HUMAN RESOURCE MANAGEMENT

Name RATI BHAN

Roll No. 511022630
Program MBA
Subject HUMAN RESOURCES
MANAGEMENT [Set 1]

Code MB0043
Learning IICM KINGSWAY CAMP
Centre

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 1

8/27/2010
 HUMAN RESOURCE MANAGEMENT

Q.1 Training refers to the process of imparting specific skills.

“Training need analysis” is required for effective training
program. Explain in detail, all the three factors of Thayer and
McGhee model of identify training needs.

Ans:- Given the investment that organizations make in training it is critical

for organizations to ensure that the money is rightly spent. Training needs
consider both the organization’s demands and that of the individual’s.
Diversification of product lines, new technology, and hence a new kind of
job or a shift in organizational culture or ways of conducting business are
common organizational needs that cover most employees in the company.
On the other hand demands that pertain to individual’s growth and
development, including induction training for new hire’s, or training
necessitated by job rotation due to an organization’s internal mobility
policies are examples of individual need based training.

The model we shall examine here is the Thayer and McGhee model. It is
based on the following three factors:

1. Organization analysis

2. Task analysis

3. Individual analysis

Organization Analysis

Total Organization Analysis is a systematic effort to understand exactly

where training effort needs to be emphasized in an organization. It involves
a detailed analysis of the organization structure, objectives, human
resources and future business plans, and an understanding of its culture.

The first step in organization analysis is establishing a clear understanding

of both short-run and long-run business and people goals. Long-term
objectives are the broad directions in which the organizations would move
over a long duration. These long-term objectives are then broken down into
specific strategies and short-term goals for each of the units/departments.
In an organization, the cumulative effect of all these would ultimately lead
to the long-term goal. Short-term goals are constantly in need of
adaptation to the changing environment, both external and internal.

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 2

8/27/2010
 HUMAN RESOURCE MANAGEMENT

For an organization analysis, there are three essential requirements: (1) an

adequate number of employees available to ensure fulfillment of the
business operation; (2) that employee performance is up to the required
standard; and (3) that the working environment in their units/departments
is conducive to fulfillment of tasks.

In order to ensure the first two requirements a human resource inventory

needs to be made. Data regarding positions, qualifications, vacancies,
replacements and training time required for replacements have to be
worked out. Job standards must also be worked out.

Various efficiency and productivity indexes, or ratios such a productivity

ratios, cost per unit etc, can be worked out to determine not only efficiency
but also adequacy, in terms of under-manning or over-manning, of the
workforce.

An important dimension of organizational need-based analysis, is the

diagnosis of the state of the organization "climate" or “culture”. While
rules, procedures, systems and methods all contribute to the making of the
environment, much of it is also determined by the attitude that the
"people" have in the organization-for instance, the attitude that top
management has towards its subordinate staff and the attitudes that
members have towards work, Managers and company procedures. These
attitudes are learnt, they result from the person’s experience both within
and outside the organization, and training inputs could be used to effect
changes of attitude and consequently of the organizational climate.

In analyzing the organization climate, both direct and indirect methods

could be used. Direct methods are observation, use of questionnaires, and
interviews. Reliance or indirect methods would not give a clear
understanding of the attitudes and predispositions of employees. In fact,
factors such as low absenteeism and low turnover are not by themselves
indicators of positive or negative attitudes, and high or low morale. It would
be better to make a careful analysis and study each indicator in a
particular situation in conjunction with more direct methods like attitude
surveys. Analysis and interpretation of the data may give clear clues not
only to attitudinal training needs but possibly also to kill training needs.

Task Analysis

This activity entails a detailed examination of each job, its components, its
various operations and the conditions under which it has to be performed.
The focus here is on the "task" itself and the training required to perform it,

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 3

8/27/2010
 HUMAN RESOURCE MANAGEMENT

rather than on the individual. Analysis of the job and its various
components will indicate the skills and training required to perform the job
at the required standard.

Standard of Performance: Every job has an expected standard of

performance (SOP). Unless such standards are attained, not only will inter-
related jobs suffer, but organizational viability will be affected, and so will
the expectations that have been set for that particular job itself. If the
standards set for the performance of a job are known, then it is possible to
know whether the job is being performed at the desired level of output or
not. Knowledge of the "task" will help in understanding what skills,
knowledge and attitudes an employee should have.

