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HUMAN RESOURCES MANAGEMENT

FUNDAMENTAL OF HRM
Human resources
Organizations are nothing but the resources of men, money, materials and machinery collected, coordinated and utilised.
These resources by themselves cannot fulfill the objective of an organisation. They need to be united into a team. It is
through the combined efforts of people that material and monetary resources are effectively utilised for the achievement
of common objectives without united human efforts no organisation can achieve its goals. People are the most significant
resources of any organisation and are therefore called human resources.
Meaning & Definition
Human Resource Management (HRM) may be defined as a set of policies, practices & programme designed to achieve
both personal and organisational goals.
According to Flippo, "Human Resource Management is the planing, organising, directing and controlling of the
procurement, development, compensation, integration, maintenance and reproduction of human resources to the end that
individual, organizational and societal objective are accomplished".
According to Northcott, "Human Resource Management is an extension of general management that of prompting and
stimulating every employee to make his fullest contribution to the purpose of a business".
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
The functions of Human Resource Management (HRM) are common to all organization. HR Management can be broadly
classifies as Personnel department which is concerned with all routine functions and HR Development (HRD) department
which is concerned with development of the employee at the individual, inter-personal and Group level. Overall, these
functions are under HR Management and may broadly be classified into two categories.
A) Managerial Functions
B) Operative Functions
I. MANAGERIAL FUNCTIONS:
Managing people is the essence of being a manager. So like other managers, a human resource management performs
the functions of planning, organising, directing & controlling.
1) Planning: HR Managers are responsible for HR policies & programmes and estimating the HR (staff requirement.
2) Organizing: Organizing is the process of dividing tasks, among members of group, defining authority, responsibility
relationships and integrating their activities towards common goals. The right organisation structure is the basic for
effective management.
3) Directing: Motivating, leading & supervising people. A manager can tap the maximum potential of employees by giving
proper directions. It is required for taking right step at crucial stages and build sound individual and human relations in the
organisation.
4) Controlling: Checking, verifying and regulating to ensure that everything occurs in right directions and according to
instructions given. Such monitoring helps to minimise the gap between desired results and actual performance.
II. OPERATIVE FUNCTIONS:
The operative functions are activities of procuring, developing, compensating &maintaining an efficient work force.
Procurement Function: Recruiting required number of personnel with the required job skills and right attitudes.The
various steps are,
a) Job Analysis: The process of studying the detail of operations and responsibilities involved in a job so as to arrive at
the number and type of people required to perform the job effectively.
b) H.R. Planning: It is the process of estimating the present and future manpower required of the organisation and fulfill
it accordingly.
c) Recruitment: It is the process of searching for required personnel and processing their applications.
d) Selection: Judging the suitability of the candidates and choosing the best suitable for the job.
e) Placement: Assigning suitable jobs to selected ones so as to match employee qualifications with job requirements.
f) Induction / orientation: Making new employees familiar with the organisation, work environment and also with
existing employees so as to make the new arrivals comfortable.
III. DEVELOPMENT FUNCTION:
Human Resource Development is the process of improving the knowledge, skill, aptitude and values in such a way so
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that they can perform the jobs more effectively. It includes the following activities.
a) Performance and Potential Appraisal: Evaluation of current performance and potential for development.
b) Training: Arranging for training to improve the skill base and knowledge levels of the employee.The other and more
important part of the training is helping the employee to develop the attitudes required to work effectively in the
Organization.
c) Executive Development: The process of developing managerial talent through various programmes.
d) Career Planning and Development: Planning career paths and implementing them to fulfill the career aspirations of
people through Promotions, transfers and so on.
IV. COMPENSATION FUNCTION:
Providing equitable ( just and fair) remuneration to employees for their contribution in the achievement of organisational
objectives. It includes the following activities.
a) Job Evaluation: Determining the relative worth of the job.
b) Wage and Salary Administration: Determining wages and salaries.
c) Bonus: It includes payment of bonus under the payment of Bonus Act 1965 as well as non-statutory bonus and other
incentives.
V. INTEGRATION FUNCTION:
The process of combining the goals of the organisation with those of its members. Integration involves motivating
employees through various financial and non-financial incentives, providing job satisfaction, workers participants in
management and by improving quality of working life etc.
VI.MAINTENANCE FUNCTIONS:
Protecting and promoting the physical and mental health of employees. For this purpose several types of fringe benefits
are provided and Health, safety and welfare measure are designed to preserve the human resources of the organisation.
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
Managerial Functions
Procurement
Planning
Organising Job Analysis
Directing
Human
Resource
Planning
Controlling Recruitment
Selection
Placement
Induction
Operative Functions
Development
Compensation Integration
Performance
Job Evaluation Motivation
Maintenance
Safety
Appraisal
Training
Wages
and Job
Social
(Functional &
Salary Adm.
Satisfaction
Security
Behavioural)
Executive
Bonus
and Conflict
Welfare
Development
Incentives
Management
Schemes
Career Planning Payroll
Participation of Personnel
and
Employees
Records
Development
Discipline
Personnel
Research
Personnel
Audit
Transfer
Promotion
Separation
Budgeting &
Reporting
Communicating
Leading
LINE MANAGERS Vs PERSONNEL MANAGERS

Line managers are departmental managers. For example, in a bank branch, the SB clerk will have the Savings officer as
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his line manager. The personnel managers functions at the branch level may be undertaken by the Accountant,
Manager or Officials of the HR Department at Regional office. In a factory, Line manager is the Floor Supervisor or the
Line Supervisor and the personnel manager is some one who is in the Personnel or HR department in the office.
Personnel Function and Responsibilities of Line and Staff Managers
Line Manager's Responsibilities

Placing the right man on the right
job
Orientation of new employees

Training employees on the job
Developing
cooperative
relationships in the organisations
Interpreting the company's policies
and procedures.
Developing potential of every
employee
Controlling labour cost.
Developing high morale
Protecting health and safety of
employees
Personnel Department's Responsibilities

Advising and assisting line managers in hiring,
training, appraising and firing employees at all levels
(staff or service functions)
Administering various employee benefit programmes
Ensuring that the various labour laws are duly
complied with
Coordinating personnel activities of different
department.
HUMAN RESOURCES DEVELOPMENT MANAGER

Functions of Human Resource Development professionals are as follows:
a) Supportive Role:Strengthening of operating and executive levels and consolidating the strengths in an organisation.
b) Role of Developing Competence: Developing technical, managerial competence among the human resource.
c) Managerial Role: Performing managerial functions like planning future manpower, recruiting, utilising, retaining,
motivating and integrating people and their role, performance and potential etc.
d) Role of Liaison: Very often the Human Resource Manager acts as a link between different departments of an
organisation.
e) Process Role: An effective organisation needs to respond to the changing environment, for which it has to develop
coping skills. Creating necessary culture and values in the organisation, diagnosing / detecting the problem at
organizational level and taking corrective actions.
SOME IMPORTANT POINTS
FUNDAMENTALS OF HUMAN RESOURCES MANAGEMENT
1 Robert Owen(1771-1858):A manager by profession he was known as FATHER OF WELFARE MANAGEMENT, he
claimed that a manager's best investment was in his workers. He called his worker's as VITAL MACHINES.
2. Charles Babbage :( 1792-1871) The concept of Division of work is attributed to him. He is also the forefather of
Computer. Before Industrial Revolution changed the Industrial climate, an employee was considered a Servant and the
Employee a Master.
3.Frederick Taylor (1856-1915): FATHER OF SCIENTIFIC MANAGEMENT Scientific management theory was
conceptualized by Frederick Taylor. He held The view that people would do the work they were paid for.This was called
SCIENTIFIC MANAGEMENT THEORY. The main draw back of the scientific Management theory is that it gave no
importance to Human behaviour. It was further substantiated by Gantt & Gilberths.
4.Birth of Labour Department: First recorded Labour department was established in a company called National Cash
registry Ltd in the year 1902.
4. Hawthorne studies (1924-1933): The Hawthorne studies were conducted in the factories of Western electrical
company in Hawthorne near Chicago-USA by Elton Mayo and team. These studies conducted are a landmark in the
development of HRM as it is today. They pointed out to various dimensions of human behavior that were not considered
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to be significanct in the earlier Scientific Management Approach.

5. Social welfare viewpoint of Personnel management with its origins in social work and certain sub-fields within
psychology is viewed as
a) Antithetical to the real organizational goal of productivity by few managers even today
b) Being against too much emphasis on productivity and profit
c) Considers that employee satisfaction is not given enough weight age at times
6. The birth of the specialized human resources management as distinct from the day-to-day supervision of
personnel by operating managers was marked by creation of a special post called as Welfare secretary.
7. In early 1950s, there was a marked increase in the number of training programs for supervisory staff
emphasizing the importance of consideration and kindness while dealing with subordinate staff. By mid 1950
however the following conclusions were arrived at the conclusion that the approach increased job satisfaction
but not productivity
8. The history of management of the people as a distinct managerial function goes back to the end of 19thcentury and the beginning of the 20th-century. The development of the people management functions took place
in three distinctive phases. The first phase revolved around the activities like time keeping, wage administration,
training the workers following the changes in technology etc. This continued precisely till the results of
Hawthorne studies.
9. Acquisition, integration, training and placements, promotions, compensation, evaluation are subsystems of
the personnel management system. These systems developed in which phase of the people management
system second phase.
III PHASE of People Management or Development Phase (1970 onwards)
10. In the third phase the work of organizational experts on the issue of motivation at the workplace led to the
new thinking that an employee is not just a' factor of products' and but a 'resource'. This developmental
approach to people management made significant impact in changing the existing systems. This has led to the
view:
a) Training activity should not only be on the job related skills but also aimed at enhancing the general growth of the
individual.
b) Training should include helping the individual to develop effective relationships in the organization at various levels.
c) It should help him to take on an address to various roles and take care of his negative emotions and their impact.
11. The relationship with unions was redefined in the III phase of development of people management. This was
because:
a) The traditional Master- Servant perspective had changed to one in which each party has rights and also duties.
b) The two entities i.e. the employer and the employee need to be guided by the principles of trust , sensitivity and
participative outlook.
c) Collaborative approach is imperative to face challenges and sustain excellence in the competitive environment.
12. This III phase of development of people management is also called the Developmental phase. Here the need
to look at an employee as Resource rather than a Factor of production became popular.
15. If we study the role functions of Line managers and HR managers that are generally accepted now, we find
the accent is on the policy rather than day-to-day functioning in HR roles.
16.Sheth: Stated that Underlying HRM, is a progressive reinforcement of values of democracy, l liberalism, humanism
and shared control over the workplace. It implies social commitment to the need for widening the base of individual rights
and corporate objectives.
17.Edgar Schien-1979: Definition of an Organization:An organization is the rational coordination of the activities of a
number of people for the achievement of some common explicit purpose or goal, through division of labour and function
and through a hierarchy of authority and responsibility.
18. Researchers like Chris Argyris, Abraham Maslow Douglas Mcgregor etc highlighted the dimensions of Motivation that
are rooted in the growth needs of the individual.
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19) Likert & Stodgill: Conducted studies at University of Michigan and Ohio state University.They concluded that
individuals in the organization needed to feel important rather than just happy.
DEVELOPMENT OF HUMAN RESOURCE MANAGEMENT IN INDIA
1)1931- The Royal Commission on labour recommended the appointment of labour officers.
a) To protect the workers from the evils of jobbery and indebtedness,
b) To check corrupt practices in recruitment and selection
c) To act as a spokesman of labour
d) To promote settlement between the workers and management.
Welfare officer was concerned mainly with recruitment and welfare of workers.
2) 1948- After independence, the Factories Act 1948 made it mandatory for factories employing 500 or more workers to
appoint welfare officers. The Act also prescribed the qualifications and duties of welfare officers.This was found
necessary as TRADE UNIONS HAD BEGUN TO BE FORMED
Comments: welfare officers mainly play a fire fighting role i.e. maintaining industrial discipline with rising expectations the
welfare needs of the working gap increased.
3) 1950s- Two professionals bodies i.e. the Indian Institute of Personnel Management (IIPM), Calcutta and the National
Institute of Labour Management (NILM) Bombay were established during the 1950s.
4)1960s-During the 1960s, the personnel function widened beyond the welfare aspect. Three major areas of practice i.e.
labour welfare; industrial relations and personnel administration were grouped under Personnel management. Rapid
industrialisation and the opening of public sector during the five-year plans accelerated the growth of personnel
management and professionalisation of management.
5)1970s- Concern for welfare shifted to achieving higher efficiency. A change in professional values of personnel
managers became visible.
6)1980s-Due to new technology and other environmental changes, Human Resource Development became a major
issue. The two professional bodies IIPM and NILM were merged to form National Institute of Personnel Management
(NIPM) at Calcutta.
7)1990s-HRM was recognised as a distinct discipline. The importance of role of human factor in industry was recognised.
8) 2000- HRM is given the same Production or Marketing today. HR professionals are now at Director Level also. Though
issues such as Unionism have taken a back-seat, new issues such as increasing Employee abilities in Soft skills such as
Teamwork, Marketing etc are occupying centre-stage. With liberalization and increased Competition, new areas of
concern such as Compensation Management, Cross-cultural Management, Managing Attrition, Stress Management,
Community benefits have become the areas associated with HR Management.
Thus the personnel function in India has grown through several stages e.g. labour welfare, industrial relations, personnel
management Human Resource Management and ultimately Human Resource Development.
It may be noted that even during early stages of development of HRM in India ,some visionaries like Jameshedji
Nasarwanji Tata has introduced certain HR measures in TISCO-the steel plant of Tata group(now called TATA STEELS)
which later went on to become benchmarks in HR industry. These measures are land marks in Indian HR development as
the Government went further and passed legislature on similar lines which are now a part of our daily life.
Broadly called the TISCO measures these are examples of the Vision of the Tata group executives.
Some important measures introduced by Tata steels - Eight hour working day (1912), free medical aid (1915),
Establishment of welfare dept (1917) School facilities for children (1917), Leave with pay (1920), Workmen accident
compensation Scheme (1920) Retiring gratuity(1937) etc.
These went on to become bench marks and Government enacted laws such as factories act(1948-Eight hour working
day), Employee State insurance act (1948-Free medical aid),Leave with pay (Factories act -1948), retiring Gratuity
(Payment of Gratuity act-1972). Thus it may be concluded that Indian organizations were sensitive to the crucial issues of
human management.
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NATURE AND SCOPE OF HUMAN RESOURCE MANAGEMENT

