Industrial Relations Definition-Industrial Relations is concerned with the relationships between management and workers and the role

of regulatory mechanism in resolving any industrial dispute. What is Industry? Industry means any systematic activity carried on by co operation between an employer and his employee whether such workmen are employed by such employer directly or by or through any agency including a contractor for the production supply or distribution of goods or sources with an overview to satisfy human want or wishes whether or not (i) Any capital has been invested for the purpose of carrying on such activity or (ii) Such activity is carried on with a motive to make any gain or profit and includes any activity relating to the promotion of sales or business or both carried on by an establishment. Such activity generally includes the co-operation of employer and employees. The object is the satisfaction of material human needs. It must he arranged or organized in a manner in which trade or business is generally arranged or organised Concepts of Industrial Relations 1. Preservation and promotion of economic interest of workers along with social interest 2. Peace and productivity goes hand in hand hence attempt to reduce industrial dispute and promote peace is a necessity. 3. Employer/Employee relation should be made healthy and growing 4. Running of the industry, day to day work should be made more democratic with increasing workers participation 5. Producing products at a very competitive price so that country can promote exports and the economy can improve. 6. Bringing mental revolution in management. The parties to Industrial Relations 1) Workers and their unions, the intelligence level knowledge of workers, background of worker leaders, real or bogus their linkage with political unions, are to be considered for the effective relations. 2) Nature of employment and employers, whether benevolent, interested in workers or aiming to get as much profit as possible, squeezing workers etc. Their attitude plays a vital role in maintaining better relations. 3) Position of government, political will, whether opportunities favouring employers or interested in workers, are to be seen. Their interest in workers can be seen through their actions in creating Laws for labour welfare and implementing them effectively Causes of industrial unrest Financial Aspects a) Demand for increase of wages, salaries and other perks. Workers demands go on increasing with the increase in cost of living b) Demand for more perks, and fringe benefits. c) Incentives -hike every now and then, workers compare their benefits with other industries and demand them without comparing the capacity of the industry where they are working. Non financial aspects a) Working hours, rest hours and travelling hours are source of disputes. b) Introduction of machines, computers modernization, and automation In effect any act of management which may result in the reduction of the workforce is resisted

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Administrators Causes a) Non implementation of agreements, awards and other local settlements with full spirit b) Stifling with recognition of labour unions though registered, c) Attempt to weaken existing trade unions and trying to foist fake unions d) Unhealthy working conditions e) Lack of skill on the part of leaders supervisors f) Disproportionate works loads, favouritism g) Victimisation, nepotism attitude of management in recruitment, promotion, transfer etc h) Instead of re-deployment or skill improvement easier way of retrenchment forced voluntary retirement schemes (C.R.S) are adopted. Government and political pressures a) Industrial unions affiliating with political unions which are in power, resulting in frequent shift of loyalty and resultant unrest-common in countries like India b) Politician influencing workers group c) Sometimes unions and workers strike against mergers, acquisition, takeovers, and disinvestments policies of government and private sectors. Other causes of strained relations. a. Refusal to have workers participation in the running of the industry. b. Non-adherence to laid out standing orders grievances procedures c. Refusal to have free frank, and transparent collective bargaining. d) Sympathetic strike a show of companionship with workers of neighbouring industries, and conducting a token strike when they are in full strike. Consequences of strained Industrial relations 1. May result in go slow tactics, Strike, lock out etc. 2. Industrial production and productivity may be affected; growth of industries will be stunted 3. May result in an atmosphere where law and order situation will deteriorate 4. Employer/ Management/ labour relations will be affected and mutual faith and team spirit will vanish. 5. Absence of mutual co-operation affects participation forums and bargaining platforms. 6. Government also will lose revenue, and may need to spend more to keep law and order around the industry 7. National income, per capital income will go down 8. Will result in loss in earnings of workers with added suffering. 9. The industries and consumers will suffer loss. Industrial Dispute The term industrial dispute connotes a real and substantial difference having some elements of persistency and continuity, till resolved and likely, if not, adjusted to endanger the industrial peace of the undertaking or the community. When the parties are at variance and the dispute or difference is connected with the employment or non employment or terms of employment or with the condition of labour. There comes in to existence an industrial dispute.

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Causes of Industrial unrest a) Close mindedness of employers and employees. One thinking to extract maximum work with minimum remuneration, other thinking to avoid work and get more enhancements in pay and wages. b) Irrational wage, wage system and structure not mutually acceptable c) Poor working environment, low presence of safety, hygiene conditions vitiated atmosphere for smooth working d) Poor human relations, and lack of dexterity on the part of management personnel e) Lack of control over the situations erosion of discipline, which rebounds. f) Introduction of new technology or automation mechanization, computerization etc. without proper consultations, preparations and discussion with workers g) Nepotism, unequal workloads, disproportionate wage, and responsibilities. h) Adoption of unfair labour practices either by employer or employees and unions. i) Unjustifiable profit sharing and not considering workers as co-shares of the gains of the industry. j) Frequent union rivalries over membership foisting up of fake unions. k) Strikes lock out, lay off, and resulting retrenchment due to high handedness on the part of the concerned. l) Throwing away the agreements and arrived settlements m) Militancy of the unions n) Attitude of government and political parties who may indirectly control some the unions for their own gains or to get a hold on the industry. Suggestions for the improvement of industrial relations and reduce disputes 1. Trade unions should be strengthened democratically so that they can understand and toe with the main stream of the national industrial activities. They can drop their survive attitude of promising impossible and consequent causing perpetual strain. 2. Employers should have more transparency in their dealings with workers to build confidence and have progressive outlook. 3. They should have open-minded flexible collective Bargaining. 4. Workers should be allowed to participate in the management through forums, committees and councils, 5. Sound labour policy and planning 6. Proper leadership and communication 7. Enforcement of discipline 8. Try to have union within workers fold. 9. Equity in distribution of wealth by acknowledging workers as team members-bonuses, profit sharing, co-ownership. Employee Grievances What is a grievance? There are several definitions of a grievance: Expressions such as problem, discontentment, deep problem etc. can be used to describe a grievance. However please note that dissatisfaction or discontent per se is not a grievance. They initially find expression in the form of a complaint. When a complaint remains unattended and the employee concerned feels a sense of lack of justice and fair play, the dissatisfaction grows and assumes the status of a grievance.

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Dissatisfaction: maybe defined as anything that disturbs an employee, whether or not such unrest is expressed in word e.g. engineers and technicians may be upset because they are suddenly instructed to observe regular hours. Complaint: It is a spoken or written dissatisfaction, brought to the attention of the supervisor and the union leader. The complaint may or may not specially assign a cause for dissatisfaction e.g. four times this morning I have had to chase around looking for the pliers. Grievance: It is simply a complaint, which has been formally presented in writing, to a management representative or a union official. However for most of the people, the word grievance suggests a complaint that has been ignored, overridden or dismissed without due consideration. ILO defines a grievance as a complaint of one or more workers related to: Wages and allowance Conditions of work Interpretation of service conditions covering such as areas as Overtime(OT), Leave, Transfer, Promotion, Seniority, Job Assignment & Termination of Service Another definition of grievance is according to Michael Jucius, A grievance can be any discontent or dissatisfaction, whether expressed or not, whether valid or not, and arising out of anything connected with the company that an employee thinks, believes, or even feels as unfair, unjust, or inequitable. A grievance means any discontentment or dissatisfaction in an employee arising out of anything related to the enterprise where he is working. It may not be expressed and even may not be valid. It arises when an employee feels that something has happened or is going to happen which is unfair, unjust or inequitable. Thus, a grievance represents a situation in which an employee feels that something unfavourable to him has happened or is going to happen. In an industrial enterprise, an employee may have grievance because of long hours of work, non-fulfilment of terms of service by the management, unfair treatment in promotion, poor working facilities, etc. Nature of Grievance: Grievances are symptoms of conflicts in the enterprise. Grievances could lead to serious problem if not addressed immediately! So they should be handled very promptly and efficiently. Coping with grievances forms an important part of any job. The manner in which a manager deal with a grievance determines his efficiency of dealing with subordinates. A manager is successful if he is able to build a team of satisfied workers by removing their grievances. While dealing with grievances of subordinates, it is necessary to keep in mind the following points: A grievance may or may not be real. Grievance may arise out of not one cause but multifarious causes. Every individual does not give expression to his grievances. Please understand that complaints of employees relating to interpretation and implementation of agreements, labour legislations, various personnel policies, rules and regulations, past practices, code of conduct are very much grievances.

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Another point that needs to be noted here is that the grievances may relate to either one employee (individual grievances) or group of employees (group grievances). Individual and group grievances are to be redressed through grievance procedure. Individual employee or group of employees concerned and manager concerned play vital role in grievance procedure. What do you think is the difference between grievance and conflict? Are they the same? Can they be used interchangeably? The differences between employees and employers relating to various personnel policies, wage levels and variety of benefits, awards, rules and regulations are conflicts. Conflicts are to be settled through collective bargaining. Trade unions and management participate in collective bargaining for settling disputes. Thus, conflicts have wider policy implications as compared to grievances. A grievance may take any of the following forms: Factual: When an employee is dissatisfied with his job, for genuine or factual reasons like a breach of terms of employment or any other reasons that are clearly attributed to the management, he is said to have a factual grievance. Thus, factual grievances arise when the legitimate needs are unfulfilled. The problem that he has is real and not virtual Imaginary: When an employees grievance or dissatisfaction is not because of any factual or valid reason but because of wrong perception, wrong attitude or wrong information he has. Such a grievance is called an imaginary grievance. Though it is not the fault of management, the responsibility of dealing with it still rests with the management. So the problem is not real. It is in the mind or just a feeling towards someone or something. Disguised: An employee may have dissatisfaction for reasons that are unknown to himself. This may be because of pressures and frustrations that an employee is feeling from other sources like his personal life. As humans we are sensitive to the environment that we operate in! The managers have to detect the disguised grievances and attend to them by counselling the concerned employees. They have to find out the root cause of the problem rather than find quick fix solutions to them. Identifying grievances: Good management redresses grievances as they arise; excellent management anticipates and prevents them from arising. An effective manager thus has to be proactive. A manager can know about the problems even before they turn into actual grievances through several means such as: a) Exit interview: Employees usually quit organizations due to dissatisfaction or better prospects elsewhere. Exit interviews, if conducted carefully, can provide important information about employees grievances. This can help the management to gather feedback and to genuinely incorporate feedback. The management should carefully act upon the information drawn from such employees. It should be careful that the discontentment is reduced so that no more employees quit the organization because of similar reasons. b) Gripe Boxes: These are boxes in which the employees can drop their anonymous complaints. They are different from the suggestion boxes in which employees drop their named suggestion with an intention to receive rewards It is normally said that if you want to progress in life, you should be close to critics. These gripe boxes can

