HUMAN RESOURCE MANAGEMENT

Human Resource Management is the process of recruitment and selecting employee, providing
orientation and induction, training and development, assessment of employee (performance of
appraisal), providing compensation and benefits, motivating, maintaining proper relations with
employees and with trade unions, maintaining employee’s safety, welfare and healthy measures in
compliance with labour laws of the land.
Human Resource Management ( HRM ) – OBJECTIVES:
The primary objective of HRM is to ensure the availability of right people for right jobs so as the
organisational goals are achieved effectively. Werther and Davis have classified the objectives of
HRM into four categories;
1. Societal Objectives: The societal objectives are socially and ethically accountable for the
requirements and difficulties of society. In the process, they need to reduce the adverse impact of
such demands on the business. The failure of companies to utilize their resources for society’s gain
in ethical ways can result in restrictions
2. Organisational Objectives: The organisational objectives acknowledge the function of human
resource management in organisational effectiveness. HRM isn’t an end in itself; it’s just an effective
way to help the business with its main objectives. Basically the HR department is out there to serve
the rest of the organisation.
3. Functional Objectives: Functional objectives attempt to maintain the department’s contribution
at a level suitable for the organisation’s requirements. Human resources need to be adjusted to
match the organisation’s demands. The department’s level of service should be customized to suit
the business it assists.
4. Personal Objectives: Personal objectives help workers in attaining their personal goals, at least
insofar since these objectives boost the individual’s contribution to the organisation. Personal
objectives of workers should be met if they’re to be maintained, retained and motivated. Otherwise,
staff performance and satisfaction might drop giving rise to employee turnover.
Human Resource Management ( HRM ) – FUNCTIONS
1. Managerial Functions
a. Human Resource Planning - In this function of HRM, the number and type of employees needed
to accomplish organisational goals is determined.
b. Organising - In an organisation tasks are allocated among its members, relationships are
identified, and activities are integrated towards a common objective.
c. Directing - Activating employees at different level and making them contribute maximum to the
organisation is possible through proper direction and motivation.
d. Controlling - After planning, organising, and directing, the actual performance of employees is
checked, verified, and compared with the plans. If the actual performance is found deviated from
the plan, control measures are required to be taken.
2. Operative Functions
a. Recruitment and Selection
b. Job Analysis and Design
c. Performance Appraisal
d. Training and Development
e. Wage and Salary Administration
f. Employee Welfare
g. Maintenance
h. Labour Relations
i. Personnel Research
j. Personnel Record
3. Advisory Functions
a. Advised to Top Management Personnel manager advises the top management in formulation and
evaluation of personnel programs, policies, and procedures.
b. Advised to Departmental Heads Personnel manager advises the the heads of various departments
on matters such as manpower planning, job analysis, job design, recruitment, selection, placement,
training, performance appraisal, etc.
Human Resource Management ( HRM ) – External and Internal environment
1. Internal Environment
These are the forces internal to an organisation. Internal forces have profound influence on HR
functions. The internal environment of HRM consists of unions, organizational culture and conflict,
professional bodies, organisational objectives, polices, etc.
2. External Environment
External environment includes forces like economic, political, technological, demographic etc. these
exert considerable influence on HRM.
Human Resource Planning:
Human resource is the most important asset of an organization. Human resources planning are the
important managerial function. It ensures the right type of people, in the right number, at the right
time and place, who are trained and motivated to do the right kind of work at the right time, there is
generally a shortage of suitable persons.
Steps in Human Resource Planning:
1. Analysing Organizational Objectives
2. Inventory of Present Human Resource
3. Forecasting Demand and Supply of Human Resources
4. Estimating Manpower Gaps
5. Formulating the Human Resource Action Plan
6. Monitoring, Control and Feedback
Compensation Management - Components of Compensation
1. Wages and Salary: Wages mark hourly rates of pay, and salary marks the monthly rate of pay of
an employee. It is irrelevant of the number of hours put in by an employee working in the firm.
These are subject to annual increase.
2. Allowances: Allowances can be defined as the amount of something that is allowed, especially
within a set of rules and regulations or for a specified purpose. Various allowances are paid in
addition to basic pay. Some of these allowances are as follows: ● Dearness Allowance: This
allowance is given to protect real income of an employee against price rise. Dearness allowance (DA)
is paid as a percentage of basic pay. ● House Rent Allowance: Companies who do not provide living
accommodation to their employees pay house rent allowance (HRA) to employees. This allowance is
calculated as a percentage of salary. ● City Compensatory Allowance: This allowance is paid
basically to employees in metros and other big cities where cost of living is comparatively more. City
compensatory allowance (CCA) is normally a fixed amount per month, like 30 percent of basic pay in
case of government employees. ● Transport Allowance/Conveyance Allowance: Some companies
pay transport allowance (TA) that accommodates travel from the employee’s house to the office. A
fixed amount is paid every month to cover a part of traveling expenses.
3. Incentives and Performance Based Pay: Incentive compensation is performance-related
remuneration paid with a view to encourage employees to work hard and do better. Both individual
incentives and group incentives are applicable in most cases. Bonus, gain-sharing, commissions on
sales are some examples of incentive compensation.
