GGSIPU MBA Weekend HRM Class Notes

7/31/2019 GGSIPU MBA Weekend HRM Class Notes

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Introduction to HRM, Concept of HRM

Human resources management consists of a group

of policies and procedures whose objective is to

mobilize and develop human resources in order to

increase an organizations efficiency and

effectiveness. The effective management of humanresources is essential for all organizations that

depend on personnel to produce goods and services.

HRM is closely linked to: the mission, the values,

the vision and the strategy of a business. It has

progressively transformed itself from an

administrative function to a catalyst for energy, a

creator of business culture and dynamism. HRM is

especially concerned with:

Identifying the best candidates for thepositions to be filled (Recruitment)

Ensure that new employees are adequatelyinformed about the policies of theorganization (Orientation)

The optional organization of the workload(Efficiency and Effectiveness)

Dev eloping knowledge and skills of mgmtand staff (Training, Skill Development an dCareer mgmt.)

Encouraging employee identification andinvolvement with the business

Assuring that management ov ersees theperformance of each employee and offersfeedback

Improving and/or maintaining a positivework environment (Conflict Resolution)

Adequately r ewarding employees for w orkaccomplished (Salary and Benefits) Managing risk with the health and safety of

employees in mind Assuring a balance between work and

personal time

Nature of HRM

It is pervasive in nature as it is present inall enterprises

Its focus is on results rather than on rules It tries to help employees develop their

potential fully

It encourages employees to give their bestto the organization

It is all about people at work, both asindividuals and groups

It tries to put people on assigned jobs inorder to produce good results

Helps an organization meet its goals byproviding for competent and well-

motivated em ployees

Tries to build and maintain cordialrelations between people at various levels

in the organization

It is a multidisciplinary activity, utilizingknowledge and inputs drawn from

psychology, economics, etc

Scope of HRM

The Indian Institute of Personnel Management hasspecified the scope of HRM thus:

Personnel aspect: This is concerned withmanpower planning, recruitment,selection, placement, transfer promotion,training and development lay off andretrenchment remuneration incentivesproductivity etc

Welfare aspect: It deals with workingconditions and amenities such as canteens,crches rest and lunch room housingtransport medical assistance education,health and safety recreation facilities etc

Industrial relations aspects: This coversunion management relations jointconsultation collective bargaininggrievances and disciplinary proceduressettlement of disputes etc.

Functions of HRM

Human resource or man power planning Recruitment, selection and placement of

personnel

Training and developm ent of employees Appraisal of performance of employees Taking corrective steps such as transfer

from one job to another Remuneration of employees Social security and welfare of employees Setting general and specific management

policy for organizational relationship

Collective bargaining, contract negotiationand grievance han dling

Staffing the organization Aiding in the self-development of

employees at all levels

Dev eloping and maintaining m otivationfor workers by providing incentives

Rev iewing an d auditing manpowermanagement in the organization Potential appraisal, feedback, counselling Role Analysis for job occupants Job Rotation Quality Circle, Organization development

and Quality of Working Life

Objectives of HRM

To help the organization reach its goals To ensure effective utilization and

maximum development of human

resources To en sure respect for human beings


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To identify and satisfy the needs ofindividuals

To ensure reconciliation of individual goalswith those of the organization

To achieve and maintain high moraleamong employees

To provide the organization with well-trained and well-motivated employ ees

To increase to the fullest the employee'sjob satisfaction and self-actualization

To develop and maintain a quality of worklife

To be ethically and socially responsive tothe needs of society

To develop overall personality of eachemployee in its multidimensional aspect

To enhance employee's capabilities toperform the present job

To equip the employ ees with precision andclarity in transaction of business

To inculcate the sense of team spirit, teamwork and inter-team collaboration

Processes of HRM

Human resource planning (Recruitment,Selecting, Hiring, Training, Induction,

Orientation, Evaluation, Promotion and

Layoffs)

Employee remuneration and BenefitsAdministration

Performance Management Employee Relations

Evolution of HRM

The early part of the century saw a concern for

improved efficiency through careful design of work.

During the middle part of the century emphasis

shifted to the employee's productivity. Recent

decades have focused on increased concern for the

quality of working life, total quality management

and worker's participation in management. These

three phases may be t ermed as w elfare,

development and empowerment. In the 21st centuryHRM will be influenced by following factors, which

will work as various issues affecting its strategy:

Size of the workforce Rising employ ees' expectations Drastic changes in the technology as well

as Life-style changes

Composition of workforce, new skillsrequired

Environmental challenges Lean and mean organizations Impact of new economic policy, politicalideology of the government

Downsizing and rightsizing of theorganizations

Culture prevailing in the organization etcRoles and Responsibilities of HR Manager

HR Team Effectiveness for HR efficiency:

Frame a clear and easily implementableHR Policies

Nurture and develop a motivated HRTeam to meet business requirement

Dev elop the collective knowledge of theHR team to handle complex and crisis

situation arising due to dynamic and

changing business environment

Create a complementing skills based teamsuch that various HR aspects can be

addressed and there are varied

competencies and skills the team has to behandle the entire gamut of HR

responsibilities ranging from HR design

t0o HR delivery e. g. recruitment

specialist, L&D experts, Business HR

Plan and implement an effective HR Planthat is aligned to Business Plan and overall

organisation people agenda

Deliver Business Expectations to attain HRcredibility

Execute manpower planning andbudgeting to have a road-map forrecruitment assignments

Manpower hiring as per the recruitmentplan agreed along with the Business

heads/department heads

Keep ears to the ground and reach out toall employees through communication

with employees at regular intervals to

gather insights @ workplace and feed them

back a ppropriately to the leadership team

of the organisation

Plan and execute suitable interventions tokeep the employees motivated

Act as a business partner and providedashboards/analytics to business

heads/department heads to help them

have a pulse of their team

Provide employee development andcounselling assistance to employees /team

members to enhance employee

performance an d productivity

Take adequate measures to retain goodemployees, ring fence high potential

employees

HR Delivery Agenda to executive effective HRpractices


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Ensure Statutory Compliant status at a lltimes

In case of a widespread organisation, HRvisit calendar to a ll l ocations is made and

followed

Executing Employee Engagementinitiatives to keep people together andmake the workplace exciting, rewarding

and engaging

Drive an effective Learning anddevelopment agenda that impacts the

employees and the businesses

Evaluate and improvise the current HRPractices to keep with time and external

benchmarks

Update HR policies in line with thebusiness and organisation requirement

Keeping and updated Employee Handbookwith all relevant details and information

Design, update and share SOPs of all HRprocesses

Conduct periodical employ ee surveys tocollate insights @ workplace and in turn

design employee interventions accordingly

to address concern areas

Support and counsel business managers toeffectively manage teams to ensure higher

employee productivity

Have an updated repository of Jobdescriptions for all roles in the

organisation along with measurable

performance indicators for each role

Maintain employee records and files inorder for ease of reference (both on-line

and physical copies of the records)

