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HRM IN INSURANCE INTRODUCTION
Competitive advantage of a company can be generated from human resources
(HR) and company performance is influenced by a set of effective HRM practices. In
this study, we intended to assess the HR practices in insurance companies. Every
organization is composed of people and utilizing their services, developing their skills,
motivating them to enhance their levels of performance and ensuring that they remain
committed to the organization are essential for the accomplishment of organizational
objectives. This is true for all types of organizations - government, business,
education, health, recreation or social action. Organizations that can do this will be
both effective as well as efficient. Inefficient or ineffective organizations face the
danger of stagnating or going out of business. The emphasis on proper and effective
human resource management has increased in the recent times. It has come to be
identified as an important factor in the successful management of an organization.
With the growing importance of knowledge workers to organizations and the rising
expectations of employees, it is essential to have a good human resource management
system in place.
Human Resource Management (HRM) consists essentially of four functions
acquiring, developing, motivating and retaining human resources. The acquisition
function starts with planning for the number and categories of employees required, and
end with staffing. The development function has three dimensions employee
training, management development, and career development. The motivation function
includes identifying the individual motivational needs of employees and finding ways
to motivate them. The retention function is concerned with providing a
work environment conducive to the employees and nurturing them to make them feel
committed and attached to the organization. Human resources are the most valuable
and unique assets of an organization. The successful management of an organization's
human resources is an exciting, dynamic and challenging task, especially at a time
when the world has become a global village and economies are in a state of flux. The
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scarcity of talented resources and the growing expectations of the modern day
worker have further increased the complexity of the human resource function. Even
though specific human resource functions/activities are the responsibility of the human
resource department, the actual management of human resources is the responsibility
of all the managers in an organization. It is therefore necessary for all managers to
understand and give due importance to the different human resource policies and
activities in the organization.
Human Resource Management outlines the importance of HRM and its
different functions in an organization. It examines the various HR processes that are
concerned with attracting, managing, motivating and developing employees for the
benefit of the organization. The insurance sector employers are indulging into
aggressive recruitments. With around 15million new policies being sold every year,
the insurance sector is picking up fast in India. Due to its robust growth there is a need
of skilled professionals in the sector. The employers are looking forward to hire
freshers at junior levels as they are quite flexible and ready to work as part time
employees as well. Apart from hiring actuaries and underwriters, the industry isfocusing on hiring agents. These agents represent the front end of the customer chain
and are responsible for bringing in new business.
Under present market forces and strict competition, the insurance companies are
forced to be competitive. Contemporary companies must seek ways to become more
efficient, productive, flexible and innovative, under constant pressure to improve
results. The traditional ways of gaining competitive advantage have to be
supplemented with organizational capability i. e. the firms ability to manage people.
Organizational capability relates to hiring and retaining competent employees and
developing competencies through effective human resource management practices.
Indeed, developing a talented workforce is essential to sustainable competitive
advantage. High performance work practices provide a number of important sources of
enhanced organizational performance.
Human Resource Management
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Human resource management (HRM) is planning personnel needs; recruiting,
selecting, training, and developing capable employees; placing them in productive
work environments; and rewarding their performance. Thus, human resource
management refers to a set of programmes, functions and activities designed and
carried out to maximize both, employee as well as organizational effectiveness. It is
concerned with the people dimensions in the management. Since every organization is
made up of people, acquiring their services developing their skills motivating them to
higher levels of performance and ensuring that they continue to maintain
their commitment to the organization are essential to achieving organizational
objectives. This is true, regardless of the type of organization -government, business,
education, health, recreation or social actions.
Human resource is one of the natural resources of any country's economy. It is
the wealth of the country. In the context of banking, human resource is of greater
importance. The deployment of human resource through proper and efficient selection,
training and development, is called Human Resource Management. The success of any
organization largely depends on efficient human resource management, apart from
operations, marketing and sales, the HR department manages all the efficient people
working in operations and marketing divisions in any organization. Thus, HRM refers
to a set of programmes, functions and activities designed and carried out in order to
maximize both employees as well as organizational effectiveness.
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An organization is driven by human capital and the quality and effectiveness
of the organization is deter mined by the qual i ty of the peopl e that are
em pl oy ed . Th e res our ces of me n mo ne y material and machine are collected
and coordinated through people. Without people organization can not exist. Success
for most organizations depends on finding the employees with the skills to
successfully perform the tasks required to attain the companys strategic goals.
Management decisions and processes for dealing with employees are critical
to ensure that the organization gets and keeps the right staff. HRM may be
defined as a set of policies practices and programs designed to maximize
both personal and organizat ional goals and the process of binding people and
organizations together so that the objectives of the each are achieved.
Some definitions of HRM are as follows
HRM is the management function that is concerned with getting, training,
motivating and keeping competent employees.
HRM is a most advanced approach in the field of resource mgmt. talks about
optimal utilization of human capital. The approach is integrative and supportive.
Features/Characteristics/Nature of HRM
HRM involves management functions like planning, organizing, directing and
controlling.
It involves procurement, development, maintenance of human resource
It helps to achieve individual, organizational and social objectives
HRM is a mighty disciplinary subject. It includes the study of management
psychology communication, economics and sociology.
It involves team spirit and team work.
Evolution of HRM
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The evolution of HRM can be traced back to Kautilya Artha Shastra where
he recommends that government must take active interest in public and private
enterprise. He says that government must provide a proper procedure for regulating
employee and employee relation. The international institute of personnel management
and national institute of labour management were set up to look into problems faced
by workers to provide solutions to them. The Second World War created awareness
regarding workers rights and 1940s to 1960s saw the introduction of new technology
to help workers. The 1960s extended the scope of human resource beyond welfare.
Now it was a combination of welfare, industrial relation, administration together it was
called personnel management. With the second 5 year plan, heavy industries started
and professional management became important. In the 70s the focus was on
efficiency of labour wile in the 80s the focus was on new technology, making it
necessary for new rules and regulations. In the 90s the emphasis was on human values
and development of people and with liberalization and changing type of working
people became more and more important there by leading to HRM which is an
advancement of personnel management.
Objectives of HRM
1. Societal objective: To be socially responsible to the needs and challenges of
society while minimizing the negative impact of such demands upon the
organization. The failure of organizations to use their resources for society's
benefit may result in restrictions. For example, societies may pass laws that
limit human resource decisions.
2. Organizational objective: To recognize that HRM exists to contribute to
organizational effectiveness. HRM is not an end in itself; it is only a means to
assist the organization with its primary objectives. Simply stated, the department
exists to serve the restof the organization.
3. Functional objective: To maintain the department's contribution at a level
appropriate to the organizations needs. Resources are wasted when HRM is
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more or less sophisticated than the organization demands. A department's level
of service must be appropriate for the organization it serves.
4. Personal objective: To assist employees in achieving their personal goals, at
least insofar as these goals enhance the individual's contribution to the
organization. Personal objectives of employees must be met if workers are to be
maintained, retained and motivated. Otherwise, employee performance and
satisfaction may decline, and employees may leave the organization.
