Human Resource Management

Term-1, A-4

Prof. Uma Sreedhar

OBJECTIVE
To prepare the students to understand the changing
environment and its implications for managing the human
resources to achieve competitive advantage and corporate
excellence.
To make the students understand the linkages between
corporate mission, vision, strategies, policies and human
resource management.
To help the students to understand the intricacies of
human resource management and acquire skills in
affectively managing human resources in what ever
functional areas of management they would be engaged

Best organisations succeed not

because of the people but
because they have right people

Context
People create excellence. They are the
real assets of an organisation. If treated
well, they can take organisations to
commanding heights. HR Managers need
to balance the aspirations of people with
organisational demands carefully.

Nature and Scope of

Human Resource Management
After reading this chapter, you should be able to

Understand the Nature, Scope and Objectives of HRM

Definition of HRM
Evolution of HRM
Difference between PM and HRM
HRM model

Function of HRM
Challenges faced by HR professionals

Meaning
HRM is a Process of bringing people and
organisations together so that the goals of
each are met.
To secure the best from people by winning
their whole hearted co-operation.
It is defined as the art of procuring,
developing and maintaining competent
workforce to achieve the goals of the
Organisation in an effective and efficient
manner

EVOLUTION OF HRM
The commodity concept : Labor considered as a commodity to
brought and sold.
The Factor of Production Concept : Better working conditions and
higher earning
The Paternalistic Concept : Collective Bargaining
Fatherly and Protective Attitude.
Welfare Schemes like Health and housing facilities,
Pension Plans Etc

The Humanitarian Concept : Social and Ethical Satisfaction,

Hawthorne Experiment
The Behavioral Human Resource Concept : Motivational and Group

Dynamics.
Resource : An Asset and an Opportunity

DIFFERENCE BETWEEN HRM AND PM

Dimensions

PM

HRM

1. Employment
Contract

Careful delineation of Aim to

written contracts
contract

go

beyond

2. Guide to
Management Action

Procedures

3. Behavior referent

Norms / Customs and Values/mission

practices

4. Key relations

Labor Management

Customer

5. Speed of Decision

Slow

Fast

6. Management Role

Transactional

Transformational
Leadership

7. Communication

Indirect

Direct

Business Needs

Dimensions

PM

HRM

8. Priced Management
skills

Negotiation

Facilitation

9. Selection

Separate marginal
tasks

Integrated key tasks

10. Pay

Job Evaluation (Fixed Performance Related

Grades)

11. Conditions

Separately negotiated

12. Labor
Management

Collective bargaining Individual contracts

contracts

13. Job categories

and Grades

Many

Few

14. Job Design

Division of Labor

Team Work

Harmonization

Dimensions

PM

HRM

15. Conflict Handling

Reached Temporary
truce

Manage climate and

culture

16. Training and

development

Controlled access to
courses

Learning companies

17. Focus of attention

for interventions

Personnel
Procedures

Wide ranging cultural.

Structural and
Personnel strategies

18. Respect for

Employees

Labor is treated as
tool which is
expendable and
replaceable

People are treated as

assets to be used for
the benefit of the
organization, its
employees and the
society as a whole.

19. Shared interests

Interest of the
organization are
uppermost

Mutuality of interests

20. Evolution

Precedes HRM

Latest in the
Evolution of the
subject

Definition
Human
Resource
Management
is
Planning, Organizing, Directing, and
Controlling
of
the
Procurement,
Development, Compensation, Integration,
Maintenance and Separation of Human
Resources to the end that individual
organizational and Social Objectives are
accomplished.

HRM model

Definition
Management
Function
Planning
Organizing
Directing
Controlling

Operative
Functions
Procurement
Development
Compensation
Integration
Maintenance
Separation

To Achieve
Individual
Functional
Organisational
Societal

Objectives are accomplished

HRM Trends in a Dynamic Environment

The job of an HR manager is to balance the
demands and expectations of the external
groups with internal needs and achieve the
assigned tasks in a an efficient way. The
internal environment (such as mission,
policies, culture, structure, etc.) also affects
the job of an HR manager. The HR manager
has to strike a happy balance between these
internal and external demands and emerge as
a winner.

Challenges faced by HR Professionals

Globalisation
Corporate Reorganisation
New Organisational forms
Changing demographics of workforce
Changing employee expectations
New Industrial Relations approach
Renewed focus on people
Managing the managers
Interests of the weaker sections of the society
Talent Management and
Employee Retention

CHAPTER: 2

HUMAN RESOURCE PLANNING

After reading this chapter, you will be able to

1. Define HRP
2. Identify the five steps involved in HRP
3. Identify the employee planning process, delineate
different stages in the process and describe each step.
4. Identify pre requisites for successful planning and list
the various barriers which render planning ineffective.

