CHAPTER 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

WHAT IS HUMAN RESOURCE MANAGEMENT?

Human resource management (HRM) is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business.The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations. Human Resource management is evolving rapidly. Human resource management is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a workforce. The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these activities themselves because they can't yet afford partor full-time help. However, they should always ensure that employees have and are aware of -- personnel policies which conform to current regulations. These policies are often in the form of employee manuals, which all employees have. Note that some people distinguish a difference between HRM (a major management activity) and HRD (Human Resource Development, a profession). Those people might include HRM in HRD, explaining that HRD includes the broader range of activities to develop personnel inside of organizations, including, eg, career development, training, organization development, etc. There is a long-standing argument about where HR-related functions should be organized into large organizations, eg, "should HR be in the Organization Development department or the other way around?" The HRM function and HRD profession have undergone tremendous change over the past 20-30 years. Many years ago, large organizations looked to the "Personnel Department," mostly to manage the paperwork around hiring and paying people. More recently, organizations consider the "HR Department" as playing a major role in staffing, training and helping to manage people so that people and the organization are performing at maximum capability in a highly fulfilling manner.

FEATURES OF HUMAN RESOURCE MANAGEMENT (HRM).

HRM involves management functions like planning, organizing, directing and controlling It involves procurement, development, maintenance of human resource It helps to achieve individual, organizational and social objectives

HRM is a mighty disciplinary subject. It includes the study of management psychology communication, economics and sociology. It involves team spirit and team work.

EVOLUTION OF HUMAN RESOURE MANAGEMENT (HRM)

The evolution of HRM can be traced back to Kautilya Artha Shastra where he recommends that government must take active interest in public and private enterprise. He says that government must provide a proper procedure for regulating employee and employee relation In the medieval times there were examples of kings like Allaudin Khilji who regulated the market and charged fixed prices and provided fixed salaries to their people. This was done to fight inflation and provide a decent standard of living During the pre independence period of 1920 the trade union emerged. Many authors who have given the history of HRM say that HRM started because of trade union and the First World War. The Royal commission in 1931 recommended the appointment of a labour welfare officer to look into the grievances of workers. The factory act of 1942 made it compulsory to appoint a labour welfare officer if the factory had 500 or more than 500 workers. The international institute of personnel management and national institute of labour management were set up to look into problems faced by workers to provide solutions to them. The Second World War created awareness regarding workers rights and 1940s to 1960s saw the introduction of new technology to help workers. The 1960s extended the scope of human resource beyond welfare. Now it was a combination of welfare, industrial relation, administration together it was called personnel management. With the second 5 year plan, heavy industries started and professional management became important. In the 70s the focus was on efficiency of labour wile in the 80s the focus was on new technology, making it necessary for new rules and regulations. In the 90s the emphasis was on human values and development of people and with liberalization and changing type of working people became more and more important there by leading to HRM which is an advancement of personnel management.

HUMAN RESOURCE MANAGEMENT GOAL

The goal of human resource management is to help an organization to meet strategic goals by attracting, and maintaining employees and also to manage them effectively. The basic premise of the academic theory of HRM is that humans are not machines, therefore we need to have an interdisciplinary examination of people in the workplace. Fields such as psychology, industrial engineering, industrial and organizational psychology, industrial relations, sociology, and critical theories: postmodernism, post-structuralism play a major role. Many colleges and universities offer bachelor and master degrees in Human Resources Management. One widely used scheme to describe the role of HRM, developed by Dave Ulrich, defines 4 fields for the HRM function.

1) Strategic business partner 2) Change agent 3) Employee champion 4) Administration

However, many HR functions these days struggle to get beyond the roles of administration and employee champion, and are seen rather as reactive than strategically proactive partners for the top management. In addition, HR organizations also have the difficulty in proving how their activities and processes add value to the company. Only in the recent years HR scholars and HR professionals are focusing to develop models that can measure if HR adds value.

SCOPE OF HUMAN RESOURCE MANAGEMENT (HRM)

The scope of HRM refers to all the activities that come under the banner of HRM. These activities are as follows 1. Human resources planning :Human resource planning or HRP refers to a process by which the company to identify the number of jobs vacant, whether the company has excess staff or shortage of staff and to deal with this excess or shortage. 2. Job analysis design :Another important area of HRM is job analysis. Job analysis gives a detailed explanation about each and every job in the company. Based on this job analysis the company prepares advertisements. 3. Recruitment and selection :Based on information collected from job analysis the company prepares advertisements and publishes them in the news papers. This is recruitment. A number of applications are received after the advertisement is published, interviews are conducted and the right employee is selected thus recruitment and selection are yet another important area of HRM. 4. Orientation and induction :Once the employees have been selected an induction or orientation program is conducted. This is another important area of HRM. The employees are informed about the background of the company, explain about the organizational culture and values and work ethics and introduce to the other employees. 5. Training and development :Every employee goes under training program which helps him to put up a better performance on the job. Training program is also conducted for existing staff that have a lot of experience. This is called refresher training. Training and development is one area were the company spends a huge amount.

6. Performance appraisal :Once the employee has put in around 1 year of service, performance appraisal is conducted that is the HR department checks the performance of the employee. Based on these appraisal future promotions, incentives, increments in salary are decided. 7. Compensation planning and remuneration :There are various rules regarding compensation and other benefits. It is the job of the HR department to look into remuneration and compensation planning.

8. Motivation, welfare, health and safety :Motivation becomes important to sustain the number of employees in the company. It is the job of the HR department to look into the different methods of motivation. Apart from this certain health and safety regulations have to be followed for the benefits of the employees. This is also handled by the HR department. 9. Industrial relations :Another important area of HRM is maintaining co-ordinal relations with the union members. This will help the organization to prevent strikes lockouts and ensure smooth working in the company.

SIGNIFICANCE / IMPORTANCE / NEED OF HUMAN RESOURCE MANAGEMENT (HRM)

HRM becomes significant for business organization due to the following reasons. 1. Objective :HRM helps a company to achieve its objective from time to time by creating a positive attitude among workers. Reducing wastage and making maximum use of resources etc. 2. Facilitates professional growth :Due to proper HR policies employees are trained well and this makes them ready for future promotions. Their talent can be utilized not only in the company in which they are currently working but also in other companies which the employees may join in the future. 3. Better relations between union and management :Healthy HRM practices can help the organization to maintain co-ordinal relationship with the unions. Union members start realizing that the company is also interested in the workers and will not go against them therefore chances of going on strike are greatly reduced. 4. Helps an individual to work in a team/group :Effective HR practices teach individuals team work and adjustment. The individuals are now very comfortable while working in team thus team work improves.

5. Identifies person for the future :Since employees are constantly trained, they are ready to meet the job requirements. The company is also able to identify potential employees who can be promoted in the future for the top level jobs. Thus one of the advantages of HRM is preparing people for the future. 6. Allocating the jobs to the right person :If proper recruitment and selection methods are followed, the company will be able to select the right people for the right job. When this happens the number of people leaving the job will reduce as the will be satisfied with their job leading to decrease in labour turnover. 7. Improves the economy :Effective HR practices lead to higher profits and better performance by companies due to this the company achieves a chance to enter into new business and start new ventured thus industrial development increases and the economy improves.

JOB ANALYSIS, JOB DESIGN , JOB DECRIPTION.

1) Job analysis A job is defined as a collection of duties and responsibilities which are given together to an individual employee. Job analysis is the process of studying and collecting information relating to operations and responsibilities of a specific job. It can be explained with the help of the following diagram Job analysis

Job description Job title/ name of the job Working hours Duties and responsibilities Working conditions Salary and incentives Machines to be handled on the job

Job specification Qualification Qualities Experience Family background Training Interpersonal skills

As mentioned in the above table job analysis is divided into 2 parts a) Job description Where the details regarding the job are given. b) Job specification

Where we explain the qualities required by people applying for the job. Job design Job design is the process of a) Deciding the contents of the job. b) Deciding methods to carry out the job. c) Deciding the relationship which exists in the organization. Job analysis helps to develop job design and job design matches the requirements of the job with the human qualities required to do the job. Factors affecting job design: - There are various factors which affect job design in the company. They can be explained with the help of diagram.

Factors affecting job design

Organizational factors

Environmental factors

Behavioral factors

1. Task characteristics

2. Process or flow of work in organization 3. Ergonomics 4. Work practices Methods of job design

1. Employee availability and ability 2. Social and cultural expectations

1. Feed back

2. Autonomy

3. Variety

There are various methods in which job design can be carried out. These methods help to analysis the job, to design the contents of the and to decide how the job must be carried out .these methods are as follows:I. Job rotation II. Job enlargement III. Job enrichment.

HRM PLANNING/ PERSONNEL PLANNING

Human resource planning:Human resource planning can be defined as the process of identifying the number of people required by an organization in terms of quantity and quality. All human resource management activities start with human resource planning. So we can say that human resource planning is the principle/primary activity of human resource management.

From human resource planning the organization identifies how many people it has currently and how many people will be required in future. Based on this information major human resource decisions are taken. Process of HRP/MP//steps in HRP/MP Human resource planning can be defined as the process of identifying the number of people required by an organization in terms of quantity and quality. All human resource management activities start with human resource planning. So we can say that human resource planning is the principle/primary activity of human resource management. The process of HRP involves various steps they can be explained with the help of the following diagram. Human resource planning

Personal requirement Forecast

Personal supply Forecast

Comparison

Differences

Yes

No

Personal Surplus (100=125)

Personal Shortage (100=75)

Layoff Termination VRS

Overtime Recruitment/hiring Subcontracting

1) Personnel requirement forecast: This is the very first step in HRP process. Here the HRP department finds out department wise requirements of people for the company. The requirement consists of number of people required as well as qualification they must posses. Personnel supply forecast: -

In this step, HR department finds out how many people are actually available in the departments of the company. The supply involves/includes number of people along with their qualification.

2) Comparison: Based on the information collected in the 1st and 2nd step, the HR department makes a comparison and finds out the difference. Two possibilities arise from this comparison a. No difference: - It is possible that personnel requirement = personnel supplied. In this case there is no difference. Hence no change is required. b. Yes, there is a difference: There may be difference between supply and requirement. The difference may be i. Personnel surplus ii. Personnel shortage 3) Personnel surplus: When the supply of personnel is more than the requirement, we have personnel surplus. We require 100 people, but have 125 people. That is we have a surplus of 25 people. Since extra employees increase expenditure of company the company must try to remove excess staff by methods of i. Layoff ii. Termination iii. VRS/CRS

4) Personnel shortage: When supply is less than the requirement, we have personnel shortage. We require 100 people; we have only 75 i.e. we are short of 25 people. In such case the HR department can adopt methods like Overtime, Recruitment, Sub-contracting to obtain new employee

RECRUITMENT, SELECTION AND INDUCTION

1. RECRUITMENT Recruitment is a process of searching for prospective employees and stimulating them to apply for jobs.

Objectives of recruitment Recruitment fulfills the following objectives 1. It reviews the list of objectives of the company and tries to achieve them by promoting the company in the minds of public. 2. It forecasts how many people will be required in the company. 3. It enables the company to advertise itself and attract talented people. 4. It provides different opportunities to procure human resource.

Methods of recruitment/sources Recruitment is a process of searching for prospective employees and stimulating them to apply for jobs Companies can adopt different methods of recruitment for selecting people in the company. These methods are 1. Internal sources 2. External sources The sources can be further explained with the help of following diagram Sources of recruitment (manpower supply)

Internal source 1. 2. 3. 4. 5. 6. Promotion Departmental exam Transfer Retirement Internal advertisement Employee recommendation

External sources 1. 2. 3. 4. 5. 6. Management consultant Employment agency Campus recruitment News paper advertisement Internet advertisement Walk in interview

Internal sources of recruitment :Internal sources of recruitment refer to obtaining people for job from inside the company. There are different methods of internal recruitment 1. Promotion :Companies can give promotion to existing employees. This method of recruitment saves a lot of time, money and efforts because the company does not have to train the existing employee. Since the employee has already worked with the company. He is familiar with the working culture and working style. It is a method of encouraging efficient workers.

