unit 1 human resource management: concept and...

DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Dr.Meena Sharma www.dimr.edu.in

HUMAN RESOURCE MANAGEMENT

Course No: 203 Course code - GC: 09

Sem-II

NOTES

Unit 1

Human Resource Management: Concept and Challenges

Meaning:

Human resources means the people. However, different management experts have defined human

resources differently. For example, Michael J. Jucius has defined human resources as “a whole

consisting of inter-related, inter-dependent and interacting physiological, psychological,

sociological and ethical components”.

In simple words, HRM is a process of making the efficient and effective use of human resources so

that the set goals are achieved. Let us also consider some important definitions of HRM.

Definition

Edwin Flippo defines- Human Resource Management as “planning, organizing, directing,

controlling of procurement, development, compensation, integration , maintenance and separation

of human resources to the end that individual, organizational and social objectives are achieved.”

According to Decenzo and Robbins “HRM is concerned with the people dimension in

management. Since every organisation is made up of people, acquiring their services, developing

their skills, motivating them to higher levels of performance and ensuring that they continue to

maintain their commitment to the organisation are essential to achieving organisational objectives.

This is true, regardless of the type of organisation-government, business, education, health,

recreation, or social action”.

Thus, HRM can be defined as a process of procuring, developing and maintaining competent

human resources in the organisation so that the goals of an organisation are achieved in an

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effective and efficient manner. In short, HRM is an art of managing people at work in such a

manner that they give their best to the organisation for achieving its set goals.

Objectives:

1. To help the organisation to attain its goals effectively and efficiently by providing competent

and motivated employees.

2. To utilize the available human resources effectively.

3. To increase to the fullest the employee’s job satisfaction and self-actualisation.

4. To develop and maintain the quality of work life (QWL) which makes employment in the

organisation a desirable personal and social situation.

5. To help maintain ethical policies and behaviour inside and outside the organisation.

6. To establish and maintain cordial relations between employees and management.

Scope:

The scope of HRM is, indeed, very vast and wide. It includes all activities starting from manpower

planning till employee leaves the organisation. Accordingly, the scope of HRM consists of

acquisition, development, maintenance/retention, and control of human resources in the

organisation

• Human Resources Planning:

Human resource planning is a process by which the company to identify the number

of jobs vacant, whether the company has excess staff or shortage of staff and to deal

with this excess or shortage.

• Job Analysis Design:

Job analysis gives a detailed explanation about each and every job in the company.

• Recruitment and Selection:

Company prepares advertisements and publishes them in the news papers. A

number of applications are received after the advertisement is published, interviews

are conducted and the right employee is selected.

• Orientation and Induction:

Once the employees have been selected an induction or orientation program is

conducted. The employees are informed about the background of the company

• Training and Development:

Every employee goes under training program which helps him to put up a better

performance on the job.

• Performance Appraisal:




HR department checks the performance of the employee. Based on these appraisal

future promotions, incentives, increments in salary are decided.

• Compensation Planning and Remuneration:

There are various rules regarding compensation and other benefits.

• Motivation, Welfare, Health and Safety:

Motivation becomes important to sustain the number of employees in the company.

• Industrial Relations:

Another important area of HRM is maintaining co-ordinal relations with the union

members.

Nature of HRM

1)Concerned with Human Element :Personnel management deals with people at work. It includes

organisation, motivation, guidance and leading of people for the accomplishment of goals of the

organisation.

2) Integral Part of Management : Personnel management is inherent in managing. It is an

integral part of the job of a manager. Every manager is concerned with the performance of

personnel functions such as training, communication, appraisal and guidance.

3) Wide Range of Activities :Involves several functions concerned with the management of

people at work. It includes manpower planning, employment, placement, training, appraisal and

compensation of employees.

4)Motivation of Human Resources: Personnel management is concerned with the motivation of

human resources in the organisation.

5) Pervasive Function :Personnel management is pervasive in nature. Since people are a

necessary element in any organisation, personnel management is inherent in all enterprises.

6) Continuous Function :Every manager has to perform this function continuously.

7) Broader Function: It covers all types of people in the organisation from workers till the top

level management.

8) People Oriented: HRM is the process which brings people and organisations together so

that their goals can be achieved.

9) Action Oriented: Human resource management believes in taking actions in order to

achieve individual and organisational goals rather than just keeping records and procedures.

10) Development Oriented: Development of employees is an essential function of human

resource management in order to get maximum satisfaction from their work so that they give their

best to the organisation




FUNCTIONS OF HRM

Planning: This function is very vital to set goals and objectives of an organization. The policies

and procedures are laid down to achieve these goals. When it comes to planning the first thing is to

foresee vacancies, set the job requirements and decide the recruitment sources. For every job

group, a demand and supply forecast is to be made, this requires an HR manager to be aware of

both job market and strategic goals of the company. Shortage versus the excess of employees for

that given job category is determined for a given period. In the end, a plan is ascertained to

eliminate this shortage of employees.

Organizing: The next major managerial function is to develop and design the structure of the

organization. It fundamentally includes the following:

1. Employees are grouped into positions or activities they will be performing.

2. Allocate different functions to different persons.

3. Delegate authority as per the tasks and responsibilities that are assigned.

Directing: This function is preordained to inspire and direct the employees to achieve the goals.

This can be attained by having in place a proper planning of career of employees, various

motivational methods and having friendly relations with the manpower. This is a great challenge to

any HR manager of an organization; he/she should have the capability of finding employee needs

and ways to satisfy them. Motivation will be a continuous process here as new needs may come

forward as the old ones get fulfilled.

Controlling: This is concerned with the apprehension of activities as per plans, which was

formulated on the basis of goals of the company. The controlling function ends the cycle and again

prompts for planning. Here the HR Manager makes an examination of outcome achieved with the

standards that were set in the planning stage to see if there are any deviations from the set

standards. Hence any deviation can be corrected on the next cycle.

OPERATIONAL FUNCTIONS

Recruitment: This is the most challenging task for any HR manager. A lot of attention and

resources are required to draw, employ and hold the prospective employees. A lot of elements go

into this function of recruitment, like developing a job description, publishing the job posting,

sourcing the prospective candidates, interviewing, salary negotiations and making the job offer.




Training and Development: On the job training is the responsibility of the HR department.

Fresher training may also be provided by some companies for both new hires and existing

employees. This Fresher training is mainly done to make the employees up to date in their

respective areas as required by the company. This function makes the employees understand the

process and makes it easy for them to get on their jobs with much ease. During the process of the

training and development, the results are monitored and measured to find out if the employees

require any new skills in addition to what he/she has.

Professional Development: This is a very important function of Human Resource Management.

This function helps the employees with opportunity for growth, education, and management

training. The organization undertakes to sponsor their employees for various seminars, trade

shows, and corporal responsibilities. This, in turn, makes the employees feel that they have been

taken care by their superiors and also the organization.

Compensation and Benefits: A company can attain its goals and objectives if it can acclimatize to

new ways of providing benefits to the employees. Some of the benefits given by companies are

listed below for our understanding:

4. Working hour flexibility

5. Extended vacation

6. Dental/Medical Insurance

7. Maternal/Paternal Leave

8. Education Reimbursement for children

Performance Appraisal: The employees of any organization will be evaluated by the HR

department as per the performance. This function of Human Resource Management is to help the

organization in finding out if the employee they have hired is moving towards the goals and

objectives of the organization. On the other hand, it also helps the company to evaluate whether

the employees needs improvement in other areas. It also helps the HR team in drawing certain

development plans for those employees who have not met the minimal requirements of the job.

Ensuring Legal Compliance: To protect the organization this function plays a crucial role. The

HR department of every organization should be aware of all the laws and policies that relate to

employment, working conditions, working hours, overtime, minimum wage, tax allowances etc.

Compliance with such laws is very much required for the existence of an organization.

Importance of HR managers in organisations




• Strategy management: This is an important aspect of any organisation and plays a vital

role in human resource management. HR managers manage strategies to ensure the

organisation reaches its business goals, as well as contributing significantly to the corporate

decision-making process, which includes assessments for current employees and

predictions for future ones based on business demands.

• Benefits analysis: HR managers work towards reducing costs, such as with recruitment

and retention. HR professionals are trained to conduct efficient negotiations with potential

and existing employees, as well as being well-versed with employee benefits that are likely

to attract quality candidates and retaining the existing workforce.

• Training and development: Since HR managers contribute significantly to training and

development programmes, they also play a pivotal role in strengthening employer-

employee relationships. This contributes to the growth of employees within the company,

hence enhancing employee satisfaction and productivity.

• Interactivity within employees: HR managers are responsible for conducting activities,

events and celebrations in the organisation which gives way to team building opportunities.

Moreover, it enhances interactivity within employees and instils a sense of trust and respect

among peers.

• Conflict management: The department to go to when any kind of professional conflict

arises between employees is HR. They ensure that issues and conflicts are resolved

effectively, approaching the problem with an unbiased attitude and encouraging effective

communication to reach a solution. In addition, they help employees understand various

ways of developing effective work relationships and the importance of not letting personal

judgement affect their behaviour.

• Establishing a healthy work culture: A healthy work culture is pivotal in bringing out the

best in employees. HR managers contribute significantly in setting up a healthy and

friendly work culture, which further translates into better productivity among employees.

• Compliance: HR professionals work towards making the organisation compliant with

employment laws, as well as maintaining records of hiring processes and applicants’ log.

