CHAPTER -1

1. INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

1.1 What is Human Resource Management?
HRM is the study of activities regarding people working in an organization. It is
a managerial function that tries to match an organization‘s needs to the skills
and abilities of its employees.
1.1.1 Definitions of HRM
Human resources management (HRM) is a management function concerned
with hiring, motivating and maintaining people in an organization. It focuses on
people in organizations. Human resource management is designing
management systems to ensure that human talent is used effectively and
efficiently to accomplish organizational goals.
HRM is the personnel function which is concerned with procurement,
development, compensation, integration and maintenance of the personnel of an
organization for the purpose of contributing towards the accomplishments of
the organization‘s objectives. Therefore, personnel management is the
planning, organizing, directing, and controlling of the performance of those
operative functions (Edward B. Philippo).
According to the Invancevich and Glueck, HRM is concerned with the most
effective use of people to achieve organizational and individual goals. It is the
way of managing people at work, so that they give their best to the organization.
According to Dessler (2008) the policies and practices involved in carrying out
the people or human resource aspects of a management position, including
recruiting, screening, training, rewarding, and appraising comprises of HRM.
1.1.2 NATURE OF HRM
HRM is a management function that helps manager‘s to recruit, select, train and
develop members for an organization. HRM is concerned with people‘s
dimension in organizations.

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CORE OF HRM
1. HRM Involves the Application of Management Functions and Principles. The
functions and principles are applied to acquiring, developing, maintaining and
providing remuneration to employees in organization.
2. Decision relating to Employees must be integrated. Decisions on different
aspects of employees must be consistent with other human resource (HR)
decisions.
3. Decisions made influence the effectiveness of an Organization. Effectiveness
of an organization will result in betterment of services to customers in the form
of high quality products supplied at reasonable costs.
4. HRM Functions are not confined to Business establishments only but
applicable to non business organizations such as education, health care,
recreation and like. HRM refers to a set of programs, functions and activities
designed and carried out in order to maximize both employee as well as
organizational effectiveness.
1.1.3 FEATURES OF HRM OR CHARACTERISTICS

1. HRM involves management functions like planning, organizing, directing

and controlling.

2. It involves procurement, development, maintenance of human resource.

3. It helps to achieve individual, organizational and social objectives.

4. HRM is a mighty disciplinary subject. It includes the study of management

psychology communication, economics and sociology.

5. It involves team spirit and team work.

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1.1.4 Significance/importance/need of HRM

HRM becomes significant for business organization due to the following

reasons.

1. Objective: HRM helps a company to achieve its objective from time to time
by creating a positive attitude among workers. Reducing wastage and making
maximum use of resources etc.

2. Facilitates professional growth: Due to proper HR policies employees are

trained well and this takes them ready for future promotions. Their talent can be
utilized not only in the company in which they are currently working but also in
other companies which the employees may join in the future.

3. Better relations between union and management: Healthy HRM practices

can help the organization to maintain co-ordinal relationship with the unions.
Union members start realizing that the company is also interested in the workers
and will not go against them therefore chances of going on strike are greatly
reduced.

4. Helps an individual to work in a team/group: Effective HR practices teach

individuals team work and adjustment. The individuals are now very
comfortable while working in team thus team work improves.

5. Identifies person for the future: Since employees are constantly trained,
they are ready to meet the job requirements. The company is also able to
identify potential employees who can be promoted in the future for the top level
jobs.

6. Allocating the jobs to the right person: If proper recruitment and selection
methods are followed, the company will be able to select the right people for the

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right job. When this happens the number of people leaving the job will reduce
as they will be satisfied with their job leading to decrease in labor turnover.

7. Improves the economy: Effective HR practices lead to higher profits and

better performance by companies due to this the company achieves a chance to
enter into new business and start new ventured thus industrial development
increases and the economy improves.

SCOPE OF HRM

The major HRM activities include HR planning, job analysis, job design,
employee hiring, employee and executive remuneration, employee motivation,
employee maintenance, industrial relations and prospects of HRM.

The scope of Human Resources Management extends to:

• All the decisions, strategies, factors, principles, operations, practices,

functions, activities and methods related to the management of people as
employees in any type of organization.

• All the dimensions related to people in their employment relationships, and all
the dynamics that flow from it. The scope of HRM is really vast. All major
activities in the working life of a worker – from the time of his or her entry into
an organization until he or she leaves it comes under the purview of HRM.
American Society for Training and Development (ASTD) conducted fairly an
exhaustive study in this field and identified nine broad areas of activities of
HRM.

These are given below:

1. Human Resource Planning

2. Design of the Organization and Job
3. Selection and Staffing

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4. Training and Development
5. Organizational Development
6. Compensation and Benefits
7. Employee Assistance
8. Union/Labor Relations
9. Personnel Research and Information System

1) Human Resource Planning: The objective of HR Planning is to ensure

that the organization has the right types of persons at the right time at the
right place. It prepares human resources inventory with a view to assess
present and future needs, availability and possible shortages in human
resource. Thereupon, HR Planning forecast demand and supplies and
identify sources of selection. HR Planning develops strategies both long-
term and short-term, to meet the man-power requirement.
2) Design of Organization and Job: This is the task of laying down
organization structure, authority, relationship and responsibilities. This
will also mean definition of work contents for each position in the
organization. This is done by .job description.. Another important step
is .Job specification. Job specification identifies the attributes of persons
who will be most suitable for each job which is defined by job
description.
3) Selection and Staffing: This is the process of recruitment and selection
of staff. This involves matching people and their expectations with which
the job specifications and career path available within the organization.
4) Training and Development: This involves an organized attempt to find
out training needs of the individuals to meet the knowledge and skill
which is needed not only to perform current job but also to fulfil the
future needs of the organization.

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5) Organizational Development: This is an important aspect whereby
synergetic effect is generated in an organization i.e. healthy interpersonal
and inter-group relationship within the organization.
6) Compensation and Benefits: This is the area of wages and salaries
administration where wages and compensations are fixed scientifically to
meet fairness and equity criteria. In addition labor welfare measures are
involved which include benefits and services.
7) Employee Assistance: Each employee is unique in character, personality,
expectation and temperament. By and large each one of them faces
problems every day. Some are personal some are official. In their case he
or she remains worried. Such worries must be removed to make him or
her more productive and happy.
8) Union-Labor Relations: Healthy Industrial and Labor relations are very
important for enhancing peace and productivity in an organization. This
is one of the areas of HRM.
9) Personnel Research and Information System: Knowledge on
behavioral science and industrial psychology throws better insight into
the workers expectations, aspirations and behavior. Advancement of
technology of product and production methods have created working
environment which are much different from the past. Globalization of
economy has increased competition many fold. Science of ergonomics
gives better ideas of doing a work more conveniently by an employee.
Thus, continuous research in HR areas is an unavoidable requirement. It
must also take special care for improving exchange of information
through effective communication systems on a continuous basis
especially on moral and motivation.

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OBJECTIVES OF HRM
The primary objective of HRM is to ensure the availability of competent and
willing workforce to an organization. The specific objectives include the
following:
1) Human capital: assisting the organization in obtaining the right number and
types of employees to fulfill its strategic and operational goals.
2) Developing organizational climate: helping to create a climate in which
employees are encouraged to develop and utilize their skills to the fullest and to
employ the skills and abilities of the workforce efficiently.
3) Helping to maintain performance standards and increase productivity
through effective job design: Providing adequate orientation, training and
development; providing performance-related feedback; and ensuring effective
two-way communication.
4) Helping to establish and maintain a harmonious employer/employee
relationship
5) Helping to create and maintain a safe and healthy work environment
6) Developing programs to meet the economic, psychological, and social needs
of the employees and helping the organization to retain the productive
employees
7) Ensuring that the organization is in compliance with provincial/territorial and
federal laws affecting the workplace (such as human rights, employment equity,
occupational health and safety, employment standards, and labour relations
legislation). To help the organization to reach its goals
8) To provide organization with well-trained and well-motivated employees
9) To increase the employees satisfaction and self-actualization
10) To develop and maintain the quality of work life
11) To communicate HR policies to all employees.
12) To help maintain ethical polices and behavior.

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1.1.5 SECONDARY OBJECTIVES OF HRM
1) Societal Objectives: seek to ensure that the organization becomes socially
responsible to the needs and challenges of the society while minimizing the
negative impact of such demands upon the organization. The failure of the
organizations to use their resources for the society‘s benefit in ethical ways may
lead to restriction.
2) Organizational Objectives: it recognizes the role of HRM in bringing about
organizational effectiveness. It makes sure that HRM is not a standalone
department, but rather a means to assist the organization with its primary
objectives. The HR department exists to serve the rest of the organization.
3) Functional Objectives: is to maintain the department‘s contribution at a
level appropriate to the organization‘s needs. Human resources are to be
adjusted to suit the organization‘s demands. The department‘s value should not
become too expensive at the cost of the organization it serves.
4) Personnel Objectives: it is to assist employees in achieving their personal
goals, at least as far as these goals enhance the individual‘s contribution to the
organization. Personal objectives of employees must be met if they are to be
maintained, retained and motivated. Otherwise employee performance and
satisfaction may decline giving rise to employee turnover.
FUNCTIONS OF HRM
Human Resources management has an important role to play in equipping
organizations to meet the challenges of an expanding and increasingly
competitive sector. Increase in staff numbers, contractual diversification and
changes in demographic profile which compel the HR managers to reconfigure
the role and significance of human resources management. The functions are
responsive to current staffing needs, but can be proactive in reshaping
organizational objectives. All the functions of HRM are correlated with the core
objectives of HRM (Table 1.1). For example personal objectives is sought to be
realized through functions like remuneration, assessment etc.

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1.2 EVOLUTION OF HRM

EVOLUTION: The history of personnel management begins around the end

of the 19th century, when welfare officers are there is Companies. They were
women and concerned only with the protection of women and girls. Their
creation was a reaction to the harshness of industrial conditions, coupled with
pressures arising from the extension of the franchise, the influence of trade
unions and the labor movement, and the campaigning of enlightened employers.
FIRST WORLD WAR: The First World War accelerated change in the
development of personnel management, with women being recruited in large
numbers to fill the gaps left by men going to fight, which in turn meant reaching
agreement with trade unions (often after bitter disputes) about ‘dilution’–
accepting unskilled women into craftsmen’s jobs and changing manning levels.
During the 1920s, jobs with the titles of ‘labor manager’ or ‘employment
manager’ came into being in the engineering industry and other industries
where there were large factories, to handle absence, recruitment, dismissal and
queries over bonuses and so on.
During the 1930s, with the economy beginning to pick up, big corporations in
these newer sectors saw value in improving employee benefits as a way of
recruiting, retaining and motivating employees. But older industries such as
textiles, mining and shipbuilding which were hit by the worldwide recession did
not adopt new techniques, seeing no need to do so because they had no
difficulty in recruiting labor.
SECOND WORLD WAR: The Second World War brought about welfare and
personnel work on a full-time basis at all establishments producing war
materials because an expanded Ministry of Labor and National Service insisted
on it. The government saw specialist personnel management as part of the drive

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for greater efficiency and the number of people in the personnel function grew
substantially.
By 1945, employment management and welfare work had become integrated
under the broad term ‘personnel management’. The role of the personnel
function in wartime had been largely that of implementing the rules demanded
by large-scale, state-governed production, and thus the image of an emerging
profession was very much a bureaucratic one. Following the development of
poor industrial relations during the 1960s a Royal Commission under Lord
Donovan was set up.
Reporting in 1968, it was critical of both employers and unions; personnel
managers were criticized for lacking negotiation skills and failing to plan
industrial relations strategies. At least in part, Donovan suggested, these
deficiencies were a consequence of management’s failure to give personnel
management sufficiently high priority.
In the 1960s and 70s employment started to develop significantly. At the same
time personnel techniques developed using theories from the social sciences
about motivation and organizational behavior; selection testing became more
widely used, and management training expanded.
During the 1970s, specialism’s started to develop, with reward and resourcing,
for example, being addressed as separate issues. • Around the mid-80s, the term
‘human resource management’ arrived from the USA. • The term ‘human
resources’ is an interesting one: it seemed to suggest that employees were an
asset or resource-like machines, but at the same time HR also appeared to
emphasize employee commitment and motivation.

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SIGNIFICANCE OF HUMAN RESOURCE MANAGEMENT
The importance of human factor can be discussed as follows:
A) Social Significance: Proper management of personnel, enhances their
dignify by satisfying their social needs. This it does by
i) Maintaining a balance between the jobs available and the jobseekers,
according to the qualifications and needs;
ii) Providing suitable and most productive employment, which might bring
them psychological satisfaction;
iii) Making maximum utilization of the resource in an effective manner and
paying the employee a reasonable compensation in proportion to the
contribution made by him;
iv) Eliminating waste or improper use of human resource, through conservation
of their normal energy and health; and v) by helping people make their own
decisions, that are in their interests.
B) Professional Significance: By providing a healthy working environment it
promotes teamwork in the employees. This it does by i) maintaining the dignity
of the employee as a human-being‘; ii) providing maximum opportunities for
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personal development; iii) providing healthy relationship between different
work groups so that work is effectively performed; iv) improving the
employees‘ working skill and capacity; v) correcting the errors of wrong
postings and proper reallocation work.
c) Significance for Individual Enterprise: It can help the organization in
accomplishing its goals by: i) creating right attitude among the employees
through effective motivation; ii) utilizing effectively the available human
resources; and iii) securing willing co-operation of the employees for achieving
goals of the enterprise and fulfilling their own social and other psychological
needs of recognition, love, affection, belongingness, esteem and self-
actualization.
PRINCIPLES OF HRM:
1. HR is the most important asset of an organization.
2. HRM is concerned with total involvement of all employees with a sense of
common purpose.
3. The success of the organization is based on proper implementation of
corporate policies consistently, continuously and courageously through people.
PILLARS OF HRM
1. Maintaining positive corporate culture,
2. Keeping favorable organizational climate,
3. Adopting learning attitude of employees are essential to achieve
organizational excellence.

