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GE3754 - HUMAN RESOURCE MANAGEMENT

UNIT 1

HUMAN RESOURCE
Human resources consist of groups of people who are ready to provide their services
for the benefit of the organisation.

According to Michael J. Jucius, "Human resource are a whole consisting of inter-

related, inter-dependent,According to Edwin B. Flippo, "Human resource management is the
planning, organising, directing, and controlling of the procurement, development, compensation,
integration, maintenance, and separation of human resources to the end that individual,
organisational, and social objectives are accomplished".

EVOLUTION OF HUMAN RESOURCE MANAGEMENT

Human resource management has emerged as a wide field in today's scenario. It began
in India in 1800 B.C. Historical evolution of HRM can be described in following phases:

Human
Resource
Human Approach
Relations
Trade Movement
Unionism
Scientific
Management
Industrial
Revolution

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1) Industrial Revolution:
 During this phase, mechanisation and technological advancement took place at a rapid
speed.
 At that time, jobs were divided and workers had to do only a small part of their job rather
than the entire portion.
 Thus, specialisation increased workers' speed and efficiency but at the same time jobs
became more tedious.
 Employers concern was only to fulfil the targets of production not with fulfilling the
demands of the workers.
 Government was not at all active to work for the welfare of the workers.

2) Scientific Management:
 F.W. Taylor introduced the concept of scientific management to increase the efficiency of
the workers.
 It is a methodical analysis which involves breaking of task into many small parts and re-
organise them to get a perfect combination.
 Taylor also stated that people's physical and mental ability must match with the tasks
which are to be performed in the job.
 Therefore, highly proficient people must be removed and supervisors should provide
training to the low performing employees in order to make thers highly skilled.
 Taylor further emphasised on using incentives to motivate employees.

3) Trade Unionism:
 Trade Union is a group of workers formed to achieve common goals.
 Workers became aware of their rights and they started protesting against the exploitation
by employers.
 They also started protesting against unfair labour practices with the help of trade unions.
 Collective bargaining, dealing with the worker's grievances regarding the conditions of
working, wages and perks, and disciplinary procedures are the ways through which trade
unions help the workers.

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4) Human Relations Movement:

 During 1930s and 1940s, Elton Mayo along with his colleagues from Harvard conducted
Hawthorne experiment.
 The experiment showed that job design and rewarding were not the only factors which
affected productivity of employees, but there are some societal and psychological factors
also influence employees' productivity.
 The wide implementation of the behavioural science techniques was due to the human
relations movement.
 It involves using supervisory training techniques, providing assistance to workers,
counselling programmes and strategies to make the relations stronger between
management and labour.
 These programmes helped the workers to share their work- related problems as well as
problems related to their personal life with the counselling professionals.
 Human relations movement was also affected by the increasing power of trade unions
because of the Wagner Act.
 The Act gave workers the legal right of collective bargaining with employers on matters
like salary, job stability, benefits and other working conditions.

5) Human Resource Approach:

 According to 'pet milk theory". "happy workers are productive workers or happy cows
give more milk".
 Gradually, the practice of considering employees as assets became prominent.
 The Human Resource Approach believes that the main source of satisfaction and
motivation of employees is their job or the task.
 This approach focuses on involvement of individuals in the organisational decision-
making".
 Further, the focus is on the following things:
i. Individuals like their work if they are involved in the establishment of
objectives which they have to attain.
ii. Many individuals show more self-direction, self-control and creativity than
needed in their present jobs (Theory Y).

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iii. The primary job of the manager is to exploit the full human potential to serve
the organisation.
iv. Healthy, safe, comfortable and convenient workplace environment should be
provided by the managers so that employees can fully utilise their abilities.
v. The manager must encourage employees to self-direct themselves and
contribute in all the significant matters of the organisation.
vi. Increasing subordinates influence, self-direction and self-control will lead to
enhanced working efficiency.
vii. Employees job satisfaction may increase if they will be able to make
maximum utilisation of their work potential.

HRM FUNCTIONS

MANAGERIAL FUNCTIONS
Manager's first and foremost job is to manage people. Managerial functions of human
resource management are as follows:

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1) Planning:
 It is concerned with pre-planning of activities to be done in future.
 Planning is related to strategy formulation of personnel programmes and changes in
advance that will help in the achievement of organisational goals.
 HRP (Human Resource Planning), hiring, selection, T&D (Training and Development)
are some of the HR functions which require planning.

2) Organising:
 It is the procedure of aligning people and other resources so that they can work together
in order to achieve a goal.
 For this, firms need to establish relationships among the employees so that they can
mutually contribute to fulfil the organisational goals.

3) Directing:
 Directing is concerned with telling employees to perform a specific task and make sure
that the work done is as per the given directions.
 The voluntary and effective co-operation of employees for the fulfilment of
organisational goals is possible through right direction.
 It is the responsibility of the human resource management to motivate, develop
communication network, integrate people, maintain discipline and resolve employee
grievances in a quick and proper way.

4) Coordinating:
 Achievement of organisational objectives is possible only through the coordination
among the groups and their activities.
 Developing, interpreting, and reviewing policies and programmes of the employees are
the responsibility of human resource department.
 The last decisions may be taken by the line managers but personnel department can give
suggestions for improvements

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5) Controlling:
 Controlling is the process of examining and verifying if everything is as per the set plans
standards.
 Human resource management functions should be controlled and made effective are
auditing of training programmes, analysis of labour turnover records, directing morale
surveys and conducting separate interviews.

OPERATIONAL FUNCTIONS
 Operational functions are the special activities which human resource people have to
perform for each and every department of the organisation.
 These are the regular functions of the human resource department.
 It focuses on all activities of the organisational workforce from their HR planning till
their exit.
 These functions are as follows:

1) Employment:
 It deals with acquiring and hiring the potential candidates for the attainment of objectives
of the organisation.
 Job analysis, manpower planning, recruitment, selection, induction, and placement, etc.
are the activities which are included in the employment function.

2) Human Resource Development:

 HRD is the procedure of building and transforming the knowledge, skills, creativity,
attitude, etc., according to the existing and upcoming requirements of the job and
organisation.
 It consists of performance evaluation, training and development, career planning and
development, etc.

3) Compensation:
 Compensation is about motivating employees by providing them reasonable and
satisfactory remuneration so that they can work more effectively.

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 Employee benefits, bonus, incentives, and social security benefits are the components of
compensation package.
 Job evaluation and wage and salary administration are the processes of compensation
management.

4) Human Relations:
 It is the procedure of integrating people through interaction at the workplace.
 It helps people to work collectively in a team to gain high productivity and satisfaction in
terms of money, mind and society.
 It involves dealing with employee grievances timely by a well-developed grievance
handling procedure, disciplinary action, and employee counselling to give them relief
from stress, frustration etc.

HUMAN CAPITAL
Human capital is a comprehensive concept that encompasses the knowledge, skills,
abilities, and health of individuals, which collectively contribute to their economic productivity
and potential.

IMPORTANCE OF HUMAN CAPITAL

The importance of human capital are as follows

1. Economic Productivity:
Human capital is a key driver of economic productivity and growth. Well-educated and
skilled individuals are more efficient in their work, leading to increased output and economic
prosperity.

2. Innovation and Creativity:

Educated and skilled individuals are better equipped to innovate and contribute to
technological advancements. A highly skilled workforce fosters a culture of creativity and
innovation, essential for progress in various industries.

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3. Competitive Advantage:
Nations and organizations with a well-educated and skilled workforce gain a
competitive edge in the global marketplace. Human capital is a critical factor in attracting
foreign investment and facilitating economic competitiveness.

4. Quality of Life:
Improvements in human capital, including access to education and healthcare,
contribute to an overall improvement in the quality of life. A healthy, educated population is
more likely to lead fulfilling lives and make positive contributions to society.

5. Adaptability and Resilience:

Highly skilled individuals tend to be more adaptable to changes in technology and
economic conditions. A workforce with diverse skills is better positioned to navigate challenges,
making economies more resilient.

6. Social Development:
Human capital development is closely linked to social progress. Investments in
education and healthcare contribute to reducing poverty, improving gender equality, and
fostering social cohesion.

7. Lifetime Earnings:
Individuals with higher levels of human capital typically earn more over their lifetimes.
Education and training enhance employability and open up opportunities for career advancement,
leading to higher income levels.

8. Health and Well-being:

The health aspect of human capital emphasizes the importance of a healthy workforce.
Healthy individuals are more productive, take fewer sick days, and contribute positively to
economic activities.

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9. Interconnectedness with Other Capitals:

Human capital is interconnected with other forms of capital, such as social and cultural
capital. A well-educated population tends to contribute positively to social and cultural
development, creating a more harmonious and cohesive society.

10. Long-term Development:

Investing in human capital is a long-term strategy for sustainable development. It lays
the foundation for continuous economic growth by ensuring that future generations are well-
prepared to meet the challenges and opportunities of an evolving world.

ROLES OF HR MANAGER

Several roles are fulfilled by HR manager. The nature and extent of these roles depend
on what top management and the staffs want from the HR manager. Three roles are typically
identified for an HR manager, which are as follows:

1) ADMINISTRATIVE ROLES:
The HR manager performs following administrative roles:

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i) Policy-Maker:
 HR manager acts as the policy-maker in an organisation.
 He assists the top management in designing the policies for hiring and retaining talent,
welfare activities, personnel records, wage and salary administration, work conditions,
etc.
 He facilitates an organisation in the appropriate implementation of human resource
policies.

ii) Administrative Expert:

 HR manager performs several administrative functions such as managing employee
records, HR related database, handling employee benefit claims, responding to questions
concerning leaves, medical and transport facilities, presenting necessary reports to
authoritarian agencies, etc.
 An HR manager must perform all these functions in an effective and efficient manner so
that the organisation can successfully meet the variable needs of the stakeholders.

iii) Advisor:
 HR manager as an advisor advises, suggests, counsels, and provides assistance to the line
managers in order to enable them to perform their tasks.
 These tasks can be resolving grievances, dispute settlement, and hiring and training of
employees.
 HR manager provides the organisation with the personnel advice regarding report
preparation, announcement of guidelines to the employees, and conveying required
information pertaining to the labour legislations, etc.

iv) Housekeeper:
As a housekeeper, HR manager aids the organisation in managing various activities
such as recruitment, prior-employment testing, background verification, wage and salary
administration,employee benefits and pension administration, programmes for employees' well
being. record maintenance, etc.

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v) Counsellor:
As a counsellor, it is the duty of an HR manager to share the employee's problems
pertaining to their job, superiors, peers, family wellbeing, economic and social status, etc., and to
counsel them on how they can tackle these problems.

vi) Welfare Officer:

It is the responsibility of the HR manager to take care of all the welfare activities being
carried-out in an organisation. HR manager being a Welfare Officer, offers various facilities such
as cafeteria, health care institution, creches, academic institutions, clubs, libraries, consumer
stores, etc.

vii) Legal Advisor:

As a legal advisor for the organisation, an HR manager helps in redressing the
grievances, dispute settlement, handling disciplinary issues, facilitating collective bargaining,
facilitating a platform for joint consultation, interpreting and implementing the labour laws,
making contracts with lawyers for lawsuits, filing and handling cases in various courts, etc.

2) OPERATIONAL ROLES:
By nature, these roles are tactical and include the following:

i) Recruiter:
It is important for an HR manager to look for the talent considering the increased level
of competition for individuals having the required set of qualifications, skills and work
experience.

ii) Trainer and Motivator:

HR manager needs to identify employees who require training and development at
regular intervals, arrange proper training and development programmes for them and providing
them valuable intrinsic as well as extrinsic rewards.

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iii) Liaison Officer:

 HR manager acts as a liaison officer in an organisation, who works as a bridge between
different departments within and outside the organisation.
 This role includes building and maintaining a good relationship with the departmental
heads to achieve the best utilisation of resources of one department by another.

iv) Mediator:
HR manager acts as a mediator to maintain industrial peace by resolving the conflicts
between two employees, supervisors and subordinates, and management and employees.

v) Employee Champion:
 HR managers are supposed to be the 'employee advocates' or 'company morale officers.
 In the competitive era of internationalisation, working situations of firms have changed
drastically.
 Therefore, to discover the area of interest of employees, an HR manager needs to look
into their hearts.

3) STRATEGIC ROLES:
The strategic roles include the following roles:

i) Strategic Partner:
 HR manager ensures the reliability and capability of employees contributing towards
the organisational goals.
 This role enables the HR manager to contribute towards developing and accomplishing
the goals and objectives of the business.

ii) Change Champion:

 HR manager as a change champion makes an organisation capable of matching up with
change or to exceed from the external rate of change.
 HR manager counsels the employees for their personal development and adaptation to
change both at individual as well as organisational level.

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COMPUTER APPLICATIONS IN HUMAN RESOURCE MANAGEMENT

 Information technology came to use in the field of HR more than four decades ago.
 The dawn of the internet era together with the web created an eruption of HR related
systems and applications.
 Today, IT has become an integrated part of HR systems. Following are some of the
applications of IT in HR:

1) E-Recruitment/Applicant Tracking:
 E-recruitment is alternatively known as applicant-tracking system.
 E recruitment enables the organisation to post employment advertisements online in order
to encourage and attract applicants.
 Application tracking system selects suitable applicants for the job and makes
arrangements for interview and hiring processes.
 E-recruitment helps in maintaining profiles of candidates, allows search for the required
talent and refer jobs to others.
 It helps in reducing managerial tasks, besides saving precious time and money that are
needed for conducting recruitment process.

2) E-Training:
 E-training offers and monitors employee training programme either online or in a
classroom-based environment.
 Trainees communicate with the trainers and progresses in the programme at their own
speed.
 E-training enables delivering relevant matter to learners in any part of the world.
 It makes use of different media and websites for tracking training programmes, outlining
skills obtained by trainees, and updating competency requirement of trainees.
 It ensures that HRM is capable of delivering what is required by the organisation, i.e.,
skilled and experienced trainers.
 Further, it analyses the effectiveness of training programmes.

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3) Electronic Performance Support Systems (EPSS):

 EPSS delivers online training and mentoring programmes.
 With the help of EPSS, managers and employees can get any information about the
organisation.
 Online performance management systems serve as an effective communication tool.
 Through it, managers are able to set key employee objectives, competencies and
performance.

4) E-Payroll:
 E-payroll system electronically gathers information about employees' attendance and
work record, which can be used for analysing employee performance.
 They compute deductions from the salary and create periodic pay-cheques and tax
information.
 This data and accounting information are then transferred to the general ledger by the
payroll system, where they are posted and consequent operations are undertaken.
 E-payroll systems generally merge e-payroll with e-finance systems.
 Various types of rules can be established by payroll systems for automatically
transferring and modifying the salary of employees with the help of simple formulae. It
employees are able to see private data related to them and get exclusive reports as well.

5) E-Benefits:
 E-benefits systems enable management to monitor and handle employee benefit plans.
 These plans may involve plans like medical and healthcare plans, insurance plans,
pension plans, stock option plans, etc.
 It also enhances the consistency in decision-making when it comes to compliance issues
at different levels of the organisation.

6) E-Self Service Human Resource:

 E-self service HR systems gather, handle and analyse all other types of information
related to HR.

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 For example, data related to employee profiles and addresses, recruitment and selection,
training and development, promotions and demotions, skill mapping and competencies
and compensation designing.
 It facilitates employees to use and update personal information.
 The system also facilitates in managing employee profiles, skills, resume, contact details,
self-appraisal reports, learning, benefits, and payroll.
 It helps the management in handling transfers, training, performance appraisals,
competency mapping, career planning and development, etc.

7) E-Time and Labour:

 E-time and labour automate the complete time and attendance records.
 This system facilitates required flexibility in data collection methods, human resource
allocation capacities and data evaluation.
 Further, it helps in establishing cost accounting capabilities.
 It determines rotation plans on the basis of employee shifts, work plans and employee
mobility and supports organisational policy related to holidays and overtime.

8) Telecommuting/Teleworking:
 It enables workers to work in a community work centre furnished with modern
computers, fax machines, router and other latest IT equipment.
 This technology prevents people to travel everyday for their work.
 They can deliver their work through "electronic highways" to their headquarters.
 Thus, teleworking bridges the gap between workplace and homes.

9) E-Enterprise Human Resources:

E-enterprise human resource services has following other applications:
 Matching vacant positions with prospective candidates,
 Recording important information as applicants to go through interview process
 Providing relevant information required for making selection decisions.

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Information is made available throughout the system with the help of e-enterprise. It is
noteworthy that as different parts of HR Series have common database, any duplication of data
or data errors is automatically deleted. Further, the most important advantage of using integrated
human resources is that information can be obtained quickly, which is very helpful in taking
instant decisions.

CHALLENGES OF HUMAN RESOURCE MANAGER

Human Resource (HR) managers face various challenges in their roles, including:

1. Talent Acquisition:
 Finding and attracting qualified candidates can be challenging in a competitive job
market.
 HR managers must develop effective recruitment strategies.

2. Employee Retention:
 Retaining skilled employees is crucial.
 HR managers need to create a positive work environment, offer growth opportunities, and
address concerns to reduce turnover.

3. Workplace Diversity and Inclusion:

 Managing a diverse workforce requires fostering an inclusive culture and addressing
issues related to discrimination or bias.

4. Employee Engagement:
 Keeping employees motivated and engaged is an ongoing challenge.
 HR managers need to design programs that enhance job satisfaction and promote a
positive workplace culture.

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5. Legal Compliance:
 Staying updated on labor laws and ensuring compliance is critical.
 HR managers must navigate complex regulations to protect both the company and its
employees.

6. Technology Integration:
 Adapting to new HR technologies can be challenging.
 HR managers need to leverage tools for recruitment, performance management, and
employee communication.

7. Training and Development:

 Identifying and providing relevant training opportunities for employees to enhance their
skills and stay competitive in their roles.

8. Performance Management:
Developing effective performance evaluation systems that are fair, transparent, and
contribute to employee development.

9. Workplace Wellness:
Addressing employee well-being, both physical and mental, to promote a healthy work-
life balance and reduce stress.

10. Succession Planning:

Developing strategies to identify and groom future leaders within the organization to
ensure continuity and leadership development.

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TRENDS IN HR POLICIES

1. Remote and Hybrid Work Models:

The COVID-19 pandemic accelerated the adoption of remote work. Many
organizations were exploring and implementing hybrid work models, combining in-office and
remote work to accommodate employee preferences.

2. Focus on Employee Well-being:

Companies were increasingly prioritizing employee well-being, recognizing the
importance of mental health, work-life balance, and overall job satisfaction. Well-being
programs and initiatives were gaining prominent.

3. Digital Transformation in HR:

Integration of technology in HR processes, including Al and automation for tasks like
recruitment, onboarding, and employee engagement.

4. Diversity, Equity, and Inclusion (DEI):

Organizations were developing strategies to address bias, promote diversity, and ensure
equal opportunities for all employees.

5. Learning and Development:

Continuous learning was a key focus, with companies investing in employee training
and development programs. Online learning platforms and personalized development plans were
becoming more prevalent.

6. Agile HR Practices:
HR departments were adopting agile methodologies to enhance responsiveness and
adaptability. This approach allows HR teams to quickly adjust to changing business needs and
evolving employee expectations.

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7. Employee Experience (EX):

Beyond traditional HR functions, there was a shift towards enhancing the overall
employee experience. This includes factors like a positive work environment, meaningful work,
and strong employee-employer relationships.

8. People Analytics:
Increasing use of data analytics in HR to make informed decisions. People analytics
involves analyzing HR data to gain insights into employee performance, engagement, and overall
organizational effectiveness.

9. Reskilling and Upskilling:

With rapid technological advancements, organizations were focusing on reskilling and
upskilling employees to ensure they have the necessary skills for the future of work.

10. Remote Onboarding and Offboarding:

Given the rise of remote work, HR was adapting onboarding and offboarding processes
to accommodate virtual environments, ensuring a smooth transition for new hires and departing
employees.

HR Accounting

According to Stephen Knauf, "Human resource accounting is the measurement and

quantification of human organisational inputs such as recruiting, training experience and
commitment".

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PROCESS OF HR ACCOUNTING
To execute the human resource accounting effectively and efficiently, it is required for
the management to follow a particular procedure. The procedure is as follows

1. HR Accounting Objectives
 There are certain goals that every company has to accomplish.
 In the first step, the company determines these goals and requirements to set a foundation
for the objectives of the human resource accounting system.

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2. Developing HR Accounting Measurements

 The second step in this process is to develop HRA measurements.
 For this purpose, the companies can use any of the two method i.e., Monetary and Non-
monetary Methods.
 These methods are helpful in calculating the cost and/or value of human resources.
 The management can use any one or both of these methods for the measurements.
 Before implementing any of these methods the validity and consistency of this method
must be checked.