PRACTICES AND POLICIES OF HRM




HR policies are the formal rules and guidelines that organization put in place to hire, train,

access and reward the members of their workplace.

HR policies are the system of codified decisions, established by an organisation,to support

administrative personnel functions,performance management ,employee relations and resource

planning

HR policies, procedures and practices establish a framework to help to manage people. They

cover everything from how the business recruits its staff through to ensuring employees are clear

about procedures, expectations and rules, are how managers can go about resolving issues if they

arise.

• Some methods utilized by HRD staff are called best practices

• Mean the way an employment action is handled is the recommended way according to HR

experts.

• It is to apply principles and policies.

Practices of HRM

Safe, Healthy & Happy

Workplace Open Book Management

Style :

Performance - linked Bonuses

360 Degree Performance Management

Feedback System

Fair Evaluation System for Employees Knowledge

Sharing

Highlight Performer

Open House Discussion Feedback

Mechanism

Reward Ceremonies

Delight Employees

with Unexpected




CHALLENGES OF HRM

Recruitment and Selection:

Finding a suitable candidate for the job from a large number of applicants is a basic problem for

the human resource manager. They have to make suitable changes from time to time in the

selection procedure and see to it that the candidate is up to the mark fulfilling the job requirements.

If required, the candidate should be provided with training to get quality results.

2. Emotional and Physical Stability of Employees:

Providing with wages and salaries to employees is not sufficient in today’s world. The human

resource manager should maintain proper emotional balance of employees. They should try to

understand the attitude, requirements and feelings of employees, and motivate them whenever and

wherever required.

3. Balance Between Management and Employees:

The human resource manager has a responsibility to balance the interest of management and

employees. Profits, commitment, cooperation, loyalty, and sincerely are the factors expected by

management, whereas better salaries and wages, safety and security, healthy working conditions,

career development, and participative working are the factors expected by employees from

management.

4. Training, Development and Compensation:

A planned execution of training programmes and managerial development programmes is required

to be undertaken to sharpen and enhance the skills, and to develop knowledge of employees.

Compensation in the form of salary, bonus, allowances, incentives and perquisites is to be paid

according to the performance of people. A word or letter of appreciation is also to be given, if

some of them have done their jobs beyond expectations to keep their morale up.

5. Performance Appraisal:

This activity should not be considered a routine process by the human resource manager. If

employees are not getting proper feedback from them, it may affect their future work. A scientific

appraisal technique according to changing needs should be applied and the quality of it should be

checked from time to time.




6. Dealing with Trade Union:

Union members are to be handled skillfully as they are usually the people who oppose the

company policies and procedures. Demands of the union and interests of the management should

be matched properly.

Retention

Hiring employees is not only the challenge that HRM faces; retaining them is also one. Retention

of employees is essential to minimize employee turnover rate. This is a major challenge for HRM

Workforce diversity

The composition of the workforce is getting diverse at present situation. Here diversity is not only

created by age, gender, educational background and religion but also by the nature, personality and

background of workers.With more diversification of workforce, issues related to bullying,

harassment, discrimination, etc may arise, to control which HRM should formulate and implement

strict rules and regulations.

Globalization

Globalization is a process by which a business firm or organization starts operating on an

international scale, creating international influence.

Internationalization of firms is obviously a Sign of Success but it is a challenge at the same time

because globalization invites issues related to unknown language, laws, work ethics, attitudes,

management approach, culture and tradition.

A human resource manager will need to deal with more heterogeneous functions such as

scheduling meetings, holiday management, human resource outsourcing, etc to overcome the

challenge.

Advancement in technology

With rapid advancement in technology, companies nowadays require such human force that has

the ability to learn and cope with the changes at an opportune moment.


http://smallbusiness.chron.com/calculate-employee-turnover-rate-annual-basis-10202.html



Technological changes must be taken into consideration by any kind of company. It is because the

present world demands every firm to move along with the change, or else be left behind and get

extinct.

Technological changes influence overall nature of work and the company will need to find out

employees that are capable to adjust with the change. During this process, unemployment, as well

as employment opportunities, arise, creating new challenges for HRM.

Management of information

Up-to-date information is essential for the operation of any company. Information may be

collected internally as well as externally. Once collected, all the information should be safely

maintained so that they would be readily available when needed in future.

On the other hand, information is also essential to clear queries of employees. HRM should be able

to present relevant facts and data while clearing such queries.

Managing any kind of information is a challenge to HRM because it should know which

information are actually useful and which are not. After distinguishing this information, it should

select such method of storing information which is safe as well as reliable.

Discipline

Discipline is one of the important issues that HRM needs to handle at present days. Lack of

discipline causes various problems which ultimately affect the productivity of the company.

For an instance, when discipline is not maintained, employees neglect their respo

Health and safety

It is one of the essential functions of HRM to collect its staff’s complete information, including

health information. It is necessary for employee’s personal safety. Keeping health information

about employees help the company in knowing what kind of tasks or activities are safe for their

employees to participate in.

Maintaining health information is also necessary to avoid the risk of legal complications. Several

companies at present provide health insurance to its employees as a fringe benefit. In lack of




proper health information about employees, various legal issues may arise when such insurance is

claimed.

STRATEGIC HUMAN RESOURCE MANAGEMENT

Strategic human resource management (SHRM) is about the formulation of HR strategies

in alignment with the overall corporate strategy to achieve the goals of the organisation

➢ Definition by Gary Dessler :

“Strategic human resource management means formulating and executing human resource

policies and practices that produce the employee competencies and behaviours that the company

needs to achieve its strategic aim”

➢ R. S. Schuler :

“Strategic human resource management is concerned with all those activities that affect

the behaviour of individuals in their efforts to formulate and implement the strategic needs of

business."

Nature of SHRM:

1) Organisational Level :Because strategies involve decisions about key goals, major policies and

the allocation of resources, they tend to be formulated at the top.

2) Focus :Strategies are business-driven and focus on organisational effectiveness; thus in this

perspective people are viewed primarily as resources to be managed toward the achievement of

Strategic business goals.

3. Integration of Strategy :Strategic HRM makes integration of the HRM and corporate strategy.

Strategic HRM seeks to ensure that HRM is fully integrated into strategic planning.

4) Strategic HRM is a Long Term Process : It is a process of environmental scanning, strategy

formulation strategy implementation and evaluation and control.

5. Offer Benefits to Organisation :Strategic HRM offers both financial and non-financial benefits

to the corporation.




8)Approach to Decisions Making :Strategic HRM is an approach to making decisions on the

intentions and plans of the organisation concerning the employment relationship and its

recruitment, training, development, performance management, reward, and employee relations

policies and practices.

9)Provide Direction to Achieve Goals : Strategic HRM refers to the overall direction the

organisation wishes to pursue in achieving its objectives through people.

IMPORTANCE

• It guides the company to move in a specific direction. It defines organization’s goals

and alignment with the company’s vision.

• It assists the firm in becoming proactive, rather than reactive, to make it analyse the

actions of the competitors and take necessary steps to compete in the market.

• It acts as a foundation for all key decisions of the firm.

• It attempts to prepare the organization for future challenges

• identifying ways to reach those opportunities.

• It ensures the long-term survival of the firm while coping with competition and

surviving the dynamic environment.

• It assists in the development of core competencies and competitive advantage, that

helps in the business survival and growth.

MODELS

1. Harvard Model- by Michael Beer




It is based on

1.Stakeholder interest. These stakeholders include …. These interests define the HRM policies.

2 situational factors influence these interests. Situational factors include workforce characteristics,

unions, and all the other factors.

3. Situational factors and stakeholder interest influence HRM policies. These include the core HR

activities, like recruitment, training, and reward systems.

4.When done well, HRM policies lead to positive HRM outcomes. These include the previously

mentioned retention, cost-effectiveness, commitment, and competence.

5. These positive HRM outcomes lead to long-term consequences. These can be individual,

organizational, and societal

It has discussed




1. line managers have to accept more responsibility for ensuring the alignment of competitive

strategy and HR policies.

2. The second point is that human resource in the organization should have a mission for

fulfilling the objectives of the organization in a more coherent way(How HR policies are

developed and implemented to achieve the objectives.

3. This model is composed of elements like mutual respect, mutual commitment, mutual

responsibility and it relies with teamwork approach and certain elements in soft view of

HRM.

4. Emphasizing the utility and inter-relationships of those elements are so valid and reliable in

achieving the objectives of HRM

2. Matching Model of HRM - by Fombrun

Devanna et.al – Strategic Human Resource Management “Matching Model’:

Michigan model of HRM has originated from the writings of C. Fomtbrun. Noel Tichy and

M./t. Devanna in Michigan school

The model shows how activities within HRM can be unified and designed in order to support the

organisations strategy.

It is divided into two parts: first which shows HR-strategy integration and second which depicts

the HR cycle.

A) Important HR issues to achieve such a match:

• Selection of the most suitable people to meet business needs.

• Performance in the pursuit of business, objectives.

• Rewards for appropriate performance.

• Development of skills and knowledge required to meet business objectives.




This model held that the HR system and the organizational structure should be managed in a

way that is congruent with organizational strategy.

The main focus was on the four functions of HRM

1. Selection,

2. Appraisal,

3. Development

4. Rewards

Matching model ensures way to achieve the organizational objectives is the applying of above

five major functions of HRM very effectively.




The work and contribution of properly selected human resource has to be evaluated in using

appropriate techniques.

