Development of Human Capacity

HRD & Development of Human Capacity

Development of Human Capacity

HRD is concerned with development of human
capacity. Human capacity or human potential
includes-aptitude, knowledge, values, skills
of HR, responsiveness, loyalty and
commitment, transparency, leadership
development.
 Aptitude
Aptitude
- An individual’s ability to learn it quickly and to do it well.
Aptitude refers to the potential for learning or acquiring a specific skill.
Aptitude differs from achievement which refers to previous learning. It
also differs from intelligence which refers to a person’s general potential
to find solutions to problems, think ideally, adapt to changing situation
and gain from experience.
At work, employee should have aptitude for learning which is beneficial
to him and organisation. All the three concepts aptitude, achievement
and intelligence are closely interrelated and grouped as human ability.
• Aptitude of persons can be tested to evaluate individual differences. The
aptitude test measures potential for acquisition of a specific skill.
Through aptitude employees potential for learning can be evaluated.
• Through aptitude tests, evaluation of wide range of experiences obtained
by the employees can be made. Aptitude test is used to judge or predict
future performance. The interest and choice of the person can also be
known from the aptitude test. These tests are the useful tool in the hands
of employers who are in search for right persons for the right job.
 Knowledge
Knowledge
Knowledge is another capacity acquired and possessed by a person through
his or her efforts. The knowledge is the fact or condition of knowing
something with familiarity gained through experience or association. Its an
understanding of technique, either science or art, by an individual. It is a
condition of being aware of something. Knowledge is acquired through
learning. Knowledge facilitates learning. Knowledge of results leads to
increases in learning.
Stages of acquiring Knowledge
(a) Declarative Knowledge
(b) Knowledge Compilation
(c) Procedural Knowledge
(a) Declarative Knowledge
The factual information and concepts relevant to the task acquired by the
trainee, or learner is known as declarative knowledge. It is also recognized as
‘knowing what’ in respect of task. In this stage of acquiring knowledge
intelligence plays a key role as memory and attention are important in
learning or acquiring skills about the task.
 Knowledge
(b) Knowledge Compilation
In this second stage the performance of task learned through the first stage
improves and become polished.

(c) Procedural Knowledge

This is the final stage the learner or trainee not only knows what to do but
know how to do. The performer applies his knowledge in carrying out the
task procedures fluently and automatically. For confirming whether the
trainee has received the perfect knowledge about the task or not, a feedback
is taken. This feedback is known as knowledge of results. Feedback makes
the learning process more interesting.
Employee involvement in acquisition of knowledge is a must. The
enhancement of knowledge takes place through additional job skills, training
and cross training. In the process learning or acquiring knowledge the
manager should assume the position of a coach or facilitator. The goal
should be to attain organizational effectiveness and quality of working life.
The hierarchy should be flattened to motivate further the employees to gain
knowledge.
 Values
Values focus on the judgment about what is right, good or desirable.
According to M.Rokeach there are two types of values
1) Terminal Value
2) Instrumental Value
The combination of both values in an individual can create a value
system. Values generally, influence attitude and behaviour. The
value systems determine what we as individuals are. 
TERMINAL VALUES
In our personal lives, Terminal Values are those things that we can
work towards or we think are most important and we feel are
most desirable – terminal values are desirable states of existence. 
Terminal Values include things like happiness, self respect, family
security, recognition, freedom, inner harmony, comfortable life,
professional excellence, etc
 Values
INSTRUMENTAL VALUES
Instrumental Values are core values, permanent in nature, comprise
personal characteristics and character traits.
Instrumental Values refer to preferable modes of behaviour and include
values like honesty, sincerity, ambition, independence, obedience,
imaginativeness, courageousness, competitiveness, and also some negative
traits too. 
Organisations also have Instrumental Values (which can be ascertained from
the organizational culture) and these are permanent in nature and difficult to
change. 
• Instrumental Values are difficult to change.