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 Chapter - 2

Managing the Personal Function

2.1ORGANISING THE PERSONNEL UNIT:
Functions of Personnel Management:

1. Managerial Functions

2. Operative Functions

1. Managerial Functions:
The Managerial functions of a personnel manager involve POSDCORB (Luther
Gullick) i.e., Planning, organizing, staffing, directing, coordinating, reporting
and budgeting of those who actually perform the operative functions of the
Personnel Department.

The following are the major managerial functions (viz. planning,

organizing, directing and controlling) performed by a personnel
department:
A. Personnel Planning:
Planning lays down a pre-determined course to do something such as what to
do, how to do, where to do, who is to do etc. A personnel manager plans in
advance the trend in wages, labor market, union demands etc. Through
planning, most of the future problems can be anticipated.

B. Organizing:
According to J.C. Massic, “An organization is a structure, a framework and a
process by which a co-operative group of human being allocates its task among
its members, identifies relationships and integrates its activities towards
common objectives.” The personnel manager has to design the structure of

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relationships among jobs, personnel and physical factors so that the objectives
of the enterprise are achieved.

C .Directing:
This function relates to guidance and stimulation of the subordinates at all
levels. The personnel manager directs and motivates the employees of his
department so that they work willingly and effectively for the achievement of
organizational goals and objectives.

D. Controlling:
A personnel manager has to constantly watch whether there is any deviation
from the planned path. Controlling is concerned with remedial actions.
Continuous monitoring of the personnel policies relating to training, labor
turnover, wage payments, interviewing new and separated employees etc., is the
backbone of controlling.

If deviations are unavoidable, corrective action can be planned in advance.

Controlling helps the personnel manager to evaluate the performance of
employees of the personnel department so far as the operating functions are
concerned.

2. Operative Functions:
The operative functions of the Personnel Department are also called service
functions. These include:
(a) Procurement function
(b) Development
(c) Promotion, transfer and termination function
(d) Compensation function
(e) Welfare function
(f) Collective bargaining function
(g) Miscellaneous functions.

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These functions of the personnel Department are discussed below:
(1) Procurement:
It includes:
(a) Recruitment i.e., tapping the possible sources from where prospective labor
supply will come.
(b) Getting information regarding prevailing wage rates and job requirements.
(c) Selecting the best candidate by following a systematic selection procedure.
(d) Maintaining the records of employees.
(e) Introducing the new employee to the officers of the other departments such
as Security Officer, Time Keeper, and Cashier etc.
(2) Training or Development Function:
The training of the new employees and also of those who are being promoted is
the crucial function of Personnel Department. A training programme is devised
for this purpose. The training increases the skills and abilities of the employees.

The various aspects of training are:

(a) Training to new employees, instructors and supervisors.
(b) Training in safety equipments and various policies of companies.
(c) Training through improvement of education such as evening classes, films,
Entertainment programmes etc.
(d) Encouraging employees to give suggestions.
(3) Promotion, Transfer and Termination:
The performance of the employees is evaluated for the purpose of taking
decisions concerning the employment. Merit rating is undertaken for evaluation
of the performance of the employees.

The functions of the Personnel Department in this regard are given below:
(a) To lay down a promotion policy.
(b) To formulate policies regarding transfer and termination.

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(c) Analysis of voluntary separations and knowing the possible causes of such
separations.
(4) Compensation:
The employees should get adequate and equitable remuneration for the work
being done by them.

The functions of the Personnel Department concerned with fixation of fair

wages are:
(a) To evaluate jobs and determine their worth in terms of money.
(b) To collaborate with those who formulate wage plans.
(c) To assist in formulation of policies regarding pension plans, profit sharing
programmes, non-monetary benefits, etc.
(d) To compare the wages of the enterprise with the industry and remove
inconsistencies, if any.
(5) Welfare Activities:
These activities relate to physical and social well-being of the employees
and include:
(a) Provision of medical facilities such as first aid, dispensaries, etc.
(b) Suggesting ways and means by which accidents can be eliminated or
minimized.
(c) To make provisions for restaurants and other recreational facilities.
(d) To apply the labor laws effectively.
(e) To publish a plant magazine.
(6) Collective Bargaining:
It includes:
(a) To assist in the negotiations which are held with the union leaders?
(b) To know the grievances of employees and following their problems
properly.

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(7) Miscellaneous:
(a) To advise the line managers regarding administration of personnel policies.
(b) To secure co-ordination of all personnel activities.
(c) To have an effective communication system.
(d) To provide good working conditions.
2.1 PLANNING THE PERSONNEL PROGRAM:
Human Resource Planning is one of the major functions of Personnel
department planning.
Human Resource Planning (HRP) is the process of forecasting the future human
resource requirements of the organization and determining as to how the
existing human resource capacity of the organization can be utilized to fulfill
these requirements. Therefore it focuses on the basic economic concept of
demand and supply in context to the human resource capacity of the
organization.

It is the HRP process which helps the management of the organization in

meeting the future demand of human resource in the organization with the
supply of the appropriate people in appropriate numbers at the appropriate time
and place. Further, it is only after proper analyses of the HR requirements can
the process of recruitment and selection is initiated by the management. Also,
HRP is essential in successfully achieving the strategies and objectives of
organization.

An HR Planning process simply involves the following four broad steps:

 Current HR Supply: Assessment of the current human resource

availability in the organization is the foremost step in HR Planning. It

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 includes a comprehensive study of the human resource strength of the
organization in terms of numbers, skills, talents, competencies,
qualifications, experience, age, tenures, performance ratings,
designations, grades, compensations, benefits, etc. At this stage, the
consultants may conduct extensive interviews with the managers to
understand the critical HR issues they face and workforce capabilities
they consider basic or crucial for various business processes.
 Future HR Demand: Analysis of the future workforce requirements of
the business is the second step in HR Planning. All the known HR
variables like attrition, lay-offs, foreseeable vacancies, retirements,
promotions, pre-set transfers, etc. are taken into consideration while
determining future HR demand. Further, certain unknown workforce
variables like competitive factors, resignations, abrupt transfers or
dismissals are also included in the scope of analysis.
 Demand Forecast: Next step is to match the current supply with the
future demand of HR, and create a demand forecast. Here, it is also
essential to understand the business strategy and objectives in the long
run so that the workforce demand forecast is such that it is aligned to the
organizational goals.
 HR Sourcing Strategy and Implementation: After reviewing the gaps
in the HR supply and demand, the HR Consulting Firm develops plans to
meet these gaps as per the demand forecast created by them. This may
include conducting communication programs with employees, relocation,
talent acquisition, recruitment and outsourcing, talent management,
training and coaching, and revision of policies. The plans are, then,
implemented taking into confidence the mangers so as to make the
process of execution smooth and efficient. Here, it is important to note
that all the regulatory and legal compliances are being followed by the

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 consultants to prevent any untoward situation coming from the
employees.

Hence, a properly conducted process of HR Planning by an HR Consulting Firm

helps the organization in meeting its goals and objectives in timely manner with
the right HR strength in action.

Human Resource Planning – Objectives:

The main objectives of HRP are:
(i) Proper assessment of human resources needs in future.
(ii) Anticipation of deficient or surplus manpower and taking the corrective
action.
(iii) To create a highly talented workforce in the organization.
(iv) To protect the weaker sections of the society.
(v) To manage the challenges in the organization due to modernization,
restructuring and re-engineering.
(vi) To facilitate the realization of the organization’s objectives by providing
right number and types of personnel.
(vii) To reduce the costs associated with personnel by proper planning.
(viii) To determine the future skill requirements of the organization.
(ix) To plan careers for individual employee.
(x) Providing a better view of HR dimensions to top management.
(xi) Determining the training and development needs of employees.
Human Resource Plan – Factors:
Several factors affect HRP. These factors can be classified into external factors
and internal factors.
External Factors:
i. Government Policies – Policies of the government like labour policy,
industrial relations policy, policy towards reserving certain jobs for different
communities and sons-of the soil, etc. affect the HRP.
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ii. Level of Economic Development – Level of economic development
determines the level of HRD in the country and thereby the supply of human
resources in the future in the country.
iii. Business Environment – External business environmental factors influence
the volume and mix of production and thereby the future demand for human
resources.
iv. Level of Technology – Level of technology determines the kind of human
resources required.
v. International Factors – International factors like the demand for resources
and supply of human resources in various countries.
vi. Outsourcing – Availability of outsourcing facilities with required skills and
knowledge of people reduces the dependency on HRP and vice-versa.
Internal Factors:
i. Company policies and strategies – Company policies and strategies relating
to expansion, diversification, alliances, etc. determines the human resource
demand in terms of quality and quantity.
ii. Human resource policies – Human resources policies of the company
regarding quality of human resource, compensation level, quality of work-life,
etc., influences human resource plan.
iii. Job analysis – Fundamentally, human resource plan is based on job
analysis. Job description and job specification determines the kind of employees
required.
iv. Time horizons – Companies with stable competitive environment can plan
for the long run whereas the firms with unstable competitive environment can
plan for only short- term range.
v. Type and quality of information – Any planning process needs qualitative
and accurate information. This is more so with human resource plan; strategic,
organizational and specific information.

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vi. Company’s production operations policy – Company’s policy regarding
how much to produce and how much to buy from outside to prepare a final
product influence the number and kind of people required.
vii. Trade unions – Influence of trade unions regarding number of working
hours per week, recruitment sources, etc., affect the HRP.

The responsibilities of the personnel department in regard to manpower

planning have been stated by Geisler in the following words:
(i) To assist, counsel and pressurize the operating management to plan and
establish objectives;
(ii) To collect and summarized data in total organization terms and to ensure
consistency with long- range objectives and other elements of the total business
plan;
(iii) To monitor and measure performance against the plan and keep the top
management informed about it; and
(iv) To provide the research necessary for effective manpower and
organizational planning.

BENEFITS OF HUMAN RESOURCE PLANNING:

Human Resource Planning (HRP) anticipates not only the required kind and
number of employees but also determines the action plan for all the functions of
personnel management.
The major benefits of human resource planning are:
i. It checks the corporate plan of the organization.
ii. HRP offsets uncertainties and changes to the maximum extent possible and
enables the organization to have right men at right time and in right place.

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iii. It provides scope for advancement and development of employees through
training, development, etc.
iv. It helps to anticipate the cost of salary enhancement, better benefits, etc.
v. It helps to anticipate the cost of salary, benefits and all the cost of human
resources facilitating the formulation of budgets in an organization.
vi. To foresee the need for redundancy and plan to check it or to provide
alternative employment in consultation with trade unions, other organisations
and government through remodeling organizational, industrial and economic
plans.
vii. To foresee the changes in values, aptitude and attitude of human resources
and to change the techniques of interpersonal, management, etc.
viii. To plan for physical facilities, working conditions and the volume of fringe
benefits like canteen, schools, hospitals, conveyance, child care centre’s,
quarters, company stores, etc.
ix. It gives an idea of type of tests to be used and interview techniques in
selection based on the level of skills, qualifications, intelligence, values, etc., of
future human resource.
x. It causes the development of various sources of human resources to meet the
organisational needs.
xi. It helps to take steps to improve human resource contributions in the form of
increased productivity, sales, turnover, etc.
xii. It facilitates the control of all the functions, operations, contribution and
cost of human resources.
PROBLEMS OF HUMAN RESOURCE PROBLEMS:
Though HRP is beneficial to the organization, employees and trade unions,
some problems crop up in the process of HRP.
Important among them are:
1. Resistance by Employers and Employees:

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Many employers resist HRP as they think that it increases the cost of manpower
as trade unions demand for employees based on the plan, more facilities and
benefits including training and development. Further, employers feel that HRP
is not necessary as candidates are/will is available as and when required in India
due to unemployment situation. Employers’ version may be true about unskilled
and clerical staff but it is not true in the case of all other categories as there is
shortage for certain categories of human resources.
Trade unions and employees also resist HRP as they view that it increases the
workload of employees and prepares programme for securing the human
resources mostly from outside. The other reason for their resistance is that HRP
aims at controlling the employees through productivity maximization, etc.
2. Uncertainties:
Uncertainties are quite prominent in human resource practices in India due to
absenteeism, seasonal employment, labor turnover, etc. Further, the
uncertainties in industrial scene like technological change, marketing conditions
also cause uncertainties in human resource management. The uncertainties
make the HRP less reliable.
3. Inadequacies of Information System:
Information system regarding human resources has not yet fully developed in
Indian industries due to low status given to personnel department and less
importance attached to HRP. Further, reliable data and information about the
economy, other industries, labor market, trends in human resources, etc., are not
available.
2.3 Co-Ordinating and Controlling:
Co-ordinating refers to balancing timing and integrating activities in an
organization, so that a unity of action in pursuit of a common purpose is
achieved. In the words of Terry, “Co-ordination deals with the task of blending
efforts in order to ensure a successful attainment of an objective.” Co-ordination

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in the management of personnel takes place at all levels, from the top
management through to the supervisor and those for whom he is responsible.
The personnel department has to co-ordinate the tasks of developing,
interpreting and reviewing personnel policies, practices and programmes, such
as safety programmes, employee benefits, job evaluation, training or
development, and communication. These activities are generally put into
operation by and through the line people; but it is the personnel department
which follows them through, unifies them, and checks to see how they work.
Controlling is the act of checking, regulating and verifying whether everything
occurs in conformity with the plan that has been adopted, the instructions issued
and the principles established. It is greatly concerned with actions and remedial
actions.
“It is not just score- keeping. It is not just plotting the course and getting
location reports; but rather it is steering the ship.” It is through control that
actions and operations are adjusted to predetermined standards; and its basis is
information in the hands of the managers.
“By check, analysis, and review, the personnel department assists in realizing
the personnel objectives. Auditing training programmes, analyzing labor
turnover records, directing morale surveys, conducting separation interviews,
interviewing new employees at stipulated intervals, comparing various features
of the programme with other organization programmes in the area, industry and
nation — these are some of the means for controlling the management of
personnel.”
This monitoring process provides management with actual performance
information for comparison with predetermined performance standards. If there
are unavoidable deviations from the planned performance, corrective action can
be taken immediately.

