Chapter 1 Introduction to human resource management

Definition - Edwin Flippo defies HRM as

“planning, organizing, directing, controlling of procurement, development,

compensation, integration , maintenance and separation of human resources to
the end that individual, organizational and social objectives are achieved.”

Features of HRM or characteristics or nature

1. HRM involves management functions like planning, organizing,

directing and controlling

2. It involves procurement, development, maintenance of human

resource

3. It helps to achieve individual, organizational and social objectives

4. HRM is a mighty disciplinary subject. It includes the study of

management psychology communication, economics and
sociology.

5. It involves team spirit and team work.

Evolution of HRM

The evolution of HRM can be traced back to Kautilya Artha Shastra where he
recommends that government must take active interest in public and private
enterprise. He says that government must provide a proper procedure for
regulating employee and employee relation

In the medieval times there were examples of kings like Allaudin Khilji
who regulated the market and charged fixed prices and provided fixed salaries to
their people. This was done to fight inflation and provide a decent standard of
living
 During the pre independence period of 1920 the trade union
emerged. Many authors who have given the history of HRM say that HRM
started because of trade union and the First World War.

The Royal commission in 1931 recommended the appointment of a labour

welfare officer to look into the grievances of workers. The factory act of 1942
made it compulsory to appoint a labour welfare officer if the factory had 500 or
more than 500 workers.

The international institute of personnel management and national

institute of labour management were set up to look into problems faced by
workers to provide solutions to them. The Second World War created awareness
regarding workers rights and 1940’s to 1960’s saw the introduction of new
technology to help workers.
The 1960’s extended the scope of human resource beyond welfare.

Now it was a combination of welfare, industrial relation, administration

together it was called personnel management.

With the second 5 year plan, heavy industries started and professional
management became important. In the 70’s the focus was on efficiency of labour
wile in the 80’s the focus was on new technology, making it necessary for new
rules and regulations. In the 90’s the emphasis was on human values and
development of people and with liberalization and changing type of working
people became more and more important there by leading to HRM which is an
advancement of personnel management.

Scope of HRM/functions of HRM

The scope of HRM refers to all the activities that come under the banner of
HRM. These activities are as follows

1. Human resources planning :-

 Human resource planning or HRP refers to a process by which the
company to identify the number of jobs vacant, whether the company has
excess staff or shortage of staff and to deal with this excess or shortage.

2. Job analysis design :-

Another important area of HRM is job analysis. Job analysis gives

a detailed explanation about each and every job in the company. Based on
this job analysis the company prepares advertisements.

3. Recruitment and selection :-

Based on information collected from job analysis the company

prepares advertisements and publishes them in the news papers. This is
recruitment. A number of applications are received after the
advertisement is published, interviews are conducted and the right
employee is selected thus recruitment and selection are yet another
important area of HRM.

4. Orientation and induction :-

Once the employees have been selected an induction or orientation

program is conducted. This is another important area of HRM. The
employees are informed about the background of the company, explain about
the organizational culture and values and work ethics and introduce to the
other employees.

5. Training and development :-

Every employee goes under training program which helps him to put
up a better performance on the job. Training program is also conducted for
existing staff that have a lot of experience. This is called refresher training.
Training and development is one area were the company spends a huge
amount.

6. Performance appraisal :-
 Once the employee has put in around 1 year of service, performance
appraisal is conducted that is the HR department checks the performance of
the employee. Based on these appraisal future promotions, incentives,
increments in salary are decided.

7. Compensation planning and remuneration :-

There are various rules regarding compensation and other benefits.

It is the job of the HR department to look into remuneration and
compensation planning.

8. Motivation, welfare, health and safety :-

Motivation becomes important to sustain the number of employees

in the company. It is the job of the HR department to look into the
different methods of motivation. Apart from this certain health and safety
regulations have to be followed for the benefits of the employees. This is
also handled by the HR department.

9. Industrial relations :-

Another important area of HRM is maintaining co-ordinal relations

with the union members. This will help the organization to prevent strikes
lockouts and ensure smooth working in the company.
Challenges before the HR manager/before modern personnel
management

Personnel management which is know as human resource management has

adapted itself to the changing work environment, however these changes are still
taking place and will continue in the future therefore the challenges before the
HR manager are

1. Retention of the employees :-

One of the most important challenge the HR manager faces is

retention of labour force. Many companies have a very high rate of labour
turnover therefore HR manager are required to take some action to reduce
the turnover

2. Multicultural work force :-

With the number of multi cultural companies are increasing

operations in different nations. The work force consists of people from
different cultures. Dealing with each of the needs which are different the
challenge before the HR manager is integration of multicultural labour
work force.

3. Women in the work force :-

The number of women who have joined the work force has
drastically increased over a few years. Women employees face totally
different problems. They also have responsibility towards the family. The
organization needs to consider this aspect also. The challenge before the
HR manager lies in creating gender sensitivity and in providing a good
working environment to the women employees.

4. Handicapped employees :-
 This section of the population normally faces a lot of problems on
the job, very few organization have jobs and facilities specially designed
for handicapped workers. Therefore the challenge before the HR manager
lies in creating atmosphere suitable for such employees and encouraging
them to work better.

5. Retrenchment for employees :-

In many places companies have reduced the work force due to

changing economic situations, labourers or workers who are displaced
face sever problems. It also leads to a negative atmosphere and attitude
among the employees. There is fear and increasing resentment against the
management. The challenge before the HR manager lies in implementing
the retrenchment policy without hurting the sentiments of the workers,
without antagonizing the labour union and by creating positive attitude in
the existing employees.

6. Change in demand of government :-

Most of the time government rules keep changing. While a lot of

freedom is given to companies some strict rules and regulations have also
been passed. The government has also undertaken the disinvestment in
certain companies due to which there is fear among the employees
regarding their job. The challenge before the HR manager lies in
convincing employees that their interest will not be sacrificed.

7. Initiating the process of change :-

Changing the method of working, changing the attitude of people

and changing the perception and values of organization have become
necessary today. Although the company may want to change it is actually
very difficult to make the workers accept the change. The challenge
before the HR manager is to make people accept change.
Significance/importance/need of HRM

HRM becomes significant for business organization due to the following

reasons.

1. Objective :-

HRM helps a company to achieve its objective from time to time

by creating a positive attitude among workers. Reducing wastage and
making maximum use of resources etc.

2. Facilitates professional growth :-

Due to proper HR policies employees are trained well and this

makes them ready for future promotions. Their talent can be utilized not
only in the company in which they are currently working but also in other
companies which the employees may join in the future.

3. Better relations between union and management :-Healthy HRM

practices can help the organization to

maintain co-ordinal relationship with the unions. Union members start

realizing that the company is also interested in the workers and will not go
against them therefore chances of going on strike are greatly reduced.

4. Helps an individual to work in a team/group :-

Effective HR practices teach individuals team work and

adjustment. The individuals are now very comfortable while working in
team thus team work improves.
5. Identifies person for the future :-

Since employees are constantly trained, they are ready to meet the job
requirements. The company is also able to identify potential employees who
can be promoted in the future for the top level jobs. Thus one of the
advantages of HRM is preparing people for the future.

6. Allocating the jobs to the right person :-

If proper recruitment and selection methods are followed, the company

will be able to select the right people for the right job. When this happens the
number of people leaving the job will reduce as the will be satisfied with their
job leading to decrease in labour turnover.

7. Improves the economy :-

Effective HR practices lead to higher profits and better

performance by companies due to this the company achieves a chance to
enter into new business and start new ventured thus industrial
development increases and the economy improves.
 Chapter 2 Job analysis, job design, job evolution

Define job analysis

A job is defined as a collection of duties and responsibilities which are given

together to an individual employee. Job analysis is the process of studying and
collecting information relating to operations and responsibilities of a specific job. It
can be explained with the help of the following diagram

Job analysis

Job description Job specification

Job title/ name of the job Qualification

Working hours Qualities

Duties and responsibilities Experience

Working conditions Family background

Salary and incentives Training

Machines to be handled on the job Interpersonal skills

As mentioned in the above table job analysis is divided into 2 parts a) Job
description

where the details regarding the job are given. b) Job

specification
where we explain the qualities required by people applying for the job.

