Human Resource Management

TYBBI

INTRODUCTION

Quality of human resource is a critical factor in the success of any organization, and more so in service organizations like banking and insurance.

HRM is concerned with managing manpower to improve individual, group and organizational effectiveness.

HRM involves: HR planning Recruitment and selection Training and development Motivation Performance appraisal Career development Promotions and transfers

Definition

David Decenzo and Stephen Robbins defined HRM as:

A process consists of four functions- acquisition, development, motivation and maintenance of Human resources.

“Human Resource Management is concerned with the ‘people’ dimension in management. It is a process consisting of the acquisition, development, motivation and maintenance of Human resources.” Wendell French defines HRM as:

“the philosophy, policies, procedures and practices related to the management of people within the organization.”

Nature of HRM

HRM is a process Acquisition

Development

Motivation

Maintenance

Focus on Objectives Universal Application Continuous in Nature Integrated use of Subsystems Multidisciplinary Approach Key element in Coping with Problems Development of Team Spirit Development of Employees’ Potentialities Long term Benefits

Objectives of HRM

Ensure availability of competent workforce Integration of goals Cost containment Goals through able employees Harmonious Relationships Optimization of Human resources Growth and development of employees Satisfy needs Motivation Legal requirements Self Actualization

Scope of HRM Human Resource Planning Job Analysis and Design Recruitment and Selection Orientation and Placement Training and Development Performance Appraisal Compensation Management Career Planning, promotions and transfers Motivation and communication Employee Welfare Human Resource Inventory HRIS Employee Safety and Health Industrial Relation

Functions of HR

HRP Organization and Job design Staffing T&D Performance Appraisal and Review Compensation and Reward Maintaining effective employer- employee relationship Health and Safety Management Employee Participation Organization Improvement

India’s Best Banks

Top ten largest banks in India-2013 SBI ICICI HDFC Punjab Bank of India BOB Canara Bank IDBI Bank of India Union Bank Axis

Structure of a Human Resource Department

Factors influencing the structure of a HRD are: Size of the organization Management Philosophy Extent of decentralization Type of work Kind of people employed Type of service to be provided by HR

Classic StructurePresident/ Director HR

Manager

Recruitment and

Selection

Manager

T&D

Manager

Compensation

and Benefit

s

Manager

Employee

Welfare

Manager

Employee

Relations

Personnel Management

Personnel management can be defined as obtaining, using and maintaining a satisfied workforce.

Personnel management is basically an administrative record keeping function at the operational level.

HRM is a refined and advanced form of personnel management.

Personnel management views labour as a tool, the behavior of which can be manipulated for the benefit of the organization and replaced when worn out.

Difference between HRM and PM

Management Economic Man Managerial emphasis Cost and investment Communication Training and development

Human Resource Development

It is an integrated use of:Training and DevelopmentOrganizational DevelopmentCareer Development

To improve individual, group and organizational effectiveness

Nature of HRD

Continuous in nature Learning and Training Career Development Organizational Development Potential Appraisal Performance Appraisal

Role of HR Manager

Strategic Partner Employee Advocates Change Campion

Qualities of a good HR Manager

Intelligence Empathy Free of stereotypes and prejudice Motivating abilities Analytical abilities A holistic approach Good understanding of human nature and social

environment

Challenges faced by HRM Focus on knowledge and skill Globalization Attrition rate Reservation Issue Managing Women Workforce/ Workforce diversity Corporate Reorganizations Stress Management Work life balance Meet growing expectation of employees Future Challenges Technology Employee Health and safety

Continued…

Ethical issues:Recruitment and SelectionPerformance AppraisalCash and incentive plansPrivacy issues

Industrial Accidents

CausesEnvironmental causesHuman causes

Preventing accidentsAccident reportsOrganizational climateSafety trainingErgonomics

HRM challenges for Indian Bank

Job Analysis, Job Design and Job Evaluation

Job Analysis Job Analysis is a systematic

exploration of the activities within a job.

It defines and documents the duties, responsibilities and accountabilities of a job and the conditions under which a job is performed. ?

Job Description

Called as Position Description Written statement of what jobholder does,

how it is done, under what conditions and why.

Common format: title; duties; distinguishing characteristics; environmental conditions; authority and responsibilities.

Used to describe the job to applicants, to guide new employees, and to evaluate employees.

Job Specification Also known as man or employee specifications. States minimum acceptable qualities and qualifications

necessary to perform the job. Used to select employees who have the essential

qualifications. Basic Contents: education, experience, age, physical,

mental and social characteristics.

Process of Job Analysis

Methods of Job Analysis

Job Analysis

Interview

Observation

Questionnaire

ChecklistDiary

Work Participation

Critical Incident Technique

Technical Conference

Continued… Observation method – job analyst watches employees

directly or reviews film of workers on the job. Individual interview method – a team of job incumbents

is selected and extensively interviewed. Group interview method – a number of job incumbents

are interviewed simultaneously. Work Participation Method- Job analyst himself performs

the work and gets first hand information. Critical Incidents Method- Any incident that contributes

positively or negatively to the job, a report of the same is analyzed to prepare a list of Do’s and Don’ts

Continued…

Structured questionnaire method – workers complete a specifically designed questionnaire.

Technical conference method – uses supervisors with an extensive knowledge of the job.

Diary method – job incumbents record their daily activities.

Checklist Method- Similar to Questionnaire method but more objective questions

The best results are usually achieved with some combination of methods.

Importance/Use of Job Analysis

HRP Recruitment and selection Training and development Job Evaluation Employee compensation Engineering Design Job Design Performance Measurement and Rating Administrative Control Health and Safety measures Career Planning

Job Design

It is the process of determining the specific tasks and responsibilities to be carried out by each member of the organization and/or teams.

The main objective of Job Design is to integrate: Needs of Employees Requirements of Organizations

It helps in determining what, how, how many and in which order are the tasks to be done.

Factors Affecting Job Design

Organizational Factors

Environmental Factors

Behavioral Factors

Organizational Factors

Task Characteristics

Work Flow

Ergonomics

Work Practices

Environmental Factors

Employee abilities and availability

Social and cultural expectations

Behavioral Factors

Feedback

Autonomy

Use of abilities

Variety

Techniques of Job Design

Work Simplification

Job Enlargement

Work Simplification

Breaking down of jobs into small tasks.

