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Different terms are used to denote personnel management. They are: labour
management, labour management relations, employee-employer relations, industrial
relations, personnel administration, personnel management, human capital
management, human asset management. Though these terms can be differentiated
widely, the basic distinction lies in the scope or coverage and evolutionary stage. In
simple sense, human resources management means employing people, developing
them, utilizing, maintaining and compensating their services in tune with the job and
organizational requirements.
Personnel Management as defined by the Institute of Personnel Management
in U.K. and subsequently adopted by Indian Institute of Personnel Management is as
"Personnel Management is a responsibility of all those who manage people as well as
being a description of the work of those who are employed as specialists. It is that
part of the management which is concerned with people at work and with their
relationships within an enterprise. It applies not only to industry and commerce but
to all fields of employment".
This definition can be summarised as follows:
1. Personnel Management is a responsibility of all the line managers in an
organisation viz., general manager, production manager, marketing manager,
finance manager etc. and it is a staff function i.e., it is the function of
personnel manager who is appointed as a specialist. Thus all managers in the
organizations are vitally concerned with personnel management as they must
achieve organisational goals through other people's efforts.
2. Personnel management is a part of management. This part is concerned with
the people and their relationship within an organisation.
3. This applies to all organisations in the universe i.e. economic, social, political,
religious etc.
Michael J. Jucius defined Personnel Management as "The field of management
which has to do with planning, organizing, directing and controlling the functions of
procuring, developing, maintaining and utilizing a labour force, such that the (a)
objectives for which the company is established are attained economically and
effectively, (b) objectives of all levels of personnel are served to the highest possible
degree, (c) objectives of society are duly considered and served".
Personnel / Human Resources Management (P/HRM) can be defined as managing
(planning, organizing, directing and compensating) human resources resulting in the
creation and development of human relations with a view to contribute
proportionately (due to them) to the organizational, individual and social goals.
Characteristics of Personnel Management
The analysis of definitions on personnel management can be summarised as follows:
Personnel Management is concerned with employees both as individuals and
as groups in attaining goals. It is also concerned with behavioural, emotional
and social aspects of personnel.
Personnel Management is concerned with the development of the knowledge,
capability, skill, and potentialities of human resources, and achieving
employee goals, including job satisfaction.
Personnel Management covers all levels (lower, middle, and top) and
categories (unskilled, skilled, technical, professional, clerical and managerial)
of employees. It covers both organised and unorganised employees.
Personnel Management applies to the employees in all types of organisations
in the world (industry, trade, service, commerce, economic, social, religious,
political and government departments). Thus it is common in all types of
Personnel Management is a continuous and never ending process.
Personnel Management aims at attaining the goals of organisation, individual
and society in an integrated approach. Organisation goals may include
survival, growth and development in addition to profitability, innovation,
excellence etc. Individual employee goals consist of job satisfaction, job
security, high salary, attractive fringe benefits, challenging work, pride, status,
recognition, opportunity for development etc. Goals of the society include
equal employment opportunity, protecting the disadvantaged sections and
physically handicapped, minimization of inequalities in the distribution of
income by minimizing wage differentials, developing the society in general by
organizing developmental activities etc.
Personnel Management is a responsibility of all line managers and a function
of staff managers in an organisation.
Personnel Management is concerned mostly with managing human resources
at work.
Human Resources Management is the central sub-system of an organisation
and it permeates all types of functional management viz., production
management, marketing management and financial management.
Personnel Management aims at securing unreserved co-operation from all
employees in order to attain predetermined goals.
Further the analysis shows that, most of the definitions are oriented towards the
functions and objectives of personnel management. As such, the detailed discussion
about the functions and objectives of HRM will help us to understand the term HRM
clearly and objectively.
People in any organisation manifest themselves, not only as individuals but also
through group interactions. When individuals come to work place, they come with
not only technical skills, knowledge etc. but also with their personal feelings,
perception, desires, motives, attitude, aptitude, values etc. Therefore, employee
management in an organisation does mean management of not only technical skills
but also other factors of the human resources.
Compl ex Dynami sm: A close observation of employees reveals that they are
complex beings i.e. (a) physiological (b) psychological (c) sociological and, (d) ethical
beings. The proportions or intensities of these dimensions of the human factor in
employment may differ from one situation to another but the fact remains that these
are the basic things of the human factor in organisations. Undoubtedly the physical
and mental attributes of human resources are highly pertinent to organisational
performance and productivity. Further, it is important to note that the employees in
any organisations are not to be viewed as static individuals since the quantity as well
as quality of human resources are modified by such environmental factors as
education, training, development etc. Hence, the handling of human resource is
entirely different from that of other resources. If human factor is properly utilised, it
may even prove a dynamic motive force for running an organisation. Otherwise, it
becomes a passive and destructive force.
A Soci al System: Human resources management is relatively new and developed
as a part of management (concerned with the management of human resources). In
simple terms personnel management is the task of dealing with human relationships,
moulding and developing the human behaviour and attitude towards the job and
organisational requirements. The personnel manager involves himself in
administering a social system. In this process, the manager has to see that there is
economic satisfaction for a reasonable livelihood, the social satisfaction of working
together as members of a group and individual job satisfaction of a worker are
An organisation may be a manufacturing company, a banking undertaking, an
insurance corporation, a transportation unit, an educational organisation, a hospital,
a court, a club, a religious or a social unit. The nature and significance of personnel
management have undergone rapid changes recognising the people not as a cost
centre but as a profit centre. Consequently, the modern personnel manager is
concerned not only with the organisation to provide able and willing workforce to
attain company goals, but also with the employees for fulfillment of economic, social
and psychological needs and with general society, which demands contributing to
minimization of socio-economic evils and maximization of social and economic
welfare of its members particularly the deprived and weaker sections. The role of the
personnel manager has also been expanded. In ascertaining and accommodating
various needs of the people.
A Challengi ng Task: The personnel manager plays a crucial role in understanding
the changing needs of the organisation and society. Further, he faces some
challenging tasks in attaining the employee, organisational and social objectives with
the available resources. In addition to it the growing strength of trade unions,
increasing involvement of Government in personnel management increasing
educational standards etc, further complicate the role of personnel manager. Hence
the modern personnel manager should equip himself with good knowledge of
disciplines viz., Economics, Commerce, Management, Anthropology, Political
Science, Physiology, Psychology, Sociology, Philosophy, Engineering, Technology
and Law. Further, it is said that all these disciplines and Human Resources
Management interact mutually with each other. In view of these challenges and
change in the scope of personnel Management, there has been a wide change in the
terms denoting personnel management. The important phases among them are
labour management, personnel management and human resources management. In
fact, the meaning of the personnel management has also been undergoing changes.
Having discussed the concepts of management, personnel and human resources and
the nature human resources, let us concentrate on the objectives of Human
Resources Management.
Objectives are pre-determined goals to which individual or group activity in an
organisation is directed. Objectives of personnel management are influenced by
organisational objectives and individual and social goals. Institutions are instituted
to attain certain specific objectives. The objectives of the economic institutions are
mostly to earn profits, and of the educational institutions are mostly to impart
education and/or conduct research so on and so forth. However, the fundamental
objective of any organisation is survival. Organisations are not just satisfied with this
goal. Further, the goal of most of the organisations is growth and/or profits.
Institutions procure and manage various resources including human to attain the
specified objectives. Therefore, basically the objectives of human resources
management are drawn from and to contribute to the accomplishment of the
organisational objectives. The other objectives of Human Resource Management are
to meet the needs, aspirations, values and dignity of individual employees and having
due concern for the socio-economic problems of the community and the country.
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The objectives of Human Resources Management in general may be stated as
i. To create and utilise an able and motivated workforce, to accomplish the
basic organisational goals.
ii. To establish and maintain sound organisational structure and desirable
working relationships among all the members of the organisation by designing
jobs and by establishing responsibility, accountability and authority for each
job in relation to other jobs.
iii. To secure the integration of individual and groups within the organisation
by co-ordinating the individual and group goals with those of the organisation.
iv. To create facilities and opportunities for individual or group development so
as to match it with the growth of the organisation.
v. To attain an effective utilization of human resources in the achievement of
organisational goals.
vi. To identify and satisfy individual and group needs by providing adequate
and equitable wages, incentives, employee benefits and social security and
measures for challenging work, prestige, recognition, security, status etc.
vii. To maintain high employee morale and sound human relations by
sustaining and improving the various conditions and facilities.
viii. To strengthen and appreciate the human assets continuously by providing
training and developmental programmes.
ix. To consider and contribute to the minimization of socio-economic evils such
as unemployment, under-employment, inequalities in the distribution of
income and wealth and to improve the welfare of the society by providing
employment opportunities to women and disadvantaged sections of the society
x. To provide an opportunity for expression and voice in management.
xi. To provide fair, acceptable and efficient leadership.
xii. To provide facilities and conditions of work and creation of favourable
atmosphere for maintaining stability of employment.
Management has to create conducive environment and provide necessary
prerequisites for the attainment of the personnel management objectives after
formulating them.
The following are the prerequisites for attaining the objectives of the personnel
i. Recruitment of right personnel possessing the required nature and level of
human resources.
ii. Managements should take a view that "People work with us rather than
people work for us".
iii. Every employee should be informed of the goals to be achieved and the part
of their contribution for the attainment of organisational goals.
iv. Maintenance of sound industrial and human relations by creating such
congenial atmosphere and by providing monetary and non-monetary benefits
which will improve the employee attitude, aptitude and behaviour towards the
job and organisational requirements.
v. Formulation of sound organisational policies indicating authority,
responsibility and accountability.
Thus formulation of sound personnel policies, procedures and programmes is
primary for attaining the objectives.
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After the establishment of objectives of personnel management, personnel policies
are to be formulated. Policies are general statements or understandings that guide
thinking and action in decision making.
A policy is a plan of action. Brewster and Richbell defined personnel policies as,
"a set of proposals and actions that act as a reference point for managers in their
dealings with employees. Personnel policies constitute guides to action. They furnish
the general standards or bases on which decisions are reached. Their genesis lies in
an organisation's values, philosophy, concepts and principles". Personnel policies
guide the course of action intended to accomplish personnel objectives. The
following example helps us to understand the personnel policy clearly.
Example: One of the personnel objectives of Indian Railways is to provide equal
employment opportunities to the people of minority sections. Personnel policy of
Indian Railways relating to the above objective is to fill 15 percent and 7.5 percent of
the vacancies form those candidates belonging to scheduled castes and scheduled
tribes respectively.
Personnel policy is not enough to understand the method of attaining personal
objectives. What is more essential in this regard is personnel procedure.
Detailed procedure to implement the course of action generally is not given in the
policy. Here a procedure gives the detailed course of action to be carried out in
carrying out the policy. Policy spells out the broad area whereas the procedure
outlines the detailed action. Procedure establishes a desired method of handling
activities. They are guides to action rather than thinking. It spells in detail the steps,
time, place, rules, employees responsible to implement it and so on.
For instance, procedure of the earlier example of Indian Railways policy would be
as follows:
All zonal railways will fill 15 percent and 7.5 percent of their vacancies in Group C
and Group D categories from the candidates belonging to Scheduled Castes and
Scheduled Tribes respectively. If suitable candidates are not available from these
communities the vacancies in the jobs of loco driver, signaling staff, station master
will be filled by the candidates belonging to the other communities. In case of
vacancies in other jobs, they should be filled only by the candidates belonging to
scheduled castes and scheduled tribes in future. However, North-East Frontier
Railway can fill even these vacancies by the candidates belonging to other
communities, if the candidates from scheduled communities are not available. In
case of jobs in Groups A and B, candidates belonging to scheduled caste and
scheduled tribes will be given preference if they are equally qualified and meritorious
than those of other communities.
Another example of policy and procedure is of Andhra Bank:
The Pay Policy is that the bank believes in paying at least the prevailing scale of
salary for similar work in comparable organisations. The bank believes in giving
consideration to significant changes in the cost of living.
The procedure is to fix the pay of clerks, cashiers, typists equal to the lowest pay
given by any public sector bank in the country; Fix the pay of officers according to the
recommendations of the Pillai Committee.
Thus it is clear that a policy is a guide to accomplish an objective, and procedure is a
process or a method or a detailed course of action to accomplish the objectives.
However, personnel rule and personnel programmes help the procedure regarding
specific and detailed action. Personnel rule spells out specific required action or non-
action allowing no discretion. For example: Paying bonus of 8.33% of the salary
(consisting of pay plus dearness allowance) on March 31, 1987 to all the confirmed
employees who had completed minimum one year of continuous service as on March
31, 1987.
Every organisation should have personnel policies in order to accomplish the
objectives of the personnel as well as the organisation. Further, organisation needs
personnel policies in order to:
a. Consider extensively the basic needs of the organisations and employees.
b. Minimize favouritism and discrimination in treating the employees and to
ensure fair and equal treatment of all employees in the organisation.
c. Ensure that the action will be continued though the managers in key jobs may
change in the position and organisation.
d. Have standards of performance. Actual results can be compared with the
policy to determine the level and nature of implementation.
e. Create and develop employee enthusiasm and loyalty.
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Personnel policies have the following advantages:
a. All employees would have clear and detail guides of probable action, so that
there is no dilemma and over-dependence on superiors.
b. They enforce employee sentiments due to fair and equitable treatment.
c. They provide advance information and predictable decisions.
d. They provide stability in P/HRM practices and in industrial relations.
e. They help the growth and expansion on an orderly basis.
f. They help the management to anticipate the probable problems their
consequences and to find out means to coordinate, control and minimize
g. They simplify the task of decision and action, and
h. Managers, supervisors and members of the work team know clearly the roles
they have to play.
Though the personnel policies are advantageous to all the parties, their
implementation is obstructed by certain factors.
The factors which obstruct the implementation of personnel policies are:
i. Some managers are reluctant to follow the policies as they restrict the scope of
action of the managers and policies formulated may not exactly fit into the
various situational requirements.
ii. Polices create hurdles to the autocratic managers.
iii. Sometimes supervisors may take decisions which adversely affect the
employees based on the policies and managers may sometimes take protection
under the policy for the decisions taken by them.
iv. Some companies or some managers strictly adhere to the policies whereas
other allow a measure of flexibility depending upon circumstances.
v. Personnel policies in most cases are impracticable as union agreements
prevail over personnel policies.
Personnel policies should be formulated effectively based on qualities of a sound
personnel policy owing to these obstacles.
A personnel policy to be sound, should be:
a. Stated simply and clearly in positive terms, in writing
b. Reasonably consistent with certain amount of scope for flexibility
c. Originated from organisational policy
d. In the interest of majority of personnel of the organisation
e. Consistent with the organisational and public policies
f. Acceptable to management, employees, trade unions and government
g. Reasonable and related to the ongoing situations
h. Known to all the parties concerned
i. Fair, consistent and uniform for all employees and throughout the
j. Based on objectives
k. In conformity with long range purposes of industrial relations
l. In a position to instill confidence among supervisors that their decisions and
actions are in conformity with the policies.
Personnel Policies to be sound should also have broad coverage in addition to
satisfying the above qualities. Hence, it would be appropriate to discuss the coverage
of personnel policies.
Policies are formulated in such areas which are repetitive in nature. They may cover
the areas like
a. Organisational policies including general company policies
b. External policies having their impact on the organisational functioning
c. Internal policies of the organisation which guide the internal relations among
different units of the organisation both vertically and horizontally
d. Centralized policies which guide the relations among different units of the
company located in various geographical areas.
The coverage of personnel policies has been classified on the basis of functions of
P/HRM by Michael Armstrong, which is outlined hereunder:
1. Social Responsibility
a. Equity treating employees fairly and justly by adopting an even-handed
b. Consideration considering individual circumstances when decisions affect
the employees prospects, seniority or self respect.
c. Quality of work life increase the interest in the job and organisation by
reducing monotony, increasing variety of responsibilities avoiding stress and
d. Working conditions provide healthy, safe and conducive working
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2. Employment Policies
Provision of equal employment opportunities selecting the candidates based on job
requirements encourage the employee on the job and in the organisation.
3. Promotion Policies
Promotion Policies would attempt to reconcile the demands of employee for growth
and organisation's demands for fresh and much more potential talent. Promotion
policy should be fair, and just to all.
4. Development Policies
Policies should cover the kind of employees to be trained, time span of training
programmes, techniques, rewarding and awarding system, qualifications and
experience of the trainer, encouraging the employees for self advancement etc. These
policies also cover the areas like career planning and development, performance
appraisal, organisational change and organisational development.
5. Relations Policies
Relations policies cover the areas of human relations like; policies regarding
motivation, morale, communication, leadership styles, grievance procedure,
disciplinary procedure, employee counseling etc. These policies also cover the areas
of industrial relations like union recognition, union representation, collective
bargaining, prevention and settlement of industrial disputes, participate
management etc. Personnel policies to be effective should be written on the basis of
authentic information available from different sources.
Policies are formulated on the basis of material collected from different sources like
a. Past experience of the organisation
b. Existing practices and experiences in other organisations of the same nature
or in the same geographical area or in the entire nation.
c. Attitudes, philosophies of the management at various levels, employees, trade
unions etc.
d. The knowledge and experience gained by all line managers and personnel
managers in handling personnel issues
e. Organisational policies etc.
Personnel policies to be effective should be evaluated and controlled continuously.
Personnel policies to be effective must be reviewed evaluated and controlled
regularly against certain established standards. Evaluation helps to determine
changes in the existing policies. All the policies should be reviewed annually and
some policies should be reviewed at specific times like collective bargaining, after
strike, lock-out etc. Departmental policies may be review through participation of all
employees. Outside consultants or experts from other organisations may be engaged
to review crucial policies. Adequate care should be taken to review the policies in the
following situations: when (a) employees offer suggestions (b) employees express
grievances (c) unsatisfactory reports about employee performance and behaviour (d)
company plans for change like expansion, diversification, contraction, adoption of
new technology, introduction of new methods etc.
Personnel policies to be effective should have favourable impact on the objectives
and functions of P/HRM and helps the parties concerned.
Evaluating the Impact of Personnel Policies
The system and methods of P/HRM is mostly based on personnel policies. Hence,
appraising the impact of personnel policies is beneficial to the employees,
organisation, and society at large. The impact of personnel policies can be measured
in terms of cost benefit to employees, organisation and society.
P/HRM policies help the organisation in terms of attainment of organisational goals,
increasing the efficiency, adaptability and achieving long run results. Further,
organisational and human outcomes such as turnover, absenteeism, commitment are
the result of human resource policies. Human resource policies help the employees
to have awareness and clear idea about the various programmes. P/HRM policies
also affect the society. Some P/HRM policies influence commonly the individual, the
organisation and the society. These policies relate to health, psychological and
physical well being. Various P/HRM policies result in commitment, competence, cost
effectiveness and congruence. These human resource outcomes lead to long term
consequences like individual well-being, organisational effectiveness and social well-
Impact of human resource policies can be measured through their outcomes.
Employee commitment, in its turn can be evaluated through the length of service of
an employee (stability of employment), absenteeism, employee attitude towards the
job, organisation etc. Competence of an employee can be appraised through
performance appraisal techniques.
The term human resources at the macro level spells the total sum of all the
components (like skill, creative ability) possessed by all the people (employed, self
employed, unemployed, employers, owners etc), whereas the term personnel even at
the macro level is limited to only employees of all organisations. Human resources
even at the organisational level includes all the component resources of all employees
from rank life to top management level, all the employers like managing director,
board of directors, persons who work on honorary basis, experts drawn from various
organisations, and those people (particularly family members) influencing the
human resources of the former group. In short in includes the resources of all the
people who contribute their services to the attainment of organisational goals and
others who contribute their services in order to create hurdles in the attainment of
organisational goals. Further, human resource includes human values, ethos and the
Thus the term 'Human Resources' is much broader compared to the term 'Personnel'
either at the components level or in coverage (at organisational level) or even at the
macro level. As such human resources management at organisational level does
mean management of the dynamic components (resources) of all the people (owner
or employed or directly or indirectly related) at the levels in the organisational
hierarchy round the clock and throughout the year.
In view of these changes, in recent years, the Department of Commerce, Schools of
Management Studies, Department of Personnel Management in various Universities
have begun calling this academic area as Human Resource Management (HRM).
Still, this process is in the state of transition. Hence, the terms personnel and human
resource are used interchangeably in this book, though the book entitled as Human
Resource Management.
Industrialists were greatly concerned with finance for the success of their enterprises
during the first three quarters of the 20
century and they never cared about
employers. But, with the institution of Human Resources Development Ministry in
the Union Government, politicians, public, academicians, governmental agencies,
and all others are now interested in HRM. Even the press and other news media have
been giving top most important to human resources. A number of courses and
research studies are designed in the personnel area in various Universities. Further,
institutes have been set up exclusively to impart knowledge in HRM. Further the
peculiarities of human resources like inseparability of resource from the employee,
perishability of human resource, static nature of supply irrespective of changes in
demand for human resources, active, reactive and creative nature of human
resources are some of the causes for increasing concern for human resource.
Human resources play a crucial role in the development process of modern
economics. Arthur Lewis observed "there are great differences in development
between countries which seem to have roughly equal resources, so it is necessary to
enquire into the difference in human behaviour", availability of physical and
financial resources and international aid play prominent roles in the growth of
modern economics, none of these factors is more significant than efficient and
committed manpower. It is infact, said that all development comes from the human
A nation with abundance of physical resources will not benefit itself unless human
resources make use of them. In fact human resources are solely responsible for
making use of national resources. They are also responsible for the transformation of
traditional economies into the modern and industrial economics. Lack of
organisation of human resources is largely responsible for the backwardness of the
nation. Countries are underdeveloped because their people are underdeveloped. The
differences in the quality of human resources in various countries affect their level of
economic development. The key element in this proposition is that the values,
attitudes, general orientation and quality of the people of a country determine its
economic development. The shift from manufacturing to service and the increasing
pace of technological change are making human resources the ingredient to the
nations well-being and growth. And in a serviceoriented industry like banks,
railways and quality, quantity and utilization of human resources become all the
more important.
Most of the problems in organisational settings are human and social rather than
physical, technical or economic. No industry can be rendered efficient as long as the
basic fact remains unrecognised that it is principally human. It is not mass of
machines and technical processes but a body of men. It's body is not an intricate
maze of mechanical devices but a magnified nervous system.
Management of an organisation in modern economies is not only complex and
sophisticated but it also influences the economic growth of a country. Its efficiency
determines the property and well being of the people of the nation. "Perhaps today
there is no other latest activity which is as important and dynamic as management
the oldest of arts and newest of professions". One of the fundamental areas of
management is the management of human resources. Thus, "in the management of
four 'M's Money, Materials, Machines and Men considering the nature of man,
the management of men is not only fundamental but also dynamic and challenging".
One of the fundamental tasks of management is to manage human resources. In the
management of five 'M's Money, Materials, Machines, Markets and Men the
management of men is fundamental, dynamic and challenging. Successful
management depends significantly upon the ability to predict and control human
behaviour. Among other things, if a company is economically successful, it means,
the management has been able to manage human resources effectively. The human
resources are "the active force of industrialisation, and strategies for development
should concentrate particularly on their enhancement".
Management of personnel includes guiding human resources into a dynamic
organisation that attains its objectives with a high degree of morale and to the
satisfaction of those concerned with it. Earnest Dale views Management as the
process of getting things done through people. In fact, it is said that all management
is personnel management as it deals with human beings. And, though there is a
separate personnel manager all managers have to manage the personnel of their
respective functions / departments to get effective results through and with the
people. In addition, line managers are responsible for management of personnel of
their respective department / units. Thus all executives must unavoidably by
personnel managers. In short all managers are personnel managers and all
management is essentially personnel management.
Human resources in an organisation is not only unique sub-system but a principle
and central sub-system and it operates upon and controls all other sub-systems.
Thus in the words of Wendell L. French, "Personnel management is a major
pervasive sub-system of all organisations". Whatever in the environment affects the
organisation like economic, social, cultural, legal, political, historic, competitors,
customers etc. as a whole also affects the personnel system. The resources system
receives inputs from the organisation in the form of objectives and it results in
individual and organisational performance that may be viewed as individual and
organisational output. Both the personnel system and the entire organisations
operate under the same cultural, economic, social, legal, political and other
constraints. Hence, greater the effectiveness and productivity of personnel, the more
will be the effective functioning of an organisation.
Peter P. Drucker has rightly observed the significance of personnel as, managers
are fond of saying our greatest asset is people. They are fond of repeating the truism
that the only real difference between one organisation and the other is the
performance of people. In essence the survival, development and performance of an
organisation although not solely but heavily depend on the quality of personnel.
Management of men is a tough job. It is probably easier to manage finance,
marketing and production, as they are not living beings. Predicting human behaviour
accurately, completely, and always is impossible, as human behaviour is influenced
by a number and variety of factors. Hence, a number of problems crop up in
managing human resources. They are:
i. Difficulty in identifying the people, use right kind of recruitment techniques
and sources.
ii. Difficulty in identifying the right kind of selection tests, interviews etc.
iii. Difficulty in convincing the employees to accept the ratings of performance
appraisal and the purpose & outcome of performance and/or potential
iv. Difficulty in motivating the employees to undergo training seriously and apply
the knowledge / skills acquired on the job.
v. Difficulty in changing the behaviour of employees in accordance with the
required behaviour of the organisation.
vi. Difficulty in formulating a wage / salary policy acceptable to all employees,
trade unions and management.
vii. Dissatisfaction of employee regarding promotions and transfers.
viii. Employee's reluctance to accept disciplinary rules of the company.
ix. Employee grievances and inability of management to redress all grievances.
Human Resources Management to be a profession should satisfy the following
1. Possess advanced specialised formal education and training
2. Possess consistent exercise of discretion and independent judgment
3. Possess deep and organised body of knowledge and expanding the knowledge
through research.
4. Members have common purpose and uphold professional standards
5. Standards of competence in terms of education, training experience and
human performance.
Human resource management (HRM) possess advanced, special formal education
and training at graduate, post graduate, and research levels in various universities
and institutes in India and abroad. HRM possess consistent exercise of discretion
and independent judgment. HRM consists of specialised, deep and organised body of
knowledge in the form of organisational behaviour, human resource development,
human relations, industrial relations and the like. The knowledge of HRM has been
expanding through research leading to degrees like MPhil and PhD and independent
research. There are various professional bodies of HRM in India and abroad like
National Institute of Personnel Management, National HRD Network etc. It is also
difficult to say that members of HRM profession have common identity and purpose
and uphold professional standards. However, members have standards of
competence in terms of education, training, experience and human performance.
HRM satisfies most of the conditions of a profession. Hence, it can be said that HRM
is a profession.
- End of Chapter -
The functions of Personnel / Human Resource Management can be broadly classified
into two categories viz., Managerial functions and Operative functions.
Managerial functions of personnel management involve planning, organising,
directing and controlling. All these functions influence the performance of operative
I. Planning: It is a pre-determined course of action. Planning is determining of
personnel programmes and changes in advance. In other words it involves planning
of manpower requirements, recruitment, selection, transfers, promotions, training
etc. It also includes forecasting of personnel needs, changing values, attitudes and
behaviour of employees and their impact on organisation.
II. Organising: An organisation is a means to an end. It is essential to carryout the
determined course of action. In the words of J. C. Massie, an organisation is a
"structure and a process by which co-operative group of human beings allocates its
tasks among its members, identifies relationships and integrates its activities
towards common objective". Complex relationships exist between the specialised
departments and the general departments as many top managers are seeking the
advice of personnel manager. Thus organisation establishes relationships among the
employees so that they can collectively contribute to the attainment of company
III. Directing: The next logical function after completing planning and organising
is the execution of the plan. The basic function of personnel management at any level
is motivating, commanding, leading and activating people. The willing and effective
co-operation of employees for the attainment of organisational goals is possible
through proper direction. Tapping the maximum potentialities of the people is
possible through function in building sound industrial and human relations besides
securing employee contributions. Coordination deals with the task of blending efforts
in order to ensure successful attainment of an objective. The personnel manager has
to coordinate various managers at different levels as far as personnel functions are
concerned. Personnel management function should also be co-ordinated with other
functions of management like management of material, machine and money.
IV. Controlling: After planning, organising, directing the various activities of the
personnel management. At this point the performance is to be verified in order to
know that the personnel functions are performed in conformity with the plans and
directions. Controlling involves checking, verifying and comparing of the actuals with
the plans, identification of deviations if any and correcting the identified deviations.
Thus action and operation are adjusted to pre-determined plans and standards
through control. Auditing, training programmes, analysing labour turnover records,
directing morale surveys, conducting separation interviews are some of the means
for controlling the personnel management function.
The operative functions of personnel management are related to specific activities of
personnel management viz. employment, development, compensation and relations.
All these functions are interacted with managerial functions. These functions are to
be performed in conjunction with managerial functions.
I. Employment:
The first operative function of Human Resources Management (HRM), employment
is concerned with securing and employing the people possessing required kind and
level of human resources necessary to achieve the organisational objectives. It covers
functions such as job analysis, human resource planning, recruitment, selection,
placement, induction, and internal mobility.
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1. Job Analysis: It is the process of study and collection of information relating to
the operations and responsibilities of a specific job. It includes
(a) Collection of data, information, facts and ideas relating to various aspects of
jobs including men, machines and materials,
(b) Preparation of job description, job specification job requirements and
employee specification which will help in identifying the nature, levels and
quantum of human resources, and
(c) Providing the guides, plans and basis for job design and for all operative
functions of HRM.
2. Human Resources Planning: It is process of determination and assuring that
the organisation will have an adequate number of qualified persons, available at
proper times, performing jobs which would meet the needs of the organisation and
which would provide satisfaction for the individuals involved. It involves,
(a) Estimation of present and future requirements and supply of human
resources based on objectives and long range plans of the organisation,
(b) Calculation of net human resources requirements based on present
inventory of human resources,
(c) Taking steps to mould, change, and develop the strength of existing
employees in the organisation so as to meet the future human resource
requirements, and
(d) Preparation of action programmes to get the rest of human resources from
outside the organisation and to develop the human resources of existing
3. Recruitment: It is the process of searching for prospective employees and
stimulating them to apply for jobs in an organisation. It deals with
(a) Identification of existing sources of applicants and developing them,
(b) Creation / identification of new sources of applicants,
(c) Stimulating the candidates to apply for jobs in the organisation,
(d) Striking a balance between internal and external sources.
4. Selection: It is the process of ascertaining the qualifications, experience, skill,
knowledge etc., of an applicant with a view to appraising his/her suitability to a job.
This function includes
(a) Framing and developing application blanks,
(b) Creating and developing valid and reliable testing techniques,
(c) Formulating interviewing techniques,
(d) Checking of references,
(e) Setting up medical examination policy and procedure,
(f) Line manager's decisions,
(g) Sending letters of appointment and rejection, and
(h) Employing the selected candidates who report for duty.
5. Placement: It is the process of assigning the selected candidate with the most
suitable job. It is matching of employee specifications with job requirements. This
function includes
(a) Counselling the functional managers regarding placement,
(b) Conducting follow-up study, appraising employee performance in order to
determine adjustment with the job, and
(c) Correcting misplacement, if any.
6. Induction and Orientation: Induction and orientation are the techniques by
which a new employee is rehabilitated in the changed surroundings and introduced
to the practices, policies, purposes and people etc., of the organisation. It includes
(a) Acquainting the employee with the company philosophy objectives, policies,
career planning and development, opportunities, product, market share, social
and commune standing, company history, culture etc.,
(b) Introducing the employee to the people with whom he has to work such as
peers, superiors and subordinates, and
(c) Moulding the employee attitude by orienting him to the new working and
social environment.
II. Human Resource Development
It is the process of improving, moulding and changing the skills, knowledge, creative
ability, aptitude, attitude, values, commitment etc based on present and future job
and organisational requirements. This function includes:
1. Performance Appraisal: It is the systematic evaluation of individuals with
respect to their performance on the job and their potential for development. It
(a) Developing policies, procedures and techniques,
(b) Helping the functional managers,
(c) Reviewing and consolidation of reports, and
(d) Evaluating the effectiveness of various programmes
2. Training: It is the process of imparting to the employees, the technical and
operating skills and knowledge. It includes
(a) Identification of training needs of the individuals and the company,
(b) Developing suitable training programmes,
(c) Helping and advising line management in the conduct of training
(d) Imparting of requisite job skills and knowledge to employees,
(e) Evaluation of the effectiveness of training programmes
3. Management Development: It is the process of designing and conducting
suitable executive development programmes so as to develop the managerial and
human relations skills of employees. It includes
(a) Identification of the areas in which management development is needed,
(b) Conducting development programmes,
(c) Motivating the executives,
(d) Designing special development programmes for promotions,
(e) Using the services of specialists, and / or utilizing the institutional executive
development programmes, and
(f) Evaluating the effectiveness of executive development programmes.
4. Career Planning and Development: It is the planning of ones career and
implementation of career plans by means of education, training, job search and
acquisition of work experiences. It includes internal mobility, and external mobility.
III. Internal Mobility
It includes vertical and horizontal movement of an employee within an organisation.
It consists of:
1. Transfer: Transfer is the process of placing employees in the same level jobs
where they can be utilised more effectively in consistence with their potentialities
and needs of the employees and the organisation. It also deals with
(a) developing transfer policies and procedures,
(b) guiding employees and line management on transfers, and
(c) evaluating the execution of transfer policies and procedures.
2. Promotion: Promotion is the upward reassignment given to an employee in the
organisation to occupy higher position which commands better status and/or pay
keeping in view the human resources of the employees and the job requirements.
This function covers
(a) formulation of equitable, fair and consistent promotion policies and
(b) advising line management and employees on matters relating to
promotions, and
(c) evaluating the execution of promotion policies and procedures.
3. Demotion: Demotion is the downward reassignment to an employee in the
organisation. It includes
(a) developing equitable, fair and consistent demotion policies and procedures;
(b) advising line managers on matters relating to demotions, and
(c) overseeing the implementation of demotion policies and procedures.
IV. Organization Development
It is a planned process designed to improve organisational effectiveness and health
through modifications in individual and group behaviour, culture and systems of the
organisation using knowledge and technology of applied behavioural science.
V. Compensation
It is the process of providing adequate, equitable, and fair remuneration to the
employees. It includes job evaluation, wage and salary administration, incentives,
bonus, fringe benefits, social security measures etc.
1. Job Evaluation: It is the process of determining relative worth of jobs.
(a) Selecting suitable job evaluation techniques,
(b) Classifying jobs into various categories, and
(c) Determining relative value of jobs in various categories
Wage and Salary administration is the process of developing and operating a suitable
wage and salary programme. It covers
(a) Conducting wage and salary survey,
(b) Determination of wage and salary rates based on various factors,
(c) Administering wage and salary programmes, and
(d) Evaluating its effectiveness.
2. Incentives: It is the process of formulating, administering and reviewing the
schemes of financial incentives in addition to regular payment of wages and salary. It
(a) Formulating incentive payment schemes,
(b) Helping functional managers on the operation, and
(c) Reviewing them periodically to evaluate effectiveness
3. Bonus: It includes payment of statutory Bonus according to the payment of
Bonus Act, 1965, and its latest amendments.
4. Fringe Benefits: Management provides these benefits to motivate the
employees and to meet life's contingencies. These benefits include:
(a) Disablement benefit
(b) Housing facilities
(c) Educational facilities to employees and children
(d) Canteen facilities
(e) Recreational facilities
(f) Conveyance facilities
(g) Credit facilities
(h) Legal clinic
(i) Medical, maternity and welfare facilities
(j) Company stores
VI. Social Security Measures
Management provides social security to their employees in addition to the fringe
benefits. These measures include:
1. Workmen's compensation to those workers (or their dependents) who involve
in accidents
2. Maternity benefits to women employees
3. Sickness benefits and medical benefits
4. Disablement benefits / allowance
5. Dependent benefits
6. Retirement benefits like Provident Fund, Pension, Gratuity etc.
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VII. Human Relations
Practising various personnel / human resources policies, and programmes like
employment, development and compensation and interaction among employees
creates a sense of relationship between the individual worker and management,
among workers and trade unions and management.
It is the process of interaction among human beings. Human relations are areas of
management practice in integrating people into wok situation in a way that motivates
them to work together productivity, co-operatively and with economic, psychological
and social satisfaction. It includes
a. Understanding and applying the models of perception, personality, learning,
intra and inter personal relations, intra and inter group relations
b. Motivating the employees
c. Boosting employee morale
d. Developing the communication skills
e. Developing the leadership skills
f. Redressing employee grievances properly and in time by means of a well
formulated grievance procedure.
g. Handling disciplinary cases by means of an established disciplinary
h. Counselling the employees in solving their personal, family and work
problems and releasing their stress and tensions.
i. Improving quality of work life of employees through participation and other
Effectiveness of various personnel programmes and practices can be measured or
evaluated by means of organisational health and human resource accounting etc.
1. Organisational Health: Organisational health may be studied through the
result of employee's contribution to the organisation and the employee job
satisfaction. The result of the employee satisfaction can be understood by labour
turnover, absenteeism and commitment.
Low rate of absenteeism and specific and high rate of employee commitment most
probably indicate employee satisfaction about the job and the organisation.
Employee contribution to the organisational goals can be measured through
employee productivity of different types.
2. Human Resource Accounting, Audit and Research: Effectiveness of
human resources management can also be found out through human resource
accounting, audit and research.
Human Resources Accounting (HRA): is a measurement of the cost and
value of human resources to the organisation. Human resource management is
said to be effective if the value and contribution of human resources to the
organisation is more than the cost of human resources.
Human Resource Audit: Human resource audit refers to an examination
and evaluation of policies, procedures and practices measures the effectiveness
of personnel programmes and practices and determine what should or should
not be done in future.
Human Resources Research: It is the process of evaluating the
effectiveness of human resources policies and practices and developing more
appropriate ones. It includes, (a) Conducting morale, attitude, job satisfaction
and behaviour surveys, (b) Collecting data and information regarding wages,
cost-benefit analysis of training, benefits, productivity, absenteeism, employee
turnover, strike, accidents, operations, working hours, shifts etc., (c)
Tabulating, computing and analysing data and information, (d) Report writing
and submission to the line managers, (e) Finding out the defects and short
comings in the existing policies, practices etc. (f) Developing more appropriate
policies, procedure, programmes of personnel.
The effectiveness in performing personnel and human resources management
functions results in contributing to the attainment of the objectives of the
organisation, individual employees and the goals of the society and/or government.
The objectives of personnel and human resources management are formulated on
the basis of organisational objectives, individual employee goals, social goals and the
functional analysis of personnel and human resources management. Further the
discussion about the meaning and definition of HRM can be made full-fledged by
studying the objectives and policies of HRM. Hence, we now discuss the objectives of
Human Resource Management.
- End of Chapter -
The relationship with which the managers in an organisation deal with one another is
broadly classified into two categories, viz, line and staff. Line and Staff are often
used in ways that are loose and unclear. Attempts have been made in some
organisations to dispense them. Thus operating managers / departments are
frequently substituted for line and auxiliary and service departments are used for
staff. Line and staff are characterised by relationships but not by departments. The
important category of relationships is line relationship.
Line Relationships: The relationship existing between two managers due to
delegation of authority and responsibility and giving or receiving instructions or
orders is called line relationship. Thus, line relationship generally exists between
superior and subordinate. 'Line' refers to those positions of an organisation which
have responsibility, authority and are accountable for accomplishment of primary
objectives. Managers identified as line are not subject to command by staff position.
In case of disagreement between line and staff, line manager has the right to make
final operating decisions.
Line authority represents uninterrupted series of authority and responsibility
delegation down the management hierarchy. In other words Board of Directors
delegates authority to the managing director, who in turn delegates a part of his
authority to the General Manager. The General Manager in turn delegates authority
to the Managing Director, who delegates a part of his authority to different
departmental Heads, and through them to the Supervisors. However, the line
managers are completely responsible and accountable for the results achieved by the
employees of the respective departments and sections. This means, though the
authority is delegated, responsibility for action taken by a subordinate still rests with
the superior / delegator.
The second kind of relationship is staff relationship.
Staff Relationships: The staff concept is probably as old as organisation itself. It is
virtually impossible for the busy line managers to perform all their functions and
concentrate on all activities including management of the people in their respective
departments. This gives rise to securing advice and help from specialists. This creates
staff relationships. The relationship between two managers is said to be a staff
relation, when it is created due to giving and taking advice, guidance, information,
help or assistance, counselling etc. in the process of attaining organisational goals.
Thus staff managers analyse problems, collect information, develop alternative
suggestions, and help the line managers to make right decisions quickly. Staff control
is monitoring and reporting, which brings the results of information to the attention
of the line managers for action by the line. Thus they reduce the work load of the line
managers and allow them to concentrate on their operative issues.
Having discussed two concepts it would be appropriate to apply the line and staff
relationships to the organisation design.
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Organisation can also be structured on the basis of line and staff. As discussed earlier
line and staff are viewed as relationships but not by departments. Some functional
managers have line relations with other managers whilst some other managers have
staff relations with other managers in the organisation. But those functional
managers having staff relations may have line relations in relation to the
subordinates in their departments. Thus organisation structure is designed on the
basis of line and staff relationship within departmental structure. It is often regarded
that the personnel manager has staff relation with other managers in an
Now we discuss the line and staff relationship and personnel management in an
Personnel Management is a Line Responsibility:
It is often said that "Personnel Management is a line manager's responsibility but a
staff function". As discussed earlier the responsibility of line managers is to attain
effective goals of their respective departments by the proper management of
materials, machine, money and men. Thus management of four 'M's, which includes
management of personnel in their respective departments is the responsibility of line
management. Since management is getting things done through and by the people,
responsibility of management of these people rests with line managers. Attaining
overall organisation goals is the responsibility of the General Manager through
proper management of personnel and with the help of the different heads of the
departments. In turn, management of personnel in different departments is the
responsibility of the Heads concerned. In the same way, first level superiors are also
responsible for managing the men of their respective sections in achieving their
goals. Thus Personnel Management is a responsibility of all line managers. It is in
this sense that every manager is a personnel manager.
Line Needs Assistance in Managing Men:
In most of the organisations, Board of Directors delegate operative/technical
responsibilities to Managing Directors and through them to the General Managers.
Different functional managers are delegated with the technical responsibility by the
General Manager. Since all these line managers have to concentrate on discharging
technical/operative responsibility, hence they may not find time to discharge their
responsibility of managing human resources. For example, the production manager
has to concentrate on production activities and thus he may not find time to perform
the various functions of personnel management relating to employees of his own
department. In such a situation, the line managers require help or advice relating to
personnel management of their respective department.
Personnel Management is a Staff Function:
Since the top management believes that organisational ability depends on sound
management of human resources. It provides specialised assistance to line managers
through personnel managers. Thus the personnel managers are created for the
purpose of providing assistance, advice, information etc. to line managers in order to
relieve them from the burden of management of personnel and to allow them to
concentrate on their technical operations. Personnel Manager performs the various
functions of personnel management viz, employment, training, development, wage
and salary administration, motivation, grievance redressal, workers participation in
management, collective bargaining etc. Thus personnel managers perform certain
staff functions relating to management of personnel like advising, assisting, guiding,
suggesting, counselling and providing information to line managers. So personnel
management is a staff function.
However, responsibility for the management of personnel still rests with line
managers. Thus personnel management is a line management responsibility but a
staff function.
The personnel department in relation to other departments and other managers
performs the following roles:
- Policy Initiation and Formulation: One of the important functions of the
personnel department is formulation of new personnel policy, alteration or
modification of the existing personnel policies. The personnel manager has to initiate
the modification or formulation of new policies. The personnel manager assists,
advises and counsels the managing director regarding implications etc., information
and modification of all major or crucial policies. He may be authorised by the
Managing Director to formulate or modify the minor policies.
- Advice: The major activity of the personnel department/manager if advising,
counselling, suggesting all other managers at all levels (Junior, Middle and Top)
regarding problems, issues, clarifications concerning policies or people of their
department / sections. Advice should be based on thorough thinking, analysis,
research regarding pros and cons, implications during and after execution, possible
measures to be taken etc.
- Service: Personnel Management renders all secretarial and executive services and
performs background work in all personnel activities regarding recruitment,
receiving and scrutinising applications, conducting tests, interviews, placement,
induction, training, compensation management and management of industrial
- Monitor and Control: Personnel Department monitors performance and
controls the line activities to the extent they are related to personnel issues. It
compares the actual performance of the line managers with the established
personnel policies, procedures and programmes. Identifies and informs the
deviations with possible alternative solutions to the line managers. It also provides
the course of corrective action. It suggests to the managing director to modify the
policies (if necessary) basing on the experiences in this regard.
The line relationship of delegated authority and responsibility from Managing
Director to first level supervisors through General Manager, heads of the
departments is shown by straight line. The relationship between the general manager
and Manager Personnel is also shown by a straight line as the General Manager also
gives orders to staff specialists. Personnel Manager, being a staff specialist, provides
advice and help to various heads of the departments and lower level managers, in
addition to General Manager.
The role of a personnel manager attached to the divisional office/branch office or
factory of a decentralised organisation is particularly a difficult one. The Personnel
Manager at divisional/branch level is responsible to the local divisional/branch
manager in a line sense and subordinate to the Manager - Personnel at head office in
a staff sense or functional sense. Personnel Manager at divisional / branch level has
to help the divisional / branch manager in developing personnel programmes and in
the management of personnel of the division / branch concerned. The Deputy
Manager Personnel at the divisional level may contact the Manager Personnel at
the head office to gain acceptance of the personnel programmes. In case of rift
between Divisional Manager and Deputy Manager - Personnel, they may report their
difficulties to their common superior, who in turn consults higher management for
correct decision.
Similarly, the personnel officer at branch level may contact the Deputy Divisional
Manager Personnel at divisional level to gain acceptance of the personnel
programme and to get clarifications about personnel issues. In case of rift between
the Branch Manager and Branch Personnel Officer, they may report their issues to
their superior at divisional level. The Branch Personnel Officer and Branch Manager
may get the assistance from the Personnel Manager at the head office, in solving the
problems of crucial and strategic nature and of those which cannot be solved at
branch / divisional level.