In a nutshell, Terminal Values signify the objectives of the life of a person –
the ultimate things the person wants to achieve through his or her behaviour
(the destination he wants to reach in life) whereas Instrumental
Values indicate the methods an individual would like to adopt for achieving
his life’s aim (the path he would like to take to reach his destination).
This applies to organisations as well, and organizations too exhibit Terminal
Values. However, Terminal Values can be changed and this can be seen when
there is a change of top management or CEO.
 Values
• According to Allport’s findings people in the same occupations or
professions such as company managers, union members, students,
parents etc. tend to hold similar values.
• The studies of values are important because they are the starting
point for understanding attitudes motivation and perceptions. The
dominant values in work force are hard work, conservative, loyalty to
organisation, quality of life, seeks autonomy, loyalty to self, success,
achievement, ambition, hard work, loyalty to career, flexibility, job
satisfaction, leisure time, loyalty to relationship
• Values are acquired through experiences with people and
institutions. Elders and parents influence values, of their children.
Values are acquired through schools, religious institutions, and society.
With our growth values dominate our life and work.
• They play vital role in shaping our life and affect the work
environment. Today values are the backbone of latest management
revolution in the world. Therefore it is necessary to understand values.
 Values
• Our efficiency and effectiveness at work is tied with intrinsic
human values i.e. moral and ethical values. Self development takes
place through human values which support business values like
service, creativity, credibility, excellence, innovation
communication, coordination direction and control.
• Interpersonal communication becomes effective through values
minimizing conflicts and disputes. Human values built up good
reputation and goodwill of the organisation. Values enhance job
satisfaction as well as improvement in customer satisfaction.
Values are the means of perfection.
• Everyone have permanent basic values. Values are integral part of
management and work culture. Values help in human resource
development.
 Human Relations Skills
• Human relations skills refer the ability to relate and
interact with subordinates, peers, superiors, and
customers or clients.
• These are Management skills facilitating effective
interaction with personnel. These skills include
leadership, communication, decision making, negotiation,
counselling and conceptual skills.
• Human resources differ in qualities possessed by them.
Efficiency of employees can be maximized by creating and
maintaining good human relations among them.  Human
relations are interdisciplinary. It embodies psychology,
anthropology, sociology, physiology, political science.
 Human Relations Skills
Basics of Human Relations
Human relations are a part of organisational behaviour which is based on certain
concepts relating to nature of people and nature of organisations.
(a) Nature of People
In order to understand people one should know the basics of human behaviour
which is the following:
(1) Individual Differences
People have some common traits. Even though they have much in common they
are different. They differ in attitude, thinking, likes and dislikes, opinion, other
qualities. Organisational behaviour commences with the individual. Individuals
make decisions. Group is effective when individuals act in positive manner.
(2) A Whole Person
Organisations do not employ skills and brain of an individual but a ‘whole
person.’ Skill, qualities, attitude and behaviour cannot be separated from the
person. When employ a person you are employing good and bad qualities of the
person which influence his working. The main aim of the management is to
develop a better employee in terms of growth and fulfilment. Employees are the
members of many organisations other than the enterprise where they are
working. So, if whole person is developed the enterprise as well as the society is
benefitted.
 Human Relations Skills
(3) Caused Behaviour
Individual do not act without any cause. There is a reason behind every
action. He works to fulfil some of his needs. Therefore management
should understand that human behaviour has some cause. The manager
must understand this fundamental and act rationally. The cause of
human behaviour is the result of an interaction between a stimulus and
person’s interpretation of that stimulus. The actions are people have
some object in sight. They are goal oriented. There is some motivation
which forces the organisation to run smoothly.
(4) The Value of the Person (Human Dignity)
People are treated differently than other factors of production because
they are the better creation of the universe. They are to be treated with
respect and dignity. With the involvement of people in organisational
behaviour ethical philosophy is involved in every action of the
management.