Communicate with employ ees andbusiness heads for better alignment

Be astute to handle dynamics at theworkplace and help employees to

ov ercome crisis situation

HRM in a Dynamic Environment

Well, jumping into the concept after quite a longperiod of time. The human resource development isa vast topic to deal with. Thus it is quite obviousthat the vast dimensions include a much of manyelements inside it. These elements are greatlyinfluenced by the dynamic behaviour of theenvironment- both internal as well as external. Inthe 21st century actually the organizations cannotexpect the success without the properunderstanding and response of these behavioursand the responses to these constants, if notcontinuous trends and changes in who theorganizations make to employ and what all theseemployees do require HR practices and systemsthat are well conceived and effectively implemented

to ensure high performances and continuoussuccess. The society is having a great influence onthe latest managerial trends. Now-a-days labour

force is very much diversified in terms of theethnicity, race, sexual orientation, disability andother cultural factors. The managerial challenge inthe 21st century is mainly concerned with how totake the advantage of the diversified environment

while fostering cooperation and cohesivenessamong the dissimilar groups of employees. If the

management is done effectively the diversified anddynamic environment can render successful outputsand offer the organization a powerful competitiveedge as it stimulates creativity, improves the skill ofproblem solving by offering broader perspectivesand also infuses flexibility to the firm. The mainpurpose of the study of HRM in a dynamicenvironment is to unravel the mystery surroundingthe external and the internal factors that complicatethe job of an HR manager in practice and reality.Factors may be many including the internal and theexternal environments. The advancements intechnology in a rapid rate also plays a major role inthe concern. Due to certain political influences andsocial factors in many cases the companies mayneed to deal with certain situations of recessionsand the local and foreign Gov ernment policies alsoplay a vital role in the influencing in this context.The HRM needs to make certain things clearenough and thereby overcome the obstacles com ingin the path by those factors. It also includes propermanagement of the skills of the employees inmaintaining a stand still structure in all theseadverse surroundings and turn them in favour ofthe organization as a wh ole.

Technological Changes

There are three ways in which technology could

improve human resource management (HRM):

It can streamline operations. It can improve relations with other

departments through m ore t imely and

efficient service.

It can play a transformational role byremoving barriers to horizontal integration

within and outside the firm.

TQM in HR

Total quality human resources management

(TQHRM) is an approach to human resourcesmanagement that involves many of the concepts of

quality management. The primary goal of TQHRM

is employee empowerment. Several differences exist

between the tra ditional human resources approach

and TQHRM. The key points offered by Dr. Foster:

Process Characteristics

Consulting role Decentralization Release Dev elopmental


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Content Characteristics

Pluralistic Holistic System-oriented Satisfaction measures Person-based

Workplace Diversity

Workplace diversity refers to the variety of

differences between people in an organization. That

sounds simple, but diversity encompasses race,

gender, ethnic group, age, personality, cognitive

style, tenure, organizational function, education,

background an d m ore. Diversity not only involves

how people perceive themselves, but how they

perceive others. Those perceptions affect their

interactions. For a wide assortment of employees to

function effectively as an organization, humanresource professionals need to deal effectively with

issues such as communication, adaptability and

change. Diversity will increase significantly in the

coming years. Successful organizations recognize

the need for immediate action and are ready and

willing to spend resources on managing diversity in

the workplace n ow.

Benefits of Workplace Diversity

Increased adaptability Broader service range Variety of viewpoints More effective execution

Challenges of Diversity in the Workplace

Communication: Perceptual, cultural andlanguage barriers

Resistance to change Implementation of diversity in the workplace

policies

Successful Management of Diversity in theWorkplace

Recommended steps that have been proven

successful in w orld-class organizations are:

Assessment of diversity in the workplace: Dev elopment of diversity in the workplace

plan:

Implementation of diversity in theworkplace plan

Recommended diversity in the workplace solutions

include:

Ward off change resistance with inclusion

Foster an attitude of openness in yourorganization

Promote diversity in leadership positions Utilize diversity training Launch a customizable employee

satisfaction survey that provides

comprehensive reporting

Employee Empowerment

Empowerment of employees in the work place

provides them with opportunities to make their own

decisions with regards to their tasks. Nowadays

more and more bosses and managers are practicing

the concept of empowerment among their

subordinates to provide them with better

opportunities. According to Thomas A. Potterfield,

many organizational theorists and practitioners

regard employee empowerment as one of the most

important and popular management concepts ofour time. Companies ranging from small to large

and from low-technology manufacturing concerns

to high-tech software firms have been initiating

empowerment programs in attempts to enhance

employee motivation, increase efficiency, and gain

competitive advantages in the turbulent

contemporary business envir onment.

Learning Organization

A learning organization is the term given to a

company that facilitates the learning of its members

and continuously transforms itself. Learningorganizations develop as a result of the pressures

facing modern organizations and enables them to

remain competitive in the business environment. A

learning organization has five main features

Systems thinking: conceptual frameworkthat allows people to study businesses as

bounded objects

Personal mastery: commitment by anindividual t o the process of learning

Mental models: assumptions held byindividuals and organizations

Shared vision: creates a common identitythat provides focus and energy for learning

Team learning: accumulation of multipleindividual learning sets constitutes team

learning


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Methods and Techniques of Forecasting the

Demand and Supply of Manpower

Manpower forecasting is the first step or feature of

the entire manpower planning activity. The HR

manager foresees the demand and supply of

different types of manpower resources in the firm.In simple words the basic idea is to see where or in

which ar ea there is a shortage or surplus of human

requirement. Forecasting is the process of making

judgments about events whose actual outcomes

have not been seen. We could use a word like

prediction which is similar, but a more general

term. E.g. a retail showroom may need thirty more

sales employees during the one-month sale period.

Manpower Demand Forecasting:

Demand forecasting is a process of evaluating the

quality and quantity (number) of employ ees a firmor organization requires to meet its future needs. A

forecast could be a long-term or a short-term plan

depending on the activity levels for each function

and departments. There are several internal and

external factors to be considered in demand

forecasting.

Internal factors include budgetconstraints, production levels, new

products and services.

External factors include competition fromother firms; it could be from the domestic

or international firms, economic value,changes in techn ology etc.

Reasons to conduct demand forecasting:

Determine the jobs necessary for offeringservices.

Determine the staff required for futureneeds.

Determine the correct staffing levels indifferent parts of the firm or organization.

Determine the shortage of employees whenand where they are needed the m ost.

Manpower Supply Forecasting

Supply forecasting measures the number of

employees available within or outside the firm or

organization. It also has to keep absenteeism, shift

changes, number of working hours, promotions etc

in mind.

Reasons for making supply forecasting are:

It helps to decide the number of employeesand positions that are available for further

need.

It helps to evaluate the present staffinglevels in different parts of the firm or

organization.

It helps to prevent a shortage of employeeswhen and where they are needed the most.

It helps to match the future requirementwith the job specification.

Broadly speaking two key sources of supply of

manpower exist. They are:

Internal Supply:

Employees m oving up the ladder by way ofpromotions

Employees are transferred from otherdepartments or locations

External Supply:

Same industry Different related industries Unrelated industries The same city Peripheral cities Metros Across the country Rural parts with good coll eges Dying public sector units Companies which are getting shut down

Demand Forecasting Techniques

Expert Forecasts: Group forecasting method in

which experts present their independently

developed forecasts to the group. However, the

experts do not meet each other. The group keeps

refining their forecasts until a group consensus is

reached. This i s called as the Delphi technique.

Trend Analysis: This technique requires studying

the past data of an organization. Based on the past

forecast, utilization and requirement actually

experienced in the business, the future forecast is

made.

Work Study Technique: It is a technique that can be

used when it is possible to apply work

measurements to know how long operations should

take and the amount of labour required. It is

calculated in two ways.

Work-Load Analysis: Evaluating the w orkload in a department or job role. This then

enables deciding the no. of employees

required for doing the job. This depends

on the nature of the work load in a branch,

department, or a division in a firm ororganization.


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Work-Force Analysis: In workforceanalysis a sufficient margin for

absenteeism, labour turnover and idle time

on the basis of past experience is made.