Salient features: Work is mechanically paced Employee works only on one part of the product Time required to train is drastically reduced

Negative Outcomes: Highly specialized and routine Boredom Lack of challenge Limited interaction

Job Enrichment Increasing the workers control over the planning and performance of a

job and participation in setting the organization policy.

It is also called vertical job loading.

According to Richard hackman and Greg Oldham, for enriching the jobs, attention should be paid to : Skill Variety Task identity Task significance Autonomy and feedback

Job Rotation Movement of an employee from one job to another.

Advantages: Reduces boredom and monotony. Broadens employees knowledge and skills Employee gets an opportunity to do a variety of work and interact

with new people

Disadvantages: Several monotonous jobs instead of one Disrupts work routine Not challenging in nature.

Job Enlargement

It is the process of increasing the scope of the job by adding more tasks to it.

Also called as horizontal job loading.

Advantages: Reduces monotony and boredom Training and developing more versatile employees.

Job Evaluations

It is a systematic, objective procedure for determining the value of a group of jobs for the organization

Specify relative value of each job in the organization.

Used to design equitable compensation program.

Advantages of Job evaluation Wage Structure

New jobs

Improves relations and reduces grievances

Uniformity

Rates the job not the man

Examines different job structures

Job hierarchy

Limitations of Job Evaluation Inaccuracy

Market forces

Changes in technology

Dissatisfaction

Time consuming and expensive

Financial burden

Conflicts

Process of Job evaluation Gaining acceptance

Selecting jobs for evaluation

Job analysis and Job description

Job evaluation

Assigning money value

Periodic Review

Techniques of Job Evaluation

Job ranking method

Job classification method

Factor comparison method

The point method

Job Ranking Method

Jobs are arranged or ranked in their importance i.e from lowest to highest or vice versa.

Committee assesses the worth of each job on the basis of its title or on its content, if the latter are available.

Job Description can be used for ranking different jobs.

Ranked jobs are classified into groups, and jobs under particular groups may receive the same salary or salary range.

Example

Rank

1. Accountant

2. Accounts clerk

3. Purchase Assistant

4. Machine Operator

5. Typist

6. Office Boy

Monthly Salaries

Rs. 3000

Rs. 1800

Rs.1700

Rs. 1400

Rs. 900

Rs. 600

Job Classification Method As in the ranking method, the Job-grading method does not call for

a detailed or quantitative analysis of job factors.

Facts about the job are collected and matched with the grades which have been established by the raters (Committee)

Grades are arranged in the order of their importance

Lowest grade may cover jobs requiring greater physical work under close supervision, but carrying little responsibility.

Example

Class I: Executives: Further classification under this method may be Office manager, Deputy office manager, office superintendent, etc.

Class II: Skilled workers: Under this category may come cashier, receipts clerk, etc.

Class III: Semiskilled workers: Under this category may come machine operators, switchboard operators, etc.

Class IV: Unskilled workers: File clerks, office boys, etc.

Factor Comparison Method

Under this method, one begins with selection of factors .

Each factor is ranked individually with other jobs.

E.g.:-

Each job is ranked several times like,

1. Skill requirements,

2. Physical exertion,

3. Responsibility, and

4. Job conditions

Point Ranking Method PRM is one of the most widely used JE Plan.

It involves identifying number of factors ,sub factors and degree to which these factors are present in Job

Points are assigned for each degree of each factor

Grand Total of these points ,classify the Job Worth

Human Resource Planning

Introduction Human resource planning is a

process by which an organization ensures that it has the right number and kinds

of people at the right place at the right time capable of effectively and

efficiently completing those tasks that will help the organization achieve its overall strategic objectives.

Introduction

Linked to the organization’s overall strategy and planning to compete domestically and globally.

Overall plans and objectives must be translated into the number and types of workers needed.

Senior HRM staff need to lead top management in planning for HRM issues.

Characteristic of HRP

Futuristic Continuous Process Part of Corporate planning Quantitative and Qualitative Long term and short term plans

Objectives of HRP

Forecasting Human Resource Requirement Effective management of Change Realizing Organizational Goals Promoting Employees Effective utilization of Human Resource Meeting Personnel Requirements Prevent Disruption of Work Control Costs Training and Management Development

Need for HRP

Smooth and efficient working of Organizations Filling Gaps in Manpower Expansion and Diversification Changing Technology Increased Employee Mobility Government Policies Budgeting Shortage of Skills

Steps in HRP

Analyzing the Organizational

Plans

Forecasting the Overall Human

Resource Requirement

Assessment of Supply of human

resources

Estimating manpower

gaps

Action planning

Evaluation and Control

Limitations

Problem of Accuracy Emphasis on Quantitative Aspects Uncertain Future Management Attitude Faulty Information System Expensive Time Consuming

Factors affecting HRP

Lack of Skilled Resources

Separation of Employees

Change in Organizational Objectives

Change in Policies

Voluntary Retirement Scheme

A voluntary retirement scheme (VRS) package is offered to employees as an incentive to retire earlier than their normal retirement age. The VRS package usually contains generous retirement benefits for certain employees.

Reasons for offering VRS Discontinuation of existing products and services Economical to sub- contract or outsource the service Low productivity norms of existing work force and refusal/ reluctance

of trade unions to give higher productivity Existing workforce is unable to sustain high output norms High wage level of existing workforce as a percentage of value added. Overmanning Inability of management to get changes implemented through existing

workforce Need for more space, hence requirement to shift to a new location Cost of VRS today is lower than tomorrows VRS Merger of companies Refusal of existing workforce to learn and acquire new/higher skills for

working on new equipment and/or new process

Problems faced by PSU banks with VRS plans

A sizeable portion of skilled/experienced workforce accepted the VRS creating an urgent need for upgradation of skills of employees remaining in the organization

A much greater number of officers (27.1%) applied for VRS as compared to clerical and subordinate staff (18.2%)

No remarkable improvement in the age profile of employees after VRS (42.4 yrs) as compared to the age profile before VRS (43.7 yrs)

Regional staff imbalance occurred as more employees from the western region opted for VRS. The poorest response was from the eastern and north-eastern region.