Scope/Functions of HRM in Insurance
1.Human Resources Planning: Human resource planning or HRP refers to a
process by which the company to identify the number of jobs vacant, whether the
company has excess staff or shortage of staff and to deal with this excess or
shortage.
2. Job Analysis Design: Another important area of HRM is job analysis. Job
analysis gives a detailed explanation about each and every job in the company.
Based on this job analysis the company prepares advertisements.
3. Recruitment and Selection: Based on information collected from job analysis
the company prepares advertisements and publishes them in the news papers. This
is recruitment. A number of applications are received after the advertisement is
published, interviews are conducted and the right employee is selected thus
recruitment and selection are yet another important area of HRM.
4. Orientation and Induction: Once the employees have been selected an
induction or orientation program is conducted. This is another important area of
HRM. The employees are informed about the background of the company, explain
about the organizational culture and values and work ethics and introduce to the
other employees.
5. Training and Development: Every employee goes under training program
which helps him to put up a better performance on the job. Training program is also
conducted for existing staff that have a lot of experience. This is called refresher
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training. Training and development is one area were the company spends a huge
amount.
6. Performance Appraisal: Once the employee has put in around 1 year of
service, performance appraisal is conducted that is the HR department checks the
performance of the employee. Based on these appraisal future promotions,
incentives, increments in salary are decided.
7. Compensation Planning and Remuneration: There are various rules
regarding compensation and other benefits. It is the job of the HR department to
look into remuneration and compensation planning.
8. Motivation, Welfare, Health and Safety: Motivation becomes important to
sustain the number of employees in the company. It is the job of the HR department
to look into the different methods of motivation. Apart from this certain health and
safety regulations have to be followed for the benefits of the employees. This is
also handled by the HR department.
9. Industrial Relations: Another important area of HRM is maintaining co-
ordinal relations with the union members. This will help the organization to preventstrikes lockouts and ensure smooth working in the company.
Human Resource Development
Human Resource Development is the part ofhuman resource management
that specifically deals with training and development of the employees in the
organization. Human resource development includes training a person after he or
she is first hired, providing opportunities to learn new skills, distributing resources
that are beneficial for theemployee's tasks, and any other developmental
activities. Human Resource Development (HRD) is the framework for helping
employees develops their personal and organizational skills, knowledge, and
abilities. Human Resource Development includes such opportunities as employee
training, employee career development, performance management and
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development, coaching, mentoring, succession planning, key employee
identification, tuitionassistance,andorganization development.
Definitions of HRD: According to Leonard Nadler, "Human resource development
is a series of organized activities, conducted within a specialized time and designed to
produce behaviouralchanges."
Difference between HRD and HRM
The human resource management is mainly maintenance oriented whereas
human resource development is development oriented.
Organization structure in case of human resources management is independent
whereas human resource development creates a structure, which is inter-dependent
and inter-related.
Human resource management mainly aims to improve the efficiency of the
employees whereas aims at the development of the employees as well as
organization as a whole.
Responsibility of human resource development is given to the personnel/human
resource management department and specifically to personnel manager whereas
responsibility of HRD is given to all managers at various levels of the organization.
HRM motivates the employees by giving them monetary incentives or rewards
whereas human resource development stresses on motivating people by satisfying
higher-order needs.
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CHAPTER 2
JOB ANALYSIS, JOB DESIGN AND JOB EVALUATION
Job Analysis
Process of job analysis
Methods
Importance/uses of job analysis
Job Design
Factors affecting job design
Techniques of job design
Job Evaluation
Job Evaluation Methods
JOB ANALYSIS
Job Analysis is a process to identify and determine in detail the particular job
duties and requirements and the relative importance of these duties for a given job. Job
Analysis is a process where judgments are made about data collected on a job.
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The Job; not the person: An important concept of Job Analysis is that the analysis is
conducted of the Job, not the person.
Process of job analysis
1. Planning and organizing of Programme: The first step is to plan and organize
the job analysis programme. A person is designated as in-charge of programme and
required authority and responsibility is assigned to him. Schedule of the
programme and budget estimation is prepared.
2. Obtaining current information: Current job design information is collected
and study of job description, job specification, process used, manuals and
organization flow charts is done by the analyst.
3. Conduct needs research: The analyst determines that which manager,
department requires the job analysis. Purpose of the job analysis is determined,
extent to which job analysis is to be done is decided and how the information will
be used concluded.
4. Establishing priorities: Identification and priorities of the jobs to be analyzed
should be established by the human resource department executives with help of
various executives of the related departments
5. Collecting Job Data: The next step is to collect the data related to the job
selected for the analysis as they are being performed in the organization at present.
6. Preparation of Job Description: Using job information obtained from job
analysis job descriptions is being prepared. It states the full information of job
including working conditions nature of job, processes used machines and materials
used.
7. Developing Job Specification: Job specifications are developed using
information given in job description. Job specification is statement regarding
human qualities that are required for a particular job. Such information is used to
select the person matching the requirements of the job.
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Methods
There are different methods used by organization to collect information and conduct
the job analysis. These methods are-
1. Personal observation: In this method the observer actually observes the
concerned worker. He makes a list of all the duties performed by the worker and
the qualities required to perform those duties based on the information collected,
job analysis is prepared.
2. Interview method: In this method an interview of the employee is conducted.
A group of experts conduct the interview. They ask questions about the job, skilled
levels, and difficulty levels. They question and cross question and collect
information and based on this information job analysis is prepared.
3. Critical incident method: In this method the employee is asked to write one or
more critical incident that has taken place on the job. The incident will give an idea
about the problem, how it was handled, qualities required and difficulty levels etc.
critical incident method gives an idea about the job and its importance.
4. Questioner method: In this method a questioner is provided to the employee
and they are asked to answer the questions in it. The questions may be multiple
choice questions or open ended questions. The questions decide how exactly the
job analysis will be done. The method is effective because people would think
twice before putting anything in writing.
5. Log records/Daily Diary: Companies can ask employees to maintain log
records or daily diary and job analysis can be done on the basis of information
collected from the record. A log record is a book in which employee records /writes
all the activities performed by him on the job. The records are extensive as well as
exhausted in nature and provide a fair idea about the duties and responsibilities in
any job. In this method worker actually does the work himself and idea of the skill
required, the difficulty level of the job, the efforts required can be known easily.
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6. HRD records: Records of every employee are maintained by HR department.
The record contain details about educational qualification, name of the job, number
of years of experience, duties handled, any mistakes committed in the past and
actions taken, number of promotions received, area of work, core competency
area, etc. based on these records job analysis can be done.
Importance/uses of job analysis
1. Organizational structure and design: Job analysis helps in preparing the
organization chart and the organizational structure. Classification of the jobs
relation of each job with one another and various positions and hierarchy of the
positions is determined.
2. Man power planning: Job analysis provides the qualitative aspect of the jobs in
the organization. It determines the demands of job in terms of duties to be
performed, qualification of person skills required in the employee. It is a tool which
is used for matching job with men.
3. Recruitment and selection: Job analysis helps to hire future human resource. It
helps to recruit and select the right kind of people for the jobs available in the
organisation. It provides information necessary to select the right person by its
immediate products i.e. job description and job specification.