This allows for completing the total job at

hand undertaken by an organization

despite the challenges of labour turnoveror absenteeism. The organization needs to

make reasonable prediction of labour

turnover or absenteeism.

Managerial Judgment Technique: This is a simple

technique. In this the managers of different

departments sit together, discuss and arrive at

conclusions as to the number employees required

for future operations based on their past

experiences. This technique involves a top-down

or bottom -up approach.

In top-down approach the managersprepare departmental forecasts. These are

viewed by department heads and a

decision is taken.

In bottom-up approach the managerssubmit their departmental proposals to top

managers who arrive at forecast.

Markov Analysis: This i s a mathematical technique.

It forecasts the availability of internal job

candidates. In this analysis, various job

classifications can be predicted based on past

movements (transfers, prom otions, a ttrition, n ew

joiners, resignations, and retirement).

Statistical Judgment Technique: This technique

concentrates on using the past to predict the future

by identifying trends, patterns and business drives

within the data to develop a forecast. This forecast

is referred to as a statistical forecast because it uses

mathematical formulas to identify the patterns and

trends while testing the results for mathematical

reasonableness and confidence.

Job Analysis

Meaning and Definition

A job analysis is a sy stematic exploration of the

activities within a job. It is a basic technical

procedure, one that is used to define the duties,

responsibilities and accountabilities of a job. This

analysis involves compiling a detailed description of

tasks, determining the relationship of the job to

technology and to other jobs and examining the

knowledge, qualifications or employment standards

accountabilities and other incumbent requirement.

Job terminology: Description of technical

terminology is highly necessary in order to facilitate

the study of a job analysis. They are

Task: A task is an action or related groupof action designed to produce a definite

outcome or result. Position: A position is a group of similar

tasks and responsibilities assigned to one

individual.

Job: A job is a group of positions that aresimilar as to kind and level of work.

Occupation: An occupation is a group ofjobs that are similar as to kind of work and

are found throughout an industry.

Job description: A job description is anorganised, factual statement of the duties

and responsibilities of a specific job.

Job specification: A job specification is astatement of the minimum acceptable

human qualities necessary to perform a job

properly.

Employee specification: Employeespecification is a statement of minimum

required employee qualifications. v iz.,

physical, educational, work etc. which

represent the possession of minimum

acceptable human qualities by the

prospective employee necessary to perform

a job.

Job classification: A job classification is agrouping of jobs on som e specified basissuch as kind of w ork or pay.

Process of Job Analy sis

Collection of Background Information:organisation charts, class specification s

and existing job descriptions

Selection of representative position to beanalysed

Collection of Job Analysis Data Dev eloping a J ob Description Dev eloping a Job Specification. Dev eloping Employee Specification

Job Analysis Methods

Observation Method: Using this method, a job

analyst watches employees directly or reviews films

of workers on the job. While the observation

method provides firsthand information, workers in

many cases do not function most efficiently when

they are being watched. Thus distortions in the job

analysis may occur. This method also requires that

the entire range of activities be observable; possible

with some jobs, but impossible for many e.g. m ost

managerial jobs.


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Individual Interview Method: Using this method,

job incumbents are selected and extensively

interviewed. The results of these interviews are

combined into a single job analysis. This method is

effective for assessing what a job entails, but is very

time consuming.

Group Interview Method: This method is similar to

the individual interview method except that a

number of job incumbents are interviewed

simultaneously. Accuracy is increased in assessing

jobs, but group dynamics may hinder its

effectiveness.

Structured Questionnaire Method: Using this

method, workers are sent structured questionnaire

on which they check or rate items they perform on

their job from a long list of possible task items. This

technique is excellent for gathering information

about jobs.

Technical Conference Method: This method utilizes

supervisors with extensive knowledge of the job.

Here, specific characteristics of a job are obtained

from th e experts.

Diary Method: This method requires job

incumbents to record their daily activities. That is,

workers are asked to maintain and keep daily

records or list of activities they are doing on that

day. This technique provides comprehensive job

information and it is much useful when it is

supplemented with subsequent interviews.

Purposes of Job Analysis

Job Descriptions: A job description is a written

statement of what the job holder does, how it is

done, and why it is done. A common format for a

job description includes the job title, the duties to

be performed, th e distinguishing characteristics of

the job, and the authority and responsibilities of the

job holder.

The content of J ob Description

Job title Organisational location of the job Supervision given and received Materials, tools, machinery and equipment

worked with

Designation of the immediate superior andsubordinates

Salary levels. Conditions of work Training and developmental facilities. Promotional chances and channels

Job Specifications: The job specification states the

minimum acceptable qualifications that the

incumbent must possess to perform the job

successfully. Based on the information acquired

through job analysis, the job specification identifies

the knowledge, skills and abilities needed to do the

job effectively. Individuals possessing the personal

characteristics identified in the job specification

should perform the job more effectively thanindividuals lacking these personal characteristics.

The job specification, therefore, is an im portant tool

in the selection process, for it keeps the selectors

attention on the list of qualifications necessary for

an incumbent to perform the job and assists in

determining wh ether candidates are qualified.

Job Evaluations: In addition to providing data for

job descriptions and specifications, job analysis is

also valuable in providing the information that

makes comparison of jobs possible. If an

organization is to have an equitable compensation

program, jobs that have similar demands in termsof skills, education and other personal

characteristics should be placed in common

compensation groups. Job evaluation contributes

toward that end by specifying the relative value of

each job in the organisation. Job evaluation,

therefore, is an important part of compensation

administration.

Job Design

Job design is defined as the process of deciding on

the content of a job in terms of its duties and

responsibilities; on the methods to be used incarrying out the job, in terms of techniques, systems

and procedures and on the relationships that should

exist between the job holder and his superiors,

subordinates and colleagues. Two important goals

of job design are (i) to meet the organisational

requirements such as higher productivity,

operational efficiency, quality of product or service

and (ii) to satisfy the needs of the individual

employees like interests, challenge, achievement or

accomplishment etc. Finally the goal of the job

design is to integrate the needs of the individual

with the organisational requirements.

Job Enlargement

Job enlargement involves expanding the number of

tasks or duties assigned to a given job. Job

enlargement is naturally opposite to work

simplification. Adding more tasks or duties to a job

does not mean that new skills and abilities are

needed to perform it.

There is only horizontal expansion. Frederick

Herzberg said that job enlargement is simply

adding zero to zero, meaning that; one set of

boring tasks (zero) is simply added to another set of

boring tasks (zero). Job enlargement is said to


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contribute to employee motivation, but the claims is

not v alidated in practice.

Job Enrichment

The most popularly adv ocated structural technique

for increasing an employees motivational potential

is job enrichment. To enrich a job, management

allows the worker to assume some of the tasks

executed by his or her supervisor. Enrichment

requires that workers do increased planning and

controlling of their work, usually with less

supervision and more self-evaluation. From the

view of increasing the internal motivation from

doing a job, it has been proposed that job

enrichment offers great potential. However, job

enrichment is successful only when it increases

responsibility, increases the employees freedom and

independence, organises tasks so as to allow

workers to do a complete activity and providesfeedback to allow individuals to correct their own

performance. Furthermore, job enrichment efforts

will only be successful if the individual s in the

enriched job find that their needs are met by the

enrichment. If these individuals did not want

increased responsibility, then increasing

responsibility will not have the desired effect.

Successful job enrichment, then, is contingent on

worker input.