2. Departmental exam: This method is used by government departments to select employees for higher level posts. The advertisement is put up on the notice board of the department. People who are interested must send their application to the HR department and appear for the exam. Successful candidates are given the higher-level job. The method ensures proper selection and impartiality. 3. Transfer: Many companies adopt transfer as a method of recruitment. The idea is to select talented personnel from other branches of the company and transfer them to branches where there is shortage of people. 4. Retirement: Many companies call back personnel who have already retired from the organization. This is a temporary measure. The method is beneficial because it gives a sense of pride to the retired when he is called back and helps the organization to reduce recruitment selection and training cost. 5. Internal advertisement: In this method vacancies in a particular branch are advertised in the notice board. People who are interested are asked to apply for the job. The method helps in obtaining people who are ready to shift to another branch of the same company and it is also beneficial to people who want to shift to another branch. 6. Employee recommendation: In this method employees are asked to recommend people for jobs. Since the employee is aware of the working conditions inside the company he will suggest people who can adjust to the situation. The company is benefited because it will obtain. External methods/sources of recruitment External sources of recruitment refer to methods of recruitment to obtain people from outside the company. These methods are 1. Management consultant :Management consultant helps the company by providing them with managerial personnel, when the company is on the look out for entry level management trainees and middle level managers. They generally approach management consultants. 2. Employment agencies :Companies may give a contract to employment agencies that search, interview and obtain the required number of people. The method can be used to obtain lower level and middle level staff.

3. Campus recruitment: When companies are in search of fresh graduates or new talent they opt for campus recruitment. Companies approach colleges, management, technical institutes, make a presentation about the company and the job and invite applications. Interested

candidates who have applied are made to go through a series of selection test and interview before final selection. 4. News paper advertisement: This is one of the oldest and most popular methods of recruitment. Advertisements for the job are given in leading newspapers; the details of the job and salary are also mentioned. Candidates are given a contact address where their applications must be sent and are asked to send their applications within a specified time limit. The method has maximum reach and most preferred among all other methods of recruitment. 5. Internet advertisement: With increasing importance to Internet, companies and candidates have started using the Internet as medium of advertisement and search for jobs. There are various job sites like naukri.com and monster.com etc. candidates can also post their profiles on these sites. This method is growing in popularity. 6. Walk in interview: Another method of recruitment, which is gaining importance, is the walk in interview method. An advertisement about the location and time of walk in interview is given in the newspaper. Candidates require to directly appearing for the interview and have to bring a copy of their C.V. with them. This method is very popular among B.P.O and call centers.

2. SELECTIONSelection can be defined as process of choosing the right person for the right job. Process of selection: The process of selection is different in different companies; however a general procedure of selection can be framed. This process of selection can be explained with the help of following diagram Process of selection Job analysis Advertisement Application blank/form Written test Interview Medical examination Initial job offer Acceptance/rejection letter

Final offer/letter of appointment Induction

1. Job analysis: The very first step in the selection procedure is the job analysis. The HR department prepares the job description and specification for the jobs which are vacant. This gives details for the jobs which are vacant. This gives details about the name of the job, qualification, qualities required and work conditions etc. 2. Advertisement: Based on the information collected in step 1, the HR department prepares an advertisement and publishes it in a leading news papers. The advertisement conveys details about the last date for application, the address to which the application must be sent etc. 3. Application blank/form: Application blank is the application form to be filled by the candidate when he applies for a job in the company. The application blank collects information consisting of 4 parts1) Personal details 2) Educational details 3) Work experience 4) Family background. 4. Written test: The HR department screens the applications, which have been received, and those applications, which are incomplete, are rejected. The other candidates are called for the written test. Arrangement for the written test is looked after the HR department i.e. question papers, answer papers, examination centers and hall tickets etc. 5. Interview:Candidates who have successfully cleared the test are called for an interview. The entire responsibility for conducting the interview lies with the HR department i.e. they look after the panel of interviewers, refreshments, informing candidates etc. 6. Medical examination: The candidates who have successfully cleared the interview are asked to take a medical exam. This medical exam may be conducted by the organization itself (army). The organization may have a tie up with the hospital or the candidate may be asked to get a certificate from his family doctor. 7. Initial job offer: Candidates who successfully clear the medical exam are given an initial job offer by the company stating the details regarding salary, terms of employment, employment bond if any etc. The candidate is given some time to think over the offer and to accept or reject.

8. Acceptance/ rejection :Candidates who are happy with the offer send their acceptance within a specified time limit to show that they are ready to work with the company. 9. Letter of appointment/final job offer :Candidates who send their acceptance are given the letter of appointment. The letter will state the name of the job. The salary and other benefits, number of medical leaves and casual leaves, details of employment bond if any etc. It will also state the date on which the employee is required to start duty in the company. 10. Induction :On the date of joining the employee is introduced to the company and other employees through am elaborate induction program. Recruitment Selection Definition: Selection is a process of choosing most According to Edwin Flippo, Recruitment is the suitable candidates out of many interested process of searching for prospective employees candidates. and stimulating them to apply for jobs in the organisation. Purpose: To select the best candidates out of those To attract maximum number or interested qualified and interested in appointment. candidates through applications. Priority: Selection is next to recruitment. Recruitment is prior to selection. It creates actual base for proper selection. Nature of Function: It is a negative function in which the unsuitable It is a positive function in which interested candidates are eliminated and the best one is candidates are encouraged to submit selected. applications. Process: It is a lengthy process, involves scrutiny of It is a short process, only publicity is given to applications, giving tests, interview and vacancies and applications are collected. medical examinations. Experts Service: Services of experts are required Services of experts are not required Cost Involved: It is a costly process, expenditure is needed for It is not costly, only expenditure is testing candidates and conducting interviews. advertisement given for publicity. Steps Involved: i) Applications are scrutinised i) Vacancies available are finalised ii) Tests, interviews and medical examinations ii) Publicity is given to them are conducted. iii) Applications are collected

END OF UNIT I

UNIT II

INDUCTION Induction = orientation Induction can be defined as a process of introducing the employee who is newly elected to the organization. When an employee is given a letter of appointment he joins the company on duty. The very first thing that the company does is, introduces the new employee to the organization and people working there. An induction program may be conducted at a particular center for all employees or at different places (branches of the company) for different employees. Normally the new employee is called together to the staff training college for the induction program. The induction starts with an introduction secession about the company, number of branches, a brief history of the company, number of products, number of countries operating in, organizational structure, culture, values, beliefs, the names of top management personnel etc. Apart from this introductory secession there will be other secessions also like secessions on behavioral science, soft skill training, secessions on giving details about the job, salary, bonus, information about different leaves that can be taken by the employee about upward mobility in the organization etc. There are different ways in which secessions can be conducted i.e. using lecture method, power point presentation, group discussion, psychological test, roll play secessions etc. The induction program concludes with the employee reporting for duty at his respective branch after induction. When he reports for duty the senior most people in the branch takes the new employee around the office and introduces to all other employees and gives information about the working of the branch. The senior people regularly stay in touch with the new employee in the first week so that he can make the new employee comfortable and help him to adjust to the company. After this the company may start a training program for the new employee.

Training and Development

Wayne Cascio defines training as training consists of planed programs undertaken to improve employee knowledge, skills, attitude, and social behavior so that the performance of the organization improves considerably. Training is normally viewed as a short process. It is applied to technical staff, lower, middle, senior level management. When applied to lower and middle management staff it is called as training and for senior level it is called managerial development program/executive development program/development program.

Objectives/purpose/goals of training and development Wayne Cascio defines training as training consists of planed programs undertaken to improve employee knowledge, skills, attitude, and social behavior so that the performance of the organization improves considerably. The purpose of training and development can be explained as follows. 1. Improving quality of work force :-

Training and development help companies to improve the quality of work done by their employees. Training programs concentrate on specific areas. There by improving the quality of work in that area. 2. Enhance employee growth :Every employee who takes development program becomes better at his job. Training provides perfection and required practice, therefore employees area able to develop them professionally. 3. Prevents obsolescence :Through training and development the employee is up to date with new technology and the fear of being thrown out of the job is reduced. 4. Assisting new comer:Training and development programs greatly help new employees to get accustomed to new methods of working, new technology, the work culture of the company etc. 5. Bridging the gap between planning and implementation :Plans made by companies expect people to achieve certain targets within certain time limit with certain quality for this employee performance has to be accurate and perfect. Training helps in achieving accuracy and perfection. 6. Health and safety measures:Training and development program clearly identifies and teaches employees about the different risk involved in their job, the different problems that Methods of performance appraisal can arise and how to prevent such problems. This helps to improve the health and safety measures in the company.

Management Development Training and Methods Meaning of Employee Training Training is next to selection. A worker selected / appointed in an Organisation needs proper training. This enables him to perform the job correctly and also with efficiency. Similarly, a manager needs training for promotion and for his self improvement. Employees are now given training immediately after appointment and thereafter from time to time. Training is used as a tool / technique for management/executive development. It is used for the development of human resource working in an Organisation. In fact, training is the watchword of present dynamic business world. Training means giving information, knowledge and education in order to develop technical skills, social skills and administrative skills among the employees. According to Edwin Flippo, training is "the act of increasing the knowledge and skill of an employee for doing a particular job." Training is necessary due to technological changes rapidly taking place in the industrial field. It is also essential along with the introduction of new techniques, new methods and so on. It is necessary for developing overall personality of employees and also for developing positive attitude towards fellow employees, job and Organisation where he is working.

Training of employees is the responsibility of the management / employer. Expenditure on such training is an investment for manpower development and gives good dividend in the long run. Employees should take the benefit of training facilities provided for raising their efficiency and also for self-development. Training need not be treated as a punishment but an opportunity to learn, to grow and to develop for jobs at the higher levels.

Types of Training
Different types of training are : Induction training, Job training, Training for promotion, Refresher training, Training for managerial development, etc.

Induction training aims at introducing the organisation to a newly appointed employee. It is a short and informative training given immediately after joining the organisation. The purpose is to give "bird's eye-view" of the organisation to an employee. Job training relates to specific job and the purpose is to give suitable information and guidance to a worker so as to enable him to perform the job systematically, correctly, efficiently and finally with confidence. Training for promotion is given after the promotion but before joining the post at the higher level. The purpose is to enable an employee to adjust with the work assignment at the higher level. The purpose of refresher training is to update the professional skills, information and experience of persons occupying important executive positions. Training for managerial development is given to managers so as to raise their efficiency and thereby to enable them to accept higher positions. A company has to make provision for providing all types of training.

Objectives of Training
To raise efficiency and productivity of employees and the Organisation as a whole. To create a pool of well-trained, capable and loyal employees at all levels and thereby to make arrangement to meet the future needs of an organisation. To provide opportunities of growth and self-development to employees and thereby to motivate them for promotion and other monetary benefits. In addition, to give safety and security to the life and health of employees. To avoid accidents and wastages of all kinds. In addition, to develop balanced, healthy and safety attitudes among the employees. To meet the challenges posed by new developments in science and technology. To improve the quality of production and thereby to create market demand and reputation in the business world. To develop cordial labour management relations and thereby to improve the organisational environment.

 To develop positive attitude and behavior pattern required by an employee to perform a job efficiently. In other words, to improve the culture of the Organisation. To prevent manpower obsolescence in an organisation. To develop certain personal qualities among employees which can serve as personal assets on long term basis.

Importance of Training
(A) Benefits of Training To Employer / Management Training raises the efficiency and productivity of managers. It also improves the performance of workers due to their motivation. Training improves the quality of production. It also reduces the volume of spoiled work and wastages of all kinds. This reduces cost of production and improves quality. It reduces accidents as trained employees work systematically and avoid mistakes in the work assigned. Training reduces expenditure on supervision as trained employees take interest in the work and need limited supervision and control. Training brings stability to labour force by reducing turnover of managerial personnel. Training raises the morale of employees. Training creates skilled and efficient manpower which is an asset of an industrial unit. Training moulds attitudes of employees and develops cordial industrial relations. Training reduces absenteeism as trained managers find their job interesting and prefer to remain present on all working days. Training facilitates the introduction of new management techniques and also new production techniques including automation and computer technology. Training creates a pool of trained and capable personnel from which replacements can be drawn to fill up the loss of key personnel due to retirement, etc. Training provides proper guidance and instructions to newly appointed executives and assists them to adjust properly with the job and the organisation. (B) Benefits of Training to Managers / Employees Training creates a feeling of confidence among the employees. It gives personal safety and security to them at the work place. Training develops skills which act as valuable personal assets of employees. Training provides opportunity for quick promotion and self-development to managers. Training provides attractive remuneration and other monetary benefits to employees.

 Training develops adaptability among employees. It updates their knowledge and skills and keeps them fresh. It actually refreshes the mental outlook of employees. Training develops positive attitude towards work assigned and thereby creates interest and attraction for the job and the work place. Training creates an attitude of mutual co-operation and understanding among the managers. Such attitude is useful not only at the work place but also in the social life. Meaning of Management Development / Managerial Training In addition to training for operative staff, an organisation has to take steps for training managers. Such training programmes are called 'managerial development / executive development programmes. Managerial talent is the most important asset that a company can possess. Management development ensures that as and when the demand for managers arise, suitably qualified persons are ready to fill the vacancies. Managerial development consists of all means by which executives learn to improve their performance. It is designed to improve the effectiveness of mangers in their present jobs and to prepare them for higher jobs in future. Managerial development aims at helping the mangers to realise their full potential. Management development is a way to improving the culture of the Organisation so that it could be geared to excellence. "People move organisations not machines." According to P. N. Singh, "Management development is an activity designed to improve the performance of existing managers, provide a supply of managers to meet the need of organisations in future and extend the understanding of the management activity by drawing from the following three resource areas :- (a) Knowledge, (b) Experience, and (c) Trainee himself."