Some kinds of rewards have to be offered on the basis of results of appraisal and the

performances of employees..

According to matching model this process is totally dependent on the HRD procedures and

programmes of the organization.

It is believed that the whole of HRM is a cyclical process which every function is

interdependent hence value of each function is very identical for acceding the organizational

objectives. In matching model, it tries to encapsulate all key functions of HRM and to utilize in

a more comprehensive manner.

Unit 2

HR Acquisition & Retention

Job Analysis

Job analysis is the systematic study of jobs to identify the observable work activities, tasks, and

responsibilities associated with a particular job or group of jobs. It is the process of collecting

information relating to the operations and responsibilities pertaining to a specific job.

Definitions :

Richard Henderson :

"Job analysis is the methodical compilation and study of work data in order to define and

characterize each occupation in such a manner as to distinguish it from all others"

Purpose of job analysis

Job analysis is used in preparation of job descriptions and job specifications which help in the

hiring of right personnel for the job. The general purpose of job analysis is to establish and

document the requirements of a job.

The aim of job analysis is to answer questions such as:




▪ What is the purpose of the job?

▪ What physical and mental task does the job holder undertake?

▪ When is the job to be performed?

▪ Where is the job to be performed?

▪ What are the conditions required for the job to be performed?

Importance of Job Analysis

1. HR Planning :

It is the foundation for forecasting demand for and supply of human resources in an organization.

2.Recruitment And Selection :

Recruitment generates a pool of candidates who are willing to perform in the organization,

whereas selection selects the best suited candidate out of the available candidates who are

supposed to perform well in the organization.

3.Training And Development :

By comparing knowledge and skill of current employees with the expected level of performance,

the need of training and development requirement can be assessed.

4. Performance Appraisal :

Job analysis helps in determining performance standards in critical parts of job.

5. Career Planning :

Job analysis provides a clear idea of opportunities in terms of career paths and jobs available in the

organization.

6. Compensation Management :

It helps to rank the job in order to determine pay surveys. Hence, it helps in compensation

decisions.

Job Description :




a) Meaning :

Job description is a written list of a job's duties, responsibilities, reporting relationships, working

conditions, and supervisory responsibilities involved in a job.

Job description is an important document, which is descriptive in nature and contains the final

statement of the job analysis. This description is very important for a successful recruitment

process.

Job description provides information about the scope of job roles, responsibilities and the

positioning of the job in the organization. And this data gives the employer and the organization a

clear idea of what an employee must do to meet the requirement of his job responsibilities.

A job description provides information on the following elements −

• Job Title / Job Identification / Organization Position

• Job Location

• Summary of Job

• Job Duties

• Machines, Materials and Equipment

• Process of Supervision

• Working Conditions

• Health Hazards

Job Specification

Job specification focuses on the specifications of the candidate, whom the HR team is going to

hire. The first step in job specification is preparing the list of all jobs in the organization and its

locations. The second step is to generate the information of each job.

This information about each job in an organization is as follows −

• Physical specifications




• Mental specifications

• Physical features

• Emotional specifications

• Behavioral specifications

A job specification document provides information on the following elements −

• Qualification

• Experiences

• Training and development

• Skills requirements

• Work responsibilities

• Emotional characteristics

• Planning of career

Job Evaluation

Job evaluation is a comparative process of analyzing, assessing, and determining the relative

value/worth of a job in relation to the other jobs in an organization.

The main objective of job evaluation is to analyze and determine which job commands how much

pay. There are several methods such as job grading, job classifications, job ranking, etc., which

are involved in job evaluation. Job evaluation forms the basis for salary and wage negotiations.

Job design

A) Meaning :

Job design means to decide the contents of a job. It fixes the duties and responsibilities of the job,

the methods of doing the job and the relationships between the job holder (manager) and his

superiors, subordinates and colleagues.

B) Definition :




▪ L. E. Davis :

“Job design is the specification of the contents, methods, and relationships of jobs in order to

satisfy technological and organizational requirements as well as the social and personal

requirements of the job holders"

Job enlargement

Job enlargement refers to that job design technique which integrates the various tasks performed at

the same level(horizontally) to the employee’s existing job duties.

Means taking charge of more duties and responsibilities which are not mentioned in the

job description

Job enrichment

Job enrichment is a common motivational technique used by organizations to give an employee

greater satisfaction in his work. It means giving an employee additional responsibilities previously

reserved for his manager or other higher-ranking positions.

Job enrichment can be defined as a vertical restructuring of a job, i.e. integration of the tasks, role,

responsibilities and authority across different levels in an organization, to add value to the

employee’s existing job profile

HUMAN RESOURCE PLANNING

Meaning:

Human Resource Planning (HRP) refers to the process of evaluation and identification of HR

requirements for meeting organizational goals to ensure competitive advantage in the

marketplace.

Bulla and Scoh:

“It is the process for ensuring that the Human Resources requirements of an organization are

identified and plans are made for satisfying those requirements”. Human Resources planning

are based on the concept that people are the most important strategic resources of an

organization.




Objectives:

1. To ensure optimum use of human resources currently employed

2. To determine future recruitment level

3. To ensure that necessary resources are available as and when required

4. To forecast future skill requirement to serve as a basis for training and development

programmes

5. To create plans, rules and regulations that meets the local and statewide laws in the given

industry.

6. To develop manuals and guides for employees and managers to follow, whether they are

training manuals or safety guides

7. To cope with changes in market conditions, technology, government policies, etc.

HR Planning Process

1. Analysing Organizational Objectives:

The objective to be achieved in future in various fields such as production, marketing, finance,

expansion and sales gives the idea about the work to be done in the organization.

2. Inventory of Present Human Resources:




From the updated human resource information storage system, the current number of employees,

their capacity, performance and potential can be analysed. To fill the various job requirements, the

internal sources (i.e., employees from within the organization) and external sources (i.e.,

candidates from various placement agencies) can be estimated.

3. Forecasting Demand and Supply of Human Resource:

The human resources required at different positions according to their job profile are to be

estimated. The available internal and external sources to fulfill those requirements are also

measured. There should be proper matching of job description and job specification of one

particular work, and the profile of the person should be suitable to it.

4. Estimating Manpower Gaps:

Comparison of human resource demand and human resource supply will provide with the surplus

or deficit of human resource. Deficit represents the number of people to be employed, whereas

surplus represents termination. Extensive use of proper training and development programme can

be done to upgrade the skills of employees.

5. Formulating the Human Resource Action Plan:

The human resource plan depends on whether there is deficit or surplus in the organization.

Accordingly, the plan may be finalized either for new recruitment, training, interdepartmental

transfer in case of deficit of termination, or voluntary retirement schemes and redeployment in case

of surplus.

6. Monitoring, Control and Feedback:

It mainly involves implementation of the human resource action plan. Comparison between the

human resource plan and its actual implementation is done to ensure the appropriate action and the

availability of the required number of employees for various jobs.

IMPORTANCE

1. Man-power planning is essential for determining present and future personnel needs of the

organisation.

2. It helps the organisation to cope with changes in competitive forces, markets, technology,

products etc.

3. It ensures optimum use of available human resources.




4. It provides adequate control measures to ensure that necessary man-power is available as and

when required.

5. It anticipates redundancies of labour force and avoids unnecessary dismissals.

6. It is a continuous process concerned with planning and development of human resources.

7. It is a process of getting the right number of qualified people into the right jobs at the right time.

8. It is the system of matching the supply of people internally (existing employees) and externally

(those to be employed in future) over a given period of time.

9. It helps the organisation to function smoothly and successfully not only in the short-period but

also in the long period.

10. It enables the organisation to cope with changes in competitive markets, market forces,

technology, products etc.

11. Man-power planning is an essential component of strategic planning.

Limitations of Human Resource Planning:

1. Lack of Overall Expertise:

HR practitioners are perceived as experts in handling personnel matters, but are not experts in

managing business.

2. Incompatible:

HR information often is incompatible with other information used in strategy formulation.

3. Ineffective in Some Cases:

Non-involvement of operating managers renders HRP ineffective. HRP is not strictly an HR

department function.

4. Inaccuracy:

HRP involves forecasting the demand and supply of personnel required. Its effectiveness depends

upon accurate projection which are not cent per cent accurate.

RECRUITMENT

Recruitment is the process of attracting, evaluating, and hiring employees for an organization.

B) Definition :

Edwin B. Flippo :

“Recruitment is the process of searching for prospective employees and stimulating them to apply

for jobs in the organization’




Recruitment Process:

Recruitment process is a process of identifying the jobs vacancy, analyzing the job requirements,

reviewing applications, screening, shortlisting and selecting the right candidate

Sources of Recruitment

Internal Sources

Internal sources of recruitment refer to hiring employees within the organization through −

• Promotions

• Transfers

• Former Employees

• Internal Advertisements (Job Posting)

• Employee Referrals

• Previous Applicants

External Sources: External sources of recruitment refer to hiring employees outside the

organization through −

• Direct Recruitment

• Employment Exchanges

• Employment Agencies

• Advertisements

• Professional Associations

• Campus Recruitment

SELECTION

Selection either, internal or external is a deliberate effort of the organization to select a fixed

number of personnel from a large number of applicants.

Definition :




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.”

Process of Selection

1. Preliminary Screening: An application form is designed to get a written record of candidate's

qualifications, experiences and other deatils. It helps in securing the necessary information about

the candidate's qualifications, training, experience, etc.