Need/importance/purpose/benefits of job analysis

Def: - A job is defined as a collection of duties and responsibilities which are given
together to an individual employee. Job analysis is the process of studying and
collecting information relating to operations and responsibilities of a specific job.

The following are the benefits of job analysis.

1. Organizational structure and design :-

Job analysis helps the organization to make suitable changes in the

organizational structure, so that it matches the needs and requirements of the
organization. Duties are either added or deleted from the job.

2. Recruitment and selection :-

Job analysis helps to plan for the future human resource. It helps to
recruit and select the right kind of people. It provides information necessary
to select the right person.

3. Performance appraisal and training/development :-

Based on the job requirements identified in the job analysis, the

company decides a training program. Training is given in those areas which
will help to improve the performance on the job.

Similarly when appraisal is conducted we check whether the employee is

able to work in a manner in which we require him to do the job.

4. Job evaluation :-

Job evaluation refers to studying in detail the job performance by all

individual. The difficulty levels, skills required and on that basis the salary is
 fixed. Information regarding qualities required, skilled levels, difficulty levels
are obtained from job analysis.

5. Promotions and transfer :-

When we give a promotion to an employee we need to promote him

on the basis of the skill and talent required for the future job. Similarly when
we transfer an employee to another branch the job must be very similar to
what he has done before. To take these decisions we collect information from
job analysis.

6. Career path planning :-

Many companies have not taken up career planning for their

employees. This is done to prevent the employee from leaving the company.
When we plan the future career of the employee, information will be collected
from job analysis. Hence job analysis becomes important or advantageous.

7. Labour relations :-

When companies plan to add extra duties or delete certain duties

from a job, they require the help of job analysis, when this activity is
systematically done using job analysis the number of problems with union
members reduce and labour relations improve.

8. Health and safety :-

Most companies prepare their own health and safety, plans and
programs based on job analysis. From the job analysis company identifies
the risk factor on the job and based on the risk factor safety equipments are
provided.

9. Acceptance of job offer :-

 When a person is given an offer/appointment letter the duties to be
performed by him are clearly mentioned in it, this information is collected
from job analysis, which is why job analysis becomes important.

Methods of job analysis

Def: - A job is defined as a collection of duties and responsibilities which are given
together to an individual employee. Job analysis is the process of studying and
collecting information relating to operations and responsibilities of a specific job.

There are different methods used by organization to collect information and

conduct the job analysis. These methods are

1. Personal observation :-

In this method the observer actually observes the concerned worker.

He makes a list of all the duties performed by the worker and the qualities
required to perform those duties based on the information collected, job
analysis is prepared.

2. Actual performance of the job :-

In this method the observer who is in charge of preparing the job

analysis actually does the work himself. This gives him an idea of the skill
required, the difficulty level of the job, the efforts required etc.
3. Interview method :-

In this method an interview of the employee is conducted. A group of

experts conduct the interview. They ask questions about the job, skilled levels,
and difficulty levels. They question and cross question and collect information
and based on this information job analysis is prepared.

4. Critical incident method :-

In this method the employee is asked to write one or more critical

incident that has taken place on the job. The incident will give an idea about the
problem, how it was handled, qualities required and difficulty levels etc. critical
incident method gives an idea about the job and its importance. (a critical means
important and incident means anything which takes place in the job)

5. Questioner method :-

In this method a questioner is provided to the employee and they are asked
to answer the questions in it. The questions may be multiple choice questions or
open ended questions. The questions decide how exactly the job analysis will be
done. The method is effective because people would think twice before putting
anything in writing.

6. Log records :-

Companies can ask employees to maintain log records and job analysis
can be done on the basis of information collected from the log record. A log
record is a book in which employees record /write all the activities performed by
them on the job. The records are extensive as well as exhausted in nature and
provide a fair idea about the duties and responsibilities in any job.

7. HRD records :-

Records of every employee are maintained by HR department. The

record contain details about educational qualification, name of the job, number
of years of experience, duties handled, any mistakes committed in the past and
 actions taken, number of promotions received, area of work, core competency
area, etc. based on these records job analysis can be done.

Job design

Definitions:

Job design is the process of

a) Deciding the contents of the job.
b) Deciding methods to carry out the job.

c) Deciding the relationship which exists in the organization. Job

analysis helps to develop job design and job design matches the

requirements of the job with the human qualities required to do the job.

Factors affecting job design: - There are various factors which affect job design
in the company. They can be explained with the help of diagram.

Factors affecting job design

Organizational Environmental Behavioral factors

Factors factors

1. Task 1. Employee 1. Feed back

characteristics availability and
ability
2. Process or flow 2. Social and 2. Autonomy
of work in cultural
organization expectations
3. Ergonomics 3. Variety
4. Work practices
 I] Organizational factors :-

Organizational factors to refer to factors inside the organization which

affect job design they are

a) Task characteristics :-

Task characteristics refer to features of the job that is depending

on the type of job and the duties involved in it the organization will
decide, how the job design must be done. Incase the company is not in a
position to appoint many people; a single job may have many duties and
vice versa.

b) The process or flow of work in the organization :-

There is a certain order in which jobs are performed in the company.

Incase the company wishes it could combine similar job and give it to one
person this can be done if all the jobs come one after the other in a sequence.

c) Ergonomics :-

Ergonomics refers to matching the job with physical ability and

characteristics of the individual and in providing an office environment which
will help the person to complete the jobs faster and in a comfortable manner.

d) Work practices :-

Every organization has different work practices. Although the job

may be the same the method of doing the job differs from company to
company. This is called work practice and it affects job design.

II] Environmental factors :-

Environmental factors which affect job design are as follows
 a) Employee availability and ability :-

Certain countries face the problem of lack of skilled labour. They are
not able to get employees with specific education levels for jobs and have to
depend on other countries due to this job design gets affected.

b) Social and cultural expectations :-

The social and cultural conditions of every country is different so

when an MNC appoints an Indian it has to take into account like festivals,
auspicious time, inauspicious time, etc. to suit the Indian conditions. This
applies to every country and therefore job design will change accordingly.

III] Behavioral factors :-

Job design is affected by behavioral factors also. These factors are

a) Feedback :-

Job design is normally prepared on the basis of job analysis and job
analysis requires employee feedback based on this employee feedback all
other activities take place. Many employees are however not interested in
providing a true feedback because of fear and insecurity. This in turn affects
job deign.

b) Autonomy :-

Every worker desires a certain level of freedom to his job

effectively. This is called autonomy. Thus when we prepare a job design we
must see to it that certain amount of autonomy is provided to the worker so
that he carries his job effectively.

c) Variety :-
 When the same job is repeated again and again it leads to burden
and monotony. This leads to lack of interest and carelessness on the job.
Therefore, while preparing job design certain amount of variety must be
provided to keep the person interested in the job.

Methods of job design

There are various methods in which job design can be carried out. These
methods help to analysis the job, to design the contents of the and to decide how the
job must be carried out .these methods are as follows :- (5 marks each)

I. Job rotation

II. Job enlargement III.

Job enrichment

I. Job Rotation :-

Job rotation involves shifting a person from one job to another, so that
he is able to understand and learn what each job involves. The company tracks
his performance on every job and decides whether he can perform the job in an
ideal manner. Based on this he is finally given a particular posting.