Organisations are made up of people and function through people. Without people organisations cannot exist. The
resources of men, money, materials and machinery are collected, coordinated and utilised through people. These
resources by themselves cannot fulfil the objectives of an organisation. They need to be united into a team. Human
resource development is the central subsystem of an organisation as can be seen in figure:
Finance
Subsyste
m
Material
Subsyste
m
HRM
Subsyste
m
Technical
Subsyste
m
Marketin
g
Subsyste
Human resource management has become verym
significant in recent decades due to the following factors:
a)
b)
c)
d)
e)
f)
g)
h)
i)
Increase in the size and complexity of organisation e.g. a multinational corporation employing millions of persons.
Rapid technological developments like automation, computerisation, etc.
Rise of professional and knowledgeable workers.
Increasing proportion of women in the workforce
Growth of powerful nationwide trade unions.
Widening scope of legislation designed to protect the interests of the working class.
Revolution in information technology that might affect the work force.
Rapidly changing jobs and skills requiring long-term manpower planning.
Growing expectations of society from employers.
Human Resource Planning:

Human resource planning has been defined as "the process by which management determines how an organisation
should move from its current manpower position to its desired manpower position. Through it management strives to have
the right number and the right kind of people at the right places, at the right time, doing things which result in both the
organisation, and the individual receiving, maximum long-range benefit." To sum up, human resource planning is the
process of determining manpower needs and formulating plans to meet these needs.
Stainer: Manpower planning is the strategy for the acquisition, utilisation, improvement and preservation of an
organisation's human resources. It is aimed at coordinating the requirements for and the availability of different types of
employees".
Beach: Human resource planning is a process of determining and assuming that the organisation will have an adequate
number of qualified persons, available at the proper times, performing jobs which meet the needs of the enterprise and
which provide satisfaction for the individuals involved.
An analysis of the above definition reveals the following characteristics of human resource planning:
(i)
(ii)
It forecasts of the manpower needs in a future time period so that adequate and timely provision may be made.
It is an on-going or continuous process because the demand for and the supply of human resource undergo
frequent changes.
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(iii)
(iv)
(v)
(vi)
(vii)
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Human resource planning is an integral part of corporate planning. Without a corporate plan, there can be no
manpower plan. Whether or not the manpower plans meets the organisation requirements and are in tune with
the reality depends on how clearly the goals are defined.
The purpose is to make optimum utilisation of an organisation's current and future human resources. In order to
maximise the return on investment in human resources, it is necessary to relate future human resources to future
needs of the organisation.
It both quantitative and qualitative aspects. The right number of right employees is required.
It is the primary responsibility of Management to ensure effective utilisation of the existing human resources.
Human resource planning is a systems approach to human resources. In it the information about the demand
and supply of human resources constitutes the input. Comparison and evaluation of demand and supply so as
to identify the gap between the two is the transformation process. The outputs of human resource planning are
the strategy and programme formulated to bridge the gap.
Human resource plans can be long-term or short-term. Long-range plans are prepared for a period of five years or more
on the basis of trends in the economy, labour market and production.
HRM AND INFORMATION TECHNOLOGY

INTRODUCTION:
Just as in every other field, IT has a role to play in HRM also.
In fact, HR Managers have the responsibility of bringing in the necessary mindset change in the members of the
Organization to make them adopt the new Technology with an open and positive mind. Secondly, they have to adopt IT
themselves not only in day-to-day functions but also in Policy formulation.
Role of IT in HRM:
Human Resource records can be created and maintained using technology. Just like any other MIS, HRIS ( Human
Resource Information System) is the need of the hour.
Human Resource Information System and Human Resource Database
The need for database is regularly increasing to take frequent decision regarding training and development.
HUMAN RESOURCE RECORDS AND RESEARCH
Human resource records are very useful to the organisation as they help in carrying out the research and audit of various
human resource activities. In addition, human resource records are useful to an organisation as they :
1. Provide up-to-date information to the management for developing and modifying human resource policies.
2. Up-to-date records help the management in taking right decisions on recruitment, selection, placement etc.
3. Help in Management succession planning and in designing career paths for individual employees.
4. Identifying training needs and design training programmes.
5. Records help to judge the validity of employment tests and interviews.
6. Serve as the basis of personnel decisions such as transfer, promotion lay off, suspension, dismissal etc.
7. In the preparation of pay rolls, human resource records are very useful.
8. Help submit the information required by governments agencies under various statutory provisions.
DESCRIPTION OF HUMAN RESOURCE RECORDS
A brief description of basic human resource records used in industrial enterprises is as given below:
The records can be divided in to two broad categories as:
Static data
Dynamic data
Static data
This includes individual records such as date of Birth, Sex, Native place, Work experience prior to joining the organisation
etc. Educational qualification & marital status may need updating occasionally but most other parameters remain the
same.
1. Individual service record:
This record contains complete information about each individual employee which may be required during his service. This
record should include information relating to each employee etc.
Name
Address
Sex
Education
Physical details with special identity marks
Work experience
Work department
Rate of appointment Marital status
Dependents
Photograph
Personal history
Dynamic data: This includes parameters which are subject to change
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1. Performance records: The performance records include the ratings given to each employee by the annual
performance appraisal. These records serve as the basis for transfer, promotion, advance increment etc.
2. Leave records: Information relating to various types of leaves and duration of leave taken by different employees.
Details of late arrivals and early departures can also be made in this record.
3. Training records: Contains information relating to various training programmes attended by each employee.
4. Health and safety records: Data relating to accidents, medical reports, insurance records etc.
5. Wage and salary records: Wages,Salaries,leave encashment, PF records,Income tax,Increments and so on.
Practical Uses: Some examples
Training records may be used to throw the short list of eligible candidates. This brings in transparency in deputing people
to training. If a HRM dept at Regional offices match the leave sanctioned(by RO) records with Training deputations, they
may be able to know at a glance that a particular branch can not afford to send two officers on training and two on
sanctioned leave at the same time as it would inconvenience the routine and upset Customer service.
Computerized collation of inputs (marks) in the performance appraisal area throw up prejudices and biases. For example,
it was observed once that a particular executive had given higher marks to all officers belonging to a minority community.
This was clear when the Computers analyzed the data.
Standardization and Computerization of certain functions like TA bill processing, Medical bill processing for
reimbursements at Head Offices not only quicken the response time but make the process very transparent. Reminders
thrown up by the systems can help in giving annual increments on time boosting employee morale.
These are only examples and are not exhaustive. There is no end to the benefits of Computerization if a person in HR
dept decides to use these tools for employee benefits and bringing about transparency. HR dept can set an example to
other departments by computerizing its operations
HUMAN RESOURCE RESEARCH
Human resource research in the task of searching for and analysing facts to find certain guidelines to solve the human
resource problems. This research is mainly concerned with the study of human behaviour and prepare guidelines for their
future guidance. Personnel or HR research is the investigation and analysis of personnel and human behaviour with a
view to set the guidelines for the future.
According to Michael I. Jucius: Personnel research is the task of searching for and analysing facts relating to the end
that personnel problems may be solved or guidelines governing their solutions derived.
According to Dale Yoder: Personnel research implies searching, investigation reexamination, reassessment and
revaluation.
The main features of personnel research are as follows:
1. Personnel research is very systematic in the sense that it is preplanned and properly designed. It involves a
systematic procedure consisting of the following steps:
(i) Formulation of a problem
(ii) Selection of hypothesis
(iii) Design of experiment
(iv) Description of sampling
(v) Collection of data
(vi) Analysis and interpretation of data
(vii) Report writing
2. It is objective and scientific as it is based on facts and avoids bias or prejudice.
3. It is purposive because it seeks to answer specific questions. It is not merely accumulation of data.
4. It is repeatable as it can be used independently by several researchers at the same time.
5. It is different from casual observation of personnel activities as it is a designed investigation and analysis.
6. It is carried out to check, verify or disapprove assumptions.
7. It seeks to supplement knowledge and extend understanding.
8. It may be pure research or applied one.
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DEVELOPMENT OF HUMAN RESOURCE