The information is useful in determining the suitability of the candidate for the concerned job. A

specimen of an application form is given on the next page.

After the applications have been received, they are properly checked as regards qualifications and

experience by the Screening Commitee. The applicants may be asked to attend preliminary

interview to provide additional information not mentioned in the application form.

Unsuitable candidates are rejected altogether. A list of candidates to be called for employment test

is made at this stage.

2. Selection Tests: Individuals differ with respect to physical characteristics, capacity, level of

mental ability, their likes and dislikes and also with respect to personality traits.

The differences among the individual candidates can be analysed with the help of various

psychological and trade tests.

They bring out the quality and weaknesses of individuals which could be analysed before offering

them jobs.

The tests must be designed properly. If they are biased, they will not be good indicators of one's

knowledge and skills. Selections based on them will be faulty. That is why, tests should not be

relied upon fully.




3. Employment Interview: Interview is used to secure more information about a candidate. The

main purposes of an employment interview are:

1. To find out the suitability of the candidate.

2. To seek out more information about the candidate.

3. To give the candidate an accurate picture of the job with details of terms and conditions

and some idea of organisational policies.

The communication skills of the candidate can be judged in the interview and also that whether the

information contained in the application is true or not.

4. Reference and Background Checking: A reference is potentially an important source of

information about a candidate's ability and personality if he holds a responsible position in some

organisation.

Prior to final selection, the prospective employer normally makes an investigation on the

references supplied by the applicant. He undertakes a thourough search into the candidate's family

background, past employment, education, personal reputation, police recorrd, etc.

5. Selection Decision: A list of candidates who clear the employment tests, interview, reference

checks, is prepared and then the selected candidates are listed in order of their merit.

For preparing the final list for each department, the views of the concerned department head are

also considered.

6. Medical Examination: The medical test of a candidate is an essential step in the selection

procedure. It has three objectives:

1. It serves to ascertain the applicant's physical capabilities to meet the job requirements.

2. It serves to protect the organisation against the unwarranted claim under workers'

compensation laws or against law suits for damages.

3. It helps to prevent communicable diseases from entering the organisation.

A proper medical examination will ensure higher standard of health and physical fitness of the

employees and will reduce the rates of accident, labour turnover, and absenteeism.




7. Job Offer or Appointment Letter: After a candidate has cleared all the hurdles in the selection

procedure, he is formally appointed by issuing him an appointment letter. The date by which the

candidate must join the orgainsation is mentioned in the letter. The broad terms and conditions of

employment, nature of job, pay scale, etc. are also an integral part of the apointment letter.

8. Contract of Employment: After getting the job offer, the candidate has to give his acceptance

within the time period given in the appointment letter. After acceptance, the candidate will have to

submit his certificates of qualifications and experience for verification by the personnel

department. Both the employer and the employee will also sign a contract of employment which

contains important terms and conditions of employment, job title, duties, place and hours of work,

leave rules, scale of pay and other benefits, disciplinary procedure and mode or termination of

employment.

Barriers to Effective Selection

1. Perception :

It refers to person’s ability to understand others. All persons perceive the world differently.

2. Fairness

Fairness in selection requires that no individual should be discriminated against on the basis of

religion, region, race or gender.

3. Validity :

It refers to the extent to which a selection test measures what it intends to measure. It just raises the

possibility of success but sometimes it does not predict success accurately. It can only increase

possibility of success.

4. Pressure :

Pressure is brought on the selectors by politicians, bureaucrats, relatives, friends and peers to select

particular candidates.




Orientation/Induction

Induction is the process of welcoming, introducing and socializing the new entrants to the existing

group of people. It is also called orientation programme. It is done to make the new employees feel

welcome at the new workplace and with his senior employees. It helps overcome a ‘reality shock’.

Reality shock is experienced by the new employees when there is a gap between his/her

expectations and the real situation. It facilitates interaction amongst employees and helps them to

get to know each other and develop a better inter personal relationship and rapport with colleagues.

According to R.P. Billimoria, “Induction is a technique by which a new employee is rehabilitated

into the changed surroundings and introduced to the practices, policies and purposes of the

organization”.

K. Aswathappa defined orientation as “a systematic and planned introduction of employees to their

jobs, their co-workers and the organization. It is also called induction”.

An induction may consist of following methods:

Method # 1. General Guidance by Human Resource (HR) Department:

General induction is about organisation. This first phase of induction is carried out by HR

Department. Some general guidelines which are common for all employees are given in this phase.

Contents covered in this phase are:

i. Origin of company, vision and mission.

ii. Operations of the firm.

iii. Information regarding reporting time, overtime, uniform, disciplinary rules, etc.

iv. Employee service details e.g., pension plans, criteria for promotion, safety rules, etc.

It is better to take some time for giving guidance about all these aspects rather than telling

everything in one day because that may lead to information overload.

Method # 2. Specific Induction by Supervisor:

Specific induction is about job and work environment. This second phase of induction is conducted

by job supervisor. Different supervisors provide induction to different employees; it is not

common for all.

Contents covered in this phase are:

i. Knowledge about department and work place.




ii. Introduction to peers.

iii. Information about location of canteen, washrooms, time clock, attendance place, etc.

iv. Timing of entry, exit, lunch period and rest intervals,

Method # 3. Follow Up Induction:

This induction may be conducted by supervisor or HR department. Its purpose is to check whether

employee is satisfied or not. In follow up induction, employees’ feelings about job, peers and work

are tried to be known. His suggestions for changes in induction programme or for any other change

are invited. This information may be helpful for improving induction programme and to evaluate

the strong & weak points of employee.

Career planning

Career planning is a step-wise process which enables an individual to focus on where to want to be

in life professionally. With the short-term goal and the long-term goals in place, career

planning can help to plan their journey in their professional life.

Career planning is the process of enhancing an employee’s future value. A career plan is an individual’s

choice of occupation, organization and career path.

According to Schermerborn, Hunt, and Osborn

“Career planning is a process of systematically matching career goals and individual capabilities with

opportunities for their fulfillment.”

Benefits of career planning:

• The career plan ensures the continuous supply of promotional employees.

• It helps in improving employee loyalty.

• Career planning encourages the development and development of the employee.

• Discourages the negative attitude of senior officials who interest in suppressing the

development of subordinates.

• This ensures that senior management knows the capacity and capacity of those employees

who can move upwards.




• It can always make a team of employees ready to meet any contingency.

• Career planning reduces the labor business.

• Each organization prepares the successor plan on which the career plan is the first step.

The process of career planning: Career plans involve different activities for successful

organizations and generally include the following steps.

1] Identifying personal needs and aspirations: Most individuals do not have a clear-cut about their

career aspirations, anchors and goals.

2] Analyzing career opportunities: Once you know the career requirements and the aspirations of

the employees, the organization determines the career path for each situation, which clearly shows

career progression prospects.

3] Aligning needs and opportunities: After identifying the needs of the employees and their career

opportunities, the next step is to align the former with the former. This process involves identifying

the ability of employees and then starting a career development program. The efficiency of the

staff can demonstrate a thorough evaluation.

4] Action plans and periodic reviews: After starting the above steps, it is necessary to review the

whole items from time to time to highlight the gap. These intervals have to be a bridge through

personal career development efforts and from time to time supported organizations.

Succession Planning

“Succession planning is the process of identifying and developing potential future leaders or senior

managers, as well as individuals to fill other business-critical positions, either in the short-term or

the long-term. In addition to training and development activities, succession planning programs

typically include the provision of practical, tailored work experience relevant for future senior or

key roles.”




Definition of Succession Planning:

Succession Planning defines as the systematic process of recognizing and creating future leaders.

Who can take the position of the old ones when they leave the organization due to retirement,

resignation, termination, transfer, promotion or death.

Importance of Succession Planning:

1. They help when there is a sudden need arises due to the reason or retirement of a key

employee. An individual employee comes to know in advance the level to which he can

rise. If he has the ability and aptitude for it.

2. An individual employee or successor feels happy when he feels that the organization is

taking care of his talents and aspirations. They help create loyalty towards the organization

and improved the motivation and morale of individual employees.

3. The organization gains a stable workforce and low employee turnover. Ultimately

organization becomes successful in accomplishing its goals effectively.

4. A good succession plan ensures that the organization prepares with a plan to support

service continuity when the key people leave. It ensures a continuous supply of qualified,

motivated people (or a process to identify them). Who are prepared to take over when

current key persons leave the organization.

5. It involves an alignment between the organization’s vision and its human resources. That

demonstrates an understanding of the need to have appropriate staffing to achieve the

strategic plan.

6. A good plan is a commitment to developing career paths for employees. Which will

facilitate the organization’s ability to recruit and retain top-performing employees?

7. A good succession plan involves an external reputation. As an employer that invests in its

people and provides opportunities and support for advancement. It involves a message to

the organization’s employees that they are valuable.

Transfer


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Transfer implies movement of an employee from one job to another without any increase in

pay, status or responsibilities.

Definition

According to Dale Yoder “A transfer involves the shifting of an employee from one job to

another without special reference to change in responsibilities or compensation”.

The following factors are mainly responsible for transfer:

(a) The demand of manpower in a department may increase or decrease resulting into surpluses or

shortage of personnel. If a machine breaks down, its employees will have to be transferred to some

other machines in the same department or may be in some other department.

(1) To correct erroneous placement.

(2) To relieve the monotony of a job, acquire better working conditions and join friends/spouse.

