Complete Notes HRM

Human Resource Management (BEBA55A) UNIT-1
HUMAN RESOURCE MANAGEMENT (BEBA55A)

UNIT – I
INTRODUCTION
Modern organizational setting is characterized by constant changing relation to environmental

factors and human resources. As regard to the environmental factors, we find changes in the
operating organizational structure, the network of the working procedures, customs on norms
and the economic, political and the social patterns in which organizations exist. Moreover,
there is a constant change in human resources, the individuals are employed daily with new
creativity, ideas and experiences, while the existing workforce is also continuously changing
their ideas, attitudes and even values. These two dimensions reveal the following trends.
o Increased complexity of the organizations, employment and a clear hierarchy of

owners, managers and workers.
o Increased the number of employers, self-employed and enlarged size of workforce.
o Enhance the need of training in view of increased requirements of specialized skills.
o Public interventions and legal complications in employee and employer relationships.
o Enhanced training and development of managers and professionalization of
management education.
o Possibility of employment explosion in view of ever increasing size of workforce.
o Rising the formal level of education of rank and file employees who becoming
increasingly critical of management malpractice and errors.
o Rank and file employees rapidly growing demands in different employment situations.
o Recognizing of close relationships between profits and earnings and ability to manage
human resources.
Indeed these trends manifest themselves in problem areas as identified by the managers in
organizational settings. Although the change may provide solutions to some problems, it may
create several new ones. There is an urgent need to understand these problems, anticipate them
and to find solution to them. The responsibility to find out the solutions to these problems lies
with every manager who has prepared to deal with different change effectively through
educational and developmental programs. Obviously, every manager is responsible for
management of human resources of course with the advice and help of personnel department.
Jawahar Science College, Block-14, Neyveli. Page 1 of 18

Management of human resources is the essence of being manager who has to get things done
through the people without whom he can be a technician but not a manager. Thus, every
manager has to develop and maintain his competency in managing human resources, which
have assumed utmost significance in modern organizations.
What is Human Resource Management?
HRM is the study of activities regarding people working in an organization. It is a managerial

function that tries to match an organization‘s needs to the skills and abilities of its employees.
Definitions of HRM
Human resources management (HRM) is a management function concerned with hiring,

motivating and maintaining people in an organization. It focuses on people in organizations.
Human resource management is designing management systems to ensure that human talent is
used effectively and efficiently to accomplish organizational goals.
HRM is the personnel function which is concerned with procurement, development,

compensation, integration and maintenance of the personnel of an organization for the purpose
of contributing towards the accomplishments of the organization‘s objectives. Therefore,
personnel management is the planning, organizing, directing, and controlling of the
performance of those operative functions(EdwardB. Philippo).
According to the Invancevich and Glueck, ―HRM is concerned with the most effective use of
people to achieve organizational and individual goals. It is the way of managing people at work,
so that they give their best to the organization‖.
According to Dessler (2008) the policies and practices involved in carrying out the ―people‖
or human resource aspects of a management position, including recruiting, screening, training,
rewarding, and appraising comprises of HRM.
Nature of HRM
HRM is a management function that helps manager‘s to recruit, select, train and develop
members for an organization. HRM is concerned with people‘s dimension in organizations.
The following constitute the core of HRM

1. HRM Involves the Application of Management Functions and Principles. The

functions and principles are applied to acquiring, developing, maintaining and
providing remuneration to employees in organization
2. Decision Relating to Employees must be integrated. Decisions on different aspects
of employees must be consistent with other human resource (HR) decisions.
3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an
organization will result in betterment of services to customers in the form of high
quality products supplied at reasonable costs
4. HRM Functions are not confined to Business Establishments Only but applicable
to non-business organizations such as education, health care, recreation and like. HRM
refers to a set of programmes, functions and activities designed and carried out in order
to maximize both employee as well as organizational effectiveness.
SIGNIFICANCE/IMPORTANCE/NEED OF HRM
HRM becomes significant for business organization due to the following reasons.
1. Objective: - HRM helps a company to achieve its objective from time to time by creating a
positive attitude among workers. Reducing wastage and making maximum use of resources
etc.
2. Facilitates professional growth: - Due to proper HR policies employees are trained well
and this takes them ready for future promotions. Their talent can be utilized not only in the
company in which they are currently working but also in other companies which the employees
may join in the future.
3. Better relations between union and management:-

Healthy HRM practices can help the organization to maintain co-ordinal relationship with the
unions. Union members start realizing that the company is also interested in the workers and
will not go against them therefore chances of going on strike are greatly reduced.
4. Helps an individual to work in a team/group:- Effective HR practices teach individuals

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

5. Identifies person for the future:-

Since employees are constantly trained, they are ready to meet the job requirements. The
company is also able to identify potential employees who can be promoted in the future for the
top level jobs. Thus one of the advantages of HRM is preparing people for the future.
6. Allocating the jobs to the right person:-
If proper recruitment and selection methods are followed, the company will be able to select
the right people for the right job. When this happens the number of people leaving the job will
reduce as the will be satisfied with their job leading to decrease in labour turnover.
7. Improves the economy:-
Effective HR practices lead to higher profits and better performance by companies due to this
the company achieves a chance to enter into new business and start new ventured thus industrial
development increases and the economy improves.
SCOPE OF HRM
The major HRM activities include HR planning, job analysis, job design, employee hiring,
employee and executive remuneration, employee motivation, employee maintenance,
industrial relations and prospects of HRM.
The scope of Human Resources Management extends to:
o All the decisions, strategies, factors, principles, operations, practices, functions,

activities and methods related to the management of people as employees in any type
of organization.
o All the dimensions related to people in their employment relationships, and all the
dynamics that flow from it.
The scope of HRM is really vast. All major activities on the working life of a worker – from
the time of his or her entry into an organization until he or she leaves it comes under the purview
of HRM. American Society for Training and Development (ASTD) conducted fairly an
exhaustive study in this field and identified nine broad areas of activities of HRM.
o Human Resource Planning
o Design of the Organization and Job
o Selection and Staffing

o Training and Development

o Organizational Development
o Compensation and Benefits
o Employee Assistance
o Union/Labour Relations
o Personnel Research and Information System
a) Human Resource Planning:
The objective of HR Planning is to ensure that the organization has the right types of persons
at the right time at the right place. It prepares human resources inventory with a view to assess
present and future needs, availability and possible shortages in human resource.
HR Planning forecast demand and supplies and identify sources of selection. HR Planning
develops strategies both long-term and short-term, to meet the man-power requirement.
b) Design of Organization and Job:
This is the task of laying down organization structure, authority, relationship and
responsibilities. This will also mean definition of work contents for each position in the
organization. This is done by ―job description‖. Another important step is ―Job specification.
Job specification identifies the attributes of persons who will be most suitable for each job
which is defined by job description.
c) Selection and Staffing:

This is the process of recruitment and selection of staff. This involves matching people and their
expectations with which the job specifications and career path available within the organization.
d) Training and Development:

This involves an organized attempt to find out training needs of the individuals to meet the
knowledge and skill which is needed not only to perform current job but also to fulfil the future
needs of the organization.
e) Organizational Development:
This is an important aspect whereby ―Synergetic effect‖ is generated in an organization i.e.
healthy interpersonal and inter-group relationship within the organization.

f) Compensation and Benefits:

This is the area of wages and salaries administration where wages and compensations are fixed
scientifically to meet fairness and equity criteria. In addition labour welfare measures are
involved which include benefits and services.
g) Employee Assistance:
Each employee is unique in character, personality, expectation and temperament. By and large
each one of them faces problems every day. Some are personal some are official. In their case
he or she remains worried. Such worries must be removed to make him or her more productive
and happy.
h) Union-Labour Relations: Healthy Industrial and Labour relations are very important for
enhancing peace and productivity in an organization. This is one of the areas of HRM. i)
Personnel Research and Information System: Knowledge on behavioural science and industrial
psychology throws better insight into the workers expectations, aspirations and behaviour.
Advancement of technology of product and production methods have created working
environment which are much different from the past. Globalization of economy has increased
competition many fold. Science of ergonomics gives better ideas of doing a work more
conveniently by an employee. Thus, continuous research in HR areas is an unavoidable
requirement. It must also take special care for improving exchange of information through
effective communication systems on a continuous basis especially on moral and motivation.
Objectives of HRM
The primary objective of HRM is to ensure the availability of competent and willing workforce
to an organization.
The specific objectives include the following:
1. Human capital: assisting the organization in obtaining the right number and types of
employees to fulfil its strategic and operational goals.
2. Developing organizational climate: helping to create a climate in which employees are
encouraged to develop and utilize their skills to the fullest and to employ the skills and
abilities of the workforce efficiently.
3. Helping to maintain performance standards and increase productivity through effective
job design: providing adequate orientation, training and development; providing
performance related feedback; and ensuring effective two-way communication.

4. Helping to establish and maintain a harmonious employer/employee relationship.

5. Helping to create and maintain a safe and healthy work environment.
6. Developing programs to meet the economic, psychological, and social needs of the
employees and helping the organization to retain the productive employees.
7. Ensuring that the organization is in compliance with provincial/territorial and federal
laws affecting the workplace (such as human rights, employment equity, occupational
health and safety, employment standards, and labour relations legislation).
8. To help the organization to reach its goals.
9. To provide organization with well-trained and well-motivated employees.
10. To increase the employees satisfaction and self-actualization.
11. To develop and maintain the quality of work life.
12. To communicate HR policies to all employees.
13. To help maintain ethical polices and behavior.
Management has to create conductive environment and provide necessary prerequisites for the
attainment of the personnel management objectives after formulating them. The primary
objectives of HRM are to ensure the availability of competent and willing workforce to an
organization. Apart from this, there are other objectives too. Specifically, HRM objectives are
of four fold: societal, organizational, functional and personal.
Societal Objectives
The Societal Objectives are socially and ethically responsible for the needs and challenges of
society. While doing so, they have to minimize the negative impact of such demands upon the
organization. The failure of the organizations to use their resources for society may limit human
resources decisions to laws that enforce reservation in hiring and laws that address
discrimination, safety or other such areas of societal concern.
Organizational Objectives
The Organizational Objectives recognizes the role of human resources management in bring
about organizational effectiveness. Human resource management is not an end itself; it is only
a mean to assist the organizations with primary objectives.

Functional Objectives
Functional Objectives try to maintain the departments’ contribution at a level appropriate to
the organizational needs. Human resources is to be adjusted to suit the organizational demands.
The department’s level of service must be tailored to fit the organization it serves.
Personal Objectives
Personal objectives assist employees in achieving their personal goals, at least in so far as these
goals enhance the individuals’ contribution to the organization. Personal objectives of
employees must be met if they are to be maintained, retained and motivated. Otherwise,
employees’ performance and satisfaction may decline giving rise to employee turnover.
Difference between Human Resource Management and Personnel Management
INTRODUCTION
The main difference between Personnel Management and Human Resource Management lies
in their scope and orientation. While the scope of personnel management is limited and has an
inverted approach, wherein workers are viewed as tool. Here the behaviour of the worker can
be manipulated as per the core competencies of the organization and are replaced when they
are worn-out.
On the other hand, human resource management has a wider scope and considers employees
as the asset to the organization. It promotes mutuality in terms of goals, responsibility, reward
etc. that will help in enhancing the economic performance and high level of human resource
development.
In early centuries, when Human Resource Management (HRM) was not prevalent, then the
staffing and payroll of the employees were taken care of, by the Personnel Management (PM).
It is popularly known as Traditional Personnel Management. Human Resource Management
have emerged as an extension over the Traditional Personnel Management. So, in this article,
we are going to throw light on the meaning and differences between Personnel Management
and Human Resource Management.

COMPARISON CHART
Dimensions Personnel Management HRM

Meaning The aspect of management The branch of management
that is concerned with the that focuses on the most
work force and their effective use of the
relationship with the entity is manpower of an entity, to
known as Personnel achieve the organizational
Management goals is known as Human
Resource Management.
Approach Traditional Modern
Treatment of manpower Machines or Tools Asset
Type of function Routine function Strategic function
Beliefs and assumptions

1. Contract Careful delineation of written Aim to go beyond contract
contracts
2. Rules Importance of devising clear 'Can-do' outlook; Impatience
rules/mutually with 'rule'
3. Guide to management Procedures Business-need'
action
4. Behaviour referent Norms/custom and practice Values/mission
6. Nature of relations Pluralist Unitarist
Strategic
8. Key relations Labor management Customer
9. Initiatives Piecemeal Integrated
11. Speed of decision Slow Fast
Line management
12. Management role Transactional Transformational leadership
13. Key managers Personnel/ IR specialists General/business/line
managers
14. Communication Indirect Direct
16. Management skills Negotiation Facilitation
Key levers

17. Selection Separate, marginal task Integrated, key task

18. Pay Job evaluation (fixed grades) Performance-related
19. Conditions Separately negotiated Harmonization
21. Thrust of relations with Regularized through facilities Marginalized (with
stewards and training exception of some
bargaining for change
models)
22. Job categories and grades Many Few
23. Communication Restricted flow Increased flow
24. Job design Division of labor Teamwork
Function of Human Resource Management
Human Resource Management is a management function concerned with hiring, motivating,

and maintaining workforce in an organization. Human resource management deals with issues
related to employees such as hiring, training, development, compensation, motivation,
communication, and administration. Human resource management ensures satisfaction of
employees and maximum contribution of employees to the achievement of organizational
objectives.
According to Armstrong (1997), Human Resource Management can be defined as “a strategic

approach to acquiring, developing, managing, motivating and gaining the commitment of the
organisation’s key resource – the people who work in and for it.”
Human Resource Management functions can be classified in following three categories.
 Managerial Functions,
 Operative Functions, and
 Advisory Functions

1. Planning:
Defined in its simplest terms, planning is the determination of anything in advance of the
action. It involves scanning of the external and internal environment, setting up of goals and
objectives, preparing an action plan to achieve these objectives/goals, laying down policies and
procedures, formulating standards of evaluation and allocating resources.
It requires anticipation, forecasting, predictions and so on. Thus, planning is a deliberate and
conscious effort to utilise the resources to achieve the given ends. Planning is a link between
the present and the future and is a continuous and never-ending process.
The goals set up under planning may be – (a) short term and (b) long term. Besides, these
objectives may be – (a) financial, (b) non-financial and (c) mixed. Above all, planning should
be flexible so that necessary adjustments could be made as and when needed.
Thus, planning provides the basis for effective and most economical action in the future. It
leads to integrated action and reduces considerably the probability of unanticipated crisis. It
also leads to the use of effective and efficient methods and helps in accomplishing the desired
goals of the enterprise through better control and coordination.
So far as an HR manager is concerned, he/she is required to determine in advance an HR

programme that will contribute towards the achievement of goals specified for the
organisa-tion. Thus, it involves planning of manpower requirements and related issues.
Obviously, it is necessary that the HR manager should be an expert in the field of HRP.

2. Organising:
After plans have been developed and the course of
action determined, organising is next in order. The
process of organising is essential for accomplishing
the objectives of the enterprise. Organising
involves the establishment of an organisation
structure through determination and grouping the
activities, the assignment of activities to the
specified individuals and departments, defining
their role, establishing relationships, the delegation
of authority to carry out the responsibilities and
provision of coordination of men and work.
So far as an HR manager is concerned, in order to execute the HR plans and programmes, he/
she also has to form an organisation. He/she is required to design the structure of the
relationships among – (a) various jobs, (b) various personnel, (c) jobs and men (d) men and
machinery, (e) a specialised unit and the rest of organisation (f) and other physical factors.
In case the relationships among these are well defined, it will leave practically no scope for any
sort of confusion and thus lead to smooth sailing of the organisation towards the specified
goals.
The HR manager is expected to procure the resources necessary to carry out the HR
programme, design an appropriate system to carry out such a programme and also establish
lines of authority and communication between the various people working with or receiving
benefits from the HR programmes. However, the development of sound organisation requires
certain principles.
3. Staffing:
Staffing is a process of manning the organisation and keeping it manned. Needless to mention
that the future of any enterprise is governed by the quality of the hired personnel. In case the
enterprise has failed to get right man for the right job, the accomplishment of the objectives of
the enterprise will be quite difficult.
So far as an HR manager is concerned, he/ she is required to recruit, select, train, place,
compensate, promote and retire the personnel of the organisation at the appropriate time in a
manner most conducive for accomplishing the objectives of the enterprise. The HR department
itself is all about staffing.
4. Directing:
Having a plan and an organisation to execute it, the next step is getting the job done. As the
process of management is concerned with getting work done through and with people, they
require proper motivation. The management is required to lead, guide, motivate, supervise,
communicate and inspire them towards improved performance.

An HR manager is also expected to do all these things in getting people to go to work will-ingly
and effectively. Although all managers must unavoidably direct their subordinates, the HR
manager should possess exceptional expertise in this regard.
5. Controlling:
Controlling is a very important function of management. In an undertaking, control consists in

verifying whether everything occurs in conformity with the plan adopted, the instructions
issued and the principles laid down. In this way, controlling is a measuring and corrective
device.
Through control, we evaluate the performance against the goals and the plan. Two important
things in the process of control are – (a) a comparison of actual performance as against
standards and (b) taking corrective actions.
So far as the HR manager is concerned, he/she has to evaluate the results of the personnel
activities in comparison with the desired objectives. Through control, he/she measures the
progress of the HR programme along the lines laid out in the programme and determines how
effectively the desired HR objectives were attained.
Thus, we can say that through direct observation, supervision report, records, audits and so on,
the HR manager ensures that the enterprise is carrying out the HR programme on the desired
lines and, if necessary, takes cor-rective steps.
The Operative functions are as follows:

1. Procurement of Human Resource / Employment:
The first important function of HRM is securing and employing the right type of personnel
according to the needs or requirements of the organization. For effective performance of
procurement function, HRM has to perform a number of functions such as manpower planning
which gives the estimate of manpower requirements.
Job analysis includes job description and job specification which gives the idea of title and
nature of job, duties and authorities on that job, specification of personnel required to perform
on that job such as qualification, qualities, experience, skill, talent, training, abilities etc.
Then he has to perform the function of recruitment which involves the identification of sources
of recruitments, selecting the right type of source for recruiting the personnel. Then he has to
perform selection function. Selection procedure has to be chalk out and selecting the right man
for the right job.
Then placing the personnel which involve allocation of job to the most suitable candidates.
After placement arrange the induction programme for the new entrant and give the information
about the company in detail and create a good image and opinion about the organization.

2. Employee Compensation:
After procurement of employees the next operative function of HRM is compensation function.
It means providing adequate, equitable, regular and fair remuneration to the employees.
According to the services rendered by the employees, remuneration should be given.
For equitable and fair compensation, it should be based on job evaluation, merit rating
Techniques. HRM has to look after the wage and salary administration. He has to formulate
the incentives, bonus, fringe benefits, and social security measures in the interest of the
employees.
3. Development of Human Resource:
Development of Human Resources is done through the training and development programme.
Development process includes improving the skills and knowledge, creativity, ability,
intellectual ability, capacities of employees.
Development process also moulds and changes the attitude and behaviour of the employees,
improves their aptitude, commitment etc. Performance appraisal helps in employee
development programme.
A systematic training programme has to be arranged by the HRM for employee and
management development. He has to prepare career planning and development programme.
HRM has to frame the policies and plans of promotion, demotion and transfer of employees.
4. Developing Healthy Human Relations:
One of the most important operative functions of HRM is developing, maintaining and
preserving the healthy, friendly, harmonious relationship between the management and
employees or employer and employee.
He is also responsible for developing healthy relations between the employee and employer,
between workers and trade unions and management. Due to healthy relations there are no
disputes, clashes and misunderstanding. But it improves morale, team spirit, team work,
cooperation, togetherness, and oneness among the employees.
5. Integration of Conflicting Interest:
HRM has to perform one more important function that is integration of individual employee
interest and business organization interest. Employees are interested in higher wages and
salaries, more facilities, bonus, social security, less working hours, overtime wages, best
working conditions and so on.
On the other hand company is interested in more profit, higher production and efficiency, long
working hours, minimum working condition, etc. HR managers have to integrate these
conflicting interests in a way that both the parties should be satisfied.
6. Safety and Health of Employees:
HR manager has to take the care of safety and health of the employees. In case of employees
whose work is risky, and hazardous, HR manager has to provide the safety measures to the
employees. Regular medical checkup of the employees has to be done. Free medicines,
treatment should be provided to the employees who fall sick.

