MH

Human Resource Management
Definition :
Human resource management involves all management

decisions and practices that directly affect or influence the
people, or human resources, who works for the
organization.
In other words,
Human resource management is concerned with people

centric issues in management.
Human Resource Management

Functions :
Human Resources Management functions includes a variety of activities: Deciding what staffing needs you have and whether to use independent
contractors or hire employees to fill these needs,
Recruitment, Selection and Training the best employees,
Ensuring they are high performers,
Dealing with performance issues, and
Ensuring your personnel & management practices conform to various
regulations.
Activities also includes
Managing your approach to employee benefits and compensation,
Maintaining employee records and personnel policies.
Usually small businesses have to carry out these activities themselves
because they can't afford part or full-time help.
However, they should always ensure that employees are aware of
personnel policies which conform to current regulations. These policies are
often in the form of employee manuals, which all employees have.
Nature of HRM
Pervasive force: HRM is pervasive in nature. It is present in all enterprises. It
permeates all levels of management in an organization.
Action oriented: HRM focuses attention on action, rather than on record
keeping, written procedures or rules.
Individually oriented: It tries to help employees develop their potential. It
encourages them to give their best to the organization. It motivates employees
through a systematic process of recruitment, selection, training and
development coupled with fair wage policies.
People oriented: HRM is all about people at work, both as individuals and
groups. It tries to put people on assigned jobs in order to produce good results.
Future-oriented: HRM helps an organization meet its goals in the future by
providing for competent and well- motivated employees.
Development oriented: HRM intends to develop the full potential of
employees. Training is offered to sharpen and improve their skills. Employees
are rotated on various jobs so that they gain experience and exposure.
Nature of HRM
Integrating mechanism: HRM tries to build and maintain cordial relations
between people working at various levels in the organization.
Comprehensive function: HRM is, to some extent, concerned with any
organizational decision which has an impact on the workforce or the potential
workforce. The term workforce signifies people working at various levels,
including workers, supervisors, middle and top managers.
Inter-disciplinary function: HRM is a multi-disciplinary activity, utilizing
knowledge and inputs drawn from psychology anthropology economics, etc.
Continuous function: HRM requires a constant alertness and awareness of
human relations and their importance in every day operations.
________________
Scope of HRM
Personnel aspect: This is concerned with manpower planning, recruitment,
selection, placement, transfer, promotion, training and development, lay off and
retrenchment, remuneration, incentives, productivity, etc.
Welfare aspect: It deals with working conditions and amenities such as

canteens, crches, rest and lunch rooms, housing, transport, medical
assistance, education, health and safety, recreation facilities, etc.
Industrial relations aspect: This covers union-management relations, joint

consultation, collective bargaining, grievance and disciplinary procedures,
settlement of disputes, etc.
___________________
Objectives of HRM
The principal objectives of HRM may be listed thus:
1.To help the organization reach its goals: HR department, like other
departments in an organization, exists to achieve the goals of the organization
first
2.To employ the skills and abilities of the workforce efficiently: The primary
purpose of HRM is to make peoples strengths productive and to benefit
customers, strengths productive and to benefit customers, stockholders and
employees.
3.To provide the organization with well-trained and well-motivated employees:
HRM requires that employees be motivated to exert their maximum efforts.
4.To increase to the fullest the employees job satisfaction and selfactualisation: It tries to prompt and stimulate every employee to realize his
potential.
Objectives of HRM
Further:
5. To develop and maintain a quality of work life: It makes employment in the
orgnisation a desirable, personal and social, situation.
6.
To communicate HR policies to all employees
7.To be ethically socially responsive to the needs of society through ensuring

compliance with legal and ethical standards.
________________________
Personnel Management
Personnel management can be defined as obtaining, using and
maintaining a satisfied workforce. It is a significant part of
management concerned with employees at work and with their
relationship within the organization.
According to Flippo, Personnel management is the planning, organizing,

compensation, integration and maintainance of people for the purpose of
contributing to organizational, individual and societal goals.
According to Brech, Personnel Management is that part which is primarily

concerned with human resource of organization.
Nature of Personnel Management
Personnel management includes the function of employment, development

and compensation- These functions are performed primarily by the personnel
management in consultation with other departments.
It is an extension to general management. It is concerned with promoting and
stimulating competent work force to make their fullest contribution to the
concern.
Personnel management exist to advice and assist the line managers in
personnel matters.
It lays emphasize on action rather than making lengthy schedules, plans,
work methods. The problems and grievances of people at work can be solved
more effectively through rationale personnel policies.
It is based on human orientation. It tries to help the workers to develop their
potential fully to the concern.
It also motivates the employees through its effective incentive plans so that
the employees provide fullest co-operation.
Role of Personnel Manager
Personnel manager is the head of personnel department. He performs both
managerial & operative functions of management. His role can be summarized as
Personnel manager provides assistance to top management- The top

management are the people who decide and frame the primary policies of the
concern. All kinds of policies related to personnel or workforce can be framed
out effectively by the personnel manager.
As a staff specialist- Personnel manager acts like a staff advisor and assists the
line managers in dealing with various personnel matters.
A counsellor,- As a counsellor, personnel manager attends problems and
grievances of employees and guides them. He tries to solve them in best of his
capacity.
As a mediator- He is a linking pin between management and workers.
As a spokesman- Since he is in direct contact with the employees, he is required to
act as representative of organization in committees appointed by government. He
represents company in training programmes.
Functions of Personnel Management
Follwoing are the four functions of Personnel Management:
Manpower Planning
Recruitment
Selection
Training and Development
Personnel Management vs. Human Resource

Management
Personnel
Management
Human Resource
Dimension
Management
It depicts a Philosophy, an
Only a functional area of
1. Philosophy
attitude, an approach, a
Management.
Policy and a practice.
Confined to
Integrated with the corporate
procurement
2. Nature
and training of
management
personnel
3.Rules and
Employees are made for Rules and regulations are
regulations
rules and regulations
made for employees
Fast and both downward and
4. Communication Slow and downward
upward
5. DecisionSlow
Fast
making
Work oriented.
People oriented with human
Achievement of
considerations.
6. Approach
organisational goals and
Primarily to satisfy the needs
objectives.
of people at work.
7. job design
Rivision of labour
Team-work
Personnel Management vs. Human

Resource Management
Dimension
8. Management's
role
9. Level of Trust
10.Emphasis
Role of management is
Transactional.
It is mainly concern of
personnel manger
Human Resource
Management
HRM remains at the centre of

Management.
Role of management is
Transformational.
It is concern of all managers
from top to bottom in the
organisation.
Low
High
Primarily concerned with
HRM concentrates more on
selection, recruitment
motivation, morale-boosting
& appraisal of
and job satisfaction.
personnel.
HRM Vs HRD
S.NO.
1
Dimensions
Role
Emphasis
Support
HRM
To Make efficient use of HR
Systems for fulfillment of Org
obielives
To Develop human
To Manage Human Resource in t he
resource for the best of
most cordial way
their potential
Provide support to the
management and other
personnels
Management To Provide support and help in

Role
implement policies.
The Concept of HRM has now

facilitated. In big org. in Indian
context
Status
HRD
To design & develop HR
Systems within the
Purview of Org
Obievlives
Provide support to staff

management and HR
department also.
Apart from support in
implementation policies,
they are also encouraged
to team & develop better
management produces.
HRD is new, but is fast
developing & attracting
in Indian organization
Evolution of the HRM &HRD

Concept
The
Commodity
concept
The Factor of
Production
Concept
The Goodwill
concept
The
Paternalistic
concept/
Paternalism
What is all about?

Labour was regarded as a commodity to be
bought and sold. Wages were based on
demand and supply. Government did very
little to protect workers.
Labour is like any other factor to production.
Viz, money, materials, land etc. workers are
like machine tools.
Welfare measures like safety, first aid, lunch
room, rest room will have a positive impact
on workers' productivity.
Management must assume a fatherly and
protective attitude towards employees.
Paternalism does not mean merely providing
benefits but it means satisfying various needs
of the employees as parents meet the
requirements of children.
Evolution of the HRM &HRD

Concept
What is all about?

To improve productivity, physical, social and
The
psychological needs of workers must be met.
Humanitarian
The organisation is a social system that has
Concept
both economic and social dimensions.
Employees are the most valuable assets of an
The Human
organisation. There should be a conscious
Resource
effort to realize orgnisational goals by
concept
satisfying
needs
and
aspirations
of
employees.
Employees should be accepted as partners in
the progress of a company. They should have
a feeling that the organisation is their own. To
The Emerging this end, managers must offer better quality
concept
of working life and offer opportunities to
people to exploit their potential fully. The
focus should be on Human Resource
Growth of HRM in India

Early phase:
HRM is a discipline which has had its origin dating back to 1800 B.C.
for example: the minimum wage rate and incentive wage plans were included in the
Babylonian Code of Hammurabi around 1800 B.C.
The Chinese, as early as 1650 B.C. had originated the principle of division of
labour and they understood labour turnover even in 400 B.C.
The span of management and related concepts of organization were well understood
by Moses around 1250 B.C. and the Chaldeans had incentive wage plans around
400 B.C.
Kautilya, in india (in his book Arthasastra) made reference to various concepts like
to job analysis, selection procedures, executive development, incentive system and
performance appraisal.

Legal phase:
The early roots of HRM in India could be traced back to the period after 1920.
The Royal commission on labour in 1931 suggested the appointment of labour
officer to protect workers interests and act as a spokesperson of labour.
After Independence, The Factories Act 1948. Made it obligatory for factories
employing 500 or more workers.
In view of legal compulsions and the enumeration of duties the entire approach of
organizations toward their personnel was to comply with the laws and keep the
welfare officers busy with routine functions
Meanwhile two professional bodies. Voz., the Indian Institute of personnel
Management (IIPM) Kolkatta and National Institute of Labour Management
(NILM) Mumbai have come into existence in 1950s.

