The nature of Human Resource Management

Chapter One
1.1. Definition and Evolution of HRM
Since mid 1980’s Human Resource Management (HRM) has gained acceptance in both academic and
commercial circle. HRM is a multidisciplinary organizational function that draws theories and ideas from
various fields such as management, psychology, sociology and economics.
There is no best way to manage people and no manager has formulated how people can be managed
effectively, because people are complex beings with complex needs. Effective HRM depends very much
on the causes and conditions that an organizational setting would provide. Any Organization has three
basic components, People, Purpose, and Structure.

In 1994, a noted leader in the human resources (HR) field made the following observation: Yesterday, the
company with the access most to the capital or the latest technology had the best competitive advantage;
Today, companies that offer products with the highest quality are the ones with a leg up on the
competition; But the only thing that will uphold a company’s advantage tomorrow is the caliber of
people in the organization.

That predicted future is today’s reality. Most managers in public- and private sector firms of all sizes
would agree that people truly are the organization’s most important asset. Having competent staff on
the payroll does not guarantee that a firm’s human resources will be a source of competitive advantage.
However in order to remain competitive, to grow, and diversify an organization must ensure that its
employees are qualified, placed in appropriate positions, properly trained, managed effectively, and
committed to the firm’s success. The goal of HRM is to maximize employees’ contributions in order
to achieve optimal productivity and effectiveness, while simultaneously attaining individual objectives
(such as having a challenging job and obtaining recognition), and societal objectives (such as legal
compliance and demonstrating social responsibility).

Human resources management (HRM) is a management function concerned with hiring,

motivating and maintaining people in an organization. It focuses on people in organizations. Human
resource management is designing management systems to ensure that human talent is used
effectively and efficiently to accomplish organizational goals.

HRM is the personnel function which is concerned with procurement, development, compensation,
integration and maintenance of the personnel of an organization for the purpose of contributing
towards the accomplishments of the organization’s objectives. Therefore, personnel management is
the planning, organizing, directing, and controlling of the performance of those operative functions
(Edward B. Philippo).

According to the Invancevich and Glueck, “HRM is concerned with the most effective use of people
to achieve organizational and individual goals. It is the way of managing people at work, so that they
give their best to the organization”.

According to Dessler (2008) the policies and practices involved in carrying out the “people” or human
resource aspects of a management position, including recruiting, screening, training, rewarding, and

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appraising comprises of HRM.

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Generally HRM refers to the management of people in organizations. It comprises of the activities, policies,
and practices involved in obtaining, developing, utilizing, evaluating, maintaining, and retaining the
appropriate number and skill mix of employees to accomplish the organization’s objectives. The goal of
HRM is to maximize employees’ contributions in order to achieve optimal productivity and effectiveness,
while simultaneously attaining individual objectives (such as having a challenging job and obtaining
recognition), and societal objectives (such as legal compliance and demonstrating social responsibility).
In short Human Resource Management (HRM) can be defined as the art of procuring, developing and
maintaining competent workforce to achieve the goals of an organization in an effective and efficient
manner.
Evolution of the HRM/ Personnel Function:
The Commodity concept: Labor as commodity to be bought and sold. Wages based on demand and supply.
Government did very little to protect workers
The Factor of Production concept: Labor any other factor of production, Workers are like machine tools.
The Goodwill concept: Welfare measures like safety, first aid, lunch room, rest room will have a positive
impact on workers‟ productivity
The Paternalistic concept/ Paternalism: Management must assume a fatherly and protective attitude
towards employees. Paternalism does not mean merely providing benefits but it means satisfying various
needs of the employees as parents meet the requirements of the children.
The Humanitarian concept: To improve productivity, physical, social and psychological needs of workers
must be met. As Mayo and others stated, money is less a factor in determining output, than group standards,
group incentives and security. The organization is a social system that has both economic and social
dimensions.
The Human Resource concept: Employees are the most valuable assets of an organization. There should
be a conscious effort to realize organizational goals by satisfying needs and aspirations of employees.
The Emerging concept: Employees should be accepted as partners in the progress of a company. They
should have a feeling that the organization is their own. To this end, managers must offer better quality of
working life and offer opportunities to people to exploit their potential fully. The focus should be on Human
Resource Development.

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1.2. Nature of HRM
HRM is a management function that helps manager’s to recruit, select, train and develop members for an
organization. HRM is concerned with people’s dimension in organizations.
The following constitute the core of HRM
1. HRM Involves the Application of Management Functions and Principles. The functions
and principles are applied to acquiring, developing, maintaining and providing remuneration to
employees in organization.
2. Decision Relating to Employees must be Integrated. Decisions on different aspects of
employees must be consistent with other human resource (HR) decisions.
3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an
organization will result in betterment of services to customers in the form of high quality products
supplied at reasonable costs.
4. HRM Functions are not confined to Business Establishments Only but applicable to non-
business organizations such as education, health care, recreation and like.
HRM refers to a set of programs, functions and activities designed and carried out in order to maximizeboth
employee as well as organizational effectiveness.
1.3. Scope of HRM
The scope of HRM is indeed vast. All major activities in the working life of a worker – from the time of his
or her entry into an organization until he or she leaves the organizations comes under the purview of HRM.
The major HRM activities include HR planning, job analysis, job design, employee hiring, employee and
executive remuneration, employee motivation, employee maintenance, industrial relations and prospects
of HRM.
The scope of Human Resources Management extends to:
1. All the decisions, strategies, factors, principles, operations, practices, functions, activities and
methods related to the management of people as employees in any type of organization.
2. All the dimensions related to people in their employment relationships, and all the dynamics that
flow from it.

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 Figure 1.1: Scope of HRM
The scope of HRM is really vast. All major activities n the working life of a worker – from the time of his
or her entry into an organization until he or she leaves it comes under the purview of HRM. American
Society for Training and Development (ASTD) conducted fairly an exhaustive study in this field and
identified nine broad areas of activities of HRM.

These are given below:

3. Human Resource Planning
4. Design of the Organization and Job
5. Selection and Staffing
6. Training and Development
7. Organizational Development
8. Compensation and Benefits
9. Employee Assistance
10. Union/Labour Relations
11. Personnel Research and Information System

a) Human Resource Planning: The objective of HR Planning is to ensure that the organization has
the right types of persons at the right time at the right place. It prepares human resources inventory
with a view to assess present and future needs, availability and possible shortages inhuman resource.
Thereupon, HR Planning forecast demand and supplies and identify sources of selection. HR
Planning develops strategies both long-term and short-term, to meet the man-power requirement.

b) Design of Organization and Job: This is the task of laying down organization structure, authority,
relationship and responsibilities. This will also mean definition of work contents for each position
in the organization. This is done by “job description”. Another important step is “Job specification”.
Job specification identifies the attributes of persons who will be most suitable for each job which
is defined by job description.

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 c) Selection and Staffing: This is the process of recruitment and selection of staff. This involves
matching people and their expectations with which the job specifications and career path available
within the organization.
d) Training and Development: This involves an organized attempt to find out training needs of the
individuals to meet the knowledge and skill which is needed not only to perform current job but
also to fulfill the future needs of the organization.
e) Organizational Development: This is an important aspect whereby “Synergetic effect” is
generated in an organization i.e. healthy interpersonal and inter-group relationship within the
organization.
f) Compensation and Benefits: This is the area of wages and salaries administration where wages
and compensations are fixed scientifically to meet fairness and equity criteria. In addition labor
welfare measures are involved which include benefits and services.
g) Employee Assistance: Each employee is unique in character, personality, expectation and
temperament. By and large each one of them faces problems every day. Some are personal some
are official. In their case he or she remains worried. Such worries must be removed to make him
or her more productive and happy.
h) Union-Labor Relations: Healthy Industrial and Labor relations are very important for enhancing
peace and productivity in an organization. This is one of the areas of HRM.
i) Personnel Research and Information System: Knowledge on behavioral science and industrial
psychology throws better insight into the workers expectations, aspirations and behavior.
Advancement of technology of product and production methods have created working environment
which are much different from the past. Globalization of economy has increased competition
many fold. Science of ergonomics gives better ideas of doing a work more conveniently by an
employee. Thus, continuous research in HR areas is an unavoidable requirement. It must also take
special care for improving exchange of information through effective communication systems on a
continuous basis especially on moral and motivation.
HRM is a broad concept; personnel management (PM) and Human resource development (HRD) are a
part of HRM.
1.4. Objectives of HRM
The primary objective of HRM is to ensure the availability of competent and willing workforce to an
organization. The specific objectives include the following:

1) Human capital : assisting the organization in obtaining the right number and types of employees to
fulfill its strategic and operational goals
2) Developing organizational climate: helping to create a climate in which employees are encouraged
to develop and utilize their skills to the fullest and to employ the skills and abilities of the workforce
efficiently
3) Helping to maintain performance standards and increase productivity through effective job design;
providing adequate orientation, training and development; providing performance-related feedback;
and ensuring effective two-way communication.
4) Helping to establish and maintain a harmonious employer/employee relationship
5) Helping to create and maintain a safe and healthy work environment

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 6) Developing programs to meet the economic, psychological, and social needs of the employees
and helping the organization to retain the productive employees
7) Ensuring that the organization is in compliance with provincial/territorial and federal laws affecting
the workplace (such as human rights, employment equity, occupational health and safety,
employment standards, and labor relations legislation). To help the organization to reach its goals
8) To provide organization with well-trained and well-motivated employees
9) To increase the employees satisfaction and self-actualization
10) To develop and maintain the quality of work life
11) To communicate HR policies to all employees.
12) To help maintain ethical polices and behavior.
The above stated HRM objectives can be summarized under four specific objectives: societal, organizational,
and functional and personnel.

Personnel

Figure 1.2: Objectives of HRM

1) Societal Objectives: seek to ensure that the organization becomes socially responsible to the
needs and challenges of the society while minimizing the negative impact of such demands upon
the organization. The failure of the organizations to use their resources for the society’s benefit in
ethical ways may lead to restriction.
2) Organizational Objectives: it recognizes the role of HRM in bringing about organizational
effectiveness. It makes sure that HRM is not a standalone department, but rather a means to assist
the organization with its primary objectives. The HR department exists to serve the rest of the
organization.
3) Functional Objectives: is to maintain the department’s contribution at a level appropriate to the
organization’s needs. Human resources are to be adjusted to suit the organization’s demands. The
department’s value should not become too expensive at the cost of the organization it serves.
4) Personnel Objectives: it is to assist employees in achieving their personal goals, at least as far as
these goals enhance the individual’s contribution to the organization. Personal objectives of
employees must be met if they are to be maintained, retained and motivated. Otherwise employee
performance and satisfaction may decline giving rise to employee turnover.
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 Table 1.1 HRM Objectives and Functions

HRM Objectives Supporting Functions

1. Societal Objectives Legal compliance
Benefits
Union- management relations
2. Organizational Objectives Human Resource Planning
Employee relations
Selection
Training and development
Appraisal
Placement
Assessment
3. Functional Objectives Appraisal
Placement
Assessment
4. Personal Objectives Training and development
Appraisal
Placement
Compensation
Assessment

1.5. Functions of HRM

Human Resources management has an important role to play in equipping organizations to meet the
challenges of an expanding and increasingly competitive sector. Increase in staff numbers, contractual
diversification and changes in demographic profile which compel the HR managers to reconfigure the role
and significance of human resources management. The functions are responsive to current staffing needs,
but can be proactive in reshaping organizational objectives. All the functions of HRM are correlated with
the core objectives of HRM (Table 1.1). For example personal objectives is sought to be realized
through functions like remuneration, assessment etc.

Figure 1.3 : Functions of HRM

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HR management can be thought of as seven interlinked functions taking place within organizations, as
depicted in Figure 1.3 Additionally, external forces—legal, economic, technological, global, environmental,
cultural/geographic, political, and social—significantly affect how HR functions are designed, managed,
and changed. The functions can be grouped as follows:
 Strategic HR Management: As a part of maintaining organizational competitiveness, strategic
planning for HR effectiveness can be increased through the use of HR metrics and HR technology.
Human resource planning (HRP) function determine the number and type of employees needed to
accomplish organizational goals. HRP includes creating venture teams with a balanced skill-mix,
recruiting the right people, and voluntary team assignment. This function analyzes and determines
personnel needs in order to create effective innovation teams. The basic HRP strategy is staffing
and employee development.
 Equal Employment Opportunity: Compliance with equal employment opportunity (EEO) laws
and regulations affects all other HR activities.
 Staffing: The aim of staffing is to provide a sufficient supply of qualified individuals to fill jobs in an
organization. Job analysis, recruitment and selection are the main functions under staffing.
Workers job design and job analysis laid the foundation for staffing by identifying what diverse
people do in their jobs and how they are affected by them.
Job analysis is the process of describing the nature of a job and specifying the human requirements
such as knowledge, skills, and experience needed to perform the job. The end result of job
analysis is job description. Job description spells out work duties and activities of employees.
Through HR planning, managers anticipate the future supply of and demand for employees and
the nature of workforce issues, including the retention of employees. So HRP precedes the actual
selection of people for organization. These factors are used when recruiting applicants for job
openings. The selection process is concerned with choosing qualified individuals to fill those jobs.
In the selection function, the most qualified applicants are selected for hiring from among the
applicants based on the extent to which their abilities and skills are matching with the job.
 Talent Management and Development: Beginning with the orientation of new employees,
talent management and development includes different types of training. Orientation is the first
step towards helping a new employee to adjust himself to the new job and the employer. It is a
method to acquaint new employees with particular aspects of their new job, including pay and
benefit programs, working hours and company rules and expectations.
Training and Development programs provide useful means of assuring that the employees are
capable of performing their jobs at acceptable levels and also more than that. All the organizations
provide training for new and in experienced employee. In addition, organization often provide
both on the job and off the job training programs for those employees whose jobs are undergoing
change.
Likewise, HR development and succession planning of employees and managers is necessary to
prepare for future challenges. Career planning has developed as result of the desire of many
employees to grow in their jobs and to advance in their career. Career planning activities include
assessing an individual employee’s potential for growth and advancement in the organization.
Performance appraisal includes encouraging risk taking, demanding innovation, generating or
adopting new tasks, peer evaluation, frequent evaluations, and auditing innovation processes.

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 This function monitors employee performance to ensure that it is at acceptable levels. This strategy
appraises individual and team performance so that there is a link between individual innovativeness
and company profitability. Which tasks should be appraised and who should assess employees’
performance are also taken into account.
 Total Rewards: Compensation in the form of pay, incentives and benefits are the rewards givento
the employees for performing organizational work. Compensation management is the methodfor
determining how much employees should be paid for performing certain jobs. Compensation
affects staffing in that people are generally attracted to organizations offering a higher level of pay
in exchange for the work performed. To be competitive, employers develop and refine their basic
compensation systems and may use variable pay programs such as incentive rewards, promotion
from within the team, recognition rewards, balancing team and individual rewards etc. This function
uses rewards to motivate personnel to achieve an organization’s goals of productivity, innovation
and profitability. Compensation is also related to employee development in that it provides an
important incentive in motivating employees to higher levels of job performance to higher paying
jobs in the organization.
Benefits are another form of compensation to employees other than direct pay for the work
performed. Benefits include both legally required items and those offered at employer’s discretion.
Benefits are primarily related to the area of employee maintenance as they provide for many basic
employee needs.
 Risk Management and Worker Protection: HRM addresses various workplace risks to
ensure protection of workers by meeting legal requirements and being more responsive to concerns
for workplace health and safety along with disaster and recovery planning.
 Employee and Labor Relations: The relationship between managers and their employees
must be handled legally and effectively. Employer and employee rights must be addressed. It is
important to develop, communicate, and update HR policies and procedures so that managers
and employees alike know what is expected. In some organizations, union/management relations
must be addressed as well. The term labor relation refers to the interaction with employees who
are represented by a trade union. Unions are organization of employees who join together to
obtain more voice in decisions affecting wages, benefits, working conditions and other aspects of
employment. With regard to labor relations the major function of HR personnel includes negotiating
with the unions regarding wages, service conditions and resolving disputes and grievances.
1.6. Role of HRM
The role of HRM is to plan, develop and administer policies and programs designed to make optimum use
of an organizations human resources. It is that part of management which is concerned with the people at
work and with their relationship within enterprises. Its objectives are: (a) effective utilization of human
resources, (b) desirable working relationships among all members of the organizations, and (c) maximum
individual development. Human resources function as primarily administrative and professional. HR staff
focused on administering benefits and other payroll and operational functions and didn’t think of themselves
as playing a part in the firm’s overall strategy.
HR professionals have an all-encompassing role. They are required to have a thorough knowledge of the
organization and its intricacies and complexities. The ultimate goal of every HR person should be to
develop a linkage between the employee and organization because employee’s commitment to the
organization is crucial.
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The first and foremost role of HR personnel is to impart continuous education to the employees about the
changes and challenges facing the country in general and their organization in particular. The employees
should know about the balance sheet of the company, sales progress, and diversification of plans, share
price movements, turnover and other details about the company. The HR professionals should impart
such knowledge to all employees through small booklets, video films and lectures.
The primary responsibilities of Human Resource managers are:
1. To develop a thorough knowledge of corporate culture, plans and policies.
2. To act as an internal change agent and consultant
3. To initiate change and act as an expert and facilitator
4. To actively involved in company’s strategy formulation
5. To keep communication line open between the HRD function and individuals and groups both
within and outside the organization\
6. To identify and evolve HRD strategies in consonance with overall business strategy.
7. To facilitate the development of various organizational teams and their working relationship with
other teams and individuals.
8. To try and relate people and work so that the organization objectives are achieved efficiently and
effectively.
9. To diagnose problems and determine appropriate solution particularly in the human resource
areas.
10. To provide co-ordination and support services for the delivery of HRD programmes and services
11. To evaluate the impact of an HRD intervention or to conduct research so as to identify, develop or
test how HRD In general has improved individual and organizational performance.
Different management gurus have deliberated different roles for the HR manager based on the major
responsibilities that they full fill in the organization. Few of the commonly accepted models are enumerated
below.
Pat Mc Lagan has suggested nine roles that are played by HR practitioners
1. To bring the issues and trends concerning an organization’s external and internal people to the
attention of strategic decision makers and to recommend long term strategies to support
organizational excellence and endurance.
2. To design and prepare HR systems and actions for implementation so that they can produce
maximum impact on organizational performance and development.
3. To facilitate the development and implementation of strategies for transforming one’s own
organization by pursuing values and visions.
4. To create a positive relationship with the customer’s by providing them with the best services; to
utilize the resources to the maximum and to create commitment among the people who help the
organization to meet the customers’ needs whether directly connected or indirectly connected to
the organization.
5. To identify the learning needs hence to design and develop structured learning programs and
materials to help accelerate learning for individuals and groups.

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 6. To enable the individuals and groups to work in new situations and to expend \and change their
views so that people in power move from authoritarian to participative models of leadership.
7. To help employees to assess their competencies, values and goals so that they can identify, plan
and implement development plans.
8. He also assists the individual employee to add values in the workplace and to focus on the
interventions and interpersonal skills for helping people change and sustain change.
9. He assesses the HRD practices and programs and their impact and to communicate results so
that the organization and its people accelerate their change and development.
According to Dave Ulrich HR play’s four key roles.
1. Strategic Partner Role-turning strategy into results by building organizations that create value;
2. Change Agent Role- making change happen, and in particular, help it happen fast
3. Employees Champion Role—managing the talent or the intellectual capital within a firm
4. Administrative Role—trying to get things to happen better, faster and cheaper.
The role HR in organizations has undergone an extensive change and many organizations have gradually
oriented themselves from the traditional personnel management to a human resources management approach.
The basic approach of HRM is to perceive the organization as a whole. Its emphasis is not only on
production and productivity but also on the quality of life. It seeks to achieve the paramount development
of human resources and the utmost possible socio-economic development.
Current Classification of HR roles
According to R.L Mathis and J. H. Jackson (2010) several roles can be fulfilled by HR management. The
nature and extent of these roles depend on both what upper management wants HR management to do
and what competencies the HR staff have demonstrated. Three roles are typically identified for HR. The
focus of each of them, as shown in Figure 1.is elaborated below:

Administrative Operational Actions Strategic HR

Personnel practices Managing employee
relationship issues strategies
and paperwork Employee advocate HR strategic or planning
Evaluation of HR
effectiveness.

Figure 1.4 : Current Classification of HR roles

Fig 1.4 Current Classification of HR Roles

1. Administrative Role of HR
The administrative role of HR management has been heavily oriented to administration and recordkeeping
including essential legal paperwork and policy implementation. Major changes have happened in the
administrative role of HR during the recent years. Two major shifts driving the transformation of the
Administrative role are: Greater use of technology and Outsourcing.

Technology has been widely used to improve the administrative efficiency of HR and the responsiveness
of HR to employees and managers, more HR functions are becoming available electronically or are being
done on the Internet using Web-based technology. Technology is being used in most HR activities, from
employment applications and employee benefits enrollments to e-learning using Internet-based resources.
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Increasingly, many HR administrative functions are being outsourced to vendors. This outsourcing of HR
administrative activities has grown dramatically in HR areas such as employee assistance (counseling),
retirement planning, benefits administration, payroll services, and outplacement services.
2. Operational and Employee Advocate Role for HR
HR managers manage most HR activities in line with the strategies and operations that have been identified
by management and serves as employee “champion” for employee issues and concerns.
HR often has been viewed as the “employee advocate” in organizations. They act as the voice for employee
concerns, and spend considerable time on HR “crisis management,” dealing with employee problems that
are both work-related and not work-related. Employee advocacy helps to ensure fair and equitable
treatment for employees regardless of personal background or circumstances.
Sometimes the HR’s advocate role may create conflict with operating managers. However, without the
HR advocate role, employers could face even more lawsuits and regulatory complaints than they do now.

The operational role requires HR professionals to cooperate with various departmental and operating
managers and supervisors in order to identify and implement needed programs and policies in the
organization. Operational activities are tactical in nature. Compliance with equal employment opportunity
and other laws is ensured, employment applications are processed, current openings are filled through
interviews, supervisors are trained, safety problems are resolved, and wage and benefit questions are
answered. For carrying out these activities HR manager matches HR activities with the strategies of the
organization.

3. Strategic Role for HR

The administrative role traditionally has been the dominant role for HR. However, as Figure 1.4 indicates
that a broader transformation in HR is needed so that significantly less HR time and fewer HR staffs are
used just for clerical work.

Differences between the operational and strategic roles exist in a number of HR areas. The strategic HR
role means that HR professionals are proactive in addressing business realities and focusing on future
business needs, such as strategic planning, compensation strategies, the performance of HR, and measuring
its results. However, in some organizations, HR often does not play a key role in formulating the strategies
for the organization as a whole; instead it merely carries them out through HR activities.
Many executives, managers, and HR professionals are increasingly seeing the need for HR management
to become a greater strategic contributor to the “business” success of organizations. HR should be
responsible for knowing what the true cost of human capital is for an employer. For example, it may cost
two times key employees’ annual salaries to replace them if they leave. Turnover can be controlled though
HR activities, and if it is successful in saving the companymoney with good retention and talent management
strategies, those may be important contributions to the bottom line of organizational performance.
The role of HR as a strategic business partner is often described as “having a seat at the table,” and
contributing to the strategic directions and success of the organization. That means HR is involved in
devising strategy in addition to implementing strategy. Part of HR’s contribution is to have financial
expertise and to produce financial results, not just to boost employee morale or administrative efficiencies.
Therefore, a significant concern for chief financial officers (CFOs) is whether HR executives are equipped
to help them to plan and meet financial requirements.
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However, even though this strategic role of HR is recognized, many organizations still need to make
significant progress toward fulfilling it. Some examples of areas where strategic contributions can be made
by HR are:
 Evaluating mergers and acquisitions for organizational “compatibility,” structural changes, and
staffing needs
 Conducting workforce planning to anticipate the retirement of employees at all levels and identify
workforce expansion in organizational strategic plans
 Leading site selection efforts for new facilities or transferring operations to international outsourcing
 locations based on workforce needs
 Instituting HR management systems to reduce administrative time, equipment, and staff by using
HR technology
 Working with executives to develop a revised sales
 compensation and incentives plan as new products
It is the era when for the competitive triumph of the organization there is a need to involve HRM significantly
in an integrated manner, which demands such capabilities from the HR specialists.
The role of HR shifted from a facilitator to a functional peer with competencies in other functions, and is
acknowledged as an equal partner by others. The HR is motivated to contribute to organizational objectives
of profitability and customer satisfaction, and is seen as a vehicle for realization of quality development.
The department has a responsibility for monitoring employee satisfaction, since it is seen as substitute to
customer satisfaction.
According to McKinsey’s 7-S framework model HR plays the role of a catalyst for the organization.
According to this framework, effective organizational change is a complex relationship between seven
S’s. HRM is a total matching process between the three Hard S’s (Strategy, Structure and Systems) and
the four Soft S’s (Style, Staff, Skills and Super-ordinate Goals). Clearly, all the S’s have to complement
each other and have to be aligned towards a single corporate vision for the organization to be effective. It
has to be realized that most of the S’s are determined directly or indirectly by the way Human Resources
are managed, and therefore, HRM must be a part of the total business strategy.