7. Stability and Optimum Utilization of Employees:

HR manager has to maintain the employees in the organization and has to utilize them at the
optimum level, He must ensure the best utilization of employees. For this he has to motivate
the employees and to give them job satisfaction, job security, participate them in management.
Their grievances should be promptly resolved. Opportunities for career development should be
given so that employees may prefer to stay in the same organization and company can enjoy
the benefits of stable workforce.
8. Personnel Research, Audit and Records:
HR manager has to conduct research in various areas of human resource for example, research
in motivational techniques, behavioural sciences, attitude, turnover, absenteeism, development,
performance, morale and so on. Audit involves the periodical assessment and appraisal of
employee performance.
Moreover he has to maintain the updated records of the employees since joining till their
retirement by maintaining service books or records. These records would help at the time of
promotion, demotion and transfer of employees.
HUMAN RESOURCE MANAGER DUTIES
In providing this specialized assistance, the human resource manager carries out three distinct
functions:
1. A line function. The human resource manager directs the activities of the people in his or
her own department, and perhaps in related areas (like the plant cafeteria).
2. A coordinative function. The human resource manager also coordinates personnel activities,
a duty often referred to as functional authority (or functional control). Here he or she ensures
that line managers are implementing the firms’ human resource policies and practices (for
example, adhering to its sexual harassment policies).
3. Staff (assist and advice) functions. Assisting and advising line managers is the heart of the
human resource manager s job. He or she advises the CEO so the CEO can better understand
the personnel aspects of the company s strategic options. HR assists in hiring, training,
evaluating, rewarding, counselling, promoting, and firing employees. It administers the various
benefit programs (health and accident insurance, retirement, vacation, and so on). It helps line
managers comply with equal employment and occupational safety laws, and plays an important
role in handling grievances and labour relations. It carries out an innovator role, by providing
up-to-date information on current trends and new methods for better utilizing the company s

employees (or human resources). It plays an employee advocacy role, by representing the
interests of employees within the framework of its primary obligation to senior management.
Although human resource managers generally can’t wield line authority (outside their
departments), they are likely to exert implied authority. This is because line Managers know
the human resource manager has top management s ear in areas like testing and affirmative
action.
ENVIRONMENT OF HRM
Internal environment:
Trade union:
They are formed protect workless interest. There is trade union influenced compensation.
Social security, incentives, industrial relation, grievances and separation.
Organizational culture:
Culture represents the personality or identity of the organization. It comprises of its values.
Believe and ethics. HR practices should be in tune with the culture of the organization.
Organizational conflict:
Conflicts happen because of difference between individual and organizational goals. HR has
to ensure the right fit between individual and organizational goals.
Vision and mission:
The vision and mission of the organization has an important influences HR policies system and
practices. Organizations which focus an innovation would recruit people who are creative.
2. External environment:
Technology environment:
Technology development is happening in a capital manner. They influence the way HR

function are performed and HR policies are implemented. Development in information
technology, internet and social media have a great impact on HR.
Economic environment:
It is the economic environment is good companies would create demand for human resources.
The HR department has to take step for requirement, selection and training of employees.

3. Legal environment:
Every organization has to be aware and comply with labour legislation such as the factory Act,
industrial dispute Act, minimum wages Act, payment of bonus Act, etc.,
4. Labour markets:
Labour markets comprise of the demand for labour and supply of labour. If the demand for
labour exceeds supply. Wages rates would increase. It the demand for labour wages is loss than
supply wages rate would decrease.
5. Human resource condition:
The education, skill level and availability of human resources influence HR policy. Today work
force more literate, skilled and knowledgeable they expect rewards based on performance, roll
in decision making and fair- treatment.
STRATEGIC HUMAN RESOURCE MANAGEMENT
If a firm’s competitiveness depends on its employees, then the business function responsible
for acquiring, training, appraising, and compensating those employees has to play a bigger
role in the firm’s success. The notion of employees as competitive advantage has therefore
led to a new field of study known as strategic human resource management, “the linking
of HRM with strategic goals and objectives in order to improve business performance
and develop organizational cultures that foster innovation and flexibility.”
Strategic HRM is concerned with the following:
1. Analyse the opportunities and threats existing in the external environment.

2. Formulate strategies that will match the organisation’s (internal) strengths and
weaknesses with environmental (external) threats and opportunities. In other words,
make a SWOT analysis of organisation.
3. Implement the strategies so formulated.
4. Evaluate and control activities to ensure that organisation’s objectives are duly
achieved.
Basically any strategic process can be broken down into two phases:
1. Strategy Formulation
2. Strategy Implementation
Let us examine the role of HR in these two phases separately.

Role in Strategy Formulation:
The environmental scanning is followed by strategy formulation.
 Environmental scanning helps an organisation identify its opportunities and threats

prevalent in the external environment.
 Here, HRM proves of great help in scanning the existing (external) environment, and
thus, identifies the specific opportunities and threats of it for the organisation.
 Besides, HRM is also of great help to make the organisation competitive and make
the best use of intelligence available. This may include the incentive plans being used
by the competitors, customer- I complaints, labour laws, etc.
 HR also participates in strategy formulation process by supplying information
regarding the company’s internal strengths and weaknesses.
 IBM’s decision to buy Lotus was probably prompted in part by IBM’s conclusion that
its own resources were inadequate to enable the firm to reposition itself as an industry
leader in networking systems, or at least to do so quickly enough.
Role in strategy implementation:
 HRM plays a crucial role in the successful execution or implementation of company’s

strategic business plan.
 Example: Maruti Udyog and Hindustan Motors are manufacturing cars, essentially
using identical technology. The secret behind the meteoric rise of Maruti is its human
resource/workforce.
 HRM supports strategy implementation in some other ways as well. For example, HR
is today heavily involved in the execution of strategy in the form of downsizing and
restructuring strategies, through outplacing employees instituting performance linked
pay plans, reducing health-care costs and retraining employees.
 Instituting HR practices that build employee commitment can help improve an
organisation’s responsiveness.

REF NO: BEBA55A-U2-01
HUMAN RESOURCE MANAGEMENT (BEBA55A)

UNIT – II
HUMAN RESOURCE PLANNING
2.1 OBJECTIVES
o After studying this unit, you will be able to:

o Understand the nature and need of HRP
o Able to gain information about different factors that affect HRP
o Realize the importance of human resource planning in current organizational scenario
o Understand the HRP process and the pre requisites for successful HRP process
2.2 INTRODUCTION
As told in the last chapter Human resource management has started to play a significant role in
the overall strategic development of the organization. At present HR strategies are designed in
tune with the overall business strategy of the organization. HR strategy should sub serve the
interest of the organization, translating firm’s goals and objectives into a consistent, integrated
and complimentary set of programmes and policies for managing people.
First part of Human resource strategy is HRP – Human Resource Planning. All other HR
activities like employee hiring, training and development, remuneration, appraisal and labour
relations are derived from HRP.HR planning is important in a wide variety of industries and
firms. HR planning affects what employers do when recruiting, selecting, and retaining people,
and of course these actions affect organizational results and success. The challenges caused by
changing economic conditions during recent year’s show why HR workforce planning should
occur.
Staffing an organization is an HR activity that is both strategic and operational in nature. As

the HR Headline indicates, HR planning is important in a wide variety of industries and firms.
HR planning affects what employers do when recruiting, selecting, and retaining people, and,
of course these actions affect organizational results and success. Human Resources planning
mean different means to different organizations. To some companies, human resources
planning mean management development. It involve helping executives to make better

decisions, communicate more effectively, and know more about the firm. The purpose of HRP
is to make the manager a better equipped for facing the present and future.
CONCEPT OF HUMAN RESOURCE PLANNING:
Human resource planning is important for helping both organizations and employees to prepare
for the future. The basic goal of human resource planning is to predict the future and based on
these predictions, implement programmes to avoid anticipated problems. Very briefly humans
resource planning is the process of examining an organization‘s or individual‘s future human
resource needs for instance, what types of skills will be needed for jobs of the future compared
to future human resource capabilities (such as the types of skilled employees you already have)
and developing human resource policies and practices to address potential problems for
example, implementing training programmes to avoid skill deficiencies.
2.3 HUMAN RESOURCE PLANNING (HRP)
Human resource planning is important for helping both organizations and employees to prepare
for the future. The basic goal of human resource planning is to predict the future and based on
these predictions, implement programmes to avoid anticipated problems. Very briefly humans
resource planning is the process of examining an organization’s or individual’s future human
resource needs for instance, what types of skills will be needed for jobs of the future compared
to future human resource capabilities (such as the types of skilled employees you already have)
and developing human resource policies and practices to address potential problems for
example, implementing training programmes to avoid skill deficiencies.
2.4 DEFINITION OF HUMAN RESOURCE PLANNING
According to Vetter, “HRP is the process by which management determines how the
organization should move from its current man power position to desired manpower position.
Through planning, management strives to have the right time, doing things which result in both
the organization and individual receiving maximum long run benefits”.
According to Gordon Mc Beath, “HRP is concerned with two things: Planning of manpower
requirements and Planning of Manpower supplies”.

According to Beach, “HRP is a process of determining and assuming that the organization will
have an adequate number of qualified persons, available at proper times, performing jobs which
meet the needs of the enterprise and which provides satisfaction for the individuals involved”
Simply HRP can be understood as the process of forecasting an organization’s future demands
for and supply of the right type of people in the right number. In other words HRP is the process
of determining manpower needs and formulating plans to meet these needs.
HRP IS A FOUR-PHASED PROCESS.
o The first phase involves the gathering and analysis of data through manpower
inventories and forecasts,
o The second phase consists of establishing manpower objectives and policies and
gaining top management approval of these.
o The third phase involves designing and implementing plans and promotions to enable
the Organization to achieve its manpower objectives.
o The fourth phase is concerned with control and evaluation of manpower plans to
facilitate progress in order to benefit both the organization and the individual. The long
run view means that gains may be sacrificed in the short run for the future grounds. The
planning process enables the organization to identify what its manpower needs is and
what potential manpower problems required current action. This leads to more effective
and efficient performance.
2.5 NATURE OF HRP
Human resource planning is the process of analysing and identifying the availability and
the need for human resources so that the organization can meet its objectives. The focus of
HR planning is to ensure that the organization has the right number of human resources,
with the right capabilities, at the right times, and in the right places. In HR planning, an
organization must consider the availability and allocation of people to jobs over long
periods of time, not just for the next month or the next year1.
HRP is a sub system in the total organizational planning. Actions may include shifting
employees to other jobs in the organization, laying off employees or otherwise cutting back
the number of employees, developing present employees, and/or increasing the number of
employees in certain areas. Factors to consider include the current employees’ knowledge,

skills, and abilities and the expected vacancies resulting from retirements, promotions,
transfers, and discharges. To do this, HR planning requires efforts by HR professionals
working with executives and managers.
2.6 OBJECTIVES OF HUMAN RESOURCE PLANNING
1. To ensure optimum utilization of human resources currently available in the

organization.
2. To assess or forecast the future skill requirement of the organization.
3. To provide control measures to ensure that necessary resources are available as and
when required.
4. A series of specified reasons are there that attaches importance to manpower
planning and forecasting exercises.
They are elaborated below:
o To link manpower planning with the organizational planning

o To determine recruitment levels.
o To anticipate redundancies.
o To determine optimum training levels.
o To provide a basis for management development programs.
o To cost the manpower.
o To assist productivity bargaining.
o To assess future accommodation requirement.
o To study the cost of overheads and value of service functions.
o To decide whether certain activity needs to be subcontracted, etc.
HRP exists as a part of planning process of business. This is the activity that aims to
coordinate the requirements for the availability of the different types of employers. The
major activities are the forecasting, (future requirements), inventorying (present strength),
anticipating (comparison of present and future requirements) and planning (necessary
program to meet the requirements).
The HR forecasts are responsible for estimating the number of people and the jobs needed
by an organization to achieve its objectives and realize its plans in the most efficient and
effective manner.

HR needs are computed by subtracting HR supplies or number of the employees available

from expected HR demands or number of people required to produce a desired level of
outcome. The objective of HR is to provide right personnel for the right work and optimum
utilization of the existing human resources.
The objectives of human resource planning may be summarized as below:
 Forecasting Human Resources Requirements: HRP is essential to determine the

future needs of HR in an organization. In the absence of this plan it is very difficult
to provide the right kind of people at the right time.
 Effective Management of Change: Proper planning is required to cope with
changes in the different aspects which affect the organization. These changes need
continuation of allocation/ reallocation and effective utilization of HR in
organization.
 Realizing the Organizational Goals: In order to meet the expansion and other
organizational activities the organizational HR planning is essential.
 Promoting Employees: HRP gives the feedback in the form of employee data
which can be used in decision-making in promotional opportunities to be made
available for the organization.
 Effective Utilization of HR: The data base will provide the useful information in
identifying surplus and deficiency in human resources. The objective of HRP is to
maintain and improve the organizational capacity to reach its goals by developing
appropriate strategies that will result in the maximum contribution of HR.
2.7 NEED FOR HRP IN ORGANIZATIONS
Major reasons for the emphasis on HRP at the Macro level:
1. Employment-Unemployment Situation: Though in general the number of educated

unemployment is on the rise, there is acute shortage for a variety of skills. This
emphasizes on the need for more effective recruitment and employee retention.
2. Technological Change: The changes in production technologies, marketing methods
and management techniques have been extensive and rapid. Their effect has been
profound on the job contents and job contexts. These changes have caused problems
relating to redundancies, retention and redeployment. All these suggest the need to plan
manpower needs intensively and systematically.

3. Demographic Change: The changing profile of the work force in terms of age, sex,
literacy, technical inputs and social background has implications for HRP.
4. Skill Shortage: Unemployment does not mean that the labour market is a buyer’s
market. Organizations generally become more complex and require a wide range of
specialist skills that are rare and scare. A problem arises in an organization when
employees with such specialized skills leave.
5. Governmental Influences: Government control and changes in legislation with regard
to affirmative action for disadvantages groups, working conditions and hours of work,
restrictions on women and child employment, causal and contract labour, etc. have
stimulated the organizations to be become involved in systematic HRP.
6. Legislative Control: The policies of “hire and fire” have gone. Now the legislation
makes it difficult to reduce the size of an organization quickly and cheaply. It is easy to
increase but difficult to shed the fat in terms of the numbers employed because of recent
changes in labour law relating to lay-offs and closures. Those responsible for managing
manpower must look far ahead and thus attempt to foresee manpower problems.
7. Impact of the Pressure Group: Pressure groups such as unions, politicians and
persons displaced from land by location of giant enterprises have been raising
contradictory pressure on enterprise management such as internal recruitment and
promotion, preference to employees’ children, displace person, sons of soil etc.
8. Systems Approach: The spread of system thinking and advent of the macro computer
as the part of the on-going revolution in information technology which emphasis
planning and newer ways of handling voluminous personnel records.
9. Lead Time: The log lead time is necessary in the selection process and training and
deployment of the employee to handle new knowledge and skills successfully.
2.8 IMPORTANCE OF HRP
HRP is the subsystem in the total organizational planning. Organizational planning includes
managerial activities that set the company’s objective for the future and determines the
appropriate means for achieving those objectives. The importance of HRP is elaborated on the
basis of the key roles that it is playing in the organization.

1. FUTURE PERSONNEL NEEDS:
Human resource planning is significant because it helps to determine the future personnel needs
of the organization. If an organization is facing the problem of either surplus or deficiency in
staff strength, then it is the result of the absence of effecting HR planning.
All public sector enterprises find themselves overstaffed now as they never had any planning
for personnel requirement and went of recruitment spree till late 1980’s. The problem of excess
staff has become such a prominent problem that many private sector units are resorting to VRS
‘voluntary retirement scheme’. The excess of labor problem would have been there if the
organization had good HRP system. Effective HRP system will also enable the organization to
have good succession planning.
2. PART OF STRATEGIC PLANNING:
HRP has become an integral part of strategic planning of strategic planning. HRP provides
inputs in strategy formulation process in terms of deciding whether the organization has got
the right kind of human resources to carry out the given strategy. HRP is also necessary during
the implementation stage in the form of deciding to make resource allocation decisions related
to organization structure, process and human resources. In some organizations HRP play as
significant role as strategic planning and HR issues are perceived as inherent in business
management.
3. CREATING HIGHLY TALENTED PERSONNEL:
Even though India has a great pool of educated unemployed, it is the discretion of HR manager
that will enable the company to recruit the right person with right skills to the organization.
Even the existing staff hope the job so frequently that organization face frequent shortage of
manpower. Manpower planning in the form of skill development is required to help the
organization in dealing with this problem of skilled manpower shortage
4. INTERNATIONAL STRATEGIES:
An international expansion strategy of an organization is facilitated to a great extent by HR

planning. The HR department’s ability to fill key jobs with foreign nationals and reassignment
of employees from within or across national borders is a major challenge that is being faced by
international business. With the growing trend towards global operation, the need for HRP will
as well will be the need to integrate HRP more closely with the organizations strategic plans.
Without effective HRP and subsequent attention to employee recruitment, selection,

placement, development, and career planning, the growing competition for foreign executives
may lead to expensive and strategically descriptive turnover among key decision makers.
5. FOUNDATION FOR PERSONNEL FUNCTIONS:
HRP provides essential information for designing and implementing personnel functions, such
as recruitment, selection, training and development, personnel movement like transfers,
promotions and layoffs.
6. INCREASING INVESTMENTS IN HUMAN RESOURCES:
Organizations are making increasing investments in human resource development compelling

the increased need for HRP. Organizations are realizing that human assets can increase in value
more than the physical assets. An employee who gradually develops his/ her skills and abilities
become a valuable asset for the organization. Organizations can make investments in its
personnel either through direct training or job assignment and the rupee value of such a trained,
flexible, motivated productive workforce is difficult to determine. Top officials have started
acknowledging that quality of work force is responsible for both short term and long term
performance of the organization.
7. RESISTANCE TO CHANGE:
Employees are always reluctant whenever they hear about change and even about job rotation.
Organizations cannot shift one employee from one department to another without any specific
planning. Even for carrying out job rotation (shifting one employee from one department to
another) there is a need to plan well ahead and match the skills required and existing skills of
the employees.
8. UNITING THE VIEWPOINT OF LINE AND STAFF MANAGERS:
HRP helps to unite the viewpoints of line and staff managers. Though HRP is initiated and
executed by the corporate staff, it requires the input and cooperation of all managers within an
organization. Each department manager knows about the issues faced by his department more
than anyone else. So communication between HR staff and line managers is essential for the
success of HR Planning and development.
9. SUCCESSION PLANNING:
Human Resource Planning prepares people for future challenges. The ‘stars’ are picked up,
trained, assessed and assisted continuously so that when the time comes such trained employees

can quickly take the responsibilities and position of their boss or seniors as and when situation
arrives.
10. OTHER BENEFITS:
(a) HRP helps in judging the effectiveness of manpower policies and programmes of
management.
(b) It develops awareness on effective utilization of human resources for the overall
development of organization.
(c) It facilitates selection and training of employees with adequate knowledge, experience and
aptitudes so as to carry on and achieve the organizational objectives
(d) HRP encourages the company to review and modify its human resource policies and
practices and to examine the way of utilizing the human resources for better utilization.
2.9 FACTORS AFFECTING HRP
HRP is influenced by several factors. The most important of the factors that affect HRP are
1. Type and strategy of organization
2. Organizational growth cycles and planning
3. Environmental uncertainties
4. Time horizons
5. Type and quality of forecasting information
6. Nature of jobs being filled and
7. Off-loading the work.
1. Type and Strategy of the Organization: Type of the organization determines the
production processes involve, number and type of staff needed and the supervisory and
managerial personnel required. HR need is also defined by the strategic plan of organization.
If the organization has a plan for organic growth then organization need to hire additional
employees. On the other hand if the organization is going for mergers and acquisition, then
organization need to plan for layoffs, as mergers can create, duplicate or overlap positions that
can be handled more efficiently with fewer employees.