Methods: If an employee is asked to perform a job, the exact components

of the job and the standard of performance must be known. Task analysis
entails not merely a simple listing of the various job components, but also
of the various sub-tasks. Conventional methods of job analysis are usually
suitable for task analysis. They are:

1. Literature review regarding the job.

2. Job performance.

3. Job observation,

4. Data Collection regarding job interviews.

For blue-collar employees, more precise industrial-engineering techniques,

like time and motion studies, could be used, and for white-collar
employees, work sampling observation, interviews, and job performance
data analysis could be employed. The focus in task analysis approach to
identifying training needs is with the clear objective of enhancing the
performance standard of a given task. This information is then utilised to
establish the training programme for the employee. It helps identify the
skill required, either in terms of education or training, to perform the job,
knowledge, and finally attitudinal pre-dispositions such as the attitudes,
towards safety, or interpersonal competence that will ensure that the job is
performed optimally.

Individual Analysis

Individual analysis is the third component in identifying training needs. The

focus of individual analysis is on the individual employee, his abilities, and

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 4

8/27/2010
 HUMAN RESOURCE MANAGEMENT

the inputs required for job performance, or individual growth and

development in terms of career planning.

The common source for this needs analysis usually forms parts of the
performance assessment process. Clues to training needs can also come
from an analysis of an individual’s or a group’s typical behavior. The
primary sources of such information are:

(1) Observation at place or work, examination of job schedules, quantum of

spoilage, wastage, and clues about interpersonal relations of the
employees; (2) interviews with superiors and employees; (3) comparative
studies of good vs. poor employees, to identify differences, skills and
training gaps; (4) personnel records; (5) production reports; and (6) review
of literature regarding the job and machines used. Job-knowledge tests,
work sampling and diagnostic psychological tests also provide information
about employees.

Q.2 India is considered as the leading „emerging economy. India’s

organizational success is rooted in its culture; bring out Indian
culture and historical perspective to HRM. Write a brief note on
Human relations movement in India.

Ans :- Human Relations Movement

Kautilya provides an account of the techniques of human resources

management as early as 4th century B.C. in the "Artha-Shastra". As per the
book, there existed logical procedures and principles in organizing labour
namely the Shreni or guild system and in the principles of the co-operative
sector. The wages were in terms of quantity and quality of work turned out
and punishment for unnecessarily delaying the work or spoiling it. The
writing of Kautilya provides an excellent discussion on staffing and
personnel management, including the detailing of what today are called job
descriptions, qualifications for jobs, methods of selection, employee and
supervisor development, formally established incentive methods (Sarasa-
saama- daana- bheda- danda- catura, the Carrot and Stick approach) and
even the science of performance evaluation. The guild system was
pioneered and closely followed by the establishment of the co-operative
sector of craftsmen and traders organizing themselves to promote their
professional interests. Numerous professional societies were similarly
formed each establishing systematic procedures and policies to nurture
their own interests.

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 5

8/27/2010
 HUMAN RESOURCE MANAGEMENT

Significantly, these practices also respected the principles of the division of

labour, which can easily be traced to the caste system that even today is a
inseparable part of the Indian cultural system. The society got divided into

· Individuals engaging themselves in activities such as teaching, sacrifice or

state management were designated as Brahmins

· While those specializing in fighting were termed as Kshatriyas.

· Individuals engaged in the areas of trade, business and agriculture were

called Vaishyas and

· Those devoting themselves in manual work were known as Shudras.

Herein hereditary facilitated the transfer of skills and training from one
generation to another. Quickly even specialised skills became hereditary
suchas goldsmiths, weavers, potters, blacksmiths, carpenters, hunters,
charioteers, snake charmers, architects, sculptors, armourers identified as
separate communities by themselves. Between the employer and
employees justice and equity laid a sound foundation for successful
enterprise.

During the medieval period, India experienced aggressions for around 700
years, during the Mughal rule. While trade and commerce flourished,
majority of the artisans and the craftsmen remained poor and lived simple
lives compounded by the large and joint family system that prevailed. Low
wages, oppressive political conditions and poor physique characterised the
workplace. Nothing significantly changed during the British rule.
Oppression and poor working conditions prevailed in all industries and
intensified in the tea estates that were the key focus of the British for
obvious reasons that tea was a key export product.