Human Resource Planning

Human Resource Planning aims at getting the
right number of qualified people into the
organisation at the right time. The process
involves assessing current human resources,
estimating the supplies and demand for labour
and matching demand with current supplies of
labour

The HRP Process

Manpower Planning Process - Corporate Analysis

(a). Objectives and Strategies
(b). Company Organization Plans
(c). Market forecasts and Budegets.
(d). Financial Plans
(e). Production Targets.
Demand Forecast

Manpower Gaps

Supply Forecast

(a). Numbers

(a). Surplus of Numbers

and skills

(a). Manpower Inventory

(b). Shortages

(c ).External Supply

(b). Job Categories

(c ). Skill requirements.

Manpower Plans
(a). Recruitment and Selection
(b). Training and Development
(c ). Redeployment/ Retrenchmant
(d). Redundancy
(e). Retention/ Internal Mobility
(f). Productivity

(b). Losses and addition

Calculating Manpower Requirements

1.

Manpower Demand
a.
b.
c.

2.

Manpower Supply
a.
b.
c.
d.

3.

Numbers required at the beginning of the year

Changes forecast during the year
Requirements at the end of the year [a+b]
Numbers available at the beginning of the year
Additions due to transfers and promotions
Losses due to separation, etc.
Numbers available at the end of the year
[a+b+c]

Requirements
a.
b.
c.

Deficit or Surplus (1-2)

Loss out of those recruited during the year
Additional numbers required during the year
[a+b]

Years
1 2 3 4 5

Importance of HRP:
It is to identify
1. Future Personnel needs.

2. Coping with changes in Technology, Markets, Products &

Government regulations.
3. These changes bring changes in job content, skill
demands, and number and type of personnel.
4. Creating Highly Talented Personnel.
Eg: Organisations perished because they were not able to
attract talented people
5. International Strategies, Expansion strategies depend
upon HRP

Importance of HRP:

(Contd)

6. Ability to fill key jobs with foreign nationals and the reassignment of employees from within or across national
borders is a major challenge facing international business.
7. Foundation for personnel functions: provides essential
information for designing and implementing personnel
functions such as Recruitment, Promotions, Transfers etc.
8. Increasing investments in HRP because it can increase
value (quality of workforce)

Other benefits:
1. Top Management can take better decision.
2. Better planning of assignment to develop managers can
be done.

Factors affecting HRP:

1. Type and Strategy of Organisation.

2. Organisational growth cycles and planning.

3. Environmental uncertainties.
4. Time horizons.
5. Type & quality of forecasting information.
6. Nature of Jobs being filled.

7. Off-loading the work

PROGRAMME PLANNING OPTIONS

Hire new full-time employees.
Offer incentives for postponing retirement.
Re-hire retired employees on part-time basis.
If a shortage of employees
is expected

Attempt to reduce turnover.

Bring in overtime for present staff.
Subcontract work to another company
Hire temporary employees.
Re-engineer to reduce needs
Do not replace employees who leave.
Offer incentives for early retirement.

If a surplus of employees is
expected

Transfer or re-assign excess employees.

Use slack time for employees training or
equipment maintenance.
Reduce work hours
Lay-off employees

CHAPTER: 3

JOB ANALYSIS AND DESIGN

After reading this chapter, you will be able to

1. Understand the nature of Job analysis and describe the

process of conducting job analysis.
2. Understand that the next logical step to job analysis is
job design and describe the factors which affect job
design.
3. Identify the various techniques of job design and
explain each of them.

Information Gathering
This step involves decisions on three issues viz;
1. What type of data is to be collected?
2. What methods are to be employed for data collection.
3. Who should collect the data?

Job Analysis
It involves the identification and precisely
identifying the required tasks, the knowledge and
the skills necessary for performing them and the
conditions under which they must be performed.
Job analysis is the process of studding and
collecting information relating to the operation and
responsibilities of a specific job.

USES OF JOB ANALYSIS

HRP

Recruitment & Selection

Training & Development
Job Description

Job Evaluation

Job Specification

Remuneration

Job Analysis

Performance Appraisal
Personnel Information
Safety and Health

METHODS OF COLLECTING JOB DATA

Observation

Interviews

Job

Check lists

Questionnaire

Data

Technical
Conference

Diary

Specimen of Job Description

Title
Code
Department
Summary

Compensation manager
HR/2310

Duties

Human Resource Department

Responsible for the design and
administration of employee
compensation programmes.