4. Performance appraisal and training/development: Based on the job
requirements identification of the training needs of the persons can be done easily.
Training is given in those areas which will help to improve the performance on the
job. Training programme can be designed according to the need and can be made
effective.
5. Job evaluation: Job evaluation refers to studying in detail the job performance
by all individual. The difficulty levels, skills required and on that basis the salary is
fixed. Information regarding qualities required, skilled levels, difficulty levels are
obtained from job analysis and worth (price) of the job is determined.
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6. Promotions and transfer: When we give a promotion to an employee we need
to promote him on the basis of the skill and talent required for the future job.
Similarly when we transfer an employee to another branch the job must be very
similar to what he has done before. To take these decisions we collect information
from job analysis.
7. Career path planning / Employee counseling: Many companies have not
taken up career planning for their employees. This is done to prevent the employee
from leaving the company. Employees are informed about the limitations of jobs in
terms of development and are guided to take required steps for their future
development. Job analysis provides such information regarding the areas in which a
person requires modification for better career options.
8. Health and safety: Job analysis provides the risk factor related to particular job
and thus action required for the safety of the employees can be taken. Unsafe
operations can be eliminated or can be replaced by safe one or the safety
equipments can be installed.
9. Performance Appraisal: By comparing actual performance of the employeesto the standard established organization can decide the personnel activities like
promotion increments incentives or corrective actions to enhance job performance.
These standards are established using information provided by job analysis.
JOB DESIGN
Job design refers to the way that a set of tasks, or an entire job, is organized.
Job design helps to determine: what tasks are done, how the tasks are done, how many
tasks are done, and in what order the tasks are done. It takes into account all factors
Factors affecting job design
1. Organizational factors: Organizational factors to refer to factors inside the
organization which affect job design they are the following:
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a) Task characteristics: Task characteristics refer to features of the job that is
depending on the type of job and the duties involved in it the organization will decide,
how the job design must be done. Incase the company is not in a position to appoint
many people; a single job may have many duties and vice versa.
b) The process or flow of work in organization: There is a certain order in which
jobs are performed in the company. Incase the company wishes it could combine
similar job and give it to one person this can be done if all the jobs come one after the
other in a sequence.
c) Ergonomics: Ergonomics refers to matching the job with physical ability and
characteristics of the individual and in providing an office environment which will
help the person to complete the jobs faster and in a comfortable manner.
d) Work practices: Every organization has different work practices. Although the job
may be the same the method of doing the job differs from company to company. This
is called work practice and it affects job design.
2. Environmental factors: Environmental factors which affect job design are as
follows:
a) Employee availability and ability: Certain countries face the problem of lack of
skilled labour. They are not able to get employees with specific education levels for
jobs and have to depend on other countries due to this job design gets affected.
b) Social and cultural expectations: The social and cultural conditions of every
country is different so when an MNC appoints an Indian it has to take into account like
festivals, auspicious time, inauspicious time, etc. to suit the Indian conditions. This
applies to every country and therefore job design will change accordingly.
3. Behavioral factors: Design is affected by behavioral factors also.
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a) Feedback: Job design is normally prepared on the basis of job analysis and job
analysis requires employee feedback based on this employee feedback all other
activities take place. Many employees are however not interested in providing a true
feedback because of fear and insecurity. This in turn affects job deign.
b) Autonomy: Every worker desires a certain level of freedom to his job effectively.
This is called autonomy. Thus when we prepare a job design we must see to it that
certain amount of autonomy is provided to the worker so that he carries his job
effectively.
c) Variety: When the same job is repeated again and again it leads to burden and
monotony. This leads to lack of interest and carelessness on the job. Therefore, while
preparing job design certain amount of variety must be provided to keep the person
interested in the job.
Techniques of job design
1. Simplification of Job: In job simplification jobs are broken in to very small
parts as in assembly line operations and work can be done by
same individual repeatedly and it will increase productivity and proficiency
of individual. However it produces boredom and monotony in worked.
2. Job Rotation: Job rotation is the systematic and planned rotation of individuals
in pre-determinedjobs (other than their own) so they can gain additional
knowledge or skills. It is done quite abit for developing managers (because
they need to be familiar with operations overall) and also used with others who
want to advance to a new role or become more knowledgeable in their current
job role.
3. Job Enlargement: Job enlargement expands job horizontally. It increases job
scope; that is, it increases the number of different operations required in a job
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and the frequency with which the job cycle is repeated. By increasing
the number of tasks an individual performs, job enlargement, increases the job
scope, or job diversity. Instead of only sorting the incoming mail by department,
for instance, a mail sorters job could be enlarged to include physically
delivering the mail to the various departments or running outgoing letters
through thepostage meter.
4. Job Enrichment: Job enrichment is an approach to job design. The focus is to
increase the depth of thejob (by the amount of discretion and responsibility the
job holderhas). It is different fromjob enlargement In job enrichment,
additional tasks are not the focus for the goal, but an increase in tasks could be a
result of giving the job holder more authority, discretion, and responsibility for
decision making in their current role. It is the most effectively motivating tool
used by the organizations which enhances the decision making skills of the
managers and helps in their overall development.
JOB EVALUATION:
Job evaluation is the process of systematically determining a relative internal
value of a job in an organization. In all cases the idea is to evaluate the job, not the
person doing it. Job evaluation is the process of determining the worth of one job in
relation to that of the other jobs in a company so that a fair and equitable wage and
salary system can be established.
Job Evaluation Methods
1. Ranking Method:
Perhaps the simplest method of job evaluation is the ranking method. According to
this method, jobs are arranged from highest to lowest, in order of their value or merit
to the organization. Jobs also can be arranged according to the relative difficulty inperforming them. The jobs are examined as a whole rather than on the basis of
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important factors in the job; and the job at the top of the list has the highest value and
obviously the job at the bottom of the list will have the lowest value.
2. Classification Method:
According to this method, a predetermined number of job groups or job classes are
established and jobs are assigned to these classifications. This method places groups of
jobs into job classes or job grades. Separate classes may include office, clerical,
managerial, personnel, etc. The job classification method is less subjective when
compared to the earlier ranking method. The system is very easy to understand and
acceptable to almost all employees without hesitation. One strong point in favor of the
method is that it takes into account all the factors that a job comprises. This system can
be effectively used for a variety of jobs.
3. Factor Comparison Method:
A more systematic and scientific method of job evaluation is the factor comparison
method. Under this method, instead of ranking complete jobs, each job is ranked
according to a series of factors. These factors include mental effort, physical effort,
skill needed, supervisory responsibility, working conditions and other relevant factors.Pay will be assigned in this method by comparing the weights of the factors required
for each job, i.e., the present wages paid for key jobs may be divided among the
factors weighed by importance (the most important factor, for instance, mental effort,
receives the highest weight). In other words, wages are assigned to the job in
comparison to its ranking on each job factor.
4. Point method
This method is widely used currently. Here, jobs are expressed in terms of key factors.
