M.B.A IInd Semester Course - 203
Human Resource Management
LESSONS 1 TO 18
INTERNATIONAL CENTRE FOR DISTANCE EDUCATION
AND OPEN LEARNING HIMACHAL PRADESH UNIVERSITY,
GYAN PATH, SUMMERHILL, SHIMLA-171005
CONTENT
SR.NO. TOPIC PAGE NO.
SYLLABUS 1
LESSON-1 HUMAN RESOURCE MANAGEMENT 2
LESSON-2 PERSONNEL MANAGEMENT 16
LESSON-3 ROLE AND RESPONSIBILITIES OF PERSONNEL MANAGER 28
LESSON-4 HUMAN RESOURCE PLANNING 35
LESSON-5 RECRUTIMENT AND SELCTION 46
LESSON-6 PLACEMENT, INDUSTIN AND SOCIALISATION 57
LESSON-7 TRAINING 66
LESSON-8 EVALUATING TRAINING EFFECTIVENESS 76
LESSON-9 WAGES AND SALARY ADMINISTRARTION 84
LESSON-10 DISCIPLINE 94
LESSON-11 EMPLOYEE GRIEVANCES 104
LESSON-12 EMPLOYEE HEALTH AND SAFETY 112
LESSON-13 JOB ANALYSIS 125
LESSON-14 JOB EVALUATION 136
LESSON-15 INTERNATIONAL HUMAN RESOURCE MANAGEMENT 144
LESSON-16 MANAGING INTERNATIONAL HR ACTIVITIES 153
LESSON-17 INTERNATIONAL SELECTION AND ITS APPROACHES 165
LESSON-18 EXPATRIATION AND REPATRIATION IN IHRM 170
ASSIGNMENT 178
PAPER 179
1
Master of Business Administration
II Semester
Course 203
HUMAN RESOURCE MANAGEMENT
Unit-I
Human Resource Management :
Introduction to Human Resource Management, Growing importance of Human Resource, Important
Environmental influence on HRM. Functions of personnel Management, Challenges to Personnel Management,
Approaches to Personnel Management, Importance of Human Relations in Modern Organizations, Recent
Changes and Development of Personnel Management, Organizing the Personnel and Human resource
Department, Responsibilities of a Personnel Managers, Personnel Management and Professionalization.
Unit-II
Human Resource Planning:
Importance of Human resource Planning, Contemporary Challenges in Human Resource Planning,
HRP Process, Approaches to HRP, Evaluating Effectiveness of HRP, Methods of HRP, recruitment, Selection
and Placement, Interview and Promotion Socializing the new employees.
Unit-III
Training and Development:
Training, Methods of Training, Evaluating Training Effectiveness, Organization of a Training Programme
Management Development Process. Methods for developing managers, Performance Appraisal Approaches
the Performance Appraisal.
Unit-IV
Wages and Salary Administration:
Economic Background employee compensation. Factors affecting Wages & Salary Policy of the
Organization. Lows and Rules Governing employees wages and Salary Administration in India, Rewards
Methods of Wage determination.
Unit-V
Maintenance and Disciplining the Employees:
Maintenance and Disciplining the employees, Discipline meaning and importance, employees grievance
handing mechanism and procedure, Disciplinary action dismissal and retrenchment, recent Trends in
maintaining health and safety of employees in the organization.
References:
1. Edwin B. Flippo Principles of Personnel Management.
2. Keith Davis Human Relations at work.
3. Robert L. Mathis and John H. Javeson Personnel Human Resource Management (4th ed).
4. S. Schuler Personnel and Human Resource Management (2nd ed).
5. David A. De Cenzo and Stephen P. Robbins Personnel Human Resource Management (3rd ed.)
6. P.P. Arya and B.B. Tandon (edited) Human Resource Development.
7. Le on C. Megginson Personnel and Human Resources Administration.
8. Dale Yoder Personnel Management and Industrial Relations.
9. Douglas Mc. Gregor The Human Side Enterprise.
10. Juclus MJ. Personnel Management.
*****
2
LESSON-1
HUMAN RESOURCE MANAGEMENT
STRUCTURE
1.0 INTRODUCTION
1.1 LEARNING OBJECTIVES
1.2 MEANING OF HUMAN RESORUCE MANAGEMENT
1.3 OBJECTIVES OF HUMAN RESORUCE MANAGEMENT
1.4 SCOPE OF HUMAN RESOURCE MANAGEMENT
1.5 SIGNIFICANCE OF HUMAN RESOURCE MANAGEMENT
1.6 ENVIRONMENTAL INFLUENCE OF HUMAN RESOURCE MANAGEMENT
1.7 STATUS OF HRM IN INDIAN INDUSTRY
1.8 RECENT DEVELOPMENTS IN HRM
1.9 SELF CHECK EXERCISE
1.10 SUMMARY
1.11 GLOSSARY
1.12 ANSWERS TO SELF CHECK EXERCISE
1.13 TERMINAL QUESTIONS
1.14 SUGGESTED READINGS
1.0 INTRODUCTION
This goes without saying that human resource is the most important asset of any organisation and
unlike other resources the human resources could be developed and increased to a limitless extent. Human
resources mean the energies, skills, knowledge and physical strength of the people at work. Human resources
comprise the value of the productive capacity of entire work force of any organisation. To be specific and
brief, human resources refer to the aggregate of knowledge, skill, experience and health of employees
working in any organisation. And development of human resource accounts for the development of human
side of the organisation. The word HUMAN has five letters and each letter speak of a distinct characteristic
of human being as under:
H Hears
U Understands
M Moves
A Adjusts
N Negotiates
Management is absolutely essential in the present times in all organizations, irrespective of their
origin, nature and ownership. Every enterprise, established with profit motive or some social, religious or
such like other purpose, requires efficient management for its sustained progress. But, management has
been viewed differently by various scholars, depending upon their belief and comprehensions. Some regard
3
it as the force that runs a business and is responsible for its success or failure. Others perceive it as a means
for achievement of desired results through group efforts and by utilizing both human and non-human resources.
Still others deem management to be a process comprising planning, organizing, staffing, directing and
controlling. Also, some look on it as an instrument for designing and maintaining an environment conducive
to the performance of individuals who are working together in a group towards the accomplishment of
some predetermined objectives.
Furthermore, some think that management merely implies certain tasks which the managers are
supposed to perform. Thus, there are numerous, opinions on what ‘management’ actually involves. And,
no description, however, lengthy would be considered satisfactory for fully and finally deducing the universally
acceptable connotation of this term.
While an agreement on the exact definition of management has not been reached, any definition of
management must include three common factors namely goals, limited resources and people.
First, goals are necessary because activities must be directed towards some end. Second, there
are limited resources. Economic resources are scarce, therefore, the manager is responsible for their
allocation. This requires not only that manager be effective in achieving the goals that are established, but
they are efficient in relation to output to input. Managers then are concerned with the attainment of goals,
which makes them effective and with best allocations of scarce resources, which makes them efficient. The
need for two or more people is the third and last requisite for management. It is with arid through people
that managers perform their work.
Now, let us move from the broad topic of management to the more specific topic of human
resource management.
1.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define human resource management, and outline the objectives and scope of human resource
management.
(b) Discuss the significance of human resource management.
(c) Examine the environmental influence on HRM.
(d) Trace the recent developments in HRM.
1.2 Meaning of Human Resource Management
Human Resource Management (HRM) is concerned with the “people” dimension in management.
Since every organisation is made up of people, acquiring their services, developing their skills, motivating
them to high level of performance and ensuring that they continue to maintain their commitment to the
organisation are essential to achieving organizational objectives. This is true regardless of type of organisation
may it be Government, business, education, health, recreation or social action. Those organizations that
are able to acquire, develop, stimulate and keep outstanding workers will be both effective, able to achieve
their goals, and efficient (expanding the least amount of resources necessary). Those organisations that are
inefficient and ineffective risk the hazards of stagnating or going out of business.
According to Thomas G. Spates, “Human resource management is a code of the ways of organizing
and treating individuals at work so that they will get the greatest possible realization of their intrinsic abilities,
thus attaining maximum efficiency for themselves and their group and thereby giving to the enterprise of
which they are a part its determining competitive advantage and its optimum results.”
4
George Terry has succinctly stated that human resource management is concerned with the obtaining
and maintaining of a satisfied work force. He further clarified that HRM is concerned with maximizing the
effectiveness of the work force through application of sound and proved personnel policies and practices.
According to Dale Yoder, “Human resource management is the function or activity aiding and
directing working men and women in maximizing their contributions and satisfactions in employment”. It
helps ‘workers’ including all those who work, from unskilled common labourers to corporation presidents
or public administrators, to combine their efforts with those of others in providing the services and products
we all want.
In the words of Flippo, “Human resource management is the planning, organizing, directing, and
controlling of the procurement, developments, compensation, integration and maintenance and separation
of human resources to the end that individual, organizational and societal objective are accomplished.”
According to process system view, human resources management is the systematic planning,
development, and control of a network of interrelated process affecting and involving all members of
organisation. These processes include:
• Human resources planning
• Job and work design
• Staffing
• Training and development
• Performance appraisal and review
• Compensation and reward
• Employee protection and representation
• Organisation improvement
According to another view, human resource management refers to the practices and policies you
need to carry out the people aspects of your management job. These include:
• Conducting job analysis
• Planning labour needs and recruiting candidates
• Selecting job candidates
• Orienting and training new employees
• Managing wage and salaries
• Providing incentive and benefits
• Appraising performance
• Communicating
• Training and development
• Building employees’ commitment
To effectively manage these processes, human resources systems are planned, developed and
implemented through the combined efforts of all managers and human resources specialists - and frequently
all employees - in an organisation. Overall, the systems are intended to achieve organisation-wide goals
and contribute to organizational effectiveness and productivity. From the foregoing definitions it may be
5
concluded that there is no standard definition of the term ‘HRM’, some authorities have defined it in terms
of its functions, some others in terms of its objects and some in terms of human relationships. However,
there are certain elements which are common to most of these definitions:
(i) HRM aims at getting the best results out of the employees. In other words, it has the overall goal of
securing the optimum contribution from the human factor in business.
(ii) It does not, however, follow from above that this modem branch of business management is geared
to the exploitation of the employees. Good HRM helps the employees develop their capacities to
the full and derive the greatest satisfaction from their work. It, thus, looks to their needs, comforts
and grievances, As Scott, Clothier and Sprieged put it, four different angles or elements of the
employee-in his-work unit must be given due consideration. There are:
(a) Capacities - referring to those abilities, to those attainments, inherited or acquired, that a
worker has, are capable of exercising, and must, to a certain degree at least, exercise in his
work.
(b) Interest - not only an individual’s desires, and ambitions, but also his instinctive, impulsive
tendencies, vague, bearing, and ill-defined carvings that mayor may not stir him to his
fullest action in performing his duties.
(c) Opportunities - not only opportunities for advancement, although, that is included, but
opportunities to exercise his capacities and satisfy his interests also.
(d) Personality - the sum total of a worker’s reaction to his experiences and environment.
Personality in manifest by an individual’s reception by others. Management has only a
minor role in influencing personality, but the worker’s personality has a great influence
upon his opportunities.
(iii) Good HRM aims at promoting group satisfaction, building up what is known as team spirit, because
it is the joint effort that is more important.
(iv) The work related to human resources is of a continuous nature. In the words of George Terry, it
cannot be turned on and off like water from a faucet; it cannot be practiced only one hour each day
or one day a week. It required a constant alertness and awareness of human relations and their
importance in everyday operations. It is, thus, a way of approach, a technique of thinking, a philosophy
of management which has to be kept in view at all times and at different levels of the organisation.
Thus, human resource management refers to set of programmes, functions and activities designed
and carried out in order to maximize both employees as well as organizational effectiveness.
1.3 Objectives of HRM
Since HRM is an integral part of management, its main objective is identical with that of latter,
survival and growth to help the organisation to achieve its objectives, HRM contributes by assuring a rich
and continuous supply of human resources. Further, to make organisation effective and efficient, HRM
aims at coordinated efforts of the competent managers and workers towards the ultimate goal. The general
objective of HRM is to contribute towards realization of firms goals. The specific objectives of HRM
include the following:
(a) Efficient utilization of people’s skills and abilities
HRM aims at utilizing the people’s skill and abilities, in order to achieve organizational as well as
individual goals. Efficient utilization of manpower is beneficial not only to the organisation but also to the
employees and consumers. Human resource manager should ensure that necessary action is taken to make
the fullest utilization of manpower.
6
(b) Provision of trained and motivated employees
The human resource manager provides to the organisation well trained and motivated employees,
which is the most valuable asset of an organisation. The human resource manager, for achieving this objective,
creates an environment which is conducive to the growth of well-trained and well motivated employees.
The effectiveness of human resource manager is judged on the basis of right type of person, at right place,
at right time for an organisation.
(c) Increased employees job satisfaction
HRM aims at providing facilities for employees thereby ensure job satisfaction of the individuals.
This objective focuses on employees’ needs rather than organizational needs.
(d) Communicating HRM policies to all concerned
HRM aims at communicating its policies to all concerned in their own language. Effective
communication helps in building organisation image among its employees, Government and public in general.
Through effective communication, policies, goals of organisation can be achieved.
(e) Development and maintenance of quality of work life
HRM develops and maintain qualify of work life that makes work environment more meaningful to
the employees life. It is a programme of building an ideal work environment to promote maximum employees
satisfaction consistent with maximum organisation growth. The premise of quality of work life is having a
work environment where an employee’s activities become more important. This means implementing
procedures that make work less routine and more rewarding for the employee. These policies include
autonomy, recognition, belongingness progress and development and external rewards. Autonomy deals
with the amount of freedom that employees can exercise in their job. Recognition involves being value by
others in the company. An individual contribution to the organisation is noticed and appreciated.
Belongingness refers to being part of organisation. Progress and developments refers to internal rewards
available from organisation; challenge and accomplishment. Finally external rewards which are usually in
the form of salary and benefits, also includes promotion, rank and status. Taken together, these components
provides for quality of work life for the individuals. If the quality of work life is lacking, then workers
productivity may suffer.
1.4 Scope of Human Resource Management
Following is the scope of human resource management explained by experts in this area:
(a) Human Resources Planning
Human Resources Planning is the process of assessing the organization’s human resources needs
in light of organizational goals and making plans to ensure that a competent, stable work force is employed.
The planning process includes an analysis of skill levels among employees and in the external labour
market, of current and expected job openings, of plans for expanding or reducing staff throughout the
organisation, and of the external legal environment. The planning process, then, is, closely related to the
staffing process and depends also on the overall strategic plans of the organisation.
The systems designed to control and direct the human resources planning process include such
devices and computerized records of employees’ skills and qualification, forecasts of the number of
employees with certain skills who are likely to leave over the next year, analysis of the extent to which
affirmative action goals have been met; and confidential organization charts showing possible candidates
for promotion to various executive positions.
7
(b) Job and Work Design
Job and work design specifies the tasks to be performed by individuals and groups within the
organisation, and establishes the rules, schedules and working conditions under which people perform
those tasks. Through careful design, or circumstance, or both, events converge to create jobs to which
people are assigned and the conditions surrounding these jobs. Some of the systems used to help manage
the process of job design include techniques such as time and motion study and work simplification, which
aims at making jobs easy to learn and workers more efficient. Other job design systems, such as job
enrichment involve techniques to restructure jobs to make them more interesting and challenging. Periodic
discussions within a work team about the allocation of tasks can be considered a job design system.
(c) Job Analysis
Job analysis, an outgrowth of job design, is the process of investigating the tasks and behaviour
associated with a particular job. Various systems used in job analysis include observations of workers as
they perform their jobs, interviews and questionnaires. Typically the information obtained from job analysis
is used to write job descriptions and to establish what is required of the person who will perform each job.
In turn, job descriptions are useful in the staffing process, especially in recruiting, hiring, and training new
employees.
(d) Recruitment
An organisation needs people for its present and future vacancies. Recruitment is the process of
exploring the sources of suitable people and taking effective measure for obtaining them. It is designed to
attract as many candidates as possible from inside and outside the organisation so than an objective
selection of the most talented persons can be done.
(e) Selections and placement
Having identified the candidates eligible for the posts, the management should proceed with the
selection of right candidates and their placement. Selection is the process of testing the ability, skill and
aptitude of the candidates. It is done to find out those candidates who are best suited to the specific jobs.
Placement is the process of assigning a job to an accepted individual for which he is best suited. Selection
and placement may or may not occur simultaneously. When candidate are chosen for specific jobs, selection
and placement go together, but when a large number of candidates are selected for avoid of jobs, placement
is generally done only by importing training.
(f) Socialisation
After an employee has been selected and placed at a specific job, the next logical step is to
introduce him to the culture of the organisation, through socialization. It is a process of transmitting the key
values, norms, policies and objectives of the company to the employees with a view to shaping their
attitudes, thought and behaviour and assimilating them into the dominant culture of the company. It enables
a new employee to understand the organisation better and makes him or her feel at home at his work
environment. This is extremely important to his motivation and performance in the organisation.
(g) Training and Development Process
Although the two terms are generally put together, they are not identical in meaning. Training is a
learning process that seeks to bring about a permanent improvement in the ability and behaviour of employees
by enabling them to learn new skill, knowledge, attitude and behaviour so that they can become better
performers. It is mostly intended for operating employees. Development is a much broaden concept than
8
training. It is basically an educational process which is directed to increase the conceptual ability of employees
to understand and apply knowledge in terms of cause and effect relationship, in the organizational situation.
It is generally intended for managerial people training and development programmes which essential for
enhancing the quality and potential of human resources for improving the standards of performance and
productivity of an Organisation.
(h) Performance appraisal and review
It is a process of ascertaining how effectively an employee is performing his job. The object of the
appraisal is to determine the present state of efficiency of an employee in order to establish the actual need
for training and motivation. It also serves to indicate the areas of weakness in employee performance so
that measures for skill improvement and prayer motivation may be taken to remedy the situation.
Although performance appraisal is central to training and development programmes, it provides
valuable information to the entire spectrum of HRM. It can offer important feedback information on the
effectiveness of recruitment, selection, motivation and compensation systems. Hence, appraisal methods
should be most carefully chosen and designed to meet the multiple requirements of HRM.
(i) Accommodation
The accommodation process refers to the extent to which management listens and responds to or
accommodates the needs, wants, and complaints (or grievances) of organization members. People working
in organizations expect to be treated fairly; moreover, they feel they have the right to be heard and to be
respected as individuals. Morale is severely affected when there is a sense of unfair treatment or when
workers perceive that management does not care about their feelings, complaints, and suggestions. Systems
for managing the accommodation process include questionnaires, suggestion boxes, an “open-door”
philosophy and formal grievance procedures. The effectiveness with which the accommodation process is
managed varies within organizations and depends on a number of factors such as prevailing leadership
style and management philosophy.
(j) Fair Compensation System
A fair compensation system for rewarding the employees is the most important prerequisite to
attracting and maintaining the employees. Compensation in a narrow sense refers to the wages and salaries
which are paid to the employees in return for their services. But its meaning is often extended to include all
kinds of payments and benefits offered to the employees in lieu of their services. However, the amount of
money paid to an employee is the most important form of compensation as it enables the receiver to satisfy
most of his or her needs. The crucial point about monetary compensation is that it should be fair from the
point of view of both the employer and the employee. Although a fair compensation is difficult to define, it
should be taken to mean the amount that is adequate for the demands and requirements of the job.
(k) Employee Benefits and Services
In addition to fair monetary compensation, employees should be provided with a number of non-
monetary benefits and services which are no less important. The benefits are provided mostly in the form
of paid holidays and vacations, pensions and retirement benefits, accident and life insurance benefits, etc.
Services that are generally offered to the employees include social and recreational activities, medical and
transport facilities, housing, credit cooperatives, discounts in purchases and cafeteria. These benefits are
provided to all the members of an organization regardless of their performance. As such they are intended
mainly for the maintenance of employees, research studies indicate that although employees prefer money
9
to anything else, they strongly desire to take a part of their compensation in the form of benefits and
services. In most of the cases an employee’s decision to stay with or leave the organization will be influenced
by the number of benefits and services provided. Therefore, an organization should be to offer as many
advantages as possible to its employees.
(l) Safety and Health Care Programmes
Safety and health care programmes are essential to the maintenance of employees. Industrial
safety implies that the working conditions in or around the factory or mines should be free from the danger
of accidents and health hazards. An accident is a tragic incident which has human, social and economic
dimensions. It results in tremendous mental and physical sufferings for the injured apart from the loss of
earnings. The organizations suffer enormous financial loss in terms of compensation payable to the injured,
damaged equipment and loss of production.
Hence, every precaution should be taken to protect the employees from the damage of accidents.
In addition to adequate safety measures, training and education programme should be organized to create
safety consciousness among the people. The setting up of a separate safety department can go a long way
in eliminating or reducing the hazards of accidents.
Apart from accidents, workers in an industrial organization is often exposed to certain health
hazards and occupational diseases. Proper steps like provision for cleanliness, safe disposal of waste and
effluents, proper ventilation and lighting should be taken to protect the health of the employees. Moreover,
efficient medical service and recreational activities can greatly contribute to the physical and mental well-
being of the employees.
(m) Collective Bargaining
The collective bargaining process refers to those events that establish a formal agreement between
workers and management regarding such matters such as wages and employee benefits, hours of work,
working conditions and. grievance procedures. The process includes both the negotiation and administration
of the labour-management contract.
(n) Organizational Development
The integrated approach which is followed for the simultaneous development of people and
organization is called organization development (OD). It may be defined as a comprehensive programme
of building a climate of improved decision-making adaptability and higher performance in an organization.
It is, in fact, a long-term process of deliberately changing the organization by training and developing
managerial people so as to make it more dynamic and effective in meeting the challenge of competition,
adaptation and growth. OD programmes are mainly characterized by planned approach to change, emphasis
on group rather than individual, participation in external change agents, use of intervention strategy and
action research. It includes such complex process as grid training, survey feed back, team building and
transactional analysis.
1.5 Significance of Human Resource Management
Human Resource Management is of utmost important from atleast three standpoints, social,
professional and individual enterprises.
(i) Social Significance
The effective management of human resources is likely to serve the goals of our society. It can
serve the following goals:
10
* It can help to maintain an even balance of jobs and job holders to raise living standards of individuals
in society.
* It can help people to avail the best most productive and most gainful jobs where they can be most
satisfy and effective.
* It can help to ensure the best protection and conservation of human resources to prevent its
wasteful or careless use.
* It can help people to take decisions with minimum direction and control.
(ii) Professional Significance
From professional standpoint, the management of human resources is also of great significance. It
can provide motivation for effective teamwork by providing desirable working conditions and policies.
Specifically, it can serve following professional goals.
* It can help in maintaining the dignity of individual members.
* It can help in providing maximum opportunities for personality development of each participant in
the organization.
* It can help in improving employees working skills and capacity thereby increasing productivity and
standard of living.
* It can provide healthy relationship between different work groups so that work is effectively
performed.
* It can ensure conservation of human resources by correcting errors of wrong placement and
proper reallocation of work.
(iii) Individual Enterprise Significance
The management of human resource management has also significance from stand points of the objectives
of the individual enterprise. It can help the individual enterprise to achieve its goal by:
* obtaining capable people through scientific recruitment and selection techniques. Enterprise can
identify proper sources of manpower supply and select the suitable candidates among available
personnel.
* using proper training and development techniques, the existing manpower can be effectively and
efficiently utilized. The proper training and development programmes help the employees to learn
new techniques of production, thereby increasing productivity and quality of product. Training
programmes also prevent industrial accidents and manpower obsolescence. Thus, ultimately helps
in improving organizational climate.
* maintaining the willingness of people to work through equal provisions of opportunities for satisfaction
of human needs not only physiological and security but also need of love, esteem and self actualization.
1.6 Environmental Influence on HRM
A number of environmental factors influence the work of a HR manager. He cannot perform his
job in a vacuum. These factors influence the organization through human resources. The term ‘environment’
here refers to the totality of all factors which influence both the organization and personnel sub-system.
11
Table 1.1: External and Internal Factors influencing the Personnel Function
External Factors Internal Factors
• Technological factors • Mission
• Economic challenges • Policies
• Political factors • Organisational culture
• Social Factors • Organisation structure
• Local and Government issues • HR systems
• Unions
• Employer’s demands
• Workforce diversity
The external environment consists of those factors (Table 1.1) which affect an organisation’s human
resources from outside the organization. Each of these external factors separately or in combination can
influence the HR function of any organization. The job of a HR manager is to balance the demands and
expectations of the external groups with the internal requirements and achieve the assigned goals in an
efficient and effective manger. Likewise, the internal environment also affects the job of a HR manager. The
functional areas, structural changes, specific cultural issues peculiar to a unit, HR systems, corporate policies
and a lot of other factors influence the way the HR function is carried out. The HR manager has to work
closely with these constituent parts, understand the internal dynamics properly and devise ways and means
to survive and progress. In addition to these, the personnel manages has to grapple with the problem of
workforce diversity.
1.7 Status of HRM in Indian Industry
The studies in this area have given the status of HRM in India as follows:
(a) Most of the companies recognized the significance of the personnel function and paid substantial
attention to personnel in their corporate structures.
(b) The private sector companies placed greater emphasis on the personnel department than those in
the public sector.
(c) The average remuneration of employees in the personnel area was at par with that of their
counterparts in other functional areas.
(d) The status of personnel in the corporate structure of multinationals appeared to be relatively higher
as compared to other private sector companies. The proportion of the gross remuneration of
employees in the personnel area to that of the gross remuneration of non personnel employees was
found to be double in the case of the former as compared to the latter. The ratio of employees in
the personnel area to non-personnel employees was found to be more in the former than in the
latter.
(e) The personnel executives at the corporate level were highly qualified, most of them were double
graduates and several of them possessed post graduate qualifications.
(f) In conjunction with the personnel executives performing general personnel functions, there existed
several personnel specialists and personnel advisors at the corporate level to facilitate the growth
of different aspects of human resource management functions.
12
(g) There existed personnel function in the organization even if it did not have a personnel functionary
at the corporate level. Although the initial salary at the enterprise level may not have been as high as
at the corporate level, by mere seniority, a labour welfare officer or an establishment officer who
performed housekeeping or record keeping functions could reach the salary level, equivalent to
the corporate structure. Thus, earning a high salary did not mean that the personnel function with a
variety of sub-systems was playing a multifunctional innovative role in an enterprise.
(h) Several designations of managers manning the personnel department in companies were found.
Perhaps designations reflected the policy and tradition of an individual company. The use of several
designations appeared to be linked with the development of different sub-systems of personnel,
management and thus, reflected the scope and status of personnel at corporate level.
(i) The employees in the personnel department had more than 40 different designations. Personnel
Manager, Personnel Officer, Chief Personnel Manager, Chief Personnel Officer, and Industrial
Relations Manager were some of the most common designations used in the companies.
(j) The personnel director had specialist officers reporting to him. Alternatively, in some cases only
one specialist existed as a manpower specialist. The higher the level of the personnel employee in
the organization (personnel director), there would be a department built around him embracing
both specialists and generalists working in IR and personnel functions. Multifunctional innovative
department had an integration of the two streams and was concerned with the formulation and
implementation of personnel policy to facilitate the attainment of corporate objectives.
The foregoing analysis of status of HRM in India depends upon a lot of factors such as philosophy
of top management of the organization towards the human resources, volume of business and government
policies towards human resources.
1.8 Recent Developments in HRM
The HR environment is changing and so is the role of HRM, to adapt the changing trends. The
human resource managers of today may find themselves obsolete tomorrow in the changed business
environment if they do not adapt HR practices suiting to the environment. As such, new role or practices
have emerged to successfully respond to the changes. Some of the important HR practices are discussed
here:
(a) Flatter Organisation: Physical organization was the norm of yesterday. The pyramidal shape
of organizations is converted into flat organizations reducing the ten-twelve levels to five-seven levels. The
increasing number of flat organization abounds in the country. One main feature of flat organization, among
other things, is that there are more people to report to the managers, they will be less able to meddle in the
work of their subordinates.
(b) Employee Empowerment: Gone are days when managers were exercising formal power
over employees to get work done from them. The changes occurred in attitude and awareness of employees
over the period has rendered this mode of managing employees as obsolete. Under the changed conditions
when employee has become, what is popularly termed as a ‘knowledge worker’, the employees need to
be provided with greater autonomy through information sharing and provision of control over factors that
affect performance. This is, experts say, turning the typical organization upside down. Granting sanction to
the employees to make decisions in their work matters is called ‘employee empowerment’.
13
(c) Team work: The concept of division of labour i.e., specialized function introduced by Adam
Smith remained in practice for a long period till the twentieth century. But, given the process-oriented work
nature of modern organizations, single-function concept has ceased to its relevance. Modern organsiation,
or say, MNCs rely more on multi-function of workers so that workers do not remain confined to a single
function but can do more than one function. This is particularly so in case of increasing concern for downsizing
by the organizations. As such, a worker’s contribution to organization becomes more as a member of the
team. The managerial implications are that these workers need to be managed accordingly as a team, not
an individual in isolation. In other words, managers need to follow a holistic approach of management for
managing such workers. 360 degree appraisal may be such as example.
(d) Ethical Management: As the issues faced by the HR managers have increased in number
and complexity, so have the pressures and challenges of working ethically. Ethical issues pose fundamental
questions about fairness, justice, truthfulness, and social responsibility. Concerns have been raised about
the ethical standards used by managers and employees, particularly those in business organisations. The
most common unethical incidents exhibited by employees have been cheating on expense account, paying
or accepting bribes and kickbacks, forging signature, lying to supervisors, employees’ alcohol or drug
abuse, and falsification of records.
Ethics means doing just or right. In this sense, ethics deals with what “ought” to be done. For the
HR manager, there are ethical ways in which the manager ought to act relative to a given human resource
issue. However, determining specific (ethical) actions is not always easy. Ethical issues in HRM often have
dimensions such as extended consequences, multiple alternatives, mixed outcomes, uncertain consequences,
and personnel effects. Then, the real problem of HR manages is how to deal with these ethical dimensions?
Researchers have suggested some guidelines that can help HR managers respond to the ethical elements:
• Does the behaviour or result achieved comply with all applicable laws, regulations, and government
codes?
• Does the behaviour or result achieved comply with all organizational standards of ethical behaviour?
• Does the behaviour or result achieved comply with professional standards of ethical behaviour?
It is clear from the above points that just complying with the laws and regulations cannot guarantee
ethical behaviour. Instead, organizational members need to be guided by values and codes of behaviour.
One way to include ethical behaviour in organizations is to conduct training of employees and HR managers.
Training of employees and HR managers in ethics compliance has been found to reduce the incidence of
ethical problems.
1.9 SELF CHECK EXERCISE
1. What do you understand by HRM? Discuss in brief.
2. Discuss brief explanation of objectives of HRM.
3. Write a short-note on Scope of HRM.
4. Discuss in brief importance of HRM.
5. What is the status of HRM in Indian Industry? Discuss in brief.
6. Write a short-note on ethical management.
14
1.10 SUMMARY
Human resource management is a process of procuring, developing and maintaining competent
human resources in the organization so that the goals of an organization are achieved in an effective and
efficient manner. To make organisation effective and efficient, HRM aims at coordinated efforts to the
competent managers and workers towards the ultimate goal. The general objective of HRM is to contribute
towards realization of firm’s goal. HRM is significant from the social professional and individual enterprise
point of view. A number of environmental factors influence the work of HR manager. HR managers of
today may find themselves obsolete tomorrow in the changed business environment if they do not adopt
HR practices suiting to the environment.
1.11 GLOSSARY
• Flat organization (also known as horizontal organization) has an organizational structure with few
or no levels of middle management between staff and executives. Transforming a highly hierarchical
organization into a flat organization is known as delayering.
• Human resource management (HRM or HR) is the strategic approach to the effective management
of people in a company or organization such that they help their business gain a competitive
advantage. It is designed to maximize employee performance in service of an employer's strategic
objectives.
• Job consists of duties, responsibilities, and tasks (performance elements) that are defined and
specific, and can be accomplished, quantified, measured, and rated.
• Management consists of the interlocking functions of creating corporate policy and organizing,
planning, controlling, and directing an organization's resources in order to achieve the objectives
of that policy.
• Personnel mean the people who work for a particular company or organization or in a department
within a company or organization that deals with the people who work for it.
1.12 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 1.2.
2. For answer refer to section 1.3.
3. For answer refer to section 1.4.
4. For answer refer to section 1.5.
5. For answer refer to section 1.7.
6. For answer refer to section 1.8.
1.13 TERMINAL QUESTIONS
1. Define human resource management. Explain the objectives and significance of human resource
management.
2. Outline the scope of human resource management in the light of ongoing changes scenario in the
economy.
3. Discuss the factors influencing HRM in detail.
4. Explain the status of HR Manager in Indian Industry.
5. What are the recent developments in HRM?
15
1.14 SUGGESTED READINGS
1. Yoder D, Heneman H.G. and Turnbull J.G. and Stove C.H., Handbook of Personnel Management
and Labour Relations, McGraw Hill, New York.
2. Ahmad, S., Human Resource Management and Technical changes, Kalpaz Publications, New
Delhi.
3. Formburn C.J. et al. Strategic Human Resource Management, Wiley, New York.
4. Bemardin, H.J. and Russel J, Human Resource Management, McGraw Hill, New York.
5. Gramin H.T. and Bennett R., Human Resource Management, Pitman Publishing, Delhi.
6. Decenzo, D.A. and Robbins, S.P., Personnel/Human Resource Management, PHI, New Delhi
7. Dessler, Gary, Human Resource Management, PHI, New Delhi.
*****
16
LESSON-2
PERSONNEL MANAGEMENT
STRUCTURE
2.0 INTRODUCTION
2.1 LEARNING OBJECTIVES
2.2 CONCEPT OF PERSONNEL MANAGEMENT
2.3 NATURE OF PERSONNEL MANAGEMENT
2.4 APPROACHES TO [ERSONNEL MANAGEMENT
2.5 FUNCTIONS OF PERSONNEL MANAGEMENT
2.6 CHALLENGES TO PERSONNEL MANAGEMENT
2.7 SELF CHECK EXERCISE
2.8 SUMMARY
2.9 GLOSSARY
2.10 ANSWERS TO SELF CHECK EXERCISE
2.11 TERMINAL QUESTIONS
2.12 SUGGESTED READINGS
2.0 INTRODUCTION
For the different use of all material and economic resources efficient use of human resources employed
in a firm is essential. Otherwise raw materials will remain stocked, machines will remain idle and money will
get tied up. The development, allocation, utilization and conservation of human resources through their
employment is a continuing, inevitable process in modern societies. Social objectives of business can be
achieved only through the efficient utilization of human efforts. Therefore, management of manpower assumes
greater importance. The efficient utilization of human resources and their conservation and prevention of
their waste is the major responsibility of personnel management.
2.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define personal management and explain approaches to personnel management.
(b) Discuss the various functions of personnel management.
(c) Pinpoint the challenges to personnel management.
2.2 Concept of Personnel Management
Personnel management is the management of people at work. It involves employment, training,
appraisal and compensation of the people. Some of the important definitions of personnel management are as
follows:
According to Edwin B. Flippo, “Personnel management is the planning, organizing, compensation,
integration and maintenance of people for the purpose of contributing to organizational, individual and societal
goals.”
17
According to E.F.L. Brech, “Personnel management is that part of the management process which
is primarily concerned with the human constituents of an organisation.”
According to Institute of Personnel Management (U.K.), “Personnel management is integral but
distinctive part of management, concerned with people at work and their relationship within the enterprise,
seeking to bring together into an effective organisation the men and women who staff the enterprise, enabling
each to make his/her best contribution to its success, both as a member of a working group and as individual.
It seeks to provide relationships within the enterprise that are conducive both to effective work and human
satisfaction.”
Personnel management is that part of the management process which is concerned with the
management of human resources in an organisation. It tries to secure the best from people by winning their
wholehearted cooperation. In short, personnel management can be defined as the art of procuring, developing
and maintaining competent workforce to achieve the goals of the organisation in an effective and efficient
way.
2.3 Nature of Personnel Management
The personnel function is performed by all the managers at all levels in organisation. It is a pervasive
function of management. It may be noted that personnel department is created to help the managers various
levels to perform their personnel functions. The personnel manager performs certain operative functions of
the personnel department like selection, placement, training and development, performance appraisal, wages
and salaries administration, etc. All the line managers have to make their contribution in the performance of
these functions. The nature of personnel management can be further elaborated as follows:
(a) It includes the functions of employment, training, development and compensation. These functions
are usually performed by the personnel department in consultation with the other departments.
(b) It is an extension of general management that of promoting and simulating every employee to
make his fullest contribution to the purpose of the business. Personnel management is the management of the
personnel.
(c) It exists to assist and advise the line or operating managers to do their personnel work more
effectively. Personnel manager is specialist advisor. Thus, personnel department is a staff department.
(d) It focuses attention on action, rather than on record keeping, written procedures or rules. The
problems of employees at work are solved through rational policies.
(e) It has human orientation. It tries to help employees develop their potential fully. It encourages
them to give out their best to the organisation. It motivates employees through a systematic process of
recruitment, selection, training and development coupled with fair wage policies.
(f) It is concerned with employees both as individuals and also as groups. It includes both blue-collar
employees (craftsmen, workers, etc.) and white-collar employees (managers, supervisors and clerks).
2.4 Approaches to Personnel Management
Philosophy is dynamic and changes with shifting values over a time. There are many forces, both
internal and external, which influence its development. The personnel philosophy and the field of personnel
management as we know today have evolved as a result of shifting values over a long period of time
stretching to many centuries under the influence of many forces such as religious, economic, cultural, political,
legal forces. For example, reformation, a religious revolution, was responsible for philosophy of competitiveness,
commercial revolution gave rise to the concept of master-servant relationship between the employer and the
18
employee, industrial revolution gave rise to modern factory system, expansion and diversion and emphasized
division of labour and specialization and facilitated rise of unions, rise of democracy led to assertion of
individual values and rights, change in cultural and work values led to demographic changes in the workforce.
Sometimes customs and folkways became values. All these forces have contributed to the evolution of the
personnel management in its present form. A study a few important developments that have occurred in this
field from the time round about industrial revolution are as follows:
(a) Pre-Industrial Revolution Scene
Though there always has been some philosophy relating to the management of employees and utilization
of human resources but prior to industrial revolution, personnel management did not appear as a field of
formal study or knowledge. The personnel philosophy of the times grew out of the custom, standards and the
practices of ancient and medieval times. The pre-industrial revolution time was marked by small size of work,
whether on farm, in shops, on the cottage or home. For example, labour was treated and paid according to
custom or tradition in kind or cash or in both. In India, even the occupation of people was determined by their
caste. There was utter lack of mobility of labour. Due to small scale of work or production and near absence
of mechanization as we understand today, and on account of causes given above, no need was felt of
evolving a particular philosophy related to personnel management. It was the industrial revolution, in 18th
century which drastically changed the nature of work and set in motion such forces that necessitated the
solution of problems of large number of workers engaged in factories, mills and companies in later years.
Before industrial revolution, only the church or the governments employed large number of people to run their
affairs. In short, modern personnel philosophy has largely been an outgrowth of the forces originating from
the industrial revolution.
(b) Early Years of Industrial Revolution – A Period of Laissez faire
Industrial revolution changed the nature of work and gave rise to factory system. In early years of
industrial revolution, the factories were small, generally owned by a single individual who also used to plan
and organize production. In the early decades of industrial revolution, i.e. during the transition from domestic
to factory system, there was very little concern for the welfare of the labour or his rights. The Government
on its own part followed the policy of “Laissez-faire” in its relationship with business or factory owners. The
period was characterized by low wages, long hours of work, child labour, arbitrary lay-offs, and miserable
working conditions. The dominant consideration was that it is the management rights and interests that should
be served. The owner was self-centred and self-interested with the result that relations between employer
and employees were distant and impersonal and he had no concern for the lot of labour. It was a condition of
“take it or leave it!” Richard P. Calhoon has termed this stage as “Caveat Operarius” meaning “Let the
employee beware!”
(c) Mechanical or Commodity Approach towards Personnel
With the inventions of new machines and introduction of innovative practices, goods began to be
produced on large scale. Big mills, foundries, and mines were established. Mechanisation i.e. use of mechanical
power and large scale production required large number of workers. Mechanisation brought with it many
problems such as unemployment, safety hazards, unpleasant and execrable working conditions. There was
little interest in the lot of labour. Workers had a low status in the society and were considered inferiors.
Ruthlessness and cruelty towards employees was part of natural law. Labour like other inert and inanimate
things was regarded as a commodity or factor of production.
19
Mechanical approach toward personnel implied that labour was to be treated as another factor of
production. Thus labour was categorized with land and capital as a factor of production. It was to be procured
as cheaply as possible and was to be utilized to the fullest. The commodity concept of labour meant that
employees services should be purchased like other factors of production, in accordance with the forces of
supply and demand. Wages were high when labour was scarce in relation to their demand and were low
when supply was more than their demand. In 19th century, industrial firms and employers were solely concerned
with production, and workers were manipulated and exploited like any other inert factor of production. The
fact, that employees and workers are human beings, have their own feelings, sensibilities and attitudes, and
needed to be treated more humanely, was not recognized. Hence the importance of human element or
workers welfare did not exist. It was assumed that workers were controllable, predictable, and interchangeable
and there was no scope for improving their contribution. They could be hired and fired at will and they had no
say in the matter. The wages and salaries were still awfully low and working conditions in factories were
abominable and unbearable. The employees interests and rights remained ignored.
Greater mechanization and the innovative practices employed by employers to effect economies of
scale resulted in unemployment of labour and insecurity. Edwin Flippo called it technological unemployment.
According to him, loss of jobs through the development of new machines or new techniques is termed as
technological unemployment. Labour is replaced either by machines or by management innovations that
result in more work being done by fewer persons. For almost over a century this mechanical approach was
applied to labour without any interference from outside. This was a free-enterprise system in which employees
looked after themselves and bore the adverse effects of technological changes.
(d) Welfarism or Paternalism
In the latter part of 19th century, workers started organizing themselves into unions and their
memberships started increasing. The period witnesses the emergence of social consciousness which helped
in initiating factory legislation. A few employers also reacted to the human problem caused by industrialization
and took some measures to help the workers in solving some of these problems. For this purpose, a few
employers in America and England appointed social or welfare secretaries to look after personal needs of
employees. They began to undertake voluntarily a number of humanistic activities to improve working conditions.
The principle characteristic of welfarism was recognition of responsibility for the welfare of employees. The
approach of welfarism was in fact an attempt on the part of employers to prevent workers from joining
unions which were raising their head and growing stronger at that time. They felt that employees joined
unions because they neglected employees welfare. Thus their brand of welfarism grew out of the fear of
union’s power. But the approach was adopted only by a small percentage of employers and a large number
of organisations remained indifferent to their welfare. It would be interesting to note the characteristics of
welfarism as it was practiced.
Welfarism of the time originated out of social consciousness as well as out of the fear of rise of
unionism. Some employers adopted this approach voluntarily and undertook some welfare activities they felt
the employees needed. It was the employer who decided what welfare measures were to be undertaken and
the employees had no say in the matter. Thus approach of welfarism was characterized by a belief that “only
management was qualified to determine what was best for employees.” Of course, employers took more
interest in helping employees who were sick or unable to work and helped employees in meeting their
personal problems such as education, housing and medical needs. Owners or managers decided who was
worthy of loans and for what purposes loans were legitimate. Through these measures, employers bought
20
employees loyalty and gratitude and maintained control over their private lives. For example, in some American
industrial establishments, it was obligatory for workers to go to church. Employers undertook those welfare
programmes that they thought were good for employees just as a parent decides what is good for the child.
Welfarism took the form of what is called paternalism.
(e) Scientific Management (Taylorism) – Business Philosophy
In the early years of 20th century, F.W. Taylor propounded the philosophy of scientific management
which implied that problems in management of a business should be tackled scientifically i.e. they should be
subjected to critical analysis, inventive experiment and objective evaluation rather than to rely on tradition and
intuition. Taylor asserted that the first object of management should be to secure the maximum prosperity for
the employer, coupled with the maximum prosperity for each employee. And the prosperity and material
welfare can be ensured only if there is an overall improvement in productive efficiency or productivity of the
enterprise. This could be done by applying scientific methods and principles. He asserted that improved
productive efficiency will result in higher wages for the labour. According to him, each individual was a
unique resource which should be conserved and utilized properly. It was also emphasized that proper training
could improve the efficiency of workers and hence efficiency of the enterprise. This, in nutshell, was the
philosophy of scientific management.
Scientific management was primarily concerned with the improvement in productivity through greater
efficiency in production and increased pay for workers through the application of the scientific method.
These principles emphasized using science, creating group harmony and cooperation, achieving maximum
output, and developing workers. It was followed by technique approach, towards personnel management.
The basic assumption was that if employees were properly selected, trained, compensated and supervised,
productivity would automatically result. The emphasis on specialization and improved training of personnel
strengthened the need of a personnel department.
Another noteworthy development that occurred in early decades of 20th century was emergence of
philosophy of business-relationships which emphasized on increasing productivity and reducing costs. The
unions started acquiring strength and demanded higher wages. The employers on their part tended to increase
pay packets instead of spending additional money on welfare and recreational measures, benefits and other
frills.
(f) Personnel Management from 1900 onward until the Great Depression
In the first two decades of 20th century, unions were the only force that led organisations to pay more
attention to the management of the personnel. This period saw the establishment of labour or personnel
departments in some large industrial organisations but their role was of advisory nature. They kept records
and provided specialized assistance only. Problems of operation were given prominence over problems of
personnel management. In the First World War, army authorities developed selection tests for recruits to the
army. The advanced versions of these tests are being applied for selection of personnel for business and
industrial organisations even today. Thanks to the efforts of early unions, organizations started giving more
attention to human and social aspects of management.
(g) Humanism and Human Behaviour Approach
The main purpose of most of the employers behind establishing personnel departments in 1900-1930
period was to prevent their employees from organizing i.e. to discourage unionisation. In some cases, they
planted their own men as office bearers of the unions. They used threats, bribes, or other unfair practices in
21
their attempts to capture or control unions. The great depression of the 1930s resulted in mass unemployment
and caused great misery to the labour in particular and other sections of the society in general. Wide spread
strikes disrupted commerce. It was felt that business organisations were averse to their needs and interests.
In words of Werther & Davis, “The depression of the 1930s led citizens to lose faith in the ability of business
to meet society needs”. They called for Government intervention. During the depression of 1930s, some
governments enacted laws about unemployment compensation, social security, minimum wages, and rights of
employees operating system form unions and bargain collectively. For example, American Government enacted
Wagner Act, also known as the National Labour Relations Act, in 1935 and allowed employees to form labour
organisations and to bargain with management about wages, hours of work, and working conditions. Under
the Act, management was prohibited to interfere, restrain or cerece employees who desire to act collectively
or refrain from such activities, to dominate or interfere with the formation or administration of any labour
organisation by contributing money or other support to it, to refuse to bargain in good faith with employee
representatives etc. The great depression not only led to Government intervention and hence labours legislation,
it also caused soul searching in employee relations during 1930s. According to this philosophy, it was felt that
management had definite responsibilities to employees over and above wages and decent working conditions.
This approach was counter to dehumanization characteristic of scientific management.
A humanistic philosophy focuses upon the individual employee, his needs, rights, and obligations, and
recognizes the need of teamwork. Human needs got more importance as a result of famous ‘Hawthorne
Studies’. These studies showed that efficiency goals of scientific management had to be balanced by
considerations of human needs. The results of Hamthrone studies had a profound impact on personnel
philosophy and management.
(h) The Hawthrone Experiments and their results
Elton Mayo, Professor of Industrial Research at Harvard University and his colleagues carried
extensive experiments at the Hawthorne Works of the Western Electric Company in Chicago (USA) between
1927 and 1932. These have become famous as Hawthorne Studies. Their purpose was to study the effects
of work environment, fatigue, rest pauses, hours of work, hours in working week, monotony, money incentives,
employee attitudes, employee organisation, leadership etc. on productivity. In fact, Mayo and his assistants
set out to measure the effect of changes in working conditions and other physical factors on the productivity
of workers. The results of these experiments were rather indifferent. What turned out to be starling and of
significance instead was that the factors responsible for improved output were social relationships among the
workers and the willingness of the workers to cooperate with the management.
Mayo and his researchers concluded that social factors, not physical, had the greatest influence on
willingness to work. Employees have not only economic needs but also psychological and social needs which
need to be served to motivate them and elicit their cooperation. An organisation was a social system rather
than an economic system. Another important conclusion of Hawthorne Studies was that management should
deal with workers not as individuals but as members of a group which influences their behaviour and attitude
towards work. Under favourable conditions a group of people may produce more creative ideas when working
together than when working individually.
The importance of Mayo’s work lies in the fact that he was the foremost pioneer who contributed to
the development of Human Relations Approach. His studies brought a behavioural science revolution. He
was the first to articulate and stress the importance of human and social factors in industrial relations. He also
stressed the promotion of informal social contacts at work. Hawthorne studies showed that the improvement
22
in productivity was due to such social factors as morale, satisfactory inter-relationships between members of
a work group and effective management. The management must understand human behaviour, especially
group behaviour, and serve it through such inter-personal skills as motivating, counseling, leading and
communicating. To summarize, humanistic philosophy or behavioural approach to personnel management
focuses on inter-personal behaviour, human relations, leadership, communication and motivation. It also lays
due stress on behaviour of people in groups. The approach is based on psychology (individual and social) and
sociology. It calls for a strong moral and ethical code with character and integrity as major requirements of
management. It recognized the importance of sound personnel management practices with concern for
individual needs and for human relations. In short, this approach stressed the importance of human and social
factors in industrial relationships. It questioned unnecessary emphasis on technical skills at the expense of
social skills.