 Human Relations Skills
(b) Nature of Organisation
The second basic in human relations is to know the nature of organisation
which comprises of the following:
(1) Social System
Organisations are social systems. Social and psychological law governs
organisations. Status and social roles of people and their behaviour get
influenced by their group and individual aspirations or drives. In organisation
formal and informal groups exist which are interdependent and influenced by
each other. The social system thus makes the human behaviour complex in
organisations.
(2) Mutual Interest
There is mutuality of interest. Organisations need people to accomplish their
goals and people need organisations to fulfil their personal objectives. Thus
people work in cooperation in meeting organisational problems.
 Human Relations Skills
How to Develop Sound Human Relations
There are ways and means to promote effective Human Relations in an organisation.
(1) Develop honesty among people at work.
(2) Remove misunderstanding and promote frankness.
(3) Restore good relations among and with employees.
(4) Develop effective three way communication system.
(5) Respect feelings of others.
(6) Have a word of appreciation for the ideas of others.
(7) Managers have to develop good leadership qualities to bring cohesion in his group
which helps in improving good human relations.
(8) Accept your wrongdoing to avoid criticism by others.
(9) Request is a powerful weapon than orders.
(10) Praise your subordinate for his good work.
(11) Respect the opinions of others
(12) Create such an environment where everyone is happy and is willing to work.
(13) Treat subordinate with respect and dignity.
(14) Understand the human needs and help achieving them.
(15) Help employees in their job performance.
The knowledge of human behaviour helps in understanding people as to why they behave
as they do.
 Factors Affecting Human Relations
Factors Affecting Human Relations
Human relations in the organization are determined by
(i) individual,
(ii) work group,
(iii) leader, and
(iv) work environment.
Individual
The individual is an important part of the organization and each individual is unique. While
motivating the employees, management should give due consideration to their economic,
social and psychological needs.
Work Group
The work group is the centre of focus of human relations approach. It has an important role
in determining the attitudes and performance of individual workers.
Work Environment
It is important to create a positive work environment where organizational goals are
achieved through satisfaction of employees. In general, when employees’ needs are
satisfied, the work environment is termed positive.
Leader
The leader must ensure complete and effective utilization of all organizational resources
to achieve organizational goals. They must be able to adjust to various personalities and
situations.
 Responsiveness
• Responsive is the quality of reacting quickly and positively.
• Responsiveness is nothing but to respond as quickly as
possible to a situation.
• Responsiveness is yet another human capacity present in
employees. Responsiveness means responding readily and
positively to a call or command from superior to the
subordinate. This is the quality possessed by an employee
which enables speedy work. This quality among human
assets put them ahead of others.
• For being responsive you must possess some other qualities
and analytical mind. Positive response means ability to
execute the work with perfection and that too on time.
You should approach problems with logic and sound
reasoning.
 Responsiveness
• Responsiveness leads to seeking out innovative solutions
to challenging problems and give you a chance to
establish benchmark of performance and standard of
excellence.
• An employee with this quality is busy in developing new
appropriate systems and procedures to function
efficiently. The benefits like early promotions accrue to
the employee He /She remains in the good books of
superiors is an added advantage of the quality of
responsiveness. These are the people who take initiative
in their organisations and accept change easily.
 Responsiveness
Now to be responsive in a workplace someone can consider the following
points.
Understanding the Responsibility
An employee needs to understand his job responsibility. He can take the
ownership and initiate things on his own without expecting a push.
Information
Information is a big factor. The business world just revolves around it. If you
have information you can easily address the concern else you will have to
wait to get the solution. It increases the waiting time. With information, life
becomes easier by just connect the dots.
Decision taking capabilities
Better and faster decision taking capability leads to immediate action.
Keeping a healthy Relationship among the Chain
It’s already mentioned the importance of relationship. If you see in today’s
world and in most of the instances hardly anyone is working independently.
People are dependent on each other. If you have a healthy relationship
among the chain, an immediate response can be expected.