1.7. Human Resource Planning

According to Vetter, “HRP is the process by which management determines how the organization should
move from its current man power position to desired manpower position. Through planning, management
strives to have the right time, doing things which result in both the organization and individual receiving
maximum long run benefits”.
According to Gordon Mc Beath, “HRP is concerned with two things: Planning of manpower requirements
and Planning of Manpower supplies”.
According to Beach, “HRP is a process of determining and assuming that the organization will have an
adequate number of qualified persons, available at proper times, performing jobs which meet the needs of
the enterprise and which provides satisfaction for the individuals involved”
Simply HRP can be understood as the process of forecasting an organization’s future demands for and
supply of the right type of people in the right number. In other words HRP is the process of determining
manpower needs and formulating plans to meet these needs.
HRP is a Four-Phased Process.
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  The first phase involves the gathering and analysis of data through manpower inventories and
forecasts,
 The second phase consists of establishing manpower objectives and policies and gaining top
management approval of these.
 The third phase involves designing and implementing plans and promotions to enable the
organization to achieve its manpower objectives.
 The fourth phase is concerned with control and evaluation of manpower plans to facilitate progress
in order to benefit both the organization and the individual. The long run view means that gains
may be sacrificed in the short run for the future grounds. The planning process enables the
organization to identify what its manpower needs is and what potential manpower problems required
current action. This leads to more effective and efficient performance.
1.7.1. Nature of HRP
Human resource planning is the process of analyzing and identifying the availability and the need for human
resources so that the organization can meet its objectives. The focus of HR planning is to ensure that the
organization has the right number of human resources, with the right capabilities, at the right times, and in
the right places. In HR planning, an organization must consider the availability and allocation of people to
jobs over long periods of time, not just for the next month or the next year.

HRP is a sub system in the total organizational planning. Actions may include shifting employees to other
jobs in the organization, laying off employees or otherwise cutting back the number of employees, developing
present employees, and/or increasing the number of employees in certain areas. Factors to consider
include the current employees’ knowledge, skills, and abilities and the expected vacancies resulting from
retirements, promotions, transfers, and discharges. To do this, HR planning requires efforts by HR
professionals working with executives and managers.

1.7.2. Objectives of Human Resource Planning

1. To ensure optimum utilization of human resources currently available in the organization.
2. To assess or forecast the future skill requirement of the organization.
3. To provide control measures to ensure that necessary resources are available as and when required.
4. A series of specified reasons are there that attaches importance to manpower planning and
forecasting exercises. They are elaborated below:
 To link manpower planning with the organizational planning
 To determine recruitment levels.
 To anticipate redundancies.
 To determine optimum training levels.
 To provide a basis for management development programs.
 To cost the manpower.
 To assist productivity bargaining.
 To assess future accommodation requirement.
 To study the cost of overheads and value of service functions.
15
  To decide whether certain activity needs to be subcontracted, etc.
HRP exists as a part of planning process of business. This is the activity that aims to coordinate the
requirements for the availability of the different types of employers. The major activities are theforecasting,
(future requirements), inventorying (present strength), anticipating (comparison of present and future
requirements) and planning (necessary program to meet the requirements).

The HR forecasts are responsible for estimating the number of people and the jobs needed byan organization
to achieve its objectives and realize its plans in the most efficient and effective manner.

HR needs are computed by subtracting HR supplies or number of the employees available from expected
HR demands or number of people required to produce a desired level of outcome. The objective of HR
is to provide right personnel for the right work and optimum utilization of the existing human resources.
The objectives of human resource planning may be summarized as below:
 Forecasting Human Resources Requirements: HRP is essential to determine the future needs
of HR in an organization. In the absence of this plan it is very difficult to provide the right kind of
people at the right time.
 Effective Management of Change: Proper planning is required to cope with changes in the
different aspects which affect the organization. These changes need continuation of allocation/
reallocation and effective utilization of HR in organization.

 Realizing the Organizational Goals: In order to meet the expansion and other organizational activities
the organizational HR planning is essential.
 Promoting Employees: HRP gives the feedback in the form of employee data which can be used in
decision-making in promotional opportunities to be made available for the organization.
 Effective Utilization of HR: The data base will provide the useful information in identifying surplus
and deficiency in human resources. The objective of HRP is to maintain and improve the organizational
capacity to reach its goals by developing appropriate strategies that will result in the maximum
contribution of HR.

16
1.7.3. Need for HRP in Organizations
Major reasons for the emphasis on HRP at the Macro level:
1) Employment-Unemployment Situation: Though in general the number of educated
unemployment is on the rise, there is acute shortage for a variety of skills. This emphasizes on the
need for more effective recruitment and employee retention.
2) Technological Change: The changes in production technologies, marketing methods and
management techniques have been extensive and rapid. Their effect has been profound on the job
contents and job contexts. These changes have caused problems relating to redundancies, retention
and redeployment. All these suggest the need to plan manpower needs intensively and systematically.

3) Demographic Change: The changing profile of the work force in terms of age, sex, literacy,
technical inputs and social background has implications for HRP.

4) Skill Shortage: Unemployment does not mean that the labour market is a buyer’s market.
Organizations generally become more complex and require a wide range of specialist skills that
are rare and scare. A problem arises in an organization when employees with such specialized
skills leave.

5) Governmental Influences: Government control and changes in legislation with regard to

affirmative action for disadvantages groups, working conditions and hours of work, restrictions
on women and child employment, causal and contract labor, etc. have stimulated the organizationsto
be become involved in systematic HRP.

6) Legislative Control: The policies of “hire and fire” have gone. Now the legislation makes it
difficult to reduce the size of an organization quickly and cheaply. It is easy to increase but difficult
to shed the fat in terms of the numbers employed because of recent changes in labor law relatingto
lay-offs and closures. Those responsible for managing manpower must look far ahead and thus
attempt to foresee manpower problems.

7) Impact of the Pressure Group: Pressure groups such as unions, politicians and persons displaced
from land by location of giant enterprises have been raising contradictory pressure on enterprise
management such as internal recruitment and promotion, preference to employees’ children, displace
person, sons of soil etc.
8) Systems Approach: The spread of system thinking and advent of the macro computer as the
part of the on-going revolution in information technology which emphasis planning and newer
ways of handling voluminous personnel records.

9) Lead Time: The log lead time is necessary in the selection process and training and deployment
of the employee to handle new knowledge and skills successfully.

17
1.7.4. Importance of HRP
HRP is the subsystem in the total organizational planning. Organizational planning includes managerial
activities that set the company’s objective for the future and determines the appropriate means for achieving
those objectives. The importance of HRP is elaborated on the basis of the key roles that it is playing in the
organization.
1. Future Personnel Needs: Human resource planning is significant because it helps to determine
the future personnel needs of the organization. If an organization is facing the problem of either
surplus or deficiency in staff strength, then it is the result of the absence of effecting HR planning.
All public sector enterprises find themselves overstaffed now as they never had any planning for
personnel requirement and went of recruitment spree till late 1980’s. The problem of excess staff
has become such a prominent problem that many private sector units are resorting to VRS ‘voluntary
retirement scheme’. The excess of labor problem would have been there if the organization had
good HRP system. Effective HRP system will also enable the organization to have good succession
planning.
2. Part of Strategic Planning: HRP has become an integral part of strategic planning of strategic
planning. HRP provides inputs in strategy formulation process in terms of deciding whether the
organization has got the right kind of human resources to carry out the given strategy. HRP is also
necessary during the implementation stage in the form of deciding to make resource allocation
decisions related to organization structure, process and human resources. In some organizations
HRP play as significant role as strategic planning and HR issues are perceived as inherent in
business management.
3. Creating Highly Talented Personnel: Even though India has a great pool of educated
unemployed, it is the discretion of HR manager that will enable the company to recruit the right
person with right skills to the organization. Even the existing staff hope the job so frequently that
organization face frequent shortage of manpower. Manpower planning in the form of skill
development is required to help the organization in dealing with this problem of skilled manpower
shortage
4. International Strategies: An international expansion strategy of an organization is facilitated to
a great extent by HR planning. The HR department’s ability to fill key jobs with foreign nationals
and reassignment of employees from within or across national borders is a major challenge that is
being faced by international business. With the growing trend towards global operation, the need
for HRP will as well will be the need to integrate HRP more closely with the organizations strategic
plans. Without effective HRP and subsequent attention to employee recruitment, selection,
placement, development, and career planning, the growing competition for foreign executives
may lead to expensive and strategically descriptive turnover among key decision makers.
5. Foundation for Personnel Functions: HRP provides essential information for designing and
implementing personnel functions, such as recruitment, selection, training and development,
personnel movement like transfers, promotions and layoffs.
6. Increasing Investments in Human Resources: Organizations are making increasing investments
in human resource development compelling the increased need for HRP. Organizations are realizing

18
 that human assets can increase in value more than the physical assets. An employee who gradually
develops his/ her skills and abilities become a valuable asset for the organization. Organizations
can make investments in its personnel either through direct training or job assignment and the
rupee value of such a trained, flexible, motivated productive workforce is difficult to determine.
Top officials have started acknowledging that quality of work force is responsible for both short
term and long term performance of the organization.
7. Resistance to Change: Employees are always reluctant whenever they hear about change and
even about job rotation. Organizations cannot shift one employee from one department to another
without any specific planning. Even for carrying out job rotation (shifting one employee from one
department to another) there is a need to plan well ahead and match the skills required and
existing skills of the employees.
8. Uniting the Viewpoint of Line and Staff Managers: HRP helps to unite the viewpoints of line
and staff managers. Though HRP is initiated and executed by the corporate staff, it requires the
input and cooperation of all managers within an organization. Each department manager knows
about the issues faced by his department more than anyone else. So communication between HR
staff and line managers is essential for the success of HR Planning and development.
9. Succession Planning: Human Resource Planning prepares people for future challenges. The
‘stars’ are picked up, trained, assessed and assisted continuously so that when the time comes
such trained employees can quickly take the responsibilities and position of their boss or seniors
as and when situation arrives.
10. Other Benefits: (a) HRP helps in judging the effectiveness of manpower policies and programsof
management. (b) It develops awareness on effective utilization of human resources for the
overall development of organization. (c) It facilitates selection and training of employees with
adequate knowledge, experience and aptitudes so as to carry on and achieve the organizational
objectives (d) HRP encourages the company to review and modify its human resource policies
and practices and to examine the way of utilizing the human resources for better utilization.
1.7.5. Factors Affecting HRP
HRP is influenced by several factors. The most important of the factors that affect HRP are (1) type and
strategy of organization (2) organizational growth cycles and planning (3) environmental uncertainties (4)
time horizons (5) type and quality of forecasting information (4) nature of jobs being filled and (5)
offloading the work.
1. Type and Strategy of the Organization: Type of the organization determines the production processes
involve, number and type of staff needed and the supervisory and managerial personnel required. HR
need is also defined by the strategic plan of organization. If the organization has a plan for organic growth
then organization need to hire additional employees. On the other hand If the organization is going for
mergers and acquisition, then organization need to plan for layoffs, as mergers can create, duplicate or
overlap positions that can be handled more efficiently with fewer employees.
Organization first decides whether to be reactive or proactive in HRP. Organizations either carefully
anticipate the needs and systematically plan to fill the need in advance (proactive) or can simply react to
the needs as they arise (reactive). Likewise, the organization must determine the width of the HR plan.
Organization can choose a narrow focus by planning in only one or two HR areas like recruitment and
selection or can have a broad perspective by planning in all areas including training and remuneration.
19
The nature of HR plan is also decides upon the formality of the plan. It can decides to have an informal
plan that lies mostly in the minds of the managers and personnel staff or can have a formal plan which is
properly documented in writing

The nature of HR plan is also depended upon the flexibility that is practiced in the organization. HR plan
should have the ability to anticipate and deal with contingencies. Organizations frame HRP in such a way
that it can contain many contingencies, which reflect different scenarios thereby assuring that the plan is
flexible and adaptable.

Organizational
Growth cycle
and Planning

Type and Environmental

Strategy of Uncertainties
Organization.

HRP
Time horizons Outsourcing

Type and
quality of
forecasting Nature of jobs
information being filled

Figure 1.2 : Factors Affecting HRP.

Figure 1.2. Summarizes the five factors that influence an organization while framing its strategic HRP.

2. Organizational Growth Cycles and Planning: All organizations pass through different stages of
growth from the day of its inception. The stage of growth in which an organization is determines the nature
and extends of HRP. Small organizations in the earlier stages of growth may not have well defined personnel
planning. But as the organization enters the growth stage they feel the need to plan its human resource. At
this stage organization gives emphasis upon employee development. But as the organization reaches the
mature stage it experience less flexibilityand variability resulting in low growth rate. HR planning becomes
more formalized and less flexible and less innovative and problem like retirement and possible retrenchment
dominate planning.
During the declining stage of the organization HRP takes a different focus like planning to do the layoff,
retrenchment and retirement. In declining situation planning always becomes reactive in nature towards
the financial and sales distress faced by the company.
3. Environmental Uncertainties: Political, social and economic changes affect all organizations and the
fluctuations that are happening in these environments affect organizations drastically. Personnel planners
deal with such environmental uncertainties by carefully formulating recruitment, selection, training and

20
development policies and programs. The balance in the organization is achieved through careful succession
planning, promotion channels, layoffs, flexi time, job sharing, retirement, VRS and other personnel related
arrangements.
4. Time Horizons: HR plans can be short term or long term. Short term plans spans from six months to
one year, while long term plans spread over three to twenty years. The extent of time period depends
upon the degree of uncertainty that is prevailing in an organizations environment. Greater the uncertainty,
shorter the plan time horizon and vice versa.

Table 1.1 : Degree of Uncertainty and Length of Planning Period

Short Planning period- uncertainty/ Long planning period- certainty/ stability

instability
Many new competitors Strong competitive position
Rapid changes in social and economic Evolutionary, rather than rapid social,
conditions political and technological change
Unstable product/ service demand patterns Stable demand patterns
Small organizational size, poor management Strong management practices.
practices (crisis Management)

Source: Elmer H. Burack and Nicholas J. Mathis, Human Resource Planning- A Pragmatic approach
to manpower Staffing and development, Illinosis, Brace- Park Press, 1987, p. 129.
5. Type and Quality of information: The information used to forecast personnel needs originates from
a multitude of sources. The forecast depends to a large extent upon the type of information and the quality
of data that is available to personnel planners. The quality and accuracy of information depend upon the
clarity with which the organizational decision makers have defined their strategy, structure, budgets,
production schedule and so on.

Table 1.2 : Levels of HRP Information

Strategic Information General Organizational Specific Information

Information Necessary for HRP
Product m ix Organizational structure Job analysis
Customer mix Information flows Skills inventories
Competitive emphasis Operating and capital Management inventories
budgets
Functional area objectives
Geographic limits of Production schedules Available training and
market Distribution channels development programs
Sales territories Recruitment sources
Production processes
Level of technology Labor market analysis
Planning horizons Compensation programs
Constitutional provisions
and labor laws
Retirement plans
Turnover data.

Source: Leap& Crino, Personnel/ Human Resource Management, p. 161.

6. Nature of Jobs Being Filled: Personnel planners need to be really careful with respect to the nature
of the jobs being filled in the organization. Employees belonging to lower level who need very limited skills
can be recruited hastily but, while hiring employees for higher posts, selection and recruitment need to be
carried out with high discretion. Organization need to anticipate vacancies far in advance as possible, to
provide sufficient time to recruit suitable candidate.

21
7. Outsourcing: Several organizations outsource part of their work to outside parties in the form of
subcontract. Outsourcing is a regular feature both in the public sector as well as in the private sector
companies. Many of the organizations have surplus labor and hence instead of hiring more people theygo
for outsourcing. Outsourcing is usually done for non-critical activities. Outsourcing of non- critical
activities through subcontracting determines HRP.
1.7.6. HRP Process
HRP effectively involves forecasting personnel needs, assessing personnel supply and matching demand–
supply factors through personnel related programs. The HR planning process is influenced by overall
organizational objectives and environment of business.

Figure 1.3. : The HRP Process

Environmental Scanning:
It refers to the systematic monitoring of the external forces influencing the organization. The following
forces are essential for pertinent HRP.
 Economic factors, including general and regional conditions.
 Technological changes
 Demographic changes including age, composition and literacy,
 Political and legislative issues, including laws and administrative rulings
 Social concerns, including child care, educational facilities and priorities.
By scanning the environment for changes that will affect an organization, managers can anticipate their
impact and make adjustments early.
Organizational Objectives and Policies: HR plan is usually derived from the organizational objectives.
Specific requirements in terms of number and characteristics of employees should be derived from
organizational objectives
Once the organizational objectives are specified, communicated and understood by all concerned, the HR
department must specify its objective with regard to HR utilization in the organization.

22
HR Demand Forecast:
Demand forecasting is the process of estimating the future quantity and quality of people required to meet
the future needs of the organization. Annual budget and long-term corporate plan when translated into
activity into activity form the basis for HR forecast.
For eg: in the case of a manufacturing company, the sales budget will form the basis for production plan
giving the number and type of products to be produced in each period. This will form the basis upon which
the organization will decide the number of hours to be worked by each skilled category of workers. Once
the number hours required is available organization can determine the quality and quantity of personnel
required for the task.
Demand forecasting is influenced by both internal factors and external factors: external factors include-
competition, economic climate, laws and regulatory bodies, changes in technology and social factors
whereas internal factors are budget constraints, production level, new products and services, organizational
structure and employee separations.
Demand forecasting is essential because it helps the organization to 1. Quantify the jobs, necessary for
producing a given number of goods, 2. To determine the nature of staff mix required in the future, 3. To
assess appropriate levels in different parts of organization so as to avoid unnecessary costs to the organization,
4. To prevent shortages of personnel where and when, they are needed by the organization. 5. To monitor
compliances with legal requirements with regard to reservation of jobs.
Techniques like managerial judgment, ratio- trend analysis, regression analysis, work study techniques,
Delphi techniques are some of the major methods used by the organization for demand forecasting.
HR Supply Forecast:
Supply forecast determines whether the HR department will be able to procure the required number of
workers. Supply forecast measures the number of people likely to be available from within and outside an
organization, after making allowance for absenteeism, internal movements and promotions, wastage and
changes in hours, and other conditions of work.
Supply forecast is required because it is needed as it 1. Helps to quantify the number of people and
positions expected to be available in future to help the organization realize its plans and meet its objectives
2. Helps to clarify the staff mixes that will arise in future 3. It assesses existing staffing in different parts of
the organization. 4. It will enable the organization to prevent shortage of people where and when they are
most needed. 5. It also helps to monitor future compliance with legal requirements of job reservations.
Supply analysis covers the existing human resources, internal sources of supply and external sources of
supply.
HR Programming:
Once an organization’s personnel demand and supply are forecasted the demand and supply need to be
balanced in order that the vacancies can be filled by the right employees at the right time.
HR Plan Implementation:
HR implementation requires converting an HR plan into action. A series of action are initiated as apart of
HR plan implementation. Programs such as recruitment, selection and placement, training and
development, retraining and redeployment, retention plan, succession plan etc when clubbed together
form the implementation part of the HR plan.
23
Control and Evaluation:
Control and evaluation represent the final phase of the HRP process. All HR plan include budgets, targets
and standards. The achievement of the organization will be evaluated and monitored against the plan.
During this final phase organization will be evaluating on the number of people employed against the
established (both those who are in the post and those who are in pipe line) and on the number recruited
against the recruitment targets. Evaluation is also done with respect to employment cost against the
budget and wastage accrued so that corrective action can be taken in future.

1.7.7. Requisites for Successful HRP

1. HRP must be recognized as an integral part of corporate planning
2. Support of top management is essential
3. There should be some centralization with respect to HRP responsibilities in order to have
co-ordination between different levels of management.
4. Organization records must be complete, up to date and readily available.
5. Techniques used for HR planning should be those best suited to the data available and
degree of accuracy required.
6. Data collection, analysis, techniques of planning and the plan themselves need to be constantly
revised and improved in the light of experience.
1.7.8. Barriers to HRP
Human Resource Planners face significant barriers while formulating an HRP. The major barriers are
elaborated below:
1) HR practitioners are perceived as experts in handling personnel matters, but are not experts in
managing business. The personnel plan conceived and formulated by the HR practitioners when
enmeshed with organizational plan, might make the overall strategic plan of the organization
ineffective.
2) HR information often is incompatible with other information used in strategy formulation. Strategic
planning efforts have long been oriented towards financial forecasting, often to the exclusion of
other types of information. Financial forecasting takes precedence over HRP.
4) Conflict may exist between short term and long term HR needs. For example, there can be a
conflict between the pressure to get the work done on time and long term needs, such as preparing
people for assuming greater responsibilities. Many managers are of the belief that HR needs can
be met immediately because skills are available on the market as long as wages and salaries are
competitive. Therefore, long times plans are not required, short planning are only needed.
5) There is conflict between quantitative and qualitative approaches to HRP. Some people view
HRP as a number game designed to track the flow of people across the department. Others take
a qualitative approach and focus on individual employee concerns such as promotion and career
development. Best result can be achieved if there is a balance between the quantitative and
qualitative approaches.
6) Non-involvement of operating managers renders HRP ineffective. HRP is not strictly an HR
department function. Successful planning needs a co-ordinated effort on the part of operating
managers and HR personnel.
24
 Chapter Two
Job Analysis and Job Design
2.1. Job Analysis Defined

Developing an organizational structure, results in jobs which have to be staffed. Job analysis is the procedure through
which you determine the duties and nature of the jobs and the kinds of people (in terms of skills and experience) who
should be hired for them.’ It provides you with data on job requirements, which are then used for developing job
descriptions (what the job entails) and job specifications (what kind of people to hire for the job). Some of the
definitions of job analysis ate given as follows, to understand the meaning of the term more clearly:
According to Michael L. Jucius, “Job analysis refers to the process of studying the operations, duties and
organizational aspects of jobs in order to derive specifications or as they called by some, job descriptions.”
According to DeCenzo and P. Robbins, “A job analysis is a systematic exploration of the activities within a job. It
is a basic technical procedure, one that is used to define the duties, responsibilities, and
accountabilities of a job.”

According to Herbert G Herman “A job is a collection of tasks that can be performed by a single employee to
contribute to the production of some product or service provided by the organization. Each job has certain ability
requirements (as well as certain rewards) associated with it. Job analysis process used to identify these requirements.”
Flippo has offered a more comprehensive definition of job analysis as, “Job analysis is the process of studying
and collecting information relating to the operations and responsibilities of a specific job. The immediate products
of the analysis are job descriptions and job specifications”
Thus, job analysis involves the process of identifying the nature of a job (job description) and the qualities of the
likely job holder (job specification).

25
2.2. Uses of Job Analysis
As summarized in Figure 3.2 the information generated by the job analysis is used as a basis of several
interrelated personnel management activities:

Organizationaldesign

Organization and
manpower planning

Job Description Placement& orientation

Job

Job Specification

Safetyand health

Employeecounseling

Performance appraisal

Figure 2.1 : Uses of Job

Figure 3.2:Analysis
Usesof JobAnalysis

1. Achievement of Goals: Weather and Davis have stated, “Jobs are at the core of every organization’s
productivity, if theyare designed well and done right, the organization makes progress towards its objectives.
Otherwise, productivity suffers, profits fall, and the organization is less able to meet the demands of
society, customer, employees, and other with a stake in its success.”
2. Organizational Design: Job analysis will be useful in classifying the jobs and the interrelationships
among the jobs. On the basis of information obtained through job analysis, sound decisions regarding
hierarchical positions and functional differentiation can be taken and this will improve operational efficiency.
3. Organization and Manpower Planning: It is helpful in organization planning, for it defines labor in
concrete terms and co-ordinates the activities of the work force, and clearly divides duties and responsibilities.
4. Recruitment and Selection: Job analysis provides you with information on what the job entails and
what human requirements are required to carry out these activities. This information is the basis on which
you decide what sort of people to recruit and hire.