This prevailed till the enactment of the Factory Act of 1881. This coincided
with the waves of industrialization and urban growth that India witnessed.
The Act brought about the first set of formal guidelines and rules that the
industries had to comply with. Workers employed in the factories were
allowed a week off-day and provisions were made for supervision, quality
and hours of work. Sadly the act also established the minimum age of
children for employment to be seven years and the maximum working
hours for them to not exceed seven hours a day and only in the day-shift.

This set the stage for the organization of employees to ensure fair work
and pay and in 1890, the first labour organization Bombay Mill Hands

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 6

8/27/2010
 HUMAN RESOURCE MANAGEMENT

Association was established. In 1905, the printers’ Union at Calcutta and in

1907, the Postal Union at Bombay were established. The Madras Labour
Union was organized thereafter in 1918. The Central Labour Board was
established in 1922 to bring together the different unions in the Bombay
city and the All India Trade Union Congress was organized. The formal
implementation of the Indian Trade Unions Act took place in 1926, one
more landmark in the history of industrial relations in the country. There
was a large scale expansion of the trade union movement after the Second
World War – especially after the independence. The union-government
interactions significantly stepped up to accommodate for the removal of
the war-time restrictions on strikes, formation of three more central labour
organizations and the competition among them and the use of adjudication
rather than collective bargaining techniques to resolve issues. In 1960, 45
percent of the total industrial workforce was claimed to be unionised.
Today, the total membership is estimated to be around 4.3 million i.e., 28
percent of total workforce.

The post-independence period also marked the formation of the Personnel

Department in different public and private sectors. Under the Factories Act,
1948, employers had to employ a Welfare Officer in a factory employing
500 or more workers. Similarly the Mines Act, 1952, empowers the
Government to specify employment of welfare officer/officers. While
welfare constituted a large part of the responsibilities of the Personnel
department, there were other tasks and responsibilities that were assigned
as well.

The responsibilities included other varied functions including the

employment of suitable people, workplace safety and driving awareness,
training and wage and salary administration. The Personnel department
however operated in a somewhat isolated manner and executed tasks as
assigned by the head of the organization / core business teams. The
interactions with the other heads of departments were limited and only on
a need-based rationale.

In the past two decades the workforce in India has evolved rapidly to
emerge as a nation of intelligent, skilled and highly aware and mature
professional, who stand shoulder-to-shoulder with the professional from the
world over. The workplace is an equitable one which believes in the values
of respect for the individual and aspiration to be the best in the world. The
role of the Human Resources function can no longer be ignored or
sidelined. It is viewed as a strategic partner and has found a place at the
top management table. The Head of Human Resources function is selected
with as much care and attention as the CEO and is consulted in all business

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 7

8/27/2010
 HUMAN RESOURCE MANAGEMENT

decisions, irrespective of its direct/ indirect implications to human

resources. Being a HR professional is a conscious decision that a individual
takes early in his / her life and pursues it with dedication and commitment.

Human relations movement in

Human relations movement in India has evolved very differently as

compared to what we see in the developed economies of the USA and the
UK. What is currently acting as a limitation is the enhanced awareness on
the need for research based HRM practices. While there is a lot of work
happening in the Indian education system to promote this, it is going to
take a while before it can create a distinct body of knowledge that is
reference-able. For now the industry relies on emulating westerns HR
practices and customizing on a as-needed basis for the Indian corporation.
For the rest the Industry forums and consortiums like the NASSCOM act as
a hub bringing together organizations on a regular basis to discuss
challenges and share best practices and identify ways and means to
overcome them together. So far this has been successful and working to
the advantage of the Indian corporate. Leading MNC research and
consulting firms like Mercer and Hewitt too contribute to the industry
through carrying out research and sharing reports on a regular basis. The
approach however remains analytical and less prescriptive.

Q.3 A company is being set up by a group of 3 professionals. The

business objective is to sell mobile phones of a Chinese company
which has come up with an inexpensive range of handset ranging
from Rs.1200 to Rs.7000. They need to submit a human resource
plan to their investors. Explain the process of Human Resource
Planning system for this company, which covers all important
steps needed for HRP.

Ans :- Thus, it will be noted that ‘manpower planning consists in

projecting future manpower requirements and developing manpower plans
for the implementation of the projections’.
A company is being set up by a group of 3 professionals. The
business objective is to sell mobile phones of a Chinese
company which has come up with an inexpensive range of
handset ranging from Rs.1200 to Rs.7000.

