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Organisation theory and management
Ms. Neha Puri
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MODULE 5 Human Resource


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Concept of Human resource management
Functions of Human resource
Significance of Human Resource
Core Values of HRM
Strategic Role of Human Resource
Human Resource planning
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Performance Appraisal
Evaluating Human Resources

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1 Concept of human resource Management (HRM)

During and after 1970s, several changes took place in
many countries which led to the use of the term Human
Resource Management in the place of the traditional
term Personnel Management. These changes include
technological changes, declining importance of trade
unionism, shift from industrial employment to service
sector employment, growing competition, deregulation
and globalization of economies, etc. As a result, three
important roles of human resources have emerged have
emerged as stated below:
Human resource policies can be integrated with
strategic business planning and used to reinforce
appropriate (or change an inappropriate) culture.
Human resources are valuable and a source of
competitive advantage.

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Human resources can be tapped most effectively by

mutually consistent policies which promote
commitment and foster a willingness in employees to
act flexibly in the interests of the adaptive
organizations pursuit of excellence.
According to Dessler, Human resource management
is the process of acquiring, training, and compensating
employees, and attending to their labors relations,
health, safety and fairness concerns. Milkovich and
Boudreau have defined human resource management
as a series of integrated decisions that form the
employment relationship; their quality contributing to
the ability of the organization and the employees to
achieve their objectives. Human resource management
is basically concerned with creating good relationships
in the organization and development of people for
contributing to the organizational objectives.

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Human resource management is that part of

management process which develops and
manages the human element of the enterprise
considering their resourcefulness in term of total
knowledge, skills, creative abilities, talents,
aptitudes and potentialities for effectively
contributing to the organizational objectives.
Every individual working in an organization is a
part of its human resources. Hence, human
resource management strategies should be
designed keeping in view of the delicate nature
of the human element.
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HRM is concerned with a holistic approach

towards management of people working in an
Finance capital



Organizational Goals

Centrality of HR for organizational Goal Achievement
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Human Resource or Personnel Department is established
in most of the organizations, under the charge of an
executive known as Human Resource/Personnel
Manager. This department plays an important role in the
efficient management of human resources. The
personnel department gives assistance and provides
service to all other departments on personnel matters.
Though personal or human resource manager is a staff
officer in relation to other department of the enterprise, he
has a line authority to get orders executed within is
There are three categories of functions which the
personnel manager is expected to perform. These
include: (i) managerial, (ii) operative, and (iii) advisory
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Managerial Functions
The Human Resource Manager is a part of the organizational
management. So he must perform the basic managerial
functions of planning, organizing, directing and controlling in
relation to his department. These functions are briefly
discussed below:
Planning. To get things done the subordinates, a manager
must plan ahead. Planning is necessary to determine the
goals of the organization and lay down policies and
procedures to reach the goals. For a human resource
manager, planning means the determination of personnel
programs that will contribute to the goals of the enterprise,
i.e., anticipating vacancies, planning job requirements, job
descriptions and determination of the sources of recruitment.
The process of personnel planning involves three essential
steps. Firstly, a supply and demand forecast for each job
category is made. This step requires knowledge of both labour
market conditions and the strategic posture and goals of the
organization. Secondly, net shortage and excess of personnel
by job category are projected for a specific time horizon.
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Organizing. Once the human resource manager has

established objectives and developed plans and
programmes to reach them, he must design and develop
organization structure to carry out the various operations.
The organization structure basically includes the
Grouping of personnel activity logically into functions
or position;
Assignment of different functions to different
Delegation of authority according to the tasks assigned
and responsibilities involved;
Co-ordination of activities of different individuals

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Directing. The plans are to be put into effect by people. But

how smoothly the plans are implemented depends on the
motivation of people. The direction function of the personnel
manager involves encouraging people to work willingly and
effectively for the goals of the enterprise. In other words, the
direction function is meant to guide and motivate the people
to accomplish the personnel programmes. The personnel
manager can motivate the employees in an organization
through career panning, salary administration, ensuring
employee morale, developing cordial relationships and
provision of safety requirements and welfare of employees
The motivational function poses a great challenge for any
manager. The personnel manager must have the ability to
identify the needs of employees and the means and
methods to satisfy those needs. Motivation is a continuous
process a new needs and expectations emerge among
employees when old ones are satisfied.