CONCEPT AND DEFINITIONS OF HRD
The main aim of HRD is to bring about an all around development of the people in the organisation. So that they can
contribute their best to the organisation, society and nation. HRD is a system and process involving organised series of
learning activities designed to produce behavioural changes in human beings in such a way that they acquire desired
level of competence for present or future role.
According to T.V. Rao, HRD is a process in which the employees of an organisation are continually helped in a planned
way to:
(a) Acquire / sharpen capabilities required to perform functions associated with their present or expected future roles.
(b) Develop their general capabilities as individuals ,discover and exploit their own inner potentials for their own or
organisational purposes.
(c) Develop an organisational culture in which superior subordinate relationships, team work and collaboration among
sub-units are strong and contribute to the professional well being, motivation of employees.
According to C. Leon Magginson, HRD may be defined as development of people by providing the right environment
where each individual may grow to his fullest potentialities. Human resources are viewed as total knowledge, skills,
creative abilities, talents and aptitudes of an organisations workforce as well as values, attitudes and beliefs of individuals
involved.
FEATURES OF HRD
1. It is a planned and Systematic approach: HRD is a system consisting of several interdependent and interrelated
subsystems e.g. performance appraisal, training, job enrichment etc. While designing a HRD system, enough
attention should be paid to building linkages between the various sub systems.
2. Continuous process: HRD believes in the need for continuous development of personnel. It is based on the belief
that there is no end to the development of an individual and the learning process can continue throughout the life.
3. Inter Disciplinary Approach: HRD is an inter disciplinary approach. It involves collection of ideas for many
sciences. It uses knowledge drawn from psychology, sociology, anthropology, economics and political science for
planning and implementing various programmes for the development of individuals, groups and the organisation.
4. Both Micro and Macro Aspects: At the macro level, HRD is described as the core of all development activities in
the same of improvement of quality of life of people of a nation. At the micro level, HRD involves the improvement in
the quality of managers and workers so as to achieve greater quality and higher levels of productivity.
OBJECTIVES OF HRD
The main objectives of HRD are as follows:
i) To provide a comprehensive framework for the overall development of people in the organisation.
ii) To develop the constructive mind and overall personality of each and every person in the organisation.
iii) To develop the capability of each individual in relation to his present and expected future roles.
iv) To develop and maintain high levels of motivation of employees.
v) To develop dynamic relationship between each employee and his supervisor.
vi) To develop the sense of team spirit, team work and inter team collaboration in the organisation.
vii) To develop the overall health and self-renewing capabilities of the total organisation.
viii) To generate systematic information about human resources for the purpose of manpower planning, placement,
succession planning and the like.
All the above mentioned objectives lead to the overall organisational effectiveness.
SIGNIFICANCE OF HRD
HRD plays a vital role in the success and growth of an organisation in the following ways:
1. Improves Capabilities: HRD improves the capabilities of the people by making them better aware of the skills
required for job performance and by improving clarity about performance standards. The employees become
innovative and enterprising every ready to take risks and get ahead. It strengthens executive skills.
2. Improves Team Work: HRD improves team work. Employees become more open towards each other and they also
trust each other. In this way the organisational climate also improves a lot.
3. Promotes Organisational Effectiveness: HRD promotes organisational effectiveness. Appropriate employee
centered policies help the organisation achieve its goals more efficiently.
4. Helpful in Realisation: Performance related rewards help employees realise the importance of utilizing their skills
fully in the service of organisational goals. The organisations health and self-renewing capabilities improve quite
significantly.
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5. Procurement of right People: HRD helps the organisation in producing the right people at the right time in making
their effective use.
6. Generation of Useful Data: HRD generates a lot of useful data, which facilitates human resource planning and
control.
HRD ultimately leads to higher productivity, lower costs and successful growth in the organisation.
CAREER PLANNING AND COUNSELLING
HRD Subs-System
As per the earlier discussion, there are three components of HRM - the administrative, developmental and maintenance.
These three components are inter-linked with each other in some specific way. Here the focus area in developmental
sub-system.
I Job Analysis
Job analysis is a scientific and systematic analysis of a job in order to obtain all pertinent facts about the job. Job
analysis has been defined as "the process of determining by observation and study the tasks, which comprise the job, the
methods and equipment used, and the skills and attitudes required for successful performance of the job.
A typical job analysis comprises of three sections, which are as follows:
a) Job Description,
b) Job Specification and
c) Job Evaluation.
a) Job Description:. Job description is a written record of the appropriate and authorised contents of job. It is a factual
and organised statement describing the job in terms of its title, location, duties, responsibilities, working conditions,
hazards, and relationship with other jobs. It tells us what is to be done, how it is to be done and why. The main object of a
job description is to differentiate it from other jobs and to set out its outer limits. Jobs description is an important document
as it helps to identify the job and gives a clear idea of what the job is.
b) Job Specification: Job specification or man specification or employee specification is a statement of the minimum
acceptable human qualities/skills required for the proper performance of a job. For example, Job Specification for a IT
programmers job would entail writing down the technical language skills required, Minimum qualification and age etc. In
some industries where jobs require physical abilities, even height, weight, Levels of Stamina, Eye sight requirements are
listed in the Job-specification level.
c) Job Evaluation: Job evaluations are used to compare the similarity between jobs within an organisation or between
organisation or even in an industry. This is often the base for wage settlements /increments, Performance bonuses etc.
TRAINING
MEANING AND DEFINITION OF TRAINING
Training is an organised procedure for increasing the knowledge and skill of people for a specific purpose. The trainees
acquire new skill, technical knowledge, problem-solving ability, etc. It also gives an awareness of the rules and
procedures to guide their behaviour. Training improves the performance of employees on present jobs and prepares them
for taking up new assignments in future.
According to Edwin B. Flippo, Training is the act of increasing the knowledge and skill of an employee for doing a
particular job.
According to Michael J. Jucius, The term training is used here to indicate only process by which the aptitudes, skills
and abilities of employees to perform specific jobs are increased.
According to Michael Armstrong, Training is a learning process whereby people acquire skills, concepts, attitudes
or knowledge to aid in the achievement of goals.
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Short duration and for a specific job

related purpose
It involves broader education and its

purpose is long term development.
Training helps an individual learn

how to perform his present job
satisfactorily.
Development involves preparing the

individual for a future job and growth of
individual in all respects.
Training is mostly the result of

initiatives taken by the management.
Training is, thus a reactive process

whereas development is a proactive
process
Development is mostly the result of internal

motivation
Development complements training
because human resources can exert their
full potential only when the learning
process goes far beyond simple routine
Development is future oriented training

focusing on the personal growth of the
employee
OBJECTIVE OF TRAINING
The training objectives are laid down keeping in view the companys goals and objectives.
1. To develop capacities and capabilities: The basic objective of training is to help develop capacities and
capabilities of the employees-both new and old by upgrading their skills and knowledge so that the organisation could
gainfully avail of their services better for higher grade professional, technical, sales or production positions from
within the organisation.
2. Improvement in level of Performance: Training aims to help existing employees in improving their levels of
performance on their present job assignments. In case of new employees, training has its objective to provide them
with basic knowledge and skill they need for an intelligent performance of their specific tasks.
3. Awareness & Consciousness: The aims of training are not only providing new knowledge and job skills to the
employees, but creating in them self consciousness and a greater awareness to recognise their responsibilities and
contribute their very best to the organisation they serve.
4. Availability with in the organisation: Sometimes, it may not be possible for the management to fill in some
important work positions from outside. Under such conditions, the apprenticeship programmes aiming at improving
the skills of the present employees come to the aid of the company to tide over the position by making available their
requirements of the personnel from within the organisation.
5. Efficiency and Effectiveness: The main objective of training is to being about efficiency and effectiveness in an
organisation, so that the organisation may remain competitive in highly competitive market situations and for the
achievement of organisational goals.
TYPES OF TRAINING: The following types of training are generally in use:
1. Orientation or Induction Training: Helps a new entrant for adapting himself to the new environment. The
employee is given a full description of the job ,policies, procedures and rules related to his work. Orientation training
helps him to acquaint himself with his immediate boss and the persons who will work under his command.
2. On-the-Job Training: Here the worker is trained on the job and at his work-place. He gets training under the same
type of conditions in which he will be working later on. The new worker is generally attached to a superior or a senior
worker who will tell him the technique of doing that job. When a worker is trained on those very machines on which
he will work, then he will adapt more easily to the new working conditions. The success of this method will depend
upon the quality of trainer. If the trainer is good and knows the job well, then it will help the worker to learn all aspects
of the jobs.
Merits: The main advantages of On the Job Training (OJT) are as follows:
a) The trainee learns in real environment of the job. He gets a feel of the actual job. Therefore, he is better motivated to
learn and there is no problem of transfer of training skills on the job.
b) OJT is the type of training, which can be tailored to suit the specific requirements of each trainee, in terms of his
background, attitudes, needs, expectations, goals and future assignments.
c) Very economical because no additional space, equipment, personnel or other facilities are required for training. The
trainee produces while he learns.
d) The trainee learns the rules, regulations and procedures by observing their day to day applications.
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f)
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OJT is most suitable for unskilled and semi-skilled jobs where the job operations are simple, easy to explain and
demonstrate within a short span of time.
The supervisors feel greater responsibility and work more willingly and zealously for the development of their
subordinates, while imparting OJT.
Demerits: Some of the demerits from which OJT suffers are:

a) There is a tendency to neglect, disregard the essentials of principles and theory in favour of immediate production.
b) Trainee while learning may damage equipment, waste materials, cause accidents frequently.
c) The work place, with environments charged with hustle and noise and the pace of skilled workers, is most likely to
affect the learning and may create a feeling of frustration in the mind of a trainee.
d) Experienced workers cannot use the machinery while it is being used for training.
3. Off-the-job Training: Off-the-job training consists of lectures, conferences, group discussions, case studies,
programme instructions, etc. This method is generally used by government and public enterprises. A school or an
institution is established to provide training to all types of persons. The lecture method or group discussion helps new
employees to learn theoretical aspects of the jobs. Lectures, case studies, group discussions and audio-visual aids
are used to explain knowledge and skills to be trainees. Classroom training is suitable for teaching concepts and
problem solving skills. It is also useful for orientations and safety training programmes. It may also include courses in
retraining and upgrading.
4. Apprenticeship Training: In apprenticeship training a worker is attached to an experienced or senior worker. The
worker learns while observing his senior and helping him in the task. The period of apprenticeship is generally long,
ranging from two to five years. This method of training is generally used in technical jobs. Mechanics, electricians,
plumbers learn their jobs by working with trained persons. This is one of the traditional methods of training and is still
in use for learning certain jobs.
Merits: The main merits of this method are:
a) The main advantage of this method is that it combines theory and practice. The trainee becomes productive
immediately.
b) It ensures the maintenance of a skilled work force/ improves workmanship
c) This fosters a sense of belongings and loyalty in the minds of employees and opens up opportunities for their growth
and development.
Demerits: Apprenticeship training is time consuming and expensive. Many persons leave the training programme
midway as the training period extends from one year to three years.
5. Refresher Training: Refresher training is helpful in acquainting personnel with latest improvements in their work.
The changing technological methods require fresh training to existing employees even if they are well trained or
qualified. Such training also helps in refreshing the memory of employees.
6. Vestibule Training: In this method a training centre called vestibule is set up and actual job conditions are
duplicated or simulated in it. Expert trainers are employed to provide training with the help of equipment and
machines which are identical with those in used at the workplace.
7. Internship Training: In internship training, educational institutions and business firms have a joint programme of
training. Selected candidates carry on regular studies for the prescribed period. They also work in some factories or
office to acquire practical knowledge and skills. This method helps to provide a good balance between practical and
theory. But it involves a long time period due to slow process. Internship training is used in professional courses e.g.
MBBS, CA, ICWA, etc.
ATTITUDE DEVELOPMENT:
Definition: The term attitude is frequently used to describe people and explaining their behaviour. Attitudes are a set of
feelings developed by an individual towards an object, person, race or work etc.
For example if a person feels that all Ex-servicemen are disciplined workers, it results in a positive attitude towards all
colleagues who are ex-servicemen. Attitudes have a persisting tendency and are difficult to change. They can be highly
negative to highly positive. In workplaces, both are not desirable. A balanced mind with balanced attitudes can allow a
person to function objectively.
Schermerhorn, et. al, have defined attitude as a predisposition to respond in a positive or negative way to someone or
some-thing in ones environment. When a person says that he likes or dislikes something, an attitude is being expressed.
An attitude may be defined as the way a person feels about something a person, a place, a commodity, a situation or an
idea. It expresses an individuals positive or negative feelings about some object. It describes an individuals feeling,
thoughts and predisposition to act towards some object in the environment
Attitudes may be regarded as varying in several ways:
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(a) Direction for or against something.