In a matrix organisation structure, employees have two superiors, i.e. they are under
dual authority. One chain of command is functional and the other chain of command
is project team. Hence matrix structure is referred to as a multi command system
(both vertical and horizontal dimension). Thus the team of employees of personnel
department has two superiors. i.e. Personnel Manager (vertical dimension) and
Project Manager (horizontal dimension). Both dimensions of structure are
permanent with power held equally.
The personnel department has staff relationship with other department / managers
in the total organisation. The personnel department is responsible for advising
management - from Managing Director to the lowest line supervisor - on all areas
relating to the personnel management and industrial relations. Personnel
department also performs various functions of employment, training and
development. It represents management in many of the relationships that effect the
organisation as a whole. It is also responsible for representing various workers
problems to management.
Personnel department generally acts in an advisory capacity. It provides information,
offers suggestions, counsels and assists all the line managers in the organisation and
is not responsible for the end results. The personnel manager must exercise control
very tactfully in order to win the confidence and cooperation of all line managers. He
has to persuade the line managers to work with staff specialists and not against them.
As a Source of Help - In certain situations (when line managers lack skill or
knowledge in dealing with employee problems) experienced personnel managers
assume line responsibility for personnel matters. But it may be resented by the
managers who ought to seek staff assistance in meeting their personnel
responsibilities. Personnel managers should earn the reputation and confidence of
line managers of being a source of help rather than a source of threat to line
managers. Staff assistance is likely to be effective when it is wanted rather than when
As a Chance Agent - Nevertheless it is still true that effective personnel executives
advice on policies helps managers in implementing their programmes.
Responsibilities within Personnel Department - As the other managers,
Personnel Manager is also a line manager in relation to subordinates within the
personnel department. Personnel manager is responsible for the success or failure of
his department in contributing to the organisational goals. In most of the
organisations the personnel manager is responsible for supervising the activities of
his subordinates like employment manager, wage and salary manager, manager for
training and development, manager industrial relations etc. He is also responsible
for the operations of personnel manager at divisional and branch levels.
As the chief of the personnel department the personnel manager has to get effective
results with the cooperation of all the employees working in the department. The
success of the personnel department should be measured in terms of its
contributions to the personnel programmes like
helping line managers in recruitment, screening and referring suitable
candidates for employment,
securing cooperation of line managers in formulating personnel policies,
providing infrastructure and various facilities for training and development,
providing general information regarding the job and organisation in induction
and training programmes,
maintaining adequate employee records to assist the line managers in making
decisions affecting the employees,
working with line managers in preparing employee appraisal methods,
helping the line managers in developing their behavioural sensitiveness,
consulting and advising in formulating the equitable wage policy and
employee benefits,
participating in grievance procedure and collective bargaining,
preparing employees to accept the change like change in technology, change in
organisational structure,
acting as change agent for the organisational development by contributing to
employees effectiveness,
evaluating the employee contribution to organisation in relation to staff and
cost incurred with the help of human resource accounting techniques,
counselling and consulting on various employer problems in order to
maintain sound industrial relations.
The success of the personnel department can be guaged by the degree of dependence
of line managers on personnel department, which in turn depend greatly on the
qualifications and qualities of the personnel manager.
The functions of personnel management vary from organisation to organisation, both
in nature and degree. So, the qualifications required of a personnel manager differ
from organisation to organisation depending on its nature, size, location etc.
However, the qualification and qualities which will be applicable in general can be
summarised as follows:
1. Personal Attributes: The personnel manager, as in case of any other manager,
must have initiative, resourcefulness, depth of perception, maturity in judgment, and
analytical ability. Freedom from bias would enable the personnel manager to take an
objective view of both of management and workers. He must thus have intellectual
integrity. Moreover, the personnel manager should be thorough with labour laws. An
understanding of human behaviour is essential to the personnel manager. The
personnel manager must be familiar with human needs, wants, hopes and desires,
values, aspirations etc.
The Personnel Manager should also possess other personal attributes like:
a. Intelligence: This includes skills to communicate, articulate, moderate,
understand etc., command over language, mental ability and tact in dealing
with people intelligently, and ability to draft agreements, policies etc.
b. Educational Skills: Personnel Manager should possess learning and
teaching skills as he has to learn and teach employees about the organisational
growth, need for and mode of development of individuals etc.
c. Discriminating Skills: Personnel Manager should have the ability to
discriminate between right and wrong, between the just and unjust, merit and
d. Executive Skills: Personnel Manager is expected to execute the
management's decisions regarding personnel issues with speed, accuracy and
objectivity. He should also be able to streamline the office, set standards of
performance, co-ordinate, control etc.
Further, the personnel manager is expected to have leadership qualities deep faith in
human values, empathy with human problems, foreseeing future needs of employees,
organisation, government, trade unions, society etc.
2. Professional Attitudes: Finally, professional attitude is more necessary
particularly in Indian context. The personnel manager's job, as in the case of other
managers is getting professionalised. He should have patience and understanding,
ability to listen before offering advice. As mentioned earlier he should have the
knowledge of various disciplines like technology, engineering, management,
sociology, psychology, philosophy, human physiology, economics, commerce and
law. He must be able to couple social justice with a warm personal interest in people,
which must be secured by an uncommon degree of common sense.
3. Qualifications: Qualifications prescribed for the post of Personnel Manager vary
from industry to industry and from State to State. These qualifications have been
undergoing several changes from time to time. However, the qualifications
prescribed in general are:
a. Degree of a recognised university
b. Post graduate degree / diploma in Social Sciences or Sociology or Social Work
or Personnel Management or Industrial Relations or Labour Welfare or
Labour Laws etc., MBA with specialisation in Personnel Management and
Industrial Relations.
c. Degree in Law is taken as an added or desirable qualification.
d. Experience in a similar capacity.
e. Knowledge of local language.
The Indian Context
Though it is said and accepted that the personnel manager should possess various
skills listed above, the Indian personnel managers do not possess at least some of the
important qualities discussed above. This is mostly due to the absence of proper
human resource planning at the macro level. The cream of the country's human
resources is attracted to the field of medicine, engineering and technology, finance
(banking, life insurance) and computer applications. Only the left-overs join the
profession of personnel management with an intention to just get a job. This resulted
in the absence of professional attitude, interest, intelligence, knowledge, skills etc.,
among today's personnel managers. As such this function in organisations and
profession in general receives inadequate attention among line managers, top
management and the planners.
The entrance of less qualitative human resources into the profession of personnel
management has resulted in ineffectiveness of personnel function. Further, other
managers view the personnel manager as a second rate citizen in the organisation
and as an unwanted group in the organisation. This type of attitude of various
managers towards personnel manager results in conflicts between personnel and
other managers.
Personnel Manager can't perform his job in a vacuum, as a number of environmental
factors affect the HRM. In fact, these factors influence the organisation through
human resources. The term 'environment of human resources management' has
reference to the totality of all factors which influence both the organisation and HRM
sub-systems. The environment furnishes the macro context and the organisation is
the micro unit.
The external environment consists of those factors which affect an organisation's
human resources from outside the organisation. Important among them are:
economic, social, political, governmental, legal, technological, manpower in the
country, tradition and culture, customers, other organisations and their trade unions.
Each of these external factors, separately or in combination, can influence the HRM
function of any organisation. Further, changes in these factors make the personnel
manager's job a challenging one.
The internal environment also affects the job of a personnel manager. The internal
environmental factors include organisation objectives, policies, organisational
structure, the functional areas of the organisation with which the personnel manager
works continuously like finance, marketing and production.
Impact of internal environmental factors is profound as they frequently and closely
interact with HRM function in an organisation. For instance, the objectives of HRM
are formulated based on the organisational structure. The personnel manager works
closely with other functional (line) managers in solving their personnel problems
through counselling, advising, providing information etc. The levels of wage and
salary, various allowance incentive, compensation etc. are heavily influenced by the
level of finance and success of marketing functions. Most of the personnel problems
are linked with the production function of an organisation. Thus the internal
environment of an organisation influences heavily the P/HRM.
The influence of external environment on HRM is equally important, though the
severity is comparatively less. People are essentially self managing. In other words,
while other resources are managed by people, personnel are managed by themselves.
People themselves decide about the nature, time and place of their employment. And
people react to the changing conditions and to the techniques of management unlike
money, material and machine. Further in the present day industries, where the
principles of democracy influence and management of labour, the relationship
between employers and employees is conceived of as a "partnership in a constructive
endeavour to promote the satisfaction of the economic needs of the community in the
best possible manner".
But, the impact of changes in the external environment of an enterprise is profound
on the personnel. These changes include technological obsolescence, cultural and
social changes, changes in the policies of the government, politics and the like. With
the result, the work environment changes affect their productivity level. It is often
said these peculiarities and changes complicated the task of personnel management.
Modern managers face now, bewildering, and often contradictory ideas and
A number of impressive changes have taken place in the level, aspiration, values and
position requirement of human resources. These are due to changes in technological
innovations, more formal education, demand of the Government, trends in the
employee roles, changes in the values of workforce, demands of employers, changes
in structure of employment etc.
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i) Technological Factors: Just as necessity is the mother of invention competition
and a host of other reasons are responsible for the rapid technological changes and
innovations. In consequence of these changes, technical personnel, skilled workers
and machine operators are increasingly required, while the demand for other
categories of employees has declined. But it is found that the supply of former
category of employees has dwindled in relation to the demand for the same. Hence,
procurement of skilled employees and their increase in numbers to match the
changing job requirements has become a complicated task. In addition, not only new
organisational relationships and different motivational techniques to satisfy the
changed relationships but also to retain technically skilled and efficient personnel
will be required.
ii) Human Resource in the Country: The structure, values and the level of
education of human resources in the country influence much the HRM function of
any organisation. The influence of manpower in the country can be studied through
the changes in structure of employment.
a. Change in the Structure of Employment: Structure of employment in
an organisation changes with the entrance of workforce with different
background (social, economic, region, community, sex, religion, traditions,
culture etc). There has been a significant change in the structure of
employment with the entry of (a) candidates belonging to scheduled caste,
scheduled tribe and backward communities, thanks to government's
reservation policy, and with (b) more female employees due to increased career
orientation among women, suitability of women for certain jobs, and women
becoming more acclimatized to the working climate & higher level
commitment. Organisational workforce is composed of people from different
regions, mostly due to increased transportation facilities and mobile character
to people. Further, technological revolution has brought occupational mobility.
These changes in workforce have naturally complicated the task of HRM as the
personnel manager has to deal with the employees with different backgrounds.
b. Changes in Employee Roles and their Values: It was the opinion of
the management that it was the boss who'd make the decisions, and employees
have to follow obediently management's decision. But gradually, this
relationship has been replaced by the relationship in which employees and
management are partners in the organisation.
Further, changing structure of the work force has led to the introduction of new
values and roles in organisations. Among these are...
(a) emphasis on quality of life rather than quantity;
(b) equity and justice for the employees over economic efficiency;
(c) pluralism and diversity over uniformity and centralism;
(d) participation over authority;
(e) personal convictions over dogma;
(f) the individual over the organisation;
(g) alienation from the job;
(h) increasing counterproductive behaviour;
(i) rising expectations;
(j) changing ideas of employees;
(k) declining work ethic.
Consequently it has become imperative for the management to provide various
fringe benefits to improve morale, to introduce negotiating machinery to
redress grievance, to encourage employee participation in decision making, and
the like, to pave the way for industrial democracy to meet the situations of
Employees prefer flexible working hours to fixed time schedule. Flexible
schedules fit not only with new values of modern workforce but also benefits
the employer with the enhancement in productivity, reduction in employee
tardiness, absenteeism and turnover, improvement in morale and the like.
Since, the rights of citizenship are entering the organisations freedom of speech
and the rights to privacy are becoming part of work ethic.
c. Level of Education: Workers have been entering the organisations with
increased level of formal education in recent years. Increased formal education
led to the changes in attitude of employees. The well educated employees
challenge and question the managements decisions and want a voice in the
company's affairs affecting their interest. "As the base of education broadens,
management must plan to deal with employees on a higher plane of logical
interactions". Thus management of well educated employees is a problem to
the organisation though they make valuable contributions.
iii) Changing Demands of Employers: Changes always are not on the side of
employees. Organisations also undergo changes and consequently their demands on
employees also change. The technological revolution and neck to neck marketing
competition of most of the organisations demand that the existing employees adopt
to the ever changing work situations and learn new skills, knowledge etc., to cope up
with the new changes.
iv) Local and Governmental Factors: Government had neither time nor
interests to spare for the problems pertaining to labour arising in industry till the end
of 1940s. But the need for government interference arose out of the belief that
government is the custodian of industrial and economic activities. The various
reasons, like problems of trade union movement, failure of many employers to deal
fairly with workers, and non-fulfillment of plan targets, encouraged the governments
to intervene in human resources management and enact various labour legislations.
Consequently the government has imposed the complex web of rules and regulations
on the employment policy of the organisations by reserving certain number of jobs of
all categories to certain sections of the community. Hence, the management cannot
manage the human resources unilaterally as it used to do, because it has to abide by
legislations, rules and regulations imposed by the government.
One of the most important external factors that affects HRM is legal environment,
i.e., awareness of legislations enacted by the government at the Centre and the
States. The important legislations enacted in India affecting HRM are: Factories Act
1948, Trade Union Act 1926, Payment of Wage Act 1936, Minimum Wages Act 1948,
Employees State Insurance Act 1948, Workmens Compensation Act 1923, Payment
of Bonus Act 1965, Industrial Employment (Standing Orders) Act 1946, Employment
Exchange (Compulsory Notification of Vacancies) Act 1959, Payment of Gratuity Act
1972, Maternity Benefit Act 1961 and Apprentice Act 1961.
v) Employees Organisation: Employees organisations have mustered strength
as a parallel to the growth of industrialism. At present these organisations constitute
one of the power blocks in many countries including India. With the formation and
recognition of these organisations, the issues related to employees' interests are no
longer determined by the unilateral action of management, and must now be
discussed with union representatives. In addition, Unions have shifted their
emphasis from economic tactics to the political pressures. Thus "...the unions have
turned increasingly to governmental action as a means of achieving their objectives
in addition to using the more traditional actions". In consequence the scope of
managerial discretion has been narrowed down.
vi) Customers: Organisations produce products or render services for the ultimate
consumption / use by the customers. In a sense it can be said that organisations
depend upon customers for their survival and growth. Customers revolt against
employees if services rendered are less qualitative. There were a number of instances
of this kind in commercial banks in India. Similarly, customers may develop negative
attitude towards the organisations, if it does not follow the social policies of the
country. Hence, personnel manager has to take the customer's attitude towards
employees in HRM particularly in service oriented industries.
vii) Social Factors: Social environment consists of class structure, mobility, social,
roles, social values, nature and development of social institutions, caste structure and
occupational structure, socially forward and weaker sections, traditions, religions,
culture etc. These factors directly influence the human resources management of an
organisation viz. its human resources.
iii) Economic Factors: A number of economic factors affect human resources
management of an organisation by influencing system, national income, per capita
income, wage level and structure, distribution of income and wealth etc. These
factors mostly influence the wage and salary levels of an organisation.
ix) Political Factors: Political stability, political parties and their ideologies and
political gimmicks, formations of new political parties, splits in and amalgamation of
existing trade unions etc. The changes in trade unions complicate the task of HRM.
Human resources and their management interacted with the internal and external
environmental factors. Many environmental factors affect the performance of
specific tasks of HRM. Changes in the internal and external environmental factors
complicate the tasks both of line and personnel managers in the tasks of dealing with
human resources.
Considering the complexities and the challenges in the HRM now and in near future
management has to develop sophisticated techniques and efficient specialists to
manage the personnel on sound lines.
1. Define Personnel Management and describe its objectives.
2. Bring out the importance of Human Resources Management for
3. Describe the managerial and operative functions of Human Resource
4. Comment on the present position and status of the Personnel Manager in a
large industrial undertaking in India.
5. What are the major qualities and qualifications required for Personnel
Billy Biscuit Company is a medium scale family-run company located in Eastern
India. It employed 140 workers during the last two years. The company has strained
industrial relations. When the workers went on strike, the company declared a
lockout. Four months later the worker's union and management resumed dialogue.
The union agreed to cooperate with management provided the management lifts the
lockout and abolishes the personnel department. The management agreed to both
the demands.
Do you feel that after the personnel department is abolished, personnel functions
should still be carried out? Give reasons. If the answer is yes, discuss 'how' it is
possible and who will have the responsibility for personnel activities in the
*Source: C. S. Venkataratnam and B. R. Srivastava, Personnel Management and
Human Resources, Tata McGraw-Hill, New Delhi, 1991, PP 27
- End of Chapter -
E.W. Vetter viewed human resource planning as "a process by which an organisation
should move from its current manpower position to its desired manpower position.
Through planning, management strives to have the right number and right kind of
people at the right place at the right time, doing things which result in both the
organisation and the individual receiving maximum long-run 'benefit' ".
Human resources planning may be viewed as foreseeing the human resource
requirements of an organisation and the future supply of human resources and (i)
making necessary adjustments between these two and organisational plans; and (ii)
foreseeing the possibility of developing the supply of human resources in order to
match it with requirements by introducing necessary changes in the functions of
human resource management.
Human Resource Planning (HRP) anticipates not only the required kind and number
of employees but also determines the action plan for all the functions of personnel
management. The major payoffs of human resource planning may be catalogued
1. It checks the corporate plan of the organisation. If it is anticipated that the
required manpower will not be available, then the HRP suggests the need for
modification of corporate plans.
2. It offsets uncertainty and change. Without the HRP, everything regarding
requirement of availability of internal moves of human resources would be in
liquid state and all the managers will be in a dilemma about securing suitable
personnel until they get them. Sometimes the organisation may have
machines, material and money but not the means, and consequently the
production cannot be started. But the HRP offsets uncertainties and changes
to the maximum extent possible and enables the organisation to have right
men at right time and in the right place.
3. It provides scope for advancement and development of employees through
4. It helps to satisfy the individual needs of the employees for promotion,
transfers, salary enhancement, better benefits etc.
5. It helps in anticipating the cost of salary, benefits and all the cost of human
resources facilitating the formulation of budgets in an organisation.
6. It tries to foresee redundancy and plan to check it or to provide for alternative
employment in consultation with trade unions, other organisations, and
governments through remodeling the organisational, industrial and economic
7. It helps in planning for physical facilities, working conditions, the volume of
fringe benefits like canteen, schools, hospitals, conveyance, child care centres,
living quarters, company stores etc.
8. It gives an idea of type of tests and interview techniques to be used in selection
process based on the level of skills, qualifications, intelligence, values etc.,
required of future human resource.
9. It causes the development of various sources of people to meet the
organisational needs.
10. It helps to take steps to improve human resource contributions in the form of
increased productivity, sales, turnover etc.
11. It facilitates the control of all the functions, operations, contributions and cost
of human resources.
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The important objectives of human resource planning in an organisation are
(i) to recruit and retain the human resource of required quantity and quality;
(ii) to foresee the employee turnover and make arrangements for minimizing
turnover and filling up of consequent vacancies;
(iii) to meet the needs of the programmes of expansion, diversification etc;
(iv) to foresee the impact of technology on work of existing employees and future
human resource requirements;
(v) to improve the standards, skills, knowledge, ability, discipline etc.
(vi) to assess the surplus or shortage of human resources and take measures
(vii) to maintain congenial industrial relations by maintaining optimum level and
structure of human resources;
(viii) to minimize imbalances caused due to non-availability of human resources of
right kind, right number, in right time, and at right place;
(ix) to make the best use of its human resources; and
(x) to estimate the cost of human resources.
Different institutions make Human Resource Planning at different levels for their
own purposes, of which national level, sectoral level, industry level, unit level,
department level, and job level are important.
1. National Level: Generally, government at the centre plans for human
resources at the national level. It forecasts the demand for and supply of
human resources for the entire nation, it takes steps to adjust the demand by
altering its economic, industrial and agricultural policies, and adjusts the
supply through its population policy, family planning, educational policy etc. It
also plans for occupational distribution, sectoral and regional allocation of
human resources. HRP at national level helps to plan for educational facilities,
hospitals, employment plans, agricultural and industrial development etc.
2. Sectoral Level: Manpower requirements for a particular sector like
agricultural sector, industrial sector or tertiary sector are projected based on
the government policy, projected output / operations etc.
3. Industry Level: Manpower needs of a particular industry like cement,
textile, chemical etc are predicted, taking into account the output / operational
level of that particular industry.
4. Unit Level: This covers the estimation of human resource needs of an
organisation or a company based on its corporate / business plan
5. Department Level: This covers the manpower needs of a particular
department in a company.
6. Job Level: Manpower needs of a particular job family within a department
like "Mechanical Engineer" are forecasted at this level.
Human Resource Planning at organisational level consists of the following steps:
Step 1 - Analyzing organisational plans
Step 2 - Demand forecasting, which means, forecasting the overall human resource
requirements in accordance with the organisational plans.
Step 3 - Supply forecasting, which means, obtaining the data and information about
the present inventory of human resources, and forecast the future changes in present
human resource inventory.
Step 4 - Estimating the net human resource requirement.
Step 5 - In case of future surplus, plan for redeployment, retrenchment, and layoffs.
Step 6 - In case of future deficit, forecast the future supply of human resources from
all sources with reference to plans of other companies.
Step 7 - Plan for recruitment, development, and internal mobility so that in future,
supply is more than or equal to net human resource requirements.
Step 8 - Plan to modify or adjust the organisational plan, if future supply is likely to
be inadequate.
The eight steps of HRP are depicted in the order mentioned above. But the same
order need not be followed in the actual planning process, as the steps are
interdependent and sometimes, the first step and the last step may be processed
simultaneously. And the planner sometimes may not explicitly process some steps.
However, it is helpful in planning the human resources effectively, without any
complications, if the planner has an idea about all steps of HRP. These steps are
discussed below in detail:
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The process of human resource planning should start with analysing the
organisational plan into production plan, technological plan, plans for expansion or
diversification, marketing plan, sales plan, financial plan etc. Each plan can be
further analysed into sub-units. Detailed programmes should be formulated on the
basis of unit-wise plans. Practicability of each programme should be ensured.
Analysing of organisational plans and programmes helps in forecasting the demand
for human resources, as it provides the quantum of future work activity.
The existing job design and analysis may thoroughly be reviewed keeping in view the
future capabilities, knowledge and skills of present employees. Further, the jobs
should be redesigned and re-analysed keeping in view the organisational and unit-
wise plans and programmes, future work quantum, future activity or task analysis,
future skills, values, knowledge and capabilities of present and prospective
employees. The job generally should be designed and analysed reflecting the future
human resources and based on future organisational plans. Job analysis and
forecasts about the future components of human resources facilitate demand
forecasting. One of the important aspects of demand forecasting is the forecasting of
the quality of human resources (skill, knowledge, values, capabilities etc) in addition
to quantity of human resources. Important demand forecasting methods are:
(a) Managerial Judgment: Most of the small scale and unorganised
industries cannot have systematic data banks for manpower information and
job analysis. Such organisations resort to the managerial judgment approach.
Under this method, the managers or supervisors who are well-acquainted with
the workload, efficiency, and ability of employees, think about their future
workload, future capabilities of employees, and decide on the number and type
of human resources to be sourced. This is done by the supervisors concerned,
who send the proposals to the top officials for approval. Under this bottoms-up
approach, the management at the top compares the proposals with the
organisational plans, makes necessary adjustments, and finalises the plans.
Alternatively, this exercise can also be done by the top management, which in
turn, sends the information to the lower levels. Under this top-down approach,
the management at the top prepares the organisational plans, departmental
plans, and human resource plans. But the best approach is participative
approach, where both the management at the top and supervisors at the
bottom meet and decide on the human resource needs based on the experience
of the supervisors and the plans formulated by the top officials.
(b) Statistical Techniques: There are two types of statistical techniques
useful for human resource planning viz.
i. Ratio Trend Analysis:Under this method, the ratios are
calculated for the past data relating to number of employees of each
category and production level, sales level, activity level / work load
level, and direct employees and indirect employees. Future
production level, sales level, activity level / work load are estimated
with an allowance for changes in organisation methods and jobs.
Future ratios are also estimated when there are changes to come in
organisation and human resources. Then future human resource is
calculated on the basis of established ratios. The following example
gives clear idea.
Present level of production on 1-1-90 = 1,500 units
Present number of foreman on 1-1-90 = 3
Ratio is 3 : 1500 i.e. 1 : 1500
Estimated production on 1-1-92 = 2,500 units
Foreman required as on 1-1-92 = 5
(without giving any provision for changes)
Future changes include decline in physical stamina of employees,
change in values, increase in extra and social activities. It is
estimated that the future ratio would be 1 : 420
Then, the Foremen required as on 1-1-92 = 6
ii. Econometric Models: Econometric models for human
resource planning are built up by analysing the past statistical data
and by brining the relationship among variable. These variables
include those factors which affect manpower requirement directly
and indirectly like investment, production, sales, activities / work
load etc. The econometric model of formula is used to forecast
manpower needs based on movements in various variables.
(c) Work study Techniques: These techniques are more suitable where the
volume of work is easily measurable. Under this method, total production and
activities in terms of clear units are estimated in a year. Manhours required to
produce / perform each unit is calculated. Work ability of each employee is
estimated in terms of manhours after giving due weightage to absenteeism, rest
etc. Then the required number of employees is calculated. The following
example gives clear idea.
Given that the planned operations during the year 1992 = 1,60,000 units for
clerical section of Personnel Department of XYZ Co Ltd
Planned operations during the year = 1,60,000 units
Standard manhours needed to perform each unit in 1992 = 0.25 hours
Planned manhours needed per year in 1992 = 40,000 hours
Work ability per employee in 1992 = 2,000 manhours
Therefore, the number of employees required in 1992 = 40,000/2,000 = 20
After estimating the overall human resource requirements the present human
resource inventory should be obtained.
The first step of forecasting the future supply of human resource is to obtain the data
and information about the present human resource inventory or existing inventory.
(a) Existing inventory: The data relating to present human resources
inventory in terms of human resources components, numbers, designation-
wise and department-wise should be obtained. Principal dimensions of human
resources inventory are:
i. Head counts - total, department-wise, sex-wise, designation-wise, skill-
wise, payroll-wise etc.
ii. Job family inventory - It includes number and category of employees of
each job family i.e., all jobs related to same category like clerks, cashiers,
typists, stenographers etc., each job family, i.e., all jobs having common
job characteristics (skill, qualification, similar operations) like production
engineer (mechanical) and maintenance engineer (mechanical), and
broad job families like general administration, production etc.
iii. Age inventory - It includes age-wise number and category of
employees. It indicates age-wise imbalances in present inventory which
can be correlated in future selections and promotions. Age composition of
human resources is also seen. Generally the individuals are dynamic,
creative and innovative during their young age. However, they may lack
judgment and maturity during that age. Hence a combination of young
and old is preferred by organisations. The HRP should give due
consideration to it and keep age-wise human resource mixing at the
optimum level by renewing the manpower.
iv. Competency inventory - Inventory of skill, experience, values,
v. Qualification inventory - Inventory of qualifications and training
including minute qualifications and training received.
vi. Salary grades inventory - Inventory of salary grades pay-wise,
allowances-wise, and total salary-wise.
vii. Gender inventory - Inventory of males and females employed
viii. Location inventory - Local and non-local inventory
ix. Performance inventory - Inventory of past performances and future
(b) Potential Losses: The second step of supply forecasting is estimation of
future losses of human resources for each department and for the entire
organisation. Potential losses to the organisation include voluntary quits,
deaths, retirements, dismissals, layoffs, disablement due to ill-health or
involvement in accident, loss of values, aptitude etc., change in the attitude of
existing employees towards the job, department and organisation. Potential
losses to a particular department or sub-unit include factors like promotions-
out, transfers-out and demotions-out in addition to the above factors relating
to the organisation. The reasons for potential loss can be classified as:
i. Permanent Total loss: Permanent total loss is due to labour
turnover. Labour turnover is measured by the following formula.
Number of employees left during a specified
Labour Turnover Rate = --------------------------------------------------------
---------- x 100
Average number of employees during the same
Management has to calculate the rate of labour turnover, conduct exit
interviews, and interviews regarding dismissal etc. This helps to forecast
the rate of potential loss and reasons for loss, and to reduce loss.
Management also calculates labour stability index (rate of employees
with certain period of experience to total number of employees),
survival rate (the proportion of employees engaged within a certain
period who remain with the firm after so many months or years of
service), which helps the management to encourage stability and
minimize undesirable turnover.
ii. Permanent Partial loss: Permanent partial loss consists of wastage
of skills, capabilities etc due to ill-health and involvement of employees in
accidents. Such loss can be estimated on the basis of heath of employees,
working conditions, and occupational diseases in organisation, safety
measures provided, and past data relating to sickness and accidents rates.
Such data helps not only to estimate loss of some components of human
resources like physique, ability etc., but also suggests measures to be
taken in order to minimize loss of human resources. Conclusions of
morale studies or surveys are helpful to forecast the loss of values,
aptitude etc of the existing employees.
iii. Temporary Total loss: Temporary total loss of human resource is
due to absenteeism and deputation-out. Past data about absenteeism, the
reasons, and measures already taken or under implementation to
minimize absenteeism, help to forecast loss of human resources due to
absenteeism. Loss of human resources due to deputations can be
anticipated through agreements of one organisation of employees with
other organisations.
iv. Temporary Partial loss: Temporary partial loss includes
consultancy, advisory, and other services offered by the employees to
others. Potential additions should also be estimated after forecasting
potential loss.
(c) Potential Additions: Similar to potential loss, there will also be additions
to the present inventory of human resources. Potential additions are of three
types viz.
i. Permanent Total additions
ii. Permanent Partial additions
iii. Temporary Total additions
iv. Temporary Partial additions
Permanent total additions to the organisation consist of new hires. It can be
estimated based on workload, interim programme etc. Permanent total
additions in case of departments include promotions, demotions and transfers
within the organisation. These additions can be estimated based on the
acquisition of new skills, knowledge, values, aptitude etc by the existing
This addition can be foreseen with the help of morale studies, surveys,
organisational programmes, general level of values etc. Consultancy and
advisory services needed are estimated, based on the future changes in
technology and special programmes or activities to be undertaken.
The multiple effects of promotions and transfers on the total moves should be
analysed and taken into consideration in forecasting changes in human
resource supply of various departments. For example, if one officer in Grade C
is promoted to Grade D, three more employees will also get promotions, (clerk
to office A, Officer A to Officer B and Office B to Officer C). Thus there are four
moves for one promotion. The rate of moves for promotion at higher level is
relatively greater than those at lower level.
The difference between the potential loss and potential additions is to be added
or subtracted as the case may be to the present inventory of human resource in
order to forecast the supply of manpower.
Future supply of Human Resource = Present Inventory of Human Resources +
Difference between Potential Additions and Potential Loss of Human
Future supply of Human Resource = Present Inventory of Human Resource +
Potential Additions - Potential Loss
(d) Analysing Sources of Supply: After estimating future supply of human
resources, sources of supply should be analysed with a view to ensure the
availability. Both internal and external factors affecting manpower supply
should be analysed.
Internal factors include, training facilities, salary levels, benefits, interpersonal
relations, company programmes, scope for self-advancement and growth,
promotional opportunities, pride for creative and innovative ideas, providing
challenging work etc.
The external factors are classified into:
i. Local Factors: Like, population density in the area, local
unemployment level, availability of employees on part-time, temporary
and casual bases, current and future competition for similar categories,
output from local educational and training institutes, residential facilities
available, local transport and communication facilities, traditional
pattern of employment, and availability of manpower with required
qualifications and skills, the pattern of migration and immigration, the
attractiveness of the areas as a place to live in, local housing, shopping,
educational facilities, medical facilities, regulations of local government
like reservation for local candidates, candidates belonging to scheduled,
backward and minority communities etc.
ii. National Factors: These include trends in the growth of working
population, training institutes and schemes in the country, output from
technical professional, vocational and general educational institutes in
the country, migration and immigration patterns, social security
measures (like unemployment benefits, lay offs, retirement benefits etc),
cultural factors, customs, social norms, national demand for certain
categories of manpower like technologists, scientists, management
graduates, computer professionals etc., effects of changing educational
patterns, impact of national educational policy, impact of government
employment regulations such as reservation for candidates belonging to
SC, ST and other categories etc.
Net human resource requirements in terms of number and quality are to be
determined in relation to the overall human resource requirements (demand
forecast) for a future date and supply forecast for that date. The difference between
overall human resource requirements and future supply of human resources is to be
found out.
If future surplus is estimated, the organisation has to plan for redeployment,
redundancy etc. If surplus is estimated in some jobs/departments, employees can be
redeployed in other jobs / departments where the deficit of employees is estimated.
Organisation should also plan for training or reorientation before redeployment of
employees. Redeployment takes place in the form of transfers. If the deficit is not
estimated in any job / department and surplus is estimated for the entire
organisation, the organisation, in consultation with the trade unions, has to plan for
redundancy or retrenchment.
Redundancy plan includes type and number of employees to be retrenched, time and
place of retrenchment, type of help to be extended to retrenched employees in the
form of compensation, help in getting new job, priority in filling future vacancies.
If deficit is estimated in any department and in the entire organisation, management
has to forecast the future supply of human resources from various sources like
internal sources, comparable organisations, educational and training institutes,
employment exchange labour market etc.
If the forecast relating to future supply of manpower from internal sources of the
organisation shows favourable trends, the management may prefer internal
candidates and plan for promotions, transfers, training and development measures.
The promotion plan includes establishing the ratio of internal promotions to external
recruits, basis for promotional channel, reservations in promotions etc. The transfer
plan includes transfer channel, company rules regarding organisation initiated
transfers and employee initiated transfers.
The training and development plan covers areas to be developed, training
techniques, training programmes, training time, availability of trainers, in-plant
training or institute training, new courses to be offered or changes to be made in the
existing courses, cost benefit analysis of training, development of the employees and
matching of their improved skills with future job requirement etc.
The productivity plan includes maximization of productivity or minimization of
labour cost per unit of output through technological changes, improving /
streamlining methods, procedures and systems, productivity bargaining, training,
financial incentives, developing various schemes, motivation, commitment,
organisation development programmes, job enrichment / enlargement, participation
Recruitment and selection plan covers the number and type of employees required,
when they are required for the job, time necessary for recruitment and selection
process, recruitment sources, recruitment techniques to be used, selection procedure
to be adopted, selection techniques and tests to be used to select the candidates. It
also covers the time factor for induction, preliminary training and placement.
If future supply of human resources from all the external sources is estimated to be
inadequate or less than the requirements (share of the particular firm in labour
market), the manpower planner has to suggest the management to alter or modify
the organisational plan. For example, if the organisational plan of Indian Railways
indicates that computerisation should be completed in all the stations and offices by
1995, and the estimations of future supply of human resources shows that the supply
of computer professionals would be less than the human resource requirements from
all the sources even by 1995, then the railways have to modify their organisational
plan by extending the period of computerisation by some more time when the supply
of human resources available to railways will be equal to greater than the
requirements of human resources.
In view of shortage of certain categories of employees, the organisation has to take
care not only of the recruitment but also of retention of existing employees. Though
there is the problem of unemployment, organisations experience shortage of some
categories of employees. Some organisations experience shortage of some other
categories of employees due to employee mobility. Hence the organisations have to
plan for retention of the existing employees.
Though HRP is beneficial to the organisation, employees and trade unions, some
problems crop up in the process of HRP. Important ones among them are:
1. Resistance by Employers and Employees: Many employers resist HRP as
they think that it increases the cost of manpower, as trade unions demand for
employees based on the plan, more facilities, and benefits, including training and
development. Further, employers feel that HRP is not necessary as candidates
are/will be available as and when required in India due to unemployment situation.
Employee's version may be true about unskilled and clerical staff but it is not true in
the case of all other categories as there is shortage for certain categories of human
Trade unions and employees also resist Human Resource Planning as they view it as
increasing the workload of employees and preparing programmes for securing the
human resources mostly from outside. The other reason for their resistance is the
HRP aims at controlling the employees through productivity maximization etc.
2. Uncertainties: Uncertainties are quite prominent in human resource practices
in India due to absenteeism, seasonal employment, labour turnover etc. Further, the
uncertainties in industrial scene like technological change, marketing conditions also
cause uncertainties in human resource management. The uncertainties make the
HRP less reliable.
3. Inadequacies of Information System: Information system regarding human
resources has not yet fully developed in Indian industries due to low status given to
personnel department and less importance attached to HRP. Further, reliable data
and information about the economy, other industries, labour market, trends in
human resources, etc., are not easily available.
In addition to these, C.B. Mackey identified eight stumbling blocks coming in the way
of HRP...
Often many managers and human resource specialists do not fully understand the
HRP process. Suffering from an identity crisis, they fail to develop a strong sense of
purpose and consequently flounder.
Sometimes, HRP activities do not enjoy top management support and continued
blessings. In the absence of support from the senior executives in the organisation,
human resource specialists find it difficult to obtain information on various vital
Many HRP programmes fail because of an overcomplicated initial effort. Successful
HRP programmes start slowly and gradually expand as the programme blooms to
flourished levels.
Achieving co-ordination with other management and human resource functions,
sometimes, seems to be impossibility. There is a tendency for HRP specialists to
become absorbed in their own world and not interact with others.
The question of striking a happy and harmonious balance between quantitative and
qualitative approaches to HRP, sometimes, poses several impediments if not
looked into seriously initially.
Some people view HRP as a numbers game designed to ensure the flow of people and
resources, in, out, up, down and across different organisational units. Such an
exclusive focus on quantitative routes may force the organisation to discount, the
more important, qualitative route emphasizing individual concerns such as
individual promotability and career development.
In order to succeed, further, HRP requires active participation and coordinated effort
on the part of operating managers. However, this is easier said than done where
operating managers look at the whole exercise with skepticism and growing mistrust.
Finally, HRP people should not try the forceful introduction of certain sophisticated
techniques just because many companies have started using them. Such a tendency
to adopt one or more of these methods (explained earlier), not for what they can do,
but because everyone is using them may not yield fruitful results.
- End of Chapter -
Recruitment is defined as "a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting
that manpower in adequate numbers to facilitate effective selection of an efficient
workforce". Edwin B. Flippo defined recruitment as "the process of searching for
prospective employees and stimulating them to apply for jobs in the organisation".
These definitions can be analysed by discussing the processes of recruitment through
systems approach.
Please use headphones
Performing the function of recruitment i.e., increasing the selection ratio is not as
easy as it seems to be. This is because of the hurdles created by the internal and
external factors, which influence an organisation. The first activity of recruitment i.e.
searching for prospective employees is affected by many factors like - (i)
organisational policy regarding filling up of certain percentage of vacancies by
internal candidates, (ii) local candidates (sons of soil), (iii) influence of trade unions,
(iv) government regulations regarding reservations of certain number of vacancies to
candidates based on community, region, caste, sex, and (v) influence or
recommendations, nepotism.
As such, the management is not free to find out or develop the source of desirable
candidates and alternatively it has to divert its energies for developing the sources
within the limits of those factors though it cannot find suitable candidates for the
The activity of recruitment is consequently affected by the internal factors such as
(i) working conditions
(ii) promotional opportunities
(iii) salary levels, types and extent of benefits
(iv) other personnel policies and practices
(v) image of the organisation, and
(vi) ability and skill of the management to stimulate the candidates.
However, the degree of complexity of recruitment function can be minimized by
formulating sound policies.
Recruitment Policy of any organisation is derived from the personnel policy of the
same organisation. In other words, the former is a part of the latter. However,
recruitment policy by itself should take into consideration the government's
reservation policy, policy regarding "sons of soil", personnel policies of other
organisations regarding merit, internal sources, social responsibility in absorbing
minority sections, women etc. Recruitment policy should commit itself to the
organisation's personnel policy like enriching the organisation's human resources or
serving the community by absorbing the weaker sections and disadvantaged people
of the society, motivating the employees through internal promotions, improving the
employee loyalty to the organisation by absorbing the retrenched or laid-off
employees or casual/temporary employees or dependents of present/former
employees etc.
The following factors should be taken into consideration in formulating recruitment
policy. They are:
a. government policies
b. personnel policies of other competing organisations
c. organisation's personnel policies
d. recruitment sources
e. selection criteria and preference etc.
Recruitment policies are mostly drawn from personnel policies of the organisation.
According to Dale Yoder and Paul D. Standohar general personnel policies
provide a variety of guidelines to be spelt out in recruitment policy. Important among
them are:
a. Abiding the public policy and relevant law on selection
b. Providing the employees the security and continuous employment
c. Integrating the organisational needs and individual needs
d. Providing the freedom and opportunity to employees to utilise their talent,
skill and knowledge to the maximum extent
e. Treating all the employees fairly and equally in all employment relationships
including salary, benefits, promotions and transfers
f. Protecting women and minority candidates
g. Providing suitable jobs which can be handled easily by physically
handicapped, to those employees who are partially disabled due to accidents
during the course of duty, and to those who cannot do their present jobs due
to health reasons.
After formulation of the recruitment policies, the management has to decide whether
to centralise or decentralise the recruitment function.
Personnel managers face a variety of problems in recruiting the candidates. These
problems are:
i) Some organisation do not possess positive image in the job market. As such the
prospective employees are not interested in applying for the jobs.
ii) Jobs in some organisations are not attractive in terms of nature of work, salary,
benefits, employment conditions etc.
iii) Organizational policies like employment policy, wage policy, public relations, etc.
and management's attitude towards employees may not be positive
iv) Trade unions influence the personnel manager to consider the candidates from
within the organisation
v) Government influence, policy etc., influence the personnel manager to recruit the
candidates of certain communities /regions.
Recruitment practices vary from one organisation to another. Some organisations
like commercial banks resort to centralised recruitment while some organisations
like the Indian Railways (for Group III and Group IV positions) resort to
decentralised recruitment practices. Personnel department at the central office
performs all the functions of recruitment in case of centralised recruitment, and
personnel departments at unit level / zonal level perform all the functions of
recruitment concerning the jobs of the respective unit or zone.
Average cost of recruitment per candidate/unit would be relatively lesser due
to economies of scale.
It would have more expertise available to it.
It can ensure broad uniformity among human resources of various units /
zones in respect of education, skill, knowledge, talent etc.
It would generally be above malpractice, abuse of powers, favouritism, bias
It would facilitate interchangeability of staff among various units / zones.
It enables the line managers of various units and zones to concentrate on their
operational activities by relieving them from the recruitment functions.
It enables the organisation to have centralised selection procedure,
promotional and transfer procedures etc.
It ensures the most effective and suitable placement of candidates.
It enables centralised training programmes, which further brings uniformity
and minimizes average cost of staff.
Despite these advantages of centralised recruitment some organisations resort to
decentralised recruitment for the following reasons...
The Unit concerned concentrates only on those sources / places where it
normally gets the suitable candidates. As such the cost of recruitment would
be relatively less.
The Unit gets most suitable candidates as it is aware of the requirements of
the jobs regarding cultural, traditional, family background aspects, local
factors, social factors etc.
Units can recruit candidates as and when they are required without any delay.
The Units would enjoy freedom in finding out, developing the sources, in
selecting and employing the techniques to stimulate the candidates.
The Unit would relatively enjoy advantage about the availability of
information, control and feedback and various functions / processes of
The Unit would enjoy better familiarity and control over the employees it
recruits rather than on employees selected by the central recruitment agency.
Both the systems of recruitment would suffer from their own demerits. Hence, the
management has to weigh both the merits and demerits of each system before
making a final decision about centralizing or decentralizing the recruitment.
Alternatively management may decentralize the recruitment of certain categories of
employees, preferably middle and top level managerial personnel, and centralize the
recruitment of other categories of employees, preferably lower level positions in view
of the nature of positions. Management has to find out and develop the sources of
recruitment after deciding about centralizing or decentralizing the recruitment
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- End of Chapter -
Sources are distinct from techniques: Where are suitable candidates available in
required number? How can they be informed about the availability of the jobs and
about the organisation? Now we deal with the first question, as the answer to it deals
with the sources of recruitment, and answer to the second question deals with the
techniques of stimulating the prospective candidates (or techniques of recruitment).
Generally, the learners of human resources management may feel that sources and
techniques of recruitment are one and the same. But they are different. Sources are
those where prospective employees are available like employment exchanges, while
techniques are those which stimulate the prospective employees to apply for jobs
like nomination by employees, advertising, promotion etc.
Sources of recruitment are broadly divided into internal sources and external
Internal sources are the sources within the organisation. Internal sources include:
Present Permanent Employees: Organisations consider the candidates
from this source for higher level jobs because (i) availability of most suitable
candidates for jobs is relatively more comfortable or equal to the external
source, (ii) the trade union demands this, (iii) the organisation has a policy to
motivate the present employees.
Present Temporary or Casual Employees: Organisations find this
source to fill the vacancies relatively at the lower level owing to the availability
of suitable candidates or trade union pressures.
Retrenched or Retired employees: Generally a particular organisation
retrenches the employees due to lay-off. The organisation takes the candidates
for employment from the retrenched employees due to obligation, trade union
pressure, etc... Sometimes, the organisations prefer to re-employ their retired
employees in recognition of their loyalty to the organisation, or to postpone
some interpersonal conflicts for promotion etc.
Dependents of deceased, disabled, retired, and present employees:
Some organisations, with a view to developing the commitment and loyalty of
not only the employee but also his family members and to build up image,
provide employment to the dependent(s) of the deceased, disabled and
present employees. Such organisations find this source as an effective source
of recruitment.
Organisations prefer this source to external source to some extent for the following
a. Internal recruitment can be used as a technique of motivation.
b. Morale of the employees can be improved.
c. Suitability of the internal candidates can be judged better than the external
candidates as "known devils are better than unknown angels".
d. Loyalty, commitment, a sense of belongingness, and security of the present
employees can be enhanced.
e. Employee's psychological needs can be met by providing an opportunity for
f. Employees economic needs for promotion, higher income can be satisfied.
g. Cost of selection can be minimized.
h. Cost of training, induction, orientation, period of adaptability to the
organisation can be minimized.
i. Trade unions can be satisfied.
j. Social responsibility towards employees may be discharged.
k. Stability of employment can be ensured.
But organisations do not excessively rely on internal sources, as an excessive
dependence on this source results in in-breeding, discourages flow of new blood into
the organisation, organisation may become dull without innovation and inflow of
new ideas, excellence and expertise. Hence organisations depend on internal source
to the extent of motivating, and then depend on external sources.