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Operative Functions
The operative functions are those tasks or duties which
are specifically entrusted to the human resource or
personnel department. These are concerned with
employment, development, compensation, integration
and maintenance of personnel of the organization.
The operative functions of human resource or personnel
department are discussed below:
Employment. The first operative function of the human
resource or personnel department is the employment of
proper kind number of persons necessary to achieve the
objectives of the organization. This involves recruitment,
selection, placement, etc. of the personnel. Before these
processes are performed, it is better to determine the
manpower requirements both in terms of numbers and
quality of the personal.
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Development. Training and development of personnel

is a follow up of the employment function. It is duty of
management to train each employee properly to
develop technical skills for the job for which he has
been employed and also to develop him for the higher
jobs in the organization. Proper development of
personnel is necessary to increase their skills in doing
their jobs and in satisfying their growth need. For this
purpose, the personnel departments will device
appropriate training programmes. There are several
on-the-job and off-the-job methods available for
training purposes. A good training programme should
include a mixture of both types of methods. It is
important to point out that personnel department
arranges for training not only of new employees but
also of old employees to update their knowledge in the
use of latest techniques.

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Compensation. This function is concerned with the

determination of adequate and equitable remuneration
of the employees in the organization for their
contribution to the organizational goals. The personnel
can be compensated both in terms of monetary as well
as non-monetary rewards. Factors which must be
borne in mind while fixing the remuneration of
personnel are their basic needs, requirements of jobs,
legal provisions regarding minimum wages, capacity of
the organization to pay, wage level afforded by
competitors etc. for fixing the wage levels, the
personnel department can make use of certain
techniques like job evaluation and performance

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Maintenance (Working Conditions and

Welfare). Merely appointment and training of
people is not sufficient; they must be provided
with good working conditions so that they may
like their work and work-place and maintain
their efficiency. Working conditions certainly
influence the motivation and morale of the
employees. These include measures taken for
health, safety, and comfort of the work-force.
The personnel department also provides for
various welfare services which relate to the
physical and social well-being of the
employees. These may include provision of
cafeteria, rest rooms, counseling, group
insurance, education for children of
employees, recreational facilities, etc.

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Motivation. Employees work in the organization for

the satisfaction of their needs. In many of the cases, it
is found that they do not contribute towards the
organizational goals as much as they can. This
happens because employees are not adequately
motivated. The human resource manager helps the
various departmental managers to design a system of
financial and non-financial rewards to motivate the
Personnel Records. The human resource or
personnel department maintains the records of the
employees working in the enterprise. It keeps full
records of their training, achievements, transfer,
promotion, etc. it also preserves many other records
relating to the behavior of personnel like absenteeism
and labour turnover and the personnel programmes
and policies of the organization.

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Controlling. Controlling is concerned with the

regulation of activities in accordance with the plans,

which in turn have been formulated on the basis of the
objectives of the organization. Thus, controlling
completes the cycle and leads back to planning. It
involves the observation and comparison of results
with the standards and correction of deviations that
may occur. Controlling helps the personnel manager to
evaluate and control the performance of the personnel
department in terms of various operative functions. It
involves performance appraisal, critical examination of
personnel records and statistics and personnel audit.

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Industrial relations. These days, the

responsibility of maintaining good industrial
relations is mainly discharged by the human
resource manage. The human resource
manager can help in collective bargaining, joint
consultation and settlement of disputes, if the
need arises.The human resource manager can
do a great deal in maintaining industrial peace
in the organization as he is deeply associated
with various committees on discipline, labour
welfare, safety, grievance, etc.

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Separation. Since the first function of human

resource management is to procure the
employees, it is logical that the last should be
the separation and return of that person to
society. Most people do not die on the job. The
organization is responsible for meeting certain
requirements of due process in separation, as
well as assuring that the returned person is in as
good shape as possible. The personnel
manager has to ensure the release of retirement
benefits to the retiring personnel in time.
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Advisory Function
Human resource manager has specialized education
and training in managing human resources. He is an
expert in his area and so can give advice on matters
relating to human resources of the organization. He
offers his advice to:
Top Management. Personnel manager advises the top
management in formulation and evaluation of personnel
programmes, policies and procedures. He also gives
advice for achieving and maintaining good human
relations and high employee morale.
Departmental Heads. Personnel manager offers advice
to the heads of various departments on matters such as
manpower planning, job analysis and design, recruitment
and selection, placement, training, performance
appraisal, etc.
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Significance of Human Resource Management

HRM is very important to us for the following reasons:
1. Development and Growth of the organisation:
HRM paves way for development and growth in the
organisation. By improving the individual capabilities,
acquiring necessary cooperation and developing
teamwork HRM makes sure that the organization
develops and grows well. Goals of thee organization are
met by HRM by effective motivation and excellent
utilization of employees.
2. Creation of healthy culture in the Organization:
HRM creates and maintains excellent culture in the
organization and it makes people develop and grow.
3. Maintenance of Human Resources:
The development, care of Human Resources is done by
the HRM.
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4 Core Values of HRM:

The core values of HRM states that
1. Human beings are the crucial aspects of
every organization. The greater is the
commitment of the human resources the more
successful is the organization.
2. An individual is a whole person. He brings all
aspects of his personality, attitudes, traits and
behavior to the work place.
3. All people represent the organization. The
building, equipment and other resources are
productive only because they are being handled
by the hyper energic force of humans.
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4. People are different from each other. They

vary in abilities, nature, personality; religion etc.
people are also influenced by social economic
and environmental factors.
5. Human resources have to be acquired,
developed and motivated to give higher
performances and also must be retained.

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6. The success of an organization depends upon the

satisfaction of organizational needs and employees
needs. There are various levels of hierarchical levels in
an organisation. The people who manage (i.e., the
managers), and people who are at work (subordinates).
The effective coordination and commitment between
managers and subordinates is essential for
organizational success. Apart from that healthy relation
ships are to be maintained with consumers,
shareholders, entrepreneurs, governments and
7. Human relations enable people to work effectively in
an organization with other people in organization

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What are the emerging challenges of HRM? The world
order is changing dramatically and is in the process of
complete transformation. The impossible things of
yesterdays have become possible today and the
impossible things of today will become possible
tomorrow. That is why it is said that change is the only
permanent aspect of nature. The concept of selfsufficient nations is losing importance and the concept of
Global Village is emerging. Management of economics
and organizations is bound to cope up with the radical
transformation by developing new techniques and
practices in the global perspective after carefully
analyzing the real challenges being faced by the
professional managers.
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Modern organizations are faced with the following

environmental challenges:
Changing technology leading to obsolescence of present
skills and techniques;
Economic and industrial policy changes leading to tough
competition from multinational corporations;
Changing international environment insisting on free flow
of goods and services throughout the world;
Changing profile of workers, e.g., increased educational
level, rising share of women in the work force, increased
emphasis on fulfillment of psychological needs;
Changing needs and expectations of customers rending
the existing processes and products obsolete.

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What is the Strategic role of HRM? The

prominent areas where the human resources manager

can play strategic role are discussed below:
Providing Purposeful Direction
The human resource manager must be able to lead
people and the organization towards the desired
direction involving people right from the beginning. One
of the most important tasks of a professional manager is
to ensure that the mission of an organization has been
internalized by each individual working in the
organization. Mission of an organization states the very
purpose and justification of its existence.

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Building Core Competency

The human resource manager has a great role to play in
developing core competency by the firms. A core
competence is a unique strength of an organization which
may not be shared by others. This may be in the form of
human resources, marketing capability, or technological
capability. If the business is organized on the basis of
core competency, it is likely to generate competitive
advantage. Because of this reason, many organizations
have restructured their businesses by divesting those
businesses which do not match core competence or
acquiring those businesses which fit core competency
such as Ambuja acquiring cement companies and
Reliance Industries acquiring yarn companies
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. Creating Competitive Advantage

In todays globalised market place, maintaining a
competitive advantage is the foremost goal of any
business organization. There are two important ways a
business can achieve a competitive advantage. The first
is cost leadership which means the firm aims to become
the low-cost leader in the industry. The second
competitive strategy is differentiation under which the
firms seek to be unique in the industry in terms of
dimensions that are widely valued by the customers.
Putting these strategies into effect carries a heavy
premium on having a highly committed and competent
workforce. Such a workforce would enable the
organization to compete on the basis of market
responsiveness, product and service quality,
differentiated products and technological innovation.
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Facilitation of Change
The HR managers will be required to act as
change agents through greater involvement in
environmental scanning and development
planning. The HR function will become more
creative and less mechanistic. It will be more
concerned with substance rather than form,
accomplishments rather than activities, and
practice rather than theory. The personal function
will be responsible for furthering the organization
not just maintaining it. HR managers will have to
devote more time to promote changes than to
maintain the status quo.
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Managing Work Diversity

In modern organizations, management of diverse workforce is
a great challenge. Workforce diversity can be observed in
terms of male and female workers, young and old workers,
educated and uneducated workers, unskilled, skilled and
professional employees, etc. Moreover, many organizations
also have people of different castes, religion and nationalities.