Use of Technology
 Loyalty and Commitment
Loyalty
Employee loyalty can be defined as employees who are devoted towards
success of their organization and believe that to be a employee of this
organization is their best interest. Not only, they plan to remain with the
organization, but they do not actively seek for alternative employment
opportunities.
• Loyalty is the state of being loyal to the work and to the organisation. A sense
of loyalty develops a strong feeling of support or allegiance. A loyal
employee shows a firm and constant support or allegiance to the
organisation and its members. Employee is loyal to the established rules,
regulations, and procedures and follows them strictly. Every employee must
be loyal to his organization. Loyalist supports the organisation when it is
passing through difficult times.
• Only loyal employees can create the value you need to turn your business
around. loyal employees contribute extensively to the productivity of your
business. They are able to create the value required to put your business on
the path to success. Only the employees carry your image squarely on their
shoulders. To improve the image without spending a lot, try building loyalty
in your employees.
 Loyalty
How to Build Employee Loyalty
Connect With Your Staff
The only way you can connect with your employees is via communication.
Make sure you communicate with your staff regularly in a clear and
concise manner. You need to understand that not everyone in the
organization receives information in the same way. This is why it is vital to
explore variety in your communication efforts. This makes sure everyone
gets the message in a convenient way, which enhances bonding.
Provide a Reason for Your Employees to be Loyal
Don't expect your employees to take up loyalty without a reason. Rack
your brain and come up with something that will convince your staff that
you care about them. One way to do this is to provide a pleasant working
environment for them. Such a gesture will show the workers that you take
their welfare seriously and they in turn will reward you with their loyalty. 
 Loyalty
Play Your Role Perfectly
However close you get to your employees, don't forget your role as their superior.
Employees should know they have someone who can make the right decision, even
in the tightest situation. Once they have faith in you, winning their loyalty is easy.
Be a Good Example to Your Employees
Some workers are able to learn from example. Try to be a loyal person. Additionally,
don't criticize your employees in front of others. Develop the same attitude in your
top managers, so that they recognize the importance of being role models. Let the
managers find ways of showing their support for the subordinate staff at all times.
You never know how infectious these actions can be to other employees.
• You end up spending a lot of money every time an employee leaves and you have to
hire and train a new one. Some of the tasks that were handled by the previous
employee remain unattended, due to lack of the right person to handle them. This
cuts down your profits.
It pays to keep the staff you have right now. So, find a way to enhance loyalty in
your employees to enjoy the benefits.
 Commitment
• Commitment is defined as the act of binding yourself to a
course of action. Commitment, a word that is so simple yet so
difficult. 
• It rests on three main ideas: giving the best of one-self, going
the extra mile, and not abandoning the situation you find
yourself in.
• The state or quality of being dedicated to a cause, activity, etc.
• a willingness to give your time and energy to something that
you believe in, or a promise or firm decision to do something
• Commitment means the state or quality of being credited to a
cause or policy. It is a pledge or undertaking or an obligation to
remain committed to the cause of the organisation. Every
organisation needs committed people for its progress.
 Commitment
• The committed workforce establishes a long term
emotional relationship with their organisation. They are
dedicated people for accomplishment of objectives of the
organisation. They restrict themselves from taking undue
advantage from the organisation.
• They give their hundred percent to their organisation.
They are the hard working people. They receive full faith
of their superiors. They enjoy confidence of their higher
ups. Superiors delegate authority to such people.
Organisations flourish where such committed people
work.
 Transparency
Transparency means the condition of being transparent. It means
no concealment of action, command, policy, procedure, work
culture of the organisation. The employees should be made
known by the organisation about rules and regulations,
procedure for action in case of any breach committed by the
employees. Transparency ensures fairness. There should not be
any hidden agenda on the part of the organisation. There must
be fair deal which is ensured only when transparency prevailed
in the organisation. It takes out fear from the minds of the
employees and they work without any worries. Transparency is
image building tool for the organisation. It leads to the speedy
growth.