2.5 Functions of Personal Management
There are two broad categories of functions of personnel management, which are: (a) Management
Function (b) Operative Functions. These are explained as follows:
(a) Management Functions
They are as follows:-
(i) Planning: Planning is the basic function of personnel management. It can be described as the
beginning of other functions. Planning can be described as a well-defined course of future action. Personnel
department is required to determine the personnel requirements, personnel programmes, policies, procedures
and methods, etc. Business operations are to be planned with reference to the overall objectives of the
enterprise.
(ii) Organisation: The function of organizing refers to the creation of a structure of duties and
function to achieve the objectives of the enterprise. According to Urwick “Organisation is determining what
activities are necessary for any purpose (or plan) and arranging them in groups which may be assigned to
individuals.” Organisation thus is concerned with activity-authority relationship. Under organisation, the
personnel manager creates a structure of duties and functions to achieve the objectives of the enterprise.
(iii) Directing: Direction can be described as the process of guiding and supervising the subordinates.
In the enterprise, the work of different subordinates is to be guided and supervised. Personnel manager is
required to give a specific direction to various activities in the office with a view to its proper functioning. He
is required to guide and to supervise the work of different departments.
(iv) Controlling: It is the last stage in management. Here, actual performance is compared with
plans and taking corrective action when results deviate from plans. Under controlling, personnel manager
evaluates and controls the performance of various employees working under him.
(b) Operative Functions
Operative functions are discussed in the following manner:
(i) Procurement: This first operative function is concerned with the obtaining of the proper kind and
number of personnel necessary to achieve the objectives. It includes operating system manpower requirements
and their recruitment, selection and placement cover various activities designed to screen and hire personnel,
such as application forms, psychological tests and interviews.
23
(ii) Development: After the personnel have been taken, it becomes necessary to develop them.
Development implies the enhancement of skill – through training, that is necessary for proper job performance.
Development function will be influenced by various factors, like induction of new machines, promotions and
transfers.
(iii) Compensation: This function can be defined as the adequate and equitable remuneration of
personnel for their contribution in achieving the objectives of organisation. Compensating remains one of the
basic functions of personnel management.
(iv) Integration: The function of integration relates to problems of communication, informal
organisation and trade unions. Integration can be defined as an attempt to effect a reasonable reconciliation
of individual and organsiational interests. Integration must follow the above functions of procurement,
development and compensation.
(v) Maintenance: It refers to sustaining and improving the working conditions that have been
established. However, it must be pointed out that it would be necessary to take care of physical well-being
and mental well-being of the employees. In other words, it includes establishment of health, sanitation, safety
standards and welfare facilities such as canteen, recreation rooms, group insurance, and education of the
employee children and so on.
2.6 Challenges to Personnel Management
Challenges to personnel management both arise from managerial practices i.e. from within the
organisation and from the changing external environment. Requirements and need of professionalism also
need tackling. Generally, these challenges are intertwined. The challenges to personnel management are as
follows:
(a) Organisational Challenges
Although there have been rapid improvements in managerial practices, improvements will still be
needed to meet these challenges. Most of them stem from within, due to demands for an expanded contribution,
modern information data and professionalism. The organizational challenges to personnel management are as
under:
(i) Organisational Objectives: The traditional concerns of a manager have been cost control,
improvement of efficiency, performance and profitability, compliance with legal requirements, growth of
business and fair return on capital. With human relation approaches in management and change in value-
system as reflected in ideas like concern for people, employee satisfaction, job security, social responsibility,
the objectives of management and organisation have undergone a sea change. More and more emphasis on
respect for dignity of individual and emerging hopes and aspirations of working class will put added pressures
on the organisation and management. Managers are required to work so as to achieve maximizing of both
dimensions viz. concern for production and concern for people and the management will have to adjust their
objectives in the light of the changes. It may necessitate change in current personnel practices.
(ii) Personnel Management Information System: For effective contribution, managers need a
modern management information system which is the total of all data concerning all aspects of production,
personnel and plans. This may need computerization of information base. The information requirements
pertain to duties, objectives, working conditions and other aspects of a specified job (job descriptions), required
qualifications, experience and skills to perform these jobs, human resource needs, compensation trends in the
market, biodata and other personnel records. Personnel department must see that privacy of personnel
24
records is safeguarded. A modern information system can help improve contribution of personnel managers
towards accomplishment of organizational goals and to meeting future challenges. The effectiveness of
personnel department depends on the quality of information it possesses and provides to others in the
organisation. Computerisation of information base, of course, involves substantial cost.
(b) External Challenges
Changes in society also affect management. Many of these changes will challenge personnel
management during this decade and beyond. These challenges are likely to stimulate many innovations in
personnel management in future. Some of these challenges are discussed below:
(i) Socio-Cultural Challenges: These challenges include population trends and demographic changes
like population growth rate, birth rate, percentage of the population comprising work force, education levels,
percentage of women in the workforce, changes in value system, social security costs, retirement programmes
etc. Decline in birth rate, increase in population, higher proportion rates of women participation and migration
of skilled workers to other countries result in change in the size and composition of workforce and pose new
challenges.
Cultural and work values also change over a time. These affect the attitudes of people toward work,
loyalty, attendance, work effort, retirement. Introduction of new values leads to changes in work ethics. Not
long ago, punctuality, honesty, loyalty to the organisation, hardwork, pride in one’s work, and frugality were
regarded as behavioural norms. These personal values were very helpful to the business organisations in
pursuit of their values of productivity, efficiency and effectiveness. One’s job or service was considered as
an essential means of livelihood and was one’s central like interest. With new winds of change, a new set of
values have appeared in the field of job or service. In pursuit of higher living standards, employees search for
more than one source of income and devise new ways and alternatives to find out new avocations and
assignments. It is no joke that many public sector employees in India regard their job salary as pension and
are always in search of some additional source of income from outside their organisation. Obviously, this
change in attitudes and values can only lead to less pride in work and hence inefficiency. New values raise
new demands. The effect of values can be positive as well as negative. For example, if workers have an
existential view of life, then they are likely to prefer quality of life to quantity, equity to efficiency, diversity to
conformity and individual to the organisation.
Moreover, extended periods of education, flexible life styles, improved social security and welfare
benefits may affect workforce participation rates. Motivating and satisfying social needs of workforce during
periods of varying values is a great challenge to personnel department.
(ii) Technological Challenges: Technological challenges mean changes in equipment, methods,
techniques and procedures. In developing countries like India, import or transfer of advanced technology is
likely to be a critical factor affecting management in general and personnel management in particular. Change
in technology may affect the growth of entire industries and hence human resource needs employment
opportunities. Technological changes are a great challenge to personnel management. Technological
unemployment is caused by introduction of machines and innovations. For example, automation and introduction
of computers may lead to some unemployment and reduction in manpower needs. Personnel departments
may have to devise some programmes aiming at early retirement of employees. The scheme known as
“Golden Handshake”, launched by some public sector companies in India, a few years ago, is a classic
example of such a programme. Technological changes not only affect changes in productivity levels, they
affect personnel management in many other ways.
25
(iii) Economic Challenges: Economic challenges comprise of factors like market pressures, business
cycle, boom or recession, general market conditions and Government economic monetary and fiscal policies.
In case of expansion of economy, the demand for new employees and for training and development would
increase. Employees and their unions demand higher wages, improved working conditions and better benefits.
In case of declining business, the organisation would like to maintain reduced workforce and reduced labour
cost. Personnel departments need to devise means and ways to reduce hours of work, to freeze new
employment, and lay off, if necessary. Thus changes in economic environment create new challenges for
personnel department.
(iv) Government and Legal Challenges: These challenges are represented in Government-business
relations and Government laws or what can be termed as changing demands of the Government. They have
immediate impact on the organisations and employer-employee relations and are a great challenge to personnel
management.
• Government-Business relations: The macro-economic policies of Government influence the
flexibility of product, labour and financial markets. For example, high structural budgetary deficits
and hikes in administrative prices of petroleum products and the like pre-empt savings, increase
prices and adversely affect business confidence and consequently working class. On the other hand
a stable macro-economic environment with a consistent budgetary mix is conducive to price stability
and building business confidence and poses less problems for personnel department. Again elimination
or curtailment of regulatory barriers or liberalization of economy will help restructuring of business
enterprises and personnel programmes.
• Legal Challenges: The Government passes laws to regulate employer-employees relations. The
Government enforces these laws and ensures their compliance. These laws have a direct and immediate
impact on personnel function. They usually aim at curbing those practices which are unfair to employees.
For example, in India we have the Indian Contract Act, Factories Act, Workmen’s Compensation
Act, Minimum Wages Act, Payment of Bonus Act and other legislation concerning social security
and safety. Organisations and their personnel departments are required to comply with them. This
helps in fulfilling societal objectives.
(v) Political Challenges: Political challenges stem from political environment which includes political
climate and stability, political parties and their philosophies, political influence of trade unions, Government
policies and international policies. Political environment and changes therein offer many challenges to personnel
management.
Internationalisation of management poses a great challenge to personnel management. Till recently,
the posts or jobs in Government departments or public sector companies and organisations were considered
prestigious as compared to those in private sector as they fetched higher salaries and benefits besides providing
security of service.
Now multi-national companies and some Indian private companies are offering fabulous salaries and
perks to higher level and middle level personnel, and professionals, salaries unheard and unimaginable only a
few years back, with the result that employees working in public sector companies and Government departments
are demanding higher wages and more benefits, and service in government establishments and public sector
organisations is becoming less attractive. Migration of some experienced and competent personnel with
specialization from public sector organisations to those in private sector has already started. This poses a
very serious challenge to personnel departments and organisations in public sector and domestic private
26
sector. Personnel management, in the circumstances, has to play an important and difficult role in coping with
this trend. Salary offers of Rs. 600,000/- and above p.a. plus car plus perks for some managerial positions are
common in newspaper advertisements now-a-days.
(vi) Demands of Interest groups on Third party interests (Societal Challenges): Government,
unions and special interest groups make demands on organisation. As the needs of society grow, the interest
of third parties may grow closer to those of organisations. As more people realize that the well being of
society is bound to the health of its organisations, pressures may mount for increased Government business
cooperation. Again competition in world markets and entry of multinationals etc. may convince unions about
the benefits of greater cooperation with the employers. To be successful, managements will have to be
sensitive to the demands of the society at large.
(vii) Other Challenges: Changes in society and business practices imply that there will be many
other challenges facing personnel management in future. Each of these challenges holds unseen implications.
As the list grows, the role of personnel management will grow and become more dynamic. The need for
innovation will be the greatest challenge of all.
2.7 SELF CHECK EXERCISE
1. Define Personnel Management.
2. Discuss in brief the nature of Personnel Management.
3. What do you mean by welfarism? Discuss in brief.
4. Write a short note on functions of Personnel Management.
5. Discuss in brief the challenges faced by Personnel Management.
2.8 SUMMARY
The function of personnel management is to provide the enterprise with efficient and competent
work force as per its requirements. The objectives of the personnel management are to develop desirable
working relationships between employers and employees to ensure maximum individual development and
lead human resources to attain individual, institutional and social objectives. The field of personnel management
has evolved as a result of shifting values over a long period of time stretching too many centuries under the
influence of many forces. These are many challenges that are likely to affect the tasks of personnel
departments and personnel managers. These challenges broadly include organizational challenges and external
challenges.
2.9 GLOSSARY
• Hawthorne Effect is when subjects of an experimental study attempt to change or improve their
behavior simply because it is being evaluated or studied. The term was coined during experiments
that took place at Western Electric's factory in the Hawthorne suburb of Chicago in the late 1920s
and early 1930s.
• Industrial revolution is defined as the changes in manufacturing and transportation that began with
fewer things being made by hand but instead made using machines in larger-scale factories.
• Paternalism is the interference with the liberty or autonomy of another person, with the intent of
promoting good or preventing harm to that person.
• Personnel manager is a manager responsible for administrative works such as recruitment, job
analysis, job evaluation, managing wages and salaries, training administration, resolving disputes,
labor law compliance and related tasks.
27
• Personnel management is defined as an administrative specialization that focuses on hiring and
developing employees to become more valuable to the company. It is sometimes considered to be
a sub-category of human resources that only focuses on administration.
2.10 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 2.2.
2. For answer refer to section 2.3.
3. For answer refer to section 2.4.
4. For answer refer to section 2.5.
5. For answer refer to section 2.6.
2.11 TERMINAL QUESTIONS
1. Define personnel management. Give its nature and functions.
2. What are the various approaches to personnel management? Discuss.
3. Explain the various challenges to personnel management.
2.12 SUGGESTED READINGS
1. Yoder D, Heneman H.G. and Turnbull J.G. and Stove C.H., Handbook of Personnel Management
and Labour Relations, McGraw Hill, New York.
2. Ahmad, S., Human Resource Management and Technical changes, Kalpaz Publications, New Delhi.
3. Formburn C.J. et al. Strategic Human Resource Management, Wiley, New York.
4. Bemardin, H.J. and Russel J, Human Resource Management, McGraw Hill, New York.
5. Gramin H.T. and Bennett R., Human Resource Management, Pitman Publishing, Delhi.
6. Decenzo, D.A. and Robbins, S.P., Personnel/Human Resource Management, PHI, New Delhi.
7. Dessler, Gary, Human Resource Management, PHI, New Delhi.
*****
28
LESSON-3
ROLE AND RESPONSIBILITIES OF PERSONNEL
MANAGER
STRUCTURE
3.0 INTRODUCTION
3.1 LEARNING OBJETCIVES
3.2 ROLE OF PEROSNNEL MANAGER
3.3 RESPONSIBILITES OF PERSONNEL MANAGER
3.4 PERSONNEL MANAGEMENT AND PROFESSIONALISM
3.5 SELF CHECK EXERCISE
3.6 SUMMARY
3.7 GLOSSARY
3.8 ANSWERS TO SELF CHECK EXERCISE
3.9 TERMINAL QUESTIONS
3.10 SUGGESTED READINGS
3.0 INTRODUCTION
Personnel management is concerned with people at work and their relationships with each other. It
may be defined as a set of programmes, functions and activities designed to maximize both personal and
organizational goals. It ensures that the organisation attracts and hires qualified, imaginative and competent
people. It involves the establishment of various policies to deal with employees and to retain them. To this
end, it lays out the rules regarding working conditions, designs appropriate compensation plans, and strengthens
employer-employee relations.
3.1 L EARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Describe the role played by a personnel manager.
(b) Understand the responsibilities of a personnel manager.
(c) Describe the personnel management as a profession.
3.2 Role of Personnel Manager
Personnel managers, now-a-days, wear many hats. They perform mainly three different types of
roles, while meeting the requirement of employees and customers, namely administrative, operational and
strategic.
(a) Administrative Roles
The administrative roles of personnel management include policy formulation and implementation,
housekeeping, records maintenance, welfare administration, legal compliance etc.
29
• Policy Maker: The human resource manager helps management in the formation of policies governing
talent acquisition and retention, wage and salary administration, welfare activities, personnel records,
working conditions etc. He also helps in interpreting personnel policies in an appropriate manner.
• Administrative expert: The administrative role of a personnel manager is heavily oriented to
processing and record keeping. Maintaining employee files, and HR-related databases, processing
employee benefits claims, answering queries regarding leave, transport and medical facilities, submitting
required reports to regulatory agencies are examples of the administrative nature of personnel
management. These activities must be performed efficiently and effectively to meet changing
requirements of employees, customers and the Government.
• Advisor: It is said that personnel management is not a line responsibility but a staff function. The
personnel manager performs his functions by advising, suggesting, counseling and helping the line
manager in discharging their responsibilities relating to grievance redressal, conflict resolution, employee
selection and training. Personnel advice includes preparation of reports, communication of guidelines
for the interpretation and implementation of policies, providing information regarding labour laws,
etc.
• Housekeeper: The administrative roles of a personnel manager in managing the show include
recruiting, pre-employment testing, reference checking, employee surveys, time keeping, wage and
salary administration, benefits and pension administration, wellness programmes, maintenance of
records, etc.
• Counsellor: The personnel manager discusses various problems of the employees relating to work,
career, their supervisors, colleagues, health, family, financial, social, etc. and advises them on minimizing
and overcoming problems, if any.
• Welfare Officer: Personnel manager is expected to be the Welfare Officer of the company. As a
welfare officer he provides and maintains (on behalf of the company) canteens, hospitals, crèches,
education institutes, clubs, libraries, conveyance facilities, co-operative credit societies and consumer
stores. Under the Factories Act, welfare officers are expected to take care of safety, health and
welfare of employees. The personnel manager are often asked to oversee everything in line with the
company legislation and stipulation.
• Legal Consultant: Personnel manager plays a role of grievance handling, settling of disputes,
handling disciplinary cases, doing collective bargaining, enabling the process of joint consultation,
interpretation and implementation of various labour laws, contacting lawyers regarding court cases,
filing suits in labour courts, industrial tribunals, civil courts and the like.
In some organisations, the above administrative functions are being outsourced to external providers
in recent times, with a view to increasing efficiency as also cutting operational costs. Technology is being put
to good use to automate many of the administrative tasks.
(b) Operational Roles
These roles are tactical in nature and include recruiting, training and developing employees, coordinating
HR activities with the actions of managers and supervisors throughout the organisation and resolving differences
between employees.
• Recruiter: “Winning the war for talent” has become an important job of personnel managers in
recent times in view of the growing competition for people possessing requisite knowledge, skills and
experience. Personnel managers have to use their experience to good effect while laying down
lucrative career paths to new recruits without increasing the financial burden to the company.
30
• Trainer, developer and motivator: Apart from talent acquisition, talent retention is also important.
To this end, personnel managers have to find skill deficiencies from time to time, offer meaningful
training opportunities, and bring out the latent potential of people through intrinsic and extrinsic rewards
which are valued by employees.
• Coordinator/linking pin: The personnel manager is often deputed to act as a linking pin between
various divisions/departments of an organisation. The whole exercise is meant to develop rapport
with divisional heads, using public relations and communication skills of HR executives to the maximum
possible extent.
• Mediator: The personnel manager acts as a mediator in case of friction between two employees,
groups of employees, superiors and subordinates and employees and management with the sole
objective of maintaining industrial harmony.
• Employee champion: Personnel managers have traditionally been viewed as ‘company morale
officers’ or employee advocates. Liberalisation, privatization and globalization pressures have changed
the situation dramatically. HR professionals have had to move closer to the hearts of employees in
their own self interest. To deliver results they are now seriously preoccupied with:
o Placing people on the right job.
o Charting a suitable career path for each employee.
o Rewarding creditable performance.
o Resolving differences between employees and groups smoothly.
o Adopting family-friendly policies.
o Ensuring fair and equitable treatment to all people regardless of their background.
o Striking a happy balance between the employee’s personal/professional as also the larger
organizational needs.
o Representing workers’ issues, problems and concerns to the management in order to deliver
effective results. Personnel managers have to treat their employees as valuable assets.
Such an approach helps to ensure that HR practices and principles are in sync with the
organisation’s overall strategy. It forces the organisation to invest in its best employees and
ensure that performance standards are not compromised.
(c) Strategic Roles
An organisation’s success increasingly depends on the knowledge, skills and abilities of its employees,
particularly as they help establish a set of core competencies (activities that the firm performs especially well
when compared to its competitors and through which the firm adds value to its goods and services over a long
period of time, e.g. ONGC’s oil exploration capabilities and Dell’s ability to deliver low cost, high-quality
computers at an amazing speed) that distinguish an organisation from its competitors. When employees’
talents are valuable, rare, difficult to imitate and organised, a firm can achieve sustained competitive advantage
through its people. The strategic role of personnel management focuses attention on how to enable ordinary
employees to turn out extraordinary performance, taking care of their ever changing expectations. The key
areas of attention in this era of global competition include effective management of key resources (employees,
technology, work processes), while delivering cost effective, value-enhancing solutions.
31
• Change agent: Strategic HR as it is popularly called now aims at building the organisation’s capacity
to embrace and capitalize on change. It makes sure that change initiatives that are focused on
creating high-performing teams, reducing cycle time for innovation, or implementing new technology
are defined, developed and delivered in a timely manner. The personnel manager in his new avtar
would help employees translate the vision statements into a meaningful format. HR’s role as a
change agent is to replace resistance with resolve, planning with results and fear of change with
excitement about its possibilities. Human resources helps an organisation identify the key success
factors for change and assess the organisation’s strengths and weaknesses regarding each factor. It
may not decide what changes the organisation is going to embrace, but it would certainly lead the
process to make them explicit. In helping to bring about a new HR environment there needs to be
clarity on issues like who is responsible for bringing about change? Who else needs to be involved?
How will it be measured? How will it be institutionalized? How will it be measured? How will it get
initiated, developed and sustained?
• Strategic partner: HR’s role is not just to adapt its activities to the firm’s business strategy, or
certainly to carry out fire-fighting operational like compensating employees. Instead, it must deliver
strategic services cost effectively by building a competent, consumer-oriented work force. It must
assume important roles in strategy formulation as well strategy implementation. To this end, it must
identify external opportunities from time to time, develop HR based competitive advantages and
move into close the gaps advantageously (like excellent training centre, design centre, automation
centre etc. which would be used by others as well). While implementing strategies, HR should
develop appropriate ways to restructure work processes smoothly.
3.3 Responsibilities of Personnel Manager
Planning, organizing, directing and controlling of procurement, development, compensation, integration,
maintenance and separation of human resources is to be done in such a way that individual, organizational
and societal objectives are achieved.
It must be noted that workforce or staff is primary and key resource and is thus a key instrument of
the organisation through which objectives are achieved. Again workforce is composed of human beings of
various types with complex changing needs and values. Providing and shaping the instrument of workforce
involves a number of activities to be performed by a personnel manager. The following are responsibilities of
personnel manager:
(i) To advise and counsel line managers in formulation and administering policies relating to personnel.
(ii) To analyse and ascertain the organizational health of the organisation with the help of records of
productive efficiency, absenteeism, labour turnover, accidents, internal mobility and complaints and
grievances.
(iii) To provide personnel procedures and services which are helpful to line managers in effective utilization
of human efforts.
(iv) To secure co-ordination of all these activities which are relevant to the efficient recruitment of
employees in the organisation.
(v) To ensure uniform and consistent administration of personal policies.
(vi) To ensure that employer observes the provisions of the Act relating to labour welfare.
(vii) To maintain harmonious relations between labour and management.
(viii) To interpret workers problems to the management.
32
3.4 Personal Management and Professionalism
In order to cope with internal and external challenges effectively, a personnel expert or manager is
required to develop a professional approach or what is called professionalism in management. Professionalism
is a major challenge. Personnel functions and activities are too important to be done by unqualified and
untrained persons. The need for education, professional training and development is being felt more and
more. With the explosion of knowledge and new developments in the fields of personnel management and
behavioural sciences, personnel manager is required to stay informed about advances in these fields. This
requires self-renewal on his part through reading, seminars, workshops with special association of experts.
He needs to learn continuously, and to strive hard to acquire human and managerial skills for achieving the
high standards expected to professionals. Profession of technical ability, proficiency in management and
resource utilization and acquisition of human relations (inter-personal) skills go a long way in enhancing
effectiveness of a personnel manager in today’s environment.
A proactive approach on the part of a personnel manager requires increased professionalism otherwise
he will not be able to meet the challenges of changing demographic factors, values, third party pressures and
other internal and external challenges. There is an urgent need for a statutory body or institute of personnel
management to look after matters concerned with it.
Management is a social process. Before describing the particular tasks, responsibility and obligations
of personnel managers and professionals, a study of social role of managers in general and of the concept of
social responsibility will be helpful. The important features of a profession are:
• Well-defined body of knowledge: A profession must have a systematic body of principles,
techniques and skills.
• Formal education and training: Everybody cannot enter a profession. An individual can enter a
profession only after acquiring knowledge and skills through formal education and training.
• Minimum qualification: An individual can enter a profession after obtaining a degree or diploma
from a reputed college, institute or university.
• Representative body: A representative body of professionals must exist to regulate and develop
professional activities in a systematic manner (like conducting exams, issuing certificate of practice,
carrying out research work).
• Service above self: A person must be committed to service to society. It must be acceded highest
priority apart from financial rewards or political gains.
• Ethical conduct: A strict code of conduct exists in every profession. Members of a profession,
however, are expected to follow the code sincerely and honestly.
Personnel management, over the years, has emerged as a highly respected profession in India. Prestigious
management institute have started imparting personnel management principles, techniques and practices in a
meaningful way. The specialised knowledge, experience and expertise in this discipline has found expression
in a growing body of literature represented by books, articles, research reports and surveys. The practitioners
and academicians in the field have formed representatives bodies (like Indian Institute of Personnel Managers,
Kolkatta and National Institute of Labour Management, Mumbai). Previously they were regulating the affairs
of the profession but are now a merged entity called, National Institute of Personnel Management (NIPM).
However, it does not regulate the profession of personal management on the same lines as the Institute of
Chartered Accountants of India, ICWA, ICSI etc. However, it conducts a two-year post graduate programme
33
which is accepted as an academic qualification for the post of personnel manager in various organisations. It
also conducts training programmes, seminars, conferences and workshops in order to contribute to aspects
relating to policy formulation, standardization of terminology etc. It has also devised a code of conduct for its
members.
It is, however, not possible for HR professionals to adhere to a strict code of ethical behaviour
always due to increasing pressures from political, economic and social forces. Such practices as gift giving,
hiring those recommended by powerful politicians, falsifying records of impress stock market analysts, drug
or alcohol abuse, sexual harassment, cheating on expense accounts, lying about sick leave, accepting bribe
and kick backs have all become part of organizational life everywhere. One way to overcome ethics related
problems is to conduct training of executives, managers and employees at regular intervals.
3.5 SELF CHECK EXERCISE
1. Define personnel management.
2. Discuss in brief the administrative role of personnel manager.
3. Write a short-note on strategic role played by personnel manager.
4. What are the responsibilities of personnel manager? Discuss in brief.
5. Write a short-note on relationship between personnel management and professionalism.
3.6 SUMMARY
Personnel management is concerned with the procurement and maintenance of a competent workforce
and inspiring employees individually and in groups to give their most while relating to organizational goals. The
personnel manager performs three roles namely administrative, operational and strategic. It is important for
the personnel manager to be a strategic business contributor in organisation. There are a number of
responsibilities of a personnel manager. He must have knowledge of the organisation and its overall functioning.
Personnel management as a profession has reached respectable heights, over the years.
3.7 GLOSSARY
• Administration refers to the group of individuals who are in charge of creating and enforcing rules
and regulations, or those in leadership positions who complete important tasks.
• Personnel management is defined as an administrative specialization that focuses on hiring and
developing employees to become more valuable to the company. It is sometimes considered to be
a sub-category of human resources that only focuses on administration.
• Policy is a set of ideas or plans that is used as a basis for making decisions, especially in politics,
economics, or business. An official organization's policy on a particular issue or towards a country
is their attitude and actions regarding that issue or country.
• Professionalism is "the conduct, aims, or qualities that characterize or mark a profession or a
professional person"; and it defines a profession as "a calling requiring specialized knowledge and
often long and intensive academic preparation."
• Recruitment refers to the overall process of attracting, short listing, selecting and appointing suitable
candidates for jobs (either permanent or temporary) within an organization. Internet-based
technologies which support all aspects of recruitment have become widespread.
34
3.8 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 3.1.
2. For answer refer to section 3.2.
3. For answer refer to section 3.2 (c).
4. For answer refer to section 3.3.
5. For answer refer to section 3.4.
3.9 TERMINAL QUESTIONS
1. Explain the various roles performed by a personnel manager.
2. What are the responsibilities of a personnel manager? Discuss.
3. Write a detailed note on personnel management and professionalism in India.
3.10 SUGGESTED READINGS
Davar, R.S., Personnel Management and Industrial Relations, Vikas Publishing House, New Delhi.
Dessler, G., Human Resource Management, Prentice Hall of India, New Delhi.
Khanka, S.S., Human Resource Management, S. Chand & Co., New Delhi.
Bernardin, H.J., Human Resource Management, Tata McGraw Hill, New Delhi.
Ivancevich, J.M., Human Resource management, McGraw Hill, Irwin.
*****
35
LESSON-4
HUMAN RESOURCE PLANNING
STRUCTURE
4.0 INTRODUCTION
4.1 LEARNING OBJECTIVES
4.2 CONCEPT OF HUMAN RESOURCE PLANNING
4.3 OBJECTIVES OF HUMAN RESOURCE PLANNING
4.4 SIGNIFICANCE OF HUMAN RESOURCE PLANNING
4.5 ADVANTAGES OF HUMAN RESOURCE PLANNING
4.6 HUMAN RESOURCE PLANNING PROCESS
4.7 PROBLEMS OF HUMAN RESORUCE PLANNING
4.8 SUGGESTIONS TO MAKE HUMAN RESOURCE PLANNING EFFECTIVE
4.9 SELF CHECK EXERCISE
4.10 SUMMARY
4.11 GLOSSARY
4.12 ANSWERS TO SELF CHECK EXERCISE
4.13 TERMINAL QUESTIONS
4.14 SUGGESTED READINGS
4.0 INTRODUCTION
Human resource is an important corporate asset and the overall performance of company depends
upon the way it is put to use. In order to realise company objectives, it is essential to have a human resource
plan. Human Resource Planning (also called employment or personnel planning) is essentially the process of
getting the right number of qualified people into the right job at the right time so that an organisation can meet
its objectives. It is a system of matching the supply of people (existing employees and those to be hired or
searched for) with openings the organisation expects over a given time frame.
Human Resource Planning (HRP) is a forward looking function. It tries to assess human resource
requirements in advance keeping the production schedules, market fluctuations, demand forecasts, etc., in
the background. The human resource plan is subject to revision, of course, and is tuned to the requirements
of an organisation from time to time. It is an integral part of the overall corporate plan and reflects the broad
thinking of management about manpower needs within the organisation. The focus of the plan is always on
getting right number of qualified people into the organisation at the right time. To this end, human resource
plans are prepared for varying time periods, i.e., short term plans covering a time frame of two years and long
term plans encompassing a period of five or more years.
4.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define human resource planning and appreciate the objectives and significance of human resource
planning.
36
(b) Outline and elaborate the process involved in human resource planning.
(c) Explain the problems which complicate and distoran effectiveness of human resource planning.
(d) Discuss how human resource planning can be made effective?
4.2 Concept of Human Resource Planning
In simple words, human resource planning is a process of sticking balance between human resources
required and acquired in an organisation. In other words, HRP is a process by which an organisation determines
how it should acquire its desired manpower to achieve the organizational goals. Thus, HRP helps an organisation
to have the right number and kind of people at the right place and right time to successfully achieve its overall
objectives. Let us also consider a few important definitions of HRP.
According to Terry L. Leap and Michael D. Crino, “HRP includes estimation of how many qualified
people are necessary to carry out the assigned activities, how many people will be available and what, if
anything, must be done to ensure that personnel supply equals personnel demand at the appropriate point in
the future.”
In the words of Beach, “Human resource planning is a process of determining and assuming that the
organisation will have an adequate number of qualified persons, available at the proper times, performing jobs
which meet the needs of enterprise and which provide performing jobs which meet the needs of enterprise
and which provide satisfaction for the individuals involved”
Geisler opines, “HRP is the process-including forecasting, developing and controlling-by which a firm
ensures that it has the right number of people and the right kind of people at the right kind of people at the right
places at the right time doing work for which they are economically most useful.”
Having gone through above definitions, HRP can now be defined as the comparison of an organisation’s
existing labour resources with forecast labour demand, and hence the scheduling of activities for acquiring,
training, redeploying and possibly discarding labour. It seeks to ensure that an adequate supply of labour is
available precisely when required.
HRP could be seen as a process, consisting of the following series of activities:
(a) Forecasting future personnel requirements, either in terms of mathematical projections of trends
in the economy and developments in the industry, or of judgements estimates based upon specific
future plans of the company.
(b) Present manpower resources and analyzing the degree to which these re-sources are employed
optimally.
(c) Anticipating manpower problems by projecting present resources into the future and comparing
them with the forecast of requirements, to determine their adequacy, both quantitatively and
qualitatively.
(d) Planning the necessary programmes of recruitment, selection, training, employment, utilization,
transfer, promotion, development, motivation and compensation so that future manpower
requirements will be duly met.
4.3 Objectives of Human Resource Planning
The basic purpose of having a human resource plan is to have an accurate estimate of the number of
employees required, with matching skill requirements to meet organizational objectives. It provides information
about the manner in which existing personnel are employed, the kind of skills required for different categories
37
of jobs and human resource requirements over a period of time in relation to organizational objectives. It
would also give an indication of the lead time that is available to select and train the required number of
additional manpower.
More specifically, human resource planning is required to meet the following objectives:
• Forecast personnel requirements: Human Resource planning is essential to determine the future
manpower needs in an organisation. In the absence of such a plan, it would be difficult to have the
services of right kind of people at the right time.
• Cope with changes: Human Resource planning is required to cope with changes in market conditions,
technology, products and government regulations in an effective way. These changes may often
require the services of people with the requisite technical knowledge and training. In the absence of
human resource plan, we may not be in a position to enlist their services in time.
• Use existing manpower productively: By keeping an inventory of existing personnel in an enterprise
by skill, level, training, educational qualifications, work experience, it will be possible to utilize the
existing resources more usefully in relation to the job requirements. This also helps in decreasing
wage and salary costs in the long run.
• Promote employees in a systematic manner: Human resource planning provides useful information
on the basis of which management decides on the promotion of eligible personnel in the organisation.
In the absence of an HR plan, it may be difficult to ensure regular promotions to competent people on
a justifiable basis.
4.4 Significance of Human Resource Planning
The failure in planning and in developing personnel will prove to be a limiting factor in attributing to
the organizational objectives. If the number of persons in an organization is less than the number of persons
required to carry out the organizational plans, there will be disruptions in the flow of work and the production
will also be lowered. But if, on the other hand, some persons are surplus in an organization, they will have to
be paid remuneration. The sound personnel policy requires that there should be adequate number of persons
of the right type to attain its objectives. For this the human resource planner should be concerned with the
training and the scheduling of the planning of personnel and persuading the management of use the results of
human resource planning studies in the conduct of the business. Every industrial or commercial organization
has the need of proper system of human resource so as to bring efficiency and economy in the organization.
Smaller concerns and those with simpler organizations also require human resource though at a small scale.
Human resource planning can prove to be an important aid to frame the training and development programmes
for the personnel because it takes into account the effects of anticipated changes in technology, markets and
products on manpower requirements and educational and training programme requirements.
Human resource planning is relatively a difficult task for the personnel management. It is particularly
so in business enterprises which are often subject to forces outside their control such as social, political and
economical changes. Manpower is a key resource required for the achievement of business objectives.
Materials, equipments, power and other resources can be effectively and efficiently used, only if there is
manpower capable of processing them into required goods and services. It takes a long time to develop the
manpower of right type to use these resources. Therefore, decisions concerning human resource development
must be taken many years in advance. However, management may stick to short periods for rank and file
employees, but it will have to concentrate upon the problems of replacing key professional and managerial
38
personnel on a long term basis. In as-much-as many big organizations do prepare long-range forecasts in
production, marketing and capital investment, it should not be surprising if it makes long term projections in
regard to its personnel. However, human resource plans cannot be rigid or static, they can be modified or
adjusted according to the change in the circumstances.
4.5 Advantages of Human Resource Planning
An organisation must plan out its human resource requirements well in advance so that it could
complete effectively with its competitors in the market. A well thought-out human resource plan provides
adequate lead time for recruitment, selection and training of personnel. It becomes all the more crucial
because the lead time for procuring personnel is a time consuming process and in certain cases one may not
always get the requisite type of personnel needed for the jobs. Non-availability of suitable manpower may
result in postponement or delays in executing new projects and expansion programmes which ultimately lead
to lower efficiency and productivity further. To be specific, the following are the advantages of human
planning:
(i) It Reduces Personnel Costs: It reduces personnel costs, because of management’s ability to
anticipate shortages or surpluses of manpower and correct these imbalances before they become
unmanageable and expensive.
(ii) To Plan the Development of the Employees: A better basis for planning employees
development that is designed to take optimum use of worker’s attitudes within the organisation.
(iii) Manpower Inventory: Personnel or manpower inventory can provide information to
management for the interval succession of managerial personnel if there is a turnover which is
not anticipated.
(iv) It Helps in Formulating Managerial Succession Plans: Human resource planning helps in
formulating managerial succession plans as a part of the replacement planning process which is
a necessitated when job change plans for managers are formulated.
(v) Thorough Performance Appraisal and Identification: Human resource planning enables
thorough performance appraisals, identification of gaps of the existing manpower so that corrective
training could be imparted. Thus, the training programme becomes more effective.
(vi) Improvement in Business Planning Process: Further, it leads to the improvement of business
planning process.
(vii) Employment Opportunities: More employment opportunities including women and minority
groups in future growth plans and identifying the specific development or training programme
needed today to make specific skills available tomorrow.
(viii) Greater Awareness among Workers: Greater awareness among workers is the importance
of sound manpower management throughout at all levels of the organisation.
4.6 Human Resource Planning Process
How to have the right number of people with right skill at right times? The process of human resource
planning helps in this regard. The human resource planning process consists of activities relating to future
demand for and supply of manpower and matching the two in the context of overall organizational plans and
objectives.
39
The various activities involved in the process of human resource planning are now discussed one by
one.
(i) Analysing Organisational Plans and Objectives: The process of human resource planning begins
with analyzing the overall plans and objectives of organisation. The reason being the human resource
plans stem from business plans. Analysis of business plans into sub-sectional and functional plans such as
technology, production, finance, marketing, expansion and diversification provides for assessing the human
resource requirements for each activity in each section and department.
Similarly, the analysis of organizational objectives also provides for human resources required by an
organisation. For example, if the objective of the organisation is rapid growth and expansion, it would
require more human resources for its all functional areas. Thus, it is evident that the human resource
planning needs to be made in accordance to the overall organizational plans and objectives.
(ii) Analysing Objectives of Human Resource Planning: The main purpose of human resource planning
is matching employees abilities to enterprise requirements, with an emphasis on future instead of present
arrangements. The ultimate mission or purpose of human resource planning is to relate future human
resource to future enterprise need so as to maximize the future return on investment in human resources.
For this, managers need to specify the objectives of human resource planning with regard to the utilization
of human resources in the organisation. While developing specific objectives of human resource planning,
certain questions need to be addressed like:
••••• Whether the vacancies, as and when these arise, will be filled in by promotion, transfer or from
external sources?
••••• What will be the selection procedure?
••••• How will provisions be made for training and developments of employees?
••••• How to restructure job positions, i.e., how to abolish the old or boring jobs and replace these by the
challenging ones?
••••• How to downsize the organisation in the light of changing business and industrial environment?
(iii) Forecasting Demand for Human Resources: The demand for human resources in an organisation is
subject to vary from time to time, depending upon both external and internal factors. External factors
include competition, economic and political climate, technological changes, government policy, etc. Among
the internal factors include growth and expansion, design and structural changes, management philosophy,
change in leadership style, employees resignation, retirement, termination, death, etc. Therefore, while
forecasting future demand for human resources in the organisation, these factors need to be taken into
consideration.
Forecasting demand for human resources is good for several reasons because it can help: (i) quantify the
number of jobs required at a given time for producing a given number of goods, or offering a given
amount of services. (ii) ascertain a staff-mix needed at different points of time in the future, and (iii)
ensure adequate availability of people with varying qualifications and skills as and when required in the
organisation.
How to forecast requirement for human resources in the future? There are various techniques varying
from simple to sophisticated ones employed in human resource forecasting. These include:
a. Management Judgment
40
b. Work-Study Method
c. Ratio-Trend Analysis
d. Delphi Technique
e. Flow Models
f. Mathematical Models
These are described one by one:
a. Management Judgement: This technique is very simple and time-saving. Under this technique,
either a “bottom-up” or a ‘top-down’ approach is employed for forecasting future human resource requirement
of an organisation. In case of bottom-up approach, line managers prepare departmental requirements for
human resource and submit it to the top managers for their review and consideration. In the ‘top-down’
approach, the top managers prepare the departmental forecasts which are reviewed with the departmental
heads or managers. However, neither of these approaches is accurate. Forecasts based on these approaches
suffer from subjectivity. This technique is suitable only for small firms or in those organisations where sufficient
data-base is not readily available.
b. Work-Study Method: This method can be used when it is possible to measure work and set
standards and where job methods do not change frequently. In this method, as used by Fredrick Winslow
Taylor in his ‘Scientific Management’, time and motion study are used to ascertain standard time for doing a
standard work. Based on this, the number of workers required to do standard work is worked out. The
following example illustrates this method:
Planned output for next year 25,000 units
Standard hours per unit 4
Planned hours required for the year (25000x4) 1,00,000
Productive hours per worker/year (after allowing
Normal overtime, absenteeism and idle time) 2,000
Number of workers required
1,00,000 50
2,000
Supposing, the span of control is ten, then, there will be requirement for five (50/10) supervisors also
to supervise the work of 50 workers as forecast just above.
c. Ratio-trend Analysis: This is one of the quickest forecasting technique. Under this method,
forecasting for future human resource requirements is made on the basis of time series data. In other words,
this technique involves studying past ratios (e.g., total output/number of workers, total sales volume/number
of sales persons and based on these, forecasting is made for future ratios. While calculating future ratios,
allowances can be made for expected changes in organisation, methods and jobs. The demand for human
resources is calculated on the basis of established ratios between two variables.
d. Delphi Technique: Delphi technique is named after the ancient Greek oracle at the city of
Delphi. This is one of the judgemental methods of forecasting human resource needs. It is a more complex
and time consuming technique which does not allow group members to meet face-to-face. Therefore, it does
not require the physical presence of the group members. The following steps characterize the Delphi technique:
41
(i) The members are asked to provide their estimates of human resource requirements through a
series of carefully designed questionnaires.
(ii) Each member anonymously and independently completes the first questionnaire.
(iii) Results of the first questionnaire are complied at a central location, transcribed, and copied.
(iv) Each member receives the copy of the result.
(v) After viewing the results, members are again asked to review their estimates. The initial results
typically trigger new estimates of cause changes in the original position.
(vi) Steps 4 and 5 are repeated as often as necessary until a consensus is reached.
The Delphi technique insulates group members from the undue influence of others. Also, since it
does not require the physical presence of group members, even a global company could use this technique
with members/ managers stationed in different countries. As the technique is extremely time consuming, it is
frequently not appropriate when a speedy decision is necessary. Further, the technique might not develop the
rich pool of alternatives that interacting or nominal groups do. The ideas that might arise from the heat of
face-to-face interaction might never come up.
e. Flow Models: Among the flow models, the simplest one is called the Markov model. This model
involves the following:
(i) Determination of time period that will be covered under forecast.
(ii) Establishment of employee’s categories, also called states. There should not be overlapping among
the various categories.
(iii) Enumeration of annual flows among various categories or states for several time periods.
(iv) Estimation of probability of flows or movements from one category to another based on past trends
in this regard.
However, the Markovian model suffers from disadvantages like heavy reliance on past data, which may
not be accurate in abnormal situations like periods of turbulent change, and individual accuracy in forecast is
sacrificed at the cost of group accuracy.
f. Mathematical Models: Mathematical models express relationship between independent variables
(e.g., production, sales, etc.) and dependent variable (e.g., number of workers required). The following is one
such widely used mathematical model for forecasting employees need:
(Laggn+G)1/%
En =
Y
Where,
En is the estimated number of workers required in n number of years. Lagg refers to the overall value (in
rupee terms) of current business operations. G denotes the overall growth in business activity over n years at
current value terms i.e. in rupees.
G implies average improvement in productivity estimated during n number of years. Y is level of business
activity per worker. Following above formula, estimates for manpower requirements in future are made. Due
allowance can also be made for expected changes in business strategy in future.
42
(iv) Preparing Manpower Inventory (Supply Forecasting): The basic purpose of preparing manpower
inventory is to find out the size and quality of personnel available within the organisation to man various
positions. Every organisation will have two major sources of supply of manpower: internal and external.
(a) Internal Labour Supply: A profile of employees in terms of age, sex, education, training, experience, job
level, past performance and future potential should be kept ready for use whenever required. Requirements
in terms of growth/diversification, internal movement of employees (transfer, promotions, retirements, etc.)
must also be assessed in advance. The possibilities of absenteeism and turnover should be kept in mind while
preparing the workforce analysis. Through replacement charts or successions plans, the organisation can
even find out the approximate date(s) by which important positions may fall vacant. Frequent manpower
audits may be carried out to find out the available talent in terms of skills, performance and potential.
Some of the important forecasting techniques may be summarized thus:
••••• Staffing table: It shows the number of employees in each job. It tries to classify employees on the basis of
age, position, category, experience, qualifications, skills etc. A study of the table indicates whether current
employees are properly utilized or not.
••••• Markov analysis: This technique uses historical rates of promotions, transfer and turnover to estimate
future availabilities in the workforce. Based on past probabilities, one can estimate the number of employees
who will be in various positions with the organisation in future.
••••• Skills inventory: A skills inventory is an assessment of the knowledge, skills, abilities, experience and
career aspirations of each of the current employees. This record should be updated at least every two years
and should include changes such as new skills, additional qualifications, changed job duties etc. Of course,
confidentiality is an important issue in setting up such an inventory. Once established, such a record helps an
organisation to quickly match forthcoming job openings with employee backgrounds.
••••• Replacement Chart: It shows the profile of job holders department-wise and offers a snapshot of who will
replace whom if there is a job opening.
(b) External labour supply: When the organisation grows rapidly, diversifies into newer areas of operations
(merchant banking, capital market operations, mutual funds, etc. in the case of a bank) or when it is not able
to find the people internally to fill the vacancies, it has to look into outside sources. To the extent an organisation
is able to anticipate its outside recruitment needs and looks into the possible sources of supply keeping the
market trends in mind, its problem in finding the right personnel with appropriate skills at the required time
would become easier.
Organisations, now-a-days, do not generally track the qualifications of thousands of employees manually.
Details of employees in terms of knowledge, skills, experience, abilities, etc., are computerized, using various
packaged software systems.
(v) Determining Manpower Gaps: The existing number of personnel and their skills (from human resource
inventory) are compared with the forecasted manpower needs (demand forecasting) to determine the
quantitative and qualitative gaps in the workforce. A reconciliation of demand and supply forecasts will give
the number of people to be recruited or made redundant as the case may be.
(vi) Formulating HR Plans: Organisations operate in a changing environment. Consequently, human resource
requirements also change continually. Changes in product mix, union agreements, competitive actions are
some of the important things that need special attention. The human resource requirements identified need to
be translated into a concrete HR plan, backed up by detailed policies, programmes and strategies (for recruitment,
selection, training, promotion, retirement, replacement, etc.).
43
• Recruitment plan: This will indicate the number and type of people required and when they are
needed; special plans to recruit right people and how they are to be dealt with via the recruitment
programme.
• Redeployment plan: This will indicate the programmes for transferring or retraining existing
employees for new jobs.
• Redundancy plan: This will indicate who is redundant, when and where; the plans for retraining,
where this is possible; and plans for golden handshake, retrenchment, lay-off, etc.
• Training plan: This will indicate the number of trainees or apprentices required and the programme
for recruiting or training them; existing staff requiring training or retraining, new courses to be developed
or changes to be effected in existing courses.
• Productivity plan: This will indicate reasons for employee productivity or reducing employee costs
through work simplification studies, mechanization, productivity bargaining, incentives and profit sharing
schemes, job redesign, etc.
• Retention plan: This will indicate reasons for employee turnover and show strategies to avoid
wastage through compensation policies, changes in work requirements and improvement in working
conditions.
• Control Points: The entire manpower plan be subjected to close monitoring from time to time.
Control points be set up to find out deficiencies, periodic updating of manpower inventory, in the light
of changing circumstances, be undertaken to remove deficiencies and develop future plans.
4.7 Problems / Barriers to Human Resource Planning
Human resource planning is not so easy to make. The planners face various problems while formulating
human resource plans. The major ones are discussed as follows:
(i) People perceive that people are available in abundance in our labour surplus economy. Then, why to
spend time and money in forecasting human resources? Surprisingly, this perception about human
resource planning is also held by the top management.
(ii) Another problem in human resource planning is that the demand for and supply of human resources
is not cent percent accurate. Experience suggests that longer the time horizon for forecasting human
resource requirements, greater is the possibility of inaccuracy in estimates of human resource needs.
(iii) Various types of uncertainties like labour turnover, absenteeism, seasonal employment, market
fluctuations and changes in technology render human resource planning ineffective. The reason
being these uncertainties make human resource forecast mere a guess far from reality.
(iv) Sometimes human resource planning suffers from a conflict between quantitative and qualitative
approaches used for it. Some people view human resource planning as a mere numbers game to
track the flow of people across the departments and in and out of the organisation. Conversely,
others take a qualitative approach focusing on the quality of human resources like career planning
development, skill, morale, etc.