Welfare phase :
During the 1960s. the scope of personnel function has expanded a bit, covering
labour welfare, participative management, industrial harmony, etc.
In this period, the human relations movement of the West had also had its impact on
Indian organizations.
The legalistic preoccupations slowly gave way to harmonious industrial relations and
good HR practices.
Development phase:
In 1960s. and 70s the HR professionals focused more on developmental aspects of
human resources.
The emphasis was on striking a harmonious balance between employee demands
and organizational requirements.
HRD has come to occupy a centre stage and a focal point of discussion in seminars,
conferences and academic meets.
The two professional bodies, IIPM and NILM, were merged to form the National
Institute of Personnel Management (NIPM) at Kolkata.
Human Resource Development

HRD is mainly concerned with providing learning experiences for the people
associated with an organization through behavioral processes. In a broader
sense, the term HRD means those learning experiences which are designed to
develop competencies and bring about behavioral change among the human
resources.
OBJECTIVES
Human Resource Development (HRD) in the organization context refers to the
process whereby the employees are continuously helped in a planned way to:
1. Acquire or sharpen capabilities required to perform various tasks and
functions associated with their present or future expected roles;
2. Develop their general enabling capabilities as individuals so that they are
able to discover and exploit their own and/or organizational development
purpose; and
3. Develop an organizational culture where superior-subordinate relationships,
team-work and collaboration among different sub-units are strong and
contribute to the professional well-being, , motivation and pride of employees.
In large professionally managed organizations, HRD functions are increasingly
managed by specialist managers in separate HRD department.
Human Resource Planning

According to Decenzo and Robbins,
Human resource planning is the process by which an organisation

ensures that it has the right number and kind of people, at the right
place, at the right time, capable of effectively completing those tasks
that will help the organisation achieve its overall objectives.
Human resource planning is a continuous process. It cannot be rigid or
static; it is amenable to modifications, review and adjustments in
accordance with the needs of the organisation or the changing
circumstances.
Human resource planning is a two-phased process by which management
can project the future manpower requirements and develop suitable
action plans to accommodate the implications of projections.

Objectives of Human Resource Planning
The major objectives of human resource planning in an

organisation are as follows :
To ensure optimum use of human resources currently
employed.
To avoid imbalances in the distribution and allocation of
human resources.
To assess or forecast future skill requirements for the
accomplishment of the organisations overall objectives.
To provide control measure to ensure availability of necessary
resources. When required.
To control the cost aspect of human resources.
To formulate transfer and promotion policies.
Objectives of
The basic activities involved in human resource planning are as :
Listing of current manpower or human resources with the
organisation.
Assessing the extent to which the current manpower is utilized to
the advantage of the organisation.
Phasing out the surplus manpower, if any.
Analysing the requirements of manpower in future in the light of
expansion plans, retirement of personnel etc.
Making manpower procurement plans.
Designing training programs for different categories of manpower.
Benefits of Manpower Planning

Manpower planning is an important tool of Human Resource
management to anticipate shortages and / or surpluses of
manpower and correct these imbalances before they become
unmanageable and expensive.
Manpower planning results in reduced labour costs as it helps
the management to anticipate shortages and /or surpluses of
manpower and correct these imbalances before they become
unmanageable and expensive.
It is a better basis for planning employee development that is
designed to make optimum use of workers skills within the
organisation.
It enables identification of the gaps of the existing manpower so
that corrective training could be imparted. Thus the training
program becomes more effective.
Benefits of Manpower Planning

It leads to improvement in the overall business planning
process.
It helps in formulating managerial succession plan as a part of
the replacement planning process.
It leads to a greater awareness of the importance of sound
manpower management throughout the organisation.
It serves as a tool to evaluate the effect of alternative manpower
actions and policies.
.
HUMAN RESOURCE PLANNING PROCESS
DIFFICULTIES IN HUMAN RESOURCE PLANNING

Human resource planning is not always effective. Some of the
major problems are described below :
Lack of Understanding of Rationale of Planning.Insufficient Top Managements Support.Insufficient Initial Effort.
Lack of Coordination with other functions.
Lack of Integration with Organisational Plans.
Non-cooperation of Operating Managers.
JOB ANALYSIS
A TECHNIQUE FOR
DETERMINING HUMAN RESOURCE REQUIREMENTS
Job analysis' provides information both for the job and job holder. It involves
the breaking up of a job into its basic elements and studying them in detail
to obtain all pertinent facts about the job. It provides information about job
contents, job duties (Job Description) and personnel qualities required for
the job (Job Specification).
JOB DESCRIPTION: It is an organized, written and factual statement of job
contents in the form of duties and responsibilities of a particular job. It describes
the scope and functions of a job and summarizes the nature and type of the job. It
describes job title, job summary, job duties & working conditions.
JOB SPECIFICATION: It is a written statement of qualifications, traits, physical

and mental characteristics that an individual must possess to perform the job duties
and discharge responsibilities effectively.
Job specification specifies the knowledge, skills, background, aptitude and
experience which an individual should possess to perform job effectively. It serves
as a guide for selection, training & development of employees
JOB ANALYSIS
(A process for obtaining all pertinent job facts)
Job Description
Job Specification
A statement containing items like:
Qualifications to do the job:
1. Job title
1. Education
2. Location
2. Experience
3. Job summary
3. Training
4. Duties
4. Judegement
5. Machines equipment tools
5. Initiative
6. Materials and forms used
6. Physical effect
7. Supervision
7. Physical skills
8. Working conditions
8. Responsibilities
9. Hazards
9. Communication skills
10. Emotional characteristics
11. Special demands e.g., sight
RECRUITMENT AND SELECTION

RECRUITMENT
It can be defined as the process of identifying the sources for prospective

candidates and to stimulate them to apply for the jobs. In other words,
recruitment is the generating of applications or applicants for specific
positions.
According to E.B. Flippo "Recruitment is the process of searching for
prospective employees and stimulating them to apply for jobs in the
organisation."
The process of recruitment and the cost involved in it depends on the size of
the undertaking and the type of persons to be recruited. In the case of small
concerns the process of recruitment is simple and inexpensive, while in the
case of large concerns the process is complicated and expensive particularly,
if technical and managerial personnel are to be recruited.
Sources of Recruitment:
Internal sources include personnel already on the payroll of
an organisation, i.e., its present working force. Whenever any vacancy occurs,
somebody from within the organisation is upgraded, transferred, promoted or
sometimes demoted.
(a) Internal Sources:
This source also includes personnel who were-once on the payroll of the
company
Merits of Internal Recruitment
The employer can better evaluate those presently employed than

outside candidates.
1.
2. Person already in employment of the company is fully aware of and

well acquainted with its policies and its operating procedures.
3. It improves the morale of employees, as they are preferred first.
4. It is less costly than going out side to recruit.
5. It promotes loyalty among the employees.
6. They are tried people and can, therefore, be relied upon.
(b) External Sources: All the vacancies cannot be filled through internal recruitment.
The present employees may be insufficient or they may not fulfill the specifications of
the jobs to be filled. Different External sources of recruitment are:
(i) By Advertising :Advantage of advertising is that more information about the

organisation, job description and job specification can be given in advertisement to
allow self-screening by the prospective candidates. Advertisement gives the
management a wider range of candidates for selection.
(ii) Employment exchanges & agencies: Employment exchanges managed and
operated by the central and state governments are the most popular source of
recruitment. The seekers get their names registered and employers notify the vacancies
to such exchanges. Exchanges refer the names of prospective candidates to the
employers. Some private agencies are also engaged in recruitments for a company.
(iii) Campus Recruitment: Many big organisations maintain a close liaison with the
universities, institutions and management schools for recruitment to various jobs.
(iv) Casual callers: Job seekers regularly apply in good organisations. Such job
seekers can be a valuable source of manpower. A waiting list of these may be screened
to fill the vacancies as they arise. Advantage is that it avoids the cost of recruitment.
(v) Recommendations: Applicants introduced by the employee's friends and relatives
to' the organisation may prove to be a good source of recruitment and indeed, many
employers prefer to take persons because something about their background is known.
SELECTION
The selection procedure is concerned with securing relevant information about
an applicant. The objective of selection process is to determine whether an
applicant meets the qualification for a specific job and to choose the applicant
who is most likely to perform well in that job.
Selection means
Rejection of candidates for a position and it is considered a negative
process accordingly.
"Selection is the process in which candidates for employment are divided
into two classesthose who are to be offered employment and those who are
not. Selection means a process by which the qualified personnel may be
chosen from the applicants offering their services to the organisation for
employment.
Process of Selection
The selection process involves the following steps
STEP - I - Filling of application blank
STEP II - Initial interview
STEP Ill - Employment tests
The more commonly used are :
(i) Aptitude test (iii) Intelligence test (v) Personality test
STEP-IV - Checking references
STEP-V - Physical or medical examination:
STEP-VI - Final interview:
SELECTION TESTS
1. Aptitude Test: This test measures the applicant's capacity to learn the skill
required for a job. It helps in finding out whether a candidate is suitable for a
clerical or a mechanical job. This test helps in assessing before training as to
how well the candidate will performs on a job after he is given the necessary
training.
2. Intelligence Test: This test is used to find out the candidate's intelligence in
terms of candidate's mental alertness, reasoning ability, understanding power
etc. For example reading and summarising a paragraph in the allotted time,
writing 10 to 15 words that begin with the same letter in one minute.
3. Trade or Performance or Achievement Test: This test is used to measure
the candidate's level of knowledge and skill in the particular trade or occupation
in which he will be appointed, in case he is finally selected. In this test the
candidate is asked to do a simple operation, which is a part of his proposed job.
For example driving test for a driver or typing test for a typist.
4. Judgement Test: These test are designed to know the ability to apply
knowledge (applicability) in solving a problem
SELECTION TESTS
5. Personality Test: Personality tests are very important in the case of appointment of
supervisors and higher executives. In a personality test, the candidate may be asked to
answer a series of questions and from his response, his personality may be judged or in
some special test situations the candidate's reaction may be assessed, or the candidate
may be asked to grade his own examination papers in order to test his honesty.
a) Interest Test: This test is used to explore the areas of interest of the candidate.
This test only indicates the interest of a candidate for a particular job. It does not reveal
his ability to do it. Ex- whether a candidate like a field or office job. Interest tests are
generally used for counseling. Well prepared questionnaires are used in interest tests.
b) Personality test: Personality test is used to measure personality traits (those
characteristics of a candidate which constitute his personality), e.g. self-confidence,
temperament, initiative, judgement, dominance, integrity, originality, etc.
c) Projective Test: These tests are based on pictures or incomplete items. The
testee is asked to narrate or project his own interpretation on these. The testees
response reflects his / her own values, motives, attitude etc.
d) Attitude Test: These are designed to know the testees tendencies towards
favouring or otherwise to people, situations, actions etc. Attitudes are known from the
responses of the testee.
SELECTION INTERVIEW
1. Direct Planned Interview: This is a straight-forward, face-to-face, question &
answer interview intended to measure the candidate's knowledge and background. It
also provides an opportunity for observing the candidate's personal characteristics.
The interviewer does some advance planning.
2. Indirect Non-directive Interview: In this type of interview, the interviewer refrains
from asking direct questions but interviewer make himself feels free to talk on any
subject he considers important. The object of this interview is to determine what the
candidate himself thinks or considers about the subject / problem (may be a current
hot issue), and how he conceives of his job and his organisation.
3. Patterned Interview: In this interview a series of questions which can illuminate
the strategic parts of the applicant's background are standardised in advance and
validated against the record of employees who have succeeded or failed on the job.
Answers to these questions are compared with a critical store and used in
determining who is to be selected.
4. Stress Interview: In this interview the interviewer deliberately creates stress to see
how an applicant operates under it. To induce the stress, the interviewer responds to
the applicant's answers with anger, silence, criticism or with a flurry of questions.
Events like noise, interruptions, or change of schedules are introduced to see how
determined and inventive an applicant can be.
SELECTION INTERVIEW
1. Direct Planned Interview: This is a straight-forward, face-to-face, question &
answer interview intended to measure the candidate's knowledge and background. It
also provides an opportunity for observing the candidate's personal characteristics.
The interviewer does some advance planning.
2. Indirect Non-directive Interview: In this type of interview, the interviewer refrains
from asking direct questions but interviewer make himself feels free to talk on any
subject he considers important. The object of this interview is to determine what the
candidate himself thinks or considers about the subject / problem (may be a current
hot issue), and how he conceives of his job and his organisation.
3. Patterned Interview: In this interview a series of questions which can illuminate
the strategic parts of the applicant's background are standardised in advance and
validated against the record of employees who have succeeded or failed on the job.
Answers to these questions are compared with a critical store and used in
determining who is to be selected.
4. Stress Interview: In this interview the interviewer deliberately creates stress to see
how an applicant operates under it. To induce the stress, the interviewer responds to
the applicant's answers with anger, silence, criticism or with a flurry of questions.
Events like noise, interruptions, or change of schedules are introduced to see how
determined and inventive an applicant can be.
SELECTION INTERVIEW
5. Systematic Depth Interview: In this interview, the interviewer has a plan of areas
he wishes to cover. The interviewer asks one before launching to the next so that he
can be more certain of complete coverage. But an answer to any one question does
not tell much about the applicants knowledge and it becomes difficult to weigh the
meaning of various answers.
6. Panel or Board Interview: In the board interview, more than one person interviews
an applicant at the same time. Areas of questioning are allocated to each interviewer
before the interview starts. One possible disadvantage of this method is that
interviewers may start competing with one another and thus create conditions of
stress for the candidate.
7. Group Interview: In this interview 5 or 6 applicants are placed together in which
they must interact. It may be structured or unstructured. It is usual for the selector to
remain silent throughout the discussion and make notes at the applicants'
interactions and responses. The applicant who verbalises better and has a better
personality is likely to be selected.
SELECTION INTERVIEW
GUIDELINES FOR EFFECTIVE INTERVIEWING
1.
The interview schedule should be definite and known to both interviewers

