NEW HORIZON COLLEGE

MARATHALLI, BANGALORE

III SEM BBA

HUMAN RESOURCE MANAGEMENT

Sub Code: 3.4

Prepared by

Ms LINCY JOYKUTTY

Assistant Professor
S.NO TITLE PAGE NUMBER

1. UNIT I: INTRODUCTION TO
HUMAN RESOURCE 3-10
MANAGEMENT

UNIT II HUMAN RESOURCE

2. PLAANING, RECRUITMENT, 11-28
SELECTION & PLACEMENT

UNIT III TRAINING & 29-39

INDUCTION
3.

UNIT IV: PERFORMANCE

APPRAISAL & COMPENSATION 40-60

UNIT V: PROMOTION &

4. 61-66
TRANSFER

UNIT VI: HUMAN RESOURCE

5. DEVELOPMENT 67-74

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PREVIOUS YEAR QUESTION
PAPER
75-81

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 UNIT-1

INTRODUCTION TO HUMAN RESOURCE

MANAGEMENT
Define Human Resource Management

Human Resources Management is defined as managing (planning,

organizing, directing & controlling) the functions of employing, developing,
and compensating human resources resulting in the creation & development of
human relations with a view to contribute proportionately to the
organizational, individual & social goals.

DIFFERENCE BETWEEN PERSONNEL MANAGEMENT & HRM

PERSONNEL MANAGEMENT:

Means persons employed. PM views man as economic man who works for
salary.

HRM treats people as human beings having economic, social & psychological
needs

OBJECTIVES OF HRM

1. Societal Objectives: To be ethically & socially responsible to the

needs & challenges of the society

2. Organizational Objectives : To recognize the role of HRM in

bringing the organizational objectives

3. Functional Objectives: To maintain the dept’s contribution at a level

appropriate to the organization’s needs. Resources are wasted if HRM
is less sophisticated to suit the organizational demands.
4.
5. Personal Objectives: to assist the employees in achieving their
personal goals to enhance the individual contribution.

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 1. To create & utilize an able and motivated workforce to accomplish
organizational objectives
2. To establish strong working relationships and groups within the
organization by co-ordination of individual and group goals with those
of the organization
3. To create facilities and opportunities for individual or group
development so as to match the growth of the organization.
4. To attain effective utilization of human resources in achievement of
organizational objectives.
5. To identify and satisfy the need by providing adequate and equitable
wages and incentives benefits and social security and measures for
challenging work, recognition and status

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

1. Human Resource Management in the Nation’s Well-Being

A nation with abundant physical resources will not benefit unless HR
makes use of them. HR with the right attitude is responsible for
making use of national resources

2. Man vis-à-vis Machine

Most of problems in the organization are human, social, psychological
rather than physical, technical or economic.
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 3. HRM is a central subsystem
HRM operates upon and controls all other subsystem. Social
significance, proper management of the personnel enhances their
dignity by satisfying their personal needs.

4. Professional Significance
By providing healthy working environment it promotes team work in
employees

5. Significance for individual Enterprises

is achieved, by creating the right attitude among employees through
effective communication.

Define Policy
“A Policy is plan of action. It is statement of intention committing the
management to a general course of action.”

Define Procedure
“A Procedure is well thought out course of action. It prescribes a
specific manner in which a piece of work is done.”

HRM FUNCTIONS

Functions of HRM

Managerial Functions Operative Functions

1. Planning 1. Employment

2. Organizing 2. Human Resources

3. Directing Development
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4. Controlling 3. Compensation

4. Human Relations

5. Industrial Relations
A. Managerial Functions
1. Planning
Planning is pre-determined course of action. It involves planning of
HR requirements, recruitment, selection, training. Involves forecasting
of personnel needs, changing values, attitude & behavior of employees
& their impact on their organization

2. Organizing
Organizing explains to carry out determined course of action.
Organization is a structure by which co-operative group of human
beings allocates its task among its members, identifies relationships &
integrates its activities towards a common objective.

3. Directing
Directing defines execution of plan. At any level the function is
motivating, commanding, leading & activating people.

4. Controlling
The performance has to be verified to check if the personnel functions
are performed in conformity with the plans & directions of
organization.

B. Operative Functions

1. Employment
is concerned with securing & employing the people to achieve
organizational objectives. It covers functions such as job analysis,
human resource planning, recruitment, selection and internal mobility.

2. Human Resource Development

HRD is process of improving, molding & changing skills, aptitude and
attitude, values based on present & future job requirements.

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 3. Compensation
Is process of providing adequate & fair remuneration to the
employees.

4. Human Relations
Is concerned with practicing policies & programs like employment,
development, compensation & interaction among employees & create
a sense of relationship between individual workers, management &
trade unions.

5. Industrial Relations
IR is relation study among employees, employer, government & trade
unions.

6. Recent Trends in HRM

Includes Quality of work life, total quality in human resources, HR
Accounting, Audit & Research

Duties and Responsibilities of Human Resource Manager

1. Human Resource Manager is responsible for efficient management and

utilization of resources in process of achieving organizational objectives,
group goals and individual goals.

2. Preparing, modifying and updating job analysis including job description

& job specifications as desired by line managers.

3. Advising the line managers regarding the developments in job analysis

like role analysis & broad jobs.

4. Advising the line managers regarding the impact of multi-skilling, down-

sizing and de-layering of human resource planning

5. Searching for prospective employees at various sources and motivating

them to apply for jobs in company.

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Role of Human Resource Manager

1. The Conscience Role

The Conscience role is that of a humanitarian who reminds the
management of its moral and obligation to its employees.

2. The Counselor
Employees, who are dissatisfied with present job, approach the Personnel
Manager for counseling. Personal problems could be marital health,
marriage, mental, physical or career related.

3. The Spokesperson
HR is considered as a spokesperson or representative of the company.

4. The Problem Solver

He acts a problem solver with respect to the issues that involve HRM and
long range planning.

5. The Mediator
The HR Manager plays the role of peace-maker and settles the disputes
between employees and management.

6. The Change Agent

He acts as a change agent and introduces changes in various existing
programs.

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ORGANIZATION STRUCTURE OF HUMAN RESOURCE
DEPARTMENT

PROCESS OF HRM
Objectives & Organization of HRM

Strategic HRM

Employment
• Job Design & Analysis
• Human Resource Planning
• Recruitment, Selection, Placement & Induction

Human Resource Development

• Performance Appraisal
• Training & Development
• Career Planning & Development
• Promotion, Transfer & Demotion
• Management of Change, Development & Culture
Compensation Management
• Job Evaluation 9
• Wage & Salary Administration
• Social Security & Welfare
Human Relations
• Morale
Important questions

Answer the following

(2 marks each)

1. Define HRM?

2. Explain the objectives of HRM.

3. Define Policy

4. Explain HRD

5. Explain Compensation

6. Define Quality Circles

(6 marks each)

1. Explain the role of Human Resource Manager

2. Explain the duties and responsibilities of HR Manager

3. Explain the importance of HRM

(14 marks each)

1. Explain the process of HRM

2. Explain the functions of HRM

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 Unit -2
HUMAN RESOURCE PLANNING,
RECRUITMENT
AND SELECTION
Define Human Resource Planning
“Human Resource Planning (HRP) is a process by which an
organization should move from current manpower position to its desired
manpower position striving to have right number, right kind of people at right
place & at right time resulting in both organizational and individual receiving
maximum benefit”

- E.W.Vetter

Human Resources Planning means deciding the number and type of

human resources required for each job, unit and total company for a particular
future date in order to carry out organizational objectives.

OBJECTIVES OF HRP

1. To recruit and retain the HR of required quality & quantity

2. To foresee the employee turnover and make arrangements for minimizing
turnover and filling up vacancies
3. To meet the needs of expansion and diversification
4. To improve the standard, skill, knowledge, discipline
5. To access the surplus and shortage of HR
6. To estimate the cost of HR

BENEFITS OF HUMAN RESOURCE PLANNING

1. It checks the corporate plan of the organization.

2. It offsets uncertainty & change. This enables the organization to have right
men at right time and in right place.

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3. It helps to anticipate the cost of salary enhancement, better benefits.

4. To foresee the need for redundancy and plan to check it or provide

alternative employment in consultation with trade unions and government
through remodeling and economic plans.

5. To foresee the changes in values, aptitudes and attitude of human

resources.

Define Recruitment
“The process of searching for prospective employees and stimulating
them to apply for jobs in the organization”
-
Edwin B. Flippo
OBJECTIVES OF RECRUITMENT

• To attract people with multi-dimensional skills & experiences that suit

present & future organizational strategies.

• To induct outsiders with a new perspective to lead the company.

• To infuse fresh blood at all levels of the organization.

• To develop organizational culture that attracts competent people to the

company.

• To search/ head hunt people whose skills fit in the company.

METHODS OF RECRUITMENT

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METHODS OF RECRUITMENT

The methods of recruitment is broadly classified as Internal & External

Internal
a. Present Permanent Employees
Organizations consider the present employees for high level jobs due
to availability of most suitable candidates for jobs or equally to the
external source, to meet the trade union demands and to motivate the
existing employees.

b. Present Temporary/ Casual Employees

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 Organizations consider temporary or casual employees for low level
jobs or trade union pressures or in order to motivate them on the
present job.

c. Retrenched/ Retired Employees

The organization retrenches the employees due to lack of work. The
organization takes the candidates back due to lack of obligation and
trade union pressure. The organizations prefer to re-employ their
retired employees as token of loyalty to the organization.

d. Dependents of Deceased, Disabled, Retired /employees

Organizations provide employment to the dependents/ family
members of deceased, disabled to build brand image & develop
commitment.
e. Employee Referral
Present employees are aware of qualifications, attitude, experience
and emotions of their friends and relatives. They are aware of job
requirements and organizational culture of their company. Hence
the HR Managers of the company depend on present employees for
reference of the candidates for various jobs. This reduces time and
cost required for recruitment.