Human Resource Planning

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 8

8/27/2010
 HUMAN RESOURCE MANAGEMENT

Human resource or manpower planning is ‘the process by which a

management determines how an organization should move from its current
manpower position to its desired manpower position. Through planning, a
management strives to have the right number and the right kind of people
at the right places, at the right time, to do things which result in both the
organization and the individual receiving the maximum long-range
benefit".

The organization’s business plan to invest in a particular product/market or

a service will drive the HRP activity towards hiring to meet the business
need. In the event an organization is divesting or shutting down a
particular business unit or a manufacturing division the HRP activities
would focus on the redeployment of the workforce that will be rendered
unemployed as a result of the business decision. An organization wanting
to retain its current market share and revenue projection at status quo
would be supported by HRP activities that are limited to only filling
positions falling vacant due to natural organizational attrition. Hence the
HRP focus in a organizations is closely linked to the business plan and acts
as a bridge between what an organization wishes to achieve and how it will
go about achieving it w.r.t. the human resources requirements.

The scope of HRP is futuristic in nature and usually runs parallel to the
annual business planning exercise. It commences prior to the start of the
company’s new financial year. For example if the business year for a
company runs April to March. The business planning and the HR
planning activities for the New Year beginning in April is usually
completed and in place by the 1st week of April. Once the HR plan is
in place it is broken up into a quarterly or even a monthly plan which then
is the input for the recruitment team to go and hire accordingly.

Steps in Human Resource Planning:

The Human Resource Planning process consists of a set of activities, viz.

a) Forecasting: manpower requirements, either by using mathematical

tools to project trends in the economic environment and development in
industry, or in by using simple judgmental estimates based on the specific
future business plans of the company;

b) Creating an inventory: of present manpower resources and assessing

the extent to which these resources are employed/ optimally;

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 9

8/27/2010
 HUMAN RESOURCE MANAGEMENT

c) Identifying: manpower problems by projecting present resources into

the future to determine their adequacy, both quantitatively and
qualitatively; and

d) Planning: the necessary programs of requirement selection, training,

development, utilization, transfer, promotion, motivation and compensation
to ensure that future manpower requirements are properly met.

Q.4 Organizations hire candidate through various sources. Discuss

all the possible sources of recruitment. ?

Ans :- Recruitment
Recruitment and selection is the process of identifying the need for a job,
defining the requirements of the position and the job holder, advertising
the position and choosing the most appropriate person for the job.
Retention means ensuring that once the best person has been recruited,
they stay with the business and are not “poached” by rival companies.

The Recruitment Sources in the recruitment process are the sources of

candidates. Generally, the HRM Function recognizes two main sources of
candidates for the job positions: internal and external sources of
candidates.

The internal recruitment sources : are very important, but they cannot
be used to fill every vacancy in the organization. It is very important to
realize, that in many organization, the internal recruitment is divided into
two separate processes: internal recruitment and promotions. The
promotion is the move of the employee when the organization initiates the
whole process. The real internal recruitment is than a move of the
employee initiated by the employee him or herself.

The external recruitment sources : bring job candidates from the

external environment using different techniques. The oldest, but still pretty
efficient is a newspaper job advertisement. Many HRM Professionals do not
believe in the power of the newspaper advertising, but for many jobs it is
still one of the best techniques with the best cost/income ratio.

The modern recruitment source: fully managed by the organization is

the web job advertisement. It is very cheap, but it can flood the
organization with many useless job resumes. This can make the final
decision almost impossible. The cost/income ratio is always attractive, but
the success rate can be really low.
RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 10
8/27/2010
 HUMAN RESOURCE MANAGEMENT

The other external recruitment sources :are the recruitment agencies

and executive search companies. Their services are not cheap, but the
organization does not have to handle all that job resumes and the good
agency also makes follow ups of the job candidates in the recruitment
process.

A very special kind of the recruitment source :is the referral

recruitment, when the employees are paid to provide the organization with
their friends as potential employees. This can look strange, but it can
provide the organization with many interesting candidates, who are not
reachable via any other recruitment source.

