Human Resource Management LT P c3 0 0 3

NPRCETNPRCETNPRCETNPRCET
HUMAN RESOURCE MANAGEMENT
BA7204
2013 REGULATION
DEPARTMENT OF MANAGEMENT STUDIES
NPR COLLEGE OF ENGINEERING & TECHNOLOGY

NPR. Nagar, Natham - 624 401, Tamil Nadu, India.
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Website: www.nprcolleges.org E-Mail: nprgi@nprcolleges.org
BA7204
LT P C3 0 0 3
COURSE OBJECTIVE:
To provide knowledge about management issues related to staffing, training,
performance,
compensation, human factors consideration and compliance with human resource
requirements.
COURSE OUTCOME:
Students will gain knowledge and skills needed for success as a human resources
professional
UNIT I PERSPECTIVES IN HUMAN RESOURCE MANAGEMENT 5
Evolution of human resource management The importance of the human factor
Challenges Inclusive growth and affirmative action -Role of human resource manager
Human resource policies Computer applications in human resource management
Human resource accounting and audit.
UNIT II THE CONCEPT OF BEST FIT EMPLOYEE 8
Importance of Human Resource Planning Forecasting human resource requirement
matching supply and demand - Internal and External sources. Recruitment - Selection
induction Socialization benefits.
UNIT III TRAINING AND EXECUTIVE DEVELOPMENT 10
Types of training methods purpose- benefits- resistance. Executive development
programmes Common practices - Benefits Self development Knowledge
management.
UNIT IV SUSTAINING EMPLOYEE INTEREST 12
Compensation plan Reward Motivation Application of theories of motivation Career
management Development of mentor Protg relationships.
UNIT V PERFORMANCE EVALUATION AND CONTROL PROCESS 10
Method of performance evaluation Feedback Industry practices. Promotion, Demotion,
Transfer and Separation Implication of job change. The control process Importance
Methods Requirement of effective control systems grievances Causes Implications
Redressal methods.
TOTAL: 45 PERIODS
TEXTBOOK
1. Dessler Human Resource Management, Pearson Education Limited, 2007
2. Decenzo and Robbins, Human Resource Management, Wiley, 8th Edition, 2007.
REFERENCES
1. Luis R.Gomez-Mejia, David B.Balkin, Robert L Cardy. Managing Human Resource. PHI
Learning. 2012
2. Bernadin , Human Resource Management ,Tata Mcgraw Hill ,8th edition 2012.
3. Wayne Cascio, Managing Human Resource, McGraw Hill, 2007.
4. Ivancevich, Human Resource Management, McGraw Hill 2012.
5. Uday Kumar Haldar, Juthika Sarkar. Human Resource management. Oxford. 2012

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
INTRODUCTION TO HUMAN RESOURCE

MANAGEMENT AND ENVIRONMENT
OBJECTIVE OF THE UNIT
After the completion of the unit the student will be able to
1. Understand nature of Human Resource Management
2. Know the differences Between Personnel Management and
Human Resource Management
3. Understand Objectives of Human Resource Management
4. Know the Functions of Human Resource Management
5. Understand Importance of Human Resource Management
6. Understand Legacy of HRM
7. Highlight the future Challenges before the Managers
8. Understand New Role of Human Resource Management
INTRODUCTION
Human Resource Management (HRM) is a relatively new
approach to managing people in any organisation. People are
considered the key resource in this approach. it is concerned with
the people dimension in management of an organisation. Since an
organisation is a body of people, their acquisition, development of
skills, motivation for higher levels of attainments, as well as
ensuring maintenance of their level of commitment are all
significant activities. These activities fall in the domain of HRM.
Human Resource Management is a process, which consists of
four main activities, namely, acquisition, development, motivation,
as well as maintenance of human resources.
Scott, Clothier and Spriegel have defined Human Resource
Management as that branch of management which is responsible
on a staff basis for concentrating on those aspects of operations
which are primarily concerned with the relationship of management
to employees and employees to employees and with the
development of the individual and the group.
Human Resource Management is responsible for maintaining
good human relations in the organisation. It is also concerned with
development of individuals and achieving integration of goals of the
organisation and those of the individuals.
Northcott considers human resource management as an
extension of general management, that of prompting and

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
stimulating every employee to make his fullest contribution to the

purpose of a business. Human resource management is not
something that could be separated from the basic managerial
function. It is a major component of the broader managerial
function.
French Wendell, defines Human resource management as the
recruitment, selection, development, utilisation, compensation and
motivation of human resources by the organisation.
According to Edwin B. Flippo, Human resource management
is the planning, organising, directing and controlling of the
procurement, development, resources to the end that individual and
societal objectives are accomplished. This definition reveals that
human resource (HR) management is that aspect of management,
which deals with the planning, organising, directing and controlling
the personnel functions of the enterprise.
NATURE OF HUMAN RESOURCE MANAGEMENT

The emergence of human resource management can be
attributed to the writings of the human relationists who attached
great significance to the human factor. Lawrence Appley remarked,
Management is personnel administration. This view is partially
true as management is concerned with the efficient and effective
use of both human as well as non-human resources. Thus human
resource management is only a part of the management process.
At the same time, it must be recognised that human resource
management is inherent in the process of management. This
function is performed by all the managers. A manager to get the
best of his people, must undertake the basic responsibility of
selecting people who will work under him and to help develop,
motivate and guide them. However, he can take the help of the
specialised services of the personnel department in discharging this
responsibility.
The nature of the human resource management has been
highlighted in its following features :
1. Inherent Part of Management : Human resource
management is inherent in the process of management. This
function is performed by all the managers throughout the
organisation rather that by the personnel department only. If a
manager is to get the best of his people, he must undertake the
basic responsibility of selecting people who will work under him.

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
2. Pervasive Function : Human Resource Management is a

pervasive function of management. It is performed by all managers
at various levels in the organisation. It is not a responsibility that
manager can leave completely to someone else. However, he may
secure advice and help in managing people from experts who have
special competence in personnel management and industrial
relations.
3. Basic to all Functional Areas : Human Resource
Management permeates all the functional area of management
such as production management, financial management, and
marketing management. That is every manager from top to bottom,
working in any department has to perform the personnel functions.
4. People Centered : Human Resource Management is people
centered and is relevant in all types of organisations. It is
concerned with all categories of personnel from top to the bottom of
the organisation. The broad classification of personnel in an
industrial enterprise may be as follows : (i) Blue-collar workers (i.e.
those working on machines and engaged in loading, unloading etc.)
and white-collar workers (i.e. clerical employees), (ii) Managerial
and non-managerial personnel, (iii) Professionals (such as
Chartered Accountant, Company Secretary, Lawyer, etc.) and nonprofessional personnel.
5. Personnel Activities or Functions : Human Resource
Management involves several functions concerned with the
management of people at work. It includes manpower planning,
employment, placement, training, appraisal and compensation of
employees. For the performance of these activities efficiently, a
separate department known as Personnel Department is created in
most of the organisations.
6. Continuous Process : Human Resource Management is
not a one shot function. It must be performed continuously if the
organisational objectives are to be achieved smoothly.
7. Based on Human Relations : Human Resource
Management is concerned with the motivation of human resources
in the organisation. The human beings cant be dealt with like
physical factors of production. Every person has different needs,
perceptions and expectations. The managers should give due
attention to these factors. They require human relations skills to
deal with the people at work. Human relations skills are also

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
required in training performance appraisal, transfer and promotion

of subordinates.
Personnel Management VS Human Resource Management :
Contemporary Human Resource Management, as a part and
parcel of management function, underscores strategic approach to
management in areas of acquisition, motivation, and management
of people at work.
Human Resource Management derives its origin from the
practices of the earlier personnel management, which assisted in
the management of people in an organisation setup. Human
Resource Management leverages setting up the systems and
procedures for ensuring efficiency, controlling and providing
equality of opportunities for all working for the organisation.
Human Resource Management (HRM) differs from Personnel
Management (PM) both in scope and orientation. HRM views
people as an important source or asset to be used for the benefit of
organisations, employees and society. It is emerging as a distinct
philosophy of management aiming at policies that promote
mutuality-mutual goals, mutual respect, mutual rewards and mutual
responsibilities. The belief is that policies of mutuality will elicit
commitment, which in turn, will yield both better economic
performance and greater Human Resource Development (HRD).
Though a distinct philosophy, HRM cannot be treated in isolation. It
is being integrated into the overall strategic management of
businesses. Further, HRM represents the latest term in the
evolution of the subject.
There are several similarities between Human Resource
Management (HRM) and Personnel Management (PM) (a) Both
models emphasise the importance of integrating personnel/HRM
practices with organisational goals. (b) Both models vest
Personnel/HRM firmly in line management. (c) Human Resource
Management (HRM) and Personnel Management (PM) both
models emphasise the importance of individuals fully developing
their abilities for their own personal satisfaction to make their best
contribution to organisational success. (d) Both models identify
placing the right people into the right jobs as an important means of
integrating personnel/HRM practice with organisational goals.
OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

According to Scott, Clothier and Spriegal, The objectives of

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Human Resource Management, in an organisation, is to obtain

maximum individual development, desirable working relationships
between employers and employees and employees and
employees, and to affect the moulding of human resources as
contrasted with physical resources.
The basic objective of human resource management is to
contribute to the realisation of the organisational goals. However,
the specific objectives of human resource management are as
follows :
(i) To ensure effective utilisation of human resources, all other
organisational resources will be efficiently utilised by the
human resources.
(ii) To establish and maintain an adequate organisational structure
of relationship among all the members of an organisation by
dividing of organisation tasks into functions, positions and jobs,
and by defining clearly the responsibility, accountability,
authority for each job and its relation with other jobs in the
organisation.
(iii) To generate maximum development of human resources within
the organisation by offering opportunities for advancement to
employees through training and education.
(iv) To ensure respect for human beings by providing various
services and welfare facilities to the personnel.
(v) To ensure reconciliation of individual/group goals with those of
the organisation in such a manner that the personnel feel a
sense of commitment and loyalty towards it.
(vi) To identify and satisfy the needs of individuals by offering
various monetary and non-monetary rewards.
In order to achieve the above objectives, human resource
management undertakes the following activities :
(i) Human Resource Planning, i.e., determining the number and
kinds of personnel required to fill various positions in the
organisation.
(ii) Recruitment, selection and placement of personnel, i.e.,
employment function.
(iii) Training and development of employees for their efficient
performance and growth.
(iv) Appraisal of performance of employees and taking corrective
steps such as transfer from one job to another.
(v) Motivation of workforce by providing financial incentives and
avenues of promotion.
(vi) Remuneration of employees. The employees must be given

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
sufficient wages and fringe benefits to achieve higher standard

of living and to motivate them to show higher productivity.
(vii) Social security and welfare of employees.
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT.

The main functions of human resource management are classified
into two categories:
(a) Managerial Functions and (b) Operative Functions
(a) Managerial Functions
Following are the managerial functions of Human Resources
Management.
1. Planning : The planning function of human resource
department pertains to the steps taken in determining in advance
personnel requirements, personnel programmes, policies etc. After
determining how many and what type of people are required, a
personnel manager has to devise ways and means to motivate
them.
2. Organisation : Under organisation, the human resource
manager has to organise the operative functions by designing
structure of relationship among jobs, personnel and physical factors
in such a way so as to have maximum contribution towards
organisational objectives. In this way a personnel manager
performs following functions :
(a) preparation of task force;
(b) allocation of work to individuals;
(c) integration of the efforts of the task force;
(d) coordination of work of individual with that of the department.
3. Directing : Directing is concerned with initiation of organised
action and stimulating the people to work. The personnel manager
directs the activities of people of the organisation to get its function
performed properly. A personnel manager guides and motivates the
staff of the organisation to follow the path laid down in advance.
4. Controlling : It provides basic data for establishing
standards, makes job analysis and performance appraisal, etc. All
these techniques assist in effective control of the qualities, time and
efforts of workers.
(b) Operative Functions : The following are the Operative

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Functions of Human Resource Management

1. Procurement of Personnel : It is concerned with the
obtaining of the proper kind and number of personnel necessary to
accomplish organisation goals. It deals specifically with such
subjects as the determination of manpower requirements, their
recruitment, selecting, placement and orientation, etc.
2. Development of Personnel : Development has to do with
the increase through training, skill that is necessary for proper job
performance. In this process various techniques of training are
used to develop the employees. Framing a sound promotion policy,
determination of the basis of promotion and making performance
appraisal are the elements of personnel development function.
3. Compensation to Personnel : Compensation means
determination of adequate and equitable remuneration of personnel
for their contribution to organisation objectives. To determine the
monetary compensation for various jobs is one of the most difficult and
important function of the personnel management. A number of decisions
are taken into the function, viz., job-evaluation,
remuneration, policy, inventive and premium plans, bonus policy and copartnership, etc. It also assists the organisation for adopting the suitable
wages and salaries, policy and payment of wages and salaries in right
time.
4. Maintaining Good Industrial Relation : Human Resource
Management covers a wide field. It is intended to reduce strifies,
promote industrial peace, provide fair deal to workers and establish
industrial democracy. It the personnel manager is unable to make
harmonious relations between management and labour industrial
unrest will take place and millions of man-days will be lost. If labour
management relations are not good the moral and physical
condition of the employee will suffer, and it will be a loss to an
organisation vis-a-visa nation. Hence, the personnel manager must
create harmonious relations with the help of sufficient
communication system and co-partnership.
5. Record Keeping : In record-keeping the personnel manager
collects and maintains information concerned with the staff of the
organisation. It is essential for every organisation because it assists
the management in decision making such as in promotions.
6. Personnel Planning and Evaluation : Under this system

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
different type of activities are evaluated such as evaluation of

performance, personnel policy of an organisation and its practices,
personnel audit, morale, survey and performance appraisal, etc.
IMPORTANCE OF
Human Resource Management has a place of great
importance. According to Peter F. Drucker, The proper or
improper use of the different factors of production depend on the
wishes of the human resources. Hence, besides other resources
human resources need more development. Human resources can
increase cooperation but it needs proper and efficient management
to guide it.
Importance of personnel management is in reality the
importance of labour functions of personnel department which are
indispensable to the management activity itself. Because of the
following reasons human resource management holds a place of
importance.
1. It helps management in the preparation adoption and
continuing evolution of personnel programmes and policies.
2. It supplies skilled workers through scientific selection process.
3. It ensures maximum benefit out of the expenditure on training
and development and appreciates the human assets.
4. It prepares workers according to the changing needs of
industry and environment.
5. It motivates workers and upgrades them so as to enable them
to accomplish the organisation goals.
6. Through innovation and experimentation in the fields of
personnel, it helps in reducing casts and helps in increasing
productivity.
7. It contributes a lot in restoring the industrial harmony and
healthy employer-employee relations.
8. It establishes mechanism for the administration of personnel
services that are delegated to the personnel department.
Thus, the role of human resource management is very
important in an organisation and it should not be undermined
especially in large scale enterprises. It is the key to the whole
organisation and related to all other activities of the management
i.e., marketing, production, finance etc.

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Human Resource Management is concerned with the

managing people as an organizational resources rather than as
factors of production. It involves a system to be followed in
business firm to recruit, select, hire, train and develop human
assets. It is concerned with the people dimension of an
organization. The attainment of organizational objectives depends,
to a great extent, on the way in which people are recruited,
developed and utilized by the management. Therefore, proper coordination of human efforts and effective utilisation of human and
others material resources is necessary.
Legacy of HRM :
The legacy of HRM needs to be analysed from two different
perspectives to get a better insight into its nature. These are (a) the
Western context (b) the Indian context.
(a) Western Context : The origin of HRM, as is known today,
date back to ancient times. One find a reference of HR policy as
early as 400 B.C., when the Chaldeans had a sound incentive
wage plan. All that has changed over the years is the status of the
employees, their roles and relationship-inter personal and intergroup. The status of labour prior to industrial revolution was
extremely low and the relationships were characterised by slavery,
seldom and guild system. The slaves performed manual tasks to
agricultural, military and clerical responsibilities. The efficiency
levels were low due to over-dependence on negative incentives
and negligence of positive incentives.
The slavery structure was replaced by seldom, were neither
slaves nor hired labourers. The structure was related to rural and
agrarian pursuits. Workers were offered positive incentives which
resulted in enhanced productivity and reduced need for
supervision. Seldom disappeared during Middle Ages with growth
in manufacturing and commercial enterprises. It was replaced by
the Guild System.
The guild system involved the owners, the journeyman and the
apprentice. It was here that real HRM started. One noticed, proper
selection procedures being adopted, workers being imparted
training and collective bargaining being adopted to settle issues
pertaining to wages and working conditions.
With the advent of Industrial Revolution, the guild system
disappeared. The doctrine of laisser-faire was advocated and the
10

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
cottage system got transformed to factory system leading to

enhanced specialisation. But this period was dominated by many
unhealthy practices like unhealthy work environment, long working
hours, increased fatigue rate, monotony, strains, likelihood of
accidents and poor work relationship. Progressive entrepreneurs
like Owen believed that healthy work environment could be
effectively used to improve productivity. But his opinion faced
severe opposition.
A major change was noticed in personnel practices after the
World War I. The modern HRM started in 1920. Groups were
formed to conduct research on personnel problems. A number of
studies were undertaken to analyse the fallacies in the personnel
field. For the first time, psychology was applied to management.
The Hawthorne studies advocated the need to improve industrial
relations for increasing production. The application of psychology
brought a dramatic change in the work relationship and productivity
started increasing. But this prosperity ended during the great
depression. Thereafter, organisations started offering fringe
benefits to workers to induce them to work. Findings of behavioural
science were used to enhance productivity.
Increasing number of organisations adopting manpower
planning, management development, techniques of personnel
management, etc. Personnel departments started stressing on
management-individual employee relationships. This was followed
by setting up of labours relations department to negotiate and
administer collective bargaining. Federal interest gave rise to
manpower management department. The members of these
departments were technically competent in testing, interviewing,
recruiting, counselling, job evaluation negotiation and collective
bargaining. They also acquired expertise in wage and salary
administration, employee benefit schemes and services, training
and development and other allied services. The top management
started encouraging line managers in middle management to
consult personnel departments in these respects. This department,
later on acquired recognition as staff to the working-line. This led to
multiplicity of personnel jobs instead of a single, stereotyped task.
The personnel or human resource manager became a part of top
management.
In todays world, stress is on scientific selection, training and
development. There is an increasing emphasis on interrelationship
between the leader, follower and the environment. Attempts are
also on to provide scope to an individuals personal dignity, status
11

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
and sense of achievement. The concern is increasing profits

through people.
HRM in India is centuries old. The first reference of HRM was
provided by Kautilya as early as 4th century B.C. in his book
Arthashastra. The work environment had logical procedures and
principles in respect of labour organisation such as Shreni Wages
were paid in terms of quantity and quality of work. Workers were
punished for unnecessary delay or spoiling of work. Kautilyas
contribution was based on Shamrastra Concepts like job
description, qualifications for jobs, selection procedures, executive
development, incentive system and performance appraisal were
very effectively analysed and explained.
The guild system prevailed in the Indian economy too. It was
based on Varnashram or caste system and resulted in division of
labour accordingly. In the course of time, professions became
hereditary. From 14th century B.C. to the latter half of 10th century
B.C., the relationship of employer-employee was marked with
justice and equity.
The HRM experienced full in mediaeval India due to foreign
aggressions over the next 700 years. During the Mughal rule,
Karkhanas were established, but the artisans and craftsmen were
poor and lived on starvation level and the productivity was low.
During the British rule, the work environment was appalling and
full of inhuman cruelties. This continued till 1881 when the Factory
Act was enacted. This Act provided for (i) weekly holidays (ii)
fixation of working hours (iii) fixation of minimum age for children at
7 years subject to a maximum working period of 7 hours a day.
In 1890, the first labour organisation was formed and was
known as Bombay Mill Hands Association. This association started
working for improving the work environment and for getting the
workers their rightful dues. The success of this association Few
amongst these were Printers Union Calcutta (1905), Postal Union,
Bombay (1907) and Madras Labour Union (1918).
The union movement was very weak till the early thirties. But
the situation showed marked improvement 5 years before and after
the Second World War. After independence, the activities of the
personnel department have multiplied.
12

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Human resource department is expected to take care of

welfare activities, employment, safety, training, wage and salary
administration, promotions, transfers, lay-off, improvement in living
and working conditions, health services, safety measurers,
prevention and settlement of disputes, etc.
FUTURE CHALLENGES BEFORE THE MANAGERS

Because of continuous changing socio-economic, technological
and political conditions, the human resource managers of the future
shall have to face more problems in the management of labour.
The human resource managers of today may find themselves
obsolete in the future due to changes in environment if they do not
update themselves some of the important challenges which might
be faced by the managers in the management of people in
business and industry are discussed below :
1. Increasing Size of Workforce : The size of organisations is
increasing. A large number of multinational organisations have
grown over the years. The number of people working in the
organisation has also increased. The management of increased
workforce might create new problems and challenges as the
workers are becoming more conscious of their rights.
2. Increase in Education Level : The governments of various
countries are taking steps to eradicate illiteracy and increase the
education level of their citizens. Educated consumers and workers
will create very tough task for the future managers.
3. Technological Advances : With the changes coming in the
wake of advanced technology, new jobs are created and many old
jobs become redundant. There is a general apprehension of
immediate unemployment. In the competitive world of today,
industry cannot hope to survive for long with old technology. The
problem, of unemployment resulting from modernisation will be
solved by properly assessing manpower needs and training of
redundant employees in alternate skills.
4. Changes in Political Environment : There may be greater
Governments interference in business to safeguard the interests of
workers, consumers and the public at large. Governments
participation in trade, commerce and industry will also pose many
challenges before management. The Government may restrict the
scope of private sector in certain areas in public interest. It does not
mean chances of co-operation between the Government and
private sector are ruled out. In fact, there will be more and more
13

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
joint sector enterprises.

5. Increasing Aspirations of Employees : Considerable
changes have been noted in the worker of today in comparison to
his counterpart of 1950s. The workers are becoming more aware of
their higher level needs and this awareness would intensify further
in the future workers.
6. Changing Psychosocial System : In future, organisations
will be required to make use of advanced technology in
accomplishing their goals while satisfying human needs. In the
traditional bureaucratic model, the organisations were designed to
achieve technical functions with a little consideration given to the
psychosocial system. But future management would be required to
ensure effective participation of lower levels in the management of
the organisation system.
7. Computerised Information System : In the past, the
automation of manufacturing processes had a major effect upon the
systems of production, storage, handling and packaging, etc. More
recently, there has been and in the future there will be the impact of
revolutionary computerised information system on management.
This revolutionary development would cover two primary areas of
personnel management which are as follows :
(a) The use of electronic computers for the collection and
processing of data, and
(b) The direct application of computers in the managerial decision
making process.
8. Mobility of Professional Personnel : Organisations will
expand the use of boundary agents whose primary function will be
achieving coordination with the environment. One interesting fact
will be an increase in the mobility of various managerial and
professional personnel between organisations. As individuals
develop greater technical and professional expertise, their services
will be in greater demand by other organisations in the
environment.
9. Changes in Legal Environment : Many changes are taking
place in the legal framework within which the industrial relations
systems in the country are now functioning. It is the duty of the
human resource or personnel executive to be aware of these
changes and to bring about necessary adjustments within the
organisations so that greater utilisation of human resources can be
14

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
achieved. This, indeed, is and would remain a major challenge for

the personnel executive.
10. Management of Human Relations : On the industrial
relations front, things are not showing much improvement even
after so many efforts by the government in this direction. Though a
large number of factors are responsible for industrial unrest but a
very significant cause is the growth of multiunions in industrial
complexes having different political affiliations. Under the present
conditions, it appears that inter-union rivalries would grow more in
the coming years and might create more problems in the industry.
Management of human relations in the future will be more
complicated than it is today. Many of the new generation of
employees will be more difficult to motivate than their
predecessors. This will be in part the result of a change in value
systems coupled with rising educational levels. Greater skepticism
concerning large organisations and less reverence for authority
figures will be more common. Unquestioning acceptance of rules
and regulations will be less likely.
New Role of Human Resource Management
Human Resource Management in the New Millenium has
undergone a great revolution by questioning the accepted practices
and re-inventing the organisations as well as structures. Many
traditional practices have been thrown out. As an example, it can
be seen that hierarchies are vanishing and there is greater
emphasis on flat organisations. It means a great deal of
specialisation and skills. It also means upgrading the norms and
standards of work as well as performance.
The new role of human resource management is much more
strategic than before. Some of the new directions of the role of
HRM can be summed up as follows :
1. A Facilitator of Change : To carry people through upheaval
requires the true management of human resources.
2. An Integrated Approach to Management : Rather than
being an isolated function, human resource is regarded as a core
activity, one which shapes a companys values. In particular, this
can have an impact on customer service.
3. A Mediator : Establishing and balancing the new and
emerging aspirations and requirements of the company and the
individual.
15

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
These changes, which are taking place, involve more

commitment of the organisation to the development of people by
improving performance and cutting costs. As a result of this, the
duration of tenure, which was traditionally long standing, is now
limited, future is becoming less certain, management opportunities
are self-determined and motivational factors are more concerned
with enhancing future employability rather than loyalty to the
company and, at the same time, the rewards are going up in terms
of higher salaries. The future creative careers, will require more
involved approach to career development, which will include :
(i)
Share employees with strategic partner organisations

(customers of suppliers) in lieu of internal moves.
(ii)
Encourage independence : Employees may go elsewhere for

career development, possibly to return in a few years.
(iii) Fund-groups of employees to set-up as suppliers outside the

organisation.
(iv) Encourage employees to think of themselves as a business
and of the organisations various departments as customers.
(v)
Encourage employees to develop customers outside the

organisation.
(vi) Help employees develop self-marketing, networking and

consultancy skills to enable them to search out, recognise or
create new opportunities for both themselves and the
organisation.
(vii) Identify skilled individuals in other organisations who can
contribute on a temporary project basis or part-time.
(viii) Regularly expose employees to new people and ideas to
stimulate innovation.
(ix) Balance external recruitment at all levels against internal
promotion to encourage open competition, competitive
tendering for jobs to discourage seeing positions as
someones territory which causes self-protective conformity.
(x)
Forster more cross-functional teamwork for self-development.
16

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(xi) Eliminate the culture of valuing positions as career goals in

favour of portraying a career as a succession of bigger
projects, achievements and new skills learned. The concept of
position is part of the outside static concept of the
organisation. Positions are out. Processes and projects are in.
(xii) Abandon top-down performance appraisal in favour of selfappraisal based on internal customer satisfaction surveys and
assessing people as you would suppliers.
(xiii)
Replace top-down assessment processes with selfassessment techniques and measure performance in term of
results.
Functions of a Human Resource Manager

A human resource manager, charged with fulfilling the
objectives of an organisation, should be a leader with high
intellectual powers, a visionary and a philosopher who provides the
initiative to shape the future in terms of leading the human beings in
an organisation towards more prosperous and progressive policies.
1. Human Resource Man as an Intellectual : The basic skill
in the human resource field as compared to technologists or
financial experts is the skill to communicate, articulate, understand
and above all, to be an expert when it comes to putting policies and
agreements in black and white. The personnel mans skill lies in his
command over the language. A personnel man has to deal with
employees and he must possess the skills of conducting fruitful and
systematic discussions and of communicating effectively. He
should also be in a position to formulate principles and foresee the
problems of the organisation. This means that he would require the
mental ability to deal with his people in an intelligent manner as well
as to understand what they are trying to say..
2. Human Resource Man as an Educator : It is not enough
that a human resource man has command-over the language,
which, however, remains his primary tool. He should be deeply
interested in learning and also in achieving growth. Basically,
human beings like to grow and realise their full potential. In order to
harmonise the growth of individuals with that of the organisation, a
personnel administrator must not only provide opportunities for his
employees to learn, get the required training and assimilate new
ideas but also he himself should be a teacher. A personnel man
who simply pushes files and attends labour courts for conciliation
purposes and other rituals of legal procedure for the settlement of
17

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
industrial disputes is not a personnel administrator of the future.