External sources:
a. Advertisement: It is the best method of recruiting persons
for higher and experimental jobs. The advertisement are
given in local or national press, trade or professional
journals. The prospective candidates evaluate themselves
against the requirements of job before sending their
applications.
b. Employment exchanges: employment exchanges run by
government are also good source of recruitment.
Unemployed persons get themselves registered with these
exchanges. Exchanges are suitable source of recruitment for
filling unskilled, semi-skilled and operative posts.
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c. Unsolicited applicants: persons in search of employment
may contact employers through telephone, by post or in
person. Generally, employers with good reputation get
unsolicited applications. If an opening is there then, these
persons are considered for this job.
d. Professional organizations: professional organizations
maintains complete bio-data of their members and supply it
to companies on demand. These organization also act as
exchange between members and recruiting firm. This source
of recruitment is found reliable for recruiting person at
middle and upper levels of organization.
e. Data banks: The recruiting firms can prepare a data bank
about various persons in different fields. They can collect
information from educational institutions, employment
exchanges, professional organizations etc.
f. Labor contracts: It is quite common to engage contractors
for the supply of labor. When workers are required for short
periods and are hired without going through the full
procedures of selection etc. .,. The persons hired under this
system are generally unskilled workers.
g. Gate recruitment: unskilled workers may be recruited at
the factory gate. In some industries like jute. A large number
of workers work as substitute whenever a permanent
employee is absent.
A notice on notice board of the company specifying the
details of the job vacancies can be put. Such recruitment is
called direct recruitment.
h. Campus recruitment: colleges, universities, research
laboratories are fertile ground for recruiters. In some
companies recruiters are bound to recruit a large no of
candidates from these constitutes every year. It is often an
expensive process.

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i. Walk-ins, Write-ins, Talk-ins: walk-in interviews are
becoming very popular method of recruitment. The
applicant just work in with their resumes for interviewers.
In write-ins, job seekers send written enquiries and they
are asked to complete the application form for further
processing.
Talk-ins are also becoming popular now-a-days. Job
applicants are required to meet the recruiters, on an
appropriated date for detailed talks. No application is
required to be submitted in this case.
j. Head-hunting: the company’s request the professional
organizations to search for the best candidates particularly
for senior executive positions. Head hunters are also called
as search consultants.
K.Body-shopping: professional organization hi-tech
training institutes develop the pool of human resources
for the possible employment. The prospective employers
contact these organizations.

L. Outsourcing
Some organizations recently started developing human resource
pool employing the candidate for their own organization. These
organizations do not utilize the human resource instead they supply
HRs to various companies based on their temporary needs.

RECRUITMENT PROCESS

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 RECRUITMENT TECHNIQUES

SELECTION PROCEDURE
Selection defines selecting the right candidate at right time and at right place.

Steps in selection process:-

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1) Job Analysis
2) Recruitment
3) Application Form
4) Written Examination
5) Preliminary Interviews
6) Business Games
7) Tests
8) Final Interview
9) Medical Examination
10) Reference Checks
11) Line Manager’s Decision
12) Job Offer
13) Employment

1) Job Analysis:- Job analysis is needed to know all

these functions and to perform various functions of
HRM.
a.) Job Terminology:- It defines the terms related to job analysis
like tasks, position, job occupation, job analysis, job
description, job specification and job classification.
b.) Tasks:- A task is an action or related group of action designed
to produce a definite outcome or result.
c.) Position:- A position is a group of similar tasks and
responsibilities assigned to one individual.
d.) Job:- A job is a group of positions that are similar as to kind
and level of work.

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e.) Occupation:- An occupation is a group of jobs that are similar
as to the kind of work and are found throughout an industry or
the entire country.
f.) Job Analysis:- It is the determination of 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.
g.) Job Description:- It is an organized, factual statement of the
duties and responsibilities of a specific job.
h.) Job Specification:- It is a statement of the minimum acceptable
human qualities necessary to perform a job properly. It includes
physical, mental, emotional, social & behavioral specification.

2) Development of bases for selection

The company has to select the appropriate candidates
from the applicant pool. The company develops the
appropriate bases for screening the candidates in order to
select the appropriate candidates for the job.

3) Application form:- It is also known as application

blank. The technique of application blank is traditional
& widely accepted for securing information from the
prospective candidates. It can also be used as a device to
screen the candidates at preliminary level. Many
companies formulated their own style of application
forms depending upon the requirement of information.
Information is generally required on the following items
in the application forms:-
a) Personnel Background Information:- It includes
name, present & permanent address, gender, date of
birth, marital status, height & weight, nationality etc.
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 This information can be used by the management to
know the suitability of the candidates regarding his
socio-economic background, family, status, impact of
these factors on employee behavior, etc.
b) Work Experience:- It covers experience in all
previous jobs with greater particulars about the nature
of work, reasons for leaving, the past employers,
duties & responsibilities etc.
c) Salary:- Salary drawn in the present employment &
salary & benefits expected.
d) Personal Items:- Association membership, personal
likes & dislikes, hobbies, etc.
e) References:- Organisation ask candidates to send the
names & addresses of persons who can be contacted
for reference purposes.

4) Written Examination
The organizations have to conduct written examinations
for the qualified candidates after they are screened on the
basis of application blanks so as to measure the
candidate’s ability in arithmetical calculations, to
measure the candidate’s aptitude and reasoning, general
knowledge and English language.

5) Preliminary Interview
It is to solicit necessary information from the prospective
applicants & to assess the applicants suitability to the job.
This may be conducted by an assistant in the personnel
departments. Thus, preliminary interview is useful as a
process of eliminating the undesirable & unsuitable
candidates.

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6. Business games: They are widely used as a selection technique
for selecting management trainees, executive trainees, and
managerial personnel at junior, middle & top management
positions.
Business games:
a. Case study
b. Role play
c. Simulation
d. In basket method
Utility:
a. Analytical , judgmental & decision making skills
b. Human relation skills
c. Encountering skills
d. Problem solving skills , decision making
7. Test: tests are classified into types:
a. Aptitude tests: these tests measure whether an individual has
the capacity or ability to learn given job if given adequate training.
B. intelligence tests: these tests measures the capacity for
comprehension, reasoning, word fluency, numbers, memory &
space.
C. emotional quotient: most of the organization realized that
an emotional involvement and commitment of the employee
determine their contribution to the company rather than their
intelligent quotient.
B. achievement tests: these are conducted when the applicants
claim to know something as these tests are concerned with what
one has accomplished. These tests are more useful to measure the
value of a specific achievement when an organization wishes to
empty experienced candidates these tests are classified into the job
knowledge test & work sample test.
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 C. situational tests: this test evaluate a candidate in a similar
real life situation. In this test the candidate is asked either to cope
with the situation or to solve critical situations of the job. These
test are classified into group discussion & in basket.
D. interest test: these tests are inventories of the like and
dislikes of candidates in relation to work, job, occupations,
recreational, activities.
E. personality tests: these tests prove deeply to discover clues to
an individual’s value system, his emotional reactions & maturity &
characteristic mood. They are expressed in such traits like self-
confidence, optimism, patience, fear etc.
i) TAT (thematic APPRECEPTION TEST): candidates are
shown a series of pictures and are asked to write a story based on
these pictures. This test measures candidate’s conceptual,
imaginative & interpretative skills.
ii) INK-BLOT TEST: The candidates are asked to see the
ink blot & make meaningful concepts out of them. The examiner
keeps a record of the responses, time taken, emotional expression
etc.
F. other test:
I) polygraph tests: The polygraphist the instrument that
records changes in breathing, blood pressure, and pulse & skin
response associated with sweating go palms & plots these reactions
on the paper. The candidate is asked a series of simple,
complicated, related, unrelated & critical questions.
ii) Honesty test: the two types of pre-employment honesty
tests are overt integrity tests & personality based integrity test.
Overt integrity tests make direct questions to assess
dishonest behavior & gather history of theft & illegal behavior.

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 Personality based integrity test assess an individual’s
predisposition towards deviant & disruptive behavior.

8. Final interview:
Types of interview are:
I) Informal interview: this is the interview which can
be conducted at any place by any person to secure the
basic & non-job related information.
II) Unstructured interview: In this interview the
candidate is given the freedom to tell about himself by
revealing his knowledge on various items/areas, his
background, expectations, interest.
III) Background information interview: this interview is
intended to collect blank & to check that the
information provided in the application blank
regarding education, family, health,hobbies etc .
IV) Stress interview: This interview aims at testing the
candidate’s job behavior & level of withstanding
during the period of stress & strain. The interviewers
tests the candidate by putting him under stress &
strain by interrupting the applicant from answering ,
criticizing his opinions , asking questions pertaining to
unrelated areas , keeping silent for unduly long period
after he has finished speaking etc.

V. GROUP DISCUSSION INTERVIEW

These are two methods of conducting group discussion
interviews , viz group interviews method and discussion
interview method.
All the candidates are brought into one room ,i.e the
interview room and are interviewed one by one under
group interview.
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Under the discussion method, one topic is given for
discussion to the candidates who assemble in one room
and they are asked to discuss the topic in detail. This type
of interview helps the interviewer in appraising certain
skills of the candidates like initiative inter personal skills
etc.

