Human Resource Management

BBA, Third Year, Sixth Semester

Course Objectives:
This course aims to familiarize the students with the basic concepts and functions of HRM in the context of Nepal.

Course Contents:
1. HRM in Context 7 hours
Concept, nature, objectives, and functions of Human Resource Management; Personnel Management Vs. Human Resource
Management; Human Resource Management system; Importance of Human Resource Management; The changing world of
work and the changing role of Human Resource professionals; Human resource strategy-concept and perspectives;
Environment of Human Resource Management in Nepalese organization; International perspective of Human Resource
Management; Ethical issues in Human Resource Management

2. Meeting Human Resource Requirements 8 hours
Human resourcing and Human Resource planning concepts and importance; Human Resource Information System and
Human Resource Inventory importance and uses, succession planning; job analysis, job specification, job description;
Attracting a high performing workforce-recruitment and selection, internal and external recruitment, Testing and selecting
employees-selection tests and tools; Classification and differential placement

3. Developing Human Resources 6 hours
Concept and importance of developing Human Resource; Employee socialization; Determining training needs;
Considerations in design of the training programmes-on-the-job vs. off-the-job training; Developing managers-methods of
management and leadership development; Mentoring; Empowerment; Evaluating training effectiveness

4. Performance and Effectiveness 4 hours
Role of Human Resource in a firms competitiveness; Concept and methods of evaluating employee performance;
Emerging concepts and issues in performance appraisal; Career development

5. Compensation 8 hours
Concept; Compensation programmes; job evaluation system-methods and process; The compensation structure; Incentive
system-gain sharing incentive plans, employee benefits and services; Retirement programmes; Retirement benefits;
Executive compensation; Compensation in Nepal-government regulations, minimum wages, social welfare factors, and
incentive compensation; Emerging concepts and issues in compensation management

6. Occupational Health and Safety 3 hours
Concepts, importance, legal provisions, practices and emerging issues in OHS

7. Managing Employee Relations, Change and Communication 4 hours
Human Resource Management Communications concept, Human Resource Management Communications
communication programme; Employee handbook, Mechanism of effective communications; Organizational culture, change
and human resources; job stress factors; Spirituality in the workplace; Participation, partnership and employee involvement

8. Industrial Relations 8 hours
Changing nature of the employment relationship; Industrial relations concept; Trade unions; Employers associations;
Labor legislation in Nepal along with important provisions; Collective bargaining-concept and process; Disciplinary
actions; Grievance handling; Conflict management unilateral, joint and third party decisions; Dismissal redundancy and
outplacement; Current situation of IR in Nepal; Emerging concepts in industrial relations

Text Books:
1. Decenzo. D.A. and Robbins, S.P.: Human Resource Management, Prentice-Hall, India.
2. Dessler, Gary.: Human Resource Management, Prentice-Hall, India






UNIT I
HUMAN RESOURCE MANAGEMENT BBA, Third Year, Sixth Semester

Concept of Human Resource Management

Definition :
Human resource management is concerned with the people dimension in management .
DeCenzo & Robbins
Human Resource Management is the process of accomplishing organizational objectives by acquiring,
retaining, terminating, developing and properly using the human resources in the organization.
Ivancevich, Donnely
Human resource management is the process of acquiring, training, appraising, and compensating
employees, and of attending to their labor relations, health and safety, and fairness concerns.

The policies and practices involved in carrying out the people or human resource aspects of
management position, including recruiting, screening, training, rewarding, and appraising.

It is a subject related to human. For simplicity, we can say that it is the management of humans or
people. HRM is a managerial function that tries to match an organizations needs to the skills and
abilities of its employees. Human Resource Management is responsible for how people are managed in
the organizations. It is responsible for bringing people in organization helping them perform their
work, compensating them for their work and solving problems that arise.

Human Resource Management is a process of bringing people and organizations together so that the goals
of each are met. It tries to secure the best from people by winning their wholehearted cooperation. In
short, it may be defined as the art of procuring, developing and maintaining competent workforce to
achieve the goals of an organization in an effective and efficient manner.

NATURE/FEATURES OF HRM
1) Pervasive force: HRM is pervasive in nature. It is present in all enterprises. It permeates all levels of
management in an organization.
2) Action oriented: HRM focuses attention on action, rather than on record keeping, written procedures or rules.
The problems of employees at work are solved through rational policies.
3) Individually oriented: It tries to help employees develop their potential fully. It encourages them to give their
best to the organization. It motivates employees through a systematic process of recruitment, selection, training
and development coupled with fair wage policies.
4) People oriented: HRM is all about people at work, both as individuals and groups. It tries to put people on
assigned jobs in order to produce good results. The resultant gains are used to reward people and motivate them
toward further improvements in productivity.
5) Future-oriented: Effective HRM helps an organization meet its goals in the future by providing for competent
and well-motivated employees.
6) Development oriented: HRM intends to develop the full potential of employees. The reward structure is tuned
to the needs of employees. Training is offered to sharpen and improve their skills. Employees are rotated on
various jobs so that they gain experience and exposure. Every attempt is made to use their talents fully in the
service of organizational goals.
7) Integrating mechanism: HRM tries to build and maintain cordial relations between people working at various
levels in the organization. In short, it tries to integrate human assets in the best possible manner in the service of
an organization.
8) Comprehensive function: HRM is, to some extent, concerned with any organizational decision which has an
impact on the workforce or the potential workforce. The term workforce signifies people working at various




levels, including workers, supervisors, middle and top managers. It is concerned with managing people at work.
It covers all types of personnel. Personnel work may take different shapes and forms at each level in the
organizational hierarchy but the basic objective of achieving organizational effectiveness through effective and
efficient utilisation of human resources, remains the same. It is basically a method of developing potentialities
of employees so that they get maximumsatisfaction out of their work and give their best efforts to the
organization .
9) Inter-disciplinary function: HRM is a multi-disciplinary activity, utilizing knowledgeand inputs drawn from
psychology, sociology, anthropology, economics, etc. unravel (to explain) the mystery surrounding the human
brain, managers, need to understand and appreciate the contributions of all such soft disciplines.
10) Continuous function: According to Terry, HRM is not a one shot deal. It cannot be practiced only one hour
each day or one day a week. It requires a constant alertness and awareness of human relations and their
importance in every day operations.
OBJECTIVES OF HRM
1) Achieve high productivity: The extent to which an organization is able to get productivity goal is
achieved, depends largely on how effectively it uses its human resources. HRM continuously
develops employees through training and other opportunities. Better quality of human resources
results in improved productivity through team work.
2) To help the organization reach its goals: HR department, like other departments in an
organization, exists to achieve the goals of the organization first and if it does not meet this
purpose, HR department (or for that matter any other unit) will wither and die.
3) To employ the skills and abilities of the workforce efficiently: The primary purpose of
HRM is to make peoples strengths productive and to benefit customers, stockholders and
employees.
4) To provide the organization with well-trained and well-motivated employees: HRM
requires that employees be motivated to exert their maximum efforts, that their performance be
evaluated properly for results and that they be remunerated on the basis of their contributions to
the organization.
5) To increase to the fullest the employees job satisfaction and self-actualization: It tries to
prompt and stimulate every employee to realize his potential. To this end suitable programmes
have to be designed aimed at improving the quality of work life (QWL).
6) To communicate HR policies to all employees: It is the responsibility of HRM to
communicate in the fullest possible sense; tapping ideas, opinions and feelings of customers, non-
customers, regulators and other external public as well as understanding the views of internal
human resources.
7) To develop and maintain a quality of work life: It makes employment in the organization a
desirable, personal and social, situation. Without improvement in the quality of work life, it is
difficult to improve organizational performance.
8) To be ethically and socially responsive to the needs of society: HRM must ensure that
organizations manage human resource in an ethical and socially responsible manner through
ensuring compliance with legal and ethical standards.
9) Increase workforce commitment: Increasing level of commitment means people are interested to
be involved in work mentally and physically in order to achieve organizational objectives. This is
achieved by the people commitment for increase in efficiency and productivity.
10) Providing supporting environment for employee for employees creativity: For this purpose
HRM focuses on effective management mechanisms such as team work, management by objectives
and total quality management.
11) Making organizational system flexible: HRM aims to train and develop workforce in order to
adjust in a quickly and frequently changing environment. It follows other flexible HR practices to




motivate workforce to work to keep organization more flexible to respond changing elements of
the environment.
12) Management of organizational culture: Organization culture refers to the widely shared beliefs,
values and norms of organizational members and other stakeholders. It guides the behavior of
people working organization. By knowing these cultures, which also represent unwritten feeling
part of the organization, workforce can learn on how to behave, respond, and react in different
situations.


FUNCTIONS OF HRM
Basic functions that all managers perform: planning, organizing, staffing, leading, and
controlling. HR management involves the policies and practices needed to carry out the
staffing (or people) function of management.


1) STAFFING
Activities in HRM concerned with seeking and hiring qualified employees. Obtaining such people involves job
analysis, human resource planning, recruitment, and selection.
a) Job analysis is the systematic process of determining the skills, duties, and knowledge required for
performing specific jobs in an organization. Through JA process, HRM identifies the essential qualifications
for a particular job.
b) Human resource planning (HRP) is the process of systematically reviewing human resource requirements to
ensure that the required numbers of employees, with the required skills, are available when needed.
c) Recruitment is the process of attracting such individuals in sufficient numbers and encouraging them to
apply for jobs with the organization.
d) Selection is the process through which the organization chooses, from a group of applicants, those
individuals best suited both for open positions and for the company.






2) TRAINING AND DEVELOPMENT
Activities in HRM concerned with assisting employees to develop up-to-date skills, knowledge, and abilities.
Activities involves in training and development are as,
a) Training is designed to provide learners with the knowledge and skills needed for their present jobs. It
is a continuous process by which employees learn skills, knowledge, abilities and attitudes to further
organizational and personal goals. The focus of training is on current job skill requirements.
b) Employment development is designed to help the organization ensure that it has the necessary talent
internally for meeting future human resource needs. It is essential because people, technology, jobs, and
organizations are always changing.
c) Career development programs are designed to assist employees in advancing their work lives. The focus
of career development is to provide the necessary information and assessment in helping employees
realize their career goals.
(Career: The sequence of positions that a person has held over his or her life).
d) Organization development deals with facilitating system wide changes in the organization. The focus of
OD is to change the attitudes and values of employees according to new organizational strategic
directions.

3) MOTIVATION
Activities in HRM concerned with helping employees exert at high energy levels.
Motivation Theories and job design: JD is the way in which job tasks are organized into a unit of work.
If job are poorly designed, inadequately or improperly described, employees will perform below their
capabilities.
Consequently, HRM must ask has the latest technology been provided to permit maximum work
efficiency. Is the office setting appropriate? Are the necessary tools readily available for employee use?
Without such planning, the best intentions of organizational members to motivate employees may be
lost or significantly reduced.
Must be understand the implication of motivation theories.
Performance appraisal system is designed to provide feedback to employee regarding their past
performance, while simultaneously addressing any performance weaknesses the employee may have.
A link should be established between employee compensation and performance.

4) MAINTENANCE
Activities in HRM concerned with maintaining employees commitment and loyalty to the organization. Help
to retain productive employee.
v HRM must ensure a safe and healthy working environment; caring for employees well beings has
major effect on their commitment.
v HRM must realize that any problem an employee faces in his or her personal life will ultimately
brought into the workplace. This calls for employee wellness program. Such programs that help
individuals deals with stressful life situations.




v To protect employee welfare, HRM must operate communication programs (provide information to
employees) in the organizations.
v Employee relations programs should ensure that employees are kept well informed through the
companys bulletin boards, meetings or teleconferencing and foster an environment where employee
voices are heard.




5) HUMAN RESOURCE RESEARCH
Although human resource research is not listed as a separate function, it pervades all HRM functional areas, and
the researchers laboratory is the entire work environment.
6) INTERRELATIONSHIP OF HRM FUNCTIONS
All HRM functional areas are highly interrelated. Management must recognize that decisions in one area will
affect other areas. The interrelationships among the five HRM functional areas will become more obvious as we
address each topic throughout the book.

PERSONNEL MANAGEMENT VS. HUMAN RESOURCE MANAGEMENT
v Both terms, however referred to the same thing; the personnel who work for an organization represent that
organizations human resources.
v Human Resource Management (HRM) historically known as personal management, deals with formal
system for the management of the people within the organization.
v HRM and personnel management are similar in the sense that both are concerned to achieve business
strategy and recognize responsibilities of all managers for managing people in organizations.
v The generic functions of personnel and human resource management (recruitment and selection, training
and development, performance evaluation and rewards) are similar.
v HRM is a modern term that emerged during the 1970s and won final acceptance in 1989.
v HR mangers concern include how to manage layoffs, address reduced employee loyalty, and create a well
trained highly motivated work force that can deliver higher quality and productivity.
v In 1970s, the job of the HR manger was to keep their companies out of court and in compliance with the
increasing number of regulations governing the work place.
v In the 1980s HR mangers had to address staffing costs related to mergers and acquisitions and downsizing.
Personnel management Vs. Human Resource Management
DIMENSIONS PERSONNEL MANAGEMENT HUMAN RESOURCE MANAGEMENT
Time and planning v Short term focused
v Reacts on the personal problems by
providing piece-meal solutions
v There will be any problem it plans to
solve.
v It follows a long-term approach to work on the
problem or change.
v Proactive actions
v Make system-wide interventions before any
problem
Investment It regards investment in people as a
variable cost.
It regards investment in people is social capital
capable of development.
Main concerns v Concern of personnel department.
v Negotiating, administrating and
collective agreement.
v The more focus is on compliance with
rules and regulations.
v Concerns of all level of managers.
v Main concerns of HRM is on employees
commitment.
v Employees involvement and participation are
emphasized in work related decisions.
Information & Traditionally, personnel specialists used Communication and information are important




communication communication and information mainly
as a source of power and control.
sources of developing trust and commitment
among the organization s employees.
Aims To increase the skills of employees
through teaching and learning.
To develop the full, longer term potential of
individual employees.
Influence It influences the line mangers to
implement its roles and responsibility.
It is embedded with the line management
responsible for coordinating and directing all
resources in the business unit in pursuit of bottom
line performance
Outcome v Satisfied employees
v Increased production
v Increased productivity
v Increased organizational effectiveness.
v Development of organizational culture and
climate.
v Committed and empowered human resources.
Function Main function manpower planning
comprises practices, such as employment
forecasting and succession planning
HR Planning establish a more explicit linkage
between human resource planning and the
organizational strategy and business planning of
the organization.


HUMAN RESOURCE MANAGEMENT SYSTEM
v HRM can be looked upon as a system composed of interrelated and interacting parts to achieve desired
goals.
v It is operate within internal and external environment.
v It is an integrated guiding map to see the integrated form of HRM comprising input, process, and
output components and their interaction with environmental factors.
v While understanding HR System,
it is generally assumed that if organization can have a greater understanding of environmental factors, it
allows achieving greater HR outcomes.










FEEDBACK
Internal environment
Goal, policies, structure, reward system, org. culture
External environment
Technology, politics, law, labor union, cultural






INPUT OF HRM MODEL
Input component of HRM model consists of
v Human energy and competencies: Energy is represented by physical strength. Competencies are
represented by knowledge, skills, attitudes, experiences and potential for growth. Energy and
competencies are the focus of HRM.
v Organizational plan : This states overall organization goals, strategy and targets within which HRM
has to function.
v Human Resource Plan: This matches future human resource demand with supply and indicates HR
requirements.
v Management inventory: This represents inventory of human resources currently available in the
organization.
v Labor Market: this serves as the source of external supply for quality human resources.
PROCESSING OF HRM MODEL
Processing components of HRM model consists of:
Acquisition: this ensures entry of right number of people at the right place at right time in the organization. It
consists of following activities:
Recruitment: It consists of identifying prospective candidates and stimulating them to apply for
the job.
Selection: It consists of choosing qualified and right persons from among the prospective
candidates.
Socialization: It is the process of adaptation of new employees to organization culture.
Orientation is a part of socialization.
Development: this ensures proper competencies of employees to handle jobs. It consists of following activities;
Analyzing development needs: Formulating human resource development plan for employees to
assess needs.
Employee training: Skill development of employees to cope with the job. It can be on the job
and off the job.
Management development: Programmes to enhance conceptual abilities of managers to develop
their future potential.
Career development: It involves tackling career paths of employees to match long term needs of
the individual and the organization.
Utilization:
This ensures willingness of employees for boosting productivity by doing jobs effectively.
Motivation: Higher output through employee need satisfaction and increased efforts.
Performance appraisal: Assessment of employee effectiveness in achieving goals through
performance on the job.
Compensation management: Design of the lowest cost pay structure that is perceived as fair by
employees. It is based on the job evaluation. It includes money, fringe benefits, incentive.
Maintenance:
This ensures retention of competent employees in the organization. It consists of
Labor relation: Employer employee relations and employee discipline to ensure adherence by
employees to rules and standards of acceptable behavior. Disciplinary problems arise when some
employees do not conform to proper norms of organization behavior. Grievance handling is
done to address employees discontent with job and conditions of employment resulting from
perception of unfair treatment. It includes unionization and collective bargaining.
Employee welfare : it consists of various activities and programmes that promote employee
welfare, such as safety, healthy, social security, sports, recreation, canteen facilities etc
OUTPUT OF HRM MODEL




Output of HRM model consists of
v Organization related output
i. Goal achievement : overall and societal
ii. Quality of work life (QWL): HRM improves QWL, which is the quality of relationship
between employees and the total working environment of the organization. It is employee
perception of physical and mental well being at work.
The mechanisms for improvements in QWL are:
v Learning and development: HRM continuously develops employees.
v Recognition: employees contribution is valued by other in org.
v Autonomy: freedom in doing in their job is provided.
v Intrinsic reward: getting satisfaction through interesting and meaningful works.
v Extrinsic reward: Salary, benefit, promotion, etc.
iv. Productivity: it is the performance output of HRM. It is the efficiency relationship input and
output. It is the result of technology, innovation, performance based rewards and higher
motivation.
v. Profit: It is the functional output of HRM.
vi. Readiness for change: It is the behavioral output of HRM. Changes should be carefully planned
and managed by organization. HRM system reduces resistance to change.
v Employment related output
They consist of 4Cs.
i. Commitment: It is related to people. High commitment achieved through better
communication, mutual trust, mutual understanding, with employees, and employee loyalty to
organization.
ii. Competence: It is related to people. High competence to adapt to change in the environment
and assume new roles.
iii. Congruence: It is related to goals. Higher degree of harmony is achieved between the goals of
individual and the organization.
iv. Cost effectiveness: It is related to efficiency. Higher cost effectiveness is achieved in utilization of
human resource.
FEEDBACK OF HRM MODEL
This component provides information to redesign HRM inputs and processing based on output
effectiveness.
ENVIRONMENT
Internal Environment of HRM Model
Focuses in the internal environment are controllable by HRM. They provide strength and weakness
of the organization. They are
v Organizational goals: provide frame of reference for conducting HRM.
v Policies: Provide guidelines for HRM decisions.
v Structure: Limit activities, design of job and relationship
v Reward system: ensure attraction and retention of quality HRs.
v Organizational culture: It promotes and hinders mutuality of interests between management
and employees.
External Environment of HRM Model
Forces in the external environment are non controllable by HRM. They provide opportunities and
pose threats. They are
v Technology : Skill, methods, system and equipment
v Politics/Law: rule of conduct enforced by the state.
v Labor union: they affect processing components of HRM system through collective bargaining,
strikes etc.
v Economic forces: they affect job market and reward system of employees.




v Socio-cultural forces: Forces related to human relationships. They provide status and value to
the firm.
Growing Importance of HRM
v The success of organizations increasingly depends on - the knowledge, skill, and abilities imbedded in an
organization's members.
v This knowledge base is the foundation of an organization' core competencies (integrated knowledge sets
within an organization that distinguish it from its competitors and deliver value to customers).
v We are surrounded by organizations and we participate in them as members, employees, customers, and
clients.
v Most of our life is spent in organization, and they supply the goods and services on which we depend to
live.
v Organizations on the other hand depend on people, and without people, they would disappear.

HRM HAS INCREASED IN IMPORTANCE SINCE THE 1980S. WHY?
v Globalization
v Government regulation
v Stronger knowledge/research base
v Changing role for labor unions
v Challenge of matching worker expectations with competitive demands
THE IMPORTANCE OF HRM
People are the key factor of production. Productivity is the key to measure a nations economic growth
potential, and labor quality is the key to improving productivity. Competition today is the competition
for talents. Since man is the most uncontrollable and unpredictable variable of all production variables,
organizational success depends on the management of people.
It provides assistance in HRM matters to line managers or those directly involved in producing the
organizations goods and services.
Every organization is comprised of people acquiring their services, developing their skills, motivating
them to high level of performance, and ensuring that they maintain their commitment to the
organization are essential to achieve organizational effectiveness.
Global competition has increased the importance of improving workforce productivity and looking
globally for the best qualified workers.
As an important strategic tool
v Representation and advocating for the organizations employees.
v Assisting the organizations in its strategic directions.
v HRM also serve the organization by determining lowest cost strategies to its HRM practices
v Being a strategic partners also involves supporting the business strategy
v HRM helps to establish an organization's sustainable competitive advantage.
Adds value to the firm
High performance work practices lead to both high individual and high organizational performance.
Factors Contributing to the Growing Importance of HRM
a) Accommodation to workers' needs
v Workers are demanding that organizations accommodate their personal needs by instituting such
programs as flexible work schedules, parental leave, child-care and elder-care assistance, and job sharing.
v The human resource department plays a central role in establishing and implementing policies designed
to reduce the friction between organizational demands and family responsibilities.
b) Increased complexity of the Managers job
v Management has become an increasingly complex and demanding job for many reasons, including
foreign competition, new technology, expanding scientific information, and rapid change.
v Therefore, organizations frequently ask human resource managers for assistance in making strategic
business decisions and in matching the distinctive competencies of the firm's human resources to the
mission of the organization.




v Executives need assistance from the human resource department in matters of recruitment, performance
evaluation, compensation, and discipline.
c) Consistency
v Human resource policies help to maintain consistency and equity within an organization.
v Consistency is particularly important in compensation and promotion decisions.
v When managers make compensation decisions without consulting the human resource department the
salary structure tends to become very uneven and unfair, promotion decisions also may be handled
unfairly when the HR department does not coordinate the decision of individual manager.
d) Expertise
v Now a days there exist sophisticated personnel activities that require special expertise.
v Similarly, many organizations have developed compensation systems with elaborate (complicated)
benefits packages to replace simple hourly pay or piece rate incentive systems.
e) Cost of Human Resource
v Human resource activities have become increasingly important because of the high cost of personal
problem.
v The largest single expense in most organizations is labor cost, which is often considerably higher than
the necessary because of such problems as absenteeism tardiness and discrimination
The Strategic Management Process

Step 1: Define the Business and Its Mission:
Step 2: Translate the mission into strategic goals:
Step 3: Formulate a strategy to achieve the strategic goals:
Step 4: Structure:
Step 5: People

STRATEGIC HUMAN RESOURCE MANAGEMENT -CONCEPT AND PERSPECTIVES
v Strategy is a long term plan of the organization.
v Strategic HRM is concerned with the development and implementation of the HR strategies integrating
with the overall organization strategy.
v HR strategy refers for specific course of actions developed for achievement of organizational goal.
v It aims at building a committed workforce for the long run survival of the organization.
v SHRM refers to improving business performance and developing an organizational culture that fosters
innovation and flexibility by linking HRM with the strategic goals and objectives of the firm.
v SHRM is the pattern of planned human resource developments and activities intended to enable an
organization to achieve its goals.
v This means accepting the HR function as a strategic partner in both the formulation of the companys
strategic, as well as in the implementation of those activities through HR activities.
v While formulating the strategic plan HR management can play a vital role, especially in identifying and
analyzing external threats and opportunities.
v HR management can also offer competitive intelligence (like new incentive plans being used by
competitors, data regarding customer complaints etc.) that may be helpful while giving shape to strategic
plans.
v HR function can also throw light on company's internal strengths and weaknesses.
v Some firms even develop their strategies based on their own HR- based competitive advantage.





OUTCOMES OF STRATEGIC HR


USING HRM TO ATTAIN COMPETITIVE ADVANTAGE
Competitive advantage refers to the ability of an organization to formulate strategies to exploit rewarding opportunities,
thereby maximizing its return on investment. Competitive advantage occurs if customers perceive that they receive value from
their transaction with an organization. This requires single-minded focus on customer needs and expectations. To achieve this,
the organization needs to tune its policies in line with changing customer's requirements. The second principle of competitive
advantage derives from offering a product or service that your competitor cannot easily imitate or copy. An organization
should always try to be unique in its industry along dimensions that are widely valued by customers. For example Apple
stresses its computers usability, Mercedes Benz stresses reliability and quality; Maruti emphasizes affordability of its lower-
end car Maruti 800. In order to enjoy the competitive advantage, the firm should be a cost-leader, delivering value for money.
It must have a committed and competent workforce. Workers are most productive if (i) they are loyal to the company, informed
about its mission, strategic and current levels of success, (ii) involved in teams which collectively decide how things are to be
done and (iii) are trusted to take the right decisions rather than be controlled at every stage by managers above them
(Thompson). A good team of competent and committed employees will deliver the goals if they are involved in all important
activities and are encouraged to develop goals that they are supposed to achieve. In recent years, a new line of thinking has
emerged to support this view-known as strategic human resources management (SHRM).
What are the strategic roles of an HR Manager?
Strategic Roles
An organization s success increasingly depends on the knowledge, skills and abilities of its employees, particularly as they
help establish a set of core competencies (activities that the firm performs especially well when compared to its competitors
and through which the firm adds value to its goods and services over a long period of time, e.g. ONGC 's oil exploration
capabilities and Dell's ability to deliver low cost, high-quality computers at an amazing speed) that distinguish an organization
from its competitors.
When employees talents are valuable, rare, difficult to imitate and organised, a firm can achieve sustained competitive
advantage through its people. The strategic role of HR management focuses attention on how to enable ordinary employees
to turn out extraordinary performance, taking care of their ever-changing expectations. The key areas of attention in this era
of global competition include effective management of key resources (employees, technology, work processes), while
delivering cost effective, value enhancing solutions
Change agent:
Strategic HR as it is popularly called now aims at building the organization s capacity to embrace and capitalize on change. It
makes sure that change initiatives that are focused on creating high-performing teams, reducing cycle time for innovation, or
implementing new technology are defined, developed and delivered in a timely manner. The HR manager in his new avtar
would help employees translate the vision statements into a meaningful format (Ulrich, 1998). HR's role as a change agent is
to replace resistance with resolve, planning with results and fear of change with excitement about its possibilities. HR helps
an organization identify the key success factors for change and assess the organization s strengths and weaknesses regarding
each factor. It may not decide what changes the organization is going to embrace, but it would certainly lead the process to
make them explicit. In helping to bring about a new HR environment there needs to be clarity on issues like who is responsible




for bringing about change? Why do it? What will it look when we are done? Who else needs to be involved? , How will it be
measured? How will it be institutionalized? How will it be measured? How will it get initiated, developed and sustained?
Strategic partner:
HR s role is not just to adapt its activities to the firms business strategy, nor certainly to carry out fire-fighting operations like
compensating employees. Instead, it must deliver strategic services cost effectively by building a competent, consumer-
oriented work force. It must assume important roles in strategy formulation as well strategy implementation. To this end, it
must identify external opportunities from time to time, develop HR based competitive advantages and move in to close the
gaps advantageously (like excellent training centre, design centre, automation centre etc. which could be used by others as
well). While implementing strategies, HR should develop appropriate ways to restructure work processes smoothly.

CHANGING WORLD OF WORK/ The Changing Environment of HRM
The world of work as we know it is rapidly changing. Even as little two decades ago, the times were calmer than they are
today. As part of an organization, then, human resource management (HRM) must be prepared to deal with the effects of the
changing world of work. This means understanding the implications of
a) Globalization,
b) Technology changes,
c) Workforce diversity,
d) Labor shortages,
e) Changing skill requirement,
f) Continuous improvement initiatives,
g) The contingent workforce,
h) Employee involvement.
a) Globalization (Discuss how cultural environment affect HRM practices?)
Organizations are no longer constrained by national boarders.
The world has become a global village producing and marketing goods and services worldwide.
To be effective in this boundless world, organizational members need to adapt to cultures, systems, and techniques
different from their own.
The rise of multinational corporations places new requirements on human resource managers.
HR department must ensure that employees with the appropriate mix of knowledge, skills, and cultural adaptability
are available to handle global assignments.
All countries have different values, morals, customs, political and economic systems, and legal systems.
HRM need to understand societal issues, such as status, that might affect operations in another country.
Flexibility & adaptability are key components for employees going abroad.
To make this a reality, human resource managers must have a through understanding of the culture of the areas
around the globe in which they may send employees.
HRM must also develop mechanism that will help multicultural individuals work together.
HR managers must take cultural values into account when trying to understand the behavior of people from different
countries as well as those in different countries
b) Technology changes (The changing world of technology)
HRM operates in a technologically changing environment.
How technology affects HRM practices
Technology has had a positive effect on internal operations for organizations, but it also has changed the way human
resource managers work.
HRIS allows HRM professionals to better facilitate human resource plans, make decision faster, clearly define jobs,
evaluate performance, and provide cost effective benefits that employees want.
In order to cope with efficient technology and to ensure quality and innovation, organizations require skilled,
innovative and motivated workforce.
The role of HRM is to plan for education, training and development of workforce to upgrade their existing level
of knowledge, skill, and decision making capacity to adapt to technology changes.
Technology helps to strengthen communication with both the external community and employee. How? Let s look at
some specific example.
a) Recruiting: Posting jobs on company web sites, or through specific job search web sites such as,
careerbuilder.com and monster.com, helps human resource managers reach a large pool of potential job
applicants and assist in determining if an applicants possess some of the basic technological skills.
b) Employee Selection: Many internet tools make background searches of applicants quick and easy.
c) Training and Development: The internet has provided HRM opportunities to deliver web based training
and development to employees on demand. Teleconferencing technology allows employees to train and
collaborate in groups regardless of their location.




d) Ethics & Employee Rights: The development of increasingly sophisticated surveillance software only adds
to the ethical dilemma of how far an organization should go in monitoring the behavior of employees who
work on computer.
e) Communication: Employees today can communicate with any individual directly without going through
channels. Instantly anytime, with anyone, anywhere. These open communication system break down
historical organizational communication pattern flow.
What are knowledge workers?
Individuals whose jobs are designed around the acquisition and application of information.
Knowledge worker include professional registered nurses, accountants, teachers, lawyers, and engineers.
Technology has been an good news/bad news proposition for workers.
While technology has reduced the demand for manufacturing jobs through automation and increased competition with
other countries, it has generated an increase in demand for service producing and technology positions.
Peter Drucker, the late management scholar and consultant, held that the key to the productivity of knowledge workers
depends on the ability to use computer technology to locate and use information for decision making.
c) Workforce diversity:
The varied personal characteristics that make the workforce heterogeneous.
Today s managers have found that employees do not set aside their cultural values and lifestyle preferences when they
come to work.
The challenge therefore, is to make organizations more accommodating to diverse groups of people by addressing
different lifestyle, family needs, and work styles.
How diversity affects HRM
v As organizations become more diverse, employers have been adapting their human resource practices to reflect those
changes.
v Workforce diversity require employers to be more sensitive to the differences that each group brings to the work
setting.
v For instance, employers may have to shift their philosophy from treating everyone alike to recognizing individual
differences and responding to those differences in way that will ensure employee retention and greater productivity.
v Employers must recognize and deal with the different values, needs, interests, and expectations of employees.
v Employers must avoid any practice or action that can be interpreted as being sexist, raciest, or offensive to any
particular group and of course must not illegally discriminate against any employee.

d) Labor shortage
The labor shortage problem is compounded by the fact that the later part of the 20
th
century benefited from a huge
increase in women entering the workforce and providing a new supply of talented and skilled workers.
In times of labor shortage, good wages and benefits aren t enough to hire and keep skilled employees.
Human resource managers need sophisticated recruitment and retention strategies and need to understand human
behavior.
In tight labor markets, managers who don t understand human behavior and fail to treat their employees properly, risk
having no one to manage.
Issues the Contingent Workforce for HRM
HR managers must make sure that contingent workers do not perceives as second class workers.
As temporary workers are brought in, HRM will also have the responsibility of quickly adapting them to the
organization.
HRM must also give some thought to how it will effectively attract quality temporaries.
HRM must reexamine its compensation philosophy.
HRM must discover specifically what theses employee want.
Finally, HRM must be prepared to deal with potential conflicts between core and contingent workers.
e) Continuous improvement initiative:
Organizational commitment to constantly improving quality of products or services or as the Japanese calls it, Kaizen.





How HRM can support improvement programs
HRM must prepared individuals for the change.
This requires clear and extensive communication of why the change will occur, what is expected, and its effect on
employees.
Improvement efforts may change work patterns, operations, and even reporting relationships. Because change and fear are
often associated, employees may create barriers to change.
HRM must be ready to help affected employees overcome their resistance.
f) Employee Involvement
Employee involvement concept are delegation, participative management, work teams, goal setting, and
employer training-the empowering of employees.
Employee Involvement implications for HRM
Employees expected to delegate to have decisions made within a group, to work in teams, or to set goals cannot do so
unless they know and understand what they are supposed to do.
Empowering employees requires extensive training in all aspects of the job.
Employees may need training in interpersonal skills to make participative management and work teams function
properly.
g) Changing skill Requirement
The vast spreads of technology require employees increased job skill requirement.
Workers will need the ability to read and comprehend (understand) software and hardware manuals, technical journals
and detailed reports.
Such increased skill provides organizations with the ability to innovate, brings products to market rapidly, and
responds to customer request.

o To facilitate customer demands and fulfill corporate expectations, today's employees must be more involved.
o Group decision making gives these employees more inputs into the processes and greater access to needed
information.
o Work teams are also an effective way to increase employee involvement.
o Involving employees allows them to focus on the job goals.
o With greater freedom, employees are in a better position to develop the means to achieve the desired ends.
The Changing role of Human Resource Professionals
Since, a number of HR challenges created by the process of globalization, change in technology, need for managing human
capital, raise profitability and make continuous change,
v The role of HR managers has been rising to meet these challenges and grab opportunities for organization.
v Due to an increasing demand of organizational excellence to work with environmental challenges and
opportunities, the role and responsibilities of human resource managers will continue to expand in future too.
v Such excellence will increase when HR managers focus on; Strategic HR, creating high performance work system,
management of employees, etc.
v Some importance role of HR professionals are;
1) Management of Strategic Human Resource




v Strategic human resource management means formulating and executing human resource policies and practices
that produce the employee competencies and behaviors the company needs to achieve its strategic aim.
v In practice, HR managers strategic role means, partnering of HR managers with their top managers in both
designing and executing their organizations strategies.
v For this HR managers follow following steps to the management of human resources;
a) Defining an organizational architecture: At the time of organizational architecture, HR department has to
architect and define reward system, culture, governing style, work process and leadership to work in
organizational strategy.
b) Conducting an organizational audit: organizational audit is done to find weak and strong components of
organizations that hinder and support strategy implementation HR expert architect organization in terms of
competencies, leadership etc. to implement it.
c) Working as strategic partner: HR experts involved into renovating (repair) the parts of the organization
taking initiatives to improve compensation practices, performance evaluation system, team work etc.
d) Taking stock of own and setting clear priorities: HR managers have to find stock of suitable HR initiatives
such as, performance based pay, participative management etc. and time to time evaluate effectiveness of
these initiatives to gain certain business performance.
2) Creating high performance work system
v A high performance work system is an integrated set of human resource management policies and practices that
together produce superior employee performance.
v There is no hard and fast rule about what comprises high performance work system, most organizational
psychologists would agree they include these practices.
Employment security
Selective hiring
Extensive training
Self managed team and decentralized decision making
Reduce status distinctions between managers and employee
Information sharing
Contingent rewards (pay for performance)
Emphasis on high quality works
v In terms of measurable outcomes, high performance work system produce, more qualified applicants per position,
more employee hired based on validated selection tests, more hours of training for new employees etc.
v Systems like these produce many benefits for employers.
v Study found that high performance work systems produced fewer occupational injuries.
3) Measuring the Human Resource Management Teams performance
v In todays performance based environment, employers naturally expect their human resource management teams
to provide measurable evidence of their efficiency and effectiveness, and for that of their proposed program.
v E.g. How much will that new testing program save us in reduced employer turnover?
v How much more productive will our employees be if we institute that new training program?
v How productive is our human resource teams, in terms of HR staff per employee, compared to our
competitors?
4) Managing with the HR scorecard process
v The HR scorecard is a concise measurement system.
v It shows the quantitative standards the firm uses to measure human resources activities (such as training,
compensation, safety etc.), and to measure the employee behavior resulting from these activities, and to
measure the strategically organizational outcomes of those employee behaviors (such as higher plant
performance, and company profit).
5) Management of employees:
v The main role of HR managers is to ensure that employees are engaged that they feel committed to the
organization and contribute fully.
v HR professionals have to involve in providing training for line management in methods of achieving high
employee morale, discuss employee problems with executive team, offer opportunity to personal and professional
growth and provide
6) Becoming a change agent:
v Because of globalization, innovation in production and information technology, pace of change is both shaky
(unsteady) and amazing (surprise).
v HR professionals can play role on creating high performing teams, reducing cycle time for innovation, or
deploying (use effectively) new technology timely.




v HR professional can work to make broad vision statements (such as we will be global leader in our market), ask
employees to work to achieve it.
v In such cases, HR can avoid resistance to change informing employees about benefits of change for them.

International perspective of Human Resource Management;
DEFINITION
The human resource management issues and problems arising from the internationalism of the business, and the human
resource strategies, policies and practices which firms pursue in response to the internationalization process.
Scullion
v As an effect of the increasing trends of globalization, competition at the global level emerged in many markets and
the number of firms operating worldwide increased.
v As a business grows from regional to national, to international size, the human resource management functions
must take on a new and broader perspective.
v As a national company expands overseas, the human resource functions must adapt to changing and far more
complex environment.
v All domestic functions of HRM become more complex when the organizations employees are located around the
world, and additional human resource management activities often are necessary that would be considered
invasions (a persons right) of employee privacy in domestic operations.
v This is because of the increased vulnerability (harmed) and risk of terrorism.
v Especially, required additional activities associated with staffing, and training and development.
v Not only are organizations concerned about selecting the best employee for the job, they must also be aware of the
entire familys needs. Why?
1) Many individuals who take international assignments fail because their spouse or family cant adjust to the
new environment.
2) Relocation (Locate new place) and orientation process before departure may take month of foreign
language training and should involve not just the employee, but the employees entire family.
3) Detail must be provided for such as work visas, safety, travel, safety, household moving arrangement,
taxes, and family issues as the childrens schooling, medical care and housing.
Three approaches to IHRM
Cross-cultural management approach
v Examines human behavior within organizations from an international perspective.
Comparative HRM
v Seeks to describe, compare and analyze HRM systems in various countries.
HRM in multinational enterprises (MNEs)
v Explores the implications of the process of internationalization on HRM activities and policies.
Multinational corporations (MNCs)
v Operations in many nations, but each is a separate enterprise
v Each enterprise adapts products to the local culture
v Most control remains with the home office
v Most employees and managers are from the home country (polycentric staffing).

