Fundamentals Of HRM

Syllabus:

Unit 1: Introduction to HRM

Concept, functions and significance of HRM. Challenges of human resource management.
Workplace diversity, employee empowerment, maintaining work life balance, and stress
management.

Unit 2: Human Resource Planning and Procurement

Fundamentals of Human Resource Management, Quantitative and qualitative dimensions of
human resource planning; job analysis, job description and job specification. Recruitment:
concept, sources and techniques. Selection: concept and process.

Unit 3: Employee Training and Development

Training: concept and methods; Apprenticeship, understudy, job rotation, vestibule training. case
study, role playing, and sensitivity training. Development: In-basket, management games,
conferences and seminars, coaching and mentoring, management development programs;
Training process outsourcing.

Unit 4: Performance Appraisal and Employee Compensation

Performance appraisal: nature, objectives and process; Performance management; Methods of
performance appraisal; Potential appraisal; Employee counselling; Job transfer and promotion.
Compensation - Concept and policies, Base and supplementary compensation; Individual, group
and organisation incentive plans; Fringe benefits; Performance linked compensation; Employee
stock option; Pay band compensation system; Job evaluation.

Unit 5: Employee Maintenance and Emerging issues in HRM

Employee health, welfare and safety; Social security; Employer-employee relations; Grievance
handling and redressal; Industrial disputes: Causes and settlement machinery; Contemporary
issues in HRM: Human Resource Information System (HRIS); HR Audit, emerging job
opportunities, e-HRM, work life balance and work from home.

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Unit 1: Introduction

1. Concept of Human Resource Management (HRM)

● Definition: HRM refers to the strategic approach to managing people in an

organization effectively. It involves recruiting, selecting, training, developing,
and retaining employees to achieve the organization's goals.
● Purpose: The main objective of HRM is to maximize employee performance to
meet the organization’s strategic objectives. It focuses on managing the
employment relationship to ensure that the organization can achieve success
through people.

2. Functions of HRM

HRM functions are typically divided into two categories: managerial functions and
operative functions.

● Managerial Functions:
1. Planning: Determining the future HR requirements and strategies to
meet those needs. It involves forecasting the organization’s future
human resource needs and planning how to meet those needs.
2. Organizing: Structuring the organization to meet business needs and
goals effectively. This includes defining roles, responsibilities, and
processes.
3. Directing: Guiding and motivating employees to achieve organizational
goals. It involves leadership, communication, and motivation.
4. Controlling: Monitoring and evaluating HR activities to ensure they
align with organizational goals. It involves setting standards, measuring
actual performance, and taking corrective action when necessary.

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 ● Operative Functions:
1. Recruitment and Selection: Attracting, screening, and selecting qualified
individuals for a job. The process includes job analysis, advertising,
interviewing, and hiring.
2. Training and Development: Providing employees with the necessary
skills and knowledge to perform their jobs effectively. It includes
onboarding, professional development, and leadership training.
3. Performance Management: Evaluating and managing employee
performance through appraisals, feedback, and development plans.
4. Compensation and Benefits: Designing and managing employee
remuneration, including salaries, bonuses, and benefits like health
insurance and retirement plans.
5. Employee Relations: Managing the relationship between the employer
and employees, including handling grievances, ensuring compliance
with labor laws, and fostering a positive work environment.

3. Significance of HRM

● Strategic Partner: HRM helps align the workforce with the organization’s
goals, making it a critical strategic partner in achieving business success.
● Employee Satisfaction: Effective HRM practices lead to higher employee
satisfaction, which can improve productivity, reduce turnover, and enhance the
overall work environment.
● Legal Compliance: HRM ensures that the organization complies with labor laws
and regulations, helping to avoid legal issues.
● Competitive Advantage: By attracting and retaining top talent, HRM provides
the organization with a competitive edge in the market.

4. Challenges of Human Resource Management

● Globalization: Managing a global workforce with diverse cultures, languages,

and legal systems.

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 ● Technological Changes: Adapting to rapid technological advancements that
require new skills and training programs.
● Changing Workforce Demographics: Addressing the needs of an increasingly
diverse workforce in terms of age, gender, ethnicity, and other factors.
● Talent Management: Attracting, developing, and retaining talent in a
competitive job market.
● Legal and Ethical Issues: Navigating complex labor laws, ethical
considerations, and ensuring fair treatment of employees.

5. Workplace Diversity

● Definition: Workplace diversity refers to the inclusion of employees from

various backgrounds, including race, gender, age, religion, disability, and
sexual orientation.
● Importance:
○ Innovation and Creativity: A diverse workforce brings a variety of
perspectives, leading to innovative ideas and solutions.
○ Market Competitiveness: Organizations that embrace diversity can
better understand and serve diverse customer bases.
○ Employee Engagement: Inclusive environments improve employee
satisfaction and reduce turnover.
● Challenges: Managing potential conflicts, ensuring equal opportunities, and
addressing unconscious biases.

6. Employee Empowerment

● Definition: Employee empowerment involves giving employees the authority,

resources, and opportunity to make decisions and contribute to the
organization’s success.
● Benefits:
○ Increased Job Satisfaction: Empowered employees feel valued and are
more likely to be satisfied with their jobs.

