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Ready Reckoner - HRM

IM 13

IM 13

BY: Awesome Eightsome

1. HRM
Recruiting, screening, training, rewarding, and appraising Primary objective of this department is to ensure that the organization has the required number of people, equipped with adequate skills, to manage business. This department formulates policies related to selection, compensation, welfare, etc., in the organization. Size and structure of the department depends on the total number of employees, technology, nature of business, etc. Optimum utilization of potential of people enhances organizational effectiveness. Human resource practices influence employee behaviours like performance, retention, and involvement etc. which in turn influence indicators of organizational effectiveness like customer satisfaction, profitability etc. Some expectations of organizations are given below:

1. All employees should have high commitment to vision and goals of organization. 2. They should value customers. 3. They should continuously learn new ideas and concepts and apply them for the benefit of organization 4. They should continuously improve their job performance and achieve higher business targets Four stages in development of human resources strategy as given below: 1. Personnel Perspectives: This is the conventional view of human resource practices. The concern of the organization is to hire the required number of people, take care of industrial relations, and fulfill statutory obligation. 2. Compensation: The objectives of HR practices is to ensure satisfaction of employees and provide financial incentives for improving productivity. In this approach, the company recognizes people as a vital resource for achieving goals of the organization. 3. Aligning Perspectives: The organization looks at the employees as the assets and change agents. HR department is expected to align appraisal, reward, training and development with change management. 4. High Performance Perspectives: The organization looks at HR as a component of business strategy, having linkage with mission and strategy of the organization. HR activities are viewed as adding values to the business. The objective here is to bring the business strategy of the organization, HR practices and business performance into alignment. HR Metrics Absence Rate Cost per Hire Health Care Costs per Employee HR Expense Factor Human Capital ROI Human Capital Value Added


Revenue Factor Time to fill Training Investment Factor Turnover Costs Turnover Rate Workers Compensation Cost per Employee The HR Scorecard Shows the quantitative standards, or metrics the firm uses to measure HR activities. Measures the employee behaviors resulting from these activities. Measures the strategically relevant organizational outcomes of those employee behaviors.

2. Scientific Selection Process :

Fresh manpower is required because of the following reasons : 1. 2. 3. 4. 5. Retirement Resignation Voluntary Retirement Promotion Growth in business

Scientific selection process can start after accurate manpower planning. Manpower planning is the process-including forecasting, developing, and controlling by which a firm ensures that it has the right number of people and the right kind of people at the right places at the right time doing work for which they are economically most useful. Manpower planning will give precise requirement about number of executives/workers who should be hired. Thereafter job descriptions for the concerned positions should be prepared, giving details about activities, which the employees will be performing once they join the organization. It is well known that executives require three kinds of skill, namely, conceptual, human and technical. Hence, job specifications should be prepared keeping these skills in mind. A job specification gives an accurate profile of the kind of person who is suitable for a given position. Once the job description and job specification are ready, selection process can be initiated by the HRD department.Blum & Nylor (1968) proposed a selection model having the following steps: 1. Job description for the given position should be prepared. The job description provides details of activities, major duties and responsibilities of the incumbent of a given position 2. Criterion variable and predictor variable for the position should be identified. Criterion variable refers to performance criterion, e.g., sales volume in a month for the job of the salesman. Predictor variable refers to selection tools and techniques which can predict performance in any organization, e.g., a typing speed test for a typist. 3. Measurement should be done on criterion and predictor variable.


4. A correlation between predictor and criterion variable should be calculated. If any significant positive relationship is seen, predictor can be accepted. If the relationship is insignificant, an attempt should be made to identify different predictor and criterion. Selection model helps an organization in taking the following decisions: Hiring Promotions Transfers Determining training needs Career development/succession plans Terminations Layoffs

Example for selection Job Description Organization: A chemical company of medium size, with a turnover of 300 -400cr.

