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Notes Compiled by Prof. V.S.

Gopal

INTRODUCTION

Human Resources are one of the most vital assets of an


organization. It is the people who make other resources moving;
they perform various activities in different financial areas like
production, marketing, finance etc. The significance of human
resources in a modern organization can be seen €€in the context
of activation of non human resources means for developing
competition advantages and source of creative energy. HRM
handle all physical and financial resources in an organization.

The quality of human resource is a critical factor in the


success of any organization, and more so in service organization
like banking and insurance. In super competitive world, the thing
that is most unique to every financial institution is the capability
of its people .It is the organization’s employees-its human
resources-that give a bank or insurance firm its competitive edge.

WHAT IS HUMAN RESOURCE MANAGEMENT?

Wendell French describes human resource management as “the


philosophy, policies, procedures, and practices related to the
management of people within the organization.”

In the words of Robbins “Human resource management is


concerned with the “people” dimensions in management. It is a
process consisting of the acquisition, development, motivation,
and maintenance of human resources.”
Notes Compiled by Prof. V.S.Gopal

Human resources management is about managing people. It is a


process of binding of people and organizations together so that
the objectives of each are achieved.

Human resource management is based on four


fundamental principles:

1. Human resources are the most important assets an


organization has and their effective management is the
key to its success.

2. Organizational success is most likely to be achieved if


the personnel policies and procedures
are closely linked to corporate objectives and strategic
plans.

3. Organizational culture, values and climate significantly


influence managerial behavior and exert a major influence
on the achievement of excellence. Hence, continuous
effort starting from the top is required for the
management and acceptance of the culture.

4. Human resource management is concerned with


integration –getting all members of the organization
involved and working together with a sense of common
purpose.
Notes Compiled by Prof. V.S.Gopal

IMPORTANCE OF HUMAN RESOURCE


MANAGEMENT

Human resources are the most precious possessions of any


organization. It is, therefore, necessary to take utmost care for
their survival and growth. Human resource management is the
management of this most important resource. Liberalization and
globalization has increased the importance of human resource
management by manifold.
Effective human resource management is vital for its impact is
felt from the individual level to the national level. The
significance of human resource management is at four levels:

1. Organizational significance: Human resource management


plays an important role in helping the organization attain
its goals. It helps in this direction through effective human
resource planning, recruitment and selection of talented
employees, training and development of employees,
developing sound performance appraisal and compensation
systems, career planning and so on.

2. Professional significance: Effective management of human


resource contributes towards the personal growth and
development of every employee. It helps to improve the
quality of work life by providing a healthy working
environment.

3. Social significance: Human resource management is of


great importance to the society. Sound management of
human resources helps in satisfying the social and
psychological needs of employees
Notes Compiled by Prof. V.S.Gopal

Through suitable employment. It avoids wastage of human


resources and helps in the conservation of physical and
mental health.

4. National significance: The true wealth of nation is not its


natural resources but its people. Human resources and
their management play a vital role in the development of a
nation. The development of a country depends on the skills,
attitudes and values of its human resources. Effective
management of human resources helps to speed up the
process of economic growth, which in turn leads to higher
standards of living and fuller employment.

OBJECTIVES OF HUMAN RESOURCE


MANAGEMENT

Every organization has some objectives. In order to attain


organizational objectives, it is necessary to integrate the
interests of the employees with that of the employer. Hence the
objectives of human resource management are derived from the
basic objectives of the organization.

 Integration of goals: HRM seeks to integrate all the


individuals and groups within the organization by reconciling
individual/group goals with those of the organization.

 Cost containment: In today’s competitive business


environment, keeping expenses down or cost containment, is
a critical HRM goal.
Notes Compiled by Prof. V.S.Gopal

 Goals through able employees: HRM seeks to help the


organization attain its goals by providing it with competent
and dedicated employees.

 Optimization of human resources: By employing the


knowledge and skills of employees efficiently and
effectively, HRM seeks to optimally utilize the human
resources of the organization.

 Growth and development of employees: HRM seeks to


ensure the growth and development of the employees by
providing opportunities for training and advancement.

 Self-actualization: HRM aims to increase employee’s job


satisfaction and set them on the path of self-actualization
by providing them with opportunities to utilize their
potential to the fullest.

 Satisfy needs: By providing adequate compensation, HRM


seeks to ensure that the basic needs of the employees are
satisfied and they are able to live a dignified life.

 Motivation: An important goal of HRM is to motivate the


human resources through adequate monetary and non-
monetary incentives so as to stimulate better performance,
which in turn will enable the organization to accomplish its
objectives. It also helps to retain talented employees and
reduce employee’s turnover.
Notes Compiled by Prof. V.S.Gopal

SCOPE OF HUMAN RESOURCE MANAGEMENT

The scope of human resource management is very vast. It is


connected with all major activities in the working life of a worker.
HRM is connected with every other department, as human
resources are the requirement of all departments in the
organization.

HRM covers the following areas:

 Human resource planning

 Job analysis and design

 Recruitment and selection and induction

 Training and development

 Performance appraisal

 Transfers and promotion

HUMAN RESOURCE MANAGEMENT


FUNCTIONS

Human resource management involves a large number of


functions. This number varies according to the size and needs of
the organization. The functions of HRM affect the organization
internally. However the external environment affects HRM
functions. The major functions of human resource management
are:
Notes Compiled by Prof. V.S.Gopal

♦ Human resource planning: Human resource planning is


the process of assessing the organization’s human
resources needs in the light of organizational goals and
changing conditions and making plans to ensure that a
competent, motivated work force is employed.
Human resource planning is very important in these
modern times where everything is fluid and changes are
occurring at great speed.
♦ Organizational and job designing: An important
activity of HRM is developing an organization which
caters for all the activities required, groups, them
together in a way which encourages integration,
cooperation, and provides for effective communication
and design making.
Job design is concerned with deciding on the content
and accountabilities of jobs in order to motivate employees
and maximize job satisfaction.

♦ Staffing: staffing or acquisition of human resource is


another activity of human resource management.
Staffing activities determine the composition of an
organization’s human resources.

• Staffing activities include: attracting qualified people


to the organization, selecting from among candidates,
reassigning employees through transfer, promotion or
demotion and ultimately managing the employee
separation through resignation, discharge or
retirement.

♦ Training and development: This activity of HRM


focuses on improving the performance of individuals
Notes Compiled by Prof. V.S.Gopal

and groups within the organization. These activities


aim to help employees learn new skills or refine
existing skills.
Human resource managers must decide which skills or
knowledge areas need development and which methods are
most effective for helping employees acquire skills and
knowledge.

 Performance appraisal and review: Performance


appraisal and review is an ongoing evaluation of
individual and group contributions to the organization
and the communications of those evaluations to the
persons involved.
This HRM functions is carried out for a number of
purposes:
To provide feedback about performance, to determine the
need for training, to make decisions about promotions, pay
increases and so on.

 Compensation and reward: Organization compensates


employees through wages and salaries, bonuses and
benefits, such as health insurance, vacation time, and
pension programs. The presence or absence of rewards
and recognition is important to employee morale and
performance.
Compensation decisions include determining: ensuring
fair and equitable pay differences among employees,
designing a pay packages relative to that of its competitors,
forms of compensation and so on.

 Health and safety management: This function of


HRM includes activities and events that serve to
protect organization members from illness and
Notes Compiled by Prof. V.S.Gopal

physical dangers in the workplace and to assist them


with their physical and emotional health.
For many organizations, protecting the health
and safety of human resources is a prime social
responsibility. This HRM functions serves to preserve the
human resources of the organization.

 Employee participation: This is a relatively new


function of HRM. Employee participation focuses on
giving employees a voice, sharing information with
them and consulting them on matters of mutual
interest.
Employee participation is an important step in
establishing industrial democracy.

STRUCTURE OF HUMAN RESOURCES


DEPARTMENT

A human recourse department is becoming an integral part


of every organization.