Global corporations (GC) are structured so that national boundaries disappear
v The best people are hired, regardless of national origin (geocentric staffing)
v The national affiliation of an employee becomes less important than his/her area of expertise
Categories of employees in an MNE
Parent-country nationals (PCNs)
v Employees who were born and live in a parent country.
A parent (or home) country: the country in which a companys corporate headquarters is located.
Host-country nationals (HCNs)
v Employees born and raised in a host country.
Host country: a country in which the MNE seeks to locate or has already located a facility.
Third-country nationals (TCNs)
v Employees born in a country other than a parent or host country.
Types of international work
1. Expatriates
v An employee sent by his/her company in one country to work in a different country.
2. Global team project




v Bringing together employees from different locations
to complete a specific team project.
3. Short-term assignments
v Sending employees on assignments, such as a three-month assignment, to a foreign location.
4. Virtual assignment
v Assignments requiring employees in different locations
to use information technology to communicate on job projects and tasks.
MANAGEMENT OF EXPATRIATES
What is an expatriate?
v An employee sent by his/her company in one country to work in a different country.
v An employee who is working and temporarily residing in a foreign country
Some firms prefer to use the term international assignees
Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another
subsidiary, and HCNs transferred into the parent country
v Global flow of human resources
Factors associated with expatriate failure:
v Uncertain technical competency
v Weak language skills
v Unsure about going overseas
v Family problems
v Low spouse support
v Behavioral rigidity
v Inability to adapt
v Poor relational ability
v Weak stress management skills
Factors associated with expatriate success:
v Good technical and language skills
v Strong desire to work overseas
v Specific knowledge of overseas culture
v Well-adjusted family situation
v Complete support of spouse
v Behavioral flexibility
v Adaptability and open-mindedness
v Good relational ability
v Good stress management skills
Factors which differentiate international from domestic HRM
v More HR activities
v The need for a broader perspective
v More involvement in employees personal lives
v Changes in emphasis with variable mix of expatriates and locals in workforce
v Risk exposure
v Broader external influences
IMPORTANCE OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT
v An increasing number of MNCs are in operations in many countries in recent years;
v There is growing need for effective management of HR in these organizations.
v To implement international business strategies by developing appropriate HR strategies for the recruitment and
development of international managers .
v To minimize financial and human costs of failure in overseas appropriate.

RISING INTEREST IN HRM: In the recent years, since 1990s, the HRM is getting more importance. The every
organization is giving importance to HRM and is a must also. The various factors responsible for raising the interest in HRM
are:
1) Increasing Competition: internal and external competition.
v To face the challenges created by rivalry actions the work force must be effective and committed.
v For this the interest is rising in innovative human resource management policies and practices to face the growing
challenges of competition.
2) Pressure of Globalization
v Globalization facilitated business activities without boarders, will have influence on the HR policies as well as
practices.




v To meet global requirements, HRM has to think over its policies as well as practices.
v Issues like selection of qualified employees with language fluency to work in other countries, their training to work
are pertinent to HRM.
v Working in cross cultural and cross country situations, employees have to be familiar with the country and its culture,
such as, the way people think, believe, and respect each other and talk.
3) Work force diversity
v Workforce from different countries with different values and culture, education and training background and
representing different races and religions are participating in the same workplace.
v It is getting bimodal educated professionals at one extreme and low skilled service workers at another extreme.
v The HR managers can help line managers to minimize differences created by language, education, and age by
developing training and development policies.
4) Change in Technology
v Today, technology is changing very rapidly, especially with innovation in information and production technology,
work efficiency and quality of product and services are expected to improve.
v So, in order to cope with efficient technology and to ensure quality and innovation, organizations require skilled,
innovative and motivated workforce.
5) Increasing size and complexities of the organization
v Modern organization are growing larger and larger, their size and expansion of business activities at the domestic and
international levels.
v With the increase in size, complexities of managing them are also increasing.
v Committed and competent human resources are needed to cope with the challenges of size and complexities.
v This has led to rising interest in HRM.
6) Change management
v In general every employee resists the change because of the uncertainty of their future.
v So HR should be developed in well manner so that the committed employees can be produced which are essential to
manage the change.
7) Organizational effectiveness
v It is the degree to which an organization achieves its goals through acquisition and efficient utilization of resource
with environmental adaptation.
v This also needs the excellent HR which is possible through effective HRM.
8) Mistake avoidance
v In the deficiency of effective HRM the organization may commit various serious mistakes on this ground. Like hiring
wrong person, following unnecessary times and cost consuming steps while recruiting, high labor turnover, poor
motivation, etc. the interest in HRM is rising because managers like to avoid HRM related mistakes.
9) Human asset accounting
v These days the big organizations are computing the value of their human assets along with financial assets for
accounting purposes. This has also added in the interest in HRM.
10) The contingent workers
v Due to the increasing effects of globalization, downsizing, corporate restructuring and total quality management, have
an impact in the employment practices of the labor force.
v There is increasing trends to employ contingent workers and decreasing trends to use lifetime employees.
v The employment of contingent workforce does not only fulfill the peak time business needs of an organization but
also minimize the labor cost.
v Similarly employees of this nature can work to maintain a balance between family and work and to earn an extra
income form part time jobs.
v With a view to managing HR in the organization, contingent employees should be treated as strategic employees to
fulfill the just in time requirement in the increasingly competitive market situation.
v If a HR department can recruit a quality contingent workforce, the firm can maintain in economy in the employment
process.




UNIT: 2
Human Resource Planning (HRP) concepts
What is planning?
v Planning is the process of establishing objectives and courses of action prior to taking action.
v Planning also helps identify potential opportunities and threats, and facilitates control
Human Resource Planning (HRP)
HRP is the process of systematically reviewing human resource requirements to ensure that the required number of employees,
with the required skills, is available when they are needed.
HRP is the process of predetermining future human resource needs and choosing courses of action needed to satisfy those
needs. It involves the estimation of future size and composition of workforce of an organization the future human resource
demand and the supply are examined under HRP. Human resource planning must be integrated within the organizations
strategic plans.
Human resource planning is the process of determining an organization s human resource needs.
Decenzo and Robbins
HRP ensures that the organization knows and gets what it wants in the way of the people needed to run the business now and in
the future.
Michael Armstrong
HRP systematically forecasts an organization s future supply of, and demand for, employee.
Wretner and Davis

v The basic purpose of human resource planning is to have an accurate estimate of the number of employees required, with
matching skill requirements to meet organizational objectives.
v It provides information about the manner in which existing personnel are employed, the kind of skills required for different
categories of jobs and human resource requirements over a period of time in relation to organizational objectives.
v It would also give an indication of the lead time that is available to select and train the required number of additional
manpower.
v Human resource planning has two components:
v requirements and
v availability
v Forecasting human resource requirements involves determining the number and type of employees needed by skill level
and location.
v In order to forecast availability, the human resource manager looks to both internal sources (presently employed
employees) and external sources (the labor market).
v When employee requirements and availability have been analyzed, the firm can determine whether it will have a surplus or
shortage of employees.
v Ways must be found to reduce the number of employees if a surplus is projected.
v Some of these methods include restricted hiring, reduced hours, early retirements, and layoffs.
Restricted Hiring: When a firm implements a restricted hiring policy, it reduces the workforce by not replacing
employees who leave.
Reduced Hours: Reaction to a declining demand can also be made by reducing the total number of hours worked.
Instead of continuing a 40-hour week, management may decide to cut each employees time to 30 hours.
Early Retirement : Early retirement of some present employees is another means of reducing the supply of workers.
Layoffs : At times, the firm has no choice but to actually lay off part of its workforce.
If a shortage is forecasted
v the firm must obtain the proper quantity and quality of workers from outside the organization.
v In this case, external recruitment and selection is required.
Characteristics of Human Resource Planning (HRP)
v Future oriented: it estimates the size and composition of future workforce.
v Quantitative and qualitative: it estimates both numbers of employees and skills and competencies.
v System oriented: it matches demand and supply forecasts to determine future shortages or surpluses; the need of
action plans are prepared. It looks at the unified whole of human resource management.
v Either short term or long term
v Integral part of corporate planning, it can be formulated at national, sectoral, industry and unit levels.
v Concern with the acquisition function of the HRM.
Objectives of Human Resource Planning
The goal of HRP is to keep a stable workforce that meets needs of the organization.
More specifically, HRP is required to meet the following objectives:
1) Forecast personnel requirements:




HR planning is essential to determine the future manpower needs in an organization. In the absence of such a plan, it would
be difficult to have the services of right kind of people at the right time.
2) Cope with changes:
HR planning is required to cope with changes in market conditions, technology, products and government regulations in an
effective way. These changes may often require the services of people with the requisite technical knowledge and training.
In the absence of an HR plan, we may not be in a position to enlist their services in time.
3) Use existing manpower productively:
By keeping an inventory of existing personnel in an enterprise by skill, level, training, educational qualifications, work
experience, it will be possible to utilize the existing resources more usefully in relation to the job requirements. This also
helps in decreasing wage and salary costs in the long run.
4) Promote employees in a systematic manner:
HR planning provides useful information on the basis of which management decides on the promotion of eligible personnel
in the organization. In the absence of an HR plan, it may be difficult to ensure regular promotions to competent people on a
justifiable basis.
Importance of Human Resource Planning
Human Resource Planning is a highly important and useful activity. If used properly, it offers a number of benefits:
1) Reservoir of talent: The organization can have a reservoir of talent at any point of time. People with requisite skills
are readily available to carry out the assigned tasks.
2) Prepare people for future: People can be trained, motivated and developed in advance and this helps in meeting
future needs for high-quality employees quite easily. Likewise, human resource shortages can also be met comfortably
(when people quit the organization for various reasons) through proper human resource planning.
3) Expand or contract: If the organization wants to expand its scale of operations, it can go ahead easily. Advance
human resource planning ensures a continuous supply of people with requisite skills who can handle challenging jobs
easily.
4) Cut costs/control: Planning facilitates the preparation of an appropriate HR budget for each department or division.
This, in turn, helps in controlling manpower costs by avoiding shortages/excesses in manpower supply. It facilitates
control mechanism by setting standards. The physical facilities such as canteen, quarters, school, medical help, etc.,
can also be planned in advance.
5) Acquisition of Human Resource
It facilitates requirement and selection of employees to fill job vacancies. It also facilitates Succession planning; HRP,
as pointed out previously, prepares people for future challenges. The stars can be picked up and kept ready for
further promotions whenever they arise. When the time comes, such people switch hats quickly and replace their
respective bosses without any problem. It also helps to make outsourcing decisions for human resources. It provides
lead time for recruitment and selection.
6) Improved labor relations: HRP promotes awareness about the importance of human resources at all levels of
organization. This ensures commitment of all levels of managers to human resource goals. It also assists in collective
bargaining with labor unions.
7) Helps in planning job assignments

Steps in Human Resource Planning (HRP)
1) Analysis of organizational plan and objective and setting HRM objectives: It is the most major aspect of every
HRP. HRP begins with the analysis of the overall plan of the organization and departmental, sectional, and functional
plans. Likewise the objectives are also analyzed if the objective is to grow and expand it requires more HR. In
accordance with the company s long term and short term objectives the HRM sets its objectives.
2) Assessing current HR: The HRP starts with the assessment of current status of HR that the organization possesses. It
is on the basis of the current capabilities and future needs that we make HRP for future. What type of people do we
have? Their skill level, potentially, productivity, special characters and lot of other features of the HR, this is done
with the help of HR inventory. This step is also known as the HR audit.
3) Forecasting HR: this means the demands forecasting. In this steps HR department has to find what quality and
quantity of HR to the organization needs in future. It is done with the reference of future plan, policy, programme and
projects of the organization. Every company must determine its specific need in its situation (exact number and skill
required). No company can afford to maintain any idle human capital, idle inventory of human capital will not only
results in unnecessary inventory carrying cost, but lead to serious consequences in terms of industrial unrest, low
morale, industrial dispute and so on since an idle brain creates many idle brains. It is more dangerous to keep idle
manpower in an organization than keeping other resources.
4) Supply Forecasting: Under a forecasting of supply, the HR department has to look after two sources; Internal
sources; promotion, transfer, etc. Eternal sources; schools, college, job markets, and all the job seeker in the labor
markets. Firstly, in general the internal sources are assess then if not sufficient then the organization approaches for
the external sources
5) Matching the demand and supply: Now, in the step of HRP demands and supply forecast are matched to determine
future shortage or surpluses of HR in terms of quality and quantity. If the shortage is found, then the additional staffs




are approached. If there is surplus of staffs then retrenchment is necessary. The early retirement, layoff, leaves,
reduced work hours are the general strategies so as to overcome the problem of over staffing.
6) Preparation of action plan: This step is concerned with the preparation of action plans to deal with shortage and
surpluses of human resources. Action plan if prepared for recruitment, redeployment, promotion, transfers, retention,
succession etc.
Requirements of effective HRP:
a) Strategic: HRP should be recognized as an equal partner of overall organization strategic plan and
its implementation. There should be close relation between strategic corporate planning and HRP.
b) Top management support: For the effectiveness of the HRP, top management should extend
total support to HRP. Personnel philosophy as well as managerial philosophy of top management
should support the HRP; otherwise it cant be implemented effectively.
c) Employee participation : HRP is concerned with the entire HR of the organization, when some
representatives are involved in planning process then its implementation becomes very easy due to
the feeling of ownership.
d) Coordination of all functional areas: The other areas besides HR department are also concerned
with HRM, their needs, their demands, should also be considered while planning. The coordinated
activities will help to plan the HR.
e) Information system: Planning needs a lot of information, human resource information system
should be established to provide up to date information about employees and jobs. In general the
information system of HR includes personal data, skills data, position, compensation data, and job
data.
f) Long term Horizon: HRP should provide long term directions (about 10 20years) for his
strategic HRP should prepare. But, it should be revised in the light of actual scenarios and
implementation experiences.
g) Capability: HRP is professional job; people responsible for HRP should be capable and should
possess planning skills.
Human Resource Information system (HRIS)
What is Human resource Information System (HRIS)?
v The HRIS is a database system that keeps important information about employees in a central and accessible location.
v When such information is required, the data can be retrieved and used to facilitate employment planning decisions.
v The application of computers to employee-related record keeping and reporting, and management decision making.
v HRISs are systems used to collect, record, and store, analyze, and retrieve data concerning an organization's human
resources.
v Basically, HRIS is a computer based system developed for the storage and analysis of the records about employee.
It gives accurate information
It does fast processing of data
It works as a valuable tool to strategic planning and its implementation
It gives instant information relating to existing HR
Act as a decision support system
It is time efficient and provide reliable information
It establish strong management control
Information categories of Human resource Management System
Group 1 Basic non confidential information
v Employee name
v Organization name
v Work location
v Work phone number
Group 2 General non confidential information
v Information in the previous category plus;
v Social security number
v Other organization information (code effective date)
v Position related information (code, title, effective date)
Group 3 General information with salary
v Information in the previous category plus;
v Current salary, effective date, amount of last change, type of last change, and reason for last change.
Group 4 Confidential information with salary
v Information in the previous category plus;




v Other position information (EEO code, position ranking etc.)
v Education data
Group 5 Extended confidential information with salary
v Information in the previous category plus;
v Bonus information, projected salary increase information, performance evaluation information

Nature and benefits of HRIS
v Modern human resource information systems are comprehensive, accurate and accessible systems for recording
employee and work data relevant to HRM, HR and organizational planning.
v HRIS is:
The system used to acquire, store, manipulate, analyze, retrieve and distribute pertinent information
regarding an organization s human resources.
Its purpose is to facilitate, or support, straight, tactical and operational decision making, to avoid litigation (a
judicial contest), to evaluate programs, policies, or practice and daily operations.

Specific benefits of HRIS
Improved planning and program development using decision support software.
Faster information processing and improved response times
Decreased administrative and HR costs
Enhanced Communication at all levels.
It gives accurate information
It does fast processing of data
It works as a valuable tool to strategic planning and its implementation
It gives instant information relating to existing HR
Act as a decision support system
It is time efficient and provide reliable information
It establish strong management control
Better safety
Competitive Advantage
Fewer Errors
Higher Quality Products
Improved Health Care
Increased Efficiency
Uses of HRIS
v Comprehensive and integrated information systems can be used widely -in administrative, operational and
strategic fields by HR and other managers.
v On the operational level HRIS data can be used
to identify potential internal applicants for job vacancies,
saying external recruitment costs and
Assuring employees of career opportunities.
v Strategically, such information may be used
to gauge the effectiveness of current recruitment or promotional systems,
their costs and/ or benefits, and
enable subsequent changes of direction in line with proposed organizational strategies.
Common HRIS Functions
Mainly following functions are performed by the HRIS in different organizations.
Job analysis information can be placed in the HRIS.
The program can write job descriptions and job specifications.
Constant monitoring of compliance with EEO legislation.
Saves money and time in compiling reports.
Ensure that women and minorities or not be adversely affected.
Track minority hiring, recruitment, and advancement.
Forecast supply and demand of labor from both the internal and external labor markets.
Useful for internal recruiting.
Can search for match between job specifications and applicant qualification.
Scanning resumes submitted online (web based or e-mail) or in person (or mail).
Matching qualifications with open positions (finding a good fit).
Help with registration, tracking training, monitor training costs, and schedule training.
Used to deliver training.
Career and managerial succession planning.
Used to provide assessment tests to help employees plan their own career.




Predict career paths.
Monitor attendance.
Monitor compliance with Labor Standards.
Individual sale data can be accessed (tracking commissions).
Benefits can be managed and administered by computers.
Planned raises and wage histories.
Provides reports for Occupational Safety and Health Administration (OSHA).
Strategic HR planning and HR information systems
Proactive HR managers ensure that their HRIS contributes to organizational performance. A recent
development in the uses of HRIS in many has been the linking of 'benchmarking' practices to the design,
choice and implementation of such systems as a directly strategic initiative. Integration with
organizational strategic objectives is achieved by the subsequent establishment of performance targets and
quantitative measures. As a strategic 'tool', HRIS can be used to contribute to the development and
modification of HR plans, on both quantitative and qualitative bases, and to feed into specific HRM
functions. HR data, if collected effectively and contained within computerized, accessible systems, can
both compare organizational HR 'bottom line' outcomes by HRM function, between functions and with
national or international performance benchmark
Human Resource Inventory
HR inventory is the statement that shows the current HR strength of an organization in terms of number, skills, knowledge,
exposure, experience and ability etc.
v Human Resources Inventory is an inventory of skills of human resources currently employed in the organization.
v It tells management what individual employees can do.
v The profile of the human resource inventory can provide information for identifying current or future threats to the
organization's ability to perform.
The basic purpose of preparing manpower inventory is
v to find out the size and quality of personnel available within the organization.
v Every organization will have two major sources of supply of manpower: internal and external.
Contents of HR inventory
Personal detail
Name of the employee:
Date of Birth and Age
Gender
Capability
Academic qualification
In house training
External training
Domestic and international
Management Development programmes
Professional details
Joined as
Current position
Career progression
Last promotion 1
Last promotion .2
Rewards
Disciplinary actions
1.
2. ..
3. .


Benefits of HR inventory
v Enables the management of know what capabilities it management has
v Useful for planning, selection, training, promotion and transfer planning.
v Makes easy to take transfer, deployment decision
v Makes easy to diversify the strength
v Provides information for career succession plans.

SUCCESSION PLANNING




v In addition to the computerized HRIS, some organizations also generate a separate management inventory report
which is also called a replacement chart, covers individuals in middle to upper-level management positions.
v Forecasting the availability of inside executive candidates.
Definition
v The ongoing process of systematically identifying, assessing and developing organizational leadership to enhance
performance.
v The process of ensuring that a qualified person is available to assume a managerial position once the position is
vacant.
v To facilitate succession planning ensuring that another individual is ready to move into a position of higher
responsibility- the replacement chart highlights those positions that may become vacant in the near future due to
retirement, promotion, transfers, resignations, or death of the incumbent.
The succession planning aims;
v To identify and develop employees to fill specific slots, talent management
v Talent management involves identifying, recruiting, hiring and developing high potential employees.

Succession Planning entails in three steps;
Step -1
Identifying and analyzing jobs: based on firms strategic goals, top management and HR director identify what the company s
future key position needs will be, and formulate job descriptions and specification for them.
Step -2
v After identifying future key position needs, management turns to the jobs of creating and assessing candidates for these
jobs.
v Creating means identifying potential internal and external candidates for future key positions, and then providing them
with the developmental experience they require to be viable candidates when its time to fill the position.
v Organizations develop high potential employees through a variety of means. Most use: internal training and cross
functional experiences they also use job rotation, external training and global regional assignments.
Step 3
Succession planning assessing these candidates and selecting those who will actually the key positions.
Benefits of succession planning
A survey shows that succession planning programs were perceived to have a positive impact on an organization s profitability,
organizational culture, and organizational efficiency.
Some of the general benefits of the succession planning are listed below
1 Provide a specific connection to business and strategic planning.
2 Provides a more systematic basis to judge the risks of making particular succession and development moves.
3 Reduce randomness of managerial development movements.
4 Helps to anticipate problems before they get started.
5 Increase managerial depth which can be called on as needed.
6 Improve the identification of high potential and future leader.
7 Broadens the use of cross functional development techniques to improve competencies and quality of decision making.
8 Improves internal promotion opportunities.
9 Overcome the limitations of reactive management approaches and goes to planned management of managerial positions.
10 Establishes a logical basis for choices among qualified candidates.
11 Improves fulfillment of EEO objectives.

Replacement chart
v HRM organizational charts indicating positions that may become vacant in the near future and the individuals who may
fill the vacancies.
v This readiness chart gives management an indication of time frames for succession, as well as helping to spot any skill
shortages.
v If skill shortages exist, HRM can either recruit new employees or intensify employee development efforts.
v Through replacement charts or succession plans, the organization can even find out the approximate date(s) by which
important positions may fall vacant.

FIG: Management Replacement Chart showing development Needs of Potential Future divisional
Vice presidents






DIVISION VICE
PRESIDENTS




















PRESEENT PERFORMANCE PROMOTION POTENTIAL

Outstanding Ready now

Satisfactory Need for training

Need improvement Questionable


JOB ANALYSIS
v A job analysis is a systematic exploration (examine in detail) of activities within a job.
Decenzo and Robbins
v Job Analysis is the systematic process of collecting and making judgments about all the important information related to a
job. Result of job analysis serve as an input for many human resource activities.
E.I. Mcormick
v It is technical procedure used to define a jobs duties, responsibilities, and accountabilities.
v Job analysis is a formal and detailed examination of jobs.
v It is a systematic investigation of the tasks, duties and responsibilities necessary to do a job.
v A task is an identifiable work activity carried out for a specific purpose, for example, E.g. a telephone operator
receives the incoming calls.
v A duty is a larger work segment consisting of several tasks (which are related by some sequence of events) that
are performed by an individual, for example, pick up, sort out and deliver incoming mail.
v Job responsibilities are obligations to perform certain tasks and duties.
v Position: It consist of a group of task performed by one person. All task performed by telephone operator consist of
his/her position.
v Responsibility: An obligation to perform certain tasks and duties.
v Job: A group of tasks that must be performed if an organization is to achieve its goals. There will be several people
performing them.

v This analysis involves the identification and description of what is happening on the job. Accurately and precisely
identifying the required tasks, the knowledge, and the skills necessary for performing them, and the conditions under
which they must be performed.
Job analysis is the procedure through which you determine the duties and nature of the jobs and the kinds of people
who should be hired for them.
Job analysis is an important personnel activity because it identifies what people do in their jobs and what they require
in order to do the job satisfactorily.
We can utilize the information it provides to write job descriptions and job specifications that are utilized in
recruitment and selection, compensation, performance appraisal, and training.

Job Analysis Collects three basic category of information. They are;
Task data:
v This kind of analysis involves the elements of works.
v It emphasizes on the purpose of each task.
Vice president Production

Ravi, K.

Required development; none
recommended
Vice president Finance

Debases D.

Required development;
none recommended

Vice Presidents Sales
Johny
Required development;
v Job rotation into finance &
production
v Executive development
course in strategic planning
v In house development
center two weeks.




v E.g. If the aspect of work is mail handling it can be described in terms of actual tasks: segregate incoming and
outgoing mails , and dispatch them accordingly. The output of objectives of the task could be," Classify mails in
order of their importance to prioritize the flow of information.
Behavioral data:
v This kind of job analysis defines jobs in accordance with the behaviors. Taking above example of mail handling, this
kind of analysis focus behavior that occurs during executing the said task. Behavioral data- data related with
relationship with other person, work output, etc.
Abilities data:
v Collect information regarding the knowledge and skill that a worker should have for satisfactory performance. E.g. the
mail handling aspects of a job can be described in terms of ability to segregate incoming and outgoing mail and also as
an ability to prioritize mail.

Reasons for Conducting Job Analysis
A sound job analysis system is extremely critical for numerous reasons.
1) Staffing All areas of staffing would be haphazard if the recruiter did not know the qualifications needed to perform
the job.
2) Training And Development if the specification suggests that the job requires a particular knowledge, skill, or
ability and the person filling the position does not possess all the qualifications required training and/or
development is probably in order.
3) Compensation and Benefits the relative value of a particular job to the company must be known before a dollar
value can be placed on it. From an internal perspective the more significant its duties and responsibilities, the more the
job is worth.
4) Safety and Health Information derived from job analysis is also valuable in identifying safety and health
considerations.
5) Employee and Labor Relations Regardless of whether the firm is unionized, information obtained through job
analysis can often lead to more objective human resource decisions.
6) Legal Considerations having properly accomplished a job analysis is particularly important for supporting the
legality of employment practices.

Uses of Job Analysis Information
1) Recruitment and Selection J ob descriptions and job specifications are formed from the information gathered
from a job analysis, which help management decide what sort of people to recruit and hire.
2) Compensation The estimated value and the appropriate compensation for each job is determined from the
information gathered from a job analysis.
3) Performance Appraisal Managers use job analysis to determine a jobs specific activities and performance
standards.
4) Training Based on the job analysis, the job description should show the jobs required activities and skills.
5) Discovering Unassigned Duties Job analysis can help reveal unassigned duties.
6) EEO Compliance The Uniform Guidelines on Employee Selection stipulate (demand) that job analysis is a
crucial step in validating all major personnel activities.

Identify the six general techniques for obtaining job analysis information
The six general techniques for obtaining job information are;
1) Observation method
2) Individual interview method
3) Group interview method
4) Structured interview method
5) Technical conference method and
6) Diary method
1) Observation Method:
v A job analysis technique in which data are gathered by watching employees work.
v Direct observations are useful when jobs consist of mainly observable physical activity which is possible with some
jobs, but impossible for many e.g. most managerial jobs.
v Reactivity can be a problem with direct observations, which is where the worker changes what he/she normally does
because he/she is being watched, thus distortions in the job analysis can occur.
2) Individual interview method
v It is the direct talk between job analyst and worker, on a certain format.
v Meeting with an employee to determine what his or her job entails.
v To get the employees perspective on the job s duties and responsibilities.
3) Group interview method




v Meeting with a number of employees to collectively determine what their jobs entails.
v When large numbers of employees perform the same job
v Accuracy is increased in assessing jobs, but group dynamics may hinder its effectiveness.
v More reliable information than in individual interview method.
v It is quick and inexpensive way to gather information
4) Structured questionnaire methods
v Structured questionnaires may be used to obtain job analysis information.
v It gives workers a specifically designed questionnaire on which they check or rate items they perform in their job from
a long list of possible task items.
v Questionnaires can be a quick, efficient way of gathering information from a large number of employees. But,
developing and testing a questionnaire can be expensive and time consuming.
v Easy to handle data/information
v Feedback is often lacking, lack of flexibility,
5) Technical conference method
v This refers to the conference of experts or supervisors.
v Under this method those experts are interviewed so as to collect the information about the job.
v Those persons who have extensive knowledge of the job should be selected for the interview.
v Although information collected under this method are more accurate and effective but in certain case they may lack
familiarity with the complexity of the jobs and information provided by them may lack the accuracy.
6) Diary methods
v Employee record their daily activities (along with the time) in the diary in a chronological order.
v Entries are made for the entire job cycle so that comprehensive information can be obtained.
v It can produce a complete picture of the job, especially when supplemented with subsequent interviews with the
workers and his or her supervisor.
v Employees may try to exaggerate (make greater than it really it) some activities and underplay (make little) others.
v Too much time involved in analyzing the facts and data.

Describe the steps involved in conducting a job analysis.
The steps in conducting a job analysis include;
1) Understanding the purpose of the job analysis
2) Understanding the roles of the jobs in the organization
3) Benchmarking positions
4) Determining how to collect job analysis information
5) Seeking clarification wherever necessary
6) Developing the first draft of the job description, and
7) Reviewing the draft with the job supervisor.



















1) Understand the purpose of the job analysis
v As per our requirement, we need different types of data for different purpose and for those different types of data we have
to use the relevant techniques.
v So first step is to find the purpose for which we need information.
v If our purpose is job description then we need qualitative information for this we have to use the interview techniques.
2) Understand the roles of jobs in the organizations
Understand the purpose of the job
analysis

Understand the roles of
jobs in the organizations

Benchmark positions

Determine how to
collect job analysis
information
Develop Draft

Seek clarification
Review draft with
supervisor





v In this step, the relevant background information like organization chart, process chart (detail picture of the workflow), job
design, etc. should be reviewed to understand the roles of jobs in the organizations.
3) Benchmark (point of reference or standard) positions: Select representative positions to analyze because there may be
too many similar jobs to analyze, and it may not be necessary to analyze them all. E.g. It is usually unnecessary to analyze
the jobs of 200 assembly workers when a sample of 10 jobs will do.
4) Determine how to collect job analysis information
Determine which method of information collection to be used - questionnaire, observation, interview, critical incident,
checklist, diary etc.
5) Seek clarification
The job analysis information should be verified with the workers performing the job and with his immediate superior. This will
help to confirm what the information is factually correct and complete. This review can also help gain the employees
acceptance of the job analysis data and conclusion.
6) Develop Draft (job description and job specification)
v The analytical job analysis process generates three tangible outcomes: job description, job specifications, and job
evaluation.
v Develop a job description and job specification from the job analysis information
v Job description outline of the role of the job holder
v Person specification outline of the skills and qualities required
of the post holder
v Job evaluation is the systematic process of determining the relative worth of jobs in order to establish which jobs
should be paid more than others within the organization.

Job Description
The data collected through job analysis are summarized into the standard format for better understanding of individuals in the
organization. The standard format is known as job description sheet.
What is a job description?
A job description is a written statement of what the jobholder actually does, how he or she does it, and under what conditions
and why the job is performed.
v It provides both organizational information (location in structure, authority, etc) and functional information (what the
work is).
v It provides the workers, analyst, and the supervisor with a clear idea of what the work must do to meet the demand of
the job.
v Job description describes jobs , not job holders.
v There is no standard format for writing job descriptions, but most descriptions include sections that cover:
1) Job identification
2) Job summary
3) Relationship
4) Responsibilities and duties
5) Standards of performance and Working conditions
1) Job identification :
It contains several types of information; job title/alternative title specifies the name of the job, such as
supervisor of data processing operation, marketing manager.
Date is the date the job description was actually written.
There may also be possible space to indicate who approved the description, the location of the job in terms of
its faculty/division and department/section.
Might also include the immediate supervisor's title and information regarding salary and /or pay scale.
There might also be space for the grade/level of the job.
2) Job summary:
This section of job description reflects important information about the purpose of the job.
It includes only its major functions or activities.
It describes the general nature of the job, and
Includes reason for the existence of the job, the yardstick of satisfactory performance and overall
organization objectives.
For the job of materials manager, the summary might state that the material manager purchases
economically, regulates delivers of, store, distribute all material necessary on the production line.
3) Relationship :
There may be a relationship statement, which shows jobholders' relationship with others inside and outside
the organization.
E.g. Human Resource manager, such as statement might look like this.
Report to: vice president of employee relation
Supervises: Human resource clerk, labor relation director, and one secretary.




Work with: All department manager and executive manager.
Outside the company: Employment agencies, union representatives, etc.
4) Responsibilities and duties :
This is the heart of the job description.
It should present a list of the jobs significant responsibilities and duties.
This section may also define the limits of the job holder s authority, including his or her decision-making
authority, direct supervision of other personnel, and budgetary authority.
For e.g. the job holder might have authority to approve purchase requests up to 50,000.00, leave of absence,
discipline department personnel, recommend salary increase, interview and hire new employees.
5) Standards of performance
v This list the standards the employee is expected to achieve under each of the job descriptions
main duties and responsibilities. E.g.
Duty : Accurately posting accounts payable
1. Post all invoices received within the same working day
2. An average of no more than three posting errors per month.
Duty : Meeting daily production schedule
1. Produce no less than 500 units per working day
2. Weekly overtime no exceed an average of 5 %
5) Working conditions :
v Usually gives us information about the environment in which a job holder must work.
v These include noise level, hazardous conditions (nature of risk), cold, heat, dust, wetness, odour, oily conditions,
etc.

Uses of Job descriptions
Job description has several uses, such as:
1) It aids in the development of job specifications, which are useful in planning recruitment, in training and in hiring
people with required skills.
2) It can be used to orient new employees toward basic responsibilities and duties.
3) It is basic document used in developing performance standards.
4) It can be used for job evaluation, a wage and salary administration technique.
5) A job description enables the manager to frame suitable questions to be asked during an interview.
6) It helps us in:
v Transfer and promotion
v Adjustments of grievances
v Defining and outlining promotional steps
v Investigating accidents
v Indicating faulty work procedures
v Defining the limit of authority
v Facilitating job placement
v Studies of health and fatigues
v Providing performance indicators




Sample job description

Job Title: Benefit Manager Occupational code: 16.167.018
Reports to: Director, Human resources Job No. 1207
Supervises: Staff of three Dates: 6 July 2010
Environmental conditions: None
Functions: Manages employee benefits program for organization
Duties and responsibilities:
v Plans and directs implementation and administration of benefits program designed to insure employee against lost of
income due to illness, injure, layoff, or retirement;
v Direct preparation and distribution of written and verbal information to inform employees of benefits programs; such
as insurance and pension plans, paid time off, bonus pay, and special employer sponsored activities;
v Analyze existing benefits policies of organization, and prevailing practices among similar organizations, to establish
competitive benefit programs;




v Evaluates services, coverage, and options available through insurance and investment companies, to determine
programs best meeting needs of organization,
v Plans modifications of existing benefit programs, utilizing knowledge of laws concerning employee insurance
coverage, and agreements with labor unions, to labor compliance with legal requirements;
v Recommend benefits plan changes to management; notifies employees and labor union representatives of changes in
benefits program;
v Direct performance of clerical functions, such as updating record and processing insurance claims;
v May interview, select, hire, and train employees.
Job Characteristics
v Successful jobholder will have knowledge of policies and practices involved in personal/HRM functions-including
recruitment, selection, training, and promotion regulations and procedure; compensation and benefits packages; labor
relations and negotiations strategies; and HRIS.
v Excellent written and verbal communication skills are critical.

Importance/Role of Job Description
J ob Description is located on the center of HRM and a key to the successful system
1) Employment of Human Resources: By what kind of ways does a company employ excellent human resources?
Contents and qualification of the job should be clarified and understood easily with the help of job description.
2) Mutual Relations among Departments: Analysis of jobs is conducted by J ob Description. Job analysis includes each
department s goals and functions. Relationship among departments can be understood by using Job Description.
3) Promotion and Career Path: Necessary ability and qualification to fulfill each job are clarified in Job Description.
4) Determination of Salary Level: Salary level is determined by contents and difficulty of each job described in Job
Description.
5) Performance Measurement: Performance is measured compared with performance planning in Job Description.
6) Training Needs: Difference between planning and performance is regarded as training needs of employees.
7) Selection of Human Resources: Excellent performers can be found by the difficulty of jobs they try and the result of
performance measurement.
8) Dismissal: Job Description shows necessary performance level for each job and those who cannot accomplish their
performance plan regarded as poor performers .



Job Specification
v A job specification is a document containing the minimum acceptable qualifications that a person should possess in
order to perform a particular job.
v Job specification takes the job description and answer the question what human traits and experience are required to
do the job well? It tells what kind of person to recruit and for what qualities that person should be tested.
v Items included in the job specification are educational requirements, experience, personality traits, and physical
abilities.
v Job specification describes the attributes required of an employee to carryout the job describe to a satisfactory
standards.
v It spells out the important attributes of a person in terms of education, experience, skills, knowledge and abilities
(SKAs) to perform a particular job.
v This helps the organization to determine what kind of persons is needed to take up specific jobs.
v It can be based on judgment as well as statistical analysis.

v Job Specifications based on Judgment
Most job specifications come from the educated guesses of people like supervisors and human resource managers. The
basic procedure here is to ask, What does it take in terms of education, intelligence, training, and the like to do job well?
v Job specification based on statistical analysis
Determine relationship between some human trait, such as height, intelligence etc. and some indicator or criteria of job
effectiveness, such as performance as rated by the supervisor.
A job specification can be developed by talking with the current job holders about the attributes required to do the job
satisfactorily. Opinions of supervisors could also be used as additional inputs.

An Example of Job specifications







CONTENTS OF JOB SPECIFICATIONS
Describe the types of information typically found in a job specification.
v Physical characteristics (health, strength, age, height, weight, vision, age range, voice, color discrimination)
v Psychological characteristics (aptitude, ingenuity (cleverness and skill), judgment, analytical ability, mental
concentration, alertness)
v Personal characteristics (Personal appearance, good and pleasing manners, emotional stability, aggressiveness,
extroversion or introversion, leadership, cooperativeness, skill in dealing with others, conversational ability etc.)
v Responsibilities: responsibility for the safety of others, responsibility generating confidence and trust, etc.
v Other features of a demographic nature: age, sex, education, experience, language etc.
Job evaluation
v Job evaluation is the systematic process of determining the relative worth of jobs in order to establish which jobs
should be paid more than others within the organization.
v Job evaluation helps to establish internal equality between various jobs.
v It suggests about the relevant importance of a particular job in organization.
v It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a
rational pay structure.

Features of job evaluation
The purpose of job evaluation is to produce a defensive ranking of jobs on which a rational and acceptable pay structure can
be built. The important features of job evaluation may be summarized thus:
1) It tries to assess jobs, not people.
2) The standards of job evaluation are relative, not absolute.
3) The basic information on which job evaluations are made is obtained from job analysis.
4) Job evaluations are carried out by groups, not by individuals.
5) Some degree of subjectivity is always present in job evaluation.
6) Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.
Benefits of job evaluation
v It tries to link pay with the requirements of the job.
v It offers a systematic procedure for determining the relative worth of jobs.
v Jobs are ranked on the basis of rational criteria such as skill, education, experience, responsibilities, hazards, etc., and
are priced accordingly.
v An equitable wage structure is a natural outcome of job evaluation.




v An unbiased job evaluation tends to eliminate salary inequities by placing jobs having similar requirements in the
same salary range.
v Employees as well as unions participate as members of job evaluation committee while determining rate grades for
different jobs. This helps in solving wage related grievances quickly.
v Job evaluation, when conducted properly and with care, helps in the evaluation of new jobs.
v It points out possibilities of more appropriate use of the plants labor force by indicating jobs that need more or less
skilled workers.