(3) To avoid interpersonal conflicts.

(4) In consideration of the interests of age/health, education of children, housing difficulties or to

join immobile dependents.

(5) The feeling that opportunity for advancement is better in another department.

(6) A search for creative opportunities.

Types of Transfer:

The Following are The Various Types of Transfers:

(A) Production Transfers:

In order to stabilise the employment in the company and avoidance of lay off, an employee may be

transferred from one department to another department. Such a transfer is known as production

transfer.

(B) Replacement Transfers:

An employee with a long service may be transferred in some other department to replace a person

with a shorter service.




(C) Versatility Transfers:

The versatility transfers are made for the purpose of preparing the employees for production and

replacement transfer. An employee is trained on different jobs so as adjust him on a different job

when there is no work at his seat or job.

(D) Shift Transfers:

In case of manufacturing concerns, there are normally three shifts. Usually these shifts are rotating.

In case shift assignments are not rotating, an employee may be transferred from one sift to another

shift.

(E) Remedial Transfers:

In case an employee does not feel comfortable on his job, he may be transferred to some other job.

His initial placement might be faulty; his health might have gone down; he may not be getting

along with his supervisor or workers i.e., he might have developed personal friction with his boss

or fellow employees.

(F) Miscellaneous Transfers:

Transfers may also be classified as temporary or permanent transfers. If a transfer is from one

department to another, it is known as departmental transfer. If a transfer is made within the

department, such a transfer is known as sectional transfer. An employee may be transferred from

one plant to another plant. Such a transfer is known as inter-plant transfer.

Promotion: Promotion means advancement in terms of job designation, salary and benefits.

According to Prof. Khanka,

Promotion is vertical movement of an employee within the organization.




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.”

Objectives

(i) For the optimum utilization of the employees’ skill, knowledge at the appropriate level

in the organizational hierarchy resulting in organizational effectiveness and employee satis-

faction.

(ii) For the development of competitive spirit and inculcate the enthusiasm in the employees to

acquire the skill, knowledge etc. needed for the higher level jobs.

(iii) To develop competent internal source of employees ready to take up jobs at higher levels

in the changing environment.

(iv) For the promotion of a feeling of content with the existing conditions of the company and a

sense of belongingness to the company.

(v) To promote employee’s self-development and be ready for the promotion as and when their

turn of promotion occurs.

(vi) To promote interest in training, development programmes and in team development areas.

(vii) To get rid of the problems created by the leaders of workers’ unions by promoting them in

the officers’ levels where they are less effective in creating problems.

Benefits of Promotion

• Recognizes and promotes employee performance, ambition, and morale.

• Boosts motivation and increases employee loyalty.

• Encourages retention.

• Develops competitive spirit in the workplace.




• Grooms future leaders.

• Reduces employee resistance and discontent.

Retention

Employee retention refers to the ability of an organization to retain its employees.

Retention is defined as the process by which a company ensures that its employees don't quit

their jobs. Every company and industry has a varying retention rate, which indicates the

percentage of employees who remained with the organization during a fixed period.

Employee retention strategies

• Hiring the Right People

• Better Job Design to enhance motivation and engage the employee.

• Shaping their Growth and Development

• Encouraging Open Communication

• Providing out-of-the-box Benefits

• Appreciating your Employees

• Salary and Benefits Must Be Competitive. ...

• Developing Orientation Programs

• Balancing their Workload

Unit 3

Managing Employee Performance and Training

Performance appraisal

Meaning: Performance appraisal is a process of evaluation and employees’ performance of a job in

the terms of requirements. Performance means the degree of accomplishment of the task which is

assigned to the individual. In other words, performance appraisal gives us an idea about the

completion of job. In every field, the technique of performance appraisal is applied e.g. bankers




evaluate the performance of their creditors or loan holders, teachers evaluate the performance of

students or parents evaluate the behavior of their children

Definitions :

1) Spriegel W. R. :

“It is defined as a process of evaluating an employee’s performance of a job in terms of its

requirements.”

Objectives of Performance Appraisal

• Performance Appraisal can be done with following objectives in mind:

• To maintain records in order to determine compensation packages, wage structure, salaries

raises, etc.

• To identify the strengths and weaknesses of employees to place right men on right job.

• To maintain and assess the potential present in a person for further growth and

development.

• To provide a feedback to employees regarding their performance and related status.

• To provide a feedback to employees regarding their performance and related status.

• 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 includes 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 analyse 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 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. 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.




Performance Appraisal Process

1.Establishing performance standards

The first step in the process of performance appraisal is the setting up of the standards which will

be used to as the base to compare the actual performance of the employees. This step requires

setting the criteria to judge the performance of the employees as successful or unsuccessful and the

degrees of their contribution to the organizational goals and objectives. The standards set should be

clear, easily understandable and in measurable terms. In case the performance of the employee

cannot be measured, great care should be taken to describe the standards.

2.Communicating the standards

Once set, it is the responsibility of the management to communicate the standards to all the

employees of the organization. The employees should be info

rmed and the standards should be clearly explained to the employees. This will help them to

understand their roles and to know what exactly is expected from them.

The standards should also be communicated to the appraisers or the evaluators and if required, the

standards can also be modified at this stage itself according to the relevant feedback from the

employees or the evaluators.

3.Measuring the actual performance

The most difficult part of the Performance appraisal process is measuring the actual performance

of the employees that is the work done by the employees during the specified period of time. It is a

continuous process which involves monitoring the performance throughout the year. This stage

requires the careful selection of the appropriate techniques of measurement, taking care that

personal bias does not affect the outcome of the process and providing assistance rather than

interfering in an employees work.

4.Comparing actual performance with desired performance

The actual performance is compared with the desired or the standard performance. The comparison

tells the deviations in the performance of the employees from the standards set. The result

can show the actual performance being more than the desired performance or, the actual

performance being less than the desired performance depicting a negative deviation in the

organizational performance. It includes recalling, evaluating and analysis of data related to the

employees’ performance.

Feedback

The result of the appraisal is communicated and discussed with the employees on

one-to-one basis. The focus of this discussion is on communication and listening. The results, the

problems and the possible solutions are discussed with the aim of problem solving and reaching

consensus. The feedback should be given with a positive attitude as this can have an effect on the

employees’ future performance.

Methods of Performance Appraisal

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. BARS

10. Forced Choice Method

11. MBO

12. Field Review Technique

13. Performance Test

We will be discussing the important performance appraisal tools and techniques in detail.

1. Ranking Method

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 judgements.

2. 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

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.

3. Critical Incident techniques

Under this method, the manager prepares lists of statements of very effective and

ineffective behaviour of an employee. These critical incidents or events represent the

outstanding or poor behaviour of employees or the job. The manager maintains logs of each

employee, whereby he periodically records critical incidents of the workers behaviour. 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 customers complaint. He was

very polite and prompt in attending the customers problem.

Advantages of Critical Incident techniques

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

employees performance.

ii. This method avoids recency 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 sessions.

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.

4. 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 behaviour 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 employees performance.

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 behaviours.

BARS

A BARS can be developed in following steps.

Collecting samples of effective and ineffective job behavior from the experts by analyzing the

critical incident method

Converting these samples into performance dimension

Relocating the performance dimension (from unacceptable to outstanding)

Rating the performance dimension accordingly, starting from 1

Finally, using the scale anchor to evaluate employee’s performance

360 Degree performance appraisal method:

A) Organizations that Use this to Assess Employee Performance :

360 degree feedback is the most comprehensive appraisal where the feedback about

the employees’ performance comes from all the sources that come in contact with the

employee on his job.

B) The Stakeholders in doing 360-Degree Assessment :

360 degree respondents for an employee can be his/her peers, managers (i.e.

superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into

contact with the employee and can provide valuable insights and information or feedback

regarding the “on-the-job” performance of the employee.

C) 360 Degree Appraisal has four Integral Components:




1) Self appraisal :

2) Superior’s appraisal :

3) Subordinate’s appraisal :

Management by Objectives: Management by objectives (MBO) is a strategic management model

that aims to improve the performance of an organization by clearly defining objectives that are

agreed to by both management and employees. ... The term was first outlined by management guru

Peter Drucker in his 1954 book, The Practice of Management

Performance Appraisal Biases

Managers commit mistakes while evaluating employees and their performance. Biases and

judgment errors of various kinds may spoil the performance appraisal process. Bias here refers to

inaccurate distortion of a measurement. These are:

1. First Impression (primacy effect): Raters form an overall impression about the ratee on the

basis of some particluar characteristics of the ratee identified by them. The identified

qualities and features may not provide adequate base for appraisal.

2. Halo Effect: The individual’s performance is completely appraised on the basis of a

perceived positive quality, feature or trait. In other words this is the tendency to rate a man

uniformly high or low in other traits if he is extra-ordinarily high or low in one particular

trait. If a worker has few absences, his supervisor might give him a high rating in all other

areas of work.

3. Horn Effect: The individual’s performance is completely appraised on the basis of a

negative quality or feature perceived. This results in an overall lower rating than may be

warranted. “He is not formally dressed up in the office. He may be casual at work too!”.

4. Excessive Stiffness or Lenience: Depending upon the raters own standards, values and

physical and mental makeup at the time of appraisal, ratees may be rated very strictly or

leniently. Some of the managers are likely to take the line of least resistance and rate

people high, whereas others, by nature, believe in the tyranny of exact assessment,

considering more particularly the drawbacks of the individual and thus making the

assessment excessively severe. The leniency error can render a system ineffective. If

everyone is to be rated high, the system has not done anything to differentiate among the

employees.