Job rotation is done to decide the final posting for the employee e.g. Mr. A is
assigned to the marketing department whole he learns all the jobs to be
performed for marketing at his level in the organization .after this he is shifted
to the sales department and to the finance department and so on. He is finally
placed in the department in which he shows the best performance
 Job rotation gives an idea about the jobs to be performed at every
level. Once a person is able to understand this he is in a better understanding
of the working of organization

Advantages of job rotation

1. Avoids monopoly :-

Job rotation helps to avoid monopoly of job and enable the

employee to learn new things and therefore enjoy his job

2. Provides an opportunity to broaden one’s knowledge :-

Due to job rotation the person is able to learn different job in the
organization this broadens his knowledge

3. Avoiding fraudulent practice :-

In an organization like bank jobs rotation is undertaken to prevent

employees from doing any kind of fraud i.e. if a person is handling a
particular job for a very long time he will be able to find loopholes in th
system and use them for his benefit and indulge

( participate ) in fraudulent practices job rotation avoids this.

Disadvantages of Job Rotation

1. Frequent interruption :-

Job rotation results in frequent interruption of work .A person who

is doing a particular job and get it comfortable suddenly finds himself
shifted to another job or department .this interrupts the work in both the
departments
 2. Reduces uniformity in quality :-

Quality of work done by a trained worker is different from that of a

new worker .when a new worker I shifted or rotated in the department, he
takes time to learn the new job, makes mistakes in the process and affects the
quality of the job.

3. Misunderstanding with the union member :-

Sometimes job rotation may lead to misunderstanding with members

of the union. The union might think that employees are being harassed and
more work is being taken from them. In reality this is not the case.
Job enlargement

There are various methods in which job design can be carried out. These methods
help to analysis the job, to design the contents of the and to decide how the job must
be carried out .these methods are as follows :- (5 marks each)

I. Job rotation

II. Job enlargement III.

Job enrichment

II. Job enlargement :-

Job enlargement is another method of job design when any

organization wishes to adopt proper job design it can opt for job enlargement.
Job enlargement involves combining various activities at the same level in the
organization and adding them to the existing job. It increases the scope of the
job. It is also called the horizontal expansion of job activities.

Jon enlargement can be explained with the help of the following

example - If Mr. A is working as an executive with a company and is currently
performing 3 activities on his job after job enlargement or through job
 enlargement we add 4 more activities to the existing job so now Mr. A
performs 7 activities on the job.

It must be noted that the new activities which have been added should
belong to the same hierarchy level in the organization. By job enlargement we
provide a greater variety of activities to the individual so that we are in a
position to increase the interest of the job and make maximum use of
employee’s skill. Job enlargement is also essential when policies like VRS are
implemented in the company.

Advantages of job enlargement

1. Variety of skills :-

Job enlargement helps the organization to improve and increase the

skills of the employee due to organization as well as the individual benefit.

2. Improves earning capacity :-

Due to job enlargement the person learns many new activities.

When such people apply foe jobs to other companies they can bargain for
more salary.

3. Wide range of activities :-

Job enlargement provides wide range of activities for employees.

Since a single employee handles multiple activities the company can try and
reduce the number of employee’s. This reduces the salary bill for the
company.
Disadvantages of job enlargement

1. Increases work burden :-

Job enlargement increases the work of the employee and not every
company provides incentives and extra salary for extra work. Therefore the
efforts of the individual may remain unrecognized.

2. Increasing frustration of the employee :-

In many cases employees end up being frustrated because

increased activities do not result in increased salaries.

3. Problem with union members :-

Many union members may misunderstand job enlargement as

exploitation of worker and may take objection to it.

Job enrichment

There are various methods in which job design can be carried out. These methods
help to analysis the job, to design the contents of the and to decide how the job must
be carried out .these methods are as follows :- (5 marks each)

I. Job rotation

II. Job enlargement III.

Job enrichment

III. Job enrichment :- (concept 2 marks)

Job enrichment is a term given by Fedric herzberg. According to

him a few motivators are added to a job to make it more rewarding,
challenging and interesting. According to herzberg the motivating factors
enrich the job and improve performance.
 In other words we can say that job enrichment is a method of adding
some motivating factors to an existing job to make it more interesting. The
motivating factors can be

a) Giving more freedom.

b) Encouraging participation.

c) Giving employees the freedom to select the method of

working.

d) Allowing employees to select the place at which they would like to

work.

e) Allowing workers to select the tools that they require on the job.

f) Allowing workers to decide the layout of plant or office.

Job enrichment gives lot of freedom to the employee but at the same time
increases the responsibility. Some workers are power and responsibility
hungry. Job enrichment satisfies the needs of the employees.

Advantages of job enrichment

1. Interesting and challenging job :-

When a certain amount of power is given to employees it makes

the job more challenging for them, we can say that job enrichment is a
method of employee empowerment.
 2. Improves decision making :-

Through job enrichment we can improve the decision making ability

of the employee by asking him to decide on factory layout, method and style
of working.

3. Identifies future managerial caliber :-

When we provide decision making opportunities to employees, we

can identify which employee is better that other in decision making and
mark employees for future promotion.

4. Identifies higher order needs of employees :-

This method identifies higher order needs of the employee.

Abraham maslow’s theory of motivation speaks of these higher order

needs e.g. ego and esteemed needs, self actualization etc. These needs
can be achieved through job enrichment.

5. Reduces work load of superiors :-

Job enrichment reduces the work load of senior staff. When decisions are
taken by juniors the seniors work load is reduced.

Disadvantages of job enrichment

1. Job enrichment is based on the assumptions that workers have complete

knowledge to take decisions and they have the right attitude. In reality this
might not be the case due to which there can be problems in working.

2. Job enrichment has negative implications ie. Along with usual work decision
making work is also given to the employees and not many may be
comfortable with this.
3. Superiors may feel that power is being taken away from them and given to
the junior’s. This might lead to ego problems.

4. This method will only work in certain situations. Some jobs already give a
lot of freedom and responsibility; this method will not work for such jobs.

5. Some people are internally dissatisfied with the organization. For such
people no amount of job enrichment can solve the problem.
 Chapter 3 Human resource planning/manpower planning

Def. of human resource planning :-

Human resource planning can be defined as the process of identifying the

number of people required by an organization in terms of quantity and quality. All
human resource management activities start with human resource planning. So we can
say that human resource planning is the principle/primary activity of human resource
management.

From human resource planning the organization identifies how many

people it has currently and how many people will be required in future. Based on
this information major human resource decisions are taken.

Process of HRP/MP//steps in HRP/MP

Human resource planning can be defined as the process of identifying the

number of people required by an organization in terms of quantity and quality. All
human resource management activities start with human resource planning. So we can
say that human resource planning is the principle/primary activity of human resource
management.

The process of HRP involves various steps they can be explained with the
help of the following diagram.

1. Personnel requirement forecast :-

This is the very first step in HRP process. Here the HRP department
finds out department wise requirements of people for the company. The
requirement consists of number of people required as well as qualification they
must posses.
2. Personnel supply forecast :-

In this step, HR department finds out how many people are actually
available in the departments of the company. The supply involves/includes
number of people along with their qualification.

3. Comparison:-
Based on the information collected in the 1st and 2nd step, the HR
department makes a comparison and finds out the difference. Two possibilities
arise from this comparison

a. No difference :-

It is possible that personnel requirement = personnel supplied. In

this case there is no difference. Hence no change is required.

b. Yes, there is a difference :-

There may be difference between supply and

requirement. The difference may be

i. Personnel surplus
ii. Personnel shortage

4. Personnel surplus :-

When the supply of personnel is more than the requirement, we have

personnel surplus. We require 100 people, but have 125 people. That is we have a
surplus of 25 people. Since extra employees increase expenditure of company the
company must try to remove excess staff by methods of

i. Layoff

ii. Termination
iii. VRS/CRS
5. Personnel shortage :-

When supply is less than the requirement, we have personnel shortage. We

require 100 people; we have only 75 i.e. we are short of 25 people. In such case
the HR department can adopt methods like Overtime, Recruitment, Sub-
contracting to obtain new employee

Advantages of HRP/need/importance/role/benefits

Human resource planning can be defined as the process of identifying the

number of people required by an organization in terms of quantity and quality. All
human resource management activities start with human resource planning. So we can
say that human resource planning is the principle/primary activity of human resource
management.