Working conditions
Report to

Conduct job analysis

Prepare job descriptions for
current and projected positions
Relate salary to the performance
of each employee Conduct
periodic salary surveys

Normal, Eight hours per day. Five

days a week
Director, Human Resource
Department

Job Specification
Education
Experience
Skill, Knowledge, Abilities

Work Orientation Factors

Age

MBA with specialisation in

HRM/MA in social work
A degree or diploma in
Labour Laws is desirable
At least 3 years experience in a
similar position in a large
manufacturing company
Skill in writing job descriptions,
in conducting job analysis
interviews, in making group
presentations.
Ability to conduct meetings, to
plan and priorities work.
The position may require upto
15 percent travel
Preferably below 30 years

STRATEGIC CHOICES
Strategic Choices

Gather Information
Uses of Job Description and Job Specification
Personnel Planning
Process Information

Performance Appraisal
Hiring
Training and Development

Job Description

Job Evaluation and Compensation

Health and Safety

Job Specification

Employee Discipline
Work Scheduling
Career Planning

Source: Adapted fro Personnel/Human Resource Management by Leap and Crino, p.121

Sources of Job data

Non-human Sources

Human Sources

Existing job descriptions and specifications

Job analysts

Equipment maintenance records

Job incumbents

Equipment design blueprints

Supervisors

Architectural blueprints of work area

Job experts

Films of employees working

Training manuals and other job training materials
Popular literature such as magazines and newspapers

Source: Cyntia D. Fisher, et. Al., Human Resource Management, Houghton Miffin, 1997, p. 140.

Types of Job Analysis information:

I.

Work Activities
A. Description of work activities (tasks)
1. How is a task performed?
2. Why is a task performed?
3. When is a task performed?
B. Interface with other jobs and equipment
C. Procedures used
D. Behaviours required on the jobs.
E. Physical movements and demands of the jobs.
Continued.

Types of Job Analysis information:

II. Machines, Tools, Equipment and Work Aids Used
A. List of machines, tools, etc. used
B. Materials processed with items
C. Products made with items
D. Services rendered with items
III. Job Context
A. Physical working conditions
1. Exposure to heat, dust, toxic substances
2. Indoor versus outdoor environment
B. Organisational context

Continued.

Types of Job Analysis information:

C. Social context
D. Work schedule
E. Incentives (financial and non-financial)
IV. Personal Requirements
A. Specific skills
B. Specific education and training
C. Work experience
D. Physical characteristics
E. Aptitudes
Source: Leap and Crino, Personnel/Human Resource Management, p. 127.

Job Design
Job design is an attempt to match the job
requirement, with the capabilities of the job holder.
Job Rotation, Job Enlargement & Job Enrichment
are techniques of Job Design.

JOB ENRICHMENT AND ITS OUTCOMES

Job Characteristics

Psychological Needs

Feedback

Knowledge of Results

Autonomy

Sense of Responsibility,
Self-control, self-esteem

Significance, Identity,
Skill, Variety

Meaningfulness,
Achievement, Variety

Source: Adapted from R.J.Hackman and G.R.Oldham, Work Redesign, p. 77.

Outcomes

Motivation,
Performance,
Satisfaction
with
Job,
Low
Absenteeism, Job
involvement

CHAPTER: 4

RECRUITMENT AND SELECTION

After reading this chapter, you will be able to

1. Understand the Nature, Objective and Importance of

Recruitment.
2. Factors governing recruitment.
3. Sources of Recruitment.
4. Definition of Selection.

5. Types of Interview
6. Barriers to Effective selection

Recruitment
Recruitment is the process of searching for
prospective employees and stimulating and
encouraging them to apply for jobs in an
organisation
Recruitment needs are of three types Planned
Anticipated and
Unexpected

Factors governing Recruitment

External forces

Internal forces

Supply and Demand

Recruitment Policy

Unemployment rate

HRP

Labour market

Size of the firm

Political and social

environment

Cost

Sons of soil

Image

Growth and expansion

Internal & External sources

Internal Sources

External Sources

Present employees

Professional or Trade
associations

Employee referral
Former employees

Ads in News papers, business

journals

Previous applicants

Blind Ads
Websites
Employment exchanges

Campus recruitment
Walk-in, write-in, talk-in
Consultants, Contractors

Displaced persons

Selection
Selection is the process of choosing the most
suitable persons out of all the applications.
Steps in the Selection Process

Induction/Orientation
Induction is the process of receiving and
welcoming an employee when we first join the
company and giving him the basic information he
needs, to settle down quickly and start work.

Socialization
Its a process through which a new recruit begins
to understand and accept the values, norms,
and beliefs held by others in the organization.

Assumptions in socialisation process:

1. Socialisation strongly influences employee
performance & organisational stability
2. New member suffer from anxiety-induced
stress
3. Environmental influence of socialisation
4. Employees adjust in similar ways

Strategies of socialisation
1.
2.
3.
4.

Formal or Informal
Individual or Group
Fixed or variable time period
Investiture or divestiture

Placement
Placement is the process of assigning a specific job
to each one of the selected candidates
Placement is the determination of the job to which
an accepted candidate is to be assigned, and his
assignment to that job

CHAPTER: 5
TRAINING AND DEVELOPMENT

Need for Training and Development

Training process
Identifying training needs
Principles of training
Executive development
Suitability of ED training
Methods of T&D
Career planning, Stages, Process & Development

Training and Development

Training is any process by which the aptitudes,
skills and abilities of employees to perform specific
jobs are increased. On the other hand, education
is the process of increasing the general knowledge
and understanding of employees.