Organization first decides whether to be reactive or proactive in HRP. Organizations either

carefully anticipate the needs and systematically plan to fill the need in advance (proactive) or
can simply react to the needs as they arise (reactive). Likewise, the organization must determine
the width of the HR plan. Organization can choose a narrow focus by planning in only one or
two HR areas like recruitment and selection or can have a broad perspective by planning in all
areas including training and remuneration.
The nature of HR plan is also decides upon the formality of the plan. It can decides to have an
informal plan that lies mostly in the minds of the managers and personnel staff or can have a
formal plan which is properly documented in writing.
The nature of HR plan is also depended upon the flexibility that is practiced in the organization.
HR plan should have the ability to anticipate and deal with contingencies. Organizations frame
HRP in such a way that it can contain many contingencies, which reflect different scenarios
thereby assuring that the plan is flexible and adaptable.
2. Organizational Growth Cycles and Planning: All organizations pass through different
stages of growth from the day of its inception. The stage of growth in which an organization is
determines the nature and extends of HRP. Small organizations in the earlier stages of growth
may not have well defined personnel planning. But as the organization enters the growth stage
they feel the need to plan its human resource. At this stage organization gives emphasis upon
employee development. But as the organization reaches the mature stage it experience less
flexibility and variability resulting in low growth rate.
HR planning becomes more formalized and less flexible and less innovative and problem like
retirement and possible retrenchment Dominate planning. During the declining stage of the
organization HRP takes a different focus like planning to do the layoff, retrenchment and
retirement. In declining situation planning always becomes reactive in nature towards the
financial and sales distress faced by the company.
3. Environmental Uncertainties: Political, social and economic changes affect all

organizations and the fluctuations that are happening in these environments affect
organizations drastically. Personnel planners deal with such environmental uncertainties by
carefully formulating recruitment, selection, training and development policies and
programmes. The balance in the organization is achieved through careful succession planning,
promotion channels, layoffs, flexi time, job sharing, retirement, VRS and other personnel
related arrangements.

Figure 2.1 summarizes the five factors that influence an organization while framing its
strategic HRP.
4. Time Horizons: HR plans can be short term or long term. Short term plans spans from six
months to one year, while long term plans spread over three to twenty years. The extent of time
period depends upon the degree of uncertainty that is prevailing in an organizations
environment. Greater the uncertainty, shorter the plan time horizon and vice versa.

5. Type and Quality of information: The information used to forecast personnel needs
originates from a multitude of sources. The forecast depends to a large extent upon the type of
information and the quality of data that is available to personnel planners. The quality and
accuracy of information depend upon the clarity with which the organizational decision makers
have defined their strategy, structure, budgets, production schedule and so on.
6. Nature of Jobs Being Filled: Personnel planners need to be really careful with respect to
the nature of the jobs being filled in the organization. Employees belonging to lower level who
need very limited skills can be recruited hastily but, while hiring employees for higher posts,
selection and recruitment need to be carried out with high discretion. Organization need to
anticipate vacancies far in advance as possible, to provide sufficient time to recruit suitable
candidate.
7. Outsourcing: Several organizations outsource part of their work to outside parties in the form
of subcontract. Outsourcing is a regular feature both in the public sector as well as in the private
sector companies. Many of the organizations have surplus labour and hence instead of hiring
more people they go for outsourcing. Outsourcing is usually done for non-critical activities.
Outsourcing of non- critical activities through subcontracting determines HRP.

HRP PROCESS
HRP effectively involves forecasting personnel needs, assessing personnel supply and
matching demand– supply factors through personnel related programmes. The HR planning
process is influenced by overall organizational objectives and environment of business.
Figure 2.2 : The HRP Process

Environmental Scanning:
It refers to the systematic monitoring of the external forces influencing the organization.
The following forces are essential for pertinent HRP.
 Economic factors, including general and regional conditions.
 Technological changes
 Demographic changes including age, composition and literacy,
 Political and legislative issues, including laws and administrative rulings
 Social concerns, including child care, educational facilities and priorities.
By scanning the environment for changes that will affect an organization, managers can
anticipate their impact and make adjustments early.
Organizational Objectives and Policies: HR plan is usually derived from the
organizational objectives. Specific requirements in terms of number and characteristics
of employees should be derived from organizational objectives Once the organizational
objectives are specified, communicated and understood by all concerned, the HR department
must specify its objective with regard to HR utilization in the organization.

HR Demand Forecast:
Demand forecasting is the process of estimating the future quantity and quality of people
required to meet the future needs of the organization. Annual budget and long-term corporate
plan when translated into activity into activity form the basis for HR forecast.
For eg: in the case of a manufacturing company, the sales budget will form the basis for
production plan giving the number and type of products to be produced in each period. This
will form the basis upon which the organization will decide the number of hours to be worked
by each skilled category of workers. Once the number hours required is available organization
can determine the quality and quantity of personnel required for the task.
Demand forecasting is influenced by both internal factors and external factors: external factors
include- competition, economic climate, laws and regulatory bodies, changes in technology
and social factors whereas internal factors are budget constraints, production level, new
products and services, organizational structure and employee separations.
Demand forecasting is essential because it helps the organization to 1. Quantify the jobs,
necessary for producing a given number of goods, 2. To determine the nature of staff mix
required in the future, 3. To assess appropriate levels in different parts of organization so as to
avoid unnecessary costs to the organization,
4. To prevent shortages of personnel where and when, they are needed by the organization. 5.
To monitor compliances with legal requirements with regard to reservation of jobs.
Techniques like managerial judgment, ratio- trend analysis, regression analysis, work study
techniques, Delphi techniques are some of the major methods used by the organization for
demand forecasting.
HR Supply Forecast:
Supply forecast determines whether the HR department will be able to procure the required
number of workers. Supply forecast measures the number of people likely to be available from
within and outside an organization, after making allowance for absenteeism, internal
movements and promotions, wastage and changes in hours, and other conditions of work.
Supply forecast is required because it is needed as it 1. Helps to quantify the number of people
and positions expected to be available in future to help the organization realize its plans and
meet its objectives
2. Helps to clarify the staff mixes that will arise in future 3. It assesses existing staffing in
different parts of the organization. 4. It will enable the organization to prevent shortage of
people where and when they are most needed. 5. It also helps to monitor future compliance
with legal requirements of job reservations.

Supply analysis covers the existing human resources, internal sources of supply and external
sources of supply.
HR Programming:
Once an organization’s personnel demand and supply are forecasted the demand and supply
need to be balanced in order that the vacancies can be filled by the right employees at the right
time.
HR Plan Implementation:
HR implementation requires converting an HR plan into action. A series of action are initiated
as a part of HR plan implementation. Programmes such as recruitment, selection and
placement, training and development, retraining and redeployment, retention plan, succession
plan etc when clubbed together form the implementation part of the HR plan.
Control and Evaluation:
Control and evaluation represent the final phase of the HRP process. All HR plan include
budgets, targets and standards. The achievement of the organization will be evaluated and
monitored against the plan. During this final phase organization will be evaluating on the
number of people employed against the established (both those who are in the post and those
who are in pipe line) and on the number recruited against the recruitment targets. Evaluation is
also done with respect to employment cost against the budget and wastage accrued so that
corrective action can be taken in future
REQUISITES FOR SUCCESSFUL HRP
1. HRP must be recognized as an integral part of corporate planning

2. Support of top management is essential
3. There should be some centralization with respect to HRP responsibilities in order to have
co-ordination between different levels of management.
4. Organization records must be complete, up to date and readily available.
5. Techniques used for HR planning should be those best suited to the data available and
degree of accuracy required.
6. Data collection, analysis, techniques of planning and the plan themselves need to be
constantly revised and improved in the light of experience.
BARRIERS TO HRP
Human Resource Planners face significant barriers while formulating an HRP. The major
barriers are elaborated below:

1) HR practitioners are perceived as experts in handling personnel matters, but are not experts
in managing business. The personnel plan conceived and formulated by the HR practitioners
when enmeshed with organizational plan, might make the overall strategic plan of the
organization ineffective.
2) HR information often is incompatible with other information used in strategy formulation.
Strategic planning efforts have long been oriented towards financial forecasting, often to the
exclusion of other types of information. Financial forecasting takes precedence over HRP.
4) Conflict may exist between short term and long term HR needs. For example, there can be
a conflict between the pressure to get the work done on time and long term needs, such as
preparing people for assuming greater responsibilities. Many managers are of the belief that
HR needs can be met immediately because skills are available on the market as long as wages
and salaries are competitive. Therefore, long times plans are not required, short planning are
only needed.
5) There is conflict between quantitative and qualitative approaches to HRP. Some people view
HRP as a number game designed to track the flow of people across the department. Others take
a qualitative approach and focus on individual employee concerns such as promotion and career
development. Best result can be achieved if there is a balance between the quantitative and
qualitative approaches.
6) Non-involvement of operating managers renders HRP ineffective. HRP is not strictly an HR
department function. Successful planning needs a coordinated effort on the part of operating
managers and HR personnel.
RECRUITMENT AND SELECTION
OBJECTIVE
 After the completion of the unit the student will be able to

 Understand the concepts of Recruitment and Selection
 Know the various internal and external Sources of Recruitment
 Know Merits and Demerits of External Sources
 Understand Evaluation of alternative sources 5. Know the purpose of Selection 6.
Understand Criteria of Selection
INTRODUCTION
Recruitment means search of the prospective employee to suit the job requirements as represented
by job specification–a technique of job analysis. It is the first stage in selection which makes the
vacancies known to a large number of people and the opportunities that the organisation offers. In

response to this knowledge, potential applicants would write to the organisation. The process of
attracting people to apply in called recruitment.
DEFINITION
Dale S. Beach has defined “Recruitment as the development and maintenance of adequate
manpower resources. It involves the creation of a pool of available labour upon whom the
organisation can depend when it needs additional employees.”
According to Edwin B. Flippo : “Recruitment is the process of searching for prospective

employees and stimulating them to apply for jobs in the organisation.”
WHAT IS RECRUITING?
Once the required number and kind of human resources are determined, the management has
to find the places where required human resources are or will be available and also find the
means of attracting them towards the organization before selecting suitable candidates for jobs.
All this process is generally known as recruitment.
Some people use the term ‘recruitment’ for employment. Recruitment is only one of the steps
in the entire employment process. Some others use the term recruitment for selection. These
two terms are not one and the same either. Technically speaking the function of recruitment
precedes the selection function and it includes only finding, developing the sources of
prospective employees and attracting them to apply for jobs in an organization, whereas the
selection is the process of finding out the most suitable candidate to the job out of the candidates
attracted. Formal definition of recruitment would give clear cut idea about the function of
recruitment.
Recruitment is defined as, “a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that
manpower in adequate numbers to facilitate effective selection of an efficient workforce.”
Edwin B. Flippo defined recruitment as “process of searching for prospective employees and
stimulating them to apply for jobs in the organization.”
Those definitions can be analysed by discussing the processes of recruitment through systems
Approach.
OBJECTIVES OF RECRUITMENT
1. To attract people with multi-dimensional skills and experiences that suits the present
and future organizational strategies.

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

3. To infuse fresh blood at all levels of the organization.
4. To develop an organizational culture that attracts competent people to the company.
5. To search or head hunt people whose skills fit the company’s values.
6. To devise methodologies for assessing psychological traits.
7. To seek out non-conventional development grounds of talent.
8. To search for talent globally and not just within the company.
9. To design entry salary that competes on quality but not on quantum.
10. To anticipate and find people for positions that does not exist yet.
RECRUITMENT PROCESS
Recruitment process passes through the following stages:

 Recruitment process begins when the personnel department receives requisitions for
recruitment from any department of the company, The personnel requisitions contain details
about the position to be filled, number of persons to be recruited, the duties to be performed,
qualifications expected from the candidates, terms and conditions of employment and
the time by which the persons should be available for appointment etc.
 Locating and developing the sources of required number and type of employees.
 Identifying the prospective employees with required characteristics.
 Developing the techniques to attract the desired candidates. The goodwill of an organisation
in the market may be one technique. The publicity about the company being a good
employer may also help in stimulating candidates to apply. There may be others of attractive
salaries, proper facilities for development etc.
 Evaluating the effectiveness of recruitment process.
According to Famularo, personnel recruitment process involves five elements, viz., a recruitment
policy, a recruitment organisation, a forecast of manpower, the development of sources of recruitment,
and different techniques used for utilising these sources, and a method of assessing the recruitment
programme. The explanation of these is described below:
1. Recruitment Policy: It specifies the objectives of recruitment and provides a framework

for the implementation of the recruitment programme. It also involves the employer’s
commitment to some principles as to find and employ the best qualified persons for each

job, to retain the most promising of those hired, etc. It should be based on the goals, needs
and environment of the organisation
Figure: Place of Recruitment in Selection System
2. Recruitment Organisation: The recruitment may be centralised like public sector banks
or decentralised. Both practices have their own merits. The choice between the two will
depend on the managerial philosophy and the particular needs of the organisation.
3. Sources of Recruitment: Various sources of recruitment may be classified as internal and

external. These have their own merits and demerits.
4. Methods of Recruitment: Recruitment techniques are the means to make contact with
potential candidates, to provide them necessary information and to encourage them to apply
for jobs.
5. Evaluation of Recruitment Programme: The recruitment process must be evaluated
periodically. The criteria for evaluation may consist of cost per applicant, the hiring ratio,
performance appraisal, tenure of stay, etc. After evaluation, necessary improvements should be
made in the recruitment programme.

SOURCES OF RECRUITMENT
Searching involves attracting the job seekers to the vacancies. The sources are broadly divided into
two categories: Internal Sources and External Sources.
INTERNAL SOURCES
Internal sources of recruitment refer to hiring employees within the organization through:
 Promotions
 Transfers
 Former Employees
 Internal Advertisements (Job Posting)
 Employee Referrals
 Previous Applicants
EXTERNAL SOURCES
External sources of recruitment refer to hiring employees outside the organization through:
 Direct Recruitment
 Employment Exchanges
 Employment Agencies
 Advertisements
 Professional Associations
 Campus Recruitment
 Word of Mouth
INTERNAL SOURCES OF RECRUITMENT

Internal sources of recruitment refer to hiring employees within the organization internally. In other
words, applicants seeking for the different positions are those who are currently employed with the
same organization. At the time recruitment of employees, the initial consideration should be given
to those employees who are currently working within the organization. This is an important source
of recruitment, which provides the opportunities for the development and utilization of the existing
resources within the organization.
Internal sources of recruitment are the best and the easiest way of selecting resources as performance
of their work is already known to the organization. Let us now discuss ore on the various internal
sources of recruitment.

PROMOTIONS
Promotion refers to upgrading the cadre of the employees by evaluating their performance in the
organization. It is the process of shifting an employee from a lower position to a higher position with
more responsibilities, remuneration, facilities, and status. Many organizations fill the higher vacant
positions with the process of promotions, internally.
TRANSFERS
Transfer refers to the process of interchanging from one job to another without any change in the
rank and responsibilities. It can also be the shifting of employees from one department to another
department or one location to another location, depending upon the requirement of the position. Let’s
take an example to understand how it works. Assume there is a finance company called ABC Ltd.
Having two branches, Branch-A and Branch-B, and an employee from Branch-A resigned from his
job responsibilities. Hence, this position has to be filled for the continuation of the project in Branch-
A. In this scenario, instead of searching or sourcing new candidates, which is time consuming and
expensive, there is a possibility of shifting an employee from Branch-B to Branch-A, depending
upon the project requirements and the capabilities of that respective employee. This internal shifting
of an employee from one branch to another branch is called as Transfer.
INTERNAL ADVERTISEMENTS (JOB POSTING)
Internal Advertisements is a process of posting/advertising jobs within the organization. This job
posting is an open invitation to all the employees inside the organization, where they can apply for
the vacant positions. It provides equal opportunities to all the employees working in the organization.
Hence, the recruitment will be done from within the organization and it saves a lot of cost.
EMPLOYEE REFERRALS
Employee referrals is an effective way of sourcing the right candidates at a low cost. It is the process
of hiring new resources through the references of employees, who are currently working with the
organization. In this process, the present employees can refer their friends and relatives for filling up
the vacant positions. Organizations encourage employee referrals, because it is cost effective and
saves time as compared to hiring candidates from external sources. Most organizations, in order to
motivate their employees, go ahead and reward them with a referral bonus for a successful hire.

PREVIOUS APPLICANTS
Here, the hiring team checks the profiles of previous applicants from the organizational recruitment
database. These applicants are those who have applied for jobs in the past. These resources can be
easily approached and the response will be positive in most of the cases.
EXTERNAL SOURCES OF RECRUITMENT
External sources of recruitment refer to hiring employees outside the organization externally. In
other words, the applicants seeking job opportunities in this case are those who are external to the
organization. External employees bring innovativeness and fresh thoughts to the organization.
Although hiring through external sources is a bit expensive and tough, it has tremendous potential
of driving the organization forward in achieving its goals. Let us now discuss in detail the various
external sources of recruitment.
DIRECT RECRUITMENT
Direct recruitment refers to the external source of recruitment where the recruitment of qualified
candidates are done by placing a notice of vacancy on the notice board in the organization. This
method of sourcing is also called as factory gate recruitment, as the blue-collar and technical workers
are hired through this process.
EMPLOYMENT EXCHANGES
As per the law, for certain job vacancies, it is mandatory that the organization provides details to the
employment exchange. Employment exchange is a government entity, where the details of the job
seekers are stored and given to the employers for filling the vacant positions. This external
recruitment is helpful in hiring for unskilled, semi-skilled, and skilled workers.
EMPLOYMENT AGENCIES
Employment agencies are a good external source of recruitment. Employment agencies are run by
various sectors like private, public, or government. It provides unskilled, semi-skilled and skilled
resources as per the requirements of the organization. These agencies hold a database of qualified
candidates and organizations can use their services at a cost.
ADVERTISEMENTS
Advertisements are the most popular and very much preferred source of external source of
recruitment. The job vacancy is announced through various print and electronic media with a specific
job description and specifications of the requirements. Using advertisements is the best way to source
candidates in a short span and it offers an efficient way of screening the candidates’ specific
requirements. Let’s take an example. Assume that there is a Sales Company called XYZ Ltd which
has got a new project of selling a product in a short span of time, as the competition is very high. In

this scenario, choosing the specific recruitment plays a vital role. Here the ideal type of recruitment
which should be chosen is Advertisement.
Advertisement is the best suitable practice for this kind of hiring, because a large volume of hiring
in a short span can be done through Advertisement only. Advertisement is one of the costliest way
to recruit candidates, but when time and number are important, then advertisement is the best source
of recruitment.
PROFESSIONAL ASSOCIATIONS
Professional associations can help an organization in hiring professional, technical, and managerial
personnel, however they specialize in sourcing mid-level and top-level resources. There are many
professional associations that act as a bridge between the organizations and the job-seekers.
CAMPUS RECRUITMENT
Campus recruitment is an external source of recruitment, where the educational institutions such as
colleges and universities offers opportunities for hiring students. In this process, the organizations
visit technical, management, and professional institutions for recruiting students directly for the new
positions.
WORD OF MOUTH ADVERTISING
Word of mouth is an intangible way of sourcing the candidates for filling up the vacant positions.
There are many reputed organizations with good image in the market. Such organizations only need
a word-of-mouth advertising regarding a job vacancy to attract a large number of candidates.
FACTORS AFFECTING RECRUITMENT
Recruitment is an important function of the Human Resource Management in an organization, and

it is governed by a mixture of various factors. Proactive HR Professionals should understand these
factors influencing the recruitment and take necessary actions for the betterment of the organization.
When the market condition changes, the organization also needs to monitor these changes and
discover how it affects the resources and analyse these functions for making recruitment an effective
process.
We have Internal Factors as well as External Factors that influence the recruitment process. In
this chapter, we will be discussing these factors in detail.

