MB0027 Human Resource Management

MB0027
Human Resource
Management

Submitted by:
Sreeja .T

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MB0027 Human Resource Management

Q.1. Write a short note on Hawthorne Studies.

Researchers from Western Electric and Harvard University led the Hawthorne
studies. The human relations or behavioral school of management began in 1927
with a group of studies conducted at the Hawthorne plant of Western Electric, an
AT&T subsidiary. The studies were prompted by an experiment carried out by the
company’s engineers between 1924 and 1927.The studies were intended to examine
the influence of environmental variables on a group of production workers. The
group of workers was divided into two groups.

Two groups were studied to determine the effects of different levels of illumination
on worker performance. One group received increased illumination, while the other
did not. A preliminary finding was that, when illumination was increased, the level of
performance also increased. Surprisingly to the engineers, productivity also
increased when the level of illumination was decreased almost to moonlight levels.
One interpretation made of these results was that the workers involved in the
experiment enjoyed being the centre of attention; they reacted positively because
management cared about them. Such a phenomenon taking place in any research
setting is now called the Hawthorne effect.

As a result of these preliminary investigations, a team of researchers headed by

Elton Mayo and F.J. Roethlisberger from Harvard conducted a lengthy series of
experiments extending over a six year period. The conclusions they reached served
as the bedrock of later developments in the human relations approach to
management. Among their key findings were the following:

• Economic incentives are less potent than generally believed in influencing

workers to achieve high levels of output.
• Leadership practices and work-group pressures profoundly influence
employee satisfaction and performance.
• Any factor influencing employee behavior is embedded in a social system. For
instance, to understand the impact of pay on performance, you also have to
understand the climate that exists in the work group and the leadership style
of the superior.

As a consequence of the Hawthorne Studies, worker attitudes, morale, and group

influences became a concern of researchers. A notable development was a group of
social scientists formed an organization, later to be called the Institute for Social
Research, to study those principles of leadership that were associated with highest
productivity.

Based upon work with clerical and production workers, an important conclusion was
that supervisors of high-producing units behaved differently from those of low-
producing units. Among the differences in style noted were that supervisors of
productive groups in comparison to their lower producing counterparts were:

• More emotionally supportive of subordinates.

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• More likely to pay a differentiated role – plan, regulate, and coordinate

the activities of subordinates, but not become directly involved in work
tasks.
• More likely to exercise general rather than close or light supervision.

As a consequence of the Hawthorne Studies, worker attitudes, morale, and group

influences became a concern of researchers.

Q.2. Trace the growth of Trade Union Movement from Factories Act 1881
to Factories Act 1948.

The coming of the British to India and their administrations brought immense insights
into the country on how to manage labour and work. It also gave rise to the trade unions
and workplace equality issues

According to the Factory Act of 1881, the workers employed in the factories were
allowed a week off-day and provisions were also made for inspection as well as
limiting the hours of work for women workers to eleven per day. The act further
provided that the minimum age of children for employment should be seven years
and that the maximum working hours for them should not exceed seven hours a day
and that too in the day-shift. In 1890, the first labour organization designated as
Bombay Mill Hands Association was established. Subsequently, in 1905, the printers'
Union at Calcutta and in 1907, the Postal Union at Bombay were established.

The Madras Labour Union was organized thereafter in 1918. In 1922, the indentured
labour system involving migration of Indian labour to other countries on contract
basis was abolished as a result of a strong National Movement. In the same year, the
Central Labour Board was established to federate the different unions in the Bombay
city and the All India Trade Union Congress was organized. It may be noted that the
reliable statistics of trade union growth are not available for the period before the
formal implementation
of the Indian Trade Unions Act, 1926, a landmark in the history of industrial relations
in this country.

The early thirties witnessed a highly-weakened trade union movement. However, the
conditions prevailing five years before as well as during the Second World War, were
conducive to the rapid growth of the trade unionism. Between 1939-40 and 1944-45
the number of registered trade unions increased from 666 to 865 (i.e., by 29.7
percent) and the total membership of union submitting returns increased from 511,
134 to 889, 388 (i.e., by 70.4 percent).