Case Study

Recruitment and Selection

Introduction

RecruitingOnce an organization identifies its

human resource needs through employment planning, it can begin the process of recruiting potential candidates for actual or anticipated organizational vacancies.

It brings together those with jobs to fill and those seeking jobs.

Definition

DeCenzo and Robbins:

“it is the process of discovering potential candidates for actual or anticipated organisational vacancies.”

Edwin Flippo:

“it is the process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organisation.”

Sources of Recruitment

Internal Sources:PromotionsTransfersJob postingsRecall of retired and ex-employeesEmployee referralsSkills inventoriesHRIS

Continued…. Advantages of Internal Source:

Familiarity Saving on costs and time Greater motivation Morale Reduced employee turnover Loyalty and commitment

Limitations: Fresh talent Restricted choice Unavailability of talent Favoritism Discontent

Continued…

External Sources:Campus recruitmentAdvertisementsEmployment agenciesEmployee recommendationsProfessional bodiesDeputationPoachingUnsolicited or casual applicationsE-recruitment/online recruitment

Continued…

Advantages of Internal Source: New talent and approach Wider choice Maintain balance Start-ups

Limitations: Expensive Time consuming Affects morale Training and orientation

Questions???

Selection

Selection – the process by which an organization chooses from a list of applicants the person or persons who best meet the selection criteria for the position available, considering current environmental conditions

Definition

Dale Yoder:

“it is the process in which candidates for employment are divided in to two classes- those are to be employment and those who are not.”

Thomas Stone:

“it is the process of differentiating between applicants in order to identify and hire those with a greater likelihood of success on the job.”

Internal Environmental Factors Influencing Selection

Organization characteristics that can influence the selection process:SizeComplexityTechnological ability

External Environmental Factors Influencing Selection

Government employment laws and regulations

Size, composition, and availability of local labor markets

The Selection Procedure

Preliminary Interview

It is the first step in the selection procedure

Objectives of this interview is to discard those candidates who are totally unqualified for the job

Candidates who seem suitable are given application blanks to fill

Application Blanks

Purposes of ApplicationsRecord of applicant’s interest in the

jobProvides a profile of the applicantBasic record for applicants who are

hiredHelps in formulation questions for the

interview

Sample Application Form

Sample Application Form (cont’d)

Selection Tests

Mechanism that attempts to measure certain characteristics of individuals,

Types of testsAptitude AbilityInterestPersonality

Employment Interviews

It serves three purposes: It is an opportunity to obtain additional

information about the candidate and determine his suitability for the job

It provides information to the candidate about the organization, the specific job for which he has applied and personnel policies

It helps to establish a friendly relationships with the candidate and motivate suitable candidates to join the organization.

Continued…

Interviews involve a face-to-face meeting with the candidate to probe areas not addressed by the application form or tests

Two strategies for effective use of interviews:1. Structuring the interview to be reliable and valid

2. Training managers on best interview techniques

Continued…

Types of Interviews: Unstructured interview Structured interview Behavioral Interviews

Candidates are observed not only for what they say, but how they behave.

Role playing is often used. Stress Interviews.

Medical Examination

It helps to determine whether the candidate is mentally and physically fit to perform the job.

It prevents employment of employees suffering from contagious diseases.

It saves expenditure that the organization may have to incur for medical treatment of the candidate.

Reference Checks

Applicants are frequently asked to provide the names and addresses of two or three persons who know them well.

These persons are commonly referred to as referees or references.

The organization contacts the referees through mail or by telephone.

These persons may be previous employers, heads of educational institutions or other public figures

Final Selection

Formal EducationExperience and

Past Performance

PhysicalCharacteristics

PersonalCharacteristics and

Personality Type

Use of Group Discussions in Selection It is an important selection tool. It involves a free exchange if ideas

among group members of the group The number of participants varies but

typically from 8-15 people The usual time for a GD is between 20-

30 minutes GD is useful for assessing:

Social Skills Intellectual Skills Attitudes

Questions????

INDUCTION

Definition

It is the process of receiving and welcoming employees when they first join the company and giving them the basic information they need to settle down quickly and happily start work.

Objectives of Induction

Smooth entry Favorable attitude Quick adjustment Reduce employee turnover Increasing commitment Understand organizational norms Develop relationships Other relationships

Contents of the induction program Information about the organization Learning arrangements and

opportunities Performance management processes Health and safety Conditions of service Pay and benefits Policies, procedures and working

arrangements Trade unions and employee involvement

Orientation program

General information Specific orientation Follow-up

Training and Development

Introduction

Employee training a learning experience designed to achieve a relatively permanent change in an individual that will improve the ability to perform on the job.

Employee development future-oriented training, focusing on the personal growth of the employee

Importance of Training

Higher productivity and profits Optimal use of resources Job satisfaction Safety Reduces stress Career development

Importance of Training in Insurance Companies

Employee Training

Determining Training Needs

Training Need and Objectives

Job training of new employee Upgrading current jobs Management development Personal development Technological and scientific

information

The Training Process

Identifying training needs Determining training objectives Designing the training program Implementation of the training

program Evaluation of the training program

Identifying training needs

Organizational analysis Task analysis Person analysis

Determining training objectives

The specific skills and knowledge to be imparted along with the attitudes to be cultivated

The employees who are to be trained The number of people to be trained and from

which unit The time period within which the training is to

be given The desired outcome on completion of training The training budget

Designing the Training Program

It covers matters such as:Contents Training methods and techniqueOn the job or off the job trainingPlaceLearning principlesTrainers

Implementation of the Training Program

Organizing training and other facilities Scheduling the training program Conducting the program Monitoring the progress of the

trainees

Evaluation of the Training Program

To determine whether the training program met its objectives

Identify strengths and weaknesses in the training process

To calculate the cost/benefit ratio of the training program

To determine who benefited most from the training program and why.