Attracting a high performing workforce
Successful employment planning is designed to identify an organization s human resource needs. Once these needs are known,
an organization will want to meet them. The next step in staffing, then is recruiting.

Recruitment
The process by which, a job vacancy is identified and potential employees are notified.
WHAT IS RECRUITMENT?
Recruitment is the process of discovering potential candidates for actual or anticipated organizational vacancies.
Decenzo, and Robbins

Recruitment involves the searching for and obtaining (of) qualified job candidates in such numbers that the organization can
select the most appropriate person to fill its job needs.
Schuler and Huber
Recruitment is the process of attracting a pool of candidates for a vacant position.
Mckenna and Beech
v The process of attracting such individuals in sufficient numbers and encouraging them to apply for jobs with the organization.
v It is actually a linking function, joining together those with jobs to fill and those seeking jobs.
v Employee recruiting means finding and/or attracting applicants for the employer's open positions.
v It is the process of attracting individuals on a timely basis, in sufficient numbers and with appropriate qualifications, and
encouraging them to apply for jobs with an organization.
v Recruiting refers to the process of attracting potential job applicants from the available labor force.
v Every organization must be able to attract a sufficient number of the job candidates who have the abilities and aptitudes
needed to help the organization to achieve its objectives.
v An effective employee selection procedure is limited by the effectiveness of recruiting process.
v Outstanding job candidates cannot be selected if they are not included in the applicant pool.
v In planning recruiting activities, an organization needs to know how many applicants must be recruited.
v Since some applicants may not be satisfactory and others may not accept the job offers, an organization must recruit more
applicants than it expects to hire.

Goals of Recruitment
Mainly there are two recruitment goals
To attract qualified applicants
Recruiting process is used to create the pool of qualified applicants. By qualified applicants we mean those applicants who
are having abilities that are perfect match with the job requirements.
To discourage non qualified applicants
Second goal of recruitment is to avoid nonqualified applicants. When recruiting is based upon careful designing of the job
description and job specification most of the applicants having irrelevant qualifications are eliminated from the list of
potential applicants which makes recruiting process more effective and easier.
Factors affecting recruitments
1) Size of the organization
2) Employment conditions in the local community influence how much recruiting takes place.
3) The effectiveness of the past recruiting efforts will show itself in the organization s historical ability to locate and
keep people who perform well.
4) Working conditions and salary and benefit packages also influence turnover and, therefore, the need for future
recruiting.
5) Organization not growing or those actually declining, any find little need to recruit.
Sources of Recruitment:
Basically organizations are available by the two main sources of recruitment which are:
I. Internal Recruitment.(current employees or promotion from within).
II. External Recruitment (outside source of candidates)
Internal Recruiting Sources:
v When job vacancies exist, the first place that an organization should look for placement is within itself.
v An organization s present employees generally feel that they deserve opportunities to be promoted to higher level
positions because of their service and commitment to organization.
v Recruiting among present employees is less expensive than recruiting from outside the organization.
INTERNAL SOURCES
v Promotion: recruiting employees from within. Internal employees are more familiar with the organizations policies,
practices, and procedures. Employees feel more secure and can identify their long-term interests in the organization.




v Transfer: This is the process of recruiting employees internally without promoting. This policy on the one hand fulfils
the current knowledge and skill requirements of the organization and on the other hands; it provides opportunities for
the employees to broaden their job knowledge providing increased interest and possibility of future promotion.
v Job Rotation: A kind of temporary assignment. Since employee rotate from one place to another they get opportunity
to work in various departments.
v Rehire and recall: Due to increasing number of job cuts, downsizing and other restructuring effects a number of
employees are temporary laid off . When the situation will be favorable employees rehire these former employees who
were temporarily laid off some reasons.

Methods for internal recruiting
a) Promotion from within:
v Promoting entry level employees to more responsible positions is one of the best ways to fill job vacancies and
important reason why company should have a human resource planning system.
v An organization that has human resource planning system uses succession plans and replacement charts to identify
and prepare individuals for upper level positions.
v Skills inventories are useful in identifying individuals who have the potential for advancement, and individual s desire
to be promoted can be assessed in the performance appraisal review.
v A promotion from within policy can stimulate great motivation among employee, and this motivation is often
accompanied by a general improvement in the employee morale.
b) Employee referrals:
This is nomination by superiors. Employee referrals locate applicants within the organization. Supervisors generally
recommend best qualified candidates for the vacant jobs. Informal communication among managers of various
departments can lead to the discovery of qualified candidates working within the organization. Retired, temporary or
casual employee working in the organization can also be referred by permanent employee.
c) Job posting
v Job posting means publicizing the open job to employee.
v In the job posting system the organization notifies its present employees about job openings through the use of
internet, bulletin boards, company publications, or personal letters.
v The purpose of the job posting is to communicate that the job opening exists.
v An effective job posting system involves the following guidelines:
v Job posting should be prominent (easy to see).
v Clear job specification should be communicated so that applicants assess themselves either they are eligible to
apply or not.
v Once the decision is made, all applicants should be informed about the decision.
Advantages of Internal Recruitment
1. Provides greater motivation & commitment for good performance.
2. Provides greater opportunities for present employees
3. Provides better opportunity to assess abilities
4. Improves morale and organizational loyalty if employees see promotions as rewards for loyalty and competence.
5. Enables employees to perform the new job with little lost time
6. Those chosen internally, already know the organization and inside candidates should require less orientation and
training than outsiders.
7. It is less costly than going outside to recruit.
Disadvantages of Internal Recruitment
1. Creates a narrowing thinking and stale (not fresh) ideas
2. Creates pressures to compete
3. Creates homogeneous workforce
4. Chances to miss good outside talent
5. Requires strong management development programs specially to train for technology.

EXTERNAL SOURCES OF RECRUITMENT
v External sources involve recruitment from outside the organization.
v Among them are: filling entry-level jobs, acquiring skills not possessed by current employees, and obtaining
employees with different backgrounds to provide new ideas.
v A new hire is sought from the labor market.
v Qualified candidates are attracted to apply for job vacancies.
EXTERNAL SOURCES
1) High Schools and Vocational Schools
Organizations concerned with recruiting clerical and entry-level operative employees often depend on high schools
and vocational schools.




2) Colleges and Universities
Potential professional, technical, and management employees are typically found in these institutions. Different
institutes use to publish booklets having information about the graduates that can be communicated to organization
who are in search of applicants.
3) Competitors and other Firms
Competitors and other firms in the industry or geographic area may be the most important source of recruits for
positions in which recent experience is highly desired.
4) Unemployed
Individuals who are unemployed with a wide range of skills and abilities, regardless of the reason, often provide a
valuable source of recruitment.
5) Older Individuals
Older workers, including those retired, may also comprise a valuable source of employees.
6) Self-Employed Workers
These individuals may provide a source of applicants to fill any number of jobs requiring technical, Professional,
administrative, or entrepreneurial expertise.
METHODS OF EXTERNAL RECRUITMENT
1) Advertising
v A way of communicating the employment needs within the firm to the public through media such as print (newsletter,
magazine, industry publications, internet etc.), audio/visual (radio, television, cinema etc.).
v The higher the position in the organization,
v The more specialized the skills, or
v the shorter the supply of that resource in the labor force, or
v The more widely dispersed the advertisement is likely to be.
v Three important variables influence the response rate to advertisement:
v identification of the organization,
v labor market, and
v The degree to which the advertisement includes specific requirements.



Advertising are of two types
a) Wants ads:
They identify the employer, describe the job and benefits, and tell prospective candidates how to apply. They attract large
number of applicants. Some ads also provide job description and specification.
b) Blind box ads
v in blind advertisements no identification about the company is provided to applicants.
v Respondents are asked to reply to the post office box number or to and employment firm acting as an agent between
applicants and the organization.
v They keep job opening confidential in order to avoid telephone enquiries, pressures and public relations problems.
Companies can use blind- box ads for many reasons e.g.
v Company wants to keep the recruitment in low profile so that lesser number of applicants should apply in order to
discourage the irrelevant people.
v Due to bad reputation or image of the organization
v Advertisement is made just for the purpose of test marketing for example just to have knowledge about the supply of
applicants in labor market etc.
2) Employment Agencies
An organization that helps firms recruits employees and, at the same time, aids individuals in their attempt to locate jobs. There
are three forms of employment agencies i.e.
a) Public employment agencies : They tend to attract and list individuals who are unskilled or have had minimum
training. Employers inform them of their personnel requirements, while job seekers get information for them about the
types of jobs that are referred to by employers. These agencies provide a wide range of services counseling,
assistance in getting jobs, information about the labor market, labor, wage rate.
b) Private employment agencies: They specialized in specific occupations (salesmen, technical workers, accountants,
computer staff etc.). These agencies are brokers who bring employers and employees together. They provide a
guarantee covering as protection to the employer should the applicant not perform satisfactorily. The fee can be totally
absorbed by either the employer or the employee, or it can be split.
c) Management consulting forms: Sometimes called HEAD HUNTERS or executive search. They specialized in
middle-level and top level executives placement, as well as hard to fill positions such as actuaries (Statistician). Differ
from private agencies - their fees, their nationwide contacts, & thoroughness of their investigations.
3) Educational Institution Placement:




v Prospective employers can directly recruit graduates or graduates-to-be for entry level positions from such institutions,
especially for technical and professional posts.
v Organizations also send their representatives to educational institutions to locate qualified candidates and to stimulate them
to apply for the job. This is also known as scouting.
4) Internships
v A special form of recruiting that involves placing a student in a temporary job.
v There is no obligation on the part of the company to permanently hire the student and no obligation on the part of the
student to accept a permanent position with the firm.
v Hiring college students to work as student interns is typically viewed as training activity rather than as a recruiting activity.
v However, organizations that sponsor internship programs have found that such programs represent an excellent means of
recruiting outstanding employees.
5) Professional organization
v Professional organizations operate placement services for the benefit of their members.
v Professional organizations serving such occupations as legal, accounting, finance, marketing, information technology, and
academics publish rosters of job vacancies and distribute these lists to members.
v Professional organizations provide a valuable service in bringing together professional and professional job openings.
v Most professional organizations have newsletters, annual meetings and publications that advertise job openings.
6) Employee Referrals (word of mouth recruiting)
v Current employee recommends their friends and relatives from outside the organization for hard-to-find job skills. Such
candidates tend to be better qualified for the jobs. They also tend to be better informed about the job and organization.
7) Unsolicited (not asked or voluntary) Applicants
v Unsolicited applicants, whether they reach the employer by letter, email, telephone, or in person, constitute a source of
prospective applicants.
v The number of unsolicited applicants depends on economic conditions, the organization s image, and the job seeker s
perception of the types of jobs that might be available; this source does provide an excellent supply of stockpiled
applicants.
v Even if the company has no current opening, the applications can be kept on file for later use.
8) Cyber Recruiting
Organizations can also use web sites and internet sources to recruit people application submission test and interview and other
recruitment and selection activities can be performed online.

Advantages of External Recruitment:
1) Facilitates inflow of new ideas, skills, knowledge and new insights.
2) The inflow of new knowledge, specialized skills and experience helps organizations adapt to changing forces in the
environment
3) Provides greater diversity and helps achieve EEO goals by making affirmative action easy
4) Provides opportunities to handle rapid growth of the organization
5) Opportunities to get people with up-to-date knowledge education and training
6) Fairness in recruitment
Disadvantages of External Recruitment:
1) It is more expensive and time consuming, cost of training new entrants is also high, attracting potential candidates
involves costs.
2) Destroys incentives of present employees to strive for promotion
3) More chances to commit hiring mistakes due to difficult applicant assessment that will lead to wastage of resources
(wrong selection).
4) More time will be needed to new employees to adapt to the work environment of the organization.

Factors affecting/Constraints/Challenges on recruiting efforts
In actual practice, it is always not easy to find and select a suitable candidate for a job opening. The most suitable ones may not
have been motivated to apply due to several constraints.
1) Poor image of the organization:
If the image of a firm is perceived to be low (due to factors such as operating in a declining industry, earning a bad name
because of environmental pollution, poor quality products, nepotism, unsafe working conditions etc.), the likelihood of
attracting a large number of qualified applicants is reduced.
2) Unattractive job:
If the job to be filled is not very attractive, most prospective candidates may turn indifferent and may not even apply. This is
especially true in case of jobs that are dull, boring, anxiety producing, lacking of career growth opportunities and generally do




not reward performance in a proper way. (e.g.,jobs in departmental undertakings such as Railways, Post and Telegraphs, public
sector banks and Insurance companies failing to attract talent from premier management institutes.)
3) Conservative internal policies:
A policy of filling vacancies through internal promotions based on seniority, experience, job knowledge etc. may often come in
the way of searching for qualified hands in the broader job market in an unbiased way. Likewise, in firms where powerful
unions exist, managers may be forced to pick up candidates with questionable merit, based on issues such as caste, race,
religion, region, nepotism, friendship etc.
4) Limited budgetary support :
Recruiting efforts require money. Sometimes because of limited resources, organizations may not like to carry on the recruiting
efforts for long periods of time. This can, ultimately, constrain a recruiter s efforts to attract the best person for the job.
5) Labor Market Influence:
The recruitment process is influenced by labor market conditions. When the economy is growing rapidly and unemployment
levels are very low, recruiting is extremely difficult. However, when the economy is stagnant and unemployment levels are
high, organizations can obtain large applicant pool with very little
6) Restrictive policies of government:
Governmental policies often come in the way of recruiting people as per the rules for company or on the basis of
merit/seniority, etc. For example, reservations for special groups (such as scheduled castes, scheduled tribes, backward classes,
physically handicapped and disabled persons, ex-servicemen, etc.) have to be observed as per Constitutional provisions while
filling up vacancies in government corporations, departmental undertakings, local bodies, quasi-government organizations, etc.

Selection
v Selection is the process of choosing from a group of applicants those individuals best suited for a particular position.
v This process involves making a judgment -not about the applicant, but about the fit between the applicant and the job
by considering knowledge, skills and abilities and other characteristics required to perform the job.
v Selection is the process of choosing among people who apply for work with an organization.
Wendell French
v Selection process is a series of steps used to decide which recruits should be hired.
Werther and Davis
v Selection activities predict which job applicant will be successful if hired.
DeCenzo and Robbins
v An exercise in predicting which applicants, if hired, will be (or will not be) successful in performing well on the
criteria the organization uses to evaluate performance.

Effective selection process requires
v Clearly spelled out job description and the job specification for the vacant position.
v Sufficiently large pool of prospective applicants
v Series of steps through which applicants pass.
v Selection standard to be used in selection
v Legal compliance for hiring
Right selection leads to;
v Human resource become a strategic resource
v Improve employer-employee relations
v Increase productivity and commitment of employees
v Facilitates environmental adaptation
Poor selection leads to;
v Increased employee turnover, absenteeism, accidents, job dissatisfaction,
v High cost of training, Productivity loses





SELECTION PROCESS
The selection process consists of a series of steps through which applicants pass. Each steps serves as hurdle (obstacles) which
the successful candidate must pass. However, the steps differ from organization to organization some use only interview,
other use written test and interview, still other follow all the steps.
1) Completed Application form Evaluation
v Applicants are asked to complete the organization s application form.
v Company specific employment form used to generate specific information the company wants.
v Information generally required to be given in the forms are; biographical data (name, father s name, date and place of
birth, age, sex, nationality, height, weight, etc.), education (subject offered, grade/percentage secured), training
acquired in special fields and knowledge gained from professional and technical institutes, work experiences, salary,
personal items (association membership, extra curricular activities, sports, hobbies, and other items), salary drawn in
present employment and expected salary, names and addresses of persons who can be contacted for references.
v All the application forms are evaluated. Forms of under qualified candidates and those not meeting job specifications
are rejected and forms providing false information are also rejected.
2) Initial Screening
v It is usually conducted by a special interviewer or high caliber receptionist in the employment office.
v This interview is essentially a sorting process in which prospective applications are given the necessary information
about the nature of jobs in the organization.
v The necessary information, then, is draw out from the candidates relating to their education, experience, skill, salary
demanded, the reason for leaving their present jobs, their job interests and whether they are available for the job, their
physical appearance, age, and facility in speech.
v If the candidate meets with the requirements of the organization, he may be selected for further action.
v If the candidate does not fit into the organizational structure he/she is eliminated at the preliminary stage.
v The main objective of such interviews is to screen out undesirable or unqualified candidates at the very outset
(beginning).
3) Employment test
Standardized written test are administered to the candidates passing the preliminary interview or initial screening.
They assess the suitability of candidates for the job. They provide objective information about the candidates.
4) Comprehensive Interview
v A selection device used to obtain in-depth information about candidates.
v Applicants who pass the application form, initial screening, and required test receive a comprehensive interview. It
probes the areas that cannot be addressed by the application form or selection tests.
v Comprehensive interview is related to job description and job specification. It assesses the candidate in the following
areas;
a) Ability to do the job and carrier goals.
b) Motivation and enthusiasm (strong interest) to do the job
c) Ability to work under pressure and stress
d) Ability to fit-in with the organization
e) Personality and interpersonal skills
f) General knowledge
5) Background examination/Reference check
v The process of verifying information that the job candidates provide.
v Information about background and character of the candidate is checked from referees listed in the application form.
v Information provided by previous employers of the candidates about job performance, remuneration and character
tends to be reliable.
v Educational, professional, and training accomplishment of the candidates can be verified.
v Reference check can be done by mail, telephone or personal visit.

6) Medical examination/physical examination
v An examination to determine an applicant s fitness to essential job performance.
v It is the final step in the selection process.
v Physical exam can only be used as a selection device to screen out individuals who are unable to physically comply
with the requirements of a job.
v It can be done in one of the following ways;
v The candidates fill out health questionnaire
v An approved physician conducts the physical examination.
v The physical examination must comply with the legal provision.
7) Hiring Decision/Placement




v Individuals who perform successfully in the preceding steps are now considered eligible to receive the employment
offer.
v An appointment letter is issued
v Others are rejected or put in waiting list as alternate candidates.
v Organization should notify the candidates who have been selected.
v The list of successful candidates should be posted on the notice board/publish such list in the newspapers.
EMPLOYEES SELECTION TEST AND TOOLS
A test is a standardized, objective measure of the behavior, performance or attitude of a candidate for selection purpose.




v It can collect unbiased information about an applicant s aptitudes, experiences and motivations.
v This information provides a basis for predicting job performance and behavior.
v Different types of selection tests can be administered depending on the needs of organization and the nature of job.
v Candidates scoring low in the tests are rejected.

TYPES OF TEST
1) Ability test : they consist of
1) Aptitude: can you learn to do it?
2) Achievement test : what he or she claims to know?
3) Intelligence: how smart are you?
2) Personality test
1) Interest: do you want to do it?
2) Attitude: how do you feel about it?
3) Projective test: expect the candidates to interpret problems or situations.
4) Preference tests: try to compare employee preferences with the job and organizational requirements.
3) Situation test
4) Honesty test
5) Simulation tests
6) Assessment centre:

1) Ability test :
Determine ability for maximum job performance. They assist in determining how well an individual can
perform tasks related to the job. Ability tests are generally of objective type with a correct answer.
There are three types of ability test;

a) Aptitude test :
Aptitude tests measure an individual s potential to learn certain skills clerical, mechanical, mathematical, etc. These
tests indicate whether or not an individual has the ability to learn a given job quickly and efficiently. Clerical tests, for
example, may measure the incumbent s ability to take notes, perceive things correctly and quickly locate things,
ensure proper movement of files, etc.
b) Achievement test :
v These are designed to measure what the applicant can do on the job currently, i.e., whether the testee actually
knows what he or she claims to know.
v Work sampling is selections test wherein the job applicant s ability to do a small portion of the job is tested.
v A typing test shows typing proficiency, a shorthand (Symbolic mode of expression) test measures the testees
ability to take dictation (say or real aloud) and transcribe (write out), etc.
Work sampling is selections test wherein the job applicant s ability to do a small portion of the job is tested.
These tests are of two types;
Motor, involving physical manipulation of things (e.g., professional skill tests for carpenters, plumbers, electricians)
or
Verbal: involving problem situations that are primarily language oriented or people-oriented (e.g., situational tests for
supervisory jobs).
v However, work-sample tests are not cost effective, as each candidate has to be tested individually.
v It is not easy to develop work samples for each job.
v For managerial jobs it is often not possible to develop a work sample test that can take one of all the full
ranges of managerial abilities.
c) Intelligence tests:
v These are mental ability tests.
It is standardized because the way the test is carried out, the environment in which the test is administered and the
way the individual scores are calculated are uniformly applied.
It is objective in that it tries to measure individual differences in a scientific way, giving very little room for




v They measure the incumbent s learning ability and also the ability to understand instructions and make judgments.
v The basic objective of intelligence tests is to pick up employees who are alert and quick at learning things so that they
can be offered adequate training to improve their skills for the benefit of the organization.
v Intelligence tests do not measure any single trait, but rather several abilities such as memory, vocabulary, verbal
fluency, numerical ability, perception, etc.,
2) Personality Test :
v Personality tests are used to measure basic aspects of an applicant s personality such as motivation,
emotional balance, self-confidence, interpersonal behavior, introversion, etc.
v There are three types of personality test : (PIP tests) projective (personality), interests and preferences.
v Let s examine these in detail:
a) Projective tests:
v These tests expect the candidates to interpret problems or situations based on their own motives, attitudes,
values, etc.
v A picture is presented to the person taking the test who is then asked to interpret or react to it.
v Since the pictures are clouded, the person s interpretation must come from inside and thus get projected.
The person supposedly projects into the picture his or her own emotional attitudes, motives, frustrations,
aspirations and ideas about life.
b) Interest tests:
v These tests aim at finding out the types of works in which a candidate is interested.
v These tests show the areas of work in which a person is most interested.
v The basic idea behind the use of interest tests is that people are most likely to be successful in jobs they like.
v The chief problem with using the interest tests for selection purposes is that responses to the questions are
not always sincere.
c) Preference tests:
These tests try to compare employee preferences with the job and organizational requirements. This test shows how
people differ in their preferences for achievement, meaningfulness, discretion etc., in their jobs.
d) Attitude tests:
Attitudes are evaluative judgments concerning objects, people, or events. Attitude tests measure tendencies to act
favorable or unfavorable towards objects, people or events.

3) Situation test
Candidates are asked to respond to the situation-specific problems. Their response to such hypothetical situations is
evaluated. Group discussion is an example of such test. Video based situational test are gaining more attention.
4) Honest Test/Polygraph Tests
v They ensure accuracy of information provided by the candidate.
v It is used to verify background information has been the polygraph, or lie detector, test.
v One purpose of the polygraph was to confirm or refute the information contained in the application blank.
5) Simulation tests:
Simulation exercise is a test which duplicates many of the activities and problems an employee faces while at work. Such
exercises are commonly used for hiring managers at various levels in an organization.
6) Assessment centre:
v An assessment centre is an extended work sample. It uses procedures that incorporate group and individual exercises.
v These exercises are designed to simulate the type of work which the candidate will be expected to do.
The in-basket: Here the candidate is faced with an accumulation of reports, memos, letters and other materials
collected in the in-basket of the simulated job he is supposed to take over.
The leaderless group discussion (LGD): This exercise involves groups of managerial candidates working together
on a job-related problem.
Business games: Here participants try to solve a problem, usually as members of two or more simulated companies
that are competing in the market place.
Individual presentations: Participants are given a limited amount of time to plan, organize and prepare a presentation
on an assigned topic. This exercise is meant to assess the participant's oral communication skill, self-confidence,
persuasive abilities, etc.
Structured interview: Evaluators ask a series of questions aimed at the participant s level of achievement,
motivation, potential for being a selfstarter and commitment to the company.

Placement
v Placement is defined as determination of the job to which an accepted candidate is to be assigned, and his assignment
to that job.




v Placement is allocation of new employees to jobs, when selected candidates report for duty, they should be placed in
the right job. Proper placement builds a competent and satisfied work force.
v Placement involves assigning a specific rank and responsibilities to the selected candidate.
v It implies matching of job requirements with the qualifications of the candidate.
v Promotion and demotions also require placement action.
v The first placement is for a probation period, usually extending from 6 to 12 months.
v Orientation and pre-service training are given to the employee during the probation period.
v If the performance is satisfactory during the probation period, the employee is given a tenure (permanent posting).
v If the performance is unsatisfactory, the probation period may be extended or employee is asked to quit the job.
v Some employees may themselves like to quit job during the probation period if they are not satisfied with the job or
placement.
v There should be a fit between employee and the job ( square peg should not be put in round holes).
v A misplaced employee is frustrated employee. Misplaced employee perform below expectations. Corrective actions
should be taken to place them properly so that they become fit for the job.
v Placement should comply with legal provisions. It should minimize disruption to the employee and the organization.
Probation
v Before giving the placement status or the longer term employment generally organizations want to test the new
recruits.
v The incumbent has to prove her/himself about her/his competency to be a permanent employee.
v Generally, the employee is granted placement after he/she had completed his/her probation period.
Probation is necessary to:
v Test her/his ability to learn in job
v Test her/his strength and weaknesses
v Test her/his work disciplines
v Know more about her/his behavior
v Help her/him develop work skills
v Help her/him learn to adjust himself
v Motivate +inspire her/him more
Proper placement leads to:
a) Reduced employee turnover, absenteeism and accidents
b) Improved employee job satisfaction and morale
c) Better adjustment to job and work environment by the candidates
Thus, basically, this is a period of both sides evaluation. During this period organization should:
v Give him freedom to choose
v Use fair judgment and decision
v Allow some mistakes to happen
v It is the last check point of recruitment















HRM UNIT -3 6HRs
Human Resource Development (HRD)
v HRD has been defined as an organized learning experience, conducted in definite time period, to increase the
possibility of improving job performance and growth.
v HRD aims at developing the total organization. It creates a climate that enables every employee to develop and use his
capabilities in order to further both individual and organizational goals.
v Human resource development (HRD) helps individuals, groups, and the entire organization become more effective. It
is essential because people, technology, jobs, and organizations are always changing.




v HRD is concerned with increasing the competencies through knowledge, skills, attitudes and experience of people in
organizations.
v The achievement of organizational goals depends largely on the efforts and performance of people working in
organization.
v Training is the part of HRD that deals with the designing programs that permit learners to acquire knowledge and
skills needed for their present jobs.
According to DeCenzo and Robbins
Human resource development is concerned with preparing employees to work effectively and efficiently in the
organization.
According to Leonard Nadler
Human resource development is organized learning experiences in a definite time period to increase the possibility of
improving job performance and growth.
According to T.V. Rao
Human resource development aims at developing a variety of competencies of employees and developing a culture in the
organization to utilize these competencies and contribute to organizational growth.

For our purpose HRD can be defined;
HRD is a process for developing human competencies through time-bound organized learning experiences to improve
productive contribution of people for achieving organizational goals effectively and efficiently.

HRD Involves Following Activities
Training & Development: Training focuses on providing employees with specific skills or helping them to correct
deficiencies in their performance. In contrast, development is an effort to provide employees with the abilities that the
organization will need in the future.
Organizational Development: It is an organization wide application of behavioral science knowledge to the planned
development and reinforcement of a firms strategies, structures, and processes for improving its effectiveness.
Career Development:
v A formal approach taken by an organization to help people acquire the skills and experiences needed to perform
current and future jobs is termed as career development.
v Company s policies especially policies regarding promotion, opportunities to excel in future help employees to
develop their career. It consists of skills,
HRD programs are divided into three categories
1) Training: Training is the acquisition of technology which permits employees to perform their present job to
standards.
2) Education: Education is training people to do a different job. It is often given to people who have been identifies as
being promotable, being considered for a new job either lateral or upwards
3) Development: Development is training people to acquire new horizons, technology, or viewpoints. It enables leaders
to guide their organizations onto new expectations by being proactive rather than reactive.

Importance of HRD
HRD is necessary for the expansion of job and career progress development activities like new skills, and abilities is required.
HRD is most important phenomenon in this recent global focus on its proper utilization. The importance of HRD can be
defined by following matters.
v To improve employee capabilities and competencies.
v To foster team work and contribution effort
v To enhance employee effectiveness in their overall performance
v To manage change and conflict
v To increase job satisfaction
v To ready for succession plan
v To facilitate environmental adaptation
v To improve decision making
v To employee motivation
v To reduce employee turnover ratio
v To develop a strategic system on HRM within the organization
Employee socialization
v Teaching the corporate culture and philosophies about how to do business.
v A process of adaptation that takes place as individuals attempt to learn the values and norms of work roles.
v In order to reduce the anxiety that new employees may experience, attempts should be made to integrate the person
into the informal organization.




v The initial T&D effort designed for employees is Socialization, the guided adjustment of new employees to the
company, the job, and the work group.
v It may begin informally in the late stages of the hiring process, the thrust of socialization continues for many months
after the individuals began working.
v During this time, the focus is on orienting the new employee to the rules, regulations, and goals of the organization,
department, and work unit. Then as the employee becomes more comfortable with his or her surroundings, more
intense training begins.
Purposes of Socialization
Basic purposes of socialization include emphasizing these areas:
1) The Employment Situation: specific information about performing the job may be provided at an early point in time.
2) Company Policies and Rules: Every job within an organization must be performed considering the guidelines and
constraints provided by policies and rules. Employees must have an understanding of these to permit a smooth
transition to the workplace.
3) Compensation and Benefits: Employees will have a special interest in obtaining information about the reward
system. Although this information is usually provided during the recruitment and selection process, a review of the
data is appropriate during Socialization.
4) Team Membership: In Socialization, the importance of becoming a valued member of the company team may be
emphasized.
5) Employee Development: Employees should know exactly what is expected of them and what is required by the firm
for advancement in the job or promotion.
6) Dealing with Change: Employees at all levels must learn to effectively deal with change in order to survive in their
jobs. The best way individuals can be prepared for change is to continually develop and expand their skills.
Importance of Socialization
Socialization is a process of adaptation by new employees to job environment and organization s culture. Its
importance are
a) Improve performance: Socialization helps new employees to understand and accept the organization s culture.
This helps organizations to achieve better employee performance.
b) Increase organizational stability: effective socialization provides favorable impression about the job and the
organization. This results in low rates of employee turnover. This helps increase organizational stability through
minimum of disruption.
c) Reduce employee anxiety: New employees suffer from anxiety. Socialization helps them to internalize the
norms, values and attitudes of other organization members. They learn about do s and don ts. They also get
familiar with job environment. A fit is facilitated between the employee and the job. Employees feel confident
and satisfy.
d) Screen out deviant employees: Socialization process ensures that deviant, rebellious and norm-rejection type
employees are screen out. New employees which are on probation and of wrong type can be spotted for screening
out during socialization.

Assumptions of Employee Socialization
Many assumptions underline the process of socialization:
1) Socialization strongly influences employee performance: Employees work performance depends to a considerable
degree on knowing what employee should or should not do. Understanding the right way to do a job indicates proper
socialization. Appraisals of employees' performance include how well they fit into the organization.
2) Organizational stability also increase through socialization: When over many years jobs are filled and vacated
with a minimum disruption, the organization will be more stable. Loyalty and commitment to the organization should
be easier to maintain because the organizations philosophy and objectives appear consistent over time.
3) New members suffer from anxiety: The outsider insider passage produces anxiety. Stress is high because the new
member feels a lack of identification if not with the work itself, certainly with a new superior, new work location,
and new rules and regulation. The new member is usually anxious about the new role but motivated to learn the ropes
and rapidly become an accepted member of the organization.
4) Socialization does not occur in a vacuum : Socialization is influenced by subtle (mysterious) and less subtle
statements and behavior offered by colleagues, management, employees, clients, and other people with whom new
members come in contact.
5) Individuals adjust to new situations in remarkably similar ways: Information obtained during recruitment and
selection is always incomplete and usually distorted. New employees, therefore, must change their understanding of
their role to fit more complete information once they are on the job.
The Socialization Process
Socialization can be conceptualized as a process made up of three stages: pre-arrival, encounter, and metamorphosis





FIGURE: A SOCIALIZATION PROCESS
Pre-arrival Stage (pre-entry stage):
v This stage encompasses learning the new employee has gained before joining the organization.
v This stage recognizes that each individual arrives with a set of organizational values, attitudes, and expectations.
v Its sources are education and training (School and colleges they instill in students the right kinds of values, norms, and
attitudes needed for successful career), prior job experience (shape employee perception), recruitment process ( it informs
prospective candidates about the organization and the job), selection process (it ensures that the right type of candidates
are selected).
v In many jobs, particularly high skilled and managerial jobs, new members will have undergone a considerable degree of
prior socialization in training and in school. Pre-arrival socialization, however, goes beyond the specific job.
Encounter Stage (Entry Stage):
v Upon entry into the organization, new members enter the encounter stage.
v Here the individuals confront the possible dichotomy between their expectations about their jobs, their coworkers, their
supervisors, and the organization in general and reality.
v If expectations prove to have been more or less accurate, the encounter state merely provides a reaffirmation (reassert) of
the perceptions generated earlier.
v Where expectation and reality differ; new employees must undergo socialization that will detach them from their previous
assumption.
v New learning will be needed in the values, norms, and attitudes.
v Socialization, however, cannot solve all the expectation differences.
v If the employees become disillusioned (false impression) with the reality, they resign the job.
Metamorphosis Stage (Change stage):
v Finally the new member must workout any problems discovered during the encounter stage.
v This may mean going through changes. Hence the last stage is termed as metamorphosis stage.
v Metamorphosis is complete as is the socialization process when new members have become comfortable with the
organization and their work teams.
v In this situation they will have internalized the norms of the organization and their coworkers; and they understand and
accept these norms.
v New members will feel accepted by their peers as trusted and valued individuals.
v They will have gained an understanding of the organizational system- not only their own tasks but the rules, procedures
and informally accepted practices as well.
v Finally they will know how they are going to be evaluated. They will know what is expected of them and what constitutes
a good job.
v Consequently, successful metamorphosis should have positive effect on a new employees productivity and the employees
commitment to the organization, and should reduce the likelihood that the employee will leave the organization any time
soon.
Outcomes of Socialization
Successful socialization leads to following outcomes;
v Positive influence on productivity of employees. Their work performance improves.
v Greater commitment t organization s goals by employees. This increase employee loyalty
v Fewer tendencies to leave the organization. Employee turnover is reduced because they stay with the organization.
Employee Orientation
v A procedure for providing new employees with basic background information about the firm.
v Orientation or induction is the task of introducing the new employees to the organization and its policies, procedures and
rules.
v Transitioning (change from one condition or state to another) a new employee into the organization.




Work-unit orientation
Familiarizes new employee with work-unit goals
Clarifies how his or her job contributes to unit goals
Introduces he or she to his or her coworkers
Organization orientation
Informs new employee about the organization s objectives, history, philosophy, procedures, and rules.
v A formal orientation programme may last a day or less in most organizations.
v It helps to avoid reality shock the state which results from the discrepancy between what the new employee expected
from his or her new job and the realistic of it.

v During this time, the new employee is provided with information about the company, its history, its current position, the
benefits for which he is eligible, leave rules, rest periods, etc.
v It also covered are the more routine things a newcomer must learn, such as the location of the rest rooms, break rooms,
parking spaces, cafeteria, etc.
v In some organizations,
v Lectures, handbooks, films, groups, seminars are also provided to new employees so that they can settle down quickly and
resume the work.
v Without basic information on things like rules and policies, new employees may make time consuming or even dangerous
errors.
Objectives of Orientation
1) Removes fears:
A newcomer steps into an organization as a stranger. He/she is new to the people, workplace and work environment. He/she is
not very sure about what he/she is supposed to do. Orientation helps a new employee overcome such fears and perform better
on the job.
It assists him in knowing more about:
The job, its content, policies, rules and regulations.
The people with whom he is supposed to interact.
The terms and conditions of employment.
2. Acts as a valuable source of information
It classifies many things through employee manuals/ handbook.
Informal discussions with colleagues may clear the fog surrounding certain issues.
Communicate specific job requirements to the employee, put him at ease and make him feel confident about his
abilities.
3) Creates a good impression
To make the newcomer feel at home and develop a sense of pride in the organization.
Through induction, a new recruit is able to see more clearly as to what he is supposed to do, how good the colleagues
are, how important is the job, etc.
New employee can pose questions and seek clarifications on issues relating to his job.
It leaves a good impression about the company and the people working there in the minds of new recruits.
Orientation should accomplish four things
a) The new employee should feel welcome and at ease
b) He or she should understand the organization in a broad sense (its past, present, culture, and vision of the future), as
well as key facts such as policies and procedures;
c) The employee should be clear about what is expected in terms of work and behavior; and
d) The person should have begun the process of becoming socialized into the firms ways of acting and doing things.

TRAINING
v Training is a process whereby people acquire capabilities to aid in the achievement of organizational goals.
v It involves planned learning activities designed to improve an employees performance at her/his current job.
v It refers to the methods used to give new or present employees the skills they need to perform their jobs.
v The process of teaching new employees the basic skills they need to perform their jobs.
v Training is useless if the trainee lacks the ability or motivation to take benefit from it.
v It can lead to higher production, fewer mistakes, greater job satisfaction and lower turnover.

Employee training is a learning experience: it seeks a relatively permanent change in an individual that will improve their
ability to perform job. DeCenzo and Robbins

Employee training and development is any attempt to improve current or future employee performance by increasing,
through learning, an employees ability to perform, usually by increasing his or her skills and knowledge.
Schuler





Training involves the changing of skills, knowledge, and attitude or behavior.

TRAINING
v Provides new skills for the employee
v Keeps the employee up to date with changes in the field
v Aims to improve efficiency
v Can be external or in-house
Training is essential for job success. It can lead to higher production, fewer mistakes, greater job satisfaction and lower
turnover.
Purposes of Training & Development
v Orient new employees and Preparing them for promotion
v Satisfy personal growth needs
v Improve performance
v Avoid Managerial Obsolescence
v Solve organizational problems
v Changes in organization structure caused by mergers, acquisitions, rapid growth, downsizing, and outsourcing
v Changes in technology and the need for more highly skilled workers
v Changes in the educational level of employees
v Changes in human resources; a diverse workforce consisting of many groups
v Increased emphasis on learning organizations and human performance management
Determining training needs
v The difference between employees desired performance and actual performance may indicate a training need. Before
organizing training programmes, it is necessary to identity needs from time to time.
v Information about the training needs is collected from various sources such as supervisors, employees themselves, HR
Director, results of the performance evaluation etc.
v Normally, the demand for a training programme arises to cope with the following work situations:
Deterioration in employees performance
Change in the prevailing technology and work procedure
For employee promotion and management succession in a higher level position
For increasing productivity and effectiveness of certain units of operation.












Training needs can be identified through the following types of analysis,
1) Organizational analysis: It involves a study of the entire organization in terms of its objectives, its resources, the
utilization of these resources, in order to achieve stated objectives and its interaction pattern with environment. The
important elements that are closely examined in this connection are:
a) Analysis of objectives: This is a study of short term and long term objectives and the strategies followed at
various levels to meet these objectives.
b) Resource utilization analysis: How the various organizational resources (human, physical and financial) are
put to use is the main focus of this study.
c) Environmental scanning: Here the economic, political, socio-cultural and technological environment of the
organization is examined.
d) Organizational climate analysis: The climate of an organization speaks about the attitudes of members
towards work, company policies, supervisors, etc. Absenteeism, turnover ratios generally reflect the
prevailing employee attitudes. These can be used to find out whether training efforts have improved the
overall climate within the company or not.
2) Task or role/Job need analysis:
v This is a detailed examination of a job, its components, its various operations and conditions under which it has to be
performed.
v The focus here is on the roles played by an individual and the training needed to perform such roles.
v The whole exercise is meant to find out how the various tasks have to be performed and what kind of skills,
knowledge, attitudes are needed to meet the job needs.
v Questionnaires, interviews, reports, tests, observation and other methods are generally used to collect job related
information from time-to-time.
v After collecting the information, an appropriate training programme may be designed, paying attention to (i)
performance standards required of employees, (ii) the tasks they have to discharge, (iii) the methods they will employ
on the job and (iv)how they have learned such methods, etc.

