MID TERM

1. why study strategy human resource management?

- SHRM is important because it helps companies ensure that they have the right people in place
to achieve their company's goals. Additionally, SHRM can help companies retain top talent and
keep their employees engaged in their work

-Strategic human resource management (SHRM) is a process that organizations use to manage
their employees. It is a way to ensure that the organization’s human resources are used in a way
that supports the organization’s goals. Think of it as a bridge connecting human resources and
the goals of the company. With SHRM, businesses can more effectively manage employee
performance and development, as well as create programs and policies that support the
company’s overall strategy

-Why Strategic Human Resources Is Important

SHRM is important because it helps businesses achieve their goals. By aligning HR programs and
policies with the company’s business strategy, SHRM can help businesses improve employee
performance, develop the workforce and create a positive work environment. SHRM can also
help businesses save money by reducing turnover and improving productivity.

Improve employee performance: SHRM can help businesses improve employee performance by
creating systems to track and improve performance.
Develop the workforce: SHRM can help businesses develop the workforce by identifying
employees’ development needs and providing training and resources to help them improve.
Create a positive work environment: SHRM can help businesses create a positive work
environment by managing employee relations.
Reduce turnover: SHRM can help businesses reduce turnover by designing compensation and
benefits programs that attract and retain employees.
Improve productivity: SHRM can help businesses improve productivity by improving employee
performance and creating a positive work environment.

https://www.forbes.com/advisor/business/strategic-human-resource-management/
 2. What are human resources planning and explain the components?

Meaning.

- Human Resource Planning (HRP) is the process of analysing and strategising the organisation's current
and future human resource needs based on goals and vision of the organisation. It is essentially
concerned with the process of estimating and projecting the supply and demand for different categories
of personnel in the organisation for the years to come.

Definition

According to E.W Vetter, Human Resources Planning is defined as - "a process by which an
organization should move from its current manpower position to its desired manpower position.
Through planning management strives to have the right number and right kind of people at the
right places at the right time, doing things which result in both the organization and the
individual receiving maximum long-run benefit".

According to Leon C Megginson, Human Resources Planning is "an integrated approach to

performing the planning aspects of the personnel function in order to have a sufficient supply of
adequately developed and motivated people to perform the duties and tasks required to meet
organizational objectives and satisfy the individual needs and goals of organizational members".

Components of Human Resource Planning

 Estimating Manpower Requirement
 Workload Analysis
 Workforce Analysis
 Absenteeism
 Labor turnover
 Recruitment and Selection
 Induction and Development
 Personnel Development
 Ensuring quality to products and services
 Overall assessment and performance and fine - tuning

1. Determine human resource needs. This part is heavily involved with the strategic plan.
What growth or decline is expected in the organization? How will this impact your
workforce? What is the economic situation? What are your forecasted sales for next year?
2. Determine recruiting strategy. Once you have a plan in place, it’s necessary to write
down a strategy addressing how you will recruit the right people at the right time.
3. Select employees. The selection process consists of the interviewing and hiring process.
4. Develop training. Based on the strategic plan, what training needs are arising? Is there
new software that everyone must learn? Are there problems in handling conflict?
Whatever the training topics are, the HR manager should address plans to offer training
in the HRM plan.
5. Determine compensation. In this aspect of the HRM plan, the manager must determine
pay scales and other compensation such as health care, bonuses, and other perks.
6. Appraise performance. Sets of standards need to be developed so you know how to rate
the performance of your employees and continue with their development.

https://www.enotesmba.com/2021/03/human-resource-planning-meaning.html#gsc.tab=0

https://open.lib.umn.edu/humanresourcemanagement/chapter/2-2-writing-the-hrm-plan/
 3. What is training? Explain the role of training.

- Training is the process of enhancing the skills, capabilities and knowledge of employees for
doing a particular job. Training process moulds the thinking of employees and leads to quality
performance of employees.

Role of Training

The role of training as a good working practice

Training and development programmes are implemented for a variety of reasons, either for an individual
employee or group of employees. An ongoing training programme is not only important to employee
personal development, it will also greatly contribute to the success of your business.

Some of the benefits of training include:

Closing gaps in skill sets

Most employees have some gaps in their skills relating to their job. A training and development program
enables your organisation to improve those skills. It will lift all employees to a higher level so they all
have similar skills and knowledge. This helps reduce any skills gaps. Implementing the necessary training
creates a knowledgeable skills base so there are also no gaps when an employee is on holiday. This
means teams can work independently and gives customers a consistent service throughout the year.