31
5. Placement and Orientation: Job analysis helps in matching the job requirements with the abilities,
interests and aptitudes of people. Jobs will be assigned to persons on the basis of suitability for the job.
The orientation program will help the employee in learning the activities and understanding duties that are
required to perform a given job more effectively.
6. Employee Training and Management Development: Job analysis provides the necessary information
to the management of training and development programs. It helps in to determine the content and
subject matter of in training courses. It also helps in checking application information, interviewing test
results and in checking references.
7. Job Evaluation and Compensation: Job evaluation is the process of determining the relative worth of
different jobs in an organization with a view to link compensation, both basic and supplementary, with the
worth of the jobs. The worth of a job is determined on the basis of job characteristics and job holder
characteristics. Job analysis provides both in the forms of job description and job specification.
8. Performance Appraisal: Performance appraisal involves comparing each employee’s actual
performance with his or her desired performance. Through job analysis industrial engineers and other
experts determine standards to be achieved and specific activities to be performed.
9. Health and Safety: It provides an opportunity for identifying hazardous conditions and unhealthy
environmental factors so that corrective measures may be taken to minimize and avoid the possibility of
accidents.
10. Employee Counseling: Job analysis provides information about career choices and personal limitation.
Such information is helpful in vocational guidance and rehabilitation counseling. Employees who are unable
to cope with the hazards and demands of given jobs may be advised to opt for subsidiary jobs or to seek
premature retirement.

2.3. Steps in Job Analysis

The six steps of job analysis are shown in figure 2.2:

Job
Specification

Figure 2.2 : Job Analysis Process

32
1. Determine the Use of the Job Analysis Information: Start by identifying the use to which the
information will be put, since this will determine the type of data you collect and the technique you use to
collect them.
2. Collection of Background Information: According to Terry, “The make-up of a job, its relation to
other jobs, and its requirements for competent performance are essential information needed for a job
evaluation. This information can be had by reviewing available background information such as organization
charts (which show how the job in question relates to other jobs and where they fit into the overall
organization); class specifications (which describe the general requirements of the class of job to which the
job under analysis belongs); and the existing job descriptions which provide a starting point from which to
build the revised job description”.
3. Selection of Jobs for Analysis: To do job analysis is a costly and time consuming process. It is
hence, necessary to select a representative sample of jobs for purposes of analysis. Priorities of various
jobs can also be determined. A job may be selected because it has undergone undocumented changes in
job content. The request for analysis of a job may originate with the employee, supervisor, or a manager.
When the employee requests an analysis it is usually because new job demands have not been reflected in
changes in wages. Employee’s salaries are, in part, based upon the nature of the work that they perform.
Some organizations establish a time cycle for the analysis of each job. For example: A job analysis may
be required for all jobs every three years. New jobs must also be subjected to analysis.
4. Collection of Job Analysis Data: Job data on features of the job, requited employee qualification
and requirements, should be collected either form the employees who actually perform a job; or from
other employees (such as foremen or supervisors) who watch the workers doing a job and there by
acquire knowledge about it; or from the outside persons, known as the trade job analysis who are appointed
to watch employees performing a job. The duties of such a trade job analyst are (i) to outline the complete
scope of a job and to consider all the physical and mental activities involved in determining what the
worker does.; (ii) find out why a worker does a job; and for this purpose he studies why each task is
essential for the overall result; and (iii) the skill factor which may be needed in the worker to differentiate
between jobs and establish the extent of the difficulty of any job.
5. Processing the Information: Once job analysis information has been collected, the next step is to
place it in a form that will make it useful to those charged with the various personnel functions. Several
issues arise with respect to this. First, how much detail is needed? Second, can the job analysis information
be expressed in quantitative terms? These must be considered properly.
6. Preparing Job Descriptions and Job Classifications: Job information which has been collected
must be processed to prepare the job description form. It is a statement showing full details of the activities
of the job. Separate job description forms may be used for various activities in the job and may be
compiled later on. The job analysis is made with the help of these description forms. These forms may be
used as reference for the future.
7. Developing Job Specifications: Job specifications are also prepared on the basis of information
collected. It is a statement of minimum acceptable qualities of the person to be placed on the job. It
specifies the standard by which the qualities of the person are measured. Job analyst prepares such
statement taking into consideration the skills required in performing the job properly. Such statement is
used in selecting a person matching with the job.

33
2.4. Methods for Collecting Job Analysis Data
As discussed earlier, information is to be collected for job analysis. Such information may be collected by
the trained job analysis, superiors concerned and job holders themselves. Job information is collected
through the following methods:
1. Participant Diary/Logs: Workers can be to keep participant diary/long or lists of things they do
during the day. For every activity he or she engages in, the employee records the activity (along with the
time) in a log. This can provide you with a very comprehensive picture of the job, especially when it’s
supplemented with subsequent interviews with the worker and his or her supervisor. This method provides
more accurate information if done faithfully. However, it is quite time consuming. Further, each jobholder
may maintain records according to his own way which presents problems in analysis at later stage. Therefore,
it has limited application.
2. Interview: There are three types of interviews you can use to collect job analysis data: individual
interviews with each employee; group interviews with groups of employees having the same job; and
supervisor interviews with one or more supervisors who are thoroughly knowledgeable about the job
being analyzed. The group interview is used when a large number of employees are performing similar or
identical work, since this can be a quick and inexpensive way of learning about the job. As a rule, the
worker’s immediate supervisor would attend the group session; if not, you should interview the supervisor
separately to get that person’s perspective on the duties and responsibilities of the job.
3. Critical Incidents: In this method, job holders are asked to describe incidents concerning the job on
the basis of their past experience. The incidents so collected are analyzed and classified according to the
job areas they describe, A fairly picture of actual job requirements can be obtained by distinguishing
between effective and ineffective behaviors of workers on the job. However, this method is time consuming.
The analyst requires a high degree of skill to analyze the contents of descriptions given by workers.
4. Technical Conference Method: This method utilizes supervisors with extensive knowledge of the
job. Here, specific characteristics of a job are obtained from the “experts.” Although it is a good data
gathering method, it often overlooks the incumbent worker’s perception about what they do on their job.
5. Job Performance: Under this method, the job analyst actually performs the job under study to get
first-hand experience of the actual tasks, and physical and social demands of the job. This method can be
used only for jobs where skill requirements are low and can be learnt quickly and easily. This is a time-
consuming method and is not appropriate for jobs requiring extensive training.
6. Functional Job Analysis: Functional job analysis (FJA) is employee- oriented analytical approach of
job analysis. This approach attempts to describe the whole person on the job. The main features of FJA
include the following:
 The extent to which specific instruction are necessary to perform the task
 The extent to which reasoning and judgment are required to perform the task
 The mathematical ability required to perform the task and
 The verbal and language facilities required to perform the task.
7. Observation Method: Using this method, a job analyst watches employees directly on the job.
Observations are made on various tasks, activities, the pace at which tasks are carried out, and the way
different activities are performed. This method is suitable for jobs that involve manual, standardized, and
short job cycle activities. This method also requires that the entire range of activities be observable;
possible with some jobs.

34
8. Questionnaires: The method is usually employed by engineering consultants. Properly drafted
questionnaires are sent out to job-holders for completion and are returned to supervisors. However, the
information received is often unorganized and incoherent. The idea in issuing questionnaire is to elicit the
necessary information from job –holders so that any error may first be discussed with the employee and,
after corrections, may be submitted to the job analyst.

Questionnaire for Job Analysis

1. Your Name ………..………..………..………..………..………..………..
2. Title or Designation of your job …………………………………………
3. Regular or Extra …………………………………………………………
4. Your Department ……………………………………………………….
5. To whom do you report directly (Name and Title): ………………………
6. Description of work:
Daily Duties:
Periodical Duties:
Occasional Duties:
7. Your knowledge Requirements:
Store Procedure and Methods:
Merchandise:
What Equipment do you use?
What Materials do you work with or sell?
If you supervise the work of others, state how many and what their jobs are.
To what job would you normally expect to be promoted?
From what job were you transferred to your present job?

This technique is time consuming and generally does not yield satisfactory results because many employees
do not complete the questionnaire or furnish incorrect information because of their own limitations. The
use of questionnaire is recommended only in case of those technical jobs where the job contents are not
completely known to the supervisor or the operation is too complex to observe.

There are certain standardized questionnaires developed by a few agencies which are used by various
organizations for job analysis. Most of these questionnaires are of two types: position analysis questionnaire
and management position description questionnaire that are described as follows:

a. Position Analysis Questionnaire. Position analysis questionnaire (PAQ) is a highly specialized

instrument for analyzing a job in terms of employee activities. The PAQ developed by Purdue University
is a comprehensive questionnaire for collecting information for job analysis.

In this questionnaire, various job elements have been grouped into six categories with each category
containing relevant job elements resulting into 195 elements as shown in Table 2.1.

35
 Table 2.2 : Position Analysis Questionnaire

Job Aspects No. of

elements
Information input - Where and how do employee get information to do their 35
job?
Mental processes- what reasoning, planning, organizing, and decision 14
making is done?
Work output – what physical activities, tools and machines are used? 49
Relationships – what contact with other people, both in the company and 36
outside is maintained or developed?
Job context- what is the physical and social context in which the job is 19
maintained?
Other job characteristics – what other activities, conditions or Characteristics 42
not covered by the categories are relevant?

The advantage of PAQ is that it provides a quantitative score or profile of any job in terms of how that job
rates on the basic activities. The PAQ’s real strength is, thus, in classifying jobs. PAQ’s results can be used
to compare the jobs relative to one another and pay levels can be assigned for each job.
The major problem with PAQ is the time it takes for a job analyst to fill out the ratings. However, PAQ has
been widely researched and tested and appears to be both reliable and valid.
b. Management Position Description Questionnaire: Management position description is a highly
structured questionnaire containing 208 items relating to managerial responsibilities, restrictions, demands
and other miscellaneous position characteristics. W.W. Tomov and P.R. Pinto have developed the following
Management position Description factors:
 Product, marketing and financial strategy planning.
 Coordination of other organization units and personnel
 Internal business Control
 Products and services responsibility
 Public and customer relations
 Advanced consulting
 Autonomy of actions
 Approval of financial commitments
 Staff Service
 Supervision
 Complexity and stress
 Advanced financial responsibility
 Broad personnel responsibility
The above methods are the most popular ones for gathering job analysis data. They all provide realistic
information about what job incumbents actually do. They can thus be used for developing job descriptions
and job specifications. Caroll L. Shartle, Otis and Lenhert have provided the following suggestions for
making the job analyst’s task simple.
36
  Introduce yourself so that the worker knows who you are and why you are there.
 Show a sincere interest in the worker and the job that is analyzed;
 Do not try to tell the employee how to do his job.
 Try to talk to the employee and supervisors in their own language;
 Do a complete job study within the objectives of the programmer: and
 Verify the job information obtained.

2.5. Job Description

Job description is the immediate product of job analysis process; the data collected through job analysis
provides a basis for job description and job specification.
Job Description: is a written record of the duties, responsibilities and requirements of a particular job.
It is concerned with the job itself and not with the job holders. It is a statement describing the job in such
terms as its title, location, duties, working conditions and hazards.
Flippo has Defined Job Description as, “A job description is an organized, factual statement of duties
and responsibilities of a specific job. In brief, it should tell what is to be done. How it is done why. It is a
standard of function, in that defines the appropriate and authorized content of a job.
According to Pigors and Myres, “Job description is a pertinent picture (in writing) of the organizational
relationships, responsibilities and specific duties that constitutes a given job or position. It defines a scope
of responsibility and continuing work assignments that are sufficiently different form that of other jobs to
warrant a specific title.”

According to Zerga, who analyzed 401 articles on job description about 30 years ago. A job description
helps us in:
(i) Job grading and classification
(ii) Transfers and promotions.
(iii) Adjustments of grievances;
(iv) Defining and outlining promotional steps:
(v) Establishing a common understanding of a job between employers and employees;
(vi) Investigation accidents ;
(vii) Indicating faulty work procedures or duplication of papers;
(viii) Maintaining, operating and adjusting machinery;
(ix) Time and motion studies;
(x) Defining the limits of authority;
(xi) Indicating case of personal merit;
(xii) Studies of health and fatigue;
(xiii) Scientific guidance;
(xiv) Determining jobs suitable for occupational therapy;
(xv) Providing hiring specifications; and
(xvi) Providing performance indicators.
“Job description” is different from “performance assessment.” The former concerns such functions as
planning, co-ordination, and assigning responsibility; while the latter concerns the quality of performance
itself. Though job description is not assessment, it provides an important basis establishing assessment
standards and objectives.
37
2.6. Writing Job Description
A Job description is a written statement of what the job holder actually does, how he or she does it, and
under what conditions the job is performed. This information is in turn used to write a job specification.
This lists the knowledge, abilities, and skills needed to perform the job satisfactorily. While there is no
standard format you must use in writing a job description, most descriptions contain at least sections on:
1. Job Identification: It includes the job title, alterative title, department, division, and plant and
code number of the job. The job title identifies and designates the job properly, the department, division,
etc., indicate the name of the department where it is situated – whether it is the maintenance department,
mechanical shop etc. Location gives the name of the place. This portion of job description gives answer
to two important questions: to what higher level job is this job accountable. And who is supervised
directly?
2. Job Summary: Job summary describes the contents of the jobs in terms of activities or tasks
performed. Job summary should clear the nature of the job. Primary, secondary and other duties to be
performed on the job should clearly be indicated separately.
3. Duties and Responsibilities: This is the most important phase of job description and should be
prepared very carefully. It describes the duties to be performed along with frequency of each major
duty. Responsibilities concerning custody of money, supervision and training of staff etc. are also describe
in this part.
Example of a Job Description
Job Title: Record Clerk Job No. 011
Supervisor: Record Supervisor Job Grand –III
Supervises: None Date: 2/21/12
Job Summary: Originate, process, and maintain comprehensive records; implement
required controls; collect and summarize data as requested.
Job Duties and Responsibilities :
 Review a variety of documents, listings, summarizes, etc, for completeness and
accuracy.
 Check records against other current sources such as reports or summaries; investigate
differences and take required action to ensure that records are accurate and up to date;
compile and summarize data report format as required.
 Implement controls or obtaining, preserving, and supplying a variety of information.
Prepare simple requisitions, forms, and other routine memoranda.
 Provide functional guidance to lower-level personnel as required.
Working Conditions: Normal working conditions. But visits sites on average twice a week.
Eight hours per day
Relationships:
 With equivalent officers in other departments.
 Maintains formal and social contacts with local officials.
Job Characteristics: Skilled operation of computer, calculating machine, or key punch
machine is not necessarily a requirement of this job.
The above information is correct and approved by:

(Signed) (Signed)
Job Analyst In charge Manager

4. Supervision: Under it is given number of persons to be supervised along with their job titles, and the
extent of supervision involved –general, intermediate or close supervision.
38
5. Relation to Other Jobs: It describes the vertical and horizontal relationships f work flow. It also
indicates to whom the jobholder will report and who will report to him. It gives an idea of channels of
promotion.
6. Machine, tools and equipment define each major type or trade name of the machines and tools and the
raw materials used.
7. Working Conditions: The working environment in terms of heat, light, noise, dust and fumes etc, the
job hazards and possibility of their occurrence and working conditions should also be described. It will be
helpful in job evaluation.
8. Social Environment: It specifies the social conditions under which the work will be performed. In this
part the size of work group, interpersonal interactions required to perform the job and development
facilities are mentioned
2.7. Job Specification
The job specification states the minimum acceptable qualifications that the incumbent must possess to
perform the job successfully. Based on the information acquired through job analysis, the job specification
identifies the knowledge, skills, and abilities needed to do the job effectively. Individuals possessing the
personal characteristics identified in the job specification should perform the job more effectively than
individuals lacking these personal characteristics. The job specification, therefore, is a important tool in the
selection process, for it keeps the selector’s attention on the list of qualifications necessary for an incumbent
to perform the job and assists in determining whether candidates are qualified.
According to Dale Yoder, “The job specification, as such a summary properly described is thus a
specialized job description, emphasizing personnel requirement and designed especially to facilitates election
and placement.”
Flippo has defined job specification as, “Job specification is a statement of the minimum acceptable
human qualities necessary to perform a job properly .....................It is a standard of personnel and designates
the qualities required for acceptable performance.”
In is clear from the above definitions that job specification is a statement of summary of personnel
requirements for a job. It may also be called “standard of personal for the selection”
A Job Specification should include:
(i) Physical characteristics, which include health, strength, endurance, age, height, weight, vision,
voice, eye, hand and foot co-ordination, motor co-ordination, and color discrimination.
(ii) Psychological and social characteristics such as emotional stability, flexibility, decision making
ability, analytical view, mental ability, pleasing manners, initiative, conversational ability etc.
(iii) Mental Characteristics such as general intelligence, memory, judgment, ability to concentrate,
foresight etc.
(iv) Personal Characteristics such as sex, education, family background, job experience, hobbies,
extracurricular activities etc.
All these characteristics must be classified into three categories:
 Essential attributes which a person must possess.
 Desirable attributes which a person ought to posses.
 Contra indicators which will become a handicap to successful job performance.

39
2.8. Job Design
Job design is of comparatively recent origin. The human resource managers have realized that the design
of a job has considerable influence on the productivity and job satisfaction; poorly designed jobs often
result in boredom to the employees, increased turnover, job dissatisfaction, low productivity and an increase
in overall costs of the organization. All these negative consequences can be avoided with the help of
proper job design.
According to Jon Werner and DeSimone, “Job design is the development and alteration of the
components of a job (such as the tasks one performs, and the scope of one’s responsibilities) to improve
productivity and the quality of the employees’ work life.”
Job design has been defined by Davis (1966) as: “The specification of the contents, methods, and
relationships of jobs in order to satisfy technological and organizational requirements as well as the social
and personal requirements of the job-holder.”
Milkovich and Boudreau defined job design as, “Job design integrates work content (tasks, functions,
and relationships), the rewards (extrinsic and intrinsic) and the qualifications required (skills, knowledge,
abilities) for each job in a way that meets the needs of employees and the organization.”
Michael Armstrong has defined job design as “the process of deciding on the content of a job in
terms of its duties and responsibilities, on the methods to be used in carrying out the job, in terms of
techniques, systems and procedures, and on the relationships that should exist between the job holder and
his superiors, subordinates and colleagues.”
Job design is an attempt to create a match between job requirements and human attributes. It involves
organizing the components of the job and the interaction patterns among the members of a work group. It
helps in developing appropriate design of job to improve efficiency and satisfaction.
Principles of Job Design:
Principles are the bases of the approach used in job design. Robertson and Smith (1985) have suggested
the following five principles of job design:
 To influence skill variety, provide opportunities for people to do several tasks and combine
tasks.
 To influence task identity, combine tasks and from natural work units.
 To influence task significance, form natural work units and inform people of the importance of
their work.
 To influence autonomy, give people responsibility for determining their own working systems.
 To influence feedback; establish good relationship and open feedback channels.
2.9. Methods of Job Design
The various techniques of job design and redesign are discussed below:
1. Job Simplification: In job simplification, the complete job is broken down into small subparts; this is
done so that employee can do these jobs without much specialized training. Moreover, small operations of
the job can also be performed simultaneously so that the complete operation can be done more quickly.
For job simplification, generally time and motion studies are used.
2. Job Rotation: Another technique designed to enhance employee motivation is job rotation, or periodically
assigning employees to alternating jobs or tasks. For example, an employee may spend two weeks attaching
40
bumpers to vehicles and the following two weeks making final checks of the chassis. During the next
month, the same employee may be assigned to two different jobs. Therefore, the employee would be
rotated among four jobs. The advantage of job rotation is that employees do not have the same routine
job day after day. Job rotation only addresses the problem of assigning employees to jobs of limited
scope; the depth of the job does not change. The job cycle of the actual daily work performed has not
been lengthened or changed. Instead, employees are simply assigned to different jobs with different cycles.
Because job rotation does not change the basic nature of jobs, it is criticized as nothing more than having
an employee perform several boring and monotonous jobs rather than one. Some employees dislike job
rotation more than being assigned to one boring job because when they are assigned to one job they know
exactly where to report and what work to expect each day. Workers quickly realize that job rotation does
not increase their interest in their work.
Although it seldom addresses the lack of employee motivation, it give manages a means of coping with
frequent absenteeism and high turnover. Thus when absenteeism or turnover occurs in the work force,
managers can quickly fill the vacated position because each employee can perform several jobs.
Job rotation is often effectively used as a training technique for new, inexperienced employees. At higher
organizational levels, rotation also helps to develop managerial generalists because it exposes them to
several different operations.
Advantage of Job Rotation Technique:
 The employee experiences variety of work, workplace and peer group.
 Job rotation helps to broaden the knowledge and skills of an employee.
 The main advantage of job rotation is that it relieves the employee from the boredom and monotony
of doing the same job.
 With the help of this method, people become more flexible. They are prepared to assume
responsibility especially at other positions.
 Job rotation broadens the work experience of employees and turns specialists into generalists.
 It is beneficial for the management also as the management gets employees who can perform a
variety of tasks to meet the contingencies.
 This method improves the self-image and personal worth of the employee.
Disadvantage of Job Rotation Technique:
 Job rotation also creates disruptions. Members of the work group have to adjust to the new
employee.
 Productivity is reduced by moving a worker into new position just when his efficiency at the prior
job was creating organizational economies.
 Training costs are increased.
 The supervisor may also have to spend more time answering question and monitoring the work of
the recently rotated employee.
 It can demotivate intelligent and ambitious trainees who seek specific responsibilities in their chosen
specialty.
3. Job Enlargement: Another means of increasing employee’s satisfaction with routine jobs is job
enlargement, or increasing the number of tasks performed (i.e. increasing the scope of the job). Job
enlargement, like job rotation, tries to eliminate short job cycles that create boredom. Unlike job rotation,
job enlargement actually increases the job cycle. When a job is enlarged, either the tasks being performed
are enlarged or several short tasks are given to one worker. Thus, the scope of the job is increased
because there are many tasks to be performed by the same worker. Job enlargement programs change
41
many methods of operation- in contrast to job rotation, in which the same work procedures are used by
workers who rotate through work stations. Although job enlargement actually changes the pace of the
work and the operation by reallocating tasks and responsibilities, it does not increase the depth of a job.
The focus of designing work for job enlargement is the exact opposite of that for job specialization.
Instead of designing jobs to be divided up into the fewest of tasks per employee, a job is designed to have
many tasks for the employee to perform. An enlarged job requires a longer training period because there
are more tasks to be learned. Worker satisfaction should increase because is reduced as the job scope is
expanded. However, job enlargement programs are successful with jobs what have increased scope;
such workers are less prone to resort to absenteeism, grievances, slowdowns and other means of displaying
job dissatisfaction.
Enlargement is done only on the horizontal level. Thus, the job remains the same, but becomes of a larger
scale than before. In the words of Geroge Strauss and L.R. Sayles “Job enlargement implies that instead
of assigning one man to each job, a group of men can be assigned to a group of jobs and then allowed to
decide for themselves how to organize the work. Such changes permit more social contacts and control
over the work process.”
Job enlargement has the following advantages:
 Increase in diversity of jobs
 Job satisfaction
 Provides wholeness and identity with the task and increases the knowledge necessary to perform
it.
 Provides variety of skills.
 Reduces tension and boredom.
 Trains and develops more versatile employees.
Despite these advantages this is not a completely satisfactory method of job design as it does not increase
the depth of a job. Enlarged jobs require longer training period as there are more tasks to be learned.
4. Job Enrichment: The concept of job enrichment has been derived from Herzberg’s two-factor theory
of motivation in which he has suggested that job content is one of the basic factors of motivation. If the job
is designed in such a manner that it becomes more interesting and challenging to the job performer and
provides him opportunities for achievement, recognition, responsibility, advancement and growth, thejob
itself becomes a source of motivation to the individual.
According to Richard W. Beatty and Graig Eric. Schneider, “Job enrichment is a motivational technique
which emphasizes the need for challenging and interesting work. It suggests that jobs be redesigned so
that intrinsic satisfaction is derived from doing the job. In its best applications it leads to a vertically
enhanced job by adding function from other organizational levels, making it contain more variety and
challenge and offer autonomy and pride to the employee.”
According to P. Robbins, “Job enrichment refers to the vertical expansion of the jobs. It increases the
degree to which the worker controls the planning, execution and evaluation of his work.”
In the words of Robert Albanese, “Job enrichment sometimes called. “vertical job leading’ is a job
redesign strategy that focuses on job depth.”
According to Mondy. Holmes, and Flippo, “Job enrichment refers to basic changes in the content and
level of responsibility of a job so to provide for the satisfaction of the motivation needs of personnel.
Rebert Ford, who was associated with designing of jobs to make them more enriched, has provided
some bases (though not exhaustive) for job enrichment as shown in Table 3.3.
42
 Table 2.3 : Job Enrichment Bases

Tasks Motivator involved

Assign specific or specialized task to Responsibility, growth, advancement
individuals enabling them to become expert
Making periodic reports directly available to Internal recognition
the individual himself rather than to the
supervisor.
Giving a person a whole, natural unit of Responsibility, achievement, recognition
work (module, exchange district, division,
area, etc.)
Increasing the accountability of individuals Responsibility, recognition
for own work

Techniques of Job Enrichment: In order to enrich the jobs. The management should adopt the following
measures:
 Freedom in decisions
 Assign a natural work unit to an employee.
 Encouraging participation
 Allow the employee to set his own standards of performance.
 Minimize the controls to provide freedom to the employees
 Make an employee directly responsible for his performance.
 Encourage participation of employees in deciding organizational goals and policies.
 Expand job vertically
 Introducing new, difficult and creative tasks to the employees.
 Sense of achievement.
Advantages of Job Enrichment: The advantages of job enrichment are as follows:

 It enriches the role.