The process of HRP plays a very important role in the organization.

The importance of HRP can be explained as follows.

1. Anticipating future requirement :-

Thru this process of HRP, the company is able to find out how many
people will be required in future. Based on this requirement the company
could take further actions. This method also helps the company to identify
the number of jobs which

will become vacant in the near future.

2. Recruitment and selection process :-

The recruitment and selection process is a very costly affair for a

company. Many companies spend lakhs of rupees on this process. Therefore
recruitment and selection must be carried out only if it is extremely
necessary. HRP process helps to identify whether recruitment and selection
are necessary or not.
 3. Placement of personnel :-

Since the HRP process is conducted for the entire organization, we

can identify the requirements for each and every department. Based on the
requirement, we can identify existing employees and place them on those
jobs which are vacant.

4. Performance appraisal :-

HRP make performance appraisal more meaningful. Since feedback is

provided in performance appraisal and employee is informed about his future
chances in same company, the employee is motivated to work better.
Information for all this is collected from HRP process.

5. Promotion opportunity :-

HRP identifies vacancies in the entire organization including all the

branches of all the company. Therefore when the company implements
promotion policy it can undertake its activities in a very smooth manner.

Limitations of human resource planning

Human resource planning can be defined as the process of identifying the

number of people required by an organization in terms of quantity and quality. All
human resource management activities start with human resource planning. So we can
say that human resource planning is the principle/primary activity of human resource
management.

Although HRP is a very advantageous method it has some

limitations which can be explained as follows

1. The future is uncertain :-

The future in any country is uncertain i.e. there are political, cultural,
technological changes taking place every day. This effects the employment
situation. Accordingly the company may have to appoint or remove people.
 Therefore HRP can only be a guiding factor. We cannot rely too much on it
and do every action according to it.

2. Conservative attitude of top management :-

Much top management adopts a conservative attitude and is not ready

to make changes. The process of HRP involves either appointing. Therefore
it becomes very difficult to implement HRP in organization because top
management does not support the decisions of other department.

3. Problem of surplus staff :-

HRP gives a clear out solution for excess staff i.e. Termination, layoff,
VRS,. However when certain employees are removed from company it
mostly affects the psyche of the existing employee, and they start feeling
insecure, stressed out and do not believe in the company. This is a limitation
of HRP i.e. it does not provide alternative solution like re-training so that
employee need not be removed from the company.

4. Time consuming activity :-

HRP collects information from all departments, regarding demand

and supply of personnel. This information is collected in detail and each and
every job is considered. Therefore the activity takes up a lot of time.

5. Expensive process :-

The solution provided by process of HRP incurs expense. E.g.

VRS, overtime, etc. company has to spend a lot of money in carrying out
the activity. Hence we can say the process is expensive.
Reasons for increased importance for HRP/Factors affecting HRP in the
organization.

Human resource planning can be defined as the process of identifying the

number of people required by an organization in terms of quantity and quality. All
human resource management activities start with human resource planning. So we
can say that human resource planning is the principle/primary activity of human
resource management.

1. Employment :-

HRP is affected by the employment situation in the country i.e. in

countries where there is greater unemployment; there may be more pressure
on the company, from government to appoint more people. Similarly some
company may force shortage of skilled labour and they may have to appoint
people from other countries.

2. Technical changes in the society :-

Technology changes at a very fast speed and new people having the
required knowledge are required for the company. In some cases, company
may retain existing employees and teach them the new technology and in
some cases, the company have to remove existing people and appoint new.

3. Organizational changes :-

Changes take place within the organization from time to time i.e. the
company diversify into new products or close down business in some areas
etc. in such cases the HRP process i.e. appointing or removing people will
change according to situation.

4. Demographic changes :-

Demographic changes refer to things referring to age, population,

composition of work force etc. A number of people retire every year. A new
 batch of graduates with specialization turns out every year. This can change the
appointment or the removal in the company.

5. Shortage of skill due to labour turnover :-

Industries having high labour turnover rate, the HRP will change
constantly i.e. many new appointments will take place. This also affects the
way HRP is implemented.

6. Multicultural workforce :-

Workers from different countries travel to other countries in search of

job. When a company plans it’s HRP it needs to take into account this factor
also.

7. Pressure groups :-

Company has to keep in mind certain pleasure. Groups like human

rights activist, woman activist, media etc. as they are very capable for
creating problems for the company, when issues concerning these groups
arise, appointment or retrenchment becomes difficult.

Definition of VRS
VRS refers to voluntary retirement scheme, when company faces the
problem of surplus labour, they have to remove the extra workers. This needs to be
done to avoid increase in cost. One of the methods used by the companies is the
methods used by companies is the VRS scheme. Under this scheme people have put
in 20 or more number of years of service are given an option to opt for early
retirement benefits and some other amount which is due to them are paid when they
leave the company.
 Chapter 4: Recruitment selection and induction

Define recruitment :-

Recruitment is a process of searching for prospective employees and

stimulating them to apply for jobs.

Objectives of recruitment

Recruitment fulfills the following objectives

1. It reviews the list of objectives of the company and tries to achieve them by
promoting the company in the minds of public.

2. It forecasts how many people will be required in the company.

3. It enables the company to advertise itself and attract talented

people.

4. It provides different opportunities to procure human resource.

Methods of recruitment/sources

Recruitment is a process of searching for prospective employees and

stimulating them to apply for jobs

Companies can adopt different methods of recruitment for

selecting people in the company. These methods are

1. Internal sources
2. External sources
 The sources can be further explained with the help of following diagram

Sources of recruitment (manpower supply)

Internal source External sources

1. Promotion 1. Management consultant

2. Departmental exam 2. Employment agency
3. Transfer 3. Campus recruitment
4. Retirement 4. News paper advertisement
5. Internal advertisement 5. Internet advertisement
6. Employee recommendation 6. Walk in interview

Internal sources of recruitment :-

Internal sources of recruitment refer to obtaining people for job from inside the
company. There are different methods of internal recruitment

1. Promotion :-

Companies can give promotion to existing employees. This method of

recruitment saves a lot of time, money and efforts because the company does
not have to train the existing employee. Since the employee has already
worked with the company. He is familiar with the working culture and
working style. It is a method of encouraging efficient workers.

2. Departmental exam :-

This method is used by government departments to select employees

for higher level posts. The advertisement is put up on the notice board of the
department. People who are interested must send their application to the HR
department and appear for the exam. Successful candidates are given the
higher level job. The method ensures proper selection and impartiality.
 3. Transfer :-

Many companies adopt transfer as a method of recruitment. The idea

is to select talented personnel from other branches of the company and
transfer them to branches where there is shortage of people.

4. Retirement :-

Many companies call back personnel who have already retired from
the organization. This is a temporary measure. The method is beneficial
because it gives a sense of pride to the retired when he is called back and
helps the organization to reduce recruitment selection and training cost.

5. Internal advertisement :-

In this method vacancies in a particular branch are advertised in the

notice board. People who are interested are asked to apply for the job. The
method helps in obtaining people who are ready to shift to another branch of
the same company and it is also beneficial to people who want to shift to
another branch.

6. Employee recommendation :-

In this method employees are asked to recommend people for jobs.

Since the employee is aware of the working conditions inside the company
he will suggest people who can adjust to the situation. The company is
benefited because it will obtain.