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This last function of control closes the system loop by providing feedback of
significant deviations from the planned performance. The feedback of pertinent
information can affect the inputs or any of the management functions.
Though all the above functions are performed at all levels of management, the
amount of time devoted to each function varies for each management level. The
top management performs planning functions more than does the supervisory
management. On the other hand, supervisors at the third rung of the
management pyramid devote more of their time to directing and controlling
production.

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CHAPTER - 3

RECRUITMENT & SELECTION

3.1 JOB & POSITION DESCRIPTION:

Definition of Job: A job may be defined as a “collection or aggregation of tasks,

duties and responsibilities which as a whole, are regarded as a regular assignment
to individual employees”.

In other words, when the total work to be done is divided and grouped into
packages, we call it a “job”.

Job Analysis: It is a systematic analysis of each job for the purpose of collecting
information as to what the job holder does, under what circumstances it is
performed and what qualifications are required for doing the job.

Definition of Job Analysis: “Job Analysis is the process of studying and collecting
information relating to the operations and responsibility of a specific job”. – Edwin
Flippo.

3.1.1 Uses of Job Analysis:

1. Human Resource Planning
2. Recruitment
3. Selection of personnel
4. Training and development
5. Organization audit
6. Job evolution
7. Job design
8. Performance appraisal

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9. Career planning
10. Safety and health
3.1.2 Steps in Job Analysis:
1. Collection of background information
2. Selection of representative job to be analyzed
3. Collection of job analysis data
4. Job description
5. Developing job specification
3.1.3 Techniques of Job Analysis Data:
1. Personal observation
2. Sending out questionnaires
3. Maintenance of log records
4. Conducting personal interviews

3.1.4 JOB DESCRIPTION:

The preparation of Job description is necessary before a vacancy is advertised.
It tells in brief the nature of a job. In other words, it emphasizes the job
requirements.
“Job Description is an organized factual statement of duties and
responsibilities of a specific job. It should tell what is to be done, how it is
done and why.” By Edwin Flippo.

Details of Job Description:

1. Job Title
2. Organizational location of the Job
3. Supervision given and received
4. Materials, tools, machinery and equipment worked with

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5. Designation of the immediate superiors and sub ordinates

6. Salary particulars: Pay, DA, other allowances, bonus, incentive wage,
method of payment, hours of work, shift, break etc.,
7. Complete list of duties to be performed according to daily, weekly, monthly
and casual, estimated time to be spent on each duty.
8. Definition of unusual terms
9. Conditions of work: Location, time, speed of work, accuracy, health
hazards, accident hazards
10.Training and development facilities
11.Promotional chances and channels
3.2 RECRUITMENT – DEFINITION:

According to Edwin B. Flippo, Recruitment is the process of searching for

prospective employees and stimulating them to apply for jobs in the organization.

According to Lord, Recruitment is a form of competition. Just as corporations

compete to develop, manufacture, and market the best product or service, so they
must also compete to identify, attract and hire the most qualified people.
Recruitment is a business, and it is a big business.

In the words of Dale Yoder, .Recruiting is a process to discover the sources of

manpower to meet the requirements of the staffing schedule and to employ
effective measures for attracting that manpower in adequate numbers to facilitate
effective selection of an efficient working force.

3.2.1 Sources of Recruitment

After the finalization of recruitment plan indicating the number and type of
prospective candidates, they must be attracted to offer themselves for consideration

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to their employment. This necessitates the identification of sources from which

these candidates can be attracted. Some companies try to develop new sources,
while most only try to tackle the existing sources they have. These sources,
accordingly, may be termed as internal and external.

3.2.2 Internal Sources

It would be desirable to utilize the internal sources before going outside to attract
the candidates. Yoder and others suggest two categories of internal sources
including a review of the present employees and nomination of candidates by
employees. Effective utilisation of internal sources necessitates an understanding
of their skills and information regarding relationships of jobs. This will provide
possibilities for horizontal and vertical transfers within the enterprise eliminating
simultaneous attempts to lay off employees in one department and recruitment of
employees with similar qualification for another department in the company.

Promotion and transfers within the plant where an employee is best suitable
improves the morale along with solving recruitment problems. These measures can
be taken effectively if the company has established job families through job
analysis programmes combining together similar jobs demanding similar employee
characteristics. Again, employees can be requested to suggest promising
candidates. Sometimes, employees are given prizes for recommending a candidate
who has been recruited. Despite the usefulness of this system in the form of loyalty
and its wide practice, it has been pointed out that it gives rise to cliques posing
difficulty to management. Therefore, before utilising this system attempts should
be made to determine through research whether or not employees thus recruited are
effective on particular jobs. Usually, internal sources can be used effectively if the
numbers of vacancies are not very large, adequate, employee records are

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maintained, jobs do not demand originality lacking in the internal sources, and
employees have prepared themselves for promotions.

3.2.3 Merits of Internal Sources:

The following are the merits of internal sources of recruitment:

 It creates a sense of security among employees when they are assured that
they would be preferred in filling up vacancies.
 It improves the morale of employees, for they are assured of the fact that
they would be preferred over outsiders when vacancies occur.
 It promotes loyalty and commitment among employees due to sense of job
security and opportunities for advancement.
 The employer is in a better position to evaluate those presently employed
than outside candidates.
 This is because the company maintains a record of the progress, experience
and service of its employees.
 Time and costs of training will be low because employees remain familiar
with the organization and its policies.
 Relations with trade unions remain good. Labor turnover is reduced.
 As the persons in the employment of the company are fully aware of, and
well acquainted wit, its policies and know its operating procedures, they
require little training, and the chances are that they would stay longer in the
employment of the organization than a new outsider would.
 It encourages self-development among the employees. It encourages good
individuals who are ambitious.
 It encourages stability from continuity of employment.

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 It can also act as a training device for developing middle and top-level
managers.

3.2.4 Demerits of Internal Sources:

However, this system suffers from certain defects as:

 There are possibilities that internal sources may dry up and it may be
difficult to find the requisite personnel from within an organization.
 It often leads to inbreeding, and discourages new blood from entering and
organization.
 As promotion is based on seniority, the danger is that really capable hands
may not be chosen.
 The likes and dislikes of the management may also play an important role in
the selection of personnel.
 Since the learner does not know more than the lecturer, no innovations worth
the name can be made. Therefore, on jobs which require original thinking
(such as advertising, style, designing and basic research), this practice is not
followed.
 This source is used by many organizations; but a surprisingly large number
ignore this source, especially for middle management jobs.

3.2.5 External Sources

De Cenzo and Robbins remark - occasionally, it may be necessary to bring in some

new blood into the organization. Thus, all organizations have to depend on external
sources of recruitment. Among these sources are included:

 Employment agencies.
 Educational and technical institutes

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 Casual labor or applicants at the gate. and

 Mail applicants.

Employment Agencies: Public and private employment agencies play a vital role
in making available suitable employees for different positions in the organisations.
Besides public agencies, private agencies have developed markedly in large cities
in the form of consultancy services. Usually, these agencies facilitate recruitment
of technical and professional personnel. Because of their specialization, they
effectively assess the needs of their clients and aptitudes and skills of the
specialized personnel.

Educational and technical institutes: Educational and technical institutes also

form an effective source of manpower supply. There is an increasing emphasis on
recruiting student from different management institutes and universities commerce
and management departments by recruiters for positions in sales, accounting,
finance, personnel and production.

Frequently, this source is tapped through on-campus interview with promising

students. In addition, vocational schools and industrial training institutes provide
specialized employees, apprentices, and trainees for semiskilled and skilled jobs.
Persons trained in these schools and institutes can be placed on operative and
similar jobs with a minimum of in-plant training.

3.2.6 FACTORS AFFECTING RECRUITMENT

The factors affecting recruitment can be classified as internal and external factors.
INTERNAL FACTORS:
 Wage and salary policies;
 The age composition of existing working force;
 Promotion and retirement policies;

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 Turnover rates;
 The nature of operations involved the kind of personnel required;
 The level and seasonality of operations in question;
 Future expansion and reduction programmes;
 Recruiting policy of the organization;
 Human resource planning strategy of the company;
 Size of the organization and the number of employees employed;
 Cost involved in recruiting employees, and finally;
 Growth and expansion plans of the organization.
EXTERNAL FACTORS:
 Supply and demand of specific skills in the labor market;
 Company‘s image perception of the job seekers about the company.
 External cultural factors: Obviously, the culture may exert considerable
check on recruitment. For example, women may not be recruited in certain
jobs in industry.
Economic factors: such as a tight or loose labor market, the reputation of the
enterprise in the community as a good pay master or otherwise and such allied
issues which determine the quality and quantity of manpower submitting itself for
recruitment.
Political and legal factors also exert restraints in respect of nature and hours of
work for women and children, and allied employment practices in the enterprise,
reservation of Job for SC, ST and so on.
3.2.7 METHODS OF RECRUITMENT
Methods of recruitment are different from the sources of recruitment. Sources are
the locations where prospective employees are available. On the other hand,
methods are way of establishing links with the prospective employees. Various

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methods employed for recruiting employees may be classified into the following
categories:
1. Direct Methods:
These include sending recruiters to educational and professional institutions,
employees, contacts with public and manned exhibits. One of the widely used
direct methods is that of sending of recruiters to colleges and technical schools.
Most college recruiting is done in co-operation with the placement office of a
college. The placement office usually provides help in attracting students,
arranging interviews, furnishing space, and providing student resumes.
For managerial, professional and sales personnel campus recruiting is an extensive
operation. Persons reading for MBA or other technical diplomas are picked up in
this manner. For this purpose, carefully prepared brochures, describing the
organization and the jobs it offers, are distributed among students, before the
interviewer arrives. Other direct methods include sending recruiters to conventions
and seminars, setting up exhibits at fairs, and using mobile offices to go to the
desired centre.
2. Indirect Methods:
The most frequently used indirect method of recruitment is advertisement in
newspapers, journals, and on the radio and television. Advertisement enables
candidates to assess their suitability. It is appropriate when the organization wants
to reach out to a large target group scattered nationwide. When a firm wants to
conceal its identity, it can give blind advertisement in which only box number is
given. Considerable details about jobs and qualifications can be given in the
advertisements. Another method of advertising is a notice-board placed at the gate
of the company.

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3. Third-Party Methods:
The most frequently used third-party methods are public and private employment
agencies. Public employment exchanges have been largely concerned with factory
workers and clerical jobs. They also provide help in recruiting professional
employees. Private agencies provide consultancy services and charge a fee. They
are usually specialized for different categories of operatives, office workers,
salesmen, supervisory and management personnel. Other third-party methods
include the use of trade unions. Labor-management committees have usually
demonstrated the effectiveness of trade unions as methods of recruitment.
3.3 SELECTION PROCESS:
Human resource selection is the process of choosing qualified individuals who are
available to fill positions in an organization. In the ideal personnel situation,
selection involves choosing the best applicant to fill a position. Selection is the
process of choosing people by obtaining and assessing information about the
applicants with a view to matching these with the job requirements. It involves a
careful screening and testing of candidates who have put in their applications for
any job in the enterprise. It is the process of choosing the most suitable persons out
of all the applicants. The purpose of selection is to pick up the right person for
every job.
It can be conceptualized in terms of either choosing the fit candidates, or rejecting
the unfit candidates, or a combination of both. Selection involves both because it
picks up the fits and rejects the unfit candidates. In fact, in Indian context, there are
more candidates who are rejected than those who are selected in most of the
selection processes. Therefore, sometimes, it is called a negative process in
contrast to positive programme of recruitment.

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According to Dale Yoder, Selection is the process in which candidates for

employment are divided into two classes-those who are to be offered employment
and those who are not.
According to Thomas Stone, Selection is the process of differentiating between
applicants in order to identify (and hire) those with a greater likelihood of success
in a job.
Thus, the selection process is a tool in the hands of management to differentiate
between the qualified and unqualified applicants by applying various techniques
such as interviews, tests etc. The cost incurred in recruiting and selecting any new
employee is expensive. The cost of selecting people who are inadequate
performers or who leave the organization before contributing to profits proves a
major cost of doing business.
3.3.1 Objectives of Selection:
(1) To predict which job applicants would be successful if hired and
(2) To inform and sell the candidate on the job and the organization. Satisfaction of
employee needs and wants as well as the fullest development of his potential are
important objectives of selection.
Dale Yoder says, Selection has long held a high rank in the priority of problem
areas in management.
Investments in good people produce a very high rate of return. A good choice of
people can provide a basis for long, sustained contributions.
3.3.2 Difference between Recruitment and Selection:
Difference between recruitment and selection has been described by Flippo as,
Recruitment is a process of searching for prospective employees and stimulating
and encouraging them to apply for jobs in an organization. It is often termed
positive as is stimulates people to apply for jobs, selection on the other hand tends

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to be negative because it rejects a good number of those who apply, leaving only
the best to be hired. Recruitment and selection differs in following manner:
1. Difference in Objective: The basic objective of recruitment is to attract
maximum number of candidates so that more options are available. The basic
objective of selection is to choose best out of the available candidates.
2. Difference is Process: Recruitment adopts the process of creating application
pool as large as possible and therefore. It is known as positive process. Selection
adopts the process through which more and more candidates are rejected and fewer
candidates are selected or sometimes even not a single candidate is selected.
Therefore, it is known as negative process or rejection process.
3. Technical Differences: Recruitment techniques are not very intensive, and not
require high skills. As against this, in selection process, highly specialized
techniques are required. Therefore, in the selection process, only personnel with
specific skills like expertise in using selection tests, conducting interviews, etc., are
involved.
4. Difference in Outcomes: The outcome of recruitment is application pool which
becomes input for selection process. The outcome of selection process is in the
form of finalizing candidates who will be offered jobs.
2.5.1 Selection Procedure
The selection procedure is concerned with securing relevant information about an
applicant. This information is secured in a number of steps or stages. The objective
of selection process is to determine whether an applicant meets the qualification
for a specific job and to choose the applicant who is most likely to perform well in
that job. Selection is a long process, commencing from the preliminary interview
of the applicants and ending with the contract of employment (sometimes).
The selection procedure consists of a series of steps. Each step must be
successfully cleared before the applicant proceeds to the next. The selection
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process is a series of successive hurdles or barriers which an applicant must cross.

