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Page No.
Lesson 1 The Changing Social Context and Emerging Issues 7
Lesson 2 Job Analysis and Job Design 18
Lesson 3 Human Resource Planning 30
Lesson 4 Attracting the Talent: Recruitment, Selection and Outsourcing 39
Lesson 5 Competency Mapping and Assessment Centres 51
Lesson 6 Performance Planning and Review 61
Lesson 7 Potential Appraisal, Career and Succession Planning 86
Lesson 8 HR Measurement and Audit 93
Lesson 9 Human Resource Development System 103
Lesson 10 Training and Development 118
Lesson 11 Compensation and Rewards 139
Self Assessment Answers 157
Page No.
Figure 2.1 Process of Job Analysis 20
Figure 2.2 Organisation of Information 23
Figure 3.1 The HRP Process 33
Figure 4.1 Hiring Process 40
Figure 9.1 Organizational Structure of Human Resource Department 107
Figure 9.2 HRD/Organizational Alignment Model 114
Figure 10.1 The Training Process 123
Figure 10.2 Needs Assessment and Remedial Measures 125
Figure 11.1 Factors that Affect Individual Compensation 140
Figure 11.2 Elements of a Total Reward System 149
LIST OF TABLES
SYLLABUS
Objectives of HRM, Scope of HRM, Evolution of HRM, HRM functions, Challenges, Personnel Management
Job analysis, Information collection for job analysis, Job description and Job specification, Job design
Human Resource Planning: need, objectives, process and problems
Recruitment – sources and methods, Selection – process, induction and outsourcing
Competency Mapping – developing competency models, uses; Assessment Center: history, measurement tools,
difference between assessment center and development center
Performance appraisal: process, methods, benefits, problems; Coaching and Mentoring: process and
implementation
Potential Appraisal: purpose and techniques; Career Planning: meaning and process; Succession Planning:
meaning, pros and cons
HR Audit: objectives, role, significance, process, pros and cons; HR Accounting: methods, pros and cons; HR
Information Systems: application, pros and cons
Human Resource Development System: need, functions, systems, HRD process, HRD effectiveness, Strategic
management & HRM
Training and Development: training and education, stakeholders in training, need for training and development,
training and learning organisations, process of training, cross cultural training, team training, orientation training
Compensation and Rewards: need for compensation, uses, components of compensation, industry compensation,
international compensation, fringe benefits & FBT, reward management-goals, reward systems, recognition
1
THE CHANGING SOCIAL CONTEXT AND EMERGING
ISSUES
CONTENTS
1.0 Aims and Objectives
1.1 Introduction
1.2 Objectives of HRM
1.3 Evolution of HRM
1.4 Scope of HRM
1.5 HRM Functions
1.5.1 Human Resource Planning
1.5.2 Recruitment and Selection
1.5.3 Performance and Career Management
1.5.4 Training and Development
1.5.5 Compensation
1.5.6 Retention, Attrition and Downsizing
1.6 HRM Challenges
1.6.1 Organizational Commitment and Empowerment
1.6.2 Organizational Learning
1.6.3 Ethical Facets
1.6.4 Workplace Diversity
1.7 Personnel Management
1.8 Policies
1.9 Let us Sum up
1.10 Keywords
1.11 Self Assessment
1.12 Review Questions
1.13 Suggested Readings
1.1 INTRODUCTION
Human resource management can be defined as managing the functions of employing,
developing and compensating human resources resulting in the creation and
development of human relations with a view to contribute proportionately to
individual, organizational and societal goals.
The liberalization of the Indian economy in 1991 has created a raft of challenges for
organizations operating in India the world's largest democracy. This country of over a
billion potential customers has some of the world's richest individuals, rocket and
nuclear technology, and an infrastructure that includes the world's largest slums, with
25% of the population earning less that one USD a day. An IT power house and one of
the fastest growing countries for outsourcing, India has the largest area of land under
cotton cultivation in the world. Textiles, jewellery and leather produced in this country
adorn the top echelons of fashion houses internationally. Indians are born into their
castes which creates a social hierarchy that spills over into organizational life. This is
the scenario within which Human Resource Management (HRM) is evolving from a
primarily industrial relations and personnel function to that of the creation and
molding of strategic and systemic policies and practices aligned with business goals in
an environment of intense global competition.
With its colonial heritage, India has legislative and financial systems that tend to fall
within the comfort zones of the West, a large workforce who are conversant with the
English language, and a fiercely independent media. Despite increasing numbers of
international Joint Ventures (JV) and Multi-National Corporations (MNC) vying with
each other for doing business in India, along with the Indian public and private sector
companies, and a growing body of theoretical and empirical literature on the use of
strategic and systemic HRM in India, a comprehensive picture of HRM in the Indian
context is lacking.
1.5.5 Compensation
Compensation or paying employees for work and developing structures of
compensation packages is one of the major responsibilities of HRM managers.
Compensation package consists of two kinds of payments during employment and
after employment. During employment package basically consists of four components
the basic salary, cash allowances, bonus and non-cash perquisites. Once the employee
has left the organization either voluntarily or on superannuation, he can continue to
draw certain kinds of benefits from it these may be in the form of pension, gratuity,
etc. Indian firms seem to employ a mixed approach to employee compensation based
on cultural values (e.g. respect for age) and legal requirements. In a study on 150
firms in India by factors such as the spread of family controlled conglomerates and
government involvement in private business and their impact on top executives'
compensation are examined. They found that CEO compensation was positively
related to CEO age and organizational performance, but tenure was negatively related
to compensation, however this may have been masked by regulatory reforms prior to
the liberalization in the 1990s. Family ownership was negatively related to CEO pay
possibly due to the dampening effect of close family ties on managerial excesses and
Indian tax laws concerned with compensation to family members. A transition
towards performance based pay rather than seniority based pay is taking place though
this is more evident in the private sector.
1.8 POLICIES
z Policy is a plan of action
z Deep thought to the basic needs of both the organization and the employees
z Consistent treatment of all personnel throughout the organization
z Continuity of action is assured
z Policies serve as a standard of performance
z Sound policies help build employees motivation and loyalty.
Specific Policies
z Policy of hiring people
z Policy on terms and conditions of employment
z Policy with regard to medical assistance 15
The Changing Social Context
z Policy regarding housing, transport, uniform and allowances and Emerging Issues
1.10 KEYWORDS
Human Resource Management: Managing the functions of employing, developing
and compensating human resources resulting in the creation and development of
human relations.
Joint Ventures: A contractual agreement joining together two or more parties for the
purpose of executing a particular task.
MNC: Corporation that has its facilities and other assets in at least one other foreign
country.
Human Resource Planning: Foreseeing the human resource requirements of an
organization and the future supply of human resources.
Human Resource Development: Framework for the expansion of human capital
within an organisation.
Recruitment: It is the personnel function that attracts qualified applicants to fill job
vacancies.
Selection: In this process the most suitable candidates are selected for hiring from
among those attracted to the organization by recruiting function.
2
JOB ANALYSIS AND JOB DESIGN
CONTENTS
2.0 Aims and Objectives
2.1 Introduction
2.2 Definition and Purpose of Job Analysis
2.3 Process of Job Analysis
2.4 Types of Information for Job Analysis
2.5 Methods of Gathering Information for Job Analysis
2.5.1 Personal Observation
2.5.2 Critical Incidents
2.5.3 Interview
2.5.4 Questionnaire Method
2.6 The Department of Labor
2.7 Job Description
2.8 Job Specification
2.9 Use of Job Analysis
2.10 Job Design
2.11 Problems with Job Design
2.12 Let us Sum up
2.13 Keywords
2.14 Self Assessment
2.15 Review Questions
2.16 Suggested Readings
We have all experienced that appalling sense of having far too much work to do and
too little time to do it in. We can choose to ignore this, and work unreasonably long
hours to stay on top of our workload. The risks here are that we become exhausted,
that we have so much to do that we do a poor quality job and that we neglect other
areas of our life. Each of these can lead to intense stress. The alternative is to work
more intelligently, by focusing on the things that are important for job success and
reducing the time we spend on low priority tasks. Job Analysis is the first step in
doing this.