Position: G.M. (R&D) Major Responsibilities and Duties: 1. To develop new molecule processes, new products and new application of chemicals, and related by-products in line with company's objectives. 2. To optimize and continuously improve present processes. 3. To provide technical support to production group for commercialization of new products. 4. To assist marketing group and customers in handling their application problems. 5. Training and development of scientists/research personnel. 6. Procurement of chemicals for R&D lab. 7. Maintenance of R&D lab. 8. Ensuring confidentiality of all R&D activities like process improvements and new formulations. 9. To interface/coordinate with major R&D establishments in India abroad and explore possibility of subcontracting/buying new molecules/processes. Responsibility: He has overall responsibility of developing new products and new processes as per the needs of the market.

Job specification The candidate for above position should have the following profile: Education: Ph.D. in relevant field and 12 to 15 years of experience of working in a big chemical company. He will be expected to develop new products and manage a team of scientists/executives. Selection Process Selection for the above position should be done in the following way Inviting applications through advertisement or placement agencies Screening of candidates to fulfill education and experience criteria Assessment of technical competencies by experts involving the head of manufacturing, and two scientists (internal or external) having expertise in the relevant field Assessment of human skills through interview and psychological testing For a position as senior as that of a General Manager, the following personality dimensions should be investigated: 1. Need for affiliation 2. Creativity and innovation 3. Proactive attitude 4. Locus of control Today, valid and reliable psychological tests are available for assessment of these dimensions. How is Selection model used for improving selection process? Pay more attention to personality assessment of candidates. This deficiency can be minimized by rigorous personality assessment using psychological tests. Companies generally select people by using the interview method. Assessment of the candidate can be improved by repeating the interview twice-thrice. Thus interviewers can get more information about the personality of the employee by repeat interviews Companies rely on internal expertise for conducting interviews. Senior executives can comfortably assess whether a given employee has the required knowledge and skill at the lower level. When a company is selecting people at higher levels, it should involve experts from other organizations also. Outside experts can be from similar industry or from a different industry.


Preference for doing a job may change after sometime. After a while, an employee may prefer to do a different kind of job, because he might have developed additional skills, the selection system should consider this kind of possibility. Personality assessment has to be very specific according to requirements of the job. Company should examine following dimensions for all executives: Proactiveness Participative approach Learning orientation

Every organization uses a number of assessment techniques like written test, group discussion, interview and psychological tests etc. It is necessary to try and establish a relationship between scores of the candidates on these tests, and their on-the-job performance after one or two years. It is a common practice to conduct performance appraisal at the end of the year. Thereafter, HRD managers should study the correlation between performance appraisal rating and tests score at the time of selection. A positive correlation between tests score and performance score can indicate that tests are valid for predicting performance, and hence the selection process is giving the company the right kind of approach. Continuous review, modification and improvement of selection methods will ensure that the organization has people with the required competencies for managing the business. As employees spend more and more time in the organization, their characteristics are likely to change. Hence, company should assess competencies and changing attitudes/perceptions, and give feedback to employees to develop them further.

3. JOB Evaluation
It is scientific method of establishing the worth of a job relative to other jobs in the organization. Job evaluation is ultimately intended to develop a pay structure and decide on the rates or ranges of pay in the structure through internal comparisons and market pricing. Objectives: 1. Helps in Internal Transfers 2. Helps during Appraisals 3. Complex the job more is the remuneration given, hence we need to evaluate 4. For Defining Job Responsibilities. 5. Helps in deciding the pay Structure. Following methods are available for job evaluation: Ranking Method 1. It is a relatively old method of job evaluation. 2. Ranking is the process of comparing jobs with one another and arranging them in order of their importance and value to the organization. Jobs which are similar are clubbed under the