To establish a data base for future decisions about the training program

Methods of Employee Training

On-the-Job Training Orientation Training Programmed Instruction Computer Assisted Instruction Team Training

Training Methods for Management Development

ON-THE JOB Coaching Job rotation and transfers Understudy assignments Committee assignments Project assignment Multiple management

OFF-THE JOB Lecture method Case studies Conferences Role-Playing Business games University training In-basket method Sensitivity training Wilderness training

Evaluation of Training

Evaluation of Training is defined as any attempt to obtain information on the effects of a training program and to assess the value of the training in the light of that information

According to Kirk Patrick there are 4 criteria's used for Training evaluation Reaction criteria Learning criteria Behavioural criteria Results criteria

Characteristics of a Good Training Program

Specific Significant Appropriate Systematic and planned group Transfer Supportive supervisors Choice of training Post training assessment

New Issues in training

Cultural Diversity TrainingAttitude change programsBehaviour change programs

Four abilities critical for success of foreign projects:Tolerance for ambiguityBehavioural flexibilityNon judgementalismCultural empathy

Customer Relationship Management

Customer identification Customer acquisition Customer retention Customer satisfaction and delight

CRM Training steps

Understanding the organizational environment

Understanding the organization’s products

Analyze the product environment

Sexual harassment Training

Two types: Quid pro quo harassment Hostile environment harassment

Training in this area focuses on: Teaching employees to be sensitive towards

other people’s values and preferences Making employees aware that there are

broad cultural differences Informing employees that people differ in

degree with regard to verbal statements

Performance Appraisal

Introduction

Performance Appraisal is a technique of assessing, as impartially as possible, the attributes, strengths, weaknesses, capacity and attitudes of individual employee in relation to his job.

Purposes of a Performance Management System

Feedback - let employees know how well they have done and allow for employee input.

Development – identify areas in which employees have deficiencies or weaknesses.

It aims to provide data to managers with which they may judge future job assignments and compensation

Major uses of Performance Appraisal Personnel training Wage and salary administration Placement Promotions Discharge Job satisfaction Manpower planning Validation of selection procedures Feedback

The Appraisal Process

Appraisal Methods

Traditional Methods Graphic rating scales Ranking Paired comparison method Forced distribution method Forced choice method Checklist method Essay evaluation Confidential reports Field review method Critical incidents Group appraisal

Modern Methods Assessment centre MBO Behaviorally Anchored Rating

scales (BARS) Human Asset Accounting

Assessment centre

This not a technique of performance appraisal by itself. In fact, this is a system or organization where assessment of several individual is done by experts by using various techniques. These techniques used role playing, case studies etc.

Management by Objectives (MBO)

Includes mutual objective setting and evaluation based on the attainment of the specific objectives

Common elements in an MBO program are:• goal specificity• participative decision making• an explicit time period• performance feedback

Effectively increases employee performance and organizational productivity.

Behaviorally Anchored Rating Scales (BARS)

Appraiser rates employee on factors which are defined by behavioral descriptions illustrating various dimensions along each rating scale.

Steps in development of BARS:

1. Supervisors prepare a list of critical incidents

2. Group critical incidents into small clusters of performance dimensions

3. Group of experts are called. Reassign or classify the critical incidents in to the same performance dimensions

4. Experts rate “surviving” critical incidents

5. Final form of BARS consists of critical incidents that survived step 3 and 4.

Human Asset Accounting

It attempts to measure the monetary value of the human resources of the organization.

Evaluation is done in terms of costs and contributions of employees.

Difference between cost and contribution reflects the performance of employees

Other Methods of Performance Appraisal

Appraisal by peers/Buddy Appraisal by Subordinates Psychological Appraisal Self Evaluation 360 Degree Appraisal

360 Degree Appraisal

Factors that impede Performance Appraisal

Employee resistance Lack of time Lack of rewards Appraisal politics Lack of training Poor appraisal forms Avoid negative actions Organizational needs Poor reflection on the manager

Human Errors in Performance Appraisal Leniency error Central tendency Halo effect Horn effect Similar – to- me error Logical error Constant error Recency error Rater’s stereotypes or bias

Making Performance Appraisal More Effective

Careful planning Use of effective communication skills Encourage employee participation Focus on behavior Emphasis on development Plan future course of action Positive ending

Human Resource Audit

HRA provides feedback on a number of critical issues: The extent to which HRM practices are contributing to

organizational effectiveness Extent to which organization's HRM practices meet

the employee’s needs and aspirations Accuracy Effectiveness of T&D Efficiency of performance appraisal system Soundness of remuneration program HR climate Compliance to legal requirements

Continued…

HR audit may be done using the following approaches:Comparative approachExternal consultant approachStatistical approachCompliance approachMBO approach

Performance Appraisal & the Law

Types of charges relating to Performance Appraisal: Discrimination Employer negligence Defamation Misrepresentation

A sound appraisal system should satisfy the following criteria:

Objective Job related Focused on behavior rather than traits Within Control of the ratee Should relate to specific functions

Continued…

Compliance procedures: Uniform and standardized Formally communicated Notice of performance deficiencies and opportunity to

correct them Access to review appraisal reports Formal appeal mechanisms Multiple, diverse, and unbiased raters Written instructions Thorough and consistent documentation A system should be established to detect potentially

discriminatory effects or abuses

TRANSFERS AND PROMOTIONS

Introduction

Transfer refers to shifting of employees from one job to another within the same organization where salary, responsibilities and category of the new job and previous job are almost the same.

Objectives of Transfer

Organizational needs Employee needs Optimal utilization of employees Increase employee versatility Relief Disciplinary action

Transfer Policy The policy on Employee transfer needs to address the following:

Right of the organization to transfer

Terms and conditions

Transfer procedures

Transfer back to former job

Effects of remuneration and seniority

Conditions of a good policy Should state the types of transfers

Person who has authority to order transfer

Effect of transfer on pay and seniority

Facilities available to transferred employees

Conditions under which personal request for transfer will be entertained

Writing

Appropriate authority in case of appeals

Best interests

Types of Transfer

Employee transfer is classified based on purpose as under: Transfers that are effected for T&D Transfers made for adjustment of varying volumes Transfers designed to correct the problem of poor employee

placement

Common types of Transfer: Production Replacement Versatility Shift Remedial Penal

Promotion

It is an advancement of an employee’s rank or position in an organizational hierarchy system

“ a promotion is the transfer of an employee to a job that pays more money or that enjoys some preferred status”- Scott and Spreigal