Need / Importance of Management Development

According to Edwin Flippo, "No organisation has a choice of whether to develop employees or not, the only choice is that of method." The need for management development is well accepted in the present business, which is fast changing due to technological and social developments. Shortage of trained managers : Talented and matured managers are not easily available. It is not possible to appoint managers from outside for the key managerial posts. The better alternative is to select talented persons as trainee managers and develop their qualities through special training and wider exposures. In this way, the organisation can create its own team of talented managers to lead the whole Organisation. Complexity of management jobs : The jobs of managers are now complicated and more challenging. They need varied skills for dealing with the complex organizational problems. For this, talented persons should be selected and proper training should be given to them.

Technological and social changes : Rapid technological and social changes are taking place in the business world. In India, such developments are fast taking place along with the liberalization and globalisation of business. Managers should be given proper training and exposure in computer applications and information technology. Management obsolescence : Executive obsolescence occurs due to mental deterioration and aging process. This can be corrected by offering self-development opportunities to managers. In fact, selfdevelopment must continue throughout the career of an executive. Complexity of business management : Business management is becoming very complicated due to government legislations, market competition, social pressures and consciousness among consumers. Welltrained and matured managers are therefore required. Such managers are not available easily. The best way is to train existing managers through management development programmes.

Methods of Management Development / Managerial Development

For management development, several methods / techniques are used. These methods can be divided into two broad categories, namely, Internal or On the job methods, and External or Off the job methods. (A) Internal Training Methods / On The Job Methods Coaching : Coaching on the job coaching is a method by which a superior teaches job knowledge and skills to a subordinate manager. He briefs the trainee executive about what is expected of him and how it can be done. The superior also checks the performance of his subordinate and guides him to improve his shortfalls and deficiencies. The superior acts as a friend and guide of his subordinate. Coaching method favours learning by doing. Its effectiveness depends on the capacity and the interest taken by the superior and also by the subordinate. The superior should adopt a positive approach in the coaching process and help the subordinate in achieving self-development. Coaching has certain limitations. For example, a trainee manager cannot develop much beyond the limits of his own superior's abilities. Similarly, the success of coaching method depends on the interest and initiative taken by the trainee - manager. Counselling : Under this method, the subordinate wanting advice approaches his superior. Counselling is provided in matters relating to the job. However, on request from the subordinate, counselling may also be offered on matters not directly related to the job. There is two-way dialogue between the subordinate and the superior to find solution to his problem. Counselling provides emotional stability to trainee - subordinate. Understudy assignment :

An understudy is a trainee-manager who is to assume the full duties and responsibilities of the position currently held by his superior, when the later leaves his post due to retirement, transfer or promotion. Here, a departmental manager (head) selects one of his suitable subordinates to become his understudy. As an alternative, the personnel department may make the selection of understudy. The departmental manager will guide him (i.e. understudy) to learn his job and deal with the problems that confront the manager daily. The understudy will learn the job of his superior through observation and participation in thedecision making. He may be given specific problems to study and to make recommendations for solving them. The understudy will be given wider exposure and an opportunity to develop capacity to deal with difficult problems and complex situations. Job Rotation : It involves transfer of executives from one job to another. The aim of job rotation is to broaden the knowledge, skills and outlook of executives. This method can be used in the case of management trainee and also in the case of an existing manager due for promotion. Job rotation method is also useful for providing variety of job experience to managers.

Advantages of Job Rotation

It brings all departments on the same footing as executives move from one department to other. Job rotation facilitates inter-departmental cooperation. New procedures are introduced in departments along with the rotation of managers. The benefit of wider exposure is available to trainee manager. There is absence of monotony in the training process due to job rotation.

Limitations of Job Rotation are:The work of departments is affected due to frequent changes of executives for training purpose. The trainee manager finds it difficult to adjust himself to his new bosses. Even the executives are not in a position to have specialized knowledge and training in one particular branch of work. Frequent changes of position of executives may also affect their morale. Delegation : Delegation is one more internal method of management development. The performance of subordinates may not improve unless additional responsibility and authority are delegated to them. Making the subordinates to achieve a particular target through delegation is one way by which subordinates will learn to grow and develop independently. They will develop leadership qualities and decision-making skills, which are necessary for a good manager. Appointment as 'Assistant to' : A junior executive may be appointed as 'Assistant to' senior executive for the purpose of training and practical experience. Here, the junior executive is given exposure to the job of senior executive and he teams new techniques while providing assistance to his boss. This broadens his viewpoint and makes him ready for future promotions. The

superior executive also gets the benefit as he can delegate some of his responsibilities to the assistant and also acts as guide of his assistant . Membership of Committees : Inter-departmental committees are normally created for bringing co-ordination in the activities of different departments. Managers from different departments are taken on such committees. Junior managers are also given membership of such committees so as to give them a broader exposure to the viewpoints of other departmental heads. Ad hoc committee of executives is also constituted and is assigned a specific problem for study. Such commitee assignments offer opportunity of training to junior executives, as they have to study the problem in depth and make recommendations. Project Assignment : In the project assignment method, a trainee manager is given a project that is closely related to the work of his department. The project relates to specific problem faced by the department. Here, the executive has to study the project on his own and make recommendations for the consideration of the departmental head. Such assignment provides valuable experience to the trainee and develops problem-solving attitude, which is one essential requirement of an executive.

Promotions and Transfers : Promotions and transfers are two more internal methods of management development. Promotion gives an opportunity to a manager to acquire new skills required for the job at the higher level. It motivates him for self-improvement. Transfer also facilitates the broadening of viewpoint required for higher positions. It gives an opportunity to work at different positions and develop.

On The Job Training Off The Job Training MeaningIt refers to the methods that are applied away It refers to the methods that are applied in from the workplace. Here training is the workplace. Here regular work and separated from regular work. training move together. SuperiorityEmployee concentrate on training as he is As the employee cannot concentrate on relived from the job, the quality of training is training while performing the job, the quality superior. of training is inferior Cost involvedIt is costly as the company has to pay fees of It is economical as it is given internally and training organisation and also the employee remain absent from the job also employee performing their job SuitabilityIt is suitable to higher-level managers. It is suitable for normal training of supervisors MethodsRefer above Refer above

PERFORMANCE APPRAISAL

Wayne Cascio as the systematic description of employees job relevant, strength, weakness defines performance appraisal. Performance appraisal may be conducted once in every 6 months or once in a year. The basic idea of the appraisal is to evaluate the performance of the employee, giving him a feedback. Identify areas where improvement is required so that training can be provided. Give incentives and bonus to encourage employees etc.

Method of performance appraisal Wayne Casco as the systematic description of employees job relevant, strength, weakness defines performance appraisal. Companies use different methods of appraisal for identifying and appraising the skills and qualities of their employees. The different methods used can be explained with the help of following diagram. Traditional method 1.Check list method 2.Confidential report 3.Critical incident method 4.Ranking method 5.Graphic rating scale 6.Narrated essay Modern method 1.Role analysis 2.Assessment centers 3.management by objective 4.Behavioral anchored rating scale 5.Psychological testing 6.Human resource accounting 7.360* Appraisal

Traditional method Companies have used traditional method of performance appraisal for very long time. A common feature of these methods is they are all relatively simple and involve appraisal by one senior. 1) Check list method: In this method the senior, the boss is given a list of questions about the junior. These questions are followed by check boxes. The superior has to put a tick mark in any one of the boxes This method can be explained with the following eg. Y Does the employee have leadership qualities? Y Is the employee capable of group efforts? Y N Has the employee shown analytical skills? on the job As seen in the above eg. A questioner containing questions is given to the senior. This method is an extremely simple method and does not involve a lot of time. The N N

same set of questioners can be given uniformity in selecting employee.

foe every employee so that there is

2) Confidential report: This method is very popular in government departments to appraise IAS officers and other high level officials. In this method the senior or the boss writes a report about the junior giving him details about the performance about the employee. The +ve and ve traits, responsibilities handled on the job and recommendations for future incentives or promotions. The report is kept highly confidential and access to the report is limited. 3) Critical incident method: In this method critical or important incidents, which have, taken place on this job are noted down along with employees behavior and reaction in all these situations. Both +ve and ve incidents are mentioned. This is followed by an analysis of the person, his abilities and talent, recommendations for the future incentives and promotions. 4) Ranking method:In this method ranks are given to employees based on their performance. There are different methods of ranking employees. Simple ranking method Alternate ranking method Paired comparison method

i. Simple ranking method :Simple ranking method refers to ranks in serial order from the best employee eg. If we have to rank 10 best employees we start with the first best employee and give him the first rank this is followed by the 2nd best and so on until all 10 have been given ranks. ii. Alternate ranking :In this method the serial alternates between the best and the worst employee. The best employee is given rank 1 and then we move to the worst employee and give him rank 10 again to 2nd best employee and give him rank 2 and so on. iii. Paired comparison :In this method each and every person is the group, department or team is compared with every other person in the team/group/department. The comparison is made on certain criteria and finally ranks are given. This method is superior because it compares each and every person on certain qualities and provides a ranking on that basis. 5) Graphic rating scale: Graphic rating scale refers to using specific factors to appraise people. The entire appraisal is presented in the form of a chart. The chart contains certain columns, which indicate qualities that are being appraised, and other columns, which specify the rank to be given.

Eg. Employee A Quality of work Excellent Very good Good Satisfactory Poor The senior has to put a tick mark for a particular quality along with the ranking. Such charts are prepared for every employee. According to the department in which they work. Sometimes the qualities which are judged may change depending upon the department. Quantity of work Intelligence

6) Narrated essay: In this method the senior or the boss is supposed to write a narrative essay describing the qualities of his junior. He may describe the employees strength and weakness, analytical abilities etc. the narrative essay ends with a recommendation for future promotion or for future incentives.

Modern methods Companies are increasingly using modern methods of appraisal. Now days one of the striving feature that appraisal involves is, the opinion of many people about the employee and in some cases psychological test are used to analyze the ability of employee. These methods are as follows 1. Role analysis :In this method of appraisal the person who is being apprised is called the focal point and the members of his group who are appraising him are called role set members. These role set members identify key result areas (KRA 2 marks) (areas where you want improvement are called KRA) which have to be achieved by the employee. The KRA and their improvement will determine the amount of incentives and benefits which the employee will receive in future. The appraisal depends upon what role set members have to say about the employee. 2. Assessment centers :Assessment centers (AC) are places where the employees are assessed on certain qualities talents and skills which they possess. This method is used for selection as well as for appraisal. The people who attend assessment centers are given management games, psychological test, puzzles, questioners about different management related situations etc. based on their performance in these test an games appraisal is done. 3. Management by objective :-

This method was given by Petter Druckard in 1974. It was intended to be a method of group decision making. It can be use for performance appraisal also. In this method all members of the of the department starting from the lowest level employee to the highest level employee together discus, fix target goals to be achieved, plan for achieving these goals and work together to achieve them. The seniors in the department get an opportunity to observe their junior- group efforts, communication skills, knowledge levels, interest levels etc. based on this appraisal is done. 4. Behavioral anchored rating scale :In this method the appraisal is done to test the attitude of the employee towards his job. Normally people with +ve approach or attitude view and perform their job differently as compared to people with a ve approach. 5. Psychological testing :In this method clinically approved psychological test are conducted to identify and appraise the employee. A feedback is given to the employee and areas of improvement are identified. 6. Human resource audit/accounting :In this method the expenditure on the employee is compared with the income received due to the efforts of the employee. A comparison is made to find out the utility of the employee to the organization. The appraisal informs the employee about his contribution to the company and what is expected in future. 7. 360* appraisal :In this method of appraisal and all round approach is adopted. Feedback about the employee is taken from the employee himself, his superiors, his juniors, his colleagues, customers he deals with, financial institutions and other people he deals with etc. Based on all these observations an appraisal is made and feedback is given. This is one of the most popular methods. Process of performance appraisal Wayne Cascio as the systematic description of employees job relevant, strength, weakness defines performance appraisal. Process of performance appraisal followed by different companies is different. A general procedure is explained below with the help of a diagram.