3. Human Resource Man as a Discriminator : A human
resource administrator must have the capacity to discriminate
between right and wrong, between that which is just and unjust and
merit and non-merit. In other words, he should be a good judge
when he sits on a selection board, a fair person when he advises
on disciplinary matters and a good observer of right conduct in an
organisation.
4. Human Resource Man as an Executive : The human
resource man must execute the decisions of the management and
its policies with speed, accuracy and objectivity. He has to
streamline the office, tone up the administration and set standards
of performance. He has to coordinate the control functions in
relation to the various other divisions and, in doing so he should be
in a position to bring unity of purpose and direction in the activities
of the personnel department. He must ask relevant questions and
not be merely involved in the office routine whereby the status quo
is maintained. He should have the inquisitiveness to find out causes
of delay, tardy work and wasteful practices, and should be keen to
eliminate those activities from the personnel functions which have
either outlived their utility or are not consistent with the objectives
and purposes of the organisation.
5. Human Resource Man as a Leader : Being basically
concerned with people or groups of people, and being placed in the
group dynamics of various political and social functions of an
organisation, a Human resource man must not shirk the role of
leadership in an organisation. He, by setting his own example and
by working towards the objectives of sound personnel management
practices, must inspire his people and motivate them towards better
performance. He should resolve the conflicts of different groups
and build up teamwork in the organisation.
6. Human Resource Man as a Humanist : Deep faith in
human values and empathy with human problems, especially in
less developed countries, are the sine qua non for a Human
resource man. He has to deal with people who toil at various levels
and partake of their joys and sorrows. He must perform his
functions with sensitivity and feeling.
7. Human Resource Man as a Visionary : While every
leading function of an organisation must evolve its vision of the
future, the primary responsibility for developing the social
18

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
organisation towards purposive and progressive action fall on the

personnel man. He should be a thinker who sets the pace for
policy-making in an organisation in the area of human relations and
should gradually work out new patterns of human relations
management consistent with the needs of the organisation and the
society. He must ponder on the social obligations of the enterprise,
especially if it is in the public sector, where one has to work within
the framework of social accountability. He should be in close touch
with socio-economic changes in the country. He should be able to
reasonably forecast future events and should constantly strive to
meet the coming challenges.
Role and Challenges of Human Resource Manager
Human Resource (HR) Department is established in every
organisation under the charge of an executive known as Human
Resource Manager. This department plays an important role in the
efficient management of human resources. The human resource
department gives assistance and provides service to all other
departments on personnel matters. Though personnel or human
resource manager is a staff officer in relation to other departments
of the enterprise, he has a line authority to get orders executed
within his department. The human resource manager performs
managerial functions like planning, organising, directing and
controlling to manage his department. He has also to perform
certain operative functions like recruitment, selection, training,
placement, etc., which the other line managers may entrust to him.
He is basically a manager whatever may be the nature of his
operative functions. The status of Human Resource Manager in an
organisation depends upon the type of organisation structure.
Role of Human Resource Manager in an Organisation
In most of the big enterprises, human resource department is
set up under the leadership of personnel manager who has
specialised knowledge and skills. The human resource manager
performs managerial as well as operative functions. Since he is a
manager, he performs the basic functions of management like
planning, organising, directing and controlling to manage his
department. He has also to perform certain operative functions of
recruitment, selection, training, placement, etc., which the problems
to management, the human resource managers attach highest
priority to the settlement of industrial disputes than anything else.
The role of human resource management in industry is
underlined by the complex and dynamic nature of environment
under which the modern large-scale industries function. The impact
19

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
of technology on organisation structure, politicisation of workers

unions, and the growing consciousness of industrial employees
about their rights and privileges, have made the role of personnel
management increasingly
more important
in
industrial
undertakings. The task has also been facilitated by the greater
recognition of the value of human resources in industry and
application of human resource development (HRD) techniques by
the enlightened managers in modern organisations.
Questions :
1. Examine the concept of Human Resource Management. Also
discuss its Nature (Features).
2. Compare and Contrast between Personnel Management and
Human Resource Management.
3. Discuss the Objectives of Human Resource Management.
4. What are the Functions of Human Resource Management?
5. Explain the legacy of Human Resource Management.
6. Discuss the Issues Facing Human Resource Management in
the changing Business Environment.
7. Discuss some of the Emerging Issues in HRM. Also explain the
New Role and Directions in HRM.
8. Elaborate some of the main challenges which might be faced
by the Managers in future in the management of people in
Business and Industry.
9. What is the importance of Human Resource Management?
10. Examine the Functions and Role of Human Resource Manager
in Industrial Organisations.
HUMAN RESOURCE PLANNING

1. Understand need and importance of Human Resource
Planning
2. Know the objectives of HR Planning
3. Explain the steps in Human Resource Planning
4. Explain the various types of Human Resource Planning
5. Understand Corporate Planning and the Human Resource
Planning Process
6. Explain Human Resource Information System
7. Understand current interest in HR Planning
INTRODUCTION
20

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Human Resource Planning is concerned with the planning the

future manpower requirements is the organisation. HR manager
ensures that the company has the right type of people in the right
number at the right time and place, who are trained and motivated
to do the right kind of work at the right time. Obviously, human
resource planning primarily makes appropriate projections for future
manpower needs of the organisation envisages plan for developing
the manpower to suit the changing needs of the organisation from
time to time, and foresees how to monitor and evaluate the future
performance. It also includes the replacement plans and
managerial succession plans.
Human Resource planning is the process by which a
management determines how an organisation should move from its
current manpower position to its desired manpower position.
Through planning a management strives to have the right number
and the right kinds of people at the right places, at the right time, to
do things which result in both the organisation and the individual
receiving the maximum long-range benefit.
Definitions of Human Resource Planning :
1.
Coleman has defined Human Resource Planning as the
process of determining manpower requirements and the means for
meeting those requirements in order to carry out the integrated plan
of the organisation.
2.
According to Wikstrom, Human Resource Planning consists
of a series of activities, viz.,
(a) Forecasting future manpower requirements, either in terms
of mathematical projections of trends in the economic environment
and developments in industry, or in terms of judgemental estimates
based upon the specific future plans of a company;
(b) Making an inventory of present manpower resources and
assessing the extent to which these resources 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; and
21

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(d) Planning the necessary programmes of requirements,

selection, training, development, utilisation, transfer, promotion,
motivation and compensation to ensure that future manpower
requirements are properly met.
Human resource planning is a double-edged weapon. If used
properly, it leads to the maximum utilisation of human resources,
reduces excessive labour turnover and high absenteeism; improves
productivity and aids in achieving the objectives of an organisation.
Faultily used, it leads to disruption in the flow of work, lower
production, less job satisfaction, high cost of production and
constant headaches for the management personnel. Therefore, for
the success of an enterprise, human resource planning is a very
important function, which can be neglected only at its own peril.
NEED AND IMPORTANCE OF HUMAN RESOURCE

PLANNING
Human Resource planning is the process by which a
management determines how an organisation should move from its
current manpower position to its desired manpower position.
Through planning a management strives to have the right number
and the right kinds of people at the right places, at the right time, to
do things which result in both the organisation and the individual
receiving the maximum long-range benefit.
Human resource planning is a double-edged weapon. If used
properly, it leads to the maximum utilisation of human resources,
reduces excessive labour turnover and high absenteeism; improves
productivity and aids in achieving the objectives of an organisation.
Faultily used, it leads to disruption in the flow of work, lower
production, less job satisfaction, high cost of production and
constant headaches for the management personnel. Therefore, for
the success of an enterprise, human resource planning is a very
important function, which can be neglected only at its own peril.
22

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Objectives of HR Planning
The major objectives of Human Resource Planning in an
organisation are to :
(i) ensure optimum use of human resources currently employed;
(ii) avoid balances in the distribution and allocation of human
resources;
(iii) assess or forecast future skill requirements of the organisations
overall objectives;
(iv) provide control measure to ensure availability of necessary
resources when required;
(v) control the cost aspect of human resources;
(vi) formulate transfer and promotion policies.
STEPS IN HUMAN RESOURCE PLANNING

Human resource planning refers to a process by which
companies ensure that they have the right number and kinds of
people at the right place, at the right time; capable of performing
different jobs efficiently. Planning the use of human resources is an
important function in every organisation. A rational estimate to
various categories of personnel in the organisation is an important
aspect of human resource planning. HRP involves the following
steps :
1. Analysis of Organisational Plans and Objectives :
Human resource planning is a part of overall plan of organisation.
Plans concerning technology, production, marketing, finance,
expansion and diversification give an idea about the volume of
future work activity. Each plan can further be analysed into subplans and detailed programmes. It is also necessary to decide the
time horizon for which human resource plans are to be prepared.
The future organisation structure and job design should be made
clear and changes in the organisation structure should be
examined so as to anticipate its manpower requirements.
2. Forecasting Demand for Human Resources : Human
resource planning starts with the estimation of the number and type
of personnel required at different levels and in different
departments. The main steps involved in HRP process are (a) to
determine and to identify present and prospective needs of human
resource, (b) to discover and recruit the required number of
persons. (c) to select the right number and type from the available
people. (d) to hire and place in the positions for which they are
qualified, (e) to provide information to the selected people about the
nature of work assigned to them, (f) to Promote or to transfer as per
the needs and the performance of employees, (g) to denote if the
23

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
employees are disinterested or their performance is not upto the

mark, (h) to terminate if they are not needed or their performance is
below standard and shows no hopes of improvement. It is the most
crucial and critical area of HRD. These HRD manager must pay
attention to place right man to the right job through recruitment
selection Training and Placement of employees. This calls for the
adoption of a systematic procedure to complete recruitment and
selection.
3. Forecasting Supply of Human Resources : One of the
important areas of human resources planning is to deal with
allocation of persons to different departments depending upon the
work-load and requirements of the departments. While allocating
manpower to different departments, care has to be taken to
consider appointments based on promotions and transfers.
Allocation of human resource should be so planned that available
manpower is put to full use to ensure smooth functioning of all
departments.
4. Estimating Manpower Gaps : Net human resource
requirements or manpower gaps can be identified by comparing
demand and supply forecasts. Such comparison will reveal either
deficit or surplus of human resources in future. Deficits suggest the
number of persons to be recruited from outside whereas surplus
implies redundant to be redeployed or terminated. Similarly, gaps
may occur in terms of knowledge, skills and aptitudes. Employees
deficient in qualifications can be trained whereas employees with
higher skills may be given more enriched jobs.
5. Matching Demand and Supply : It is one of the objectives
of human resource planning to assess the demand for and supply
of human resources and match both to know shortages and
surpluses on both the side in kind and in number. This will enable
the human resource department
to
know
overstaffing
or understaffing. Once the manpower gaps
are identified, plans are prepared to bridge these gaps. Plans
to meet the surplus manpower may be
redeployment in
other
departments and retrenchment in consultation,
with the trade unions. People may be persuaded to quit through
voluntarily retirement. Deficit can be met through recruitment,
selection, transfer, promotion, and training plans. Realistic
plans for the procurement and development of manpower
should be made after considering the macro and micro
environment which affect the manpower objectives of the
organisation.
24

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
TYPES OF HUMAN RESOURCE PLANNING

In most developing countries the development of human
resources has been regarded as one amongst many objectives of
long-term economic growth. As a result even the objectives of
economic planning and the priorities thereof began to be shifted
away from purely growth-oriented development strategies to those
that recognise and partly remedy the past neglect of such social
sectors like population planning, health, education, housing, social
security and other social services. The following have been the
prime concerns of governments in developing countries.
(i) How to cope with the phenomenal explosion in population ?
(ii) How to provide productive employment to the already
unemployed and to those who are entering the labour market ?
(iii) What supplementary programmes to initiate for specific target
groups (rural/urban poor, socially disadvantaged groups like
the scheduled castes/tribes, backward classes, minorities,
women, children, physically handicapped, etc.) for employment
creation, income generation and poverty alleviation ?
(iv) What pro-active measures to take up to meet the skill
shortages so that there is no problem in realising plan targets
due to shortage in critical skills at various levels and in various
trades/disciplines ?
(v) How to upgrade technical, administrative and managerial skills
in different sectors of the economy to sustain and improve
productivity and further the pace of economic development ?
(vi) How to cope with the growing imbalances in the supply and
demand side of human resources in an uncertain and turbulent
environment within and outside the country in an increasingly
interdependent world ?
The broad framework for Human Resource Planning at
macrolevel would encompass all these and other concerns, dealing
with both the supply and the demand side of the problems. It should
cover not only quantitative aspects, but also qualitative factors. The
objectives of Human Resource Planning in India, as in most other
developing countries at the macrolevel, should thus encompass all
aspects of human resource development, from population planning
on the one hand to investments in health, education, housing and
other social welfare services on the other.
The major components of human resource planning based on
environmental analysis and adjustment are :
25

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(a) Population Planning Employment Planning

(b) Educational Planning
(c) Other aspects of Social and Human Development
The Government of India has spelt out the human
resources/manpower planning objectives at the macro level in
successive five-year economic plans. The prime concern,
throughout, has been to find a solution to the problem of
unemployment and the poverty that goes with it. The key issues
involved relate to questions on the rate and pattern of growth. A
data base is created to facilitate the formulation of sound policies
and programmes. The decennial census conducted by the office of
Registrar General constitutes the most comprehensive source of
population statistics while the quinquennial labour force survey
conducted by the National Sample Survey Organisation (NSSO)
serves as the most important source of labour force statistics. The
Annual Survey of Industries (ASI) also furnishes vital data on
employment trends in industry. The gravity of the unemployment
situation led the government to initiate, form time to time a variety
of special employment schemes such as the National Rural
Employment Programme (NREP), Minimum Needs Programme,
National Scheme of Training Rural Youth for Self-Employment
(TRYSEM), Integrated Rural Development Programme (IRDP) and
the Self-Employment Scheme for Education Unemployed Youth
(SEEUY).
As part of the decentralised strategy for human resources
planning and employment generation, state planning boards and
district-level manpower planning generation councils have been set
up. These councils are assisted by the District Employment
Exchange, District Industries Centre, District Agriculture Office,
Lead Bank, University Employment and Guidance Bureau, Special
Employment Exchanges for major public sector projects as also
those for handicapped, professionals, etc. in preparing a portfolio of
opportunities for salaried, self and wage employment. The
employment exchanges have three broad functions (i) registration
and placement of job seekers; (ii) rendering vocational training and
career advice services; and (iii) collection and dissemination of
manpower data.
Along with measures for generating employment in the
successive plans, attention was paid to provide a substantial
infrastructure for education and technical training. Skill formation
has also been provided for in various beneficiary-oriented
26

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
programmes. Apprenticeship Act was enacted to induce the

corporate sector to take part in the process of skill formation. The
major concerns are still on how to substantially bring about
improvements in education, training, values, knowledge, skills and
attitudes relevant to the needs of the society and its development
tasks. Special measures are also required to deal with the paradox
of unemployment and skill shortages in certain disciplines/sectors,
persistent problem of migration and the regulation of overseas
employment to minimise their exploitation and also to deal with the
negative effects of possible brain drain. A variety of legislative and
administrative measures have taken place at national, state and
district levels.
Thus it is seen that the broad framework, contents and
processes involved in Human Resource Planning at macrolevel are
indeed complex. The complexity is further compounded by the
rapid changes in environment in the many senses of the term. The
approach to Human Resource Planning at macrolevel has therefore
to be a dynamic process. It is indeed difficult to make any objective
evaluation of the success of efforts in this context. While India can
boast of having the third largest pool of scientific and technical
personnel, the technological lag in its economy is striking. The
country still has critical shortages in certain skills even as a large
number of those trained/educated in even related disciplines
remain unemployed. There is the irony of doctors without patients
and patients without doctors ! These are some of the issues that
become critical in matching the supply and demand of human
resources.
The objectives of Human Resource Planning at the microlevel
are to ensure that the organisation :
(i) obtains and retains the quantity and quality of human resources
it needs at the right time and place; and
(ii) makes optimum utilisation of these resources.
Corporate Planning and Human Resource Planning
Process
Human Resource Planning constitutes an integral part of
corporate plan and serves the organisational purposes in more
ways than one. For example, it helps organisations to (i) capitalise
on the strengths of their manpower; (ii) determine recruitment
levels; (iii) anticipate redundancies; (iv) determine optimum training
levels; (v) serve as a basis for management development
programmes; (vi) cost manpower for new projects; (vii) assist
27

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
productivity bargaining; (viii) assess future requirements; (ix) study

the cost of overheads and value of service functions; and (x) decide
whether certain activities need to be subcontracted.
The Human Resource plan is a part of the corporate plan.
Without it there can be no Human Resource Plan for human
resources. If there are several imponderables and unpredictables in
the corporate plan, there will be difficulties in Human Resource
Planning. Whether or not the Human Resource Planning meets the
requirements and is in tune with reality depends on clarity of goals
and the validity of the stated assumptions. The other important
point is the time frame in defining the future. In Human Resource
Planning the future can be classified into three periods :
(i) the short-range or immediate future;
(ii) the mid-range; and
(iii) the long-range future, none of which can be spelt out in
terms of a set number of days, months or years. The immediate
future may refer to current situation and experiences and may even
concern issues such as overtime and replacements. If there has
been previous planning for human resource such plans can serve
as a guide in the immediate future. If not, a beginning should be
made at once.
The mid-range future has a different time span in various
companies. It can be as short as a few months or as long as
several years. Most would agree upon 2-3 years period as a midrange.
The long-range plan could be five years, while 10 to 15 years
span could be used for a perspective plan. Long-range plans must
be made on the basis of various trends in the economy and in the
labour market, and on long-term trends of production in the
company. Long-range plans are general rather thana specific,
flexible rather than rigid.
Nevertheless, a plan can be extremely useful in identifying
factors and trends that need to be reckoned with for early warning
on possible problems. The long lead time provides the opportunity
and resilience to meet exigencies and make necessary
adjustments. More complete plans can be had as time slowly brings
the long-range into short-range.
The first step in the Human Resource Planning process is the
establishment of a planning horizon. One should know the period
for which the plan will apply. Then, the specific corporate objectives
28

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
and strategies should be clear. Based on these, estimates or

projections for demand and supply of human resources can be
made. The difference between the estimates of demand for and
supply of Human Resource is often referred to as the Human
Resource gap, and one of the main components of the Human
Resource strategy is to formulate plans for closing such gapsperhaps by recruitment and training (if the demand is positive, i.e.
demand exceeds supply) or by planned redundancy (if the gap is
negative).
HUMAN RESOURCE INFORMATION SYSTEM

HRIS is an important element in human resource development.
It is a system of maintain, collect, and analyse data relating to
human resources of the organisation. It helps managers in
decision-making in respect of promotion, wage fixing, recruitment,
training and development. In this way HRIS acts as a decision
support system. The inputs of HRIS include the information relating
to employees, their abilities, qualifications, potentialities, creative
instincts, age, pay scales, various jobs in the organisation, their
required skills and qualifications to do them, the number of
employees and executives manning various
positions,
organisational objectives, policies and procedures etc.
Current Interest in HR Planning
Major reasons for the present emphasis on manpower planning
include the following :
1. Employment-Unemployment Situation : Though in
general the number of educated unemployed is on the rise, there is
an acute shortage of a variety of skills. This emphasises the need
for more effective recruitment and retaining people.
2. Technological Change : The changes in production
technologies, marketing methods and management techniques
have been extensive and rapid. Their effect has been profound on
job contents and contexts. These changes can cause problems
relating to redundancies, retraining and redeployment. All these
contribute to the need to plan human resource needs intensively
and systematically.
3. Organisational Change : In a turbulent environment
marked by cyclical fluctuations and discontinuities, the nature and
pace of changes in organisational environment, activities and
structures affect human resource requirements and require
strategic consideration.
29

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
4. Demographic Changes : The changing profile of the work

force in terms of age, sex, literacy, technical inputs and social
background have implications for human resource planning.
5. Skill Shortages : Government control and changes in
legislation with regard to affirmative action for the disadvantaged
groups, working conditions and hours of work, restrictions on
women and child employment, casual and contract labour, etc.
have stimulated the organisations to become involved in systematic
human resource planning.
6. Legislative Controls : The days of executive fiat and hire
and fire policies have passed. Now legislation makes it difficult to
reduce the size of an organisation quickly and cheaply. It is easy to
increase but difficult to reduce the numbers employed because of
recent changes in labour law relating to lay-offs and closures.
Those responsible for managing human resources must look far
ahead and attempt to foresee human resource position.
7. Impact of Pressure Groups : Pressure groups such as
unions, politicians and persons displaced from land by location of
giant enterprises have been raising contradictory pressures on
enterprise management in areas such as internal recruitment and
promotions, preference to employees children, displaced persons,
sons of soil, etc.
8. Systems Concept : The spread of systems thinking and the
advent of microcomputer as part of the on-going revolution in
information technology emphasises planning and adopting newer
ways of handling voluminous personnel records.
9. Lead Time : A longer lead time is necessary for the
selection process and for training and development of the
employees, to handle new knowledge and skills successfully.
Questions :
1. Explain in detail the concept of Human Resource Planning.
Discuss the need and
importance of Human Resource
Planning.
2. Examine the Objectives of HR Planning.
3. What are the main types of Human Resource Planning ? Long
Range Human Resource Planning is merely a wiseful thinking.
Do you agree with this statement ? Explain.
4. Examine the reasons for the Current Interest in HR Planning.
5. What is Human Resource Planning? Explain the steps in
human resource planning.
30

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
JOB ANALYSIS
1. Understand the concept of Job Analysis
2. Know the process of Job Analysis
3. Understand purposes and Uses of Job Analysis
4. Know the sources of Information for Job Analysis
5. Understand the concept of Job Description
6. Understand the Concept of Job Specification
7. Know the concept of Job Design
INTRODUCTION
Job Analysis is a procedure by which pertinent information is
obtained about a job, i.e., it is a detailed and systematic study of
information relating to the operation and responsibilities of a
specific job. An authority has defined job analysis as the process
of determining, by observation and study, and reporting pertinent
information relating to the nature of a specific job... It is the
determination of the tasks which comprise the job and of the skills,
knowledge, abilities and responsibilities required of the worker for a
successful performance and which differentiate one job from all
others.
Information provided by Job Analysis
Job analysis provides the following information :
1. Job Identification : Its title, including its code number;
2. Significant Characteristics of a Job : It location, physical
setting, supervision, union jurisdiction, hazards and discomforts;
3. What the Typical Worker Does : Specific operation and
tasks that make up an assignment, their relative timing and
importance, their simplicity, routine or complexity, the responsibility
or safety of others for property, funds, confidence and trust;
4. Which Materials and Equipment a Worker Uses : Metals,
plastics, grains, yarns, milling machines, punch presses and
micrometers;
5. How a Job is Performed : Nature of operation - lifting,
31

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
handling, cleaning, washing, feeding, removing, drilling, driving,

setting-up and many others;
6. Required Personal Attributes : Experience, training,
apprenticeship, physical strength, co-ordination or dexterity,
physical demands, mental capabilities, aptitudes, social skills;
7. Job Relationship : Experience required, opportunities for
advancement, patterns of promotions, essential co-operation,
direction, or leadership from and for a job.
SOURCES OF INFORMATION FOR JOB ANALYSIS

According to George R. Terry, the make-up of a job, its
relation to other jobs, and its requirements for competent
performance are essential information needed for a job analysis.
Information on a job may be obtained from three principal sources :
(a) From the employees who actually perform a job;
(b) From other employees such as supervisors and foremen
who watch the workers doing a job and thereby acquire knowledge
about it; and
(c) From outside observers specially appointed to watch
employees performing a job. Such outside persons are called the
trade job analysts. Sometimes, special job reviewing committees
are also established.
Methods of Job Analysis
Four methods or approaches are utilised in analysing jobs.
These are :
1. Personal Observation : The materials and equipment used,
the working conditions and probable hazards, and an
understanding of what the work involves are the facts which should
be known by an analyst.
2. Sending out of Questionnaires : This method is usually
employed by engineering consultants. Properlydrafted
questionnaires are sent out to job-holders for completion and are
returned to supervisors. However, the information received is often
unorganised and incoherent. The idea in issuing questionnaire is to
elicit the necessary information from job-holders so that any error
may first be discussed with the employee and, after due
corrections, may be submitted to the job analyst.
32

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
3. Maintenance of Long Records : The employee maintains a

daily record of duties he performs, marking the time at which each
task is started and finished. But this system is incomplete, for it
does not give us any desirable data on supervisor relationship, the
equipment used, and working conditions. Moreover, it is timeconsuming.
4. Personal Interviews may be held by the analyst with the
employees, and answers to relevant questions may be recorded.
But the method is time-consuming and costly.
Purposes and Uses of Job Analysis
A comprehensive job analysis programme is an essential
ingredient of sound personnel management. It is fundamental to
manpower management programmes because the results of job
analysis are widely used throughout the programmes. The
information provided by job analysis is useful, if not essential, in
almost every phase of employee relations.
1. Organisation and Manpower Planning : It is helpful in
organisational planning for it defines labour needs in concrete
terms and coordinates the activities of the work force, and clearly
divides duties and responsibilities.
2. Recruitment and Selection : By indicating the specific
requirements of each job (i.e., the skills and knowledge), it provides
a realistic basis for hiring, training, placement, transfer and
promotion of personnel.
3. Wage and Salary Administration : By indicating the
qualifications required for doing specified jobs and the risks and
hazards involved in its performance, it helps in salary and wage
administration. Job analysis is used as a foundation for job
evaluation.
4. Job Re-engineering : Job analysis provides information
which enables us to change jobs in order to permit their being
manned by personnel with specific characteristics and
qualifications. This takes two forms :
(a) Industrial Engineering Activity, which is concerned with
operational analysis, motion study, work simplification methods and
improvements in the place of work and its measurement, and aims
at improving efficiency, reducing unit labour costs, and establishing
the production standard which the employee is expected to meet;
and
33

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(b) Human Engineering Activity, which takes into

consideration human capabilities, both physical and psychological,
and prepares the ground for complex operations of industrial
administration, increased efficiency and better productivity.
5. Employee Training and Management Development : Job
analysis provides the necessary information to the management of
training and development programmes. It helps it to determine the
content and subject-matter of in-training courses. It also helps in
checking application information, interviewing, weighing test results,
and in checking references.
6. Performance Appraisal : It helps in establishing clear-cut
standards which may be compared with the actual contribution of
each individual.
7. Health and Safety : It provides an opportunity for
indentifying hazardous conditions and unhealthy environmental
factors so that corrective measures may be taken to minimise and
avoid the possibility of accidents.
JOB DESCRIPTION
Job description is a written record of the duties, responsibilities
and requirements of a particular job. It is concerned with the job
itself and not with the work. It is a statement describing the job in
such terms as its title, location, duties, working conditions and
hazards. In other words, it tells us what is to be done and how it is
to be done and why. It is a standard of function, in that it defines the
appropriate and authorised contents of a job.
Job description helps top executives, especially when they
jointly discuss one anothers responsibilities. Overlapping or
confusion can then be pointed out questions can be raised about
the major thrust of each position, and problems of structure can be
identified. A job description becomes a vehicle for organisational
change and improvement.
A job description contains the following:
1. Job identification, which includes the job title, alternative
title, department, division, plant and code number of the job. The
job title identifies and designates the job properly. The department
division, etc. indicate the name of the department where it is
situated-whether it is the maintenance department, mechanical
shop etc. The location gives the name of the place.
34

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
2. Job Summary serves two important purposes. First it

provides a short definition which is useful as an additional
identification information when a job title is not adequate. Second, it
serves as a summary to orient the reader toward an understanding
of detailed information which follows. It gives the reader a quick
capsule explanation of the content of a job usually in one or two
sentences.
3. Job duties give us a comprehensive listing or the duties
together with some indication of the frequency of occurrence or
percentage of time devoted to each major duty. It is regarded as
the heart of a job.
4. Relation to other jobs : This helps us to locate the job in
the organisation by indicating the job immediately below or above it
in the job hierarchy. It also gives us an idea of the vertical
relationships of work flow and procedures.
5. Supervision : Under it is given the number of persons to be
supervised along with their job titles, and the extent of supervision
involved general, intermediate or close supervision.
6. Working conditions usually give us information about the
environment in which a job holder must work. These include cold,
heat, dust, wetness, moisture, fumes, odour, oily conditions, etc.
obtaining inside the organisation.
Information about jobs can be had from :
(i) Observation of employees while on work;
(ii) Study of specially maintained diaries;
(iii) A review of Critical incidents; and,
(iv) Discussions with departmental heads and outside experts or
consultants.
A job description enables us to frame suitable questions to be
asked during an interview. It is particularly helpful when the
application from is, used as a tool for eliminating the unfit
personnel. A job description helps us in :
(i) Job grading and classification;
(ii) Transfers and promotions;
(iii) Adjustments of grievances;
(iv) Defining and outlining promotional steps;
(v) Establishing a common understanding of a job between
employers and employees;
(vi) Investigating accidents;
35

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(vii) Indicating faulty work procedures or duplication of papers;

(viii) Maintaining, operating and adjusting machinery;
(ix) Time and motion studies;
(x) Defining the limits of authority;
(xi) Indicating case of personal merit;
(xii) Facilitating job placement;
(xiii) Studies of health and fatigue;
(xiv) Scientific guidance;
(xv) Determining jobs suitable for occupational therapy;
(xvi) Providing hiring specifications; and
(xvii) Providing performance indicators.
JOB SPECIFICATION
Job Specification is a standard of personnel and designates the
qualities required for an acceptable performance. It is a written
record of the requirements sought in an individual worker for a
given job. In other words, it refers to a summary of the personal
characteristics required for a job. It is a statement of the minimum
acceptable human qualities necessary for the proper performance
of a job.
Job specifications translate the job description into terms of the
human qualifications which are required for a successful
performance of a job. They are intended to serve as a guide in
hiring and job evaluation. As a guide in hiring, they deal with such
characteristics as are available in an application bank, with testing,
interviews, and checking of references.
Job specifications relate to:
(a) Physical characteristics, which include health, strength,
endurance, age-range, body size height, weight, vision, voice,
poise, eye, hand and foot co-ordination, motor co-ordination, and
colour discrimination.
(b) Poychological characteristics or special aptitudes which
include such qualities as manual dexterity, mechanical aptitude,
ingenuity, judgment, resourcefulness, analytical ability, mental
concentration and alertness.
(c) Personal characteristics traits of temperament such as
personal appearance, good and pleasing manners, emotional
stability, aggressiveness or submissiveness, extroversion; or,
36

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
34
introversion, leadership, co-operativeness, initiative and drive, skill
in dealing with others, unusual sensory qualities of sight, smell,
hearing, adaptability, conversational ability, etc.
(d) Responsibilities which include supervision of others,
responsibility for production, process and equipment; responsibility
for the safety of others; responsibility for generating confidence and
trust; responsibility for preventing monetary loss.
(e) Other features of a demographic nature, which are age,
sex, education experience and language ability.
JOB DESIGN
Job analysis helps in developing appropriate design of job to
improve efficiency and satisfaction. Job design is the process of
deciding on the contents of a job in terms of its duties and
responsibilities, on the methods to be used in carrying out the job,
in terms of techniques, systems and procedures and on the
relationships that should exist between the jobholder and his
superiors, subordinates and colleagues. It is a deliberate and
systematic attempt to structure the technical and social aspects of
work so as to improve technical efficiency and job satisfaction. Job
design is an attempt to create a match between job requirements
and human attributes. It involves both organising the components
of the job and the interaction patterns among the members of a
work group.
The main objective of job design is to integrate the needs of the
individual and the requirements of the organisation. Needs of
employees include job satisfaction in terms of interest, challenge
and achievement. Organisational requirements refer to high
productivity, technical efficiency and quality of work. Today,
educated and creative employees demand well-designed jobs.
Therefore, increasing attempts are being made to redesign jobs so
as to improve the quality of working life. A systematic body of
knowledge on the designing of jobs has been developed after the
Industrial Revolution and the large scale enterprises.
Approaches to Job Design : The main approaches to job
design are described below :
1. Classical Approach : Also known as Engineering approach,
37

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
it was developed by F.W. Taylor and his associates. The principles

of scientific management formed the basis for designing jobs in
most Organisations. These principles focus on planning,
standardising and improving human effort at the operative level in
order to maximise productivity. In the words of Taylor, the work of
every workman is fully planned out by the management at least one
day in advance and each man receives in most cases complete
written instructions, describing in detail the task which he is to
accomplish. This task specifies not only what is to be done but how
it is to be done and the exact time allowed for doing it.
Jobs designed on the basis of classical approach are not
appropriate in the modern environment characterised by increased
awareness, improved education and rising expectations of
workforce.
2. Behavioural Approach : The findings of Elton Mayo,
Frederick Herzberg and other human relations experts led to
search for alternative ways of designing jobs so as to avoid the
dysfunctional consequences of standardisation and simplification.
Job redesign, work structuring, job enrichment, participative system
and other similar strategies were developed to improve the quality
of work life. The aim of all these attempts is to design jobs which
will not only ensure technical efficiency but will satisfy social and
psychological needs of workers.
The most popular behavioural approach to job redesign is the
Job characteristics model of Hackman and Oldham. This model is
based on the assumption that three key psychological stats of a
jobholder determine his motivation, satisfaction and performance
on the job.
Behavioural approach to job design is a socio-technical
approach as it deals with both the technical and social aspects of a
job. It is, therefore, an improvement over the classical approach
which considered only the technical side of jobs. Tavistock Institute
of Human Relations, London has carried out several experiments in
the application of the socio-technical approach to job design.
The job characteristics model, however, suffers from some
limitations. It is probabilistic and has an intuitive appeal. But there is
little empirical evidence to support it. In one study of bank
employees in India growth need has not been found coaching,
counselling etc., are examples of corrective actions that help to
improve performance.
Limitations of Performance Appraisal : The main problems
involved in performance appraisal are as follows :
38