Formal & Structured Interview :- In this type

of interview , all the formalities procedures like fixing
the value , time, panel of interviewers opening &closing
intimating the candidate officially, etc are strictly
followed in arranging & conducting the interview.
Panel Interview:- A panel of experts interview each
candidate , judges his performance individually &
prepares consolidated judgment.
Depth Interview:- In this interview, the candidate
would be examined extensively in core areas of job
skills & knowledge. They are conducted for specialist
jobs.
Decision Making Interview:- After the
candidate are examined by the experts including the line
managers of the organization in the core areas of the job
, the head of department section concerned interviews
the candidates once again , mostly through informal
discussion.
9) Medical Examination:- Certain jobs require
certain physical qualities like clear vision, perfect
hearing, clear tone, etc. It reveals whether or not a
candidate possesses these qualities.

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 10) Reference Checks:- After completion of final
interview & medical examination , the personnel
department will engage in checking references. These
references may be from the individuals who are familiar
with the candidate’s academic achievement or from the
applicant’s previous employees.
11) Final Decision by line Managers:-
The line manager concerned has to make final decision
whether to select or reject the candidate. A true
understanding between line managers & personnel
manager should be established to take proper decisions.
12) Job Offer:-
The candidate after receiving job offer communicates
his acceptance to the offer or requests the company
modify the terms & conditions of employment or rejects
the offer.

13) Employment:-
The company employs those candidates who accept the
job offer with or without modification of the terms &
conditions of employment of employment & place them
on the job.

Define Placement
Placement is “the determination of the job to which an accepted
candidate is assigned and his assignment to that job. It is matching of what
supervisor to think he can do with job demands with what he offers in form of
payroll, companionship and promotional possibilities.

Problems in Placement
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 1. Employee Expectations
Employee sometimes expects high salary, independent and challenging
work and the job offers low salary, dependent and routine works then
employee finds himself misfit to the job.

2. Job Expectations
The expectations of employees are more than his/her skills and abilities.
Therefore the HR Manager finds mismatch between job and employee.

3. Change in Technology
The technological changes bring radical changes in job description and
specification. The changes would result in mismatch between job and
employee

4. Changes in Organizational Structure

The business grand strategies like mergers, acquisitions and downsizing
results in job. These changes result in misfit between employee and job.

How to make placement effective:

a. Job rotation: the technique of rotating the employee among
different jobs in the department/organization enables the
employee to satisfy his aptitude for challenging work.
b. Training &development: It helps the employee to acquire
new skills & knowledge based on the redesigned jobs.
c. Team work: it allows the employees to use their skills &
knowledge abilities etc. & it minimizes the problem in
placement.
d. Job enrichment: It provides the challenging work &
decision making authority to the employee.
e. Empowerment: employee empowerment relating to the job
makes the employee to exploit his potentialities & makes
use of them.

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 Prohibition period generally ranges between six months &
two years.

Job Analysis

Job Description Job Specification

Define Job Analysis

Job Analysis is defines as “the process of determining by observation
and study, reporting pertinent information relating to the nature of a specific
job. It is determination of tasks which comprise the job and of skills,
knowledge, abilities and responsibilities required of the worker of a successful
performance and which differentiate on job from all others”.
Define Job Description
Job Description is defined as “an organized, factual statement of the
duties and responsibilities of a specific job”. It is standard of function, in that
it defines the appropriate and authorized content of job. It explains how is it
done, what is to be done and why?
Define Job Specification
Job Specification is defined as “A statement of the minimum
acceptable human qualities necessary to perform job properly”. It is standard
of personnel and designates the qualities required for acceptable performance.

Important questions of Recruitment & Selection

Answer the following
(2 marks each)
1. What is Recruitment?
2. What is HRP?
3. What is Selection?
4. Define Job Analysis
5. Define Job Specification.
6. Define Job Description
7. Define Body Shopping
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8. Define Head Hunting
(6 marks each)
1. Explain Selection Procedure
2. What is Placement? Explain the problems in placement
3. Explain the benefits of HRP
(14 marks each)
1. Explain the techniques of Recruitment

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 CHAPTER-3

TRAINING & INDUCTION

Induction:-

“Induction is the process of receiving & welcoming an employee

when he first joins a company & giving him the basic information he needs to
settle down quickly & happily & start work “. It is also called as orientation.

The new employee acquaints himself with the following heads:-

i) About the company’s history, objectives, policies, procedures,

rules & regulations, codes etc.
ii) About the department
iii) About the superiors, subordinates, etc.

Objective & purpose of induction

While introduction the new employee, the superior or manager should aim
at:-

i) Putting the new employee at ease

ii) Creating interest in his job & the company
iii) Providing basic information about working arrangements
iv) Indicating standards of performance & behaviour expected of him.
v) Informing him about training facilities.
vi) Creating the feeling of social security
vii) Minimizing the reality stock which would be caused due to
incompatibility caused between the employee expectation &
actually what the company provides offers regarding pay, benefits,
status, working conditions, responsibility, opportunities for growth,
innovations, etc.

Process of induction

a) Reporting for duty at a certain place to the head of department

concerned.
b) The head of the department welcomes the new employee.

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 c) Introduction to the organizational/branch head by the head of
department
d) Departmental head introduces to all the employees of the
department, describes the department, total work of the
department, total work of the department, etc,
e) Supervisor concerned introduces to his co-workers in that
section/unit to the work job; material; machine.
f) Providing information about the duties, responsibilities, rights
facilities, provisions, welfare measurers, etc.
g) Supervisor classifies the 3 debts of the new employee about the
work.

Advantages of Induction:-

I. First impression matters a good deal & results in less turn over.

II. Newcomer adjusts himself to the work quickly & it saves the time of
the supervisor.

III. Reduces employee dissatisfaction & grievances

IV. Develops a sense of belongings & commitment.

Induction Problems:-

1) Supervisor who is entrusted with the job is not trained or is too busy.
2) Employee is overwhelmed with too much information is a short time.
3) Employee is overloaded with forms to complete.
4) Employee is pushed into the job with a sketchy orientation under the
mistaken belief that trial by fired is the beast orientation.
5) Employee may develop wrong perceptions because of short periods on
each job.
6) Employee is forced to fill in the gaps between a broad orientation by the
HR department & a narrow orientation at the departmental level.
7) Employee’s mistakes can damage the company.

Training:-

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Meaning & Definition:-

Training is the act of increasing the knowledge & skill of an employee

for doing a particulars job.

Dale.S.Beach defines the training as “… the organized procedure by

which people learn knowledge &/or skill for a definite purpose”.

Training & Development need = Standard performance – Actual

performance.

DIFFERENCE BETWEEN TRAINING DEVELOPMENT &

EDUCATION:-

Training refers to the process of imparting specific skills. Development

refers to the learning opportunities designed to help employees grow.

Education is theoretical learning in classrooms.

Differences b/w Training & Development.

Area Training Development

Content Technical Skills & Managerial &
Knowledge Behavioural skills &
Knowledge
Purpose Specific job related Conceptual & general
knowledge
Duration Short term Long term
For Whom Mostly Technical & Managerial
Non Managerial

Need & Importance of Training

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 Training is necessary for the following reasons:-

i) Increased Productivity:-

Training improves the performance of employees. Increased skill &

efficiency results in better quantity & quality of production. A trained
workforce will handle machine carefully & will handle machine carefully
& will use the materials is an economical way.

ii) Higher Employee Morale: - A trained worker derives happiness & job
satisfaction from his work. It also gives him job security & ego
satisfaction.

iii) Less Supervision:- The degree of supervision required for a trained

worker will be less. Trained workers may contribute significantly in
reducing managerial problems of supervision.

iv) Less Wastages:- Untrained workers may waste more materials,

damage machines & equipments & may cause accidents. A trained worker
will know the art of operating the machine properly. The control of
various wastes will substantially reduce the manufacturing cost.

iv) Easy Adaptability:- The technological advancement will require new

approach to work. The methods of work are constantly undergoing a
change. This will necessitate the adoptability of workers to changing work
environment. A trained worker can be more adaptable to change. The
trained persons will adapt to new situation more easily because they have
basic technical knowledge.

v) Reduced Turnover & Absenteeism:- Labour turnover & absenteeism

are mainly due to job dissatisfaction when a worker is properly trained he
will take keen interest in his job & can derive satisfaction from it Training
helps in reducing labour absenteeism by increasing job satisfaction
among them.
vi) Employee Development:- Training also helps in the development of
employees. It first helps in locating talent in them & then developing it to
the maximum. Training provides employee an opportunity to showcase
his talent also.

Benefits of Training

32
How Training Benefits the Organisation

i) Leads to improved profitability &/or more positives attitudes toward

profits orientation.

ii) Improves the job knowledge & skills at all levels of the organization.

iii) Improves the morale of the workforce.

iv) Helps people identify with organizational goals.

v) Helps create a better corporate image.

vi) Fosters authenticity, openness & trust

vii) Improves the relationship between boss & subordinate.

viii) Aids organizational development.

ix) Helps prepare guidelines for work.

x) Provides information for future new in all areas of the organization.

xi) Organisation gets more effective decision making & problem solving.

xii) Aids in developing leadership skill, motivation, loyalty, better attitude

& other aspect that successful workers & managers usually display.

xiii) Aids in increasing productivity &/or quality of work.

xiv) Improve labour – management relations.

xv) Helps in handling conflict, thereby helping to prevent stress & tension.

Benefits to Individual:-

a) Helps the individual in making better decision & effective problem

solving.

b) Through training & development, motivational variables of recognition,

achievement, growth, responsibility & advancement are internalized &
operationalised.

c) Aids in encouraging & achieving self development & self confident.

33
d) Increase job satisfaction & recognition.

e) Moves a person towards personal goals while improving interactive in

learning.

g) Helps eliminate fears in attempting new tasks.