same ranking. In this way, all jobs are arranged in hierarchical order. 3. It is not an accurate method. Paired Comparison Method 1. It is a statistical technique used to provide a sophisticated method of job ranking. 2. This technique requires the comparison of each job separately with every other job. However, it does not provide any defined standards for judging the relative worth of a job. 3. It is difficult to compare one job with all other jobs in the company, for that would entail prior quantification. 4. Moreover, when the number of employees in an organization exceeds 25, it becomes an unbelievably cumbersome exercise. 5. Hence, it is not a convenient method for job evaluation. Factor Comparison Method 1. In this method, jobs are evaluated directly in currency value. A number of key jobs which are well established and assumed to be fairly priced are drawn from all levels of job hierarchy. 2. Thereafter a set of four to seven factors are chosen which can adequately describe all jobs. 3. Each factor is assigned a percentage figure representing its proportional importance in getting the job done. 4. Thereafter rate of pay for each benchmark job is broken down and distributed among key factors. Point Factor Rating System 1. Point factor rating method is a very popular method of job evaluation, and is used by most of the companies in India and abroad. 2. A number of job factors are selected and defined, for example, knowledge, skill, accountability etc. These are considered to be common to all jobs in the organization. 3. It is believed that the different levels at which they are present in jobs will indicate that jobs criticality and its relative value. 4. The levels or degrees to which each factor can be present in the organization's job are defined Point factor method is useful because of the following reasons: 1. This method is perceived to be more objective because it is analytical. 2. It is more acceptable and fair. 3. Point factor rating scheme provides evaluators with defined yardsticks which should help them to achieve some degree of consistency and objectivity in their judgment. 4. This method provides a rationale which helps in the design of graded pay structure. The following factors can be selected with respective weightages for assessment of relative worth of jobs of officers, executives and managers:


These factors have been selected because of the following reasons : 1. These three factors adequately describe a number of jobs which can be evaluated by the company. These factors can assess most of the components of jobs at officer/manager level. 2. A number of studies on job evaluation have considered these factors. 3. These factors are similar to the Hay Plan, which is another popular job evaluation Scheme.

Factors in Job Evaluation Plan : (Give some fart in exam ) A job evaluation plan is given below for a factory. Knowhow can be assessed by three criteria: 1. Knowledge & Skills 2. Interpersonal skills 3. Planning & organizing work. Problem solving involves the following three criteria: 1. Time span 2. Variety in job 3. Authority in taking decision. Accountability can be assessed by three criteria: 1. Impact 2. Span of control 3. Responsibility for customer care

4. Objectives of Performance Appraisal

An organization is a group of people who are trying to achieve a common goal. The common goal is achieved by collective effort of all employees who work in any organization across various locations. When a large number of people work together there should be a method to assess their contribution for the organization. Therefore, organizations use performance appraisal systems for scientifically assessing the performance of each employee and identifying their potential for development. From the organizational point of view, a performance appraisal system has three objectives: 1) Performance appraisal This particular facet helps in evaluating an employees past performance and the key result areas (KRAs) that he was able to achieve in the last appraisal period.

2) Performance monitoring Performance monitoring is a comparison of what was the employees performance as against the expected performance. 3) Development of a culture of high performance At the start of the appraisal period itself, the goals of an employee are set which results in higher performance of the employee due to clarity of objectives.

Need for Performance Appraisal 1) To provide systematic feedback to employees regarding their performance within a limited period of time. 2) Developing criteria for promotion and career development. 3) Counseling and development of managerial competency. 4) Help employees to overcome their weaknesses related to knowledge and skill and improving their strength, to enable them to improve their performance. 5) Generate adequate feedback and performance guidelines for improvement. 6) Help in creating a desirable culture within the organization. 7) Generate relevant and unbiased information about employees. 8) Communicating work expectations 9) Identifying training and developmental needs.