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 ○ Improved Productivity: When employees have the autonomy to make
decisions, they can work more efficiently and creatively.
○ Enhanced Commitment: Empowered employees are more committed to
the organization and its goals.
● Implementation: Provide training, encourage open communication, delegate
decision-making authority, and recognize and reward contributions.

7. Maintaining Work-Life Balance

● Definition: Work-life balance refers to the equilibrium between personal life

and professional responsibilities.
● Importance:
○ Health and Well-being: A good work-life balance reduces stress and
improves mental and physical health.
○ Employee Retention: Organizations that support work-life balance are
more likely to retain employees.
○ Productivity: Employees with a balanced life are more focused and
productive at work.
● Strategies:
○ Flexible Work Arrangements: Offering flexible hours, remote work
options, and compressed workweeks.
○ Employee Assistance Programs: Providing support for personal issues,
such as counseling or financial planning.
○ Encouraging Time Off: Promoting the use of vacation days and ensuring
that employees are not overworked.

8. Stress Management

● Definition: Stress management refers to techniques and strategies used to help

individuals cope with stress in the workplace.
● Causes of Stress:
○ Workload: Excessive work demands and tight deadlines.

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 ○ Role Ambiguity: Unclear job responsibilities and expectations.
○ Lack of Control: Feeling powerless or unable to influence outcomes.
○ Workplace Conflicts: Issues with colleagues, managers, or the
organizational culture.
● Stress Management Techniques:
○ Time Management: Prioritizing tasks, setting realistic deadlines, and
delegating work.
○ Relaxation Techniques: Practicing mindfulness, deep breathing
exercises, and meditation.
○ Physical Activity: Regular exercise to reduce stress levels and improve
overall health.
○ Support Systems: Seeking support from colleagues, friends, family, or
professional counselors.

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Unit 2: Human Resource Planning and Procurement

1. Human Resource Planning (HRP)

● Definition: Human Resource Planning (HRP) is the process of forecasting an

organization’s future human resource needs and developing strategies to meet
those needs. It ensures that the right number and type of employees are
available at the right time and place to meet the organization’s objectives.
● Importance of HRP:
○ Aligning Workforce with Business Goals: HRP ensures that the
organization has the necessary talent to achieve its strategic objectives.
○ Managing Workforce Dynamics: Helps manage changes in workforce
demographics, technology, and business conditions.
○ Cost Efficiency: By anticipating needs, HRP helps reduce costs
associated with overstaffing or understaffing.
○ Legal Compliance: Ensures that the organization meets legal
requirements related to employment, such as equal opportunity and
diversity mandates.

Quantitative Dimensions of HRP:

● Workload Analysis: This involves assessing the amount of work that needs to
be done in the organization and the number of employees required to complete
it. Techniques like work study, time and motion studies, and productivity
analysis are used to determine the optimal number of employees.
● Workforce Supply Analysis: Involves analyzing the current workforce in terms
of numbers, skills, and competencies. This can be done through techniques like
skill inventory, replacement charts, and transition matrices.
● Forecasting Techniques:
○ Trend Analysis: Uses historical data to predict future HR needs based on
past trends.

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 ○ Ratio Analysis: Involves using ratios to determine future HR needs, such
as employee to production output ratio.
○ Econometric Models: Uses statistical methods to forecast HR needs by
considering various factors like economic indicators, business growth
rates, and industry trends.

Qualitative Dimensions of HRP:

● Skills Inventory: Involves cataloging the skills, knowledge, and abilities of the
current workforce to identify gaps and areas for development.
● Succession Planning: Identifying and developing employees to fill key
positions in the future. It ensures leadership continuity and prepares the
organization for potential changes in key roles.
● Competency Mapping: Involves identifying the competencies required for
different roles in the organization and assessing the current workforce against
these competencies to identify gaps.
● Job Enrichment and Enlargement: Enhancing job roles by adding more
responsibilities or expanding the scope of the job to meet future organizational
needs.

2. Job Analysis

● Definition: Job analysis is the process of systematically studying and recording

the responsibilities, duties, skills, and work environment of a particular job. It
serves as the foundation for many HR activities, including recruitment,
selection, training, and performance appraisal.
● Importance:
1. Foundation for HR Functions: Job analysis provides essential
information for recruitment, selection, training, compensation, and
performance management.
2. Legal Compliance: Ensures that job requirements are fair and unbiased,
helping the organization comply with labor laws.
3. Job Clarity: Provides clear job descriptions, which helps employees
understand their roles and responsibilities.

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 ● Steps in Job Analysis:
1. Data Collection: Gathering information about the job through various
methods like observations, interviews, questionnaires, and work diaries.
2. Job Description: Writing a detailed job description based on the
information collected, outlining the duties, responsibilities, and
reporting relationships.
3. Job Specification: Developing a job specification that details the
qualifications, skills, and abilities required for the job.

