UNIT II

LESSON

3
PERSONNEL POLICIES

CONTENTS
3.0 Aims and Objectives

3.1 Introduction

3.2 Need for Personnel Policy

3.3 Objectives of Personnel Policies

3.4 Principles of Personnel Policies

3.5 Coverage of Personnel Policies

3.6 Formulation of Personnel Policies

3.7 Evaluating the Impact of Personnel Policies

3.8 Types of Personnel Policies

3.9 Personnel Procedures and Programmes

3.10 Obstacles in Administering Personnel Policies

3.11 Let us Sum up

3.12 Lesson End Activity

3.13 Keywords

3.14 Questions for Discussion

3.15 Suggested Readings

3.0 AIMS AND OBJECTIVES

After studying this lesson, you will be able to:
 Understand the nature and importance of personnel policies
 Distinguish between various types of personnel policy
 Know how to formulate personnel policies
 Evaluate the impact of personnel policies
38
Personnel Management Concepts 3.1 INTRODUCTION
Personnel strategy is the pattern of decisions concerning policies and practices associated
with the personnel system. A policy is a predetermined established guideline towards the
attainment of accepted goals and objectives. Policies in the management of personnel
cover a wide variety of subjects.
After the establishment of objectives of personnel management, personnel policies are
to be formulated. Policies are general statements that guide thinking and action in decision-
making.

3.2 NEED FOR PERSONNEL POLICY

Personnel policies guide action. They offer the general standards or parametres based
on which decisions are reached. They serve as a road map for managers on a number of
issues such as recruitment (the job for physically challenged only), selection (selection
based on merit only), promotion (performance leads to promotion) and compensation.
Important features of an effective personnel policy can be broadly outlined as:
i. It is generally derived from the personnel objectives of an organisation.
ii. It summaries past experience in the form of useful guidelines that help managers to
speed-up the decision making process. It helps managers as well as subordinates
to dispose of repetitive problems in a consistent manner without getting into trouble.
It serves as a standing plan that can be put to use repeatedly while solving problems
of a recurring nature
iii. As a guide to executive thinking it permits managers to transfer some of the recurring
problems to subordinates. In a way, a personnel policy is an important management
tool that facilitates some transfer of decision making to lower levels of organisation.
iv. It helps in achieving coordination of organisational members and help predict more
accurately the actions and decisions of others.
Box 3.1: Tata Steel’s Personnel Policy
The personnel policy of Tata Steel, as contained in the Statement of Objectives, is given
below. The company tries to take care of its employees:
 by a realistic and generous understanding and acceptance of their needs and rights
and by having an enlightened awareness of the social problems of the industry;
 by providing adequate wages, good working conditions, job security, an effective
machinery for redressal of grievances and suitable opportunities for promotion and
self-development through in-company and external programmes;
 by treating them as individuals, giving them a sense of self-respect and better
understanding of their role in the organisation and satisfying their urge for self-
expression through a closer association with the management;
 by creating a sense of belonging through human and purposeful activities as an
integral part of human relations ensuring their willing cooperation and loyalty.

3.3 OBJECTIVES OF PERSONNEL POLICIES

Policies, as useful instructional devices, offer many advantages to the personnel working
at various levels. These are:
 Delegation: They help managers operating at different levels to act with confidence
without the need for consulting superiors every time.
 Uniformity: They increase the chances of different people at different levels of 39
Personnel Policies
the organisation making similar choices, when independently facing similar situations.
They make the actions of organisational members more consistent.
 Better control: As personnel policies specify the relationship shared between the
organisation, management and its employees, they allow members to work towards
achievement of the objectives of the organisation without friction/conflict, paving
the way for better control.
 Standards of efficiency: Policies can also serve as standards in the execution of
work. They enable the management to see if they have been translated into action
by various groups in the organisation or not. In the light of actual performance,
existing policies may be subjected to amendment/refinement.
 Confidence: Policies make the employees aware of where they stand in the
organisation and create confidence in them while confronting routine and recurring
problems. They reduce chances of misinterpretation, misrepresentation and friction.
 Speedy decisions: Policies can speed up decision making by providing a blanket
framework within which personnel decisions can be made. They summarise past
experience.
 Coordinating devices: Personnel policies help in achieving coordination. If
organisational members are guided by the same policies, they can predict more
accurately the actions and decisions of others. They ensure a steady course of
action and prevent unwarranted deviations from planned operations.
In the absence of a policy, similar questions must be considered time after time. Lack of
a policy means that the organisation has established no continuing position. Despite their
usefulness, personnel policies are not always easy to formulate and implement. A number
of hurdles come in the way.