3) Person need analysis:
Here the focus is on the individual in a given job. There are three issues to be resolved through manpower analysis.
v First, try to find out whether performance is satisfactory and training is required.
v Second, whether the employee is capable of being trained and the specific areas in which training is needed.
v Finally, we need to state whether poor performers on the job need to be replaced by those who can do the
job.

FIGURE: DETERMINING TRAINING NEEDS
Is there
need for
training
What are the
organization s
goals?
Organizational need
analysis
What task must be
completed to achieve
its goals? J ob need
analysis
What behaviors are
necessary for each job
incumbent to complete his or
her arranged tasks? Person
need analysis
v What deficiencies, if
any do incumbents have
in the sTFocus on
future
responsFocus on




Personal observation, performance reviews, supervisory reports, diagnostic tests help in collecting the required
information and select particular training options that try to improve the performance of individual workers.

Considerations/Issues in design of the training programme
Following factors should be considered in order to have more effective utilization of resources that are supposed to be spent on
proposed training and development programs.
1) Goals and scope: Specific considerations are; what types of training needs should be fulfilled? What should be the
instructional objectives? What types of skills should be included (technical, human conceptual)?
2) Principles of Learning : Learning principles should be implemented to have more effective training
a) Participation: Learning should permit and encourage active participation of the learner.
b) Repetition: to provide the learner with the opportunity for practice and repetition.
c) Relevance: should be problem centered rather than content centered. People are motivated to learn when training is
immediately relevant to help them solve a current problem.
d) Transference: Trainees can apply the knowledge and skills learned in training course to their jobs.
e) Feedback: Feedback improves performance not only by helping learners correct their mistakes, but also by providing
reinforcement for learning.
3) Desired Program Content: Contents of the training program and the methods used to deliver the training should be in
relevance to training objectives and need assessed for training.
4) Cost Effectiveness: That is the benefits gained by such programs must outweigh (exceed in weight) the cost associated
with providing the learning experience. If organizations are not able to have advantages or development and
enhancement of the performance after training it is only wastages of the resources.
5) Appropriateness of the Facilities: Factors that are supposed to facilitate the training program should be appropriate and
available.
6) Trainer Performance and Capabilities: Trainers or people who are assigned responsibility to train the trainees are
having enough experience, skills, capabilities and past trends that show that they can be effective trainers. Trainers
themselves are required to be well trained in order to provide the training.
7) Duration: should training be a one shot affairs, Continuous, short term or long term.
8) Responsibility of Training: Training plan, programmes, & budget should be approved by top management. There should
be involvement of HRM department as well as other department in the designing of training programmes.
Considerations/issues in conducting training programme
1) Administration: Coordination of training programmes, authority to make change in the training design during the conduct
of training etc.
2) Trainees (target group): Who should participate in the training? What should be the eligibility requirements for training?
How should be trainees be selected? How should indiscipline on the part of trainees be managed?
3) Trainers: Qualities of trainers, full time or resource persons from external sources, compensation of trainers, modality of
effectiveness of trainers, etc.
4) Training methods: On the - job and off the job training methods, methods used to make training more practical and
experimental, methods focus individual or group works.
5) Training materials: what types of training materials be used? When should these materials be distributed? How should
the training materials be updated?
6) Records: What type of information system should be developed for training? How can the safety and confidentialities of
training records be ensured?
7) Resources: size of budget, process of budget release, spent and controlled.
8) Evaluation: Impact of training be evaluated, variables of evaluation, utilization of evaluation result, follow up of trainees
to assess impact of training.
On-the-job training
On-the-job training is provided when the workers are taught relevant knowledge, skills and abilities at the actual workplace.
Receive immediate feedback, practice in the actual environment, employee are coached and instructed by skilled coworkers, by
supervisors, by the special training instructor. Trainees learn the job by personal observation and practice as well as
occasionally handling it.
Advantages:
1) It is less costly to deliver.
2) Multi skilling is possible.
3) Workers actually produce while they learn.
4) Since immediate feedback is available, they motivate trainees to observe and learn the right way of doing things.
5) Very few problems arise in the case of transfer of training because the employees learn in the actual work
environment where the skills that are learnt are actually used (high degree of transference).
Disadvantages:
1) The productivity of trainee is low while they develop skills.
2) May cause disruptions in production schedules.




3) Scrap and reject rates can be high.
4) Experienced workers cannot use the facilities that are used in training.
5) Poor learners may damage machinery and equipment.
6) If the trainer does not possess teaching skills, there is very little benefit to the trainee.
Off-the-job training: under this method of training, the trainee is separated from the job situation and his attention
is focused upon learning the material related to his future job performance. It is mostly classroom based. Trainees focus
learning experiences. They are removed from the stress.
Advantages:
1) Large group can be trained simultaneously at low cost.
2) There is an opportunity for freedom of expression for the trainees.
3) Trainee can focus his entire concentration on learning the job rather than spending his time in performing it.
4) Costly errors and injuries can be avoided during training.
5) Large amount of information can be covered.
6) Trainees develop useful contacts.
7) In house trainers and training capacity can be developed.
Disadvantages:
1) The transfer of training to job is of low degree.
2) The trainee motivation is low.
3) Specific employee needs may not be met.
4) Trainee involvement is unenthusiastic.
5) It is not useful to develop interpersonal skills.
On-the-job training Methods
1) Job Rotation: Lateral transfer, allow employees to work at different jobs. Provide good exposure to a variety of tasks.
This kind of training involves the movement of trainee from one job to another. The purpose of job rotation is to provide
trainees with a greater understanding of different functional areas as well as a better sense of their own career objectives
and interests.
Merits: Improve participant s job skills, job satisfaction, offer faster promotions and higher salaries to quick learner,
lateral transfer beneficial in rekindling enthusiasm and developing new talents.
Demerits: Increase workload for participants, constant job change may produce stress and anxiety; development cost may
shoot up when trainees commit mistakes, handle tasks less optimally.
2) Job Instruction Training (JIT)
The JIT method (developed during World War II) is a four-step instructional process involving preparation,
presentation, performance try out and follow up.
It is used to teach workers how to do their current jobs.
The four steps followed in the JIT methods are:
1) The trainee receives an overview of the job, its purpose and its desired outcomes, with a clear focus on the
relevance of training.
2) The trainer demonstrates the job in order to give the employee a model to copy. The trainer shows a right
way to handle the job.
3) Next, the employee is permitted to copy the trainer s way. Demonstrations by the trainer and practice by the
trainee are repeated until the trainee masters the right way to handle the job.
4) Finally, the employee does the job independently without supervision.
3) Apprenticeship Training/Understudy
v Support and encouragement from an experienced workers.
v Employees learn by working with those already skilled in their jobs.
v A master's worker guides the trainee.
v Assistantships and internships are similar to apprenticeships because they also demand high levels of participation
from the trainee.
4) Committee Assignments
v In this method, trainees are asked to solve an actual organizational problem.
v The trainees have to work together and offer solution to the problem.
v It helps them to develop team spirit and work unitedly toward common goals.
v However, managers should very well understand that committee assignments could become notorious (well known)
time wasting activities.
Off-the job Training Methods
a) Lecture Method:
v Lecture conveys specific technical, interpersonal, or problem solving skills.
v One of the most simple way of imparting knowledge to the trainees, especially when facts, concepts, or
principles, attitudes, theories and problem solving abilities are to be taught.




v To be effective, the lecture must motivate and create interest among the trainees.
v Lectures are formal organized talks by the training specialist, the formal superior or other individual specific
topics.
v An advantage of lecture method is that it can be used for very large group which are to be trained within a short
period, thus reducing the cost per trainee.
v The major limitation of the lecture method is that it does not provide for transfer of training effectively.
b) Vestibule training
v In this method, actual work conditions are simulated in a class room.
v Learning tasks on the same equipment that one actually will use on the job but in a simulated work environment.
v Material, files and equipment those that are used in actual job performance are also used in the training.
v This type of training is commonly used for training personnel for clerical and semi-skilled jobs.
v The duration of this training ranges from a few days to a few weeks. Theory can be related to practice in this
method.
c) Role playing
v It is defined as a method of human interaction that involves realistic behavior in imaginary situations.
v This method of training involves action, doing and practice.
v This method is mostly used for developing interpersonal interactions and relations.
v Learning by doing is emphasized.
v Human sensitivity and interactions are stressed.
v The knowledge of results is immediate.
v Trainee interest and involvement tend to be high.
d) Conference/discussion approach
v The trainer delivers a lecture and involves the trainee in a discussion so that his doubts about the job get clarified.
v The trainer uses audio-visual aids such as blackboards, and slides; in some cases the lectures are videotaped or audio
taped.
v The conference is, thus, a group-centred approach where there is a clarification of ideas, and communication of
procedures
v Those individuals who have a general educational background and whatever specific skills are required such as
office equipment operation, filing, indexing, recording, etc. may be provided with specific instructions to handle
their respective jobs.
e) Programmed Learning
v The medium is a textbook, PC, or the Internet, programmed learning (or programmed instruction) is a step by step,
self learning method that consists of three parts:
a) Presenting questions, facts, or problems to the learner
b) Allowing the person to respond
c) Providing feedback on the accuracy of answer
v It reduces training time, reduce the learners risk of error, provide immediate feedback.
Management Development
v Management development is a systematic process of improving managerial performance by imparting knowledge,
increasing skills, changing attitudes and developing experiences. It prepare managers to handle present and future
responsibilities.
v Executive or management development is a planned, systematic and continuous process of learning and growth by which
managers develop their conceptual and analytical abilities to manage.
According to DeCenzo and Robbins
Management development is future oriented training, focusing on personal growth of the employee.
According to Gray Dessler
Management development is any attempt to improve current or future management performance by imparting knowledge,
increasing skills or changing attitudes.
Features of Management Development
1) It is a planned effort to improve executives ability to handle a variety of assignments
2) It aims at improving the total personality of an executive
3) Focus on future responsibilities; growth oriented.
4) Long-term on-going educational process.
5) Target is managerial employees
6) Develop potential through conceptual, interpersonal technical and decision making skills.
7) Develop employee potential capable of achieving, proactive to future needs.
The goals of Management development
1) Increase managerial capabilities
2) Enhance managerial potential




3) Foster team work
4) Facilitate environmental adaptation
5) Improve managerial decision making
6) Facilitate managerial succession
7) Aid managerial job satisfaction
8) Aid managerial job satisfaction
Distinction between training and management development
Training Management Development
1) Focus on present job, task oriented 2) Focus on future responsibilities; growth-
oriented
2) Short-term periodic process 3) Long term on going educational process
3) Target is operative employees 4) Target is managerial employee
4) Confined to hands-on skills and
knowledge
5) Develop conceptual, interpersonal,
technical and decision making skills.
5) Remedial effort, fulfils current needs 6) Develops employee potential; fulfills
future needs
6) Management initiated and employee
participated
7) Employee initiated and management
facilitated.

Methods of Management Development



On-the job methods
1) Coaching
v It is actively guiding managers by their experienced immediate supervisor or boss.
v The coach gives the guidance through direction, advice, criticism, and suggestions.
v In coaching, participants can learn by actually doing a piece of work and obtain feedback on performance quickly.
Coaching would work well
v if the coach provides a good model with whom the trainee can identify,
v if both can be open with each other,
v if the coach accepts his responsibility fully, and
v if he provides the trainee with recognition of his improvement and appropriate rewards.
2) Understudy
v The trainee works directly with a senior manager or with the person he or she is to replace; the latter is responsible for
the trainee's coaching.
v Normally, the understudy relieves the executive of certain responsibilities, giving the trainee a chance to learn the job.
3) Job Rotation
v The transferring of executives from one job to another and from one department to another in a systematic manner in
order to broaden their experience is called job rotation.




v The idea behind this is to give them the required diversified skills and a broader outlook, which are very important at
upper management levels.
v Job rotation increases the inter-departmental cooperation and reduces the monotony of the work.
v Rotated managers have little knowledge when shifted to new tasks. Productivity may suffer.
v Managers lack specific responsibility and opportunities for specialization
4) Multiple Management Program
v Lower and middle level managers who have potential for future career and promotion are invited to participate at the
time of formulating corporate plans and policies.
v Top management also provides opportunities to the lower level managers to provide their ideas and suggestions for
the future corporate plan and policy.
v With the help of this programme top management can identify the future top managers for the organization.
Off-the-job methods
1) Lecture
v Lectures are formal presentations on a topic by an experienced and knowledgeable person.
v The presentation is generally supported by discussions, case studies, audio-visual aids and film shows.
v It is a simple and inexpensive way of imparting knowledge on a topic of special importance to a large audience.
v If the lecture is not interesting enough, the audience may not participate and offer any feedback.
The method could be used effectively if the following things are kept in mind
v The presentation should be interesting, lively and leave enough room for healthy discussions
v The presenter must possess excellent communication and interpersonal skills.
v To enrich the presentation, audio-visual aids, examples, cases, and real-life incidents should be used freely,
2) Simulation Exercise
v It is training technique which indicates the duplication of organizational situations in a learning environment.
v The participants are placed in artificial environment that closely resembles to actual work environment
Simulation includes
a) Role playing: It is a human interaction involving realistic behavior in imaginary situations. Potential managers
or trainees to act out their particular role positions under simulated conditions. Role play develops interpersonal
skills among participants. They learn by doing things.
b) Case studies: This is a training method that employs simulated business problems for trainees to solve. The
individual is expected to study the information given in the case and make decisions based on the situation.
Improves problem-solving skills of participants.
c) Decision Games/Business Game: Business games involve two or more hypothetical organizations
competing in a given product market. The participants are assigned such roles as Managing Director, General
Manager, Marketing Manager, etc. They make decisions affecting price levels, production volume and inventory
levels. The results of their decisions are manipulated by a compute programme, with the results simulating those
of an actual business situation.
3) Behavior modeling
v It involves; showing trainees the right (model) way of doing something, letting trainees practice and then giving
feedback on the trainees performance.
The basic procedure is as follow
Molding: First, trainees watch live or video examples that show models behaving effectively in a problem
situation.
Role playing: Next, the trainees are given roles to play in a simulated situation.
Social reinforcement: The trainer provides reinforcement in the form of praise and constructive feedback based
on how the trainee performs in the role playing situation.
Transfer of training: Finally, trainees are encouraged to apply their new skills when they are back on their jobs.
4) Sensitivity training
It is a method of changing behavior through unstructured group interaction in a free and open environment.
Participants communicate and discuss with one another about themselves and each other s behavior.
They express their ideas, beliefs, and attitudes and share impressions.
They become sensitive to the behavior of self and others.
The primary focus is on reducing interpersonal friction.
5) Transactional analysis
v This analysis helps a manager to understand his or her ego states.
v In the practical application of this technique, managers analysis their daily transactions with employees and identify
the ego states.
v Individual personality consists of three ego states
a) The parent : ego state of authority, superiority, controlling




b) The adult: ego state of objectivity and rationality.
c) The child: ego state of emotion.
v Parents and child ego states feel and react directly. The adult state thinks before acting. The ideal interaction is of
adult ego state.
v This help manager to correct their behavior while transacting with their counterparts.
v It improves communication and develops healthy human relations.

Mentoring: When a senior employee takes an active role in guiding another individual, we refer to this activity as
mentoring or coaching (actively guiding another individual). The effective coach, in the corporate hierarchy, gives guidance
through direction advice, criticism, and suggestions in an attempt to aid the employee's growth. Technical, interpersonal and
political skills are generally conveyed in such a relationship from the more experienced person.

The technique of senior employees coaching individuals has the advantages of learning by doing and provides opportunities for
high interaction and rapid feedback on performance. Unfortunately, its two strongest disadvantages are (1) tendencies to
perpetuate the current styles and practices in the organization and (2) heavy reliance on the coach's ability to be a good teacher.

The important features/processes of mentoring may be presented thus,

Mentoring Functions
The main objective of mentoring is to help an employee attain psychological maturity and effectiveness
and get integrated with the organization. In a work situation, such mentoring can take place at both formal
and informal levels, depending on the prevailing work culture and the commitment from the top
management. Formal mentoring can be very fruitful, if management invests time and money in such
relationship building exercises.

Empowerment of Employee
The process of enabling workers to set their own goals, makes decisions, and solves problems within their sphere of
responsibility and authority.
It is simple in that it tells managers to quit bossing people around so much and to let them do their jobs.
It is complex in that manager and employees typically are not trained to do that.
A significant time, training, and practice may be needed to truly empower employees.
Techniques and issues in empowerment
Use of work teams, Japanese firm call quality circle - a small groups of employees from the same work area who
regularly meet to discuss and recommend solutions to workplace problems.
Eliminate layers from its hierarchy, thereby becoming much more decentralized
Power, responsibility and authority are delegated as far down the organization as possible.
Empowerment only enhances organizational effectiveness if certain conditions exist
Organization must be sincere in its efforts to spread power and autonomy to lower levels of the organization.
Organization must be committed to maintaining participation and empowerment.
Organization must be systematic and patient in its efforts to empower workers
The organization must be prepared to increase its commitment to training.

EVALUATING TRAINING AND DEVELOPMENT EFFECTIVENESS
Any training and development implemented in an organization effort must be cost effective.




That is the benefits gained must outweigh the costs of the learning experience.
The credibility of training is greatly enhanced when it can be shown that the organization has benefited tangibly from
such programs.
Effectiveness can be measured in monetary or non-monetary terms.
It is important that the training be assessed on how well it addresses the needs it was designed to address.
Evaluation must be systematic and objective. It should focus on outcomes.
EVALUATING TRAINING
How will we determine if a training program is effective? This is easier if some output can be measured such as an increase or
decrease in costs, sales, production, employee turnover, or revenue. In these cases, HR can calculate a return on the investment
(ROI) by determining the benefit of the training and dividing it by the training expense.
What if we're training managers on better communication skills or teaching English as a second language to employees? That's
a little more difficult to evaluate. A different approach to determining the effectiveness of training is called Kirkpatrick's
model.

Kirkpatrick's Model: Evaluate the benefits of training for skills that are hard to quantify, such as attitudes and behaviors.
This is a four level approach that works well in determining the value of managerial training and training that is difficult to
assess in terms of ROI.
Level one measures the reactions of the participants towards the training and answers questions about whether the
participants liked the training; felt they achieved their learning goals; how much they liked the trainers; and any suggestions
they have for improving the training.
Level two measures how much the participants learned. This could be accomplished by pre-and post-testing the participants
or by evaluating the participants against a control group that has not been trained.
Level three measures whether the training actually changes the employee's behavior when he or she returns to the job. This
might be evaluated by the participants, supervisor or trainer.
Level four measures whether the training benefited the employer or not. This could be done by determining ROI, or by
evaluating a behavior against another standard, such as a benchmark.

THE CRITERIA FOR EVALUATING TRAINING EFFECTIVENESS
1) Participants Opinions (reaction)
Evaluating a training program by asking the participants opinions.
Did they like the program? Did they think it worthwhile?
It is an inexpensive approach that provides an immediate response and suggestions for improvements.
The basic problem with this type of evaluation is that it is based on opinion rather than fact.
In reality, the trainee may have learned nothing, but perceived that a learning experience occurred.
1) Extent of Learning
What the trainee learned from the program
Test the trainee to determine whether they learned the principles, skills, and facts they were supposed to learned.
The pretest, posttest, control group design is one evaluation procedure that may be used.
2) Behavioral Change
It is concerned with changes in job behavior that result after the training.
It also includes transfer of new training to the jobs.
Tests may indicate fairly accurately what has been learned, but they give little insight into desired behavioral
changes.
3) Accomplishment of Training Objectives (Result):
What final results were achieved in terms of the training objectives previously set?
E.g. did the number of customer complaints about the employee drop?

METHODS OF EVALUATING TRAINING EFFECTIVENESS
1) Post Training Performance Method
Evaluating training programs based on how well employees can perform their jobs after training.
In this method the participants performance is measured after attending a training program to determine if
behavioral changes have been made. For example, assume we provide a week long seminar for HRM recruiters
on structured interviewing techniques. We follow up one month later with each participants to see if, in fact,
attendees use the techniques addressed in the program and how. If changes did occur, we may attribute them to
the training, but we cannot empathetically state that the change in behavior is directly related to the training.
2) Pre-Post Test approach
Evaluating training programs based on the difference in performance before and after training.
Performances of the participant is measured prior to training and rated on actual job performance.
If required training is provided.




After completion of the training again the performance is measured this is compared with performance before
training.
If evaluation is positive e.g. increase in productivity that means that training is effective.
3) Pre- Post Training Performance with control group Method
Under this evaluation method, two groups are established and evaluated on actual job performance.
Members of the control group work on the job but do not undergo instructions.
On the other hand, the experimental group is given the instructions.
At the conclusion of the training, the two groups are reevaluated.
If the training is really effective, the experimental group s performance will have improved, and its performance
will be substantially better than that of the control group.
4) Observation Methods
Trainees are closely observed during the delivery of training program by trained experts.
Changes in knowledge, skills and attitudes of trainees are assessed by observing:
a) Trainee performance in actual work situations for on-the job training. The errors and mistakes are
carefully observed and recorded.
b) Trainee participation in discussion, role play, case study, interpersonal contacts, computer games etc. in
classroom situations for off-the-job training.
5) Trainee surveys
They involve direct questioning to trainees to gather their reactions about training programs. The participants are
asked to fill-up a form after the end of training. The object of trainee survey can be
Physical facilities, lodging, teaching aids etc.
Achievements of training objectives
Contents, timing, process, methods, materials of training
Trainer effectiveness
Relationship with other participants
Suggestions for improvements
The feedback received from trainees is useful for removing weakness of the current programs. Improvements can
be made in future programs.
6) Cost Effectiveness Analysis
It assesses total value of benefits against total costs of training. It measures value for money of training. The
training is effective if benefits exceed costs.
The benefits of training are realized in future. It is difficult to determine monetary value of costs and benefits.






UNIT IV
Role of Human Resource in a firms competitiveness
v Competitiveness is a multidimensional concept. It can be looked at from three different levels: country,
industry, and firm level.
v Competitiveness originated from the Latin word, competer, which means involvement in a business rivalry
for markets.
v It has become common to describe economic strength of an entity with respect to its competitors in the global
market economy in which goods, services, people, skills, and ideas move freely across geographical borders
(Murths, 1998).
Definition
Firms competitiveness can be defined as the ability of firm to design, market products superior to those offered by
competitors, considering the price and non-price qualities (D'Cruz, 1992).
v In order to enjoy the competitiveness, the firm should be a cost-leader, delivering value for money.
v It must have a committed and competent workforce.

Role of Human Resource
v Human resources that support the business strategy and implementing the chosen strategy, efficiently and effectively.
v Leveraging other resources such as physical assets and capital to complement and augment the human resources based
advantage.
v High quality HR that enables organizations to compete on the basis of market responsiveness, product and service quality,
differentiated products and technological innovation.
v HR can play a role in environmental scanning i.e. identifying and analyzing external opportunities and threats that may be
crucial to the firm's competitiveness.
v HR also participates in the strategy formulation process by supplying information regarding the company s internal
strengths and weaknesses.
v A good team of competent and committed employees will deliver the goals if they are involved in all important activities
and are encouraged to develop goals that they are supposed to achieve.

Concept of evaluating employee performance
Concept
v Performance refers to the degree of accomplishment of assigned tasks by an employee.
v Performance appraisal may be defined as any procedure that involves 1) setting standards, 2) assessing the employees
actual performance relative to those standards, and 3) providing feedback to the employee with the aim of motivating
him or her to eliminate performance deficiencies or to continue to perform above par.
v Performance Evaluation or Appraisal is the process of deciding how employees do their jobs.
v Performance evaluation is review of an employees performance on the job and his potential for assuming future
responsibilities.
v It reviews job-relevant strengths and weakness of an employee.
v It provides feedback so that employees know where they stand, where they ought to be going, and how they are going
to get there. It communicates expectations of improved performance.
Definition
v Performance appraisal is a method of evaluating the behavior of employees in the work spot, normally including both
the quantitative and qualitative aspects of job performance.
v It is a systematic and objective way of evaluating both work-related behavior and potential of employees.
v It is a process that involves determining and communicating to an employee how he or she is performing the job and,
ideally, establishing a plan of improvement.
Formal and Informal performance evaluation
1) Formal performance evaluation: ongoing evaluation process at periodic intervals. It compares actual performance
with specified standards of performance. It is based on thoughtful judgment of supervisors and reliable information
about employees job performance.
2) Informal Performance evaluation: Managers informally review and judge the performance of subordinates and
provide suggestions for improvement. It is based on the perception and impressions of supervisors gathered from
substantiated (prove the truth of) information.
THE PERFORMANCE EVALUATION PROCESS






THE PERFORMANCE EVALUATION PROCESS
a) Setting appraisal objectives: Clear objectives whether to reward employee or review their potentiality.
b) Setting the performance standards: Set performance standards based on the information from job analysis and job
description. Standards are usually in terms of quality, cost, volume of output, time, etc. Standards should be clear and
understandable, as far as possible they should be objective rather than subjective.
c) Communicate the expectations: Once performance standards are set they should be clearly communicated to the
employee concerned. The communication should be two way so that there will not be any barrier to implementing the
managerial performance expectations.
d) Making the appraisal: In this process information on actual performance is collected using various means such as direct
observations, statistical reports and other written documents. Sometimes experts can be hired for this job; they will provide
reports about the performance of employees.
e) Comparing standards and actual performance: The information collected on the actual performance of employee, thus
compared with expected performance. The result may be performance above or below or equal standard.
f) Discuss the appraisal with the employee: Whatever may be the outcome of the evaluation should be presented before the
concerned employee and the pros and cons of the result should be discussed with him or her, if performance is above
standard-rewarded, equal-tries to maintain and develop the employee.
g) Corrective action: If the performance is below the standard, the managers develop actions to correct the behavior of the
employee to improve his/her performance in future.

PURPOSE OF PERFORMANCE EVALUATION/APPRAISAL





PURPOSE OF PERFORMANCE APPRAISAL
1) To make personnel decisions: Can be used career development, training, transfer and promotion.
2) Feedback for employees: Employee will receive feedback on how well he or she is performing in a given job and
what is his or her job related strength and weakness.
3) Criteria in test validation: helps to examine how far the criteria adopted for recruitment, selection and training
practices are effective in case of individual employee.
4) Diagnosis of organizational problems: It aims to identify performance related problems in different units of an
organization.
5) To reward employee: The result of performance appraisal is useful to make decisions on reward, awards and benefits
to the employees.
6) To develop and motivate employee: The result of performance appraisal can be used to develop and motivate
employees by recognizing their performance strength and weakness.
7) To review potentiality of employees: Appraisal information is used to find the future capability of an individual to
hold a higher managerial position.
Uses of Performance Appraisal
a) Human Resource Planning: In assessing a firms human resources, data must be available that describe the promotability
and potential of all employees, especially key executives.
b) Recruitment and Selection: Performance evaluation ratings may be helpful in predicting the future performance of job
applicants.
c) Training And Development: A performance appraisal should point out an employees specific needs for training and
development. By identifying deficiencies that adversely affect performance, human resource managers are able to develop
training and development programs that permit individuals to build on their strengths and minimize their deficiencies.
e) Compensation Programs: Performance appraisal results provide the basis for decisions regarding pay increases.
f) Internal Employee Relations: Performance appraisal data are also frequently used for decisions in areas of internal
employee relations including motivation, promotion, demotion, termination, layoff, and transfer.
g) Assessment of Employee Potential: Some organizations attempt to assess employee potential as they appraise job
performance.

Methods of evaluating employee performance
Three approaches exist for doing employee performance appraisals;



ABSOLUTE APPRAISAL METHODS
Measuring an employees performance against established standards.
Employees are compared to a standard, and their evaluation is independent of any other employee in a work group.
1) Critical Incident Method:
A performance evaluation that focuses on key behaviors that differentiates between doing a job effectively or
ineffectively.
These critical incidents or events represent the outstanding or poor behavior of employees on the job.




The rater maintains logs on each employee, whereby he periodically records critical incidents of the workers
behavior.
At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers
performance.
The recording of incidents may be a chore (tedious) for the manager concerned, who may be too busy or forget to do
it.
An example of a good critical incident of a sales assistant is the following:
July 20 The sales clerk patiently attended to the customer s complaint. He is polite, prompt, and enthusiastic in solving the
customer s problem.
On the other hand, the bad critical incident may appear as under:
July 20 The sales assistant stayed 45 minutes over on his break during the busiest part of the day. He failed to answer the
store manager s call thrice. He is lazy, negligent, stubborn (inflexible) and uninterested in work.
Strength
v It looks at behaviors.
v List of critical incident on a given employee provides a rich set of examples from which employees can be shown
which of their behaviors are desirable and which ones call for improvement.
Drawbacks
This method suffers, however, from the following limitations:
v Appraiser must regularly write these incidents down, and doing this on a daily or weekly basis for all employees is
time-consuming and burdensome for supervisors.
v Negative incidents may be more noticeable than positive incidents.
v It results in very close supervision which may not be liked by the employee.

2) Checklist appraisal
v A performance evaluation in which a rater checks off applicable behaviors and traits of the employee.
v The evaluator uses a list of behavioral descriptions and checks off behaviors that apply to the employee.
v A checklist represents a set of objectives or descriptive statements about the employee and his behavior.
v If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he
leaves the item blank.
v A more recent variation of the checklist method is the weighted list. Under this, the value of each question may be
weighted equally or certain questions may be weighted more heavily than others.

The following are some of the sample questions in the checklist.
S.N. Questions Yes No
1. Is the employee really interested in the task assigned?
2. Is he respected by his colleagues (co-workers)
3. Does he respect his superiors?
4. Does he follow instructions properly?
5. Does he make mistakes frequently?
Advantages
v The checklist are economy,
v ease to administration
v Limited training of raters.
Limitations
v The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the
questions.
v This method is expensive and time consuming.
v Finally, it becomes difficult for the manager to assemble, analyze and weigh a number of statements about the
employees characteristics, contributions and behaviors.

3) Adjective/Graphic rating Scale Appraisal:
v Using this method, a set of performance factors is identified, including such characteristics as quantity and quality of
work, job knowledge, cooperation, loyalty, dependability, attendance, honesty, integrity, attitudes, and initiative.
v The appraiser would go through the set of factors rating them, e.g. on a scale 1 to 5 where the highest number (5)
would denote the best rating whereas the lowest number (1) would denote the poor rating.
Strength
v One positive point in favor of the rating scale is that it is easy to understand, easy to use and permits a statistical
tabulation of scores of employees.




v Easy to develop and administer, less time consuming, many employee can be rated quickly. Comparison among
employees is possible.
Drawbacks
v This method is not free from the rater's bias.
v The evaluation criteria are not directly related to job performance.
v Rating error of all types may be present

Unsatisfactory
(1)
Fair
(2)
Satisfactory
(3)
Good
(4)
Outstanding(
5)
Quality of works
neatness, thoroughness and accuracy of work

Quantity of works
Volume of work under normal working
conditions

Knowledge of job
A clear understanding
of the factors connected
with the job

Dependability
Conscientious, thorough, reliable, accurate,
with respect to attendance, reliefs, lunch
breaks, etc.

Attitude
Exhibits enthusiasm and cooperativeness on the
job

Cooperation
Willingness and ability to work with others to
produce desired goals.


4) Forced Choice Appraisal
v A performance evaluation in which the rater must choose between two or more behavior-related statements that is
most or least descriptive of the employee being appraised.
v Since the rater is bound to select from among the given readymade few limited statements this method is known as
forced choice method.
v Each statement may be favorable or unfavorable.
v The appraiser s job is to identify which statement is most (or in some case least) descriptive of the individual being
evaluated.
v The HR department arrives at overall scoring for each employee by applying a scoring key.
Advantage
v Absence of personal bias.
Limitation
v In the preparation of sets of phrases trained technicians are needed and as such the method becomes very expensive.
v Managers may feel frustrated rating the employees in the dark .
v The results of the forced choice method may not be useful for training employees because the rater himself does not know
how he is evaluating the worker.

The following Table is a classic illustration of the forced choice items in organizations.







5) Behaviorally Anchored Rating Scales (BARS):
v A performance appraisal technique that generates critical incidents and develops behavioral dimensions of
performance. The evaluator appraises behaviors rather than traits.
v The appraiser rates the employees based on items along a continuum, but the points are examples of actual behavior
on the given job rather than general descriptions or traits.
v It is a combination of the rating scale and critical incident techniques of employee performance evaluation.
v The format of BARS consists of a set of statements which describe key aspects of performance in a particular job and
have been scaled on a single dimension, ranging from very poor behavior to outstanding behavior.
There are five steps in developing BARS;
a) Job holders/supervisors are asked to provide information about critical incidents of the jobs to be appraised.
b) All these critical incidents will be grouped on 5 to 10 different job dimensions.
c) Each dimension is anchored with positive and negative critical incidents.
d) All incidents are scaled on 7 to 9 point scales.
e) Each employee in the particular job is rated on each dimension on the appropriate scales of the BARS.

Figure: A Sample BARS for a College Professor







Relative Standard methods/Multiple-person Evaluation Techniques
v This method compares individuals against other individuals.
v Evaluating one employee in comparison to another.
v The most popular of the relative methods are group order ranking, individual ranking, forced distribution and paired
comparison.
1) Group Order Ranking:
v Group order ranking requires the evaluator to place employees into a particular classification, such as top 20 percent.
v The ranking of an employee in a work group is done against that of another employee.
v The relative position of each employee is expressed in terms of his numerical rank.
v It may also be done by ranking a person on his job performance against another member of the competitive group.
v The quintessence (most perfect form) of this method is that employees are ranked according to their relative levels of
performance.
v Though it is relatively easier to rank the best and the worst employees, it is very difficult to rank the average employees.
Limitations of this method
a) The whole man is compared with another whole man in this method. In practice, it is very difficult to compare
individuals possessing varied behavioral traits.
b) This method speaks only of the position where an employee stands in his group. It does not tell anything about how
much better or how much worse an employee is when compared to another employee.
c) When a large number of employees are working, ranking of individuals becomes a vexing (anger or irritate) issue.
d) There is no systematic procedure for ranking individuals in the organization. The ranking system does not eliminate
the possibility of snap judgments.
2) Paired Comparison method:
v Each worker is compared with all other employees in the group; for every trait, the worker is compared with all other
employees.
E.g.
When there are five employees to be compared, then A s performance is compared with that of B s and decision is arrived at as
to whose is better or worse. Next, B is also compared with all others. Since A is already compared with B, this time B is to be
compared with only C, D and E.
v By this method, when there are five employees, fifteen decisions are made (comparisons). The number of decisions to
be made can be determined with the help of the formulae n (n-2).
v Though this method seems to be logical, it is not applicable when a group is large. When the group becomes too large,
the number of comparisons to be made may become frighteningly excessive. For instance, when n=100, comparisons
to be made are 100 (100-2) =100 (98) =9800.
FOR THE QUALITY OF WORK
Employee Rated


"D" Highest rank
Ranking the employees by the paired comparison method may be illustrated as shown in the above Box
Note: +means better than . Means worse than.
3) Forced distribution method
v Under this system, the rater is asked to appraise the employee according to a predetermined distribution scale.
v Normally, the two criteria used here for rating are the job performance and promotability.




v For this purpose. a five-point performance scale is used without any mention of descriptive statements.
v The workers of outstanding merit may be placed at the top 10% of the scale. The rest may be placed as 20% good,
40% outstanding, 20% fair and 10% poor.
v The rater s bias is sought to be eliminated here because workers are not placed at a higher or lower end of the scale.
Strength
v By forcing the distribution according to predetermined percentages, the problem of making use of different raters with
different scales is avoided.
v It tends to eliminate or reduce rater bias.
Weakness
v Using this method in salary administration however, is that it may result in low morale, low productivity and high
absenteeism.
v Employees who feel that they are productive, but find themselves placed in a grade lower than expected feel frustrated
and exhibit, over a period of time, reluctance to work.
4) Individual Ranking
v Ranking employees performance from highest to lowest.
v It requires the evaluator merely to list employees in order from highest to lowest.
v In this process, only one employee can be rated best . If the evaluator is must appraise 30 individuals, this method
assumes that the difference between the first and second employee is the same as that between the twenty first and
twenty second.
v Advantage and disadvantages same as group ranking methods.

Discuss MBO can be an appraisal method
v MBO become an appraisal method by establishing a specific set of objectives for an employee to achieve and
rewarding performance based on how well those objectives have been met.
Using Achieved Outcomes to evaluate Employee
v In this approach makes use of achieved performance outcomes.
v Employees are evaluated on how well they accomplished a specific set of objectives determined as critical in the
successful completion of their job.
v Commonly referred to as management by objectives (MBO).
v MBO is not measure of employee behavior; rather, it is a measure of each employees contribution to the success of
the organization.
v MBO requires the management to set specific, measurable goals with each employee and then periodically discuss the
latter's progress towards these goals.
v This technique emphasizes anticipatively set goals (that are agreed upon by the superior and the employee) that are
tangible, verifiable and measurable.
v MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished.
v It is, thus, a kind of goal setting and appraisal programme involving six steps:
v Set the organization's goals
v Set departmental goals
v Discuss departmental goals
v Define expected results
v Performance reviews
v Provide feedback
Factors that can distort Appraisal
In reality, most appraisals fall short, often through one or more actions that can significantly impede (obstruct or hinder)
objective evaluation. The problems inherent in performance appraisal may be listed thus:






1) Leniency or Strictness Error
v Performance appraisal distortion caused by evaluating employees against ones own value system.
v Every evaluator has his own value system which acts as standard against which he makes his appraisals.
v Relative to the true or actual performance an individual exhibits, some supervisors have a tendency to be liberal in
their ratings, i.e. they consistently assign high value to their employees (positive leniency error), while at other times
they may have tendency to assign consistently low rating (negative leniency error).
v The tendency can be avoided by holding meeting or training sessions for raters so that they may understand what is
required of them in rating.
2) Halo error
v The halo error or effect occurs when one is rated either extremely high or extremely low on all factors based on a
rating of one or two factors.
v For example, if an employee tends to be conscientious and dependable, we might become biased towards that
individual to the extent that we will rate him or her positively on many desirable attributes.
3) Similarity error
v Evaluator rate other people in the same way that the evaluators perceive themselves, they make a similarity error. That
is they project self perceptions onto other.
v For e.g., the evaluator who perceive himself or herself as aggressive may evaluate others by looking for
aggressiveness. Those who demonstrate these characteristics tend to be benefit, and others who lack it may be
penalized.
4) Central tendency error
v It assigns average rating to all the employees with a view to avoiding commitment or involvement; or when the rater
is in doubt or has inadequate information or lack of knowledge about the behavior of the employee.
v Such tendency seriously distorts the evaluations, making them most useless for promotion and salary purpose.
v For example, a professor, with a view to play it safe, might give a class grades nearly equal to B, regardless of the
differences in individual performance.
5) Inflationary Pressure
v Inflationary pressure has always exist, but appear to have increased as a problem over the past three decades.
v As equality values have grown in importance in our society, as well as fear of retribution (for evil done) from
disgruntled (disappointed) employee who fail to achieve excellent appraisals, evaluation has tended to be less rigorous
and negative repercussions (indirect effect) from the evaluation to be reduced by generally inflating or upgrading
appraisal.
6) Inappropriate Substitutes for performance
v It is more often difficult to find consensus on what is a good job, and it is even more difficult to produce agreement
on what criteria determine performance.
v As a result, the appraisal frequently uses substitutes for performance, criteria (effort, enthusiasm, neatness, positive
attitudes, and conscientiousness as substitute for performance) that supposedly closely approximate performance and
act in its place.
v Many of these substitutes are well chosen and give a good approximation of actual performance.
v However, the substitutes chosen are not always approximate.