INTERNAL RECRUITMENT

Internal sources of Recruitment: -

1. Present Permanent Employees: -
Organizations consider the candidates from this source for higher level of
jobs due to availability of most suitable candidates for jobs relatively or
equally to external sources, to meet the trade union demands and due to
the policy of the organization to motivate the present employees.
2. Present temporary/casual Employees: -
Organizations find this source to fill the vacancies relatively at the lower
level owing to the availability of suitable candidates or trade union
pressures or in order to motivate them on present job.
3. Retrenched or Retired Employees: -
Employees retrenched due to lack of work are given employment by the
organization due to obligation, trade union pressure etc. Sometimes they
are re-employed by the organization as a token of their loyalty to the
organization or to postpone some interpersonal conflicts for promotion.
4. Dependents of Deceased, Disabled, retired and present
employees: -
Some organizations function with a view to developing the commitment
and loyalty of not only the employee but also his family members.
5. Employee Referrals: -
Present employees are well aware of the qualifications, attitudes,
experience and emotions of their friends and relatives. They are also aware
of the job requirements and organizational culture of their company. As
such they can make preliminary judgment regarding the match between
the job and their friends and relatives.
Campus Recruitment:
These candidates are directly recruited by the Company from their
college/educational institution. They are inexperienced as far as work

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 11

8/27/2010
 HUMAN RESOURCE MANAGEMENT

experience is concerned.
6. Private Employment Agencies/Consultants: -
Public employment agencies or consultants like ABC Consultants in India
perform recruitment functions on behalf of a client company by charging
fees. Line managers are relieved from recruitment functions and can
concentrate on operational activities.
7. Public Employment Exchanges: -
The Government set up Public Employment Exchanges in the country to
provide information about vacancies to the candidates and to help the
organization in finding out suitable candidates. As per the Employment
Exchange act 1959, makes it obligatory for public sector and private sector
enterprises in India to fill certain types of vacancies through public
employment exchanges.
8. Professional Organizations: -
Professional organizations or associations maintain complete bio-data of
their members and provide the same to various organizations on
requisition. They act as an exchange between their members and
recruiting firm.
9. Data Banks: -
The management can collect the bio-data of the candidates from different
sources like Employment Exchange, Educational Training Institutes,
candidates etc and feed them in the computer. It will become another
source and the co can get the particulars as and when required.
10. Casual Applicants: -
Depending on the image of the organization its prompt response
participation of the organization in the local activities, level of
unemployment, candidates apply casually for jobs through mail or
handover the application in the Personnel dept. This would be a suitable
source for temporary and lower level jobs.
11. Similar Organizations: -
Generally experienced candidates are available in organizations producing
similar products or are engaged in similar business. The Management can
get potential candidates from this source.
12. 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 latter rapport with the management.
13. Walk In: -
The busy organization and rapid changing companies do not find time to
perform various functions of recruitment. Therefore they advise the
potential candidates to attend for an interview directly and without a prior
application on a specified date, time and at a specified place.
14. Consult In: -

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 12

8/27/2010
 HUMAN RESOURCE MANAGEMENT

The busy and dynamic companies encourage the potential job seekers to
approach them personally and consult them regarding the jobs. The
companies select the suitable candidates and advise the company
regarding the filling up of the positions. Headhunters are also called search
consultants.
15. Body Shopping: -
Professional organizations and the hi-tech training develop the pool of
human resource for the possible employment. The prospective employers
contact these organizations to recruit the candidates. Otherwise the
organizations themselves approach the prospective employers to place
their human resources. These professional and training institutions are
called body shoppers and these activities are known as body shopping. The
body shopping is used mostly for computer professionals. Body shopping is
also known as employee leasing activity.
16. Mergers and Acquisitions: -
Business alliances like acquisitions, mergers and take over help in getting
human resources. In addition the companies do also alliances in sharing
their human resource on adhoc basis.
17. E-recruitment: -
The technological revolution in telecommunications helped the
organizations to use internet as a source of recruitment. Organizations
advertise the job vacancies through the worldwide wed (www). The job
seekers send their applications through e-mail using the Internet.
18. Outsourcing: -
Some organizations recently started developing human resource pool by
employing the candidates for them. These organizations do not utilize the
human resources; instead they supply HRs to various companies based on
their needs on temporary or ad-hoc basis.