Points are assigned to each factor after prioritizing each factor in the order of
importance. The points are summed up to determine the wage rate for the job. Jobs
with similar point totals are placed in similar pay grades.
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CHAPTER 3HUMAN RESOURCE PLANNING, RECRUITMENT,
SELECTION AND INDUCTIONHuman Resource Planning
Objectives of Human Resource Planning Process of Human Resource Planning Limitations of Human Resource Planning
RECRUITMENT Objectives of Recruitment SOURCES OF RECRUITMENT
SELECTION Process of Selection Types of Selection Test
I N D U C T I O N
Human Resource Planning
Human resource planning has traditionally been used by organizations to
ensure that the right person is in the right job at the right time. Human resource
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planning can be defined as the process by which management determines how the
organization should move from its current manpower position to its desired position.
Through planning, management strives to have the right number and the right kinds of
people, at the right places, at the right time, doing things which result in both the
organization and the individual receiving maximum long-run benefits.
Objectives of Human Resource Planning
The important objectives of manpower planning in an organization are
1. To recruit and retain the human resources of required quantity and quality.
2. To foresee the employee turnover and make the arrangements for minimizing
turnover and filling up of consequent vacancies
3. To meet the needs of the program of expansion, diversification etc.
4. To foresee the impact of technology on work, existing employees and future human
resources requirements.
5. To improve the standards skill, knowledge, ability, disciplines etc.
6. To assess the surplus or shortage of human resources and take measuresaccordingly.
7. To maintain congenial industrial relations by maintaining optimum level and
structure of human resources;
8. To minimize imbalances caused due to non-availability of human resources of right
kind, right number in right time and right place;
9. To make the best use of its human resources; and
10. To estimate the cost of human resources.
Process of Human Resource Planning
1. Analysing the Corporate Level Strategies: Human Resource Planning should start
with analysing corporate level strategies which include expansion, diversification,
mergers, acquisitions, reduction in operations, technology to be used, method of
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production etc. Therefore Human Resource Planning should begin with analysing the
corporate plans of the organisation before setting out on fulfilling its tasks.
2. Demand forecasting: Forecasting the overall human resource requirement in
accordance with the organisational plans is one of the key aspects of demand
forecasting. Forecasting of quality of human resources like skills, knowledge, values
and capabilities needed in addition to quantity of human resources is done through the
following methods: -a. Executive or Managerial Judgment,b. Statistical Techniques, c.
Work Study method, d. Delphi Technique
3. Analysing Human Resource Supply: Every organisation has two sources of
supply of Human Resources: Internal & External. Internally, human resources can be
obtained for certain posts through promotions and transfers. In order to judge the
internal supply of human resources in future human resource inventory or human
resource audit is necessary. Human resource inventory helps in determining and
evaluating the quantity of internal human resources available. Once the future internal
supply is estimated, supply of external human resources is analysed.
4. Estimating manpower gaps: Manpower gaps can be identified by comparingdemand and supply forecasts. Such comparison will reveal either deficit or surplus of
Human Resources in the future. Deficit suggests the number of persons to be recruited
from outside, whereas surplus implies redundant employees to be re-deployed or
terminated. Employees estimated to be deficient can be trained while employees with
higher, better skills may be given more enriched jobs.
5. Action Planning: Once the manpower gaps are identified, plans are prepared to
bridge these gaps. Plans to meet the surplus manpower may be redeployment in other
departments and retrenchment. People may be persuaded to quit voluntarily through a
golden handshake. Deficit can be met through recruitment, selection, transfer and
promotion. In view of shortage of certain skilled employees, the organisation has to
take care not only of recruitment but also retention of existing employees. Hence, the
organisation has to plan for retaining of existing employees.
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6. Modify the Organisational plans: If future supply of human resources form all the
external sources is estimated to be inadequate or less than the requirement, the
manpower planner has to suggest to the management regarding the alterations or
modifications in the organisational plans.
7. Controlling and Review: After the action plans are implemented, human resource
structure and the processes should be controlled and reviewed with a view to keep
them in accordance with action plans.
Limitations of Human Resource Planning
1. The future is uncertain: The future in any country is uncertain i.e. there are
political, cultural, technological changes taking place every day. This effects the
employment situation. Accordingly the company may have to appoint or remove
people. Therefore HRP can only be a guiding factor. We cannot rely too much on it
and do every action according to it.
2. Conservative attitude of top management: Much top management adopts a
conservative attitude and is not ready to make changes.
3. Problem of surplus staff: HRP gives a clear out solution for excess staff i.e.
Termination, layoff, VRS, However when certain employees are removed from
company it mostly affects the psyche of the existing employee, and they start feeling
insecure, stressed out and do not believe in the company.
4. Time consuming activity: HRP collects information from all departments,
regarding demand and supply of personnel. This information is collected in detail and
each and every job is considered. Therefore the activity takes up a lot of time.
5. Expensive process: The solution provided by process of HRP incurs expense. E.g.
VRS, overtime, etc. company has to spend a lot of money in carrying out the activity.
Hence we can say the process is expensive.
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RECRUITMENT
R e c r u i t m e n t i s d e f i n e d a s , a p r o c e s s t o d i s c o v e r t h e
s o u r c e s o f m a n p o w e r t o m e e t t h e r equi r emen ts o f t he s ta ff i ng
s ch ed ul e a nd t o e mp lo y e ff ec ti ve me as ur es f or a tt r ac ti ng t ha t
manpower in adequate numbers to facilitate effective selection of an efficient
workforce.Recruitment is the process of hiring talented employees for certain jobs bymotivating them to apply for those jobs which are available in organization.
Objectives of Recruitment
1. It reviews the list of objectives of the company and tries to achieve them by
promoting the company in the minds of public.
2.It forecasts how many people will be required in the company.
3. It enables the company to advertise itself and attract talented people.
4.It provides different opportunities to procure human resource.
SOURCES OF RECRUITMENT: INTERNAL SOURCES:
Internal sources of recruitment refer to obtaining people for job from inside the
company. There are different methods of internal recruitment:
1. Promotion: Companies can give promotion to existing employees. This method of
recruitment saves a lot of time, money and efforts because the company does not have
to train the existing employee. Since the employee has already worked with the
company. He is familiar with the working culture and working style. It is a method of
encouraging efficient workers.
2. Departmental examination: This method is used by government departments to
select employees for higher level posts. The advertisement is put up on the notice
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board of the department. People who are interested must send their application to the
HR department and appear for the exam. Successful candidates are given the higher
level job. The method ensures proper selection and impartiality.
3. Transfer: Many companies adopt transfer as a method of recruitment. The idea is
to select talented personnel from other branches of the company and transfer them to
branches where there is shortage of people.
4. Retirement: Many companies call back personnel who have already retired from
the organization. This is a temporary measure. The method is beneficial because it
gives a sense of pride to the retired when he is called back and helps the organization
to reduce recruitment selection and training cost.
5. Internal advertisement: In this method vacancies in a particular branch are
advertised in the notice board. People who are interested are asked to apply for the job.
The method helps in obtaining people who are ready to shift to another branch of the
same company and it is also beneficial to people who want to shift to another branch.