Process of performance appraisal

Setting performance standards

Communicating standards set to the employee

Measuring performance

Comparing performance with standard

Discussing result

Collective action

Implementation and review

1. Setting performance standards :In this very first step in performance appraisal the HR department decides the standards of performance i.e. they decide what exactly is expected from the employee for each and every job. Sometimes certain marking scheme may be adopted eg. A score 90/100 = excellent performance, a score os 80/100 = good. And so on. 2. Communication standard set to the employee :Standards of performance appraisal decided in 1st step are now conveyed to the employee so that the employee will know what is expected from him and will be able to improve his performance. 3. Measuring performance :The performance of the employee is now measure by the HR department, different methods can be used to measure performance i.e. traditional and modern method. The method used depends upon the companys convenience. 4. Comparing performance with standard :The performance of the employee is now judged against the standard. To understand the score achieved by him. Accordingly we come to know which category of performance the employee falls into i.e. excellent, very good, good, satisfactory etc. 5. Discussing result: The results obtained by the employee after performance appraisal are informed or conveyed to him by the HR department. A feedback is given to the employee asking him to change certain aspects of his performance and improve them. 7. Collective action :The employee is given a chance or opportunity to improve himself in the areas specified by the HR department. The HR department constantly receives or keeps a check on the employees performance and notes down improvements in performance. 8. Implementation and review :-

The performance appraisal policy is to be implemented on a regular basis. A review must be done from time to time to check whether any change in policy is required. Necessary changes are made from time to time. JOB TRANSFER In business organisation employees are shifted from one post to another or from one department to other or from one branch of company to other. This is called job transfer. It is more common in banks, government department and manufacturing companies. Transfer is neither a promotion nor demotion but horizontal or lateral movement of an employee. Purpose of Transfer To meet the variation in volume of work in different department To provide training to employee To rectify any poor placement of employee To satisfy personal needs of employee To meet organisational needs arises due to expansion, fluctuation in work requirement or changes in organisational structure. To have a solution to poor performance of employee in a particular department. To avoid fatigue and monotony To remove poor personal relations To punish employees as a disciplinary action

PROMOTION POLICIES PROMOTION According to Edwin Flippo, Promotion involves a change from one job to another that is better in terms of status and responsibilities. Promotion Objectives To provide higher status, salary, and satisfaction to existing employees. To motivate employees to higher productivity and loyalty to the organisation. To retain the services of qualified and competent employees. To recognise, appreciate and reward the loyalty and efficiency of employees To support the policy of filling higher vacancies from within the organisation. To raise employees morale and sense of belongings Principles of Sound Promotion Policy Rules of promotions i.e. qualifications, experience and other terms should be clear and precise Wide publicity should be given to promotion policy There should be no scope for partiality, favouritism or injustice. Should be based on scientific performance appraisal of employees Opportunity should be provided to every worker Promotion policy should be prepared for longer period Promotion should not be forced to accept by an employee Promotion should be given from within the same department Grievance relating to promotions should be settled properly. Promotion policy should be finalised after consultation with employees.

SEPERATIONS Separation is the cessation of services of personnel from an organisation. Separation takes place due to the following reasons: A) Initiative of Employer Layoff It is a temporary separation an employee for a definite period. Retrenchment It is a permanent separation with due notice as per statutory provision Discharge or Dismissal It is a permanent separation for violation of organisational rules. Voluntary Retirement The employee offered attractive package for separation from organisation on voluntary basis. B) Initiative of Employee Retirement at the age of 60 years. Resignation given by employee LABOUR TURNOVER Labour turnover is the separation of employees from the existing job or service. Labour turnover is expressed in terms of percentage of workers left during a specific period out of the total labour force employed. 2 to 3 % labour turnover is normal but more that 10% labour turnover is a serious problem. Here HR manager has to introduce suitable remedial measures in order to reduce the rate upto 2-3%. Causes of High Labour Turnover (Steps to reduce labour turnoverwrite in other way) Unscientific promotion policy is the major cause. Low wages, low bonus and absence of monetary incentives. Hard nature of job, inadequate safeguards against accidents. Poor working conditions. Ill-treatment and harassment by supervisors. Availability of better employment opportunities. Absence of security of job and job satisfaction Personal reasons such as illness, marriage, death in family etc. Promotion By Merits Promotion By Seniority Meaning Here, the length of service is the only Here, ability, interest, qualifications etc. are consideration for promotion. taken into account for promotions It is favored by management It is favoured by employees and trade unions It is complicated method as merits are It is simple and objective method. difficult to judge There is ample scope of partiality There is no scope for partiality There is no guarantee of promotion to an An employee knows the likely date of his employee even after many years promotion Employee develop to avail the benefit No encouragement to learn and grow Only efficient worker get promotions Efficient an in efficient workers get promotions Used extensively in private sector Used in government department

CAREER PLANNING Career planning is a systematic process by which, one decide career goals and the path to achieve these goals. From organisational point of view, career planning means helping employees to plan their careers in terms of their educational background and capacities. CAREER DEVELOPMENT Career development is essential for implementation of career plan. It refers to a set of programmes designed to match the individuals needs, abilities and career goals with future opportunities in the organisation. Career planning and career development moves together. Benefits of Career Planning and Development Organisation can achieve high quality of work from their employees and promote loyaltyamong employees. Keeps employee motivation high. Links organisational goals with the employee career goals. Facilitates managerial succession of employee. Facilitates career success of majority of employees including managers. Leads to job satisfaction to employees Reduce labour turnover and labour absenteeism due to job attraction. Helps employees to know career opportunities in the organisation. Create a better image of organisation in the job market thus attract competent and career conscious employees. Facilitate rapid expansion of organisation due to availability of highly skilled team of employees. Steps in Career Planning & Development Analysis of Personnel Career Situation For analysis following information will be required: Total number of employees available Personnel need of the organisation Span of control available within organisation Facilities available for training and development Projection of Personal Situation In this step, find out the situation likely to develop after the completion of career development plan. Identifying of Career Needs Find out precisely the scope and limitations of career development needs in the future. Selection of Priorities It is difficult to meet all the career development needs of the organisation and employees, therefore in this step select the pressing and urgent need. For this certain techniques like cost-benefit analysis, work measurement etc. are used. Development of Career Plan In this step, the organisation should ensure following:

Introduce systematic policies and programmes of staff training. Implement a system of study leave. Provide appropriate training facilities and opportunities. Develop the experience of employees by rotating them from one region to another. Give priorities to existing employees in the filling of vacancies Establish a register for promotion on merit-cum seniority basis. Ensure full participation of employees representatives in matters relating to training and promotions.

Write-up of Formulated Plan Prepare a brief report of career plan, which contain schedule, procedures and other details. Monitoring of Career Development Plan In this step, compare planned target with the target actually archived and in case of any shortfall, introduce suitable remedial measures. Implementation of Career Development Plan In this step, HR department implements the career development plan with the help of financial and administrative departments. Review and Evaluation of Plan Evaluate the implemented plan to know the benefits available from this plan to individual employee and to organisation. Future Needs It is the last step of the current career development plan and the first step for next plan. Here on the basis of the achievements of the current plan, the career needs of the future period are estimated.

Career Management Process It is the process of designing and implementing plans to enable the employees to achieve their career goals. It involves following steps: Career Needs Assessment Career needs of employees are assessed by evaluating the attitudes, abilities and potentials of employees. Psychological tests, in-depth interview and simulation exercise can be used to judge the employee potential. Identification of Career Opportunities Here, the management has to give publicity to career opportunities available in the organisation. For this appropriate job analysis is useful. Need-Opportunity Alignment In this step, employees needs are adjusted with career opportunities available. The organisation has to design following programmes to help the employees in this regard: Individualised Technique such as work assignment, planned job rotation and job enrichment. Performance Appraisal Technique MBO Technique Career Counseling Technique Supervisors provide career guidance to employees so as to enable them to decide their career goals. Monitoring Career Moves In this step, progress towards target goals are monitored.

SUCCESSION PLAN Succession refers to the filling of position fallen vacant or likely to fall vacant in near future. The basic purpose of succession planning is to identify and develop people to replace current personnel in key position in case of resignation, promotion, expansion etc. Career planning and succession planning are similar but not synonyms. There are three basic elements in the succession planning: Deciding the position for which the successor is needed Identifying most suitable successor Grooming of that successor to enable to make him competent for new position. A succession plan consists of a runner up chart for a particular position in an organisation. The chart helps the MD to identify a successor. END OF UNIT II

UNIT III

INCENTIVES AND REMUNERATION

REMUNERATION Remuneration is a payment or compensation received for service or employment. This includes the base salary and any bonus or other economic benefits that an employee or executives received during employment. Or Remuneration is traditionally seen as the total income of an individual and may comprises a range of separate payments determined according to different rules. For instance the total remuneration of medical staff may comprise a capitation fee and a fee for services mot is may include a salary and shared financial risk. A remuneration strategy therefore is the particular configuration of building of payments that go make up an individual's total income. TYPES OF REMUNERATION The following are the types of remuneration. 1) COMPANSATION It is of two types a) Executives Pay Executive pay is the total pay or financial compensation an executive offer within the co-corporation salary, and all bonuses, shares, options and any other company benefits. Executives pay is an important part of corporate governance and is often determined by companies' board of director. b) Deferred Compensation It is an arrangement in which a portion of an employee's income is paid out at a date after which that income is actually earned. Example of deferred compensation includes pensions, retirement plans and stock options. 2) EMPLOYEE BENEFITS
Employee benefits are various non-wage compensation provided to employees in addition to their wage and salaries, where an employee exchange (cash) wages for some other forms of benefits, this is generally referred to as salary sacrifice arrangement. Some of these benefits are housing ( employer provided or employer- paid ) , group insurance ( health, dental, etc), disability income protection, retirement benefits, tuition reimbursement, sick leave, vacation ( pad and not paid), social security, profit sharing, funding of education and other specialized benefits. The purpose of employee's benefits also is to increase the economic security of employee.

3) COMISSION
The payment of commission as remuneration for service rendered or product sold in a common way to reward sales people. 4) SALARY A salary is a form an employee to an employee which may be specified in a employment contract. It is contracted with piece wages, where each job, hour or other unit is paid separately rather than on a periodic basis. From a point of business salary can also be viewed as the cost of acquiring human resources for running operation it is the termed personnel expenses or salary expenses. In accounting salaries are recorded in payroll account.

5) PERFORMANCE LINKED INCENTIVES (PLI)

A performance linked incentives is a form of payment from an employer to an employees which

is directly related to the performance output of an employee and which may be specified on an employment contact. PLI may be either open handed ( does not have fixed ceiling ) or closed handed ( has an upper ceiling which is normally stipulated in the employment contacts). Open handed incentives are normally applicable revenue generating activities (e.g. sales) and close handed are associated with support functions ( e.g. operation, human resources, administration etc)

INCENTIVES

Incentive is a reward monetary or non-monetary which is given to a worker for his efficiency and hard work. If a worker has raised production by hard work then there must be increase in wage corresponding to an increase in output. Any firm earning high profits give bonus at high rate as incentives. So the workers exert themselves to produce any where near their full capacity and try to increase the profit of the firm because their income increases with the increase in the firm's profit. An incentive motivates and encourages a worker to produce more and better and are prevalent in the fixed salary method. Incentives help in increasing the interest of the worker in the production and are in addition to the job hourly rate and in some proportion to the worker's contribution towards production. Incentive and production are closely related with each other. Incentives stimulate the worker for increased production and help to create better efficiency.

TYPES OF INCENTIVES Incentives may be classified in to the following two groups:

a) financial incentives b) non- financial incentives

A) FINANCIAL INCENTIVES
Financial incentives involve direct monetary payments or benefits to workers for better productivity and performance. Besides incentives for the immediate work contribution, workers may receive additional financial benefits in the form of; i) bonuses ii) profit sharing METHOD OF FINANCIAL INCENTIVES i) Piece rate system ii) Cent percent premium iii) Halsey system Rowan iv) system v) Bedaux or point system vi) Emerson's effiency bonus system vii) Gantt task and bonus system viii) Taylor's differential piece rate system i x) Merrick's multiple piece rate system Weir premium plan x) Barth system xi) collective or group bonuses system. xii) Here I am going to elaborate the two (piece rate system and cent premium) methods

1. PIECE RATE SYSTEM:Under this system, a piece rate for the completion of job is fixed. Now if a worker completes the job earlier, he can save his time. In this time he can make jobs and get extra money for his extra work Earning of a worker = no. of pieces produced * rate per piece ADVANTAGES OF PIECE RATE SYSTEM i) This method is simple understood by every worker. ii) The employer can calculate his labor cost per unit of job. iii) Workers are paid on their merits. iv) In this method production will improve. v) Man power does not go waste. DIS-ADVANTAGES OF PIECE RATE SYSTEM i) The worker put maximum efforts to earn more and more which result suffering with their health. ii) Accidents may be more due to hasty work. Quality of work may decrease. iii) It does not ensure the regularity of the employment. iv) The worker may waste more material because of tendency for higher output. v) 2. Cent Percent premium: In this system the standard time for completion of the job is fixed and its rate of completion during this period is also fixed. Now the worker who completes the job earlier they get full payment for the time saved. ADVANTAGES OF CENT PER CENT PREMIUM i) It is used for bigger job in which single job takes several days for completion. ii) This method is very simple and easy to understand. iii) The workers earning is based upon his efficiency. iv) Time and rate is fixed earlier. So there is no problem at the time of payment. DIS-ADVANTAGES OF CENT PER CENT PREMIUM i) The worker is not guaranteed a minimum wage. ii) The inefficient workers suffer.