Promotional Ladder at CANARA BANK

Chairman and Managing Director

Executive Director

Scale VII: General Manger

Scale VI: Deputy General Manager

Scale V: Assistant General Manager

Scale IV: Divisional Manager

Scale III: Senior MAnager

Scale II: Manager

Scale I: Officer

Special Assistant

Clerk

Objectives of Promotion

Incentive Recognition Boosts employee morale Enhances commitment of employees Job satisfaction Retain Competitive spirit Developing a competent internal source Minimize discontent and unrest

Bases of Promotion

Promotion based on Seniority Advantages:

• Simplicity

• Objectivity

• Reward

• Reduces employee turnover

• Union approval

• In line with Indian culture

Criticism:• Faulty assumption

• Ignores performance

• Efficiency suffers

• Demotivating

Continued…

Promotion based on Merit Advantages:

• Enhances efficiency• Motivates

Limitations:• Subjective• Favoritism• Opposition of unions• Insecurity

Continued…

Promotion based on Seniority-Cum-Merit

Ways to strike a balance:Minimum length of serviceMeasurements of seniority and merit

through a common factorMinimum merit and seniority

Types of Promotion

Horizontal

Vertical

Dry

Promotion Policies Statement of the organisation’s broad directives on promotion matters Main characteristics:

Policy statement Basis of promotion Promotion charts Communication of policy Career planning Detailed records Employee training Consistency Fair and impartial Decision making authority Appeal mechanism

Motivation

Introduction

A need or desire that energizes and directs behavior

It may be internal or external It is a six phased process:

Need Deficiency

Search and Choice of strategy

Goal-Directed Behavior

Evaluation of Performance

Reward or Punishment

What is Motivation

The act or process of stimulating to action, providing an incentive or motive, especially for an act.

Motivation is the art of getting people to do what you want them to do because they want to do it.

Difficulties in studying Motivation

Wide variety of human behaviors Inferential Motives vary from person to person Motives change with time

External Rewards

• Salary

• Working conditions

• Benefits

• Environment

Internal Rewards

• Achievement

• Responsibility

• Recognition

• Feedback

• Learning and growth

What motivates people

Continued…

In addition to the external and internal awards, have:

• Employee engagement

• Challenging job profiles

• Keep them self-motivated

• Good projects

• Job rotation

• Job security / stability

• Good team, co-workers, bosses

Theories of Motivation

Theory X and Y Need Hierarchy theory ERG theory Two factor theory Equity theory Expectancy theory Behavior modification theory Goal setting theory

McGregor’s XY Theory

Theory X• Assumes that workers have little ambition, dislike

work, avoid responsibility, and require close supervision.

Theory Y• Assumes that workers can exercise self-direction,

desire responsibility, and like to work.

Assumption:• Motivation is maximized by participative decision

making, interesting jobs, and good group relations.

Continued…

Maslow’s-Hierarchy of Needs Theory

Needs were categorized as five levels of lower- to higher-order needs. Individuals must satisfy lower-order needs before

they can satisfy higher order needs. Satisfied needs will no longer motivate. Motivating a person depends on knowing at what

level that person is on the hierarchy. Hierarchy of needs

Lower-order (external): physiological, safety Higher-order (internal): social, esteem, self-

actualization

PHYSIOLOGICAL OR SURVIVAL NEEDSFood, drink, shelter, sex, warmth, physical comfort

Continued…

Physiological needs(air, water, food, rest, exercise, etc)

Safety needs(shelter, job security, retirement plan, insurance)

Love and belonging(children, friends, partners)

Self esteem(Ego, status, respect ,

fame, recognition, reputation, dignity)

Selfactualization(Confidence,

achievements,freedom)

Maslow’s Definition of a Self -actualized Person

Has no mental illness Satisfied in basic needs Fully exploited talents Motivated by values

McClelland’s Theory of Needs

AFFILIATION POWERACHIEVEMENT

There are three major acquired needs that are major motives in work.

•Achievement: The need for achievement is characterized by the wish to take responsibility for finding solutions to problems, master complex tasks, set goals, etc.•Affiliation: the need for affiliation is characterized by a desire to belong, an enjoyment of teamwork, a concern about interpersonal relationships, and a need to reduce uncertainty.•Power: the need for power is characterized by a drive to control and influence others, a need to win arguments, and a need to persuade and prevail.

ERG THEORY

Clayton Alderfer’s ERG theory is a variation of Maslow's hierarchy of needs.

Three groups of needs Existence needs: physical and material wants

Relatedness needs: desires for interpersonal relationships

Growth needs: desires to be creative and productive; to use one’s skills

Maslow’s and Alderfer’s Needs Theories

Highest-order needs

Most essential (prepotent) needs

Maslow’s Need Hierarchy Categories

Alderfer’s Needs Hierarchy Categories

Self-actualization

Esteem

Belongingness

Safety

Physiological

Growth

Relatedness

Existence

Both similar to and different from Maslow's need hierarchy

Satisfied and unsatisfied needs operate in much the same way

Movement upward is the same Movement downward is new

Continued…

Fredrick Herzberg’s Two-Factor Theory

Motivators Can increase job satisfaction Factors related to doing the job (work itself, responsibility, personal

growth, sense of achievement, recognition)

Hygiene factors Can prevent dissatisfaction, but cannot increase satisfaction Factors extrinsic to or surrounding the job (supervision, relations

with co-workers, working conditions, company policies and practices)

Continued…

Recognition

Achievement Growth

ResponsibilityNature of the work

Motivators: Factors directly related to doing

a job

Hygiene Factors: Elements associated

with conditions surrounding the job

Job

Relations with co-workers

Working conditions

BenefitsCompensation

Supervision

Continued…

Dissatisfactionand

demotivation

Not dissatisfiedbut

not motivated

Positivesatisfaction

and motivation

Hygiene Factors

•Company policies•Quality of supervision•Relations with others•Personal life•Rate of pay•Job security•Working conditions

Motivational Factors

•Achievement•Career advancement•Personal growth•Job interest•Recognition•Responsibility

Continued…

Hygiene-FactorsExtrinsic factors

related to conditions surrounding the job:

MotivatorsIntrinsic factors

related to the doing of the

job itself:

Neither satisfied nor dissatisfied

Hygiene factors must be satisfied first, leading to a state of being neither satisfied nor dissatisfied

From the state of being neither satisfied nor dissatisfied, motivators can impel an employee’s motivation and performance to higher levels

J. Stacy Adam’s Equity Theory

Focuses on individuals’ comparisons of their own circumstances to those of others Inputs (age, experience, education, etc.) Outcomes (salary, benefits, titles, perks, etc.) Ratios of an individual’s input/outcome

versus that ratio of another person or people

Continued…

Continued… Employees who feed overrewarded may try to reduce

inequity by any of the below responses: Internal-physical- work harder Internal-psychological- discount the value of rewards External-physical- convince other workers to ask for more rewards External-psychological- choose someone else for comparision

Employees who feed underrewarded may try to reduce inequity by any of the below responses: Internal-physical – deliberately lower quality and quantity of work Internal-psychological- inflate the value of rewards External-physical- bargain for more rewards External-psychological- choose someone to compare himself more

favourably

Victor Vroom’s Expectancy Theory

• States that an individual tends to act in a certain way based on the expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual.

• Key to the theory is understanding and managing employee goals and the linkages among and between effort, performance and rewards.

• Effort: employee abilities and training/development

• Performance: valid appraisal systems

•Rewards (goals): understanding employee needs

Simplified Expectancy Model

Continued…

Expectancy Relationships Expectancy (effort-performance linkage)

• The perceived probability that an individual’s effort will result in a certain level of performance.

Instrumentality• The perception that a particular level of

performance will result in attaining a desired outcome (reward).

Valence• The attractiveness/importance of the performance

reward (outcome) to the individual.

Continued…

To influence employees’ motivation Identify rewards that are valued Strengthen subordinates’ beliefs that their

efforts will lead to valued rewards Clarify subordinates’ understanding of

exactly where they should direct their efforts Make sure that the desired rewards under

your control are given directly following particular levels of performance

Provide levels and amounts of rewards that are consistent with a realistic level of expected rewards

B.F. Skinner’s Behavior Modification theory

It states behavior depends on consequences, and that, if the consequences are controlled, then behavior also can be controlled

Reinforcement theory focuses on the impact of external environmental consequences on behavior.

Law of effect — impact of type of consequence on future behavior.

Operant conditioning:

• Developed by B.F. Skinner.

• Applies law of effect to control behavior by manipulating its consequences.

Operant conditioning strategies Positive reinforcement

Increases the frequency of a behavior through the contingent

presentation of a pleasant consequence.: eg: praise for good work

Negative reinforcement

Increases the frequency of a behavior through the contingent removal of

an unpleasant consequence. : eg: coming late prevents firing

Punishment

Decreases the frequency of a behavior through the contingent presentation of an unpleasant consequence.

Extinction

Decreases the frequency of a behavior through the contingent removal of an pleasant consequence. : eg: stop rewarding for suggestions

Schedules of Reinforcement

Reinforcement may either be continuous or partial in nature

Interval schedules: reinforcement occurs after a certain amount of time has passed

Fixed Interval = reinforcement is presented after a fixed amount of time : eg: salary

Variable Interval = reinforcement is delivered on a random/variable time schedule : eg: checks in office

Ratio schedules: reinforcement occurs after a certain number of responses

Fixed Ratio = reinforcement presented after a fixed # of responses : eg: incentive

Variable Ratio = reinforcement delivery is variable but based on an overall average # of responses

Goal Setting Theory

Developed by Edwin Locke.

Properly set and well-managed task goals can be highly motivating.

Motivational effects of task goals:

• Provide direction to people in their work.

• Clarify performance expectations.

• Establish a frame of reference for feedback.

• Provide a foundation for behavioral self-management.

Self efficacy

Continued…

Elements important if goals are to motivate employees:Specific goalsChallenging goalsOwned

• Participation• Psychological Contracts• Supervisory Support• Rationale

Performance monitoring and Feedback

How to Create Jobs that motivate

Job Enlargement Job Enrichment Empowerment

Job masteryControlRole modelsSocial reinforcement and persuasionEmotional support

Hackman & Oldham’s Job Characteristics Model

Core Dimensions Psychological States Outcomes

Skill VarietyTask Identity Task Signif.

Autonomy

Feedback

Meaningfulness of Work

Responsibilityfor outcomes

Knowledge ofResults

High intrinsicmotivationHigh job per-ormanceHigh job satis-factionLow absenteeism & turnover

Motivating Potential Score

MPS

=

Skill Variety +Task Identity+Task Significance3

X

Autonomy

X

Feedback

Employee Ownership Plans

Profit sharing Gain Sharing Skill based Pay

COMPENSATION MANAGEMENT

Introduction

What employees receive in exchange for their contribution

It is a comprehensive term including pay, incentive and benefits

Compensation can come both directly through base pay and variable pay or indirectly through benefits

It is the total amount of the monetary and non monetary pay provided to an employee in return of work performed as required.

Objectives of compensation

EfficiencyQualityPerformanceCost

Fairness

Compliance

Wage and Salary administration

Wages : Aggregate earnings of an employee for his service

Salary: Compensation made to an employee for his service

It is a process of managing a company’s compensation program

It is the group of activities involved in development, implementation and maintenance of a pay system.

Objectives of wage and salary administration

To establish a fair and equitable remuneration To attract competent personnel To retain present employees To improve productivity To control costs To improve union management relations To improve public image of the company

Factors affecting wages and salary

The organisations ability to pay Supply and demand of labour Prevailing market rate Cost of living Ability of the organization to pay Productivity Trade union’s bargaining power Job requirements Managerial attitudes Psychological and social factors

Methods of Wage Payment

Time Wage Piece Wage Balance wage

Time wage Method

Based on amount of time spent Conditions

Unit of output is not measurable, commodity is non-standardised, not uniform and have varieties of output.

Volume of work is not always within the control of labor

When workers are new and learning the job or trade

When it is difficult to fix the unit of output When employees have little control over the

quality of output

Piece Wage Method

Based on amount of work performed Features:

It can offer direct connection between effort and reward

It can ensure adequate planning and close control over labor costs.