& interviewee.
2.
Interview should be conducted by the competent, trained and experienced

interviewers.
3.
The interviewers should be supplied with specific guidelines for

conducting interview.
4. The interviewers should ensure an element of privacy for the interviewee.

5.
Candidates resume should be provided to the interviewers before the start

of interview.
6. The interview should not end abruptly, but it should come to close tactfully.
7.
The interviewers should show their sensitivity to the interviewees

sentiments and also sympathetic attitude to him/her.
________________________
Strategic HRM
Strategy
A strategy is a way of doing something. It usually includes the formulation of a
goal and set of action plans for accomplishment of that goal.
Effective Greek generals needed to lead an army, win and hold territory, protect
cities from invasion, destroy the enemy, and so forth. Each objective needed a
different deployment of resources. The Greeks knew that strategy was more
than fighting battles.
Strategic Management
Strategic management may be understood as the process of formulating,
implementing and evaluating business strategies to achieve organisational
objectives. A more comprehensive definition of strategic management is :
A set of managerial decisions and actions that determine the long term
performance of a corporation. It includes environmental scanning, strategy
formulation, strategy implementation and evaluation and control. The study of
strategic management emphasizes monitoring and evaluating environmental
opportunities and threats in the light of a corporations strengths and
weaknesses.
Strategic HRM
Strategic Management Process
The four steps constitute the strategic management process. Strategic
management process begins with the scanning of the external environment and
the internal environment and ends with monitoring the activities of the
organisation.
Strategic HRM
1. Environmental Scanning
Environment scanning involves general surveillance of the environment to
determine trends and projections of factors that will affect the fortunes of the
organisation. The scan focuses on the firms task environment. Elements
outside the task environment are not ignored, but are paid less attention.
Scanning is done to prevent information overload for decision makers. It should
focus on providing relevant information for planning and decision making.
With regard to HRM, the relevant areas to be scanned for planning and
decision- making are the labour market, legal environment, constitutional
provisions and technology.
2. Strategy Formulation
Strategies are formulated at three levels:
Corporate level,
Business unit level, and
Functional level.
Strategic HRM
Corporate-level Strategy- This is formulated by the top management of an
organisation made up of more than one line of business. The major questions
that need to be answered at this stage are :
What kind of business should the company be engaged in?
What are the goals and expectations for each business?
How should resources be allocated to reach these goals?
In formulating corporate level strategies, the company should decide in at least
eight areas:
Market standing,
innovation,
productivity,
physical and financial resources,
profitability,
managerial performance and development,
worker performance and attitudes, and
social responsibility.
Strategic HRM
Corporate Level Strategies
1. Growth strategies
(a) Internal growth

(c) Horizontal related
diversification
(e) Vertical Integration of
related businesses
(b) Horizontal integration

(d) Conglomerate
diversification
(f) Vertical integration of
unrelated businesses
(g) Mergers
(h) Strategic alliances
2. Stability strategy
3. Retrenchment strategies
(a) Turnaround
(c) Liquidation
(b) Divestment

Strategic HRM
Business-level Strategy- A business unit is an organisational subsystem that
has a market, a set of competitors, and a goal distinct from those of the other
subsystems in the group.
The concept of strategic business unit (SBU) was pioneered by General
Electric (GE). At GE, there are over 200 strategic business units, each having
its own strategies consistent with the organisations corporate-level strategy.
Examples of Business Level Strategies are
Launching of new products.
Improvement in product mix ( Include more speciality products)
Focus on exports
Increase of market share
Strategic HRM
Functional- level Strategy- Each business unit will consist of several
departments, such a manufacturing, sales, finances and HRD. Functional-level
strategies identify the basic course of action that each of the department must
pursue in order to help the business unit to attain its goals. In formulating
functional level strategies, managers must be aware that the different functions
are interrelated.
Each functional area, in pursuing its purpose, must mesh its activities with the
activities of other departments. A change in one department wills invariable
affect the way other department operates. Hence, the strategy of one functional
area cannot be viewed in isolation.
Examples of Functional- level Strategy are : Development of new products
Improvement in existing products
Installation of new machinery and equipments
Revising advertisement budget.
Human Resource Planning for expansions.
Strategic HRM
Strategy Implementation
Strategies formulated need to be implemented, Implementation of strategies is,
often more difficult than their formulation. A though implementation is the logical
step to formulation, the two differ in the following ways:
Implementing strategies requires such actions as altering sales territories, adding

new departments, closing facilities, hiring new employees, changing an
organisations pricing strategies, developing financial budgets, formulating new
employee benefits, establishing cost-control procedures, changing advertising
strategies, building new facilities, training new facilities, transferring managers
among divisions, and building a better computer information system.
Strategic HRM
Strategy Evaluation
The strategic management process result in decisions that can have significant
and long-lasting consequences. Erroneous strategic decision can inflict severe
penalties and can be exceedingly difficult, if not impossible, to reverse.
Strategy evaluation, therefore, assumes greater relevance. Strategy evaluation
helps determine the extent to which the companys strategies are successful in
attaining its objectives.
Basic activities involved in strategy evaluation are:
Establishing performance targets, standards and tolerance limits for the
objectives. Strategies and implementation plans.
Measuring the performance in relation to the targets at a given time. If
outcomes are outside the limits, inform managers to take action.
Analyse deviations from acceptable tolerance limits.
Execute modifications where necessary and are feasible.
Strategic HRM
TRAINING AND DEVELOPMENT

EMPLOYEE TRAINING
Training is concerned with imparting specific skills for particular purposes.
The term Development refers to the nature and direction of change induced among
employees through the process of training and education.
Training benefits an organisation in the following ways:
1. Trained employees make better and economic use of materials and equipments. Thus
Maintenance cost is reduced and the life of machines and equipments is increased.
2. It helps to improve the job satisfaction and morale of employees, resulting in
improvements in their earnings, job security and career prospects.
3. It helps to reduce the time & cost required to gain acceptable level of performance.
4. It facilitates delegation and decentralisation of authority. Trained employees are
willing to accept new and challenging assignments.
5. It helps to improve the quantity & quality of employees and their performances.
6. It helps to reduce the need for constant and close supervision of workers.
7. It enables the organisation to fill manpower needs; promising employees can be
spotted and trained for higher level jobs.
8. Trained employees reduce the frequency of mistakes and also accidents are reduced.
Purposes of Training
Newly recruited employees require training so as to perform their tasks
effectively. Instruction, guidance, coaching help them to handle jobs
competently, without any wastage.
Training is necessary to prepare existing employees for higher-level jobs
(promotion).
Existing employees require refresher training so as to keep abreast of the
latest developments in job operations.
Training is necessary when a person moves from one job to another
(transfer). After training, the employee can change jobs quickly, improve his
performance levels and achieve career goals comfortably.
Training is necessary to make employees mobile and versatile. They can be
placed on various jobs depending on organisational needs.
Training is needed to bridge the gap between what the employee has and
what the job demands. It make employees more productive in long-run.
Difference between Training and Development

Learning
Training
Development
Dimension
Meant for
Operatives
Executives
Focus
Current Job
Scope
Individual employee
Goal
Fix current skill

deficit
Management
Initiated by
Content
Specific job related

information
Time- Frame immediate
Current and future

jobs
Work group or
organisation
Prepare for future
work demands
The Individual
General Knowledge
Long Term
Methods of Training
1. On the Job Training: On the job training is considered to be the most effective and
the oldest method of training the operating personnel. Under this method, the
worker is trained by his immediate supervisor or by an experienced employee in
real work situation. The trainee is explained the method of handling tools, operating
the machines etc.
Advantages of On-the-job training
1. Trainee learns in the actual job environment so that he is strongly motivated to learn.
2. No adjustment is needed after the training as it is not located in artificial situations.
3. Employees are trained in accordance with the job requirements. So it is realistic.
4. The training is cheaper &convenient. No separate equipment & space is required.
5. This method is used to train industrial employees as well as sales personnel.
Limitations of On-the-Job training
1. Training involves some interference in the normal work routine. At the same
time the pressure of work makes concentration on learning difficult.
2. Trainees may cause damage to machinery & equipment.
3. The effectiveness of training is dependent on the competence of supervisor.
4. This method of training is very much time consuming.
5. There is a tendency to ignore theory and concentrated only on practical part.
6. This method is not fit for training large number of employees at the same time.
Other methods of On the job Training