(b) Degree The attitude can be highly positive, positive, negative, highly negative or neutral etc. To be neutral in
attitude is to be indifferent to the object,
(c) Intensity degree of confidence.
COMPONENTS OF ATTITUDES
There are three basic components of an attitude described below:
i) Cognitive or Informational Component: Beliefs and values, ideas and other information a person has about the
attitude object. For instance, a person seeking a job may learn from newspapers and other people that a particular
company is a good pay-master. Thus the information component consists of beliefs and information available to that
person. For example, many managers have a negative attitude towards HR managers as they believe that HR
functionaries do nothing other than recruiting and sending people for trainings. They lack information about the entire
picture. They may give scant importance to the circulars issued by HR department or may refuse to cooperate in
sending employees to training programmes etc resulting in a negative atmosphere
ii) Affective or Emotional Component: It involves the persons feelings of likes and dislikes towards the attitude object.
The emotional component involves the persons feelings. Emotions play a very important role in employee behaviour. The
expression of emotions, either positive or negative, is also important to work behaviour.
iii) Behavioral Component: Tendency to behave in a particular way towards a particular object or race or gender .For
example, an employee who has negative feelings towards working ladies may be unnecessarily harsh with all lady
colleagues. Behavioral component stems out of the emotional or Informational components at times.
SOURCES OF ATTITUDES
The central idea running through the process of attitude formation is that the thoughts, feelings and tendencies to behave
are acquired or learned gradually. But how does one learn them? The attitudes are acquired from the following sources:
(a) Direct Personal Experience: The quality of a persons direct experience with the attitude object determines his
attitude towards it. For example, a person who is cheated by a trickster as soon as he reaches Mumbai may feel that
all persons from Mumbai are cheats. He develops a negative attitude towards his colleagues who hail from Mumbai.
(b) Association: A new attitude object may be associated with an old attitude object and the attitude towards the latter
may be transferred towards the former. For example, if a newly recruited worker remains most of the time in the
company of a worker towards whom the supervisor has a favourable attitude, the supervisor is likely to develop a
positive attitude towards the new worker also. Hence, the favourable attitude for the old worker has been transferred
towards the new worker.
(c) Social Learning: Attitudes are also learnt from others as for example, from parents, teachers, superiors, models etc.
An individual may learn by having contact with others or even watching models over the T.V. In fact, social learning
makes it possible for a person to develop attitude towards something even when he has no direct experience of the
attitude object. For example, these days, it has become a habit of Filmmakers and news channels to show the Police
force either as corrupt or violent. Due to this, a whole generation of Indians have grown up with either distaste or fear
for Policemen.
SIGNIFICANCE OF ATTITUDE AT WORKPLACE
Knowing that attitudes exist, understanding their sources will definitely help an employee adjust better to the work place
and help an employer understand the employee better. Attitudes help predict work behaviour These are: (1) The
adjustment function (2) The Ego-Defensive function (3) The value Expression function and (4) The knowledge function.
The Adjustment Function:
Attitude of others help people adjust to their work environment. A person with a positive attitude can help the newcomer
to feel at home. A person who feels that youngsters are being given too much of importance may behave badly with
younger colleagues. If the younger man is aware of this, he can either laugh it off or try to change the senior Colleague or
be indifferent. If he is not aware, he may be hurt deeply by the behaviour of the Senior resulting in poor work
performance.
The Ego-Defensive Function: Attitudes also act as defense mechanisms .An older executive who has no Computer
knowledge may go about stating that Computers area waste of time. His negative attitude towards the Computers is his
defense mechanism. Once we understand this, we may be able to help him overcome the dislike of Computers and get
better decisions out of him.
The Value Expression Function:
Attitudes also are expressions of values held by people. Normally old time managers who believe strongly that elders
should be respected may be very uncomfortable in the current informal atmosphere where even seniors are addressed by
first names. They may may express that all his other colleagues who are comfortable with the new system are not having
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good morals and proceed to treat them accordingly.

The Knowledge Function: Attitudes based on certain knowledge or lack of it serve the purpose of relating to others in a
certain way. This is supposed to be used very effectively by the countries during war. No soldier who has information that
the enemy land consists of ordinary humans with same emotions and nature like him may drop a bomb on that nation. He
is given to understand that he is destroying evil. This helps him relate to his duties.
FACTORS AFFECTING ATTITUDES
The above are the three important ways in which attitudes are learnt. But what type of attitudes will ultimately develop is
dependent on the following factors:
(a) Psychological Factors: The psychological make-up of a person is made up of his perceptions, ideas, beliefs,
values, information, etc. It has a crucial role in determining a persons attitudes. For example, if a person perceives
that generally all superiors are exploitative, he is likely to develop a negative attitude towards his superior who in fact
may not be exploitative.
(b) Family Factors: During childhood, a person spends a major part of his time in the family. thus, he learns from the
family members who provide him with ready-made attitudes on a variety of issues such as education, work, health,
religion, politics, economics, etc.
(c) Social Factors: Societies differ in terms of language, culture, norms, values, beliefs, etc., all of which influence a
persons attitudes. For example, people in India in general hold different attitude towards communism than people of
china. Similarly, Indians and Americans differ in their attitudes towards religion. Thus, people belonging to a nation
develop attitudes which would be in tune with the needs of the society.
(d) Organisational Factors: A worker spends a major part of his life in the institution in which he works. Thus,
organisational factors such as nature of job, factory or office layout, fellow workers, quality of supervision, monetary
rewards associated with the job, trade unionism, informal groups, organisations policies and practices, play an
important role in shaping the job attitudes of a person.
(e) Economic Factors: A persons attitude towards a host of issues such as pleasure work, marriage, working women,
etc., is influenced by economic factors such as his economic status in the society, rate of inflation in the economy,
Governments economic policies, and the countrys economic conditions.
(f) Political Factors: Politics plays a crucial role in the administration of a country. Therefore, political factors such as
ideologies of the political parties, political stability and the behaviour of the political leaders greatly affect the attitudes
of the people.
CHANGING ATTITUDES
It is not enough if we understand that attitudes exist and why. It is important to help employees develop positive attitudes
to have the right and desired impact on their work culture.It is not easy to change attitudes but it is not impossible either.
The major barriers for attitude change are prior commitment and lack of information.However,there are three identified
methods of changing attitudes.
PROVIDING INFORMATION
A prior commitment is a persons feelings towards an object which are already well developed and influence his thinking
greatly. For example, many people have developed strong feelings that all VRS employees are lethargic and should not
be drafted in to workforce again. His/her feelings are based on certain information available with them which may be
insufficient but the fact is that it exists. To change this, fresh information needs to be provided. This may not however be
sufficient in all cases
USING FEAR (OF CONSEQUENCE)
The second way of changing the attitude is through the use of fear. Many feel that fear can be used effectively to change
attitudes. For example, a person who is indifferent to the menace of polio can be shown pictures of an Polio victim
causing him to develop fear and become alert. However, the fear instilled should be in the right degree or it will become
Counter-productive. Influence of friends, Celebrities and respectable people can also change attitudes. Thus if the antipolio message is given by either Amitabh Bachhan or Sachin Tendulkar, the indifferent attitude may be changed. In
organizations, all the three methods are being used in varying degrees to ensure reasonable and positive attitudes.
CO-OPTING
A final way in which attitude changes often take place is by co-opting. This is to take the people who are having
reservations about a particular object or work in to confidence prior to the event itself to change their attitudes. A good
example is co-opting employees in the organizational activities such as deposit campaigns to help them develop positive
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attitudes by understanding the organizational goals better.

PERCEPTION
INTRODUCTION
S. P. Robins-"Perception may be defined as a process by which individuals organise and interpret their sensory
impressions in order to give meaning to their environment". Perception basically refers to the manner in which a person
experiences the world. It is the process by which people organise, interpret and experience ideas and use stimulus
materials in the environment so that they satisfy their needs.
Importance of Perception
Every person perceives the world and approaches the life problems differently. This factor is very important in
understanding human behaviour. The world as we see is not necessarily the same as it really is. It is because what we
hear is not what is really said. We buy what we like best and not what is best. It is because of perception that a particular
job may appear a good job to one and bad to another.
Due to perception only "facts" as they are sent by one viewer, may be different from the facts as seen by another viewer.
The tension or discomfort that one feels when he thinks he is missing something others may not realise it. Everyone
wears his own rose-coloured glasses, i.e. one does not always see what is actually happening. If people behave on the
basis of their perceptions, then changing behaviour in a predetermined direction can be made easier by understanding
their present perception of the world.
People act as they perceive and different people perceive things differently. People's perceive things differently. People's
perception is determined by their needs. Like the mirrors at an amusement park, they distort the world in relation to their
tensions. If people are asked to describe the people they work with, they talk more about their boss than their colleagues
because of their continuous worry to please the boss.
Perception is an important dynamite for the manager who wants to avoid making errors when dealing with people and
events in the work setting. This problem is made even more complicated by the fact that different people may perceive
the same situation in different ways. A manager's response to a situation, for example, may be misinterpreted by a
subordinate who perceives the situation quite differently. In order to deal with the subordinates effectively, a manager
must understand their perceptions properly.
PERCEPTUAL PROCESS:
Perception is the process through which people receive, select, organise and interpret information from their environment.
Through perception, people process information input into decisions and actions. It is a way of forming impressions about
oneself, other people and daily life experiences. It is also a screen or filter through which information passes before
having an effect on people. Perceptual inputs are first received, then processed by the perceiver and the resultant output
becomes the base of behaviour.
Inputs: The perceiver comes across information, objects, events people, etc. in the environment. These serve as the
inputs of the perceptual process. Thus, perceptual inputs encompass all stimuli that exist in the environment.
Processing Mechanisms: When the perceiver receives information, he tries to process it through the sub-processes of
selection, organisation and interpretation. Thus, the mechanisms of perception are selection, organisation and
interpretation. Perceptual selection takes account of only those stimuli that are relevant and appropriate for an individual.
Perceptual organisation is concerned with shaping the perceived inputs and converting them into a meaningful shape or
form. Perceptual interpretation deals with inferences drawn from observed meaning from the perceived events or objects.
From it emerges the resultant behaviour of the perceiver.
Outputs: As a result of the perceptual process, the output which the individual gets are change sin attitudes, opinions,
beliefs, feelings etc.
Behaviour: The perceiver's behaviour is shaped by the perceived outputs i.e., changes in attitudes, opinions, beliefs etc.
the perceiver's behaviour generates responses depending upon the situation and these responses further give rise to a
new set of inputs.
Factors Affecting Perception
Perceiving people and events as they really are is important for a manager because behaviour occurs as a result of
perception. If a person perceives hostility, he will mould behaviour appropriate to such threats. If one subconsciously feels
inferior to another, he will act in a submissive manner. The factors that influence perceptual mechanism are of two kinds:
internal and external. These are discussed below:
1. Internal Factors: The internal factors are the needs and desires of individuals, individual personality and experience.
a)
Needs and desires: Depending on the needs and desires of people, perception varies from person to person.
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Personality: Individual personality has a profound influence on perceived behaviour

(i)
Secure individuals tend to perceive others as warm, not cold.
(ii) Individuals weak in certain aspects tend to find fault in others.

