Strategic Human

Resources Management
and Human Resource
Policies.
 UNIT - III

HUMAN RESOURCE
POLICIES
 Flow of Presentation
o Human Resource policies
Meaning
Features
Purpose of HR policies in Organization
Factors affecting HR policies
Areas of HR policies in Organization

o REQUISITES OF SOUND Hr POLICIES

Meaning
Recruitment (Meaning ,Features, Objectives )
Selection (Meaning, Features, Objectives)
Training (Meaning, Features, Objectives)
o Performance appraisal
Meaning
Objectives
Features
Need
Types

o Compensation
Meaning
Objectives
Need
Types
o Promotion
Meaning
Objectives
Features
Types

o Outsourcing
 Meaning
 Objectives
 Features
 Need
 Types
o Retrenchment
Meaning
Objectives
Drivers to Retrenchment
Types

o barriers to effective implementation of hr

policies
Barriers
Ways to overcome them
o need for reviewing and updating HR
Policies
Meaning
Need

o Importance of strategic hr policies to

maintain workplace harmony
 Human Resource Policy

• HR policies are systems of codified decisions,

established by an organization to support all
people related activities inside the organization.
 Features of Human Resource Policy
• Forward looking
• Innovative, flexible and creative
• Inclusive
• Evidence based
• Organizational objectives with alignment
• Evaluation
• Reviewed periodically
 Purpose of HR policies
• Communication

• Training needs

• Equity

• Change management
 Factors affecting HR Policies

2.Value and
1.Country 3.Social 4.Financial
philosophy
law values impact
management
 Areas of HR Policies In An
Organization
• Age and employment
• Health and safety
• New technology
• Promotion
• Employee development
• Sexual harassment
• Reward
 Recruitment
• Recruitment is a process of searching for prospective
employees to apply for jobs. In simple terms,
recruitment applies to the process of attracting
potential employees to the organization or company.
 Objectives of Recruitment
• To attract and encourages more and more
candidates.
• To increase success rate of selection.
• To meet the organization’s obligations.
• To act as a link between the employers and job
seekers.
• To create a pool of candidates
 Features of Recruitment
• Managerial and continues process
• Positive Function
• Identifying and seeking candidates
• Evaluation and hiring
 Selection

Selection is the process of evaluating the qualifications,

experience, skill, knowledge, etc. of an applicant in
relation to the requirements of the job to determine his
suitability for the job
 Objectives of Selection
• To predict which applicant is more suitable for

the job
• To sell the organization and the job to the right
candidate
 Features of Selection
• Reduces Cost of Training and Development
• Assess Behaviour
• Time dimension
 Training and Development
• Training is concerned with developing a particular
skill to a desired standard by instruction and practices.
Training is the act of increasing the knowledge and
skill of an employee for doing a particular job
 Objectives of Training and
Development
• To provide job related knowledge to the workers
• To impart the skills for efficient learning
• To improve the productivity of the workers with
the organization
• To reduce the number of accidents.
• To prepare workers for promotions by imparting
them with advanced skills
Features of Training and Development
• Employee Satisfaction
• Improvement in performance
• Consistency
• Addressing Weakness
 Performance Appraisal
Performance appraisal is
a formal , structured system of
measuring and evaluating an
employee’s job-related
behaviors and their
potential for greater contribution
 Objectives of Performance Appraisal
• Providing feedback

• Facilitating promotion decisions

• Facilitating layoffs
 Features of Performance Appraisal

• Continuous Process

• Systematic assessment

• Scientific evaluation

• Economical and less time consuming

 Need of Performance Appraisal
• Provides information about performance
ranks based on which decision regarding salary
fixation,confirmation,promotion,tranfer and
demotion are taken.
• Provides feedback regarding the level of
achievement of the employee.
• Prevents grievances and in disciplinary
activities.
 Types of Performance Appraisal

360 degree Management Psychological

appraisal by appraisal
objectives
(MBO)
 Types of Performance Appraisal
1.) 360 degree Appraisal

360 degree appraisal involves feedback of the manager,

supervisors, team members and any other direct
reports. The employees complete profile has to be
collected and assessed. In addition to evaluating the
employees performance and skill set an appraiser
collects an in-depth feedback of the employee.
2.) Management By Objectives (MBO)

MBO is a modern approach of Performance appraisal.

In MBO method of performance appraisal, the
manager, the employee agree upon specific and
obtainable goals with a set deadline. With this method
the appraiser an define success and failure easily.
3.) Psychological Appraisal

This appraisal method evaluates the employees

intellect, emotional stability, analytical skills and other
psychological traits. This method makes it easy for the
manager in placing the employees in appropriate
teams.
 Compensation

• Compensation is a
systematic approach
to provide monetary
value to employees in
exchange for work
performed
 Objectives of Compensation
• To acquire competent personnel
• To comply with regulations
• To control cost
• To enhance administrative efficiency
• To facilitate understanding
• To retain employees
• To ensure equity
 Need of Compensation
• Attracting and retaining personnel
• Motivating personnel
• Optimizing cost of compensation
• Consistency in compensation
• Compensation laws
 Types of Compensation