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
1. Errors in Rating : Performance appraisal may not be valid

indicator of performance and potential of employees due to the
following types of errors :
(a) Halo Effect : It is the tendency to rate an employee
consistently high or low on the basis of overall impression. One trait
of the employee influences the rater appraisal on all other traits.
For example, an employee may be rated high on performance just
because he sits on the job late in the evening. Similarly, a person
who does not shave regularly may be considered lazy at work and
may be underrated. This error may be minimised by rating all the
employees on one trait before taking up anther trait.
(b) Stereotyping : This implies forming a mental picture of a
person on the basis of his age, sex, caste or religion. It results in an
over-simplified view and blurs the assessment of job performance.
(c) Central Tendency : It means assigning average ratings to
all the employees in order to avoid commitment or involvement.
This is adopted because the rater has not to justify or clarify the
average ratings. As a result, the ratings are clustered around the
midpoint.
(d) Constant Error : Some evaluators tend to be lenient while
others are strict in assessing performance. In the first case,
performance is overrated (leniency error) while in the second type it
is underrated (strictness error). This tendency may be avoided by
holding meetings so that the raters understand what is required of
them.
(e) Personal Bias : Performance appraisal may become
invalid because the rater dislikes an employee. Such bias or
prejudice may arise on the basis of regional or religious beliefs and
habits or interpersonal conflicts. Bias may also be the result of time.
Recent experience or first impression of the rater may affect the
evaluation.
(f) Spill Over Effect : This arises when past performance
affects assessment of present performance. For instance, recent
behaviour or performance of an employee may be used to judge
him. This is called regency.
2. Lack of Reliability : Reliability implies stability and
consistency in the measurement. Lack of consistency over time and
among different raters may reduce the reliability of performance
appraisal. inconsistent use of measuring standards and lack of
training in appraisal techniques may also reduce reliability. Different
39

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
qualities may not be given proper weight age. Factors like initiative
are highly subjective and cannot be quantified.
3. Incompetence : Raters may fail to evaluate performance
accurately due to lack of knowledge and experience. Post appraisal
interview is often handled ineffectively.
4. Negative Approach : Performance appraisal loses most of
its value when the focus of management is on punishment rather
than on development of employees.
5. Multiple Objectives : Raters may get confused due to too
many objectives or unclear objective of performance appraisal.
6. Resistance : Trade unions may resist performance
appraisal on the ground that it involves discrimination among its
members. Negative ratings may affect interpersonal relations and
industrial relations particularly when employees/unions do not have
faith in the system of performance appraisal.
7. Lack of Knowledge : The staff appraising performance of
employees might not be trained and experienced enough to make
correct appraisal.
Questions :
1. Explain the meaning and importance of Job Descriptions.
2. What is Job Analysis ? What information is provided by it ?
Explain the Process, Purposes and Uses of Job Analysis.
3. What are the contents of Job Description?
RECRUITMENT AND SELECTION

1. Understand the concepts of Recruitment and Selection
2. Know the various internal and external Sources of Recruitment
3. Know Merits and Demerits of External Sources
4. Understand Evaluation of alternative sources
5. Know the purpose of Selection
6. Understand Criteria of Selection
INTRODUCTION
Recruitment means search of the prospective employee to suit
40

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
the job requirements as represented by job specificationa

technique of job analysis. It is the first stage in selection which
makes the vacancies known to a large number of people and the
opportunities that the organisation offers. In response to this
knowledge, potential applicants would write to the organisation. The
process of attracting people to apply in called recruitment.
Dale S. Beach has defined Recruitment as the development
and maintenance of adequate manpower resources. It involves the
creation of a pool of available labour upon whom the organisation
can depend when it needs additional employees.
According to Edwin B. Flippo : Recruitment is the process
of searching for prospective employees and stimulating them to
apply for jobs in the organisation.
Sources of Recruitment :
The various sources of recruitment are generally classified as
internal source and external source.
(a) Internal Sources : This refers to the recruitment from
within the company. The various internal sources are promotion,
transfer, past employees and internal advertisements.
(b) External Sources : External sources refers to the practice
of getting suitable persons from outside. The various external
sources are advertisement, employment exchange, past
employees, private placement agencies and consultants, walks-ins,
campus recruitment, trade unions, etc.
The following external sources of recruitment are commonly
used by the big enterprises:
1. Direct Recruitment: An important source of recruitment is
direct recruitment by placing a notice on the notice board of the
enterprise specifying the details of the jobs available. It is also
known as recruitment at factory gate.
The practice of direct recruitment is generally followed for
filling casual vacancies requiring unskilled workers. Such workers
are known as casual or badli workers and they are paid
remuneration on daily-wage basis. This method of recruitment is
very cheap as it does not involve any cost of advertising vacancies.
2.
Casual
Callers or
Unsolicited
Applications:
41
The

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
organisations which are regarded as good employers draw a

steady stream of unsolicited applications in their offices. This
serves as a valuable source of manpower. If adequate attention is
paid to maintain pending application folders for various jobs, the
personnel department may find the unsolicited applications useful
in filling the vacancies whenever they arise. The merit of this source
of recruitment is that it avoids the costs of recruiting workforce from
other sources.
3. Media Advertisement: Advertisement in newspapers or
trade and professional journals is generally used when qualified
and experienced personnel are not available from other sources.
Most of the senior positions in industry as well as commerce are
filled by this method. The advantage of advertising is that more
information about the organization job descriptions and job
specifications can be given in advertisement to allow self-screening
by the prospective candidates. Advertisement gives the
management a wider range of candidates from which to choose. Its
disadvantage is that is may bring in a flood of response, and many
times, from quite unsuitable candidates.
4. Employment Agencies: Employment exchanges run by the
Government are regarded as a good source of recruitment for
unskilled, semi-skilled and skilled operative jobs. In some cases,
compulsory notification of vacancies to the employment exchange
is required by law. Thus, the employment exchanges bring the jobs
givers in contact with the job seekers.
However, in the technical and professional area, private
agencies and professional bodies appear to be doing most of the
work. Employment exchanges and selected private agencies
provide a nation-wide service in attempting to match personnel
demand and supply.
5. Management Consultants: Management consultancy firms
help the organisations to recruit technical, professional and
managerial personnel They specialise middle level and top level
executive placements. They maintain data bank of persons with
different qualifications and skills and even advertise the jobs on
behalf their clients to recruit right type of personnel.
6. Educational Institutions or Campus Recruitment: Jobs in
commerce and industry have become increasing technical and
complex to the point where school and college degrees are widely
required. Consequently big organisations maintain a close liaison
42

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
with the universities, vocational institutes and management

institutes for recruitment to various jobs.
Recruitment from educational institutional is a well established practice of thousand of business and other
organisations.1t is also known as campus recruitment. Reputed
industrial houses which require management trainees send their
officials to campuses of various management institutes for picking
up talented candidates doing MBA.
7. Recommendation: Applicants introduced by friends and
relatives may prove to be a good source of recruitment. In fact,
many employers prefer to take such persons because something
about their background is known. When a present-employee or a
business friend recommends some one for a job, a type of
preliminary screening is done and the person is placed on a job.
8. Labour Contractors: Labour contractors are an important
source of recruitment in some industries in India. Workers are
recruited through labour contractors who are themselves
employees of the organisation. The disadvantage of this system is
that if the contractor leaves the organisation , all the workers
,employed through him will also leave That is why this source of
labour is not preferred by many businesses, organizations.
Recruitment through labour contractors has been banned for the
public sector units.
9. Telecasting: The practice of telecasting of vacant posts
over T.V. is gaining importance these days. Special programmes
like Job Watch, Youth Pulse, Employment News, etc, over the
T.V have become quite popular in recruitment for various types of
jobs. The detailed requirements of the job and the qualities required
to do it are publicized along with the profile of the organisation
where vacancy exists. The use of T.V. as a source of recruitment is
less as compared to other sources.
10. Raiding : Raiding is a technical term used when
employees working elsewhere are attracted to join organisations.
The organisations are
always on the lookout for qualified
professionals, and are willing to offer them a better deal if they
make the switch. There are always some employees who are
professionally very competent, but dissatisfied with something or
the other in the organisation. They form the easy group to attract.
The other group is formed of those who are equally competent but
are quite satisfied with their present position. To attract them, the
43

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
organisation has to offer a very lucrative package of perquisites.

Whatever may be the means used to attract, often it is seen as an
unethical practice and not openly talked about.
MERITS OF EXTERNAL SOURCES

The merits of external sources of recruitment are as under:
1. Qualified Personnel: By using external sources of
recruitment the management can make qualified and trained people
to apply for vacant Jobs in the organisation.
2. Wider choice : When vacancies are advertised widely a
large number of applicants from outside the organisation apply. The
management has a wider choice while selecting the people for
employment.
3. Fresh Talent: The insiders may have limited talents.
External sources facilitate infusion of fresh blood with new ideas
into the enterprise. This will improve the overall working of the
enterprise.
4. Competitive Spirit: If a company can tap external sources,
the existing staff will have to compete with the outsiders. They will
work harder to show better performance.
Demerits of External Sources
The demerits of filling vacancies from external sources are as
follows:
1. Dissatisfaction among Existing Staff: External recruitment
may lead to dissatisfaction and frustration among existing
employees. They may feel that their chances of promotion are
reduced.
2. Lengthy Process: Recruitment from outside takes a long
time. The business has to notify the vacancies and wait for
applications to initiate the selection process.
3. Costly Process: It is very costly to recruit staff from external
sources. A lot of money has to be spent on advertisement and
processing of applications.
4. Uncertain Response: The candidates from outside may not
be suitable for the enterprise. There is no guarantee that the
enterprise will be able to attract right kinds of people from external
sources.
44

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
EVALUATION OF ALTERNATIVE SOURCES

A company cannot fill all its vacancies from one single source.
It must carefully combine some of these sources, weighing their
cost and flexibility, the quality of men they supply, and their effect
on the present work force. Following are some of the measures
which can be used to assess how good or how poor various
sources have proved to be:
1. Timelag between Requisition and Placement: The basic
statistics needed to estimate the time lag are the time-lapse data.
To take an example, a companys past experience may show that
the average number of days from application to interview is 15 from
interview to offer is 5, from offer to acceptance is 7 and from
acceptance to report for work is 21. Therefore, if the company
begins its recruitment and selection process today, the best
estimate is that it will be 48 days before the new employee is added
to the pay-roll. With this information, the length of the pipe-line for
alternative sources of recruitment can be described and suitable
recruiting sources chosen.
2. Yield Ratios: These ratios tell us about the number of
leads/contacts needed to generate a -given number of hires in a
given time. To take an example, suppose a company is
contemplating expansion and needs 10 additional engineers in the
next 6 months. On the basis of its past experience the company
predicts as under: We must extend offers to 2 candidates to gain
one acceptance. If we need 10 engineers we will have to extend 20
offers. Further, if the interview -to-offer ratio has been 3 : 2 then 30
interviews must be conducted and since the invitees to interview
ratio is 4: 3 then as many as 40 candidates must be invited. Finally,
if contacts or leads required to find suitable candidates to invite are
in 6 : 1 proportions then 240 contacts be made.
3. Employee Attitude Studies: These studies try to discover
the reactions of present employees to both external and internal
sources of recruitment.
4. Correlation Studies: These studies tell us about the extent
of correlation which, exists between different sources of recruitment
and factors of success on the job.
Selection : To select means to choose. Selection is a part of
the recruitment function. It is the process of choosing people by
45

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
obtaining and assessing information about the applicants (age,

qualification, experience and qualities) with a view of matching
these with the job requirements and picking up the most suitable
candidates. The choices are made by elimination of the unsuitable
at successive stages of the selection process.
Purpose of Selection
The purpose of selection is to pick up the most suitable
persons who would match the requirements of the job and the
organization. The emphasis in selection is, therefore, on the optimal
match between the person and the job. Now the question arises as
to which is the dependent variable? Person or job. Some
organizations emphasize on selecting the Right Person for the
Right Job. Here the Job is usually considered constant (through
Jobs and Job context do undergo changes over time) and the
person is sought to be fitted into the job. Creative and innovative
organizations, instead, seek to find the Right Job for Right Person.
A secondary objective in selection could be to choose the best
person available. However, there could be a real problem with such
an objective if the Job is not appropriate for the person concerned.
It may become difficult for organizations to retain their best people
in jobs that do not offer opportunities for them to harness their
potential; instead they may lead to problems of monotony, boredom
and frustration among Individuals and increased and increased
turnover of staff for the organization.
Criteria of Selection
Selection decisions are usually based on how an applicant is
rated (rather, predicted) in terms of the likelihood of success on the
job. The information used found in the application blanks,
performance in one or more tests and the interview(s).
The criteria of selection needs to be critical to the job. The key
job dimensions identified in job analysis and job description provide
the basis for determining relevant criteria.
Frequently educational qualifications, technical skills and
achievements are used as the basis for selection. But is there a
statistical relationship between such requirements and job
performance? It appears that certain job requirements can be
measured more easily and accurately than certain others. The core
job skills like sensory motor skills and manipulative skills and
achievement can be measured relatively more accurately than
ones aptitude, interest and personality traits.
46

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Integrity
loyalty,
initiative/drive/resourcefulness
and
intelligence/mental alertness are the key attributes influencing the
selection of managerial employees. All these attributes being
subjective are hard to assess accurately, yet are widely attempted.
Perhaps it is so because managements and employers in India
have relatively less pressure to defend the criteria.
SELECTION PROCESS
The selection process begins with the job specification. The
more dearly and precisely it is done the less would be the number
of qualified applicants. Suppose the purpose is to select
management trainees. If the qualification prescribed is MBA, the
number of applicants may be in hundred. If the qualification is
graduation in any discipline, the number of applicants may be in
thousand. Of course, the reputation of the firm, the job content,
compensation package, location, etc. also influence the response
to any, recruitment drive. But Job specification does plays an
important role m deciding the quantity and, quality of response from
prospective applicants.
The selection process covers the period from the job
specification and initial contact with the applicant to his final
acceptance or rejection. The successive stages in the selection
process are referred to as hurdles that the applicants should cross.
Not all selection processes, however, include all these stages. The
complexity of the selection process usually increases with the
increase in the skill level and job level (responsibility and
accountability) of the position for which selection is being made.
The sequencing of the hurdles also may vary from job to job and
organization to organization.
When a market research firm is recruiting research
investigators on temporary basis for a specific assignment it may
ask the candidates to appear for interview along with written
application form in the next two days following the date of
advertisement and make job offers immediately after the interview
without any other tests or references.
Initial Screening: The initial screening and/or preliminary
interview is done to limit the costs of selection by letting only
suitable candidates go through the further stages in selection. At
this stage, usually a junior executive either screens all enquiries for
positions against specified norms (in terms of age, qualifications
and experience) through preliminary interview where information is
47

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
exchanged about the job, the applicant and the, mutual

expectations of the individual and the organization. If the
organization finds the candidate suitable, an application form,
prescribed for the purpose, is given to these candidates to fill in and
submit.
Application Form : The application form is usually designed to
obtain information on various aspects, of the applicants social,
demographic, academic and work-related background and
references. The forms may vary for different positions some
organizations may not have any form specially designed instead,
ask the candidates to write applications on a plain sheet.
Tests: A test is a sample of an aspect of an individuals
behavior, performance or attitude. It also provides a systematic
basis for comparing the behavior, performance or attitude of two or
more persons. Tests serve as a screening device and provide
supplementary inputs in selection decisions. Their value lies in the.
fact that they serve
additional predictors intended to make
selection decision more apt and accurate.
Intelligence Tests: These are tests to measure ones intellect
or qualities of understanding. They are also referred to as tests of
mental ability.
The traits of intelligence measured include:
reasoning, verbal and non-verbal
fluency, comprehension,
numerical, memory and spatial relations ability. Binet-Simon;
Standford-Binet and Weshier-Bellevue Scale are some examples of
standard intelligence tests.
Aptitude Tests: Aptitude refers to ones natural propensity or
talent or ability to acquire a particular skill. While intelligence is a
general trait, aptitude refers to a more specific capacity or potential.
It could relate to mechanical dexterity, clerical, linguistic, musical
academic etc.
Achievement Tests: These are proficiency tests to measure
ones skill or acquired knowledge. The paper and pencil tests may
seek to test a persons knowledge about a particular subject. But
there is no guarantee that a person who knows most also performs
best. Work sample tests or performance test using actual task and
working conditions (then simulated ones) provide standardized
measures of behavior to assess the ability to perform than merely
the ability to know. Work sample tests are most appropriate for
testing abilities in such skills as typing, stenography and technical
trades. Work sample tests bear demonstrable relationship between
test content and job performance.
48

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
PIP Tests : PIP tests are those which seek to measure ones
personality, interest and preferences. These tests are designed to
understand the relationship between any one of these and certain
types of jobs.
Interest tests are inventories of likes and dislikes of people
towards occupations, hobbies, etc. These tests help indicate which
occupation (e.g. artistic, literary, technical, scientific, etc.) are more
in tune with a persons interests. Strong Vocational Interest Blank
and Kuder Preference Records are examples of interest tests.
These tests do not; however, help. in predicting on the job
performance. Besides, they leave room for faking and the
underlying assumptions in the tests could be belied.
Projective Tests : These tests expect the candidates to
interpret problems or situations. Responses to stimuli will be based
on the individuals values, beliefs and motives. Thematic
Apperception Test and Rorschach Ink Blot Test are examples of
projective tests. In Thematic Apperception Test a photograph is
shown to, the candidate who is then asked to interpret it. The test
administrator will draw inferences about the candidates values,
beliefs and motives from an analyis of such interpretation.
Other Tests: A vide variety of other tests also are used though
less frequently and in rare instances instances. These include
polygraphy (literally mean many pens), graphology (handwriting
analysis), non-verbal communication tests (gestures, body
movement, eye-contact, etc an lie-detector tests.
The following could be considered as thumb rules of selection
tests: (a) Tests are to be used as a screening device; (b) Tests
scores are not precise measures. Use tests as supplements than
stand alone basis. Each test can be assigned a weightage; (c)
Norms have to be developed for each test; and their validity and
reliability for a given purpose is to be established before they are
used; (d) Tests are better at predicting failure than success; (e)
Tests should be designed, administered assessed and interpreted
only by trained and competent persons.
INTERVIEW
Interview is an oral examination of candidates for employment.
No selection process is complete without one or more interviews.
Interview is the most common and core method of both obtaining
49

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
information from job-seekers, and decision-making on their

suitability or otherwise.
Organizations may seek to make their selection process as
objective as possible. But interview which is an essential element of
the process, by and large still remains subjective.
Interviews usually take place at two crucial stages in the
selection process, i.e., at the beginning and in the end. Interviews
can differ in terms of their focus and format. Usually several
individuals interview one applicant. This is called panel interview.
Such panels usually consist of representatives from-personnel and
concerned operating units/line functions. In this method, usually,
applicants get screened from one stage to another, at least in the
intial stages. The interviews can be structured or unstructured
general or in-depth. Some times where the job requires the job
holder to remain claim and composed under pressure, the
candidates are intentionally objected to stress and strains in the
interview by asking some annoying or embarrassing questions.
This type of interview called the stress interview.
Interviewing is both an art and a science. The effectiveness of
the interview as a screening device can be improved by taking care
of certain aspects like the following :
1. The interview should be based on a checklist of what to look for
in a candidate. Such a checklist could be based on proper job
analysis. Each critical attribute which the interview seeks to
evaluate may be assigned a specific weightage.
2. It is desirable to prepare a specific set of guidelines for the
interview.
3. The interviewers need to trained to evaluate performance in the
interview objectively. Also, all interviewers need to develop
common understanding about the criteria measures, their
purposes and weightages.
4. The interviewers may use past behavior to predict future
behaviors and obtain additional information to attempt such
linkages more meaningfully.
5. There should be proper coordination between the initial and
succeeding interviews.
6. The interview (even stress interview) should be conducted in a
related physical setting.
50

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
BACKGROUND INVESTIGATION
The background investigation in selection process may include
verification of reference from past teachers, employers or public
men; pulic men; police verification; and, medical examination.
Background verification is sought to guard oneself against
possible falsification by applicant. But given the acute skill
shortages and competitive pirating strategies of employers it is
possible for some of them to give clean chit to those whom they
wish to get rid of and be unfair to those whom they are not
prepared to lose. There fore, employers in-private sector generally
find that they get more accurate information when they track the
actual past performance than when they merely ask for references
reflecting opinion about the candidate.
Medical and physical examinations are usually resorted to by
employers as part of the selection process mainly to :
(a) determine whether the applicant has the physical ability to
carry on the duties arid responsibilities effectively; ascertain
whether the applicant has a record of health problems, which can
potentially affect his behavior and performance on the job
adversely.
(b) know whether the applicant is more sensitive to certain
aspects of work-place environment such as chemicals.
Questions :
1. What do you mean by recruitment? Explain the external
sources of recruitment of Managerial Personnel.
2. Discuss the external sources of recruitment that are commonly
used by the big enterprises. Also discuss the merits and
demerits of external sources of recruitment.
3. Carefully describe the selection procedure in a big industrial
concern or What could be the basis of identifying the criteria for
selection How can its validity and reliability be established.
51

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
PERFORMANCE APPRAISAL
1. Understand meaning and definition of Performance Appraisal
2. Know purpose of Performance Appraisal
3. Understand the uses of Performance Appraisal
4. Know the essentials of an Effective Performance Appraisal
System
5. Understand the Performance Appraisal Process
6. Understand main methods or Techniques of Performance
Appraisal
INTRODUCTION
Performance appraisal or Performance evaluation is a method
of evaluating the behaviour of employees in a work place, normally
including both the quantitative and qualitative aspect of job
performance. Performance here refers to the degree of
accomplishment of the tasks that makeup an individual job. It
indicates how well an individual fulfilling the job demands.
Performance is measured in terms of results. Thus, Performance
appraisal is the process of assessing the performance or progress
of an employee, or a group of employees on th given job, as well as
his potential for future development. Thus, performance appraisal
comprises all formal procedures used in organisations to evaluate
contributions, personality, and potential of individual employees. In
other words, performance appraisal includes the comparison of
performance scales of different individuals holding similar areas of
work responsibilities and relate to determination of worth of the
scales for the achievement of organisaton objective.
Definitions of Performance Appraisal : Performance Appraisal
has been defined as follows :
1. According to Edwin Flippo, Performance appraisal is the
systematic, periodic and an impartial rating of an employees
excellence in matters pertaining to his present job and his potential
for a better job.
2. According to Cummings, The overall objective of performance
appraisal is to improve the efficiency of an enterprise by attempting
to mobilise the best possible efforts from individuals employed in it.
Such appraisals achieve four objectives including the salary
reviews the development and training of individuals, planning job
52

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
rotation and assistance promotions.

3. According to Wendell French, Performance appraisal and
review in the formal, systematic assessment of how well employees
are performing their jobs in relations to establish standards and the
communication of that assessment to employees.
4. According to Dale Yoder, Performance appraisal includes all
formal procedures used to evaluate personalities and contributions
and potentials of group members in a working organisation. It is a
continuous process to secure information necessary for making
correct and objective decisions on employees.
Performance appraisal is a systematic evaluation of the
employees performance at work. Performance appraisal is a
process of evaluating an employees performance on a job in terms
of its requirement. It is a process of estimating or judging the value,
excellence, qualities of status of some object, person or thing.
Performance appraisal is a formal programme in an
organisation which is concerned with not only the contributions of
the members who form part of the organisation, but aims at spotting
the potential also. The satisfactory performance is only a part of the
system as a whole and the management needs more information
than mere performance ratings of the subordinates.
Performance appraisal is the systematic evaluation of the
individual with respect to his performance on the job and his
potential for development. Performance appraised is collcerned
with determining the differences among the employees working in
the organisation. Generally, the evaluation is done by the
individuals immediate superior in the organisation and whose
performance is reviewed in turn by his superior. Thus, everyone in
the organisation who rates others below him is also rated by his
superiors, Performance appraisal employs rating techniques for
comparing individual employees in the work group, in terms of
personal qualities or deficiencies and the requirements of their
respective jobs
Characteristics of Performance Appraisal : The following
are the characteristics of Performance Appraisal
1. A Process : Performance appraisal is not a one-act play. It
is rather a process that involves several acts or steps.
53

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
2. Systematic Assessment : Performance appraisal is a

systematic assessment of an employees strengths and weakness
in the context of the given job.
3. Main Objective : The main objective of it is to know how
well an employee is going for the organisation and what needs to
be improved in him.
4. Scientific Evaluation : It is an objective, unbiased and
scientific evaluation through similar measure and procedures for all
employees in a formal manner.
5. Periodic Evaluation : Although informal appraisals tend to
take place in an unscheduled manner (on continuous) basis with
the enterprises a supervisors evaluate their subordinates work and
as subordinates appraise each other rand supervisors on a daily
basis, yet the systematic (i.e., formal) appraisal of an individual
employee is likely to occur at certain intervals through out that
persons history of employment (say quarterly, six monthly,
annually, etc.)
6. Continuous Process : In addition to being periodic
performance usually is an ongoing process. It means that
appraisals are regularly scheduled and are not dumped on the
employee on whimsical dates without relevance. The process has
not been broken in persons history of employment however, the
periodicity of appraisal may be changed as per needs of the
situation.
7. Employee Feedback : Performance appraisal system
provides information to employees on how well they are doing their
jobs, and this feedback is provided to them when it is relevant.
Performance appraisal is also called Employee Rating and
Service Rating. Performance appraisal and merit rating are used
synonymously. But strictly speaking performance appraisal is a
wider term than merit-rating. In merit rating the focus is on judging
the calibre and worth of an employee so as to place him on right
job. On the other hand, performance appraisal focuses on the
performance and future potential of the employee. Its aim is not
simply to decide placement or promotion but to measures the value
of worker in different job situations.
54

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
PURPOSE OF PERFORMANCE APPRAISAL

The following are the main purposes of performance appraisal.
1. Appraisal Procedure : It provides a common and unified
measure of performance appraisal, so that all employee are
evaluated in the same manner. It gives an indiscriminatory rating of
all the employees.
2. Decision Making : Performance appraisal of the employees
is extremely useful in the decision making process of the
organization. In selection, training, promotion, pay increment and in
transfer, performance appraisal is very useful tool.
3. Work Performance Records : Performance appraisal gives
us a complete information in the form of records regarding every
employee. In the case of industrial disputes even arbitrator accepts
these records in the course of grievance handling procedure.
4. Employees Development : Performance appraisal guides
the employees in removing their defects and improving their
working. The weaknesses of the employee recorded in the
performance appraisal provide the basis for an individual
development programme. If properly recorded and used, the
performance appraisal gives the fair opportunities to employees to
correct and rectify their mistakes.
5. Enables Supervisors to be More Alert and Competent :
Performance appraisal enables supervisor to be more alert and
competent and to improve the quality of supervision by giving him a
complete record of employee's performance. He can guide an
employee, where he is prone to commit mistakes.
6. Merit Rating : Merit rating is another name of performance
appraisal, it gives supervisors a more effective tool for rating their
personnel. It enables them to make more careful analysis of
employee's performance and make them more productive and
useful.
7. Improves Employer Employee Relations : Performance
appraisal is not only a useful guide for the supervisors and
employees but it improves the employer-employee relations by
creating a more conductive and amicable atmosphere in the
organization. It also stimulates free exchange of thoughts and ideas
55

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
between the supervisor and his men. In this way performance

appraisal bridges the emotional gap between the employer and
employee by bringing them more close and by reducing man-toman differences in the organization.
USES OF PERFORMANCE APPRAISAL

Performance appraisal helps the employees in Selfimprovement and Self-development. It helps the management in
taking decisions about Placement, Promotions, Transfer, Training
and Development,etc.
It helps to achieve individual and
organisational goals. It is useful to the employees and the
organisation. Therefore, Performance Appraisal should be
conducted objectively from time to time. The employees should not
oppose it. However, they should see that the performance
appraisals are systematic, fair and impartial. It should not be for
punishing the employees. It should be for improving the employees
and their performances.
1. Help in Deciding Promotion : It is in the best interest of the
management to promote the employees to the positions where they
can most effectively use their abilities. A well-organised,
development and administered performance appraisal programme
may help the management in determining whether an individual
should be considered for promotion because the system not only
appraises the worth of the employee on the present job but also
evaluates his potentialities for higher job.
2. Help in Personnel Actions : Personnel actions such as layoffs, demotions, transfers and discharges etc. may be justified only
if they are based on performance appraisal. While in some cases,
actions are taken because of unsatisfactory performance of the
employee, in some other cases it may be called for due to some
economic conditions beyond control such as changes in production
process. In former case, the action can only be justified on the
basis of the result of performance appraisal.
3. Help in Wage and Salary Administration : The wage
increase given to some employees on the basis of their
performance may be justified by the performance appraisal results.
In some cases appraisal, i.e., merit and seniority are combined for
higher salaries on better positions.
56

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
4. Help in Training and Development : An appropriate

system of performance appraisal helps the management in devising
training and development programmes and in identifying the areas
of skill or knowledge in which several employees are not at par with
the job requirements. Thus the appraisal system points out the
general training deficiencies which may be corrected by additional
training, interviews, discussions or counselling. It helps in spotting
the potential to train and develop them to create an inventory of
executives.
5. Aid to Personnel Research : Performance appraisal helps
in conducting research in the field of personnel management.
Theories in personnel field are the outcome of efforts to find out the
cause and effect relationship between personnel and their
performance. By studying the various problems which are faced by
the performance appraiser, new areas of research may be
developed in personnel field.
6. Help in Self Evaluation : Performance appraisal helps the
employee in another way also. Every employee is anxious to know
his performance on the job and his potentials for higher jobs so as
to bring himself to the level of that position.
7. Help in Creating Healthy Competition : Performance
appraisal brings out the deficiencies and shortcomings of the
employees. Discussions between rater and rates may be
conducted in a spirit of co-operation and mutual understanding.
This gives an opportunity to the employer to have an insight on
their performance and to take corrective measures to improve upon
their performance.
Essentials of an Effective Performance Appraisal System :
The following are the essentials of an effective Performance
Appraisal System :
1. Mutual Trust : The existence of an atmosphere of
confidence and trust so that both supervisor and employee may
discuss matters frankly and offer suggestions which may be
beneficial for the organisation and for an improvement of the
employee. An atmosphere of mutual trust and confidence should be
created in the organisation before introducing the appraisal system.
Such an atmosphere is necessary for frank discussion of appraisal.
It also helps to obtain the faith of employees in the appraisal
system.
2. Clear Objectives : The objectives and uses of performance
57

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
appraisal should be made clear and specific. The objectives should

be relevant, timely and open. The supervisor must very thoroughly
evaluate the employees performance so that he is capable of
meeting challenges about his ratings of his subordinate.
3. Standardisation : Well-defined performance factors and
criteria should be developed. These factors as well as appraisal
form, procedures and techniques should be standardised. It will
help to ensure uniformity and comparison of ratings. The appraisal
techniques should measure what they are supposed to measure.
These should also be easy to administer and economical to use.
The appraisal system should be performance based and uniform.
Employees should be made fully aware of performance standards
and should be involved in setting the standards.
4. Training : Evaluators should be given training in philosophy
and techniques of appraisal. They should be provided with
knowledge and skills in documenting appraisals, conducting post
appraisal interviews, rating errors, etc.
5. Job Relatedness : The evaluators should focus attention on
job-related behaviour and performance of employees. The results
of performance rather than personality traits should be given due
weight. Suggestions for improvement should be directed towards
the objective facts of the job (such as work schedules, output,
reports completed, sales made, losses incurred, profits earned,
accomplishments, etc.). Joint plans for the future must be
developed after consultation with subordinates. The individual as a
person should never be criticised.
6. Strength and Weaknesses : The raters should be required
to justify their ratings. The supervisor should try to analyse the
strength and weaknesses of an employee and advise him on
correcting die weakness.
7. Feedback and Participation : Arrangements should be
made to communicate the ratings to both the employees and the
raters. The employees should actively participate in managing
performance and in the ongoing process of evaluation. The
superior should play the role of coach and counseller. The overall
purpose of appraisals should be developmental rather than
judgmental.
8. Individual Differences : While designing the appraisal
system, individual differences in organisations should be
58