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perform the role of critics for the organisation. The management should carefully act upon the information thus gathered. c) Opinion Survey: The management can be proactive by conducting group meetings, periodical interviews with employees, collective bargaining sessions etc. through which they can get information about employees dissatisfaction before it turns into a grievance. d) Open-door Policy. Some organisations extend a general invitation to their employees to informally drop in the managers room any time and talk over their grievances. This can be very effective because it can nip the evil in the bud. That is it can take care of the problem before it gets out of hand. In fact the management should hold formal and informal get together with the employees. The management should also remember that the employees might just need a patient hearing at times. What leads to a grievance? (Causes of grievances) In order to handle the grievances efficiently, it is necessary to find and analyse the grievances of the subordinates. If a grievance is found to be genuine or real (factual), corrective action should be taken immediately. But if the grievance arises due to imagination or disturbed frame of mind of the worker, then it is necessary to explain and clear up the matter. Before dealing with the grievances, their causes must be diagnosed. The causes of grievances may be broadly classified into the following categories: (1) Grievances resulting from working conditions a) Improper matching of the worker with the job. b) Changes in schedules or procedures. c) Non-availability of proper tools, machines and equipment for doing the job. d) Unreasonably high production standards. e) Poor working conditions. f) Bad employer employee relationship, etc. (2) Grievances resulting from management policy a) Wage payment and job rates. b) Leave. c) Overtime. d) Seniority and Promotional. e) Transfer. f) Disciplinary action. g) Lack of employee development plan. h) Lack of role clarity. (3) Grievances resulting from personal maladjustment a) Over ambition. b) Excessive self-esteem or what we is better known as ego. c) Impractical attitude to life etc. Effects of Grievances: Frustration Alienation De-motivation Slackness Low Productivity Increase in Wastage & Costs

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Absenteeism In discipline Labour unrest

Establishing a grievance procedure Though such a procedure will vary in different organizations, yet the following principles should be observed while laying down a grievance procedure: a) A grievance should be dealt with in the first instance at the lowest level: that is, an employee should raise his grievance with his immediate superior. It may be simple to settle it on the spot and that will be the end of it. Even if it cannot be settled at that level, the mans superior will know what is happening. This is necessary not only to maintain his authority, but also to prevent him from being aggrieved, as he will certainly be, if he is by-passed and hears of the complaint from his own superior. b) It must be made clear to the employee what line of appeal is available. If he cannot get satisfaction from his immediate superior, he should know the next higher authority to which he can go. c) Since delay causes frustration and tempers may rise and rumours spread around the work, it is essential that grievances should be dealt with speedily. The problems of the employees should be taken care of by the management least it should become a major issue for the management. d) The grievance procedure should be set up with the participation of the employees and it should be applicable to all in the organisation. The policies and rules regarding grievances should be laid down after taking inputs from the employees and it should be uniformly applicable to all in the organisation. It should be agreed that there would be no recourse to the official machinery of conciliation unless the procedure has been carried out and there is still dissatisfaction, and moreover, there must be no direct action on either side, which might prejudice the case or raise tempers while the grievance is being investigated. Why do we need to take inputs from the employees while framing the policies? It is necessary because it is going to be applicable to the employees and not only that; if the employees have contributed to the policies then their commitment is higher. Open door policy: Under this policy, any employee can take his grievance to the chief boss and talk over the problem. As the name suggests, the management keeps its doors open for the employees to share their problems. It is said that this policy can remove the cause of grievance quickly. Though this policy appears to the attractive, it has some prerequisites. The open door policy is workable only in small organizations. In big organizations, the top management does not have the time to attend to innumerable routine grievances daily that is the work of lower-level mangers. Under this policy, the front-line supervisor who should be the first man to know about the grievances of his subordinates is bypassed. This provokes him in two ways. First, he thinks the man who skipped him is disrespectful. Secondly, he fears that he will incur his superiors displeasure because of his failure to handle his subordinates will interpret this. Step-Ladder Procedure Under the step-ladder procedure, the employee with a grievance has to proceed step by step unless he is able to redress his grievance. According to the Model Grievance Procedure, an aggrieved employee shall first present his grievance verbally in person to the officer designated by the management for this purpose. An answer shall be given within 48 hours. If

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he is dissatisfied with the answer, the worker will present his grievance to the head of the department, who will give his answer within 3 days. If the worker is dissatisfied with the answer, he may ask that his grievance should be referred to the Grievance Committee, which shall make its recommendations within 7 days to the manager. The management must implement unanimous recommendations of this committee. A dissatisfied worker can apply to the management for a revision of its decision within on weeks time.

Step ladder Grievance Procedure. Model of grievance procedure The model Grievance Procedure provides for five successive time-bound steps. These are as under: 1. An aggrieved employee shall first present his grievance verbally in person to the officer designated by the Management for this purpose. An answer shall be given to him within 48 hours of the presentation of the complaint. 2. If the worker is not satisfied with the decision of this officer or fails to receive an answer within the stipulated period, he shall in person or by his departmental representative, if required, present his grievance to the head of the department designated by the management for this purpose. And he will get the answer within 3 days of the presentation of his grievance. 3. If the decision of the departmental head is unsatisfactory, the aggrieved worker may request the forwarding of his grievance to the Grievance Committee, which shall make its

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recommendations to the management within 7 days of the workers request. The final decision of the management shall be communicated to the worker within the stipulated period (3 days) by the Personnel Officer. 4. A revision of his grievance can be done if the decision is not satisfactory. The management shall communicate its decision within a week. 5. If no agreement is possible the union and the Management may refer the grievance to voluntary arbitration within a week from the date of receipt by the worker of the managements decision. In the above-mentioned procedure the following points should be noted: When calculating the various time intervals under the above clauses, holidays shall not be included. The Management shall provide the necessary clerical and other assistance for the smooth functioning of the grievance machinery. During the working time, the concerned person may go for enquiry with the Labour/personnel Officer, provided the he has taken permission from his supervisor. Hence he may not suffer any loss of payment. In the case of any grievance arising out of the discharge or dismissal of a worker, the above procedure shall not apply. If it is so, he may appeal wither to the dismissing authority or to a senior authority within a week from the date of dismissal or discharge. Guidelines for Effective Grievance Handling: While dealing with grievances, a manager cannot depend upon some ready-made, solutions. Every case has to be dealt with on merit. The following guidelines may help to deal effectively with the grievances: The complaint should be given a patient hearing by his superior. He should be allowed to express himself completely. The management should be empathetic. The superior should try to get at the root of the problem. It should be remembered that symptoms are not the problems. It should also be noted that symptoms are an indication that there is a problem. The management must show it anxiety to remove the grievances of the workers. The workers should feel that the management is genuinely interested in solving its problems. If the grievances are real and their causes located, attempts should be made to remove the causes. If the grievances are imaginary or unfounded, attempts should be made to convince the workers. Every grievance must be handled within the reasonable time limit. Employees expect immediate action to be taken to solve the problem. All grievances should be put into writing. Relevant facts about the grievance must be gathered. Decision taken to redress the grievance of the worker must be communicated to him. Follow up action should be taken to know the response of the affected employee. This is to ensure that the issue was solved to his satisfaction Essentials of a grievance procedure A grievance procedure should incorporate the following features:

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1. Conformity with existing legislation: The procedure should be designed in conformity with the existing statutory provisions. Where practicable, the procedure can make use of such machinery as the law might have already provided for. 2. Acceptability: Everybody must accept the grievance procedure. In order to be generally acceptable, it must ensure the following: A sense of fair-play and justice to the worker, Reasonable exercise of authority to the manager, and Adequate participation of the union. 3. Simplicity: The following points should be noted in this regard: The procedure should be simple enough to be understood by every employee. The steps should be as few as possible. Channels for handling grievances should be carefully developed. Employees must know the authorities to be contacted at various levels. Information about the procedure should be thoroughly disseminated among all employees through pictures, charts, diagrams, etc. 4. Promptness: Speedy settlement of a grievance is the cornerstone of a sound personnel policy. It should be remembered that justice delayed is justice denied. The procedure should aim at a rapid disposal of the grievance. This can be achieved by incorporating the following feature in the procedure: (a) As far as possible, grievances should be settled at the lowest level (b) No matter should ordinarily be taken up at more than two levels, i.e. normally there should be only one appeal. (c) Different types of grievances may be referred to appropriate authorities. (d) Time limit should be placed at each step and it should be rigidly followed at each level. 5. Training: In order to ensure effective working of the grievance procedure, it is necessary that supervisors and the union representatives should be given training in working of the grievance procedure. All the policies should be conveyed to the concerned parties. 6. Follow-up: The personnel department should review the working of the grievance procedure periodically and necessary changes should be introduced to make it more effective. This is generally ignored by the organizations. A regular follow up of the system increase the faith of the people in the system. Therefore it is necessary that the grievance procedure should be reviewed whenever it is so required. Checklist for Handling Grievances: 1. Let the Employee Talk Put the employee at ease Listen him in private Listen with sincere interest Do not argue Probe for the real grievance Get all the details Check the employees story Take notes

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Repeat the grievance in your own words. Tell the employee when he will get an answer.

2. Check the Facts Consult others Refer to the written policy Consider the employees view point Look at the employees record 3. Telling the Employee Be willing to admit mistake Give the benefit of doubt If the employees grievance is unfounded explain Keep your cool Prepare the case for appeal. 4. Follow Through Take prompt action to correct the cause of the grievance Check with employer Dont let it happen twice.

PERFORMANCE MANAGEMENT Definition-The systematic evaluation of individuals with respect to their work performance on the job and their potential for development. According to Locket Developing individuals with competence & commitment working towards the achievement of shared meaningful objectives within an organization that supports and encourages their achievements. Aims To establish a high performance culture. To develop the capacity for people to meet and exceed expectation. Empowering, motivating, rewarding employees to do their best. Aligning everyones individual goals to those of Organization. Proactively managing performance against agreed accountabilities and objectives. Linking job performance to achievement of medium corporate strategy/service plans. Principles of Performance Management It translates corporate goals into team, departmental and individual goals. It helps to clarify corporate goals. It is a continuous and evolutionary process, in which performance improves over time. It relies on consensus and co-operation rather than control or coercion. It encourages self-management of individual performance. It requires a management style that is open and honest and encourages two-way communication between superiors and subordinates. It requires continuous feedback. Feedback loops enable the experiences and knowledge gained on the job by individual to modify corporate objectives. It measures and assesses all performance against jointly agreed goals.

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 It should apply to all staff and it is not primarily concerned with linking performance to financial reward. Users of Performance Management Parties who have interest Employer wants: Information for Placement and Development of employee. Objective recommendations to overcome weakness and optimize strengths of the individuals. Information on employees career goals Fair basis for determining salary increases Employees want to know: What is expected of him/her. Standards of performance expected and criteria of evaluating the performance. Guidance in overcoming weakness. His/her career prospects. Concerns of Performance Management Performance Improvement it is concerned with organizational, team and individual effectiveness. Employee Development. Stakeholders- needs and expectations. Communication and Involvement. Ethical Considerations Respect for the individual Mutual respect Procedural fairness Transparency The Performance Management Cycle Role Profile Purpose of the role or the overall aim of the role Key result areas/ principal accountabilities Key competencies -what the role holder has to be able to do, behavior required to perform the role effectively Performance Agreement It defines expectations, result to be achieved, and the following; Objectives and standards of performance Performance measures/indicators Competency assessment Core values Operational requirements Performance Standard Its the statement of the condition that exists when a job is being performed effectively.