These hurdles are designed to eliminate an unqualified candidate at any point in the
selection process. Thus, this technique is called .Successive Hurdles Technique. In
practice, the process differs among organizations and between two different jobs
within the same organization. Selection procedure for the senior managers will be
long drawn and rigorous, but it is simple and short while hiring lower level
employees.
3.3.3 SELECTION PROCESS:
 Selection process depends on the number of candidates that are available for
selection.
 Selection process depends on the sources of recruitment and the method that
is adopted for making contact with the prospective candidates.
 Various steps involved in as selection process depend on the type of
personnel to be selected. All the above factors are not mutually exclusive,
rather these operate simultaneously. In any case, the basic objective of a
selection process is to collect as much relevant information about the
candidates as is possible so that the most suitable candidates are selected.
3.3.4 STEPS IN SELECTION PROCESS:
 Application pool from recruitment process
 Eliminate those who does not fulfill job requirement.
 Primary screening & interview
 Selection tests
 obtain un favorable test score and Eliminate those not meeting standards
 Interview job and organizational requirements
 investigations
 Physical examination Eliminate those not meeting physical standards
 Approval by appropriate authority
 Final Employment decision

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 CHAPTER – 4
PERFORMANCE APPRAISAL
4.1 PERFORMANCE APPRAISAL DEFINITION:

Performance appraisal or performance review is a systematic process in which

employee performance at work is evaluated in relation to the projects on which
employee has worked and his contribution to the organisation. It is also known as an
annual review or performance review.

According to Edwin B Flippo – “Performance Appraisal is a systematic, periodic and

so for as humanly possible, an impartial rating of an employee’s excellence in
matters pertaining to his parent job potentialities for his current job.”

4.1.1 PERFORMANCE APPRAISAL:

The basic purpose of performance appraisal is to identify employees worth and

contribution to the company. Important factors include – attendance, efficiency,
attitude, quality of work, amount of work are just a few important factors.

The physical or objective factors like attendance, amount of work, efficiency can be
easily measured by the records maintained by the Human Resource Department
Manager.

However, it gets a bit risky, when it comes to measuring subjective factors like
attitude, behavior, friendliness etc. But to properly evaluate an individual’s
performance, appraisal of both subjective and objective factors needs to be done.

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As Dale Yoder said, “Performance appraisal includes all formal procedures used to
evaluate personalities and contributions and potential of group members in a working
organisation. It is a continuous process to secure information necessary for making
correct and objective decisions on employees.

Performance Appraisal Process

1. Setting performance standards

2. Set up measurable goals

3. Measure actual performance

4. Compare with preset standards and goals

5. Discuss with the employee – met the expectations, did not meet the
expectations, exceeded the expectations

6. Take corrective actions

7. Set standards for next cycle

Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:

1. To maintain records in order to determine compensation packages, wage

structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on
right job.
3. To maintain and assess the potential present in a person for further growth
and development.

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 4. To provide a feedback to employees regarding their performance and related
status.
5. To provide a feedback to employees regarding their performance and related
status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be
justified by following advantages:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the

promotion programmes for efficient employees. In this regards, inefficient
workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation
packages for employees. Merit rating is possible through performance
appraisal. Performance Appraisal tries to give worth to a performance.
Compensation packages which include bonus, high salary rates, extra
benefits, allowances and pre-requisites are dependent on performance
appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance
appraisal helps the supervisors to frame training policies and programmes. It
helps to analyze strengths and weaknesses of employees so that new jobs
can be designed for efficient employees. It also helps in framing future
development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to
understand the validity and importance of the selection procedure. The

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 supervisors come to know the validity and thereby the strengths and
weaknesses of selection procedure. Future changes in selection methods can
be made in this regard.
5. Communication: For an organization, effective communication between
employees and employers is very important. Through performance appraisal,
communication can be sought for in the following ways:
a. Through performance appraisal, the employers can understand and
accept skills of subordinates.
b. The subordinates can also understand and create a trust and
confidence in superiors.
c. It also helps in maintaining cordial and congenial labor management
relationship.
d. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

6. Motivation: Performance appraisal serves as a motivation tool. Through

evaluating performance of employees, a person’s efficiency can be
determined if the targets are achieved. This very well motivates a person for
better job and helps him to improve his performance in the future.

Disadvantages of Performance Appraisal

1. If the factors being used in the performance appraisal are incorrect or not
relevant, the appraisal will fail to provide any useful or effective data.

2. Sometimes, equal weightage is not given to important factors when performing

an appraisal.

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3. Some objective factors are very vague and difficult to gauge like attitude and
initiative. There is no scientific method to measure these factors.

4. Managers are sometimes not qualified enough to correctly assess the employees
and their abilities. Thus, these mistakes can be very detrimental to the growth of
the company.

Three ways performance appraisal helps an organisation mention as follows:

 A systematic performance appraisal system helps the managers to properly

identify the performance of employees in a systematic manner and their areas
of talent and areas where they are lacking.

 Performance appraisal helps employees identify the areas in which they need to
improve. Furthermore, the managers can also use this information to provide
constructive criticism of the way employees perform their work.

 It helps the management to place the right employees for the perfect jobs
depending on their skills in particular areas.
Performance Appraisal is the systematic evaluation of the performance of
employees and to understand the abilities of a person for further growth and
development. Performance appraisal is generally done in systematic ways which
are as follows:

1. The supervisors measure the pay of employees and compare it with targets
and plans.
2. The supervisor analyses the factors behind work performances of
employees.
3. The employers are in position to guide the employees for a better
performance.
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 Methods of Performance Appraisal:

(1) Traditional Methods

(2) Modern Methods.
Traditional performance appraisal methods like appraisal templates, ranking,
checklists, critical incidents, and more take a goal-oriented approach and evaluate
work results. Modern methods focus on individual’s personality
traits (creativity, integrity, goal-oriented approach, leadership qualities) and tend
to be more objective.

1. TRADITIONAL METHODS:
Following are the tools used by the organizations for Performance Appraisals of
their employees.

1. Ranking
2. Paired Comparison
3. Forced Distribution
4. Confidential Report
5. Essay Evaluation
6. Critical Incident
7. Checklists
8. Graphic Rating Scale
9. Forced Choice Method
10.Field Review Technique
11.Performance Test

1. Ranking Method

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 The ranking system requires the rater to rank his subordinates on overall
performance. This consists in simply putting a man in a rank order. Under
this method, the ranking of an employee in a work group is done against that
of another employee. The relative position of each employee is tested in
terms of his numerical rank. It may also be done by ranking a person on his
job performance against another member of the competitive group.

Advantages of Ranking Method

i. Employees are ranked according to their performance levels.

ii. It is easier to rank the best and the worst employee.

Limitations of Ranking Method

iii. The “whole man” is compared with another “whole man” in this
method. In practice, it is very difficult to compare individuals
possessing various individual traits.
iv. This method speaks only of the position where an employee stands in
his group. It does not test anything about how much better or how
much worse an employee is when compared to another employee.
v. When a large number of employees are working, ranking of
individuals become a difficult issue.
vi. There is no systematic procedure for ranking individuals in the
organization. The ranking system does not eliminate the possibility of
snap judgments.
2. Paired comparison analysis: This form of performance appraisal is a good
way to make full use of the methods of options. There will be a list of
relevant options. Each option is in comparison with the others in the list. The

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 results will be calculated and then such option with highest score will be
mostly chosen.
Steps to conduct paired comparison analysis:
 List the options you will compare (elements as A, B, C, D, E for example).
 Create table 6 rows and 7 columns.
 Write down option to column and row; A to row second, cell first from left
and A to row first, cell second from left; B to row third, cell first from left
and B to row first, cell third from left etc; column seventh is total point.
 Identify importance from 0 (no difference) to 3 (major difference).
 Compare element “A” to B, C, D, E and place “point” at each cell.
 Finally, consolidate the results by adding up the total of all the values for
each of the options. You may want to convert these values into a percentage
of the total score.
3. Forced Distribution method

This is a ranking technique where raters are required to allocate a certain

percentage of rates to certain categories (eg: superior, above average,
average) or percentiles (eg: top 10 percent, bottom 20 percent etc). Both the
number of categories and percentage of employees to be allotted to each
category are a function of performance appraisal design and format. The
workers of outstanding merit may be placed at top 10 percent of the scale,
the rest may be placed as 20 % good, 40 % outstanding, 20 % fair and 10 %
fair.

Advantages of Forced Distribution

i. This method tends to eliminate raters bias

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 ii. By forcing the distribution according to pre-determined percentages,
the problem of making use of different raters with different scales is
avoided.

Limitations of Forced Distribution

iii. The limitation of using this method in salary administration, however,

is that it may lead low morale, low productivity and high
absenteeism.
Employees who feel that they are productive, but find themselves in
lower grade (than expected) feel frustrated and exhibit over a period
of time reluctance to work.
4. Confidential Records: Mostly used by government departments, however
its application in industry is not ruled out. Here the report is given in the
form of Annual Confidentiality Report (ACR) and may record ratings with
respect to following items; attendance, self - expression, team work,
leadership, initiative, technical ability, reasoning ability, originality and
resourcefulness etc. The system is highly secretive and confidential.
Feedback to the assesses is given only in case of an adverse entry.
Disadvantage is that it is highly subjective and ratings can be manipulated
because the evaluations are linked to HR actions like promotions etc.
5. Essay Method: In this method the rater writes down the employee
description in detail within a number of broad categories like, overall
impression of performance, promote ability of employee, existing
capabilities and qualifications of performing jobs, strengths and weaknesses
and training needs of the employee. In this style of performance appraisal,
managers/ supervisors are required to figure out the strong and weak points
of staff’s behaviors. Essay evaluation method is a non-quantitative
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 technique. It is often mixed with the method the graphic rating scale. The
essay method involves an evaluator's written report appraising an employee's
performance, usually in terms of job behaviors and/or results. The subject of
an essay appraisal is often justification of pay, promotion, or termination
decisions, but essays can be used for developmental purposes as well The
assessor writes a brief essay providing an assessment of the strengths,
weaknesses and potential of the subject. In order to do so objectively, it is
necessary that the assessor knows the subject well and should have
interacted with them. Since the length and contents of the essay vary
between assessors, essay ratings are difficult to compare.
6. Critical Incident techniques

Under this method, the manager prepares lists of statements of very effective
and ineffective behavior of an employee. These critical incidents or events
represent the outstanding or poor behavior of employees or the job. The
manager maintains logs of each employee, whereby he periodically records
critical incidents of the worker’s behavior. At the end of the rating period,
these recorded critical incidents are used in the evaluation of the worker’s
performance. Example of a good critical incident of a Customer Relations
Officer is: March 12 - The Officer patiently attended to a customer’s
complaint. He was very polite and prompts in attending the customer’s
problem.

Advantages of Critical Incident Techniques

i. This method provides an objective basis for conducting a thorough

discussion of an employee’s performance.

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 ii. This method avoids decency bias (most recent incidents are too much
emphasized)

Limitations of Critical Incident Techniques

iii. Negative incidents may be more noticeable than positive incidents.

iv. The supervisors have a tendency to unload a series of complaints
about the incidents during an annual performance review session.
v. It results in very close supervision which may not be liked by an
employee.
vi. The recording of incidents may be a chore for the manager concerned,
who may be too busy or may forget to do it.
7. Checklists and Weighted Checklists

In this system, a large number of statements that describe a specific job are
given. Each statement has a weight or scale value attached to it. While rating
an employee the supervisor checks all those statements that most closely
describe the behavior of the individual under assessment. The rating sheet is
then scored by averaging the weights of all the statements checked by the
rater. A checklist is constructed for each job by having persons who are
quite familiar with the jobs. These statements are then categorized by the
judges and weights are assigned to the statements in accordance with the
value attached by the judges.

Advantages of Checklists and Weighted Checklists

i. Most frequently used method in evaluation of the employee’s

performance.

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 Limitations of Checklists and Weighted Checklists

ii. This method is very expensive and time consuming

iii. Rater may be biased in distinguishing the positive and negative
questions.
iv. It becomes difficult for the manager to assemble, analyze and weigh a
number of statements about the employees’ characteristics,
contributions and behaviors.

2. MODERN METHODS:

Six modern performance appraisal methods

With the right performance appraisal method, organizations can enhance employee
performance within the organization. A good employee performance review
method can make the whole experience effective and rewarding. Now that the
drawbacks of traditional methods are clear.

Here’s a close look at the six most-used modern performance methods:

1. Management by Objectives (MBO)

Management by objectives (MBO) is the appraisal method where managers and
employees together identify, plan, organize, and communicate goals. After setting
clear goals, managers and subordinates periodically discuss the progress made to
control and debate on the feasibility.

This process usually lays more stress on tangible work or career-oriented goals. So,
intangible aspects like interpersonal skills, job commitment, etc. are often brushed
under the rug. This method is slightly expensive and time-intensive.

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2. 360-Degree Feedback:
Once-in-a-year performance appraisals are lackadaisical and don’t work. Workers
need ongoing communication with team leaders and managers. A continuous
process, like 360-degree feedback, can help employees stay motivated. This is one
of the most widely used appraisal methods.