3. Developing HR Accounting Database

 Certain factors work as the basis for human resource accounting.
 Such factors are time management sheet, the cost of each employee working in the
company, different psychological factors, etc.
 These factors form a database for human resource accounting.

4. Pilot Testing the System

 This is the fourth step in the process of human resource accounting.
 At this step, the management conducts a pilot test of the system.
 A pilot test is a type of sample test which is done on a selected number of people before
conducting the main test.
 This test aims to pre-check the working system before finalizing it as part of the
organization.
 Also, it helps in finding the flaws in the database which can be corrected before the final
implementation.

5. Implementing the Human Resource Accounting

 In the final step, the management will implement the human resource accounting in the
organization and will introduce the entire workforce and staff to a new system of
accounting.
 The importance and different methods of HRA are explained to the employees so that
they become familiar with the new concept and accept it wholeheartedly.

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HR ACCOUNTING METHODS
Human Resources (HR) accounting involves quantifying and analyzing the costs
associated with managing an organization's workforce. There are various methods to approach
HR accounting:

1. Historical Cost Method:

 Focuses on tracking historical costs related to recruiting, training, and maintaining
employees.
 Involves recording actual expenditures incurred in the past for HR activities.

2. Replacement Cost Method:

 Calculates the cost of replacing employees with similar skills and qualifications.
 Useful for assessing the potential financial impact of employee turnover.

3. Opportunity Cost Method:

 Evaluates the value of the best alternative forgone when a particular HR decision is
made.
 Useful for decision-making regarding investments in training, recruitment, or employee
development.

4. Present Value of Future Earnings Method:

 Estimates the present value of an employee's future contributions to the organization.
 Takes into account factors like productivity, performance, and career progression.

5. Standard Cost Method:

 Involves setting standard costs for HR activities and then comparing actual costs against
these standards.
 Helps in identifying variations and areas for improvement in HR processes.

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6. Activity-Based Costing (ABC):

 Allocates HR costs based on the actual activities that consume resources.
 Provides a detailed understanding of how HR resources contribute to different
organizational functions.

7. Return on Investment (ROI) Analysis:

 Measures the financial return generated from HR investments, such as training programs
or employee development initiatives.
 Helps in assessing the effectiveness and efficiency of HR practices.

8. Benchmarking:
 Compares HR performance metrics and costs against industry standards or best practices.
 Assists in identifying areas where the organization can improve its HR efficiency.
 It's important for organizations to choose an HR accounting method that aligns with their
specific goals, industry, and organizational structure.

HR AUDIT
According to Storey and Sisson, "HR audit is concerned with the gathering, analysing
information, and then deciding what actions need to be taken to improve performance".

HR AUDIT METHODS
Human Resources (HR) audits are systematic examinations of HR policies, practices,
and procedures to assess compliance, effectiveness, and efficiency. Here's an overview of HR
audit methods in detail:

1. Compliance Audit:
 Focuses on ensuring that HR practices adhere to local, state, and federal regulations.
 Examines areas such as labor laws, equal employment opportunities, and workplace
safety.

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2. Policy and Procedure Audit:

 Evaluates the development, communication, and implementation of HR policies and
procedures.
 Aims to ensure consistency, clarity, and alignment with organizational objectives.
3. Employee File Audit:
 Reviews personnel files to ensure completeness, accuracy, and compliance with record-
keeping requirements.
 Examines documentation related to hiring, performance, discipline, and termination.

4. Recruitment and Selection Audit:

 Assesses the effectiveness of recruitment and selection processes.
 Reviews job descriptions, interview practices, and documentation to ensure fair and
consistent hiring.

5. Training and Development Audit:

 Evaluates the organization's training programs and initiatives.
 Assesses whether training aligns with organizational goals and if it effectively enhances
employee skills.

6. Performance Management Audit:

 Examines the performance appraisal processes to ensure fairness, clarity, and alignment
with organizational objectives.
 Assesses the documentation of performance evaluations and goal-setting.

7. Compensation and Benefits Audit:

 Reviews the fairness and competitiveness of the organization's compensation and benefits
packages.
 Ensures compliance with relevant laws and regulations governing employee
compensation.

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8. Employee Relations Audit:

 Assesses the overall health of employee relations within the organization.
 Reviews communication channels, conflict resolution mechanisms, and employee
satisfaction.

9. HR Technology Audit:
 Evaluates the efficiency and effectiveness of HR information systems and technology.
 Ensures data security, accuracy, and the integration of HR systems with overall
organizational systems.

10. Succession Planning Audit:

 Assesses the effectiveness of succession planning processes.
 Reviews the identification and development of potential leaders within the organization.

11. Diversity and Inclusion Audit:

 Evaluates the organization's commitment to diversity and inclusion.
 Assesses policies, practices, and outcomes related to diversity in the workplace.

Conducting regular HR audits helps organizations identify areas for improvement, ensure legal
compliance, and enhance overall HR performance. It also provides valuable insights for strategic
decision-making and long-term planning.

APPROACHES TO HR AUDIT
The various approaches that can be used by the auditors to evaluate HR functions are

1) Comparative Approach:
 In this approach, the progress of one organisation is compared with the progress of other
organisation.
 Results of both the organisations are matched.
 In this case, other organisation is treated as a model organisation and the target is to
achieve the same result as that of the "model" organisation.

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2) Outside Authority Approach:

Under this approach, standards for comparison are set by external experts and these
yardsticks are used by the internal auditors of the organisation to evaluate their work.

3) Statistical Approach:
 In certain cases, statistical approach has to be followed in order to create statistical
performance measures with the help of organisation's current information.
 For example, to measure the rate of absenteeism, the amount of revenue received, etc.,
certain arithmetical methods are required to evaluate the performance.
 Thus, this statistical technique helps the auditors to get the information.

4) Compliance Approach:
In this approach, past performance and activities of the employees are reconsidered to
check their conformity with the organisational rules and regulations and whether there was any
violation of legal provisions or not.

5) Management by Objectives (MBO) Approach:

 In this approach, the auditor asks the departmental heads and operational managers to set
certain objectives for their departments.
 The degree with which these objectives are achieved determine the performance of the
departmental manpower.
 This assessment is then utilised by the HR audit to verify the genuine performance of the
employee and compare it with the "set targets.

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UNIT - II
HUMAN RESOURCE PLANNING
Human resource planning (HRP) is the process by which an organisation ensures that
it has the right number and kinds of people, in the right places, and at the right times, who are
capable of effectively and efficiently performing assigned tasks.
Proper Human Resource Planning; leads to the optimum utilization of human resources,
improves productivity, and helps in achieving the objectives of an organization.
Improper or no planning; it leads to disturbance in the flows of work, lower production, less
job satisfaction, high cost of production, and consistent trouble for managers.

IMPORTANCE OF HR PLANNING
1. Supply future personnel needs:
 Planning is vital for determining personnel needs for the future.
 Without Human Resource Planning, the organization can’t get the right person at the
right time and at the right cost.
2. Cope with change:
 Human Resource Planning enables the enterprise to cope (face) with changes in
competitive forces, markets, technology, products, and government regulations.
 Such changes often generate changes in job content, skill demands, number and type
of personnel.
 Shortages of people may be found in some areas while surpluses in other areas may
occur.
3. Tap/retain high talent personnel:
 There is often a scarcity of highly talented people.
 The time required to hire and develop such personnel is long.
 Much effort has to be devoted to long-range career development, counselling, planned
work assignments, and appropriate rewards.
4. Supports strategic planning:
 The modern competitive enterprise engages in strategic planning.
 Top management evaluates the environment in which the organization operates,
assesses the strengths and weakness of the enterprise, sets objectives, and determines
programs for implementation.
 Human resource planning is an essential component of strategic planning.

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5. Help to win government contracts:

 Thousands of companies and not-for-profit organizations sell products and services to
the government.
 To bid for government contracts, a firm must supply detailed information on its
manpower resources.
 To be competitive, it must plan for and develop appropriate human resources.
6. Foundation for human resource functions:
 Human resource planning provides essential information for designing and
implementing human resource functions such as recruitment, selection, personnel
movement (transfers, promoting, and layoffs and training and employee
development).

HUMAN RESOURCE FORECASTING

Human Resource Forecasting is the process by which an organisation estimates its future
human resource needs.

Human resource forecasting = Forecasting Human Resource Demands

+
Forecasting Human Resource Supplies

Three Ranges of HR forecasting

1) Short range forecasting (0-2 years)
2) Intermediate range forecasting (2-5 years)
3) Long range forecasting (beyond 5 years)

Forecasting Human Resource Requirements

An organisation's future demand for people is central to HR planning. A variety of forecasting
methods can determine an organisation's demand for human resources.

Causes of demand
1) External challenges - Economical challenges, Social political challenges,
Technological changes, Competitors.

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2) Organisational challenges- Strategic plans, Budgets, Sales and production forecasts,

New ventures, Organisation and job designs.
3) Workforce factors- Retirements, Resignations, Terminations, Deaths, Leaves of
absence.

Types of Demand forecasting techniques

Demand forecasting can be divided into two categories
1) Judgemental forecasting
2) Statistical Techniques

Judgemental forecasting methods

The most commonly used judgemental methods are
1) Bottom-up forecasting
2) Top-down forecasting
3) Delphi technique
4) Nominal group technique

Bottom-up forecasting
 Bottom-up forecasting is also called as unit forecasting.
 It is the simplest method.
 In this method, each unit, branch or department estimates its own future need for
employees.
 The sum of the estimated unit needs is the demand forecast for the whole
organisation.
 The estimates are approved by the next level of management and then forwarded to
the HR planning group, which integrates them into an organisation-wide forecast.

Top-down Forecasting
 In this method, estimates are made by top managers and executives.
 The top managers and executives meet to discuss how trends, business plans, the
economy, and other factors will affect the need for human resources at various levels
of the organisation.

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 Besides predicting the most likely future demand, these experts may also make
separate forecasts based on best and worst case scenarios.
 However the success of these estimates depends on the quality of the information
provided to the judgmental experts.

Delphi Technique
 Delphi technique, one of the highly structured judgmental method of expert
forecasting, is used to achieve group consensus on a forecast.
 In using this technique, the experts do not meet face to face.
 The first step in the Delphi process is to develop an anonymous questionnaire that
asks the experts for an opinion and why they hold that opinion.
 The results of this questionnaire are compiled and returned to the experts, along with
a second anonymous questionnaire.
 In this way, the experts can learn from each other and modify or elaborate their
positions in the second questionnaire.
 The process continues through several more rounds until the experts agree on a
judgment.
 Merits- improve the quality of decision making by minimising conflicts and
preventing the dominating the decision process.
 Demerits- not appropriate if results are needed quickly.

Nominal Group Technique (NGT)

 In this method, several people (managers and/or executives and/or experts) sit at
conference table and independently list their ideas on a sheet of paper.
 The ideas presented are recorded on larger sheets of paper so everyone can see all the
ideas. The group's ideas are then discussed and ranked by having each member of the
group vote for the three to five most important ones.

 The Delphi technique is more frequently used to generate predictions, and the NGT is
more frequently used to identify current organisational problems and solutions to
those problems.

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Statistical Techniques
The next method of human resource demand forecasting is with the use of several
statistical procedures The most commonly employed statistical procedures are
1. Regression analysis
2. Productivity ratio
3. Personnel ratios
4. Time series analysis
5. Stochastic analysis.

Regression analysis
 Past levels of various work load indicators, such as sales, production levels, and value
added, are examined for statistical relationships with staffing levels.
 If sufficiently strong relationships are found, a regression model is derived.
 Forecasted levels of the retained indicator(s) are entered into the resulting model and
used to calculate the associated level of human resource requirements.

Productivity ratios
 Historical data are used to examine past levels of a productivity index (P)
 P =Work load /Number of people
 If constant, relationships are found, human resource requirements can be computed by
dividing predicted work loads by P.

Personnel ratios
 Past personnel data are examined to determine historical relationships among the
employees in various jobs or job categories.
 Regression analysis or productivity ratios are then used to project either total or key
group human resource requirements, and personal ratios are used to allocate total
requirements to various job categories or to estimate requirements for non-key
groups.
Time series analysis
 Past staffing levels (instead of work load indicators) are used to project future human
resource requirements.

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 Past staffing levels are examined to isolate seasonal and cycloidal variations, long-
term trends, and random movement.

Stochastic analysis
 The likelihood of landing a series of contracts is combined with the personnel
requirements of each contract to estimate expected staffing requirements.
 Potential applications are mostly in government contractors and construction
industries.

FORECASTING HUMAN RESOURCE SUPPLIES

Judgmental forecasts
1. Replacement analysis
2. Succession analysis.
Statistical techniques
1. Markov Analysis
2. Goal programming.

Judgmental Techniques
Organisations use two judgmental techniques to make supply forecasts
(i) replacement analysis and (ii) succession analysis

Replacement Analysis
 Replacement analysis uses replacement charts.
 Replacement charts are visual representation of who will replace whom in the event
of a job opening.
 In other words, replacement charts are developed to show the names of the current
occupants of positions in the organisation and the names of replacements.
 Replacement charts make potential vacancies readily apparent and indicate what types
of positions most urgently need to be filled.
 Present performance levels of current employees can be used to estimate potential
vacancies.

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Succession analysis
 Succession analysis is similar to replacement, except that succession planning tends to
be longer term and more developmental and tends to offer greater flexibility.

Statistical Techniques
With the advent of personal computers, organisations are using more sophisticated
statistical model to forecast the supply of human resources. Two commonly used statistical
techniques for forecasting human resource supplies are (1) Markov analysis and
Goal programming

Markov Analysis
 Markov analysis is a simple method of predicting the internal supply of labour at
some future time.
 The heart of Markov analysis is the transition probability matrix.
 The transition matrix shows the probability of an employee staying in his present job,
moving from one position to another or leaving the organisation, for the forecast time
period.
 Markov analysis can help identify the lower retention probability, but it does not
suggest any particular solution to the potential problem.

Goal Programming
 Goal programming is a further extension of Markov analysis.
 The objective of goal programming is to optimise goals a desired staffing pattern- the
percentages of new recruits, and the total salary budget.

MATCHING SUPPLY WITH DEMAND

 Demand equals Supply
 Demand is less than Supply
1.Restricted hiring
2.Reduced hours
3.Job sharing
4.Early retirement
5.Layoffs

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 Demand is greater than Supply

1. Create recruiting
2. Compensation Incentives
3. Training programmes
4. Different selection standards

INTERNAL AND EXTERNAL SOURCES OF RECRUITMENT

RECRUITMENT
Recruitment is the process of identifying, attracting, interviewing, selecting, hiring
and on boarding employees. It involves everything from identification of a staffing need to
filling it.
Internal Sources of recruitment
1. Present employees
2. Employee Referrals
3. Former Employees
4. Previous Applicants

Present employees
 Promotion and transfer among present employees is the good source of recruitment.
 Promotion is the upgrading of an employee to higher position, earning, higher status,
pay and responsibilities.
 It is advantageous because employees are well-versed with the organization culture
 It motivates employees
 Cheaper one.
 It reduces requirement of training
 Transfer is the process of shifting an employee from one job to another without any
change in position, status and responsibilities.

Former Employee
 Retired and retrenchment employees may be come back to the company to work on
part time bases.
 Advantage: Employee performance already known.

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Employee Referrals
Existing employees refer their relative, family members friends to their company as
potential candidate to fill the vacancy.

Previous Applicants
 Applications from potential candidates are already lying with the organisation will be
used if vacancy is needed
 It is particularly for unskilled and semiskilled jobs.

Advantages of Internal sourcing recruitment

1. Familarity with own employees
2. Better use of talent internally available
3. Economical (inexpensive) Recruitment.
4. Improves morale
5. Motivates Employees

Disadvantages of Internal sourcing recruitment

1. Limited choice.
2. Discouraging competition
3. Stagnation of skills.
4. create conflicts

External sources of recruitment

1. Employment Agencies
2. Advertisement
3. Campus Recruitment
4. Professional Associates
5. Walkins
6. Deputation
7. Word of mouth
8. Raiding

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Employee agencies
 Like government employment agencies there are some private employment agencies
 The candidate just has to register.
 Their function is to invite job applications and short list suitable candidates.
 The final decision in the selection process will be done by the organization
representatives.
 Example - Datamatics, Ferguson Associates, Billimoria etc
 Advantage- Organization time will be saved.

Advertisement
 It is widely used method
 It generates many applications because the reach is high.

Campus Recruitment.
 Companies visiting educational institutions for recruitment purpose
 Advantage – Many candidates are available at one place

Professional Association
 They conduct placement activities to help new and experienced professionals to get
jobs.
 Some have publications that accept classify advertisments

Walkins
 Walkins are job seekers who arrive at the HR dept in search of job.
 Inexpensive recruitment
 it is also called as gate hiring

Deputation
 Deputation is the process of sending employee to another organisation for a short
duration of 2-3 years.
 No cost training
 Mostly occur in Government and public sectors

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Word of mouth
 In this method, the word is passed around the possible vacancies or openings in the
organisation.
 Advantage - It is economy (time & money)
 Disadvantage- non availability of candidate when needed

Advantages of external sourcing recruitment

1. Open process- attract large number of applicants.
2. Availability of talented candidates.
3. Opportunity to select best candidate.
4. Provides healthy competition.

Disadvantages of external sourcing recruitment

1. Expensive & time consuming
2. Unfamiliarity with organisation
3. Discourages existing employees

SELECTION PROCESS

Selection process is a series of steps through which applicants pass. After each step, the
applicants can either be accepted or rejected.

Phase 0 - Reception of applicants

Phase 1 - Initial screening
Phase 2 - Application Blank
Phase 3 - Employment Tests
Phase 4 - Employment Interviews
Phase 5 - Reference and background checks
Phase 6 - Physical examination
Phase 7 - Job offer decision

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Phase 0: Reception of Applicants

The basic objective at the recruitment level is to attract worth applicants as much as
possible so that there are more options available at the selection stage.

Phase 1: Initial Screening

 The actual selection process starts with the initial screening.
 The main purpose is preselection and the elimination of applicants who are obviously
not qualified for the job
 This procedure has two steps:
1. Screening inquiries
2. Screening interviews.
 Screening inquiries- based on the job description and job specification some of the
applicants can be eliminated. Factors that might lead to a negative decision at this
point include inadequate or inappropriate experience and education, gaps in the
applicant's job history.
 Screening Interviews: This is often called initial screening interview or courtesy
interview. In this screening interview, straight forward questions such as
qualifications, experience, and salary are asked also HR describes the job in detail.
This makes the unqualified or marginally qualified to voluntarily withdraw from
candidacy.
Phase 2: Application Blank
 The next step in the selection process is for those applicants who were successful in
the initial screening to complete an application blank
 An application blank, also known as application form.
 It is a form that is completed by the applicant providing information such as
education, experience, work history, some personal data, and various background
demographics.
 The application blank quickly collect verifiable historical data from the candidate.
 It is highly structured in which the questions are standardised and determined in
advance
 This information gives an indication of an applicant's suitability for a job.

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Phase 3. Employment Tests

 Once the applicants have been screened by application blank, the next step is to
undergo employment tests.
 Employment testing is used to help identify the candidates with the greatest potential
for success on the job.
 Some of the more common employment tests used are follows
1. Intelligence tests
2. Aptitude tests
3 Personality tests
4. Performance tests
5. Interest tests

Phase 4: Employment Interviews

 Employment tests are normally followed by employment interviews.
 The aim of the interview is to determine an applicant's degree of suitability for a job
by matching the information give by the applicant to the job requirements
 The employment interviews, also known as selection interviews or in-depth
interviews.
 They allow a two-way exchange of information interviewers learn about the applicant
and the applicant learns about the employer.
 The applicants may be interviewed by a combination of human resource specialists,
executives or senior management within the organisation, a potential supervisor and
worker representatives.

Phase 5 Reference and Background Checks

 Most organisations check candidates references as part of the selection process.
 Reference and background checks are inquiries made of their prior employers, prior
co-workers, family, friends, teachers, schools, universities, and other sources of
information
 This is used to obtain information of the applicant's prior work performance, skills,
competencies, professional status, education, characters, and behavioural traits.

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Phase 6: Physical/ Medical Examination

 The candidate has to undergo a physical (also known as medical) examination
 The purpose of physical examination is to determine the applicant's physical
suitability for the position he/she is selected.
 Medical examination is used to establish the employees' health record, enrolling the
new employee in health-related employment benefits, including health and accident
insurance, disability insurance, and life insurance.