6. Employee recommendation: In this method employees are asked to recommend
people for jobs. Since the employee is aware of the working conditions inside the
company he will suggest people who can adjust to the situation. The company is
benefited because it will obtain.
EXTERNAL SOURCES
External sources of recruitment refer to methods of recruitment to obtain people from
outside the company. These methods are:
1. Management consultant: Management consultant helps the company by providing
them with managerial personnel, when the company is on the look out for entry level
management trainees and middle level managers. They generally approach
management consultants.
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2. Employment agencies: Companies may give a contract to employment agencies
that search, interview and obtain the required number of people. The method can be
used to obtain lower level and middle level staff.
3. Campus recruitment: When companies are in search of fresh graduates or new
talent they opt for campus recruitment. Companies approach colleges, management,
technical institutes, make a presentation about the company and the job and invite
applications. Interested candidates who have applied are made to go through a series
of selection test and interview before final selection.
4. News paper advertisement: This is one of the oldest and most popular methods of
recruitment. Advertisements for the job are given in leading news papers; the details of
the job and salary are also mentioned. Candidates are given a contact address where
their applications must be sent and are asked to send their applications within a
specified time limit. The method has maximum reach and most preferred among all
other methods of recruitment.
5. Internet advertisement: With increasing importance to internet, companies and
candidates have started using the internet as medium of advertisement and search for
jobs. There are various job sites like naukri.com and monster.com etc. candidates can
also post their profiles on these sites. This method is growing in popularity.
6. Walk in interview: Another method of recruitment which is gaining importance is
the walk in interview method. An advertisement about the location and time of walk in
interview is given in the news paper. Candidates require to directly appearing for the
interview and have to bring a copy of their C.V. with them. This method is very
popular among B.P.O and call centers.
SELECTION
Selection is the process of picking individuals who have relevant
qualifications to fill jobs in an organization. The basic purpose is to choose
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the individual who can most successfully perform the job from the pool of qualified
candidates. The size of the labour market, the image of the company, the place of
posting, the nature of job , the compensation package and a host of other factors
influence the manner of aspirants are l ik ely to res pon d to the re cru iti ng
efforts of the company. Through the process of recruitment the company
tries to locate prospective employees and encourages them to apply for vacancies at
various levels. Recruiting, thus, provides a pool of applicants for selection.
Process of Selection
1. Job analysis: The very first step in the selection procedure is the job analysis. TheHR department prepares the job description and specification for the jobs which are
vacant. This gives details for the jobs which are vacant. This gives details about the
name of the job, qualification, qualities required and work conditions etc.
2. Advertisement: Based on the information collected in step 1, the HR department
prepares an advertisement and publishes it in a leading news papers. The
advertisement conveys details about the last date for application, the address to which
the application must be sent etc.
3. Application blank/form: Application blank is the application form to be filled by
the candidate when he applies for a job in the company. The application blank collects
information consisting of the following four parts: 1. Personal details, 2. Educational
details, 3. Work experience, 4. Family background
4. Written test: The applications which have been received are screened by the HR
department and those applications which are incomplete are rejected. The other
candidates are called for the written test. Arrangement for the written test is looked
after the HR department i.e. question papers, answer papers, examination centers and
hall tickets etc.
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5. Interview: Candidates who have successfully cleared the test are called for an
interview. The entire responsibility for conducting the interview lies with the HR
department i.e. they look after the panel of interviewers, refreshments, informing
candidates etc.
6. Medical examination: The candidates who have successfully cleared the interview
are asked to take a medical exam. This medical exam may be conducted by the
organization itself (army). The organization may have a tie up with the hospital or the
candidate may be asked to get a certificate from his family doctor.
7. Initial job offer: Candidates who successfully clear the medical exam are given an
initial job offer by the company stating the details regarding salary, terms of
employment, employment bond if any etc. The candidate is given some time to think
over the offer and to accept or reject.
8. Acceptance/ rejection: Candidates who are happy with the offer send their
acceptance within a specified time limit to show that they are ready to work with the
company.
9. Letter of appointment/final job offer: Candidates who send their acceptance are
given the letter of appointment. The letter will state the name of the job. The salary
and other benefits, number of medical leaves and casual leaves, details of employment
bond if any etc. It will also state the date on which the employee is required to start
duty in the company.
10. Induction: On the date of joining the employee is introduced to the company and
other employees through am elaborate induction program.
Types of Selection Test
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Different selection test are adopted by different organization depending upon their
requirements. These tests are specialized test which have been scientifically tested and
hence they are also known as scientific test.
1. Aptitude test: Aptitude tests are test which assess the potential and ability of a
candidate. It enables to find out whether the candidate is suitable for the job. The job
may be managerial technical or clerical. The different types of aptitude test are the
following:
a) Mental ability/mental intelligence test: This test is used to measure the over all
intelligence and intellectual ability of the candidate to deal with problems. It judges
the decision making abilities.
b) Mechanical aptitude test: This test deals with the ability of the candidate to do
mechanical work. It is used to judge and measure the specialized knowledge and
problem solving ability. It is used for technical and maintenance staff.
c) Psycho motor test: This test judges the motor skills the hand and eye co-ordination
and evaluates the ability to do jobs lie packing, quality testing, quality inspection etc.
2. Intelligence test: This test measures the numerical skills and reasoning abilities of
the candidates. Such abilities become important in decision making. The test consists
of logical reasoning ability, data interpretation, comprehension skills and basic
language skills.
3. Personality test: In this test the emotional ability or the emotional quotient is
tested. This test judges the ability to work in a group, inter personal skills, ability to
understand and handle conflicts and judge motivation levels. This test is becoming
very popular now days.
4. Performance test: This test judges and evaluates the acquired knowledge and
experience of the knowledge and experience of the individual and his speed and
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accuracy in performing a job. It is used to test performance of typist, data entry
operators etc.
I N D U C T I O NIt involves familiarizing the new employees with company, the work
environment and existing employees so that the new people feel at home. Once an
employee is selected and placed on an appropriate job, the process of familiarizing
him with the job and the organization is known as induction. Induction is the process
of receiving and welcoming an employee when he first joins the company and giving
him basic information he needs to settle down quickly and happily and stars work.Induction is designed to achieve following objectives: -
1) To give new comer necessary information.
2) To build new employee confidence in the organization.
3) It helps in reducing labor turnover and absenteeism.
4) It reduces confusion and develops healthy relations in the organization.
5) To ensure that the new comer do not form false impression and negative attitude
towards the organization.
6) To develop among the new comer a sense of belonging and loyalty to the
organization.
7) To help the new comer to overcome his shyness and overcome his shyness
nervousness in meeting new people in a new environment.
The advantages of formal induction are: -
1) Induction helps to build up a two-way channel of communication between
management and workers.
2) Proper induction facilitates informal relation and team work among employee.
3) Effective induction helps to integrate the new employee into the organization and to
develop a sense of belonging.
4) Induction helps to develop good relation.
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5) A formal induction programme proves that the company is taking interest in getting
him off to good start.
6) Proper induction reduces employee grievances, absenteeism and labor turnover.