(iii) Persons who accept themselves and have faith in their individuality perceive things favourably.
(iv) Self-accepting individuals perceive themselves as liked, wanted and accepted by others.
c) Experience: Experience and knowledge have great influence on perception. Successful experiences enhance and
boost the perceptive ability and lead to accuracy in perception of a person whereas failure erodes self-confidence.
II. External Factors: The external factors which influence the perception are size, intensity, frequency, status etc.
a)
Size: The bigger the size of the perceived stimulus, the higher is the probability that it is perceived. Size attracts the
attention of an individual. It establishes dominance and enhances perceptual selection.
b)
Intensity: Intensity attracts to increase the selective perception.
c)
Frequency: Repeated external stimulus is more attention attracting than a single time.
d)
Status: Perception is also influenced by the status of the perceiver. High status people can exert greater influence on
perception of an employee than low status people.
e)
Contract: Stimuli that contract with the surrounding environment are more likely to be attention catching than the
stimuli that blend in.
PERCEPTUAL ERRORS AND DISTORTION

Quite often, errors creep into the perceptual interpretation of individuals. The errors may arise due to selective perception,
projection, stereotyping. Halo effect, impression, inference, attribution, etc. the following section deals with these
concepts and explains how perceptual distortion could be avoided.
(i) Selective Perception: People differ in terms of their needs, motives, interests, etc. They tend to perceive what is in
accordance with their needs, motives and interests. Sometimes, they distort meanings so that they may fit with what they
want. If a man feels very threatened or insecure, everything around him will appear to be a potential source of danger.
People tend to anticipate what they are familiar with. Take for example, a doctor, a mechanic and a policeman who
witness an automobile accident. Because of their experience in particular fields, each one will probably notice certain
things about the accident - things that will stand out for each. The doctor will see the condition of the people involved in
the accident, whether they need medical help and ambulance. The mechanic will notice the condition of the car, how
much damage has taken place. The policeman might see who violated a traffic rule. Thus each may select from the total
event the aspects he thought were significant.
Perception is basically a selective process. As people can see only limited amount of information in the environment, they
are characteristically selective. By selection, certain aspects of stimuli are screened out and others are admitted. Those
which are admitted remain in the awareness of the people and those which are screened out fall below the threshold.
(ii) Projection: It means attributing one's own traits or characteristics to the people being judged. The tendency to
attribute one's own characteristics to other people can distort perceptual judgements about others. This may be
particularly true regarding undesirable traits, which the perceiver possesses but fails to recognise in himself. For example,
an individual who is himself not very energetic may see others as lazy or may explain their lack of achievement as
resulting from their unwillingness to work hard. One who is dishonest may be suspicious of others and may perceive
dishonest intentions in others where they do not exist. People who are afraid may interpret others behaviour as fearful or
anxious.
When a manager engages in projection, he compromises his ability to respond to individual differences. He tends to see
people as more homogenous than they really are. In order to avoid this error in judging others, the manager should be
conscious of his weakness of overlooking differences among people.
(iii) Stereotyping: Judging people on the basis of the characteristics of the group to which they belong is called
"stereotyping". The word 'stereotype' was first used by Walter Lippmann to perception. It was basically applied for ethnic
prejudice. Now it is often used as a short-cut to predicting the behaviour of people. Some examples of common
stereotypes are that Americans are materialistic, Japanese are nationalistic, and Germans are industrious.
Stereotyping is the tendency for a person's perception of another to be influenced by the social group to which he
belongs. But the danger lies in incorrect stereotyping.
(iv) Halo Effect: It refers to tendency of drawing a general impression about an individual based on a single characteristic
such as intelligence, sociability or appearance. This is a very common type of error committed by managers while
evaluating the subordinates. Halo error creeps in when the manager or rater allows one aspect of a man's character or
performance to influence their ratings on all subsequent characteristics. A rater may tend to give an employee
approximately the same rating on all factors. One way of minimizing the effect of halo error is to have manager judge all
his subordinates on a single factor or trait before going to the next. In this manner, he can consider all of the men relative
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to a standard or to each other on each trait.

Halo effect takes place in all walks of life. For instance, a teacher may award higher marks to those students who are
more social. A good looking employee may be considered efficient and a dowdy looking one unintelligent.
(v) Impression: People often form impression of others on the first sight. Even before knowing any of their personality
traits, they start having impression and making assessment of individuals they meet for the first item. This sometimes
leads to perceptual distortion because first impression need not be the last impression. If a new employee in an industrial
organisation is judged on the basis of his first impression on the superior, it will be a great injustice to such an employee.
(vi) Inference: There is a tendency on the part of the some people to judge others on limited information. For example,
an employee might be sitting at his desk throughout the working hours without doing anything, but it may be inferred that
he is sincere towards his duties. Thus, performance appraisal must not be based on half-cooked or incomplete
information. In the above case, the productivity and the behaviour of the concerned employee towards customers, fellow
employees and others must also be taken into consideration.
(vii) Attribution: When people give cause and effect explanation to the observed behaviour, it is known as attribution.
Perception is distorted sometimes by the efforts of the perceiver to attribute a causal explanation to an outcome. There is
a tendency for the individuals to attribute their own behaviour to situational factors, but explain the behaviour of others by
their personal dispositions.
When a person observes an event in an organisation his evaluation of and reaction to other's behaviour may be highly
influenced by his perception. A nurse who drops a tray of medicine will be excused if the incident is perceived as caused
by slippery floor; chastised if it is viewed as caused by her clumsiness; and perhaps fired if it is viewed as a deliberate
act. Similarly, increased profitability of a plant may be attributed to installation of new machines, efficient handling of
resources, or to the rising market.
The attribution theory suggests that when we observe an individual's behaviour, we attempt to determine whether it was
internally or externally caused. Internally caused behaviour is believed to be under the control of the individual. Externally
caused behaviour is seen as resulting from outside causes. In other words, the person is seen as forced into the
behaviour by the situation. If an employee is late for work, the supervisor may relate it to oversleeping which is an internal
interpretation. But if coming late is attributed to a major traffic jam on the way, it is called external attribution.
Perceptual distortion occurs because of attribution on two counts: (1) fundamental attribution error and (2) selfserving bias. When we make judgements about the behaviour of other people, we have a tendency to under estimate the
influence of external factors and overestimate the influence of internal or personal factors. This is called the fundamental
attribution error which can explain why a sales manager may be prone to attribute the poor performance of sales agents
to laziness rather than the innovative product line introduced by a competitor. There is also a tendency for individuals to
attribute their successes to internal factors like ability or effort while putting the blame for failure on external factors like
luck. This is called self-serving bias.
(viii) Perceptual Set: Previously held beliefs about objects influence an individual's perception of similar objects. This is
called perceptual set. For example, a manager may have developed the general belief and attitudes that workers are lazy
and shirkers, and that they want to gain whatever is possible from the organisation without giving their best to it. His
subsequent perceptions will be influences by this set when he meets a group of workers. The manager tends to interpret
the behaviour of workers according to his mental set.
HUMAN IMPLICATIONS OF ORGANISATIONS

INTRODUCTION
Every management tries to coordinate various factors of production in such a way that their contribution is maximum in
achieving organisational goals. The performance of non-human factors like machines, etc. will depend upon the level of
technology and the competence of those who use them. To improve the overall performance in a business it becomes
essential to increase the efficiency of human beings. The performance of persons depends upon two factors, i.e. (i) ability
to do a work, and (ii) motivation. Both these factors taken together will increase the efficiency of human beings. If a
person does not have the capability or liability to do a work then he cannot increase his efficiency. On the other hand,
even if a person has got the ability but is not properly motivated even then his performance will be low.
A key element in personnel management is motivation. According to Likert, it is the core of management which shows
that every human being gives him a sense of worth in face-to-face groups which are most important to him. A supervisor
should strive to treat individuals with dignity and a recognition of their personal worth.
DEFINITIONS
Motivation has been variously defined by scholars. Some definitions are discussed as follows:
Lillis: It is the stimulation of any emotion or desire operating upon ones will and promoting or driving it to action.
Dubin: Motivation is the complex of forces starting and keeping a person at work in an organisation.
MASLOWS NEED HIERARCHY THEORY
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Probably the most widely known theory of individual need and motivation comes from Abraham Maslow who was a
clinical psychologist in U.S.A., Maslow. He suggested that every individual has a complex set of exceptionally strong
needs and the behaviour of an individual at a particular moment is usually determined by his strongest need.
According to psychologists, human needs have a certain priority. As the more basic needs are satisfied, the individual
seeks to satisfy the higher needs. If the basic needs are not satisfied, efforts to satisfy the higher needs will be
postponed. Maslow stated that people have five basic levels of needs, which they tend to satisfy in a hierarchical fashion.
He proposed that human needs can be arranged in a particular order from the lowest level need to the highest level need.
This hierarchy of human needs is shown in the following figure:
This need hierarchy can be explained as follows:
1. Physiological Needs: The physiological needs are taken at the first or starting step for motivation theory because
these are the strongest needs until they are reasonably satisfied. There are the basic bodily needs comprising of hunger,
thirst, shelter, clothing, air and other necessities of life. Human beings first try to acquire these basic necessities of life,
only they tend to move to the second level of needs.
2. Safety Needs: In the hierarchy of needs, the second needs are safety and security needs. Once a reasonable level of
physiological needs are satisfied (what is reasonable is subjective , differing from person to person), the human beings
tend to satisfy the second level of needs, which are security and stability. In todays civilized society, a person is usually
protected from physical danger or threats of violence etc., so that the safety and security needs dwell upon economic and
job security, security of source of income, provision for old age, insurance against risk, medical insurance and other
protective measures to safeguard the satisfaction of physiological needs in the future which may be unpredictable.
3. Social Needs: Once the second level is satisfied, the human beings strive to satisfy their social needs. Man is a social
animal he wants to belong to a social group where his emotional needs for love, and affection, warmth and friendship are
satisfied. Social needs can be satisfied by being in the company of friends, relatives or other group such as work groups
or voluntary groups.
4. Esteem Needs: Fourth in the hierarchy of needs is ego or self esteem needs which are concerned with self respect,
self confidence, recognition, appreciation, applause, prestige, power and control. These needs give the individuals a
sense of self worth and ego satisfaction.
5. Self Actualization Needs: At the top of the hierarchy is the need for self actualization or the need to fulfill what a
person considers to be the mission in his life. After all his other needs are fulfilled, a man has the desire for personal
achievement. He wants to do something, which is challenging and since this challenge gives him enough push and
initiative to work, it is beneficial to him and the society. The sense of achievement gives him a sense of psychological
satisfaction.
5. Self Actualization
4. Esteem Needs
3. Social Needs
2. Safety Needs
1. Physiological Needs
Thus, Maslow suggested the following points:

(i) There are five levels of needs.
MASLOW'S HIERARCHY OF NEEDS
(ii) All these needs are arranged in a hierarchy.
(iii) A satisfied need is no longer a need. Once a need or a certain order of need is satisfied it ceases to be a motivating
factor.
(iv) Once one level of need is satisfied, the next level of need will emerge as the depressed needs seeking to be
satisfied.
(v) The physiological and security needs are finite but the needs of higher order are infinite and are likely to be dominant
in persons at higher levels in the organisation.
(vi) Maslow suggests that various levels are interdependent and overlapping. Each higher level emerging before the
lower level need has been completely satisfied. Even though a need is satisfied it will influence behaviour because of
interdependent and overlapping characteristic of needs.
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HERZBERGS MOTIVATION-HYGIENE THEORY or TWO FACTORS