Phase 7: Job offer decision

 The final hiring decision takes one of the following three forms
 Clinical judgment method: This method is an informal evaluation of the applicants
and a subjective selection.
 Weighted compromise method: This method requires the assignment of weights for
the various criteria used in the selection process and the calculation of an aggregate
score for each candidate.
 Multiple cut-off method: This method is a sequential process in which each applicant
is required to meet specific standards at each step in the evaluation.
 Thus by employing any one of the above methods, the successful individuals are
selected and given the employment offer

EMPLOYMENT TESTS
Intelligence tests
To measure the candidate's mental capacity with respect to verbal comprehension,
quantitative skills, and memory.

Aptitude tests
To measure a person's particular job skills as well as the potential for acquiring those
skills.
Personality tests
To measure a variety of personality traits and characteristics.
Interest tests
To measure the candidate's occupational interests in terms of likes and dislikes for
different job opportunities

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Situational tests
To evaluate individuals in a real life situation by asking them to cope with or solve
critical elements of a real job.
Performance simulation tests
To assess the applicant's performance on specific tasks that are representative of the
actual jobs
Worksampling
To demonstrate that applicant possesses the necessary talents by actually doing the
tasks.
Assessment centers
To evaluate a candidate's managerial potential.

EMPLOYMENT INTERVIEWS
An interview is a conversation or verbal interaction, normally between two people.
The intention of employment interviews are to probe into areas such as assessing candidates'
motivation, ability to work under stress, interpersonal skills, and ability to fit-in the
organisation

Types of Interviews
Interviews can be classified in many ways. Based on the degree of structure and the
interview format, interviews can be categorised into five types. They are
1. Unstructured (or non-directive or free) interviews
2. Structured (or patterned) interviews
3. Mixed (or semi-structured) interviews
4. Problem-solving interviews
5. Stress-producing interviews.

Unstructured Interviews
 Unstructured interviews are also known as non-directive interviews or free interviews.
 In the unstructured interview, questions are not planned in advance, and interviews
with different candidates may cover quite different areas of past history, attitudes, or
future plans.

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 In this, the interviewer develops questions as the interview proceeds, uses general
questions, from which other questions are developed.
 The advantage is the freedom it allows the interviewer to adapt to the situation and to
the changing stream of applicants

Structured Interviews
 The structured interviews is also known as patterned interviews or standardised
interviews.
 In a structured interview, all questions are planned in advance and asked each
candidate in exactly the same order.
 It offers greater consistency and accuracy than some other interviews
 This approach improves the reliability of the interview process.

Mixed Interviews
 Mixed Interviews are also referred to as semistructured interviews or action
interviews or depth interviews.
 In the mixed interviews, interviewers use a blend of structured and unstructured
questions.
 This semistructured interview involves some planning on the part of the interviewer
but also allows flexibility in precisely what the interviewer asks candidates.
 In fact, this mixed interviews are most commonly in practice.

Problem-Solving Interviews
 Problem-solving interviews focus on a problem or series of problems that the
applicant is expected to solve.
 These are hypothetical situations and the applicant is asked what should be done.
 Both the answer and the approach used by the applicant are evaluated
 It reveals the applicant's ability to solve the types of problems presented.

Stress Interviews
 The stress interview is a special type of interview designed to create anxiety and put
pressure on the applicant to see how the person responds.

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 When the job involves much stress, this stress interview is used to learn how the
applicant will respond.
 The interview consists of a series of harsh questions asked in rapid succession and in
an unfriendly manner.

DIFFERENCE BETWEEN RECRUITMENT AND SELECTION (2 MARK)

RECRUITMENT SELECTION

Recruitment is the process of advertising Selection is the process where a company

for vacancies, attracting, interviewing, picks the best candidate out of the hundreds
selecting and hiring employees. of applicants received.

Involves everything from the identification Involves choosing the right candidate from
of a staffing need to filling. the application received

Occurs first Follows recruitment

The main objective is to encourage large no The main objective is to select the right
of candidates to apply for a post. candidate for the post.

ORGANIZATION ATTRACTION
Employee perceives the organisation to be the best place to work. In other terms, their
desirability to work in that organisation.
Factors
1. Job security
2. Base pay
3. Health care benefits
4. Organization reputation
5. Career Development
6. Retirement Benefits
7. Promotion Opportunities
8. Good Relationship with managers and co-workers.

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INDUCTION
 Induction is also known as orientation or indoctrination.
 Induction is a technique by which a new employee is rehabilitated into his surroundings
and introduced to the practices, policies and purposes of the organization.
 The purpose of an induction is to welcome a newcomer, make feel at home and generate
him a feeling that his job however small is a meaningful and has significant part in the
organisation.

Objectives
1) To create a favourable impression
2) To reduce anxiety and hazing
3) To develop realistic job expectations
4) To save time and effort
5) To improve new worker productivity
6) To strengthen organisation culture

Process
1) General orientation
2) Specific orientation
3) Follow-up orientation

General orientation
 The basic objective is to make the new employee feel at ease and comfortable.
 To motivate the employee to go through the orientation process seriously for the better
adaptability to the organization.
 It is conducted by the HR department.
 In this phase, general information about specific services such as pension, health and
wealth plans, safety programs etc are given.

Specific Orientation
 The basic objective is to enable an employee to adjust himself to his work and
environment.
 It is conducted by the job supervisor.

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 In this phase, the role, responsibilities of the individual in the department and the
departmental operating practices are explained.

Follow-up orientation
 The basic objective is to find out whether the employee is reasonably acquainted with
the organisation, work and co-workers.
 It is done within one week to six months from the time of initial hiring and orientation.
 It is conducted either by a supervisor or a HR specialist.
 It determines how well the employee is adjusting and permits evaluation of the
orientation program.

METHODS
The key parts of the employee induction programme are:
1. Meet colleagues
 Introduce them to their team and consider assigning them a buddy for extra support.
 The employee will be more eager to start working if they’re made to feel welcomed
and they’re part of the team already.

2. Tour of workplace
 Familiarise employee with their new surroundings, showing them where they can find
the restrooms, the first aid box, the fire exits and any kitchen facilities.
 By showing them their surroundings and having their workstation and equipment
ready for them, make employee feel valued and important.

3. Health and safety

 On the first day of the induction process, the new employee should know health and
safety procedures and receive any necessary training.
 Different types of roles will require different levels of training, but as a minimum
requirement, employees should know how to assess and minimise common workplace
risks, and be informed about emergency procedures.

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4. Get all the necessary documents sorted

 All employees need to signed a written statement of employment (usually in the form
of an employment contract) on their first working day.
 HR collect their bank details for payroll.

5. Get to grips with company policies

 It’s a good idea to grant all new employees access to an online employee handbook
which covers all policies and procedures of the company.
 This will detail any legal requirements they’ll have to abide by, as well as company
policies surrounding dress code, annual leave, sickness absence etc.

6. Understand their role

 The employees are invited to a meeting where they explain the key responsibilities of
their new role, what they expect from employees and how their work will contribute
to the wider company.
 This will encourage them to work hard and excel in their role.

7. Identify any training needed

 By the end of the induction process, the employer will likely have a good idea of how
well the employee be able to perform their role.
 This way they can organise further training or tasks in order to ensure they’re fully
equipped.

8. Organise first probation meeting

 Giving feedback to new employees is essential in keeping them on the right track and
giving them motivation to maintain a high standard of work.
 By this meeting they understand how well employees are settling in.

SOCIALIZATION
Socialization refers to a long lasting process of scheduled and unscheduled, informal and
formal activities by which an individual attains attitudes, behaviours and knowledge of an
organisation and adapt its culture. Socialization is defined as a process of adaptation to a new
culture of the organisation.

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PROCESS

Pre arrival Stage

This state clearly states that every individual who has joined the organization has his
own set of values, attitudes and expectations. When an experienced people enter an
organization they bring the cultural values of previous organization whereas the fresher has
only conceptual knowledge and little information related to the organizational functioning
which has been taught in class. During selection process, organization seek to find out those
candidates who can easily adjust with the organizational culture. So it is necessary for fresher
as well as experienced person to adapt to the culture.

Encounter Stage

Once the candidate joins the organization, he enters the encounter stage. During this
stage, the individuals tackle with the reality which may be opposite to their expectations
about their jobs, colleagues, employers and organization. If expectation meets the reality,
then encounter stage confirms the perception of their candidate. The experienced candidate
has to forget his previous values and beliefs before learning new values otherwise he may
feel exhausted and might leave the job.

Metamorphosis Stage

Candidates who newly joined the organization try to overcome the issues faced during
encounter stage. This simply means undergoing modifications. This stage is finished as soon
as the candidate becomes familiar with the job and surroundings, understood the rules and
regulations and feel themselves as the part of the organization.

Methods
The different methods which can be used to transfer the organisational norms and values to
the employees are
 Stories

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 Rituals
 Material Symbols
 Language
Stories
 The most popular method by which individuals work and communicate based on their
experience.
 In order to learn the organisational values and norm with the help of stories, it will
require the circulation of oral and informal description of events regarding the
organisation, different rules, its founders, and other practices followed in
organisations.
 A true the point of view about the organisation is created by these stories rather than
the things written in the organisational documents

Rituals
 Rituals can be seen as the recurring sequences of actions which express and
strengthen the crucial values of the organisation, like identifying who are the
important individual, which objectives are most important, or which ones are not
essential.
 For example, in many organisation the top performers are rewarded, which signifies
the importance of high performance.

Material Symbols
 In order to communicate about particular meanings, different material symbols are
used by the organisations.
 For example, different facilities which are provided to an individual by the
organisation can reflect his status in the firm.
 Different sizes of rooms, tables, nameplates etc, are used to exhibit these differences.

Languages
 The acceptance of culture is confirmed when these languages are learnt by the
members and thus by accepting it, culture is also preserved.
 In course of time, different terminologies and languages are used by the organisations
to represent different equipment, key employees, offices customers, suppliers etc.

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 Once these terminologies are accepted and adopted by new members, these serve a
common thread which binds the members of different cultures.

IMPORTANCE OF SOCIALISATION
1)Helps In Understanding Organisation Culture:
 Socialisation makes the employee feel comfortable in the organisation.
 It makes the employee aware about values, procedures and customs of the company
so that employees can understand them as well as adjust themselves in the
organisation.

2) Contributes to Employee's Long-Term Success:

 Socialisation is very helpful in an employee's long-term success.
 Employees, who properly understand their roles and responsibilities in the
organisation a more contended, more engrossed with their career prospects and more
adjusting in nature.
 Hence, there are chances that such employees have higher salary than these
employees who are not properly socialised.

3) Helps in Adjustment:
 Socialisation helps the employee to easily adapt to the new surroundings and thereby
tries to minimise the cultural shock which might be suffered by the fresher.

4) Helps in Employee Participation:

 Employee participation refers to the degree of involvement of employees with their
job and their willingness to put additional effort to attain the organisational goals.
 It is considered as an important element of competitive advantage in various
organisations.
 Thus, participative employees are more socialised because they easily get adjusted to
the new job, new group, and even the entire organisation.

5) Provides Job Satisfaction:

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 Socialisation gives job satisfaction to new employees because they are able to
understand their duties and responsibilities and also realise the basis on which their
performance will be analysed.

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UNIT III
TRAINING
Meaning
Training can be defined as the systematic attempt to enhance the specific skills,
desired behaviour and knowledge of employees which are necessary for performing a job
effectively.
Definition
According to Planty, Cord and Efferson, “ Training is the continuous, systematic
development among all levels of employees of that knowledge and their skills and attitude
which contribute to their welfare and that of the company
Purposes of training
 To increase employee efficiency.
 To upgrade employee’s skills.
 To avoid or delay managerial obsolescence
 To prepare employees for undertaking higher positions.
 To reduce employee turnover.
TRAINING METHODS
Companies adopt various methods to train their employees. They are
 On-the-job training methods
 Off-the-job training methods

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On-the-job training methods

 On-the-job training methods are based on the concept of learning by doing.
 In this method, trainees are provided with real job settings to do their jobs.
 The new employees gain knowledge of What is to be done from the existing
employees and improve their skills under the guidance of experienced ones.
 This type of training method is very popular and used by most of the corporations.
 Some of the well-known off- the-job training methods are

Job Instruction Training (JIT):

 The trainees are given instructions systematically one-by-one.
 These instructions are given by the experienced trainers. In this training method, the
trainees first observe their instructors while performing the task and then they perform
the task on their own.
 This helps the trainers to easily point out the faults committed by the trainees and
rectify them as soon as possible.

Apprenticeship:
 It follows the principle of "earning while learning".
 In this method, an expert and experienced person gives his knowledge and skills to
the trainee Who desires to learn that skill.
 Once the trainee has completed apprenticeship programme, trainee can apply for the
permanent job, if there is any.

Job Rotation:
 It is that process in which the employees are given the opportunity to perform the
functions of other departments in the organisation.
 When the employees are rotated from one department to another department or from
one division to other division, they gain new knowledge and experience about the
different jobs performed by different people in the organisation.
 Job rotation takes place either in the form of promotion or transfer.
 This training method is the best way to transform an employee into an expert.

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Coaching:
 The guidance given by the superiors of the organisation to their subordinates is called
coaching.
 It's an unofficial and unplanned training method, it improves the bonding between the
employees and their superiors.
 The senior manager acts as a coach and guides the employees about how to perform
the task and how the mistakes can be rectified.
 Later, they also evaluate the performance of these employees.

Understudy:
 It is the method of preparing the trainees to perform the responsibilities of his trainer
or to occupy the senior position in future.
 In this method, when the superior or manager is about to get separated from the
organisation due to the reasons of transfers, resignation, retirement etc., his position is
allotted to that employee who has received training under him.
 This method is different from coaching because here the manager can select an
employee from his department.

Mentoring:
 In this method, training is given by a specialised and experienced person.
 Mentoring is usually done by senior employees where they try to enhance the skills of
junior employees.
 Many organisations use mentoring as a nurturing tool which fosters the understanding
and proficiency of their employees.

OFF-THE-JOB TRAINING METHODS

 Off- the-job training methods are based on the concept of 'learning by gaining
knowledge'.
 Under this method, the trainees are in a classroom which may be situated inside the
company or some outside place such as institutes or centres to provide the training.
 Because of outside location, trainee can learn freely without the stress of job.
 Some of the well-known off- the-job training methods are

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Lectures:
 It is a one- way communication method in which the mentor collects the entire
relevant data for the trainees and conveys a lecture using various teaching aids such as
models, chart papers, visual aids, audio aids, etc.
 Thus, it is the simplest method of providing techincal knowledge to the trainees.

Simulations:
 This training method depicts a real-life situation of the job that have happened in the
organisation in the past such as damage to any valuable thing.
 Several realistic examples can be shown to the trainees to prepare them to handle the
situations accordingly.
 By this, the organisation prepares the trainees well in advance about what may happen
on the job and how they have to deal with these types of situations.
 This method is used in those industries where on-the-job training can be expensive or
destructive, such as, aeronautical industry.

Case Study:
 Under this method, the real business cases are framed and provided to trainees.
 Trainees have to discuss it and give their ideas on how they would have tackled that
situation.
 This is one of the very common ways of imparting knowledge based on actual
business situations.

Role-Play:
 In this method, trainees are provided with an imaginary or real problem which is
concerned with the organisation. They are asked to assume identity of a particular
person and behave as if they are in that particular situation.
 In order to enhance their managerial skills, employees can make use of various visual
aids and tips given by their mentor while executing their performance.

In-Basket Exercise:
 In this method, the trainee is given all the relevant things like letters, reports, records,
etc. that are needed by managers.

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 The trainee is given a specific situation which managers confront regularly.

 He is asked to assess the situation, prioritise the things, justify his reasons and give
final decision on the issues raised during the exercise.
 The whole exercise is video-recorded and this improves their skills and abilities such
as problem-solving ability, time management, etc.

Conferences:
 A structured method of communicating thoughts to a large number of audiences who
are attending the event is called as a conference.
 Experts from specific fields come together to share their views on a common topic
and also obtain answers to their questions, if they have any.

Seminar:
 Another word for 'Seminar' is "Seed Plot" which means it is a base ground for gaining
knowledge.
 These are conducted by experienced and expert people who not only deliver the topic
in front of learners but also help them to share their ideas and explore their views
towards the topic of discussion.

Group Discussion:
 It is one of the very common training methods adopted by numerous organisations.
 Under this method, a topic is given to the group of trainees and they are asked to
actively participate in it and give their outlook towards the issue.
 The topic is given on the spot and thus, no time is given to the trainees to prepare the
topic.
 This method not only helps in solving the problem related to an organisation but also
creates a higher rate of interest and enthusiasm among the trainees.

Sensitivity Training:
 This training is related to emotions and sentiments.
 It is also called as T-group training or laboratory training.
 The assessment is based on the behaviour of 'one for the other'.

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 This training is carried out to make employees get aware and respect the feelings and
emotions of other co-trainees.

Syndicates:
 Syndicate training method has proved to be very useful training for higher
management.
 In this training method the employees form a group and get united to execute any
particular function.
 This method includes numerous groups who work together to achieve the
organisational training goals.

EXECUTIVE DEVELOPMENT PROGRAM

Objectives of Executive Development

Objectives of executive development for various levels of management are given
below:

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1) Top Management
i) To widen the perception of every manager about his position, role and responsibilities
within the organisation.
ii) To enhance the thought process and the ability to analyse in order to pinpoint the problems
and make the best decisions which are for organisation's good.
iii) To recognise technical, institutional and economic influences in order to tackle business
related issues.
iv) To determine various problems generally faced by the organisation and foresee future
problems so that precautionary actions can be taken.
v) To gain knowledge about problems related to human relationships.

2) Middle Line Management

i) To be absolutely clear about managerial duties and activities.
i) To develop problem-analysing abilities and corresponding competencies to take the
required action.
iii) To acquaint managers with the effects of business laws, financial accounting and business
statistics on managerial functioning.
iv) To impart knowledge of all aspects of managerial problems and be acquainted with, and
be aware of the importance of interdepartmental relations.
v) To understand the role of motivation and interpersonal relationships in performing
management functions efficiently.
vi) To inculcate a sense of responsibility among managers to play leadership roles effectively.

3) Middle Functional Executive and Specialists

i) To enhance the knowledge of business operations and functions in particular areas like
marketing. finance, production, and human resource.
ii) To increase the level of expertise in management techniques like operations research,
quality control, work study, etc.
iii) To stimulate out-of-the-box thinking so as to establish improved methods and procedures.
organisational functions.
iv) To understand various
v) To comprehend problems related to human relations.
vi) To develop problem-solving ability in one's functional domain.

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On-the-Job Methods
Various on-the-job methods include the following:
Coaching:
In this method, the trainee is coached by a supervisor who instructs the trainee and
imparts job-related knowledge to him.

Job Rotation:
Job rotation is specifically used for managers to match the manager's present skills
and the skills which are necessary for the future job.

Understudy:
 An individual may undergo the process of understudy when the organisation aims to
develop an individual for a higher managerial post.
 Understudies are rotated among various managers.

Mentoring:
 Mentor is defined a wise and busted guide or advisor.
 In an organisation, a senior manager acts as a mentor to a junior member.

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 Thus mentoring has a vital role in conveying knowledge and skills from a senior
manager to a junior employee.

Committee Assignments:
 It is also referred as junior board or multiple management.
 A junior board act as a shadow of the board of directors to enable young managers get
some insight into the intricacies involved in managing a company, insights about
decision-making, strategy conceptualisation and policy formulation.
 The junior board is aimed at grooming young and energetic managers for shouldering
higher responsibilities efficiently in future.

Planned Progression:
 It is a method used by organisations to give managers a clear picture of their way to
growth and development.
 Managers are made aware of their present status vs their skills, knowledge and
performance about the future.
 A manager thereby knows the inputs that may be required for progress to the
achievement of his goal.

Creation of "Assistant-to" Positions:

 Creating an "Assistant-to" position is assigning a position that enables trainee to assist
and work closely with an experienced manager, who can observe the trainee closely to
determine his developmental needs.
 The manager can assign specific jobs to the trainee to evaluate the his competency on
the specific job, as well as his decision-making abilities.

Temporary Promotions:
 An individual is appointed as an "acting" manager in place of a manager who may be
on a leave or an Outstation duty or when a post has fallen vacant. Temporary
promotion is a win-win situation for the organisation and the acting manager.
 Organisation gets benefited as the managerial post is now being looked after and is no
more empty, while the acting manager gets the benefit of experience and
developmental opportunities.