Job Rotation

Job rotation refers to the movement of an employeefrom one job to another. Jobs themselves are not

actually changed, only the employees are rotated

among various jobs. An employee who works on a

routine/respective job moves to and works on

another job for some hours/day s/months and backs

up to the first job. This measure relieves the

employee from boredom and monotony, improves

employees skills regarding various jobs and

prepares the competent employees to meet the

contingencies.

Human Resource Planning

Human resource or manpower planning is the

process by which a management determines how an

organization should move from its current

manpower position to its desired manpower

position. Through planning, a management strives

to have the right number and the right kind of

people at the right places, at the right time, to do

things which result in both the organization and the

individual receiving the maximum long-range

benefit". The scope of HRP is futuristic in nature

and usually runs parallel to the annual business

planning exercise. It comm ences prior to the start ofthe companys new financial year.

Steps in Human Resource Planning

Forecasting manpower requirements Creating an inventory of present

manpower resources and assessing the

extent to which these resources are

employed/ optimally Identifying manpower problems by

projecting present resources into the

future t o determine their adequacy

Planning the necessary programmes ofrequirement selection, training,

development, utilization, transfer,

promotion, motivation and compensation

Need for Human Resource Planning

Organization needs competent staff withthe necessary qualifications, skills,

knowledge, work experience and aptitude Employees exit and organization both

naturally (superannuation) and

unnaturally (resignations), there is an on-

going need for hiring replacement staff

Meet the need for more employees due toorganizational growth and expansion

Organizations might need to replace thenature of the present workforce as a result

of it s changing n eeds

Identify an organizations need to reduceits workforce

Process of Human Resource Planning

1. Deciding goals or objectives;2. Estimating future organisational structure

and manpower requirements;

3. Auditing Human resources both internallyand externally

4. Planning job requirements and jobdescriptions/person specifications; and

5. Building a plan


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Recruitment

It is the process of generating a pool of capable

people to a pply for employment to an organization.

Types of Recruitment

Recruitment is of 2 types:

Internal Recruitment - is a recruitment which takes

place within the concern or organization. Internal

sources of recruitment are readily available to an

organization. Internal sources are primarily three -

Transfers, promotions and Re-employment of ex-

employees. Re-employment of ex-employees is one

of the internal sources of recruitment in which

employees can be invited and appointed to fill

vacancies in the concern. There are situations when

ex-employees provide unsolicited applications also.

Internal recruitment may lead to increase in

employees productivity as their motivation level

increases. It also saves time, money and efforts. But

a drawback of internal recruitment is that it refrains

the organization from new blood. Also, not all the

manpower requirements can be met through

internal recruitment. Hiring from outside has to be

done.

Internal sources are primarily 3 Transfers Promotions (through Internal Job

Postings) and Re-employment of ex-employees - Re-

employment of ex-employees is one of the

internal sources of recruitment in which

employees can be invited and appointed to

fill vacancies in the concern. There are

situations when ex-employees provide

unsolicited applications also.

External Recruitment - External sources of

recruitment have to be solicited from outside the

organization. External sources are external to a

concern. But it involves lot of time and money. The

external sources of recruitment include -Employment at factory gate, advertisements,

employment exchanges, employment agencies,

educational institutes, labour contractors,

recomm endations etc.

Selection

Employee Selection is the process of putting right

men on right job. It is a procedure of matching

organizational requirements with the skills and

qualifications of people. Effective selection can be

done only when there is effective matching. By

selecting best candidate for the required job, theorganization will get quality performance of

employees. Moreover, organization will face less of

absenteeism and employ ee turnover problem s. By

selecting right candidate for the required job,

organization will also save time and money. Proper

screening of candidates takes place during selection

procedure. All the potential candidates who apply

for the g iven job are tested.

But selection must be differentiated from

recruitment, though these are two phases of

employment process. Recruitment is considered to

be a positive process as it motivates more of

candidates to apply for the job. It creates a pool of

applicants. It is just sourcing of data. While

selection is a negative process as the inappropriate

candidates are rejected here. Recruitment precedes

selection in staffing process. Selection inv olves

choosing the best candidate with best abilities, skills

and knowledge for the required job.

The Employee Selection Process takes place in

following order-

1. Preliminary Interviews: It is used toeliminate those candidates who do not

meet the minimum eligibility criteria laid

down by the organization. The skills,

academic and family background,

competencies and interests of the

candidate are examined during

preliminary interview.

2. Application blanks: The candidates whoclear the preliminary interview arerequired to fill application blank. It

contains data record of the candidates such

as details about age, qualifications, reason

for leaving previous job, experience, etc.

3. Written Tests: Various written testsconducted during selection procedure are

aptitude test, intelligence test, reasoning

test, personality test, etc. These tests are

used to objectively assess the potential

candidate. They should not be biased.

4. Employment Interviews: It is a one to oneinteraction between the interviewer and

the potential candidate. It is used to find

whether the candidate is best suited for the

required job or not.

5. Medical examination: Medical tests areconducted to ensure physical fitness of the

potential employee.

6. Appointment Letter- A reference check ismade about the candidate selected and

then finally he is appointed by giving a

formal appointment letter.

Induction (Orientation) & Placement

Once the candidates are selected for the required

job, they have to be fitted as per the qualifications.


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Placement is said to be the process of fitting the

selected person at the right job or place, i.e. fitting

square pegs in square holes and round pegs in

round holes. Once he is fitted into the job, he is

given the activities he has to per form and also told

about his duties. The freshly appointed candidates

are then given orientation in order to familiarizeand introduce the company to him. Generally the

information given during the orientation

programme includes:

Employees layout Type of organizational structure Departmental goals Organizational layout General rules and regulations Standing Orders Grievance system or procedure

In short, during Orientation employees are made

aware about the mission and vision of the

organization, the nature of operation of the

organization, policies and programmes of the

organization.

The main aim of conducting Orientation is to build

up confidence, morale and trust of the employ ee in

the new organization, so that he becomes a

productive and an efficient employee of the

organization and contributes to the organizational

success.

The nature of Orientation program varies with the

organizational size, i.e., smaller the organization the

more informal is the Orientation and larger the

organization more formalized is the Orientation

programme.

Proper Placement of employees will lower the

chances of employ ees absenteeism. The employees

will be more satisfied and contended with their

work.

Internal Mobility

Internal mobilitythe movement of employees

from one position to another within a corporation

is an efficient and cost-effective method of talent

deployment. A successful internal m obility program

begins with a company clarifying its purpose and

the business goals it seeks to accomplish with an

internal mobility initiative. Next, the corporation

translates the business goals driving internal

mobility into specific business policies. These

business policies will in turn determine the

organization of the staffing department delivering

the service, how and when the initiative will a pply,

and the rules and procedures followed. Newchallenges and learning opportunities are the best

way of guaranteeing employability throughout a

career. The career development approaches used to

achieve these goals are job broadening or increasing

job responsibilities, project work, network

participation, and job r otation within one functional

family or between businesses, functions or un its.

Internal mobility within the organization is basedon the following principles:

Talent has to be managed at the service ofto the entire corporation, not to one

specific unit or function

Every individual has a responsibility totake his/her career development in his/her

own hands

The company offers guidance,opportunities and resources to maintain

employability throughout a managers'

career

Organisations look for a balance betweendeveloping competencies internally and

attracting competencies from outside

Training & Development

Training of employ ees takes place after orientation

takes place. Training is the process of enhancing the

skills, capabilities and knowledge of employees for

doing a particular job. Training process moulds the

thinking of employees and leads to quality

performance of employees. It is continuous and

never ending in nature.

Importance of Training

Training is crucial for organizational developm ent

and success. It is fruitful to both employ ers and

employees of an organization. An employee will

become more efficient and productive if he is

trained well.