3.4 PRINCIPLES OF PERSONNEL POLICIES

While developing sound personnel policies, management should pay attention to the
following:
 Related to objectives: Policies must be capable of relating objectives to functions,
physical factors and company personnel.
 Easy to understand: Policies should be stated in definite, positive, clear and
understandable language.
 Precise: Policies should be sufficiently comprehensive and prescribe limits and
yardsticks for future action.
 Stable as well as flexible: Personnel policies should be stable enough to assure
people that there will not be drastic overnight changes. They should be flexible
enough to keep the organisation in tune with the times.
 Based on facts: Personnel policies should be built on the basis of facts and sound
judgement and not on personal feelings or opportunistic decisions.
 Appropriate number: There should be as many personnel policies as necessary
to cover conditions that can be anticipated, but not so many that they become
confusing or meaningless.
 Just, fair and equitable: Personnel policies should be just, fair and equitable to
internal as well as external groups. For example, a policy of recruitment from
within may limit opportunities to bright candidates from outside; and a policy of
40 ‘recruitment from outside only’ would limit promotional avenues to promising internal
Personnel Management Concepts
candidates. To ensure justice, it is necessary to pursue both the policies scrupulously
and to apply them carefully.
 Reasonable: Personnel policies must be reasonable and capable of being
accomplished. To gain acceptance and commitment from employees, they should
be ‘conditioned by the suggestions and reactions of those who will be affected by
the policy’.
 Review: Periodic review of personnel policies is essential to keep in tune with
changing times and to avoid organisational complacency or managerial stagnation.
For instance, if the current thinking is in favour of workers’ participation in
management, the personnel policy should be suitably adjusted to accommodate the
latest fad, accepted by many in the organisation.
Personnel policies, to be sound, should also have broad coverage in addition to satisfying
the above conditions. Hence, it would be appropriate to discuss the coverage of personnel
policies here.

3.5 COVERAGE OF PERSONNEL POLICIES

The coverage of personnel policies has been classified on the basis of functions of HRM
by Michael Armstrong and is outlined as:
a. Social responsibility:
 Equity: Treating employees fairly and justly by adopting an even-handed
approach.
 Consideration: Considering individual circumstances when decisions affect
the employee’s prospects, seniority or self-respect.
 Quality of work life: increase the interest in the job and organisation by
reducing monotony, increasing variety of responsibilities avoiding stress and
strain.
b. Employment policies: Provision of equal employment opportunities involves –
selecting the candidates based on job requirements and encouraging them to put in
their 100%.
c. Promotion policies: Promotion policies should reconcile the demands of employees
for growth and the organisation’s demands for fresh and much more promising
talent. Promotion policy should be fair and just to all.
d. Development policies: Policies should cover the kind of employees to be trained,
time span of training programmes, techniques, rewarding and awarding system,
qualifications and experience of the trainer, encouraging the employees for self
advancement, etc. These policies also cover areas like career planning and
development, performance appraisal, organisational change and organisational
development.
e. Relations policies: Relations policies cover different aspects of human relations
like: policies regarding motivation, morale, communication, leadership styles,
grievance procedure, disciplinary procedure, employee counselling, etc. These
policies also cover the areas of industrial relations like union recognition, union
representation, collective bargaining, prevention and settlement of industrial disputes
and participative management. In order to be effective they must be written on the
basis of authentic information available from different sources.
 41
3.6 FORMULATION OF PERSONNEL POLICIES Personnel Policies

Policy formulation and implementation involves the following steps:

i. Identifying the need: Initially important areas of personnel management
(recruitment, selection, training, compensation, bargaining) must have a policy
formulation which is clearly spelt out. Additional policy guidelines can come at any
stage depending on the recurrence of a ticklish issue at various levels. (appealed
policies).
ii. Collecting data: Once priority areas are listed, steps should be taken to collect
facts before formulating a policy. Various sources could be tapped for this purpose
such as (i) company's records, (ii) past practices, (iii) survey of industry practices,
(iv) experience of personnel handling various issues, (v) top management philosophy,
(vi) organisational culture, (vii) employee aspirations and, (viii) changing economic,
social and legislative environment etc.
iii. Specifying alternatives: Policy alternatives should emerge clearly after collecting
relevant data from various sources. These have to be evaluated carefully in terms
of their contribution to organisational objectives. It is always better to involve people
at various levels, especially those who are going to use and live with such policies.
Top management should put the stamp of approval only when every thing is above
board and the stated policy clearly reflects organisational priorities.
iv. Communicating the policy: To gain approval at various levels, the formulated
policy should be communicated through out the organisation. Policy manual, in-
house journal and discussions with people at various levels may be used to reach
out to employees quickly. Special coaching programmes can also inform people
about the manner of application.
v. Evaluating the policy: Personnel policies, to be effective, must be reviewed,
evaluated and controlled regularly against certain established standards. Evaluation
helps determine changes in existing policies. All the policies should be reviewed
annually and some policies should be reviewed at specific times for example when
there is collective bargaining or after strike/lock out, etc. Departmental policies
may be reviewed through participation of all employees. Outside consultants or
experts from other organisations may be engaged to review crucial policies.
Adequate care should be taken to review the policies in the following situations
when (a) employees offer suggestions; (b) employees express grievances;
(c) unsatisfactory reports about employee performance and behaviour; (d) company
plans for change like expansion, diversification, contraction, adoption of new
technology and introduction of new methods. Personnel policies, to be effective,
should have a favourable impact on the objectives and functions of P/HRM and
help the parties concerned.