INTERNAL FACTORS
Organizations have control over the internal factors that affect their recruitment functions. The
Internal factors are:
 Size of organization
 Recruiting policy
 Image of organization
 Image of job
SIZE OF ORGANIZATION
The size of the organization is one of the most important factors affecting the recruitment process.
To expand the business, recruitment planning is mandatory for hiring more resources, which will be
handling the future operations.
RECRUITING POLICY
Recruitment policy of an organization, i.e., hiring from internal or external sources of
Organization is also a factor, which affects the recruitment process. It specifies the objectives of the
recruitment and provides a framework for the implementation of recruitment
programs.
IMAGE OF ORGANIZATION
Organizations having a good positive image in the market can easily attract competent resources.
Maintaining good public relations, providing public services, etc., definitely helps an organization
in enhancing its reputation in the market, and thereby attract the best possible resources.
IMAGE OF JOB
Just like the image of organization, the image of a job plays a critical role in recruitment. Jobs having
a positive image in terms of better remuneration, promotions, recognition, and good work
environment with career development opportunities are considered to be the characteristics to attract
qualified candidates.
EXTERNAL FACTORS
External factors are those that cannot be controlled by an organization. The external factors that
affect the recruitment process include the following:

DEMOGRAPHIC FACTORS
Demographic factors are related to the attributes of potential employees such as their age, religion,
literacy level, gender, occupation, economic status, etc.
LABOUR MARKET
Labor market controls the demand and supply of labor. For example, if the supply of people having
a specific skill is less than the demand, then the hiring will need more efforts. On the other hand, if
the demand is less than the supply, the hiring will be relative easier.
UNEMPLOYMENT RATE
If the unemployment rate is high in a specific area, hiring of resources will be simple and easier, as
the number of applicants is very high. In contrast, if the unemployment rate is low, then recruiting
tends to be very difficult due to less number of resources.
LABOR LAWS
Labor laws reflect the social and political environment of a market, which are created by the central
and state governments. These laws dictate the compensation, working environment, safety and
health regulations, etc., for different types of employments. As the government changes, the laws
too change.
LEGAL CONSIDERATIONS
Job reservations for different castes such as STs, SCs, and OBCs are best examples of legal
considerations. These considerations, passed by government, will have a positive or negative impact
on the recruitment policies of the organizations.
COMPETITORS
When organizations in the same industry are competing for the best qualified resources, there is a
need to analyse the competition and offer the resources packages that are best in terms of industry
standards.

HUMAN RESOURCE MANAGEMENT (BEBA55A) - UNIT – III

INDUCTION/ORIENTATION TRAINING
INTRODUCTION
Everything you need to know about induction in human resource management. Induction
means introduction of a new employee to the job and the organization.
It is the process of receiving and welcoming an employee when he first joins a company and
giving him the basic information he needs to settle down quickly and happily and start work.
It is a welcoming process to make him feel at home and generate in him a feeling of
belongingness to the organization. In the process of induction the new comer is explained
his duties and responsibilities, company rules, policies and regulations so as to make him
familiar to the organization.
The prime aim of an induction session is to guarantee a successful integration of the

employees and the management. Research has also shown that a well-planned induction
programme increases staff retention. It is important for the new employees to get a proper
idea of the organization’s values and objectives, and the job they are required to do.
Induction is the biggest event of the organizational life of a new employee. It is beneficial
to both, employee as well as organization. But many organizations treat it as a formality
and, therefore, take it lightly and not in its true perspective. Such organizations cannot create
favourable image in the minds of new recruits and to that extent, their effectiveness is
affected adversely.
WHAT DO YOU MEAN BY INDUCTION
When a new employee reports to duty, he will be new to the organization and to its policies,
rules and existing employees also. New employee will be a stranger to the work, place and
to the entire environment. Unless he is familiar to the organization, he cannot work with
confidence and pleasure. Therefore, there is a necessity of introduction of an employee to
the organization which is technically called Induction.
Induction means introduction of a new employee to the job and the organization. It is the
process of receiving and welcoming an employee when he first joins a company and giving
him the basic information he needs to settle down quickly and happily and start work. It is
a welcoming process to make him feel at home and generate in him a feeling of
belongingness to the organization. In the process of induction the new comer is explained
his duties and responsibilities, company rules, policies and regulations so as to make him
familiar to the organization.
INDUCTION COVERS THE FOLLOWING:
History- The organization’s traditions, customs, myths, background of founders and the
present members in the top management.
Company Goals- Goals of the organization with rules, values or principles directing the
organization.
Language- Jargons, slangs, and technical terms unique to the organization.
Politics- Ways and means to gain formal and informal information about jobs and
relationships/power structures in the organization.
People- Nuances in initiating and maintaining relationships with peers.
Performance Proficiency- Effectiveness in acquiring and using knowledge, skills and
abilities needed for the job.
In addition to the above, induction includes communication of HRM policies such as work
hours, pay procedures, overtime requirements/company benefits, and duties and
responsibilities of new members; In large organization the members are shown the various
physical facilities available. Important aspect is introduction of the new employee to his
supervisor and co-workers.
THE IMPORTANT CHARACTERISTICS OF INDUCTION ARE:

(i) Encouraging employees to ask questions.
(ii) Including information on both technical and social aspects of the job.
(iii) Making the new employee’s manager responsible for the orientation.
(iv) Avoiding embarrassment to the new members.
(v) Arranging formal and informal interaction with managers and peers.

(vi) Providing relocation assistance such as house hunting, information about the local
society, and etc.
(vii) Giving information about the company’s products, services and customers.
(viii) Familiarizing adequately with the culture of the organization such as how work is done,
what matters in the organization, which work- related behaviours are acceptable or
unacceptable and etc.
OBJECTIVES OF INDUCTION IN HRM
The main object of induction is to make the new employee feel at home and develop a sense
of pride in the organization and commitment to the job.
The following are the some of the other important objectives:
(i) To help the new employee to develop a close and cordial relation with the existing
employees.
(ii) To give the new employee necessary information such as – location of the different
building, company rules, leave rules, rest periods etc.
(iii) To help the new employee overcome his natural shyness and nervousness in meeting
the new people in the organization.
(iv) To develop a sense of belongingness and loyalty among new employees.
(v) To help the employees know the different facilities and opportunities available in the
organization.
(vi) To help the new employees to minimize the “reality shock” that they may undergo after
reporting to duty
GENERALLY A FORMAL ORIENTATION OR INDUCTION PROGRAMME

SHOULD PROVIDE THE FOLLOWING INFORMATION:
i. Company history and its products and operation.
ii. Organization structure of the company.
iii. Policies, rules and regulations.
iv. Location of the department and daily work routine.
v. Facilities available and safety measures provided.
vi. Terms and conditions of service.

vii. Payment of salaries and wages, working hours, overtime, holidays etc.
viii. Rules regarding disciplines.
ix. Opportunities for training, promotion, transfer etc.
x. Grievance procedures and suggestion schemes.
IMPORTANCE OF INDUCTION PROGRAMME:
Induction or orientation programme offers the following advantages:

(i) Helps to develop close and cordial relation – Induction helps new employees to develop
close and cordial relation with present employees.
(ii) Helps to get necessary information – Programme helps to get necessary information
about location of plant, company rules and regulations, leave rules, rest periods etc.
(iii) Helps to overcome natural shyness – It helps employees to overcome their natural
shyness and nervousness in meeting people working in the organization.
(iv) Helps to know different facilities – It helps to know the different facilities offered and
opportunities available in the organization.
(v) Helps to build confidence – It helps employees to build confidence and enables them to
be efficient and sincere.
(vi) Enables employees to develop team spirit – It helps employees to develop a sense of
belongingness and team spirit among themselves.
(vii) Provides opportunities to express difficulties – It provides employees an opportunity to
express their difficulty and problem relating to work and helps them to avoid their fear and
misconception about their company.
(viii) Helps to maintain good communication – Proper communication can be maintained
between workers and management through induction programme
TRAINING AND DEVELOPMENT
Meaning and Definition of Training
Training is the important subsystem of human resource development. Training is a

specialized function and is one of the fundamental operative function and is one of the
fundamental operative functions for known resource management.

Training is a short-term process utilizing a systematic and organized procedure by which

non-managerial personnel acquire technical knowledge and skills for a definite purpose. It
refers to instruction in is technical and mechanical operations, like operation of some
machines. It is designed primarily for non- managers, It is for a short duration and it is for a
specific job- related purpose.
According to Dale S Beach, "Training is the organized procedure by which people learn
knowledge and for skill for a definite purpose."
According to Planting, Cord and Efferson, "Training is the continuous, systematic

development process among all levels of employees of that knowledge and their skills and
attitude which contribute to their welfare and that of the company."
According to Chowdhary D.P. “Training is a process which enables the trainees to achieve
the goals and objectives of their organizations.”
According to Schermerhorn , Hunt and Obsorn, "Training is a set of activities that provides
the opportunity to acquire and improve job-related skills."
According to Robert N. Lussier, "Training is the process of acquiring the skills necessary
to do the job."
In other words, training improves changes, molds the employees knowledge, skill, behaviour
aptitude, and attitude towards the requirements of the job and organization. Training refers
to the teaching and learning activities carried on for the primary purpose of helping members
of an organization, to acquire and apply the knowledge, skills, abilities and attitudes needed
for a particular job and organization.
Thus, training bridges the differences between job requirements and employees, present
specifications.

SCOPE OF TRAINING
The organizations find themselves compelled to organize some training activities because
many new entrants lack basic skills.
Considerable amount has been spent by employers on formal training.
Training of a company’s workforce results in an increase of productivity and reduces

wastage. It is corporate prudence and cost effective practice to retain workers for new jobs
than releasing them and hiring new ones. As training enhances the competency of the
workforce, it will result in increased morale. A large number of different kinds of activities
will be positively impacted if training systems are will designed.
Training can pave way for increased quality, both in the production and service sectors.
Training can facilitate employee retention and faster customer service. If designed and
delivered well, it will facilitate achievement of organizational objectives – the main purpose
of organizational existence.
In treating training, there are three types of organization. Some organizations regard training
as an unnecessary and time wasting activity. They feel that the cost of training is high and
is not commensurate with the benefit derived from it.
The second type of organizations treats training as a continuous activity. They make every
superior in organization responsible for training which invariably results in learning updates
either in technology, methodology or in behavior.
There are some organizations where training is used as a tool to deal with specific problems.
In these organizations, training happens only when there exists a problem which needs to be
solved. Training is taken up with a limited objective and discontinued once the problem is
solved.
Company’s selection and promotion policies have a definite bearing on training. However,
certain recent changes in perception have done a lot of good to corporate training.

1) More and more skills are taught and learnt and fewer skills are regarded as inborn.
2) The change of technology is advancing at faster pace making skills of today obsolete
tomorrow, thus making training and re-training imperative.
3) Globalization has resulted in diversity in lifestyles, attitude of people, working

environment, etc., compelling employees to get trained in various skills like foreign
languages, negotiation techniques, telephone skills, etc.
TRAINING INPUTS
There are three basic types of inputs.

1) Skills,
2) Attitudes, and
3) Knowledge.
The primary purpose of training is to establish a sound relationship between the worker and
his job – the optimum man- task relationship. Such a relationship is at its best when the
worker’s attitude to the job is right, when the workers knowledge of the job is adequate, and
he has developed the necessary skills.
Training activities in an industrial organization are aimed at making desired modifications

in skills, attitude and knowledge of employees so that they perform their jobs most
efficiently and effectively.
1) Skills: Training activities nowadays encompass activities ranging from the acquisition of
a simple motor skill to a complex administrative one. Training an employee for a particular
skill is undertaken to enable him to be more effective on the job. For example, new workers
can be trained to achieve levels of output attained by experienced older workers .Similarly
existing workers whose levels of output are below par can be retained.
2) Attitudes: Through orientation (induction) programmes, organization develops attitudes
in new employees which are favorable toward the achievement of organizational goals.
Training programmes in industry are aimed at molding employee attitudes to achieve
support for company activities, and to obtain better cooperation and greater loyalty.

3) Knowledge: Training aimed at imparting knowledge to employees in the organization

provides for understanding of all the problems of modern industry. This knowledge for a
worker is specific to his job, and related broadly to plant, machinery, material product, and
quality and standard of product. Knowledge for managerial personnel may be related to
complexity of problems in organizing, planning, staffing, directing and controlling.
In general, training initiated for imparting knowledge to employs should consider three
aspects:
(a) Knowledge in general about factory and work environment- job context.
(b) Specific knowledge related to job- job context.
(C) Knowledge related to quality and standards of product or quality of work.
PROCESS OF EMPLOYEE TRAINING
The training design process refers to a systematic approach for developing training programs. It
includes the seven steps in this process. Training is one of the most profitable investments an
organization can make. No matter what business or industry you are in the steps for an effective
training process are the same and may be adapted anywhere. If you have ever thought about
developing a training program within your organization consider the following four basic training
steps. You will find that all four of these steps are mutually necessary for any training program to be
effective and efficient.
Step1 is to conduct a needs assessment, which is necessary to identify whether training is needed.
This step identifies activities to justify an investment for training. The techniques necessary for the data
collection are surveys, observations, interviews, and customer comment cards. Several
examples of an analysis outlining specific training needs are customer dissatisfaction, low morale, low
productivity, and high turnover.

The objective in establishing a needs analysis is to find out the answers to the following
questions:
 “Why” is training needed?
 “What” type of training is needed?
 “When” is the training needed?
 “Where” is the training needed?
 “Who” needs the training? and “Who” will conduct the training?
 “How” will the training be performed?
By determining training needs, an organization can decide what specific knowledge, skills, and
attitudes are needed to improve the employee’s performance in accordance with the company’s
standards.
The needs analysis is the starting point for all training. The primary objective of all training is to
improve individual and organizational performance. Establishing a needs analysis is, and should
always be the first step of the training process.
Step 2 is to ensure that employees have the motivation and basic skills necessary to master
training content. This step establishes the development of current job descriptions and standards
and procedures. Job descriptions should be clear and concise and may serve as a major training tool
for the identification of guidelines. Once the job description is completed, a complete list of
standards and procedures should be established from each responsibility outlined in the job
description. This will standardize the necessary guidelines for any future training.
Step 3 is to create a learning environment that has the features necessary for learning to occur. This
step is responsible for the instruction and delivery of the training program. Once you have
designated your trainers, the training technique must be decided. One-on-one training, on-the-job
training, group training, seminars, and workshops are the most popular methods.
Before presenting a training session, make sure you have a thorough understanding of the
following characteristics of an effective trainer. The trainer should have:
- A desire to teach the subject being taught.

- A working knowledge of the subject being taught.

- An ability to motivate participants to “want” to learn.

- A good sense of humour.
- A dynamic appearance and good posture.
- A strong passion for their topic.
- A strong compassion towards their participants.
- Appropriate audio/visual equipment to enhance the training session.
For a training program to be successful, the trainer should be conscious of several essential
elements, including a controlled environment, good planning, the use of various training methods, good
communication skills and trainee participation.
Step 4 is to ensure that trainees apply the training content to their jobs.
This step willdetermine how effective and profitable your training program has been. Methodsfor
evaluation are pre-and post- surveys of customer comments cards, the establishment of a cost/benefit
analysis outlining your expenses and returns, and an increase in customer satisfaction and profits. The
reason for an evaluation system is simple. The evaluations of training programs are without a doubt
the most important step in the training process. It is this step that will indicate the effectiveness of
both the training as wellas the trainer.
There are several obvious benefits for evaluating a training program. First, evaluations will provide
feedback on the trainer’s performance, allowing themto improve themselves for future programs.
Second, evaluations will indicate its cost-effectiveness. Third, evaluations are an efficient way
to determine the overall effectiveness of the training program for the employees as well as the
organization.
The importance of the evaluation process after the training is critical. Without it, the trainer does not
have a true indication of the effectiveness of the training. Consider this information the next time
youneed to evaluate your training program. You will be amazed with the results.
The need for training your employees has never been greater. As business and industry continues to
grow, more jobs will become created and available. Customer demands, employee morale, employee
productivity, and employee turnover as well as the current economic realities of a highly competitive
workforce are just some of the reasons for establishing and implementing training in an
organization. To be successful, all training must receive support from the top management as well

as from the middle and supervisory levels of management. It is a team effort and must be
implemented by all members of the organization to be fully successful.
NEED FOR EMPLOYEE TRAINING
Training of employees takes place after orientation takes place. Training is the process
of enhancing the skills, capabilities and knowledge of employees for doing a particular
job. Training process moulds the thinking of employees and leads to quality performance
of employees. It is continuous and never ending in nature.
Training is given on four basic grounds:
1. New candidates who join an organization are given training. This training
familiarizes them with the organizational mission, vision, rules and regulations and
the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updations and amendments take place in technology, training is given to

cope up with those changes. For instance, purchasing new equipment, changes in
technique of production, computer impartment. The employees are trained about
use of new equipments and work methods.
4. When promotion and career growth becomes important. Training is given so that
employees are prepared to share the responsibilities of the higher level job.
Training needs can be assessed by analyzing three major human resource areas: the organization
as a whole, the job characteristics and the needs of the individuals. This analysis will provide
answers to the following questions:
 Where is training needed?
 What specifically must an employee learn in order to be more productive?
 Who needs to be trained?
Begin by assessing the current status of the company how it does what it does best and the abilities
of your employees to do these tasks. This analysis will provide some benchmarks against which the
effectiveness of a training program can be evaluated. Your firm should know where it wants to be in
five years from its long-range strategic plan. What you need is a training program to take your

firm from here to there. Second, consider whether the organization is financially committed to
supporting the training efforts. If not, any attempt to develop a solid training program will fail.
Next, determine exactly where training is needed. It is foolish to implement a companywide training
effort without concentrating resources where they are needed most. An internal audit will help
point out areas that may benefit from training. Also, a skills inventory can help determine the
skills possessed by the employees in general. This inventory will help the organization determine
what skills are available now and what skills are needed for future development.
Also, in today’s market-driven economy, you would be remiss not to ask your customers what they
like about your business and what areas they think should be improved. In summary, the analysis
should focus on the total organization and should tell you (1) where training is needed and (2) where
it will work within the organization. Once you have determined where training is needed,
concentrate on the content of the program. Analyze the characteristics of the job based on its
description, the written narrative of what the employee actually does. Training based on job
descriptions should go into detail about how the job is performed on a task-by-task basis.
Actually doing the job will enable you to get a better feel for what is done. Individual employees
can be evaluated by comparing their current skill levels or performance to the organization’s
performance standards or anticipated needs.
Types / Method / Techniques of Employee Training

Some commentator use a similar term for workplace learning to improve performance:
“training and development”. One can generally categorize such training as on-the-job or off-
the-job:
 On-the-job training takes place in a normal working situation, using the actual tools,
equipment, documents or materials that trainees will use when fully trained. On-the-job
training has a general reputation as most effective for vocational work.
 Off-the-job training takes place away from normal work situations — implying that the
employee does not count as a directly productive worker while such training takes place. Off-
the-job training has the advantage that it allows people to get away from work and
concentrate more thoroughly on the training itself. This type of training has proven more
effective in inculcating concepts and ideas.