Development of Work Ethics and Culture

The future personnel or HR managers will have to mobilize a
new work ethic so as to assist the line managers in setting up
and enforcing good quality standards. Greater focus will be on
project and team forms of organization. Greater efforts will be
needed to achieve group cohesiveness because workers will
have transient commitment to groups. As changing work ethic
requires increasing emphasis on individual, jobs will have to
be redesigned to provide challenge. Flexible starting and
quitting times for employees [flexi time] may be necessary.
Focus will shift from extrinsic to intrinsic motivation.

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Total Quality Management (TQM)

TQM is a dynamic process involving all levels in an
organization to promote never ending improvement in
the efficiency and effectiveness of all elements of a
business. Quality was earlier considered to be the
domain of shop-floor and nowadays has spread all over
the organization encompassing every conceivable
activity in the organization, with the customer at the
center of all thoughts, processes and decisions. The goal
of TQM is to mobilize the entire workforce in pursuits of
specific company goals with the primary aim of achieving
customer satisfaction with regard to quality, price, and
delivery and after sale service.
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Human Resource Planning is the process of anticipating
and carrying out the movement of people into, within, and
out of the organization. Human resources planning is done
to achieve the optimum use of human resources and to
have the correct number and types of employees needed to
meet organizational goals.
Thus, it is a double-edged weapon. If used properly, it leads
not only to proper utilization, but also reduces excessive
labor turnover and high absenteeism, and improves
It can also be defined as the task of assessing and
anticipating the skill, knowledge and labor time
requirements of the organization, and initiating action to
fulfill or source those requirements. Thus, if the
organization as a whole or one of its subsystem is not
performing to the benchmark, in other words, it is declining,
it may need to plan a reduction or redeploys its existing
labor force.
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Significance of Human Resource Planning:

Human Resource Planning is a highly important and
useful activity .If used properly; it offers a number of
Reservoir of Talent. The organisation can have a
reservoir of talent at any point of time. People with
requisite skills are readily available to carry out the
assigned tasks.
Prepare People for Future. People can be trained,
motivated and developed in advance and this helps
meeting future needs for high-quality employees quite
easily. Likewise, manpower shortages can also be met
comfortably through proper human resource planning.
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Expand or Contract. If the organisation wants

to expand its scale of operations, it can go
ahead easily. Advance planning ensures a
continuous supply of people with requisite
skills who can handle challenging jobs easily.
Cut Costs. Planning facilitates the preparation
of an appropriate manpower budget for each
department or division. This in turn helps in
controlling manpower costs by avoiding
shortages/excesses in manpower supply. The
physical facilities such as canteen, quarters,
school, medical help etc, can also be planned
in advance.

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Succession Planning. Human Resource

Planning as pointed out previously prepares
people for future challenges. The stars can be
picked up and kept ready for further promotions
whenever they arise. All multinational companies
for example, have this policy of having a hot list
of promising candidates prepared in advance.
Such candidates are rolled over various jobs and
assessed and assisted continuously. When the
time comes, such people switch hats quickly
and replace their respective losses without any
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Before 1890

Industrial Technologies

Disciplinary Systems


Employee well-being

Health and safety



Take design/efficiency/
impact of work groups on
individual works

Time and motion studies

Employee counseling
and testing


Union of workforce
Passage of major labor

Anti-union campaigns
Personnel becomes staff
support to operational line
unit functions


Employee benefits and


Wage increases
Pension/health and
other benefit plans

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Employee relations
Specialized personnel functions

Training and development

Separate divisions within personnel established: recruitment,
labor relations, training, benefits, etc.


Employee Participation

Employee Involvement
Management by objectives, Quality circles, sensitivity training.


Government Intervention

Employee rights issues now regulated in areas of

discrimination, equal opportunity, safety and health and various
benefit reforms.


Employee recognition

Expanding/enrichment of employee knowledge, skill, abilities

Job rotation
Formation of integrated task teams


Changing demographics of

Diversity programs
Employee rights issues
Global perspective
Information technology

2000 and beyond

Strategic HR Planning

Transition from service and support to consultative and

leadership role

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It is the process of attracting qualified applicants

for a specific job. the process begins when
applications are brought in and ends when the
same is finished. the result is a pool of
applicants, from where the appropriate
candidate can be selected.