Improved employee performance

An employee who receives appropriate training is better able to do their job. They will become more
aware of the best procedures for tasks. The training will help build the employee's confidence because
they have a better understanding of the responsibilities of the job and the market conditions in which
the organisation operates in. Often this confidence will encourage the employee to continually improve
and stay on top of industry trends. Employees who are well regarded and on top of changing industry
conditions assist your organisation company hold a position as a market leader and as a strong
competitor in the industry.

Being aware of legislation

It is important to customers to know that they are dealing with knowledgeable employees who know the
regulatory and legislative obligations of the organisation and know the resources necessary to maintain
compliance. Some organisation need their employees to understand the compliance monitoring by third
party assessors. Training will provide this and can be conducted at regular intervals to ensure employee’s
knowledge is current.

Consistency for customers

Customer service has never been more important. A structured training and development program
ensures that employees have a consistent knowledge. This consistency is particularly relevant for the
organisation’s basic policies and procedures. This includes all of the computer systems and programmes
such as the Microsoft Office suite. Putting all employees through regular training in these areas ensures
that all staff members are well equipped to do their job.

Employee satisfaction

Training is a retention tool, instilling loyalty and commitment from employees. Staff looking for the next
challenge will be more likely to stay if you offer ways for them to develop. The investment in training that
a company makes shows the employees they are valued and creates a supportive workplace. Employees
who feel appreciated and that they are developing through training opportunities may feel more
satisfaction toward their jobs.
 4. What do you understand about performance appraisal? Explain it.

What Is a Performance Appraisal?

The term “performance appraisal” refers to the regular review of an employee’s job performance and
overall contribution to a company. Also known as an annual review, employee appraisal, performance
review or evaluation, a performance appraisal evaluates an employee’s skills, achievements, and growth,
or lack thereof.

Companies use performance appraisals to give employees big-picture feedback on their work and to
justify pay increases and bonuses, as well as termination decisions. They can be conducted at any given
time but tend to be annual, semiannual, or quarterly.

KEY TAKEAWAYS

 A performance appraisal is a regular review of an employee’s job performance and contribution

to a company.

 Performance appraisals are also called annual reviews, performance reviews or evaluations, or
employee appraisals.

 Companies use performance appraisals to determine which employees have contributed the
most to the company’s growth, review progress, and reward high-achieving workers.

 Although there are many different kinds of performance reviews, the most common is a top-
down review in which a manager reviews their direct report.

 Employees who believe that the evaluation’s construction isn’t reflective of their company’s
culture may feel dissatisfied with the appraisal process.

What Is the Purpose of Performance Appraisals?

Performance appraisals are usually designed by human resources (HR) departments as a way for
employees to develop in their careers. They provide individuals with feedback on their job performance,
ensuring that employees are managing and meeting the goals expected of them and giving them
guidance on how to reach those goals if they fall short.

Because companies have a limited pool of funds from which to award incentives, such as raises and
bonuses, performance appraisals help determine how to allocate those funds. They provide a way for
companies to determine which employees have contributed the most to the company’s growth so that
companies can reward their top-performing employees accordingly.

Performance appraisals also help employees and their managers creates a plan for employee
development through additional training and increased responsibilities, as well as to identify ways that
the employee can improve and move forward in their career.

Ideally, the performance appraisal is not the only time during the year that managers and employees
communicate about the employee’s contributions. More frequent conversations help keep everyone on
the same page, develop stronger relationships between employees and managers, and make annual
reviews less stressful.

Types of Performance Appraisals

Most performance appraisals are top-down, meaning that supervisors evaluate their staff with no input
from the subject. But there are other types:

Self-assessment: Individuals rate their job performance and behavior.

Peer assessment: An individual’s work group or co-workers rate their performance.

360-degree feedback assessment: Includes input from an individual, supervisor, and peers.

Negotiated appraisal: This newer trend utilizes a mediator and attempts to moderate the adversarial
nature of performance evaluations by allowing the subject to present first. It also focuses on what the
individual is doing right before any criticism is given. This structure tends to be useful during conflicts
between subordinates and supervisors.
5. Critically discuss the principal methods of wage and salary payment
- What are the principal methods of salary payment?
There are three types of payment that have traditionally been very popular with employers.
These payment methods are cash, check and direct deposit. Direct deposit is generally
considered to be the most widely used payment option.

- Cash payments in payroll are in decline because they are neither practical nor allowed in every
country. The same goes for traditional paper paychecks, which are costly, time-consuming, and
easy to lose. What’s more, in the remote work era, where employees are enjoying the freedom
of working from anywhere instead of coming into the office each day, cash and paper check
payments are out of the question.