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
recognised. Organisations differ in terms of size, nature, needs and

environment. Therefore, the appraisal system should be tailormade for the particular organisation. The needs of rates in terms of
feedback, mobility, confidence and openness should also be
considered.
9. Post Appraisal Interview : A post-appraisal interview
should be arranged so that employees may be supplied with
feedback and the organisation may know the difficulties under
which employees work, so that their training needs may be
discovered.
10. Review and Appeal : A mechanism for review of ratings
should be provided. Which particular technique is to be adopted for
appraisal should be governed by such factors as the size, financial
resources, philosophy and objectives of an organisation.
The results of the appraisal, particularly when they are
negative, should be immediately communicated to the employees,
so that they may try to improve their performance.
Steps in Appraising Performance : Various steps in
appraising performance of employees are as follows :
1. Establishing Performance Standard : The process of
evaluation begins with the establishment of Performance
Standards. While designing a job and formulating a job description,
performance standards are usually developed for the position.
These standard should be very clear and not vague, and objective
enough to be understood and measured. These standard should be
discussed with the supervisors to find out which different factors are
to be incorporated. Weights and points to be given to each factor
and these then should be indicated on the Appraisal Form, and
later on used for appraising the performance of the employees.
2.
Communicating
Performance
Expectations
to
Employees : The next important step is to communicate the
aforesaid standards to the concerned employees. Their jobs and
jobs-related behaviour should be clearly explained to them. It
should be noted that job related behaviours are those critical
behaviour that constitute job success. The employee should not be
presumed to guess what is expected of him. It should be noted that
here communication means that the standards have been
transmitted to the employee and he has received and understood
them a two-way communication, i.e., transference of information
59

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
from the manager to the subordinate regarding expectations, and

feedback from the subordinate to the manager that this information
has been received and understood in same context and contents.
3. Measuring Actual Performance : The third step is the
measurement of actual performance. To determine what actual
performance is, it is necessary to acquire information about it we
should be concerned with how we measure and what we measure.
Four sources of information are frequently used to measure actual
performance : personal observation, statistical reports, oral reports
and written reports.
4. Comparing Actual Performance with Standards : The
next step is comparison of actual performance with the standards.
By doing so the potentiality for growth and advancement of an
employee can be appraised and judged. Efforts are made to find
out deviations between standard performance and actual
performance.
5. Discussing the Appraisal with the Employee : After
comparing actual performance with standards, the next step is to
discuss periodically the appraisal with the employee. Under this
discussion good points, weak points, and difficulties are indicated
and discussed so that performance is improved. The information
that the subordinate receives about his performance assessment
has a great impact of his self-esteem and on his subsequent
performance. Conveying good news is considerably less difficult for
both the manager and the subordinate than when performance has
been below expectations.
6. Initiating Corrective Action : The final step is the initiation
of corrective action whenever necessary. Immediate corrective
action can be of two types. One is immediate and deals
predominantly with symptoms. The other is basic and delves into
causes. Immediate corrective action is often described as putting
out fires whereas basic corrective action gets to the source of
deviation and seeks to adjust the difference permanently. Coaching
and counseling may be done or special assignments and projects
may be set. Persons may be deputed for formal training courses,
and decision making responsibilities and authority may be
delegated to the subordinates. Attempts may also be made to
recommend for salary increases or promotions, if these decisions
become plausible in the light of appraisals.
It should be noted that the above details may vary from
organisation to organisation, but these steps usually form the
60

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
principal steps/features of a sound evaluation programme.
METHODS OR TECHNIQUES OF PERFORMANCE

APPRAISAL
Several methods and techniques are used for evaluating
employee performance. They may be classified into two broad
categories as shown.
Performance Appraisal
Traditional Methods
Modern Methods
1. Ranking Method
2. Grading Method
3. Man-to-Man Comparison Method
4. Graphic Rating Scale Method
1. Management by Objective (MBO)

2. Assessment Centre Method
3. Human Asset Accounting Method
4. Behaviourally Anchored Rating Scales
5. 360o Appraisal
Traditional Methods of Performance Appraisal : There are

different techniques/methods which are used for performance
appraisal of employees. Some of the methods of performance
appraisal are:
1. Ranking Method : Ranking method is the oldest and
simplest method of rating. Here, each employee is compared with
all others performing the same job and then he is given a particular
rank i.e. First Rank, Second Rank etc. It states that A is superior to
B. B is superior to C and so on. This method ranks all employees
but it does not tell us the degree or extent of superiority i.e. by how
much one employee is superior to another. Secondly, this ranking
is based on only mental assessment so it is not possible to give any
objective proof about why the rater has ranked one employee as
superior to another. In this method, the performance of individual
employee is not compared with the standard performance. Here,
the best is given first rank and poorest gets the last rank.
The ranking method is highly subjective. Similarly, here the
employees are compared as a whole. Comparison of the various
parts of an employee's performance is not done.
2. Grading Method : Under this method of performance
appraisal, different grades are developed for evaluating the ability
of different employees and then the employees are placed in these
61

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
grades. These grades may be as follows : (i) Excellent; (ii) very

good; (iii) Good; (iv) Average; (v) Bad; (vi) Worst.
3. Man-to-Man Comparison Method : This method was first
used in USA army during the 1st World War. Under this method,
few factors are selected for analysis purposes. These factors are :
leadership, dependability and initiative. After that a scale is
designed by the rate for each factor. A scale of person is also
developed for each selected factor. Each person to be rated is
compared with the person in the scale, and certain scores for each
factor are awarded to him/her. In other words, instead of comparing
a whole man to a whole man personnel are compared to the key
man in respect of one factor at a time.
We can use this method in job evaluation. This method is also
known as the Factor Comparison Method. In performance
appraisal, it is not of much use because the designing of scale is a
very difficult task.
4. Graphic Rating Scale Method of Performance Appraisal:
This is the very popular, traditional method of performance
appraisal. Under this method, scales are established for a number
of fairly specific factors. A printed form is supplied to the rater. The
form contains a number of factors to be rated. Employee
characteristics and contributions include qualities like quality of
work, dependability, creative ability and so on. These traits are then
evaluated on a continuous scale, where the rater places a mark
somewhere along the scale. The scores are tabulated and a
comparison of scores among the different individuals is made.
These scores indicate the work of every individual.
The following table presents simple graphic scale :
Quality
Excellent
Good
Average
Poor
Quantity Creative Dependability
This method is popular because it is simple and does not

require any writing ability. The method is easy to understand and
use. Comparison among pairs is possible. This is necessary for
decision on salary increases, promotion, etc.
62

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
MODERN METHOD OF APPRAISAL AND CAREER

DEVELOPMENT
Most of the traditional methods emphasise either on the task or
the workers personality, while making an appraisal. For bringing
about a balance between these two, modern methods, have been
developed. The details of these methods are as follows :
1. Management by Objective (MBO) : It was Peter F. Drucker
who first gave the concept of MBO to the world in 1954 when his
book The Practice of Management was first published.
Management by objective can be described as, a process whereby
the superior and subordinate managers of an organisation jointly
identify its common goals, define each individuals major areas of
responsibility in terms of results expected of him and use these
measures as guides for operating the unit and assessing the
contribution of each of its members.
Essential Characteristics of MBO : The important features of
MBO are as follows :
1. A Philosophy : Management by objective is a philosophy or
a system, and not merely a technique.
2. Participative Goal Setting : It emphasises participative goal
setting.
3. Clearly Define Individual Responsibilities : Management
by objective (MBO) clearly defines each individuals responsibilities
in terms of results.
4. Accomplishment of Goal : It focuses a tension on what
goal must be accomplished rather than on how it is to be
accomplished (method).
5. Objective Need into Personal Goal : MBO converts
objective need into personal goals at every level in the
organisation.
6. It Establishes Goals Yardsticks : It establishes standards
or goals yardsticks as operating guides and also as basis of
performance evaluation.
63

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
7. Efforts to Blend and Balance Goals : It is a system

intentionally directed toward effective and efficient attainment of
organistional and personal goals.
Objectives of MBO : The objective of MBO is to change
behaviour and attitudes towards getting th ejob done. In other
words, it is results-oriented. It is performance that counts. It is a
management system and philosophy that stress goals rather than
methods. It provides responsibility and accountability and
recognises that workers or employees have needs for achievement
and self-fulfillment. It meets these needs by providing opportunities
for participation in goal setting process. Subordinates become
involved in planning their own careers.
The Process of MBO : It is as follows :
1. Establishment of Goal : The first step is to establish the
goals of each subordinate. In some organisations, superiors and
subordinates work together to establish goals. While in other
organisation, superiors establish goals for subordinates. The goals
typically refer to the desired outcome to be achieved. Thereafter
these goals can be used to evaluate employee performance.
2. Setting the Performance Standard : The second step
involves setting the performance standard for the subordinates in a
previously arranged time period. As subordinates perform, they
know fairly well what there is to do, what has been done, and what
remains to be done.
3. Comparison of Actual Goals with the Standard Goals : In
the third step the actual level goal attainment is compared with the
standard goals. The evaluator explores reasons of the goals that
were not met and for the goals that were exceeded. This step helps
to determine possible training needs. It also alerts the superior to
conditions in the organisation that may affect a subordinate but
over which the subordinate has no control.
4. Establishing New Goals, New Strategies : The final step
involves establishing new goals and, possibly, new strategies for
goals not previously attained. At this point, subordinate and
superior involvement in goal-setting may change. Subordinates
who successfully reach the established goals may be allowed to
participate more in the goal-setting process next time. The process
is repeated.
64

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Benefits or Advantages of MBO : The benefits of MBO are

as follows :
1. Balanced Focus on Objectives : MBO forces the
management to set objectives with balanced stress on key result
area. Thus, crisis conditions are avoided to take place in the
organisation.
2. Better Managing Things : MBO forces managers to think
about planning for results, rather than merely planning activates or
work. Managers are required to ensure that the targets are realistic
and needed resources are made available to subordinates to
achieve the targets. Clearly set objectives for the subordinates
serve as evaluation standards and motivators for them. Thus, MBO
results in improvement in managing.
3. Better Organising : The positions in the enterprise can be
built around the key result areas. Managers are required to clarify
organisational roles and structures hence better organising.
4. MBO Reduces Role Conflict and Ambiguity : Role conflict
exists when a person is faced with conflicting demands from two or
more supervisors; and role ambiguity exits when a person is
uncertain as to how he will be evaluated, or what he has to achieve.
Since MBO aims at providing clear targets and their order or
priority, it reduces both these situations.
5. It Provide more Objective Appraisal Criteria : The targets
emerge from the MBO process provide a sound set of criteria for
evaluating the managers performance.
6. More Motivation : MBO helps and increases employee
motivation because it relates overall goals to the individuals goals :
and help to increase an employees understanding or where the
organisationis and where it is heading.
7. Managers Complete with Themselves : Managers are
more likely to complete with themselves than with other managers.
The kind of evaluation can reduce internal conflicts that often arise
when managers compete with each other to obtain scarce
resources.
8. Develop Personal Leadership : MBO helps the individual
manager to develop personal leadership, especially the skills of
listening, planning, controlling, motivating, counseling and
65

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
evaluating. This approach to managing instills a personal

commitment to respond positively to the organisations major
concerns as well as to the development of human resources.
9. MBO Identifies Problem Early : It identifies problems better
and early. Frequent performance review sessions makes this
possible.
10. Identifies Performance Deficiency : MBO identifies
performance deficiencies and enables the management and the
employee to set individualised self improvement goals and thus
proves effective in training and development of people.
Mc Gregor points out that MBO, in most of the cases, does
some good without costing much. He further point out, under proper
conditions, participation and consultative management provide
encouragement to people to direct their creative energies towards
organisation objectives, give them some oice in decisions which
affect them, and provide sufficient opportunities for satisfaction of
social, egoistic and self-fulfillment needs.
DISADVANTAGES OF MBO
1. Unfavourable Attitude of Managers : Some executives
have an attitude that the regular attention required of them by
Management by objectives system, drawn heavily on their busy
time-schedule and is not consistent with their roles. They feel that it
is not so effective a way as some other approaches. Some view
their roles as primarily involving policy-making, budget formulation
etc.
2. Difficult to Apply MBO Concepts : Those executives who
have been involved very often find it difficult to apply MBO concepts
to their own work habits. They find it hard to think about the results
of work rather than the work itself. They tend to over emphasize
goals that the easy to quantify, sometimes forgetting that workers
often behave almost like children at play-when the game no longer
challenges, interest is soon last.
3. Heavy Paper Work : MBO involves a huge amount of news
letter, instruction booklets, training manuals, questionnaires,
performance data review and appraisals report to be prepared by
the superior and subordinates. Thus MBO is said to have created
one more paper mill in organisation added to the already existing
66

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
large amount of paper work.

4. Tug of War : There is sometimes tug of war in which the
subordinates try to set the lowest targets possible and the
supervisors the highest.
5. Time Consuming : MBO is time consuming especially in the
early phases of its introduction when employees are unfamiliar with
its process.
A number of pitfalls have been indicated, by the researchers, in
the way of effective working of MBO programmes. The reasons for
failure in the MBO process are : hasty implementation,
unknowledgeable users, lack of management follow through, and
support, over emphasis on structure, treatment of another gimmick,
failure to carefully monitor and encourage the MBO process during
hard initial year of implementation.
MBO can be effective technique for performance evaluation
and for motivating subordinates, by developing communication
between executives at all levels. Those at the bottoms must be
willing to listen to the voice of experience, and those at the bottoms
must be willing to listen to the voice of experience, and those at the
top willing to accept fresh idea from lower echelon employees.
Similarly, executives must keep abreast of new programmes,
especially the modern ideas that have been developed in the
academic circles.
2. Assessment Centre Method
This concept was first applied to military situations by Simoniet
in the Geran Army in the 1930s and the War office Selection Board
of the British Army in the year 1960. The main objective of this
method was and is to test candidates in a social situation, using a
number of assessors and variety of procedures. The most
important characteristic of the assessment centre is job-related
simulations. These simulations involve characteristics that
managers feel are important to the job success. The evaluators
observe and evaluate participants as they perform activities
commonly found in these higher level jobs.
In this method many evaluators join together to assess the
performance of employee in several situations with the use of
variety of criteria. It is used mostly to help select employees for the
67

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
first level (the lowest) supervisory positions. The assessments are

made to find employee potential for the purpose of promotions. The
assessment is generally done with the help of a couple of
employees and involves a paper-and pencil test, interviews, and
situational exercises. The main features of the techniques are given
below :
(i) Leaderless Discussion : The use of situational excises
such as an in basket exercise, business game, a role-playing
incident and leaderless group discussion.
(ii) Highly Experienced Evaluator : Evaluators are drawn
from experienced managers with proven ability at different level of
management.
(iii) Employees Individual and Collective Evaluation : The
evaluators evaluate all employees, both individually and
collectively, and each candidate is given one of the three categories
more than acceptable, less than acceptable and unacceptable.
(iv) Preparation of Summary Report : A summary Report is
made by the members, and a feed back on a face-to-face basis is
administered to all the candidates who ask for it.
Objectives of Assessment Centres : The centres are used
for the following purposes :
1. For implementing affirmative goals.
2. For making an early determination of potential.
3. For providing accurate information relating with human resource
planning.
4. For determining individual training needs of employees.
5. For selecting recent college students for entry level position.
6. For measuring potential for first level supervision, sales and
upper management positions and also for higher levels of
management for development purposes.
The characteristics assessed in a typical assessment centre
include assertiveness, persuasive ability, communicating ability,
planning and organisaional ability, self confidence, resistance to
stress, energy level, decision-making, sensitivity to the feeling
others, administrative ability, creativity, and mental alertness etc.
Procedure : The Assessment centre programme commonly
68

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
used as follows :
Firstly : A leadership group is made each member supporting
a predefined position, but the group must arrive at consensus.
Secondly : A task force is used with an appointed leader, who
decides on a course of action.
Thirdly : Simulation games and in-basket exercises are used
to test organisational and planning abilities.
Fourthly : Oral report is made by the candidate, which tests
his communication skills and straight into his present position.
Fifthly and Lastly : Personal interviews, and projective tests
are used to assess work motivation, career orientation, and
dependence on other. Paper and pencil tests measure intellectual
ability.
The duration of Assessment centre programme varies with the
persons. For instance, centre designed to select first line
supervisors, sales personnel, and management trainee generally
last for a day or less; while those used for higher-level managers
may run for two or three days or longer if used for developmental
and not for selection purposes.
Drawbacks : These are as follows :
(i) Exam Syndrome : One of the most obvious drawbacks is
the examination-taking syndrome solid performer in day-to-day
operations feel suffocated in the simulated environment.
(ii) Adverse Effect on Potential : Another drawback is its
potential adverse effect on those not selected to participate in the
exercise.
(iii) Negative Reaction : Employees who receive a poor report
from the centre may react in negative way.
(iv) Poor Report Demoralises Employee : A good performer
at one level may leave the organistaion in order to remove the bad
assessment report from his or her work record. Thus, a poor report
can demoralise an employee who was once an asset.
69

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(v) Other Problems : Other problems include-strong and

unhealthy sense of competition among the assesses, difficulty of
conducting test frequently, and the possibility of overemphasising
the test performance.
However a well-conducted assessment centre can and does
achieve better forecasts of future performance and progress than
other methods of appraisal. Apart from that reliability, content
validity, and predictive validity are said to be high in the
assessment centres. This test helps in making sure that the wrong
people are not hired or promoted.
3. Human Asset Accounting Method :
This technique refers to money estimates to the value of a
firms internal human organisation and its external customer
goodwill. If well trained employees leave a firm, the human
organisation is worthless; if they join it, its human assets are
increased. if distrust and conflict prevail, the human enterprise is
devalued. If team work and high morale prevail, the human
organisation is a very valuable asset.
The current value of a firms human organisation can be
evaluated by developed procedures by undertaking periodic
measurements of key casual and intervening enterprise variables.
The key casual variables include the structure of an organisations
management policies, decisions, business leadership, skills,
strategies, and behaviour. The intervening variables indicate the
internal state and health of an organisation. They include loyalties,
attitudes, motivations, and collective capacity for effective
interaction, communication and decision-making. These two types
of variable measurements must be made over several years to
provide the needed date for the computation of the human asset
accounting.
4. Behaviourally Anchored Rating Scales (BARS) :
This method is also called behavioural expectation scales.
These are the rating scales whose scale points are determined by
statements of effective and ineffective behaviour. They are said to
be behaviourally anchored in that the scales represent a range of
descriptive statements of behaviour varying from the least to the
most effective. A rater must indicate which behaviour on each scale
best described an employees performance. Behaviourally
anchored rating scales (BARS) are having 5 steps :
70

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
1. Generate Critical Incidents : Persons with knowledge of

the job to be appraised (job holders/supervisors) are asked to
describe specific illustrations (critical incidents) of effective
performance behaviour.
2. Develop Performance Dimensions : These people then
cluster the incidents into a smaller set (or say 5 or 10) of
performance dimensions. Each cluster (dimension) is then defined.
3. Reallocate Incidents : Any group of people who also know
the job then reallocate the original critical incidents. They are given
the clusters definitions, and critical incidents, and asked to
redesign each incident to the dimension it best described. Typically
a critical incident is retained if some percentage usually (50 to 80%)
of this group assigns it to the same cluster as the previous group
did.
4. Scale of Incidents : This second group is generally asked
to rate (7 or 9 point scales are typical) the behaviour described in
the incident as to how effectively or ineffectively it represents
performance on the appropriate dimension.
5. Develop Final Instrument : A subset of incident (usually 6
or 7 pe) cluster are used as behaviour anchors for the performance
dimensions.
BARS were developed to provide results which subordinates
could use to improve performance superiors would feel comfortable
to give feedback to the ratee. Further, BARS help to overcome
rating errors. Unfortunately, the method too suffers from distortions
inherent in most rating techniques.
5. 360o Appraisal : In 360-degree performance appraisal
technique a manager is rated by everyone above, alongside and
below him.
360 degree approach is essentially a fact-finding, selfcorrecting technique, used to design promotions. The personality of
each top manager their talents, behavioural traits, values, ethical
standards, tempers, loyalties is to be scanned, by their
colleagues as they are best placed to diagnose their suitability for
the job requirements.
In this method a question are is structured to collect required
71

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
data about a manager from his bosses, peers, subordinates.

360-degree approach of assessment provides equal
opportunity to evaluate the efforts of the top manager or managers
in running a company effectively. It focuses on the intrinsic qualities
of the manager as well as his capacity to lead. It also gives
feedback to all assesses on their styles.
Merits of 360-Degree Approach : The merits of the technique are
1. The organisation gains from the self-awareness of the top
managers. It reveals strengths and weaknesses in their
managing styles.
2. The gap between self assessment and the views of ones
colleagues is reduced.
3. Teamwork thrives once peer group assessment is included in
the methodology.
4. Empowerment is facilitated.
5. Facts about the organisational culture are brought to light.
6. Inflexible managers are forced to initiate change in their style:
Demerit of 360-Degree Approach : The main drawbacks of
this approach are as follows :
1. 360-degree approach can be utilised to humiliate people.
2. Response from colleagues tends to be biased.
3. Linking rewards to findings can prove to be unfair.
4. The results could be uneven.
This technique identifies most suitable and acceptable person
for the consideration of promotion. 360-degree approach supports
the companys progress and rewarding the excellent performance
of an individual.
Limitations of Performance Appraisal
The main limitations of Performance Appraisal are explained
below :
1. Time Consuming : Performance appraisal is a time taking
affair. It is a very lengthy process under which different forms are to
be filled in and various observations are required to be noted in a
careful manner.
2. Lack of Reliability : Reliability implies stability and
consistency in the measurement. Lack of consistency over time and
among different raters may reduce the reliability of performance
72

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
appraisal.
3. Incompetence : Raters may fail to evaluate performance
accurately due to lack of knowledge and experience. Post appraisal
interview is often handled ineffectively.
4. No Uniform Standards : The standards used for appraisal
purpose are not uniform within the same organisation. This makes
the rating unscientific. Similarly, the rating is done on the basis of
an overall impression, which is not proper.
5. Absence of Effective Participation of Employees : In
performance appraisal effective participation of concerned
employee is essential. In many methods of appraisal he is given a
passive role. He is evaluated but his participation or self evaluation
is rather absent.
6. Resistance of Employees to Appraisal : Employees
oppose the system as they feel that the system is only for showing
their defects and for punishing them. The managers resist the
system as they are not willing to criticise their subordinates or have
no capacity to guide them for self improvement or self
development.
7. Paperwork : Some supervisors feel that performance
appraisal is paperwork. They make such complaints because many
a times, performance appraisal reports are found only in the files
rather than rendering any practical use.
8. Fear of Spoiling Relations : Performance appraisals may
also affect superior-subordinate relations. As appraisal makes the
superior more of a judge rather than a coach, the subordinate may
look upon the superior with a feeling of a suspicion and mistrust.
9. Stereotyping : This implies forming a mental picture of a
person on the basis of his age, sex, caste or religion. It results in
an over-simplified view and blurs the assessment of job
performance.
10. Negative Approach : Performance appraisal loses most of
its value when the focus of management is on punishment rather
than on development of employees.
11. Multiple Objectives : Raters may get confused due to two
many objectives or unclear objective of performance appraisal.
73

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
12. Resistance : Trade unions may resist performance

appraisal on the ground that it involves discrimination among its
members. Negative ratings may affect interpersonal relations and
industrial relations particularly when employees/unions do not have
faith in the system of performance appraisal.
13. Halo Effect : Generally, there is the presence of a halo
effect which leads to a tendency to rate the same individual first,
which once have stood first.
14. Individual Differences : Some people are more distinct
while some are very liberal in assigning the factors, points or
number to the employees. They are unable to maintain a fair
distinction between two individuals. It also nullifies the utility of this
system.
15. Unconfirmed : Sometimes the results of performance
appraisals are not confirmed by other techniques of motivation,
incentive wages plans and so on. Factors are introduced in the
managerial appraisal because of a fact or bias in the person
concerned conducting the appraisal.
Questions :
Define Performance appraisal. How is performance appraisal
useful?
2. Discuss the meaning and purpose of Performance Appraisal.
3. What are the main objectives/purposes of performance
Appraisal ? Discuss the important reasons of benefits which
justify the existence of a system of performance appraisal in
an enterprises.
4. Discuss the role of a Performance Appraisal System in an
Organisation.
5. Explain the importance of Performance Appraisal in Human
Resource Management.
6. What is Performance Appraisal? What are its Objective?
Explain
7. Describe the Process of Evaluating Employees Performance.
8. Describe in detail the process of Performance Appraisal.
9. Performance Appraisal is not merely for appraisal but is for
accomplishment and improvement of performance Discuss.
1.
74

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
JOB EVALUATION
1. Understand Meaning and Definition of job Evaluation :
2. Know the objectives of Job Evaluation
3. Understand the concept of Merit Rating
4. Know Objects of Merit Rating
5. Understand the various methods of Job Evaluation
6. Highlight distinctions between Job Evaluation and Merit Rating
7. Study various methods of Merit Rating
INTRODUCTIONS
Job Evaluation is a system wherein a particular job of an
enterprise is compared with its other jobs. In the present industrial
era, there are different types of jobs which are performed in every
business and industrial enterprise. Comparative study of these jobs
is very essential because on the basis of such study the structure of
wages for different types of jobs is prepared. The comparison of
jobs may be made on the basis of different factors such as duties,
responsibilities, working conditions, efforts, etc. In nut shell, it may
be said that job evaluation is a process in which a particular job of a
business and industrial enterprise is compared with other jobs of
the enterprise. Some scholars name it the determination of job rate.
Definitions: Some eminent scholars have defined Job evaluation
as follow :
1. Kimball and Kimball define job evaluation as 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.
2. According to Wendell French, job evaluation is a process
of determining the relative worth of the various jobs within the
organisation, so that differential wages may be paid to jobs of
different worth. The relative worth of a job means relative value
produced. The variables which are assumed to be related to value
produced are such factors as responsibility, skill, effort and working
conditions.
Job evaluation is a process of comparing jobs with other jobs in
terms of the demand a job makes on the worker.lt does not set the
price of a job; it merely fixes its relative worth. It presents an effort
75

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
to determine the relative value of every job in a plant, and to

determine what the fair basic wage for such a job should be. It is
not evaluating the ,merit of the worker who is doing the work. It
rates the job and not the qualities of the individual worker on the
job, which is the task of employee rating.
We may define job evaluation as a process of analysing and
describing positions, grouping them and determining their relative
value of comparing the duties of different position in terms of their
different responsibilities and other requirements
OBJECTIVES OF JOB EVALUATION

The following are the objectives of job evaluation :
To secure and maintain complete, accurate and impersonal
descriptions of each distinct job or occupation in the entire
plant;
(ii) To provide a standard procedure for determining the relative
worth of each job in a plant;
(iii) To determine the rate of pay for each job which is fair and
equitable with relation to other jobs in the plant, community or
industry;
(iv) To ensure that like wages are paid to all qualified employees
for like work;
(v) To promote a fair and accurate consideration of all
employees for advancement and transfer; (vi) To provide a
factual basis for the consideration of wage rates for similar
jobs in a community and industry; and
(vii) To provide information for work organisation, employees
selection, placement, training and numerous other similar
problems.
(i)
In fact the primary purpose of job evaluation is to set wages. It

does this by providing a basis for the following matters:
(a) Equity and objectivity of salary administration, ie., paying the
people whose work is alike the same wages, and establishing
appropriate wage differentials between jobs calling for different
skills and responsibilities;
(b) Effective wage and salary control;
(c) Union-management negotiations on wages; and
(d) Comparison of wage and salary rates with those of other
employees.
76

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Besides setting wages, job evaluation also help in :

(a) Providing standardisation and improvement of working
conditions;
(b) Clarifying the functions, authority and responsibility of
employees;
(c) Establishing references for the settlement of grievances arising
out of individual rates and for negotiations with a trade union on
internal wage structure and differentials;
(d) Developing machinery for a systematic reviewing of job rates
as job contents change; and
(e) Developing personnel statistics.
Principles of Job Evaluation
There are certain broad principles, which should be kept in
mind before putting the job evaluation programme into practice.
These principles are :
(i) Rate the job and not the man. Each element should be rated
on the basis of what the job itself requires.
(ii) The elements selected for, rating purposes should be easily
explainable in terms and as few in number as will cover the
necessary requisites for every job without any overlapping.
(iii) The elements should be clearly defined and properly selected.
(iv) Any job rating plan must be sold to forcemen and employees.
The success in selling it will depend on a clear-cut-cut
explanation and illustration of the plan.
(v) Foremen should participate in the rating of jobs in their own
departments.
(vi) Maximum co-operation can be obtained from employees when
they themselves have an opportunity to discuss job ratings.
(vii) In talking to foremen and employees, any discussion of money
value should be avoided. Only point values and degrees of
each element should be discussed.
(viii) Too many occupational wages should not be established. It
would be unwise to adopt an occupational wage for each total
of point values.
Advantages of Job Evaluation
Job evaluation enjoys the following advantages :
(i) Job evaluation is a logical and to some. extent an objective
method of ranking jobs relative to one another. It may help in
removing inequalities in existing wage structures and in maintaining
sound and consistent wag differentials a plant or industry.
(ii) In the case of new jobs, the method often facilitates fitting
them into the existing wage structure.
77

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(iii) The method helps in removing grievances arising out of

relative wages; and it improves labour-management relations.
(iv) The method replaces the many accidental factors,
occurring in less systematic procedures, of wage bargaining by
more impersonal and objective standards, thus establishing a clear
basis for negotiations.
(v) The method may lead to greater uniformity in wage rates,
thus simplifying wage adminstration.
(vi) The information collected in the process of job description
and analysis may a1so be used for the improvement of selection,
transfer and promotion procedures on the basis of comparative job
requirements.
(vii) Such information also reveals that workers are engaged on
jobs requiring less skill and other qualities than they possess,
thereby pointing to the possibility of making more efficient me of the
plants labour force;
Methods of Job Evaluation :
The following are the methods of Job Evaluations
1. Ranking Method : The ranking method requires a
committee typically composed of both management and employee
representatives of job in a simple rank order, from highest to
lowest. Rating specialists review the job analysis information and
thereafter appraise each job subjectively according to its general
importance in comparison with other jobs. In other words, an overall
judgment is made of the relative worth of each job, and the job is
ranked accordingly. These are overall rankings, although raters
may consider individually the responsibility, skill, effort, and working
conditions and each job. No attempt is made to determine the
critical factors in each job. Therefore, it is quite possible that
important elements of some jobs may be overlooked while
unimportant items are weighed too heavily. It may be noted that
because of the difficulties in ranking a large number of jobs at the
time, the paired comparison technique of ranking is sometimes used.
With this technique, decisions are made about the relative worth of only
two jobs at a time. However, since each job is compared with every
other jobs, the number of comparisons to be made increases rapidly with
the addition of each job to the list.
2. Job Grading or Job Classification Method : This method
works by assigning each job a grade, level or class that
corresponds to a pay grade for instance Grade I, Grade II, Grade III
and so forth. These grades or classifications are created by
identifying gradations of some common denominations, such as job
78

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
responsibility, skill, knowledge, education required, and so on.

