure the employees, it is logical that the
last should be the separation and return of that person to society. Most people do not die on the job. The
organisation is responsible for meeting certain requirements of due process in separation, as well as
assuring that the returned person is in as good shape as possible. The personnel manager hasto ensure the
release of retirement benefits to the retiring personnel in time.
3. Advisory Functions:
Human resource manager has specialized education and training in managing human resources. He is an
expert in his area and so can give advice on matters relating to human resources of the organization.
He offers his advice to:
1. Advised to Top Management:
Personnel manager advises the top management in formulation and evaluation of personnel programs,
policies and procedures. He also gives advice for achieving and maintaining good human relations and
high employee morale.
2. Advised to Departmental Heads:
Personnel manager offers advice to the heads of various departments on matters such as manpower
planning, job analysis and design, recruitment and selection, placement, training, performance appraisal,
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 5
etc.
 Personnel Management vs. Human Resource Management
Both the terms refer to the one and the same function of the management and that is managing the people
at work. However, Human Resource Management is mainly focused on best utilizing the man power by
understanding their strength and weaknesses and engaging them in different occupations so that their
productivity can be increased. Therefore, training and development and employee engagements are part of
it. Personnel Management, on the other hand, is mainly concerned with maintaining good employee-
employer relationship and activities connected with it. Therefore, Personnel Management mainly works
around Industrial/ Employee/ Labour Relations and activities connected with grievance handling,
negotiations, enforcement of labour statute, looking after welfare of employees and so on.
Personnel Management is thus basically an administrative record-keeping function, at the operational
level. Personnel Management attempts to maintain fair terms and conditions of employment, while at the
same time, efficiently managing personnel activities for individual departments etc. It is assumed that the
outcomes from providing justice and achieving efficiency in the management of personnel activities will
result ultimately in achieving organizational success.
Human resource management is the new version of personnel management. There is no any watertight
difference between human resource management and personnel management. However, there are some
differences in the following matters.
1. Personnel management is a traditional approach of managing people in the organization. Human
resource management is a modern approach of managing people and their strengths in the organization.
2. Personnel management focuses on personnel administration, employee welfare and labor relation.
Human resource management focuses on acquisition, development, motivation and maintenance of human
resources in the organization.
3. Personnel management assumes people as a input for achieving desired output. Human resource
management assumes people as an important and valuable resource for achieving desired output.
4. Under personnel management, personnel function is undertaken for employee's satisfaction. Under
human resource management, administrative function is undertaken for goal achievement.
5. Under personnel management, job design is done on the basis of division of labor. Under human
resource management, job design function is done on the basis of group work/team work.
6. Under personnel management, employees are provided with less training and development
opportunities. Under human resource management, employees are provided with more training and
development opportunities.
7. In personnel management, decisions are made by the top management as per the rules and
regulation of the organization. In human resource management, decisions are made collectively after
considering employee's participation, authority, decentralization, competitive environment etc.
8. Personnel management focuses on increased production and satisfied employees. Human resource
management focuses on effectiveness, culture, productivity and employee's participation.
9. Personnel management is concerned with personnel manager. Human resource management is
concerned with all level of managers from top to bottom.
10. Personnel management is a routine function. Human resource management is a strategic function.
 Differences between HRM Aand HRD
Here’s a tabular format to differentiate between HRM and HRD:
Human Resource Management Human Resource Development

HRM deals with management principles and HRD focuses on an ongoing developmental purpose of
mainly emphasises the employees. the entire organisation in a formal pattern.

It is a reactant function dealing with It stands for proactive functions, which act as a subset of
management. HRM.

Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 6
They focus on the improvement of the They are applied for organisational motives in a holistic
employees from all divisions. form.

A usual process of administration. A continuous process.

People-centric form of management. Focuses on the organisation as a whole.

Anchor different roles to play, making it An organisationally directed process; subsystem of a

independent. whole institution.
What are the benefits of HRM?
It is difficult to differentiate between HRM and HRD when choosing a better career option. Here is a list of
advantages of studying HR Management:
 Improvement in employee turnover: With the help of an HR professional, the ideal candidates are
selected, helping the organisation save up on its costs. Proper compensation and benefits are also outlined to
pay attention to their requirements. HR professionals mainly allow employee turnover at a lower rate,
benefiting the organisation.
 Conflict Resolutions: A workplace is, without hesitance, an area consisting of different
personalities and opinions. A good HR course will teach you to deal with conflict management and how to
resolve such situations. Both parties should be equally assisted, and parting with both sides is undesirable
for an HR professional.
 Employee Satisfaction: This is one of the significant roles performed by an HR professional.
Organising surveys, focus groups and interview strategies showcase whether the employees are suitable for
the organisation. HR professionals are also responsible for finding underlying causes of dissatisfaction.
 Improvement of employee performance: Performance management systems are organised by
Human Resource Management teams. HRs scrutinise and hire the best, leading to a better work
environment through annual performance reviews.
 Training and Development: HR departments focus on assessments for employees to be well-
equipped with the skills and additional qualifications, reducing the need to seek individuals for minor
functions.
 Budget Control: Annual pay of organisation members is looked upon by the HR team. They also
deal with the competitive and realistic wages to focus on labour markets and sale analysis, fully based on
job functions.

Hence, HRM is a required and most demanded profession by almost every organisation in every country
globally.
What are the advantages of HRD?
Certain benefits are available if you decide to build a career in human resource development. The following
advantages are as follows:-
 Employees with enhanced skills: Employees need to have a broad set of skills that define the
organisation’s potential. Most employees must possess soft skills and hard skills that are checked on by the
HRD department frequently.
 Supporter of business goals: Alignment of human resources order can bring in development to
broader business motives. The HRD team must organise crucial training and development programs for
every employee to receive vocational skills and reach their business goals.
 Increase in workforce diversity: A strong HRD department expands opportunities for the
institution’s employees. Training in terms of behaviour and attitude provided by the HRD team brings a
diverse workplace and better organisation functioning.

Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 7
 Easier management of employees: Staff supervision attracts greater coordination and reduces
pressure on all. All should take adequate pressure to improve their time-management and functional skills
towards planned goals.
Hence, HRD focuses entirely on the benefits of the organisation.

 Role of HR manager is discussed in brief as under:

1. Advisory Role: One of the major roles of HR manager is, to advise the top management in the matter
relating to management and development of human resource, in order to achieve organizational objects.
Looking to the company’s vision, mission and long range planning, HR executive advises the higher
management to formulate appropriate HR policies, procedures which may create a perceptible change in
the minds of the workers’ to help the transformational process of dynamism.
2. Pro-Acting Role: HR manager ascertains the probable areas of conflict and differences between workers
and management, identifies the factors that may create problems in future, forecasts the extent, quantum of
loss that may occur and the department may suffer loss and takes remedial measures beforehand by way of
developing organizational culture, climate, introducing system, mechanism, and does not leave any room
to crop up problems, grievances.
3. Welfare Role: HR executive looks to the welfare aspect of the employee’s viz., canteen, creche, rest-
room, hospital, transportation, housing accommodation, school, etc. His one of the principal roles is to
provide welfare facilities to the employees for their betterment and well-being.
4. Developmental Role: Development of workers for attaining company goals is made by the HR manager
through improvement of knowledge, skill, abilities, aptitude, attitude, value, beliefs etc. A dynamic
organization needs dynamic employees and transformation of employee’s mind-set to the process of
dynamism is possible only when all the potential areas for growth and development are reinforced. HR
manager takes all possible measures for growth and development of employees through formulation of HR
policies in the matter of training, career planning and development, counselling etc.
5. Mediator’s Role: HR manager works as a link personality between trade unions and top management in
order to eliminate the differences of opinions cropped up in process of settlement of disputes. He takes
initiative to sort out problems through collective bargaining/ bipartite negotiation process.
6. Social Upliftment Role: Organization is part and parcel of the society. As a societal member it has
ethical and moral obligation to contribute to the society for its growth and development by way of taking
necessary measures like creating and improving infrastructure, spreading learning institutions, providing
medical facilities, generating employment opportunities. HR executive plays a vital role to give a proper
shape in the formulation of suitable HR policies for the people in the society.
7. Counsellor’s Role: Because of illiteracy and ignorance workers cannot take decision in their personal
problems and they need advice to sort out such problems, viz. education of children, medical treatment,
marital matter, family problems, etc. HR manager, as he comes close to the workers because of his nature
of work, develops understanding between them and advises, guides the workers in right direction.
8. Spokesperson Role: HR executive works as a spokesperson of the company especially, in the matter of
depicting organization health, condition, strength etc. to the employees while negotiating for settlement of
industrial disputes. He also acts as a representative of the workers when they are
nonunionized/unorganized and cannot represent their case properly to the top management. Under such
circumstances HR manager places their grievances, problems, demand to the top management for
settlement/redressal.
9. Motivator’s Role: One of the functions of HR manager is to motivate the employees to achieve their
own goals, as well as organizational goals HR manager performs such role by way of introducing reward
schemes. HR manager’s role of establishing mutual understanding, mutual confidence and mutual trust
helps to motivate the employees to excel in the level of their performance.
10. Procurer’s Role: HR manager helps to procure the right number and right kind of people at the right
time, to enable the company to run smoothly, effectively and efficiently and to achieve its goals. He
facilitates formulation of a dynamic recruitment policy, designs and develops Test/Interview techniques,
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 8
selection process, suiting individuals and organization requirement in order to find out the right persons
for the required jobs. He makes a systematic, problem free procurement exercise when workers express
happiness, satisfaction and a state of contentment.
11. Change Agent Role: In changing scenario, workers are required to change their attitudes, belief,
perceptible state, values to meet organization needs, requirement and expectation. In the age of stiff
competition organization can survive and develop only if the workers are adaptive to change requirement.
It is the HR executive who through establishment of sound human relation convinces the workers about
the necessity of changing attitude, values to accept change role, as reinforced by introduction of OD
programme, TQM concept, quality circle etc.
Some of roles and responsibilities are as follows: 1. Recruiting and hiring – It is a process of
discovering sources of manpower and employing effective measures for attracting that manpower in
adequate numbers to facilitate the selection of an efficient working force in an organization.
2. Training and development – These processes help in enhancing and enabling the capacities of people to
build their strengths and confidence in order for them to deliver more effectively.
3. Competency development – Competency is a cluster of related knowledge, skills, and attitude that
affect a major part of one’s job. It can be improved by means of training and development.
4. Organization development – It is an organization-wide effort to increase its effectiveness and viability
and move towards growth.
5. Communication – It is an activity that involves conveying meaningful information. At all times, the HR
must convey all relevant information to the employees.
6. Performance management – It focuses on improving the performance of the organization, employees,
and various other services.
7. Employee relations – This is a concept that works towards bettering the relations among the employees,
as well as between the employee and the management.
8. Coaching, mentoring, and counselling – It is a practice of supporting an individual and helping him
overcome all his issues in order to perform better.
9. Policy recommendation – Policy recommendations help to streamline management practices and reduce
employee grievances. For example, a manager who is more than 35 years and, who possesses a minimum
experience of 7 years, is entitled to receive the benefits stated in the company’s administrative manual.
10. Wages, salary, and compensation benefits – These benefits are provided to the employees to keep them
motivated towards their work and the organization.
11. Talent management and employee engagement – It is a management concept that works towards
retaining the talent by engaging the person in a way which would further the organization’s interest. 12.
Leadership development – This activity refers to enhancing the quality and efficiency of a leader in an
organization.
13. Team building – It focuses on bringing out the best in a team to ensure development of an
organization, and the ability to work together closely to achieve goals.
14. Networking and partnering – It is also important to build relations with the external stakeholders,
including the customers and suppliers for better business. Role of HR Manager – 3 Main Roles: As
Business Partner, Employee Advocate and Counsellor
 Concept, objectives, scope, importance of Human resource
planningConcept of human resource planning:
Human resource (HR) planning or manpower planning is the process by which the organization ensures
that it has the right kind of people, at right time, at right place and they are working effectively and
efficiently and help the organization in achieving the overall objective. It is a continuous process. Of
developing and determining objectives, policies that will procure, develop and utilize human resources to
achieve the goal of the organization
According to E.W. Vetter, human resource planning is “the process by which a management determines
how an organization should make from its current manpower position to its desired manpower
position.Through planning a management strives to have the right number and the right kind of people at
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 9
the right places, at the right time to do things which result in both the organization and the individual
receiving the maximum long range benefit.”
Dale S. Beach has defined it as “a process of determining and assuring that the organization will have an
adequate number of qualified persons available at the proper times, performing jobs which meet the
needs of the enterprise and which provide satisfaction for the individuals involved.”
In the words of Leon C. Megginson, human resource planning is “an integration approach to performing
the planning aspects of the personnel function in order to have a sufficient supply of adequately developed
and motivated people to perform the duties and tasks required to meet organizational objectives and satisfy
the individual’s needs and goals of organizational members.”
On the analysis of above definitions, human resource planning may be viewed as foreseeing the human
resource requirements of an organization and the future supply of human resources and making necessary
adjustments between these two and organization plans, and foreseeing the possibility of developing the
supply of human resources in order to match it with requirements by introducing necessary changes in the
functions of human resource management.
 Features of Human Resource Planning:
The following features of human resource planning can be derived:
1. Well Defined Objectives:
Enterprise’s objectives and goals in its strategic planning and operating planning may form the objectives
of human resource planning. Human resource needs are planned on the basis of company’s goals. Besides,
human resource planning has its own objectives like developing human resources, updating technical
expertise, career planning of individual executives and people, ensuring better commitment of people and
so on.
2. Determining Human Resource Needs:
Human resource plan must incorporate the human resource needs of the enterprise. The thinking will have
to be done in advance so that the persons are available at a time when they are required. For this purpose,
an enterprise will have to undertake recruiting, selecting and training process also.
3. Keeping Manpower Inventory:
It includes the inventory of present manpower in the organization. The executive should know the persons
who will be available to him for undertaking higher responsibilities in the near future.
4. Adjusting Demand and Supply:
Manpower needs have to be planned well in advance as suitable persons are available in future. If
sufficient persons will not be available in future then efforts should be .made to start recruitment process
well in advance. The demand and supply of personnel should be planned in advance.
5. Creating Proper Work Environment:
Besides estimating and employing personnel, human resource planning also ensures that working
conditions are created. Employees should like to work in the organisation and they should get proper job
satisfaction

 Importance of Manpower Planning

1. Key to managerial functions- The four managerial functions, i.e., planning, organizing,
directing and controlling are based upon the manpower. Human resources help in the implementation of
all these managerial activities. Therefore, staffing becomes a key to all managerial functions.
2. Efficient utilization- Efficient management of personnel’s becomes an important function in
the industrialization world of today. Setting of large scale enterprises requires management of large scale
manpower. It can be effectively done through staffing function.
3. Motivation- Staffing function not only includes putting right men on right job, but it also
comprises of motivational programmes, i.e., incentive plans to be framed for further participation and
employment of employees in a concern. Therefore, all types of incentive plans become an integral part of
staffing function.
4. Better human relations- A concern can stabilize itself if human relations develop and are
Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 10
strong. Human relations become strong trough effective control, clear communication, effective
supervision and leadership in a concern. Staffing function also looks after training and development of the
work force which leads to co-operation and better human relations.

Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 11
5. Higher productivity- Productivity level increases when resources are utilized in best possible
manner. Higher productivity is a result of minimum wastage of time, money, efforts and energies. This is
possible through the staffing and its related activities ( Performance appraisal, training and development,
remuneration)
 Need of Manpower Planning
Manpower Planning is a two-phased process because manpower planning not only analyses the current
human resources but also makes manpower forecasts and thereby draw employment programmes.
Manpower Planning is advantageous to firm in following manner:
1. Shortages and surpluses can be identified so that quick action can be taken wherever required.
2. All the recruitment and selection programmes are based on manpower planning.
3. It also helps to reduce the labour cost as excess staff can be identified and thereby overstaffing
can be avoided.
4. It also helps to identify the available talents in a concern and accordingly training programmes
can be chalked out to develop those talents.
5. It helps in growth and diversification of business. Through manpower planning, human
resources can be readily available and they can be utilized in best manner.
6. It helps the organization to realize the importance of manpower management which ultimately
helps in the stability of a concern.
 Steps in Manpower Planning
1. Analyzing the current manpower inventory-Before a manager makes forecast of future
manpower, the current manpower status has to be analyzed. For this the following things have to be
noted-
 Type of organization
 Number of departments
 Number and quantity of such departments
 Employees in these work units
Once these factors are registered by a manager, he goes for the future forecasting.
2. Making future manpower forecasts- Once the factors affecting the future manpower
forecasts are known, planning can be done for the future manpower requirements in several work units.
The Manpower forecasting techniques commonly employed by the organizations are as follows:
i. Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi
technique.
ii. Trend Analysis: Manpower needs can be projected through extrapolation (projecting
past trends), indexation (using base year as basis), and statistical analysis (central tendency measure).
iii. Work Load Analysis: It is dependent upon the nature of work load in a department,
in a branch or in a division.

Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 12
iv. Work Force Analysis: Whenever production and time period has to be analyzed, due
allowances have to be made for getting net manpower requirements.
v. Other methods: Several Mathematical models, with the aid of computers are used to
forecast manpower needs, like budget and planning analysis, regression, new venture analysis.
3. Developing employment programmes- Once the current inventory is compared with future
forecasts, the employment programmes can be framed and developed accordingly, which will include
recruitment, selection procedures and placement plans.
4. Design training programmes- These will be based upon extent of diversification, expansion
plans, development programmes,etc. Training programmes depend upon the extent of improvement in
technology and advancement to take place. It is also done to improve upon the skills, capabilities,
knowledge of the workers.
 Obstacles in Manpower Planning
Following are the main obstacles that organizations face in the process of manpower planning:
1. Under Utilization of Manpower: The biggest obstacle in case of manpower planning is the
fact that the industries in general are not making optimum use of their manpower and once manpower
planning begins, it encounters heavy odds in stepping up the utilization.
2. Degree of Absenteeism: Absenteeism is quite high and has been increasing since last few
years.
3. Lack of Education and Skilled Labour: The extent of illiteracy and the slow pace of
development of the skilled categories account for low productivity in employees. Low productivity has
implications for manpower planning.
4. Manpower Control and Review:
a. Any increase in manpower is considered at the top level of management
b. On the basis of manpower plans, personnel budgets are prepared. These act as control
mechanisms to keep the manpower under certain broadly defined limits.
c. The productivity of any organization is usually calculated using the formula:
Productivity = Output / Input
But a rough index of employee productivity is calculated as follows:
Employee Productivity = Total Production / Total no. of employees
d. Exit Interviews, the rate of turnover and rate of absenteeism are source of vital
information on the satisfaction level of manpower. For conservation of Human Resources and better
utilization of men studying these conditions, manpower control would have to take into account the data to
make meaningful analysis.
e. Extent of Overtime: The amount of overtime paid may be due to real shortage of men,
ineffective management or improper utilization of manpower. Manpower control would require a careful
study of overtime statistics.
Few Organizations do not have sufficient records and information on manpower. Several of those who
have them do not have a proper retrieval system. There are complications in resolving the issues in design,
definition and creation of computerized personnel information system for effective

Dr. Sadananda Sahoo, Associate Professor. GIET University, Gunupur. Human Resource Management 13
manpower planning and utilization. Even the existing technologies in this respect is not optimally used.
This is a strategic disadvantage.
 Techniques of Manpower Planning:
We have already noted that manpower planning involves forecasting manpower needs, assessing
manpower supply and reconciling supply and demand through various personnel-related programmes. The
manpower planning process is affected by the organisation’s strategic management decisions and
environmental uncertainties.
These two factors, in turn, determine the length of the planning horizons, the type and quality of
information available to manpower planners and the nature of jobs to be filled. Manpower demand
forecasts and assessments of supply must be continuously monitored so that adjustments can be made in
the programmes designed to reconcile the supply and demand of manpower resources.
1. Forecasting Manpower Needs (Demand):
Manpower demand refers the total human resource needs of an organisation for a given time period. The
precise nature of an organisation’s demand for manpower depends on various factors. Once the factors
affecting the demand for manpower are identified, methods for forecasting can be designed and
implemented.
External factors include competition (foreign and domestic), the economic climate (such as the stock
market crash of 1992), laws and regulations and changes in technology. Internal factors include budget
constraints, production levels, new products and services and organisational structure.
2. Short-term Forecasting:
Short-range forecasts usually grow out of normal budgetary processes. Manpower budgets and projections
are generally based on estimates of work-loads (production schedules, passenger loads, expansions or
contractions in operations).
Conversion ratios that translate workload data into manpower demand estimates may be used for a short-
range demand forecast. For example, as sales increase by a certain percentage, a manufacturing concern
may determine by how much the number of employees in certain departments or divisions must also
increase.
The use of conversion ratios provides only a rough approximation of the number of employees required
and may indicate very little about the types of manpower needed. It is important for an organization to
carefully define not only the number of workers needed by the entire organization, but also the type
required at various levels, departments and locations. Job analysis information is hopeful in this respect,
because it defines the educational, experience and skill requirements of future employees.
3. Long-term Forecasting:
This is done with mathematical and statistical models. Unlike forecasting short-term needs, which
generally involves necessary adjustments, to assure that specific vacancies are filled, long-term forecasts
are more general in nature.
Mathematical models used in manpower forecasting are based on selected key variables that affect the
organisation’s overall manpower needs. Some models contain both internal and external variables.

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4. Linear Regression:
Another quantitative approach, viz., linear regression analysis, may also be used to estimate the manpower
necessary at a future point in time, based upon such factors as sales, output or services rendered.
5. Forecasting Manpower Supply:
Manpower planners must consider both the external supply (employees available for hire in the
organisation’s geographic workforce) and the internal supply (the organisation’s current employees) of
human resources.
It is important for personnel planners to anticipate and pinpoint changes in personnel supply. Various
methods are available for doing this.Although manpower planning is concerned with having an adequate
number of employees to fill positions within the organisation, it is equally concerned with providing the
right type of person for the job. A major function of manpower planning is to examine the skills and
capabilities of current employees in light of the organisation’s short- and long-term needs.
Inventories form the basis of promotion, transfer, layoff and training and development decisions. In
essence, skills inventories provide an information base for monitoring an employee’s potential
contribution to the organisation, making informed personnel-related decisions, and, in general, assessing
the organisation’s manpower supply.
Manpower information systems provide a means of collecting, summarising and analysing data to find out
the manpower requirement. Information requirements associated with the personnel function are
numerous. For example, assessing personnel supply involves keeping track of employees throughout the
organisation.
6. Balancing Manpower Supply and Demand:
Once an organisation’s manpower needs (demand) are determined and the current supply of employees is
assessed, then manpower supply and demand must be balanced in order that vacancies can be filled by the
right employee at the proper time. Balancing supply and demand is largely a matter of planning, timing
and use of various personnel-related programmes to achieve the desired results.
UNIT-II
RECRUITMENT& SELECTION
 RECRUITMENT
Meaning:
Recruitment is a positive process of searching for prospective employees and stimulating them to apply for
the jobs in the organisation. When more persons apply for jobs then there will be a scope for recruiting
better persons.
The job-seekers too, on the other hand, are in search of organisations offering them employment.
Recruitment is a linkage activity bringing together those with jobs and those seeking jobs. In simple
words, the term recruitment refers to discovering the source from where potential employees may be
selected. The scientific recruitment process leads to higher productivity, better wages, high morale,
reduction in labour turnover and enhanced reputation. It stimulates people to apply for jobs; hence it is a
positive process.
Recruitment is concerned with reaching out, attracting, and ensuring a supply of qualified personnel and
making out selection of requisite manpower both in their quantitative and qualitative aspect. It is
the development and maintenance of adequate man- power resources. This is the first stage of the
process of selection and is completed with placement.
Definition:
According to Edwin B. Flippo, “It is a process of searching for prospective employees and stimulating
and encouraging them to apply for jobs in an organisation.” He further elaborates it, terming it both
negative and positive.
He says, “It is often termed positive in that it stimulates people to apply for jobs, to increase the
hiring ratio, i.e. the number of applicants for a job. Selection, on the other hand, tends to be negative
because it rejects a good number of those who apply, leaving only the best to be hired. ”
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In the words of Dale Yoder, Recruitment is the process to “discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that manpower in
adequate numbers to facilitate effective selection of an efficient working force.” Kempner writes,
“Recruitment forms the first stage in the process which continues with selection andceases with the
placement of the candidates.”
In personnel recruitment, management tries to do far more than merely fill job openings. As a routine the
formula for personnel recruitment would be simple i.e., just fill the job with any applicant who comes
along.