(v) Generally, human resource planning is perceived as experts in handling personnel matters. But, they
are not experts more than often. Hence, human resource requirements estimated by such people are
not realistic ones. The organizational plans based on such estimates are endangered to be flopped.
44
6. As human resource planning is based on data relating to human resources, the same is not maintained
in a proper manner in some of the industrial organisations. Then, in the absence of reliable data, it
becomes difficult to develop effective human resource plans.
In sum and substance, problems in human resource planning arise both from inherent limitations of
forecasting, on the one hand, and from weaknesses of human who do it, on the other. But, both can be
overcome.
4.8 Suggestions to make HRP Effective
Following are some of the steps that may improve the effectiveness of human resource planning:
(a) Human resource plans must be viewed as an integral part of corporate planning. So to say, human
resources plans should be tailored with the objectives, strategies and overall environment of the
particular organisation.
(b) The support and commitment of the top management be ensured before starting the process of
human resource planning.
(c) Personnel records must be complete, up-to-date and readily available to ensure an adequate and
strong data-base. Data-base serves as backbone for human resource planning.
(d) The time horizon of the human resource plan should be appropriate to accommodate the changing
needs and circumstances of the particular organisation.
(e) Both quantitative and qualitative aspects of human resource plans should be stressed in a balanced
manner in order to avoid conflicts between the two.
4.9 SELF CHECK EXERCISE
1. HR planning is a forward looking function. How? Discuss in brief.
2. Define HR Planning.
3. What are the objectives of HR Planning? Discuss in brief.
4. Discuss in brief the importance of HR Planning.
5. Write a short-note on Delphi Techniques of forecasting demand for Human Resources.
6. Discuss in brief the problems faced by personnel's while doing HR Planning.
7. Give any three suggestions to make HR Planning effective.
4.10 SUMMARY
Human resource planning is essentially the process of getting the right number of qualified people
into the right job at the right time. So then an organisation can meet its objectives. The importance of human
resource planning is explained by the fact that it maintains a fine balance between demand for and supply of
human resources required to effectively compute those tasks that help organisation to achieve its objectives.
Organisation use human resource planning as a means of achieving greater effectiveness. Human resource
planning systematically attempts to forecast personnel demand, assess supply and reconcile the two. The
process of human resource planning includes activities like analysing organisational plans and objectives,
forecasting demand for and supply of human resource matching demand and supply and monitoring and
controlling of human resource plans. The major problems in human resource planning are misconception,
inaccuracy, uncertainties, unrealistic, unbalanced focus, inefficient information system etc. Support of the top
management, tailor- made approach, appropriate time horizon and balance focus are the pre-requisites for
making human resource planning effective.
45
4.11 GLOSSARY
• Delphi Technique typically includes at least two rounds of experts answering questions and giving
justification for their answers, providing the opportunity between rounds for changes and revisions.
• Forecasting human resource demand is the process of estimating the future human resource
requirement of right quality and right number. As discussed earlier, potential human resource
requirement is to be estimated keeping in view the organisation's plans over a given period of time.
• Human resources is used to describe both the people who work for a company or organization and
the department responsible for managing resources related to employees.
• Human Resource supply forecasting is the process of estimating availability of human resource
followed after demand for testing of human resource. Source of external supply of human resource
is availability of labour force in the market and new recruitment.
• Human resource planning (HRP) is the continuous process of systematic planning ahead to achieve
optimum use of an organization's most valuable asset-quality employees. Human resources planning
ensure the best fit between employees and jobs while avoiding manpower shortages or surpluses.
4.12 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 4.0.
2 For answer refer to section 4.2.
3. For answer refer to section 4.3.
4. For answer refer to section 4.4.
5. For answer refer to section 4.6.
6. For answer refer to section 4.7.
7. For answer refer to section 4.8.
4.13 TERMINAL QUESTIONS
1. Define human resource planning. Discuss the objectives of human resource planning.
2. “Human resource planning is a pre-requisite for effective management of human resources of an
organisation”. Discuss.
3. Explain the steps involved in human resource planning process.
4. Discuss the problems in human resource planning. How can these problems be overcome?
5. How is demand for human resource forecast?
4.14 SUGGESTED READINGS
Dessler, G., Human Resource Management, Prentice Hall of India, New Delhi.
Khanka, S.S., Human Resource Management, S. Chand & Co., New Delhi.
Bernardin, H.J., Human Resource Management, Tata McGraw Hill, New Delhi.
Ivancevich, J.M., Human Resource management, McGraw Hill, Irwin.
*****
46
LESSON-5
RECRUTIMENT AND SELCTION
STRUCTURE
5.0 INTRODUCTION
5.1 LEARNING OBJECTIVES
5.2 MEANING OF RECRUITMENT
5.3 FACTORS AFFECTING RECRUITMENT
5.4 CONSTRAINTS OF RECRUITMENT
5.5 SOURCES OF RECRUITMENT
5.5.1 INTERNAL SOURCES
5.5.1.1 MERITS OF INTERNAL SOURCES
5.5.1.2 DEMERITS OF INTERNAL SOURCES
5.5.2 EXTERNAL SOURCES
5.5.2.1 MERITS OF EXTERNAL SOURCES
5.5.2.2 DEMERITS OF EXTERNAL SOURCES
5.6 THE CONCEPT OF SELECTION
5.7 DIFFERENCE BETWEEN RECRUITMENT AND SELECTION
5.8 SIGNIFICANCE OF SELECTION
5.9 STAGES IN SELECTION PROCEDURE
5.10 SELF CHECK EXERCISE
5.11 SUMMARY
5.12 GLOSSARY
5.13 ANSWERS TO SELF CHECK EXERCISE
5.14 TERMINAL QUESTIONS
5.15 SUGGESTED READINGS
5.0 INTRODUCTION
The human resources are the most important assets of an organisation. The success of failure of an
organisation is largely dependent on the caliber of the people working therein. Without positive and creative
contributions from people, organisations cannot progress and prosper. In order to achieve the goals or perform
the activities of an organisation, therefore, we need to recruit people with requisite skills, qualifications and
experience. While doing so, we have to keep the present as well as the future requirements of the organisation
in mind. Through the process of recruitment, a company tries to locate perspective employees and encourages
them to apply for vacancies at various levels. Recruiting, thus, provides a pool of applications for selection.
47
5.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define recruitment and list the factors that affect recruitment.
(b) Describe different sources of recruitment.
(c) Define selection and appreciate the need for scientific selection.
(d) Discuss the steps involved in selection process.
5.2 Meaning of Recruitment
Recruitment is the process of searching for prospective employees and stimulating them to apply for
jobs in the organisation. When more persons apply for jobs then there will be a scope for recruiting better
persons. The job-seekers too, on the other hand, are in search of organisations offering them employment
opportunities. Recruitment is a linkage activity bringing together those with jobs and those seeking jobs.
In the words of Yoder, “Recruitment is a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that manpower in
adequate numbers to facilitate effective selection of an efficient working force”. Recruitment is the process
which prompts people to offer for selection in an organisation. This involves locating sources of manpower to
meet job requirements. It is a process of searching for prospective employees and stimulating and encouraging
them to apply for jobs in an organisation.
5.3 Factors Affecting Recruitment
Every organisation, big or small, has to engage in recruitment of persons. A number of factors
influence this process. Some factors have been discussed as follows:
(a) Size of Organisation: The number of persons to be recruited will depend upon the size of an
organisation. A big enterprise needs more persons at regular intervals while a small undertaking
employs sometimes only. A big business house will always be in touch with sources of supply and
shall try to attract more and more persons for making a proper selection. It can afford to spend
more amount in locating prospective candidates. So the size of an enterprise will influence the
process of recruitment.
(b) Employment Conditions: The employment conditions in a country greatly influence recruitment
process. In under developed countries, employment opportunities are limited and there is no dearth
of prospective candidates. At the same time suitable candidates may not be available because of
lack of educational and technical facilities. In India, the availability of persons for white collar jobs
is large whereas the supply of technical persons is limited. If the supply of persons is more, then
selection from large number becomes easy.
(c) Salary Structure and Working Conditions: The wages offered and working conditions prevailing
in an enterprise greatly influence the supply of personnel. If higher wages are paid as compared to
similar concerns then the organisation will not face any difficulty in making recruitments. A concern
offering low wages will always face to problem of labour turnover.
The working conditions in an organisation will determine job satisfaction of employees. An enterprise
offering good working conditions like proper sanitation, lighting, ventilation, etc. will give more job
satisfaction to employees and they may not like to leave their present jobs. On the other hand, if
employees leave the jobs due to unsatisfactory working conditions there will be a need for recruitment
of more persons.
48
(d) Rate of Growth: The growth rate of an enterprise also influences recruitment process. An expanding
concern will require regular employment of new employees. There will also be promotions of
existing employees to higher jobs necessitating the filling up of those vacancies. A stagnant enterprise
will recruit persons only when present incumbent vacates his position on retirement, etc.
5.4 Constraints of Recruitment
An enterprise may not be able to recruit freely even though it offers better salaries and other amenities.
A number of constraints may be faced in recruitment which are as follows:
(a) Image of Organisation: The image of the enterprise in the community largely influences recruitment
to it. A prospective candidate may not be interested to get a job in some organisation because its
reputation is not good. An enterprise may attract adverse reputation because of undesirable attitude
of the management, bad working conditions, etc. Such organisations do not get sufficient number of
personnel even if they offer high wages.
(b) Unattractive jobs: If the job is boring, hazardous, tension ridden, lack opportunities for advancement,
very few persons will be available for such jobs. On the other hand, if it carries good salaries, has
promotional avenues, has good working conditions there will be sufficient persons available for
such jobs.
(c) Organisational Policies: Internal policies of the organisation may also act as a constraint on
recruitment of new persons. A policy of filling up higher positions from outside will discourage
competent persons to join such an organisation.
(d) Union Requirements: In some cases, agreements with workers’ union may also act as constraints
to employ persons from outside. An understanding with union to fill up certain percentage of posts
through it may restrict the choice of management in recruiting on its own.
(e) Government Policies: Government policies may also act as constraints on recruitment policy.
Government legislation may require to reserve certain percentage of posts for weaker sections of
society or for persons belonging to specific caste. Another legislation may require the enterprise to
recruit new persons only from the lists supplied by government employment exchange. Such
legislations restrict the choice of management in recruiting any type of persons.
5.5 Sources of Recruitment
In general there are two sources of recruitment:
I Internal sources
II External sources
5.5.1 Internal Sources
Internal source is one of the important sources of recruitment. The employees already working the
organisation may be more suitable for higher jobs than those recruited from outside. The present employees
may help in the recruitment of new persons also. Internal sources are discussed as follows:
(i) Transfers: Transfer involves shifting of persons from present jobs to other similar places. These
do not involve any change in rank, responsibility and prestige. The number of persons does not
increase with transfers but vacant posts may be attended to.
49
(ii) Promotions: Promotions refer to shifting of persons to positions carrying better prestige, higher
responsibilities and more salaries. The higher positions falling vacant may be filled up from within
the organisation. A promotion does not increase the number of persons in the organisation. A person
going to get a higher position will vacate his present position. Promotion avenues motivate employees
to improve their performance so that they get promotions to higher positions.
5.5.1.1 Merits of Internal Sources
The merits of internal source of recruitment are:
(i) Improves Morale: The internal sources of recruitment will boost morale of employees. They are
assured of higher positions whenever vacancies arise. Existing employees are given preference in
promotions. Outsiders are employed only when suitable candidates are not available from within.
(ii) Proper Evaluation: The management is in a better position to evaluate the performance of existing
employees before considering them for higher positions. An outsider employed just on the basis of
an interview may not prove suitable later on. The service records of existing employees will be a
guide to study their suitability for ensuring vacancies.
(iii) Economical: The method of internal recruitment is economical also. The cost in selecting a person
is saved. Moreover, internal candidates do not require any training since they are well acquainted
with various jobs in the organisation.
(iv) Promotes Loyalty: Internal sources of recruitment promote loyalty among employees. They are
preferred to consider at the time of filling up higher positions. They will feel a part and parcel of the
organisation and will always try to promote its interests.
5.5.1.2 Demerits of Internal Sources
Following are the demerits of internal source:
(a) Limited Options: The recruitment of only internal candidates restricts the choice of management.
The present employees may not be suitable to take up positions of higher responsibility but there
will be no option. A person will be selected only out of the available candidates. The outside candidates,
even though they may be suitable, will not get a chance to show their talent.
Internal sources may dry up in the meantime and filling up of higher positions will become a problem.
(b) Lack of Originality: The present employees may not be able to bring new ideas. They will be
accustomed to carry on things in the same old ways. New persons will bring fresh thinking and new
methods may be tried.
5.5.2 EXTERNAL SOURCES
Every enterprise has to use external sources for recruitment to higher positions when existing employees
are not suitable. More persons are needed when expansions are undertaken. External methods are discussed
as follows:
(a) Advertisement: Advertisement is the best method of recruiting persons for higher and experienced
jobs. The advertisements are given in local or national press, trade or professional journals. The
requirements of jobs are given in the advertisement. The prospective candidates evaluate themselves
against the requirements of jobs before sending their applications. Management gets a wider range
of candidates for selection.
50
(b) Employment Exchanges: Employment exchanges run by the Government are also a good source
of recruitment. Unemployed persons get themselves registered with these exchanges. The vacancies
may be notified with the exchanges, whenever there is need. The exchange supplies a list of
candidates fulfilling required qualifications. Exchanges are a suitable source of recruitment for
filling unskilled, semi-skilled, skilled and operative posts. The job-seekers and job-givers are brought
into contact by the employment exchanges.
Private agencies also helps in recruiting qualified and experienced. persons. These agencies remain
in contact with employers and persons seeking change in jobs for higher posts.
(c) Educational Institutions: The jobs in trade and industry are becoming technical and complex.
These jobs require certain amount of educational and technical qualifications. The employers maintain
a close liaison with universities and technical institutions. The students are spotted during the course
of their studies. The students are assured of jobs on the completion of their studies. Junior level
executives or managerial trainees may be recruited in this way.
(d) Unsolicited Applicants: Persons in search of employment may contact employers through
telephone, by post or in person. Generally, employers with good reputation get more unsolicited
applications. If an opening is there or is likely to be there then these persons are considered for such
jobs. Personnel department may maintain a record of unsolicited applications. When jobs suitable
for those persons are available those are considered for employment.
(e) Casual Callers: Management may appoint persons who casually call on them for meeting short-
term demands. This will avoid following a regular procedure of selection. These persons are appointed
for short periods only. They need not be paid retrenchment or lay off allowance. This method of
recruitment is economical because management does not incur a liability in pensions, insurance and
fringe benefits.
(f) Labour Contractors: It is quite common to engage contractors for the supply of labour, when
workers are required for short periods and are hired without going through the full procedure of
selection etc. Contractors or jobbers are the best source of getting them. The contractors maintain
regular contracts with workers at their places and also bring them to the cities at their own expense.
The persons hired under this system are generally unskilled workers.
5.5.2.1 Merits of External Sources
The merits of external source are:
(a) Availability of Suitable Persons: Internal sources, sometimes, may not be able to supply suitable
persons from within. External sources will give a wide choice for selection to the management. A
large number of applicants may be willing to join the organisation. They will also be suitable as per
the requirements of skills, training and education.
(b) Brings New Ideas: The selection of persons from outside sources will have the benefit of new
ideas. The persons having experience in other concerns will be able to suggest new things and
methods. This will keep the organisation in a competitive position. The present employees may not
be able to infuse new thinking because their ways of thinking will remain the same.
5.5.2.2 Demerits of External Sources
Following are the limitations of external sources:
51
(a) Demoralisation: When new persons from outside join the organisation then present employees
feel demoralised because these positions should have gone to them. There will be a heart burning
among old employees. Some employees may even leave the enterprise to find out better avenues in
other concerns.
(b) Lack of Co-operation: The old staff may not co-operate with the new employees because they
feel that their right has been snatched away by them. This problem will be acute especially when
persons for higher positions are recruited from outside.
(c) Expensive: The process of recruiting from outside is very expensive. It starts with giving costly
advertisements in the media and then arranging written tests and conducting interviews. Inspite of
all this if suitable persons are not available among the applicants then the whole process will have
to be repeated.
(d) Problem of Maladjustment: There may be a possibility that the new entrants have not been able
to adjust in the new environment. They may not temperamentally adjust with the new persons. In
such cases either the persons may leave themselves or management may have to replace them.
These things have adverse effect on the working of the organisation.
5.6 The Concept of Selection
The process of selection leads to employment of persons having the ability and qualifications to
perform the jobs which have fallen vacant in an organization. It divides the candidates for employment into
two categories, namely, those who will be offered employment and those who will not be. This process is
more of ‘rejection’ since more candidates may be turned away than are hired. That is why, selection is
frequently described as a negative process in contrast with the positive process of recruitment. The basic
purpose of the selection process is choosing right type of candidates to man various positions in the organization.
In order to achieve this purpose, a well organized selection procedure involves many steps and at each step
more and more information is obtained about the candidates.
5.7 Difference between Recruitment and Selection
Following are the differences between recruitment and selection:
(a) Recruitment is the process of searching for prospective employees and stimulating them to apply for
jobs in the organization. On the other hand, selection means employment of workers or establishing
a contractual relationship between the employer and the worker.
(b) Recruitment is a positive process of searching for prospective employees, whereas selection is a
negative process because it involves rejection of unsuitable candidates.
(c) The purpose of recruitment is to create a large pool of applicants for the jobs in the organization. But
selection aims at eliminating unsuitable candidates and ensuring most competent people for the jobs.
(d) Recruitment is a relatively simple process as the candidates are required to fill in the prescribed
forms and deposit with the employer. But selection is a complex and lengthy process under which the
candidates have to pass through a number of stages before getting the offer for a job.
5.8 Significance of Selection
Selection has become a critical process these days because it requires a heavy investment of money
to get right types of people. Induction and training costs are also high. If the right types of persons are not
chosen, it will lead to a huge loss of the employer in terms of time, effort and money. Therefore, it is essential
to devise a suitable selection procedure. Each step in the selection procedure should help in getting more and
more information about the applicant to facilitate decision-making in the area of selection.
52
Absenteeism and employee turnover are the important problems which are being faced by most of
the organizations. The intensity of these problems can be reduced if, in the future, all selections are made
carefully so that there are ‘round pegs in the round holes’. Whenever unsuitable employees are appointed,
the efficiency of the organization goes down. Such employees will shirk work and absent themselves from
the work quite often. They may also be compelled to leave their jobs. If this happens, all the expenses
incurred on the selection and training of such employees will go waste.
Proper selection and placement of personnel goes a long way towards building up a stable work-
force. It keeps the rates of absenteeism and labour turnover low and increase the morale of the employees.
If the employees are quite suitable according to the requirements of the jobs, they show higher efficiency and
productivity. This enables the organization to achieve its objectives effectively.
5.9 Stages in Selection Procedure
There can not be a rigid procedure of selection suitable for all types of organizations. The number of
steps in the selection procedure and the sequence of steps vary from organization to organization. For instance,
some organizations do not hold preliminary interview, test or screening, whereas in other organizations such
as commercial banks, preliminary tests are given to eliminate a large number of unsuitable applicants. Similarly,
in some cases, medical examination is given before final selection and in others, medical check up follows
final selection. Thus, every organization designs a selection procedure which suits its requirements. However,
the main steps which could be incorporated in the selection procedure are discussed below:
(A) Preliminary Interview: In most of the organizations, the selection programme begins with
preliminary interview or screening. The preliminary interview is generally brief and does the job of
eliminating the totally unsuitable candidates. The preliminary interview offers advantages not only
to the organization, but also to the applicants. If an applicant is eliminated at this stage, the organization
will be saved from the expenses of processing him through the remaining steps of the selection
procedure and the unsuitable candidate will be saved from the trouble of passing through the long
procedure. Preliminary interview may take place across the counter in the organization’s employment
office. It may consist of a short exchange of information with respect to organization’s interest in
hiring and the candidate’s enquiry. It may serve primarily to determine whether it is worthwhile for
the applicant to fill in an application blank. Candidates who pass this crude screening are usually
asked to fill in the application blank.
(B) Receipt of Applications: Whenever there is a vacancy, it is advertised or enquiries are made
from the suitable sources, and applications are received from the candidates. Standard application
forms may be drawn up for all jobs and supplied to the candidates on request. The application form
is useful for several reasons. It gives a preliminary idea of the candidate to the interviewer and
helps him in formulating the questions to be asked from the candidate. The written information
about age, qualifications, experience, etc. may prove to be of great value to the interviewers. Forms
make the processing of application very easy since there is uniformity of filling the data in the
application form.
(C) Screening of Applications: After the applications are received, they are screened by the screening
committee and a list is prepared of the candidates to be interviewed. Applicants may be called for
interview on some specific criteria like gender, desired age group, experience and qualifications.
The number of candidates to be called for interview is normally five to seven times the number of
posts to the filled up.
53
(D) Employment Tests: Employment tests are used to select persons for various jobs. They help in
matching the characteristics of individuals with the vacant jobs so as to employ right kinds of
personnel. The following types of tests have gained popularity these days:
(i) Intelligence Tests: Intelligence tests are used to judge the mental capacity of the applicant. They
evaluate the ability of an individual to understand instructions and make decisions. They are widely
used in all types of organizations for the purpose of proper selection.
(ii) Aptitude Tests: Aptitude means the potential which an individual has for learning the skills
required to do a job efficiently. Aptitude tests measure an applicant’s capacity and his potential of
development. Aptitude tests are the most promising indices for predicting a worker’s success.
(iii) Proficiency Tests: Proficiency tests are designed to measure the skills already acquired by the
individuals. They are also known as performance, occupational or trade tests. They are used to test
the level of knowledge and proficiency acquired by an applicant. A trade test takes a sample of
individual’s behaviour which is designed as replica of the actual work situation such as typing. A
trade test should be differentiated from the aptitude test. An aptitude test measures the potentials of
the applicant to learn skills required on a job.
(iv) Interest Tests: Interest tests identify patterns of interest in those areas in which the individual
shows special concern, fascination and involvement. These tests suggest what types of jobs may
be satisfying to the employees. Interest tests are more often used for vocational guidance. They
help the individuals in selecting occupations of their interest.
(v) Personality Tests: Personality tests probe for the qualities of the personality as a whole, the
combination of aptitude, interest and usual mood and temperature. It is vary difficult to devise and
use personality tests because they are concerned with discovering clues to an individual’s value
system, his emotional reactions, maturity, etc.
(vi) Interview: Although application blank and employment tests provide a lot of valuable information
about the candidate, yet they do not provide the complete set of information required about the
applicant. Hence, interview may be used to secure more information about the candidate. The main
purposes of an employment interview are: (i) to find out the suitability of the candidate, (ii) to seek
more information about the candidate, and (iii) to give him an accurate picture of the job with details
of terms and conditions and some idea of organization’s policies. The actual data of the applicant
given in the application form may also be checked and more information may be taken from the
candidate. This occasion is also utilized for testing the capability and personality of the applicant.
Thus, interview affords an opportunity to develop a clear picture of the candidate.
It is customary to have an interview in several stages especially for senior positions. There may be
a preliminary interview by the head of the department. The final interview is taken by the interview
or selection committee consisting of chairman of the organization, head of department, personnel
manager and may be some outside experts. During the interview, the members of the selection
committee appraise each candidate according to merits. At the end of interview of each candidate,
the chairman consults the members and after a brief discussion finalizes the grading of the candidate.
After the completion of interview of all the candidates, a panel is prepared. The number of persons
in the panel is generally about two to three times the number of vacancies to be filled up.
54
Although personal interview is perhaps the most widely used method for selecting the personnel, it
has certain limitations too. Firstly, it can test only the personality of the candidate and not his skills
and ability for the job. Secondly, it depends too much on the personal judgment of the interviewer
which may not always be accurate. That is why, in most of the organizations, occupational and
other tests are given to the candidates before they are called for the final interview.
(E) Medical Examination: The pre-employment physical examination or medical test of a candidate
is an important step in the selection procedure. Though in the suggested selection procedure, medical
test is located near the end, but this sequence need not be rigid. The organizations may place the
medical examination relatively early in the process so as to avoid time and expenditure to be incurred
on the selection of medically unfit persons. Some organizations either place the examination relatively
early in the selection procedure or they advise the candidates to get themselves examined by a
medical expert so as to avoid disappointment at the end.
The objectives of physical examination are: (i) to ascertain the applicant’s physical capabilities to
meet the job requirements; (ii) to protect the organization against the unwarranted claims under the
Workmen’s Compensation Act or against law suits for damages; and (iii) to prevent communicable
diseases entering the organization. The physical examination should disclose the physical
characteristics of the individual that are significant from the standpoint of his efficient performance
of the job he may be assigned or of those jobs to which he may reasonable be expected to be
transferred or promoted. A qualified medical expert appointed by the organization should certify
whether the candidate is physically fit to the requirements of a job. A proper medical examination
will ensure higher standards of health and physical fitness of the employees and will reduce the
rates of accident, labour turnover and absenteeism.
(F) Background Investigation: A referee is potentially an important source of information about the
candidate’s ability and personality if he holds a responsible position in some organization or has
been the boss or employer of the candidate. Prior to final selection, the prospective employer
normally makes an investigation on the references supplied by the applicant and undertakes more
or less a thorough search into the candidate’s past employment, education, personal reputation,
financial condition, police record, etc. However, it is often difficult to persuade a referee to give his
opinion frankly. The organization may persuade him to do so by giving an assurance that all
information will be treated as strictly confidential.
(G) Final Selection: After a candidate has cleared all the hurdles in the selection procedure, he is
formally appointed by issuing him an appointment letter or by concluding with him a service agreement.
The appointment letter contains the terms and conditions of employment and pay scale and other
benefits associated with the job.
5.10 SELF CHECK EXERCISE
1. Define recruitment.
2. Discuss in brief the factors affecting recruitment.
3. What are the problems faced by the organisations while recruiting? Discuss in brief.
4. Write short-note internal sources of recruitment.
5. What are the external sources of recruitment? Discuss in brief.
6. Define selection.
7. Write a brief note on selection process.
55
5.11 SUMMARY
Once the requirement of manpower is known, the process of recruitment starts. Recruitment is the
process of identifying the sources for prospective candidates and to stimulate them to apply for the jobs. Job
recruits can be drawn from within or outside the organization. The process of selection leads to employment
of persons having the ability and qualifications to perform the jobs which have fallen vacant in an organization.
There are several advantages of a proper selection procedure. As the employees are placed in the jobs for
which they are best suited, they derive maximum job satisfaction and reap maximum wages. Labour turnover
is reduced and the overall efficiency of the concern is increased.
5.12 GLOSSARY
• External Sources of Recruitment means hiring people from outside the organization. In other words,
seeking applicants from those who are external to the organization. For certain job vacancies, it is
mandatory for every organization to provide details about it to the employment exchange.
• Hiring process is the process of reviewing applications, selecting the right candidates to interview,
testing candidates, choosing between candidates to make the hiring decision and performing various
pre-employment tests and checks.
• Internal Sources of Recruitment means hiring people from within the organization. In other words,
seeking applicants for the job positions from those who are currently employed with the firm. The
employee is familiar with the working of the organization.
• Recruitment is a positive process of searching for prospective employees and stimulating them to
apply for the jobs in the organisation. In simple words, the term recruitment refers to discovering
the source from where potential employees may be selected.
• Selection is the process of picking or choosing the right candidate, who is most suitable for a vacant
job position in an organization. Employee selection is a process of matching organization's
requirements with the skills and the qualifications of individuals.
• Selection process can be defined as the process of selection and short listing of the right candidates
with the necessary qualifications and skill set to fill the vacancies in an organisation. The selection
process varies from industry to industry, company to company and even amongst departments of
the same company.
5.13 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 5.2.
2. For answer refer to section 5.3.
3. For answer refer to section 5.4.
4. For answer refer to section 5.5.1.
5. For answer refer to section 5.5.2.
6. For answer refer to section 5.6.
7. For answer refer to section 5.9.
56
5.14 TERMINAL QUESTIONS
1. What is meant by recruitment? How does it differ from selection?
2. Critically discuss the various sources of requirement of employee. What sources of recruitment will
you recommend for the appointment of managerial personnel?
3. Discuss in brief the significance of proper selection of personnel. What steps are involved in the
selection procedure? Explain.
4. Explain various types of employment tests normally taken by the industrial organisations.
5.15 SUGGESTED READINGS
• Beandwell, Ian, and Holden, Len, Human Resource Management, Macmillan India Ltd., New Delhi.
• Robbins, S.P., and Coultes, M., Management, Prentice Hall of India, New Delhi.
• Saiyadin, M.S., Human Resource Management, Tata McGraw Hill Publishing Co., New Delhi.
• Yodes, Dale Personnel Management and Industrial Relations, Prentice Hall of India, New Delhi.
*****
57
LESSON-6
PLACEMENT, INDUSTIN AND SOCIALISATION
STRUCTURE
6.0 INTRODUCTION
6.1 LEARNING OBJECTIVES
6.2 MEANING OF PLACEMENT
6.3 PRINCIPLES OF PLACEMENT
6.4 PROBLEMS IN PLACEMENT
6.5 CONCEPT OF INDUSTION
6.6 OBJECTIVES OF INDUCTION
6.7 BENEFITS OF INDUCTION PROGRAMME
6.8 CONTENTS OF INDUCTION PROGRAMME
6.9 PHASES OF INDUCTION PROGRAMME
6.10 SUGGESTIONS TO MAKE INDUCTION PROGRAMME EFFECTIVE
6.11 PROBLEMS IN INDUCTION
6.12 CONCEPT OF SOCIALISATION
6.13 PHASES OF SOCIALISATION PROCESS
6.14 SELF CHECK EXERCISE
6.15 SUMMARY
6.16 GLOSSARY
6.17 ANSWERS TO SELF CHECK EXERCISE
6.18 TERMINAL QUESTIONS
6.19 SUGGESTED READINGS
6.0 INTRODUCTION
Once a candidate has been selected, he/she needs to be placed on a suitable job. In fact, placing the
right person on the right job is as important as selecting right person. The person put on a suitable job needs
to be made familiar with his/her job, the organisation and the other employees through induction or orientation
so as to enable him/her to contribute the maximum. This lesson is, therefore, devoted to a detailed discussion
of placement, induction, and socialization.
6.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define placement and explain the principles of placement.
(b) Explain the objectives, contents and phases of induction programme.
(c) Outline the elements that make an induction programme effective.
(d) Define socialization and discuss the stages of socialization process.
58
6.2 Meaning of Placement
Placement is understood as assigning jobs to the selected candidates. Assigning jobs to employees
may involve a new job or different job. Thus, placement may include initial assignment of job to new employee,
on transfer, promotion or demotion of the present employees. In this section, placement refers to the assignment
of jobs to new employees only. Placement arising out of transfers, promotions, and demotions are not discussed
in the present lesson.
Placement involves assigning a specific job to each one of the selected candidates. However, placement
is not so simple as it looks. Instead, it involves striking a fit between the requirements of a job and the
qualification of a candidate. Pigors and Myers have defined placement as “the determination of the job to
which an accepted candidate is to be assigned, and his assignment to that job. It is a matching of what the
supervisor has reason to think he can do with the job demands (job requirements), and what he offers in the
form of pay rolls, companionship with others, promotional possibilities, etc.”
The importance of placement lies in the fact that a proper placement of employees reduces employees
turnover, absenteeism, accidents and dissatisfaction, on the one hand, and improves their morale, on the other.
It has been customary in most of the organisations to put employees initially on a probation period
with a view to adjudge their suitability for the job in the organisation. The probation period may vary from
organisation to organisation ranging from one to two years. Having found the employees performance
satisfactory during the probation period, their jobs are regularised.
6.3 Principles of Placement
A few basic principles should be followed at the time of placement of a worker on the job. These
may be enumerated as below:
(a) Man should be placed on the job according to the requirements of the job. The job should not be
adjusted according to the qualifications or requirements of the man. Job first, man next, should
be the principle of placement.
(b) The job should be offered to the man according to his qualifications. The placement should
neither be higher nor lower than the qualifications.
(c) The employee should be made conversant with the working conditions prevailing in the industry
and all things relating to the job. He should also be made aware of the penalties if he commits
a wrong.
(d) While introducing the job to the new employee, an effort should be made to develop a sense of
loyalty and cooperation in him so that he may realize his responsibilities better towards the job
and the organisation.
(e) The placement should be ready before the joining date of the newly selected person.
(f) The placement in the initial period may be temporary as changes are likely after the completion
of training. The employee may be later transferred to the job where he can do better justice.
Proper placement helps to improve employee morale. The capacity of the employee can be utilized
fully if he is placed on the job for which he is most suitable. Right placement also helps to reduce labour
turnover, absenteeism and accident rates. If a candidate adjusts himself to the job and continues to perform
as per expectations, it might mean that the candidate is properly placed.
59
6.4 Problems in Placement
The main problem with placement arises when the recruiters look at the individual but not at the job.
Often, the individual does not work independent of the others. Jobs in this context are classified into two
categories:
(A) Independent Jobs: In independent jobs, non-overlapping routes or territories are allotted to each employee
e.g. in field sales. In such situations, the activities of one employee have little bearing on the activities of other
workers. Independent jobs do not pose great problems in placement. Each employee has to be evaluated
between his capabilities and interests and those required on the job. The objectives of placement will be:
(a) To fill the job with people who have at least the minimum required qualifications.
(b) People should be placed on the job that will make the best possible use of their talents, given
available job and HR constraints.
(B) Dependent jobs: Dependent jobs may be sequential or pooled. In sequential jobs, the activities of one
employee are dependent on the activities of a fellow employee. Assembly lines are the best example of such
jobs.
In pooled jobs, there is high interdependence among jobs. The final output is the result of the contribution
of all the workers.
In dependent jobs, an employee is placed in a specific sub group. While placing, care must be taken
to match characteristics of the employee with that of the sub group. Because, in such jobs, team work
matters a lot.
6.5 Concept of Induction
Introduction of a new entrant into any existing group of people has been a common feature we come
across in our every day life. Recall, the bride on joining to your family was introduced to your family members
and manners. Remember your own joining to your present Department of Business Management. On joining
the Department, you may have been told about the Department’s rules and regulations, the procedure for
academic activities such as sessional tests, assignments, seminar presentations, summer training, semester
examination, papers to be taught with the names of the teachers, etc. You were probably introduced to your
seniors by organizing ‘freshers welcome’. Similarly, when a person joins a new job, he/she also needs the
same type of introduction to his/her job and the organisation. This introduction is called ‘induction’. Induction
is also known as ‘orientation’ and ‘indoctrination’.
A new entrant joins an organisation as a stranger to his co-workers, job and organisation. This causes
the initial anxiety for the new entrant. It culminates at times to surprise resignation by the new employee.
Hence, arrangements need to be made to make the integration of the new employee into the organisation as
smooth and as free of anxiety as possible. Induction helps do so.
Induction is welcoming a new employee to the organisation. In other words, it is a well orchestrated
event to socialize the new entrant with the people and the work environment in a particular organisation.
According to Michael Armstrong, “Induction is the process of receiving and welcoming an employee
when he first joins a company and giving him basic information he needs to settle down quickly and happily
and start work”.
R.P. Billimoria defined induction as “a technique by which a new employee is rehabilitated into the
changes surroundings and introduced to the practices, policies and purposes of the organisation.”
60
In short, induction is, therefore, the process of welcoming, indoctrination and socialization of new
employee to his/her job and organisation.
6.6 Objectives of Induction
When a new entrant joins an organisation, he/she is an utter stranger to the co-workers, work place
and work environment. As such, he/she may feel insecure, shy and nervous. The first few days may be all
anxious and disturbing ones for the new entrant. Particularly when a new entrant comes from rural area, he/
she finds himself/herself completely at sea in an industrial town and city. Then, induction helps reduce such
anxieties and dispels doubts and nervousness from the mind of the new entrant. Therefore, an induction
programme is designed to achieve the following objectives:
(i) To promote a feeling of belonging and loyalty to the organisation among new comers so that
they may not form false impression regarding the company because first impression is the
last impression.
(ii) To build up the new employee’s confidence in the organisation and in himself so that he may
become an efficient employee.
(iii) To bring an agreement between the organisations goals and the personal goals of the
organisation.
(iv) To give the new employee information regarding company (its structure, product, policies,
rules and regulations) and facilities provided by the company such as cafeterias, locker
room, break time, leave rules etc.
(v) To introduce the new worker to the supervisor and the fellow workers with whom he has to
work.
(vi) To create a sense of security for the worker in his job by impressing the idea that fairness to
the worker is the inherent policy of the organisation.
(vii) To lessen or reduce the cost of replacing the worker in the early impressionable period
because of lack of information or incorrect business impressions.
6.7 Benefits of Induction Programme
A formal induction programme may provide the following benefits to the new comer and the organisation:
a. A well-designed induction programme reduces anxiety, nervousness, and absenteeism and employee
turnover.
b. Induction helps minimize the reality or cultural shock new employees undergo on joining a new
organisation.
c. Effective induction also helps integrate the new employees into the organisation and fosters the
feeling of belongingness to the new organisation.
d. Induction also binds the newcomer and the present employee in a team.
6.8 Contents of Induction Programme
Every organisation has an obligation to make integration of the individual into it as smooth and
comfortable as possible. Small organisations may do it through informal orientation by the employee’s immediate
supervisor whereas large organisations usually develop formal orientation programmes. The range of information
that may be covered under orientation training is as follows:
61
(i) Company’s history, philosophy and operations
(ii) Products and services of the company
(iii) Company’s organisation structure
(iv) Location of departments and employee services
(v) Personnel policies and practices
(vi) Employee’s activities
(vii) Rules and regulations
(viii) Grievance procedure
(ix) Safety measures
(x) Standing orders
(xi) Terms and conditions of service
(xii) Benefits and services for employees
(xiii) Opportunities for training, promotions, transfers etc.
6.9 Phases of Induction Programme
A carefully designed induction programme consists of the following three phases:
a. General Induction
b. Specific Induction
c. Follow-up induction
A brief description of these follows:
(a) General Induction: The first phase of induction is conducted by the HR department. The focus
of the induction is to expose the new entrant to the organisation by explaining him the mission, objectives,
history and philosophy of the organisation. The new employee is also briefed about his service conditions,
pays and perks, promotion procedure, personnel policies and grievance handling mechanism practiced in the
organisation. This phase of induction inculcates pride for the employee to work in the organisation. The
period of induction, depending on the organisation, may vary from a few days to few weeks.
(b) Specific Induction: This induction is given by the new employee’s supervisor. The focus is on
the overall exposition of the new employee to his job. Accordingly, the employee is introduced to the job,
shown place of work and around the premises, introduced to his co-workers and briefed about the procedures
and methods, custom and routines, rules and regulations regarding his job. This training/induction helps the
new employee adjust with his work environment. The induction may last for few weeks or even months.
(c) Follow-up Induction: The main objective of the follow-up induction is to verify whether the
new employee is getting himself adjusted with the work and organisation or not. This induction is given by the
employee’s supervisor or a qualified specialist on industrial psychology. While giving induction training, the
employee’s suggestions on adequacy or otherwise of the already conducted induction programmes and on
any other related aspects, if any, are duly taken into consideration to make the induction more and more
effective. Such feedback can also be used to assess the requirements of guidance and counseling for the new
entrants. The duration of follow-up induction may vary from some weeks to few months.
62
6.10 Suggestions to make an Induction Programme Effective
Giving induction to the new employees is essential but is not so simple. Only carefully designed and
implemented induction programme are observed effective. Following are some of the requisites of an effective
induction programme:
(a) Receiving New Employees: The new employees need to be duly received by the organisation.
This inculcates a feeling in the new entrants that they are required in the organisation. Such a feeling serves
as a corner stone to be interested to integrate into the organisation.
(b) Determining the New Employees’ Need for Information: The central element that guides
the designing of an induction programme is to decide first “What do the new employees need to know now?”
Many a times, the new employees are given information which is not immediately required but the required
one is not given. Such information lack tends to make the new comer confused about the job and the
organisation. Therefore, it is important to decide the vital information a new entrant needs to receive on his
joining the organisation.
(c) Determining How to Present the Information: Having being decided what information
employees want, the next important thing to be decided is how to present the same to the new employees.
Obviously, the required information needs to be presented to the new employees in the right from and manner
to have its maximum impact on the employees.
(d) Delivering Induction Training by the Right Instructor: Much of the effectiveness of an
induction programme depends on who conducts the induction training. This is because induction training
cannot be given by anyone, but by the right instructor/trainer only. Possession of the required skill, knowledge
and attitude are considered to be the requisites of a right instructor. Therefore, the induction programme
needs to be conducted by the right trainer only. If required the trainer be given induction training before he/
she conducts the induction training for the new entrants to the organisation.
(e) Evaluating the Induction Programme: Like all other training programmes, whether or not an
induction programme is effective is determined by evaluating the programme. This is necessary to know
whether to continue the programme in future also or not or whether the programme needs any improvement
in future. In fact, it is the evaluation of the induction programme that makes the organisation knows whether
the amount incurred in induction programme remains as an expenditure or has turned into an investment.
There are various methods employed to measure the effectiveness of training programmes.
6.11 Problems in Induction
An orientation programme can go wrong for a number of reasons. The HR department should try to
avoid these errors:
(i) The supervisor who has to induct the employee may not be trained or may be too bossy.
(ii) Employee is overwhelmed with too much information in a short time.
(iii) Employee is confused with a wide variety of forms to be filled.
(iv) In the initial stage, employee is given only manual jobs that discourage job interest and
company loyalty.
(v) Employee is asked to perform challenging jobs where there are high chances of failure that
could needlessly discourage the employee.
63
(vi) Employee is given only a sketchy induction under the mistaken belief that “trial and error”
method is the best induction.
(vii) Employee is forced to balance between a broad orientation by the HR department and a
narrow orientation at the departmental level.
(viii) Employee is thrown into action too soon. His mistakes can damage the company.
(ix) Employee may be asked to work on a number of jobs and he may develop wrong perceptions
because of short periods spent on each job.
6.12 Concept of Socialisation
In simple words, socialization is the process of adaptation. Different thinkers have defined socialization
differently. For example, Feldoman has defined socialization as “Acquisition of work skills and abilities,
adoption of appropriate role behaviours and adjustments to the norms and values of the work group”.
In the opinion of Maanen and Schein, “Socialisation can be conceptualized as a process made up of
three stages: pre-arrival, encounter and metamorphosis”.
Thus, socialization can be defined as a process of adoption that takes place as individuals attempt to
learn the values and norms of work roles.
6.13 Phases of Socialisation Process
The socialization process involves the following three phases:
(a) Pre-arrival
(b) Encounter
(c) Metamorphosis
It is interesting to note that these phases show striking similarity with phases of behavioural modification
theory propounded by Kurt Lewin, i.e., unfreezing, changing and refreezing. A brief description of the phases
of socialization follows:
(a) Pre-arrival: The pre-arrival phase explicitly recognizes that all the new recruits arrive the
organisation with a set of values, attitudes, expectations and learning. In other words, pre-arrival refers to all
the learning that occurs before a new member joins the organisation. For example, an MBA graduate knows
from the Professors what business is like, what to expect in a business career and acquire the kind of
attitudes that will help fit in the organisation. He also comes to know about the organisation and the job during
the selection process. Based on this pre-arrival knowledge, the individual forms some expectations of
organisation.
(b) Encounter: Upon entry into organisation, the new member enters the encounter stage. The role
playing starts here. The member starts comparing expectations, the image of the organisation which he had
formed during pre-arrival phase with reality. If expectations and reality concur the encounter is smooth. But
seldom has it concurred. When the two differ, stress and frustration set in. What follows thereafter is a
mental process of adjustment. In the process of adjustment, the individual tries to replace his/her own values
and norms with those of the organisation. At the other extreme, the member simply can not reconcile to those
value and norms of the organisation and gets disillusioned and quits the job.
(c) Metamorphosis: In this stage, the member masters the skills required to adjust with the
organisation’s norms and values. This is a stage going through changes. Hence, this is called metamorphosis
stage. This is, of course, a voluntary process and a conscious decision which enables the new member to
become compatible with the organisation. This signals the completion of socialization process.
64
6.14 SELF CHECK EXERCISE
1. Define Placement.
2. Write a short-note on principles of placement.
3. Discuss in brief the problems faced by organisations.
4. Define Induction.
5. Write a short-note on objectives of Induction.
6. Discuss in brief the benefits of induction programme in the organisation.
7. Define socialization.
8. Write a short-note on encounter phase of socialization process.
6.15 SUMMARY
Placement is the process of assigning a specific job to each one of the selected candidates. Matching
the requirements of the job with the qualifications of a candidate is the essence of placement. The main
problem with placement arises when the recruiters look at the individual but not at the job. Induction is the
task of introducing the new employees to the organisation and its policies, procedures and rules. Improvement
in employee morale, reduction in anxiety, absenteeism, turnovers and nervousness are the major benefits
induction offers to the organisation as well as employees. A formal induction programme consists of three
phases, namely general induction, specific induction and follow-up induction. Socialisation is a process through
which a new recruit begins to understand and accept the values, norms and beliefs held by others in the
organisation.
6.16 GLOSSARY
• Human resources (HR) is the department within a business that is responsible for all things worker-
related. That includes recruiting, vetting, selecting, hiring, on boarding, training, promoting, paying,
and firing employees and independent contractors.
• Induction is the process of introducing a new employee to his/her job and organization and giving
him all the necessary information required by him/her to start his work. Induction helps to reduce
the anxiety of a new entrant in the organization and helps him to feel a sense of belongingness in the
organization.
• Placement is the act of organizing people or things into a certain order, the act of putting items in a
certain location, or the act of finding a job for someone. When kids are put into classes based on
their scores on an intelligence test, this is an example of when placement is based on performance.
• Socialization refers to the adaptation that takes place when an individual passes from outside the
organization to role of an inside member. Socialization is a process of adaptation, adjustment, making
arrangements for setting one employee in the organizational environment.
6.17 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 6.2.
2. For answer refer to section 6.3.
3. For answer refer to section 6.4.
4. For answer refer to section 6.5.
5. For answer refer to section 6.6.
65
6. For answer refer to section 6.7.
7. For answer refer to section 6.12.
8. For answer refer to section 6.13.
6.18 TERMINAL QUESTIONS
1. Define placement. Describe the principles of placement.
2. What is the purpose of induction programme? State the contents of induction programme.
3. What benefits can induction provide for an employee and organisation ?
4. Explain the measures to be taken to make induction programme effective.
5. “Selection is a substitute for socialization.” Do you agree or not? Discuss.
6.19 SUGGESTED READINGS
1. Monappa, A., Managing Human Resources, Macmillan India Ltd., New Delhi.
2. Werther, W.B. and Davis, K., Human Resource and Personnel Management, Tata McGraw Hill,
New York.
3. Cascio, W.F., Managing Human Resources, Tata McGraw Hill, New Delhi.
4. Yodes, Dale, Personnel Management and Industrial Relations, Prentice Hall of India, New Delhi.
5. Davar, R.S., Personnel Management and Industrial Relations in India, Vikas Publishing House, New
Delhi.
*****
66
LESSON-7
TRAINING
STRUCTURE
7.0 INTRODUCTION
7.1 LEARNING OBJECTIVES
7.2 DEFINITION OF TRAINING
7.3 NEED FOR TRAINING
7.4 OBJECTIVES OF TRAINING
7.5 DIFFERENCE BETWEEN TRAINING AND DEVELOPMENT
7.6 BENEFITS OF TRAINING
7.6.1 BENEFITS OF TRAINING TO EMPLOYERS
7.6.2 BENEFITS OF TRAINING TO EMPLOYEES
7.7 ORGANISATIONAL STRUCTURE OF TRAINING DEPARTMENT
7.8 METHODS OF TRAINING
7.9 SELF CHECK EXERCISE
7.10 SUMMARY
7.11 GLOSSARY
7.12 ANSWERS TO SELF CHECK EXERCISE
7.13 TERMINAL QUESTIONS
7.14 SUGGESTED READINGS
7.0 INTRODUCTION
In the knowledge driven world of today, the pace of change is so fast that it even defies Moor’s law.
Even to stay at the same place, the organizations have to run fast. Strategic advantage to the organizations
comes only from the core competences, which are developed by the individuals working in it. Such levels of
excellence can be achieved only by investing in people. Investment must not confine to compensation only,
but must entail the inputs aimed at updating the skills of the employees. Training is one such potion to cure the
organizations of the sluggishness, which may creep in because of the organizational inertia.
7.1 LEARNING OBJECTIVE
This lesson shall develop the concept of training and management development and explain the
concept and methods of training, as practiced in organizations.
7.2 DEFINITION OF TRAINING
Training is often looked upon as an organized activity for increasing the knowledge and skills of
people for a definite purpose. It involves systematic procedures for transferring technical know-how to the
employees so as to increase their knowledge and skills for doing specific jobs with proficiency. In other
words, the trainees acquire technical knowledge, skills and problem solving ability by undergoing the training
programme.
67
There are several textbook definitions of training, but the one by Edwin B Flippo is generally well
accepted. According to Flippo, “Training is the act of increasing the knowledge and skills of an employee
for doing a particular job”.
Training involves the development of skills that are usually necessary to perform a specific job. Its
purpose is to achieve a change in the behaviour of those trained and to enable them to do their jobs better.