The following diagram illustrates the common structure of the


human resources department:
PRESIDENT/DIRECTOR (Human
Notes Compiled by Prof. V.S.Gopal
Resources)

Manager Manager Manager Manager Manager

Recruitm Employe
Training & Compensati Employe
ent e
Developme on e
& Relation
nt & Benefits Welfare
Selection s

Structure of Human Resource Department

All the managers have to perform the activities or functions


assigned to them by the President / Director.
The most important principle about the organization of the
HR department is that it should fit the needs of its business.
There is no best structure to adopt but the choice of the
structure should be made on the basis of an analysis of what the
organization wants by way of HRM guidance and services.

HUMAN RESOURCE DEVELOPMENT

Employee education, training and development have now


become a vital and extremely important part of organizational
strategy. A 2000 survey of human resource managers in large
organizations discovered that these managers considered training
and development as their most important function.
Notes Compiled by Prof. V.S.Gopal

The increasing focus on the development of human


resources has resulted in Human Resource Development (HRD)
becoming a key and vital aspect of the HRM.
HRD is defined as “a set of systematic and planned
activities designed by an organization to provide its members
with the opportunities to learn necessary skills to meet current
and future job demands.”
According to the American Society for Training and Development
(ASTD), Human Resource Development (HRD) has three primary
functions:

TRAINING AND DEVELOPMENT


Training is the process of providing employees the
knowledge and skills needed to do a particular task or job.
Development is the process of preparing employees for
future work responsibilities and also increasing their capacities to
perform current jobs.
It is the work of HRD professionals to coordinate the training
and development programs and ensure that people in the
organization have the necessary knowledge and skills to be
effective in their position.

ORGANIZATIONAL DEVELOPMENT
Organizational development (OD) is defined as the process
of enhancing the effectiveness of an organization and the well
being of its members though planned interventions that apply
behavioral concepts.
The focus of OD is on:
Macro organizational changes: These changes are aimed at
ultimately improving the effectiveness of the organization.
Notes Compiled by Prof. V.S.Gopal

Micro organizational changes: These changes are directed


towards improving the effectiveness of individuals, small groups,
and teams within the organization.

CAREER DEVELOPMENT

Career development is described as an ongoing process by


which individual’s progress through a series of stages, each of
which is characterized by a relatively unique set of issues,
themes, and tasks.
Career development involves two processes:
Career planning: It involves helping the employee develop a
realistic career plan. Assessing the skills and abilities of the
employee with the assistance of an expert does this.

Career management: The focus here is on taking the necessary


steps to achieve the career plan. The emphasis is on what the
organization can do help in the employees development.
Notes Compiled by Prof. V.S.Gopal

HUMAN RESOURCE PLANNING

Human Resource Planning is based on the belief that people


are an organization’s most important strategic resource. It
attempts to address
The human resource needs of an organization both in quantitative
and qualitative terms. Human Resource planning is also concerned
with how people are employed and develops in order to improve
organizational effectiveness.

DEFINITION

Wendell French defines human resource planning as “the process


of assessing the organization’s human resources needs in the light
of organizational goals and changing conditions and making plans
to ensure that a competent, stable work force is employed.”

OBJECTIVES OF HUMAN RESOURCES


PLANNING
The specific objectives of human resources planning may
vary as per the specific needs of the organization. However, most
human resource plans have the following objectives:

• Optimal utilization of human resources: The main


objective of human resource planning is to maintain and
improve the organization’s ability to achieve its goal by
developing strategies that will result in optimum
contribution of human resources.

• Meeting personnel requirements: Human resource planning


is not concerned with merely forecasting future manpower
Notes Compiled by Prof. V.S.Gopal

requirements of the organization but also with developing


appropriate recruitment and selection strategies to meet
these requirements. Human resource planning seeks to
recruit and select employees in a manner that will maximize
return on the investment in human resources.

• Placement of personnel: It is not sufficient the right


personnel; but it is important to place them on the right job.
Human resources planning strive to place the right man on
the right job.

• Prevent disruption of work: The costs of work disruption


due to unavailability of required human resources can be
very high. Human resource planning aims to ensure the
timely availability of the right number and kind of people
for the smooth running of the organization.

• Control costs: An important objective of human resource


planning is to reduce or control labor costs by maintaining a
proper balance between demand for and supply of human
resources. Human resource planning seeks to cut and save
costs on human resources.

• Training and management development: Human resource


planning aims at developing a well-trained and flexibility
workforce. This increases the organization’s ability to an
uncertain and changing environment.
Notes Compiled by Prof. V.S.Gopal

B. JOB ANALYSIS

The success of any organization depends on the ‘right man


on the right job.’ Matching the man to the job and the job to the
man is the key to the efficient running of an organization. The
purpose of job analysis is to provide a detailed information and
description about the job.
Job analysis provides information about why job the job is
done, the way it is done, the equipment or machinery used, the
skill or training or education needed to perform the job, the
wages paid, the working conditions and any other special or unique
characteristics of the job.

2.3 DEFINITION
Wendell French defines job analysis as “the systematic
investigation of job content, the physical circumstances in which
the job is carried out, and the qualifications needed to carry out
job responsibilities.”

2.4 JOB DISCRIPTION AND JOB


SPECIFICATION

Job description and job specification are the two major outcomes
of the job analysis process.

JOB DISCRIPTION

Job description is sometimes called as position description.


Job description is a recorded statement of the activities of the
jobholder. It describes what is done on the job, how it is done
and why it is done. Job description attempts to accurately
Notes Compiled by Prof. V.S.Gopal

portray job content, environment and conditions of employment.


It describes every aspect of the job. It is extremely useful in
differentiating one job from another. The job description
document usually contains the following information:

 Job identification: Information regarding the job title,


code number of the job, department or division where the
job is located and so on is provided over here.

 Job summary: It describes the activities or tasks


performed on the job.

 Job duties and responsibilities: This is the heart of the


job description. It describes the duties performed and the
frequency of each duty. Responsibilities such as supervision,
custody of money, supervision and training of staff are
described in this part.

 Working conditions: This includes the physical environment


of the job, risks in the workplace and possibilities of their
occurrence and so on.

 Machines, tools and equipment: The name and types of the


major machines and tools used on the job are described
here.

 Social environment: This part describes the size of the


work group, interpersonal interactions required to perform
the job.

 Supervision: It states the extent of supervision given or


received, the number of people supervised along with their
designation.
Notes Compiled by Prof. V.S.Gopal

 Relation to other jobs: In this part the jobs immediately


below and above are mentioned. This provides an idea of the
relationship between different aspects of the work.

Job description acts as an important resource for:


1. Describing the job to potential candidates
2. Guiding new employees in what they are specifically
expected to do and
3. Comparing the employee’s actual activities with the
ones stated in the job description.
Job description is an important document that helps to identify
the job and gives a clear idea of what the job is. A good job
description provides a detailed and clear picture of the whole job.

JOB SPECIFICATION

Job specification is also referred to as man specification or


employee specification. Job specification is a statement of the
minimum qualities required in a candidate for successful
performance of the job. It describes the personal
characteristics that an individual must process in order to
perform the job effectively.
Based on the information acquired through job analysis, job
specification identifies the knowledge, skills, and abilities needed
to do the job effectively. Although the specific items mentioned
in the job specification may vary, they usually include following
specifications:
1. Qualifications and experience
2. Physical characteristics (height, weight, physique, eyesight,
motor coordination)
Notes Compiled by Prof. V.S.Gopal

3. Psychological characteristics (intelligence, analytical ability,


concentration, memory, judgment, interests)
4. Social characteristics (emotional intelligence, interpersonal
skills, leadership, cooperativeness)
5. Other characteristics (age, sex, family background)

Job specification tells what kind of person is required for a


given job. It is an important tool in the recruitment and selection
process as it helps the selectors to determine whether a
candidate has the personal characteristics required to succeed on
the job. Job specification tells what kind of a person to recruit
and for what qualities that person should be tested.