1. Apprenticeship Training usually combine on the job training and class room
instruction in particular subjects. The trainees serve as apprentices under the direct
supervision of experts for a long period and some stipend is paid to them during the
training period. Trainees are imparted knowledge and skill in doing a particular
craft or series of related jobs. This is one of the oldest methods of training.
In India, specified industries are required under the apprenticeship Act 1962 to train a
certain number of apprentices in designated trades.
Advantages of apprenticeship training to the trainees
1. Trainees receive stipend in the course of training.
2. They also acquire valuable skills which carry a high price in the labour market.
3. They can be absorbed in the firm.
4. Apprenticeship programmes serve as a source of skilled labour for the employer.
5. Apprenticeship training is intense and provides sufficient knowledge and skill.
6. It is also popular for training technical and skilled personnel in crafts like machinists,
fitters, carpenters, electricians, welders, etc.
Drawbacks of apprenticeship training
1. It is an expensive and time consuming method of training.
2. There is no guarantee that the apprentice will continue to work in the same Org.
3. If the apprentices do not get employment after training, there is wastage of skill.
4. Compulsory apprenticeship schemes involve additional burden on industry.
2. Classroom Training: Under this method, theoretical instructions are provided to the
trainees through the joint efforts of employers and educational institutions.
Employers send their employees for training to the technical or vocational training
institutes. Special courses are designed to fill the needs of the organisation and
lecture method is used for instruction. Lectures may be supplemented by group
discussions, seminars, demonstrations, films. etc. The purpose is to bring about the
balance between theoretical and practical knowledge.
The main purpose of the special course is to provide advanced knowledge in specific
areas for the effective performance of the job. Classroom training is suitable where
concepts, problem solving ability and attitudes are to be learnt or where depth in
knowledge is required. This method is also known as 'internship training'.
3. Job Rotation: This kind of training involves shifting the trainee from one
department to another or from one job to another. This enables the trainee to gain a
broader understanding of all parts of the business and how the organisation as a
whole functions. The trainee gets fully involved in the departments operations and
also gets a chance to test her own aptitude and ability. Job rotation allows trainees
to interact with other employees facilitating future cooperation among departments.
When employees are trained by this method, the organisation finds it easier at the
time of promotions, replacements or transfers.
Off The Job Methods

1. Vestibule Training: Under this method, employees are trained in a special training
centre within the plant. In the vestibule training, an attempt is made to duplicate the
actual conditions of the work place as nearly as possible. The training is provided
by qualified instructors under carefully planned and controlled learning conditions.
The emphasis is on learning rather than on production.
Advantages of Vestibule training
1. The trainees are free from pressure of the work and can concentrate fully on
learning.
2. It is less time consuming due to better concentration by trainees & specialist trainers.
3. Thorough and uniform training is possible as the learning conditions are carefully
controlled. It is possible to teach the best and standardised methods for a job.
4. There is little danger of the costly machines being damaged or mishandled.
5. Vestibule training is suitable when a large number of people are to be trained at the
same time and for the same kind of work.
Disadvantages of Vestibule training
1. Vestibule training is expensive as it involves duplication of materials, equipment and
conditions of the work place. Expert trainers are employed at the high
remuneration. Also Workers do not contribute to production during the training
period.
2. The artificial training atmosphere may create the adjustment problems for the
Off The Job Methods

2. Class Room Lectures/Conferences: This approach is well adapted to conveying specific
information rules, procedures or methods. The use of audio-visuals or demonstrations can
often make a formal classroom presentation more interesting while increasing retention and
offering a vehicle for clarifying more difficult points.
3.
Films: They can provide information and explicitly demonstrate skills that are not easily
represented by the other techniques. Used in conjunction with conference discussions, it is a
very effective method in certain cases.
4. Case Study: Taken from actual experiences of organisations, cases represent attempts to
describe, as accurately as possible real problems that managers have faced. Trainees study
the cases to determine problems, analyse causes, develop alternative solutions, select what
they believe to be the best solution, and implement it.
5.
Computer Modelling: It simulates the work environment by programming a

computer to imitate some of the realities of the job and allows learning to take place
without the risk or high costs that would be incurred.
6.
Programmed Instruction: This method incorporates a prearranged and proposed

acquisition of some specific skills or general knowledge. Information is broken into
meaningful units and these units are arranged in a proper way to form a logical and
sequential learning package i.e. from simple to complex. The trainee goes through these units
by answering questions or filling the blanks.
Types of Employees' Training

(a) Induction or Orientation Training seeks to adjust newly appointed employees to
the work environment. New employee needs to be made fully familiar with his job,
his superiors and subordinates and with the rules and regulations of the
organisation.
(b) Safety Training is provided to minimise accidents and damage to machinery It
involves instructions in the use of safety devices and in safety consciousness.
(c) Refresher Training: When existing techniques become obsolete employees have to
be trained for new methods and techniques. With the passage of time employees
may forget some of the methods of doing work. Refresher training is designed to
revive and refresh the knowledge and to update the skills of the existing employees.
(d) Job Training refers to the training provided with a view to increase the knowledge
and skill of an employee for improving performance on the job. Employees may be
taught the correct methods of handling equipment and machines used in a job. Such
training helps to reduce accidents, waste and inefficiency.
(e) Promotional Training involves training of existing employees to enable them to
perform higher level jobs. Employees with potential are selected and given training
before their promotion, so that they do not find it difficult to shoulder the higher
responsibilities of the new positions to which they are promoted.
(f) Remedial Training: Such training is designed to correct the mistakes and
PERFORMANCE APPRAISAL
Performance Appraisal (PA) refers to all those procedures that are used to evaluate the
personality, the performance, and the potential of its group members. Evaluation is
different from judgement - the former being concerned with performance, the latter
with person.
Informal performance appraisal is a continuous process of feeding back information to
the subordinates about how well they are doing their work in the organization. The
informal appraisal is conducted on a day-to-day basis. Informal appraisal quickly
encourages desirable performance and discourages undesirable performance.
On the other hand Formal performance appraisal occurs usually annually on a
formalized basis and involves appraisee and appraiser in finding answers certain
questions.
PERFORMANCE APPRAISAL
Objectives of Performance Appraisal
Performance appraisal has been used for basically three purposes:
i) Remedial purpose, ii) Maintenance purpose, and iii) Development of employees
Major objectives are:
1. Providing a basis for promotion / transfer / termination by identifying those
employees who deserve and can be used for career planning.
2. Enhancing employees effectiveness by identifying his strengths & weaknesses
and informing him what is expected from him. The feedback reinforces good
performance and discourages poor performance.
3.
Identifying employees training & development needs to prepare them for

meeting challenges in their current & future employment. It also helps in
designing training and development programmes.
4. Performance appraisal helps in creating a positive & healthy climate in the Org.
5. Interpersonal relationship between superior-subordinate can be improved.
6. Aiding wage administration: Performance appraisal can help in development of
scientific basis for reward allocation, wage fixation, raises, incentives, etc.
7. Performance appraisal provides a mechanism for communication between superior
& subordinates.
Benefits of Performance Appraisal

A. For the Appraisee
i. Better understanding of his role in the organization

ii. Clear understanding of his strengths and weaknesses.
iii. Increased motivation, job satisfaction, and self-esteem
iv. Opportunity to discuss work problems and how they can be over come
v. Opportunity to discuss any guidance, support or training needed.
vi. Improved working relationships with the superiors
B. For the Management
i. Identification of performers & non-performers and their development

ii. Opportunity to prepare employees for assuming higher responsibilities
iii. Opportunity to improve communication between the employees and Mngt.
iv. Identification of training and development needs
v. Generation of ideas for improvements
C. For the organization
i. Improved performance throughout the organization

ii. Creation of a culture of continuous improvement and success
iii. Conveyance of message that people are valued
Process of Performance Appraisal

Performance appraisal comprises the following steps:
1. Select performance factors to be evaluated and set the standards to be achieved
2. Set the performance review period
3. Measure actual performance
4. Compare performance with set standards and rate it with a suitable scale
5. Communicate the rating to the appraisee
6. Use the performance appraisal for the desired purpose
Pitfalls in Performance Appraisal

1. Shifting Standards: Appraisal should be based on uniform & fair standards. Ex last
year, quality was the criteria for performance evaluation but this year on the basis of
quantity.
2. Different Raters Patterns: Managers differ in rating style-some rate harshly
whereas others are quite lenient.
3. Central Tendency: Many raters may prefer an easier path of rating most people as
average instead of outstanding or poor
4. First impression: Some raters may form an overall impression based on some
specific qualities of the ratee in the first meeting itself and carry it forward.
5. Latest Behaviour: At times, the appraisal is influenced by the most recent
behaviour, ignoring the most commonly engendered behaviour during the entire
period.
6. Halo Effect: Some raters have a tendency to rate high/low on all performance
measures based on one of their characteristics. For example, an average work
performer is very good in cricket and plays Ranji trophy may be given high overall
rating. One who does not shave regularly may be assessed, as lazy.
7. Horn Effect: Some bosses compare performance of their subordinates with what
they did. This is not correct because the performance also depends upon the
situation. Salesman now operates in a buyers market as against the sellers
Methods of Performance Appraisal

A. Traditional Methods
i) Rating by superiors: In this system, supervisors appraise the performance of
subordinates without involving the latter. This method is most commonly used in
government organizations. However, it suffers from the prejudiced approach and
the ability of the superiors. The validity of the system can be improved by basing it
on performance.
ii) Ranking Method: It is the oldest and simplest method of performance appraisal in
which one employee is compared with all others for the purpose of placing them in
a simple rank order of worth. The employees are ranked from the highest to the
lowest or from the best to the worst.
The greatest limitations of this method are:
It does not tell that how much better or worse one is than another.
The task of ranking individuals becomes difficult when there are large number
of employees to be rated.
It is very difficult to compare one individual with others having varying
behaviour traits.