Objectives of Recruitment
The objectives of recruitment are:
i. To attract people with multi-dimensional skills and experiences that suit the present and future
organizational strategies,
ii. To induct outsiders with a new perspective to lead the company,
iii. To infuse fresh blood at all levels of the organization,
iv. To develop an organizational culture that attracts competent people to the company,
v. To search or head hunt/head pouch people whose skills fit the company’s values,
vi. To devise methodologies for assessing psychological traits,
vii. To seek out non-conventional development grounds of talent,
viii. To search for talent globally and not just within the company,
ix. To design entry pay that competes on quality but not on quantum,
x. To anticipate and find people for positions that does not exist yet.
Sources of Recruitment of Employees: Internal and External Sources | Recruitment
Sources of Recruitment of Employees: Internal and External Sources
The searching of suitable candidates and informing them about the openings in the enterprise is themost
important aspect of recruitment process.
The candidates may be available inside or outside the organisation. Basically, there are two sources of
recruitment i.e., internal and external sources

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(A) Internal Sources:

Best employees can be found within the organization when a vacancy arises in the organisation, it may be
given to an employee who is already on the pay-roll. Internal sources include promotion, transfer and in
certain cases demotion. When a higher post is given to a deserving employee, it motivates all other
employees of the organisation to work hard. The employees can be informed of such a vacancy by internal
advertisement.
Methods of Internal Sources:
The Internal Sources Are Given Below:
1. Transfers:
Transfer involves shifting of persons from present jobs to other similar jobs. These do not involve any
change in rank, responsibility or prestige. The numbers of persons do not increase with transfers.
2. Promotions:
Promotions refer to shifting of persons to positions carrying better prestige, higher responsibilities and
more pay. The higher positions falling vacant may be filled up from within the organisation. A promotion
does not increase the number of persons in the organisation.
A person going to get a higher position will vacate his present position. Promotion will motivate
employees to improve their performance so that they can also get promotion.
3. Present Employees:
The present employees of a concern are informed about likely vacant positions. The employees
recommend their relations or persons intimately known to them. Management is relieved of looking out
prospective candidates.
The persons recommended by the employees may be generally suitable for the jobs because they know the
requirements of various positions. The existing employees take full responsibility of those recommended
by them and also ensure of their proper behaviour and performance.
Advantages of Internal Sources:
The Following are The Advantages of Internal Sources:
1. Improves morale:
When an employee from inside the organisation is given the higher post, it helps in increasing the morale
of all employees. Generally every employee expects promotion to a higher post carrying more status and
pay (if he fulfills the other requirements).
2. No Error in Selection:
When an employee is selected from inside, there is a least possibility of errors in selection since every
company maintains complete record of its employees and can judge them in a better manner.
3. Promotes Loyalty:
It promotes loyalty among the employees as they feel secured on account of chances of advancement.
4. No Hasty Decision:
The chances of hasty decisions are completely eliminated as the existing employees are well tried and can be
relied upon.
5. Economy in Training Costs:
The existing employees are fully aware of the operating procedures and policies of the organisation. The
existing employees require little training and it brings economy in training costs.
6. Self-Development:
It encourages self-development among the employees as they can look forward to occupy higherposts.
Disadvantages of Internal Sources:
(i) It discourages capable persons from outside to join the concern.
(ii) It is possible that the requisite number of persons possessing qualifications for the vacant posts
may not be available in the organisation.
(iii) For posts requiring innovations and creative thinking, this method of recruitment cannot be
followed.
(iv) If only seniority is the criterion for promotion, then the person filling the vacant post may not be
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really capable.
In spite of the disadvantages, it is frequently used as a source of recruitment for lower positions. It may
lead to nepotism and favoritism. The employees may be employed on the basis of their recommendation
and not suitability.
(B) External Sources:
All organisations have to use external sources for recruitment to higher positions when existing
employees are not suitable. More persons are needed when expansions are undertaken.
The external sources are discussed below:
The different methods are
1. Advertisement:
It is a method of recruitment frequently used for skilled workers, clerical and higher staff. Advertisement
can be given in newspapers and professional journals. These advertisements attract applicants in large
number of highly variable quality.
Preparing good advertisement is a specialized task. If a company wants to conceal its name, a ‘blind
advertisement’ may be given asking the applicants to apply to Post Bag or Box Number or to some
advertising agency.
2. Employment Exchanges:
Employment exchanges in India are run by the Government. For unskilled, semi-skilled, skilled, clerical
posts etc., it is often used as a source of recruitment. In certain cases it has been made obligatory for the
business concerns to notify their vacancies to the employment exchange. In the past, employers used to
turn to these agencies only as a last resort. The job-seekers and job-givers are brought into contact by the
employment exchanges.
3. Schools, Colleges and Universities:
Direct recruitment from educational institutions for certain jobs (i.e. placement) which require technical or
professional qualification has become a common practice. A close liaison between the company and
educational institutions helps in getting suitable candidates. The students are spotted during the course of
their studies. Junior level executives or managerial trainees may be recruited in this way.
4. Recommendation of Existing Employees:
The present employees know both the company and the candidate being recommended. Hence some
companies encourage their existing employees to assist them in getting applications from persons who
are known to them.
In certain cases rewards may also be given if candidates recommended by them are actually selected by
the company. If recommendation leads to favouritism, it will impair the morale of employees.
5. Factory Gates:
Certain workers present themselves at the factory gate every day for employment. This method of
recruitment is very popular in India for unskilled or semi-skilled labour. The desirable candidates are
selected by the first line supervisors. The major disadvantage of this system is that the person selected may
not be suitable for the vacancy.
6. Casual Callers:
Those personnel who casually come to the company for employment may also be considered for the
vacant post. It is most economical method of recruitment. In the advanced countries, this method of
recruitment is very popular.
7. Central Application File:
A file of past applicants who were not selected earlier may be maintained. In order to keep the file alive,
applications in the files must be checked at periodical intervals.
8. Labour Unions:
In certain occupations like construction, hotels, maritime industry etc., (i.e., industries where there is
instability of employment) all recruits usually come from unions. It is advantageous from the management
point of view because it saves expenses of recruitment. However, in other industries, unions may be asked
to recommend candidates either as a goodwill gesture or as a courtesy towards the union.
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9. Labour Contractors:
This method of recruitment is still prevalent in India for hiring unskilled and semi-skilled workers in brick
klin industry. The contractors keep themselves in touch with the labour and bring the workers at the places
where they are required. They get commission for the number of persons supplied by them.
10. Former Employees:
In case employees have been laid off or have left the factory at their own, they may be taken back if they
are interested in joining the concern (provided their record is good).

Apart from these major sources of external recruitment, there are certain other sources which are exploited
by companies from time to time. These include special lectures delivered by recruiter in different
institutions, though apparently these lectures do not pertain to recruitment directly.
Then there are video films which are sent to various concerns and institutions so as to show the history and
development of the company. These films present the story of company to various audiences, thus creating
interest in them.
Various firms organise trade shows which attract many prospective employees. Many a time
advertisements may be made for a special class of work force (say married ladies) who worked prior to
their marriage.
These ladies can also prove to be very good source of work force. Similarly there is the labour market
consisting of physically handicapped. Visits to other companies also help in finding new sources of
recruitment.
Merits of External Sources:
1. Availability of Suitable Persons:
Internal sources, sometimes, may not be able to supply suitable persons from within. External sources do
give a wide choice to the management. A large number of applicants may be willing to join the
organisation. They will also be suitable as per the requirements of skill, training and education.
2. Brings New Ideas:
The selection of persons from outside sources will have the benefit of new ideas. The persons having
experience in other concerns will be able to suggest new things and methods. This will keep the
organisation in a competitive position.
3. Economical:
This method of recruitment can prove to be economical because new employees are already trained and
experienced and do not require much training for the jobs.
Demerits of External Sources:
1. Demoralization:
When new person from outside joins the organization, present employees may feel demoralized because
these positions might have gone to them. There can be a heart burning among old employees. Some
employees may even leave the enterprise and go for better avenues in other concerns.

2. Lack of Co-Operation:
The old staff may not co-operate with the new employees because they feel that their right has been
snatched away by them. This problem will be acute especially when persons for higher positions are
recruited from outside.
3. Expensive:
The process of recruiting from outside is very expensive. It starts with inserting costly advertisements in
the media and then arranging written tests and conducting interviews. In spite of all this if suitable persons
are not available, then the whole process will have to be repeated.
4. Problem of Maladjustment:
There may be a possibility that the new entrants have not been able to adjust in the new environment. They
may not temperamentally adjust with the new persons. In such cases either the persons may leave
themselves or management may have to replace them. These things have adverse effect on the working of
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the organisation.
Suitability of External Sources of Recruitment:
External Sources of Recruitment are Suitable for The Following Reasons:
(i) The required qualities such as will, skill, talent, knowledge etc., are available from external
sources.
(ii) It can help in bringing new ideas, better techniques and improved methods to the organization.
(iii) The selection of candidates will be without preconceived notions or reservations.
(iv) The cost of employees will be minimum because candidates selected in this method will be
placed in the minimum pay scale.
(v) The entry of new persons with varied experience and talent will help in human resource mix.
(vi) The existing employees will also broaden their personality.
(vii) The entry of qualitative persons from outside will be in the long-run interest of the organization.

SELECTION:
Selection is a process of measurement, decision making and evaluation. The goal of a selection system is
to bring in to the organisation individuals who will perform well on the job. To have an accurate and fair
selection system, an organisation must use reliable and valid measures of job applicant characteristics. In
addition, a good selection system must include a means of combining information about applicant
characteristics in a rational way and producing correct hire and no-hire decisions. A good personnel
selection system should add to the overall effectiveness of the organisation.
Organisations vary in the complexity of their selection system. Some merely skim applications blanks and
conduct brief, informal interviews, whereas others take to resting, repeated interviewing, and background
checks and so on. Although the latter system is more costly per applicant, many benefits are realised from
careful, thorough selection. An organisation needs to have members who are both skilled and motivated to
perform their roles. Either such members can be identified by careful selection or attempts can be made to
develop them after hire by extensive training. Thus cursory selection may greatly increase training and
monitoring costs, whereas spending more on the selection process will reduce these post-hire expenses.
 SELECTION PROCEDURE
Selection procedure employs several methods of collecting information about the candidate’s
qualifications, experience, physical and mental ability, nature and behaviour, knowledge, aptitude and the
like for judging whether a given applicant is suitable or not for the job. Therefore, the selection procedure
is not a single act but is essentially a series of methods or stages by which different types of information
can be secured through various selection techniques. At each step, facts may come to light which are
useful for comparison with the job requirement and employee specifications.

Steps in
Scientific Selection Process
(i) Job Analysis, (ii) Recruitment. (iii) Application Form, (iv) Written Examination, (v) Preliminary
Interview (iv) Business Games (vii) Tests. (viii) Final Interview. (ix) Medical Examination (x) Reference
Checks. (xi) Line Manager’s Decision. (xii) Job offer (xiii) Employment.
Job Analysis: Job analysis is the basis of selecting the right candidate. Every organization should finalize
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the job analysis, job description, job specification and employee specifications before proceeding to the
next stop of selection.
Human Resource Plan: Every company plans for the required number of and kind of employees for a
future date. This is the basis for recruitment function.
Recruitment: Recruitment refers to the process of searching for prospective employees and stimulating
then to apply for jobs in an organization. It is the basis for the remaining techniques of the selection and the
latter varies depending upon the former. It develops the applicants’ pool.
Development of Bases for Selection: The Company has to select the appropriate candidates from the
applicants’ pool. The company develops or borrows the appropriate bases/techniques for screening the
candidates in order to select the appropriate candidates for the jobs.
Application Form: Application Form is also known as application blank. The technique of application
bank is traditional and widely accepted for securing information from the prospective candidates. It can
also be used as a device to screen the candidates at the preliminary level. Many companies formulate their
own style of application forms depending upon the requirement of information based on the size of the
company, nature of business activities, type and level f the job etc. Information is generally required on the
following items in the application forms: Personal background information, Educational attainments,
Work experiences, Salary ,Personal details and References.
Written Examination: The organizations have to conduct written examination for the qualified
candidates after they are screened on the basis of the application blanks so as to measure the
candidate’s ability in arithmetical calculations, to know the candidates’ attitude towards the job, to
measure the candidates’ aptitude, reasoning, knowledge in various disciplines, general knowledge and
English language.
Preliminary Interview: The preliminary interview is to solicit necessary information from the
prospective applicants and to assess the applicant’s suitability to the job. This may be conducted by an
assistant in the personnel department. The information thus provided by the candidate may be related to
the job or personal specifications regarding education, experience, salary expected, aptitude towards the
job, age, physical appearance and other physical requirements etc. Thus, preliminary interview is useful as
a process of eliminating the undesirable and unsuitable candidates. If a candidate satisfied the job
requirements regarding most of the areas, he may be selected for further process. Preliminary interviews
are short and known as stand-up interviews or sizing-up of the applicants or screening interviews.
However, certain required amount of care is to be taken to ensure that the desirable workers are not
eliminated. This interview is also useful to provide the basic information about the company to the
candidate.
Business Games: Business games are widely used as a selection technique for selecting management
trainees, executive trainees and managerial personnel at junior, middle and top management positions.
Business games help to evaluate the applicants in the areas of decision-making identifying the
potentialities, handling the situations, problem-solving skills, human relations skills etc. Participants are
placed in a hypothetical work situation and are required to play the role situations in the game. The
hypothesis is that the most successful candidate in the game will be the most successful one on the job.
Group Discussion: The technique of group discussion is used in order to secure further information
regarding the suitability of the candidate for the job. Group discussion is a method where groups of the
successful applicants are brought around a conference table and are asked to discuss either a case study or
a subject-matter. The candidates in the group are required to analyses, discuss, find alternative solutions
and select the sound solution. A selection panel then observes the candidates in the areas of initiating the
discussion, explaining the problem, soliciting unrevealing information based on the given information and
using common sense, keenly observing the discussion of others, clarifying controversial issues, influencing
others, speaking effectively, concealing and mediating arguments among the participants and summarizing
or concluding apply. The selection panel, based on its observation, judges the candidates’ skill and ability
and ranks them according to their merit. In some cases, the selection panel may also ask the candidates to
write the summary of the group discussion in order to know the candidates’ writing ability as well
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 Test: Psychological tests play a vital role in employee selection. A psychological test is
essentially an objective and standardized measure of sample of behavior from which inferences about
future behavior and performance of the candidate can be drawn. Objectivity of tests refers to the validity
and reliability of the instruments in measuring the ability of the individuals. Objectivity provides equal
opportunity to all the job seekers without any discrimination against sex, caste etc. standardization of test
refers to uniformity of the total behavior of the prospective employee on the job.
Types of Test: Tests are classified into six types. They are Aptitude tests, Achievement tests , Situational
tests, Interest tests, Personality tests and Multidimensional testing.
Aptitude tests: These tests measure whether an individual has the capacity or latent ability to learn a
given job if given adequate training. Aptitudes can be divided into general and mental ability or
intelligence and specific aptitudes such as mechanical, clerical, manipulative capacity etc.
Emotional Quotient (EQ): Most of the organizations realized that emotional involvement and
commitment of the employees determine their contribution to the company rather than their intelligence
quotient. As such, emotional quotient (EQ) is used as important criteria in the employee selection process.
Achievement Tests: These tests are conducted when applicants claim to know something as these tests
are concerned with what one has accomplished. These tests are more useful to measure the value of a
specific achievement when an organization wishes to employ experienced candidates. These tests are
classified into: (a) Job knowledge test: and (b) Work sample test.