JOB DESCRIPTION OF A BANK CLERK

The following is a brief job description of the duties and


responsibilities that a bank clerk in the term / fixed deposit
section has to perform:
 Keep the accounts opening forms of all the different
deposit schemes.

 Keep the latest information on rate of interest, maturity


values of all schemes.

 Collect and keep numbered receipt books in use in personal


custody and return to the officer at the end of the day.

 Open the account/issue the deposit receipt as per the duly


account opening form. Incorporate all details in ledger /
register.
 Calculation of interest provisions and cumulative interest
provisions as per the procedure.
Notes Compiled by Prof. V.S.Gopal

 Payment of interest on various deposits as per the laid down


procedures. Calculate interest properly to avoid excess
payment.

 Taking down the balances periodically, scheme wise along


interest provisions and tallying it with the General Ledger
Head.

 Transfer of overdue deposits to separate heads and making


interest provisions thereon as per procedure.

 Intimation to customers regularly about maturity of deposit


receipts.

 In case of payment before maturity, obtain application,


calculate interest, penalty wherever necessary. Getting it
checked before preparing vouchers.

 In case customer desires loan against deposit, marking of


lien on the deposit and on the ledger with particulars and
obtain signature of the competent authority.

 Calculation of TDS (Tax Deduction at Source) wherever


applicable.

 Obtaining form no: 15H / 15G from customers.


Notes Compiled by Prof. V.S.Gopal

JOB EVALUATION

It is the vital that organizations pay their employees fair


and competitive salaries in order to attract and retain their
talented and competent employees. If the salary is poor then the
employee will leave the organization for another that will pay
more. However paying more than what an employee deserves will
prove costly and counterproductive.
Job evaluation means to determine the relative worth of
jobs in an organization. It is the process of determining the value
of a job in order to fix some salary or wages. Job evaluation is
done on the basis of information obtained through job analysis.

DEFINITION
Wendell French defines job evaluation as “a process of
determining the relative worth of the various jobs within the
organization, so that different wages may be paid to jobs of
different worth.”

OBJECTIVES OF JOB EVALUATION


There are several objectives of job evaluation:
• To develop a consistent wage policy.

• To determine the rate of pay for each job which is fair and
equitable in relation to other jobs in the organization or
industry?

• To ensure that like wages are paid to all qualified employees


for like work.

• To eliminate inconsistencies and inequalities in wages.


Notes Compiled by Prof. V.S.Gopal

• To establish a rational basis for fixing incentives and


different bonus plans.

• To develop a framework for periodic review and revision of


wage rates.

• To provide a basis for wage negotiations with trade unions.

• To maximize if not eliminate wage discrimination on the


basis of age, sex, caste, religion etc.

RECRUITMENT

The acquisition of human resources for the organization


takes place through the process of recruitment and selection.
After the human resource needs of the organization are
identified through human resource planning, the next step is that
of recruitment and selection. One of the most difficult tasks of
the human resource manager is that of recruiting and selecting
the right kind of people for the organization.
Recruitment is the first step towards procuring qualified
manpower for the organization. The process of acquiring human
resources begins with recruitment, continues with selection and
ceases with placement.

DEFINITION
DeCenzo and Robbins describes recruitment as “the process of
discovering potential candidates for actual or anticipated
organizational vacancies.”
Notes Compiled by Prof. V.S.Gopal

It is a linking activity aimed at bringing together those with


jobs to fill and those seeking jobs.
A number of factors such as the size of the organization,
the employment conditions in the community, reputation of the
organization, working conditions and salary and benefits offered
by the organization affect the recruitment process.
Ideally the recruitment process should ensure that for
every position available in the organization, there are sufficient
numbers of qualified applicants. In very large organization,
recruitment is a complex and continuing process that demands
extensive planning and effort.

SOURCES OF RECRUITMENT
The various sources of recruitment may be broadly
classified in two broad categories: Internal and external sources.
Some organizations draw their human resources internally i.e.
from within the organization while others draw externally i.e.
from outside the organization.

INTERNAL SOURCES OF RECRUITMENT

The internal sources of recruitment focus on finding


qualified applicants within the organization. The organization
itself is the best source of applicants for positions above the
entry level. The internal sources of recruitment may be of the
following type:

 Promotion: promoting qualified and experienced employees


may fill vacancies in the organization. Promotion refers to
shifting an employee to a higher position carrying higher
status, responsibilities and pay. Promotion may be based on
Notes Compiled by Prof. V.S.Gopal

performance or seniority depending upon the organization’s


promotional policies.

 Transfers: Another common way of filling up vacancies is


through internal transfers. An existing employee who is
experienced and capable is transferred from one
department in the organization to another. In transfers, the
shifting of the employee occurs without any major change in
his status and responsibilities.

 Job posting (internal advertisement): A popular method of


finding applicants is through job postings or internal
advertisements. Job posting involves announcing job opening
to all current employees through notices on the bulletin
boards or through the company newsletters. Some
organizations have developed computerized job posting
systems so that employees can obtain information on their
on their computer screens.
Job posting carry information about the nature of the
position and qualifications needed, and any employees who is
interested in the job may apply for the same. Job
announcements ensure that employees are aware of
opportunities to move up in the organization.

 Recall or retired and ex-employees: When an organization is


not able to find a suitable candidate for a vacancy, former
employees of the organization who have retired or had quit
the organization may be recalled.

 Employee referrals: Another way to find applicants within


the organization is through employee referrals. Informal
communications among managers may lead to the discovery
of a good candidate for the job. Employee referrals may be
Notes Compiled by Prof. V.S.Gopal

for candidates within the organization as well as outside the


organization. Some organizations even offer rewards to
employee whose referrals get selected in the organization.

 Skills Inventories: Many firms have developed computerized


skills inventories of their employees information on every
employee’s skills, educational background, work history, and
other important factors is stored in the organization’s
database. The skill is used to identify employees with the
attributes needed for a particular job.

A new development in this area is the Human Resource


Information System (HRIS). It is a computerized system that
assists in the processing of HRM information. It provides skill
inventory information.
The HRIS is designed to quickly fulfill the personnel
information needs to the organization. It permits the
organization to track most information about an employee and
about jobs and retrieve that when it is needed. HRIS is
extremely useful for storing employment, training and
compensation information on each employee.
EXTERNAL SOURCES OF RECRUITMENT

Organizations turn to external sources of recruitment when the


internal sources of fall short. New organizations rely largely on
external sources to meet their recruitment needs. However even
well established organizations turn to external sources when
candidates with the desired skills, knowledge and qualifications
are not available in the organizations in order to introduce new
blood in the organization.
Notes Compiled by Prof. V.S.Gopal

There external sources of recruitment are:

o Campus recruitment: Educational and training institution


like the IIMs, IITs and other professional colleges are a
good source of recruiting qualified and trained personnel.
Many educational institutions have placement departments
who forward and names of graduating students to
interested organizations and invite them to conduct campus
interview.

o Advertisements: Advertisements in journals, newspapers


and magazines with wide circulation is a very popular source
of recruitment. However care should be taken in preparing
the advertising so that only qualified applicants respond.
The advantage of this method is that a single
advertisement can reach millions of potential recruits. The
cost per persons is very low.
As more and more people surf the inter net, the Internet as
a medium of advertising is becoming increasingly popular.

o Employment agencies: Private consulting firms carry out


recruiting functions on behalf of organizations. Firms of
such kinds are also referred to as head hunting firms.
These firms carry out all the functions of recruitment and
selection and provide organizations with candidates as per
their requirements. The employment agencies charge a fee
for their services. ABC consultants, personnel search are
some of the top employment consultants in India.

o Employee recommendations: A very good external source of


recruitment is a recommendation from a current employee.
An employee will rarely recommended someone unless he is
certain that the individual will perform adequately. This is
Notes Compiled by Prof. V.S.Gopal

because recommendations reflect on the recommender and


his reputation is at stake.