Methods of Wage Payments | Labour | Production | Economics

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There are different methods of wage payments. Wages are paid for work done and this is
sometimes measured by the time worked i.e. according to the period of time the worker is
employed, and sometimes by output. The former is called “piece wages” and the latter “time
wages”.

Under “time wages” or time rates a definite sum is paid for a fixed period of time, that is, wages
are paid at a fixed rate per hour, day, week; or other period, and each worker in a given category
receives the same payment irrespective of differences in individual output.

Under Piece Wages or Piece Rates, payments depend upon output, each worker is paid
according to the quantity of work done by him, and irrespective of the time he takes.

There are also various bonus systems to stimulate production. Piece rates, by which the pay of
each worker is proportionate to his output, might be thought more satisfactory than time rates,
especially from the point of view of the employer and the national economy and they also seem
fair to the workers.

However, they are not suitable for all kinds of work, and also the system is liable to abuse if
applied unscrupulously. Earnings are usually higher for workers on piece rates than for those on
similar work paid on a time basis, and the danger of excessive speed is not great as the workers
are not penalised if they fail to reach a given standard or “target”.

This danger is, however, serious if, as under some bonus system, attractive monetary rewards are
paid for attaining high standards of production, and efforts to reach these standards may involve
strain resulting in injury to health, increase in accidents, and damage to materials and machines.
Trade unions tend to prefer time rates, though they are parties to many collective agreements
which include piece rates where these are suitable for the kind of work done. In addition the risk
of speeding and the greater difficulty of regulating piece rates by collective agreements there
may be tendency of piece rates to weaken the solidarity of the workers because of considerable
differences in earnings.

Many individual workers, especially those who can achieve high output, favor piece rates or
bonus payments which, if reasonable fixed, enable them to earn more. Where conditions are
suitable employers also prefer piece rates because of their inducement work people to
concentrate and to do more work.

There are two principal systems of wage payments:

1. Time wage system, and

2. Piece rate system.

Other systems called premium plans or profit sharing schemes are used with either of these two
systems to remunerate the employees and to provide them incentive wages for increased
productivity.

Method # 1. Time Wage System:

Under this system, the worker is paid for the amount of time spent on the job. This is the oldest
and most common system and the wages are based on a certain period of time during the
course of work. The period of time may be an hour, a day, a week, a fortnight or a month and the
wage rate will depend upon the period of time. It must be remembered here that wages are paid
after the time fixed for work is completed irrespective of output or completion of the work.

Wages can be determined by the following formula:

Wages = Number of Hours worked × Rate per hour

Suppose that a worker is paid at the rate of Rm 8.00 per hour and he has spent 200 hours at
work during a particular month. His wages for the month will be Rm 1,600/.

Under this system, wages are paid on the basis of time spent on the job irrespective of the
amount of work done. The unit of time may be a day, a week a fortnight or a month.

In the past, daily wages have been the most common basis and, therefore, it came to be known
as the ‘Day Wage System’.
Advantages:

(i) This method also avoids wasteful handling of materials and tools. In the absence of rough
handling of machinery, repairs and maintenance expenditure is low. Workers can adjust the pace
of work so that there is no injury to the health.

(ii) Learners can concentrate on learning the best methods of work and their earnings are not
dependent on the amount of work.

(iii) It is the simplest and the oldest method. It is easy to understand and workers can easily
compute their own remuneration.

(iv) Unions prefer time wage as it does not differentiate between efficient and inefficient
workers. A sense of equality and solidarity is created among them.

(v) Where work done is of an intangible nature, e.g. mechanics, designer engineers, service, etc.
it is difficult to measure output accurately and standards of output cannot be laid down.

(vi) The plan is economical as no detailed records of output are required. Clerical work in the
computation of wages is minimum. The employer knows the cost of labour.

(vii) As there is no pressure to speed up production, the quality of work can be kept high. A
worker can show his skill.

(viii) Earnings of workers are regular and fixed and they do not suffer from temporary loss of
efficiency. This gives them a sense of economic security and self-confidence. The worker is
assured of a fixed income and can, therefore, plan his expenses accordingly.

(ix) In continuous or assembly line production, the pace of work is beyond the control of an
individual worker. Time wage is, therefore, a better method.

(x) It is an objective method and the employer can calculate the wage bill in advance.

Disadvantages of Time System:

(i) This system increases the cost per unit of production. Under this system, the cost per unit of
production is uncertain because the quantity differs from time to time.

(ii) Under this system of wage payment, it is very difficult to measure the efficiency of workers
because all the workers of equal status are paid the wages at equal rate.
(iii) As this system does not make any difference between efficient and inefficient workers, it kills
the efficiency of efficient workers.