4. Fringe Benefits/Perquisites: Fringe benefits include employee benefits like medical care,
hospitalization, accident relief, health and group insurance, canteen, uniform, recreation and the
likes.
Types of Compensations
1. Direct Compensation: It is naturally made up of salary payments and health benefits. The creation
of salary ranges and pay scales for different positions within an organization are the central
responsibility of compensation management staff. Direct compensation that is in line with the
industry standards facilitates employees with the assurance that they are getting paid fairly. This
helps the employer not to worry about the costly loss of trained staff to a competitor.
2. Indirect Compensation: It focuses on the personal encouragements of each individual to work.
These benefits can include things like free staff development courses, subsidized day care, the
chances for promotion or transfer within the company, public recognition, the ability to effect
change or bring some changes in the workplace, and service to others.
JOB EVALUATION: The Job Evaluation is the process of assessing the relative worth of the jobs in an
organization. The jobs are evaluated on the basis of its content and the complexity involved in its
operations and thus, positioned according to its importance. The purpose of the job evaluation is to
have a satisfactory wage differential.
Job evaluation is done by any of the following methods:
Points rating - Different levels are accorded to the various elements of jobs and then the points
allocated to different levels are totalled to get point score of the jobs which forms the basis of pay
structure.
Factor comparison - A comparison of various independent factors of jobs is done and points are
given to each factor rank of individual job. These points are then totalled to rank the jobs.
Job ranking - Job is not broken into factors or elements, rather it is evaluated as a whole and is
compared with other jobs to be ranked accordingly.
Paired comparison - Jobs are compared with each other and allocated points depending on being
‘greater, lesser or equal’. These points are added to create rank order of jobs.
Job Analysis
Job analysis is the process of identifying and determining in detail contents of a particular job,
thereby, clearly defining duties, responsibilities, accountabilities, and skills associated with the job.
An important aspect of job analysis is that the analysis is conducted of the job, and not of the
person. The process of job analysis results in two sets of data:
Job description - It is a written statement containing complete information about what all a
job involves including job title, duties, tasks and responsibilities related to job, working conditions
and hazards, reporting relationships, tools, machines and equipments to be used, and relationships
with other positions.
Job specification - It provides particulars about capabilities that an individual should posses
to perform the job efficiently. This includes educational qualification, experience, training,
appropriate skills, knowledge, and abilities required to perform the job.
Incentive Wage Systems - TIME BASED SYSTEMS
1. Halsey Plan: This plan was first designed by Halsey in Under this plan, a standard time is fixed for
completing a work in advance. A person taking standard or more time is paid for the time taken by
him. A worker completing his task in less than the standard time is paid for some of the time saved.
The payments for time saved vary from 33 1/3% to 66 2/3 %.
2. Rowan Plan: This system is similar to that of Halsey plan. A worker is guaranteed minimum wages
for time spent on the job. He gets bonus for completing the job in less than the standard time. The
only difference between Halsey and Rowan plans is the method of calculating bonus is that
proportion of the wages of the time taken which he saved bears to the standard time allowed.
3. Emerson Plan: Emerson, an associate of F.W. Taylor, developed this efficiency plan in A standard
output is fixed for determining the efficiency of workers. A worker reaching up to 66 % of efficiency
is paid only minimum wages and bonus is paid only when his efficiency crosses this limit.
4. Bedeaux Plan: This plan was devised by Charles E. Bordeaux in It provides comparable standards
for all workers. The benefit of time saved goes both to the worker and his supervisor in the ratio of
and respectively. A supervisor also helps a worker in saving his time so he is also given some benefit
in this method.
PRODUCTIVITY BASED SYSTEMS
1. Taylor’s Differential Piece-Rate Plan: F.W. Taylor started this method as a part of the scheme of
scientific management. The standard time was fixed for completing a task with the help of time and
motion study. If a worker completes the task in the standard time he is paid at higher rate and lower
rate is paid if more than the standard time is taken.
2. Gantt’s Task and Bonus Plan: This method is named after H.L. Gantt, a class associate of F.W.
Taylor. He tried to improve Taylor’s method of wage payment. The workers are guaranteed
minimum wages for taking standard time or more. A person taking less than the standard time gets
time wages plus bonus.
Group Incentive Plans:
1. Priest man’s plan: A standard production is fixed for the whole enterprise under this plan. If
productivity exceeds the standard then bonus is paid in accordance with the increase. In case
production does not reach the standard then workers get minimum wages only. This method does
not offer incentive to individual workers. Inefficient workers share the efforts of efficient workers
because increased production benefits all the manpower in the organization.
2. Scalon plan: This method is named after Joseph Scalon. There is a payment of one percent
participating bonus for every one percent increase in productivity under this plan. The bonus is
available to all workers except top management. The entitle amount or bonus is not paid every
month.
3. Co-partnership: The employees are offered shares of the enterprise at reduced rates in this plan.
The payment is also collected in instalments. The employees share profits of the enterprise as its
members.
4. Profit sharing: When shareholders share profits for contributing towards capital then workers
should also get a part of profits for contributing their labour.