In 360-degree feedback, every employee in an organization appraises his/her

managers, peers, customers, suppliers, and also does a self-evaluation. This method
ensures effective performance analysis and Total Employee Involved (TEI). If not
handled properly, this method can also suffer from the subjectivity of the appraiser.

3. Assessment Centre Method

The assessment centre method tests employees in a social-related situation. This
concept was introduced way back in 1930 by the German Army but it has been
polished and tailored to fit today’s environment. Employees are asked to take part
in situation exercises like in-basket exercises, work groups, simulations, and role-
playing exercises that ensure success in a role.

While it gives an insight of the employee’s personality (ethics, tolerance, problem-

solving skill, introversion/extroversion, adaptability, etc.), it can also breed
unhealthy competition among the workers and bears adverse effects on low
performers.

4. Behaviorally Anchored Rating Scale (BARS)

Behaviorally anchored rating scales (BARS) bring out both the qualitative and
quantitative benefits in a performance appraisal process. BARS compare employee
performance with specific behavioral examples that are anchored to numerical
ratings.

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This performance appraisal method is said to be better than the traditional methods.
BARS provide clear standards, improved feedback, accurate performance
analysis, and consistent evaluation. However, when done manually it suffers
from the usual distortions that are inherent in most review methodologies.

5. Psychological Appraisals
Psychological appraisals come in handy to determine the hidden potential of
employees. This method focuses on analyzing an employee’s future
performance rather than their past work.

Qualified psychologists conduct a variety of tests (in-depth interviews,

psychological tests, discussions, and more) to identify an employee’s emotional,
intellectual, and other related traits. However, it is a rather slow and complex
process and the quality of results is highly dependent on the psychologist who
administers the procedure.

6. Human-Resource (Cost) Accounting Method

Human resource (cost) accounting method analyses an employee’s performance
through the monetary benefits he/she yields to the company. It is obtained by
comparing the cost of retaining an employee (cost to company) and the monetary
benefits (contributions) an organization has ascertained from that specific
employee.

When an employee’s performance is evaluated based on cost accounting methods,

factors like unit-wise average service value, quality, overhead cost, interpersonal
relationships, and more are taken into account. Its high-dependency on the cost and
benefit analysis and the memory power of the reviewer is the drawback of human
resources accounting method.

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PROBLEMS OF PERFORMANCE APPRAISAL:

1) Compare/contrast error:

When appraising employees, it is important never to compare their abilities and

using it to make a judgment.

Each employee is gifted in their unique way and thus has different strengths and
weaknesses. When you try to compare or contrast their abilities, it means that you
will not get a fair review because high performers will certainly make relatively
low performers for particular tasks to look below average, which on some
occasions is never the case.

2) Similarity error:

In every organization, some employees have a resemblance of different aspects

with the manager. Now some managers usually find it easy to reward such
employees. The appraisal process based on performance and results that they
provide and not primarily by similarity/dissimilarity that you have.

3) Bias:

Bias is also one of the problems with performance appraisal managers often
encounter. As a matter of fact, everyone has some biases towards someone or
something irrespective of how we portray them. However, as a manager, it is
imperative not to let the biases hinder the manner in which you approach
performance evaluation process.

If you do not like someone it will not be right to use that feeling in making review
judgment, it is unprofessional.
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4) Stereotyping:

Stereotyping is closely related to biases only that in this case, you tend to make
your judgment by your predetermined mindset towards a particular employee’s
race, gender, political affiliation, religious background, culture and other
characteristics.

Stereotyping is problematic when assessing employees’ performance because it

implies that you will only be able to provide judgment based on what you label the
group similar to one that the particular employee belongs to.

5) The Halo effect:

This is also known as the horns effect. It is a situation where you let your positive
or negative feelings towards an employee to influence your evaluation easily. It is
necessary to judge each criterion independently without compromising what you
feel for the employee.

6) Recency (Impression) effect:

This is majorly about carrying out an appraisal for a short period before it takes
place. As stated earlier, an appraisal is an activity that takes place continuously,
which means that the focus should not only be for the short period before it
happens but rather the entire time of the year.

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7) Attribution error:

This is one of the trickiest problems with performance appraisal. It involves

making your independent belief on possible causes of some behaviors’ or outcome
and letting that influence your judgment.

It is never a good idea to develop an assumption of what transpired or made the

employee behave in the manner that he or she did and later use it as a basis for
reviewing the appraisal process. Only be for the short period before it happens but
rather the entire time of the year.

8) Leniency and Severity tendencies:

These mistakes usually arise as a result of distribution errors, which imply that the
overall dissemination of appraisal does not stand firm to the classic bell. This
means that some managers are too lenient and will end up appraising all employees
above average, others will give average whereas others would provide below
average.

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 CHAPTER – 5

COMPENSATION SYSTEMS

5.1 WAGE AND SALARY ADMINISTRATION:

Compensation is a tool used by management for a variety of purposes. It is a
remuneration that an employee receives in return for his or her contribution in the
organisation. So, the employee compensation programs are designed to attract
capable employees to the organisation, to motivate them towards superior
performance and to retain their services over an extended period of time.
5.1.1 Meaning and Definition of Compensation
In layman‘s language the word compensation ‘means something, such as money,
given or received as payment for service. The word compensation may be defined
as money received in the performance of work, plus the many kinds of benefits and
services that organization provides their employee. It refers to wide range of
financial and non-financial rewards to employee for their service rendered to the
organization. It is paid in the form of wages, salaries, special allowance and
employee benefits such as paid vacation, insurance, maternity leaves, free travel
facility, retirement benefits etc.
According to Wendell French - Compensation is a comprehensive term which
includes wages, salaries and all other allowances and benefits. Wages are the
remuneration paid for skilled, semi-skilled and unskilled operative workforce.
Salary is the remuneration of those employees who provides mental labor to the
employer such as supervisor, office staff, executive etc wages are paid on daily or
hourly basis where as salary is paid on monthly basis.
5.1.2 Objectives of Compensation Planning

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The basic purpose or objective of establishing sound compensation is to establish
and maintain an equitable rewards system. The other aim is the establishment and
maintenance of an equitable compensation structure i.e. an optimal balancing of
conflicting personnel interest so that the satisfaction of employees and employers
is maximized and conflicts minimized, the compensation management is
concerned with the financial aspect of employees need, motivation and rewards.
A sound compensation structure tries to achieve these objectives:
 To attract manpower in a competitive market.
 To control wages and salaries and labor costs by determining rate change
and frequency of increment.
 To maintain satisfaction of employees by exhibiting that remuneration is fair
adequate and equitable.
 To induce and improved performance, money is an effective motivator.
a) To Employees:
i. Employees are paid according to requirement of their jobs i.e. highly skilled jobs
are paid more compensation than low skilled jobs. This eliminates inequalities.
ii. The chances of favoritism are minimized.
iii. Jobs sequence and lines of promotion are established wherever they are
applicable.
iv. Employee‘s moral and motivation are increased because of the sound
compensation structure.
b) To Employers:
i. They can systematically plan for and control the turnover in the organization.
ii. A sound compensation structure reduces the likelihood of friction and grievance
over remunerations.
iii. It enhances an employee morale and motivation because adequate and fairly
administrative incentives are basis to his wants and needs.
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iv. It attracts qualified employees by ensuring and adequate payment for all the
jobs.
v. In dealing with a trade union, they can explain the basis of their wages
programme because it is based upon a systematic analysis of jobs and wages facts.
5.1.3 Factors Affecting Compensation Planning
Factors determining compensation of an employee considerable amount of guess
word and negotiation are involved. But following are the certain factors which
have been extracted as having an important bearing upon the final decision:
a) Supply and Demand of Labor: Whatever the organization produces as
commodity they desire services and it must pay a price that of workers acting in
concert. If more the labor is required, such as at war time prosperity, there will be
tendency to increase the compensation; whereas the situation when anything works
to decrease the supply of labor, such as restriction by a particular labor union, there
will be a tendency to increase the compensation. The reverse of each situation is
likely to result in a decrease in employee compensation, provided, labour union,
ability to pay, productivity, government do not intervene.
b) Ability to Pay: Labor Unions have often demanded an increase in
compensation on the basis that the firm is prosperous and able to pay.
c) Management’s Philosophy: Management‘s desire to maintain or improve
moral, attract high caliber employees, reduce turnover, and improve employees
standard of living also affect wages, as does the relative importance of a given
position to a firm.
d) Legislation: Legislation is plays a vital role in determining internal organization
practices. Various acts are prescribed by government of country for wage hours
laws. Wage-hour laws set limits on minimum wages to be paid and maximum
hours to be worked. In India minimum wages act 1948 reflecting the wage policy
for an organization and fixation of minimum rates of wages to workers in sweated
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industries. In 1976 equal remuneration act was enacted which prohibits
discrimination in matters relating to remuneration on the basis of religion, region
or gender.
5.1.4 Various Modes of Compensation
a) Wages and Salary- Wages represent hourly rates of pay and salary refers to
monthly rate of pay irrespective of the number of hours worked. They are subject
to annual increments. They differ from employee to employee and depend upon the
nature of jobs, seniority and merit.
b) Incentives- These are also known as payment by results. These are paid in
addition to wages and salaries. Incentive depends upon productivity, sales, profit or
cost reduction efforts. Incentive scheme are of two types:
 Individual incentive schemes.
 Group incentive schemes.
c) Fringe Benefits- These are given to employees in the form of benefits such as
provident fund, gratuity, medical care, hospitalization, accident relief, health
insurance, canteen, uniform etc.
d) Non- Monetary Benefits- They include challenging job responsibilities,
recognition of merit, growth prospects, competent supervision, comfortable
working condition, job sharing and flexi time.
Incentives
Incentives are monetary benefits paid to workmen in lieu of their outstanding
performance. Incentives vary from individual to individual and from period to
period for the same individual. They are universal and are paid in every sector. It
works as motivational force to work for their performance as incentive forms the
part total remuneration. Incentives when added to salary increase the earning thus
increase the standard of living. The advantage of incentive payment are reduced

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supervision, better utilisation of equipment, reduced scrap, reduced lost time,
reduced absenteeism and turnover & increased output.
According to Burack & Smith, ―An incentive scheme is a plan or programmes
to motivate individual or group on performance. An incentive programme is most
frequently built on monitory rewards (incentive pay or monetary bonus), but may
also include a variety of non monetary rewards or prizes.
5.2 FINANCIAL INCENTIVE SYSTEM:
Kinds of Incentives
Incentives can be classified under the following categories:
1. Individual and Organizational Incentives
2. Financial and Non-Financial Incentives
3. Positive and Negative Incentives
5.2.1 Individual and Organizational Incentives- According to L.G. Magginson,
―Individual incentives are the extra compensation paid to an individual for all
production over a specified magnitude which stems from his exercise of more than
normal skill, effort or concentration when accomplished in a predetermined way
involving standard tools, facilities and materials.
Individual performance is measured to calculate incentive where as organizational
or group incentive involve cooperation among employees, management and union
and purport to accomplish broader objectives such as an organization-wide
reduction in labor, material and supply costs, strengthening of employee loyalty to
company, harmonious management and decreased turnover and absenteeism.
I) Individual Incentive System is of two types:
a) Time based System- It includes Halsey Plan, Rowan Plan, and Emerson Plan
etc.

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b) Production based System- It includes Taylor‘s Differential Piece Rate System,
Gantt‘s Task and Bonus Plan.
5.2.2 Group Incentive System is of following types
a) Scanlon Plan
b) Priestman‘s Plan
c) Co-Partnership Plan
d) Profit Sharing
Individual Incentive Plans:
5.2.2.1 Halsey Plan- Under this plan a standard time is fixed in advance for
completing a work. Bonus is rewarded to the worker who performs his work in less
than the standard time and paid wages according to the time wage system for the
saved time.
The total earnings of the worker = wages for the actual time + bonus
Bonus = 33.5% of the time saved (standard time set on past experience)
Or 50% of the time saved (standard are scientifically set)
Example: Time required to complete job (S) = 20 hours
Actual Time taken (T) = 15 hours
Hourly Rate of Pay (Br) = Rs 1.5
Calculate the wage of the worker.
Solution: T X R + (S-T) X R
2
15 X 1.5 + (20-15) X 1.5 = 22.5 + 3.75 = Br. 26.25
2
In this equation Br. 3.75 are the incentives for saving 5 hours.