 Education : is the understanding & interpretation of

knowledge
Training :

is the art of increasing the knowledge

and skill of an employee for doing a particular job

Development: covers those activities which improve
job performance, but also those which bring about
growth of performance help individuals in the
progress towards maturity actualisation of their

potential capacities

Need of training & development

To keep pace with:

a) Technological advances.
b) Organisational complexity
c) Organisational tenure
d) Human relations

 Training process
1.Determining the need &priorities for training
-organisational analysis
-operational analysis
-man analysis
2.Establishing of training goals.
3.Selecting trainees: 4 considerations
-legal requirements & formalities.
-employee needs & motivation.
-skills obsolescence & retraining.
-multi skilling(self managed teams)

4. Determining the curriculum & choosing training

methods
5. Formulating the budget
6. Selecting & training trainers
7. Presentation or application of selected
training
techniques
8. Performance or learning try out
9. evaluation of the training programs

Principles of training
1.
2.
3.
4.

5.
6.
7.
8.
9.

Clearly defined objectives

Determining training policy
Organised material
Understanding principles of learning
-trainee readiness
-trainee relevance
-reinforcement
Appropriate methods of training
Efficient trainers
Short learning session
Practising sessions
feedback

Executive Development
According to Flippo Management development
includes the process by which managers and
executives acquire not only skills and competency in
their present jobs but also capabilities for future
managerial task of increasing difficulty and scope

Executive Development
On-the-job Techniques

Off-the-job Techniques

Coaching

Lectures

Under study

Case Studies

Position Rotation

Group Discussions

Project Assignment

Conferences

Committees

Role Playing

Multiple Management

Management Games

Selected Readings

In basket Exercise
Sensitivity Training
Programmed Instruction

Suitability of executive development

techniques
Understudy

Job rotation
Committee/
multiple mgmt
Lectures
Case study

- To develop conpetent succesors to senior

executives
- To broaden outlook and to create diversified
skills in an executive
- To provide knowledge and skills in different
functional areas
- To provide conceptual knowledge in a short
period to a large number of persons
- To develop analytical and decision making
skills

 Role playing
Inbasket exercise
Mgmt games
Sensitivity training
conference

-to develop negotiating and selling

skills
- to develop situational judgement and
social sensitivity
- to develop quick thinking, organising
ability and leadership skills
- to develop awareness of self and its
impact on others
- To improve attitudes and behaviour

Comparative value of different methods

Explaining facts and

procedures, expounding
general principles

-Lectures, guided discussion

Developing analytical skills

& ability to ask oneself
questions

-Case method (incident

process)

Developing awareness of
oneself & ones impact on
others

-Sensitivity training (T-groups)

role playing

 Carry over from class to the

job

-Problem solving , conferences

(to a lesser extent: role play)

Inducing change in behavior

-Role playing, Problem

solving , conferences , Tgroups

Oppurtunity for emotional

catharsis

-T-groups, Problem solving

conferences

Insuring good training with

unskilled trainers

-Lectures, incident process

Training and Development Method

On the job method

On the job method

On specific job Job rotation

Experience

Coaching

Special courses
And lectures

Special Projects
nd task forces

Under Study
Programme

Conferences

Vestibule
training

Commitees
and junior
Boards

Computer
modeling

Case Studies
role

Simulation
playing

Sensitivity
training

Types of Training
1.
2.
3.
4.
5.

Orientation training
Job training
Promotional training
Refresher training
Remedial training

Career Planning
Career is a sequence of positions held by
a person during the course of a life time.
Career Stages
Exploration
Establishment
Mid career
Late career
Decline

Career Planning Process

Career Development

CHAPTER: 6

WAGE AND SALARY ADMINISTRATION

Job Evaluation
Wage, Salary, Compensation

Factors affecting wages and salary

Types of Fringe benefits

Job Evaluation
Aims at finding the relative worth of a Job.
Methods of Job Evaluation

Methods of Job Evaluation

There are Analytical and Non Analytical methods of Job
Evaluation
Analytical Method

1. Point ranking method and

2. Factor comparison method

Non Analytical Method

1. Ranking method
2. Job grading method

Wage and Salary Administration

The main objective of salary Administration are to design
a cost effective pay structure that will attract, motivate
and retain competent employees and that will also be
viewed as fair by these employees. Apart from meeting
legal requirements, organization have to take care of
ever rising employee expectations and competitive
pressures while designing an effective compensation
plan

In this session.

Evolution of Wages & Salaries

Concepts of Wages and Salaries
3 premises of Wages
Different types of Wages
Factors affecting Wages & Salaries
Labour Laws
Calculations of Wages
Theory of Wages
Pay structure

Living Standards in India.

Increasing middle class from 250 mn to 300 mn.