The most frequently used method in smaller organizations that is on the job training. This
method of training uses more knowledgeable, experienced and skilled employees, such as
mangers, supervisors to give training to less knowledgeable, skilled, and experienced
employees. OJT can be delivered in classrooms as well. This type of training often takes place
at the work place in informal manner.
ON-THE-JOB TRAINING
On the Job Training is characterized by following points
 It is done on ad-hoc manner with no formal procedure, or content
 At the start of training, or during the training, no specific goals or objectives are developed
 Trainers usually have no formal qualification or training experience for training
 Training is not carefully planned or prepared
 The trainer are selected on the basis of technical expertise or area knowledge
Formal OJT programs are quite different from informal OJT. These programs are carried out
by identifying the employees who are having superior technical knowledge and can effectively
use one-to-one interaction technique. The procedure of formal on the job training program is:
1. The participant observes a more experienced, knowledgeable, and skilled trainer (employee)
2. The method, process, and techniques are well discussed before, during and after trainer
has explained about performing the tasks
3. When the trainee is prepared, the trainee starts performing on the work place
4. The trainer provides continuing direction of work and feedback
5. The trainee is given more and more work so that he accomplishes the job
flawlessly The four techniques for on the job development are:
 COACHING
 MENTORING
 JOB ROTATION
 JOB INSTRUCTION TECHNIQUE (JIT)
1.) Coaching is one of the training methods, which is considered as a corrective method for

inadequate performance. According to a survey conducted by International Coach

Federation (ICF), more than 4,000 companies are using coach for their executives. These
coaches are experts most of the time outside consultants.
A coach is the best training plan for the CEO’s because
 It is one to one interaction
 It can be done at the convenience of CEO
 It can be done on phone, meetings, through e-mails, chat
 It provides an opportunity to receive feedback from an expert
 It helps in identifying weaknesses and focus on the area that needs improvement
This method best suits for the people at the top because if we see on emotional front,
when a person reaches the top, he gets lonely and it becomes difficult to find someone to talk
to. It helps in finding out the executive’s specific developmental needs. The needs can be
identified through 60 degree performance reviews.
Procedure of the Coaching
The procedure of the coaching is mutually determined by the executive and coach. The
procedure is followed by successive counseling and meetings at the executive’s convenience by
the coach.
1. Understand the participant’s job, the knowledge, skills, and attitudes, and resources
required to meet the desired expectation
2. Meet the participant and mutually agree on the objective that has to be achieved
3. Mutually arrive at a plan and schedule
4. At the job, show the participant how to achieve the objectives, observe the performance
and then provide feedback
5. Repeat step 4 until performance improves
For the people at middle level management, coaching is more likely done by the
supervisor; however expert’s from outside the organization are at times used for up and
coming managers.Again, the personalized approach assists the manger focus on definite needs
and improvement.
2.) Mentoring isanongoing relationship that is developed between a senior and junior employee.
Mentoring provides guidance and clear understanding of how the organization goes to achieve
its vision and mission to the junior employee.
The meetings are not as structured and regular than in coaching. Executive mentoring is
generally done by someone inside the company. The executive can learn a lot from
mentoring. By dealing with diverse mentee’s, the executive is given the chance to grow
professionally by developing management skills and learning how to work with people with
diverse background, culture, and language and personality types.
Executives also have mentors. In cases where the executive is new to the organization, a
senior executive could be assigned as a mentor to assist the new executive settled into his
role. Mentoring is one of the important methods for preparing them to be future executives.
This method allows the mentor to determine what is required to improve mentee’s
performance. Once the mentor identifies the problem, weakness, and the area that needs to
be worked upon, the mentor can advise relevant training. The mentor can also provide
opportunities to work on special processes and projects that require use of proficiency.
Some key points on Mentoring
 Mentoring focus on attitude development
 Conducted for management-level employees
 Mentoring is done by someone inside the company
 It is one-to-one interaction
 It helps in identifying weaknesses and focus on the area that needs improvement
3.) For the executive, Job Rotation takes on different perspectives. The executive is
usually not simply going to another department. In some vertically integrated organizations,
for example, where the supplier is actually part of same organization or subsidiary, job
rotation might be to the supplier to see how the business operates from the supplier point of
view.
Learning how the organization is perceived from the outside broadens the executive’s

outlook on the process of the organization. Or the rotation might be to a foreign office to
provide a global perspective. For managers being developed for executive roles, rotation to
different functions in the company is regular carried out.
This approach allows the manger to operate in diverse roles and understand the different
issues that crop up. If someone is to be a corporate leader, they must have this type of
training. A recent study indicated that the single most significant factor that leads to leader’s
achievement was the variety of experiences in different departments, business units, cities,
and countries.
An organized and helpful way to develop talent for the management or executive level of the
organization is job rotation. It is the process of preparing employees at a lower level to
replace someone at the next higher level. It is generally done for the designations that are
crucial for the effective and efficient functioning of the organization.
Some of the major benefits of job rotation are:

 It provides the employees with opportunities to broaden the horizon of knowledge, skills,
and abilities by working in different departments, business units, functions, and countries
 Identification of Knowledge, skills, and attitudes (KSAs) required
 It determines the areas where improvement is required
 Assessment of the employees who have the potential and caliber for filling the position
4.) Job Instruction Technique (JIT) uses a strategy with focus on knowledge (factual and
procedural), skills and attitudes development.
JIT Consists of Four Steps:
Plan – This step includes a written breakdown of the work to be done because the trainer and
the trainee must understand that documentation is must and important for the familiarity of
work. A trainer who is aware of the work well is likely to do many things and in the process
might miss few things. Therefore, a structured analysis and proper documentation ensures that
all the points are covered in the trainingprogram. The second step is to find out what the trainee
knows and what training should focus on. Then, the next step is to create a comfortable
atmosphere for the trainees’ i.e. proper orientation program, availing the resources,
familiarizing trainee with the training program, etc.

Present – In this step, trainer provides the synopsis of the job while presenting the
participants the different aspects of the work. When the trainer finished, the trainee
demonstrates how to do the job and why is that done in that specific manner. Trainee actually
demonstrates the procedure while emphasizing the key points and safety instructions.
Figure 6.1 : Steps in JIT
Trial – This step actually a kind of rehearsal step, in which trainee tries to perform the
work and the trainer is able to provide instant feedback. In this step, the focus is on improving
the method of instruction because a trainer considers that any error if occurring may be a
function of training not the trainee. This step allows the trainee to see the after effects of
using an incorrect method. The trainer then helps the trainee by questioning and guiding to
identify the correct procedure.
Follow-up – In this step, the trainer checks the trainee’s job frequently after the training
program is over to prevent bad work habits from developing. There are various methods of
training, which can be divided in to cognitive and behavioral methods. Trainers need to
understand the pros and cons of each method, also its impact on trainees keeping their
background and skills in mind before giving training.
OFF THE JOB TRAINING –
There are many management development techniques that an employee can take in off the
job. The few popular methods are:

 SENSITIVITY TRAINING
 TRANSACTIONALANALYSIS
 STRAIGHT LECTURES/ LECTURES
 SIMULATION EXERCISES
1.) Sensitivity Training is about making people understand about themselves and others
reasonably, which is done by developing in them social sensitivity and behavioral flexibility.
Social sensitivity in one word is empathy. It is ability of an individual to sense what others
feeland think from their own point of view. Behavioral flexibility is ability to behave suitably
in light of understanding.
Sensitivity Training Program requires three steps:
Unfreezing the Old Values –
It requires that the trainees become aware of the inadequacy of the old values. This can be
done when the trainee faces dilemma in which his old values is not able to provide proper
guidance. The first stepconsists of a small procedure:
 An unstructured group of 10-15 people is formed.
 Unstructured group without any objective looks to the trainer for its guidance
 But the trainer refuses to provide guidance and assume leadership
 Soon, the trainees are motivated to resolve the uncertainty
 Then, they try to form some hierarchy. Some try assume leadership role which may not be
liked by other trainees
 Then, they started realizing that what they desire to do and realize the alternative ways of
dealing with the situation

Figure 6.2 Procedure of Sensitivity Training
Development of New Values – With the trainer’s support, trainees begin to examine their
interpersonal behavior and giving each other feedback. The reasoning of the feedbacks are
discussed which motivates trainees to experiment with range of new behaviors and values.
This process constitutes the second step in the change process of the development of these
values.
Refreezing the new ones – This step depends upon how much opportunity the trainees get
to practice their new behaviors and values at their work place.
2.) Transactional Analysis provides trainees with a realistic and useful method for
analyzing and understanding the behavior of others. In every social interaction, there is a
motivation provided by one person and a reaction to that motivation given by another
person. This motivation reaction relationship between two persons is a transaction.
Transactional analysis can be done by the ego states of an individual. An ego state is
a system of feelings accompanied by a related set of behaviors. There are basically three
ego states:
Child: It is a collection of recordings in the brain of an individual of behaviors, attitudes,

and impulses which come to her naturally from her own understanding as a child. The
characteristics of this ego are to be spontaneous, intense, unconfident, reliant, probing,
anxious, etc. Verbal clues that a person is operating from its child state are the use of words like
“I guess”, “I suppose”, etc. and non verbalclues like, giggling, coyness, silent, attention
seeking etc.

Parent: It is a collection of recordings in the brain of an individual of behaviors, attitudes,

and impulses imposed on her in her childhood from various sources such as, social,
parents, friends, etc. The characteristics of this ego are to be overprotective, isolated, rigid,
bossy, etc. Verbal clues that a person is operating from its parent states are the use of words
like, always, should, never, etc and non-verbal clues such as, raising eyebrows, pointing an
accusing finger at somebody, etc.
Figure 6.3
Adult: It is a collection of reality testing, rational behavior, decision making, etc. Aperson in
this ego state verifies, updates the data which she has received from the other two states. It is a
shift from thetaught and felt concepts to tested concepts. All of us evoke behavior from one
ego state which is responded toby the other person from any of these three states.
3.) Lecture is telling someone about something. Lecture is given to enhance the knowledge
of listener or to give him the theoretical aspect of a topic. Training is basically incomplete
without lecture. When the trainer begins the training session by telling the aim, goal, agenda,
processes, or methods that wil be used in training that means the trainer is using the lecture
method. It is difficult to imagine trainingwithout lecture format. There are some variations in
Lecture method. The variation here means that some forms of lectures are interactive while
some are not.
Straight Lecture: Straight lecture method consists of presenting information, which the
trainee attempts to absorb. In this method, the trainer speaks to a group about a topic.
However, it does not involve any kind of interaction between the trainer and the trainees. A
lecture may also take the form of printed text, such as books, notes, etc. The difference
between the straight lecture and the printed material is the trainer’s intonation, control of
speed, body language, and visual image of the trainer. The trainerin case of straight lecture can

decide to vary from the training script, based on the signals from the trainees, whereas same
material in print is restricted to what is printed. Agood lecture consists of introduction of the
topic,
purpose of the lecture, and priorities and preferences of the order in which the topic will
be covered. Some of the main features of lecture method are:
 Inability to identify and correct misunderstandings
 Less expensive
 Can be reached large number of people at once
 Knowledge building exercise
 Less effective because lectures require long periods of trainee inactivity
4.) Games and Simulations are structured and sometimes unstructured, that are usually
played for enjoyment sometimes are used for training purposes as an educational tool. Training
games and simulations are different from work as they are designed to reproduce or simulate
events, circumstances, processes that take place in trainees’ job.
A Training Game is defined as spirited activity or exercise in which trainees compete with
each other according to the defined set of rules. Simulation is creating computer versions of
real-life games. Simulation is about imitating or making judgment or opining how events
might occur in a real situation. It canentail intricate numerical modeling, role playing without
the support of technology, or combinations. Training games and simulations are now seen as
an effective tool for training because its key components are:
 Challenge
 Rules
 Interactivity
These three components are quite essential when it comes to learning. Some of the
examples of this technique are:

Figure 6.4
Trainees can therefore experience these events, processes, games in a controlled setting
where they can develop knowledge, skills, and attitudes or can find out concepts that will
improve their performance. The various methods that come under Games and Simulations
are:
 BEHAVIOR-MODELLING
 BUSINESS GAMES
 CASE STUDIES
 EQUIPMENT STIMULATORS
 IN-BASKET TECHNIQUE
 ROLE PLAYS

IDENTIFICATION OF TRAINING NEEDS
This training needs assessment works best in small to mid-sized organizations. It will give
you a quick assessment of the training needs of an employee group. These training needs
assessment helps find common training programs for a group of employees.
1. The facilitator gathers all employees who have the same job in a conference room with a
white board or flip charts and markers.
2. Ask each employee to write down their ten most important training needs. Emphasize that
the employees should write specific needs. Communication or team buildings are such broad
training needs, as an example that you would need to do a second training needs assessment
on each of these topics. How to give feedback to colleagues or how to resolve a conflict with
a co-worker are more specific training needs.
3. Then, ask each person to list their ten training needs. As they list the training needs, the
facilitator captures the training needs on the white board or flip chart. Don’t write down
duplicates but do confirm by questioning that the training need that on the surface appears
to be a duplicate, really is an exact duplicate.
4. When all training needs have been listed, use a weighted voting process to prioritize the
training needs across the group. In a weighted voting process, you use sticky dots or numbers
written in magic marker (not as much fun) to vote on and prioritize the list of training needs.
Assign a large dot 25 points and smaller dots five points each. Distribute as many dots as
you like. Tell needs assessment participants to place their dots on the chart to vote on their
priorities.
5. List the training needs in order of importance, with the number of points assigned as votes
determining priority, as determined by the sticky dot voting process. Make sure you have
notes (best taken by someone on their laptop while the process is underway) or the flip chart
pages to maintain a record of the training needs assessment session.
6. Take time, or schedule another session, to brainstorm the needed outcomes or goals from
the first 3–5 training sessions identified in the needs assessment process. This will help as
you seek and schedule training to meet the employees’ needs. You can schedule more
brainstorming later, but I generally find that you need to re-do the needs assessment process
after the first few training sessions.

7. Training needs assessment can be, and often needs to be, much more complicated than
this. But, this is a terrific process for a simple training needs assessment.
8. Make sure you keep the commitments generated by the training needs assessment process.
Employees will expect to receive their key identified training sessions with the brainstormed
objectives met.
TYPICAL AREAS OF EMPLOYEE TRAINING
1. Communications: The increasing diversity of today’s workforce brings a wide variety

of languages and customs.
2. Computer skills: Computer skills are becoming a necessity for conducting administrative
and office tasks.
3. Customer service: Increased competition in today’s global marketplace makes it critical
that employees understand and meet the needs of customers.
4. Diversity: Diversity training usually includes explanation about how people have
different perspectives and views, and includes techniques to value diversity.
5. Ethics: Today’s society has increasing expectations about corporate social responsibility.
Also, today’s diverse workforce brings a wide variety of values and morals to the workplace.
6. Human relations: The increased stresses of today’s workplace can include
misunderstandings and conflict. Training can people to get along in the workplace.
7. Quality initiatives: Initiatives such as Total Quality Management, Quality Circles,
Benchmarking, etc. require basic training about quality concepts, guidelines and standards
for quality, etc.
8. Safety: Safety training is critical where working with heavy equipment, hazardous
chemicals, repetitive activities, and etc. but can also be useful with practical advice for
avoiding assaults, etc.
9. Sexual harassment: Sexual harassment training usually includes careful description of
the organization’s policies about sexual harassment, especially about what are appropriate
behaviours.

HUMAN RESOURCE MANAGEMENT

Unit – IV: PERFORMANCE APPRAISAL
Structure of Unit:
8.0 Objectives
8.1 Introduction
8.2 Meaning of Performance Appraisal
8.3 Need and Importance of Performance Appraisal
8.4 Objectives of Performance Appraisal
8.5 Methods of Performance Appraisal
8.6 The Performance Appraisal Process
8.7 Factors Affecting Performance Appraisal
8.8 Benefits of Performance Appraisal
8.9 Problems of Performance Appraisal
8.10 Performance Appraisal Practices in India
8.11 Effective PerformanceAppraisal
8.0 Objectives
After completing this unit, you will be able to:
 Understand the concept of performance appraisal;

 State the meaning and importance of performance appraisal;
 Discuss the benefits and problems of appraisal;
 Enumerate the steps in performance appraisal process;
 Outline the objectives of performance appraisal;
 Describe various appraisal methods;
 Outline few performance appraisal practices in India:
8.1 Introduction
In a casual sense, perfor-mance appraisal is as old as mankind itself. In an official sense, performance
appraisal of an individual began in the Wei dynasty (AD. 261-265) in China, where an Imperial Rater
appraised the performance of the official family’. In 1883, the New York City Civil Service in USA
introduced a official appraisal programme shortly before World War . However, official appraisal of
employees’ performance is thought to have been started for the first time during the First World War,
when at the instance of Walter Dill Scott, the US Army: adopted the “Man-to-man’ rating system for
evaluating personnel. For being fair and unbiased, in judging the employee it is necessary to review the
performance of the person in the organization. This is now done in a systematic way in most countries of
the world. The evaluation of an individual’s performance in the organization is called Performance Appraisal.
The, system of performance appraisal compels the management to have a promotion policy within the
organization. It also gives motivation to those employees who are efficient and are capable of working in
a best way. An organization’s goals can be achieved only when people within the organization give their
best efforts. How to know whether an employee has shown his or her best performance on a given job?
The answer is performance appraisal.In the organization context performance appraisal is an evaluation
of personnel in a systematic way by superiors or others familiar with their performance. It is also described
as merit rating in which one individual is ranked as better or worse in comparison to others. The basic
purpose in this merit rating is to determine an employee’s eligibility for promotion. However,
performance appraisal is a broad term and it may be used to ascertain the need for training and
development, salary increase, transfer, discharge, etc. besides promotion.
In simple terms, performance appraisal may be understood as the review of an individual’s performance in
an orderly way, the performance is measured by considering factors like job knowledge, quality and
quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment,
versatility, health, and the like. Evaluation should not be restricted to past performance alone but, the
future performances of the employee should also be assessed.
8.2 Meaning of Performance Appraisal
Performance appraisal system has been defined in many ways. The easiest way to understand the meaning
of performance appraisal is as follows:
It is the systematic assessment of an individual with respect to his or her performance on the job and his or
her potential for development in that job. Thus, performance appraisal is a systematic and objective way
of evaluating the relative worth or ability of an employee in performing his job. The two aspects of
performance appraisal considered to be important are: systematic and objective. The appraisal is said to
be systematic when it evaluates all performances in the same manner, by applying the same approach, so
that appraisal of different persons are comparable. Such an appraisal is taken from time to time according
to plan; it is not left to probability. Thus, both raters’ and rates know the system of perfor-mance appraisal
and its timing. Appraisal has objectivity also. It’s important aspect is that it attempts at precise measurement
by trying to remove human biases and prejudices.