3. Job Description and Job Specification

● Job Description:
○ Definition: A job description is a written document that outlines the
duties, responsibilities, working conditions, and reporting relationships
of a specific job.
○ Components:
■ Job Title: The official title of the job.
■ Job Summary: A brief overview of the job’s purpose and main
responsibilities.
■ Duties and Responsibilities: A detailed list of the tasks and
responsibilities associated with the job.
■ Reporting Relationships: Information on who the jobholder
reports to and who reports to them.
■ Working Conditions: Describes the physical and environmental
conditions in which the job is performed.
■ Tools and Equipment Used: Lists any tools, equipment, or
software required to perform the job.
● Job Specification:
○ Definition: A job specification outlines the qualifications, skills,
experience, and attributes required for a specific job. It complements the
job description by focusing on the person rather than the job itself.
○ Components:

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 ■ Educational Qualifications: The minimum educational
requirements for the job.
■ Experience: The amount and type of work experience needed.
■ Skills and Competencies: Specific skills (technical, interpersonal,
etc.) required to perform the job effectively.
■ Personal Attributes: Characteristics like teamwork,
communication skills, and problem-solving abilities.
■ Physical Requirements: Any physical attributes necessary for the
job, such as strength, vision, or dexterity.

4. Recruitment

● Concept of Recruitment:
○ Definition: Recruitment is the process of attracting and identifying
qualified candidates for a job vacancy. It involves creating a pool of
candidates from which the organization can select the most suitable
person for the job.
○ Objectives: To attract a large pool of qualified applicants, ensure that the
organization has a diverse and capable workforce, and reduce the time
and cost associated with filling vacancies.
● Sources of Recruitment:
○ Internal Recruitment: Filling job vacancies with current employees.
Methods include promotions, transfers, and internal job postings.
■ Advantages: Motivates employees, reduces recruitment costs, and
shortens the learning curve for the new role.
■ Disadvantages: Can lead to stagnation, limits the pool of
applicants, and may create internal competition.
○ External Recruitment: Sourcing candidates from outside the
organization. Methods include job advertisements, employment
agencies, campus recruitment, and online job portals.
■ Advantages: Brings in fresh ideas and perspectives, widens the
talent pool, and helps fill gaps in skills or competencies.

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 ■ Disadvantages: Higher costs, longer onboarding processes, and
potential disruption to team dynamics.
● Techniques of Recruitment:
○ Job Portals and Online Recruitment: Using online platforms like
LinkedIn, Indeed, and Glassdoor to post job openings and attract
candidates.
○ Social Media Recruitment: Leveraging social media platforms like
LinkedIn, Facebook, and Twitter to engage with potential candidates.
○ Campus Recruitment: Visiting colleges and universities to recruit fresh
graduates for entry-level positions.
○ Employee Referrals: Encouraging current employees to refer qualified
candidates from their networks. This can be incentivized through
referral bonuses.
○ Recruitment Agencies: Partnering with external agencies to identify and
shortlist candidates for specialized or high-level positions.
○ Walk-ins: Allowing candidates to visit the organization directly and
apply for positions on the spot.

5. Selection

● Concept of Selection:
1. Definition: Selection is the process of choosing the most suitable
candidate from the pool of applicants recruited for a job. It involves a
series of steps designed to assess the candidates’ qualifications, skills,
and fit with the organization.
2. Objective: To identify and hire individuals who are best suited for the job
and who will contribute to the organization’s success.
● Selection Process:
1. Initial Screening: The first step involves reviewing applications and
resumes to filter out candidates who do not meet the basic job
requirements.

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 2. Application Form: Candidates fill out an application form providing
detailed information about their qualifications, experience, and personal
details.
3. Preliminary Interview: A brief interview to assess the candidate's overall
suitability and to clarify details from the application.
4. Employment Tests: These can include aptitude tests, personality tests,
technical tests, and job simulations designed to assess the candidate’s
abilities and compatibility with the job requirements.
5. In-depth Interview: A more detailed interview where candidates are
assessed on their knowledge, experience, and fit with the organizational
culture. This can include behavioral interviews, situational interviews,
and panel interviews.
6. Background and Reference Checks: Verifying the candidate’s
employment history, qualifications, and references to ensure accuracy
and reliability.
7. Final Interview: The last round of interviews, often conducted by senior
management or HR, to make the final decision on the candidate’s
selection.
8. Decision and Job Offer: Once a candidate is selected, they are given a job
offer detailing the terms of employment, including salary, benefits, and
other conditions.
9. Medical Examination: Some organizations require a medical
examination to ensure the candidate is physically fit for the job.
10. Onboarding and Orientation: After acceptance of the job offer, the
candidate undergoes onboarding and orientation to familiarize them
with the organization’s policies, culture, and expectations.

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 Unit 3: Employee Training & development

1. Training

● Concept of Training:
○ Definition: Training is a planned effort to facilitate the learning of
job-related skills, behaviors, and knowledge by employees. The goal is to
improve employees' current job performance and prepare them for
future roles within the organization.
○ Importance: Training helps bridge the gap between the current skill set
of employees and the required skill set. It enhances productivity, reduces
errors, improves job satisfaction, and increases organizational
efficiency.
● Training Methods:
○ On-the-Job Training (OJT): Employees learn by performing tasks under
the supervision of experienced workers or managers. It's practical and
relevant but can sometimes disrupt normal operations.
○ Off-the-Job Training: Employees are trained away from their regular
work environment. This includes workshops, seminars, and classroom
sessions where they can focus on learning without distractions.