The first of the action-oriented skills that we look at is Job Analysis. Job Analysis is a
key technique for managing job overload – an important source of stress. To do an
excellent job, you need to fully understand what is expected of you. While this may
seem obvious, in the new, fast-moving, high-pressure role, it is oftentimes something
that is easy to overlook.
By understanding the priorities in your job, and what constitutes success within it, you
can focus on these activities and minimize work on other tasks as much as possible.
This helps you get the greatest return from the work you do, and keep your workload
under control.
Job Analysis is a useful technique for getting a firm grip on what really is important in
your job so that you are able to perform excellently. It helps you to cut through clutter
and distraction to get to the heart of what you need to do.
An important concept of Job Analysis is that the analysis is conducted of the Job, not
the person. While Job Analysis data may be collected from incumbents through
interviews or questionnaires, the product of the analysis is a description or
specifications of the job, not a description of the person.
2.5.3 Interview
The interview method consists of asking questions to both incumbents and supervisors
in either an individual or a group setting. The reason behind the use of this method is
that job holders are most familiar with the job and can supplement the information
obtained through observation. Workers know the specific duties of the job and
supervisors are aware of the job’s relationship to the rest of the organization.
Due diligence must be exercised while using the interview method. The interviewer
must be trained in proper interviewing techniques. It is advisable to use a standard
format so as to focus the interview to the purpose of analyst.
Although the interview method provides opportunities to elicit information sometimes
not available through other methods, it has limitations. First, it is time consuming and
hence costly. Second, the value of data is primarily dependent on the interviewer’s
skills and may be faulty if they put ambiguous questions to workers. Last,
interviewees may be suspicious about the motives and may distort the information
they provide. If seen as an opportunity to improve their positions such as to increase
their wages, workers may exaggerate their job duties to add greater weightage to their
positions.
Source: U.S. Department of Labor, Dictionary of Occupational Titles, 4th ed. Revised (Washington, D.C.:
Government Printing Office, 1991), p.xix.
Contd...
26 7. Ability to make presentations to groups on compensation policies and practices.
Essentials of HRM
8. Ability to plan and prioritize work.
Education and Experience
This position requires the equivalent of a college degree in Business Administration,
Psychology, or a related field plus 3-5 years experience in HR management, 2-3 of which
should include compensation administration experience. An advanced degree in Industrial
Psychology, Business Administration, or HR Management is preferred, but not required.
Physical Requirements Rarely Ocassionally Frequently Regularly
(0-12%) (12-33%) (34-66%) (67-100%)
Seeing: Must be able to read reports X
and use computer
Hearing: Must be able to hear well X
enough to communicate with
coworkers
Standing/Walking X
Climbing/Stooping/Kneeling X
Lifting/Pulling/Pushing X
Fingering/Grasping/Feeling: Must X
be able to write, type and use phone
system
2.13 KEYWORDS
Job Analysis: It is the process used to collect information about the duties,
responsibilities, necessary skills, outcomes, and work environment of a particular job.
Job Context: It includes information about job conditions, work schedule and
organizational and social context.
Critical Incident Technique: It is a qualitative approach to job analysis used to obtain
specific, behaviorally focused descriptions of work or other activities.
Job Description: It is an organized, factual statement of duties and responsibilities of
a specific job.
Job Specification: It is a statement of human qualifications necessary to do the job.
Job Design: It integrates the work context, the rewards and the qualifications required
for each job.
29
2.14 SELF ASSESSMENT Job Analysis and Job Design
3
HUMAN RESOURCE PLANNING
CONTENTS
3.0 Aims and Objectives
3.1 Introduction
3.2 Objectives of HRP
3.3 Levels of HRP
3.3.1 Corporate Level Planning
3.3.2 Intermediate Level Planning
3.3.3 Operations Planning
3.4 Process of HRP
3.5 Techniques of HR Demand Forecasting
3.5.1 Qualitative Methods
3.5.2 Quantitative Methods
3.6 Factors Affecting HR Demand Forecasting
3.7 Guidelines for making HRP Effective
3.8 Let us Sum up
3.9 Keywords
3.10 Self Assessment
3.11 Review Questions
3.12 Suggested Readings
3.1 INTRODUCTION
HRP process is invaluable to an organization’s well-being. It is the system of
matching the available resources either internally or externally, with the demand that
the organization expects to have over a period of time.
31
Thomson (1988) defines Human Resource Planning as courses of action are Human Resource Planning
determined in advance and continually updated, with the aim of ensuring that:
a) the organization’s demand for labour to meet its projected needs is as accurately
predicted as the adoption of modern forecasting techniques allows and
b) the supply of labour to the enterprise is maintained by deliberate and systematic
action to mobilize it in reasonable balance with these demands.
In simple words human resource planning is the process by which an organization
ensures that it has the right number and kind of people, at the right place, at the right
time, capable of effectively and efficiently completing tasks that will help
organization achieve its overall objective.
Environmental Scanning
It is the systematic process of studying and monitoring the external environment of the
organization in order to pinpoint opportunities and threats. It involves a long-range
analysis of employment. The range of external environmental factors that are most
frequently monitored as part of environmental scanning include economic factors,
competitive trends, technological changes, socio-cultural changes, politico-legal
considerations, labour force composition and supply, and demographic trends.
Forecasting and Analyzing Human Resources Demand 33
Human Resource Planning
Once an organization has identified the opportunities and threats in its internal and
external environments, the next step in the HRP process is to forecast human resource
needs in the light of organizational strategies and objectives. The objective of
forecasting is to estimate future human resource requirements for specific periods.
Demand forecasting involves predicting the number and types of employees a firm
will need in the future. Environmental forces such as changes in technology, changes
in consumer buying behaviour, the economy, and governmental regulations are likely
to influence demand for HR – both in terms of numbers and in types of employees
required.
Short-range plans of
the firm
Human resource
objectives
Forecast
Corporate demand-supply to
determine gaps, if any
Action plans
Source: Strategic Human Resource Management by Tanuja Agarwala, Oxford University Press 2007, p.216
Action Plans
Action plans need to be developed to meet the HRP objective. They involve
developing and implementing programmes such as staffing, appraising, compensating,
career development, layoffs, and training to ensure that people are available with the
appropriate characteristics and skills when and where the organization needs them.
Social Factors
It is common experience that a number of well-conceived projects either do not take
off or get delayed due to social pressures. In such an event, the human resource
demand forecasts made by the planners will undergo substantial changes. Delays
result in cost escalation changes in technology to accommodate the needs/sentiments
of society, changes in location of project etc.
Technological Factors
Rapid changes in technology affect human resources forecasts. From the time a
project is conceived to the time is implemented, substantial time lag may occur during
which, changes in technology may make the entire project unviable. Businesses then
have to quickly catch up with new technology in order that the losses are minimized.
Political Factors
Unforeseen political factors might make considerable impact on the business plans of
enterprises. This is true especially for those organizations which demand mostly only
on international markets either for the sourcing of their raw materials or for selling of
their products and services.
Economic Factors
Economic factors often result in several planned activities being forced to undergo
considerable change. Recent examples are found in India, with economic reforms
being introduced in the early nineties. The traditional concept of manufacturing
everything indigenously, even if it meant just assemble at the component level had to
undergo substantial change and several organizations that had set up or were in the
process of setting up manufacturing activities suddenly found local manufacturing an
unviable proposition. This resulted in major changes in business strategies and for
some enterprises, even the threat of closure.
Demand Generation
Before dwelling on demand forecasting techniques, it is essential to examine the
reasons for the creation of employee demands. This will help us focusing only on
those factors that create demand.
Growth
Growth in traditional business, may lead to demand for higher levels of production,
sales volumes and services. If all possible productivity technique are already applied
and there is no further scope of improvement at that relevant time, simple statistical
models discussed before in this lesson can be applied to forecast future manpower
needs of an enterprise.