ISSUES IN PERFORMANCE APPRAISAL
The effectiveness of performance appraisal or absence of it, to a large extent, is a function of how well the organization has
prepared itself for its use. In this context the following issues are important.
1) Achievement of objectives
Some of the problems in the achievement of objectives are described below;
v The supervisor while rating an employee is also influenced by the outcome of his rating.
v Timely feedback is very important for achieving the objectives of appraisal.
v Considerable time gap exists between appraisal and feedback, making feedback untimely and ineffective.
v Supervisor also feels that employee appraisal in no way helps them. On the contrary it may create problems as they
might have to deal with unsatisfied employees.
v Barring (except) a few, generally organizations pay no attention to training the supervisors in the art of writing
appraisal report.
2) Human Error
The factors that dilute the appraisal process unconsciously. They are calling them human errors because they just
happen and supervisors may neither know about them nor have much control on them.
Halo effect
Central tendency errors
Recency vs. primary effect
3) Problems of criteria
v Appraisal has to be against certain criteria. If a discrepancy between expected and actual performance is pointed out,
the question is whether the expected was fully defined and communicated to the employee.
v To some extent the problem of criteria is not so acute in engineering, production or process industries (the output is
tangible and can be accounted for) as compared to service industry (satisfaction of recipients is more important.
Satisfaction is purely a subjective feeling and hence, it is hard to find a common solution that will satisfy all).
v It is difficult to identify clear-cut criteria for the white collar employees as compared to the blue collar ones.
4) Problems of confidentiality: Reasons for giving selective feedback or keeping secret the rating on various items of
appraisal report.
1) Each employee expects rewards if the report is better than average.
2) Very often supervisors pass the responsibility to top management by saying that while they did give good
rating to the employee, but the top management did not take that into consideration while rewarding him.
3) Giving rewards may not be shown the supervisory rating and they should be kept confidential.
4) Problems of confidentiality: Reasons for giving selective feedback or keeping secret the rating on various items of
appraisal report.
1) Each employee expects rewards if the report is better than average.
2) Very often supervisors pass the responsibility to top management by saying that while they did give good rating to the
employee, but the top management did not take that into consideration while rewarding him.
3) Giving rewards may not be shown the supervisory rating and they should be kept confidential.
CAREER DEVELOPMENT
v The sequence of employment positions that a person has hold over his or her life_ Career.
v A formal approach taken by an organization to help people acquire the skills and experiences needed to perform
current and future jobs is termed as career development.
v Company s policies especially policies regarding promotion, counseling the employees, opportunities to excel in
future help employees to develop their career.
v It consists of skills, education and experiences as well as behavioral modification and refinement techniques that
allow individuals to work better and add value.
v Career development is an ongoing organized and formalized effort that recognizes people as a vital organizational
resource.
v Organizations see career development as a way of preventing job burnout (total loss of strength), providing career
information to employees, improving the quality of work lives and meeting affirmative action goals.
STAGES IN CAREER DEVELOPMENT/CAREER STAGE
v Each person s career goes through stages that influence an individual s knowledge of, and preference for various
occupations.
v Progress froma beginning through growth and decline phases to a termination point is typical in ones work life.




1) Growth Stage
v This stage begins from birth to age 14 in which the influence of teachers, parents and friends moulds the internal and
the external career concepts of an individual.
v The individual learns to behave and react in different situations from these people.
v During which an individual develops a self-concept by identifying and interacting with other people.
2) Exploration Stage
v A career stage that usually ends in the mid-twenties as one makes the transition from school to work.
v During this period, an individual externally develops occupational image after learning from books, movies, parents,
schools, sports, and experiences.
v He or she starts to make choices along the educational path-vocational or other college education.
v Whereas, internally, he or she begins to develop a self image about what might be and what might not be.
v This stage has the least relevance to organization because it occurs prior to employment.
v During the exploration period we develop many expectations about our career, many of them unrealistic.
v In the exploration stage we form our attitude towards work and our dominant social relationship patterns.
v Therefore exploration is preparation for work.
3) Establishment Stage
v This is the stage of an early career, which starts at the age of 25, and lasts until the age of 35.
v A career stage in which one begins to search for work and finds a first job.
v It begins with uncertainties and anxieties, and is, indeed, dominated by two problems: finding a niche (suitable
position in life or employment) and making your mark (making mistakes and learning from those mistake, and
assuming increased responsibilities).
v An individual passes through different processes of recruitment and selection, orientation and socialization, and job
placement, transfer, and /or promotion and socialization.


Exploration
Establishment
Mid Career Late career Decline
HIGH





Transition from
school to work




Transition from
school to work





Getting first job
and being
accepted



Getting first
job and
being






Will performance increase or begin
to decline





Will performance
increase or begin to
decline






The elder statesperson




The elder
statesperson






Preparing for
retirement




Preparing for
retirement


5 10 15 20 25 30 35 40 45 50 55 60 65 70 75
AGE

AGE
P
E
R
F
O
R
M
A
N
C
E
CAREER STAGE
LO



v At this stage individuals experience as being accepted by their peers, get opportunity to gain the first tangible
evidence of success or failure in the real world.
v The age between 25 and 30 is also known as trial stage.
v During the trial stage, the individual may decide to leave the first job and pursue the next.
4) Mid-career Stage
v The mid-career stage starts from the age of 35 and continue till the age of 50.
v This stage is mark by improvement in performance, leveling off, or beginning deterioration of performance.
v A mid-career employee is also known as plateaued (static state after an increase) employee refers to stagnation in
ones job.
v Continued growth and high performance are not the only successful outcome of the mid career stage.
v Maintenance, or holding onto what you have, is another possible outcome of the mid career stage. These
employees are plateaued, not failed.
v Plateaued mid-career employees can be highly productive.
5) Late-career Stage
v The period between 50 and 70 is referred as late career stage during which individuals are no longer learning about
their jobs or expected to do better than the levels of performance from previous years.
v During the late career, she or he uses wisdom and perspective and self-judgment and is involved in social services.
v This is the stage of new sense of growth and realistic assessment, feeling of security from the job whereas threats
from younger employees, psychological preparation of retirement and finding new sources of self-satisfaction and
motivation.
6) Decline Stage
v This stage arrives as the employee reaches the retirement age and includes the steps such as a formal preparation for
retirement and retirement rituals.
v At this stage, the individual feels declining power and authority as compared with other career stages.
Career Development: value for the organization (important of career development)
Positive results can accrue from a well designed career development program.
1) Needed talent will be available
2) The organization s ability to attract and retain talented employees improves
3) Minorities and women have comparable opportunities for growth and development
4) Reduced employee frustration
5) Enhanced cultural diversity
6) Organizational goodwill : if employees think their employing organizations care about their long term well being, they
tends to respond in kind by projecting positive images of the organization into other areas of their lives.
External and Internal Career
Internal career Planning
Also known as individual centered career planning, it refers to the individual s subjective apprehension
(understanding) and evaluation of his or her career.
It has a number of intangible indicators which are difficult to evaluate and study e.g. general ambition of an
individual to go ahead, to achieve very specific plans such as a specific rank, position, income or skill by the age of
40.
The external career planning
v The external career involves properties or qualities of an occupation or an organization.
v It refers to the more or less objective description of official progression steps through a given occupation.
v This has clear and tangible indicators that are evaluated and judged, e.g. occupation, opportunity, task characteristics
etc.







HRM UNIT FIVE 8 HRS
COMPENSATION
Concept; Compensation programmes; job evaluation system-methods and process; The compensation structure; Incentive
system-gain sharing incentive plans, Employee benefits and services; Retirement programmes; Retirement benefits;
Executive compensation; Compensation in Nepal-government regulations, minimum wages, social welfare factors, and
incentive compensation; Emerging concepts and issues in compensation management

COMPENSATION
v Compensation is what employees receive in exchange for their contribution to the organization.
v The total of all rewards provided employees in return for their services
Compensation may be defined as money received in the performance of work, plus the many kinds of benefits and services
that organizations provide their employees. Money is included under direct compensation,(pay, gross salary), while benefits
come under indirect compensation, and may consist of life, accident, and health insurance, the employer s contributing to
retirement, pay for vacation or illness, and employer s required payments for employee welfare as social security.
v Generally, employees offer their services for three types of rewards.
1) Pay refers to the base wages and salaries employees normally receive.
2) Incentives refer to bonuses, commissions and profit sharing plans, designed to encourage employees to produce
results beyond normal expectation.
3) Benefits such as insurance, medical, recreational, retirement, etc., represent a more indirect type of
compensation.
v So, the term compensation is a comprehensive one including pay, incentives, and benefits offered by employers for
hiring the services of employees.
v Compensation dissatisfaction can lead to absenteeism, turnover, job dissatisfaction, low performance, strikes and
grievances.
Nature of Compensation
Compensation offered by an organization can come both directly through base pay and variable pay and indirectly through
benefits.
a) Base pay: It is the basic compensation an employee gets, usually as a wage or salary.
b) Variable pay: It is the compensation that is linked directly to performance accomplishments (bonuses, incentives,
stock options).
c) Benefits: These are indirect rewards given to an employee or group of employees as a part of organizational
membership (health insurance, vacation pay, retirement pension etc.)
Factors influencing compensation
The amount of compensation received by an employee should reflect the effort put in by the employee, the degree of
difficulty experienced while expending his energies, the competitive rates offered by others in the industry and the demand-
supply position within the country, etc. These are discussed below.
a) Job needs: Jobs vary greatly in their difficulty, complexity and challenge. Some need high levels of skills and
knowledge while others can be handled by almost anyone. Simple, routine tasks that can be done by many people
with minimal skills receive relatively low pay. On the other hand, complex, challenging tasks that can be done by
few people with high skill levels generally receive high pay.
b) Ability to pay: Projects determine the paying capacity of a firm. High profit levels enable companies to pay higher
wages.
c) Cost of living: Inflation reduces the purchasing power of employees. To overcome this, unions and workers prefer
to link wages to the cost of living index. When the index rises due to rising prices, wages follow suit.
d) Prevailing wage rates: Prevailing wage rates in competing firms within an industry are taken into account while
fixing wages. A company that does not pay comparable wages may find it difficult to attract and retain talent.
e) Unions: Highly unionized sectors generally have higher wages because well organized unions can exert presence on
management and obtain all sorts of benefits and concessions to workers.
f) Productivity: This is the current trend in most private sector companies when workers wages are linked to their
productivity levels. If your job performance is good, you get good wages. A sick bank, for example, can t hope to
pay competitive wages, in tune with profit making banks.
g) State regulation: The legal stipulations (demand) in respect of minimum wages, bonus, dearness allowance,
allowances, etc., determine the wage structure in an industry.


h) Demand and supply of labor: The demand for and the supply of certain skills determine prevailing wage rates.
High demand for software professionals, R&D professionals in drug industry, telecom and electronics engineers,
financial analysts, management consultants ensures higher wages.
OBJECTIVES/PURPOSES OF COMPENSATION
The ultimate goal of compensation administration (the process of managing a company s compensation programme) is to
reward desired behaviors and encourage people to do well in their jobs. Some of the important objectives that are sought
to be achieved through effective compensation management are listed below:
a) Attract talent: Compensation needs to be high enough to attract talented people. Since many firms compete to hire
the services of competent people, the salaries offered must be high enough to motivate them to apply.
b) Retain talent: If compensation levels fall below the expectations of employees or are not competitive, employees
may quit in frustration.
c) Ensure equity: Pay should equal the worth of a job. Similar jobs should get similar pay. Likewise, more qualified
people should get better wages.
d) New and desired behavior: Pay should reward loyalty, commitment, experience, risks taking, initiative and other
desired behaviors. Where the company fails to reward such behaviors, employees may go in search of greener
pastures outside.
e) Control costs: The cost of hiring people should not be too high. Effective compensation management ensures that
workers are neither overpaid nor underpaid.
f) Comply with legal rules: Compensation programmes must invariably satisfy governmental rules regarding
minimum wages, bonus, allowances, benefits, etc.
g) Ease of operation: The compensation management system should be easy to understand and operate. Then only will
it promote understanding regarding pay- related matters between employees, unions and managers.
v To motivate employees by compensating on the basis of their performance.
v To help in achieving organizational strategic objectives by enhancing innovation and quality.

TYPES OF COMPENSATIONS
a) Wages and salary: wages usually refers to hourly rates of pay. The more a workers work, the more he/she receives
compensation in the form of wage. Salary is given for fixed term employees. It will be either daily or weekly or
monthly. Generally, salary is paid for fixed term employees employed on a permanent basis in Nepalese
organizations.
b) Incentives: Incentives refers to the additional compensation above salary or wages provided to the employees.
Incentives are generally based on sales, profits, or cost reduction efforts. Incentives may be based on individual
performance or group performance or organizational performance.
c) Employee benefits: A benefit is an indirect reward given to an employee or group of employees as a part of
organizational memberships. Such indirect rewards includes insurance benefit, paid vacations and holidays, pension
programmes and other benefits associated with employment in a organization.
d) Perquisites: These include amenities (facility) and perks to uplift the quality of work life of employees. Examples
of perquisites are car and housing loans, reimbursement of the costs of children's education, paid holidays, travel
allowance etc.
Compensation Programs
Incentive Compensation Programs, Paying for performance programs, Team based compensation programs.
1) Incentive Compensation Program
Compensation programs that relate pay to productivity. Incentives can be paid based on individual, group, or
organization wide performance a pay for performance concept.
a) Individual Incentive: Pay off for individual performance. Popular approaches included merit pay, piecework plans,
time saving bonuses, and commissions. In such a plan, employees are paid for each unit produced.
b) Group-incentives: Two or more employees can be paid for their combined performance. Group incentives make the
most sense where employees tasks are interdependent and thus require cooperation.
c) Plant/Organiztion wide incentives: This type of incentive produces rewards for all employees based on
organization wide organization s productivity, cost savings, or profitability. Aim to direct the efforts of all
employees toward achieving overall organizational effectiveness.
v Scanlon Plan: Provides a financial reward to employees for savings in labor costs that result from their suggestions.
It seeks cooperation between management and employees through sharing problems, goals, and ideas.


v Improshare: Improshare stands for improved productivity through sharing. This plan is similar to a piece rate
except that it rewards all employees in an organization. E.g. if workers save labor costs in producing a product, a
predetermined portion of the labor saving goes to the employee.
v Profit sharing or gain sharing: They allow employees to share in the firms success by distributing part of the
company s profits back to the workers. It aims to increase commitment and loyalty to the organization.
2) Paying for performance program
v Rewarding employees based on their job performance.
v Piecework plans, gain sharing, wages incentive plans, profit sharing, and lump sum bonuses are examples of pay for
performance programs.
v Instead of paying an employee for time on the job, pay is adjusted to reflect performance measures that might
include individual productivity, team or work group productivity, departmental productivity, or the overall
organization s profit for a given period.
v If the employees, teams, or organization s performance declines, so too does the reward, thus, encouraging strong
efforts and motivation.
v On the cost saving side, performance-based bonuses and other incentive rewards avoid the fixed expenses of
permanent and often annual salary increases. A recent extension of the pay for performance concept,
Competency- based compensation, is used: Organizational pay system that rewards skills, knowledge, and
behavior. Those who possess competencies within a certain range will be grouped together in a pay category.
3) Team based compensation program
v Under a team-based compensation plan, team members who work on achieving and in many cases, exceeding
established goals often share equally in the rewards.
v Providing for fair treatment of each team member encourages group cohesiveness.
JOB EVALUATION SYSTEM AND PROCESS
What is job evaluation?
v Job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an
organization.
v It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a
rational pay structure.
v External labor market conditions, collective bargaining, and individual skill differences may require a compromise
between the job evaluation ranking and the actual pay structure.
v This is a ranking of job.
v Every job evaluation method requires at least some basic job analysis in order to provide factual information about
the jobs concerned.
v Thus, job evaluation begins with job analysis and ends at that point where the worth of a job is ascertained for
achieving pay-equity between jobs.
FEATURES OF JOB EVALUATION
v It tries to assess jobs, not people.
v The standards of job evaluation are relative, not absolute.
v The basic information on which job evaluations are made is obtained from job analysis.
v Job evaluations are carried out by groups, not by individuals.
v Some degree of subjectivity is always present in job evaluation.
v Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.
JOB EVALUATION CRITERIA
v The heart of job evaluation is determining appropriate criteria to arrive at the ranking.
v Most job evaluation plans use responsibility, skill, effort, and working conditions as major criteria.
v Other criteria can and have been used: supervisory controls, complexity, personal contacts, and the physical demand
needed.
BENEFITS OF JOB EVALUATION
v It tries to link pay with the requirements of the job.
v It offers a systematic procedure for determining the relative worth of jobs.
v An equitable wage structure is a natural outcome of job evaluation. An unbiased job evaluation tends to eliminate
salary inequities by placing jobs having similar requirements in the same salary range.


v Employees as well as unions participate as members of job evaluation committee while determining rate grades for
different jobs. This helps in solving wage related grievances quickly.
v Job evaluation, when conducted properly and with care, helps in the evaluation of new jobs.
JOB EVALUATION VERSUS PERFORMANCE EVALUATION
Point Job Evaluation Performance Appraisal
Define
Find the relative worth of a job. Find the worth of a job holder.
Aim Determine wage rates for different jobs. Determine incentives and rewards for superior performance
Shows
How much a job is worth? How well an individual is doing an assigned
work?

PROCESS OF JOB EVALUATION
The process of job evaluation involves the following steps:
1) Gaining acceptance
Before undertaking job evaluation, top management must explain the aims and uses of the programme to the employees and
unions. To elaborate the programme further, oral presentations could be made. Letters, booklets could be used to classify all
relevant aspects of the job evaluation programme.
2) Creating job evaluation committee
Usually a job evaluation committee consisting of experienced employees, union representatives and HR experts.
3) Finding the jobs to be evaluated
Certain key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that they
represent the type of work performed in that department.
4) Analyzing and preparing job description
This requires the preparation of a job description and also an analysis of job needs for successful performance
5) Selecting the method of evaluation
The most important method of evaluating the jobs must be identified now, keeping the job factors as well as organizational
demands in mind.
6) Classifying jobs
The relative worth of various jobs in an organization may be found out after arranging jobs in order of importance using
criteria such as skill requirements, experience needed, under which conditions job is performed, type of responsibilities to be
shouldered, degree of supervision needed, the amount of stress caused by the job, etc. Weights can be assigned to each such
factor. When we finally add all the weights, the worth of a job is determined. The points may then be converted into
monetary values.
7) Installing the programme
Once the evaluation process is over and a plan of action is ready, management must explain it to employees and put it into
operation.
8) Reviewing periodically
In the light of changes in environmental conditions (technology, products, services, etc.) jobs need to be examined closely.
New job descriptions need to be written and the skill needs of new jobs need to be duly incorporated in the evaluation
process.
JOB EVALUATION METHODS
The basic methods of job evaluation are currently in use: ordering, classification, point and factor comparison methods.
1) Ordering or Ranking method
v Raters examine the description of each job being evaluated and arrange the jobs in order according to their value or
merit to the organization.
v Jobs can also be arranged according to the relative difficulty in performing them.
v This method requires a committee composed of both management and employee representative to arrange job in
a simple rank order from highest to lowest.
v The committee members merely compare two jobs and judge which one is more important, or more difficult to
perform. Then they compare the other job with the first two, and so on until all the jobs have been evaluated and
ranked.
The following table is a hypothetical illustration of ranking of jobs.



The ranking method is simple to understand and practice and it is best suited for a small organization.
Drawbacks:
v Its simplicity however works to its disadvantage in big organizations because rankings are difficult to develop in a
large, complex organization.
v Its sheer inability to be managed when there are a large number of jobs.
v Subjectivity of the method- there are no definite or consistent standards by which to justify the rankings
2) Classification method
v A job evaluation method by which a number of classes or grades are defined to describe a group of jobs is known as
Classification method.
v The classifications are created by identifying some common denominator - skills, knowledge, responsibilities.
v This method places groups of jobs into job classes or job grades.
Following is a brief description of such a classification in an office.
a) Class I - Executives: Further classification under this category may be Office Manager, Deputy Office Manager,
Office superintendent, Departmental supervisor, etc.
b) Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc.
c) Class III - Semiskilled workers: Under this category may come Machine-operators, Switchboard operator etc.
d) Class IV - Semiskilled workers: This category comprises Draftaris, File clerks, Office boys, etc.
Strength of job classification method are
v Less subjective when compared to the earlier ranking method.
v The system is very easy to understand and acceptable to almost all employees without hesitation.
v It takes into account all the factors that a job comprises.
The weaknesses of the job classification method are;
v Even when the requirements of different jobs differ, they may be combined into a single category, depending on the
status a job carries.
v It is difficult to write all-inclusive descriptions of a grade.
v The method oversimplifies sharp differences between different jobs and different grades.
v When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to
classify the job using their subjective judgments.

3) Point Method
v Raters assign numerical values to specific job components, and the sum of these values provides a quantitative
assessment of a jobs relative worth.
v The points are summed up to determine the wage rate for the job. Jobs with similar point totals are placed in similar pay
grades.
v The point method requires selection of job factors according to the nature of the specific group of jobs being evaluated.
The most frequent factors employed in point systems are
Skill: Social skills required, Problem-solving skills, Degree of discretion/use of judgment, Creative thinking
Responsibility/Accountability: Complexity of the work, Degree of freedom to act, Number and nature of subordinate
staff,
Effort: Mental demands of a job, Physical demands of a job, Degree of potential stress.
Merits
v It forces raters to look into all key factors and sub-factors of a job.
v Point values are assigned to all factors in a systematic way, eliminating bias at every stage.


v It is reliable because raters using similar criteria would get more or less similar answers.
v Jobs may change over time, but the rating scales established under the point method remain unaffected.
Demerits
v The point method is complex.
v Preparing a manual for various jobs, fixing values for key and sub-factors, establishing wage rates for different
grades, etc., is a time consuming process.
4) Factor Comparison Method
v Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors.
v There are five universal job factors: (1) Mental Requirements, (2) Skills, (3) Physical Requirements, (4)
Responsibilities, and (5) Working Conditions.
v The committee first rank each of the selected benchmark jobs on the relative degree of difficulty for each of the five
factors.
v Then, the committee allocates the total pay rates for each job to each factor based on the importance of the
respective factor to the job.
The steps involved in factor comparison method may be briefly stated thus:
i. Select key jobs (say 15 to 20), representing wage/salary levels across the organization. The selected jobs must
represent as many departments as possible.
ii. Find the factors in terms of which the jobs are evaluated (such as skill, mental effort, responsibility, physical effort,
working conditions, etc.).
iii. Rank the selected jobs under each factor (by each and every member of the job evaluation committee) independently.
iv. Assign money value to each factor and determine the wage rates for each key job.
v. The wage rate for a job is apportioned along the identified factors.
vi. All other jobs are compared with the list of key jobs and wage rates are determined.

An example of how the factor comparison method works is given below:
Box: An Example of Factor Comparison Method

After the wage rate for a job is distributed along the identified and ranked factors, all other jobs in the department are
compared in terms of each factor. Suppose the job of a painter is found to be similar to electrician in skill (15), fitter in
mental effort (10), welder in physical effort (12) cleaner in responsibility (6) and labourer in working conditions (4). The
wage rate for this job would be (15+10+12+6+4) is 47.

COMPENSATION STRUCTURE
Establishing compensation structure
v Once the job evaluation is complete, the data gathered become the nucleus of the of the organization s pay structure.
v This means establishing pay rates or ranges compatible with the ranks, classifications, or points arrived at through job
evaluation.
Compensation survey
v Used to gather factual data on pay practices among firms and companies within specific communities.


v The source of data for compensation survey can be; published surveys (labor department, Bureau of statistics, employer
associations etc.), consultants and agencies, advertisement and applicants, information communication with employee
and employer about compensation matter.
Pay curve
v The average relationship between points of established pay grades and wage base rates.
v It can identify jobs whose pay is out of trend line.
The Pay structure
v A pay scale showing ranges of pay within each grade.
v Jobs similar in terms of classes, grades, or points are grouped together.
v The pay structure for a job is determined by;
Ranking through the job evaluation
Market rates for similar jobs (indicated by compensation survey).
Legal factors and union pressure
Creation of job grades. Pay grade groups jobs of similar worth for pay purpose.
v Compensation structure should be reviewed from time to time to adapt it to changes in the environment and the cost of
living.
INCENTIVE SYSTEM: GAIN SHARING INCENTIVE PLAN
Incentives are variable rewards granted according to variations in the achievement of specific results. Milton
L. Rock
v Incentives are compensation that rewards an employee for performance beyond normal expectations.
v Incentives would increase earnings of employees if they actually performed more than the given standard.
v This is the methods of rewarding employees on the basis of their outputs.
v The incentive system is useful for many employees whose time of promotion is too far away due to the lack of some
necessary qualifications.
v The goals of incentives are; motivation, retention, cost saving and goal achievement.
v Incentives can be awarded at three level; individuals, groups and organizational performance.
Types /Level of incentives
Incentives can be at three levels
1) Individuals :
This incentive is paid according to individual performance and effort. Some of the examples of the individual incentive plans
are; the piecework plan, the standard hour plan, sales incentive plan, managerial incentive plan.
2) Group incentives :
Reward is linked to the combined performance of a group of employees. They are useful where; output of individual
employee cannot be measured, tasks are interdependent and required teamwork. Examples are; Production incentive plans,
Department head incentive plan, Professional incentive plan.
3) Organizational incentives:
Reward is linked to the overall performance of the organization. The goal is to direct the efforts of all employees towards
improving organizational effectiveness. All employees share the reward. The widely used organizational rewards are; Gain
sharing, profit sharing, Scanlon plan, ESOP.
GAIN SHARING PLAN
v A gain sharing plan aims at increasing productivity or decreasing labor costs and sharing the resultant gains (usually a
lump sum payment) with employees.
v Any saving from improvement in productivity is regarded as gained to be distributed among employees.
v It is based on a mathematical formula that compares a baseline of performance with actual productivity during a given
period.
v When productivity exceeds the base line an agreed-upon savings is shared with employees.
v Gain sharing is built around the idea that involved employees will improve productivity through more effective use of
organizational resources.
v Gain sharing plan protect low performers. Where rewards are spread across a large number of employees, poor
performers may get rewards for non performance at the cost of the bright performers.
Effective implementation of gain sharing plan requires;
v A management philosophy emphasizing the role of employees;
v Highly structured committees where employees are involved and can provide valuable suggestions;
v A formula that computes and divides the productivity-related saving.


The process of implementation gain sharing plan requires
v Determine corporate objectives to increase productivity
v Define specific productivity measures
v Determine the percentage of gain to be shared out of incremental gains
v Find a suitable formula to share productivity gain among the employees
v Determine a motivating size of payment
v Pay in cash or stock
v Determine how frequent bonuses are to be paid
v Continue participatory system in the organization
v Implement the plan
Gain sharing plan can be of following types;
1) Production gain sharing: if a group of workers exceed predetermined levels of production output, they receive bonus.
It stimulates production efficiency. Employee participation through team work is emphasized. However, this plan is
short-range. It is related to specific production goals.
2) Profit sharing Plan: Organizations share profit with the workers under this plan. The incentive is linked to profit. It
boosts morale and cooperation of employees. Labor relations improve. Labor turnover is reduced.
3) Cost reduction plan: employee committee provides new ideas for cost reduction. Employees are rewarded by bonus
payments for cost savings. Scanlon plan is an example where employees aim to reduce costs and share in the resultant
saving. It is based on the ratio of labor cost to productivity. Cost reduction plan creates commitment from workers to
reduce costs. However, its success depends on management s willingness to allow employees to influence the job and
the job setting.
4) Employee share Ownership Plan (OSOP)
Under this plan, employees have an ownership stake in the organization. Organizations allow employees to buy shares at a
stated price. The price is generally below market price. Employees get a sense of ownership and share in the success of the
organization. The employees generally do not control the operations of the organization. It is generally used as incentive for
executives to stay in the organization.
Share can be made available through the following methods;
Installment purchase: Payment for share purchase in installment.
Stock option: employees are given option to purchase a specific number of shares at a specific price within a specific period.
Gift: employees are given shares as gift as a part of their share in profit sharing plan.
EMPLOYEE BENEFITS AND SERVICES
v Employee benefits: membership-based, nonfinancial rewards offered to attract and keep employees.
DeCenzo and Robbins
v Employee benefits are indirect form of compensation provided for employees against the continuous service rendered for
the company and in order to make them secured from old age, health and accidents related problems.
v Benefits and Services are indirect compensation (as against direct compensation on critical job factors and performance)
because they are usually extended as condition of employment or with intention of inducement (attractive offer) or
motivation and are not directly related to performance.
v Employee benefits and services include any benefits that the employee receives in addition to direct remuneration.
v Different types of such benefits have been provided by companies to attract and retain employees in organization.
Objectives of employee benefits and services
v to increase the commitment of employees to the organization;
v to provide for the actual or perceived personal needs of employees, including those concerning security, financial
assistance and thus, provision of assets in addition to pay, such as company cars and petrol;
v to demonstrate that the company cares for the needs of its employees;
v to ensure that an attractive and competitive total remuneration package is provided which both attracts and retains high-
quality staff;
v to provide a tax-efficient method of remuneration which reduces tax liabilities compared with those related to equivalent
cash payments.
EMPLOYEE BENEFIT PLANS
There are many benefits and various ways to classify them. We will classify them as; (1) Pay for time not for worked, (2)
insurance benefits, (3) retirement benefits, and (4) services.
1) Pay for time not for worked


Also called supplemental pay benefits is one of the most costly benefits, because of the large amount of time off that many
employees receive. Common time-off-with-pay periods include holidays, vacations, funeral leave, sick leave, sabbatical
leave, maternity leave, and unemployment insurance payments for laid off or terminated employees, etc.
a) Unemployment Insurance: Unemployment insurance or compensation is designed to provide an income to individuals
who have lost a job through no fault of their own (for example, layoff, plant closing).
b) Vacations and holidays: Employers are providing benefits for their employees for vacation and holidays. Number of
paid employee vacation days and holidays varies considerably from employer to employer. The most common paid
holidays include New year s Day, memorial day, independence Day, etc.
c) Sick leave: Sick leave provides pay to employees when they re out of work due to illness. Most sick leave policies grant
full pay for a specified number of sick leave-usually up to about per year.
d) Severance Pay: A onetime separation payment some employers provide when terminating an employee. It is
humanitarian gesture, and good public relations. One reason behind payment of severance is avoiding litigation from
disgruntled former employees.
e) Supplemental unemployment benefits: These cash payments supplement the employees unemployment
compensation, to help the person maintain his or her standard of living while out of work. They generally cover three
contingencies: layoff, reduced work weeks, and facility relocation.
2) Insurance Benefit
Most employers also provide a number of required or voluntary insurance benefits, such as worker s compensation and health
insurance.
a) Workers Compensation: provides income and medical benefits to work related accident victims or their dependents,
regardless of fault. If the person was on the job when the injury occurred, he or she is entitled to workers compensation.
Most require employers to carry workers compensation insurance with private, state-approved insurance companies. It
can be monetary or medical.
b) Hospitalization, medical and disability insurance : This type of insurance plan is provided to care employees for long
time sickness, for making payment of high medical charges and ensuring continuous pay when they are disable to work
due to accident or any other causes during service time and, thus unable to work.
c) Long term care: This type of plan is provided for the employees who are getting older and reaching the age of 50.
Some of these benefits are adult day care to provide social and recreational activities, and supervision for those who can
not function independently, daily living activities for people who can not move alone and help from nurses and other
aids to provide home care, are some of the long term care facilities are provided in the old age.
d) Life insurance: Group life insurance provides lower rates for the employer or employee and includes all employees,
including new employees, regardless of health or physical condition.
The benefit paid schedule: The amount of life insurance benefit is usually tied to the employees
annual earning.
Supplemental benefits: continued life insurance coverage after retirement.
Financing: The amount and percent that the employee contributes.
3) Retirement Benefits
v Retirement plans provide income for employees who retire after reaching a certain age or having
served the firm for a specific period of time.
v Employers provide some benefits to the employees, after retirement and during old age, with a view
to create a feeling of security about the old age.
a) Social security: There are three types of benefits under social security.
v Familiar retirement benefit provides income if employees are retire at age 62 or thereafter.
v Survivors or death benefits: provide monthly payments to employees dependents regardless of
the employees age at death.
v Disability payments: provide monthly payments to employee and his or her dependents if he or
she becomes totally disable to work.
b) Pension Plan:
Plan that provide a fixed sum, when employees reach a predetermined retirement age or when they can no longer work due to
disability. Pension plan can classify as;


Contributory versus noncontributory plans;
The employee contributes to the contributory pension plan, while the employer makes all contributions to the
noncontributory pension plan.
Defined contribution versus defined benefit plan
Defined contribution plan; specify what contribution the employee and/or employer will make to employees retirement or
saving funds. With a defined contribution plan, the person s pension will depend on the amounts contributed to the fund and
on the retirement fund s investment earnings.
Defined benefit plan; employees know ahead of time the pension benefits they will receive (the benefits is
defined or specified by amount or formula).
c) Provident fund
v Provident Fund Scheme provides for monetary assistance to the employees and/or their dependents during
post retirement life.
v Thus, this facility provides security against social risks and this benefit enables the industrial worker to have
better retired life.
d) Gratuity
v This is another type of retirement benefit to be provided to an employee either on retirement or at the time of
physical disability and to the dependents of the deceased employee.
v Gratuity is a reward to an employee for his long service with his present employer.
v Gratuity is payable to all the employees who render a minimum continuous service of five years with the
present employer.
e) Medical benefit
v Some of the large organizations provide medical benefits to their retired employees and their family members.
v This benefit creates a feeling of permanent attachment with the organization to the employees even when they
are no longer in service.
4) Employee service benefits :
Service benefits include personal services such as, legal and personal counseling; job related services, such as,
subsidized child care facilities, elder care facility, educational subsidies, time off, and executive perquisites, such
as, company cars.
5) The cafeteria benefit /Flexible Benefits
This benefit is now called as flexible benefit plan. Under this benefit plan employees are provided, few options,
instead of one options to choose as their benefit option. An employee has to choose the best benefit package
which he or she believes will best to meet his or her needs. Whereas old employees like to have medical benefit
programme, young employees may prefer to get a fully paid vacation.
Advantages of cafeteria benefit
v Employees choose packages that best satisfy their unique needs.
v Flexible benefits help firms meet the changing needs of a changing workforce.
v Increased involvement of employees and families improves understanding of benefits
v Flexible plans make introduction of new benefits less costly. The new option is added merely as one
among a wide variety of elements fromwhich to choose.
v Cost containment - The organization sets the dollar maximum. Employee chooses within that constraint.
Disadvantages of cafeteria benefit
v Employees make bad choices and find themselves not covered for predictable emergencies.
v Administrative burdens and expenses increase.
v Adverse selection - employees pick only benefits they will use. The subsequent high benefit utilization
increases its cost.
v Subject to non-discrimination requirements in Section 125 of the Internal Revenue Code

Fringe Benefit


Fringe benefit is primarily a means in the direction of ensuring, maintaining and increasing the income of the
employee. It is a benefit which, supplements to a worker s ordinary wages and which is of value to themand their
families in so far as it materially increase their retirement.
Feature of Fringe Benefits
1) Those payments or benefits which a worker enjoys in addition to the wages of salary he receives.
2) Offer to stimulate workers interest in their work and to make their job more attractive and productive for
them.
3) Fringe is never a direct reward geared to the output, effort or merit of an employee.
4) A fringe must constitute a positive cost to the employer and should be incurred to finance an employee
benefit.
Employee Services
In addition to the fringe benefits, organizations also provide a wealth of services that employees find desirable.
These services are usually provided by the organization at no cost to the employee or at a significant reduction
fromwhat might have to be paid without the organizations support.
These services are provided at the discretion of the management and are generally of some concern to trade
unions when they engage in collective bargaining with the employees. These services include:
a) Services related to the types of work performed, including subsidies for the purchase and upkeep of
work clothing and uniforms and of the various types of tools used by a worker in the course of his work;
b) Eating facilities, which include the provision of company restaurants, cafeterias, canteens, lunch rooms,
and fully or partially subsidized food.
c) Transportation facilities, including parking lots and bus service;
d) Child care facilities, including company owned housing projects and subsidized housing;
e) Housing services: including company-owned housing projects and subsidized housing.
f) Financial and legal services, including sponsoring of loan funds, credit unions, income tax service, legal
aid, saving plans etc.
g) Recreational, social and cultural programmes, including athletics, beauty parlors, social clubs,
recreational areas, entertainment programmes, parties, picnics, libraries, reading rooms, etc.
h) Educational services, which include sponsorship for off duty courses, educational leave, tuition fee
refund, and scholarship for employees and their children.
i) Medical services, including clinics and hospitals, and referrals to community social services.
j) Outplacement service; which include contacts with other employers in the area, help in writing up
resumes, and secretarial assistance.
k) Flextime; The workers are permitted to build up their flexible work day around a core of mid day hours
( 11.00 to 2.00 pm). It is called flextime because the workers themselves determine their own starting
and stopping time.
Executive compensation program
v Executive skill largely determines whether a firmwill prosper, survive, or fail. Therefore, providing adequate
compensation for these managers is vital. A critical factor in attracting and retaining the best managers is a
company s programfor compensating executives.
v Executive compensation is basically built around three important factors: job complexity, employers ability to
pay and executive human capital.
The complexity of a chief executives job would depend on the size of the company as measured by its
sales volume, earnings and assets growth, the geographic dispersal of the unit, etc.
The employers ability: A sick bank, for instance, cannot afford to pay the same kind of salary to its
executives as that of a healthy and growing bank.
The economic theory of Human capital says that the compensation of a worker should be equal to his
marginal productivity. The productivity of an executive, likewise depends on his qualifications, job
knowledge, experience an contribution.
Types/Elements of Executive Compensation


v Executive compensation often has five basic elements: (1) Base Salary, (2) Short-Term Incentives or
Bonuses, (3) Long-Term Incentives and Capital Appreciation Plans, (4) Executive Benefits, and (5)
Perquisites.
The way an executive compensation package is designed is partially dependent on the ever-changing tax
legislation.
v Base Salary: It is a factor in determining standard of living. Salary also provides the basis for other forms of
compensation.
v Short-Term Incentives or bonuses: all top executives receive bonuses that are tied to base salary.
v Long-Term Incentives and Capital Appreciation: The stock option is a long-term incentive designed to
integrate further the interests of management with those of the organization.
v Executive Benefits: Executive benefits are generally more than those received by other employees because
the benefits are tied to their higher salaries.
v Perquisites: Any special benefits provided by a firmto a small group of key executives that are designed to
give the executives something extra. E.g. automobiles, travel allowance, management loans, relocation
benefits, children education.
Compensation in Nepal-government regulations,
Pay decisions: In practice, the government, as an employer, makes an announcement of any pay increments and benefits. In some cases,
unions, at the enterprise level, following the process of the Labor Act, pressurize the government and employers to increase pay and
incentives. Government plays an important role in regulating compensation in Nepal. The tolls for pay system governance are:
Legal framework
Institutional frameworks
1) Legal framework
This consists of an array of laws. They are;
a) Labor Laws: they regulate the wages of workers. They deal with unions, labor relations, and child labor.
They deal with
i. Minimum wages: Minimum monthly, daily or hourly wages that must be paid regardless of the
worth of job. Minimumwages in Nepal are fixed by the government.
ii. Overtime payment: The rates for hours worked above specified weekly hours are laid down.
iii. Equal pay : legal provisions ensures fair and equal treatment on the job for compensation. Gender-
based discrimination compensation is made illegal.
iv. Provident fund, gratuity and pension: Employee and employer contributions employee provident
fund specified by law. In Nepal it is 10% of gross salary for both parties. Contributions can also be
made to pension schemes. The law makes provisions for the government of gratuities and pension to
employees on retirement or termination.
v. Bonus: Payment of bonus fromthe profit are specified by law. In Nepal, the Bonus Act has
prescribed 10% of net profit as the limit for bonus payment.
b) Company Act: The Company Act limits the amount for payment of salary, allowances, perquisites and
commission to management executives.
c) Other Legal provisions: they may also regulate compensation.
2) Institutional Framework
The government regulation of compensation is also done by various regulatory institutions. They can be:
v Wage board: They fix minimum wages. In Nepal, minimum wages of labor and tea plantation workers
are fixed by the wages committee formed by the government.
v Tribunals: They provides verdict of adjudication in cases of wage disputes. The tribunals are formed by
the government.
v Department of labor: This is the government responsible for implementation of legal framework related
to compensation.
3) Civil service pay system
The civil Service Act and Regulations has provided the following compensation system for civil servants. Pay and
allowances, as prescribed fromtime to time.