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A performance standard definition should take the form of a statement that performance will be up to standard if a desirable, specified and observable result happens. It should preferably be quantified in terms, for example of level of service, or speed of response.

Performance Measure It can be classified as finance, output, impact, reaction and time Measures should relate to results not efforts The results must be within the job holders control Measures should be objective and observable Data must be available for measurement Existing measures should be used or adopted whenever possible Classification of Measures Finance Income, economic value added, share holder value, added value, rates of return, costs Output units procured or processed, through-put, new accounts Input attainment of a standard (quality levels) changes in behaviour (internal and external customers) completion of work/projects, level of take up of a service, innovation. Reaction judgment by others, colleagues, internal and external customers Time speed of response or turn around achievement compared with timetables, amount of backlog, time to market, and delivery times. Individual measures will be more meaningful if they are linked to one or other of the organizational measures. Performance Management Should be a continuous Process Achievement of sustained improvement of performance. Continuous development of skills Overall competence. Importance of organizational learning. Issues Of Concern Updating objectives and work plans Continuous learning Dealing with performance problems

Updating objectives and work plans Discussing what the job holder has done and achieved Identifying any shortfalls in achieved objectives or meeting standards Establishing the reasons for any shortfalls and of the behaviour of the individual or the manager that have contributed to the problem. Agreeing any changes required to objectives and work plans in response to changed circumstances. Agreeing any actions required by the individual or the manager to improve performance.

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Managing Continuous Learning Any occasion when managers issue instructions to individuals or agree with them, what needs to be achieved followed by a review of how well the task was accomplished provides a learning opportunity.

Dealing with performance problems The five basic steps required to handle performance problems are: Identify and agree the problems. Establish reason(s) for the shortfall Decide and agree on the action required Resource the action Monitor and provide feedback Performance review It enables a perspective to be obtained on past performance as a basis for making plans for the future. The 5 key elements of performance review; Measurement Feedback Positive reinforcement Exchange of views. Agreement of action plans Personal Development Plans These are explicit statements of what you expect the employee to accomplish during the current review cycle. Performance plans provide the employee with direction or a road map for the year. The plans also define individual performance expectations as well as a broader view of where the business is going. Specific performance plans should be based on the primary responsibilities listed in the employees job description, although the employee may perform additional tasks. A minimum of one personal development goal should be set for the review period for each employee. This will help him/her focus on developing or learning new skills or changing behaviour to align better with business goals. Identify areas to change/develop Identify success criteria (i.e., what will the person be doing differently? How will that be measured?) Action Plan (what will be done, by when) Introducing performance management Where and how should performance management be introduced? Usually introduced on an organization-wide basis, starting at the top. The most common and best method of introduction is to set up a project team or working group for this purpose with management and staff representatives. Workshops and focus groups can be used to develop and discuss ideas. The aim is to get the maximum of buy-in to the new process. Who should be covered? All professional, administrative, technical and support staff. Everybody.

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When should reviews take place? The usual practice is to have an annual review with interim reviews. Some organizations require development reviews to be conducted on or about the anniversary of the day on which an employee joined the organization. This they believe spreads the load for the managers What sort of reviews should be held? Organizations frequently arrange separate reviews; One that is concerned only with agreeing objectives and personal development plans and, If they have performance pay, one that is solely concerned with making pay decisions What use should be made of pilot tests? Pilot tests of performance management are highly desirable-bearing in mind that the usual cycle lasts 12 months and it may therefore be difficult to pilot-test the whole process. Examples of aspects of performance management that can be tested are drawing up performance agreements, objectives setting and documents completion. What briefing arrangements should be made? It is advisable to issue an overall description of performance management to all employees, which sets out its objectives and methods of operation and the benefits it is expected to provide for the organization and its manager and employees. It is advisable to supplement written with oral briefings through a briefing group system, if there is one, or a special programme. Monitoring and evaluating performance management This is important especially after its the first year of operation. The best method is to ask those involved- managers, individuals and teams- how it has worked. It is also desirable to scrutinize a sample of completed forms to check on how well and thoroughly they have been completed.

Reward Management Reward management system An employee reward system consists of an organizations integrated policies, processes and practises for rewarding its employees in accordance with their contribution, skills and competences and their market worth. It is developed within the framework of the organizations rewards philosophy, strategies and policies and contains arrangements in the form of processes, practices, structures and procedures which provide and maintain appropriate types and levels of pay, benefits and other forms of reward. Aims of reward management-the organizations requirements The overall aim of the reward management is to support the attainment of the organizations strategic and short-term objectives by helping to ensure that it has the skilled, competent, committed and well-motivated workforce it needs. From the organizations point of view, the specific aims of reward management are: Play a significant part in the communication of the organizations value, performance, standard and expectations;

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Encourage behaviour that will contribute to the achievement of the organizations objectives and reflect the key performance drivers- two of basic questions to be answered when developing reward systems are: what sort of behaviour do we want? and how can reward processes promote that behaviour? Underpin organizational change programmes concerned with culture, processes and structure; Support the realization of the key values of the organization in such areas as quality, customer care, teamwork, innovation, flexibility and speed of response; Provide value for money-no reward initiative should be undertaken unless it has been established that it will add value, and no reward practice should be retained if it does not result in added value.

Rewards aims from the employees point of view From the employees point of view the reward system should: Treat them as stakeholders who have right to be involved in the development of the reward policies; Meet their expectations that they will be treated equitably, fairly and consistently in relation to work they do and their contribution; Be transparent- they should know what the reward policies of the organization are and how they are affected by them. Reward strategy Reward strategy defines the intentions of the organization on how its reward policies and process should be developed to meet business requirements. Reward strategy should be developed with the aim of ensuring that it will support initiatives in the fields of resourcing, development and overall goals for improving organizational performance. The strategy should also take into account the employee relations climate and the processes for negotiating pay with the trade unions. The key strategic issues on employee reward include: Competitive pay Achieving a more equitable and definable pay system Restructuring the pay system to take account of and underpin organizational changes; for example, introducing broad banding after a de-layering exercise; Using pay as a lever for performance improvement and culture change; Devolution of pay decisions to line managers; Involvement of employee in reward matters; Development of teamwork; Increasing levels of competence and enlarging the skill base[ support to multi-skilling] An effective reward strategy: Is based on corporate values and beliefs; Flows from the business strategy but also contributes to it; Is driven by business needs and fits the business strategy; Aligns organizational and individual competences; Is integrated with other personnel and developmental strategies- the content of the strategy will be contingent on those environments; Is linked to business performance, adopting a competitive strategy perspective; Is practical and implementable; Has been evolved in consultation with key stakeholders, taking full account of their views on what they believe is the best for them- unless such account is taken, reward initiative like performance pay can fail totally.

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Reward policy Reward policy provides guidelines for decision making and action. It will address such issues as: Competitive pay-the pay stance of the organization indicates the extent to which it wants it to be market led-that is the relationship it wishes to maintain between its pay and the market rates; Internal equity-the policy will indicate the degree to which internal equity is a prime consideration and the circumstances in which the need to be competitive may override the principle of internal equity; Contingent pay- the extent to which the firm believes that pay would vary according to performance, competence or skill; Variable pay-the extent to which it is believed that contingent pay should be at risk that is not consolidated; Individual or team reward-the need for rewards to concentrate on individual or team performance; Employee benefits- the types and levels of employee benefits to be provided and the extent to which employees can choose the benefits they want; The total reward mix- the mix of total rewards between the base pay, variable pay and indirect pay [employee benefits] and the use of non-financial rewards, bearing in mind that there is always choice within a portfolio of reward practices; Structure-the extent to which the organization wants a hierarchical and relatively formal [narrow-banded structure] or one which is flexible and broad-banded; Rewards priorities- the degree to which the organization wants to concentrate on piling the rewards higher for the relatively small number of key player, or recognizes the need to provide rewards which will support the steady improvement of the many, in other words who are the people likely to extent the most leverage on the overall business performance who should be rewarded accordingly?; Differentials- the levels of reward at the top of the organization compared with the average and minimum rewards levels; Flexibility-the amount of flexibility allowable in operating the reward system; the degree of consistency required in applying policies; the amount of control exercised from the centre; Uniformity- the extent to which pat structure and policies should apply to the whole organization or be flexed for different levels or categories of employees; Devolution the amount of authority that will be devolved to line managers to make pay decisions; Control-how much control should be exercised from the centre over the imp[lamentation of reward policies; Gender neutrality- the approach that will be adopted towards eliminating gender bias in reward processes and structures so as to ensure equal pay is provided for work of equal value; Partnership- the extent to which the organization believes in sharing success with employees; Involvement- how much employees will be involved in pay decisions that affect them, including the development of new approaches; Transparency-how much should be published about reward policies and practices. Achieving the aims of a reward system The aims of a reward system are best achieved if:

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Reward strategies are developed which are aligned to the business strategies for financial performance, market share, product/market development, quality, customer focus and organizational development [cultural and structural change]; Reward policies are formulated which enable philosophies and strategies to be implemented consistently but flexed in accordance with the changing needs of the business; Employees are valued according to their contribution, skill and competence; The reward system is transparent and employees are treated as stakeholders who are entitled to make representations on any area of reward that affects their interests and who will be involved in the development of reward processes; Employee relations strategies are designed to build mutual trust and to develop a partnership approach which provides for increases in prosperity to be shared with all employees; Reward policies emphasize the need for equity and fairness while recognizing that the ideal of internal equity may not be sustainable in full because of market pressures; The maximum amount of responsibility is developed to line managers to manage the reward system within their budgets and in accordance with broad policy guidelines; There is constant thrust to maximize the performance leverage of any money spent on pay; Rewards initiatives are only taken if their interaction with other business and personnel policies is assessed, and an integrated approach is adapted to the development of mutually supportive processes.