Then, for each job grade so created standard job descriptions are
determined. Thereafter, such standard description is matched with
job descriptions in the organisation. The standard description that
most nearly matches the job description determines the jobs
grading. This method requires a decision at the initial stage on the
number of pay grades to be included in the wage and salary plan.
Of course, the actual amount to be assigned to pay grades made
after the job evaluation is completed.
3. Factor-comparison Method : This method is a combination
of ranking and point systems. All jobs are compared to each other
for the purpose of determining their relative importance by selecting
four or five major job elements or factors which are more or less
common to all jobs. These elements are not predetermined. These
are chosen on the basis of job analysis. The few factors which are
customarily used are :
(i) mental requirements (ii) skill (iii) physical requirements (iv)
responsibilities (v) working conditions, etc.
A few jobs are selected as key jobs which serve as standard
against which all other jobs are compared. key job is one whose
contents have been stabilised over a period of time and whose
wage rate is considered to be presently correct by the management
and the union.
Evaluation of Various Methods : None of the systems is free
from defects. None is the best in all conditions and for all types of
organisations. However, the point system is the best in the present
circumstances. It is widely used in almost all the enterprises as a
technique of job evaluation since it presents an analytical approach
to the measurement of job worth. It is better not to insist on a
particular system of job evaluation. A mix of all the methods should
be adopted.
MERIT RATING
Merit rating in a technique to evaluate the merits of duals
according to job request merit. The personal abilities that an
individual brings to his job, measured by the extent to which his
output or quality of his work exceeds the minimum that can
reasonably to expected for his basic rate of pay.
79

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
The definitions of merit rating are given as follows :

1. According to Edward Flippo, Merit rating is a systematic,
periodic and, so far as humanly possible, an impartial rating of an
employees excellence in matters pertaining to his present job to his
potentialities for a job.
2. According to Scot, Clothier and Spriegal, Merit rating of
an employee is the process of evaluating the employees
performance on the job in terms of the requirements of the job.
3. Alford and Beatty observe, Employees or personnel rating
is the evaluation or appraisal of the relative worth to the company of
a mans services of his better job.
Merit Rating is a process through which the ability, efficiency
and potentiality of an employee are evaluated. Merit Rating is
necessary for determining the wages rate, the need of training to
the employees and the promotion of employees to the higher jobs.
Objects Of Merit Rating
The objects of Merit Rating are as follows:
1. To make a comparative study of the abilities of different
employees.
2. To provide higher reward to the more efficient employees.
3. To prove the justification of different rat of wages to different
employees according to their abilities.
4. To establish harmonious relation between employees and
employers.
5. To motivate the employees to do better and more work.
6. To determine a policy for promotions and transfer.
7. To evaluate the success of training programmes.
8. To forecast the need of training to the employees and to
determine the nature of training.
80

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
MERIT RATING
Merit rating is a process through the ability, efficiency and the
potentiality of an employee are evaluated for the purpose of
determining wage rate, need of training and for determining the
policy for promotions and transfers.
Methods of Merit Rating
Following are the various methods of Merit Rating :
1. Rating Procedure : In this method, the abilities of an
employee are compared with that of other employees. Under this
method, the employees are divided into efficient and inefficient
employee. This method adopts the technique of paired comparison.
Therefore, the pairs of two employees each are made according to
the formula of N(N-1)Z and the more efficient employee in every
pair is underlined. The employee having maximum underline is
treated as the most efficient employee having maximum underline
is treated as the most efficient employee whereas the employee
having no underline to his credit, is treated least efficient employee.
2. Grading Method : Here different grades are divided for
evaluating the ability of different employees and then the
employees are placed in these grades. The grades areExcellent,
Very Good, Good, Average, Bad, Worst. Every grade may again be
sub-divided into three grades:
(i) Highly Satisfactory (ii) Satisfactory (iii) Non-satisfactory.
Employees can be placed in any of these groups according to their
abilities.
3. Man to Man Comparison Method : This is the method
where, a master scale is used to evaluate the qualities of different
employees. The five scales of performance are determined for
every job in the master scale. For example, to measure the
efficiency of employees, first of all the most efficient employee is
selected and after that the most inefficient employees are selected
who are respectively more efficient than average efficiency and less
efficient than average efficiency. These five employees become the
base for measuring the efficiency of the totalemployees. Every
employee of the enterprise is compared with these five employees
to evaluate their ability and efficiency.
81

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
4. Graphic Rating Method : In this method, the abilities of

employees are evaluated through graph. The abilities of all the
employees are represented on a graph paper with the help of scale.
Following qualities are included to evaluate the ability of employees
such as Quantity of Job, Quality of job, Regularity, ability to learn,
ability to initiate, dependence upon other employees and officers,
safety aspects, ability to direct, ability to supervise, behaviour with
other employees and officers.
Under this method of Merit Rating, a report is prepared
regarding Merit Rating of every employees and it is represented on
a graph paper. It makes evaluation of employees very easy and
simple.
5. Checking List Method : A list of necessary qualities for the
performance of a job is prepared under this method. The qualities
of the employees are measured on the basis of the abilities of such
lists. If an employee possesses that quality, the sign + is marked
in the list. If that quality is not possessed by an employee the sign is marked in the list. If there is a doubt regarding it, the sign of (?)
is marked in the list. On the basis these sign, the abilities of an
employee are evaluated. The specimen of checking list of Merit
Rating is as follows :
Checking List of Merit Rating
S.No. Question
Yes (+)
No (-)
1. Does the employee posses technical knowledge of his job?

2. Does the employee posses interest in his job?
3. Is the attendance of employee satisfactory?
4. Is the health of employee satisfactory?
5. Does the employee follow the orders and instructions?
6. Does the employee behave well?
7. Does the employee perform his duties properly?
8. Does the employee violet his responsibilities?
6. Descript Evaluation Method : In this method supervisor
prepares a detailed report of the abilities, efficiency and
potentialities of the employees under his supervision. All the
employees are evaluated on the basis of these reports.
82

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
7. Forced Choice Descriptive Method : In this method some

details are collected regarding the performance of an employee on
the given job. After this, some standards are fixed with the consent
of evaluations. The performance of an employee is evaluated on
the basis of these standards and the ability and efficiency of all the
employees are evaluated on this basis.
DISTINCTION BETWEEN JOB EVALUATION AND

MERIT RATING
The objective of Job Evaluation and Merit Rating are almost
same, because both the techniques aim at making comperative
study of the abilities and performance of an employee. Even then
there are technical differences between these two. These
differences are as follows :
Job Evaluation
Merit Rating
Meaning It is a technique by
which different jobs of an enterprise are
evaluated.
Merit Rating is the process by which the

ability, efficiency and potentiality of an employee
are evaluated.
Begining : This process is started after

the appointment of an employees.
This process of Merit Rating is started before

the appointment of employees.
Procedure of Evaluation : In the process

of job evaluation, the performance of an
employee is evaluated by comparing it with
the performance of another employees
of equal rank and status
In the process of Merit Rating, the

ability, efficiency and the potentiality of an
employee are evaluated.
Relation : It is realted with the relative

study of different jobs
It is related with relative study of different

employees.
Basis of Determining Wages and Salaries

In the process of job evaluation, the
remuneration of an employee is determined
In the process of Merit Rating, the

remuneration of an employee is determined on
the basis of his efficiency, ability and potentiality.
Limitation of Job Evaluations : These are :

(i) Though many ways of applying the job evaluation technique
are available, rapid changes in technology and in the supply and
demand of particular skills have given rise to problems of
adjustment.
83

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(ii) Substantial differences exist between job factors and the

factors emphasised in the market. These differences are wider in
cases in which the average pay offered by a company is lower than
that prevalent in other companies in the same industry or in the
same geographical area.
(iii) A job evaluation frequently favours groups different from
those which are favoured by the market. This is evident from the
observations whole of Kerr and Fisher. According to them, the jobs
which tend to rate high as compared with the market are those of
janitor, nurse and typist, while craft rates are relatively low. Weaker
groups are better served by an evaluation plan than by the market;
the former places the emphasis not on force but on enquiry.
(iv) Job factors fluctuate because of changes in production
technology, information system, and division of labour and such
other factors. Therefore, the evaluation of a job today is made on
the basis of job factors, and does not reflect the time job value in
future. In other words, continuing attention and frequent evaluation
of a job are essential.
(v) Higher rates of pay for some jobs at the earlier stages than
other jobs or the evaluation of a job higher in the organisational
hierarchy at a lower rate than another job relatively lower in the
organisational hierarchy often give rise to human relations
problems and lead to grievances among those holding these jobs.
Questions :
1. What is meant by Job Evaluation? Explain in brief the various
methods of Job Evaluation.
2. What do you understand by Job Evaluation? What are its
objects? Discuss the various methods of Job Evaluation. Also
evaluate which method is the best one?
3. Distinguish between Job Evaluation and Merit Rating
84

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
TRAINING AND DEVELOPMENT

1. Understand Meaning and nature of Training and Development
2. Know the objectives of Training
3. Study the needs and importance of Training
4. Understand the concept of Training and Development
5. Know Management Development Programme (MDP)
6. Understand the requites for the Success of Management
Development Programme (MDP)
7. Study Training Practices in India
8. Make and evaluation of Training Facilities
INTRODUCTION
Training is an organised 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. According to Edwin B. 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 behavior of those trained and to enable
them to do; their jobs better. Training makes newly appointed
workers fully productive in the minimum of 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. In fact, training is a continuous
process. It does not stop anywhere. The managers are
continuously engaged in training their subordinates. They should
ensure that any training programme should attempt to bring about
positive Changes in the (i) Knowledge, (ii) skills, and (iii) attitudes of
the workers. The purpose of training is to bring about improvement
in the performance of work. It includes the learning of such
techniques as are required for the better performance of definite
tasks.
The objective of training is to achieve a change in the
behavioor of those trained. In the industrial situation, this means
that the trainees acquires new techniques skills, problems solving
85

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
abilities and develop proper, work attitude. The trainees apply the
newly acquired knowledge on the job in such a way as to keep
them in the achievement of organisational goals and targets.
Training is a necessary activity in all organisations, It plays a large
part in determining the effectiveness and efficiency of the
organisation. Training is must for .all. A training programme
enables the trainee to achieve the reasonable level of acceptable
performance. To achieve improved performance and increase in
productivity, quality and profitability. Change Organisational climate
and culture, to improve health and safety and Possibility and
personal growth and development.
Training generally is intended to provide training experiences
that help people perform efficiently in their present and future jobs.
Training is a process in which abilities are developed into specific
required skills knowledge or attitudes.
Thus managing the training process can go a long way
towards enhancing its effectiveness. If training programs are well
conceived and well executed, both the organisation and its
employees benefit. A comprehensive process helps managers
ensure that the objectives of the training program are met.
Training enables the employees to get acquainted with jobs
and also increase, their aptitudes and skills and knowledge. It
makes newly recruited employees fully productive in the minimum
of time. Even for the old workers, it is necessary to refresh them
and to enable them to keep up with new methods and techniques
as well as new machines and equipments for doing the work. Thus,
training is not a one-step process, but it is a continuous or neverending process because it increases the knowledge and skills of
new employees in performing their jobs and serves as a refresher
course for the old employees. Training job will never be finished as
long as the organization remains in operation. At any given time,
the different phases of training programme will be found at
practically every stage of progress. Men may be learning by their
own experiences and by trial and error methods. Training does not
disappear from any organisation merely because its presence is
ignored. The purpose of training is to bring about improvement in
the performance of workers. It includes the learning of such
techniques as are required for the intelligence performance of
definite task.
There is a growing realisation about the importance of training
in Indian organisations, specially after globalisation. This has posed
a lot of challenges to Indian industries. Without efficiency,
86

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
effectiveness and competency, it would be impossile to survive and

to be internationally competative, all out efforts are required. Quality
innovation, technology upgradation,cost reduction and productive
work culture, have thus become the slogans of every industry,
which no organisation will be able to achive without continuously
training its human resources. Justifiably, therefore, there is an
upward trend in investment in training in many organisations. But
increasing the investment in training and hiking training budgets is
not going to achieve desired results. There are certain
fundamentals and basic in training which must be given due
importance if investments have to bring in returns.
NATURE OF TRAINING AND DEVELOPMENT

Training is the most important component of Human Resource
Development (HRD) but HRD is training plus. An organisation
which aspires to grow must be in tune with the changing neecds of
the society. Training becomes relevant in the context since it is only
through training that the gap between performance of the
organization and the felt need of a changing society can be
neutralised Training reduces the gap by increasing employees
knowledge, skill, ability and attitude.
Training makes a very important contribution to the
development of the organisations human resources and hence to
the achievement of its aims and objectives. To achieve its purpose,
training needs to be effectively managed so that the right training is
given to the right people, in the right form, at the right time and at
the right costs.
The term training indicates the process involved in improving
the aptitudes, skills and abilities of the employees to perform
specific jobs. Training helps in updating old talents and developing
new ones.
Training is a vital phase of management control. It helps in
reducing accidents, eliminating wastages and increasing, the
quality of work.
Training and Development are terms which are sometimes
used interchangeably. Development was seen as an activity
associated with managers, In contrast training has a more
immediate concern and has been associated with improving the
knowledge and skill of non-managerial employees in the present
job.
87

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Training and development may be regarded interactive, each

complementing the other. The logical step for the organisation is to
produce a plan for human resource development (i.e. training and
development) which will dovetail into the employee resourcing plan
(i.e.selection) and the organisations overall strategic plan.
Objectives of Training
The primary objective of training is to prepare employees
both new and old, for promotions to positions which require added
skill and knowledge. This means that the training may range from
highly specific instruction as to steps in the performance of a given
job to very general information concerning the economy and
society. Therefore, it is necessary to establish the goals of training
very cautiously. The objectives of training are as follows :
(i) To impart to new entrants the basic knowledge and skill they
need for an intelligent performance of definite tasks;
(ii) To assist employees to function more effectively in their
present positions by exposing them to the latest concepts,
information and techniques and developing the skills, they will
need in their particular fields;
(iii) To build up a second line of competent officers and prepare
them to occupy more responsible positions;
(iv) To broaden the minds of senior managers by providing them
with opportunities for an inter-change of experiences within and
outtside with a view to correcting the narrowness of the outlook
that may arise from over-specialisation;
(v) To impart customer education for the purpose of meeting the
training needs of Corporations which deal mainly with the
public.
In a nutshell, the objectives of training are to bridge the gap
between existing performance ability and desired performance.
Since training is a continuous process and not a oneshot affair,
and since it consumes time and entails much expenditure, it is
necessary that a training programme or policy should be prepared
with great thought and care, for it should serve the purposes of the
establishment as well as the needs of employees. Moreover, it
must guard against over-training, use of poor instructors, too much
training on skills which are unnecessary for a particular job,
imitation of other company training programmes, misuse of testing
techniques, inadequate tools and equipment, and overreliance on
one single technique e.g., on slides, pictures on lecturers and
88

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
not enough on practice.
NEED AND IMPORTANCE OF TRAINING

1. Increasing Productivity : Instruction can help employees
increase their level of performance on their present job assignment.
Increased human performance often directly leads to increased
operational productivity and increased company profit. Again,
increased performance and productivity, because of training, are
most evident on the part of new employees who are not yet fully
aware of the most efficient and effective ways of performing their
jobs.
2. Improving Quality : Better informed workers are less likely
to make operational mistakes. Quality increases may be in
relationship to a company product or service, or in reference to the
intangible organisational employment atmosphere.
3. Helping a Company Fulfil its Future Personnel Needs :
Organisations that have a good internal educational programme will
have to make less drastic manpower changes and adjustments in
the event of sudden personnel alternations. When the need arises,
organisational vacancies can more easily be staffed from internal
sources if a company initiates and maintains and adequate
instructional programme for both its non-supervisory and
managerial employees.
4. Improving Organisational Climate : An endless chain of
positive reactions results from a well-planned training programme.
Production and product quality may improve; financial incentives
may then be increased, internal promotions become stressed, less
supervisory pressures ensue and base pay rate increases result.
Increased morale may be due to many factors, but one of the most
important of these is the current state of an organisations
educational endeavour.
5. Improving Health and Safety: Proper training can help
prevent industrial accidents. A safer work environment leads, to
more stable mental attitudes on the part of employees. Managerial
mental state would also improve if supervisors now that they can
better themselves through company-designed development
programmes.
6. Obsolescence Prevention : Training and development
programmes foster the initiative and creativity of employees and
89

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
help to prevent manpower obsolescence, which may be due to age,

temperament or motivation, or the inability of a person to adapt
himself to technological changes.
7. Personal Growth : Employees on a personal basis gain
individually from their exposure to educational experiences. Again,
Management development programmes seem to give participants
a wider awareness, an enlarged skin, an enlightened altruistic
philosophy, and make enhanced personal growth possible.
It may be observed that the need for training arises from more
than one reason
(i) An increased use of technology in production;
(ii) Labour turnover arising from normal separations due to death
or
physical
incapacity,
from
accidents,
disease,
superannuation, voluntary retirement, promotion within the
organisation and change of occupation or job.
(iii) Need for additional hands to cope with an increased production
of goods and services;
(iv) Employment of inexperienced, new or badli labour requires
detailed instruction for an effective performance of a job;
(v) Old employee need refresher training to enable them to keep
abreast of the changing methods, techniques, and use of
sophisticated tools and equipment;
(vi) Need for enabling employees to do the work in a more effective
way, to reduce learning time, reduce supervision time reduce
waste and spoilage of raw material and produce quality goods,
and develop their potential.
(vii) Need for reducing grievances and minimising accident rates;
(viii) Need for maintaining the validity of an organisation a whole
and raising the moral of its employees.
TRAINING AND DEVELOPMENT

Though training and education differ in nature and orientation,
they are complementary. An employee, for example, who
undergoes training, is presumed to have had some formal
education. Furthermore, no training programme is complete without
an element of education. In fact, the distinction between training
and education is getting increasingly blurred now-a-days. As more
and more employees are called upon to exercise judgment and to
choose alternative solutions to the job problem training
programmes seek to broaden and develop the individual through
education. For instance, employees in well-paid jobs and or
90

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
employees in the service industry may be required to make

independent decisions regarding their work and their relationships
with clients. Hence, organisations must consider elements of both
education and training while planning their training programmes.
Training is the systematic modification of behavior through
learning which occurs as a result of education, instruction
development and planned experience. Training is the increasing
knowledge and skill of an employee for doing a particular job;
Training is a short term process utilizing a systematic and
organised procedure by which trainees learn technical knowledge
and skill for a definite purpose. Training is a process of learning a
sequence of programmed behavior. It implies application is a
process of learning a sequence of programmed behaviour. It
implies application of rules and procedures to guide their behaviour
thereby improve their performance.
Training is a systematic programme to increase the knowledge,
skills, abilities and aptitudes of employees to perform specific jobs.
Training is concerned with increasing the knowledge and
understanding of the total environment. Development is concerned
with the growth of an employee in all respects. Development
programmes seek to develop skills and competence for future jobs
while training programmes are directed toward maintaining and
improving job performance. Thus training is a process by which the
aptitudes, on the one hand skills, abilities of employees to perform
specific jobs are increased. On the other hand, education is the
process of increasing the general knowledge and understanding of
employees.
Distinction between Training an Development
Training
Development
Training means learnings skills and

knowledge for doing a particular job.
It increases job skills.
Development means the gorwth of an

employee in all respects. It shapes
attitudes.
The term training is generally used to

denote imparting specific skills among
operative workers and employees.
The term development is associated

with the overall growth of the executives.
Training is concerned with maintaining

and improving current job performance.
Thus, it has a short-term perspective.
Executive development seeks to develop

competence and skills for future performance.
Thus, it has a long-term perspective.
91

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Training is job-centred in nature.
Development is career-centred in nature.
The role of trainer or supervisor is very

important in training.
All development is self development. The

executive has to be internally motivated for
self-development
Development refers to those learning opportunities designed to

help employee grow. Development is not primarily skills-oriented.
Instead, it provides general knowledge and attitudes which will be
helpful to employees in higher positions. Efforts towards
development often depend on personal drive and ambition.
Development activities, such as those supplied by management
development programmes are generally voluntary.
Management Development Programme (MDP)
Management development programmes, aim systematically to
identify talent, improve skills, widen experience and help people to
grow in their ability to accept greater responsibility.
The subject matter of a course for Management Development
Programme (MDP) may comprise :
1. Company or Organisation : The Management
Development Programme (MDP) relating company or organisation
may contain the following sub-areas :
(i) Objective and philosophy of company; (ii) Policies,
procedures and practices of an organisation; (iii) Products and
services; (iv) Organisational structure and organisation dynamics;
(v) Plant facilities; (vi) Financial aspects such as investment
planning, financial planning and control capital budgeting; (vii)
Labour management relations etc.
2. Managemetn Techniques and Principles : Under this main
area the following sub-areas may be included:
(i) Organisation principles; (ii) Financing, planning and
management; (iii) Cost analysis and control; (iv) Operations
research and data processing; (v) Marketing management,
Marketing research; (vi) Production planning and control; (vii)
management and administration; (viii) Decision-making.
3. Human Relations : In this constituent the below mentioned
sub-areas may be included :
(i) Motivation; (ii) Understanding human behaviour; (iii) Group
dynamics; (iv) Discipline; (v) Complaints and grievances; (vi)
92

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Collective bargaining; (vii) Counselling and suggestion scheme;

(viii) Selection methods and procedures; (ix) Attitudes, training and
development; (x) Job evaluationand performance appraisal; (xi)
Labour economics; (xii) Supervisory responsibilities.
4. Technical Knowledge and Skills : Under this main area
the following sub-areas may be included:
(i) Computer technology; (ii) PERT/CPM; (iii) Linear
programming; (iv) Materials handling; (v) Inventory control; (vi)
Adequate understanding of technology, products, processes.
5. Personnel Skills : It contains the following sub-areas :
(i) Speaking; (ii) Report writing; (iii) Conference leadership; (iv)
Learning through listening; (v) Reading improvement.
6. Economic, Social, and Political Environment : It contains
the following sub-areas :
(i) Business; (ii) Economic system; (iii) Relations with the state;
(iv) Community relations; (v) Political systems; (vi) Legal framework
of business; (vii) Social responsibilities of the corporation and
business.
Consideration
on
Administering
a
Management
Development Programme : While administering the programme,
we should have to give the following considerations :
1. Systematic Career Planning : A Management
Development Programme should support a systematic career
planning for managerial personnel otherwise the frustrated trainees
might seek opportunities elsewhere and the whole investment
made in training programmes would go waste.
2. Structured Course : Management Development must follow
a series of structured courses. There should also be an active
interaction between the trainees and management.
3. Indiscriminate Approach : The training programme should
cover as far as possible, every manager, capable of showing
potential for growth. It should be free from discrimination. Peter
Drucker pointed out that the right men out of every ten who were
not included in the programme will understandably feel slighted.
They may end of by welcoming less effective, less productive, less
willing to do new thing.
4. Properly Planned : The entire programme should be
properly planned. The trainee should take part in it. An individual
may stay out, but it should be made clear that he does so at some
93

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
risk to his future promotion. The company should not normally allow
any manager to opt out of a training programme.
Essentials of Success of Management Development
Programme (MDP) :
The following are the essentials for the success of
Management Development Programme (MDP) :
1. Circulate the Materials to Participants : The following
materials should be distributed among the participants to make the
programme more successful :
(a) News letter conveying information about corporate affairs;
(b) Copies of talks given by management personnel;
(c) Excerpts from well-written and informative articles;
(d) Copies of minutes of meeting distributed among those who
were not present.
When these materials are discussed by a group, new plans
and improved procedures will be formulated.
2. Programme should be prepared well in advance : The
programme should be prepared well in advance and should contain
decisions about instructional methods and development
approaches to be used and have a provision of expertise and the
necessary support system. It should be based on the policy of
promoting a proper utilisation of trained executives, their knowledge
and techniques in the improvement of the operations of an
organisation.
3. Training division should have smart and successful
executives : The training division should not be a dumping ground
for people found to be unsuitable for other jobs; it should be
mannered by a group of smart and successful executives drawn
from various functional areas and disciplines. A multi-disciplinary
approach should be emphasised in training programmes rather
than the purely personal flavour that is often found in them.
4. Programme should be for all not the weak ones : A
management programme should not only be looked upon as
something meant for the limping horses in the organisation; it
should be for the high fliers as well. In view of knowledge
explosion and the consequent threat of management
obsolescence, such programmes should be meant for everyone in
94

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
an organisation and not just for the weak ones.

5. Management Development Programme (MDP) should be
based on a definite strategy : The MDP should be based on a
definite strategy, which should spell out the type, coverage and
objectives of the programme. The multitire supervisory and
management development programme should start from the first
line supervisor and go all the way up to the top management.
6. Top Management should Accept Responsibility : The top
management should accept responsibility for getting the policy of
development executed. To do so, a senior officer may be placed incharge to initiate and implement the MDP.
7. Management Development is a Line Job : It is
essentially a line job. It takes place on the job and involves both
the man and his boss.
8. Selection of the Right Materials : Management
development starts with the selection of the right materials for
managerial ranks. It is essential to ensure that really good material
is led into the programme at the entry level.
9. Realistic Time Table is Required : There should be
realistic time table in accordance with the needs of a company. This
time table should take into account the needs for managerial
personnel over a sufficiently long period and the resources which
are available and which will be required.
10. It should Fulfill the needs of the Company :
Management development must be geared to the needs of the
company and the individual.
11. Developing Managers is the Responsibility of All
Managers : Every manager must accept direct responsibility for
developing managers under his control on the job, and a high
priority should be given to his task.
Thus, for the development of management, it is essential for
the top management to promote a culture for:
(i) learning and gaining knowledge
(ii) the quest of excellence
(iii) tolerance of mistakes
(iv) striving to maintain a balance and an equity
(v) the discovery of self and others; and
(vi) enabling a subordinate to become aware of his superiors
95

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
interest in his development and mental growth.

Training Practices in India :
Different types of training facilities available in India, are as
follows :
1. Workers Training : This type of training had become very
popular after the world war II. But the real progress in the direction
was made. The following types trainings are given to the workers in
our country :
(a) Apprentice Training At, 1961 : During 1961 the
Apprentice Training Act was passed. About 550 Industrial Training
Institutes were opened. More than 300 centres were set up
established for Apprenticeship Training. There is a Advanced
Training Institute in Chennai and Kolkatta has the Central Staff
Training and Research Institute. There is the Foreman Training
Institute in Bangalore. The Director General of Employment and
Training, Government of India had established Training Centres
under Craftsman Training Scheme. The National Apprenticeship
Training Scheme was extended to other industrial houses also.
Child Training Schemes were developed under Apprenticeship
Scheme and now this has been extended to many new works.
(b) Private Sector : Normally the private sector has not
introduced any formal training programme to its workers. But many
business organisation have an induction programme to their new
workers aimed at informing and educating them about the
company, its products policies and management, etc. These
programmes are generally conducted by their personnel
department with the help of the supervisory staff. Now, may wellestablished private firms are conducting programmes in company
based on their workers needs and job requirements.
(c) Public Sector Undertakings : The public sector
companies use their internal training facilities for training their nonsupervisory employees. In some cases, employees are also
encouraged to avail of the external training facilities. Sometimes
they sponsor their candidature and meet the costs also. Some
public sector organistions such as banks, insurance etc., have
started well-organised training programme.
96

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
2. Supervisors Training
(a) General Education : Normally supervisors are recruited
either by promotion from ranks or by direct recruitment. The latter is
the more widely followed practice in our country. But promotion
from ranks is more common in western countries. Illiteracy and
poor educational background very much limit the possibility of
promotion to supervisory jobs from the ranks in India. The problem
of supervisory training has, therefore, to be talked at the root and in
order to bridge the gap between the potentiality of a worker for
supervisory work and the post itself the level of general education
needs to be raised. Many organisation have successfully
undertaken training of junior and senior hands in Mathematics,
Elements of Sciences etc. through regular routine classes during
working hours.
(b) Training Institutes : The Central Training Institute for
Instructors ha san additional course meant for supervisors which
covers meant for supervisors which covers non-technical subject
such as leadership, foundations for good relations, handling of
problems, induction of new entrants, effective communication, and
so on. Some institutes of new entrants, effective communication,
and so on. Some institutes particularly Small Industries Service
Institute, NITE etc., organise short-term training programme for
supervisors.
(c) Training within Industry (TWI) : Training Within Industry
was formally introduced in India with the help of ILO experts. Many
organisation, both in public and private sectors, have had persons
trained by TWI Centre staff, so that they undertake supervisory
training in their respective organisations. These programmes have
had mixed results. The managements who have realised the
importance of training for supervisors, and have not been led into
complacency by the simplicity of TWI have obtained highly
successful results and the programmes.
3 Management Training : The management training and
development has attracted the greatest attention of both practicing
managers and academicians in this field. this is due to the fact that
management has every much lagged behind the imperative
demand of the country. The major gap in the developing countries
is managerial competence has to be homegrown to suit the ethos,
temper and needs for our society.
There are two types of facilities for training development of
practicing managers :
97

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(a) Business Organisation : These organistions are

employing managerial personnel to impart such training either
through their own Management Training institutes or through
organising lectures, instructors being their own line and staff
managers or faculty being taken from outside in some cases.
These organisations recruit fresh management trainees. They are
put through training process while working in the organisation,
Hindustan Machine and Tools Ltd., Hindustan Steel Ltd., LIC,
Commercial Banks, Fertilizer Corporations and many other
organisations in public sector Hindustan lever Ltd. TISCO, Reliance
Ltd. and others in private sector have their own Management
Training Institutes.
(b) Management Institutes : There are many management
institutes, associations and other bodies which organise short-term
management development programmes. Prominent among these
are Administrative Staff College, Hyderabad, IIMs., All India
Management Association, and its local chapters, National
Productivity Council, Indian Institute of Bank Management. Indian
Institute of Personnel management, National Institute for Training in
Industrial Engineering (NITIE). These bodies organised
management development programmes ranging from 2 days to 12
weeks.
Evaluation of Training Facilities :
The preceding discussion shows that training and development
facilities both for managers and operative staffs have developed
considerably in India. In case of former, however, the facilities have
increased manifold in a short period of about 20 years. This is in
terms of management graduates being educated in the short-term
management development programmes. We are constantly and
steadily moving towards professional management. Old guards are
changing their styles. They are changing to adopt new
environment. Since independence, managers have developed
themselves maximum. Somebody has rightly said that There are
very few success stories that can be told since the achievement of
Indian Independence. If one among these exception is the record of
the farmer, another is the story of the manager.
Process of Designing a Training Programme : Training
programmes are costly propositions. They are time and energy
consuming too. Hence, the training programmes should be framed
with great care and caution. The following steps should be taken
while developing a training programme. These steps usually involve
98

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
a considerable amount of dialogue between personnel department

professionals and other supervisors and managers. Ordinarily, the
flows or sequences of these steps are approximately as follows but
the various steps are independent and in some cases may be done
simultaneously.
1. Determining the need and Priorities for Training : The
very first step in designing a training programme is to determine the
organisations need for such programme. It is from need
assessment that the entire training process will flow. If the
organisation does not accurately determine its need, the training
process will be in apropriately undertaken. Mc-Guhee and Thayer
have recommended the following three-steps approach in order to
determine training need :
(a) Organisational Analysis : This analysis basically
determines where training emphasis shold be placed in the
organisation.
(b) Man Analysis : It is used to determine who needs to be
taining and what skills an dknowledge orattitudes should be
augmented or improved.
(c) Operational Analysist : It assists to decide what the
training should consist of, requiring a study of what a person should
be taught if he is to perform his task with maximum effectiveness.
Some of the popular methods to assess the training needs of
employees in a company include observation and analysis of job
performance. In each company, the management should analyse
organistation needs, job specifications and the present skill levels
of the employees. The analysis of organisational needs should
focus on the number of employees with various combinations of
skills needed at each level and in every part of the firm for specific
periods. Regarding job specifications, many organisations have
written job specifications that define the skills needed for each job
in the firm. By carefully examining these specifications, the human
resources staff can obtain a clear idea of the nature of skills needed
for each job. Then, an analysis of worker skills and qualifications
from his personal file can assist in determining training needs.
Similarly training needs can be assessed for a group of employees.
2. Translating needs into Objectives and Establishing
Training Goals : Once the training needs have determined, the
next important step is to translate the skills needed into specific
training objectives or desired outcomes of training objectives.
These training objectives or goals are then used to determine the
99