iii) Paired Comparison Method: In this method each employee is compared with the
other employees on one-to-one basis, usually based on one trait only. The rater is
provided with a bunch of slips each containing a pair of names, the rater puts a tick
mark against the employee whom he considers the better of the two. The number
of times the employee is compared as better with others determines his or final
ranking. The number of possible pairs for a given number of employees is
ascertained by the formula:
N*(N-1)/2 Where N is the total number of employees to be evaluated.
iv) Forced Distribution Method: This method assumes that employees performance
level confirms to a normal statistical distribution i.e. 10, 20, 40, 20 and 10 percent.
This is useful for rating a large number of employees, It tends to reduce bias
problem. The major drawback of this method is that if all the distribution grades
improve similarly, no single grade would rise in the ratings.
v) Graphic rating Scales Method: It is one of the most popular and simplest
technique for appraising performance. It is also known as linear rating scale. It
uses a printed appraisal form, which list traits like quality and reliability etc., and
range of job performance characteristics for each trait. The rating is done on the
basis of five point scale and finally gets totaled. This method is good for measuring
various job behaviours of an employee.

vi) Critical Incident Method: In this method, the rater focuses his or her attention on
those key or critical behaviours that makes the difference between performing a
job in an effective manner. There a re three steps involved in appraising
employees:
A list of good or bad on-the-job behaviour of specific incidents is prepared.
A group of experts then assigns a weightage or score to these incidents.
Finally a check list indicating incidents that describes workers as good or bad is
constructed.
Then the checklist is then given to the rater for evaluating the workers.
The basic idea behind this rating is to apprise the workers who can perform their jobs
effectively in critical situations. The strength of critical incident method is that it
focuses on the behaviour and then judge the performance rather than personalities.
vii) Field Review Technique: In this technique, the appraiser goes to the field (e.g.
shop floor) and obtains the information about work performance of the employee
by way of questioning the said individual, his peer group, and his superiors. The
information received about how he is performing helps the appraiser in defining
the profile of the employee.
viii) Rating by self and the Peer Group: Here the appraisal is done independently at
three levels (tiers) employee, peer group, and the superior. HR department
B. Modern Methods of Performance Appraisal

i) Management by Objective (MBO): (Peter F. Drucker) It is actually a process in
which all the superior and subordinate of an organisation jointly identify its
common goals, define each individuals major areas of responsibility being
expected from him and use these measures as guide for operating the unit and
assessing the contributions of each individual in the organisation.
It requires the manager to get specific measurable goals with each employee and then
periodically discuss his or her progress towards these goals. It is a method by
which managers and subordinates plan, organize, communicate, control and debate
over the performance. MBO programme consists of four main steps:
a) Goal Setting: Here superior and subordinate jointly establish goals, which each
individual is to attain.
b) Performance Standards: Standards are set for the employees as per the previously
arranged time period. When the employees starts performing their jobs, they came
to know what is to be done, what has been done, and what remains to be done.
c) Comparison: In the third step, actual levels of goals attained are compared with the
goals agreed upon. This enables the evaluator to find out the reasons for variation
between the actual and standard performance of the employees.
B.
Modern Methods of Performance Appraisal
d) Periodic Review: Finally corrective measure is initiated when actual performance

deviates from the standards established. The purpose of this review is not to
degrade the performer, but to aid his/her future performance.
Limitations of MBO:
Setting of unclear & un-measurable objectives creates problem for both the
employee to perform and superior to evaluate the performances.
Time consuming: Activities like goal setting and measuring performances involved the
MBO programme requires a greater time period to give realistic results.
Tug of War: Sometimes setting objectives with the subordinate turns into tug of war in
the sense that the superior pushes for higher quotas and the subordinates push in
lower quotas of performances.
Lack of Trust: MBO is likely to be ineffective in an environment where management
has little trust in its employees.
ii)
Behaviourally Anchored Rating Scales (BARS):
The problem of judgmental performance evaluation led to the objective evaluation by

developing a technique called Behaviourally Anchored Rating Scales (BARS) by
some organisations.
BARS are descriptions of various degrees of behaviour with regards to a specific
performance dimension say knowledge and judgement. It combines the benefits
of narratives, critical incidents, and quantified ratings by anchoring a quantified
scale with specific behavioural examples of extremely good, good, slightly good or
poor or extremely poor performance.
Steps involved in developing a BARS are:
- Generating Critical Incidents.
- Developing Performance Dimensions.
- Reallocating Incidents.
- Scaling Incidents.
- Developing Final BARS Instruement.
It offers better and more equitable appraisals than the other techniques. This method
provides advantages like more accurate gauge, clear standards, better feedback and
consistency in evaluation.
iii) 360o Performance Appraisal:

This method was first developed by General Electric Company of USA in 1992. This is
a new concept in performance appraisal, where the feedback is collected from all
around-the employee, the superior, the subordinates, the peer group, the clients and
the customers. Thus an employee is appraised by superior, subordinates, peers,
clients and customers, with whom he interacts in the course of his job
performance.
The evaluation is very comprehensive in terms of the employees skills, abilities, styles,
and job-related competencies and is done by computerized software systems,
which prepares individual reports. These reports are then presented to the
employee being rated. They then meet the some or any of the appraiser and share
information they feel as important and useful in developing a self improvement
plan.
This system has the following advantages:
i. Higher validity and reliability of the evaluation
ii. Self evaluation by the employees gets compared with the perception of others
iii. Helps in maximizing employee potential in the face of challenges.
This method is more useful for training and development requirements, rather than for
pay increase.
In India, companies like Reliance Industries, Wipro Corporation, Infosys Technologies,
JOB EVALUATION
Job evaluation is the process of analysing and assessing the various jobs
systematically to ascertain their relative worth in an organisation. Jobs are
evaluated on the basis of their content and are placed in the order of their
importance. In this way, a job hierarchy is established in the organisation, the
purpose being fixation of satisfactory wage differentials among various jobs.
In job evaluation programme, the jobs are ranked and not the job holders. Job
holders are rated through performance appraisal
Job Evaluation
1. The job is rated on factors like

responsibility, qualification, experience,
working conditions, etc. required for
performance of the job
Perfornmance Appraisal
Employee is rated on the basis of

this or her performance.
Evaluation takes place after the

employee has been hired and
placed on a job.
Purpose is to effect promotions,
3. The purpose is to establish satisfactory reward, award punishments,
wage differentials.
assess training needs, resort to
layoffs, transfers, etc.
4. It is not compulsory. Many
Compulsory. It is done regularly for
organisations carry on without it. It is
all jobs.
mainly for lower level jobs.
2. A job is rated before the employee is
appointed.
JOB EVALUATION PROCESS

The job evaluation process starts with defining objectives of evaluation and ends
with establishing wage and salary differentials.
The main objective of job evaluation, as was stated earlier, is to establish
satisfactory wage and salary differentials.
A job evaluation programme involves answering several questions. The major
ones are:
Objectives of
Job
Evaluation
Job Analysis
Job
Description
Job
Specification
Job
evaluation
Programme
Wage Survey
Employee
Classification
JOB EVALUATION PROCESS

A Job- evaluation programme involves answering several
questions. The major one are:
1. Which jobs are to be evaluated ?
2. Who should evaluate the jobs?
3. What training do the evaluators need?
4. How much time is involved ?
5. What should be the criteria for evaluation?
6. What methods of evaluation are to be employed?
Which jobs are to be evaluated ?

In any exercise, where there are more than 30 or 40 jobs to be evaluated, it is
necessary to identify and select a sample of benchmark jobs which can be used for
comparisons inside and outside the organisations. The each of the principal
occupations.
The size of the sample depends on the number of different jobs to be covered.
The higher the proportion the better the evaluation, bearing in mind the time
required to analyse jobs
Staffing the Evaluation process

Job evaluation is done by a committee which consists of heads of various
departments, representatives of employee unions and specialist will be normally
the chairman of the committee.
Responsibility for the overall co-ordination of the job-evaluation programme
should be in the hands of a senior executive who can then report its progress to the
board, and advise it on ensuring wage and salary development.
Training for the Committee

Members of the job-evaluation committee should be trained in its procedure so as
to make the programme successful. Training is given through series of meetings in
which the following issues are generally discussed and the doubts cleared.
1.
What is job evaluation?
2.
Why does this company need?
3.
How will it work?
4.
How does it affect promotion policy?
5.
How will the systems be kept up-to-date?
6.
Does job evaluation mean that employees in the same grade gets the same rate of
pay?
7.
How does the system cater to additional or alterations in jobs?
8.
What happens if an individual disagrees with his grading?
9.
How quickly will appeals on grading be dealt with?
10. How will the company go about grading new jobs in case of change or expansion?
Time factor
Job evaluation should not be conducted in haste. It may leads to complaint against
the grading of jobs. Eight jobs in a day can be the ideal pace. After this, the quality
of evaluation tends to drop, and more time has to be spent later in checking and
assessing the validity of the grading.
The final review of all the grades allocated should be done to check that no
inconsistencies have occurred, and enough time should be allowed for
re-evaluation, if necessary.
Job Evaluation Criteria

The heart of job evaluation is the determination of the criteria for evaluation.
Most job evaluations use responsibility, skill, effort and working conditions as
major criteria. Other criteria used are difficulty, time- span of discretion, size of
subordinate staff, and degree of creativity needed.
Methods of Job Evaluation-
Job
Evaluation
NonAnalytica
Analytical
l
Ranking
Point-Ranking
Method
Method
Factor Comparison
Job-grading
Analytical Methods
I. Point Ranking Method The system starts with the selection of job
factors, construction of degrees for each factor, and assignment of points to each
degree. Different factors are selected for different jobs, with accompanying
differences in degrees and points. The national electrical Manufacturers
Association (NEMA), USA, has given the factors, degrees and points for hourly
rated and salaried jobs
Advantages of point system are:
1. A Job is split into a number of factors. The worth of each job is determined on the
basis of its factors are not by considering the job as a whole.
2.
The procedure adopted is systematic and can easily be explained to the employees.
3.
The method is simple to understand and easy to administer.
Disadvantages of point system are:

1. Employees may disagree with the points and their factors allotted with their
degrees identified.
2.
Serious doubts are expressed about the range of points allotted and matching them
with the job grades.
For example, a score range of 238 to 249 is grade seven and the next range of 250
to 271 is grade six. A variation of one point makes all the difference.
Analytical Methods
II. Factor Comparison Method
Under this method, one begins with the selection of factors, usually mental
requirements, skill requirements, physical exertion, responsibility, and job
conditions. These factors are assumed to be constant for all the jobs.
Each factor is ranked individually with other jobs. For example, all the jobs
may be compared first by the factor mental requirements . Then the skill
factor, physical requirements, responsibility, and working conditions are
ranked.
Thus, a job may rank near the top in skills but low in physical requirements.
Then total point values are then assigned to each factor. The worth of a job is
then obtained by adding together all the point values.
An advantage of the factor-comparison method is that jobs of unlike naturefor example, manual, clerical and supervisory-may be evaluated with the same
set of factors. But the method is complicated and expensive
Non-analytical Methods
Ranking and job-classification methods come under this category because they
make no use of detailed job factors. Each job is treated as a whole in determining
its relative ranking.
I. Ranking Method
This is the simplest, the most inexpensive and the most expedient method of
evaluation. The evaluation committee assesses the worth of each job on the basis
its title or on its contents.
But the job is not broken down into elements or factors. Each job is compared with
others and its place is determined.
The method has several drawbacks:1.
Job evaluation may be subjective as the jobs are not broken into factors.
2.
It is hard to measure whole jobs.
II Job-grading Method
In the ranking method, the job-grading method (or job-classification method) does
not call for a detailed or quantitative analysis of job factors. It is based on the job
as a whole. The difference between the two is that in the ranking method, there is
no parameters for evaluation, while in the classification method, there are such
parameters in the form of job classes or grades.
Under the classification method, the number of grades are first decided upon, and
the factors corresponding to these grades are then determined. Facts about jobs are
collected and are matched with the grades which have been established.
The essential requirement of the job-grading method is to frame grade descriptions
to cover differences in degree of skill, responsibility and other job characteristics.
Job grades are arranged in the order of their importance in the form of a schedule.
The lowest grade may cover jobs requiring greater physical work under close
supervision but carrying little responsibility. Each succeeding grade reflects a
higher level of skill responsibility, with less supervision.
II Job-grading Method
Contd.
The advantages of the job- classification method

1. It is simple and inexpensive.
2. This method yields satisfactory results in organisations where number of jobs is
small.
The disadvantages of the method are:
(i) Job grade descriptions are vague are not quantified;
(ii) Difficulty in convincing employees about the inclusion of a job in a particular
grade because of vagueness of grade descriptions: and
(iii) more job classification schedules need to be prepared because the same
schedule cannot be used for all types of jobs.
Wage Survey
After establishing Job hierarchy with the help of evaluation method(s), it is
time to fix wage and salary differentials. Before fixing such differentials, the wage
rate must be ascertained.
The first step in a wage survey is to select key jobs, the duties of which are clearly
defined, reasonably stable, and representative of all levels of job.
Thus, a sample of jobs is created.
Secondly, a sample of firms in the labour- market area must be chose. The labour
market for different jobs can vary from local to regional to national in scope.
With both samples being selected, the final task is to obtain appropriate wage
information. Taking care to ensure that the job comparisons being made are valid.
Job content, the varying qualities of personnels on these jobs, and the total
compensation programme must be carefully analysed, compared, and equated.
Employee classification
The last phase in the job-evaluation process is to establish employee classification.
Employee classification is the process of assigning a job title to every employee in
the organisation. For definable jobs, employee classification is easy.
For example, cashier in a bank. The cashiers job is to handle cash and not to
maintain ledgers.
Where jobs involved are of a family type, employee classification is a difficult
task. Examples of job families are typists, clerk-cum-typists, stenographers and
secretarial group. A woman employed in an office may do typing, take dictation by
shorthand and transcribe it, answer the telephone, sort and distribute the mail,
compose routine letters for her boss and so on.
Will her designation be stenographer or secretary? The decision is of vital concern
both to the employee and the employer.
Employee classification
Criticisms against job evaluation
1. It encourages employees to focus on how to advance in position in the organisation
at a time when there may be only limited opportunities for enhancement as a result
of downsizing.
2. It promotes an internal focus instead of a customer-oriented focus.
3. It is not suitable for forward-looking organisation that has trimmed multiple job
titles into two or three broad jobs.
4. Elaborate exercises of wage and salary fixation through job evaluation can be
dispensed with. Salaries can easily be fixe by adopting going rates, which can
easily be ascertained through wage surveys.
COMPENSATION
Salary & Wage
Permanent employees who are engaged in Mental work and their work is not
measureable get salary against their work. Candidates who are engaged in physical
work/labour and their work can be measure in term of No of Hours or day & takes on
contractual basis or piece rate or per day basis or weekly basis get wages. Even lower
grade employees related to manufacturing company's also get wages.
Compensation is the amount that an employee receives in exchange for their
contribution to the organisation.
Compensation is divided into three types of rewards that are given for their
services.
Base pay
Pay refers to the base wage and salaries.
Variable pay-
Compensation form like bonuses, commissions profit sharing plans,

incentives.
Indirect-
Benefits- Insurance, medical recreational, retirement pensions,

gratuity, vocations pay etc.
OBJECTVES OF COMPENSATION
a. Equity:- The most important objective of any pay system is fairness or equity.
The term equity has three dimensions.
Internal equity: - This ensures that more difficult jobs are paid more.
External equity:- This ensures that jobs are fairly compensated in comparison to
similar jobs in the labour market.
Individual equity:-It ensures equal pay for equal work, i.e., each individuals pay
is fair in comparison to others doing the same/similar jobs.
b. Attract talent: Compensation needs to be high enough to attract talented people.
Since many firms compete to hire the services of competent people, the
salaries offered must be high enough to motivate them to apply.
c. Retain talent: If compensation levels fall below the expectations of employees or
are
not competitive, employees may quit frustration.
d. New and desired behavior: Pay should reward loyalty, commitment, experience,
risks taking inactive and other desired behaviours. Where the company fails to reward
such behaviours, employees may go in search of greener pastures outside.
OBJECTVES OF COMPENSATION
Contd.
e. Control costs: The cost of hiring people should not be too high. Effective
compensation management ensures that workers are neither overpaid nor underpaid.
f. Comply with legal rules: Compensation programmes must invariably satisfy
governmental rules regarding minimum wages, bonus, allowances, benefits, etc.
g. Ease of operation: The compensation management system should by easy to
understand and operate. Then only will it promote understanding regarding pay
related matters between employees, unions and managers.
Wages
In India, different Acts include different item under wages, though all the Acts include
basic wage and dearness allowance under the term wages. Under the Workmens
Compensation Act, 1923, wages for leave period, holiday pay, overtime pay, bonus,
attendance bonus, and good conduct bonus form part of wages.
Under the Payment of Wages Act, 1936, Section 2 (vi), any award of settlement and
production bonus, if paid, constitutes wages.
Under the Payment of wages Act, 1948, retrenchment compensation, payment in lieu of
notice and gratuity payable on discharge constitute wages.
Following types of remuneration, if paid, do not amount to wages under any of the Acts:
I.
Bonus or other payments
2.
Value of any house accommodation, supply of light, water, medical attendance

travelling allowance, or payment in lieu thereof or any other concession.
3.Any sum paid to defray for special expenses entailed by the nature of the
employment of a workman.
Any contribution to pension, provident fund, or a scheme of social security and social
insurance benefits.
Any other amenity or service excluded from the computation of wages by general or
special order of an appropriate governmental authority.
The term Allowances includes amounts paid in addition to wages over a period of time
including holiday pay, overtime pay, bonus, social security benefit, etc. the wage
structure in India may be examined broadly under the following heads:
Basic Wage
The basic wage in India corresponds with what has been recommended by the Fair
Wages Committee (1948) and the 15 Indian Labour Conference (1957). The various
awards by wage tribunals, wage boards, pay commission reports and job evaluations
also serve as guiding principles in determining basic wage. While deciding the basic
wage, the following criteria may be considered:
1.
Skill needs of the job;
2.
Experience needs;
3.
Difficulty of work: mental as well as physical;
4.
Training needed;
5.
Responsibilities involved;
6.
Hazardous nature of job.
Dearness Allowance (DA)

It is the allowance paid to employees in order to enable them to face the increasing
dearness of essential commodities. It se4rves as a cushion, a sort of insurance against
increase in price levels of commodities. Instead of increasing wages every time there is
a rise in price levels, DA is paid to neutralize the effects of inflation; when prices go
down, DA can always be reduced.
DA is linked in India to three factors: the index factor, the time factor and the point factor.
All India consumer price index(AICPI): The labour Bureau, Shimla, computes the AICPI (
Base 1960 = 100 points) from time to time.
Time factor: In this case DA is linked to the rise in the All India Consumer Price Index
(AICPI) in a related period, instead of linking it to fortnightly or monthly fluctuations in
index.
Point factor: Here DA rises in line with a rise in the number of index points above a
specific level.
Other allowances: The list of allowances granted by employers in India has been
expanding thanks to the increasing competition in the job market and the growing
awareness on the part of employees.
Wage Policy in India

Minimum Wage, Fair and Living Wage
Minimum wage: Minimum wage is that wage which must invariably be paid whether the
company, big or small, makes profits or not. It is the minimum amount that a worker can
expect to get for services rendered by him. The 15th Indian Labour Conference (1957)
formally quantified the term minimum wage as :
In calculating the minimum wage, the standard working class family should be taken to
comprise three consumption units for one earner, the earnings of women, children and
adolescents being disregarded;
Minimum food requirements should be calculated on the basis of a set intake of calories
as recommended for an average Indian adult of moderate activity;
Clothing requirements should be estimated on the basis of per capita consumption of 18
yards per annum which would give for the average workers family of four a total of 72
yards;
In respect of housing the rent corresponding to the minimum area provided for under
Government Industrial Hosing Scheme should be taken into consideration in fixing the
minimum wage;
Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per
cent of the total minimum wage.
Fair Wage : It is that wage which is above the minimum wage but below the living wage.
According to the Committee on Fair Wages, 1948, fair wage should be determined
taking the following factors into account;
The productivity of labour;
The prevailing rates of wages in the same or similar occupations in the same region or
neighboring regions;
The level of national income and its distribution;
The place of industry in the economy of the country; and
The employers capacity to pay.
Living wage : According to the Committee on Fair Wages, the living wage is the
highest among the three. It must provide
(i)basic amneties of life,
(ii)efficiency of worker and
(iii) satisfy social needs of workers such as medical, education, retirement, etc. Living
Wage is dynamic concept, which grows in line with the growth of the national economy.
State Regulation of Wages

The Government has adopted various methods to regulate wages in India such as
prescribing minimum rates of wages, regulating payment of wages, settlement of wage
related disputes through adjudication process, setting up of wage boards, etc.
Employer
Collective Bargaining
Legislation--------------------------------------------- Minimum Wages Act, 1948
Wage Boards
Payment of Wages Act, 1936
Pay Commissions
Adjudication Machinery
Payment of Bonus ACT, 1965
Minimum Wages Act, 1948
The Act prescribes minimum rates of wages for certain sweated and unorganized
sectors covered under the Act. The minimum wages can be fixed by hour, day, month or
any other longer period. The Act provides for setting up a tripartite body consisting of
employees, unions and the government, to advise and assist in fixing and revising
minimum wage rates.
The Payment of Wages Act, 1936