FRINGE BENEFITS - Fringe benefits refers to the extra benefits provided to the employees in addition
to the normal compensation paid in the form of wage or salary .
Kinds of fringe benefits - George R. Terry has enumerated as many as 28 benefits under fringe. A
few of them are-a bonus for quality and attendance, contribution to group insurance plan, lay off
and termination pay, travel expenses, suggestion awards, medical leave with pay, overtime,
university and trade course etc.
Fringe benefits in India - Payment for time not worked, Employee security, Safety and Health,
Workman’s compensation, Health benefits, Voluntary arrangements, Welfare and recreational
facilities, Old age and retirements benefits.
PERFORMANCE APPRAISAL
According to Flippo, “Performance appraisal is the systematic, periodic and an impartial rating of an
employee’s excellence in the matters of pertaining to his present job and his potential for a better
job in the future.”
Objectives of performance appraisal:
1. Work related objectives: a. To provide control for work done; b. To improve efficiency; c. To help
in assessing work and plan future work assignment; d. To carry out job evaluation.
2. Career development objectives: a. To identify strong and weak points and encourage finding
remedies for weak points through training; b. To plan development assignments; c. To plan career
goals; d. To determine career potential.
Features of Performance Appraisal: 1. Systematic process of evaluation of an employee. 2. Analysis
of the strengths and weaknesses of an employee. 3. To find out how well an employee is performing
the job. 4. Appraisal is done periodically. 5. It is based on a definite plan. 6. Performance appraisal
is different from job evaluation. 7. Performance appraisal is a continuous process that is accepted
by every organization.
Process of performance appraisal:
1.Setting the performance standards 2. Communicating the performance standard to the employees
3. Measuring the actual performance 4. Comparing the actual with the standard performance 5.
Providing feedback 6. Initiating corrective action
Methods of performance appraisal:
A. Traditional methods:
1. Ranking methods: It is the oldest and simplest formal systematic method of performance
appraisal in which employees are ranked from the highest to the lowest or from the best to the
worst.
2. Paired Comparison: In this method, each employee is compared with other employees on one- on
one basis, usually based on one trait only. The rater is provided with a bunch of slips each coining
pair of names, the rater puts a tick mark against the employee whom he insiders the better of the
two. The number of times this employee is compared as better with others determines his or her
final ranking.
3. Grading methods: In this method, certain categories of worth are established in advance and
carefully defined. There can be three categories established for employees: outstanding, satisfactory
and unsatisfactory. There can be more than three grades. Employee performance is compared with
grade definitions. The employee is, then, allocated to the grade that best describes his or her
performance.
4. Forced distribution methods: This method was evolved by Tiffen to eliminate the central
tendency of rating most of the employees at a higher end of the scale. The method assumes that
employees’ performance level confirms to a normal statistical distribution i.e., 10,20,40,20 and 10
percent.
5. Forced-choice methods: The forced-choice method is developed by J. P. Guilford. It contains a
series of groups of statements, and rater rates how effectively a statement describes each individual
being evaluated. Common method of forced-choice method contains two statements, both positive
and negative.
6. Check-list method: The basic purpose of utilizing checklist method is to ease the evaluation
burden upon the rater. In this method, a series of statements, i.e., questions with their answers in
‘yes’ or ‘no’ are prepared by the HR department. The checklist is, then, presented to the rater to tick
appropriate answers relevant to the appraisee.
7. Critical incidents method: In this method, the rater focuses his or her attention on those key or
critical behaviours that make the difference between performing a job in a noteworthy manner
(effectively or ineffectively)
8. Graphic rating scale method: The graphic rating scale is one of the most popular and simplest
techniques for appraising performance. It is also known as linear rating scale. In this method, the
printed appraisal form is used to appraise each employee.
9. Essay method: Essay method is the simplest one among various appraisal methods available. In
this method, the rater writes a narrative description on an employee’s strengths, weaknesses, past
performance, potential and suggestions for improvement.
10. Field review method: When there is a reason to suspect rater’s biasedness or his or her rating
appears to be quite higher than others, these are neutralised with the help of a review process. The
review process is usually conducted by the personnel officer in the HR department.
11. Confidential report: It is the traditional way of appraising employees mainly in the Government
Departments. Evaluation is made by the immediate boss or supervisor for giving effect to promotion
and transfer. Usually a structured format is devised to collect information on employee’s strength
weakness, intelligence, attitude, character, attendance, discipline, etc. report.
B. Modern methods:
1. Management by objectives (MBO): Peter F. Drucker propounded a new concept, namely,
management by objectives (MBO) way back in 1954 in his book. The Practice of management. The
concept of MBO as was conceived by Drucker, can be described as a “process whereby the superior
and subordinate managers of an organization jointly identify its common goals, define each
individual’s major areas of responsibility in terms of results expected of him and use these measures
as guides for operating the unit and assessing the contribution of each its members”.
2.Behaviourally anchored rating scales (BARS):
3. Assessment centres: Assessment centres are mainly used for evaluating executive or supervisory
potential. By definition, an assessment centre is a central location where managers come together
to participate in well-designed simulated exercises. They are assessed by senior managers supple-
mented by the psychologists and the HR specialists for 2-3 days. Assessee is asked to participate in
in-basket exercises, work groups, simulations, and role playing which are essential for successful
performance of actual job.