5.2.2.2. Rowan Plan – Under this method minimum wages are guaranteed given to
worker at the ordinary rate for the time taken to complete the work. Bonus is that
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proportion of the wages of the time taken which the time saved bears to the
standard time allowed.
Incentive = Wages for actual time for completing the work + Bonus where,
Bonus = S-T X T X R
S
5.2.2.3 Emerson Plan – Under this system, wages on the time basis are guaranteed
even to those workers whose output is below the standard. The workers who prove
efficient are paid a bonus. For the purpose of determining efficiency, either the
standard output per unit of time is fixed, or the standard time for a job is
determined, and efficiency is determined on the basis of a comparison of actual
performance against the standard.
5.2.2.4 Taylor’s Differential Piece Rate System - F.W. Taylor, founder of the
scientific management evolved this system of wage payment. Under this system,
there is no guarantee of minimum wages. Standard time and standard work is
determined on the basis of time study. The main characteristics of this system are
that two rates of wage one lower and one higher are fixed. Those who fail in
attaining the standard, are paid at a lower rate and those exceeding the standard or
just attaining the standard get higher rate. Under this system, a serve penalty is
imposed on the inefficient workers because they get the wages at lower rates. The
basic idea underlying in this scheme is to induce the worker at least to attain the
standard but at the same time if a worker is relatively less efficient, he will lose
much. For example, the standard is fixed at 40 units per day and the piece rate is
Br. 40 and Br. 50 per unit. If a worker produces 40 units or more in a day, he will
get the wages at the rate of Br. 50 per unit and if he produces 39 units will get the
wages at Br. 40 per unit for the total output.
5.2.2.5 Gantt’s Task and Bonus Plan - In this, a minimum wage is guaranteed.
Minimum wage is given to anybody, who completes the job in standard time. If the
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job is completed in less time, then there is a hike in wage-rate. This hike varies
between 25% to 50% of the standard rate.
5.2.2.6 Profit Sharing – It is a method of remuneration under which an employer
pay his employees a share in form of percentage from the net profits of an
enterprise, in addition to regular wages at fixed intervals of time.
5.2.3 Financial and Non-financial Incentives- Individual or group performance
can be measured in financial terms. It means that their performance is rewarded in
money or cash as it has a great impact on motivation as a symbol of
accomplishment. These incentives form visible and tangible rewards provided in
recognition of accomplishment. Financial incentives include salary, premium,
reward, dividend, income on investment etc. On the other hand, non-financial
incentives are that social and psychological attraction which encourages people to
do the work efficiently and effectively. Non-financial incentive can be delegation
of responsibility, title or promotion, security of service, etc.
5.2.4 Positive and Negative Incentives- Positive incentives are those agreeable
factors related to work situation which prompt an individual to attain or excel the
standards or objectives set for him, where as negative incentives are those
disagreeable factors in a work situation which an individual wants to avoid and
strives to accomplish the standards required on his or her part. Positive incentive
may include expected promotion, worker‘s preference, competition with fellow
workers and owns record etc. Negative incentives include fear of lay off,
discharge, reduction of salary, disapproval by employer etc.
5.2.5 Role of Compensation and Reward in Organization:
Compensation and Reward system plays vital role in a business organization.
Since, among four Ms, i.e Men, Material, Machine and Money, Men has been most
important factor, it is impossible to imagine a business process without Men. Land,
Labor, Capital and Organization are four major factors of production.
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Every factor contributes to the process of production/business. It expects return
from the business process such as Rent is the return expected by the Landlord.
Similarly Capitalist expects Interest and Organizers i.e. Entrepreneur expects
profits. The labour expects wages from the process.
It is evident that other factors are in-human factors and as such labour plays vital
role in bringing about the process of production/business in motion. The other
factors being human, has expectations, emotions, ambitions and egos. Labour
therefore expects to have fair share in the business/production process.
5.2.5.1 Advantages of Fair Compensation System:

Therefore a fair compensation system is a must for every business organization.

The fair compensation system will help in the following:
 If an ideal compensation system is designed, it will have positive impact on
the efficiency and results produced by workmen.
 Such system will encourage the normal worker to perform better and achieve
the standards fixed.
 This system will encourage the process of job evaluation. It will also help in
setting up an ideal job evaluation, which will have transparency, and the
standards fixing would be more realistic and achievable.
 Such a system would be well defined and uniform. It will be apply to all the
levels of the organization as a general system.
 The system would be simple and flexible so that every worker/recipient
would be able to compute his own compensation receivable.
 Such system would be easy to implement, so that it would not penalize the
workers for the reasons beyond their control and would not result in
exploitation of workers.

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  It will raise the morale, efficiency and cooperation among the workers. It,
being just and fair would provide satisfaction to the workers.
 Such system would help management in complying with the various labor
acts.
 Such system would also bring about amicable settlement of disputes
between the workmen union and management.
 The system would embody itself the principle of equal work equal wages.
Encouragement for those who perform better and opportunities for those who wish
to Excel.
5.3 Fringe Benefits
Employees are paid several benefits in addition to wages, salary, allowances and
bonus. These benefits and services are called fringe benefits‘because these are
offered by the employer as a fringe. Employees of the organization are provided
several benefits and services by the employer to maintain and promote employee‘s
favorable attitude towards the work and work environment. It not only increases
their morale but also motivate them. These provided benefits and services forms
the part of salary and are generally refereed as fringe benefits.
According to D. Belcher, ― Fringe benefits are any wage cost not directly
connected with the employees’ productive effort, performance, service or sacrifice.
According to Werther and Davis, ―Fringe embrace a broad range of benefits
and services that employees receive as part of their total compensation, package
pay or direct compensation and is based on critical job factors and performance.
According to Cockman, ― Employee benefits are those benefits which are
supplied by an employer to or for the benefits of an employee and which are not in
the form of wages, salaries and time rated payments.
These are indirect compensation as they are extended condition of employment and
are not related to performance directly.
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5.3.1 Kinds of Fringe Benefits
The various organizations offer fringe benefits that may be categorized as follows:
1) Old Age and Retirement Benefits - These include provident fund schemes,
pension schemes, gratuity and medical benefits which are provided to employee
after their retirement and during old age as a sense of security about their old age.
2) Workman’s Compensation - These benefits are provided to employee if they
are got ignored or die under the working conditions and the sole responsibility is of
the employer.
3) Employee Security- Regular wage and salary is given to employee that gives a
feeling of security. Other than this compensation is also given if there is lay-off or
retrenchment in an organization.
4) Payment for Time Not Worked – Under this category of benefits, a worker is
provided payment for the work that has been performed by him during holidays
and also for the work done during odd shifts. Compensatory holidays for the same
number in the same month are given if the worker has not availed weekly holidays.
5) Safety and Health – Under these benefits workers are provided conditions and
requirements regarding working condition with a view to provide safe working
environment. Safety and Health measures are also taken care of in order to protect
the employees against unhealthy working conditions and accidents.
6) Health Benefits – Employees are also provided medical services like hospital
facility, clinical facility by the organization.

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 CHAPTER – 6

PERSONNEL ADMINISTRATIVE ACTIONS

Definition of Terms
 Promotions: means an improvement in pay, prestige, position and
responsibilities of an employee within his or her organization.
 Transfer: Transfer involves a change in the job (accompanied by a change in
the place of the job) of an employee without a change in the responsibilities or
remuneration.
 Demotion: The permanent movement of a staff member from one position in
one job class to a position in another job class of decreased responsibility or
complexity of duties and in a lower salary range.
 Separations: Lay-offs, resignations and dismissals separate employees from the
employers.
6.1 Reasons for Transfer
Transfer of employees is must and essential in an organization for the purpose of
minimizing politics between employees, to ensure cordial relationship between
employees, to increase transparency in work, to obviate syndicate of employees for
unethical purpose and to obviate nepotism in organization.

Employee transfers are considerable, as most essential when a position of

employee is a top-level in hierarchy. Especially in the governmental organizations
employees holding top-level positions are affected with frequent transfers for the
reason, to obviate nepotism into increase transparency in the work. Organizations
having no transfers for their employees may create their own informal groups for
their common interest and their own benefit. Subsequently, this may leads to
secrecy in the flow of work, eventually, no transparency in work. Employee

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transfers less organization may definitely see organizational politics among
employees that which leads to fall in coordination in between employees,
eventually may lead to drop in overall organizational performance.

The followings are reasons for transfer

1. To avoid favoritism and nepotism.
2. To avoid gaining capacity of influencing and egocentrism.
3. To avoid monotony in the work of an employee.
4. Makes an employee accountable to his seat, so as not to find mistake by his
successor.
5. So as to avoid excess dependency on particular employee, otherwise may affect
the purpose of hierarchy and lose control over subordinates.
6. To create transparency among the employees and their work.
7. It limits taking advantage and sole control over the seat or section.
8. To avoid unnecessary influence on others for their own advantage.
9. To make conversant of different seats work.
10.To maintain healthy relationship in between all the staff members to retain
harmonious environment to avoid unnecessary disputes.

6.1 .1 Types of Transfer

Employee transfers may be classified as below.
A. Production transfers: Such transfers are made to meet the company
requirements. The surplus employees in one department/section who are
efficient might be absorbed in other place where there is a requirement. Such
transfers help to stabilize employment.
B. Replacement transfers: This takes place to replace a new employee who has
been in the organization for a long time and thereby giving some relief to an old
employee from the heavy pressure of work.
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C. Veracity transfers: It is also known as rotation. It is made to develop all round
employees by moving them from one job to another. It also helps to reduce
boredom and monotony.
D. Personnel or remedial transfers: Such a transfer is made to rectify mistakes in
selection and placement. As a follow up, the wrongly placed employee is
transferred to a more suitable job.
E. Shift transfers: This is pretty common where there is more than one shift and
when there is regularized rotation.
6.2 DISCIPLINARY ACTIONS:

Though there is no rigid and specific procedure for talking a disciplinary action,
disciplinary procedure followed in industries usually consists of the following
steps:

1. Framing a charge and issuing a letter: When an employee commits an act

of misconduct that requires disciplinary action, the employee concerned
should be issued a charge sheet. Charges of misconduct or indiscipline
should be clearly and precisely stated in the charge sheet. The charge sheet
should also ask for an explanation for the said delinquent act and the
employee should be given sufficient time in answering this.

2. Consideration of explanation: On getting the answer for the letter of

charge served, the explanation furnished is considered and if it is not
satisfactory then disciplinary action need be taken. On the contrary when
the management is satisfied with the employee’s explanation there is no
need for serving a show cause notice.

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 3. Issuing show cause notice: Show cause notice is issued by the manager
when he is convinced that there is sufficient prima facie evidence of
employee’s misconduct. However, this gives the employee another chance to
account for his misconduct vis-à-vis. The charges made against him. Inquiry
should also be initiated by first serving him a notice of inquiry indicating
clearly the name of the inquiring officer, time, date and place o inquiry, etc.

4. Making a full-fledged inquiry: In conformity with the principle of natural

justice, the employee concerned must be given an opportunity of being
heard. When the process of inquiry is over and the findings of the same are
recorded, the Inquiry Officer should suggest the nature of disciplinary action
to be taken.
5. Passing the final order of punishment: Disciplinary action is to be taken
when his misconduct of the employee is proved. While deciding the nature
of disciplinary action, the employee’s previous record, precedents, effects of
disciplinary action on other employees, etc., have to be considered.
When the employee feels that the inquiry conducted was not proper and the
action taken is unjustified, he must be given a chance to make an appeal.

6. Follow up: After taking the disciplinary action, a proper follow up action
has to be taken and the consequences of the implementation of disciplinary
action should be noted and taken care of.

6.3 Definitions of Promotion

Some definitions given by authorities on the subject are listed below:
According to Scott and Clothier, ―A promotion is the transfer of an employee to a
job which pays more money or one that carries some preferred status.
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According to Prof Mamoria, ―Promotion is a term which covers a change and
calls for greater responsibilities, and usually involves higher pay and better terms
and conditions of service and, therefore, a higher status or rank.
According to Arun Monappa and Saiyadain, ―Promotion is the upward
reassignment of an individual in an organization‘s hierarchy, accompanied by
increased responsibilities, enhanced status, and usually with increased income,
though not always so.
From the above definitions, we can say that promotion usually implies several
things to the person concerned—higher status, both at work and in the community
outside, more pay and fringe benefits, perhaps greater job security and a more
senior position from which a person renders better service to his organization.
Employees expect to be informed about ladders of promotion, how they can
prepare themselves for advancement and what will be expected of them from the
higher rated jobs.
6.3.1 Types of promotion

A. Promotion by seniority:
In a straight seniority system—where the only factor in allocating jobs is length of
service—a worker would enter the organization at the lowest possible level and
advance to higher positions as vacancies occur
Advantages:
 Employees get to experience many jobs on the way up the promotional ladder,
provided that they stay long enough and openings develop. Jobs can be grouped
into different ladders such that experience on one job constitutes good training
for the next.
 Cooperation between workers is generally not hindered by competition for
subjectively determined promotions.
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 Workers need not seek to gain favor with supervisors (through non-productive
means) to obtain advancement. If, for example, a supervisor’s direction violates
the interests or policy of the ranch, employees would have less fear of reprisal
for not following it.
Disadvantages:
 Some employees may not be able or want to do certain jobs into which a strict
seniority system would propel them. Employees should be able to opt not to
accept an opportunity for promotion.
 Ambitious workers may not be willing to "wait their turn" for higher-level jobs
that they want.
 Employee motivation to work as well as possible is not reinforced.
 New employees would be underrepresented in higher levels for a long time
(since they are the last hired and have least seniority).
 Employers would tend to hire over skilled people at entry level, so they have
the capacity for promotion.
B. Promotion by Merit:
Promotions based on merit advance workers who are best qualified for the
position, rather than those with the greatest seniority. When present employees are
applying for a position, a worker’s past performance is also considered. Effective
performance appraisal helps build trust in the system.
Merit is not easy to define and measure; it often requires difficult subjective
evaluations. At some point, someone has to make a judgment about an employee’s
relative merit. Employees may find it difficult to make a distinction between merit,
because it is so hard to measure in an objective way, and favoritism.
Advantages:
 Employee job-related abilities can be better matched with jobs to be filled.

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 Motivated and ambitious employees can be rewarded for outstanding
performance.
 Performance is fostered.
Disadvantages:
 Merit and ability are difficult to measure in an objective, impartial way.
 Supervisors may reward their favorites, rather than the best employees, with
high merit ratings.
 Disruptive conflict may result from worker competition for merit ratings.
 Unlawful discrimination may enter into merit evaluations.

6.3.2 DEMOTION:

Demotion is the reverse of promotion. It is the downward movement of an

employee in hierarchy with lower status, salary and decreased responsibilities. It is
generally used as a punitive measure for incompetence or a preliminary step to
dismissal. It is a downgrading process where the employees suffer considerable
emotional and financial loss.

According to D.S Beach, Demotion is ―the assignment of an individual to a job of

lower rank and pay usually involving lower level of difficulty and responsibility.
According to Arum Moapa and Saiyadain: Demotion is a downward assignment
in the organization‘s hierarchy to a lower level job which has less responsibility,
pay and status. Because of this hierarchical repositioning it has a negative
connotation and may lead to employee dissatisfaction.
6.3.3 Causes of Demotion
 Demotion may be used as a disciplinary weapon.
 Demotion may be resorted to when employees, because of ill health or
personal reasons, cannot do their job properly.