Definitions of Performance Appraisal

According to Flippo, a prominent personality in the field of Human resources, “performance appraisal is
the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his
present job and his potential for a better job.”
In the words of Yoder, “Performance appraisal refers to all formal procedures used in working organizations
to evaluate personalities and contributions and potential of group members.” Thus performance appraisal
is a formal programme in an organization which is concerned with not only the contributions of the members
who form part of the organization, but also aims at spotting the potential of the people.”
It is a systematic way of judging the relative worth of an employee while carrying out his work in an
organization. It also helps recognize those employees who are performing their tasks well and also- who
are not performing their tasks properly and the reasons for such (poor) performance.
According to International Labor Organization, “A regular and continuous evaluation of the quality,
quantity and style of the performance along with the assessment of the factors influencing the performance
and behavior of an individual is called as performance appraisal.”
In short, we can say that performance appraisal is expected to result in an assessment of: development
potential of the employees, training needs for the employees; capabilities of employees being placed in
higher posts, behavior and obedience of the employees; and the need of the organization to evolve a
control mechanism.
8.3 Need and Importance of Performance Appraisal

Performance is always measured in terms of outcome and not efforts. Performance Appraisal is needed in
most of the organizations in order:
(1) To give information about the performance of employees on the job and give ranks on the basis of
which decisions regarding salary fixation, demotion, promotion, transfer and confirmation are
taken.
(2) To provide information about amount of achievement and behavior of subordinate in their job.
This kind of information helps to evaluate the performance of the subordinate, by correcting
loopholes in performances and to set new standards of work, if required.
(3) To provide information about an employee’s job-relevant strengths and & weaknesses.
(4) To provide information so as to identify shortage in employee regarding ability, awareness and
find out training and developmental needs.
(5) To avoid grievances and in disciplinary activities in the organization.
(6) It is an ongoing process in every large scale organization.

Performance appraisals in an organization provide employees and managers with an opportunity to converse
in the areas in which employees do extremely well and those in which employees need improvement.
Performance appraisals should be conducted on a frequent basis, and they need not be directly attached
to promotion opportunities only. It is important because of several reason s such as:
1. Personal Attention: Performance appraisal evaluation, gives employee to draw personal concern
from supervisor and talk about their own strengths and weaknesses.
2. Feedback: Employees on a regular basis get feedback of their performances and issues in which
they lack, which needs to be resolved on a regular basis.
3. Career Path: It allows employees and supervisors to converse goals that must be met to grow
within the company. This may encompass recognizing skills that must be acquired, areas in which
improvement is required, and additional qualification that must be acquired.
4. Employee Accountability: Employees are acquainted that their evaluation will take place on a
regular basis and therefore they are accountable for their job performance.
5. Communicate Divisional and Company Goals: It not only communicates employees’ individual
6. Goals but provides an opportunity for managers to explain organizational goals and in the manner
in which employees can contribute in the achievement of those goals.
8.4 Objectives of Performance Appraisal

Performance appraisal in any organization is undertaken to meet certain objectives which may be in the
form of salary increase, promotion, recognizing training and development needs, providing feedback to
employees and putting stress on employees for better performance.
An employee in an organization may think that performance appraisal is basically used by the organization
to blame employees and to take corrective actions. An employee may feel that performance appraisal is
introduced in an organization for punishment in such a case well thought out performance appraisal may
results into failure. If the objectives set in a more positive, problems may arise as they may not all be
achievable and they may cause conflict. For Example, an employee who is likely to be appraised will
never discloses his loopholes as it may affect his appraisal. Thus the objective of performance appraisal
should be clear and specific. Thus including objectives into the appraisal system may draw attention
to areas for improvement, new directions and opportunities.
1. Salary Increase: Performance appraisal plays an important role in making decision about increase
in salary. Increase in salary of an employee depends on how he is performing his job. Evaluation
of an employee takes place on a continuous basis which may be formally or informally. In a large
as well as in small organizations performance appraisal takes place but it may be in a formal or

informal way. It shows how well an employee is performing and to what extent a hike in salary
would take place in comparison to his performance.
2. Promotion: Performance appraisal gives an idea about how an employee is work-ing in his present
job and what his strong and weak points are. In comparison to his strength and weaknesses it is
decided whether he can be promoted to the next higher position or not. If necessary what additional
training is required? Similarly it could be used for demotion, discharge of an employee and transfer.
3. Training and Development: Performance appraisal gives an idea about strengths and weaknesses
of an employee on his present job. It gives an idea about the training required by an employee for
overcoming the limitations that an employee is having for better performance in future.
4. Feedback: Performance appraisal gives an idea to each employee where they are, how they are
working, and how are they contributing towards achievement of organizational objectives. Feed
works in two ways. First, the person gets view about his performance and he may try to conquer
his weaknesses which may lead to better performance. Second, the person gets satisfied after he
relates his work with organizational objectives. It gives him an idea that he is doing a meaning ful
work and can also contribute in a better way.
5. Pressure on Employees: Performance appraisal puts a sort of stress on employees for better
performance. If the employees are aware that they are been appraised in comparison to their
performance and they will have positive and acceptable behaviour in this respect
Activity A:
1. Currently you are working in a manufacturing organization. Write the objectives of performance
appraisal of your organization in the light of those mentioned above.

8.5 Methods of Performance Appraisal
Performance appraisal methods are categorized in two ways traditional and modern methods. Each
organization adopts a different method of performance appraisal according to the need of organization. In
small organization, it may be on an informal basis where personal opinion of a superior about his
subordi-nates may consider for appraisal. Table 8.2 Methods of Performance Appraisal
Traditional Methods Modern Methods

Ranking method Management by Objectives (MB0)
Paired comparison Behaviorally anchored rating scales
Grading method Assessment centers
Forced distribution method 360-degree appraisal
Forced choice method Cost accounting method
Checklist method
Critical incidents method
Graphic scale method
Essay method
Field review method
1. Ranking Method: It is the oldest and simplest method of performance appraisal in which employees’
are ranked on certain criteria such as trait or characteristic. The employee is ranked from highest to lowest
or from worst to best in an organization. Thus if there are seven employees to be ranked then therewill be
seven ranks from 1 to 7.
Rating scales offer the advantages of flexibility comparatively easy use and low cost. Nearly everytype of
job can be evaluated with the rating scale, the only condition being that the Job-performance criteria
should he changed’.In such a way, a large number of employees can be evaluated in a shorter time period.
Thus, the greatest limitation of this method is that differences in ranks do not indicate how much an
employee of rank 1 is better than the employee whose rank is last.
2. Paired Comparison: In method is comparatively simpler as compared to ranking method. In this

method, the evaluator ranks employees by comparing one employee with all other employees in the
group. The rater is given slips where, each slip has a pair of names, the rater puts a tick mark next those
employee whom he considers to be the better of the two. This employee is compared number of times so
as to determine the final ranking.

This method provides compari-son of persons in a better way. However, this increases the work as the
large number ofcom-parisons has to be made. For example, to rank 50 persons through paired comparison,
there will be 1,225 comparisons. Paired comparison method could be employed easily where the numbers
of employees to be compared are less.
This may be calculated by a formula N (N — 1)12 where N is the total number of persons to be compared.
Where N is the total number of persons to be evaluated.
For example
If the following five teachers have to be evaluated by the Vice Chanceller of a University : Chinmay( c),
Mohan (M), Rohit (R), Vishal (V), and Basanti (B), the above formula gives
5 (5— 1)/2 or 10 pairs. These are;

CwithM,
CwithR MwithR
CwithV MwithV RwithV
CwithB MwithB RwithB VwithB
Thus, the pairs to be compared give the maximum possible combinations in which an employee could be
compared with one another. If an employee sores better number of times as compared to other employee
is considered better, makes his/her score. Such scores are considered for each worker and he/she is
ranked according to his/her score. This method cannot work when large number of employee is compared.
3. Grading Method: In this method, certain categories are defined well in advance and employees are
put in particular category depending on their traits and characteristics. Such categories may be defined as
outstanding, good, average, poor, very poor, or may be in terms of alphabet like A, B, C, D, etc. where
A may indicate the best and D indicating the worst. This type of grading method is applied during Semester
pattern of examinations. One of the major limitations of this method is that the rater may rate many
employees on the better side of their performance.
4. Forced Distribution Method: This method was evolved to abolish the trend of rating most of the
employees at a higher end of the scale. The fundamental assumption in this method is that employees’
performance level conforms to a normal statistical distribution. For example, 10 per cent employees may
be rated as excellent, 40 per cent as above average, 20 per cent as average, 10 per cent below average,
and 20 per cent as poor. It eliminates or minimizes the favoritism of rating many employees on a higher
side. It is simple and easy method to appraise employees. It becomes difficult when the rater has to
explain why an employee is placed in a particular grouping as compared to others.
5. Forced-choice Method: The forced-choice rating method contains a sequence of question in a

statement form with which the rater checks how effectively the statement describes each individual being
evalu-ated in the organization. There may be some variations in the methods and statements used, but the
most common method of forced choice contains two statements both of which may be positive or negative.
It may be both the statement describes the characteristics of an employee, but the rater is forced to tick
only one i.e the most appropriate statement which may be more descriptive of the employee. For example,
a rater may be given the following two statements:
(i) The employee is hard working.
(ii) The employee gives clear instructions to his subordinates.
Though both of them describe the characteristics of an em-ployee, the rater is forced to tick only one
which appears to be more descriptive of the employee. Out of these two statements, only one statement
is considered for final analysis of rating. For example, a rater may be given the following two statements:
(i) The employee is very sincere.
(ii) Employee gives clear and fast instructions to his subordinates.
Both of the above statements are positive but the rater is supposed to rate only one which is more
appropriate of subordinate’s behavior. For ranking only one statement is considered .As the rater is not
aware about the statement to be considered the result would be free from bias. This method may be more
objective but it involves lot of problems in framing of such sets of statements.
6. Check-list Method: The main reason for using this method is to reduce the burden of evaluator. In
this method of evaluation the evaluator is provided with the appraisal report which consist of series of
questions which is related to the appraise. Such questions are prepared in a manner that reflects the
behavior of the concerned appraise. Every question has two alternatives, yes or no, as given below:
1. Is he/she respected by his/her subordinates? Yes/No

2. Is he/she ready to help other employees? Yes/No
3. Does her behavior remain same for everyone in the organization? Yes/No
The con-cerned rater/evaluator has to tick appropriate answers relevant to the appraises.
When the check-list is finished, it is sent to the personnel department to prepare the final scores for all
appraises based on all questions based on yes or no. While preparing question effort is made to establish
the level of consistency of the rater by asking the same question twice but in a different manner. This
method is considered to be easy if questions are framed properly for different categories of employees.
However, one of the disadvantages of the check-list method is that it is very difficult to accumulate,
analyze and evaluate a number of statements about employee characteristics and contributions. It iseven
costly method with lot of time and efforts required by the organization.
7. Critical Incidents Method: This method is very useful for finding out those employees who have the
highest potential to work in a critical situation. Such an incidence is very important for organization as they

get a sense, how a supervisor has handled a situation in the case of sudden trouble in an organization,
which gives an idea about his leadership qualities and han-dling of situation. It is also said to bea continuous
appraisal method where employees are appraised continuously by keeping in mind the critical situation. In
this method, only the case of sudden trouble and behavior associated with these incidents or trouble are
taken for evaluation.
This method is categorized in three steps. First, a list of notable (good or bad) on-the-job behavior of
specific incidents or sudden trouble is prepared. Second, selected experts would then assign weightage or
score to these incidents according to how serious a particular incident is and their degree of willingness to
perform a job. Third, finally a check-list indicating incidents that illustrate workers as good or “bad” is
formed. Then, the checklist is given to the rater for evaluating the workers.
The strong point of critical incident method is that it focuses on behaviors and, thus, judge’s performance
rather than personalities.
Its drawbacks are that too frequently they need to write down the critical incidents which is very time-
consuming and burdensome for evaluators, i.e., managers. Generally, negative incidents are more noticeable
than posi-tives.
8. Graphic Scale Method: It is one of the simplest and most popular techniques for appraising
performances of employee. It is also known as linear rating scale. In graphic rating scale the printed
appraisal form is used to appraise each employee.
Such forms contain a number of objectives, and trait qualities and characters to be rated like quality of
work and amount of work, job knowhow dependability, initiative, attitude, leadership quality and emotional
stability.
The rater gives an estimate the extent to which subordinates possess each quality. The extent to which
quality is possessed is measured on a scale which can vary from three points to several points. In general
practice five-point scales is used. Some organizations use numbers in order to avoid the propensityof the
rater to tick mark central points. It may be numbered or defined. Thus numbers like 5, 4, 3, 2 and 1 may
denote points for various degrees of excellent-poor, high-low, or good-bad, and so on. Such numbers
may be expressed in terms like excellent, very good, average, poor and very poor; or very high, high,
average, low and very low.
Graphic scale method is good for measuring various job behaviors of an employee. But, it is bound to
limitations of rater’s bias while rating employee’s behavior at job.

9. Essay Method: In this method, the rater writes a detailed description on an employee’s
characteristics and behavior, Knowledge about organizational policies, procedures and
rules, Knowledge about the job, Training and development needs of the employee,
strengths, weakness, past performance, potential and suggestions for improvement. It is
said to be the encouraging and simple method to use. It does not need difficult formats and
specific training to complete it.
10. Field Review Method: In this method of appraisal direct superior is not going to
appraise an employee but appraised by another person, usually, from personnel
department .The rater, in such a case, appraises the employee on the basis of his past
records of productivity and other information such as absentee-ism, late corning, etc. It is
more suitable in a situation where an organization wants to provide promotion to an
employee. It also gives information for comparing employees from different locationsand
units. It reduces partiality to some extent as personnel department person is supposed to
be trained in appraisal mechanism. This method suffers from two limitations:
1. As employees are not rated by immediate boss, the rater from other department
may not be familiar with the conditions in an employee’s work environment which
may hamper his ability and work motivation to perform.
2. The rater from other department do not get a chance to scrutinize the employee’s
behavior or performance with different time interval and in a variety of situations,
but only in an unnaturally structured interview situation which is for a very short
period of time.
10
Jawahar Science College, Block-14, Neyveli.
Modern Methods
1. Management by Objectives (MB0): The concept of ‘Management by Objectives’

(MBO) was coined by Peter Drucker in 1954. It is a process where the employees and the
superiors come together to identify some goals which are common to them, the employees
set their own goals to be achieved, the benchmark is taken as the criteria for measuring
their performances and their involvement is there in deciding the course of action to be
followed.
The basic nature of MBO is participative, setting their goals, selecting a course of actions to
achieve goals and then taking decision. The most important aspect of MBO is measuring the
actual performances of the employee with the standards set by them. It is also said to be a
process that integrates organizational objectives into individual objectives.
Entire program me of MBO is divided in four major steps i.e setting up of goal, action planning,
compari-son and timelyreview.
Setting up of goal-In goal setting superior and subordinate together set certain goals, i.e
the expected outcome that each employee is supposed to achieve.
In action planning, the manner in which goals could be achieved is determined i.e. identifying
the activities which are necessary to perform; to achieve pr determined goals or standards.
When the employees start with their activities, they come to know what is to be done, what
has been done, and what remains to be done and it also gives an idea about the resources to
be achieved.
In the third step, the goals set by the individual employee are compared with the actual goals
achieved. It gives an idea to the evaluator as why there is a variation in desired outcome and
actual outcome .Such a comparison helps create need for training so as to enhance
employees’ performance. Finally, in the timely review step, corrective actions are taken so
that actual performances do not deviates from standards established in beginning.
The main reason for conducting reviews is not to humiliate the performer but to assist
him in better performances in future. Few advantages of MBO are a) it is outcome –
oriented. It co-ordinates the planning and control functions and provides motivation)
Employees are clear about the task that theyare expected to perform and also how they
may be evaluated.MBO do have certain limitations such as it is time consuming, employees
and the superiors jointly setting the goals may lead to conflict as employee would always
11
like to set lower goal and the superior would like to set it on the higher side, lack of
confidence in employee by management.
2. Behaviorally Anchored Rating Scales: This method is a combination of traditional

rating scales and critical incidents methods. It consists of preset critical areas of job
performance or sets of behavioral statements which describes the important job
performance qualities as good or bad (for e.g. the qualities like inter personal relationships,
flexibility and consistency, job knowledge etc). These statements are developed from
critical incidents.
These behavioral examples are then again translated into appropriate performance
dimensions. Those that are selected into the dimension are retained. The final groupsof behavior
incidents are then scalednumerically to a level of performance that is perceived to represent.
A rater must indicate which behavior on each scale best describes an employee’s
performance. The results of the above processes are behavioral descriptions, such as
anticipate, plan, executes, solves immediate problems, carries out orders, andhandles urgent
situation situations. This method has following advantages: a) It reduces rating errors)
Behavior is assessed over traits. c) It gives an idea about the behavior to the employee
and the rater about which behaviors bring good Performance and which bring bad
performance.
3. Assessment Centres: It is a method which was first implemented in German Army in

1930. With the passage of time industrial houses and business started using this method.
This is a system of assessment where individual employee is assessed by many experts by
using different technique of performance appraisal. The techniques which may be used
are role playing, case studies, simulation exercises, transactional analysis etc.
In this method employees from different departments are brought together for an assignment
which they are supposed to perform in a group, as if they are working for a higher post or
promoted. Each employee is ranked by the observer on the basis of merit .The basic
purpose behind assessment is to recognize whether a particular employee can be
promoted, or is there any need for training or development. This method has certain
advantages such as it helps the observer in making correct decision in terms of which
employee has the capability of getting promoted, but it has certain disadvantages also it is
costly and time consuming, discourages the poor performers etc.
12
4. 360 Degree Performance Appraisals: This method is also known as ‘multi-rater
feedback’, it is the appraisal in a wider perspective where the comment about the
employees’ performance comes from all the possible sources that are directly or indirectly
related with the employee on his job.
In 360 degree performance appraisal an employee can be appraised by his peers, managers
(i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who
comes into direct or indirect contact with the employee and can provide necessary
information or feedback regarding performance of the employee the “on-the-job”.
The four major component of 360 degree performance appraisal are