Objectives of Wage and Salary Administration (i) To establish a fair and equitable remuneration: There should be internal and external equity in remuneration paid to employees. Internal equity means similar pay for similar work. External equity implies pay for a job should be equal to pay for a similar job in other organisations Payments based on jobs requirements of employee performance and industry levels minimise favouritism and inequities in pay. (ii) To attract competent personnel by ensuring an adequate payment for all jobs. (iii) To retain the present employees: By paying at competitive levels, the company can retain its personnel. (iv) To improve the motivation and morale of employees this in turn leads to higher productivity. (v) To control costs: The company can systematically plan (payroll budgeting) and control labour costs. (vi) To establish job sequences and lines of promotion wherever applicable. (vii) To improve union management relations: Wages and salaries based on systematic analysis of jobs and prevailing pay levels are more acceptable to trade unions- and therefore simplifies collective bargaining and negotiations over pay. It reduces grievances arising out of wage inequities. (viii) To improve public image of the company: Wage and salary programming also seeks to project the image of a progressive employer and to comply with legal requirements relating to wages and salaries. Essentials of a Sound Wage and Salary Structure

1. Internal Equity: It implies a proper relationship between wages paid for different jobs
within the company. Pay differentials should be related directly to differentials in job

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2. External Competitiveness: Wages and salaries in the organisation should be in line with
wages and salaries for comparable jobs in other organisations. Otherwise the organisation may not be able to attract and retain competent personnel. A salary survey reveals what other organisations pay for specific jobs and the basis for payment. Once the going rate prevailing in the region is known, the company can decide a higher or lower level for its employees without disturbing internal equity.

requirements. Fair pay differentials between jobs can be established with the help of job evaluation. Job evaluation helps to determine relative worth of a job.

3. Built-in Incentive: Wage or salary plan should contain a built in incentive so as to motivate

4.

employees to perform better. Such an incentive can he developed through performance based payment. A sound performance appraisal system should be used to measure accurately and objectively the performance of individual employees. Link with Productivity: Some part of the total pay should be linked to productivity. Such linkage is necessary because workers expect a share in productivity gains. neutralised so as to protect the real wages of labour.

5. Maintain Real Wages: At least a part of the increase in the cost of living should be
merit. But annual increments should partly be linked to seniority or years of service. The logic for seniority based increments is that is a person accumulates experience his skills get sharpened and his efficiency ends to increase.

6. Increments: Compensation policy can be good motivator if pay increases are linked with

Principles of Wage and Salary Administration

1. 2. 3. 4. 5.

Differences in pay should he based on differences in job requirements. Wage and salary level should be in line with those prevailing in the job market. Follow the principle of equal pay for equal work. Recognise individual differences in ability and contributions The employees and the trade union should be informed about the procedure used to establish wage rates. standard of living. concerning wages.

6. The wages should be sufficient to ensure for the worker and his family reasonable

7. There should be a clearly established procedure for hearing and adjusting complaints 8. The wage and salary structure should be flexible. 9. Wages due to employees should be paid correctly and promptly. 10. A wages committee should review and revise wages from time to time
Factors Affecting Wages (i) Demand for and Supply of Labour: Wage or salary is the price for the services rendered by a worker. Forces of demand and supply of labour determine the going wagerate. (ii) Ability to Pay: An organizations ability to pay its employees is an important determinant of wage level. Ability to pay depends upon the profit earning capacity of the enterprise. (iii) Labour Unions: Well-organised trade unions exert pressure for higher wages and allowances. This pressure is exercised through collective bargaining, strikes and other methods.

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(iv)

(v)

(vi)

(vii)

(viii)

Cost of Living: Due to inflation, the real wages decline affecting the purchasing power of workers. Labour agreements generally have clause providing for automatic increase in pay as cost of living rises. Prevailing Wage Rates: While fixing wages, prevailing wages in the particular industry/region are taken into account. This is necessary to retain and attract qualified workers. Job Requirements: Basic wages depend largely on the difficulty level and physical and mental effort required in a particular job. The relative worth of a job can be estimated through job evaluation. Productivity: There is an increasing trend towards linking wage increases to gains in productivity or performance of workers. In some concerns annual increment in wages is based on merit. State Regulation: Wage policy and laws of the Government exercise a significant influence on wage levels. Government has enacted laws to protect the interests of the working class.

In addition some factors account for wage differentials between industries/regions and occupations. These specific factors are as follows: (a) Workers age and potential (b) Educational qualifications (c) Work experience (d) Promotion possibilities (e) Hazards involved in the job. (f) Stability of employment (g) Demand for the product (h) Industrys role in the economy. Methods of Wage Payment There are two methods of paying labour remuneration and other methods are combinations or modifications of these two. One is the time wage system and another is the piece wage system. Time Wage System Under this system, wages are paid on the basis of time spent on the job irrespective of the amount of work done. The unit of time may be a day, a week, a fortnight or a month. Time Wage system has the following advantages: (a) It is the simplest and the oldest method. It is easy to understand and workers can easily compute their own remuneration. (b) Earnings of workers are regular and fixed and they do not suffer from temporary loss of efficiency. The worker is assured of a fixed income and can, therefore, plan his expenses accordingly. (c) The plan is economical as no detailed records of output are required. The employer knows the cost of labour. (d) As there is no pressure to speed up production, the quality of work can be kept high. A worker can show his skill. (e) This method also avoids wasteful handling of materials and tools. In the absence of rough handling of machinery, repairs and maintenance expenditure is low. Workers can adjust the pace of work so that there is no injury to their health (f) Learners can concentrate on learning the best methods of work as their earnings are not dependent on the amount of work.

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(g)

(h)

Unions prefer time wage as it does not differentiate between efficient and non-efficient workers. A sense of equality and solidarity is created among them. Where work done is of an intangible nature, e.g., mechanics, design engineers, service, etc. it is difficult to measure output accurately and standards of output cannot be laid down. In mental and non-repetitive jobs, therefore, time wage is a more equitable and convenient method. In continuous or assembly line production, the pace of work is beyond the control of an individual worker. Time wage is therefore, a better method.

Piece Wage System Under this system, remuneration is based on the amount of output of a worker. One unit of rate of wage is paid per piece. It is called payment by results. Piece wage system has the following advantages: (i) There is a direct relation between effort and reward; workers who work hard and produce more get more wages. This provides an incentive to increase productivity. (ii) Ambitious and efficient workers are provided ample opportunity to utilise their talent and increase their earnings and thereby improve their standard of living and morale. (iii) The method is just and fair to all. Efficient workers get ample reward, while shirkers are penalised. It prevents soldiering on the job. (iv) Management can distinguish between efficient and inefficient workers for the purpose of promotion, etc. (v) Increase in productivity results in higher output and lower costs of production per unit; (vi) The cost of labour per unit of output can be easily calculated as the wage bill varies in direct proportion to the output. (vii) As workers themselves have a stake in maximisation of efficiency, cost of supervision is low (viii) Workers are more likely to cooperate with the schemes of rationalisation designed to improve efficiency of operations. (ix) If the benefits of lower costs are passed to consumers in the form of lower prices or better quality, the society as a whole stands to gain. Piece wage system is, however, subject to the following drawbacks: (i) It is very difficult to fix piece wage rates. Employers often cut the piece rate when they find workers are producing large quantities. (ii) The earnings of workers are not stable and they may suffer due to temporary delays or difficulties. They feel insecure and dissatisfied. (iii) In order to maximise their earnings, workers work with excessive speed. This may affect their health. It also increases the wastage of materials and wear and tear of machinery. The method is not suitable for work of artistic and delicate nature. (iv) Employees may not stress quality so that rigid quality control becomes necessary. (v) This system may create jealousy between efficient and inefficient workers. Trade unions do not like it as it affects their solidarity. (vi) Detailed records of production have to be kept so that the clerical work is increased. The method is not practicable when contribution of individual workers cannot be calculated, i.e., construction work. (vii) The method may lead to industrial disputes. Workers resent loss of output and earnings due to breakdown of machinery or power, non-availability of materials and such other factors beyond their control. Trade unions dislike piece wage system.

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Piece wage system is suitable under the following conditions: i. When work done by an individual worker can be measured accurately, e.g., production of standardised goods in the factory. ii. When the quantity of output depend s directly upon the skill and efforts of the worker iii. Where the flow of work is regular and interruptions are minimum, i.e., repetitive jobs. iv. Where quality and workmanship are not very important. v. In large scale production involving heavy overheads and broad supervision vi. When competitive conditions and cost control require that labour cost per unit is fixed in order. vii. When methods of production are standardised and the job is of a repetitive nature. Balance of debt method This method is a combination of time and piece wage systems. The worker is guaranteed a time rate with an alternative piece rate. If the wages calculated at piece rate exceed the time rate, the worker gets credit. On the other hand, if time wages exceed piece wages, the worker is paid time wage and the deficit is carried forward as debt to be recovered in future. This method provides a sense of security to employees. At the same time an employee is given the opportunity to increase his earnings beyond the guaranteed time wage. This method is appropriate in industries where the flow of work is minimum e.g. dock workers. But rates in this method have to be fixed on the most scientific basis. The Process of Wage Determination The wage determination process consists of the following steps. (i) Job Analysis. First of all the contents and requirements of a job are analysed. The data collected through job analysis is used to prepare job description and job specification. On the basis of these statements standards job performance are laid down. (ii) Job Evaluation. The relative value of every job is determined through job evaluation. The relative job value is then converted into money value so as to fix basic wage for the job. (iii) Wage Survey. Wage or salary surveys are conducted to find out wage/salary levels prevailing in the region or industry for similar jobs. Other organisational problems such as recruitment policy, fringe benefits, etc are also considered. (iv) Developing Wage Structure. On the basis of foregoing steps an equitable wage structure is prepared. While determining such a structure several points need to be considered. a. Legislation relating to wages b. Payments equal to, more or less than prevailing wage rates c. Number and width of pay grades d. jobs to be placed in each pay grade e. provision for merit increases f. differentials between pay plans g. Dealing with wages/salaries that are out of line with the structure. (v) Wage Administration Rules. Rules are required to determine the degree to which advance will be based on length of service rather than merit, the frequency with which pay increments will be awarded, the rules that will govern promotions from one pay grade to another, and the way control over wage/ salary costs can be maintained. Once the rules are framed these should be communicated to the employees. (vi) Employee Appraisal. In order to reward merit and performance, it is necessary to evaluate the performance of individual employees. Some differentials in pay are maintained on the basis of employees performance. This is necessary to provide