Situational test: This test evaluates a candidate in a similar real life situation. In this test, the candidate is
asked either to cope with the situation or solve critical situations of the job. Interest tests: These
tests are inventories of the likes and dislikes of candidates in relation to work, job, occupations, hobbies
and recreational activities. The purpose of this test is to find out whether a candidate is interested or
disinterested in the job for which he is a candidate and to find out in which area of the job
range/occupation the candidate is interested. The assumption of this test is that there is a high correlation
between the interest of a candidate in a job and job success. Interest inventories are less faked and they
may not fluctuate after the age of 30.
Personality Tests: These tests prove deeply to discover clues to an individual’s value system, his
emotional reactions and maturity and characteristic mood. They are expressed in such traits like self-
confidence, tact, emotional control, optimism, decisiveness, sociability, conformity, objectivity, patience,
fear, distrust, initiative, judgment dominance of submission, impulsiveness, sympathy, integrity, stability
and self-confidence.
Other Tests:
Cognitive Ability Tests: These tests measure mathematical and verbal abilities. Popularly known tests of
this category include Graduate Record Examination (GRE) and Scholastic Aptitude Test (SAT).
Polygraph Tests: The polygraph is an instrument that records changes in breathing, blood pressure, pulse
and skin response associated with sweating of palms and plots these reactions on paper.
Multi-dimensional Testing: However, the need for multi-skills is being felt by most of the companies’
consequent upon globalization, competitiveness and the consequent customer-centred strategies.
Organization have to develop multi-dimensional testing in order to find out whether the candidates possess
a variety of skills or not, candidate’s ability to integrate the multi-skills and potentiality to apply them
based on situational and functional requirement.
 INTERVIEW
Interview is probably the most widely used selection tool. It is a most complex selection technique
because its scope includes measuring all the relevant characteristics and integrating and classifying all
other information about the applicant. In practically all organization interviewing is used for a variety of
purposes, including selection, appraisal, disciplinary action, counseling and general problem solving.
The interview is a selection technique which enables the employer to view the total individual and directly
appraise him and his behavior. It is a method by which an idea about an applicant’s personality can be
obtain by a face-to-face contact.
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It tries to achieve an exacting appraisal of an applicant, his previous experience, education, training and
family backgrounds.
Meaning and definition of interview
“Interviewing” is meant “deliberate, active listing with a purpose to draw the other person out, to
discover what he really wants to say, and to give a chance to express himself freely.”
“An interview is an attempt to secure maximum amount of information form the candidate concerning his
suitability for the job under consideration.”
“An interview is a purposeful exchange of ideas, the answering of questions and communication
between two or more persons.”
Objectives & importance of interview
1. To cross-check or verify the information obtained in earlier steps,application form and tests.
2. To judge the candidate’s qualification and characteristics so as to decided whether or not to
select him.
3. To give the candidate essential facts about the job and the company to enable him to decide
intelligently whether he should or should not accept the employment.
4. To established a rapport or mutual understanding between the company and the candidate and
to promote the company’s goodwill.
Steps in interview process
An effective interview involves the following sequence of steps:
1.) Preparation for the interview:-
Advance preparation is essential for a successful interview. The following arrangements should be made
before the interview begins:
 Determining the objectives of the interview.
 Choosing the appropriate type of interview.
 Acquainting oneself about the candidate.
 Determining the type of information to be obtained.
 Selecting the right interviewers.
 Selecting the candidates to be interviewed by checking and comparing their applications and
test scores.
 Finalizing the interview assessment forms.

2.) The physical setting:

The place of interview should be both private and comfortable. It should be neat and clean, well lighted. It
should be free from noise and interruptions. The candidates should be properly received and should be
guided into the interview room. The interview should start at the fixed time and the candidates should not
be required to wait unnecessarily.
3.) Conducting the interview:
This step is heart of the interview process. In this activities are follows.
Establishing rapport with the candidate and gaining his confidence exchange of a smile, offering seatto
the candidate, etc.
Getting complete information-for this purpose, Ask
open-close question.
Use the language which is clear to the candidate.
Recording the observation- the interview should write down in brief his observation of the candidate on
the interview forms. Such notes will indicate to the candidate the interviewer’s interest and thereby
encourage him to talk freely. These notes will also be helpful in evaluating the candidate later.
4.) Closing the interview:
The close of the interview is as significant as it beginning. The interview is a trying situation for the
candidate. Therefore, it should end with a happy note without any awkward situation. before closing the
interview the candidate should be asked whether he wants to make any comments in order to the
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interviewer may show some sing at an appropriates time . Laying down the pen, pushing back the chair
saying thank you, that's all are these sings.
5.) Evaluation of results:
After an interviewer is over, the interviewer should evaluation the candidate’s suitability for the job. It is
based on observation impression and information collected during the interview. The evaluation may be
done either by grades ranging from A to E . After the interview, a list of selected candidates is prepared.
 Types of interview
The interviews are classified by the purpose for which the interview is held.
Promotion interview:-
Persons due for promotion are interviewed even if there is no competition. The interview is likely to be
informal and serves as induction into a new team, with new responsibilities. Clarification about nature of
duties, responsibilities and expectations are made during a promotion interview.
Informal interview:-
It is planned and is used when the staff is required urgently. A friend or relative of the employer may take
a candidate to the house of employer or manager who ask few questions like name, birth place, educations
and experience,etc. when candidate enquires about the vacancies after reading an advertisement, it’s a
example of informal interview.
Formal interview:

This type of interview is preplanned and is held in a formal atmosphere. All the formalities and procedure,
e.g.the time, the venue and the questions to be asked are decided in advance.
Appraisal or assessment interview:-
An appraisal interview is one of the methods of periodical assessment of employees. There are other
methods like completion of self assessment forms and assessment by supervisors. But annual appraisal
interview is the best method for judging employees' attitudes. A face-to-face confidential talk is an
opportunity for both, the employee and the supervisor to discuss several issues.
Patterned or structured interview:
Such interview is fully planned to a high degree of accuracy and precision. It’s based on the assumption
that to be more effective every pertinent detail should be worked out in advance. Therefore, a list
questions to be asked is prepared and the questions are asked in a particular cycle. The time to be allowed
to each candidate and the information to be sought a predicated. The interviewer is carefully selected.
The interviewer actively participates and the candidate is expected only to answer the questions. Thus, a
standardized pattern is adopted or the structure of the interview is decided in advance. Such interview is
also known as directed or guided interview.
It allows for a systematic coverage of the required information.
Stress Interview: -
This interview aims at testing the candidate’s job behavior and level of withstanding during theperiod of
stress and strain. Interviewer tests the candidate by putting him under stress and strain byinterrupting
the applicant from answering, criticizing his opinions, asking questions pertaining to unrelated areas,
keeping silent for unduly long period after he has finished speaking etc. Stress duringthe middle portion
of the interview gives effective results. Stress interview must be handled with atmost care and
skill. This type of interview is often invalid. As the
interviewee’s need for a job, his previous experience in such type of interviews may inhibit his actual
behavior under such situations.
Behavioral Interview:-
In a behavioral interview, the interviewer will ask you questions based on common situations of the job
you are applying for. The logic behind the behavioral interview is that your future performance will be
based on a past performance of a similar situation. You should expect questions that inquire about what
you did when you were in XXX situation and how did you dealt with it. In a behavioral interview, the
interviewer wants to see how you deal with certain problems and what you do to solve them.
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Group Interview:-
Many times companies will conduct a group interview to quickly prescreen candidates for the job opening
as well as give the candidates the chance to quickly learn about the company to see if they want to work
there. Many times, a group interview will begin with a short presentation about the company. After that,
they may speak to each candidate individually and ask them a few questions. One of the most important
things the employer is observing during a group interview is how you interact with the other candidates.
Are you emerging as a leader or are you more likely to complete tasks that are asked of you? Neither is
necessarily better than the other, it just depends on what type of personality works best for the position
that
Group Discussion Interview:-
There are two methods of conducting group discussion interview, namely group interview method and
discussion interview method. All candidates are brought into one room i.e. interview room and are
interviewed one by one under group interview This method helps a busy executive to save valuable time
and gives a fair account of the objectivity of the interview to the candidates. Under the discussion
interview method, one topic is given for discussion to the candidates who assemble in one room and they
are asked to discuss the topic in detail. This type of interview helps the interviewer in appraising, certain
skills of the candidates like initiative, inter-personal skills, dynamism, presentation,
leading comprehension, collaboration etc.
Interviewers are at ease in this category of interview because of its informality and flexibility. But it may
fail to cover some significant portions of the candidates’ background and skills
Depth Interview:
In this type of Interview, the candidates would be examined extensively in core areas of knowledge and
skills of the job. Experts in that particular field examine the candidates by posing relevant questions as to
extract critical answers from them, initiating discussions regarding critical areas of the job, and by asking
the candidates to explain even minute operations of the job performance. Thus, the candidate is examined
thoroughly in critical / core areas in their interviews.
Phone interview:
A phone interview may be for a position where the candidate is not local or for an initial prescreening call
to see if they want to invite you in for an in-person interview. You may be asked typical questions or
behavioral questions. Most of the time will schedule an appointment for a phone interview. If the
interviewer calls unexpectedly, it's ok to ask them politely to schedule an appointment. On a phone
interview, make sure your call waiting is turned off, you are in a quiet room, and you are
not eating, drinking or chewing gum.
Panel or board interview:
Such interview is conducted by a group of interviewers. It seeks to pool the collective wisdom and
judgment of several interviewers. Questions are asked in turn or at random. The candidate may even be
asked to meet the members of the panel individually for a fairly lengthy interview.
Guidelines for effective interviewing
Interview can be made be more effective by observing the following guidelines:
An interview should have a definite time schedule with ample time for conduct, i.e., it should not be
hurried.
Interview should have an element of privacy.
The interview should be based on a checklist of what to look for in a candidate such a checklist should
be prepared on the basis of job requirements.
Competent, trained and experienced persons should be chosen as interview. Proper
method of interview should be employed.
A specific set of guidelines should be given to the interviews .

There should be proper coordination between the initial and succeed interviews. The
interviewer should try to minimize his personal bias or prejudiced.
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Limitations of interview
Interview is a widely used method of employee selection. But it suffers from several pitfalls, some ofwhich
are given below:
Personal bias:-
Interview like other people have personal biases. Their likes & dislikes about hairstyle, dress, fluencyof
speech, etc. affect their judgment.
Halo effect:-
Under this type of error, a single prominent characteristic of the candidate affects the judgment of
interviewer on all other traits. For example, an interviewer may conclude that a poorly groomed candidate
is stupid or alternatively, he may overrate the candidate’s qualifications just because of his pleasing
personality.
Constant error:-
Such error arises because the interview of previous candidate unduly influences the interviewer in favor or
against the candidate. For example, a qualified candidate may be underrated just because the previous
candidate was very brilliant.
Projection:-
Error of projection arises when an interviewer expects his own knowledge, skills and values in a
candidate. Therefore, he is likely to select candidates who resemble him in terms of manners, background,
voice, etc.
Leniency:-
It implies the tendency to assign high scores. It’s normally associated with lack of confidence and interest
in rating. The opposite of leniency is toughness, i.e., the tendency to constantly give low scores. This may
arise due to exaggerated expectation, lack of contact with people.
 Induction
Meaning:
Induction of Employee is the first step towards gaining an employees' commitment, Induction is aimed at
introducing the job and organization to the recruit and him or her to the organization. Induction involves
orientation and training of the employee in the organizational culture, and showing how he or she is
interconnected to (and interdependent on) everyone else in the organization.
The new employee’s first contact with his or her physical and human working environment is
extremely important, since it will condition his or her relationship with the company. The employee
must feel supported and important. The first person he or she will meet is the immediate supervisor,who
should present the corporate profile in addition to providing information on the organization’s
background, values, clientele, services offered, staff, and expected behaviour. The immediate superior will
also specify the newcomer’s role. The points listed below should be covered during this meeting. Purpose
and Need
An employee has to work with fellow employees and his supervisor. For this he must know them, the way
they work and also the policies and practices of the organization so that he may integrate himself with the
enterprise. Any neglect in the area of induction and orientation may lead to high labour turnover,
confusion, wasted time and expenditure.
Induction Programme
A good induction programme should cover the following:
1. The company, its history and products, process of production and major operations involved
in his job.
2. The significance of the job with all necessary information about it including job training and
job hazards.
3. Structure of the organization and the functions of various departments.
4. Employee’s own department and job, and how he fits into the organization.
5. Personnel policy and sources of information.
6. Company policies, practices, objectives and regulations.
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7. Terms and conditions of service, amenities and welfare facilities.