Performance management

Performance management is the process of identifying, measuring, managing, and developing

the performance of the human resources in an organization. Performance appraisal, on the other

hand, is the ongoing process of evaluating employee performance




Unlike performance appraisals, a performance management system looks at the present and the

future of an employee’s position with the organization and provides ways for employees to do

better in their role with the future in mind. Performance management can be defined as “all

activities which enable staff to perform to the best of their abilities.”

Performance management can mean everything from HR’s activities in choosing the right

candidates, to giving staff access to training and courses to build core competencies, to assigning a

mentor that will give feedback, and more. In contrast to performance appraisals, performance

management is an ongoing process of evaluating employee performance and providing

constructive criticism to encourage and support the progress of staff toward organizational goals.

Performance feedback

• Create the Right Contest for the Discussion :

• Managers should choose a neutral location for the feed-back session. should describe the

meeting as an opportunity to discuss the role of the employee.

• Ask the Employee to Rate His or Her Performance before the Session :

• Having employees complete a self-assessment before the feedback session can be very

productive. It requires employees to think about their performance over the past rating

period, and it encourages them to think about their weaknesses.

• Encourage the Subordinate to Participate in the Session :

• When employees participate in the feedback session, they are consistently satisfied with the

process. Participation includes allowing employees to voice their opinions of the

evaluation, as well as discuss performance goals.

• Recognize Effective Performance through Praise :

• Performance feedback sessions as focusing on the employee's performance problems. The

purpose of the session is to give accurate performance feedback, which entails recognizing

effective performance as well as poor performance.

• Focus on Solving Problems :

• To improve poor performance, a manager must attempt to solve the problems causing it.

This entails working with the employee to determine the actual cause and then agreeing on

how to solve it.

Training and Development

1. Training:

Training is the act of increasing the knowledge and skill of an employee for doing a

particular job. Training is the methods used to give new or present employees the skills they need

to perform their jobs.

2) Development: Development is a long-run process. It is concerned with managerial

personnel.


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B) Definitions :

▪ Dale S. Beach. :

“Training is the organized procedure by which people learn knowledge and / or skill for a

definite purpose. “

▪ Michael J. Jucius. :

"Training is a process by which the aptitudes, skills and abilities of employees to perform

specific jobs are increased.”

The objectives of training are as follows:

• To provide job related knowledge to the workers.

• To impart skills among the workers systematically so that they may learn quickly.

• To bring about change in the attitudes of the workers towards fellow workers, supervisor

and the organization. a. Higher productivity

• Increased efficiency in operation

• A safe and harmonious working environment.

Importance of Training:

1. Increased Productivity:

It improves performance. Better skilled workers increase quantity and improve quality of output.

Wastages are reduced. It reduces the learning time with the resultant productivity.

2. Improvement in Employee Morale:

Training improves needed skills, which build up confidence and satisfaction. This, in turn,

develops enthusiasm and pride, which are indicative of high morale.

3. Better Safety:

More accidents are caused by deficiencies in people than by deficiencies in equipment and

working condition. Proper training with emphasis upon selected safety points reduces accidents.

4. Reduced Supervision:

Untrained personnel are a source of constant worry to the immediate supervisor. Once he acquires

the requisite skill he is entitled to lesser close supervision.

5. Personal Growth:




The training programmes give the participants a wider awareness, a sense of self-satisfaction and

fulfilment, an enlightened philosophy and a value system that are the apex to the personal growth.

6. Ensure better Placement:

Training helps in spotting out promising men and in locating mistakes in selection. Promising

trainee will be discovered from his quick understanding of instructions.

7. Organizational Stability:

Training and development programmes foster the initiative and creativity of employees, which

increases a sense of belonging, thus preventing manpower obsolescence. There is no greater

organizational asset than that of trained and motivated personnel.

Features

I. Increases knowledge and skills for doing a particular job- Training bridges the gap between job

needs and employee skills, knowledge and behaviours.

II. Focuses attention on the current job- It is job specific and provides employees with specific

skills. Training helps employees’ correct deficiencies in their performance.

III. Concentrates on individual employees- Training lays emphasis on changing what employees

know, how they work, their attitudes toward their work or their interactions with their co-workers

or supervisors.

IV. Narrow focus- Tends to be more narrowly focused and oriented toward short-term

performance concerns. It tries to fix current skill deficit. The goal of training is a fairly quick

improvement in workers’ performance. It is a job specific and individual-oriented effort aimed at

improving short term performance fairly quickly

V. Relatively permanent change in employee behaviour- Training is actually a learning experience

that seeks a relatively permanent change in individuals that will improve their ability to perform on

the job.

Development, in contrast, is considered to be more general than training and more oriented to

individual needs in addition to organizational needs and it is most often aimed toward management

of people.

There is more theory involved with such education and hence less concern with specific behaviour

than is the case with training. Usually, the intent of development is to provide knowledge and

understanding that will enable people to carry out non-technical organizational functions more

effectively.




The term ‘education’ is wider in scope and more general in purpose when compared to training.

Training is the act of increasing the knowledge and skills of an employee while doing a job. It is

job-oriented (skill learning). Education, on the other hand, is the process of increasing the general

knowledge and understanding of employees.

It is a person-oriented, theory-based knowledge with the main purpose of improving the

understanding of a particular subject or theme (conceptual learning). Its primary focus is not the

job of an operative.

Education is imparted through schools or colleges and the contents of such a programme generally

aim at improving the talents of a person. Training is practice-based and company-specific.

However, both have to be viewed as programmes that are complementary and mutually supportive.

Both aim at harnessing the true potential of a person/employee.

TRAINING PROCESS

Step # 1. Identifying Training Needs:

Training need is a difference between standard performance and actual performance. Hence, it tries

to bridge the gap between standard performance and actual performance. The gap clearly

underlines the need for training of employees. Hence, under this phase, the gap is identified in

order to assess the training needs.

Step # 2. Establish Specific Objectives:

After the identification of training needs, the most crucial task is to determine the objectives of

training. Hence, the primary purpose of training should focus to bridge the gap between standard

performance and actual performance. This can be done through setting training objectives. Thus,

basic objective of training is to bring proper match between man and the job

3. Select Appropriate Methods:

Training methods are desired means of attaining training objectives. After the determination of

training needs and specification of objectives, an appropriate training method is to be identified

and selected to achieve the stated objectives. There are number of training methods available but

their suitability is judged as per the need of organizational training needs.

Step # 4. Implement Programs:

After the selection of an appropriate method, the actual functioning takes place. Under this step,

the prepared plans and programs are implemented to get the desired output. Under it, employees

are trained to develop for better performance of organizational activities.




Step # 5. Evaluate Program:

It consists of an evaluation of various aspects of training in order to know whether the training

program was effective. In other words, it refers to the training utility in terms of effect of training

on employees’ performance.

Methods of Training:

There are various methods of training. The choice of any of the methods depends upon several

factors like cost of training, number of workers, depth knowledge required, background of the

trainees, purpose of training and so on.

1. On-The-Job Training:

On the job training is concerned with developing employees in the present job. It involves

assignment of the new employee to a specific job at a machine or workplace in the shop, office, or

laboratory. The worker is trained while he is engaged in the work by utilizing the actual work

situation for the purpose.

He is trained by an experienced employee, special instructor or his superior. With competent

instructors, this type of training may be most effective, for rapid training of large number of

unskilled and semi-skilled workers. It is a simple method, since there is no division of

responsibility between the training department and the line supervisors.

a. Vestibule Training:

New workers are trained for specific jobs and special machines or equipment are provided in a

separate location, near the actual place of work under practical work situation. Here more

emphasis is on teaching the best method than on production. Trainees have an opportunity to get

accustomed to work routine and recover from their initial nervousness before going on to the

actual job.


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b. Apprenticeship Training:

This method is followed in those trades, crafts and technical fields in which long period is required

for gaining proficiency. It aims at providing necessary background, practical knowledge and

necessary experience to the worker.

It combines classroom instructions, demonstrations and on-the-job training. A trainee has to work

in direct association and under the direct supervision of his masters. Learning is by imitation and

experience.

c. Coaching Training by Supervisors:

The fresh employee is trained by the supervisor, who familiarises him with the input and outputs of

the work and techniques of operation of equipment etc. The supervisor guides and instructs or

supervise the employee, whenever needed.

The employee has also opportunity of remaining doubts. The method develops good relationship

between worker and supervisor. The method prove to be ineffective, if the supervisor is

incompetent and does not take interest in the training.

d. Orientation or Induction Method:

The training is imparted by a competent and experienced executive, who provides knowledge

about the work; tools, equipment, techniques and situational problems. The object of the training is

to make the employee aware and believe in the ideologies of the working.

e. Under Study Method :

It is another method of ‘on the job training.’ Under this method, the worker or the new employee is

imparted training by senior and experienced. The method teaches motivation, because the

employee has to continue training for a long period.

f. Job Rotation Method :

It is broad-based training, wherein the employee has to rotate from one job to other, from one

department to other department, from are work to other work, or from one section to other section,

so that he may learn the working of various departments.

2. Off- The- Job Training:

1. Conference/Lecture and Seminar Method:

The top level of management holds conference and shows his views with the employees. He

informs to the employee about the future development in the Field and new ideas. He also gives




the ideal measure to solve all the problems. This is an easy method and is adopted at levels of

training.