Specific Training Methods:

● Apprenticeship:
○ Definition: A structured process that combines on-the-job training with
classroom instruction. Apprentices work under the guidance of
experienced mentors while also attending formal classes.
○ Advantages: Provides hands-on experience, builds a strong foundation
of skills, and often leads to certification in a trade or profession.
○ Disadvantages: Time-consuming and may require a significant
commitment from both the apprentice and the organization.

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 ● Understudy:
○ Definition: An experienced employee (usually a manager) trains a less
experienced employee (the understudy) to take over their job in the
future. This is often used as a succession planning tool.
○ Advantages: Ensures continuity, provides real-world learning
experiences, and prepares the understudy for future roles.
○ Disadvantages: Can be stressful for both parties, and there is a risk that
the understudy might not perform well in the new role.
● Job Rotation:
○ Definition: Employees are moved between different jobs or departments
to learn a variety of skills and gain a broader understanding of the
organization.
○ Advantages: Enhances employee versatility, reduces monotony, and aids
in succession planning.
○ Disadvantages: Can be disruptive to operations and may cause
temporary decreases in productivity as employees adapt to new roles.
● Vestibule Training:
○ Definition: A simulation-based training method where employees are
trained in a separate environment that closely resembles the actual work
environment. This is often used for jobs that require handling expensive
or complex equipment.
○ Advantages: Reduces the risk of errors in the actual work environment,
provides hands-on experience, and allows employees to learn without
pressure.
○ Disadvantages: Can be expensive to set up and may not fully replicate
real-world conditions.
● Case Study:
○ Definition: Trainees analyze real or hypothetical business scenarios to
develop problem-solving and decision-making skills. Case studies often
involve group discussions and presentations.
○ Advantages: Encourages critical thinking, promotes teamwork, and
allows employees to apply theoretical knowledge to practical situations.

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 ○ Disadvantages: May not cover all possible real-world scenarios and
relies on the quality of the cases used.
● Role Playing:
○ Definition: Trainees act out roles in a simulated situation to develop
interpersonal and communication skills. It's often used for training in
customer service, sales, and conflict resolution.
○ Advantages: Improves communication skills, builds empathy, and helps
employees prepare for real-life situations.
○ Disadvantages: Can be uncomfortable for some participants and may not
always reflect actual workplace dynamics.
● Sensitivity Training:
○ Definition: A method focused on increasing employees’ awareness of
their attitudes and behaviors toward others, especially in diverse or
conflict-prone environments. It aims to improve interpersonal
relationships and promote a more inclusive workplace.
○ Advantages: Enhances teamwork, reduces workplace conflicts, and
promotes diversity and inclusion.
○ Disadvantages: May evoke strong emotional reactions and requires
skilled facilitators to manage effectively.

2. Development

● Concept of Development:
○ Definition: Development refers to long-term efforts aimed at enhancing
an employee’s potential and preparing them for future roles within the
organization. Unlike training, which focuses on specific skills for current
roles, development is about growth and career progression.
○ Importance: Development programs help in building a leadership
pipeline, enhancing employee engagement, and retaining top talent by
offering career growth opportunities.
● Development Methods:

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 ● In-Basket Exercise:
○ Definition: Trainees are given a set of tasks, emails, reports, and memos
typically found in a manager's "in-basket." They must prioritize and
address these tasks within a set time, simulating the decision-making
process of a manager.
○ Advantages: Tests decision-making, time management, and
prioritization skills in a realistic setting.
○ Disadvantages: May not fully capture the complexity of real-world
decision-making and can be stressful for participants.
● Management Games:
○ Definition: Simulated business scenarios where trainees make decisions
in a competitive environment. These games are designed to develop
strategic thinking, problem-solving, and leadership skills.
○ Advantages: Engages participants, fosters teamwork, and provides a
risk-free environment to experiment with different strategies.
○ Disadvantages: May oversimplify real-world complexities and may not
translate directly to practical workplace skills.
● Conferences and Seminars:
○ Definition: Organized events where employees attend sessions led by
experts on specific topics. These events provide opportunities for
learning, networking, and discussing industry trends and best practices.
○ Advantages: Provides exposure to new ideas, facilitates knowledge
sharing, and helps build professional networks.
○ Disadvantages: Can be costly and time-consuming, with limited
hands-on learning.
● Coaching and Mentoring:
○ Coaching:
■ Definition: A personalized, goal-oriented process where a coach
works with an employee to improve specific skills, behaviors, or
performance.
■ Advantages: Tailored to individual needs, provides immediate
feedback, and can lead to rapid improvement.