EXTERNAL RECRUITMENT
External sources of Recruitment: -
1. Press Advertisements
Advertisements of the vacancy in newspapers and journals are a widely
used source of recruitment. The main advantage of this method is that it
has a wide reach

2. Educational Institutes
Various management institutes, engineering colleges, medical Colleges etc.
are a good source of recruiting well qualified executives, engineers,
medical staff etc. They provide facilities for campus interviews and
placements. This source is known as Campus Recruitment

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 13

8/27/2010
 HUMAN RESOURCE MANAGEMENT

3. Placement Agencies
Several private consultancy firms perform recruitment functions on behalf
of client companies by charging a fee. These agencies are particularly
suitable for recruitment of executives and specialists. It is also known as
RPO (Recruitment Process Outsourcing)

4. Employment Exchanges
Government establishes public employment exchanges throughout the
country. These exchanges provide job information to job seekers and help
employers in identifying suitable candidates

5. Labour contractor
Manual workers can be recruited through contractors who maintain close
contacts with the sources of such workers. This source is used to recruit
labour for construction jobs

6. Unsolicited Applicants
Many job seekers visit the office of well-known companies on their own.
Such callers are considered nuisance to the daily work routine of the
enterprise. But can help in creating the talent pool or the database of the
probable candidates for the organization

7. Employee referrals / Recommendations

Many organizations have structured system where the current employees
of the organization can refer their friends and relatives for some position in
their organization. Also, the office bearers of trade unions are often aware
of the suitability of candidates. Recruitment Management can inquire
these leaders for suitable jobs. In some organizations these are formal
agreements to give priority in recruitment to the candidates recommended
by the trade union.

8. RECRUITMENT AT FACTORY GATE

Unskilled workers may be recruited at the factory gate these may be
employed whenever a permanent worker is absent. More efficient among
these may be recruited to fill permanent vacancies.

Q.5 Write short notes on:

A. MBO

Management by Objectives (MBO) is a process in which a manager and an

employee agree upon a set of specific performance goals, or objectives,
and jointly develop a plan for reaching them. The objectives must be clear

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 14

8/27/2010
 HUMAN RESOURCE MANAGEMENT

and achievable, and the plan must include a time frame and evaluation
criteria. For example, a salesperson might set a goal of increasing
customer orders by 15 percent in dollar terms over the course of a year.

MBO is primarily used as a tool for strategic planning, employee

motivation, and performance enhancement. It is intended to improve
communication between employees and management, increase employee
understanding of company goals, focus employee efforts upon
organizational objectives, and provide a concrete link between pay and
performance. An important factor in an MBO system is its emphasis on the
results achieved by employees rather than the activities performed in their
jobs.

Implementing an MBO Program

To be successful, an MBO program should be part of a small business's

overall system of planning and goal setting. The first step in implementing
MBO is to establish long-range company goals in such areas as sales,
competitive positioning, human resource development, etc. A small
business owner may find it helpful to begin by defining the company's
current business and looking for emerging customer needs or market
trends that may require adaptation. Such long-range planning provides a
framework for charting the company's future staffing levels, marketing
approaches, financing needs, product development focus, and facility and
equipment usage.

The next step in establishing an MBO system is to use these long-range

plans to determine company-wide goals for the current year. Then the
company goals can be broken down further into goals for different
departments, and eventually into goals for individual employees. As goal-
setting filters down through the organization, special care must be taken to
ensure that individual and department goals all support the long-range
objectives of the business. Ideally, a small business's managers should be
involved in formulating the company's long-range goals. This approach
may increase their commitment to achieving the goals, allow them to
communicate the goals clearly to employees, and help them to create their
own short-range goals to support the company goals.

At a minimum, a successful MBO program requires each employee to

produce five to ten specific, measurable goals. In addition to a statement of
the goal itself, each goal should be supported with a means of
measurement and a series of steps toward completion. These goals should
be proposed to the employee's manager in writing, discussed, and

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 15

8/27/2010
 HUMAN RESOURCE MANAGEMENT

approved. It is the manager's responsibility to make sure that all employee

goals are consistent with the department and company goals. The manager
also must compare the employee's performance with his or her goals on a
regular basis in order to identify any problems and take corrective action
as needed.

Formulating goals is not an easy task for employees, and most people do
not master it immediately. Small business owners may find it helpful to
begin the process by asking employees and managers to define their jobs
and list their major responsibilities. Then the employees and managers can
create a goal or goals based upon each responsibility and decide how to
measure their own performance in terms of results. In the Small Business
Administration publication Planning and Goal Setting for Small Business,
Raymond F. Pelissier recommended having employees create a miniature
work plan for each goal. A work plan would include the goal itself, the
measurement terms, any major problems anticipated in meeting the goal,
a series of work steps toward meeting the goal (with completion dates),
and the company goal to which the personal goal relates.