Employee Turnover
Employee turnover or attrition is another reason for generation of manpower demands
in an organization. While it is necessary to look at the trends of employee attrition, it
might not be appropriate to simply make a forecast based on the trends. Changing
business scenario and environment have to be considered before any assumptions on 37
Human Resource Planning
future turnover of employees can be made.
3.9 KEYWORDS
Human Resource Planning: It is the system of matching the available resources
either internally or externally, with the demand that the organization expects to have
over a period of time.
Corporate Level Planning: Takes into consideration the changing market situation,
strategic plans of the organization, the technological changes anticipated etc.
Intermediate Level Planning: It is done at the Strategic Business Unit Level and
includes determining the recruitment/layoff strategy, retaining strategy etc.
38 Operational Planning: It includes simple plans like plans for training and
Essentials of HRM
development of resources, recruitment etc. to match the requirements laid down at a
broader level.
Action Plans: Involves developing and implementing programmes such as staffing,
appraising, compensating, career development, layoffs, and training.
Estimation: It is a method of demand forecasting that involves asking people in
position the question of requirements for future.
Simulation Models: These are highly sophisticated probabilistic simulation models
that use probabilities of future events to estimate future employment levels.
Markov Analysis: It shows the percentage of employees who remain in each job from
one year to the next.
4
ATTRACTING THE TALENT: RECRUITMENT,
SELECTION AND OUTSOURCING
CONTENTS
4.0 Aims and Objectives
4.1 Introduction
4.2 Definition of Recruitment
4.3 Sources of Recruitment
4.3.1 Internal Sources of Recruitment
4.3.2 External Sources of Recruitment
4.4 Factors Affecting Recruitment
4.4.1 External Factors
4.4.2 Internal Factors
4.5 Definition of Selection
4.6 The Selection Process
4.6.1 Pre-screening
4.6.2 Pre Interview Screening and Preliminary Interview
4.6.3 Checking References
4.6.4 Tests
4.6.5 Interviews
4.6.6 Assessment Centers
4.6.7 Physical Examination
4.6.8 Job Offer
4.7 Problems Affecting the Objectivity of Selection Interviews
4.8 Induction
4.9 Outsourcing
4.10 Let us Sum up
4.11 Keywords
4.12 Self Assessment
4.13 Review Questions
4.14 Suggested Readings
40
Essentials of HRM 4.0 AIMS AND OBJECTIVES
After studying this lesson, you should be able to:
z State, explain and evaluate various methods of recruitment
z Explain the concept of selection
z Analyse the selection process
z Understand the purpose of induction and how it is carried out
z Analyse the function of outsourcing
4.1 INTRODUCTION
Successful employee selection is dependent on a clear understanding of a job’s
components. A job analysis is used to identify job tasks and responsibilities. This may
be accomplished by collecting information about the position; by interviewing
workers, supervisors, and other farm employers; and by observing current employees.
Other sources, such as the Dictionary of Occupational Titles (DOT) or its
replacement, the Occupational Information Network (O*NET), provide written job
analysis data to get you started. End products of a job analysis include a job analysis
schedule, job specifications, and a job description.
Selection follows on from recruitment. Once the recruitment process has attracted the
right number and type of applicants, it is up to the selection process to sift between
them for those that are most suited to the position. These will be hired, the rest
(probably the majority) will be thanked for applying but not accepted. See Figure 4.1
below:
Recruitment Selection
process process
4.6.1 Pre-screening
A certain amount of screening will probably already have been already done before
the initial interview, possibly in the recruitment phase and through some screening
processes (probably an analysis of the CV, an application form etc).
4.6.4 Tests
Different types of tests are conducted to evaluate the capabilities of an applicant, his
behaviour, special qualities etc. Separate tests are conducted for various types of jobs.
4.6.5 Interviews
I. Unstructured Interview: Involves a procedure where different questions may be
asked of different applicants.
II. Situational Interview: Candidates are interviewed about what actions they would
take in various job-related situations. The job-related situations are usually
identified using the critical incidents job analysis technique. The interviews are
then scored using a scoring guide constructed by job experts.
46
Essentials of HRM III. Behavior Description Interviews: Candidates are asked what actions they have
taken in prior job situations that are similar to situations they may encounter on
the job. The interviews are then scored using a scoring guide constructed by job
experts.
IV. Comprehensive Structured Interviews: Candidates are asked questions pertaining
to how they would handle job-related situations, job knowledge, worker
requirements, and how the candidate would perform various job simulations.
Interviews tapping job knowledge offer a way to assess a candidate's current level
of knowledge related to relevant implicit dimensions of job performance
(i.e., "tacit knowledge" or "practical intelligence" related to a specific job
position).
V. Structured Behavioral Interview: This technique involves asking all interviewees
standardized questions about how they handled past situations that were similar to
situations they may encounter on the job. The interviewer may also ask
discretionary probing questions for details of the situations, the interviewee's
behavior in the situation and the outcome. The interviewee's responses are then
scored with behaviorally anchored rating scales.
Role Playing
1. Role playing is a type of assessment center exercise where the candidate assumes
the role of the incumbent of the position and must deal with another person in a
job-related situation. A trained role player is used and responds "in character" to
the actions of the candidate. Performance is assessed by observing raters.
2. Problems with this technique:
(a) Since this technique is not conducive to group administration, test security
would be an issue.
(b) Job content areas identified in the job analysis were not as amenable to this
type of exercise as they were to the selection techniques utilized in the final
test.
4.9 OUTSOURCING
Outsourcing the Human Resource (HR) processes is the latest practice being followed
by middle and large sized organizations. It is being witnessed across all the industries.
In India, the HR processes are being outsourced from nearly a decade now.
Outsourcing industry is growing at a high rate.
Human Resource Outsourcing refers to the process in which an organisation uses the
expert services of a third party (generally professional consultants) to take care of its
HR functions while HR management can focus on the strategic dimension of their
function. The functions that are typically outsourced are the functions that need
expertise, relevant experience, knowledge and best methods and practices. This has
given rise to outsourcing the various HR functions of an organisation. HR
Consultancies such as Ma Foi and Planman Consulting provide such services through
expert professional consultants. Human resources business process outsourcing (HR
BPO) is a major component of the worldwide BPO market. Performance management
outsourcing involves all the performance monitoring, measurement, management
being outsourced from a third party or an external organisation.
Many organizations have started outsourcing its recruitment process i.e. transferring
all or some part of its recruitment process to an external consultant providing the
recruitment services. It is commonly known as RPO i.e. recruitment process
outsourcing. More and more medium and large sized organizations are outsourcing
their recruitment process right from the entry level jobs to the C-level jobs.
The present value of the Recruitment Process Outsourcing industry (RPO) in India is 49
Attracting the Talent: Recruitment,
estimated to be $2.5 billion and it is expected to grow at the annual rate of 30-40 Selection and Outsourcing
per cent for the next couple of years. According to a recent survey, only 8-10 per cent
of the Indian companies are complete recruitment processes. However, the number of
companies outsourcing their recruitment processes is increasing at a very fast rate and
so is the percentage of their total recruitment processes being outsourced.
Outsourcing organizations strive for providing cost saving benefits to their clients.
One of the major advantages to organizations, who outsource their recruitment
process, is that it helps to save up to as much as 40 per cent of their recruitment costs.
With the experience, expertise and the economies of scale of the third party,
organizations are able to improve the quality of the recruits and the speed of the whole
process. Also, outsourcing enables the human resource professionals of organizations
to focus on the core and other HR and strategic issues. Outsourcing also gives a
structured approach to the whole process of recruitment, with the ultimate power of
decision making of recruiting with the organisation itself. The portion of the
recruitment cycle that is outsourced range from preparing job descriptions to arranging
interviews, the activities that consume almost 70 per cent of the time of the whole
recruitment process.
Outsourcing the recruitment processes for a sector like BPO, which faces an attrition
of almost 50-60 per cent, can help the companies in BPO sector to save costs
tremendously and focus on other issues like retention. The job seekers are also
availing the services of the third parties (consultants) for accessing the latest job
opportunities.