Benefits of Personnel & Human Relations, Intra & Inter group

Relation & Policy Implementation:

a) Improves communication between groups & individuals.

b) Provides information on equal opportunities & affirmative action.
c) Provides information on other governmental laws & administrative
policies.
d) Improves interpersonal skills.
e) Make organization policies rules & regulations viable.
f) Improves Morale.
g) Build cohesiveness in groups.

Identification of Training Needs

Training needs are identified on the basis of organizational analysis, job

analysis & manpower analysis. Training programme, Training methods &
course content are to be planned on the basis of training needs.

Training needs = Job & organizational requirements – Employees

specifications.

TRAINING METHODS:-

Training methods are broadly divided into two. They are

i) On – the – job method

ii) Off – the – job method

Training Methods
34
 On the – job method Off the
job

* Job Rotation * Vestibule

Training

* Coaching * Role
Playing

* Job Instruction * Lecture

methods

* Committee Assignment *
Conference & discussion

* Internship training *
Programmed instruction

On – the – Job Training Methods:-

On the Job methods refers to methods that are applied in the

workplace, while the

Employee is actually working.

i) Job Rotation:- This type of training involves the movement of the trainee
from one job to another. The trainee receives job knowledge. &
gains experience from his supervisor or trainer in each of the
different job assignments. This method gives an opportunity to the
trainee to understand the problems of employees on other jobs &
respect them.

ii) Coaching:- The trainee is placed under a particular supervisor whose

functions as a coach in training the individual. The supervisor
provides feedback to the trainee on his performance &offers him
some suggestions for improvement. A limitation of this method of
35
 training is that the trainee may not have the freedom or opportunity
to express his own ideas.

iii) Job Instruction:- This method is also known as training through step by
step. Under this method the trainer explains to the trainee.

iv) Apprenticeship training:- It is meant to give the trainee sufficient

knowledge & skill in those shades & crafts in which a long period
of training required for gaining complete proficiency. The way of
doing the jobs, job knowledge & skills & allows him to do the job.
The trainer Appraises the performance of the trainee, provides
feedback information & corrects the trainer.

v) Internship:- In internship training, educational institutions & business

firms have a joint programme of training. Selected candidates carry
on regular. Studies for the prescribed period. They also work in
some factory or office to acquire practical knowledge & skills.
This method helps to provide a good balance between theory &
practice.

Off – the – Job Training Methods:- off the job training refers to training
imported away from the Employee’s immediate work area. The
employee is separated from the job situation & his attention Is
focused exclusively on learning which can later lead to improved
job performance.

Off the job training methods are a follows:-

i) Vestibule Training: - This is a training method where the actual work

conditions are simulated & the equipment used by the trainees is
similar to what is used on the job. In this way, the trainees gain
experience of using the equipment without any pressures of work
or cost involved.

ii) Role Playing:- It is described as a method of human interaction

involving realistic behaviour is imaginary situations. The trainees
as sum the roles of different characters is the organizational
context. It basically helps in improving the communication,
people-management & relationship management skills of the
trainees.
36
 iii) Case Exercises:- A real life problem encountered in the organization is
presented to the trainees in the form of case study. They are then
asked to analyse the case & present their views &
recommendations for solving the problem.

iv) Sensitivity Training:- This method aims to influence an individual

behaviour through group Decision. The trainees are enabled to see
themselves others see them & develop an understanding of others
views & behaviour

v) Conference or Discussion:- It is a method in training the clerical,

professional & supervisory Personnel. This method involves a group of
people who pose ideas, examine & share facts, ideas &Data, test
assumptions & drew conclusions all of which contribute to the
improvement of job performance.
vi) Programmed Instructions:- The trainee is given a series of questions
after he studies the relevant material required for the
accomplishment of the job. After the trainee answers a question,, he
himself gives a immediate feedback whether it is right or wrong. If
the answer is correct, he is asked to proceed to the next question but
if it is wrong, he is asked to refer back to the material.
vii) Classroom Lecturers:- This approach is widely used for helping the
employees understand the rules procedures & policies of the
organization. A two way communication makes a session lively
interesting.

Objectives of Training

Training is an essential part of the orientation program for new recruits in an

organization.

The main objectives of training are:-

i) Improving Employee Performance:

When an employee is recruited by an organization, he might not

have all the skills required to carry out his job. Training the employee at this
stage helps him learn his job faster & excuses better performance. Training
also helps in bridging the gap between the actual & the expected performance
of the employees by enhancing their knowledge & skills.

ii) Updating Employee Skills:-

37
 Technological changes may result in job changes in terms of the
tasks & activities involved. Training enables employees to update their skills
& helps integrate the technological changes successfully into organizational
systems & processes.

iii) Avoiding Managerial Obsolescence:-

Managerial obsolescence is the failure to adopt new methods &

processes that can improve employee & organizational performance. Rapid
changes in technical, legal & social environments have an impact on the way
managers perform their jobs, & those who do not adopt to these change
become absolute & ineffective.

iv) Preparing for Promotion & Managerial Succession:-

Training helps an employee acquire the skills required to assume

greater responsibilities. It makes the transition from an employee’s present job
to the next one, easier & smoother.

v) Retaining & Motivating Employees:-

One way to motivate & retain employee is through a systematic

program of career planning & development.

vi). Creating an Efficient & Effective Organisation:-

A manager who has well trained & well equipped employees

need to spend less time supervising them. Accidents at the workplace can also
be reduced by effective training of the employees.

Evaluation of the Training Program

Transfer to the job

Follow up studies

Assessing the
Knowledge after
training 38
 Trained or
developed workers

Assessing the
Knowledge prior to
training

Setting Evaluation
Criteria

Important Questions

Two Marks 2*1=2

1. Define Training.

2. Distinguish between training, education & development.

3. Give the meaning of Induction.

4. What is vestibule training?

5. What is sensitivity training?

Eight Marks 6*1=6

1. Explain needs & importance of training in modern organization.

2. Distinguish between orientation & training.
3. What are the objectives of training
4. Give the advantages and disadvantages of vestibule training.

Fifteen Marks 14*1=14

1. Describe the process of training & development?

2. Discuss the various methods of training to the employees.

39
 CHAPTER-4

PERFORMANCE APPRAISAL & COMPENSATION

Performance appraisal can be defined as the process of evaluating the
performance of an employee & communicating the results of the
evaluation to him for the purpose or rewarding or developing the
employee.

According to Edward Flippo “Performance appraisal is the systematic,

periodic & an impartial rating of an employee’s excellence in matters
pertaining to his present job & his potential for a better job.”

Objectives of Performance Appraisal

1) Work – Related Objectives:-

a) To access the work of employees in relation to job
requirements
b) To improve efficiency
c) To help management is fixing employees according to their
capacity, interest, aptitude & qualifications.
d) To carry out job evaluation.
2) Career Development objectives:-
a) To access the strong & weak points in the working of the
employees & finding remedies for weak points through
training.
b) To plan career goal
c) To guide the job change with the help of continuous ranking.
3) Communication:-
a) To provide feedback to employee’s so that they come to
know where they stand & can improve their job performance.
b) To clearly establish goals i.e what is expected of the
employee in terms of performance & future work assignment.
c) To develop positive superior – subordinated relations &
thereby reduce grievances.
4) Organizational Objectives:-
a) To serve as a basis for promote or demotion
b) To serve as a basis for wage & salary administration &
considering pay increases & increments.
40
 c) To serve as a basis for planning suitable training &
development programme
d) To serve as a basis for transfers of termination in case of
reduction in staff strength.

METHODS OF PERFORMANCE APPRAISAL

Performance appraisal methods can be classified into two. They are:-

1) Traditional methods
2) Modern methods

Traditional methods:- It is also known as Traits approach. It is based on the

evaluation of traits in a person.

A) Graphic Rating Scale:- This method of appraisal requires the rater to

rate the employee on factors like quantity & quality of work, job
knowledge, dependability, punctuality, attendance, etc.
Rating Scales are of two types viz
a) Continuous rating scale
b) Discontinuous rating scale.

In continuous order like 0,1,2,3,4 & 5 & in discontinuous order, the appraises
assigns the points to each degree.

QUANTITY OF Unsatisfactory poor Fair Average Good

Excellent
Work
0 1 2 3 4
5

CONTINUOUS RATING SCALE

41
ATTITUDE

No Interest Indifferent Interested Enthusiastic

Very Enthusiastic

DISCONTINUOUS RATING SCALE

Advantages:-

i) It is easy to understand, easy to use & permits a statistical

tabulation of scores of employees.
ii) Ratings are objective in nature.

Disadvantage:-

i) A supervisor may tend to rate his men high to avoid criticism from
them.
ii) The choice of employee behavior categories – the important might
ones get missed out & irrelevant ones may get included.

B) Ranking Method:- It is otherwise called as Straight ranking method. It

is the simplest & old method of merit rating. Every employee is judges as a
whole without distinguishing the rates from his performance. A list is then
prepared for ranking the workers in order of their performance on the job so
that an excellent employee is at the top & the poor at bottom.

Advantages:-

• It permits comparison of all employees in any single rating group

regardless of the types of work.
• It is suitable only when there are limited persons organization.

Disadvantages:-

• This method only tells us about & not the actual difference among
them.

C) Paired Comparison method:-

Under this method, the appraiser compares each employee with

every other employee, one at a time. For example, there are five employees
named A, B, C, D & E. The performance of A is first compared with the
42
performance of B & a decision is made about whose performance is better.
Then A is compared with C, D & E in that order. The same procedure is
repeated for other employees. After the completion of comparison, the results
can be tabulated, & a rank is created from the number of times each person is
considered to be superior.

D) Forced Distribution method:-

It is developed to prevent the raters from too high or too low. Under
this method, the rate after assigning the points to the performance of each
employee has to distribute his ratings in a pattern to conform to normal
frequency distribution.