External sources are those sources which are outside the organisation. External
sources include -
Educational and Training Institutes: Different industries, business
firms, service organisations, social or religious organisations can get
inexperienced candidates of different types from Colleges and Universities
imparting education in Science, Commerce, Arts, Engineering and
Technology, Agriculture, Medicine, Management Studies etc., trained
candidates in different disciplines like Vocational, Engineering, Medicine
from the training institutes like Vocational Training Institutes of State
Governments in various trades, National Industrial Training Institute for
Engineers etc. Most of the Universities and Institutes imparting technical
education in disciplines like Engineering, Technology, Management studies
provide facilities for campus recruitment and selection. They maintain the
biodata and performance record of the candidates. Organisations seeking to
recruit the candidates from this source can directly contact the institutes
either in person or by post, and stimulate the candidates to apply for jobs.
Most of the organisations using this source, perform the function of selection
after completing recruitment in the institute's campus itself with a view to
minimizing time lapse and securing the 'cream' candidates before they are
attracted by other organisations.
Private Employment Agencies / Consultants: Public employment
agencies or placement consultants perform the recruitment functions on
behalf of a client company by charging a fee. Recruitment function is
entrusted to a private agency or consultant, and this way, the line managers
are relieved from recruitment functions so that they can concentrate on their
operational activities. But due to limitations of high cost, ineffectiveness in
performance, and confidential nature of this function, management
sometimes does not depend on this source. However, these agencies function
effectively in the recruitment of executives. Hence, they are also called
'executive search agencies'. Most of the organisations depend on this source
for highly specialized positions and executive positions.
Public Employment Exchanges: Government set up public employment
exchanges in the country to provide information about vacancies to the
candidates and to help the organisations find suitable candidates. The
Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
makes it obligatory for public sector and private sector enterprises in India to
fill certain types of vacancies through public employment exchanges. These
industries have to depend on public employment exchanges for the specified
Professional Organisations/Associations: Professional Organisations or
Associations maintain complete biodata of their members and provide the
same to various organisations on requisition. They also act as an exchange
between their members and recruiting firms in exchanging information,
clarifying doubts etc. Organisations find this source more useful to recruit the
experienced and professional employees like executives, managers, engineers.
Data Banks: The management can collect biodata of candidates from
different sources like Employment Exchanges, Educational Training
Institutes, candidates etc., and feed them into a database in the computer, and
the company can get the particulars as and when it needs to recruit.
Casual Applicants: Depending upon the image of the organisation, its
prompt response, participation of the organisation in the local activities, and
level of unemployment, candidates apply casually for jobs through mail or
handover the applications in companies' Personnel Departments. This would
be a suitable source for temporary and lower level jobs.
Similar Organisations: Generally, experienced candidates are available in
organisations producing similar products or are engaged in similar business.
The management can get most suitable candidates from this source. This
would be the most effective source for executive positions in newly established
organisations or diversified or expanded organisations.
Trade Unions: Generally, unemployed or underemployed persons, or
employees seeking change in employment put a word to the trade union
leaders with a view to getting suitable employment, due to the latter's intimacy
with management. As such the trade union leaders are aware of the
availability of candidates. In view of this fact and in order to satisfy the trade
union leaders, management enquires with the trade unions for available
suitable candidates. Management decides about the sources depending upon
the type of candidates needed from time to time.
Organisations search for the required candidates from these sources, for the
following reasons:
a. The suitable candidates with skill, knowledge, talent etc. are generally
b. Candidates can be selected without any pre-conceived notion or reservations.
c. Cost of employees can be minimized because employees selected from this
source are generally placed in minimum pay scale.
d. Expertise, excellence and experience in other organisations can be easily
brought into the organisation.
e. Human resource mix can be balanced with different backgrounds,
experiences, skills etc.
f. Latest knowledge, skill, innovative or creative talent can be brought into the
Please use headphones
Recruitment techniques are the means or media by which management contacts
prospective employees, or provides necessary information, or exchanges ideas, or
stimulates them to apply for jobs. Management uses different types of techniques to
stimulate internal and external candidates.
Techniques useful to stimulate internal candidates are:
1. Promotions - Most of the internal candidates would be stimulated to take
up higher responsibilities and express their willingness to be engaged in the
higher level jobs if management gives them the assurance that they will be
promoted to the next higher level.
2. Transfers - Employees will be stimulated to work in the new sections or
places if management wishes to transfer them to the places of their choice.
Techniques useful to stimulate external candidates are:
1. Recommendations of the Present Employees - Management can
contact, persuade the outside candidates to apply for job in the organisation
through the recommendations by the present employees, trade union leaders
2. Scouting - Scouting means sending the representatives of the organisation
to various sources of recruitment with a view to persuading or stimulating the
candidates to apply for jobs. The representatives provide information about the
company, exchange ideas, and clarify the doubts of the candidates.
3. Advertising - Advertising is a widely accepted technique of recruitment,
though it mostly provides one way communication. It provides the candidates
information about the job and company, and stimulates them to apply for jobs.
It includes advertising through different media like newspapers, magazines,
radio, television etc. The technique of advertising should aim at:
(a) attracting attention of the prospective candidates,
(b) creating and maintaining interest,
(c) stimulating action by the candidates.
Management, in order achieve these objectives of advertising, has to analyse
job requirements, decide who does what, write the copy, design the
advertisement, plan and select the media, and evaluate the response.
The management, after selecting the recruitment techniques, has to decide upon the
type of appeal in order to make the recruitment efforts effective.
Findings of the various surveys conducted in foreign countries reveal that various
organisations use employee referrals, casual applicants, advertising, local
educational institutions, public employment exchanges, and private employment
agencies as their sources of recruitment. Industries in India depend on the following
i) Internal sources
ii) Badli lists, which means a central pool of candidates from which vacancies are
iii) Public employment exchanges
iv) Casual labourers
v) Labour contractors
vi) Candidates introduced by friends and relatives
vii) Private employment agencies / consultants
viii) Campus recruitment
ix) Sons of the Soil
(Recently there has been a move in India that the vacancies at the lower level should
be filled by the local people or 'sons of soil'. Some organisations, including public
sector organisations, have started providing jobs to the 'sons of soil' on priority basis.
The National Committee on Labour, in this connection, recommended for providing
employment to the local persons. Further, the Government of India issued directives
to public sector enterprises to recruit local candidates on priority basis).
x) Specified Communities and Categories
According to the Government directives, the organisations, particularly in the public
sector, have to recruit candidates to a specified extent (%) from the scheduled castes,
scheduled tribes, backward communities, and classes like physically handicapped,
ex-servicemen and the like.
- End of Chapter -
After identifying the sources of manpower, searching for prospective employees and
stimulating them to apply for jobs in an organisation, the management has to
perform the function of selecting the right employees at the right time. The obvious
guiding policy in selection is the intention to choose the best qualified and suitable
candidate for each unfilled post and to avoid selecting those who will not work well.
The selection procedure is the system of functions and devices adopted in a given
company to ascertain whether the candidate's specifications are matched with the job
specifications and requirements. The selection procedure cannot be effective until
and unless...
i) requirements of the job to be filled have been clearly specified (job analysis,
ii) employee specifications (physical, mental, social, behavioural etc.) have been
clearly specified
iii) candidates for screening have been attracted
The selection process can be successful if the following preliminary requirements are
1. Someone should have the authority to select. This authority comes from the
employment requisition, as developed by an analysis of the work-load and
2. There must be some standard of personnel with which a prospective employee
may be compared i.e., there should be available beforehand a comprehensive
job description and job specification as developed by a job analysis.
3. There must be sufficient number of applicants from whom the required
number of employees may be selected.
The goal of selection is to sort out or eliminate those judged unqualified to meet the
job and organisational requirements, whereas the goal of recruitment is to create a
large pool of persons available and willing to work. Thus it is said that recruitment
tends to be a positive action while selection tends to be somewhat negative action.
A number of factors affect the selection decision of candidates. The important among
them are:
i) profile matching
ii) organisational and social environment
iii) successive hurdles
iv) multiple correlation
i) Profile Matching: Tentative decision regarding the selection of the candidates
(who are known) is taken in advance. The scores secured by these known candidates
in various tests are taken as a standard to decide the success or failure of other
candidates at each stage. Normally the decision about the known candidates is taken
at interview stage. Possible care is also taken to match the candidate's bio-data with
the job specifications.
ii) Organisational and Social Environment: Some candidates who are
eminently suitable for the job may fail, as successful employees due to varying
organisational and social environment. Hence candidate's specifications must match
with not only the job specifications but also with organisational and social
environmental requirements.
iii) Successive Hurdles: In this method hurdles are created at every stage of
selection process. Therefore applicants must successfully pass each and every
screening device in case of successive hurdles.
iv) Multiple Correlation: Multiple correlation is based on the assumption that a
deficiency in one factor can be counterbalanced by an excess amount of another. A
candidate is routed through all the selection steps before a decision is made. The
composite test score index is taken into account in the selection tests. Hence the
borderline cases multiple correlation method is useful and for others successive
hurdles method is useful.
Every organisation has to follow a systematic selection procedure, since problems
with the employee start after his selection and employment. In other words, if an
organization selects a wrong person, it has to face a number of problems with him. In
addition to the cost of selection, training and other areas will become a recurring
expenditure to the company owing to employees leaving the company quickly
(increased employee turnover) caused due to improper selection technique. Every
organisation is influenced by the social factors, as it is a part and parcel of the
society. It has to do justice to all sections of people in providing employment
opportunities. Hence organisations should have an objective system of selection that
should be impartial and provide equal opportunity to all. Above all, the organisations
should also follow the Government rules and regulations regarding filling up of
certain number of vacancies by the candidates belonging to specific communities and
Job Analysis
Application Form
Written Examination
Preliminary Interview
Group Discussion
Final Interview
Medical Examination
Reference Checks
Line Manager's Decision
JOB ANALYSIS : Job analysis is the basis for selecting the right candidate. Every
organisation should finalise the job description, job specification and employee
specifications before proceeding to the next step of selection.
RECRUITMENT : Recruitment refers to the process of searching for prospective
employees and stimulating them to apply for jobs in an organisation. Recruitment is
the basis for the remaining techniques of the selection and the later varies depending
upon the former.
APPLICATION FORM : Application Form is also known as an Application Blank.
The technique of application blank is traditional and widely accepted for securing
information from the prospective candidates. It can also be used as a device to screen
the candidates at the preliminary level. Many companies formulate their own style of
application forms depending upon the requirement of information, based on the size
of the company, nature of business activities, type and level of the job etc. They also
formulate different application forms for different jobs at different levels so as to
solicit the required information for each job. But a few companies in our country do
not have prescribed application forms. So, they ask the prospective applicant to apply
on white paper giving particulars about him/her, like name, date of birth, mailing
address, educational qualification, experience etc. Applications of some of the
organisations are brief and general, while those of others are quite elaborate,
complex to answer, and require detailed information about the applicant. Some firms
ask the candidates to fill up the application forms in their own handwriting so as to
draw tentative inferences about their suitability for the employment. This is done
particularly for clerical positions. Information is generally required on the following
items in the application forms.
Personal Background Information: It includes name, present and
permanent addresses, sex, date of birth, marital status, health, height and
weight, nationality, number of dependents, annual income of applicant's
parents etc. This information can be used by the management to know the
suitability of the candidate regarding his socio-economic background,
neighbourhood, family status and background, sociological outlook, impact of
these factors on employee behaviour etc.
Educational Attainments: These include list of schools, colleges,
institutions attended, period of study, major subjects, class, percentage of
marks, rank secured, extra-curricular activities, positions and memberships
held during the educational career, hobbies and interests, study either
through a regular course or correspondence course or private study etc. This is
the major area of information gathered by the organisation through
application forms.
Work Experience: It covers experience in all previous jobs with greater
particulars about the nature and quantum of work handled, period of
experience in each job, reasons for leaving the past employers, duties and
responsibilities involved, name of the immediate supervisor, salary drawn etc.
This information enables the organisation to know the stability of the
employee, his aptitude for the nature of work, nature of relationship he
maintained with the past employers etc.
Salary: Salary drawn in the present employment and salary and benefits
Personal items: Association membership, personal likes and dislikes,
hobbies etc.
References: Organisations ask candidates to send the names and addresses
of the persons who can be contacted for reference purposes.
Evaluation of Application Forms
There are two methods of evaluating an application form, viz., clinical method and
weighted method.
a. Clinical Method: The clinical method takes help of psychology. Under the
clinical method, the application forms are analysed in detail, drawing all
possible inferences, projecting the applicant's personality, and forecasting
future job success. A properly designed form can provide clues to a person's
leadership ability, emotional stability, assertiveness, writing ability, attitude
towards his supervisors etc.
b. Weighted Method: Under the weighted method, certain points or weights
are assigned to the answers given by the applicant in the application form. In
developing a weighted application form, it is necessary to identify those items
of the personal history of the employee that differentiate between groups of
successful and unsuccessful employees. Assigning weights to the responses in
an application form gives certain amount of objectivity to this device. But this
approach requires a different application blank for each occupation group as it
is a statistical technique.
c. Biographical Inventories: In some cases, management may wish to
select the existing employees for the higher positions. In such a case the
employee is asked to submit his up-to-date bio-data which includes name,
address, educational qualifications, marital status, habits and attitudes, health,
human relations, parental home, childhood, personnel attitudes, present home,
spouse and children, self impressions, recreation, hobbies, interests, values,
openings and preferences etc.
Advantages of a well-designed Application Form
i) It is useful in testing the candidate's ability to spell, write legibly and answer
factual questions rapidly and accurately.
ii) It provides basic information to the interviewer before the interview.
iii) It is advantageous for those candidates who find it easier to think out answers by
themselves and write them more leisurely than answer the same question orally
when asked in interviews.
iv) It is useful as a record in employment department.
v) It is useful for finding out the aptitude of the candidate for different subjects, and
likes & dislikes.
vi) It is useful as a preliminary selection device.
The above advantages can be derived only when the application is brief, containing
standard items.
The next stage in the selection process is conducting different tests as given below.
The organisations have to conduct a written examination for the qualified candidates
after they are screened on the basis of the application blanks, so as to measure the
candidate's ability in arithmetical calculations, to know the candidate's attitude
towards the job, to measure the candidate's aptitude, reasoning, knowledge in
various disciplines, general knowledge and English language.
Psychological Tests:
i) Aptitude Tests - These tests measure whether an individual has the capacity or
latent ability to learn a given job if given adequate training. Aptitudes can be divided
into general and mental ability or intelligence and specific aptitudes such as
mechanical, clerical, manipulative capacity etc.
Intelligence Tests: These tests in general measure intelligence quotient (IQ)
of the candidate. In detail these tests measure his capacity for comprehension,
reasoning, word fluency, verbal comprehension, numbers, memory and space.
Intelligence tests include sample learning, ability and adaptability tests etc.
Mechanical Aptitude Tests: These tests measure the candidate's capacities
of spatial visualisation, perceptual speed and knowledge of mechanical matter.
These tests are useful for selecting apprentices, skilled, mechanical employees,
technicians etc.
Psychomotor Tests: These tests measure abilities like manual dexterity,
motor ability and eye-hand coordination of the candidates. These tests are
useful to select semi-skilled workers and workers for repetitive operations like
packing, watch assembly etc.
Clerical Aptitude Tests: These tests measure specific capacities involved in
office work. Items of this test include spelling, computation, comprehension,
copying, word processing etc.
ii) Achievement Tests - These tests are conducted when applicants claim to know
something, as these tests are concerned with what one has accomplished. These tests
are more useful to measure the value of specific achievement when an organisation
wishes to employ experienced candidates. These tests are classified into:
Job Knowledge Test: The candidate is tested in the knowledge of a
particular job. For example, if a junior lecturer applies for the job for a senior
lecturer in Commerce subject, he may be tested in job knowledge where he is
asked questions about accountancy principles, banking law, business
management etc.
Work Sample Test: Here, a portion of the actual work is given to the
candidate as a test and the candidate is asked to do it. If a candidate applies
for a post of lecturer of Business Management, he may be asked to deliver a
lecture on Management Information System (MIS) as a work sample test.
iii) Situational Tests - This test evaluates a candidate in a similar real-life
situation. The candidate is asked either to cope with the situation or to solve critical
problems on the job.
Group Discussion: This test is administered through group discussion
approach to solve a problem, under which candidates are observed in the
areas of initiating, leading, proposing valuable ideas, conciliating, and skills of
oral communication, coordinating, and concluding.
In-basket: The candidate is supplied with actual letters, telephone /
telegraphic message, reports, requirements by various officers of the
organisation, and given adequate information about the job and the
organisation. The candidate is asked to take decisions on various items based
on the in-basket information regarding requirements in the memoranda.
iv) Interest Tests - These tests are inventories of the likes and dislikes of
candidates in relation to work, job, occupations, hobbies and recreational activities.
The purpose of this test is to find out whether a candidate is interested or
disinterested in the job for which he is applying, and to find out the specific area of
the job occupation in which the candidate is actually interested. The assumption of
this test is that there is a high correlation between the interest of a candidate in a job
and job success. Interest inventories are less faked and they may not fluctuate after
the age of 30.
v) Personality Tests - These tests probe deeply to discover clues to an individuals
value system, his emotional reactions and maturity, and characteristic moods. They
are expressed in terms of traits like self-confidence, tact, emotional control,
optimism, decisiveness, sociability, conformity, objectivity, patience, fear, distrust,
initiative, judgment, dominance or submission, impulsiveness, sympathy, integrity,
stability, self-confidence etc.
Objective tests: Most personality tests are objective tests as they are suitable
for group testing and can be scored objectively.
Projective Tests: Candidates are asked to project their own interpretation,
of certain standard stimulus situations basing on ambiguous pictures, figures
etc., under these tests.
Personality tests have disadvantages in the sense that they can be faked by
candidates and most candidates give socially acceptable answers. Further,
personality inventories may not successfully predict job success.
Objectives of Psychological Tests:
i) to guide and counsel students seeking admission to colleges.
ii) to render vocational guidance for help in careers.
iii) to select and place the new employees.
iv) to appraise employees for promotions, wage fixation etc.
Uses of Tests:
i) Provide a uniform basis for comparing candidates from diverse background.
ii) Reduce labour turnover to a considerable extent by selecting the right candidate
for the right job.
iii) Increase production through maximization of employee commitment.
iv) Minimize time involved in the selection process.
Limitations of Tests:
i ) Tests are to be used as supplement rather than as a substitute for any other
ii) Tests predict failure rather than success of an employee on the job.
iii) Tests are only a screening device.
iv) Test scores are not precise measures because they are samples of behaviour, and
v) Test conditions are different from the actual conditions.
Types of Interviews
Various forms of employment interviews are adopted to solicit different kinds of
information and to measure the candidate skills, knowledge etc., at different places.
Employment interviews can be divided into three categories, viz, preliminary
interview, core interview and decision-making interview.
1. Preliminary Interviews
It is generally regarded as exchange of basic information between the candidate and
the personnel manager about the job and organisation like job nature, salary,
working conditions, benefits etc. It is helpful to the organisation to weed out
unwanted hands and to the candidate to select or reject the job. Sometimes, it may
prove to be unsatisfactory, when the exchange of information between the candidate
and the organisation is not true. This interview may generally be informal and
a. Informal Interview: This is the interview which can be conducted at any
place by any person to secure the basic and non-job related information. The
interaction between the candidate and the personnel manager when the former
meets the latter to enquire about the vacancies or additional particulars in
connection with the employment advertisement is an example of informal
b. Unstructured Interview: In this interview the candidate is given the
freedom to tell about himself by revealing his knowledge on various
items/areas, his background, expectations, interests etc. Similarly, the
interviewer also provides information on various items required by the
2. Core Interviews
It is normally the interaction between the candidate and the line executive or experts
on various areas of job knowledge, skill, talent etc. This interview may take various
forms like:
a. Background Information Interview: This interview is intended to
collect the information which is not available in the application blank, and to
ask more about the information provided in the application blank regarding
education, place of domicile, family, health, interests, hobbies, likes, dislikes,
extracurricular activities of the applicant.
b. Job and Probing Interview: This interview aims at testing the
candidate's job knowledge about duties, activities, methods of doing the job,
critical / problematic areas, methods of handling those areas etc.
c. Stress Interview: This interview aims at testing the candidate's job
behaviour and level of withstanding during periods of stress and strain.
Interviewer tests the candidate by putting him under stress and strain by
interrupting the applicant while answering, criticising his options, asking
questions pertaining to unrelated areas, keeping silent for unduly long periods
after he has finished speaking etc. Stress during the middle portion of the
interview gives effective results. Stress interview must be handled with utmost
care and skill. This type of interview is often invalid, as the interviewees need
for the job, his previous experience in such type of interviews may inhibit his
actual behaviour under such situations.
d. Formal and Structured Interview: In this type of interview, all the
formalities, procedures like fixing the venue time, panel of interviewers,
opening and closing, intimating the candidates officially etc. are strictly
followed in arranging and conducting the interview. The course of the interview
is preplanned and structure, in advance, depending on job requirements. The
questions / items for discussion are structured and experts are allotted
different areas and questions to be asked. There will be very little room for the
interviewers to deviate from the questions prepared in advance in a sequence.
e. Group Interview: In this method, all the candidates are brought into one
room i.e. interview room and are interviewed one by one. This method helps
busy executives (interviewers) to save valuable time and gives a fair account of
the objectivity of the interview to the candidates.
f. Panel interview: Interviewing of candidates by one person may not be
effective as he may not be able to judge the candidates in different areas / skills
owing to limited knowledge and competence in multiple disciplines and areas.
Hence most organisations invite a panel of interviewers, specialised in different
areas/fields/disciplines, to interview candidates. The panel of experts
interviews each candidate; each panel member judges his performance
individually and prepares a consolidated judgment based on each expert's
judgment and weightage of each factor. This type of interview is known as
panel interview. This type of interview would be more effective as each
candidate is appraised by an expert in relevant areas. Experts should be
cautioned against excessive weightage to a particular factor, domination of
other experts etc.
g. Depth Interview: In this type of interview, the candidates would be
examined extensively in core areas of knowledge and skills of the job. Experts
in that particular field examine the candidates by posing relevant questions as
to extract critical answers from them, initiating discussions regarding critical
areas of the job, and by asking the candidates to explain even minute
operations of the job performance. Thus the candidate is examined thoroughly
in critical / core areas in their interview.
Please use headphones
The Interview Process
Interview is not a single step. It is a process consisting of several steps. The major
steps are grouped into four categories:
(1) Preparation for the Interview:
Advance preparation for interview is essential as it permits focusing its coverage of
the vital aspects and it helps the interviewer to remember and absorb many
impressions and facts. The following preparations have to be made by the
organisation before starting an interview:
i. Choosing the appropriate types of interviews based on job requirements and
the nature of the interviews discussed earlier.
ii. Identifying the knowledge, skill areas to be examined through interviews
based on requirements.
iii. Determining the type and number of interviewers:
- Interviewers should be selected based on personal characteristics,
technical competence, initiative, common sense, general smartness,
ability to inspire confidence, and capacity to work in a team.
- Interviewers may be drawn from personnel specialists, line managers
concerned, experts in the discipline concerned, academicians,
practitioners and psychologists.
- Interviewers may include psychologists. A number of research studies
and observations regarding the effectiveness of psychologists conclude
that there is a wide variation in the abilities of psychologists as in case of
other specialists; Psychologist would be a competent interviewer if he has
got knowledge of job requirements and organisational interests;
Psychologist's ability as an interviewer is probably higher than non-
psychologists, if he is qualified experienced and trained; and Psychologist
would act as an additional source of information rather than a deciding
- Interviewers may interview the candidates either jointly or separately. A
panel interview is preferable to individual interview. The number of
interviewers is to be decided on the basis of number and nature of areas
to covered by the interview, number of candidates to be interviewed and
the time available for interviewing.
iv. Reviewing the information collected in advance through other selection
methods, finding out the validity of those methods, the scores obtained etc. The
information available in the applicable blank should thoroughly checked for
accuracy and validity, stability, acquainting about the applicant should be done,
the number of positions and length of time held in each of the past jobs should
be reviewed, nature of positions in the previous employment should be
compared with that of proposed employment, the employee growth should be
checked with the organisational progression in the past employment,
discharges and unexplained breaks should be asked about. This avoids further
evaluation of those areas appraised effectively by other means already.
v. Deciding upon the administrative arrangements.
vi. Finalising the physical setting including time which would be convenient to
interviewees and interviewers.
vii. Determining the coverage of the interview. Generally the interview should
cover the areas like relevance of qualifications and experience to job
requirements, gaps in employment history and causes therefore, reasons for
choosing course, school, occupation etc., likes and dislikes, quickness of
reaction, ability to recognise thoughts, manner and poise, cultural level etc.
(2) Conducting the Interview
The next major step in the interview process is conducting the interview. Conducting
an interview effectively is difficult and hence most of the line managers avoid this
task. The interviewers should take much care in the process of conducting interview,
as there is a scope to commit mistakes at various levels. Adequate information from
the candidate can be obtained by listening to and observing rather than talking too
Interviewers very often commit the following mistakes:
indulging in discourtesy and rudeness
arriving at conclusion before the interview is over
asking questions mechanically
feeling shy to ask questions
failing to observe the behaviour and tap the unexplored areas
However such mistakes by interviewers can be avoided by training and developing
them, or by selecting competent interviewers.
The various sub activities of conducting the interview are:
i. Open the interview : The interviewer has to open the interview with a
conscious effort and with conducive voice, speech and appearance. This helps
the interviewer to establish a rapport with and gain the confidence of the
ii. Get complete and accurate information : The interviewer should get
full information relating to skills, knowledge, aptitude, attitude and traits of the
candidate. The best way of getting full information is by structured interview.
The interviewer, in order to get complete and accurate information...
must be alert for pauses, omission and diversion of discussion,
has to use the language which is clear to the
has to make even unjustifiably favourable remarks or unfavourable
comments about the applicant's motives or actions with a view to
obtaining truthful information,
has to frame the questions in such a way that the candidate
answers elaborately.
iii. Record observations and impressions : The interviewer has to record
his observations and impressions in the course of the interview with a view to
manage the information gathered for evaluating the candidate's suitability at
the later stage.
iv. Guide the interview : Guiding the interview is essential to have sufficient
discussion (not too much, not too less) on a topic, and to lead the applicant
tactfully and surely towards the interview goals. Some applicants are talkative,
some are intelligent in giving information they know and avoiding others areas.
Some candidates are reticent. The interviewer has to guide the interview
tactfully without causing much psychological inconvenience to the interviewee
while aiming at getting complete and reliable information.
v. Check the success of the interview : Success of the interview can be
seen with these items...
making favourable impression on the candidate,
refraining from making judgments at the beginning of the
putting the candidate at ease,
giving chance for further discussion,
asking questions at the right time, asking clearly and in
appropriate language,
avoiding unnecessary interferences during the interview,
avoiding expression of approval or disapproval of any attitude of
the candidate,
talking to the minimum required level, and listening more,
guiding the interview,
obtaining relevant and adequate information through questioning,
following up leads,
taking notes,
giving opportunity to the candidates to ask questions,
creating and keeping good atmosphere throughout the interview,
being fair and just in conducting the interview,
closing the interview pleasantly with an indication.
(3) Closing the Interview
Closing the interview is as important as its commencement and it should end
pleasantly, the interviewer may show some signs of the close of the interview at an
appropriate time. Interview results should be evaluated after closing the interview.
(4) Evaluation of the Interview Results
The interviewer / panel of interviewers evaluate(s) the candidate's strengths and
weaknesses against the job and organisational requirements. The evaluation is
generally based on the observations, impressions and information collected during
the course of interview. However, the final decision about the suitability of candidate
for the job is made on the basis of the results of all selection techniques. But the
interview results influence the selection decision much more than any other
The evaluation may be in descriptive form or grading form or rating form. The
interviewer has to strike a fine balance between the job requirements and employee
values, skills, knowledge etc. In view of the errors in evaluation, the interviewer has
to write explanation of rating on each factor which clarifies his thinking and enables
discussion among the interviewers. The interviewer should also take into
consideration the educational record, physical attributes, attitudes, sociability and
social intelligence, flexibility in behaviour, tact, manners, temperament,
dependability, self-confidence of the candidate with a view to minimize errors in the
Guidelines for Effective Interviews
Interview techniques can be used effectively through the following means:
Selecting the interviewers with higher caliber, skill and knowledge
Resorting to right type of interview technique depending upon the
Studying the backgrounds information, data, facts about the candidates before
the interview
Assessing and evaluating the characteristics and traits of the candidate
Basing the interview coverage on job and organisational requirements
Following time management techniques to collect as much important
information as possible within the available time
Checking beforehand the reliability and validity of the interview method
Respecting interviewee's interest and individuality
Clearly informing the interviewee the purpose of the interview
Making the interviewee feel at ease throughout the interview
Encouraging the interviewee to speak freely
Not having personal biases affecting the interview
Limitations of Interview Techniques
Although interviews have widespread use in the selection process, a host of problems
do arise while conducting interviews. Research has indicated the questionable nature
of the validity and reliability of interviews. Often the interviewer gets impressed
favourably or unfavourably with the job applicant for wrong reasons. For example, a
qualified male applicant should not be rejected merely because the interviewer
dislikes long hair on males. Interviewers, like all people, have personal biases.
They react positively or negatively to fluency of speech, correctness of grammar and
punctuation, poise and other characteristics of the candidate. Consequently, there
may be several inbred notions held by the interviewer, which would colour selection
of a candidate.
Another problem with interviewers is that they often consider candidate's
nonverbal behaviour patterns as a basis for reaching a decision. That is, how the
person looks, sits in the chair, and maintains eye contact may majorly influence the
applicant's ratings by the interviewer.
Closely related is the problem of the halo-effect which occurs when the interviewer
allows a single prominent characteristic to dominate judgment of all other traits. For
example, it is easy to discount the candidate's unfavourable characteristics when he
has a pleasing personality. They ignore the fact that merely having a pleasant
personality does not necessarily ensure that the person would fit in the organisation
or job. Sometimes the halo-effect can work in the opposite direction also. An
interviewer may assume that a poorly groomed individual is stupid, dishonest etc.
There is also the potential problem of making contrast-errors. These errors take
place when an interviewer is overly influenced, in favour or against, by the interviews
of previous applicants. For instance, if a qualified applicant follows a brilliant
applicant, his qualifications tend to pale in comparison. This is unfortunate, since the
qualified candidate may be rejected because of the contrasterror.
However, these limitations can be minimized by appointing trained and qualified
interviewers, as they are likely to make fewer errors because they understand
potential errors, have learned how to ask questions effectively, are able to establish a
positive relationship with applicants, and have systematically organised the
Once the candidate reports for duty, the organisation has to place him initially in that
job for which he has been selected. Immediately the candidate is trained in various
related jobs during the period of probation of training or trial. The organisation,
generally, decides the final placement after the initial training is over on the basis of
candidates aptitude and performance during the training/probation period.
Probation period generally ranges between six months and two years. If the
performance is not satisfactory, the organisation may extend the probation or ask the
candidate to quite the job. If the employee's performance during the probation
period is satisfactory, his services are regularised and he is placed permanently on
the job.
"Placement is the determination of the job to which an accepted candidate is to be
assigned and his assignment to that job". It is a matching of what the supervisor
thinks as what the job demands (job requirements), of what he imposes (in strain,
working conditions), and what he offers in the form of payroll, companionship with
others, promotional possibilities etc. It is not easy to match all the factors to the new
employee who is still unknown to many. So the new employee is placed as a
probationer until the trial period is over.
"Induction is the process of receiving and welcoming an employee when he first joins
a company and giving him the basic information he needs to settle down quickly and
happily and start work".
Introducing the new employee designated as a probationer to the job, job location,
organisation, organisational surroundings, various employees etc, is the final step of
employment process and is called induction. Some of the companies do not lay
emphasis on this function as they view that this function will be automatically
performed by the colleagues of the new employees. This is more so in educational
This process gains more significance as the rate of turnover is high among new
employees compared to that among senior employees. This is mainly because of the
problem of adjustment and adaptation to the new surroundings and environment.
Further, absence of information, lack of knowledge about the new environment,
cultural gap, behavioural variations, different levels of technology, variations in the
requirements of the job and the organisation also disturb the new employee.
Induction is essential as the new comer may feel insecure, shy and nervous. This
situation leads to instability and turnover (employee leaving the job). Hence
induction plays a pivotal role in acquainting the new employee to the new
environment, company rules and regulations.
Generally the new comer may expect opportunities for advancement, social status,
prestige, higher responsibility, opportunities to use special aptitudes and educational
background, challenges, adventure, opportunity to be creative and original, and
lucrative salary. But jobs with low challenge, inadequate feedback, inadequate
performance appraisal result in reality shock. Induction is necessary to reduce reality
Lecture, handbook, film, group seminar etc. are used to impart the information to
new employees about the environment of the job and organisation in order to make
the new employee acquaint himself with the new surroundings.
Coverage of Induction
Induction programme should cover the following information:
i. About the Company's history, objectives, policies, procedures, rules and
regulations, codes etc.
ii. About the department,
iii. About the superiors, subordinates peers etc.
i. About the Company
a. history, growth, organisation and management, products market, customers
etc. of the company
b. basic conditions of employment hours of work, shift, holidays, retirement
c. pay, allowance, deductions
d. sickness rules, information on pay during sick leave
e. leave rules casual, special, earned leave; holidays, vacation
f. work rules: work-load, use of materials, equipment, machine
g. disciplinary rules and procedure
h. grievance procedure
i. career path, promotion channel
j. unions, negotiating machinery
k. education, training and developmental facilities
l. health, safety, medical care arrangements
m. canteen and restaurant facilities
n. social benefits and welfare measures
o. telephone calls and correspondence
p. traveling and subsistence expenses
q. uniform, clothing
Normally it is the personnel / HR manager, who personally explains, clears doubts
and queries of the new employee regarding the above aspects.
ii. About the Department
The departmental head concerned introduces the new employee to the important
employees and describes briefly about the department and the job. Then the
supervisor concerned introduces the employee to all the employees in the section
unit, describes in detail the job or work, material, machine, equipment with which
the employee has to work, process of production, his position in the departmental
organisation structure, work distribution, assignment, working hours, shift,
quality/standard to be maintained, customers, uses of the product / service etc.
iii. About subordinates and superiors
Various employees, their designations, position in the organisation.
Objectives of Induction
When the supervisor or manager inducts the new employee, the objective is...
o putting the new employee at ease
o creating interest in his job and the company
o providing basic information about working arrangements
o indicating the standards of performance and behaviours expected of him
o making the employee feel that his job is meaningful and that he is not just a
cog in the wheel
o informing him about training facilities
o creating the feeling of social security
o minimizing the reality shock caused due to incompatibility between the
employee expectations and actually what the company provides /offers
regarding pay, benefits, status, working conditions, responsibility, opportunity
for growth, innovations and creativity etc.
Induction Process
The following steps may be identified as the stages of induction process from the
earlier discussion:
1. The employee reports for duty at a certain place to the department Head
2. The Head of the department welcomes the new employee.
3. The employee is introduced to the organization / Branch Head by the head of
the department.
4. Organisational / Branch Head introduces the employee to other employees
and describes the department, and total work of the department etc.
5. The supervisor concerned introduces the employee to his co-workers in that
section / unit, and to the work / job, material, machine he'd be working with.
6. The employee is provided with information about the duties, responsibilities,
rights, facilities, welfare measures etc.
Advantages of Induction
a. First impression matters a good deal and results in lesser turnover (employees
leaving the job).
b. New comer understands the organization, what is expected of him, who and
what he is going to work with, and hence adjusts to the work quickly, saving
time of the supervisor.
c. Employee's reality shock, dissatisfaction, grievances reduce.
d. Employee develops a sense of belonging and commitment.
MODEL QUESTIONS (Lessons 5 to 8)
1. What is Human Resource Planning? Describe the steps involved in Human
Resource Planning?
2. "Human Resource Planning has greater relevance in the present day context
of technological revolution than ever before". Substantiate this statement.
3. Differentiate between recruitment and selection. Describe some of the
recruitment techniques followed by the Indian organisations.
4. Discuss the importance of interview as a selection technique. Explain the
various types of interview.
5. What are the various sources of employment? Critically evaluate them.
6. Write short notes on
a. Placement
b. Psychological Tests
c. Induction
Case: Recruitment and Selection Policy in "B" Company Ltd.,
(Source: Subratesh Ghosh, Personnel Management, Oxford & IDM, New Delhi, 1990.
"B" Company Ltd., Pragatipuram, was established as a jointstock Company in 1920,
with an authorized capital of Rs.1,50,00,000 and paid up capital of Rs.1,25,00,000.
The Company manufacturers light metal products of various types. At present it
employs 4,950 employees.
The company has a systematic recruitment procedure. The Managing Director,
subject to the overall control of the Board of Directors, is the ultimate authority for
making policy decisions regarding the expansion in the volume of employment and
also for creation of new posts. For the existing posts, the General Manager is the
authority for making relevant decisions regarding the recruitment policy or changes
therein. Usual day to day decisions, however, are taken by the Chief Personnel
Manager of the Company.
The recruitment policy of the company is implemented by the personnel department,
which works under the overall control and guidance of the Chief Personnel Manager.
The department has a senior officer to look after the recruitment activities, but he
does not deal exclusively with it. In addition to recruitment, he also looks after
housing of the workers.
Forecasting the recruitment needs
"B" Company, however, does not have any recruitment plan to guide its recruitment
activities over a period. At the workshop level, the company has no arrangement for
manpower planning, although it is reported that at the head office situated at
Calcutta, the manpower planning is in use. The company does not have any
arrangement for maintaining a systematic manpower inventory. For forecasting the
manpower needs in future, the management relies on the work-study made by
industrial engineers supported by the opinions of the managers concerned related to
their own departments.
For estimating the changes in the manpower supply, the company relies on the
conventional turnover analysis. It does not use any sophisticated method for
forecasting the changes in manpower supply in future.
Pattern of preferences
"B" Company's recruitment policy is based on a definite pattern of preferences for
selection of candidates. Dependents of deceased employees or medically unfit
employees are treated as 'priority' cases and 25 percent of the total number of
vacancies may be reserved for them. In 15 percent of vacancies, labourers working
under contractors in the projects of the company would be given preference. In 20
per cent of vacancies, suitable ex-employees and dependents or relatives of
employees may be given preference. Here, the seniority of the service of the
employee concerned would be the criterion in the case of several candidates fulfilling
the requirements of this condition. Local candidates may be given preference in 40
per cent of the total number of vacancies.
Factors affecting the selection of candidates
Subject to the pattern of preferences mentioned above, the company selects
candidates on the basis of certain factors, among which the most important is the
professional and general educational qualifications. The other factors considered in
order of importance attached to them are - academic performance (only in the case of
graduate trainees), service experience, impression about the candidate's potential
ability to work (as revealed in interviews), impression about the personality of the
candidate, his record of extra-curricular activities, and local origin.
Union and the recruitment policy
In "B" Company Ltd., the representative union of workers is consulted when the
recruitment policy is formulated or changed to any significant extent. In the existing
collective agreement governing the union-management relations and major terms
and conditions of work, there are clauses affecting the recruitment policy.
Accordingly, the recruitment policy in the company is not made or changed
unilaterally by the management.
Constraints to the recruitment policy
So far as the union views and possible reactions are considered for changes in the
recruitment policy, the union policy may be taken, in a certain way, as a constraint
affecting the managements power regarding the recruitment policy. Besides this, the
management feels the existence of certain other constraints in this respect. Labour
laws, government regulations and general policy affecting recruitment appear to
circumscribe the companys freedom in the field of recruitment to some extent.
Another constraint operating from outside is the political environment of the State in
which the factory is situated. Demands for preference to the 'sons of the soil' and the
agitations of the "Adivasi" community of the region have been mentioned in this
connection by the executives dealing with the recruitment of the company. The
technological factor also operates, in this case, as an indigenous factor to constrain
the recruitment policy of the management. The company's plans for technological
changes and modernization are always to be considered while formulating and
implementing the recruitment policy. Senior executives dealing with recruitment
have mentioned the growing feeling among the management to prefer greater
mechanization, as labour tended to be more and more expensive. However, in view of
the constraints of the union pressure and the government policy towards
rationalisation and automation, this preference has not been fully reflected in the
company's official recruitment policy.
Implementation of the policy
Actual implementation of the recruitment policy, formulated and approved at
different levels, is made by the personnel department. While discharging this
responsibility, personnel department, of course, consults and takes the help of the
line management and the Head of the department in which the appointment is to be
made, but the basic work rests with them.
Changes in the recruitment policy
Some of the senior executives of "B" Company expect that the company's recruitment
policy may change in near future. About the nature of the anticipated change, no
clear picture was available. However the Chief Personnel Manager of the company
desires to have greater freedom to recruit people from the external labour market
according to the needs of the company. But he anticipates difficulty in giving effect to
this desire in view of the collective agreement between the union and the
management. The Senior Personnel Officer of the company wants a greater degree of
preference for the local people and the ex-servicemen in the recruitment policy. He
also favours the use of psychological tests in selection of employees.
Questions for discussion
1. Discuss the pattern of preferences and the criteria of selection of candidates in
the recruitment policy. Is "B" Company Ltd. correct to assign priority to
professional and educational qualifications among the criteria of selection? If
so, why? If not, why not?
2. Give your views on the desirability of changing the recruitment policy of "B"
Co. Ltd.
- End of Chapter -
Before discussing job analysis in detail, many related terms should be carefully
Task: A distinct work activity which has an identifiable beginning and end. For
example, hand sorting of a bag of mail into appropriate boxes.
Duty: Several tasks which are related by some sequence of events for example,
picking up, sorting and delivering incoming mail.
Position: A collection of tasks and duties which are performed by one person. For
example, mail room clerk preparing the outgoing mail, sorting the incoming mail,
and operating the addressing machine, postage machine, & related equipment.
Job: One or more positions within an organisation. For example, three mail clerks
having the same job but different payroll positions.
Job family: Several jobs of a similar nature which may come into direct contact
with each other or may be spread out throughout the organisation performing
similar functions. For example, clerical jobs located in different departments.
Job analysis: A systematic investigation into the tasks, duties and responsibilities
of a job.
Job description: A written summary of tasks, duties and responsibilities of a job.
Job specification: The minimum skills, education, and experience necessary for an
individual to perform a job.
Job evaluation: The determination of the monetary worth of a job to an
organisation. Job evaluation is usually a combination of an internal equity
comparison of jobs with an external job market comparison.
Job classification: The grouping or categorising of jobs on some specified basis
such as the nature of the work performed or the level of pay. Classification is often
utilised as a simplified method of job analysis.
Procurement is the first operative function of personnel management, which can be
sub-divided into various sub functions like human resource planning, recruitment
and selection. Management should determine the kind of personnel required for a
job and the number of persons to be employed. The organisation should also find out
the right man for the right job in right time. Thorough knowledge of the job is
essential to perform these functions.
In addition, establishment of a scientific standard in advance is essential to compare
the applicant's skills with the job requirements and to select the right candidate. This
standard stipulates the minimum acceptable qualifications, skills, and qualities
required for adequate job performance. Stipulating the standard requires the
knowledge regarding job design, study of the job duties and responsibilities,
requirements of the job, human abilities and qualities etc. Job analysis is needed to
know all these and to perform various functions of HRM effectively.
A comprehensive job analysis programme can be used as a foundation and as an
essential ingredient for all the functions and areas of personnel management and
industrial relations. Brief descriptions of uses of job analysis are given below:
1. Employment: Job analysis is useful as a guide in every phase of employment
process like manpower planning, recruitment, selections, placement,
orientation, induction, and in performance appraisal, as it gives the
information about duties, tasks and responsibilities etc.
2. Organisation audit: Job information obtained by job analysis often reveals
instances of poor organisation in terms of the factors affecting job design. The
analysis process, therefore, constitutes a kind of organisation audit.
3. Training and development programmes: Description of duties and
equipment used is of great help in developing the content of training and
development programmes. Needs of training and development are identified
with the help of job description. Further, the training programmes are also
evaluated with the standards of job analysis.
4. Performance appraisal: Instead of rating an employee on characteristics
such as dependability, there is now a tendency toward establishing job goals
and appraising the work done toward those goals. In this type of appraisal, a
job description is useful in defining the areas in which job should be
5. Promotion and transfer: Job information helps in charting the channel of
promotion and in showing lateral lines of transfer.
6. Preventing dissatisfaction and settling complaints: Job information
can be used as a standard in preventing and settling complaints related to
work load, nature of work, work procedure etc.
7. Discipline: Job information can be used as a standard when discipline is
being considered for standard performance.
8. Restriction of employment activity for health reasons and early
retirement: When employees are unable to maintain the standard job
performance due to old age or health hazard, they may opt for early
retirement or the organisation may retrench their services. In such cases, job
information is helpful to the employees and their supervisors to think
objectively. In some other cases, some mutually satisfactory rearrangements
of subsidiary duties might make it possible to retain older employees whose
intelligence, general experience, and reliability make them valuable assets.
Job information becomes a standard in this situation also.
9. Wage and salary administration: Job analysis is the basis for job
evaluation. Basically, wage and salary levels are fixed on the basis of job
evaluation, which takes into consideration the content of the job in terms of
tasks, duties, responsibilities, risks, hazards etc.
10. Health and safety: Job description provides the information about hazards
and unhealthy conditions, accident prone areas in the job etc. It helps the
management to provide health and safety measures.
11. Induction: Job description is the basis for induction as the employee is
provided with the information about the job.
12. Industrial relations: A job description is a standard function to solve
industrial disputes and to maintain sound industrial relations. If an employee
attempts to add or delete some duties from the ones listed in job description,
the standard has been violated. The labour union as well as management is
interested in this matter. Controversies often result, and a written record of
the standard job description is valuable in resolving such disputes.
A job analysis provides the following information:
1. Job identification: Its title, including its code number.
2. Significant characteristics of a job: Its location, physical setting,
supervision, jurisdiction, hazards and discomforts.
3. What a typical worker does: This includes collection of information on
specific operations and tasks to be performed by the typical worker, including
their relative timing and importance, their simplicity, routine or complexity,
responsibility towards others etc.