In India, the trend of outsourcing recruitment is also catching up fast. For example:
Vodafone outsources its recruitment activities to Alexander Mann Solutions
(RPO service provider). Wipro has outsourced its recruitment process to MeritTrac.
Yes bank is also known to outsource 50 per cent of its recruitment processes.
4.11 KEYWORDS
Recruitment: It is the process of searching the candidates for employment and
stimulating them to apply for jobs in the organisation.
Employment Exchanges: Exchanges provide job information to job seekers and help
employers in identifying suitable candidates.
50 Recruitment Policy: It specifies the objectives of recruitment and provides a
Essentials of HRM
framework for implementation of recruitment programme.
Selection: It is the process of choosing from a group of applicants the individual(s)
best suited for a particular position.
Personality Tests: A selection procedure that measures the personality characteristics
of applicants that are related to future job performance.
Assessment Center: It consists of a standardized evaluation of behavior based on
multiple evaluations including: job-related simulations, interviews, and/or
psychological tests.
Human Resource Outsourcing: It refers to the process in which an organisation uses
the expert services of a third party to take care of its HR functions.
5
COMPETENCY MAPPING AND ASSESSMENT CENTRES
CONTENTS
5.0 Aims and Objectives
5.1 Introduction
5.2 Developing Competency Models
5.3 Various Competency Models – Brief Outline
5.4 Uses and Benefits of Competency Approach in an Organisation
5.5 History of Assessment Centres
5.5.1 The use of Assessment Centres in the US
5.5.2 Definition – Assessment Center
5.6 Measurement Tools Uses in an Assessment Centre
5.6.1 Psychometric Tests
5.6.2 The Leaderless Group Discussion (LGD)
5.6.3 In-basket Exercise
5.6.4 Group Exercises
5.6.5 Behavioral Event Interviews
5.7 A Typical Assessment Centre
5.8 Future Trends in Competency Modeling
5.9 Let us Sum up
5.10 Keywords
5.11 Self Assessment
5.12 Review Questions
5.13 Suggested Readings
5.1 INTRODUCTION
Competency mapping is a process through which one assesses and determines one’s
strengths as an individual worker and in some cases, as part of an organization. It
generally examines two areas: emotional intelligence or Emotional Quotient (EQ), and
52 strengths of the individual in areas like team structure, leadership, and decision-
Essentials of HRM
making. Large organizations frequently employ some form of competency mapping to
understand how to most effectively employ the competencies of strengths of workers.
They may also use competency mapping to analyze the combination of strengths in
different workers to produce the most effective teams and the highest quality work.
The value of competency mapping and identifying emotional strengths is that many
employers now purposefully screen employees to hire people with specific
competencies. They may need to hire someone who can be an effective time leader or
who has demonstrated great active listening skills. Alternately, they may need
someone who enjoys taking initiative or someone who is very good at taking
direction. When individuals must seek new jobs, knowing one’s competencies can
give one a competitive edge in the job market.
However, competency mapping can ultimately serve the individual who decides to
seek employment in an environment where he or she perhaps can learn new things and
be more intellectually challenged. Being able to list competencies on resumes and
address this area with potential employers may help secure more satisfying work. This
may not resolve issues for the company that initially employed competency mapping,
without making suggested changes. It may find competency mapping has produced
dissatisfied workers or led to a high worker turnover rate.
Defining Competency: Although the definition appears to vary widely (Schippmann,
et al., 2000), competencies are typically defined as a combination of knowledge,
skills, abilities and other individual characteristics that can be reliably measured and
that can be shown to differentiate performance (Mirabile, 1997; Schippmann, et al.,
2000; Spencer, McClelland, & Spencer, 1994).
Contd...
55
Competency Mapping and
give feedback at a later date give feedback immediately Assessment Centres
involve the organisation having control over the
information obtained
have very little pre-centre briefing
tend to be used with external candidates
5.10 KEYWORDS
Competency: Combination of knowledge, skills, abilities and other individual
characteristics that can be reliably measured and that can be shown to differentiate
performance.
Assessment Center: It consists of a standardized evaluation of behavior based on
multiple inputs.
Development Center: Focuses on development of individuals in organisations.
Psychometric Tests: Structured exercises used for measuring a person’s aptitude,
competence, skill, sensitivity, memory, intelligence and personality.
Leaderless Group Discussion: It evaluates group interaction skills, which are known
to be critical to success in supervisory/managerial positions by presenting candidate
groups with problems that face virtually all managers.
In-basket Exercise: It assesses a candidate's ability to perform a manager’s job from
an administrative perspective.
Behavioral Event Interviews: They constitute a powerful tool for numerous
organizational processes like recruitment, selection, performance management and
even research.
6
PERFORMANCE PLANNING AND REVIEW
CONTENTS
6.0 Aims and Objectives
6.1 Introduction
6.2 Steps to Implement Performance Planning and Review
6.3 Performance Appraisal: Brief History
6.4 Concept of Performance Appraisal
6.5 Objectives of Performance Appraisal
6.6 Goals of Performance Appraisal
6.7 Process of Performance Appraisal
6.8 Improving the Performance Appraisal Process
6.9 Importance of Effective Performance Appraisals
6.10 Challenges in Performance Appraisals
6.11 Techniques/Methods of Performance Appraisals
6.11.1 Past Oriented Methods
6.11.2 Future Oriented Methods
6.12 Pitfalls that should be Avoided while Designing an Appraisal System
6.13 Meaning of Performance Coaching
6.14 Objectives of Performance Coaching
6.15 Role of the Supervisor and Manager in Coaching
6.16 The HRD Professional’s Role in Coaching
6.17 Conditions for Effective Coaching
6.18 Conducting the Coaching Analysis
6.19 The Coaching Discussion
6.19.1 An Analysis and Synthesis of the Two Approaches
6.19.2 What if the Coaching Discussion Fails?
6.20 Skills for Effective Coaching
6.21 The Effectiveness of Coaching
6.22 Recommendations for Organizations to Promote Effective Performance
Management and Coaching
6.23 Concept of Mentoring
6.24 Why is Mentoring Important?
6.25 The Mentoring Implementation Process
Contd...
62 6.25.1 Introducing the Mentoring Process
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6.25.2 Identifying Mentors and Mentees
6.25.3 Training of Mentoring Co-ordinators
6.25.4 Matching Mentors and Mentees
6.25.5 Implementation
6.25.6 Evaluation
6.25.7 Improvement
6.26 Let us Sum up
6.27 Keywords
6.28 Self Assessment
6.29 Review Questions
6.30 Suggested Readings
6.1 INTRODUCTION
Performance Appraisal is a formal system of measuring, evaluating, and influencing
an employee’s job-related attributes, behaviors and outcomes. The objectives are:
z to determine how productive an employee is
z to determine if an employee’s productivity can be improved
Performance appraisals serve an important purpose in managing people and meeting
company goals.
Managing employee performance is not an easy job. Managers in the organization are
at cross roads many a times when they are unable to handle the performance in a
proper manner because the do not have good enough approach. Their disciplinary
actions to mange performance may give rise to the problems rather than solving them.
Managers who employee disciplinary approach to solve problems may not get the
desired result as it never helps and this may lead to either ignoring the poor performer
or awarding the task among better performers or employee exit. It can also result into
conflict and constant worry among employees and feeling of discrimination.
Helping employees for their growth and development should be the motto of work
organizations. Therefore, it is necessary that managers and supervisor must realize and
take an active and positive role in employee performance. They should make certain
that goal is met. Their role is to manage employee performance, to ensure that 63
Performance Planning
employees know what they are to do, and can do. Prepare them to face the challenges and Review
on job and adapt to changes. Therefore, performance management requires that
managers and supervisors play the role of coaching and mentoring employees not
controlling them. Coaching is one of the most important functions a manger performs.
Coaching in the organizations requires that managers and employees work in
partnership role to get the job done. It conveys a very positive and participative
management approach, which empowers employees towards the growth and success.
An old Chinese proverb is, “give man a fish you feed him for a day. Teach a man to
fish you feed him for a life time.” The same is true for performance management
coaching.