A transparent workplace, features benefits that can lead to
happier employees and even increased production. The key
to transparent workplaces is openness between supervisors
and employees.
 Transparency
Transparency brings many benefits, such as:
• Gain New Ideas.
• Build Trust within the organisation.
• Autonomy which improves overall motivation, speed and
efficiency of the organisation.
• When information is shared openly, hierarchy lowers and
culture improves.
• Organisations can respond to market changes much faster
when they are agile and build on informed, empowered,
proactive and thinking individuals.
• Transparency encourages problem-solving.
• Positive control since transparency improves self control.
• Speed, efficiency and quality of decision making.
 Leadership Development
• Teaching of leadership qualities, including communication,
ability to motivate others, and management, to an individual
who may or may not use the learned skills in a leadership
position.
• Leadership development is defined as a program or activity
that makes people become better leaders. An example
of leadership development is a program for assistant managers
on how to more effectively communicate with employees.
• Leadership development expands the capacity of individuals
to perform in leadership roles within organizations.
• Leadership roles may be formal, with the corresponding
authority to make decisions and take responsibility, or they
may be informal roles with little official authority
 Leadership Development
• Managers have to work with many people having distinct
behaviour patterns. Managers have to lead and guide his
subordinates at the workplace. Hence he must possess leadership
qualities for effective management of people. A good leader
extracts work from the toughest employee.
• Leadership is a process of influencing the behaviour of others in
the direction of an objective or set of objectives or toward a vision
of the future. A constructive leadership style which provides vision
and direction and furthers cooperation and productive group
effort is essential for organisational effectiveness.
• Some of the experts feel that leadership can be distinguished from
management. But leadership and management overlap.
• leadership involves establishing direction which includes
developing a vision and strategies for getting there, aligning
people, which includes communicating the direction and securing
cooperation and motivating and inspiring
 Leadership Development
• For effective leadership, a leader should have self
confidence, physical attractiveness, intelligence, drive,
alertness and insight in respect of tasks to be performed
and the feelings of the persons performing those tasks.
• A leader must encourage and support his people and
provide information and suggest new procedures. He
must be production centric i.e. he should assign task by
fixing a deadline and make a review of deficient work.
• He should also be employee centric i.e. behaving
friendly, easily accessible to the employees, must listen
to subordinates and allow them to participate in
planning and decision making. Manager should adopt a
suitable style depending upon situation and the
behaviour patterns.
Human Resource Accounting
 Human Resource Accounting
• The American Association of Accountants (AAA) defines
HRA as follows: ‘HRA is a process of identifying and
measuring data about human resources and
communicating this information to interested parties’.
• Human resource accounting is the process of identifying
and reporting investments made in the human
resources of an organization that are presently
unaccounted for in the conventional accounting practices.
It is an extension of standard accounting principles.
Measuring the value of the human resources can assist
organizations in accurately documenting their assets.
 Objectives of HRA
Objectives of HRA
1.Providing cost value information about acquiring, developing,
allocating and maintaining human resources.
2.Enabling management to monitor the use of human resources.
3.Finding depreciation or appreciation among human resources.
4.Assisting in developing effective management practices.
5.Increasing managerial awareness of the value of human
resources.
6. For better human resource planning.
7. For better decisions about people, based on improved
information system.
8. Assisting in effective utilization of manpower.
9.HRA provides quantitative information about the value of
human asset, which helps the top management to take decisions
regarding the adequacy of human resources.
 Benefits of HRA
1. The system of HRA discloses the value of human resources, which
helps in proper interpretation of return on capital employed.
2. Managerial decision-making can be improved with the help of HRA.
3. The implementation of human resource accounting clearly identifies
human resources as valuable assets, which helps in preventing
misuse of human resources by the superiors as well as the
management.
4. It helps in efficient utilization of human resources and
understanding the evil effects of labour unrest on the quality of
human resources.