There was a large scale expansion of the trade union movement after the Second
World War - especially after the independence. As Subramanian observes, there
existed four-fold reasons for this rapid growth. These were as follows:

(1) The cumulative impact of the acute economic distress stemming from war
conditions and the removal of the war-time restrictions on strikes.

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(2) The development of three more central labour organizations and the competition
among them.
(3) The labour policy of the Government based on adjudication rather than collective
bargaining.

(4) The growth of the spirit of trade unionism among the workers. Accordingly,
during the period 1947-1960 while, industrial employment rose by 2.8 times, the
total claimed union membership also went up by 2.3 times. In 1960, 45 percent of
the total industrial workforce was claimed to be unionized. Today, the total
membership is estimated to be around 4.3 million i.e., 28 percent of total workforce.

Explicitly, during post-independence period, the activities of Personnel Department in

different public and private sectors have multiplied. According to the provisions of
section 49 of the Factories Act 1948, it became obligatory for the-employers to
employ a Welfare Officer in a factory employing 500 or more workers. Likewise,
section 58 of the Mines Act, 1952, empowers the Government to specify employment
of welfare officer/officers. However, it does not mean that the functions of Personnel
Department are entirely limited to welfare activities.

Q.3. Elaborate the HR planning System

Planning is very important to our everyday activities. It is amazing that this

important part of HR is mostly ignored in HR in most organizations because those at
the top do not know the value of HR planning. Organizations that do not plan for the
future have fewer opportunities to survive the competition ahead.

Human Resource Planning

Human resource or manpower planning is ‘the process by which a management

determines how an organization should move from its current manpower position to
its desired manpower position. Through planning, a management strives to have the
right number and the right kind of people at the right places, at the right time, to do
things which result in both the organization and the individual receiving the
maximum long-range benefit”.

Process of Human Resource Planning

The process of Human Resource Planning is one of the most crucial, complex and
continuing managerial functions which, according to the Tata Electrical Locomotive
Company, “embraces organization development, management development, career
planning and succession planning”.
It may be rightly regarded as a multi-step process, including various issues, such as:

1. Deciding goals or objectives;

2. Estimating future organizational structure and manpower requirements;
3. Auditing Human resources;
4. Planning job requirements and job descriptions; and
5. Developing a human resource

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Human Resource Planning System

Human Resource Planning System

A. Objectives of Human Resource Planning: Human Resource Planning fulfils

individual, organizational and national goals; but, according to Sikula, “the ultimate
mission or purpose is to relate future human resources to future enterprise needs, so
as to maximize the future return on investment in human resources. In effect, the
main purpose is one of matching or fitting employee abilities to enterprise
requirements, with an emphasis on future instead of present arrangements.” The
objectives may be laid down for a short-term (i.e. for one year).

B.Estimating the Future Organizational Structure or Forecasting

the Manpower Requirements: The management must estimate the structure of the
organization at a given point in time. For this estimate, the number and type of
employees needed have to be determined. Many environmental factors affect this
determination. They include business forecasts, expansion and growth, design and
structural changes, management philosophy, government policy, product and human
skills mix, and competition.

Forecasting provides the basic premises on which the manpower planning is built.
Forecasting is necessary for various reasons, such as:

a) The eventualities and contingencies of general economic business cycles (such

as inflation, wages, prices, costs and raw material supplies) have an influence on
the short- range and long-run plans of all organizations.

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b) An expansion following enlargement and growth in business involves the use

of additional machinery and personnel, and a re-allocation of facilities, all of
which call for advance planning of human resources.

c) Changes in management philosophies and leadership styles.

d) The use of mechanical technology (such as the introduction of automatic

controls, or the mechanization of materials handling functions) necessitates
changes in the skills of workers, as well as a change in the number of employees
needed.

e) Very often, changes in the quantity or quality of products or services require a

change in the organization structure. Plans have to be made for this purpose as
well.

C. Auditing Human Resources: Once the future human resource needs are
estimated, the next step is to determine the present supply of manpower resources.
This is done through what is called “Skills Inventory”. A skills inventory contains
data about each employee’s skills, abilities, work preferences and other items of
information which indicate his overall value to the company.

D. Job Analysis: After having decided how many persons would be needed, it is
necessary to prepare a job analysis, which records details of training, skills,
qualification, abilities, experience and responsibilities, etc., which are needed for a
job. Job analysis includes the preparation of job descriptions and job specifications.