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Dale S.Beach observed, Recruitment is the

development and maintenance of adequate
manpower resources. It involves the creation of
a pool of available labour upon whom the
organisation can draw when it needs additional
There are two broad methods of Recruitment
which are as follows:
1. External Recruitment
2. Internal Recruitment
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External Recruitment
Every enterprise has to tap external sources for various positions.
Running enterprises have to recruit employees from outside for
filling the positions whose specifications cannot be met by the
present employees, and for meeting the additional requirementsThe
following are the most commonly used external sources of
Advertisements of the vacancy in newspapers and journals are a
widely used source of recruitment. The main advantage of this
method is that it has a wide reach.
various management institutes, engineering colleges, medical
Colleges etc. are a good source of recruiting well qualified
executives, engineers, medical staff etc. They provide facilities for
campus interviews and placements. This source is known as
Campus Recruitment.

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Several private consultancy firms perform recruitment functions on
behalf of client companies by charging a fee. These agencies are
particularly suitable for recruitment of executives and specialists. It
is also known as RPO (Recruitment Process Outsourcing)
Government establishes public employment exchanges throughout
the country. These exchanges provide job information to job seekers
and help employers in identifying suitable candidates
Manual workers can be recruited through contractors who maintain
close contacts with the sources of such workers. This source is
used to recruit labour for construction jobs.
Many job seekers visit the office of well-known companies on their
own. Such callers are considered nuisance to the daily work routine
of the enterprise. But can help in creating the talent pool or the
database of the probable candidates for the organisation

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Merits of external sources of recruitment

Qualified Personnel. By using external sources of
recruitment, the management can make qualified and
trained people to apply for vacant jobs in the
Wider Choice. When vacancies are advertised widely, a
large number of applicants from outside the organisation
apply. The management has a wider choice for selecting
the people for employment.
Fresh Talent. The insiders may have limited talents.
External sources facilitate infusion of fresh blood with
new ideas into the enterprise.
Competitive Spirit. If a company can tap external
sources, the existing staff will have to compete with the
outsiders. They will work harder to show better
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Demerits of External Sources

Dissatisfaction amongst existing staff. External
recruitment may lead to dissatisfaction and frustration
amongst existing employees. They may feel that their
chances of promotion are reduced.
Costly Process. It is very costly to recruit staff from
external sources. A lot of money has to be spent on
advertisement and processing of applications.
Uncertain Response. The candidates from outside may
not be suitable for the enterprise. There is no guarantee
that the enterprise will be able to attract right kinds of
people from external sources.

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Internal recruiting is the search for in-house
employees who have the abilities and the
attitudes to fulfill the requirements needed and
to help the organization achieve its objectives.
Although internal recruiting is often neglected,
and the Internet hardly offers any useful
discussions for this recruiting strategy, it is
crucial not to overlook this strategy. The
discussion of internal recruiting provides the
advantages and disadvantages of this recruiting
technique in comparison to the external method.
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Advantages of internal recruiting:

Recruiting costs: Since the recruiting machinery is
focused on an already existing pool of employees to fill a
vacant position, and therefore selection and socializing
processes are less time and dollar consuming, internal
recruiting tends to be less expensive than external
Motivation: The prospect of potential promotion or
transfers provides a clear sign to the current work force
that the organization offers room for advancement. This
addresses the employee's need for self-achievement.
Familiarity: The familiarity of the employee has a two-side
effect: On the one hand the employee is familiar with the
organization's policies, procedures, and customs. At the
same time, the organization has established an
employment history showing the workers formal and
informal skills and abilities.

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Disadvantages of internal recruiting

Inbreeding: One drawback of extensive internal
recruiting is the reduced likelihood of innovation and new
perspectives. A lack of new employees from the outsides
leads to a lack of new ideas and approaches.
EEO Criteria: A use of the internal pool for the
consideration of vacant positions can lead to conflicts
with the Equal Employment Opportunity Commission. The
organization has to ensure and continuously check its
balance of a diverse workforce. This has to relate to the
organizations legal, political and geographical
More training: Internal recruiting demands a higher
degree of employee training. In order to develop the skills
needed to train the current workforce in new processes
and technologies, the organization has to provide a more
expensive training program.
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Nature and Purpose of Selection
Selection involves a series by which the candidates are
screened for choosing the most suitable persons for
vacant posts. The process of selection leads to
employment of persons who possess the ability and
qualifications to perform the jobs which have fallen
vacant in an organization. It divides the candidates for
employment into two categories, namely, those who will
be offered employment and those who will not be. This
process should be called rejection since more
candidates may be turned away than employed. That is
why, selection is frequently described as a negative
process in contrast with the positive nature of
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Significance of Selection
Selection is a critical process these days
because it requires a heavy investment of
money to get right types of people. Induction and
training costs are also high. If the right types of
person are not chosen, it will lead to huge loss of
the employer in terms of time, effort and money.
Therefore, it is essential to devise a suitable
selection procedure. Each step in the selection
procedure should help in getting more and more
information about the applicants to facilitate
decision-making in the area of selection.
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Absenteeism and employee turnover are the important