2) NON-FINACIAL INCENTIVES The financial incentives must be supported by the non-financial incentives. Only cash wages cannot help in solving the problems of the workers. So there must also be some non-financial incentives. Non financial incentives include good working conditions, amenities and social benefits in the organization. Non financial incentives play an important role in maintaining better production and efficiency in an organization. With this type of incentives workers create interest for greater and better output and will also enjoy richer and fuller life. At last the say that the non-monetary reward given to the worker for the better productivity and performance, is called non-financial incentives. Some of the chief Non-financial incentives are: 1. Security of service. The service of the trained person should be secure in the industry. A worker knows that the he is not going to be dismissed, suspended or discharge unless he behaves wrongly or creates indiscipline or shows carelessness against the work. He will have security of his service. 2. Opportunity for training. There should exist a suitable arrangement for the training the workers of different levels and thus offering them opportunities for improving their knowledge and skill. 3. Chances of Quick Promotion. There is no back door entry of the worker. Every worker is likely to be promoted to a higher rank when the opportunity arises. There fore it is necessary for every worker to increase his efficiency and show his skill what he has. Only then he gets the chances of promotion. 4. Personal Reward. The rewards like certificates of merit, appreciation for good work, good conduct and attendances etc. also increase the efficiency of the workers. Respect of recognition in

the organization in also is itself a reward to the workers. 5. Welfare Measures. Some of the necessary welfare measure like provision of medical facilities, transportation, housing, food services, recreational and educational facilities to workers and their families has a sound effect on the workers. In the factory some facilities like drinking water, shelters, canteen, rest room, latrines and urinals etc must be provided to the increase the efficiency of the workers. 6. Sympathetic Attitude of the Management. For increasing the efficiency of the worker it is necessary for the management that fair and sympathetic treatment is given to a worker. A faith in their individuality is not ignored and their grievances should always be redressed speedily.

Theories of Motivation There are a number of different views as to what motivates workers. The most commonly held views or theories are discussed below and have been developed over the last 100 years or so. Unfortunately these theories do not all reach the same conclusions! Taylor Frederick Winslow Taylor (1856 1917) put forward the idea that workers are motivated mainly by pay. His Theory of Scientific Management argued the following: Workers do not naturally enjoy work and so need close supervision and control Therefore managers should break down production into a series of small tasks Workers should then be given appropriate training and tools so they can work as efficiently as possible on one set task. Workers are then paid according to the number of items they produce in a set period of time- piece-rate pay. As a result workers are encouraged to work hard and maximise their productivity. Taylors methods were widely adopted as businesses saw the benefits of increased productivity levels and lower unit costs. The most notably advocate was Henry Ford who used them to design the first ever production line, making Ford cars. This was the start of the era of mass production. Taylors approach has close links with the concept of an autocratic management style (managers take all the decisions and simply give orders to those below them) and Macgregors Theory X approach to workers (workers are viewed as lazy and wish to avoid responsibility). However workers soon came to dislike Taylors approach as they were only given boring, repetitive tasks to carry out and were being treated little better than human machines. 38

Firms could also afford to lay off workers as productivity levels increased. This led to an increase in strikes and other forms of industrial action by dis-satisfied workers. Mayo Elton Mayo (1880 1949) believed that workers are not just concerned with money but could be better motivated by having their social needs met whilst at work (something that Taylor ignored). He introduced the Human Relation School of thought, which focused on managers taking more of an interest in the workers, treating them as people who have worthwhile opinions and realising that workers enjoy interacting together. Mayo conducted a series of experiments at the Hawthorne factory of the Western Electric Company in Chicago He isolated two groups of women workers and studied the effect on their productivity levels of changing factors such as lighting and working conditions. He expected to see productivity levels decline as lighting or other conditions became progressively worse What he actually discovered surprised him: whatever the change in lighting or working conditions, the productivity levels of the workers improved or remained the same. From this Mayo concluded that workers are best motivated by: Better communication between managers and workers ( Hawthorne workers were consulted over the experiments and also had the opportunity to give feedback) Greater manager involvement in employees working lives ( Hawthorne workers responded to the increased level of attention they were receiving) Working in groups or teams. ( Hawthorne workers did not previously regularly work in teams) In practice therefore businesses should re-organise production to encourage greater use of team working and introduce personnel departments to encourage greater manager involvement in looking after employees interests. His theory most closely fits in with a paternalistic style of management. Maslow Abraham Maslow (1908 1970) along with Frederick Herzberg (1923-) introduced the Neo-Human Relations School in the 1950s, which focused on the psychological needs of employees. Maslow put forward a theory that there are five levels of human needs which employees need to have fulfilled at work. All of the needs are structured into a hierarchy (see below) and only once a lower level of need has been fully met, would a worker be motivated by the opportunity of having the 39

next need up in the hierarchy satisfied. For example a person who is dying of hunger will be motivated to achieve a basic wage in order to buy food before worrying about having a secure job contract or the respect of others. A business should therefore offer different incentives to workers in order to help them fulfill each need in turn and progress up the hierarchy (see below). Managers should also recognise that workers are not all motivated in the same way and do not all move up the hierarchy at the same pace. They may therefore have to offer a slightly different set of incentives from worker to worker.

Herzberg Frederick Herzberg (1923-) had close links with Maslow and believed in a two-factor theory of motivation. He argued that there were certain factors that a business could introduce that would directly motivate employees to work harder (Motivators). However there were also factors that would de-motivate an employee if not present but would not in themselves actually motivate employees to work harder (Hygienefactors) Motivators are more concerned with the actual job itself. For instance how interesting the work is and how much opportunity it gives for extra responsibility, recognition and promotion. Hygiene factors are factors which surround the job rather than the job itself. For example a worker will only turn up to work if a business has provided a reasonable level of pay and safe working conditions but these factors will not make him work harder at his job once he is there. Importantly Herzberg viewed pay as a hygiene factor which is in direct contrast to Taylor who viewed pay, and piece-rate in particular 40

Herzberg believed that businesses should motivate employees by adopting a democratic approach to management and by improving the nature and content of the actual job through certain methods. Some of the methods managers could use to achieve this are: Job enlargement workers being given a greater variety of tasks to perform (not necessarily more challenging) which should make the work more interesting. Job enrichment - involves workers being given a wider range of more complex, interesting and challenging tasks surrounding a complete unit of work. This should give a greater sense of achievement. Empowerment means delegating more power to employees to make their own decisions over areas of their working life.

Social Security and Labour Welfare in India: Social security is one of the pillars on which the structure of a welfare state rests, and it constitutes the hard core of social policy in most countries. It is through social security measures that the state attempts to maintain every citizen at a certain prescribed level below which no one is allowed to fall. It is the security that society furnishes through appropriate organization, against certain risks to which its members are exposed (ILO, 1942). Social security system comprises health and unemployment insurance, family allowances, provident funds, pensions and gratuity schemes, and widows and survivors allowances. The essential characteristics of social insurance schemes include their compulsory and contributory nature; the members must first subscribe to a fund from which benefits could be drawn later. On the other hand, social assistance is a method according to which benefits are given to the needy persons, fulfilling the prescribed conditions, by the government out of its own resources. The present section reviews labour welfare activities in India with particular emphasis on the unorganized sector. Although provisions for workmens compensation in case of industrial accidents and maternity benefits for women workforce had existed for long, a major breakthrough in the field of social security came only after independence. The Constitution of India (Article 41) laid down that the State shall make effective provision for securing the right to public assistance in case of unemployment, old age, sickness and disablement and in other cases of underserved want. The Government took several steps in compliance of the constitutional requirements. The Workmens Compensation Act (1926) was suitably revised and social insurance programmes were developed for industrial workers. Provident funds and gratuity schemes were introduced in most industries, and maternity legislation was overhauled. Subsequently, State governments instituted their own social assistance programmes. The provisions for old age comprise pension, provident fund, and gratuity schemes. All the three provisions are different forms of retirement benefits. Gratuity is a lump sum payment made to a worker or to his/her heirs by the company on termination of his/her service due to retirement, invalidity, retrenchment or death (Vajpayee and Shanker, 1950).

Welfare 41

Welfare is the provision and maintenance of the conditions of life for individuals by the community. Welfare has a positive and negative aspect. Negative welfare is the provision by the state or other institutions of a safety net or the distribution of benefits according to some criteria; so-called positive welfare is the provision of opportunities for people to help themselves. This contrast lies behind foreign-aid strategies which concentrate on providing skills or seed capital rather than food parcels, for example. The concept of positive and negative welfare is related to the concepts of positive and negative freedom. Marxists support both positive and negative welfare, but recognise that the market inevitably generates inequality and a class of people inevitably the recipients of welfare, who have nothing to sell but their labour power, alongside a class of people who live off the proceeds of exploitation, invariably the providers of welfare. Only by bringing the means of production under thorough going proletarian democracy can the very need for welfare be abolished.

Concept of labour welfare The concept of labour welfare is flexible and elastic and differs widely with time, region, industry, social values and customs, degree of industrialization, the general socioeconomic development of the people and the political ideologies prevailing at a particular time. It is also moulded according to the age-groups, socio-cultural background, marital and economic status and educational level of the workers in various industries In its broad connotation, the term welfare refers to a state of living of an individual or group in a desirable relationship with total environment ecological, economic, and social. Conceptually as well as operationally, labour welfare is a part of social welfare which, in turn, is closely linked to the concept and the role of the State. The concept of social welfare, in its narrow contours, has been equated with economic welfare. As these goals are not always be realised by individuals through their efforts alone, the government came into the picture and gradually began to take over the responsibility for the free and full development of human personality of its population. Definitions: Labour welfare has been defined in various ways, though unfortunately no single definition has found universal acceptance. The Oxford Dictionary defines labour welfare as efforts to make life worth living for worker Chambers Dictionary defines welfare as a state of faring or doing well; freedom from calamity, enjoyment of health, prosperity. The ILO report refers to labour welfare as such services, facilities, and amenities, which may be established in, or in the vicinity of undertakings to enable persons employed therein to perform their work in healthy and congenial surroundings and provided with amenities conducive to good health and high morale. Labour and Labour Welfare Labour sector addresses multidimensional socio-economic aspects affecting labour welfare, productivity, raising living standard of labour force and social security. To raise earnings of work force and achieve higher productivity, skill upgradation through suitable 42

training is of utmost importance. Manpower development to provide adequate labour force of appropriate skills and quality to different sectors essential for rapid socioeconomic development and elimination of the mismatch between skills required and skills available has been a major focus of human resource development activities during the last fifty years. Employment generation in all the productive sectors is one of the basic objectives. In this context, providing enabling environment for self employment has received special attention both in urban and rural areas. Objective is also to eliminate bonded labour, employment of children and women in hazardous industries, and minimize occupational health hazards. During the Ninth Plan period, elimination of such undesirable practices as child labour, bonded labour, ensuring workers safety and social security, looking after labour welfare and providing of the necessary support measures for sorting out problem relating to employment of both men and women workers in different sectors will receive priority attention. It is also envisaged that the employment exchanges will be reoriented so that they become the source of labour related information, employment opportunities and provide counseling and guidance to employment seekers. All labour welfare measures have the following objectives: 1. Enabling workers to live richer and more satisfactory lives; 2. Contributing to the productivity of labour and efficiency of the enterprise; 3. Enhancing the standard of living of workers by indirectly reducing the burden on their purse; 4. Enabling workers to live in tune and harmony with services for workers obtaining in the neighbourhood community where similar enterprises are situated; 5. Based on an intelligent prediction of the future needs of the industrial workers, designing policies to cushion off and absorb the shocks of industrialisation and urbanisation to workers; 6. Fostering administratively viable and essentially developmental outlook among the workforce; and 7. Discharging social responsibilities. Principles of labour welfare Certain fundamental considerations are involved in the concept of labour welfare. The following are the more important among them. Social responsibility of industry This principle is based on the social conception of industry and its role in the society that is, the understanding that social responsibility of the state is manifested through industry. It is assumed that labour welfare is an expression of industrys duty towards its employees. Social responsibility means that the obligation of the industry to pursue those policies, to take such decisions, and to follow those lines of action which are desirable in terms of the objectives and values currently obtaining in the society. The values of the Indian community are enshrined in the constitution of the country. Labour welfare is not embroidery on capitalism nor the external dressing of an exploitative management; rather, it is an expression of the assumption by industry of its responsibility for its employees (Maurioce Bruce, 1961). Industry is expected to win the co-operation of the workers, provide them security of employment, fair wage, and equal opportunity for personal growth and advancement, and make welfare facilities available to them. 43

Democratic values The principle of democratic values of labour welfare concedes that workers may have certain unmet needs for no fault of their own, that industry has an obligation to render them help in gratifying those needs, and that workers have a right of determining the manner in which these needs can be met and of participating in the administration of the mechanism of need gratification. The underlying assumption to this approach is that the worker is a mature and rational individual who is capable of taking decisions for himself/herself. Adequacy of wages The third principle of labour welfare is adequacy of wages; it implies that labour welfare measures are not a substitute for wages. It will be wrong to argue that since workers are given a variety of labour welfare services, they need be paid only low wages. Right to adequate wage is beyond dispute.