Conventional appraisal methods rely on judgment of immediate superior which has possibility of bias and error. In the last few years, an alternative approach to appraisal has evolved, i.e, 360 Degree appraisal. The objective of 3600 feedback system is to support people and encourage their continued development through use of high quality information from multiple sources of close interaction. Rationale: The developmental feedback concept (3600) proposes that those who are a part of employee circle of influence can facilitate that persons development. Ratings in 360 Degree Appraisal a) Supervisory rating: Though organizations are becoming flat and lean, supervisors have control over work life of employees. They decide the targets and evaluate employee performance against those targets. b) Peer ratings: In any organization, peers are a valuable source of information regarding performance of employees, because they work closely with each other and they are aware about the


knowledge levels and overall performance of the employees. As there is no power relationship between peers they tend to give honest and useful feedback about the employee. c) Subordinate ratings: Today it is accepted that subordinate evaluation represents a valid source of performance information. d) Self-rating: Though self-rating are likely to be biased because of leniency, social desirability, etc., self rating also forms an integrating component of 360 degree appraisal. As the objective of 360 degree feedback is developmental, self rating must, of necessity be considered, as without it, a developmental process may be difficult to start. Advantages In most cases, 360 degree feedback works as a supplement to conventional supervisory assessment. Executives are assessed on their job activities as well as the outcome they achieve through their job. It includes assessment of effort as well as result. Benefits of 360 degree appraisal for various stakeholders of the organization: 1. Customers get an opportunity for involvement in the assessment process. This can not only strengthen their relationship with the organization, but provide invaluable feedback from the vital viewpoint of the customer, who happens to be the point of the whole organizational exercise. 2. Employees come to know about assessment criteria for themselves and details about how they will be assessed on these criteria. 3. Supervisors get additional information and insight regarding performance of their subordinates. 4. Executives share their ideas regarding improvement in the organization. Organizations can get credible information to understand their strengths and weaknesses. Problems in implementation 1. When it is used for managing performance feedback, providers may avoid giving correct feedback fearing that it will have an adverse impact on a colleagues career. 2. Feedback providers may inflate ratings in the hope of positively impacting a colleagues career. 3. Feedback providers may be influenced by interpersonal relationships while making assessment.


Despite these problems, 360 degree appraisal is gaining popularity in multinational corporations in countries like US, UK, Canada, etc. Issues to be kept in mind while initiating this system: Culture and Maturity A company should assess its culture and the maturity of its people. If executives do not display the higher levels of maturity called for by this system, it may not work well. Another pre-requisite is that there should be a culture of openness and participation in the organization. Educate about 360 Before actually starting the exercise, company should educate its executives regarding details as well the nuances of 360 degree appraisal, to dispel any possible misgivings and to explain and how it will be utilized by the organization. Train for giving and receiving feedback There should be an attempt to train people on how to give feedback as called for by the system, as also how to receive feedback in the organization. Communicate Objectives As it has multiple applications like reward & recognition, career development, etc., the objectives of starting the exercise should be clearly communicated across the organization. Measurement method and meaning and definition of competencies should be explained to all executives.

Developing and implementing a 360 degree appraisal system is a very complex and time consuming exercise, not to undertaken lightly. It can be suitable for the organizations which have a culture characterized by transparency, high level of maturity of their executives, openness and trust. Many companies in India have not implemented this. Very few organizations have experimented with this system, as it is not very easy to implement in Indian conditions. Some general Techniques for Performance Appraisal:1. Graphic Rating Scale Method: Rate each trait mentioned on a scale. 2. Alternation Ranking Method: List all subordinates and rank them on that trait-best to worst. 3. Forced Distribution Method: Every one cannot get an excellent rating. Eg. Only 15% can be rated high performance. 4. Critical Incident Method: Supervisor keeps a record of undesirable incidents of each subordinates work related behavior. Thereafter supervisor and subordinate meet and discuss using specific incidents as example.

5. Paired Comparison Method The number of times an employee is rated better is added up

As compared to A B C D E


6. Errors in Performance Appraisal




Reasons for failure of performance appraisal The failure of the performance appraisal system in an organization can be linked to some of the following commonly observed deficiencies: 1. 2. 3. 4. 5. 6. Supervisor who is evaluating has two roles namely, judge and helper. Sometimes, there may be conflict between the two roles. Expectations of the supervisor and the subordinates regarding the job may be at variance. Interval between two appraisal programmes either too long or too short. Very few supervisors have the skill to constructively convey to an employee how to improve his performance. Sometimes, the supervisor does not find subordinate appraisal personally rewarding. Poor communication keeps employees in the dark about what is expected from them.