Small business owners may also find it helpful to break down employee
goal setting into categories. The first category, regular goals, would include
objectives related to the activities that make up an employee's major
responsibilities. Examples of regular goals might include improving
efficiency or the amount and quality of work produced. The second
category, problem-solving goals, should define and eliminate any major
problems the employee encounters in performing his or her job. Another
category is innovation, which should include goals that apply original ideas
to company problems. The final category is development goals, which
should include those goals related to personal growth or the development
of employees. Dividing goal setting into categories often helps employees
think about their jobs in new ways and acts to release them from the
tendency to create activity-based goals.

Another requirement for any successful MBO program is that it provide for
a regular review of employee progress toward meeting goals. This review
can take place either monthly or quarterly. When the review uncovers
employee performance that is below expectations, managers should try to
identify the problem, assign responsibility for correcting it, and make a
note in the MBO files.

Small Business Owner Involvement

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 16

8/27/2010
 HUMAN RESOURCE MANAGEMENT

Given that MBO represents an unusual way of thinking about job

performance for many employees, small business owners may find it best
to introduce MBO programs gradually and to include a formal training
component. A small business's managers can be introduced to MBO
through a classroom seminar taught by the small business owner or by an
outside consultant. Either way, it is important that the managers be
allowed to express any doubts and reservations they may have, and that
the training include preparation of an actual goal by each participant.
When MBO is brought back to the small business, it may be best to start
slowly, with each employee only preparing a few goals. This approach will
allow employees to learn to prepare goals that are achievable, develop
ways to measure their own performance, and anticipate problems that will
prevent them from attaining their goals.

Another factor determining the success of MBO programs is the direct

involvement of the small business owner. Pelissier noted that the small
business owner needs to champion the MBO system from the beginning, as
well as set an example for the company's managers, in order for it to
succeed. Since managers have a natural tendency to focus their attention
upon their own functions rather than on the goals of the overall
organization, it can be difficult to educate them about MBO. It is also
important for the small business owner to remain patient during the
implementation phase: in fact, Pelissier claimed that it may take three to
four years before an MBO program creates quantifiable results in a small
business. As David Dinesh and Elaine Palmer indicated in their article for
Management Decision, partial implementation is one of the major potential
problems associated with MBO programs.

Implemented correctly, however, MBO can provide a number of benefits to

a small business. For example, MBO may help employees understand how
their performance will be evaluated and measured. In addition, by allowing
them to contribute to goal setting, it may increase the motivation and
productivity of a small business's employees. MBO also stands to provide a
small business's employees with the means to prioritize their work on a
daily basis. Although employee performance evaluation is still a complex
task under an MBO system, MBO can also provide an objective basis for
evaluation. However, it is important to note that an employee's failure to
meet reestablished goals can be attributed to many things besides
personal failure. For example, the failure to meet goals could result from
setting the wrong objectives, not taking into account company restrictions
that may impinge upon performance, establishing an improper measures of
progress, or a combination of all of these factors.

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 17

8/27/2010
 HUMAN RESOURCE MANAGEMENT

Overall, establishing an MBO system in a small business may be difficult,

but it is usually worth it. The most difficult aspect of implementing MBO
may be simply getting people to think in terms of results rather than
activities. Even when an MBO system is implemented well, a small business
may encounter problems. For example, employees may set low goals to
ensure attainment. Similarly, managers' objectives may focus on the
attainment of short-term rather than long-term goals. Finally, employees
and managers alike may fall victim to confusion and frustration. Some of
the most common reasons for the failure of an MBO program include a lack
of involvement among the top management of a small business,
inadequate goal setting on a company-wide basis, implementation of an
MBO system that occurs too rapidly, or the failure to instruct a company's
managers and employees in the basics of MBO. But even though
establishing an MBO program may be problematic, it can also offer
significant rewards to small businesses.

B. 360 Degree

360 Degree Appraisal

Typically, performance appraisal has been limited to a feedback process

between employees and Managers. However, with the increased focus on
teamwork, employee development, and customer service, the emphasis
has shifted to employee feedback from the full circle of sources depicted in
the diagram below. This multiple-input approach to performance feedback
is sometimes called "360-degree assessment" to connote that full circle.