5. This system can increase productivity because the human talent,
devotion, and skills are considered valuable assets, which can boost
the morale of the employees.
6. It can assist the management for implementing best methods of
wages and salary administration.
 COST OF HUMAN RESOURCES
I Acquisition Cost
It refers to the cost incurred in acquiring the right man for the
right job at the right time in a right quantity.
a)Recruitment Cost
b) Selection Cost
II Training & Development Cost
It refers to the sacrifice that must be made to train a person
either to provide expected level of performance or to enrich
individuals skills.
a) Formal Training Cost
b) On the Job Training Cost
c) Special Training Cost
d) Development Programs
III Welfare Cost
IV Other Costs
Human Resource Accounting Methods
Human Resource Accounting Methods
• Historical or Acquisition Cost Model
• Replacement Cost Model
• Opportunity Cost Model (Competitive Bidding
Method)
• Standard Cost Approach
• Economic Value
• Expected realizable value method
• Present value of future earnings
 Human Resource Accounting Methods
Historical or Acquisition Cost Model
This model involves capitalisation of the actual cost incurred
on recruiting, selecting, hiring, training and developing the
human resources of the organisation. The sum of such costs
for all the employees of the organisation represents the value
of the human resources of the organisation. This value is
amortised over the expected length of service of individual
employees. The unexpired cost is considered to be the
investment in human resources. If an employee leaves the
organisation due to resignation, death, dismissal etc., whole of
the amount not written off is charged to the current revenue.
 Human Resource Accounting Methods
Replacement Cost Model
This method of valuation of human resources was developed by Eric
G. Flamholtz on the basis of concept of replacement cost suggested
by Rensis Likert.
Replacement cost refers to the sacrifice that would have to be
incurred to replace resources presently owned or employed. This
method is based on current value or replacement cost. Under this
system, an organisation values an employee at the estimated cost of
replacement with a new employee of equivalent ability. The
application of such a method, however, is made difficult by the
problems of defining and measuring replacement costs. In the
context of human resources, it refers to the cost that would have to
be incurred to replace human resources presently employed.
Flamholtz has referred to two different concepts of replacement cost
viz., individual replacement cost and positional replacement cost.
 Human Resource Accounting Methods
Opportunity Cost Model (Competitive Bidding Method)
This model of HRA seeks to measure the value of human resources on the
basis of common concept of opportunity cost. This model was proposed by
Hekimian and Jones to overcome the limitations of replacement cost model.
It attempts to estimate the value of human resources by establishing an
internal labour market in an organisation through the process of
competitive bidding.
Under this model all managers of profit centres are encouraged to bid for
any scarce employee they want. This is largely artificial method involving the
concept of the competitive bidding process. Under this system, profit centre
managers are encouraged to bid for scarce employees, the successful bid
being included in the organisation's human investment calculations.
Employee abilities are related to profit generation, and may lead to a more
efficient allocation of human resources. The employee is allotted to the
highest bidder among the divisional managers and the bid price is included
in that division's investment base. The value of an employee would be high
if he has several alternative uses for employment in the various division of
an enterprise.
 Human Resource Accounting Methods
Standard Cost Approach
David Watson has suggested this approach. Instead of using historical or
replacement cost, many companies use standard cost for the valuation of
human assets just as it is used for physical and financial assets. For using
standard cost, employees of an organization are categorized into different
groups based on their hierarchical positions. Standard cost is fixed for each
category of employees and their value is calculated. This method is simple
but does not take into account differences in employees put in the same
group. In many cases, these differences may be quite vital.
Economic Value
The economic value model of human resource accounting involves
estimating the total inflow of cash that will be produced by an employee
over the course of his service to the company. Subtract the total cost of
hiring, training, developing and paying an employee from the estimate of
the cash he will generate for the company, and you have arrived at his net
worth according to the economic value method of HR accounting.