The main objective of the Act is to provide for regular payment of wages without any
unauthorized reductions to persons who are employed in any industrial establishment or
factory or railway or by a railway contractor whose monthly wages are less than Rs 1600.
The Act prescribes the following permissible deductions to be made from the employees
salary: fines, deductions for absence, deductions for
(i)loss of goods entrusted to worker,
(ii)house given by employer,
(iii)services provided by employer,
(iv)advances given to worker,
(v)tax payable by employer,
(vi)deductions under orders, cooperative society. PF, insurance premium, etc.
Adjudication of Wage Disputes
Collective bargaining is a procedure through which employee problems relating to
various issues including wages are settled through the process of joint consultation, in
an atmosphere of give and take, trust and mutual confidence. If these problems are not
settled through collective bargaining, they may be settled through voluntary arbitration or
adjudication. The awards given or reached by or through the arbitrator or adjudicator or
collective bargaining agreements form the basis for fixing wages in various
organisations.
Wage Boards
This is one of the important institutions set up by the Government of India for fixation and
revision of wages. Separate wage boards are set up for separate industries. Government
of India started instituting Wage Boards in accordance with the recommendations of
Second Five year Plan, which were reiterated by the Third Five-year Plan. Wage
Boards are not governed by any legislation but are appointed on an adhoc basis by the
Government.
The Wage Boards take the following factors into consideration for fixing or revising the
wages in various industries:
(i)Job evaluation,
(ii)Wage rates, for similar jobs in comparable industries,
(iii)Employees productivity,
(iv)Firms ability to pay,
(v)Various wage legislations,
(vi)Existing level of wage differentials and their desirability,
(vii)Governments objectives regarding social justice, social equality, economic justice
and economic equality,
(viii)Place of the industry in the economy and the society of the country and the region,
(ix)Need for incentives, improvement in productivity, etc.
The wage Boards fix and revise various components of wages like basic pay, dearness
allowance, incentive earnings, overtime pay, house rent allowance and all other
allowances.
Pay Commissions
Wages and allowances of Central and State government employee are determined
through the pay commissions appointed by the appropriate government.
Bonus
It secured the character of a legal right. Bonus is an extra payment to the workers
beyond the normal wage. Bonus is deferred wage payment which aims at bridging the
gap between the actual wage and the need based wage. It is also said that bonus is
share of the workers in the prosperity of an organisation.
The Payment of Bonus Act, 1965
The Act defines an employee who is covered by it as one earning Rs. 2500 p.m. (w.e.f.
1.4.93) basic plus dearness allowance and specifies the formula for calculating the
allocable surplus from which bonus is to be distributed. The minimum bonus to be paid
has been raised from 4 per cent to 8.33 per cent (w.e.f. 25.9.75) and is sought to be
linked to increased productivity in recent times.
INCENTIVE PAYMENTS
Meaning and Definition
Incentives are monetary benefits paid to workmen in recognition of their outstanding
performance. They are defined as variable rewards granted according to variations in
the achievement of specifics results. Unlike wages and salaries which are relatively
fixed, incentives generally vary from individual, and from period to period for the same
individual.
Importance
1. Motivation of workers for efficiency and greater output.
2. Earnings of employees would be enhanced due to incentives. It exceed two to three
times the rated wages or salaries.
3. There will be reduction in the total as well as unit cost of production, incentives are
given on greater number of units produced for given inputs.
4.
Production capacity is also likely to increase.
5. Reduced supervision, better utilization, reduced wastage & time , reduced

absenteeism and turnover.
PRE-REQUISITIES FOR AN EFFECTIVE INCENTIVE SYSTEM

1. The co-operation of workers in the implementation of an incentive scheme is
essential
In particular, workers co operation is necessary in:
(i)
The methods followed in measuring the output upon which payment is based;
(ii) The methods followed in setting wage rates for different classes of work; and
(iii)
Appropriate safeguards concerning earnings, job security and settlement of

disputes over piece-work rates and allotted time.
2. The scheme must be based on scientific work measurement. The standards set must
be realistic and must motivate workers to put in better performance.
3. Indirect workers, such as supervisors, foremen, charge hands, crane operators,
canteen staff, store keepers, and clerical staff should also be covered by
incentive schemes.
4. There should be management commitment to the cost and time necessary to
administer incentive schemes properly, and these must be carefully assessed
before embarking on an incentive programme.
5. There is greater need for planning. Many incentive schemes, started hurriedly,
planned carelessly, and implemented indifferently have failed and have failed
and have created more problems for the organisation than they have tried to
solve.
The other safeguards are:

(i)
The incentive scheme should be appropriate to the type of work carried out and
the workers employed.
(ii)
The reward should be clearly and closely linked to the efforts of the individual
or group.
(iii)
Individuals or groups should be able to calculate the reward they get at each of
the levels of output they are capable of achieving.
(iv)
The scheme should be properly installed and maintained.
(v)
Create incentives for performance and disincentives for non-performance.
TYPES OF INCENTIVE SCHEMES

Incentives schemes are of many types. The International Labour Organisation (ILO)
classifies all the schemes of payment by results into four categories. They are
1. Schemes where the workers earnings vary in the same proportion as output.
2. Schemes where earnings vary less proportionately than output.
3. Schemes where earnings vary proportionately more than output.
4. Schemes where earnings differ at different levels of output.
Incentive Schemes
A. Earnings
B. Earnings
C. Earnings
Earnings differ at
vary in the
vary less
vary
different levels of
same
proportionat
proportionatel
output
Taylors
proportion as
ely than
y more
Highthan
Piece Rate
Differential
output
output
output
Straight Piece
High
Piece
Rate
Merrick
Halsey
Plan
Work
Standard
Standard
Differential Piece
Rowan Plan
Hour
Hour
Rate
Gantt Task
Barth
System
Scheme
Bedaux
Emersons
Plan
Efficiency Plan
A. Earnings vary in the same proportion as output

1. Straight piece-work method is the simplest, oldest and the most commonly used
method. Here, the rate per unit of output is fixed, and the total earnings of a workers
are arrived at by multiplying the total output (measured in terms of units ) by the rate
per unit.
Obviously, earnings of the worker directly depend upon his or her performance. For
example, if the rate per unit is 10 Rs and the total output of an employee is 100 units,
his or her earnings will be 100 x10 = Rs 1000.
2. In the standard hour system (also called 100 per cent gains-sharing), standard
time in terms of hours is fixed for completion of a job. The rate per hour is then
determined. A worker is paid for standard time at his or her time-rate is if he or she
completes the job in the standard time, unless he or she is guaranteed time wages. If
time wages are guaranteed, he or she gets paid on the basis of the time taken
multiplied by the time-rate.
3. Under the Halsey system, standard time is fixed for the completion of a job and the
rate per hour is then determined. If the worker takes the standard time or more to
complete the job, he or she gets paid at the time rate. In other words, time wages are
guaranteed even if the output of the worker is below standard. Where the work is
done in less than the standard time, he or she gets paid for the actual time, at the
time-rate plus a bonus which is calculated at a specified percentage of the saved
time. The percentage varies from 30-70 per cent. The usual share is 50 per cent, the
remaining going to the employer.
4. Under the Rowan System too, standard time and rate per hour are fixed. If the time
taken to complete the job is equal to or exceeds the standard time, the employee is
paid for the time taken at rate per hour. If the time taken is less than the standard
time, the employee is entitled to bonus, in addition to the time wages. The bonus
takes the form of a percentage of the workers time-rate. This percentage is equal to
the proportion of the saved time, to the standard time.
5. The Barth Variable Sharing system does not guarantee the time-rate. The workers
pay is ascertained by multiplying the standard hour by the number of hours actually
taken to do the job, taking the square root of the product and multiplying it by the
workers hourly rate.
6.
Under the Bedaux scheme, the standard time for a job is determined. Each minute
of the allowed time is called a point or B.Thus, there are 60 Bs in one hour. Each job
has standard number of Bs. The rate per hour is also determined. The worker
receives, in addition to his or her hourly rate, a bonus which under the original plan
is
equal to 75 per cent of the number of points earned, in excess of 60 per hour,
multiplied by one-sixtieth of the workers hourly rate. If a worker does not reach his
or
her standard, he or she is paid at he time-rate.
Earnings Varying Proportionately More than Output- (i) the high piece rate and (ii)
the high standard hour system, the earnings of the worker are in proportion to his or her
output, as in straight piece-work, but the increment in earnings for each unit of output
above the standard is greater, for example, for each one per cent increase in output
above the standard, there may be a 4/3 times increase in earnings as compared to one
per cent increase in earnings under the straight piece-rate system. The higher rates start
applying after the standards have been reached.
The main feature of these two schemes is that since direct labour costs per increase for
levels of output above the standard, the worker also shares the earnings in overhead
costs which result from an increased output. The amount of this share depends on the
size of the increments in earnings which are payable at different levels of output.
Taylors Differential Piece-Rate system (developed of F.W.Taylor in 1880) there is a