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  If a company curtails some of its activities, employees are often required to
accept lower-level position until normally is restored.
 The employee may be unable to meet the challenges posed by a new job.
 He may have low administrative skills.
 Due to poor business conditions and continuous losses, a firm may decide
to layoff some and to downgrade others.
 It is sometimes used as a disciplinary tool against offending employees.
6.4 Types of Separation
A. Resignation
In most cases, employees voluntarily resign organization employment. Employees
voluntary resigning should provide you with a written letter of resignation. While
resignation is voluntary, you should remember to acknowledge receipt of a letter of
resignation right away. Accept the resignation by writing “Accepted” with an
effective date and signing your name and date on the original (copy to employee).
Once accepted, an employee may not rescind the resignation without
management’s agreement.

B. Retirement
An employee’s decision to retire is entirely voluntary. However, an employee’s
retirement decision does not automatically terminate organization employment.
Retiring employees must also submit a letter of resignation to the home
department.

C. Probationary Releases and Extensions

Probationary employees are at-will and may be released during probation. You are
encouraged to contact Employee Relations as soon as you begin having concerns
about a probationary employee. The decision to release an employee should be

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reviewed prior to the end of the probationary period with Employee & Labor
Relations.

In some circumstances, the probationary period may be extended an additional

three months. Probationary employees must be advised, in writing, of the reasons
for the extension no later than seven calendar days before the six month
probationary period ends. A decision to extend probation requires review and
coordination with employee & labor relations. You are encouraged to contact
Employee and Labor Relations as soon as you begin thinking about extending an
employee’s probationary period but no later than two weeks before the end of
probationary period. More information about managing the probationary
employees, see the 'Performance Management' section on the left.

D. Termination for Cause

Career employees may be terminated at the conclusion of the progressive
discipline process for failure to improve attendance, conduct and/or performance.
Career employees may be terminated without previous disciplinary action due to
serious misconduct. In any circumstance, termination of a career employee must
be reviewed and approved in advance by Employee and Labor Relations.

E. Resignation in Lieu of Termination

Employees subject to an involuntary separation action, e.g., probationary release,

termination, may voluntarily request to resign in lieu of rumination. Management
is encouraged to accept offers to resign in lieu of termination. However,
management may not coerce or otherwise pressure an employee to agree to resign
in lieu of termination. You should be in contact Employee and Labor Relations
prior to accepting resignations in lieu of termination.

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F. Termination of Employment Contracts
Contract employees are at-will and the terms for termination should be provided in
the employment contract. A decision to release a contract employee prior to the
normal termination date of a contract, or non-renewal of a long-term contract
employee, should be reviewed in advance with Employee and Labor Relations.

G. Termination of Managers & Senior Professionals (MSP)

Managers and senior professionals (MSP) may be terminated when, in
management's judgment, the needs or resources of a department or the
performance or conduct of an employee do not justify the continuation of an
employee's appointment. There are no layoff policy provisions for MSP’s. Then
contact Employee & Labor Relations for assistance in terminating or releasing a
manager or senior professional.

H. Job Abandonment
Employees absent from work, without authorization, for more than a certain
number of days (consult the applicable organization policy or collective bargaining
agreement), may trigger the job abandonment process. Employees may be
terminated for job abandonment following the appropriate notification process.
You must work closely with Employee and Labor Relations to evaluate the need
for and decision to proceed with a job abandonment action.

I. Layoff
Employees may be laid off from career positions based on a lack of work and/or
lack of funds. Layoff may be permanent or temporary. Layoffs are generally
determined by seniority (total years at UC) order and should not, in most cases, be
based on performance. Generally, employees need 60 days written notice before
permanent layoff. Therefore, departments are encouraged to begin layoff planning

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at least 90 days in advance of the effective date. Department considering layoffs
should review the applicable policies or collective bargaining agreements and
consult with Employee & Labor Relations early in the planning process. More
detailed information regarding layoff actions is available in the LAYOFF
RESOURCES FOR MANAGERS section to the left.

J. Medical Separation
A regular status employee who becomes unable to perform essential functions of
his or her position with or without reasonable accommodation, due to a disability,
may be separated from employment. Prior to medical separation, the organization
will engage in the interactive process in accordance with the applicable provisions
of organization policy or collective bargaining agreements.

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 CHAPTER – 7

LABOR RELATIONS

7.1 TRADE UNIONS AND MANAGEMENT

INTRODUCTION:

With the changed social, political and educational environment in terms of

awareness of rights, trade unions are considered a major component of industrial
relations system. Workers union plays a crucial role to protect the interest of its
members.

Trade unions are those organizations of employees/workers who work for the
maintenance and enhancement of their economic status by insisting on a rise in
money wages and improvement in working conditions and benefits. Besides this
economic objective, there are other dimensions of trade unions which have grained
importance in the context of the changing sociopolitical environment. The workers
are not only a factor of production but an individual whose total life situation is a
matter of concern for the trade unions. Trade unions are considered to be
institutions experimenting with industrial democracy which would strengthen
democracy. They have also been viewed as instruments of change in the socio-
political system so that workers may have their own government and prevent their
exploitation.

According to G.D.H. Cole, "a trade union means an association of workers in one
or more occupations - an association carried on mainly for the purpose of
protecting and advancing the members' economic interests in connection with their
daily work".

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7.1.1 OBJECTIVES AND NEED OF TRADE UNIONS

Unions concentrate their attention to achieve the following objectives:

(A) Wages and Salaries: The subject which drew the major attention of the trade
unions is wages and salaries. This item may be related to policy matters. However,
differences may arise in the process of their implementation. In the case of
unorganized senior the trade union plays a crucial role in bargaining the pay scales.

(B) Working Conditions : Trade unions with a view to safeguard the health of
workers demand the management to provide all the basic facilities such as lighting
and ventilation, sanitation, rest rooms, safety equipment while discharging
hazardous duties, drinking water, refreshment, minimum working hours, leave and
rest, holidays with pay, job satisfaction, social security benefits and other welfare
measures.

(C) Personnel Policies: Trade unions may fight against improper implementation
of personnel policies in respect of recruitment, selection, promotions, transfers,
training, etc.

(D) Discipline : Trade unions not only conduct negotiations in respect of the items
with which their working conditions may be improved but also protect the workers
from the clutches of management whenever workers become the victims of
management's unilateral acts and disciplinary policies. This victimization may take
the form of penal transfers, suspensions, dismissals etc. In such a situation the
separated worker who is left in a helpless condition may approach the trade union.
Ultimately, the problem may be brought to the notice of management by the trade
union, which explains about the injustice meted out to an individual worker and
fights the management for justice. Thus, the victimized worker may be protected
by the trade union.
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(E) Welfare: As stated earlier, trade unions are meant for the welfare of workers.
Trade union works as a guide, consulting authority and cooperates in overcoming
the personal problems of workers. It may bring to the notice of management,
through collective bargaining meetings the difficulties of workers in respect of
sanitation, hospitals, quarters, schools and colleges for their children's cultural and
social problems.

(F) Employee-Employer Relations: Harmonious relations between the employees

and employer are required for industrial peace. A trade union always strives for
achieving this objective. However, the bureaucratic attitude and unilateral thinking
of management may lead to conflicts in the organisation which, ultimately, disrupt
the relations between the workers and the management. Trade union, being the
representative of all the workers, may carry out continuous negotiations with the
management with a view to promoting industrial peace.

(G) Negotiating Machinery: Negotiations include the proposals made by one

party and the counterproposals of the other. This process continues until the parties
reach an agreement. Thus, negotiations are based on the give and take' principle.
Trade union, being a party for negotiations, protects the interests of workers
through collective bargaining. Thus, the trade union works as the negotiating
machinery.

(H) Safeguarding Organizational Health and the Interest of the Industry:

Organizational health can be diagnosed by methods evolved for grievance
redressal and techniques adopted to reduce the rate of absenteeism and labor
turnover and to improve the employee relations. Trade union by their effective
working may achieve employee satisfaction. Therefore trade unions help in
reducing the rate of absenteeism, labor turnover and developing systematic

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grievance settlement procedures leading to harmonious industrial relations. Trade
unions can thus contribute to the improvements in level of production, productivity
and discipline thereby improving quality of work-life.

7.1.2 FUNCTIONS OF TRADE UNIONS:

(A) Militant or protective or intra-mutual functions: These functions include

protecting the workers' interests, i.e., hike in wages, providing more benefits, job
security, etc. through collective bargaining and direct action such as strikes,
gheraos, etc.

(B) Fraternal or extra-mutual functions: These functions include providing

financial and non-financial assistance to workers during the periods of strikes and
lock-outs, extension of medical facilities during slackness and casualties, provision
of education, recreation, recreational and housing facilities, provision of social and
religious benefits, etc.

(C) Political functions: These functions include affiliating the union to a political
party, helping the political party in enrolling members, collecting donations,
seeking the help of political parties during the periods of strikes and lock-outs.

(D) Social functions: These functions include carrying out social service activities,
discharging social responsibilities through various sections of the society like
educating the customers etc.

7.2 Collective Bargaining

Collective bargaining is a process whereby organized labor and management
negotiate the terms and the conditions of employment. Let us explore some
definitions from different sources: “Collective bargaining is a method by which
trade unions protect and improve the condition of their member’s working lives.”

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According to Flanders “Collective Bargaining as a means of joint regulation”
According to ILO, (convention no: 87) “Collective Bargaining is a fundamental
right. The right to Collective Bargaining forms an integral part of the ILO
declaration on fundamental Principles (1998).”
OECD (Organization for Economic Co-operation and Development), WTO (World
Trade Organization) and the United Nations advocates Collective Bargaining in
similar tones. Collective Bargaining is a part of “Core Labor Standards, Social
clause and Global Compact respectively” This means future that Collective
Bargaining should be considered as a Fundamental Right.
Today collective bargaining has assumed a complex nature, conducted in the most
formal environment, associating the services of a large number of experts, legal
practitioners, consultants and specialized personnel. Today it is regarded as a social
process, because it occurs in a social setting.
In majority of the cases collective bargaining process deals with issues like:
 Rate of wages, pay.
 Hours of employment, working conditions
 Employment policies
 Productivity settlement

7.2.1 Advantages of Collective Bargaining

To understand the collective bargaining it is necessary to know about the various
advantages of collective bargaining, these are:
 Collective bargaining has the advantage of settlement through dialogue and
consensus rather than through conflict and confrontation. Agreement resulting
from collective bargaining usually represents the choice or compromise of the
parties themselves.

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 Collective bargaining agreements often institutionalize settlement through
dialogue. For instance, a collective agreement may provide for methods by
which disputes between the parties will be settled. In that event parties know
beforehand that if they are in disagreement there is an agreed method by which
such disagreement may be resolved.
 Collective bargaining is a form of participation because it involves a sharing of
rule making power between rule making power between employers and unions
in the areas which in earlier times were regarded as management prerogative
e.g. transfer, promotion, redundancy.
 Collective bargaining agreements sometimes renounce or limit the settlement of
disputes through trade union action.
 Collective bargaining is an essential feature in the concept of social partnership
towards which labor relations should strive. Social partnership in this context
may be described as a partnership between organized employer institutions and
organized labor institutions designed to maintain non- confrontational process
in the settlement of disputes which may arise between employers and
employees.
 Collective bargaining has a valuable by- products relevant to the relationship
between the two parties.
 In societies where there is a multiplicity of unions and shifting union loyalties,
collective bargaining a consequent agreements tend to stabilize union
membership.
 Collective bargaining is the most important and effective in improving
industrial relations.

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 7.3 CONFLIT RESOLUTIONS:
Meaning:
Conflict resolution is the process by which two or more parties reach a
peaceful resolution to a dispute. Conflict may occur between co-workers, or
between supervisors and subordinates, or between service providers and their
clients or customers.

Conflict Resolution Process

1. Clarify what the disagreement is: Clarifying involves getting to the heart
of the conflict. The goal of this step is to get both sides to agree on what the
disagreement is. To do this, you need to discuss what needs are not being
met on both sides of the conflict and ensure mutual understanding. During
the process, obtain as much information as possible on each side’s point of
view. Continue to ask questions until you are certain that all parties involved
(you and those on either side of the conflict) understand the issue.
2. Establish a common goal for both parties: In this step of the process, both
sides agree on the desired outcome of the conflict. “When people know that
they’re working towards the same goal, then they’re more apt to participate
truthfully to make sure that they reach that end goal together.” Kimberly A.
3. Discuss ways to meet the common goal: This involves listening,
communicating, and brainstorming together. Continue with both sides
working together to discuss ways that they can meet the goal they agreed on
in step to Keep going until all the options are exhausted.
4. Determine the barriers to the common goal: In this step of the process,
the two parties acknowledge what has brought them into the conflict and talk
about what problems may prevent a resolution. Understanding the possible

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 problems that may be encountered along the way lets you proactively find
solutions and have plans in place to handle issues. Define what can and
cannot be changed about the situation. For the items that cannot be changed,
discuss ways of getting around those road blocks.
5. Agree on the best way to resolve the conflict: Both parties need to come to
a conclusion on the best resolution. Start by identifying solutions that both
sides can live with. Ask both sides and see where there is common ground.
Then start to discuss the responsibility each party has in maintaining the
solution. It’s also important to use this opportunity to get to the root cause to
ensure this conflict will not come up again. “A lot of times when we try to
fix problems, we get so caught up in fixing it that we do not identify what
we need to do so it doesn’t happen.” Benjamin cautioned.
6. Acknowledge the agreed upon solution and determine the
responsibilities each party has in the resolution: Both sides need to own
their responsibility in the resolution of the conflict and express aloud what
they have agreed to. After both parties have acknowledged a win-win
situation, ask both parties to use phrases such as “I agree to…” and “I
acknowledge that I have responsibility for…”

7.4. Grievance Handling

Grievance is formal complaint which demonstrates any kind of dissatisfaction in an
employee, arising out of the factors which are related to his job. The
communication of grievances should be done formally. It can be communicated
via:
 A written document
 E-mail.