8. Rules and regulations governing hours of work and over-time, safety and accident prevention,
holidays and vacations, methods of reporting, tardiness and, absenteeism.
9. Grievances procedure and discipline handling.
10. Social benefits and recreation services.
11. Opportunities, promotions, transfer, suggestion schemes and job satisfaction.
 Promotion
The employees are given the promotions to higher posts and positions as and when vacancies are available
or when new posts are created at the higher levels. It is quite common in all types of organizations. It is the
product of internal mobility of the employees due to change in organizational processes, structure etc. It is
better than direct recruitment which satisfies many human resources problems of the organization and
helps in achieving organizational objectives. Promotion means higher position to an employee who carries
higher status, more responsibilities and higher salary. The higher status and salary is the two most
important ingredient of any promotion. It is an advancement of employee to a higher post with greater
responsibilities and higher salary, better service conditions and thus higher status.
 Transfer
One of the internal mobility of the employee is transfer. It is lateral movement of employee in an
organization by the employee. “A transfer involves the shifting of an employee from one job to another
without changing the responsibilities or compensation”.
Transfers of employees are quite common in all organizations. This can also be defined as a change in job
within the organization where the new job is substantially equal to the old in terms of pay, status and
responsibilities. Transfers of employees can possible from one department to another from one plant to
another. Transfer may be initiated by the organization or by the employees with the approval of the
organization. It can be also due to changes in organizational structure or change in volume of work, it is
also necessary due to variety of reasons.
 Types of Transfers most of the transfers generally carried out four types of transfers which are
discussed below:
Production Transfer: Such transfers are resorted to when there is a need of manpower in one department
and surplus manpower in other department. Such transfers are made to meet the company requirements.
The surplus employees in one department/section might be observed in other place where there is a
requirement.
Replacement Transfers: This takes place to replace a new employee who has been in the organization for
a long time and thereby giving some relief to an old employee from the heavy pressure of work.
Remedial Transfers: As the name suggest, these transfers are made to rectify the situation caused by
faulty selection and placement procedures. Such transfers are made to rectify mistakes in placement and
recruitments. If the initial placement of an individual is faulty or has not adjusted to work/job, his transfer
to a more appropriate job is desirable.
Versatility Transfer: Such transfers are made to increase versatility of the employees from one job to
another and one department to another department. Transfer (Job Rotation) is the tool to train the
employees. Each employee should provide a varied and broader job experiences by moving from one
department to another. This is for preparing the employee for promotion; this will definitely help the
employee to have job enrichment.
Demotion
Demotion is just the opposite of promotion. It is a downward movement of an employee in the
organizational hierarchy with lower status and lower salary. It is a downgrading process and is insulting to
an employee. Demotion is a punishment for incompetence or mistakes of serious nature on the part of an
employee. It is a serious type of penalty or punishment and should be given rarely and only under
exceptionalcircumstances and also tactfully.
 Meaning of separation:
Separation of an employee exists when the service of an employee comes to an end because of onereason
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or other. Separation arises due to resignation; lay off, dismissal and retirement.
Types of separation
i) Resignation: when the employee himself initiates the separation then it is termed as separation.
There are some resignation which are avoidable and others which are unavoidable. It is the responsibility
of the management to look out the real reason of the resignation. In such a cases the exit interview is
better to conduct to find out the reason of resignation.
ii) Lay off: lay off is generally done to reduce the financial burden of the organization by
temporary removing the surplus employees. This is done due to inability of the employee to recruit them
due to shortage of sufficient resources. Lay off results in a great loss to the organization as they had to
suffer all the expenses of selection, placement and training.
iii) Dismissal: dismissal or discharge means separating the employee from the payroll due to
unsatisfactory performance where the employee fails to perform his duties well and he is not properly
skilled to perform his job or due to violation of organizational rules it means indiscipline, dishonesty.
Whatever is the cause of dismissal but it should be done at the last stage.
iv) Retirement: number of separation in the organization happen due to retirement. There must be
clear rules of retirement there may be compulsory retirement where an employee has to retire after
attaining a particular age. Forced retirement means when a person is found guilty in the court of law or
breaks any service agreement then has to retire forcibly irrespective of his age. Premature retirement
means that the employee becomes disable to perform the job in that case he may be given the option to
take retirement before his retirement age.

 CONCEPT OF CAREER PLANNING

Career planning is the process by which one selects career goals and the path to these goals. The
major focus of career planning is on assisting the employees achieve a better match between personal
goals and the opportunities that are realistically available in the organization. Career programmers should
not concentrate only on career growth opportunities. Practically speaking, there may not be enough high
level positions to make upward mobility a reality for a large number of employees. Hence, career-planning
efforts need to pin-point and highlight those areas that offer psychological success instead of vertical
growth.
Career planning is not an event or end in itself, but a continuous process of developing Humanresources
are for achieving optimum results. It must, however, be noted that individual andorganizational careers
are not separate and distinct. A person who is not able to translate his career plan into action within the
organization may probably quit the job, if he has a choice. Organizations, therefore, should help
employees in career planning so that both can satisfy each other’s needs NEED FOR CAREER
PLANNING
Every employee has a desire to grow and scale new heights in his workplace continuously. If there are
enough opportunities, he can pursue his career goals and exploit his potential fully. He feels highly
motivated when the organization shows him a clear path as to how he can meet his personal ambitions
while trying to realize corporate goals.
Unfortunately, as pointed out by John Leach, organizations do not pay adequate attention to this aspect in
actual practice for a variety of reasons. The demands of employees are not matched with organizational
needs; no effort is made to show how the employees can grow within certain limits, what happens to an
employee five years down the line if he does well, whether the organization is trying to offer mere jobs or
long-lasting careers, etc. When recognition does not come in time for meritorious performance and a
certain amount of confusion prevails in the minds of employees whether they are ‘in’ with a chance to
grow or not, they look for greener pastures outside. Key executives leave in frustration and the
organization suffers badly when turnover figures rise. Any recruitment effort made in panic to fill the
vacancies is not going to be effective. So, the absence of a career plan is going to make a big difference to
both the employees and the organization. Employees do not get right breaks at a right time; their morale
will be low and they are always on their toes trying to find escape routes.
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Organizations are not going to benefit from high employee turnover. New employeesmean additional
selection and training costs. Bridging the gaps through short-term replacements is not going to pay in
terms of productivity. Organizations, therefore, try to put their career plans in place and educate
employees about the opportunities that exist internally for talented people. Without such a progressive
outlook, organizations cannot prosper.
Career planning is needed for the following reasons:
1. Provides career goals and paths
Career planning is needed to provide career goals and career paths to an employee. It provides clear future
directions in terms of career.
2. Develop competencies
Career planning motivates and encourages an employee to develop competencies for higher leveljobs.
The competencies can be conceptual, interpersonal and technical.
3. Creativity
Career planning is needed to increase employee creativity. It is needed for innovation in organization. It
can be lead to entrepreneurship within the organization.
4. Employee retention
Career planning is needed for retention of qualified employees in the long-term. This is needed to decrease
costs of recruitment, selection and training.
5. Motivation
Career planning motivates employees for higher performance. Upward movement in organization isbased
on the quality and quantity of performance.
Objectives
Career planning seeks to meet the following objectives:
i. Attract and retain talent by offering careers, not jobs.

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ii. Use human resources effectively and achieve greater productivity.

iii. Reduce employee turnover.
iv. Improve employee morale and motivation.
v. Meet the immediate and future human resource needs of the organization on a timely basis
CAREER PLANNING PROCESS
The career planning process involves the following steps:
Identifying individual needs and aspirations:
Most individuals do not have a clear cut idea about their career aspirations, anchors and goals. The human
resource professionals must, therefore, help an employee by providing as much information as possible
showing what kind of work would suit the employee most, taking his skills, experience, and aptitude into
account. Such assistance is extended through workshops/seminars while the employees are subjected to
psychological testing, simulation exercises, etc. The basic purpose of such an exercise is to help an
employee form a clear view about what he should do to build his career within the company. Workshops
and seminars increase employee interest by showing the value of career planning. They help employees set
career goals, identify career paths and uncover specific career development activities .These individual
efforts may be supplemented by printed or taped information. To assist employees in a better way,
organizations construct a data bank consisting of information on the career histories, skill evaluations and
career preferences of itsemployees (knownas skill or talent inventory).
Analyzing career opportunities:
Once career needs and aspirations of employees are known, the organization has to provide career paths
for each position. Career paths show career progression possibilities clearly. They indicate the various
positions that one could hold over a period of time, if one is able to perform well. Career paths change
over time, of course, in tune with employee’s needs and organizational requirements. While outlining
career paths, the claims of experienced persons lacking professional degrees and that of young recruits
with excellent degrees but without experience need to be balanced properly.
Aligning needs and opportunities:
After employees have identified their needs and have realized the existence of career opportunities the
remaining problem is one of alignment. This process consists of two steps: first, identify the potential of
employees and then undertake career development
Programmers with a view to align employee needs and organizational opportunities. Through performance
appraisal, the potential of employees can be assessed to some extent. Such an appraisal would help reveal
employees who need further training, employees who can take up added responsibilities, etc. After
identifying the potential of employees certain developmental techniques

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such as special assignments, planned position rotation, supervisory coaching, job enrichment, understudy
programs can be undertaken to update employee knowledge and skills.
Action plans and periodic review:
The matching process would uncover gaps. These need to be bridged through individual career
development efforts and organization supported efforts from time to time. After initiating these steps, it is
necessary to review the whole thing every now and then. This will help the employee know in which
direction he is moving, what changes are likely to take place, what kind of skills are needed to face new
and emerging organizational challenges. From an organizational standpoint also, it is necessary to find out
how employees are doing, what are their goals and aspirations, whether the career paths are in tune with
individual needs and serve the overall corporate objectives, etc.
CAREER DEVELOPMENT
Career Development is defined as the efforts that are made by the organization to equip its employees with
the skills, knowledge & experience that help them to perform the duties of their current as wellas future
jobs effectively. The organization develops and implements certain policies including counseling the
employees, promotion & opportunities to attain excellence that facilitate the employee to prepare their
career. Development of career actually promotes the knowledge, skills, and experiences along with the
behavior modification & techniques of refinement that promotes the addition of value for the employees
by improving their work.
In career development, human resource management has the vital importance that centers the entire
efforts of the organization. It is relatively different from the training in such a way that it has wide scope,
longer frame of time & broader focus. Moreover the purpose of training is limited to the performance
improvements but the goal of development is to make employees more capable and enriched.
In modern days the careers development not only fulfills the needs of the organization but also the needs
of the employees.
The career development is looked as essential by the organizations due to the following reasons.
 It is a method of prevention from job burnout
 The career information is provided to the employees
 The quality of work life is improved
 The affirmative action goals are met
In short the careers development becomes essential for the organizations to be sustained in the
competitive global environment.

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Career Development Methods:

There are many methods that are used extensively for the purpose of careers development. But mostly
these are used in combination of more than one method. Following are the commonly used methods of
career development.
1. Discussion with Knowledgeable Individuals:
In this method the subordinate is combined with his superior to agree on the best career development
activities. In certain cases guidance counselors & psychologists provide this service. In case of academic
institutions like colleges & universities, specialized career planning & development guidance is provided
to the students. Professors are usually responsible for such guidance.
2. Company Material:
There are certain organizations that have developed certain specific material for the development of its
employees. The developed material is in accordance with the needs of the organizations. Moreover the job
descriptions can be considered as good material that show the employees to decide either their strengths &
weakness match with the requirement of any offering job within their own organization.
3. Performance Appraisal System:
The performance appraisal system in the organizations can also be regarded as good source of career
development. When the strengths & weaknesses of employees are discussed with their relative supervisors
than the needs for the development of employees emerged clearly. If there is not possibility to overcome
the weakness of certain employee, then there can be a solution of alternative career path for that employee.
4. Workshops:
Certain organizations offer the workshops for their employees that last for two or more days so that the
employees can be able to develop their career within the organization. The career objectives are described
& match by the employees with the needs of the organizations. In other situations, the workshops are
presented at the community level so that the employees may be sent or they may start the visit themselves.
5. Personal Development Plans (PDP):
There are some organizations that encourage their employees to present their own plans of personal
development. Such plan consists of summary of needs of personal development of employees along with
the specified action list for the achievement. So the management encourages the employees to analyze
their weakness & strengths.