E. Developing a Human Resource Plan: This step refers to the development and
implementation of the human resource plan, which consists in finding out the sources
of labour supply with a view to making an effective use of these sources. The first
thing, therefore, is to decide on the policy- should the, personnel be hired from within
through promotional channels or should it be obtained from an outside source. The
best policy which is followed by most organizations is to fill up higher vacancies by
promotion and lower level positions by recruitment from the labour market.

Q.4. Discuss the Multiple Person Evaluation Methods.

Evaluation is a system set up by the organizations to regularly and systematically

evaluate employee performance. Performance evaluation is the personnel activity by
means of which the organizations determine the extent to which the employee is
performing the job effectively. When it has been decided who will evaluate, when,
and on what basis, the technique to be used will be selected. A number of
approaches will be used to evaluate the overall performance of the employees.
Among the approaches one is multiple- person evaluation methods.

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Multiple-person Evaluation Methods

Three techniques that have been used to evaluate an employee in comparison with
other employees being evaluated are discussed in this section.

Ranking: In ranking method, the evaluator is asked to rate employees from highest
to lowest on some overall criterion. This is very difficult to do if the group of
employees being compared number over 20. It is also easier to rank the best and
worst employees than it is to evaluate the average ones. Simple ranking can be
improved by alternative ranking. In this approach the evaluators pick the top and
bottom employees first, then select the next highest and next lowest, and move
towards the middle.

Paired comparison: This approach makes the ranking method easier and more
reliable. First, the names of the persons to be evaluated are placed on separate
sheets (or cards) in a predetermined order, so that each person is compared to all
others to be evaluated. The evaluator then checks the person he feels is the better of
the two on a criterion for each comparison. Typically the criterion is overall ability to
do the present job. The number of times a person is preferred is tallied, and this
develops an index of the number of preferences compared to the number being
evaluated. These scores can be converted into standard scores by comparing the
scores to the standard deviation and the average of all scores. This method can be
used by superiors, peers, subordinates, or some combination of these groups.

Forced distribution: The forced-distribution system is similar to 'grading on a

curve’. The evaluator is asked to rate employees in some fixed distribution of
categories, such as 10 percent in low, 20 percent in low average, 40 percent in
average, 20 percent in high average, and 10 percent in high. One way to do this is to
type each employee's name on a card and ask the evaluators to sort the cards into
five piles corresponding to the ratings. This should be done twice for the two key
criteria of job performance and promotability. One reason forced distribution was
developed was to try to alleviate such problems as inflated ratings and central
tendency in the graphic rating scale.

Q.5. Write a note on different theories for Managing Compensation

Compensation provided to employees can direct in the form of monetary benefits

and/or indirect in the form of non-monetary benefits known as perks, time off, etc.
Compensation does not include only salary but it is the sum total of all rewards and
allowances provided to the employees in return for their services. If the
compensation offered is effectively managed, it contributes to high organizational
productivity.

Managing compensation

The basic purpose of wage and salary administration is to establish and maintain an
equitable wage and salary structure. Its secondary objective is the establishment
and maintenance of an equitable labour-cost structure i.e., an optimal balancing of
conflicting personnel interests so that the satisfaction of employees and employers is
maximized and conflicts are minimized. The wage and salary administration is

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concerned with the financial aspects of needs, motivation and rewards. Managers,
therefore, analyze and interpret the needs of their employees so that reward can be
individually designed to satisfy these needs.

The word ’salary’ is defined in the Oxford Dictionary as ‘fixed periodical payment to a
person doing other than manual or mechanical work’. The payment towards manual
or mechanical work is referred to as wages. The word pay refers to the payment for
services done which would include salary as well as wages.

Wages are commonly understood as price of labour. In ordinary parlance, any

remuneration paid for services is etymological wage. Benham defines wage as “‘a
sum of money paid under contract by an employer to a worker for services
rendered.”

Labour was always looked upon as a commodity governed by the law of supply and
demand. Certain theories were propounded for determination of wages but these
could not stand the test of time. A few theories are discussed below:

Subsistence theory: This theory, also known as ‘Iron Law of Wages’, was
propounded by David Ricardo (1772-1823). According to this theory, wages tend to
settle at a level just sufficient to maintain the workers and his family at minimum
subsistence levels. The theory applies only to backward countries where labourers
are extremely poor and are unable to get their share from the employers.