Training makes newly appointed employees fully productive in lesser time. Training is equally necessary for
the old employees whenever new machines and equipment are introduced and/or there is a change in the
techniques of doing the things.
7.3 NEED FOR TRAINING
Training is a continuous process and does not stop anywhere. The top management should ensure
that any training programme should attempt to bring about positive changes in the knowledge, skills, and
attitudes of the employees. The need for training can arise because of the following reasons:
(i) Changing Technology.
Technology is changing at a fast pace. Be it any industry, technological changes are changing the
way in which operations were done. Newer machines are being used for automation of the processes.
Computers have made the controls very easy.
In order to keep themselves abreast with the changes, the employees must learn new techniques to
make use of advances in the technology. Training needs to be treated as a continuous process to update the
employees in new methods and procedures.
(ii) Demanding Customers.
As the free markets become stronger, customers are becoming more and more demanding. They are
much more informed about the products. They have many sources of information. Intensified competition
forces the organizations to provide better and better products and services to them. Added to the customer
conscious, their requirements keep on changing. In order to satisfy the customers and to provide best of the
quality of products and services, the skills of those producing them need to be continuously improved through
training.
(iii) Thrust on Productivity.
In the competitive times, organizations cannot afford the extravaganza of lethargy. They have to be
productive in order to survive and grow. Continuous improvement of the employees’ skills is an essential
requirement for maintaining high standards of productivity. Productivity in the present times stems from
knowledge, which has to be relearned continuously.
(iv) Improved motivation.
Training is a source of motivation for the employees as well. They find themselves more updated
while facing the challenging situations at job. Such skill development contributes to their career development
as well. Motivated employees have lesser turnover, providing an organization with a stable work force, which
ahs several advantages in the long run.
(v) Accuracy of output
Trained workers handle their job better. They run their machines safely. They achieve greater accuracy
is whatever job they do. This reduces accidents in the organizations. Adherence to accuracy infuses high
standards of quality in the products and services, thus giving them a competitive edge in the difficult times.
Quality reduces wastages and ensures better customer satisfaction.
68
7.4 OBJECTIVES OF TRAINING
The objectives of training can vary, depending upon a large number of factors. The objectives depend
on the nature of the organization where training has to be provided, the skills desired and the current skill
levels. It is difficult to draw generalizations of the objectives of training; still they can be stated as under:
(a) To increase the knowledge of workers in doing specific jobs.
(b) To systematically impart new skills to the human resources so that they learn quickly.
(c) To bring about change in the attitudes of the workers towards fellow workers, supervisor
and the organization.
(d) To improve the overall performance of the organization.
(e) To make the employees handle materials, machines and equipment efficiently and thus to
check wastage of time and resources.
(f) To reduce the number of accidents by providing safety training to employees.
(g) To prepare employees for higher jobs by developing advanced skills in them.
7.5 DIFFERENCE BETWEEM TRAINING AND DEVELOPMENT
No longer do the organizations talk of training in isolation. It is usually addressed along with
development. Although the terms training and development are used together, they are often confused.
Training means learning the basic skills and knowledge necessary for a particular job or a group of jobs. In
other words, training is the act of increasing the knowledge for doing a particular job. But development refers
to the growth of an individual in all respects. An organization works for the development of its executives or
potential executives in order to enable them to be more effective in performing the various functions of
management. An executive development programme aims at increasing the capacities of the individuals to
achieve the desired objectives. Executive capacities imply his personal abilities and potentials. Desired
objectives imply consideration for tile goals of the organization and individuals. Increasing the capacities
implies that change must, occur in the executive and through him in his subordinates. The distinction between
training and development is shown in Table 7.1.
Exhibit 7.1 Training vs. Development
Training
1. Training means learning skills and knowledge
for doing a particular job and increases skills
required for a job.
2. Training generally imparts specific skills to the
employees.
3. Training is concerned with maintaining and
improving current job performance. Thus, it has
a short-term perspective.
4. Training is job centered in nature.
5. The role of trainer or supervisor is very
important in training.
Development
1. Development refers to the growth of an
employee in all respects. It is more concerned
with shaping the attitudes.
2. Development is more general in nature and
aims at overall growth of the executives.
3. Development builds up competences for future
performance and has has a long-term
perspective
4. Development is career-centered in nature.
5. All development is 'self-development' and the
executive has to be internally motivated for
the same.
69
7.6 Benefits of Training
7.6.1 Benefits of Training to Employers
The employers invest in training because they reap several benefits out of the exercise, which can be summed
up as under:
(i) Faster learning of new skills
Training helps the employers to reduce the learning time of their employees and achieve higher
standards of performance. The employees need not waste time in learning by observing others. If a formal
training programme exists in the organization, the qualified instructors will help the new employees to acquire
the skills and knowledge to do particular jobs quickly.
(ii) Increased productivity
Training increases the skill of the new employee in while performing a particular job. An increased
skill level usually helps in increasing both quantity and quality of output. Training can be of great help even to
the existing employees. It helps them to increase their level of performance on their present job assignments
and prepares them for future assignments.
(iii) Standardization of procedures
Training can help the standardization of operating procedures, which can be learnt by the employees.
Standardization of work procedures makes high levels of performance rule rather than exception. Employees
work intelligently and make fewer mistakes when they possess the required know-how and skills.
(iv) Lesser need for supervision
As a generalization, it can be stated safely that trained employees need lesser supervision. Training
does not eliminate the need for supervision, but it reduces the need for detailed and constant supervision. A
well-trained employee can be self-reliant in his/her work because s/he knows what to do and how to do.
Under such situations, close supervision might not be required.
(v) Economy of operations
Trained personnel will be able to make better and economical use of the materials and the equipment
and reduce wastage. Also, the trained employees reduce the rate of accidents and damage to machinery and
equipment. Such reductions can contribute to increased cost savings and overall economy of operations.
(vi) Higher morale
The morale of employees is increased if they are given proper training. A good training programme
moulds employees’ attitudes towards organizational activities and generates better cooperation and greater
loyalty. With the help of training, dissatisfactions, complaints, absenteeism and turnover can also be reduced
among the employees. Thus, training helps in building an efficient and co-operative work force.
(vii) Managerial Development
The top management can identify the talent, who can be groomed for handling positions of responsibility
in the organizations. Newer talent increases the productivity of the organizations. By providing opportunity
for self-development, employees put in their best effort to contribute to the growth of the organization.
7.6.2 Benefits of Training to Employees
The employees are the ultimate link in an any organization, who carry out the operations. Training
can help them in several ways, as mentioned below:
70
(i) Increasing Confidence
Training creates a feeling of confidence in the minds of employees, who feel comfortable while
handling newer challenges. It gives a feeling of safety and security to them at the work place.
(ii) New Skills
Training develops skills, which serves as a valuable personal asset of a worker. It remains permanently
with the worker himself.
(iii) Career advancement
The managers can develop their skills to take up higher challenges and work in newer job dimensions.
Such an exercise leads to the career development of the employees, who can move up the corporate hierarchy
faster.
(iv) Higher Earnings
Higher earnings are a consequence of career development. A highly trained employee can command
high salary in the job market and feel more contended.
(v) Resilience to change
In the fast changing times of today, training develops adaptability among workers. The employees
feel motivated to work under newer circumstances and they do not feel threatened or resist any change.
Such adaptability is essential for survival and growth of an organization in the present times.
(vi) Increased Safety
Trained workers handle the machines safely. They also know the use of various safely devices in the
factory, thus, they are less prone to accidents.
7.7 Organizational Structure of Training Department
The exact position of the training department must be specified in the organizational structure of the
company. Training, being a staff function has a risk of being sidelined in a large organization. Some of the
typical structures of training department can be:
a) As a part of the personnel department
In most companies, human resource development is entrusted upon HRD/Personnel department. In
such situation, the training department would function within the authoritative control of the HRD manager.
Usually, the new employees undergo an orientation/induction programme, which is organized by this department.
In such department, there can be a permanent training manager, who shall plan and manage the training
programmes. He shall also evaluate the training programmes and report to the HRD manager. Although rare,
organization might hire some permanent faculty to provide the training. The common practice is that some
core faculty might be hired, while the external experts might impart specialized training. Usually, the training
imparted by this department is more generic in nature.
b) In the form of a matrix organization
The training manager might not be a specialist in all functional areas. While imparting sophisticated
training, the common practice is to take a manager from the functional department. For example, if sales
training was to be given to the representatives, the sales manager might be asked to plan the same. In such
a situation, he shall design the training programme and identify the faculty who shall provide the training. He
might even identify the trainees who need to be trained. The training manager, who shall be under the HRD
71
manager, shall organize the training according to the plan suggested by the sales manager. He might arrange
for the hotel, training facilities and other necessary paraphernalia required for the training. In such a situation,
the training activity is conducted in the form of a matrix organization, where the training manager merely
becomes a facilitator of a training programme.
c) Training by functional heads
When training is not a very regular exercise, even the functional heads, such as marketing manager/
production manager etc. might undertake the task of organizing the training programmes. They plan and
organize the entire programme themselves.
d) External Organization
Several organizations, such as consultancy organizations, professional bodies, government departments,
educational institutions etc. specialize in providing training. They contact the prospective organizations and
put forth their proposals to conduct training programmes for them. The clients review their proposal and if
satisfied, they might nominate their staff to participate in these events.
7.8 Methods of Training
There is a wide range of training methods and techniques have been developed over the years by
various organizations and training experts as shown in Table 7.2. Different training methods are suitable for
different categories of people in the organization. There can be several categories of personnel in an
organization, e.g. managerial and non-managerial, technical, administrative, skilled, unskilled, senior, junior
etc. Each organization has to choose the methods and techniques of training which are relevant for its training
needs.
Various methods of training may be classified into the following categories:
Table 7.2. Methods of Training
l. On-the-job Training (at the place of work)
(i) Coaching
(ii) Understudy
(iii) Position Rotation
II. Vestibule Training (adapted to the environment at the place of work)
III. Off-the-job Training (away from the place of work)
(i) Special Lecture-cum-Discussion
(ii) Conference
(iii) Case Study
(iv) Sensitivity training
(v) Special projects
(vi) Committee assignments.
a) On-The-Job Training
On-the-job training is considered to be the most effective method of training the operative personnel.
Under this method, the worker is given training at the work place by his immediate supervisor. In other
words, the worker learns in the actual work environment. It is based on the principle of ‘learning by doing’.
72
On-the-job training is suitable for imparting skills that can be learnt in a relatively short period of time,
It has the chief advantage of strongly motivating the trainee to learn. It is not located in an artificial situation.
It permits the trainee to learn on the equipment and in the work-environment. On-the-job training methods are
relatively cheaper and less time consuming. Another important factor about on-the-job training is that supervisors
play an important part in training the subordinates.
There are four methods of on-the-job training explained below:
(i) Coaching.
Under this method, the supervisor imparts job knowledge and skills to his subordinate. The emphasis
in coaching or instructing the subordinate is on learning by doing. This method is very effective if the superior
has sufficient time to provide coaching to his subordinates.
(ii) Understudy.
The superior gives training to a subordinate as his understudy or assistant. The subordinate learns
through experience and observation. It prepares the subordinate to assume the responsibilities of the superior’s
job in case the superior leaves the organization.
(iii) Position Rotation.
The purpose of Position rotation is to broaden the background of the trainee in various positions. The
trainee is periodically rotated from job to job instead of sticking to one job so that he acquires a general
background of different jobs. However, rotation of an employee from one job to another should not be done
frequently. He should be allowed to stay on a job for a sufficient period so that he may acquire the full
knowledge of the job.
b) Vestibule Training
Vestibule means a cabin and the term ‘vestibule training’ is used to designate training in a cabin (or a
classroom) for semi-skilled jobs. It is more suitable where a large number of employees have be trained at the
same time for the same kind of work. Where this method is used, there should be well-qualified instructors in
charge of training programme. Here the emphasis tends to be on learning rather than production. It is frequently
used to train clerks, machine operators, typists, etc.
Vestibule training is adapted to the same general type of training problem that is faced by on-the-job training.
A vestibule school is run as a special endeavour of the personnel department. An attempt is made to duplicate,
as nearly as possible, the actual material, equipment and conditions found in the real work place. The vestibule
school may be started when the training work exceeds the capacity of the line supervisors. Thus, in vestibule
training, the workers are trained on specific jobs in a school run by the organization. An attempt is made to
create working conditions, which are similar to the actual workshop conditions. The learning conditions are
also carefully controlled.
c) Off-the-Job Training
The biggest merit of on-the-job training methods is that they do not require the worker to be absent
from his work place. There is no disruption in the normal activities. However, when the training is specialized,
or needs the use of sophisticated equipment, or needs a specialist trainer, it might not be feasible to provide
the training while on job. For such situations, off-the-job training methods are used by the organizations.
Off-the-job training methods require the worker to undergo training for a specific period away from
the work-place. These methods are concerned with both knowledge and skills in doing certain jobs. The
workers are free of tension of work while they are learning.
73
There are several off-the-job methods of training and development as described below:
(i) Special Lecture cum Discussion
Training through special lectures is also known as ‘class-room training’. It is more associated with
imparting knowledge than with skills. Some executives of the organization or specialists from vocational and
professional institutes may deliver the special lectures. Many firms also follow the practice of inviting experts
for special lectures for the staff on matters like health, safety, productivity, quality, etc. There are
certain aspects of nearly all jobs that can be learnt better in the classroom than on the job. Orientation about
organization and safety training can be accomplished more effectively in the classroom. The standard
instructional method suitable for operative employees is a ‘formal lecture’ by in instructor to the trainees. The
lecturer possesses a considerable depth of knowledge of the subject at hand. He seeks to communicate his
thoughts in such a manner as to interest the class and cause the trainees to retain what he has said. The
trainees generally take notes as an aid to learning.
(ii) Conference / Seminar Training
The literal meaning of conference is ‘consultation’. But in practice, conference implies sharing some
information with an audience of a large number of people. It is conducted in a big hall where the participants
are allowed w exchange their views and raise queries. The proceedings of the conference are conducted by
the chairman who is also responsible for summing up the proceedings of the conference. These days video
conferencing is also gaining popularity under which people can participate in the conference through link via
satellite.
Seminars are also used for bringing various people to a platform where they discuss various issues
relating to work. This helps them in understanding others’ viewpoints, making themselves understand and
seeking solutions to the problems, which they might not be able to solve themselves. Seminars offer brainstorming
platforms where more than one brains work on solving work-related problems. Seminars can include lecturing
by external experts as well. Seminars can be within the organization or the trainees can be nominated to
participate in those being organized by other institutions.
(iii) Case Study
The case method is a means of simulating experience in the classroom. Under this method, the
trainees are given a problem or case which is more or less related to the concepts and principles already
taught. They analyse the problem and suggest solutions which are discussed in the class. The instructor helps
them reach a common solution to the problem. This method gives the trainee an opportunity to apply his
knowledge to the solution of realistic problems.
(iv) Role Playing
In this technique, the trainees are made to experience what others feel of a particular situation. They
understand the viewpoint of others and come to know of constrains within which others are working. Such an
interaction and understanding helps in reducing the dysfunctional conflicts within the organizations. Many
times, various departments of the organizations disagree because they do not understand each others’ viewpoint.
Role playing is an effective training technique to bridge the differences between them. Besides, this, it is an
effective method to prepare the trainees to face the situations that they are likely to face while discharging
their duties. For example, the sales staff is often asked to play the role of the customers to understand how
they might behave in a given situation. They become trained enough to face the likely situations.
74
(v) Behavioural Simulation Games
These focus primarily on the process of inter-personal relations, on how decisions are made, and
with what consequences, rather than on the substance of the decisions. Sometimes, structured exercises is
used to connote all types of simulations, but there exists a distinction between a game and an exercise.
1. Games have set rules and have predictable results. Often, their design is hidden in order to
highlight a behavioural process and to dramatize its effects.
(vi) In-basket Exercises
These are more elaborate simulation exercises in which a complex organization is created in the
form of an office environment. The trainees work in an office setting with their in-basket full of interdepartmental
memos, letters, reports, forecasts and other data on their desks, as one receives in an office. The normal
phone calls, emails and face to face meetings also keep on happening to give a real office-like environment.
Such a simulation of the office in-basket familiarizes the trainees with the role that they are expected to play.
They also get acquainted with the nature of communication that they have to perform in the work-settings.
Critical incidents are also included in the in-basket to familiarize to the trainees.
(vii) Laboratory training
Laboratory training provides the participants with an extensive experience of how various groups
and individuals interact in group situations. Laboratory is a controlled environment for training where the
external factor are not allowed to interfere with the training process. The biggest advantage of laboratory
training if its effectiveness and the limitation is that controlled conditions might nor provide a real-life enactment
of the situations.
7.9 SELF CHECK EXERCISE
1. Define Training.
2. Write a short-note on need of training.
3. What are the objectives of training program? Discuss in brief.
4. Write a short note on benefits of training.
5. What do you understand by vestibule training? Discuss in brief.
7.10 Summary
In the rapidly changing times, the human resources have to be updated with the ongoing changes.
Training is an important activity in all the organizations and its significance has increased even further in the
highly competitive times of today. The training function can be imparted by a training department within the
organization, or by an external organization, depending upon the training objectives and the organization’s
resources. Several training methods have been developed, which include on-the-job, vestibule and of-the-job
training methods. Each of these have their own merits and demerits.
7.11 GLOSSARY
• Education means inculcating moral values, positive thinking, attitude of helping, attitude of giving to
society and ethical values these kind of students are only able to bring changes in society.
• Employee development is defined as a process where the employee with the support of his/her
employer undergoes various training programs to enhance his/her skills and acquire new knowledge
and skills.
75
• Off-the-Job Training is the training method wherein the workers/employees learn their job roles
away from the actual work floor.
• On-the-Job training refers to the methods that are used at the workplace, while the employee is
actually working. It means 'learning while doing'. The trainees learn in the real work environment
and gain practical experience dealing with the tasks and challenges during a normal working day.
• Training constitutes a basic concept in human resource development. Training is a highly useful tool
that can bring an employee into a position where they can do their job correctly, effectively, and
conscientiously. Training is the act of increasing the knowledge and skill of an employee for doing
a particular job.
• Training Process comprises of a series of steps that needs to be followed systematically to have an
efficient training programme. The Training is a systematic activity performed to modify the skills,
attitudes and the behavior of an employee to perform a particular job.
7.12 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 7.2.
2. For answer refer to section 7.3.
3. For answer refer to section 7.4.
4. For answer refer to section 7.6.
5. For answer refer to section 7.8 (b).
7.13 TERMINAL QUESTIONS
Q.1 Why is it important to train the human resources in organizations? Define training and explain its
need?
Q.2 What can be various objectives of training?
Q.3 How can the training function be organized? Is it better to have external; organization for training?
Why/Why not?
Q.4 What are various methods of on-the-job training?
Q.5 Briefly explain some on-the-job training methods practiced in business organizations.
7.14 SUGGESTED READINGS
1. Udai Pareek (1997) Training Instruments for HRD, Tata McGraw Hill, New Delhi.
2. Rolf Lynton and Udai Pareek (2000) Training for organizational transformation, Sage Publications,
New Delhi.
3. Rolf Lynton and Udai Pareek (2000) Training for organizational transformation, Sage Publications,
New Delhi.
4. Pepper, A.D. (1986), Managing the training and development function, Gower.
5. Rae, L. (1986), How to Measure Training Effectiveness, Gower.
*****
76
LESSON-8
EVALUATING TRAINING EFFECTIVENESS
STRUCTURE
8.0 INTRODUCTION
8.1 LEARNING OBJECTIVES
8.2 CONCEPT OF TRAINING EFFECTIVENESS
8.3 CRITERIA FOR EVALUATING TRAINING EFFECTIVENESS
8.4 POST TRAINING EVALUATION
8.5 TRAINING EVALUATION TECHNIQUES
8.6 SELF CHECK EXERCISE
8.7 SUMMARY
8.8 GLOSSARY
8.9 ANSWERS TO SELF CHECK EXERCISE
8.10 TERMINAL QUESTIONS
8.11 SUGGESTED READINGS
8.0 Introduction
The results of training are not evident immediately. So, the justification of all training programmes
can be made only when they are critically evaluated in terms of the advantages that an organization gets in
comparison to the investment made. While the investments can be measured in terms of money, the advantages
can be both monetary as well as non-monetary. Being an activity, which involves a great degree of human
factor, the evaluation to training has always been difficult.
8.1 LEARNING OBJECTIVES
After studying this lesson you will able to understand the concept of evaluating training effectiveness
and what is training effectiveness? The criteria used for evaluating training effectiveness. The different
techniques used for evaluating training programme.
8.2 CONCEPT OF TRAINING EFFECTIVENESS
Training effectiveness is the degree to which trainees are able to learn and apply the knowledge and
skills acquired during the programme. The attitudes, interests, values and expectations of the trainees and the
training environment influence it. A training programme is likely to be more effective when the trainees are
involved in their jobs and have career plans. Contents of training programme, and the ability of trainers also
determine training effectiveness to a certain extent.
8.3 Criteria for evaluating training effectiveness
The following criteria may be used to measure the effectiveness of training:
(i) Reactions
Trainees’ reactions to the objectives, contents and methods of training are good indicators of
effectiveness. In case the trainees considered the programme worthwhile and liked it, the training can be
considered effective.
77
(ii) Learning
The extent to which the trainees have gained the desired knowledge and skills during the training
period is a useful basis of evaluating training effectiveness.
(iii) Behaviour
Improvement in the job behaviour of the trainees reflects the manner and extent, to which, the
learning has been put to practice.
(iv) Results
Productivity improvement, quality improvement, cost reduction, accident reduction, reduction in labor
turnover and absenteeism are the outcomes of training which can be used for evaluating effectiveness.
8.4 Post Training Evaluation
Training is a human phenomenon. So, there is a large variation in its results. The results of training
can show themselves in both long-run as well as short-run. There can be varying effect of training on the
trainees. So, post-training becomes a very tedious exercise for the trainers. Any mistake can lead to wrongful
conclusions and even hamper the training process in future.
In general terms, post-training evaluation can be understood in terms of three distinct phases:
(i) Immediate effect of training
This relates to changes in knowledge, skill or behaviour immediately after a training experience.
Such an evaluation attempts to assess whether or not training has been effective in communicating the
message. Immediate evaluation help in answering the following questions:
• Do the trainees understand what is now required of them?
• Have they acquired the necessary behavioural skills to be able to implement the learning?
(ii) Intermediate
This phase of evaluation is conducted after some time period has elapsed after the training. During
this period, the trainees would have put the skills learnt during training into practice. This evaluation shows
whether the knowledge, skill and behaviour, which have been learned during the training, is being put into use
on the job. In other words, the evaluation seeks to find whether the change in behaviour, skills and attitude as
a result of the training can be identified.
(iii) Long term
This refers to the long-term effectiveness of the training on an individual, the unit and/or even the
organization.
This evaluation is determines the value of the training delivered and assesses:
Ø The effectiveness of the training towards achievement of the training objectives.
Ø The effectiveness of the learning process - in other words, whether the trainees have learned
what was set out to teach them.
Ø Whether the learning has been applied into practice or not.
Ø Whether the applied learning has brought about the changes required in relation to attitudes,
skill or behaviour.
78
8.5 Training Evaluation Techniques
The commonly used training evaluation techniques are :-
a) Post-course assessments
Post-course assessments are often conducted immediately after the end of a training programme
and are the most frequently used method for evaluating a training programme. This evaluation is based on the
fact that if the training has been effective and has been delivered in and acceptable manner, the trainees shall
respond positively. However, it has been observed by some researchers that the positive response of the
trainees is not so much because of the effectiveness of the learning process, but because of their enjoyment
of it. Hence, the trainers should not place too much emphasis on individual comments taken from a post-
course assessment. However, complete analysis of a set of assessment forms can provide useful insights into
those parts of the programme, which the trainees believe to have been the most effective. Despite this
limitation, the views and opinions of the trainees should not be discarded lightly, particularly if a consistent
view is expressed by a range of people.
This method can be especially useful in assisting the trainer to evaluate and assess the effectiveness
of particular instructors or presenters, especially if evidence about similar sessions or courses being presented
by other people is available. It may well be that one of the most useful benefits of a post-course assessment
is in assisting the trainer to assess the skill of the instructor.
b) Pre and post-course tests
An ideal way of measuring learning is to measure it before (i.e at the start of a programme) and then
to measure the same set of knowledge when it is over. It is often helpful in deciding what needs to be built on,
particularly when teaching a specific skill. The gains made by a training are quite visible by such an evaluation.
However, the problem is that reliable techniques for pre and post evaluation might not be available.
c) Management briefing
In this technique, the trainer moves out of the area within his own responsibility and becomes much
more reliant on the trainee’s line manager. Ideally, training should always be the responsibility of the line
manager, but in actual practice, they are reluctant to accept this as part of their responsibility. They prefer to
pass it on to the trainer. Management briefing can be a useful way of involving line managers, as well as
assisting the trainer in the evaluation process. The commonest way of conducting a management briefing is
for the trainer to provide the manager with a detailed set of objectives and an outline of the content of a
particular programme. The manager then discusses this with the trainee, and together they work out some
personal and specific objectives which may be related to the trainee’s knowledge, skill or attitude. The trainee
who attends a programme having been fully briefed by the manager and who is fully committed to achieving
personal objectives will be well prepared for the learning process.
d) Management de-briefing
This method of evaluation also requires the complete commitment of line managers. They should
review the learning process with the trainee after the programme. However, It is important to note that it is
but the application of the learning within that the job the trainee is expected to do has to be evaluated and not
merely the learning process itself. A fundamental problem, identified by the vast majority of people who
attend training programmes, is that there is little or no opportunity for them to apply the learning gained when
they return to an inevitably busy work situation. Management debriefing can overcome this problem, not only
by reviewing the learning, but also by assisting the trainee to understand how to apply it in the work situation.
79
e) Questionnaires
Questionnaire is a very useful instrument to gather information about the effectiveness of training.
Any systematic training evaluation must involve the Training Department in following up, at various intervals,
people who have attended specific programmes. If the objective is to assess retention and application, the
questionnaire should be designed primarily to assess the level of skill or knowledge which the trainee has
retained during the period following the training – after three, six or twelve months, whichever period the
trainer deems to be appropriate. Trainees should be encouraged to answer honestly and openly without
reference to notes or handouts.
A second but no less important use of questionnaires is to identify how and how well the learning has
been applied. A trainer might seek answers to the following questions:
• What benefits have trainees gained and what opportunities do they now have for increasing their
learning?
• Considerable benefit can also of course be obtained from negative responses. The trainer would
want to know what learning has not been applied and why.
§ Is it because the learning has not been relevant?
§ Is it because the timing was not opportune?
On the basis of such responses, the trainer can assess whether or not the training being delivered is
relevant and applicable to the particular circumstances which need to be evaluated. Questionnaires allow the
flexibility of covering up a large number of responses. The respondent might feel more free to respond on a
questionnaire than a face to face dialogue.
f) Training Appraisals
An essential part of any training appraisal system should be to assess the effectiveness of training
delivered during the previous period, and also to assess training needs in relation to future objectives. The
application of training effectiveness for the previous period can be assessed by a few simple questions. This
applies whether training has been carried out on formal programmes, by the process of self-development or
by learning on the job. Because the immediate supervisor of the trainee usually conducts the appraisal, it
should be possible for the two people working together to assess the applicability of the training needs of the
trainee.
This method provides a very effective feedback, both in terms of evaluation and in terms of the value
of the training, which has been delivered.
g) Training for promotion
One of the major objectives of any training is to train the prospective managers after promotion. A
manager has to perform newer roles after being promoted to a higher position. Leaders’ role might be quite
difficult for some. The degree of effectiveness of a manager after promotion can be an indicator of an
effective training.
The value of this method depends partly on who is responsible for promotion procedures within an
organization. If they are the one-off responsibility of departmental line managers, for example, it may be less
valuable. Decisions maybe dismissed as particular idiosyncrasies of the manager. On the other hand if promotion
procedures are well considered and involve some objective form of assessment, the training experience of
individuals who are promoted is likely to have some relevance to an evaluation of training procedures. Trainers
80
should track and monitor the career progress of trainees, relating their promotion back to course performance.
If people who attend programmes are not coming through in terms of promotion some serious questions must
be asked about the value of the training being given. If, on the other hand, those having undergone training are
promoted on a regular basis, the trainer will get a better response to training.
This method also assists the trainer in assessing whether the training is genuinely associated with,
and related to, business needs. In. a company with well-considered promotion procedures, only those people
who are capable of meeting business needs are likely to be promoted.
i) Assessment/development centers
Many companies now run centers designed to assess employees’ potential, also called as assessment
centers. The practice to provide people with an opportunity to assess their own development needs along
with skilled assessors development centers is also becoming popular. Both these exercises provide a lot of
useful information to the trainer, which can be of relevance to the processes of evaluation. In assessment
centers, the potential identified frequently relates back to previous training experience and assists the trainer
in evaluating how effective previous training programmes have been.
Development centers enables the trainer to find out whether the identified training needs of individuals
are being met or not. Trainers cannot say it with proof that they are responding to the direct and individually
identified needs of a group of trainees. Evidence which emerges from development center work, however,
provides an ideal basis on which to build evaluation programmes designed to test the effectiveness of training
delivered against a check list of specifically identified needs assuming that other techniques of evaluation are
applied to the training given.
j) Repertory grids
Grid analysis helps trainers assess performance on two dimensions simultaneously. Usually, the
trainer is concerned over assessing performance both in relation to the skill level and the motivational level.
Many people who have the necessary degree of skill to do a job effectively lack the motivation, and vice
versa. Grid analysis assists the trainer to evaluate both factors and to plot them on a grid. Working with line
managers, this type of approach enables the trainer to assess real training requirements and also to follow up
the delivery of the training once it has been completed.
k) Surveys
Many organizations conduct a lot market research into customer attitudes. Even surveys into employee
attitudes and communications audits are a common management experience. Such information provides a
useful base on which to assess current performance and to build future performance. On similar lines,
surveys are being conducted to the find out the organizations’ training needs and they apply with equal force
to the evaluation of training delivery. A full-scale or even a shorter, more qualitative survey can be carried out
effectively in most of organizations. Sometimes the information the trainer is seeking may be of a more
confidential nature. Then, it may be necessary either to employ he services of an external consultant or to
allow people to respond anonymously.
Questionnaires can also be used to find out how people perceive the benefits from training experiences
in the past and also to identify what they believe would be the most valuable training experience for them in
the future. This method of survey is often most effective if it is followed up by shorter qualitative interviews
based on the initial findings.
81
l) Trainer interviews
Interviewing the former trainees provides useful insights into their experiences with training. Structured
interviews are more effective, with each interviewee being asked the same set of questions. This allows
effective analysis of response, and also helps in keeping the interview on track. Interviewing is time consuming
and needs a lot of resources. So, a proper assessment of the costs and benefits must be done before using
them as an assessment tool.
The greatest benefit of interview-based evaluation is that the trainer can gain a great deal of information
through a mixture of closed and open questions designed to probe in detail the trainee’s responses. Such an
approach can cover knowledge, skill arid attitude assessment, both in the initial and latter phases of evaluation.
If this approach is linked with a more quantitative approach, as outlined earlier, it can provide trainers with a
good feel for the effectiveness of the programmes they have been responsible for delivering.
m) Trainer-observed behaviour
This evaluation method is most valuable in relation to action-based learning, including role-plays and
simulations. The trainer can observe how behaviour has changed as a result of learning and feedback, and
can reinforce this with additional feedback to the trainee after a particular exercise or experience. It should
be noted that feedback is an essential part of this type of evaluation, and the trainers cannot expect sound
behaviour they observe to be repeated unless they provide some kind of positive reinforcement. Putting the
learnt behaviour into practice can contribute to the success of such a training programme.
n) Participant observation
Observation is a good method of any evaluation programme. As with trainer observation, trainees
learn a great deal from their colleagues who can observe and give opinions, particularly about the behaviour
identified with the training. However, an objective feedback is an essential aspect of such an exercise.
Observation is most effective where the trainer or participant is concerned with immediate evaluation of the
learning, and has less application to the long-term benefits of training.
o) Records of performance
Many organizations keep a record of the performance, either through detailed appraisal systems or
through the use of effective personnel reports. In such a situation, it is possible to use them to identify training
needs and or to evaluate the training delivered. Working closely with the line manager, the trainer needs to
identify through performance records how effective an individual employee has been in relation to the training
received. As with all methods of evaluation, the relevant performance records only can provide a real measure
of training effectiveness.
If, the trainers can identity those people who have been most successful after the training, they can
assume it to be a clear indication of training effectiveness. It is also possible for the trainer in this situation to
identify those people with low performance levels who perhaps pave not received the same training experiences
as the others. Again, this can provide evidence of training need, as well as a measure of the effectiveness of
training within that department.
p) Action plan follow-up
It is a common practice that after most training experiences, trainers usually asks the participants to
complete an action plan. However, these action plans (which can be in the form of projects etc.) are not
referred by the trainee nor the trainer. If used judiciously such plans can be used effectively as a means of
evaluating the training effectiveness. It requires a joint effort by the line manager and the trainers who can
82
follow up by interviews, a surveyor just a brief letter to all participants to assess whether or not the action
plans so ‘enthusiastically’ made on the final morning of the course have now been implemented – and if not,
why not. What, in other words, have been the barriers to implementation? If this method of follow-up is to be
effective, trainers must develop close relationships with line managers and must be seen to have a genuine
desire to assist and evaluate rather than to forcibly impose their own solution which, in any event, are unlikely
to be as effective as if they had been undertaken willingly.
8.6 SELF CHECK EXERCISE
1. How training effectiveness is evaluated? Discuss in brief.
2. Write a short-note on criteria used for evaluating training effectiveness.
3. Write a short-note on management briefing.
4. Write a short-note on surveys.
5. What do you mean by records of performance? Discuss in brief.
6. Discuss in brief the team follow -up.
8.7 Summary
Evaluation of training is necessary because its results are not visible immediately and are also not
clearly measurable. In a rapidly changing scenario like the present times, the human resources have to be
constantly updated as newer skills. Continued training is an important activity in most modern knowledge-
based industries. So, evaluation of the effectiveness of training is an important pre-requisite for planning and
setting the training objectives. There are several techniques available for evaluating the effectiveness of
training, the choice of which would depend upon several factors, such as the training objectives, available
resources, capacity of the subordinates as well as that of the supervisors, etc.
8.8 GLOSSARY
• Measures of effectiveness are the emergency response time, false alarm rate, operational availability,
and total cost of ownership. The target value for each measures of effectiveness is established to
achieve a competitive advantage.
• Questionnaire is a research instrument consisting of a series of questions (or other types of prompts)
for the purpose of gathering information from respondents. Although questionnaires are often designed
for statistical analysis of the responses, this is not always the case.
• Survey is defined as a research method used for collecting data from a pre-defined group of
respondents to gain information and insights on various topics of interest. Surveys have a variety of
purposes and can be carried out in many ways depending on the methodology chosen and the
objectives to be achieved.
• Training effectiveness is fundamentally an evaluation that inspects the level to which training enhanced
the employee's skill, knowledge, and behaviour inside the association.
• Training evaluation is a systematic process to analyze if training programs and initiatives are effective
and efficient. Trainers and human resource professionals use training evaluation to assess if the
employee training programs are aligned with the company's goals and objectives.
83
8.9 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 8.2.
2. For answer refer to section 8.3.
3. For answer refer to section 8.5 (c).
4. For answer refer to section 8.5 (k).
5. For answer refer to section 8.5 (o).
6. For answer refer to section 8.5 (p).
8.10 TERMINAL QUESTIONS:
1. Explain the importance of evaluating training. Are the results of training visible immediately? Why/
Why not?
2. ‘Immediate post-training evaluation is the most reliable evaluation technique’ Comment.
3. Differentiate between management briefing and management debriefing.
4. Of various techniques for evaluating training effectiveness, how would you decide which technique
should be used?
5. Write short notes on:
a. Repository Grid
b. Questionnaire
8.11 Suggested Reading
1. Bramley, P. (1986), Evaluation of Training, BACIE.
2. Jackson, T. (1989), Evaluation : relating training to business performance, Kogan Page.
3. Pepper, A.D. (1986), Managing the training and development function, Gower.
4. Rae, L. (1986), How to Measure Training Effectiveness, Gower.
*****
84
LESSON-9
WAGES AND SALARY ADMINISTRARTION
STRUCTURE
9.0 INTRODUCTION
9.1 LEARNING OBJECTIVES
9.2 MEANING OF WAGE AND SALARY ADMINSTRATION
9.3 OBJECTIVES OF WAGE AND SALARY ADMINISTRATION
9.4 PRINCIPLES OF WAGE AND SALARY ADMINISTRATION
9.5 FACTORS AFFECTING WAGE RATES
9.6 WAGE AND SALARY DETERMINATION PROCESS
9.7 THEORIES OF WAGES
9.8 WAGE LEGISLATIONS IN INDIA
9.9 WAGE DIFFERANTIALS
9.10 SELF CHECK EXERCISE
9.11 SUMMARY
9.12 GLOSSARY
9.13 ANSWERS TO SELF CHECK EXERCISE
9.14 TERMINAL QUESTIONS
9.15 SUGGESTED READINGS
9.0 INTRODUCTION
Wage and salary administration affect levels of employee commitment to the organisation. However,
fascinating the individual’s job assignment is, the employee must be paid. Pay affects the way people work-
how much and how well. A large part of the compensation that people receive from work is monetary.
Although managers are expected to conserve money and distribute it wisely, many employees feel that they
should get more of it for what they do. Wages, salaries and many employee benefits and services are form of
compensation.
Contemporary employment reward system attaches great prominence to wages and salaries. In the
evolution of economies, the role of financial rewards has grown. The sophistication of wage and salary
administration has increased as industrialized economies have become more complex. New suggestions for
managing compensation systems are constantly emerging.
9.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Explain the objectives of wage and salary administration.
(b) State the principles governing wage and salary administration.
(c) Indicate the process of wage and salary administration.
(d) Highlight the theories of wages.
(e) State the main provisions of wage legislations in India.
85
9.2 Meaning of Wage and Salary Administration
Employee compensation may be classified into two types – base compensation and supplementary
compensation. Base compensation refers to monetary payments to employees in the form of wages and
salaries. The term ‘wages’ implies remuneration to workers doing manual work. The term ‘salaries’ is
usually defined to mean compensation to office, managerial, technical and professional staff. The distinction,
however, is rarely observed in actual practice. Base compensation, is a fixed and non-incentive payment on
the basis of time spent by an employee on the job. Supplementary compensation signifies incentive payments
based on actual performance of an employee or a group of employees. The term ‘compensation administration’
or wage and salary administration denotes the process of managing a company’s compensation programme.
According to D.S. Beach “Wage and Salary Administration refers to the establishment and
implementation of sound policies and practices of employee compensation”. It includes such areas as job
evaluation, surveys of wage and salaries, analysis of relevant organizational problems, development and
maintenance of wage structure, establishing rules for administrating wages, wage payment incentives, profit
sharing, wage changes and adjustments, supplementary payments, control of compensation costs and other
related items.”
According to S.P. Robbins, “The term compensation administration or wage and salary administration
denotes the process of managing a company’s compensation programme. The goals of compensation
administration are to design a cost-effective pay structure that will attract, motivate and retain competent
employees.”
Thus, wage and salary administration aims to establish and maintain an equitable wage and salary
structure and an equitable labour cost structure.
9.3 Objectives of Wage and Salary Administration
The objectives of wage and salary administration are numerous and sometimes conflict with each
other. The important among them are:
(a) To Acquire Qualified Competent Personnel: Candidates decide upon their career in a particular
organization mostly on the basis of the amount of remuneration the organization offers. Qualified and competent
people join the best-paid organizations. As such, the organizations should aim at payment of salaries at that
level, where they can attract competent and qualified people.
(b) To Retain the Present Employees: If the salary level does not compare favourably with that
of other similar organizations, employees quit the present one and join other organizations. The organization
must keep the wage levels at the competitive level, in order to prevent such quits.
(c) To Secure Internal and External Equity: Internal equity mean payment of similar wages for
similar jobs within the organization. External equity implies payment of similar wages to similar jobs in
comparable organizations.
(d) To Ensure Desired Behaviour: Good rewards reinforce desired behaviour like performance,
loyalty, accepting new responsibilities and changes, etc.
(e) To Keep Labour and Administrative Costs in line with the ability of the organization to pay.
(f) To Protect in Pubic as Progressive Employers and to comply with the wage legislations.
(g) To Pay According to the Content and difficulty of the job and in tune with the effort and merit
of the employees.
86
(h) To Facilitate Pay Roll administration of budgeting and wage and salary control.
(i) To Simplify Collective Bargaining procedures and negotiations.
(j) To Promote Organization feasibility
9.4 Principles of Wage and Salary Administration
The following principles should be followed for an effective wage and salary administration:
(a) Wage policy should be developed keeping in view the interests of all concerned parties viz. employer,
employees, the consumers and the society.
(b) Wage and salary plans should be sufficiently flexible or responsive to changes in internal and
external conditions of the organisation.
(c) Efforts should be made to ensure that differences in pay for jobs are based on variations in job
requirements such as skill, responsibility, efforts and mental and physical requirements.
(d) Wage and salary administration plans must always be consistent with overall organizational plans
and programmes.
(e) Wage and salary administration plans must be in conformity with the social and economic objectives
of the country like attainment of equality in income distribution and controlling inflation etc.
(f) These plans and programmes should be responsive to the changing local and national conditions.
(g) Wage and salary plans should expedite and simplify administrative process.
(h) Workers should be associated, as far as possible, in formulation and implementation of wage
policy.
(i) An adequate data base and a proper orgnisational set up should be developed for compensation
determination and administration.
(j) The general level of wages and salaries should be reasonably in line with that prevailing in the
labour market.
(k) There should be a clearly established procedure for hearing and adjusting wage complaints. This
may be integrated with the regular grievance procedure, if it exists.
(l) The workers should receive a guaranteed minimum wage to protect them against conditions
beyond their control.
(m) Prompt and correct payments to the employees should be ensured and arrears of payment should
not accumulate.
(n) The wage and salary payments must fulfill a wide variety of human needs including the need for
self actualization.
(o) Wage policy and programme should be reviewed and revised periodically in conformity with
changing needs. For revision of wages, a wage committee should always be preferred to the
individual judgement, however unbiased of a manager.
9.5 Factors Affecting Wage Rates
There are several factors, which influence the wage rates. The variations in wage structure in
various industries are the results of these factors. Some important factors are:
87
(i) Demand and Supply: The wage rates are fixed by the demand and supply position of the
workers in the labour market. If labour is in short supply, the workers will offer their services only if they are
paid well. On the other hand, labour may be available at cheaper rates if their supply is in plenty.
(ii) Bargaining Power: Wages also depend to a considerable extent on the relative bargaining
power of the labour unions and the employers. 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.
(iii) Cost of Living: Progressive employers do not leave the wages to be determined by the blind
forces of demand and supply. They take due notice of the cost of living for the workers at that place and try
to fix the wages as to ensure a decent living wage to the workers. Cost of living varies under inflationary and
deflationary pressures. Where employers do not show enough awareness, labour unions, if strong, come out
with a demand of wage adjustment according to the cost of living index number.
(iv) Condition of Product Market: The wage levels will be influenced by the degree of competition
prevailing in the market for the product of the industry. If it is a perfect competitive market the wage level
may be at part with the value of the net additions made by the workers to the total output. But in any given
industry or occupation, wages may not reach this level it imperfect competition exists in the product market.
(v) Comparative Wages: Wages paid by other firms in the same market for similar work also
influence the wage levels. Wage rates must also be in consistent with the wages paid by other firms in the
same industry. The comparative wages will increase the job satisfaction among the workers.
(vi) Ability to Pay: Wage rates are influenced by the ability of industry or firm to pay its workers.
Those firms, which are earning huge profits, may naturally afford much better wage rates and more facilities
to its workers in comparison to those firms, which are earning only marginal profits.
(vii) Productivity of Labour: Productivity is considered to be the main basis of wage determination.
In firms, where productivity lab OUT is high, higher wages are paid as compared to other firms where it is low.
(viii) Job Requirements: A worker is compensated according to the 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.
(ix) Government Policy: Since the bargaining power of the workers is not enough to ensure fair
wages in all industries, the Government has to interfere in regulating wage rates to guarantee minimum wage
rates in order to cover the essentials of a decent living.
(x) 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.
9.6 Wage and Salary Determination Process
Usually, the steps involved in determining wage and salary rates are as follows:
(a) Job Analysis: A job analysis describes the duties, responsibilities, working conditions and
interrelationships between the job as it is and the other jobs with which it is associated. Job descriptions are
crucial in designing pay systems, for they help to identify important job characteristics. They also help determine,
define and weigh compensable factors (factors for which an organisation is willing to pay-skill, experience,
effort and working environment). After determining the job specifications, the actual process of grading,
rating or evaluating the job occurs. A job is rated in order to determine its value in relation to all the other jobs
in the organisation which are subject to evaluation. The next step is that of providing the job with a price. This
involves converting the relative job values into specific monetary values or translating the job classes into rate
ranges.
88
(b) Conducting the Salary Survey: Compensation or salary surveys play a central role in pricing
jobs. Virtually every employer, therefore, conducts at least an informal survey. Employers use salary surveys
in three ways (i) Survey data are used to price bench mark jobs that anchor the employer’s pay scale and
around which the other jobs are slotted, based on their relative worth to the firm (ii) Some jobs (generally 20%
or more) of an employer’s position are usually priced directly in the market place (rather than relative to the
firm’s benchmark jobs), based on a formal or informal survey of what competitive firms are paying for
comparable jobs (iii) Surveys also collect data on benefits like insurance, sick leave and vacations to provide
a basis for decisions regarding employee benefits.
Salary surveys can be formal or informal. Informal telephone surveys are good for quickly checking
on a relatively small number of easily identified and quickly recognized jobs. Such as when a company’s HR
manager wants to confirm and salary at which to advertise a newly open cashier’s job. In formal surveys,
most firms either use the results of packaged surveys available from the research bodies, employer’s
associations, government labour bureaus etc. or they participate in wage surveys and receive copies of
results or else they conduct their own. These surveys may be carried out by mailed questionnaire, telephone,
or personal interviews with other managers and personnel agencies.
Wage and salary surveys provide many kinds of useful information about differences in wage levels
for particular kinds of occupations. This can have a great influence on an organisation’s compensation policy.
(c) Group Similar Jobs into Pay Grades: After the results of job analysis and salary surveys have
been received, the committee can turn to the task of assigning pay rates to each job, but it will usually want
to first group jobs into pay grades. A pay grade in comprised of jobs of approximately equal difficulty or
importance as determined by job evaluation. Pay grading is essential for pay purposes because instead of
having to deal with hundreds of pay rates, the committee might only have to focus on say 10 or 12.
(d) Price Each Pay Grade: The next step is to assign pay rates to pay grades. Assigning pay rates
to each pay grade is usually accomplished with a wage curve. The wage curve depicts graphically the pay
rates currently being paid for jobs in each pay grade, relative to the points or rankings assigned to each job or
grade by the job evaluation. The purpose of wage curve is to show the relationship between (i) the value of
the job as determined by one of the job evaluation methods and (ii) the current average pay rates for the
grades.
If there is reason to believe that the present pay rates are substantially out of step with the prevailing
market pay rates for those jobs, bench mark jobs within each grade are chosen and priced via a salary survey.
The new market based pay rates are then plotted on the wage curve. The steps involved in pricing jobs with
a wage curve are:
(i) Find the average pay for each pay grade, since each of the pay grades consists of several
jobs.
(ii) Plot the pay rates for each pay grade. Then fit a line, called a wage line through the points
just plotted. This can be done either free hand or by using a statistical method.
(iii) Price the Jobs. Wages along the wage line are the target wages or salary rates for the jobs
in each pay grade.
(e) Fine-Tune Pay Rates: Fine tuning involves correcting out of lines rates and developing rate
ranges.
89
(f) Developing Rate Ranges: Most employers do not pay just one rate for all jobs in a particular
pay grade. Instead, they develop rate ranges for each grade so that there might be different levels and
corresponding pay rates within each pay grade. The rate range is usually built around the wage line or curve.
One alternative is to arbitrarily decide on a maximum and minimum rate for each grade. As an alternative,
some employers allow the rate range for each grade to become wider for the higher pay ranges reflecting the
greater demands and performance variability inherent in these more complex jobs.
There are several benefits of using rate ranges for each pay grade. Firstly, the employer can take a
more flexible stance with respect to the labour market. It becomes easier to attract experienced, higher paid
employees into a pay grade where the starting salary for the lowest step may be too low to attract such
experienced personnel. Secondly, rate ranges can also allow the employer to provide for performance
differences among employees within the same grade or between those with different seniorities.
(ii) Correcting out of Line Rates: The average current pay for a job may be too high or too low,
relative to other jobs in the firm. If a rate falls well below the line, a pay rise for that job may be required. If
the rate falls well above the wage line, pay cuts or a pay freeze may be required.
Underpaid employees should have their wages raised to the minimum of the rate range for their pay
grade, assuming the organisation wants to retain those employees and has the funds to do so. This can be
done immediately or in one or two steps.
There are several ways to cope with the over paid employees:
(i) To freeze the rate paid to employees in this grade unless general salary increases bring the
other jobs into line with it.