Advantages of internal recruitment

1. Internal methods are time saving.

2. No separate induction program is required.

3. The method increases loyalty and reduces labour turnover.

4. This method is less expensive.
Disadvantages of internal recruitment

1. There is no opportunity to get new talent in this method.

2. The method involves selecting people from those available in the company
so there is limited scope for selection.

3. There are chances of biased and partiality.

4. Chances of employee discontent are very high.

External methods/sources of recruitment

External sources of recruitment refer to methods of recruitment to obtain people

from outside the company. These methods are

1. Management consultant :-

Management consultant helps the company by providing them with

managerial personnel, when the company is on the look out for entry level
management trainees and middle level managers. They generally approach
management consultants.

2. Employment agencies :-

Companies may give a contract to employment agencies that search,

interview and obtain the required number of people. The method can be used
to obtain lower level and middle level staff.

3. Campus recruitment :-

When companies are in search of fresh graduates or new talent they

opt for campus recruitment. Companies approach colleges, management,
technical institutes, make a presentation about the company and the job and
 invite applications. Interested candidates who have applied are made to go
through a series of selection test and interview before final selection.

4. News paper advertisement :-

This is one of the oldest and most popular methods of recruitment.

Advertisements for the job are given in leading news papers; the details of
the job and salary are also mentioned. Candidates are given a contact address
where their applications must be sent and are asked to send their applications
within a specified time limit. The method has maximum reach and most
preferred among all other methods of recruitment.

5. Internet advertisement :-

With increasing importance to internet, companies and candidates

have started using the internet as medium of advertisement and search for
jobs. There are various job sites like naukri.com and monster.com etc.
candidates can also post their profiles on these sites. This method is growing
in popularity.

6. Walk in interview :-

Another method of recruitment which is gaining importance is the

walk in interview method. An advertisement about the location and time of
walk in interview is given in the news paper. Candidates require to directly
appearing for the interview and have to bring a copy of their C.V. with them.
This method is very popular among B.P.O and call centers.

Advantages of external recruitment

1. There is influx of new talent in the method.

2. The method encourages more and more competition.

3. There is lesser chance of partiality through this method.

 4. If options like campus recruitment have been exercised we get a chance to
employ fresh graduates, thus increasing employment.

Disadvantages of external recruitment

1. The method is costly because it involves recruitment cost, selection,

training cost.

2. The method is time consuming.

3. The method reduces loyalty to the company.

Selection

Define selection :-

Selection can be defined as process of choosing the right person for the right
job.

Process of selection :-

The process of selection is different in different companies; however a

general procedure of selection can be framed. This process of selection can be
explained with the help of following diagram

Process of selection

Job analysis

Advertisement

Application blank/form

Written test
 Interview

Medical examination

Initial job offer

Acceptance/rejection letter

Final offer/letter of appointment

Induction

1. Job analysis :-

The very first step in the selection procedure is the job analysis. The
HR department prepares the job description and specification for the jobs
which are vacant. This gives details for the jobs which are vacant. This gives
details about the name of the job, qualification, qualities required and work
conditions etc.

2. Advertisement :-

Based on the information collected in step 1, the HR department prepares

an advertisement and publishes it in a leading news papers. The advertisement
conveys details about the last date for application, the address to which the
application must be sent etc.

3. Application blank/form :-

Application blank is the application form to be filled by the candidate

when he applies for a job in the company. The application blank collects
information consisting of 4 parts- 1) Personal details 2) Educational details 3)
Work experience 4) Family background.
4. Written test :-

The application which have been received are screened by the HR

department and those applications which are incomplete are rejected. The other
candidates are called for the written test. Arrangement for the written test is
looked after the HR department i.e. question papers, answer papers, examination
centers and hall tickets etc.

5. Interview :-

Candidates who have successfully cleared the test are called for an
interview. The entire responsibility for conducting the interview lies with the HR
department i.e. they look after the panel of interviewers, refreshments, informing
candidates etc.

6. Medical examination :-

The candidates who have successfully cleared the interview are asked to
take a medical exam. This medical exam may be conducted by the organization
itself (army). The organization may have a tie up with the hospital or the
candidate may be asked to get a certificate from his family doctor.

7. Initial job offer :-

Candidates who successfully clear the medical exam are given an initial
job offer by the company stating the details regarding salary, terms of
employment, employment bond if any etc. The candidate is given some time to
think over the offer and to accept or reject.

8. Acceptance/ rejection :-
 Candidates who are happy with the offer send their acceptance within
a specified time limit to show that they are ready to work with the company.

9. Letter of appointment/final job offer :-

Candidates who send their acceptance are given the letter of

appointment. The letter will state the name of the job. The salary and other
benefits, number of medical leaves and casual leaves, details of employment
bond if any etc. It will also state the date on which the employee is required
to start duty in the company.

10. Induction :-

On the date of joining the employee is introduced to the

company and other employees through am elaborate induction program.

Types of selection test

Different selection test are adopted by different organization depending upon

their requirements. These tests are specialized test which have been scientifically
tested and hence they are also known as scientific test. Different types of test can be
explained with the help of following diagram,

I. Aptitude test :-

Aptitude tests are test which assess the potential and ability of a
candidate. It enables to find out whether the candidate is suitable for the job.
The job may be managerial technical or clerical. The different types of
aptitude test are

a. Mental ability/mental intelligence test :-

 This test is used to measure the over all intelligence and intellectual
ability of the candidate to deal with problems. It judges the decision
making abilities.

b. Mechanical aptitude test :-

This test deals with the ability of the candidate to do

mechanical work. It is used to judge and measure the

specialized knowledge and problem solving ability. It is used for

technical and maintenance staff.

c. Psycho motor test :-

This test judges the motor skills the hand and eye co-ordination and
evaluates the ability to do jobs lie packing, quality testing, quality
inspection etc.

II. Intelligence test :-

This test measures the numerical skills and reasoning abilities of the
candidates. Such abilities become important in decision making. The test
consists of logical reasoning ability, data interpretation, comprehension skills
and basic language skills.

III. Personality test :-

In this test the emotional ability or the emotional quotient is tested. This
test judges the ability to work in a group, inter personal skills, ability to
understand and handle conflicts and judge motivation levels. This test is
becoming very popular now days.

IV. Performance test :-

 This test judges and evaluates the acquired knowledge and experience
of the knowledge and experience of the individual and his speed and accuracy
in performing a job. It is used to test performance of typist, data entry
operators etc.

Induction

Induction = orientation

Define induction :-

Induction can be defined as a process of introducing the employee who is

newly elected to the organization. When an employee is given a letter of
appointment he joins the company on duty. The very first thing that the company
does is, introduces the new employee to the organization and people working there.

An induction program may be conducted at a particular center for all

employees or at different places (branches of the company) for different employees.
Normally the new employee is called together to the staff training college for the
induction program.

The induction starts with an introduction secession about the company,

number of branches, a brief history of the company, number of products, number of
countries operating in, organizational structure, culture, values, beliefs, the names of
top management personnel etc.

Apart from this introductory secession there will be other secessions also
like secessions on behavioral science, soft skill training, secessions on giving
details about the job, salary, bonus, information about different leaves that can be
taken by the employee about upward mobility in the organization etc.

There are different ways in which secessions can be conducted i.e. using
lecture method, power point presentation, group discussion, psychological test, roll
play secessions etc.
 The induction program concludes with the employee reporting for duty at his
respective branch after induction. When he reports for duty the senior most people in
the branch takes the new employee around the office and introduces to all other
employees and gives information about the working of the branch. The senior people
regularly stay in touch with the new employee in the first week so that he can make
the new employee comfortable and help him to adjust to the company.

After this the company may start a training program for the new
employee.

Define placement :-

Companies conduct recruitment and selection and finally select

employees. The employees undergo an induction program. After the induction
program is over the employee is given a specific job in the company. This is
called placement.
 Chapter 5 Training and Development

Define training/development/managerial/executive development program :- (2

marks concept)

Training is defined by Wayne Cascio as “training consists of planed

programs undertaken to improve employee knowledge, skills, attitude, and
social behavior so that the performance of the organization improves
considerably.”