 Job enrichment is the most widely used of job design as it provides a meaningful learning to
employees.
 It makes the work interesting and employee get motivated.
 It helps in reducing the rate of labor turnover and absenteeism.
 It increases skills of the employees.
 It increases morale and performance.
 Reduce Boredom and dissatisfaction.
 Increase in output both qualitative and quantitative.
Disadvantages of Job Enrichment: Dunham and Newstrom state, “Even the strongest supporters of
job enrichment readily admit that there are limitations in its application.” Newstrom and Keith Davis also
write, “Employees are the final judges of what enriches their jobs. All that management can do is to gather
information about what tends to enrich jobs, try these changes in the job system, and then determine
whether employees feel that enrichment has occurred.” A few limitations of or problems with job enrichment
are as follows:
43
  Increase cost
 Need more employee counseling, training, and guidance.
 Not applicable to all jobs.
 Negative impact on personnel.
 Imposed on people.
 Objected by unions
 Pay dissatisfaction
JOB ENLARGEMENT vs. JOB ENRICHMENT
Job enlargement and job enrichment are both important forms of job design in order to enhance productivity
and satisfaction of the employees. They differ from each other in the following respects:
1. Nature of Job: The major difference between job enrichment and enlargement lies in the nature of
additions to the job. Enlargement involves a horizontal loading or expansion, or addition of tasks of the
same nature. Enrichment involves vertical loading of tasks and responsibility of the job holder; it improves
the quality of the job in terms of its intrinsic worth.
2. Purpose: The purpose of job enlargement is to reduce the monotony in performing repetitive jobs
by lengthening the cycle of operation. On the other hand, the purpose of job enrichment is making the
job lively, challenging and satisfying. It satisfies the higher level needs such as ego satisfaction, self-
expression, sense of achievement and advancement of Job holders.
3. Skill Requirement: Job enlargement may not necessarily require the use of additional skills which
the job holder was using in performing the job before the enlargement. This is due to similarity of
additional tasks. Enrichment calls for development and utilization of higher skills, initiative, and innovation
on the part of the job holder in performing the job.
4. Direction and Control: Job enlargement requires direction and control from external sources, say
supervisor. In fact, the job holder may require more direction and control because of enlargement of his
responsibility. Enrichment does not require external direction and control as these come from the job
holder himself. He requires only feedback from his supervisor.

44
 Chapter Three
Recruitment and Selection
3.1. Recruitment
Recruitment forms a step in the process which continues with selection and ceases with the placement of
the candidate. It is the next step in the procurement function, the first being the manpower planning.
Recruiting makes it possible to acquire the number and types of people necessary to ensure the continued
operation of the organization. Recruiting is the discovering of potential applicants for actual or anticipated
organizational vacancies.

45
According to Edwin B. Flippo, “Recruitment is the process of searching for prospective employees and
stimulating them to apply for jobs in the organization.”
According to Lord, “Recruitment is a form of competition. Just as corporations compete to develop,
manufacture, and market the best product or service, so they must also compete to identify, attract and
hire the most qualified people. Recruitment is a business, and it is a big business.”
In the words of Dale Yoder, “ Recruiting is a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that manpower in
adequate numbers to facilitate effective selection of an efficient working force.”

Planning

Figure 3.1: Recruitment to Human Resource Acquisition Process

According to Werther and Davis, “Recruitment is the process of finding and attracting capable
applicants for employment. The process begins when new recruits are sought and ends when their applications
are submitted. The result is a pool of applicants form which new employees are selected.”
Dales S. Beach writes, “Recruitment is the development and maintenance of adequate manpower
resources. It involves the creation of a pool of available labor upon whom the organization can depend
when it needs additional employees.”
Thus, recruitment process is concerned with the identification of possible sources of human resource
supply and tapping those sources. In the total process of acquiring and placing human resources in the
organization, recruitment falls in between different sub-processes as shown in Figure 3.2.
According to Scott, Clothier and Spriegel the need for recruitment arises out of the following situations:
 Vacancies created due to expansion, diversification, and growth of business.
 An increase in the competitive advantage of certain concerns, enabling them to get more of the
available business than formerly.
 An increase in business arising from an upswing during the recovery period of a business cycle.
 Vacancies created due to transfer, promotion, retirement, termination, permanent disability or
death.
 The normal population growth, which requires increased goods and services to meet the needs of
the people.
 A rising standard of living, which requires more of the same goods and services as well as the
creation of new wants to be satisfied.
46
 3.1.1. Process of Recruitment
Recruitment process passes through the following stages:
1. Recruitment process begins when the personnel department receives requisitions for recruitment
from any department of the company, The personnel requisitions contain details about the
position to be filled, number of persons to be recruited, the duties to be performed,
qualifications expectedfrom the candidates, terms and conditions of employment and the
time by which the personsshould be available for appointment etc.
2. Locating and developing the sources of required number and type of employees.
3. Identifying the prospective employees with required characteristics.
4. Developing the techniques to attract the desired candidates. The goodwill of an organization in the
market may be one technique. The publicity about the company being a good employer may
alsohelp in stimulating candidates to apply. There may be others of attractive salaries, proper
facilities for development etc.
5. Evaluating the effectiveness of recruitment process.
According to Famularo, personnel recruitment process involves five elements, viz., a recruitment policy,
a recruitment organization, a forecast of manpower, the development of sources of recruitment, and different
techniques used for utilizing these sources, and a method of assessing the recruitment program. The
explanation of these is described below:
1. Recruitment Policy: It specifies the objectives of recruitment and provides a framework for the
implementation of the recruitment program. It also involves the employer’s commitment to some
principles as to find and employ the best qualified persons for each job, to retain the most promising of
those hired, etc. It should be based on the goals, needs and environment of the organization.

Figure 3.2 : Place of Recruitment in Selection System

47
2. Recruitment Organization: The recruitment may be centralized like public sector banks or
decentralized. Both practices have their own merits. The choice between the two will depend on the
managerial philosophy and the particular needs of the organization.
3. Sources of Recruitment: Various sources of recruitment may be classified as internal and external.
These have their own merits and demerits.
4. Methods of Recruitment: Recruitment techniques are the means to make contact with potential
candidates, to provide them necessary information and to encourage them to apply for jobs.
5. Evaluation of Recruitment Program: The recruitment process must be evaluated periodically.The
criteria for evaluation may consist of cost per applicant, the hiring ratio, performance appraisal, tenureof
stay, etc. After evaluation, necessary improvements should be made in the recruitment program.
1.1.2. Recruitment Policy
As Yoder et al observe recruitment policy spells out the objectives of the recruitment and provides a
framework for implementations of the recruitment program in the form of procedures. It may involve a
commitment to broad principles such as filling vacancies with the best qualified individuals. The recruitment
policy may embrace several issues such as the extent of promotion from within, attitudes of enterprise in
recruiting old, handicapped, and minor individuals, minority group members, part-time employees and
relatives of present employees. In addition, the recruitment policy may also involve the organization system
to be developed for implementing the recruitment program and procedures to be employed. Explicitly, an
organizational system is a function of the size of an enterprise. In smaller enterprises, there may be
merely informal recruiting procedures and the line official may be responsible to handle this function along
with their usual responsibilities. On the other hand, in larger organizations, there is usually a staff unit
attached with personnel or an industrial relations department designated as employment or recruitment
office. This specialization of recruitment enables staff personnel to become highly skilled in recruitment
techniques and their evaluation. However, recruitment remains the line responsibility as far as the personnel
requisition forms are originated by the line personnel, who have also the final word in the acceptance or
rejection of a particular applicant. Despite this, the staff personnel have adequate freedom in respect of
sources of manpower to be tapped and the procedure to be followed for this purpose.
Recruitment policy covers the following areas:
1. To prescribe the degree of emphasis. Inside the organization or outside the organization.
2. To provide the weightage that would be given to certain categories of people such as localpopulation,
physically-handicapped personnel, personnel from scheduled castes/tribes and otherbackward classes.
3. To prescribe whether the recruitment would be centralized or decentralized at unit levels.
4. To specify the degree of flexibility with regard to age, qualifications, compensation structure and other
service conditions.
5. To prescribe the personnel who would be involved in recruitment process and the role of humanresource
department in this regard.
6. To specify the budget for meeting the expenditures incurred in completing the recruitment process.
According to Yoder, “the recruitment policy is concerned with quantity and qualifications of manpower.”
It establishes broad guidelines for the staffing process. Generally, the following factors are involved in a
recruitment policy:

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 1. To provide each employee with an open road and encouragement in the continuing development
of his talents and skills;
2. To provide individual employees with the maximum of employment security, avoiding, frequent
lay-off or lost time;
3. To avoid cliques which may develop when several members of the same household or community
are employed in the organization;
4. To carefully observe the letter and spirit of the relevant public policy on hiring and, on the whole,
employment relationship;
5. To assure each employee of the organization interest in his personal goals and employment
objective;
6. To assure employees of fairness in all employment relationships, including promotions and transfers;
7. To provide employment in jobs which are engineered to meet the qualifications of handicapped
workers and minority sections; and
8. To encourage one or more strong, effective, responsible trade unions among the employees.

Prerequisites of a Good Recruitment Policy: The recruitment policy of an organization must satisfy
the following conditions:
1. It should be in conformity with its general personnel policies;
2. It should be flexible enough to meet the changing needs of an organization;
3. It should be so designed as to ensure employment opportunities for its employees on a long-termbasis so
that the goals of the organization should be achievable; and it should develop the potentialities of employees;
4. It should match the qualities of employees with the requirements of the work for which they are
employed; and
5. It should highlight the necessity of establishing job analysis.
3.1.3 Factor Affecting Recruitment
The factors affecting recruitment can be classified as internal and external factors.
The internal factors are:
1. Wage and salary policies;
2. The age composition of existing working force;
3. Promotion and retirement policies;
4. Turnover rates;
5. The nature of operations involved the kind of personnel required;
6. The level and seasonality of operations in question;
7. Future expansion and reduction programs;
8. Recruiting policy of the organization;
9. Human resource planning strategy of the company;
10. Size of the organization and the number of employees employed;

49
 11. Cost involved in recruiting employees, and finally;
12. Growth and expansion plans of the organization.
The external factors are:
1. Supply and demand of specific skills in the labor market;
2. Company’s image perception of the job seekers about the company.
3. External cultural factors: Obviously, the culture may exert considerable check on recruitment. For
example, women may not be recruited in certain jobs in industry.
4. Economic factors: such as a tight or loose labor market, the reputation of the enterprise in the
community as a good pay master or otherwise and such allied issues which determine the quality
and quantity of manpower submitting itself for recruitment.
5. Political and legal factors also exert restraints in respect of nature and hours of work for women
and children, and allied employment practices in the enterprise, reservation of Job for SC, ST and
so on.
2.1.4. Sources of Recruitment
After the finalization of recruitment plan indicating the number and type of prospective candidates, they
must be attracted to offer themselves for consideration to their employment. This necessitates the
identification of sources from which these candidates can be attracted. Some companies try to develop
new sources, while most only try to tackle the existing sources they have. These sources, accordingly, may
be termed as internal and external.
Internal Sources
It would be desirable to utilize the internal sources before going outside to attract the candidates. Yoder
and others suggest two categories of internal sources including a review of the present employees and
nomination of candidates by employees. Effective utilization of internal sources necessitates an understanding
of their skills and information regarding relationships of jobs. This will provide possibilities for horizontal
and vertical transfers within the enterprise eliminating simultaneous attempts to lay off employees in one
department and recruitment of employees with similar qualification for another department in the company.
Promotion and transfers within the plant where an employee is best suitable improves the morale along
with solving recruitment problems. These measures can be taken effectively if the company has established
job families through job analysis programs combining together similar jobs demanding similar employee
characteristics. Again, employees can be requested to suggest promising candidates. Sometimes, employees
are given prizes for recommending a candidate who has been recruited. Despite the usefulness of this
system in the form of loyalty and its wide practice, it has been pointed out that it gives rise to cliques posing
difficulty to management. Therefore, before utilizing this system attempts should be made to determine
through research whether or not employees thus recruited are effective on particular jobs. Usually, internal
sources can be used effectively if the numbers of vacancies are not very large, adequate, employee records
are maintained, jobs do not demand originality lacking in the internal sources, and employees have prepared
themselves for promotions.
Merits of Internal Sources: The following are the merits of internal sources of recruitment:
1. It creates a sense of security among employees when they are assured that they would be
preferredin filling up vacancies.

50
2. It improves the morale of employees, for they are assured of the fact that they would be preferredover
outsiders when vacancies occur.
3. It promotes loyalty and commitment among employees due to sense of job security and opportunities for
advancement.
4. The employer is in a better position to evaluate those presently employed than outside candidates.This is
because the company maintains a record of the progress, experience and service of itsemployees.
5. Time and costs of training will be low because employees remain familiar with the organization andits policies.
6. Relations with trade unions remain good. Labor turnover is reduced. As the persons in the employment of
the company are fully aware of, and well acquainted wit, itspolicies and know its operating procedures, they
require little training, and the chances are thatthey would stay longer in the employment of the organization
than a new outsider would.
7. It encourages self-development among the employees. It encourages good individuals who are ambitious.
8. It encourages stability from continuity of employment.
9. It can also act as a training device for developing middle and top-level managers.
Demerits of Internal Sources: However, this system suffers from certain defects as:
1. There are possibilities that internal sources may “dry up”, and it may be difficult to find
the requisitepersonnel from within an organization.

2. It often leads to inbreeding, and discourages new blood from entering and
organization.

3. As promotion is based on seniority, the danger is that really capable hands may not
be chosen.The likes and dislikes of the management may also play an important
role in the selection ofpersonnel.

4. Since the learner does not know more than the lecturer, no innovations worth the
name can be made. Therefore, on jobs which require original thinking (such as
advertising, style, designing andbasic research), this practice is not followed.
This source is used by many organizations; but a surprisingly large number ignore this source, especially
for middle management jobs.
External Sources
DeCenzo and Robbins remark, “Occasionally, it may be necessary to bring in some ‘new blood’ to
broaden the present ideas, knowledge, and enthusiasm.” Thus, all organizations have to depend on external
sources of recruitment. Among these sources are included:
1. Employment agencies.
2. Educational and technical institutes. And
3. Casual labor or “applicants at the gate” and nail applicants.
Public and private employment agencies play a vital role in making available suitable employees for different
positions in the organizations. Besides public agencies, private agencies have developed markedly in large
cities in the form of consultancy services. Usually, these agencies facilitate recruitment of technical and
professional personnel. Because of their specialization, they effectively assess the needs of their clients
and aptitudes and skills of the specialized personnel. They do not merely bring an employer and an
employee together but computerize lists of available talents, utilizing testing to classify and assess applicants
and use advanced techniques of vocational guidance for effective placement purposes.
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Educational and technical institutes also form an effective source of man power supply. There is an increasing
emphasis on recruiting student from different management institutes and universities commerce and
management departments by recruiters for positions in sales, accounting, finance, personnel and production.
These students are recruited as management trainees and then placed in special company training
programs. They are not recruited for particular positions but for development as future supervisors and
executives. Indeed, this source provides a constant flow of new personnel with leadership potentialities.
Frequently, this source is tapped through on-campus interview with promising students. In addition, vocational
schools and industrial training institutes provide specialized employees, apprentices, and trainees for
semiskilled and skilled jobs. Persons trained in these schools and institutes can be placed on operative and
similar jobs with a minimum of in-plant training. However, recruitment of these candidates must be based
on realistic and differential standards established through research reducing turnover and enhancing
productivity.
Frequently, numerous enterprises depend to some extent upon casual labor or “applicants at the gate”
and nail applicants. The candidates may appear personally at the company’s employment office or send
their applications for possible vacancies. Explicitly, as Yoder and others observe, the quality and quantity
of such candidates depend on the image of the company in community. Prompt response to these applicants
proves very useful for the company. However, it may be noted that this source is uncertain, and the
applicants reveal a wide range of abilities necessitating a careful screening. Despite these limitations, it
forms a highly inexpensive source as the candidates themselves come to the gate of the company. Again,
it provides measures for good public relations and accordingly, all the candidates visiting the company
must be received cordially.

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 Table 3.1 : Recruiting Sources Used by Skill and Level

Skill/Level Recruiting Source Percentage of Use

Unskilled and Semiskilled Informal contacts 85
Walk-ins 74
Public Employment Agencies 66
Want Ads 52
Skilled Informal Contacts 88
Walk-ins 66
Public Employment Agencies 55
Want Ads 55
Professional Employees Internal Search 94
Informal Contacts 92
Walk-ins 71
Public Employment Agencies 52
Want Ads 48
Private Employment Agencies 22
Managerial Level Internal Search 100
Informal Contacts 71
Walk-ins 31
Private Employment Agencies 20
Want Ads 17
Public Employment Agencies 12

Source: Adapted from Stephen L. Mangum, “Recruitment and job Search: The Recruitment Tactics of
Employers. “Personnel Administrator, June 1982, p. 102.

As Jucius observes, trade unions are playing an increasingly important role in labor supply. In several
trades, they supply skilled labor in sufficient numbers. They also determine the order in which employees
are to be recruited in the organization. In industries where they do not take active part in recruitment, they
make it a point that employees laid off are given preference in recruitment.
Application files also forms a useful source of supply of work force. Attempts may be made to review the
application to determine jobs for which the candidates filed for future use when there are openings in these
jobs. The candidates may be requested to renew their cards as many times as they desire. All the renewed
cards may be placed in “active” files and those not renewed for considerable time may be placed in
“inactive” file or destroyed. Indeed, a well-indexed application file provides utmost economy from the
standpoint of a recruiting budget.

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Efficacy of alternative sources of supply of human resources should be determined through research.
Attempts may be made to relate the factor of success on the job with a specific source of supply. Alternative
sources can also be evaluated in terms of turnover, grievances and disciplinary action. Those sources
which are significantly positively related with job performance and significantly negatively related with
turnover, grievances and disciplinary action, can be effectively used in recruitment programs. The
assessment should be periodically performed in terms of occupations. It may be that source “A” is most
effective for technical workers, while source “B” for semiskilled workers.
Advantages of External Recruitment: External sources of recruitment are suitable for the following
reasons:
1. It will help in bringing new ideas, better techniques and improved methods to the
organization.
2. The cost of employees will be minimized because candidates selected in this method
will beplaced in the minimum pay scale.
3. The existing employees will also broaden their personality.
4. The entry of qualitative persons from outside will be in the interest of the organization in the
longrun.
5. The suitable candidates with skill, talent, knowledge are available from external sources.
6. The entry of new persons with varied expansion and talent will help in human resource mix.

Disadvantages of External Sources:

1. Orientation and training are required as the employees remain unfamiliar with the
organization.
2. It is more expensive and time-consuming. Detailed screening is necessary as very little is
knownabout the candidate.
3. If new entrant fails to adjust himself to the working in the enterprise, it means yet more
expenditureon looking for his replacement.
4. Motivation, morale and loyalty of existing staff are affected, if higher level jobs are filled
from external sources. It becomes a source of heart-burning and demoralization among
existingemployees.
3.1.4. Methods of Recruitment
Methods of recruitment are different from the sources of recruitment. Sources are the locations where
prospective employees are available. On the other hand, methods are way of establishing links with the
prospective employees. Various methods employed for recruiting employees may be classified into the
following categories:

1. Direct Methods:
These include sending recruiters to educational and professional institutions, employees, contacts with
public and manned exhibits. One of the widely used direct methods is that of sending of recruiters to
colleges and technical schools. Most college recruiting is done in co-operation with the placement office
of a college. The placement office usually provides help in attracting students, arranging interviews, furnishing
space, and providing student resumes.

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 For managerial, professional and sales personnel campus recruiting is an extensive operation. Persons
reading for MBA or other technical diplomas are picked up in this manner. For this purpose, carefully
prepared brochures, describing the organization and the jobs it offers, are distributed among students,
before the interviewer arrives. Sometimes, firms directly solicit information from the concerned professors
about students with an outstanding record. Many companies have found employees contact with the
public a very effective method. Other direct methods include sending recruiters to conventions and seminars,
setting up exhibits at fairs, and using mobile offices to go to the desired centers.
Table 3.2: Methods of Contacting Prospective Candidates

Based on personnel to be recruited

Managerial/technical personnel Operative personnel
Advertisement Public employment exchanges
Internet Labor unions
Walk-ins Employee referrals
Campus recruitments Gate hiring
Job fairs Labor contractors
Consultancy firms
Personnel contacts
Poaching and raiding
Based on the movement of the organization
Direct methods Third party method
Advertisement Consultancy firms
Internet recruiting Public employment exchanges
Campus recruitment Labor unions
Job fairs Employee referrals
Personnel contacts Labor contractors
Gate hiring

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2. Indirect Methods:
The most frequently used indirect method of recruitment is advertisement in newspapers, journals, and on
the radio and television. Advertisement enables candidates to assess their suitability. It is appropriate
when the organization wants to reach out to a large target group scattered nationwide. When a firm wants
to conceal its identity, it can give blind advertisement in which only box number is given. Considerable
details about jobs and qualifications can be given in the advertisements. Another method of advertising is
a notice-board placed at the gate of the company.
3. Third-Party Methods:
The most frequently used third-party methods are public and private employment agencies. Public
employment exchanges have been largely concerned with factory workers and clerical jobs. They also
provide help in recruiting professional employees. Private agencies provide consultancy services and
charge a fee. They are usually specialized for different categories of operatives, office workers, salesmen,
supervisory and management personnel. Other third-party methods include the use of trade unions. Labor-
management committees have usually demonstrated the effectiveness of trade unions as methods of
recruitment.
Several criteria discussed in the preceding section for evaluating sources of applicants can also be used for
assessing recruiting methods. Attempts should be made to identify how the candidate was attracted to the
company. To accomplish this, the application may consist of an item as to how the applicant came to learn
about the vacancy. Then, attempts should be made to determine the method which consistently attracts
good candidates. Thus, the most effective method should be utilized to improve the recruitment program.

3.1.5. Philosophies of Recruitment

There are basically two philosophies of recruitment:
1. Traditional
2. Realistic
The traditional philosophy is to get as many people as possible to apply for the job. As a result of this, a
large number of job seekers apply for the job, which makes the final selection process difficult and can
often result in the selection of wrong candidates. Wrong selection can, in turn, lead to employee dissatisfaction
and turnover in the long run.
In realistic philosophy, the needs of the organization are matched with the needs of the applicants, which
enhance the effectiveness of the recruitment process. In realistic approach, the employees who are recruited
will stay in the organization for a longer period of time and will perform at higher level of effectiveness.

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 Table 3.3 : Difference between Traditional and Realistic Job Preview

Traditional Job Preview Realistic Job Preview

Setting unrealistic and high job expectations. Setting realistic job expectations.
Job is viewed by the candidates as highly attractive Attractiveness of job is evaluated in the
light of realistic job expectations
High rate of acceptance of job offers. Some accept and some reject job
offers.
High expectation belied by actual job experience Expectations are confirmed by job
experience.
Creations of dissatisfaction, frustration and Creation of satisfaction in the light of
thoughts for leaving the job job expectations.
High rate of personnel turnover and lower rate of High rate of personnel retention and
job survival high rate of job survival

3.2. Selection
Human resource selection is the process of choosing qualified individuals who are available to fill positions
in an organization. In the ideal personnel situation, selection involves choosing the best applicant to fill a
position. Selection is the process of choosing people by obtaining and assessing information about the
applicants with a view to matching these with the job requirements. It involves a careful screening and
testing of candidates who have put in their applications for any job in the enterprise. It is the process of
choosing the most suitable persons out of all the applicants. The purpose of selection is to pick up the right
person for every job.
It can be conceptualized in terms of either choosing the fit candidates, or rejecting the unfit candidates, or
a combination of both. Selection involves both because it picks up the fits and rejects the unfits. In fact, in
Indian context, there are more candidates who are rejected than those who are selected in most of the
selection processes. Therefore, sometimes, it is called a negative process in contrast to positive program of
recruitment.
According to Dale Yoder, “Selection is the process in which candidates for employment are divided into
two classes-those who are to be offered employment and those who are not”.
According to Thomas Stone, “Selection is the process of differentiating between applicants in order to
identify (and hire) those with a greater likelihood of success in a job”.
In the words of Michael Jucius, “The selection procedure is the system of functions and devices
adopted in a given company for the purpose of ascertaining whether or not candidates possess the
qualifications called for by a specific job or for progression through a series of jobs.”
According to Keith Davis, “Selection is the process by which an organisation chooses from a list of
screened applicants, the person or persons who best meet the selection criteria for the position available.”