BELL

SHAPED CURVE

NUMBER OF EMPLOYEES

10% 20% 40% 20%

10%

Excellent

Good

Average

Below Average

Unsatisfactory

43
E) Checklist Methods:-

The checklist is a simple rating technique in which the supervisor

is given a list of statements or words & asked to check statements representing
the characteristics & performance of each employee.

There are 3 types of checklist method. They are:-

i) Simple checklist method:- under this method, a checklist of statements

on the traits of the employee & his or her job is prepared is two
columns – viz as ‘Yes’ & ‘No’ columns. All that the rater (immediate
superior) should do is tick the ‘Yes’ column if the answer to the
statement is positive & in column ‘No’ if the answer is negative. The
HR department assigns certain points to each ‘Yes’ ticked. Depending
on the number of ‘Yes’ the total score is arrived at

Table :- Checklist for Operators

Yes No
Is the employee really interested in the job

Is his or her attendance satisfactory

ii) Weighted Checklist Method:- It involves weighting different items in

the checklist, having a series of statements about an individual, to
indicate that some are important than others. Weighted performance
score is compared with the overall assessment standards in order to
find out the overall performance of the employee.

iii) Forced Choice Method:- In this, the rater is given a series of

statements about an employee. These statements are arranged in blocks
of two or more, & the rater indicates which statement is most or least
descriptive of the employee. Typical Statements are:
*) Learns fast ----------Works hard
44
 *) Work is reliable ---------- performance is a good example for
*) Absents after ---------- others usually tardy

As in the checklist method, the rater is simply expected to select the

statements that describe the rate. Actual assessment is done by the HR
department.

F) Critical Incident Method:-

The appraiser makes a note of all the critical incidents that reflect the
performance or behaviour of the employee during the appraisal period. These
are recorded as & when they occur & can demonstrate either positive or
negative traits or performance. At the end of the appraisal period this records
forms the basis for evaluation of the performance of the employee.

G) Essay or Free Form Appraisal:-

This method requires the manager to write a short essay describing

each employee’s performance during the rating period. Questions or
Guidelines are provided to the appraiser, based on which he analysis &
describes the employee’s performance.

H) Group Appraisal:-

Al employee is appraised by a group of appraisers. This group

consists of the immediate supervisors of the employee to other supervisor’s
who have close contact with the employee’s work, manager or head of
department & consultants. This method widely used for purposes of
promotion, demotion & retrenchment appraisal. Eq:- Blue Star

I) Confidential Report:-

Assessing the employee’s performance confidentially is a traditional

method. The superior appraiser the performance of his subordinate based on
his observations, judgment & intuitions.

II Modern Methods:-

Modern concerns use the following methods for the performance

appraisal:-

A) BARS (Behaviorally Anchored Rating Scales):-

45
 BARS concentrates on the behavioral traits demonstrated by the employees
instead of his actual performance.
These are three steps in implementing a BARS system. They are:-
i) Determination of relevant job dimensions by the manager & the
employee for each job dimension.
ii) Identification of behavioral anchors by the manager & the
employee for each job dimension.
iii) Determination of the scale values to be used & grouping of anchors
for each scale value, based on consensus.

Example:-

Dimension: Planning & Organising Anchors

Scale Value

5[ ] Excellent Develops a comprehensive plan, documents well, obtain

approval & distributes to all concerned.
4[ ] Good Lays out all plane.
3[ ] Average Revises due dates as project progresses & investigate
customer complaints
2[ ] Below Average Poor plans & unrealistic time schedules are common
1[ ] Unacceptable Fails due to lack of planning & is not interested in
improving.
B) Assessment Centre:-
An assessment centre is a central location where the managers
may come together to participate in job related exercises evaluated by trained
observers. The principle idea is to evaluate managers over a period of time, by
observing & later evaluating their behaviour across a series of select exercises
such as role-playing in basket exercises, etc.
C) Human Resources Accounting:-
It deals with cost of & contribution of human resources to the
organization. Cost & Contribution of human resources to the organization.
Cost of the employee includes cost of manpower planning, recruitment,
selection, placement, induction, training, development wages & benefits, etc.
Employee contribution is the money value of employee service which can be
measured by labour productivity or value added by human resource.

46
 Cost of human resources may be taken as standard. Employee
performance can be measured in terms of employee contribution to the
organization.
D) Management by Objective:-
Management by objective is a process whereby the superior &
subordinate managers of an organization jointly identify its common goals,
define each individuals major areas of responsibility in terms of results
expected of him & use these measures of guides for operating the unit &
assessing the contribution of its members.
Four Steps in MBO process
1) It is to establish the goals each subordinate is to attain.
2) Setting the performance standards for the subordinates.
3) Actual level of goal attainment is compared with the goals.
4) Establishing new goals & possibly new strategies for goals not previously
attained.
E) Psychological Appraisal:-
It focuses on future potential & not actual performance. Industrial
psychologist are employed for conducting the appraisal.
The appraisal normally consists of in depth interviews,
psychological tests, discussions with supervisors & a review other
evaluations.
The psychological appraisal results are useful for decision making
about
i) Employee Placement
ii) Career Planning & development
iii) Training & Development
F) Results Method:-
Organisation of the contemporary periods evaluates employee
performance based on accomplishments they achieve rather than based on the
behavioural factor/traits. Employee accomplishments include sales turnover,
number of units produced, & number of customers served, number of
complaint settled & the like.
G) Balance Scorecard:-
It was developed by Robert Kaplan & David Norton. It brings
the linkages among financial, customer, processes & learning.
H) Managerial Appraisal:-

47
 Harold Koontz has developed a concept of managerial appraisal
i.e appraising managers as managers. According to this concept, the managers
attain organizational objectives by performing the basic managerial functions
Viz. planning, organizing, leading, motivating, staffing & controlling.
The checklist containing the questions in these areas is prepared
with a five degree rating scale i.e extremely poor performance, neither poor or
not fair performance, fair performance. The appraisers rate performance of
managers by assessing weights to the scale & appraise only those areas which
are clear & are supported by adequate knowledge.

i) 360 Degree Performance Appraisal:-

The employee’s performance is evaluated by his supervisor, his peers,
his internal/external customers, his internal/external suppliers & his
subordinates.

Peers

Customers Feedback Suppliers

To
Employee

Subordinate

Limitation / Pitfalls of Performance Appraisal

1) Halo Effect:- The appraiser allow a single characteristic of the appraise
to dominate his judgment of the employee performance. This can result
in either a positive or negative report.
2) Leniency Effect:- This refers to the situation where the appraiser tends
to give high ratings & only positive feedback to the appraise,
irrespective of his actual performance.
3) Stringency Effect:- An appraiser which feels that the rules & standards
of the organization are not strict enough, tries to be very strict in rating
his appraises. This might lead to dissatisfaction among his appraises as
they would feel that the evaluation is biased & unfair.
4) Recency Effect:- This occurs when the recent performance of the
appraise dominates the appraisal. The appraiser tends to get influenced
by the performance of the employee over the last 2-3 months of the

48
 appraisal period as it is still fresh in his memory. An employee who has
perform well for the preceding nine months but fail to maintain the same
level of performance in the last 3 months preceding the appraisal might
get the same rating as or an interior one than someone who performed
well only in the last 2-3 months of the appraisal period.
5) Primacy Effect:- The performance of the appraiser at the beginning of
the appraisal period dominate the evaluation.
6) Central Tendency Effect:- It is the tendency of the appraiser to rate
most of the appraiser in the middle of the performance scale. The
appraiser gives neither high nor low ratings & tends to give ratings in the
middle of the scale to all the appraisers.
7) Stereotyping:- It involves judging someone based on the group he
belongs to & the appraisers perception of the group.

Uses of Performance Appraisal

Apart from evaluating the performance of the employee for
rewards/punishment & development, a good performance appraisal system
has many other users. Some of these are listed below.

i) Training & development needs of the employees can be determines.

ii) Organisational effectiveness can be improved by improving the
individual performances of the employees.
iii) The performance appraisal system forms the basis for compensation
management in the organization.
iv) Can be used as basic for transfers, promotions & other career
planning activities & individual employees.
v) It also helps in succession planning in the organization.

Compensation

Compensation is the remuneration paid by the management to the

employee for his/her contribution to the organization.
Compensation includes Wages/Salary, incentives, bonus & social security
measures or fringe benefits.

Definitions & Concepts

49
 Wage & Salary administration:- is essentially the application of
systematic approach to the problem of ensuring that the employee are paid in
a logical, equitable & fair manner.
Wage:- Indian Labour Organisation defines the term Wage as the “the
remuneration paid by the employer for the services of hourly, daily, weekly &
fortnightly employees.
Salary: - The term salary is defined as the remuneration paid to the
clerical & managerial personnel employed on monthly or annual basis. It is
also known as Basic Pay.
Earnings:- Earnings are the total amount of remuneration received by
an employee during a given period. These include salary, dearness allowance,
House rent allowance, city compensatory allowance, other allowances, over
time payments, etc.
Nominal/Money Wage:- It is the Wage paid or received in monetary
terms.
Real Wage:- It is the amount of Wage arrived after discounting
nominal wage by the living cost. It represents the purchasing power of money
wage.

Objectives of compensation

1) To acquire qualified competent personnel:- Candidates decide upon their

career in a particular organization mostly on the basis of the amount of
remuneration the organization offers qualified & competent people join the
best – paid organization.
2) To retain the Present Employees:- If the salary level does not compare
favourably with that of other similar organizations, employees quit the present
one & join other organizations.
3) To secure Internal & External Equity:- Internal equity does mean
payment of similar wages for similar jobs within the organization External
equity implies payment of similar wages to similar jobs in comparable
organizations.