a) Salary and allowance: A civil employee shall be entitled to salary and allowance fromthe day of
assumption of his/her post.
b) Entitlement to earned salary and allowance: (1) Each civil employee shall receive salary and
allowance as well, if any receivable, after completion of each month.
c) Medical expenses over the service tenure, equivalent:
v 12 Month salary for gazetted officers
v 18 months salary for non-gazetted employees
v 21 months salary for classless employees
d) Work performance incentive fund: (1) Government of Nepal may provide for a work
performance incentive fund in order to encourage the civil employee based on work performance,
work results and achieved results.
e) Gratuity: If any civil employee, who has served for Five years or more but has not completed the
period required for pension, retires or leaves service by getting resignation accepted or is
removed from the post without being disqualified for government service in the future, he/she
shall receive gratuity at the following rate:
v In the case of the civil employee who has served from Five years to Ten years, Half the last month's
salary for each year of his/her service,
v In the case of a civil employee who has served for more than Ten years up to Fifteen years, the
last One month's salary for each year of his/her service,
v In the case of a civil employee who has served for more than Fifteen years but less than Twenty
years, the last One and Half month's salary for each year of his service.
f) Deposit of contribution to Employee Provident Fund: An amount at the rate of Ten per cent of
the monthly salary of the civil employee shall be deducted, and Government of Nepal shall, adding the
amount of One Hundred percent thereof to such amount, deposit the total amount in the Employee
Provident Fund.
g) Pension: (1) A civil employee who has been in government service for a period of twenty years or more
shall be entitled to a monthly pension at the following rate:
Total year of service X amount of the last salary
50
h) Increment in pension: Where the salary of the incumbent civil employee is increased, two-third
amount of the increment in the basic figure of salary shall also be added to the amount of pension of
the retired civil employee of the same post.
i) Special economic facility: If a civil employee dies while in service, his/her near heir shall be
provided with a lump sumof One Hundred Fifty Thousand Rupees.
j) Provisions relating to insurance facility: (1) The Government of Nepal shall establish a fixed
term (Sabadhik) life insurance fund for the civil employee insurance. Festival expenses and other
facilities: (1)A civil employee shall receive an amount equivalent to the salary of one month
being earned by him/her as the festival expenses each year to celebrate festival as per his/her
religion, culture and custom.
k) Festival expenses and other facilities: (1)A civil employee shall receive an amount equivalent to
the salary of one month being earned by him/her as the festival expenses each year to celebrate
festival as per his/her religion, culture and custom.
l) Special provision in respect of incapacitated employee: If it is certified by the medical board
constituted by Government of Nepal that any civil employee is unable to serve regularly owing to a
physical or mental disease, Government of Nepal may retire that employee, by adding a service
period of Seven years in maximumto his/her service period
m) Disability allowance as prescribed
n) Life insurance coverage: Rs. 200,000 for gazetted and 100,000 for non-gazetted employees.


o) Payment in lieu of accumulated leave
p) Health insurance; travel insurance
4) The Labor Act, 1992
The labor Act, 1992 has prescribed the following compensation system for workers and employees;
a) Pay and allowances; minimum wages have been prescribed.
b) Welfare fund as prescribed
c) Compensation for disability
d) Gratuity, provident fund, medical expenses as prescribed
e) Leave and payment for specified accumulated leave.
f) Housing facilities by allocating 5% of gross profit.
g) Day care centers for the children of women workers as prescribed.
5) Compensation management in Nepal has remained ineffective. The lack of professional management in family oriented
enterprises has contributed to this state of affairs. It is hope that the advent of global companies will have positive
demonstration effect on compensation management in Nepalese organization in future years.
Emerging Trends and issues in compensation Management
1) There has been a dramatic increase in the diversity of compensation strategies and practices. Not too long ago,
employees received a base salary and a set of reestablished benefits. Today, firms are providing variable pay,
bonuses, group incentive plans, broad based success sharing, plus a broader and more flexible selection of employee
benefits.
2) Significant rise in pay inequity; Pay increased for CEOs appeared to be coming under more scrutiny by late 2001,
as the economy slowed and as corporate scandals involving executive behavior and accounting irregularities came to
light.
3) Pay for knowledge, competencies or skills
In these types of plan, employees are paid on the basis of either the degree of specific, technical knowledge they
hold or an inventory of knowledge and/or skill that they posses. These plan are based on the assumption that
knowledge, skill, or competence will be translated into improved employee performance and, ultimately, superior
organizational effectiveness.
4) Team based compensation: Pay based on how well the team performed. With the wide growth in use of teams
within organizations has come discussion concerning how team members should be compensated.
5) Broad banding:
It involves consolidating existing pay grades and ranges into fewer, wider bands. Broad banding provides greater
flexibility in setting pay rates, and it provides considerably more latitude (full extent) in defining work and in
moving people around within an organization. Broad banding encourages developmental and lateral career moves
and facilitates cross-functional teams because differences in titles, levels, and salaries are minimized.
6) Pay programs are increasingly being used to communicate major change and realignment in organization,
particularly during and after major downsizing and reengineering efforts.


Occupational Health and Safety UNIT 6 3 hours
Concepts, importance, legal provisions, practices and emerging issues in OHS

Occupational Health and Safety
The modern definition of Occupational Health (ILO and WHO) is: The promotion and maintenance of the
highest degree of physical, mental and social well-being of workers in all occupations total health of all at work
Elements of Workplace Safety and Health
v Safety: Involves protecting employees from injuries due to work-related accidents/or Safety is protection of a person s
physical health.
v Health: Refers to the employees freedom from physical or emotional illness.
v The main purpose of health and safety policies is the safe interaction of people and the work environment.
Primary purposes of safety and health program are;
v to create a psychological environment and attitudes that promote safety.
v to develop and maintain a safe physical working environment.

Psychological Conditions: Conditions resulting from the workplace environment that result from organizational stress and
low quality of working life. These include: a) Dissatisfaction, withdrawal, b) Mistrust in others, irritability
Physical Conditions: Conditions resulting from the workplace environment that include occupational diseases and accidents,
such as: Repetitive motion injuries, Back pain Cancer Etc. Poor workingconditions
affect employee performance badly.


Employees may find it difficult to concentrate on work.
Their health may suffer.
Accidents and injuries may multiply causing enormous financial loss to the company.
Absence and turnover ratios may grow.
A company with a poor safety record may find it difficult to
hire and retain skilled labor force.
The overall quality of work may suffer.
Many deaths, injuries and illnesses occur because of safety violations, poor equipment design or gross negligence.
Importance of Occupational Health and Safety program
v Promote and maintain the highest degree of physical, social and mental well being of workers.
v Improve productivity and quality of work.
v Reduce accidents, injuries, absenteeism and labor turnover.
v Protect workers against any health hazard arising out of work or conditions in which it is carried on.
v Increased efficiency and quality
v Reduced medical and insurance costs
v Lower workers compensation rates and payments
v Firms with good safety and health records can attract and retain good employees,

What are the different health and safety provisions made by the Labour Act of Nepal?
Labour Act, 2048 (1992)
Preamble Whereas it is expedient (advantageous) to make timely provisions relating to labor by making provisions for the
rights, interests, facilities and safety of workers and employees working in enterprises of various sectors.
Health and Safety (Chapter 5)
1) Provisions Relating to Health and Safety (27)
The Proprietor shall make the arrangements in the Enterprise as mentioned below
a) To Keep each Enterprise clean and tidy by cleaning daily with germicidal medicines,
b) To make arrangements for adequate supply of fresh air and light as well as proper temperature in the working
rooms;
c) To make arrangements of removal and disposal of solid waste during production process,
d) To make arrangements of prevention of accumulation of dust, fume, vapour and other impure materials in working
rooms which would adversely affect the health;
e) To make provisions for sufficient supply of pure potable water during the working hours,
f) To make provisions for separate modern type toilets for male and female workers or employees at convenient place;
g) To declare as non-smoking zone in all or some parts of the Enterprise, according to the nature of its works;
h) To conduct compulsory health check-ups of the workers or employees once every year in the Enterprises where the
nature of works is likely to affect the health adversely.
2) Protection of Eyes (28) :
Necessary protective means shall have to be arranged for the protection of eyes of the workers and employees from injuries
likely to be caused by dust or pieces while working in the Enterprise using glass, mercury, magnet, iron, concrete, cement,
lime, stone and explosive substances.
3) Protection from Chemical Substance (29)
The Proprietor shall have to make provisions for necessary personal protective devices for the protection of workers or
employees handling chemical substances.
4) Provision for Safety Against Fire (30)
The Proprietor shall have to make arrangements of necessary modern equipment for safety against fire in each Enterprise.
5) Hazardous (risky) Machines to be fenced (31)
Strong fences shall have to be placed around every part of hazardous machines, instruments and equipment operated by
energy
6) In relation to Lifting of Heavy Weight (32)
No worker or employee shall be engaged in the works of lifting, loading or transporting any load likely to cause physical
injury or harm to the health.Minor not to be engaged in Works without Adequate Guidelines or of Vocational Training.
What causes accidents?
There are three basic causes of workplace accidents: chance occurrences, unsafe conditions, and employees unsafe acts.
Causes of unsafe conditions
v Improperly guarded equipment
v Defective equipment
v Risky procedures in, on, or around machines or equipment
v Unsafe storage- congestion (abnormal accumulation), overloading
v Improper illumination insufficient light
v Improperly ventilation insufficient air change, impure air source


Causes of unsafe Acts
v These acts may be the result of lack of knowledge or skill on the part of employee, certain bodily defects and wrong
attitudes
v People with specific traits may indeed by accident prone. For e.g people who are impulsive, extremely extroverted
and less conscientious are more likely to have accidents.
These acts include acts like;
a) Operating without authority
b) Failing to secure equipment
c) Operating or working at unsafe speeds, either too fast or too low.
d) Using unsafe equipment
e) Lifting improperly etc.
Other Causes
These causes arise out of unsafe situational and climate conditions and variations such as bad working conditions, rough
and slippery floors, excessive glare, heat, humidity, dust, and fume laden atmosphere; very long hours of work, excessive
noise and etc.
v Unmarried employees generally have more accidents than married employees
v Accidents are more frequent during the night time
v Workers who work under stress
Enumerate a few measures, which could be taken to prevent accidents at work.
Accidents prevention boils down (reduce in volume) to two basic activities: (1) reducing unsafe conditions and (2) reducing
unsafe act
a) Reducing unsafe conditions is always an employer s first line of defense in accident prevention. Safety engineer
should design jobs so as to remove or reduce physical hazards.
b) Reducing unsafe acts by emphasizing safety
v It is the supervisor s responsibility - For this supervisor should
v Praise employees when they choose safe behavior
v Listen when employees offer safety suggestions, concern, or complaints;
v Be a good example- by following every safety rules and procedures.
v Visit plant area regularly
v Maintain open safety communications-telling employees about safety activities.
v Links managers bonuses to safety improvements
c) Reducing unsafe act through selection and placement
The employer s aim is to identify the trait that might predict accidents on the job in question, and then screen
candidates for this trait. Ask several safety related questions during the selection interview
d) Reducing unsafe acts through training
Instruct employee in safe practices and procedures, warn them of potential hazards and work on developing a
safety conscious attitude.
e) Reducing unsafe acts through motivation: Use posters and positive reinforcement.
v Safety posters can increase safe behavior, but they are no substitute for a comprehensive safety program.
v Positive reinforcement programs provide workers with continuing positive feedback, to shape the workers
safety-related behavior.
f) Use behavior based safety
Identifying the worker behaviors that contribute to accidents and then training workers to avoid these behaviors.
g) Use employee participation
v There are two reasons to get the employees involved in designing the safety program
i. Employees are management s best source of ideas about what the potential problems are and how to solve
them.
ii. Employee involvement tends to encourage employees to accept the safety program.
OR
What causes accidents?
v The causes of accidents can be generally classified as either human or environmental.
v Human causes are directly attributable to human error brought about by carelessness, intoxication (make drunk),
daydreaming, inability to do the job, or other human deficiency.
v Environmental causes, in contrast, are attributable to the workplace and include the tools, equipment, physical
plant, and general work environment.
v Both of these sources are important, but the human factor is responsible for the vast majority of accidents.
Enumerate a few measures, which could be taken to prevent accidents at work.
Measures can we to look for preventing accidents are;


1) Education: Create safety awareness by posting highly visible signs that proclaim safety slogans, placing accidents
prevention articles in organization newsletters, or exhibiting a sign proclaiming the number of days the plant has
operated without a lost day accidents.
2) Skill Training: Incorporate accident prevention measures into the learning process
3) Engineering: Prevent accidents through both job and equipment design. This may include eliminating factors that
promote operator fatigue (extreme tiredness), boredom, and daydreaming (day dream).
4) Protection: Provide protective equipment where necessary. This may include safety shoes, gloves, hard hats, safety
glasses, and noise mufflers. Protection also includes performing preventive maintenance on machinery.
5) Regulation enforcement: The best rules and regulations will be ineffective in reducing accidents if they are not
enforced. Additionally if such rules are not enforced, the employer may be liable for any injuries that occur.
Emerging issues in Occupational Health and Safety
1) AIDs and workplace
v AIDs has become a critical health care issues for employer and employees alike, with corporations incurring
increasing cost related to the growing number of AIDS cases.
v Overall, AIDs related corporate expenses include the patient s health insurance, disability, benefits, employee
life insurance, and pension costs.
2) Drugs in the workplace
v Consequences of drug abuse include increased on-the-job violence, workplace irritability, and job mistakes.
v Poor judgment, tardiness and early departure, frequent absence.
v More liability insurance covered accidents are caused by drug-impaired employees.
v Employers must educate employees about the risk of drug use and establish penalties for substance abuse.
3) Smoking in the workplace
v One of the most volatile issues for human resource professionals today is a company s position on smoking.
v Smoke causes lung cancer death, increase medical expenses, absenteeismor decreased productivity.
v The cost of property fire and additional cleaning required.
v Employers create ventilated smoking lounges to separate smokers fromnonsmokers.
v Worksite smoking restrictions may promote meaningful reduction in tobacco exposure and consequent health
risks.
v Companies have drawings for prices and other incentives to encourage employees to quit smoking.
4) Violence in the workplace
v Workplace violence includes incidents where persons are abused threatened, or assaulted in circumstances
relating to there work, involving on explicit challenge to their safety well being or health .
Consequences of Violence in the workplace
v There is the immediate cost of human suffering, pain, and possibly the precious of life.
v Beyond human losses rising health care costs, higher workers compensation fees, and increased legal
expenditures are a few of the significant consequences.
v In the aftermath of a violent incident, the organization usually pays for medical and post trauma stress
treatments, lost wages due to increased absences, increased security and property damage, and investigations,
which may includes the use of outside experts such as management consultants.
v Loss of employee productivity revenue loss.
Protection programs of Violence in the workplace
v Screening potential employees
v Communicating company s commitment to non violence through policies and procedures.
v Training and educating supervisions and workers
v Building threat management teamwith the aid of employee assistance programs.
5) Video Display Terminals
v Workers who spend considerable time in front of VDTs complain of eye fatigue and irritation, blurred vision,
headaches, dizziness, and muscular and wrist problems.
v People who work as little as two hours a day in front of computer monitor can develop computer vision
syndrome the symptoms of which include eye strain, blurred vision, headache, and dry irritated eyes.


v Specially designated glasses are available to reduce these syndromes.
v Muscular wrist problems can be reduced using adjustable chairs, keyboard support equipment, physical
therapy for the eyes, hands, wrist, shoulder and back
v WHO: has adopted a standard that states workers should sit at least three feet away fromthe back of a
terminal.
6) Repetitive strain Injuries (RSI)
v Increased ergonomics injuries.
(Ergonomics: is the science of designing work space and equipment to be as compatible as possible with the
physical and psychological limits of people)
v Wrist guards, adjustable tables, increased breaks, and job rotation as a ways of combating the injuries.
UNIT 7 ------------------Employee Relations
HRM depends upon the effective communications systems in the organization for its success because all its functions like
staffing, compensating, performance appraisal, training and development, etc require communication system for their
executions. Basic purposes that are served through communication systems are keeping employees informed using it as a tool
to bring about positive change and to influence culture. Bulletin board, newsletter and gossip are different sources that are
used to disseminate information in the organizations.
Major responsibilities of the employee relation specialist are;
v Ensure that open communication permeates (spread throughout) the organization: This entails fostering an environment
where employees talk directly to supervisors and settle any differences that may arise. If needed, employee relations
specialists are also intervene to assist in achieving a fair and equitable solution.
v ER specialists are also intermediaries in helping employees understand the rules: Their primary goal is to ensure that
policies and procedures are enforced properly, and to permit a wronged employee a forum to obtain relief. As part of this
role, too, comes the disciplinary process.
Communications in organization
The transmission of information and understanding through the use of common symbols is termed as communication.
Communication is the exchange of information between people; it occurs when one person understands the meaning of a
message sent by another person, and responds to it. Two forms of information are sent and received in communications:
facts and feelings. Facts are pieces of information that can be objectively measured or described. Examples are the cost of a
computer, the daily defect rate in a manufacturing plant, and the size of the deductible payment of the company-sponsored
health insurance policy. Feelings are employees' emotional responses to the decisions made or actions taken by managers or
other employees. Organizations need to design communication channels that allow employees to communicate facts and
feelings about specific aspects of their jobs.
Barriers to Effective Communication and ways to remove these barriers
The complex factors in the communication pose barriers to effective communication.
a) Individual barriers include perceptual biases, which function as noise by affecting how the receiver gathers, organizes,
and interprets information.
b) Organizational barriers to effective communication include organizational culture and structure, status differences, and
time.
A number of interpersonal and intrapersonal barriers effect the decoding of a message.
c) Filtering refers to manipulating information so that it will be received more favorably. Filtering is most likely to occur
where there is emphasis on status differences and among employees with strong career mobility aspirations. Expect more
filtering taking place in large corporations than in small business firms.
d) With selective perception, receivers see and hear based on their needs, motivations, experience, background, and other
personal characteristics.
e) Information overload happens when individuals have more information than they can sort out and use; they tend to
select out, ignore, pass over, or forget information, etc.
f) Emotions: When people feel that they're being threatened, they tend to react in ways that reduce their ability to achieve
mutual understanding.
g) Language: The meanings of words are not in the words; they are Employees come from diverse backgrounds and have
different patterns of speech. Grouping of employees into departments creates specialists who develop their own jargon or
technical language.
Ways to remove these barriers
h) Active listening is a good way to minimize both individual and organizational barriers to effective communication. In
active listening, the receiver assumes a conscious and dynamic role in the communication process through a variety of
behaviors and actions. Both the sender and the message are targets for the active listener. Cultural differences can
influence active listening.


i) Feedback is information about some behavior and its effect. Managers need to provide feedback to employees about their
job performance; they also give feedback to suppliers and customers about various matters. Managers often have
difficulty giving negative feedback just as employees tend to stop actively listening to negative feedback. Therefore,
effective feedback should be fact-based, timely, and focused on behaviors. Feedback is another part of communication
that is affected by cultural differences.
j) Supportive communication is honest, accurate interpersonal communication that focuses on building and enhancing
relationships. There are number of attributes of supportive communication, which aims to create an environment in which
people can openly exchange information about issues.
What is the purpose of HRM communications?
v HRM communications programs are designed to keep employees abreast (up to date) of what is happening in the
organization and knowledgeable of the policies and procedures affecting them.
v HRM communication focuses on the internal constituents the employees.
v Communication programs help increase employee loyalty and commitment by building into the corporate culture a
systematic means of free-flowing, timely, and accurate information by which employees better perceive that the
organization values them.
v Such a system builds trust and openness among organizational members that helps withstand (oppose) even the sharing
of bad news.
Communications and HRM
HRM depends upon the effective communications systems in the organization for its success because all its functions like
staffing, compensating, performance appraisal, training and development, etc require communication system for their
executions. Basic purposes that are served through communication systems are keeping employees informed using it as a tool
to bring about positive change and to Influence culture. Bulletin board, newsletter and gossip are different sources that are
used to disseminate information in the organizations.
Employee Handbooks
An employee handbook stating the policies and rules of the organization is handed over to new employees. This helps them
to become familiar with the organizational do s and don ts. These are the booklets that contain statements of policies and
procedures, and copies are usually issued to individual employees. Employees handbooks can be of two categories:
v Those which deal with the terms and conditions of employment e.g. leave, gratuity, working hours, personal policies,
discipline and the like and
v Those which indicate the standard operating procedures for performing the tasks for which they are hired.
The employee handbook is probably the most important source of information the HR department can provide and sets the tone
for the company's overall employee relations philosophy.
Employees handbooks
v Do not include excessive and unnecessary information.
v Allow for feedbacks
v Update and refined on continuous basis.
v Should be well organized to make easy to find the needed information (table of contents and index).
Why use an employee handbook? OR Describe the purpose of the employee handbook and explain
what information should be included in the handbook.
Employee handbook mainly includes the information both about the employee and employer, for employee it provides
information regarding the job description and for employer it provides information about the rules regulations of the
organization and different compensation benefits etc related information to the employees. A well designed handbook, gives
employees a central information source for such useful information as what the company is about, its history, and employee
benefits. The handbook, then, gives employees and opportunity to learn about the company and what the company provides for
them and to understand the information at their own pace.
1) It helps employees learn about company at their own pace.
2) Provides references regarding policies, rules, and benefits.
3) Ensures HRM policies will be consistently applied.
4) Creates sense of security and assist in creating an atmosphere in which employees become more productive
members of the organization and increase their commitment and loyalty to the organization.
5) Employers, too, can benefit from using an employee handbook. In addition to any benefit accrued from having a
more committed and loyal workforce, handbooks are tools to educate, inform, and guide employees in the organization
6) Provides information to recruits.
7) May be interpreted as implied contract.
8) Should be updated continually but the important thing is that these purposes can be achieved only if the employee
handbook is Well Organized, Clearly Written and legally limited.
v Although employee handbooks differ, most include introductory comments about organization, and information
employee need to know the workplace, their benefits, and employee responsibility.
v Employee handbook mainly includes the information both about the employee and employer,


for employee it provides information regarding the job description and
for employer it provides information about the rules regulations of the organization and different compensation
benefits etc related information to the employees.
Employees handbook can be of two categories
v Those which deal with the terms and conditions of employment e.g. leave, gratuity, working hours, personal policies,
discipline and the like and
v Those which indicate the standard operating procedures for performing the tasks for which they are hired.
Effective HRM communications programs involves
a) Top management commitment: Before any organization can develop and implement an internal
organizational communications program, it must have the backing support, and blessing of the CEO.
Employees must see any activity designed to facilitate work environments as being endorsed by the companys
top management. Effective communications does not just imply that top management sends information down
throughout the company. It also implies that information flows upward as well and laterally to other areas in the
organization.
b) Effective upward communication: The upward flow of communication is particularly noteworthy
because often the employees, the ones closest to the work, may have vital information that top management
should know. In keeping with the spirit of employee empowerment, as employees are more involved in making
decisions that affect them, that information must be communicated up the ladder. Furthermore, its important
for top management to monitor the pulse of the organization regarding how employees view working for the
organization.
c) Determining what to communicate: One means of determining what to communicate is through a
what-if, so what test. When deciding the priority of the information to be shared, HR managers should ask
themselves what if this information is not shared.
d) Allowing for feedback: must develop into the system a means of assessing the flow of information and
for fostering employee feedback.
e) Information sources: If successful programs can be linked to the immediate supervisor, then HRM must ensure
that these individuals are trained in how to communicate properly. In addition to the communications role, the
employee relations department is responsible for additional assignments. Typically, in such department,
recruiting, employment, and turnover statistics are collected, tabulated, and written up in the company s
affirmative action plan documentation. This material is updated frequently and made available to employees on
request.

Communication Programs/ Improving Communication in Organizations
Working with supervisors and managers, employee relations representatives can facilitate effective communications by
developing and maintaining the following types of programs:
1) Information Dissemination Programs: Information dissemination involves making information available to decision
makers, wherever they are located. The employee handbook is probably the most important source of information the
HR department can provide and sets the tone for the company's overall employee relations philosophy. There are many
other forms of written communication besides the employee handbook that can be used to alert employees to important
information. These include memos and newsletters.
2) Electronic Communications: New technologies have made it possible to disseminate information that goes beyond the
printed word. Visual images and audio information are powerful communication tools. A recent technological advance,
teleconferencing, allows people with busy schedules to participate in meetings even when they are a great distance away
from the conference location (or each other). Advances in electronic communications (voice mail and e-mail) have made
interactive communications between sender and receiver possible even when they are separated by physical distance and
busy schedules.
3) Meetings: Formal meetings are opportunities for face-to-face communication between two or more employees and are
guided by a specific agenda. Formal meetings facilitate dialogue and promote the nurturing of personal relationships,
particularly among employees who may not interact frequently because they are separated by organizational or
geographic barriers.
4) Employee Feedback Programs: These programs are designed to improve management-employee relations by giving
employees a voice in decision making and policy formulation. The most common employee feedback programs are
employee attitude surveys, appeals procedures, and employee assistance programs.
5) Employee Assistance Programs (EAPs): EAPs help employees cope with personal problems that are interfering with
their job performance. These problems may include alcohol or drug abuse, domestic violence, elder care, AIDS and other
diseases, eating disorders, and compulsive gambling. Confidentiality is an important component of these programs.
Organizational culture


What is Organizational Culture?
Organizational culture consists of the shared beliefs, values, and assumptions that exist in an organization. These beliefs,
values, and assumptions determine the norms that develop and the patterns of behavior that emerge from these norms.
v The term "shared" mean that all members have had uniform exposure to these elements and have some minimum
common understanding of them.
v Culture tends to be stable, providing social continuity and may influence behaviors both inside and outside the
organization.
v Culture has a strong impact on both organizational performance and member satisfaction.
Subcultures are smaller cultures that develop within a larger organizational culture that reflect departmental differences in
training, occupation, or departmental goals.
Dominant Culture is the distinctive, overarching personality of an organization. An organization s dominant culture
reflects core values, dominant perceptions that are generally shared throughout the organization
v The system of sharing meaning within the organization that determines how employees act
v Organizational culture is the characteristics values, traditions, and behaviors a company s employees
share. A value is a basic belief about what is right or wrong, or about what you should or shouldnt
do. Values are important because they guide and channel behavior.
v Organizational culture itself can express the do s and donts of any organization. Every organization
has its own unique culture.
v This culture includes longstanding, and often unwritten, rules and regulation; a special language that
facilitates communication among members; shared standards of relevance as to the critical aspects of
the work that is to be done; standards for social etiquette (conventional rule of social behavior or
professional conduct) customs for how members should relate to peers, employees, bosses and
outsiders; what is appropriate and smart behavior within organization and what is not.
Cultural Characteristics
There are six core characteristics that are valued collectively by members of an organization and make up the roots of an
organization's culture.
1) Sensitivity to Others. This is especially true when it comes to sensitivity to customers.
2) Interest in New Ideas.
3) Willingness to Take Risks.
4) The Value Placed on People. How an organization values its people has a dramatic impact on the culture.
Toxic Organizational Cultures: Organizational cultures in which people feel that they are not valued. Turnover is
high in these organizations and profitability is problematic.
Healthy Organizational Cultures. Organizational cultures in which people feel they are valued. In these organization
turnover is very low and profitability tends to be high.
5) Openness of Available Communication Options. This characteristic relates to the ability of lower-level employees to
easily access upper-level employees.
6) Friendliness and Congeniality
Diagnosing a Culture
One way of learning about a culture is to examine the symbols, rituals, and stories that characterize the organization's way of
life. For insiders, these symbols, rituals, and stories are mechanisms that teach and reinforce the culture.
a) Symbols. Symbols such as a corporate motto or mascot provide common meaning and reinforce cultural values and what
the company considers important.
b) Rituals. Rituals and ceremonies such as parties and gatherings are expressive events that define and build the culture.
They send a cultural message and convey the essence of a culture.
c) Stories. The folklore (traditional focus) of organizations stories about past organizational events is a common aspect
of culture. Stories and anecdotes, both pleasant and unpleasant, are told repeatedly across generations of employees to
communicate informally how things work . Such stories reflect the uniqueness of organizational cultures. Researchers
have identified several common themes that appear to underline many organizational stories.
d) Jargon. The everyday language used in companies can help sustain its culture, especially the unique slang or jargon that
is the company's own. The use of jargon helps people find their identities as members of a special group.
e) Ceremonies. Celebrations of an organization's basic values and assumptions. These ceremonies convey meaning to
people inside and outside the organization.
f) Statements of Principle. Explicitly written statements describing the principal beliefs that guide an organization. Such
documents can help reinforce an organization s culture. This may include a Code of Ethics, which are explicit statements
of the company's ethical values and expectations.
g) Slogans. Catchy phrases that companies use to call attention to their products or services. They also communicate
important aspects of the organization's culture to both the public at large and the company s own employees.


Organizations with strong cultures have several potential advantages.
v Coordination. The overarching values and assumptions facilitate the coordination of different parts of the organization
and communication.
v Conflict Resolution. Sharing core values can also facilitate conflict resolution.
v Financial Success. Strong cultures contribute to financial success and other indicators of organizational effectiveness
when the culture supports the mission, strategy and goals of the organization.
STRESS MANAGEMENT
Stress: A stress is a dynamic condition in which an individual confronts an opportunity, constraint, or
demand related to what he or she desire, and for which the outcome is perceived as both uncertain and
important.
Stress is the body s nonspecific reaction to any demand made on it.
v Stress can manifest itself in both positive and negative ways;
v Stress is said to be positive when the situation offers an opportunity for one to gain something; for e.g
v When constraints or demands are placed on us, however, stress can become negative.
v Constraints and demand can lead to potential stress, when coupled with uncertainty about the outcome
and its importance, potential stress become actual stress.
v Stress related problems are, lost productivity, increased workers compensation claims, turnover and
health care cost .
For various reasons, programs dealing with stress and its related problems are becoming increasingly popular.
Long-termproductivity depends largely on the dedication and commitment of the company s employees.
Employees are increasingly holding their employers liable for emotional problems they claim are work
related.
And, stress-related mental disorders have become the fastest-growing occupational disease. There is
increasing evidence indicating that severe, prolonged stress is related to the diseases that are leading causes of
death coronary heart disease, stroke, hypertension, cancer, emphysema(disease of the lungs causes
breathlessness), diabetes, and cirrhosis(chronic liver disease, as a result of alcoholism); stress may even lead
to suicide.
Some signs that may indicate problems include impaired judgment and effectiveness, rigid behavior, medical
problems, increased irritability, excessive absences, emerging addictive behaviors, lowered self-esteem, and
apathetic behavior.
Causes of Stress/Sources of Stress
Stress can be caused by factors called stressors. Causes of stress can be grouped into two major categories:
organizational and personal. Both directly affect employees and, ultimately, their jobs.
Regardless of its origin, stress possesses the same devastating potential. Some factors are controllable to varying
degrees, whereas others are not.
a) Organizational Factors many factors associated with a persons employment can be potentially stressful.
These include the task demands, role demands, interpersonal demands, organizational structure, and
organizational leadership.
b) Task demand relate to an employees job. They include the design of the persons job (autonomy, task
variety, degree of automation), working condition, and the physical works layout. The more interdependence
between employees tasks and the task of others, the more potential stress present. J obs where temperatures,
noise, or the other working conditions are dangerous or undesirable can increase anxiety.
c) Role demands relate to pressure placed on an employee as a function of the particular role he or she plays in
the organization. Role conflict create expectations that may be hard to satisfy, Role overload is experienced
when the employees expected to do more than time permits. Role ambiguity is created when role expectations
are unclear and the employees are unsure what to do.
d) Interpersonal demands are pressure created by other employees. Lack of social support from colleagues and
poor interpersonal relationships can cause considerable stress, especially among employees with a high social
need.
e) Organizational structure can increase stress. Excessive rules and an employees lack of opportunity to
participate in decisions that affect himor her are examples of structural variables that might be potential
sources of stress.
f) Organizational leadership represents the supervisory style of the organization s company officials. Some
managers create a culture characterized by tension, fear, and impose excessively tight controls.
g) Personal factor


v Family relationship problems (marital difficulties, the breaking off of a relationship, and discipline
trouble with children) create stress for employee
v Economic problem created by overextending their financial resources can create stress, for employees and
distract their attention fromtheir work.
v Some people may have a inherent tendency to emphasize negative aspect of the world in general. If this is
true, then a significant individual factor that influences stress is a persons basic disposition (natural
tendency). That is stress symptoms originate on the job may actually originate in the persons personality
Personality type A behavior is characterized by a chronic sense of time urgency, excessive competitive
drive and difficulty accepting and enjoying leisure time.
Personality type B behavior is characterized by lack of either time urgency or impatience It has been found only
the hostility and the anger associated with type A behavior actually associated with the negative effects of
stress. And type B s are susceptible (emotional) to these same anxiety producing elements. Managers must
recognize that type A employees are more likely to show symptoms of stress even if organizational and
personal stressors are low.
3) Environmental factors
v Economics uncertainties: Change in business cycle create economic uncertainties. When economy is
contracting, people become increasingly anxious about their job security.
v Political uncertainties: Change is implemented in an orderly manner in stable political systems.
v Technological change: New innovations can make an employees skills and experience obsolete in a very
short time, computer, automation and similar forms of innovations are a threat to many people and cause them
stress.
Symptoms of Stress
Stress reveals itself in three general ways; physiological, psychological, and behavioral symptoms.
Stress can express following four types of the symptoms:
a) Short-term physical symptoms: Short-term physical symptoms include; faster heart beat, increased
sweating, cool skin, Cold hands and feet, Feelings of nausea (inclination of vomit), Rapid Breathing, dry
Mouth, desire to urinate, diarrhea.
b) Long-term physical symptoms: Change in appetite frequent colds illnesses (such as asthma Back pain
digestive problems headaches aches and pains) feelings of intense and long-termtiredness, Risk factors (Heart
attacks and strokes Hypertension and headaches Ulcers Allergies)
c) Psychological symptoms: Psychological symptoms include Worry or anxiety, Confusion, and an inability to
concentrate or make decisions, Feeling ill, Feeling out of control or overwhelmed by events, Mood changes,
Depression, Frustration which can lead to productivity decreased.
d) Behavioral symptoms: Behavioral Symptoms include, changes in eating habits, increased smoking or
substance consumption, talking too fast or, too loud or sleep disorder, Helplessness, Restlessness, Being more
lethargic (lack of energy), Difficulty sleeping, drinking more alcohol and smoking more, Changing eating
habits, relying more on medication, Irrationality, Overreaction and reacting emotionally. Reduced personal
effectiveness Being unreasonably negative Making less realistic judgments Being unable to concentrate and
having difficulty making decisions being more forgetful Making more mistakes being more accident-prone
Changing work habits Increased absenteeism, Neglect of personal appearance
Outcomes of Organization due to stress: Continuous stress in working environment results in some problemin
organizational operations like poorer decision-making, decreased creativity, lost work time, Increased turnover
and more sabotage
MANAGING STRESS
Fromthe organization s standpoints management may not be concerned when employees experiences low to
moderate levels of stress. The reason is that such level of stress may be functional and lead to higher employee
performance. But high level of stress and even low level sustained over long periods can lead to reduced
employee performance and thus require action by management.
As we discuss individual and organizational approaches towards managing stress.
Organizational Approaches
Several of the factors that causes stress particularly task and role demands are controlled by management. As such
they can be modified or changed.
The strategies that management might have to consider are;
1) Goal Setting: Individual performs better when they have specific and challenging goals and receive feedback
on how well they are progressing towards these goals. The use of goals can be reducing stress as well as


provide motivation. Specific goals that are perceived as attainable clarify performance expectations. In
addition, goal feedback reduces uncertainties about actual job performance. The result is less employee
frustration, role ambiguity, and stress.
2) Selection and placement: Individual differ in their response to stressful situations i.e. little experience and
external locus of control are more tend to be prone to stress. Selection and placement decisions should take
facts into consideration.
3) Redesigning job: Redesigning jobs to give employees more responsibility, more meaningful works, more
autonomy, and increased feedback can reduce stress because these factors give the employee greater control
over work activities and lessen dependence on others.
4) Increase employee involvement: Giving employees a voice in the decision that directly affect their job
performance, management can increase employee control and reduce role stress. So managers should consider
increasing employee involvement in decision making.
5) Increasing formal communication: With employees reduces uncertainty by lessening role ambiguity and
role conflict. Given the importance that perceptions play in moderating the stress response relationship
management can also use effective communications as means to shape employee perceptions.
6) Sabbaticals: These sabbaticals ranging in length fromweeks to several months allow employees to travel,
relax, or pursue personal projects that consume time beyond normal vacation weeks.
7) Wellness programs: These programs focus on the employees total physical and mental control. For e.g.
provide workshops to help people quit smoking, control alcohol use, lose weight, eat better and develop or
regular exercise program.
INDIVIDUAL STRESS MANAGEMENT APPROACHES
An employee can take personal responsibility for reducing stress level. Individual strategies of managing
stress are;
1) Implementing time management techniques: Understanding and utilization of basic time
management principles can help individuals better cope with tension created by job demands. The
time management principles are;
v making daily list of activities to be accomplished,
v prioritizing activities by importance and urgency,
v scheduling activities according to the priorities set, and
v Knowing your daily cycle and handling the most demanding parts of your job during the high
part of your cycle.
2) Physical exercise: Physician recommended noncompetitive physical exercise, such as aerobics
(exercise designed to increase oxygen intake), walking, jogging (slow running), swimming, and
riding a bicycle, as a way to deal with excessive stress levels. These types of physical exercise can
increase heart capacity, lower the at-rest heart rate, provide a mental diversion from work pressures).
3) Relaxation Techniques: Reduce tension through meditation, hypnosis (artificially produce sleep).
The objective is to reach a state of deep relaxation, in which one feels physically relaxed somewhat
detached from the immediate environment, and detached from the body sensation. Deep relaxation
for 15 to 20 minutes a day releases tension.
4) Expanding social support: It provides you with someone to hear your problems and to offer a more
objective perspective on the situation. Having friends, family, or work colleagues to talk to provides
and outlet when stress level become excessive.
5) Transcendental meditation (TM): A stress-reduction technique whereby a secret word or phrase
(mantra) provided by a trained instructor is mentally repeated while an individual is comfortably
seated.
6) Get a healthy diet
7) Get a good night sleep
8) Avoid inappropriate talk
Spirituality in Workplaces
v Workplace spirituality recognizes that people have an inner life that nourishes and is nourished by meaningful
work that takes place in the context of community.


v Organizations that promote a spiritual culture recognize that people have both mind and spirit, seek to find
meaning and purpose in their work, and desire to connect with other human beings and be part of a
community.
Why spirituality now?
v The study of emotions improves our understanding of organizational behavior, an awareness of spirituality
can help you to better understand employee behavior in the twenty- first century.
Characteristics of a spiritual organization
v Spiritual organizations are concerned with helping people develop and reach their full potential.
v Organizations that are concerned with spirituality are more likely to directly address problem created by
work/life conflicts.
What differences spiritual organizations fromtheir non-spiritual counterparts? Research identified four cultural
characteristics that tends to be evident in spiritual organizations.
1) Strong sense of purpose: People want to be inspired by a purpose that they believe is important and
worthwhile.
2) Trust and respect: Spiritual organizations are characterized by mutual trust, honesty, and openness.
3) Humanistic work practices: These practices embraced by spiritual organizations include flexible work
schedule, group and organization based rewards, narrowing of pay and status differentials, guarantee of
individual workers rights, employee empowerment, and job security.
4) Toleration of employee expression: Spiritually based organizations are that they dont stifle employee
emotions.
Participation, partnership and employee involvement
Employee Involvement: Involvement describes congruence between personal and organizational goals, i.e., the degree
to which members of a work organization are able to satisfy important personal needs through their experiences with the
organization . An effective productivity management process is simply not possible without the commitment and
involvement of employees at all levels.
CHARACTERISTICS OF EI ENVIRONMENT
1) Employee input to decisions
2) Employee participation in problem-solving
3) Information sharing
4) Constructive feedback
5) Teamwork and collaboration
6) Meaningful and challenging work
7) Employment security
EMPLOYEE INVOLVEMENT APPROACHES
1) Human Relations Approach: The human relations approach is based on the belief that more satisfied employees are
more productive employees. Organizations operating under the human relations framework utilize involvement
techniques such as suggestion schemes, survey feedback and quality circles, but do not seek to redesign jobs, change the
organization structure or transform the organization s culture to promote maximum employee involvement in decision
making.
2) Human Resources Approach: The key assumption here is that people are a valuable resource, capable of making
significant contributions to organizational performance. They should be developed to increase their capabilities and,
when people have input to decisions, better decisions result.
3) High Involvement Approach: High involvement systems operate under the assumption that employees are capable of
making important decisions about their work and that maximum organizational performance results when people
exercise considerable control over their work activities.
High involvement organizations typically utilize profoundly different approaches to job design such as autonomous work
teams. They are very flat organizations, as employees make most of the routine, day-to-day decisions that are made by
supervisors in traditionally managed organizations. All of the organization s systems, such as the reward system and the
goal-setting system are designed to reinforce maximum employee involvement in decision-making. High involvement
systems represent a radical departure from traditional management assumptions and thus require a great deal of
management commitment to change.
KEY TO SUCCESS OF EMPLOYEE INVOLVEMENT (EI): Success in the employee involvement arena requires, first
and foremost, recognition by top management that participative management means cultural change which requires
management commitment and a long-term perspective.
1) Management Commitment: Management must be willing to support change through the provision of resources,
modification of the organizational systems and personal involvement in the change process.
2) Long-term View: Management must also adopt a long-term view for the change to succeed. Attitudes and behaviors do
not change overnight, and managements demand for quick success will heighten resistance and undermine the process.