2. Internship Training:

Here the technical institutions and business houses cooperate. Such training will bring about a

balance between theory and practice. Students may be sent to factories for practical training under

this system. Reputed training institutes provide meaningful training.

3. Classroom Method:

Where concepts, attitudes, theories and problem-solving abilities are to be learnt, the classroom

instruction is the most useful device. In other words it is more associated with knowledge rather

than skill. Orientation about organization; safety training or refresher training can be accomplished

most effectively in the classroom.

There may be different methods of instruction such as:

(i) Formal Lecture:

Formal Lectures are arranged by the organization and delivered by the lecturer presumed to be a

master of the subject at hand. The lecture method may be used for a large group and therefore, cost

per trainee is low. Trainee should be permitted to ask questions.

(ii) Conference and Seminar:

The seminars and conference may be arranged to achieve the training purpose. Under this method,

a particular topic is followed by discussion and exchange of view under a chairman, who sums up

the discussion by his fruitful advices and comments.

(iii) Case Study:

It is a practical problem faced by an industrial unit which is discussed at large in the group,

possibly to find an optimum solution. The supervisor reviews the solutions and discusses it with

the trainees.

(iv) Role-playing:

Under this system, the trainees play their assigned role under an instructor who prepares them and

assigns different rules for the play.

4. Case Study Method:




In order to solve many problems in the management the social, economic and technical aspects of

the problem is to be studied. If the worker is struggling with the problem, he must be briefed about

it and it has to be rectified with the solution.

5. Role Playing:

Under this method of training practical Knowledge of the work is imparted through assigning

notes of manager, supervisor, worker, customer etc. The employee learns how to deal with the

complexities of interdependence and interaction involved in different roles.

6. Management Institutions:

Training is arranged in different training colleges, universities and management institutions.

Desirous candidates and employees of business establishment, Join these courses and gain

Knowledge in the specific Field.

7. Brain Storming:

Through collective analysis process we can solve all the business problem. A group of people from

various fields are invited to put forward their ideas, Knowledge, and experience. In other words,

the training is imported by pooling of collective Knowledge and experience of trainees.




Evaluation of Training Program

Training evaluation is a systematic process to analyze if training programs and initiatives are

effective and efficient. Trainers and human resource professionals use training evaluation to assess

if the employee training programs are aligned with the company's goals and objectives.

Kirkpatrick Training Evaluation Model

The Kirkpatrick Four-Level Training Evaluation Model is designed to objectively measure the

effectiveness of training. The model was created by Donald Kirkpatrick in 1959, with several

revisions .

Level 1 Reaction measures how participants react to the training (e.g., satisfaction?).

Level 2 Learning analyzes if they truly understood the training (e.g., increase in knowledge, skills

or experience?).




Level 3 Behavior looks at if they are utilizing what they learned at work (e.g., change in

behaviors?), and

Level 4 Results determines if the material had a positive impact on the business / organization.

Unit 4

Compensation Management

Compensation

Meaning

The term compensation means money and other benefits received by employee for providing

services to his employer..

It is the result of agreement between the employer and employee, whereby for a specified work

or service, rendered by the employee, the employer agrees to pay a specified sum of money.

Definitions :

Terry Leap :

“Compensation is a board term pertaining to financial rewards received by persons

through their employment relationship with an organisation.”

R. Wayne Mondy :

“Compensation is the total of all rewards provided to employees in return for their

services. The overall purposes of providing compensation are to attract, retain and motive

employees."

Objectives

1. To attract competent and qualified persons towards organization by offering fair wage and

incentive.

2. To retain present employees by paying competitive remuneration.

3. To establish fair and equitable remuneration so as to avoid pay disparities.

4. To improve production, productivity and profitability of the organization.

5. To minimise un-necessary expenditure and to control cost through a device of internal check

and establishment of standard.

6. To improve and maintain good human relation between employer and employee through a

process of payment of bonus, profit sharing and other fringes benefits




7. To enhance the name and fame of the company through a proper system of wage payment.

8. To ensure prompt and regular payment of wage and salary to all the employees.

Compensation Management

Also known as wage and salary Management. Compensation Management is an organized

practice that involves balancing the work-employee relation by providing monetary and non-

monetary benefits to employees.

It includes Job evaluation, survey of wages and salaries, analysis of org problems, development

and maintenance of wage structure establishment . Rules for administering wage ,incentives,

bonus, profit sharing, adjustments, supplementary payments, control of compensation cost and

other items.

Importance of Compensation Management :

2) Attract Top Talent

3) TO retain employees

4) To Motivate employees

5) Distinguish the Employers

6) Brings the Differentiation into the Organization

7) Competitive Advantage

6) Manages the Personnel Expenses

WAGE:

The dictionary meaning of the term ‘wage’ is the pay of artisans or labourers receiving a fixed sum

by hour, day, week or month, or for a certain amount of work. In a narrow sense ‘wage’ is the

remuneration paid to blue-collar workers for their services, usually on hourly rate or daily rate.

Thus we find that –

i. Wage is remuneration

ii. It is paid to workers, especially maintenance and production workers

iii. It is payment in exchange for service / labour

iv. It is paid generally on fixed hourly / daily rate.

Wages may be expressed in terms of money called nominal wages, or in terms of purchasing

power with reference to some base year called real wages.

In broad sense, ‘wage’ refers to economic compensation paid by the employer to his workers in

exchange for their labour / service, under some contract. So, wage includes basic wage and also

allowance like overtime pay, holiday pay etc.




SALARY:

Salary is a periodic, fixed payment for services, especially for official or professional services. It

usually refers payment to weekly or monthly rated employees like clerical, technical, supervisory

and managerial employees.

From the above it is observed –

i. Salary is economic compensation

ii. It is a periodic fixed payment

iii. It is paid to white-collar employees like office staff, technical staff, managerial staff,

professional staff

iv. It is paid by employer in exchange for services rendered by above categories of employees

Thus, ‘Salary’ is defined as economic compensation paid by employer to his monthly / weekly

rated white-collar employees for their services, under any contract / agreement.

Incentives:

Incentive is a reward paid in addition to wages whether monetary or not that motivates or

compensates an employee for performance above the standard. Payment of incentive depends on

productivity, sales and Profit of the organization.

FRINGE BENEFITS:

An extra benefit supplementing an employee's money wage or salary, for example a company car,

private healthcare, etc

It is a general term used to describe any of a variety of non-wage or supplemental benefits that

employees receive in addition to their regular wages. These include such employee benefits as

provident fund, gratuity, medical care, hospitalization, accident relief, paid holidays, health and

group insurance, pension etc.

Statutory Benefits

Mandatory and provided by all the organizations

E.g.: paid holiday leaves

Voluntary- non statutory Benefits

Determined by the individual organizations on their own

E.g.: transportation facilities, child care.

INCENTIVES

The definition of incentive is something that makes someone want to do something or work harder.

It s an extra money earned due to outstanding performance . An example of incentive is extra

money offered to those employees who work extra hours.It is based on the performance.

Employee Separation

Meaning :




An employee who works for an organization has to leave the organization one day or the

other. Separation is the act of an employee leaving his organization because of any of the reasons

viz., superannuation, turnover, transfer, dismissal, retrenchment, etc.

According to Yoder, separation is a negative recruitment. It may be In the form of resignation,

dismissal or discharge, suspension, retrenchment or lay-off.

Retirement :

Retirement is the major cause of separation of employees from the organisation. It can be

defined as the termination of service of an employee on reaching the age of superannuation. For

example, at present the superannuation age for the teachers working in the Central Universities is

62 years and in case of some state government employees, it is 58 years. Some people characterize

retirement as ‘role less role’.

Resignation

Resignation is termination of service by an employee by serving a notice, called ‘resignation’ on

the employer. Resignation may be voluntary or involuntary. A voluntary resignation is when an

employee himself/herself decides to resign on the grounds of ill health, marriage, better job

prospects in other organisations, etc.

Voluntary Retirement Scheme(VRS)

VRS means the nicest possible way to tell your employees to terminate employment. That is why it

is called the Golden Handshake.

VRS means the nicest possible way to tell your employees to terminate employment. That is why it

is called the Golden Handshake.

The voluntary retirement scheme(VRS) is the most humane technique to provide overall reduction

in the existing strength of the employees. It is a technique used by companies for trimming the

workforce employed in the industrial unit.

VRS applies to an employee who has completed 10 years of service or is above 40 years of age.

His name must be in muster

The scheme applies to all employees including workers and executives, except the directors of a

company.

The amount receivable on account of voluntary retirement of the employee does not exceed the

amount equivalent to three months’ salary for each completed year of service, or salary at the time

of retirement multiplied by the balance months of service left before the date of retirement on

superannuation of the employee. It is the last salary drawn which is to form the basis for

computing the amount of payment.




Lay off

It is a temporary separation of employees from the organization. Organisations usually resort to

layoffs to overcome the problems of business slowdown and other temporary business

interruptions.

Layoff implies denial of employment to the employees for reasons beyond the control of

employer. Breakdown of machinery, seasonal fluctuations in demand, shortage of power, raw

materials, etc. are the examples of reasons leading to layoff.

According to Section 2 (KKK) of the Industrial Disputes Act, 1947, lay off is defined as “the

failure, refusal or inability of an employer, on account of shortage of coal, power or raw materials

or accumulation of stocks or breakdown of machinery or by any other reason, to give employment

to a workman whose name appears on the muster rolls of his industrial establishment and who has

not been retrenched”. Upto Rs.500000 tax exempted.