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OFF-THE-JOB METHODS
Following are the off-the-job methods of management development:

Case Study:
Case study is a very useful technique, particularly for developing an executive's
decision-making and analytical skills.

Incident Method:
 It aims to develop intellectual ability, practical judgement skills, and social awareness
of managers.
 Incidents are modelled on the basis of actual situations that had occurred in other
organisations.
 In this technique, trainees are developed using a group process.

Role-Playing:
 Role-playing is a technique that helps the executives to understand individuals better.
 This method enables trainees to learn from imaginary experiences that they get
through role-playing.

In-Basket Technique:
 This method helps to develop organising, planning and problem-solving skills.
 The in-basket technique places executives in real-life situations where they are asked
to execute typical management activities and tasks which are required to be carried-
out on a daily basis, in the normal course of their job.

Business Games:
This method helps to develop organisational ability, quick thinking, responses and
leadership qualities.

Sensitivity Training:
 It includes sensitivity to emotional feelings of self and others.

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 An important benefit is increased awareness in executives about their own behaviour

and how others see their actions, better sensitivity to other's behaviours, and a better
understanding of various group processes.

Simulation:
Simulation helps to develop decision-making skills, which can be put to good use for
solving problems in the shortest possible time.

Grid Training:
 The managerial grid, a six- phase technique.
 It takes into account five principal managerial styles; these styles represent different
combinations of the two attributes, "concern for people" and "concern for
production".
 This technique helps to develop quality of leadership in executives.

Conferences:
This method develops an executive's ability to modify his attitudes as when need
arises, for the benefit of the organisation.

Lectures:
 Lecture is a mode of delivery of information from a lecturer to the audience.
 It is used for management development since earlier times.
 This is best suited to transmit more knowledge in a short time period to a large pool of
managers.
 Its drawback is that it is a one-way transmission of information and hence does not
enable active participation of the audience.

Special Projects:
 In this technique, a trainee is assigned a project which is linked closely to the
objectives and targets of his department.
 An example of such a project is the "action learning" project
 In this project, the management generates real problems for the trainees to tackle.

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 Trainees might also be provided a written assignment that specifically mentions the
aims, target dates, action plans and the name of the supervisor for keeping an eye on
the assignment until its completion.

BENEFITS/IMPORTANCE OF TRAINING
1) Decrease in Production Expenditure:
 Training helps the employees to do their work to the best of their abilities in the most
economic way.
 It results in maximum use of resources available within the organisation.
 This helps the organisation to cut their cost on re-work and non-economical methods.

2) Reduces Chances of Accident:

 A trained person uses machines very efficiently because he has been taught to use it to
the full capacity
 This reduces the chances of accident or mishaps.

3) Steadiness in the Organisation:

 Training helps the employees to work efficiently.
 This helps the organisation to free the supervisor from supervising them.
 It also boosts confidence of the employees, who work with dedication and without
absenteeism.

4) Increases Employee's Confidence:

 The trained workers are able to do their jobs in appropriate ways and can understand
the procedures and methods without any difficulty.
 Hence, employees gain confidence and start working with their full potential to attain
job satisfaction.

5) Improved Levels of Quantity and Quality:

 Training leads to better production of the goods in large quantity, which are superior
in quality as well.

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6) Identification of Efficient and Non-Efficient Employees:

 Training helps to differentiate between an efficient and non-efficient person.
 With the help of training, it is easy to find the person who is able to learn and perform
the tasks quickly and those who are slow learner and performers.

7) Minimum Need of Supervision:

 If a trained person is operating machinery, there will be no need of supervisor as the
employee himself is sufficient enough to do a good job.

8) Useful for Managers:

 As managers are free from the workload of supervision, it becomes easier for them to
focus on other vital issues of an organisation.

9) Improves Understanding Power:

 Training gives the person better understanding of procedures.
 They can understand the technical details of the procedure on their own, which helps
in delivering better results.

RESISTANCE TO TRAINING
 In the corporate world, resistance to training is a big hurdle for many trainers and
instructional designers.
 Employee training is much needed for achieving success.
 Despite the significance of training in the success of employee and the organisation,
training is generally resisted by both the managers and the employees.
 They argue that training has nothing to do with their work improvement and it is only
distracting them.
 However, it is the responsibility of the trainer to make them realise that training is an
important part of their employment and it is essential for them.
 The different sources of resistance to training are

1) Group Resistance
 If the objectives of the training programme are assumed to be conflicting with the
group objectives, then any person co-operating with the trainer is seen as a traitor.

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 For example, a teamwork programme aimed at improving the productivity might be

seen as responsible for lay-offs in the organisation. Under such circumstances,
employees may collectively protest against the programme and this should be tackled
in the following manner:
i) By taking the issue head-on and not avoiding it.
ii) By dealing with the opponents when there is no reconcilement.
iii) By not blaming a particular person.
iv) By pointing out feelings and beliefs and confirming that some people may
have problem.
v) By showing interest in employees' grievances.

2) Resistance to Change:
 People will initially find it very difficult to adopt altogether new approaches.
 Under such circumstances, trainee may adopt following strategies to tackle
resistance by
i) Motivating individuals to adopt smaller changes.
ii) Motivating them to adopt and practice new skills without fear of being
mocked.
iii) Discovering the reason for resistance and encouraging interaction on the
subject.
iv) Showing the new practice by doing it oneself and getting opinion on it.
v) Collecting the positive opinion of individuals and propagating it.

3) Fear of Appearing Foolish:

A person may not try a new idea or practice because of the fear of being appearing foolish in
front of others.
The fear of embarrassment may stop people from adopting new techniques.
Following strategies may be adopted to tackle this situation by:
i) Developing an understanding that taking risks is essential for success.
ii) Discouraging negative atmosphere in the organisation. iii) Keeping the atmosphere light
and lively without any pressure on employees.

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SELF-DEVELOPMENT
MEANING
Self-development is also referred to as personal development or personal growth,
which means to develop oneself or an individual. Self-development can also be defined as
development of one's abilities.

DEFINITION
According to Stewart, "Self-development is defined as individuals improving their
knowledge, skills, and abilities through their own self-directed efforts."

STAGES OF SELF-DEVELOPMENT
1) Personal Audit:
An audit should be conducted regarding the existing position and the various
activities which can be done for improvement.

2) Setting Self-Development Objectives:

Establishing the objectives and targets regarding points of achievement having both
work related and personal targets.

3) Identifying Development Needs:

Identifying the skills and knowledge necessary for the accomplishment of
objectives.

4) Constructing the Development Plan:

 Perform an analysis regarding the information obtained from personal audit and
determine various development goals and gaps.
 The development plan depends on these gaps.
 The personal growth plan directly encourages the person to engage in self-
development plan to assess his accomplishments and will provide work-related
programme.

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MODEL OF SELF-DEVELOPMENT
 Joseph Luft and Harry Ingham invented Johari window which has proved to be the
most comprehensive model which elaborates human interaction.
 Its a unique approach to analyse individual behaviour.
 According to him, an individual must relate his/her behaviour to others in order to
comprehend his own behaviour.
 The interpersonal relationship alongwith communication can be improved through the
Johari window.
 It says that interpersonal effectiveness is directly concerned with the volume of
information which is shared mutually.
 Based on awareness of motivation, feelings, and behaviour, there are four quadrants
that collectively represent an individual with respect to others.

1) Open Self:
 The motives, feelings, and behaviours about which an individual is aware and is ready
to share with other individuals are represented by open sell.
 These three features are quite evident when an individual is open, straight forward,
and sharing.

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2) Blind Self:
 It is the state in which motives, feelings, and behaviour related information is known
to others but the individual is not aware of them.
 He/she might frustrate or disturb others unknowingly.
 The other individuals can inform this to the individual but are afraid to hurt his/her
feelings.

3) Hidden Self:
 Individuals often do not share numerous feelings with others from the initial stages of
their age.
 This quadrant includes those motives, feelings, and behaviours which are hidden from
others but the individual is aware of them.

4) Unknown Self:
 The state where neither others nor the individuals are aware of the information.
 Till the time these behaviours, feelings, and motives are not allowed to come up,
individuals and others are not aware of them and only witness them through deep
fears and dreams.

The Johari window is deeply influenced by feedback. The degree of how others inform the
individual regarding his/her acts and feelings affects the Johari window. Also, an individual's
ability to perceive these feedbacks and interactions in the organisation is crucial. Disclosure
is the other force which influences Johari window.

METHODS OF SELF-DEVELOPMENT
1) Constructive Behaviour:
 It is the responsibility of the manager to maintain a positive behaviour to achieve the
objectives of the organisation.
 It is easy to develop constructive behaviour controlling the factors that influence his
behaviour.
 All those stimuli that promote negative behaviour should be avoided
 All those stimuli that promote positive behaviour should be encouraged.

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 The stimuli that promote positive behaviout may be reinforced in order to attain
organisational goals.

2) Time Management:
 Managers have less time (or sometimes no time) when it comes to realising the goals
of the organisation.
 This makes time management an important tool managing time.
 Time management identifies and eliminates factors that cause wastage of time.

KNOWLEDGE MANAGEMENT
Knowledge management is defined as methodical approach of leveraging
knowledge and information to improve organisational productivity, competency, innovation
and responsiveness. The main purpose of KM is to share information with other departments
of the organisation, so that it can be best utilised.

FEATURES OF KNOWLEDGE MANAGEMENT

1) It is a never-ending process.
2) It is all-pervasive. It is practiced by everyone in the organisation.
3) Procurement, transfer, and storage of information along with expertise, experience of
individuals, and delivering them when required.
4) Work teams and experts need to work together under knowledge management.
5) Social interaction also leads to knowledge creation.
6) It is the main pillar of organisational effectiveness.

Elements of Knowledge Management

The three basic elements of knowledge management are:
1) Knowledge Creation:
 Gathering data, information, facts, and techniques pertaining to the organisation and
its members comes under knowledge creation.
 There are numerous ways such as experimentation, automated knowledge discovery,
research and development, creative thinking, benchmarking best practices, observing

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customers, process improvement projects, customer feedback, etc., are used to

generate new knowledge.
 Knowledge creation is a continuous process which involves constant gathering of
information, disposing the obsolete information, and keep evolving as per the
dynamic environment.

2) Knowledge Sharing:
 Communication and dissemination of the created knowledge throughout the
organisation from the organisational database comes under knowledge sharing.
 Process engineering, information technology, and organisational dynamics are the
basic methods used for knowledge sharing.
 It is essential that all these three tools work in uniformity to ensure an efficient flow
of information to groups and its members.

3) Knowledge Utilisation:
 A major purpose of knowledge sharing is utilising it for resolving issues and problems
in the organisation.
 Usage and sharing of knowledge leads to its growth, unlike other resources which get
depleted after usage.

IMPORTANCE OF KNOWLEDGE MANAGEMENT

1) Quicker and Better Decisions:
 Better and faster decisions are facilitated with the help of knowledge management.
 Past experiences can be used in finding solutions for similar kinds of problem thus
facilitating a quick and right decision.
 KM also helps in preventing the challenges which were faced earlier by previous
associates.

2) Enhanced Productivity:
 Knowledge management helps in enhancing the business productivity with the help of
detailed information recorded in its database.
 Using this information, the organisation or individuals can minimise costs and make
optimum use of organisational resources for achieving the intended growth.

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3) New Products and Services:

 The use of previous information fosters innovation and thus helps in the production of
new products and services.
 KM minimises the time and costs involved in research and development processes by
providing creative ideas for developing new products.
 Past knowledge and experience of experts can be used for future productions, leading
to more flexible and faster implementation of various business activities.

4) Business Intelligence and Analysis:

 Job of various business intelligence professionals and business analysts is to provide
right information at the right time to the decision-maker.
 For this purpose, they gather information from numerous sources in order to evaluate
the market, customers, and competitors, etc.
 In such situations, KM system enables the analysts to generate meaningful reports by
retrieving and generating relevant data, and their sources from stored information
using keywords and tags in the database.
5) Project Management:
 Knowledge management helps in finding solutions for current problems of project
management, cost estimation, and risk management based on past knowledge and
experiences related to previous projects.
 Project managers can obtain knowledge, and enhance their skills by using a formal
KM system to gather information regarding new projects.
 Above all, when the team members of a project are working in different physical
locations, the communication between them is facilitated through the knowledge
management systems.

6) Customer Service:
 The previously stored data in the KM systems aids customer service associates and
help while handling similar problems and providing feedback-based appropriate
solutions.
 Use of an automated answering systems has become prominent these days in various
organisations.

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 It facilitates front-desk employees in transferring queries to concerned experts.

 These systems also enable personnel to get used to the customer's style of raising
questions through the application of technologies based on information-expansion.

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UNIT IV
COMPENSATION
Definition
According to R. Wayne Mondy, "Compensation is the total of all rewards provided to
employees in return for their services. The overall purposes of providing compensation are to
attract, retain and motivate employees".

Objectives of Compensation
1) Establish Equity - equal pay for equal work
2) Increase Worker's Efficiency - motivates employees.
3) Macroeconomic Stabilization - attained by high employment rate and low inflation rate.
4) Effective Distribution of Labour
5) Maintain Income-Expenditure Ratio.
6) Avoid Conflicts- will create harmony and peace in the organisation.
7) Legal Compliance - employee also saved from the legal problems.

Compensation Plans
Compensation plan completes the entire process of deciding the compensation package
for the employee, Compensation plan in India are as follows:

1) Basic Salary:
 Basic salary is the fundamental component of pay structure.
 It is the major portion of the employee's compensation.
 Different components of the wages such as bonuses, premiums, allowances, etc. are
determined with the help of basic salary.
 Seniority and rank are the two factors considered for determining the basic salary.

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2) Incentives:
 An incentive is an addition given to the regular wages.
 Incentives attract the employees and motivate them to perform better.
 It also motivates the employees to improve their efficiency and productivity of the
organisation.
3) Bonus:
 Bonus is the payment which is given to workers as a share of the organisation's profits
in a particular year.
 Bonus is paid according to the performance of employees based on their eligibility,
performance standards, time span, etc.
 examples of bonuses - Profit-related bonus, attendance bonus, work study related
bonus.
4) Employee Benefits:
 Employee benefits are also known as fringe benefits or fringes.
 These are given to the employees in addition to their wages and salaries.
 e.g.. health care benefits, retirement benefits, etc.
5) Provident Fund:
 Provident fund is the payment which an employee receives after his retirement or when
he resigns from the organisation.
 Both employee and employer contribute equally in the provident fund.
 The provident fund is mainly given to secure the future of employees after retirement.
6) Overtime Pay:
 It is the amount of compensation that an employee receives if he works for extra hours
beyond his normal working hours.
 For example, if the working hours for an employee are 42 hours in a week but if he is
working for 48 hours in a week then he has to be paid extra amount for the extra 6 hours
he has worked.
 In this case, the employee is working for more than 48 hours in a week so he should be
paid at double rate.
7) Allowances:
 Allowances is the payment given to an employee by an employer in monetary terms.
 Taxable, partially taxable, and fully taxable are the three types of allowances given to
the employees.

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 Some important allowances are given below:

i) Dearness Allowance (DA):
Dearness allowance is given by an employer to his employees to compensate the
increased level of price in the economy.
ii) House Rent Allowance (HRA):
HRA is given to employees by his employer for his accommodation expenses.
iii) Conveyance Allowance:
It is an allowance given to employees to compensate the expenses incurred on the
conveyance to perform their duties.
iv) Leave Travel Allowance (LTA):
It is given to employees for spending holidays with their families. The amount of
allowance depends on the designation of the employees.
v) Fixed Medical Allowance:
This allowance is paid to employees at fixed time period at a fixed rate regardless of
the actual amount of expenditure done on the medical treatment.
vi) City Compensatory Allowance:
This allowance is given to the employees who live in big cities.This is given to
compensate the high cost of living in big cities.
vii) Tiffin Allowance:
It is paid to the employees by the employer in lieu of tiffin expenses.
viii) Telephone/Mobile Allowance:
This allowance is given to employees by the employer to help employees in maintaining
a telephone or cell phone.
ix) Children Education Allowance:
This allowance is given to employees by the employer so that employees can meet the
expenses of their children's education.
x) Hostel Allowance:
This allowance is given to the employees by the employer to meet the expenses of their
children staying in hostel away from their hometown.

PROCESS OF COMPENSATION MANAGEMENT

Compensation management process has certain steps to be followed. These steps are

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1) Job Analysis:
 Job analysis is the first step taken by the management in compensation management
process.
 It includes identifying the nature of job, duties and responsibilities performed by
employees. their accountability towards the organisation, their performance, etc
2) Job Evaluation:
 The next step is evaluation of different jobs in the organisation.
 It determines the worth of the job.
 The nature of work, and skills and duties required for a particular job forms the basis
for job evaluation.
 In the job evaluation method, worth of each job is assessed using various methods such
as ranking, grading, paired comparison, factor comparison, etc.
 These evaluation methods are done without any biasness to identify the salary structure
of various jobs.
3) Developing the Pay Structure:
 Pay structure depicts what an organisation pays to each employee.
 Organisation can opt for narrow graded and broad graded pay structure on the basis of
significance and level of the job.
4) Wages and Salary Survey:
 Before setting up pay structure, it is compulsory for the organisations to consider
external equity.

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 For this, organisations use wage and salary survey method.

 With the help of wage and salary survey method, organisations gather information from
the labour market about the salary given to the employees of same level or performing
same job in similar industries.
 information related to current wage rate, cost of living, rates during inflation and
deflation periods, etc., are also gathered through labour market.
 There are two types of survey methods, either the organisation can go to the labour
market and conduct the survey or it can purchase the surveys conducted by professional
organisations.
5) Job Pricing:
 Determining pay rates for different jobs of the organisation is known as job pricing.
 The basis for determining the job pricing are job evaluation process and wage and salary
survey process.
 While finalising the job prices, organisation should ensure two things, viz.
 Appropriate salary is given to the employees according to the value of the job
 The efficient performers of the organisation should be rewarded for their excellent
performance.
6) Compensation Revision and Control:
 Budgeting, performance appraisal, compa-ratio method, etc. are to determine the cost
incurred on the human resource of the organisation and the effectiveness of
compensation management.
 Among all these methods, budgeting is the most effective method which helps in setting
standards to evaluate the expenses incurred in the form of compensation.
 This method facilitates in regulating the financial outflow and aids in HR cost
controlling and monitoring.

IMPORTANCE OF COMPENSATION MANAGEMENT

Importance of compensation management is as follows:
1) Compensation management is crucial to align employees' efforts with the aims and
objectives of the organisation.
2) It helps in creating and developing a competent and motivated workforce in order to achieve
the set goals and targets of the organisation.
3) It helps to build positive image of the organisation in the society.

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4) It eradicates social problems like bribery and theft. This is because if the employees get
sufficient, they are less likely to engage such criminal activities.
5) It enhances their commitment level and loyalty.
6) It helps in improving the organisational productivity.
7) It aids the organisation to comply with the existing rules and regulations set by the
government regarding compensation.

REWARD
Meaning and Definition of Reward
A reward can be defined as any form of gratification that an employee gains from his
or her employment with an employer.
According to White & Klein, "Reward can be defined as something that is perceived as
beneficial or advantageous to a particular actor's interests".

TYPES OF REWARDS
Typically, the rewards can be divided into three main categories-
1. Intrinsic versus Extrinsic Rewards
 Intrinsic rewards are the rewards that are non-tangible but yet results in higher levels
of job satisfaction.
 Some examples are- an impressive job title, career growth, personal achievements,
praises, etc.
 Extrinsic rewards are tangible rewards that employees receive upon doing good work.
It includes bonuses, raises, gifts, etc.
 Intrinsic rewards make employees feel valued in a company.
 Similarly, extrinsic rewards focus on improving employees' performance through
appreciation.
 It's necessary to find a balance between extrinsic (performance) and intrinsic
(motivation).
2. Non-financial versus Financial Rewards
 Financial rewards work by positively contributing to the overall employees' financial
wellbeing.
 It includes bonuses, salary raises, etc.
 Non-financial types of rewards do not provide any financial gain to the employee.

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 Instead, it focuses on appreciating employees through employee benefits such as Gym

memberships, parking spaces, gift cards etc
 Non-financial rewards are more feasible for companies to reward employees mainly
because:
 Long-term effects as compared to financial rewards:
 Employees are more likely to keep enjoying the benefits.
 However, financial rewards give one-time satisfaction.
 Employees feel more comfortable about discussing their rewards with their peers.
 For the same performance, financial incentives require higher investment.
 It's a more affordable option for small businesses and startups.
3. Membership versus Performance-based Rewards
 Performance-based rewards are allocated based on the performance of an employee in
a company.
 Performance-based rewards are given in pay plans, incentive systems, group bonuses,
or commissions.
 Membership-based rewards are given in the form of benefits and services provided to
the company's employees.
 For example, it might be in the form of the annual Christmas bonus, company retreat,
upgraded office furnishing, etc.