7) Induction is helpful in supplying information concerning the organization,
the job and employee welfare facilities.
CHAPTER 4
TRAINING AND DEVELOPMENT
Definition of Training and Development Program
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Objectives/Purpose/Goals of Training and Development
Training Process
Techniques of Training and Development
Evaluation of Training Program
T R A I N I N G A N D D E V E L O P M E N T
Definition of Training and Development Program
Training is the process of planned programs and procedures undertaken for the
improvement of employee's performance in terms of his attitude, skills, knowledge and
behavior. These training and development programs can significantly improve the
overall performance of organization. Training is normally viewed as a short process. It
is applied to technical staff, lower, middle, senior level management. When applied to
lower and middle management staff it is called as training and for senior level it is
called managerial development program/executive development program/development
program. Training and development managers and specialists create, procure, and
conduct training and development programs for employees.
Objectives/Purpose/Goals of Training and Development
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1. Improving quality of workforce: Training and development programs can help in
improving the quality of work produced by the workforce of organization. Mostly,
training is given in a specific area like finance, marketing or HR, which helps in
improving the quality of work in that particular area.
2. Enhance employee growth: By attending these training and development
programs, employees are able master the work of their jobs and that's how they
develop and grow themselves in a professional way.
3. Prevents obsolescence: These programs help employees to keep themselves up to
date with the new trends in latest technology, which reduces the chances of
termination of the job.
4. Assisting new comer: These programs help new employees to adjust themselves in
a new working environment, culture and technology. They feel themselves as regular
employees of that organization.
5. Bridging the gap between planning and implementation: It helps organizations
to easily achieve their targets and goals what they actually planned for. Employees
know their job better and they deliver the quality performance according to needs of
top management. That's why organizations can easily implement their plans.
6. Health and safety measures: Training and development program clearly identifies
and teaches employees about the different risk involved in their job, the different
problems that can arise and how to prevent such problems. This helps to improve the
health and safety measures in the company.
Training Process
1. Determining training needs of employee: In the very 1st step of training
procedure, the HR department, identifies the number of people required training,specific area in which they need training, the age group of employee, the level in
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organization etc. in some cases the employee may be totally new to the organization.
Here the general introduction training is required. Some employees may have
problems in specific areas; here the training must be specific. This entire information
is collected by HR department.
2. Selecting target group: Based on information collected in step 1 the HR
department divides employee into groups based on the following:i. The area of
training, ii. Level in the organization, iii. The intensity of training
3. Preparing trainers: Once the employees have been divided into groups, the HR
department arranges for trainers. Trainers can be in house trainers or specialized
trainers from outside. The trainers are given details by HR department, like number of
people in group, their age, their level in organization, the result desired at the end of
training, the area of training, the number of days of training, the training budget,
facilities available etc.
4. Preparing training packages: Based on the information provided by trainers, he
prepares entire training schedule i.e. number of days, number of sessions each day,
topics to be handled each day, depth of which the subject should be covered, the
methodology for each session, the test to be given for each session, handout/printed
material to be given in each session.
5. Presentation: On the first day of training program the trainer introduces himself
and specifies the need and objective of the program and then actually stars the
program. The performance of each employee is tracked by the trained and necessary
feedback is provided.
6. Performance: At the end of training program the participants reports back to their
office or branches. They prepare report on the entire training program and what they
have learned. They the start using whatever they have learned during their training.
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Their progress and performance is constantly tracked and suitable incentives are given
if the participant is able to use whatever he has learned in training.
7. Follow up: At the end of training program the participants reports back to theiroffice or branches. They prepare report on the entire training program and what they
have learned. They the start using whatever they have learned during their training.
Their progress and performance is constantly tracked and suitable incentives are given
if the participant is able to use whatever he has learned in training.
Techniques of Training and Development
On-the-job training and development techniques
Job rotation means moving management trainees from department to broaden
their understanding of all part of the business and to test their abilities. A
manager may spend several months in each department. The person may just
bean observer in each department but more commonly gets fully involved in its
operations.
Coaching/understudy approach: Here the person workers directly with the senior
manager or with the person he or she is to replace; the latter is responsible for
the executive of certain responsibilities, giving the trainee a chance to learn the
job.
Action learning programmers give managers and others released time to work
full time on projects, analysis and solving problems in departments other than
their own trainees meet periodically in four or five person project groups to
discuss their findings. Several trainees may work together as a project group or
compare notes and discuss each others projects.
Off the job training and development techniques:
Case Study method: Case study method presents a trainee with a written
description of an organizational problem. The person then analyzes the case,
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diagnoses the problem and presents his or her findings and solutions in
discussion with other trainees.
Management Games: With management games trainees are dividend in to give
or six persons group, each of which competes with the others in a stimulated
marketplace. Management games can be good development tools. People learn
best by getting involved, and the games can be useful for gaining such
involvement. They help trainee develop their problem solving skills, as well as
to focus attention on planning rather than just putting out fires. The group also
usually elects their own officers and organize themselves; they can thus develop
leadership skills and faster cooperation and team work.
Roll Playing: The aim of role playing is to create a realistic situation and then
have the trainees assume the role of specific persons in that situation. When
combined with the general instruction and other roles for the exercise, role
playing can trigger spirited discussions among the role player trainees. The aim
is to develop trainees skills in areas like leadership and delegation.
Evaluation of Training Program
Criteria used for the evaluation of training programs-
1. Reaction: Reaction refers to attitude of employee about the training, whether the
employee considers training to be positive or negative one. If reaction is positive then
people have accepted the program and changes will be possible.
2. Learning: Another method of judging effectiveness is to identify levels of learning
i.e. how much the people have learnt during the training. This can be found out by
trainers mark sheet, the report submitted by the employee, and actual performance.
3. Behavior: The HR department needs to understand behavior of the employees, to
understand the effectiveness of training. The behavioral change can be seen in how the
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person interacts with juniors, peer groups and seniors. They mark change in behavior
and inform the HR department of the success of training program.
4. Result: Results provided by employee in monetary terms also determineseffectiveness of training program i.e. employee success in handling the project, the
group performance before and after training etc.
CHAPTER 5
PERFORMANCE APPRAISAL
Definition
Process of Performance Appraisal
Methods of Performance Appraisal
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PERFORMANCE APPRAISAL
Definition
Performance appraisal is defined by Wayne Cascio as the systematic description of
employees job relevant, strength, weakness. Performance appraisal may be conducted
once in every 6 months or once in a year. The basic idea of the appraisal is to evaluate
the performance of the employee, giving him a feed back. Identify areas where
improvement is required so that training can be provided. Give incentives and bonus to
encourage employees etc.
Process of Performance Appraisal
1. Setting performance standards: In this very first step in performance appraisal the
HR department decides the standards of performance i.e. they decide what exactly is
expected from the employee for each and every job. Sometimes certain marking
scheme may be adopted eg. A score 90/100 = excellent performance, a score of 80/100
= good. And so on.
2. Communication standard set to the employee: Standards of performance
appraisal decided in 1st step are now conveyed to the employee so that the employee
will know what is expected from him and will be able to improve his performance.