4. Cost accounting method: This method evaluates an employee’s performance from the monetary
benefits the employee yields to his/her organization. This is ascertained by establishing a
relationship between the costs involved in retaining the employee, and the benefits an organization
derives from Him/her.
5. 360 – DEGREE APPRAISAL: Under 360 – degree appraisal, an employee is appraised by his
supervisor, subordinates, peers, and customers with whom he interacts in the course of his job
performance. All these appraisers provide information or feedback on an employee by completing
survey questionnaires designed for this purpose.
It is a system in which employees will get feedback from all the people they work with. There are
about 7 to 12 people who will fill out a form which is usually a feedback form. The contents of the
form may vary from broad range competencies to work environment. The employee who receives
the feedback will also be required to fill out a self assessment which again might consist of the same
components. This system is used to get an improved understanding of every one’s strengths and
weaknesses. There are three general reasons as to why an organization would go in for a 360 degree
appraisal.
A 360 degree appraisal has four stages in it: 1. Self Appraisal 2. Superior’s Appraisal 3. Sub-
ordinates Appraisal 4. Peer Appraisal
How to implement 360 degree performance appraisal system?
1. Determine the right skill to be assessed. 2. Proper selection of appraiser. 3. Proper training should
be provided to all the employees about how to use the 360 degree review system. 4. The intention
of appraisal system should be elucidate. 5. Design simple and easily understandable process. 6.
Ensure that a follow up is taken after appraisal review.
360 Degree Performance Appraisal Process
1. Communicating the 360 degree performance review
2. Selection of raters
2. Distribution of survey
3. Submission of questionnaires
4. Completion of report
5. Facilitation of feedback
6. Completion of development plan
7. Re- evaluating
360 degree feedback questionnaire The questionnaire for 360 degree feedback depends on the job
profile of employee. However there are some topics such as leadership, interpersonal skills, problem
solving attitude, motivation and efficiency of employees which can be judged by the colleagues,
peers, supervisor as well as client.
Advantages of 360 degree assessment • This system provides a comprehensive view towards the
performance of employees. • It improves the credibility of the performance appraisal system • The
feedback from colleagues helps to strengthen the self development process of the employee • It
also increases the responsibility and alertness of employee towards their clients. • The different
ideas coming from different raters combined provide more accurate 360 degree assessment. • More
persuasive opinions can be gathered from different participants. • Here not only manager but
colleagues are also responsible for assessment of staff performance which empowers them. •
Employees get motivated who generally undervalue themselves. • Honest culture can be
established among the organization using 360 degree performance appraisal system.
Disadvantage • The process is very lengthy, complex and takes a lot of time. • If the feedback got
exchange among the employees it can create trouble and tension among the staff. • A lot of effort
has to be placed in order to train the employee to effectively use the 360 degree appraisal system. •
It is very difficult to figure out the results. • Some feedbacks are useless and need to be deleted
carefully. • A suspicious environment can be created in the organization as the information is not
available to everybody.
Collective Bargaining:
Collective Bargaining is a process in which the representatives of a labor organization and the
representatives of business organization meet and attempt to negotiate a contract or agreement,
which specifies the nature of employee-employer union relationship.
A collective bargaining process generally consists of four types of activities
1. Distributive bargaining: It involves haggling over the distribution of surplus. Under it, the
economic issues like wages, salaries and bonus are discussed. In distributive bargaining, one party’s
gain is another party’s loss.
2. Integrative bargaining: This involves negotiation of an issue on which both the parties may gain,
or at least neither party loses. For example, representatives of employer and employee sides may
bargain over the better training programme.
3. Attitudinal restructuring: This involves shaping and reshaping some attitudes like trust or distrust,
friendliness or hostility between labour and management. When there is a backlog of bitterness
between both the parties, attitudinal restructuring is required to maintain smooth and harmonious
industrial relations.
4. Intra-organizational bargaining: It generally aims at resolving internal conflicts. This is a type of
manoeuvring to achieve consensus with the workers and management.
Collective Bargaining Process
1. Prepare: This phase involves composition of a negotiation team. In this phase both the employer’s
representatives and the union examine their own situation in order to develop the issues that they
believe will be most important.
2. Discuss: Here, the parties decide the ground rules that will guide the negotiations.
3. Propose: This phase involves the initial opening statements and the possible options that exist to
res.
4. Bargain: negotiations are easy if a problem solving attitude is adopted. This stage comprises the
time when ‘what ifs’ and ‘supposes’ are set forth and the drafting of agreements take place. olve
them.
5. Settlement: Once the parties are through with the bargaining process, a consensual agreement is
reached upon wherein both the parties agree to a common decision regarding the problem or the
issue.
Forms of Collective Bargaining:
In the first place, bargaining may be between the single employer and the single union, this is known
as single plant bargaining. This form prevails in the United States as well as in India.
Secondly, the bargaining may be between a single firm having several plants and workers employed
in all those plants. This form is called multiple plants bargaining where workers bargain with the
common employer through different unions.