3) Supervisory Support: Since supervisory support is such an essential ingredient to this process, they must be educated
about EI; they must understand what it is, why it is needed, their new roles and how they will be supported. The
resistance of supervisors can be further reduced by involving them in planning and managing the EI process. Their input
in the plan and its ongoing execution will provide them with a sense of ownership and control and a better plan will
probably result. To be effective, the supervisor must also be provided with the needed skills such as group leadership,
active listening, communications, providing feedback and problem solving through training, coaching and reinforcement.
4) Union Support: If the Union, as an institution, is not involved in the employee involvement initiative, they may well
resist the effort. Awareness programmes should also be conducted for them covering the business scenario, status of the
organization, need of EI, management plans etc, so that they also understand, appreciate and extend necessary support
for the success of the EI programme.
5) Training and Development: Awareness training must be conducted at all levels in the organization. Managers and
supervisors must appreciate that participative management represents a major change from the traditional styles of
management. For them to embrace this change, they must understand the nature, rationale and implications of
participative management. Training in problem solving must also be provided to equip the employees and supervisors /
managers with the skills to analyses problems and to develop solutions.
6) Strategy: Employee involvement requires a well-developed strategy to achieve long-term success. EI challenges long-
held beliefs and impacts broad areas of organizational functioning. Changing management style is probably the most
difficult and frustrating task facing the chief executive who desires to institutionalize the EI process for performance
improvement in the organization. An intelligent, long-term strategy is, therefore, a vital ingredient for success.

UNIT 8 --------- Industrial relations concept
v The term industrial relations refers to relationships between management and labor or among employees and their
organizations.
v Theoretically speaking, there are two parties in the employment relationship labor and management.
v Both parties need to work in a spirit of cooperation, adjustment and accommodation.
v The concept of industrial relations has been extended to denote the relations of the state with employers, workers and
their organizations,
The subject therefore, includes individual relations and joint consultation between employers and workers at their places of
work; collective relations between employers and their organizations and trade unions; and the part played by the state in
regulating these relations.
v The State has also come to play a major role in industrial relations one, as an initiator of policies and the other, as an
employer by setting up an extremely large public sector.
v According to R A Lester, industrial relations involve attempts to have workable solutions between conflicting
objectives and values, between incentive and economic security, between discipline and industrial democracy, between
authority and freedom and between bargaining and cooperation .
v According to the ILO, industrial relations deal with either the relationships between the state and the employers and
the workers organization or the relation between the occupational organizations themselves . The ILO uses the
expression to denote such matters as freedom of association and the protection of the right to organize, the application
of the principles of the right to organize, and the right of collective bargaining, collective agreements, arbitration and
mechanism for cooperation between the authorities and the occupational organizations at various levels of the economy.
PURPOSE/OBJECTIVES OF INDUSTRIAL RELATIONS
In addition to their primary objective IR is bringing about good and healthy relations between employers and employees,
industrial relations are designed.
v To safeguard the interest of labor and of management by securing the highest level of mutual understanding and
goodwill among all those sections in the industry which participate in the process of production.
v To avoid industrial conflict and develop harmonious relations, which are an essential factor in the productivity of
workers and the industrial progress of country.
v To raise productivity to a higher level by lessening the tendency to high turnover and frequent absenteeism.
v To establish and nurse the growth of an industrial democracy based on labor partnership in the sharing of profits and
of managerial decisions.
v To eliminate as far as is possible and practicable, strikes, lockouts and gheraos by providing reasonable wages,
improved living and working conditions, and fringe benefits.
v To establish favorable work climate through open communication and participation culture.
v To reduce industrial conflicts and tensions through collective bargaining.

THE ACTORS AND PROCESS OF LABOR RELATIONS
The key actors in industrial relations are employees or workers and their organization, employers and their organizations and
society (government and pressure groups).
1) Employees and their organizations


Employees or workers are the seller of labor and skills. Employees, trade unions and organization level unions have many
activities at different IR levels
v At the strategic level, they are concerned with political and representation strategies.
v At the middle or collective bargaining level, they are interested in collective bargaining strategies;
v At the workplace level, they work on contract administration, worker participation, and job design.
2) Employers and their organizations
Employers are the buyers of labor and skills. They hire and fire workers. They negotiate terms and conditions of employment
with the unions.
v At the strategic level: formation of business strategies, investment strategies, and human resource strategies.
v At the collective bargaining level: development of personnel policies and negotiating policies.
v At the workplace/organizational relationship level: supervisory style, workers participation, job design.
3) Government (state) /and pressure Groups
v Government promotes and protects the interests of both groups through labor legislation, regulations, labor courts,
tribunals, wage boards etc.
v It enforces the compliance of laws in labor relations.
v Pressure groups lobby and pressurize government to enact or withdraw laws to protect the interests of labor or
employers.
Strategic level: Formation of macroeconomic policies and social policies.
Middle level : Concerned with labor law and administration
Organizational level: they regulate labor standards, workers participation and individual rights.
Labor relations are concerned with managing the interrelationship among the above three actors.
PROCESS OF INDSTRIAL RELATIONS
The process of labor relations involves the following steps;
1) Unionization: A union is an organization of workers. The process of labor relations begins with the formal
establishment of labor union and its recognition by employer. The unionization process consisting of legal basis,
organizing drive, registration, election and recognition should be followed.
2) Dispute or Conflict: Conflict between workers and management. They serve as the starting points for labor relations.
The key issues which lead to dispute or conflict relate to rights and interests. The causes of dispute can be economics,
managerial and political, such as;
v Wages, benefits and services
v Working conditions
v Terms and conditions of employment
v Political interference
v Disciplines and grievance
3) Collective bargaining: It refers to negotiation of agreement between two parties. The unions and management negotiate
at the bargaining table.
4) Contract Settlement: The compromise between union and employer is converted into a written. This contract is
approved by union members.
5) Contract administration : Contract administration is the primary responsibility of management;
The agreed upon contract is administrated by;
v Communicating the contract to all union members and management personnel
v Implementing the contract
v Interpreting the contract for grievance resolution
v Monitoring activities during the contract period
TRADE UNIONS - (CONCEPT)
A trade union is a formal association of workers that promotes and protects the interests of its members through collective
action.
v A continuous and voluntary association of the salary or wage earners and engaged on whatever industry or trade, formed
for safeguarding the interests of its members, maintaining and improving the conditions of their working lives, raising
their status and promoting their vocational interests, and securing better relations between them and their employees,
through collective bargaining.
v It is a relatively permanent formation of workers. It is not a temporary or casual combination of workers. It is formed on
a continuous basis.
v It is formed for securing certain economic (like better wages, better working and living conditions) and social (such as
educational, recreational, medical, respect for individual) benefits to members.
v Collective strength offers a sort of insurance cover to members to fight against irrational, arbitrary (not according to
rules) and illegal actions of employers. Members can share their feelings, exchange notes and fight the employer quite
effectively whenever he goes off the track.
v It emphasizes joint, coordinated action and collective bargaining
Principles of Trade Unions


a) Unity is strength
b) Equal pay for equal work or for the same job
c) Security of services
If any one of them is threatened or is in jeopardy, they would fight back.
WHY DO WORKERS JOIN IN TRADE UNIONS?
Workers join trade unions because they are constrained by circumstances to do so; and because they want:
a) To get economic security; that is they want steady employment with an adequate income
b) To restrain the management from taking any action which is irrational, illogical, discriminatory to the interests of
labor. Workers desire that the assignment of jobs, transfers, promotions, the maintenance of discipline, lay off,
retirement, rewards and punishment should be on the basis of predetermined policy and on the basis of what is fair
and just;
c) To communicate their views, aims, ideas, feeling and frustrations to the management; that is they want to have an
effective voice in discussions which affect their welfare
d) To secure protection from economic hazards beyond their control; e.g. illness, accidents, death, disability, etc.
e) To get along with their fellow workers in a better way and to gain respect in the eyes of their peers;
Labour legislation
v Labor legislation is designed
To protect workers rights to form and join unions and to engage in collective bargaining.
To place limits on some of the powers of unions.
v Labor legislation guides the IR (industrial relations) system and influences the HR activities of the organization.
v Legislation is guided by the national culture and value systems, which differ from country to country, and this is
reflected in the laws of different countries.
Briefly mention the labour legislations in Nepal
v National culture influences the legislative process.
v In Nepal, the state has to play a dual role in implementation the IR system.
v First, it has to play a regulatory role to ensure that IR activities are smoothly ongoing in organizations.
v Second, since the government is still the biggest employer in the economy, as it employs and manages a larger number
of employees in the state enterprises, it has to sit in the negotiation table in order to bring about an agreement in the
collective bargaining process.
Currently, some important laws regulating the HR and IR systems are;
1) The Interim Constitution of Nepal (2007)
Right relating to labor
1) Every worker and employee shall have the right to appropriate labor exercise.
2) Every worker and employee shall have the right to form and join trade unions and to engage in collective bargaining for
the protection of their respective interests, as provided in law.
Obligations of the State
To pursue a policy of extensively increasing opportunities for employment and income generation by increasing investment
for promoting industry, trade and export and ensuring the professional rights of labors;
2) Civil Service Act, 2049 (1993)
Provision relating to professional organization of civil employees
The duties of the trade union of civil employees are to provide suggestion and assistance to the Government of Nepal about
effective and dynamic civil service while taking account of the protection and promotion of employees right and interest.
3) Labor Act, 2048 (1992): The act makes provisions for the rights, interests, facilities and safety of workers and
employees working in enterprises of various sectors. a)Employment and Security of Service, b) Working hours, c)
Remuneration, d)Health and Safety e) Welfare Provision, f) Special Provisions to be Applicable to Special Type of
Enterprise, g) Conduct and Punishments, h) Committee, Officers and Other Provisions, i) Settlement of Labor Dispute
The Act has 11 chapters and 92 sections
4) Labor regulations (1993): This regulates the security of profession and service, welfare and remuneration and health
and safety of workers and employees. Moreover it makes provisions for forming different committees to regulate IR
system in the country.
5) Labor rules relating to the tea Estate: this regulates employment and services, welfare and remuneration and health
and safety of workers working in a tea garden.
6) Trade Union Act 1992: The act makes legal provisions regarding registration, operation of the trade unions and other
necessary provisions for the protection and promotion of professional and occupational rights of the workers of the
enterprises.
7) Trade Union rules (1993): These rules make provisions for the application for registration of a trade union at the
enterprise level, registration certificate procedure, election of trade union s authentic body, the election procedure, and
provide various formats for applications and certificates.


8) Bonus Act 1973: The Act makes provisions for the percent amount of bonus to be distributed out of profit, settlement of
dispute over bonus, penalty for not obeying the order made by the Act, rights to appeal and the regulation of bonus in
the government owned enterprises.
9) Foreign employment Act 1992
This Act was made to provide for the matters relating to foreign employment. Some major provisions of the Act are:
process of licensing foreign employment offices, deposits to be kept, selection of workers for foreign employment,
contract relating to foreign employment and mechanism for investigation and inspection of documents related to foreign
employment offices.
COLLECTIVE BARGAINING-CONCEPT AND PROCESS
Collective bargaining is a procedure by which the terms and conditions of workers are regulated by
agreements between their bargaining agents and employers. The basic objective of collective bargaining
is to arrive at an agreement on wages and other conditions of employment. Both the employer and the
employees may begin the process with divergent views but ultimately try to reach a compromise,
making some sacrifices. As soon as a compromise is reached, the terms of agreement are put into
operation.
According to DeCenzo and Robbins
The negotiation, administration, and interpretation of a written agreement between two parties, at least
one of which represents a group that is acting collectively, that covers a specific period of time.
According to Dessler
The process through which representatives of management and the union meet to negotiate a labor
agreement

The underlying idea of collective bargaining is that the employer and employee relations should not be
decided unilaterally or with the intervention of any third party. Both parties must reconcile their
differences voluntarily through negotiations, yielding some concessions and making sacrifices in the
process. Both should bargain from a position of strength; there should be no attempt to exploit the
weaknesses or vulnerability of one party. With the growth of union movement all over the globe and the
emergence of employers associations, the collective bargaining process has undergone significant
changes. Both parties have, more or less, realized the importance of peaceful co-existence for their
mutual benefit and continued progress.
OBJECTIVES OF COLLECTIVE BARGAINING
The main objectives of collective bargaining are given below:
a) To settle disputes/conflicts relating to wages and working conditions.
b) To protect the interests of workers through collective action.
c) To resolve the differences between workers and management through voluntary negotiations and arrive at a consensus.
d) To avoid third party intervention in matters relating to employment.
FEATURES OF COLLECTIVE BARGAINING
Some of the important features of collective bargaining may be listed thus:
1) Collective: It is collective in two ways. One is that all the workers collectively bargain for their
common interests and benefits. The other is that workers and management jointly arrive at an
amicable solution through negotiations.
2) Strength: Across the table, both parties bargain from a position of equal strength. In collective
bargaining, the bargaining strength of both parties is equal.
3) Flexible: It is a group action where representatives of workers and management expend energies in
order to arrive at a consensus. It has sufficient flexibility, since no party can afford to be inflexible
and rigid in such situations.
4) Voluntary: Both workers and management come to the negotiating table voluntarily in order to have
a meaningful dialogue on various troubling issues. The implementation of the agreement reached is
also a voluntary process.
5) Continuous: Collective bargaining is a continuous process. It does not commence with negotiations
and end with an agreement. The agreement is only a beginning of collective bargaining. It is a
continuous process which includes implementation of the agreement and also further negotiations.


6) Dynamic Collective bargaining is a dynamic process because the way agreements are arrived at; the
way they are implemented, the mental make-up of parties involved keeps changing.
7) Power relationship: Workers want to gain the maximum from management, and management
wants to extract the maximum from workers by offering as little as possible. To reach a consensus,
both have to retreat from such positions and accept less than what is asked for and give more than
what is on offer. By doing so management tries to retain its control on workplace matters and unions
attempt to strengthen their hold over workers without any serious dilution of their powers.
8) Representation: The chief participants in collective bargaining do not act for themselves. They
represent the claims of labor and management while trying to reach an agreement.
9) Bipartite process: The employers and the employees negotiate the issues directly, face to face
across the table. There is no third party intervention.
10) Complex: Collective bargaining is a complex process involving a number of procedures, techniques
and tools: preparation for negotiations, timing, selection of negotiators, agenda, tedious negotiations,
make up of agreement, ratification, enforcement etc
COLLECTIVE BARGAINING PROCESS
The process of collective bargaining is complex. Normally, steps in the process depend on the country-specific legal
provisions and the types of issue. The following steps are involved in the collective bargaining process:
1) Identification of the problem: The nature of the problem influences whole process. Whether the problem
is very important that is to be discussed immediately or it can be postponed for some other
convenient time, whether the problem is a minor one so that it can be solved with the other party s
acceptance on its presentation and does not need to involve long process of collective bargaining
process, etc. It also influences selection of representatives, their size, period of negotiations and
period of agreement that is reached ultimately. As such it is important for both the parties to be clear
about the problem before entering into the negotiations.
2) Selection of negotiators/Representatives: The success of collective bargaining depends on the
skills and knowledge of the negotiators. Considerable time should, therefore, be devoted to the
selection of negotiators with requisite qualifications. Generally speaking, effective negotiators
should have a working knowledge of trade unions principles, operations, economics, psychology,
and labour laws. They should be good judges of human nature and be able to get along with people
easily. They must know when to listen, when to speak, when to stand their ground, when to concede,
when to horse-trade, and when to make counter proposals. Timing is important. Effective speaking
and debating skills are essential.
3) Preparation for Negotiations: Both management and labor representatives have to be involved in
homework to develop their negotiations skills. In this
a) Collection of data: Both labor and management initially spend considerable time collecting
relevant data relating to grievances, disciplinary actions, transfers and promotions, lay-offs,
overtime, former agreements covering wages, benefits, working conditions (internal sources) and
current economic forecasts, cost of living trends, wage rates in a region across various
occupations, competitive terms offered by rivals in the field etc.
b) Climate of negotiations: Both parties must decide an appropriate time and set a proper climate
for initial negotiations. At this stage the parties must determine whether the tone of the
negotiations is going to be one of mutual trust with 'nothing up our sleeves', one of suspicion
with lot of distortion and misrepresentation, or one of hostility with a lot of name calling and
accusations.
c) Bargaining strategy and tactics: The strategy is the plan and the policies that will be pursued at
the bargaining table. Tactics are the specific action plans taken in the bargaining sessions. It is
important to spell out the strategy and tactics in black and white, broadly covering the following
aspects:
i. Likely union proposals and management responses to them.
ii. A listing of management demands, limits of concessions and anticipated union responses.


iii. Development of a database to support proposals advanced by management and to counteract
union demands.
iv. A contingency operating plan if things do not move on track.
Skilled negotiators as mentioned by Richardson, take charge of the issue through logical presentations, good manners and
cool behavior.
4) Negotiations at the bargaining table: When a solution comes through what is popularly known as 'good faith
bargaining' (Both parties are making every reasonable effort to arrive at agreement, proposals are being matched with
counter proposals), a formal document must be prepared expressing everything in a simple, clear and concise form. After
this, both parties must sign the agreement and abide by its terms and conditions during the entire term of the contract.
5) Contract administration: Once the contract is agreed upon and ratified, it must be administered.
Contract administration involves four stages; 1) disseminating the agreements to all union members
and managers, 2) implementing the contract, 3) interpreting the contract and grievance resolution,
and 4) monitoring activities during the contract period.
Disciplinary actions
According to DeCenzo and Robbins
Discipline is a condition in the organization when employees conduct themselves in accordance with the
organizations rules and standards of acceptable behavior.
According to Gray Dessler
Discipline is a procedure that corrects or punishes a subordinate because a rule or procedure has been
violated.
v The purpose of discipline is to encourage employees to behave sensibly at work (where sensible
means adhering to rules and regulations). Discipline is called for when an employee violates one
of the rules. Discipline regulates the behavior of employees.
v Discipline is a process of training a worker so that he can develop self control and can become
more effective in his work.
v When employees willingly conform to rules and standards of acceptable behavior, discipline is said to be good. It is
said to be bad when employees follow rules and standards of acceptable behavior unwillingly or actually disobey
them.
v The best discipline is clearly self discipline, when most people understand what is required at
work. It is based on individual effort. Employees willingly adhere to reasonable rules and
acceptable standards of behavior.
v Discipline is essential for maintenance of industrial peace. Harmonious industrial relations very
much depend on self discipline of management as well as employees.
Factors to Consider when Disciplining
Before we review disciplinary guidelines, we should take at the major factors that need to be considered if we are
to have fair and equitable disciplinary practices. The following seven contingency factors can help us analyze a
discipline problem:
1) Seriousness of the problem: How sever is the problem? As noted previously, dishonesty is usually
considered a more serious infraction than reporting to work 20 minutes late.
2) Duration of problem. Have there been other discipline problems in the past, and over how long a time
span? A first occurrence is usually viewed differently than a third or fourth offense.
3) Frequency and mature of the problem. Is the current problems part of an emerging or continuing
pattern of disciplinary infractions? We are concerned with not only the duration but also the pattern of the
problem. Continual infractions may require but also the pattern of the problem.
4) Extenuating (to weaken the force of) Factors. Are there extenuating circumstances related to the
problem? The student who fails to turn in her termpaper by the deadline because of the death of her
grandfather is likely to have her violation assessed more leniently than will her peer who missed the
deadline because he overslept.
5) Degree of socialization. To what extent has management made an earlier effort to educate the person
causing the problemabout the existing rules and procedures and the consequences of knowledge that the
violator holds of the organizations standards of acceptable behavior.
6) History of the Organizations Discipline practices. How have similar infractions been dealt with in the
past within the department? Within the entire organizations? Has there been consistency in the application
of discipline procedures? Equitable treatment of employees must take into consideration precedents


within the unit where the infraction occurs, as well as previous disciplinary actions taken in other units
within the organization. ? Equity demands consistency against some relevant benchmark.
7) Management Backing (Support). If employees decide to take their case to a higher level in
management, will you have reasonable evidence to justify your decision? Should the employee challenge
your disciplinary action, it is important that you have the data to back up the necessity and equity of the
action taken and that you feel confident that management will support your decision.
What major types of disciplinary problem might be encountered in an Organization?
Frequently encountered problems can be classified as follows.
1) Attendance related: Attendance related problems are serious disciplinary problems in organizations.
They arise due to;
v Unexcused absence (absenteeism), chronic absenteeism, leaving work without prior notice, arriving late for work,
habitual tardiness, abuse of leave etc.
The reasons for attendance related problems are;
a) Lack of harmony between individual s goals and organization s goals.
b) Changing attitudes and values towards employment.
c) No fear of dismissal as a result of being a union member.
d) Employee regard sick leave as earned time off. They consume such leave without getting sick
2) On the job behavior related problems: Disciplinary problems result from non conformance to rules and acceptable
standards of behavior on the job. They adversely affect productivity.
They arise due to;
Insubordination, Smoking in unauthorized places, Fighting, Gambling, Failure to use safety devices, Failure to report
injuries, Carelessness, Sleeping on the job, Using abusive or threatening language with supervisors, Possession of
narcotics or alcohol, Possession of firearms(gun, pistol) or other weapons, Sexual harassment, destruction of
organizational property
3) Dishonesty related problems: Disciplinary problems result mainly from lies or stealing.
They arise due to;
Theft (employee steal the organization s property), falsifying employment application, willfully damaging organizational
property, falsifying work records, concealing defective works
4) Outside activities-related problems: Disciplinary problems result from activities of employees outside of their work.
They either adversely affect on the job performance or reflect negatively on the image of the organization.
They arise due to;
Involvement in unauthorized strikes, criminal activities outside the job (smuggling), criticizing the management in
public, working for a competing organization; leaking confidential information to competitors, making speech
embarrassing to the organization
Disciplinary Guidelines
All human resource managers should be aware of disciplinary guidelines. In the section, we will briefly describe them.
a) Make Disciplinary Action Corrective Rather than punitive. The objective is to correct an employees undesirable
behavior. While punishment may be a necessary means to that end, one should never lose sight of the eventual objective.
b) Make disciplinary Action progressive. Although the type of disciplinary action that is appropriate may vary depending
on the situation, it is generally desirable for discipline to be progressive. Only for the most serious violations will an
employee be dismissed after a first offense. Typically, progressive disciplinary action begins with a verbal warning and
proceeds through a written warning, suspension, and, only in the most serious cases, dismissal.
c) Follow the Hot-stove Rule. Administering discipline can be viewed as analogous to touching a hot stove (hence, the
hot-stove rule). According to the Red Hot Stove rule, disciplinary action should have the following consequences:
i. Burns immediately If disciplinary action is to be taken, it must occur immediately so the individual will
understand the reason for it. With the passage of time, people have the tendency to convince themselves that they are
not at fault.
ii. Provides warning It is very important to provide advance warning that punishment will follow unacceptable
behavior. As you move closer to a hot stove, you are warned by its heat that you will be burned if you touch it.
iii. Gives consistent punishment Disciplinary action should also be consistent in that everyone who performs the
same act will be punished accordingly. As with a hot stove, each person who touches it is burned the same.
iv. Burns impersonally Disciplinary action should be impersonal. There are no favorites when this approach is
followed.
Administering Discipline
There should be adequate mechanisms to initiate disciplinary action against employees in the organization. Some of these
begin prior to the violation of rules and some come after such violations. A brief discussion of orderly procedures of
administering discipline in the organization is discussed below.


1) Define disciplinary policies and procedures: Top management has to define its policies and procedure of disciplining
employees in the organization. In this process they have to clearly state what the expected job behavior is and how they
want to achieve this.
2) Respond immediately: Even in the best supervisory and managerial conditions, behavioral problems are possible,
which might cause a violation of rules and regulations. When a violation occurs, managers have to respond quickly to
discipline the employee.
3) Provide a warning: Before initiating any disciplinary action, managers have to provide a warning to check violation at
source. But, without any solid reasons, a manager cannot warn.
4) State the problem specifically: Managers have to explain clearly and specifically about time, place, individuals
involved and any mitigating circumstances surrounding the violation.
5) Allow the employee to explain his or her position: Provide an opportunity to the violator to explain why and how he
or she behaves undesirably. Managers have to listen carefully and try to understand his or her problem.
6) Keep discussion impersonal: Managers must be concerned with the type of violation, not the personality of the violator.
7) Be consistent: Disciplinary actions that managers choose should be consistent for all employees. Inconsistency in
enforcing the rules for violation may damage a manager s effectiveness.
8) Take progressive action: If a manager chooses penalties to correct the repeated undesirable behavior, he or she has to
take a progressive action. Thus, the manager starts with a verbal warning and then proceeds through a written reprimand,
suspension, a demotion or pay cut, and finally dismissal.
9) Obtain agreement on change: Finally, the employee has to convince the manager how he or she plans not to repeat the
violation in the future.
Disciplinary Actions
Discipline implies adherence to rules and standards of acceptable behavior. Indiscipline requires disciplinary actions.
Disciplinary action is punishment associated with violation of rules.

Disciplinary action should aim to correct undesirable behavior. It should not be punitive. It should be progressive. It should
be based on severity and frequency of the offence. It should be applied consistently in an impersonal manner.
Disciplinary action generally follows a typical sequence of following four steps:


Figure: The Progressive Discipline Approach

1) Written Verbal Warning: A written, verbal warning is a temporary record of a reprimand that is then placed in the
manager s file on the employee. This written verbal warning should state the purpose, date, and outcome of the interview
with the employee. Because of the need to document this step in the process, the verbal warning must be put into writing.
The written verbal reprimand is best achieved when completed in a private and informal environment. The manager
should begin by clearly informing the employee of the rule that has been violated and the problem that this infraction has
caused.
2) Written Warning: The second step in the progressive discipline process is the written warning. It is the first formal
stage of the disciplinary procedure. This is because the written warning becomes part of the employees official
personnel file. This is achieved by not only giving the warning to the employee but sending a copy to HRM to be


inserted in the employees permanent record. Employee is advised in writing of the violation, its effects, and potential
consequences of future violations. Then the manager writes up the warning-stating the problem, the rule that has been
violated, any acknowledgment by the employee to correct her behavior, and the consequences from a recurrence of the
deviant behavior-and sends it to HRM.
3) Suspension: A suspension or layoff usually takes only the prior steps have been implemented without
the desired outcome. Exceptions-where suspension is given without any prior verbal or written
warning occasionally occur if the infraction is of a serious nature. A suspension may be for one day
or several weeks; disciplinary layoffs in excess of a month are rare. Some organizations skip this
step completely because it can have negative consequences for both the company and the employee.
From the organizations perspective, a suspension means the loss of the employee for the layoff
period. If the person has unique skills or is a vital part of a complex process, her loss during the
suspension period can severely impact her department or the organization performance if a suitable
replacement cannot be located. From the employees standpoint, a suspension can result in the
employee returning in a more unpleasant and negative frame of mind than before the layoff.
4) Dismissal: Management s ultimate disciplinary punishment is dismissing the problem employee. Dismissal should be
used only for the most serious offenses (illegal act). Yet it may be the only feasible alternative when an employees
behavior seriously interferes with a department or the organization s operation. A dismissal decision should be given
long and hard consideration. For almost all individuals, being fired from a job is an emotional trauma. For employees
who have been with the organization for many years dismissal can make it difficult to obtain new employment or may
require the individual to undergo extensive retraining. In addition, management should consider the possibility that a
dismissed employee will take legal action to fight the decision.
Grievance Handling
Grievance
Introduction
Every employee has certain expectations which he thinks must be fulfilled by the organization he is working for. When the
organization fails to do this, he develops a feeling of discontent or dissatisfaction. When an employee feels that something is
unfair in the organization, he is said to have a grievance.

According to Jucius, a 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.
According to Dale S. Beach Grievance is any dissatisfaction or feeling of injustice in connection with ones employment
situation that is brought to the attention of management.
According to Keith Davis Grievance is any real or imagined feeling of personal injustice that an employee has about the
employment relationship.
FEATURES OF GRIEVANCE
If we analyze this definition, some noticeable features emerge clearly:
a) A grievance refers to any form of discontent or dissatisfaction with any aspect of the organization.
b) The dissatisfaction must arise out of employment and not due to personal or family problems.
c) The discontent can arise out of real or imaginary reasons. When the employee feels that injustice has been done to him,
he has a grievance. The reasons for such a feeling may be valid or invalid, legitimate or irrational, justifiable or
ridiculous.
d) The discontent may be voiced or unvoiced. But it must find expression in some form. However, discontent per se is not a
grievance. Initially, the employee may complain orally or in writing. If this is not looked into promptly, the employee
feels a sense of lack of justice. Now the discontent grows and takes the shape of a grievance.
e) Broadly speaking, thus, a grievance is traceable to perceived non-fulfillment of ones expectations from the organization.
FORMS OF GRIEVANCES
A grievance may take any one of the following forms: (a) factual, (b) imaginary, (c) disguised.
a) Factual: A factual grievance arises when legitimate needs of employees remain unfulfilled, e.g., wage hike has been
agreed but not implemented citing various reasons.
b) Imaginary: When an employees dissatisfaction is not because of any valid reason but because of a wrong perception,
wrong attitude or wrong information he has. Such a situation may create an imaginary grievance. Though management is
not at fault in such instances, still it has to clear the fog immediately.
c) Disguised: An employee may have dissatisfaction for reasons that are unknown to himself. If he/she is under pressure
from family, friends, relatives, neighbors, he/she may reach the work spot with a heavy heart.
CAUSES OF GRIEVANCE
Grievances may occur for a number of reasons:


a) Economic: Wage fixation, overtime, bonus, wage revision, etc. Employees may feel that they are paid less when
compared to others.
b) Work environment: Poor physical conditions of workplace, tight production norms, defective tools and
equipment, poor quality of materials, unfair rules, lack of recognition, etc.
c) Supervision: Relates to the attitudes of the supervisor towards the employee such as perceived notions of bias,
favoritism, nepotism, caste affiliations, regional feelings, etc.
d) Work group: Employee is unable to adjust with his colleagues; suffers from feelings of neglect, victimization
and becomes an object of ridicule and humiliation, etc.
e) Miscellaneous: These include issues relating to certain violations in respect of promotions, safety methods,
transfer, disciplinary rules, fines, granting leave, medical facilities, etc.
GRIEVANCE PROCEDURE
v Grievance procedure is a formal, systematic process that permits employees to complain about matters affecting
them and their work.
v Grievance procedures are typically designed to resolve grievances as quickly as possible and at the lowest level
possible in the organization.



Step 5 Grievance (rights)
arbitration



NO NO
Step 4 Senior
Management
Settlement
NO

Employee, grievance
Committee, National
Union representative


NO
Step 3
Labor relation
Specialist & Plant
facilities manager
Settlement
NO

Employee, Steward
Union, Grievance
Committee


NO
Step 2
Employee


Settlement
No

Supervisor & Labor
relation Specialist


NO
Step 1
Supervisor

Settlement


Employee and union
steward

1) Step 1: Employee supervisor: This is generally regarded as the initial step to resolve an employee problem. Here,
the employee tries to address the issue with her supervisor, seeking some resolution. If the issue is resolved here, nothing
further need be done. Depending on the problem, this step may be skipped altogether, should the employee fear
retaliation from the supervisor.
2) Step 2: Employee employer relations: failing the satisfaction desired in step 1, the employee files the complaint with
the employee relations representative. As part of his or her job, the employee relation representative investigates the
matter, including gathering information from both parties, and makes a recommendation for resolution.
3) Step 3: Employee - department head: If employee relations fail to correct the problem, or if the employee wishes to
further exercise her rights, the next step in the complaint procedure is to meet with the area manager. Once again, there
will follow an investigation and decision. It is important to note, however, that if employee relations found no validity in
the individual s charge, they are not responsible for continuing to assist the employee.
4) Step 4: Employee president: In this step involves taking the issue to the president. Generally, although employee
rights may be protected under various state laws, the president s decision in final.
YES
YES
YES
YES
GRIEVANCE
PROCEDURE


5) Step 5: Finally, if those efforts are unsuccessful in resolving the grievance, the final step is for the complaint to go to
arbitration-called grievance arbitration.

A formal grievance handling procedure is presented below
1) Contact supervisor: When there is any problem about any employment related issue. An
employee first contacts his or her supervisor with the help of the union steward. They discuss the
grievance and try to solve it in the shop floor. This is some sort of informal discussion. If
grievance is not settled with agreement in this step, the next step will be effective.
2) Meet with management and labor relations specialist: At this step the employee together
with union specialist meets with the management. They try to reach an agreement after
discussing the issues.
3) Meeting between executives and top management: When the concerned manager fails to reach
an agreement, the complaint can enter into the third step of grievance procedure. At this step top
management and union executives sit together to reach an agreement. Because of the authority of
the top management to make decisions, there is the possibility of setting complaints at this level.
4) Arbitration: This is the final step where an independent arbitrator mediates between
management and employees. The mediator goes through the rules to handle grievance to settle it
in a way acceptable to all parties involved. He or she may be appointed by the government or by
other private agencies.
GUIDELINES FOR HANDLING GRIEVANCES
The following guidelines may help a supervisor while dealing with grievances. He need not follow all these steps in every
case. It is sufficient to keep these views in mind while handling grievances
a) Treat each case as important and get the grievance in writing.
b) Talk to the employee directly. Encourage him to speak the truth. Give him a patient hearing.
c) Discuss in a private place. Ensure confidentiality, if necessary.
d) Handle each case within a time frame.
e) Examine company provisions in each case. Identify violations, if any. Do not hold back the remedy if the company
is wrong. Inform your superior about all grievances.
f) Get all relevant facts about the grievance. Examine the personal record of the aggrieved worker. See whether any
witnesses are available. Visit the work area. The idea is to find where things have gone wrong and who is at fault.
g) Gather information from the union representative, what he has to say, what he wants, etc. Give short replies,
uncovering the truth as well as provisions. Treat him properly.
h) Control your emotions, your remarks and behavior.
i) Maintain proper records and follow up the action taken in each case.
Be proactive, if possible. Actually invite workers to ventilate their grievances freely, listen to the other side patiently, explain
the reasons why the problems arose and redress the grievances promptly.
ADVANTAGES OF HAVING A GRIEVANCE HANDLING PROCEDURE
The following are some of the distinct advantages of having a grievances handling procedure:
a) Upward communication from employee to management is facilitated. Managers become aware of employees
grievances.
b) The management can know the employees feelings and opinions about the company s policies and practices. It can feel
the pulse of the employees.
c) With the existence of a grievance handling procedure, the employee gets a chance to ventilate his feelings. He can let off
steam through an official channel.
d) It keeps a check on the supervisor s attitude and behaviour towards their subordinates. They are compelled to listen to
subordinates patiently and sympathetically.
e) The morale of the employees will be high with the existence of proper grievance handling procedure. Employees can get
their grievances redressed in a just manner.
f) Possibilities of arbitrary actions by supervisors is reduced.
DISADVANTAGES OF HAVING A GRIEVANCE HANDLING PROCEDURE
a) Grievance procedure can be time consuming and costly
b) Necessary human relations skills may be lacking to deal with the grievances at successive steps.
c) Reprisals by management against grievant employees can happen.