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 ■ Disadvantages: Requires time and commitment from both the
coach and the employee, and the success largely depends on the
quality of the coach.
○ Mentoring:
■ Definition: A long-term relationship where an experienced
employee (the mentor) provides guidance, advice, and support to
a less experienced employee (the mentee).
■ Advantages: Facilitates professional growth, builds confidence,
and helps in career planning.
■ Disadvantages: The relationship may become too dependent, and
success depends on the compatibility between the mentor and
mentee.
● Management Development Programs (MDPs):
○ Definition: Structured programs designed to enhance the managerial
and leadership skills of current and future managers. MDPs often include
a combination of training sessions, workshops, on-the-job
assignments, and self-assessment tools.
○ Advantages: Prepares employees for higher responsibilities, builds a
leadership pipeline, and aligns leadership development with
organizational goals.
○ Disadvantages: Can be expensive and time-consuming, with the
outcomes sometimes difficult to measure.
● Training Process Outsourcing (TPO):
○ Definition: The practice of hiring external vendors to handle all or part
of the organization’s training and development activities. This can
include designing training programs, delivering training, and managing
training logistics.
○ Advantages: Access to specialized expertise, cost savings, and the ability
to focus internal resources on core activities.
○ Disadvantages: Potential loss of control over training content and
quality, and the risk of misalignment with organizational culture and
goals.

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Unit 4: Performance Appraisal and Employee Compensation

1. Performance Appraisal

● Nature of Performance Appraisal:

1. Definition: Performance appraisal is a systematic evaluation of an
employee’s job performance and productivity in relation to established
criteria and organizational objectives. It serves as a basis for decisions
related to promotions, compensation, and training needs.
2. Purpose: The primary goal is to assess an employee’s contribution to the
organization, provide feedback, identify areas for improvement, and
support career development.
● Objectives of Performance Appraisal:
1. Employee Development: Identifying strengths and weaknesses to
facilitate employee growth and development.
2. Compensation Decisions: Providing a basis for decisions related to
salary increases, bonuses, and other rewards.
3. Promotions and Transfers: Evaluating employees for potential
promotions, transfers, or additional responsibilities.
4. Training Needs Analysis: Identifying areas where employees may need
further training or development.
5. Feedback and Communication: Enhancing communication between
employees and supervisors by providing clear, constructive feedback.
6. Goal Setting: Helping employees set and achieve individual and
organizational goals.
● Performance Appraisal Process:
1. Setting Performance Standards: Establishing clear, measurable, and
achievable standards that align with the organization’s goals.
2. Communicating Standards to Employees: Ensuring that employees
understand what is expected of them and how their performance will be
measured.

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 3. Measuring Actual Performance: Collecting data on the employee’s
performance through various methods, such as observations,
self-assessments, peer reviews, and output metrics.
4. Comparing Actual Performance with Standards: Evaluating the
employee’s performance against the set standards to identify gaps and
areas for improvement.
5. Providing Feedback: Conducting a formal appraisal meeting to discuss
the employee’s performance, provide feedback, and set goals for future
improvement.
6. Taking Corrective Actions: Implementing development plans, training,
or other interventions to address performance gaps.
7. Documentation: Keeping detailed records of the appraisal process for
future reference, legal compliance, and decision-making.

Performance Management:

● Definition: Performance management is a broader, ongoing process that

involves planning, monitoring, and reviewing an employee’s performance.
Unlike performance appraisal, which is typically conducted annually,
performance management is a continuous process that includes setting goals,
providing ongoing feedback, and supporting employee development.
● Components:
○ Goal Setting: Establishing clear, achievable objectives that align with
organizational goals.
○ Continuous Feedback: Providing regular feedback to guide and improve
employee performance.
○ Coaching and Development: Offering support and resources to help
employees achieve their goals.
○ Performance Reviews: Conducting periodic reviews to assess progress
and adjust goals as needed.

Methods of Performance Appraisal:

● Traditional Methods:

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 ○ Rating Scales: Employees are rated on various performance factors, such
as job knowledge, punctuality, and teamwork, using a numerical or
descriptive scale.
○ Essay Method: The appraiser writes a detailed narrative describing the
employee’s performance, strengths, and areas for improvement.
○ Checklist Method: The appraiser uses a checklist of statements that
describe specific job behaviors, and checks those that apply to the
employee.
○ Forced Distribution: Employees are ranked into predetermined
categories, such as top performers, average performers, and low
performers, to prevent rating inflation.
● Modern Methods:
○ 360-Degree Feedback: Employees receive feedback from multiple
sources, including peers, subordinates, supervisors, and sometimes
customers. This method provides a comprehensive view of an
employee’s performance.
○ Behaviorally Anchored Rating Scales (BARS): Combines elements of the
rating scale and critical incident methods by defining specific behaviors
for each level of performance.
○ Management by Objectives (MBO): Employees and managers
collaboratively set specific, measurable goals, and performance is
evaluated based on the achievement of these goals.
○ Psychological Appraisals: Focuses on the employee’s potential for future
performance rather than past performance, often involving assessments
by psychologists.

Potential Appraisal:

● Definition: Potential appraisal is the process of identifying employees who

have the potential to take on higher responsibilities in the future. It focuses on
evaluating an employee’s capabilities and readiness for future roles.
● Purpose: Helps in succession planning, career development, and identifying
high-potential employees who can be groomed for leadership positions.