(ii) To transfer or promote some or all of the employees involved to jobs for which they can
legitimately be paid their current pay rates.
(iii) To freeze the rate for sometime, during which time the overpaid employees should be
transferred or promoted. If it cannot be done, then the rate at which these employees are
paid is cut to the maximum in the pay range for their pay grade.
6. Wage Administration Rules: The development of rules of wage administration has to be done
in the next step. It is considered advisable in the interests of the concern and the employees that the information
about average salaries and ranges in the salaries of group should be made known to the employees concerned;
for secrecy in this matter may create dissatisfaction and it may also vitiate the potential motivating effects of
disclosure. Finally, the employee is appraised and the wage fixed for the grade he is found fit.
9.7 Theories of Wages
There are number of theories on wages. Important among them are discussed hereunder:
(i) The Just Wage Theory: This was the first theory on wages advocated during medieval period.
The essence of this theory is that the worker should be paid on the level of maintaining himself and his family.
(ii) Subsistence Theory: According to Ricardo “the labourers are paid to enable them to subsist
and perpetuate the race without increase or diminution”.
(iii) Standard of Living Theory: Karl Marx pointed out that the “wage of labour is determined by
a traditional standard of living, which, in turn, is determined by the mode of production of the country concerned”.
(iv) The Wage Fund Theory: According to J.S. Mill, the wages are determined on the basis of the
relationship between the amount of fund allocated for the purpose of wage payment and number of workers
in a country.
90
Wage = Amount of fund allocated for wage payment
Number of workers
(v) Residual Claimant Theory: According to Walker, the wages are determined on the basis of the
amount left after the payment of rent, profits and interest to land, entrepreneur and capital respectively out of
the production value.
The amount of wages = Production value – (Rent + Profits + Interest).
(vi) Marginal Productivity Theory: According to J .B. Clark, the wages are determined on the
basis of marginal contributions of the worker to the production. The employer stops employing further workers
where the contributions of the most recently employed worker are equal to his wages.
(vii) The Bargaining Theory of Wages: According to this theory the wages and other terms of
employment are determined on the basis of the relative bargaining strength of the two parties, viz., the
employer and the employees. Webbs stated that, “the haggling of the market which under a system of free
competition and individual bargaining determines the conditions of employment....”
(viii) Contribution of Behavioural Scientists to the Wage Theories: According to behavioural
scientists, wages are determined on the basis of several factors like the size, nature, prestige of the organization,
strength of the union, social norms, traditions, customs, prestige of certain jobs in terms of authority, responsibility
and status, level of job satisfaction, morale, desired lines of employee behaviour and level of performance.
Thus, the first five wage theories influenced the wage determination until 19th century. But the
influence of these theories had been reduced to a greater extent during the 20th century. The bargaining
theory of wages and the behaviour theory of wages influence much the determination during the present
century. The modern and important system of salary administration is job evaluation.
9.8 Wage Legislations in India
Government has enacted various legislative measures from time to time to protect the interest of
workers and also to emphasize the obligations on the part of management in this regard. We shall briefly
discuss the main measures in this regard as contained in the four legislations.
(a) The Payment of Wages Act, 1936
The primary objective of the Act is to ensure that wages are paid properly and regularly and prevent
the exploitation of workers by malpractices like nonpayment or short-payment, or payment in cash. The Act
is applicable to all those employed in factories/establishments declared as factories under section 85 of
Factories Act, 1948 and drawing less than Rs. 1,600 per month. The Act provides for the wage period as one
month and the mode of payment, i.e., cash on a working day which should be paid before the seventh for
organisations with less than a thousand employees and by the tenth for larger organisations. The Act also
stipulates the rate of payment for overtime work and penal deductions for participation in illegal strikes. An
employer can also levy a fine on employee only after due notice is given.
(b) The Minimum Wages Act, 1948
The main purpose of the Act is to avoid exploitation of workers by underpaying them for their efforts.
Though the central legislation, but it is implemented by both the Central and State Governments in their
respective spheres.
The Act does not define ‘minimum wages’. The definition given by the Fair Wages Committee, 1948,
is considered for legal interpretation. Nonetheless, it takes into account the bare minimum that is needed to
91
keep a man’s “body and soul” together. The Act provides for setting up a tripartite body consisting of
representatives of employers, trade unions, and the Government, to advise and assist in fixing and revising
minimum wage rates. The minimum wages can be fixed by hour, day, month or such other large period. As
per the amendments made to the Minimum Wages Act, 1948, the minimum wages fixed once needs to be
revised at intervals not exceeding 5 years, taking into consideration the Variable Dearness Allowance (VDA).
(c) The Payment of Bonus Act, 1965
The issue of bonus has been the main bone of contention between the employees and the employers.
This spate of industrial disputes to the bonus issue was sought to be ended with the passage of the Bonus Act.
The main purpose of Bonus Act is to provide for the payment of bonus to persons employed in certain
establishments and for matters connected therewith. The Act also extends to all factories as defined in
Section 2(m) of the Factories Act, 1948 and to all other establishments in which 20 or more persons are
employed on any day during an accounting year.
The Act is applicable to employees whose earning in Rs. 2,500 p.m. (w.e.f. 2-5-93) basic plus
dearness allowance and who have worked in the unit for not less than 30 working days in a year. The Act also
sets the formula for calculating the allocable surplus/profit from which bonus is to be paid. The minimum
bonus is to be paid has been raised from 4 per cent to 8 1/3 per cent (w.e.f. 25.9.75). Of course, by a process
of collective bargaining, the workers through their representative union can negotiate for more than what the
Bonus Act provides. But, the minimum bonus has to be paid to the employees even if there is a loss. In such
case, bonus is treated as a ‘deferred wage’. The Act has been under attack of criticism mainly on the issue
of bonus quantum and the formula used for calculating the allocable surplus for bonus.
(d) The Equal Remuneration Act, 1976
The basic purpose of this Act is to provide for the payment of equal wages/remuneration to men and
women doing the same or similar work and thus, avoid sex discrimination in the matter of remuneration. The
Act stipulates punishments for contravention of the provisions of the Act. This Act is in consonance with the
recommendations made by the International Labour Organisation (ILO) Convention (No. 100), Industrial
Courts, Labour Tribunals, and the Minimum Wages Committee and the Fair Wages Committee for ‘Equal
pay for equal work’.
9.9 Wage Differentials
As there are individual differences, so are wage differentials also. Wage differentials mean differences
or disparities in wages. Wages differ in different employments or occupations, industries and localities and
also between persons in the same employment or grade. Wage differentials may be:
(a) Occupational Differentials: The reasons for occupational wage differentials can be varying
requirements of skill, knowledge, demand supply situation, degree of responsibilities involved etc. In countries
adopting a course of planned economic development, skill differentials play an important role in manpower
and employment programmes, for they considerably help in bringing about an adequate supply of labour with
skills corresponding to the requirements of product plans.
(b) Inter Firm Differentials: Inter firm differentials reflect the relative wage levels of workers in
different plants in the same area and occupation. The reasons for inter firm differentials are ability of employer
to pay, employees bargaining power, degree of unionisation, skills needs etc.
(c) Inter-Area Differentials: Such differentials arise when workers in the same industry, and in the
same occupational group, but living in different geographical areas are paid different wages. Varying
requirements of skill, knowledge, demand-supply situation are generally the reasons for such differential. In
some cases these differentials are used to encourage planned mobility of labour.
92
(d) Inter-personal Wage Differentials: These differentials are between workers working in the
same plant and the same occupation. These may be due to differentials in sex, skills, age, knowledge or
experience.
After all, what is the rationale behind wage differentials? There are two views about it. One, in view
of the principles of socialistic pattern of society in which the object of the representative Government is to
minimise inequalities in incomes and distribution of wealth. Two, wages differentials are justified given the
wide differences in demand and supply of jobs alongwith wide variations in job requirements like skill, ability,
aptitude, knowledge, experience and so on. That wage differentials ensure full employment of the national
resources is yet another justification given in support of wage differentials.
9.10 SELF CHECK EXERCISE
1. What do you understand by wage and salary administration? Discuss in brief.
2. Write a short-note on objectives of wages and salary administration.
3. Discuss in brief principles of wages and salary administration.
4. Write a short-note on factors influencing wage rates.
5. Discuss in brief the following: -
a) The Payment of Wages Act, 1936.
b) The Minimum Wages Act, 1948.
c) The Payment of Bonus Act, 1965.
6. Write a short-note on wage differentials.
9.11 SUMMARY
The main objective of wage and salary administration is to establish and maintain an equitable wage
and salary system to obtain, retain and motivate people of required skill is an organisation. There are numerous
objectives of wage and salary administration and sometimes conflict with each other. The variations in wage
structure in various industries are the results of various factors affecting wage rates. The steps involved in
wage and salary determination process are job analysis, salary survey, grouping similar jobs, pricing each pay
grade and fine tuning pay rates. Theories of wages include just wage theory, subsistence theory standard of
living theory, marginal productivity theory, bargaining theory of wages, and residual claimant theory. Payment
of Wages Act, Minimum Wages Act, Payment of Bonus Act and Equal Remuneration Act has been enacted
by Government of India to protect the interest of workers. Wage differentiates are the result of occupational
differences, inter-firm differentials, inter-area differentials and inter-personal wage differentials.
9.12 GLOSSARY
• Remuneration is the pay or other financial compensation provided in exchange for an employee's
services performed or donating, or the act of providing to a number of complementary benefits in
addition to pay are increasingly popular remuneration mechanisms.
• Salary is a type of payment a person gets for work done for a job. A salary is usually paid for a fixed
period of time, such as a month or a week. Generally, it does not matter how many hours are
worked, the salary remains the same.
• Wage is a fixed regular payment earned for work or services, typically paid on a daily or weekly
basis.
93
• Wage differential refers to the difference in wages between people with similar skills within differing
localities or industries. There are also geographical wage differentials where people with the same
job may be paid different amounts based on where exactly they live and the attractiveness of the
area.
• Wage and salary administration is a collection of practices and procedures used for planning and
distributing company-wide compensation programs for employees. These practices include employees
at all levels and are usually handled by the accounting department of a company.
9.13 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 9.2.
2. For answer refer to section 9.3.
3. For answer refer to section 9.4.
4. For answer refer to section 9.5.
5. a) For answer refer to section 9.8.
b) For answer refer to section 9.8.
c) For answer refer to section 9.8.
6. For answer refer to section 9.9.
914 TERMINAL QUESTIONS
1. Define wage and salary administration. Explain the basic objectives and principles of wage and
salary administration.
2. What factors affect the wage rates? Explain.
3. Indicate the steps to be followed in designing salary structure.
4. Explain the theories of wage payments.
5. Are wage differentials justified? Comment.
9.15 SUGGESTED READINGS
1. Subrammanium, K.N., Wages in India, Tata McGraw Hill, New Delhi.
2. Dessles, G., Human Resource Management, Prentice Hall of India, New Delhi.
3. Gopalji, Personnel Management in India Industries, Himalaya Publishing House, Mumbai.
4. Monappa, A. and Saiyadain, M.S., Personnel Management, Tata McGraw Hill Publishing Co., New
Delhi.
5. Davar, R.S., Personnel Management and Industrial Relations in India, Vikas Publishing House, New
Delhi.
*****
94
LESSON-10
DISCIPLINE
STRUCTURE
10.0 INTRODUCTION
10.1 LEARNING OBJECTIVES
10.2 MEANING AND FEATURES OF DISCIPLINE
10.3 OBJECTIVES OF DISCIPLINE
10.4 TYPES OF DISCIPLINE
10.5 CAUSES OF INDISCIPLINE
10.6 ESSENTIALS OF A GOOD DISCIPLINARY SYSTEM
10.7 PROCEDURE OF DISCIPLINARY ACTION
10.8 DISCIPLINARY ACTIONS
10.9 THE RED HOT STOVE RULE
10.10 STATUTORY PROVISIONS CONCERNING INDISCIPLINES
10.11 CODE OF DISCIPLINE
10.12 SELF CHECK EXERCISE
10.13 SUMMARY
10.14 GLOSSARY
10.15 ANSWERS TO SELF CHECK EXERCISE
10.16 TERMINAL QUESTIONS
10.17 SUGGESTED READINGS
10.0 INTRODUCTION
Disciplined behaviour of its work force is a pre-condition of efficient and effective performance for
any enterprise. Only disciplined employees can meet the various environment challenges and contribute to
organizational goals to the best of their efforts. Contrary to grievances, disciplinary matters are initiated by
the management. Traditionally discipline means obedient and orderly behaviour of employees. But behavioral
scientists take discipline as self control of employees to meet organizational standards and objectives.
Like grievances, indiscipline is also inevitable in organisation, as all the employees may not accept the
responsibility of self-discipline and will require some degree of extrinsic disciplinary action. In this sense,
discipline is action by the management to enforce organizational standards. It is also referred to as enforcement
of penalties for violation of rules and regulations.
10.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define discipline and discuss the objectives of imposing discipline among employees.
(b) State the types of discipline and identify the causes of indiscipline.
95
(c) Describe the procedure involved in taking a disciplinary action.
(d) Outline the statutory provisions concerning discipline and also code of discipline.
10.2 Meaning and Features of Discipline
According to Richard D. Calhoon, “Discipline may be considered as a force that promotes individuals
or groups to observe the rules, regulations and procedures which are deemed to be necessary for the effective
functioning of an organisation.” The discipline is used as a tool for implementing various rules and regulations
for the smooth running of the organisation.
As per Spriegel, “Discipline is the force that prompts an individual or a group to observe the rules,
regulations and procedures which are deemed to be necessary to the attainment of an objective; it is force or
fear of force which restrains an individual or a group from doing things which are deemed to be destructive
of group objectives. It is also the exercise of restraint or the enforcement of penalties for the violation of
group regulations.”
Spriegal gives the punitive side of enforcing discipline. According to him, discipline is essential for
achieving organizational goals. The non-observance of discipline will mean an obstruction in the way of
achieving goals. The organisation should enforce discipline through fears of punishment.
Earl R. Bremblett takes discipline as co-operation for smooth working in the organisation. He does
not stress on the rigidity of observing rules and regulations but their compliance in some orderly way. In his
words, “Discipline in the broad sense means orderliness – the opposite of confusion. It does not mean a strict
and technical observance of rigid rules and regulations. It simply means working, co-operating, and behaving
in a normal and orderly way, as any responsible person would expect an employer to do.”
Ordway Tead observes, “Discipline is the orderly conduct of affairs by the members of an organisation
who adhere to its necessary regulations because they desire to co-operate harmoniously in forwarding the
end which the group has in view, and willingly recognize that, to do this, their wishes must be brought into a
reasonable unison, with the requirements of the group in action.” In Tead’s view discipline is the outcome of
group’s harmonious behaviour for making concerted efforts to achieve the goals.
Discipline is positive and negative. Positive discipline refers to the willingness of individuals and
groups to carry out the instructions that have to be issued to them. Negative discipline is the one where
management has to exert pressure by fear or punishment for asking persons to undertake some activities and
restrain them from undertaking others.
Thus, discipline can now be defined as a condition in the organisation when employees conduct
themselves in accordance with the organisation’s rules and standards of acceptable behaviour.
The main features of characteristics of discipline that flow from above definitions are:
(a) Discipline is self-discipline: It refers to one’s efforts at self-control to conform to organizational
rules, regulations and procedures which have been established to ensure the successful attainment of
organizational goals.
(b) It is a negative approach: It means discipline encourages people to undertake some activities,
on the one hand, and restrains them from undertaking others, or the other.
(c) It is a punitive approach: It means that discipline also imposes penalty or punishment if the
rules and regulations framed by the organisation are not obeyed or ignored by the members. Punishment is
imposed not to change past behaviour but to prevent its recurrence in future.
96
10.3 Objectives of Discipline
The objectives of discipline are to:
(a) Motivate an employee to comply with the company’s performance standards: An employee
receives discipline after failing to meet some obligation of job. The failure could be either directly related to
the tasks performed by the employee or ignoring rules and regulations that define proper conduct at work.
(b) Maintain respect and trust between the supervisor and employee: Discipline if not properly
administered can create problems like low morale, resentment, and ill will between the supervisor and employee.
In such case, improvement in employee’s behaviour, if any, will be relatively short-lived and the supervisor
will need to discipline the employee again and again. On the contrary, properly administered discipline will not
only improve employee behaviour but will also minimize future disciplinary problems through good relationship
between the supervisor and the employee.
(c) Improve the performance of the employee: Discipline for poor task performance should not
be applied while employees are on training or learning the job. Nor should employees be disciplined for
problems beyond their control, for example, failure to meet output standards due to the lack of raw materials.
Discipline should be exercised when employees are found responsible for unsatisfactory performance.
(d) Increase the morale and working efficiency of the employees.
(e) Foster industrial peace which is the very foundation of industrial democracy.
10.4 Types of Discipline
Discipline may be either preventive or corrective in nature. In other words it can be termed as
positive and negative discipline respectively. In case of preventive discipline employees are encouraged to
follow organizational rules and standards willingly. The basic objective here is to infuse a sense of self-
discipline among the employees so that a system relationship in the organisation may be maintained. In this
relationship the management strives to work with all parts of the system to develop it. In this way the
management has not to impose discipline, the employees maintain it themselves.
Positive discipline applies reason to the achievement of common objective. It enables him to have
greater self expression and freedom so much so that he identifies the objective as his own. Corrective
discipline is meant for taking corrective action that follows the infraction of a rule. It is also termed as
negative discipline as some disciplinary action will follow for the violation of rule of standards, which is
usually not liked by the employees. Further it requires attention to due process where concern for employees
rights must be shown.
10.5 Causes of Indiscipline
Mostly non-cooperation results in indiscipline. Various factors like social, economic and cultural also
play a significant role in causing indiscipline. Henry Fayol observed that, “discipline is what the leaders make
it”. Many times indiscipline is due to managerial faults, lapses, thoughtless words, deeds and poor management.
The common causes of indiscipline are:
(a) Absence of effective leadership: Absence of effective leadership results in poor management in
the areas of direction, guidance, instructions, etc. This, is turn, leads to indiscipline.
(b) Unfair Management Practices: Management sometimes indulges in unfair practices like wage
discrimination, non-compliance with promotional policies and transfer policies, discrimination in
allotment of work, defective handling of grievances, payment of low wages, delay in payment of
wages, creating low quality work life, etc. These unfair management practices gradually result in
indiscipline.
97
(c) Communication barriers: Communication barriers alongwith absence of upward communication,
absence of humane and understanding approach on the part of superiors result in frustration and
leads to indiscipline.
(d) Non-uniform disciplinary action: Management has to treat all cases of indiscipline in a fair and
equitable way. But management may undertake disciplinary actions in a discriminating way, leading
to violent protests from various quarters (especially while dealing with people who are close to
management).
(e) Divide and rule policy: Managers may often divide the employees into groups, get the information
from different groups about others and encourage the spying activity. Henry Fayol pointed out that
dividing enemy forces to weaken them is clever, but dividing one’s own team is a grave sin against
the business. Building a team is highly difficult when compared to dividing the team. Dividing the
team results in indiscipline.
(f) Inadequate attention to personnel problems and delay in solving personnel problems creates
frustration among individual workers.
(g) Victimization and excessive pressures on the work of the subordinate may also lead to indiscipline.
10.6 Essentials of a Good Disciplinary System
To avoid conflict and lawsuits, managers must administer discipline properly. This entails ensuring
that disciplined employees receive due process. Due process is based on the notion that employees have the
right to be fairly treated, particularly when being disciplined. Effective discipline, again, should be aimed at the
behaviour, not at the employee personally, because the reason for discipline is to improve performance. Some
of the factors lending weight to effective disciplinary procedures in an organisation may be listed as follows:
(a) Rules and performance criteria: Employees should be aware of the rules and standards and
the consequences of violating them.
(b) Documentation of the facts: Managers should gather a convincing amount of evidence to
justify any disciplinary action. This evidence should be carefully documented so that no one can find fault
with the process followed.
(c) Consistent response to rule violations: It is important for employees to believe that discipline
is administered consistently, predictably, and without discrimination or favoritism.
(d) Training of supervisors: Training supervisors and managers on how and when discipline should
be used is important.
(e) Prompt action: Effective discipline is immediate. The longer the time that transpires between
the offence and the disciplinary action, the less effective the discipline will be.
(f) Impersonal discipline: Effective discipline is handled impersonally by focusing on behaviours,
not on the person. The objective should be to correct undesirable, behaviours and not merely punishing the
delinquent employee. Make disciplinary action corrective rather than punitive.
(g) Reasonable penalty: It is desirable for discipline to be progressive beginning with an oral
warning and proceeding through a written warning, suspension followed by dismissal in most serious cases.
(h) Follow-up: Organisational policies, procedures and rules should be appraised at regular intervals
to ensure that they are in tune with the times. If a particular rule is violated time and again (e.g., no smoking),
it should be examined thoroughly to discover and remove the causes of such violations. Continual infractions
may require a different type of discipline from that applied to isolated instances of misconduct.
98
10.7 Procedure of Disciplinary Action
Positive discipline is not just a simple act of supervisor discussing performance problems with an
employee. Rather, it is a procedure comprising a number of steps. Important steps in that procedure are:
(a) Location of Responsibility: Who should administer discipline is a subject to some debate. In
one view, the responsibility for administering discipline should fall on the shoulders of immediate supervisor of
the employee. The reason being the immediate supervisor is responsible for employee’s output. He/she also
knows better about employee’s performance problems. The contrary opinion expressed in this regard is that
discipline should be administered on an equitable and uniform basis by the H.R. department. However, this
approach has its drawbacks: first, the HR department must spend inordinate amounts of time on disciplinary
matters and the second; the supervisor will lose some control over subordinates.
In order to overcome the problem of where to place the responsibility for discipline, the supervisor
should be entrusted with the responsibility to administer less severe forms of discipline, such as an oral
warning or a written notice. For serious situations involving discharge or suspension, the supervisor should
consult with HR representatives in order to administer such disciplines.
(b) Define Performance Expectations: A core ingredient in every disciplinary procedure is to
clearly define the standard of behaviour that management expects from its employees. Employee standards
of performance or behaviour must be in conformity with the organizational objectives. Obviously, these
standards need to be revised alongwith change in organizational goals and objectives. Many organisations
provide their employees with written principles of behaviour in the form of “Employee Manuals.”
(c) Communication of Policy, Procedures and Rules: In order to maintain satisfactory levels of
employee performance, the disciplinary policy, procedures and rules formulated by the organisation need to
be clearly communicated to the employees. Employees about their expected behavior should be communicated
through employee handbooks/manuals, orientation programmes, rules and regulations distributed in writing to
employees or pasted on bulletin boards.
(d) Collection of Performance Data: Before an employee is said to have undisciplined, it is of the
utmost importance to prove that some rule, regulation or standard is violated and, thus, unsatisfactory
performance has taken place. Here, one problem is while collection of some performance data is easy, others
are difficult. For example, an employee’s absence routinely recorded is rarely subject to misinterpretation.
However, there are some measures of performance such as horseplay, insubordination, and abusive language
to supervisors which are some what subjective and difficult to record.
Knowledge about concrete records of unsatisfactory performance of employees is considered
important for three reasons. First, the burden of proof lies with the manager or employer. This is based on the
common law that a person is innocent until proven guilty. Second, an employee if convinced with proof about
his unsatisfactory performance is more likely to improve his/her behaviour or performance. Third, if the
accused employee questions the punishment awarded to him/her and the grievance reaches arbitration, the
arbitrator may ask the employer to supply the proof of employee misconduct or undesirable behaviour.
(e) Framing Charges and Intimation: Once the prima fascia case of employee misconduct is
established, the employer then issues a notice to employee stating charges labeled against him. Such a notice
is generally known as a ‘show cause notice’. In the notice, each charge needs to be clearly specified. Also,
the accused employee should be given an opportunity to explain his/her position.
99
(f) Consideration of Explanation: On receipt of explanation from the accused employee, the
management may consider any one of the three types of options available to it:
(i) If the accused employee confesses the charge labeled against him/her, the management can
dispense any further enquiry and award punishment to the accused employee.
(ii) In case the management is satisfied with the explanation given by the accused, the charged
against him/her can be cancelled and quashed.
(iii) If the management is not satisfied with the explanation given by the accused, the management
can proceed to further probing of the matter so that the fact is established and an appropriate
action can be taken.
(g) Awarding Punishment: Once the unsatisfactory performance of the accused is well established,
the management then awards punishment to the accused employee. As already mentioned, while awarding
punishment, the management should follow a procedure of progressive discipline. The progressive discipline
is characterised by either a penalty commensurate with the offense or a series of increasing serious penalties
for continue unsatisfactory performance.
(h) Follow Up: The last step in the procedure of positive discipline is follow-up. It means, once the
punishment is awarded, it is necessary to keep vigil whether the punishment has any salutary effect on the
behaviour and performance of the accused employee or not. If not the corrective measures like corrective
counseling should be introduced to improve the accuser’s behaviour.
10.8 Disciplinary Actions
The ultimate disciplinary action which a management may resort to is separation of employee from
the company for cause i.e. discharges. But keeping in view human limitations, the management should avoid
this kind of stringent action giving employees every chance to improve themselves. But while taking any
action management should follow “Hot-Stove Rule”. The rule states that the disciplinary action should have
similar features to the consequences a person suffers from touching a hot stove. In other words the action
should be imposed with warning, should be immediate, consistent (i.e. fair and not discriminatory), and
impersonal. As Werther and Keith Davis have observed, “effective discipline condemns the employee’s
wrongful act, not the employee as a person.” Progressive discipline will require higher penalties for repeated
violation of discipline. The different kinds of disciplinary action may be as under:
(a) Verbal Warning: It is the mildest form of disciplinary action. A temporary record of reprimand
is then placed in the employee’s file retained by the manager for future reference. A verbal warning, if
communicated in a private and informal environment, will give desired results. However, the employee must
be told that a stringent action may follow if he does not improve his behaviour.
(b) Written Warning: Basically it is the first formal stage of disciplinary procedure. Once issued to
the employee, it becomes a part of employee’s personal file maintained by personnel department.
(c) Suspension: If the earlier steps do not show the desired results, suspension or lay-off may
follow. This temporary separation continues till the employee clarifies his position. Once the suspended
employee regains the faith of the management by proving himself without fault he may be paid for the lost
days.
(d) Demotion and Pay Cut: If the dismissal is not possible due to any reason, demotion and pay-cut
are the alternative disciplinary actions which management can apply. On the applicability of these actions,
either the employee will leave the organisation on his own or will try to improve himself. In both the cases the
problem of indiscipline will be automatically solved.
100
(e) Dismissal: The ultimate disciplinary punishment is dismissing or discharge of problem employee.
This decision should be given long and hard consideration and should be used very sparingly and only for the
most serious offences, as discharging of an experienced employee will attract numerous problems for the
organisation.
10.9 The Red Hot Stove Rule
Disciplinary action against an undisciplined employee is painful and generates resentment on the part
of employees. Hence, a question arises as to how to impose discipline without generating resentment? Douglas
McGregor suggested The Red Hot Stove Rule to guide managers in enforcing discipline. This rule is based on
an analogy between touching a red hot stove and violating rules of discipline. According to this rule, the
disciplinary action should have the following consequences:
(a) Burns Immediately: When a person touches a hot stove the burn is immediate. Similarly, if a
disciplinary action is to be taken, it must occur immediately so that the individual will understand the reason
for it. With the passage of time, people have the tendency to convince themselves that they are not at fault.
(b) Provides Warning: As you move closer to a stove, you are warned by its heat that you will be
burned if you touch it. Similarly, it is very important to provide advance warning that punishment would follow
unacceptable behaviour.
(c) Consistent: The effect of red hot stove is consistent. Everyone who touches it will be burnt.
Disciplinary action should also be consistent in that everyone who performs the same act will be punished
accordingly.
(d) Impersonal: The effect of a red hot stove is impersonal. A person is burnt because he touched
the stove not because of who he is. Disciplinary action should be impersonal. There are no favorites when
this approach is followed.
(e) Repetition: A person who repeatedly touches the hot stove is burnt more than one who touched
it only once. This effect is commensurate with the gravity of misconduct. A single incidence of indiscipline
will get less punishment as compared to repeated incidences.
10.10 Statutory Provisions Concerning Indiscipline
The Indian law on indiscipline consists of the following:
(a) Industrial Employment (Standing Orders) Act, 1946: This Act requires the employers in
specified industrial establishments to define precisely the conditions of employment including the rules of
discipline and procedure of punishment for indiscipline and also to make them known to workmen. Among
other matters standing orders define disciplinary action for misconduct, acts or omissions which constitute
misconduct and various forms punishment.
(b) The Industrial Disputes Act, 1947: Under Section 11-A of this Act, a Labour Court, Labour
Tribunal or National Tribunal can set aside the order of discharge or dismissal of employee. In case of
protected workmen, prior permission for dismissal and discharge is essential. These protected workmen are
trade union officers who are declared as such to save them from being victimized for raising the dispute.
(c) The Payment of Wages Act, 1936: Section 8 of this law places restrictions on the imposition of
fines on an accused employee.
101
10.11 Code of Discipline
The Indian Labour Conference at its 15th session held at New Delhi in July 1957, after a long and
hard discussion formulated a ‘Code of Discipline’ for the purpose of maintaining discipline in the Indian
Industries-both private and public sector industries. The principles laid down for governing discipline in the
industries are classified into the three broad categories. These are:
I. Mutual Agreement between Management and Union
• There should be no strike or lock-out without due notice.
• There should not be unilateral action on either side.
• There should be no recourse to go slowdown.
• Industrial disputes, if any, should be settled utilizing existing machinery.
• Neither party should be indulged in the acts of violence, coercion or intimidation.
• Both parties should agree to set up a grievance procedure and should also abide by it.
• Both managers and employees should be properly educated about their duties, responsibilities and
obligations to the organisation.
II. Agreement on the Part of Management
• Not to increase workload unless agreed upon or settled otherwise.
• Not to encourage unfair labour practices such as discrimination, coercion, victimization, etc.
• Take prompt actions to implement awards and agreements.
• Take immediate and appropriate disciplinary action against officers found guilty of precipitating
indiscipline among workers in the organisation.
• Recognize trade union in accordance with the criteria evolved at the 16th session of the Indian
Labour Conference held in May 1958.
III. Agreement on the Part of Trade Unions
• Not to encourage or support any form of physical duress.
• Not to permit violent demonstrations and rowdyism.
• Not to encourage unfair labour practices such as negligence of duty, insubordination, go-slow,
carelessness, etc.
• Take immediate action to implement awards, agreements, settlements and decisions.
• Display at a prominent place the Code of Discipline in the local language for the knowledge of
workers.
• Disapprove the actions of the members found violating the Code of Discipline.
10.12 SELF CHECK EXERCISE
1. Define Discipline.
2. Write a short-note on features of discipline.
3. Discuss in brief the objectives of discipline.
4. What are the causes of indiscipline? Discuss on brief.
5. What are the essentials of a good disciplinary system? Discuss in brief.
102
6. Discuss in brief the procedure of disciplinary action.
7. Write a short-note on the Industrial Disputes Act, 1947.
10.13 SUMMARY
Discipline refers to a procedure that corrects or punishes a subordinate because a rule or procedure
has been violated. The main objectives of discipline are to motivate employees to comply with the organisation’s
performance standards, maintain respect and trust between the supervisor and employee and improve
employee’s performance. The common causes of indiscipline are absence of effective leadership, unfair
management practices, divide and rule policies, communication barriers, victimization etc. The general guidelines
in administrating discipline include making disciplinary actions corrective, making disciplinary actions progressive
and following the hot stove rule. Disciplinary action follows a procedure comprising a number of steps.
Disciplinary actions taken against the accused employee include oral warning, written notice, suspension,
demotion and dismissal.
10.14 GLOSSARY
• Discipline is defined as the regulations or conditions that are imposed on employees by management
in order to either correct or prevent behaviors that are detrimental to an organization. The purpose
of employee discipline is not to embarrass or degrade an employee.
• Disciplinary action is a response by the employer to problems with employee performance or
behavior. It may come in the form of a verbal or written reprimand or the loss of employee privileges.
The purpose of disciplinary action is to correct behavior and document issues.
• Good discipline means that employees are willing to abide by company rules and executive orders
and behave in the desired fashion. Discipline implies the absence of chaos, irregularity and confusion
in the behaviour of a worker.
• Indiscipline or misconduct is the deviation or by passing of the established rules which should be
followed without any discretion. It is an act or a conduct which is prejudicial to the interests of the
employer or which is likely to impair his reputation or create unrest among other employees.
• Industrial Dispute Act of 1947 came into force on the first day of April, 1947. The unique object of
the Act is to promote collective bargaining and to maintain a peaceful atmosphere in industries by
avoiding illegal strikes and lock outs. The Act also provides for regulation of lay off and retrenchment.
10.15 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 10.2.
2. For answer refer to section 10.2.
3. For answer refer to section 10.3.
4. For answer refer to section 10.5.
5. For answer refer to section 10.6.
6. For answer refer to section 10.7.
7. For answer refer to section 10.10.
103
10.16 TERMINAL QUESTIONS
1. Define discipline. Discuss the features and objectives of discipline.
2. What are the causes of indiscipline in the Indian industries? Explain.
3. Outline the procedure involved in a disciplinary action.
4. What are the statutory provisions laid down concerning discipline in the Indian Industries?
10.17 SUGGESTED READINGS
1. Mamoria, C.B., Personnel Management, Himalaya Publishing House, New Delhi.
2. Jucius, M.J., Personnel Management, Homewood, Irwin.
3. Megginson, L.C., Personnel and Human Resource Administration, Homewood, Irwin.
4. Personnel Management in India, Indian Institute of Personnel Management, Kolkata.
*****
104
LESSON-11
EMPLOYEE GRIEVANCES
STRUCTURE
11.0 INTRODUCTION
11.1 LEARING OBJECTIVES
11.2 MEANING AND FEATURES OF GRIEVANCE
11.3 CAUSES OF GRIEVANCES
11.4 NEED FOR A GRIEVANCE PROCEDURE
11.5 THE DISCOVERY OF GRIEVANCE
11.6 ESSENTIALS PRE-REQUISITES OF GRIEVRENCE PRODUCER
11.7 GRIEVANCE PROCEDURE
11.8 MODEL OF GRIEVANCE PROCEDURE
11.9 GRIEVANCE MANAGEMENT IN INDIAN INDUSTRY
11.10 GUIDELINES FOR HANDLINGS GRIEVANCES
11.11 SELF CHECK EXERCISE
11.12 SUMMARY
11.13 GLOSSARY
11.14 ANSWERS TO SELF CHECK EXERCISE
11.15 TERMINAL QUESTIONS
11.16 SUGGESTED READINGS
111111.0 INTRODUCTION
In a sense, discipline and grievance are the two sides of the same coin. When employees behave in
an undesirable manner, it constitutes, what the employers or managers consider it, indiscipline. On the other
side, when employees feel violation of the employment contract by the employers or managers, it constitutes
the employee grievance. In order to ensure the smooth functioning of organisation both indiscipline and
grievance need to be settled.
Every employee has certain expectations which he thinks must be fulfilled by the organisation he is
working for. When the organisation fails to do this, he develops a feeling of discontent or dissatisfaction.
When an employee feels that something is unfair in the organisation, he is said to have a grievance.
11.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define grievance and list the causes of grievances.
(b) State the essential prerequisites of a grievance procedure.
(c) Discuss the various steps involved in a grievance procedure.
(d) Describe how grievances are redressed in Indian Industry.
105
11.2 Meaning and Features of Grievance
In a broader perspective, any discontent or dissatisfaction, real or imaginary, experienced, by an
employee about his or her employment constitutes a grievance. In their working lives, employees occasionally
become aggrieved at the treatment meted out to them by the supervisors or the management on certain
service conditions, managerial decisions, practices, etc.
According to J.M. Jucius, “A grievance is any discontent or dissatisfaction whether expressed or not,
whether valid or not, arising out of anything connected with the company which an employee thinks, believes
or even feels to be unfair, unjust or inequitable”.
In the words of Edward Flippo, “It is a type of discontent which must always be expressed. A
grievance is usually more formal in character than a complaint. It can be valid or ridiculous and must grow out
of something connected with company operations or policy. It must involve an interpretation or application of
the provisions of the labour contract.
The Model Grievance Procedure has provided the following definition of grievances.
“Complaints affecting one or more individual workers in respect of their wage payments, overtime,
leave, transfer, promotions, seniority, work assignment and discharge would constitute grievance. Where the
points at dispute are of general applicability or considerable magnitude, they will fall outside the scope of this
procedure.”
Now, grievance can be defined as a complaint expressed verbally or in writing where an employee
feels injustice has been done to him by the management. Usually, a complaint based on interpretation or
application of the provisions of negotiated contract between the union and the management constitutes a
grievance.
On the analysis of the definitions of grievance, some noticeable features emerge clearly:
(i) A grievance reflects dissatisfaction or discontent or a feeling of injustice with any aspect of
the organisation.
(ii) The dissatisfaction must arise out of employment and not from personal or family problems.
(iii) The dissatisfaction can arise out of real or imaginary reasons. The reasons may be valid or
invalid, legitimate or irrational, justifiable or ridiculous.
(iv) A grievance arises only when an employee feels that injustice has been done to him.
(v) The dissatisfaction may be expressed or implied. It may be expressed verbally or in writing.
Initially the employee complains orally or in writing. If this is not looked into properly, the
discontent grows and takes the shape of a grievance.
(vi) The grievance results from perceived non-fulfillment of one’s expectations from the
organisation.
(vii) Grievances, if not redressed in time, tend to lower morale and productivity of employees.
11.3 Causes of Grievances
Grievances are related to the human behaviour which differ from person to person. There may be
various reasons for the arising of grievances, which are summarized as follows:
(a) Employment Conditions: Workers may be aggrieved because of the employment conditions.
They may desire labour welfare facilities or improvement in the working conditions.
106
(b) Effect of Trade Unions: Sometimes, trade unions in the organisation may be the cause of
grievances among the employees where trade unions are new and/or strong and they are bent upon doing
something for the welfare of the employees. Grievances arise if the management does not agree to the
proposals made by it.
(c) Difference of Opinion: Grievance may also arise because of a difference of opinion or thought.
When both the parties stick to their views, which are contradictory and it becomes a prestige point for both
the parties, grievance may arise.
(d) Social Injustice: Grievance may be caused by social injustice. If a facility is provided in a
similar unit, the employee of the unit where the facility is not provided may feel aggrieved.
(e) Adherence to Rules: Grievance may arise if company does not adhere to its policies or procedures
or if the rules are followed but in a biased manner or they are being assigned a different explanation.
(f) Psychological Reason: Sometimes, doubts and fears in the minds of workers for any injustice to
be committed to them may give rise to grievance.
11.4 Need for a Grievance Procedure
Grievances affect not only the employees and managers but also the organisation as a whole. In
view of these adverse effects, the management has to identify and redress the grievances in a prompt
manner. If the individual grievances are left ignored and unattended, there is a danger that these grievances
may result in collective disputes. They affect the employee morale adversely. Hence, it is essential to have a
proper grievance handling
The following are some of the distinct advantages of having a grievances handling procedure:
(a) The management can know the employees’ feeling and opinions about the company’s policies
and practices. It can feel the ‘pulse’ of the employees.
(b) With the existence of a grievance handling procedure, the employee gets a chance to ventilate
his feelings. He can let off steam through an official channel. Certain problems of workers
cannot be solved by first line supervisors, for these supervisors lack the expertise that the top
management has, by virtue of their professional knowledge and experience.
(c) It keeps a check on the supervisor’s attitude and behaviour towards their subordinates. They
are compelled to listen to subordinates patiently and sympathetically.
(d) The morale of the employees will be high with the existence of proper grievance handling
procedure. Employees can get their grievances redressed in a just manner.
11.5 The Discovery of Grievances
Grievances can be uncovered in a number of ways. Gossip and grapevine offer vital clues about
employee grievances. Gripe boxes, open door policies, periodic interviews, exit surveys could also be undertaken
to uncover the mystery surrounding grievances. These methods are discussed below:
(a) Observation: A manager/supervisor can usually track the behaviours of people working under
him. If a particular employee is not getting along with people, spoiling materials due to carelessness or
recklessness, showing indifference to commands, reporting late for work or is remaining absent the signals
are fairly obvious. Since the supervisor is close to the scene of action, he can always find out such unusual
behaviours and report promptly.
107
(b) Grievance Procedure: A systematic grievance procedure is the best means to highlight employee
dissatisfaction at various levels. Management, to this end, must encourage employees to use it whenever they
have anything to say. In the absence of such a procedure, grievances pile up and explode in violent forms at
a future date. By that time things might have taken an ugly shape altogether, impairing cordial relations
between labour and management. If management fails to induce employees to express their grievances,
unions will take over and emerge as powerful bargaining representatives.
(c) Gripe Boxes: Gripe boxes may be kept at prominent locations in the factory for lodging anonymous
complaints pertaining to any aspect relating to work. Since the complainant need not reveal his identity, he
can express his feelings of injustice or discontent frankly and without any fear of victimization.
(d) Open door policy: This is a kind of walk-in-meeting with the manager when the employee can
express his feelings openly about any work-related grievance. The manager can cross-check the details of
the complaint through various means at his disposal.
(e) Exit Interview: Employees usually leave their current jobs due to dissatisfaction or better
prospects outside. If the manager tries sincerely through an exit interview, he might be able to find out the real
reason why employee is leaving the organisation. To elicit valuable information, the manager must encourage
the employees to give a correct picture so as to rectify the mistakes promptly. If the employee is not providing
fearless answers, he may be given a questionnaire to fill up and post the same after getting all his dues
cleared from the organisation where he is currently employed.
(f) Opinion Surveys: Surveys may be conducted periodically to elicit the opinions of employees
about the organisation and its policies.
It is better to use as many channels as possible, if the intention is to uncover the truth behind the
curtain.
11.6 Essential Pre-requisites of a Grievance Procedure
Every organisation should have a systematic grievance procedure in order to redress the grievances
effectively. As explained above, unattended grievances may culminate in the form of violent conflicts later
on. The grievance procedure, to be sound and effective should possess certain pre-requisites:
(a) Conformity with statutory provisions: Due consideration must be given to the prevailing
legislation while designing the grievance handling procedure.
(b) Unambiguity: Every aspect of the grievance handling procedure should be clear and unambiguous.
All employees should know whom to approach first when they have a grievance, whether the complaint
should be written or oral, the maximum time in which the redressal is assured, etc. The redressing official
should also know the limits within which he can take the required action.
(c) Simplicity: The grievance handling procedure should be simple and short. If the procedure is
complicated it may discourage employees and they may fail to make use of it in a proper manner.
(d) Promptness: The grievance of the employee should be promptly handled and necessary action
must be taken immediately. This is good for both the employees and management, because if the wrong doer
is punished late, it may affect the morale of other employees as well.
(e) Training: The supervisors and the union representatives should be properly trained in all aspects
of grievance handling beforehand or else it will complicate the problem.
(f) Follow up: The personnel department should keep track of the effectiveness and the functioning
of grievance handling procedure and make necessary changes to improve it from time to time.
108
11.7 Grievance Procedure
Grievance which indicates discontent and dissatisfaction among employees adversely affects their
productivity. In other words, by not initiating timely action to deal with grievance, the organisation tends to
lose the productive efforts of the discounted employee. It is indeed unrealistic to assume that an aggrieved or
dissatisfied employee with put his or her best efforts on the job. The redressal of the employees grievances,
therefore, assumes importance. The procedure the management applies to deal with the employees grievances
can be states as follows:
(a) Timely Action: The first and foremost requisite in grievance handling is to settle them immediately
as and when they arise. Or say, grievances need to be nipped in the bud. Sooner the grievance is settled,
lesser will be its effects on employees’ performance. This requires the first line supervisors be trained in
recognizing and handling a grievance properly and promptly.
(b) Accepting the Grievance: The supervisor should try to recognize and accept the employee
grievance as and when it is expressed. It must be noted that acceptance does not necessarily mean agreeing
with the grievance, it simply shows the willingness of the supervisor to look into the complaint objectively and
dispassionately to deal with the grievance. Evidence suggests that more the supervisor shows his or her
concern for the employees, lesser is the number of grievances raised by the employees.
(c) Identifying the Problem: As stated earlier, the grievance expressed by the employee may be at
times simply emotionally, overtones, imaginary or vague. The supervisor, therefore, needs to identify or
diagnose the problem stated by the employee.
(d) Collecting the Facts: Once the problem is identified as a real problem, the supervisor should,
then, collect all the relevant facts and proofs relating to the grievance. The facts so collected need to be
separated from the opinions and feeling to avoid distortions the facts. It is useful to maintain the facts for
future uses as and when these are required.
(e) Analysing the cause of the Grievance: Having collected all the facts and figures relating to
the grievance, the next step involved in the grievance procedure is to establish and analyse the cause that led
to grievance. The analysis of the cause will involve studying various aspects of the grievance such as the
employees past history, frequency of the occurrence, management practices, union practices, etc. Identification
of the cause of the grievance helps the management take corrective measures to settle the grievance and
also to prevent its recurrence.
(f) Taking Decision: In order to take the best decision to handle the grievance, alternative courses
of actions are worked out. These are, then, evaluated in view of their consequences on the aggrieved employee,
the union and the management. Finally, a decision is taken which is best suited to the given situation in the
organisation. Such decision should serve as a precedent both within the department and the organisation.
(g) Implementing the Decision: The decision whatsoever taken must be immediately communicated
to the employee and also implemented by the competent authority. McGregor’s “Hot Stove Rule” should be
strictly followed while implementing the decision. The decision, thus, implemented should also be reviewed to
know whether the grievance has been satisfactorily resolved or not. In case, it is not resolved, the supervisor
once again needs to go back to the whole procedure step by step to find out an appropriate decision or
solution to resolve the grievance.
However, if the grievance is not resolved at the internal level, the grievance is, then, referred to an
arbitrator who is acceptable to the employee as well as the management. The arbitrator follows a quasi-
judicial process where both the parties present evidence. Based on the evidences so produced, the matter is
cross-examined in thread-bare. The arbitrator then thinks, applies his mind and arrives at a decision. The
decision taken by arbitrator is final and binding on both the parties.
109
11.8 Model of Grievance Procedure
The National Commission on Labour has suggested a model grievance which would ensure the
speedy settlement of grievance. The model comprises of the five steps as outlined below:
(a) The aggrieved employee shall convey his or her grievance verbally to the officer designated
by the management to deal with grievance. The officer will have to reply to the complaints
within forty-eight hours of its presentation to him or her.
(b) If the grievant is not satisfied with the answer or does not receive the answer within forty-
eight hours, he or she shall, then, present the grievance to the departmental head nominated
for this purpose. The head must give his or her reply within three days of the presentation of
the grievance.
(c) If the aggrieved employee is still not satisfied with the decision of the departmental head or
does not receive within the stipulated period, the employee can approach to the Grievance
Committee for the settlement of his or her grievance. The Grievance Committee has to give
its recommendations in seven days and report the same to the management. The management
must communicate the decision to the grievant within three days.
(d) If still employee is not satisfied either with the decision made by the Grievance Committee or
does not receive decision from the committee, he or she can make appeal to the management
for revision of the decision taken. The management can take a week period for appeal to be
considered and can revise the decision and inform the grievant.
(e) If the employee is still not satisfied with the management’s decision, the grievance is referred
to a voluntary arbitration within a week after decision taken by the management at stage 4.
The decision of the arbitrator is final and binding on both the parties, i.e., the management
and the union.
11.9 Grievance Management in Indian Industry
At present, there are three legislations dealing with grievances of employees working in industries.
The Industrial Employment (Standing Orders) Act, 1946, requires that every establishment employing 100 or
more workers should frame standing orders. These should contain, among other things, a provision for redressal
of grievances of workers against unfair treatment and wrongful actions by the employer or his agents. The
Factories Act, 1948, provides for the appointment of a Welfare Officer in every factory ordinarily employing
500 or more workers. These welfare officers also look after complaints and grievances of workers. They
also look after proper implementation of the existing labour legislation. Besides, individual disputes relating to
discharge, dismissal or retrenchment can be taken up for relief under the Industrial Disputes Act, 1947,
amended in 1965.
However, the existing labour legislation is not being implemented properly by employers. There is
lack of fairness on their part. Welfare officers have also not been keen on protecting the interests of workers
in the organized sector. In certain cases, they are playing a double role. It is unfortunate that the public sector,
which should set up an example for the private sector, has not been implementing labour laws properly.
In India, a Model Grievance Procedure was adopted by the Indian Labour Conference in its 16th
session held in 1958. At present, Indian industries are adopting either the Model Grievance Procedure or
procedures formulated by themselves with modifications in the Model Grievance Procedure. In other words,
the grievance procedures are mostly voluntary in nature.
110
11.10 Guidelines for Handling Grievances
The following guidelines may help a supervisor while dealing with grievance. He need not follow
all these steps in every case. It is sufficient to keep these views in mind while handling grievances:
• Treat each case as important and get the grievance in writing.
• Talk to the employee directly. Encourage him to speak the truth. Give him a patient hearing.
• Discuss in a private place. Ensure confidentiality, if necessary.
• Handle each case within a time frame.
• Examine company provisions in each case. Identify violations, if any. Do not hold back the remedy if
the company is wrong. Inform your superior about all grievances.
• Get all relevant facts about the grievance. Examine the personal record of the aggrieved workers.