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Unit- III

TRAINING
Human Resource Management is concerned with the planning, acquisition, training & developing human
beings for getting the desired objectives & goals set by the organization. The employees have to be
transformed according to the organizations' & global needs. This is done through an organized activity
called Training.
Training is a process of learning a sequence of programmed behavior. It is the application ofknowledge &
gives people an awareness of rules & procedures to guide their behavior. It helps in bringing about
positive change in the knowledge, skills & attitudes of employees.
Thus, training is a process that tries to improve skills or add to the existing level of knowledge so that the
employee is better equipped to do his present job or to mould him to be fit for a higher job involving
higher responsibilities. It bridges the gap between what the employee has & what the job demands.
Concept
Training is the process of increasing the knowledge and skills for doing a particular job. It is an organized
procedure by which people learn knowledge and skill for a definite purpose. In other words, training is a
systematic programme of the organization which aims at increasing the aptitudes, skill and abilities of the
workers to perform specific job. By training, the employee can acquire new manipulative skills, technical
knowledge, problem solving abilities etc.
According to Edwin B.Flippo, “Training is the act of increasing the knowledge and skill of an
employee for doing a particular job”
Need for training
Training is crucial for organizational development and success. It is fruitful to both employers and
employees of an organization. An employee will become more efficient and productive if he is trained
well.
Training is given on four basic grounds:
1. New Hire Orientation
Training is particularly important for new employees. This can be conducted by someone within the
company and should serve as a platform to get new employees up to speed with the processes of the
company and address any skill gaps.
2. Tackle shortcomings
Every individual has some shortcomings and training and development helps employees iron them out.
For example divide the entire headcount in several groups to provide focused training which is relevant to
those groups - sales training, first time managers, middle management, senior leadership, executive
leadership.
3. Improvement in performance
If shortcomings and weaknesses are addressed, it is obvious that an employee's performance improves.
Training and development, however, also goes on to amplify your strengths and acquire new skill sets. It
is important for a company to break down the training and development needs to target relevant
individuals.
4. Employee satisfaction
A company that invests in training and development generally tends to have satisfied employees.
However, the exercise has to be relevant to the employees and one from which they can learn and take
back something. It will be futile if training and development become tedious and dull, and employees
attend it merely because they have to. As a company, weshould stress on industry specific training and
send many employees for international seminars and conferences that can be beneficial to them.
5. Increased productivity
In a rapidly evolving landscape, productivity is not only dependent on employees, but also on the
technology they use. Training and development goes a long way in getting employees up to date with
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new technology, use existing ones better and then discard the outdated ones. This goes a long way in
getting things done efficiently and in the most productive way.
6. Self-driven
Employees who have attended the right trainings need lesser supervision and guidance. Training develops
necessary skill sets in employees and enables them to address tasks independently. This also allows
supervisors and management to focus on more pressing areas.
Objectives of Training Programme
i) To impart to new entrants basic knowledge and skills,
ii) To assist the employees to function more effectively in their present position by exposing them to
the latest concepts, information and techniques and developing in them the skills required in their fields,
iii) To build up a second line of competent officers and prepare them as a part of their career
progression to occupy more responsible positions.
iv) To broaden the minds of the senior managers by providing them opportunities for interchange of
experiences within and outside with a view to correct the narrow outlook that may arise from over
specialization.
(v) To impart customer education.
Approaches to training
There are three approaches to training: (1) the traditional approach, (2) the experiential approach, and
(3) the performance-based approach. In the traditional approach, the training staff designs the objectives,
contents, teaching techniques, assignments, lesson plans, motivation, tests, and evaluation. The focus in
this model is intervention by the training staff. In the experiential approach, the trainer incorporates
experiences where in the learner becomes active and influences the training process. Unlike the academic
approach inherent in the traditional model, experiential training emphasizes real or simulated situations in
which the trainees will eventually operate. In this model, the objectives and other elements of training are
jointly determined by the trainers and trainees. Trainers primarily serve as facilitators, catalysts, or
resource persons. In the performance-based approach to training, goals are measured through attainment of
a given level of proficiency instead of passing grades of the trainees. Emphasis is given to acquiring
specific observable skills for a task.
Training Methods: On Job Training and off the Job Training Methods
A large variety of methods of training are used in business. Even within one organization different
methods are used for training different people. All the methods are divided into two classifications for:
A. On-the-job Training Methods:
1. Coaching
2. Mentoring
3. Job Rotation
4. Job Instruction Technology
5. Apprenticeship
6. Understudy
B. Off-the-Job Training Methods:
1. Lectures and Conferences
2. Vestibule Training
3. Simulation Exercises
4. Sensitivity Training
5. Transactional Training
A. On-the-job training Methods:
Under these methods new or inexperienced employees learn through observing peers or managers
performing the job and trying to imitate their behaviour. These methods do not cost much and are less
disruptive as employees are always on the job, training is given on the same machines and experience
would be on already approved standards, and above all the trainee is learning while earning. Some of the
commonly used methods are:
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1. Coaching:
Coaching is a one-to-one training. It helps in quickly identifying the weak areas and tries to focus on them.
It also offers the benefit of transferring theory learning to practice. The biggest problem is that it
perpetrates the existing practices and styles. In India most of the scooter mechanics are trained only
through this method.
2. Mentoring:
The focus in this training is on the development of attitude. It is used for managerial employees.
Mentoring is always done by a senior inside person. It is also one-to- one interaction, like coaching.
3. Job Rotation:
It is the process of training employees by rotating them through a series of related jobs. Rotation not only
makes a person well acquainted with different jobs, but it also alleviates boredom and allows to develop
rapport with a number of people. Rotation must be logical.
4. Job Instructional Technique (JIT):
It is a Step by step (structured) on the job training method in which a suitable trainer (a) prepares a trainee
with an overview of the job, its purpose, and the results desired, (b) demonstrates the task or the skill to
the trainee, (c) allows the trainee to show the demonstration on his or her own, and (d) follows up to
provide feedback and help. The trainees are presented the learning material in written or by learning
machines through a series called ‘frames’. This method is a valuable tool for all educators (teachers and
trainers). It helps us:
a. To deliver step-by-step instruction
b. To know when the learner has learned
c. To be due diligent (in many work-place environments)
5. Apprenticeship:
Apprenticeship is a system of training a new generation of practitioners of a skill. This method of
training is in vogue in those trades, crafts and technical fields in which a long period is required for
gaining proficiency. The trainees serve as apprentices to experts for long periods. They have to work in
direct association with and also under the direct supervision of their masters.
The object of such training is to make the trainees all-round craftsmen. It is an expensive method of
training. Also, there is no guarantee that the trained worker will continue to work in the same organization
after securing training. The apprentices are paid remuneration according theapprenticeship agreements.
6. Understudy:
In this method, a superior gives training to a subordinate as his understudy like an assistant to a manager
or director (in a film). The subordinate learns through experience and observation by participating in
handling day to day problems. Basic purpose is to prepare subordinate for assuming the full
responsibilities and duties.
B. Off-the-job Training Methods:
Off-the-job training methods are conducted in separate from the job environment, study material is
supplied, there is full concentration on learning rather than performing, and there is freedom of expression.
Important methods include:
1. Lectures and Conferences:
Lectures and conferences are the traditional and direct method of instruction. Every training programme
starts with lecture and conference. It’s a verbal presentation for a large audience. However, the lectures
have to be motivating and creating interest among trainees. The speaker must have considerable depth in
the subject. In the colleges and universities, lectures and seminars are the most common methods used for
training.
2. Vestibule Training:
Vestibule Training is a term for near-the-job training, as it offers access to something new (learning). In
vestibule training, the workers are trained in a prototype environment on specific jobs in a special part of
the plant.
An attempt is made to create working condition similar to the actual workshop conditions. After training
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workers in such condition, the trained workers may be put on similar jobs in the actual workshop.
This enables the workers to secure training in the best methods to work and to get rid of initial
nervousness. During the Second World War II, this method was used to train a large number of workers in
a short period of time. It may also be used as a preliminary to on-the job training. Duration ranges from
few days to few weeks. It prevents trainees to commit costly mistakes on the actual machines.
3. Simulation Exercises:
Simulation is any artificial environment exactly similar to the actual situation. There are four basic
simulation techniques used for imparting training: management games, case study, role playing, and in-
basket training.
(a) Management Games:
Properly designed games help to ingrain thinking habits, analytical, logical and reasoning capabilities,
importance of team work, time management, to make decisions lacking complete information,
communication and leadership capabilities. Use of management games can encourage novel, innovative
mechanisms for coping with stress.
Management games orient a candidate with practical applicability of the subject. These games help to
appreciate management concepts in a practical way. Different games are used for training general
managers and the middle management and functional heads – executive Games and functional heads.
(b) Case Study:
Case studies are complex examples which give an insight into the context of a problem as well as
illustrating the main point. Case Studies are trainee centered activities based on topics that demonstrate
theoretical concepts in an applied setting.
A case study allows the application of theoretical concepts to be demonstrated, thus bridging the gap
between theory and practice, encourage active learning, provides an opportunity for the development of
key skills such as communication, group working and problem solving, and increases the trainees”
enjoyment of the topic and hence their desire to learn.
(c) Role Playing:
Each trainee takes the role of a person affected by an issue and studies the impacts of the issues on human
life and/or the effects of human activities on the world around us from the perspective of that person.
It emphasizes the “real- world” side of science and challenges students to deal with complex problems
with no single “right” answer and to use a variety of skills beyond those employed in a typical research
project.
In particular, role-playing presents the student a valuable opportunity to learn not just the course content,
but other perspectives on it. The steps involved in role playing include defining objectives, choose context
& roles, introducing the exercise, trainee preparation/research, the role-play, concluding discussion, and
assessment. Types of role play may be multiple role play, single role play, role rotation, and spontaneous
role play.
(d) In-basket training:
In-basket exercise, also known as in-tray training, consists of a set of business papers which may include
e-mail SMSs, reports, memos, and other items. Now the trainer is asked to priorities the decisions to be
made immediately and the ones that can be delayed.
4. Sensitivity Training:
Sensitivity training is also known as laboratory or T-group training. This training is about making people
understand about themselves and others reasonably, which is done by developing in them
social sensitivity and behavioral flexibility. It is ability of an individual to sense what others feel and think
from their own point of view.
It reveals information about his or her own personal qualities, concerns, emotional issues, and things that
he or she has in common with other members of the group. It is the ability to behave suitably in light of
understanding.
A group’s trainer refrains from acting as a group leader or lecturer, attempting instead to clarify the group
processes using incidents as examples to clarify general points or provide feedback. The group action,
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overall, is the goal as well as the process.
Compensation includes all rewards that individuals receive as a result of their employment. Pay is the
money that a person receives for performing a job. Additional financial rewards other than base pay
include paid vacations, sick leave, holidays and medical insurance, and they are called benefits. Non-
financial rewards are non-monetary rewards, such as enjoyment of the work performed or a pleasant
working environment.
Safety and Health
Employees who work in a healthy and safe environment are more likely to be productive. Safety involves
protecting employees from work-related accidents and injuries. Health activities seek to prevent illness
and provide for general physical and mental well being.
Employee and Labor Relations
Business firms are required by law to recognize a union and bargain with it in good faith if the firm’s
employees want the union to represent them. This is still true despite the fact that the private-sector
membership has fallen to 9 percent.
 Training Evaluation
The process of examining a training program is called training evaluation. Training evaluation checks
whether training has had the desired effect. Training evaluation ensures that whether candidates areable
to implement their learning in their respective workplaces, or to the regular work routines Techniques of
Evaluation
The various methods of training evaluation are:
 Observation
 Questionnaire
 Interview
 Self-diaries
 Self-recording of specific incidents
Types of evaluation
Evaluating training (includes monitoring) addresses how one determines whether the goals orobjectives
were met and what impact the training had on actual performance on the job.
Generally there are four kinds of standard training evaluation:
1. Formative
2. Process
3. Outcome
4. Impact.
2. Formative evaluation provides ongoing feedback to the curriculum designers and developers
to ensure that what is being created really meets the needs of the intended audience.
3. Process evaluation provides information about what occurs during training. This includes
giving and receiving verbal feedback.
4. Outcome evaluation determines whether or not the desired results (e.g., what participants are
doing) of applying new skills were Achieved in the short-term.
5. Impact determines how the results of the training affect the strategic goal

 PERFORMANCE APPRAISAL
Performance appraisal
The basic purpose of performance appraisal is to facilitate orderly determination of an employee’s worth
to the organization of which he is a part. However, far determination of the worth of an employee can take
place only by appraising numerous factors.
Performance appraisal also known as merit rating/ merit evaluation/performance evaluation. Performance
appraisal means a systematic evaluation of personality and performance of each employee by his
supervisor or some other person trained in the techniques of merit rating. It employs various rating
techniques for comparing individual employees in a group, interms of personal qualities or deficiencies
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and the requirement of their respective jobs.
Definition:
“performance appraisal includes all formal procedure used to evaluate personalities and contributionsand
potentials of group members in a working organization.”..Dale yoder.
“Performance appraisal is a process of evaluating an employee’s performance of a job in terms of its
requirements.”…Scot, clothier and Spiegel.
Features/ characteristics of Performance appraisal
1. It is a continuous process.
2. It is a systematic examination of an employees’ strength and weakness in terms of job.
3. It is a scientific study.
4. It is arranged periodically according to a definite plan.
5. It helps in securing information necessary for making objective and correct decision on
employees.
6. It is an impartial rating of an employee excellence.
Objectives of the performance appraisal:
1. To improve the job performance of employees and also to identify there development
potentialities.
2. To diagnose the strength or weakness of individuals so as to access the area in which training
is required.
3. To prevent grievance and un disciplinary activities of the personnel.
4. To evaluate the success of training programmes
5. To motivate the employee to perform well.
6. To provide coaching, counseling and career planning to employees.
7. To test the effectiveness of recruitment, selection, placement and rotation process.
8. To facilitate research in personnel management.
9. To establish harmonious relationship between employer and employees.
10. To provide valid information for deciding promotion, transfer, placement, punishment,etc.
Process of performance appraisal:
1. Determining objectives: The first step in the process is determination of objectives of
performance appraisal. Based on the objectives the remaining stages of process are initiated.
2. Establishing Performance standard or criteria: The standards are set up for appraising the
performance of employees. Job performance standards are the work requirements that are expected from
an employee on a particular job. these are the criteria against which to judge results or performance. These
standards may be of physical nature. If work performance cannot be measured be measured in quantitative
terms for instance, in case of a personal quality then it should be mentioned in the appraisal form.
The person who are required to do appraisal, number of times, criteria, etc must be decided in advance.
3. Communicating standards: A after determining the standard, it should be communicated to the
employees. They must be aware of what is expected out of them. It should also communicate to
evaluators. If there is any objection, it may be recorded. The standard can be modified in the feedback
information obtain from evaluators and employees.
4. Measuring performance: In this stage actual performance of employees are measured. With
the help of personal observation, written report, face to face interview, etc information regarding
performance are gathered.
5. Comparison: Actual performance and standards are compared in order to find out the
deviations.
6. Discussion: the results of the appraisal are then communicated to the employees. The
deviations and reasons for deviations are analyzed and discussed with the employees. The discussion will
enable the employees to know the strength and weakness of his own.
7. Corrective action: By way of conducting discussion with the employees, the steps required for
improving performance can be assessed and corrective action can be taken. Coaching,
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training,counseling,etc can be conducted to improve the performance of employees.
Methods of Performance appraisal:
1. Traditional method
 Ranking method
 Paired comparison method
 Grading system
 Graphic scale
 Check list
 Forced distribution
 Critical methods
 field review
 Confidential report
 Free essay method
 Group appraisal
 Comparative evaluation
2. Modern method
 Assessment centre
 Human resource accounting
 Behaviourly anchored rating scales
 Appraisal by MBO
 Psychological appraisal
Essential requirements of performance appraisal:

1. A good atmosphere should exist in the organization to creaqte confidence and mutual trust
among employees.
2. The objectives of the performance appraisal must be definite and clear.
3. Well defined performance standards should be developed. Procedures and techniques adopted
in appraisal is also standardized.
4. Proper training should be imparted to appraisers.
5. The appraiser should focus on job related behavior and performance of employees.
6. Proper documentation of appraisal should be done.
7. There should be feedback regarding the performance and participation in fixation of
standards.
8. The size, number of employees and organization set up must be considered while designing
the appraisal system.
9. There must be post appraisal review.
10. A review committee should be constituted for reviewing and appeal against appraisal results.