Thirdly, instead of a separate union bargaining with separate employer, all the unions belonging to
the same industry bargain through their federation with the employer’s federation of that industry.
This is known as multiple employer bargaining which is possible both at the local and regional levels.
Main Features of Collective Bargaining:
1. It is a Group Action
2. It is a Continuous Process
3. It is a Bipartite Process
4. It is a Process
5. It is Flexible and Mobile and not Fixed or Static
6. It is Industrial Democracy at Work
7. It is Dynamic
8. It is a Complementary and not a Competitive Process
EMPLOYEE PARTICIPATION
Employee participation is the process whereby employees are involved in decision making
processes, rather than simply acting on orders. Employee participation is part of a process of
empowerment in the workplace.
Objectives of Employee Participation The objectives of workers’ participation in management are as
follows: 1. To raise level of motivation of workers by closer involvement. 2. To provide opportunity
for expression and to provide a sense of importance to workers. 3. To develop ties of understanding
leading to better effort and harmony. 4. To act on a device to counter-balance powers of managers.
5. To act on a panacea for solving industrial relation problems. 6. It helps in managing resistance to
change which is inevitable. 7. Workers' participation can encourage communication at all levels. 8.
Joint decision- making ensures the there will be minimum industrial conflict.
Forms of Employee Participation
1. CO-OWNERSHIP
2. SEAT ON BOARD OF DIRECTORS
3. WORKS COMMITTEE -These committees are consultative bodies. Their functions include
discussion of conditions of work like lighting, ventilation, temperature and sanitation etc., and
amenities like water supply for drinking purposes, canteen, medical services, safe working
conditions, administration of welfare funds etc.
4. JOINT MANAGEMENT COUNCILS: Joint committees for settlement of grievances or specific
problems may be set up for promoting workers’ participation in management. Workers
representatives sit with the management across the table to discuss matters which fall within its
purview. Certain issues like wages, bonus etc., should not be discussed in such councils. Usually their
area of operation includes welfare and safety measures, vocational training, working hours and
breaks, holidays etc.
5. PROFIT SHARING: Workers feel involved in the management especially when they are given a
share in profits of the business.
6. SUGGESTION SCHEME: Suggestion scheme may also be introduced for creating interest in the
work by announcing a suitable reward for original and useful suggestions.
Workers’ Participation in Management:
Workers’ participation is a system where workers and management share important information
with each other and participate in decision taking. Workers’ participation in management is an
essential ingredient of Industrial democracy. The concept of workers’ participation in management is
based on Human Relations approach to Management which brought about a new set of values to
labour and management.
Levels of Participation
1. Informative Participation: This refers to management’s information sharing with workers on such
items those are concerned with workers. It is important to note that here workers have no right of
close scrutiny of the information provided.
2. Consultative Participation: In this type of participation, workers are consulted in those matters
which relate to them. Here, the role of workers is restricted to give their views only.
3. Associative Participation: This is an advanced and improved form of consultative participation.
Now, the management is under a moral obligation to acknowledge, accept and implement the
unanimous decision of the council.
4. Administrative Participation: In the administrative participation, decisions already taken are
implemented by the workers. Compared to the former three levels of participation, the degree of
sharing authority and responsibility by the workers is definitely more in this participation.
5. Decisive Participation: Here, the decisions are taken jointly by the management and the workers
of an organization. In fact, this is the ultimate level of workers’ participation in management.
PERSONALITY:
Personality, a characteristic way of thinking, feeling, and behaving. Personality embraces moods,
attitudes, and opinions and is most clearly expressed in interactions with other people. It includes
behavioural characteristics, both inherent and acquired, that distinguish one person from another
and that can be observed in people’s relations to the environment and to the social group
Personality trait is basically influenced by two major features − Inherited characteristics and Learned
characteristics.
Inherited Characteristics The features an individual acquires from their parents or forefathers, in
other words the gifted features an individual possesses by birth is considered as inherited
characteristics. It consists of the following features – Colour of a person’s eye, Religion/Race of a
person, Shape of the nose, Shape of earlobes .
Learned Characteristics The characteristics an individual acquires by observing, practicing, and
learning from others and the surroundings is known as learned characteristics. Learned
characteristics includes the following features –
Perception − Result of different senses like feeling, hearing etc.
Values − Influences perception of a situation, decision making process.
Personality − Patterns of thinking, feeling, understanding and behaving.
Attitude − Positive or negative attitude like expressing one’s thought.
Traits of Personality - Psychologists resolved that there are five major personality traits and every
individual can be categorized into at least one of them. These five personality traits are − Extrovert,
Neurotic, Open, Agreeable, Conscientious.
Theories of Personality Development:
1. Sigmund Freud’s Psychoanalytic theory of personality
2. Erikson 8 Stages of Development of personality
3. Chris Argyris’s Immaturity Maturity Theory
4. Traits theory, and
5. Self theory
PERCEPTION:
Perception is the ability to capture, process, and actively make sense of the information that our
senses receive. It is the cognitive process that makes it possible to interpret our surroundings with
the stimuli that we receive throughout sensory organs.