Kinlaw’s Approach
Kinlaw suggests a three-stage approach to the coaching discussion, as follows:
z Confronting or presenting
z Using reactions to develop information
z Resolving or resolution
The goals of the confronting or presenting stage are to limit any negative emotion the 75
Performance Planning
employee might feel toward the problem situation, to specify the performance to be and Review
improved, and to establish that the goal is to help the employee change and improve.
Kinlaw argues this can be done by specifically describing the performance that needs
to be changed, limiting the discussion to a specific problem behavior, and avoiding
assignment of blame by focusing on the future.
At the second stage, ‘using reactions to develop information’, Kinlaw notes that
employees may resist dealing with the problem after being confronted with it, and
argues that supervisors can reduce this resistance by focusing on the employee’s
concerns rather than their own. The supervisor may then develop information by
attending to the employee’s explanations, acknowledging important point, probing for
information, and summarizing what has been discussed. At the end of this second
stage of the coaching discussion, the employee and supervisor should be in a position
to agree on the nature of the problem and its causes.
The third and final stage of Kinlaw’s coaching discussion is called resolving or
resolution. In this stage, the employee takes ownership of the problem and agrees
upon the steps needed to solve it. Both parties at this point express commitment to
improving performance and to establishing a positive relationship. This is done by
examining alternative courses of action, reviewing key points of the session, and
affirming that performance can be successfully improved.
Fournies’ Approach
Fournies suggests a five-step coaching – discussion process that assumes the
supervisor has conducted a thorough coaching analysis (as described above), and has
determined that the employee could perform the task if he or she wanted to. The goal
of the discussion is to get the employee to agree that a problem exists and to commit
to a course of action to resolve it.
Step 1: Get the employee’s agreement that a problem exists
Step 2: Mutually discuss alternative solutions to the problem
Step 3: Mutually agree on actions to be taken to solve the problem
Step 4: Follow-up to measure results
Step 5: Recognize any achievement when it occurs
6.25.5 Implementation
Flexibility is very important during the process of implementation; in other words
adapting the mentoring process to suit the needs of the programme. However, it is
essential that both mentors and mentees should realise that they have a responsibility
to keep to the deadlines and action plans decided upon by both parties.
An effective relationship will be based on mutual respect and should be flexible
enough to examine options and brainstorm strategies. Remember that many of us
"talk our way to understanding" when we are given freedom and encouragement to
express our creative thoughts without fear of judgement. Active listening on the part
of both mentor and mentee is important.
The relationship should be subject to re-negotiation in order to accommodate new
issues and address needs as they arise. Unambiguous and brief records of dates of
meetings should be kept. The duration of each meeting may vary as per mentee’s
requirement to discuss issues. Still a separate time for meeting should be reserved.
The meeting times and venues should be conducive to focused and confidential
discussions and should be mutually convenient. The meeting space should be private.
The times of meetings should vary, but should not always be at the end of a working
day or week.
Periodic feedback and discussion are essential to ensure the continued development
and support of the mentee. This would also be an opportunity to establish progress and
the provision of resources and other aids. All the progress should be recorded so as to
provide an indication of what needs to be done in the next review period.
82 Feedback needs to focus on learning. Ensure that the feedback session is a dialogue
Essentials of HRM
where the mentees also have the opportunity to voice ideas and opinions relating to
the issues at hand. Feedback would first be given on positive issues, for example
something the mentee has done well, then moving to the areas where development is
still required, ending off with issues regarding areas where the mentee has performed
well again.
Feedback should be descriptive, specific, in the mentee’s interests, useful, given at the
right time, clearly formulated and correct. Conditions under which feedback occur
should be socially minded; refrain from demoralizing the mentee and giving
subjective interpretations; do not confuse feedback with value judgments; be open and
honest. Finally, the feedback should relate to the learning and how performance may
be improved.
The learning contract would be completed when the mentees have evidence that all the
learning included in the contract has been acquired. The completion would depend on
the learners being able to apply what has been learnt.
6.25.6 Evaluation
One of the shortcomings of mentoring programme is that very few of them carry out
systematic evaluation. There is great benefit in having mentors and mentees
participate in evaluation. There can be two “progress reviews:” one at mid-point and
one at the end of the program. These reviews give participants the opportunity to ask
questions and share their challenges and success stories. This kind of information also
allows the program coordinator to make any mid-point or program-end adjustments
that will enhance current or future programs.
Programme should be evaluated in terms of measuring relationship outputs for
example:
z How many of the learning objectives were reached?
z Has the mentee improved key scores on his or her performance appraisal?
z Does the supervisor feel that mentoring is helping the mentee make progress?
Measuring programme outputs for example:
z Decrease in mentee labour turnover.
z Achievement of performance appraisal scores on key competencies.
z Number of mentees considered suitable for promotion after a set period.
Unlike other people management interventions such as performance management, or
skill training, mentoring has more medium and long term implications. For certain
skill areas, it will be impossible for the mentee to develop the required skills within a
year. It may be necessary for the mentee to attend other courses, or to study a degree
before he or she will obtain the overall level of competence required.
6.25.7 Improvement
No mentoring programme will be perfect. Like many other functions in an
organization, mentoring depends to a large extent on the human element, which means
that mistakes are inevitable. All role players should therefore see the programme as a
learning experience. The long-term objective should be to improve employee
performance and development.
83
6.26 LET US SUM UP Performance Planning
and Review
The performance appraisal process provides an opportunity for introducing
organizational change.
It facilitates the process of change in the organizational culture.
The interactive sessions between the management and the employees, the mutual goal
setting and the efforts towards the career development of the employees help the
organization to become a learning organization.
Conducting performance appraisals on a regular basis helps it to become an ongoing
part of everyday practice and helps employees to take the responsibility of their work
and boosts their professional development.
Even though conducting employee performance appraisals is an important part of
every manager's job, most supervisors don't look forward to sitting down with their
employees and going through the formal evaluation process.
In order to make a performance appraisal system effective and successful, an
organization comes across various challenges and problems.
Successful organizations are revolutionizing the way they are developing their
employees.
They are moving away from traditional training approaches that rely on formal
classroom training alone and are creating conditions where learning happens
continuously through a variety of developmental experiences and mentoring
partnerships.
Performance coaching and Mentoring are very important for employee development.
Performance coaching refers to giving feedback to employees, counseling, mentoring,
educating, building morale etc. The dynamics of performance counseling are
applicable to Mentoring as well.
The mentoring relationship refers to the interaction between mentor and mentee while
the mentoring process focuses on the steps that must be implemented to make the
overall mentoring process work.
Mentoring could also be part of a larger initiative to support skills development in an
organisation. However, for both the mentoring and performance coaching relationship;
the ultimate goal is same.
Taking cognizance of the dynamics of the relationship, Coaching and Mentoring
process must be managed well to ensure intervention effectiveness.
6.27 KEYWORDS
Performance Appraisal: It is a formal system of measuring, evaluating, and
influencing an employee’s job-related attributes, behaviors and outcomes.
Rating Scales: It consists of several numerical scales representing job related
performance criterions such as dependability, initiative, output, attendance, attitude
etc.
Forced Choice Method: In this method, a series of statements is arranged in the
blocks of two or more and the rater indicates which statement is true or false.
Forced Distribution Method: Here employees are clustered around a high point on a
rating scale.
84 Critical Incidents Method: This approach is focused on certain critical behaviors of
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employee that makes all the difference in the performance.
Field Review Method: This is an appraisal done by someone outside employees’ own
department usually from corporate or HR department.
Management by Objectives: In this method, the performance is rated against the
achievement of objectives stated by the management.
Mentoring: It is a process where an experienced person provides help, guidance,
support to nurture and develop a less experienced person.
Performance Coaching: It is concerned with collaborative effort towards managing
performance with a focus on expanding excellence towards individual learning growth
and development.
Mirza S. Saiyadain, Human Resource Management, Third Edition, Tata McGraw Hill.
P. Subba Rao, Personnel and Human Resource Management, Second Edition, Himalaya
Publishing House.