Limitation of Performance appraisal

1. There is a possibility of inconsistent ratings.
2. An evaluator may appraise an employee based on the general impression i.e., Halo
effect.
3. There is a possibility of personal bias
4. In order to avoid the possibility of giving a high or low rate, the evaluators may opt for
average rating
5. Different standards are followed by different supervisors for evaluation.
6. There is a lack of training in appraisal techniques which reduce reliability.
7. Due to lack of knowledge and skills, the raters may fail to evaluate performance
accurately.
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8. There is a resistance from trade unions.
9. There is a possibility of similarity errors.
10. The evaluators have varied range of rating.
Problems of performance appraisal
Since performance appraisal is conducted by human beings, it is subjected to a number oferrors, biases,
weaknesses and pitfalls.
Some of these are discussed below.
1. The halo effect:
The halo effect is introduced when an overall impression of an individual is judged on the basis of a single
trait. A high rating on one trait leads automatically to high rating on all other trait. Also, a very high rating
may be given to protect an employee for whom there may be personal sympathy.
2. Constant error:
This error is a reflection on the trait of the rater. Some raters are, by nature, too liberal, others too strict and
some tend towards rating most people in the middle.
3. Recency of events:
There is a tendency of many evaluators to give much more weight to the recent behaviour of the candidate
than the past behaviour. This is based on the reflection that the future trend is established by the mere
recent behaviour.
4. The central tendency:
It is the most commonly found error. It is the tendency of most raters to give average ratings to all or the
center of the scale. This may be due to the fact that a very high rating or a very low rating could invite
questions, criticisms or explanations.
Accordingly, an average rating is safer. It could also be due to the fact that the rather lacks sufficient
knowledge about the applicant and hence, does not want to commit himself one way to another.
5. Errors of variable standards:
It is quite possible that organisations follow different standards of performance. Some divisional heads
may require much higher quality of performance than others.
6. Other miscellaneous biases:
There may be some built - in biases in the minds of the rater, based upon his own perception of things,
people and performances. A person may be rated higher because he is a 'nice' person or because of his
seniority.
METHODS OF PERFORMANCE APPRAISAL
1. Rating Scales: Rating scales consists of several numerical scales representing job related
performance criterions such as dependability, initiative, output, attendance, attitude etc. Each scales ranges
from excellent to poor. The total numerical scores are computed and final conclusions are derived.
Advantages – Adaptability, easy to use, low cost, every type of job can be evaluated, large number of
employees covered, no formal training required. Disadvantages – Rater’s biases
2. Checklist: Under this method, checklist of statements of traits of employee in the form of Yes or
No based questions is prepared. Here the rater only does the reporting or checking and HR department
does the actual evaluation. Advantages – economy, ease of administration, limited training required,
standardization. Disadvantages – Raters biases, use of improper weighs by HR, does not allow rater to
give relative ratings
3. Forced Choice Method: The series of statements arranged in the blocks of two or more are
given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR
department does actual assessment. Advantages – Absence of personal biases because of forced choice.
Disadvantages – Statements may be wrongly framed.
4. Forced Distribution Method: here employees are clustered around a high point on a rating
scale. Rater is compelled to distribute the employees on all points on the scale. It is assumed that the
performance is conformed to normal distribution. Advantages – Eliminates Disadvantages – Assumption
of normal distribution, unrealistic, errors of central tendency.
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5. Critical Incidents Method: The approach is focused on certain critical behaviors of employee
that makes all the difference in the performance. Supervisors as and when they occur record such
incidents. Advantages – Evaluations are based on actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases, chances of subordinate improvement are high.
Disadvantages – Negative incidents can be prioritized, forgetting incidents, overly close supervision;
feedback may be too much and may appear to be punishment.
6. Behaviorally Anchored Rating Scales: statements of effective and ineffective behaviors
determine the points. They are said to be behaviorally anchored. The rater is supposed to say, which
behavior describes the employee performance. Advantages – helps overcome rating errors. Disadvantages
– Suffers from distortions inherent in most rating techniques.
7. Field Review Method: This is an appraisal done by someone outside employees’ own
department usually from corporate or HR department. Advantages – Useful for managerial level
promotions, when comparable information is needed, Disadvantages – Outsider is generally not familiar
with employees work environment, Observation of actual behaviors not possible.
8. Performance Tests & Observations: This is based on the test of knowledge or skills. The tests
may be written or an actual presentation of skills. Tests must be reliable and validated to be useful.
Advantage – Tests may be apt to measure potential more than actual performance. Disadvantages – Tests
may suffer if costs of test development or administration are high.
9. Confidential Records: Mostly used by government departments, however its application in
industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR) and
may record ratings with respect to following items; attendance, self expression, team work, leadership,
initiative, technical ability, reasoning ability, originality and resourcefulness etc. The system is highly
secretive and confidential. Feedback to the assessee is given only in case of an adverse entry.
Disadvantage is that it is highly subjective and ratings can be manipulated because the evaluations are
linked to HR actions like promotions etc.
10. Essay Method: In this method the rater writes down the employee description in detail within a
number of broad categories like, overall impression of performance, promoteability of employee, existing
capabilities and qualifications of performing jobs, strengths and weaknesses and training needs of the
employee. Advantage – It is extremely useful in filing information gaps about the employees that often
occur in a better-structured checklist. Disadvantages – It its highly dependent upon the writing skills of
rater and most of them are not good writers. They may get confused successdepends on the memory power
of raters.
11. Cost Accounting Method: Here performance is evaluated from the monetary returns yields to
his or her organization. Cost to keep employee, and benefit the organization derives is ascertained. Hence
it is more dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are collection of
different methods that compare performance with that of other co-workers. The usual techniques used may
be ranking methods and paired comparison method.
 Ranking Methods: Superior ranks his worker based on merit, from best to worst. However
how best and why best are not elaborated in this method. It is easy to administer and explanation.
 Paired Comparison Methods: In this method each employee is rated with another employee
in the form of pairs. The number of comparisons may be calculated with the help of a formula as under.
N x (N-1) / 2
Modern Methods
1. Management By Objectives: It means management by objectives and the performance is rated
against the achievement of objectives stated by the management. MBO process goes as under.
 Establish goals and desired outcomes for each subordinate
 Setting performance standards
 Comparison of actual goals with goals attained by the employee
 Establish new goals and new strategies for goals not achieved in previous year.
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Advantage – It is more useful for managerial positions.
Disadvantages – Not applicable to all jobs, allocation of merit pay may result in setting short-term goals
rather than important and long-term goals etc.
2. Psychological Appraisals: These appraisals are more directed to assess employees potential for
future performance rather than the past one. It is done in the form of in-depth interviews, psychological
tests, and discussion with supervisors and review of other evaluations. It is more focused on employees
emotional, intellectual, and motivational and other personal characteristics affecting his performance. This
approach is slow and costly and may be useful for bright young members who may have considerable
potential. However quality of these appraisals largely depend upon the skills of psychologists who perform
the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943. An
assessment center is a central location where managers may come together to have their participation in
job related exercises evaluated by trained observers. It is more focused on observation of behaviors across
a series of select exercises or work samples. Assessees are requested to participate in in-basket exercises,
work groups, computer simulations, role playing and other similar activities which require same attributes
for successful performance in actual job. The characteristics assessed in assessment center can be
assertiveness, persuasive ability, communicating ability, planning and organizational ability, self
confidence, resistance to stress, energy level, decision making, sensitivity to feelings, administrative
ability, creativity and mental alertness etc. Disadvantages – Costs of employees traveling and lodging,
psychologists, ratings strongly influenced by assessee’s inter-personal skills.
Solid performers may feel suffocated in simulated situations. Those who are not selected for this also may
get affected.
Advantages – well-conducted assessment center can achieve better forecasts of future performance and
progress than other methods of appraisals. Also reliability, content validity and predictive ability are said
to be high in assessment centers. The tests also make sure that the wrong people are not hired or promoted.
Finally it clearly defines the criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of performance data on
an individual group, derived from a number of stakeholders like immediate supervisors, team members,
customers, peers and self. In fact anyone who has useful information on how an employee does a job may
be one of the appraisers. This technique is highly useful in terms of broader perspective, greater self-
development and multi-source feedback is useful. 360-degree appraisals are useful to measure inter-
personal skills, customer satisfaction and team building skills. However on the negative side, receiving
feedback from multiple sources can be intimidating, threatening etc. Multiple raters may be less adept at
providing balanced and objective feedback.

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MODULE-4 COMPENSATION MANAGEMENT

Meaning:

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 Dr. Sadananda Sahoo, Associate professor, G IET university Gunupur
Compensation of employees for their services is an important responsibility of Human resource
management. Every organization must offer good wages and fringe benefits to attract and retain talented
employees with the organization. If at any time, the wages offered by the firm are not competitive as
compared to other firms, the efficient workers may leave the firm. Therefore, the workers must be
remunerated adequately for their services. Compensation to workers will vary depending upon the nature
of job, skills required, risk involved nature of working conditioning ,paying capacity of the employer,
bargaining power of the trade union, wages and benefits offered by the other units in the region or
industry, etc.
Concept:
Compensation refers to a wide range of financial and non-financial rewards to employees for their services
rendered to the organization. It is paid in the form of wages,salaries and employee benefits such as paid
vacations, insurance,maternity leave,free travel facility, retirement benefits, etc.
Types of compensation:
1. Base compensation:
Base compensation involves monetary benefits in the form of wages and salaries. The term ‘wage’ is used
to denote remuneration to workers and the term ‘salary’ is usually defined to mean compensation to office
employees, foremen, managers and professional and technical staff.
2. Supplementary compensation:
Supplementary compensation involves ‘fringe benefits’ offered through several employee services and
benefits such as housing, subsidized food, medical aid, crèche,etc. it is also known as non-wage
payments/service programmes/employee benefits. It helps to retain the employees on a long term basis.
Wage and salary administration:
Wages and salaries represent a substantial part of total costs in most of the organization. Wage and salary
administration is essentially the systematic approach to the problem of ensuring that employees are paid in
a logical , equitable and fair manner.
The most important objective of any pay system is fairness and equity. The term equity has three
dimensions:
1. Internal equity: This refers to the pay corresponding to difficulty level of the job assigned to
an employee. More difficult jobs should be paid more.
2. External equity: External equity ensures that an employee is compensated equally in
comparison to similar jobs in the labor market.
3. Individual equity: Individual equity highlights equal pay for equal jobs, i.e. each individual
pay is fair in comparison to others doing the same/similar job.
Other objectives:

1. To acquire qualified competent personnel

2. To retain the present employees
3. To ensure desired behavior from employees.
4. To reduce labour cost
5. To simplify collective bargaining procedures and negotiations.
6. To promote organizational feasibility
7. To comply with wage legislations.
8. It helps in motivating employees for better performance.
Factors affecting wages/compensation:
1. Demand and supply of labour: wage is a compensation or price for the services rendered by a
worker. Wages are based on the demand and supply of labour force available in the market. If there is
huge supply of the labour,the wages will increase ,on the other hand, if there is a scarcity of labour force,
wage will increase.
2. Ability to pay: employer’s ability to pay is an important factor affecting wages not only for
the individual firm, but also for the entire industry. This depends on the financial position and profitability
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 Dr. Sadananda Sahoo, Associate professor, G IET university Gunupur
of the firm.
3. Cost of living: another important factor affecting te wage is cost of living of wages. This tend
to vary money wage depending upon the variation in the cost of living index following rise or fall in the
general price level and consumer index.
4. Productivity of workers: to the achieve the best result from the worker and to motivate him to
increase his efficiency, wages have to be productivity based. Productivity is the key factor in the
operations of a company.
5. Labour unions: organized labour able ensures better wages than the unorganized one. Higher
wages may have to be paid by the firm to its workers under the pressure of trade unions. If trade union fail
in their attempt to raise the wages and other allowance through collective bargaining they might resort too
strike, this exerts influence on employer to concede at leastpartial demands of labour union.
6. Government: several laws have been enacted by the government to protect the working class.
Laws on minimum wages,hours of work, equal pay for equal work,payment of dearness
allowance,bonus,etc. have been enacted to bring about measure of fairness in compensating the working
class. Thus, the laws enacted and labour policies framed by the government have an important influence
on wages and salaries paid by the employers.
7. Prevailing wage rates: wages in a firm are influenced by the general wage level or the wages
paid by the similar occupations in the industry,region and economy as a whole. External alignment of
wages is essential because if wages paid by the firm are lower than those paid by the other firms,the firm
will not be able to attract and retain efficient employees.