See whether any witnesses are available. Visit the work area. The idea is to find where things have
gone wrong and who is at fault.
• Gather information from the union representative, what he has to say, what he wants, etc. Give short
replies, uncovering the truth as well as provisions. Treat him properly.
• Control your emotions, your remarks and behaviour.
• Maintain proper records and follow up the action taken in each case.
• Be proactive, if possible. Some companies in India actually invite workers to ventilate their grievances
freely, listen to the other side patiently, explain the reasons why the problems arose and redress the
grievances promptly.
11.11 SELF CHECK EXERCISE
1. Define Grievance.
2. Discuss in brief features of Grievance.
3. What are the causes of grievance? Discuss in brief.
4. Write a short-note on Grievance Procedure.
5. Discuss in brief the guidelines followed for handling grievances at workplace.
11.12 SUMMARY
A grievance refers to any form of discontent of dissatisfaction, arising of employment regarding
certain organizational issues. Working conditions, management policy and practices, union practices and
personality traits cause grievances. If grievances are not identified and redressed properly, they may adversely
affect the workers, managers and the organisation. An effective grievance procedure contains characteristics
such as timely, simple, legal sanctity, acceptability, training and follows up. A typical grievance procedure
consists of different steps such as timely action acceptance of the grievance, identification of the problem,
collection of facts, analysis of the cause, taking decision and implementation and follow up of the decision.
11.13 GLOSSARY
• Condition of employment refers to something that both the employee and employer agree to at the
beginning of a worker's employment. A condition may also include a contract that states that an
employee is given employment for a certain length of time so long as the employee does not violate
the terms of the contract.
111
• Grievances are concerns, problems or complaints that employees raise with their employer. There
is no legally binding process that you or your employer must follow when raising or handling a
grievance at work.
• Grievance handling is the management of employee dissatisfaction or complaints (e.g. favouritism,
workplace harassment, or wage cuts). By establishing formal grievance handling procedures, you
provide a safe environment for your employees to raise their concerns.
• Grievance procedures are a means of dispute resolution that can be used by a company to address
complaints by employees, suppliers, customers, and/or competitors. A grievance procedure provides
a hierarchical structure for presenting and settling workplace disputes.
• Observation is the act of noticing something or a judgment or inference from something seen or
experienced. An example of observation is the watching of Haley's Comet. An example of observation
is making the statement that a teacher is proficient from watching him teach several times.
11.14 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 11.2.
2. For answer refer to section 11.2.
3. For answer refer to section 11.3.
4. For answer refer to section 11.7.
5. For answer refer to section 11.10.
11.15 TERMINAL QUESTIONS
1. Define grievance. Identify the various causes of grievances.
2. “An effective grievance procedure must contain some essential characteristics”. Explain.
3. How can the managers discover the grievances of the employees?
4. How is a grievance redressed? Outline the grievance procedure.
5. Discuss the model grievance procedure that is applicable in India.
11.16 SUGGESTED READINGS
1. Jucious, M.J., Personnel Managmenet, Richard D. Irwin, Illinois.
2. Monappa, A. and Saiyadain, M.S., Personnel Management, Tata McGraw Hill, New Delhi.
3. Carrell, M. and Arvin, C.H., Labour Relations and Collective Bargaining, Prentice Hall, N.J.
4. Dwivedi, R.S., Managing Human Resources, Galgotia Publishing Company, New Delhi.
*****
112
LESSON-12
EMPLOYEE HEALTH AND SAFETY
STRUCTURE
12.0 INTRODUCTION
12.1 LEARING OBJECTIVES
12.2 MEANING OF HEALTH
12.3 IMPORTANCE OF HEALTH
12.4 OCCUPATIONAL HAZARDS AND DISEASES
12.5. PROTECTION AGAINST HAZARDS
12.6 STATUTARY PROVISIONS REGARDING HEALTH
12.7 MEASURES TO PROMOTE EMPLOYEE HEALTH
12.8 EMPLOYEE SAFETY
12.9 TYPES AND CASUES OF ACCIDENTS
12.10 SIGNIFICANCE OF INDUSTRIAL POLICY
12.11 EFFECTIVE SAFETY MANAGEMENT
12.12 STATUTARY PROVISIONS REGARDING SAFETY IN INDIA
12.13 SELF CHECK EXERCISE
12.14 SUMMARY
12.15 GLOSSARY
12.16 ANSWERS TO SELF CHECK EXERCISE
12.17 TERMINAL QUESTIONS
12.18 SUGGESTED READINGS
12.0 INTRODUCTION
A safe and hygienic work environment is the basic and common requirement of every employee
irrespective of his position or status in the organisation. And it is the moral as well as legal responsibility of
every employer to provide a workplace to its employees which is not hazardous to their physical or mental
health. Human engineering or ergonomics which is the study of work and of work methods can help the
organisations in protecting their employees against the dangers of accidents and industrial diseases. Very
minor accidents may create major industrial disputes. Therefore, designing and operations of man, machine
environment scientifically will ensure mental and physical rest to the human beings. Scientific management,
therefore, is a necessity for the organisations as it will strengthen industrial relations and will enhance job
satisfaction.
12.1 LEARNING OBJECTIVES
After reading this lesson, you should be able to
(a) Define health and discuss the importance of health.
(b) Outline the measures to protect health.
113
(c) Specify the legal provisions regarding health.
(d) State the importance of industrial safety.
(e) Enumerate the various types of accidents and their causes.
(f) Elaborate legal provisions for maintaining safety.
12.2 Meaning of Health
Health is a stage of compete physical, mental and social well being and not merely the absence of
any disease. A person is considered healthy if he is well adjusted to the environment in which he works.
According to the Joint I.L.O/W.H.O. Committee on Organisational Health, Industrial health is (i) the
prevention and maintenance of physical, mental and social well being of workers in all occupations (ii)
prevention among workers of ill health caused by the working conditions (iii) protection of workers in their
employment from risks resulting from factors averse to health and (iv) placing and maintenance of the
worker in an occupational environment adapted to his physical and psychological equipment.
The World Health Organisation (WHO) defined health as “a state of complete physical, mental and
social well being and not merely an absence of disease or infirmity”.
According to the First Five Year Plan “Health is positive state of well being in which harmonious
development of mental and physical capabilities of the individuals lead to the enjoyment of a rich and full life.
It implies adjustment of the individual to his total environment – physical and social.”
In simple words, one can say that health is a condition under which an individual is able to mobilize all
his resources-intellectual, emotional and physical for optimum living.
Health has found an important place in the constitution of all the countries and UN agencies. The
Preamble of the WHO Constitution states that the enjoyment of the highest attainable standard of health is a
fundamental right of every human being and those governments are responsible for the health of their people
and can fulfill that responsibility by taking appropriate health and social welfare measures.
There are two types of employee’s health: physical health and mental health. A brief mention of
these follows:
Physical Health: The physical health refers to infirmity in the employee’s health. Employee’s physical
health and his work are intimately related. While an unhealthy employee works less both quantitatively and
qualitatively, commits accidents, and remain absent from work, a healthy employee produces results opposite
to these. The same underlines the need for and importance of healthy employees in an organisation.
Mental Health: This refers to the mental soundness of the employees. As is physical health important
for good performance, so is mental health also. Experience suggests that three factors, namely, mental
breakdowns, mental disturbances, and mental illness impair the mental health of employees.
12.3 Importance of Health
The trite saying ‘Health is wealth’ explains the importance of health. Ill-health results in high rate of
absenteeism and turnover, industrial discontent and indiscipline, poor performance and low productivity and
more accidents. On the contrary, the natural consequences of good health are reduction in the rate of
absenteeism and turnover, accidents and occupational diseases. Besides, employee health also provides other
benefits such as reduced spoilage, improved morale of employee, increased productivity of employee and
also longer working period of an employee which, of course, cannot be easily measured.
114
In long and short, employee health is important because it helps to:
• Maintain and improve the employee performance both quantitatively and qualitatively.
• Reduce employee absenteeism and turnover.
• Minimize industrial unrest and indiscipline.
• Improve employee morale and motivation.
In India, the Royal Commission on Labour (1931), the Labour Investigation Committee (1946), the
Health Safety and Development Committee (1943), the Labour Welfare Committee (1969) and the National
Commission on Labour (1969), all have expressed concern for employee health. These emphasized upon the
creation and maintenance of as healthy an environment as possible, in the homes of the employees as well as
in all places where they congregate for work, amusement or recreation.
The I.L.O. in its Recommendation No.112 envisaged the importance of employee health in these
words:
“Occupational health service should be established in or near a place of employment for the purpose
of: (i) protecting the workers against any health hazard arising out of work or conditions in which it is carried
on; (ii) contributing towards worker’s physical and mental adjustment; and (iii) contributing to establishment
and maintenance of the highest possible degree of physical and mental well-being of the workers.”
12.4 Occupational Hazards and Diseases
Employees in certain industries are exposed to certain occupational hazards and diseases. Ronald
Blake has classified occupational hazards into the following four categories:
(a) Chemical Hazards: The common chemical substances, such as carbon monoxide, carbon dioxide,
nitrogen dioxide, sulphur dioxide, hydrocarbons, sulphuric acid, tannic acid, acetic acid, fumeric acid, ozone,
limes and alkalies cause injury to the employees when they are absorbed through skin and inhaling or ingesting.
Workers may suffer from respiratory diseases, skin diseases, allergy, heart disease, cancer and neurological
disorders. These diseases may be temporary or chronic in nature. Often a disease may be difficult to diagnose
because neither its symptoms may appear after a long dormant period or may not be apparent at all. These
diseases often shorten employee’s life expectancy.
(b) Biological Hazards: These hazards are manifested by diseases caused by bacteria, fungi,
viruses, insects, dietary deficiencies, excessive drinking, allergies, brain fever, imbalances, tetanus, stresses
and strains. All these tell upon employee’s health.
(c) Environmental Hazards: Environmental hazards may include noise pollution, vibration and
shocks, illumination, radiation, heat, ventilation, air and water pollution. These hazards cause redness of eyes,
genetic disorders, cancer, sterility, hearing loss, nerve injury etc., to workers.
(d) Psychological Hazards: Industrial/job stress caused by various stressors, such as task and role
demands, organizational leadership, lack of group cohesion, inter-group and interpersonal conflicts, life and
career changes, etc., lead to emotional disturbances which, in turn, lead to fatigue and exhaustion. All these
affect health of employees.
Apart from occupational hazards, there are some occupational diseases also that impair health of
employees in industries. A brief mention of these follows:
Occupational Diseases: Occupational diseases are caused by working conditions prevalent in
industries. Let these be exemplified with a few examples.
115
Workers working on lead (e.g., cable-makers, lead pipe makers, compositors, painters and plumbers)
fall prey to ‘painter’s colic’ or ‘wrist drop’ disease. This disease causes vomiting, stomach pains, joint pains
and loss of appetite. It may even lead the workers to collapse.
Workers working in handling wool, hoofs, hides, hair bristles, animal carcasses etc., become victim of
anthrax.
Like occupational hazards, occupational diseases also develop with worker’s frequent exposure to
unhealthy working conditions. They develop slowly with accumulated effects over an extended period of
time.
12.5 Protection against Hazards
Industrial establishments can take two types of measures to protect worker’s health against
occupational hazards:
(A) Preventive Measures
These are based on the philosophy that prevention is better than cure. The preventive measures to
protect employee against occupational health hazards may include:
• Pre-employment medical examination.
• Periodic post-employment medical examination.
• Removal of hazardous conditions of the extent possible.
• Surveillance of special classes of workers such as women workers and child labourers exposed to
health hazards.
• Emergency treatment in case of accidents.
• Education of workers in health and hygiene.
• Training in first-aid to workers.
• Proper factory layout and illumination.
• Proper effluent Disposal Treatment Plants.
• Proper redesign of job to remove monotony and fatigue.
• Proper scheduling of the work with adequate rest.
(B) Curative Measures
The curative measures begin once a worker actually suffers from ill-health or sickness or disease.
The curative measures include the following:
• Adequate and timely medical treatment.
• Allowing the employee adequate period of convalescing and recuperating.
• Adequate compensation.
• Allowing the needed best medical treatment from outside hospitals.
12.6Statutory Provisions Regarding Health
The Factories Act, 1948 insists that the following provisions must be made in industrial establishment
for safeguarding employee health.
116
(A) Cleanliness (Sec.11): According to Section 11, the factory shall be kept clean and free from
foul smell arising from any drain, toilet or any other nuisance. Dirt and refuse shall be removed daily by
sweeping or washing the floor, benches, staircases and passages. The floor of every work room shall be
cleaned at least once a week by washing, using disinfectants where necessary or by some other effective
method. Where a floor becomes wet during the manufacturing process, effective mean of drainage shall be
provided for. All inside walls and partitions, all ceilings or tops of the rooms and all walls, sides and tops of
passages and staircases shall be kept white washed, colour washed or painted as the case may be from time
to time as per provisions of the Act. All doors and window frames and other wooden or metallic frame work
and shutters shall be kept painted or varnished and the painting or varnishing shall be carried out at least once
in every five years.
(B) Disposal of wastes and effluents: According to Section 12, effective arrangement shall be
made in every factory for the disposal of wastes arising due to the manufacturing process carried on therein,
so as to make them harmless. The State Government may make rules prescribing the arrangements to be
made in this regard.
(C) Ventilation and temperature: According to Section 13, every factory must provide for in
every work room adequate ventilation by the circulation of fresh air. It will also ensure in the work room such
a temperature as will secure to workers therein reasonable conditions of comfort and prevent injury to health.
Thus, the walls and roofs of the work rooms shall be of such material and design as are helpful to keep the
temperature reasonably low. The State Government may prescribe a standard of adequate ventilation and
reasonable temperature and make rules providing for the keeping of thermometers in specified places and
adoption of methods which will keep the temperature low.
(D) Dust and Fume: According to Section 14, effective arrangements must be made in every
factory for the prevention of the inhalation or accumulation of dust or fume given off by any manufacturing
process in any work room which may be injurious to the health of the workers. If any exhaust appliance is
necessary for this purpose it shall be installed as near as possible to the point of origin of the dust, fume or
other impurity. No internal combustion engine which is stationary shall be operated unless its exhaust is
conducted into the open air.
(E) Artificial humidification: According to Section 15, in respect of all the factories, in which the
humidity of air is artificially increased, the State Government may make rules regarding the permissible
standards of humidity, tests for determining humidity and methods to be adopted for securing adequate
ventilation and cooling of the air in the work rooms. The water used for humidification shall be taken from a
public supply or other source of drinking water and must be purified before actual use. The inspector of
factories may also specify measures in this regard which should be carried out before the specified date.
(F) Overcrowding: According to Section 16, no room in any factory shall be overcrowded to an
extent which is injurious to the health of the workers employed therein. At least 9.9 cubic meters of space per
worker shall be provided in a factory which was in existence on the date of commencement of this Act.
However, in factories built after the commencement of this Act, at least 14.2 cubic meters of space per
worker shall be provided. In determining the space, no account shall be taken of any space which is more
than 4.2 meters above the level of the floor of the room. The chief inspector may, however, by order in writing
specify the maximum number of workers who may be employed in a particular work room in compliance
with the provision of this section if he is satisfied that such an order does not harm the health of the workers
employed therein.
117
(G) Lighting: According to Section 17, there shall be sufficient and suitable lighting arrangement,
natural or artificial or both, in every part of a factory where workers are working or passing through. Under
this provision, all glazed window and sky lights used for the lighting of the workroom shall be kept clean or
both the inner and the outer sides to allow free flow of light. Effective provision shall be made for the
prevention of glare, either directly from a source of light or by reflection. The formation of shadows that
causes strain on the eyes or risk of accident to any worker shall also be prevented. The State Government
may prescribe standards of sufficient and suitable lighting for factories.
(H) Drinking water: According to Section 18, in every factory, effective arrangements shall be
made to provide sufficient and pure drinking water to all the workers employed therein. The water points
should be conveniently situated and properly maintained. All such points shall be legibly marked “Drinking
Water” in a language understood by majority of the workers employed in the factory. No such point shall be
situated within six meters of any washing place, urinal, latrine, spittoon, open drain etc. In a factory where
more than 250 workers are employed, provision shall be made for cool drinking water during hot weathers.
(I) Latrines and urinals: According to Section 19, separate arrangement for latrines and urinals for
men and women shall be provided for every factory. Such an accommodation shall be adequately lighted and
ventilated and maintained in good sanitary conditions. Sufficient number of sweepers should be provided for
to clean latrines and urinals. In a factory where more than 250 workers are ordinarily employed, all latrines
and urinal accommodation shall be of the prescribed sanitary types. Here the floors and the internal walls,
upto a height of 90 cms, of the latrines and urinals and the sanitary blocks shall be laid in gaized tiles or
otherwise finished to provide a smooth polished surface. Latrines and urinals shall be thoroughly cleaned by
washing at least once in a week by using disinfectants.
(J) Spittoons: According to Section 20, a sufficient number of spittoons must be provided at
convenient places in every factory. They must be maintained in a clean and hygienic condition. The State
Government may make rules regarding their number, locations and maintenance. No person shall spit except
in the spittoons. If a person does so he may be fined upto Rs. 5.
12.7 Measures to Promote Employee Health
Health promotion at the work place may be broadly defined as any effort to prevent disease or
premature death through behavioural and organizational change. Health promotion focuses on prevention
rather than treatment or cure. Therefore the health programme at the company is planned around improvement
and prevention of controllable risk factors such as smooking, obesity, high level of cholesterol, stress, hypertension
and low level of physical fitness, which are responsible for most major diseases. Promoting health consciousness
is not an easy task. It requires continuous education, systematic campaign and genuine support from top
management. Before the company starts planning for the programme, it must investigate the needs and
resources of both the employees and the organisation. The planning programme, basically, involves five steps:
setting goals, developing the plan, allocation of resources, implementation and evaluation of the plan. The
core health promotion activities may cover such areas as:
(a) Healthy living
(b) Eating wisely
(c) Exercise and physical fitness
(d) Smoking cessation
(e) Stress management
(f) Protecting one self from workplace hazards.
118
The initial effort and investment required to institute such health promotion programmes may prove
to be quite heavy but the long-run rewards are quite fruitful. Improvements in employees health result in
better work attitudes, higher morale, job satisfaction, reduced absenteeism and turnover.
12.8 Employee Safety
The main purpose of effective safety programmes in an organisation is to prevent work – related
injuries and accidents. A well managed factory will see to it that there are no physical hazards such as (i)
slipping and falling hazards, (ii) collision and obstruction hazards (iii) equipment hazards, (iv) fire hazards (v)
hazards from falling objects, etc.
(A) Slipping, tripping, or falling on the floor hazards: People fall when they slip. Highly polished
surfaces, accumulation of water, soap, or oil, etc. on the floor, torn or loose coverings cause the floor to be
slippery.
(B) Obstruction and collision hazards: When the factory layout and space management are poor,
it result in improper placement of furniture and equipment causing collision of employees with equipment and
machinery, tables, chairs, etc. Further, overcrowding and a narrow space for movement also results in accidental
collision between employees.
(C) Equipment hazards: Quite often, unguarded moving parts, wiring, switches and cards, edges
of metal equipment, etc., can cause injuries to employees working in these surroundings. Further, waste
paper baskets, lobbies, plumbing fixtures and small snail carts also cause problems for employees. All these
should be guarded against.
(D) Hazards from falling objects: When file cabinets, lockers and shelves are not properly placed,
they could fall on employees and injure them. Also, the stocked materials, paper stands, when placed on the
working tables might fall on employees.
(E) Fire hazards: The places where paperwork is heavy and precautionary measures taken are nil,
the possibilities of accidents are high. Improper disposal facilities for smokers, lack of provision of safety
cans for inflammable materials, non-existence of fire escapes and exits are the factors that contribute to fire
accidents. It is necessary for the manager to see that fire protection equipment and fire extinguishers are
available at all times in the factory.
12.9 Types and Causes of Accidents
The ever increasing mechanisation, electrification, chemicalisation and sophistication have made
industrial jobs more and more complex and intricate. This has led to increased dangers to human life in
industries through accidents and injuries. In fact, the same underlines the need for and importance of industrial
safety. Let us first understand what industrial accident actually means.
a) Industrial Accident
An accident (industrial) is a sudden and unexpected occurrence in the industry which interrupts the
orderly progress of the work. According to the Factories Act, 1948: “It is an occurrence in an industrial
establishment causing bodily injury to a person which makes him unfit to resume his duties in the next 48
hours”. In other words, accident is an unexpected event in the course of employment which is neither
anticipated nor designed to occur. Thus, an accident is an unplanned and uncontrolled event in which an
action or reaction of an object, a substance, a person, or a radiation results in personal injury. It is important
to note that self-inflicted injuries cannot be regarded as accidents.
119
An industrial injury is defined as “a personal injury to an employee which has been caused by an
accident or an occupational disease and which arises out of or in the course of employment and which could
entitle such employee to compensation under Workers Compensation Act, 1923.
b) Types of Accidents
Accidents may be of different types depending upon the severity, durability and degree of the injury.
An accident causing death or permanent or prolonged disability to the injured employee is called ‘major’
accident. A cut that does not render the employee disabled is termed as ‘minor’ accident. When an employee
gets injury with external signs of it, it is external injury. Injury without showing external signs such as a
fractured bone is called an internal one. When an injury renders an injured employees disabled for a short
period, say, a day or a week, it is a temporary accident. On the contrary, making injured employee disabled for
ever is called permanent accident. Disability caused by accident may be partial or total, fatal or non-fatal.
c) Causes of Accidents
The industrial safety experts have classified the causes of accidents into three broad categories:
(i) Unsafe Conditions (work-related): Unsafe working conditions are the biggest cause of accidents.
These are associated with defective plants, tools, equipments, machines and materials. Such causes are
known as technical causes. They arise when there are improper guarded equipments, defective equipments,
faulty layout of plant, inadequate lighting arrangements and ventilation, unsafe storage, inadequate safety
devices, etc. Besides, the psychological reasons such as working over time, monotony, fatigue, tiredness,
frustration and anxiety are also some other causes that cause accidents. Safety experts identify that there are
some high danger zones in an industry. These are, for example, handlift trucks, wheel-barrows, gears and
pulleys, saws and hand rails, chisels and screw drivers, electric drop lights, etc., where about one-third of
industrial accidents occur.
(ii) Unsafe Acts: Industrial accidents occur due to certain acts on the part of workers. These acts
may be the result of lack of knowledge or skill on the part of the worker, certain bodily defects and wrong
attitude. Examples of these acts are:
(a) Operating without authority.
(b) Failure to use safe attire or personal protective equipments.
(c) Careless throwing of material at the work place.
(d) Working at unsafe speed, i.e. too fast or too low.
(e) Using unsafe equipment, or using equipments unsafely.
(f) Removing safety devices.
(g) Taking unsafe position under suspended loads.
(h) Distracting, teasing, abusing, quarreling, day-dreaming, horseplay
(i) One’s own accident prone personality and behaviour.
(iii) Other Causes: These causes arise out of unsafe situational and climatic conditions and variations.
These may include excessive noise, very high temperature, humid conditions, bad working conditions, unhealthy
environment, slippery floors, excessive glare, dust and fume, arrogant behaviour of domineering supervisors,
etc.
120
12.10 Significance of Industrial Safety
Safety i.e. accident-free industry enjoys certain benefits. The following are the major ones:
(i) It saves costs: Occurrence of an accident involves two types of costs: direct costs and indirect
costs. The direct cost is in the form of compensation payable to the dependents of the victim employee, and
medical expenses incurred in treating the patient employee if the accident is not fatal. However, the management
has not to bear the direct cost if the victim is insured under the ESI Scheme. The indirect costs, also called the
‘hidden costs’, include loss on account of down-time of operators, slowed-up production rate of other workers,
materials spoiled, and damages to equipment. Added to these is the injured employee’s work performance
less than his normal efficiency. Research evidences indicate that the indirect costs are three to four times
higher than the direct costs. But, the safety by avoiding accidents eliminates these direct and indirect costs.
(ii) It improves productivity: As safe conditions at the work place keep employees free from
worrying about their safety, they devote more time to improving the quantity and quality of their output. Thus,
safety in the industry promotes productivity.
(iii) It develops moral: An industrial employee is a worker in the factory and at the same time,
bread-earner for his/her family. Hence, the happiness of his/her family is tagged to the well-being of the
worker. Safety is, therefore, important on human grounds as well.
(iv) Safety is a legal requirement: The maintenance of safety in the factory premises is a legal
requirement for the industry. There are laws and acts for ensuring safety measures in the factory, and
imposing penalties on non-compliance of the same has become quite severe.
12.11 Effective Safety Management
Effective safety management considers the type of safety problems, accidents, employees and
technology in the organizational setting. The role of human beings in safety related problems should also be
looked into. Safety efforts will not be successful if we try to engineer machines without paying attention to
behavioural reactions of employees. A comprehensive approach to safety includes the following steps:
(a) Safety Policy: Every factory must formulate and implement a safety policy. The objective of
such a policy should be to eliminate or reduce accidents and injuries in the workplace.
(b) Top Management Support: The safety policy must be supported by top management firmly.
Safety commitment should begin with top management. The commitment manifests itself in top managements’
being personally involved in safety activities in a routine way, giving safety matters top priority in company
meetings and production scheduling, giving company safety officer high rank and status and including safety
training in new workers’ training.
(c) Safety committee: To promote safety consciousness among employees, safety committees
could be constituted, under the chairmanship of a safety officer. The committee should consist of representatives
from workers and supervisors from various departments and levels. It must meet regularly to conduct safety
reviews and make recommendations for changes necessary to avoid future accidents.
(d) Safety discipline motivation: Safety rules must be enforced strictly. Violations should not be
tolerated. Frequent reinforcement of the need for safe behaviour and feedback on positive safety practices
have been found to be extremely effective in improving workers’ safety. Rewards and certificates could be
offered to employees for good safety records. To promote employee involvement and motivation, safety
contests could be held followed by incentives for safe work behaviour.
121
(e) Safety engineering: To minimize workplace accidents, proper engineering procedures could be
followed. Fencing of machinery, adequate space between machines, parts and equipment, use of material
handling equipment, safety devices, proper maintenance of machines, etc., are undertaken to prevent accidents
from occurring.
(f) Safety training and communications: Safety training can also reduce accidents. It is especially
useful in case of new recruits. Training in safe practices, procedures, material handling, first aid, fire prevention
etc., could be offered to them. Posters, newsletters, displays, slogans and signs could also be used to promote
safety consciousness throughout the organisation. Another way to communicate safety ideas is through
safety films and videotapes.
(g) Accident investigation and research: When accidents takes place, they should be thoroughly
investigated to find the actual reason (poor lighting, poor ventilation, wet floor etc.) as early as possible. Such
an early probe is necessary to ensure that conditions under which the accident occurred have not changed
significantly. Photographs, videotapes could be used to gain better view of the actual scene. In the next step,
the injured employee or his supervisors should be interviewed to find out what happened and how the accident
occurred. In the third place, on accident investigation report should be prepared indicating what has happened
and recommending steps to prevent similar accidents from occurring.
(h) Evaluation of Safety effort: Organisations should monitor and evaluate safety efforts by conducting
safety audits at intervals. Accident and injury statistics should be periodically compared with previous accident
patterns to find any important changes. This analysis should be designed to measure progress in safety
management.
(i) Governmental support: To extend support to safety related activities the Government of India
established the National Safety Council in 1966. The principle job of this council is to promote safety
consciousness at the plant level and conduct safety programmes. The National Safety Day is celebrated
every year to signify the foundation day of the council. National safety awards are given every year to
industrial units for ensuring accident-free environments.
12.12 Statutory Provisions Regarding Safety in India
The International Labour Organisation (ILO) organised a Tripartite Technical Conference in 1948 to
formulate a ‘Model Code’ of Safety Regulations for Industrial Establishments for the guidance of governments
and industry. The code covers various areas of unsafe conditions and unsafe acts.
In India, The Factories Act, 1948 lays down safety provisions contained in Sections 21 to 41. These
provisions are obligatory on the part of industrial establishment. A brief of these is presented as follows:
(a) Fencing of Machinery (Section 21): It is obligatory on the part of the management to fence
machinery with guards of a substantial construction. The same shall be constantly maintained and kept in its
proper position when any part of the machine is in motion or movement.
(b) Work on or Near Machinery in Motion (Section 22): A trained adult made worker wearing
tight fitting clothing should examine and operate the machine in motion. He should not handle a belt on a
moving pulley more than fifteen centimeters in width. No young children or women should handle a machine
which is in motion.
(c) Employment of Adolescents on Dangerous Machines (Section 23): Young persons should
not be allowed to work on dangerous machines unless he has been fully instructed as to the dangers involved
and he has received sufficient training to work on the machine under the supervision of a person having
thorough knowledge and experience of working on that machine.
122
(d) Striking Gear or Device for Cutting off Power (Section 24): Every factory must provide
suitable striking gear to move driving belt to and from fast and loose pulleys which form part of transmission
machinery. These should also be a locking device to prevent accidental starting of transmission machinery to
which the device is fitted.
(e) Self-Acting Machines (Section 25): No traversing part of a self-acting machine and no material
carried thereon shall be allowed to run within a distance of 45 centimeters from any fixed structure which is
not a part of the machine.
(f) Casting of New Machinery (Section 26): All machinery driven by power and installed in any
factory after April 1, 1949, every set crew, bolt or key, spindle shall be sunk or securely guarded to prevent
any danger. Further, all spur, worm and toothed or friction gearing while in operation shall be completely
uneased unless it is safely situated.
(g) Prohibition of Employment of Woman and Children near Cotton Openers (Section 27):
Women and children shall not be employed in any part of a factory for pressing cottons when cotton opener
is in operation. However, women and children may be employed in a room which is separated from opener.
(h) Hoists and Lifts (Section 28): In every factory, hoists and lifts should be in good condition and
should be examined once in every six months.
(i) Lifting Machines, Tackles, Chains and Ropes (Section 29): Similarly, in every factory,
lifting machines chains, ropes and lifting tackles must be in good construction and should be examined once in
a year.
(j) Revolving Machinery (Section 30): In every room where grinding work is going on, a notice
indicating the maximum safe working peripherals speed of the machine shall be affixed near it. Effective
measures will also be taken in every factory to ensure that the safe working peripheral speed of every
revolving vessel, cage, basket, flywheel, pulley, or similar other appliances driven by power is not exceeded.
(k) Pressure Plants (Section 31): If in any factory, any plant or its part is operated at a pressure
above atmospheric pressure, the pressure should not be allowed to exceed by taking effective measures in
this regard.
(l) Floors, Stairs and Other Means of Access (Section 32): In every factory, all floors, steps,
stairs, passage and gangway shall be of sound construction and be properly maintained.
(m) Pits and Openings in Floors (Section 33): Since every fixed vessel, sumps, tank, pit, or
opening in a floor may be a source of danger, therefore, shall be securely covered or fenced.
(n) Excessive Weights (Section 34): No person shall be employed in the factory to lift or carry
excess load/weight so as to cause him/her physical injury.
(o) Protection of Eyes (Section 35): In every factory, adequate provisions of goggles or screen to
protect persons working on machine which might cause damage to their eyesight shall be made.
(p) Precaution against Dangerous Fumes (Section 36): No employee in any factory shall be
allowed to enter any chamber, tank, pit, vat, pipe, flue or such other confined place in which any gas or fume
is present.
(Q) Explosive of Inflammable Gas or Dust (Section 37): In any factory which produces through
its manufacturing process dust, gas, fume or vapour of such nature exploding or ignition, effective measures
such as enclosure of the plant or machinery used in the process, removal of accumulated dust or fume and
effective enclosure of all possible source of ignition, should be taken to prevent explosion likely to be caused
by gas or fume.
123
(r) Precaution in Case of Fire (Section 38): In every factory, effective measures be taken to
prevent outbreak of fire and its spread. These may include exit door to escape in case of fire, necessary
equipments and facilities for extinguishing fire and adequate arrangement to raise alarm in case of fire,
preferably a siren.
(s) Power to Require Specification of Defective Parts or Tests of Stability (Section 39): If
it appears to the factory inspector that any building or part of it is in such a condition that it is dangerous to
human life, he/she may ask for details about them or insist on suitable tests to determine their safety.
(t) Safety of Building and Machinery (Section 40): Where unsafe condition of building and
machinery is reported, the inspector having being satisfied may ask the occupier or manager to repair it
suitably.
(u) Power to Make Rules (Section 41): The state Government is empowered to make rules
requiring the provision in any factory of such further devices and measures for securing safety of persons
employed therein.
12.13 SELF CHECK EXERCISE
1. Define Health.
2. Define Physical health.
3. Define mental health.
4. Discuss in brief importance of health.
5. Write a short-note on impact of chemical hazards.
6. Discuss in brief importance of cleanliness.
7. What do you mean by employee safety? Discuss in brief.
8. Write a short-note on industrial accidents.
9. Discuss in brief significance of industrial safety.
12.14 SUMMARY
Health refers to a complete mental, physical and social well-being of individual workers. Safety
involves protecting the physical well being of people. The importance of health lies in improved productivity,
reduced absenteeism and turnover, minimized industrial unrest and indiscipline and improved employee morale
and motivation. The main occupational hazards are chemical, biological, environmental and psychological
hazards. Both preventive and curative measures help protect health of industrial workers. The main purpose
of effective safety programmes in an organisation is to prevent work-related injuries and accidents. Unsafe
working conditions, unsafe acts and other environmental factors cause industrial accidents. Factories Act,
1948 has laid down provisions for maintaining safety at the work place.
12.15 GLOSSARY
• Chemical hazard is a type of occupational hazard caused by exposure to chemicals in the workplace.
Exposure to chemicals in the workplace can cause acute or long-term detrimental health effects.
These hazards can cause physical and/or health risks.
• Cleanliness means that there is no dirt, no dust, no stains, no bad smells. The goals of cleanliness
are health, beauty, absence of offensive odor and to avoid the spreading of dirt and contaminants to
oneself and others. In the case of glass objects such as windows or windshields, the purpose can
also be transparency.
124
• Health is "a state of complete physical, mental and social well-being and not merely an absence of
disease or infirmity."
• Human resources describe the people who make up the workforce of an organization, business
sector, or economy. "Human capital" is sometimes used synonymously with "human resources",
although human capital typically refers to a narrower effect (i.e., the knowledge the individuals
embody and economic growth).
• Industrial accident may be defined as an occurrence which interrupts or interferes with the orderly
progress of work in an industrial establishment.
• Industrial safety refers to the management of all operations and events within an industry in order
to protect its employees and assets by minimizing hazards, risks, accidents, and near misses. Industrial
safety is overseen by federal, state, and local laws and regulations.
• Safety of workers refers to the provision of a safe environment, safe equipment and safe procedures
in the workplace in order to ensure workers' health and safety.
12.16 ANSWERS TO SELF CHECK EXERCISE
1. For answer refer to section 12.2.
2. For answer refer to section 12.2.
3. For answer refer to section 12.2.
4. For answer refer to section 12.3.
5. For answer refer to section 12.4.
6. For answer refer to section 12.6.
7. For answer refer to section 12.8.
8. For answer refer to section 12.9.
9. For answer refer to section 12.10.
12.17 TERMINAL QUESTIONS
1. Define health. Explain the various ways and means to protect employee’s health in industries.
2. Highlight the various legal provisions for health.
3. “Accidents do not just happen, they are caused.” Comment.
4. What steps should be taken by management to increase motivation for safety?
5. Explain the statutory provisions regarding safety in India.
12.18 SUGGESTED READINGS
1. Cascio, W.F., Managing Human Resources, Tata McGraw Hill, New Delhi.
2. Aswathappa, K., Human Resource and Personnel Management Tata McGraw Hill, New Delhi.
3. Dessles, G., Human Resource Management, Prentice Hall of India, New Delhi.
4. Pylee, M.V. and Simon, G.A., Industrial Relation and Personal Management, Vikas Publishing House,
New Delhi.
*****
125
LESSON-13JOB ANALYSIS
Learning Objectives
1. To introduce students to the concept of Job Analysis, Job Description, Job Specification and Job Design.
2. To make students conversant with merits and demerits of various components of job analysis.
3. To familiarize students with the techniques of Job Design.
Contents
MEANING AND DEFINITIONS
TYPES OF JOB ANALYSIS
USES/ ADVANTAGES OF JOB ANALYSIS
PROCESS OF JOB ANALYSIS
METHODS OF JOB ANALYSIS
JOB DESCRIPTION
USES OF JOB DESCRIPTION
CONTENTS OF JOB DESCRIPTION
JOB SPECIFICATION
USES OF JOB SPECIFICATION
ROLE ANALYSIS
JOB DESIGN
TECHNIQUES OF JOB DESIGN
MEANING AND DEFINITIONS
A job is defined as a collection of duties and responsibilities which are given together to an individual
employee. Job analysis is the process of studying and collecting information relating to operations and
responsibilities of a specific job. Information thus collected is analyzed and the facts about nature of job,
working condition and qualities in employee can be easily known.
‘Position’ is someone’s rank or status in an organisation. It is the place that someone or something
has in a list or competition.
While “position” and “job” are often used interchangeably, there is a difference:
A Job is a generic summary of key responsibilities which includes the general nature of work
performed, the level of work performed, the skills and knowledge required for competent performance, and
other elements. The job description is used to determine the appropriate salary grade.
A Position is unique to an employee, and is used for budgeting and posting purposes. It is a more
detailed summary of the duties specific to the individual employee.
According to Dale Yoder, “Job analysis is the procedure by which facts with respect to each job are
systematically discovered and noted.”
In the words of Flippo: “Job Analysis is the process of studying and collecting information relating to
the operations and responsibilities of specific job.”
126
Job study is another name of job analysis.
TYPES OF JOB ANALYSIS
From the viewpoint of the purpose, there are two types of job analysis: single purpose job analysis
and multipurpose job analysis.
i. Single purpose Job Analysis: When data is gathered and studied with a specific single purpose in
mind, then it is known as a single purpose job analysis. This type of job analysis is useful in tackling a
particular problem at hand.
ii. Multipurpose Job Analysis: When data is gathered and studied with more than one purpose in
mind, it is known as a multipurpose job analysis. For example better selection, better training, more
effective control etc may be the object of job analysis. Obviously, multipurpose job analysis is more
useful than single purpose job analysis.
USES/ ADVANTAGES OF JOB ANALYSIS
The uses of job analysis may be summarized as under:
1. Human resource planning: Job analysis helps in forecasting human resource requirements in terms
of knowledge and skills. Accordingly, promotions, transfers, training etc can be planned. It also helps in
determining quality of human resources needed in an organisation.
2. Recruitment & Selection: Job analysis is used to find out how and when to hire people for future job
openings. It shows to the employment officer what the job is and what qualifications are required in
employees to perform the job. Thus, the study of a job helps in job specifications on the basis of which
employees are selected.
3. Placement and orientation: After selecting people, we have to place them on jobs best suited to
their interests, activities and aptitude. If we are not sure about what needs to be done on a job, it is not
possible to identify the right person suited for the job. To teach a new employee how to handle a job,
we have to clearly define the job.
4. Training: If there is any confusion about what the job is and what is supposed to be done, proper
training efforts cannot be initiated. Job analysis helps in framing training programmes. It would suggest
what is to be taught, whom the training has to be imparted, and how it is to be taught.
5. Counseling: Managers can properly counsel employees about their careers when they understand
the different jobs in the organisation. Likewise, employees can better appreciate their career options
when they understand the specific needs of various other jobs. Job analysis can point out areas that an
employee might need to develop to further a career.
6. Employee safety: A thorough job analysis reveals unsafe conditions associated with a job. By studying
how the various operations are taken up in a job, managers can find unsafe practices. This helps
management in devising safety programmes.
7. Reduces Fatigue: Job analysis helps in reducing fatigue and boredom by eliminating unnecessary
movements of the employees. It helps also in designing better methods of production and thus increases
productivity.
127
8. Performance appraisal: By comparing what an employee is supposed to do and what is he doing
actually, the worth of that person can be assessed. Ultimately, every organisation has to pay a fair
remuneration to people based on their performance. To achieve this, it is necessary to compare what
individuals should do (as per performance standards) with what they have actually done (as per job
analysis).
9. Job design and redesign: Once the jobs are understood properly, it is easy to locate weak spots and
undertake remedial steps. We can eliminate unnecessary movements, simplify certain steps and improve
the existing ones through continuous monitoring. In short, we can redesign jobs to match the mental
make-up of employees.
10. Improvement in Efficiency: Job study can help in improving efficiency and morale of the employees
by placing right persons on the right jobs. The tragedy of misfit can be avoided. Hence, production
becomes more efficient. It results into job satisfaction among employees. Thus, the overall efficiency
of the organisation can be increased.
11. Job evaluation: Job analysis helps in finding the relative worth of a job, based on criteria such as
degree of difficulty, type of work done, skills and knowledge needed, etc. This, in turn, assists in
designing proper wage policies and other compensations.
12. Settlement of Disputes: Since a scientific wage structure is established and since jobs are
systematically compared with one another, on the basis of risks and responsibilities involved, it becomes
easier to settle industrial disputes. In fact, it will reduce the possibility of industrial disputes.
PROCESS OF JOB ANALYSIS
A successful Job Analysis has to pass through below mentioned stages:
Identification of Job Analysis Purpose
↓Who Will Conduct Job Analysis
↓How to Conduct the Process
↓Data Collection
↓Documentation, Verification and Review
↓Developing Job Description and Job Specification
1. Identification of Job Analysis Purpose: Any process is futile until its purpose is not identified and
defined. Therefore, the first step in the process is to determine its need and desired output. Spending
human efforts, energy as well as money is useless until HR managers don’t know why data is to be
collected and what is to be done with it.
2. Who Will Conduct Job Analysis: The second most important step in the process of job analysis is to
decide who will conduct it. Some companies prefer getting it done by their own HR department while
some hire job analysis consultants. Job analysis consultants may prove to be extremely helpful as they
offer unbiased advice, guidelines and methods. They don’t have any personal likes and dislikes when
it comes to analyze a job.
128
3. How to Conduct the Process: Deciding the way in which job analysis process needs to be conducted
is surely the next step. Several alternative methods of collecting job information are available and may
be used. They are as follows:
i. Questionnaire Method: This is the oldest and widely used method of collecting job information.
Each employee has to write answers to questions included in a questionnaire about his job. Of course,
the necessary guidance is given to the employee in this regard. The size of the questionnaire has to be
ideal i.e. neither too short nor too long.
ii. Interview Method: Conducting interview with workers by the specialized job analysts is a more
expensive method. They may be interviewed individually or collectively. Their answers are systematically
recorded on the job-information sheets.
iii. Observation: Under this method, the job analysts would actually observe the actual performance of
the job. Of course, they may seek clarification from the workers or from the supervisors on the
matters that crate doubts in their minds. This method is generally regarded as providing the best
information about job.
4. Data Collection: Next is to collect job-related data including educational qualifications of employees,
skills and abilities required to perform the job, working conditions, job activities, reporting hierarchy,
required human traits, job activities, duties and responsibilities involved and employee behaviour.
5. Documentation, Verification and Review: Proper documentation is done to verify the authenticity
of collected data and then review it. This is the final information that is used to describe a specific job.
6. Developing Job Description and Job Specification: Now is the time to segregate the collected
data in to useful information. Job Description describes the roles, activities, duties and responsibilities
of the job while job specification is a statement of educational qualification, experience, personal traits
and skills required to perform the job.
Thus, the process of job analysis helps in identifying the worth of specific job, utilizing the human talent
in the best possible manner, eliminating unneeded jobs and setting realistic performance measurement
standards.
METHODS OF JOB ANALYSIS
The few of job analysis methods that are commonly used by the organisations to investigate the
demands of a specific job are discussed below:
Job Analysis Methods
Most Common Methods of Job Analysis
129
i. Questionnaire Method: This is the oldest and widely used method of collecting job information.
Each employee has to write answers to questions included in a questionnaire about his job. Of course,
the necessary guidance is given to the employee in this regard. The size of the questionnaire has to be
ideal i.e. neither too short nor too long. In order to get the true job-related information, management
should effectively communicate it to the staff that data collected will be used for their own good. It is
very important to ensure them that it won’t be used against them in anyway. If it is not done properly,
it will be a sheer wastage of time, money and human resources.
ii. Interview Method: Conducting interview with workers by the specialized job analysts is a more
expensive method. They may be interviewed individually or collectively. Their answers are systematically
recorded on the job-information sheets. This method helps interviewer know what exactly an employee
thinks about his or her own job and responsibilities involved in it. It involves analysis of job by employee
himself. In order to generate honest and true feedback or collect genuine data, questions asked during
the interview should be carefully decided.
iii. Observation: Under this method, the job analysts would actually observe the actual performance of
the job. Of course, they may seek clarification from the workers or from the supervisors on the
matters that create doubts in their minds. This method is generally regarded as providing the best
information about job. It is due to the fact that every person has his own way of observing things.
Different people think different and interpret the findings in different ways. Therefore, the process
may involve personal biasness or likes and dislikes and may not produce genuine results. This error can
be avoided by proper training of job analyst or whoever will be conducting the job analysis process.
Other Methods
1. Computerized Job Analysis:As computer technology has expanded, researchers have developed
computerized job analysis systems. A computerized job analysis system often can reduce the time and
effort involved in writing job descriptions. This method allows firms to develop more accurate and
comprehensive job descriptions, linked to compensation programs, and performance appraisal systems.
These processes can also provide better data for future reference.
2. Checklists: The checklist method of job data collection differs from the questionnaire method in the
sense that it contains a few objective questions in the form of yes or no. The job holder is asked to tick
the questions that are related to his/her job.
Like questionnaire method, the checklist method is suitable in the large organisations wherein a large
number of workers are assigned one particular job. Since the method is costly, it is not suitable for
small organisations.
3. Technical Conference Method: In this method, a conference is organised for the supervisors who
possess extensive knowledge about job. They deliberate and discuss on various aspects of the job. The
job analyst obtains job information from the discussion held among these experts/supervisors. The
method consumes less amount of time. However, the main drawback of this method is that it lacks
accuracy and authenticity as the actual job holders are not involved in collecting job information.
4. Critical Incidents: This method is based on the job holder’s past experiences on the job. They are
asked to recapitulate and describe the past incidents that they consider incidental to their jobs. The
incidents so reported by the job holders are then, classified into various categories and analyzed in
detail. Yes, the job analyst requires a high degree of skill to analyze the incidents appropriately described
by the job holders. However, this method is also time-consuming one.
130
5. Diaries or Log Records: In this method, the job holder is asked to maintain a diary recording in detail
the job-related activities each day. If done judiciously, this method provides accurate and comprehensive
information about the job. This overcomes memory lapses on the part of the job holder. The disadvantage
associated with this method is that it remains incomplete because it does not give desirable data on
supervisor relationship, the equipment used and working conditions prevalent at the work place. It also
engages considerable time of a production worker.
6. Combination Methods: There are indeed a number of different ways to obtain and analyze information
about a job. No specific job analysis method has received the stamp of approval from the various
courts in all situations. Each of the methods has strengths and weaknesses, and a combination of
methods generally is preferred over one method alone.
JOB DESCRIPTION
Job Description is an important document, which is basically descriptive in nature and contains a
statement of job Analysis. It provides both organisational information’s (like location in structure, authority
etc) and functional information (what the work is).
It gives information about the scope of job activities, major responsibilities and positioning of the job
in the organisation. This information gives the worker, analyst, and supervisor with a clear idea of what the
worker must do to meet the demand of the job.
In the words of Dale Yoder, “Job description is a systematic out line of data collected through job
analysis.”
SPECIMEN OF JOB DESCRIPTION
Business logo Name of Business with Address & Contacts
Job title:
Place of work: Department/Unit:
Working hours: Salary Range:
Description of the Company
Reports to: Supervises:
Works with: Size of the work team:
Job purpose:
Duties & responsibilities:
Working conditions (travel, work space, etc.)
Minimum level of Education:
Skills required: (e.g. good analytical and reporting skills, etc.)
Competencies required: (e.g. communication, teamwork, problem solving, etc.)
Qualifications/trainings required: (e.g. certificates of specific trainings)
Promotion:
Prior experience:
131
USES OF JOB DESCRIPTION
There are several uses of job description because of which it is important. The major ones are cited below:
1. Job description makes the work of personnel department easy. The information about jobs is useful to
them in recruitment, training, promotion, transfer and settle of disputes.
2. It helps in establishing just and proper wage structure.
3. It helps in the development of job specification.
4. It acts as a tool during the orientation of new employees, to learn duties & responsibilities. It can act as
a basic document used in developing performance standards.
CONTENTS OF JOB DESCRIPTION
Job description is in the form of statement. Following are its main contents:
1. Name of the job, its code number and its department.
2. Brief description of the job.
3. Description of job duty – what is to be done, how it is to be done, within how much time and why
it is to be done.
4. Its relationships with other jobs.
5. Machines, tools and materials used.
6. Conditions under which job is to be done.
7. Training requirements.
8. From whom guidance and instructions will be received.
9. Salary scale applicable to the job.
JOB SPECIFICATION
Job Specification translates the job description into terms of the human qualifications, which are
required for performance of a job. They are intended to serve as a guide in hiring and job evaluation.
Job specification 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. It is a summary of the required qualities to perform a job. It specifies the type of employee
required and the working conditions which will be encountered on the job.