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
specific courses that will be offered. Training objectives should

include such matters as specific skills to be taught, the number of
people to be trained and from which units, and the period within
which such training should take place. Objectives for training
programme that do not relate directly to specific job skills should
also be considered for example, employee health and safety
guidelines, promotion opportunities and self-study opportunities.
Training objectives include the general content of the training to be
given. The most frequently adopted objectives or training subjects
by the companies are : new employee orientation, performance
appraisal, leadership, selection process, interpersonal skills, word
processing, new equipment operation, team building, delegation
skills, and listening skills. Sometimes, orientation regarding
company policy and practices can be particularly important,
especially for new employers.
3. Selecting Trainees : Selecting individuals or groups for
training is a very complex decision for the firm and the individuals
chosen. From the firms perspective, providing the right training to
the right people can help to create and maintain a well-trained and
stable work force. To impart training for individuals with limited
performance partial or lack of interest is simply a waste of time,
effort, and money. Overlooking individuals with ambition and
potential represents a lost opportunity and can contribute to higher
employee turnover. It should be assumed that ambition and
potential are widespread in the firm and exist at all age levels.
There are at least four important considerations important in
selecting trainee : (i) legal requirements and formalities (ii)
employee needs and motivation (iii) skills obsolescence and
retraining, and (iv) multi-skilling. Employee needs and motivation
can be determined with the help of previous performance
evaluations as well as interviews performance evaluations as well
as interviews with individual employees and owner supervisors.
The rapidly change in technology is requiring that all segments of
the society give higher priority to worker retraining. This also means
that individual workers themselves must seek out training
opportunities to avoid having their skills become obsolete. Similarly,
numerous companies have moved in the direction of training their
employees to have multiple skills, called multi-skilling. In particular,
multi-skilling is relevant where self-managed teams are utilised.
Everyone is encouraged to learn all of the jobs of the team and
employees are usually paid according to the number of skills that
they have developed.
100

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
4. Making the Curriculum and Choosing Training Methods

After -deeming training objectives and translating into specific
course areas, the trainees are identified and evaluated,
management will be in a position to decide the overall curriculum,
i.e., the arrangement of courses to be offered. The curriculum is a
sort of grand plan of what training is to be presented and with what
frequency. However, a part which must be added to this grand plan
is the matter of training methods. Will the training be on the job, off
the job, prior to employment, or prior to a formal assignment ? Will
it be done by lecture computer assisted, or carried out by some
other method ? Will it be long-term or short-term ?
5. Preparation of training budget Preparing a training budget will
be an interactive process with the other steps in formulating a
training program. Budget constraints may limit the human resource
manager's alternatives and must, therefore, considered during all
phases of the development process. Costs that must be included in
the training budget are : staff planning time, trainees' wages,
trainers' salary, and expenses such as cost of training materials,
travels, accommodations, and meals. If the desired training
programme does not fit within budget constraints, the human
resource manager must consider modification such as fewer
trainees, different trainees, different training techniques, and a
different training location.
6. Selecting trainers and providing training to trainers. An
effective training programme can be developed only when effective
trainers are available. Firms have the option of using staff trainers
or of seeking contract trainers outside, or of having both, types'of
trainers.'Staff trainers' may be full-time specialists on the p^y,;rblt
4
of^organisation or may be part-time trainers. After their selection,
they must be provided with the information regarding the persons
who are to be strained. The trainers should be engaged after
careful evalutlon of their suitability and effectiveness so as to
ensure quality training.
7. Using selected training technique. To conduct the training is a
significant aspect of training process. Under this step, the trainers
speaks, demonstrate, and illustrates in order to put over the new
knowledge, skills, and operations. Besides, he suggests the trainee
to be at ease, without any stress and strain, and explains to him the
necessity of the training programme and creation of trainee's
personal interest in training. The trainer tells the sequence of the
entire job, the need for each step in the job, the relationship of the
job to the total work-flow, the nature of interpersonal behaviour
101

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
required at the job, and so on. All key points should be covered and
emphasised. Audio-visual aids should be used to demonstrate and
illustrate. To ensure follow-up by the trainee, he should be asked to
repeat the operations, and encouraged to ask questions for further
classifications and understanding.
8. Performance or learning tryout As the training continues, it, is
important that the progress of trainees should be monitored. This
may be accomplished by periodic skill or knowledge tests or
periodic assessments by the personnel department. The trainee
may be asked to do the job several times. His mistakes, if any, are
corrected and complicated steps should be explained again. As
soon as the trainee demonstrates that he can do the job rightly, he
is put at his own job and the training is said to be over.
9. Evaluation system of training programme. In order to
generate adequate feedback, some key purposes of conducting
this evaluation are :
(i) Determining whether a programme meets its objectives or goals.
(ii) Identify strengths and weaknesses in the training process.
(iii) Calculate the cost-benefit ratio of a programme.
(iv) Determine who benefited the most from a programme and why
(v) Establish a data base for futher decision about the programme.
Training programmes can be evaluated with a variety of
methods. The most popular method involves analysis
questionnaires filled out by the trainees either at the end of the
training session or within a few weeks. Although in some situations
employees can accurately evaluate the quality of the training
programme, in other situations their subsequent performance or
degree of improvement is a more valid measure. After specific
performance measurement, the results are compared with the
objectives for the training programme. If the training objectives
have been met, the training is said to be successful.
METHODS OF TRAINING
The following methods are generally used to provide training :
On-the-Job Training Methods : This type of training is
imparted on the job and at the work place where the employee is
expected to perform his duties. It enables the worker to get training
under the same working conditions and environment and with the
same materials, machines and equipments that he will be using
ultimately after completing the training. This follows the most
102

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
effective methods of training the operative personnel and generally

used in most of the individual undertaking.
1. On Specific Job : On the job training methods is used to
provide training for a specific job such a electrician moror mechanic
pluming etc.
(a) Experience : This is the oldest method of on-the-job
training. Learning by experience cannot and should not be
eliminated as a method of development, though as a sole
approach, it is a wasteful, time consuming and inefficient. In some
cases, this method bas proved to be very efficient though it should
be followed by other training methods to make it more meaningful.
(b) Coaching : On-the-Job coaching by the superior is an
important and potentially effective approach is superior. The
technique involves direct personnel instruction and guidance,
usually with extensive demonstration.
2. Job Rotation : The major objective of job rotation training is
the broadening of the background of trainee in the organisation. If
trainee is rotated periodically from one job to another job, he
acquires a general background. The main advantages are : it
provides a general background to the trainee, training take place in
actual situation, competition can be stimulated among the rotating
trainees, and it stimulates a more co-operative attitude by exposing
a man to other fellow problem and view-points.
3. Special Projects : This is a very flexible training device. The
trainee may be asked to perform special assignment, thereby he
learns the work procedure. Sometime a task-force is created
consisting of a number of trainees representing different functions
in the organisation.
4. Apprenticeship : Under this method, the trainee is placed
under a qualified supervisor or instructor for a long period of time
depending upon the job and skill required. Wages paid to the
trainee are much less than those paid to qualified workers. This
type of training is suitable in profession, trades, crafts and technical
areas like fitter, turner, electrician, welders, carpenters etc.
5. Vestibule Training : Under this method, actual work
conditions are created in a class room or a workshop. The
machines, materials and tools under this method is same as those
used in actual performance in the factory. This method gives more
103

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
importance to learning process rather than production.

6. Multiple Management : Multiple management emphasizes
the use of committies to increase the flow of ideas from less
experience managers and to train them for positions of greater
responsibility. The McCormick & Company of Baltimore, U .S.A.
developed the programme. The company claims that the plan has
increased employee efficiency, reduced labour turnover and
absenteeism, and enabled the company to pay higher wages than
those prevailing in the area and industry. In this method; a junior
board authorized to discuss any problem that the senior board may
discuss, and its members are encouraged to put their mind to work
on the business a whole, rather than too concentrate to their
specialized areas.
Off-the-job Training Methods
Following are the off the job training techniques :
1.
Special Courses and Lectures : Lecturing is the

most traditional form of formal training method
Special courses and lectures can be established by
business organizations in numerous ways as a part of
their development programmes. First, there are
courses, which the eorganizations themselves
establish
to
be taught by members of the
organizations. Some organizations have regular
instructors assigned to their training and development
such as Tata and Hindustan Lever in private
sector; Life Insurance Corporation. State Bank of India
and other nationalized commercial banks, Reserve
Bank, Hindustan Steel, Fertilizer Corporation and
many others in public sector. A second approach to
special courses
and lectures is for organizations to work with universities or
institutes in establishing a course or series of course to be taught
by instructors by these institutes. A third approach is for the
organizations to send personnel to programmes established by the
universities, institutes and other bodies. Such courses are
organized for a short period ranging from 2-3 days to a few weeks.
2. Conferences : This is also an old method, but still a favorite
training method. In order to escape the limitations of straight
lecturing many organizations have adopted guided, discussion type
of conferences in their training programmes. In this method, the
participants pools, their ideas and experience in attempting to arrive
104

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
at improved methods of dealing with the problems, which are

common subject of discussion; Conferences may include buzz
sessions that divide conferences into small groups of four or five
intensive discussion. These small groups then report back to the
whole conference with their conclusions or questions. Conference
method allows the trainees to look at the problem from a prouder
angle.
3. Case Studies : This technique, which has been developed,
popularized by the Harvard Business School, U.S.A is one of the
most common form of training. A case is a written account of a
trained reporter of analyst seeking to describe an actual situation.
Some causes are merely illustrative; others are detailed and
comprehensive demanding extensive and intensive analytical
ability. Cases are widely used in variety of programmes. This
method increases the trainees power of observation, helping him to
ask better questions and to look for broader range of problems.
4. Brainstorming : This is the method of stimulating trainees
to creative thinking This approach developed by Alex Osborn seeks
to reduce inhibiting forces by providing for a maximum of group
participation and a minimum of criticism. A problem is posed and
ideas are invited. Quantity rather quality is the primary objective.
Ideas are encouraged and criticism of any idea is discouraged.
Chain reactions from idea to idea often develop. Later these ideas
are critically examined. There is no trainer in brainstorming and it
has been found that the introduction of known eports into it will
reduce the originality and practicability of the group contribution,
Brainstorming frankly favours divergence, and his fact may be
explain why brainstorming is so little used as yet in developing
countries where no solutions ought to carry the highest premium.
5. Laboratory Training : Laboratory training adds to
conventional training by providing situations in which the trains
themselves experience through their own interaction some of the
conditions they are talking about. In this way, they more or less
experiment on themselves. Laboratory training is more concerned
about changing individual behaviour and attitude. There are two
methods of laboratory training: simulation and sensitivity training.
(a) Simulation : An increasing popular technique of
management development is simulation of performance. In this
method, instead of taking participants into the field, the field can be
simulated in the training session itself
Simulation is the
presentation of real situation of organisation in the training session.
105

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
It covers situations of varying complexities and roles for the

participants. It creates a whole field organisation, relates
participants, through key roles in it, and has them deal with specific
situations of a kind they encounter in real life. There are two
common simulation methods of training : role-playing is one and
business game is the other.
(i) Role-playing : Role-playing is a laboratory method, which
can be used rather easily as a supplement of conventional training
methods. Its purpose is to increase the trainees skill in dealing with
other people. One of its greatest use, in connection with human
relations training, but it is also used in sales training as well. It is
spontaneous acting of a realistic situation involving two or more
persons, under classroom situations. Dialogue spontaneously
grows out of the situation, as the trainees assigned to it develop it.
Other trainees in the group serve as observers or critics. Since
people take rules even day, they are somewhat experienced in the
art, and with, a certain amount of imagination they can project
themselves into roles other than their own. Since a manager is
regularly acting roles in his relationship with other it is essential for
him to have role awareness and to do role thinking so that they can
size up each size up each relationship and develop the most
effective interaction position.
(ii) Gaming : Gaming has been devised to simulate the
problems of running a company or even a particular department. It
has been used for a variety of training objectives from investment
strategy, collective bargaining techniques to the morale of clerical
personnel. It has been used at all the levels, from the executives for
the production supervisors. Gaming is a laboratory method in which
role-playing exists but its difference is that it focuses attention on
administrative problems, while role-playing tend to emphasis mostly
feeling and tone between people in interaction. Gaming involves
several terms, each of which given a firm to operate for a number of
periods. Usually the periods is short one year or so. In each period,
each-team makes decisions on various matters such as fixation of
price, level of production inventory level, and so forth.
Since each team is competing with others, each firms
decisions win affect the results of all others. All the firms decisions
are fed into a computer, which is programmed to bebave somewhat
like a real market.
(b) Sensitivity Training : Sensitivity training is the most
controversial laboratory training method. Many of its advocates
106

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
have an almost religious zeal in their enhancement with the training

group experience. Some of its critics match this favour in their
attacks on the technique. As a result of criticism and experience, a
somewhat revised approach, often described as team
development training. has appeared. National Training
Laboratories at Bethel U.S.A. The training groups themselves
called T GROUP first used it. Since then its use has been
extended to other organizations, universities and institutes.
Training is essential for the smooth, economic, timely and
efficient production, work or service in any organisation. To get
work accomplished well from a worker or employee, it is a must that
he is given proper training in methods of work. Training is the
organized producer by which people learn knowledge and skill for a
definite purpose management cant make a choice as between
training or no training. On the other hand, it is a must. The only
choice lies in the method of training.
Induction Training
The introduction of the new employee to the job is known as
induction. It is the process by which new employees are introduced
to the practices, policies and purposes of the organisation.
Induction follows placement and consists of the task of orienting or
introducing the new employee to the company, its policy and its
position in the economy. Induction literally means helping the
worker to get or with his own environment. After an employee is
assigned his job, it is necessary to introduce him to his job
situation, his associates in the job and the overall policies of the
company. The induction stage demands great care because the
first impression made on the mind of the employee is very critical in
the employment life and the treatment he receives during the early
days on the new job helps him to form an opinion about his
employer and the company.
An induction process properly designed should serve the
following purposes :
(a) to help the newcomer to overcome his natural shyness, any
nervousness he may experience in meeting new people in the new
environment;
(b) to integrate the new employee into the organisation and
develop a sense of belonging which is a strong motivational force;
107

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(c) to supply information about the nature for workforce,

conditions of service and welfare facilities
Training requirement for different types of employees
Employees at different levels require training. Unskilled
workers squire training in improved methods of handling machines
and materials to reduce the cost of production and waste and to do
the job in the most economical way. Such employees are given
training on the job itself and the training is imparted by their
immediate superior officers, sardars or foremen. The training period
ranges from 3 weeks to 6 weeks.
Semi-skilled workers require to cope with the requirements of
an industry arising out of the adoption of mechanization,
rationalization and technical processes. These employees are
given training either in their own sections or departments, or in
segregated training shops where machines and other facilities are
easily available. The trainings is usually imparted by the more
proficient, workers, bosses or inspectors, and lasts for few hours or
a week, depending upon the number of operations, and the speed
and accuracy required on a job. Training methods include
instruction in several semi-skilled operations because training in
one operation only creates difficulties in adjustments to new
conditions, lends the colour of specialisation to a job and makes
work somewhat monotonous for an individual.
Skilled workers are given training through the system of,
apprenticeship, which varies in duration from a year to three or five
years. Craft training is imparted in training centres and the industry
itself.
Other employees : Besides the above types of employees,
others typists, stenographers, accounts clerks and those who
handle computers need training in their particular fields; but such
training is usually provided outside an industry.
Salesmen are given training so that they may know the nature
and quality of the products and the routine involved in putting
through deal; they are trained in the-art of salesmanship, audio
handling customers and meeting their challenges.
The supervisory staff need training most for they form a very
important link in the Chain of administration. The training
programmes, for supervisors must be tailor-made to fit the needs of
an undertaking. Their training enables supervisor to cope with the
108

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
increasing demands, of the enterprise in which they are employed

and to develop team spirit. Supervisory training aims at :
(i)
Helping the present supervisors to improve their

performance;
(ii) Helping them to prepare for greater responsibilities of the
higher levels of management;
(iii) Building, up the security and status of supervisors; and .
(iv) Ensuring their technical competence with a view to enabling
them to know and understand all about the processes and
operations in which their workers participate.
TECHNIQUES OF EVALUATION OF TRAINING

Several techniques of evaluation are being used in
organisations. One approach towards evaluation is to use
experimental and control groups. Each group is randomly selected,
one to receive training (experimental) and the other not to receive
training (control).
The random selection helps to assure the formation of groups
quite similar to each other. Measures are taken of the relevant
indicators of success (e.g. words typed per minute, quality pieces
produced per hour, wires attached per minute) before and after
training for both groups. If the gains demonstrated by the
experimental group are better than those by the control group, the
training programme is labelled as successful.
Another method of training evaluation involves longitudinal or
time-series analysis. Measurements are taken before the
programme begins and are continued during and after the
programme is completed. These results are plotted on a graph to
determine whether changes have occurred and remain as a result
of the training effort. To further validate that change has occurred
as a result of training and not due to some other variable, a control
group may be included.
One simple method of evaluation is to send a questionnaire to
the trainees after the completion of the programme to obtain their
opinions about the programmes worth. Their opinions could also
be obtained through interviews. A variation of this method is to
measure the knowledge and/or skills that employees possess at the
commencement and completion of training. If the measurement
109

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
reveals that the results after training are satisfactory, then the
training may be taken as successful.
In order to conduct a thorough evaluation of a training
programme, it is important to assess the costs and benefits
associated with the programme. This is it difficult task, but is useful
in convincing the management about the useful-ness of training.
Executive Development
The stages involved in a management development
programme are:
(i) Organizational Planning, to determine, the companys present
and future needs;
(ii) Managerial appraisal, to evaluate periodically the abilities and
performance of individuals with a view to identifying managers
showing a promise of further development and meeting their
training needs;
(iii) Programme targeting, to focus the companys effects on the
most pertinent areas;
(iv) Ascertaining key positions requirements to stress
requirements of particular managerial positions;
the basic
(v) Replacement of skills inventories, to indicate persons qualified

for managerial replacements;
(vi) Planning individual development programmes, to provide
specified development programmes for promising managers;
and
(vii) Appraising existing programmes, to ascertain areas of
improvement to be incorporated in future programmes.
Since the object of management development is to influence
and modify the behavior of the managers in operation, it is
necessary that in framing a management development programme
for specified managerial group, the following points should be
involved.
(1) The programme must take care to throw impulses into-the
system in a manner that generates the urge to behaviour changes
from within the trainee manager by the process of evolving rather
than an imposition from outside.
110

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
(2) Identify the pattern of behaviour of which the programme is

aimed at which it seeks to influence and modify.
(3) Identify the nature of the exposure-the impulses that must
be introduced into the system-through the development
programme, which will touch the springs of motives and responses
modifying the behaviour in the desired direction.
Need for Induction of New Employees
The new employee may have some difficulty in settling down to
his new job and in developing a sense of belonging. He can easily
adjust himself to his new job if he is given a clear explanation of the
work of the department to which he is attached. This introduction of
the employee to the job is known as induction.
Purpose and Need for Induction
The purpose of induction and orientation is to help the new
employee and the organization to accommodate each other.
Included in this process may be financial assistances for expenses
of travel filling out of pay roll and other forms, introduction to
colleagues and explanation of the policies and practices of the
organization, many other factors which serve to integrate the new
employee into the enterprise.
The need for security, belonging, esteem and knowledge is met
through proper induction and orientation. Haphazard procedures,
casual greetings, and lack of information can precipitate anxiety,
discouragement, disillusionment or defensive behavior, including
quitting. A successful induction is that which reduces the anxiety of
the new employee. Therefore, such methods which bring this about
are explained to company workers.
Any neglect in the area of induction and orientation may lead to
labour turnover, confusion and wasted time and expenditure.
Orientation is generally provided on the following :
(i) The significance of the job with all necessary information about
it including job training and job hazards.
(ii) The company, its history and products, process of production
and major operations involves in his job;
(iii) Structure of the organization - the geography of the plant and
111

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
functions of the various departments.

(iv) Employees own department and job and how they fit into the
organization;
(v) Many programmes include follow-up interviews at the end of 3
or 6 months with a view to finding out how the new employee is
getting along;
(vi) Relations between foremen and personnel department;
(vii) Company policies, practices, objectives and regulations;
(viii) Personnel policy and sources of information;
(ix) Terms and conditions of service, amenities and welfare
facilities;
(x) Rules land regulations governing hours of work and overtime,
safety and accidents prevention, holidays and vacations,
method of reporting, tardiness and absenteeism;
(xi) Grievance procedure and discipline handling;
(xii) Social benefits (insurance, incentive plans, pensions, gratuities,
etc.) and recreation services, athletic, social and culture
activities) and
(xiii) Opportunities, promotions, transfers, suggestion schemes and
job stabilisation.
Verbal explanations at interview are supplemented by a wide
variety of printed material, employee handbooks, house journal,
picture stories, comics and cartoons, pamphlets, etc., along with
short study tours around the plant on the above matters.
Techniques of Induction Programme
An Induction programme consists primarily of three steps:
(a) General orientation by the staff the personnel department;
(b) Specific orientation by
representative;
the job supervisor, or
his
(c) Follow-up orientation by either the personnel department or

112

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
supervisor.
The first phase of the programme is ordinarily conducted by the
personnel department. This type of induction is general for it gives
the necessary information about the history and operations of the
firm - the purpose which is to help an employee to build up some
pride and interest in the organization. Information is also given on
specific employee services, such as pension, health and welfare
plans, safety programmes, etc.
At the second stage, induction is conducted by the job
supervisor. Induction is specific and requires skill on the part of the
for men. The employee is shown the department and his place of
work, introduced to other employee, informed of the location of the
bathrooms, lavatories, canteens, and time clock; and told about the
organizations specific practices and customs (such as whether the
personnel bring their lunch or whether lunch is supplied to them at
concessional rates, the timings and length of rest periods, the work
dress etc.). The purpose of specific induction is to enable an
employee to adjust himself with his work and environment.
Follow-up induction takes place sometime within one week to
six months from the time of the initial hiring and orientation. It
conducted either by a foreman or a specialist. The employee may
be asked whether his hours of work and pay are as represented to
him before employment; how he feels about his fellow-workers;
how he feels about his boss; and whether he has any suggestion to
make for changes in the induction procedure or in other company
practices. The interviewer records the answers as well as his own
comments on the employees progress. At the same time, the line
supervisor completes an evaluation of the employee, indicating his
strong and weak points, indicating also whether he is doing well.
Questions :
1. Define Training and Development. What are the differences
between training and development?
2. Examine the nature of training and development. What does
training include? Also examine the difference between
Training, Education and Development
3. Examine the objectives, need and purpose of training.
4. Discuss the importance of Training and Development, in the
light of its benefits for an organisation.
113

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
5. How Training Benefits the Organisation?

6. What can be the subject matter of Management Development
Programme (MDP) ?
7. What consideration should be given to administer
Management Development Programme (MDP)?
8. What are the requisites for the success of Management

Development Programmes (MDP)?
9. Elaborate on the different methods that are generally used for
the training of employees.
10. Write a short note on induction training.
11. Examine the training requirement for different types of
employees in an organisation.
12. Examine the main techniques of evaluation of training of
employees.
13. Explain the process of executive development.
14. Explain the purpose and need for induction of new employees.
Also explain the techniques of an induction programme.
15. Write a detail note on Training Practice in India
16. What is the process of Designing Training Programme?
17. What procedure is adopted while developing a Training
Programme?
SUCCESSION PLANNING
After the completion of the unit the student will be able to :
a. Understand the concept of succession planning
b. Know the time framework applied in succession planning
114

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
c. Comprehensively understand the elements

d. Explore the issues and generalize solutions
INTRODUCTION
Survival, growth and efficient continous existence of an
organization requires a succession of people to fill various
important jobs. The purpose of succession planning is to
identify, develop and make the people ready to occupy higher
level jobs as and when they fall vacant. Higher level jobs fall
vacant due to various reasons like retirement, resignation,
promotion, death, creation of new position and new assignments.
Succession may be from internal employees or external people.
Succession from internal employees is advantageous to the
organization as well as to the internal employees. Organization can
buy the employees loyalty and commitment, belongingness, shared
feeling of development along with the organization by promoting the
internal employees. Employees get the benefits of growth in the
organization. The organization mostly prefer to encourage the
growth and development of its employees and as such tend to
prefer succession from within.
Organizations, appraise employees potentialities, identify training
gaps for future vacancies, develop them for higher and varied jobs.
The scope of succession plan would be more when the
organization grows steadily and employees have potentialities to
take up higher responsibilities.
Professionally run organizations ask their managers to identify the
internal employees having potentialities and develop them in order
to occupy their positions as and when they fall vacant
However, it is necessary to allow the inflow of new blood also.
Hence, organizations should also search for outside talent in
certain cases like when competent internal people are not
available, when major expansion, diversification and growth plans
are in offing, complete dependence on either internal source or
external source is not advisable to any organization. Hence, a
judicial balance between these two sources should be maintained.\
115

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
MEANING AND PURPOSE OF SUCCESSION

PLANNING
Succession Planning is The process of ensuring a suitable supply
of successors for current and future senior or key jobs arising from
business strategy, so that the careers of individuals can be planned
and managed to optimize the organizations needs and the
individuals aspirations.
PURPOSE OF SUCCESSION PLANNING is to identify and
develop people to replace current jobholders in key positions.
Through Succession Planning, companies assure a steady flow of
internal talent to fill important vacancies. Succession Planning
encourages hiring from within and creates a healthy environment
where employees have careers and not merely jobs. It helps in
identifying human resources shortages and skill shortages before
openings occur. Thereafter, it becomes easy to groom qualified
candidates for future vacancies. The organization is thus assured of
continuity of operations and better qualified incumbents.
The absence of a Succession Plan can seriously hamper the
growth prospects of an organization. Imagine the disastrous
consequences when there is a sudden vacuum at the top level.
There is no one to see the ship. Critical plans needing immediate
action get postponed. The organization remains headless and
directionless for a while. Suitable candidates may not be available
internally, as no one has been groomed in the past, keeping such
an eventuality in mind. Bringing in outsiders may mitigate the crisis
temporarily but the long term impact is bound to be negative.
Internal forces may start a rebellion and creating of war situations
with frustrating regularity.
Preparing a schedule for Succession is critical to the success of a
company, especially at the top levet when the baton changes over
a period of time, disruption and dislocation are minimized. Indeed
when a new CEO is meant to consolidate on past successes, a
slow shift is ideal. If qualified candidates are not available within the
company, outsiders can be considered readily for possible
openings. Complete dependence on Succession from within or
from outside is not desirable. Internal candidates require a pat on
the back when they do well. External candidates are needed for
injecting fresh blood into the company
116

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
REPLACEMENT CHARTS
A Succession Plan is a plan for identifying who is currently in post
and who is available and qualified to take over in the event of
retirement, voluntary retirement, dismissal or sickness. A typical
Succession Chart shows details of key positions of executives and
brief references to their possible successors. The replacement
chart is a visual representation of who will replace whom if there is
a job opening.
TIME FRAME
Right person for the right job, at the right place and right time
implies the time frame of succession planning. Time frame is
applied for mentoring, training and job rotation. As the process of
succession planning is to find right person within the internal frame
work, there are
possibilities when no internal candidate is
available, so here the management uses succession planning to
recruit a person from outside. Within the organization the top level
authorities keep supervising and training their subordinates for
promoting them to higher post applying succession planning
effectively.
ELEMENTS OF SUCCESSION PLANNING

1. Management Succession Planning
In organizational development, succession planning is the
process of identifying and preparing suitable employees through
mentoring, training and job rotation, to replace key players such as
the chief executive officer (CEO) within and as their terms expire.
From the risk management aspect, provisions are made in case no
suitable internal candidates are available to replace the loss of any
key person. It is usual for an organization to insure the key person
so that funds are available if she or he dies and these funds can be
used by the business to cope with the problems before a suitable
replacement is found or developed.
Succession Planning involves having senior executives periodically
review their top executives and those in the next lower level to
determine several backups for each senior position. This is
important because it often takes years of grooming to develop
effective senior managers. There is a critical shortage in companies
of middle and top leaders for the next five years. Organizations will
need to create pools of candidates with high leadership potential.
A careful and considered plan of action ensures the least possible
117

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
disruption to the persons responsibilities and therefore the

organizations effectiveness. Examples include such a person who
is:
suddenly and unexpectedly unable or unwilling to continue their
role within the organization;
accepting an approach from another organization or external
opportunity which will terminate or lessen their value to the
current organization;
indicating the conclusion of a contract or time-limited project; or
moving to another position and different set of responsibilities
within the organization.
A succession plan clearly sets out the factors to be taken into
account and the process to be followed in relation to retaining or
replacing the person.
2. Business Succession Planning
Business succession planning involves planning for the smooth
continuation and success of a business which depends greatly on
the availability of competent people. Be it profit or non-profit
organization, one of the concerns is there may be no successor to
drive it once the leader or key person leaves either by choice or
by circumstances. This concern has been repeatedly expressed in
the papers by leaders from the private and government sector. It is
people, or more aptly, the right people, that make things happen.
But the music will stop one day! If the leader or key person does
not retire (whether by old age, disability or choice) he will end his
time of service when he dies. And when they do, problems often set
in. The day after is often filled with chaos and uncertainty.
What is likely to happen to the organization when a key leader is
eliminated without succession planning in place? Here are some
things to expect. First, there would be either no able successor or
where there is, the successor is often either unprepared to handle
the heavy responsibilities placed upon them or he/she simply does
not have the ability to manage the organization in the way it used to
be. Whatever the case may turn out to be, the situation can be dire
for the organization. Profit may be lost. Business can become
untenable to continue. In the case of the unplanned death of an
owner, the remaining co-owners and the heirs may be embroiled in
a relationship crisis that threatens to wreck the business.
In an unplanned situation, ineffective quick-fixed solutions are the
only answers left. If no able successor can be found, a temporary
118