4. Job duties: A detailed list of duties along with the probable frequency of
occurrence of each duty.
5. What materials and equipment the worker uses: For example, metals,
plastics, grains, yarn or lathes, milling machines, testers, punch presses,
micro-meters etc.
6. How a job is performed: Emphasis is on the nature of operations like
lifting, handling, cleaning, washing, feeding, removing, drilling, driving,
setting up, and the like.
7. Required personal attributes: These include experience, training
undergone, apprenticeship, physical strength, dexterity, physical demands,
mental capabilities, aptitudes, social skills etc.
8. Job relationship: This includes opportunities for advancement, patterns of
promotions, essential cooperation etc.
Jobs can be analysed through a process, which consists of six basic steps:
Step 1. Collection of background information : Background information
consists of organisation charts, class specifications, and existing job descriptions.
Organisation charts show the relation of the job with other jobs in the overall
organisation. Class specifications describe the general requirements of the class of
job to which this particular job belongs. The existing job description provides a good
starting point for job analysis.
Step 2. Selection of representative positions to be analysed : It would be
highly difficult and time consuming to analyse all the jobs. So, the job analysis has to
select some of the representative positions in order to analyse them.
Step 3. Collection of job analysis data : This step involves actually analysing a
job by collecting data on features of the job, required employee behaviour, and
human resource requirements.
Step 4. Developing a job description : This step involves describing the
contents of the job in terms of functions, duties, responsibilities, operations etc. The
incumbent of the job is expected to discharge the duties and responsibilities and
perform the functions and operations listed in job description.
Step 5. Developing a job specification : This step involves conversion of the job
description statements into a job specification. Job specification or job requirements
describes the personnel qualities, traits, skills, knowledge and background necessary
for getting the job done.
Step 6. Developing employee specification : This final step involves
conversion of specification of human qualities under job specification into an
employee specification. Employee specification describes physical qualifications,
educational qualifications, experience requirements etc. which specify that the
candidate with these qualities possess the minimum human qualities listed in the job
There are several techniques that can be used for the purpose of collection of data:
The important among them are: (1) interviews (2) direct observations (3)
maintenance of records (4) questionnaires and (5) critical incident technique. In
practice, these techniques may be used individually or in possible combinations.
(1) Interviews: There are two types of interviews that can be used for collection of
data for job analysis viz., 'individual interviews' (with groups of employees who do
the same job) and 'supervisory interviews' (with one or more supervisors who are
thoroughly knowledgeable about the job being analysed)
The interviewer has to collect accurate and complete data / information by creating
favourable attitudes among employees and supervisors. There are several basic
attitudes and techniques that serve to secure maximum accurate and complete
information. These attitudes and techniques also help to reduce the natural suspicion
of both employee and supervisor toward the interviewer. Important among them are:
- The interviewer should introduce himself so that the workers know him, who he is,
and why he is there.
- The interviewer has to show a sincere interest in the worker and the job being
- The interviewer should not try to tell the worker how to do the job.
- The interviewer must try to talk to the employees and supervisors in their own
- The interviewer should not confuse the work with the worker.
- The interviewer has to do a complete job study within the objectives of the
- The interviewer must verify the job information obtained by consulting other
employees doing the same job.
(2) Direct Observation: Direct observation is particularly useful in jobs that
consist primarily of observable physical activity, like draftsman, mechanic etc. One
approach to this method is - observing the worker on the job during a complete work
cycle. In this process, notes are taken regarding all the job activities observed. The
next stage is interviewing the worker and getting the additional information from
him. The other approach is to observe and interview simultaneously.
(3) Maintenance of records: In this technique, the workers are asked to maintain
and keep daily records or list of activities they are doing on that day. For every
activity be engages in, the employee records the activity in the list given. This
technique provides comprehensive job information and it is much useful when it is
supplemented with subsequent interviews.
(4) Questionnaires: Many companies use job analysis questionnaires to secure
information on job requirement relating to typical duties and tasks, tools and
equipment used etc.
(5) Critical incidence technique: The critical incident technique for job analysis
is especially useful for scientific analysis, and selection research. The earlier
mentioned techniques are useful for the purpose of gathering data, for making
recruitment and selection decisions. In most cases, the utility of the above techniques
is unchecked and as such they are not entirely scientific.
In this technique, incidents are short examples of successful or unsuccessful job
behaviour. After many incidents are collected, they are classified into behavioural
categories. These categories describe specific desired job behaviours and can be
useful in recruitment and selection decisions. Furthermore, the categories also
include a list of the specific behaviors that make the difference between effective and
ineffective performance on the job. They, therefore, specify precisely what kinds of
performance should be appraised.
It is also useful for testing the effectiveness of the job description and job
specification. The job analysis information thus collected is useful to the personnel
department to prepare the forms detailing as job description, job specifications and
job standards.
There are three important sub-systems in job analysis. They are job description, job
specification and employee specification. We will talk about these in subsequent
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Job description is an important document which is descriptive in nature, and
contains a statement of job analysis. It serves to identify a job for consideration by
other job analysis. It tells us what should be done, why it should be done, and where
it should be performed.
Hints for writing job descriptions
Earnest Dale developed the following hints for writing the job description.
1. It should indicate the scope and nature of the work including all important
2. It should be clear regarding the work of the position, duties etc.
3. More specific words should be selected to show (a) the kind of work, (b) the degree
of complexity (c) the degree of skill required (d) the extent of which problems are
standardised, (e) the extent of the worker's responsibility for each phase of the work,
and (f) the degree and type of accountability. Action words such as analyse, gather,
plan, confirm, deliver, maintain, supervise and recommend should be used.
4. Supervisory responsibility should be shown to the incumbents.
5. Brief and accurate statements should be used in order to accomplish the purpose.
6. Utility of the description in meeting the basic requirements should be checked
from the extent of understanding of the job that a new employee gets by reading the
job description.
The purpose of job description is to serve to identify a job for consideration by job
analysis. Other purpose is to tell the employee what should be done and why it
should be done etc., to provide information to employee about his salary, terms and
conditions of work, nature of work, working conditions etc.
A job description normally contains the following information:
1. Job title
2. Organisational location of the job
3. Supervision given and received
4. Materials, tools, machines and equipment worked with
5. Designation of the immediate superiors and subordinates
6. Salary level: Pay, DA (Dearness Allowance), other allowances, bonus,
incentive, wage, method of payment, hours of work, shift, break etc.
7. Complete list of duties to be performed, separated into daily, weekly, monthly,
and casual, estimated time to be spent on each duty
8. Definitions of unusual terms
9. Conditions of work: Location, time, speed of work, accuracy, health hazards,
accident hazards
10. Training and developmental facilities
11. Promotional chances and channels
Job description serves as a basis to develop job specification. It clearly tells the
employee his duties & responsibilities, it gives information to the employee about his
working hours, shift, salary etc., and about the training and development facilities,
promotional chances etc.
Job description cannot provide complete details of the nature of work, duties and
responsibilities of employees. Many times employees experience confrontation
between the actual work and work as per job description. Now-a-days employees are
expected to play a wider range of roles than those just stated in the job description.
Hence, job description is used as a guideline rather than as a detailed account of
duties and responsibilities.
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The job analyst has to write the job description after consulting the worker and the
supervisor. After writing the preliminary draft, the job analyst has to get further
comments and criticism from the worker and supervisor before preparing the final
draft. The following modes may be used in writing job description:
Getting the questionnaire filled by the immediate supervisor of the employee
Completing the job description form by observing the actual work being done
by the employee
Securing all the information pertaining to the job from the employee
The job analyst has to finalise the job description and write the final draft by using
any one or a combination of two or more of these methods. The job description
should be reviewed after the final draft is prepared.
Keeping the job description up-to-date:
Job requirements have been undergoing continuous changes. The job analyst has to
secure the information about the changes as and when reported or when a grievance
is vented claiming that a given job should be reclassified into higher group or class
carrying higher rate of pay. The job analyst has to check the information received and
has to change or update the job description accordingly.
It is a written statement of qualifications, traits, physical and mental characteristics
that an individual must possess to perform the job duties and discharge
responsibilities effectively.
Job Specification Information:
The first step in a programme of job specification is to prepare a list of all jobs in the
company and where they are located.
The second step is to secure and write up information about each of the jobs in a
company. Usually, this information includes:
i. Physical Specifications: Like, physical qualifications or physical capacities
which vary from job to job. Physical qualifications or capacities are physical
features like height, weight, chest, vision, hearing, ability to lift weight, ability
to carry weight, health, age, capacity to use or operate machines, tools,
equipment etc.
ii. Mental specifications: Like, ability to perform arithmetic calculations,
ability to interpret data, information blueprints, ability to read electrical
circuits, ability to plan, reading abilities, scientific abilities, judgment, ability
to concentrate, ability to handle variable factors, general intelligence, memory
iii. Emotional and Social Specifications: These are more important for the
post of managers, supervisors, foreman, etc. These include emotional stability,
flexibility, social adaptability in human relationships, personnel appearance
including dress, posture, poise, features and voice required by the job.
iv. Behavioural Specifications: These play an important role in selecting the
candidates for higher level jobs in the organisational hierarchy. This
specification seeks to describe the acts of managers rather than the traits that
cause the acts. These specifications include judgment, research, creativity,
teaching ability, maturity (capable of accepting responsibility) trial of
conciliation, self-reliance (self-starter sticks to own decisions), dominance
(giving orders in a personal way) etc.
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Job evaluation is the outcome of job analysis. Job analysis provides the information
necessary for appraising or evaluating a job like tasks to be performed in a job, skill,
knowledge, abilities, aptitude etc., necessary to carry out the tasks, responsibilities,
authority and accountability requirements to perform a job successfully. Job
description and job specification are three sub-systems of job analysis. Job
description provides the information relating to duties and responsibilities of a job,
job specification gives the information relating to minimum acceptable human
qualities like knowledge and skill necessary to perform a job. Employee specification
indicates minimum employee qualifications like physical, educational, behavioral
etc., which represent the possession of minimum acceptable human qualities. Thus
job analysis provides information necessary to job evaluation.
Job evaluation deals with money and work. It determines the relative worth of
money value of jobs. The International Labour Organisation defined job evaluation
as, "as attempt to determine and compare demands which the normal performance
of a particular job makes or normal workers, without taking into account the
individual abilities or performance of the workers concerned".
Wendell L. French defined job evaluation as, "as process of determining the relative
worth of the various jobs within the organisation, so that deferential wage may be
paid to jobs of different worth".
Job evaluations is defined as "the overall activity of involving an orderly, systematic
method and procedure of ranking, grading and weighing of jobs to determine the
value of a specific job in relation to other jobs".
British Institute of Management (1970) defined job evaluation as, "the process of
analysing and assessing the content of jobs, in order to place them in an acceptable
rank order, which can then be used as a basis for remuneration system. Job
evaluation, therefore, is simply a technique, designed to assist in development of new
pay structure, by defining relativities between jobs on a consistent and systematic
Thus job evaluation may be defined as a process of determining the relative worth of
jobs, ranking and grading them by comparing the duties, responsibilities,
requirements like skill, knowledge of a job with other jobs with a view to fix
compensation payable to the concerned job holder.
The following objectives are derived from the analysis of the above mentioned
1. To generate data and information relating to job description, job specification
and employee specifications of various jobs in an organisation.
2. To compare the duties, responsibilities and demands of a job with that of
other jobs.
3. To determine the hierarchy and place of various jobs is an organisation.
4. To determine the ranks of grades of various jobs.
5. To ensure fair and equitable wages on the basis of relative worth or value of
jobs. In other words equal wages are fixed to the jobs of equal worth or value.
6. To minimize wage discrimination based on sex, age, caste, region, religion etc.
Job evaluation is an aid to measure the contribution of human resources to the job
and the organisation. Proper ground should be prepared to measure the
contributions of human resources and to appraise relative worth of jobs. It is very
difficult for a single man to study, review and evaluate all jobs. Hence appointment of
a job evaluation committee consisting of technical and non-technical people is more
The next step in the preparation of ground work is analysing the jobs which are to be
evaluated. Job knowledge can be obtained from the job description and job
specification records. Job knowledge can be gathered and collected through
interviews, observations, activity sampling, questionnaires, critical incidents, dairies
etc. The steps in job analysis, job description and job specification information etc.,
are discussed.
The next step is identification of compensable factors like knowledge in respect of
education, experience, skill etc. This ground work is more useful for systematic job
Job evaluation has certain advantages over other techniques of pay fixation. They
1. It is a logical and to a certain extent an objective method of ranking and
grading the jobs.
2. It helps to fit the newly created jobs in the existing structure.
3. Employee grievances, doubts and complaints would be at the lower ebb, as it
is a systematic and objective methods of wage fixation.
4. It eliminates some undesirable factors like inequalities in bargaining
capacities of employees and employers, fluctuations in market rates etc.
5. It satisfies the principles of fair wage, wage equity, uniformity in wages etc.
6. It helps to redesign the jobs for minimizing wide wage differentials.
7. It ensures employee satisfaction about wage level and wage equity.
8. It also helps to redesign the jobs by reallocating the easy and difficult tasks
equally among various jobs.
Though there are certain advantages of job evaluation, it suffers from some
problems. They are:
1. Job evaluation is not exactly scientific.
2. 'Modus Operandi' of most of the techniques is difficult to understand even to
the supervisors.
3. The factors taken by the programme are not exhaustive
4. There may be wide fluctuations in compensable factors in view of changes in
technology, values and aspirations of employee etc.
5. Employees, trade union leaders, management and the programme operators
may perceive differently in selecting the compensable factors, in giving
weightages or degrees etc.
6. The results of job evaluation may not exactly coincide with social evaluations,
which in turn, result in employee dissatisfactions.
7. Job evaluation is only one among several factors in determining wage level.
Sometimes other factors like government policy may dominate the job
8. It also helps to redesign the jobs by reallocating the easy and difficult tasks
equally among various jobs.
9. Job evaluation programme once structured may not be useful for the next
Despite these limitations or problems, job evaluation is the most appropriate
technique for fixing and revising wage, as it is a systematic and objective method of
wage fixation.
Ranking Method, Grading Method, Point System, Factor Comparison Method
Jobs are evaluated on the basis of various techniques. These techniques are grouped
into two classes viz., conventional and non-conventional techniques.
Conventional techniques are divided into quantitative and non-quantitative
techniques. Non-quantitative techniques include ranking (simple ranking and paired
comparison) and job classification and grading method. Quantitative techniques
include point rating and factor comparison method.
Non-conventional methods consist of
(i) time span of discretion theory,
(ii) decision banding
(iii) direct consensus method
(iv) guide chart profile method,
(v) problem solving compensable factor,
(vi) guide line method,
(vii) Urwick Orr profile method and
(viii) profile method.
Conventionally, non-quantitative simple and crude techniques were
developed. They are ranking and job classification methods.
a. Simple Ranking: This is the most simplest and administratively the most
easiest technique. The evaluator compares one job with other jobs based on
duties, responsibilities and demands made by the jobs on the job incumbent
and the degree of importance of the job to the organisation and ranks all the
jobs from the most important to the least important. The evaluator has to
appraise and rank the jobs but not the job incumbents.
b. Ranking the key jobs: Ranking all the jobs at a stretch under simple ranking
method is difficult. The evaluator, in order to minimize this problem, has to
identify the key or representative jobs at the first stage; rank the key jobs at
the second stage; identify and rank all other jobs at the third stage.
c. Paired Comparison: Another problem of ranking method is that each job
cannot be compared with all other jobs for the purpose of ranking. The
method of paired comparison can be adopted to minimize this problem.
Under this paired comparison method, the evaluator ranks each job in turn
against all other jobs to be appraised, so that a series of paired rankings is
produced. This method is more comprehensive, logical and reliable, compared
to the simple ranking method.
d. Single Factor Ranking Method: Another problem in ranking method is
difficulty of operation of the method, as ranking has to be done on the basis of
number of factors. In view of this, Goldenberg has suggested a single factor
ranking scheme. The single factor considered is the discretionary contents
present in each job related to other jobs. The single most important task to be
performed in a job is identified and compared within the single most
important task to be performed in other jobs. Thus pure ranking does not
cover these refinements.
The jobs are to be priced after they are ranked. In other words, money value should
be assigned to each job. Key jobs with known monetary values will be used as the
basis to determine the money value of other jobs. Generally there is agreement about
the rates of key jobs.
Advantages of this method include:
(i) This method is the simplest, quickest and least costly from the view point of time
and money
(ii) This method is most appropriate in small organisations
(iii) It is also appropriate for ranking the top managerial personnel in large
organisaitons, and
(iv) It is useful as a first and basic step of job evaluation.
Despite the above mentioned advantages, this method suffers from the following
(i) This method provides no yardstick for measuring the relative worth of one job
against the other
(ii) Job requirements, job specifications and employee specifications are not
considered in evaluation
(iii) It does not indicate the extent or degree to which one job is worthy than the
(iv) It is not a comprehensive and systematic technique.
Class and grade are used differently in this method. A grade is a group of different
skills to perform. A class if subdivision of a given occupation. For example, Assistant
Accountant, Accountant, Senior Accountant and Chief Accountant are the jobs in the
occupation of Accountant. The jobs within a class have fairly similar tasks to be
performed, whilst the jobs within a grade may be different as far as tasks are
concerned. However, classes and grades are designed for the similar jobs and thus
receive similar pay. For example, a grade may consist of jobs like Financial
Accountants, Cost Accountants and Management Accountants and a class my consist
of Assistant Financial Accountant, Financial Account, Senior Financial Accountant
and Chief Financial Accountant.
Under this method, jobs at different levels in the organisational hierarchy are divided
into various grades, with a clear cut definition of each grade. Grades are formulated
on the basis of nature of tasks, requirements of skill, knowledge, responsibilities and
authority of various jobs. There are several steps in the mechanism of this method.
The important among them are:
i ) Determine the shape and size of organisational structure i.e tall or flat
organisation, geographical or functional organisation etc.
ii) Preparation of job descriptions
iii) Preparation of grade descriptions based on various components
iv) Establishment of a number of job grades and division of the organisation into
various grades like Grade I, Grade II. Grade VI.
v) Discussion and negotiation with trade union representatives regarding the
number of grades, grade descriptions, getting their consent, finalising the number of
grades and grade description and recording them.
vi) Selection of key jobs and grading them
vii) Grading the entire jobs
viii) Classifying the jobs of each grade
ix) Assigning the money value of the key grades first and then to all other grades.
This method enjoys the following advantages.
(i) It is simple and easy to understand and operate.
(ii) It provides an opportunity for a systematic organisation structure.
(iii) Pay grades are better and appropriate for comparison with those of other
(iv) It is more elaborate than ranking method.
In spite of the above mentioned advantages, this method suffers from the following
(i) If sometimes seems to be arbitrary, though it takes the views of the representative
of the trade unions,
(ii) Writing grade descriptions is not easy in this method. However, classification and
gradation represent a link in the historical development of job evaluation between
ranking and a points system.
There are two methods under conventional quantitative techniques, viz., points
rating and factor comparison system.
1. Points Rating Method: This method was introduced by Merrill R. Lott.
This was one of the earliest approaches for evaluating jobs based on
quantitative values. This method is analytical in the sense that jobs are broken
into components for purposes of comparison. This method is quantitative as
each component of the job is assigned a numerical value. Thus, characteristics
of factors considered to have a bearing on all jobs in the programme like skill,
knowledge, responsibility, working conditions etc., are selected under this
method. Each factor is divided into degrees or levels and point value is
assigned to each level. The total of point values assigned to each factor gives
the total point values for each job which can be compared.
This method of job evaluation should be developed systematically and applied
methodically in order to avoid the anomalies. The important steps in the process of
developing this techniques are:
i) Constituting a representative committee of members from various departments for
job evaluation.
ii) Selecting a sample of jobs and preparing job descriptions, job specifications and
employee specifications.
iii) Selecting and defining those factors which are related to all jobs and are
considered to be most critical in determining the relative degrees of difficulty and
responsibility between jobs. Eight to twelve factors are most desirable. The following
factors may be considered for this purpose.
a. Skill: Education, training, judgement, analysis, mental complexity, mental
dexterity, adaptability etc.
b. Effort: Physical demand, visual, effort, concentration, mental effort,
alertness etc
c. Responsibility: For preventing monetary loss, machines, materials, safety
policy etc.
d. Job Conditions: Working conditions, hazards etc
iv) Determining the weight of each factor according to its relative importance.
Assigning the percentage value to each factor. The total percentage of all factors is
v) Defining each factor, specifying the scope and elements of each factor
i. Dividing each factor into levels and defining each level.
ii. Determining relative value of each level within factors. Factors can be divided
into point values by arithmetic or geometric progression.
iii. Testing the mechanism. Get the total points with the help of above discussed
method for a new sample jobs and compare them with the results obtained
through other methods. Proceed further, if the system produces acceptable
iv. Appraise all the jobs and arrive at a composite numerical value for each job.
v. Price the points in order to arrive at the wage level and establish a wage
structure with the help of organisational hierarchy of jobs and salary policy.
There are no hard and fast rules regarding factors, sub-factors assigning the
weightages, deciding upon degrees and values.
This system is only a preliminary step in arriving at an equitable pay structure. There
are no scientific techniques to guide in respect of assigning money value to the
points. But, various factors like influence of trade unions, pay structure in
comparable industries, financial position of the company, living cost affect the pay
level. However, points system will help in arriving at an equitable pay structure. The
important task in this context is conversion of point scores into monetary values by
assigning a standard unit of money to each point. Money value of various scores can
be attained by plotting a graph with points ratings on the X-axis and money value on
the Y-axis. There are certain alternatives regarding plotting money on the Y-axis.
Important one is showing current salary rates on Y-axis against the score of the job
concerned on X-axis. Trend line through a scatter of points is seen. In case point
score is divided among various grades of jobs in an organisation, the pay level can be
related to the grades . The minimum and maximum pay of each grade are shown in
the figures. The pay scale of various jobs will be fixed within the minimum and
maximum limits of the pay.
This method is superior to other methods discussed so far, as this is analytical as well
as quantitative. The advantage on this method are:
i ) Almost the same pay scale can be arrived at for the same jobs because agreement
among rates on the same is very close.
ii) Definitions are written in applicable terms to jobs.
iii) Assigning monetary values is very easy
iv) Prejudice, bias and error of human judgment are minimized in this technique.
v) Point score or monetary values cannot be manipulated very easily.
vi) Assignment of point score or money values is consistent and accurate
vii) Once the score is assigned to a particular job, it is long standing.
viii) Wage differentials would be systematic and according to the content of the job
under this method.
Despite these merits, this technique also suffers from various disadvantages.
i) It is difficult to determine factors levels and assign point values,
ii) It would be somewhat difficult to explain the mechanism and operation of this
method of employees, supervisors and trade union leaders.
iii) Operation of this method involves heavy expenditure, spending of much time and
clerical work.
However, this technique is superior to the conventional non-quantitative techniques
in several respects.
Another conventional quantitative technique is the point factor or factor comparison
This method is based both on the principles of points rating and principle of ranking.
This method is analytical as jobs are broken into sub-factors and components. Under
this method, first the components or sub-factors are ranked under various factor
headings. The next step is assigning the monetary values to the components or sub-
factors of each job. Thus each job is ranked a number of times (i.e., number of
compensable components or sub-factors).
The mechanism or 'modus operandi' of this method involves the following steps:
1. Developing job descriptions, job specifications or job requirements, covering
physical requirements, mental requirements, skill requirements, training and
experience, responsibility and authority, working conditions etc.
2. Selecting a number of key jobs. This step is more critical and useful from the
point of final evaluation as the other jobs are assigned monetary values based
on the fixed wage rates arrived for the key jobs on the basis of negotiations. A
key job must be clearly divisible into sub-factors and components. This step
also involves dividing the job into sub-factors and components.
3. The third step is ranking of key jobs. The sub-factors of each key job must be
given relative ranks, based on their individual contribution to the total job.
4. The fourth step involves valuing the sub-factors of each of the key jobs. This
step is also known as factor evaluation. Money worth of each sub-factor of the
key jobs is ascertained in order to know the total money value (or salary) of
each of the key jobs.
5. The fifth step is integrating the monetary value of sub-factors arrived through
factors evaluation with those of ranking of factors. It is to find out whether the
difference factors as per the ranking and factor evaluation is one and the same
or not. Cross checking is provided where the money value of each sub-factor is
given in brackets.
6. The sixth step is comparing all the jobs (factor by factor) of the same grade of
level with the related key job and establishing monetary value of the sub-
factors of various jobs based on the monetary value of sub-factors of key jobs.
There are certain advantages to this technique over others.
i) It is analytical and quantitative method.
ii) This method is a combination of two techniques i.e., ranking and factor
iii) Since 'modus operandi' of this system is relatively easy to understand, it can be
operated and explained to supervisors employee and trade union leaders.
iv) This technique is more reliable and valid, compared to other techniques, as each
job is compared with all other jobs from two respects, i.e. factor rank order and
factor comparison.
v) This technique assigns money value more or less fairly and objectively and there is
cross-checking of money value with rank order.
However, this techniques suffers from certain disadvantages.
i) It is costly and somewhat difficult to operate compared to the conventional
non quantitative techniques.
ii) Factor evaluation in this method is not that such objective as that of point-rating
iii) This technique does not consider all the sub-factors as the operation of the system
would be difficult if it considers all the factors.
Apart from these conventional techniques of job evaluation, there are some
developments in job evaluation techniques in recent years. These techniques will be
discussed under non-conventional techniques.
In different job evaluation methods like job comparison or ranking method, grading
or job classification method, point rating method and factor comparison method,
points or factors are calculated. After calculating these points, they are to be
converted into monetary value i.e. in terms of rupees. Under the market pricing
method the points/factors are converted on the basis of market factors like demand
and supply. For example, if a particular skills demand is more than the supply. For
example if a particular skills demand is more than the supply compared to other
skills, that particular skill enjoys higher market price and thus the points of that
particular skill is converted at that higher market price compared to other skills
whose supply is more than the demand for the same and ultimately are quoted at less
price in the market. Thus, the jobs with greater demand are priced at high and
consequently higher salaries are fixed for them. And the jobs with lower demand,
lower market price are fixed lower salaries.
As stated earlier, the points or factors arrived through the methods like ranking / job
comparison, grading / job classification, point rating and factor comparison are
converted into monetary values. These points / factors are converted at the price
which is fixed on the basis of mental ability, physique, analytical ability, sharpness,
difficulty in carrying out the job etc.
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Following are the essentials for the success of job evaluation programme:
1. Compensable factors should represent all of the major aspects of job content.
Compensable factors selected should:
(a) avoid excessive overlapping or duplication.
(b) be definable and measurable
(c) be easily understood by employees and administrators,
(d) not cause excessive installation or administrative cost; and
(e) be selected with legal considerations in mind.
2. Operating managers should be convinced about the techniques and programme of
job evaluation. They should also be trained in fixing and revising the wages based on
job evaluation.
3. All the employees should be provided with complete information about job
evaluation techniques and programme.
4. All groups and grades of employees should be covered by the job evaluation
5. The programme of and techniques selected for job evaluation should be easy to
understand by all the employees.
6. Trade unions acceptance and support to the programme should be obtained.
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One of the most significant concerns of personnel managers in the past several years
has been employee productivity and satisfaction. Personnel managers have realised
that an important factor influencing these areas is the type of work handled by the
employee. Job design answers the questions of how the job is to be performed, who is
to perform it, and where it is to be performed. Thus, in a way, job design great the
affects how an employee feels about a job, how much authority an employee has over
the work, how much decision making the employee has on the job and how many
tasks the employee has to complete. Managers realise that job design determines
their working relationship with their employees and the relationship among
employees themselves. Job design is defined as the process of deciding on the
content of a job in terms of its duties and responsibilities: on the methods to be used
in carrying out the job, in terms of techniques, systems and procedures and on the
relationships that should exist between the job holder and his superiors,
subordinates and colleagues.
Two important goals of job design are:
(i) to meet the organisational requirements such as higher productivity, operational
efficiency, quality of product / service etc. and
(ii) to satisfy the needs of the individual employees like interests, challenge,
achievement or accomplishment, etc. Finally the goal of the job design is to integrate
the needs of the individual with the organisational requirements.
There are three important approaches to job design viz.
1. Engineering approach
2. Human approach and
3. Job characteristic approach
The most prominent single element in the Engineering approach, envisaged by
F.W.Taylor and others, was the task idea. "The work of every workman is fully
planned out by the management at least one day in advance and each man receives in
most cases complete written instructions, describing in detail the task which be is to
accomplish. This task specifies not only what is to be done but how it is to be done
and the exact time allowed for doing it". The principles offered by scientific
management to job design can be summarised thus:
Work should be scientifically studied. Taylor advocated fragmentation and
rountinisation of work to reap the advantages of specification.
Work should be arranged so that workers can be efficient.
Employees selected for work should be matched to the demands of the job.
Employees should be trained to perform the job.
Monetary compensation should be used to reward successful performance of
the job.
These principles to job design seem to be quite rational and appealing because they
point toward increased organisational performance. Specification and routinisation
over a period of time result in job incumbent's becoming experts rather quickly,
leading to higher levels of output. Despite the assumed gains in efficiency
behavioural scientists have found that some job incumbents dislike specialised and
routine jobs. In the course of a study of 180 auto assembly line workers, one worker
lamented: 'what I can't get used to is the monotony. I get through with one job and
have another one staring me in the face'. More recently a steel worker complained
that the problem with narrowly defined jobs is that they required 'arms and hands
but no brainwork'.
Problems with engineering approach. After listening to several complaints from
employees about their highly specialised jobs, Walker and Guest indicated the
problems with job specialisation thus:
Repetition: Employees performed a few tasks repeatedly. This quickly led the
employee to become very bored with the job. There was no challenge to the employee
to learn anything new or to improve the job.
Mechanical Pacing: Assembly line workers were made to maintain a certain
regular pace of work. They could not take a break when they needed to or simply
divert their attention to some other aspect of the job or another individual.
No end product: Employees found that they were not turning out any identifiable
end product, consequently, they had little pride and enthusiasm in their work.
Little social interaction: Employees complained that because the assembly line
demanded constant attention, there was very little opportunity to interact on a casual
basis with other employees and share their work experience, beliefs and sentiments.
No input: Employees also complained that they had little chance to choose the
methods by which they performed their jobs, the tools which they used, or the work
procedures. This, of course, created little interest in the job because there was
nothing which they could improve or change.
The humane approach recognised the need to design jobs which are interesting and
rewarding. In the past two decades much work has been directed to changing jobs so
that job incumbents can satisfy their needs for growth, recognition and
responsibility. Herezberg's research popularised the notion of enhancing need
satisfaction through what is called job enrichment. One widely published approach to
job enrichment uses that is called as the job characteristics model and this has been
explained separately in the ensuing section.
According to Herzberg there are two types of factors viz.
(i) motivators like achievement, recognition, work itself, responsibility, advancement
and growth and
(ii) hygiene factors (which merely maintain the employee on the job and in the
organisation) like working conditions, organisational policies, inter-personal
relations, pay and job security.
According to Herzberg the employee is dissatisfied with the job if the maintenance
factors to the required degree are not introduced into the job. But, employee may not
be satisfied even if the required maintenance factors are provided. Herzberg feels
that the employee will be satisfied with his job and he will be more productive if
motivators are introduced into the job content. As such, he asserts that the job
designer has to introduce hygiene factors adequately so as to reduce dissatisfaction
and build motivating factors. Thus Herzberg has laid emphasis on the psychological
needs of employees in designing job.
The job Characteristics Theory of Hackman and Oldham states that employees will
work hard when they are rewarded for the work they do and when the work gives
them satisfaction. Hence they suggest that motivation, satisfaction and performance
should be integrated in the job design. According to this approach, and job can be
described in terms of five core job dimensions which are defined as follows:
i ) Skill Variety: The degree to which a job requires a variety of different activities
so that the workers can use a number of different skills and talents.
ii) Task Identity: The degree to which the job requires completion of a whole and
identifiable piece of work.
iii) Task Significance: The degree to which the job has a substantial impact on the
lives or work of other people.
iv) Autonomy: The degree to which the job provides substantial freedom,
independence, and discretion to the individual in scheduling the work and in
determining the procedures to be used in carrying it out.
v) Feedback: The degree to which an individual requires direct and clear
information about the effectiveness of his or her performance.
This approach explains that existence of core job characteristics in a job, gives the
psychological satisfaction of meaningful work to the job incumbent. The
characteristic of autonomy gives the job incumbent a feeling of personal
responsibility for the results and the characteristics of feedback from job leads to
psychological state of knowledge about the own performance of job incumbent. The
core job dimensions can be combined into a single predictive index called the
motivating potential score. Its computation is as follows:
Skill variety + Task identity + Task Significance x Autonomy x Feedback
Jobs that are high on motivating potential must be high at least in one of the three
factors that lead to meaningful work and they must be high in both autonomy and
feedback and vice versa. High motivating potential score results in positive
motivation, performance and satisfaction and vice versa.
These three critical psychological states lead to the outcome such as
(a) high internal work motivation.
(b) high growth satisfaction
(c) high quality work performance
(d) high general job satisfaction
(e) high work effectiveness and
(f) low absenteeism and turnover
The model says that internal rewards are obtained by an individual when he learns
that he has performed well on a task that he cares about.
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While designing the jobs the personnel manager should follow certain guidelines.
They are:
i) Mechanical and technical factors of the job and simplifications of the mechanical
ii) Consideration of social factors and providing the scope for satisfaction of social
needs of the job incumbent.
iii) Providing scope for social interaction, exchange of social problems, views and
attitudes with superiors, subordinates and peers.
iv) Providing scope for identifying deficiencies of job incumbents and satisfying
v) Providing scope for identifying psychological needs like esteem, need for
challenging work etc., and satisfying them.
As discussed earlier, scientifically structured job design as suggested in the above
model, motivates the employees for higher efficiency productivity and generates job
satisfaction that one designed on the basis of traditional engineering system.
Specification should be introduced in job design so that the needs of the employees
for accomplishment, recognition, psychological growth etc., can be satisfied.
Personnel departments use a variety of methods to improve job motivating potential
such as job rotation, job enlargement and job enrichment.
Job rotation refers to the movement of an employee from one job to another. Jobs
themselves are not actually changed: only the employees are rotated among various
jobs. An employee who works on a routine / repetitive job moves to an another job
for some hours / days / months and returns back up to the first job. This measure
relieves the employee from boredom and monotony, improves employee's skills
regarding various jobs and prepares the competent employees to meet the
contingencies. This measure also improve worker's self-image and provides personal
growth. However frequent job rotations are not advisable in view of their negative
impact on the organisation and the employee.
In practice, because job rotation does not change the basic nature of the jobs, it is
criticised as nothing more than having an employee perform several boring and
monotonous jobs rather than being assigned to the same one. However, job rotation
may prove to be useful to managers in that it helps managers to become generalists
through exposure to several different operations.
When a job is enlarged, the tasks being performed are either enlarged or several
short tasks are given to one worker. Thus, the scope of the job is increased because
there are many tasks to be performed by the same worker. Although, it actually
changes the peace of the work and the operation by reallocating tasks and
responsibilities. Job enlargement does not increase the depth of a job. Enlarged jobs
require longer training period because there are more tasks to be learned. Worker
satisfaction should increase because boredom is reduced as the job scope is
expanded. However, job enlargement programmes would be successful only if
workers are more satisfied with jobs which have a longer scope.
Job enrichment, as is currently practiced all over the world, is a direct outgrowth of
Herzberg's two factor theory of motivation. It is therefore based on the assumption
that in order to motivate workers, the job itself must provide opportunities for
achievement, recognition, responsibility, advancement and growth. The basic idea is
to restore to jobs the elements of interest that were taken away under intensive
different from horizontal loading, referred to earlier. Horizontal loading does not
enrich the task. Washing dishes, then silverware, and then pots and pans does no
more to satisfy and provide an opportunity to grow than washing only dishes. Under
job enrichment there is a conscious effort to build into jobs a higher sense of
challenge and achievements. In a job enrichment programme, the worker decides
how the job is performed, planned, and controlled, and makes more decisions
concerning the entire process. The job enrichment approach to boring jobs is to give
the individual employee more autonomy in the job. Employees decide how the job
will be performed and receive less direct supervision on the job. Consequently, the
employee receives a greater sense of accomplishment as well as more authority and
1. Increasing the responsibility of the activity
2. Providing wide scope, more sequence and increased pace of the work
3. Giving a natural unit of work either to an employee or group of employees.
4. Providing the freedom of work by minimizing controls when the employees
are clearly accountable for attaining defined goals.
5. Allowing the employees to set their own standards or targets
6. Providing the employees the control information and allow them to monitor
their own performance.
7. Encouraging employee participation in planning, innovations and creations
8. Introducing new, difficult, creative tasks to the employees.
9. Assigning the specific projects to the individuals or groups that will enhance
their expertise
1. Selecting those jobs which permit close relation between motivation and job
2. Introducing on a pilot scheme basis.
3. Starting with the assumption that three jobs can be changed.
4. Brainstorming a list of changes that may enrich the jobs.
5. Concentrating on motivational factors such as achievement, responsibility,
self-control etc.
6. Trying to change the content of the job rather than changing the employees
from their jobs.
7. Providing adequate training, guidance, encouragement and the help.
8. Introducing with care as job enrichment programmes may be resisted by
9. Preparing the specific programmes for each project and ensure the control
information to monitor the performance.
There is evidence that job enrichment produces lower absenteeism and reduced
turnover costs. Experiments at AT & T in America, Olivetti and Fiat in Italy, Renault
in France; Volvo Inc. in Sweden; Daimler Benz and Volks Wagen in Germany yielded
fruitful results. However, job enrichment has been attacked in recent years on several
counts. It is contended that there are few, if any, genuine cases where job enrichment
has been applied successfully to a large, heterogeneous workforce. According to
Mitchell Fein, most application of job enrichment have either been common sense
job redesign or done with select groups of workers who were well motivated and
satisfied anyway. Fein also indicated that the intrinsic nature of the job is secondary
to most production workers. Their primary interest is in receiving external rewards
(such as money and other pay related benefits) which enable them to lead a
comfortable life. Moreover, the prospects of humanising work are constrained by the
realities of the work to be done - realities which are beyond the power of planners to
control. Labour leaders have been particularly skeptical of job enrichment
programmes in recent years. Since most job enrichment programmes result in
employees taking on additional responsibilities, determining whether a programme
will result in increased job autonomy or simply increased workloads is difficult. It is
small wonder, employees in unionised firms look at the whole exercise with distrust.
These negative reactions compel managers to go slow and introduce enrichment
programmes carefully, by talking stock of the peculiar situational variables that
surround an organisation.
The purpose of the job design is to enable the effectiveness of work, speedy disposal
of work with creating psychological friction and satisfy the social and psychological
needs of the employees. Hence, simplification of job design is suggested. The
simplification of the job design is free from right job description and specification. It
provides for adaptability to various situations and contingencies. It provides scope in
the employees to utilise their different kinds of potentialities in various tasks of the
organisation. Job simplification provides for team work, enlargement, enrichment,
challenging work, variety of tasks, adaptability, etc.
1. What is Job Analysis? What are its uses?
2. What are the potential problems associated with Job Analysis?
3. It is claimed that "Job Analysis is the cornerstone to all Personnel / Human
Resource Management activities" Do you agree? Explain
4. Are Job Descriptions same as job specifications? Describe any four methods
for analysing jobs.
5. What is Job Evaluation? What is its purpose?
6. Write Short Notes on
a. Factor Comparison Method
b. Job Enlargement
c. Job Design
Case 1
A Case on Variation Between the Designation and the Job Responsibilities
Pracheenagar is a large and densely populated town in North India. Its municipal
affairs are managed by a Municipality which was established in the last lap of the 19
Century under the British Rule. It works under the Municipal Act of 'X' State, where
Pracheenagar is situated. But to great extent its style of administration is bounded
by its past tradition, political and factional expediency of the executives as well as
political and factional factors. The Municipality has a larger number of trade unions
and in every department there are at least 3 or 4 rival unions, which fight with each
other as well with the management. In the past there were several strike among
municipal employees and in recent years there has been considerable erosion of
authority of the administration of the Municipality even in small personnel matters.
Like many other old organisations, the personnel management of Pracheenagar
Municipality has been largely unaffected by the growth of professional skill and
knowledge in personnel matters in this country or abroad. There is no job-
description and the employee's designations also often carry very little relations with
the works being performed by the people having them.
As a large Municipality, it has a fleet of vehicles (e.g. trucks, ambulances, jeeps, cars,
road-rollers etc) and also some other types equipment and machinery used for water
supply. road construction and other purposes connected with municipal services.
These vehicles, equipment and machinery are repaired in a workshop owned by the
In this Municipal Workshop, there are some workers who carry the designation of
"Khalasi" , which is applicable mainly to the unskilled labourers, although they
perform some more responsible or skilled jobs. Special complications developed in
respect of three of them. One of them, Sri Karam Chand, was asked to work as a
telephone operator ten years back and has been doing that work since then, although
in designation he still remains a Khalasi. Another person, Sri Dharam Sing, has been
performing the work of a clerk for the last 5 years without any change in his
designation. Sri Dhan Narayan, for the last 7 years has been working as the gate pass
checker in the workshop , although his official designation of "Khalasi" has not been
changed in all these years.
Karam Chand and Dhan Narayan are members of Pracheenagar Municipal
Employees Union. While Dharam Singh is a member of Pracheenagar Municipal
Worker's Union. These two Unions put up a strong demand for appointing these
three persons in their present jobs and to give them appropriate designations
accordingly. It was maintained on their behalf that after so many years, these people
would not be able to work any more as "Khalasis". Moreover, so long they were not
even given any additional remuneration for their higher responsibilities. So the
injustice done to them in the past must be rectified by promoting them to the
positions according to the actual jobs they had been doing for so many years.
This demand, however, was strongly opposed by another Union, Pracheenagar
Karmachari Parishad which demanded that these three persons should be placed
back to their scheduled jobs and new appointments should be made according to the
recruitment regulations of the Municipality. These Unions received support from two
other Unions,all of which had support among the clerical staff and were hopeful that
through appropriate pressures they would be able to get their own men appointed to
positions vacated by the three 'Khalasis' on their reversal to their original positions.
Due to the threats and counter threats from different unions on this issue, the
problem because very difficult for the authorities of Pracheenagar Municipality. In
fact, they also found it difficult to come to a decision which would be fair to these
three employees, but would not violate the regulations of the Municipality or create
labour relations problems.
1. Discuss what light is thrown by this case on the importance of job description and
correspondence between designation and the jobs performed.
2. What would be your approach to solve the problems mentioned here and what
further steps would you recommend?
- End Of Chapter -
After an employee is selected, placed and inducted, he or she must be provided with
training. Training is the act of increasing the knowledge and skill of an employee for
doing a particular job. Training is a short term educational process and utilizing a
systematic and organised procedure by which employees learn technical knowledge
and skills for a definite purpose. Dale S.Beach defines training as "the organised
procedure by which people learn knowledge and/or skill for a definite purpose".
In other words training improves, changes, moulds the employee's knowledge, skill,
behaviour, aptitude, and attitude towards the requirements of the job and the
organisation. Training refers to the teaching and learning activities carried on for the
primary purpose of helping members of an organisation, to acquire and apply the
knowledge, skills, abilities and attitudes needed by a particular job and organisation.
Training bridges the differences between job requirements and employee
Employee training is distinct from management development or executive
development. While the former refers to training given to employees in the areas of
operations, technical and allied areas, the latter refers to developing an employee in
the areas of principles and techniques of management, administration, organisation
and allied areas.
Training is concerned with increasing technical knowledge, skills and abilities. But,
education is broader in scope. Its purpose is to develop individuals in all areas. It is
concerned with increasing technical, managerial and general knowledge and total
environment. Education is for the development of individual's understanding of
culture, value, ethics, social and other aspects in addition to technical and
managerial skills, knowledge and abilities. Thus education is broad in scope.
Every organisation should provide training to all employees irrespective of their
qualification, skill, suitability for the job etc. Training is not something that is done
once to new employees; it is used continuously in every well run establishment.
Further, technological changes, automation, require updating the skills and
knowledge. As such an organisation has to restrain the old employees.
Specially, the need for training arises due to the following reasons:
1. To match the employee specifications with the job requirements
and organisational needs. An employee's specifications may not
exactly suit to the requirements of the job and the organisation irrespective of
his past experience, qualifications, skills, knowledge etc. Thus management
may find deviations between employee's present specifications and the job
requirements and organisational needs. Training is needed to fill these gaps
by developing and moulding, the employee's skill, knowledge, attitude,
behaviour etc. in tune with job requirements and organisational needs.
2. Organisational viability and the transformation process. The
primary goal of most of organisation is their viability and efficiency. But the
organisational viability is continuously influenced by environmental
pressures. If the organisation does not adapt itself to the changing factors in
the environment, it will lost its market share. If the organisation desires to
adopt these changes, first it has to train the employees to impart specific skills
and knowledge in order to enable them to contribute to the organisational
efficiency and to cope with the changing environment. In addition, it provides
continuity to the organisation process and development. The productivity of
the organisation can be improved by developing the efficiency of
transformation process which in turn depends on enhancement of the existing
level of skill and knowledge of the employees. The achievement of these
objectives mostly depends on the effectiveness of the human resources that
the organisation possesses. Employee effectiveness can be secured by proper
3. Technological advances. Every organisation, in order to survive and be
effective, should adopt the latest technology i.e mechanisation,
computerisation and automation. Technology alone does not guarantee
success unless it is supported by people possessing requisite skills. So,
organisation should train the employees to enrich them in the areas of
changing technical skills and knowledge from time to time.
4. Organisational complexity. With the emergence of increased
mechanisation and automation, manufacturing of multiple products and by
products or dealing in services of diversified lines, extension of operations to
various regions of the country or in overseas countries, organisation of most
of the companies has become complex. This leads to growth in number and
kind of employees and layers in organisational hierarchy. This in turn, creates
the problems of coordination and integration of activities at various levels.
This situation calls for training in the skills of coordination, integration and
adaptability to the requirements of growth, diversification and expansion.