Training is given on four basic grounds:

New candidates who join an organizationare given training. This training

familiarizes them with the organizationalmission, vision, rules and regulations and

the w orking conditions.

The existing employees are trained torefresh and enhance their knowledge.

If any updates and amendments take placein t echnology, training is given to cope up

with those changes. For instance,

purchasing new equipment, changes in

technique of production, computerisation.

The employ ees are trained about use of

new equipments and work methods.

When promotion and career growthbecomes important. Training is given so


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that employees are prepared to share the

responsibilities of the higher level job.

The benefits of training can be summed up as:

Improves morale of employees: Traininghelps the employee to get job security andjob satisfaction. The more satisfied the

employee is and the greater is his m orale,

the more he will contribute to

organizational success and the lesser will

be employee absenteeism and turnover.

Less supervision: A well trained employeewill be well acquainted with the job and

will need less of supervision. Thus, there

will be less wastage of time and efforts.

Fewer accidents: Errors are likely to occurif the employees lack knowledge and skills

required for doing a particular job. The

more trained an employ ee is, the less arethe chances of committing accidents in job

and the more proficient the employee

becomes.

Chances of promotion: Employees acquireskills and efficiency during training. They

become m ore eligible for promotion. They

become an asset for the organization.

Increased productivity: Training im provesefficiency and productivity of employees.

Well trained employees show both

quantity and quality performance. There is

less wastage of time, money and resourcesif employees are properly trained.

Ways/Methods of Training

Training is generally imparted in two ways:

On the job training: On the job trainingmethods are those which are given to the

employees within the everyday working of

a concern. It is a simple and cost-effective

training method. The improficient as well

as semi- proficient employees can be well

trained by using such training method. Theemployees are trained in actual working

scenario. The motto of such training is

learning by doing. Instances of such on -

job training methods are job-rotation,

coaching, temporary promotions, etc.

Off the job training: Off the job trainingmethods are those in which training is

provided away from the actual working

condition. It is generally used in case of

new employees. Instances of off the job

training methods are workshops,

seminars, conferences, etc. Such method is

costly and is effective if and only if largenumber of employees have to be trained

within a short time period. Off the job

training is also called as vestibule training

,i.e., the employees are trained in a

separate area( may be a hall, entrance,

reception area, etc. known as a vestibule)

where the actual working conditions are

duplicated

Career and Succession Planning

Career planning is the process of setting

individual career objectives and devising

developmental activities necessary to achieve

them. It is, in the broadest sense, the personal

process of planning ones future work. In this

process, an individual analyses his or her

interest, values, goals, and capabilities. From

the management view point, career planning

and development should remain an individual

responsibility.

The principal objectives of career planning are:

To secure the right man at the right joband at the right time;

To maintain a contended team ofemployees;

To provide adequate career avenues toemployees to higher levels of

responsibilities; and

To strengthen the retention programme ofthe organisation.

There are four distinct elements of a career

planning programme. They include:

1. Individual assessments of abilities,interests, career needs, and goals;

2. Organisational assessments of employeeabilities and potential;

3. Communication of information concerningcareer options and opportunities with the

organisation; and

4. Career counselling to set realistic goals andplan for their attainment.

Comprehensive definition of Succession

Planning is that it is the process of ensuring a

suitable supply of successors for current and future

senior or key jobs arising from business strategy, so

that the careers of individuals can be planned and

managed to optimise the organisations needs and

the individuals aspirations.

Succession planning includes these activities:

Analysis of th e demand for managers an dprofessionals by company level, function

and skill.


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Audit for existing executives andprojection of likely future supply from

internal and external sources.

Planning of individual career paths basedon objective estimates of future needs and

drawing on reliable performance

appraisals and assessments of potential. Career counselling undertaken in the

context of a realistic understanding of the

future n eeds of the firm, as well as those of

the individuals.

Accelerated promotions, targeted againstthe future needs of the business.

Performance-related training anddevelopment to prepare individuals for

future roles as well as current

responsibilities.

Planned strategic recruitment not only tofill short-term n eeds but also future needs.

The actual activities by which openings arefilled.

Job evaluation

Job evaluation is a process of determining the

relative worth of a job. It is a process which is

helpful even for framing compensation plans by the

personnel manager. Job evaluation as a process is

advantageous to a company in many ways:

Reduction in inequalities in salarystructure

Specialization (define a job and thereby fixsalaries for it)

Helps in selection of employees Harmonious relationship between

employees and manager

Standardization (determining the salarydifferentials for different jobs become

standardized)

Relevance of new jobs (understand therelative value of new jobs)

Principles of Job Evaluation

Definition: Jobs must be clearly definedsuch that they are identifiable and easily

distinguishable. These jobs must then be

part of the job description.

Evaluation: A job evaluation scheme mustbe arrived upon and used as a standard

and all jobs in the organisation must be

evaluated as per that scheme only.

Job Understanding: Job evaluators need tohave deep insights into the job design

process. They must have a methodical

understanding of various tasks inv olved. Concern: Job evaluation must be

concerned with the job and not with the

person. i.e. it is the job that has to be

evaluated and not the person

Assessment: The assessment has to becarried out in an acceptable manner and

by com petent people. Further, it is based

on judgement and is not scientific but can

however be used to make objectivejudgements if used correctly.

Competency based Training and Assessment

With the ever evolving and diversifying business

challenges, the approach to the management of

human resources has also undergone a paradigm

shift. The competitive advantage achieved through

technology, new products and information is short

lived and vastly evaporating. The only

distinguishing feature from the competition which

remains, are the skills and contribution from the

employees. The organizational leadership thereforeplays an important part a s they directly influence

the performance and the people of the organization.

A well-defined and uniform competency framework

is the first step towards an organized approach to

the human resource management of the

organization.

There is a constant need to increase efficiency and

create and deliver value in each transaction.

Therefore it is imperative that a more scientific

approach like competencies be used to define and

understand the knowledge, skills and attitude

required to perform a job effectively. Evaluating anemployees performance based on pre -defined

competencies and their behavioural indicators, in

turn is called competency based assessment.

The preliminary condition for a competency based

assessment is a well-defined competency framework

of the organization. Ideally, the com petency

framework needs to be in alignment with the long

term organizational goals and its vision and

mission. These competencies then need to be

interpreted in the context of the tasks performed by

employees at different levels, so a competency like

fosters teamwork will be defined differently for a

senior leader like COO and would further have to be

contextualized for a junior manager.

The competencies are like the Pole Star for the

organization especially the senior leaders and act as

a constant check for the employees to direct and

redirect their efforts to yield specific results. Since,

competencies can be assessed and analy zed; it gives

a fairly objective evaluation of an employees

performance. The best part about the competencies

is that they can be learnt unlike personality traits

which are characteristic to an individual. If theorganization identifies criteria critical to its success


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in the form of core competencies, they can be

cascaded down to the whole organization.

Having a competency framework and assessments

based on it provides a comprehensive picture of the

skill map of the organization, the development

needs, and potential leaders and thus define theapproach to effective talent management. From the

perspective of the employ ees, they g et a better

understanding of the potential progression of their

careers which further augments their engagement

with the organization.

Within the competency based assessment approach

the organizations can find a structured model to

integrate their management practices as well. A

sy stematic approach like this can help define

organizational priorities clearly and align the

human resource strategies to create and build on

key behaviours which are desired and would berewarded. It also creates individual employees

accountable and responsible for their performance

and learning and development while creating a

culture of transparency. And most importantly

competency based assessments go a step further to

understand the individual and organizational fit to

make correct hiring decisions, the starting point of

the employees life-cycle in the organization.