Fredrick Herzberg and his associates developed the MOTIVATION HYGIENE THEORY, commonly known as the two
factors theory, in the late 1950s and early 1960s. Herzberg and his associates conducted a research based on the
interview of 200 engineers and accountants who looked for 11 different firms in Pittsburgh area, U.S.A. The purpose of
the research was to find out as to what variables are perceived to be desirable goals to achieve and conversely,
undesirable conditions to avoid. During the court of the interviews, these men were asked to describe a few previous job
experiences in which they felt exceptionally good or exceptionally bad about jobs. They were also asked to rate the
degree of which their feelings were influenced-for better or worse-by each experience, which they described.
Based upon the answers received from these 200 people, Herzberg concluded that there are certain factors that tend to
be consistently related to job satisfaction and on the other hand, there are some factors, which are consistently related to
job dissatisfaction. The last of job conditions, he referred to as MAINTENANCE OR HYGIENE factors and the first job
conditions as MOTIVATIONAL FACTORS. The motivational factors are intrinsic in nature and the hygiene factors are
extrinsic in nature. These two factors are described in detail as follows:
1. Hygiene Factors: Hygiene factors or the maintenance factors do not motivate people, they simply prevent
dissatisfaction and maintain status quo. Such factors do not produce positive results but prevent negative results. If these
factors are not there it will lead to job dissatisfaction. These are not motivators, as they maintain a zero level of motivation
or in other words, these factors do not provide any satisfaction but eliminate dissatisfaction. According to Herzberg there
are ten maintenance or hygiene factors:
1. Company Policy & Administration
2. Technical Supervision
3. Inter-personal relations with Supervisor
4. Inter-personal relations with peers
5. Inter-personal relations with subordinates
6. Salary
7. Job security
8. Personal life
9. Working conditions
10. Status
The word hygiene is taken from the medical science, where it means taking prevention's to maintain your health but not
necessarily improve it. Similarly, hygiene factors in this theory prevent damage to efficiency but do not encourage growth.
As such, these are also called dis-satisfiers.
2. Motivational Factors: These factors are intrinsic in nature and are related to the job. The motivational factors have a
positive effect on job satisfaction and often result in an increase in total output. Thus, these factors have a positive
influence on morale, satisfaction, efficiency and productivity. Herzberg concluded that six factors motivate the employees:
1. Achievement
2. Advancement
3. Possibility of growth
4. Recognition
5. Work itself
6. Responsibility
Any increase in these factors will improve the level of satisfaction, thus, these factors can be used for motivating the
employees.
Based on his research, Herzberg stated that managements have hitherto been very much concerned with hygiene
factors. As a result they have not been able to obtain the desired behaviour from the employees. In order to increase the
motivation, it is necessary to pay attention to the motivational factors.
He further concluded that todays motivational factors are tomorrows hygiene factors. Because once a need is satisfied, it
stops influencing the behaviour. Further, one persons hygiene may be another persons motivator, because motivation is
also influenced by the personality characteristics of individuals.
MC GREGORS THEORY X THEORY Y
Douglas McGregor introduced these two theories i.e., Theory X and Theory Y, based on two distinct views of human
beings. He proposed, at opposite extremes, two pairs of assumptions about human beings which he thought were implied
by the actions of the managers. Theory X deals with one extreme, based on one set of assumptions and Theory Y, deals
with another extreme based on another set of assumptions. These theories are not based on any research, but according
to McGregor, these are intuitive deductions.
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Theory X. This theory is based on the traditional approach to human behaviour. The assumptions generally, held by the
managers who believe in this theory are:
1. The average human beings inherently dislike work and will try to avoid it, whenever possible.
2. As the employees are lazy, they must be controlled, coerced, threatened with punishment to achieve goals, to which
they are indifferent.
3. Average employees will try to avoid responsibility and seek formal directions whenever possible, because they have
relatively little ambition.
4. Most workers place security above all other factors associated with work. These assumptions about human nature
are negative in their approach. Managers who advocate these views feel that extreme control is most appropriate for
dealing with irresponsible and immature employees. This is an autocratic style of leadership based on the traditional
theory of what workers are like and what management must do to extract work from them. Workers have to be
persuaded and pushed into performance.
Theory Y. This approach assumes that management by direction and control is a questionable method for motivating
whose physiological and social needs have been satisfied and whose social esteem and self actualization needs are
becoming more important. For such people, Theory Y, seems to be applicable, which is the contrast of Theory X. This
theory makes the following assumptions about people:
1. The average human being does not inherently dislike work. He can view work as natural or enjoyable as rest or play.
2. Employees will exercise self direction and self control in the attainment of the objectives to which they are committed.
3. Given proper working conditions, average person can learn to accept and even to seek responsibility.
4. Commitment to objectives is a function of the rewards associated with their achievement.
5. All the people are capable of making innovative & creative decisions and the decision making is not the sole province
of the people in management positions.
This theory has assumed a new approach in management. It emphasises on co-operation between management and
employees. The individual and organisational goals do not conflict in this approach. This theory places greater emphasis
on satisfaction of high level needs of the employees. McGregor himself holds that the assumptions of theory Y are more
valid than Theory X. Thus, delegation of authority, job enlargement, management by objectives and participative
management techniques are great motivators for the employee.
APPLICABILITY OF THEORY X AND THEORY Y

Theory X and Theory Y represent two extremes. No person can belong to these two extreme situations. Each Manager
possesses the traits of Theory X and Theory Y, though the degrees may be different under different situations. Thought,
no generalizations can be made, still it appears that theory X is more applicable to unskilled and uneducated lower class
workers who work for the satisfaction of their physiological needs only. Theory Y appears to be applicable to the
educated, skilled and professional employees who understand their responsibilities and do not need any direction and
control. However, there can be exceptions. A lower level employee may be more responsible and mature than a wellqualified high level employee. Still these theories are very important tools in understanding the behaviour of human being
and in designing the motivational schemes. The management should use a combination of both the theories to motivate
different employees.
6. Vroom's Expectancy Theory: Victor Vroom made an important contribution to the understanding of the concept of
motivation and the decision processes that people use to determine how much effort they will expend on their jobs.
Criticising Herzberg's two factors theory, he said that a person's motivation towards an action at any time would be
determined by an individual's perception that a certain type of action would led to a specific outcome and his personal
preference for this outcome. This model is based on the belief that motivation is determined by the nature of the reward
people expect to get as a result of their job performance. Because man is a rational human being he will try to maximise
the perceived value of such rewards. People will be highly motivated if they are made to believe that if they behave in a
particular way, they will receive a certain type of outcome according to their personal preference. There are three
variables in Vroom's model given in the form of an equation. Since the model is a multiplier, all the three variables must
have high positive value to imply motivated performance choices. If any of the variables is zero, the probability of
motivated performance tends to be zero.
MOTIVATION = VALENCE x EXPECTANCY x INSTRUMENTALITY
It is important to note that if any of the three factors are Zero, Motivation level of the employee will be Zero.
All these three variables are explained as follows:
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1. Valence: Valence means the attraction (or repulsion) of an outcome to the individual. Whenever an individual has
preference for a reward valance is the strength of that preference. The valence is something subjective and varies from
person to person. For example,if there is a person who values Recognition for work done as against Cash incentives will
be having ZERO valence if there a Cash reward is given without recognizing the efforts put in by him.In this case,because
Valence= 0,Motivation becomes Zero.
2. Expectancy: Expectancy is also referred to as the Effort-Performance Probability. It refers to the extent to which the
person believes his efforts will lead to the first level outcome i.e., completion of the task. Expectancy is the probability that
a particular action will lead to the outcome, it is the perception in the mind of the individual of the likelihood that a
particular action or behaviour will lead to a certain outcome. Since it is an association between effort and performance, its
value can range between 0 and 1. If the individual feels that the probability of achieving an outcome is zero, he will not
even try. On the other hand, if probability is higher, he will put more efforts to achieve the desired outcome.
3. Instrumentality (Performance-Reward Probability): Instrumentality refers to the probabilities attached by the
individual to each possible performance outcome alternative just as the individual previously assigned probabilities to
various levels of effort leading to different levels of performance (expectancy). In simple words, instrumentality refers to
the belief and expectation of a person that this performance will lead to a particular desired reward.
LEARNING
DEFINITION
E. R. Hilgard has defined learning as a relatively permanent change in behaviour that occurs as a result of prior
experience. Ironically, it can be said that change in behaviour indicates that learning has taken place and that learning is
a change in behaviour. To quote W. McGehee, Learning has taken place if an individual behaves, reacts, responds as a
result of experience in a manner different from the way he formerly behaved.
Learning is change in behaviour through education and training, practice and experience. It is accompanied by
acquisition of knowledge, skills and expertise, which are relatively permanent.
Nature of Learning
The process of learning involves the following implications:
(i) Learning involves a change, though not necessarily improvement, in behaviour. Learning may be good or bad from
organisations point of view. For example, bad habits, prejudice, stereotypes and work restrictions may be learnt by
an individual.
(ii) Change in behaviour must be relatively permanent. Temporary changes may be only reflexive and fail to represent
any learning. Changes caused by fatigue or temporary adaptations are not covered in learning.
(iii) The change in behaviour should occur as a result of experience practice, or training. The change may not be evident
until a situation arises in which the new behaviour can occur.
(iv) The practice or experience must be reinforced in order for learning to occur. If reinforcement does not company the
practice or experience, the behaviour will eventually disappear.
(v) Learning is reflected in behaviour. A change in an individuals thought process or attitudes, not accompanied by
behaviour, is so learning.
EMPLOYEES FEEDBACK AND REWARD SYSTEM

INTRODUCTION
Wage and salary administration affect levels of employee commitment to the organisation. A large part of the
compensation that people receive from work is monetary. Wages, salaries and many employee benefits and services are
form of compensation. The sophistication of wage and salary administration has increased, as industrialized economies
have become more complex.
MEANING
Administration of employee compensation is called wage and salary administration.
According to S. P. Robbins, The term compensation administration or wage and salary administration denotes the
process of managing a companys compensation programme. The goals of compensation administration are to design a
cost-effective pay structure that will attract, motivate and retain competent employees. Thus, wage and salary
administration aims to establish and maintain an equitable wage and salary structure and an equitable labour cost
structure.
DEFINITIONS
Compensation may be defined as money received in performance of work plus many kinds of services and benefits that
organisations provide to their employees. Compensation may be classified into (a) Base or primary compensation and (b)
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Supplementary compensation. Primary compensation refers to basic pay in the form of wages and salaries. It is a fixed
and non-incentive payment on the basis of time expand on the job. Supplementary compensation consists of incentive
and variable payments, based on either individual output or output of the group as a whole.
WAGE POLICY IN INDIA
Wage policy refers to all systematic efforts of the government in relation to the national wage and salary system. It
includes notification, orders, legislations etc. to regulate the levels or structures of wages and salaries with a view to
achieve the economic and social objectives of the government. India aims at rapid economic growth, industrial peace,
price stability, equitable distribution of income and progressively rising standard of living for the working class. In order to
realise these objectives, the Government of India has taken the following steps:
The first step towards the evolution of wage policy was the enactment of the Payment of Wages Act 1936. The main
objective of the Act is to prohibit and delay or withholding of wages, legitimately due to the employees. The next step was
the passing of the Industrial Disputes Act, 1947 authorising all the state governments to set up industrial tribunals which
would look into disputes relating to remuneration. Another important development that led to the evolution of wage policy
was the enactment of Minimum Wages Act, 1948. The purpose of this Act is the fixation of minimum rates of wages to
workers in sweated industries, such as woolen, carpet making, flour mills, tobacco manufacturing, oil mills, plantations,
quarrying, mica agriculture and the like. The Act was amended several times to make it applicable to more and more
industries. In 1976, Equal Remuneration Act was passed, which prohibits discrimination in matters relating to
remuneration on the basis of religion, region or sex.
The constitution of India also made it obligatory for the government to evolve a wage policy. Successive five year plans
have also devoted necessary attention to the need for a wage policy. Following the recommendations of the First and
Second plans, the Government of India constituted wage boards for important industries in the country. A wage board is a
tripartite body comprising representatives from the government, employers and employees. Technically speaking, a wage
board can make only recommendations and wage policies are normally implemented through persuasion.
Wages and allowances of central and State government employees are determined through the pay commissions
appointed by the appropriate government. So far the central government has appointed five pay commissions. The
disputes arising out of pay commission awards and their implementation are decided by commissions of inquiry,
adjudication machinery and the joint consultative machinery.
In spite of legislations, tribunals and boards disparities in wages and salaries still persist. In order to correct such
disparities, the Government of India appointed a committee headed by Mr. Bhootalingam in 1979. The brief given to the
committee was to suggest rational and integrated wage policy covering all sectors of the economy. Soon after the
committee submitted its report, it was strongly opposed by the trade unions. It was criticized as anti labour and
impracticable. Therefore, the Government shelved its report.
Concepts of Wages
While evolving wage policy three concepts of wages are generally considered. These are broadly based on the needs of
the workers, capacity of the employer to pay and the general economic conditions prevailing in a country. These concepts
are:
1) Minimum Wage: Minimum wage is that wage which must be paid whether the company earns any profit or not. This
wage provides not merely for bare sustenance of life, but also for the preservation of the efficiency of the worker.
Minimum wage may be fixed by an agreement between the management and the workers but is usually determined
through legislation. This is more so in the unorganized sector where labour is ununionised. In the fixation of minimum
wages, besides the needs of workers, other factors like ability of the concern to pay nature of the jobs etc. are also
considered. The 15th Labour Conference (1957) formally quantified the term minimum wage thus.
(i) In calculating the minimum wage, the standard working class family should be taken to comprise three consumption
units for one earner, the earnings of women, children, adolescents being disregarded.
(ii) Minimum food requirements should be calculated on the basis of a set intake of calories as recommended by Dr.
Aykoyd for an average Indian adult of moderate activity.
(iii) Clothing requirements should be estimated on the basis of per capita consumption of 18 yards per annum which
would give for the average workers family of four a total of 72 yards.
(iv) In respect of housing the rents corresponding to the minimum area provided for under Government Industrial
Housing Scheme should be taken into consideration in fixing the minimum wage.
(v) Fuel, lighting and other miscellaneous items of expenditure should constitute 20% of the minimum wage.
2) Fair Wage: Fair wage is that which is above the minimum wage but below the living wage. It can be fixed only by
comparison with an accepted standard wage. Such a standard can be determined with reference to those industries
where labour is well organised and has been able to bargain well with the employer. According to the Committee on Fair
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Wages, 1948 fair wage should be determined taking into consideration the following factors:
(i) Productivity of labour
(ii) The prevailing rates of wages in the same or similar occupations in the same region or neighbouring regions.
(iii) The level of national income and its distribution
(iv) The place of industry in the economy of the country and
(v) The employers capacity to pay.
3) Living Wages: According to the committee on fair wages, the living wage is the highest among the three. It must
provide:
(1) Basic amenities of life
(2) Efficiency of worker and
(3) Satisfy social needs of workers such as medical, education, retirement etc. living wage is a dynamic concept, which
grows in line with the growth of the national economy. It varies from country to country. in the more advanced
countries living wage itself forum the basis for minimum wages.
In India, minimum wage is fined mainly for sweated industries under the provisions of the Minimum Wages Act, 1948. Fair
wage is fined for the other industries considering prevailing rates of wages, productivity of labour, capacity of employer to
pay, level of national income etc. Tribunals, awards & wage boards play major role in fair wage fixation. Many people are
of the opinion that living wage is a luxury for a developing country like India and can therefore be deferred.
COMPENSATION MANAGEMENT-II
INTRODUCTION
The use of financial incentives-financial rewards paid to workers whose production exceeds some predetermined
standard was first popularized by F.W. Taylor in the late 1800s. Financial incentive refer to performance linked
compensation paid to improve motivation and productivity of employees. The use of incentives assumes that peoples
actions are related to their skills and ability to achieve important longer run goals, incentives generally vary from individual
to individual and from period to period for the same individual.
MEANING OF INCENTIVE PLANS
Incentives are monetary benefits paid to workers in recognition of their outstanding performance.
According to the National Commission on Labour, Wage incentives are extra financial motivation. They are
designed to stimulate human effort by rewarding the person, over and above the time rated remuneration for
improvements in the present or targeted results.
According to Dale Yoder, Incentive wages relate earnings to productivity and may use premiums, bonuses or a
variety of rates to compensate for Superior performance.
According to K.N. Subramaniam, Incentive system of payment is the imparting of incentives to workers for higher
production and productivity.
The international law office refers to incentives as payment by results.
PERFORMANCE MANAGEMENT
CONCEPT OF PERFORMANCE APPRAISAL:
Performance evaluation or performance appraisal is the process of assessing the performance and progress of an
employee or of a group of employees on given job and his potential for future development. It consists of all formal
procedures used in working organisations to evaluate personalities, contribution and potentials of employees,
It is the process of obtaining, analysing and recording information about the relative worth of an employee. Performance
appraisal and merit rating are used synonymously.
According to Flippo, "Performance Appraisal is the systematic, periodic and an impartial rating of an Employee:
Concept of Performance Appraisal
Performance evaluation or performance appraisal is the process of assessing the performance and progress of an
employee or of a group of employees on a given job and his potential for future development. It consists of all formal
procedures used in working organisations to evaluate personalities, contributions and potentials of employees. It is the
process of obtaining, analysis and recording information about the relative worth of an employee.
Characteristics of Performance Appraisal:
The main characteristics of performance appraisal are as follows:
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(i) Performance appraisal is a process consisting of a series of steps.