How to Avoid Appraisal Problems Learn and understand the potential problems, and the solutions for each. Use the right appraisal tool. Each tool has its own pros and cons. Train supervisors to reduce rating errors such as halo, leniency, and central tendency. Have raters compile positive and negative critical incidents as they occur.

7. Training Methods
The most common methods for imparting are as follows: On-the-job training (OJT) Having a person learn a job by actually doing the job. OJT methods Coaching or understudy Job rotation Special assignments Advantages Inexpensive Immediate feedback Apprenticeship training A structured process by which people become skilled workers through a combination of classroom instruction and on-the-job training. Informal learning The majority of what employees learn on the job they learn through informal means of performing their jobs on a daily basis. Job instruction training (JIT) Listing each jobs basic tasks, along with key points, in order to provide step-bystep training for employees.


Programmed instruction (PI) A systematic method for teaching job skills involving: Presenting questions or facts Allowing the person to respond Giving the learner immediate feedback on the accuracy of his or her answers Advantages Reduced training time Self-paced learning Immediate feedback Reduced risk of error for learner

Lecture method: It is universally popular and age-old method of teaching and training, and used by most training establishments. This method is very useful for communicating a number of concepts and ideas in a limited time to a fair number of participants. However, participants can experience boredom and monotony if the trainer does not provide any opportunity for interaction and discussion. This method is primarily suitable for technical programmes, which require details about principles and theories. It can be used for behavioural programmes also, but to a limited extent Case Study: The objective of the case study is to help the participant analyze a business problem as a simulation, and find likely solutions that she/he can implement. This method is suitable for developing analytical and decision making abilities. Business Game: Objective of the business game is to give an opportunity to work together. By using this method it is possible to make assessment about teamwork and leadership abilities of participants. Role Play: Role-play is useful to educate the participant how he should act in a crucial situation. In this method, the participants are given a specific role to play in front of the other participants and trainers. They are given feedback about the effectiveness of the way they have acted in a social situation. It is a dynamic simulation, and can be quite realistic and hence educative.

8. Role of training in managing business? Methods of identifying training needs for executives in any org?
An organizations main objective is to make profit by producing sought-after goods/services with a good degree of value addition. This process of value addition, achieved by people through optimisation of resources, means that capabilities of organizational personnel directly influence the quality of product/services etc. Organizations have to continuously change to achieve growth and survival, because on-going and planned change determines success in a dynamic and competitive environment. Today, training is a strategic tool for initiating change.


A strategic training system may be defined as a training system, which is designed primarily based on strategic plans and objectives of the organization Sethumadhavan (1997). Such a training system focuses on achieving business and corporate/individual goals. Training can be conceptualized as a system which interacts with other human resource systems like selection, reward & recognition performance appraisal, etc., on one hand and technology, manufacturing systems on the other. Stakeholders in training and their objectives

Stakeholders in Training Organization Training department Trainer Trainee/participants

Objectives/Interests Improvement results in organization/business

Competency development of people Effectiveness of training Multiple and diversified objectives

Training Need Analysis for Executives Training is an integral component of overall HR strategy of the company. Moreover proer training of company executives is highly important because they are the players in motivating people and in rampification of business processes. Hence it is very important that the training program for executives is properly planned so that it meets its requirements. It should be linked to business. Following issues should be analyzed before organizing training programmes. 1. Human resource goal identification - what are the expectations from the HR departments? 2. Situation diagnosis what is the present status of organizational culture, people, personnel programme? 3. What kind of people and competencies are required for managing business in the present and future? The objective of training need analysis is to identify gaps in areas of knowledge and skill, which should be fulfilled through suitable training programme. It helps in developing training modules and enables the trainers to conduct the training programmes successfully. Training need analysis is related to selection process of the organization. If the selection system is able to identify the fit between job and person, it will minimize the essential training needs of people. If selection system is not able to identify a suitable person for a given job, the company will have to spend more effort and time in developing the required knowledge and skills among the employees, and choose the best person for fitment in a particular job. Case of executives need analysis should be able to identify that whether a suitable executive is present in an organization to handle the job responsibilities.