Performance management and potential

appraisal

Performance Management is a long term processthat focuses on continuous performance

improvement. Its goal is to create a climate of

shared understanding about what is to be achieved,

and then developing people to increase the chance

that it will indeed be achieved.

Aims of Performance Management

To assist in the achievement of enhancedstandards of work performance of an

employee or class of em ployees.

To assist employees to identify theknowledge and skills to perform their jobsefficiently.

To ensure that the employees work towardsthe defined goals.

To ensure that the employees receive regularfeedback on performance.

To assist the employees to achieve personalgrowth through acquiring relevant

knowledge and skills and attitudes.

To evaluate the company and its ability to setand r each goals.

To identify and remedy situations that arehindering company performance.

Purpose of Performance Management

Driving results: The purpose of performance

management is to drive improvement in business

results through individual, group and enterprise

goal alignment, measurement, performance

coaching and performance information sharing.

Building capabilities: Performance management

drives organisational and individual capability

development by clarifying role-specific goals and

competencies, creating an environment of

constructive feedback, and using formal

developmental coaching or mentoring.

Growing talent: Another important purpose of

performance management is to motivate and retain

high performers by providing career development

programs that include motivation and reward

strategies, challenging work assignments and otheron-the-job learning initiatives that will lead to

career a dvancement an d job satisfaction.

Basic Principles of Performance Management

Effective organisations need effective performance

management. Organisational effectiveness is not

possible without performance management.

Performance management helps to achieve the

following:

To facilitate the integration of individualand organisational objectives and valuesand develop a performance-orientated

culture.

To identify and meet individualdevelopment needs and to identify those

employees with a g ood growth potential.

To identify poor performers. To pr ovide a basis for v aluing people. To improve the quality of management.

Managers ability to deliver has an impact on

performance management. Effective Performance

management n eeds managers who not only hav e an

open and honest management style, but who also

provide support and direction through:

Having a thorough understanding of theirinstitutional strategy and the big picture

and being vary of any assumptions they

may hold about their employees interest

in such matters before engaging with them

on such issues.

Recognising that appraisal is not aboutsupervision, but is more concerned with

helping individuals set strategic goals for

themselves that are consistent with thoseof the organisation.


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Performance management is not a fixed event; it is

a cyclic process centred on learning and

development. Performance management does not

just happen, as is often assumed, at an annual event

set up for the purpose. Formal appraisal is but a

single aspect of the process. Performance

management is about learning and development,which is a continuous and ongoing activity. It is

more effective if it is planned in advance,

experienced, reviewed and evaluated on a regular

basis. Feedback on progress and achievement is an

important aspect of the learning cycle, and in this

respect, employees are no different to students. We

all need high-quality regular feedback if we are to

develop. Indeed, conventional wisdom tells us that

any feedback, even if negative, is better than none at

all. Managers, then, need to be n ot only particularly

skilled in this regard, but they must also seek every

opportunity to provide feedback to the team

members.

Performance management is not a system. It is a

natural process of managing people. Performance

management is the way an organisation views its

employees. This may not necessarily entail

following best practices, but rather doing what is

best for the organisation. Either way, the focus will,

or should, invariably be on changing behaviour, not

paperwork, and should focus on the process, rather

than the system. Performance management works

best and succeeds most when it is aligned w ith the

culture, climate, aspirations and values of the

organisation. It is perceived to be an artificial

implant grafted on to the existing sy stem.

Role of Appraisal in Performance Management

Performance Appraisal is the assessment, at regular

intervals, of an employ ees performance at work.

Appraisals are a part of performance management.

Performance management is a continuous process

while appraisals are periodic activities. Appraisal is

a static process, whereas performance management

is a dynamic process.

If the management inv olves improvements, the

moment an organisation is assessed to determine

where it stands, there is an appraisal taking place.

Managing an organisation becomes difficult without

some form of appraisal. Appraisals are not reducing

the performance of individuals and dyads or teams

to a five-point scale or a number. It is the reduction

of annual performance into a number and equating

one number with another. Since appraisal scales are

not calibrated and equated, the numbers generated

from the appraisal process are not comparable

across functions, levels, departments and

organisations. Some organisations use liberalscales, some use conservative scales and some use

no scales but m erely feelings.

Performance appraisal should lead to increased

performance. However, in most organisations,

performance appraisals have lead to decreased

performance. This is because of de-motivation.

When appraisals are linked to rewards and when

fewer people are rewarded than those expecting

them, those who are n ot rewarded get de-motivated.If those who expect to be rewarded exceed the

number of those who actually get rewards, the net

outcome of performance a ppraisal may be negative.

If people continue to perform in spite of appraisals,

and they do not have a positive attitude to

appraisals, then the organisation is spending more

psychological energy.

Using appraisal sy stems should make the

performance management process more effective

and productive. Appraisal systems help managers

manage their performance. Managers should view it

as aids for performance management. Managersshould not be overwhelmed with appraisals and

appraisal outcomes and should not ignore the most

important aspects of performance management

performance improvements and competency

building. This happens when the concerns get

focused on appraisals rather than improvements or

on ratings and rewards rather than performance

enhancement and development. Managers need to

learn to enjoy the performance management

process itself, as it occurs round the year and is not

blocked by appraisals as they occur once in a while.

Performance management systems with an

appraisal component built into them should lead to

improved performance and more motivated and

competent people.

Compensation Administration

Elements of compensation

Base pay: Base pay is the fixed rate of compensation

that an employee receives for performing the

standard duties and assignment of a job.

Employers need to ensure that base-pay programsare designed to reveal market practices within their

identified competitor group. To achieve this,

organisations must first identify their competitive

market. This can be achieved by considering

different factors, including the nature of the

industry, geographic location, total employment

and annual revenue. Next, they need to conduct an

assessment of market pay practices for similar jobs

within the recognised competitor group. This

assessment should involve the duties, skills, and

impact levels of each job evaluated that is, each

job of similar size and scope.


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Then a pay structure for managing the competitive

base-pay levels for the jobs throughout the

organisation should be developed. Pay structures

typically consist of a series of pay ranges or bands

that reveal competitive rates of pay for specific jobs,

as well as allowing room for salary growth. Jobs of

similar value from both the market point of viewand an internal point of view are grouped together.

Then a competitive pay range is developed around

the market rates for the particular jobs.

Variable pay: Performance-based variable pay

continues to achieve momentum as a more

successful way to identify and reward employee

performance. Also known a s pay -per-performance,

variable pay is popular in todays corporate w orld.

By including a percentage of variable pay in the

compensation plan, organisations ensure that two

people with different efficiency levels do not get the

same benefits. By doing this, the company rewardsproductivity and hard work and motivates the

under-performers to work hard. Once limited to

senior management levels, these incentive or bonus

plans are being redesigned to reward the

achievement of specific company or employee

performance objectives. In a variable pay plan, the

size of the award varies among employees and from

one performance period to another, based on levels

of achievement measured, as well as against pre

established company and employee performance

targets. Amounts are usually calculated as a

percentage of base pay depending on job category

and position. Rewards are normally paid in cash on

an annual, semiannual or quarterly basis depending

on the plan design. Plan designs range from sales-

comm ission types to individual incentive or bonus

plans to team awards. The main idea of these

programs is to reward innovation and hard work

and to discourage mediocrity in performance.

Skill and competency-based pay: Skill-based pay

offers employ ees extra compensation when they

have new skills specially recognised by the company

as essential to achieve a competitive advantage.