o Professional bodies: Professional bodies like the institute


of chartered accounts, Institute of company secretary
maintain a record of qualified persons in their specialized
fields. Organizations can approach such bodies to meet
their specific needs.

o Deputation: In deputation the services of an experienced


employee of another organization are borrowed for a fixed
period of time. This source of recruitment is usually for
senior positions in the organization. The person on
deputation serves the borrower organization for a period of
time and then returns to the lender organization.

o Poaching: Poaching involves attracting talented and


competent persons from rival organization by offering
better terms and conditions of employment with regard to
salary, designations, working conditions, additional perks and
benefits. Poaching is considered to be unethical as
employees often carry with them sensitive information that
could hurt the interests of their former organization.

o Unsolicited or casual applications: Often organizations


receive unsolicited applications for jobs in the form of
telephone calls, letters, and e-mails. Organizations do not
throw such application but maintain a record of these
applications as they serve as a prospective source of
manpower.
Notes Compiled by Prof. V.S.Gopal

E – Recruiting

Perhaps no method has ever had as revolutionary an effect


on recruitment practices as the Internet. There are respective
company websites devoted in some manner to job posting
activities. Currently, employees can electronically screen
candidates, soft attributes, direct potential hires to a special
website for online skill assessment, conduct background checks
over the Internet, interview candidates via videoconferencing,
and mange the entire process with web based software.
Companies benefit immensely through cost saving, speed
enhancement and extended worldwide candidate reach which the
Internet offers. From the job seekers perspective, the Internet
allows for searchers over a boarder array of geographic and
company posting than was possible before.
There are negatives associated with Internet recruiting.
For example, broader exposure might result in many unqualified
applicants applying for jobs. More resumes need to be
interviewed, more e-mails dealt with and specialized applicant
tracking software may be needed to handle the large number of
applicants who lack access to Internet.
Problems notwithstanding, both job givers as well as job
seekers find Internet as the most effective source of recruiting
and its usage in the days to come will be all pervasive.
Notes Compiled by Prof. V.S.Gopal

SELECTION

Selection is the process of choosing the most suitable


person /s out of all the applicants. It is the process of choosing
the required qualifications and skills to perform the job
successfully. Selection involves screening of candidates.
Screening is a process of reducing the number of applicants to a
few by way of rejecting the candidates who are not found eligible
as per the qualifications prescribed.
Selection of employees is a managerial decision. It is the
management, which fixes the criteria for selection.

DEFINITION
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 on the job.”

SELECTION PROCEDURE

Organizations make large investments to get the right kind of


people; hence, a sound selection procedure is necessary. The
objective of the selection procedure is to determine whether an
applicant meets the qualifications for a specific job and to choose
the applicant who is the most likely to perform well in that job.
Although organizations differ in terms of which selection method
to use, most of the follow a fairly standardized set of steps. The
various steps involved in the selection procedure are as follows:
Notes Compiled by Prof. V.S.Gopal

PRELIMINARY INTERVIEW

APPLICATION BLANK

SELECTION TEST

EMPLOYMENT INTERVIEW

MEDICAL EXAMINATIONS

REFERENCE CHECKS

FINAL SELECTION

SELECTION PROCEDURE

1. Preliminary interview: This is the first step in the selection


procedure. The objective of this interview is to discard
those candidates who are totally unqualified for the job.
Only suitable candidates are retained for further screening.
Preliminary interview saves time and efforts of both the
organization and the candidate. It avoids unnecessary
waiting for candidates who have no chance of being hired.
The organization too benefits, as it does not waste time and
money on further processing unsuitable candidates.
The preliminary interview is the first contact of an
individual with the organization. Hence it is vital that the
Notes Compiled by Prof. V.S.Gopal

staffs who are involved in this step are extremely


courteous, receptive and polite with the rejected candidate.
The candidates who seem suitable are given the application
blanks to fill.

2. Application blanks: This is a very popular method of getting


information from the candidate. The candidates are
supplied a blank specially prepared application form for
filling it with information relating to educational
qualifications, age, experience, training, past experience,
hobbies, interests etc.
While some organizations have specially prepared
application forms, others ask candidates to prepare on their
own.
The application form has several benefits:
• It helps to eliminate those candidates who are lacking in
education and experience.
• It helps in formulation questions for the interview.
• Information obtained through application forms can be used
for future reference.

3. Selection test: The selection or employment test is


the next step in the selection procedure. A variety of
psychological tests are used to obtain information about
various aspects to an individual’s behavior, performance and
attitudes. Use of such tests is becoming increasingly
popular.
The different tests help in:
• Identification of differences among individuals.
• Identification of the maximum and minimum
potential of the candidates.
• Identification of skills, abilities, talents,
interests in the candidates.
Notes Compiled by Prof. V.S.Gopal

4. Employment interview: The interview is a widely used


tool of selecting prospective candidates for the
organization. It gives the employer and prospective
employee an opportunity to meet each other.
The selection or employment interview serves three
purposes:
• It is an opportunity to obtain additional information
about the candidate and determine his suitability for the
job.
• It provides information to the candidate about the
organization, the specific job for which he has applied and
personnel policies.
• It helps to establish a friendly relationship with the
candidate and motivate suitable candidates to join the
organization.
• Although the employment interview is very popular,
doubts have been raised as to its reliability in selection of
the right candidate.

5. Medical examination: Applicants who have


successfully passed the above steps are now sent foe a
medical examination. Medical examination is for the
following reasons:
• It helps to determine whether the candidate is mentally and
physically fit to perform the job.
• It prevents employment of employees suffering from
contagious diseases.
• It saves expenditure that the organization may have to
incur for medical treatment of the candidate.

6. Reference checks: Applicants are frequently asked to


provide the names and address of two or three persons who
Notes Compiled by Prof. V.S.Gopal

know them well. These persons are commonly referred to as


referees or references. These persons may be previous
employers, heads of educational institutions or other public
figures.
The organization contacts the referees through mail
or by telephone to know more about the candidate’s
character, skills, potentialities etc. The feedback and the
comments of the referees influence the selection of the
candidate. Candidates who are evaluated positively by
referees are selected while those who are evaluated
negatively are rejected.

7. Final selection: The candidates who have cleared all


the above obstacles are recommended by the human
resources department to the concerned department for
their final approval.

On the final approval of the concerned department, the


appointment letter is issued to the candidate. The appointment
letter contains details regarding the pay scale, the post, the rank,
other terms and conditions of employment and the date by which
the candidate should join the organization. Sometimes a contract
is signed between the candidate and a representative of the
organization.
Notes Compiled by Prof. V.S.Gopal

INDUCTION

When a new employee joins the organization, the first few


days are ones of great uncertainty. Even the calmest and most
competent employee feels a little nervous, anxious and insecure.
This is because he is unfamiliar with the new surroundings, new
coworkers and new job procedures. Hence, most organizations
offer some kind of an induction program to help new employees
get acquired with the company and make a productive beginning on
the job. Induction programs are also commonly referred to as
orientation programs.

DEFINITION
Michael Armstrong defines induction as “the process of receiving
and welcoming employees when they first join the company and
giving them the basic information they need to settle down
quickly and happily and start work.”

Induction is the process of familiarizing of the new


employee with the job and the organization. It includes
introducing the new employee to his or her work unit.

According to Armstrong, induction has five main aims:

1. To put new employee at ease.


2. To create employee interest in the job and the
organization.
3. To provide basic information about working conditions.
4. To indicate the standards of performance and
behavior expected from the employee.
5. To tell the employee about training arrangements and
how he or she can progress in the company.
Notes Compiled by Prof. V.S.Gopal

3.6 Importance of induction

Induction is extremely important as a new worker often


finds himself completely at sea in the workplace. Induction
assumes even greater importance when the new employee is new
to the town / city or in some cases to the country.

 Smooth entry: To make the entry of the new employee in to


the organization a smooth one as initially everything is
strange and unfamiliar to him.

 Favorable attitude: To establish a favorable attitude to


the company in the mind of the new employee so that he will
stay on in the organization.