Retrenchment

Retrenchment means permanent termination of an employee’s services for economic reasons.

Retrenchment occurs on account of surplus staff, poor demand for products, general economic

slowdown, etc. It’s worth noticing that termination of services on account of retirement, winding

up of a business, illness or on disciplinary grounds does not constitute retrenchment.

The Industrial Disputes Act, 1947 makes it obligatory for organisations employing 100 or more

employees to give three months’ notice to the employee to be retrenched and also seek prior

approval of the Government.

Suspension

A suspension is when you remain employed but are asked to not attend your place of work, or

engage in any work at all (such as working from home).

Employee may be suspended on full pay if allegations of misconduct have been made against you

and are being investigated. Suspension on full pay is not a punishment, but part of the investigation

process in a disciplinary procedure for many employers.

Employer should give a clear reason for the suspension and explain what other options have been

explored instead of suspension. If an employee is suspended because of allegations against him, he

is entitled to know what the allegations are.

Grievance

A grievance is any dissatisfaction or feeling of injustice having connection with one’s employment

situation which is brought to the attention of management.




Grievance is any dissatisfaction that adversely affects organizational relations and productivity

According to Michael Jucious, ‘grievance is any discontent or dissatisfaction whether expressed or

not, whether valid or not, arising out of anything connected with the company which an employee

thinks, believes or even feels to be unfair, unjust or inequitable’

Causes of Grievance

Concerning wages.

Concerning supervision.

Concerning individual advancement and adjustment.

General working condition.

Collective bargaining.

Management policy

Grievance Procedure

GRIEVANCE PROCEDURE IN INDIAN INDUSTRY

STEP 1: In the first step the grievance is to be submitted to departmental representative, who is a

representative of management. He has to give his answer within 48 hours.




STEP 2: If the departmental representative fails to provide a solution, the aggrieved employee can

take his grievance to head of the department, who has to give his decision within 3 days.

STEP 3: If the aggrieved employee is not satisfied with the decision of departmental head, he can

take the grievance to Grievance Committee. The Grievance Committee makes its

recommendations to the manager within 7 days in the form of a report. The final decision of the

management on the report of Grievance Committee must be communicated to the aggrieved

employee within 3 days of the receipt of report. An appeal for revision of final decision can be

made by the worker if he is not satisfied with it. The management must communicate its decision

to the worker within 7 days.

STEP 4: If the grievance still remains unsettled, the case may be referred to voluntary arbitration.

Unit 5

Emerging Trends in HRM

Human Resources Information System (HRIS)

• HRIS stands for Human Resources Information System.

• It is Systematic procedure for collecting, storing, maintaining, retrieving and validating

data needed by org abt its employees and HR activities.

According to Walker

• HRIS is a Systematic procedure for collecting, storing, maintaining, retrieving and

validating data needed by org. about its employees and personal activities and organization

unit characteristics .

NEED of HRIS

• Maintaining employee record in information system is easy as compared to manual record

keeping

• For easy availability of information

• To reduce cost of storing data

• less time consuming as compared to manual task

• For higher accuracy




• For getting organised data & If Manual then disorganise

Advantages of an HRIS

• One-stop shopping. One of the most frequently mentioned advantages of an HRIS is that

you enter information only once for many HR-related employee tasks.

• Integration of data. Furthermore, different parts of the system can “talk to each other”

allowing more meaningful reporting and analysis capabilities, including internal

evaluations and audits and preparation of data for outsiders.

• Accuracy. Improved accuracy is likely assuming data are entered and manipulated

correctly.

• Self service. This feature can be a great timesaver for HR. Employees may enter the system

to change data (for example, change their own addresses) and managers and supervisors

may enter the system to enter data (for example, performance reviews) or to retrieve data

without bothering HR.

• Automated reminders. Systems can schedule events, such as performance appraisals and

benefit deadlines, automatically notifying and nudging if actions have not been performed.

• Hosting of company-related documents. The system can host such materials as employee

handbooks, procedures, and safety guidelines. The materials are easily updated in one

place.

• Benefits administration. This could include enrollment, notices, changes, and reporting.

• Recruiting management. This may include applicant tracking, management, and reporting.

USIS of HRIS

• Record-keeping. An HRIS is a record-keeping system that keeps track of changes to

anything related to employees. The HRIS can be seen as the one source of truth when it

comes to personnel data.

• Compliance. Some data is collected and stored for compliance reasons. This includes

material for the identification for employees in case of theft, fraud, or other misbehaviors,

first contact information in case of accidents, citizens identification information for the tax

office, and expiration dates for mandatory certification. All this information can be stored

in the HRIS.

HR ACCOUNTING

HRA is the measurement of cost and value of the people for the organisation_ by

Definition

Flamholtz

American Accounting Association Committee- HRA is process and identification and

measuring data about HR & communicating this data to interested parties .




Advantages

1. Human Resource Accounting provides useful information about the cost and the value of

human resources.

2. shows the strengths and weakness of human resources. All this information helps the

managers in planning and making the right decisions about human resources.

3. Investors would like to know the value of a firm’s human asset. Moreover, they want to

know about an organization’s investment in human resources. This information would

assist them in making decisions to acquire, retain and dispose of the stock.

4. Human Resource Accounting provides useful information for making suitable personnel

policies about promotion, favorable working environment, and job satisfaction of

employees, etc.

5. It allows management personnel to monitor effectively the use of human resources.

6. It provides a sound and effective basis of human asset control, that is, whether the asset is

appreciated, depleted or conserved.

Limitations

• Many difficulties are involved in the implementation of human resource accounting.

• Few important limitations or demerits are mentioned below:

• There is no specific guideline for measuring the cost and value of human resources.

• While valuing the human assets, demand for rewards and compensation might be higher.

• The nature of amortization(repay/comp) to be followed is yet to be fixed up.

HR AUDIT

➢ HR Audit is a tool for evaluating the personnel activities of an organization.

Definition

Biles and Schuler:-

HR Audit evaluates the HR activities in an organisation with a view to their effectiveness

and efficiency

Flamholtz

HR Audit is a systematic assessment of strength, limitation and developmental needs of its

existing Hr policies in the context of Org. effectiveness.

OBJECTIVES


https://iedunote.com/human-resource-planning



(i) To determine the effectiveness of management programmes which facilitate management to

develop allocate and monitor human resources.

(ii) To analyse the factors and recommend for correcting deviation’s viz. the extent of bank

deviation from HRD policies / intent of objectives spelt out / achievement of performance

standards

(iii) To seek explanations and information and answers questions like what happened / why

happened.

(iv) To the extent, to which like managers have complied with HRD policies

(v) To study the current manpower inventory and identify shortfalls or excesses

HRD audit - benefits

(i) Involvement of Top Management:

Since the employees cannot participate in HRD audit, the auditors have to force the

management to share their plans, which has increased employee involvement.

(ii) Role Clarity of HRD and Line Managers:

Enhanced role clarity of the HR Department and HR functions and increased understanding of

line managers, about their role have been uniform result of audit

(iii) Human Productivity and Strengths and Weaknesses:

Identifies the strengths and weaknesses in management system. It also points out the absence

of system that can enhance human productivity e.g. MIS, rules and procedures etc. Preparation

of a manual for the delegation of p

owers, roles and responsibilities, sharing of information, are some of the replant activities.

(iv) Increase in Professionalism:

As a result of HR audit, new recruitment and retention strategies have been worked out for the

talented-employees

(v) Create a Learning Organisation:

A learning culture style requires empowering attitude, participative style of management and

ability to convert mistakes, conflicts and problems.

(vi) Improvements in HR Systems:




HR audit helps in redesigning the HR system. The most frequently changed or renewed

systems include performance appraisal training, job rotation, career planning and promotion

policies.

HR SHARED SERVICES

• This third-party management is often referred to as HR shared services.

• Many organisation Now a days outsource their functions like recruitment, payroll, talent

mgmt. ,data analysis, Customer services etc…

Objectives

• Economies of scale

• Cost saving

• Companies can focus on more strategic tasks

• Offer Improve customer services

• Keep transparency employee & employer

• Those include tasks such as talent

• Enhance professional services

• Provide customer with quality ,timely and effective service

BENEFITS

• Lower and more transparent costs.

• Allows focus on strategic things –

• Cuts down on redundant employees

• Ensures consistency –Reduces cost

• Improves productivity

• Increases customer satisfaction

• better quality services.

Issues in HR Services

• De-humanization of HR – In today’s times, employees love to have a face to face

interaction with the HR personnel to discuss their problems




• Morale of existing employees – Pay cuts, job losses and less wages are also a side effect of

outsourcing HR services. This can heavily impact the morale of the employees and hence,

the overall productivity. It can also develop a rebellious feeling in the minds of the

employees.

• Lack of understanding of a culture – Being an outsider, it may be difficult for the vendors

to understand the culture of the company and fulfil the needs accordingly.

• Confidentiality – While outsourcing some HR function, there may be cases where some

vital employee and customer data is leaked to the consultancy company.

• Loss of control to extended agencies – HR executives may depend too much on the HR

provider’s services.

• One-size does not fit all.

• The technology doesn’t always meet the centralization criteria.

• Some HR responsibilities are shifted to non-administrative employees.

• The cost savings don’t always materialize.


unit 1 human resource management: concept and...

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