Efficiency The fourth principle of labour welfare lays stress on the dictum that to cultivate welfare is to cultivate efficiency. Even those who deny any social responsibility for industry do accept that an enterprise must introduce all such labour welfare measures which promote efficiency (Marshall, 1950). It has been often mentioned that workers education and training, housing, and diet are the three most important aspects of labour welfare, which always accentuate labour efficiency. Re-personalization Since industrial organisation is rigid and impersonal, the goal of welfare in industry is the enrichment and growth of human personality. The labour welfare movement seeks to bring cheer, comfort, and warmth in the human relationship by treating man as an individual, with quiet distinct needs and aspirations. Social and cultural programmes, recreation and other measures designed after taking into consideration the workers interests go a long way in counteracting the effects of monotony, boredom, and cheerlessness.

Co-responsibility The sixth principle of labour welfare recognises that the responsibility for labour welfare lies on both employers and workers and not on employers alone (Moorthy, 1958). Labour welfare measures are likely to be of little success unless mutuality of interest and responsibilities are accepted and understood by both the parties, in particular the quality of responsibility at the attitudinal and organisational level. Totality of welfare The final principle of labour welfare is that the concept of labour welfare must permeate throughout the hierarchy of an organisation, and accepted by all levels of functionaries in the enterprise. 44

Approaches The issue of labour welfare may be studied from different angles, such as: The location, where these amenities are provided, within and outside the industrial undertakings; The nature of amenities such as those concerned conditions of employment and The welfare activities termed as statutory, voluntary and mutual. The agencies which provide living conditions of work people; these amenities. On the basis of location of welfare activities, labour welfare work has been classified by Broughton in two specific categories, namely, (a)intramural(b)extramural (a)Intra-mural activities: consist of such welfare schemes provided within the factories as medical facilities, provision of crches, and canteens, supply of drinking water, washing and bathing facilities, provision of safety measures such as fencing and covering of machines, good lay-out of machinery and plant, sufficient lighting, first-aid appliances; activities relating to improving conditions of employment, recruitment and discipline and provision of provident fund and gratuity, maternity benefits,etc. (b)Extra-mural activities: cover the services and facilities provided outside the factory such as, housing accommodation, indoor and outdoor recreation facilities, amusement and sports, educational facilities for adults and children, provision of libraries and reading rooms. In the welfare activities concerned with conditions of employment are included activities for the management of problems arising out of hours of work, wages, holidays with pay, rest intervals, sanitation, continuity of employment, control over the recruitment of female and juvenile labour, while all such schemes of benefits as co-operative societies, legal and medical aid, and housing are included in the category of activities concerned with conditions of workers. Labour welfare work may be statutory, voluntary or mutual. It is statutory when such activities have to be undertaken in furtherance of the legislation adopted by the government. It is voluntary when the activities are undertaken at their own accord by the employers or some philanthropic bodies or when a labour organisation undertakes such activities for the welfare of their members. It is mutual, when all parties join hands to bring about the social and economic uplift of the workers. The National Commission on labour has classified various labour welfare measures under two distinct classes: (1)those which have to be provided, irrespective of the size of the establishment or the number of the persons employed therein such as facilities relating to washing, storing, drying the clothing, first-aid, drinking water, latrines and urinals (2)those which are to be provided subject to the employment of a specified number of persons, such as canteen, rest shelter, crche, ambulance,etc. According to the Encyclopedia of social sciences, industrial welfare work has taken numerous forms such as: (a)those dealing with immediate working conditions are special provisions for adequate light, heat, ventilation, toilet facilities, accident and occupational disease prevention, lunch room, rest room, maximum hours, minimum wages,etc.; (b)those concerned with less immediate working conditions and group interests, are gymnasiums ,club rooms, play grounds, gardens, dancing, music, house organs, mutual aid societies, vacation with pay, profit-sharing, stockownership, disability and 45

unemployment funds, pensions, savings banks, provisions for conciliation and arbitration, shop committees and workers councils; (c)those designed to improve community conditions, such as housing, retail stores, schools, libraries, kinder gardens, lectures on domestic sciences, day nurseries, dispensary and dental service screening of motion pictures, arranging athletic contests and picnics and summer camps. Social security measures The concept of social security has been mentioned in the early Vedic hymn which wishes everyone to be happy, free from ill- health, enjoy a bright future and suffer no sorrow. The phrase social security is, therefore, a new name for an old aspiration. Today is based on the ideals of human dignity and social justice. Social security is defined as the security that society furnishes, through appropriate organisation, against certain risks to which its members are exposed. These risks are essentially contingencies against which the individual, who has small means, cannot protect himself. These contingencies include employment injury, sickness, disablement, industrial disease, maternity, old age, burial, widowhood, orphanhood and unemployment. Social security is also broadly defined as the endeavour of the community, as a whole, to render help to the utmost extent possible to any individual during periods of physical distress inevitable on illness or injury and during economic distress consequent on reduction or loss of earnings due to illness, disablement, maternity, unemployment, old age or death of working member. Social security thus provides a self-balancing social insurance or assistance from public funds or a combination of both. Though social security programmes vary from country to country, their three major characteristics are: they are established by law; they provide some kind of cash payment to individuals to replace atleast a part of their lost income that our due to such contingencies as unemployment, maternity, work injury, invalidism, sickness, old age and death; the benefits or services are provide in three major ways: social insurance, social assistance or public services.

Social insurance: The features of social insurance are: It is financed entirely by or mainly from the common monetary contributions of workers, employers and the state. The state and the employers make major contribution to this fund, while the employees pay only a nominal amount. When there is total or partial loss of income, these benefits, within limits, ensure the maintenance of the beneficiarys minimum standard of living. Social insurance benefits are granted without an examination of an individuals need and without any means test, without affecting the sense of self respect of the beneficiary. These benefits are so planned as to cover, on a compulsory basis, all those who are sought to be covered. Social insurance reduces the suffering arising out of the contingencies faced by an individual contingencies which he cannot prevent. 46

Social insurance is different from commercial insurance, for the latter is voluntary and is meant for the better paid section of the population, and its benefits are in proportion to the premiums paid; it offers protection only against individual risks and does not aim at providing a minimum standard of living. Social assistance: Social assistance is provided as a supplement to social insurance for those needy person who cannot get social insurance payments, and is offered after a means test. The general revenues of the government provide the finance for social assistance payments, which is made available as a legal right to those workers who fulfil given conditions. Social assistance and social insurance go side by side. Social assistance programmes cover such programmes as unemployment assistance, old- age assistance, public assistance and national assistance. Social security is the combination of social assistance and social insurance. Social insurance, however, falls midway between the two, for it is financed by the stste as well as by the insured and their employers;whereas social assistance is given gratis to the needy by the state or the community. Public service: Public service programmes constitute the third main type of social security. They are financed directly by the government from their general revenues in the form of cash payment and services to every member of the community falling within the defined category. This kind of public service is currently available in a number of countries in the form of national health service providing medical care for every person in the country, old-age pension, pension for invalidism, survivors pension to every widow or orphan, and a family allowance to every family having a given number of children. Although these social security programmes have different characteristics, it is not always easy to draw a line of demarcation among them. In many cases, two or even three programmes have common characteristics. Apart from state there are many other agencies which provide se4curity against contingencies. In many countries trade union have their own sickness, old-age, unemployment schemes. Saving funds, sickness benefits and oldage pensions have also been provided by a large number of organisations to their employees. The underlying idea of social security measures is that a citizen, who has contributed, or is likely to contribute to his countrys welfare, should be given protection against certain hazards. The 1952 ILO convention on social security (minimum standard)divided social security into nine components: (a)Medical care: This should cover pregnancy,confinement, and its consequences and any disease which may lead to a morbid condition. The need for pre-natal and post-natal care, in addition to hospitalisation, was emphasized. A morbid condition may require general practitioner care, provision of essential pharmaceuticals and hospitalization. (b)Sickness benefit:This should cover incapacity to work following morbid condition resulting in loss of earnings. This calls for periodical payments based on the convention specification. The worker need not be paid for the first three days of suspension of earnings and the payment of benefit may be limited to 26 weeks in a year. 47

(c) Unemployment benefit:This should cover the loss of earning during a workers unemployment period. When he is capable and available for work but remains unemployed because of lack of suitable employment. This benefit may be limited to 13 weeks payment in a year, excluding the first seven days of the waiting period. (d)Old-age benefit: This benefit provides for the payment-the quantum depending upon an individuals working capacity during the period before retirement.-of a certain amount beyond a prescribed age and continues till death.

(e)Employment injury benefit: This should cover the following contingencies resulting from accident or disease during employment: Morbid condition Inability to work following a morbid condition, leading to suspension of earning; Total o0r partial loss of earning capacity which may become permanent; Death of the breadwinner in the family, as a result of which family is deprived of financial support. Medical care and periodical payment corresponding to an individuals need should be available. (f)Family benefit: This should cover responsibility for the maintenance of children during an entire period of contingency. Periodical payment, provision of food, housing, clothing, holidays or domestic help in respect of children should be provided to a needy family. (g)Maternity benefit: This benefit should cover pregnancy, confinement and their consequences resulting in the suspension of earnings. Provision should be for medical care, including pre-natal confinement, post-natal care and hospitalization if necessary. Periodical payment limited to 12 weeks should be made during the period of suspension of earnings. (h) Invalidism benefit: This benefit, in the form of periodical payments should cover the needs of workers who suffer from any, disability arising out of sickness or accident and who are unable to engage in any gainful activity. This benefit should continue till invalidism changes into old-age, when old age benefits would become payable. (i) Survivors benefit: This should cover periodical payments to the family following the death of its breadwinner and should continue the entire period of contingency. The ILO has suggested various methods of organizing, establishing and financing various social security schemes. For the benefit of the less developed countries, it has fixed the level of benefits fairly low, so that the schemes may be practicable.

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UNIT IV

Industrial relations
Good industrial relations, while a recognizable and legitimate objective for an organization, are difficult to define since a good system of industrial relations involves complex relationships between:

(a) Workers (and their informal and formal groups, i. e. trade union, organizations and their representatives);

(b) Employers (and their managers and formal organizations like trade and professional associations); 50

(c) The government and legislation and government agencies l and 'independent' agencies like the Advisory Conciliation and Arbitration Service.

Oversimplified, work is a matter of managers giving instructions and workers following them - but (and even under slavery we recognize that different 'managing' produces very different results) the variety of 'forms' which have evolved to regulate the conduct of parties (i.e. laws, custom and practice, observances, agreements) makes the giving and receipt of instructions far from simple. Two types of 'rule' have evolved:

'Substantive', determining basic pay and conditions of service (what rewards workers should receive); 'Procedural,' determining how workers should be treated and methods and procedures.

Determining these rules are many common sense matters like:

Financial, policy and market constraints on the parties (e.g. some unions do not have the finance to support industrial action, some have policies not to strike, some employers are more vulnerable than others to industrial action, some will not make changes unless worker agreement is made first, and rewards always ultimately reflect what the market will bear); The technology of production (the effect of a strike in newspaper production is immediate -it may be months before becoming effective in shipbuilding); The distribution of power within the community - that tends to vary over time and with economic conditions workers (or unions) dominating in times of full employment and employers in times of recession.