 Quick adjustment: To obtain effective output from the new


employee in the shortest possible time.

 Reduce employee turnover: Research has found that


employees are far more likely to resign during their first
few months after the joining the organization. Induction
reduces the likelihood of employees leaving the organization
quickly.

 Increasing commitment: A proper induction makes the feel


that the organization is worth working for. This increases
employee commitment as he identities himself with the
organization, wants to stay with and is prepared to work
hard on behalf of the organization.
Notes Compiled by Prof. V.S.Gopal

 Understand organizational norms: Induction programs


convey to the new employee what the organization expects
from him in terms of behavioral norms and the values that
he should uphold.
Induction provides an opportunity to inform people of
‘the way things are done here.’ This reduces any doubts or
misconceptions that the new employee may be holding.

 Develop relationships: Induction helps to foster a close and


cordial relationship between the newcomers and the old
employees and their supervisors.

 Other information: Induction serves as an opportunity to


provide other necessary information such as the location of
cafeteria, toilets, rest periods, leave rules.

ENTRY INTERVIEW FOR EFFECTIVE INDUCTION OF NEW


ENTRANT

Objectives

 To ensure introduction of the new entrant to the


institution, its culture, tradition, ethos, and work ethics.

 To have a formal interaction between the head of the


branch / office and the new entrant in order to have
introduction to the job and colleagues.

 To provide psychological assurance that he will be looked


after and cared in the new place.
Notes Compiled by Prof. V.S.Gopal

 Help the employee to shed apprehensions, if any, and feel


free in the environment.

 To initiate the socialization process of the employee in the


organization on a positive note, so that the process of
emotional integration is fast and smooth.

SYSTEM

 The branch manager / section In-charge conducts the


entry interview of the entry interview of the new
employee on the first first day immediately on his
joining the Branch / office.

 The interview has to be conducted in a friendly


atmosphere and the employee is made to feel at ease.

 Through the interview the manager elicits the


background of the employee – family and profession,
his goals in life, his expectations, his capabilities and
potential.

 The manager volunteer’s information about the bank’s


history, its rich heritage and culture, its mission and
goals to make the employee aware of the duties
expected from him. He also gives general information
about the Branch / office, the people working there
and also the place.
Notes Compiled by Prof. V.S.Gopal

 The manager finds out the needs of the employee at


the new place and helps him to settle.

 The manager to introduce the new employee to his


colleagues.

 A handbook “step into the family for an enriching


partnership” is given to the employee.
Notes Compiled by Prof. V.S.Gopal

TRAINING AND DEVELOPMENT

A well-trained workforce is the greatest asset of an


organization. After the employee is selected, the next important
task for the organization is to see that the employee adjusts as
quickly as possible on the job and performs his job efficiently. In
order to do so, it is essential that the employee is properly
trained and prepared for the tasks that lie ahead.
An organization cannot function effectively when its employees
are not trained well. Lack of training is often the cause of: Poor
productivity, Errors and wastages, Unsafe working practices and
Dissatisfaction at work.

Training is basically the management of learning. The


objective of training and development is to raise the level of
performance in one or more aspects. This is achieved either by
providing new knowledge and information relevant to a job or by
teaching new skills or by imbibing an individual with new attitudes,
values, motives and other personality characteristics.

DEFINITION
According to Edwin Flippo, training is “the act of increasing the
knowledge and skill of an employee for doing a particular job.”

Training prepares employees to perform their present job


even better and more efficiently. It also prepares the employee
for higher positions with increased responsibilities.
Notes Compiled by Prof. V.S.Gopal

IMPORTANCE OF TRAINING

Organizational training programs are very costly. When an


employee is being trained, not only the organization spending
money on him but it is also losing in terms of manpower as the
employee is away from work. However despites his loss, good
organizations spend a considerable amount of time, effort and
money to train their employees. They feel that training of
employees is an investment, which will reap benefits and profits
for the organization in the future.

The major benefits of training are:

• Higher productivity and profits: Trainings improves the


knowledge and skills of employees and hence leads to
greater efficiency in the work place. The more efficient an
employee, the higher will be the production, which in turn
will contribute to greater profits for the organization.

• Optimal use of resources: well-trained employees are able


to make optimal use of their resources (manpower,
materials, machinery and capital.) This helps in reducing
cost and time wastages.

• Job satisfaction: Employees who have received training and


know their job well are a confident lot. This increases their
morale and leads to higher job satisfaction.

• Safety: Training reduces errors and accidents on the job


by making the employees more competent and able at their
work. Training helps to improve safety standards at work.
Notes Compiled by Prof. V.S.Gopal

• Reduces stress: An employee who knows his job well is less


likely to experience stress. Besides training in stress and
time management enable the employee to cope with
frustration and tension.

• Career development: Training prepares the employees for


higher positions by developing the necessary skills and
attitudes. It improves employee’s prospects for
advancement and promotion within the organization. Training
prepares the employee for opportunities that will come
during his career.

TRAINING METHODS

A variety of methods have been developed for the training of


managers and senior executives in the organization. The different
methods of management development may be classified as on the
on the On-the-job and Of- the-job training methods.

MANAGEMENT DEVELOPMENT PROGRAMS


On-the-job Training Of-the-job Training

1) Coaching 1) Lecture method


2) Job rotation and 2) Case studies
transfers 3) Conferences
3) Understudy assignments 4) University training
4) Committee assignment 5) In-basket method
5) Project assignment 6) Wilderness training
6) Multiple assignment
Notes Compiled by Prof. V.S.Gopal

On-the-job training

1) Coaching: In coaching a superior guides and instructs a


junior manager. He trainees the junior in the knowledge and
skills required to do the job. This method emphasizes on
learning by doing.
In this method, the superior serves as coach who helps
the training grow and improve his performance on a day-to-
day basis. The coach sets challenging goals for the training,
informs him what is to be done and evaluate the trainee’s
progress towards the goals.

2) Job rotation: Job rotation is a popular management training


technique. It involves movement or transfer of managers
from one position or job to another on a plant basis. They
are move from one managerial position to another according
to a rotation schedule. Job rotation is also called as position
rotation and cross training.
The aim of job rotation is to broaden the knowledge,
skills and outlook of managers. It exposes the managers to
different jobs and department to acquaint them with all the
facets of the organization. It thus widens the manager’s
horizons.
Job rotation is frequently used with junior executives
and fresh college graduates who are just beginning their
working careers. Through job rotation, trainees gain
perspective on various aspects of organizatiozational life.
They have the opportunity to see and be seen by higher
management, and to learn to direct experience where they
might best apply their knowledge, abilities and interest.

3) Understudy assignment: In the understudy method, the


trainees work directly under individuals whom they are likely
Notes Compiled by Prof. V.S.Gopal

to replace. The objective of understudy assignments is to


train an employee to succeed in a specific position. The
employee may work as an assistant manager to a superior
who trains him to shoulder his responsibilities in due course.

4) Committee assignments: Organizations frequently set up


committees and panels to investigate and study various
problems confronting the company. For example, grievances
committee, pay revision committee and so on. Trainees are
often placed in such committees so that they get a fee and
developed better understanding of the various issues facing
the organization.

5) Project assignments: In this method, a number of trainings


executives are put together to work on project i.e. closely
related to their work or department. The group called
project in or task force studies the problem and find
appropriate solutions.
In this method the trainees learned the procedures
and techniques involved in the particular work and the inter
relationships between their department and other
departments.

6) Multiple management: This was developed Charles P. in the


U.S.A. In this method a junior board of young executives is
constituted. This board is given the authority to discuss any
problem that the senior board would discuss. They discuss a
wide variety of subjects and make recommendations to the
board of directors.
Notes Compiled by Prof. V.S.Gopal

Of-the-job Training Methods

1) Lecture method: Lecture method is one of the most popular


methods. It is widely used all over the world in the field of
education as well as in the field of industrial training.
A lecture is a prepared presentation of knowledge,
information, and viewpoints in order to make the learners
accept what the lecturer says. The key word is ‘prepared’.
Presentation of the lecture will spell the difference
between acceptance or rejection, interest or boredom.