Companies constantly search for opportunities to improve organisational
effectiveness. Training is responsible for much of the planned change and
effectiveness in an organisation as it prepares the people to be the change
agents and to implement the programmes of effectiveness.
5. Change in the job assignment. Training is also necessary when the
existing employee is promoted to the higher level in the organisation and
when there is some new job or occupation due to transfer. Training is also
necessary to equip the old employees with the advanced disciplines,
techniques or technology.
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Indian economy is opened for the rest of the globe. There would be heavy
competition for Indian industries from foreign industries, Indian industries would be
forced to maintain total quality and adopt latest technology. Training assumes
greater significance in view of these changing conditions. Training is inevitable as it
develop the skills and knowledge of employees and enables them to take up
challenging jobs. Further new employees cannot be placed on job without training.
Training also helps the employees whose performance is below expectations and
standards. Training builds up self confidence in the employees. Skills, knowledge and
abilities acquired through training develops total human resources of the
The Personnel Manager formulates the following training objectives keeping the
Companys overall objectives in mind:
1. To prepare the employee both new and old to meet the present as well as the
changing requirements of the job and the organisation.
2. To prevent obsolescence.
3. To impart the new entrants the basic knowledge and skill they need for an
intelligent performance of a specific job.
4. To prepare employees for higher level tasks.
5. To assist employees to function more effectively in their present positions by
exposing them to the latest concepts, information and techniques and
developing the skills they will need in their particular fields.
6. To build up a second line of competent officers and prepare them to occupy
more responsible positions.
7. To broaden the minds of senior managers by providing them will
opportunities for an interchange of experiences within and outside with a view
to correcting the narrowness of outlook that may arise from over-
8. To develop the potentialities of people for the next level job.
9. To ensure smooth and efficient working of a department.
10. To ensure economical output of required quality.
11. To promote individual and collective morale, a sense of responsibility,
cooperative attitudes and good relationships.
Training methods and content may not be the same for different categories of
employees. As such management has to offer training to different categories of
employees based on job analysis. The methods adopted would, therefore, be
different. A brief outline of the various training methods for different categories of
employees in given below:
1. Supervisory Training: Supervisors mostly learn to supervise under the
guidance of a manager. Here the emphasis is generally on the on-the-job
training methods. These methods can be supplemented by various off-the-job
training methods. Course contents of training to this category include:
production control, organisation methods, work/activity control, method
study, time study, job evaluation, company policies and practices, personnel
policies, procedures, programmes, training the sub-ordinates, grievance
handling, disciplinary procedure, communications, effective instruction,
report writing, performance appraisal, personnel records, dealing with
absenteeism, labour turn-over, industrial and labour laws, leadership qualities
2. Sales training: On-the-job as well as off-the-job training methods are
followed in training the sales personnel. Course content includes job
knowledge, organisational knowledge, knowledge about the company
products, customers, competitors, sales administration procedures, laws
concerning sales, special skills like prospecting, making presentations,
handling objections, closing the sales etc. employee attitudes such as loyalty
to the company and trust in the company products, understanding and
tolerance with regard to potential and existing customers.
3. Clerical Training: Off-the-job training is mostly followed in training the
clerical personnel. The training content includes organisation and methods,
company policies, procedures and programmes, background knowledge of the
Company, forms reports, written communication, clerical aptitude,
maintaining ledgers, records etc.
- End Of Chapter -
The training programme will not be effective if the trainer is poorly qualified or ill-
equipped with the technical aspects of the content or if he lacks aptitude for teaching
and teaching skills. Training Principles can be studied through the principles of
learning and principles of teaching.
Andrew F. Sikula defined learning as the human process by which skills, knowledge,
habits and attitudes are acquired and utilised in such a way that behaviour is
modified. Models of human learning are studied in order to find out the reasons for
fast and accurate learning. The Principles of learning developed by Sikula are as
1. All human beings can learn
2. An individual must be motivated to learn.
3. Learning is an active process
4. Learners may acquire knowledge more rapidly with guidance. Feedback
ensures improvement in speed and accuracy of learning.
5. Appropriate material (like case studies, tools, problems, reading etc) should
be provided
6. Time must be provided to practice learning.
7. Learning methods should be varied. Variety of methods should be introduced
to off-set fatigue and boredom.
8. The learner must secure satisfaction from learning. Education must fulfill
human needs, desires, and expectations.
9. Learners need reinforcement of correct behaviour.
10. Standards of performance should be set for the learner.
11. Different level of learning exist
12. Learning is an adjustment on the part of an individual
13. Individual differences play a large part in effectiveness of the learning process.
14. Learning is a cumulative process.
15. Ego involvement is widely regarded as a major factor in learning.
16. The rate of learning decreases when complex skills are involved.
17. Learning is closely related to attention and perception.
18. Learning involves longterm retention and immediate acquisition of
19. Accuracy deserves generally more emphasis than speed.
20. Learning should be relatively based.
21. Learning should be a goal oriented.
Trainers need some understanding of the patterns in which new skills are learned.
The employee is likely to find himself unusually chumpsy during the early stages of
learning. This can be called discouraging stage. After the employee adjust himself to
the environment, he learns at a fast rate. A 'plateau' develops after the lapse of more
training time due to a loss of motivation and lack of break in training schedule and
time. The trainer reaches the next stage when he is motivated by the trainer and/or
some break or pause in time and training process is given. The trainer at this stage
learns at a fast rate. Special repetition of the course leads the trainee to reach the
stage of over-learning as shown in the figure.
Fig: Learning Curve
Thus it is clear that, learning rarely takes place at a constant rate. It varies according
to the difficulty of the task, ability of the individual and physical factors. However,
the rate of learning varies from one individual to another.
1. Learning is a continuous process.
2. People learn through their actual personal experience
3. People learn step by step, from known to unknown and simple to complex
4. There is a need for repetition in teaching to improve skill and to learn
5. Practice makes a man perfect. Hence, opportunity should be created to use,
transfer the skills, knowledge and abilities acquired through learning, it gives
satisfaction to be learner.
6. Conflicts in learning. Conflict in learning arises when the trainer knows or has
developed some habits which are incorrect in terms of the method being
The learner should have interest and desire to learn to the maximum extent. Further,
he is expected to participate sincerely, during the training programme. Training
programme will be effective only when the trainee be motivated to commit himself to
the programme. When does motivation begin? Motivation beings even before
starting the training programme. Motivation should be continued throughout the
training programme, and even after training programme is completed. The next
question is how to motivate the trainee? Trainees may be motivated through the
offers of confirmation to successful probationers, promotions or wage hike or
enhanced benefits or some reward or award to successful trainees in case of present
Motivation should be based on the needs of the trainee. Who has to motive the
trainee and what is the role of instructor in this regard are the other issues. All line
managers are expected to motivate the employees of their respective
departments/sections. Further personnel manager, training manager also motivate
the training programme content of the programme, matching the training
programme content to their jobs, use of training in reducing their weaknesses and
further strengthening their knowledge, skill, aptitude etc. The instructor plays a
crucial role in motivating the trainees during the programme. He has to activate
them by identifying and satisfying their needs for recognition, achievement,
identification, leadership, work, prestige, responsibility, advancement, growth,
status, congenial working conditions during the training programme, using audio-
visual aids by making instruction interesting through course content, planning,
presentation etc.
Motivation may not work successfully in all situations. Motivation fails in the
following circumstances.
1. If the trainees do not have desire to progress or develop.
2. If there is no tradition of training the employees in the organisation.
3. When the employees resist the training being provided only on traditional
lines and when it is not necessary.
4. When the training environment (both physical and psychological) is changed.
5. When the physical labour dislike training due to their limited needs.
6. Lack of ability to learn or grasp on the part of trainees.
7. When the employees have the feeling that they cannot succeed and that they
are doomed to fail in everything.
8. When the training programme affects job security and thereby leads to
retrenchment of other employees.
9. When the future jobs (for which training is going to be given) demands extra-
ordinary physical and mental energy, skills, knowledge etc.
Conducive climate is highly essential for serious participation, attentiveness, creation
of interest, and sincerity of learner. Climate for learning consists of working
conditions, relationship with other trainees, and trainers/instructors, conditions of
relaxation, freedom, scope for social interaction, and formation of social groups.
Conducive climate for learning should be provided in view of its significance in
training. It consists of ideal physical and psychological environment. Ideal physical
environment, consisting of suitable location with space, adequate accommodation,
audio-visual aids, air conditioning, ventilation, lighting and other facilities like
canteen, facilities for relaxation, should be provided. Ideal psychological
environment, consisting of business atmosphere, friendly environment, frequent
communication, follow-up regarding performance and progress, enthusiastic, helpful
and broad minded trainer etc., should be created and provided. Provision for
measuring learner's progress through tests should also be made in order to regulate,
correct and followup the training programme.
The instructor should have the knowledge of the possible learning problems. He
should identify the problems of trainees and take steps to solve them. The possible
learning problem are:
1. Lack of knowledge, skill, aptitude, and favourable attitude.
2. Knowledge and skill not being applied.
3. Existence of anti-learning factors: Most operational situations contain a
number of elements which will restrict the development of learning regardless
of the methods employed.
4. Psychological problems like fear and shyness.
5. Inability to transfer learning to operational situation.
6. Heavy dependence on repetition, demonstration and practice.
7. Unwilling to change.
8. Lack of interest about the knowledge of results.
9. Absence of self-motivation.
10. Negative attitude about involvement and participation.
Learning theories and principles can be made use of to solve the learning problems.
There are four basic approaches in learning theory. They are:
1. Behavioural approach: The basis of learning is by trial and error,
repetition being particularly emphasised.
2. Gestalt approach: The basis of learning is seen as in-sight. The total
situation is seen as a meaningful pattern which occurs as follows:
Stimuli ------------ Response-------------- Reward /
This type of learning is particularly associated with the learning of ideas.
3. Model approach. Learning is achieved by adopting the success and avoiding
the failure of others who learned through trial and error approach.
4. Instruction. Learning is dependent on teaching by others, who are more
skillful and knowledgeable.
Different areas of learning theory are:
1. Motivation
2. Reinforcement (individual must receive reward to punishment)
3. Feedback of knowledge
4. Learning by doing.
5. Spaced repetition (distribution of learning periods/content through time)
6. Appropriate size of scope of the lesson.
7. Providing supportive theory or background.
In addition to learning principles, teaching principles should also be taken care of for
effective training.
1. The employee must be taught to practice only the correct method of work.
2. Job analysis and motion study techniques should be used.
3. Job training under actual working conditions should be preferred to class
room training.
4. Emphasis should be given more on accuracy then speed.
5. Teaching should be done at different time-intervals.
6. It should be recognised that it is easier to train young workers than old
workers due to their decreasing adaptability with the increase in age.
- End Of Chapter -
A number of principles have been evolved over the years which can be followed as
guidelines by the trainers. Some of them are stated below:
1. Motivation: As the effectiveness of an employee depends on how well he is
motivated by management, the effectiveness of learning also depends on
motivation. In other words, the trainee will acquire new skills or knowledge
quickly if he or she is highly motivated. Thus the training must be related to
the desires of the trainee such as more wages or better job, recognition, status,
promotion etc. The trainer should find out novel ways to motivate experienced
employees who are already enjoying better facilities.
2. Progressive Information: It has been found by various research studies
that there is a relation between learning rapidly and effectively and providing
right kind of information. Therefore, the trainer should not bombard the
trainee with excessive information or information that can be misinterpreted.
The trainee has a desire to learn new skills to remain up-to-date. In order to
sustain his interest it is necessary to provide only the right kind of
3. Reinforcement: The effectiveness of the trainee is learning new skills or
acquiring new knowledge should be reinforced by means of rewards and
punishments. Examples of positive reinforcement are promotions, rise in pay,
praise etc. Punishments are called as negative reinforcements, e.g. demotions,
threats of dismissal, cuts in salary etc. Management can punish the trainees
whose behaviour is undesirable. But the negative consequences of such
punishments on employees behaviour and performance must be kept in mind.
4. Practice: Practice makes a man perfect so goes the old maxim. A trainee
should actively participate in the training programme in order to make the
learning programme an effective one. Continuous practice is highly essential
for effective learning. Jobs are broken down into elements from which the
fundamental, physical, sensory and mental skills are extracted. Training
exercises should be provided for each skill.
5. Full vs. Part: Research has not indicated clearly whether it is desirable to
teach (employees) the complete job at a stretch or dividing the job into parts
and teaching each part at a time. It the job is complex the job separately and
then put the parts together into an effective complete job. Generally the
training process should start from the known and proceed to the unknown
and from the easy to the difficult when parts are taught. However, the trainer
has to teach the trainees based on his judgment on their motivation and
6. Individual Differences: Individual training is costly, and group training is
economically viable and advantageous to the organisation. But individuals
vary in intelligence and aptitude. So it is necessary to adjust the training
programme to individual abilities and aptitude, depending on the financial
strength of the organisation.
Organisations provide training to their employees in the following areas:
1. Company policies and procedures,
2. Specific Skills,
3. Human relations,
4. Problem solving,
5. Managerial and supervisory skills, and
6. Apprentice training.
1. Company Policies and Procedures: This area of training is to be
provided with, in order to make the new employee fully conversant with the
company rules, practices, procedures, traditions, management, organisation
structure, environment, products / services offered by the company etc.
Information regarding company rules and policies creates favourable attitudes
of confidence in the minds of new employees about the company and its
products / services.
2. Training in Specific Skills: Training in specific skills would make the
employee more productive and effective on the job. The trainer in this area
trains the employee regarding various skills necessary to do the actual job. For
example, the clerk in the bank should be trained in the skills of making entries
correctly in the ledger, skills of arithmetical calculations, quick comparison of
figures, entries and the like. Similarly, technical officers are to be trained in
the skills of project appraisal, supervision, follow up the like.
3. Human Relations Training: Human relations training assumes greater
significance in organisations as employees have to maintain human relations
not only with other employees but also with their customers. Employees are t
o be trained in the areas of self-learning, interpersonal competence, group
dynamics, perception, leadership styles, motivation, grievance redressal,
disciplinary procedure, and the like. This training enables the employees for
better team work, which leads to improved efficiency and productivity of the
4. Problem-solving Training: Most of the organisational problems are
common to the employees dealing the same activity at different levels of the
organisation. Further some of the problems of different managers may have
same root cause. Hence management may call together all managerial
personnel to discuss common problems so as to arrive a effective solutions
across the table. This not only helps in solving the problems but also serves as
a forum of the exchange of ideas and information that could be utilised. The
trainer has to organise such meetings, train and encourage the trainees to
participate actively in such meetings.
5. Managerial and Supervisory Training: Even the non-managers
sometimes perform managerial and supervisory functions like planning,
decision-making, organising, maintaining inter-personal relations, directing
and controlling. Hence, management has to train the employees in managerial
and supervisory skills also.
6. Apprentice Training: The Apprenticeship Act, 1961 requires industrial
units of specified industries to provide training in basic skills, and knowledge
in specified trades to educated unemployee's / apprentices with a view to
improving their employment opportunities or to enable them to start their
own industry. This type of training generally ranges between one year to four
years. This training is generally used for providing technical knowledge in the
areas like trades, crafts etc.
Please use headphones
One of the better personnel programmes to come out of World War II was the
training within the industry (TWI) programme of the War Man-Power Commission.
This was basically a supervisory training programme to make up for the shortage of
civilian supervisory skills during the war. One of the parts of this programme was the
job instruction training course, which was concerned with how to teach. The training
procedure discussed below is essentially an adoption of the job instruction training,
which has been proved to have a great value.
The important steps in training procedure are discussed below:
1. Preparing the instructor: The instructor must know both the job to be taught
and how to teach it. The job must be divided into logical parts so that each can be
taught at a proper time without the trainee losing perspective of the whole. This
becomes a lesson plan. For each part one should have an mind the desired technique
of instruction, that is, whether a particular point is best taught by illustration,
demonstration or explanation.
2. Preparing the trainee: As in interviewing, the first step in training is to put the
trainee at ease. Most people are somewhat nervous when approaching an unfamiliar
task. Though the instructor may have executed this training procedure, many times
he or she never forgets its newness to the trainee. The quality of empathy is a mark of
the good instructor.
3. Getting ready to teach: This stage of the programme is class hour teaching
involving the following activities:
Planning the programme
Preparing the instructor's outline.
Do not try to cover too much material.
Keep the session moving along logically.
Discuss each item in depth.
Repeat, but in different words.
Take the material from standardised texts when it is available.
When the standardised text is not available, develop the programme and
course content based on group approach. Group consists of employer, skilled
employees, supervisors, trade union leaders and others familiar with job
requirements. Group prepares teaching material.
Teach about the standards for the trainee like quality, quantity, waste or
scrap, ability to work without supervision, knowledge of procedures, safety
rule, human relations etc.
Remember your standards, before you teach.
Take periodical progress of the trainees, and application in to account.
4. Presenting the Operation: There are various alternative ways of presenting
the operation viz., explanation, demonstration etc. An instructor mostly uses the
method of explanation. In addition one may illustrate various points through the use
of pictures, charts, diagrams and other training aids. Demonstration is an excellent
device when the job is essentially in nature. The following sequence is a favorites
with some instructors.
a. Explain the sequence of the entire job.
b. Do the job step by step according to the procedure.
c. Explain each step that the is performing.
d. Have the trainee explain the entire job.
5. Try out the Trainee's Performance: The trainee should now be asked to start
the job independently. Some instructors prefer that the trainee explains each step
before doing it, particularly if the operation involves any danger. The trainee,
through repetitive practice, will acquire more skill.
6. Follow up: The final step in most training procedures is that of follow up. When
people are involved in any problem or procedure. it is unwise to assume that things
are always constant. Follow-up can be adapted to a variable reinforcement schedule
as suggested in the discussion of learning principles. The follow up system should
provide feedback on training effectiveness and on total value of training system.
Basically the organisation strength of a training section or department depends on
the organisational structure of the Company and/or Personnel Department. Training
is a function with inadequate coverage of the Human Resources Department in some
companies, while it is a separate department in other organisations. Manager of
Human Resources Development section reports to the Chief Personnel Manager of
the Personnel Department where training is a function of the Human Resource
Development Section.
The specification of values, objectives forms a basis for evaluation. The basis of
evaluation and the mode of collection of information necessary for evaluation should
be determined at the planning stage. The process of training evaluation has been
defined as "any attempt to obtain information on the effects of training performance,
and to assess the value of training in the light of that information". Evaluation leads
to controlling and correcting the training programme. Hamblin suggested five levels
at which evaluation of training can take place viz., reactions, learning, job behavior,
organisation and ultimate value.
1. Reactions: Training programme is evaluated on the basis of trainee's
reactions to the usefulness of coverage of the matter depth of the course
content, method of presentation, teaching methods etc.
2. Learning: Training programme, trainer's ability and trainee's ability are
evaluated on the basis of quantity of content learned and time in which it is
learned and learner's ability to use or apply, the content he learned.
3. Job Behaviour: This evaluation includes the manner and extent to which
the trainee has applied his learning to his job.
4. Organisation: The evaluation measures the use of training, learning and
change in the job behaviour of the department/organisation in the form of
increased productivity, quality, morale, sales turn-over and the like.
5. Ultimate Value: It is the measurement of ultimate result of the
contributions of the training programme to the Company goals like survival,
growth, profitability etc and to the individual goals like development of
personality and social goals like maximizing social benefit.
There are three essential ingredients in a successful evaluation. They are
(i) support throughout the evaluation process. Support items are human resources,
time, finance, equipment and availability of data sources, records etc...
(ii) Existence of open communication channels among top management, participants
and those involved in providing data etc., and
(iii) Existence of sound management process.
John Dopyera and Louise Pitone identified eight points in planning training
evaluation. They are:
1. Should an evaluation be done? Who should evaluate?
2. What is the purpose of evaluation?There are mainly two purposes of doing
evaluation. They are justification evaluation and determination evaluation.
Justification evaluations are undertaken as reactions to mandates. Other
purposes include training needs assessment, programme improvements and
impact evaluation.
3. What will be measured? The focus of the evaluation will be on training and
delivery, programme content, materials, impact of training on individuals
through learning, behaviour or performance change. Learning can be
measured through pre-test and posttest. Evaluate the effects of training after
the trainee returns to the work place using changes in between or the work
results as indicators.
4. How comprehensive will be evaluation be? The scope or the duration
and comprehensiveness of the evaluation is influenced by available support,
communication and evaluation purpose.
5. Who has the authority and responsibility? Who has the authority and
responsibility at different stages of evaluation will be determined by the
factors like personnel, credibility of internal staff, communication, objectivity
of internal staff to do an evaluation regardless of results.
6. What are the sources of data? The most common sources of evaluation data
are reactions, opinions and / or test results of the participants, managers,
supervisors, production records, quality control, financial records, personnel
records, safety records etc.
7. How will the data be collected and complied? Data can be collected before
training for needs analysis or pre-testing purpose, during training programme
to make improvements along the way and after training for evaluation. Next
step is selection of treatment or control groups and determination of nature of
samples. Data can be complied either manually or by computers.
8. How will the data be analysis and reported? First reporting issue is concerned
with audiences like participants or trainees, training staff, managers,
customers etc. Second and third issue are concerned with analysis and results
and accuracy, policies and format respectively. The decision points are
intended to increase awareness of and interest in the evaluation of training, to
improve planning skills and to encourage more systematic evaluation of
Training programme can be evaluated on the basis of various factors like production
factor, general observation, human resource factor, performance tests, cost-value
relationship etc.
Production Factors: In operative training, the prime measure of worth is that of
productivity. Productivity rates covering both quantity and quality are good
indicators of the values of training. In most business situations these productivity
rates will have to be obtained before and after training. In an experimental situation,
a control group that does not receive training could be compared with the one that
does in order to ascertain the effect of training. Management will generally look first
at production and wastage rates to determine the worth of operative training. The
other production factors are decrease in unit time and unit cost of production and
reduction in space or machine requirements.
General Observations: General observation should not be overlooked as a means
of training evaluation. The immediate supervisor is often a good judge of the skill
level of his sub-ordinates. For on-the-job training programmes, the supervisor is, in
effect, the judge of his or her own efforts. If the supervisor is treated as a part of the
professional management of the organisation and is properly selected and trained,
this self- analysis and appraisal can be quite accurate and objective. The efficient
supervisor observes accurately the level of skill and knowledge acquired by the
trainee during the training programme. He also observes how effectively the trainees
apply the acquired skill and knowledge to the present and future jobs.
Human Resource Factors: Training Programme can also be evaluated on the
basis of employee satisfaction which in turn can be viewed on the basis of:
1. decrease in employee turn over
2. decrease in absenteeism
3. decrease in number and severity of accidents
4. betterment of employee morale
5. decrease in grievance and disciplinary cases
6. reduction in time to earn piece rates
7. decrease in number of discharges or dismissals.
Performance Tests: In the immediate sense, the specific course of training can be
evaluated in terms of written and performance tests. The test is supported by a
sample of what the trainee knows or can do. Successful accomplishment of the tests
would indicate successful training. But the true test is whether or not what has been
learned in training is successfully transferred and applied to the job. It is dangerous
to rely upon tests alone to demonstrate the true value of training. Performance
appraisal on the job before and after training may be supplemented to the tests.
Cost-value Relationship: Cost factor in training should be taken into
consideration in evaluating the training effectiveness. Cost of various techniques of
training and their value in the form of reduced learning time, improved learning and
higher performance can be taken into account. Cost of training includes cost of
employing trainers and trainees, providing the means to learn, maintenance and
running of training centers, wastage, low level of production, opportunity cost of
trainers and trainees etc. The value of the training includes increased value of human
resources of both the trainee and trainer and their contribution to raise production,
reduce wastage, breakage, minimization of time requirement etc. Cost-value
relationship of a training programme or a training techniques is helpful in:
(a) determining the priorities for training (for present and potential managers
age structure of the trainees etc)
(b) matching the employee and job through training
(c) determining the worth of management sacrifices (like time taken by training
program, non availability of staff for production during training period etc)
(d) choosing the right training method.
Any one or the possible combination of the methods of training evaluation listed can
be used by an organisation for evaluation depending upon the need and convenience.
The various methods of training evaluation are:
1. Immediate assessment of trainees reaction to the programme.
2. Trainees observation during training programme
3. Knowing trainee's expectations before the training programme and collecting
their views regarding the attachment of the expectations after training.
4. Seeking opinion of trainee's superior regarding his/her job performance and
behaviour before and after training.
5. Evaluation of trainee's skill level before and after training programme.
6. Measurement of improvement in trainees on the job behavior.
7. Examination of testing system before and after some time of the training
8. Measurement of trainees attitudes after training programme.
9. Cost benefit analysis of the training programme.
10. Seeking opinion of trainee's colleagues regarding his/her job performance and
11. Measurement of levels in absenteeism, turn-over, wastage/scrap, accidents,
breakage of the machinery during pre and postperiod of the training
12. Seeking opinions of trainee's sub-ordinates regarding his/her job performance
and behavior.
Training evaluation information should be provided to the trainer and / or
instructors, trainees and all other parties concerned for control, correction and
improvement of trainees activities. Further the training evaluator should follow it up
to ensure implementation of the evaluation report at every stage. Feedback
information can be collected on the basis of questionnaire or through interview.
Management development is a systematic process of growth and development by
which managers develop their abilities to manage. It is the result of not only
participation in formal courses of instruction but also of actual job experience. It is
concerned with improving the performance of the managers by giving them
opportunities for growth and development. It is planned effort to improve current or
future managerial performance. "The role of the company in management
development is t o establish the programme and the developmental opportunities for
its present and potential managers". Exposing the employees to lectures, case
studies, readings, job rotation, special assignments and the like does not guarantee
that they will learn. What is more important is the effort of the individuals. Each
individual has to make his own contribution to the development of himself, as others
can only create the opportunity. "Executive development is eventually something
that the executive has to attain himself. But he will do this much better if he is given
encouragement, guidance and opportunity by his company". The role of the company
is to provide conditions that accelerate the growth. And these conditions should be
part of the organisational climate itself, in order to be away from the unrealistic
expectation that we can create and develop managers only in the class room.
The word manager has been used to mean people at different levels of hierarchy. To
some, the term means only the top man at the top rank of the ladder. To others a
manager is any person who supervises others. All those who perform all or some of
the basic functions of management to some degree regularly or occasionally, can be
called managers. Needless to say that their actions have significant impact on the
performance of the part or whole of the organisation. So a scientist who keeps
himself to the laboratory is as much a manager as a foreman who supervises a group
of workers. Even a worker may be considered a (potential) manager for the purpose
of management development, one of the objectives of which is to create management
Though the composition of the skills is the same for all managers at all levels, their
(contents) proportion differs depending on the level at which a manager is and also
the nature of the work he does. A foreman requires more of technical skills and
human skills. He must be able to teach his men the technical aspects of the products
and processes. He must also be good at human relations in order to motivate, co-
ordinate and direct his subordinates.
Technical skills are less important whereas the conceptual skills are especially
important at the top level. Human skills are important at all levels. One should also
remember that, at the same level the skills required for a production executive differ
from that of a marketing executive.
Though the success of the Management Development depends on the commitment of
executives at all levels, its launching should be done by the chief of the organisation,
since it is a fundamental policy decision that involves time, various resources and
organisation efficiency. Planning and administration of the programme may be
handed over to a committee composed of senior executives, while the day to day
administration of the same can be performed by the personnel department.
In the post efficient and loyal workers were promoted to the supervisory or
management positions and it was soon realised that "Superior workers do not
necessarily make superior managers". This realisation necessitated the need for
planned programmes for the selection, training and development of managerial
Formal management development programme started emerging in the late 1940s
and 1950s. Several forces have operated to cause the expansion of management
development activities. To name only a few
1. Shift from owner managed to professionally managed enterprises.
2. Management has been recognised as a distinct kind of occupation consisting
of acquired skills and a unified body of knowledge.
The Management development programmes are organised with a view to achieving
specific objectives. They are:
1. To overhaul the management machinery.
2. To improve the performance of the managers.
3. To give the specialists an overall view of the functions of an organisation and
equip them to co-ordinate each other's efforts effectively.
4. To identify the persons with the required potential and prepare them for
senior positions.
5. To increase the morale of the members of the management group.
6. To increase the versatility of the management group.
7. To keep the executives abreast with the changes and developments in their
respective fields.
8. To create the management succession which can take over in case of
9. To improve thought process and analytical ability.
10. To broaden the outlook of the executive regarding his role, position and
11. To understand the conceptual issues relating to economic, social and technical
12. To understand the problems of human relations and improve human relation
13. To stimulate creative thinking.
The essential ingredients of the management development programmes can be
explained through the steps of management development process. The important
steps or ingredients of a management development programme are:
i ) Analysis of developmental needs.
ii) Appraisal of present management talent.
iii) Inventory of management manpower.
iv) Planning of individual development programme.
v) Establishment of development programme.
vi) Evaluation of the programme.
i) Analysis of Organisational Present and Future Developmental Needs:
The decision to launch a management development programme having been made,
the next thing to do is the critical examination of organisational present and future
developmental needs. We should know how many and what type of managers are
required to meet the present and future needs. An examination of the organisational
structure in the light of the future plans of the organisation should help to know what
the organisation requires in terms of functions, departments, and executive
Having got the above information, it is easy to prepare the descriptions and
specifications for all management positions which in turn, gives us the information
as to the kind of education, experience, training, special knowledge, skills and
personal traits required for each job.
A comparison of the existing talents plus those that can be developed from within,
with those required to meet the projected needs will help the top management make
a policy decision as to whether it wishes to fill those positions from within the
organisation or from outside sources.
ii) Appraisal of Present Management Talent: In order to make the above
suggested comparison, a qualitative assessment of the existing management talent
should be made and an estimate of their potential for development should be added
to that. Only when can it be compared with the projected required talent.
iii) Inventory of Management Manpower: This is prepared to have a complete
information about each executive in each position. For each member of the
management team, a card is prepared listing such data as name, age, length of
service, education, work experience, training courses completed, health record,
psychological test results and performance appraisal data etc. The selection of the
individuals for the Management Development Programme is made on the basis of
the kind of background they possess. The management may set certain standards in
terms of each of the above factors mentioned on the cards to qualify for the
management development programme.
Such information when analysed discloses the strength as well as the deficiencies of
managers in certain functions relative to the future needs of the organisation.
(iv) Planning of Industrial Development Programmes: Guided by the results
of the performance appraisal which indicate the strengths and weaknesses of each of
his subordinates the executive performs this activity of planning for individual
development programmes. "Each of us has a unique set of physical, intellectual,
emotional characteristics". Therefore, a development plan should be tailor made for
each individual.
It would be possible to impart knowledge, skills and mould behaviour of human
beings, but it would be difficult to change the basic personality and temperament of a
person once he reaches adulthood stage.
v) Establishment of Development Programmes: It is the duty of the P/HR
department to establish the well- conceived development opportunities. The P/HR
department has to identify the existing level of skills, knowledge etc., of various
executives and compare them with their respective job requirements. Thus it
identifies developmental needs and will establish specific development programmes
like, Leadership courses, Management games, Sensitivity training. The department
may not be in a position to organise development programmes for executives at the
top level as could be organised by reputed institutes of management. In such
situations, top management deputes certain individuals to the executive
development programmes organised by the reputed institutes.
Further the P/HR department must go on recommending specific individual and
executive development programmes based on the latest changes and developments
in management education.
vi) Programme Evaluation: Since management development programme
involves huge expenditure in the form of money, time and effort, the top
management of any organisation, naturally wishes to know whether it has got back
worth the amount it has spent. All efforts made in the direction of finding out its
worth, together may be called programme evaluation.
If the objectives of the programme have been accomplished, the programme can be
said to be a success. But it is difficult to measure the changes or effects against
For example, a group of executives may attend a course in human relations, at the
end of which their behaviour may be watched. It is difficult to notice the subtle
changes changes in their attitudes and behaviour immediately after the programme.
The effect of certain programmes can only be noticed in the long run in a more
general way while the effect of certain other programmes may be noticed in the short
run in a specific way. The results of the programmes are measured against the
specific current needs they are established for. Cost reduction, grievance reduction,
improvement in report writing are only a few example for the specific needs that the
programmes may be established for.
- End Of Chapter -
There are mainly two types of techniques by which managers can acquire the
knowledge, skills and attitudes and make themselves competent managers. One is
through formal training and the other is through on-the-job experiences.
On-the-job training is of utmost importance as the real learning takes place only
when the learner uses what he has learnt. The saying "An ounce of practice is worth
tons of theory" is true whoever said it. But it should also be remembered that class-
room training or pedagogical techniques have also got their own importance in
gaining new knowledge, new techniques, and broader concepts.
Learning is haphazard without theoretical background and learning can never be
called learning if it is just theory without practice. When on the job training is
properly balanced with the class room training (off-the-job training) the real learning
takes place.
1. Lecture: It is the simplest of all techniques. This is the best technique to
present and explain series of facts, concepts and principles. The lecturer
organises the material and gives it to a group of trainees in the form of talk.
The main uses of lectures in executive development are:
i) It is direct and can be used for a larger group of trainees.
ii) It presents the overview and scope of the subject clearly.
iii) It presents the principles, concepts, policies and experiences in the
shortest time. Thus it is a time saving technique.
The lectures do not give scope for student participation and may sometimes be
boring which in turn hinders learning. Skills can be learnt only by doing and
therefore lectures are of no use for technical skills.
2. Conferences and Seminars: A conference seminar is a meeting of several
people to discuss the subjects of common interest. Better contribution from
members can be expected as each one builds upon ideas of other participants.
This method is best suited when a problem has to be analysed and examined
from different viewpoints.
It helps the members develop their ability to modify their attitudes. Participants
enjoy this method of learning as they get an opportunity to express their views.
The success of the conference depends on the conference leader. In order to make the
conference a success, the conference leader must be able to see that the discussion is
through and concentrates on the central problem by encouraging all the participants
to develop alternatives and present their viewpoints and by preventing domination
by a few participants.
3. Case Studies: Cases are prepared on the basis of actual business situations
that happened in various organisation. The trainees are given cases for
discussing and deciding upon the case. Then they are asked to identify the
apparent and hidden problems for which they have to suggest solutions.
The situation is generally described in a comprehensive manner and the trainee has
to distinguish the significant facts from the insignificant, analyse the facts, identify
the different alternative solutions, select and suggest the best. This whole exercise
improves the participants decision-making skills by sharpening their analytical and
judging abilities.
4. Role Playing: A problem situation is simulated by asking the participants to
assume the role of a particular person in the situation. The participants
interact with other participants assuming different roles. Mental set of the role
is described but no dialogue is provided.
The whole play may be tape-recorded and the trainee may thus be given the
opportunity to examine his or her own performance.
Role playing gives the participants vicarious experiences which are of much use to
understand people better. This method teaches human relations skills through actual
practice. Examples of role playing situations are: a grievance discussion, employment
interview, a sales presentation etc.
5. Business Games: Under this method, the trainees are divided into groups
or different teams. Each has to discuss and arrive at solutions concerning such
subjects as production, pricing, research expenditure, advertising etc.,
assuming itself to be the management of a simulated firm. The other teams
assume themselves as competitors and react to the decision. This immediate
feedback helps to know the relative performance of each team. The team's
cooperative decision promotes greater interaction among participants and
gives them the experience in co-operative group processes.
All this develops organisational ability, quickness of thinking, leadership and the
ability to cope with stress.
6. Programmed Instruction: In recent years, this method has become
popular. The subject matter to be learned is presented in a series of carefully
planned sequential units. These units are arranged from simple to more
complex levels of instruction. The trainee goes through these units by
answering questions or filling the blanks. This method is expensive and time
7. Sensitivity Training: The main objective of sensitivity training is the
"development of awareness of and sensitivity to behavioural patterns of one
self and others". This development results in the:
(i) increased openness with others,
(ii) greater concern for others.
(iii) increased tolerance for individual differences.
(iv) less ethnic prejudice,
(v) understanding of group processes,
(vi) enhanced listening skills,
(vii) increased trust and support.
The role played by the trainee here is not a structured one as in role play. It is a
laboratory situation where one gets a chance to know more about himself and the
impact of his behaviour on others. It develops the managerial sensitivity, trust, and
respect for others. One of the limitations of Sensitivity Training is that it extracts a
huge emotional cost from the manager.
1. Job Rotation: The transferring of executives from job-to-job and from
department to department in a systematic manner is called Job Rotation.
When a manager is posted to a new job as part of such a programme, it is not
merely an orientation assignment. He has to assume the full responsibility
and perform all kinds of duties.
The idea behind this is to give him the required diversified skills and a broader
outlook, which are very important at the senior management levels. It is up to the
management to provide a variety of job experiences for those judged to have the
potential for higher ranks before they are promoted.
Job rotation increases the interdepartmental cooperation and reduces the monotony
of work. It helps the executives to develop general management perspective and does
not allow them to confine themselves to their specialised field only.
2. Coaching: In coaching the trainer is placed under a particular supervisor
who acts as an instructor and teaches job knowledge and skills to the trainee.
He tells him what he wants him to do, how it can be done and follows up while
it is being done and correct errors.
"Coaching should be distinguished from counselling. Counselling involves a
discussion between the boss and his subordinates of areas concerned with the man's
hopes, fears, emotions, and aspirations. It reaches into very personal and delicate
matters. To be done correctly, counselling demands considerable background and
ability on the part of the counselor. If carried out poorly, it may do considerable
The act of coaching can be done in several ways. The executive apart from asking
them to do the routine work may ask them to tackle some complex problem by giving
them chance to participate in decision-making.
One of the important limitations of this technique is that the individual cannot
develop much beyond the limits of his own boss's abilities.
3. Understudy: "An understudy is a person who is under training, to assume at
a future time, the full responsibility of the position currently held by his
superior". This method supplies the organisation a person with as much
competence as the superior to fill his post which may full vacant because of
promotion, retirement or transfer.
An understudy may be chosen by the department or its head. He will then be taught
what all the job involves and given a feel, for the job. This understudy also learns the
decision-making as his superior involves him in the discussion of daily operating
problems as well as long term problems. The leadership skills can also be taught by
assigning him the task of supervising two or three people of the department.
4. Multiple Management: Multiple Management is a system in which
permanent advisory committees of managers study problems of the company
and make recommendations t o higher management. It is also called Junior
board of executives system. These committees discuss the actual problems and
different alternative solutions after which the decisions are taken.
The technique of multiple management has certain advantages over the other
techniques. They are:
i ) members have the opportunity to acquire the knowledge of various aspects
of business.
ii) it helps to identify the members who have the skills and capabilities of an
effective manager.
iii) members have the opportunity to participate in the group interaction and
thereby gain the practical experience of group decision-making.
iv) it is relatively inexpensive method, and
v) considerable number of executives can be developed in a short span of time.
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The changes in technology, increasing competition, need for rapid industrialism,
changing preferences of customers and increasing complexities of human relations
necessitates the organisation of training and development in India. At present
various industries conduct training and development programmes in addition to the
training and development programmes conducted by various institutes. The
announcement of economic liberalisation and opening of India economy to the rest
of the globe resulted in inflow of advanced technology to India, establishment of
various foreign companies in India resulted in heavy competition, need for
maintenance of high quality, productivity, adoption of latest technology etc. These
changes in external environment and global environment necessitated the conduct of
various training courses like Total Quality Productivity Management, Customer
Service, Meeting the Competition etc.
There are different kinds of institutes providing training programmes. These include:
i) In-house Staff Training Centres / Colleges of organisations.
ii) Management Associations and Productivity Councils.
iii) University Management Departments.
iv) Management Consultants and
v) Independent Training and Management Development Institutes.
Despite the need for training and its significance, organisation of training
programmes faces certain problems. These problems include:
i) Duplication in training programmes organised by companies and training
ii) Failure of the institutes in offering the training programmes really based on
iii) Relatively little importance is given to the behavioural
training programmes.
iv) Absence of rapport between the industry and the independent training
v) Inadequate training facilities to train the trainers.
vi) Absence of seriousness on the part of trainees.
vii)Improper design of the course content and training programmes.
viii) Lack of initiative on the part of the superiors to allow the employees to
implement the knowledge or skill gained through the training programmes
ix)Absence of rewards and awards to the trainers.
Government of India instituted a separate Ministry of Human Resource
Development in the Union Cabinet with a view to train and develop the human
resources of the country. Government policy is favourable towards training and
development. Government established various training institutions in addition to
encouraging the public sector enterprises to establish and develop their own training
1. Differentiate Training, education and development
2. Describe the steps involved in a training programme
3. Explain the various methods available for evaluating the effectiveness of
training programmes.
4. Explain the different principles of learning
5. Analyse the need for Executive Development Programmes. Do you think the
systems of executive development programmes now followed in Indian
industry are adequate?
6. Write short notes on:
a. Identification of Training Needs
b. Sensitivity Training
c. Programmed Instruction
- End Of Chapter -
Organisations resort to internal mobility of employees in order to place the right
employee in the right job. This type of mobility which is restricted to movement of an
employee from one job to another in the same level of organisational hierarchy is
termed as transfer.
Transfer is defined as "a lateral shift causing movement of individuals from one
position to another usually without involving any marked change in duties,
responsibilities, skills needed to compensation".
In other words transfer is viewed as a change in assignment in which employee
moves from one job to another in the same level of hierarchy requiring similar skill
involving approximately same level of responsibility, same status and same level of
pay. Promotion is upward reassignment of a job, demotion is a downward job
reassignment whereas transfer is a lateral or horizontal job reassignment.
Organisation resort to transfers with a view to attain the following purposes:
1. To meet the organisational requirements: Organisations may have to resort to
transfer its employees due to changes in technology, change in volume of
production, production schedule, product line, quality of products, change in
the job pattern caused by change in organisational structure, fluctuations in
the market conditions like demand fluctuations, introduction of new lines and
/ or dropping of existing lines. All the changes demand the shift in job
assignments with a view to place the right man in the right job.
2. To satisfy the employee needs: Employees do need transfer in order to satisfy
their desire to work under a friendly superior, in a department / region where
opportunities for advancement are bright, in or near their native place or
place of interest, doing a job where the work itself is challenging etc.
3. To utilise employee skill, knowledge etc., where they are more suitable or
badly needed.
4. To improve employee's professional background by placing him in different
jobs of various departments, units, regions etc. This develops the employee
and enables him to accept any job without any hesitation.
5. To correct inter-personal conflicts.
6. To adjust the workforce of one section / plant in other section / plan during
layoff or closure or adverse business conditions or technological changes.
7. To give relief to the employees who are overburdened or doing complicated or
risky work for long period.
8. To punish the employees who violate the disciplinary rules.
9. To help the employees whose working hours or place of work is inconvenient
to them.
10. To minimize scope for fraud, bribe etc., which results due to permanent stay
and contact of an employee with customers, dealers, suppliers etc.
Transfers can be classified into the following types:
a. Production Transfer : transfers caused due to changes in production
b. Replacement transfer : transfers caused due to initiation of replacement of
a long-standing employee in the same job.
c. Rotation transfer : transfer initiated to increase the versatility of
d. Shift transfer : transfer of an employee from one shift to another
e. Remedial transfer : transfers initiated to correct the wrong placements.
f. Penal transfer : transfers initiated as a punishment for in
disciplinary action of employees.
Despite these benefits some problems are associated with transfers. They are:
1. Adjustment problems to the employee to the new job, place, environment,
superior and colleagues.
2. Transfers from one place to another cause much inconvenience and cost
relating to housing, education to children etc. to the employee and his family
3. Transfer from one place to another result in loss of man-days.
4. Company initiated transfers result in reduction in employee contribution.
5. Discriminatory transfers affect employee morale, job satisfaction,
commitment and contribution.
However, these problems can be minimized through formulating a systematic
transfer policy.
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Organisation should clearly specify their policy regarding transfers. Otherwise,
superiors may transfer their subordinates arbitrarily when they do not like them. It
causes frustration among employees. Similarly subordinates may also request for
transfer even for pretty, reasons. Most of the people may ask for transfer to riskless
and easy jobs and places. As such organisations may find it difficult to manage the
transfers. Hence organisation should formulate a systematic transfer policy.
Systematic transfer policy should contain the following items.
1. Specification of circumstances under which an employee will be transferred in
the case of company initiated transfer.
2. Specification of a superior who is authorised and responsible to initiate a
3. Jobs from and to which transfers will be made based on the job specification
description and classification etc.
4. The region or unit of the organisation within which transfers will be
5. Reasons which will be considered acceptable for employee - initiated
transfers, their order of priority etc.
6. Reasons considered acceptable for mutual transfer of employees.
7. Norms to decide priority when two or more employees request for transfer
like priority of reasons, seniority etc.
8. Specifications of basis for transfer like job analysis, merit, length of service
9. Specification of pay, allowances, benefit etc. that are to be allowed to the
employee in the new job.
10. Other facilities to be extended to the transferee like special leave during the
period of transfer, special allowance for packaging luggage, transportation etc.
Generally, line managers administer the transfers and personnel managers assist the
line managers in this respect.
- End Of Chapter -
When there are vacancies in an organisation, they can be filled up by the internal
employees or external candidates. Though the organisation may prefer to fill up the
vacancies by the external candidates through the selection procedure, the internal
candidates may also apply for the post and may be tested and selected for higher
level job in the organisational hierarchy at part with external candidates. Is such
upward movement of an employee a promotion? or is it purely selected? It is purely a
selection. If the organisation prefers to fill a vacancy only by the internal candidates,
it assigns that higher level job to the selected employee from within through
promotional tests. Such upward movement can be said as promotion.
According to Paul Pigors and Charles A.Myers, "Promotion is advancement of an
employee to a better job better in terms of greater responsibility, more prestige or
status, greater responsibility, more prestige or status, greater skill and especially
increased rate of pay or salary". Arun Monappa and Mirza S.Saiyandian defined
promotion as "the upward reassignment of an individual in an organisation's
hierarchy, accompanied by increased responsibilities, enhanced status and usually
with increased income through not always so". Promotion is the reassignment of a
higher level job to an internal employee (which is supposed to be assigned exclusively
to internal employee) with delegation of responsibility and authority required to
perform that higher level job and normally with higher pay. Thus the main
conditions of promotion are:
(i) Reassignment of higher level job to an employee than what he is presently
(ii) The employee will naturally be delegated with greater responsibility and
authority than what he has had earlier; (iii) Promotion normally accompanies higher
pay. It means that in some cases the employees perform higher level job and receive
the salary related to the lower level job. For example, if a university Professor is
promoted to the next higher level of the faculty position i.e. Dean of the faculty, he
will not receive may increase in salary. Such promotion is called dry promotion.