57
Thus, the selection process is a tool in the hands of management to differentiate between the qualified and
unqualified applicants by applying various techniques such as interviews, tests etc. The cost incurred in
recruiting and selecting any new employee is expensive. The cost of selecting people who are inadequate
performers or who leave the organization before contributing to profits proves a major cost of doing
business. Decenzo and Robbins write, “Proper selection of personnel is obviously an area where
effectiveness - choosing competent workers who perform well in their position-can result in large saving.”
According to them, selection has two objectives: (1) to predict which job applicants would be successful
if hired and (2) to inform and sell the candidate on the job and the organization. Satisfaction of employee
needs and wants as well as the fullest development of his potential are important objectives of selection.
Dale Yoder says, “Selection has long held a high rank in the priority of problem areas in management.
Investments in good people produce a very high rate of return. A good choice of people can provide a
basis for long, sustained contributions.”
Difference between Recruitment and Selection: Difference between recruitment and selection has
been described by Flippo as, “Recruitment is a process of searching for prospective employees and
stimulating and encouraging them to apply for jobs in an organization. It is often termed positive as is
stimulates people to apply for jobs, selection on the other hand tends to be negative because it rejects a
good number of those who apply, leaving only the best to be hired.” Recruitment and selection differs in
following manner:
1. Difference in Objective: The basic objective of recruitment is to attract maximum number of candidates
so that more options are available. The basic objective of selection is to choose best out of the available
candidates.
2. Difference is Process: Recruitment adopts the process of creating application pool as large as possible
and therefore. It is known as positive process. Selection adopts the process through which more and
more candidates are rejected and fewer candidates are selected or sometimes even not a single candidate
is selected. Therefore, it is known as negative process or rejection process.
3. Technical Differences: Recruitment techniques are not very intensive, and not require high skills. As
against this, in selection process, highly specialized techniques are required. Therefore, in the selection
process, only personnel with specific skills like expertise in using selection tests, conducting interviews,
etc., are involved.
4. Difference in Outcomes: The outcome of recruitment is application pool which becomes input for
selection process. The outcome of selection process is in the form of finalizing candidates who will be
offered jobs.

3.2.1. Selection Procedure

The selection procedure is concerned with securing relevant information about an applicant. This information
is secured in a number of steps or stages. The objective of selection process is to determine whether an
applicant meets the qualification for a specific job and to choose the applicant who is most likely to
perform well in that job. Selection is a long process, commencing from the preliminary interview of the
applicants and ending with the contract of employment (sometimes).
The selection procedure consists of a series of steps. Each step must be successfully cleared before the
applicant proceeds to the next. The selection process is a series of successive hurdles or barriers which an
applicant must cross. These hurdles are designed to eliminate an unqualified candidate at any point in the
selection process. Thus, this technique is called “Successive Hurdles Technique”. In practice, the process
differs among organizations and between two different jobs within the same organization. Selection procedure
for the senior managers will be long drawn and rigorous, but it is simple and short while hiring lower level
employees.

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The major factors which determine the steps involved in a selection process are as follows:
 Selection process depends on the number of candidates that are available for selection.
 Selection process depends on the sources of recruitment and the method that is adopted for
making contact with the prospective candidates.
 Various steps involved in as selection process depend on the type of personnel to be selected.
All the above factors are not mutually exclusive, rather these operate simultaneously. In any case, the basic
objective of a selection process is to collect as much relevant information about the candidates as is
possible so that the most suitable candidates are selected. A comprehensive selection process involves the
various steps as shown in Figure 3.3.

Eliminate those who does not

fulfill job requirement.

Unfavorable personnel data

Eliminate those who obtain

unfavorable test score

Eliminate those not meeting job

and organizational requirements

Eliminate those with adverse remarks

Eliminate those not meeting physical standards

Adopt objectivity

Congratulate

Check the reliability and validity

Figure 3.3 Steps in Selection Process

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1. Application Pool: Application pool built-up through recruitment process is the base for selection
process. The basic objective at the recruitment level is to attract as much worthwhile applications as
possible so that there are more options available at the selection stage.
2. Preliminary Screening and Interview: It is highly noneconomic to administer and handle all the
applicants. It is advantageous to sort out unsuitable applicants before using the further selection steps. For
this purpose, usually, preliminary interviews, application blank lists and short test can be used. All applications
received are scrutinized by the personnel department in order to eliminate those applicants who do not
fulfill required qualifications or work experience or technical skill, his application will not be entertained.
Such candidate will be informed of his rejection.

Preliminary interview is a sorting process in which the prospective candidates are given the necessary
information about the nature of the job and the organization. Necessary information is obtained from the
candidates about their education, skills, experience, expected salary etc. If the candidate is found suitable,
he is elected for further screening. This courtesy interview; as it is often called helps the department screen
out obvious misfits. Preliminary interview saves time and efforts of both the company and the candidate. It
avoids unnecessary waiting for the rejected candidates and waste of money on further processing of an
unsuitable candidate. Since rejection rate is high at preliminary interview, the interviewer should be kind,
courteous, receptive and informal.

3. Application Blank or Application Form: An application blank is a traditional widely accepted device
for getting information from a prospective applicant which will enable the management to make a proper
selection. The blank provides preliminary information as well as aid in the interview by indicating areas of
interest and discussion. It is a good means of quickly collecting verifiable (and therefore fairly accurate)
basic historical data from the candidate. It also serves as a convenient device for circulating information
about the applicant to appropriate members of management and as a useful device for storing information
for, later reference. Many types of application forms, sometimes very long and comprehensive and
sometimes brief, are used. Information is generally taken on the following items:
(a) Biographical Data: Name, father’s name, data and place of birth, age, sex, nationality,
height, weight, identification marks, physical disability, if any, marital status, and number of
dependents.
(b) Educational Attainment: Education (subjects offered and grades secured), training acquired
in special fields and knowledge gained from professional/technical institutes or through
correspondence courses.
(c) Work Experience: Previous experience, the number of jobs held with the same or other
employers, including the nature of duties, and responsibilities and the duration of various assignments,
salary received, grades, and reasons for leaving the present employer.
(d) Salary and Benefits: Present and expected.
(e) Other Items: Names and addresses of previous employers, references, etc. An application
blank is a brief history sheet of an employee’s background and can be used for future reference,
in case needed.
The application blank must be designed from the viewpoint of the applicant as well as with the company’s
purpose in mind. It should be relatively easy to handle in the employment office. Application form helps to
serve many functions like:
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  Its main usefulness is to provide information for reference checking, good interviewing, and
correlation with testing data.
 It helps to weed out candidates who are lacking in education, experience or some other eligibility
traits.
 It helps in formulating questions to be asked in the interview.
 Data contained in application form can be stored for future reference.
 It also tests the candidate’s ability to write, to organize his thoughts, and to present facts clearly
and succinctly.
 It indicates further whether the applicant has consistently progressed to better jobs. It provides
factual information.
Weighted Application Blanks
Some organizations assign numeric values or weights to the responses provided by the applicants. This
makes the application form more job related. Generally, the items that have a strong relationship to job
performance are given higher scores. For example, for a sales representative’s position, items such as
previous selling experience, area of specialization, commission earned, religion, language etc. The total
score of each applicant is then obtained by adding the weights of the individual item responses. The
resulting scores are then used in the final selection. WAB is best suited for jobs where there are many
employees especially for sales and technical jobs. It can help in reducing the employee turnover later on.
However, there are several problems associated with WAB e.g.
 It takes time to develop such a form.
 The WAB would have to be updated every few years to ensure that the factors previously identified
are still valid products of job success.
 The organization should be careful not to depend on weights of a few items while finally selecting
the employee.

4. Selection Tests: Many organizations hold different kinds of selection tests to know more about the
candidates or to reject the candidates who cannot be called for interview etc. Selection tests normally
supplement the information provided in the application forms. Such forms may contain factual information
about candidates. Selection tests may give information about their aptitude, interest, personality, which
cannot be known by application forms. Types of tests and rules of good of testing have been discussed in
brief below:

A. Aptitude Tests: These measure whether an individual has the capacity or talent ability to learn a
given job if given adequate training. These are more useful for clerical and trade positions.
B. Personality Tests: At times, personality affects job performance. These determine personality
traits of the candidate such as cooperativeness, emotional balance etc. These seek to assess an
individual’s motivation, adjustment to the stresses of everydaylife, capacityfor interpersonalrelations
and self-image.
C. Interest Tests: These determine the applicant’s interests. The applicant is asked whether he
likes, dislikes, or is indifferent to many examples of school subjects, occupations, amusements,
peculiarities of people, and particular activities.
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 D. Performance Tests: In this test the applicant is asked to demonstrate his ability to do the job. For
example, prospective typists are asked to type several pages with speed and accuracy.
E. Intelligence Tests: This aim at testing the mental capacity of a person with respect to reasoning,
word fluency, numbers, memory, comprehension, picture arrangement, etc. It measures the ability
to grasp, understand and to make judgment.
F. Knowledge Tests: These are devised to measure the depth of the knowledge and proficiency in
certain skills already achieved by the applicants such as engineering, accounting etc.
G. Achievement Tests: Whereas aptitude is a capacity to learn in the future, achievement is concerned
with what one has accomplished. When applicants claim to know something, an achievement test
is given to measure how well they know it.
H. Projective Tests: In these tests the applicant projects his personality into free responses about
pictures shown to him which are ambiguous.
Rules of Good Testing
 Norms should be developed for each test. Their validity and reliability for a given purpose should
be established before they are used.
 Adequate time and resources must be provided to design, validate, and check tests.
 Tests should be designed and administered only by trained and competent persons.
 The user of tests must be extremely sensitive to the feelings of people about tests.
 Tests are to be uses as a screening device.
 Reliance should not be placed solely upon tests in reaching decisions.
 Tests should minimize the probabilities of getting distorted results. They must be ‘race-free’.
 Tests scores are not precise measures. They must be assigned a proper weightage.
5. Interview: An interview is a procedure designed to get information from a person and to assess his
potential for the job he is being considered on the basis of oral responses by the applicant to oral inquiries
by the interviewer. Interviewer does a formal in-depth conversation with the applicant, to evaluate his
suitability. It is one of the most important tools in the selection process. This tool is used when interviewing
skilled, technical, professional and even managerial employees. It involves two-way exchange of information.
The interviewer learns about the applicant and the candidate learns about the employer.
Objectives of Interviews: Interview helps:
 To obtain additional information from the candidate.
 Facilitates giving to the candidate information about the job, company, its policies, products etc.
 To assess the basic suitability of the candidate.
The selection interview can be:
 One to one between the candidate and the interviewer:
 Two or more interviewers by employers representatives-sequential;
 By a panel of selections, i.e., by more than representative of the employer.
The sequential interview involves a series of interviews; each interviewer meeting the candidate separately.
The panel interview consists of two or more interviews meeting the candidate together.
Types of interviews: Interviews can be classified in various ways according to:
(A) Degree of Structure
(B) Purpose of Interview
(C) Content of Interview
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(A) Degree of Structure:
(1) Unstructured or non-directive: in which you ask questions as they come to mind. There is
no set format to follow.
(2) Structured or directive: in which the questions and acceptable responses are specified in
advance. The responses are rated for appropriateness of content.
Structured and non-structured interviews have their pros and cons. In structured interviews all applicants
are generally asked all required questions by all interviewers. Structured interviews are generally more
valid. However structured interviews do not allow the flexibility to pursue points of interests as they
develop.
(B) Purpose of Interview: A selection interview is a type of interview designed to predict future job
performance, on the basis of applicant’s responses to the oral questions asked to him.
A stress interview is a special type of selection interview in which the applicant is made
uncomfortable by series of awkward and rude questions. The aim of stress interview is supposedly
to identify applicant’s low or high stress tolerance. In such an interview the applicant is made
uncomfortable by throwing him on the defensive by series of frank and often discourteous questions
by the interviewer.
(C) Content of Interview: The content of interview can be of a type in which individual’s ability to
project a situation is tested. This is a situation type interview. In job-related interview, interviewer
attempts to assess the applicant’s past behaviors for job related information, but most questions
are not considered situational.
In a behavior interview a situation in described and candidates are asked how they behavedin
the past in such a situation. While in situational interviews candidates are asked to describe
how they would react to situation today or tomorrow. In the behavioral interview they are askedto
describe how they did react to the situation in the past.
Principles of Interviewing
To make it effective, an interview should be properly planned and conducted on certain principles; Edwin
B. Flippo has described certain rules and principles of good interviewing to this end:
 Provide proper surroundings. The physical setting for the interview should be both private and
comfortable.
 The mental setting should be one of rapport. The interviewer must be aware of non-verbal behavior.
 Plan for the interview by thoroughly reviewing job specifications and job descriptions.
 Determine the specific objectives and the method of the interviewing.
 Inform yourself as much as possible concerning the known information about the interviewee.
 The interviewer should possess and demonstrate a basic liking and respect for people.
 Questions should be asked in a manner that encourages the interviewee to talk. Put the applicant
at ease.
 Make a decision only when all the data and information are available. Avoid decisions that are
based on first impressions.
 Conclude the interview tactfully, making sure that the candidate leaves feeling neither too elated nor
frustrated.
 Maintain some written record of the interview during or immediately after it.
 Listen attentively and, if possible, protectively.
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  Questions must be stated clearly to avoid confusion and ambiguity. Maintain a balance between
open and overtly structured questions.
 ‘Body language’ must not be ignored.
 The interviewer should make some overt sign to indicate the end of the interview.
Interviewing is largely an art, the application of which can be improved through practice.
6. Background Investigation: The next step in the selection process is to undertake an investigation of
those applicants who appear to offer potential as employees. This may include contacting former employers
to confirm the candidate’s work record and to obtain their appraisal of his or her performance/ contacting
other job-related and personal references, and verifying the educational accomplishments shown on the
application.
The background investigation has major implications. Every personnel administrator has the responsibility
to investigate each potential applicant. In some organization, failure to do so could result in the loss of his
or her job. But many managers consider the background investigation data highly biased. Who would
actually list a reference that would not give anything but the best possible recommendation? The seasoned
personnel administrator expects this and delves deeper into the candidate’s background, but that, too,
may not prove to be beneficial. Many past employers are reluctant to give any information to another
company other than factual information (e.g., date of employment).
Even though there is some reluctance to give this information, there are ways in which personnel
administrators can obtain it. Sometimes, for instance information can be obtained from references once
removed. For example, the personnel administrator can ask a reference whose name has been provided
on the application form to give another reference, someone who has knowledge of the candidate’s work
experience. By doing this, the administrator can eliminate the possibility of accepting an individual based
on the employee’s current employer’s glowing recommendation when the motivation for such a positive
recommendation was to get rid of the employee.
7. Physical Examination: After the selection decision and before the job offer is made, the candidate is
required to undergo physical fitness test. Candidates are sent for physical examination either to the
company’s physician or to a medical officer approved for the purpose. Such physical examination provides
the following information.
 Whether the candidate’s physical measurements are in accordance with job requirements or not?
 Whether the candidate suffers from bad health which should be corrected?
 Whether the candidate has health problems or psychological attitudes likely to interfere with work
efficiency or future attendance?
 Whether the candidate is physically fit for the specific job or not?
Policy on these physical exams has changed today. Dale Yoder writes, “Modem policy used the physical
examination not to eliminate applicants, but to discover what jobs they are qualified to fill. The examination
should disclose the physical characteristics of the individual that are significant from the standpoint of his
efficient performance of the job he may enter or of those jobs to which he may reasonably expect to be
transferred or promoted. It should note deficiencies, not as a basis for rejection, but as indicating restrictions
on his transfer to various positions also.”
8. Approval by Appropriate Authority: On the basis of the above steps, suitable candidates are
recommended for selection by the selection committee or personnel department. Though such a committee
or personnel department may have authority to select the candidates finally, often it has staff authority to
recommend the candidates for selection to the appropriate authority. Organizations may designate the
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various authorities for approval of final selection of candidates for different categories of candidates. Thus, for
top level managers, board of directors may be approving authority; for lower levels, even functionalheads
concerned may be approving authority.
9. Final Employment Decision: After a candidate is finally selected, the human resource department
recommends his name for employment. The management or board of the company offers employment in
the form of an appointment letter mentioning the post, the rank, the salary grade, the date by which the
candidate should join and other terms and conditions of employment. Some firms make a contract of
service on judicial paper. Usually an appointment is made on probation in the beginning. The probation
period may range from three months to two years. When the work and conduct of the employee is found
satisfactory, he may be confirmed. The personnel department prepares a waiting list and informs the
candidates. In case a person does not join after being selected, the company calls next person on the
waiting list.
10. Evaluation: The selection process, if properly performed, will ensure availability of competent and
committed personnel. A period audit, conducted by people who work independently of the human resource
department, will evaluate the effectiveness of the selection process. The auditors will do a thorough and
the intensive analysis and evaluate the employment program.
3.2.2. Selection Decision Outcomes
Consider, for a moment, that any selection decision can result in four possible outcomes. As shown in
Figure 3.4, two of these outcomes would indicate correct decisions, but two would indicate errors.
Correct decisions are those where the applicant was predicted to be successful and later did prove to be
successful on the job, or where the applicant was predicted to be unsuccessful and would have performed
accordingly if hired. In the former case, we have successfully accepted; in the latter case, we have successfully
rejected. Thus the purpose of selection activities is to develop outcomes shown as “correct decisions” in
Figure 3.4.
Problems occur when we make errors-by rejecting candidates who would later perform successfully on
the job (reject errors) or accepting those individuals who subsequently perform poorly on the job (accept
errors). These problems are, unfortunately far from insignificant. Reject errors historically meant that the
costs in performing selection activities would be increased. Accept errors, on the other hand, have very
obvious costs to the organization including the cost of training the employee, the costs generated (or
profits forgone) due to the employee’s incompetence, the cost of severance and the subsequent costs of
further recruiting and selection screening. The major thrust of any selection activity, therefore, is to reduce
the probability of making reject or accept errors while increasing the probability of making reject or
accept errors while increasing the probability of making correct decisions.
Accept Reject
Later Job Pertormance

Successful

Unsuccessful

Figure 3.4: Selection Decision Outcomes

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In summary, selections have two objectives: (1) to predict which job applicants would be successful if hired
and (2) to inform and sell the candidate on the job and the organization. Unfortunately, these two objectives
are not always compatible putting a job candidate through hours of filling out forms, taking tests, and
completing interviews rarely endears the organization to the candidate. These are tiresome and often
stressful activities. Yet if the selection activities place too great an emphasis on public relations, obtaining
the information needed to make successful selection decisions may be subordinated. Hence a manager’s
dilemma in selection is how to balance the desire to attract people with the desire to gather relevant
selection data.
3.2.3. Placement – Orientation - Socialization
After an employee has been recruited he is provided with basic background information about the employer,
working conditions and the information necessary to perform his job satisfactorily. The new employee’s
initial orientation helps him perform better byproviding him information of the company rules, and practices.
According to Pigors and Myers, “Placement consists in matching what the supervisor has reason to
think the new employee can do with what the job demands (job requirements), imposes (in strain, working
conditions, etc.), and offers (in the form of pay rate, interest, companionship with other, promotional
possibilities, etc.)” They further state that it is not easy to match all these factors for a new worker who is
still in many ways an unknown quantity. For this reason, the first placement usually carries with it the status
of probationer.
A few basic principles should be followed at the time of placement of an employee on the job.
These may be enumerated as below:
 The job should be offered to the man according to his qualifications. The placement should neither
be higher nor lower than the qualifications.
 While introducing the job to the new employee, an effort should be made to develop a sense of
loyalty and cooperation in him so that he may realize his responsibilities better towards the job and
the organization.
 The employee should be made conversant with the working conditions prevailing in the industry
and all things relating to the job. He should also be made aware of the penalties if he commits a
wrong.
 Man should be placed on the job according to the requirements of the job. The job should not be
adjusted according to the qualifications or requirements of the man. Job first; man next, should be
the principle of placement.
 The placement should be ready before the joining date of the newly selected person.
 The placement in the initial period may be temporary as changes are likely after the completion of
training. The employee may be later transferred to the job where he can do better justice.
In the words of John M. Ivancevich, “Orientation orients, directs, and guides employees to understand
the work, firm, colleagues, and mission. It introduces new employees to the organization, and to his new
tasks, managers, and work groups.”
According to John Bernardin, “Orientation is a term used for the organizationally sponsored, formalized
activities associated with an employee’s socialization into the organization.”

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Billimoria has defined orientation as, “Induction (orientation) is a technique by which a new employee
is rehabilitated into the changed surroundings and introduced to the practices, policies, and purposes of
the organization.”
Orientation is one component of the new employee socialization process. Socialization is the ongoing
process of instilling in all new employees prevailing attitudes, standards, values, patterns of behavior that
are expected by the organization and its departments.
Thus, orientation is a process through which a new employee is introduced to the organization. It is the
process wherein an employee is made to feel comfortable and at home in the organization. The new
employee is handed over a rulebook, company booklets, policy manuals, progress reports and documents
containing company information which are informational in nature. It is responsibility of the human resource
department to execute the orientation program.

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 Chapter Four
Employee Development and Training
4.1. Concept
Training is a process of learning a sequence of programmed behavior. It is the application of knowledge &
gives people an awareness of rules & procedures to guide their behavior. It helps in bringing about positive
change in the knowledge, skills & attitudes of employees.
Thus, training is a process that tries to improve skills or add to the existing level of knowledge so that the
employee is better equipped to do his present job or to mold him to be fit for a higher job involving higher
responsibilities. It bridges the gap between what the employee has & what the job demands.
Training refers to a planned effort by a company to facilitate employees’ learning of job related competencies.
These competencies include knowledge, skills, or behaviors that are critical for successful job performance.
The goal of training is for employees to master the knowledge, skill, and behaviors emphasized in training
programs and to apply them to their day to day activities. Training is seen as one of several possible
solutions to improve performance. Other solutions can include such actions as changing the job or increasing
employee motivation through pay and incentives. Today there is a greater emphasis on-
 Providing educational opportunities for all employees. These educational opportunities may include
training programs, but they also include support for taking courses offered outside the company,
self-study, and learning through job rotation.
 An ongoing process of performance improvement that is directly measurable rather than organizing
one time training events.
 The need to demonstrate to executives, managers, and trainees the benefits of training.
 Learning as a lifelong event in which senior management, trainer manager, and employees have
ownership.

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  Training being used to help attain strategic business objectives, which help companies, gains a
competitive advantage.
TRAINING AND DEVELOPMENT OBJECTIVES
The principal objective of training and development division is to make sure the availability of a skilled and
willing workforce to an organization. In addition to that, there are four other objectives: Individual,
Organizational, Functional, and Societal. Training and development is a subsystem of an organization. It
ensures that randomness is reduced and learning or behavioral change takes place in structured format.
Individual Objectives – help employees in achieving their personal goals, which in turn, enhances the
individual contribution to an organization.
Organizational Objectives – assist the organization with its primary objective by bringing individual
effectiveness.
Functional Objectives – maintain the department’s contribution at a level suitable to the organization’s
needs.
Societal Objectives – ensure that an organization is ethically and socially responsible to the needs and
challenges of the society.
The quality of employees and their development through training and education are major factors in
determining long-term profitability of a small business. If you hire and keep good employees, it is good
policy to invest in the development of their skills, so they can increase their productivity.
Training often is considered for new employees only. This is a mistake because ongoing training for current
employees helps them adjust to rapidly changing job requirements. Reasons for emphasizing the growth
and development of personnel include

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  Creating a pool of readily available and adequate replacements for personnel who may leave or
move up in the organization.
 Enhancing the company’s ability to adopt and use advances in technology because of a sufficiently
knowledgeable staff.
 Building a more efficient, effective and highly motivated team, which enhances the company’s
competitive position and improves employee morale.
 Ensuring adequate human resources for expansion into new programs.
Research has shown specific benefits that a small business receives from training and developing its
workers, including:
 Increased productivity.
 Reduced employee turnover.
 Increased efficiency resulting in financial gains.
 Decreased need for supervision.
Employees frequently develop a greater sense of self-worth, dignity and well-being as they become more
valuable to the firm and to society. Generally they will receive a greater share of the material gains that
result from their increased productivity. These factors give them a sense of satisfaction through the
achievement of personal and company goals.
4.2. Need for Employee Training
Training of employees takes place after orientation takes place. Training is the process of enhancing the
skills, capabilities and knowledge of employees for doing a particular job. Training process molds the
thinking of employees and leads to quality performance of employees. It is continuous and never ending in
nature.
Training is given on four basic grounds:
1. New candidates who join an organization are given training. This training familiarizes them with the
organizational mission, vision, rules and regulations and the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updating and amendments take place in technology, training is given to cope up with those
changes. For instance, purchasing new equipment, changes in technique of production, computer
impartment. The employees are trained about use of new equipment and work methods.
4. When promotion and career growth becomes important. Training is given so that employees are
prepared to share the responsibilities of the higher level job.
Training needs can be assessed by analyzing three major human resource areas: the organization as a
whole, the job characteristics and the needs of the individuals. This analysis will provide answers to the
following questions:
1. Where is training needed?
2. What specifically must an employee learn in order to be more productive?
3. Who needs to be trained?
Begin by assessing the current status of the company how it does what it does best and the abilities of your
employees to do these tasks. This analysis will provide some benchmarks against which the effectiveness
of a training program can be evaluated. Your firm should know where it wants to be in five years from its
long-range strategic plan. What you need is a training program to take your firm from here to there.
Second, consider whether the organization is financially committed to supporting the training efforts. If
not, any attempt to develop a solid training program will fail.