Skill-based pay can be particularly useful foremployees who like their current jobs but are

looking for new challenges. Competency -based pay

is more widespread than skill-based pay because the

criteria cover not only measurable skills but also

knowledge, performance behaviours and personal

attributes. It helps out employees to grow in the

company and helps them to close the knowledge

gaps needed for creative m oves.

Long-term incentive compensation: Long-term

incentive compensation vehicles, such as stock-

option plans and other deferred-compensation

plans, which are not usually used to rewardperformance, are achieving desirability among

employees. These long term incentive compensation

plans appreciate employees based on company

performance ov er a long term that is typically three

to five years. Stock-option plan s are a common form

of long -term com pensation at public organisations.

In most private companies, incentives that reflect

stock plans are u sed for key employ ees.

Long-term compensation plans can be valuable

preservation tools for the success of an

organisation. They help to focus on driving and

improving the key employees to achieve the

financial performance of the company over a longer

term.

Elements of benefits

Company benefits can include a wide range of

offerings from standard medical insurance to more

modern benefits like prepaid legal services, andapplicants who are comparing job offers often

narrow their choices down to those that offer the

most generous benefits package. Applicants and

new employees checking their choices of benefit

plans often feel confused and ov erwhelmed as the

terminology used can be difficult to recognise and

understand. While the different plans are typically

designed to deal with the health and welfare of the

employee population, understanding them can be a

difficult task. Further complicating matters, some

companies share the costs of these benefits with the

employees, in an effort to help make up for the

significant expenses connected with broad benefitplans. Some of the benefits are discussed below:

Training: For most of the employees, training

means more than money. For example, according to

one survey of HR executives conducted by the

American Management Association, technical and

employability training w ere rated considerably

higher than pay-for-performance or bonuses.

Companies typically answer to this interest by

sending workers to outside conferences and

seminars, repaying employ ees for tuition, offering

managerial training and supporting employees in

degree programs.

Health care: The benefits that get the most attention

from employers today are health care benefits

because of the high costs involved in getting good

healthcare facilities and the increasing concern

about staying healthy. In the past, health insurance

plans included only medical, surgical and hospital

expenses. However, today employers include

prescribed drugs and dental, optical and mental

healthcare benefits in the package they offer their

workers.

Typically, an employer offers employees some form

of group health insurance or set am ount to spen d on


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healthcare or personal insurance plans each year.

Employees may be offered insurance after working

for a specified period of time, and the level of

cov erage is usually linked to employment status,

with part time employees receiving fewer benefits.

Depending on the companys plan, employees may

have to select the healthcare plan, paying a small feewhile the com pany pays the r emaining amount of

the premium or the employ er may cover all

insurance-related costs.

In group benefits, employees can have access to

different types of healthcare plans, including

insurance plans, under which people pay for

services at the time of availing them, and submit a

bill to the insurance company for reimbursement.

Managed healthcare plans like providing services

from health maintenance organisations (HMOs)

and preferred provider organisations (PPOs), which

offer care through a network of providers are alsogetting immensely popular.

Pensions: Employees have ranked retirement or

pension plans as second to medical coverage.

However, many employers offer no pension

cov erage to their employees. Approximately half of

the private-sector workforce is not covered for

pension by the employer. There are two main types

of pension plans: defined benefit and defined

contribution.

In defined benefit plans, the benefits are calculated

as a percent of the last few or the highest years ofearnings multiplied by years of service. They are

then paid in the form of life pensions. These plans

are adjusted towards those who are expected to

work for the same company throughout their career.

Defined contribution plans generally apply to

younger workers. This type of pension plan permits

workers t o save directly from some selected assets

of their own choice.

Stock options: Stock options give employees a

chance to buy stock in their company at a

predetermined price during a limited time period.In todays strong economy, employers have found it

increasingly essential to provide stock options to

attract the most v alued w orkers. For example, m ore

than 70 percent of technical workers now have stock

options and 7 to 12 percent of U.S. companies offer

stock option plans to all employees, u sually a llowing

from one hundred to two hundred option shares

annually, or an amount based on a percentage of

salary.

Generally there are two types of stock options:

Discounted stock options: This type of plan

permits an employee to buy the companys stock at

a price below the market value.

Index options: Some companies issue stock

options with employed prices joined to the Standard

and Poors 500 Index or other peer group stockindex. With this method, if the stock price

outperforms the index then the exercise price will

be less than the fair market value. If the index

outperforms the market, the exercise price will be

more than the fair market value.

Objectives of compensation plans

The Objectives of compensation can be classified

under four broad categories equity, efficiency,

macro-economic stability and optimum allocation

of labour.

Equity: Equity is the first category, which may take

sev eral forms. This concept involves income

distribution through narrowing of inequalities,

increasing the salary of the less paid employees,

protecting real wages and the concept of equal pay

for work of equal worth. Compensation

management struggles for internal and external

equity.

Efficiency: Efficiency is often closely related to

equity, because the two concepts are not opposing.

The objectives of efficiency are revealed in attempts

to link part of wages to productivity or profit, groupor individual performance, purchase and

application of skills and so on. Arrangements to get

efficiency may also be seen as being fair.

Macro-economic stability: Macr o-economic stability

can be achieved through high employment levels

and low inflation. For example, an unwarranted

high minimum wage would have a bad impact on

levels of employment, though at what level this

result would occur is a matter of debate.

Efficient allocation of labour: The well-organised

allocation of labour in the labour market means thatemployees will move to wherever they receive a net

gain. Such movement can be from one location to

another or from one job to another. The condition

or availability of financial incentives causes such

movement.

For example, w orkers may m ove from a low-wage

area to a high wage area. Employees may gain new

skills to benefit from the higher wages paid for

skills. When an employer offers wages lesser than

the market rates, the employee turnover increases

and when they offer the wages above market rates,

the employ er attracts job applicants. Whenemployees move from small to large industries, an


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efficient allocation of labour due to structural

changes takes place.

Objectives of benefit plans

Employers and employees value benefits

differently[3]. They will hardly ever agree on the

level of benefits that plans should provide.

Employers try to find the employees needs and the

cost to the organisation. Employees wish to increase

the value of benefits received and minimise other

expenses.

Employer objectives

The employ er objectives for benefit plans are

influenced by:

Meeting the organisation andcompensation objectives.

Actual salary and percentage of payr oll. Administration complexity and cost. Tax and accounting issues. The part benefits play in the total rewards

objectives of th e organisation.

Employee objectives

Employee objectives for benefit plans inv olve

income protection for:

Cash flow: This refers to the cash outflow with

respect to the personal expenses of employees. This

normally occurs when there is an unexpected

increase in expenses for example a sudden

occurrence of m edical expenses.

Income replacement: Providing replacing income if

employee turns out to be disabled.

Income for surviving dependants: Providing income

for existing dependents in the event of death.

Adequate retirement income: Providing sufficient

income upon r etirement.

To design a benefits program, an organisationshould define its program objectives. Furthermore,

program objectives need to be adjusted with the

organisations and HRs philosophy and strategy.

Since company philosophies and strategies vary, no

two com panies will share the sam e objectives for

employee benefit plans.

Characteristics of Compensation Programs

Internal equity: It is a measure of how an

organisation values each of its jobs in relation to

one another. Internal equity exists when an

employer pays wages corresponding with therelative internal value of each job. This is

established according to the employers view of the

importance of the work performed. Before an

organisation can calculate approximately the

importance of each job, it must first find out the

job-related factors that will be used for setting

compensation levels -in short, compensable factors.