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incentive for hard work and superior performance is evaluated against predetermined standards of performance. The technique of wage curve is often used to develop rate ranges. A minimum and maximum rate for each grade (e.g. 10% below and above the page line) may be decided. The minimum and maximum lines are drawn on the curve. Some overlapping between rate ranges is allowed. The Executive Compensation The pay packet of executives consists of several components such as the following: (a) Straight Salary (b) Bonus based on companys profits or commission as a percentage of profit. (c) Stock options involving issue of the companys shares at a special price which is lower than market value. (d) Fringe benefits or perquisites such as free furnished housing, servants, chauffer driven car, free telephone, leave travel concession, newspapers and magazines, clubs membership, membership of professional association, discount coupons, sponsorship to executive development programmes expense account, entertainment allowance, etc. Executive compensation depends on several factors, some of which are as follows: i. Complexity of the Job. Managerial jobs are more complex requiring higher skills and greater responsibilities. These jobs call for creativity, innovation, decision making and other skills. Job complexity differs with the nature of industry, for instance in high tech industries like petrochemicals, pay scales tend to be relatively higher. ii. Capacity to Pay. Large fast growing and diversified companies generally pay higher remuneration to their executives than small and stagnant companies. iii. Education and Experience. Professionally trained and experienced managers are relatively short in supply. Therefore, higher remuneration is paid to them to young and inexperienced executives. iv. Performance. Performance and efficiency are more significant in managerial jobs. Executives who consistently outperform others are in great demand and companies are willing to reward them substantially. v. Economic Environment. Liberalisation and globalisation led to increase in executive pay. Multinationals pay scales tend to be high and most firms are stepping up managerial salaries to attract and retain executive talent. vi. Legislation. Statutory limits on the amount of remuneration payable to different categories of managerial personnel of public limited companies and their subsidiaries have been laid down. Incentive plans and profit sharing (supplementary compensation) Incentive wages refer to performance linked compensation aimed to improve motivation and productivity of employees. It implies monetary inducement offered to employees to perform beyond acceptance standards. It is related directly or indirectly to productivity and profitability of the enterprise. Wage incentives are extra financial motivation and above the time rated remuneration, for improvements in the present or targeted results. Advantages of incentive plans Wage incentives schemes are considered beneficial to both employers and employees in the following ways: (i) It helps to make improvements in work flow, work methods and man/ machine relationship

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(ii) (iii)

(iv) (v)

(i)

Wage incentive plans provide an opportunity for hardworking and ambiguous workers to earn more. Employees are encouraged to become innovative. They think and evolve more efficient ways of doing work. Moreover they bring to the notice of management wasteful practices and problems that retard productivity. The costs of supervision are reduced as workers themselves are motivated to work hard and improve performance so as to earn monetary rewards A spirit mutual cooperation and team work is created among workers. As their activities are interdependent, any obstruction on the part of a worker can affect output and rewards. Wage incentives are a sound technique of improving productivity. Workers are likely to work at their best when they are offered monetary rewards for good performance.

Limitations of Incentive plans Wage incentive schemes may cause the following ill effects. (i) In the absence of a ceiling on incentive earnings, some workers may overlook and thereby spoil their health. (ii) In order to maximize output, workers may sacrifice quality unless strict check or inspection is maintained. (iii) Once an incentive plan is introduced, management may face resistance while revising while revising standards and rates due to changes in technology methods, machinery and materials. (iv) Strict vigilance becomes necessary to ensure that workers do not disregard safety regulations. (v) Introduction and administration of incentive plans increase the cost and time of clerical work (vi) Whenever production flow is disrupted due to the fault of management, workers insist on compensation. (vii) Jealousy and conflicts among workers may arise when some workers earn more than others. Essentials of a Sound Incentive Plan

1. Proper Climate. In the absence of mutual trust and understanding between management and

2. Workers Participation. A wage incentive plan should be installed in consultation with

workers, a wage incentive system may be viewed as an attempt on the part of management to coerce for production. Management must develop sound industrial relations before introducing the plan. Sound policies regarding recruitment, selection, placement, training, transfer, promotion etc. are required. workers and their union. Involvement of employees will ensure that they fully understand the objectives and mechanism of the plan. established through scientific work study free from bias and favouritism.

3. Scientific Standards. The standards of performance for payment of incentives should be 4. Guaranteed Minimum Wage. A minimum wage should be guaranteed to every worker
irrespective of his performance. This is necessary to ensure a sense of security and confidence among workers. worker can calculate his own earnings. The linkage between pay and performance should be clear. Complicated plans and formulate create suspicion and distrust in the mind of workers.

5. Simplicity. The incentive plan should be easy to understand and simple to operate so that a

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6. Equitable. The plan should provide equal opportunity to all workers to earn incentive pay.

7. Economical. The plan should not be very costly in operation. Need for detailed records and
complicated calculations increase costs. The potential benefits of the scheme should exceed its costs.

Otherwise, it will cause dissatisfaction and jealousy among workers who have no opportunity to earn more. Some benefit of increased productivity should be given to indirect workers so as to avoid any disparity. The plans should be comprehensive so as to cover all the employees.

8. Flexibility. There should be scope for making changes in the scheme to rectify errors and to
take care of changes in technology, market demand, etc. However, frequent changes should be avoided as these create confusion and doubt among workers. as small as possible. Once the job is completed, incentive should be paid as soon as possible. motivate the worker.

9. Prompt Payment. The time gap between actual performance and incentive payment should be 10. Adequate incentive. Incentive payments under the scheme should be large enough to 11. Ceilings on Earnings. A ceiling on the maximum incentive earnings should be laid down to
prevent overexertion and to ensure quality. Otherwise the plan may become detrimental to the health and welfare of employees

12. Reasonable Standards. The standards should be of average difficulty, neither too low nor

13. Grievance Machinery. Suitable machinery for quick and fair re-dressal of grievances arising 14. Appraisal System. A clear system for inspecting, counting and recording output of each
worker should be developed. The results should be made known to the workers. from the implementation of the scheme should be installed.

too high. Working conditions and work methods should be standardised so that standards are just and fair to all. Management must avoid all bottlenecks in workflow.

15. Follow Up. The operation and effectiveness of the scheme should be reviewed periodically.
Any deficiency in the scheme or in its administration should be properly rectified. Types of Wage Incentive Plans Wage incentive plans may be classified into three broad categories as follows (a) Individual incentive plans- earnings are related directly to the Performance of the individual worker. (b) Group incentive plans-earnings of a group are related to the performance of the group as a whole. (c) Plant wide incentive plans performance of the factory as a whole is used as the basis for calculating earnings of workers. Employee Stock Option Plan Employee stock option plans are becoming popular especially for executives. Under these plans, specified types of employees are allotted the companys shares below the market price. The allotment is made either for the bonus payable to employees or otherwise. When the company achieves better results, the market price of its shares and the value of the employees shareholding rise. Profit Sharing Profit sharing is an arrangement by which employees receive in addition to wages, a share fixed in advance in the profits of the enterprise. It an agreement between an employer and his employees under which the employer pays besides wages, a predetermined share in the companys profits. Profit sharing refers to the system wherein an employer pays in addition to

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regular wages, special sums based upon the net profits of the enterprise as a hole. According to the International Labour Organisation (LL.O.), profit sharing is a method of industrial remuneration under which an employer undertakes to pay to his employees, a share in the net profits of the enterprise addition to their regular wages. The main objective of profit sharing is to create unity of interests and the spirit of cooperation. Features of Profit Sharing (a) The profit sharing agreement is voluntary and is based on joint consultation between the employer and the employees. (b) The agreement is made at the unit level or the industry level. (c) The proportion of profits to be distributed among the participants is computed on the basis of some agreed formula. (d) The employees participating in the scheme must have some minimum years of service or other qualifications. (e) The payment is in addition to normal wages and allowances. (f) The payment may be in the form of cash, companys shares or deposit in the employees provident fund- account (g) Workers share the profits only and do not contribute to the companys loss. (h) The payment is not based on individual merit or performance. Rather it is a reward for collective effort. Advantages of Profit Sharing

1. Profit sharing helps to improve productivity and to reduce costs because workers have a 2. As a group incentive scheme, profit sharing creates a sense of responsibility among 3. Profit sharing helps in building up a stable and contented work force. The chance of sharing
strike in the profitability of the enterprise. employees. Workers have a sense of belonging and cooperate voluntarily in productivity improvement programmes. profits attracts and retains qualified workers. Labour turnover and absenteeism can be reduced. for increasing the net profits. Profit sharing promotes industrial peace and reduces industrial disputes.

4. Industrial climate is improved due to mutual cooperation between employer and employees 5. Profit sharing helps to increase the earnings and standard of living of workers. 6. Profit sharing contributes to social justice through a more equitable distribution of profits

7. Profit sharing is a step towards industrial democracy because workers are treated as
partners in industry rather than as mere wage earners. Limitations of Profit Sharing (i) Profit sharing does not ensure a regular income to employees. The share in profits is payable only when the profits exceed a specified limit. (ii) All workers are given the same amount and no distinction is made between efficient and inefficient workers. (iii) A share in profits is payable at long intervals after the final accounts of the company are prepared. The reward is so remote that its motivational effect is lost. (iv) The determination of profits and its distribution may become a bone of contention between employer and employees. This will defeat the very purpose of profit sharing.

among the employer and the employees.

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(v)

(vi)

During periods of prosperity, workers may start considering the share in profits as a permanent gain. In years of depression, they may receive no much share and thereby get frustrated. It is time consuming and difficult to install and operate a successful profit sharing plan.

Labour Co-partnership Co-partnership is an extension of profit sharing. It is a system wherein employees are made partners of the enterprise and are allowed to participate in the management and control of the undertaking. Workers share in companys profits is paid in the form of shares by which they become entitled to participate in the decision making process. In this way, co-partner involves both profit sharing and control sharing. Advantages of Co-partnership

1. Co-partnership helps to improve the status of employees. They become partners or 2. Employees get an opportunity to participate in the management of the enterprise. 3. There is improvement in labour management relations because their interests -are 4. The employees become more loyal and committed to the enterprise because their future is
linked with the companys future. Limitations of Co-partnership interlinked. shareholders of the company.

1. Employees in general do not like the idea of co-partnership. They prefer to be wage earners 2. Trade unions oppose the attempt to make employees as shareholders. Workers prefer bonus 3. It is very risky for a worker to invest his savings in one company. 4. The share of workers in the capital is too small and therefore, workers
get very limited voting power. Employee benefits Employees are paid several benefits in addition to wage salaries, allowances and bonus. These benefits and services are called fringe benefits because these are offered by the employer as a fringe. The International Labour Organisation (I.L.O.) has described fringe benefits as follows: Wages are often augmented by special cash benefits, by the provision of medical and other services or by payments in kind that form part of the wage for expenditure on the goods and services. In addition, workers commonly receive such benefits as holidays with pay, low cost meals, low rent housing, etc. Such additions to the wage proper are sometimes referred to as fringe benefits. Benefits that have no relation to employment or wages should not be regarded as fringe benefits even though they may constitute a significant part of the workers total income. The main features of fringe benefits are as follows: (i) Fringe benefits are a supplement to regular wages or salaries. (ii) These benefits are paid to workers not for any specific job or performance but to stimulate their interest in the work. (iii) Fringe benefits involve a labour cost for the employer and are not meant directly to improve efficiency. For example, money spent on lighting in the factory is not a fringe benefit as it does not supplement the wages of employees. in cash rather than in the form of shares. rather than become co-owners.

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(iv)

(v) (vi)

Fringe benefits refer to items for which a direct monetary value to the employee can be ascertained e.g. paid holidays, pension, etc. On the other hand, services refer to the items such as athletics, legal aid, dispensary, etc. Fringe benefits add to the workers standard of living or welfare. These benefits may be statutory or voluntary. Provident Fund is a statutory benefit whereas housing for workers is a voluntary benefit.