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Alternate ranking method: -This method involves ranking employees from best to
worst on a particular trait, choosing highest, then lowest until all are ranked.
Since it is easier to distinguish between the worst and best employees and
alternate ranking is quite popular. First, list all subordinates to be rated. Then
indicate the employee who is the highest on the characteristic being measured
and also the one who is lowest. The process continues till all the employees are
ranked on similar fashion.
Paired comparison method: -Paired comparison method helps make the ranting
method more precise. For every trait (quality of work, quality etc), Pairs are
made and every subordinate is compared with every other subordinate.
Forced distribution method: -Forced distribution method is similar to grading on a
curve. With this method, manager place predetermined percentage or rates in to
performance categories. Forced distribution means tow things for employee:
Not everyone can get an A; and ones performance is always rated relative to
ones peers. One practical, one practical, if low-tech, way to do this is to write
each Employees name on a separate index card. Then for each trait managersplace the employees card in the appropriate performance category.
Critical Incident Method: -Critical incident method involves keeping a record of
uncommonly good or undesirable examples of an employees work related
behavior and reviewing it with the employee at predetermined time.
Narrative Forms: -The final written appraisal is often in narrative form. A
persons supervisor is asked (i) to rate the employees performance for each
performance factor or skill (ii) to write down examples and (iii) an important
plan. This aids the employee to understand where his or her performance was
good or bad and how to improve that performance.
Behaviorally Anchored Rating Scales: - is an appraisal method that aims at
combining the benefits of narrative critical incidents and quantified ratings by
anchoring a quantified scale with specific narrative example of good and poor
performance.
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Assessment centers: Assessment centers (AC) are places where the employees
are assessed on certain qualities talents and skills which they possess. This
method is used for selection as well as for appraisal. The people who attend
assessment centers are given management games, psychological test, puzzles,
questioners about different management related situations etc. based on their
performance in these test an games appraisal is done.
Management by objective: This method was given by Petter Druckard in
1974. It was intended to be a method of group decision making. It can be use for
performance appraisal also. In this method all members of the of the department
starting from the lowest level employee to the highest level employee together
discus, fix target goals to be achieved, plan for achieving these goals and work
together to achieve them. The seniors in the department get an opportunity to
observe their junior- group efforts, communication skills, knowledge levels,
interest levels etc. based on this appraisal is done.
360* appraisal: In this method of appraisal and all round approach is adopted.
Feedback about the employee is taken from the employee himself, his superiors,his juniors, his colleagues, customers he deals with, financial institutions and
other people he deals with etc. Based on all these observations an appraisal is
made and feedback is given. This is one of the most popular methods.
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CHAPTER 7
COMPENSATION MANAGEMENT- WAGES, INCENTIVES,
FRINGE BENEFITS, EMPLOYEE WELFARE
Wages and salary administration
1. Factors Affecting Wages Salary
INCENTIVES, REWARDS, REMUNERATION AND PUNISHMENTS
Employee benefits
Health, Safety and Welfare health
1. Health
2. Safety
3. Welfare
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COMPENSATION
It refers to fair and equitable remuneration to employees for their
contribution to the attainment of organizational objectives. Compensation is all forms
of financial returns and tangible services and benefits employees receive as part of an
employment relationship. An effective set of choices about compensation systems
plays a major role in determining firm performance. It is paid in form of wages,
salaries, and employee benefits such as paid vacations, insurance, maternity leave, free
travel facility, retirement benefits etc. monetary payments are a direct form of
compensating employees & have a great impact in motivating employees. The system
of compensation should be designed in such a way that it achieves following
objectives:
(1) Capable employees are attracted towards organization.
(2) Employees are motivated for better performance.
3) Employees do not leave employer frequently.
A) Wages and salary administration
Base compensation includes monetary benefits to employees in form of
wages or salaries. The term wage is used to denote remuneration to workers doing
manual or physical work. Thus wages are given to compensate the unskilled workers
for their services rendered to organization Wages may be based on hourly, daily,
weekly or even monthly basis The term salary means compensation to officeemployees, foremen, managers & professional& technical staff. It is based on weekly,
monthly &yearly basis. Thus time period for which salaries are paid is generally
higher than in case of wage payments. Wages may be based on number of units
produced (i.e. piece wage system) or time spent on job. But salary is always based on
time spent on job.
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Factors Affecting Wages Salary
1) Demand and supply: -Wage rates of workers depends upon demand and supply force
in labour market. If the labour is in short supply, the workers will offer the services
only if they are paid well. On the other hand, if the supply is more then workers
available might get ready work at cheaper rates.
2) Bargaining Power: -Where labour unions are strong enough to force the hand of
employers, the wages will be determined at a higher level in comparison to other units
where unions are weak.
3) Cost of living: -Wages of workers also depends upon the cost of living of the worker
so as to ensure him a decent living wage. Cost of living varies under deflationary and
inflationary pressures. Where labour unions are strong and employer do not show
enough awareness, here wage are adjusted according to cost of living index numbers.
4) Condition of product market: -Degree of competitions prevailing in the market for
the product of the industry will also influence the wage level. For e.g. if there is
perfect competition in the market the wage level may be at par with the value of net
additions made by the workers to the total output, but may not reach this level in case
of imperfect competition in the market.
5) Comparative Wages: -Wages paid by the other firms for the same work also
influence the wage levels. Wage rates must also be in consistent with the wages paid
by the other firms in the same industry so as to increases the job satisfaction among
the workers.
6) Ability to Pay:-Wage rates are influenced by the paying ability of industry or firms toits workers. Those firms which are earning huge profits may afford to pay high wages
and can provide more facilities to its workers in comparison to the firms earning
comparatively low profits.
(7)Productivity of labour: -Higher productivity will automatically fetch more profit to
the firm, where in turn workers will be paid high wages in comparison to other firms
with low productivity.
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(8)Job Requirements: -If a job requires higher skill, greater responsibility and risk, the
worker placed on that job will naturally get higher wages in comparison to other jobs
which do not require the same degree of skill, responsibility or risk.
(9)Govt. Policy: -Since the bargaining power of the workers is not enough to ensure fair
wages in all industries, the Govt. has to interfere in regulating wage rate to guarantee
minimum wage rates in order to cover the essentials of a decent living.
(10)Goodwill of the company: -A few employers want to establish themselves as good
employer in the society and fix higher wages for their workers. It attracts qualified
employees. In addition there are other important factors which affect the individual
differences in wage rates..
B) INCENTIVES , REWARDS, REMUNERATION AND PUNISHMENTS
HR department should make efforts to provide appropriate incentives,
rewards and increase remuneration to employees. Otherwise, dissatisfaction
may creep into all levels of the bank, resulting in" inefficiency, perfunctory
attitude, and poor service standards. These will ultimately affect the functioning of the
organization. Therefore, the HR department has to formulate policies with utmost caretaking into account all these facets.
Radical changes are required in the performance appraisal system to avoid
nepotism. HR policies with regard to manpower and career planning, and
placement policies have to he revamped. A level of professionalism with the help
of technology and scientific management has to be brought in by the HR departments.