(ii) It is the systematic examination of an employees strengths and weaknesses in terms of the job.
(iii) Performance appraisal is a scientific or objective study. Formal 0rocedures are used in this study. The same
approach is adopted for all jobholders so that the results are comparable.
(iv) It is an ongoing or continuous process wherein the evaluations are arranged periodically according to a definite plan.
(v) The main purpose of performance appraisal is to secure information necessary for making objective and correct
decisions on employees.
Objectives of Performance Appraisal:
The main purposes of performance appraisal are as follows:
(i) To provide feedback to employees so that they come to know where they stand and can improve their job
performance.
(ii) To provide a valid database for personnel decisions concerning placements, pay, promotion, transfer, punishment,
etc.
(iii) To diagnose the strengths and weaknesses of individuals so as to identify further training needs.
(iv) To provide coaching, counselling, career planning and motivation to subordinates.
(v) To develop positive superior-subordinate relations and thereby reduce grievances.
(vi) To facilitate research in personnel management.
(vii) To test the effectiveness of recruitment, selection, placement and induction programmes.
Thus, performance appraisal aims at both judgemental and developmental efforts. The first two objectives are
judgemental whereas the remaining are developmental. Under developmental efforts employees are helped to identify
their weakness and take steps to overcome them. It is largely self development of employees. By focusing attention on
performance, performance appraisal goes to the heart of personnel management and reflects managements interest in
the progress of employees.
Uses of Performance Appraisal:
Performance appraisal is a significant element of the information and control system in organisation. It can be put to
several uses concerning the entire spectrum of human resource management functions. Some common applications of
performance appraisal are given below.
i) Performance appraisal provides valuable information for personnel decisions such as pay increases, promotions,
demotions, transfers and terminations. Management gets an objective basis for discussing salary increases and
promotions with the staff. Thus, performance appraisal serves as the basis of suitable personnel policies.
ii) It helps to judge the effectiveness of recruitment, selection, placement and orientation systems of the organisation.
iii) It is useful in analysing training and development needs. These needs can be assessed because performance
appraisal reveals people who require further training to remove their weaknesses. It also identifies individuals with
high potential who can be groomed up for higher positions.
iv) Performance appraisal can be used to improve performance through appropriate feedback, working and counselling
to employees. It serves as a means of telling a subordinate how he is doing and suggesting necessary changes in his
knowledge behaviour and attitudes. It serves to stimulate and guide employees development.
v) Performance appraisal facilitates human resource planning, career planning and succession planning.
vi) It promotes a positive work environment which contributes to productivity. When achievements are recognised and
rewarded on the basis of objective performance measures, there is improvement in work environment.
vii) A competitive spirit is created and employees are motivated to improve their performance. Systematic appraisal
provides management an opportunity to properly size up the employees. It also enables a manager to understand his
strengths and weaknesses.
viii) Systematic appraisal of performance helps to develop confidence among employees. Appraisal records protect
management from charges of discrimination leveled by trade union leaders. Employee grievances can be reduced.
THE PROCESS OF PERFORMANCE APPRAISAL
The performance appraisal process follows a set pattern and it consists of the following steps:
1. Establishing Performance Standards: The appraisal process begins with the setting up of criteria to be used for
appraising the performance of employees. The criteria is specified with the help of job analysis which reveals the
contents of a job. This criteria should be clear, objective and in writing. It should be discussed with the supervisors to
ensure that all the relevant factors have been included. Where the output can be measured the criteria is clean. If
work performance cannot be measured, the personal characteristics which contribute to employee performance must
be determined. These characteristic include work quality, honesty, and reliability, cooperation and team-work, job
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3.
4.
5.
6.
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knowledge, initiative, leadership, safety consciousness, attendance, learning ability, adaptability, judgement, sense of
responsibility, health and physical condition, etc. These standards should be indicated on the Appraisal Form.
Appraisal forms should be carefully designed and printed.
In addition, who is to do the appraisal and how frequently appraisal is to e done should also be decided. In fact,
performance standards will depend upon the objectives of the appraisal i.e., to appraise actual performance on the
present job or to judge potential for higher jobs.
Communicating The Standards: The performance standards specified in the first step are communicated and
explained to the employees so that they come to know what is expected of them. The standards should be conveyed
to the evaluators. The reactions of employees to the standards should be obtained. If necessary the standards may
be revised or modified in the light of feedback obtained from the employees and the evaluators.
Measuring Performance: Once the performance standards are specified and accepted, the next stage is the
measurement of actual performance. This requires choosing the right technique of measurement, identifying the
internal and external factors influencing performance and collecting information on results achieved. Personal
observations, written reports and face to face contacts are the means of collecting data on performance. The
performance of different employees should be so measured that it is comparable. What is measured is more
important than how it is measured.
Comparing The Actual With The Standards: Actual performance is compared with the predetermined performance
standards. Such comparison will reveal the deviations which may be positive or negative. Position deviations occur
when the actual performance exceeds the standards. On the other hand, excess of standard performance over the
actual performance represents negative deviation.
Discussing the Appraisal: The results of the appraisal are communicated to and discussed with the employees.
Along with the deviations the reasons behind them are also analysed and discussed. Such discussion will enable an
employee to know his weaknesses and strengths. Therefore, he will be motivated to improve himself. The impression
the subordinate received about his performance has an impact on his subsequent performance. The impact may be
positive or negative depending how the appraisal feedback is presented and discussed with the employee.
Taking Corrective Actions: Through mutual discussions with employees, the steps required to improve
performance are identified and initiated. Training, coaching, counselling, etc. are examples of corrective actions that
help to improve performance.
PROBLEMS IN PERFORMANCE APPRAISAL