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 ● Process:
○ Assessment of Current Performance: Evaluating the employee’s current
job performance as a baseline.
○ Identification of Competencies: Determining the skills, knowledge, and
attributes required for future roles.
○ Assessment of Potential: Using tools like assessment centers,
psychological tests, and 360-degree feedback to evaluate the employee’s
potential.
○ Development Planning: Creating a personalized development plan to
prepare the employee for future roles.

Employee Counselling:

● Definition: Employee counselling is a supportive process in which a trained

counsellor helps employees deal with personal or work-related issues that may
affect their job performance.
● Purpose: To assist employees in managing stress, resolving conflicts, and
improving their overall well-being, which in turn enhances job performance.
● Types:
○ Directive Counselling: The counsellor provides specific advice and
solutions to the employee.
○ Non-Directive Counselling: The counsellor listens and helps the
employee explore options without offering direct advice.
○ Participative Counselling: A collaborative approach where both the
counsellor and employee work together to find solutions.

Job Transfer and Promotion:

● Job Transfer:
○ Definition: A job transfer is the lateral movement of an employee from
one job, department, or location to another within the same
organization, usually without a change in salary or level.
○ Purpose: To provide employees with new experiences, resolve
interpersonal conflicts, or meet organizational needs in different areas.

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 ○ Types:
■ Lateral Transfer: Moving to a similar role in a different
department or location.
■ Vertical Transfer: Moving to a higher or lower level within the
organization.
■ Geographical Transfer: Moving to a different physical location.
● Promotion:
○ Definition: Promotion is the advancement of an employee to a
higher-level position within the organization, often accompanied by
increased responsibilities, status, and pay.
○ Criteria for Promotion: Performance, seniority, potential, and
contribution to the organization.
○ Types:
■ Horizontal Promotion: Advancement within the same functional
area, but with greater responsibilities.
■ Vertical Promotion: Moving up the organizational hierarchy,
often with a significant increase in authority and responsibilities.

2. Employee Compensation

● Concept and Policies:

○ Definition: Compensation refers to all forms of financial and
non-financial rewards given to employees in exchange for their work.
This includes base pay, bonuses, benefits, and other perks.
○ Compensation Policies: Guidelines that determine how compensation is
structured, distributed, and adjusted within the organization. These
policies are influenced by factors such as the organization’s
compensation strategy, industry standards, and legal requirements.
○ Objectives:
■ Attract and Retain Talent: Competitive compensation packages
help attract and retain skilled employees.
■ Motivate Performance: Well-designed compensation systems
motivate employees to perform at their best.

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 ■ Ensure Fairness: Compensation policies aim to ensure that pay is
fair and equitable across the organization.
■ Legal Compliance: Ensures that the organization adheres to labor
laws and regulations related to pay and benefits.

Base and Supplementary Compensation:

● Base Compensation:
○ Definition: The fixed salary or wage that employees receive on a regular
basis (hourly, weekly, monthly) for performing their job duties. It is the
primary component of an employee’s total compensation.
○ Factors Influencing Base Pay: Job role, market rates, employee
qualifications, experience, and performance.
● Supplementary Compensation:
○ Definition: Additional financial benefits provided to employees on top of
their base compensation. This includes bonuses, overtime pay,
commissions, and profit-sharing.
○ Purpose: To reward employees for exceeding performance expectations,
working extra hours, or achieving specific business goals.

Incentive Plans:

● Individual Incentive Plans:

○ Definition: Compensation plans designed to reward individual
employees based on their performance. Examples include sales
commissions, bonuses for meeting personal performance targets, and
piece-rate pay.
○ Advantages: Directly links pay to individual performance, motivating
employees to achieve their personal goals.
○ Disadvantages: Can lead to unhealthy competition among employees
and may not promote teamwork.
● Group Incentive Plans:

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 ○ Definition: Compensation plans that reward a group or team of
employees for achieving collective goals. Examples include
profit-sharing, team bonuses, and gain-sharing.
○ Advantages: Encourages teamwork, collaboration, and collective
problem-solving.
○ Disadvantages: Rewards may not always reflect individual contributions,
leading to potential conflicts within the team.
● Organization-Wide Incentive Plans:
○ Definition: Incentive plans that reward all employees based on the
overall performance of the organization. Examples include
company-wide profit-sharing, stock options, and bonuses tied to
corporate performance metrics.
○ Advantages: Aligns employee interests with organizational goals, fosters
a sense of ownership and commitment to the organization’s success.
○ Disadvantages: External factors beyond employees’ control can
influence the outcomes, and rewards may be less tangible to individual
employees.

Fringe Benefits:

● Definition: Non-wage compensations provided to employees in addition to

their regular salary. These benefits are often designed to enhance employee
satisfaction and well-being.
● Examples:
○ Health Insurance: Medical, dental, and vision coverage for employees
and their families.
○ Retirement Plans: Pension plans, 401(k) matching, and other retirement
savings programs.
○ Paid Time Off (PTO): Vacation days, sick leave, and holidays.
○ Employee Discounts: Discounts on company products or services.
○ Wellness Programs: Gym memberships, mental health support, and
wellness initiatives.