G. Dessler, Human Resource Management, 12th Edition, Pearson Education.
86
Essentials of HRM
LESSON
7
POTENTIAL APPRAISAL, CAREER AND SUCCESSION
PLANNING
CONTENTS
7.0 Aims and Objectives
7.1 Introduction
7.2 Potential Appraisal
7.2.1 Purpose of Potential Appraisal
7.2.2 Techniques of Potential Appraisal
7.3 Career Planning
7.3.1 Steps in Career Planning Process
7.3.2 Advice on Career Planning
7.3.3 Career Anchors
7.4 Succession Planning
7.4.1 Succession Planning: Pros and Cons
7.5 Let us Sum up
7.6 Keywords
7.7 Self Assessment
7.8 Review Questions
7.9 Suggested Readings
7.1 INTRODUCTION
Potential appraisal done in a systematic way it would contribute to having well-
designed career plans and succession planning. A career plans would indicate the
preferred growth path of an individual in an organization. Succession planning is the
process where every individual manager is expected to develop a subordinate who
would take over from him over a period of time. Many managers feel insecure about
this process and avoid indulging in this developmental activity. What they fail to
realise is that, if an individual has the potential and shows good performance, there is
always room at the top. Unless they develop their own people, they themselves 87
Potential Appraisal, Career
become stagnant. Succession planning too would succeed if and only if a good and Succession Planning
potential appraisal system exists and is in firm place. If potential appraisal is not done
in a planned manner, you may promote an undeserving employee.
7.6 KEYWORDS
Potential Appraisal: It refers to the appraisal i.e. identification of the hidden talents
and skills of a person.
Career: It is the sequence of jobs that an individual has held throughout his or her
working life.
Career Planning: It is the life-long process a person goes through to learn about
himself, develop a self-concept, learn about careers, and work situations and then
make a career choice based on information gathered while developing coping and
social skills.
92 Internal Career: It reflects the goals and values held by an individual in relation to his
Essentials of HRM
working life and the criteria of success by which he judges himself.
External Careers: It refers to the actual job sequence that specifies a path through an
occupation or organization.
Succession Planning: It refers to the process of developing the second line for taking
up a higher role in the organization.
8
HR MEASUREMENT AND AUDIT
CONTENTS
8.0 Aims and Objectives
8.1 Introduction
8.2 Human Resource Audit: An Introduction
8.3 Role of HR Audit in Business Improvements
8.4 Why conduct an HR Audit?
8.5 The HR Audit Process
8.5.1 Interviews/Questionnaires
8.5.2 Observation and Recording
8.5.3 Follow-up and Corrections done
8.6 Advantages for Human Resource Audit
8.7 Human Resource Accounting: An Introduction
8.8 Methods of Human Resource Accounting
8.8.1 Methods based on Cost
8.8.2 HR Accounting based on Value
8.9 Impacts and Implications of Human Resource Accounting
8.10 Human Resource Information Systems (HRIS): An Introduction
8.11 Why HRIS?
8.12 HRIS – Application and Utilities
8.13 HRIS – Benefits
8.14 HRIS – Disadvantages
8.15 Let us Sum up
8.16 Keywords
8.17 Self Assessment
8.18 Review Questions
8.19 Suggested Readings
8.1 INTRODUCTION
Human Resource audit is a comprehensive evaluation of the existing human resource
development strategies, structure, systems, styles and skills in accordance with both
short-term and long-term business plans of the organization. It involves the study and
analysis using a variety of methodologies like interviews, questionnaires, available
records, workshops etc.
Human resource accounting aims at depicting the human resources potential in money
terms while casting the organisation’s financial statements.
Human Resource Information System (HRIS) is a systematic way of storing data and
information for each individual employee. This aids in planning, decision making,
preparing and submission of reports for use both internally and external to the
organization. It helps maintain details such as employee profiles, attendance/absence
reports, compensation, personal, training and various kinds of details on employees.
It studies the existing processes and systems and suggests modifications based
on future business requirements. This helps in process improvements within
the organization.
z Increased focus on human resources and human competencies.
The organization understands that people are its greatest assets and to ensure a
competitive edge in today’s challenging business scenario, the focus is on
people development. HR audit provides guidelines for developing and
enhancing employee’s competencies.
z Strengthening accountabilities through appraisal systems and other mechanisms
within the organization.
The HR audit brings in a sense of responsibility and ownership of the systems
and processes within the company. This helps in improving accountability in
appraisal systems and other processes in the organization.
8.16 KEYWORDS
Human Resource Audit: It is a comprehensive evaluation of the existing human
resource development strategies, structure, systems, styles and skills.
Human Resource Accounting: It is the process of identifying and measuring data
about human resources and communicating this information to interested parties.
Historical Method: Under this method, the cost of acquisition i.e. selection, hiring,
training costs of employees are capitalized and written off over the expected useful
life of the employees.
102 Replacement Cost Method: Under this method, the human resources are valued at
Essentials of HRM
their replacement cost i.e. the monetary implications of replacing existing personnel.
Standard Cost Method: Under this method, standard costs of recruiting, hiring,
training, and developing per grade of employees are determined annually.
Economic Value Method: Under this method, the net present value of incremental
cash flows attributed to human resources is taken as the asset value.
Human Resource Information System: It is a systematic way of storing data and
information for each individual employee.
9
HUMAN RESOURCE DEVELOPMENT SYSTEM
CONTENTS
9.0 Aims and Objectives
9.1 Introduction
9.2 Concept of Human Resource Development
9.3 HRD Department and its Functions
9.4 Human Resource Development Systems
9.5 Human Resource Development Process
9.6 Critical Elements of HRD Effectiveness
9.7 Strategic Management and HRD
9.8 HRD/Organization Alignment Model
9.8.1 Organization Mission/Goals
9.8.2 Core Competencies
9.8.3 Needs Assessment
9.8.4 Integrated Solutions
9.8.5 Organization Outcomes
9.9 Let us Sum up
9.10 Keywords
9.11 Self Assessment
9.12 Review Questions
9.13 Suggested Readings
9.1 INTRODUCTION
People are the assets on which competitive advantage is built, whether in the public or
private sector, whether in the corporate world or in the world of education. In the
104 words of the latest theory on human resource management, people are an “inimitable”
Essentials of HRM
asset. People and their skills are the one thing that competitor organizations cannot
imitate so human resource management and the practices associated with it have
become accepted by managers in all forms of organizations as one of the most
important strategic levers to ensure continuing success.
The traditional emphasis of what used to be called “personnel management” was on
the regulation of the management of people in organizations. This regulatory role was
reinforced, by increasing government regulation of employment conditions through
legislation concerned with the conduct of industrial relations, discrimination,
employment rights, health and safety and other employment conditions. In many
organizations today, this older notion of personnel administration still holds sway with
its emphasis on rules and regulation.
Research Officer
Organization Development
Another primary function of HRD is Organization Development (OD) is defined as
the process of enhancing the effectiveness of an organization and the wellbeing of its
members through planned interventions that apply behavioral science concepts. OD
activities are at two levels – (a) Micro OD and (b) Macro OD.
Micro level activities include individual and team aspects, where as macro changes are
intended to ultimately improve the effectiveness of the organization. For example,
many organizations have sought to improve organizational effectiveness by
introducing employee involvement programs that require fundamental changes in
work expectations, reward systems, and reporting procedures. The role of the HRD
professional involved in an intervention is to function as a change agent. Facilitating
change often requires consulting with and advising line managers on strategies that
can be used to effect the desired change. The HRD professional may also become
directly involved in carrying out the intervention strategy, such as facilitating a
meeting of the employees responsible for planning and implementing the actual
change process.
Career Development
Career development is an ongoing process by which individual’s progress through a
series of stages. Career development involves two distinct processes: career planning
and career management. Career planning is done by the individual self, often with the
assistance of counselors and others, to assess his or her skills and abilities in order to
establish a realistic career plan. Career management involves taking the necessary
steps to achieve that plan, and generally focuses more on what the organization can do
to foster employee career development.