50
4) To Ensure Desired Behaviour:- Good rewards performance loyalty,
accepting new responsibilities & changes.
5) To Keep Labour & Administrative Costs:- In line with the ability of the
organization to pay.
6) To facilitate pay roll administration of budgeting & wage & salary control.
7) To promote organization feasibility.

Principles and techniques of wage fixation

The wage payment is an important factor affecting the labour management

relations. A number of factors thus influence the remuneration payable to the
employee. This factor can be categorized into:-
1) External Factors 2) Internal Factors
External Factors:- influencing wage & salaries are as discussed below:
A) Demand & Supply:- The labour market conditions or demand & supply
forces operate at the national & local levels & determine organizational wage
structure.
B) Cost of Living:- The workers will accept a wage which may ensure them a
minimum standard of living. Wages will also be adjusted according to price
index number.
C) Trade Union’s Bargaining power:- Stronger the trade union higher will be
the wage rates. The strength of a trade union is judged by its membership,
financial position & type of leadership.
D) Government Legislations:- It influences wage determination. The two
important legislations which affect wage fixation are: the payment of wages
Act, 1936 & the Minimum wages Act, 1948.
The important provisions of the payment of wages Act, 1936 are:-
i) Ensuring proper payment of wages & avoiding all malpractices like non-
payment, under payment, delayed & irregular payment.
ii) The Act covers all employees drawing the wage upto Rs.1000 per month.
The important provisions of the minimum wages act, 1948 are:-
i) The act seeks to protect the workers from under payment of wages for their
efforts.
ii) It presented the guidelines for the fixation of minimum wages.
E) Economy:- While it may be possible for some organization to thrive in a
recession, there is no doubt that economy affects remuneration decisions. A

51
depressed economy will probably increase the labour supply. This in turn,
should lower the going wage rate.
F) Technical Development:- The Wage rates of skilled employee constantly
change if pin organizational has to keep its level upto the mark to suit the
market needs.

Internal Factors:- The important internal factors affecting wage & salary
decisions are as follows:-

1) Ability to pay:- The ability to pay of an enterprise will influence wage rates
to be paid. If the concern is running into losses then it may not be able to pay
higher wage rate. A profitable concern may pay more to attract good workers.
ii) Job Requirements:- The relative worth of a job can be estimated through
job evaluation. Simple, routine tasks that can be done by many people with
minimum skills receive relatively low pay. On the other hand complex,
challenging tasks that can be done by few people with high skill level
generally receive high pay.

JOB EVALUATION:- It deals with money & work. It determines the relative
worth or money value of jobs.

Job evaluation may be defined as a process of determining the relative worth

of jobs, ranking & grading them by comparing the duties, responsibilities,
requirements like skill, knowledge of a job with other jobs with a view to fix
compensation payable to the concerned job holder.

Principles governing compensation / wage & salary administration:-

i) Maintaining equity in the distribution of wages & salaries in the

organization.
ii) Maintaining competitiveness in the wage market, in comparison to other
players in the industry.
iii) Matching employee expectations.
iv) Reinforcing positive employee behaviour & contribution to the
organisation.
v) Eliminating any discrepancies in wage administration in the organisation.
vi) Devising a system that is most efficient for the organisation.

52
vii)Optimization of management & employee interest.
viii) Maintaining good industrial relations & harmony, with respect to
compensation.

Techniques of job evaluation

Quantitative & Non quantitative techniques are used to compare jobs

in an organisation for the purpose of classifying them & attaching monetary
values to them.

1) Ranking:- The jobs in an organisation are assessed based on the

knowledge, Skills, Effort & the other job dimensions associated with each job.
Ranking involves preparation of brief job description & ranking each job by
arranging them in an ascending order. For ranking the job, some factors
related to the jobs must be kept in view:
These factors are:-
a) Difficulty of work
b) Monotony of work
c) Responsibility involved
d) Supervision Required
e) Working Conditions.
2) Factor Comparison Method:- This method consists of evaluating each job
on the basis of the following factors:-
a) Mental Requirements
b) Skill Requirements
c) Physical Requirements
d) Responsibilities
e) Working Conditions.
By Considering each of the above factors, the jobs are ranked. One factor is
taken at a time for consideration & each job is compared with the other with
respect to its worth on this factor alone. On the basis of total weightage, a
wage rate for job determine the wage scale.
3) Point Methods:- This method consists of evaluating each job in respect of
certain factors.
Eg:- Factors such as skill, effort, responsibility & working conditions.
The following steps are considered:-

53
1) Determine Type of job
2) Decide upon Job Factors
Eg:- Skill may have sub factors
Such as Education, Experience, Training & Judgment
3) Construction of factor scale
Eg:- Experience – 100

5 10 20 25
40
Upto 3 Months Between Between Overones
Over 4 years
3 to 6 months 6 to 1 year Year upto 4
years

4) Evaluate each job in terms of the scale constructed:- This provides the
worth of jobs in terms
Of points.
5) Conducting a Wage Survey:- The Points should be converted into money
value.
6) Designing the Wage Structure.

Techniques of wage/fixation
There are different systems of wage payments, prevalent in different
industries & in different countries. They are discussed as follows:-

1) Time Wage Plan:- under this plan of wage payment, Employees are paid
for the period of time for which they have been employed. When the quality
of work is more important than the quantity & the nature of work is such that
it cannot be easily standardized, a time wage system is preferred. The worker
is assured of a fixed amount of wages, irrespective of the output.
2) Piece Wage Plan:- Under this wage plan, workers are paid for the work
done. This method is usually employed when there is need for production of
large numbers & the units of work produced can be easily standardized.
3) Payments by Result System:- Under this system, the wage for each piece
of work is fixed & the workers are paid once the work is completed.

54
Eg:- It a Function Hall is to be decorated, the workers are paid once the work
is completed.
4) Skill Based Pay:- Employees are compensated for their job-related skills.
This is also called knowledge- Based Pay.
5) Broad Banding:- as a base-Pay technique, reduces the number of salary
levels into broad salary bands the bands normally have a fixed minimum &
maximum which overlap with other bands
Eg:- If the salary band for the entry level is fixed as Rs.10,000 - Rs 18,000 the
salary band for the next level can be Rs 12,500 – Rs 22,000.
6) Balance or Debt Method:- This method takes into account both piece rate
& time rate systems.
When piece rate earnings are less than time rate earnings, he is paid on the
basis of time rate, but the excess which he is paid is carried forward as a debt
against him to be recovered from any future balance of piece work.
Incentives:-
Incentives are the rewards to an employee over & above his base wage or
salary, in recognition of his performance & contribution.

Types of incentive plans:-

Incentive plans are of two types:-
1) Short term Plans:- They are related to employee productivity over a short
period of time. Some of the incentives plans, based on these two methods, are
discussed below:-
a) Halsey Plan:- A certain amount of work is fixed as standard output, which
is to be completed in prescribed time. A worker receives a percentage of
wages as extra earnings extrawage=plan percentage x Time saved x Hourly
rate.
Eg:- A worker completing the standard output in 6hrs, where as the prescribed
time in 8 hrs, let the hourly rate be Rs.5 & the plan % of wages be fixed at
50%
Extra Wage = 50/100 x 2 x 5 = Rs 5

So, worker eventually earns Rs 35 (including Rs 30 at the hourly rate for 6

hours of work).
b) Rowan Plan:- Worker is guaranteed a minimum wage on a time basis then,
a standard time is fixed for the completion of work & if the worker completes
it before time, he earns more for the time saved.

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Extra Earnings = (Time Saved x Time taken x hourly rate) / Standard time =
(2 x 6 x 5) / 8 = Rs 7.50
Earnings = Rs 30 + Rs 7.50 = Rs 37.50
c) Taylor’s Differential Piece rate:- Two rates are fixed for each tasks
Higher rate was paid to the worker who finished standard task & the lower
rate to the worker who did not finish the standard task.
Eg:- Worker turns out 30 units, he would get Rs 10 x 30 = Rs 300 per day & if
turns out only 20 units he would get Rs 8 x 20 = Rs 160 per day.
This was more beneficial to hard worker & a penalizing rate to lazy worker
d) Gantt Task Bonus Plan:- A Bonus is paid over & above the time wage, if
the standard task is accomplished.
2) Long Term Plan:- It helps in providing steady earnings, over a longer time
period.
Eg:- Annual Bonus, Profit sharing Eso Rs, Etc.
a) Annual Bonus :- Annual Bonus plans are based on the annual performance
of the company. Bonus is normally a one time payment made at the end of the
financial year.
Eg:- Diwali Bonus.
b) Profit sharing:- Employees earn a share of the company’s profit, which is
normally calculated as a percentage of the total profit.
Walt Disney Corporation was the first company to employ this method.
c) Gain sharing:- The group is rewarded for its team work, co-ordination &
other characteristics that have determined its success. A group is entitled for
gain sharing even if the firm has not recorded any profits.
d) ESOP’s( Employee Stock Option Plans):- This is a scheme in which
employees are given a part of ownership at a price lower than market price, in
consideration of their duration &/or meritorious performance on the job.

Fringe benefits:- It is the monetary & non-monetary benefits given to

employee during their employment tenure.

Types of fringe benefits/social security & welfare programmes:-

I Monetary Rewards:-
1) Payment for Time not Worked:-
This category includes.