1 mn new mobile subscriptions every month
10,000 motor cycles purchased everyday
Banks are making 15 bn a year in home loans
Average purchase of clothes by a middle class
accounts to Rs 4,000/- every month
40.26% of household have television in 2003, as
compared to 31.60 % in 2001
In India, the salary level of employee increases every
year by 20%.
*Source:- Oct 23, 2003 New York Times

Evolution of Wages and Salaries

Phase I

Phase II

Phase III

Phase IV

Basic definitions
Compensation: Consideration for which labour is
exchanged. Wages & Salaries are compensation paid in
form of cash. It consists of Bonus, Allowance, OT, social
security payment benefits etc.

Wages: are compensation. This includes basic wages,

allowances, bonuses. A cost of production in the view of
employers. Paid to labours who are
involved in production or commercial activities.
Salaries: Compensation paid to indirect labour involves
supervisors, managers & supporting staffs. Salaries are
mostly in the form of time rate, mostly on monthly basis.

Basic definitionscontd
Wage rate: Rate of wage of a worker per unit time.
This does not include any allowance or bonuses or
over-time payment etc.
Wage Scale: Wage scale is listing of standard wage
rate in a proper sequence, according to the size of
rate.

Three premises of Wage

Internal Equity:
More difficult jobs are paid more
External Equity:
Jobs are fairly compensated in comparison to similar
jobs in the labour market.
Individual Equity:
Equal pay for equal work

Different types of Wages

Minimum Wage: wage level fixed by the government
which it considers adequate taking into account the cost
of living.
Living Wage: Government defines Living Wage is one
which should enable the earner to provide himself and
his family not only the bare essentials of food, clothing
and shelter, but also comfort, education, protection
against ill health etc
Fair Wage: Fixed by employer. It is a wage above the
minimum wage and below the living wage.
Real Wage: Expressed in terms of goods and services
which can be purchased by dividing nominal wages by
CPI.

Factors affecting Wage and Salary

External Factors:
Government Legislations
Market Rate

Labour supply and demand

Cost of Living
Labour Unions

Factors affecting Wage and Salary

Internal Factors:
Ability to pay
Job Evaluation & PA
The Employee
Age, Qualifications, Promotions, Hazards
involved in the job, Industry involved in the job

Government Legislations
Minimum Wages Act, 1948
Minimum wages to certain sweated and
unorganized sectors covered in the act.
Can be fixed by hour, day, month or any
other longer period.
Subjected to be revised every 5 years.

Government Legislations
The Payment of Wages Act, 1936
Regular payment without any unauthorised deductions to
persons who are employed in any industrial establishment or
factory or railway or by a railway contractor whose monthly
wages are less than Rs 1600/ Permissible deductions to be made from the employees
salary:
Fine
Deductions for absence
Deductions for loss of goods entrusted to worker
House given by employer
Services provided by employer
Advance provided by employer
PF, Insurance etc.

Government Legislations
Payment of Bonus Act, 1945
The important provisions of of the Act are:
60% of the surplus (67% of incase of foreign
companies) should be allocated for the payment
of Bonus.
Salary for the purpose of bonus means Basic
pay+DA
Employees drawing up to Rs 2500/- are eligible
for bonus.
Employees dismissed of fraud, theft are
disqualified for bonus
Minimum of 8.33% or maximum of 20% bonus is
given

Methods of Wage payment

Time Wage System:

Workers are paid on the basis of the time spent on the work
irrespective of the amount of work done. The basis of time
may be hour, day, week or month.

Differential piece rate system:

In this system, the rater per piece is increased, as the
output level is increased. Increase in rates may be
proportionate to increase in output.

Theory of Wages
Subsistence theory:
Propounded by David Ricardo
Proposes the labourers are paid to enable
them to subsist and perpetuate the race without
increase or diminution
Also known as Iron Law of Wages
Wage Fund theory:
Propounded by Adam Smith
Wage level is a function of surplus available.
Higher the fund, higher the pay, Lower the
fund, Lower the pay
Focus on employer and his capacity to pay

Theory of Wages
Residual Claimant Theory:
Propounded by Francis A. Walker
Land, labour, Capital & entrepreneurship add
value to the product.
Revenue earned is first distributed to land,
capital and entrepreneurship and the remaining
was paid to labour.
Marginal Productivity theory:
Propounded by Phillips Henry Wicksteed and
John Bates Clark
Wage determined by the labour market.
Employer continues to employ as long as the
value addition by the marginal work is more
than the cost.

Pay structure

Basic Pay:
is the basic wage decided with the criteria the skills,
experience needed, difficulty (both physical and
mental) involved, training need, responsibilities
involved and hazardous nature of the job.
Dearness Allowance (DA):
is paid to employees in order to enable them to face
the increasing dearness of essential commodities.
When prices go down DA can always be cut down to
size.