Promotions may be temporary or permanent depending upon the organisational
needs and employee performance.
Managements can motivate the employees for higher productivity through
promotions. But it may not be possible for the management to promote all employees
due to limited vacancies at the higher level. Hence management uses another
technique to motivate employees i.e., upgradation of the job. Paul Pigors and Charles
A.Myers view upgradation an small scale promotion. But upgradation is not
promotion of an employee. It is elevating the place of the job in the organisational
hierarchy or including the job in higher grade.
Organisations promote the employees with a view to achieve the following purposes:
1. To utilise the employees skills, knowledge at the appropriate level in the
organisational hierarchy resulting in organisational effectiveness and
employee satisfaction.
2. To develop competitive spirit and inculcate the zeal in the employees to
acquire the skill, knowledge etc. required by higher level jobs.
3. To develop an internal source of an employee's ready to take up jobs at higher
levels in the changing environment.
4. To promote employee's self-development and make them await their turn for
promotions. It reduces labour turnover.
5. To promote a feeling of contentment with the existing conditions of the
company and a sense of belongingness.
6. To promote interest in training, development programmes and in team
development areas.
7. To build loyalty and to boost morale.
8. To reward committed and loyal employees.
9. To get rid of the problems created by the leaders of worker's unions by
promoting them to the officers levels where they are less effective in creating
Having discussed the purposes of promotion, now we study the basis of promotion.
Organisations adopt different criteria for promotion depending upon their nature,
size, management etc. Generally they may combine two or more criteria for
promotion. The well-established basis of promotions are seniority and merit. The
other basis of promotion which is well-practiced in all types of organisations under
different shades in favoritisms. Organisations should have the idea of effectiveness
of each basis in promotion the right man to the job.
Merit as the Basis of Promotion: Merit is taken to denote an individual
employee's skill, knowledge, ability, efficiency and aptitude as measured from
educational, training and past employment record. The merits of merit system of
promotion are:
(i) The resources of higher order of an employee can be better utilised at higher level.
It results in maximum utilization of human resources in an organisation
(ii) Competent employees are motivated to exert all their resources and contribute
them to the organisational efficiency and effectiveness
(iii) It works as golden hand-cuff to reduce employee turnover.
(iv) Further it continuously encourages the employees to acquire new skill,
knowledge etc for all around development.
Despite these advantages the merit systems suffers from some demerits, they are:
1. Measurement or judging of merit is highly difficult,
2. Many people, particularly trade union leaders, distrust the management's
integrity in judging merit.
3. The techniques of merit measurement are subjective.
4. Merit denotes mostly the past achievement, efficiency but not the future
success. Hence the purpose of promotion may be served if merit is taken as
sole criteria for promotion. Merit should mean future potential but not past
performance in case of promotion. Hence it is suggested that organisations
should measure the future potentially of the candidate based on the
requirements of a job to which he is going to be promoted and take it as merit
rather than the past performance. However, past performance can be
considered in evaluating and forecasting future success. Some of the demerits
of this system can be avoided it the organisation views the merit as future
Seniority as the Basis of Promotion: Seniority refers to relative length of service in
the same job and in the same organisation. The logic behind considering the
seniority as a basis of promotion is that there is a positive correlation between the
length of service in the same job and the amount of knowledge and the level of skill
acquired by an employee in an organisation. This system is also based on the custom
that the first in should be given first chance in all benefits and privileges. The
advantages of seniority as a basis of promotion are:
1. It is relatively easy to measure the length of service and judge the seniority.
2. There would be full support of the trade unions to this system.
3. Every party trusts the management's action as there is no scope for
favouritism and discrimination and judgment.
4. It gives a sense of certainty of getting promotion to every employee and of
their turn for promotion.
5. Senior employees will have a sense of satisfaction with this system as the
order employees are respected and their inefficiency cannot be pointed out.
6. It minimizes the scope for grievances and conflicts regarding promotion.
7. This system seems to serve the purpose in the sense that employees may learn
more with increase in the length of service.
In spite of these merits, this system also suffers from certain limitations. They are:
1. The assumption that the employees learn more relative to their length of
service is not valid as this assumption has reverse effect. In other words
employees learn upto a certain age and beyond that stage the learning ability
or the cognitive process diminishes.
2. It demotivates the young and more competent employees and results in
employee turnover particularly among the dynamic employees.
3. It kills the zeal and interest to develop, as everybody will be promoted without
4. Organisational effectiveness may diminish through the deceleration of the
human resource effectiveness as the human resource may consist of mostly
non-dynamic and old blood.
5. Judging the seniority though it seems to be easy in the theoretical sense, it is
highly difficult in practice as the problem like job seniority, company
seniority, zonal/regional seniority, service in different organisations,
experience as apprentice trainee, researcher, length of service not only by days
but by hours and minutes will crop up.
Thus the two main basis of promotion enjoy certain advantages and at the same time
suffer from certain limitations. Hence a contribution of both of them may be
regarded as an effective basis of promotion.
Managements mostly prefer merit as the basis of promotion as they are interested in
enriching organisational effectiveness by enriching its human resources. But trade
unions favour seniority as the sole basis for promotion with a view to satisfy the
interests of majority of their members. The management, in these days of trade
unions regulation and control, cannot go for merit or ability as the sole basis of
promotion. Even if the managements go for enriching their human resources, most
of the employees may be dissatisfied with the job resulting in instability of
employment, lack of commitment loyalty, high rate of absenteeism, increase in
grievances and industrial disputes. In addition, if most of the young blood is
promoted, the human resource at the higher level may lack maturity, stability of
mind and the skill of judgment. A number of benefits are tied to the length of service
giving the impression to the employees that the benefit of promotion is also linked to
the length of seniority.
Though much can be said in favour of seniority, it cannot be taken as the sole basis in
view of the effects on organisational effectiveness. Similarly, merit or ability cannot
be taken as the sole basis in view of its limitations as discussed above. Hence a
combination of both seniority and merit can be considered the basis for promotion
satisfying the management for organisational effectiveness and the employees and
trade unions for respecting the length of service. In fact satisfying the employees and
trade unions will also result in organisational effectiveness through organisational
stability, motivation, loyalty and commitment of the employees. A balance between
seniority and merit should be struck. There are several ways in striking the balance
between these two basis viz.
1.Mininum Length of Service and Merit:
Under this method, all those employees who complete the minimum service, say five
years, are made eligible for promotion and then merit is taken as the sole criteria for
selecting the employee for promotion from the eligible candidates. Most of the
commercial banks in India have been following this method for promoting the
employees from clerks position to Officer's position.
2.Measurements of Seniority and Merit Through a Common Factor:
a) Due weightage is given to seniority and merit (for example 40% for seniority and
60% for merit)
b) Length of service is measured by points with the help of assigned weightage (for
example one point for every six months of completed service) with a maximum of 40
c) Merit is also measured by points with the help of assigned weightage (for example
maximum 20 points for academic achievement mostly suitable to the new job,
maximum 10 points for past employment performance and maximum 30 points for
the suitability of the candidate for future job which can be judged through tests and
d) Points assigned to a candidate under both the heads of seniority and merit are
added up (for example if a candidate has 10 years of service and is assigned 20 points
for seniority and if 15 points are assigned for his second class graduate degree and
first class post graduate degree, if 5 points are assigned for his past performance on
the job and if 10 points are assigned for his performance in tests and interview, his
total merit is determined as 50 points for a maximum of 100 points).
e) Merit list is prepared and candidates for promotion are selected on the basis of
their ranks (for example, if there are three candidates for one post viz. X, Y, and Z
and if their merit points are 50, 75, and 60 respectively, the second candidates i.e. Mr
Y is selected for promotion).
3. Minimum Merit and Seniority:
In contrast to the earlier methods, minimum score of merit which is necessary for
the acceptable performance on the future job is determined and all the candidates
who secure minimum score are declared as eligible candidates. Candidates are
selected for promotion based on their seniority only from the eligible candidates.
Managements promote the employees on any one of these basis depending upon the
internal and external environmental factors. Environmental factors include the size
and nature of the organisation, nature of job, trade union's influence in addition to
political factors or favoritisms and reservations in promotions.
Managements give weightage to favoritisms in promoting employees. This basis
includes nepotism, friendship, management sponsored trade union leaders and
recommendations of political leaders, government officials and other persons to
whom the management owes certain obligations and employees who always praise
the managers (who take the decisions about promotion), with the sole motive of
gaining their favour. Managers may change the norms of either merit or seniority or
both in accordance with the qualifications, past performance and experience of those
employees whom they wish to favour for promotions. The scope for giving weightage
to this basis is relatively more in private sector compared to public sector. But, this
basis cannot be preferred widely with the growing strength and regulating power of
trade unions. However, there is much scope for operational deviations, though the
promotional policy and procedure is clearly and systematically formulated and
written. The advantages of this basis are : the management can discharge its
obligations towards the political leaders and others and in turn it gets favours from
But this basis suffers from limitations like:
(i) Affecting the morale of employees trade union leaders,
(ii) Shift in the employees attitudes and values, in the sense, that the employees
aspiring for promotions may resort to the influence, recommendations etc., rather
than developing their qualifications or skill. This is in turn affects the organisational
Reservation in Promotions: Government at the centre issued the orders to
government departments to introduce reservations in promotions in addition to
selections. Accordingly, these departments have to fill certain percentage of
vacancies at the higher level from among the employees belonging to scheduled
castes and scheduled tribes.
Though promotion benefits the employee and the organisation, it creates certain
problems like disappointment of the candidates resulting from denial of promotions.
Promotion disappoints some Employees:
Some employees who are not promoted will be disappointed when their colleagues
with similar qualifications and experience are promoted either due to favouritism or
due to lack of systematic promotion policy. Employees may develop negative attitude
and reduce their contributions to the organisation and prevent organisational and
individual advancement.
Some employees refuse promotion. There is a general tendency that employee
accepts promotion. But there are several incidents where employees refuse
promotions. These incidents include promotion together with transfer to an
unwanted place, promotion to that level where the employee feels that he will be
quite incompetent to carry out the job, delegation of unwanted responsibilities, and
when trade-union leaders feel that promotion causes damage to their position in
trade union. The other problems associated with the promotion are: some superiors
will not relieve their subordinates who are promoted because of their
indispensability in the present job and inequality in promotional opportunities in
different departments, regions and categories of jobs.
Promotion problems can be minimized through career counselling by the superiors
and by formulating a systematic promotion policy.
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Every organisation has to specify clearly its policy regarding promotion based on its
corporate policy. The basis characteristics of a systematic promotion policy are:
(i) It should be consistent in the sense that the policy should be applied uniformly to
all employees irrespective of the background of the persons
(ii) It should be fair and impartial. In other words it should not give room for
nepotism, favoritisms etc.
(iii) Systematic line of promotion channel should be incorporated.
(iv) It should provide equal opportunities for promotion in all categories of jobs,
departments, and regions of an organisation
(v) It should ensure open policy in the sense that every eligible employee should be
considered for promotion rather than a closed system which considers only a class of
(vi) It should contain clear cut norms and criteria for judging merit, length of service,
potentiality etc.
(vii) Appropriate authority should be entrusted with the task of making a final
(viii) Favouritism should not be a basis for promotion.
(ix) It should contain promotional counselling, encouragement, guidance and follow-
up regarding promotional opportunities, job requirements and acquiring the
required skills, knowledge etc. It should also contain the reinforcing the future
chances in the minds of rejected candidates and a provision for challenging the
managements decision and action by employee or union within the limits of
promotion policy.
Promotion policy should contain the following items:
1. The percentage of vacancies to be filled by promotions and by external recruitment
in each job family at different levels, in each department, region etc.
2. The basis of promotion i.e. merit, seniority or merit cum seniority.
3. The norms to judge merit, tests to be used to measure merit and potentiality,
norms to measure the seniority on the job in the department, in the organisation etc.
Clear cut guidelines should also be framed for computing overall seniority:
(a) When the employees work in different jobs, departments, organisations or
deputation lien
(b) when employees avail themselves of the different types of leave facility etc,
and when retrenched employees are taken back . Seniority should be clearly
specified whether it is job seniority, departmental seniority, zonal seniority or
organisational seniority.
4. The weightages to be given for merit and seniority if the basis of merit-cum-
seniority is to be followed for promotion.
5. Other criteria to be taken into consideration in case two or more employees are
assigned the same rank.
6. The groups of jobs with same job requirements, class of the jobs based on the level
of skill requirements.
7. Establishment of clear cut promotional channels from one level to job to another,
from one department to another, one unit to another and from one region to another.
8. Necessary qualifications, level of performance on the present job, level of
potentialities to be possessed by employees to be considered for promotion.
9. Mode of acquiring the new skills, knowledge and facilities offered by the
organisation like guidance by superiors, training facilities, leave facilities for
acquiring higher academic qualifications, facilities to attend management
development programmes in home or foreign countries etc.
10. Promotion policy should also contain alternatives to promotion when deserving
candidates are not promoted due to lack of vacancies at higher level. These
alternatives include upgradation, redesignation, sanctioning of higher pay or
increments or allowances assigning new and varied responsibilities to the employee
by enriching the job or enlarging the job. The other alternative is merit promotion.
Under this, all the deserving candidates who could not get promotion due to meager
promotional opportunities may be re-designated and sanctioned the pay of a higher
level job. This is close to the merit promotion scheme introduced in the Indian
Universities and colleges. However, the vertical organisation structure solves the
problem of meager promotional opportunities to a certain extent.
11. Provision should be made for immediate relief of the promoted candidates by
their present superiors or heads of the departments.
An organisation should keep complete personnel data and make it available to the
line managers, who make the decisions regarding promotions. Though all the line
managers make the decisions, there should be a central agency for coordination.
Promotions initially may be for a trial period so as to minimize the mistakes of
promotion. Promotion policy once it is formulated, should be communicated to all
employees particularly to the trade union leaders. Promotion policy should be
reviewed periodically based on the findings of the attitude and morale surveys.
- End Of Chapter -
The remaining type of internal mobility is demotion. It is the opposite of promotion.
Demotion is the reassignment of a lower level job to an employee with lesser
responsibilities and authority and normally with lower level pay. Organisations use
demotions less frequently as it affects employee career prospects and morale.
Demotions are necessary for the following reasons:
1. Unsuitability of the Employee to Higher Level Jobs: Employees are
promoted based on the seniority and past performance. But, some of the
employees promoted on those bases may not meet the job requirements of the
higher level job. In most cases employees are promoted to the level of their
incompetency. Some employees selected for higherlevel jobs may prove to be
incompetent in doing that job. Such employees may be demoted to the lower
level jobs where their skill, knowledge and aptitude suit to the job
2. Adverse Business Conditions: Generally adverse business conditions
force the organisation to reduce quantity of production, withdrawal of some
lines of products, closure of certain departments or plants. In addition,
organisations resort to economy drives. Consequently organisations minimize
the number of employees. Junior employees will be retrenched and senior
employees will be demoted under such conditions.
3. New Technology and New Methods of Operation Demand New and
Higher Level Skills: If the existing employees do not develop themselves to
meet those new requirements, organisations demote them to the lower level
jobs where they suitable. For example, teachers handling 10
class were
demoted to the level of 8
class teachers when the syllabus was revised and
the teachers were found misfit even after training in one school in Andhra
4. Employees are demotion on Disciplinary Grounds: This is one of the
extreme steps and as such organisaiton rarely use this measure.
Though the demotion seems to be simple it adversely affects the employee morale,
job satisfaction etc., as it reduces employee status not only in the organisation but
also in the society in addition to deduction in responsibility, authority and pay.
Hence there should be a systematic demotion policy.
Organisation should clearly specify the demotion policy. Otherwise the superiors
may demote the employees according to their whims and fancies. Systematic
demotion policy should contain the following items.
1. Specification of circumstances under which an employee will be demoted, like
reduction in operations, indisciplinary cases.
2. Specification of a superior who is authorised and responsible to initiate a
3. Jobs from and to which, demotions will be made and specifications of lines or
ladders of demotion.
4. Specification of basis for demotion like length of service, merit or both.
5. It should contain clear cut norms for judging merit and length of service.
6. It should contain clear cut norms for judging merit and length of service.
7. Specification of provision regarding placing the demoted employees in their
original places if the normal conditions are restored.
8. Specification of nature of demotion i.e., whether it is permanent or temporary
if it is a disciplinary action. It should also specify the guidelines for
determining the seniority of such demand employee.
Demotion policy should be consistent, fair and impartial. The Management should
prepare the employees gradually to take up demotion when it is inevitable. It may
sometimes use the same designations but with less responsibility, status and pay in
order to guard the employee's social status when demotions are caused due to
adverse economic conditions, technological factors etc.
Maintenance of harmonious human relations in an organisation depends upon the
promotion and maintenance of discipline. No organisation can prosper without
discipline. Discipline has been a matter of utmost concern for all organisations.
There are some people who believe and state that maintenance of discipline is
concerned with only higher echelons of an organisation. But discipline is concerned
with employees at all levels.
Maintenance of effective discipline in an organisation ensures the most economical
and optimum utilization of various resources including human resources. Thus the
objective of discipline in an organisation is to increase and maintain business
efficiency. Effective discipline is a sign of sound human and industrial relations and
organisational health.
Discipline refers to a condition or attitude, prevailing among the employees, with
respect to rules regulations of an organisation. Discipline in the broadest sense
means orderliness, the opposite of confusion. It does mean a strict and technical
observance of rules and regulations. It simply means working, cooperating and
behaving in a normal and orderly way, as any responsible employee would do.
Discipline is defined as "....a force that prompts individuals or groups to observe the
rules, regulations and procedures which are deemed to be necessary for the effective
functioning of an organisation."
According to Ordway Tead, discipline is ".... the orderly conduct of affairs by the
members of an organisation, who adhere to do necessary regulations because they
desire to cooperate harmoniously in forwarding the end which the group has in view,
and willingly recognise that. To do this their wishes must be brought into a
reasonable union with the requirements of group in action." Discipline is said to be
good when employees willingly follow company's rules and it is said to be bad when
employees follow rules unwillingly or actually disobey regulations.
Wester's dictionary gives three basic meanings of the word 'Discipline' viz
i) It is training that corrects moulds, strengthens or perfects.
ii) It is control gained by enforcing obedience, and
iii) It is punishment or chastisement.
This definition indicates the aspects of discipline viz. , positive approach and
Negative approach.
There are two aspects of discipline viz., Positive and Negative aspects.
1. Positive Aspect: Employees believe in and support discipline and adhere to
the rules, regulations and desired standards of behaviour. Discipline takes the
form of positive support and reinforcement for approved actions and its aims
is to help the individual in moulding his behaviour and developing him in a
corrective and supportive manner. This type of approach is called positive
approach or constructive discipline or self-discipline. Positive discipline taken
place whenever the organisational climate is marked by aspects such as
payment of adequate remuneration and incentives, appropriate avenues for
career advancement, appreciation of proper performance and reinforcement
of approved personnel behaviour or actions etc. all of which motivate
employees to adhere to certain rules and regulations or exercise self-control
and work to the maximum possible extent.
2. Negative aspect: Employees sometimes do not believe in and support
discipline. As such, they do not adhere to rules, regulations and desired
standard of behaviour. As such, disciplinary programme forces and
constraints the employees to obey orders and function in accordance with set
rules and regulations through warnings, penalties and other forms of
punishment. This approach to discipline is called negative approach or
corrective approach or punitive approach. This approach is also called
autocratic approach as the sub-ordinates are given no role in formulating the
rules and they are not told why they are punished. Negative or enforced
discipline connects that personnel are forced to observe rules and regulations
on account of fear or reprimand, fine, demotion, or transfer. But these are
helpful in extracting just minimum standard of work from the employees
since they work on account of the fear they have got. In fact, punishments,
penalties, demotions and transfers provide or establish a climate which de-
motivates employees. Hence, such climate is not helpful for the
accomplishment of group goals and for enhancing the morale on the part of
employees. Therefore, "where the end is not accepted as necessary or
desirable, where there is no common aim between the disciplines and
disciplined, discipline becomes a mere frustration of human purpose, stunts
development of human personality, embitters human relations, for it is then a
denial of freedom to the individuals."
But, it has been that, "if employment relationship is good in other respects, most
employees can be counted on the exercise of a considerable degree of self-discipline.
They will respond to positive leadership and need not be threatened or punished". In
contrast, if the authority is exercised arbitrarily or if rules of conduct are
unreasonable or if employees do not have a sense of adhering to the rules and
regulations, discipline is threatened and if it is prolonged, it affects the
organisational health. Any programme of discipline will be effective and successful
only when it is used to supplement and strengthen self-discipline.
Some of the employees, for various reasons, deviate from the expected standards of
behaviour. Hence, it becomes essential to have constructive programme of discipline
to deal with these violations.
According to Walkins, Dodd, McNaughton and Prasow, a constructive programme of
discipline to promote harmonious industrial relations should be developed around
the following essential elements.
Formulation of a set of clear and reasonable rules, carefully published and
Impartial enforcement of these rules by means of announced warnings and
penalties, corrective in purpose, proportionate and uniform in their
Supervisory leadership that is uniformed on disciplinary rules and procedures,
but firm in the handling of disciplinary matters.
An impartial and uniform procedure for investigation of apparent infractions,
whose procedure is subject to review by higher levels of management and
includes a system of appeal against disciplinary decisions that are considered
Without the continual support and regard to the subordinates, no manager can get
the things done. But , disciplinary action against a delinquent employee is painful
and generates resentment on his part. Hence, a question arises as to how to impose
discipline without generating resentment? This is possible through what Douglas
McGregor called the "Red Hot Stove Rules", which draws an analogy between
touching a hot stove and undergoing discipline. When one touches a hot stove:
a. The burn is immediate.
b. He had warning. When the stove was red-hot, he knew what happen if he
touched it.
c. The effect is consistent. Every time the hot stove is touched it burns.
d. The effect is impersonal. A person is burned not because of who he is but
because he touched the hot stove.
The same thing is true with discipline. The disciplinary procedure should start
immediately after an omission is noticed. It should give a clear-cut warning
regarding the extent of punishment for an offence. The same punishment should be
consistently given for the same type of offence. Irrespective of status, punishment
should be same i.e. it should be impersonal.
Indiscipline means disorderliness, insubordination and not following the rules and
regulations of an organisation. The symptoms of indiscipline are change in the
normal behaviour, absenteeism, apathy, go-slow at work, increase in number and
severity of grievances, persistent and continuous demand for overtime allowance,
lack of concern for performance etc. The parties responsible for indiscipline in Indian
Industries are Trade Unions and Management. Politicalised Trade Union leadership
in India encouraged and instigated indiscipline. Intra-Union rivalry and inter-union
rivalry are also major causes of indiscipline. Similarly management tactics like
deliberate delay in disciplinary procedure, concealed penalties such as transfer to an
inconvenient, place at a short notice, maintenance of confidential reports, without
holding of pay and the level of sincerity, honesty and commitment of superiors are
also responsible for indiscipline in India.
Disciplinary procedure in Indian industries broadly comprises of the following
1. Issuing of Charge sheet to the Employee calling upon him for
Explanation: When the management of the establishment comes to the
conclusion that an act of misconduct committed by an employee warrants
disciplinary action, the concerned employee should be issued a chargesheet.
The charge-sheet should indicate the charges of indiscipline or misconduct
clearly and precisely. Explanation should also be called from the delinquent
employee and for that sufficient time should be given to the employee. Serving
of the charge-sheet may be either personally or by post.
2. Consideration of the Explanation: When the delinquent employee
admits, unconditional about his misconduct, there is no need for conducting
any enquiry further. Besides, when the employer is satisfied with the
explanation given by the delinquent employee, there is no need for taking any
disciplinary action. On the contrary, when the management is not satisfied
with the employees explanation, there is a need for serving a show-cause
3. Show-cause notice: In the show-cause notice, the employer provides
another change to the employee to explain his conduct and rebut the charges
made against him. Show-cause notice is issued by the manager, who decides
to punish the employee. Besides, a notice of enquiry should be sent to the
employee and t his should indicate clearly the name of the enquiring officer,
time, date and place of enquiry into the misconduct of the employee.
4. Holding of a Full-Fledged Enquiry: The enquiry should be in conformity
with the principles of natural justice, that is, the deliquent employee must be
given a reasonable opportunity of being heard. The enquiry officer should
record his findings in the process of an enquiry. He may also suggest the
nature of disciplinary action to be taken. He may also suggest the nature of
disciplinary action to be taken.
The important steps in domestic enquiry are: preparing and serving the charge sheet,
suspension in grave cases, obtaining reply to charge sheet, selecting enquiry officer,
conducting enquiry proceedings, holding of enquiry in the free environment,
recording findings, submitting enquiry officer's report to the disciplinary authority,
decision of the disciplinary authority, communication of the order of punishment.
5. Considering the Enquiry Proceedings and Findings and Making
Final Order of Punishment: When the misconduct of an employee is
proved, the manager may take disciplinary action against him. While doing so,
he may give consideration to the employee's previous record precedents,
effects of this action on other employees, consulting other before awarding
punishment. No inherent right to appeal has been provided unless the law
provides it. In case the employee feels the enquiry is not proper and action
unjustified, he must be given a chance to make an appeal.
6. Follow-up: After taking disciplinary action, there should be proper follow-
up. The disciplinary action should not make the employee repeat his mistake.
Section 11-A of the Industrial Disputes Act, 1947, which was introduced by an
amendment in 1971 reads as follows:
"Where an industrial dispute relating to the discharge or dismissal of a workman has
been referred to a labour court, tribunal or national tribunal, as the case may be, is
satisfied that the order of discharge or dismissal was not justified, it may, by its
award, set aside the order of discharge or dismissal as the circumstances of the case
may require, provided that in any proceedings under the section, the labour court,
tribunal or national tribunal, as the case may be, shall rely only on the materials on
record and shall not take any fresh ordinance in relation to the matter".
Only under the following circumstances can be tribunals exercise the right to
consider the case:
o When there is a want of good faith
o When there is victimisation or unfair labour pratices are used.
o When management has been guilty to a basic error or violation of a Principle
of natural justice; and
o When the findings are baseless and perverse.
When a delinquent employee is going to be punished, the type of punishment should
commensurate with the severity of the omission or misconduct. Different types of
punishments resulting from various types of omissions or misconduct are as follows:
1. Oral warning: Whenever an employee commits minor omissions he may be
given an oral reprimand by the superior concerned. In such cases, the superior
should enlighten the employee as to how to prevent their recurrence. Since
repeated warnings may bring down drastically the level of morale of the
employee, oral warnings should be used sparingly.
2. Written Warnings: Whenever oral warnings fail to achieve the desired
behaviour on the part of an employee, written warnings, which are the first
formal state of progressive discipline, may be resorted to . Written warnings
are also referred to as pink slips which indicate that certain rights would be
withdrawn in case the employee continues his omission or misconduct.
3. Loss of Privileges and Fines: It an employee leaves the work, without
taking the permission of the superior, he may not be allowed to select good
tools and machine for himself and to move freely in the company. All these
might have been the privileges enjoyed hitherto by the employee. Further, if
the contract of employment provides for imposition of fines by the employer
on the delinquent employee, the employer may resort to them.
4. Punitive Suspension: Under punitive suspension the employer prohibits
the employee from performing the tasks assigned to him and the wages are
withheld or withdrawn during the period of such prohibition.
5. Withholding of Increments: Under this method, the employer withholds
the annual increments of the delinquent employee in a graded scale.
6. Demotion: This is a major punishment under this kind of punishment; an
employee is reduced to a lower grade from the grade enjoyed by his earlier.
7. Termination: The employees services can be terminated in the following
i) Discharge simpliciter
ii) Discharge
iii) Dismissal
Discharge and Dismissal: When the conduct of an employee is deemed to be
incompatible with the faithful discharge of his duties and undesirable or against the
interests of the employer to continue him in employment, dismissal will be justified.
This is an extreme kind of punishment. But in case of discharge, an employer
terminates the employment of delinquent employee either by giving agreed advance
notice or by paying money in lieu of such notice. In other words, in discharge, the
reciprocal promises and obligations are stated to be discharged. Termination of the
service of an employee may not be on account of his misconduct but may be for
certain other reasons which do not cast a slur on him. This is referred to as 'discharge
simpliciter'. In such a case, if the employee challenges the employer's bona-fides, the
employer must prove them. But discharge has acquired a meaning analogue to
dismissal and an employee may be punished by way of discharge also. In such case,
discharge should not be regarded as 'discharge simpliciter' but discharge in lieu of
Thus, though both discharge and dismissal culminate in termination of employment,
discharge is regarded as some kind of punishment less severe than that of dismissal.
Discharge requires either an advance notice or payment of money in lieu thereof,
whereas there is no such requirement in case of dismissal. However, dismissal
attaches some kind of stigma to the employee concerned or casts a slur on him.
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Maintaining Discipline: The different approaches to discipline include:
(i) Human relations approach,
(ii) Human resources approach,
(iii) Group discipline approach
(iv) The leadership approach, and
(v) The judicial approach.
The employee is treated as human being and his acts of indiscipline will be dealt
from the view point of human values, aspirations, problems, needs, goals, behaviour
etc. Under human relations approach, the employee is helped to correct his
deviations. The employee is treated as a resource and the acts of indiscipline are
dealt by considering the failures in the areas of development, maintenance and
utilization of human resources under the human resources approach. The group, as a
whole, sets the standards of discipline, and punishments for the deviations. The
individual employees are awarded punishments for their violation under the group
discipline approach. Every superior administers the rules of discipline and guides,
trains and controls the subordinates regarding disciplinary rules under the
leadership approach.
In Judicial approach, in- disciplinary cases are dealt on the basis of legislation and
court decisions. The Industrial Employment (Standing Orders) Act, 1946, to a certain
extent, prescribed the correct procedure that should be followed before awarding
punishment to an employee in India. No other enactment prescribed any procedure
for dealing with disciplinary problems. But over a period of time, a number of
principles regarding the basic formalities to be observed in disciplinary procedures
emerged, gradually resulting from the awards of several Industrial Tribunals, High
Courts and the Supreme Court.
The principles indicated by the Supreme Court for proceeding against a delinquent
employee are known as the "Principles of Natural Justice". These include:
a. The delinquent employee must be indicated in unambiguous terms about the
charge levelled against him.
b. The delinquent employee must be given opportunity for conducting his
defence. i.e. by cross examination of the witnesses.
c. The enquiry should be fair and the enquiry officer should be impartial.
d. The evidence should be put forward in the presence of the employee charged.
e. Punishment should be proportionate to the misconduct committed.
- End Of Chapter -
One of the most important factors in human resource management is compensation
management. The soundness of compensation management depends upon the
amount of wage or salary paid to an employee for fair day's work. Despite the
conclusions of morale studies, wage or salary is significant to most of the employees
as it constitutes a major share of their income. "Pay, in one form or another is
certainly one of the main springs of motivation in our society". Salary provides more
than a means of satisfying the physical needs - it provides recognition, a sense of
accomplishment and determines social status. Hence, formulation and
administration of sound remuneration policy to attract and retain right personnel in
right position is the prime responsibility of an organisation.
Development and administration of sound wage and salary policies are not only
important but also complex managerial functions. The complexities stem from the
fact that on the one hand a majority of union-management problems and disputes
relate to the question of wage payment and on the other, remuneration is often one
of the largest components of cost of production. Thus it influences the survival and
growth of an organisation to a greatest extent.
The influence of remuneration over distribution of income, consumption, savings,
employment and prices is also significant. This aspect assumes all the more
importance in a developing economy like India where it becomes necessary to take
measures for a progressive reduction of the concentration of income and/or to
combat inflationary trends. Thus the wage policy of an organisation should not
become an evil to the economy.
What is wage and salary administration? Wage and Salary administration is
essentially the application of a systematic approach to the problem of ensuring that
employees are paid in a logical, equitable and fair manner.
Wage: Wage and Salary are often discussed in loose sense, as they are used
interchangeably. But ILO defined the term wage as "the remuneration paid by the
employer for the services of hourly, daily, weekly and fortnightly employees". It also
means that remuneration paid to production and maintenance or blue collar
Salary: The term salary is defined as the remuneration paid to clerical and
managerial personnel employed on monthly or annual basis.
This distinction between wage and salary does not seem to be valid in these days of
human resources approach where all employees are treated as human resources and
are viewed at par. Hence, these two terms can be used interchangeably. As such, the
term wage and / or salary can be defined as the direct remuneration paid to an
employee compensating his services to an organisation. Salary is also known as basic
Earnings: Earnings are the total amount of remuneration received by an employee
during a given period. These include salary (pay) dearness allowance, house rent
allowance, city compensatory allowance, other allowance, overtime payments etc.
Nominal Wage: It is the wage paid or received in monetary terms. It is also known
as money wage.
Real wage: Real wage is the amount of wage arrived after discounting nominal
wage by the living cost. It represents the purchasing power of money wage.
Take home salary: It is the amount of salary left to the employee after making
authorised deductions like contribution to the provident fund, life insurance
premium, income tax and other charges.
Minimum Wage: It is the amount of remuneration which could meet the "normal
needs of the average employee regarded as a human being living in a civilized
society". It is defined as the amount or remuneration, "which may be sufficient to
enable a worker to live in reasonable comfort, having regard to all obligations to
which an average worker would ordinarily be subjected to".
Statutory minimum wage: It is the amount of remuneration fixed according to
the provisions of the Minimum Wages Act, 1948.
The need based minimum wage: It is the amount of remuneration fixed on the
basis of norms accepted at the 15
session of the Indian Labour Conference held at
New Delhi in July, 1957.
The conference recommended that minimum wages should ensure the minimum
human needs of industrial workers. The norms laid down by it are:
(i) In calculating the minimum wage, the standard working class family should be
taken to comprise three consumption units for one corner, the earnings of women,
children and adolescent being disregarded.
(ii) Minimum food requirements should be calculated on the basis of a set intake of
calories as recommended by Dr.Aykroyd for an average Indian adult of moderate
(iii) Clothing requirements should be estimated on the basis of per capita
consumption of 18 yards per annum which would give for the average workers
family of four a total of 72 yards.
(iv) In respect of housing, the rent corresponding to the minimum area provided for,
under Government Industrial Housing Scheme should be taken into consideration in
fixing the minimum wage.
(v) Fuel, lighting and other miscellaneous, items of expenditure should constitute 20
per cent of the total minimum wage.
The living wage: According to the committee on Fair wages, the living wage is the
highest amount of remuneration and naturally it would include all amenities which a
citizen living in a modern civilized society is entitled to expect, when the economy of
the country is sufficiently advanced and the employer is able to meet the expanding
aspirations of his workers.
The fair wage: Fair wages are equal to that received by workers performing work of
equal skill, difficulty or unpleasantness.
Incentive wage: This is the amount of remuneration paid to a worker over and
above the normal wage as an incentive for employees contribution to the increased
production or saving in time or material.
Wage rate: It is the amount of remuneration for a unit of time excluding incentives,
overtime pay etc.
Standard wage rate: It is the amount of wage fixed for a unit of time fixed on the
basis of job evaluation standards.
Management has to formulate and administer the salary policies on sound lines:
(i) Most of the employee's satisfaction and work performance are based on pay
(ii) Internal inequalities in pay are more serious to certain employees.
(iii) Employees compare their pay with that of other
(iv) Employees ract only to gross external inequities
(v) Employee comparisons of pay are uninfluenced by levels of aspirations and pay
history, and
(vi) Employees compare the pay of different employees with their skill, knowledge,
performance etc.
The objectives of wage and salary administration are numerous and sometimes
conflict with each other. The important among them are:
1. To acquire qualified and competent personnel: Candidates decide
upon their career in a particular organisation mostly on the basis of the
amount of remuneration of organisation offers. Qualified and competent
people join the best-paid organisations. As such, the organisations should aim
at payment of salaries at that level, where they can attract competent and
qualified people.
2. To retain the present employees: If the salary level does not compare
favourably with that of other similar organisations, employees quit the present
one and join other organisations. The organisation must keep the wage levels
at the competitive level, in order to prevent such quit.
3. To secure internal and external equity: Internal equity does mean
payment of similar wages for similar jobs within the organisation. External
equity implies that payment of similar wages to similar jobs in comparable
4. To ensure desired behaviour: Good rewards reinforce desired behaviour
like performance, loyalty, accepting new responsibilities and changes etc.
5. To keep labour and administrative costs in line with the ability of the
organisation to pay.
6. To project in public as progressive employer and to comply with the wage
7. To pay according to the content and difficulty of the job and in tune with the
effort and merit of the employee.
8. To facilitate pay roll administration of budgeting and wage and salary control.
9. To simplify collective bargaining procedures and negotiations.
10. To promote organisation feasibility.
SYSTEMS TO ACHIEVE THE OBJECTIVES: The above mentioned objectives
are achieved by the use of the following systems:
1. Job evaluation: All jobs will be analysed and graded to establish the pattern
of internal relationships. It is the process of determining relative worth of
jobs. It includes selecting suitable job evaluation techniques, classifying jobs
into various categories and determining relative value of jobs in various
2. Wage and Salary ranges: Overall salary range for all the jobs in an
organisation is arranged. Each job grade will be assigned a salary range. The
individual salary ranges will be fitted into an overall range.
3. Wage and salary adjustments: Overall salary grades of the organisation
may be adjusted based on the data and information collected about the salary
levels of similar organisations. Individual salary level may also be adjusted
based on the performance of the individual employees.
PRINCIPLES: There are several principles of wage and salary plans, policies and
practices. The important among them are:
1. Wage, Salary plans and policies should be sufficiently flexible.
2. Job evaluation must be done scientifically.
3. Wage and salary administration plans must always be consistent with over all
organisational plans and programmes.
4. Wage and salary administration plans and programmes should be in
conformity with the social and economic objectives of the country like
attainment of equality in income distribution and controlling inflationary
5. Wage and salary administration plans and programmes should be responsive
to the changing local and national conditions.
6. These plans should simplify and expedite other administrative processes.
ADMINISTRATION: Generally a large number of factors influence the salary
levels in an organisation. Significant among them are:
i. Remuneration in comparable industries,
ii. Firm's ability to pay,
iii. Cost of living,
iv. Productivity,
v. Union pressure and strategies and
vi. Government legislations.
i. Remuneration in comparable industries: Prevailing rates of
remuneration in comparable industries constituted an important factor in
determining salary levels. The organisation, in the long run, must pay at least
equal to the going rate for similar jobs in similar organisations. Further, the
salary rate for the similar jobs in the firms located in the same geographical
region also influence the wage rate in the organisation. The organisation has
to pay the wages equal to that paid for similar jobs in comparable industries in
order to secure and retain the competent employees, to follow the directive of
courts of law, to meet the trade unions demands, to satisfy the employee need
for same social status as that of same categories of employees in comparable
organisations. Comparable industries constitute the organisations engaged in
the same or similar activities, of the same size, in the similar type of
management. i.e., public sector or under the management of same owners,
organisations located in the same geographical region etc.
ii. Firms ability t o pay: One of the principle considerations that weighs with
the management in fixing the salary levels is its ability to pay. But in the short
run, the influence of ability to pay may be practically nil. However, in the long
run, it is quite an influential factor. In examining the paying capacity of an
organisation, apart from profitability, various expenses that the industry has
to bear, certain trends in prices of products / services that are to be charged by
the industry should also be taken into account. In addition, total cost of
employees (salaries, allowance, cost of fringe benefits etc) should be taken
into consideration in determining the ability to pay. Trade Unions demand
higher wages when the company's financial position is sound. But they may
not accept wage reduction when the company's financial position is in
doldrums. Hence, the management has to take decisions judiciously. Further,
certain incentives are linked to the profitability. Thus, whatever the influence
of other factors may be, the organisation cannot pay more than its ability to
pay in the long run.
iii) Cost of living: The cost of living is another important factor that
influences the quantum of salary. The employees expect that their purchasing
power be maintained at least at the same level, if not increased by adjusting
wages to changes in cost of living. In fact, in recent years, in advanced
countries, "a number of labour agreements have 'escalator' clauses, providing
for automatic wage and salary increase as cost of living index raises". Dearness
Allowance is an allowance granted to the employees with a view to combating
on slaughts of soaring prices.
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iv) Productivity: An interesting development in wage determination has
been productivity standard. This is based on the fact that productivity increase
is also the result of employee satisfaction and contribution to the organisation.
But wage productivity linkage does not appear to be so easy since many
problems crop up in respect of the concept and measurement of productivity.
But, although the wages are not linked directly to the productivity, in an
organisation, changes in productivity have their impact on remuneration. This
criteria received consideration of wage boards, "not only because it constituted
a factor in the fixation of 'fair wage' but also because it was directly related to
such questions as desirability of extending the system of payment of result".
v) Union pressure and strategies: The wages are also often influenced by
the strength of unions, their bargaining capacity and their strategies. Arthur M.
Ross, concluded that "real hourly earnings have advanced more sharply in
highly organised industries than in less unionised industries". Unions
pressures management through their collective bargaining strategies, political
tactics any by organising strikes etc. Trade union's influence may be on the
grounds that wages in comparable industries, firm's financial position, rising
living cost, government regulations etc. It may be noted here that the unions
may have the wage raise particularly in those industries where the wage level is
below that of other comparable industries.
vi) Government legislations: Government legislations influence wage
determination. The two important legislations which affect wage fixation are:
the Payment of Wages Act, 1936 and the Minimum Wages Act, 1948. The
important provisions of the Payment of Wages Act, 1936 are: ensuring proper
payment of wages and avoiding all malpractices like non-payment, under
payment, delayed and irregular payment, payment in kind and under
measurement of work. The Act covers all employees drawing the wage upto
Rs.1,000 per month. The act stipulated that the Organisations with less than
hundred workers should pay the wage by seventh and the organisations with
more than 100 employees should pay by tenth of next month.
The Act also stipulates time for payment of dues to the discharged employees. Under
the Act, fines can be levied but after due notice to the employees deductions towards
fine are restricted to 1/3
of the wage.
The important provisions of the Minimum Wage Act, 1948 are: The Act seeks to
protect the workers from underpayment of wages for their efforts. It presented the
guidelines for the fixation of minimum wage which is just sufficient to meet the basic
needs of workers and to keep a man's 'body and soul' together.
Statutory minimum wage is the wage determined according to the procedure
prescribed by the relevant provisions of the Act. The Act provides for fixing of:
(i) Minimum wage in certain employment,
(ii) Minimum time rate,
(iii) Minimum piece rate,
(iv) Guaranteed time rate,
(v) Overtime rate, and
(vi) Basic pay and D.A.
The Act also provides for revision of minimum wage at fixed intervals.
Wages are fixed by the following institutions in India. They are: (i) collective
bargaining and adjudication. (ii) Wage Boards, and (iii) Pay Commissions.
i) Collective bargaining and adjudication: Collective bargaining is a procedure
in which compromise is reached through balancing of opposed strengths. It is a
means through which employee problems relating to various issues including wages
are settled. If these problems are not settled through collective bargaining, they may
be settled through voluntary arbitration or adjudication. The awards given or
reached by or through the arbitrator or adjudicator or collective bargaining
agreements, form the basis for fixing wages in various organisations.
ii) Wage Boards: This is one of the important institutions set up by the
Government of India for fixation and revision of wages. Separate wage boards are set
up for separate industries. Government of India started instituting Wage Boards in
accordance with the recommendations of Second Five Year Plan, which reiterated by
the Third Five Year / Plan. Wage Board consists of one neutral Chairman, two
independent members and two or three representatives of workers and management
each. The wage Boards have to study various factors before making its
recommendations. The recommendations of the Wage Boards are first referred to the
Government for its acceptance. The Government may accept with or without
modification or reject the recommendations of the Wage Board. The
recommendations accepted by the Government are enforceable by the parties
The Wage Boards take the following factors into consideration for fixing or revising
the wages in various industries.
1.Job evaluation
2.Wage rates for similar jobs in comparable industries.
3.Employees productivity
4.Firms ability to pay.
5.Various wage legislations.
6. Existing level of wage differentials and their desirability
7. Government's objectives regarding social justice, social equality, economic justice
and economic equality.
8. Place of the industry in the economy and the society of the country and the
9. Need for incentives, improvement in productivity etc.
The wage boards fix and revise various components of wages like basic pay, dearness
allowance, incentive earnings, overtime pay, house rent allowance and all other
ii) Pay commissions: This is another institution which fixes and revises the wages
and allowances to the employees working in government departments. Pay
Commissions are separately constituted by Central and State Governments. Central
Government so far has appointed four pay Commissions.
The First Pay Commission: This Commission was appointed by the Central
Government in the year 1946 with Varadachariar as Chairman. This Commission
stated that the state must now take some steps to implement the living wage
principle. The Commissioner recommended the minimum wage at Rs.30/- for the
lowest grade of Class IV employee in the Central Government. The Commission felt
that the hardships of the lowest paid employees should be relieved. It allowed 100%
neutralisation in cost of living index.
The Secondary Pay Commission: The Central Government appointed the
Second Pay Commission in August 1957 (Chairman Justice B. Jagannadha Das) with
a view to recommending revised pay scales for different classes of employees of
Central Government. The Commission revised the pay scales by merging 50% of the
dearness allowance with the basic pay and it recommended Rs.80 (Rs.70 as
remuneration payable to a Central Government employee.
The Third Pay Commission (1970-73): Due to the continuous demand made by
the employees of Central Government and their organisations, the Government
appointed Third Pay Commission in April 1970 under the Chairmanship of Raghubir
Dayal, retired Judge of the Supreme Court of India with a view to examining the
principle which would give the structure of remuneration and conditions of service of
Central Government employees and to consider and recommend the desirable and
feasible changes in the structure of remuneration and conditions of service of Central
Government employees. The Commission, in its report (April 1973), observed the
tests of 'inclusiveness', 'comprehensibility' and 'adequacy'.