low rate for output below the standard, and a higher piece-rate for output above the
standard with a large bonus of 50 per cent of the time-rate when the standard output is
attained.
To illustrate the Taylors piece rate system, we take the following:
Standard output
= 100 units
Rate per unit
= 10 paise
Differentials to be applied:
120 per cent of piece-rate at or above the standard
80 per cent of piece-rate when below the standard
Case (i)
Output
Earnings
= 120 units
= 120 x 120/10 x 0.10 = Rs 14.40
Case (ii)
Output
Earnings
= 90 units
= 90 x 80/100 x .10 = Rs 7.20
The Merrick Differential Piece-Rate system is modification of the Taylor system, with
three instead of two rates. One large step is broken into two, so as to encourage new
and average workers. Straight piece-rates are paid upto 83 per cent of the standard
output, at which a bonus of 10 per cent of the time-rate is payable, with a further 10 per
cent bonus on reaching the standard output. For output above the standard, high piecerates are paid.
The Merrick System can be illustrated as follows:
Standard output = 100 units
Piece-rate
= 10 paise
Case (i)
Output
= 80 units
Efficiency
= 80/100 x 100 = 80%
Earnings:
As the efficiency is less than 83 per cent, only the base piece-rate applies:
80 x 0.10
= Rs 8.00
Case (ii)
Output
= 90 units
Efficiency
= 90/100 x 100 = 90%
Earnings:
As the efficiency is more than 83 per cent but less than 100 per cent, 110 per cent of the
base rate applies:
90x110/100 x 0.10 = Rs 9.90
Under the Gantt Task system the worker is guaranteed his or her time rate for output
below the standard. On reaching the standard output or task, which is set at a high level,
the worker is entitled to a bonus of 20 per cent of the time wages. For outputs above the
task, high piece-rates are paid.
The Gantt Task System operates as follows:
Rate per hour
= Re 0.50
High piece-rate = Re 0.10
Standard output = 80 units
Time taken
= 8 hrs
Case (i)
Output
= 70 units
As the output is less than the standard only time wages are paid to the worker.
Earnings
= 8 x 0.50 = Rs 4.00
Case (ii)
Output
= 80 units
Earnings
As the output is equal to the standard, the worker is entitled to time wages plus 20 per
cent of time wages as bonus.
Time wages
Bonus
Total earnings
= 8 x 0.50 = Rs 4.00
= 20/100x4 = Re 0.80
= Rs 4.80
Under the Emersons Plan, a standard time is set for each job, and the efficiency of
each worker is determined by dividing the time taken by the standard time. Up to 67 per
cent of efficiency, the worker is paid by time- rate. Thereafter, a graduated bonus, which
amounts to a 20 per cent bonus at 100 per cent efficiency, is paid to the worker;
Thereafter, an additional bonus of 1 per cent is added for each additional 1 per cent
efficiency.
The following example illustrates the method:
Standard output in 10 hrs = 100 units.
Rate per hour
= Re 1.
Case (i)
Output in 10 hrs = 50 units
Earnings:
Efficiency
= 50 per cent
As the efficiency is below 67 per cent the worker is entitled to time wages only.
10 x 1
= Rs 10.00
Case (ii)
Output in 10 hrs = 100 units
Efficiency
= 100 per cent
The worker is entitled to time wages plus 20 per cent of time wages as bonus.
Time wages
= 10 x 1 = Rs 10.00
Bonus
= 20/100x10
= Rs 2.00
Earnings:
= Rs 12.00
Under the Accelerated Premium system, the earnings of workers increase with output,
the rate of increase itself rising progressively with the output. The worker receives a
strong incentive to increase his or her output in order to get increased earnings. But he
accelerated premium system are complicated and are difficult to understand and
implement.
FRINGE BENEFITS
The term Fringe benefits refers to the extra benefits provided to employees in addition
to the normal compensation paid in the form of wage or salary. These are now become
important components of a comprehensive compensation package offered by employers
to employees.
Main features
1. They are supplementary forms of compensation.
2. They are paid to all employees based on their membership in the organisation. (as
unlike incentives which are paid to specific employees whose work is above standard.)
3. They are indirect compensation because they are usually extended as a condition of
employment and are not directly related to performance.
4. They help in raising the living standard of employees.
5. They may be statutory or voluntary. Provident fund is statutory while transport is
voluntary.
FRINGE BENEFITS
Need for FRINGE BENEFITS
1. Employee demands more of these varied types of benefits rather than pay hike.
These benefits in reducing tax burden.
2. Trade Union demands more and newer varieties of these benefits. They always
demand one after another.
3. As a social security by providing safety measures, compensation in case of worker
accident, medical facilities etc.
4. Improving human relations by satisfying them economically, socially and
psychologically. Consumer stores, credit facilities, canteen, recreational facilities etc.
satisfy the workers social needs, whereas retirement benefits satisfy some of
psychological needs about the post retirement life. All these benefits minimize the
economic problems and thus satisfy economically.
5. Employees preference of fringe benefits than pay hike as these motivates
employees to give their best.
FRINGE BENEFITS
Types of Fringe Benefits
a) Payment for time not worked
i) Hours of work : As per factories Act 1948 Sec 51 no worker shall be required to work
more than 48 hours in a week. In some organisations number of working hours is less
than 48.
ii) Paid Holidays : Saturday, Sunday payment
iii) Shift Premium : Night shift allowance
iv) Holiday pay : Double payment when work on holidays
v) Paid vacation : Earned leaves benefit or payment in lieu.
FRINGE BENEFITS
b) Employee Security
i) Retrenchment compensation: Industrial Disputes Act 1947 provides that all
organisations employing 50 or more workers have to give one month notice or one
months wages to all the workers retrenched after one year continuous service. The
compensation is paid at the rate of 15 days wage for every completed year of service
with a maximum of 45 days wages in a year.
(Retrenchment refers to permanent termination of employees services due to economic
reasons such as surplus staff, poor demand for products, economic slowdown etc. but
termination of services on grounds of discipline, illness, retirement, winding up of
business does not constitute retrenchment.)
ii) Layoff compensation: In the case of layoff, employees are entitled to get 50% of
basic wage and dearness allowance for the layoff period except weekly holidays with a
maximum limit of 45 days in an year.
(Layoff refers to a temporary removal of an employee from the payroll of an organisation
due to reasons beyond control of an employer. Global competition, reduction in product
demand, changing technology that reduces the need of workers, and mergers &
acquisitions are the primary factors behind layoffs.)
FRINGE BENEFITS
c) Safety & health:
Safety measures includes fencing of machinery, work on or near machinery in motion,
working on dangerous machines, striking gear and devices for cutting off power,
prohibition of employment to women and children etc. Further it also includes
precautions for revolving machines, pressure plants, excessive weights, protection of
eyes, precaution against dangerous fumes, explosives & inflammable materials.
Health measures provided by Factories Act 1948 stipulates certain requirements like
cleanliness, waste disposal and effluents, ventilation and temperature, dust and fumes,
over-crowding, lighting, drinking water, toilets and urinals etc. It also includes protection
of employees against accidents, unhealthy working conditions and to protect workers
productive capacity.
d) Workmens Compensation: Provision for the payment of compensation in case of
death of employee due to employment injury or any other occupational disease under
Workmens Compensation Act 1923. Compensation depends upon the injury and
monthly wage of the employee. In case of death dependents are eligible for
compensation.
FRINGE BENEFITS
e) Health Benefits: Various medical services like hospital, clinical and dispensary
facilities are provided not only to employees but also to their family members.
Employees State Insurance Act, 1948 deals about various health benefits as:
i) Sickness Benefits: cash benefit for a max of 56 days in a year.
ii) Maternity Benefits: 12 weeks before delivery and 6 weeks after delivery in addition
to 75 paise per day or twice of sickness benefit whichever is higher.
iii) Disablement Benefits: cash benefits to partial or total (temporary or permanent)
disablement due to employment injury or occupational disease.
iv) Dependents benefits: in case of insured person dies as a result of employment
injury, dependents are entitled for periodical payments.
v) Medical Benefits: provided to insured employees and his family members in
following forms: Out patient treatment, doctors visit at home, treatment as in patient in
an hospital.
f) Welfare and recreational facilities: It includes canteen, consumer services, credit
societies, housing, legal aid, employee counseling, welfare organisations, holiday
homes, educational facilities, transportation, parties & picnics etc.
FRINGE BENEFITS
g) Retirement Benefits:
i) Provident Fund: Under Employees Provident Fund, Family pension Fund and
Deposit linked insurance Act 1952, both the employee and the employer contributes to
the fund payable after certain years of membership with interest.
ii) Pension: Government of India introduced a scheme of Employees Pension Scheme
for the purpose of providing family pension and life insurance benefits to the employees.
Later family pension Act was separately introduced in 1971. Both the employee and the
employer contributes to the fund.
iii) Deposit Linked Insurance: Under this scheme, if a member of the employee
provident fund dies while in service, his dependents will be paid an additional amount
equal to average balance during the last three years in his account, It is between
Rs1000 to Rs 10000.
iv) Gratuity: Under Payment of Gratuity Act 1972,
Amount paid equal to 15 days wage (average basic pay last drawn) for each completed
year of service. Not greater than 20 months wage.
At the time of retirement or superannuation or on his death or disablement
applicable to a person in employment of minimum of 5 years continuous service,
FRINGE BENEFITS
g) Retirement Benefits:
v) Superannuation benefits: benefits if not applicable to employees in higher cadres,
org pay certain amount irrespective of profit or loss and deposited in LIC in
superannuation scheme. It is paid in 3 parts after retirement 1 part as cash, 2 parts
annual interest of rest 2 part paid as pension monthly or annually till life. After death this
2 part will be provided to family dependents.
vi) Medical Benefits to retired employees till life.

MH

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Human Resource Management

Human resource management involves all management

Human resource management is concerned with people

Human Resource Management

Welfare aspect: It deals with working conditions and amenities such as

Industrial relations aspect: This covers union-management relations, joint

To communicate HR policies to all employees

7.To be ethically socially responsive to the needs of society through ensuring

According to Flippo, Personnel management is the planning, organizing,

According to Brech, Personnel Management is that part which is primarily

Nature of Personnel Management

Personnel management includes the function of employment, development

Personnel manager provides assistance to top management- The top

Personnel Management vs. Human Resource

Personnel Management vs. Human

HRM remains at the centre of

Management To Provide support and help in

The Concept of HRM has now

Provide support to staff

Evolution of the HRM &HRD

What is all about?

Evolution of the HRM &HRD

What is all about?

Growth of HRM in India

Growth of HRM in India

Growth of HRM in India

Human Resource Development

Human Resource Planning

Human resource planning is the process by which an organisation

Human Resource Planning

The major objectives of human resource planning in an

Benefits of Manpower Planning

Benefits of Manpower Planning

HUMAN RESOURCE PLANNING PROCESS

DIFFICULTIES IN HUMAN RESOURCE PLANNING

JOB SPECIFICATION: It is a written statement of qualifications, traits, physical

A statement containing items like:

Qualifications to do the job:

5. Machines equipment tools

6. Materials and forms used

RECRUITMENT AND SELECTION

It can be defined as the process of identifying the sources for prospective

The employer can better evaluate those presently employed than

2. Person already in employment of the company is fully aware of and

(i) By Advertising :Advantage of advertising is that more information about the

The interview schedule should be definite and known to both interviewers

Interview should be conducted by the competent, trained and experienced

The interviewers should be supplied with specific guidelines for

4. The interviewers should ensure an element of privacy for the interviewee.

Candidates resume should be provided to the interviewers before the start

The interviewers should show their sensitivity to the interviewees

(a) Internal growth

(b) Horizontal integration

(h) Strategic alliances

Implementing strategies requires such actions as altering sales territories, adding

TRAINING AND DEVELOPMENT

Difference between Training and Development

Fix current skill

Specific job related

Current and future

Other methods of On the job Training

Off The Job Methods

Off The Job Methods