2) Conferences: The conference method is commonly used


when the number of trainees is small. The conference
method encourages active participation and leads to greater
two-way communication. The conference method permits
the participants to pull their ideas together discuss the
problem from all points of view express themselves, become
aware of the opinions of other, ask questions and seek
clarifications.
The effectiveness of the conference method is
strongly influence by the skills and personality of the
trainer. A good trainer is able to get all the participants
involved in the discussions. He knows when to lead the group
and when to allow others to lead the discussions.
The attitude of trainees, their verbal communications
skills and eagerness to acquire knowledge and participate in
the discussion also plays a crucial role in the success of the
training method. The conference method applies the
learning principles of motivation and feedback in training
situation.
Notes Compiled by Prof. V.S.Gopal

3) The case study method: The case studies, a trainee come


face to face with business situations similar to the ones
they are likely to handle future. Case studies consist of
problem situations to which the group has to find the best
possible situation. Case studies are extremely popular in
executive training programs.
In a typical case study, a complex problem or case of
the kind daily faced by the manger and executives is
presented to the trainees prior to a general meeting. The
trainees are expected to familiarize themselves with the
information and to find additional relevant information.
When they meet as a group, each member interprets the
problem and offers a solution. Then a systematic discussion
takes place. Different view are exchanged, the trainees
come to appreciate the different perspectives on a problem
and consequently different approaches to solving it. Usually
the cases have no single correct solutions. The group leader
does not suggest and answer. The group as a whole must
reach an agreement and resolve the problem.
Through case studies, the trainees learn to diagnose
business problems, understand the critical factors in
business and to take decisions with regard to its effects on
the organization as a whole.

4) Training in universities: Training programs required a great


deal of planning, tremendous infrastructure and trained
experts to conduct them. A major constraint is a cost
factor, which is very high. Hence many organizations depute
their employees for the different courses conducted by the
universities and other reputed institutions. Universities
have recognized the needs of the industrial community and
have devised several programs to cater to the needs of
organizations. The programs may be a very brief one-day
Notes Compiled by Prof. V.S.Gopal

affair or could extend to one year or more. To suit the


convenience of the working employee, the courses are
conducted in the evening or on weekends. The courses over
a wide variety of subjects, such as
• Business policy and strategy
• Human relations
• General management functions
• Communications
• Accounting
• Industrial relations
• Marketing
• Quantitative approaches

5) In-basket method: In this method of training, the


trainee is placed in a simulated situation where he is given
‘basketful’ of items that a manager is likely to encounter on
the job such as letters, reports, memoranda, notes and
other related materials. The trainee has to respond and
make decisions on these items. The trainee’s decisions are
then evaluated and he is given feedback on the nature of
actions he takes.

6) Sensitivity training: In sensitivity training, trainees


meet in small groups for a few hours every day. The training
often takes place at a comfortable retreat, removing
trainees from the daily pressures and routines of the job
and family life.
The trainers assume a passive role. There is no agenda
or format. In the beginning the discussion is very unclear
and unstructured and the topic of the discussion does not
matter. The important thing is that something to be
Notes Compiled by Prof. V.S.Gopal

discussed and someone be involved in the process. In time


trainees begin to discuss themselves and one another,
pointing out their likes and dislikes, strengths and
weaknesses. Thus they examine feelings, experiences,
expressions, gestures, and behaviors, thoughts, which are
often taken for, granted in every day life.
Sensitivity training must be used with care. It has
proved to be traumatic for some individuals. The frankness
and criticism that take place in sensitivity training can be
more hurting than helping.

7) Wilderness training: This training method is a recent


development. In this method executives and other
employees are involved in outdoor-based programs. The
objective of such program is to foster individual growth and
development, increase self-confidence, risk taking and build
leadership, teamwork skills.
In most wilderness programs, the learning’s takes
place in a wilderness areas involving such activities as river
rafting, mountain climbing or scaling obstacles. Group
discussions and short lectures are also included in such
programs.

There is no ideal or best method of management


development.

Each organization must design its own particular program


based on:
• The climate in the organization.
• The organizational level for which training is required.
• The particular characteristics of the personnel to be
developed.
Notes Compiled by Prof. V.S.Gopal

• The economic resources that the organization can allot


for training and development.

TRAINING AT SBI

State Bank of India is India’s largest public sector bank. It


is the second largest employer of people after the Indian
Railways. The bank currently over 2.15 lakhs personnel in various
cadres. SBI has a separate HRD division, which looks in to the
training interests of the bank.

The SBI training philosophy is proactive, planned and


continuous. It is an integral part of organizational development.
It seeks to impart knowledge, improve skills and reorient
attitudes for individual growth and organizational effectiveness.

The HRD mission of SBI is to enable every individual to


realize and activate his potential, as to contribute to the
achievement of the bank’s goals and derive satisfaction there
from.

The training wing in SBI consists of nearly 65 training


centers established at various places in the country. There are
three colleges one each specialized in agricultural development,
information and technology and general banking.

At the apex level, an academy has been established at


gurgaon near Delhi. This academy provides training to the top
management of SBI and also to officials from other banks. Every
training center is equipped with modern infrastructure facilities
and has a suitably trained faculty.
Notes Compiled by Prof. V.S.Gopal

The management of the training system is overseen by the


Chief General Manager at the central office of the bank in
Mumbai.

At the training center, various programs are conducted


throughout the year for employees in various cadres. The
programs are signed in such a manner so as to help develop the
employee’s ability to work more efficiently and without mistakes.
This ultimately benefits the employee as well as the institution.

The training programs may classified in to three main divisions


1. Core Program
2. Role Related Program
3. Factitional Program

These programs are developed for all categories of employees.


They are so designed to provide full knowledge of each subject
needed for that category. Each program is designed keeping in
mind the following details:
 Duration
 Target group
 Eligibility
 Objectives

The following is an example program designed for


officers:
Notes Compiled by Prof. V.S.Gopal

DURATION 24 days – 4 weeks (88 sessions)


TARGET GROUP Probationary/ Trainee Officers
ELIGIBILITY Recently appointed / Promoted
probationary Trainee
Officers
OBJECTIVES To increase their awareness of the
changing economic environment and the
role of the banking sector in it.
To enable them to understand State’s
Bank’s original structure, functions,
vision, mission, values, and HRD
philosophy
To introduce them to Banks system and
procedures
To familiarize the trainees with
computers

PROGRAM DESIGN
Subject No. Of sessions
Inauguration & formalities 1
Human Resource Management 2
Banking system & State Bank 4
Banking Laws 8
Deposits & Miscellaneous Business 12
Bank’s System Accounts 18
Computer Appreciation 22
Customer Orientation 8
Offices languages Act 1
Interface with functions- Branch/ 2
ZO’s/HO’s
Dummy Banking 4
Educational Tour 4
Exit Point Test 1
Valediction 1
TOTAL SESSIONS 88
Notes Compiled by Prof. V.S.Gopal

PERFORMANCE APPRAISAL

Once an employee has been selected, trained and placed on


the job, the next step is that of Performance Appraisal.
Performance appraisal is the process of evaluating the
performance of the employee in the organization. Performance
appraisal is the process by which the management finds out how
well or how badly the employee is performing on the job.

Performance appraisal is beneficial both to the employee as


well as to the organization. Performance appraisal is a kind of
feedback to the employee. It enables him to understand whether
his work is satisfactory r whether he needs any improvement in
his performance. Performance appraisal reveal to an employee his
strengths and weaknesses, enhancing his self-confidence in some
areas and encouraging him to improve his performance in other
areas.

Performance appraisal provides feedback to the


management whether an employee’s is up to the mark and whether
he is contributing to the attainment of organizational goals.
Important management decisions such as promotions, transfers,
demotions, raises in salary, training and so on are
Made on the basis of the performance appraisal reports.