(Source: From P. A. Me Lagan (1989)_ Models for HRD Practice, Training and Development Journal, 41:53.)
1 2 3
Human
Performance Human
Resources
Requirements Resources Needs
Function
Training Needs
HRD Philosophy HRD Strategies Assessment
HRD Policy HRD Systems Organizational
HRD Goals Career Paths Occupational,
Individual
4 5
Organization Integrated
Outcomes Solutions
Transfer of Training
HRD Priorities
Cost Benefits of HRD
HRD Programs
Critical Success
HRD Practices
Factors
9.10 KEYWORDS
Personnel Management: It is the strategic and coherent approach to the management
of an organisation's most valued assets – the people.
Human Resource Development: It is a framework for the expansion of human capital
within an organisation.
Line Function: Directing the activities of the people within department and service
areas.
Staff Function: It carries out the support role, it support the line in its performance.
Strategic Management: It involves a set of managerial decisions and actions that are
intended to provide a competitively superior fit with the external environment and
enhance the long-run performance of the organization.
Core Competencies: A company's primary area of business and greatest expertise.
10
TRAINING AND DEVELOPMENT
CONTENTS
10.0 Aims and Objectives
10.1 Introduction
10.2 Training and Education
10.3 Training and Development: Concept
10.4 Stake Holders in Training and Development
10.5 Training and Learning Organization
10.6 Need for Training and Development
10.7 The Training Process
10.7.1 Organizational Objectives and Strategies
10.7.2 Needs Assessment
10.7.3 Training and Development Objectives
10.7.4 Designing Training and Development Program
10.7.5 Implementation of the Training Program
10.7.6 Evaluation of Training Program
10.8 Special Topics in Training and Development
10.8.1 Cross-cultural Training
10.8.2 Orientation Training
10.8.3 Team-training and Cross-training
10.8.4 Diversity Training
10.9 Let us Sum up
10.10 Keywords
10.11 Self Assessment
10.12 Review Questions
10.13 Suggested Readings
10.1 INTRODUCTION
The term training refers to the acquisition of knowledge, skills, and competencies as a
result of the teaching of vocational or practical skills and knowledge that relate to
specific useful competencies. It forms the core of apprenticeships and provides the
backbone of content at technical colleges and polytechnics. In addition to the basic
training required for a trade, occupation or profession, observers of the labor-market
recognize today the need to continue training beyond initial qualifications: to
maintain, upgrade and update skills throughout working life. People within many
professions and occupations may refer to this sort of training as professional
development.
Training differs from exercise in that people may dabble in exercise as an occasional
activity for fun. Training has specific goals of improving one's capability, capacity,
and performance.
A training program can serve a range of diverse purposes, and organizations initiate
training programs for many different reasons. In broadcasting one of the strongest
motives is the need to respond to challenges presented by new technologies. As our
technology changes at an increasingly rapid pace, it requires new skills. The resulting
changes in job descriptions frequently blur boundaries between previously distinct
jobs, producing greater demands for a multi-skilled staff. In any event, many persons
will need to be trained in the new skills required by technology changes, and some of
that retraining will be conducted within their organizations.
Improving efficiency and performance to ensure that the organization is capable of
responding to the challenges of its competitors will sometimes require a very different
kind of training program. But in striving for enhanced efficiency and levels of
performance, training should also be seen as a part of individual professional
development. An organization can increase the likelihood that it will keep valued
employees if it demonstrates that it is willing to invest in their professional
development, by helping them gain new skills and expertise through organizational
support for their training.
Organizational objectives
and strategies
Establishment of training
goals
Implementation of training
programme
Evaluation of results
Lack of skill or
Other causes
knowledge
Training Non-training
Contd...
126 MBO or work planning systems Training progress
Essentials of HRM
Quality circles Rating scales
Customer survey/satisfaction data Observation of behaviour
Consideration of current and projected changes
Lectures
Lecture is a verbal presentation of information by an instructor to a large audience.
The lecturer is presumed to possess a considerable depth of knowledge of the subject
at hand. A virtue of this method is that it can be used for very large groups, and hence
the cost per trainee is low. Lecture method is mainly used in colleges and universities,
though its application is restricted in training factory employees.
Limitations of the lecture method account for its low popularity. The method violates
the principle of learning by practice. If constitutes a one way communication. There is
no feedback from the audience. Continued lecturing is likely to bore the audience. To
break the boredom, the lecturer often resorts to anecdotes, jokes and other attention –
getters. This activity may eventually overshadow the real purpose of instruction.
However, lecture method can be made effective if it is combined with other methods
of training.
Audio Visuals
Audio visuals include television slides, overheads, video tapes and films. These can be
used to provide wide range of realistic examples of job conditions and situations in the
condensed period of time. Further, the quality of the presentation can be controlled
128 and will remain equal for all training groups. But, audio-visuals constitute a one-way
Essentials of HRM
system of communication with no scope for the audience to audience.
Programmed Instruction
This is a method where training is offered without the intervention of a trainer.
Information is provided to the trainee in blocks, either in book from or through a
teaching machine. After reading each block of material, the learner must answer a
question about it. Feedback in the form of correct answers is provided after each
response. Thus, Programmed Instruction (PI) involves:
i) Presenting questions, facts, or problems to the learner
ii) Allowing the person to respond
iii) Providing feedback on the accuracy of his or other answers
iv) If the answers are correct, the learner proceeds to the next block. If not, he or she
repeats the same.
The main advantage of PI is that it is self-paced; trainees can progress through the
program at their own speed. Strong motivation is provided to the learner to repeat
learning. Material is also structured and self-contained, offering much scope for
practice.
The disadvantages are not to be ignored. The scope for learning is less, compared to
other methods of training. Cost of preparing books, manuals and machinery is
considerably high.
Simulation
A simulator is any kind of equipment or technique that duplicates as nearly as possible
the actual conditions encountered on the job. Simulation then, is an attempt to create a
realistic decision-making environment for the trainee. Simulations present likely
problem situations and decision alternatives to the trainee. For example, activities of
an organization may be simulated and the trainee asked to make a decision in support
to those activities. The results of those decisions are reported back to the trainee with
an explanation of what would have happened had they actually been made in the
workplace. The trainee learns from this feedback and improves his subsequent
simulation and workplace decisions.(Source: K. Ashwathappa, in Human Resource Management)
Conduct of Training
A final consideration is where the training and development program is to be
conducted. Actually, the decision comes down to the following choices:
z At the job itself.
z On site but not on the job – for example, in a training room in the company.
132 z Off the site, such as in a university or college classroom, hotel or conference
Essentials of HRM
centre.
Typically, basic skills are taught at the job, and basic grammar skills are taught on the
site. Much of interpersonal and conceptual skills are learnt off the site.
1. Reactions: The first level includes participants reaction related to training. What
does the learner feel about the training? Happy trainees will be more likely to
want to focus on training principles to utilize the information on the job.
2. Learning: Apart from what participants think about training, it should be checked
whether they actually learned. What facts, knowledge, etc., did the learner gain?
3. Behaviors: What is learned in a training program never gets used back on the job.
It’s not that the training was ineffective rather the reason could be transfer of
training did not happen. Transfer of training refers to the effective application of
principles learned to what is required to do on the job. The issue of concern in
evaluating behavior is; what skills did the learner develop, that is, what new
information is the learner using on the job?
4. Results or Return on Investment (ROI): Training managers are under pressure to
show that their program produces “bottom line” results. They measure ROI. A
company’s ROI refers to the benefits derived from training relative to cost
incurred. HR managers need to calculate and present these benefits to top
management. The benefits include higher revenues generated, increased
productivity, lower costs, customer satisfaction, job satisfaction, lower employee
turnover. The questions raised are, How much did quality improve because of
training? What results occurred, that is, did the learner apply the new skills to the
necessary tasks in the organization and, if so, what results were achieved? How
much it contributed to profit? How much productivity has improved and how
much has reduced?
Although level 4, evaluating results and effectiveness, is the most desired result from
training, it's usually the most difficult to accomplish. Evaluating effectiveness often
involves the use of key performance measures – measures you can see, e.g., faster and
more reliable output from the machine after the operator has been trained, higher
ratings on employees' job satisfaction questionnaires from the trained supervisor, etc.