(iv) Under this system of wage payment, the workers do not make proper utilisation by their
time.

(v) As the production is low and the payment to the workers is more, this system increases the
cost of production.

(vi) Under this system of wage payment, the quantity of production decreases because the
workers do not get any incentive for increasing the production.

(vii) This system requires intensive supervision over workers. It increases the cost of supervision.

(viii) This system of wage payment makes equal payment to both the efficient and inefficient
workers. Therefore, efficient workers do not get any incentive for more production and this
system encourages labour unions. Sometimes, these labour unions misuse their powers.

We draw the conclusion that although time workers in the same grade receive the same wages
for the day or week for different amounts of work and although the work of each is not
measured exactly, they and their foremen have a reasonably clear idea of the amount of work to
be done.

In other words, they must approximate to understand standards of output or of steady

application to their work, and supervision ensures that this standard is maintained. Those who
fail to do so are liable to lose their jobs or be put on to a job with a lower time rate, on the other
hand good work can be rewarded by promotion to a higher grade with a better rate of pay.

Thus, although time rates are properly distinguished from incentive system, they have associated
with the positive incentives of promotion and the negative of demotion and dismissal. Working
at excessive speed is usually more associated with incentives methods than with time rates.

But Richardson also found that during a period of severe unemployment where, because of fear
of unemployment, the workers on low time rates and long hours worked at almost intolerable
speed and strain imposed by the management, each man knowing that if he failed to keep the
pace, there were dozens of men available to take his place.

A foreman or manager who is always forcing the pace and finding fault is responsible for such
tension and discontent. Hence, only under exceptional cases time worker is associated with
speed.
Method # 2. Piece Rates or Piece Wages:
Piece rates and bonus systems provide a stimulus to output by varying the payments according
to the quantity of work done by each worker or by a team of workers. Thus, workers who
produce more receive more. These incentive methods are, therefore, applied when high output
is desired, when quality of work is largely controlled by the machines and not by men, or where
quality is of secondary importance or can easily be tested by inspection.

As their wages depend upon output the workers in trying to increase production are liable to be
careless of quality, and, therefore, somewhat closer inspection of the product for quality is
necessary than with time workers, but less supervision of the men to keep them at work is
needed.

Incentive methods are suitable where easily defined standardized units are produced in large
quantities by repetition work and the output of each worker can easily be counted.

They are effective under these conditions if the quantity produced depends considerably upon
the workers efficiency, speed, and concentration on the job.

If overhead costs are high the use of incentives which result in increased output enables such
costs to be spread over a larger production and the unit costs are, therefore, reduced.

The work should be regular and continuous so that the worker is not hampered in his efforts to
attain a high standard of labour by having to wait for material or because his machine has broken
down. Workers on piece rates are likely to protest if their work is interrupted through no fault of
their own, and their grievance is legitimate as their power is reduced.

In fairness to the workers, therefore, the management must either organise the work so that
interruptions are rare, or where this is not practicable they are agree to reasonable guarantee
minimum time payment to cover losses caused by periods of interruption or abandon the piece
work system altogether as being unsuitable for such work.

For example, the textile industries provide illustrations of work suitable for piece rates. Thus, in
cloth weaving the work is of defined standard and the output is easily measured by a meter on
the loom.

The worker can influence the amount produced by quickly repairing breakages in the yarn and
by otherwise keeping the looms running well. Quality of work can be controlled by inspection,
and where the worker is responsible for defects he can be penalised by a deduction from his
earnings, though this should be rarely done, being reserved for repeated carelessness.
Advantages of Piece Rate Wages:

(i) This system of wage payment is very easy to understand and very simple to calculate.

(ii) Workers get more wages because they produce more. It increases their efficiency and
productivity. It increases their remuneration also which improves their standard of living.

(iii) This system of wage payment increases the mobility of workers because they can change
their enterprise easily.

(iv) Under this system, the workers use their machines and equipment with proper care because
they feel that if their machine is out of order, their work will be held up and their wages will be
low.

(v) This system decreases the cost of production because the maximum production is done by
the workers in the minimum time. It decreases the cost per unit of production also.

(vi) The system of wage payment gets more production because all the workers make their best
efforts to increase the production.

(vii) As the workers are paid according to their work, they make the best possible utilisation of
their time. They do not want to waste their time.

(viii) This system of wage payment minimises the needs of supervision. It reduces the cost of
supervision.

(ix) This system provides an opportunity to measure the efficiency of the workers. It makes
proper distinction between efficient and inefficient working staff of the enterprise.