4.5 DEFINITION
According to the Indian National Institute of Personnel
management, “performance Appraisal is a technique of assessing,
as impartially as possible, the attributes, strengths, weaknesses,
capacity and attitudes of individual employee in relation to his
job.”
Notes Compiled by Prof. V.S.Gopal

C. D. Fisher describes Performance Appraisal as “the process by


which an employee’s contribution to the organizations during a
specified period of time is assessed.”

Performance appraisal has three basic functions:

1. Performance appraisal seeks to provide adequate


feedback to each individual on his or her performance.
2. Performance appraisal serves as a basis for improving
or changing behavior towards more effective working
habits.
3. Performance appraisal aims to provide data to
managers with which they may judge future job
assignments and compensation.

MAJOR USES OF PERFORMANCE APPRAISAL

Some of the major uses of performance appraisal are:

o Personnel Training: Performance appraisal provides


information about the employee’s strengths and weaknesses.
Once weaknesses in knowledge, skills, and abilities are
identified it can be corrected through additional training.
However appraisal should be only on job related
characteristics and training should focus on those areas of
poor performance that attributed to the individual and not
due to other factors in the work environment.
Thus performance appraisal serves as a diagnostic kit for
identifying employee strength and weaknesses.

o Wage and Salary Administration: Performance appraisals


are frequently used to determine the salary raise to be
Notes Compiled by Prof. V.S.Gopal

given to the employees. Increases in pay are often linked to


the employee’s job performance.
It is suggested that “personnel development” and “salary
administration” should not be combined in the same
appraisal as employees become defensive. This is because:
• Employees attach greater importance to raises, as
they are more immediate and real.
• Personnel development loses its importance if
admitting weaknesses means a lower raise.
This problem can be overcome by having two appraisals – one
for employee development and another for salary raise. It is
also suggested that the same person should not conduct the
process of employee development and salary fixation.

o Placement: Information through performance appraisal is


useful in making placement decisions.
Trainee employees are appraised by exposing them to
various tasks in the areas of finance, marketing, accounting
etc. On the basis of their performance the trainees are
placed in the field that they performed the best.
Thus performance appraisal is useful in making optional
use of employee abilities and talents.

o Promotions: Performance appraisal is helps in identifying


the better performing employees. It helps us to compare
the performance of the employees. The performance
appraisal is useful in making promotional decisions.
However it must be remembered that promotions are not
determined by performance only. Seniority (job experience)
plays an important role. Experts suggest that the seniority
and merit may be used to make promotional decisions.
Notes Compiled by Prof. V.S.Gopal

o Discharge: Performance appraisal provides evidence of


inadequate job performance by the employee. This
information can be used to determinate or dismiss
employees.
In order to prevent lawsuits, organizations must maintain
proper records and documents relating to employee’s
performance. The organization should be able to
demonstrate that the decision to terminate the employee
was a fair one and used as the last resort.

o Job satisfaction: A fair performance appraisal maintains


employee initiative and morale leading to greater job
satisfaction.

o Feedback: Performance appraisal provides information of an


employee’s weaknesses or deficiencies in knowledge, skills
and abilities that once identified can be corrected through
additional training. Performance appraisal can also be used
determine the usefulness of a training program by
determining whether an employee’s job performance
improved after the training period.
Notes Compiled by Prof. V.S.Gopal

MODERN METHODS OF PERFORMANCE AND


APPRAISAL

The modern methods of performance appraisal focus more


on the evaluation of work results and job achievements rather
than personality traits.
The new methods of performance appraisal are as follows:

Management by Objectives: Management Guru Peter Drucker is


credited for the development of management by objectives,
popularly known as MBO.

MBO involves a mutual agreement between the employee and


supervisor on goals to be achieved in a given time. MBO focuses
on results – on how well employees accomplish specified goals. The
emphasis is on what employee does rather than on what
supervisors think of them or perceive their behaviors to be. MBO
actively involves employees in their own evaluations. They are not
simply graded or rated by others.

 MBO consist of two phases: Goal setting and Performance


review

 Goal setting: In this place the employees meet their


supervisors individually to determine the goals to be
achieved within a specified time and discus ways of
reaching those specified goals. The goals are set by
mutual agreement between the supervisor and the
subordinate. The goals must be realistic, specific and
as objective as possible.
Notes Compiled by Prof. V.S.Gopal

 Performance review: In this phase the employee and


the supervisor meet after the specified period of time
and discuss the extent to which goals were met. The
supervisor attempts to solve any problems that the
subordinate faces and new goals are set. The
supervisor’s role is that of a listener and guide but
never that of a critic.

 Assessment Centers: The assessment center in


an organization is the place where individuals are assessed
in as systematic and scientific manner as possible. An
assessment center is a place specially designed equipped for
a specific purpose – appraisal.
The objective of assessment center is to evaluation of
individuals for future growth and development. The
evaluations are made not on the job but are based on
observations of behavior and on the results obtained in
psychological tests. In an assessment center a through and
complete evaluation is done of the individual – his strengths,
weaknesses and personality characteristics.

 Techniques of assessment
Organizations use different techniques of assessment
depending upon their specific needs and requirements. Some
of the common techniques of assessment are:

 Role-playing: In this, the candidate acts out the role


of a manager in a simulated situation, showing for an
example, how he or she would conduct a job interview.

 In – basket test: In this form of evaluation, the


candidate is placed in a simulated situation where he is
given a ‘basketful’ of items that a manager is likely to
Notes Compiled by Prof. V.S.Gopal

encounter on the job such as letters, reports,


memoranda, notes and other related materials. The
candidate has to respond and make decisions on these
items. The candidate is evaluated on the nature of
actions he takes.

 A Leadership group discussion – co-operative nature:


In this, members of a group are presented with a
problem. The individual members of the group are
observed on their contributions towards the solution
as well as for their interaction with other members of
the group.

 Behaviorally Anchored Rating Scales (BARS): Smith


and Kendall developed the original behaviorally anchored
rating scales. These scales are a combination of critical
incidents and rating scales.

The development of BARS involves the following steps:

Step 1: The supervisors prepare a list of critical incident.

Step 2: The supervisors then group the critical incidents in to


small clusters of performance dimensions such as job knowledge,
leadership etc. Thus there are number of performance
dimensions (usually 5 to 10), each having a number of critical
incidents.

Step 3: In this step a group of experts are called. The experts


are presented with the critical incidents prepared in step one.
There is to reassign or classify the critical incidents in to the
same performance dimensions.
Notes Compiled by Prof. V.S.Gopal

The critical incidents that are reassigned by the majority of


experts in the same dimension as that by the supervisors (in step
2) are retained. While those critical incidents about which there
are confusion about the dimension to which they belong to
discarded.

Step 4: The experts then rate each of the “surviving” critical


incidents on a scale (of 7 to 9 points) as to how well they
represent performance on the given dimension. Those critical
incidents for which there is high rater agreement are retained.
Those incidents for which there is a low rater agreement are
discarded.

Step 5: The final form of BARS consists of critical incidents


that survived step 3 and step 4. These incidents serve as
behavioral anchors for the performance dimension scales
anchored by the critical incidents.

 Human Assets accounting: This method is still in the early


stages of development. It attempts to measure the
monetary value of the human resources of the organization.
In this method, valuation is done in terms of costs and
contributions of employees. Costs of human resources
consist of expenditure on human resource planning,
recruitment etc. Contribution of human resources is the
money value of labor productivity or added by human
resources. The difference between cost and contribution
reflects the performance of employees.
Notes Compiled by Prof. V.S.Gopal

TRANSFERS

Reshuffle of human resources is essential for the smooth


and efficient management of the organization. It also serves the
broader interests of the organization. Hence such reshuffles
popularly known as job transfers hence become very common in
modern business organizations.
Job transfers carried out on a routine basis in organization.
They are designed to prepare managers to take on the additional
responsibilities by providing them with experience in different
areas of the firm. Most of the job transfers are considered to be
lateral promotions; that is the manager is placed in a position that
carries similar authority and responsibility but in a different part
of the firm.