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a) Hours of work:- Sec 51 of the Factories Act, 1948 specifies that no adult
worker shall be required to work in a factory for more than 48 hrs in any
week.
b) Paid Holidays:- According to the factories act, 1948, an adult worker shall
have a weekly paid Holiday, preferably Sunday.
c) Shift Premium: - Companies operating second & third shifts, pay a
premium to the workers, who are required to work during the odd hours shift.
d) Holiday Pay:- Organisation offer double the nominal rate of the salary to
those workers who work on paid holidays.
e) Paid vacation:- Workers in Manufacturing mining & plantations who
worked for 240 days during a calendar year are eligible for paid vacation at
the rate of one day for every 20 days worked.
2) Employee Security:- Physical & Job security to the employee should also
be provided with a view to promoting security to the employee & his family
members.
a) Retrenchment Compensation:- The Industrial Disputes Act, 1947
provides for the payment of compensation in case of lay off & retrenchment.
The non seasonal industrial establishment employing 50 or more workers has
to give one month’s notice or one month’s wages to all the workers who are
retrenched after one year’s continuous service. The compensation is paid at
the rate of 15 days wage for every completed years of service with a
maximum of 45 days wage in a year.
b) Lay-off Compensation:- Employees are entitled to lay off compensation at
the rate of 50% of the total of the basic wage & dearness allowance for the
period of their lay off except for weekly holidays. It can normally be paid
upto 45 days in a year.

3) Safety & Health:- Employee’s state Insurance Act, 1948 , deals

comprehensively about the health benefits to be provided.
a) Sickness Benefits:- Insured employees are entitled to get cash benefit for a
maximum of 56 days in a year.
b) Maternity Benefit:- Insured women employees are entitled to maternity
leave for 12 weeks ( six weeks before the delivery & 6 weeks after the
delivery) in addition to cash benefit of 75 paise per day or twice sickness
benefits, whichever is higher.

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c) Disablement Benefits:- Insured employees who are disabled temporarily or
permanently due to employment injury & for occupational diseases are
entitled to get the cash benefit under this head.
d) Dependent’s Benefit:- If an insured person dies as a result of an
employment injury sustained as an employee, his dependents who are entitled
to compensation under the act shall be entitled to the periodical payments.
e) Medical Benefits:- This benefit shall be provided to an insured employee
or to a member of his family where the benefits is extended to his family.

4) Welfare & Recreational Facilities:-

a) Canteens:- Sec 46 of the factories act 1948, imposes a statutory obligation
to employees to provide canteen in factories employing more than 250
workers.
b) Consumer Societies:- Most of the large organizations located for from the
towns & which provide housing facilities near the organisation set up the
consumer stores in employees colonies & supply all necessary goods at fair
prices.
c) Credit Societies:- To encourage thrift & provide loan facilities at
reasonable terms & conditions primarily to employees.
d) Employee Counselling:- It reduces absenteeism, turnover, tardiness ete.
E) Education Facilities:- It includes reimbursement of fees, setting up of
schools, colleges, hostels etc.

5) Old Age & Retirement Benefits:- Employers provide some benefits to the
employees after retirement & during old age with a view to create a feeling of
securities about the old age. These benefits are called old age & retirement
benefits.
a) Provident Fund:- Employees is all factories under Factories Act, 1948 are
considered by the Act, Both the employer & employee contribute to the fund.
The employees on attaining 15 years of membership are eligible for 100% of
the contribution with interest.
b) Pension:- This Scheme is for the payment of a lump sum amount of
Rs4000 to an employee on his retirement as retirement benefit & a lump sum
amount of Rs 2,000 in the event of death of an employee as life insurance
benefit.
c) Gratuity:- This is another type of retirement benefit to be provided to an
employee on retirement or at the time of physical disability & to the

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dependents of the decreased employee. It is a reward to an employee for is
long service with his present employer.
d)Deposit Linked Insurance:- The maximum amount of benefit payable
under the deposit linked insurance is Rs 1000.

II) Non-Monetary Rewards:-

1) Knick – Knacks Covers accessories, companies Watches, tie-pins, Diaries,
Calendars, Wallets & T-Shirts.
2) Tokens cover movie – tickets, vacation trips, etc.

Fair Wage:-
The basis of fair wage is the minimum wage, within the capacity of the
organisation to pay & should be related to the productivity of the labour.
Fair wage is a wage above the minimum wage but below the living wage.
Merit Rating:- It is a systematic & impartial procedure for determining the
excellence with which an individual is performing a job.

Questions:

Two Marks

1. What is Halo error?

2. What is merit rating?

3. Define performance appraisal.

4. Give the meaning of Compensation.

5. Meaning of Nominal wage.

6. What is Fair wage?

7. What do you mean by Incentives?

Six Marks
What is the importance of performance appraisal?

1. What are the objectives of performance appraisal?

2. State the objectives of Compensation.

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 3. Explain the principles of wage & salary administration.

4. Explain the factors influencing of wage & salary administration.

5. State the limitations of performance appraisal.

6. Explain the techniques of job evaluation.

Fourteen Marks
Explain with diagram the process of performance appraisal system.

1. Explain the methods of performance appraisal system.

2. Analyse the principles & techniques of wage & salary administration.

3. Discuss the types of incentives adopted by the organisation.

4. Briefly explain the monetary & non monetary rewards of the

organisation.

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 Unit – 5
PROMOTIONS & TRANSFERS

Define Promotion.
Promotion is defined as “advancement of an employee to a better job,
better in terms of greater responsibility, more prestige and status, greater skill
and increased rate of pay or salary.
By: Paul Pigors &
Charles Myers

“Promotion is reassignment of a higher level job to an internal employee with

delegation of responsibilities and authority required to perform that higher
level job and with higher pay.”

Purpose of Promotion

1. To utilize employee’s skill, knowledge appropriate level in

organizational hierarchy resulting in organizational effectiveness and
employee satisfaction.
2. To develop competent internal source as employees are ready to take
up jobs at higher levels in changing environment.
3. To promote feeling of content with existing conditions of the company
and sense of belongingness.
4. To build loyalty and to boast morale of the employees.
5. To reward loyal and committed employees.

BASIS OF PROMOTION

1. Merit as basis of Promotion

Merit is considered to denote an individual’s skill, knowledge, ability,
efficiency, and aptitude as measured by past employment record.

MERITS
• The resources of higher order of an employee can be utilized
efficiently.
• Competent employees are motivated to exert all their resources and
contribute to organizational efficiency.
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 DEMERITS
• Measurement and judging of merit is highly difficult.
• Merit determines the past achievements and efficiency but not
future efficiency.

2. Seniority as basis of Promotion

Seniority refers to relative length of service in same job and in same

organization. The emphasis is given to seniority as there is positive
correlation between length of service in same job and art of knowledge
and skills acquired by an employee.

MERITS
• It is relatively easy to measure length of service and judge the
seniority/
• Senior employees have a sense of satisfaction to this system as older
employees are respected and their inefficiency cannot be questioned.
• It gives sense of certainty of getting promotion to every employee
and of their turn of promotion.

DE-MERITS
• The assumption that the employee learn more relatively with length
of service is not valid as employees learn up to certain age.
• The assumption on basis of seniority de-motivates young, dynamic
and competent employees and result in employee turnover.

3. Seniority – cum Merit

Management prefers merit as basis of promotion enriching its human
resources. Trade Unions on other hand favour seniority as sole basis for
promotion with a view to satisfy the interests of majority of their
members.
The striking balance between seniority and merit are

i. Minimum length of Service and Merit

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 The employees who complete minimum years of service are made
eligible for promotion and then merit is taken as sole criteria for
selecting the employees for promotion from eligible candidates.

ii. Measurement of Seniority and Merit through common factor

iii. Minimum Merit and Seniority

Candidates who secure minimum score of Merit are considered as
eligible employees Candidates are selected for promotion based on
their seniority only from eligible candidates to next higher level

Types of Promotion

1. Vertical
The employee is moved to the next higher level in the organizational
hierarchy with greater responsibility, authority, pay and status.
2. Upgradation
The job is upgraded in the organizational hierarchy. The employee
gets more salary, higher authority and responsibility.

3. Dry Promotion
The employee is moved to the next higher level in organizational
hierarchy with greater responsibility, authority and status without any
increase in salary.

Define Transfer
Transfer is defined as “A lateral shift causing movement of individuals
from one position to another usually without involving any marked charges in
duties, responsibilities and skills needed or compensation.”

Transfer includes:-
Promotion
Promotion is an upward reassignment of job.

Demotion
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Demotion is a downward reassignment of job.

Transfer
Transfer is a lateral or horizontal job assignment.

Reasons of Transfer

1. Employee initiated Transfer

These transfers are known as personal transfers. These transfers are
primarily in the interest of employees and hi/her desire or liking. The
transfer could be permanent or temporary.

2. Company initiated Transfer

Transfers are initiative of the company. The transfer could be permanent
or temporary.

3. Public initiated Transfer

The Public initiates the transfer with the help of politicians, government
and Trade Unions. If the employee’s behavior in the society is against the
social norms or if he indulges in any social evils then a transfer could be
initiated.

4. To meet organizational requirements.

5. To satisfy employee needs
6. To correct interpersonal conflicts.
7. To help the employees whose working hours or place of work is
inconvenient to them.
8. To minimize fraud, bribe which results in permanent stay of an employee
in a particular team.
Types of Transfer

1. Production Transfer
Transfers caused due to changes in production.

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2. Replacement Transfer
Transfers caused due to initiation, replacement of long standing employees
in the same job.

3. Rotation Transfer
Transfers initiated to increase the versatility of employees.

4. Shift Transfer
Transfer of an employee from one shift to another.

5. Remedial Transfer
Transfers initiated to correct the wrong placements.

6. Penal Transfer
Transfers initiated as a punishment for in disciplinary action of employees.

Define Demotion
Demotion “is defined as reassignment of lower level job to an
employee with delegation of responsibilities and authority required to perform
that low level job and with less pay. Demotion in job affects the employee’s
career prospects and morale.