Fringe Benefits
Refers to the extra benefits paid by the
employers.
They are the
compensation.

supplementary

It is paid to all the employees.

form

of

Types of Fringe Benefits

Payment for Time not worked

Hours of Work
Paid Holidays
Shift Premium

Holiday Pay
Paid Vacation
Employee Security

Retrenchment Compensation
Lay Off compensation

Types of Fringe Benefits

Safety and Health

Safety measures
Workmens compensation
Health benefits

Welfare Recreational Facilities

Canteen
Housing

Counseling
Holiday Home
Education facilities

Transportation

Types of Fringe Benefits

Old age retirement benefits

PF
Gratuity

Medical benefits
Pension
ESI

Are Wages and Salaries used

as an advantage by the
organisations?

Facts and Figures

60% of employees consider an organisation good to
work on the basis of their pay scale offered.
80% of the organisation say that their main
advantage is the pay scale.
The benefits and incentives constitute nearly 40 % of
the money earned by an employee
Source: BT-ORG-MARG Survey 2002

References

Personnel Management & Industrial Relations

by Latha Nair & N G Nair
Dynamic Personnel Administration
by Prof. M N Rudrabasavaraj

www.nytimes.com

Difference between Wage and Salary

Wage : The amount paid by the employer for the
services of hourly, daily, weekly fortnightly employees
(ILO).
Salary : Remuneration paid to the clerical and
management personal employed on a monthly or yearly
basis (White Collar Employees).

CHAPTER: 7

PERFORMANCE APPRAISAL
Definition
Problems of Performance Appraisal
Methods

Performance Appraisal
PA is the process of assessing the performance
and progress of an employee or of a group of
employees and his potential for future
development.
According to Flippo, PA is a systematic, periodic
and an impartial rating of an employees
excellence in matters pertaining to his present job
and his potential for a better job

Performance Appraisal Process

PERFORMANCE APPRAISAL

My Company pays for performance. Unfortunately, no one

here knows how to measure it,
---- Anonymous
PA is the Process of assessing the performance and progress
of an employee or of a group of employees and his potential
for future development.
According to Flippo, PA is a systematic, periodic and an
impartial rating of an employees excellence in matters
pertaining to his present job and his potential for a better job.

The Process of Performance Appraisal

Problems in PA:
1. Errors in Rating:
(a)

Halo Effect

(b)

Stereotyping

(c)

Central Tendency

(d)

Constant Error

(e)

Personal Bias

(f)

Spill Over Effect

2. Lack of Reliability
3. Incompetence

4. Negative Approach
5. Multiple Objectives.
6. Resistance
7. Lack of Knowledge

Essentials of an Effective
Performance Appraisal System
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Mutual Trust
Clear Objectives
Standardisation
Training
Job Relatedness
Documentation
Feedback and Participation
Individual Differences
Post Appraisal Interview
Review and Appeal

Behaviourally Anchored Rating Scales

(BARS)
This method combines graphic scales with critical incidents
method.
BARS are descriptions of various degrees of
behaviour relating to specific performance dimensions. The
steps involved in constructing BARS are as follows:
(a) Identify Critical Incidents
Job holders/ supervisors describe specific eg. Of both
effective / ineffective job behaviours.
(b) Select Performance Dimensions
The behavioral incidents are clustered into smaller set
(usually 5 to 10) of performance dimensions.

(c) Retranslate the Incidents

Another group of persons assign each incident to the
dimension that it best describes. Incidents for which there is
less than 75% agreement with the first group are not
retranslated.
(d) Assign Scales to Incidents
Rate each incident on 7-9 point scale. Rating is done on the
basis of how well the behaviour described in the incident
represents performance on the appropriate dimensions. S.D
1.5 < on the seven point scale are included in the final
anchored scales.

(e) Develop Final Instrument

One Scale per dimension

APPRAISAL BY RESULTS OR MBO

Developed by PETER DRUCKER in 1954
Also Known as work planning and review or goal setting
approach to appraisal.
MBO is defined as a process whereby the superior and
subordinate managers of an organisation jointly identify its
common goals, define each individuals major areas of
responsibility in terms of results expected of him and use
these measures as guides for operating the unit and
assessing the contributions of each of its members.

MBO Process
1) Set Organisational goals
Goals of the organisation in key areas of performance are laid
down. Goals are defined in clear, precise and measurable terms.
Analysis of internal and external environment of the organisation is
made to set these goals.
2) Defining Performance Targets
Performance standards for each employee are defined.
Responsibilities based on org. charts and job descriptions. Each
subordinate writes down his own performance goals which are
work related and career oriented. Managers also writes down and
discuss them reach an agreement and put the agreed goals in
writing.
Employees at all levels are actively involved in goal setting.

3) Performance Reviews
Frequent performance reviews held and progress is assessed,
weaknesses and constraints are identified.

4) Feedback
Feedback on performance is communicated to the employee so
that he can regulate and improve upon his own performance.
Rewards are decided and new goals and targets are determined
for the next period.

Advantages of MBO
1. Ends-means Chain
Makes goals more explicit & focuses attention on key result
areas.