Check Your Progress 1

What are the steps involved in the formulation of personnel policies?

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42
Personnel Management Concepts 3.7 EVALUATING THE IMPACT OF
PERSONNEL POLICIES
The system and methods of human resource management are mostly based on personnel
policies. Hence, appraising the impact of personnel policies is beneficial to the employees,
organisation and society at large. The impact of personnel policies can be measured in
terms of cost and benefit to employees, organisation and society.
HRM policies help the organisation in terms of attainment of organisational goals,
increasing the efficiency, adaptability and achieving of long-run results. Further,
organisational and human outcomes such as turnover, absenteeism and commitment are
the result of human resource policies. They help the employees to have an awareness
and a clear idea about the various programmes. HRM policies also affect the society.
Some HRM policies affect commonly the individual, the organisation and the society.
They relate to the employee’s health, psychological and physical well being. Various
HRM policies result in commitment, competence, cost effectiveness and congruence.
These human resource outcomes lead to long term consequences like individual well
being, organisational effectiveness and social well being as illustrated in Table 3.1.
Table 3.1: Impact of P/HRM Policies
P/HRM Policy Choices Personnel/Human Long-term consequences
Resource outcome
Employee influence Commitment Individual well being
Human resource supply Competence Organisational effectiveness
Selection system Congruence Social well being
Reward system Cost effectiveness
HRD system
Work environment
Source: Modified version from S.K. Bhatia, “Assessing the overall Impact of HRM policies”, The Hindu,
15th October 1987, p. 18.

The impact of human resource policies can be measured through their outcomes viz.,
commitment of the employee towards the organisation. Employee commitment, in turn,
can be evaluated through the length of service of an employee (stability of employment),
absenteeism, employee attitude towards the job, organisation, etc. The competence of
an employee can be appraised through performance appraisal techniques. Congruence
of an employee to policies can be identified through the nature and frequency of
grievances, disagreement, discord and conflict. Cost effectiveness can be measured
through human resource accounting techniques. However, assessing the impact of human
resource management policies is highly difficult, but not impossible.

3.8 TYPES OF PERSONNEL POLICIES

These may be classified into several categories depending on (i) their source (originated
appealed and imposed), (ii) scope (general or specific), and (iii) form (within or implied).
These may be stated thus:
 Originated policies: These are established by top management deliberately so as
to guide executive thinking at various levels.
 Appealed policies: These are formulated to meet the requirements of certain
peculiar situations which have not been covered by the earlier polices. Such requests
usually came from subordinates who fail to handle the cases based on guidance
offered by existing policies.
 Imposed polices: These are formed under pressure from external agencies such 43
Personnel Policies
as government, trade associations and unions.
 General policies: They reflect the basic philosophy and priorities of the top
management in formulating the broad plan for mapping out the organisation’s growth
chart.
 Specific policies: These policies cover specific issues such as hiring, rewarding
and bargaining. Such policies, however, should be in line with the basic framework
offered by the general policies.
 Written or implied policies: implied policies are inferred from the behaviour of
members ( such as dress code, gentle tone while talking to customers, not getting
angry while at work etc.). Written policies, on the other hand, spell out managerial
thinking on paper so that there is very little room for loose interpretation.

Check Your Progress 2

Fill in the blanks:

1. .......................... is the pattern of decisions concerning policies and practices
associated with the personnel system.
2. Special coaching programmes informs people about the ..........................
3. The system and methods of .......................... are based on personnel policies.
4. .......................... are formed under pressure from external agencies such as
government; trade associations and unions.