Having a reward system that fits your organizational needs will make recognizing
employees much more effective. For example, performance-based rewards would more benefit
a salesperson. Similarly, a new hire will be more motivated by intrinsic rewards such as praises
and career advancement. Recognition from one's peers is a strong motivating factor for any
employee. Finally it's essential to measure the effectiveness of reward system. One way to do
so is to take the necessary feedback from employees.

CRITERIA FOR REWARDS DISTRIBUTION

1) Performance:
It is universally accepted that performance should always be rewarded.
But the issues
i) A near fool proof method of defining performance.
ii) An acceptable method of measuring performance- fair, objective and transparent.

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iii) Striking a balance between quality and quantity of performance.

2) Effort:
 The effort an employee put-in, irrespective of results, is a reflection of his commitment.
 All rewarding mechanisms should take into account the efforts put in by employees,
irrespective of outcomes.
3) Seniority:
 Seniority or the length of service given by an employee is a criteria for rewards.
 However, this traditional criterion is gradually giving way to performance in most
industries, especially the IT Industry.
4) Skills Set:
 The skills set an employee possess is also an important criteria.
 An employee who upgrade his skills set should be recognised and rewarded, whether
or not those skills are used or required.
 For example, many organisations give an additional increment to those who become
graduates.
5) Job Complexity:
 The difficulty or complexity of a job performed by an employee is also an important
criterion.
 Jobs that require difficult skills are difficult to perform, needed to be performed under
difficult circumstances or conditions, hazardous in nature, require the use of
sophisticated and expensive technolog should be rewarded.
6) Discretionary Time:
 Certain jobs involve use of personal discretion, taking decisions, and therefore carry an
involvement of risk should be rewarded.
 If this is not followed, employees would be unwilling to accept risk-carrying jobs and
assignments.

MOTIVATION

The word 'motivation' has originated from the term 'motive' which relates to wants,
needs, impulses and drives within a person. Motivation refers to the process of inspiring people
for doing tasks and achieving goals and desires.

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THEORIES / MODELS OF MOTIVATION

CONTENT APPROACHES
 According to content theories, there is always one best motivating technique that can
commonly be used for all the employees.
 The content theories mainly focus on the need of the employees and their motivating
factors.
 Thus, these theories are very useful for the managers because it can motivate the
workers and increase organisational productivity.
 Some of the well-known motivational content theories are Maslow's Need Hierarchy,
Herzberg's Motivation Hygiene Theory, and Alderfer's ERG Theory.

MASLOW'S NEED HIERARCHY THEORY

Human beings have categorised their needs into two types - first one is basic (primary)
needs, which are essential for the survival of the human beings and second one is acquired
(secondary) needs, which are less important as compared to basic needs.
According to Maslow, need hierarchy has following

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1) Basic Physiological Needs:

 Basic requirements of an individual such as food, shelter, clothing, air, water, etc., are
considered as basic physiological needs.
 Since these needs are essential for the survival and sustainability of human beings, these
needs are prioritised and placed at the initial stage of the Maslow hierarchy of needs
2) Safety and Security Needs:
 After the fulfilment of basic needs, human beings expect safety and security of
themselves as well as of their family.
 These securities are in the form of job security, insurance (life insurance, vehicle
insurance, etc.), old age security (pension, retirement fund, etc.), and security of
income.
 In simple words, an individual requires an assurance in order to maintain his standard
of living.
3) Social Needs:
 Social need is a kind of cognitive requirement of human beings.
 When this need is not met, it creates a lot of imbalance in the mind of an individual
which adversely affects his health.

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 Since man lives in a society, he socialises himself by interacting with other people,
share his feelings with others, making friends, etc.
 That is why, it is said that the community and culture of an individual reflect his
identity.
4) Esteem Needs or Ego Needs:
 Egoistic needs are of two types,
 ie, internal and external. Self-confidence. self-motivation, skills, abilities, competency,
etc., are some of the factors that are based on internal egoistic needs and are earned
after an immense hard work by an individual.
 Individuals having inward esteem needs always receive earned gratitude' by the society.
 External egoistic needs focus on building goodwill and status of an individual that is
earned by achieving some higher position or if the individual becomes financially well
5) Self-Actualisation Needs:
 It is a stage of self-fulfilment in which people realise their highest potential for self-
development in a unique or creative way.
 In simple words, these needs are considered as aim of an individual's life.
 Once all the needs of an individual are met, he searches out for personal achievement
that gives mental satisfaction to him.
 Individual having the need for achievement wants to become better than others, takes
challenging tasks in order to demonstrate his potential and becomes successful which
not only satisfies him but benefits the society as well.
As per Maslow's need theory:
1) There exist five levels of human needs that he requires to satisfy.
2) These needs are organised according to their preferences, ie., most important to least
important.
3) The first two needs, i.e., basic and safety needs, are considered as lower order needs and
remaining three, i.c., social, egoistic and self-actualisation needs, are considered as higher order
needs.

HERZBERG'S TWO FACTOR MODEL THEORY/MOTIVATION HYGIENE

THEORY
 In the late fifties, a motivational theory was introduced by Frederick Irving Herzberg,
named as motivation hygiene theory.

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 It is also known as two-factor motivation theory.

 It is based on two factors, job satisfaction and job dissatisfaction.
 The absence of job satisfaction means no job satisfaction and not job dissatisfaction.
Herzberg classified the factors responsible for either job satisfaction or job dissatisfaction into
following categories:
1) Hygiene Factors:
 These factors are those motivating factors whose presence motivates the employees at
the workplace but for a limited period.
 However, their absence can result in job dissatisfaction for the employees.
 Adequate number of hygiene factors at the workplace help in comforting the
employees.
 Since, these factors focus on avoiding dissatisfaction, they are also termed as
maintenance factors or dissatisfiers.
 These factors fulfils the physiological needs of the employees.
 Some of the hygiene factors are as follows:
i) Pay
ii) Company Policies and Administrative Policies:
iii) Fringe Benefits
iv) Physical Working Conditions:
v) Status
vi) Interpersonal Relations
vii) Job Security
2) Motivational Factors:
 According to Herzberg, unlike hygiene factors, motivational factors positively satisfy
the human beings for a much longer term.
 That is why, hygiene factors are considered as less motivating as compared to
motivational factors.
 These factors are known as satisfiers.
 These factors are considered as intrinsic rewards that motivate employees to perform
more effectively.
 Following are some of the motivational factors:
i) Recognition
ii) Sense of Achievement

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iii) Growth and Promotional Opportunities

iv) Responsibility
v) Meaningfulness of the Work

ALDERFER’S ERG THEORY

Alderfer’s ERG theory suggests that there are three groups of core needs: existence (E),
relatedness (R), and growth (G)—hence the acronym ERG. These groups align with Maslow’s
levels of physiological needs, social needs, and self-actualization needs, respectively.

Existence needs
 Existence needs concern our basic material requirements for living.
 These include what Maslow categorized as physiological needs (such as air, food,
water, and shelter) and safety-related needs (such as health, secure employment, and
property).

Relatedness needs
 Relatedness needs have to do with the importance of maintaining interpersonal
relationships.
 These needs are based in social interactions with others and align with Maslow’s levels
of love/belonging-related needs (such as friendship, family, and sexual intimacy) and
esteem-related needs (gaining the respect of others).
Growth needs
 Growth needs describe our intrinsic desire for personal development.

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 These needs align with the other portion of Maslow’s esteem-related needs (self-
esteem, self-confidence, and achievement) and self-actualization needs (such as
morality, creativity, problem-solving, and discovery).
Alderfer proposed that when a certain category of needs isn’t being met, people will redouble
their efforts to fulfill needs in a lower category. For example, if someone’s self-esteem is
suffering, he or she will invest more effort in the relatedness category of needs.

MCGREGOR'S THEORY X AND THEORY Y

 In 1960, Douglas McGregor introduced a theory named Theory X and Theory Y which
mainly considered philosophical view of mankind and based on Maslow's need theory.
 According to this theory, everyone has two different views, ie, positive and negative.
 McGregor called these negative views as Theory X and positive views as Theory Y.
 This theory was beneficial for the organisations as it involves simple rules and
regulations that should be followed by the managers while dealing with their
subordinates.

OR
Assumptions of Theory X
According to theory X. four assumptions followed by the managers are as follows:
1) Most of the employees try to neglect the work given to them as they inherently have an
aversion to work

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make them achieve the set targets.

2) Managers believe that employees need to be pressurised, supervised and sometimes even
threatened
3) Managers believe that employees do not take their responsibilities seriously and only follow
the routine rules.
4) Employees give priority to job security which makes them non-ambitious and lenient
towards their job.
Assumptions of Theory Y
According to theory Y, various positive assumptions followed by the managers regarding
employees are as follows:
1) Employees have the ability to treat their work either as a routine task or as an enjoyable
activity.
2) Employees having determination to accomplish desired goals and objectives can easily
control themselves.
3) An average employee can become a responsible employee by developing the tendency to
accept the responsibilities.
4) Achievement of an employee is based on his level of commitment towards his objectives.
The accomplishment of these objectives results in rewards which motivates him to become
loyal towards his goal.
5) Employees also have a great ability to think out of the box and do something innovative.
This is not only the responsibility of the employees working at higher positions, but also the
average employees can be creative.

EQUITY THEORY OF WORK MOTIVATION

 J.S. Adams is the founder of equity theory of motivation.
 According to this theory, employees working in an organisation expect justice and
fairess on the part of management.
 Biased and unfair treatment not only demotivates them, but also hampers their
performance.
 Following are the four significant elements of Adams equity theory:
1) Person:
The individual dealing with equitable or non-equitable situations.
2) Comparison Other:

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'Comparison other is the individual with whom the person compares his efforts and
inputs made and outcomes received. These are also known as 'relevant other".
3) Inputs:
These are the characteristics of an individual such as skills, proficiencies, experience,
talent and potentials which he carries with him while joining the job. These are constantly
observed by different people having different outlook.
4) Outcomes:
These are the results of employees' performance and are awarded in the form of salary,
promotion, bonus and fringe benefits. These are distributed depending upon the performance
of the individual.
According to this theory, once the person starts comparing his contribution and result
with the relevant other's effort, he starts developing motivation to perform better.
When the person's input and outcomes are not equal to that of "relevant other, he gets motivated
to put in more efforts and reduce that feeling of inequity. More the inequitable feeling arises in
the person, greater is the degree of motivation to reduce that imbalance. Thus, equity acts as
motivation force will act as follows:

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MCCLELLAND'S ACQUIRED NEEDS THEORY

David McClelland has identified three acquired needs namely, the needs for
achievement, power, and affiliation
1. The Need for Achievement (nAch):
It is the desire to accomplish difficult tasks, to solve difficult problems, to do thing more
efficiently, and to master complex tasks.
2. The Need for Power (n Power):
It is the desire to influence or control other people, to be responsible for others, and to
hold authority over them.
3. The need for Affiliation (nAff):
It is the desire to establish and maintain warm relationships with others
McClelland proposed that people acquire these needs for achievement, power, and affiliation
through experiences over the time. People are motivated by these needs, and the manager
should recognize these needs in workers and use them to motivate behaviour.
Implication of Acquired Needs Theory
One implication for HRM is that training for supervisors and managers with strong
achievement or power needs include training in effective interpersonal and group skills to
ensure that their leadership behaviours and peer relationships will contribute effective
teamwork.

VROOM'S EXPECTANCY THEORY

 One of the most widely accepted explanations of motivation presented by Victor Vroom
in his expectancy theory.
 The theory is founded on the basic notions people will motivated to exert a high level
of effort when they believe the are relationships between the effort they put forth, the
performance they achieve, and the outcomes/rewards they receive.

The key constituents of the expectancy theory are:

1. Valence: It means the value or strength one places on a particular outcome or reward
2. Expectancy: It relates efforts to performance.
3. Instrumentality: It means the belief that performance is related to rewards.
Thus, the Vroom's motivation formula is expressed as,

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Motivation Valence x Expectancy x Instrumentality

all the three variables must have high positive values to imply motivated performance choices.
If any one of the variables approaches to zero level, the possibility of the motivated
performance also touches zero level.

CAREER MANAGEMENT

CAREER STAGES (CAREER DEVELOPMENT CYCLE)

Careers, as they develop over the course of a person's working life, can be divided into
many stages, which occur at different ages for different people. John Van Maanen and Edgar
H. Schein have identified five career stages that every individual comes across during his/her
career. They are:
1. Exploration stage,
2. Establishment stage,
3. Mid-career (or advancement) stage,
4. Late-career (or maintenance) stage, and
5. Decline (or disengagement) stage.
Stage 1: Exploration (adolescence that is, from about 15 The exploration stage is the to
25 years)
 The exploration period, usually from ages 15 to 25, during which a person seriously
explores various occupational alternatives, attempting to match these alternatives with
his or her interests and abilities.
 This pre-work career exploration stage involves people's examining their needs and
personal goals and evaluating the alternatives and educational choices available.
 In this stage, individuals rely on family members' and vocational counselors' advice,
test results, and personal interest to determine their directions. Thus the exploration is
influenced by school, family, and friends.
Stage 2: Establishment (early adulthood, that is, from about 25 to 35 years)
 The career establishment stage begins with the individual's entry into the world of work,
ideally in a position that matches organisational needs with the individual's needs.

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 This stage involves the individual's entry into the organisation, socialisation on the job,
recognition for effective work, possible romotions and transfers, and achievement of
full acceptance by the work group
 During this time, job expectations from new employees often exceed reality, causing
feelings of under utilisation.
 Also, new employees may tend to overemphasize analytical tools and rational decision-
making procedures to the cause of human understanding and development of personal
relationships so important in day-to-day operations.
3: Mid-career or Advancement (later adulthood, that is from 35 to 45 years)
 The advancement stage is characterised by upward movement in the organisation.
 In this stage, the individual is not so concerned with fitting into the organisation as with
moving up in the organisation.
 Those who are successful realise job satisfaction and self-fulfillment.
 Many remain in this stage for a long period.
 On the other hand, the less successful never reach the advancement stage but instead
move to the next stage.
Stage 4: Late-career or Maintenance (middle age, from about 45 to 65 years)
 The maintenance stage begins when people detect cues that they are nearing the limit
of their advancement; their careers are beginning to level off, and/or their need to
compete is declining.
 It is a career state in which individuals are no longer learning about their jobs
 In this stage, people seek other means of personal gratification, such as helping younger
employees or engaging in community and society-oriented activities.
Stage 5: Decline or Disengagement (old age, from about 65 years onwards)
 The decline or late stage is the final stage in one's career, usually marked by retirement.
 This disengagement stage may occur at various ages, depending on the person's degree
of success in previous stages.
 Those who are not very successful may begin to disengage after they reach a mid-career
crisis in the fifties, they may merely go through the motions of their jobs until they
reach retirement.
 Successful employees may continue to be active and make productive contributions to
their organisations until their last day on the job and may resist retirement.
 Others may develop new and productive careers.

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CAREER PLANNING
 Career planning process is an important aspect for an individual’s career development.
 Career planning is the continuous self-evaluation and planning process done by a
person to have a strong career path which is aligned with one's career goals, aspirations
and skills.
 For example a person trying to make a career in information technology may require
skills like languages, programming whereas a person looking to have a career goal in
marketing may first need a specialized degree in business or more specifically
marketing.
 Some of the basic steps in a career planning process are:

1. Self-Assessment
 The first step in the process is self-assessment to be done by the individual to understand
his or her skills, areas of interest, aspirations etc.
 Aspirations and goals are very important as that define how person would create future
plan.
2. Research on Careers and Opportunities
 The second step in the process is to understand the career options, companies available,
growth options in career etc. which are aligned with the self-assessment done already.
 Right opportunities need to identified and proper research is required for that.
 An individual needs to be aware of the market trends and growth areas.

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3. Set Career Objectives

 The next step in the career planning is to set short-term as well as long-term career
goals for oneself to have a clear career path.
 A plan has to be done according to clear objectives.
4. Learn & Improve Skills
 The fourth step in the process is to keep acquiring new skills and knowledge to be in
line with career objectives and with industry requirements.
 Many a times there can be clear gaps in the objectives, aspirations and skills.
 To fill those gaps, proper planning is required to acquire and learn those skills so that
career plan can be properly executed.
5. Preparation of CV/Resume
 The next step in the planning process is to be fully prepared in terms of CV, cover letter,
recommendations etc.
 The resume should clearly highlight the skills, qualifications, objectives which is
aligned with the career planning of an individual.
6. Job/Work Search
 The sixth step is to short-list the companies where an individual is seeking a job & start
applying.
 It can be also working a entrepreneurship project as well.
7. Revise Career Goals
 The last step in the career planning process is to continuously evaluate the career goals
and again do a self-assessment to build a strong career path.

MENTORING
According to Reidy-Croft, "Mentoring refers to the information and advice provided
by an older, experienced individual to a younger and less experienced individual to help in
latter's growth and development".

PARTICIPANTS IN MENTORING
1) Mentors:
 Employees with greater skills and knowledge and commitment provide help and
acceleration to the careers of their mentees or proteges are called mentors.
 Mentors are generally in the middle of their careers.

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2) Proteges:
 Proteges are employees who have just started their careers and need to develop their
individuality in the industry.
 Mentors and proteges usually work in the same organisation.
 Proteges display sufficient interest in the mentor and take active part in his activities.
3) Organisation:
 The workplace where either the protege or both protege and mentor work is called the
organisation.
 It is also an active participant in the mentoring activity by permitting employees to take
up mentoring as an essential tool of development, by extending needed support to the
participants, by creating an environment that promotes and helps the mentoring
programme in succeeding and also acts as an artificial person.

CLASSIFICATION OF MENTORING PROGRAMMES

The classification of mentoring programmes can be done in the following manner.
1) Procedural Classifications:
The classifications of mentoring programmes can be done on the basis of how they are
commenced, led, and ended. On this basis, mentoring programmes can be classified into two
groups:
i) Formal Mentoring:
 Mentoring associations of formal nature are allocated to different people by a
programme manager on the basis of forms submitted by the prospective mentor and
protégé.
 The selection of mentors is done on the basis of their competency level, but the decision
is taken by the programme coordinator and not by the protégé.
 The mentors may see the protégés as 'at risk performers', who have joined the
programme because they required remedial actions.
ii) Informal Mentoring:
 Protégés are selected by mentors and protégés are seen as younger forms of mentors.
 The relationship with protégés develops a sense of creativity or contribution to the
future generations in the mentors.
 The protégés select those mentors who are seen as role models by others.

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 Mentors select those protégés who are high performing, and are regarded as rising stars
or shining diamonds.
 Likewise, protégés select those mentors who have desired expertise in the same field.
2) Purposive Classifications:
Purposive classification is based on the purpose/objective for which mentoring
programme was started like career mentoring or psycho-social mentoring. These classifications
are discussed below:
i) Career Mentoring:
 Career mentoring focussed on developing career advancement for proteges like
exposure and visibility, sponsorship, assignments, etc.
 According to Kram, mentors can offer five career development related functions like
sponsoring promotions, coaching protégé, protecting protégé from negative forces,
providing challenging assignments, and increasing protégés exposure and visibility.
ii) Psycho-Social Mentoring:
 It deals with augmenting the confidence, identity level and personality of the protégé.
 Psycho-social mentoring relate to effective results like job satisfaction and work-life
balance.
 Psycho-social mentoring is likely to augment the confidence level, self-esteem and
identity of the protégé.
 Certain behaviours related to psycho-social mentoring like counselling, role modelling,
acceptance and authorisation, and friendship were highly placed for attaining
satisfaction in life by the mentor.
 The relationship between the mentor and the protégé must be more mature and
emotional bond.
3) Other Classifications:
Following involves other classification of mentoring:
i) One-to-One Mentoring:
 In one-to-one mentoring, each mentor is given only one protégé.
 mentor and protégé must meet atleast four hours in every month.
ii) Group Mentoring:
 In group mentoring, one adult mentor mentors a group of protégés maximum to four
protégés.

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 Mentor acts as the leader of the group and meets regularly with group members over a
certain period of time.
iii) Team Mentoring:
 In team mentoring, several mentors work with small groups of protégés.
 But, the ratio between mentor and protégé does not exceed four.
iv) Peer Mentoring:
In peer mentoring, employees working at the same level mentor their colleagues.
v) E-Mentoring:
In e-mentoring, mentors interact with protégés with the help of communication
technologies for the purpose of mentoring.