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Performance-Linked Compensation:

● Definition: A compensation system where an employee’s pay is directly linked

to their performance. This can include bonuses, pay raises, and other financial
rewards based on individual, team, or organizational performance metrics.
● Purpose: To incentivize employees to achieve high levels of performance and
align their efforts with organizational goals.
● Examples: Sales commissions, performance-based bonuses, and merit pay
increases.

Employee Stock Option (ESO):

● Definition: A benefit plan that gives employees the right to purchase company
stock at a predetermined price, usually at a discount, after a specified period.
● Purpose: To align employees’ interests with those of the shareholders,
encouraging them to contribute to the company’s long-term success.
● Advantages: Potential for significant financial gains if the company’s stock
price increases, promotes loyalty, and retention.
● Disadvantages: The value of stock options can fluctuate, and employees may
face risks if the company’s stock price declines.

Pay Band Compensation System:

● Definition: A compensation structure that categorizes jobs into different pay

bands or ranges, with a minimum and maximum salary level for each band.
Employees are paid within the range based on their experience, skills, and
performance.
● Advantages: Provides flexibility in salary decisions, allows for career
progression within the same band, and helps control labor costs.
● Disadvantages: Can create discrepancies in pay for similar roles and may lead
to dissatisfaction if not managed transparently.

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 Job Evaluation:

● Definition: A systematic process used to determine the relative worth of jobs

within an organization, often for the purpose of establishing fair and equitable
pay structures.
● Methods:
○ Ranking Method: Jobs are ranked from highest to lowest based on their
overall value to the organization.
○ Job Classification: Jobs are grouped into categories based on similar
duties and responsibilities, and each category is assigned a pay grade.
○ Point-Factor Method: Jobs are evaluated based on specific factors (e.g.,
skill, effort, responsibility) and assigned points. The total points
determine the job’s value.
○ Factor Comparison: A more complex method that involves comparing
jobs against a benchmark using specific compensable factors.

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Unit 5: Employee Maintenance and Emerging issues in HRM

1. Employee Health, Welfare, and Safety

● Employee Health:
○ Definition: Employee health refers to the overall physical and mental
well-being of employees. Ensuring employee health involves promoting
a healthy work environment, providing healthcare benefits, and
supporting mental health initiatives.
○ Importance: Healthy employees are more productive, less likely to take
sick leave, and contribute to a positive workplace culture.
○ Health Programs:
■ Health Insurance: Providing medical, dental, and vision
insurance.
■ Wellness Programs: Initiatives such as health screenings, fitness
programs, mental health support, and stress management
workshops.
■ Occupational Health Services: Offering services that focus on
preventing work-related illnesses and injuries.
● Employee Welfare:
○ Definition: Employee welfare refers to the various services, benefits, and
facilities provided to employees to improve their working conditions and
quality of life.
○ Types of Welfare Measures:
■ Intra-Mural Welfare: Facilities provided within the workplace,
such as canteens, restrooms, recreation facilities, and childcare
centers.
■ Extra-Mural Welfare: Benefits provided outside the workplace,
like housing, education, transportation, and cultural programs.
○ Objectives:

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 ■ Enhancing Employee Satisfaction: Providing welfare measures
helps in boosting employee morale and job satisfaction.
■ Reducing Absenteeism: Better welfare facilities often lead to
lower absenteeism rates.
■ Attracting and Retaining Talent: Companies with robust welfare
programs are more attractive to potential employees.
● Employee Safety:
○ Definition: Employee safety involves protecting employees from
workplace hazards that could cause injury or illness.
○ Importance: Ensuring safety reduces workplace accidents, promotes a
culture of safety, and is legally required under various labor laws.
○ Safety Measures:
■ Safety Training: Regular training sessions on safe work practices,
use of personal protective equipment (PPE), and emergency
procedures.
■ Workplace Safety Policies: Implementing and enforcing safety
protocols, such as fire safety measures, machine guarding, and
ergonomics.
■ Occupational Safety and Health Administration (OSHA):
Compliance with OSHA standards and guidelines to ensure a safe
working environment.

2. Social Security

● Definition: Social security refers to government-mandated programs that

provide financial and social support to employees in times of need, such as
unemployment, illness, disability, or retirement.
● Components of Social Security:
○ Retirement Benefits: Pension schemes and provident funds that provide
financial support to employees after retirement.
○ Unemployment Insurance: Financial assistance provided to employees
who lose their jobs.

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 ○ Disability Benefits: Compensation for employees who are unable to work
due to a disability.
○ Health Insurance: Government or employer-provided health coverage
for medical expenses.
● Importance: Social security systems are crucial for ensuring the financial
stability and well-being of employees, particularly in times of crisis.

3. Employer-Employee Relations

● Definition: Employer-employee relations refer to the relationship between

employers and their employees, including how they communicate, resolve
conflicts, and work together to achieve organizational goals.
● Key Aspects:
○ Communication: Open and transparent communication between
management and employees to build trust and prevent
misunderstandings.
○ Employee Engagement: Involving employees in decision-making
processes and ensuring they feel valued and motivated.
○ Conflict Resolution: Developing mechanisms for resolving disputes and
maintaining harmonious relationships in the workplace.
● Impact on Organizational Performance: Positive employer-employee relations
lead to higher job satisfaction, increased productivity, and lower turnover rates.