Broadly in the Western style economies the parties (workers and employers) are free to make their own agreements and rules. This is called 'voluntarism'. But it does not mean there is total noninterference by the government. That is necessary to:

Protect the weak (hence minimum wage); Outlaw discrimination (race or sex); Determine minimum standards of safety, health, hygiene and even important conditions of service; To try to prevent the abuse of power by either party. 51

HR managers responsibilities
The personnel manager's involvement in the system of industrial relations varies from organization to organization, but normally he or she is required to provide seven identifiable functions, thus: 1. To keep abreast of industrial law (legislation and precedents) and to advise managers about their responsibilities e.g. to observe requirements in respect of employing disabled persons, not to discriminate, not to disclose 'spent' convictions of employees, to observe codes of practice etc. in relation to discipline and redundancy, and similarly to determine organizational policies (in conjunction with other managers) relevant to legal and moral requirements (see also 4.). 2. To conduct (or assist in the conduct) of either local negotiations (within the plant) or similarly to act as the employer's representative in national negotiations. This could be as a critic or advisor in respect of trade etc. association policies or as a member of a trade association negotiating team. Agreements could be in respect of substantive or procedural matters. Even if not directly involved the personnel manager will advise other managers and administrators of the outcome of negotiations. 3. To ensure that agreements reached are interpreted so as to make sense to those who must operate them at the appropriate level within the organization (this can involve a lot of new learning at supervisory level and new pay procedures and new recording requirements in administration and even the teaching of new employment concepts like stagger systems of work - at management level). 4. To monitor the observance of agreements and to produce policies that ensure that agreements are followed within the organization. An example would be the policy to be followed on the appointment of a new but experienced recruit in relation to the offered salary where there is a choice of increments to be given for experience, ability or qualification. 5. To correct the situations which go wrong. 'Face' is of some importance in most organizations and operating at a 'remote' staff level personnel managers can correct industrial relations errors made at local level without occasioning any loss of dignity (face) at the working level. 'Human resource management' and the obscurity of its reasoning can be blamed for matters which go wrong at plant level and for unwelcome changes, variations of comfortable 'arrangements' and practices and unpopular interpretation of agreements. 6. To provide the impetus (and often devise the machinery) for the introduction of joint consultation and worker participation in decision-making in the organization. Formal agreement in respect of working conditions and behavior could never cover 52

every situation likely to arise. Moreover the more demanding the task (in terms of the mental contribution by the worker to its completion) the more highlyeducated the workers need to be and the more they will want to be consulted about and involved in the details of work life. Matters like the rules for a flexitime system or for determining the correction of absenteeism and the contents of jobs are three examples of the sort of matters that may be solely decided by management in some organizations but a matter for joint consultation (not negotiation) in others with a more twenty-first-century outlook and philosophy. Human resource management is very involved in promoting and originating ideas in this field. 7. To provide statistics and information about workforce numbers, costs, skills etc. as relevant to negotiations (i.e. the cost of pay rises or compromise proposals, effect on differentials and possible recruitment/retention consequences of this or whether agreement needs to be known instantly); to maintain personnel records of training, experience, achievements, qualifications, awards and possibly pension and other records; to produce data of interest to management in respect of personnel matters like absentee figures and costs, statistics of sickness absence, costs of welfare and other employee services, statements about development in policies by other organizations, ideas for innovations; to advise upon or operate directly, grievance, redundancy, disciplinary and other procedures.

Definition of Trade Union Section 2(h) of the Trade Unions Act, 1926 has defined a trade union as Any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers, or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more trade unions. According to Flippo A labour union or trade union is an organisation of workers formed to promote, protect, and improve, through collective action, the social, economic, and political interests of its members. Features of trade unions: I. It is an organisation formed by employees or workers. II. It is formed on a continuous basis. It is a permanent body and not a casual or temporary one. III. It is formed to protect and promote all kinds of interests economic, political and social-of its members. The dominant interest with which a union is concerned is, however, economic. IV. It includes federations of trade unions also. V. It achieves its objectives through collective action and group effort.

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Having understood the features let us come on to the next topic for today and that is objectives of Trade Unions that is why do workers organise themselves into unions? Objectives of Trade Union Workers organise themselves in the form of a union to achieve the following goals: a) To improve the economic lot of employees by securing for them better wages. b) To secure better working conditions for the workers. c) To secure bonus for the employees from the profit of the concern, d) To resist schemes of the management which reduce employment, e.g., rationalisation and automation. e) To secure welfare of employees through group schemes which give benefit to every employee. f) To protect the interests of employees by taking active participation in the management. g) To secure social welfare of the employees. h) To secure organisational stability, growth, and leadership. Functions of Trade Unions Broadly speaking, trade unions perform two types of functions, viz., (i) Militant functions (ii) Fraternal functions, Militant Functions. One set of activities performed by trade unions leads to the betterment of the position of their members in relation to their employment. The aim of such activities is to ensure adequate wages, secure better conditions of work and employment, get better treatment from employers, etc. When the unions fail to accomplish these aims by the method of collective bargaining and negotiations, they adopt an approach and put up a fight with the management in the form of so-slow, strike, boycott, gherao, etc. Hence, these functions of the trade unions are known as militant or fighting functions. The second one is the fraternal function. Can you guess what could it mean? Or rather where has it been derived from? Fraternal Functions. Another set of activities performed by trade unions aims at rendering help to its members in times of need, and improving their efficiency. Trade

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unions try to foster a spirit of cooperation and promote friendly relations and diffuse education and culture among their members. They also arrange for legal assistance to its members, if necessary. Besides, these, they undertake many welfare measures for their members, e.g., school for the education of children, library, reading-rooms, in-door and out-door games, and other recreational facilities. Some trade unions even undertake publication of some magazine or journal. These activities, which may be called fraternal functions, depend on the availability of funds, which the unions raise by subscription from members and donations from outsiders, and also on their competent and enlightened leadership. Now that is like good fathers! Another broad classification of the functions of unions may be as follows: (a) Intra-mural activities (b) Extra-mural activities (c) Political activities. Intra-mural activities. These consist of those functions of the unions that lead to the betterment of employment conditions such as ensuring adequate wages and salaries, etc. for which the methods adopted may be collective bargaining, negotiations, strikes, etc. Extra-mural activities. These activities help the employees to maintain and improve their efficiency or productivity, e.g., measures intended to foster a spirit of cooperation, promote friendly relations, and diffuse education among members and various other types of welfare measures. Political activities. Modern trade unions also take up political activities to achieve their objectives. Such activities may be related to the formation of a political party or those reflecting an attempt to seek influence on public policy relating to matters connected with the interests of working class. I Lack of education makes the workers narrow-minded, and prevents them from taking long-term views. Thus, anything, which does not result in an immediate reward, becomes unattractive to them. This attitude is responsible for many strikes and lock-outs in industrial concerns. II. Trade unions may not welcome rationalisation and improved methods of production for the fear that some of the workers will be put out of work. Therefore, they resort to go slow policy that retards industrial progress. III. When labour unions strike because of illogical grounds, incalculable losses occur to producers, community and the nation. These are harmful to the workers also. They suffer because of the loss of wages. IV. They create artificial scarcity of labour by demanding that only union personnel should be employed. V. By undue insistence on the payment of standard rates of wages, they have only leveled down the earnings of the efficient workers.

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Why do Workers Join Unions? Since human behaviour is goal directed, the employees will join a union if some of their wants can be fulfilled by membership in a union. The important forces that make the employees join a union are as follows: I. Greater Bargaining Power. The individual employee possesses very little bargaining power as compared to that of his employer. If he is not satisfied with the wage and other conditions of employment, he can leave the job. II. A trade union provides such a forum where the feelings, ideas and opinions of the workers could be discussed. It can also transmit the feelings, ideas, opinions and complaints of the workers to the management. The collective voice of the workers is heard by the management and give due consideration while taking policy decisions by the management. III. Minimise Discrimination. The decisions regarding pay, work, transfer, promotion, etc. are highly subjective in nature. I may rate you very differently as compared to your marketing teacher! Similarly the personal relationships existing between the supervisor and each of his subordinates may influence the management. Thus, there are chances of favouritisms and discriminations. A trade union can compel the management to formulate personnel policies that press for equality of treatment to the workers. All the labour decisions of the management are under close scrutiny of the labour union. This has the effect of minimising favouritism and discrimination. IV. Sense of Security. The employees may join the unions because of their belief that it is an effective way to secure adequate protection from various types of hazards and income insecurity such as accident, injury, illness, unemployment, etc. The trade union secure retirement benefits of the workers and compel the management to invest in welfare services for the benefit of the workers. V. Sense of Participation. The employees can participate in management of matters affecting their interests only if they join trade unions. They can influence the decisions that are taken as a result of collective bargaining between the union and the management. I hope you have not forgotten Collective bargaining! VI. Sense of Belongingness. Many employees join a union because their coworkers are the members of the union. At times, an employee joins a union under group pressure; if he does not, he often has a very difficult time at work. On the other hand, those who are members of a union feel that they gain respect in the eyes of their fellow workers. They can also discuss their problem with the trade union leaders. Structure of Trade Unions: The structure of unions refers to the basis on which unions are organised (i.e., whether they are organised on craft or industrial or general union basis) and to the pattern whereby the plant unions are linked to regional level or national level federations or unions. 56

Let us examine these two aspects one by one: Unions in India are largely organised by industry rather than craft. Although industrial unionism has been the general trend, craft unions have also emerged here and there; primarily, they exist among non-manual workers like administrative staff, professionals, technicians, etc. Ahmedabad Textile Labour Association is the sole example of craft union of manual workers. Another aspect of the structure of unions in India relates to their pattern of relationship between national level, regional level, local level and plant level unions. Let us see how they are related in India. I. Plant level Unions: The first level in the structure from below is the plant level union. This comprises the unions in one organisation or factory. Please note that only seven members are required to form a union. This has lead to multiple unions in one factory. (We will discuss the details of this aspect in the problems faced by unions in India). II. Local Level federations. This is the second level in the structure from below. The local trade union federation holds together the plant level unions at the local level in a particular craft and industry. These local level federations might be affiliated to either some regional level or national level federation or these may be independent. III. Regional level federations. These are the organisations of all the constituent unions in a particular state or region. The importance of such federations cannot be exaggerated. In a country like India, conditions vary form region to region. The style of living, languages, customs, traditions, conditions, etc. are different. Therefore, it is better that workers are organised at regional or state level. These regional federations may have members of two kinds: (1) The plant level unions affiliating themselves to these directly and (2) The local federations.

Collective Bargaining
Definition: According to Dale Yoder, Collective bargaining is the term used to describe a situation in which the essential conditions of employment are determined by bargaining process undertaken by representatives of a group of workers on the one hand and of one or more employers on the other. In the words of Flippo, Collective bargaining is a process in which the representatives of a labour organisation and the representatives of business organisation meet and attempt to negotiate a contract or agreement, which specifies the nature of employee-employer-union relationship. Features of Collective Bargaining The features of collective bargaining are as under: I. It is a collective process. The representatives of both workers and management participate in bargaining.

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II. It is a continuous process. It establishes regular and stable relationship between the parties involved. It involves not only the negotiation of the contract, but also the administration of the contract. III. It is a flexible and dynamic process. The parties have to adopt a flexible attitude through the process of bargaining. IV. It is a method of partnership of workers in management . Pre-requisites for collective bargaining: Please understand that effective negotiations and enforcement requires a systematic preparation of the base or ground for bargaining which involves the following three steps: 1. Recognition of the Bargaining Agent. The management should give recognition to the trade union for participating in the collective bargaining process. In case there is more than one union, selection could be done through verification of membership by a government agency giving representation to all the major unions through joint consultations. Thus, the bargaining agent of the workers should be properly identified before initiating any action. 2. Deciding the Level of Bargaining. Whether the dealings are confined to enterprise level, industry level, regional or national level should be decided as the contents, scope and enforcement agencies differ in each case. 3. Determining the Scope and Coverage of Bargaining. It would be better to have a clear understanding of what are the issues to be covered under bargaining. Many a time, bargaining is restricted to wage and working conditions related issues but it would be advantageous for both the management and union to cover as many issues as possible to prevent further friction and disputes. Therefore, all the important and interrelated issues are to be taken for consideration.