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
replacement is often the only choice left, and the ultimate result
may still be the downfall of the organization. It is difficult enough to
run an organization with experience and ability. Without the
requisite qualities in the new leader, the rot of the organization is
almost likely to set in immediately; unless it is lucky to have a
replacement who happens to be suitable and motivated. If not, an
unmotivated successor is equally bad news for the set-up. Without
the drive, the organization will stay stagnant and more than likely,
to slide.
Without succession planning, a business that has become
successful can just as easily fall. The business grows because
there is a leader (probably the owner) with experience, drive and
ability. Without proper succession planning, the future success of
the business is left to chance once that leader is gone. Under such
a circumstance, if it succeeds at all, it is by default rather than
planned. That is not all. The passing of the baton from one
generation to the next is often clouded by the stakeholders differing
views and agendas. Without proper planning, the clashes of views
and agendas can pull the business in several directions and this
may wreck an otherwise viable business.
With so much at stake, business succession planning has to be a
priority and should be part of every business planning. There are
two main options available to business succession planning, which
are:
1. Retention Planning: Retention of the business within the family
circle; and
2. Buy-sell Planning: Selling of the establishment to other
business owners or key employees or interested outsiders.
It is a norm in many parts of Asia that succession planning is a
sensitive issue to discuss amongst partners or shareholders. This is
despite the fact that a successful transition minimizes disruption,
ensures continuous profitability and guarantee satisfactory returns
to the partners and shareholders.
TODAY..... Good joint management and effort among business
shareholders have built a successful and profitable business. The
business shareholder and his family enjoy a comfortable livelihood
and good lifestyle.
TOMORROW..... Suddenly, unexpectedly, a key shareholder dies
and the business is disrupted instantly. What will be the outcome of
119

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
the shareholders' business interest and his family's livelihood and

lifestyle?
FUTURE..... The surviving shareholder and the deceased
shareholders family face a critical decision. What are the options
available to the surviving shareholders and the deceased
shareholders family?
What are the options available after the event has happened?
The heirs become active in the business - Do they have the
experience, skills and expertise to manage the business and be an
asset to the company?
The deceaseds share is sold to an outsider. The heirs keep their
share as inactive shareholders - Can the surviving shareholders
accept this arrangement with the extra input of effort and yet share
equally in the profits?
The deceased shareholders share is sold to surviving
shareholders - Will the surviving shareholders be able to raise the
necessary cash for this transaction?
An Ideal solution for all concerned could be...(action plan)
Proper business continuation and succession planning can help
prevent a business from being frozen and discontinued. It also
helps avoid conflict among family member and between heirs and
surviving owners.
Family Business Succession Planning
Due to the complexities surrounding the transfer of ownership of
family businesses from one generation to another, specific
resources have been developed for family business owners
planning for this transition. Among these resources is the McCabe
Arch which is a visualization and planning tool for the American
business owner. It offers practical solutions for planning the orderly
consumption and distribution of financial and emotional wealth.
The process, like the construction of an arch, begins with two solid
cornerstones, the business owner who is willing to plan for his or
her eventual departure from the business, and the willing
successor.
However, the unique aspect of an arch was that we continually
build it from two sides. For a succession planning model to work,
120

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
we needed commitment from the owner and the protg. It was

imperative that both sides complete their assignments with the
ultimate goal of the findingand resolvingthe key issues that
were represented by the various blocks. -Harry McCabe (Author of
Pass It On: The Entrepreneur's Succession Planning book)
Each building block on each side of the arch represents a step in
the 7 Steps to Succession, which provides a time table and road
map for Family Business Succession Plans.
ISSUES
IN
SOLUTIONS
SUCCESSION
PLANNING
AND
1. There is a compelling argument that gifting family businesses to

the next generation destroys businesses and family relationships.
When family members purchase shares in a family business they
are required to assess their own skills and ability to generate wealth
from the business. Families that skip this step, families that gift
ownership encourage children to work in and often lead family
businesses for all the wrong reasons.
2. If the employees retire or exit for other reasons, the ethos and
dynamics of the business will inevitably change. If the value of the
business is to be maintained or enhanced, it is imperative that
these changes are carefully controlled.
The first step is to formally decide precisely what difference their
departure will make. If the retiring directors/managers were
responsible for sales dynamism, strict financial control, key account
customer loyalty or engineering innovation, for example, these are
the critical skill gaps which will need to be seemlessly filled.
3. The assumption is companies will need to recruit externally to fill
operational gaps arising as they undergo change. This is not
necessarily the case.
4. External HR professionals can be brought in to work as change
managers. They can identify current or anticipated gaps in
managers' range of skills and employees' competencies and then
develop the most cost efficient ways to fill these gaps.
But there is more to succession planning. Rather than just being a
way of averting the dangers of a foreseeable motivational and
121

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
anagement vacuum, it can be an opportunity to refresh, revitalise or

reposition a staid enterprise in a rapidly changing world.
5. Businesses can move forward by optimising the contribution of
their existing management, staff and workforce. It is highly likely
existing personnel will have undiscovered capabilities and talents.
But the fact these attributes have not become apparent in their
existing roles is probably more to do with habit and complacency
than a failure to invest in employee development. It might be the
case they have simply not been invited to extend themselves in an
unfamiliar direction or take on wider responsibilities. It is definitely
the case that uncovering unsung talent in existing staff is less costly
than recruiting and introducing new personnel.
6. Job rotations can sometimes reveal these hidden reservoirs of
ability. Perhaps someone on your sales force has the potential to
become an outstanding marketer perhaps someone from your shop
floor or office has the potential to be an outstanding sales
generator. An operative might have innate interpersonal skills which
earmark him or her for development into line management.
7. In some instances, the skills shortfalls can be filled by job
rotation. Skills shortfalls in one department can be overcome by
importing them from another where a competent individual's ability
is being under-utilised. There are huge savings to be made by
offering coaching, mentoring or further job training to existing staff.
SUMMARY
Succession Planning is concerned with the preparing people to fill
up successive jobs. The purpose of succession planning is to
develop people to replace current incumbents in key positions for a
variety of such reasons as : superannuation, resignation,
promotion, growth, diversification, creation of new positions, etc.
Succession Planning focuses on preparing people to fill execution
positions. Succession planning is concerned with the examining
development needs of a firms strategic plans. Informally, it means
high-level managers indentifying and developing their own
replacements. The employees having managerial attitude and
potential may be considered for development programme that will
help prepare them for the executive jobs.
122

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Questions
1. What is Succession Planning ? How do the organizations plan
for the succession of the employees
2. Explain the issues involved in the implementation of
Succession Planning ? Can they be resolved ? Give Examples.
3. Discuss the various elements of succession planning ? Is there
any mechanism of justifying the elements applied in the
process of succession planning ?
4. Do the Indian Business Houses apply succession planning as
the core system to achieve the target of growth, expansion and
diversification ? Explain giving examples.
EMPLOYEE HEALTH AND SAFETY

1. Understand the concept of health and safety
2. Know the safety measures applied and to make students
understand the importance of human resources
3. Understand how to manage stress and nurture good physical
and mental health
4. Understand What Employee Welfare and team spirit is
INTRODUCTION
Since large number of employees spend great deal of their time in
work place, their work environment is not always good for their
healthy life. Stress, Strains, Mental and Psychological Conditions,
Poor working conditions, Long hours of work, Poor ventilation,
Insanitation, Malnutrition etc spoil their health. Efficiency in work
place is possible only when an employee is healthy on the other
hand industry exposes workers to certain hazards which affect his
heaith. The symptoms of bad health are high rate of absenteeism
and turnover, industrial discontent and indiscipline, poor
performance and low productivity. Modern industry is characterized
by complicated mechanisms, intricate job requirements, and fast
moving production lines. One of the important consequences of all
this is increased dangers to human life, through accidents. To avoid
123

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
this safety programmes like industrial health programmes are

introduced, both for employers and employees benefit.
MEANING AND DEFINITION OF HEALTH

The W.H.O has defined health as a state of complete physical,
mental and social well-being and not merely the absence of
disease or infirmity.
Industrial health refers to a system of public health and preventive
medicine which is applicable to industrial concerns.
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 adverse to health, and
iv) Placing and maintenance of the worker in an occupational
environment adapted to his physical and psychological
equipment.
PHYSICAL HEALTH AND MENTAL HEALTH

Physical health implies prevention of disease orhealth
conservation and prevention of occupational disease. Health is the
outcome of the interaction between the individual and his
environment. Health not only depends on the employee but also on
the environment. Efficiency in work is possible when the worker is
healthy physically and mentally.
Industries exposes employees to certain hazards which he would
not meet elsewhere and which may affect his health. Physical and
mental health both are essential for the satisfaction and improved
morale, discipline, performance and productivity of the employees.
In India, the Royal Commission on Labour (1931), the Labour
Investigation Committee (1946), the Health Survey and
Development committee (1943), the Labour Welfare Committee
(1969) all emphasized upon the creation and maintenance of an
healthy environment as possible, in the homes of the people as well
124

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
as in all places where they congregate for work, amusement or

recreation are essential.
SAFETY MEASURES
Safety measures deals with prevention of accidents and with
minimizing the resulting loss and damage to persons and property. Five
basic principles must govern the safety programme of an organisation.
They are :
1. Factors resulting to accidents have to be traced out, analysed
and eliminated.
2. Identify potential hazards, provide effective safety facilities and
equipment take prompt remedial action.
3. The top management must continuously monitor the safety
performance.
4. Management and supervision must be fully accountable for
safety performance in the work place.
5. All employees should be given thorough training in safe
methods of work and should receive continuing education and
guidance on eliminating safety hazards and on prevention of
accidents
There are three Es of safety to prevent accidents, namely,
engineering, education and enforcement of safety rules.
Statutory Provisions for safety in India
The Factories Act contain specific provision for the safety of
workers.
1. When any part of the machinery is in motion, it is obligatory to
fence the machinery.
2. Any examination, adjustment of any part of the machinery shall
be carried out by trained male worker wearing tight fitting
clothing.
3. No adolescent shall be allowed to work on any machinery
which poses danger.
4. Suitable devices for cutting off power in an emergency shall be
provided
5. Prohibition of employing women and children near cottonopeners.
6. Precautions against dangerous fumes, use of portable electric
lights. Explosive or inflammable gas or dust, fire etc.
125

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
STRESS MANAGEMENT
Stress is a state of mind that show certain biochemical reactions in
the human body and is projected by a sense of anxiety, tension,
depression, frustration and irritation. Such reactions are caused
when the demands of the environmental forces or internal forces
are not met by the resources available to the person. Situations
produce stress in the form of bio-chemical, functional and structural
changes in the human organism. These situations could be fear,
pain, fatigue, emotional arousal, humiliation, frustration, lack of
concentration, blood pressure, drugs, loss of loved one, nonoccurrence of an expected event and even unexpected successes
that require a change in the operational style. High level stress
damages the physical and psychological well-being of a person and
extremely low levels of stress are equally undesirable for they
cause boredom, and result in lack of stimulation, innovation and
challenges. Thus moderate level of stress is necessary for higher
level of performance.
Meaning and Definition of Stress
The term Stress refers to the bodys physical, mental, and
chemical reactions to circumstances that confuse, endanger,
frighten or irritate the individual.
i.
According to Hans Selye Stress is defined as the nonspecific

response of the body to any demand .
ii. Stress is a discrepancy between an employees perceived

state and desired state, when such a discrepancy is considered
important by the employee. Stress influences two behaviors (1) the employees psychological and physical well-being and
(2) the employees efforts to cope with the stress by preventing
or reducing it.
iii. S.P. Robbins, Stress is a dynamic condition in which an
individual is confronted with an opportunity, constraint or
demand related to what he or she desires and for which the
outcome is perceived to be both uncertain and important.
Sources of Stress
There are two sources of stress namely organizational sources and
personal sources.
126

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
A) Organizational Sources
The extent and ratio of stress that people experience in job place
are influenced by the following factors :
i. Nature of job
The nature of job itself can determine the type and degree of
stress that can be induced. Some jobs lead to more stress-related
responses than others. For example job of a police officer, or air
traffic controller are often considered to be low- stress jobs. In
general high stress occupations are those in which the employees
have little control over their operations, work under time constraints
and have major responsibilities for human or financial resources.
Persons working under adverse working conditions such as
temperature extremes, pollution, uncomfortable lighting and
ventilation and loud noise are also vulnerable to high stress.
According to a study , some of the high stress jobs are foreman,
manager, inspector, waitress or waiter and clinical laboratory
technician. On the contrary low stress jobs are college professor,
personnel worker, craft worker, farm labourer etc.
ii. Role Ambiguity
Role is the set of activities associated with certain position in the
organisation. When there is lot of uncertainity regarding job
definitions or job expectations, then people experience role
ambiguity. Role ambiguity is high in managerial jobs where
responsibilities are more and role definitions and task specifications
are not clear.
Role ambiguity produce psychological strain and dissatisfaction,
lead to under-utilization of human resources and leads to feeling of
futility on how to cope with the organizational environment.
iii.
Role Conflict
Role conflict occurs when two or more persons have different and
sometimes opposing expectations of a given individual. Role
conflicts occur when contradictory demands are at the same time
placed before an employee. For example, a building contractor may
ask a carpenter to something which is different to what the city
building code is, thus causing a role conflict. Similarly a father may
127

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
know that his son has committed a crime but does not inform the
police.
iv. Responsibilities assigned to employees
Any type of responsibility can be a burden on an employee. Holding
a person responsible for anything going wrong can create stress
and it can be more if the manager has a limited degree of control
over his subordinates.
v. Lack of Participation
When the employees are allowed to participate in the decision
making process of the organisation, the employees develop high
morale, work more efficiently and feel that they have control over
the work environment thereby reducing the extent of role conflict
and role ambiguity which are the causes of stress.
vi. Interpersonal Relations
The efficiency, performance and effectiveness of a organisation is
mapped by the degree of relations that the people enjoy in the work
place. Harmonious, cordial and congenial relations result in peace.
When the interpersonal relations are poor there is stress, tension
and anxiety. Under such crisis full situation the superior and
subordinate relations keep deteriorating
B.
Personal sources
i. Job concern
Job variables can become stressors when they become sources of
concern, anxiety and frustration to a individual. Lack of job security,
prospect of losing a job with family depending on the individual, job
recession, low status of job, lack of career progress are all factors
resulting into stress.
ii. Relocation
Transfers or promotions resulting into change of place
geographically, disturbs the routine daily life of individual causing
stress. Fear of working in a new place, unpredictability of the new
work environment, anxiety due to fear of how to create new
relations, getting away from spouse, children, relatives or looking
for new dwelling, school for children in new place can be the result
of uncertainity and a cause of stress.
128

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
iii.
Change of life structure
Structure of life and process of living has many facets like sociocultural factors like religion, race, education, family. As a person
grow older responsibilities also grow up, and therefore stress
develops. The extent of stress is also determined by the ability to
cope with stress
Coping with stress
A. Organizational Strategies
1. Preventive management : Preventive management can be
conducted by surveys and employee/group interviews.
Managers can identify potential problems of serious stressors
and take steps to reduce them
2. Maintaining a productive culture : Maintenance of positive
organizational environment and satisfied employees sets the
right direction.
3. Management by objectives : A management by objectives or
similar performance appraisal technique that identify employee
goals, roles and responsibilities and strengthen communication
can reduce stress by eliminating uncertainty in critical aspects
of employees jobs
4. Controlling the physical environment : Reducing stress in
the physical environment requires that management undertake
one or two different strategies. First by reducing noise, better
control of temperature, second by protecting employees by
improved safety equipment.
B. Personal Strategies
1. Meditation : Transcendental meditation gives mental and
physical relaxation. Meditation reduces anxiety and improve
work performance and gives job satisfaction.
2. Exercise : One of the least expensive and effective stress
reduction strategy is exercise like jogging, sports, fitness
classes, cycling, swimming etc. This improves mental and
physical health.
3. Entertainment : Watching a favorite movie or listening to
music can release stress
4. Removing the cause of stress : sometimes one can easily
check the cause of stress, for example, a confrontational
supervisor, difficult support staff, no possibility for advancement
129

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
5.
etc. Thus the key is to reduce or lessen the cause.

seeking Counseling : Stress is a common psychological
problem. Counselors can offer helpful insights and stressreduction techniques that may remove the problem.
EMPLOYEE WELFARE
Employee welfare depends on overcoming personal crisis, family
problems and work place problems. Removal of these problems
leads to healthy and more productive years of service to the
employees.
Organisations try number of approaches to address rising problems
of the employees. One such approach is the establishment of
wellness programs. Wellness is defined as a freely chosen
lifestyle aimed at achieving and maintaining an individuals good
health.
Employee welfare programs can bring behavioral changes in
employees. More broader and comprehensive approaches are
adopted by organizations to solve problems of employees. Job
security, Voluntary participation, Accessibility, Insurance coverage
can boost the morale and efficiency of the employees.
SUMMARY
The life of industrial workers is full of risks and hazards. Every year lakhs
of employees are injured in factories, mines, railways, ports and docks,
leading to acute ailments or permanent handicaps. The injuries are caused
due to unsafe activity, or an act on their part or chance occurrences or as
a result of unsafe work conditions or unsafe acts of employees
themselves, or defective plant or shop layout, inadequate ventilation,
unsafe and insufficient space for movement inside the plant. Safety
measures are devised to prevent accidents minimizing loss and damage
caused to a person and property.
Job stress is a pervasive problem. It may result in low productivity,
increased absenteeism and turnover, and other employee problems
like mental imbalance, heart illnesses. Strategies to control stress
include fitness programs, meditation, counseling etc.
130

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
ADDITIONAL READINGS
1. C.B. Mamoria and S.V. Gankar, Personnel Management,
Himalaya Publishing House, 2004.
2. Hook, Charles R, Industrial Safety-Its Relation to Business
Today, U.S.A, Pg No : 21,1938.
3. Khan R.L, Wolfe R.P. Quinn, J.D.Snoekand and R.A.
Rosenthal, Organisational Stress : Studies in Role Conflict and
Ambiguity, John Wiley, Pg No : 70-71,1964.
4. T. V. Rao, Readings in Human Resource Development
Questions
1. Give the importance of industrial health. Explain how safety
measures can help in reducing industrial accidents.
2. Explain in detail the physiological, psychological and
behavioural responses to stress.
3. What are the personal factors that contribute to stress? Would
this stress be reduced if employees were made more
responsible for their own activities? Support your reasons.
RECENT TRENDS IN HUMAN

RESOURCE MANAGEMENT
1. Understand the concept of Business Process Outsourcing
(BPO)
2. Know the concepts of Back Office and Front Office
Outsourcing.
3. Understand objectives need and benefits of BPO.
4. Know services offered by BPO.
5. Understand Future prospects of BPO in India.
6. Know the concept of KPO, forms, benefit and Importance of
KPO.
7. Understand Future prospects and challenges to KPO.
8. Understand career options in BPO and KPO.
9. Understand the concepts Downsizing and Strategy for
implementation of Downsizing.
131

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
INTRODUCTION
Business Process Outsourcing (BPO) is a contract whereby a
firm (outsourcer) transfers its processes along with the associated
operational activities and responsibilities to a third party (BPO
operator), so that the third party BPO operator provides the
required services to firms customers, for an agreed consideration.
BOP services are included in retail banking, insurance, travel and
hospitality, automobiles, telecom, pharma, finance, accounting and
Human Resource.
Outsourcing of human resource activities is an innovative
strategy in Indian industry, just like in other advanced countries. It
can be a tool for companies, particularly, small ones for competing
against the big players. These are specialist HR service providing
agencies with expertise to provide professional assistance in
matters of employee benefits administration, recruitment and
training, legal matters, etc.
Outsourcing practices varies from company to company in
Indian organisations. In some reputable companies like ITC
Welcome group (hotel) and others, part of training is outsourced,
just like recruitment. Outsourcing is cost effective and results in
efficiency. Outsourcing is also useful for complementing in-house
strategies. As such, it may not necessarily be resorted to in place of
the function earlier carried out by the company.
The work given to third party may be to produce something or
to provide a service
To produce something as for example a manufacturer of car
(outsourcer) will not produce all car parts himself. He may ask
another company (BPO operator) to produce some car parts for
him. For this, he will pay the BPO operator some money.
In this way in BPO, the company does only the core activities
and gives less important work to third parties in exchange for a fee.
BPO is divided into two categories:
1. Back Office Outsourcing : This includes internal business
functions such as billing or purchasing.
2. Front Office Outsourcing : This includes customer-related
services such as marketing or technical support.
132

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
BPO is a contractual service to completely manage, deliver and

operate one or more business processes or functions.
BPO that is contracted outside a companys own country is
sometimes called offshore outsourcing. BPO that is contracted into
a companys neighbouring country is sometimes called near-shore
outsourcing. BPO is dependent on IT, hence it is also referred as
information technology enabled services or ITES. Knowledge
Process Outsourcing (KPO) and legal process outsourcing are
some of the parts of BPO.
According to NASSCOM the top five Indian BPO exporters are
Genpact, WNS Global Services, Transworks Information Services,
IBM Daksh and TCS BPO.
Objectives of BPO
1. In enables to focus exclusively core services.
2. Scarce resources can be put to better use.
3. BPO reduces cost of operations.
4. Organisation can get specialised services.
5. Organisation can strengthen strategic business relations with
many organisations.
NEED OF BPO
1. Flexibility : Outsourcing may provide a firm with increased
flexibility in its resource management. Most BPO services are
offered for a fee basis. This helps a company becoming more
flexible by transforming fixed into variable costs.
2. Core Activities : A company is able to focus on its core
competencies. Focusing on core activities may help a company to
create a competitive edge. Employees are relieved from performing
non-core or administrative processes and can invest more time in
building firms core businesses.
3. Speed of Business Processes : Using techniques such as
linear programming is a way to reduce cycle time and inventory
level, which increases the speed of business processes.
4. Transform Organisation : BPO helps to transform the
bureaucratic organisation into a very agile organisation. A company
can help to maintaining ambitious growth goals. Thus BPO allow
133

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
firms to retain their entrepreneurial speed and agility.

5. Long Term Relationship with Customers : BPO
employees are generally professionally trained in customer relation,
their approach and attitude towards the customer can go a long
way in building long term relationships.
Benefits :
Operational Cost Control
Cost Savings
Improved HR
Productivity Improvements
Access to Expertise
Establish and Develop Minority Suppliers
Gain access to information technology tools without major
investment
(h) Increased flexibility to meet changing business conditions
(i) It helps the company to minimise business risks
(a)
(b)
(c)
(d)
(e)
(f)
(g)
SERVICES OFFERED BY BPO

1. Telemarketing Services : Telemarketing outsourcing
services target interaction with potential customers. The objective is
to generate interest in products and promote sales.
2. Customer Support Services : This services manages
customers inquiries through multiple channels of voice, e-mail and
chat.
3. Technical Support Services : This services offers round
the clock technical support and problem solution to customer of
computer hardware, software and internet infrastructure
manufacturing companies.
4. Desk Services : This services provides technical problem
solution and support for corporate employees.
5. Insurance Processing Services : This service provides
specialised solutions to insurance sector.
6. Medical Transcription Services : Medical Transcription
accounts for 2% of total Indian Outsourcing Services.
134

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
FUTURE PROSPECTS OF
OUTSOURCING IN INDIA
BUSINESS
PROCESS
Business Process Outsourcing (BPO) is the fastest growing

segment within IT services. Global market for outsourcing is
growing at the rate of 7%. IT is estimated at around 1.2 trillion
dollars in 2007. 73% of executives of US companies said their
organisations have outsourced some work. BPO industry is drawing
significant attention in India by virtue of its utility as an upcoming
business.
It is estimated in 2008 India would have revenues of 11 billion
US $ from offshore BPO. India thus has a commanding 63% share
of offshore BPO services. other locations like Eastern Europe,
Philippines, Morocco, Egypt and South Africa have emerged to take
a share of market. China is also trying to grow from a very small
base in this industry.
1. BPO industrys current size is about $ 26-29 billion.
2. BPO sector in India employs over seven lakh people and
accounts for more than 35% of world wide market.
3. In last 3 years BPO sector is growing at over 35%.
4. Total export BPO market opportunity is about $ 220-280 billion
by 2012. While domestic BPO market provides additional
opportunities worth $ 15-20 billion.
5. Technology, telecom, travel and transportation provide
opportunity in excess of $ 10 billion by 2012.
6. Nassam has 1200 members, of which 40% are BPOs and over
50% of them are located in southern states.
In comparison to American and European countries, India has
vast pool of skilled human resources ready to work at lower wages.
India has largest English speaking population after other western
countries. This helps BPOs to serve American clients by working at
nights and helps in better utilisation of resources. Certainly the
future business of BPO looks bright in India.
Challenges and Threats of BPO :
Although BPO has many potential advantages there are a few
stumbling blocks, which could counter these advantages. A failure
to meet service levels, unclear contractual issues, changing
requirements, unforeseen changes etc. The outsourcer may
become too dependent on BPO service provider. A major drawback
is related to risk involved. Thus to achieve any benefits, risks and
135

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
threats to outsourcing must be managed.
KNOWLEDGE PROCESS OUTSOURCING (KPO) :

The success of BPO has encouraged many firms to start
outsourcing their high-end knowledge work as well. India has a
large pool of knowledge workers in various sectors ranging from
Pharmacy, Medicine, Law, Biotechnology, Education and Training,
Engineering, Design and Animation, Research and Development
etc. This talent is soon being discovered and tapped by leading
businesses across the globe. Hence Knowledge Process
Outsourcing involves off-shoring of knowledge intensive business
processes that require specialised domain expertise.
Knowledge Process Outsourcing (KPO) is a contract between
a company (outsourcer) and a third party (KPO Operator). In this
contract the company transfers (gives) some of its knowledge or
information related to work to the KPO operator in exchange of
fees. So KPO is like BPO. But KPO does high end jobs and BPO
does low end jobs. KPO is mostly used by Pharmaceuticals,
Biotechnology, Financial Services, Technology Research and other
companies who deal with knowledge and information.
KPO saves cost. This kind of outsourcing is adopted by
companies to implement their strategies and to protect their
intellectual property rights. According to report by Global Sourcing
Now, Global KPO industry is expected to reach US $ 17 billion by
2010.
FORMS OF KPO
1. Legal Process Outsourcing (LPO) : LPO does a wide
range of legal work such as legal research, pre-litigation
documentation, advising clients, writing software licensing
agreements etc. Thousands of lawyers jobs will move from USA to
countries like India in near future.
2. Human Resource Outsourcing (HRO) : Human Resource
includes payroll management, training, staffing, travel, retirement
benefits, risk management, compensation consulting etc. By
outsourcing these activities, the outsourcer can concentrate on
important matters.
3. Research Process Outsourcing (RPO) : RPO is popular in
biotech industry. Biotech industry is a very high profit-making
industry.
136

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
4. Medical Business Process Outsourcing (MBPO) : India is

becoming a main centre for medical treatment for westerners and
middle-east travelers. The chain of Apollo Hospitals is the first
major hospital to be get MBPO work.
Benefits of KPO :
1. Better quality of work.
2. Increase in Profits.
3. Uninterrupted Services.
4. Savings in cost and time.
5. Trained Professionals at Work
6. Pool of In-house Experts.
7. Standard Operational Efficiency.
8. On-time delivery of Services.
9. Recruitment of Larger Workforce without increasing costs.
10. Flexibility in accommodating clients orders.
1.
2.
3.
4.
5.
Importance of KPO :
Innovation and differentiation will be key factors in identifying
KPO companies and attracting business.
KPO companies are professional services companies.
Successful KPOs have world-class people development as its
foundation.
KPOs have to recruit talented persons as the nature of work is
different. The selection of right person is half battle won.
The objective of every KPO company is to deliver world-class
quality of work to the satisfaction of clients so that repeat
orders are produced.
KPO needs specialisation. Persons with specialised education
are always given preference in employment.
Future Prospects of KPO in India : India has become a

preferred choice of outsourcing countries-Citigroup, GE Capital and
American Express have established their KPO companies in India.
With huge talent pool, India could emerge as a global KPO hub.
India enjoys cost advantage. More and more companies are turning
to India for off shoring KPO work as quality work gets done at
cheaper rates.
137

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Parma giants Astra-Zeneca and Glaxo-Smithkline have set u

drug discovery centres at a low-cost destinations. Motorola, Philips,
Nokia, Intel, IBM and Cisco have established offshore design
centres in India. The future of KPO business in India presents an
encouraging picture to rejoice.
1. According to a report, the Global Knowledge Process
Outsourcing Industry is expected to reach US $ 17 billion by
2010. From this US $ 12 billion with be outsourced to India.
2. Indian KPO sector is expected to employ more than 2,50,000
KPO professionals by 2010, compared to current figure of
25,000 employees.
3. India will continue to remain as the top KPO destination.
4. Companies that are outsourcing to KPOs are trying to balance
their risks.
5. Large KPO providers are expected to move to multi-location
delivery centers.
6. India will capture more than 70% of KPO outsourcing sector by
2010.
7. KPO will have a compounded growth rate of 46% per year till
2010, whereas BPO would grow only by 26% till 2010.
Challenges to KPO
1. High Staff Turnover.
2. High cost of Training.
3. Ensuring the security and confidentiality of information,
especially when privacy laws change from country to country.
Reasons for Growth of KPOs :
1. KPOs are growing rapidly in India as India has large pool of
knowledge workers in various sectors.
2. Indian education system gives great importance to higher
education and specialisation.
3. The Indian Government has set up IITS (Indian Institute of
Technology) and IIMs (Indian Institute of Management) across
the country.
4. India has more than 250 universities and engineering colleges.
5. In all good educational institutions, medium of education is
English, this has resulted in large population of educated and
qualified professionals.
CAREER OPTIONS IN BPO-KOP

Career Options in BPO : It is expected that BPO sector will
have to face man power shortage of 39 to 49% by the year 2009.
138

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Large population of educated English speaking people and low cost

are encouraging more and more companies from abroad to
outsource their call centres to India. Call centres jobs require a high
school diploma or even a college degree.
1. Call Centre Operators : This is entry level in call centres.
Here general duties are answering telephone calls, taking down
details of callers query and logging information on a computer,
giving advice, in some cases, selling caller products etc.
In outbound call centre services such as tele-marketing, an
operator also needs to identify potential customers and make
outgoing calls, marketing products, follow-up calls, sending fax, email etc. Duties of a call centre operator depends on the type of
product/service of that organisation.
2. Centre Manager : He manages day-to-day operations of call
centre. It includes financial budgets, operations, communicating,
coaching and development of call centre. He has to set operational
goals and objectives, monitor and improve performance, have
interactions with people outside the call centre, manage all call
centre support functions including training, hiring, IT support and
process improvement.
3. Quality Monitor Agent : They see that all call centre
procedures are followed properly and give performance feedback
about call handling to coaches, training group and hiring manager.
4. Process Specialist : He uses quality improvement
techniques to create environment of continuous quality
improvement. A call centre experience is useful for jobs in customer
relation, sales jobs or insurance sector.
Career Options in KPO : KPO provides companies an
opportunity to tap into specialised knowledge in various vertical
business domains. KPO sector offers a good working atmosphere
with global exposure and an opportunity to develop skill sets in a
specialised field. Many are unaware of potential of this sector and
scope of future prospects. This sector also requires higher level of
control, confidentiality and enhanced risk management. A recent
report indicates that outsourcing of legal processes alone benefits
about 700 Indian law firms working in high-end areas.
1. Legal Services : Writing legal documents does not require
costly professionals as the same can be done by a KPO firm in
139