Finding out the relative internal value of jobs in alarge organisation can be a difficult process. Job-

evaluation methods are usually used to develop job

hierarchy that reveals the relative value of jobs on

the basis of skill, effort, responsibility, and working

conditions. A number of job-evaluation approaches

have been developed. Such approaches include:

Whole job ranking. Classification. Point factors. Factor comparison. Slotting. Scored questionnaires.

External competitiveness: It is a measure of an

organisations pay structure compared to that of its

opponents. External equity exists when an employer

pays a wage rate equal to the wages persisting in

external labour markets. Evaluating external equity

requires measuring these labour markets. There is,

however, no single labour market for a specific job.

Supply and demand differ considerably among

markets, resulting in significant variation in wages

across labour markets. The following factors add to

these wage differences among markets:

Geographic location. Industry sector. Union statu s. Size of the organisation. Product competition. Company prestige. Education and experience level of available

work force.

Licensing or certification requirements calledfor by the job

Some combination of these factors v erifies the

labour market for a specific job. Employ ers should

carefully define the appropriate market to ensure

accurate external wage comparisons. Determining

the market too narrowly can result in wages that are

higher than necessary. If, for example, a company

doing business in two locations defines its pay

practice strictly in terms of a metropolitan labour

market, it could set wages that are unnecessarily

high for its rural areas. On the other hand, defining

the market too broadly may cause an organisation

to set wages too low to attract and maintain

competent employees.

Affordability: It is a measure of h ow high priced a

compensation program is to a company. If pay


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structures are not formulated responsibly, an

organisation could end up paying labour costs that

exceed what it can a fford t o pay.

Legal defensibility: Compensation programs should

stick to specific laws designed to provide fairness in

how employees are paid. Role description is acritical step in the development of a legally

justifiable testing mechanism. Perform ing a role

description study and using the resulting data to

develop exam specifications assures that candidates

are tested on critical incidents or the knowledge,

skill, and abilities that are appropriate to the role

for which they are being certified or licensed.

Understandable or saleable: Compensation

programs should be well communicated between

the employees and employers.

Efficient to administer: With increased pressure toimprove productivity and reduce costs, it is

essential that an organisations compensation

program be as simple and as easy as possible to

maintain and manage. A balance needs to be struck

between what appears to be the best program and

what is well-organised, effective and easiest to

manage.

Safeguard organisational resources: The

compensation program should reward performance

fairly without differing with the interests of

company stakeholders. Awards should reflect both

individual employ ee and company performance.

Flexible: Pay programs are necessary tools to fight

for labour in th e marketplace. They should be

flexible and capable of changing as needed.

Meet the organisations unique needs: To some

degree, each company is single within its own

industry or geographical area. The aim

characteristics of the company need to be identified

and addressed when designing compensation

programs.

Incentives and Employee Benefits

An Employee Reward system consists of an

organisations integrated policies, processes, and

practices for rewarding its employees. This is done

in accordance with their contribution, skill,

competence, and their market worth. It is developed

within the framework of the organisations reward

philosophy, strategies, and policies. It contains

arrangements in the form of processes, practices,

structures, and procedures. These arrangements

will provide and maintain appropriate types and

levels of pay benefits and other forms of reward.

The overall objective is to reward employees fairly,

equitably, and consistently, in accordance with their

value to the organisation. This further helps in the

achievement of the organisations strategic goal s.

It is not just about pay and employee benefits. A

reward system consists of financial rewards likefixed, variable pay, and employee benefits which

together comprise total remuneration. The system

also incorporates non-financial rewards like

recognition, praise, achievement, responsibility, and

personal growth. The combination of financial

rewards, employ ee benefits, and non-financial

compensation comprises the total Employee reward

sy stem.

Needs for Employee Rewards

In a world where organisations like to boast about

running "lean and mean," it may seem nearlyimpossible to compensate employees, for doing

good work without breaking the budget. According

to a survey by staffing firm Accountemps found that

frequent recognition of accomplishments was the

top non-monetary compensation named by full and

part-time office workers, with regular

communication. This can make your employees

more productive without shaving one millimetre off

your bottom line. Therefore, there is a need for

employee rewards and its results are mentioned

below:

Retention: A good employee r eward program is apositive impact on employee retention. When the

employee is content with the reward program then,

it will be easy for the organisation to r etain the

employee.

Health and Safety: Solid employee reward

programs also have measurable positive effects both

on safety and workplace health. This reduces overall

health-care costs for both employ ee and employer.

Motivation: A crucial outcome of a good employee

reward program is enhanced motivation among

personnel. This also includes helping the employeesto make connections between professional goals

and personal g oal s.

Engagement: A solid employee reward program

also increases employ ee engagement in the

workplace, a factor that converts into improved

performance and better customer experience.

Return on Investment: Employee reward

programs provide a concrete Return on Investment

(ROI). Studies have shown that employee

recognition and rewards of a non monetary basis

show a greater return on investment than do cashawards.


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Bottom Line: Ultimately, from th e employers

viewpoint, employ ee reward programs have a

positive effect on the bottom line for reasons such

as, the positive effect on health care costs,

performance, and w orkplace engagement.

According to many management consultants,human resource professionals, career coaches, book

authors and bosses, from a range of industries;

there are 15 best ways to reward employees without

spending much of company funds. They are:

1. Have flexible working hours: If there is one

complimentary r eward that rises above the r est, it i s

flexible work schedules. It is commonly suggested

that flex time is a plus side that offers, the m ost gain

with the least pain. For example, give a little

latitude in determining work schedules and to take

time for family or personal issu es such as doctors

appointment and banking errands. As long as theemployee deserves, and does not abuse the

privilege, this can go a long way to building trusting

and mature relationships with key workers.

2. Send a handwritten note: Supervisors must ask

top management people to write a personal note to

employees, who deserve recognition.

3. Make work fun: Create some events to provide

fun to employee.

4. Help them connect: Introducing employees and

staffs to key suppliers, custom ers or someone insenior management can, help make an employees

career.

5. Bring in the casualness: For example,

implementing a non formal day. It can make

employees feel r ight at h ome with each other, which

translates into increased productivity. It is great to

work in an office where, employees are m ore

concerned about doing quality w ork than, what they

are wearing.

6. Celebrate employees family special days: Every

birth and wedding deserves a celebration. Eachemployee must be made to leave office early on

special days, and the food is on the house. No need

to make up the time. Give memorable gifts for

employees spouse or family and apologies, for

taking them away from their families on a Sunday.

7. Reward effort as well as success: Even if

employees ideas sometimes fail, y ou must

encourage the employees to keep producing new

ideas. This stimulates innovation and positive

behaviour, not winning.

8. Give them free days: Give a certain number offree days off to employees to use, as they see fit.

Employees can u se these days as they like. They do

not have to pretend to be sick. They can go to the

beach, read a book, and play with their kids and so

on.

9. Serve refreshments: During the hectic times of

the year, serving drinks and refreshments tocolleagues helps to build a comfortable

environment. Small gestures will build great

companies. As y ou serve, y ou can encourage

colleagues and hear about real consumer issues.

10. Celebrate employees birthday: Host a monthly,

hour-long birthday lunch for any employee, with a

birthday that month. Employ ees are invited to a sk

him anything. They feel recognised, and he gains

loyal employees who share their ideas.

11. A pplaud their efforts literally: If an employee

has done something really worthwhile, have yourentire staffs to give them a standing ovation at the

next meeting.

12. Have a Wall of Fame: Set a public space within

your firm for

GGSIPU MBA Weekend HRM Class Notes

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