1. Employees SelfAppraisal
2. Appraisal bySuperior
3. Appraisal by Subordinate
4. Peer Appraisal.
Employee self-appraisal gives an option to the employee to know his own strengths and
weaknesses, his achievements, and judge his own performance. Appraisal by superior forms
the traditional part of the 360 degree performance appraisal where the employees’
responsibilities and actual performance is judged by the superior.
Appraisal by subordinate gives a chance to evaluate the employee on the basis of

communication and motivating abilities, superior’s ability to delegate the work, leadership
qualities etc. It is also known as internal customers; the correct opinion given by peers can
aid to find employees’ who are co-operative, employees who ready to work in a team and
understanding towards others.
5. Cost Accounting Method: In this method performance of an employee is evaluated on

the basis of monetary returns the employee gives to his or her organization. A relationship is
recognized betweenthe cost included in keeping the employee in an organization and the
benefit the organization gets fromhim or her. The evaluation is based on the established
relationship between the cost and the benefit. The following factors are considered while
evaluating an employee’s performance:
1. Interpersonal relationship with others.
2. Quality of product produced or service given to the organization.
3. Wastage, damage, accidents caused by the employee.
13
4. Average value of production or service by an employee.
5. Overhead cost incurred.
Activity B:
1. In the light of above mentioned methods of Performance Appraisal select

any company of your choice and identify the method used by that
company.
14
8.6 The Performance Appraisal Process
The performance appraisal system of one organization may vary from other organizations,
though some of the specific steps that an organization may follow are as follows:
1. Establish Performance Standards: It begins by establishing performance

standards i.e. what they expect from their employee in terms of outputs,
accomplishments and skills that they will evaluate with the passage of time. The
standards set should be clear and objective enough to be understood and measured.
The standards which are set are evolved out of job analysis and job descriptions.
Standards set should be clear and not the vague one. The expectation of the manager
from his employee should be clear so that it could be communicated to the
subordinates that they will be appraised against the standards set for them.
2. Communicating the Standards Set for an Employee: Once the standards for
performance are set it should be communicated to the concerned employee, about
what it expected from them in terms of performance. It should not be part of the
employees’ job to estimate what they are expected do. Communication is said to
be two ways street, mere passing of information to subordinate does not mean
that the work is done. Communication only takes place when the information
given has taken place and has been received and understood by subordinate. . If
necessary, the standards may be tailored or revised in the light of feedback
obtained from the employees.
3. Measuring of the Actual Performances: It is one of the most crucial steps of

performance appraisal process. It is very important to know as how the
performance will be measured and what should be measured, thus four important
sources frequently used by managers are personal observation, statistical reports,
oral reports, and written reports. However, combination of all
These resources gives more reliable information. What we measure is probably more
critical to the evaluation process than how we measure. The selection of the
incorrect criteria can result in serious consequences. What we measure gives an
idea about what people in an organization will attempt to achieve. The criteria which
are considered must represent performance as stated in the first two steps of the
appraisal process.
4. Comparing Actual Performance with Standards Set in the Beginning: In
15
this step of performance appraisal the actual performance is compared with the
expected or desired standard set. Acomparison between actual or desired standard
may disclose the deviation between standard performance and actual performance
and will allow the evaluator to carry on with the discussion of the appraisal with the
concerned employees.
5. Discussion with the Concerned Employee: In this step performance of the

employee is communicated and discussed. It gives an idea to the employee
regarding their strengths and weaknesses. The impact of this discussion may be
positive or negative.
The impression that subordinates receive from their assessment has a very strong
impact on their self esteem and, is very important, for their future performances.
6. Initiate Corrective Action: Corrective action can be of two types; one is

instant and deals primarily with symptoms. The other is basic and deals with the
causes. Instant corrective action is often described as “putting out fires”, where as
basic corrective action gets to the source from where deviation has taken place
and seeks to adjust the differences permanently. Instant action corrects something
right at a particular point and gets things back on track. Basic action asks how and
why performance deviated. In some instances, managers may feel that they do not
have the time to take basic corrective action and thus may go for “perpetually put
out fires.
Thus the appraisal system of each organization may differ as per the requirement of that
Organization.
Activity C:
1 Assume you are currently operating an appraisal system in your organization. How will
you carry out the appraisal process in your organization?
16
8.7 Factors Affecting Performance Appraisal
There are various factors which may influence the performance appraisal system in any
organization. There are some factors which introduce bias whereas; some other factors
hinder purposeful assessment. Such factors are as follows:
1. Value System of Evaluator: The task of evaluator is to assess the work of

subordinate and write reports of the same. They are projected to do this for
some purposeful assessment. It happens that evaluator sometime judges the
performance on the basis of their own value system. Each person has his own value
system and socio-cultural environment. Mostly, it is found that the reports are
influenced by the evaluator’s value-system. This subjective element has lot of impact
on final report.
2. Dominant Work Orientation: The performance Appraisal Report of a subordinate

is prepared by a superior is found to have an impact by the dominant work
orientation of the superior officer. Sometimes there is more emphasis on certain
aspect of the work as compared to other aspect which may be equally important
by the superior. It introduces subjectivity performance appraisal system. A superior
may evaluate the subordinate on the basis of following elements:
a) Inclination for work of dynamic nature.

b) Liking for routine work and strict maintenance of.
c) Importance on inter-personal relations and rank.
d) Emphasis on qualities which do not have much functional utility; and
e) Emphasis on consistency to some philosophy.
These elements bring subjectivityin the process of evaluation, influence the judgment of
the superior and distort the evaluation of performance of the subordinates.
3. Loyalty: It plays a vital role in evaluating employee. An Employee shows loyalty

due to many reasons such as common values, objectives, emotional needs, interests,
caste, religion, language or region. Loyalty brings the superior and the loyal
subordinate closer and closer to each other, and creates distance between those
employee who are not loyal to their superior. This makes assessment of superior
to be biased.
17
4. Level of Achievement: Subordinates evaluation may also depend on the level of
achievement of the superior. If there is a vast difference between the level of
achievement of the superior and
Subordinate, then it can create problems of adjustment and purpose for which
evaluation is done is not achieved.
5. Factors Hindering Objective Assessment: There are various factors which

obstruct the objective appraisal of the performance of the subordinates. These
factors are as follows:
a) Superiority complex of the superior reporting officer.
b) Overall performance assessment do not take place only certain incidence are
assessed.
c) Past-record of the subordinate.
d) Personality of the subordinate.

g) Ability of the subordinate to exercise influence at higher level.
8.8 Benefits of Performance Appraisal

An effective performance appraisal system can be of benefit to three parties they are for
organization, for appraiser and for appraisee.
1) For the Organizations: Following are the benefits of an organization.

 It leads to better performance throughout the organization, due to successful
communication of the objectives and values of the organizations, sense of being close
to the organization, loyalty and improved relationships between managers and staff.
 Overall improvement in the duties performed by each employee of the organization.
 Due to performance appraisal of employee new ideas for improvement in their work is
generated.
 Long-term plans can be generated.
 The need for training and development can be identified more clearly.
 A traditions ofnonstop improvement and success in the organization can be formed and
maintained.
 Career development plans can be chalked out for capable employee to enhance their
18
performance in future.
2) For the appraiser: Following are the benefits to the appraiser:
 It gives an opportunity to the appraiser to develop a general idea of individual jobs and
departments.
 For everynew or difficult situation new idea is generated for improvement or for
overcoming that problem.
It gives an opportunity to integrate team and individual objectives and targets with departmental and
organizational objectives.
 It gives an opportunity to explain the amount of work expected by manager from
teams and
individuals.
 It gives an opportunity to focus more on targets.
 It enables to form more productive relationship with staff based on mutual trust and
understanding.
3) For the Appraisee: Following are the benefits for the appraisee:
 Increased motivation.
 Increased job satisfaction.
 Increased sense of personal value.
 Increase in morale of an employee.
 It gives an opportunity to know their strength and weaknesses.
 It gives an idea about areas of their improvement.
 There will be a chance to subordinate to express his views even after performance
appraisal
 An employee should express his emotional needs and his value system which
is considered to be important today.
Activity D:
1 Suppose you are an evaluator (superior) in your organization. List out the
benefit that you would like to get as an appraiser.
19
8.9 Problems of Performance Appraisal
Performance appraisal technique is very beneficial for an organization for taking decisions
regarding salary fixation, demotion, promotion, transfer and confirmation etc.But,it is not
freed from problem In spite of recognition that a completely error-free performance
appraisal can only be idealized a number of errors that extensively hinder objective
evaluation. Some of these problems are as follows:
1. Biasness in rating employee: It is the problem with subjective measure i.e. the rating
which will not be verified by others. Biasness of rater may include:
(a) Halo Effect: It is the propensity of the raters to rate on the basis of one trait
or behavioral consideration in rating all other traits or behavioral considerations.
One way of minimizing the halo effect is appraising all the employees by one trait
before going to rate on the basis of another trait.
(b) The Central Tendency Error: It is the error when rater tries to rate each and
every person on the middle point of the rating scale and tries not to rate the people
on both ends of the scale that is rating too high or too low. They want to be on the
safer side as they are answerable to the management.
(c) The Leniency and Strictness Biases: The leniency biasness exists when some
raters have a tendency to be generous in their rating by assigning higher rates
constantly. Such ratings do not serve any purpose.
(d) Personal prejudice: If the raters do not like any employee or any group, in such
circumstances he may rate him on the lower side of the scale, the very purpose of
rating is distorted which might affect the career of employees also.
(e) The Recent Effect: The raters usually retain information about the recent actions of
the employee at the time of rating and rate on the basis of recent action taken place
which may be favorable or unfavorable at that point of time.
2. The superiors may be unsuccessful in conducting performance appraisal of employees
and post
Performance appraisal interviews. The performance appraisal is mostly based on
subjective assessment.
3. The performance appraisal techniques have a low reliability and validity in terms of result.
5 Ratings an employee on the negative side may disturb interpersonal relations and
industrial relations system.
6. Appraisers opinion on the performance of the employee may lead to setback on
20
production.
7. An organization may give emphasis to punishment if an employee has not done a
good job rather thanproviding training.
8. Few ratings are based on guess work.
Various other problems of performance appraisal are:

 There was a significant relationship between rating by superior and performance after
promotions.
 Appraisal reports were completed within a short period of time.
 The circumstances were very unpleasant in feedback interview.
 The Subordinates were not given suggestion in a manner which may be helpful to them.
Activity E:
1 List out the problem faced by you as a subordinate in your organization in appraising
you.
21
8.10 Performance Appraisal Practices in India
The systematic study of performance appraisal practices in India is very limited. According to
few studies in India the performance appraisal is mainly undertaken for three objectives
such as (i) to determine increments in salary; (ii) to assist organizational planning, placement,
or suitability; and (iii) for training and development purposes. Other objectives of appraisal
were: informing employee where they stand in organization, follow-up interviews, etc.
Every company uses different criteria to evaluate their employees. There are basically
three groups of criteria being used for appraisal purpose: (i) evaluation of qualitative
characteristics, such as, intelligence, reliability, honesty, leadership and attitudes, abilities,
etc., evaluation of actual performance- qualitatively and quantitatively; and evaluation of
development and future potential and development by an employee during the period under
consideration. Evaluation criteria vary from company to company. There is vast deviation in
periodicity of appraisal of employees. Few companies appraise annually, some appraise half-
yearly, and a few quarterly; however, annual appraisal is most common among many.
Few innovative performance appraisal practices are:
 Managerial personnel are allowed to challenge or appeal appraisal decisions made by

evaluator.
 Employee management skills are important in performance appraisal.
 Personnel department gives a clear instruction of policy and its implementation.
 Evaluation to be made only on the basis of performance of employee at work.
 It has also enhanced role clarity in the Organization.
The performance appraisal practice by Dabur India Limited is as follows: The main purpose of
performance appraisal system is to evaluate the performance of employee, promote their
employees and to make necessary arrangement for their training needs if required.
Employees are evaluated by how well they accomplish a specific set of objectives that have
been determined to be critical in the successful completion of their job. This approach is
frequently referred to as Management by objectives.
The latest mantra being followed by organizations across the world being – “get paid according
to what you contribute” – the focus of most of the organizations is turning to performance
management and specifically to individual performance.
22
1. The focus of the performance appraisals practice in todays environment is changing by
concentrating more on career development relying on the dialogues and discussions
with the superiors.
2. Performance measuring, rating and review systems have become more thorough,
structured and individual employee specific than before.
3. Appraisal through a 360-degree feedback system takes place
4. In India, the performance appraisal processes are faced with a lot of poblems, the
most important is the need of quantifiable indicators of the performance.
The emergence of following trends related to Performance appraisal practices can be seen
in the global scenario: 360 degree feedback, Team performance appraisal, Rank and yank
strategy.
1) 360 Degree Feedback: It is also known as ‘multi-rater feedback’, where the

feedback about the employees’ performance comes from all the sources that come
in contact with the employee on his job.
2) Team Performance Appraisal: In this method each employee performance is

measured as a team member as well as individually.
3) Rank and Yank Strategy: It is also known as up or out policy where the
performance appraisal model is prepared in which best-to-worst ranking methods
are used to identify and separate the poor performers from the good performers.
Then certain plans are chalked out for improvement. Some of the organizations
following this strategy are Ford, Microsoft and Sun Microsystems.
23
8.11 Effective Performance Appraisal
The performance appraisal system is always questioned in terms of its effectiveness and the
problems of reliability and validity. It is always difficult to know whether what is appraised is
what was supposed to be appraised. As long as subjective judgment is there this question
cannot be answered perhaps, the following steps can help improve the system.
a) The supervisors should be told that they themselves will be evaluated on the basis of
how seriously they are performing their duties.
b) To perform assigned task of evaluation in a better way superior should be provided

with better training of writing report.
c) To carry out job evaluation studies and prepares job descriptions/roles and
prepares separate forms for various positions in the organization.
d) The system should be designed in such a way that it is neither difficult to understand
nor impossible to practice.
e) The supervisor should monitor whether the improvement in performance in the areas
found weak is taking place or not and, if not, help the employee to achieve the
required improvement.
f) Finally, reviewing, the appraisal systems everynow and then help updating it, and making
appropriate changes in it. This is the most important factor in making performance
appraisal effective, with the passage of time necessary changes in tasks, abilities
and skills to perform has to be made. If
changes in the format are not considered the reports may not generate the kind of
result needed to satisfy appraisal objectives.
The following measures could also be adopted for improving the effectiveness of an
appraisal:
a) Behaviorally Based Measures: The research strongly favors behaviorally based

measures over those developed around traits. b) Ongoing Feedback: Employees like to
know how they are performing the duties assigned to them. c) Multiple Raters: If a person
is evaluated by a large no of superior then chance ofgetting more frequent information
24
increases d) Peer Evaluations: Peer evaluations are conducted by employees’ co-workers,
people explicitly familiar with the jobs involved mainly because they too are doing the same
thing, they are the person who know the co-workers’ day to-day work behavior and
should get a chance to provide the management with some feedback.
25
Human Resource Management – Unit V

Transfer - Promotion and termination of services
Introduction
Internal mobility is the process of movement of employees which takes place between the jobs
in sections, departments or divisions of the organization. Internal Mobility is necessary to
match the employee’s skill and requirements with the requirements of the job and those of the
organization continuously. The objectives of internal mobility are:
 To improve organizational effectiveness

 To eliminate structural defects and unwanted positions
 To improve employee effectiveness by putting his knowledge, skills and abilities to
better use
 To adjust to changing business operations
 To ensure discipline
 To correct wrong placements and job assignments
Internal mobility can take any or more of the form of promotion, demotion, transfer
Promotion
Promotion is an upward movement of employee in the organization to another job, higher in

organisation’s hierarchy. In the new job, the employee finds a change in salary, status,
responsibility and grade of job or designation. As a whole, the organization perceives the
staffing of vacancy worth more than the employee’s present position. In contrast to promotion
when the salary of an employee is increased without a corresponding change in the job-grade,
it is known as ‘upgrading’. But when promotion does not result in change in pay, it is called
‘dry promotion’. Promotion is a method of internal mobility.

Principles of Promotion
Promotion is a double edged weapon. If handled carefully, it contributes to employee

satisfaction and motivation. If mishandled, it leads to discontentment and frustration among
the employees. It is the responsibility of the HR manager to lay down a sound promotional
policy and ensure its implementation.
Policy of promotion
The HRM must make it clear whether to fill up higher positions by internal promotions or
recruit people from outside. Generally speaking top positions in an organisation are filled
through external recruitment. The lower positions are filled by promotions from within.
When it has been decided to fill up higher positions with promotions, a further decision on
determining the basis of promotion should be made by HRM. The basis of promotion may be
seniority or merit or both.
One most important point regarding the policy of promotion is whether to promote employees
against vacancies or non-vacancies. In many organizations promotions are done on a non-
vacancy basis after they complete a minimum period of service. Such promotions are time
bound and not based on vacancies or merit. The other practice is to link promotions to
vacancies. Sometimes these vacancies are created to avoid frustration among the aspirants for
promotion.
A promotion should be preceded by a job analysis and performance appraisal. A job analysis
is important to know what the job demands from the employee and performance appraisal will
enable the management to know whether the employee in question can match the requirements
of the job.
The promotion policy should be discussed with the labour unions and their acceptance must be
obtained in the form of an agreement.
When promotions are made on the basis of competence, openings for promotion should be
displayed at several places to enable interested people to apply.

Bases of promotion
Organisations adopt different bases of promotion depending on their nature, size, managerial
policy etc. The well-established bases of promotion are seniority and merit.
Seniority based promotion

If seniority is the bases for promotion, an employee with the longest period of service will get
promoted, irrespective of whether he is competent or not.
Advantages
 It is easy to administer.
 It is easy to measure the length of service and judge the seniority.
 With the base of seniority there is no scope for favouritism, discrimination and
subjective judgement.
 By seniority everyone is sure of getting promotion one day.
 Subordinates are more willing to work under an older boss who has given many years
of service to the company.
Disadvantages
 The learning capabilities of senior (older) employees may diminish.
 It de-motivates the younger and more competent employees and it results in more
employee turnover.
 The organisation is deprived of external talent which is very necessary due to
technological advancements and multi-culture organisation.
 Judging the seniority is highly difficult as the problems like job seniority, company
seniority, regional seniority, service in different organizations, trainee experience,
research experience etc., will crop up.
Merit or competence based promotion

Merit based promotion occur when an employee is promoted because of superior performance
in the current job. Merit means an individual’s knowledge, skills, abilities as measured from
his educational qualifications, experience, training, and past employment record.
Advantages
 Promotion by merit is a reward to encourage those employees who make a successful
effort to increase their knowledge or skill and who maintain a high level of productivity.
 It helps the employer to focus on talented employees recognize their talent and reward
their contributions.  Efficiency is encouraged, recognized and rewarded.
 Competent people are retained as better prospects are open to them.
 It inspires other employees to improve their standards of performance through active
participation in all activities and putting in more efforts.
Disadvantages
 It is not easy to measure merit. Personal prejudices, biases, and union pressures may
come in the way of promoting the best performer.

 When young employees get ahead of senior employees in the organization this creates
frustration among senior employees .They feel insecure and may also quit the
organization.
 The past performance may not guarantee future success of an employee.
 Loyalty and length of service is not properly rewarded
Advantages of Promotion Plan
 It provides an opportunity to the present employees to move into jobs that provide
greater personal satisfaction and prestige.
 It offers opportunities to management to provide recognition and incentives to the better
employees, to correct initial mistakes in appointments and to ‘freeze’ inefficient
personnel.
 It generates within an organization beneficial pressures on work performance and
desired behaviour of all its members.
 It serves as an orderly, logical and prompt source of recruitment for management to fill
vacancies as they arise.
 Promotion fulfils the long cherished desires in the lives of employees.
Disadvantages of Promotion Plan

 Promotion promotes “inbreeding” in which the company will not have new blood and
new thinking. Old habits and ideas are perpetuated.
 The system becomes stagnant, repetitious and very conventional.
 The newer employees are introduced at places where they are having little influence.
Demotion
Demotion is the reverse of promotion. It is the downward movement of an employee in
hierarchy with lower status, salary and decreased responsibilities. It is generally used as a
punitive measure for incompetence or a preliminary step to dismissal. It is a downgrading
process where the employees suffer considerable emotional and financial loss. Causes for
demotion
 The employee may be unable to meet the challenges posed by a new job.
 He may have low administrative skills.
 Due to poor business conditions and continuous losses, a firm may decide to layoff
some and to downgrade others.
 It is sometimes used as a disciplinary tool against offending employees.
Transfer
A transfer implies a lateral movement of an employee in the hierarchy of positions with the
same pay and status. Transfers may be either company initiated or employee initiated. In fact,
a transfer is a change in job assignment. It may involve a promotion, demotion or no change at
all in status and responsibility. Transfers from one job to another may be either temporary or
permanent. Temporary transfers may be due to
 temporary absenteeism
 shifts in the workload

 vacations
Permanent transfers may be due to
 Shifts in the workload
 Vacancies requiring the special skill of the transferred employee
 ill-health of the employee
Transfer requests might come from the worker himself, from his superior, from the head of
another department or may be made necessary by changes in the volume of trading activities.
When the transfer request comes from the employee himself, it is because he does not like the
work or the place of work or the co-workers.
Requests for transfers should be favourably considered especially when it comes from an
employee. An unsatisfied employee is more of a liability than an asset. It is true that no
company can comply with all requests for transfers.
Types of Transfers
Different types of transfer in the jobs are listed below.