Objectives of Fringe Benefits (i) To recruit and retain the best employees (ii) To protect employees against certain hazards e.g. life insurance, old age pension, etc. (iii) To improve motivation and morale of workers by satisfying some unsatisfied needs (iv) To improve work environment and industrial relations (v) To ensure health, safety and welfare of employees (vi) To develop a sense of belonging and loyalty among workers (vii) To meet statutory requirements (viii) To satisfy the demand of trade unions (ix) To improve the public image of the enterprise. Types of Fringe Benefits Some of the popular benefits paid to employees are given below:

1. 2. 3. 4. 5. 6.

Payment without work, e.g., sick leave, maternity leave, paid vacations, etc. Health and safety benefits. Retirement benefits e.g., provident fund, pension, gratuity, etc. Subsidised housing, transport, lunch, free dress, etc. medical, legal, child care, counselling, educational, recreational facilities consumer cooperative stores, interest free loans, holiday, homes etc

Job evaluation Job evaluation measures the worth of a job in terms of money. Its object is to ensure that a man is paid according to the job done by him. For example, when we say that the principal of a college deserves to be paid more than a lecturer, or that a pilot ought to receive a fatter pay pack than a bus driver, the basis of our statement is the broad comparison we make in out minds between the requirements and hazards involved in each job. Only on evaluation, this is done on a more scientific and rational basis. Job evaluation seeks to get the maximum and reward requirements of each job. Then, on the basis of relative requirements, where the rate for each job is fixed. Methods of job evaluation 1. Ranking System: Under it, the jobs are ranked in the order of levels of responsibilities and duties or their importance. Wage rates for each job is then determined accordingly. Though very simple, this method can be reliable only where there is wide similarity between the jobs evaluated. Either the jobs should belong to the same class (e.g. machine operators and their assistants) or to the same department (e.g. senior or junior clerks)

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2. Classification method: In the case of this method, first of all, grades are defined for requirements that are common to various jobs. The, on the basis of comparison between requirements as regards each, jobs are placed in appropriate grades. In Government departments, For example, HR are classified into class one, class two, class three and class four. Each class contains a wide variety of jobs and yet on the basis of requirements in the case of each job, there is hardly any difference between them. 3. Points system: Under this method, requirements relevant to each job are properly analyzed and qualified. For the sake of precision, requirements as regards a job are subdivided into degrees. Then for each degree, certain points are assigned. the total number of points given to a job, determine its relative position in the job structure, the points being assigned keeping in mind the nature of the job. For factory and office jobs, for example there are different systems of point assignment. The requirements as regards nay job may include items such as education, training, experience, physical characteristics, duties, responsibilities and so on. Each of these items may be further sub-divided for assignment of points. Education, for example, may be sub-divided into research degree, masters degree, graduation, high school and so on. Thus, if a job requires a masters degree for its holder, it may be given 40 points, for a bachelors degree it may be given 35 points, and so on. The same method may be repeated in regard to each of the requirements, and the total of the points allocated to the job may then be compared with those given to other jobs to determine its position in the structure. 4. Factor comparison: It is based on the point system. The difference is that here first certain key jobs are chosen and they are allocated points for each of the factors present in them. Based on this, wage rates for each of the key jobs are fixed. The point allocated and the wage rates determined for the key jobs serve as the basis of referenced for gradation of the other jobs. Advantages of job evaluation 1. Objectivity: It is based on job analysis and hence the reward for a job is directly related to the job content. There is little scope for applying subjective standards in assessing the worth of a job. 2. Reliability: It provides well-defined and systematic methods of measurement. For this reason, it is unquestioningly accepted by both workers and management. Disadvanatges 1. Uniformity in pay Because job evaluation seeks to determine the worth of a job rather than the person occupying it, it brings about uniformity in wages of all employees belonging to a particular category. For these reason workers, particularly those who are above average may not view it favourably.

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2. Lack of complete accuracy It is difficult to determine with complete accuracy the relative worth of the different factors involved in any job, particularly so if the factors are of a highly technical nature. 3. Unrealistic Job evaluation is based on the assumption that wage rates can be related to the worth of a given job. It conveniently ignores the fact that conditions in the labour market have a decisive influence it the determination of wages rates. 4. Complicated The methods followed for carrying out job evaluation may not be sufficiently understand by workers. In the event, they may get suspicious about the employers motives. TRAINING Every organization needs to have trained and experienced people to perform the activities that have to be done. If the current or potential job occupant can meet this requirement, training is not important. But when this is not the case, it is necessary to raise the skill levels and increase the versatility and adaptability of employees.

Three terms: Training, Development and Education Training-a process of learning a sequence of programmed behaviour. It is application of knowledge. It gives people an awareness of the rules, and procedures to guide their behaviour. It attempts to improve their performance on the current job or prepare them for an intended job.

Development-is a related process. It covers not only those activities which improve job performance but also those which bring about growth of the personality; help individuals in the progress towards maturity and actualization of their potential capacities so that they become not only good employees but better men and women. In organizational terms, it is intended to equip persons to earn promotion and hold greater responsibility. Training a person for a bigger and higher job is development. And this may well include not only imparting specific skills and knowledge but also including personality and mental attitudes. In this sense, development is not much different from education. Education-is the understanding and interpretation of knowledge. It does not provide definitive answers, but rather it develops a logical and rational mind that can determine relationships among the pertinent variables and thereby understand phenomena. Education must impart qualities of mind and character, and understanding of basic principles and develop the capabilities of analysis, synthesis and objectivity. Usually, education is outside the scope or an organizations functions. It involves a range of skills and expertise which can be provided only by education institutions. An organization can and does make use of such institutions in order to support and supplement its internal training and development efforts.

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Distinction between training and development Training is short-term process utilizing a systematic and organized procedure by which nonmanagerial HR learns technical knowledge and skills for a definite purpose. Development is a long-term educational process utilizing a systematic and organized procedure by which managerial HR learns conceptual and theoretical knowledge for general purpose. Training refers only to instruction in technical and mechanical operations, while development refers to philosophical and theoretical educational concepts. Training is designed for non-managers, while development involves managerial HR. In the words of Campbell, training courses are typically designed for a short-term stated set purpose, such as the operation of some piece(s) of machinery, while development involves a broader education for long term purposes. Training and development differ in four ways. (a) What is learned, (b) Who is learning; (c) Why such learning takes place; and (d) When learning occurs The difference may be stated thus: Learning Dimensions Who? What? Why? When? Training Non Managerial HR Technical and Operations Specific Purpose Short-term Job Mechanical Related Development Managerial HR Theoretical Ideas Conceptual

General Knowledge Long-term

Basic purpose of training To increase productivity To improve quality To help a company fulfil its HR needs To improve organizational climate To improve health and safety Obsolescence prevention Personal Growth It may be observed that the need for training arises from more than one reason. a) An increased use of technology in production b) Labour turnover arising from normal separations due to death or physical incapability, for accidents, disease, super-annulations, voluntary retirement, promotion within the organization and charge on occupation or job. c) Need for additional hands to cope with an increased production of goods and services d) Employment of inexperienced, new or badly labour requires detailed instruction for an effective performance of a job.

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e) Old employees need refresher training to enable them to keep abreast of the changing methods, techniques and use of sophisticated tools and equipment. f) Need for enabling employees to do work in a more effective way, to reduce learning time, reduce supervision time, reduce waste and spoilage of raw material and produce quality goods and develop their potential. g) Need for reducing grievances and minimizing accident rates h) Need for maintaining the validity and minimizing accident rates and raising the morale of its employees Training process 1. Training Needs Analysis/Assessment 2. Training Objective/Purpose 3. Training Methods 4. Training Evaluation 5. Evaluation of the Result/Feedback Training Needs Analysis There are three types of training need analysis: Organizational need analysis Job need analysis Person needs analysis. Organizational Needs Analysis Attaining the objectives of the business should be the ultimate concern of any training and development effort. Therefore, conducting organizational needs analysis should be the first step in effective needs assessment. This includes: Define Organizations Short Term Goals/Objectives Define Organizations Long Term Goals/Objectives Human Resource Analysis Efficiency Indexes Assessment Assessment of the organizational climate The organizational needs analysis should translate the organization's objectives into an accurate estimate of the demand for human resources. Efficiency indexes including cost of labour, quantity of output (productivity), quality of output, waste, and equipment use and repairs can provide useful information. The organization can determine standards for these indexes and then analyze them to evaluate the general effectiveness of training programs. Job Needs Analysis -The specific content of present or anticipated jobs is examined through job analysis. For existing jobs, information on the tasks to be performed (contained in job descriptions), the skills necessary to perform those tasks (drawn from job qualifications), and the minimum acceptable standards (obtained from performance appraisals) are gathered. This information can then be used to ensure that training programs are job specific and useful. The process of collecting information for use in developing training programs is often referred to as job needs analysis. In this situation, the analysis method used should include questions specifically designed to assess the competencies needed to perform the job. Person Needs Analysis-Person needs analysis can be either broad or narrow in scope. The broader approach compares actual performance with the minimum acceptable standards of performance. The narrower approach compares an evaluation of employee proficiency on each

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required skill dimension with the proficiency level required for each skill. The first method is based on the actual, current job performance of an employee; therefore, it can be used to determine training needs for the current job. The second method, on the other hand, can be used to identify development needs for future jobs. Whether the focus is on performance of the job as a whole or on particular aspects of the job, several approaches can be used to identify the training needs of individuals: Output Measures-Performance data (e.g., productivity, accidents, customer complaints), as well as performance appraisal ratings, can provide evidence of performance deficiencies. Person needs analysis can also consist of work sample and job knowledge tests that measure performance capability and knowledge. Self-Assessed Training Needs The self-assessment of training needs is growing in popularity. Here top managers require the employee and his or her supervisor to identify what the business needs are for the department and the business, as well as the skill needs and deficiencies of the individual. Self assessment is premised on the assumption that employees, more than anyone else, are aware of their weaknesses and performance deficiencies. Therefore, they're in the best position to identify their own training needs. Attitude Surveys Attitude surveys completed by a supervisor's subordinates or by customers or by both also can provide information entraining needs. For example, when one supervisor receives low scores regarding her or his fairness in treating subordinates, compared with other supervisors in the organization, the supervisor may need training in that area. Similarly, if the customers of a particular unit seem to be particularly dissatisfied compared with other customers, training may be needed in that unit. Thus, customer surveys can serve a dual role: providing information to management about service pinpointing employee deficiencies. Types of Training On-site training On-the-Job Training Apprentice Training Coaching/mentoring Job Rotation

Off- Site Training Lectures/Seminars Multimedia Presentations Programmed/Computer Assisted instruction Simulation Role Playing Behaviour modelling