problems which are often faced by many organization.
The intensity of these problems can be reduced if in the
future all selections are made care fully so that there are
round pegs in the round holes. Whenever unsuitable
employees are appointed, the efficiency of the
organization will go down. Such employees will shirk work
and absent themselves from the work more often. They
may also be compelled to leave their jobs. If this
happens, all the expenses incurred on the selection and
training of such employees will go waste.
Scientific selection and placement of personnel will go a
long way towards building up a stable work-force. It will
keep the rates absenteeism and labor turnover low and
will increase the morale of the employees. If the
employees are suitable according to the requirements of
the jobs, they will show higher efficiency and productivity.
This will also enable the organization to achieve its
objectives effectively.
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The benefits of selecting right kinds of people for

various jobs are as follows:
Proper selection and placement of personnel go a long
way towards building up a stable workforce. It will
keep the rates of absenteeism and labor turnover low,
Competent employees will show higher efficiency and
enable the organization to achieve its objective
The rate of industrial accidents will be considerably
low if suitable employees are placed on various jobs.
When people get jobs of their taste and choice, they
get higher job satisfaction. This will build up a
contended workforce for the organization.
The moral of the employees who are satisfied with
their jobs is often high

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Training is a process of learning a sequence of
programmed behavior. It is the application of knowledge
& gives people an awareness of rules & procedures to
guide their behavior. It helps in bringing about positive
change in the knowledge, skills & attitudes of
Thus, training is a process that tries to improve skills or
add to the existing level of knowledge so that the
employee is better equipped to do his present job or to
mould him to be fit for a higher job involving higher
responsibilities. It bridges the gap between what the
employee has & what the job demands.

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Since training involves time, effort & money by

an organization, so an organization should to be
very careful while designing a training program.
The objectives & need for training should be
clearly identified & the method or type of training
should be chosen according to the needs &
objectives established. Once this is done
accurately, an organization should take a
feedback on the training program from the
trainees in the form of a structured questionnaire
so as to know whether the amount & time
invested on training has turned into an
investment or it was a total expenditure for an
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Training is a continuous or never ending process. Even

the existing employees need to be trained to refresh
them & enable them to keep up with the new methods &
techniques of work. This type of training is known as
Refresher Training & the training given to new
employees is known as Induction Training. This is
basically given to new employees to help them get
acquainted with the work environment & fellow
colleagues. It is a very short informative training just after
recruitment to introduce or orient the employee with the
organization's rules, procedures & policies.
Training plays a significant role in human resource
development. Human resources are the lifeblood of any
organization. Only through trained & efficient employees,
can an organization achieve its objectives.

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Significance of training
To impart to the new entrants the basic knowledge &
skills they need for an intelligent performance of definite
To prepare employees for more responsible positions.
To bring about change in attitudes of employees in all
To reduce supervision time, reduce wastage & produce
quality products. To reduce defects & minimize accident
To absorb new skills & technology. Helpful for the growth
& improvement of employee's skills & knowledge.

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The most widely used methods of training used by organizations are
classified into two categories: On-the-Job Training & Off-the-Job
ON-THE-JOB TRAINING is given at the work place by superior in
relatively short period of time. This type of training is cheaper & less
time-consuming. This training can be imparted by basically four
methods: Coaching is learning by doing. In this, the superior guides his subordinates & gives him/her job instructions. The superior points out
the mistakes & gives suggestions for improvement.
Job Rotation: - In this method, the trainees move from one job to
another, so that he/she should be able to perform all types of jobs.
E.g. In banking industry, employees are trained for both back-end &
front-end jobs. In case of emergency, (absenteeism or resignation),
any employee would be able to perform any type of job.

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OFF THE JOB TRAINING: - is given outside the actual work place.
Lectures/Conferences:- This approach is well adapted to convey
specific information, rules, procedures or methods. This method is
useful, where the information is to be shared among a large number
of trainees. The cost per trainee is low in this method.
Films: - can provide information & explicitly demonstrate skills that
are not easily presented by other techniques. Motion pictures are
often used in conjunction with Conference, discussions to clarify &
amplify those points that the film emphasized.
Simulation Exercise: - Any training activity that explicitly places the
trainee in an artificial environment that closely mirrors actual
working conditions can be considered a Simulation. Simulation
activities include case experiences, experiential exercises, vestibule
training, management games & role-play.