DEFINITION

Yorder and associates have defined job transfer as “a lateral


shift causing movement of individuals from one position to
another usually without involving any marked change in duties,
responsibilities, skills needed or compensation.”

Transfers may be initiated either by the company or the


employee. A company may initiate transfer to place employees in
positions where they are likely to be more effective. Similarly,
employees may initiate transfer to locations where they are likely
to get greater satisfaction.
Notes Compiled by Prof. V.S.Gopal

TRANSFER POLICY

Every organization should have a just and impartial policy


concerning the transfers of employees. It is important that every
employee knows the policy. A transfer policy serves as a guide –
post for managers in affecting transfer policy.

A good transfer policy should satisfy the following conditions:

• It should states the types of transfers (departmental or


interdepartmental) and the circumstances under which
transfers will be made.

• The persons who have the authority to order transfers.


Usually the person in charge of that department handles
transfers in each department. The HR department usually,
has a big say in transfers.

• The effect of transfer on pay and seniority should be


clearly mentioned.

• The facilities (leave, special, allowance for shifting place)


available to transferred employee should be clearly stated.

• The transfer policy should state the conditions under which


personal requests of the employees for transfer will be
entertained.

• All transfer decisions should be communicated to the


employee in writing.
Notes Compiled by Prof. V.S.Gopal

TYPES OF TRANSFERS

Employee transfer may be classified in to three types based


on its purpose:

 Transfers that are affected for the training and


development of the employees.
 Transfers made for adjustment of varying volumes within
the organization.
 Transfers designed to correct the problem of poor
employee placement.

The common types of transfers are:

 Production transfers: When there is excess manpower in


one department or branch in the organization, they are
transferred to other departments or branches in order to
lay off. The main purpose of such transfer is to prevent lays
offs and stabilize employment.

 Replacement transfers: these types of transfers are


applied for the protection of senior or long serving
employees. Such transfers are made when the operations of
the organization are declining and hence a long-standing
employee replaces a junior or new employee.

 Versality transfer: Versality transfers are affected to


give the employee a chance to learn various skills involved in
different jobs. The purpose of such transfers is to develop
Notes Compiled by Prof. V.S.Gopal

and all round employee with varied experience. He is


prepared for future positions.

Shift Transfers: Shift transfers are routine in industries


where work is in process for 24 hrs or in three shifts. Such
transfers are usually effected on rotation basis but they are also
effected for personal reasons of an employee such as marriage,
child - care, age parents etc.

 Remedial Transfers: Remedial Transfers are affected to


correct the wrong placement of the employee or shift an
inefficient employee who ids not carrying out his job
satisfactorily. The wrongly placed employee is placed in a
more suitable job. Such transfers protect the interest of
the employees.

 Penal Transfers: The management may transfer an


employee from one position to another as punishment for
undesirable acts performed by him. In such transfers, the
employee is shifted to less important position in the
organization.

PROMOTIONS

Promotion refers to advancement of an employee to a higher


post carrying greater responsibilities, higher status and better
salary. Promotion puts an employee or executive on a career path,
which goes upward.

On being promoted, promoter’s duties and responsibilities


increase, and the higher ones goes in an organization the greater
Notes Compiled by Prof. V.S.Gopal

is the effect of the employee’s decision on the working of the


organization.

Promotion is upward movement of an employee in the


organization’s hierarchy, to another job commanding greater
authority, higher status and better working conditions. Generally,
when an employee is assigned a higher-level job with more pay and
powers, he is said to be promoted.

DEFINITIONS
According to Scott and Clothier, a promotion “is a transfer of an
employee to a job which pays more money or one that carries
some preferred status.”
Notes Compiled by Prof. V.S.Gopal

CHAIRMAN AND MANAGING DIRECTOR

EXECUTIVE DIRECTOR

SCALE VII: GENERAL MANAGER

SCALE VI: DEPUTY GENERAL MANAGER

SCALE V: ASSISTANT GENERAL MANAGER

SCALE IV: DIVISIONAL MANAGER

SCALE III: SENIOR MANAGER

SCALE II: MANAGER

SCALE I: OFFICER

SPECIAL ASSISTANT

CLERK
Notes Compiled by Prof. V.S.Gopal

BASES OF PROMOTION

Organizations adopt a variety of criteria for promoting employee.


Promotion can be made on the basis of seniority or merit or a
combination of both

PROMOTION BASED ON SENIORITY

Seniority implies relative length of service in the


organization. Seniority is described as “The principle that an
employee’s relative length of service is an organization is a factor
in determining his employment rights and job opportunities in the
organization.”
Promotional systems that are based on seniority place a
premium on length of service and job experience. I.e. those
employees who joined the organization first should be the first
choice for promotions. Seniority suggests that employees should
be given preference in various aspects of employment based on
the length of their service.
The use of seniority as the basis of promotion is based on
the assumption that the longer a person does a job, the more he
learn from it. This experience gives him greater knowledge of the
organization and jobs related to his own, hence he is more
suitable for promotion.

PROMOTION BASED ON MERIT

This system of promotion takes in to account the


knowledge, skills and performance of an employee it stresses on
the ability of the employee in deciding promotion. Under this
system the best performing employee is promoted.
Notes Compiled by Prof. V.S.Gopal

PROMOTION BASED ON SENIORITY-CUM-MERIT

As both seniority and merit-based systems of promotion


have plus and minus points, may organization use a promotional
system based on a combination of seniority and merit.

Before using this system, it is essential that the management


clearly state the following details:
1. The minimum length of service to be eligible for promotion.
2. The relative weight age assigned to merit and seniority.
3. The minimum performance and qualifications essential to be
eligible for promotion.

PROMOTIONAL POLICIES

Every organization should develop a sound policy regarding


promotion of its employees. The promotion policy should formally
state the organization’s broad objectives. Employees are likely to
be frustrated and restless in the absence of sound promotion
policy.

The main characteristics of a good promotion policy are as


follows:

 Policy statement: The sound promotion policy has a policy


statement. It is statement of the ratio of internal
promotions to external recruitment at each level, the
method and procedure of selection, and qualifications
desired.
Notes Compiled by Prof. V.S.Gopal

The policy statement must clearly state whether


vacancies are to be filled up primarily from within the
organization or by recruitment from outside.

 Basis of promotion: The basis of promotion must be clearly


specified. The weight age to seniority and merit must be
clearly stated. Ideally, an organization should try to strike a
balance between seniority, merit and future potential of the
employee.

 Promotion charts: A promotion charts conveys to the


employees the avenues of advancement available to them. In
a promotion chart each position is linked to several other
positions can be made.

 Communication of policy: The organization should


communicate its promotion policy in writing to the
employees and the unions. If the organization is secretive
about its promotion policies, employees will become
suspicious of the management’s intentions.

 Career planning: The promotion policy should be in line with


employee career planning. This will avoid sudden spurt
promotion followed by drought (long periods when there are
no opportunities for promotion.)

 Detailed records: A sound promotion policy ensures that


detailed records of employee service and performance are
maintained.
Notes Compiled by Prof. V.S.Gopal

 Employee training: The organization must prepare the


employees for promotion through suitable training on the
job or in professional institutions or through job rotation
and conferences.

 Consistency: The organization must be consistent in its


promotion policies. It should be applied uniformly regardless
of the person concerned.

PERFORMANCE APPRAISAL FORM

The Annual Appraisal Report of this leading PSU consists of


six parts:

Part 1 – Bio-data sheet

Part 2 – Business Dimensions (for officers in operations)

Part 3 – Performance Appraisal (for officers in administration)

Part 4- Additional Accomplishments / Outstanding


Achievements

Part 5 – Managerial Dimensions

Part 6 – Potential review


Notes Compiled by Prof. V.S.Gopal
Notes Compiled by Prof. V.S.Gopal
Notes Compiled by Prof. V.S.Gopal
Notes Compiled by Prof. V.S.Gopal