Factors affecting perception:
1. Internal (endogeneous) factors: These factors reside in person concern . These include one’s
needs, desires, personality and experience.
2. External factors: The external factors relate to what is to be perceived and situation. These are
size, intensity, frequency, status, movement etc.
Perceptual Process - Perceptual process are the different stages of perception we go through. The
different stages are – Receiving, Selecting, Organizing and Interpreting.
ATTITUDES: In psychology, an attitude refers to a set of emotions, beliefs, and behaviors toward a
particular object, person, thing, or event. Attitudes are often the result of experience and they can
have a powerful influence over behavior. While attitudes are enduring, they can also change. It is an
expression of a favorable or unfavorable evaluation of a person, place, thing or event.
EMOTIONS: According to the book "Discovering Psychology" by Don Hockenbury and Sandra E.
Hockenbury, an emotion is a complex psychological state that involves three distinct components: a
subjective experience, a physiological response, and a behavioral or expressive response.
GROUP DYNAMICS:
Group dynamics is a set of behavioural and psychological processes that occur within a social group
or between groups. Group dynamics is relevant to groups of all kinds – both formal and informal.
Process/Stages of Group Development/Evolution:
1. Forming: The first stage in the life of a group is concerned with forming a group.
2. Storming: The next stage in this group is marked by the formation of dyads and triads. Members
seek out familiar or similar individuals and begin a deeper sharing of self. Pairing is a common
phenomenon. There will be conflict about controlling the group.
3. Norming: The third stage of group development is marked by a more serious concern about task
performance. The dyads/triads begin to open up and seek out other members in the group. Efforts
are made to establish various norms for task performance.
4. Performing: This is a stage of a fully functional group where members see themselves as a group
and get involved in the task.
5. Adjourning: In the case of temporary groups, like project team, task force, or any other such
group, which have a limited task at hand, also have a fifth stage, This is known as adjourning.
Adjourning may also be referred to as mourning.
Group Roles - Group roles are divided into three types –
Roles allotted to individuals according to their work and eligibility is known as task-oriented roles.
Task-oriented roles can broadly divide individuals into six categories initiator, informer, clarifier,
summarizer, reality tester and information seekers or providers respectively.
Roles that group individuals according to their efforts made to maintain healthy relationship in the
group and achieve the goals are known as relationship-oriented roles. There are five categories of
individuals in this category namely: harmonizer, gatekeeper, consensus tester, encourager, and
compromiser.
Roles that classify a person according to the measure of individual effort put in the project aimed is
known as individual roles. Five types of individuals fall into these roles: aggressor, blocker,
dominator, cavalier, and avoidance.
Group Decision Making
Group decision-making commonly known as collaborative decision-making is a situation faced when
individuals collectively make a choice from the alternatives before them. The decision is then no
longer attributable to any individual group member as all the individuals and social group processes
like social influence contribute to the decision outcome.
Group Decision-Making Techniques
Brainstorming - This technique includes a group of people, mostly between five and ten in number,
sitting around a table, producing ideas in the form of free association. The main focus is on
generation of ideas and not on evaluation of these ideas.
Nominal Group Thinking - This technique is similar to brainstorming except that this approach is
more structured. It motivates individual creativity. After all ideas have been discussed, they are
evaluated for their merits and drawbacks and the idea with the highest cumulative ranking is
selected as the final solution to the problem.
Didactic Interaction The group that makes the decision is divided into two sub-groups, one in favor
of the “go” decision and the opposing in favor of “no go” decision. The first group enlists all the
“pros” of the problem solution and the second group lists all the “cons”. These groups meet and
discuss their discoveries and their reasons. After tiring discussions, the groups switch sides and try to
find weaknesses in their own original standpoints. This interchange of ideas and understanding of
various viewpoints results in mutual acceptance of the facts as they exist so that a solution can be
put together around these facts and ultimately a final decision is reached.
Delphi Technique - This technique is the improvised version of the nominal group technique, except
that it involves obtaining the opinions of experts physically distant from each other and unknown to
each other.
Power: Power refers to the possession of authority and influence over others. A capacity that A has
to influence the behavior of B, so that B acts in accordance with A’s wishes. The definition implies a
potential that need not be actualized to be effective and a dependency relationship. Power may
exist but not be used. It is, therefore, a capacity or potential.
Types of power:
1. Coercive Power : Coercive power is the ability of a manager to force an employee to follow an
order by threatening the employee with punishment if the employee does not comply with the
order.
2. Legitimate power: Legitimate power is power you derive from your formal position or office held
in the organization's hierarchy of authority.
3. Reward power: Reward power is simply the power of a manager to give some type of reward to
an employee as a means to influence the employee to act. Rewards can be tangible rewards like
monitory awards, certificates, medals, gifts etc and intangible rewards like Praise, Positive feedback
etc.
4. Referent power: Referent power is power of an individual over the Team or Followers, based on a
high level of identification with, admiration of, or respect for the powerholder/ leader.
5. Expert Power: Expert power is power based upon employees perception that a manager or some
other member of an organization has a high level of knowledge or a specialized set of skills that
other employees or members of the organization do not possess.