Training is normally viewed as a short process. It is applied to technical

staff, lower, middle, senior level management. When applied to lower and middle
management staff it is called as training and for senior level it is called managerial
development program/executive development program/development program.

Objectives/purpose/goals of training and development

Training is defined by Wayne Cascio as “training consists of planed

programs undertaken to improve employee knowledge, skills, attitude, and
social behavior so that the performance of the organization improves
considerably.”

The purpose of training and development can be explained as

follows.

1. Improving quality of work force :-

Training and development help companies to improve the

quality of work done by their employees. Training programs
concentrate on specific areas. There by improving the quality of work
in that area.

2. Enhance employee growth :-

 Every employee who takes development program becomes better at
his job. Training provides perfection and required practice, therefore
employee’s area able to develop them professionally.

3. Prevents obsolescence :-

Through training and development the employee is up to date

with new technology and the fear of being thrown out of the job is
reduced.

4. Assisting new comer :-

Training and development programs greatly help new

employees to get accustomed to new methods of working, new
technology, the work culture of the company etc.

5. Bridging the gap between planning and implementation :-

Plans made by companies expect people to achieve certain

targets within certain time limit with certain quality for this employee
performance has to be accurate and perfect. Training helps in achieving
accuracy and perfection.

6. Health and safety measures :-

Training and development program clearly identifies and teaches

employees about the different risk involved in their job, the different
problems that can arise and how to prevent such problems. This helps to
improve the health and safety measures in the company.

Methods of training operating personnel/factory workers

Training is defined by Wayne Cascio as “training consists of planed programs

undertaken to improve employee knowledge, skills, attitude, and social behavior
so that the performance of the organization improves considerably.”
 There are different methods of training for operating personnel (factory
workers). Training these workers becomes important because they handle
equipment worth crores of rupees. The different methods can be explained with
the help of following diagram.

Methods of training operating personnel

On the job Apprenticeship Vestibule Job rotation Classroom

method method method method method

1. On the job training method :-

In this method workers who have to be trained are taken to the factory,
divided into groups and one superior is allotted to every group. This superior
or supervisor first demonstrates how the equipment must be handled, and then
the worker is asked to repeat whatever he has observed in the presence of the
supervisor. This method makes it easy for the employee to learn the details
about specific equipment. Once the worker studies the first equipment
thoroughly the supervisor moves on to the next equipment and so on.

2. Apprenticeship training :-

In this method both theory and practical session are conducted. The
employee is paid a stipend until he completes training. The theory sessions
give theoretical information about the plant layout, the different machines,
their parts and safety measures etc. The practical sessions give practical
 training in handling the equipment. The apprentice may or may not be
continued on the job after training.

3. Vestibule training :-

In this method of training an atmosphere which is very similar to the

real job atmosphere is created. The surroundings, equipment, noise level will
be similar to the real situation. When an employee is trained under such
conditions he gets an idea about what the real job situation will be like.
Similarly when he actually starts doing the job he will not feel out of place.
This method is used to train pilots and astronauts. In some places graphics are
also used to create the artificial surroundings. This method involves heavy
investment.

4. Job rotation :-

In this method the person is transferred from one equipment to the

other for a fixed amount of time until he is comfortable with all the
equipments. At the end of the training the employee becomes comfortable
with all the equipment. He is then assigned a specific task.

5. Classroom method :-

In this method the training is given in the classroom. Video,

clippings, slides, charts, diagrams and artificial modules etc are used to give
training.
Methods of training for managers/methods of development/managerial
development/executive development

Training is defined by Wayne Cascio as “training consists of planed programs

undertaken to improve employee knowledge, skills, attitude, and social behavior so
that the performance of the organization improves considerably.”

Various methods are used to train personnel for managerial level jobs in the
company. These methods can be explained with the help of following diagram.

On the job method :

On the job method refers to training given to personnel inside the company.
There are different methods of on the job training.

1. Job rotation :-

This method enables the company to train managerial personnel in

departmental work. They are taught everything about the department.
Starting from the lowest level job in the department to the highest level job.
This helps when the person takes over as a manager and is required to check
whether his juniors are doing the job properly or not. Every minute detail is
studied.

2. Planned progression :-

In this method juniors are assigned a certain job of their senior in

addition to their own job. The method allows the employee to slowly learn the
job of his senior so that when he is promoted to his senior job it becomes very
easy for him to adjust to the new situation. It also provides a chance to learn
higher level jobs.

3. Coaching and counseling :-

 Coaching refers to actually teaching a job to a junior. The senior
person who is the coach actually teaches his junior regarding how the work
must be handled and how decisions must be taken, the different techniques
that can be used on the job, how to handle pressure. There is active
participation from the senior.

Counseling refers to advising the junior employee as and when he

faces problems. The counselor superior plays an advisory role and does
not actively teach employees.

4. Under study :-

In this method of training a junior is deputed to work under a senior.

He takes orders from the senior, observes the senior, attends meetings with
him, learns about decision making and handling of day to day problems. The
method is used when the senior is on the verge of retirement and the job will
be taken over by the junior.

5. Junior board :-

In this method a group of junior level managers are identified and

they work together in a group called junior board. They function just like the
board of directors. They identify certain problem, they have to study the
problem and provide suggestions.

This method improves team work and decision making ability. It gives an
idea about the intensity of problem faced by the company. Only promising
and capable junior level managers are selected for this method.

Off the job training method :-

Off the job training refers to method of training given outside the company.
The different methods adopted here are
1. Classroom method :-

The classroom method is used when a group of managers have to be

trained in theoretical aspects. The training involves using lectures, audio
visuals, case study, role play method, group discussions etc. The method is
interactive and provides very good results.

2. Simulation :

Simulation involves creating atmosphere which is very similar to the

original work environment. The method helps to train manager handling
stress, taking immediate decisions, handling pressure on the jobs etc. An
actual feel of the real job environment is given here.

3. Business games :-

This method involves providing a market situation to the trainee

manager and asking him to provide solutions. If there are many people to be
trained they can be divided into groups and each group becomes a separate
team and play against each other.

4. Committee :-

A committee refers to a group of people who are officially

appointed to look into a problem and provide solution. Trainee managers
are put in the committee to identify how they study a problem and what
they learn from it.

5. Conference :-

Conferences are conducted by various companies to have

elaborate discussions on specific topics. The company which organizes
the conference invites trainee manager and calls for experts in different
fields to give presentation or lecture. The trainee manager can ask their
doubts to these experts and understand how problems can be solved on the
job.
 6. Readings :

This method involves encouraging the trainee manager to increase his

reading related to his subject and then ask him to make a presentation on what
he has learned. Information can be collected by trainee manager from books,
magazines and internet etc.

7. In basket training :-

In this method the training is given to the manager to handle files

coming in and to finish his work and take decisions within a specified time
limit. The trainee manager is taught how to prioritize his work, the activities
which are important for his job and how to take decisions within limited time
limit.

Training procedure/process of training :-

Training is defined by Wayne Cascio as “training consists of planed programs

undertaken to improve employee knowledge, skills, attitude, and social behavior so
that the performance of the organization improves considerably.”

Every company has a specific training procedure, depending upon its

requirements. A general training procedure is explained below along with diagram

Process/procedure of training

Determining training need of employee

Select a target group for training

Preparing trainers
 Developing training packages

Presentation

Performance

Follow up

1. Determining training needs of employee :-

In the very 1st step of training procedure, the HR department, identifies the
number of people required training, specific area in which they need training, the
age group of employee, the level in organization etc. in some cases the employee
may be totally new to the organization. Here the general introduction training is
required. Some employees may have problems in specific areas; here the training
must be specific. This entire information is collected by HR department.

2. Selecting target group :-

Based on information collected in step 1 the HR department divides

employee into groups based on the following.

Age group
i. The area of training
ii. Level in the organization
iii. The intensity of training etc.