Keeping in view various principles recommended for devising the pay structure, the
Commission brought down the number of scales to only 80. But the main demand of
the employees since 1957 had been for a need based minimum wage according to the
norms of the 15
Indian Labour Conference. After making some modifications to the
norms of the conference, the Commission has evolved its own concept of the need
based wage which is Vegetarian died and three adult consumption units. Though the
cost of need-based wage, according to the Commissions concept came to Rs.196 per
mensum, the Commission recommended a minimum remuneration of Rs.185 per
month, for a whole time employee at the start of his career. The Commission has
also recommended that the system of special pay should be used as sparingly as
possible. It has recommended continuance of the existing rates as Special Pay.
The Fourth Pay Commission: The Central Government appointed the Fourth
Pay Commission in July 1983 in response to the demands made by the trade unions
for the revision of pay scales. The Commission submitted its report in June 1986. The
Commission was asked to examine the pay structure, conditions of service of Central
Government employees, taking into consideration the economic conditions in the
country, resources of the Government, pay scales of the Public Sector and State
Government employees. The Pay Commission has taken into consideration the
following factors:
1. Incidence of poverty in the country
2. Earnings of employees in State Government, Private Sector, Unorganised and
Agricultural Sectors.
3. Enforcement of the Minimum Wages Act
4. Plan allocations.
5. Cost of living index
6. Share of Government employees in the National Income.
The important recommendations of the Pay Commission are:
1. Reduction of Pay Scales from 156 to 136
2. Minimum Pay to the lowest paid Central Government employee is Rs.750/-
3. Rationalisation and liberalisation of dearness allowance formula.
4. Substantial enhancement of House Rent Allowance.
5. Reimbursement of Medical Expenses.
Government has modified these recommendations favourably and accepted them.
Some of the trade unions were satisfied with the recommendations. But certain other
trade unions criticised the Fourth Pay Commissions recommendations on the
following grounds.
a. Pay is not just, fair and equal for equal work and responsibilities.
b. Pay Commission created feelings to conflict among employees.
c. A number of anamolies cropped up with the implementation of pay scales
based on the recommendations of the Fourth Pay Commission.
There is a feeling among the trade unions circles that executives get a very high
salary including perks. Hence, they view that the level of executive compensation
should be contained in view of the objectives of socialistic pattern of society.
However, the existing provisions of managerial compensation would provide a clear
picture. Section 198 of the Companies Act, 1956 says that the total managerial
remuneration payable by a public limited company to its directors, secretaries and
treasures and managers in a financial year shall not exceed 11% of the net profits of
the company. Sections 198(4) of the Companies Act provides that in the absence or
inadequacy of profits, a maximum of Rs.50,000 may be paid to Managing Director
and all directors. In exceptional cases, the Government may permit payment of
higher salary. Section 309(4) of the Act stipulates certain ceilings on the
remuneration payable.
The Government issued guidelines in November, 1978. According to these guidelines,
the overall salary was restricted to Rs.72,000 per annum and perks were restricted to
Rs.62,000 per annum. Managers and organisations were highly critical about these
guidelines. They felt that they discourage initiative and hamper the skill of managers.
Peter F. Drucker, who was in India during November and December, 1978, thought
that such ceilings should cause migration of talent from India. He suggested that
Indian managers should not accept lower salaries and they should demand tax free
perks as is the custom in Sweden. Ratio between the lowest and highest salary of
managers in Sweden is 1:5. But the tax fee benefits are enormously granted to the
In view of the criticism, the government announced some liberalisations to the
guidelines. Overall ceiling is as it was at Rs.60,000 but it is increased to Rs.62,700 in
case of Bombay. Rates of house rent allowance to salary are raised to 45% in case of
Bombay, 40% in case of Delhi, 35% in case of Calcutta and 30% in case of other
places. An allowance of 10% is allowed for cooking gas, electricity etc. Expenditure on
pensionary benefits is increased upto 25% of the salary. Medical expenses allowance
equal to three months salary is allowed.
However, the Gujarat High Court in May, 1980 and the Delhi High Court in August,
1980 struck down the guidelines of November, 1978 as violative of Section 637-A, of
the Companies Act, 1956.
The Government in U.K. accepted fair remuneration for executives in public sector
with a view to attracting talent whereas the Government in India reduced the
managerial compensation in private sector with a view of equalising them with those
of public sector. Thus the government wishes to control its burden at the cost of
talent and skill. However, recently as part of liberalisation policy, government has
released, most of its restrictions on managerial compensation in private sector.
The term fringe benefits refer to various extra benefits provided to employees, in
addition to the compensation paid in the form of wage of salary. Balcher defines
these benefits as, "any wage cost not directly connected with the employee's
productive effort, performance, service or sacrifice". Cockmar, defines fringe benefits
as, "those benefits which are provided by an employer to or for the benefit of an
employee and which are not in the form of wages, salaries and time related
Different terms are used to denote fringe benefits. They were welfare measures,
social charges, social security measures, supplements, sub-wages, employee benefits
etc. The ILO described 'fringe benefits' as : "Wages are often augmented by special
cash benefits, by the provision of medical and other services or by payments in kind,
that forms part of the wage for expenditure on the goods and services. In addition,
workers commonly receive such benefits as holidays with pay, low cost meals, low-
rent housing etc. Such additions to the wage proper are sometimes referred to as
fringe benefits. Benefits that have no relation t o employment or wages should not be
regarded as fringe benefits even-though they may constitute a significant part of the
worker's total income".
Thus fringe benefits are those monetary and non-monetary benefits given to the
employees during and post-employment period which are connected with
employment but not to the employees contributions to the organisation.
The term 'fringe benefits' covers bonus, social security measures, retirement benefits
like Provident Fund, gratuity, pension, workmens compensation, housing, medical,
canteen, cooperative credit, consumer stores, educational facilities, recreational
facilities, financial advice and so on. Thus fringe benefits cover a number of employee
services and facilities provided by an employer to this employee and in some cases in
their family members also. Welfare of employee and his family members is an
effective advertising and also a method of buying the gratitude and loyalty of
employees. But, while some employers provide these services over and above the
legal requirements to make effective use of their work force, some restrict themselves
to those benefits which are legally required.
During the World War II certain non-monetary benefits are extended to employees
as a means of neutralising the effect of inflationary conditions. These benefits, which
include housing, health, education, recreation, credit, canteen etc., have been
increased from time to time as a result of the demands and pressures from trade
unions. It has been recognised that these benefits help employees in meeting some of
their lifes contingencies and to meet the social obligation of employers.
Most of the organisations have been extending the fringe benefits to their employees,
year after year, for the following reasons:
1. Employee demands: Employees demand a more and varied types of
fringebenefits rather than pay hike because of reduction in tax burden on the
part of employees and in view of the gallping price index and cost of living
2. Trade union demands: Trade unions complete with each other for getting
more and a new variety of fringe benefits to their members such as life
insurance, holiday resorts etc. If one union succeeds in getting one benefit, the
other union persuades management to provide a new model fringe. Thus, the
competition among trade unions within an organisation results in more and
varied benefits.
3. Employer's preference: Employers also prefer fringe benefits to pay-hike,
asfringe benefits motivate the employees for better contribution to the
organisation. It improves morale and works as an effective advertisement.
4. As a social security: Social security is a security that society furnishes
through appropriate organisation against certain risks to which its members
are exposed. These risks re contingencies of life like accidents and
occupational diseases. Employer has to provide various benefits like safety
measures, compensation in case of involvement of workers in accidents,
medical facilities etc. with a view to provide security to his employees against
various contingencies.
5. To improve human relations: Human relations are maintained when the
employees are satisfied economically, socially and psychologically. Fringe
benefits satisfy the workers economic, social and psychological needs.
Consumer stores, Credit facilities, Canteen, recreational facilities, etc. satisfy
the workers social needs, whereas retirement benefits satisfy some of the
psychological problems about the post-retirement life. However, most of the
benefits minimize economic problems of the employee. Thus fringe benefits
improve human relations.
The important objectives of fringe benefits are:
1. To create and improve sound industrial relations.
2. To boost up employee morale
3. To motivate the employees by identifying and satisfying their unsatisfied
4. To provide qualitative work environment and work life.
5. To provide security to the employees against social risks like old age benefits
and maternity benefits.
6. To protect the health of the employees and to provide safety to the employees
against accidents.
7. To promote employees welfare by providing welfare measures like recreation
8. To create a sense of belongingness among employees and to retain them.
Hence, fringe benefits are called golden hand-cuffs.
9. To meet requirements of various legislations relating to fringe benefits.
Organisations provide a variety of fringe benefits. Dale Yoder and Paul D. Standohar
classified the fringe benefits under four heads as given hereunder:
1. For employment security: Benefits under this head include
unemployment insurance, technological adjustment pay, leave travel pay,
overtime pay, leave for negotiation, leave for maternity, leave for grievances,
holidays, cost of living, bonus, call-back pay, lay-off pay, retiring rooms, jobs
to the sons / daughters of the employees and the like.
2. For health protection: Benefits under this head include accident
insurance, disability, insurance, health insurance, hospitalisation, life
insurance, medical care, stick benefits, sick leave etc.
3. For old age and retirement: Benefits under this category include: deferred
income plans, pension, gratuity, provident fund, old age assistance, old age
counselling, medical benefits for retired employees, travelling concession to
retired employees, jobs to sons / daughters of the decreased employee and the
4. For personal identification, participation and stimulation: This
category covers the following benefits: anniversary awards, attendance bonus,
canteen, cooperative credit societies, cooperative consumer societies,
educational facilities, beauty parlour services, housing, income, tax
paid, counselling, quality bonus, recreational programmes, stress counselling,
safety measures etc.
Robert H. Hoge classified the fringe benefits as follows:
1. Payment for time not worked: Benefits under this category include: sick
leave with pay, vacation pay, paid rest and relief time, paid lunch periods,
grievance time, bargaining time, travel time etc.
2. Extra-pay for time worked: This category covers the benefit such as:
premium pay, incentive bonus, shift premium, old age insurance, profit
sharing, unemployment compensation, Christmas bonus, Deevali or Pooja
bonus, food cost subsidy, housing subsidy, recreation etc.
The following classification of fringe benefits is adopted for discussion about the
fringe benefits in India.
This category includes :
(a) Hours of work,
(b) Paid holidays
(c) Shift premium,
(d) Holiday pay, and
(e) Paid vacation.
a. Hours of work: Section 51 of the Factories Act, 1948 specifies that no adult
worker shall be required to work in a factory for more than 48 hours in any
week. Section 54 of the Act restricts the working hours to 9 in any day. In
some organisations, the number of working hours are less than the legal
b. Paid holidays: According to the Factories Act, 1948, an adult worker shall
have a weekly paid holiday, preferably Sunday. When a worker is deprived of
weekly holidays, he is eligible for compensatory holidays of the same number
in the same month. Some organisations allow the workers to have two days as
paid holidays in a week.
c. Shift Premium: Companies operating second and third shifts, pay a
premium to the workers who are required to work during the odd hours shift.
d. Holiday pay: Generally organisations offer double the normal rate of the
salary to those workers, who work on paid holidays.
e. Paid vacation: Workers in manufacturing, mining and plantations who
worked for 240 days during a calendar year are eligible for paid vacation at
the rate of one day for every 20 days worked in case of adult workers and at
the rate of one day for every 15 days worked in case of child workers.
Physical and job security to the employee should also be provided with a view to
promoting security to the employee and his family members. The benefits of
confirmation of employee on the job creates a sense of job security. Further, a
minimum and continuous wage or salary gives a sense of security to the life. The
payment of Wages Act, 1936.
The Minimum Wages Act, 1948. The Payment of Bonus Act, 1965, provides income
security to the employees.
a. Retrenchment compensation: The Industrial Disputes Act, 1947 provides
for the payment of compensation in case of lay-off and retrenchment. The
non-seasonal industrial establishments employing 50 or more workers have to
give one months notice or one months wages to all the workers who are
retrenched after one years continuous service. The compensation is paid at
the rate of 15 days wage for every completed years of service with a maximum
of 45 days wage in a year. Workers are eligible for compensation as stated
above even in case of closing down of undertakings.
b. Layoff compensation: In case of lay off, employees are entitled to lay-off
compensation at the rate equal to 50% of the total of the basic wage and
dearness allowance for the period of their lay-off except for weekly holidays,
Layoff compensation can normally be paid upto 45 days in a year.
Employees safety and health should be taken care of in order to protect the
employee against accidents, unhealthy working conditions, and to protect the
workers productive capacity. In India, the Factories Act, 1948, stipulated certain
requirements regarding working conditions with a view to provide safe working
environment. These provisions relate to cleanliness, disposal of waste and effluents,
ventilation and temperature, dust and fume, artificial humidification, over-crowding,
lighting, drinking water, latrine, urinals, and spittoons. Provisions relating to safety
measures include fencing of machinery, work on or near machinery to motion,
employment of young persons on dangerous machines, striking gear and devices for
cutting off power, self-acting machines, prohibition of employment of women and
children near cotton openers, hoists and lifts, lifting machines, chains, ropes and
lifting tackles, revolving machinery, pressure plant, floors, excessive weights,
protection of eyes, precautions against dangerous fumes, explosive or inflammable
dust, gas, etc. Precautions in case of fire, power to require specifications of defective
parts or test of stability, safety of buildings and machinery etc.
Workmens compensation: In addition to safety and health measures, provision for
the payment of compensation has also been made under Workmens Compensation
Act, 1923. The Act is intended to meet the contingency of invalidity and death of a
worker due to an employment injury or an occupational disease, specified under the
Act at the sole responsibility of the employer. The Act covers the employees whose
wages are less than Rs.500 per month. Amount of compensation depends on the
nature of injury and monthly wages of the employee . Dependents of the employee
are eligible for compensation in case of death of the employee.
Today various medical services like hospital, clinical and dispensary facilities are
provided by organisations not only to employees but also to their family members.
Employees State Insurance Act, 1948 deals comprehensively about the health
benefits to be provided. This Act is applicable to all factories, establishments running
with power and employing 20 or more workers. Employees in these concerns and
whose wages do not exceed Rs.1,000 per month are eligible for benefits under the
Act. Benefits under this Act Include:
a. Sickness benefit: Insured employees are entitled to get cash benefit for a
maximum of 56 days in a year under this benefit.
b. Maternity benefit: Insured women employees are entitled to maternity
leave for12 weeks (six weeks before the delivery and six weeks after the
delivery) in addition to cash benefit of 75 paise per day or twice of sickness
benefit, whichever is higher.
c. Disablement benefit: Insured employees, who are disabled temporarily or
permanently (partial or total) due to employment injury add / or occupational
diseases are entitled to get the cash benefit under this head.
d. Dependent's benefit: If an insured person dies as a result of an
employment injury sustained as an employee, his dependents who are entitled
to compensation under the Act, shall be entitled to periodical payments
referred to as dependent benefit.
e. Medical benefit: This benefit shall be provided to an insured employee or to
a member of his family where the benefit is extended to his family. This
benefit is provided in the following forms:
Outpatient treatment, or attendance in a hospital, dispensary, clinic or other
institutions; or
by visits to the home of the insured person; or
treatment as in-patient in a hospital or other institutions.
An insured person shall be entitled to medical benefits during any week for which
contributions are payable, or in which he / she is eligible to claim sickness or
maternity benefit or eligible for disablement benefit.
Industrial life generally breaks joint family system. The saving capacity of the
employees is very low due to lower wages, high living cost and increasing aspirations
of the employees and his family members. As such, employers provide some benefits
to the employees, after retirement and during old age, with a view to create a feeling
of security about the old age. These benefits are called old age and retirement
benefits. These benefits include
(a) provident fund,
(b) pension,
(c) deposit linked insurance,
(d) gratuity, and
(e) medical benefit.
a. Provident Fund: This benefit is meant for economic welfare of the
employees. The Employees Provident Fund, Family Pension Fund and
Deposit Linked Insurance Act, 1952 provides for the institution of Provident
Fund for employees in factories and establishments. Provident Fund Scheme
of the act provides for monetary assistance to the employees and / or their
dependents during post-retirement life. Thus, this facility provides security
against social risks and this benefit enables the industrial worker to have
better retired life. Employees in all factories under Factories Act, 1948 are
covered by the Act. Both the employee and the employer contribute to the
fund. The employees on attaining 15 years of membership are eligible for
100% of the contributions with interest. Generally the organisations pay the
Provident Fund amount with interest to the employee on retirement or to the
dependents of the employee, in case of death.
b. Pension: The Government of India introduced a scheme of Employees
Pension Scheme for the purpose of providing Family Pension and Life
Insurance benefits to the employees of various establishments to which the
Act is applicable. The Act was amended in 1971 when Family Pension Fund
was introduced in the Act. Both the employer and the employee contribute to
this fund. Contributions to this fund are from the employee contributions to
the Provident Fund to the tune of 11/2% of employee wage.
Employee's Family Pension Scheme 1971 provides for Family Pension to the family of
a deceased employee as per the following rates:
This scheme also provides for the payment of a lumpsum amount of Rs.4,000 to an
employee on his retirement as retirement benefit and a lumpsum amount of
Rs.2,000 in the event of death of an employee as life insurance benefit.
Pay for Months Rate
Rs.800 or more 12% of the basic subject to a maximum
of Rs.150 as monthly pension.
More than Rs.200 15% of the basic subject to maximum of
but less than Rs.800 Rs.96 and aminimum of Rs.60 as monthly pension.
Rs.200 or less 30% of the basic subjects to a minimum of
Rs.60 as monthly pension
c. Deposit linked insurance: Employees Deposit Linked Insurance Scheme
was introduced in 1976 under the P.F.Act, 1952. Under this scheme, if a
member of the employees Provident Fund dites while in service, his
dependents will be paid an additional amount equal to the average balance
during the last three years in his account. (The amount should not be less than
Rs.1,000 at any point of time). Under the Employees Deposit Linked
Insurance Scheme, 1976, the maximum amount of benefit payable under the
deposit linked insurance is Rs. 10,000.
d. Gratuity: This is another type of retirement benefit to be provided to
an employee either on retirement or at the time of physical disability and to the
dependents of the deceased employee. Gratuity is a reward to an employee for his
long service with his present employer.
The payment of Gratuity Act, 1972 is applicable to the establishments in the entire
country. The Act provides for a scheme of compulsory payment of gratuity by the
management of factories, plantations, mines, oil fields, railways, shops and other
establishments employing 10 or more persons to their employees, drawing the
monthly wages upto Rs.1,600 per month.
Gratuity is payable to all the employees who render a minimum continuous service of
five years with the present employers. It is payable to an employee on his
superannuation or on his retirement or on his death or disablement due to accident
or disease. The gratuity payable to an employee shall be at the rate of 15 days wage
for every completed year of service or part thereof in excess of six months. Here the
wage means the average of the basic pay last drawn by the employee. The maximum
amount of gratuity payable to employee shall not exceed 20 months wage.
e. Medical benefit: Some of the large organisations provide medical benefits to
their retired employees and their family members. This benefit creates a feeling of
permanent attachment with the organisation to the employees even while they are in
However, most of the large organisations provide health services over and above the
legal requirements to their employees free of cost by setting up hospitals, clinics,
dispensaries and homeopathic dispensaries. Companys elaborate health service
programmes include:
a. Providing health maintenance service, emergency care, on the job treatment
care for minor complaints, health counselling, medical supervision in
rehabilitation, accident and sickness prevention, health education
programme, treatment in employee colonies etc.
b. Medical benefits are extended to employee family members and to the retired
employees and their family members.
c. Small organisations which cannot set up hospitals or large organisations (in
those places where hospitals cannot be set up because of various reasons)
provide the medical services through local hospitals and doctors. Sometimes
they provide the facility of reimbursement of medical expenses borne by the
Welfare and recreational benefits include: (a ) canteens, (b) consumer societies, (c)
credit societies (d) housing, (e) legal aid, (f) employee counselling, (g) welfare
organisations , (h) holiday homes, (i) educational facilities, (j) transportation (k)
parties and picnics, and (I) miscellaneous.
a. Canteens: Perhaps no employee benefit has received as much attention in
recent years as that of canteens. Some organisations have statutory obligation
to provide such facilities as Section 46 of the Factories Act, 1948 imposes a
statutory obligation to employers to provide canteens in factories employing
more than 250 workers. Others have provided such facilities voluntarily. Food
stuffs are supplied at subsidised prices in these canteens. Some companies
provide lunch rooms when canteen facilities are not available.
b. Consumer stores: Most of the large organisations located far from the
townsand which provide housing facilities near the organisation set up the
consumer stores in the employees colonies and supply all the necessary goods
at fair prices.
c. Credit Societies: The objective of setting up of these societies is to
encourage thrift and provide loan facilities at reasonable terms and
conditions, primarily to employees. Some organisations encourage employees
to form cooperative credit societies with a view to fostering self-help rather
than depending upon money lenders, whereas some organisations provide
loans to employees directly.
d. Housing: Of all the requirements of the workers, decent and cheap housing
accommodation is of great significance. The problem of housing is one of the
main causes for fatigue and worry among employees and this comes in their
way of discharging their duties effectively. Most of the organisations are
located very far from towns where housing facilities are not available. Hence
most of the organisations built quarters nearer to factory and provided cheap
and decent housing facilities to their employees, whilst a few organisations
provide and / or arrange for housing loans to employees and encourage them
to construct houses.
e. Legal aid: Organisations also provide assistance or aid regarding legal
matters to employees as and when necessary through company lawyers or
other lawyers.
f. Employee counselling: Organisations provide counselling service to the
employee regarding their personal problems through professional counselors.
Employee counselling reduces absenteeism, turnover tardiness etc.
g. Welfare organisations welfare officers: some large organisations set up
welfare organisations with a view to provide all types of welfare facilities at
one centre and appoint welfare officers to provide the welfare benefits
continuously and effectively to all employee family.
h. Holiday homes: As a measure of staff welfare and in pursuance of
governments policy, a few large organisations established holiday homes at a
number of hills stations, health resort and other centres with low charges of
accommodation, so as to encourage employees use this facility for rest and
recuperation in pleasant environment.
i. Educational facilities: Organisations provide educational facilities not only
to the employees but also to their family members. Educational facilities
include reimbursement of fee, setting up of schools, colleges, hostels,
providing grants in aid to the other schools where a considerable number
of students are from the children of employees. Further, the organisations
provide reading rooms and libraries for the benefit of employees.
j. Transportation: Companies provide conveyance facilities to their
employees from the place of their residence to the place of work as most of the
industries are located outside town and all employees may not get quarter
k. Parties and picnics: Companies provide these facilities with a view to
inculcating a sense of association, belongingness, openness, and freedom
among employees. These activities help employees to understand other better.
Organisations provide other benefits like organising games, sports, with awards,
setting up of clubs, community service activities, Christmas gifts, Deewali, Pongal
and Pooja and Pooja gifts, birthday gifts, leave travel concession, annual awards,
productivity / performance awards etc.
1. Critically evaluate the various criterion for Promotion decisions in organisations.
2. Transfer, Promotion and separation are effective methods to adjust the size of the
work-force of an enterprise to changing situations to be accomplished with the advice
and assistance of staff specialists. Elucidate.
3. Describe the various factors which influence wage and salary structure in Indian
4.What are "fringe benefits"? List the various types of fringe benefits offered by
Indian Industrial organisations to their employed.
5. What are the essentials of a good disciplinary system?
6. Write short notes on:
a) "Hot stove Rule"
b) "Principles of Natural Justice"
c) Causes of Indiscipline.
A Case Criteria of Promotion*
"XYZ' Port is one of the port commissioned several years after Independence of
India. It is a modern port in which cargo handling in most of the berths and jetties is
mechanised. It has a fairly large Engineering Division, which is responsible for the
repair and maintenance of all plants, equipments, machinery, vehicles and vessels
owned by the Port Authority. The Division also manages the mechanised cargo
handling operations in the Coal Berth, Iron Ore Berth and the Phosphates cum
Fertilizer Berth. The Division is headed by a Manager (Engineering) assisted, by two
Deputy Managers, one Assistant Manager and 7 Junior Assistant Manager (J.A.M.).
There are several other ranks of engineers executives below them, viz., Senior Plant
Engineers, Plant Engineers, Engineers (Design), Assistant Plant Engineers. These
non-managerial engineer-executives have been largely drawn from an older and
larger point in the neighbourhood, mainly on the basis of their working experience
and record of service. This helped the new port to solve the initial operational and
maintenance problems as it had difficulty in getting adequate number of qualified
engineers with experience in port engineering and management. All the Senior Plant
Engineers and most of the Plant Engineers and Assistant Plant Engineers of the Port
are holders of Engineering Diplomas with fairly long periods of service experience.
However, the few posts of the managerial rank in the Engineering Division have been
all earmarked for graduate engineers with some experience in Port administration.
About 5 years after the commissioning of the port, there was considerable increase of
cargo handling at the Coal Berth. In other sections and Berths of the Port also
activities were increasing, as a result of which there were more break downs and the
workload of the Division, both in terms of operations and maintenance, increased a
good deal. To handle the extra traffic, the Coal Berth and some other Berths switched
on to 3 shifts from the earlier 2 shifts operation. There was only a skeleton increase
in the manpower of the Division to handle the extra work load, which was mainly
handled on the basis of overtime, additional effort and improved productivity per
manhour. Fortunately in all these matters the two recognised unions did cooperate
and there was not much difficult in terms of labour relations, excepting problems of
individual grievances and adjustment of labour to the higher tempo of working. In
managing this transition to a higher level of activity the engineering executives
played a heroic role. There was practically no increase in the number of engineers at
any level. But they managed the heavier workload with tremendous efforts and
commitment on their part. Most of them had to overstay at work on a regular basis.
leave was a forgotten word for them and they had to rush from their homes at off-
hours to tackle sudden operational problems or emergency breakdowns. Particularly
the Senior Plant Engineers, who were the officers-in-charge at the Berths or the
Plants and the Plant Engineers, who were shifts in charge, had to bear the brunt
of all these challenges. They expected that the top management would reward them
mainly by creating new opportunities for promotion, as rewards in terms of higher
monetary remuneration could not be expected in a port, because the remuneration
policy was decided at the all India level only by the Union Ministry of Shipping.
The top management of XYZ Port also recognised the contributions made by the
non-managerial engineer executives, most of whom were Diploma-holders. They also
felt the latters urge for promotion and felt that something was to be done
particularly for the Senior Plants Engineers and the Plant Engineers. But the main
problem in this respect was the restriction posed by the minimum educational
criterion for promotion to the Junior Assistant Mangers rank and above. The Senior
Plant Engineers, in spite of their experience and good performance were debarred
from promotion to the post of the Junior Assistant Manager because of being
diploma holders. As the number of posts of Senior Plant Engineers was limited to 4
and the number of Plant Engineers was about three times of that none of them could
be promoted unless some of the Senior Plant Engineers were agitated. Although in
terms of experience they were superior to Junior Assistant Managers who were
mostly graduate Engineers of only 2 to 4 years experience and although they were on
the same pay scale, the Junior Assistant Managers, being managerial cadre by rank,
were supposed to give orders to the Senior Plant Engineers, who in turn were
expected to report to them. This was resented by the latter and taking advantage of
the increased workload and urgency of operations and maintenance problems during
this period, many Senior Plant Engineers dealt directly with the Deputy Mangers
without going through the Junior Assistant Managers. The Deputy Managers also
had to accommodate them without bothering about the formal channel, because
being the people directly operating at the site, the Senior Plant Engineers always had
the best first hand knowledge of the site problems. This also naturally created an
organisational problem and the top management had difficulty in sorting it out.
About the promotion issue of the Senior Plant Engineers to top management had a
real dilemma. On the one hand, they realised that considering their merit and
experience, they had a strong case for being promoted to the managerial positions.
On the other hand, they also understood that this would require a lowering of the
minimum educational qualification below the level of degree in engineering.
1. What may be the best way of rewarding the Senior Plant Engineers in this
particular case for their hard work and commitment?
2. What should be the most appropriate criterion for selection as a Junior Assistant
Manager in XYZ port promotion or recruitment?
3. What may be the plus and minus points for lowering the minimum educational
qualifications for selection to the post of the Junior Assistant Manager in this case?
Grass Cutter v. Gas Cutter*
In one public sector undertaking with a chequered past, a line manager was
appointed as the Chief of Personnel. Within a year taking up the assignment, he had
to sign a wage agreement with the workers union. The union at that time was
dominated by non-technical staff. The Unions charter of demands favoured the
interests of in dominant member groups. It asked for a significant revision in
gardeners pay, but was not equally vocal in pressing for the increase it the pay scales
of workers in certain technical grades. The management conceded these demands
because the union cooperated with them in keeping the burden of the pay revision
well within in the guidelines of the Bureau of Public Enterprises (BPE).
Once the agreement was signed and communicated to employees / members by the
management and the union respective , there was commotion among the technical
staff. They walked out of the union, formed a separate technical staff union and
marched round the company premises holding placards which read. "Here grass
cutters get more than the gas cutters". In the engineering assembly unit, till the pay
revision occurred, welding was a highly rated job. But not any longer. Now
gardeners get more than welders.
*Source: C.S.Venkataraman and B.K. Srivastava, Personnel Management and
Human Resources, Tata Mc-Graw Hill, New Delhi, 1991, PP 200-201
*Source: Ghash,subratesh, Personnel Management, Oxford IBH, New Delhi, 1990
PL 88-90
1. What happens if grass-cutters get more than gas-cutters?
2. Evaluate the pros and cons of the approach of both the management and
union in this incident?
3. List the lessons learnt. Suggest a way out of the problem on hand.
Two-Tier Pay Structure*
In 1976, the Indian subsidiary of a multinational refinery became a Government of
India company. The government company had announced an ambititious expansion
programme which meant doubling the work force in less than four years. In 1977 at
the time of wage revision, the union and management agreed to a two tier pay
structure. Those already employed will be eligible for a higher grade and those who
are (to be) recruited afresh will get a lower grade though jobs are similar in skill,
responsibility and effort. Both the union and the management justified that this is an
innovative practice widely followed in deregulated companies abroad, particularly
the airlines in North America.
1. Is it a fair agreement?
2. Would it contravene with the concept of equal pay for equal work?
*Source: C.S.Venkataraman and B.K. Srivastava, Personnel Management and
Human Resources, Tata Mc-Graw Hill, New Delhi, 1991, PP 200-201
- End Of Chapter -
Performance Appraisal
Appraising the performance of individuals, groups and organisations is a common
practice of all societies. While in some instances these appraisal processes structured
and formally sanctioned, in other instances they are an informal and integral part of
daily activities. Thus teachers evaluate the performance of students, bankers evaluate
the performance of creditors, parents evaluate the behaviour of their children, and all
of us, consciously or unconsciously evaluate our own actions from time to time. In
social interactions, performance evaluation is done in a haphazard and often
unsystematic way. But in organisations formal programmes of evaluating employee
and managerial performance conducted in a systematic and planned manner have
achieved widespread popularity in recent years.
During and after World War I, the systematic performance appraisal was quite
prominent. Credit goes to Walter Dill Scott for systematic performance appraisal
technique of man-to-man rating system (or merit rating).It was used for evaluating
military officers. Industrial concerns also used this system during 1920s and 1940s
for evaluating hourly paid workers. However, with the increase in training and
management development programmes from 1950s, managements started adopting
performance appraisal for evaluating technical, skilled, professional and managerial
personnel as a part of training and executive development programmes. With this
evolutionary process, the term merit-rating had been changed into employee
appraisal or performance appraisal. This is not a mere change in the name but a
change in the scope of the activity as the emphasis of merit-rating was limited to
personal traits, whereas performance appraisal covers results, accomplishments and
Performance appraisal is a method of evaluating the behaviour of employees in the
work-spot, normally, including both the quantitative and qualitative aspects of job
performance. Performance here refers to the degree of accomplishment of the tasks
that make up an individuals job. It indicates how well an individual is fulfilling the
job demands. Often the term is confused with effort, which means energy expanded,
and used in a wrong sense. Performance is always measured in terms of results. A
student, for example, may exert a great deal of effort while preparing for the
examination but may manage to get a poor grade. In this case the effort expanded is
high but performance is low. In order to find out whether an employee is worthy of
continued employment or not, and if so, whether he should receive a bonus, a pay
rise or a promotion, his performance needs to be evaluated from time to time.
When properly conducted performance appraisals not only let the employee know
how well he is performing but should also influence the employees future level of
effort, activities, results and task direction. Under performance appraisal we evaluate
not only the performance of a worker but also his potential for development. Some of
the important features of performance appraisal may be captured thus:
o Performance appraisal is the systematic description of an employee's job
relevant strengths and weaknesses.
o The basic purpose is to find out how well the employee is performing the job
and establish a plan of improvement.
o Appraisal process is always systematic in the sense that it tries to evaluate
performance in the same manner using the same approach.
o Appraisals are arranged periodically according to a definite plan.
o Performance appraisal is not job evaluation. Performance appraisal refers to
how well someone is doing an assigned job. Job evaluation determines how
such a job is worth to the organisation and, therefore, what range of pay
should be assigned to the job.
o Performance appraisal is a continuous process.
Historically performance appraisal has generally been employed for administrative
purposes, such as promotion and salary increases as well as individual development
and motivation. A study by Schuster and Kind all way back in 1974 confirmed this.
Of the 403 companies responding to the survey of Fortune's 500 largest industrial
corporations, 316 (78 per cent) reported the use of some type of formal performance
appraisal plan meant for administrative and developmental motivational purposes.
In a more recent survey 50 per cent of those who responded to the survey conducted
by Fombrun and Laud used the appraisal process in areas related to compensation
(merit pay increases). Communication (feedback), human resources planning
(performance potential, succession planning), career planning and internal
Performance appraisal is needed in order to:
1.Provide information about the performance ranks basing on which decisions
regarding salary fixation, confirmation, promotion, transfer and demotion are taken.
2.Provide feedback information about the level of achievement and behaviour of
subordinate. This information helps to review the performance of the subordinate,
rectifying performance deficiencies and to set new standards of work, if necessary.
3. Provide information which helps to counsel the subordinate.
4. Provide information to diagnose deficiency in employee regarding skill,
knowledge, determine training and developmental needs and to prescribe the means
of employee growth.
5. Provides information for correcting placement.
6.To prevent grievances and indiscipline.
Performance appraisal aims at attaining different purposes. They are:
1. To create and maintain a satisfactory level of performance
2. To contribute to the employee growth and development through training
development programmes.
3. To help the superiors to have a proper understanding about their
4. To guide job changes with the help of continuous ranking.
5. To facilitate fair and equitable compensation based on performance.
6. To facilitate validating of selection tests, interview techniques through
comparing their scores with performance appraisal ranks.
7. To provide information for making decisions regarding lay off retrenchment
8. To ensure organisational effectiveness through correcting employees for
standard and improved performance, and suggesting the change in employee
The major problems in performance appraisal are:
1. Rating biases: The problem with subjective measure (is that rating which is
not verifiable by others) has the opportunity for bias. The rater biases include
(a) halo effect, (b) the error of central tendency (c) the leniency and strictness
biases, (d) personal prejudice and (e) the recency effect.
a)Halo effect: It is the tendency of the raters to depend excessively on the rating of
one trait or behavioural consideration in rating all other traits or behavioural
considerations. One way of minimizing the halo effect is appraising all the employees
by one trait before to rate on the basis of another trait.
Please use headphones
b) The error of central tendency: Some raters follow play safe policy in rating by
rating all the employees around the middle point of the rating scale and they avoid
rating the people at both the extremes of the scale. They follow play safe policy
because of answerability to management or lack of knowledge about the job and
person is rating or least interest in his job.
c) The leniency and strictness: The leniency bias crops up when some rates have
a tendency to be liberal in their rating by assigning higher rates consistently. Such
ratings do not serve any purpose. Equally damaging one is assigning consistently low
d) Personal prejudice: If the rater dislikes any employee or any group, he may
rate them at the lower end, which may distort the rating purpose and affect the
career of these employees.
e) The recency effect: It is also known as recent behaviour bias. Here the rates
generally remember the recent actions of the employee at the time of rating and rate
on the basis of these recent action favourable or unfavourable rather than on
the whole activities.
2. Failure of the superiors in conducting performance appraisal and post-
performance appraisal interviews.
3. Most part of the appraisal is based on subjectivity.
4. Less reliability and validity of some of the performance appraisal techniques.
5. Negative ratings affect interpersonal relations and industrial relations.
6. Influence of external environmental factors and uncontrollable internal factors.
7. Feedback and post appraisal interview may have a setback on production.
8. Management emphasizes on punishment rather than development of an employee
in performance appraisal.
9. Some ratings particularly about the potential appraisal are purely based on guess
The other problems of performance appraisal reported by various studies are:
10. Relationship between appraisal rates and performance after promotions was not
11. Some superiors completed appraisal reports within a few minutes.
12. Absence of inter-rater reliability.
13. The situation was unpleasant in feedback interview.
14. Superiors lack the tact of offering the suggestions constructively to subordinates.
15. Supervisors were often confused due to too many objectives of performance
Performance appraisal system should be effective as a number of crucial decisions
are made on the basis of the score or rating given by the appraiser, which in turn, is
heavily based on the appraisal system. Appraisal system to be effective, should
possess the following essential characteristics:
1. Reliability and validity: Appraisal system should provide consistent,
reliable and valid information and data, which can be used to defend the
organisation even in legal challengers. If two appraises are equally qualified
and competent to appraise an employee with the help of same appraisal
technique, their ratings should agree with each other. Then the technique
satisfies the conditions of inter-rater reliability. Appraisals must also satisfy
the condition of validity by measuring what they are supposed to measure. For
example, if appraisal is made for potential of an employee for promotion, it
should supply the information and data relating to potentialities of the
employee to take up higher responsibilities and carry on activities at higher
2. Job relatedness: The appraisal technique should measure the performance
and provide information in job related activities / areas.
3. Standardisation: Appraisal forms, procedures, administration of
techniques, ratings, etc., should be standardised as appraisal decisions affect
all employees of the group.
4. Practical viability: The techniques should be practically viable to
administer, possible to implement and economical regarding cost aspect.
5. Legal sanction: It should have compliance with the legal provisions
concerned of the country.
6. Training appraisers: Because appraisal is important and sometimes
difficult, it would be useful to provide training to appraisers viz. some insights
and ideas on rating, documenting appraisals, and conducting appraisal
interviews. Familiarity with rating errors can improve rater performance and
this may inject the needed confidence in appraisers to look into performance
ratings more objectively.
7. Open communication: Most employees want to know how well they are
performing on the job. A good appraisal system provides the needed feedback
on a continuing basis. The appraisal interviews should permit both parties to
learn about the gaps and prepare themselves for future. To this end, managers
should clearly explain their performance expectations to their subordinates in
advance of the appraisal period. Once this is known it becomes easy for
employees to learn about the yardsticks and if possible, try to improve their
performance in future.
8. Employee's access to results: Employees should know the rules of the
game. They should receive adequate feedback on their performance. If
performance appraisals are meant for improving employee performance, then
withholding appraisal results would not serve any purpose. Employees simply
could not perform better without having access to this information. Permitting
employees to review the results of their appraisal allows them to detect any
errors that may have been made. If they disagree with the evaluation, they can
even challenge the same through formal channels.
9. Due process: It follows then that formal procedures should be developed to
enable employees who disagree with appraisal results (which are considered
to be inaccurate or unfair). They must have the means for pursuing their
grievances and having them redressed objectively.
Performance appraisal should be used primarily to develop employees as valuable
resources. Only then it would show promising results. When management uses it as a
whip or fails to understand its limitations, it fails.
The appraiser may be any person who has a thorough knowledge about the job
content, contents to be appraised, standards of contents, and who observes the
employee while performing a job. The appraiser should be capable to determining
what is more important and what is relatively less important. He should prepare
reports and make judgments without bias. Typical appraisers are: Supervisors, peers,
subordinates, employees themselves, users of service and consultants.
Supervisors: Supervisors include superiors of the employee, other superiors having
knowledge about the work of the employee and department head or manager.
General practice is that immediate superiors appraise the performance which in turn
is reviewed by the departmental head / manager. This is because supervisors are
responsible for managing their subordinates and they have the opportunity to
observe, direct and control the subordinate continuously. Moreover, they are
accountable for the successful performance of their subordinates. Sometimes other
supervisors, who have close contact with employee work also appraise with a view to
provide additional information.
On the negative side, immediate supervisors may emphasize certain aspects of
employee performance to the neglect of others. Also, managers have been known to
manipulate evaluations to justify their decisions on pay increases and promotions.
However, the immediate supervisor will continue to evaluate employee performance
till a better alternative is available. Organisations, no doubt, will seek alternatives
because of the weaknesses mentioned above and s a desire to broaden the
perspective of the appraisal.
Peers: Peer appraisal may be reliable if the work group is stable over a reasonably
long period of time and performs tasks that require interaction. However, little
research has been conducted to determine how peers establish standards for
evaluating others or the overall effect of peer appraisal on the groups attitude.
Whatever research was done on this topic was mostly done on military personnel at
the management or pre-management level (officers or officer candidates) rather than
on employees in business organisations. More often than not in business
organisations if employees were to be evaluated by their peers, the whole exercise
may degenerate into a popularity contest, having the way for the impairment of work
Subordinates: The concept of having superiors rated by subordinates is being used
in most organisations today, especially in developed countries. For instance in most
U.S. universities students evaluate a professors performance in the class room. Such
a method can be useful in other organisational settings too provided the
relationships between superiors and subordinates are cordial. Subordinates ratings
in such cases can be quite useful in identifying competent superiors. The rating of
leaders by combat soldiers is an example. However, the fear of appraisal often
compels a subordinate to be dishonest in his ratings. Though useful in universities
and research institutions, this approach may not gain acceptance in traditional
organisations where subordinates do not have much discretion.
Self-appraisal: If individuals understand the objectives they are expected to
achieve and the standards by which they are to be evaluated, they are to a great
extent in the best position to appraise their own performance. Also, since employee
development means self-development , employees who appraise their own
performance may become highly motivated. Exhibit 1 provides a self appraisal
form which might be useful in work settings.
Users services: Employee performance in service organisations relating to
behaviours, promptness, speed in doing the job, and accuracy, can be better judged
by the customers or users of services. For example, teachers performance is better
judged by students and the performance of a conductor in passenger road transport
is better judged by passengers.
EXHIBIT 1. Self-Appraisal Form A Model
Name: Department:
Designation: Employee Code No:
Qualification: Scales of pay and total salary:
Category Group:
1. Name and Designation of the immediate superior
2. Specify the nature of supervision received from the supervisor
3. Indicate your relationship with your superior
4. Number of subordinates
5. Indicate the nature of duties of your subordinates
6. Specify the nature of follower-ships of your subordinates.
7. Indicate the level of cooperation received from your subordinates.
8. How many times your subordinate refused your orders.
9. Does your subordinate appreciate your style of leadership?
10. Do you maintain sound human relations with your sub-ordinates?
11. Do you attend to your work punctually?
12. Specify the level of your self-expression both written and oral.
13. Indicate your level of work with others.
14. Do you prefer team management?
15. Specify the nature and level of your initiative.
16. To what extent you know about your job and the organisation.
17. Specify the level of our technical and other skills.
18. Indicate your ability to understand new things.
19. Comment about your originality and resourcefulness.
20. Identify the areas of work to which you are best suited.
21. Comment about your level and nature of judgment skills.
22. Do you have skills of integrity?
23. Do you accept responsibility?
24. List out your achievements during the present year.
25. Would like to develop yourself? If yes, specify the areas of technical,
managerial and human relation areas.
26. Are you interested in specialised jobs or generalised jobs?
27. Indicate the improvements in your work performance.
28. To what extent you availed the leave facility?
29. Specify your participation in extra-curricular activities.
30. Provide any other related information.
Signature of the
Comments of Immediate Superior
Sometimes consultants may be engaged for appraisal when employees or employers
do not trust supervisory appraisal and management does not trust the self-appraisal
or peer appraisal or subordinate appraisal. In this situation, consultants are trained
and they observe the employee at work for sufficiently long time for the purpose of
In view of the limitations associated with each and every method discussed above,
several organisations follow a multiple rating system wherein several superiors
separately fill out rating forms on the same subordinate. The results are then
Informal appraisals are conducted whenever the supervisor or personnel manager
feels it necessary. However, systematic appraisals are conducted on a regular basis,
say for example every six months or annually. One study of 244 firms found that
appraisals were most often conducted once a year, usually near the employees
anniversary date. Recent research suggests, however, that more frequent feedback
correlates positively with improved performance. Research has also indicated that
appraisals for developmental purposes should be separated from those for salary
Performance appraisal is a nine step process. At the first stage, performance
standards are established based on job description and job specification. The
standards should be clear, objective and incorporate all the factors.
The second stage is to inform these standards to all the employees including
The third stage is following the instructions given for appraisal measurement of
employee performance by the appraisers through observation, interview, records and
Fourth stage is finding out the influence of various internal and external factors on
actual performance. The influence of these factors may be either inducing or
hindering the employee performance. The measured performance may be adjusted
according to the influence of external and internal factors. The performance derived
at this stage may be taken as actual performance.
Fifth stage is comparing the actual performance with that of other employees and
previous performance of the employees and others. This gives an idea where the
employee stands. If performance of all the employees is ranked either too high or too
low, there may be something wrong with the standards and job analysis.
Sixth stage is comparing the actual performance with the standards and finding out
the deviations. Deviations may be positive or negative. If employees performance is
more than the standards, it is positive deviation and vice versa is negative deviations.
Seventh stage is communicating, the actual performance of the employee and other
employees doing the same job, and discuss with him about the reasons for positive or
negative deviations from the pre-set standards as the case may be.
Eighth stage is suggesting necessary change in standards, job analysis, internal and
external environment.
Ninth stage is follow up performance appraisal report. This stage includes guiding,
counselling, coaching and directing the employee or making arrangements for
training and development of the employee in order to improve performance. If the
actual performance is very poor and beyond the scope of improvement, it may be
necessary to take steps for demotion or retrenchment or any other suitable measure.
- End Of Chapter -
With the evolution and development of appraisal system, a number of techniques or
methods of performance appraisal have been developed.