(x) This system encourages the workers to do more and more work because they get their wages
according to their work.

(xi) This system of wage payment justified also because the workers are paid the wages
according to the work performed by them.

(xii) This system brings industrial peace also because it satisfies both the workers and the
employer.

Limitations of Piece Rate Wage:

Piece wage system is, however, subject to the following drawbacks:

(i) The earnings of workers are not stable and they may suffer due to temporary delays or
difficulties. They feel insecure and dissatisfied.
(ii) In order to maximise their earnings, workers work with excessive speed. This may affect their
health. It also increases the wastage of materials and wear and tear of machinery. The method is
not suitable for work of artistic and delicate nature.

(iii) It is very difficult to fix piece wage rates. Employers often cut the piece rate when they find
workers are producing large quantities.

(iv) Employees may not stress quality so that rigid quality control becomes necessary.

(v) This system may create jealousy between efficient and inefficient workers. Trade unions do
not like it as it affects their solidarity.

(vi) Detailed records of production have to be kept so that the clerical work is increased. The
method is not practicable when contribution of individual workers cannot be calculated i.e.
construction work.

(vii) The method may lead to industrial disputes. Fixation of piece rates may create controversy.
Workers resent loss of output and earnings due to breakdown of machinery or power, non-
availability of materials and such other factors beyond their control. Trade unions dislike piece
wage system.

It can be concluded that piece rates and other incentive system are satisfactory if applied to
suitable kinds of work on the basis of fair time studies, but they are liable to misuse. They have
been abused by fixing rates in such a way, that workers could only attain a reasonable level of
earning by working at excessive speeds.

Also much discontent has been caused by the practice of fixing a rate on the basis of a time
study, and later cutting the rate, which has the effect of lowering earnings or of makings the
workers speed up in order to secure a level of earnings equal to that before the rate was cut.

If this is done the system seems to the workers merely a device for speeding, and they may come
to the conclusion that however hard they work their earnings will not be allowed to increase
much.

Therefore, a fair relationship must be maintained between the earning of the workers different
occupations in an undertaking and those in one occupation must not be able, except by working
harder, to earn much more than workers in another occupation of similar difficulty, but this
should be avoided, not by cutting rates, but by fixing proper rates at the outset on the basis of
reliable time studies.

It should, however, be noted that piece rates should generally remain unchanged, except:

1. Where a mistake has been made in setting the rate.

2. When the price level and as a result of which purchasing power of money has changed.

3. Where the conditions of the work have changed making it easier or more difficult.

4. Where the basic rate of pay is increased or decreased, whether by collective or individual
agreement.

Thus, if an employer buys new costly machines which enable the workers to double their output
with no greater effort than before, it would be unfair that the piece rates should remain
unchanged and workers gain double earnings.

These high earnings would be badly out of line with those of other work people in the
undertaking for whom no improved equipment was available; also if almost the whole benefit
from improved methods went to the workers, there would be no increase for the employer to
spend money on better machinery and organisation.

If other things being the same, general price level have increased, the purchasing power of the
workers would be reduced and, therefore, the workers real earning would be reduced in the
same proportion. Hence, the piece rates should change in favour of workers.

Suitability of Piece Rate System:

Piece rate system is suitable in the following situations:

(i) When productivity of the workers is to be increased.

(ii) Where the degree of physical worn is more than the mental work.

(iii) Where output can be measured and quality control system exists to discourage low quality
production.

(iv) When methods of production are standardised and the job is of repetitive nature.

(v) Where work does not require personal skills of higher order.

Time wage system is suitable under following conditions:

(i) Where units of output are non-measurable as in case of office work and mental work is
involved as in policy working.

(ii) When delays in work are frequent and beyond the control of employees, i.e. where output is
uncertain and irregular.
(iii) When quality of work is especially important, e.g. artistic furniture, fine jewellery, etc.

(iv) When supervision is good and supervisors know what constitutes a “fair day’s work”.

(v) When employees have little control over the quantity of output or there is no clear-cut
relation between effort and output as in some machine-paced or assembly line jobs.

(vi) When competitive conditions and cost control do not require in advance the precise
knowledge of labour costs per unit of output.

(vii) Where machinery and materials used are very sophisticated and expensive.

(viii) Work is of a highly varied nature and standards of performance cannot be established.

(ix) Employees and trade unions strongly oppose incentive payments.

(x) When workers are new and learning the job.

(xi) When collective efforts of a group of persons are essential for completing the job.

https://www.economicsdiscussion.net/wages/wage-payments/methods-of-wage-payments-
labour-production-economics/29317