The 360 degree matrix

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 18

8/27/2010
 HUMAN RESOURCE MANAGEMENT

There are no prohibitions in law or regulation against using a variety of

rating sources, in addition to the employee’s Manager, for assessing
performance. Research has shown assessment approaches with multiple
rating sources provide more accurate, reliable, and credible information.
For this reason, HR Management supports the use of multiple rating
sources as an effective method of assessing performance for formal
appraisal and other evaluative and developmental purposes.

The circle, or perhaps more accurately the sphere, of feedback sources

consists of Managers, peers, subordinates, customers, and one’s self. It is
not necessary, or always appropriate, to include all of the feedback sources
in a particular appraisal program. The organizational culture and mission
must be considered, and the purpose of feedback will differ with each
source. For example, subordinate assessments of a Manager’s performance
can provide valuable developmental guidance, peer feedback can be the
heart of excellence in teamwork, and customer service feedback focuses
on the quality of the team’s or agency’s results. The objectives of
performance appraisal and the particular aspects of performance that are
to be assessed must be established before determining which sources are
appropriate.

We shall discuss the contributions of each source of ratings and feedback.

In addition, precautions are listed to consider when designing a
performance management program that includes 360-degree assessment.

Superiors: Evaluations by superiors are the most traditional source of

employee feedback. This form of evaluation includes both the ratings of
individuals by Managers on elements in an employee’s performance plan
and the evaluation of programs and teams by senior managers

Q.6 Hawthorne study has played a critical role in human resource

development: Elucidate the Hawthorne study and explain its
contribution to human relations movement.

Ans. The Hawthorne effect is a form of reactivity whereby subjects

improve or modify an aspect of their behavior being experimentally
measured simply in response to the fact that they are being studied, not in
response to any particular experimental manipulation.

The term was coined in 1955 by Henry A. Landsberge when analyzing older
experiments from 1924-1932 at the Hawthorne Works (a Western Electric

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 19

8/27/2010
 HUMAN RESOURCE MANAGEMENT

factory outside Chicago). Hawthorne Works had commissioned a study to

see if its workers would become more productive in higher or lower levels
of light. The workers' productivity seemed to improve when changes were
made and slumped when the study was concluded. It was suggested that
the productivity gain was due to the motivational effect of the interest
being shown in them. Although illumination research of workplace lighting
formed the basis of the Hawthorne effect, other changes such as
maintaining clean work stations, clearing floors of obstacles, and even
relocating workstations resulted in increased productivity for short periods.
Thus the term is used to identify any type of short-lived increase in
productivity

The term gets its name from a factory called the Hawthorne Works, where
a series of experiments on factory workers were carried out between 1924
and 1932.

This effect was observed for minute increases in illumination.

Evaluation of the Hawthorne effect continues in the modern era.

Most industrial/occupational psychology and organizational behavior

textbooks refer to the illumination studies. Only occasionally are the rest of
the studies mentioned In the lighting studies, light intensity was altered to
examine its effect on worker productivity

Contiribution Human Relations Movement refers to those researchers

of organizational development who study the behavior of people in groups,
in particular workplace groups. It originated in the 1930s' Hawthorne
studies, which examined the effects of social relations, motivation and
employee satisfaction on factory productivity. The movement viewed
workers in terms of their psychology and fit with companies, rather than as
interchangeable parts.

"The hallmark of human-relation theories is the primacy given to

organizations as human cooperative systems rather than mechanical
contraptions."

George Elton Mayo stressed the following:

1. Natural groups, in which social aspects take precedence over

functional organizational structures
2. Upwards communication, by which communication is two way, from
worker to chief executive, as well as vice versa.

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 20

8/27/2010
 HUMAN RESOURCE MANAGEMENT

3. Cohesive and good leadership is needed to communicate goals and

to ensure effective and coherent decision making

(Wilson & Rosenfeld, Managing Organizations, McGraw Hill Book Company,

London, p.9.)

It has become a concern of many companies to improve the job-oriented

interpersonal skills of employees. The teaching of these skills to employees
is referred to as "soft skills" training. Companies need their employees to
be able to successfully communicate and convey information, to be able to
interpret others' emotions, to be open to others' feelings, and to be able to
solve conflicts and arrive at resolutions. By acquiring these skills, the
employees, those in management positions, and the customer can
maintain more compatible relationships.

RATI BHAN, MBA (1ST SEM), SUBJECT CODE-MB043, SET-1 Page 21

8/27/2010