PROCESS OF MENTORING
Various steps that are involved in mentoring are

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1) Need Assessment:
 In this phase, the human resource department coordinates with the line managers and
analyses certain aspects of mentoring.
 The basic aspects can be done to the organisation to incorporate mentoring and if yes
then identifying employees who need it, the total number of proteges, the number of
mentors and the type of mentoring needed.
2) Programme Design:
 Post-need assessment, the human resource department coordinates with line managers,
and even with the help of consultancies if needed, design a mentoring programme.
 The main aim is to complete the mentoring process in a timely and organised way.
 Programme designing includes duration, content, timing, criteria of evaluation,
methodology and cost of the programme.
3) Training:
 After finalising the potential participants (mentors, supervisors, and proteges) and the
programme design, it is required to train the participants on how to adopt mentoring
approach.
 The training might start with the experts lecturing the participants on the meaning and
importance of mentoring. It includes role-plays, self-scoring instruments, case
discussions and reading assignments.
 These programmes might happen half-day to three days.
4) Pairing:
 After training, the human resource department along with the line manager decides who
will mentor which protege or allow the mentors and proteges to choose among
themselves.
 If the mentors or proteges are unable to pair themselves, the human resource department
helps them.
 While pairing mentors and proteges, the human resources consider important factors
like matching of functional/behavioural expertise, proximity of the participants, gender
and cultural issues, etc.
5) Facilitation:
 This phase comprises of cooperation and help from the human resource department and
reporting supervisors who are taking care of mentoring activities.
6) Evaluation:

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 There is a principle that states that a thing that cannot be evaluated cannot be improved.
 Evaluation measures the usefulness of the mentoring programme and does its cost-
benefit analysis.
 It needs to be done keeping in mind the objectives set for the programme while
designing it.

Development of Mentor-Protégé Relationships

Following are the essential ingredients for developing mentor-protégé relationships:
1) Formation of a Safe Environment:
 Mentor should build an environment of trust and belief, wherein protégé may feel free
in expressing himself.
 One of the best ways through which trust can be created is by sharing personal
experiences.
 Honesty and truthfulness on the part of mentor helps the protégé to express his feelings.
2) Establishing Nature of Relationship:
 Mentor and protégé should try to establish an official relationship.
 This will make the mentor understand that the protégé needs his guidance and support
throughout the project.

3) Listen without Judgment:

 While sharing one's experiences with the protégé is important.
 The mentor should develop the habit of listening to the protégé without any judgement.
 He should avoid making point or pointing mistakes in his protégé's argument.
 This will make the protégé feel valued and important.
4) Focus on Learning:
 Mentor may learn many things from the protégé and from the mentoring relationship.
 He may not know answers to all questions so both may learn from each other.
 There are greater chances of building an effective relationship if the protégé see mentor
as a fellow learner.
 The mentor may identify things which he can learn from the protégé.
 Alternatively, both may identify a mutual area of interest in which they can investigate
collectively.

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5) Agreeing on Objectives not Approaches:

 Mentoring relationship should focus and agree on learning objectives and not on
learning approaches.
 The job of the mentor is to find out new ways of doing things for his protégé.
 The mentor should not simply give list of techniques for solving certain problems.
 The mentor should adopt a teaching behaviour in which the mentor may offer different
options so as to encourage the protégé to find solutions himself.
 If mentor tells the protégé how to do particular activity each time, the protégé may lose
important learning opportunity.
6) Provide Honest Feedback:
 Appropriate and honest feedback is very necessary in building a positive mentor-
protégé relationship.
 As far as negative feedback is concerned, it should be given judiciously and
specifically.
 Negative feedback can prove helpful if it is accompanied with positive feedback.
 counselling of the protégé should be conducted in private to have the right impact.
 The feedback should be given with suggestions as how to remove weaknesses in
protégé.
7) Appreciation of Differences:
 Both mentor and protégé establish the mentoring relationship with differing attitudes
and expectations.
 The mentor should identify the crucial differences, while promoting common values
and objectives.
 It should be noted that greater differences between the mentor and protégé greater
learning and vice-versa.

ADVANTAGES OF MENTORING
Following are the advantages of mentoring:
1) Helps Mentee in Learning the Basics:
Mentors can help their mentees in learning the basics of the organisation functioning
like how to complete tasks, understanding others and their perspective, ethical decision-making
and recognising talented individuals.
2) Facilitates Career Growth:

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Mentors impart skills to the mentees thus helping them in career growth. They teach
their mentees corporate values and priorities and also make them capable of taking
responsibility of their own career.
3) Makes Job Attractive and Motivating:
As a result of mentoring, the mentees get better paid and obtain higher benefits and this
increases their enthusiasm in the job.
4) Encourages Learning and Development:
Mentoring shows ways to continuous learning and development out of a complex
organisation's structure where performance and growth are crucial and expectation from an
individual are high.
5) Builds Networking Relationships:
Mentoring motivates mentees and provides them with networking relationships during very
crucial phase of their career. It displays its highly talented employees as champions at important
executive meetings and different in such high-level networking meetings and discussions.
6) Brings Sense of Achievement:
When a mentor on assessment gives a positive feedback of the mentee, he gets a sense
of achievement. He continuously strives to maintain that progress and keep getting mentor's
approval. For the mentor, it is a sense of pride and accomplishment to see his mentee growing.

DISADVANTAGES OF MENTORING
Following are the disadvantages of mentoring:
1) Dependency on Mentor
In cases where the mentor is very skilled and is excellent in his job and has the ability to
transfer his quality and knowledge efficiently to his mentee, mentoring proves to be highly
successful. In other cases, where mentor might not be a good teacher, he might pass on bad
qualities to his mentee.
2) Mismatch Pair:
When the relationship between a mentor and mentee is not a healthy one and is forced
on either of them, then desired results will not be obtained. If a newly appointed employee is
assigned a highly experienced mentor, the two might not get along well. A manager might
become egoistic towards his mentor and thus reduce the efficiency of mentoring. There might
be times when the mentor is so occupied with this routine job that he is not able to help the
mentee properly. This might result in a negative impact on the mentee who might even feel
unwelcomed in the organisation.

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3) Leads to Frustration:
There might be times when the mentor thinks that the mentee is not up to the mark in
following instructions or is growing at a very slow pace. The mentee might get imitated if he
thinks that the guidance provided to him is not sufficient. In either of the cases, it is better for
the mentee to look for some other mentor before things get worse.

JOB SATISFACTION
Job satisfaction may be defined as the feeling or attitude that an employee has about
the job that he/she is performing.
DEFINITION
According to Locke, "Job satisfaction is a pleasurable emotional state resulting from
the appraisal of one's job.
DETERMINANTS OF JOB SATISFACTION

THEORIES AND MODEL OF JOB SATISFACTION

Theories of job satisfaction are based on various factors such as personality of an
individual, value of the individual in the organisation, the working conditions in which an
employee is working and the influence of social environment. Some of the theories are
discussed are

1) Facet Model of Job Satisfaction:

 An employee's behaviour and work performance gets affected by the various work
situations of the job which are termed as job aspects or facets.
 The main focus of this model is on the degree to which an employee gets satisfaction
from each and every facet.
 This model tells how much satisfaction the employees have with each facet of the job.

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 This model can be very useful to the managers as well as top level of management while
offering maximum satisfaction to their employees.
[ write any 7 from the below table]

Herzberg's Motivator-Hygiene Theory of Job Satisfaction:

According to Frederick Herzberg's motivator hygiene theory, every employee has the
requirement of two main job facets while working in an organisation which must be fulfilled
by the organisation, if possible. These requisites are as follows:
i) Motivator Needs:
 Every employee needs motivation to work effectively in the organisation.
 The degree of challenge an individual's job possess, the freedom to take decisions, and
the responsibility given to him/her itself motivate the individuals
ii) Hygiene Needs:

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 Hygiene needs are associated with the physical and psychological aspects where an
employee performs.
 These needs consider physical work situations such as sufficient space for workers,
cleanliness, temperature etc. and also the psychological work situation such as salary,
job security, degree and nature of command.
 Organisations must understand that keeping the work environment safe, relaxed and
healthy is necessary because it increases the work productivity and also contributes to
the employee's well-being.
According to Herzberg, both the factors of employee's needs (hygiene as well as motivator)
directly impact job satisfaction in following two ways:
i) Employees get satisfied and have positive behaviour when their motivator needs are fulfilled
whereas, an organisation is unable to meet these desires, the employees will surely get
dissatisfied and may have negative behaviour.

ii) Employees will be satisfied if their hygiene needs and demands are fulfilled, and opposite
of this will occur in case of non-fulfilment of these desires by the organisation.
3) Discrepancy Model of Job Satisfaction:
 When an employee starts working in an organisation, he has some expectation in his
mind before starting the job.
 This model depends upon the comparative method for evaluation wherein certain level
of comparison in relation to the present job of an employee with his ideal job is analysed
and evaluated.
 An individual generally desires to have his present job just like his ideal or perfect job.
 But, when these expectations are not fulfilled the employees will get dissatisfied with
his occupation.
 Hence, it is recognised that employees have strong desires that their present job to be
perfect and ideal also play an important role in their satisfaction level.

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4) Steady-State Theory of Job Satisfaction:

 According to this theory, every employee has a steady or equilibrium level of job
satisfaction.
 According to various researchers, some modification in working conditions can
increase the job satisfaction of an employee for a limited duration.
 After sometime, the employee returns back to the earlier state of equilibrium of his job
satisfaction.
 For example, when a management makes increment in the salary of an employee, he is
contented with his job but just for a limited period of time.
 Thus, the management should focus on those job facets that can provide long-term job
satisfaction to the employees so that the employees can perform more effectively in the
organisation.

SIGNIFICANCE OF JOB SATISFACTION

Satisfaction plays a crucial role for both the company and the employee for many
reasons including the following:
1) Enhances Productivity Levels:
 Many management researchers have established that job satisfaction is highly related
to productivity.
 Happy and satisfied employees generally work smarter and harder to achieve company
goals.
 They have higher levels of motivation and hence contribute to higher levels

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2) Protects Physical Well-Being:

 Job satisfaction is directly proportional to the physical health and well- being of the
employees.
 A healthy employee is well-adjusted to the work and the work environment and hence
tends to contribute more towards the organisation in comparison to those who are not
satisfied and are unhealthy.
3) Decreases Employee Turnover and Absenteeism:
 A high employee turnover is one of the major disorders of companies that operate in a
highly competitive marketplace.
 A high job satisfaction level reduces voluntary separation of employees from a
company and thus the company is able to retain its talented and skilled employees.
 A higher satisfaction level also has a positive effect on the attendance of the employees.
 It helps in reducing the rate of absenteeism in the company.
4) Enhances Goodwill:
 An employee who feels good and well about his job, tends to spread a positive word of
mouth for his company in his interactions outside the workplace.
 This generates a lot of goodwill and enhances the image of the company.
 This in turn attract other competent people to join the company.

EMPLOYEE ENGAGEMENT
Employee engagement is an organisational approach which confirms the commitment
and motivation of employee toward organisation.
According to Gebauer and Lowman, "Employee engagement is a deep and broad
connection that employees have with a company that results in a willingness to go above and
beyond what is expected of them to help their company succeed".

Degrees/Levels of Employee Engagement

The degree or levels of employee engagement are mentioned below:
1) Highly Engaged:
 When employees are extremely engaged then they act with full dedication to achieve
organisational goal.
 A highly engaged employee is very much satisfied working in the organisation.

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 These employees try to bring better efforts and they are also ready to take the
initiatives.
 Hence, these highly engaged employees come in the category of 'A' player.
 These employees possess the capacity to turn an ordinary organisation into an
innovative and productive organisation.
2) Almost Engaged:
 Employees under almost engaged criteria are considered as reasonably satisfied with
their job.
 They deliver high performance and are focused, hardworking and honest toward work.
 These employees possess a positive perspective and believe toward their work and
organisational objective.
 Highly engaged employees are inspiration for them and they feel fortunate to work with
these employees.
 Further these employees are considered as the backbone of the organisation.
3) Honeymooners and Hamsters:
 New employees who have not yet achieved the level of full productivity, come under
the category of honeymooner.
 On the other hand Hamsters are those employees who are either not working with
efficiency or are working in wrong direction.
 Hence, both type of employees under the category of honeymooner and hamster deliver
unsatisfactory performance to organisation whereas they gain all the benefits in a
similar way other employees avail.
4) Crash and Burners:
 Employees under this category are among the high performers.
 They are among the good performer in the organisation but are unable to meet their
individual goals.
5) Disengaged:
 These employees are unable to fulfil their desires from work.
 Their engagement with work has reached to its lowest and they are only working in
organisation to earn their salary.
 These employees feel that mission and vision of these organisations are inappropriate.
 Further these employees talk poor about the organisation and employers.

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DRIVERS OF EMPLOYEE ENGAGEMENT

 Connection
 Job/work role
 Work culture and environment
 Freedom
 Growth
 Performance management

IMPORTANCE OF EMPLOYEE ENGAGEMENT

 Retains employees
 Retains customers
 Enhances productivity
 Increases in employees self respect and creativity
 Helps in building relation

ORGANISATIONAL CITIZENSHIP BEHAVIOUR (OCB)

Organisational Citizenship Behaviour (OCB) is referred as set of discretionary
workplace behaviours that exceed one's basic job requirements. They are often described as
behaviours that go beyond the call of duty.
According to Lee and Allen, "Organisational citizenship behaviour is behaviour that,
although not a part of job of employee, but play a very important role for the functioning of
organisation".

CATEGORIES OF ORGANISATION CITIZENSHIP BEHAVIOUR

Categories of organisational citizenship behaviour are as follows:
1) Intrinsic Citizenship Behaviour:
 Such behavioural occurrences are due to intrinsic factors like high understanding of the
organisation and personal belief in the culture of the organisation.
 The urge to get long-term profits for any individual impels them to help as well as add
in the organisational results. This forces the development of citizenship amongst them
and peers to achieve long-term goals and bring in long- term discipline.
 The benefits of this behaviour can only be reaped if all employees turn into citizens and
work together for a common goal.

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 The individuals need to communicate the same within a smaller group and hence find
endorsers to promote the same.
 Organisation promotes the cause and hence motivates the individual and the
organisation on a whole.
 This is the time when the individuals make their importance felt and hence create a
higher brand value for themselves in the organisation and become indispensable.
2) Extrinsic Citizenship Behaviour:
 In this kind of behaviour, motivation does not come voluntarily but the management
tries to inculcate and instil an additional responsibility wherein they counsel the
employees and create awareness about the benefits and need of becoming citizens.
 The extrinsic motivation can only be created if the employees are educated about the
benefits of aligning their personal goals with the organisational long-term goals.
 To find a leader to promote this behaviour requires a strong sense of understanding and
a well-crafted message.

DIMENSIONS OF ORGANISATION CITIZENSHIP BEHAVIOUR

Organ identified five categories of discretionary extra role organisational behaviours
that he suggested constituted the OCB construct:
1) Altruism:
 It is typically directed toward other individuals but contributes to group efficiency by
enhancing individuals' performance.
 e.g., helping new colleagues and freely giving time to others.
2) Conscientiousness:
 It enhances the efficiency of both an individual and the group.
 It includes virtues like self-discipline, carefulness, thoroughness, organisation,
deliberation, and need for achievement
 e.g., efficient use of time and going beyond minimum expectations.
3) Sportsmanship:
 It improves the amount of time spent on constructive endeavours in the organisation.
 It is the spirit of being positive and competitive.
 It involves competing with the situation and not with the people.
 e.g., avoids complaining and whining.

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4) Courtesy:
 It helps to prevent problems and facilitates constructive use of time
 e.g.. advance notices, reminders, and communicating appropriate information.
5) Civic Virtue:
 It promotes the interests of the organisation.
 It is a moral virtue of righteous behaviour that can be claimed to be important for the
benefit of the society.
 e.g., serving on committees and voluntarily attending functions.

BENEFITS OF ORGANISATION CITIZENSHIP BEHAVIOUR

Benefits from organisational citizenship behaviour that can be instrumental in
organisational success are as follows:
1) Enhances the productivity of co-workers
2) Enhances the productivity of higher managerial staff
3) Releases resources that can be used for more productive functions
4) Reduces the need to devote scarce resources for purely maintenance functions
5) Serves as an effective means of coordinating activities between team members and cross
workgroups
6) Increases group cohesiveness and morale, to make the workplace more attractive and making
it easier for the organisation to attract and retain the best people.
7) Enhances the stability of organisational performance
8) Enhances an organisations ability to adapt environmental changes

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UNIT 5
PERFORMANCE EVALUATION
MEANING AND DEFINITION OF PERFORMANCE EVALUATION
Performance evaluation or performance appraisal is a tool which is used to evaluate
the employees performance at the workplace.
According to Mondy et al., "Performance appraisal is a system of review and
evaluation of an individual's (or team's) performance"

PROCEDURE OF PERFORMANCE EVALUATION

Performance evaluation includes various steps such as
1) Establish Performance Standards with Employees:
 The process of performance appraisal starts with the formation of performance
standards, according to organisational goals.
 These standards should be derived from the organisational strategic decisions.
 These standards should be easy to understand so that they can be easily evaluated.
 A manager should have a clear-cut picture in his mind about what he expects from his
employees.
 Thus, he would be able to convey these expectations to the employees in the future
and evaluate their performance.
2) Mutually Set Measurable Goals:
 After the formation of standards, the most important thing is to convey the
expectations.
 Many jobs have ambiguous performance standards and the problem occurs when
these standards are formulated without any discussion with employees.
3) Measure Actual Performance:
 Measurement of actual performance is the next phase of the appraisal process.
 To measure actual performance, it is necessary to collect information about it.
 There are four common sources of information which are often exercised by the
managers to evaluate actual performance.
 These sources are: personal observations, statistical reports, oral reports and written
reports.
 Every source has its own benefits and limitations.

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 However, a group of these sources will boost the number of input sources and
collecting trustworthy information.
 Selecting wrong criteria may result in severe outcomes.
 What is to be measured indicates what people have to achieve in order to excel in the
organisation.
4) Compare Actual Performance with Standards:
 Next step involves comparison of standards with actual performance.
 This step includes identification of fluctuations between the standard performance and
the actual performance in order to proceed further.
5) Discuss the Appraisal with the Employee:
 During this phase, the appraiser discusses the appraisal with the employee.
 The review of performance appraisal affects employee's self-esteem and his
performance.
 Providing positive feedback is easier for both the appraiser and the employee than
providing negative feedback.
 The appraisal may have both positive and negative outcomes.
6) If Necessary, Take Corrective Actions:
 The last phase of appraisal process involves taking remedial actions wherever
needed.
 These actions could be immediate or basic.
 Immediate actions mostly deal with the symptoms.
 These actions deal with urgent problems.
 They rectify the problems immediately and smoothens the flow of work.
 On the other hand, basic actions deal with causes of the problem.
 They diagnose how and why the performance is fluctuated.

METHODS/TECHNIQUES OF PERFORMANCE EVALUATION

Several techniques/methods of performance evaluation have been established to
achieve the organisational goals.
Traditional/Past-Oriented Methods of Appraisal
Traditional methods of performance appraisal focus on past performance. Traditional
appraisal methods are as follows:
1) Graphic Rating Scales (GRS):

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 A Graphic Rating Scale (GRS) is also called "linear or simple rating scale.
 A five- or seven-point graphic rating scale includes each characteristic.
 Numbers and/or expressive words or phrases indicating out the performance level are
pointed in the rating scale.
 The middle part of the rating scale is more often filled with words like average,
adequate, satisfactory
2) Straight Ranking Method:
 This is the most traditional and easiest method of performance appraisal.
 By this method, every employee is provided with a rank starting from "best" to
"worst' considering his overall performance.
 It involves lesser administration and tends to provide a satisfactory solution to small
enterprises having fewer employees.
 Due to rank assignment, this method encounters various appraisal failures,
specifically central tendency and human errors.
3) Paired Comparison Method:
 This method came into existence in continuation to the straight ranking method to
provide an organised process.
 It is also known as "man-to-man appraisal".
 It is a useful method in which the employee who is supposed to be appraised, is
compared with others, in a combination, one at a time.
 At many times, the person is compared with another one.
4) Critical Incident Method:
 This method focuses on diagnosing those particular happenings(or circumstances)
 It is a method asking for a narration of happenings, but does not believe in providing
ranks or ratings.
 It is sometimes combined with a rating type system.
5) Group Appraisal Method:
 This method considers the performance evaluation by a group of people holding
information about the job and performance standards.
 The appraiser provides the requisite awareness regarding his subordinates to the group
members.
 Then, the group converses about the performance standards of the job and the actual
performance of the subordinates.