3. Preparing trainers :-

Once the employees have been divided into groups, the HR department
arranges for trainers. Trainers can be in house trainers or specialized trainers from
outside. The trainers are given details by HR department, like number of people in
group, their age, their level in organization, the result desired at the end of
training, the area of training, the number of days of training, the training budget,
facilities available etc.
4. Preparing training packages :-

Based on the information provided by trainers, he prepares entire training

schedule i.e. number of days, number of sessions each day, topics to be handled
each day, depth of which the subject should be covered, the methodology for
each session, the test to be given foe each session, handout/printed material to be
given in each session.

5. Presentation :-

On the first day of training program the trainer introduces himself and
specifies the need and objective of the program and then actually stars the
program. The performance of each employee is tracked by the trained and
necessary feedback is provided.

6. Performance :-

At the end of training program the participants reports back to their

office or branches. They prepare report on the entire training program and
what they have learned. They the start using whatever they have learned
during their training. Their progress and performance is constantly tracked
and suitable incentives are given if the participant is able to use whatever he
has learned in training.

7. Follow up :-

Based on the em0ployee performance, after training, the HR

department is able to identify what is exactly wrong with training program
and suitable correction is made.

Evaluation of training program

 Training is defined by Wayne Cascio as “training consists of planed
programs undertaken to improve employee knowledge, skills, attitude, and social
behavior so that the performance of the organization improves considerably.”

Effectiveness of training programs are constantly evaluated by the company

to find if the money, they have invested has been spend properly or not. Training
programs can be evaluated by asking following questions.

a) Has change occurred after training?

b) Is the change due to training?
c) Is the change positive or negative?
d) Will the change continue with every training program?

A training program should give following resulting changes.

1. Reaction :-

Reaction refers to attitude of employee about the training, whether the

employee considers training to be +ve or –ve one. If reaction are +ve then
people have accepted the program and changes will be possible.

2. Learning :-

Another method of judging effectiveness is to identify levels of

learning i.e. how much the people have learnt during the training. This can be
found out by trainers mark sheet, the report submitted by the employee, and
actual performance.
 3. Behavior :-

The HR department needs to understand behavior of the

employees, to understand the effectiveness of training. The behavioral
change can be seen in how the person interacts with juniors, peer groups
and seniors. They mark change in behavior and inform the HR
department of the success of training program.

4. Result :-

Results provided by employee in monetary terms also determines

effectiveness of training program i.e. employee success in handling the
project, the group performance before and after training etc.

5. Effectiveness of training program must lead to

i. Increase in efficiency of worker
ii. Reduction in labour turnover
iii. Increase in discipline

iv. Reduction in wastage and therefore cost of production

v. Proper care of tools and equipments
vi. Employee development in career terms
vii. Overall efficiency in the company

Advantages of training programs/training

Training is defined by Wayne Cascio as “training consists of planed

programs undertaken to improve employee knowledge, skills, attitude, and
social behavior so that the performance of the organization improves
considerably.”

The following are the advantages of training program to the company

1. Increase in efficiency of worker :-

 Training programs can help workers to increase their efficiency
levels, improve quality and thereby increase sales for the company.

2. Reduced supervision :-

When workers have been formally trained they need not be

supervised constantly. This reduces the work load on the supervisor and
allows him to concentrate on other activities in the factory.

3. Reduction in wastage :-

The amount of material wasted by a trained worker is negligible as

compared to the amount of material wasted by an untrained worker. Due to
this the company is able to reduce its cost its cost of production.

4. Less turnover of labour :-

One of the advantages of the training program is that it increases the

confidence of employees and provides them with better career
opportunities. Due to this employee generally do not leave the company.
There by reducing labour turnover.

5. Training helps new employees :-

A person, who is totally new to the company, has no idea about its
working. Training helps him to understand what is required from him and
helps him to adjust to the new environment.

6. Union management relations :-

When employees are trained and get better career opportunities. The
union starts having a possible attitude about the management. They feel that
the management is genuinely interested in workers development. This
improves union management relations.
The following are the advantages of training program to the employee

1. Better career opportunities :-

Training programs provide the latest information, develops talent and

due to this the employee is in a position to get better jobs in the same
company or other companies.

2. High rewards :-

Effective training programs result in improved performance. When

performance appraisal is done excellent performance from the employee is
rewarded by giving him incentives and bonus.

3. Increased motivation :-

Employees who have been trained are generally more confident as

compared to others. Since their efforts will be rewarded in future they are
very much interested in improving their performance. Therefore we can say
that their motivation levels are very high.

4. Group efforts :-

Training programs are not only technical programs but are also
conducted in areas like conflict management, group dynamics (formal and
informal groups), behavioral skills, stress management etc. this enables
employees to put in group effort without facing problems that groups
normally face. In other words training teaches people to work in a group.

5. Promotion :-

People who attend training programs learn from them and improve
themselves are generally considered for promotion. Thus training increases
chances of promotion.
 Chapter 6 Performance appraisal

Definition :-

Performance appraisal is defined by Wayne Cascio as “the

systematic description of employee’s job relevant, strength,
weakness.

Performance appraisal may be conducted once in every 6

months or once in a year. The basic idea of the appraisal is to evaluate
the performance of the employee, giving him a feed back. Identify
areas where improvement is required so that training can be provided.
Give incentives and bonus to encourage employees etc.

Method of performance appraisal

Performance appraisal is defined by Wayne Cascio as “the

systematic description of employee’s job relevant, strength,
weakness.

Companies use different methods of appraisal for identifying

and appraising the skills and qualities of their employees. The different
methods used can be explained with the help of following diagram.

Methods of performance appraisal

Traditional method Modern method

1. Check list method 1. Role analysis

2. Confidential report 2. Assessment centers

3. Critical incident method 3. management by objective

4. Ranking method 4. Behavioral anchored rating scale

5. Graphic rating scale 5. Psychological testing
6. Narrated essay 6. Human resource accounting

7. 360* Appraisal

Traditional method

Traditional method of performance appraisal has been used

by companies for very long time. A common feature of these
methods is they are all relatively simple and involve appraisal by
one senior.

1. Check list method :-

In this method the senior, the boss is given a list of questions about the
junior. These questions are followed by check boxes. The superior has to put a
tick mark in any one of the boxes
This method can be explained with the following eg.

Y N
Does the employee have leadership qualities?

Y N Is the
employee capable of group efforts?
Y N

Has the employee shown analytical skills? on the job

 As seen in the above eg. A questioner containing questions is given to the senior.
This method is an extremely simple method and does not involve a lot of time.
The same set of questioners can be given foe every employee so that there is
uniformity in selecting employee.

2. Confidential report :-

This method is very popular in government departments to appraise IAS

officers and other high level officials. In this method the senior or the boss writes
a report about the junior giving him details about the performance about the
employee. The +ve and – ve traits, responsibilities handled on the job and
recommendations for future incentives or promotions. The report is kept highly
confidential and access to the report is limited.

3. Critical incident method :-

In this method critical or important incidents which have taken place

on this job are noted down along with employee’s behavior and reaction in
all these situations. Both +ve and –ve incidents are mentioned. This is
followed by an analysis of the person, his abilities and talent,
recommendations for the future incentives and promotions.

4. Ranking method :-

In this method ranks are given to employees based on their performance.

There are different methods of ranking employees.

Simple ranking method

Alternate ranking method

Paired comparison method

i. Simple ranking method :-

 Simple ranking method refers to ranks in serial order from the
best employee eg. If we have to rank 10 best employees we start with
the first best employee and give him the first rank this is followed by
the 2nd best and so on until all 10 have been given ranks.

ii. Alternate ranking :-

In this method the serial alternates between the best and the
worst employee. The best employee is given rank 1 and then we move
to the worst employee and give him rank 10 again to 2 nd best employee
and give him rank 2 and so on.

iii. Paired comparison :-

In this method each and every person is the group,

department or team is compared with every other person in the
team/group/department. The comparison is made on certain criteria
and finally ranks are given. This method is superior because it
compares each and every person on certain qualities and provides a
ranking on that basis.