Financial Non-financial
compensation compensation

 Basic salary  Leave policy

 House rent allowance  overtime policy
 Leave travel allowance  Retirement benefits
 Medical reimbursement  Flexible timings
 Conveyance Insurance
 Bonus Holiday homes
 Promotion
Promotion means advancement within an
organization. It is an upward movement of an
employee from current job to another i.e.
Higher in pay ,responsibility ,status and
organizational level.
 Objectives of Promotion
• To build loyalty among the employees towards the
organization
• To promote good human relations
• To retain skilled and talented people
• To attract trained ,competent and hardworking people
• To develop competitive spirit among employees
• To reward and motivate employees to higher level of
productivity
 Features of Promotion
• Improves organizational productivity
• improves employee morale and job satisfaction
• Maximum utilization of employees skill and
knowledge
 Types of promotion

Vertical Up gradation Dry

promotion promotion
 Types of Promotion
1.) Vertical promotion

In vertical promotion, employee is moved to the next

higher level ,in the organizational hierarchy with
grater responsibility ,authority ,pay and status.
2.) Up gradation

the job is upgraded in the organizational hierarchy .

Consequently, the employee gets more salary, higher
authority ,responsibility.
3.) Dry Promotion

When promotion is made without increase in

salary it is called dry promotion. The employee
is moved to the next higher level in the
organizational hierarchy with greater
responsibility, authority and status.
Outsourcing
 What is Outsourcing ?

Outsourcing is a process
by which an organization
contracts with other
individual or company
to get some of its work done
 Objectives of Outsourcing
• Increase business opportunities
• Business success
• Ensure smooth operations
• Global competitiveness
• Business expansion
• Freedom from labor troubles
 Features of Outsourcing
• Increase company's concentration on
core business
• Reduces and controls cost
• Improves services quality resulting from
specialization
 Need of Outsourcing
• Reduce and control operating cost
• Improve company focus
• Gain access to world class capabilities
• Free internal resource for other purposes
• Resources are not available internally
Types Of Outsourcing
Business Process Outsourcing
(BPO)

Knowledge Process Outsourcing

(KPO)

Professional Outsourcing

Project Outsourcing
 Types of Outsourcing
1.) Business process outsourcing
(BPO)

BPO is a subset of outsourcing that involves

contracting Of operations and responsibilities of
specific business functions or processes to a third
party provider.
2.) Knowledge Process Outsourcing (KPO)

KPO typically calls for work that needs higher levels

of involvement from the worker. The worker has to
employ advanced level of research, analytical and
technical skills and has to make decisions of a higher
order than BPO work.
3.) Project Outsourcing

Sometimes companies have trouble managing one of

their projects or even just completing a portion of a
specific project. In such a case, companies can project
outsource.
3.) Professional outsourcing

Professional outsourcing includes accounting, legal,

purchasing, information technology (IT), IT or
administrative support and other specialized services.
What is Retrenchment ??
 Definition of Retrenchment
• The Industrial Disputes Act, 1947 defines the term
as

-the termination by the employer of the service of a

workman;

-The termination may be for any reason

whatsoever;

-But the termination should not be as a measure of

punishment by way of disciplinary action.
 Objectives of Retrenchment
• To cut down expenses
• To reduce the diversity of the operations of the
company
• To cut down the payroll to get back within
budget
 What drives Retrenchment ?
• Cost is very high

• Changing market conditions

• Merging of two firms

• Poor competitive positions

Types Of Retrenchment

Turnaround

Divestment

Liquidation
 Types Of Retrenchment
1.) Turnaround Strategy
Turnaround strategy means backing out,
withdrawing or retreating from a decision wrongly
taken earlier in order to reverse the process of
decline. Certain indicators are :
I. Mismanagement
II. Continuous losses
III. Over- manpower, high turnover of employees
and low morale, etc.
2.) Divestment Strategy

Divestment strategy involves the sale or

liquidation of a portion of business. This strategy
is adopted when:
I. The turnaround strategy has been attempted
but unsuccessful
II. A business cannot be integrated within the
company
III. Company is unable to face competition
3.) Liquidation Strategy
Liquidation strategy means closing down the
entire firm and selling its assets.
Reasons for Liquidation include:
I. Business becomes unprofitable
II. Obsolescence of product/process
III. High competition
IV. Failure of strategy
Barriers to Effective Implementation to
HR Policies
• Selective perception by employees
• Ambiguity in the policy statement
• Lack of support from top management
• Bureaucratic organizational culture
• Failure to understand the strategic needs of business
• Inadequate assessment of environmental factors
• Irrelevant initiatives by organizations
 Ways to Overcome these Barriers
• Need analysis
• Formulating of the appropriate
strategy
• Enlist support for the
strategy
• Assessment of barriers
• Prepare action plans
• Evaluate progress and
regular follow up
Need for Reviewing and Updating HR
Policies
• Dress code
• Vacation time
• Company function
• Minimizing absenteeism
• Inclement weather
Importance of HR Policies to Maintain
Work Place Harmony
• Motivates personnel
• Gives right direction
• Keeps good control
• Reduces business related risk
• Efficiency of operations
• Helps in decision-making
• Encourages creativity and innovation