4. Grievance Handling and Redressal

● Definition: A grievance is a formal complaint raised by an employee regarding

any aspect of their employment, such as working conditions, discrimination, or
unfair treatment. Grievance handling is the process of addressing these
complaints to ensure a fair and just resolution.
● Grievance Handling Process:
1. Receiving the Grievance: Employees can submit their grievances
verbally or in writing.
2. Acknowledgment: The employer acknowledges receipt of the grievance
and assures the employee that it will be addressed.

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 3. Investigation: A thorough investigation is conducted to understand the
details of the grievance.
4. Resolution: Based on the findings, appropriate action is taken to resolve
the issue.
5. Communication: The outcome of the grievance process is communicated
to the employee.
● Importance: Effective grievance handling prevents escalation of issues,
promotes fairness, and enhances employee trust in management.

5. Industrial Disputes: Causes and Settlement Machinery

● Industrial Disputes:
○ Definition: Industrial disputes refer to conflicts between employers and
employees, or between employees and their unions, typically over issues
such as wages, working conditions, or job security.
○ Causes:
■ Wage Demands: Disagreements over salary increases, bonuses, or
benefits.
■ Working Conditions: Disputes over working hours, safety, and
other workplace conditions.
■ Job Security: Conflicts related to layoffs, retrenchments, or
changes in job roles.
■ Management Policies: Disagreements over management
decisions, such as changes in work processes or organizational
restructuring.
● Settlement Machinery:
○ Conciliation: A neutral third party helps the disputing parties reach an
amicable agreement.
○ Arbitration: A neutral arbitrator hears both sides and makes a binding
decision.
○ Adjudication: A legal process where disputes are settled by a labor court
or tribunal.

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 ○ Collective Bargaining: Negotiations between employers and employee
representatives (usually trade unions) to reach an agreement on
employment terms.

6. Contemporary Issues in HRM

● Human Resource Information System (HRIS):

○ Definition: HRIS is a software system used to manage various HR
functions, such as employee data management, payroll, recruitment,
and performance management.
○ Benefits:
■ Automation of HR Processes: Streamlines HR tasks, reducing
manual work and errors.
■ Data Management: Centralizes employee information, making it
easier to access and analyze.
■ Improved Decision Making: Provides HR analytics and reports
that help in making informed decisions.
● HR Audit:
○ Definition: An HR audit is a comprehensive evaluation of an
organization’s HR policies, practices, and procedures to ensure
compliance with laws and alignment with business goals.
○ Purpose:
■ Identifying Gaps: Highlighting areas where HR practices may be
lacking or non-compliant.
■ Improving Efficiency: Recommending changes to enhance HR
efficiency and effectiveness.
■ Ensuring Compliance: Verifying that HR practices adhere to legal
and regulatory requirements.
● Emerging Job Opportunities:
○ Definition: New job roles and career paths that are emerging due to
technological advancements, changing business needs, and evolving
workforce demographics.
○ Examples:

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 ■ Data Analysts and Scientists: Growing demand for professionals
who can analyze and interpret data to drive business decisions.
■ Sustainability Managers: Roles focused on developing and
implementing sustainability initiatives within organizations.
■ Remote Work Specialists: Professionals who manage and
optimize remote work environments.
● e-HRM:
○ Definition: e-HRM involves using digital tools and platforms to manage
HR functions, such as recruitment, performance appraisal, and
employee engagement.
○ Benefits:
■ Accessibility: Employees and managers can access HR services
from anywhere, at any time.
■ Cost-Effectiveness: Reduces the need for physical infrastructure
and administrative resources.
■ Employee Empowerment: Provides employees with self-service
options for managing their own HR-related tasks.
● Work-Life Balance:
○ Definition: Work-life balance refers to the equilibrium between an
employee’s work responsibilities and personal life.
○ Importance: Maintaining work-life balance is crucial for employee
well-being, job satisfaction, and productivity.
○ Strategies:
■ Flexible Working Hours: Allowing employees to choose their work
hours to better accommodate personal commitments.
■ Remote Work: Offering options to work from home or other
non-office locations.
■ Leave Policies: Providing sufficient paid leave, including vacation
days, parental leave, and sick leave.
● Work from Home:
○ Definition: Work from home (WFH) is a work arrangement where
employees perform their job duties remotely from their home or another
location outside the traditional office.

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 ○ Advantages:
■ Flexibility: Employees can manage their work schedules around
personal responsibilities.
■ Cost Savings: Reduces commuting costs and time, as well as
office-related expenses for employers.
■ Increased Productivity: Some studies suggest that employees are
more productive when working from home due to fewer
distractions and a more comfortable environment.
○ Challenges:
■ Communication: Maintaining clear and effective communication
can be more difficult in a remote setting.
■ Work-Life Balance: The lines between work and personal life can
blur, leading to overwork and burnout.
■ Technology Dependence: Reliable technology and internet access
are essential for effective remote work. Additionally, employees
and organizations must be prepared to address cybersecurity risks
associated with remote work.

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