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6) Checklist Method:
 Under this method, rater does not assess the performance of the employee. Rather,
 A chain of questions is given pertaining to the employee's actions.
 For the purpose of pointing out whether the answer to a question regarding an
employee is assertive or not, the rater examines it.
 It is possible that some questions may be given more or equal weightage.
 Normally, the questions are framed in 'yes/no" style.
 Finally HR prepares a report about his performance and final scores..

Modern methods performance appraisal
 Modern/Future-Oriented Methods of Appraisal
 Modern methods of performance appraisal focus on future performance
 Various modern methods of performance appraisal are as follows:
1) Behaviourally Anchored Rating Scales (BARS):
 BARS are often known as behavioural expectation scale.
 The rating points on this rating scale are established by the statements of efficient or
inefficient behaviours.
 The scale shows a series of narrative behavioural statements, ranging from worst to
best.
 A rater must point out which behaviour explains an employee's performance.
2) Management by Objectives (MBO):
 It is an individual appraisal method which determines task-related results rather than
behaviours or activities.
 It is also termed as appraisal by results.
 Its main goal is to improve the performance of organisation by linking the
organisational and subordinates' objectives.
 MBO involves regular evaluation and feedback in order to reach the target.
 One more significant aspect of MBO is the collective evaluation.
3) Psychological Appraisals:
 Psychologists evaluate a person's future performance instead of his past performance.
 The appraisal usually includes psychological tests, in-depth interviews, conversation
with supervisors and a review of other assessments.

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 The psychologists complete the analysis of the employee's logical, emotional,

motivational and other job-related characteristics that determine individual capability.

4) Human Resource Accounting:

 This process includes the assessment of goodwill of an organisation.
 It can be enhanced by establishing a system in order to carry out regular assessment of
particular variables.
 These variables are categorised in two forms, ie., key variables and intervening
variables.
 The key variables are the strategies, rules and regulations of an organisation,
including its leadership policies, abilities and behaviour of an employee, etc.
 Intervening variables include commitments, attitudes, encouragements, interpersonal
relations, communication and decision-making.
 This method is mostly used for analysing the group performance, instead of individual
performance.
5) 360-Degree Performance Appraisal:
 It is used to evaluate the performance of employees and managers based on the
feedback obtained from the individuals who work along with them.
 It can be taken as an organised collection and review of performance data of a person
or a group extracted from a number of stakeholders.
 Through this method, the employees hold the chance to review the manager, which is
not possible in traditional performance appraisals.
 It is a realistic method, which is free from biasness.
6) Assessment Centres:
 Assessment centres are mainly used for the assessment of managerial or
administrative capability.
 The basic purpose is to assess managers periodically, one to three days, with the help
of observation and evaluation of their actions across the cycle of chosen exercises or
work samples.
 Assesses are asked to take part in workgroups (without leaders), in-basket exercises,
computer simulations, role-playing and other parallel activities which require the
same qualities for successful performance as required in the actual work.

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 Once recording of observations is completed, the raters gather to discuss these

observations and take final decisions on the basis of these discussions.

7) Behaviour Observation Scale:

 A behaviour observation scale (BOS) contains a list of desired behaviours required for
the successful performance of specific jobs, which are assessed based on the
frequency with which they occur.
 One major difference between BARS and BOS is that, with BOS, each behaviour is
rated by the appraiser.

PROBLEMS/LIMITATIONS OF PERFORMANCE EVALUATION

Limitations of performance evaluation are as follows:
i) First Impression Error:
 It occurs when a manager forms a positive or negative image about a employee on the
first impression and keeps it in mind for future judgements.
 It is also known as primary or primacy effect.
 For example, a new manager finds that an employee is not performing properly.
 The reason behind this is that his parents had recently died in a mishap.
 Later the employee became normal and began giving a high level performance but the
manager's opinion did not change as it was negatively influenced by the first
impression.
ii) Halo Effect:
 It takes place whenever a rater gives too much importance to a particular factor of
performance and gives identical ratings to other performance factors as well.
 For example, if an employee is always the first one to reach office and the last one to
leave office, he is considered to be very industrious and creative.
 Whereas an employee with the casual attitude
 would not be taken seriously and would not be relied upon. It might not be accurate as
the manager has taken into account only a single obvious characteristic of the
employees. Such judgements should be carefully examined as a single trait cannot
define the character and performance of an employee.
iii) Strictness or Leniency:

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 Several managers rate their subordinates equally either low or high.

 These are known as strictness or leniency errors.
 The strict manager assigns lower ratings to what an employee is entitled to.
 While the lenient manager assigns higher rating than entitled.
iv) Central Tendency Bias:
 Some managers play a safe game by giving average ratings to all the employees.
 The reason behind this is because several systems want the managers to mention
additional remarks when they assign too high or too low ratings to employees.
v) Recency Bias:
 Recent actions have the tendency to surpass the overall performance.
 For example, an individual performed very well and hard over the year, but due to
some situations in last few weeks, his performance level went down.
 As a result, his supervisor gave him a bad rating on the basis of his last few weeks'
performance and ignored his eleven months superior performance.
 This is termed as recency error.
 If the manager maintains the record of his performance throughout the year, then
recency error can be reduced to a large extent.
vi) Stereotyping:
 Stereotyping refers to making a general image regarding the characteristics (which is
usually wrong) of all members of a group.
 This hampers a manager's ability to take correct decisions.
 For example, Mahesh is an introvert but an excellent salesman, but his manager
underrates his performance compared to the other salespersons.
 The manager here ignored Mahesh's performance due to stereotyping and made an
inaccurate judgement.
vii) Contrast Effect:
 Contrast effect states that something which is drastically different (highest or lowest)
will overstate the difference. For example, in an interview when there are huge
numbers of job applications, distortion in the evaluation of any candidate may occur
on the basis of the place of his application.
 If his application is placed after a relatively weak candidate, it may immediately grasp
the attention of the interviewer whereas it may lose its charm if it is placed after a
very strong candidate.

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vii) Personal Bias:

 Sometimes unfair evaluation occurs due to various reasons like personal beliefs,
attitudes, assumptions, experiences, preferences, and deficiency of accepting any
particular an individual, class, or fact.
 Differentiating people on the basis of race, religion, age, sex, etc., and assuming that a
particular person is not suitable specific job.
 Example -people believe that young workers are more efficient than aged workers.
This may result in giving a lower efficiency rating to older worker as compared to
young worker.
ix) Spillover/Past Performance Effect:
 It simply means previous performance rating affects the current rating, irrationally.
 For example, Vijay was awarded as a 'star performer' in the last year as he got the
highest rating. This year his performance was not up to the mark even then he was
rated as a 'star performer', on the basis of previous record.
x) Similar-to-Me Effect:
 It is in the nature of supervisors to give higher ratings to those employees whom they
believe have qualities or qualifications similar to their own.
 For example, those employees whose children go to the same school as that of their
manager get high performance rating as compared to those employees whose children
go to the other schools.
xi) Attribution Error:
 It is the inclination to determine behaviour of people according to personal factors
while ignoring the situational factors.
 For example, Manoj is a manager having both good and average employees in his
team but he gives the credit of success to his own leadership quality and blames the
bad attitude and laziness of employees for failure.

SOLUTIONS FOR PERFORMANCE EVALUATION PROBLEMS

Solutions for performance evaluation problems are as follows:
1) Know the Problem
2) Use the Right Appraisal Tool
3) Keep a Diary
4) Get Agreement on a Plan

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5) Develop Clear Policies

6) Improve Rater's Skills
7) Be Fair
8) Refinements in the Design of Appraisal Method performance feedback

FEATURES OF PERFORMANCE FEEDBACK.

Following are the characteristics of performance feedback:
1) It is specific.
2) It takes into consideration the requirements of the recipient of the feedback.
3) It emphasises on behaviour instead of individual.
4) It entails interchange/exchange of information instead of providing advice.
5) It is solicited instead of imposed.
6) It is timely. Providing instant feedback is very beneficial.

TYPES OF PERFORMANCE FEEDBACK

There are various types of performance feedback which are explained below:
1) Formal Feedback:
 Formal feedback collection sessions can happen on annual, quarterly, or monthly
review cycle.
 The timeline is determined by the company in accordance with its plans of
performance management.
 Evaluators record writing the results of the formal feedback session when the session
occurs.
 As soon as the written record is completed, this document is included in the personnel
file of the employee.
 Usually a formal performance feedback comprises of a documented conversation
amongst an employee and a superior.
2) Informal Feedback:
 The discussion among the employee and the evaluator is frequently included in
informal feedback.
 The informal feedback sessions happen regularly. Informal feedback can be given by
peers by way of verbal acknowledgment or peer rewards.

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 A feeling of job performance arises in an employee mind, his responsibility and

motivation increases through this informal feedback.
 It is not recorded in writing but it is conveyed personally by a team leader or a
superior.
 It requires no cost.
 The words used here are simple and upfront.
3) Positive Feedback:
 This type of feedback functions on the basis of developing the strengths of an
individual.
 It expresses to an employee regarding the things which he is performing well and
motivates him for better performance.
 Positive feedback can be given by the superiors in a formal manner like a
performance assessment, or informal manner like giving comments to the employee
for appreciating the job done by him.
4) Negative Feedback:
 This process indicates the poor performance of the individuals and making them know
the ways to overcome it.
 This includes making the employees informed regarding the attitude which they
display is unsuitable and also about their habits and behaviours that are creating
difficulties.
 Adverse feedbacks are also given by the managers that whether the actions of the
employees are deliberate or not.

PROCESS OF PERFORMANCE FEEDBACK

Following steps are included in the performance feedback process:
1) Organising Performance Feedback:
 Performance feedback must be a consistent and an anticipated activity of
management.
 In many organisations, there is a practice of providing performance feedback once in
a year.
 However, feedback provided only at one time in a year is not sufficient.
 The reason may be that it is the responsibility of superiors to rectify the lack in
performances at the moment they take place.

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 Feedback should be received by the employees so frequently that they are aware of
what will be said by the manager at the performance review.
2) Arranging for a Feedback Session:
 Superiors must be well-prepared for every session of formal feedback.
 Correct content should be made by the managers for meeting.
 The location where the meeting is to be held must be neutral.
 Meeting should be described by the manager as an opportunity walk over the
employee's role, manager's role, and relation among them when declaring the meeting
to an employee.
 It should also be expressed by the managers that an open dialogue meeting would be
preferred by them.
3) Conducting the Feedback Session:
 Of the approaches described below, any one may be adopted by the manager in the
course of feedback session:
 Tell-and-Sell Approach: This approach is concerned with telling the employees about
their ratings and afterwards explaining those ratings.
 Tell-and-Listen Approach: This approach involves telling the ratings to the employees
and allowing them to put forward their viewpoint.
 Problem-Solving Approach: This approach entails working together by employees
and managers with an object to resolve the problems of performance in an
environment of motivation and respect.
 Problem-solving approach is the best approach as it has been also proved by
researchers. But the fact that maximum numbers of managers use tell-and-sell
approach .
IMPORTANCE OF PERFORMANCE FEEDBACK
Importance of performance feedback is stated below:
1) Helps in identification of an employee weakness
2) Helps in identification of an employee strength
3) Helps in identification of an employee for promotion
4) Helps to determine training
5) Helps to Sustain Quality Workforce

PROMOTION

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MEANING AND DEFINITION OF PROMOTION

Promotion is when a person moves to a higher position because of his/her good
performance, this movement from a lower to a higher level position is called promotion.
According to Paul Pigors and Charles A. Myers, "Promotion is advancement of an
employee to a better job better in terms of greater responsibility, more prestige or status,
greater skill and especially increased rate of pay or salary".

PURPOSES OF PROMOTION
The promotion of an employee takes place to achieve the following purposes:
1) To Utilise Employees' Skills
2) To Develop Competitive Spirit level
3) To Promote Employee's Self-Development
4) To Promote Feeling of Contentment
5) To Promote Employees' Interest
6) To Reward Employees
7) To Help in Problem-Solving

TYPES OF PROMOTION
There are mainly four types of promotion, which are explained as follows:
1) Horizontal Promotion:
 It is a type of promotion in which the employee remains in the same classification of
job but with more responsibility and increased salary.
 For example, an analyst becomes a senior analyst after being promoted horizontally.
2) Vertical Promotion:
 In vertical promotion, there is a change in the rank, responsibilities, salary, and
classification of job.
 For example, an Assistant Supervisor is promoted to the position of a Manager.
 In this context, there is an increase in responsibility and accordingly there is an
increment in the pay as well as upward movement in organisational hierarchy.
3) Dry Promotion:
 When there is an increase in responsibilities and rank but there is no salary increment
or other financial benefits, such type of promotion is called dry promotion.

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 For example, when a Professor of a college is promoted as Head of the Department,

there is an increase in the grade but no financial increment.
4) Open versus Closed Promotion:
 In case of open promotion systems, all the employees are allowed to apply for the
promotional vacancies in the organisation.
 But when only limited candidates are allowed to apply for such promotional
vacancies, such systems are called closed promotional systems.

BENEFITS/MERITS OF PROMOTION
Below are some points showing why promotions are beneficial to the employees:
1) Rewards Superior Performance
2) Reduces Training Cost
3) Improves Morale of Employees
4) Promotes Employee's Growth
5) Motivate Others for Career Advancements
6) Gives Satisfaction to the Existing Employees

LIMITATIONS OF PROMOTION
1) Promotion Disappoints Some Employees
2) Some Employees Refuse Promotion

DEMOTION
MEANING AND DEFINITION OF DEMOTION
Demotion is opposite of promotion. When an employee is moved to a lower rank
from a higher position along with reduction in past scale it is called demotion.
According to Beach, "Demotion is a reassignment of an individual to a job of lower
rank and pay usually involving lower level of difficulty and responsibility".

REASONS FOR DEMOTION

There are various reasons that are responsible for the demotion. Some of them are as
follows:
1) Lack of Employee's Competence
2) Adverse Working Conditions

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3) Demand for New and Higher Level Skills

4) To Maintain Discipline
5) Deteriorating Health or Capacity
6) Work-Life Balance

DIFFERENCE BETWEEN PROMOTION AND DEMOTION

Promotion and demotion are poles apart but there are some more differences between
the two.
1) Demotion means the movement of an employee from higher to lower rank whereas
promotion means the movement of an employee from lower to higher rank.
2) Demotion brings negative vibes to the employee as his financial condition and prestige is
adversely affected whereas promotion makes the employee financially as well as
prestigiously stronger.
3) Demotion reduces the morale of the employee and is very depressing whereas contentment
given by promotion encourages the employee to work harder to become more successful.
Thus, the degree of promotional effect is less than the effect of a demotion.
4) Promotions take place more frequently as compared to demotions as every individual
working in a company wants to get promoted to a better place with better salary rather than
demotion. Thus, they do whatever they can do to get the promotion

TRANSFER
MEANING AND DEFINITION OF TRANSFER
Transfer means the movement of an employee from one department to the other or
frem one location to the other or from one branch to other branch. The transfer takes place
with no change in the pay scale or position and sometimes it may prove out to be financially
beneficial to the employee.
According to Edwin B. Flippo, "Transfer is a change in job where the new job is
substantially equal to the old in terms of pay, status and responsibilities".

PURPOSE/REASONS OF TRANSFER
Transfer is made due to following reasons:

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1) To Meet Organisational Needs

2) To Fulfil Employee's Requirements
3) To Enhance Employee's Productivity
4) To Make Effective Utilisation of Employees' Skill:
5) To Increase Employees' Versatility:
6) To adjust employees and their time
7) To Ensure Discipline in Employees
8) To Maintain a Tenure System

TYPES OF TRANSFER
On the Basis of Purpose:
It includes the following:
i) Production Transfers:
 Production transfers are based on the changing requirement of the organisation.
 When the employees are available in excessive number in a place are moved to a
place where there is demand for more employees.
 In this case, the organisation is same, only the departments are changed in order to
increase the productivity of the organisation.
ii) Replacement Transfers:
 Replacement means substitute to a new employee in place of the old employee who
has been working in the organisation since a long time.
 New employees are energetic and have new ideas.
 Replacement transfer helps in utilising the new knowledge and advanced skills of the
fresh talent in the interest of the organisation.
 The purpose of these transfers is to avoid lay-offs
iii) Shift Transfers:
 Shift transfer means transfer from one shift to another as per the convenience of the
employee as well as the organisation.
 It is a very common type of transfer.
 There are usually 3 shifts namely morning, evening and night.
 The position and job remains the same, only the timings are adjusted accordingly.
iv) Remedial Transfers:

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 Remedial transfers are made to remedy the situation or faults happened during the
placement.
 When employees are not able to perform their duties effectively or they are unable to
adjust themselves in the changing environment, employees are transferred to a more
suitable place where their skills can be better utilised and their performance can
become better.
v) Versatility Transfers:
 These transfers are made to make the employees more versatile.
 They are transferred to a different job so that they can get varied experience and
skills.
 It also prepares the employees for future promotions along with greater job
satisfaction.

2) On the Basis of Unit:

It includes the following:
i) Sectional Transfers:
When the transfers are made to train the employees to handle the operations and
working in different sections of the same department, such transfers are called sectional
transfers.
ii) Departmental Transfers:
Transfers made from one department to another department within the same
organisation are called departmental transfers.
The job responsibilities remain same for the employee in both the departments.
iii) Inter-Plant Transfers:
If an organisation is having more than one branch or plant, inter-plant transfers can be
made to fulfil the various changing needs of the organisation.

BENEFITS OF TRANSFER
Benefits of transfer are as follows:
1) When an employee is transferred from one department to another, or is given
responsibilities of different jobs, he is able to gain advanced knowledge and different skills
that may prove to be beneficial for him.

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2) Transferring staff members is one of the best ways to improvise social interaction in an
organisation. It maintains a healthy coordination between the employees of different
departments.
3) When the employees work with coordination and cooperation, it results in smooth
functioning of the organisation.
4) This stabilises the work fluctuations happening in by transferring in the organisation.
5) Transfer helps the employees to overcome the tediousness of same job they are performing
since a long time. They are able to acquire new skills which increase their chances of future
promotion.
6) Transferred employees are motivated to learn new things as they receive new challenges
and get opportunities to express their ideas and show their potential.

PROBLEMS OF TRANSFER
There are several problems that are faced by the employees which are related to
transfer. Some of them are as follows:
1) One of the major problems faced by employees during a transfer is adaptability. When
moved to a new job an employee has to adjust himself as per the place and environment.
2) Transfers cause a lot of trouble not only to the employee but also his family members. An
employee may face the problem of housing, adjustment, education of children, etc. when
transferred from one place to another.
3) There is a loss of time as well as money when employees are transferred from one place to
another Sometimes, employees are not happy with their transfer, so, they become careless
and inefficient in their work.
4) When transfers are based on discrimination, it diminishes the morale of the employee
leading to reduced job contentment, loyalty and devotion and he becomes less productive.

SEPARATION
Separation involves ending the employment relationship with an employee. Simply, it
can be denoted by termination of employment. It is also known as employee turnover.

TYPES/METHODS OF SEPARATION
There may be voluntary or involuntary reasons for separation of the employees, which
are as follows:

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1) VOLUNTARY SEPARATION:
When an employee decides himself to end up his relationship with the organisation, it
is called voluntary separation.
i) Resignation:
 Resignation is a particular situation when an employee takes himself the decision of
leaving his job or he is forced by the organisation to quit his job.
 In case of voluntary resignation, the employee decides to quit his job on his own.
 On the other hand, resignation is involuntary when the employer asks the employee to
leave his job or face disciplinary procedure.
 The domestic enquiry process should be followed instead of forcing an employee to
resign from the job.
2) Retirement:
 Retirement is the process of separation of employees from the organisation when they
have reached at a predetermined age.
 The predetermined age in organisations is usually 58-60 years.
 When an employee attains this age, he is discharged from rendering his services to the
organisation.
 It is the responsibility of an organisation to have clear rules for the process of
retirement.
 A retired employee must be honoured and various retirement benefits like gratuity,
insurance, provident fund, etc., must be given to him as soon as possible.
 Some organisations also give monthly pension to its retired employees, along with the
other benefits.
3) Involuntary Separation:
 When the employer asks the employee to leave the organisation, it is called
involuntary separation.
 In such case, the employee feels that he has been treated unfairly and he looks for the
legal protection to tackle it.
 Involuntary separations are as follows:
i) Lay-Off:
 Temporary termination of the employee from his job for a certain period of time is
known as lay-off.