Conditions: Amount of work can be easily measured,

standardised and counted Productivity is closely related to skill and

effort

Balance or Debt Method

Combination of time and piece rates

Name of worker

Units completed

Total earnings under Piece rate (Rs.)

Total earnings under time wage rate (Rs.)

Credit (Rs.)

Debit (Rs.)

Balance (Rs.)

Ram (first week)

16 16 15 1 Nil 1

Ram (second week)

14 14 14 Nil Nil 1

Essentials of a Sound Wage System

Just and reasonable Guarantee of living wage Simplicity Flexibility Promptness Incentive for extra remuneration Attractive to talented workers Equal pay for equal work

India’s Highest Paid Banking CEOs

HDFC- Deepak Parekh: 2.48 Cr ICICI – KV Kamath: 2.47 Cr Kotak Mahindra Bank: Uday Kotak:

1.34 Cr UTI Bank- P.J. Nayak : 0.94 Cr

Incentives

Anything that attracts an employee and stimulates him to work

Incentives are of two types:Financial Non-financial

Objectives

Profitable for both workers and management Helps to increase production Reduce cost Increase morale by rewarding workers in

proportion to their output Recognise the worker for his good performance Reduce labour turnover and absenteeism Aim at improving relations between workers and

management

Determinants of Incentives

The individual The work situation

TechnologyJob satisfactionFeedbackEquity

Types of Incentives Plans Financial incentives

Salary, rewards, bonus, etc

Non- Financial incentives Job satisfaction Job security Respect and recognition T&D Opportunity for growth Suggestion scheme, praise, etc.

Continued…

Individual Piecework Standard hour plan Bonus Commissions Perquisites Stock options

Group Productivity Gain Sharing plan Profit sharing plan

Essentials of Good Incentive Plan Proper climate Cooperation of workers Workers participation Scientific standard Simplicity Equitable Flexible Less costly Guarantee minimum wages Ceiling on earning Grievance settlement on time Timely payment of incentive

Fringe Benefits

It may be described as the various services and programs that organizations provide to their employees in addition to compensation in the form of wages and salaries

it is sometimes referred to as the “The Hidden Payroll” of organizations.

Features of Fringe Benefits

They are a supplement to regular wages or salaries

It is not paid for any specific job or performance but to increase their interest in work

It is a cost for the employers They are meant to enhance the employee's

standard of living It may be statutory or voluntary

Objectives of Fringe Benefits

Attracting and retaining talent Negotiation tool Promote organizational image Satisfy employee needs Increase satisfaction and morale

Types of Fringe Benefits

Pension scheme Personal security Financial assistance Personal needs Company cars and petrol Other benefits Intangible benefits

Employee Welfare It refers to various services, facilities and

amenities provided to employees for their betterment.

To include such services, facilities and amenities as may be established in or in the vicinity of undertakings to enable the persons employed in them to perform their work in healthy, congenial surroundings and to provide them with amenities conducive to good health and high morale.

Types of Welfare Services Intramural welfare services

Wash basins, bathrooms and humidity

Work place sanitation and cleanliness

Water coolers

Safety gears

Canteen

Basic medical aid

Library

Work and personal counseling

Child care centers and crèches

Extramural Welfare services Housing

Transportation

Education facilities

Health services

Any Questions

?

PARTICIPATIVE MANAGEMENT

Introduction

Workers participation provides a platform for formal and informal communication where workers know what is going on in the organization and they can suggest and communicate their opinion to the management.

Participation is about employees playing a greater part in the decision making process

Definition

Newstrom and Davis define participation as “the mental and emotional involvement of people in group situations that encourages them to contribute to group goals and share responsibility for them.”

Important features in the definition: Mental and emotional involvement Motivation to contribute Acceptance of responsibility

Objectives of Participation

Economic objectives

Social objectives

Psychological objectives

Benefits of Participation Mutual understanding Improves performance Industrial democracy Promotes better industrial relations Increases job satisfaction Awakening of employees Satisfies employee expectations Better communication Openness to change Encourages creativity and innovation

Methods and techniques of Participation

Works committees Co-partnership Employee directors Joint Management Councils (JMC) Suggestion schemes Quality Circles Total Quality Management Self Managing teams

Factors Influencing Participation

Subject matter of participation Level of participation Extent of authority Personal characteristics

Key to Successful Participation

Top management support Employee support Benefits greater than costs Employee ability Employee interests Communication ability Long term process

Lack of success of Participative management in India Restriction of employees in decision making

process, due to assumption that they are not competent enough

Due to non fulfillment of lower order needs, majority of workers are not motivated enough to assume higher responsibilities in the organization

The union representatives are frequently members of political parties who put their vested political interests before the interest of workers

The focus has been on participation at higher levels.

Attitude of labor unions towards participation

Traditionally, Union leaders have not been in favour of participation.

Current days union leaders feel participation gives them an opportunity to get on the inside and express their view points before any action or decision is taken.

Most union leaders take a viewpoint which falls somewhere in between traditional and modern.

Limitations of Participation

Employees may become too independent

Occasional failure may demotivate employees

Great difficulty in adjusting Rather than acting as partners,

managers may play role of a judge and a critic

Continued…

Potential problems can be overcome by basic guidelines such as: Participation should move from simple issues to more complex

one Provide employees with adequate training Do not force the workers to participate Communicate clearly the areas of decisional freedom Realistic goals must be set The philosophy behind participation should always be kept in

mind Decisions should never be manipulated in the name of

participation

Industrial Relations

Industrial relations is concerned with the systems and procedures used by unions and employers to determine the reward for effort and other conditions of employment, to protect the interests of the employed and their employers and to regulate the ways in which employers treat their employees.

Objectives of IR To establish harmonious relationship between the

management and the employees.

Protect workers interest.

Raise productivity in the organization and curb employee turnover and absenteeism.

To protect the manager’s interest.

To avoid governmental interference by amicable resolution of all issues.

Parties to Industrial Relations

Employees and their associations Employers and their associations The government and its various

agencies

PERSONNEL POLICIES AND MANUAL

INTRODUCTION

Personnel policies provide an organization with a mechanism to manage risk by staying up to date with current trends in employment standards and legislation.

Definition

Personnel policies constitutes guides to actions. They furnish the general standards or bases on which decisions are reached. Their genesis lies in an organizations values, philosophies, concepts and principles.