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
India. Now KPOs do patents, drafting, legal research, writing

software etc.
2. Accounting Services : All accounting work from book
keeping to auditing is done by KPO firms. They provide trained
professionals who offer cheaper services with standard quality.
3. Journalism and Content Development : This sector has
recently grown with the rise of content development firms. English
speaking trained writers from a KPO firm are good candidates to
help newspapers and journals with their editing and copy writing
work.
4. Architectural and Engineering Services : A large pool of
trained draftsmen can provide expert CAD/CAM services to clients.
5. Financial Analytics and Equity Research : Analytical,
Conceptual and interdisciplinary thinking, Accountancy and
financial analysis, Fundamentals of finance, experienced in
interpreting research reports.
6. Other Key KPO Areas : KPOs provide opportunities to
graduates in engineering, management, law, statistics, economics,
accounts and biological sciences to name a few, apart from
opening its doors to Arts, Science and Commerce graduates.
The essential skills for a successful career in KPO is a good
mix of communication skills, analytical abilities and domain
knowledge. Candidates can expect a starting salary of Rs. 15,000
to Rs. 30,000 in BPOs or KPOs. Promotions are performancebased. They can also become CEO of BPO or KPO centre. Jobs of
BPO and KPO are full of stress, so the candidate must have the
ability to handle pressure. He must be cool and must perform well
in all situations.
Distinguish between BPO and KPO
BPO
KPO
1. Meaning : BPO is a contractual service to

completely manage, deliver and operate
one or more business process
KPO is a high added value chain of processes

where the achievement of objective is
dependent on skills, knowledge and experience
of people carrying out activity.
2. Potential : BPO market is long term in nature KPO market may or may not be long term
3. Activates : BPO undertakes data processing, KPO undertakes legal processes,
basic data entry, setting up of bank A/C,
Intellectual property and patent services,
140

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
department outsourcing, technical support,

to customers etc.
Legal research, clinical research publishing

etc.
4. HR Requirement : It needs personal with

basic graduate qualification
KPO requires professional from

respective fields.
5. Scope : BPO provides domain based

processes and business expertise.
KPO demands advanced and expertise

skills. KPO is a step ahead of BPO.
DOWNSIZING
The word downsizing was coined by Stephen Roach of
International Bank, by Morgan Stanley, USA. Downsizing was used as a
strategy to reduce the size of a business to make it more profitable.
The term downsizing was used in mega organizations in the

USA with a view to reduce the excess of man power and to reduce
high labour cost.
Downsizing has been practised by corporate organizations for
maintaining a sizeable number of regular employees. It is an
extreme step taken by employers for wholesale reduction in the
number of regular staff. Its key objective is to improve financial
performance and organizational efficiency. The practice was
popular during the recessionary period of early 1990s. However,
the practice continues even today in large organizations, both
PSUs and private organizations.
The glaring success in the UK and the US organizations in
reduction of manufacturing costs, production cost the importance it
had as a component in the total value added. The main concern for
cost reduction, therefore, was highlighted outside the factory in all
other areas, termed as overhead costs, e.g. R&D, selling,
distribution, finance and personnel and marketing. As such,
ruthless forms of business process re-engineering, delaying and
downsizing came into practice resulting in perceptible high
productivity.
In American industry, during June 1995 alone, a one half of the
major corporations cut down jobs, which on an average, constituted
8 per cent of the organizational workforce. Downsizing, as such,
implied corporate strategy for terminating the jobs of a huge
number of staff on regular employment and also taking contingent
141

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
workers from subcontractors or foreign workers. This practice is

very much in use in US corporation in the aftermath of the terrorists
attack in New York on 11th September, 2001, although, the focus in
discharging the excess regular employees has shifted from
American staff to foreigners.
The advocates of downsizing claim that downsizing helps meet
an organizations commitment to its shareholders who own the
business/company. However, critics of downsizing feel it to be an
unpalatable face of capitalism, since it was being practised in
various forms, for example, plant closure, layoffs of workers, etc.
These practices, no doubt, apparently helped increase plant
productivity and positively impacted the bottom line of the
corporates but these are all short-term gains. And, they do not take
into consideration the effect of the strategy on people. As such, the
approach is one-sided and only serves the purpose of the capitalist.
This is made clearer from the gains achieved in the US companies,
mentioned below.
Downsizing was actively implemented in 1995 in the USA, in
reputable companies like Mobil Oil Company. It cut down the
companys workforce through layoff by 9.2 per cent and gained
market value to the extent of 4 per cent. The company resorted to
downsizing in spite of the commendable high profits (19 per cent
higher than the previous year) and 9 per cent higher divided
payouts (19 per cent), and, the company chose to continue cost
cutting initiatives for higher growth and opportunities. These are
also other instances in the USA where corporations reduced the
number of jobs. USA eliminated more than 15.2 million while collar
workers during 1989-99 and thereafter, some 3.6 million of the
redundant staff got employment with 30 per cent less emoluments.
The organizations no doubt, made record profit of 13 per cent in
1993 and 10 per cent in 1994.
Downsizing has also been practised by employers in India as
the most convention tool for reducing manpower strength. Notable
illustrative examples have been Standard Chartered Bank, State
Bank of India and others. VRS also has been resorted to by many
organizations.
Nature of Downsizing : Downsizing as a strategy may be
practised for long or a short period. In the short-term strategy, it
reduces manpower strength quickly. It is a costly activity. However,
the organization may devise a Voluntary Retirement Scheme (VRS)
and pay high attractive incentives to the staff offering early
142

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
retirement.
A long-term downsizing may be resorted due to : (a) induction
of faster and new technologies/new work methods, (b) inadequacy
of large number of staff in higher age groups to cope with the new
technologies, due to lack of skill/knowledge, or (c) general
resistance to the change which may have been envisaged. Even,
retraining of such staff is not possible and change in the mindset is
an absolute necessity.
However, in most of the cases of the ageing population
redundancy is the only appropriate answer. In such cases, even
outplacement of the potential staff, not needed in the organization,
may be a costly affair. However, retraining of those who are willing
to be retrained, and are found retrainable can be redeployed. But,
for this to happen, a well planned and systematic action plan is
called for, to overcome the situation.
Strategy for Implementation of Downsizing : Following
strategy is used for effective implementation of downsizing :
1. Advance Preparation : Advance preparation to involve
people through open communication to thwart grapevine rumors.
2. Staff Feedback : Encourage staff feedback and impress the
ultimate need for downsizing with no alternative in management
hands.
3. Training : Train the managers for implementation of
downsizing. This is a painful experience for the managers as they
have to take a decision for termination of their own staff who gave
them their best.
4. Stages in Implementation : It is necessary to plan
downsizing in phases.
Downsizing may lead to lower overheads, faster decisionmaking, lesser bureaucracy, improved communication and
entrepreneurial, executive behaviour. But, the disastrous effects of
downsizing cannot be neglected.
143

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
EMPLOYEE
OPTIONS
INCENTIVE SCHEMES
LIKE STOCK
Employee stock option is a latest technique of employees

participation. This can be implemented by any company, institution
or undertaking whose shares are listed on stock exchange of the
country.
The method involves offering shares to employees. Every year,
the shares are revalued and prices are announced. Employees are
given an option to redeem their shares at quoted prices.
Participation through ownership has the distinct advantage of
making the worker committed to the job and to the organisation.
The object of this scheme is to check the tendency of employees of
frequent change of companies. This scheme sense of ownership
and responsibility on the employee. One drawback of the scheme is
that it can be implemented in profit making companies.
Questions
1. Write note on Business Process Outsourcing (BPO)
2. Explain future prospects of Business Process Outsourcing
(BPO) in India.
3. What do you mean by Knowledge Process Outsourcing
(KPO)? Explain its forms and benefits.
4. Explain Future Prospects of Knowledge Process Outsourcing
(KPO) in India.
5. Identify various career options available in BPOs/KPOs in
India.
6. What are the career options in Business Process Outsourcing
(BPO) and Knowledge Process Outsourcing (KPO) sector?
7. Distinguish between Business Process Outsourcing (BPO) and
Knowledge Process Outsourcing (KPO)
8. Explain the nature of Downsizing. Also point out strategy for
implementation of Downsizing.
144

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
CASE STUDIES
INTRODUCTION
Case method is an excellent medium for developing analytical
skill. It was started by Harvard Business School. This method is
increasingly being used by many other prestigious management
institute in India. University of Mumbai has introduced Case Study
method in revised course of M.Com. We have given sixteen
selected Case Studies in this lesson for the benefit of Student.
Case Study : 1
Sinha is a senior employee of CIC Logistics Pvt. Ltd. having its
headquarters at Delhi and branches at all major cities in the
country. The managing partner of the firm asked Sinha to head its
Southern branch at Bangalore. The firm has been quite successful
since its inception in 1950s, but has witnessed high turnover
among its younger staff in the last five years. The managing partner
is convinced that the problem is not salary, because a recent
survey indicated that the firms salary structure is competitive with
that of other major firms. Driven by this incomprehension, the
managing partner wanted Sinha to find out the real reasons.
Having settled in Bangalore, Sinha met the four Senior
Managers to determine why the branch has had such a high
attrition rate amongst the younger staff. Krishna, age 46, stated that
the younger staff lacked dedication and failed to appreciate the
career opportunities provided by the firm. Gowda, age 52, said the
younger employees were always complaining about the lack of
meaningful feedback on their performance, and many mentioned
that they would like to have a mentor in the organisation to assist
with their development. Gowda further explained that the firm does
provide performance rating to its staff and the previous Manager
had always maintained an open-door policy. Manohar, aged 39,
said that he has received complaints that training was not relevant
and was generally dull. He explained that various persons in the
firm who worked with training from time to time acted mainly on
guidance from Delhi. Radha, aged 35, said she believed that the
root of the problem is the absence of an HR department. However,
she said that when the idea was mentioned to the managing
partner in Delhi, it was completely rejected.
Questions :(a) Do you think that CIC Logistics Pvt. Ltd. needs an HR
145

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Department ? Justify.
(b) What Role does an HR Department play ?
(c) How would you sell the idea of the HR Department to the
Managing Partner ?
(d) What type of Organisational Structure would you recommend ?
(Mumbai M.Com. April 2008)
Case Study : 2
Safety (India) Pvt. Ltd. is a passenger transport company
plying more than 500 passenger buses in Bangalore of different
routes. There are more than 5,000 employees working in the
company. Out of these about 300 crewmen, (drivers and conducts)
are working on the routes. The behaviour of these crewmen while
dealing with public and daily commuters in not satisfactory. So far
as salary structure of these crewmen is concerned they are paid
reasonably well. In spite of it they have become lethargic, lazy and
careless. Their productivity level is also very low as compared to
the crewmen of other transport company. After having surveyed
their behavioural pattern it came to light that they are little
interested in their job and job has lost its meaning to them. Read
the above case and answer the following questions.
Questions :
1. As a manager of this company what kind of job design you will
suggest for these crewmen and why?
2. Is it possible to modify their behaviour by imparting training to
them. Explain it.
3. Is it necessary to motivate them by giving monetary incentives?
Give reasons.
Case Study : 3
Mangal Pande has small factory for producing plastic good.
There are 100 employees working in that factory. At present it is
solely managed by his father. Mangal Pande has joined his father
recently after having completed post graduation in management.
He discovers that the authority to manage all affairs of the
factory has been retained by his father being the owner. Hardly
there seems to be any line of authority in the factory. some of his
relatives and trust worthy senior employees have been empowered
for looking after various operation like, purchase, sale, accounting
and finance. Mangal Pande is not fully satisfied with the present set
up of distribution of authority. He wants to decentralise part of
authority still being retained by his father. And he believes that
through delegation of authority he will be able to establish cordial
and healthy relationship of superior and subordinate.
146

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Read the above case and answer the following questions.

Questions :
1. What is the need of delegating authority being felt by Mangal
Pande and what should be the base of delegating it?
2. You are requested to suggest some guidelines as to make
delegation of authority more effective.
3. Does it help in motivating the employees? Explain it.
Case Study : 4
Gulshan Kumar started a Super cassette company in 1985 on
a very small scale. In a short span of five years his companys
sales almost equaled the combined sales of other three leading
music recording companies in India. This was possible because of
MR. Kumars business acumen, extraordinary managerial skills,
imaginative sales promotion programmes and above all his care for
good music and lower overhead expenses. Encouraged by
enormous success of his music recording company Mr. Gulshan
Kumar ventured into other manufacturing activities. Throughout this
period Mr. Kumar found it difficult to delegate authority and
continued making all final decisions on new product plans, capital
budgeting, advertising, pricing policies, sales plans, hiring of staff
and labour union and other matters. Some of newly set up units
which turned out to be non-profitable were classed down after few
years of their setting up.
Carefully examine the above case of answer the following
questions.
Questions :
1. What could have been a possible reason of Mr. Kumars
reluctance to delegate authority?
2. How you would have convinced Mr. Kumar about the utility of
delegating authority?
Case Study : 5
Raj Khanna is the President of Dimple Outsourcing Company
having more than 3000 employees in its roll. He had been working
as financial manager in some multinational company. He is highly
ambitious, bold, energetic in his approach. he is result-oriented and
practical in approach. he does not respect for rules and formalities
rather he moves in direct manner adopting short cut methods. He
seeks high degree of compliance to orders and instructions given
by him.
147

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Use of rationally and intellect is on lower side and his decisions

are based on intuition. But in this new company most of middle
level managers are equipped with knowledge of modern
management. They are unhappy with the working style of vicepresident finance.
Questions :
1. What managerial style is being used by Raj Khanna and how it
is different from other styles of management?
2. Why young professionally qualified middle level managers are
not happy with him?
3. Give your suggestions for improving the existing style being
followed by Raj Khanna.
Case Study : 6
Aamir Khan is a senior finance manager in a reputed
consultancy organisation. He directly reports to vice-president
(finance). He is heading a department consisting of 100 employees.
Recently he has been promoted to this position. He has been
working in the same department for a long time. After having
worked for some time he comes to known that middle level
managers much as deputy, assistant managers and foremen and
superiors do not fully cooperate with him for implementing the
decisions taken by him. He analyses the entire situation and arrives
at a conclusion that middle level and lower level managers should
be associated with decision-making process as to get their
maximum, co-operation and contribution. He is taking whole matter
to the vice-president (Finance) and discussing it with him. Read the
case carefully and answer the following questions.
Questions :
1. How Aamir Khan should convene the vice-president that
individual decisions are less effective than group decisions?
2. Which scheme of participation of middle and lower level
manager he should suggest to vice-president (finance)?
3. What would be the overall implication of this move on the level
of satisfaction and efficiency of lower level managers?
Case Study : 7
Ganesh Desai, a professionally qualified engineer, has been
working in one of the production plants of the company as assistant
plant manager. After having worked for 5 years he gets promotional
opportunity. He is promoted to the position of plant manager and
148

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
transferred to another plant which is facing difficulty in meeting

production target and budgetary standards. He is highly ambitious
and authority oriented energetic person. he strongly believes that to
solve the problem rigid and close control should be exercised, he
should make decisions on his own and get them implemented by
exercising authority. After joining new plant he give directive to
each work station for increasing production by 10% and reducing
budget by 5%. He monitors the situation closely and had finally
dismissed 5 supervisors who fail in meeting production target
without giving patient hearing to them. He promotes senior
operators to the position of dismissed supervisors. Ultimately this
style of functioning yielded desired result, productivity increases
and budgetary deviations were brought under control.
Questions :
1. What kind of organisation behaviour, Ganesh Desai has
followed? Discuss the type of organisational climate created by
him.
2. Give your suggestions for improving existing organisational
climate considering relaxed control and self control.
Questions :
1. Do you think Nawals father understood and interpreted the
Hawthorne studies correctly?
2. If you were Nawal, what would your reaction be to your fathers
comments?
Case Study : 8
Fanta-Cola Limited is a great Indian company producing and
distributing cold drinks in India. The company has been in existence
for the last 15 years. It has a big manufacturing plant situated in
Delhi and a fleet of trucks for the purpose of controlled and efficient
distribution of cold drinks to neighboring states as well as in Delhi.
Employees working in the company are fully satisfied with service
conditions, promotional avenues and welfare schemes launched by
the company for them. The customers so also feel comfortable and
satisfied with the drink both in terms of quality and price. But after
the entry of two big multinational companies, Fanta-Cola and Pepsi,
the entire situation has changed. Fanta-Cola has lost 90% of its
market share to these companies and it has become very difficult to
compete with them.
149

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Read the above case carefully and answer the following

questions.
Questions :
1. Make our SWOT analysis of Fanta-Cola Ltd.
2. Suggest suitable strategy for mainting survival and profitability
of Fanta-Cola in the light of competition with multinational
companies.
3 How can Fanta-Cola utilise its strengths to regain its, lost
market share?
Case Study : 9
In 1990 Vijay Kumar Desai, a chartered accountant, was
elected as the chairman of Promising Life Insurance company
which was at that time the third largest life insurance company in
the country. During the next 5 years, however, while its business
increased, it did not grow as fast as its major competitors and
Promising Company dropped from third to sixth place.
This naturally perturbed Vijay Kumar Desai as it did to the
board of directors of the company. Finally, after deliberations the
board of directors concluded that the lack of leadership in the sales
of both ordinary life policies and group life insurance was the major
case of companys comparative slow progress. It was also
generally concluded that the two directors in charge of sales in
these two major areas of business were competent executives and
leaders, but the regional and district managers working under them
were not very competent leaders.
Vijay Kumar Desai called these two directors and asked them
to ensure strong leadership at the regional and district level or else
quit their jobs. As these directors left the meeting with the
chairman, one director told other. Now just how do we make
people leaders? How can we be sure whether or not a person is a
leader? You know this is tough job.
Read and analyse the above case and answer the following
questions.
Questions :
1. If you were one of the directors, how would you answer the
question that the other director has raised?
2. What would you do about developing strong leaders?
Case Study : 10
150

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Engler Enterprises manufactures a variety of food products and

household items. It has a workforce of 450 employees330 are
located in a rural Midwest community, and the other are located in
regional sales offices throughout the United States and in several
Pacific Rim countries.
Sharon Howells has been the production manager for the past
two years since she was promoted to that position. Unfortunately,
she is failing in her new job. She has been with the company since
it started 18 years ago, and because of her exceptional
performance record she has been promoted many times. Engler
Enterprises started as a family business and has followed a policy
of promotion from within to motivate employees and give them new
opportunities to learn and grow.
Sharon is a very conscientious manager and she works well
with people. She has a high school diploma and one year of
college, but she does not have the training and educational
preparation to handle the job of production manager. In there
previous assignments, she learned how to do word processing and
spread sheets on computers, which led top management to think
she would be bale to learn what she needed to know to handle the
job of production manager. Although one executive thinks Sharon
should receive more time to learn the job, the other want to move
her into the marketing department.
The company is continuing to expand into foreign markets and
it is essential that the production department adopt the latest
technology and production processes. Top management is
convinced that the job of production manager demands someone
who has been educated in manufacturing technology and who has
at least two years experience. They are divided, however, on how
to handle this problem.
One executive thinks the job should be given to one of the
production supervisors, Bryan Green, whose undergraduate degree
included two courses in production management. Bryan only has
four years seniority, which is much less than many others. But
151
NPR COLLEGE OF ENGINEERING &

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Bryan is a very bright and capable supervisor

and he could probably acquire the knowledge and
skills needed to be a good production manager.
Promoting him would serve the companys tradition
of promoting from within.
Another executive thinks the company should
advertise the job with Job Service and in the
newspaper, such as the The Wall Street Journal. This
executive believes the company could solicit a large
number of applicants with excellent qualifications in
spite of the companys rural location.
An alternative suggestion is to use the services
of a private employment
agency.
This
alternative
has
the
advantage
of reducing
the
amount of attrition and disruption to the current
operations and personal feeling, but it would probably
cost $ 25,000 to $ 30,000.
Q
u
e
s
t
i
o
n
s
:
1. How valuable is a tradition of promotion from
within, and how disruptive might it be to deviate
from this tradition? What are the potential
advantages and risks of promoting from within
in this situation?
2. If the company decides to go outside, what
are the best external recruiting sources for
finding a new production manager?
3. What are the advantages of using a private
placement firm to find a new production
manager? Since private placement firms can be
Case Study : 11
152
expensive,
what is
the

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Rane is a branch manager of a reputed bank and

has earned a reputation for efficient operations.
Recently, a divisional manager telephones Rane
that a new branch office was to be opened in
another city. The divisional manager also informed
Rane that senior management is highly pleased with
the way his branch office has been functioning in
the past and would like him to recommend
someone from his office for promotion as
branch manager to manage the new branch.
Rane started analysis of his subordinate staff to
determine who might make a good manager. He as
narrowed his choice down to two persons within his
office: Ms. Anita and Mr. Malla. Both Anita and
Malla are young persons in early forties. Each
has a management degree from reputed institutes.
Anita usually seems more effective and tactful when
dealing with customers. Both have low absenteeism
record and either one would probably make a
satisfactory manager for the new branch of the bank.
Rane has an impression that most people
prefer male supervisors and women generally are
not really interested in career and as manager might
develop aggressive female tendencies. As such
Malla may be an effective manager in a new
workplace. Hence he recommended Malla for
promotion as a branch manager in the banks new
branch.
Read the above case and answer the following
questions.
Q
u
e
s
t
i
o
n
s
:
1. If you were Rane, whom would you recommend
153

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
as head of the new

branch?
Give
arguments in
favour
of your
recommendation.
2. As HR manager, how would you handle
Anitas feelings of
being ignored?
Case Study : 12
Gagan Industries Ltd. is a manufacturing
company with line and staff organisation. Shri
Raman, a young staff officer, developed a plan for
increasing the life of certain equipment in the plant.
He carried the plan directly to the Superintendent of
the department in which
he hoped
to
The Staff Officers Association condemned the
behaviour of Shri Raman and felt that he should have
allowed the plan to appear as a contribution of the
staff group rather than his own. Shri Raman himself
declared, By God, it is my idea and I want credit
for it. There is none among the Staff Officers
who would not have claimed it to be a personal
achievement.
Read the above case and answer the following
questions.
Q
u
e
s
t
i
o
n
s
:
1. Analyse the situation in terms of the possible
causes of the reaction of the Superintendent and
the Staff Officers group.
2. Suggest
measures
to
defuse the situation.
3. Why did the Superintendent refuse to implement
the plan which he appreciated privately?
154
introduce
it,
but
was

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Case Study : 13
The Mild Steel Company, which was established in
January
1965, employed 500 workers and a large number of
technical and clearical staff. The company had its
units at various places and the corporate policies
were formulated by the Board of Directors.
For a long time, the company had no welldefined recruitment policy.
Several
employees
without any professional background were elevated
to the posts of managers. Subsequently, when these
persons demanded promotion, the management
conceded their demands by promoting them to even
higher posts.
But in recent years, with the changing
eocnomic conditions, growing competitions, and
consequent marketing difficulties, the management
felt the need for infusing fresh and young blood in the
organisation. The company felt
that qualified
young engineering graduates would be best suited
for the front-line executive posts. If properly trained,
the management concluded the young engineers
would be able to put the whole organisation on
sound footing after a few years when they reach
higher positions.
Before recruiting the young graduates, the
management decided to put a qualifiation embargo
on the old times so that the inadequately qualified
managers would never have a chance to rise in the
organisation hierarchy.
The company advertised in all leading
newspapers inviting applications
from
First Class Engineering
Graduates
for
appointment
as
Junior Executives. The selected candidates were to
get an all inclusive salary of Rs. 3,000 per month.
The candidataes were to be put on probation for one
year, after which they could be confirmed in their
posts.
Nearly 30 candidates rresponded to the
advertisement. Fifty candidates were selected after
155

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
written examination and interview. The selected

candidates were imparted intensive theoretical and
practical training and were placed in various shops.
The
management
started
watching the
functioning of the various shops that were run by
the young and qualified executives. But they found
no improvement.
Meanwhile, discontent was growing in the old

timers. They protested
that their promotion
opportunities were blocked by the managements
new recruitment policy. On the other hand the new
executives complained that thee was no job satisfaction. Subsequently the manag
search of better prospects elsewhere.
The Chief Human Resource Manager of the
company
conducted an exit interview of the graduate
engineers leaving their
johs to find out th ereal causes of such a spate of
resignations. The graduate engineers had the
following complaints.
1. They were not deriving any satisfaction from
the jobs. They were also not in a position to
utilise their special knowledge to the fullest
extent.
2. Their working conditions were not satisfactory.
3. There was no challenge in the job, and future
prospects were ocmpletely dim.
4. The management-workers relation was very
unhealthy. The entire atmosphere was charged
with
doubt,
suspicion,
spathy,
and
misunderstanding.
5. The senior officers did not give any importance
to them and their suggestions.
The management called for
of the senior executives
to
Questions :
1. Comment
raised by
2. Elaborate
a part of
conference
review the companys
separately on all the seven points

the engineers leaving the company.
and justify your stand and action as
top management team torevitalise the
156
policies
of

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
company.
Case Study : 14
As a result of economic reforms initiated in the
recent past, the Indian economy has been
globalised. The regulations and controls have been
relaxed. Many more multinationals have been inclined
to make their entry in India. Consequently, market
dynamics specially nature
of competition has
company already working in India for the last 20
years. To compete with multinational company you
personally feel that production as well as distribution
systems are to be made cost effective so that better
quality of medicines can be produced and
distributed at reasonable cost. For improving costeffectives of the system you carry opinion that your
organisation is overstaffed. You are bringing this
fact to the knowledge of managing director. He is
discussing this problem with you in the light of
human resource planning and development. The
managing director of the company is asking you the
following questions.
Questions :
1. How to proceed for making manpower
planning? Discuss various steps involved in it.
2. How will you convince your managing
director that human resource planning and
development would help in making production
and distribution systems cost effective?
Case Study : 15
A largest service provider groups based in UK,
operating in over 30 countries with more than
40,000 employees. Handling the requirements of
Housing Tax and Council Tax Benefit processing of a
large Government council in UK. However, as the
task involved seasonal fluctuations in demand,
the
service
provider
faced significant
challenges. Some significant
challenges included:
inability
to
process huge volume of benefits administration
forms in short period of time, maintaining manpower
according to demand, maintaining accuracy, quality
and security as processes involved citizens directly
and were confidential in nature.
157
been drastically changed.
Indian

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Questions :
(a) Is outsourcing the solution?
(b) Which countries can they outsource to and why?
(c) Company to whom the job is entrusted should be
BPO or
KPO?
(d) What should they look for in company to
whom this job is outsourced?
Case Study : 16
Reliable Consultancy Ltd., is a consultancy firm
catering to the various
needs
of
business
organisations. They are experts in undertaking
research, and they provide research data on an
ongoing basis. They also provide assistance with
respect to project formulation, feasibility study and
project implementation. They charge fees for the
work undertaken. The fees is calculated on the basis
of work undertaken and the duration of the job. The
company operates at the international level. They
have branches in important Indian cities besides few
locations abroad. At the end of June, 2007 the
company had an employee strength of more than
1400, out of which 400 were permanent employees.
The rest worked purely on temporary basis. The
structure of basic remuneration is different for
permanent employees, and the temporary staff.
However all the employees were paid as per the
industry standards. During the review meeting held
at the end of June, 2007 the top management was
informed about the serious problem faced by the
company financially.
The
Finance
Manager
explained the core management team about the gap
between coast and revenue getting narrowed on
monthly basis. The Manager also explained the
various contributory factors related to cost and
revenue. He was very clear about the revenue side
and explained that it would be impossible to alter the
fee structure. He said that the company was
already working on narrow margin and therefore
reducing the fee, in his opinion, was impossible. He
further suggested to review the pattern
of employment. He observed that the cost to
company per permanent employee was atleast five
to six times over and above the temporary staff. He
158

TECHNOLOGY
Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
therefore suggested that the HRD should consider

the possibility of reducing the number of
permanent employees. After lengthy discussion
between various members present about the issues
related to this exercise of downsizing the HRD
Manager concluded with a promise to get back to
the board within a month about the scheme and
methods for implementing the
restructure. The
meeting ended with a positive note on
downsizing the work force.
Answer
the
following questions
:
(a) It is right to reduce the number of permanent
employees? Give reasons.
(b) What are the effects of downsizing in
the long run?
(c) Suggest atleast, two schemes for reducing the
workforce at
Reliable
Consultanc
y Ltd.
159

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562

BA7204
Unit I
Part A
1) HRM
2) Acquisition
3) Paternalistic concept
4) Personnel policy
5) Change agent
6) EEO
7) Workforce diversity
8) HR accounting
9) Economic value method
Part B
1) Evolution of HRM
2) Personnel policies
3) Role of a HR Manager
4) EEO
5) Methods of HR accounting
6) Computer applications in HRM
Unit II
Part A
1) Job analysis
2) Job description
3) Job specification
4) Human resource planning
5) Recruitment
6) Selection
7) Any method in recruitment
8) Any method in selection
9) Socialization
10) Validation
11) Interview
160

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
Part B
1) Process of recruitment
2) Process of selection
3) Methods of HR forecasting
4) Validation
5) Types of interview
6) Socialization
Unit III
Part A
1) Training
2) Development
3) Self-development
4) Executive development
5) On the job training
6) Off the job training
7) Knowledge management
8) Organisational change
Part B
1) Models of planned self-development
2) Types of training
3) Methods of executive development
4) Process of knowledge management
5) Sources of resistance to training
6) Overcoming resistance to training
Unit IV
Part A
1) Compensation
2) Motivation
3) Job evaluation
4) Career
Part B
161

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
1) Theories of motivation
2) Methods of job evaluation
3) Factors affecting compensation
4) Stages of career development
5) Types of incentives
Unit V
Part A
1) Performance management
2) Promotion
3) Demotion
4) Layoff
5) Separation
6) Grievance
Part B
1) Methods of performance appraisal
2) Steps in grievance handling
3) Types of separation
4) Types of transfers
5) Control process
162

Phone No. : 04544 - 305500, 501 & Fax No: 04544-305562
163

Human Resource Management LT P c3 0 0 3

Uploaded by

Copyright:

Available Formats

Human Resource Management LT P c3 0 0 3

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Human Resource Management LT P c3 0 0 3

Uploaded by

Copyright:

Available Formats

NPRCETNPRCETNPRCETNPRCET

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

DEPARTMENT OF MANAGEMENT STUDIES

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

INTRODUCTION TO HUMAN RESOURCE

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

stimulating every employee to make his fullest contribution to the

NATURE OF HUMAN RESOURCE MANAGEMENT

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

2. Pervasive Function : Human Resource Management is a

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

required in training performance appraisal, transfer and promotion

OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

Human Resource Management, in an organisation, is to obtain

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

sufficient wages and fringe benefits to achieve higher standard

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT.

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

Functions of Human Resource Management

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

different type of activities are evaluated such as evaluation of

DEPARTMENT OF MANAGEMENT STUDIES

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

Human Resource Management is concerned with the

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

cottage system got transformed to factory system leading to

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

and sense of achievement. The concern is increasing profits

DEPARTMENT OF MANAGEMENT STUDIES

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

Human resource department is expected to take care of

FUTURE CHALLENGES BEFORE THE MANAGERS

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

joint sector enterprises.

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

achieved. This, indeed, is and would remain a major challenge for

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

These changes, which are taking place, involve more

Share employees with strategic partner organisations

Encourage independence : Employees may go elsewhere for

(iii) Fund-groups of employees to set-up as suppliers outside the

Encourage employees to develop customers outside the

(vi) Help employees develop self-marketing, networking and

Forster more cross-functional teamwork for self-development.

DEPARTMENT OF MANAGEMENT STUDIES

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

(xi) Eliminate the culture of valuing positions as career goals in

Functions of a Human Resource Manager

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

industrial disputes is not a personnel administrator of the future.

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

organisation towards purposive and progressive action fall on the

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

of technology on organisation structure, politicisation of workers

HUMAN RESOURCE PLANNING

NPR COLLEGE OF ENGINEERING & TECHNOLOGY

Human Resource Planning is concerned with the planning the