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Next, determine exactly where training is needed. It is foolish to implement a companywide training effort
without concentrating resources where they are needed most. An internal audit will help point out areas
that may benefit from training. Also, a skills inventory can help determine the skills possessed by the
employees in general. This inventory will help the organization determine what skills are available now and
what skills are needed for future development.
Also, in today’s market-driven economy, you would be remiss not to ask your customers what they like
about your business and what areas they think should be improved. In summary, the analysis should focus
on the total organization and should tell you (1) where training is needed and (2) where it will work within
the organization. Once you have determined where training is needed, concentrate on the content of the
program. Analyze the characteristics of the job based on its description, the written narrative of what the
employee actually does. Training based on job descriptions should go into detail about how the job is
performed on a task-by-task basis. Actually doing the job will enable you to get a better feel for what is
done. Individual employees can be evaluated by comparing their current skill levels or performance to the
organization’s performance standards or anticipated needs.
4.3. Importance
Training is crucial for organizational development and success. It is fruitful to both employers and employees
of an organization. An employee will become more efficient and productive if he is trained well. The
benefits of training can be summed up as:
1. Improves Morale of Employees- Training helps the employee to get job security and job
satisfaction. The more satisfied the employee is and the greater is his morale, the more he will
contribute to organizational success and the lesser will be employee absenteeism and turnover.
2. Less Supervision- A well trained employee will be well acquainted with the job and will need
less of supervision. Thus, there will be less wastage of time and efforts.
3. Fewer Accidents- Errors are likely to occur if the employees lack knowledge and skills required
for doing a particular job. The more trained an employee is, the less are the chances of committing
accidents in job and the more proficient the employee becomes.
4. Chances of Promotion- Employees acquire skills and efficiency during training. They become
more eligible for promotion. They become an asset for the organization.
5. Increased Productivity- Training improves efficiency and productivity of employees. Well trained
employees show both quantity and quality performance. There is less wastage of time, money and
resources if employees are properly trained.
4.4. Types of Employee Training
Some commentator use a similar term for workplace learning to improve performance: “training and
development”. One can generally categorize such training as on-the-job or off-the-job:
1. On-the-job training takes place in a normal working situation, using the actual
tools, equipment, documents or materials that trainees will use when fully trained.
On-the-job training has a general reputation as most effective for vocational
work.
2. Off-the-job training takes place away from normal work situations — implying that
the employeedoes not count as a directly productive worker while such training takes
place. Off-the-job traininghas the advantage that it allows people to get away from
work and concentrate more thoroughlyon the training itself. This type of training
has proven more effective in inculcating concepts andideas.
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The most frequently used method in smaller organizations that is on the job training. This method of
training uses more knowledgeable, experienced and skilled employees, such as mangers, supervisors to
give training to less knowledgeable, skilled, and experienced employees. OJT can be delivered in classrooms
as well. This type of training often takes place at the work place in informal manner.
On the Job Training is characterized by following points
1. It is done on ad-hoc manner with no formal procedure, or content
2. At the start of training, or during the training, no specific goals or objectives are developed
3. Trainers usually have no formal qualification or training experience for training
4. Training is not carefully planned or prepared
5. The trainer are selected on the basis of technical expertise or area knowledge
Formal OJT programs are quite different from informal OJT. These programs are carried out by identifying
the employees who are having superior technical knowledge and can effectively use one-to-one interaction
technique. The procedure of formal on the job training program is:
1. The participant observes a more experienced, knowledgeable, and skilled trainer (employee)
2. The method, process, and techniques are well discussed before, during and after trainer has
explained about performing the tasks
3. When the trainee is prepared, the trainee starts performing on the work place
4. The trainer provides continuing direction of work and feedback
5. The trainee is given more and more work so that he accomplishes the job flawlessly

The four techniques for on the job development are:

i. COACHING
ii. MENTORING
iii. JOB ROTATION
iv. JOB INSTRUCTION TECHNIQUE (JIT)
1.) Coaching is one of the training methods, which is considered as a corrective method for inadequate
performance. According to a survey conducted by International Coach Federation (ICF), more than
4,000 companies are using coach for their executives. These coaches are experts most of the time outside
consultants.

A coach is the best training plan for the CEO’s because

i. It is one to one interaction
ii. It can be done at the convenience of CEO
iii. It can be done on phone, meetings, through e-mails, chat
iv. It provides an opportunity to receive feedback from an expert
v. It helps in identifying weaknesses and focus on the area that needs
improvement
This method best suits for the people at the top because if we see on emotional front, when a person
reaches the top, he gets lonely and it becomes difficult to find someone to talk to. It helps in finding out the
executive’s specific developmental needs. The needs can be identified through 60 degree performance
reviews.
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Procedure of the Coaching
The procedure of the coaching is mutually determined by the executive and coach. The procedure is
followed by successive counseling and meetings at the executive’s convenience by the coach.
1. Understand the participant’s job, the knowledge, skills, and attitudes, and resources required to
meet the desired expectation
2. Meet the participant and mutually agree on the objective that has to be achieved
3. Mutually arrive at a plan and schedule
4. At the job, show the participant how to achieve the objectives, observe the performance and then
provide feedback
5. Repeat step 4 until performance improves
For the people at middle level management, coaching is more likely done by the supervisor; however
experts from outside the organization are at times used for up and coming managers. Again, the personalized
approach assists the manger focus on definite needs and improvement.
2.) Mentoring is an ongoing relationship that is developed between a senior and junior employee. Mentoring
provides guidance and clear understanding of how the organization goes to achieve its vision and mission
to the junior employee.
The meetings are not as structured and regular than in coaching. Executive mentoring is generally done by
someone inside the company. The executive can learn a lot from mentoring. By dealing with diverse
mentee’s, the executive is given the chance to grow professionally by developing management skills and
learning how to work with people with diverse background, culture, and language and personality types.
Executives also have mentors. In cases where the executive is new to the organization, a senior executive
could be assigned as a mentor to assist the new executive settled into his role. Mentoring is one of the
important methods for preparing them to be future executives. This method allows the mentor to determine
what is required to improve mentee’s performance. Once the mentor identifies the problem, weakness,
and the area that needs to be worked upon, the mentor can advise relevant training. The mentor can also
provide opportunities to work on special processes and projects that require use of proficiency.
Some key points on Mentoring
i. Mentoring focus on attitude development
ii. Conducted for management-level employees
iii. Mentoring is done by someone inside the company
iv. It is one-to-one interaction
v. It helps in identifying weaknesses and focus on the area that needs
improvement
3.) For the executive, job rotation takes on different perspectives. The executive is usually not simply
going to another department. In some vertically integrated organizations, for example, where the supplier
is actually part of same organization or subsidiary, job rotation might be to the supplier to see how the
business operates from the supplier point of view.
Learning how the organization is perceived from the outside broadens the executive’s outlook on the
process of the organization. Or the rotation might be to a foreign office to provide a global perspective.
For managers being developed for executive roles, rotation to different functions in the company is regular
carried out.

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 This approach allows the manger to operate in diverse roles and understand the different issues that crop
up. If someone is to be a corporate leader, they must have this type of training. A recent study indicated
that the single most significant factor that leads to leader’s achievement was the variety of experiences in
different departments, business units, cities, and countries.
An organized and helpful way to develop talent for the management or executive level of the organization
is job rotation. It is the process of preparing employees at a lower level to replace someone at the next
higher level. It is generally done for the designations that are crucial for the effective and efficient functioning
of the organization.
Some of the major benefits of job rotation are:
i. It provides the employees with opportunities to broaden the horizon of knowledge, skills, and
abilities by working in different departments, business units, functions, and countries
ii. Identification of Knowledge, skills, and attitudes (KSAs) required
iii. It determines the areas where improvement is required
iv. Assessment of the employees who have the potential and caliber for filling the position
4.) Job Instruction Technique (JIT) uses a strategy with focus on knowledge (factual and procedural),
skills and attitudes development.
JIT Consists of Four Steps:
Plan – This step includes a written breakdown of the work to be done because the trainer and the trainee
must understand that documentation is must and important for the familiarity of work. A trainer who is
aware of the work well is likely to do many things and in the process might miss few things. Therefore, a
structured analysis and proper documentation ensures that all the points are covered in the training program.
The second step is to find out what the trainee knows and what training should focus on. Then, the next
step is to create a comfortable atmosphere for the trainees’ i.e. proper orientation program, availing the
resources, familiarizing trainee with the training program, etc.
Present – In this step, trainer provides the synopsis of the job while presenting the participants the
different aspects of the work. When the trainer finished, the trainee demonstrates how to do the job and
why is that done in that specific manner. Trainee actually demonstrates the procedure while emphasizing
the key points and safety instructions.

Figure 4.1 : Steps in JIT

Trial – This step actually a kind of rehearsal step, in which trainee tries to perform the work and the
trainer is able to provide instant feedback. In this step, the focus is on improving the method of instruction
because a trainer considers that any error if occurring may be a function of training not the trainee. This
step allows the trainee to see the after effects of using an incorrect method. The trainer then helps the
trainee by questioning and guiding to identify the correct procedure.

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Follow-up – In this step, the trainer checks the trainee’s job frequently after the training program is over
to prevent bad work habits from developing. There are various methods of training, which can be divided
in to cognitive and behavioral methods. Trainers need to understand the pros and cons of each method,
also its impact on trainees keeping their background and skills in mind before giving training.
OFF THE JOB TRAINING –
There are many management development techniques that an employee can take in off the job. The few
popular methods are:
i. SENSITIVITY TRAINING
ii. TRANSACTIONALANALYSIS
iii. STRAIGHT LECTURES/ LECTURES
iv. SIMULATION EXERCISES
1.) Sensitivity Training is about making people understand about themselves and others reasonably,
which is done by developing in them social sensitivity and behavioral flexibility.
Social sensitivity in one word is empathy. It is ability of an individual to sense what others feel and think
from their own point of view. Behavioral flexibility is ability to behave suitably in light of understanding.
Sensitivity Training Program requires three steps:
Unfreezing the Old Values –
It requires that the trainees become aware of the inadequacy of the old values. This can be done when the
trainee faces dilemma in which his old values is not able to provide proper guidance. The first step consists
of a small procedure:

 An unstructured group of 10-15 people is formed.

 Unstructured group without any objective looks to the trainer for its guidance

 But the trainer refuses to provide guidance and assume leadership

 Soon, the trainees are motivated to resolve the uncertainty

 Then, they try to form some hierarchy. Some try assume leadership role which may not be liked
by other trainees

 Then, they started realizing that what they desire to do and realize the alternative ways of dealing
with the situation

Development of New Values – With the trainer’s support, trainees begin to examine their interpersonal
behavior and giving each other feedback. The reasoning of the feedbacks are discussed which motivates
trainees to experiment with range of new behaviors and values. This process constitutes the second step
in the change process of the development of these values.

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Refreezing the new ones – This step depends upon how much opportunity the trainees get to practice
their new behaviors and values at their work place.
2.) Transactional Analysis provides trainees with a realistic and useful method for analyzing and
understanding the behavior of others. In every social interaction, there is a motivation provided by one
person and a reaction to that motivation given by another person. This motivation reaction relationship
between two persons is a transaction.
Transactional analysis can be done by the ego states of an individual. An ego state is a system of
feelings accompanied by a related set of behaviors. There are basically three ego states:
Child: It is a collection of recordings in the brain of an individual of behaviors, attitudes, and impulses
which come to her naturally from her own understanding as a child. The characteristics of this ego are to
be spontaneous, intense, unconfident, reliant, probing, anxious, etc. Verbal clues that a person is operating
from its child state are the use of words like “I guess”, “I suppose”, etc. and nonverbal clues like, giggling,
coyness, silent, attention seeking etc.
Parent: It is a collection of recordings in the brain of an individual of behaviors, attitudes, and impulses
imposed on her in her childhood from various sources such as, social, parents, friends, etc. The
characteristics of this ego are to be overprotective, isolated, rigid, bossy, etc. Verbal clues that a person is
operating from its parent states are the use of words like, always, should, never, etc and non-verbal clues
such as, raising eyebrows, pointing an accusing finger at somebody, etc.

Figure 4.3
Adult: It is a collection of reality testing, rational behavior, decision making, etc. A person in this ego state
verifies, updates the data which she has received from the other two states. It is a shift from the taught and
felt concepts to tested concepts. All of us evoke behavior from one ego state which is responded to by the
other person from any of these three states.
3.) Lecture is telling someone about something. Lecture is given to enhance the knowledge of listener or
to give him the theoretical aspect of a topic. Training is basically incomplete without lecture. When the
trainer begins the training session by telling the aim, goal, agenda, processes, or methods that will be used
in training that means the trainer is using the lecture method. It is difficult to imagine training without lecture
format. There are some variations in Lecture method. The variation here means that some forms of lectures
are interactive while some are not.
Straight Lecture: Straight lecture method consists of presenting information, which the trainee attempts
to absorb. In this method, the trainer speaks to a group about a topic. However, it does not involve any
kind of interaction between the trainer and the trainees. A lecture may also take the form of printed text,
such as books, notes, etc. The difference between the straight lecture and the printed material is the
trainer’s intonation, control of speed, body language, and visual image of the trainer. The trainer in case of
straight lecture can decide to vary from the training script, based on the signals from the trainees, whereas
same material in print is restricted to what is printed. A good lecture consists of introduction of the topic,
purpose of the lecture, and priorities and preferences of the order in which the topic will be
covered.

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Some of the main features of lecture method are:
i. Inability to identify and correct misunderstandings
ii. Less expensive
iii. Can be reached large number of people at once
iv. Knowledge building exercise
v. Less effective because lectures require long periods of trainee inactivity
4.) Games and Simulations are structured and sometimes unstructured, that are usually played for
enjoyment sometimes are used for training purposes as an educational tool. Training games and simulations
are different from work as they are designed to reproduce or simulate events, circumstances, processes
that take place in trainees’ job.
A Training Game is defined as spirited activity or exercise in which trainees compete with each other
according to the defined set of rules. Simulation is creating computer versions of real-life games. Simulation
is about imitating or making judgment or opining how events might occur in a real situation. It can entail
intricate numerical modeling, role playing without the support of technology, or combinations. Training
games and simulations are now seen as an effective tool for training because its key components are:
i. Challenge
ii. Rules
iii. Interactivity
These three components are quite essential when it comes to learning. Some of the examples of this
technique are:

Figure 4.4
Trainees can therefore experience these events, processes, games in a controlled setting where they can
develop knowledge, skills, and attitudes or can find out concepts that will improve their performance. The
various methods that come under Games and Simulations are:
i. BEHAVIOR-MODELLING
ii. BUSINESS GAMES
iii. CASE STUDIES

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 iv. EQUIPMENT STIMULATORS

v. IN-BASKET TECHNIQUE

vi. ROLE PLAYS

4.5. Objectives and Process of Employee Training
The training design process refers to a systematic approach for developing training programs. It includes
the seven steps in this process. Training is one of the most profitable investments an organization can
make. No matter what business or industry you are in the steps for an effective training process are the
same and may be adapted anywhere. If you have ever thought about developing a training program within
your organization consider the following four basic training steps. You will find that all four of these steps
are mutually necessary for any training program to be effective and efficient.
Step1 is to conduct a needs assessment, which is necessary to identify whether training is needed. This
step identifies activities to justify an investment for training. The techniques necessary for the data collection
are surveys, observations, interviews, and customer comment cards. Several examples of an analysis
outlining specific training needs are customer dissatisfaction, low morale, low productivity, and high turnover.

The objective in establishing a needs analysis is to find out the answers to the following questions:
1. “Why” is training needed?
2. “What” type of training is needed?
3. “When” is the training needed?
4. “Where” is the training needed?
5. “Who” needs the training? and “Who” will conduct the training?
6. “How” will the training be performed?
By determining training needs, an organization can decide what specific knowledge, skills, and attitudes
are needed to improve the employee’s performance in accordance with the company’s standards.
The needs analysis is the starting point for all training. The primary objective of all training is to improve
individual and organizational performance. Establishing a needs analysis is, and should always be the first
step of the training process.

Step 2 is to ensure that employees have the motivation and basic skills necessary to master training
content. This step establishes the development of current job descriptions and standards and procedures.
Job descriptions should be clear and concise and may serve as a major training tool for the identification
of guidelines. Once the job description is completed, a complete list of standards and procedures should
be established from each responsibility outlined in the job description. This will standardize the necessary
guidelines for any future training.
Step 3 is to create a learning environment that has the features necessary for learning to occur. This step
is responsible for the instruction and delivery of the training program. Once you have designated your
trainers, the training technique must be decided. One-on-one training, on-the-job training, group training,
seminars, and workshops are the most popular methods.
Before presenting a training session, make sure you have a thorough understanding of the following
characteristics of an effective trainer. The trainer should have:
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 - A desire to teach the subject being taught.
- A working knowledge of the subject being taught.
- An ability to motivate participants to “want” to learn.
- A good sense of humor.
- A dynamic appearance and good posture.
- A strong passion for their topic.
- A strong compassion towards their participants.
- Appropriate audio/visual equipment to enhance the training session.
For a training program to be successful, the trainer should be conscious of several essential elements,
including a controlled environment, good planning, and the use of various training methods, good
communicationskills and trainee participation.
Step 4 is to ensure that trainees apply the training content to their jobs.
This step will determine how effective and profitable your training program has been. Methods for evaluation
are pre-and post- surveys of customer comments cards, the establishment of a cost/benefit analysis outlining
your expenses and returns, and an increase in customer satisfaction and profits. The reason for an evaluation
system is simple. The evaluations of training programs are without a doubt the most important step in the
training process. It is this step that will indicate the effectiveness of both the training as well as the trainer.
There are several obvious benefits for evaluating a training program. First, evaluations will provide feedback
on the trainer’s performance, allowing them to improve themselves for future programs. Second, evaluations
will indicate its cost-effectiveness. Third, evaluations are an efficient way to determine the overall
effectiveness of the training program for the employees as well as the organization.
The importance of the evaluation process after the training is critical. Without it, the trainer does not have
a true indication of the effectiveness of the training. Consider this information the next time youneed to
evaluate your training program. You will be amazed with the results.
The need for training your employees has never been greater. As business and industry continues to grow,
more jobs will become created and available. Customer demands, employee morale, employee productivity,
and employee turnover as well as the current economic realities of a highly competitive workforce are just
some of the reasons for establishing and implementing training in an organization. To be successful, all
training must receive support from the top management as well as from the middle and supervisory levels
of management. It is a team effort and must be implemented by all members of the organization to be fully
successful.
4.6. Advantages of On the Job Training Methods
On the job training method has the following advantages that can be considered:
1. Generally most cost-effective
2. Employees are actually productive
3. Opportunity to learn whilst doing
4. Training alongside real colleagues.
5. Training can be delivered on time and at the optimum time.
6. The trainee will have the good opportunities to practice and implement.
7. The trainee will have feedbacks.
8. Trainee builds confidence by working with own speed and productivity.

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 Chapter Five
Performance Appraisal
5.1. Meaning of Performance Appraisal
Performance appraisal system has been defined in many ways. The easiest way to understand the meaning
of performance appraisal is as follows:

It is the systematic assessment of an individual with respect to his or her performance on the job and his or
her potential for development in that job. Thus, performance appraisal is a systematic and objective way
of evaluating the relative worth or ability of an employee in performing his job. The two aspects of
performance appraisal considered to be important are: systematic and objective. The appraisal is said to
be systematic when it evaluates all performances in the same manner, by applying the same approach, so
that appraisal of different persons are comparable. Such an appraisal is taken from time to time according
to plan; it is not left to probability. Thus, both raters’ and rates know the system of perfor-mance appraisal
and its timing. Appraisal has objectivity also. It’s important aspect is that it attempts at precise measurement
by trying to remove human biases and prejudices.
According to Flippo, a prominent personality in the field of Human resources, “performance appraisal is
the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his
present job and his potential for a better job.”
In the words of Yoder, “Performance appraisal refers to all formal procedures used in working organizations
to evaluate personalities and contributions and potential of group members.” Thus performance appraisal
is a formal program in an organization which is concerned with not onlythe contributions of the members who
form part of the organization, but also aims at spotting the potential of the people.”
It is a systematic way of judging the relative worth of an employee while carrying out his work in an
organization. It also helps recognize those employees who are performing their tasks well and also- who
are not performing their tasks properly and the reasons for such (poor) performance.
According to International Labor Organization, “A regular and continuous evaluation of the quality,
quantity and style of the performance along with the assessment of the factors influencing the performance
and behavior of an individual is called as performance appraisal.”
In short, we can say that performance appraisal is expected to result in an assessment of: development
potential of the employees, training needs for the employees; capabilities of employees being placed in
higher posts, behavior and obedience of the employees; and the need of the organization to evolve a
control mechanism.

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 5.2. Need and Importance of Performance Appraisal
Performance is always measured in terms of outcome and not efforts. Performance Appraisal is needed in
most of the organizations in order:

(1) To give information about the performance of employees on the job and give ranks on the basis of
which decisions regarding salary fixation, demotion, promotion, transfer and confirmation are
taken.

(2) To provide information about amount of achievement and behavior of subordinate in their job.
This kind of information helps to evaluate the performance of the subordinate, by correcting
loopholes in performances and to set new standards of work, if required.

(3) To provide information about an employee’s job-relevant strengths and & weaknesses.

(4) To provide information so as to identify shortage in employee regarding ability, awareness and
find out training and developmental needs.

(5) To avoid grievances and in disciplinary activities in the organization.

(6) It is an ongoing process in every large scale organization.

Performance appraisals in an organization provide employees and managers with an opportunity to converse
in the areas in which employees do extremely well and those in which employees need improvement.
Performance appraisals should be conducted on a frequent basis, and they need not be directly attached
to promotion opportunities only. It is important because of several reason s such as:

1. Personal Attention: Performance appraisal evaluation, gives employee to draw personal concern
from supervisor and talk about their own strengths and weaknesses.

2. Feedback: Employees on a regular basis get feedback of their performances and issues in which
they lack, which needs to be resolved on a regular basis.

3. Career Path: It allows employees and supervisors to converse goals that must be met to grow
within the company. This may encompass recognizing skills that must be acquired, areas in which
improvement is required, and additional qualification that must be acquired.

4. Employee Accountability: Employees are acquainted that their evaluation will take place on a
regular basis and therefore they are accountable for their job performance.

5. Communicate Divisional and Company Goals: It not only communicates employees’ individual
goals but provides an opportunity for managers to explain organizational goals and in the manner
in which employees can contribute in the achievement of those goals.
5.3. Objectives of Performance Appraisal
Performance appraisal in any organization is undertaken to meet certain objectives which may be in the
form of salary increase, promotion, recognizing training and development needs, providing feedback to
employees and putting stress on employees for better performance.
An employee in an organization may think that performance appraisal is basically used by the organization
to blame employees and to take corrective actions. An employee may feel that performance appraisal is

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introduced in an organization for punishment in such a case well thought out performance appraisal may
results into failure. If the objectives set in a more positive, problems may arise as they may not all be
achievable and they may cause conflict. For Example, an employee who is likely to be appraised will
never discloses his loopholes as it may affect his appraisal. Thus the objective of performance appraisal
should e clear and specific. Thus including objectives into the appraisal system may draw attention to
areas for improvement, new directions and opportunities.