According to Flippo, “A job specification is a statement of minimum acceptable human qualities
necessary to perform a job properly.”
Job Specification Information:
The first step in the programme of job specification is to prepare a list of all jobs in the company and
where they are located. The second step is to write up information about each of the jobs in the organisation.
Usually this information includes:
1. Physical specifications: Physical specifications include the physical qualifications or physical
capacities that vary from job to job. Physical qualifications or capacities include physical features
like height, weight, vision, hearing, ability to lift weight, capacity to use or operate machines, tools,
equipment etc.
132
2. Mental specifications: Mental specifications include ability to perform, arithmetical calculations,
to interpret data, information blue prints, to read electrical circuits, ability to plan, reading abilities,
scientific abilities, judgment, ability to concentrate, ability to handle variable factors, general
intelligence, memory etc.
3. Emotional and social specifications: Emotional and social specifications are more important for
the post of managers, supervisors, foremen etc. These include emotional stability, flexibility, social
adaptability in human relationships, personal appearance including dress, posture etc.
4. Behavioral Specifications: Behavioral specifications play an important role in selecting the
candidates for higher-level jobs in the organisational hierarchy. This specification seeks to describe
the acts of managers rather than the traits that cause the acts. These specifications include judgments,
research, creativity, teaching ability, maturity trial of conciliation, self-reliance, dominance etc.
Specimen of Job Specification for the post of Account Manager
Name of the Job Marketing Research Officer
Department Marketing Department
Job Duty To conduct marketing research, find out opportunities for
market expansion, collect information about customers
changing taste, habits, fashion, customs etc., prepare the report
and submit the same to the managing director and give advice
to marketing manager
Special Job Requirements 1. Mental aptitude for research
2. Competence and skill to conduct marketing research
independently
3. Knowledge of customers social, economic and cultural
environment.
Educational Requirements MBA Degree from a recognized university with marketing
management.
Experience Two to five years of research experience in any business
unit.
USES OF JOB SPECIFICATION
Job specification is useful to management in recruitment and selection of employees and is useful to both
management and employees in the following ways:
1. For Advertisement Planning: The minimum physical and mental qualities indicted by job specification
are useful in contracting advertisement.
2. For Scientific Recruitment: It is useful in preparing objective tests like intelligence tests, personality
tests, trade tests etc in one of the stages of scientific selection process of employees.
3. Providing Guidance: It is also useful in providing guidance about the transfer or promotion of employees
along the posts having similar job specification.
4. Training Programme: Proper training programme can be planned on the basis of information provided
by job specification.
133
5. Self Development: Due to job specification, the employee himself gets acquainted with his own
weaknesses and he would himself try to remove them.
ROLE ANALYSIS
Role analysis is used to help employees get a better grasp on their role in an organisation. It is
necessary to supplement the job analysis process with the role analysis in order to have a clear picture of
what the job actually demands.
A position holder may perform three types of roles in day to day life like the expected role, the
perceived role and the actual role. The expected role is what other people expect from a person. For
example: School teacher is expected to come to the school and teach properly. The perceived role is how
the individual thinks he should behave to fulfill the expected role. For example: A teacher may think that he
may able to complete the given course within the prescribed time limit. The actual role is the way the person
actually behaves in an organisation. For example: The teacher completes the given course before few months
by taking extra lectures.
Over a period of time, the roles to be played by a job holder may undergo a complete transformation
identifying important job related behaviors that may lead to effective performance. Role analysis provides a
satisfactory answer to this problem.
JOB DESIGN
Job design involves conscious efforts to organize tasks, duties and responsibilities into a unit of work
to achieve certain objectives. Job design follows job analysis i.e. it is the next step after job analysis.
Job design also calls for work arrangement or rearrangement aimed at reducing or overcoming job
dissatisfaction among employees arising from repetitive and mechanistic tasks. Through job design, organisations
try to raise productivity levels in the organisation. Job enlargement, job enrichment, job rotation, and job
simplification are the various techniques used in a job design exercise. It outlines the job responsibilities very
clearly and also helps in attracting the right candidates to the right job.
The characteristics of job design are as follows:
1. Organisational Structure: The job design specifies the contents and procedures of performing the
task in the organisation. Hence, it helps in designing organisational structure. The organisational structure
is determined by the job design process.
2. Human at the Centre: In the modern concept of job design, a human being is at the centre and his
needs and convenience are given prime importance.
3. Structure of Competent Employee: Job design is a systematic approach of providing job-related
data and information on skills, knowledge and ability of the incumbent to perform the task. On the basis
of the information provided by it, the job description and job specification schedule are prepared, which
helps to the best suited candidate for the job.
4. Motivation and Commitment of Employees: Job design makes the work more interesting and
challenging, which motivates the employees for higher level of performance.
5. Environmental Adaptation: The process of job design and job redesign is prepared in such a way
that it adapts the change in the environmental forces.
134
6. Labor Relation: A well prepared job design brings a harmonious relation between employees and
management. On the other hand, poorly prepared job design creates employee-grievances, greater
employee turnover, greater absenteeism and conflict.
7. Quality of Work Life: A quality of work life is understood as an efficient relationship between
employees and organisational working environment. A properly prepared job design leads to improvements
in quality of work life.
8. Job Redesign: A job design has to be reconsidered from time to time in the light of developments in
production techniques and technologies. In other words, the concept of job design includes job redesign
also.
9. Job Satisfaction: A job is designed in such a way that it gives meaning and satisfaction to employees.
This ultimately results in increased production and productivity. Thus, employees as well as organisations
are benefited from the situation.
TECHNIQUES OF JOB DESIGN
1. JOB ROTATION
Job Rotation is a management approach where employees are shifted between two or more
assignments or jobs at regular intervals of time in order to expose them to all verticals of an organisation. It is
a pre-planned approach. Its objective is to test the employee skills and competencies in order to place him or
her at the right place. Besides, it reduces the monotony of the job and gives them a wider experience and
helps them gain more insights.
Job rotation is a well-planned practice to reduce the boredom or fatigue of doing same type of job
everyday and explore the hidden potential of an employee. It helps management in discovering the talent of
employees and determining what he or she is best at. On the other hand, it gives an individual a chance to
explore his or her own interests and gain experience in different fields or operations.
2. JOB ENLARGEMENT
According to Robert Cooper, “Job enlargement is adding more to the present job design and introducing
variety into it.”
Job enlargement is considered horizontal expansion, which means that the tasks added are at the
same level as those in the current position. Job enlargement may also result in greater workforce flexibility. In
other words, job enlargement is a job design technique in which the number of tasks associated with a job is
increased (and appropriate training provided) to add greater variety to activities, thus reducing monotony.
After performing the same position for a while, employees can get bored. As an example, we’ll look
at John, an accountant in a large corporation. For his position, John is responsible for posting entries and
creating financial statements for several small companies the corporation owns. He’s been doing this for a
couple of years now, and the tasks required each month are found in a checklist he works down for each
company. Although he likes accounting, his work is getting a bit monotonous.
3. JOB ENRICHMENT
According to Stephen Robbins, “Job enrichment refers to the vertical expansion of jobs and increases
the degree to which the worker controls the planning execution and evaluation of his job.”
Typically job enrichment involves combining various existing and new tasks into one large module of
work. The work is then handed over to an employee, which means there is an increase in responsibilities and
135
scope. This increase in responsibility is often vertical. The idea is to group various tasks together such that
natural work units are created. Job enrichment also opens up a feedback channel for the employees. Employees
are frequently apprised of their performance. This keeps them on track and helps them know their weak and
strong points. Performance standards are set for the employees themselves and future performances are
matched against the benchmarks. Research studies on job enrichment found out decreased levels of absenteeism
among the employees, reduced employee turnover and a manifold increase in job satisfaction.
4. WORK SIMPLIFICATION: Work simplification means dividing the job into small parts i.e. different
operations in a product line or process which can improve the production or job performance. Job analysis
provides the information related to job and this data can be used to make process or job simple.
Work simplification techniques range from low-tech (such as using no-scrub cleaners) to high-tech
(such as using voice recognition software for typing).
Some other examples include:
• Using an automated can opener instead of the manual version.
• Lengthening a short handle on a dustpan to avoid bending.
• Using pre-pressed clothes that eliminate the need for ironing.
• Sliding heavy objects or using a wheeled cart to avoid lifting.
*****
136
LESSON-14
JOB EVALUATIONLearning Objectives
1. To introduce students with the concept, meaning and definitions of Job Evaluation.
2. To highlight objectives, principles as well as merits and demerits of Job Evaluation.
3. To elaborate the process and various methods of Job Evaluation.
CONTENTS
MEANING AND DEFINITIONS
OBJECTIVES OF JOB EVALUATION
PRINCIPLES OF JOB EVALUATION
PROCESS OF JOB EVALUATION
METHODS OF JOB EVALUATION
ADVANTAGES OF JOB EVALUATION
LIMITATIONS OF JOB-EVALUATION
MEANING AND DEFINITIONS
Job evaluation is an orderly and systematic process of determining the wages (or worth) of the job in
relation to other jobs. It is a process of rewarding the job after it has been analysed. According to the
International Labour Office (I.L.O.), “job evaluation is an attempt to determine and compare the
demands which the normal performance of a particular job makes on normal workers, without taking
into account the individual abilities or performance of the workers concerned”.
DEFINITION
“Job evaluation represents an effort to determine the relative value of every job in a plant to determine
what the fair basic wage for such a job should be.”
-Kimball and Kimball
OBJECTIVES OF JOB EVALUATION
Job Evaluation is undertaken with the following objectives:
1. To have external and internal consistency in wage structure. Thus, inequalities in wages must be
removed. If a foreman gets less wages than the supervisor, it is a case of internal inconsistency.
2. To have a systematic evaluation of jobs and fixation of wages on that basis helps in solving wage
controversies.
3. To remove subjectiveness in the fixation of wages, introduce objectiveness and also facilitate union
management negotiations on wages.
4. To conduct wage surveys and compare our wage systems with other concerns.
5. To fix minimum and maximum wages throughout the organisation.
6. To generate standardisation in wage differentials.
7. To help in the selection of candidates for the vacant jobs. The factors determined for job evaluation
are taken into account while selecting a candidate. It reduces selection and recruitment costs.
137
8. To ensures that same wages are paid to all qualified employees doing similar type of work.
9. To establish a rational basis for incentive and bonus schemes.
10. To provide a framework for periodic review and revision of wage rates and a basis for wage negotiation
with trade unions.
11. To enable the management to gauge and control payroll costs.
PRINCIPLES OF JOB EVALUATION
1. It is important to keep in mind that we should do the rating of the job rather than the rating of the man
who is doing the job (which is covered in merit rating). The man doing the job may be a misfit.
2. The factors selected should be less in number. Usually the factors selected are skill, effort, responsibility
and working conditions. Each factor should be precisely defined.
3. The job-evaluation plan must be acceptable to employees. In other words, such a plan must be ‘told’
to employees by explaining its advantages and objectives.
4. The value or weightage given to the factors should not be disclosed to the foreman or supervisor
while discussing the job evaluation plan with them. In case monetary values are also explained, it will
result in the biased evaluation.
5. There should be limited number of occupational wages i.e., there should be few categories of jobs
and they should be arranged in terms of their value.
6. The foreman of the concerned department should also participate in job evaluation.
7. Maximum co-operation of employees for the programme of job evaluation is very essential for its
success.
PROCESS OF JOB EVALUATION
The process of job evaluation involves the following steps:
1. Gaining Acceptance: At the very outset, the support and cooperation of top management, employees
and trade unions should be obtained through communication and participation. To acquaint them with the
aim of job evaluation, conference, letters and booklets can be used.
2. Constituting Job Evaluation Committee: For evaluating the jobs, a committee consisting of
experienced and respected representatives of management and workers and outside experts should be
constituted. The participation of employees in the committee will reduce their doubts and apprehension
about the programme.
3. Selecting Jobs to be Evaluated: Due to constraints of time and money, it may not be possible to
evaluate each job. Therefore, some key jobs may be selected in each department, which are representative
of the type of work performed. The key jobs are evaluated in detail and other jobs are then compared
with the key jobs.
4. Describing the Jobs: A detailed job description is prepared for every job, indicating the duties and
responsibilities involved in it. The acceptance of the employees performing the job is also obtained to the
job description.
5. Selecting the Method of Evaluation: There are several methods available for evaluating jobs. According
to the nature of the job and the organization, an appropriate method or sometimes, more than one methods
are chosen for evaluation.
138
6. Weighting Job Factors: A job is compared with other jobs in terms of significant factors which may be
as follows:
a) Efforts and Initiative
b) Skill-mental and manual
c) Responsibilities to be undertaken
d) Experience
e) Supervision required
f) Working Conditions
Weights are assigned to each job factor and total weights for a job indicate its relative value. Different
jobs are arranged in a sequence in terms of their relative worth to the company.
7. Assigning Money Values: Each job is priced according to its worth. In other words, the sequence of
jobs in terms of their relative worth is related to a money scale.
8. Periodic Review: A periodic review and revision of job descriptions will help to tone down the feelings
of employees who believe that their work was not properly evaluated and will also enable the management
to update the job description in the light of technological and other changes.
METHODS OF JOB EVALUATION
Various methods of job evaluation may be grouped as under:
METHODS OF JOB EVALUATION
QUANTITATIVE NON-QUANTITATIVE
METHODS METHODS OR
QUALITATIVE METHODS
POINT FACTOR RANKING OR JOB GRADING
RATING
SYSTEM COMPARISON JOB COMPARISON
METHOD METHOD
1. Point Rating Method
This is the most widely used method of job evaluation. Under the point method, a detailed analysis of job’s
worth is made for determining the fair wages.
The following is the procedure for job evaluation under this method:
a) All factors influencing various jobs should be considered beforehand.
b) The job description is prepared for the job if it is not available.
139
c) All factors are evaluated in terms of points depending on the degree of their importance in a particular
job.
d) Each job is rated factor by factor and then the values of points are added up. The total points for a job
indicate its relative worth or value.
e) All jobs with same (more or less) points are classified into one grade. Thereafter, wages for each job
are fixed on the basis of total points.
The table of National Metal Traders Association (NMTA) of U.S.A. is given here for understanding
the allocation of points to various factors:
Job elements and degree value points assigned to each factor and key to grades for machine operators:
Factors No. of 1st 2nd 3rd 4th 5th
points degree degree degree degree degree
1. Skill 250
(i) Education 70 14 28 42 56 70
(ii) Experience 110 22 44 66 88 110
(iii) Initiative and ingenuity 70 14 28 42 56 70
2. Effort 75
(iv) Physical demand 50 10 20 30 40 50
(v) Mental or visual demand 25
3. Responsibility 100 5 10 15 20 25
(vi) Equipment process 25 5 10 15 20 25
(vii) Material or Product 25 5 10 15 20 25
(viii) Safety of others 25 5 10 15 20 25
(ix) Work of others 25 5 10 15 20 25
4. Job conditions 75
(x) Working Conditions 50 10 20 30 40 50
(xi) Hazards 25 5 10 15 20 25
In the above table, the total points for a job are 500. Skill carries 50% of the points and these are
further subdivided into education, experience, initiative and ingenuity.
The last step is to evaluate the jobs by assigning points to various factors as laid down in the job
specifications. The total points of a job indicate its relative worth and thereby, its wages.
2. Factor Comparison Method: The factors comparison method was developed in 1926 by E.J. Benge.
This method is different from point method only in respect of yardstick provided for evaluating jobs. Under
this method, only few jobs, called ‘Key Jobs’ are evaluated at the first instance. While selecting key jobs,
the analysts must see that job descriptions of key jobs are available. Key jobs serve as standards against
which other jobs can be compared. A key job is one having standardized contents and well accepted pay
rate. Key jobs should be cross section of all jobs in the organization representing all levels of pay. Job
descriptions are then carefully analysed and the key jobs are then rated in terms of the selected factors by
considering one factor at a time.
140
Steps in Factor Comparison Method
SELECT JOB SELECT KEY DETERMINE
FACTORS JOBS CORRECT RATES
OF KEY JOBS
EVALUATE ALL OTHER ALLOCATE THE CORRECT RANK
JOBS IN TERMS OF RATE OF EACH KEY AMONG JOB FACTORS
THESE FACTORS AS JOB FACTORS
YARDSTICKS
DESIGN, ADJUST
AND OPERATE THE
WAGE STRUCTURE
The factors to be used in this method are generally restricted to 7. Usually the factors considered
are the same as under point system viz., skills, responsibility, working conditions, physical and mental efforts.
Suppose five key jobs are selected. Each job will be given a rank in relation to job factors. For example, five
jobs may be ranked as follows:
Skill Responsibility Efforts Working
Conditions
E C A B
D E B A
C D E C
B A C D
A B D E
The amount is then allocated among the factors for each key job and wages are determined. The
following example shows as to how the wages of key jobs are calculated:
141
Job Factors Job A Rs. Job B Rs. Job C Rs. Job D Rs. Job E Rs.
1. Skill 13.50 6.00 4.50 3.00 12.00
2. Effort 6.00 4.50 5.70 1.50 5.25
3. Responsibility 2.25 1.50 2.55 1.20 3.00
4. Working Conditions 3.75 5.25 3.00 5.40 5.40
Suppose job Z is similar to job A in skill (Rs. 13.50), job B in effort (Rs. 4.50), job C in responsibility
(Rs. 2.55) and job D in working conditions (Rs. 5.40), then correct wage will be Rs. 25.95 (Rs. 13.50 + Rs.
4.50 + Rs. 2.55 + Rs. 5.40).
3. Ranking Method
Rank means ‘to arrange according to classes’. Under this method, each job is compared with other
jobs and then all jobs in an organization are arranged according to their worth or importance as judged by
duties, responsibilities and demands on the job holder. For this purposes, a committee comprising certain
executives is formed. Under this method specific factors are not considered, but the committee does keep in
mind certain factors e.g., type of work, responsibilities involved, working conditions and supervision required.
No weight or points are specified for these factors. The following techniques can be used for ranking jobs:
(a) Job Description: In this technique, a written job description is prepared for every job. The job
descriptions are then studied and analysed to note the differences between them in terms of duties,
responsibilities, skill requirement etc. Each job is then assigned a rank according to its relative
importance. Several raters may independently rank each job from which average ratings are
calculated to determine the final ratings. In this method, the rater is required to keep in mind all the
jobs being ranked which may not be possible when the number of jobs is large. Further, the rater
may overlook significant differences among jobs, due to which accuracy of ranking may be low.
(b) Paired Comparisons: In this method, each job is paired with every other job in the series. The
more difficult job in each pair is identified. Rank is then assigned on the basis of the number of times
a job is rated more difficult.
(c) Ranking along a Number Line: In this technique, ranks obtained through job descriptions and
paired comparisons are spread along a number line. Each job is then placed along the line on the
basis of its closeness to the highest ranked job.
4. Job Grading (or Job Classification Method)
Under this method, yardstick is provided in the form of job classes or grades. The committee goes
through the job description of each job and assigns it a particular grade depending on how well its characteristics
match the grade definitions. A job grade is a group of different jobs of similar difficulty or requiring similar
knowledge and skills to perform. There are different rates of wages for different classes. The jobs may be
graded as skilled, unskilled, routine, administrative etc.
This method is an improvement over ranking method in the sense that predetermined yardstick is
available. Each grade should be sufficiently large to include a number of jobs. The following steps are
involved in job grading:
142
PREPARATION PREPARATION SELECTION OF
OF JOB DESCRIPTION OF GRADE KEY JOBS
DESCRIPTION
CLASSIFY JOBS ASSIGNING A
BY PRE-DETERMINED GRADE TO
GRADES KEY JOBS
ADVANTAGES OF JOB EVALUATION
Job evaluation results in following advantages:
1. The wage differentials are rationally and systematically established.
2. Job evaluation is a logical and objective technique of ranking jobs and thereby removing wage
inequities. Thus it helps in establishing an equitable, rational and consistent wage and salary structure.
3. It helps to improve industrial relations by reducing employee doubts and grievances arising out of
wages.
4. It helps in fitting new jobs at their appropriate places in the existing wage structure.
5. It provides a clear and objective basis for wage negotiations and collective bargaining.
6. It is acceptable to management as well as employees as it reveals jobs which require less or more
skilled workers than those already performing these jobs. In this way job evaluation facilitates
better utilization of the work force.
7. Due to increasing mechanization and automation, performance depends in many cases more on the
machine than on the worker. In such cases, it is unrealistic to pay workers on the basis of their
output. Job evaluation is a realistic basis of wage fixation in these cases.
8. Job evaluation involves detailed analysis of a job. Data generated in job evaluation is very useful in
selection, placement and training of employees.
9. Any dispute relating to wages can be easily settled by referring it to the job evaluating committee.
10. With technological changes, job contents also change. Job evaluation reviews the job rates.
11. It helps in bringing uniformity in wage structure.
12. It provides a sound base for bonus schemes and helps in job classification and work simplification.
LIMITATIONS OF JOB-EVALUATION
1. Job-evaluation cannot be scientific and objective though it is claimed to be so because it is based on
judgement. It is not automatic and is subject to all human limitations. There is no standard list of factors
and some job factors cannot be measured accurately.
143
2. Job evaluation fails to consider several factors which influence the value of a given job from workers’
point of view. Demand and supply of a particular skill, social status, nature of supervision, security of
service, career prospects etc. are such factors.
3. Factors applied, though presumed to be independent, usually overlap. Thus weightage given to them
and their reliability becomes questionable.
4. The effectiveness of a job may differ for the workers, though the jobs are equal on the basis of various
factors. If wages of these jobs are disturbed, it will result into new kinds of problems.
5. Job evaluation makes the wage and salary structure inflexible by freezing wage differentials between
jobs. It makes little provision for adjusting to prevailing wage rates and changing conditions.
6. Its usefulness is restricted only to big concerns as its installation requires time and finance. As job
contents change, revaluation of jobs becomes necessary. Moreover, job standardization essential for
proper evaluation may be difficult under changing conditions.
7. It limits the right of the trade unions to negotiate with the management in respect of fixation of wages.
8. It gives a false impression about the accuracy of fixation of wages. In fact, much has to be done
afterwards for eliminating wages controversies.
9. Usually the factors selected are skill, responsibility, effort and working conditions. Workers insist that
few more should be added viz., supervision received, amount of overtime, innovative plans etc.
10. Some methods of job evaluation are difficult to understand. Workers and trade unions often oppose job
evaluation. They fear that it will do away with collective bargaining for settlement of wage rates.
11 Job evaluation is not well suited to determining the relative worth of managerial jobs. These jobs
involve considerable planning, decision making and supervision of others. These executive skills cannot
be measured in quantitative terms.
*****
144
LESSON-15
INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Learning Objectives:
1. To make students conversant with the concept, meaning and definition of international HRM.
2. To highlight the differences between domestic and international HRM.
3. To study the factors influencing global HRM.
CONTENTS
INTRODUCTION AND MEANING
IMPORTANCE OF IHRM
DIFFERENCES BETWEEN DOMESTIC AND INTERNATIONAL HRM
FACTORS MODERATING THE DIFFERENCES BETWEEN DOMESTIC AND INTERNATIONAL
HRM
FACTORS INFLUENCING THE GLOBAL HRM
INTRODUCTION AND MEANING
International orientation assumes greater relevance as business gets increasingly interlinked across
nations. Maintaining or improving on employment and its quality in a particular country requires that its HR
markets must be responsive not only to changes related to development and growth within the country but
also to changing conditions worldwide. At the same time globalisation creates scope for MNCs and TNCs to
play a role in generating and upgrading of employment and development of human resources in host countries.
Just as the success of a domestic business depends on its human resources, so is the case with an international
business. The competitive edge of MNC in international market depends on the type of people, the willingness
with which they work and the commitment they exhibit towards the organization. The MNC may be having
best of resources at its home country base but without using the manpower these resources cannot be
effectively utilized or transferred to foreign countries.
Thus, an international business must procure, motivate, retain and effectively utilize services of
people both at the corporate office in the home country and at plants in the host countries. This process of
procurement, allocation, the effective utilisation of human resources in an international business is called
International Human Resource Management (IHRM)
Morgan has developed a model of IHRM. According to Morgan, IHRM as the interplay among
three dimensionshumans resource activities, types of employees and countries of operations.
1. The three broad activities of IHRM, namely procurement, allocation and utilization cover all the six
activities of domestic HRM i.e. HR planning, employee hiring, training and development, remuneration,
performance management and industrial relations.
2. The national or country categories involved in IHRM activities are:
(a) the host country where a subsidiary may be located.
(b) The home country where the firm has its headquarters and
(c) Other countries that may be source of labour, finance and other inputs.
145
3. The three categories of employees of an international firm are:
• Host country nationals
• Parent country nationals and
• Third country nationals
Morgan’s model can be illustrated with the help of the following model.
FIGURE 1: TYPE OF EMPLOYEES
A useful definition of IHRM has been offered by Schuler and his colleagues, which takes on board
both strategic and international dimensions of MNC’s HRM and also moves away from the narrower function
of expatriation.
According to them “Strategic IHRM is human resource management issues, functions, policies
and practices that result from the strategic activities of multinational enterprises and their impact on
the international concerns and goals of those enterprises.”
IMPORTANCE OF IHRM
International HRM is of growing importance for a number of reasons, the most significant of these are:
1. Globalisation of business has added to a number of multinational enterprises across the global
resulting in greater mobilisation of human resources.
2. The effective management of human resources internationally is increasingly being recognised as
a major determinant of success or failure in international business.
3. Underperformance or failure in overseas assignments is costly, both in terms of human resources
and finance and the indirect costs of poor performance in international assignments such as damage
to foreign customer relations may be particularly costly.
4. In international business, HR play a significant role in implementation and control of strategies.
Implementation, which is more crucial than crafting of strategies, is not possible through structural
innovation but can be done with radical organization cultures. Cultures are built by proactive HR
policies and actions.
146
Research evidence shows that:
• Shortage of international managers is becoming an increasing problem for international firms.
• To a large extent the successful implementation of global strategies depends on the existence of an
adequate supply of internationally experienced managers.
• Business failure in the international arena may often be linked to poor management of human
resources and
• Expatriate failures continue to be a significant problem for many international firms.
In view of the above problems it can be argued that:
i. HRM at any level is important to strategy implementation. The movement away from more traditional
hierarchical organizational structures towards the network organization has been facilitated by the
development of networks of personal relationships and horizontal communication channels and
undoubtedly, human resources play a very significant role in network organizations.
(ii) Major strategic components of MNCs have a significant bearing on international management
issues, functional policies and practices.
(iii) Many of these characteristics of strategic IHRM can help or hinder the MNCs in their attempt to
achieve their goals and objectives and
(iv) There are various factors that make the relationship between MNCs and strategic IHRM complex,
thereby making the study of IHRM important.
DIFFERENCES BETWEEN DOMESTIC AND INTERNATIONAL HRM
Major points of distinction between domestic and international HRM are as follows:
1. More Human Resource Activities: The scope of IHRM is much broader than the domestic
HRM. Be it employee selection, training or compensation, IHRM adds new dimensions which are
neither being felt nor observed in DHRM. In addition to the basic human resource activities, IHRM
has to take into consideration host country laws and regulations, language, translation services,
international taxation, international orientation and re-allocation and administrative services for
expatriates.
2. Perspective: IHRM requires a much broader perspective on even the most common HR activities
as compared to the domestic HRM. For example, while dealing with pay issues, the corporate HR
manager must co-ordinate pay systems in different countries with different currencies that may
change in relative value to one another over time. Similar complications tend to arise while handling
fringe benefits. The most common HR activities have to be handled in different ways in IHRM,
because HR managers working in the global environment face the problem of designing and
administering programmes for more than one country. People in different nations have different
perceptions about different things. MNCs operating in these countries need to be aware of the
varied perceptions. They have to modify some of their policies to suit the local sentiments. For
example, in Australia and Singapore, if the work load increases, firms are most likely to add more
staff, whereas in Korea and Japan, firms prefer that the existing employees work longer hours. A
strong practice in Korea, Singapore, Japan and Indonesia has been that a family man should be paid
more for the same job than a single woman. This conviction is strongly opposed by female workers
in Asia.
147
3. Human Resource Services: Majority of international business houses maintain international human
resource services section to provide services to the parent country and third country nationals such
as handling of their banking, investments, housing arrangements, health care and co-ordinating home
visits etc. The HR department needs to ensure that the expatriate employees understand all these
arrangements related to their foreign assignments. A great degree of involvement is thus needed in
the personal lives of the employees for selection, training and effective management of parent country
and third country nationals.
Involvement of the HR department in the personal lives of the employees is very much limited in
domestic HRM. Domestic HRM may provide employee insurance or at the time of transfer, some
assistance may be provided in relocating the employee and his family. But the domestic HRM does
not involve itself in the personal lives of the employees more than these. In the international setting,
however, the HR department must involve itself more and understand the personal lives to provide
the service and support needed by them. Some firms in addition to providing suitable housing and
schooling in the assigned location also help children who are left behind at boarding schools in the
home country. These issues are not considered in domestic HRM.
4. Enhanced Emphasis: Once the international business develops, the emphasis placed on various
HR activities change. The need to enhance emphasis in HR activities, as the MNC develops, broadens
the responsibilities of the local HR activities. For example, in the initial stages, the MNCs use the
employees from the home country or the third nation and the emphasis of HR activities is on expatriates,
their relocation, orientation, welfare etc. But as the MNC matures, trained locals become available
and the emphasis shifts to selection, training and development. Thus, with the development of MNCs
the emphasis on HR activities keeps on changing, whereas in domestic HR, the emphasis remains
the same.
5. Exposure to Risks: Domestic HR is less exposed to risks as compared to IHRM. Unfair hiring
practices of the firm may result in a firm being charged with the violation of constitutional provisions.
Any violation of such provisions can result in penalties imposed on the firm. Risks of strikes and
labour unrest can result from the failure to maintain cordial relations with the worker unions.
In IHRM, the above mentioned risks exist and in addition, there are some other unique and more
threatening risks:
(a) Depending on the countries where the MNCs operate, physical safety of the employees is a major
concern for the HR managers as well as for the headquarter. Terrorism poses a great risk to
international operations. Firms have to spend a major portion of their revenues on protection against
terrorism. Such risks are not faced by domestic HR managers.
(b) In highly volatile assignment locations the HR department may also be required to devise emergency
evacuation procedure.
(c) The risks associated with wrong selection-decision are very high. If managers/employees do not
perform well and have to be recalled to the home country, their failure brings huge financial losses
for the firm.
(d) Another risk is that of expropriation or seizure of MNC’s assets in a foreign country by the Government
of that country.
148
(e) In many countries kidnapping and terrorism pose a great risk to international operations.
If the unions, political groups or government of the host country are not happy with the policies of the
MNC, the firm may be asked to leave the country, have its assets seized or the government taking
the majority control of its operations. This type of risk is not faced by local HRM.
6. External Influence: External factors influence the international HRM to a larger extent as compared
to the local HRM. MNCs occupy an important and more visible place in the host countries, particularly
in the developing countries. The HR managers of these companies have to deal with ministers,
political leaders and many economic and social interest groups which DHR managers would not
encounter. Host country government can dictate the selection procedures also. The HR managers
also need to learn and interpret the local ways of doing business and the general code of conduct
regarding various other activities e.g. giving gifts etc. In developed countries, labour is more expensive
and better organized than in less developed countries and governments require compliance with
guidelines such as labour relations, taxation, health and safety. Further, the HR manager will become
more involved in administering benefits such as housing, education and other facilities that are readily
available in the host country.
FACTORS MODERATING THE DIFFERENCES BETWEEN DOMESTIC AND
INTERNATIONAL HRM
The above discussion indicates that the complexity involved in operating in different countries and
employing different national categories of employees is a key variable that differentiates between domestic
and international HRM. In addition to complexity, there are three other variables that moderate (either diminish
or accentuate) differences between domestic and international HRM. These four moderators are:
• The Cultural Environment
• The Industry (industries) with which the MNC is primarily involved.
• The Extent of Reliance of the multinational on its home country domestic markets.
(A)THE CULTURAL ENVIRONMENT
Management of human resources of a company does not take place in a vacuum. Various factors
inside and outside the company influence its shape and content. One of the major external factors is the
cultural environment within which the company operates. Because international business involves the interaction
and movement of people across national boundaries, an appreciation of cultural differences and when these
differences are important becomes all the more essential.
Culture is a concept which has aroused controversy and confusion among scholars as to its precise
meaning and definition. The term is usually used to describe a shaping process. That is, members of a group
or society share a distinct way of life with common values, attitudes and behaviour that are transmitted over
time in a gradual, yet dynamic process. People are not born with culture, rather they acquire it through the
socialisation process that begins at birth. Culture is different between nations. A nation’s culture is shaped by
historical, geographical and philosophical factors. In management studies, the recognition of cultural differences
among different people is even more important as it helps in understanding the motives and behaviour of
those with whom we interact. Many scholars have written in detail about various culturally influenced work
related attitudes and values and explored how they might affect different aspects of organization and their
interaction with their cultural context. In addition it has been argued that certain people related issues such as
HRM more readily influenced by culture as compared with the hard aspects such as financial and technical
matters.
149
An awareness of cultural differences is essential for the HR managers at the corporate headquarters
as well as in the host location. The culturally insensitive attitudes and behaviours stemming from ignorance or
from neglected beliefs like ‘My way is best’ or ‘what works at home will work here’, are not only inappropriate
but often cause international business failure.
The major cultural work related attitudes and values which are likely to shape human behaviour
include attitude to power and authority, tolerance for ambiguity and uncertainty, attitude to risk and risk taking,
individualism, self orientation, collectivism, group orientation, acceptance of responsibility, interpersonal trust,
attitude to the other persons’ opinions, attitude to sharing information and knowledge with others, preference
for certain leadership behaviour, preference for independence and autonomy, self confidence, self reliance,
achievement orientation, ambition, attitudes to conflict and harmony, work ethics, etc.
Coping with cultural differences and recognising how these differences are relevant are a constant
challenge for international firms. Helping to prepare staff and their families for working and living in a new
cultural environment has become a key activity for HR departments in those MNCs that appreciate or have
been forced to appreciate the impact that the cultural environment can have on staff performance and well
being.
(B) THE INDUSTRY TYPE
The industry (or industries if the MNC is a conglomerate) in which the MNC is engaged is of
considerable importance because patterns of international competition vary widely from one industry to
another. At one end of the continuum of international competition is the Multidomestic industry in which
competition in each country is essentially independent of competition in other countries. Traditional examples
of this industry are retailing, distribution and insurance. At the other end of the continuum is the Global
Industry, one in which a firm’s competitive position in one country is significantly influenced by its position in
other countries. Examples of this industry are commercial aircraft, semi-conductors etc.
The role of the HRM function in multidomestic and global industries can be analysed using Porter’s
model. According to Porter, “The global industry is not merely a collection of industries but a series of
linked domestic industries in which the rivals compete against each other on a truly world wide basis.
In a multidomestic industry, the international strategy collapses to a series of domestic strategies. The
issues that are uniquely international revolve around how to do business abroad, how to select good
countries in which to compete or to assess country risk and mechanisms to achieve the one time
transfer of know-how. In a global industry, however, managing international activities like a portfolio
will undermine the possibility of achieving competitive advantage. In a global industry, a firm must in
some way integrate its activities on a world wide basis to capture the linkages among countries.”
If the firm is in a multidomestic industry, the role of the HR department will most likely be more
domestic in structure and orientation. The main role for HRM function would be to support the primary
activities of the firm in each domestic market to achieve a competitive advantage through either cost efficiency
or product/service differentiation. At times, there may be demand for international services from the HRM
function but these activities would not be pivotal-indeed many of these services may be provided via consultants
and/or temporary employees.
If the firm is in a global industry, the HRM function will be structured to deliver the international
support required by the primary activities of the multinational.
150
(C) RELIANCE OF THE MNC ON ITS HOME COUNTRY DOMESTIC MARKET
A very important but often ignored factor which influence the HR practices in multinationals is the
extent of the reliance of the MNC on its home country domestic market. However, size is not the only key
variable when looking at a MNC - the extent of reliance of the MNC on its home country domestic market is
also very important. In fact, for many firms, a small home market is one of the major motives for going global.
According to a survey of foreign direct investments conducted by the UNCTAD, the top ten MNCs of the
world are RIO Tinto (UK/Australia), Thomoson Corporation (Canada), ABB (Switzerland), Nestle
(Switzerland), British American Tobacco (UK), Electrolux (Sweden), Interbrew (Belgium), Anglo American
(UK), Astrazeneca (UK) and Philips Electronics (Netherlands).
There is not a single US firm in the above mentioned list. The reason for this is as obvious as it is
important - the size of the domestic market for US firms. The demands of a large domestic market present a
challenge to the globalisation of many US firms. MNCs from small advanced economies like Sweden,
Switzerland, Belgium and the Netherlands are in a very different position to US MNCs based in the largest
single national market in the world.
FACTORS INFLUENCING THE GLOBAL HRM
Environmental changes provoke managerial responses which, in turn alter the global
work environment. The various factors which influence the global HRM are:
◆ Forces for change
◆ Requirements for MNCs
◆ Managerial responses
All these elements are crucial for the survival and growth of the international firms. These are
discussed in detail as follows:
1. Forces for Change
The most predominant features of our current environment is one of rapid change. In the current
global workplace, the key trends that are generally accepted to be forces for change are as follows:
(i) Growth in Mergers, Acquisitions and Alliances: A contributing element as well as a response to
global competition has been an increase in the number of mergers and acquisitions (M and As) and the
formation of strategic alliances. The past decade has seen a plethora of mergers and acquisitions as a
form of market entry and expansion. There are considerable challenges involved in successful M and
As. It is never a simple process to integrate two existing firms into one entity. The recent merger of the
computers firms Hewlett-Packard and Compaq highlights the complexity of the integration process.
Most M and As fail because the integration of the acquired company into the new company does not go
well. One must have the human side of it done very well - who is staying, who is leaving, those who are
staying have to be moulded to suit the company’s value proposition and culture.
(ii) Global Competition: As more and more firms from numerous countries become internationalised, the
levels of competition increase. Increased global competition not only impacts the firm’s competitive
position, but also the dealings with issues related to business ethics and social responsibility, that has
become a priority for MNCs involving HR managers. As firms from developing nations and transitional
economies become more involved with global economies (such as the emergence of Chinese MNCs),
concerns have been expressed about the desirability of globalisation of trade and business. Demonstration
and debates in various countries against ‘globalisation’ are perhaps indicative of this.
151
(iii) Organisational Restructuring: Organisational change is a fact of life. Firms have to constantly
restructure their operations and activities to support changes as a consequence of growth and changes
in environment. However, the rate of structural changes has increased exponentially with global
competition. The past decade has seen large scale retrenchments as firms outsource these activities,
sell underperforming units, engage in plant rationalisation, integrate acquired operations and merge
businesses. In order to perform their role in a better way, it would seem important that the HR managers
understand the various international structural options-alongwith the control and coordination elements
imposed by international growth and the HR implications that accompany the range of operation modes.
(iv) Advances in Technology and Tele-Communication: Advances in technology and telecommunication
have developed new ways of conducting international business, although these have not yet lived up to
expectations. Arrangements such as virtual teams have facilitated project work across time zones and
national boundaries, constant communication via digital mobile phones and email have assisted managerial
handling of crisis and situations. Computerised processes and procedures have enhanced production
and improved working conditions. All these changes have implications for the way in which people are
managed.
2. Requirements for Multinational Management
As a consequence of the above forces for change, following are the impacts on multinational
management:
(i) Flexibility: The MN management must provide for flexibility in terms of management approaches
and action. Large firms have tended to become bureaucratic over time as control and coordination
concerns arise.
(ii) Local Responsiveness: The mantra of 1990s was ‘Think Global-Act Local’. A slogan to remind
managers in global firms that subsidiaries required some freedom to act according to their local
environment with a simultaneous requirement for anover all view of the firm’s global position. The
challenge is how to enable local responsiveness without affecting overall corporate cohesion. Firms
are still trying hard to find ways in which to achieve this objective.
(iii) Knowledge Sharing: Knowledge sharing is an important consideration for the managers of the firms
growing internationally. Structural changes need to be made in order to dismantle functional and unit
boundaries to counter the mentality of those employees who protect their territory and are unwilling to
share resources and knowledge. The challenge before the management is how to leverage knowledge
and information that is embedded in the various parts of the MNC so that the necessary know how can
be transferred where needed. Organisations need to provide an encouraging environment-using reward
systems and communication networks that promote knowledge sharing.
According to Kamoche, “The scope for organizational learning exists if the knowledge acquired
by individuals in international assignments can be diffused across the organisation.
(iv) Transfer of Competence: Competence is also regarded an a source of competitive advantage.
Human competence refers to the knowledge, skills and abilities required in competent work performance
and is fundamental to organisational viability. Firms can develop required levels of competence through
hiring practices and training programmes.
According to Hamel and Prahalad “A core competence is the sum of learning across individual
skills, sets and individual organisational units.”
152
The management challenges is to identify what is core competence, where it resides and how it can be
protected, nurtured and exploited for competitive advantage. The challenge is more for the dispersed
MNC with diversed global units and employees from different global backgrounds. The management
must develop an effective mechanism to encourage openness to new ideas and new ways of working
to counter the negative attitudes that form barriers to the transfer of new skills.
3. Managerial Responses
The various managerial responses to the requirement of multinational management are discussed as
follows:
i. Developing Global Mindset: A global mindset or perspective should be developed throughout
the firm to encourage employees in various locations and functions to view activities as part of the
corporate whole. Regional and global meetings and training programmes held in rotating locations,
staff exchanges and cross border teams are ways in which MNCs can provide opportunities for
employees to see the bigger picture.
ii. Informal Control Mechanisms: Informal control mechanisms like personal networks and corporate
culture have been advocated as a way of developing responsibility to enhance local responsiveness
and flexibility. Infact, there is a strong argument that organisations are tending to place more weightage
on the informal mechanisms to facilitate control and coordination.
Organisations need processes and forums where staff from various units can develop personal
relationships that can be used for organisational purposes, because network relationships are built
and maintained through personal contracts.
There has been evidence of MNCs where corporate culture is superimposed upon national cultures
in subsidiary operations. However, its advocates emphasise on developing voluntary adherence to
corporate behavioural norms and expectations through the process of internalisation of corporate
values and beliefs. Building shared values across global units represents an alternative solution to
the governance problems in MNCs.
iii. Horizontal Communication: Horizontal communication, fostered through the use of less
hierarchical structures flowing through informal conducts such as personal networks, has also been
suggested as a way of enhancing a global perspective and encouraging knowledge sharing.
iv. Cross-Border and Virtual Teams: The formation of cross border even virtual teams is another
way of encouraging network building, knowledge sharing, competency development and transfer.
v. International Assignments: International assignments have been a time honoured way of achieving
a broader perspective at the individual level and as a mechanism for transferring information, skills
and knowledge for the benefit of the organisation, while maintaining cohesion and control.
*****
153
LESSON-16
MANAGING INTERNATIONAL HR ACTIVITIES
Learning Objectives:
1. To give general idea of the term ‘international HR activities’.
2. To make students conversant with the process of international HR activities.
CONTENTS
MEANING OF INTERNATIONAL HR ACTIVITIES
PROCESS OF MANAGING INTERNATIONAL HR ACTIVITIES
MEANING OF INTERNATIONAL HR ACTIVITIES
International Human Resource Management (IHRM) can be defined as a set of activities targeting
human resource management at the international level. It strives to meet organizational objectives and achieve
competitive advantage over competitors at national and international level.
PROCESS OF MANAGING INTERNATIONAL HR ACTIVITIES
Managing interactional HR activities is an elaborate and complex task. The following Figure 2 outlines
the basic steps involved in international HR activities.
I) HR Planning (HRP)
HRP assumes greater relevance in intemational businesses where efficient use of human resotlrces
is necessary to realise strategic global objectives. But the implementation of HRP procedures may be difficult
in some host countries than in others. In cultures where people are viewed as being basically subjugated to
nature, there is very little need for HRP. The implementation of extensive HRP systems in such cultures
would be met with bewilderment at best and significant resistance at worst. Likewise, societies that are
oriented towards the present would not view longterm planning as valuable. In societies oriented towards the
past, planning would tend to focus on purely historical data and the use of these data in predicting furure HR
needs. Such an approach might be appropriate for firms that operate in relatively stable environments, but
would not work well for firms operating in highly volatile environments, where the past has little to do with the
future.
154
FIGURE 2: BASIC STEPS IN INTERNATIONAL HRM
HRP
Recruitment & Selection
Training & Development
Performance Management
Remuneration
Repatriation
Employee Relations
Multicultural Management
Some major issues in HR planning in international business are as follows:
(i) The potential of the international top management has to be identified at the earliest stage.
(ii) For future international managers, critical success factors have to be identified.
(iii) Development opportunities for the personnel have to be provided for.
(iv) Commitment to individuals in international career plans have to be identified and maintained.
(v) Strategic business planning has to be co-ordinated with the HR planning.
(vi) Global and regionally focused strategies have to be achieved and simultaneously multiple business
units have to be dealt with.
The major functions of the IHRM are related to recruitment, selection and development of employees.
These functions are explained in detail as follows:
II) RECRUITMENT AND SELECTION
Recruitment is the process of searching for prospective employees and stimulating them to apply for
jobs in the organisation. When more persons apply for jobs then there will be a scope for recruiting better
persons. The job-seekers too, on the other hand, are in search of organisations offering them employment.
Recruitment is a linkage activity bringing together those with jobs and those seeking jobs.
Recruitment, according to Yoder, “is a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that manpower
in adequate numbers to facilitate effective selection of an efficient working force.” Recruitment is the
process which prompts people to offer for selection in an organisation. This involves locating sources of
O
R
G
A
N
I
S
A
T
I
O
N
A
155
manpower to meet job requirements. In his words, “It is a process of searching for prospective employees
and stimulating and encouraging them to apply for jobs in an organisation. It is often termed positive
in that it stimulates people to apply for jobs to increase the hiring ratio, i.e., the number of applicants
for a job.”
The appointment of suitable persons on various jobs is very essential. The selection of a wrong
candidate will mean loss of time and money which have been incurred in this process. It also leads to
absenteeism and retrenchment. This calls for a properly planned recruitment and selection process. After the
receipt of appropriate number of applications through various sources of recruitment, the selection process
starts. It is concerned with securing relevant information about the applicants. The purpose of the selection
process is to determine whether a candidate is suitable for employment in the organisation or not. All persons
who have applied may not be suitable. Moreover, the number of applicants will be much more than the
positions vacant. It becomes all the more important to scrutinize applications properly so that those who are
found unsuitable at the first instance should not be called for tests or interviews. This will save time and
money of the enterprise as well as the candidates.
The procedure to be followed for selecting an employee may be different for various jobs. If the job
is not very important then a simple procedure may be followed. For employing unskilled workers, the personnel
manager may select them after a brief interview. If skilled and unskilled persons are to be selected then
foreman may interview them and also test their experience by asking them to work on jobs. When the
position to be filled is important, then a number of steps may be followed before a person is finally selected.
III) TRAINING AND DEVELOPMENT
Every organisation needs the services of trained persons for performing the activities in a systematic
way. The fast changing technological development makes the knowledge of employees obsolete. They require
constant training to cope with the needs of the jobs. Training is an organised procedure for increasing the
knowledge and skills of people for a specific purpose. The trainees acquire new skills, technical knowledge,
problem-solving ability, etc. It also gives an awareness of the rules and procedures to guide their behaviour.
Training improves the performance of employees on present jobs and prepares them for taking up new
assignments in future.
The mangers or executives are the most important and valuable assets of an organisation. Their
development has become one of the most important and complex tasks of human resource management.
Since World War II, tremendous emphasis has been laid on the development of executive talent in the field of
management. The dramatic change in the area of management development has been named as ‘Management
Revolution’. It has now been well recognised that qualified executives are needed throughout the industry
and trade and do not just emerge from labour force without consciously planned action on the part of the
organisation. The process of development and training are often confused. Training means learning the basic
skill and knowledge for a particular job or a group of jobs and there is no choice with the employer whether
to train or not. The only choice is that of the method to be employed. It occurs as a result of controlled
external stimulation but development takes place when the individual is internally motivated.
Development means self development and an organisation is only to provide the necessary conditions
for the development. The initiative for development should be taken by the individual himself. Moreover, it
develops the overall personality of the individual while on the other hand, the training programme seeks to
develop the skills and knowledge for a particular job.
156
According to Dale Yoder, “The use of the terms training and development in today’s employment
setting is far more appropriate than training alone since human resources can exert their full potential
only when the learning process goes far beyond simple routine.”
Executive development consists of all the activities by which executives learn to improve their behaviour
and performance. It is designed to improve the effectiveness of managers in their present jobs and to prepare
them for higher jobs in future.
According to Michael J. Jucius, “Executive development is the programme by which executive
capacities to achieve desired objectives are increased.”
Management development according to Edwin B. Flippo, “includes the process by which the
managers and executives acquire not only skills and competency in their present jobs but also
capabilities for future managerial tasks of increasing difficulty and scope.”
Thus executive development is a planned effort to improve current and future managerial performance.
The executive development programme is needed for all levels of executives-top, medium and low, who
direct, control and coordinate various activities of people and organisation.