Clear policies regarding performance rewards, incentives and increase in remuneration
have to be outlined and implemented. With regard to the accountability for non-
performance and for the mistakes, the HR department's in tervent ion is a must for
establishing the facts of each case. Proper judgment "with impartial attitude
helps develop satisfaction among the staff members.
Before punishing for mistakes and non-performance, a certain kind of enquiry
is required by the HR dep ar tme nt. In the pre sen t sce nar io, par tic ula rly in
th e ne w pr iv at e se ct or in su ra nc e companies, dismissals are taking place
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arbitrarily without proper enquiry for accountability. This wi ll im par t th e
e ff ic ie nc y o f th e e xi st in g s ta ff a nd l ow er d yn ami sm i n t he ir
per formance, ul timately leading to reduced product ivity due to fear and
insecurity of losing the job. It is the first and foremost duty of the HR
department to formulate appropriate policies with regards to p u n i s h m e n t s .
A s e t o f g u i d e l i n es a n d p r o c e du r e s h a s t o b e f o r mu l a te d a n d
f o l l o w e d f o r punishments to staff in case of any indiscipline.
C) Employee benefits
Also called benefits in kind; also called fringe benefits, perquisites, or perks are
various non-wage compensations provided to employees in addition to their normal
wages orsalaries. Some of these benefits are: housing (employer-provided or
employer-paid), group insurance(health,dental, life etc.),disability income protection,
retirement benefits, daycare, tuition reimbursement, sick leave, vacation(paid and non-
paid),social security, profit sharing, funding of education, and other specialized
benefits. The purpose of the benefits is to increase the economic security of
employees.
Perquisites:
The term perks is often used colloquially to refer to those benefits of a more
discretionary nature. Often, perks are given to employees who are doing notably well
and/or have seniority. Common perks are take-home vehicles,hotel stays, free
refreshments, leisure activities on work time (golf, etc.),stationery, allowances
forlunch, andwhen multiple choices existfirst choice of such things as job
assignments and vacation scheduling. They may also be given first chance at job
promotions when vacancies exist.
D) HEALTH, SAFETY and WELFAREHEALTH
The well- being of the employee in an organization is affected by accidents and ill
health both physical and mental.
1. Health
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PHYSICAL HEALTH: health of employees results in reduced productivity.
Healthy employees are more productive, more safety conscious, and are more
regular to work. This realization has made many management to provide health
services to their employees like first-aid, complete medical care, etc. Many
progressive organizations have well equipped dispensaries with full-time and
part-time doctors.
MENTAL HEALTH: In recent years, mental health of employees, particularly
that of executives, has engaged the attention of management. Mental
breakdowns are common in modern days because of stress and tension. This
results in reduced productivity and lower profits for the organization. A mental
health service is rendered in following ways:
1 . P s y c h i a t r i c c o u n s e l i n g
2. Co operation and consultation with outside psychiatrics
3. Education of company personnel in importance of mental Health.
4. Development and maintenance of effective human resource Programme.
2.SAFETY: Safety refers to absence of accidents. It is protection of workers fromthe dangers of accidents.
NEED FOR SAFETY MEASURES
COST SAVING: Two types of cost are incurred by the management when an accident
occurs. These are direct costs in form of compensation payable and medical expenses
incurred in treating the patients.
INCREASED PRODUCTIVITY: Safety promotes productivity. Employees in a safeenvironment can devote time to improving quality and quantity of output.
MORAL and LEGAL: Safety is important on humane grounds too. There are legal
provisions relating to safety measures which have to be undertaken by the
management.
3. WELFARE: Welfare includes anything that is done for the comfort and
improvement of employees and is provided over and above the wages. Welfare
helps in keeping the morale and motivation of the employees high so as to retain
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To Increase Industrial Productivity: In todays competitive world,
motivation, job security and high pay packages are not enough to increase
industrial productivity. Leadership, flexibility, delegation of authority,
industrial democracy and employee say in decision making are important to
increase annual turnover of any organization.
To Establish Harmonious Industrial Relationship: Participatory from of
management is an unbeatable tact to establish and maintain cordial
relationships with employees and workers union. The success of an
organization depends on its human resources. Employee empowerment acts
as a strong force to bind the employees and motivate to give them their best
to the organization.
To Maintain a Proper Flow of Communication: Two-way
communication plays an important role in the success of any organization.
Employee participation in decision making ensures proper flow of
communication in the organization. Everyone contributes their best and tries
to strengthen the organization by contributing their best to improve business
processes.
Benefits of Participative Management
Innovation and increased efficiency: The problem solving process and
openness to new ideas can result in innovation. Apart from this as mentioned above
there is also knowledge sharing amongst the workers and the managers. This means
that those who are part of a certain process at the ground level give inputs for
improved efficiency of the same. This has dual implications, helping improve the
quality of product and curtailing the cost of manufacture.
Timeliness: There is improved communication between the managers and the
workers and between workers across different units. A loophole or flaw is reported
in time.
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e ff ic ie nt s el ec ti on , t ra in in g a nd d ev el op me nt , i s c al le d Human
Resource Management. T h e s u c c e s s o f a n y i n s u r a n c e c o m p a n y
l a r g e l y d e p e n d s o n e f f i c i e n t h u m a n r e s o u r c e management, apart
from operations, marketing and sales, the HR department manages all the
efficient people working in operations and marketing divisions in any organization.
Need for HRD and Its Management in insurance sector
1. There are many changes in the insurance sector on account of changes in the
industry due to the entry of new insurance companies. Therefore, it has become a
necessity to recruit, train and de plo y peo ple at all lev el eff ici ent ly, forbe t ter per formance and success . This i s the basic function of HRD, which
includes the concept of HRM.
2. In view of the changes in the political scene in the recent past, seeping changes are
expected to take place in the insurance industry . It is expected that only a few
insurance companies will remain after a series of amalgamations and
mergers, not only in the Indian insurance industry, but also at the international
level.
3. Emergence of new private sector insurance companies, competition and self-
regulation has necessitated efficient Human Resources Management in insurance
companies. HRM is a continuous process, involving selection, recruitment and training
on an "on going basis" for the staff and their deployment in the right place. The
activity is called HR development.
EFFICIENCY IN INSURANCE SECTOR WITH HRM
1. The crucial factors behind successful insurance companies will be continuous and
sustained build up of skills, knowledge, education and attitudes among people working
in the companies, particularly the frontline staff, working in the branches.
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the HR department to properly counsel people and prepare them to face the challenges
before them. T h e i r m i n d s h o u l d b e f i n e - t u n e d t o w o r k i n t h e
n e w t e c h n o l o g i c a l e n v i r o n m e n t .
The main function of HRM is to build up capabilities in people working and
intensify their sense o f be l o ng i n g t o t h e o r ga n i za t i on . To i m pr ov e
t h e i r p e r f o r m a n c e a n d i n c r e a s e t h e b a n k ' s productivity HR must
incorporate challenges in routine work. Team spirit has to be inculcated in the
branches and greater focus should be on customer care.
CASE STUDIES
1) FUTURE GENE RALI INDIA LIFE I NSURANCE
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