 Human Resource Accounting Methods
Expected realizable value method
The elements of expected realizable value like the productivity,
transferability and promotability are measured using personal
research, appraisal techniques or other objective methods. The
productivity is measured by objective indices and managerial
assessment. The promotability and transferability are measured in
terms of potential using psychometric tests and subjective evaluations.

Present value of future earnings

In this method, the future earnings of various groups of employees
are estimated up to the age of their retirement and are discounted at
a predetermined rate to obtain the present value of such earnings.
This method is similar to the present value of future earnings used in
the case of financial assets. However, this method does not give
correct value of human assets as it does not measure their
contributions to achieving organizational effectiveness.
 Human Resource Audit
• HR audit is an important management control device. It is
a tool to judge organisations performance and
effectiveness of HR management. According to Dale
Yoder, “Personnel audit refers to an examination and
evaluation of policies, procedures and practices to
determine the effectiveness of personnel management.”

• Human Resource Audit is a comprehensive method of

objective and systematic verification of current practices,
documentation, policies and procedures prevalent in the
HR system of the organization. An effective HR audit helps
in identifying the need for improvement and
enhancement of the HR function.
 Human Resource Audit
• A well-executed HR Audit will reveal gap areas that can
potentially lead to costly legal disputes and governmental
fines. It is advisable to conduct an HR audit once every year.
Additionally, conducting an HR Audit after a significant change
in the organization (such as reconstruction, expansion, or
deduction in force), will help to identify the right practices and
highlight functions in need of modification.

• The entire process of HR auditing is broadly segmented in

following phases pre-audit information, on-site review,
records review, and audit report.
 The Importance of HR Audit
Conducting an HR audit can help a company:
• To review every aspect of management of HR to determine the
effectiveness of each programmes in an organisation.
• To seek explanation and information in respect of failure and success of
HR.
• Identify policies and procedures that need to be updated for changes in
the law or compliance rules
• Identify policies and procedures that are not followed and find out why
• Find out about unwritten practices and whether there are any legal risks
associated with those practices
• Gauge whether procedures and practices are user friendly and what
changes can be made to help assure broader compliance
• Identify opportunities for new policies or procedures that will help
minimize risk
• Determine whether record-keeping practices are being followed
• Identify where additional training or communication would be helpful for
compliance
 Approaches to HR Audit
According to William Werther and Keith Davis, there are five approaches for the
purpose of evaluation.
(1) Comparative Approach
Under this approach auditors identify one model company and the results obtained
of the organisation under audit are compared with it.
(2) Outside Authority Approach
In outside authority approach a benchmark is set to compare own results. A
standard for audit set by outside consultant is used as benchmark.
(3) Statistical Approach
Under statistical approach the statistical information maintained by the company in
respect of absenteeism, employee turnover etc. is used as the measures for
evaluating performance.
(4) Compliance Approach
Under compliance approach the auditors make a review of past actions to determine
to see whether those activities are in compliance with the legal provisions and in
accordance with the policies and procedures of the company.
(5) MBO Approach
Under MBO approach specific targets are fixed. The performance is measured
against these targets. The auditors conduct the survey of actual performance and
compare with the goals set.
Impact Assessment of HRD initiatives
It is observed that companies who restructured their HR units, yielded
measurable profits. HR departments are now professional service units within
their organizations. In this new avatar, they are effectively demonstrating how
competent they are and how BIG a role they can play in delivering profitable
business results.
The biggest challenge for HR has always been quantifying their contribution in the
only language that anyone really cares about – money. So select the strategy that
is most likely to have a significant impact on workforce productivity and profits.
8 ways HR can positively impact the bottom line
• Know your business
• Engage in competitive learning
• Hire and engage the right talent
• Protect Assets
• Good leaders and profitability go hand-in-hand
• Innovate
• Construct a positive experience, Create a Positive Environment
• Align your HR strategy with your business strategy
• Execute with excellence
• Reduced Turnover