Methods for Training Need Analysis Through performance appraisal: A popular method of training need analysis is identification through the analysis of job appraisals of executives by their seniors In some companies identification of training need is a component of the appraisal form itself. This helps in assessing the executive as well as indicate the nature of training, which will enable him to perform better in future. Many companies are practicing this method. It can be successful if appraisal is effective and the appraiser is aware about the knowledge and skills required for doing job. Training needs survey: When the organization has to identify the training needs for a large number of people, it should conduct a training needs survey. The survey process comprises the following steps: Understanding the business. Study of organization chart and manpower in different categories. Designing a questionnaire to capture training need of various categories of people including workers. Sampling and data collection. Analysis of survey data. Observation The major role of executives is to motivate their employees, making the process more efficient,improving overall productivity. A major decline in any of these parameters or a general dissatisfaction among the employees regarding their manager might be the right time to send an excutive for training. A major technological shift in business process can also require training of executives. Adaption to new environment Executives may need training when they are shifted to new business processes or regional or functional areas. This is to familiarize them with the processes and make them identify the major factors which play crucial role in that business environment.

9. Evaluation of Training
Evaluation of training is a systematic attempt to analyze the impact of training programs on knowledge, skills and attitudes of trainees. Systematic evaluation becomes inevitable if a company is seriously interested in knowing whether a training program is accomplishing its objectives. Evaluation of training can be useful in multiple ways: Provides feedback to the trainer, which can be useful in developing training skills. Evaluation will help in redesigning the content of the program. It can lead to redesigning the whole program. Today, most companies evaluate a program as soon as it is over. Such an attempt is useful, but it does not communicate anything about the participants future development, whether their

knowledge is increasing and whether they are performing differently on the job, and if they are taking initiative or not. Such questions remain unanswered by immediate evaluation of training. Therefore, it is essential to undertake long-term evaluation of the impact of training programs on the performance of an organizations human resources. Kirpatrick (1994) suggested a framework of evaluation with four levels of criteria, i.e., Reactions: refer to feelings experienced during the training program. Learning: includes changes in knowledge, skills, and attitudes of the trainee. Job behavior: examines to what extent trainees behave differently on their job because of the training program, to what extent trainees apply the concepts which they have learned during the training program. Results: Results include tangible outcomes of the program in terms of reduced costs, improved quality and quantity, etc. The model clearly defined evaluation as meaning "measuring changes in behavior that occur as a result of training programs." The model itself is composed of four Levels of training evaluation. The advantages to a Level Four evaluation are as follows:

Determine bottom line impact of training Tie business objectives and goals to training

A fifth level, ROI has been added as the brainchild of Dr. Jack J. Phillips.

Kirkpatrick alluded to ROI when he created level four linking training results to business results. However, over time the need to measure the dollar value impact of training became so important to corporations that a fifth level was added by Dr. Phillips. ROI calculations are being done by a few world-class training organizations. They help these organizations: Quantify the performance improvements Quantify the dollar value benefits Compute investment returns Make informed decisions based on quantified benefits, returns, and percent return comparisons between learning programs


In the area of training and development, studies on evaluation of training are limited in the Indian context. Seth (1984) conducted an independent analysis of the impact of training on personnel managers. His approach took cognizance of the belief and attitude of personnel managers based on the assumption that changes in ones belief system results in corresponding changes in the organization. It was emphasized that training without evaluation defeats the purpose of training. Sikkas (1985) study on training evaluation indicated that changes following training could be measured and evaluated. The findings indicated that participants experienced positive reaction after training. Long term evaluation of training requires that systematic records of training programs conducted, their content, names of the participants and names of the trainers should be maintained by HRD department. Long term evaluation of training should be conducted once in three-four years.