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 After the fixed time duration, the employee can re-join work on being called by the
employer.
 Section 2 (kkk) of the Industrial Disputes Act, 1947, defines "lay-off as the failure,
refusal or inability of an employer to give employment to a worker whose name is
present on the rolls but who has not been retrenched".
ii) Dismissal or Discharge:
 Dismissal is a punishment, in which the service of an employee is terminated due to
serious misconduct.
 This ultimate punishment is given by the employer to his employee to correct his
undisciplined behaviour.
 Dismissal is a permanent separation and dismissed person is not able to get a job
somewhere as it carries a stigma.
 Dismissal are used without any discrimination by employers and Labour Courts.
iii) Retrenchment:
 Retrenchment can be defined as the termination of service due to surplus labour.
 According to Industrial Disputes Act, "Retrenchment as the termination by the
employer of the service of a workman for any reason whatsoever, other than as a
punishment, but does not include voluntary retirement, retirement and termination on
the grounds of ill health".
 Retrenchment is different from dismissal.
 Dismissal takes place because of one's own fault but on the other hand retrenchment
is forced on both the employees and the employer. I
 n retrenchment, the termination of services of many employees takes place but in
dismissal generally termination of service of only one or two employees takes place.
iv) Rightsizing/Downsizing:
 When there is surplus of employees in an organisation, then the organisation plans to
eliminate some of the job positions which are no more required in the organisation.
 This method of removing the job positions, thereby reducing the size of the
organisation is known as rightsizing/downsizing.
 Due to the process of downsizing, the employees who are not required anymore are
removed from the organisation. The main purpose is to improve the efficiency of
work.

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BENEFITS OF SEPARATION
Benefits of employee separations to the organisation include the following:
1) Minimises Cost of Labour
2) Helps in Replacing Low Performers
3) Promotes Innovation
4) Facilitates Workforce Diversity

JOB CHANGE
Employees go through numerous job changes during their entire career.
The term job change or employee mobility can be defined as the movement of employee:
1) To a new position in a different company.
2) To a new post in the same sub-unit of the same organisation, but with the changes in job
duties and responsibilities.
3) To a new post in a different sub-unit of the same organisation.

PURPOSES OF JOB CHANGE

Some of the purposes of job change are as follows:
1) Enhancing Organisational Effectiveness
2) Maximising Efficiency of the Employee
3) Handling Operational Changes
4) Ensuring Discipline

TYPES OF JOB CHANGE

There are following types of job change:
1) Internal Job Change:
 Also known as internal mobility or internal recruiting.
 Internal mobility means movement of the present employees within the same
organisation, in search of new job prospects. It is of two types:
i) Vertical:
 Mobility of employee from one position to another of a different rank is called
vertical mobility.
 Examples - Promotion and demotion
ii) Horizontal:

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 Mobility of employee from one position to another of the same rank is called
horizontal mobility.
 Example - Transfer

2) External Job Change:

 Also known as external mobility.
 External mobility means movement of the employees of an organisation to some other
organisation in search of better career opportunities.
 This occurs when employees are dissatisfied with their existing job conditions.

IMPLICATIONS/EFFECTS OF JOB CHANGE

Movement of the employee or job change have implications on both the employee
and the organisation. Some of them are

1) Effects of Promotion:
Following are some of the effects of promotion:
i) Promotion leads to an employee taking on responsibility of another employee.
ii) Promotion is seen as favourable by employees as it has the desired effect on pay,
responsibility. authority, and the ability to influence decisions in the organisation.
iii) Promotion also leads to a problem in the organisation wherein continuous promotion
places an employee in management role. Employers feel forced to design alternative career
course for employees who are worthy of promotion and all related benefits, but do not want
to engage in the work of other employees.
iv)Promotion of one employee comes at the cost of no-promotion for many others. When
other candidates want promotion, they often leave the organisation due to dissatisfaction.
Further, selection of wrong person for promotion may cause resentment in many others. Only
those employees should be promoted who have contributed to the success of the organisation

2) Effects of Demotion:
Following are the major effects of demotion:
i) A demotion is a strong sign which shows that management is dissatisfied with employee's
behaviour. Generally, organisations do not use this method for punishing employees because
it lowers the morale and self-confidence of employees. This is why demotion is used rarely.

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ii) Demotion can create negative impression on other employees as well because it is
considered a harsh measure for solving problems.
iii) The demoted employee may get emotionally charged. He may experience disrespect,
embarrassment and disappointment. This decreases the overall productivity of the employee.
iv) Demotions frustrate certain needs like esteem and belonging.
v) Managers may improve their performance seeing that others have been demoted for non-
performance.

3) Effects of Transfer:
Transfer of employees from one location to another can also lower their level of confidence.
The effect is generally felt in the form of employee dissatisfaction of losing colleagues and
pressures of adjusting to a new environment.
Following are some of the effects of transfer
i)Employees attached to the organisation may feel decrease in morale due to transfer to a
foreign location.
ii) Other employees may feel anxious or nervous due to the fear that they will he transferred
next.
iii) Employees may dislike the transfer
iv)Transfer of employee may also lead to disruption in work. For example, the successor of
the transferred employee may not be capable enough of carrying forward the previous work.
v) Employees may resign due to the transfer policy of the organisation, if the employee is not
ready to leave his native place.
vi)Employees may have to bear a part of the relocation costs, which otherwise company has
to pay. This demotivates the employees further.
vii) Family members of transferred employee may feel psychologically disturbed as they
have to make adjustments to new surroundings.
viii) Without transfer policy in place, management may see more political activity among the
employees.
However, proper communication channels can help in maintaining good relations between
employer and employee, when it comes to transferring employees.

4) Effects of Separation:
It is noteworthy that different forms of separation have different effects. They are discussed
below:

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i) Downsizing:
When employees are separated due to downsizing, they may become depressed. An
employee may lose his confidence when he feels that he has less capability. He may also get
angry with the company for wrongfully dismissing him. Downsizing makes the employee
financially unstable due to loss of earnings and particularly when he could not find an
alternative employment. All of this has a negative bearing on his lifestyle.
ii) Lay-Off:
Lay-off creates immense emotional impact on the employee concerned. It creates
feelings of unemployment, homelessness, loss of confidence, possible illness, etc. The
employee experiences loss of social status and reputation. The person laid-off becomes
uncertain about how to handle the new situation. The person faces a lot of stress. At the same
time, persons continuing with the organisation also get internally disturbed about the possible
loss of job. There is disturbance in stability. Due to fear of losing job, employees may not be
able to give their full attention to the organisation. This creates a feeling of disconnection
with the company with a significant loss of productivity.
iii) Retrenchment:
Retrenchment can generate feelings of shock both for the leaving employee as well as for the
employees continuing with the company. Remaining employees may feel demoralised due to
insecurity creased by retrenchment. The employee retrenched may experience feelings of
frustration towards the company. Retrenchment not only affects the financial stability of the
employee but also damages his self-esteem.
iv) Resignations
Resignations create problems of low efficiency and effectiveness. If a competent and friendly
employee resigns, it lowers the morale and efficiency of existing employees. Secondly,
person succeeding the employee will take time to build similar relationships with others for
improving the outcome of the workforce.

CONTROLLING
MEANING AND DEFINITION OF CONTROLLING
Controlling is a function of management that strives to measure the performances and
take the remedial actions when needed. Thus, controlling is a process which facilitates
measuring the actual performance against set standards.

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According to II. Koontz and O'Donnell, "Controlling is the measuring and correcting
of activities of Control process

PROCESS OF CONTROLLING
Following are the distinctive stages involved in a control system

1) Setting Performance Standards:

 All the firms chase certain targets in terms of revenues, creativity, customer
satisfaction, personnel, etc.
 The standards are the targets which help in reaching the required levels of
performance, encourage for better performance, and provide benchmarks for
measuring the actual performance levels.
 A standard can be fixed for any activity such as finance, operational, legal, charitable,
etc
 Four important factors are highlighted against which the performance is measured are:
i) Quantity iii) Required Time
iii) Quality iv) Cost Incurred
2) Measuring Performance:
 The next stage is to evaluate the level of performance.
 Example, a manager can calculate the number of units produced, total time taken, the
days of absenteeism, amount of money earned.
 Following are the three sources from where the performance data are attained
i)Written Reports:

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 Computerised reports and on-screen reports are the types of written report.
 With the help of computer and its abilities, data can be gathered and analysed easily.
 This technology can provide enormous benefits to the managers in presenting written
reports.
ii) Oral Reports:
 Oral reports are the summary provided by the managers to their superiors.
 For example, a sales person provides a daily summary to his superior regarding the
targets achieved, number of calls made in a day, challenges faced by him, and the
reaction of customers regarding a product or service.
iii) Personal Observation:
In direct observation, the person goes to the place where the work is going on and
observes what exactly is happening.
3) Comparing Performance with the Standards:
 The third stage is a comparison of performance against the standard.
 This process involves assessment of performance by the manager.
 In some cases, small variations from the benchmark are tolerable while in a few cases,
even minor variation can cause disaster.
 Therefore, it is important for the management to direct their attention towards
handling the exceptions.
 For example, the sales manager may investigate the reasons behind unexpectedly
declining sales of a product in one region, while increasing sales for the same product
in other region.
4) Taking Corrective Actions:
 The final stage of the control process is taking corrective actions when major
variations are found in the outcomes.
 This stage includes adjustment of operations for achievement of the desired outcomes.
 If any major variation is found, the manager takes strong and immediate actions to
deal with the challenges.
 The remedial measures can be anything such as changes in the marketing strategy,
introducing rules and principles, a new technique to inspect the manufactured item, or
altering a process.
TECHNIQUES OF CONTROLLING

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There are various techniques available for controlling in the field of management. We
can group them under two broad categories as follows:

i) Traditional Techniques
ii) Modern Techniques

TRADITIONAL TECHNIQUES
As the name suggests, managers have developed and used these techniques for a long
period of time. These techniques are still fruitful and used by the firms till date.
Following are the most commonly used traditional techniques for controlling:
1. Personal Observation
2. Break-even Analysis
3. Statistical Reports
4. Budgetary Control

Personal Observation
 It is the oldest traditional method.
 The manager personally observes the employees/workers at the workplace.
 It also called as On-the-Spot or Direct Observation.
 Direct observation pressurizes the employees and motivates them to work with
maximum efficiency.
 The benefit of using it is to get first-hand and authentic information for the analysis.
 Also, the managers can correct the operations on the spot in case of non-performance.
 The employees can share issues or problems simultaneously.

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 It boosts the morale of the employees.

Break-even Analysis
 This control technique depicts the relationship between Cost and Volume at different
output levels.
 It is also known as the Cost, Volume and Profit analysis.
 It predicts the profits and losses in response to the changes in output levels.
 The point where the cost price equals the selling price is the Break-even point.
Statistical Reports
 The manager gathers information to evaluate performance in functional areas.
 They use the collected information for comparison purposes.
 It involves the analysis of the numeric data in the form of:
1. Averages
2. Percentages
3. Co-relation
4. Ratios, etc
 The organization presents the above information via Charts, Graphs, Tables, etc.
 These reports help visualize the data and identify the areas that demand attention.
 Hence, it is the most used and helpful technique for data analysis.
Budgetary Control
 Budgetary Control is an important traditional control technique used in planning and
controlling functions.
 The budgeting process includes comparing and evaluating the actual and budgeted
performances.
 The formulated budget can be inaccurate and expensive.
 Following are the common types of budgets prepared by organizations:
1. Cash Budget
2. Sale Budget
3. Production Budget
4. Capital Budget
5. Material Budget

MORDEN TECHNIQUES

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Morden control techniques are additions to the management literature. These are of
recent origin and provide innovative methods for organizational evaluation and control.

1. Return on Investment
2. Financial Statement and Ratio Analysis
3. Responsibility Accounting
4. Management Audit
5. PERT & CPM
6. Management Information System

Return on Investment
 Return on Investment (ROI) is the profit earned by invested capital.
 It is analyzed to attain financial control in the business.
 It is also known as the Du-Pont System of financial analysis.
 To measure the generated return, we calculate the rate of ROI.
 This rate helps assess the financial position of the business.
Financial Statement and Ratio Analysis
 It helps in controlling the finances of the organization by calculating different Ratios.
 For this purpose, data is accumulated from the firms’ financial statements.
 The most used Ratios are as follows:
1. Profitability Ratios
2. Liquidity Ratios
3. Solvency Ratios
4. Turnover Ratios
Responsibility Accounting
 It is an accounting system that depends upon the responsibility assigned to the
employee. So businesses conduct an evaluation of the employee’s ability to fulfil the
assigned responsibility as per set standards.
 This control technique is suitable for large organizations containing many
departments.
 Generally, responsibility centres are of four types:
1. Revenue Centre
2. Cost Centre

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3. Profit Centre
4. Investment Centre
Management Audit
 Management or Internal Audit is the examination of the utilization of the company’s
resources.
 The Top-level initiates it to ensure the efficient performance of the management.
 Internal Auditing starts as soon as the financial audit ends.
 During the audit, the overall management process is evaluated.
 However, management audit is not compulsory for organizations.
PERT & CPM
 PERT is Program Evaluation and Review Technique, whereas CPM stands for
Critical Path Method.
 These control techniques are used for project management and evaluation.
 The project’s success is largely affected by the time taken and steps involved.
 Therefore, managers strive to cut the total time and cost involved in completing the
activity.
 It focuses on the efficient execution of the project.
 But the execution must be within the stipulated time and predetermined costs.
Management Information System
 Management Information system (MIS) provides information for effective decision-
making.
 Managers can retrieve any data when they needed.
 It is one of the cost-effective controlling techniques.
 It provides information at the right time and helps manage a huge bundle of data.
 The information obtained from MIS is accurate and facilitates decision-making.

An organization can use various traditional and modern techniques to exercise

managerial control. These are the systematic approach for monitoring and controlling
different business operations. Managers must examine the operations and take the required
measures to attain effective control.

IMPORTANCE OF CONTROLLING
Controlling helps in following ways:

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1) Aids in Achieving Organisational Goals:

 Controlling allows the management to ensure that the difference between the
outcomes and the benchmark is minimum.
 This in turn, aids in achieving the intended organisational goals.
2) Enables Optimum Utilisation of Resources:
 Implementation of plans involves utilisation of resources, i.e. men, material, and
money. Resources are always limited and scarce and hence have to bebutilised,
without wastage.
 This is ensured by effective control mechanisms.
3) Ensures Discipline and Order:
 Controlling introduces a sense of attentiveness among employees that they are under
control and evaluation.
 This ensures that all are performing as per expectation and working as per the plan.
4) Improves Coordination:
 Controlling also involves integration of all the activities in the organisation.
 It seeks to ensure that all the units work in coordination, for the achievement of
common goals according to plans and procedures.
5) Helps in Better Planning:
Controlling provides real-time feedback about the implementation of plans, which in
turn helps managers to plan in a better way, so that the observed pitfalls and identified errors
could be avoided in future.
6) Makes Employees Accountable:
 Control function enables the management to monitor and observe the performance of
employees regarding the roles and duties assigned to them.
 This helps in fixing accountability and holding them responsible for their performance
of success or failure.
7) Motivates Employees:
 Controlling enables monitoring the performance of employees.
 It helps in identifying performers and achievers. Such employees are then rewarded
by the organisation.
 This motivates employees to perform as they know that their performances would be
noticed and their efforts would be acknowledged.
8) Facilitates Delegation:

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 Controlling helps superiors to evaluate the capabilities and performance of their

subordinates, which allows the superiors in delegating responsibility to them.
 Delegation always makes management more efficient, as superiors now have more
time for other important tasks and duties.

GRIEVANCE

Meaning and Definition of Grievance

Grievance can be referred to as a feeling of discontentment and dissatisfaction that an
employee has regarding his employment.

GRIEVANCE MANAGEMENT
 Grievance management is the procedure through which the manager deals with the
grievances of his employees during his service.
 Grievance management makes it possible to identify problems of the employees.
 Without grievance management, it is impossible for the management to deal with
employee problems and respond to them.
 Thus, grievance management plays an important role

GRIEVANCE REDRESSAL PROCEDURE

 Grievance handling procedure or grievance redressal procedure is the formal system
for dealing with employee grievances.
 It involves several steps through which an affected employee can take his grievance to
higher levels of management for redressal.

STEPS IN GRIEVANCE HANDLING PROCEDURE

Steps involved in grievance handling procedure are

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Step 1) Identification of Grievances:

Those grievances of employees which are not being disclosed must be recognised by
the management.
Step 2) Define Correctly:
After identifying the grievances, management should correctly define them.
Step 3) Data Collection:
Every data related to grievance must be gathered from all sources and after that it
should be classified as facts, data, opinions, etc.
Step 4) Analyse and Solve:
After data collection, analysis of information must be done in order to develop
alternative solutions and select the best solution.
Step 5) Prompt Redressal:
After the analysis of grievances, it must be redressed immediately by implementing
the solution in a speedy manner.
Step 6) Implementation and Follow-Up:
The implementation of the solution to check the effectiveness of the solutions.

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MODEL OF GRIEVANCE HANDLING PROCEDURE

National Commission on Labour has suggested a model grievance redressal procedure which
includes following steps:
1) First of all, the distressed worker approaches the foreman and communicates his grievance
verbally.
2) The worker will approach the supervisor, if he is not satisfied by the redressal of his
grievance by the foreman.
3) Within 48 hours, the supervisor must provide a reply. The worker will proceed towards the
next step if the supervisor is unable to provide a satisfactory reply in the given timeframe
4) In the next step, worker contacts the Head of Department either alone or alongwith the
representative of his department. He has to respond within three days.
5) If the worker does not get the answer or is not satisfied with the response of the
departmental head, he can appeal to the Grievance Committee. The representatives of the
employer and the employees constitute the Grievance Committee.
6) The committee makes its recommendations and forward it to the manager within seven
days after intimation of grievances.
7) The management shall implement the agreed decisions, if any, decided by the committee.
8) When there is any unanimous decision, the members of the committee place their views
before the manager of the worker for his decision. The worker is informed about the decision
within three days by the manager.
9) When the worker is not satisfied, he can make an appeal against the manager's decision
which has to be again decided within a week.

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The worker may be accompanied by the union official for discussion with the
manager. If no decision is taken. then within a week of the receipt of the management's
decision, both the union and management can take the grievance to voluntary arbitration.

ADVANTAGES OF GRIEVANCE HANDLING PROCEDURE

Advantages of grievance handling procedure are as follows:
1) It brings out grievance issues in front of the management so that remedial actions can be
taken.
2) Timely intervention by the management prevents minor grievances from assuming big
proportions
3) It provides a formalised outlet for the employee's psychological release to reduce their
discontentment.
4) It facilitate in the establishment and maintenance of conducive working environment.
5) It helps the management to identify the attitudes and feelings of employee regarding the
organisational policies, rules and practices so that essential upgradations in policies and rules
can be done.

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6) It closely monitors arbitrary management actions. As the manager knows that his actions
can be scrutinised and challenged, he will be more cautious while coming to a decision.

DISADVANTAGES OF GRIEVANCE HANDLING PROCEDURE

Disadvantages of grievance handling procedure are as follows:
1) The procedure can be lengthy and costly.
2) Lack of people skills to deal with grievances at every stage.
3) Different procedures are followed in organisations.
4) Final decisions can be withheld by the management. This causes frustration among
employees.
5) The members may not react promptly and become dependent on the "the union" to look
after all the issues.

GRIEVANCE REDRESSAL METHODS

Methods used to resolve the grievances are as follows:
1) Collective Bargaining:
In this method of grievance resolution, issues of various employees are resolved
2) Mediation:
It is a voluntary method of grievance handling which comes into play when the
grievance stays as it is even after the formal procedure is undertaken to resolve it. But, it is
used before opting for an unbiased third party redressal, i.e., arbitration.
3) Conciliation:
It is a process in which a third party, after analysing the conflict, proposes a solution
to the conflict with an intent that both the parties involved in conflict give their consent to it
Main motive behind this method is to resolve the disputes as soon as possible in order to
avoid lock-outs, strikes, etc. or to reduce its duration, if it happened.
4) Arbitration:
This process of grievance handling takes place with the help of an unbiased third
party, which studies the issue and provides the parties with an impartial solution. Arbitration
should not be confused with the formal court system. And, hence its decisions are not
compulsory all the time.
5) Adjudication:
In this method also the grievances are resolved by the interference of a third party but
here the third party is employed by government and its decisions are also binding.

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Sometimes, the consent of panties involved is asked before referring the grievances to
adjudication and sometimes, government can refer it on its own.

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