1. Salary Increase: Performance appraisal plays an important role in making decision about increase
in salary. Increase in salary of an employee depends on how he is performing his job. Evaluation
of an employee takes place on a continuous basis which may be formally or informally. In a large
as well as in small organizations performance appraisal takes place but it may be in a formal or
informal way. It shows how well an employee is performing and to what extent a hike in salary
would take place in comparison to his performance.

2. Promotion: Performance appraisal gives an idea about how an employee is work-ing in his present
job and what his strong and weak points are. In comparison to his strength and weaknesses it is
decided whether he can be promoted to the next higher position or not. If necessary what additional
training is required. Similarly it could be used for demotion, discharge of an employee and transfer.

3. Training and Development: Performance appraisal gives an idea about strengths and weaknesses
of an employee on his present job. It gives an idea about the training required by an employee for
overcoming the limitations that an employee is having for better performance in future.

4. Feedback: Performance appraisal gives an idea to each employee where they are, how they are
working, and how are they contributing towards achievement of organizational objectives. Feed
works in two ways. First, the person gets view about his performance and he may try to conquer
his weaknesses which may lead to better performance. Second, the person gets satisfied after he
relates his work with organizational objectives. It gives him an idea that he is doing a meaning ful
work and can also contribute in a better way.

5. Pressure on Employees: Performance appraisal puts a sort of stress on employees for better
performance. If the employees are aware that they are been appraised in comparison to their
performance and they will have positive and acceptable behavior in this respect

5.4. Methods of Performance Appraisal

Performance appraisal methods are categorized in two ways traditional and modern methods. Each
organization adopts a different method of performance appraisal according to the need of organization. In
small organization, it may be on an informal basis where personal opinion of a superior about his
subordi-nates may consider for appraisal.

Table 5.2 Methods of Performance Appraisal

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 Traditional Methods Modern Methods
Ranking method Management by Objectives (MB0)
Paired comparison Behaviorally anchored rating scales
Grading method Assessment centers
Forced distribution method 360-degree appraisal
Forced choice method Cost accounting method
Checklist method
Critical incidents method
Graphic scale method
Essay method
Field review method

1. Ranking Method: It is the oldest and simplest method of performance appraisal in which employees’
are ranked on certain criteria such as trait or characteristic. The employee is ranked from highest to lowest
or from worst to best in an organization. Thus if there are seven employees to be ranked then there will be
seven ranks from 1 to 7.
Rating scales offer the advantages of flexibility comparatively easy use and low cost. Nearly every type of
job can be evaluated with the rating scale, the only condition being that the Job-performance criteria
should he changed’. In such a way, a large number of employees can be evaluated in a shorter time period.
Thus, the greatest limitation of this method is that differences in ranks do not indicate how much an
employee of rank 1 is better than the employee whose rank is last.

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2. Paired Comparison: In method is comparatively simpler as compared to ranking method. In this
method, the evaluator ranks employees by comparing one employee with all other employees in the
group. The rater is given slips where, each slip has a pair of names, the rater puts a tick mark next those
employee whom he considers to be the better of the two. This employee is compared number of times so
as to determine the final ranking.

This method provides compari-son of persons in a better way. However, this increases the work as the
large number of comparisons has to be made. For example, to rank 50 persons through paired comparison,
there will be 1,225 comparisons. Paired comparison method could be employed easily where the numbers
of employees to be compared are less.
This may be calculated by a formula N (N — 1)12 where N is the total number of persons to be compared.
Where N is the total number of persons to be evaluated.
For example
If the following five teachers have to be evaluated by the Academic Vice President of a University : Chaltu(
c),Merga (M), Ramato (R), Gurmesa (G), and Banata (B), the above formula gives
5 (5— 1)/2 or 10 pairs. These are;

CwithM,
CwithR MwithR
CwithG MwithG RwithG
CwithB MwithB RwithB GwithB
Thus, the pairs to be compared give the maximum possible combinations in which an employee could be
compared with one another. If an employee sores better number of times as compared to other employee
is considered better, makes his/her score. Such scores are considered for each worker and he/she is
ranked according to his/her score. This method cannot work when large number of employee is compared.

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3. Grading Method: In this method, certain categories are defined well in advance and employees are
put in particular category depending on their traits and characteristics. Such categories may be defined as
outstanding, good, average, poor, very poor, or may be in terms of alphabet like A, B, C, D, etc. where
A may indicate the best and D indicating the worst. This type of grading method is applied during Semester
pattern of examinations. One of the major limitations of this method is that the rater may rate many
employees on the better side of their performance.
4. Forced Distribution Method: This method was evolved to abolish the trend of rating most of the
employees at a higher end of the scale. The fundamental assumption in this method is that employees’
performance level conforms to a normal statistical distribution. For example, 10 per cent employees may
be rated as excellent, 40 per cent as above average, 20 per cent as average, 10 per cent below average,
and 20 per cent as poor. It eliminates or minimizes the favoritism of rating many employees on a higher
side. It is simple and easy method to appraise employees. It becomes difficult when the rater has to
explain why an employee is placed in a particular grouping as compared to others.
5. Forced-choice Method: The forced-choice rating method contains a sequence of question in a
statement form with which the rater checks how effectively the statement describes each individual being
evalu-ated in the organization. There may be some variations in the methods and statements used, but the
most common method of forced choice contains two statements both of which may be positive or negative.
It may be both the statement describes the characteristics of an employee, but the rater is forced to tick
only one i.e the most appropriate statement which may be more descriptive of the employee. For example,
a rater may be given the following two statements:
(i) The employee is hard working.
(ii) The employee gives clear instructions to his subordinates.
Though both of them describe the characteristics of an em-ployee, the rater is forced to tick only one
which appears to be more descriptive of the employee. Out of these two statements, only one statement
is considered for final analysis of rating. For example, a rater may be given the following two statements:
(i) The employee is very sincere.
(ii) Employee gives clear and fast instructions to his subordinates.
Both of the above statements are positive but the rater is supposed to rate only one which is more
appropriate of subordinate’s behavior. For ranking only one statement is considered .As the rater is not
aware about the statement to be considered the result would be free from bias. This method may be more
objective but it involves lot of problems in framing of such sets of statements.
6. Check-list Method: The main reason for using this method is to reduce the burden of evaluator. In
this method of evaluation the evaluator is provided with the appraisal report which consist of series of
questions which is related to the appraise. Such questions are prepared in a manner that reflects the
behavior of the concerned appraise. Every question has two alternatives, yes or no, as given below:
1. Is he/she respected by his/her subordinates? Yes/No
2. Is he/she ready to help other employees? Yes/No

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 3. Does her behavior remain same for everyone in the organization? Yes/No
The con-cerned rater/evaluator has to tick appropriate answers relevant to the appraises.
When the check-list is finished, it is sent to the personnel department to prepare the final scores for all
appraises based on all questions based on yes or no. While preparing question effort is made to establish
the level of consistency of the rater by asking the same question twice but in a different manner. This
method is considered to be easy if questions are framed properly for different categories of employees.
However, one of the disadvantages of the check-list method is that it is very difficult to accumulate,
analyze and evaluate a number of statements about employee characteristics and contributions. It iseven
costly method with lot of time and efforts required by the organization.
7. Critical Incidents Method: This method is very useful for finding out those employees who have the
highest potential to work in a critical situation. Such an incidence is very important for organization as they
get a sense, how a supervisor has handled a situation in the case of sudden trouble in an organization,
which gives an idea about his leadership qualities and han-dling of situation. It is also said to bea continuous
appraisal method where employees are appraised continuously by keeping in mind the critical situation. In
this method, only the case of sudden trouble and behavior associated with these incidents or trouble are
taken for evaluation.
This method is categorized in three steps. First, a list of notable (good or bad) on-the-job behavior of
specific incidents or sudden trouble is prepared. Second, selected experts would then assign weightage or
score to these incidents according to how serious a particular incident is and their degree of willingness to
perform a job. Third, finally a check-list indicating incidents that illustrate workers as good or “bad” is
formed. Then, the checklist is given to the rater for evaluating the workers.
The strong point of critical incident method is that it focuses on behaviors and, thus, judge’s performance
rather than personalities.
Its drawbacks are that too frequently they need to write down the critical incidents which is very time-
consuming and burdensome for evaluators, i.e., managers. Generally, negative incidents are more noticeable
than posi-tives.
8. Graphic Scale Method: It is one of the simplest and most popular techniques for appraising
performances of employee. It is also known as linear rating scale. In graphic rating scale the printed
appraisal form is used to appraise each employee.
Such forms contain a number of objectives, and trait qualities and characters to be rated like quality of
work and amount of work, job knowhow dependability, initiative, attitude, leadership quality and emotional
stability.
The rater gives an estimate the extent to which subordinates possess each quality. The extent to which
quality is possessed is measured on a scale which can vary from three points to several points. In general
practice five-point scales is used. Some organizations use numbers in order to avoid the propensityof the
rater to tick mark central points. It may be numbered or defined. Thus numbers like 5, 4, 3, 2 and 1 may
denote points for various degrees of excellent-poor, high-low, or good-bad, and so on. Such numbers
may be expressed in terms like excellent, very good, average, poor and very poor; or very high, high,
average, low and very low.
Graphic scale method is good for measuring various job behaviors of an employee. But, it is bound to
limitations of rater’s bias while rating employee’s behavior at job.

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9. Essay Method: In this method, the rater writes a detailed description on an employee’s characteristics
and behavior, Knowledge about organizational policies, procedures and rules, Knowledge about the job,
Training and development needs of the employee, strengths, weakness, past performance, potential and
suggestions for improvement. It is said to be the encouraging and simple method to use. It does not need
difficult formats and specific training to complete it.
10. Field Review Method: In this method of appraisal direct superior is not going to appraise an
employee but appraised by another person, usually, from personnel department .The rater, in such a
case, appraises the employee on the basis of his past records of productivity and other information such
as absentee-ism, late corning, etc. It is more suitable in a situation where an organization wants to provide
promotion to an employee. It also gives information for comparing employees from different locationsand
units. It reduces partiality to some extent as personnel department person is supposed to be trained in
appraisal mechanism. This method suffers from two limitations:
1. As employees are not rated by immediate boss, the rater from other department may not be
familiar with the conditions in an employee’s work environment which may hamper his ability and
work motivation to perform.
2. The rater from other department do not get a chance to scrutinize the employee’s behavior or
performance with different time interval and in a variety of situations, but only in an unnaturally
structured interview situation which is for a very short period of time.
Modern Methods
1. Management by Objectives (MB0): The concept of ‘Management by Objectives’ (MBO) was
coined by Peter Drucker in 1954. It is a process where the employees and the superiors come together to
identify some goals which are common to them, the employees set their own goals to be achieved, the
benchmark is taken as the criteria for measuring their performances and their involvement is there in
deciding the course of action to be followed.
The basic nature of MBO is participative, setting their goals, selecting a course of actions to achieve goals
and then taking decision. The most important aspect of MBO is measuring the actual performances of the
employee with the standards set by them. It is also said to be a process that integrates organizational
objectives into individual objectives.
Entire program me of MBO is divided in four major steps i.e setting up of goal, action planning, compari-son
and timely review.
Setting up of goal-In goal setting superior and subordinate together set certain goals, i.e the expected
outcome that each employee is supposed to achieve.
In action planning, the manner in which goals could be achieved is determined i.e. identifying the activities
which are necessary to perform; to achieve pr determined goals or standards. When the employees start
with their activities, they come to know what is to be done, what has been done, and what remains to be
done and it also gives an idea about the resources to be achieved.
In the third step, the goals set by the individual employee are compared with the actual goals achieved. It
gives an idea to the evaluator as why there is a variation in desired outcome and actual outcome .Such a
comparison helps create need for training so as to enhance employees’ performance. Finally, in the timely
review step, corrective actions are taken so that actual performances do not deviates from standards
established in beginning.
The main reason for conducting reviews is not to humiliate the performer but to assist him in better
performances in future. Few advantages of MBO are a) it is outcome –oriented. It co-ordinates the
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planning and control functions and provides motivation) Employees are clear about the task that theyare
expected to perform and also how they may be evaluated.MBO do have certain limitations such as it is
time consuming, employees and the superiors jointly setting the goals may lead to conflict as employee
would always like to set lower goal and the superior would like to set it on the higher side, lack of
confidence in employee by management.
2. Behaviorally Anchored Rating Scales: This method is a combination of traditional rating scales and
critical incidents methods. It consists of preset critical areas of job performance or sets of behavioral
statements which describes the important job performance qualities as good or bad (for e.g. the qualities
like inter personal relationships, flexibility and consistency, job knowledge etc). These statements are
developed from critical incidents.

These behavioral examples are then again translated into appropriate performance dimensions. Those that
are selected into the dimension are retained. The final groups of behavior incidents are then scaled numerically
to a level of performance that is perceived to represent. A rater must indicate which behavior on each
scale best describes an employee’s performance. The results of the above processes are behavioral
descriptions, such as anticipate, plan, executes, solves immediate problems, carries out orders, and handles
urgent situation situations. This method has following advantages: a) It reduces rating errors) Behavior is
assessed over traits. c) It gives an idea about the behavior to the employee and the rater about which
behaviors bring good Performance and which bring bad performance.
3. Assessment Centers: It is a method which was first implemented in German Army in 1930. With the
passage of time industrial houses and business started using this method. This is a system of assessment
where individual employee is assessed by many experts by using different technique of performance
appraisal. The techniques which may be used are role playing, case studies, simulation exercises,
transactional analysis etc.
In this method employees from different departments are brought together for an assignment which they
are supposed to perform in a group, as if they are working for a higher post or promoted. Each employee
is ranked by the observer on the basis of merit .The basic purpose behind assessment is to recognize
whether a particular employee can be promoted, or is there any need for training or development. This
method has certain advantages such as it helps the observer in making correct decision in terms of which
employee has the capability of getting promoted, but it has certain disadvantages also it is costly and time
consuming, discourages the poor performers etc.
4. 360 Degree Performance Appraisals: This method is also known as ‘multi-rater feedback’, it is the
appraisal in a wider perspective where the comment about the employees’ performance comes from all
the possible sources that are directly or indirectly related with the employee on his job.
In 360 degree performance appraisal an employee can be appraised by his peers, managers (i.e. superior),
subordinates, team members, customers, suppliers/ vendors - anyone who comes into direct or indirect
contact with the employee and can provide necessary information or feedback regarding performance of
the employee the “on-the-job”.
The four major component of 360 degree performance appraisal are
1. Employees Self-Appraisal
2. Appraisal by Superior
3. Appraisal by Subordinate
4. Peer Appraisal.

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Employee self appraisal gives an option to the employee to know his own strengths and weaknesses, his
achievements, and judge his own performance. Appraisal by superior forms the traditional part of the 360
degree performance appraisal where the employees’ responsibilities and actual performance is judged by
the superior.
Appraisal by subordinate gives a chance to evaluate the employee on the basis of communication and
motivating abilities, superior’s ability to delegate the work, leadership qualities etc. It is also known as
internal customers; the correct opinion given by peers can aid to find employees’ who are co-operative,
employees who ready to work in a team and understanding towards others.
5. Cost Accounting Method: In this method performance of an employee is evaluated on the basis of
monetary returns the employee gives to his or her organization. A relationship is recognized betweenthe
cost included in keeping the employee in an organization and the benefit the organization gets fromhim or
her. The evaluation is based on the established relationship between the cost and the benefit. The following
factors are considered while evaluating an employee’s performance:
1. Interpersonal relationship with others.
2. Quality of product produced or service given to the organization.
3. Wastage, damage, accidents caused by the employee.
4. Average value of production or service by an employee.
5. Overhead cost incurred.
5.5. The Performance Appraisal Process
The performance appraisal system of one organization may vary from other organizations, though some of
the specific steps that an organization may follow are as follows:
1. Establish Performance Standards: It begins by establishing performance standards i.e. what
they expect from their employee in terms of outputs, accomplishments and skills that they will
evaluate with the passage of time. The standards set should be clear and objective enough to be
understood and measured. The standards which are set are evolved out of job analysis and job
descriptions. Standards set should be clear and not the vague one. The expectation of the manager
from his employee should be clear so that it could be communicated to the subordinates that they
will be appraised against the standards set for them.
2. Communicating the Standards Set for an Employee: Once the standards for performance
are set it should be communicated to the concerned employee, about what it expected from them
in terms of performance. It should not be part of the employees’ job to estimate what they are
expected do. Communication is said to be two ways street, mere passing of information to
subordinate does not mean that the work is done. Communication only takes place when the
information given has taken place and has been received and understood by subordinate. . If
necessary, the standards may be tailored or revised in the light of feedback obtained from the
employees.
3. Measuring of the Actual Performances: It is one of the most crucial steps of performance
appraisal process. It is very important to know as how the performance will be measured and
what should be measured, thus four important sources frequently used by managersare personal
observation, statistical reports, oral reports, and written reports. However, combination of all

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 these resources gives more reliable information. What we measure is probably more critical to the
evaluation process than how we measure. The selection of the incorrect criteria can result in
serious consequences. What we measure gives an idea about what people in an organization will
attempt to achieve. The criteria which are considered must represent performance as stated in the
first two steps of the appraisal process.
4. Comparing Actual Performance with Standards Set in the Beginning: In this step of
performance appraisal the actual performance is compared with the expected or desired standard
set. A comparison between actual or desired standard may disclose the deviation between standard
performance and actual performance and will allow the evaluator to carry on with the discussion
of the appraisal with the concerned employees.
5. Discussion with the Concerned Employee: In this step performance of the employee is
communicated and discussed. It gives an idea to the employee regarding their strengths and
weaknesses. The impact of this discussion may be positive or negative.
The impression that subordinates receive from their assessment has a very strong impact on their
self-esteem and, is very important, for their future performances.
6. Initiate Corrective Action: Corrective action can be of two types; one is instant and deals
primarily with symptoms. The other is basic and deals with the causes. Instant corrective action is
often described as “putting out fires”, whereas basic corrective action gets to the source from
where deviation has taken place and seeks to adjust the differences permanently. Instant action
corrects something right at a particular point and gets things back on track. Basic action asks how
and why performance deviated. In some instances, managers may feel that they do not have the
time to take basic corrective action and thus may go for “perpetually put out fires.
Thus the appraisal system of each organization may differ as per the requirement of that Organization.

5.6. Factors Affecting Performance Appraisal

There are various factors which may influence the performance appraisal system in any organization.
There are some factors which introduce bias whereas; some other factors hinder purposeful assessment.
Such factors are as follows:
1. Value System of Evaluator: The task of evaluator is to assess the work of subordinate and
write reports of the same. They are projected to do this for some purposeful assessment. It
happens that evaluator sometime judges the performance on the basis of their own value system.
Each person has his own value system and socio-cultural environment. Mostly, it is found that the
reports are influenced by the evaluator’s value-system. This subjective element has lot of impact
on final report.
2. Dominant Work Orientation: The performance Appraisal Report of a subordinate is prepared
by a superior is found to have an impact by the dominant work orientation of the superior officer.
Sometimes there is more emphasis on certain aspect of the work as compared to other aspect
which may be equally important by the superior. It introduces subjectivity performance appraisal
system. A superior may evaluate the subordinate on the basis of following elements:

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 a) Inclination for work of dynamic nature.
b) Liking for routine work and strict maintenance of.
c) Importance on inter-personal relations and rank.
d) Emphasis on qualities which do not have much functional utility; and
e) Emphasis on consistency to some philosophy.
These elements bring subjectivityin the process of evaluation, influence the judgment of the superior
and distort the evaluation of performance of the subordinates.
3. Loyalty: It plays a vital role in evaluating employee. An Employee shows loyalty due to many
reasons such as common values, objectives, emotional needs, interests, caste, religion, language
or region. Loyalty brings the superior and the loyal subordinate closer and closer to each other,
and creates distance between those employee who are not loyal to their superior. This makes
assessment of superior to be biased.
4. Level of Achievement: Subordinates evaluation may also depend on the level of achievement of
the superior. If there is a vast difference between the level of achievement of the superior and
Subordinate, then it can create problems of adjustment and purpose for which evaluation is done
is not achieved.
5. Factors Hindering Objective Assessment: There are various factors which obstruct the
objective appraisal of the performance of the subordinates. These factors are as follows:
a) Superiority complex of the superior reporting officer.
b) Overall performance assessment do not take place only certain incidence are assessed.
c) Past-record of the subordinate.
d) Personality of the subordinate.
g) Ability of the subordinate to exercise influence at higher level.
5.7. Benefits of Performance Appraisal
An effective performance appraisal system can be of benefit to three parties they are for organization, for
appraiser and for appraise.
1) For the Organizations: Following are the benefits of an organization.
 It leads to better performance throughout the organization, due to successful communication of
the objectives and values of the organizations, sense of being close to the organization, loyalty and
improved relationships between managers and staff.
 Overall improvement in the duties performed by each employee of the organization.
 Due to performance appraisal of employee new ideas for improvement in their work is generated.
 Long-term plans can be generated.
 The need for training and development can be identified more clearly.
 A traditions of nonstop improvement and success in the organization can be formed and maintained.
 Career development plans can be chalked out for capable employee to enhance their performance
in future.
2) For the appraiser: Following are the benefits to the appraiser:
 It gives an opportunity to the appraiser to develop a general idea of individual jobs and departments.
 For every new or difficult situation new idea is generated for improvement or for overcoming
thatproblem.
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  It gives an opportunity to integrate team and individual objectives and targets with departmental
and organizational objectives.
 It gives an opportunity to explain the amount of work expected by manager from teams and
individuals.
 It gives an opportunity to focus more on targets.
 It enables to form more productive relationship with staff based on mutual trust and understanding.
3) For the Appraisee: Following are the benefits for the appraisee:
 Increased motivation.
 Increased job satisfaction.
 Increased sense of personal value.
 Increase in morale of an employee.
 It gives an opportunity to know their strength and weaknesses.
 It gives an idea about areas of their improvement.
 There will be a chance to subordinate to express his views even after performance appraisal
 An employee should express his emotional needs and his value system which is considered
to be important today.
5.8. Problems of Performance Appraisal
Performance appraisal technique is very beneficial for an organization for taking decisions regarding salary
fixation, demotion, promotion, transfer and confirmation etc. But, it is not freed from problem In spite of
recognition that a completely error-free performance appraisal can only be idealized a number of errors
that extensively hinder objective evaluation. Some of these problems are as follows:
1. Biasness in rating employee: It is the problem with subjective measure i.e. the rating which will not
be verified by others. Biasness of rater may include:
(a) Halo Effect: It is the propensity of the raters to rate on the basis of one trait or behavioral
consideration in rating all other traits or behavioral considerations. One way of minimizing the
halo effect is appraising all the employees by one trait before going to rate on the basis of another
trait.
(b) The Central Tendency Error: It is the error when rater tries to rate each and every person
onthe middle point of the rating scale and tries not to rate the people on both ends of the scale
thatis rating too high or too low. They want to be on the safer side as they are answerable to
themanagement.
(c) The Leniency and Strictness Biases: The leniency biasness exists when some raters have
atendency to be generous in their rating by assigning higher rates constantly. Such ratings do not
serve any purpose.
(d) Personal prejudice: If the raters do not like any employee or any group, in such
circumstanceshe may rate him on the lower side of the scale, the very purpose of rating is distorted
which mightaffect the career of employees also.
(e) The Recent Effect: The raters usually retain information about the recent actions of the
employee at the time of rating and rate on the basis of recent action taken place which may be
favorable orunfavorable at that point of time.
2. The superiors may be unsuccessful in conducting performance appraisal of employees and post
performance appraisal interviews.
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3. The performance appraisal is mostly based on subjective assessment.
4. The performance appraisal techniques have a low reliability and validity in terms of result.
5 Ratings an employee on the negative side may disturb interpersonal relations and industrial relations
system.
6. Appraisers opinion on the performance of the employee may lead to setback on production.
7. An organization may give emphasis to punishment if an employee has not done a good job rather
than providing training.
8. Few ratings are based on guess work.
Various other problems of performance appraisal are:
 There was a significant relationship between rating by superior and performance after promotions.
 Appraisal reports were completed within a short period of time.
 The circumstances were very unpleasant in feedback interview.
 The Subordinates were not given suggestion in a manner which may be helpful to them.
5.9. Effective Performance Appraisal
The performance appraisal system is always questioned in terms of its effectiveness and the problems of
reliability and validity. It is always difficult to know whether what is appraised is what was supposed to be
appraised. As long as subjective judgment is there this question cannot be answered perhaps, the following
steps can help improve the system.
a) The supervisors should be told that they themselves will be evaluated on the basis of how seriously
they are performing their duties.
b) To perform assigned task of evaluation in a better way superior should be provided with better
training of writing report.
c) To carry out job evaluation studies and prepares job descriptions/roles and prepares separate
forms for various positions in the organization.
d) The system should be designed in such a way that it is neither difficult to understand nor impossible
to practice.
e) The supervisor should monitor whether the improvement in performance in the areas found weak
is taking place or not and, if not, help the employee to achieve the required improvement.
f) Finally, reviewing, the appraisal systems every now and then help updating it, and making appropriate
changes in it. This is the most important factor in making performance appraisal effective, with the
passage of time necessary changes in tasks, abilities and skills to perform has to be made. If
changes in the format are not considered the reports may not generate the kind of result
needed to satisfy appraisal objectives.