Standard of living theory: This theory is a modified form of subsistence theory.

According to this theory, wages are determined not by subsistence level but also by
the standard of living to which a class of labourers becomes habituated.

Residual claimant theory: Francis A. Walker (1840-1897) propounded this theory.

According to him, there were four factors of production/ business activity viz., land,
labour, capital and entrepreneurship. Wages represent the amount of value created
in the production which remains after payment has been made for all these factors of
production. In other words, labour is the residual claimant.

The wage fund theory: According to this theory, after rent and raw materials are
paid for, a definite amount remains for labour. The total wage fund and the number
of workers determine the average worker’s share in the form of wages.

Demand and supply theory: According to this theory, wages depend upon the
demand and supply of labour.

Marginal productivity theory: This is an improved form of demand and supply

theory. Wages are determined by the value of the net product of the marginal unit of
labour employed.

Purchasing power theory: According to this theory the prosperity, productivity

and progress of industry depend on there being sufficient demand to ensure the sale
of its products and pocketing of reasonable profits. A large pact of the products of
industry is consumed by workers and their families and if wages are high, demand
will be good. However, if wages and the purchasing power of the workers are low,

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some of the goods will remain unsold; output will go down, which will result in
unemployment.

The bargaining theory of wages: John Davidson propounded this theory.

According to him, wages are determined by the relative bargaining power of workers
or trade unions and of employers. When a trade union is involved, basic wages,
fringe benefits, job differentials and individual differences tend to be determined by
the relative strength of the organization and the trade union.

Need of Compensation Management

 A good compensation package is important to motivate the employees to

increase the organizational productivity.
 Unless compensation is provided no one will come and work for the
organization. Thus, compensation helps in running an organization effectively
and accomplishing its goals.
 Salary is just a part of the compensation system, the employees have other
psychological and self-actualization needs to fulfill. Thus, compensation
serves the purpose.

The most competitive compensation will help the organization to attract and sustain the
best talent. The compensation package should be as per industry standards

6. Write the advantages and limitations of Job Evaluation Method

Your employees want fair pay. Your employees want regular raises. You want to
attract and retain talented employees in your organization. Your employees need
clarity about their roles and responsibilities as well as about what's expected from
them. Job evaluation, performed effectively and used to clarify and revise job
descriptions and position responsibilities, is your solution to all of these issues. As a
compensation and benefits specialist, you are responsible for developing a fair
compensation plan.
Job evaluation is a tool used to evaluate the worth of each job in your organization
and in today's labor market. A successful job evaluation system can help you make
your organization's pay system equitable, understandable, legally defensible,
approachable, and externally competitive. You can use job evaluations to:

• Clarify job descriptions so that employees understand the expectations of

their roles and the relationship of their roles to other jobs within the
organization.
• Attract desirable job candidates.
• Retain high-potential employees.

Advantages and Limitations of Job Evaluation

Advantages:

1. Job evaluation is a logical and an objective method of ranking jobs relatively

to each other. It may thus help in removing inequities in existing wage

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structures and in maintaining sound and consistent wage differences in a

plant or an industry.
2. The method replaces accidental factors occurring in less systematic
procedures of wage bargaining by more impersonal and objective standards,
thus establishing a clearer basis for negotiation.
3. The method may lead to greater uniformity in wage rates and simplify the
process of wage administration.
4. Information collected in a process of job description and analysis can be used
for improvement of selection, training, transfer and promotion, procedures on
the basis of the comparative job requirement.

Limitations:

1. Though there are many ways of applying job evaluation in a flexible manner,
rapid changes in technology and in the supply of and demand for particular
skills, create problems of adjustment that may need further study.
2. When job evaluation results in substantial changes in the existing wage
structure, the possibility of implementing these changes in a relatively short
period may be restricted by the financial limits within which the firm has to
operate.
3. When there are a large proportion of incentive workers, it may be difficult to
maintain a reasonable and acceptable structure of relative earnings.
4. The process of job rating is, to some extent, inexact because some of the
factors and degrees can be measured with accuracy.
5. Job evaluation takes a long time to complete, requires specialized technical
personnel and is quite expensive.

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