Problems of Collective Bargaining: The collective bargaining scene in India is not very encouraging. The major emphasis of both union and employers is to settle the disputes through adjudication rather than sorting out the issues among themselves. Whatever bargaining takes place, it is limited to large plants only. Smaller organisations generally do not prefer this form of handling the issues. Several factors are responsible for this state of affairs. These are listed below: I. Due to the dominance of outsiders in trade unionism in the country, there is multiplicity of unions which are weak and unstable, and do not represent majority of the employees. Moreover, there are inter-union rivalries, which further hinder the process of collective bargaining between the labour and the management. II. Since most of the trade unions are having political affiliations, they continue to be dominated by politicians, who use the unions and their members to meet their political ends. III. There is a lack of definite procedure to determine which union is to be recognised to serve as a bargaining agent on behalf of the workers IV. In India, the law provides an easy access to adjudication. Under the Industrial Disputes Act, the parties to the dispute may request the Government to refer the matter to adjudication and the Government will constitute the adjudication machinery, i.e., labour court or industrial tribunal. Thus, the faith in the collective bargaining process is discouraged. V. There has been very close association between the trade unions and political parties. As a result, trade union movement has leaned towards political orientations rather than collective bargaining. 58

Collective bargaining can help bring industrial peace in our country by promoting mutual understanding and cooperation between workers and managements. It provides a framework for deciding the terms and conditions of employment without resorting to strikes and lockouts and without the intervention of outsiders. The management and the union can develop a matured relationship. Instead of fighting amongst themselves, they should work towards the betterment of the organisation. Does that sound impossible? No it is not impossible. When organisations like Eicher can do without a trade union and Tatas known for taking care of their employees and the community at large.this is not a myth! The following steps should be taken for the success of collective bargaining. I. Strong Trade Union: A strong and stable representative trade union is essential for effective collective bargaining. For having such a trade union, workers should have freedom to unionise so that they can exercise their right of unionisation and form a trade union for the purpose of electing their representatives for collective bargaining. II. Compulsory Recognition of Trade Unions: There must be an acceptable and recognised bargaining agent. That means that there must be recognised union or unions to negotiate the terms and conditions of the agreement with the management. III. Mutual Accommodation: There has to be a greater emphasis on mutual accommodation rather than conflict or uncompromising attitude. Conflicting attitude does not lead to amicable labour relations; it may foster union militancy as the union reacts by engaging in pressure tactics. IV. Efficient Bargaining Mechanism: No ad-hoc arrangements are satisfactory for the reason that bargaining is a continuing process. An agreement is merely a framework for every day working relationships, the main bargain is carried on daily and for this there is a need to have permanent machinery. As for machinery being efficient, it has three aspects: (a) Availability of full information (b) Selection of proper representatives (c) Recognition of natural temperament of each other. V. Emphasis on Problem-solving Attitude: I am sure you will agree that there should be an emphasis upon problem-solving approach with a de-emphasis upon excessive legalism. Litigation leads to loss of time and energy and it does not benefit anyone. Therefore the emphasis is to look for mutually acceptable solutions rather than creating problems for each other. VI. Political Climate: For effective collective bargaining in a country, it is important to have sound political climate. The Government must be convinced that the method of arriving at the agreements through mutual voluntary negotiations is the best for regulating certain conditions of employment. Therefore, positive attitude of the political parties is a must for the promotion of collective bargaining.

Types of Collective Agreements in India Collective bargaining as it is practiced in India can be divided into three classes. First is, the bipartite agreement drawn up in voluntary negotiation between management and union. The second type is known as a settlement, while the third type of collective agreement is consent award. These are discussed below: 59

1. Bipartite Agreements: These are most important types of collective agreements because they represent a dynamic relationship that is evolving in establishment concerned without any pressure from outside. The bipartite agreements are drawn up in voluntary negotiation between management and union. Usually the agreement reached by the bipartite voluntarily has the same binding force as settlement reached in conciliation proceedings. The implementations of these types of agreements are also not a problem because both the parties feel confident of their ability to reach the agreement. 2. Settlements: It is tripartite in nature because usually it is reached by conciliation, i.e. it arises out of dispute referred to the appropriate labour department and the conciliation officer plays an important role in bringing about conciliation of the differing view points of the parties. And if during the process of conciliation, the conciliation officer feels that there is possibility of reaching a settlement, he withdraws himself from the scene. Then the parties are to finalise the terms of the agreement and should report back to conciliation officer within a specified time. But the forms of settlement are more limited in nature than bipartite voluntary agreements, because they strictly relate to the issues referred to the conciliation officer. 3. Consent Award: Here the negotiation takes place between the parties when the dispute is actually pending before one of the compulsory ad judicatory authorities and the agreement is incorporated to the authorities, award. Thus though the agreement is reached voluntarily between the parties, it becomes part of the binding award pronounced by an authority constituted for the purpose.

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Workers Participation in Management

Workers participation in management is an essential ingredient of Industrial democracy. The concept of workers participation in management is based on Human Relations approach to Management which brought about a new set of values to labour and management. Traditionally the concept of Workers Participation in Management (WPM) refers to participation of non-managerial employees in the decision-making process of the organization. Workers participation is also known as labour participation or employee participation in management. In Germany it is known as co-determination while in Yugoslavia it is known as self-management. The International Labour Organization has been encouraging member nations to promote the scheme of Workers Participation in Management. Workers participation in management implies mental and emotional involvement of workers in the management of Enterprise. It is considered as a mechanism where workers have a say in the decision-making. Definition: According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share the responsibility of achievement. According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the freedom of opportunity for selfexpression; a feeling of belongingness with the place of work and a sense of workmanship and creativity. The concept of workers participation in management encompasses the following: It provides scope for employees in decision-making of the organization. The participation may be at the shop level, departmental level or at the top level. The participation includes the willingness to share the responsibility of the organization by the workers. Features of WPM: 1. Participation means mental and emotional involvement rather than mere physical presence. 2. Workers participate in management not as individuals but collectively as a group through their representatives. 3. Workers participation in management may be formal or informal. In both the cases it is a system of communication and consultation whereby employees express their opinions and contribute to managerial decisions. 4. a. There can be 5 levels of Management Participation or WPM: Information participation: It ensures that employees are able to receive information and express their views pertaining to the matter of general economic importance.

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b.

Consultative importance: Here workers are consulted on the matters of employee welfare such as work, safety and health. However, final decision always rests with the top-level management, as employees views are only advisory in nature. c. Associative participation: It is an extension of consultative participation as management here is under the moral obligation to accept and implement the unanimous decisions of the employees. Under this method the managers and workers jointly take decisions. d. Administrative participation: It ensures greater share of workers participation in discharge of managerial functions. Here, decisions already taken by the management come to employees, preferably with alternatives for administration and employees have to select the best from those for implementation. e. Decisive participation: Highest level of participation where decisions are jointly taken on the matters relating to production, welfare etc. Objectives of WPM: 1. 2. 3. 4. To establish Industrial Democracy. To build the most dynamic Human Resources. To satisfy the workers social and esteem needs. To strengthen labour-management co-operation and thus maintain Industrial peace and harmony. 5. To promote increased productivity for the advantage of the organization, workers and the society at large. 6. Its psychological objective is to secure full recognition of the workers. Strategies / Methods / Schemes / Forms of WPM: 1. Suggestion schemes: Participation of workers can take place through suggestion scheme. Under this method workers are invited and encouraged to offer suggestions for improving the working of the enterprise. A suggestion box is installed and any worker can write his suggestions and drop them in the box. Periodically all the suggestions are scrutinized by the suggestion committee or suggestion screening committee. The committee is constituted by equal representation from the management and the workers. The committee screens various suggestions received from the workers. Good suggestions are accepted for implementation and suitable awards are given to the concerned workers. Suggestion schemes encourage workers interest in the functioning of an enterprise. Works committee: Under the Industrial Disputes Act, 1947, every establishment employing 100 or more workers is required to constitute a works committee. Such a committee consists of equal number of representatives from the employer and the employees. The main purpose of this committee is to provide measures for securing and preserving amity and good relations between the employer and the employees. Functions: Works committee deals with matters of day-to-day functioning at the shop floor level. Works committees are concerned with: Conditions of work such as ventilation, lighting and sanitation. Amenities such as drinking water, canteens, dining rooms, medical and health services. Educational and recreational activities. Safety measures, accident prevention mechanisms etc. 62

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Works committees function actively in some organizations like Tata Steel, HLL, etc but the progress of Works Committees in many organizations has not been very satisfactory due to the following reasons: Lack of competence and interest on the part of workers representatives. Employees consider it below their dignity and status to sit alongside blue-collar workers. Lack of feedback on performance of Works Committee. Undue delay and problems in implementation due to advisory nature of recommendations. Joint Management Councils: Under this system Joint Management Councils are constituted at the plant level. These councils were setup as early as 1958. These councils consist of equal number of representatives of the employers and employees, not exceeding 12 at the plant level. The plant should employ at least500 workers. The council discusses various matters relating to the working of the industry. This council is entrusted with the responsibility of administering welfare measures, supervision of safety and health schemes, scheduling of working hours, rewards for suggestions etc. Wages, bonus, personal problems of the workers are outside the scope of Joint management councils. The council is to take up issues related to accident prevention, management of canteens, water, meals, revision of work rules, absenteeism, indiscipline etc. the performance of Joint Management Councils have not been satisfactory due to the following reasons: Workers representatives feel dissatisfied as the councils functions are concerned with only the welfare activities. Trade unions fear that these councils will weaken their strength as workers come under the direct influence of these councils. Work directors: Under this method, one or two representatives of workers are nominated or elected to the Board of Directors. This is the full-fledged and highest form of workers participation in management. The basic idea behind this method is that the representation of workers at the top-level would usher Industrial Democracy, congenial employee-employer relations and safeguard the workers interests. The Government of India introduced this scheme in several public sector enterprises such as Hindustan Antibiotics, Hindustan Organic Chemicals Ltd etc. However the scheme of appointment of such a director from among the employees failed miserably and the scheme was subsequently dropped. Co-partnership: Co-partnership involves employees participation in the share capital of a company in which they are employed. By virtue of their being shareholders, they have the right to participate in the management of the company. Shares of the company can be acquired by workers making cash payment or by way of stock options scheme. The basic objective of stock options is not to pass on control in the hands of employees but providing better financial incentives for industrial productivity. But in developed countries, WPM through co-partnership is limited. Joint Councils: The joint councils are constituted for the whole unit, in every Industrial Unit employing 500 or more workers, there should be a Joint Council for the whole unit. Only such persons who are actually engaged in the unit shall be the members of Joint Council. A joint council shall meet at least once in a quarter. The chief executive of the unit shall be the chairperson of the joint council. The vice-chairman of the joint 63

4.

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council will be nominated by the worker members of the council. The decisions of the Joint Council shall be based on the consensus and not on the basis of voting. In 1977 the above scheme was extended to the PSUs like commercial and service sector organizations employing 100 or more persons. The organizations include hotels, hospitals, railway and road transport, post and telegraph offices, state electricity boards. 7. Shop councils: Government of India on the 30th of October 1975 announced a new scheme in WPM. In every Industrial establishment employing 500 or more workmen, the employer shall constitute a shop council. Shop council represents each department or a shop in a unit. Each shop council consists of an equal number of representatives from both employer and employees. The employers representatives will be nominated by the management and must consist of persons within the establishment. The workers representatives will be from among the workers of the department or shop concerned. The total number of employees may not exceed 12. Functions of Shop Councils: Assist management in achieving monthly production targets. Improve production and efficiency, including elimination of wastage of man power. Study absenteeism in the shop or department and recommend steps to reduce it. Suggest health, safety and welfare measures to be adopted for smooth functioning of staff. Look after physical conditions of working such as lighting, ventilation, noise and dust. Ensure proper flow of adequate two way communication between management and workers. Workers Participation in Management in India Workers participation in Management in India was given importance only after Independence. Industrial Disputes Act, 1947 was the first step in this direction, which recommended for the setting up of works committees. The joint management councils were established in 1950 which increased the labour participation in management. Since July 1975 the two-tier participation called shop councils at shop level and Joint councils were introduced. Workers participation in Management Bill, 1990 was introduced in Parliament which provided scope for upliftment of workers. Reasons for failure of Workers participation Movement in India: 1. Employers resist the participation of workers in decision-making. This is because they feel that workers are not competent enough to take decisions. 2. Workers representatives who participate in management have to perform the dual roles of workers spokesman and a co-manager. Very few representatives are competent enough to assume the two incompatible roles. 3. Generally Trade Unions leaders who represent workers are also active members of various political parties. While participating in management they tend to give priority to political interests rather than the workers cause. 64

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Schemes of workers participation have been initiated and sponsored by the Government. However, there has been a lack of interest and initiative on the part of both the trade unions and employers. 5. In India, labour laws regulate virtually all terms and conditions of employment at the workplace. Workers do not feel the urge to participate in management, having an innate feeling that they are born to serve and not to rule. 6. The focus has always been on participation at the higher levels, lower levels have never been allowed to participate much in the decision-making in the organizations. 7. The unwillingness of the employer to share powers with the workers representatives, the disinterest of the workers and the perfunctory attitude of the government towards participation in management act as stumbling blocks in the way of promotion of participative management. 4. Measures for making Participation effective: 1. Employer should adopt a progressive outlook. They should consider the industry as a jointendeavour in which workers have an equal say. Workers should be provided and enlightened about the benefits of their participation in the management. Employers and workers should agree on the objectives of the industry. They should recognize and respect the rights of each other. Workers and their representatives should be provided education and training in the philosophy and process of participative management. Workers should be made aware of the benefits of participative management. There should be effective communication between workers and management and effective consultation of workers by the management in decisions that have an impact on them. Participation should be a continuous process. To begin with, participation should start at the operating level of management. A mutual co-operation and commitment to participation must be developed by both management and labour. Modern scholars are of the mind that the old adage a worker is a worker, a manager is a manager; never the twain shall meet should be replaced by managers and workers are partners in the progress of business

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