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Selection & Development of Training Methods Factors to Consider 1. Purpose (Based on needs Analysis) Common Objectives include: Information Acquisition Skill Development (e.g. interpersonal, problem solving, decision making) 2. Principles of Learning I. Motivation to learn Relevance & Meaningfulness Adequate preparation & Self-efficacy Choice / Participation (e.g. time, content) Clear Goals Reinforcement ii. Feedback iii. Opportunity to practice 3. Transfer of Training Facilitated by: Similarity of setting and task Over learning Teaching of general principles Reinforcement of transfer 4. Individual Differences Should accommodate differences in: Readiness to learn Motivation to learn Preferred learning style 5. Trainer Qualifications Trainers should: Have knowledge of the organization Be knowledgeable about content Be motivated to train Understand principles of learning 6. Cost Methods of Training Common individual training methods include: Self-discovery Trainees discover the competencies on their own using such techniques as guided exercises, books, and research. Pros: Trainees are able to choose the learning style that works the best for them. They are able to move at their own pace and have a great deal of ownership over their learning. Cons: Trainees can easily get side-tracked and may move slower than the trainer desires. It is also more difficult to measure the employees progress Movies/videos/computer based training

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Content for the training experience comes primarily from a videotape or computer-based program. Pros: It is easy to provide this training and the trainer can follow-up with questions and discussion. It is also easy to assure that the same information is presented to each trainee. Cons: It is expensive to develop. Most trainers choosing this option must purchase the training from an outside vendor, making the content less specific to their needs. On-the-job training This is the most common method of training. The trainee is placed on the job and the manager or mentor shows the trainee how to do the job. To be successful, the training should be done according to a structured program that uses task lists, job breakdowns, and performance standards as a lesson plan. Pros: The training can be made extremely specific to the employee's needs. It is highly practical and reality based. It also helps the employee establish important relationships with his or her supervisor or mentor. Cons: Training is not standardized for employees. There is often a tendency to have a person learn by doing the job, providing no real training. Mentoring A mentor can tutor others in their learning. Mentors help employees solve problems both through training them in skills and through modelling effective attitudes and behaviours. This system is sometimes known as a buddy system. Pros: It can take place before, during, or after a shift. It gives the trainee individual attention and immediate feedback. It also helps the trainee get information regarding the business culture and organizational structure Cons: Training can be interrupted if the mentor moves on. If a properly trained mentor is not chosen, the trainee can pick up bad habits. When choosing from among these methods, the trainer must decide which one best suits the trainees, the environment, and the investments available. Many trainers will choose to combine methods or vary them. Others will select a single method that works best for them and never vary. With so many options, a trainer is limited only by his or her creativity. Training Feedback/Evaluation of Training Criteria (based on Kirkpatrick, 1976) Reaction-Did employees like the training, think it was useful, feel more confident in their abilities? Learning- Did employees learn anything new? Behavioural-Do trainees behave any differently back on the job? Results-Did the training have the desired outcome? Training scorecard When implementing a training scorecard it is important to track, collect, compile, analyze, and report six different types of training data collected over different time periods. These types of data are indicators, reaction, learning, application, business impact, and return-oninvestment. It includes:

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Indicators This is the traditional approach to reporting training data. Some examples of indicators are number of employees trained, total training hours, training hours per employee, training investment as a percentage of payroll, cost per participant. Although these measures are necessary, they do not reflect the results of the training program. There are many types of indicators, but it is most important to include in the scorecard the measures of interest to the organization's top managers. Level 1: Reaction At this level, participants reactions to and satisfaction with the training program are measured. Some recommended data to capture on Level 1 instruments are: Relevance of training to job Recommendation of training to others Importance of information received Intention to use skills/knowledge acquired Those four items have predictive validity for projecting actual applications and should be compared from one program to another. Level 2: Learning Learning can be measured informally with self-assessments, team assessments, or facilitator assessments, or formally with objective tests, performance testing, or simulations. Learning self-assessments may ask participants to rate the following items: Understanding of the skills/knowledge acquired Ability to use the skills/knowledge acquired Confidence in the use of skills/knowledge acquired Level 3: Behaviour application This level measures changes in on-the-job behaviour while the training is applied or implemented. This information often is collected through a follow-up survey or questionnaire. Key questions asked concern: The importance of the skills/knowledge hack on the job The frequency of use of the new skills/knowledge The effectiveness of the skills/knowledge when applied on the job

Level 4: Business impact At this level the actual business results of the training program are identified. A paper-based or automated follow-up questionnaire can be used to gather this data. Depending on the training programs' performance and business objectives, data may be gathered on the following: Productivity level Quality cost control Sales revenue Customer satisfaction Level 5: Return on investment

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At this level the monetary benefits of the program are compared with the cost of the program. The costs of the program must be fully loaded. The methods used to convert data should be reported. The ROI calculation for a training program is identical to the ROI ratio for any other business investment: ROI (%) = ((benefits - costs]/costs) x 100 A benefit-cost ratio may also be calculated by dividing costs into benefits. Intangible benefits Intangible benefits are measures that are intentionally not converted to monetary values because the conversion to monetary data would be too subjective. It is important to capture and report intangible benefits of the training program, such as: increased job satisfaction reduced conflicts reduced stress improved teamwork Seminar Seminars often combine several group methods: lectures, discussions, conferences, demonstrations. Pros: Group members are involved in the training. The trainer can use many group methods as part of the seminar activity. Cons: Planning is time-consuming. The trainer must have skill in conducting a seminar. More time is needed to conduct a seminar than is needed for many other methods.

Executive development All those persons who have authority over others are responsible for their activities and for the operation of an enterprise and the way it is managed. In a business organization, the coordination and direction of the efforts of others is a major part of the management job. The manager has to deal not only with the staff but also with others outside his own group, and has a decided influence on the organization. In any organization each supervisor, foreman, executive is a manager in the area of his responsibility. Even the corporate chairman, departmental head, HR administrator, planner or coordinator is, in fact, a manager, although many of them do not supervise others but are on the Board of Management. The titles of managers are not standardized, but in a broad sense, all supervisors foreman executives and administrators are managers. These terms are used interchangeably. Managerial functions consist of three key tasks viz. 1. The maintenance and operation of the organizational communication with a view to translating the broad organizational goals into detailed working purposes and providing feedback on progress on the problems of achievement.

2. The maintenance of the viability of an organization. 3. The maintenance of faith in the superiority and desirability of achieving the organizational aims For the discharge of these functions, it is essential and appropriate that men/women with certain qualities are appointed. These qualities may be broadly identified as:

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Domination by organizational personality, i.e. summer or personal predilections and desires while executing organizational action. Adherence to corporate morality and code of conduct in official actions under conditions of powerful contrary images i.e. a high sense of responsibility. Possession of general abilities such as persistence and determination, flexibility of mind and in leadership. Specialized knowledge and ability which are pertinent to a particular vocation or discipline.

Characteristics of managers The management development process would be better understood if the main characteristics of managers are noted. The successful manager in a large firm has the following characteristics. He moves rapidly form job to job. It now take 20 years on the average to president, during which time there are seven geographical moves. 11 positional ones, and countless numbers of special and project assignments. More than before, the successful managers career may include moving from one company to another. He is flexible, realistic and sensitive to the complexities of his work environment. Compared with less successful managers, he is both challenged by, and comfortable in, situations filled with high risks and ambiguity. He earns his spurs by handling critical assignments, which are more important than routine work done well. Very often, he has a sponsor, someone from the higher management who is impressed by his abilities, finds him useful to have around, and who looks after his interests. It helps if the sponsor is himself moving up rapidly. He engages in anticipatory socialization at each stage be copies the values of those who are a step above him. He is not necessarily an organization conformist. High level managers tend to be more, inner directed and less other directed and less concerned with pleasing others than are those at lower levels. Executive or Management development activities are used inter-changeably. They are that part of the enterprise function which aims at full development of managers at whatever level. Executive development is a systematic process of training and growth by which managerial human resources gain and apply skill, knowledge, attitude and insights to manage the work in their organizations effectively and efficiently. In other words, Management development by which managerial HR learn conceptual and theoretical knowledge for general purposes. These purposes concern (i) productivity, (ii) quality, (iii) Human resources planning, (iv) morale, (v) indirect compensation, (vi) health and safety, (vii) obsolescence prevention and (viii) HR growth.

Purpose and objective of management development Executive development is an attempt at improving an individuals managerial effectiveness through a planned and deliberate process of learning. For an individual this means a change through a process of planned learning. This should be the common and significant aim of development attempts from the point of view of the trainer and the trainee in an organizational setting. The change in the individual must take place in those crucial areas which can be considered as output variables. a) Knowledge change

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Attitude change Behaviour change Performance change; and End-operational results (the last two changes being the result of the first three changes) The success of development effort, to be marked as effective depends upon the following inputs: Trainees personal characteristics such as his intelligence and motivation to learn; His actual learning efforts. These two variables are influenced by (i) Formal Organization, (ii) Leadership Climate, and (iii) Cultural factors, such as attitudes and norms of the small group of which an individual is a member. The organizational aims of management development are to secure the following valuable endresults 1. Improvement in technical performance 2. Improvement in supervision and leadership at each level 3. Improvement in inter-departments co-operation 4. Highlighting an individuals weakness. 5. Attracting good men, 6. Facilitating sound Promotion from within Policies and practices 7. Ensuring that the qualifications of key HR become better known 8. Creating reserves in management ranks; 9. Making an organization more flexible by an increased versatility of its members; 10. Improving organizational structure; 11. Stimulating junior executives to do better work 12. Keeping the company abreast of technical and economic conditions and 13. Broadening key men in the middle cadre. In sum, management development aims at securing management improvement in the short-run. The objectives of management development are: 1. to develop manages to perform better on their present assignments, 2. to prepare them for higher assignments; 3. to provide a steady source of competent persons at all levels to meet organizational needs; 4. to help them grow fast; 5. to help them grow fast; 6. to prevent obsolescence of managers; 7. to replace elderly executives, who have risen from the ranks, by highly competent and academically qualified professional and 8. to create conditions and a climate which contribute to the growth process. Executive development process According to Dooher and Marquis, the stages involved in a management development programme are: 1. Organizational planning to determine the companys present and future needs, 2. programme targeting to focus the companys efforts on the most pertinent areas; 3. Ascertaining key positions requirements to stress the basic requirement of particular managerial positions.

b) c) d) e)

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4. Managerial appraisal, to evaluate periodically the abilities and performance of individuals with a view to identifying managers showing a promise of further development and meeting their training needs; 5. Replacement of skills inventories to indicate persons qualified for managerial replacements; 6. Planning individual development programmes, to provide specific development programmes for promising managers, and 7. Appraising existing programmes to ascertain areas of improvement to be incorporated in future programmes. Since the object of management development is to influence and modify the behaviour of the mangers in operation, it is necessary that in framing a management development programme for specified managerial group, the following points should be involved. (i) (ii) Identify the pattern of behaviour at which the programme is aimed at which it seeks to influence and modify Identify the causes of the impulse (internal and external) vertical/horizontal, up and down the enterprise which lead to or give rise to the pattern of behaviour. Identify the nature of the exposure the impulses that must be introduced into the system through the development programme which will touch the springs of motives and responses modifying the behaviour in the desired direction. The programme must take care to throw impulses into the system in a manner that generates the urge to behaviour changes from within the trainee manager by the process of evolving rather than an imposition from outside components or ingredients of management development programme.