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Vestibule Training: - Employees learn their jobs on the

equipment they will be using, but the training is
conducted away from the actual work floor. While
expensive, Vestibule training allows employees to get a
full feel for doing task without real world pressures.
Additionally, it minimizes the problem of transferring
learning to the job.
Role Play: - Its just like acting out a given role as in a
stage play. In this method of training, the trainees are
required to enact defined roles on the basis of oral or
written description of a particular situation.

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Management Games: - The game is devised on a

model of a business situation. The trainees are divided
into groups who represent the management of
competing companies. They make decisions just like
these are made in real-life situations. Decisions made by
the groups are evaluated & the likely implications of the
decisions are fed back to the groups. The game goes on
in several rounds to take the time dimension into

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In-Basket Exercise: - Also known as In-tray method of training. The

trainee is presented with a pack of papers & files in a tray containing
administrative problems & is asked to take decisions on these
problems & is asked to take decisions on these within a stipulated
time. The decisions taken by the trainees are compared with one
another. The trainees are provided feedback on their performance.

Performance Appraisal
Performance mechanism is a method of assessing the contribution
of employees at different levels of the organisation during a
particular period of time. This is necessary to evaluate the
contribution of the employees during the past year and to provide
feedback for improvement. Performance appraisal is also vital to
deciding the appropriate compensation decisions. It also helps
decide on promotions and helps the superior determine the
appropriate compensation decisions. It also helps decide on
promotions and helps the superior determine the appropriate
training that may be necessary to enhance the employees
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Performance evaluation also helps build confidence as

the employee has an opportunity to voice his opinions
and his grievances to his superior.
There are a number of methods of performance
appraisal. No single method can be considered ideal in
all circumstances. The methods of performance
appraisal can be broadly classified into two categories:
traditional and modern methods.
Traditional methods are the relatively older methods of
performance appraisal.These methods are based ob
studying the personal qualities of the employees.

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The traditional methods are as follows:

This traditional form of appraisal, also known as Free Form method
involves a description of the performance of an employee by his
superior. The description is an evaluation of the performance of any
individual based on the facts and often includes examples and
evidences to support the information. A major drawback of the
method is the inseparability of the bias of the evaluator.
This is one of the oldest and simplest techniques of performance
appraisal. In this method, the appraiser ranks the employees from the
best to the poorest on the basis of their overall performance. It is
quite useful for a comparative evaluation.
A better technique of comparison than the straight ranking method,
this method compares each employee with all others in the group,
one at a time. After all the comparisons on the basis of the overall
comparisons, the employees are given the final rankings.

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In this method of performance appraisal, the evaluator rates the
employee on the basis of critical events and how the employee
behaved during those incidents. It includes both negative and
positive points. The drawback of this method is that the supervisor
has to note down the critical incidents and the employee
behaviour as and when they occur.
In this method, a senior member of the HR department or a
training officer discusses and interviews the supervisors to
evaluate and rate their respective subordinates. A major drawback
of this method is that it is a very time consuming method. But this
method helps to reduce the superiors personal bias.
The rater is given a checklist of the descriptions of the behaviour
of the employees on job. The checklist contains a list of
statements on the basis of which the rater describes the on the
job performance of the employees.

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In this method, an employees quality and quantity of work is
assessed in a graphic scale indicating different degrees of a
particular trait. The factors taken into consideration include
both the personal characteristics and characteristics related
to the on-the-job performance of the employees. For example
a trait like Job Knowledge may be judged on the range of
average, above average, outstanding or unsatisfactory.

To eliminate the element of bias from the raters ratings, the
evaluator is asked to distribute the employees in some fixed
categories of ratings like on a normal distribution curve. The
rater chooses the appropriate fit for the categories on his own

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Modern Methods:
Modern Methods were devised to improve upon the traditional
methods. Modern methods attempt to remove the short comings of
the old methods such as subjectivity, bias etc. Some of the modern
methods are:
Behaviorally Anchored Rating Scales (BARS) is a relatively new
technique which combines the graphic rating scale and critical
incidents method. It consists of predetermined critical areas of job
performance or sets of behavioral statements describing important
job performance qualities as good or bad (for e.g. the qualities like
inter-personal relationships, adaptability and reliability, job
knowledge etc). These statements are developed from critical
In this method, an employees actual job behaviour is judged against
the desired behaviour by recording and comparing the behaviour
with BARS. Developing and practicing BARS requires expert
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2..Management By Objectives(MBO)
The concept of Management by Objectives (MBO) was first given
by Peter Drucker in 1954. It can be defined as a process whereby
the employees and the superiors come together to identify common
goals, the employees set their goals to be achieved, the standards
to be taken as the criteria for measurement of their performance and
contribution and deciding the course of action to be followed.
The essence of MBO is participative goal setting, choosing course
of actions and decision making. An important part of the MBO is the
measurement and the comparison of the employees actual
performance with the standards set. Ideally, when employees
themselves have been involved with the goal setting and the
choosing the course of action to be followed by them, they are more
likely to fulfill their responsibilities