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The organizations which allow the employees to see the top level executives
directly with their grievances are called to have “Open Door Policy”. Many of the
lower level employees do not find it very comfortable to approach the top
executives directly.
The organizations in which the employee is required to talk to his immediate senior
about his grievances, which either offers a solution or escalates the grievance are
called to have “Step Ladder Policy” for grievance handling.
7.4.1 Importance of Grievance Handling
Grievance handling process gives the aggrieved employees an opportunity to
communicate their feelings and problems to the concerned people. These people
can then address the grievances as per the policies. A good grievance handling
system brings following benefits to the organization:
a.) It develops the trust of employees in the organization, its motives and policies
b.) It helps in addressing the employee’s problems before they become too big
c.) It helps in improving the overall work conditions and atmosphere
d.) It helps in developing a committed work force and improving the productivity
e.) It helps in identifying the areas of improvement and taking the required actions
7.4.2 Causes of Grievances
The factors causing the grievance can be divided into three:
i. Grievances due to management policies can be sub-divided into:
a. Salaries
b. Overtime
c. Leave policies
d. Lack of growth in career
e. Conflicts in the roles
f. Unmatched skills and responsibilities
g. Disciplinary action
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ii. Grievances due to working conditions can be sub-divided into:
a. Unhygienic work environment
b. Safety issues
c. Insufficient equipments
d. Indiscipline and wrong approaches to discipline
e. Unrealistic expectations
f. Transfer
iii. Grievances due to interpersonal factors can be sub - divided into:
a. Inability to get along with superiors
b. Poor relations with team members
c. Ego
d. Impractical approach to life
7.4.3 Steps of Grievance Handling
The important steps in grievance handling procedure are:
1. Accepting the grievance and acknowledging it
2. Carefully listening the problem
3. Understanding the redefining the problem to ensure that both the parties are at
the same level of understanding
4. Gathering the information – all facts and figures.
5. Offering the best solution
6. Follow up

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 7.4.4 The Effects of Grievances

Grievance affects employees, management and work and its effects are:
i. Effect of grievance on Employees
A) Frustration
B) De-motivation
C) Aloofness
D) Low productivity

ii. On the Management

i.) Labor unrest
ii.) Absenteeism
iii.) Indiscipline
iv.) iv.) High labor turnover
iii. On Work
i.) Low productivity
ii.) High wastages
iii.) Increased costs
7.5 Managing Employee Industrial Relations:
There are phenomenal changes in industrial relations field in the world. To
improve the working conditions in industries and also to safe guard the interest of
the workers and to put a check on amassment of wealth by industrialists.
Industrial relations are the relationships between employees and employers
within the organizational settings. From this perspective, industrial
relations cover all aspects of the employment relationship, including human
resource management, employee relations, and union-management (or
labor) relations.

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The main concepts of industrial relations are:

1. Preservation and promotion of economic interest of workers along with social

interest.

2. Peace and productivity goes hand in hand hence, attempt to reduce industrial
dispute and promote peace is a necessity.

3. Employer employee relation should be made healthy and growing.

4. Running of the industry, day to day work should be made more democratic with
increasing workers participation.

5. Producing products at a very competitive price so that country can promote

export and our economy can improve.

6. Bringing mental revolution in management.

The determinants of good industrial relation can be promoted

1. Measures for securing and preserving unity and better relations between workers
and employers

2. Arrange to probe and settle industrial dispute between employer employee or

employer and employer or employee and employee, give proper representation to
workers union and industrial federations of employers.

3. Both the ultimate weapons of employers and employee – strike and lock out
should be prevented at any cost. Proper relief to workers after a lock out‘ or lay
off‘ through government agencies

4. Workers participation at all levels and encourage give and take principle in
collective Bargaining.

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Industrial relation requires a study regarding

(i) conditions of work

(ii) compensation paid for the sweat the worker makes
iii) Permanency of the job assured continuance of work or otherwise.
The parties to Industrial Relations are
1) Workers and their unions, the intelligence level knowledge of
workers, back-ground of worker leaders, real or bogus their linkage with
political unions, are to be considered for the effective relations.
2) Nature of employment and employers, whether benevolent, interested
in workers or aiming to get as much profit as possible squeezing workers
their attitude plays vital role in maintaining better relations. Whether they
want to have team and growth of their team as a whole or just hire and
fire system.
3) Position of government, political will whether opportunitie favoring
employers or interested in workers, are to be seen. Their interest in
workers can be seen through their actions in creating Laws for labor
welfare and implementing them effectively.

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 CHAPTER – 8

CROSS-CUTTING ISSUES IN HUMAN RESOURCE

MANAGEMENT

8.1 Legal Definitions of Sexual Harassment

Sexual harassment is a legal term, created for the purpose of ending harassment
and discrimination against women in the workplace. The term is constantly being
redefined and extended in legislation and court decisions. However, not all sexual
behavior in the workplace is harassment, and the laws against sexual harassment
do not extend to situations outside the workplace or school.

The basic definition of sexual harassment comes from the United Stated Equal
Employment Opportunity Commission (EEOC):
Unwelcome sexual advances, requests for sexual favors, and other verbal or
physical conduct of a sexual nature constitutes sexual harassment when submission
to or rejection of this conduct explicitly or implicitly affects an individual's
employment, unreasonably interferes with an individual's work performance or
creates an intimidating, hostile or offensive work environment.

This definition has been further elaborated:

Sexual harassment can occur in a variety of circumstances, including but not

limited to the following:

 The victim as well as the harasser may be a woman or a man. The victim
does not have to be of the opposite sex.
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  The harasser can be the victim's supervisor, an agent of the employer, a
supervisor in another area, a co-worker, or a non-employee.
 The victim does not have to be the person harassed but could be anyone
affected by the offensive conduct.
 Unlawful sexual harassment may occur without economic injury to or
discharge of the victim.
 The harasser's conduct must be unwelcome.

8.1.1 Types of Sexual Harassment in Work Place

Sexual harassment is unwelcome sexual behavior, which could be expected to
make a person feel offended, humiliated or intimidated. Sexual harassment is
against the law. Some types of sexual harassment may also be offences under
criminal law and should be reported to the police, including indecent exposure,
stalking, sexual assault and obscene or threatening communications, such as phone
calls, letters, emails, text messages and postings on social networking sites.
Sadly, sexual harassment has always been a feature of life at work. Perhaps it is not
always quite as blatant today as it has been in the past, but it is still there, in more
or less subtle forms, and it is just as unpleasant. People subject to sexual
harassment can take legal action but it must be the policy of the organization to
make it clear that it will not be tolerated, and this policy should be backed up by
procedures and practices for dealing with harassment. It can be physical, verbal or
written.
 Physical- Physical violence, touching, unnecessary close proximity.
 Verbal- Comments and questions about appearance, life-style, sexual
orientation, offensive phone calls.
 Non-Verbal- Whistling, sexually-suggestive gestures, display of sexual
materials.

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Sexual harassment is covered in the workplace when it happens:
 At work
 At work-related events
 Between people sharing the same workplace
 Between colleagues outside of work.

8.1.2 Effects of Sexual Harassment

Sexual harassment at work can have very serious consequences both for the
harassed individual as well as for other working women who experience it
secondhand. The consequences to the individual employee can be many and
serious. In some situations, a harassed woman risks losing her job or the chance
for a promotion if she refuses to give in to the sexual demands of someone in
authority. In other situations, the unwelcome sexual conduct of co-workers makes
the working conditions hostile and unpleasant- putting indirect pressure on her to
leave the job. Sometimes, the employee is so traumatized by the harassment that
she suffers serious emotional and physical consequences—and very often,
becomes unable to perform her job properly.
The consequences to working women as a group are no less serious. Sexual
harassment has a cumulative, demoralizing effect that discourages women from
asserting themselves within the workplace, while among men it reinforces
stereotypes of women employees as sex objects. Severe or pervasive sexual
harassment in certain types of businesses creates a hostile or intimidating
environment that causes women to leave their jobs and look elsewhere for work or
discourages them from seeking those jobs in the first place.
The effect on the morale of all employees can also be serious. Both men and
women in a workplace can find their work disrupted by sexual harassment even if
they are not directly involved. Sexual harassment can have a demoralizing effect

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on everyone within range of it, and it often negatively impacts company
productivity on the whole.
8.1.3 Remedies
There are no easy solutions to these problems. It may be very hard to eradicate
sexual harassment completely, but the effort must be made along the following
lines.
1. Issue a clear statement by the chief executive that sexual harassment will not be
tolerated.
2. Back up the statement with a policy directive that spells out in more detail that
the organizations deplore it, why it is not acceptable and what people who
believe they are being subjected to harassment can do about it.
3. Reinforce the policy statement by behavior at senior level that demonstrates
that it is not merely words but that these exhortations have meaning.
4. Ensure that the sexual harassment policy is stated clearly in induction courses
and is conveyed to everyone on promotion. Reinforce this message by regular
reminders.
5. Make arrangements for employees subjected to sexual harassment to seek
advice, support and counseling without any obligation to take a complaint
forward. They could talk informally with someone in HR. Alternatively, a
counselor (possibly engaged as part of an employee assistance programme) can
usefully offer guidance on harassment problems, assist in resolving them
informally by seeking, with the agreement of the complainant, a confidential
and voluntary interview with the person complained against to achieve a
solution without resource to a formal disciplinary procedure, assist in
submitting a complaint if the employee wishes to raise it formally, and
counseling the parties on their future conduct.

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6. Create a special procedure for hearing complaints about sexual harassment. The
normal procedure may not be suitable because the harasser could be the
employee’s line manager. The procedure should provide for employees to bring
their complaint to someone of their own sex, should they so choose.

8.2 Equal Employment Opportunity

protects applicants and employees from discrimination in hiring, promotion,
discharge, pay, fringe benefits, job training, classification, referral, and other
aspects of employment, on the basis of race, color, religion, sex (including
pregnancy), or national origin. Religious discrimination includes failing to
reasonably accommodate an employee’s religious practices where the
accommodation does not impose undue hardship.

Age- protects applicants and employees 40 years of age or older from

discrimination based on age in hiring, promotion, discharge, pay, fringe benefits,
job training, classification, referral, and other aspects of employment.
Sex- prohibits sex discrimination in the payment of wages to women and men
performing substantially equal work, in jobs that require equal skill, effort, and
responsibility, under similar working conditions, in the same establishment.
Genetics- protects applicants and employees from discrimination based on genetic
information in hiring, promotion, discharge, pay, fringe benefits, job training,
classification, referral, and other aspects of employment. Also restricts employers’
acquisition of genetic information and strictly limits disclosure of genetic
information. Genetic information includes information about genetic tests of
applicants, employees, or their family members; the manifestation of diseases or
disorders in family members (family medical history); and requests for or receipt
of genetic services by applicants, employees, or their family members.

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Relations- prohibit covered entities from retaliating against a person who files a
charge of discrimination, participates in a discrimination proceeding, or otherwise
opposes an unlawful employment practice.

8.2.1 Workforce Diversity Management

Diversity is generally defined as acknowledging, understanding, accepting, valuing,
and celebrating differences among people with respect to age, class, ethnicity,
gender, physical and mental ability, race, sexual orientation, spiritual practice, and
public assistance status.

8.2.2 Benefits of Diversity in the Workplace

Diversity is beneficial to both associates and employers. Although associates are
interdependent in the workplace, respecting individual differences can increase
productivity. Diversity in the workplace can reduce lawsuits and increase marketing
opportunities, recruitment, creativity, and business image.

8.2.3 Challenges of Diversity in the Workplace

There are challenges to managing a diverse work population. Managing diversity is
more than simply acknowledging differences in people. It involves recognizing the
value of differences, combating discrimination, and promoting inclusiveness.
Managers may also be challenged with losses in personnel and work productivity
due to prejudice and discrimination and complaints and legal actions against the
organization
8.3 HIV and Workplace
People living with HIV/AIDS have the right to remain active in the workplace.
However, they often face discrimination in the workplace when others are aware of
their condition.

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HIV is not transmitted through casual contact, such as sharing seats, utensils or
even hugs. As such, no special precautions need to be taken to prevent HIV
infection in normal workplace contacts, other than providing a safe and healthy
work environment.
An employer should not terminate the services of an employee living with
HIV/AIDS simply because he/she is living with the disease. Highly Active
Antiretroviral Therapy (HAART) allows people living with HIV to lead normal,
healthy and productive lives for many years. By maintaining employment,
employers are helping their employee living with HIV/AIDS to afford treatment
and thus remain healthy and economically active.

8.3.1 Helping Those with HIV Maintain Anti-Retroviral Therapy

The report makes several specific recommendations to help improve ART
adherence, including:
 Prioritizing actions that promote the economic independence of people living
with HIV.
 Improving national efforts to develop new anti-discrimination policies and
enforcing existing anti-discrimination laws in the workplace.
 Offering direct incentives to keep up ART, including food distribution and
economic incentives.
 Expanding opening hours of health facilities offering ART to ensure wider
access.
 The adoption of measures by employers to provide flexibility for people living
with HIV who may need to change their work arrangements. This includes time
off to visit health facilities to receive medication and support to help adhere to
treatment.

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 Strengthening of health systems by Governments, including the provision of
training and retention measures to benefit health workers and ensure
sustainability of treatment delivery.
 Ensuring that social protection schemes are sensitive to the needs of people
living with HIV and provide them with the necessary support to remain on
treatment.
8.3.2 Workforce Empowerment
Employee empowerment has been defined in many ways but generally means the
process of allowing employees to have input and control over their work, and the
ability to openly share suggestions and ideas about their work and the organization
as a whole. Empowered employees are committed, loyal and conscientious. They
are eager to share ideas and can serve as strong ambassadors for their
organizations.
Empowerment is based on the idea that giving employees skills, resources,
authority, opportunity, motivation, as well holding them responsible and
accountable for outcomes of their actions, will contribute to their competence and
satisfaction.

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