2. Role Clarity
Helps to avoid role ambiguity & role conflict.
3. Objective appraisal
Objective criteria for evaluating performance.

4. Motivation & Commitment

Active participation helps to satisfy ego & self
actualisation needs. Job satisfaction & morale tends to
be high because of close linkage between individual &
organisational goals .
5. Management Development
Continuous feedback & opportunities for self control
help to develop leadership potential of executives.

6. Coordination
Harmony between objectives at different levels
provided a sense of common direction to all.

Limitations of MBO
Difficulty in goal setting
Managers may ignore qualitative goals. Short Term
measure may override Long Term measure. Blue collar
workers are often unable to set their job goals.

Problems of understanding

Participation may need to tug of war where subordinate

tries to set lower targets & superior insists on higher
targets.

Lack of Understanding
Lack of top management support & hasty implementation
may also cause failure.

Time Consuming & Expensive

A Manager may become so engrossed in performing

assigned activities that he looses the sight of the goal.
This is called the activity trap.

Appraisal Interview
In this Interview feed back on performance is provided. The
rater explains his ratings to the employee and traits taken into
consideration for appraisal.
1. Tell & Sell Interview
The purposes of this interview are
a) To let the employee know how well he is doing.
b) To gain the employees acceptance of the evaluation.
c) To draw up a plan of improvement for him.
2. Tell & Listen Interview

To communicate the appraisal to the employee & Listen

sympathetically to his reactions.
3. Problem Solving Interview

The aim is not appraisal but development of an employee.

Appraisal of Potential
Appraising potential is different from assessing
performance.
Potential refers to the abilities
present but not currently utilised.
It can be
judged by
a) Reviewing Present Performance
b) Analysing Personality Traits
c) Relooking at Past Experience
d) Considering Agent Qualification
e) Explaining unused knowledge of & skills of an
employee

CHAPTER: 8

COLLECTIVE
BARGAINING,
HEALTH &
SAFETY AND
STRATEGIC
HRM

Agenda
Meaning and Features
Objectives and Types of Bargaining
Process of Collective Bargaining
Collective Bargaining in India
Conditions for Effective Bargaining
Industrial Dispute

MEANING
Its a method by which
trade unions strive
protect and improve
working conditions of
workers.

the
to
the
the

The ongoing process of

negotiation
between
representatives of the
workers and employers to
establish the conditions of
employment.

FEATURES

Collective
Strength
Voluntary
Continuous

Dynamic
Power
Relationship
Representation
Flexible

1. Collective
In 2 ways:

Workers collectively bargain

Workers and management jointly arrive at a

solution

2. Strength
Both parties bargain from a position of equal
strength.

3. Voluntary
Both the parties come to negotiating table
voluntarily for resolving several troubling issues.

4. Continuous
It does not commence with negotiations and end
up with an agreement only, it also includes
implementation of the agreement and further

negotiations.

5.

Dynamic
The way agreements are arrived at, the way they are
implemented, the mental make-up of parties involved
keeps changing.

6.

Power relationship
Management tries to retain its control on workplace
matters and unions attempt to strengthen their hold
over workers without any dilution of their powers.

7. Representation
Employers carries out negotiation with the
representatives of unions.
8. Flexible
It has sufficient flexibility because no party can
afford to be inflexible and rigid in such
situation.It is not a one way street but a give and
take process

OBJECTIVES
To settle disputes/conflicts
To protect the interests of workers
To resolve the differences between workers
and management
To avoid third party intervention

TYPES
Conjunctive/Distributive Bargaining
Cooperative Bargaining

Productivity Bargaining
Composite Bargaining

PROCESS OF COLLECTIVE BARGAINING

Identification of the problem

Preparing for negotiations
Negotiation of agreement
Implementation of contract

Vs
Collective Bargaining

Negotiation Skills

1. Regulation of terms and

conditions of employment
of workers between their
bargaining agent and
employers.

Settlement of disputes
between two or more parties
wherein all modify their
demands to achieve an
acceptable compromise.

2. It is a kind of rule making

exercise.

It is a deliberate, explicit
event.

Collective bargaining in India

Roots in Great Britain created by Industrial
Revolution
Trade unions came to India in 1990s
Grew at par with the growth of trade unionism

INDUSTRY

COMMITTEES

Engineering

CII

SAIL
TISCO

240 Trade Union

Federations
1 Trade union

Railways, Post,Telegraph

Pay Commission Awards

Coal, Steel, Ports, Docks

Joint Coordination
Committees
Wage boards

Media, sugar

Cement

Cement Industry
Arbitration

Causes for the limited success of CB

in India
Problems with the unions
Legal problems

Political interference
Attitude of management

Conditions Essential For Effective

Bargaining
Unanimity among workers

Strength of both the parties

Attitude of the parties
Representative authority

Suggestions for Effective

Implementation

Unions should be made strong

Inference of political leaders should be avoided

Govt. should make effort
Management should develop positive attitude

Recommendation of National
Commission

Govt. intervention to be reduced

Trade unions to be strengthened

Legal provision should be made

Contd.
Workers should be made conscious about their
rights
One union for one plant or industry
Govt. policy should be declared

INDUSTRIAL DISPUTE
It means any dispute or difference between
employers between employers and workmen and
between workmen and workman, which is
connected with employment or non-employment or
terms of employment or with conditions of labour
of any person.