CONFLICT MANAGEMENT UNILATERAL, JOINT AND THIRD PARTY DECISION
Conflict


According to Robbins, Conflict can define as a process that begins when one party perceives that another party has
negatively affected, or is about to negatively affects, something that the first party cares about.
v Conflict is the process in which one party perceives that its interests are being opposed or negatively affected by
another party.
v Conflict is a process in which people disagree over significant issues, thereby creating friction between parties.
v Conflict can exist when people have opposing interests, perceptions, and feelings; when those involved recognize
the existence of differing points of view; when the disagreement is ongoing; and when opponents try to prevent each
other from accomplishing their goals.
Although conflict can be destructive, it can also be beneficial when used as a source of renewal and creativity.
Conflict Good or Bad
Conflict can have both positive and negative consequences. On the positive side, conflict can bring energy to a competition
and focus participants on the task at hand. It can also increase group cohesion and stimulate open discussion of issues. On the
negative side, conflict can cause participants to lose sight of common goals and focus on winning at all costs. In addition, it
can lead to distorted judgments and a lack of cooperation. Finally, the losers in a conflict feel demoralized and lose
motivation; this loser effect harms long-term relationships and overall organizational performance.

Types and levels of Conflict
a) Inter-group conflict occurs when groups within and outside the organization disagree on various issues.
b) Interpersonal conflict is due to differences in goals, values, and styles between two or more people who are required to
interact.
c) Intra group conflict occurs within a work group over goals and work procedures.
d) Intrapersonal conflict is a person's internal conflict over divergent goals, values, or roles.
e) Inter group conflict can occur at two levels which are horizontal and vertical. Horizontal conflict takes place between
departments or groups at the same level of the organization. In contrast, vertical conflict occurs between groups at
different levels of the organization.
Conflict Management
Individual Conflict Management Styles (Unilateral)
1) The obliging style of conflict management is based on low concern for self, high concern for others, and focusing on
the needs of others while satisfying or ignoring personal needs. This works best when issues are unimportant, knowledge
is limited, there is long-term give and take, and the person managing the conflict has no power.
2) The avoiding style is based on low concern for self and others and a focus on suppressing, setting aside, and ignoring
the issues. This is appropriate when the conflict is too strong and parties need to cool off.
3) The integrative style shows high concern for self and for others and focuses on collaboration, openness, and exchange
of information. This is used when issues are complex, when commitment is needed, when dealing with strategic issues,
and when long-term solutions are required.
4) The dominating style shows high concern for self, low concern for others, and focuses on advancing own goals at any
cost. This is used when time is short, issues are trivial, all solutions are unpopular, and an issue is important to the party
resolving the conflict.



5) The compromising style shows moderate concern for self and others and focuses on achieving a reasonable middle
ground where all parties win. This is used when goals are clearly incompatible, parties have equal power, and a quick
solution is needed.
Resolving conflict through negotiation (Joint)
The next conflict management process is negotiation. It refers to the process by which two conflicting parties attempt to
resolve their divergent goals by redefining the terms of their interdependence. While negotiating, two conflicting parties will
make a joint decision to agree, even though they still have different preferences. There are two types of negotiation strategies:
1) Distributive Strategy: refers to the win-loss, fixed amount situations where one party s gain is another party s loss. This
type of strategy is often adopted to solve economic issues such as sharing salary and other monetary benefits in
organizations.
2) Integrative Strategy: Using this strategy, parties in conflict will try to find a solution of problems that will benefit both.
This strategy is useful to use the resources for the benefit of all involved in the conflict process. Each party involved in
conflict tries to identify issues, assess alternatives, openly expresses preferences and they jointly reach a mutually
acceptable solution.

Third Party Conflict Resolution
This is the situation where interference of a third person is possible to resolve the conflict between the parties. The person is
expected to play the neutral role in the negotiation process. There are three types of third party conflict resolution, as
described below:
1) Mediation: A mediator is a neutral third party who facilitates a negotiated solution by using reasoning and persuasion,
suggesting alternatives, and the like. Mediator will have a high degree of control over the process and low degree of
control over the final decision of the conflict. The parties will make the final decision in the conflict process.
2) Arbitration: An arbitrator is a third party with the authority to dictate an agreement. Arbitration can be voluntary
(requested by the parties) or compulsory (forced on the parties by law or contract). The big plus of arbitration over
mediation is that it always results in a settlement. In this case arbitrators will have a high degree of control over the final
decision but low control over the process. Since parties are clear about the guiding rules and regulations in the process,
the arbitrator has little or no control over the process. He or she can only decide on the final outcome of the conflict.


















3) Inquisition: In this case an inquisitor will have a high degree of control over process and outcomes of the conflict. The
inquisitor can enter into the process by defining rules and regulations and, at the same time, make final decisions on
conflict.
Labour /Industrial Dispute
Labor disputes are differences, conflicts or strife between workers and employers. They manifest in the formof
strikes, lockouts and other industrial actions. Disputes can be between employers and workers, between
employers and employers, between workers and workers, and between employers and government. In practice,
most disputes are between employer and workers.
Types of Dispute
a) Dispute of right, which relate to the application or interpretation of an existing agreement or contract of
employment such as training and development, working conditions, fair wage levels.

High

Level of Process
Control



Low
Low level of decision High
Control

Figure; Types of Third Party Interventions
Mediation
Inquisition
Arbitration


b) Dispute of interest: relate to claim by employees or proposal by management about the terms and conditions
of employment such as, debates over the determination of new wage levels, bonuses, leave and hours of work
and indiscipline.
Causes of labour disputes
Some important causes if disputes are the following:
a) Compensation demand: relate to pay, benefits and services. Inflationary pressures increase cost of living.
High cost of living leads to demand by labour for higher compensation. Employers want to pay the least and
workers want to get the most in terms of wages, benefits and services.
b) Bonus: No bonus or insufficient bonus can lead to disputes. Labours expect a share in the profit. Employers
want link bonus to productivity.
c) Working conditions: Hours of work, working environment, safety, health, and other factors related to
working conditions.
d) Industrial sickness: Economic recession, taxation policies and changing competitive forces make industries
sick. This may require lay off or downsizing of organizations.
e) Modernization and automation: IT has increased organizations efficiency, at the same time they pose a
threat for unskilled labour force. Many workers are resisting such changes and creating disputes in the
organization
f) Lack of communication: employers are generally unwilling to talk over disputes with workers and unions.
This blocks communication and causes dispute.
g) Disciplinary actions: disciplinary actions related to violence, attendance, job behaviour, dishonesty, and
outside activities of workers also result in discipline.
h) Absence of wok council and grievance handling procedures at the work site
i) Non recognition of labour union
j) Multiple unionismaffiliated with national parties
k) Lack of consultation in recruitment and development
l) J ob security
What is an industrial dispute? How can it be resolved?
Industrial dispute defined as any dispute or difference between employers and employers, or between employees
and employees, or between employers and employees, which is connected with the employment, or non-
employment, or the terms of employment or with the conditions of work of any person.
Settlement of labour disputes
The employers and employees entering into dispute after their differences in the settlement process. The methods available
for settlement of labor disputes are;
1) Collective bargaining: It refers to negotiation, settlement and administration of a time-bound agreement
between labour and management to settle disputes. Representatives of labour and management sit together
and negotiate to settle the disputes.
2) Grievance procedure: when a complaint about dispute is filed, it becomes grievance. Grievances are
worker s perception of unfair treatment on the job. They result in dissatisfaction. It consists of several steps
through which a worker can take his grievances to successfully higher levels of management for redressal.
Grievance procedure facilitates communication. Possibility of arbitrary actions are reduced
3) Conciliation: conciliation is a process whereby a third party provides assistance in settling disputes. The
settlement of the dispute depends on the agreement of the parties involved. The third party does not impose its
decisions but brings themtogether. It generally deals with interest disputes.
4) Mediation: Mediation is a process whereby the third party is more active and submits proposals for dispute
settlement. The parties involved in dispute are free to accept or reject such proposals. The mediator cannot
force agreement but facilitates it. Mediators should be impartial and be trusted by both parties.
5) Adjudication: It is process of mandatory settlement of a dispute by ordinary courts, labour courts or a
tribunal. This method only deals with rights dispute. The verdict of adjudication is binding on both the parties.
When all the above efforts have failed the solutions through adjudication are sought to the disputes.


Dismissal and outplacement
Dismissal
v Dismissal is the termination of the services of an employee as a punitive measure for some misconduct.
v Dismissal is the most drastic disciplinary step the employer can take. Because of this, it requires special care.
v The best way to handle a dismissal is to avoid it in the first place. Many dismissals start with bad hiring decisions.
Using effective selection in practices including assessment tests, reference and background checks, drug testing, and
clearly defined job descriptions can reduce the need for many dismissals.
v Before dismissing the employee, advance notice of the impending danger must be given and the reasons of dismiss must
be stated clearly. The employee should be given the opportunity to defend himself.
v Finally, before dismissing an employee, the employer has to hold disciplinary proceedings
(domestic enquiry) in a proper way.
Reasons/Grounds for dismissal
There are four bases for dismissal: unsatisfactory performance, misconduct, lack of qualification for the job, and changed
requirements of the job.
a) Unsatisfactory performance: mean persistent failure to perform assigned duties or to meet prescribed job standards.
Specific grounds include excessive absenteeism, tardiness, a persistent failure to meet normal job requirements, or an
adverse attitude towards company, supervisor, or fellow employees.
b) Misconduct: is deliberate and intentional violation of the employer s rules and may include stealing, rowdy behavior,
and insubordination (disobedient).
c) Lack of qualification for the job is an employees inability to do the assigned work although he or she is diligent (hard
working).
d) Changed requirements of the job refer to an employees inability to do the job after the employer changed the nature
of the job. Again employee may be industrious, so it reasonable to retrain or transfer this person, if possible.
Outplacement:
v Outplacement is a human resource program created to help separated employees deal with the emotional stress of job
loss and to provide assistance in finding a new job
v Employees who are retrenched and laid off may have difficulty in finding an alternative job if the
market conditions are adverse. There might be a demand for certain category of employees
possessing multiple skills, but the retrenched employees may not have those marketable skills . To
fill this vacuum, some organizations offer training in such skills and assist the retrenched employees
in finding a suitable job elsewhere.
v The Goals of Outplacement: The goals of outplacement reflect the organization's need to maintain employee
productivity. The most important of these goals are (1) reducing the moral problems of employees who will be laid off so
that they will remain productive; (2) minimizing the amount of litigation initiated by separated employees; and (3)
assisting separated employees in quickly finding comparable jobs.
v Outplacement Services: The most common outplacement services provided to separate employees are emotional
support and job-search assistance.

The role of HR Department in employee separations and outplacement
Cooperation and teamwork characterize the relationship between managers and HR staff in the employee separation process.
HR staff can act as valuable advisers to managers, particularly in the dismissal process, by helping them avoid mistakes that
can lead to claims of wrongful discharge. They can also help protect the employee whose rights may be violated by
managers. Furthermore, they may assist in the development of and/or selection of the contents of voluntary severance plans
or buyouts, early retirement plans, and outplacement services
Outplacement counseling is a systematic process by which someone you ve terminated is trained and
counseled in the techniques of conducting a self-appraisal and securing a new job appropriate to his or
her needs and talents.
Outplacement assistance includes efforts made by employer to help a recently separated worker find a
job (Davis, p.269). Apart from training, some multinational firms offer assistance in the form of paid
leave, travel charges for attending interviews, waiving bond requirements to the retrenched employees.
Lay off: A layoff is a temporary removal of an employee from the payroll of an organization dueto reasons beyond the
control of an employer. Global competition, reductions in product demand, changing technologies that reduce the need for
workers, and mergers and acquisitions are the primary factors behind most layoffs.
Retrenchment: Retrenchment is the permanent termination of an employee's services due to economic reasons (such as
surplus staff, poor demand for products, general economic slowdown, etc.)
Bank of America has given a fat sum as liberal retrenchment compensation running into several lakhs
of rupees to all eligible retrenched officers in 1998. It has also held counseling sessions for those officers


on issues such as how to repay their car/house loans, where for invest their money, etc. Search firms
were also hired to find suitable employment. When the downsizing effort stabilized, Bank of America
had even extended the former employees a warm welcome back home! Such outplacement assistance,
in whatever form it is available, assures the remaining employees of the management s commitment
towards their welfare if a further downsizing ever happens to take place in future.
Current situation of IR in Nepal;
The history of labor relations in Nepal is about sixty years old. The following is the scenario of
Nepal s labor relations and management practices.
1) Suspicious management: The Nepalese management is suspicious of trade unions and their activities. It has taken a
reactive approach to labor relations. Whenever there is industrial unrest, management reacts. A proactive strategy is
lacking which requires careful anticipation and prediction of the moves of labor unions.
2) Union rivalry: Nepalese trade unions are highly politicized through their affiliation to political parties. This has divided
trade unions on ideological lines. Multiplicity of trade unions is a common feature of large Nepalese organizations. Inter-
union rivalries have adversely affected the effectiveness of labor unions.
3) Collective bargaining: Collective bargaining in Nepal lacks good faith. Management regards it as an encroachment in its
prerogative to manage. Labor regards it as a weapon to fulfill their demands. Both labor and management do not make
every reasonable effort to bargain in good faith and arrive at settlement. The agreements remain poorly implemented.
4) Evolving legal framework: Nepal lacks a comprehensive legal framework for labor relations. It is still evolving.
Government mediation has become common in settling labor disputes through a fire brigade approach .
5) Labor policy and strategy: Nepal lacks a comprehensive labor policy. There is a piece meal approach to labor relations.
Organizations lack labor relations strategy.
6) Quality of work-life: Nepalese trade unions are obsessed with wage increase demands. Economic considerations
dominate their actions. Quality of work life is least considered in labor relations. Unacceptable labor practices such as
child and bonded labor are present.
7) Education and training: Both labor and management in Nepal lack education and training about managing labor
relations. This has led to the lack of professional approach to labor issues.
8) Employee Grievance: Employee grievances in Nepal are increasing. They are related to management about; transfer,
promotion, work assignment, pay, benefit and services, disciplinary actions.
Emerging concepts in industrial relations
Industrial relations in the twenty first century are at crossroads. The emerging concepts in industrial relations are;
a) Labor Management Cooperation: Historically labor management relations were based on conflict. In recent times, this
relationship is getting based on cooperation. Both management and labor unions have realized the importance of
cooperation to increase productivity, improve quality, reduce costs and increase incomes of members.
b) Increasing influence of unions: In recent years, the membership of unions has been declining. New technologies, new
production systems and outsourcing have led to decline in number of employees. However, the influence of labor unions
is increasing. The win rate for union candidates in political elections is increasing. Public employees are also getting
unionized. Even professionals and white-collar workers have joined unions. Nontraditional employees are also getting
unionized.
c) New tactics: labor unions are using new tactics. They are getting aggressive. They are pushing governments to pass new
laws that safeguard their rights and interests. They also file lawsuits to support the rights and interests of employees.
They are also promoting employee participation programmes.
d) Multiplicity of unions: The trade union movement is getting fragmented. Multiplicity of unions is caused by political
ideological rifts (disagreement), personal ambitions of leaders, craft (special skills or techniques) divisions among
workers, and narrow thinking of management.
e) Politically Free Unions: labor unions are getting rid of political influences. The trend towards depoliticization (make
non-political) of unions is increasing. Unions are getting professional leadership to deal with management.
f) International labor relations: There are differing perspectives on industrial relations among countries. American
multinational companies tend to centralize labor relations in headquarters. European multinational companies
decentralize labor relations to host countries. In Europe, trade unions are more acceptable compared to USA. In Japan,
unions are closely identified with the organization.


HRM in Nepal
Human Resource Planning Practices in Nepalese Organization
HRP practices in Nepalese organizations are indicated by;
1) Poor tradition of Human Resource Planning: Nepal has a poor tradition of human resource planning. The
Feudocratic Administrative Model promotes ad-hocism, guesswork and hunch in human resource planning. The
education system is not friendly to the needs of labor market. Nepalese managers regard human resource planning as
an area of low priority. Nepalese organizations lack right number and right kinds of people at the right place and at
the right time. Most organizations lack systems for human resource planning. HRP techniques are poorly
understood. HRP is not linked with overall corporate plan.
2) Lack of assessment of current Human Resources: Most Nepalese organizations lack up to date human
resource inventory which describes the skills currently available. They also lack effective Human Resource
Information database, replacement chart and job analysis system is lacking in Nepalese organization.
3) Poor demand forecasts: Nepalese organizations lack proper demand forecasting in terms of number and
skills of people required. Even the government has stopped making manpower demand forecasts for its
developmental planning. Business organizations lack reliable revenue forecasts which serve as the basis for the
forecast of human resource demand.
4) Poor supply forecasts: Nepalese organizations lack proper supply forecasts of human resources from
inside and outside sources. Promotion and transfer are not planned in advance. Supply outstrips demand for human
resource in Nepal. Nepalese labor market is supply-driven. Even the professionals and skilled techniques are
suffering from unemployment.
5) Mismatch of demand and supply: Nepalese organizations do not give proper attention to match demand
and supply forecasts to determine future shortage and supplies. Succession planning is not done by Nepalese
managers. They seem to be afraid of this concept. They fear that the persons being developed for succession may
oust them from their jobs.
6) Short term horizon: HRP in Nepal has generally one year horizon. Strategic planning is lacking. HRP is
not regarded as a part of overall strategic planning.
7) Overstaffing in government and public enterprises: Most government agencies and public enterprises
in Nepal suffer from overstaffing. The number one priority of Nepalese politicians is to provide employment t o
their political workers. HRP is completely neglected by politically appointed managers of public enterprises.
8) Private sector reluctance (unwilling): The family owned and managed private sector organizations do not bother
about human resource planning. They prefer to hire their relatives, friends and near and dear . Even the big houses
in the private sector lack proper human resource planning.
RECRUITMENT AND SELECTION PRACTICES IN NEPAL
1) Importance of recruitment: Recruitment is an importance aspect of human resource
management in Nepal. Employment opportunities are rather limited because of poor economic
growth and slow pace of individualization. The labor market is glutted with candidates seeking
jobs. Organizations do not face problems in attracting a large pool of prospective candidates to
fulfill their human resource needs.
2) Sources of recruitment: Nepalese organizations use a mix of internal and external sources of
recruitment. The following sources are used for requirement of government employees:




Post By open
competition
By Promotion
By evaluation
Of competency
By internal
competitive
examination
By adjustment of
promotion by
evaluation of work
performance and
experience
Classless/
Non-gazetted
fithth class
100%

- - -
a) Non-gazetted positions
Fourth class - - - -


Third Class 100% - -
Second Class 60% 20% 20% -
First Class 60% 20% - 20%
b) Gazetted positions
1) Third Class 70% 10% 10% 10%
2) Second Class 10% 60% 20% 10%
3) First Class 10% 60% 10% 10%
In order to make inclusive the civil service, forty-five percent posts of the posts to be fulfilled by
open competition shall be set aside and be filled up by having separate competition between the
following candidates only, by considering the percentage into cent percent:
a) Women -Thirty Three Percent
b) Adiwasi/Janjati -Twenty Seven Percent
c) Madhesi -Twenty Two Percent
d) Dalit - Nine Percent
e) Disabled (differently able)- Five Percent
f) Backward Area - Four Percent

For all open competition oriented posts, recruitment is done by the public service commission. The
concerned ministry should request recruitment for specified vacancies. Minimum qualification has been
laid down for each post. The general principles prescribed by the public service commission are
generally followed by all public enterprises for their requirement.

Friend and relatives are the main sources of recruitment for private sector. But the public companies do
seek candidates from labor market. In industries, job posting and employee referrals serve as important
methods for internal recruitment.
Methods used for external recruitment are:
a) Advertisements: Gorkhapatra and Kantipur are the important daily newspapers for
making recruitment advertisement.
b) Walk-ins: this method is used for recruitment of factory workers, manual workers on daily
wage basis, and even teachers in private schools.
c) Labor contractors: they supply non skilled laborer in industries. Construction industry
depends heavily on labor contractors for supply of laborers.
3) Selection: the selection process for government employees consists of:
a) Application forms are evaluated. Screening test is administered for officer-level new
entrants.
b) Selection tests are administered; they are written tests.
c) Selection interview is held. It is generally semi-structures conducted by a panel.
d) Hiring decision is made
e) Medical examination is done.
The written examination and interview are the major tools for selection purposes. The
organizations are required to cope with ever increasing number of candidates for selection
purposes. The selection of candidates in the unorganized private sector is based on the
subjective judgment of the owner and personal relationship counts most. The selection
practices also differ from organization to organization. Private sector banks short list the
candidates and use outside agencies for selection purposes.

It can be concluded that the acquisition of human resources in Nepalese organizations is not
based on proper human resource planning. Nepotism, favoritism and bending of rules to
suit the favored candidates tend to be widespread. Placement is not appropriate. Socialization
is neglected.


HRD in Nepalese organizations
The opening-up of the Nepalese economy through liberalization and globalization has increased
the importance of HRD in recent years.
HRD in Nepal suffer from the following problems;
1) Lack of conceptual celerity: HRD is misunderstood in Nepalese organizations. It is a narrow
concept synonymous to training. Mechanisms of HRD such as management development,
career planning and development, performance appraisal, reward management and employee
welfare activities have remained neglected. HRD in Nepal is concerned with skills. It is least
concerned with potential development to handle future jobs and responsibilities.
2) Lack of clear-cut policy: In the absence of clear policy, decisions related to HRD are made on
an ad-hoc basis.
3) Lukewarm (unenthusiastic) top management support: HRD in Nepal is accorded the least
priority. It is not regarded as a competency building exercise. Management support at top level
is lukewarm for HRD. Managers do not devote sufficient time for HRD matters.
4) Poor planning: Nepalese organizations lack effective HRD planning to predetermine HRD
needs. HRD programming is lacking. HRD in Nepal is not continuous process to develop the
skills and potential of employees.
5) Unsupportive organizational climate: lack of mutuality of interests between management
and employees. Management is suspicious of labor and climate of the trust is lacking.
Employees lack autonomy and avoid risk taking. Communication is generally one way top
down. Collaboration is lacking. Team spirit is lacking. Reward system is not based on
performance.
6) Lack of appropriate structure: Most organizations in Nepal lack separate HRD department.
Clearly defined authority-responsibility relationships are lacking. HRD is positioned at a lower
level in the organization. The staffing of HRD lacks competent and experienced persons. It is
regarded as a dumping ground for unwanted employees.
7) Weak institutional capacities: in-house institutional capabilities for HRD suffer from limited
facilities, resources and capabilities. Institution building is neglected. Political interference in
the management of public sector training institutions has made them ineffective.
8) Inadequate Human resource Information system: Nepalese organizations lack a
comprehensive information system for human resources. This has constrained HRD planning.
9) Inadequate Budget: Generally there is no separate budget for HRD.

Training and Management Development Practices in Nepalese organizations
1) Human resource development has remained an area of low priority in Nepal. Training is not regarded as an
investment in human capital. It is a practice in Nepalese organization to make training the first victim of budget cuts.
2) Need assessment: Training needs is not properly assessed by Nepalese organizations at organizational, task and
individual levels. The widely used method for determining training needs is supervisory recommendations. Most
Nepalese organizations lack training needs survey and performance analysis to identify training needs.
3) Training methods: Nepalese organizations use a mix of on-the-job and off-the-job training methods. On-the-job
apprenticeship and internship methods are used for skills and professional jobs. Off-the-job training methods are
lecture/conference-oriented. Experimental exercises are little used for training.
4) Training institutions Nepal Administrative Staff College provides various types of off-the-job training to civil
servants. But they have remained largely theoretical and pedagogy oriented. Tribhuvan University system also
conducts training programmes for university employees and others. Center for Economic Development and
Administration (CEDA) had played a very important role in the training of senior civil servants and managers in the
past. Public sector enterprises like banks, airlines, electricity authority have their own training schools. But they have
remained underfunded and mismanaged. They also lack training aids, professional trainers, and Nepal-based training
materials. They tend to repeat the same courses year-after-year.
5) Management Development: Nepalese organizations do not give adequate attention to developing their managers to
assume greater responsibilities in the future. Some private consulting firms conduct short term programmes for
managers. But they face great difficulty in attracting participants. The popular methods of management development
are coaching and understudy assignment. Job rotation is not effectively used. Planned work assignments are little
used. Off-the-job management development methods are largely lecture/seminar oriented.


6) Effectiveness of training: There is a big question mark about the effectiveness of training in Nepal. The evaluation
of training is generally based on reaction and learning criteria. Behavior and results criteria are generally not used to
evaluate training effectiveness. Trainee surveys constitute the widely used method for evaluating training.
7) Training related problems:
v Training policy is lacking in most organizations.
v The quality of training is poor due to outdated curriculum and training materials, shortage of professional
trainers, and lack of training aids.
v Defective trainee selection. Target group is not clear for training.
v Training is conducted to meet targets rather than training needs.
v Lack of transfer of training to job situations. Trained people are not placed in right jobs. Opportunities are
lacking for practice. Utilization of trained human resources is poor.
v Evaluation of training effectiveness is lacking.
8) Management Development related problems:
Management development interventions are generally lacking to develop employee potential.
Education programmes do not clear to the needs of the market and the students.
9) Ineffective Implementation: Implementation of training and management development has remained ineffective in
Nepalese organizations. The reasons are;
v Lack o clear responsibility assignment for implementation.
v Activities are not properly planned and sequenced.
v Inadequate budget allocation
v Poor monitoring and control of HRD performance.
v Lack of top management support.
Career Planning and Development Practices in Nepal
1) Career planning has remained a neglected aspect of HRM in Nepalese organization. Employees
generally lack systematic career planning. Career goals remain unclear. Career paths are not
properly charted. There is lack of sensitivity towards career goals of employees by top
management.
2) Formal career information, education and counseling by top management.
3) Nepalese organizations lack succession planning to aid career planning. Transfers and promotions
are non-transparent and ad-hoc. Employees are not consulted for job transfer.
4) Career development opportunities are few for employees. Individual career development efforts
are lacking. Nepalese organizations offer jobs, not careers to employees.
5) Growth and exposure opportunities through training, observation and development are few.
Training in foreign countries is highly desired but only the favored ones get such opportunities.
6) Organization supported career development efforts suffer from lack of adequate budget.
7) Private sector organizations lack consciousness about career development of employees. They
regard money invested for career development as a cost rather than investment.
8) Career oriented performance appraisals are lacking in Nepalese organizations. Feedback is not
given to employees about their career development efforts.
Changing world of work
The world of work as we know it is rapidly changing. Even as little two decades ago, the times were
calmer than they are today. As part of an organization, then, human resource management (HRM) must
be prepared to deal with the effects of the changing world of work. This means understanding the
implications of
1) Globalization: Organizations are o longer constrained by national borders. The world has become a
global village producing and marketing goods and services worldwide. To be effective in this
boundless world, organizational members need to adapt to cultures, systems, and techniques
different from their own. The rise of multinational and transnational corporations places new
requirements on human resource managers. HR must ensure that employees with the appropriate mix
of knowledge, skills, and cultural adaptability are available to handle global assignments. HR
managers must take cultural values into account when trying to understand the behavior of people
from different countries as well as those in different countries. Globalization is creating a situation
where human resource management must search for mobile and skilled employees who can


successes at their jobs in a foreign land. These employees must understand the host countrys
language, culture, and customs.
2) Technology changes: Technology is having a major impact on HRM. It s giving all employees
instant access to information and changing the skill requirements of employees. Technological
changes have required HRM to address or change its practices when it deals with such activities as
recruiting and selecting employees, motivating and paying individuals, training and developing
employees, and in legal and ethical matters.
3) Workforce diversity: The varied personal characteristics that make the workforce heterogeneous.
Today s managers have found that employees do not set aside their cultural values and lifestyle
preferences when they come to work. The challenge therefore, is to make organizations more
accommodating to diverse groups of people by addressing different lifestyle, family needs, and work
styles. As organizations become more diverse, employers have been adapting their human resource
practices to reflect those changes. Workforce diversity requires employers to be more sensitive to
the differences that each group brings to the work setting. For instance, employers may have to shift
their philosophy from treating everyone alike to recognizing individual differences and responding
to those differences in way that will ensure employee retention and greater productivity. They must
recognize and deal with the different values, needs, interests, and expectations of employees. They
must avoid any practice or action that can be interpreted as being sexist, raciest, or offensive to any
particular group and of course must not illegally discriminate against any employee.
4) Labor shortages: The labor shortage problem is compounded by the fact that the later part of the
20
th
. Century benefited from a huge increase in women entering the workforce and providing a new
supply of talented and skilled workers. In times of labor shortage, good wages and benefits arent
enough to hire and keep skilled employees. In HRM labor shortage means that human resource
managers will need sophisticated recruitment and retention strategies and will need to understand
human behavior.
5) Changing skill requirement: The vast spread of technology require employees increased job skill
requirement. Workers will need the ability to read and comprehend (understand) software and
hardware manuals, technical journals and detailed reports. Such increased skill provides
organizations with the ability to innovate, brings products to market rapidly, and responds to
customer request. Changing skill requirement require human resource management to provide
extensive employee training. This training can be in the form of remedial help for those who have
skill deficiencies or specialized training dealing with technology changes.
6) Continuous improvement initiatives: Organizational members focus on quality and continuous
improvement for several reasons: todays educated consumers demand it, and quality improvements
have become strategies initiatives in the organizations HRM is instrumental in quality initiatives by
preparing employees to deal with the change and training them in new techniques. Organizational
commitment to constantly improving quality of products or services. Components of continuous
improvement are intense focus on the customer, concern for continuous improvement, improvement
in the quality of everything the organization does, accurate measurement (use statistical techniques
to measure every critical variable in the organizations operations), empowerment of employees
Vehicles for finding and solving problems).
7) The contingent workforce: The part time, temporary, and contract workers used by organizations
to fill peak staffing needs or perform work not done by core employee. The HRM implications of
contingent workforce include attracting and recruiting skilled contingent workers, adjusting to their
special needs, and managing any conflict that may arise between core and contingent workers.
Organizations facing a rapidly changing environment must be ready to adjust rapidly. Having too
many full time employees limits management s ability to react. On the other hand, organizations that
rely heavily on contingent workers have greater flexibility because workers can be easily added or
taken off as needed.
8) Employee involvement. Employee involvement can be best defined as giving each worker more
control over his or her job. To do this requires delegation, participative management, work teams,


goal setting, and employee training. If handled properly, involving employees should lead to
developing more productive employees who are more loyal and committed to the organization.
9) Decentralized work sites: Decentralized work sites remove traditional managers need to control
the work must change. Instead, greater employee involvement will allow workers the discretion to
make decisions that affect them.
Environment of Human Resource Management
Many interrelated factors affect human resource management. Such factors are part of either the firms
external environment or its internal environment. The firm often has little, if any, control over how the
external environment affects management of its human resources. In addition, there are certain
interrelationships that complicate the management of human resources.
External Environmental Factors
External Environmental factors Comprised of those factors that affect a firms human resources from
outside the organizations boundaries.
1) The Labor Force: The labor force is a pool of individuals external to the firm from which the
organization obtains its workers. The capability of a firms employees determines to a large extent
how well an organization can perform its mission.
2) Legal Considerations: Another significant external force affecting human resource management
relates to federal, state, and local legislation and the many court decisions interpreting this
legislation. In addition, many presidential executive orders have had a major impact on human
resource management.
3) Society: Society may also exert pressure on human resource management. If a firm is to remain
acceptable to the general public, it must be capable of accomplishing its purpose in line with societal
norms. Social responsibility is an implied, enforced, or felt obligation of managers, acting in their
official capacities, to serve or protect the interests of groups other than themselves.
4) Unions: Union is a group of employees who have joined together for the purpose of dealing
collectively with their employer. Although unions remain a powerful force, union membership as a
percentage of the nonagricultural workforce slipped from 33 percent in 1955 to 9.5 percent today.
5) Shareholders: The owners of a corporation are concerned about shareholders. Because shareholders
have invested money in a firm, they may at times challenge programs considered by management to
be beneficial to the organization.
6) Competition: For a firm to succeed, grow, and prosper, it must be able to maintain a supply of
competent employees. Other organizations are also striving toward that objective.
7) Customers: Because sales are critical to the firms survival, management has the task of ensuring
that its employment practices do not antagonize (make hostile) the members of the market it serves.
8) Technology: As technological changes occur, certain skills are no longer required. This necessitates
some retraining of the current workforce. The trend toward a service economy also affects the type
and amount of technology needed.
9) The Economy: The economy of the nation on the whole and of its various segments is a major
environmental factor affecting human resource management. As a generalization, when the economy
is booming, it is often more difficult to recruit qualified workers. On the other hand, when a
downturn is experienced, more applicants are typically available.
The Internal Environment
Factors that affect a firms human resources from inside its boundaries are termed as internal
environmental factors. The primary internal factors include the firms mission, policies, corporate
culture, management style of upper managers, employees, the informal organization, other units of the
organization, and unions.
1) Mission: the organizations continuing purpose or reason for being. Each management level should
operate with a clear understanding of the firms mission. In fact, each organizational unit (division,
plant, and department) should clearly understand objectives that coincide with that mission.


2) Policies: A predetermined guide established to provide direction in decision making. As guides,
rather than as hard and-fast rules, policies are somewhat flexible, requiring interpretation and
judgment in their use. They can exert significant influence on how managers accomplish their jobs.
3) Corporate Culture: The system of shared values, beliefs, and habits within an organization that
interacts with the formal structure to produce behavioral norms.
4) Management Style of Upper Managers: Closely related to corporate culture is the way in which
the attitudes and preferences of ones superiors affect how a job is done. This situation deserves
special emphasis here because of the problems that can result if the managerial style of upper-level
managers differs from that of lower-level managers.
5) Employees: Employees differ in many ways including their capabilities, attitudes, personal goals,
and personalities. As a result, behavior that manager finds effective with one worker may not be
effective with another.
6) Informal Organization: the informal organization is the set of evolving relationships and patterns
of human interaction within an organization that are not officially prescribed. Such informal
relationships are quite powerful.
7) Other Units of the Organization: Managers must be keenly aware of interrelationships that exist
among divisions or departments and should use such relationships to their best advantage.
8) Labor-Management Agreement: Upper management typically negotiates labor-management
agreements, but managers throughout the organization must implement the terms of the agreements.
In most instances, agreements place restrictions on the manager s actions.
Current HRM Challenges
1) Managing Teams: Team building activities aimed at improving the internal work and relationship
processes of teams requires attention to both task and interpersonal relationships. Trust is the key
to teammembers commitment to a common goal, mutual accountability, and collaboration. Trust is
built on six interdependent factors: the integrity of the members; open communication; mutual
respect and support; fairness and equity; competence and hard work; and reward for cooperation. In
addition, clear goals are a requirement for effective teamwork. Members of effective teams play
eight different roles, all of which are necessary for a complete team and for synergy
2) Managing Diversity: A diverse workforce refers to two or more groups, each of whose members
are identifiable and distinguishable based on demographic or other characteristics like gender age
group, education etc. Managing diversity means planning and implementing organizational systems
and practices to manage people so that the potential advantages of diversity are maximized while its
potential disadvantages are minimized. Managers are striving for racial, ethnic, and sexual
workplace balance as a matter of economic self-interest.
3) Managing Globalization: One of the most dramatic challenges facing as they enter the twenty-first
century is how to compete against foreign firms, both domestically and abroad. Many companies are
already being compelled to think globally, something that doesn't come easily to firms long
accustomed (usual) to doing business in a large and expanding domestic market with minimal
foreign competition. Weak response to international competition may be resulting in upwards layoffs
in every year. Human resources can play a critical role in a business's ability to compete head-to-
head with foreign producers.
4) Managing Change: Many organizations face a volatile environment in which change is nearly
constant. If they are to survive and prosper, they need to adapt to change quickly and effectively.
Human resources are almost always at the heart of an effective response system. Here are a few
examples of how HR policies can help or hinder a firm grappling with external change.

Future HR Trends:
1) Workplace Flexibility: collaborative work in a virtual office as well as flexible work hours is
one of future HR trends.
2) Global Business: borderless business requires a global workforce to perform the function at
international business level.


3) Work & Society: working to live, not living to work
4) Workforce Development: constant learning in a just-in-time format, learning organization &
high skill utilization
5) Definition of Jobs: jobs get bigger & broader
6) Strategic Role of HR: becoming leaders, not just partners
7) The Value of Predicting: having a vision & a way to achieve it.

v Key issues of the organization are to achieve efficiency, effectiveness and competitiveness and
this can be done by using not ignoring the knowledge and experience are available. Because
most of the time best HR Practices are not used because of resistance to change, ignorance on the
part of decision makers and political considerations. By overcoming these three factors we can
have more effectively managed organizations by using HR practices.
Challenges/Issues of Managing Human Resources in present era
Following are the main issues that are faced by the mangers to manage the workforce of todays organization for
achievement of objectives.
a) To Attract People: People will be interested to join any organization if it is providing them quality working
environment, attractive benefit and opportunities to excel in future. Keeping in view the opportunities in the market, the
first issues will be to attract good people for your organization.
b) To Develop People: Development is related to provide the opportunities for training and development to match the skills
to job in particular areas. It requires careful need assessment for training and selecting effective training methods and
tools. After attracting/selecting, Continuous development of workforce of the organization leads towards development of
the organization. So that they will start playing their important role in theorganization.
c) To Motivate: Motivation means to influence performance of others and to redirect the efforts in desirable direction by
using different motivational tools that can help in fulfilling the mission of organization. Third important issues/concern
will be to keep your workforce motivated so that they should keep on delivering effectively.
d) To Keep Talented People: This is related to retention of workforce in organization and to take steps that can prevent
undesirabledetachments of talented and motivated workers from the organization.




Code of Ethics for HR Professionals
v Ethics related problems are faced by the organizations whenever there is a practice of using
favoritism rather than ability or job performance for managerial decisions regarding
employment, promotion, pay and discipline.
v These problems can be reduced and eliminated by maintaining the highest standards of
professional and personal conduct, encouraging employers to make fair and equitable treatment
of all employees a primary concern, maintaining loyalty to employers and pursue company
objectives in ways consistent with the public interest, upholding all laws and regulations relating
to employer activities, and maintaining the confidentiality of privileged information. Peoples
expectations that their employers will behave ethically are increasing, so much that many firms
and professional organizations have created codes of ethics outlining principles and standards of
personal conduct for their members. These negative perceptions have worsened over the years.
The widespread perceptions of unethical behavior may be attributed to the fact that managerial
decisions are rarely clear-cut. Except in a few blatant cases (such as willful misrepresentation),
what is ethical or unethical is open to debate. Even the most detailed codes of ethics are still
general enough to allow much room for managerial discretion. In other words, many specific
decisions related to the management of human resources are subject to judgment calls.
Workplace Flexibility: collaborative work in a virtual office