This is where following sound principles of performance management are of great
benefit.
Benchmarking
The process of benchmarking developmental services and practices against those of
recognized leaders in the industry is another important activity linked to ROI. While
134 there is no single exact model of benchmarking, Edwards Deming’s classic four step
Essentials of HRM
process is advocated to carry out benchmarking process. These four step process are:
1. Plan: Conduct self audit to define internal process and measurement; decides on
areas to be benchmarked and choose the compression anchor.
2. Do: Collect data through surveys, interviews, site visits, and historical records.
3. Check: Analyze the deal to find performance gaps and communicate finding with
suggestion for improvements.
4. Act: Establish goals, implement changes, monitor performance and redefine
benchmarks as continuous process.
10.10 KEYWORDS
Training: It refers to the acquisition of knowledge, skills, and competencies as a result
of the teaching of vocational or practical skills and knowledge that relate to specific
useful competencies.
Education: This activity focuses upon the jobs that an individual may potentially hold 137
Training and Development
in the future, and is evaluated against those jobs.
Development: This activity focuses upon the activities that the organization
employing the individual, or that the individual is part of, may partake in the future,
and is almost impossible to evaluate.
Learning Organizations: These are those that have in place systems, mechanisms and
processes, that are used to continually enhance their capabilities and those who work
with it or for it, to achieve sustainable objectives – for themselves and the
communities in which they participate.
Person Analysis: It helps in determining the specific individuals who need training
and who do not.
Simulator: It is any kind of equipment or technique that duplicates as nearly as
possible the actual conditions encountered on the job.
Orientation: It is the formal process of familiarizing new employees with the
organization, their jobs, and their work units.
11
COMPENSATION AND REWARDS
CONTENTS
11.0 Aims and Objectives
11.1 Introduction
11.2 Compensation: Overview
11.3 Need for a Compensation Management System
11.4 Job Evaluation Technique
11.5 Components of Compensation System
11.6 Use of a Compensation Plan
11.7 Compensation Equity
11.8 Challenges of a Compensation and Benefits Strategy
11.9 Industry’s Compensation (Micro-level)
11.10 International Compensation
11.11 Fringe Benefit Tax
11.11.1 Reasons for Introducing Fringe Benefit Tax
11.11.2 What is Fringe Benefit Tax?
11.12 Compensation Survey
11.13 Motivation and Reward Management
11.14 Goals and Objectives of Rewarding
11.15 Rewards System
11.16 Forms of Recognition
11.17 Let us Sum up
11.18 Keywords
11.19 Self Assessment
11.20 Review Questions
11.21 Suggested Readings
11.1 INTRODUCTION
Human Resource is the most vital resource for any organization. It is responsible for
each and every decision taken, each and every work done and each and every result.
Employees should be managed properly and motivated by providing best
remuneration and compensation as per the industry standards. The lucrative
compensation will also serve the need for attracting and retaining the best employees.
Compensation is the remuneration received by an employee in return for his/her
contribution to the organization. It is an organized practice that involves balancing the
work-employee relation by providing monetary and non-monetary benefits to
employees.
Compensation is an integral part of human resource management which helps in
motivating the employees and improving organizational effectiveness.
Employee motivation is the psychological feature that arouses an employee to behave
in a certain manner for accomplishing certain organizational goals. It is imperative for
the organization to enhance motivation level of the employees in order to bring out the
best in them. Reward system management is the framework that envisions formulation
of different types of reward systems to boost the motivation employees. Often new
businesses require a different approach and therefore a different reward system.
Seniority Competencies
Compensation
Market
Status
Allowances
z COLA – cost of living between home country and foreign country, inflation
z Relocation allowances
z Hardship allowances
z Separation allowances
z Clothing allowances – very cold climates
z Home leave allowances
z Spouse assistance allowances.
Monetary Rewards
Monetary rewards are those paid by any negotiable instrument – cash, cheque, money
order and direct deposit. It can also be any item that can be readily converted to cash
such as savings bonds or gift-cards/certificates.
Non-monetary Rewards
These can be in the form of meals, trips, plaques, trophies, desk items, cups and mugs,
personal items and clothing such as caps, shirts and sweatshirts and other items such
as tools, electronics, radios and sports equipments (The Business Research Lab, 2006).
Management
To insure fair and consistent application, set of rewards and recognition programmes
should be developed. This should be characterized by pre-arranged frequently
scheduled ways of acknowledging contributions and accomplishments for an
individual or team. Reward and recognition should be given as acknowledgements and
appreciation for attendance, safety, customer service, productivity, public service,
outstanding achievements and the like.
Another approach to employee recognition is by providing employee rewards and
recognition at anytime for demonstration of behaviours and values of the organization;
contributions to the goals and objectives of the organization or work unit and to
acknowledge individual or team accomplishments. Such behaviours and contribution
are team work, project completion, suggestion for a new or modified business
practice, exemplary efforts, employee appreciation, employee of the month and 149
Compensation and Rewards
honouring separating employees (Joan Llyod at Work, 2007).
11.18 KEYWORDS
Compensation: It is the remuneration received by an employee in return for his/her
contribution to the organization.
Job Evaluation: It is a method used to describe, analyse, compare and evaluate jobs
within a unit, branch or an industry on the basis of the work content and the job
requirements in order to place them under a particular wage of salary grade.
Piece Rate Wages: It is prevalent in the manufacturing wages; the laborers are paid
wages for each of the quantity produced by them.
Expatriate: Person who lives and works in a foreign country.
Compensation Survey: It is a process of collection data and fact about compensation
practices, policies that exist in companies.
Reward System Management: It is the framework that envisions formulation of
different types of reward systems to boost the motivation employees.
Voluntary Benefits: Benefits vacations, holidays, special leave, sick leave, health
insurance, educational assistance, employee discounts, medical benefits canteen
facility, mobile phones, recreational facilities, credit cards etc.
LESSON 1
1. Societal
2. American Society of Personnel Administration
3. Career Development 4. Assessment Centre
5. Efficiency 6. Personnel Department
7. Policy
LESSON 2
1. Job Analysis 2. Job Context
3. Personal Observation 4. Information
5. Job Description 6. Job Rotation
7. Job Enrichment
LESSON 3
1. Human Resource Planning 2. Corporate
3. Intermediate, Operations and Short-term 4. Environment Scanning
5. Surplus 6. Delphi
7. Attrition
LESSON 4
1. Promotion 2. Placement Agencies
3. Pre-screening 4. Personal Adjective Checklist
5. Unstructured 6. Role Playing
7. Outsourcing
LESSON 5
1. Competency Mapping 2. Strategies
3. Job Competencies Assessment Model 4. Systems Method
5. Development 6. Leaderless Group Discussion
7. Behavioural Event Interview
LESSON 6
1. Time and Motion Study 2. Realistic and Time Limited
3. Past 4. Rater’s Biasness
5. Annual Confidentiality Report 6. Psychological
7. Essay 8. Kinlaw’s Approach
9. Supervisors 10. Mentors
158
Essentials of HRM LESSON 7
1. Potential Appraisal 2. Performance Appraisal
3. Yourself 4. Career Path
5. Internal Career 6. Succession Planning
LESSON 8
1. Diagnostic 2. Auditors/Audit Team
3. Employees 4. Value
5. Replacement Cost 6. HR Accounting
7. Skills Inventory
LESSON 9
1. Regulation 2. Human Capital
3. Functional Control 4. Vice President/Director HRD
5. Self-renewal 6. Career Development
7. Strategic Management
LESSON 10
1. Specific 2. Providers
3. Learning 4. Personal Analysis
5. On-the-job Training 6. Simulation
7. Sensitivity Analysis 8. Four-deep Training
LESSON 11
1. Indirect Financial 2. Inflation
3. Quantity 4. Reimbursement
5. External Equity 6. Fringe Benefit Tax
7. Voluntary Benefits 8. Formal Recognition