CONFLICT - Conflict can be defined as a mental struggle resulting from incompatible or opposing
needs, drives, wishes, and external or internal demands. Where there are people, there is conflict.
Classification of Conflict
Intrapersonal conflict takes place within an individual. The person experiences it in his own mind.
Intragroup conflict occurs among individuals within a team. The incompatibilities and
misunderstandings between team members leads to intragroup conflict.
Interpersonal conflict means a conflict between two individuals. Basically, this occurs because of
some differences in people.
Intergroup conflict occurs when a misunderstanding arises among different teams within an
organization.
Conflict Management Techniques
Collaborating -This technique follows the rule "I win, you win". Collaborating means working
together by integrating ideas set out by multiple people. The objective here is to find a creative
solution acceptable to everyone.
Compromising- This technique follows the rule "You bend, I bend". Compromising means adjusting
with each other’s opinions and ideas, and thinking of a solution where some points of both the
parties can be entertained. Similarly, both the parties need to give up on some of their ideas and
should agree with the other.
Accommodating -This technique follows the rule "I lose, you win". Accommodating means giving up
of ideas and thoughts so that the other party wins and the conflict ends.
Competing- This technique follows the rule "I win, you lose". Competing means when there is a
dispute a person or a group is not willing to collaborate or adjust but it simply wants the opposite
party to lose.
Avoiding - This technique follows the rule "No winners, no losers". Avoiding means the ideas
suggested by both the parties are rejected and a third person is involved who takes a decision
without favoring any of the parties.
Types of Conflicts: There are 3 types of conflicts.
1. Task: relates to the content and goals of the work – Low to moderate level.
2. Relationship: focus on interpersonal relationships - High level.
3. Process: relates to how the work gets done – Low level.
NEGOTIATION:
Negotiation is a method by which people settle differences. It is a process by which compromise or
agreement is reached while avoiding argument and dispute.
There are five steps to the negotiation process
1. Preparation and Planning
2. Definition of Ground Rule
3. Clarification and Justification
4. Bargaining and Problem Solving
5. Closure and Implementation
STRESS MANAGEMENT:
“Stress can be defined as a state of physical and mental tension caused by certain external or
internal factor in a person's life”.
Symptoms of Stress:
● Absenteeism, escaping from work responsibilities, arriving late, leaving early, etc.
● Deterioration in work performance, more of error prone work, memory loss, etc.
● Cribbing, overeacting, arguing, getting irritated, anxiety, etc.
● Deteriorating health, more of accidents, etc.
● Improper eating habits (overeating or undereating), excessive smoking and drinking, sleeplessness,
etc.
Sources/Causes of Stress:
1. Organizational factors- a. Discrimination in pay/salary structure b. Strict rules and regulations c.
Ineffective communication d. Peer pressure e. Goals conflicts/goals ambiguity f. More of centralized
and formal organization structure g. Less promotional opportunities h. Lack of employees
participation in decision-making i. Excessive control over the employees by the managers.
2. Individual factors- inherent personality traits such as being impatient, aggressive, rigid, feeling
time pressure always, etc. Similarly, the family issues, personal financial problems, sudden career
changes all lead to stress.
3. Extra-organizational factors- In today’s modern and technology savvy world, stress has increased.
Inflation, technological change, social responsibilities and rapid social changes are other extra-
organizational factors causing stress.
PSYCHOLOGICAL THEORY OF STRESS
James-Lange: Theory of Emotion
Cannon-Bard: The Emergency Theory
The Schachter-Singer Theory
ORGANIZATIONAL CULTURE
Organizational culture includes an organization’s expectations, experiences, philosophy, as well as
the values that guide member behavior, and is expressed in member self-image, inner workings,
interactions with the outside world, and future expectations.
Broadly there are two types of organization culture: Strong Organization Culture: refers to a
situation where the employees adjust well, respect the organization’s policies and adhere to the
guidelines. Weak Organization Culture: where individuals accept their responsibilities out of fear of
superiors and harsh policies. The employees in such a situation do things out of compulsion.
Types of organizational culture
1. Normative Culture: In such a culture, the norms and procedures of the organization are
predefined and the rules and regulations are set as per the existing guidelines.
2. Pragmatic Culture: Customer satisfaction is the main motive of the employees in a
pragmatic culture. Such organizations treat their clients as Gods and do not follow any set
rules.
3. Academy Culture: Organizations following academy culture hire skilled individuals and very
particular about training the existing employees. The management makes sincere efforts to
upgrade the knowledge of the employees to improve their professional competence.
4. Baseball team Culture: considers the employees as the most treasured possession of the
organization. The employees are the true assets of the organization who have a major role in
its successful functioning.
5. Club Culture: The individuals are hired as per their specialization, educational qualification
and interests. The high potential employees are promoted suitably and appraisals are a
regular feature of such a culture.
6. Fortress Culture: organizations where the employees are not very sure about their career
and longevity. Such organizations follow fortress culture.
7. Tough Guy Culture: In a tough guy culture, feedbacks are essential. The performance of the
employees is reviewed from time to time and their work is thoroughly monitored.