FEATURES OF EXECUTIVE DEVELOPMENT
An analysis of the above mentioned definitions reveals the following characteristics of executive
development:
1. Executive development is a planned, organised and systematic process of learning.
2. It is a continuous process, it continues throughout an executive’s entire professional career because
there is no end to learning.
3. Managerial skills cannot be developed over night or in one shot. It is a long-term process.
4. Executive development is guided by self development.
According to Michael Armstrong, “Executive development is eventually something that the
executive has to attain himself. But he will do this much better if he is given encouragement,
guidance and opportunity by his company.
5. The aim of development is to prepare managers for better performance and helping them to realise
their full potential.
TRAINING AND DEVELOPMENT IN INTERNATIONAL HRM
Any person, who has to leave for a foreign assignment, needs pre-departure training.
A few commonly understood objectives of training in the multinational corporations are:
1. Bridging the cultural gaps between the host and the parent organizations.
2. Recognising that orientation/induction challenges are different for the parent and the host unit.
3. Ensuring that organizational success is critical in achievement of global objectives.
4. Building a united corporate culture across subsidiaries.
Expatriate training is needed to reduce the failure rate. Following are the various kinds of training needed by
the expatriates :
1. Cross Cultural Training (CCT): Cross Cultural Training seeks to foster an appreciation for the host
country/s culture. The belief is that understanding the host country/s culture will help the manager
empathise with the culture, which will enhance his or her effectiveness in interacting with host-country
157
citizens. An expatriate should receive training in the host country’s culture, history, politics, economy,
religion, and social and business practices. If possible, it is also advisable to arrange for a familiarization
trip to the host country before the formal transfer, as this is likely to ease a likely cultural shock. Given
the problems related to adaptation of spouse in the host country, it is important that the spouse and
perhaps the whole family, be included in the training programs. Often, CCT includes counseling on
return to home base to prevent reverse culture stock.
The increased globalisation of business all over the world has made the cultural training more important
as more and more people are travelling around the globe frequently on business deals. Ranbaxy and
Mafatlal are the groups which have recognised the importance of cultural training.
Advantages of CCT
◆ Increases chances of success in global assignment
◆ Provides a comprehensive global perspective for managers
◆ Instills a sense of confidence into people
◆ Foreign employees can be managed better
◆ Reduces culture shock.
Disadvantages
◆ Develops a false sense confidence among expatriates
◆ May not remove cultural biases and prejudices
◆ May not be taken seriously by the recipients
◆ May not make a visible difference on business volumes.
2. Language Training: Language training is a seemingly obvious and desirable component of a pre-
departure programme. English is the major and universal language of international business and
majority of people working in MNCs speak their language. But people who can speak only English
are at a disadvantage in nonEnglish speaking countries like China, Russia and Germany. Language
training acquaints people with the language of the host country. This training is a very obvious and
desirable component of overseas training. Ability to communicate in the host country language will
help build rapport with local employees and improve the employee’s effectiveness. Hence, language
training is very important. However, most of the MNCs do not give much importance to language
training.
3. Practical Training: Practical training seeks to help the expatriate manager and family feel ‘at
home’ in the host-country. Sooner the expatriate settles down, better are the prospects that he/she
and his/her family will adapt successfully. One important need is for a support network of friends.
Where an expatriate community exists, firms often try to integrate the new expatriate family quickly
into that group.
The expatriate community can be a useful source of support and information, and can help the
family to adapt to an alien culture.
HCN Training
It is not that an expatriate alone who needs to be trained. A HCN who is tipped to head a subsidiary
should also be trained. In selecting a host country national for a subsidiary the focus is on ascertaining the
technical and managerial fit for the role. In preparing a host country national for the assignment, the priority
158
in training is the knowledge and the awareness of the parent company, beginning with the history and genesis
of the organisation, connecting with its vision/mission, goals and the specific objectives of the subsidiary.
Specifically, HCN training should focus on gaining knowledge about the parent organisation and its global
presence and objectives, on acquisition of technical know-how specific to the organization, on role of the
subsidiary in the MNCs road map both from the technological as well as corporate cultural perspective and
on general awareness of the parent country cultural norms.
MANAGEMENT DEVELOPMENT
MNCs are using management development as a strategic tool. This is particularly true in firms
pursing a multinational strategy which is a common feature among firms these days. Such firms need a
strong, unifying corporate culture and informal management networks to assist in co-ordination and control.
In addition, MNCs need to be able to detect pressure to conduct business in a locally-responsive manner. This
obviously demands knowledge about country culture. The management development programmes help build
a corporate culture by encouraging new managers to socialise and imbibe the values and norms of the firm.
In-house training progammes and interaction during off site training can develop a spirit of espirit-de-corps,
shared experiences as well as competencies. These programmes often include picnics, songs and sports
events that develop feelings of togetherness. Bringing managers together in one location for extended periods
and rotating them through several jobs in different countries help the firm in building an informal management
network. An example in this context is Ericsson, a Swedish telecommunications company. Inter unit co-
operation is extremely important at Ericsson, particularly for transferring know-how and core competencies
from the parent company to its subsidiaries, from subsidiaries to the parent and among the subsidiaries
themselves. To facilitate co-operation, Ericsson transfers large numbers of people back and forth between
headquarters and subsidiaries. This establishes a network of interpersonal contacts. This philosophy is effective
for both giving shape to a common culture in the company and co-ordinating the firm’s globally dispersed
operations.
IV) PERFORMANCE MANAGEMENT
One of the most challenging tasks of IHRM is managing the performance of a firm’s various
international facilities. While recruitment, selection, and training and development tend to focus on pre-
assignment issues, performance management looks at post-assignment performance-related issues.
Performance management may be understood as a process that enables an MNC to evaluate and facilitate
continuous improvement of individuals, subsidiary units, and corporate performance, against clearly-define,
pre-set goals and targets. Obviously, performance management is comprehensive in as much as it includes
assessment of the performance of not only individuals but the activities of the firm and its subsidiaries too.
The focus is mainly on assessment of expatriate performance. In the international context, expatriate
performance management comprises several steps: linkage with organisational strategy, setting performance
goals, identifying variables impacting performance, appraising the performance, providing feedback, offering
opportunities for improvement and linking results with rewards.
V) REMUNERATION/COMPENSATION
Yet another activity that receives considerable attention of the international HR manager is designing
attractive remuneration packages for the expatriates. HR managers spend a great deal of time developing
effective compensation and benefits programmes for international employees because they are high cost
employees. To successfully manage these programmes, the HR managers require knowledge of employment
159
and taxation laws, customs, environment and employment practices of many foreign countries, familiarity
with currency fluctuations and the effect of inflation on compensation and an understanding of why and when
special allowances must be supplied and which allowances are necessary in which countries. The level of
local knowledge needed in many of these areas requires specialist advice and many MNCs retain the services
of consulting firms which may offer a wide range of services or provide highly specialized services relevant
to HRM in a global context.
While developing international compensation a firm seeks to achieve several objectives such as:
1. The compensation policy should be consistent with the overall strategy, structure and business needs
of the MNC.
2. The policy must work to attract and retain staff in the areas where the MNC has the greatest need and
opportunities. Hence the policy must be competitive and recognise factors such as incentive for foreign
service, tax equalisation and reimbursement of reasonable costs.
3. The policy should facilitate the transfer of international employees in the most cost effective manner
for the firm.
4. The policy must give due consideration to equity and case of administration. The international employees
have the following expectations from the firm’s compensation policy:
(i) The employees expect the policy to offer financial protection in terms of benefits, social security and
living costs in the foreign location.
(ii) The employee will expect a foreign assignment to offer opportunities for financial achievement through
income and/or savings.
(iii) The employees will expect issues such as housing, education of children and recreation to be addressed
in the policy.
(iv) The employees also have expectations in terms of career advancement. Generally, the following problems
crop up while designing an international remuneration package:
l. Discrepancies in pay between parent, host and third-country nationals.
2. The need to vary expatriate compensation, depending on the ‘stage of life cycle’of the expatriate’s
family (e.g. young children, children in college, etc).
3. Remuneration issues related to re-entry into the parent-country organisation.
4. Remuneration issues to deal adequately with new waves of change in the international business
environment.
Expatriate compensation depends on internal as well as external factors as shown in the following
figure. Internal factors include goal orientation, capacity to pay, labour relations, subsidiary role and the
like. Parent nationality, local culture, industry type and the like constitute external factors of expat
compensation. These variables are self-explanatory.
160
FIGURE 6: FACTORS INFLUENCING INTERNATIONAL COMPENSATION
The expat remuneration package generally comprises salary benefits, allowances, incentives and taxes.
Base Salary: The term base salary acquires a somewhat different meaning when employees go
abroad. In a domestic setting, base salary denotes the amount of cash compensation that serves as a benchmark
for other components (e.g. bonuses and benefits). For expatriates, base salary is the primary component of a
package of allowances, many of which are directly related to the base salary (e.g. foreign service premium,
cost-of-living allowance, housing allowance) as well as the basis for in-service benefits and pension
contributions. It may be paid in home-country or host-country currency. The base salary is the foundation
block for international remuneration whether the employee is a parent-country or third-country national.
FIGURE 7: COMPONENTS OF EXPAT COMPENSATION
Salary
Taxes Benefits
Expart
Compensation
Incentives Allowances
161
Benefits: Benefits constitute a major element of the remuneration of a regular employee. These
benefits comprise a similar, or even larger, portion of expatriate remuneration. However, several thorny
issues surround benefits package to expatriates. These include:
l. Whether MNCs should maintain expatriates in the home-country benefits prograrnmes, particularly if
these programmes are not tax-deductible,
2. Whether MNCs have the option of enrolling expatriates in the host-country benefits programmes and/
or making up for any difference in coverage,
3. Whether host-country legislations regarding termination of employment affect the employee benefits
entitlement,
4. Whether the home or the host country is responsible for the expatriate social security benefits,
5. Whether the benefits should be subject to the requirement of the home or the host country,
6. Which country should pay for the benefits,
7. Whether other benefits should be used to offset any shortfall in the coverage and
8. Whether home-country benefits programmes should be available to local citizens.
Allowances: Allowances are an expensive feature of expatriate remuneration package. One common
allowance relates to the cost-of-living allowance-a payment for differences between the home-country and
the overseas assignment. This allowance is designed to provide the expatriate with the same standard of
living that he or she enjoyed in the home-country and it may cover a variety of expenses, including relocation,
housing, education, and hardship. In any expatriate remuneration package, the unique feature is spouse
assistance. Many MNCs offer spouse assistance to help guard against or offset the income lost by an
expatriate’s spouse as a result of relocation abroad. Although, some firms may pay an allowance to make up
for a spouse’s lost income, the US firms are beginning to focus on providing spouses with employment
opportunities abroad, either by offering job search assistance or employment in the firm’s foreign subsidiary.
Incentives: In recent years, some MNCs have been designing special incentives programmes for
keeping expatriates motivated. In the process, a growing number of firms have dropped the ongoing premium
for overseas assignment and replaced it with one-time lump-sum premium. For example, in the early 1990s,
over 60 per cent of MNCs gave ongoing premiums to their expatriates. Today, the figures have come down
to 50 per cent and the declining trend continues.
The lump-sum payment has at least three advantages. First, expatriates realise that they are paid this
only once and that too when they accept an overseas assignment. So the payment tends to retain its motivational
value. Second, costs to the company are less because there is only one payment and no future financial
commitment. This is so because incentive is a separate payment, distinguishable from a regular pay, and it is
more readily available for saving or spending.
Taxes: The final component of the expatriate’s remuneration relates to taxes. MNCs generally select one of
the following approaches to handle international taxation.
1. Tax equalization: Firms withhold an amount equal to the home-country tax obligation of the expatriate,
and pay all taxes in the host country.
2. Tax protection: The employee pays up to the amount of taxes he or she would pay on remuneration
in the home country. In such a situation, the employee is entitled to any windfall received if total taxes
are less in the foreign country than in the home country.
162
Tailoring the Package: Working within the components described above, MNCs seek to tailor
remuneration packages to fit with the specific situation. For example, senior-level managers in Japan are paid
four times more than their junior staff members. This is in sharp contrast to the US, where the gap is much
higher. Many senior-level managers in Europe are paid much less than their US counterparts. In designing an
expat’s remuneration, MNCs generally follow a number of approaches. The most common is the Balance-
Sheet Approach, which envisages a compensation package that seeks to equate or balance an expat’s
purchasing power in the host country with the purchasing power in his or her home country. In order to
balance the compensation received for the international assignment with compensation received in the home
country, MNCs usually provide additional salary.
This increased salary includes adjustments for differences in taxes, housing, and the costs of basic
goods and services. Goods and services include items such as food, recreation, personal care, clothing,
education, furnishing. transportation and medical care. This approach is most common and majority of MNCs
use balance sheet approach to compensate their expats.
A second approach to expat compensation is the Going-Rate Approach. In this, the expat
compensation is linked to the salary structure in the host country. A third approach is Lump Sum Method,
which involves giving the expat a predetermined pay and letting the individual decide about how to spend it.
Fourth is the Cafeteria Approach, which entails giving expats a series of options and then leaving him or her
how to spend the available funds. Last is the Regional System, under which the MNC sets a compensation
system for all expats who are assigned to a particular region. Thus, everyone going to Europe falls under one
particular system and everyone going to South Africa falls under a different system.
VI) REPATRIATION
Any discussion on expatriates should include their repatriation-the activity of bringing the expatriate
back to the home country. It has been the knowledge of practitioners and academics that re-entry into the
home country presents new challenges as the repatriate (returning person) copes with what has been termed
re-entry shock, or reverse culture shock. While people expect life in a new country to be different, they may
be less prepared for a possible problem of adjustment upon home-coming. As a consequence, it can be a
traumatic experience for some, even more than what was encountered in a foreign location. An MNC may
think that repatriation is the final phase in the expatriation process, but its ability to attract future expatriates
depends on how well the firm handles its repatriation programmes. There are several reasons for repatriation.
The most common reason for returning is that the period of contractual posting got over . A second common
reason is that expatriates want their children in a home-country school, and the longer they are away, less
likely it is that this will happen. The third reason can be that the assignees are not happy in their overseas
assignments. Unhappiness can stem from one’s inability to adjust to host country environment, spouse’s or
children’s unwillingness to stay and moral support from headquarters did not come when there was a crisis.
Finally, expatriates return because of failure to do a good job. Such failure often spells trouble for the assignees
and may result in demotion and termination.
VII) EMPLOYEE RELATIONS
The last component of IHRM is labour or employee relations. From a strategic perspective, the key
issue in international employee relations is the degree to which organised labour can limit the choices to
integrate and consolidate its global operations. A firm’s ability to integrate and consolidate its global operations
to realise experience curve and location economies can be halted by organised labour, constraining the pursuit
of a global strategy. An example to be stated here is General Motors which bought peace with labour unions
by agreeing not to integrate and consolidate operations in the most efficient manner.
163
Key Issues in International Labour Relatians
One issue relates to the responsibility of handling labour relations. Who should take up this responsibility-
the headquarters or the subsidiary plant in the concerned country? Because national differences in economics,
political, and legal systems produce different labour-relations systems across countries, MNCs generally
delegate the management of labour relations to their foreign subsidiaries.
However, a policy of decentralisation does not keep the corporate office away from exercising some
co-ordination over labour-relations strategy. Generally, the corporate office becomes involved in over- seas
labour agreements made by foreign subsidiaries because these agreements may affect the international plans
of the firm and/or create precedents for negotiations in other countries. However, the involvement of the
MNC headquarters in host-country labour relations is influenced by several factors. First the labour-relations
function is centralised and is coordinated by headquarters when there is a high degree of inter-subsidiary
production integration. Labour relations throughout a system become crucial to corporate headquarters when
transnational sourcing patterns are developed, that is, when a subsidiary in one country relies on another
foreign subsidiary as a source of components or as an user of its output. In this context, a co-ordinated
labourrelations policy is one of the key factors in a successful global-production strategy.
Second, the nationality of ownership of the subsidiary has an impact on who handles employee
relations. For example, there are differences between European and US firms in terms of headquarters
involvement in employee relations. US firms tend to exercise a greater centralised control over labour relations
than British or European firms. Finally, subsidiary characters also influence on who should handle employee
relations. For example, subsidiaries that are formed through acquisition of well-established indigenous firms
tend to be given much more autonomy over labour relations than are green-field sites set up by an MNC.
Similarly, greater intervention would be expected when the subsidiary is of key strategic importance to the
MNC, particularly when it is young. Further, where a subsidiary depends more on its parent company for
resources, there will be an increased corporate involvement in labourrelations and HR management. Again,
a poor subsidiary performance tends to be accompanied by an increased corporate involvement in employee
relations.
What should be the Union Tactics? Unions use several tactics to deal with international business. By
far the most common union tactic is strike. A strike is a concerted and temporary suspension of functions,
designed to exert pressure upon others in the same unit. Strike is a very powerful ploy as it suspends production,
cuts out the creation of profit, cuts off the firm from its market, sources of materials may be lost, and fixed
charges such as interest, taxes, and salaries for officials continue to be incurred during the strike period. The
very existence of the firm may be threatened by a prolonged strike.
Unions should be cautions before resorting to a strike. An MNC enjoys formidable financial strength.
It can absorb losses in a particular foreign subsidiary that is in dispute with a national union and still show an
overall profit on worldwide operations. The bargaining power of a union may be threatened or weakened by
the financial resources of a multinational. This is particularly evident where an MNC has adopted a practice
of transnational sourcing and cross-subsidisation of its products or components across different countries.
An MNC has the ability to move the production facilities to their locations from the place of industrial
dispute. Ford, for example, threatened British unions with a plan to move manufacturing to continental Europe
unless British workers abandoned their demands. National relative advantages provide MNCs with the choice
of location of units. Threats by MNCs, whether real or professional, to reorganise production facilities
internationally, with the accompanying risk of plant closure or rationalisation will have serious impact on the
ability of a union to organise strikes.
164
The second tactic used by labour unions is to form International Trade Secretariats (ITSs). There are
15 ITSs which function as a loose confederation to provide worldwide links for the national unions in a
particular trade or industry (e.g. metals, transport, and chemicals) world wide. The secretariats operate
mainly to facilitate the exchange of information. The primary goal of each ITS is to achieve transactional
bargaining with each of the MNCs in its industry.
Next tactic sought by the labour unions is lobbying for restrictive national legislations. The motivation
for labour unions to pursue restrictive national legislations is based on a desire to prevent the export of jobs via
multinational investment policies.
Finally, labour unions seek intervention from the Internatioaal Labour Organisation (ILO), the United
Nations Conference on Trade and Development (UNCTAD), the European Union (EU), and Organisation
for Economic Co-operation and Development (OECD). The ILO has identified a number of work-place
related principles that should be respected by all nations. These are-freedom of associations, the right to
organise and collectively bargain, abolition of forced labour, and non-discrimination in employment. In 1991 ,
the ILO adopted a code of conduct for MNCs. The code has been influential in drafting of the OECD
guidelines for MNCs. These voluntary guidelines cover disclosure of information, competition, financing,
taxation, employment and industrial relations and science and technology.
VIII) MULTICULTURALISM
Culture is understood as the customs, belief, norms and values that guide behaviour of people in a
society and passed on from one generation to the next. Multiculturalism means that people from many
cultures (many countries) interact regularly. Global firms are the repositories of multiculturalism. Not that
domestic firms have only mono cultures. Domestic firms too will have employees with different nationalities.
Infosys, for example has foreigners representing nine per cent of the total employee strength, so also Wipro
which has overseas citizens accounting for four per cent of its total number of employees. Domestic firms
have multiculturalism, may be by choice but it is by design with MNCs. Multiculturalism does not mean that
each subsidiary of an international business has its own distinct culture. If this happens, subsidiaries might
become stand-alone companies. International business, therefore, needs to maintain a united culture that
knits all the subsidiaries together.
Multicultural management offers the following benefits:
◆ Greater creativity and innovation
◆ Awareness about the need to maintain sensitivity in dealing with foreign customers
◆ Possibilities of hiring the best talent
◆ Creating a ‘super organisational culture’, using the best of all cultures
◆ Evolving universally acceptable HR policies and practices.
The IHR manager needs cross-cultural competence to manage multiculturalism. Specifically, the IHR manager
needs to:
◆ Possess strong personal identity
◆ Have knowledge of beliefs and values of different cultures
◆ Display sensitivity to the affective processes of culture.
◆ Communicate clearly in the language of a given cultural group.
◆ Cultivate cosmopolitan outlook and attitudes.
*****
165
LESSON-17
INTERNATIONAL SELECTION AND ITS APPROACHES
Learning Objectives:
1. To give a brief outline of the concept of international selection.
2. To present various approaches that are applied while selecting an employee in IHRM.
CONTENTS
INTRODUCTION
APPROACHES IN SELECTION IN IHRM
INTRODUCTION
The appointment of suitable persons on various jobs is very essential. The selection of a wrong
candidate will mean loss of time and money which have been incurred in this process. It also leads to
absenteeism and retrenchment. This calls for a properly planned recruitment and selection process. After the
receipt of appropriate number of applications through various sources of recruitment, the selection process
starts. It is concerned with securing relevant information about the applicants. The purpose of the selection
process is to determine whether a candidate is suitable for employment in the organisation or not. All persons
who have applied may not be suitable.
Moreover, the number of applicants will be much more than the positions vacant. It becomes all the
more important to scrutinize applications properly so that those who are found unsuitable at the first instance
should not be called for tests or interviews.
This will save time and money of the enterprise as well as the candidates. The procedure to be
followed for selecting an employee may be different for various jobs. If the job is not very important then a
simple procedure may be followed. For employing unskilled workers, the personnel manager may select them
after a brief interview. If skilled and unskilled persons are to be selected then foreman may interview them
and also test their experience by asking them to work on jobs. When the position to be filled is important, then
a number of steps may be followed before a person is finally selected.
VARIOUS APPROACHES IN SELECTION IN IHRM
HRP, having done, the intemational HR manager must proceed with the job of hiring the right number
of people of the right type. The international HR manager must not only select people with skills, but also
employees who can mix with the organisation’s culture. General Electric, for example, is not just hiring people
who have skills required to perform particular jobs, it wants to hire employees whose styles, beliefs, and value
systems are consistent with those of the firm.
International businesses are said to adopt three approaches to staffing – ethnocentric, polycentric,
and geocentric.
(A) Ethnocentric Approach: In this approach, all key management positions are held by parent-country
nationals. This strategy may be appropriate during the early phases of international business, because firms at
that stage are concerned with transplanting a part of the business that has worked well in their home country.
This practice was widespread at one time. Firms such as Procter and Gamble, Philips, NV, and Matsushita
originally followed the ethnocentric approach. In the Dutch film Philips, for example, all important positions in
166
most foreign subsidiaries were at one time held by Dutch nationals who were referred to by their non-Dutch
colleagues as the Dutch Mafia. In many Japanese and South Korean firms today, such as Toyota,
Matsushita, and Samsung, key positions in international operations are still held by the home-country nationals.
Advantages of the Ethnocentric Approach
(i) Perceived lack of qualified host country nationals (HCNs).
(ii) The necessity to maintain and consolidate good communication, coordination and control links with
the organisation’s headquarters.
(iii) The assurance that the foreign subsidiary or unit will comply with corporate objectives, policies,
standards etc.
(iv) PCNs may be most suitable because they have the requisite skills and experience.
(v) Promising managers are given the opportunity of international experience.
Disadvantages
(i) Its limits the promotional opportunity of HCNs.
(ii) PCN expatriate managers may experience adjustment problems.
(iii) PCN expatriate managers may attempt to impose styles which are appropriate at the organisation’s
headquarters but which may be deemed inappropriate in the host country.
(iv) The compensation packages of PCN expatriate managers may be at a level considered unjustified
by the HCNs. PCN expatriate managers are expensive.
(B) Polycentric Approach: Polycentric approach is just the opposite of ethnocentric approach. The polycentric
staffing requires host-country nationals to be hired to manage subsidiaries, while parent-country nationals
occupy key positions at corporate headquarters. Although top management positions are filled by homecountry
personnel, this is not always the case. For example, Hindustan Unilever ltd. (HUL), the Indian subsidiary of
Unilever, has locals as its chiefs. Preference for home-country citizens for key positions does not fit into a
pattern, unless government interventions dictated selection process. In Brazil, for example, two-thirds of the
employees in any foreign subsidiary traditionally had to be Brazilians. In addition, many countries exert real
and subtle pressure to staff the upper management ranks with nationals. In the past, these pressures by host
countries have led companies such as Standard Oil to change their approach to selecting managers.
Advantages of Polycentric Approach
(i) It eliminates language barriers, avoids adjustment problems of expatriate managers and their families
and removes the need for expensive cultural awareness training programmes.
(ii) Hiring costs are reduced.
(iii) No work permit required.
(iv) Motivation effect because HCNs see a career potential.
(v) Lower organisational profile in sensitive political situations.
(vi) Continuity of management improves because the HCNs stay longer in the organisation.
(vii) Local responsiveness and sensitivity.
167
Disadvantages of Polycentric Approach
(i) More difficulty in bridging the gap (objectives, policies, standards. communication, control, culture
and attitudes etc.) between the HC unit and the organisation’s parent headquarters.
(ii) Tends to encourage too much decentralization.
(iii) HCN managers have limited career opportunities outside the subsidiary or unit.
(iv) Unit opportunities for PCN expatriate managers to gain foreign experience adversely affecting their
insight and hence strategic decision making and resources allocation.
(C) Geocentric Approach: The most popular and practical approach to staffing is the geocentric approach.
This staffing philosophy seeks the best people for key jobs throughout the organization regardless of nationality.
Selecting the best person for the job, irrespective of nationality, is most consistent with the underlying philosophy
of a global corporation. Colgate-Palmolive is an example of a company which follows geocentric approach.
It had been operating internationally for more than 50 years, and its products are household names in more
than 170 countries. Sixty per cent of the company’s expatriates are from countries other than the US. All the
top executives speak at least two languages, and important meetings routinely take place all over the globe.
Assumptions for the success of Geocentric Approach
For the Geocentric approach to be successful, five assumptions must be met:
(i) Highly competent employees are available at the headquarters as well as the subsidiaries.
(ii) International experience is a condition for selection in top positions.
(iii) Managers with high potential and ambition for promotion are constantly ready to be transferred from
one country to another.
(iv) Open disposition and high adaptability on the part of competent and mobile managers to different
assignment conditions.
(v) Open disposition and high adaptability can be learnt with more foreign experience.
Advantages of Geocentric Approach
(i) Facilitates the development of an international team.
(ii) Overcomes the decentralisation effect of the polycentric approach.
Disadvantages
(i) Immigration controls and work permits for the foreign manager and his family.
(ii) Provision of extensive, time consuming and sometimes expensive information and documentation for
foreign nationals.
(iii) Large numbers of PCNs, HCNs and TCNs must be sent to foreign locations in order to create a
successful geocentric staffing policy.
(iv) High training and relocation cost.
(v) Devising an appropriate compensation structure.
(vi) More centralized control over staffing and loss of autonomy by the subsidiaries in HRM issues.
Thus, international businesses have choices of hiring three categories of employees – parent country
nationals (PCNs), host country nationals (HCNs) and third country nationals (TCNs).
168
Advantages and Disadvantages of Using PCNs, TCNs and HCNs
Parent Country Nationals
Advantages
◆ Familiarity with the home office, goals, objectives, policies and practices.
◆ Easy organisational control and coordination.
◆ Promising managers are given international exposure.
◆ PCNs are the best people for assignment because of special skills and experiences.
Disadvantages
◆ Difficulty in adapting to the foreign language and the socio-economic, political, cultural and legal
environment.
◆ Excessive cost of selecting, training and maintaining expatriate managers and their families abroad.
Host Country Nationals
Advantages of HCN
◆ Familiarity with the socio-economic, political and legal environment and with business practices in
the host country.
◆ Lower cost incurred in hiring as com pared to PCNs and TCNs’
◆ Promotional opportunities to locals and consequently their motivation and commitment.
◆ Responds effectively to the host country’s demands for localisation of the subsidiary’s operations.
◆ Languages and other barriers are eliminated.
◆ Continuity of management improves, since HCNs stay longer in positions,
Disadvantages
◆ Promotional opportunities for HCNs are limited.
◆ PCNs may impose an inappropriate HQ style.
◆ Compensation for PCNs and HCNs may differ.
◆ Family adjustment problems, especially concerning the unemployed spouses.
◆ Difficulty in exercising effective control over the subsidiary’s operations.
◆ Communication difficulties in dealing with home office personnel.
◆ Lack of opportunity for the home country’s nationals to gain international and cross- cultural
experience.
◆ HCNs have limited career opportunity out- side the subsidiary.
◆ Hiring HCNs may encourage a federation of nationals rather than global units
Third Country Nationals
Advantages
◆ Salary and benefit requirements may be lower than for PCNs.
◆ TCNs may be better informed than PCNs about host country environment.
◆ TCNs are truly international managers.
169
Disadvantages
◆ Host country government may resent hiring TCNs.
◆ TCNs may not want to return to their own countries after assignment.
◆ Host country’s sensitivity with respect to nationals of specific countries.
◆ HCNs are impeded in their efforts to upgrade their own ranks and assure responsible positions in the
multinational subsidiaries.
Keeping aside the TCNs, the choice between HCNs and PCNs for heading subsidiaries in foreign
locations is influenced by many factors which can be grouped into four categories: Parent country, industry
characteristics, subsidiary performance and host country variables.
With regard to parent country characteristics, MNCs prefer home country nationals to head
subsidiaries where culture distance is high. This is necessary to maintain unified corporate culture. Size is
positively related to the preference of PCNs. Larger MNCs have more PCNs as heads of subsidiaries since
they have managerial resources and are more likely to have a formal management development prograrnme
around the world. Similarly, MNCs that are more research intensive tend to deploy talent from head office to
subsidiaries so that locals may be trained.
With regard to industry characteristics, the tendency is to have more PCNs as heads of subsidiaries
in banking, security brokering and publishing and printing industries. The need to exercise greater control and
the need to understand local needs force the dominance of PCNs in banking and their low presence in
advertising industries, respectively. Subsidiary characteristics too influence the choice of PCNs or HCNs. A
newly set up subsidiary tends to attract PCNs to establish systems and procedures. Where a subsidiary is
acquired, tendency is to have more of HCNs.
PCNs tend to dominate, if a subsidiary occupies a strategic role. Fully owned subsidiary occupies
strategic importance and hence tends to attract more PCNs.
Where subsidiary performance is slackening, headquarter’s intervention through PCNs becomes
a necessity. PCNs need to be expatriated to staff subsidiary if education level in the host country is low and
skilled people are not available.
Besides, a high level of political risk in the host country is likely to make direct control through
PCNs more important. Where cost of living in the host country is lower, it is advantageous to employ HCNs
for top positions in subsidiaries.
*****
170
LESSON-18
EXPATRIATION AND REPATRIATION IN IHRM
Learning Objectives:
1. To make students conversant with the concept, meaning and definition of international HRM.
2. To highlight various issues pertaining to expatriation that the organisation encounters in international
IHRM.
3. To study the meaning and process of repatriation.
CONTENTS
MEANING
EXPATRIATE PROBLEMS
EXPATRIATE ASSIGNMENT LIFE CYCLE
FACTORS IN EXPATRIATE SELECTION
ALTERNATIVE MODEL OF EXPATRIATE SELECTION
EXPATRIATE’S PERFORMANCE
REPATRIATION
PROCESS OF REPATRIATION
MEANING
An expatriate is an employee sent by his or her employer to work in a foreign country. The firm is
normally referred to as the parent company, while the country of employment is known as the host country.
Many corporations are sending expatriates to their overseas operations. In fact, expatriates have and the
need for internationally competent managers is expected to rise as more and more firms face global competition.
Expatriates provide a number of benefits for companies, including greater parent control and particular
expertise. Expatriates are very expensive, however, and this can discourage extensive use of expatriates. Of
the three staffing policies , two of them, namely, ethnocentric and geocentric approaches and two categories
of employees, viz., PCNs and TCNs, rely on extensive use of expatriate employees working outside their
home country with a planned return to that or a third country. As expatriates play a major role in international
businesses, MNCs take great care in their selection process. Figure 3 is a model of the life-cycle of an
expatriate assignment. It involves a process of determining the need for an expatriate assignment, identifying
and then selecting likely candidates, pre-assignment training, departure, post arrival orientation and training,
crisis and adjustment of crisis and failure, reassignment aboard, and/or repatriation and adjustment.
FIGURE 1: THE EXPATRIATE ASSIGNMENT LIFE CYCLE
Crisis and Reassignment
Adjustment Abroad
Determining
the Need of an Post-arrival Repatriation
Expatriate Departure Orientation and and Adjustment
Training
The Selection Pre-assignment Crisis and
Process Training Failure
171
A major problem connected with expatriates is their premature return to their home country. Popularly
called expatriate failure, the subject has assumed considerable importance in the literature on international
business. The expatriate failure results in considerable losses to MNCs. Several reasons have been assigned
to explain why people return home before the assignment period expires.
One of the reasons for expatriate failure is his or her inability to adjust to host country culture.
Expatriate’s cultural adjustment typically comprises three stages.
Initially, the expatriate enjoys a great deal of excitement, as he/she discovers the new culture. This
stage is called the tourist stage. Business travellers, as compared with expatriates, often have the luxury of
remaining at this stage. This initial phase is followed by a period of disillusionment (second stage) in which the
expatriates mood descends as the difficulties with the new culture become clear. These difficulties typically
include an inability to converse well in the local language, problems in obtaining certain products and food
supplies of personal preference, home sickness and so on. This stage is characterised by what is called
culture shock.
If culture shock is handled successfully, the expatriate enters the third stage, which may be called the
adapting or adjustment phase. He/she begins to feel more positive, works more effectively and lives a more
satisfying life. Neither the highs of tourist stage nor the lows of culture shock phase usually mark this
adaptive phase. If culture shock is not handled successfully, the expatriate’s work performance deteriorates
and he/she will eventually return home having not really done the job well or enjoyed the time spent abroad.
International businesses use a combination of selection methods to identify people with the appropriate talent
for overseas posting. Some popular techniques include interviews, standardized tests of intelligence or technical
knowledge, assessment centres, biographical data, work samples and references.
Selecting Staff for International Assignments
Selecting staff for internationals assignments is a complex undertaking for several reasons including:
◆ Identifying a suitable person for the assignment.
◆ Predicting his performance in a new culturally very different environment.
◆ Dealing with personal and family related issues and problems.
◆ Devising an appropriate compensation package.
◆ Complying with host country rules and regulations.
Figure 4 illustrates the criteria for selecting staff for international assignments.
172
FIGURE 2: FACTORS IN EXPATRIATE SELECTION
Cross Cultural Suitability
Family Requirements
Individual Situation
Organisation Specific
Requirement
SELECTION DECISION
Language
Country Cultural
Requirement
Technical Ability
These criteria are discussed in detail as follows :
1. Technical ability
• Technical and managerial competencies of the person to perform the required tasks.
• Research studies indicate that technical ability is the most important selection criteria for organisations.
• Technical ability is usually easy to evaluate on the basis of past performance.
2. Cross Cultural Suitability
• Certain individual traits and characteristics can have an impact on the success or failure of an international
assignment-cultural empathy, adaptability, diplomacy, language ability, positive attitude, emotional stability
and maturity are a few examples.
• Cross cultural suitability is the ability to implement technical and managerial skills and feel reasonably
comfortable in a foreign environment.
• This suitability is sometimes difficult to determine.
3. Family Requirement
• Spouse and other family members may not adjust to a foreign environment.
• Adjustment level of spouse depends on several factors, such as the adjustment of the expatriate and
the spouse’s own opinion of the international assignment.
• A higher level of organizational support in the early stages of expatriation usually correlates with a
higher level of adjustment by the spouse.
4. Country-Cultural Requirements
• Hardship postings (remoteness of job location, social upheavals, safety risks, very low standard of
living and lack of recreational opportunities etc.).
173
• Pressure of living in repressive cultures and countries e.g. China, Saudi Arabia.
• Denial of work permits to female expatriates.
5. Organization Specific Requirements
• Organisational staffing approach may require sending more expatriates to work in certain regions and
locations than otherwise.
• Partner organisations may be involved in the selection of expatriate staff for example in international
joint ventures.
• Certain specific skills e.g. training may be used as a selection criteria.
6. Language
• Knowledge of the host country’s language is considered critical for many senior level positions alongwith
the ability to communicate effectively.
• Knowledge of the host country’s language helps expatriates and their families feel more comfortable in
the new environment.
7. Other Considerations
(i) Time: Unexpected international vacancies may arise for which positions have to be quickly filled by
expatriates and which may preclude the use of screening tests.
(ii) Family: A potential expatriate may refuse the international assignment due to family considerations
e.g. children education, parental care, single parents etc.
(iii) Dual Career Couples: Research studies indicate that many potential expatriates are reluctant or
unwilling to take an international assignment because of the career implications of their spouses e.g.
loss of jobs and career opportunities, difficulty in finding employment in the expatriate’s host country.
Some companies all now offering assistance programmes for the benefits of their expatriates spouses
(e.g. employment hunting, intra-company employment on assignment career support etc.)
(iv) Female Managers: Studies indicate the female expatriates make up a very small proportion of the
total expatriate population. Possible reasons are:
• Females are less desirous than males of international assignments.
• Females are less likely to be offered international assignments.
• There are a comparatively smaller number of females with the requisite skills to be sent on international
assignments.
• Many repressive cultures discourage the sending of female expatriates on foreign assignments.
• In many repressive cultures males donot like reporting to females.
ALTERNATIVE MODEL OF EXPATRIATE SELECTION
Mendenhall and Oddou propose a four dimensional approach linking specific behavioural tendencies
to probable international performance:
(i) Self-Orientedness: Adaptive concern for self-preservation, self enjoyment and mental hygiene.
(ii) Perceptual: Expertise in accurately understanding the behaviour of host country nationals.
(iii) Others-Orientedness: Degree of concern about the host country nationals and the expatriate’s
desire to affiliate with them.
174
(iv) Cultural Toughness: Difference between the expatriates’ country and the host country’s cultural,
social, political, economic etc. environment and its implications for the expatriate.
PERFORMANCE MANAGEMENT IN EXPATRIATION
Linking with Organisational Strategy: Performance management becomes an integral part of
corporate strategy. Besides contributing to enhanced performance, performance management helps identify
employees with high potentials, facilitates establishing performance-reward linking and delineates employee
needs for development. All these offer vital inputs for formulation and execution of strategies.
FIGURE 3: EXPATRIATE’S PERFORMANCE
Setting Individual Performance Goals: It is critical, in the international context, to closely link unit
goals to individual/team goals, especially at the top and senior management levels. Goals are the future
outcomes that individuals and organisations desire and strive to achieve. Popularly, goals seek to serve three
specific purposes:
- guide and direct behaviour in the direction of the goal.
- offer benchmarks for employees to strive towards excellence.
- reflect what the employees and managers consider as important.
In order to serve the above purposes, goals must be specific, measurable, accurate, realistic and
timely (SMART). In a wide range of occupations, people who set specific and challenging goals consistently
outperform those who have easy or unspecified goals. Similarly, quantitative goals render themselves easy
for measurement and time bound goals enhance measurability. Measurability and timeliness add to performance
enhancement.
Variables impacting Performance: Performance of an expatriate depends on several variables
which are distinct from the performance of an employee working in his or her home country. Performance of
the non-expatriate is influenced by job extrinsic factors (for example, working conditions, company policy)
and job intrinsicfactors (example, challenging job, career prospects). An expatriate’s performance depends
on several other variables in addition to job extrinsic and job intrinsic factors.
175
Compensation packages contribute to performance considerably whether an employee is working
in the home country or is an expatriate posted in a foreign location. Expatriate’s performance is influenced by
the type of task too.
Appraising the Performance: Appraising performance is a routine job but involves three key
decisions areas. Specification on performance criteria, identifying the appraisers and deciding on the frequency
of appraisal. Generally , performance criteria in any organisation include outcomes and behaviours. Appraisers
in an MNC include immediate managers/supervisors, team members and clients. Self appraisal is also in
place.With regard to frequency of performance, MNC’s have almost the same periodicity as domestic firms.
Frequency shall be once in three months, six months or once in a year.
Providing Feedback: Feedback refers to the information provided to the assessee about work
behavior and outcomes. It helps control the work behaviour of employees by directing their behaviour through
the provision of necessary feedback for corrective action. The task of assessing performance and providing
feedback in MNCs is compounded by time and distance. Physical distance between headquarters and subsidiary
is long and time zones are different. But technological advancements have helped ease the difficulty to some
extent. International managers do travel long distances and spend considerable time with subsidiary heads
and employees, as part of assessment and feedback.
Opportunities for Improvement: Performance feedback also helps in highlighting the need for
training and development. Conducting appraisal, offering feedback and organising training and developmental
programmes are all parts of performance management. These activities seek to provide opportunities to
expatriates to improve, socialise, and adjust to local environment ably.
Linking Rewards and Results: The final activity in expatriate performance management relates
to establishing linkages between performance and compensation. Rewards must follow performance. Only
then there is positive reinforcement to repeat performance.
REPATRIATION
In the previous sections, the expatriate selection, training, remuneration, and performance appraisal
were discussed. Any discussion on expatriates should include their repatriation-the activity of bringing the
expatriate back to the home country. It has been the knowledge of practitioners and academics that re-entry
into the home country presents new challenges as the repatriate (returning person) copes with what has been
termed re-entry shock, or reverse culture shock. While people expect life in a new country to be different,
they may be less prepared for a possible problem of adjustment upon home-coming. As a consequence, it can
be a traumatic experience for some, even more than what was encountered in a foreign location. An MNC
may think that repatriation is the final phase in the expatriation process, but its ability to attract future expatriates
depends on how well the firm handles its repatriation programmes.
There are several reasons for repatriation. The most common reason for returning is that the period
of contractual posting got over . A second common reason is that expatriates want their children in a home-
country school, and the longer they are away, less likely it is that this will happen. The third reason can be that
the assignees are not happy in their overseas assignments. Unhappiness can stem from one’s inability to
adjust to host country environment, spouse’s or children’s unwillingness to stay and moral support from
headquarters did not come when there was a crisis.
Finally, expatriates return because of failure to do a good job. Such failure often spells trouble for the
assignees and may result in demotion and termination.
176
Benefits from Returnees: Repatrees offer several advantages to the company. Coke, Cisco,
Ford, Whirlpool and Britannia are increasingly hiring foreign returned Indian executives. The reasons given
are twofold: such returnees have imbibed global culture and also have understood local culture. Secondly,
having extensive understanding of how the company is perceived in other countries and being part of the
global social network that can advance company’s business around the world, repatriates are an important
element in expanding the international operations of the company. Third, repatriates understand both the
operations of corporate headquarters and of overseas operations. They can also transfer important technology
or information from foreign subsidiaries back to the home country, or provide critical coordination and control
functions from the home office to local operations.
Repatrees too have added value to their personal and professional life. During their stay overseas,
the returnees gain exposure and expertise. Their outlook is global, their vision is borderless, their skills are
sharpened – in all they come back fully groomed to take on any challenges of domestic as well as global
business. Their status in society is enhanced. Others view the repatriates with awe and respect.
Repatriation Process: The following figure shows the repatriation process. Beforeelaborating on
the stages in the repatriation process, it is useful to understand that on completion of the overseas assignment.
The MNC brings the expatriate back to the home country, although not all foreign assignments end with a
transfer to home – rather the expatriate is re-assigned to another international assignment. Some employees
are made to travel around the globe frequently in which case they form part of the MNC’s international cadre
of managers. Even with such managers, repatriation is essential, particularly at retirement.
FIGURE 4: THE REPATRIATION PROCESS
Preparation Physical Transition Readjustment
relocation
Repatriation
Process
1. Preparation involves developing plans for the future and gathering information about the new position.
The firm may provide a checklist of items to be considered before the return to home (e.g. closure
of bank accounts and settling bills) or a thorough preparation of the employee and his or her family
for the transfer to home.
2. Physical relocation refers to saying good bye to colleagues and friends, and travelling to the next
posting, usually the home country. Personalised relocation assistance reduces the amount of uncertainty,
stress and disruptions experienced by the repatriate and the family.
3. Transition means settling into temporary accommodation, which involves making necessary
arrangements for housing and schooling, and carrying out other administrative tasks such as renewing
driving licence and opening bank account.
177
4. Readjustment involves coping with reverse culture shock and career demands. Of all the steps in the
repatriation process, re-adjustment is the most difficult one. The re-entry adjustment is a tough task
because of multiple factors. First, there is anxiety experienced by the expatriate when he or she
returns home, the apprehension being accentuated by the uncertainty about the placement in the
firm, career prospects, and a sense of isolation, feeling of ‘devaluing’ the international experience,
coping with new role demands, and probable loss of status and pay.
MNCs respond to the repatriation problem in several ways. Many firms have formal repatriation
programmes. Some companies assign the expatriate to a mentor, popularly called as the ‘godfather’.
The mentor is usually in a more senior position than the expatriate and knows him or her personally.
The purpose behind the use of a mentor is to remove the sense of alienation through the provision of
information (e.g. workplace changes) on a regular basis, so that the expatriate is better prepared for
the conditions he or she is likely to face upon re-entry. The mentor should also ensure that the
expatriate is not sidelined when important decisions are made regarding positions and promotions.
Challenges of Re-entry: Repatriation poses certain problems more intense than those encountered
at expatriation. Infact, assignee views expatriation as sort of reward for impressed performance but repatriation
is perceived as the end of a ‘honeymoon’ in his or her career. Challenges of re-entry relate to the individual
assignee as well as the MNC.
Individual Perspectives: Challenges from the assignee perspective include personal and professional.
From a personal perspective, the assignee experiences ‘reverse culture shock.’ The returnee expects that
the home country would remain the same when he or she had left. But after repatriation, the assignee finds
that things are not the same. Political, economic, social and cultural climate has changed.
Moreover, the returnees themselves are not the same old individuals. The ‘stay abroad’ brings changes
in their perception, attitudes, habits and practices. These changes create high expectations about the home
country but the hopes do not match with reality. It is not the assignee alone facing the adjustment problem.
Even the spouse has the same problem. Children too find re-entry difficult. Coming back to school, attempting
to regain acceptance into peer groups and being out-of-touch with current slang, sports and fashion do cause
problems.
Lowered social status, depleted spendable income, housing problem, problem of children’s school,
difficulty of club membership and the like add to the re-entrant’s problems. Professional disappointments add
to the returnee’s woes. The repatree feels that his or her skills acquired while on foreign service are no more
in use. The repatriate is of the opinion that job at home is lacking an autonomy, authority and significance,
compared to his or her global assignment. He or she feels that the organisation is unfairly ignoring the global
competence acquired by the returnee.
Worst, organisations may not guarantee jobs to the returnees. Often, due to poor career planning,
repatriates are placed in a ‘holding pattern’ being assigned jobs that are available, without regard to the
individual’s abilities, capabilities and needs.
Many returnees complain that, upon return, they are offered a limited number of career choices and
are rarely considered for promotions.
Challenges from Organisation Perspective: As is too well known, majority of the returnees
consider quitting the organisation. Considering the investment made on training, posting, and maintaining the
assignee, while on assignment, his or her quitting will adversely affect the MNC’s bottom line. Often, loss of
the multinational becomes gain for a rival. When an experienced assignee quits and joins a rival organisation,
the latter tends to gain competitive advantage. In addition, high withdrawals by returnees may affect the
company’s ability to hire bright individuals in future.
*****
178
ASSIGNMENT
Note: Attempt any four questions (Compulsory Assignments)
Q.1 Define Human resource Management. Discuss significance and objectives.
Q.2 Discuss features, objectives and types of training.
Q.3 What factors affect the Wage Rate? Discuss.
Q.4 Define the features and objective of discipline.
Q.5 What do you mean by HP Planning? Discuss the process of HR Planning.
*****
179
MBA Examination
Human Resource Management
Paper 203
Note: The candidates shall limit their answers precisely with the answer book (400 pages) issued
to them and no supplementary/continuation sheet will be issued.
Attempt any Five Questions in all selecting one question from each unit. All questions carry equal
marks.
UNIT-I
1. Write a comprehensive essay on the changing roles of human resource managers in India in view
of the changing business scene in this globalized world.
2. Discuss the Following:
a) Objectives of Human Resource Management.
b) Evolution of the concept of HRM.
UNIT-II
3. Describe briefly the concept of selection what are the different techniques that are followed by
HR Managers while selecting first line executives in an organization?
4. Discuss any two of the following
a) Approaches to HR Planning
b) Contemporary challenges in HR Planning
c) Features of a good promotion policy
UNIT-III
5. Write a comprehensive note on the ‘performance appraisal in India Industry. What are the limitation
of appraisal methods as they obtain? How you can make it more effective.
6. How will you determine the training need of an industrial organization? Also explain whether and
how the effectiveness of a training programme can be evaluated.
UNIT-IV
7. Distinguish between wages and salaries. Sate the various factors which a wage administrator has
to keep in mind while deciding pay and perks policies in an organization.
8. Discuss the following:
a) Elements of wage and salary administrator
b) Concept of Minimum wage.
UNIT-V
9. Bring out the difference between positive and negative discipline. State the essentials of a good
disciplinary system.
10. Discuss any two of the following:
a) Modern managerial practices pertaining to health and safety of employees in India.
b) Open door policy in Grievances.
c) Pre-requisite of an effective grievance procedure.
*****
Top Related