 Worker’s capacity.
 Educational qualification.
 Work experience.
 Hazards in work.
 Promotion possibilities.
 Stability of employment.
 Demand for special skills.
 Profits earned by the organization.
Elements of compensation:
Workers are compensated in the form of following benefits:
 Monthly wage and salary or total pay including wage, house rent allowance, dearness
allowance and city compensatory allowance.
 Bonus at the end of the year
 Economic benefits such as paid holidays leave travelconcessions.
 Contribution towards insurance premium
 Contribution towards retirement benefits such as employee provident fund
 Transport and medical facilities
Dearness Allowance
The Dearness Allowance (DA) is a cost of living adjustment allowance paid to Government
employees, Public sector employees (PSU)and pensioners in Pakistan, Bangladesh and India.
Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact
of inflation on people. Indian citizens may receive a basic salary or pension that is then supplemented by a
housing or a dearness allowance, or both. The guidelines that govern the DA vary according to where one
lives (for example, whether rural or urban).
Bonus:
A bonus is an additional compensation given to an employee above his/her normal wage. A bonus can
be used as a reward for achieving specific goals set by the company, or for dedication to the company.
Fringe benefits

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Supplementary compensation involves ‘fringe benefits’ offered through several employee services and
benefits such as housing, subsidized food, medical aid, crèche,etc. it is also known as non-wage
payments/service programmes/employee benefits. It helps to retain the employees on a long term basis.
These definitions are considered here one by one:
1. Minimum Wage:
A minimum wage is a compensation to be paid by an employer to his workers irrespective of his ability to
pay. The Committee on Fair Wage’ has defined minimum wage as “the wage must provide not only for the
bare sustenance of life, but for the preservation of the efficiency of the workers. For this purpose, minimum
wage must provide some measures of education, medical requirements and amenities”.
2. Living Wage:
A living wage is one which should enable the earner to provide for himself and his family not only the bare
essentials of food, clothing and shelter but a measure of frugal comfort including education for his children,
protection against ill-health, requirement of essential social’ needs and a measure of insurance against the
more important misfortunes, including old-age. Thus, a living wage represents a standard of living. A living
wage is fixed considering the general economic conditions of the country.
3. Fair Wage:
Fair wage, according to the committee on Fair Wage, is the wage which is above the minimum wage but
below the living wage. The lower limit of the fair wage is obviously the minimum wage; the upper limit is
set by the capacity of the industry to pay. The concept of fair wage is essentially linked with the capacity of
the industry to pay.
Differences Between Real Wages and Nominal wages
Definition of Real and Nominal wages
Real wage refers the compensation that takes inflation into consideration in the tabulation
Nominal wages on the other hand is just the payment done for labor done within an organization.

Determinants of Real and Nominal wages

Real wages are determined by the inflation rates and consider the purchasing power of a given
compensation amount.

Nominal wages however, don’t consider inflation and any market conditions. It is mostly determined by the
government set regulations such as minimum wages.

Formula used for Real and Nominal wages

Real wage is determined by a specific formula; Real Wage = (Old Wage * New CPI) / Old CPI where (CPI
is Consumer Price Index).
Nominal wages are not derived from any formula or mathematical calculation. It is simply based on what
the organization is willing to pay as compensation under the government regulations.
Purpose
The purpose of real wages is to maintain the purchasing power during changes in market conditions such as
inflation. Real wages help one determine the change in purchasing power by determining exactly what
goods and services can be purchased with the wages paid.

Nominal wages purpose is to compensate the time and efforts put into completing a task assigned.

Time Frame
Real wages take into account different periods in time, e.g the past years market conditions.

Nominal wage only considers the current point in time.

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What is Job Evaluation?
Job evaluation aims to provide this equity and consistency by defining the relative worth of different jobs in
an organization. Job evaluation is the process of determining the relative worth of different categories of
jobs by analyzing their responsibilities and consequently, fixation on their remuneration.
Job evaluation is a practice which seeks to provide a degree of objectivity in measuring the organizational
value of jobs within the organization and among similar organizations.
Process of Job Evaluation
The process of job evaluation involves the following steps:
1. Gaining Acceptance
2. Creating Job Evaluation Committee
3. Finding the Jobs to be Evaluated
4. Analyzing and Preparing Job Description
5. Selecting Method of Evaluation
6. Classifying Jobs
7. Installing Program
8. Reviewing Periodically
Gaining Acceptance
Before undertaking job evaluation, top management must explain the aim and use of the program to the
employees and unions. To elaborate the program further, oral presentations could be made. Letters and
booklets could be used to classify all relevant aspects of the job evaluation program.
Creating Job Evaluation Committee
It is not possible for a single person to evaluate all the key jobs in an organization. Usually, a job
evaluation committee consisting of experienced employees, union representatives, and HR experts is
created to set the ball rolling.
Finding the Jobs to be Evaluated
Every job need not be evaluated. This may be too taxing and costly. Certainly, key jobs in each department
may be identified. While picking up the jobs, care must be taken to ensure that they represent the type of
work performed in that department.
Analyzing and Preparing Job Description
This requires the preparation of a job description and also an analysis of job needs for successful
performance.
Selecting Method of Evaluation
The most important method of evaluating the jobs must be identified now, keeping the job factors as well as
organizational demands in mind.
Classifying Jobs
The relative worth of various jobs in an organization may be found out after arranging jobs in order of
importance using criteria such as skill requirements, experience needed, under which conditions the job is
performed, type of responsibilities to be shouldered, degree of supervision needed, the amount of stress
caused by the job, etc.
Weights can be assigned to each such factor. When we finally add all the weight, the worth of a job is
determined. The points may then be converted into monetary values.
Installing Program
On the evaluation process is over and a plan of action is ready, management must explain it to employees
and put it into operation.
Reviewing Periodically
In the light of changes in environmental conditions (technology, products, services, etc.) jobs need to be
examined closely. For example, the traditional clerical functions have undergone a rapid change in sectors
like banking, insurance, and railways, after computerization.

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New job descriptions need to be written and the skill needs of new jobs need to be duly incorporated into
the evaluation process. Otherwise, employees may feel that all relevant job factors based on which their pay
has been determined have not been evaluated properly.
 Wage Differentials
Definition of Wage Differentials
The word differential means relating to, or showing a difference, or making use of a specific difference or
distinction. Wage differential is an element of location selection that is a wage scale reflecting the average
schedule of workers’ pay in an area that takes into account the performance of related tasks or services.
Wages differ in different employments or occupations, industries and localities, and or between persons in
the same employment or grade. It may be termed as occupational wage differentials, inter-industry, inter-
firm, inter-area or geo graphical differentials and personal differentials.
Causes for Wage Differentials
Wage differentials come into existence because of the following elements:
1. Deviations in the competency level of the manpower, which may be due to initiate quality, pedagogy
level, and working environment available for the workers.
2. The existence of non-rivalry groups because of the hurdles in the way of the movements of
manpower from low paid to high paid jobs.
3. Variations in the social admiration of job.
4. Deviations in the characteristics of employment and occupations.
The nature characteristics and the degree of wage deviations are specified by the elements like as the
situations existing in the market, the degree of unionization and the absolute negotiation strength of the
employers and employee.
Types of wage Differentials
The common types of compensation differentials could be classified as follows:
1. Employee Based
Compensation deviation also exists at personal level. There are so many people in an organization with
having alike qualifications and they are not provided with similar salaries in the same organisations. This is
because they have acquired distinct skills instead of they may have same educational background or
qualification. This occurs more when skill-based compensation system is followed as against job based
compensation.
Nature of job matching personality can be stated as i.e., the type of employment, level of competency,
working style and degree to which he/she or an employee can do perform the job independently. They can
be classified as:
economy, and the requirements of social justice also directly or indirectly affect wage differentials.
1. Deviations in Occupational Wage: Deviations in the occupational wages are based on talent, skill,
experience and training acquired by the worker. These may be inter plant, inter industries. Inter plant
deviation means the deviations in pay for the similar job or task in the similar industry, on the other hand
inter industry variations are for the similar jobs or task between industries in the similar position. They are
the pay differences for the same kind of input.
2. Wage Differentials on skill based: The wage difference among different extent of skill of the
employees occurs under the skill based differentials. In any of the industry or organization in any state or in
country Skilled or competent employees realize more than semi-skilled, unskilled and temporary
employees. Basically organizations have noticed and make it compulsory to extent the skill or competency
variations to attract the required skilled employees.
3. Gender Based Differentials: Generally need of male and female employee depends upon the
nature of job some of the jobs may need a masculine role and some may need a feminine role for its
effective performance. These circumstances helps to employ women and man employee as par the job
requirements but the difference in the capacity or ability to perform the job the pay or wages may vary
accordingly, and it may create wage differentiation’s.

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4. Performance Based Differentiation: The degree of efficiency or competency mandatory to
perform any task or job also differentiated the compensation. Some of the jobs may require non automatic
work, some may require semi automation efforts and some may needed fully automation which only to be
supervised by a single person. Secondly, the nature of job i.e. simple or complex also creates
differentiation’s in compensation packages.
5. Experience Based Differentiation: There is a great difference in the compensation package of any
fresher and experienced employee. Wages at the starting level gets an increment or increased as per the
organizational rules of considering the experience of any employee. Experience propound expertise and
employee can improve the quality and productivity. This increase may change the level of excellence
acquired, level of extent of supervision needed, and the number of years of experience. Such
differentiation’s are stated as the experience or expertise based differentiation’s.
2. Industry and Organization Based
Industrial differentials also can be stated as the occupational differentials comes in existence due to the
requirement of different competency level and instability in demand and supply of manpower having such
kind of competency or skills. Compensation package usually determined on the basis of skills required to
complete a specific job. So highly specified jobs needed higher degree of competency and pay higher for
this, and vise versa. Linked with this, scarcity of labor supply also induces the higher wages and salaries.
Different organizations lies within the same industry and at the same location provide different
compensation to employees having same background. Organizational differentials occurs due to the
organizational policies followed for the recruitment and the ability to pay of any organization For example,
most of the multinational organizations working in India provides higher salaries to their employees as
compared to their counterparts of Indian origin. Similarly, larger organizations provide higher salaries as
compared to smaller organisations.
Industry and organization based differentiation’s states that payment of compensation as per the nature of
the job or task, industrial types, technical knowledge or expertise required, organization capacity to pay
according to the size of the organization, these can be discussed as follows:
1. Nature of the organization and job: The compensation packages may differentiated or depends
upon the nature of the organization, whether organization using a Hi-Tech process for operation, non-
automation technique, automation in operations, manufacturing, repairing or machining shop, process
industry, service industry, software or IT industry etc. Compensation is provided according to the
performance and skill level required for performing a effective job
2. Size of the organization: The Size of the organization specify its paying capacity, span of control,
budget on personnel and relative strength to specify the compensation packages. Larger the organizations
provide higher salaries as compared to smaller organizations.
3. Technology required: As per the nature or requirement of job organization used the technology,
and for the using of this technology required skilled, competent and experts which becomes the element for
fixing the differential compensation packages.
4. Intra Industry (inter plant) based differentials: In the similar plant or industry, the employer
may provide different-different compensation packages, based on deviations in the quality of job,
competency level of employee, imbalance in the demand and supply of employee in labor market, and
differences in efficient utilization of plant or machinery. Other factors, which reflect wage differences,
could be (a) Technology up gradation (b) Managerial efficiencies (c) capacity to pay and (d) Age and size
of organization.
5. Inter industry based differentials: These differences comes in existence when the similar
occupation worker charged differentially at the same location and at the same time but in the different
industries Inter industries compensation deviation generally occurs because of the degree of unionization,
their negotiation power, financial capacity of organization to pay. Some other components also effects such
as advancement in technology, managerial efficiency, financial strength and age of the organization effects
inter industry differentials.

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6. Regional Differentials: Apart from industrial lifeless differentials, there may also deviations in
compensation on the basis of region. Such kind of differences are existed in different countries of the world
as well as different regions within a country. Such differences occurs due to the differences in cost of living
as per the location of survival , and lack of mobility of manpower from one region to another, it means the
employees are rigid in nature. For example, wages and salaries are higher in metropolitan cities as
compared to other cities; higher in cities as compared to rural areas.

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