3.9 PERSONNEL PROCEDURES AND PROGRAMMES

Policies do not include detailed statements describing specifically how the policy is to be
implemented. Policies are implemented by procedures. A procedure is a well thought out
course of action. It prescribes the specific manner in which a piece of work is to be
done. Procedures are called ‘action guidelines’. They are usually derived from policies.
Where policies define a abroad field, procedures show a sequence of activities within
that area. The emphasis is on chronological, step-by-step sequence of required actions.
For instance, a student is required to complete several customised steps in order to
register himself for courses in a university. The basic purpose of a procedure is to spell
out clearly the way one has to go about doing something.
Further, personnel rules and programmes help in translating procedures into concrete
action. They spell out specific required actions or non-actions allowing no discretion.
Personnel programmes are complex sets of goals, policies, procedures, rules, steps to be
taken, resources to be employed and other elements necessary to carry out a given
course of action. As a single purpose ‘metaplan’, they show the major steps needed to
achieve an objective, which will be responsible for each, and the appropriate time for
carrying it out. A programme, thus is a comprehensive plan covering a large territory.

3.10 OBSTACLES IN ADMINISTERING

PERSONNEL POLICIES
The factors which obstruct the implementation of personnel policies are:
 Many times managers are reluctant to follow policy guidelines, for they restrict the
scope of managerial work and curtail executive freedom.
44  Often conflicts erupt between implied and expressed policy statements especially
Personnel Management Concepts
on employment matters. For example, a policy of promoting employees on the
basis of merit only (expressed) may be sabotaged by unscrupulous managers by
promoting ‘yes men’ (implied).
 Personnel policies demand constant revision, modification and restructuring.
However, they are characterised by considerable inertia. Once established, they
persist and become unalterable. In the absence of review and appraisal, it would
be difficult to break the cycle and effect a desirable policy change.
 Personnel policies are not easy to communicate. From the time policies are initiated
to the time they are used, there is always the danger of falling into ‘generalities and
pleasantries’.
 Since policies grant freedom to managers as to what is to be done in a particular
situation, there is always the danger of some managers strictly adhering to the
policy rhetoric and others deviating from the path excessively. A manager may be
more liberal than was originally intended and vice versa. In general, ‘the extra
margin’ of liberty may or may not prove to be an investment in the long run.
In order to overcome these obstacles, it is necessary to understand the basics in policy
formulation and revision. It would be pertinent to look into the essentials of a sound
personnel policy at this stage.

Check Your Progress 3

1. Distinguish between personnel policies and procedures.

..............................................................................................................................................
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2. Mention different types of personnel policies.
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3.11 LET US SUM UP

Personnel policies are guides to actions. They serve as roadmaps for managers on a
number of issues such as recruitment, selection and promotion. They cover almost all
functions of personnel management. A good personnel policy should be easy to understand,
based on facts, equitable, reasonably flexible, precise and related to objectives. The
personnel policy formulation is a five step process involving: need classification, data
collection, specification of alternatives, communication of policy and evaluation.

3.12 LESSON END ACTIVITY

“Though the personnel policies guide all managers in attaining their goals, their
administration is hindered by various factors.” Explain the statement.

3.13 KEYWORDS
Personnel Policies: A set of proposals and actions that act as a reference point for
managers in their dealings with employees.
Personnel Procedures: Action guidelines governing the behaviour of employees at work. 45
Personnel Policies
Appealed Policies: These are formulated to meet the requirements of certain peculiar
situations which have not been covered by the earlier policies.
Implied Policies: These are inferred from the behaviour of members.
Specific Policies: These policies cover specific issues such as hiring, rewarding and
bargaining.

3.14 QUESTIONS FOR DISCUSSION

1. What is personnel policy? Describe the important personnel policies that affect the
job of a personnel manager.
2. What is the purpose of a personnel programme? Is this solely in the interest of the
organisation?
3. How does the personnel function change as a firm grows in size? Briefly describe
each stage of its development.
4. Identify and discuss the managerial and operative functions of personnel
management.
5. Explain the coverage of personnel policies. Describe the qualities of a sound
personnel policy.

Check Your Progress: Model Answers

CYP 1
Steps involved in the formulation of Personnel Policies
(i) Identifying the need
(ii) Collecting data
(iii) Specifying alternatives
(iv) Communicating the policy
(v) Evaluating the policy
CYP 2
1. Personnel Strategy
2. manner of application
3. human resource management
4. Imposed policies
CYP 3
1. Policies do not include detailed statements describing specifically how the
policy is to be implemented. Policies are implemented by procedures. A
procedure is a well thought out course of action.
2. Types of Personnel Policies
(i) Originated policies
(ii) Appealed policies

Contd....
46
Personnel Management Concepts (iii) Imposed policies
(iv) General policies
(v) Specific policies
(vi) Implied policies

3.15 SUGGESTED READINGS

V S P Rao, Human Resource Management, Excel Books, New Delhi, 2005
D K Bhattacharyya, Human Resource Management, Excel Books, New Delhi, 2006
P L Rao, Comprehensive HRM, Excel Books, New Delhi, 2004