HUMAN RESOURCE INFORMATION

SYSTEM
A human resource information system (HRIS) is
a systematic procedure for collecting, storing,
maintaining, retrieving and validating data
needed by an organisation about its human
resources.

HRP & Analysis

Org charts
Staffing Projections
Skills Inventories

Employee and
Labor Relations

Health, Safety
and Security

W&S
Administration

Job Analysis

HRIS

Equal
Employment
Opportunity

Staffing

HRD & Career

and Succession
Planning

HEALTH AND SAFETY

Health is a state of complete physical, mental
and social well being of an individual and not
merely the absence of illness.
What is Safety?
Safety means freedom from the occurance or
risk of injury or loss Industrial safety refers to
the protection of workers from the danger of
industrial accidents..

An accident is an unplanned and uncontrolled

event in which an action or reaction of an object,
substance, person or a radiation results in
personal injury.
Types of Accidents

1. Internal or External Injury

2. Major or Minor Injury

3. Fatal or Disability

Accidents

Internal

External

Major

Minor

Fatal

Disability

Temporary

Permanent

Partial

Total

Partial

Total

Safety Process
Strategic
Choices

Development of
Safety Policy

Organisation
of Safety

Strategic
Choices

Development of
Safety Policy

Organisation
of Safety

Significance of Industrial Health

To maintain and improve productivity and quality

of work..

To minimise absenteeism and labour turnover.

To reduce industrial unrest, indiscipline and

accidents.

To improve employee motivation and morale.

To reduce spoilage and cost of operations.

To preserve the physical and mental health of

employees.

Working conditions affecting health

Cleanliness.

Lighting.

Temperature and Ventilation

Freedom From Noise

Dust Control

Working Space and Seating Arrangement.

STRATEGIC HRM
A Strategy is a way of doing something It usually
includes the formulation of a goal and set of action
plans for accomplishment of that goal. It is a
process of formulating, implementing and
evaluating business strategies to achieve
organisational objectives.
It is a set of managerial decisions and actions that
determine the long-term performance of a
corporation. It includes environmental scanning,
strategy formulation, strategy implementation and
evaluation and control.

Steps involved in Strategic Management

Analyse the opportunities and threats or

constraints that exist in the external
environment.

Formulate strategies that will match the

organisations strengths and weaknesses with
the environmental threats and opportunities.

Implement the strategies.

Evaluate and control activities to ensure that the

organisations objectives are achieved.

Strategic Management Process

Environmental
Scanning

External

Strategy
Formulation

Evaluation and
Control

Programmes
Budget
Procedures

Strategic
Control
Process and
Performance

Corporate Strategy
Formulation
Business Unit
Strategy Formulation

Internal

Strategy
Implementation

Functional Strategy
Formulation

Corporate level strategies

1. Growth strategies
(a) Internal growth
(c) Horizontal related
diversification
(e) Vertical integration of
related businesses
(g) Mergers

(b) Horizontal integration

(d) Conglomerate
diversification
(f) Vertical integration of
unrelated businesses

2. Stability strategies
3. Retrenchment strategies
(a) Turnaround

(c) Liquidation

(b) Divestment

Strategy Formulation
Strategies are formulated at three levels:

Corporate level,

Business unit level, and

Functional level

CHAPTER: 9
ETHICAL ISSUES IN HRM &
HUMAN RESOURCE AUDIT

Ethical Issues in HRM

Ethics refers to a system of moral principles a
sense of right and wrong, and goodness and
badness of actions and the motives and
consequences of these actions.

Ethical Issues in HRM

Cash and
Incentive plans

Performance
appraisal

Race and
disability

Ethical
Issues

Employment
issues

Privacy
issues

Safety and
health

Restructuring
And layoffs

Human Resource Audit

An HR audit is a tool for evaluating the personnel
activities of an organization. The audit may
include one division or an entire company. It
gives feedback about the HR functions to
operating managers and HR specialists.
The audit is an overall quality control check on
HR activities in a division or company and an
evaluation of how these activities support the
organizations strategy.

Benefits of HRM audit

Identification of the contributions of the HR

department to the organization
Improvement of the professional image of the HR
department.
Encouragement of greater responsibility and
professionalism among members of the HR
department
Clarification of the HR departments duties and
responsibilities,
Simulation of uniformity of HR policies and practices
Finding critical personnel problems
Ensuring timely compliance with legal requirements

Questions & Answers

Thank You