The important traditional techniques or methods of performance appraisal include:
i) Straight Ranking Method
ii) Paired Comparison Method (Man-to-Man comparison Method)
iii) Grading Method
iv) Linear Rating Method
v) Forced Distribution Method
vi) Free Easy Method
vii) Critical Incident Method
viii) Group Appraisal Method
ix) Field Review Method
Under this method the employees are ranked from best to worst on some
characteristics. The rater first finds the employee with the highest performance and
the employee with the lowest performance in that particular job category and rates
the former as the best and the latter as the poorest. Then the rater selects the next
highest and next lowest and so on until the rates all the employees in that group.
Consider all of your employees in terms of their total performance. Then select the
one you would consider as having best total performance. Put his name in Column 1
below, on the first line, numbered 1. Next pick out the person having the worst total
performance. Put his name at the bottom of Column II, on the line numbered 20.
Now from the remaining names, select the one having the best total performance.
Put his name in the first column on line 2. Keep up this process until all names have
been placed in the scale.
Column I (best) Column II (Worst)
1..................................... 11...........................................
2..................................... 12...........................................
3...................................... 13...........................................
4....................................... 14...........................................
5....................................... 15.............................................
6........................................ 16.............................................
7........................................ 17..............................................
8......................................... 18..............................................
9.......................................... 19..............................................
10......................................... 20...............................................
Fig. Ranking Scale
Ranking can be relatively easy and inexpensive, but its reliability and validity may be
open to doubt. It may be affected by rater bias or varying performance standards.
Ranking also means that somebody would always be in the backbench. It is possible
that the low ranked individual in one group may turn-out to be a superstar in
another group. One important limitation of the ranking method is that the size of the
difference between individuals is not well defined. For instance, there may be little
difference in performance between individuals ranked second and third, but a big
difference between those ranked third and fourth.
This method is relatively simple. Under this method, the appraiser ranks the
employees by comparing one employee with all other employees in the group, one at
a time. As illustrated in Fig. (below) this method results in each employee being
given a positive comparison total and a certain percentage of the total positive
evaluation. This percentage of positive comparisons gives the paired comparison
method an advantage over other comparative methods (ranking and forced
Example A B C D E
A - A A A A
B - - C D E
C - - - C E
D - - - - E
E - - - - -
To compute Employees : Positive evaluations:
Number of positive evaluations: x100 = Employeess % Superior
Total number of evaluations
Employee A Employee B Employee C Employee D Employee E
4/4x 100 =100% 0/4x100=0% 2/4x100 =
50% 1/4x100=25% 3/4x100=75%
Fig. Paired Comparison of Employees.
Paired comparison does not force distribution of employees in each department. For
instance, if a department has two outstanding employees and six average employees
and paired comparison is correctly utilised, then those two employees will get a much
higher percentage of positive comparison than the other six. Paired comparison
method could be employed fairly easily where the number of employed is less. The
number of comparisons required equals N (N-1) /2. This means that where the
number is fairly large (for instance for 20 employees 190 comparisons would be
necessary) the technique may be time consuming. Another limitation of this
technique is that employee are simply compared to each other on total performance
rather than specific job criteria.
Under this system the appraiser appraises the employee on the basis of selected
features. These features include analytical ability, cooperativeness, dependability,
self-expression, job knoweldge, judgment, leadership, organising skills etc. The
employees would be classified as Group A (outstanding). Group B (very good), Group
C (average), Group D (fair), Group E (poor). The actual performance of employees is
compared with the group specifications, and the group is allotted to the employee to
which he best suits.
Graphic rating scales compare individual performance to an absolute standard. In
this method, judgments about performance are recorded on a scale. This is the
oldest and widely used technique. This method is also known as linear rating scale or
simple rating scale. The appraisers are supplied with printed forms, one for each
employee. These forms contain a number of objectives, behaviour and traits based
qualities and characters to be rated like quality and volume of work, job knowledge,
dependability, initiative, attitude etc., in the case of workers and analytical ability,
creative ability, initiative, leadership qualities, emotional stability in the case of
managerial personnel. These forms contain rating scales.
Rating scales are of two types, viz., continuous rating scale and discontinuous rating
scales. In continuous order like 0, 1, 2, 3, 4 and 5 and in discontinuous scale the
appraiser assigns the points to each degree. Performance regarding each character is
known by the points given by the rater. The points given by the rater to each
character is known by the points given by the rater.
The points given by the rater to each character are added up to find out the overall
performance. Employees are ranked on the basis of total points assigned to each one
of them.
One reason for the popularity of the rating scales is its simplicity, which permits
many employees to be quickly evaluated. Such scales have relatively low design cost
and effective of administration. They can easily pinpoint significant dimensions of
the job. The major drawback of these scales is their subjectivity and low reliability.
Another limitation is that the descriptive words often used in such scales may have
different meanings to different raters.
The rater may rate his employees at the higher or at the lower and of the scale under
the earlier methods. Forced distribution method is developed to prevent the raters
from rating too high or too low. Under this method, the rater after assigning the
points relating to the performance of each employee has to distribute his ratings in a
pattern to conform to normal frequency distribution as shows below.
Thus, similar to the ranking technique, forced distribution requires the raters
(supervisors) to spread their employee evaluation in a predetermined distribution.
Like ranking , this method eliminates central tendency and leniency biases. However,
in this method employees are placed in certain ranked categories but no ranked
within the categories. Quite often work groups do not reflect a normal distribution of
individual performance. This method is based on the rather
questionable assumption that all groups of employees will have the same
distribution of excellent, average and poor performance. If one department has all
outstanding employees, the supervisor would find it extremely difficult to decide who
should be placed in the lower categories. Difficulties can also arise when the rater
must explain to the employee why he was placed in one grouping and others were
placed in higher groupings.
Please use headphones
Force Choice Method: This method was developed at the close of World War II.
Under this method, a large number of statements in groups are prepared. Each group
consists of four descriptive statements (tetra) concerning employee behaviour. Two
statements are most descriptive (Favourable) and two least descriptive
(unfavourable) of each tetra (Fig) Sometimes there may be five statements in each
group out of which one would be neutral. The actual weightages of the statements
are kept secret. The appraiser is asked to select one statement that mostly described
employee's behaviour out of the two favourable statements and one statement from
the two unfavourable statements. The items are usually a mixture of positive and
negative statements. The intent is to eliminate or greatly reduce the raters personal
bias, specifically the tendency to assign all high or low ratings. The items are
designed to discriminate effective from ineffective workers as well as reflect valuable
personal qualities.
Fig. Forced Choice Method
It is difficult to construct and validate the statements under the forced choice
method, especially for relatively small organisations. For raters who are not properly
trained, it may be difficult to choose among statements that are equally desirable or
equally undesirable. Since they, most often, do not know which of the statements in a
given group have the discriminative power to draw the certain between good and
poor workers, they may fail to live up in the expectations and provide an objective
evaluation. Further, it may be time consuming to prepare statements that suit the
demands of a particular job or company. Finally, it may be unpalatable for the raters
to believe that they cannot make an objective evaluation and hence their freedom
curtailed to size.
This method requires the manager to write a short essay describing each employee's
performance during the rating period. This format emphasizes evaluation of overall
performance, based on strengths/weakness of employee performance, rather than
specific job dimensions. By asking supervisors to enumerate specific examples of
employee behaviour, the essay technique minimizes supervisory bias and halo effect.
The time involved in writing separate essays about each employee can be formidable.
Essays are not amendable for evaluation and analysis: fifty essays describing
different employees performance cannot be tied to merit increases and promotion
possibilities because there is no common standard. Another inherent limitation of
this method is that the evaluators may have unequal skills in writing the essays. A
skillful writer can present a more dramatic case about an employee than an awkward
writer or supervisor. Thus the quality of the ratings depends, not actually on
employee performance, but on the writing ability of the rater.
Employees are rated discontinuously i.e., once in a year or six months under the
earlier methods. The performance rated may not reflect real and overall performance
as the rater would be serious about appraisal just two or three weeks before the
appraisal. Hence a continuous appraisal method i.e., critical incident method has
been developed. Under this method, the supervisor continuously records the critical
incidents of the employee performance or behaviour relating to al characteristics
(both positive and negative) in a specially designed note book (Fig.). The supervisor
rates the performance of his subordinates on the basis of notes taken by him. Since
the critical incident method does not necessarily have to be a separate rating system,
it can be fruitfully employed as documentation of the reasons why an employee was
rated in a certain way.
Fig: Model of Recording Critical Incidents for a Bank Officer
The critical incident method has the advantage of being objective because the rater
considers the records of performance rather than the subjective points of opinion, for
example, mood, emotional balance, relationship between superior and subordinate.
This certainly help in reducing bias in the evaluation. However, the system is not
without drawbacks. First what constitutes a critical incident is not defined in the
same manner by all raters. The question of discounting precious time of the executive
is also involved here. Because of the time required to write complete profiles of
critical incidents, managers can be asked instead to record sketchy notes of their
observations noting the date and some other reminder of the event. Later these could
be transformed into detailed descriptions for completing a rating scale of some kind.
Associated with this method is the problem of recency of events. The recency or
severity of events, sometimes may influence the opinion of raters. More often than
not, the employee might have done something 'critically good and excellent' but the
supervisor concerned may not have been present and hence the event not recorded.
Further, the method can result in employees becoming concerned about what the
superior writes about them. Employees may begin to fear the manager's "blank
Under this method, an employee is appraised by a group of appraisers. This group
consists of the immediate supervisor of the employer, other supervisors who have
close contact with the employees work, manager or head of the department and
consultants. The head of the department or manager may be the Chairman of the
group and the immediate supervisor may act as the Coordinator for the group
activities. This group uses any one or multiple techniques discussed earlier. The
immediate supervisor enlightens other members about the job characters, demands,
standards of performance etc. Then the group appraises the performance of the
employee , compare the actual performance with standards, finds out the deviations,
discusses the reasons therefore, suggests ways for improvement of performance,
prepares action plan, studies the need for change in the job analysis and standards
and recommends change, if necessary. This method is widely used for purposes of
promotion, demotion and retrenchment.
A trained employee from the personnel department interviews the line managers/
supervisors with a view to appraise the performance of the subordinates of the line
manager/supervisors. The trained employee collects the opinions of the line manager
about the progress of his subordinates. Level of performance, their strengths and
weaknesses, outstanding ability, promotability, possible plans of action. Interviews
are conducted through oral communication. The appraiser takes the detailed notes
and gets the approval of the line manager and places it in the employee file.
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The traditional techniques of performance appraisal emphasize either on the task or
the worker's personality. Modern techniques bring a balance between these two.
Modern techniques of Performance Appraisal include:
i) Appraisal by Management by Objectives (MBO)
ii) Assessment Centre Method
iii) Human Resource Accounting Method
iv) Behaviourably Anchored Rating Scales
Although the concept of management by objectives was advocated by Peter F.
Drucker way back in 1954, it was described only recently as the larger rage in
performance appraisal. Refinements brought out by George Odiorne, Valentine,
Humble and others have enriched the concept and made it more acceptable all over
the globe as an appraisal technique. During the last decade about 50 organisations
have adopted MBO in their work settings. Some of the companies which
implemented MBO reported excellent results, others disappointments, and many in-
Stated briefly, MBO is a process whereby the superior and subordinate managers of
an organisation jointly identify its common goals, define each individual's major
areas of responsibility in terms of results expected of him, and use these measures as
guides for operating the unit and assessing the contribution of its members. Thus
MBO focuses attention on participative set goals that are tangible, verifiable and
measurable. The emphasis is on what must be accomplished rather than how it is to
be accomplished. Generally, the MBO process if undertaken along the following
o The subordinate and superior jointly determine goals to be accomplished
during the appraisal period and what level of performance is necessary for the
subordinate to satisfactorily achieve special goals.
o During the appraisal period the superior and subordinate update and after
goals as necessary due to changes in the business environment.
o Both superior and subordinate decide if goals were met by the employee and
discuss, if not, why not. Take into consideration the reason(s) for deviation
from expected performance such as a strike, lock-out, market change, or
labour dispute.
o News goals and performance objectives are determined by the superior and
employee for the next period based on performance levels.
In traditional approaches to performance evaluation, personal traits of employees
are often employed as criteria for appraising performance. The evaluators generally
assume the role of judges drawing distinctions between good and bad performance.
With MBO the focus of the appraisal process shifts from the employees personal
attributes to job performance. The supervisor now plays a supportive role. He tries,
on a day to day basis, to help the employee reach the agreed upon goals. He
counsels and coaches. Also, the employees role evolves from that of a by stander to
that of active participant. He plays a key role in setting the standards and
determining the measurement scheme. Individuals establish goals with their
superiors jointly and then jointly establish goals with their superiors and then are
given some latitude in the means used to achieve their objectives.
At the end of the appraisal period, the employee and supervisor meet for an appraisal
interview. They review first the extent to which the goals have been accomplished
and second, the actions needed to solve remaining problems. Since the supervisor
keeps communication channels open throughout the appraisal period, the employee
gets an opportunity to work in a give-and-take atmosphere. The problem solving
discussion that takes place during the appraisal interview is primarily designed to
help the employee in progressing according to the plan, to learn from mistakes and
develop. One of the unique features of MBO is that goals are determined before the
appraisal period begins. Previously discussed methods of appraisal focus attention
on performance direction before the appraisal period begins. Thus, the MBO process
is developmental in that it directs employees to move in desired directions and reach
the expected level of achievement.
Quite often, while assessing MBO as an appraisal tool, people comment that, 'MBO is
okay in theory but no good in practice'. There is an element of truth in this
statement. In practice all leadership styles may not be compatible with the
participative culture advocated by MBO. The reward punishment psychology
differentiates between star performers and poor performers constantly forcing
employees to improve their performance day in day out. All jobs do not fit in with the
philosophy advocated by MBO. An assembly-line worker, for instance, usually has so
little job flexibility that performance standards and objectives are already
determined. Finally it is no easy to make a comparative assessment of multiple
personnel working in an organisation. In traditional appraisal techniques, all
personnel are rated on common factors. In MBO, each person will have different sets
of goals of non-comparable complexity and degree of accomplishment.
This method of appraising was first applied in German Army in 1930. Later business
and industrial houses started using this method. This is not a technique of
performance appraisal by itself. In fact, it is a system or organisation, where
assessment of several individual is done by various experts by using various
techniques. These techniques include the methods discussed in this chapter in
addition to in-basket, role playing, case studies, stimulation exercises, structured
insight, transactional analysis etc.
In this approach individuals from various departments are brought together to spend
two or three days working on an individual or group assignment similar to the ones
they would be handling when promoted. Observers rank the performance of each and
every participant in order of merit. Since assessment centres are basically meant for
evaluating the potential of candidates to be considered for promotion, training or
development, they offer an excellent means for conducting evaluation processes in an
objective way. All assesses get an equal opportunity to show their talents and
capabilities and secure promotion based on merit. Since evaluators know the
position requirements intimately and are trained to perform the evaluation process
in an objective manner, the performance ratings may find favour with majority of the
employees. A considerable amount of research evidence is available to support the
contention that people chosen by this method prove better than those chosen by
other methods. The centre enables individuals working in low status departments to
compete with people from well-known departments and enlarge their promotion
chances. Such opportunities, when created on a regular basis, will go a long way in
improving the morale of promising candidates working in less-important positions.
Human Resources Accounting deals with cost of and contribution of human
resources to the organisation. Cost of the employee includes cost of manpower
planning, recruitment, selection, induction, placement, training, development, wages
and benefits etc. Employee contribution is the money value of employee service
which can be measured by labour productivity or value added by human resources.
Cost of human resources may be taken as standard. Employee performance can be
measured in terms of employee contribution to the organisation. Employee
performance can be taken as positive when contribution is more than the cost and
performance can be viewed as negative if cost is more than contribution. Positive
performance can be measured in terms of percentage of excess of employee
contribution over the cost of employee. Similarly negative performance can be
calculated in terms to the cost of employee. These percentage can be ranked to 'Zero
Rank Rating Percentage of Surplus / Deficit of contribution to cost
of Employee
1. Extremely good performance Over 200
2. Good performance 150 200
3. Slightly good performance 100 150
4. Neither poor nor good 0 100
5. Slightly poor performance 0
6. Poor performance 0 (-50)
7. Extremely poor performance (50) (-100)
This technique has been fully developed and still it is in the transition stage.
The Behaviourally Anchored Rating Scales (BARS) method combines elements of the
traditional rating scales and critical incidents methods. Using BARD major
component, job behaviour are described more objectively as being effective and
ineffective. The method employs individuals who are familiar with a particular job to
identify its major components. They then rank and validate specific behaviours for
each of the components.
How to construct BARS? Developing a BARS follows a general format which
combines techniques employed in the critical incident method and weighted
checklist rating scales. Emphasis is on pooling the thinking of people who will use the
scales as both evaluators and evaluates.
Step I: Collect Critical Incidents: People with knowledge of the job to be
probed, such as job holders and supervisors, describe specific examples of effective
and ineffective behaviour related to job performance.
Step II: Identify Performance Dimensions: The people assigned the task of
developing the instrument cluster the incidents into a small set of key performance
dimensions. Generally between five and ten dimensions account for most of the
performance. Examples of performance dimensions include technical competence,
relationships with customers, handling of paper work, and meeting day-to-day
deadlines. While developing varying levels of performance for each dimension
(anchors), specific examples of behaviour should be used, which would later be
scaled in terms of good, average or below average performance.
Step III: Reclassification of Incidents: Another group of participants who are
knowledgeable about the job is instructed to retranslate or reclassify the critical
incidents generated (in step II) previously. They are given the definition of job
dimension and told to assign each critical incident to the dimension that it best
describes. At this stage incidents for which there is less than 75 per cent agreement
are discarded as being too subjective.
Step IV: Assigning scale values to the incidents: Each incident is then
rated on a one to seven or one to nine scale with respect to how well it represents
ineffective performance; the top scale value indicates very effective performance. The
second group of participants usually assigns the scale values. Means and standard
deviations are then calculated for the scale values assigned to each incident. Typically
incidents that have standard deviations of 1.50 or less (on a 7 point scale) are
Step V: Producing the final instrument: About six or seven incidents for
each performance dimension all having met both the retranslation and standard
deviation criteria will be used as behavioural anchors. The final BARS instrument
consists of a series of vertical scales (one for each dimension) anchored (or
measured) by the final incidents. Each incident is positioned on the scale according
to its mean value.
Because the above process typically requires considerable employee participation, its
acceptance by both supervisors and their subordinates may be greater. Proponents of
BARS also claim that such a system differentiates among behaviour, performance,
and results and consequently is able to provide a basis for setting developmental
goals for the employee. Because, it is job specific and identifies observable and
measurable behaviour, it is more reliable and valid method for performance
Researchers, after surveying several studies on BARS, concluded that "despite the
intuitive appeal of BARS, findings from research have not been encouraging". It has
not proved to be superior to other methods in overcoming rater errors or in achieving
psychometric soundness. A specific deficiency is that the behaviours used are activity
oriented rather than results oriented. This creates a potential problem for
supervisors doing the evaluation, who may be forced to deal with employees who are
performing the activity but not accomplishing the desired goals. Further, it is time
consuming and extensive to create BARS. They also demand several appraisal forms
to accommodate different types of jobs in an organisation. In a college, lecturers,
office clerks, library staff, technical staff and gathering staff all have different jobs
separate BARS forms would need to be developed traditional techniques such as
graphic rating scales. Decotis concluded that: "It may be time to quilt hedging about
the efficacy of behavioural scaling strategies and conclude that they offer no clear-cut
advantages over more traditional and easily developed methods of performance
The following example helps to understand this technique. The critical incidents
relating to cashier in a Bank are:
A - can expect to identify the different denominations of Indian currency
B - can expect the cashier to know the difference between currency
issued by Reserve Bank of India and others.
C - can expect the cashier to identify torn notes which can not be
D - can expect to know various deposit schemes of the bank.
E - can expect to know the names of Board of Directors of Reserve Bank
of India.
F - can expect to have the skill of arranging notes for building
G - can expect to know the names of foreign currencies.
H - can expect to identify various foreign currencies.
I - can expect to know the exchange rates.
J - can expect to know the denominations of various foreign currencies.
Incidents A, B, and C can be formed into a subset, incidents G, H, I and J can be
formed into another subset. These two subsets can be forced into a cluster, which can
be used as behavioural anchors. This cluster can be titled as job knowledge.
Behaviourally Anchored Rating Scale for the dimensions of job knowledge for bank
cashier is shown in the Figure below.
Please use headphones
-End Of Chapter -
Employees at the grass root level experience a sense of frustration because of low
level of wages, poor working conditions, unfavourable terms of employment,
inhuman treatment by their superiors and the like, whereas managerial personnel
feet frustrated because of alternation over their conditions of employment,
interpersonal conflicts, role conflicts, job pressures, lack of freedom in work, absence
of challenging work etc.
Certain values were attributed to work in the past. Years ago work was worship and
people had sincerity and commitment to work. But todays employee will not believe
in such values of work. He works for his salary, he works hard if the conditions of
work are conducive and congenial and terms of employment are favourable to him.
As such, the work homes have been changing from time to time.
Work norms in modern industrial society indicate that:
(i) Employees role in industry is different from his role in the family
(ii) Superior knows the best and he has the right to impose on the subordinates
(iii) Rules are for employees and they have to follow them and
(iv) Employer has the right to layoff the worker due to marketing and technological
Contemporary problems of managerial personnel: Due to these work norms, the
managerial personnel at the middle and higher levels in the organisation hierarchy
face a variety of problems. They are dissatisfied with the strict economic functions of
the job and with the social relationships in the organisation consequent to the
mechanisation and automation of the industry. Further, disregard by others and less
and less utilization of capabilities and skills also caused frustration among the
managerial personnel.
Employees also experience alienation which may result from poor design of socio-
technical systems. Alienation is a feeling of powerlessness, lack of meaning,
loneliness, boredom, lack of involvement and lack of attachment to job. The workers
at the lower level are not happy with their work due to tight schedule of work, speed
of machine, close watch and supervision and less social interaction. Even the
ministerial staff complains that they are un happy with the job due to routine nature
of work and fixation of schedules and standards. Thus, job discontent is due to the
limited scope of the job, short cycle of operations, and lack of opportunity to exercise
discretion, initiative, and existence of bureaucratic controls, oppressive supervision,
low wages, poor working conditions etc.
Job discontent and job pressures have their substantial effect on employee's health in
the form of reduction in general happiness, increases in smoking, drinking, putting
on excess body weight etc. Frustration would further cause heart disease, joint pains,
etc. Frustration might also be due to absence of recognition, tedious work, unsound
relations with co-workers, poor working conditions, low self-esteem, occupational
stress, work overload, monotony, fatigue time pressures, lack of stability, security etc.
In view of the contemporary managerial problems, the present day employees are
much concerned about high wages, better benefits, challenging job etc.
There has been much concern today about providing employees decent wages,
convenient working hours, conducive working conditions etc. The term 'Quality of
Worklife' has appeared in Research Journals and the press in USA only in 1970s.
There is no generally accepted definition about this term. However, some attempts
were made to describe the term quality of worklife (QWL). It refers to the
favourableness or unfavourableness of a job environment for people. QWL means
different things to different people. J.Richard and J.Lloy define QWL as the degree to
which members of a work organisation are able to satisfy important personal needs
through their experience in the organisation.
Quality of worklife improvements are defined as any activity which takes place at
every level of an organisation, which seeks greater organisational effectiveness
through the enhancement of human dignity and growth.... a process through which
the stakeholders in the organisation management, unions and employees learn
how to work together better.... to determine for themselves what actions, changes
and improvements are desirable and workable, in order to achieve the twin and
simultaneous goals of an improved quality of life at work for all members of the
organisation and grater effectiveness for both the company and the unions.
Please use headphones
Trade unions claim that they are responsible for the improvement in various facilities
to workers, whereas management takes credit for improved salaries, benefits and
facilities. However, P/HR manager has (identified) specific issues in QEL, besides
normal wages, salaries, fringe benefits etc and takes lead in providing them so as to
maintain higher order QWL, Klott, Mundick and Schuster suggested 11 major QWL
issues. They are:
1. Pay and stability of employment: Good pay still dominates most of the
other factor in employee satisfaction. Various alternative means for providing
wages should be developed in view of increase in the cost of living index,
increase in levels and rates of income tax and professional tax. Stability of
employment is guaranteed to a certain extent in India. However, stability to a
greater extent can be provided by enhancing the facilities for human resources
2. Occupational stress: Stress is a condition of strain on ones emotions,
thought process and physical condition. Stress is determined by the nature of
work, working conditions, working hours, pause in the work schedule,
workers abilities and nature should match with the job requirements. Stress
is caused due to irritability hyperexcitation or depression, unstable behaviour,
fatigue, stuttering, treambling, psychosomatic pains, heavy smoking and drug
abuse. Stress adversely affects employee productivity. The P/HR manager, in
order to minimize the stress, has to identify, prevent and tackle the problem.
He may arrange for the treatment of the problem with the health unit of the
3. Organisational health programmes: Organisational health programmes
aim at educating employees about health problems, means of maintaining and
improving health etc. These programmes cover drinking and smoking
cessation, hypertension control, others forms of cardiovascular risk reduction,
family planning etc. Effective implementation of these programmes results in
reduction in absenteesism, hospitalisation, disability, excessive job turnover
and permature death. This programme should also cover relaxation, physical
exercise, diet control etc.
4. Alternative work schedules: Alternative work schedules including work at
home,flexible working hours, staggered hours, reduced work week, part-time
employment, may be introduced for the convenience and comfort of the
workers, as the work schedule which offers the individual the leisure time,
flexible hours of work is preferred.
5. Participative management and control of work: Trade Unions and
workers believe that workers participation in management and decision
making improves QWL. Workers also feel that they have control over their
work, use their skills and make a real contribution to the job if they are
allowed to participate in creative and decision making process.
6. Recognition: Recognising the employee as a human being rather than as a
labour increases the QWL. Participative management, awarding and
rewarding systems, congratulating the employees for their achievement, job
enrichment, offering prestigious designations to the jobs, providing well
furnished and decent work places, offering membership in clubs or
associations, providing vehicles, offering vacation trips are some means to
recognise the employees.
7. Congenial worker supervisor relations: Harmonious supervisor worker
relations gives the worker relations gives the worker a sense of social
association, belongingness, achievement of work results etc. This, in turn,
leads to better QWL.
8. Grievance procedure: Workers have a sense of fair treatment when the
company gives them the opportunity to ventilate their grievances and
represent their case succinctly rather than settling the problems arbitrarily.
9. Adequacy of resources: Resources should match with stated objectives:
Otherwise, employees will not be able to attain the objectives and this results
in employee dissatisfaction and lower QWL.
10. Seniority and merit in promotion: Seniority is generally taken as the
basis for promotion in case of operating employees; merit is considered as the
basis for advancement for managerial people, whereas seniority - cum merit
is preferred for promotion of ministerial employees. The promotional policies
and activities should be fair and just in order to ensure higher QWL.
11. Employment on permanent basis: Employment of workers on casual,
temporary probationary basis gives them a sense of insecurity. On the other
hand, employment on permanent basis gives them security and leads to
higher order QWL.
P/HR manager has to build and maintain QWL by providing a wide range of fringe
benefits as discussed earlier. These benefits results in improvement in productivity,
reduction in absenteeism, turnover, sick leave, alternation etc. These benefits or
maintenance activities include medical and health benefits, safety measures, legal
and financial services, consumer services, retirement benefits, conveyance, canteen
facilities, recreational services, career counselling, employee information reports etc.
The general perception is that improvement in QWL costs much to the organisation.
But it is not so improvement over the existing salary, working conditions and
benefits will not cost much. However, the rate of interest in productivity is higher
than that of cost of QWL. Thus, increase in QWL results in increase in productivity.
But continual increase in QWL eventually leads to reduction in productivity due to
increase in cost of output. This is because the workers output does not increase
proportionately after a certain level, even though QWL increases.
Improved QWL leads to improved performance. Performance means not only
physical output but also the behaviour of the worker in helping his colleagues n
solving job related problems accepting orders with enthusiasm promoting team spirit
and accepting temporary unfavourable work conditions without complaint.
Quality of worklife is broader than motivation though these two terms seem to be
similar. All personal related activities affect quality of work life, some examples are.
Quality of worklife, some examples are:
1. Adequate and fair compensation: There are different opinions about
adequate compensations. The Committee on Fair Wages defined fair wage as
"....the wage which is above the minimum wage but below the living age"
2. Safe and healthy working conditions: Most of the organisations provide
safe and healthy working conditions due to humanitarian requirements and /
or legal requirements. In fact, these conditions are a matter of enlightened
3. Opportunity to use and develop human capacities: Contrary to the
traditional assumptions, QWL is improved ".... to the extent that the worker
can exercise more control over his or her work, and the degree to which the
job embraces an entire meaningful task" but not a part of it. Further, QWL
provides opportunities like autonomy in work and participation in planning in
order to use human capabilities.
4. Opportunity for career growth: Opportunities for promotions and
limited in case of all categories of employees either due to educational barriers
or due to limited openings at the higher level. QWL provides future
opportunity for continued growth and security by expanding one's
capabilities, knowledge and qualifications.
5. Social integration in the work force: Social integration in the work force
can be established by creating freedom from prejudice, supporting primary
work groups, a sense of community and interpersonal openness,
egalitarianism and upward mobility.
6. Constitutional protections on the work organisation: QWL provides
constitutional protection to the employees only to the level of desirability as it
hampers worker's satisfaction of doing the job beyond that level. It happens
because the management's action is challenged in every action and
bureaucratic procedures need to be followed at that level. Constitutional
protection is provided to employees on such matters as privacy, free speech,
equity and due process.
7. Work and quality of life; QWL provides for the balanced relationship
among work, non-work and family aspects of life. In other words, family life
and social life should not be strained by working hours including, overtime
work, work during inconvenient hours, business travel, transfers, vacations
8. Social relevance of work. QWL is concerned about the establishment of
socially beneficial manner. The workers self-esteem would be high if his work
is useful to the society. Quality of work life suffers from barriers, like any
other new scheme. Management, employees and unions fear the effect of
unknown change. All these parties feel that the benefits of this concept are
few, though they are convinced about its effect on personnel management as a
whole and on the individual parties separately. Management should develop
strategies to improve quality of work life in view of the barriers.
The Strategies for improvement in quality of work life include self-managed work
teams, job redesign and enrichment, effective leadership and supervisory behaviour,
career development, alternative work schedules, job security, administrative or
organisational justice and participate management.
1. Self-managed work teams: These are also called autonomous work groups
or integrated work teams. These work teams are formed 10 to 20 employees
who plan, coordinate and control the activities of the team with the help or a
team leader, who is one among them. Each team performs all activities
including selecting their people. Each item has authority to make decisions
and regulate the activities. Group, as a whole, is accountable for the success or
failure. Salaries are fixed both on the basis of individual and group
2. Job redesign and enrichment: Narrow jobs can be combined into larger
units of accomplishment. Jobs are redesigned with a view to enriching them to
satisfy higher order human needs.
3. Effective leadership and supervisory behaviour: For effective
leadership and supervisory behaviour "9-9" style of managerial grid is
4. Career development: Provision for career planning, communicating and
counselling the employees about the career opportunities, career path,
education and development and for second careers should be made.
5. Alternative work schedule: Provision for flexible working hours part time
employment, job sharing and reduced work week should be made.
6. Job security: This tops the employee's list of priorities. It should be
adequately taken care of.
7. Administrative or organisational justice: The principles of natural
justice, should be taken care of in conducting disciplinary procedure and
grievance procedures, similarly fair play and equity should guide decisions
relating to promotions, transfers, demotions, work assignment, leave etc.
Both employees and management are jointly involved in decision making process on
matters of mutual interest in participate management. The objective of participate
management is to produce better solutions to the problems which will benefit all
concerned. The two parties aim at achieving common objectives in participative
management. Participative managers consult with their followers, involve them in
decisionmaking so that their group will act as a social unit in work performance.
Participate managers are not autocratic or free-rein managers and they responsible
and accountable ultimately for the success or failure of their departments.
Participate management satisfies economic, psychological and social needs of
employees. It gives a sense of significance, pride and accomplishment, freedom and
opportunity for expression, a feeling of belongingness to the place of work and a
sense of creativeness to the employees.
Participate management aims at
(i) improving organisational efficiency,
(ii) developing social education for effective solidarity among workers.
(iii) attaining industrial peace,
(iv) treating the workers are human beings, and
(v) developing self-management teams in industry.
The result of participate management is that management would be effective if it is
in the form of voluntary group.
A group is defined as two or more individuals, interacting with and interdependent
on each other, who come together to achieve particular objectives: Groups may be
formal or informal. Formal groups are defined and formed by organisation structure
with clear-cut assignment, responsibility, accountability, rules and norms. Informal
groups are the natural formations in the work environment and form in response to
the need for social contact. Thus these groups are not structured and determined by
the organisation. These groups satisfy the social needs of their members. The
important aspects of group interaction are group goals, participation, leadership
norms and cohesiveness.
Goals: Groups generally have who types of goals viz., task goal and maintaining the
group itself. Task goal is related to the main function for which the group is formed.
The second goal is related to dealing with inter-personal conflict resolving it and
maintaining inter-personal relations. Group members trusting behaviour will
contribute to increased originality, greater emotional stability, less defensive and
improved self-control.
Type of Participation in Group: Participation in a group may be voluntary, invited or
assigned. If the group activity is effective, members voluntarily join the group in
significant numbers.
Some people like experts and specialists are invited, to join the groups as members of
advisors. Group as whole and other members of the group are benefited by the
interaction of those special members.
Some people like experts and specialists are invited, to join the groups as members of
advisors. Group as a whole and other members of the group are benefited by the
interaction of those special members. For example, University Professors invited to
the special members on various committees of Government, economic bodies,
political and social organisations. These institutions are benefitted by the rich
theoretical base of the professors.
Participation in group is also assigned. The management forms various groups and
assigns the membership including the tasks and responsibilities to various
individuals. For example, the managerial personnel may form a group with three
assistant personnel managers to suggest measures to minimize absenteeism. He
assigns three different aspects of the problem like absenteeism among unskilled
workers,technical personnel and managerial personnel to the three assistant
personnel managers of the group.
Leader : The leader of the group is a must to co-ordinate and control the members
as well as activities whether it is a formal group or an informal group. Group may
have to types of leaders viz., takes leader and unofficial social leader, as they have
two basic objectives i.e. performing the main task and satisfying members social
Norms : Groups norm is expected behaviour of group members. These norms are
normally unwritten in the case of informal groups. The norm of quality circles is
openness which helps to solve the problems better.
Cohesiveness: is the degree attraction that the group has for its members. This
attraction may be in the form of loyalty, sense of belongingness, friendliness, feeling
of responsibility for group tasks. Group cohesion can be increased through stability
of membership, similar values of members, providing free communication
opportunities, physical isolation from the formal control, small size.
With this background about the participative management and group interaction, we
now discuss the history of quality circles, one of the sophisticated technique of
participative management.
Though the quality circles had been in operation with different names in India, the
credit for developing this concept has gone to the Union of Japanese Scientists and
Engineers along with Kaoru Ishikawa of Tokyo University. In fact R.S.Dwivedi,
rightly felt that, historically 'Gun Mandal' (Quality Circles) have been used in
different social, religious, and political settings since the dawn of Indian Civilization
to enhance 'satvic qualities' (i.e., Urge for excellence and knowledge, concern for
others interest, trust and confidence, self-actualization etc) minimize rajasic (urge
for economic resources, authority and power, concern for personal interest,
restlessness and tension, craze for ego inflation etc.) and tamasic qualities (i.e. prone
to err, indolence and wickedness, urge to exploit and damage others, distrust, loss of
self-identity etc). Non-application of the science of Bhagavatgita and Vedas to
industrial and business organisations is one of the reasons for dependence of Indian
Organisation on the techniques developed in foreign countries. The concept of
quality circles is not an exception to it.
A quality circle has been defined as a self-governing group of workers with or without
their supervisors who voluntarily need regularly to identify, analyse and solve
problems of their work field. But there is misconception that quality circle and task
force are one and the same and quality circle is not a task force and former is broader
than the latter.
A task force is a group of most skilled employees selected and appointed by
management, engaged in various functions, with an orientation to problem-solving.
The QC is a voluntary association of workers engaged in similar work with a
orientation of human relations, QCs are formed to attain specific objectives.
The important objectives of quality circles are:
1. To develop, enhance and utilise human resources effectively
2. To improve quality of products / services, productivity and reduce cost of
production per unit of output.
3. To satisfy the workers psychological needs for self-urge, participation,
recognition etc. with a view to motivate them. Accomplishment of this
objective will ensure enhancement of employee morale and commitment.
4. To improve various supervisory skills like leadership, problem solving, inter
personal and conflict resolution.
5. To utilize individuals imaginative, creative and innovative skills through
participation, creating and developing work interest, inculcating problem
solving techniques etc. Achievement of these objectives effectively requires the
use of certain techniques.
Mainly three techniques are used in discussing about various problems in quality
circles. They are (1) Brain Storming processes, (2) Cause and effect or fishbone
diagrams and (2) Sampling and Charting methods.
1. Brain storming processes: Under this techniques, complete free
environment is created with a view to stimulate creativity. In this free
environment, employee's ideas are free from criticism. Hence, employees
voice all their worthy as well as stupid ideas. All these ideas are recorded
seriously. This technique is useful to generate as many ideas as possible. Later,
the plus and minus points of each idea are discussed, before taking a final
2. Cause and Effect: Members are asked to find out the causes for the
identified problem. In this process, members identify one important effect of
this cause on the problem. Then they identify other causes and their effects.
Charting out of those causes and effects resembles fish bone diagram. Hence
this technique is also called "fishbone diagram".
3. Sampling and charting methods: Members of the quality control observe
the events and their consequences in the form of positive of negative results.
They chart out all their observation either in sequence or in some other
relationship, which gives clear idea of the problem.
Organisational structure of QC generally consists of four levels, viz., QC members ,
QC leader, facilitator and Steering Committee. (Figure shown below).
1.Steering Committee: It consists of representatives of management from
different departments at top level and top level representative of recognised unions /
federations of employees. The important functions of this committee are:
a) Sponsoring QC programme in the entire organisation by defining overall
objectives and operating guidelines relating to the identification of the department
where the circles are to be formed, provision of training to leaders and members of
QCs, identification of the problem to be discussed, receiving, discussing and
finalising the suggestions, action plans, budget etc.
b) Selecting and training the facilitators,
c) Providing the resources and moral support to the facilitators.
2. Facilitator: Facilitator is an important person between the quality circle and the
steering committee. Facilitator would (a) act as a consultant and guide to the QC
leaders (b) initiate the setting up of QCs leaders and members (c) provide feedback to
the steering committee about the proceedings and results of the QCs. (d) act as an
evaluator and reviewer of QC operations and programmes.
The facilitator has to maintain sound inter-personal relations in order to function as
a social leader. He should prove himself successful in acting as a Co-ordinator,
Coach, Promoter, Teacher and Innovator. He is expected to be an excellent resource
person for training the managers at higher level.
3.QC Leader:
Activities of each circle are co-ordinated and streamlined by its leader. Generally, he
is an elected member of the circle. Manager / Supervisor of that particular
department / section, where the QC is set up, may act as the leader. The activities of a
QC Leader include:
a) Conducting meetings, initiating of the discussion and motivate the members of
participate actively, (b) acting as a link between the members and facilitator, and (c)
training the members in problem identification, discussion and problem solving
The leader must have skills in discussion, initiation and promotion of active
participation. He should be a trained one in group dynamics, human behaviour, and
participative leadership styles.
4.QC Members:
Members of a single work group form into a quality circle. They join voluntarily or on
invitation. They are also free to withdraw from membership. Members activities
include: attending meetings, participating actively in problem identification,
contributing ideas in developing solutions to the identified problems and the like.
In addition to the sound organisational structure. QCs should follow systematic
process in order to attain the objectives effectively.
Size of each QC should be moderate so as to enable fruitful discussion. Size may vary
between 6 and 12. The members and leader are given instructions regarding
problem-solving techniques. Initially, the QC members should acquaint themselves
about the objectives and role of QCs. Each working session of a QC may be for one
hour. There may be at least one working session in every week, preferably during
working hours and in the company premises. If the working session is conducted
after the working hours, the members may be paid honorarium for attending the
The members of QC select the problem from the operational problems suggested by
management or by the members of the QC. After selecting the problem, the members
analyse it by using the various problem-solving techniques discussed earlier.
Sometimes the QC leader invites various experts to analyse the problem and their
effects. Then the members develop alternative solutions, their effect and
consequences on organisation and members, cost benefit analysis and merits and
demerits of each solution. The next stage is that members select the best solution
from among the alternative solutions. Some of the members then present the
selected solution to the management. Management reviews the solution and may or
may not accept the solution offered by the QC members. But managers, in most
cases, accept the solution. If the solution is accepted, the members either by
themselves and / or with the help of others implement the solution. Management has
to provide all types of support, including finance, to implement such solutions. Thus,
the support of management at the help is essential for effective functioning of QCs.
The members and leader of the QC should recognise and practice the following
concepts to make the QC process effective.
a. Acceptance by all, particularly the leader, that there is more than one way to
solve a problem successfully.
b. Encouragement of all members to clarify and build on each others ideas.
c. Periodic summarising of the activities by the leader, or a member to ensure
common understanding.
d. Avoidance of heated arguments in favour of one particular position. Vigorous
eloquence should not be a substitute for clarity and logic.
e. Avoidance of such techniques as majority vote and conflicting to obtain group
f. Promotion of constructive disagreements in place of dodging arguments in
search of an artificial state of harmony.
Being suspicious of agreements that come too quickly and easily. A circle leader, who
is also the supervisor must constantly be aware of the influence of the supervisory
However, there are certain problems in QCs regarding fitting of QC is existing
cultural environment in the industry, rewarding awarding and motivating the QC
members, leaders, and facilitators. These problems can be solved if top management
takes proper care and interest. This participate scheme will contribute to the
organisational effectiveness and to enhance job satisfaction, sound human relations
in an organisation and quality of work life of employees.
Employees participating in management contributes to the effective functioning of
an industrial organisation because of his ideas, commitment and concern for the
employees in the organisation. There is another organisation in the industry i.e.,
trade union (or employees organisation) which should also be made effective.
Participative management will prove successful even in correcting the functioning
and making the trade union successful. Here participative management does mean
exactly opposite to the employee participation in management i.e., participation of
management representatives in employees organisation.
1. What is Performance Appraisal?Differentiate it from Job Evaluation what are
the varied objectives of Performance Appraisal?
2. What are some of the Problems encountered in Performance Appraisal? How
can they be overcome?
3. Describe and evaluate any four modern techniques of Performance Appraisal?
4. What is Quality of Work Life (QWL)? Discuss same of the key issues relating
to QWL.
5. Write short notes on
a. Quality circles
c. MBO
A Case on Performance Evaluation in South Indian Plantations Co Ltd*
South Indian Plantation Co. Ltd., produces different types of plantation products.
The company has several tea, coffee and rubber estates. Each estate is administered
by a Manager, assisted by 1 to 3 Assistant Managers, under the overall control of the
General Manager (Operations) who reports directly to the Managing Director.
The Assistant Managers are directly recruited as Assistants and are on probation for
two years. During the period of probation, they work directly under the control and
guidance of the Managers of the particular estates to which they are assigned. They
learn the job while doing it and the Manager concerned assigns them different
responsibilities to make them acquainted with different aspects of operations of the
estate, including office management. The Manager concerned is also responsible for
their performance evaluation, mainly on the basis of Annual Performance Reports,
which are reviewed by the G.M. (Operations). When an Assistant, on completion of
two years of service, is confirmed on the basis of his annual performance reports he
is posted in the same estate or in another as an Assistant Manager in the appropriate
scale. As Assistant Manager also his performance is evaluated on the same format, by
the Manager of the estate in which he is posted, subject to the review of the G.M.
In recent years, there has been some discontent among the Assistant Managers
against the existing system of performance evaluation. There were some feeling that
the Assistant Managers should not be left entirely to the whims of the Managers
concerned, some of whom as Assistant Managers, because the company never had a
systematic training and job-rotation scheme. As such they had insufficient
experience and background in certain other operations to assess the Assistant
Managers, who were specializing in those operations and in which some of them had
formal technical qualifications as well.
The General Manager (Operations) also partly shared these feelings. Moreover, he
also wanted to improve the quality of the evaluation of Assistant Managers, as he
could not fully trust the conventional reporting formal, based on the assessment of
typical performance characteristics of the assesses with qualitative statements like
'Very Good', 'Poor'. Needs improvement etc., made by the managers concerned
without any specific
*Source : Subrates Ghosh, Personnel Department, Oxford IBM New Delhi, 1990
P.P 148-150
guidelines for evaluation and arrangement of scoring the degrees of performance
As a provisional measure, he issued a circular that from the next year, there would be
an Annual Examination to be held in each estate for assessing the knowledge of the
operational matters and the intellectual capacity of the Assistant Managers, in
addition to the Annual Performance Reports of the Managers on their performance.
The question papers for these annual examination for the assistant managers in each
estate would be set by the estate manager concerned and he himself would
examine the answer-scripts. The overall performance of each assessee would be
judged by these two instruments. viz., The Annual Performance Reports and Annual
Examination Results and both would enjoy equal weightage.
The circular created a stir in the company. The managers were almost equally
divided for and against the proposed examination, while most of the Assistant
Managers felt uncomfortable about the idea of holding written, examinations for
performance evaluation. They appreciated the G.M's anxiety to improve the equality
of the evaluation system, by adding a supplementary dimension to the conventional
annual reports, but criticized the written examination as essentially theoretical.
Some other assistant managers, however, welcomed the new proposal, as a better
method of testing the operational knowledge in estate management on a more
objective basis. However, they felt that the proposed examination systems should be
changed in certain respects. Particularly they were not happy about the proposed
paper setting and script evaluation arrangements. They suggested that the papers be
set at the Head Office and examined by persons other than particular estate manager
under whom the assistant managers concerned were working.
1. Critically examine the existing system of performance evaluation of assistant
managers of the company. Does it require any change? Give reasons for your
2. Examine the proposed annual examination as a supplementary instrument of
performance evaluation of assistant managers. What improvements, if any,
would you recommend for the proposal system?
3. If you are appointed as a special officer of the company to review its
performance evaluation, system, what would be your recommendations to the
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