5. Graphic rating scale :-

Graphic rating scale refers to using specific factors to appraise

people. The entire appraisal is presented in the form of a chart. The chart
contains certain columns which indicate qualities which are being appraised
and other columns which specify the rank to be given.

The senior has to put a tick mark for a particular quality along with the ranking.
Such charts are prepared for every employee. According to the
department in which they work. Sometimes the qualities which are judged
may change depending upon the department.

6. Narrated essay :-

In this method the senior or the boss is supposed to write a narrative

essay describing the qualities of his junior. He may describe the employees
strength and weakness, analytical abilities etc. the narrative essay ends with
a recommendation for future promotion or for future incentives.

Modern methods

Modern methods of appraisal are being increasingly used by companies.

Now days one of the striving feature that appraisal involves is, the opinion of
many people about the employee and in some cases psychological test are used to
analyze the ability of employee. These methods are as follows

1. Role analysis :- (2 marks)

In this method of appraisal the person who is being apprised is called

the focal point and the members of his group who are appraising him are
called role set members.

These role set members identify key result areas (KRA 2 marks) (areas
where you want improvement are called KRA) which have to be achieved
by the employee. The KRA and their improvement will determine the
amount of incentives and benefits which the employee will receive in future.
The appraisal depends upon what role set members have to say about the
employee.

2. Assessment centers :-
 Assessment centers (AC) are places where the employee’s are
assessed on certain qualities talents and skills which they possess. This
method is used for selection as well as for appraisal. The people who attend
assessment centers are given management games, psychological test,
puzzles, questioners about different management related situations etc.
based on their performance in these test an games appraisal is done.

3. Management by objective :-

This method was given by Petter Druckard in 1974. It was intended to

be a method of group decision making. It can be use for performance
appraisal also. In this method all members of the of the department starting
from the lowest level employee to the highest level employee together discus,
fix target goals to be achieved, plan for achieving these goals and work
together to achieve them. The seniors in the department get an opportunity to
observe their junior- group efforts, communication skills, knowledge levels,
interest levels etc. based on this appraisal is done.

4. Behavioral anchored rating scale :-

In this method the appraisal is done to test the attitude of the

employee towards his job. Normally people with +ve approach or attitude
view and perform their job differently as compared to people with a –ve
approach.

5. Psychological testing :-
In this method clinically approved psychological test are
conducted to identify and appraise the employee. A feedback is given to
the employee and areas of improvement are identified.

6. Human resource audit/accounting

In this method the expenditure on the employee is compared with the

income received due to the efforts of the employee. A comparison is made to
find out the utility of the employee to the organization. The appraisal informs
 the employee about his contribution to the company and what is expected in
future.

7. 360* appraisal :-

In this method of appraisal and all round approach is adopted.

Feedback about the employee is taken from the employee himself, his
superiors, his juniors, his colleagues, customers he deals with, financial
institutions and other people he deals with etc. Based on all these observations
an appraisal is made and feedback is given. This is one of the most popular
methods.

Process of performance appraisal

Performance appraisal is defined by Wayne Cascio as “the systematic

description of employee’s job relevant, strength, weakness.

Process of performance appraisal followed by different companies is

different. A general procedure is explained below with the help of a diagram.

Process of performance appraisal

Setting performance standards

Communicating standards set to the employee

Measuring performance
 Comparing performance with standard

Discussing result

Collective action

Implementation and review

1. Setting performance standards :-

In this very first step in performance appraisal the HR department decides

the standards of performance i.e. they decide what exactly is expected from the
employee for each and every job. Sometimes certain marking scheme may be
adopted eg. A score 90/100 = excellent performance, a score os 80/100 = good.
And so on.

2. Communication standard set to the employee :-

Standards of performance appraisal decided in 1st step are now

conveyed to the employee so that the employee will know what is expected
from him and will be able to improve his performance.

3. Measuring performance :-

The performance of the employee is now measure by the HR department,

different methods can be used to measure performance i.e. traditional and modern
method. The method used depends upon the company’s convenience.
 4. Comparing performance with standard :-

The performance of the employee is now judged against the standard.

To understand the score achieved by him. Accordingly we come to know
which category of performance the employee falls into i.e. excellent, very
good, good, satisfactory etc.

5. Discussing result :-

The results obtained by the employee after performance appraisal are

informed or conveyed to him by the HR department. A feedback is given to
the employee asking him to change certain aspects of his performance and
improve them.

6. Collective action :-

The employee is given a chance or opportunity to improve himself in

the areas specified by the HR department. The HR department constantly
receives or keeps a check on the employee’s performance and notes down
improvements in performance.

7. Implementation and review :-

The performance appraisal policy is to be implemented on a regular

basis. A review must be done from time to time to check whether any change
in policy is required. Necessary changes are made from time to time.

Limitations of performance appraisal

Performance appraisal is defined by Wayne Cascio as “the systematic

description of employee’s job relevant, strength, weakness.
The following are the limitations of performance appraisal

1. Halo effect :-
 In this case the superior appraises the person on certain positive
qualities only. The negative traits are not considered. Such an appraisal will
no give a true picture about the employee. And in some cases employees who
do not deserve promotions may get it.

2. Horn effect :-

In this case only the negative qualities of the employee are considered
and based on this appraisal is done. This again will not help the organization
because such appraisal may not present a true picture about the employee.

3. Central tendency :-

In this case the superior gives an appraisal by giving central values. This
prevents a really talented employee from getting promotions he deserves and
some employees who do not deserve any thing may get promotion.

4. Leniency and strictness :-

Some bosses are lenient in grading their employees while some are very
strict. Employee who really deserves promotions may loose the opportunity due
to strict bosses while those who may not deserve may get benefits due to lenient
boss.

5. Spill over effect :-

In this case the employee is judged +vely or –vely by the boss depending
upon the past performance. Therefore although the employee may have improved
performance, he may still not get the benefit.

6. Fear of loosing subordinates and spoiling relations :-

Many bosses do not wish to spoil their relations with their subordinates.
Therefore when they appraise the employee they may end up giving higher
grades which are not required. This is a n injustice to really deserving employees.
7. Goodwill and techniques to be used :-

Sometimes a very strict appraisal may affect the goodwill between senior
and junior. Similarly when different departments in the same company use
different methods of appraisal it becomes very difficult to compare employees.

8. Paper work and personal biased :-

Appraisal involves a lot of paper work. Due to this the work load of HR
department increases. Personal bias and prejudice result in bosses favoring certain
people and not favoring others.

Advantages/needs/importance/use/purpose of performance appraisal

Performance appraisal is defined by Wayne Cascio as “the systematic

description of employee’s job relevant, strength, weakness.

1. Feedback to the employee :-

Performance appraisal is beneficial because it provides feedback to

the employee about his performance. It identifies the areas for
improvement so that employee can improve itself.

2. Training and development :-

Due to performance appraisal it is easy to understand what type of

training is required for each employee to improve himself accordingly
training programs can be arranged.

3. Helps to decide promotion :-

 Performance appraisal provides a report about the employee. Based on
this report future promotions are decided, incentives, salary increase is
decided.

4. Validation of selection process :-

Through performance appraisal the HR department can identify

whether any changes are required in the selection process of the company
normally a sound selection process results in better performance and positive
appraisal.

5. Deciding transfers and lay off of the worker :-

Employee with specific talent can be transferred to places where

their talents are utilized properly; similarly decisions regarding
termination of employees depend upon performance appraisal reports.

6. Human resource planning and career development:-Companies can plan

for future vacancies at higher levels

based on performance appraisal reports. Similarly career planning can be

done for the employee on the performance appraisal report.