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ASSESSMENT CENTRES An assessment centre typically involves the use of

methods like social/informal events, tests and exercises,
assignments being given to a group of employees to
assess their competencies to take higher responsibilities
in the future. Generally, employees are given an
assignment similar to the job they would be expected to
perform if promoted. The trained evaluators observe and
evaluate employees as they perform the assigned jobs
and are evaluated on job related characteristics.
The major competencies that are judged in assessment
centers are interpersonal skills, intellectual capability,
planning and organizing capabilities, motivation, career
orientation etc. assessment centers are also an effective
way to determine the training and development needs of
the targeted employees.
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Human resources are valuable assets for every
organization. Human resource accounting method tries
to find the relative worth of these assets in the terms of
money. In this method the performance appraisalof the
employees is judged in terms of cost and contribution of
the employees. The cost of employees include all the
expenses incurred on them like their compensation,
recruitment and selection costs, induction and training
costs etc whereas their contribution includes the total
value added (in monetary terms). The difference
between the cost and the contribution will be the
performance of the employees. Ideally, the contribution
of the employees should be greater than the cost
incurred on them
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Evaluating Human Resources

The Four Cs Model for Evaluating Human Resources
To evaluate the effectiveness of the HRM process, within
an organization, Harvard researchers have proposed a
four Cs model: competence, commitment, congruence,
and cost effectiveness. Examples of questions related to
each of the four Cs, and some methods for measuring
them follow:
1. Competence:
How competent are employees in their work? Do they
need additional training? Performance evaluations by
managers can help a company determine what talent it
has available. To what extent do HRM policies attract,
keep, and develop employees with skills and knowledge
needed now and in the future?
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2. Commitment:
How committed are employees to their work and organization?
Surveys can be conducted through interviews and
questionnaires to find answers to this question. Additional
information can be gained from personnel records about
voluntary separation, absenteeism, and grievances.
TO what extent do HRM policies enhance the commitment of
employees to their work and organization?
3. Congruence:
Is there congruence, or agreement, between the basic
philosophy and goals of the company and its employees?
Is there trust and common purpose between managers and
Incongruence can be detected in the frequency of strikes,
conflicts between managers and subordinates, and grievances.
A low level of congruence results in low levels of trust and
common purpose; tension and trust between employees and
managers may increase.

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4. Cost effectiveness:
Are HRM policies cost-effective in terms of wages, benefits, turnover,
absenteeism, strikes, and similar factors?
By shaping HRM policies to enhance commitment, competence,
congruence, and cost effectiveness, an organization increases its
capacity to adapt to changes in its environment.
High commitment means:
1. Better communication between employees and managers.
2. Enhanced mutual trust.
3. All stakeholders responsive to one anothers needs and concerns
whenever changes in environmental demands occur.
High competence means:
1. Employees are versatile in their skills and can take on new roles
and jobs as needed.
2. Employees are better able to respond to changes in
environmental demands.
Cost effectiveness means:
That human resource costs, such as wages, benefits, and strikes,
are kept equal to or less than those of competitors.
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Higher congruence means:

That all stakeholders share a common purpose and
collaborate in solving problems brought about by
changes in environmental demands. This capacity to
collaborate is crucial in an ever changing environment.
Managers need the participation of a broad range of
stakeholders (including management, unions, and
governmental agencies) to obtain the data needed to
evaluate the impact of HRM practices and policies.
High competence means:
1. Employees are versatile in their skills and can take on
new roles and jobs as needed.
2. Employees are better able to respond to changes in
environmental demands.
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Cost effectiveness means:

That human resource costs, such as wages, benefits,
and strikes, are kept equal to or less than those of
Higher congruence means:
That all stakeholders share a common purpose and
collaborate in solving problems brought about by
changes in environmental demands. This capacity to
collaborate is crucial in an ever changing environment.
Managers need the participation of a broad range of
stakeholders (including management, unions, and
governmental agencies) to obtain the data needed to
evaluate the impact of HRM practices and policies.

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Thank You
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CC: manoj.amity@panafnet.com

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