 8. Bet your company Culture: take decisions which involve a huge amount of risk and the
consequences are also unforeseen. The principles and policies of such an organization are
formulated to address sensitive issues and it takes time to get the results.
9. Process Culture: As the name suggests the employees in such a culture adhere to the
processes and procedures of the organization. Feedbacks and performance reviews do not
matter much in such organizations.
Edgar Schein Model of Organization Culture:
Schein believed that there are three levels in an organization culture. The first level is the
characteristics of the organization which can be easily viewed, heard and felt by individuals
collectively known as artifacts. The next level according to Schein which constitute the organization
culture is the values of the employees. The values of the individuals working in the organization play
an important role in deciding the organization culture. The thought process and attitude of
employees have deep impact on the culture of any particular organization. The third level is the
assumed values of the employees which can’t be measured but do make a difference to the culture
of the organization. There are certain beliefs and facts which stay hidden but do affect the culture of
the organization. The inner aspects of human nature come under the third level of organization
culture.
Robert A Cooke Model of Organization Culture According to Robert A Cooke, the culture of an
organization is the way employees behave at the workplace to ensure stable future and growth.
Cooke proposed three types of culture in the organization:
1. Constructive Culture A constructive culture encourages discussions and exchange of ideas
amongst employees. Constructive culture motivates the employees and eventually extracts the best
out of them.
2. Passive Culture In a passive culture, the main motive of the employee is to please the superiors
and make his position safe and secure in the organization. In such a culture, employees unhappily
adhere to the guidelines and follow the rules and regulations just to save their job.
3. Aggressive Culture Organizations following an aggressive culture promote competition amongst
the employees. They encourage the employees to compete against each other so that each one
performs better than his fellow worker.
ORGANIZATIONAL DEVELOPMENT: Organizational Development or simply OD is a technique of
planned change. It seeks to change beliefs, attitudes, values and structures-in fact the entire culture
of the organization—so that the organization may better adapt to technology and live with the pace
of change.
Objectives of Organizational Development:
(a) Improvement in the performance of the organization.
(b) Improvement in the ability of the organization to adapt to its environment, and
(c) Improvement in interpersonal and intergroup behaviour to secure team work.
ORGANIZATIONAL CHANGE: Organizational change refers to any alteration that occurs in total work
environment. An organization must develop adaptability to change otherwise it will either be left
behind or be swept away by the forces of change. Organizational change is inevitable in a
progressive culture. Modern organizations are highly dynamic, versatile and adaptive to the
multiplicity of changes.
Causes of Organizational Change: (A) External Pressures: i. Change in Technology and Equipment. ii.
Market Situation. iii. Social and Political Changes.
(B) Internal Pressures: i. Changes in the Managerial Personnel. ii. Deficiencies in the Existing
Organization. iii. Other Factors like Employee’s desire to share in decision-making, Employee’s
desire for higher wage rate, Improvement in working conditions, etc.
Resistance to Organizational Change: Resistance to change may be classified as:
1. Individual Resistance: Individual resistance may be there because of the following reasons:
A. Economic Reasons like Obsolescence of Skills, Fear of Economic Loss etc.
B. Personal Reasons such as Ego Defensiveness, Status Quo, Fear of Unknown etc.
C. Social Reasons like Social Displacement, Peer Pressure etc.
2. Organizational Resistance: (i) Threats to Power and Influence (ii) Organizational Structure (iii)
Resource Constraints and (iv) Sunk Cost.
Overcoming Resistance to Organizational Change:
(a) One of the easiest techniques to overcome resistance to change is to educate the people who
resist it.
(b) If subordinates are allowed to participate and involve themselves in the change process they
generally feel satisfied and do not oppose change.
(c) Support may be facilitative and emotional. Managers sometimes deal with potential resistance by
being supportive.
(d) Offering incentive is another fruitful way to overcome resistance to change.
(e) Managers generally indulge in manipulation when all other tactics have failed to overcome
resistance to change.
(f) At times, there is no way except to deal with resistance coercively.
MODELS OF ORGANIZATIONAL CHANGE
Kurt Lewin’s Change Management Model: The Planned Approach to Organizational Change
A commonly accepted model for bringing change in people was suggested by Kurt Lewin in terms of
three phase process:-
(1) Unfreezing: The essence of unfreezing phase is that the individual is made to realize that his
beliefs, feelings and behaviour are no longer appropriate or relevant to the current situation in the
organization.
(2) Changing: Once convinced and ready to change, an individual, under this phase, learns to behave
in new ways. He is first provided with the model in which he is to identify himself. Gradually he will
accept that model and behave in the manner suggested by the model.
(3) Refreezing: During this phase, a person has to practice and experiment with the new method of
behaviour and see that it effectively blends with his other behavioural attitudes.
Kotter’s 8 step Model of Change
John Kotter (1996), a Harvard Business School Professor and a renowned change expert, in his book
“Leading Change”, introduced 8 Step Model of Change. The 8 steps in the process of change include:
creating a sense of urgency, forming powerful guiding coalitions, developing a vision and a strategy,
communicating the vision, removing obstacles and empowering employees for action, creating
short-term wins, consolidating gains and strengthening change by anchoring change in the culture.