(iii)

(iv)

The essential components or steps of a comprehensive management development programme are discussed below under the following heads: (i) (ii) (iii) (iv) (v) (vi) (vii) Looking at organizations objectives; Ascertaining development needs; Appraisal of present management talents; Preparation of manpower inventory; Planning of individual development programming; Establishment of training and development programmes; Programme evaluation

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Diagrammatically the model for developing executives may be shown as in the which follows: Setting Development Objectives Establishing Parameters to Development Determining Development Needs including Who needs Developing? What needs Developing? Conducting Development Programmes

Appraising and Evaluating Effectiveness of Development activities

Management Development / Managerial Training In addition to training for operative staff, an organization has to take steps for training managers. Such training programmes are called 'managerial development / executive development programmes. Managerial talent is the most important asset that a company can possess. Management development ensures that as and when the demand for managers arises, suitably qualified persons are ready to fill the vacancies. Managerial development consists of all means by which executives learn to improve their performance. It is designed to improve the effectiveness of mangers in their present jobs and to prepare them for higher jobs in future. Managerial development aims at helping the mangers to realise their full potential. Management development is a way to improving the culture of the Organization so that it could be geared to excellence. "People move organizations not machines." According to P. N. Singh, "Management development is an activity designed to improve the performance of existing managers, provide a supply of managers to meet the need of organizations in future and extend the understanding of the management activity by drawing from the following three resource areas :- (a) Knowledge, (b) Experience, and (c) Trainee himself." Need / Importance of Management Development According to Edwin Flippo, "No organization has a choice of whether to develop employees or not, the only choice is that of method." The need for management development is well accepted in the present business, which is fast changing due to technological and social developments. 1. Shortage of trained managers: Talented and matured managers are not easily available. It is not possible to appoint managers from outside for the key managerial posts. The better alternative is to select talented persons as trainee managers and develop their qualities through special training and wider exposures. In this way, the organization can create its own team of talented managers to lead the whole Organization.

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2. Complexity of management jobs: The jobs of managers are now complicated and more challenging. They need varied skills for dealing with the complex organizational problems. For this, talented persons should be selected and proper training should be given to them. 3. Technological and social changes: Rapid technological and social changes are taking place in the business world. In India, such developments are fast taking place along with the liberalization and globalisation of business. Managers should be given proper training and exposure in computer applications and information technology. 4. Management obsolescence: Executive obsolescence occurs due to mental deterioration and aging process. This can be corrected by offering self-development opportunities to managers. In fact, self-development must continue throughout the career of an executive. 5. Complexity of business management: Business management is becoming very complicated due to government legislations, market competition, social pressures and consciousness among consumers. Well-trained and matured managers are therefore required. Such managers are not available easily. The best way is to train existing managers through management development programmes. Methods of Management Development / Managerial Development For management development, several methods / techniques are used. These methods can be divided into two broad categories, namely, 1. Internal or On the job methods, and 2. External or off the job methods. Internal Training Methods / On the Job Methods 1. Coaching: Coaching on the job coaching is a method by which a superior teaches job knowledge and skills to a subordinate manager. He briefs the trainee executive about what is expected of him and how it can be done. The superior also checks the performance of his subordinate and guides him to improve his shortfalls and deficiencies. The superior acts as a friend and guide of his subordinate. Coaching method favours learning by doing. Its effectiveness depends on the capacity and the interest taken by the superior and also by the subordinate. The superior should adopt a positive approach in the coaching process and help the subordinate in achieving selfdevelopment. Coaching has certain limitations. For example, a trainee manager cannot develop much beyond the limits of his own superior's abilities. Similarly, the success of coaching method depends on the interest and initiative taken by the trainee manager. 2. Counselling: Under this method, the subordinate wanting advice approaches his superior. Counselling is provided in matters relating to the job. However, on request from the subordinate, counselling may also be offered on matters not directly related to the job. There is two-way dialogue between the subordinate and the superior to find solution to his problem. Counselling provides emotional stability to trainee subordinate. 3. Understudy assignment: An understudy is a trainee-manager who is to assume the full duties and responsibilities of the position currently held by his superior, when the later leaves his post due to retirement, transfer or promotion. Here, a departmental manager (head) selects one of his suitable subordinates to become his understudy. As an alternative, the personnel department may make the selection of understudy. The departmental manager will guide him (i.e. understudy) to learn his job and deal with

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the problems that confront the manager daily. The understudy will learn the job of his superior through observation and participation in the decision making. He may be given specific problems to study and to make recommendations for solving them. The understudy will be given wider exposure and an opportunity to develop capacity to deal with difficult problems and complex situations. 4. Job Rotation: It involves transfer of executives from one job to another. The aim of job rotation is to broaden the knowledge, skills and outlook of executives. This method can be used in the case of management trainee and also in the case of an existing manager due for promotion. Job rotation method is also useful for providing variety of job experience to managers. Advantages of Job Rotation 1. It brings all departments on the same footing as executives move from one department to other. 2. Job rotation facilitates inter-departmental cooperation. New procedures are introduced in departments along with the rotation of managers. 3. The benefit of wider exposure is available to trainee manager. 4. There is absence of monotony in the training process due to job rotation. Limitations of Job Rotation are:1. The work of departments is affected due to frequent changes of executives for training purpose. 2. The trainee manager finds it difficult to adjust himself to his new bosses. 3. Even the executives are not in a position to have specialized knowledge and training in one particular branch of work. 4. Frequent changes of position of executives may also affect their morale. 5. Delegation: Delegation is one more internal method of management development. The performance of subordinates may not improve unless additional responsibility and authority are delegated to them. Making the subordinates to achieve a particular target through delegation is one way by which subordinates will learn to grow and develop independently. They will develop leadership qualities and decision-making skills, which are necessary for a good manager. 6. Appointment as 'Assistant to: A junior executive may be appointed as 'Assistant to' senior executive for the purpose of training and practical experience. Here, the junior executive is given exposure to the job of senior executive and he teams new techniques while providing assistance to his boss. This broadens his viewpoint and makes him ready for future promotions. The superior executive also gets the benefit as he can delegate some of his responsibilities to the assistant and also acts as guide of his assistant. 7. Membership of Committees: Inter-departmental committees are normally created for bringing co-ordination in the activities of different departments. Managers from different departments are taken on such committees. Junior managers are also given membership of such committees so as to give them a broader exposure to the viewpoints of other departmental heads. Ad hoc committee of executives is also constituted and is assigned a specific problem for study. Such committee assignments offer opportunity of training to junior executives, as they have to study the problem in depth and make recommendations. 8. Project Assignment: In the project assignment method, a trainee manager is given a project that is closely related to the work of his department. The project relates to

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specific problem faced by the department. Here, the executive has to study the project on his own and make recommendations for the consideration of the departmental head. Such assignment provides valuable experience to the trainee and develops problem-solving attitude, which is one essential requirement of an executive. 9. Promotions and Transfers: Promotions and transfers are two more internal methods of management development. Promotion gives an opportunity to a manager to acquire new skills required for the job at the higher level. It motivates him for selfimprovement. Transfer also facilitates the broadening of viewpoint required for higher positions. It gives an opportunity to work at different positions and develop. (B) External Methods of Management Development / off The job Methods 1. Universities and Colleges: The universities and colleges, now, provide facilities of management education. Here, education is given through lectures, discussions, home assignments, tests and examinations. Colleges affiliated to the Universities also conduct DBM, MBA and other management development programmes for the executives from business sector. Candidates working at managerial levels in companies are normally selected for such training programmes. 2. Management Institutions: Along with the universities and colleges, there are management training institutions such as KIM and so on. These institutes run special training courses for graduates interested in management education and also orientation programmes for existing managers from public and private sector enterprises. Companies can depute their managers for short orientation courses and update the knowledge and information of their managers in specific areas. Even seminars, workshops and conferences are arranged for the training of managers by various associations such as chambers of commerce and export promotion councils. 3. Role-playing: Role-playing has been defined as "A method of human interaction, which involves realistic behaviour in the imaginary situations." It is particularly useful for learning human relations and leadership training. Its objective is to raise the ability of trainee manager while dealing with others. In the role playing, a conflict situation is artificially created and two or more trainees are assigned different roles to play. For example, a male employee may assume the role of a female supervisor and the female supervisor may assume the role of a male employee. Then, both may be given a typical work situation and asked to respond as they expect others to do. Such role playing results in better understanding among individuals. It helps to promote interpersonal relations and attitude change. 4. Case Study: Case study method was first developed by Christopher Langdell at Harvard Law School. A case is a written account giving certain details of the situation is relation to a specific matter. Such case study may be related to any aspect of management such as production, marketing, personnel, finance and so on. The case presented is always incomplete. This means the solution to the problem is not provided. The participants are supposed to identify the best available solution. A small group of managers are asked to study the case in the fight of theoretical study already completed and is followed by open discussion in the presence of capable instructor, who can guide intelligent discussion and analysis. There is nothing like one correct answer to the case study. Case study method has certain advantages like, (a) in-depth thinking about the matter by managers, (b) more perception in situation and greater respect for the opinions of others.

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5. Conferences and Seminars: Deputing officers for conferences and seminars is a method available for management development. Various matters are discussed systematically in such conferences and seminars. This provides new information and knowledge to the managers. The participants in such conferences and seminars are limited. As a result, more persons get an opportunity to participate in such conferences for self-development. Conferences may be directed or guided or may be for consultation and finally for problem solving. 6. Simulation: Here, an executive or trainee is given practical training by creating situation / environment, which closely represents the real life situation at the work place. For example, activities of an organization may be simulated and the trainee may be asked to make a decision in support of those activities. The results of those decisions are reported back to the trainee with an explanation. The report illustrates what would have happened if that decision was taken. The trainee teams from this feedback and improves his subsequent simulation. 7. Management / Business Games: A variety of computer and non-computer management / business games have been devised for training of managers. This training method is used in management development. It is a type of classroom method of training. The game is designed to represent real life situation. Employees for managerial positions are put in an exercise of actual decision-making. A problem is provided to them along with all the necessary information and constraints. The employee is asked to make a decision. The quality of this decision is judged by how well the applicant has processed the information provided to him. The processing of information is supposed to be guided by knowledge of the goals and policies of the organization. Even if mistake is made in the game, the trainee can learn a lot out of his mistake. This avoids possible mistakes while taking decisions for his company. This method develops capacity to take rational decisions by managers. 8. TV and Video Instructions: TV and Video instructions are used for training and management development programmes. At present, programmes on management problems are arranged on TV network regularly. Videotapes are also available on management training. Books and periodicals are published regularly on management. Audio-visual aids (film strips, Video, tape recorders, TV, overhead projectors, etc.) are now used for training of managers.

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