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The following measures could also be adopted for improving the effectiveness of an appraisal:

a) Behaviorally Based Measures: The research strongly favors behaviorally based measures over
those developed around traits. b) Ongoing Feedback: Employees like to know how they are performing
the duties assigned to them. c) Multiple Raters: If a person is evaluated by a large no of superior then
chance ofgetting more frequent information increases d) Peer Evaluations: Peer evaluations are conducted
by employees’ co-workers, people explicitly familiar with the jobs involved mainly because they too are
doing the same thing, they are the person who know the co-workers’ day to-day work behavior and
should get a chance to provide the management with some feedback.

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 Chapter Six
Compensation and Incentives
6.1. Compensation
In layman’s language the word ‘compensation’ means something, such as money, given or received as
payment for service. The word compensation may be defined as money received in the performance of
work, plus the many kinds of benefits and services that organization provides their employee. It refers to
wide range of financial and non-financial rewards to employee for their service rendered to the organization.
It is paid in the form of wages, salaries , special allowance and employee benefits such as paid vacation,
insurance, maternity leaves, free travel facility , retirement benefits etc.

According to Wendell French,” Compensation is a comprehensive term which includes wages, salaries
and all other allowance and benefits.”
Wages are the remuneration paid for skilled, semi-skilled and unskilled operative workforce. Salary is the
remuneration of those employees who provides mental labor to the employer such as supervisor, office
staff, executive etc wages are paid on daily or hourly basis whereas salary is paid on monthly basis.
6.1.1. Objectives of Compensation Planning
The basic purpose or objective of establishing sound compensation is to establish and maintain an equitable
rewards system. The other aim is the establishment and maintenance of an equitable compensation structure
i.e an optimal balancing of conflicting personnel interest so that the satisfaction of employees and employers
is maximized and conflicts minimized, the compensation management is concerned with the financial aspect
of employees need, motivation and rewards.
A sound compensation structure tries to achieve these objectives:
 To attract manpower in a competitive market.
 To control wages and salaries and labor costs by determining rate change and frequency of
increment.
 To maintain satisfaction of employees by exhibiting that remuneration is fair adequate and equitable.
 To induce and improved performance, money is an effective motivator.

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a) To Employees:

i. Employees are paid according to requirement of their jobs i.e highly skilled jobs are paid more
compensation than low skilled jobs. This eliminates inequalities.
ii. The chances of favoritism are minimized.
iii. Jobs sequence and lines of promotion are established wherever they are applicable.
iv. Employee’s moral and motivation are increased because of the sound compensation structure.

b) To Employers:

i. They can systematically plan for and control the turnover in the organization.
ii. A sound compensation structure reduces the likelihood of friction and grievance over remunerations.
iii. It enhance an employee morale and motivation because adequate and fairly administrative incentives
are basis to his wants and need.
iv. It attracts qualified employees by ensuring and adequate payment for all the jobs.
v. In dealing with a trade union, they can explain the basis of their wages program because it is
based upon a systematic analysis of jobs and wages facts.
6.1.2. Factors Affecting Compensation Planning
Factors determining compensation of an employee considerable amount of guess word and negotiation
are involved. But following are the certain factors which have been extracted as having an important
bearing upon the final decision:
1. Supply and Demand of Labor: Whatever the organization produces as commodity
they desireservices and it must pay a price that of workers acting in concert. If more
the labor is required,such as at war time prosperity, there will be tendency to increase
the compensation; whereas thesituation when anything works to decrease the supply of
labor, such as restriction by a particular labor union, there will be a tendency to increase the
compensation. The reverse of each situation is likely to result in a decrease in employee
compensation, provided, labor union, ability to pay, productivity, government do not
intervene.

1. Ability to Pay: Labor Unions has often demanded an increase in

compensation on the basisthat the firm is prosperous and able to pay.
2. Management’s Philosophy: Management’s desire to maintain or improve
moral, attract high calibre employees, reduce turnover, and improve employees
standard of living also affect wages, as does the relative importance of a given
position to a firm.
3. Legislation: Legislation related to plays a vital role in determining internal
organization practices.Various acts are prescribed by government of country for
wage hours laws. Wage-hour laws set limits on minimum wages to be paid and
maximum hours to be worked. In India minimum wages act 1948 reflecting the
wage policy for an organization and fixation of minimum rates of wages toworkers
in sweated industries. In 1976 equal remuneration act was enacted which
prohibitsdiscrimination in matters relating to remuneration on the basis of religion,
region or gender.

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 6.1.3. Various Modes of Compensation
Various modes of compensation are as follows-
a) Wages and Salary- Wages represent hourly rates of pay and salary refers to monthly rate of pay
irrespective of the number of hours worked. They are subject to annual increments. They differ
from employee to employee and depend upon the nature of jobs, seniority and merit.
b) Incentives- These are also known as payment by results. These are paid in addition to wages
and salaries. Incentive depends upon productivity, sales, profit or cost reduction efforts. Incentive
scheme are of two types:
 Individual incentive schemes.
 Group incentive schemes.
c) Fringe Benefits- These are given to employees in the form of benefits such as provident fund,
gratuity, medical care, hospitalization, accident relief, health insurance, canteen, uniform etc.
d) Non- Monetary Benefits- They include challenging job responsibilities, recognition of merit,
growth prospects, competent supervision, comfortable working condition, job sharing and flexi
time.
6.2. Incentives
Incentives are monetary benefits paid to workmen in lieu of their outstanding performance. Incentives vary
from individual to individual and from period to period for the same individual. They are universal and are
paid in every sector. It works as motivational force to work for their performance as incentive forms the
part total remuneration. Incentives when added to salary increase the earning thus increase the standard of
living. The advantage of incentive payment are reduced supervision, better utilization of equipment, reduced
scrap, reduced lost time, reduced absenteeism and turnover & increased output.

According to Burack & Smith, “An incentive scheme is a plan or program to motivate individual or
group on performance. An incentive program is most frequently built on monitory rewards (incentivepay or
monetary bonus), but may also include a variety of non-monetary rewards or prizes.”

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 6.2.1. Kinds of Incentives
Incentives can be classified under the following categories:
1. Individual and Organizational Incentives
2. Financial and Non-Financial Incentives
3. Positive and Negative Incentives
1) Individual and Organizational Incentives- According to L.G. Magginson, “Individual incentives are
the extra compensation paid to an individual for all production over a specified magnitude which stems
from his exercise of more than normal skill, effort or concentration when accomplished in a predetermined
way involving standard tools, facilities and materials.” Individual performance is measured to calculate
incentive where as organizational or group incentive involve cooperation among employees, management
and union and purport to accomplish broader objectives such as an organization-wide reduction in labour,
material and supply costs, strengthening of employee loyalty to company, harmonious management and
decreased turnover and absenteeism
I) Individual Incentive System is of two types:
a) Time based System- It includes Halsey Plan, Rowan Plan, Emerson Plan and
Bedeaux Plan
b) Production based System- it includes Taylor’s Differential Piece Rate System, Gantt’s
Task and Bonus Plan
II) Group Incentive System is of following types
a) Scalon Plan
b) Priestman’s Plan
c) Co-Partnership Plan
d) Profit Sharing
Some important these plans of incentive wage payments are as follows:
Halsey Plan- Under this plan a standard time is fixed in advance for completing a work. Bonus
is rewarded to the worker who perform his work in less than the standard time and paid wages
according to the time wage system for the saved time.
The total earnings of the worker = wages for the actual time + bonus
Bonus = 33.5% of the time saved (standard time set on past experience)
Or
50% of the time saved (standard are scientifically set)
Example: Time required to complete job (S) = 20 hours
Actual Time taken (T) = 15 hours
Hourly Rate of Pay (R) = Birr 1.5
Calculate the wage of the worker.
Solution: T X R + (S-T ) X R
2
15 X 1.5 + (20-15 ) X 1.5 = 22.5 + 3.75 = 26.25 Birr
2
In this equation 3.75 Birr are the incentives for saving 5 hours.
Rowan Plan – Under this method minimum wages are guaranteed given to worker at the ordinary
rate for the time taken to complete the work. Bonus is that proportion of the wages of the time
taken which the time saved bears to the standard time allowed.
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 Incentive = Wages for actual time for completing the work + Bonus where,
Bonus = S-T X T X R
S
Emerson Plan – Under this system, wages on the time basis are guaranteed even to those workers
whose output is below the standard. The workers who prove efficient are paid a bonus. For the
purpose of determining efficiency, either the standard output per unit of time is fixed, or the standard
time for a job is determined, and efficiency is determined on the basis of a comparison of actual
performance against the standard.
Bedeaux Plan – It provide comparable standards for all workers. The value of time saved is
divided both to the worker and his supervisor in the ratio of ¾ and ¼ respectively. A supervisor
also helps a worker in saving his time so he is also given some benefit in this method. The standard
time for each job is determined in terms of minutes which are called Bedeaux points or B’s. each
B represents one minute through time and motion study. A worker is paid time wages upto
standard B’s or 100% performance. Bonus is paid when actual performance exceeds standard
performance in terms of B’s.
Taylor’s Differential Piece Rate System - F.W. Taylor, founder of the scientific management
evolved this system of wage payment. Under this system, there is no guarantee of minimum wages.
Standard time and standard work is determined on the basis of time study. The main characteristics
of this system is that two rates of wage one lower and one higher are fixed. Those who fail in
attaining the standard, are paid at a lower rate and those exceeding the standard or just attaining
the standard get higher rate. Under this system, a serve penalty is imposed on the inefficient
workers because they get the wages at lower rates. The basic idea underlying in this scheme is to
induce the worker at least to attain the standard but at the same time if a worker is relatively less
efficient, he will lose much. For example, the standard is fixed at 40 units per day and the piece
rate are 40 P. and 50 P. per unit. If a worker produces 40 units or more in a day, he will get the
wages at the rate of 50 P per unit and if he produces 39 units will get the wages at 40 paise per
unit for the total output.
Gantt’s Task and Bonus Plan - In this, a minimum wage is guaranteed. Minimum wage is
given to anybody, who completes the job in standard time. If the job is completed in less time,
then there is a hike in wage-rate. This hike varies between 25% to 50% of the standard rate.
Profit Sharing – It is a method of remuneration under which an employer pay his employees a
share in form of percentage from the net profits of an enterprise, in addition to regular wages at
fixed intervals of time.
2) Financial and Non-financial Incentives- Individual or group performance can be measured in
financial terms. It means that their performance is rewarded in money or cash as it has a great impact on
motivation as a symbol of accomplishment. These incentives form visible and tangible rewards provided in
recognition of accomplishment. Financial incentives include salary, premium, reward, dividend, income
on investment etc. On the other hand, non-financial incentives are that social and psychological attraction
which encourages people to do the work efficiently and effectively. Non-financial incentive can be delegation
of responsibility, lack of fear, worker’s participation, title or promotion, constructive attitude, security of
service, good leadership etc..
3) Positive and Negative Incentives- Positive incentives are those agreeable factors related to work
situation which prompt an individual to attain or excel the standards or objectives set for him, where as
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negative incentives are those disagreeable factors in a work situation which an individual wants to avoid
and strives to accomplish the standards required on his or her part. Positive incentive may include expected
promotion, worker’s preference, competition with fellow workers and own ‘s record etc. Negative
incentives include fear of lay off, discharge, reduction of salary, disapproval by employer etc.
6.2.2. Fringe Benefits
Employees are paid several benefits in addition to wages, salary, allowances and bonus. These benefits
and services are called ‘fringe benefits’ because these are offered by the employer as a fringe. Employees
of the organization are provided several benefits and services by the employer to maintain and promote
employee’s favorable attitude towards the work and work environment. It not only increases their morale
but also motivate them. These provided benefits and services forms the part of salary and are generally
refereed as fringe benefits.
According to D. Belcher, “ Fringe benefits are any wage cost not directly connected with the employees
productive effort, performance, service or sacrifice”. According to Werther and Davis, “Fringe embrace
a broad range of benefits and services that employees receive as part of their total compensation, package-
pay or direct compensation and is based on critical job factors and performance”.
According to Cockman, “ Employee benefits are those benefits which are supplied by an employer to or
for the benefits of an employee and which are not in the form of wages, salaries and time rated payments”.
These are indirect compensation as they are extended condition of employment and are not related to
performance directly.

Unit 7
Industrial Relation
The term “Industrial Relation” refers to all types of relationship between all the parties concerned with
industry. According to Encyclopaedia Britannica, it denotes relations of all those associated in productive
work, including industry, agriculture, mining, commerce, finance, transport and other services.
According to Dale in his book Personnel Management and Industrial Relation, defines Industrial relations
are relationship between management and employees or among employee and their organization that arise
out of employment.
According to R.A.Lester Industrial relations involves attempts to have workable solutions between
conflicting objectives and values, between incentive and economic security, between discipline and the
industrial democracy, between authority and freedom and between bargaining and cooperation”.
In modern usage, the phrase “Industrial Relation” includes the whole gamut of matters that arise due to the
continuing relationship between the employers and the workers.
Its scope includes three rarely distinct areas:
 Relations between mangers and individual workers.
 The collective relations between employers and labor (trade) union.
 The role of government in the regulation of these relationships.
These three closely associated areas are often referred to respectively as
 Personnel Management
 Collective Bargaining
 Labor Legislation
 Parties involved in industrial relations:
 Employers

 Employee
 Government
















Figure 7.1
7.1. Objective of Industrial Relation
The primaryobjectives of Industrial Relation at national level are that to improving the economic condition
of workers, increasing productivity and achieving industrial democracy in industrial enterprise. The labor
management committee of the Asian Regional Conference of the International Labor Organization (ILO)
has recognized certain fundamental objectives of Industrial relations are to maintain sound and harmonious
relations between employees and employers. The other objectives drawn from this objective are:
1. Industrial Relation safeguards the interest of labor and management through mutual understanding
and goodwill among those parties in the industry which actively participates in the process of
production.
2. To raise productivity of the industry at a higher level this is the need of the day to contribute to the
economic development of the country.
3. To avoid all forms of industrial conflict
4. To minimize labor turnover and absenteeism by providing job satisfaction to the workers and
increasing their morale.
5. To minimize the occurrence of strikes, lockouts and heroes.
6. To encourage and develop trade unions in order to improve workers collective strength and
resolving their problems through collective bargaining.
7. To establish, develop and maintain industrial democracy based on employee’s participation in
management and profit of the industry.
8. To facilitate government control over industries in regulating production and for protecting
employment or where production needs to be regulated in public interest.
9. To check and ensure a healthy and balanced social order in the industry.
7.2. Approaches to IR
Industrial Relation is perceived by differently by different people. Some of the approaches to industrial
relations are as follows. There are three popular approaches to IR: Unitary, Pluralistic and Marxist.
Some others are psychological approach, sociological, V.V.Giri, Gandhian , HRD and System Approach.
Here we are discussing on mainly popular approaches.
Unitary Perspective: In unitary, the organization is perceived as an integrated and harmonious system,
viewed as one happy family. A core assumption of unitary approach is that management and staff, and all
members of the organization share the same objectives, interests and purposes; thus working together,
hand-in-hand, towards the shared mutual goals. Furthermore, unitary has a paternalistic approach where
it demands loyalty of all employees. Trade unions are deemed as unnecessary and conflict is perceived as
disruptive.
From employee point of view, unitary approach means that:
 Working practices should be flexible. Individuals should be business process improvement oriented,
multi-skilled and ready to tackle with efficiency whatever tasks are required.

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  If a union is recognized, its role is that of a further means of communication between groups of
staff and the company.
 The emphasis is on good relationships and sound terms and conditions of employment.
 Employee participation in workplace decisions is enabled. This helps in empowering individuals in
their roles and emphasizes team work, innovation, creativity, discretion in problem-solving, quality
and improvement groups etc.
 Employees should feel that the skills and expertise of managers supports their endeavors.
From employer point of view, unitary approach means that:
 Staffing policies should try to unify effort, inspire and motivate employees.
 The organization’s wider objectives should be properly communicated and discussed with staff.
 Reward systems should be so designed as to foster to secure loyalty and commitment.
 Line managers should take ownership of their team/staffing responsibilities.
 Staff-management conflicts - from the perspective of the unitary framework - are seen as arising
from lack of information, inadequate presentation of management’s policies.
The personal objectives of every individual employed in the business should be discussed with them and
integrated with the organization’s needs
Pluralistic-Perspective: In pluralism the organization is perceived as being made up of powerful and
divergent sub-groups - management and trade unions. This approach sees conflicts of interest and
disagreements between managers and workers over the distribution of profits as normal and inescapable.
Consequently, the role of management would lean less towards enforcing and controlling and more toward
persuasion and co-ordination. Trade unions are deemed as legitimate representatives of employees. Conflict
is dealt by collective bargaining and is viewed not necessarily as a bad thing and if managed could in fact
be channeled towards evolution and positive change. Realistic managers should accept conflict to occur.
There is a greater propensity for conflict rather than harmony.
Theyshould anticipate and resolve this by securing agreed procedures for settling disputes. The implications
of this approach include:·
 The firm should have industrial relations and personnel specialists who advise managers and provide
specialist services in respect of staffing and matters relating to union consultation and negotiation.
 Independent external arbitrators should be used to assist in the resolution of disputes.
 Union recognition should be encouraged and union representatives given scope to carry out their
representative duties·
 Comprehensive collective agreements should be negotiated with unions
Marxist Perspective: This view of industrial relations is a byproduct of a theory of capitalist society
and social change. Marx argued that:
 Weakness and contradiction inherent in the capitalist system would result in revolution and the
ascendancy of socialism over capitalism.
 Capitalism would foster monopolies.
 Wages (costs to the capitalist) would be minimized to a subsistence level.
 Capitalists and workers would compete/be in contention to win ground and establish their constant
win-lose struggles would be evident
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This perspective focuses on the fundamental division of interest between capital and labor, and sees
workplace relations against this background. It is concerned with the structure and nature of society and
assumes that the conflict in employment relationship is reflective of the structure of the society. Conflict is
therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by
capital.
7.3. Suggestions and Measures to Improve IR
Good industrial relation refer to harmonious relations between the trade union and the management in an
organization, but it is not easy to promote and maintain sound and harmonious industrial relations in an
organization but there are some suggestions which are help to maintain sound and cordial relation between
the labor and the management.
1. Support of Top Management: Top management action always be proactive and geared to
problem solving and its action and decision must be in favor of an organization and employees.
2. Sound Personnel Policies: personnel policies constitute the business philosophy of an organization
and guide it in arriving at human relations decisions. Sound policies and rules are of little help
unless they are executed objectively and equitably at all the levels of an organization. Positive
Attitudes: Both top management and trade union should adopt positive attitudes towards each
other, they help them to understand problem of each and which can be solved by collective
bargaining.
3. Collective Bargaining: Collective bargaining is an instrument which helps to maintain industrial
peace in an organization .such collective bargaining agreements and association of employees in
decision making process will bring about cooperation between labour and management.
4. Strong Trade Union and Sound Employers’ Union: Industrial relations can be sound only
when the bargaining power of the employees’ union is strong and equal to that of management.
And employers’ union should also be sound and well organized. Sound management are helpful
for the maintenance and promotion of uniform personnel policies among various organizations and
to protect the interest of weak employers.
5. There are also some others suggestions but they are some expensive because they want
some research work on them:
 There should be well established and properly administered grievance redress machinery,
sometimes which provides an outlet for tensions and frustrations of workers. Similarly, a suggestions
scheme will help to satisfy the creative urge of workers.
 Job supervisors should be trained thoroughly to ensure that organizational policies and practices
as well as leadership and communication skill, which help them too properly, implemented and
carried into effect.
 A regular follow up of IR programmed is essential so that existing practice may be properly
evaluated and a check may be exercised on certain undesirable tendencies, should they manifest
themselves.
7.4. Significance of Good Industrial Relations
If the objective of the nation is rapid national development and increased social justice are to be achieved,
there must be harmonious relationship between management and union. Such relations will lead to the
following benefits:
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1. Industrial Peace: Good industrial relations bring harmony and remove causes of disputes. This
leads to industrial peace, which is an ideal situation for an industrial unit to concentrate on productivity
and growth.
2. High Morale: Cordial industrial relations improve the morale of the employee. It implies the
existence of an atmosphere of cooperation, confidence, and respect within the enterprise. In such
an atmosphere, there are common goals, which motivate all members of the organization to
contribute their best. Consequently, there is higher productivity, higher income, and increased job
satisfaction – all resulting in higher morale of the workforce.
3. Mental Revolution: Sound industrial relation completely transforms the outlook of employers
and employee. It is based on consultation between the workers and the management. This motivates
the workers to give their best to the organization and share the fruits of progress jointly with the
management.
4. Reduced Wastage and Increased Productivity: It helps in increasing production. Wastage of
man, material and machines are reduced to the minimum and thus national interest is protected.
Thus, they will contribute to the economic growth of the countries.
5. Programmes for Workers Development: New programmes for workers development are
introduced in an atmosphere of peace such as training facilities, labor welfare facilities etc. Hence,
full advantage of latest inventions, innovations and other technological advancement can be obtained.
Through these employee development programme, workforce easily adjust itself to required
changes for betterment.
7.5. Industrial Disputes
Industrial Disputes Act 1947 defines any dispute or difference between employers and employers or
between employers and workers, or between workers and workers, which is connected with the
employment or non-employment or terms of employment or with the conditions of labor of any person.
Industrial Disputes are frequently clouded by a sense of exploitation, distrust and discontent between
employee and employers. In simple language, the disputes between employers and employees on any
Industrial matters are known as industrial disputes. The term ‘dispute’ is characterized by the following
factors :
1. Dispute mainly relate to the strife between employers and their employees.
2. There must actually be a difference.
3. Its work related or industrial matter issues.
4. Disputes must be raised by group or class of workmen.
5. Disputes between one or two workmen and their employers are not an industrial dispute.

7.6. Forms of Industrial Disputes

Industrial dispute can take place in any of the following forms:
1) Strikes: A strike means a cessation of work by a body of persons employed in any industry
acting in combination or a concerted refusal under a common understanding of a number of

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 persons who are or have been so employed to continue work or to accept employment. Strikes
are of several types:
 Economic Strike
 Sympathetic Strike
 General Strike
 Set down Strike
 Slow Down Strike
 Lightening Strike
 Hunger Strike
2) Lock Out: lock out is the counterpart of strike. Lock outs bring psychological pressure on the
workers to agree to his conditions or face closure of the units. A lockout is decaled as a trial of
strength between the management and its employees. Lockouts means the employer closes down
his factory where his workers are employed because he wants to force them to agree to his terms
and conditions of service during the pendency of a dispute.
3) Gherao: Its means “to surround”. According to National Commission on Labour “ Gherao tend
to inflict physical duress on the persons affected and endanger not only industrial harmony but also
create problems of law and order”.
4) Picketing: It is primarily a method of drawing public attention towards the disputes and it is legal
so there is no violence is involved. In picketing, workers are dissuaded from reporting for work
by certain persons stationed at the gate of the factory.
5) Boycott: Boycott aims at disrupting the normal functioning of an enterprise, through forceful
appeals and negative behavioural acts.
7.7. Causes of Disputes
1) Wages and Allowances: The most important cause for disputes relates to wages. The demand
for increase in wages and allowances is the most important cause of industrial disputes. The
demand for wages and allowances has never been fully met because of inflation and high cost of
living. High inflation results in increased cost of living resulting in never ending demands from
unions. There are some more economic reasons who are the cause of industrial disputes are
bonus, working conditions and working hours, modernization and automation and demand for
other facilities.
2) Union Rivalry: Most organizations have multiple unions. Multiplicity of unions leads to inter-
union rivalries. If one union agrees to a wage settlement, another union will oppose it.
3) Political Interference: Major trade unions are affiliated to political parties. Political affiliated is
not peculiar to our country alone. Even a cursory assessment of labor movements around the
world would show that trade unions are, by their very nature, political and that politicization of the
rule rather than the exception. Everywhere trade unions have been compelled to engage in political
action to obtain enough freedom from legal restraint to exercise their main industrial functions.
4) Managerial Causes: These causes include autocratic managerial attitude and defective labor
policies. In this includes failures of recognize the trade union, defective recruitment policies, irregular
layoff and retrenchment, defiance of agreements and codes, defective leadership, weak trade
unions.
5) Unfair labor Practices:

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