[ LIMITATIONS OF PERFORMANCE APPRAISAL ]
The main problems involved in performance appraisal are as follows:
1. Errors in Rating: Performance appraisal may not be valid indicator of performance and potential of employees due
to the following types of errors:
(a) Halo Effect: It is the tendency to rate an employee consistently high or low on the basis of overall impression. One
trait of the employee influences the raters appraisal on all other traits. For example, an employee may be rated high
on performance just because he sits on the job late in the evening. Similarly, a person who does not shave regularly
may be considered lazy at work and may be underrated. This error may be minimised by rating all the employees on
one trait before taking up another trait.
(b) Stereotyping: This implies forming a mental picture of a person on the basis of his age, sex, caste or religion. It
results in an over simplified view and blurs the assessment of job performance.
(c) Central Tendency: It means assigning average ratings to all the employees in order to avoid commitment or
involvement. This is adopted because the rater has not to justify or clarify the average ratings. As a result the ratings
are clustered around the midpoint.
(d) Constant Error: Some evaluators tend to be lenient while others are strict in assessing performance. In the first case
performance is overrated (leniency error) while in the second type it is underrated (strictness error). This tendency
may be avoided by holding meetings so that the raters understand what is required of them.
(e) Personal Bias: Performance appraisal may become invalid because the rater dislikes an employee. Such bias or
prejudice may arise on the basis of regional or religious beliefs and habits or interpersonal conflicts. Bias may also be
the result of time. Recent experience or first impression of the rater may affect the evaluation.
(f) Spill Over Effect: This arises when past performance affects assessment of present performance. For instance,
recent behaviour or performance of an employee may be used to judge him.
2. Lack of Reliability: Reliability implies stability and consistency in the measurement. Lack of consistency over time
and among different raters may reduce the reliability of performance appraisal. Inconsistent use of measuring
standards and lack of training in appraisal techniques may also reduce reliability. Different qualities may not be given
proper weightage. Factors like initiative are highly subjective and cannot be quantified.
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3.
Incompetence: Raters may fail to evaluate performance accurately due to lack of knowledge and experience. Post
appraisal interview is often handled ineffectively.
4. Negative Approach: Performance appraisal loses most of its value when the focus of management is on
punishment rather than on development of employees.
5. Multiple Objectives: Raters may get confused due to two many objectives or unclear objectives of performance
appraisal.
6. Resistance: Trade unions may resist performance appraisal on the ground that it involves discrimination among its
members. Negative ratings may affect interpersonal relations and industrial relations particularly when
employees/unions do not have faith in the system of performance appraisal.
7. Lack of Knowledge: The staff appraising performance of employees might not be trained and experienced enough
to make correct appraisal.
ESSENTIALS OF AN EFFECTIVE PERFORMANCE APPRAISAL SYSTEM
To be effective, a performance appraisal system should satisfy the following requirements.
1. Mutual Trust.
2. Clear Objectives.
3. Standardisation: Well-defined performance factors and criteria should be developed.
4. Training: Evaluators should be given training in philosophy and techniques of appraisal. They should be provided
with knowledge and skills in documenting appraisals, conducting post appraisal interviews, rating errors, etc.
5. Job Relatedness: The evaluators should focus attention on job-related behaviour and performance of employees. In
order to focus attention on behaviour under the employees control, rates must become familiar with the observed
behaviour..
6. Documentation: The raters should be required to justify their ratings. Documentation will encourage evaluators to
make counscious efforts minimizing personal biases. It will also help to impart accountability for ratings.
7. Feedback and participation: Arrangements should be made to communicate the ratings to both the employees and
the raters. The employees should actively participate in managing performance and in the ongoing process of
evaluation. The superior should play the role of coach and counseller. The overall purpose of appraisals should be
developmental rather than judgemental.
8. Individual Difference: While designing the appraisal system, individual differences in organisations should be
recognised. Organisations differ in terms of size, nature, needs and environment. Therefore, the appraisal system
should be tailor made for the particular organisation. The needs of rates in terms of feedback, mobility, confidence
and openness should also be considered.
9. Post Appraisal Interview: After appraisal, an interview with the employee should be arranged. It is necessary to
supply feedback, to know the difficulties under which the employees work and to identify their training needs. The
later should adopt a problem solving approach in the interview and should provide counselling for improving
performance.
10. Review and Appeal: A mechanism for review of rating should be provided. The review may be made by a committee
consisting of line executives and personnel experts. The committee will see whether the raters are unusually strict or
lenient. It may compare ratings with operating results and may require the raters to give specific examples or tangible
proof. Differences if any are discussed and dissent is recorded. Provision must be made for an appeal in case the
employee/rate is not satisfied with the ratings.
Essentials of a Good Appraisal System
1. Easy to understand and administer
2. Open and participative involve employees in goal setting process and provide feedback
3. Valid and reliable
4. Built an incentive i.e., reward should follow satisfactory performance.
5. Contain a follow up mechanism for identifying employees growth needs.
6. Periodically reviewed and updated.
7. Established with the support of all line people who administer the system.
Methods of Performance Appraisal
Several methods and techniques are used for evaluating employee performance. These may be classified into two broad
categories as shown in:
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PERFORMANCE APPRAISAL
Traditional Methods
1. Confidential Report
2. Free Form or Essay
3. Straight Ranking
4. Paired Comparisons
5. Forced distribution
6. Graphic Rating Scales
7. Checklist Method
8. Critical Incidents
9. Group Appraisal
10. Field Review
Modern Methods
1. Assessment Centre
2. Human Resource Accounting
3. Behaviourally Anchored Rating Scales
4. Appraisal through MBO
TRADITIONAL METHODS
Some important traditional methods are discussed here;
1. Confidential Report: This is a traditional form of appraisal used in most government organisations. A confidential
report is a report prepared by the employees immediate superior. It covers the strengths and weaknesses, main
achievements and failure, personality and behaviour of the employee. It is descriptive appraisal used for promotions and
transfers of employees.
2. Free Form or Essay Method: Under this method, the evaluator writes a short essay on the employees performance
on the basis of overall impression. The description is expected to be as factual and concrete as possible. An essay can
provide a good deal of information about the employee especially if the evaluator is asked to give examples of each one
of his judgments. The limitations are as follows.There is no common criterion for appraisal. Secondly, the quality of
appraisal depends on the writing ability of the evaluator rather than on employee performance. One evaluator may be a
good essay writer but the other may not be. Thirdly, it is a very time consuming method of appraisal. This method may be
appropriate for assessing senior executives where the number involved is small. Fourthly, it is not possible to compare
two essay appraisals due to variations in their length and contents.
3. Straight Ranking Method: In this technique, the evaluator assigns relative ranks to all the employees in the same
work unit doing the same job. Employees are ranked from the best to the poorest on the basis of overall performance.
The wholeman is compared with the whole man without analysing performance. The relative position of an employee is
reflected in his numerical rank.
For instance, if five person A, B, C, D and E are to be ranked the ranking may be as follows:
Employee
Rank
A
2
B
1
C
5
D
4
E
3
Straight ranking is one of the oldest and simplest methods. It is time saving and a comparative evaluation technique of
appraisal. But there are several weaknesses in this method. First, it involves bias and snap judgement because appraisal
is not based on specifically defined measures of job-related performance. Secondly, ranking of individuals having varying
behaviour patterns or traits is difficult especially when a large number of persons are to be rated. Thirdly, the method only
indicates how a person stands in relation to others in the group but does not tell how much better or worse he is than
another.
7. Checklist Method: A checklist is a list of statements that describe the characteristics and performance of employees
on the job. The rater checks to indicate if the behaviour of an employee is positive or negative to each statement. The
performance of an employee is rated on the basis of number of positive checks. There are three types of checklists that
can be used:
(a) Simple checklist: Where in equal importance is given to each statement,
(b) Weighted checklist: In which weights are assigned to different statements to indicate their relative importance, and
(c) Forced choice checklist: Wherein five statements are given for each trait, two most descriptive statement, two least
descriptive statements and one neutral statement. The rate is required to check one statement each from the most
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descriptive and least descriptive ones. The aim is to minimise the raters personal bias.
8. Critical Incidents Method: In this method the supervisor keeps a written record of critical (either good or bad) events
and how different employees behaved during such events. The rating of an employee depends on his positive/negative
behaviors during these events. These critical incidents are identified after thorough study of the job and discussion with
the staff. For example, a fire, a sudden breakdown of machinery, a serious accident, etc. may be identified as critical
incidents for the working of a factory. Critical incidents method helps to avoid vague impressions and general remarks as
the rating is based on actual records of behaviour/performance. The feedback from actual events can be discussed with
the employee to allow improvements. The rater can fully defend his ratings on the basis of his record.
9. Group Appraisal Method: Under this method, a group of evaluators assesses employees. This group consists of the
immediate supervisor of the employee, other supervisors having close contact with the employees work, head of the
department and a personnel expert. The group determines the standards of performance for the job, measures actual
performance of an employee analyses the causes of poor performance and offers suggestions for improvements in
future. The advantage of this method is that it is simple yet more thorough. Due to multiple evaluators personal bias is
minimised. But it is a very time-consuming process.
The traditional methods given above all focus more on the traits of an employee than on his job performance. In the
absence of predecided performance criteria or standards, the personal bias or subjectivity of the evaluator affects the
rating.
MANAGEMENT BY OBJECTIVES (MBO)
In its basic form, management by objectives requires the managers to set specific measurable goals with each employee
and then periodically discuss his progress to wards these goals. MBO can be on a modest scale with subordinates and
superiors jointly setting goals and periodically providing feed back. However the term, MBO almost always refers to a
comprehensive, organisation wise goal setting and appraisal programme that consist of the following steps.
i) Set the Organisations Goals: Establish an organisation wise plan for next year and set goals.
ii) Set Departmental Goals: In this step departmental heads and their superiors jointly set goals for their departments.
iii) Discuss Departmental Goals: Departmental heads discuss the departments goals with all the subordinates in the
department and ask them to develop their own individual goals. In other words, every employee will state how can he
contribute to the departments attaining its goals?
iv) Define Expected Results (Set Individual Goals): In this step, department heads and their subordinates set shortterm performance targets.
v) Performance Reviews: Measures the Results. Departments heads compare the performance of each employee
with expected results.
vi) Provide Feed Back: Department heads hold periodic performance review meetings with subordinates to discuss and
evaluate the latters progress in achieving expected results.
The MBO approach has done away with the judge mental role of the superiors in the appraisal of their subordinates. It
ideas to greater satisfaction, greater agreement, greater comfort and less tension and hostility between the workers and
the management. This approach is considerably superior to the traditional approach of performance appraisal. It
emphasises training and development of individuals. It is problem solving approach. This approach also has a built in
device of self-appraisal by the subordinates because they know their goals and the standards by which their performance
will be measured.
MBO method suffers from the following limitations:
This method can be used only when the goal setting is possible by the subordinates. Blue collar workers are often unable
to set their own goals.MBO programme involves considerable time, energy and expenditure. It is difficult to administer
because continuous interaction between superiors and subordinates is required. If the span of supervision is quite large, it
will not be possible for the superior to have discussion with each and every subordinate for setting up mutually agreed
goals.Normally,in Banks,MBO method is used for assessing Branch Managers.
360 DEGREE PERFORMANCE APPRAISALS
The 360 degree technique is understood as systematic collection of performance data on an individual or group, derived
from a number of stakeholders-the stake holders being the immediate supervisors, team members, customers, peers and
self. In fact, anyone who has useful information on how an employee does the job may be one of the appraisers. The
appraiser should be capable of determining what is more important and what is relatively less important. He should
assess the performance without bias.
The 360 degree appraisal provides a broader perspective about an employees performance. In addition, the technique
facilitates greater self-development of the employees. This appraisal provides formalized communication links between
an employee and his customers. By design this appraisal is effective in identifying and measuring interpersonal skills,
customer satisfaction and team building skills.
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However, there are some limitations of this method. Receiving feed back on performance from multiple sources can be
intimidating. Further, organisations that use this technique take a long time in selecting the rater, designing
questionnaires and analysing the data. In addition, multiple raters are less adapt at providing a balanced and objective
feed back than the supervisors who are sought to be replaced. Raters can have enormous problems in separating honest
observations from personal differences and biases.
Despite the limitations, more and more firms are using the 360-degree technique to assess the performance of their
employees.
CTDI WISHES YOU ALL THE BEST
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CAIIB-HRM

HUMAN RESOURCES MANAGEMENT

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Job Evaluation Motivation

LINE MANAGERS Vs PERSONNEL MANAGERS

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Personnel Function and Responsibilities of Line and Staff Managers

Line Manager's Responsibilities

Orientation of new employees

Personnel Department's Responsibilities

HUMAN RESOURCES DEVELOPMENT MANAGER

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to be significanct in the earlier Scientific Management Approach.

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SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

NATURE AND SCOPE OF HUMAN RESOURCE MANAGEMENT

Human Resource Planning:

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HRM AND INFORMATION TECHNOLOGY

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SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

DEVELOPMENT OF HUMAN RESOURCE

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SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

Short duration and for a specific job

It involves broader education and its

Training helps an individual learn

Development involves preparing the

Training is mostly the result of

Training is, thus a reactive process

Development is mostly the result of internal

Development is future oriented training

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Demerits: Some of the demerits from which OJT suffers are:

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(a) Direction for or against something.

SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

good morals and proceed to treat them accordingly.

SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

attitudes by understanding the organizational goals better.

SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

Personality: Individual personality has a profound influence on perceived behaviour

Secure individuals tend to perceive others as warm, not cold.

(ii) Individuals weak in certain aspects tend to find fault in others.

Intensity: Intensity attracts to increase the selective perception.

PERCEPTUAL ERRORS AND DISTORTION

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to a standard or to each other on each trait.

HUMAN IMPLICATIONS OF ORGANISATIONS

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Thus, Maslow suggested the following points:

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HERZBERGS MOTIVATION-HYGIENE THEORY or TWO FACTORS

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APPLICABILITY OF THEORY X AND THEORY Y

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EMPLOYEES FEEDBACK AND REWARD SYSTEM

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SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

SCO 1-2-3, 4TH FLOOR, SECTOR 17-D, CHANDIGARH , PH. 0172-2708961-62

(i) Performance appraisal is a process consisting of a series of steps.

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PROBLEMS IN PERFORMANCE APPRAISAL

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