Principles of Personnel Policies Principle of individual development Principle of scientific selection Principle of free flow of information Principle of participation Principle of fair remuneration Principle of incentive Principle of dignity of labour Principle of labor cooperation Principle of team spirit Principle of contribution to national prosperity

Benefits of Personnel Policies

Clarity Uniformity and consistency Confidence and security Prompt decision making Continuity and stability Delegation of authority Standards of performance Motivation Resolve conflicts

Personnel Manual

It is simply the organizations Human resources policies written into a usable guidebook for its employees

Objectives of Personnel Manual

Understanding Consistency Responsibility Line of Authority Avoids confusion and indecision Avoids misunderstanding

Guidelines for Personnel Manual

Responsibility for preparation of manual Careful drafting Contents Separate handbooks Revision Legal issues Forms Descriptions HR department is responsible May be abridged and expanded Employees may be intimated about the changes

Policies regarding employee conduct and discipline at LIC

Obligation to maintain security Participation and demonstration Private trading Part-time work Acceptance of gift

Trade Unions

Introduction

Trade union is a voluntary association of workers which is formed to protect the rights and interests of workers, to prevent exploitation of workers by the employer and to establish good relations between the employer and employees.

“Strength lies in unity”

Features of Trade Union

Association Voluntary Permanent Collective action Common interest Changing character Aim

Advantages

Increase wages Represent workers Productivity deals Important in service sector

Problems

Inter union rivalry Small size of union Financial weakness Leadership issues Politicalisation of unions Recognition of unions

FRAUDS AND SCAMS IN FINANCIAL INSTITUTIONS

Introduction

Frauds in financial institutions are not a new phenomenon

To check the menace of customer cheating and to protect the interests of the general public and public funds, the government has set up the “Serious Fraud Investigation Office” while the RBI has set up a “Board of Financial Supervision”

TYPES OF FRAUDS

Deposit accounts Advance accounts Telegraphic transfers Drafts, mail transfers Cash department Travelers cheques, credit cards Letters of credit Foreign exchange transactions ATMs Internet Banking

High risk areas

Credit related frauds Misappropriation of cash by fudging accounts

and signatures Unauthorized withdrawal Opening of fictitious accounts Use of interbranch and interbank clearing Cheating in foreign exchange Withdrawal from deposit accounts using forged

documents Identity theft Theft of PIN or password

Impact of Frauds and Scams on Society and Investors

Harshad Mehta scam losses caused to the SBI was more than Rs. 5.5 billions

The Ketan Parekh scam caused losses of Rs. 1.3 billion to Bank of India

The Sanjay Seth led home trade scam amounted to Rs. 6 billions

The Healthcare industry in India is losing approximately Rs.600 crore on false claims every year.

Effects of Bank and Insurance Frauds

Erosion of investor confidence Faith of FII is shaken up Stringent law for borrowings and affect

the business expansion plans of industrialists and entrepreneurs

Political instability Hole in insurance companies pockets

and affects all the stakeholders Higher premium, restricted benefits, etc.

Role of Vigilance Department

Ensuring integrity in the organization Eliminating forces that obstruct

integrity in the organization Vigilance activity may be in the form

of:Preventive vigilanceDetective/investigative vigilancePunitive vigilance

Controlling Frauds

Careful attention to recruitment and selection process Sound training Stringent rules Continuous vigilance Developing a good system of internal controls Discouraging collusion of employees with customers Regular monitoring of employees Conducting proactive auditing Ensuring swift punishment of wrongdoers and protection

of the honest and innocent Providing hotline for whistleblowers

CONCEPTS

Downsizing

A downsizing strategy reduces the scale (size) and scope of a business to improve its financial performance

A reduction of the workforce is one of only several possible ways of improving profitability or reducing costs.

Objective of downsizing is to achieve rightsizing. Where there is surplus of workforce, downsizing is

required Alternative methods to reduce employees:

Reduce work hours so total salary get reduced with same number of people

Transfer Offer incentives for early retirement or VRS Declare lay-off

Separation

It is a step ahead of demotion. It involves cessation of services of a personnel form an

organization. The employment relationship between and organization

and an employee come to an end. Forms of retirement:

Resignation Dismissal Death Suspension Layoff Retrenchment Retirement

Lay-off

Layoff is a temporary separation of an employee by the employer under specific circumstances.

Here, the services of an employee are not terminated.

It is temporary separation.

Layoff reduces financial burden on the organization.

Retrenchment

Retrenchment is a sort of permanent separation by an employer with due notice as per statutory provisions.

The principle applied under retrenchment is, “last come first go”.

It is applied mainly when work force is Superfluous, not in cases of punishment, retirement, etc.

The industrial Disputes Act, 1947 has laid down conditions for retrenchment.

Termination

It is permanent separation of an employee from the organization.

The action take should be bona fide and not be a punitive measure nor a case of victimization.

Dismissal is termination of service by way of punishment.

Career Planning and Development

DEFINITION OF CAREER

Career is a sequence of separate but related work activities that provides continuity, order and meaning to a persons life.Edwin Flippo

Career is the pattern of work related experiences that span the course of a persons lifeJeffrey Greenhaus

Career Planning

“Career planning is a process of systematically matching career goals and individual capabilities with opportunities for their fulfillment”Schermerborn, Hunt and Osborn

Aims of Career Planning

Attract and retain Map out careers Better use of human resource More stable workforce Utilise managerial talent Improve employee morale Provide guidance and encouragement to

employees Higher productivity and organizational

development

Career Stages

Exploration stage

Establishment stage

Mid career stage

Late career stage

Decline stage

HR In BANKS

JD of a Bank Clerk

Keep account opening forms for all deposit schemes

Keep latest information on rate of interest and maturity values of all schemes

Open the account/ issue deposit receipt as per the account opening form

Recruitment at LIC

Done by central office at MumbaiAdvertisements in national and

regional newspapersEntrance examInterview

Induction at Canara Bank

Branch manager/ section incharge conducts the entry interview on the first day

The manager volunteers information about the banks history, mission, goals, etc

Finds out needs of the employee and helps him settle

Introduces to colleagues Handbook is provided

CASE STUDY