Right Sizing of Workforce

Right Sizing of workforce refers to employing and maintaining exact

number of employees with required skills, abilities and knowledge to perform
the existing number of jobs in a organization. Multi-skilled and efficient
people help in reducing the number of jobs.

Need for Right Sizing

1. To have exact number of employees as per job analysis, job
description and job specification exercise of company.
2. To minimize the cost of human resources
3. To minimize organizational politics.
4. To avoid industrial relation issues and problems.
5. To reduce maintenance activities of various employee facilities and
benefits.

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Important Questions
Answer the following
(2 marks each)
1. Define Promotions
2. Define Demotions
3. Define Right Sizing
4. Define Dry Promotion
5. Define Transfer

(6marks each)
1. Explain the basis of Promotion
2. Explain the reasons for Transfer
3. Define Transfer. Explain the types of Transfer

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 CHAPTER-6

HUMAN RESOURCE DEVELOPMENT

Meaning:-

Human Resource Development “is a process which helps the human

resources of an organization to motivate, to possess & develop technical,
managerial & behavioural knowledge, Skills & abilities & mould the
values, beliefs, attitudes necessary to perform present & future roles by
realizing highest human potential with a view to contribute positively to
the organisational, group & social goals.”

Features of HRD:-

i) It is a systematic & planned approach for development of individuals in

order to achieve organizational, group & individual goals.

ii) It is a continuous process for development of technical, managerial,

behavioural & conceptual skills & knowledge.

iii) HRD is multidisciplinary. It draws input from Engineering, Technology,

Medicine, Economics, Management, etc.

iv) It is embodied with techniques & processes; it includes performance

appraisal, career planning & development, quality circles, etc.

Scope of HRD:-

The scope of HRD invades into all the functions of HRM. It includes.

i) Recruiting the employees within the dimensions & possibilities for

developing human resources.

ii) Selecting those employees having potentiality for development to meet the
present & future organizational needs.

iii) Train all the employees in acquiring new technical skills & knowledge.

iv) Planning for succession & develop the employees.

v) Changing the employee’s behaviour through organization development.

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Need for HRD Or Factors Affecting HRD:-

i) Changes in Economic Policies:- Even the Government of India

Liberalised its economic policies in 1991. Liberalisation, Privatisation &
Globalisation posed threat to weak firms & created opportunities to the large
firms. These firms started developing their human resources in order to exploit
the opportunities.

ii) Changing Job Requirements:- Organisational dynamism brings changes

in organizational design & job design. The Changes in job design in job
description & job specifications, these changes demand for HRD.

iii) Need for Multi Skilled Human Resources:- The customer cantered
approach led to de-jobbing, flexible organizations & flexible work. All these
changes demand the employees with multiple skills.

iv) Organisational Viability & Transformation Process:- Organisational

viability is continuously influenced by the environmental threats. Of the
organisation does not adapt itself to the changing environmental factors, it will
lose its market share of the organisation derives to adopt these changes first it
has to develop human resources.

v) Technological advances:- Organisations in order to survive & develop

should adopt the latest technological adaptation of the latest technology will
not be complete until they are manned by developed employed.

vi) Organisational Complexity:- With the emergence of increased

mechanization & automation manufacturing multiple products & rending of
service organizations become complex manager of organizational complexity
is possible through HRD.

HRD Objectives:-

i) To prepare the employee to meet the present & changing future job
requirements

ii) To prevent employee obsolescence

iii) To prepare employee for high level jobs.

iv) To impact new entrants with basic HRD Skills & Knowledge

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v) To aid total quality management.

vi) To promote individual & collective morale, a sense of responsibility, co-

operative attitudes & good relationship.

vii) To ensure smooth & efficient working of the organisation.

viii) To enhance organizational capabilities.

ix) To create a climate that enables every employee to discover, develop &
use his/her capabilities to a full extent in order to achieve both individual &
organisational goals.

Role of Training in HRD:-

Training plays the most important role in the HRD. Training helps the
organisation to impart basic technical skills & knowledge to the employees in
addition, it also upgrades the technical skills & knowledge as & when there is
change in technology. Technical skill is the basic component of human
resource that is most essential for employee performance, thus, training
imparts & develops the basic skill & thus contributes to the basic area of
human resource development.

Job & organisational requirements are not static. They are changed
from time to time in view of technological advancement & trends towards
Total Quality management consequents upon increased competition &
globalization.

Organisational efficiency, productivity, progress & development to a

greater extent depend on the level of HRD Training is important as it
constitutes significant part of human resource development & manages thus
training plays important role HRD & achieving changing organizations
strategies, goals & objectives.

Knowledge Management

The term knowledge management is coined by Kael Wiig – a Consultant

Knowledge management is “a systematic, explicit & deliberate

building renewal & application of knowledge to maximize an enterprise
knowledge related effectiveness & returns from its knowledge assets.”

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Knowledge management process includes:-

i) Identify Stage:- Competencies

ii) Collect Stage:- Acquiring existing knowledge, skills, experience, etc.

iii) Select Stage:- Assessment of value of collected knowledge

iv) Store Stage:- Nuggets of knowledge

v) Share Stage:- New & existing knowledge accessible for employees

vi) Apply stage:- Apply Knowledge in organisational activities, decision

making, problem solving etc.

vii) Customers Acceptance:- Clients approval for the products / services.

viii) Create stage:- Development of new knowledge through observation feed

back, brain storming, etc.

Impact of Globalisation on HRM

Liberalizations include liberalizing industry business & trade both

domestic & foreign.

The economic reforms announced by the government, change the

direction of the country from socialistic pattern to market economy. The
trends of market economy result in intense & vibrant competition, entry of
new multinationals, intensification of competition due to import liberalization
& changed notions about small scale industry.

Now the survival & development of industry in India, mostly depends

on the ability to compete with other Indian firms, multinationals & in foreign
markets. The ability to maintain high quality & maximize productivity
determines the ability of Indian firms, which in turn is largely dependent on
the quality & commitment of human resources.

i) Impact on Employment:- India is the second largest country next to china

in terms of population in the world. The structural shifts caused by
liberalization would provide better employment to the qualitative human
resources.

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ii) Impact on Human Resource Development :- Liberalisation has positive
impact on HRD , HRD Strategies of industries of liberalized India would be:

a) Creating Autonomous jobs

b) Competence building
c) Preferring Empowerment
iii) Impact on Wages & Benefits:- Wage differentials are highly essential
under the market economy to attract the skilled, talented & committed human
resources through affering higher salaries & benefits.

iv) Impact on Trade unions:- Trade unions in India played a phenomenal

role in protecting the interests of workers even by controlling & regulating the
management at the cost of the organisation but trade unions now by play an
important role by co-operating with the management as the “Survival of the
organisation under competitive environment would be at state.

v) Managing Diversified Cultures:- In the recent part, managing diversity

has emerged as a Strategic Challenge in the area of the human resource
management due to globalization.

The increasing globalization of workspace has contributed to the need for

managing different cultures & sub cultures effectively.

Problems in relation to transnatonals & multinationals:-

MNC refers to “a company which is like holding company having one fixed
head office in one country or origin & business activities spread within the
country of origin & other countries”.

Eg: IBM of USA, Siemens of Germany, Sony of Japan, ITC of India, etc.

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 TNC (Trans National Company) is having a structure in which both parent &
subsidiaries interact with each other before or in the process of manufacturing
a product or service.

Parent Co in India

Subsidaries in S.Africa
Subsidaries in Srilanka

Subsidiaries in Nepal

Fig (1):- Transactional Company

Fig(2):- Multinational Company

Parent Co in India

Parent Co in India Parent Co in India Subsidiaries in

S.Africa

Transnational & multinational companies create the problems to the domestic

companies in several areas including human resource management areas

These problems include:-

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 i) Pay discriminatory Salaries:- Multinational & Transnational
companies pay higher salaries for the employees of their home
country & low salaries for the employees drawn from developing
countries like India.
ii) Higher Salary level:- Multinational & Transnational companies in
general pay higher level salaries compared to domestic companies.
This in turn forces the domestic companies to enhance the salary
levels for their employees.
iii) Exploit Human resources:- MNC’s & TNC’s exploit the human
resources by prescribing heavy workloads higher work targets&
long working hours, They do not provide welfare measures as
provided by public sector & other domestic companies.
iv) Hire & Fire Policy:- MNC & TNC’s Hire the employees,
whenever they need, exploit their human resources & fire them
whenever the employee skills are redundant or business conditions
are adverse.
v) Downsizing & Delayering:- MNC’s & TNC’s reduce human
resource cost per unit of output & consequently adopt various
human resource strategies without considering the employee’s
future.

Intellectual Capital

The term intellectual capital is becoming popular after globalization.

Acc to AM Sharma, “Intellectual capital is the sum & synergy of an

organisation’s knowledge, experience, relationships, processes,
discoveries, innovations, market presence & community influence”.

Four Dimensions of Intellectual Capital are:-

i) Human Capital:- It is the skills, knowledge, abilities, values,

commitment, attitude & aptitude of organizations people.
ii) Structural Capital:- It includes the explicit rules based knowledge
embed in the organizations work processes & systems encoded in
written policies, shared databases of best practices, patents &
copyrights.
iii) Social Capital:- It is reflected in the ability of groups to collaborate
& work together.
iv) Customers Capital:- It captures all Client relationships.

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Important Questions

Two Marks 2*1=2

1. Define Human Resource Development.

2. Give the meaning of knowledge management.

3. What is intellectual capital?

Six Marks

1. State the objectives of HRD.

2. List out the features of HRD.

3. Write a note on TNC & MNC.

4. Explain the process of Knowledge management.

Fourteen Marks

1. Explain the factors influencing HRD.

2. Analyze the impact of globalization on HRM.

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