Production transfer
Transfers from jobs in which labour requirements are declining to jobs in which they are
increasing (through resignation or otherwise) are called production transfer.
This type of transfer is made to avoid lay-off of efficient employees by providing them with
alternative positions in the same organisation.
Replacement transfer
These are transfers in which a long- service employee is transferred to a similar job where he
replaces or “bumps” an employee with shorter service. This type of transfer is made when all
operations are declining but management wants to retain the long-service employee as long as
possible.
Versatility transfer
The versatility transfer (better called ‘rotation’) is for the purpose of providing management
with a more versatile group of employees. This type of transfer will increase the versatility of
the employee by shifting him from one job to another. The employee gets an opportunity for
varied job experience. This helps the employee through job enlargement.
Remedial transfer
These transfers are made to remedy the situation. Remedial transfers provide management with
a procedure whereby an unsatisfactory placement can be corrected. Initial placement might be
faulty or the type of job might not suit his health. In such cases the worker would benefit by
transfer to a different kind of work.
Benefits of transfers
 Improve employee skills
 Remedy faulty placement decisions
 Prepare the employee for challenging future
 Improve employee satisfaction
 Improve employee-employer relations.
Problems with transfers
 Inconvenient to employees.
 Employees may or may not fit in the new location
 Shifting of experienced hands may affect productivity
 Discriminatory transfer may affect employee satisfaction.

CAREER MANAGEMENT
Career development is an organized approach used to match employee goals with the business
needs of the agency in support of workforce development initiatives. The purpose of career
development is to:
 Enhance each employee‘s current job performance.
 Enable individuals to take advantage of future job opportunities.
 Fulfil agencies‘ goals for a dynamic and effective workforce.
Career development involves managing your career either within or between organizations. It
also includes learning new skills, and making improvements to help you in your career. Career
development is an ongoing, lifelong process to help you learn and achieve more in your career.
Whether you are looking at making a career change, or moving up within a company, planning
your own career development will help you succeed. By creating a personal career
development plan, you can set goals and objectives for your own personal career growth. Don‘t
make the mistake of leaving your career development future in the hands of your employer,
hoping that you will get the next promotion or pay raise.
This misconception can lead to job dissatisfaction and resentment. Career planning is a lifelong
process, which includes choosing an occupation, getting a job, growing in our job, possibly
changing careers, and eventually retiring. The Career Planning Site offers coverage of all these
areas. This article will focus on career choice and the process one goes through in selecting an
occupation. This may happen once in our lifetimes, but it is more likely to happen several times
as we first define and then redefine ourselves and our goals.
Managers are responsible for linking the organization‘s needs to employee career goals, and
can assist employees in the career planning process. Human Resources is responsible for
designing career paths and employee development programs that help employees reach their
goals. Each employee is responsible for planning and managing his/her career.
Objective Career Management is the combination of structured planning and the active
management choice of one‘s own professional career. The outcome of successful career
management should include personal fulfilment, work/life balance, goal achievement and
financial assurance. The word career refers to all types of employment ranging from semi-
skilled through skilled, and semi-professional to professional. The term career has often been
restricted to suggest an employment commitment to a single trade skill, profession or business

firm for the entire working life of a person. In recent years, however, career now refers to
changes or modifications in employment during the foreseeable future. There are many
definitions by management scholars of the stages in the managerial process. The following
classification system with minor variations is widely used:
1. Development of overall goals and objectives,

2. Development of a strategy (a general means to accomplish the selected
goals/objectives),
3. Development of the specific means (policies, rules, procedures and activities) to
implement the strategy, and
4. Systematic evaluation of the progress toward the achievement of the selected
goals/objectives to modify the strategy, if necessary.
The career management process begins with setting goals/objectives. A relatively specific
goal/objective must be formulated. This task may be quite difficult when the individual lacks
knowledge of career opportunities and/or is not fully aware of their talents and abilities.
However, the entire career management process is based on the establishment of defined
goals/objectives whether specific or general in nature. Utilizing career assessments may be a
critical step in identifying opportunities and career paths that most resonate with someone.
Career assessments can range from quick and informal like those on CareerBuilder or may be
more in depth like those such as Myers-Briggs and Career Leader supported assessments found
on My Path. Regardless of the ones you use, you will need to evaluate them. Most assessments
found today for free (although good) do not offer an in-depth evaluation.
1. The time horizon for the achievement of the selected goals or objectives- short term,
medium term or long term – will have a major influence on their formulation.
1. Short term goals (one or two years) are usually specific and limited in scope. Short term
goals are easier to formulate. Make sure they are achievable and relate to your longer
term career goals.
2. Intermediate goals (3 to 20 years) tend to be less specific and more open ended than
short term goals. Both intermediate and long term goals are more difficult to formulate
than short term goals because there are so many unknowns about the future.
3. Long term goals (more than 100 years), of course, are the most fluid of all. Lack of life
experience and knowledge about potential opportunities and pitfalls make the
formulation of long term goals/ objectives very difficult. Long range goals/objectives,

however, may be easily modified as additional information is received without a great

loss of career efforts because of experience/knowledge transfer from one career to
another.
4. Making career choices and decisions – the traditional focus of careers interventions.
The changed nature of work means that individuals may now have to revisit this process
more frequently now and in the future, more than in the past.
5. Managing the organizational career – concerns the career management tasks of
individuals within the workplace, such as decision-making, life-stage transitions,
dealing with stress etc.
6. Managing boundary less‘ careers – refers to skills needed by workers whose
employment is beyond the boundaries of a single organization, a work style common
among, for example, artists and designers.
7. Taking control of one‘s personal development – as employers take less responsibility,
employees need to take control of their own development in order to maintain and
enhance their employability.
Career development, as both a field of study and a practical form of training for workers, is
primarily concerned with producing better employees and maximizing employee potential.
Career development programs can help the unemployed find jobs or provide workers with the
skills and tools they need to advance within a government agency, corporation or organization.
Self-Awareness- One of the major objectives of any career development program is a

heightened sense of self-awareness for participants. Employees should be able to identify their
strengths and weaknesses, in order to apply their skills more effectively. Understanding
shortcomings is also useful in teaching employees where to focus efforts toward improvements.
Self-awareness is also related to understanding the difference between real and perceived
career advancement limitations. By examining available opportunities and making an honest
assessment of an employee‘s skills, career development seeks to give every employee a
realistic outlook on the future.
Flexibility- Career development also sets enhanced flexibility as a goal. Employees work in a
changing world and adaptation is an essential skill. This may mean abandoning practices that
have worked in the past, or devoting time to education and new training. Employees who find
themselves unable to adapt in a changing workplace may suffer from decreased productivity
or be unable to compete with workers whose skills are more flexible and easier to apply across
a range of tasks.

Education- Education is among the more straightforward objectives of career development.

Such programs attempt to give employees, or prospective employees, access to information
about job opportunities and options for skills training. Following up with such employees is an
important objective as well, since this gives those who work in career development a way of
measuring the program‘s effectiveness.
Sensitivity to Diversity- Many career development programs make sensitivity to diversity in

the workplace a top priority. With ever-increasing globalization, workers are frequently put
into contact with members of different backgrounds and cultures. Understanding the value of
diverse work habits and viewpoints can prevent this from becoming a point of confusion or
misunderstanding. At the same time, educating workers about the customs and concerns of
others can help prevent social problems or embarrassment in a diverse workplace.
The Career Management Process
Career development and the career planning process include a number of specific steps that
help to identify personal skills and attributes. Finding out how those skills can be utilized in
the job market is accomplished by researching a number of career fields that are of interest to
you and then by gaining experience in those fields and/or speaking to people currently working
in the field. Participating in some form of experiential education will help you to identify if the
field is the right choice for you.
Step #1: Self-Assessment
Evaluating who you are as a person. This involves taking a personal inventory of who you are
and identifying your individual values, interests, skills, and personal qualities. What makes you
tick as a person? You will look at those personal attributes under a microscope and come up
with key qualities you can identify and use in your search for the perfect career. Career
assessments may be required to promote a better understanding of personal attributes and skills.
Contact your Career Services Office at your college to discuss if a career assessment may be
right for you
Self-Assessment Reality Check Goal Setting Action Planning
The Career Management Process
Step #2: Research (Career Exploration)
Obtain an insider‘s perspective about the career field you are considering. Conduct
Informational Interviews in person, phone, or by email. Professionals enjoy sharing their
expertise with people interested in the field. Perform informational interviews with alumni
from your college to gain their perspective of the field and to listen to what they have to say.
This strategy provides first-hand knowledge from someone currently working in the field and
gives you an opportunity to ask about their experiences as well as potential jobs and what one
might expect if just entering the field. Gain experience through internships or by job shadowing
for one to several days to see what a typical work day entails and to gain perspective of what
the environment is like and the typical job responsibilities of someone working in the field.
Research what types of jobs are available in your area of interest by checking out Majors to
Career Converter, The Occupational Outlook Handbook and The Career Guide to Industries.
The Occupational Outlook Handbook offers a wealth of information for those currently just
entering the job market and for those anticipating making a career change.
Step #3: Decision-Making
Once you‘ve made a thorough self-assessment and have done some research of career options,
it‘s time to make a decision. This can be difficult since there may still be many unknowns and
a fear of making the wrong choice. One thing for sure is that although we can do all the
necessary steps to making an informed decision, there is no absolute certainty that we are
unquestioningly making the right decision. This uncertainty is easier for some people than
others but a key point to remember is that you can always learn from any job you have and take
those skills and apply them at your next job.
Step#4: Search (Taking Action)
It‘s now time to look for prospective jobs and/or employers, send out cover letters and resumes,
and begin networking with people in the field. Keep in mind that cover letters and resumes are
designed to make a favourable impression on employers (if done properly) and the interview
process is what will ultimately land you the job. In other words, make sure your cover letter
and resume highlight your skills and strengths based on the employer‘s needs and that you are
fully prepared to knock their socks off at the interview. Take time to research the employer‘s
website prior to the interview, and be prepared to ask thoughtful questions based on your
research.
Step #5: Acceptance
Wow! You‘ve completed all of the steps above and you‘ve been accepted into a new and
exciting or different job. Congratulations! According to the Bureau of Labor Statistics, 64.1%
of people change jobs between 5 and 14 times in their lifetime. Consequently, learning the

skills above will increase your chances of gaining meaningful and satisfactory work as well as
help you to avoid many of the stresses that occur with changing jobs. By recognizing that
change is good (even advantageous), changing jobs can be viewed as a positive experience and
need not be as anxiety provoking as it may initially seem. You will continue the process of
self-assessment, research, decision-making, and job searching in order to make effective and
fulfilling career changes throughout your lifetime
The impact of career development/ succession planning programmes can be seen through the
productivity indicator, engagement surveys and reduction in attrition rate. It is in fact a win-
win situation for all.
Mentoring
Mentoring is the Employee training system under which a senior or more experienced person
(the mentor) is assigned to act as an advisor, counsellor, or guide to a junior or trainee.
The mentor is responsible for providing support to, and feedback on, the person in his or her
charge.
Meaning:
Mentoring is a process of using specially selected and trained individuals to provide guidance,
pragmatic advice, and continuing support that will help the people in their learning and
development process. The best example of a mentor is Mr N. R. Narayan Murthy of Infosys.
Mentoring is a method of helping people acquire skills and knowledge from experienced
managers who are wise in the way of the organization.
Mentors provide people with:
1. Advice in drawing up self-development programmes.
2. Guidance on how to acquire the necessary knowledge and skills to do a new job.
3. Information on corporate culture.
4. Help in the right direction.
5. Coaching in specific skills.
Mentors are a parental figure with whom individuals can discuss their aspirations, and who
will lend a sympathetic ear to their problems.
Definitions:
1. According to David Clutterbuck, ‘mentoring involves primarily listening with empathy,
sharing experience, professional friendship, developing insight through reflection, being a
sounding board, encouraging’.

2. According to Jacobi, ‘mentoring is a one to one helping relationship or nurturing process’.

3. According to Vickie L. Nadolski, ‘mentoring is linking an experienced person (mentor)
with a less experience person (mentee) to help their personal and professional growth’.
Characteristics of Mentoring:
1. Mentoring requires a high degree of mutual trust between the mentor and the mentee.
2. Effective communication is the key to the mentoring programmes.
3. The success of mentoring depends on the availability of the mentor and predictability.
4. It is a systematic process of building a partnership.
5. Self-esteem and confidence is necessary for effective mentoring.
6. Mutual respect between each other is also required.
Types of mentoring:
1. Formal mentoring: Formal mentoring also referred as classic mentoring. This type
of mentoring pairs a senior faculty member with a junior member, usually from the
same department, for a specified period of time.
2. Informal mentoring: Voluntary mentoring relationships that are not assigned and
lack structure about how mentors work with mentees constitute ‘informal mentoring’.
3. Peer mentoring: Members with equal ranks form either the same or different
departments develop supportive networks. They meet regularly to discuss issues and
challenges they are facing as well as share advice, information and strategies.
4. Group or Team mentoring: In group mentoring, senior faculty members serve as

mentors for a group of junior mentees who meet regularly as a team. For example, a
senior member may meet with a group of junior faculty on a monthly basis.
5. Special project mentoring: Here mentor helps to guide mentees for short term
project or task (normally lasting a few weeks to a few months).
6. Reverse mentoring: Here, the roles of traditional mentoring are reversed. A young
employee takes on the role of the mentor while the mentee is an older and often more
experienced employee. This relationship closes the knowledge gap for both parties.

Benefits of mentoring:
The benefits of mentoring process observed in the following areas
a. mentors
b. mentees
c. organization
Benefits for mentors:

The benefits of mentoring for mentors given here as follows;
 Mentoring process strengthens mentor’s active listening skills.
 Mentoring encourages knowledge sharing that increases self-worth (self-value) of
mentor.
 A sense of fulfilment and achievement is established to the mentor with mentoring.
 Mentoring process helps to enhance mentor’s relationship building skills.
 The process of mentoring provides an added sense of responsibility and purpose for
one’s career.
Benefits for Mentees:
The benefits for mentee given here under;
 Skills or competency levels of mentees developed with mentoring process.
 Mentoring improves mentees confidence in their ability.
 Communication skills of mentee will enhanced with process of mentoring.
 With mentoring process, mentee comes to know how to maintain professional
relationship.  Mentee’s network of contacts enhanced.
Benefits for organization:
With mentoring process, an organization will have following benefits;
 The process of mentoring helps an organization to achieve its talent development goals
like succession planning and strong leadership development.
 Mentoring process improves employee retention keeping an employee for a long period
in organization there by reducing turnover rates.
 The training costs get reduced by one to one interaction.
 By mentoring process it is possible to inform everyone throughout the company that
leadership is willing to in its employees.
 Mentoring improves talent acquisition efforts (acquiring skilled human labour to meet
organizational needs) New hires are aware of this organization’s career development
opportunities.

WORKING MODEL FOR MENTORING:
The working model for mentoring includes the following stages.
Stages 1: Introduction:
The objective of introduction is to build a connection and start the relationship between mentor
and mentee. This is a good time to get to know each other better before starting mentoring
sessions.
Stage 2: Foundation:
This entails an agreement about the mentor and mentee roles and sets the expectations for
mentoring process.
Stage 3: Orientation:
The mentee is oriented to the process in order to lessen the tension and increased motivation.
Stage 4: Collaboration:
In this stage, the mentor works together with the mentee and is seen as a caring partner.
Stage 5: Problem solving:
At this stage, mentor helps the mentee to identify the issue about his skills and performance.
This issue are rectified by corrective actions.
Stage 6: personal framework:
Here the mentoring relationship is strengthened and the mentor is regarded as a trustworthy
partner. The mentor makes an effort to help mentees in developing confidence and self-esteem.
Stage -7 professional frame work:
At this stage mentee views the mentor as a role model and now the focus is on skills
improvement and performance improvement.
Stage 8 Transitions:
Transition refers to change. This is the last stage encourages the interdependence of mentor
and mentee. The mentee is taught to work independently but the guidance of mentor is still
there.

ROLES AND RESPONSIBILITIES OF MENTOR AND MENTEE:
A) Mentor roles and responsibilities:
1. Identifying roles
 Have a clear understanding of why he /she want to be mentor

 Mentor with a realistic assessment of mentees skills and experiences
2. Communicating expectations
 Have a clear understanding of mentor’s expectations for mentee

 Clearly communicating those expectations
 Stay flexible in changing expectations
 Adopt feedback to mentee’s leering style
 Be realistic about setting timelines
3. Working together
 Advice , don’t dictate

 Advice on what mentor know and admit things he/she don’t know
 Give good examples
 Offer constructive feedback
 Evaluate progress
 Be supportive to mentees, be reliable
4. Meeting all the goals:
 After mentoring is completed, follow up on successes

 Provide an evaluation of the experience
 Repeat the mentoring process with others
B) Mentee roles and responsibilities:
1. Identifying roles
 Have a understanding about what mentee want to be mentored

 Select a mentor based on his /her goals
2. Communicating expectations
 Have a clear understanding of mentee’s expectations for mentor

 Clearly communicate those expectations

 Stay flexible in changing expectations
 Inform mentor about learning style that mentee preferred
 Be realistic about setting timelines
3. Working together
 Listen and contribute to the conversation
 Understand that mentors will not have all the answer
 Accept constructive feedback
 Evaluate progress
 Celebrate success
 Be reliable
4. Meeting the goals
 Provided updates to the mentor after mentoring is completed

 Provide evaluation of the experience
 Say thank you
Human Resource (HR) Audit:

Meaning:
HR audit is an important management control device. It is a tool to judge organisations
performance and effectiveness of HR management. According to Dale Yoder, “Personnel audit
refers to an examination and evaluation of policies, procedures and practices to determine the
effectiveness of personnel management.”
It is an analytical, investigative and comparative process. It gives feedback about HR functions
to operating managers and HR specialists. It enables to know about the effectiveness of
personnel programmes. It further provides feedback about how well managers are meeting their
HR duties. It provides quality control check on HR activities. It refers to determine the
effectiveness and efficiency of HRM.
Definition
According to R.D. Gray, “the primary purpose of audit is to know how the various units are
functioning and how they have been able to meet the policies and guidelines which were agreed
upon; and to assist the rest of the organization by identifying the gap between objectives and
results for the end product of an evaluation should be to formulate plans for corrections or
adjustments.”
The essential features of HR audit are:
(1) The measurement and effectiveness HR management’s mission, goals, strategies, policies,
programmes and activities, and
(2) To determine the action plan for future in response to the results from such measurement.
Objectives of HR Audit:
(1) To review every aspect of management of HR to determine the effectiveness of each

programmes in an organisation.
(2) To seek explanation and information in respect of failure and success of HR.
(3) To evaluate implementation of policies.
(4) To evaluate the performance of personnel staff and employees.
(5) To seek priorities, values and goals of management philosophy.
Need for Human Resource Audit:

Though there is no legal obligation to have HR audit as in case of financial accounts but the
managements have realized its need and usefulness. Therefore they have taken up HR audit
voluntarily.
It is done to fulfil the following needs:
(1) The managements of organisations have realized the need for HR audit because of powerful
influence on motivation of employees at work due to participation of employees in decision
making.
(2) Growth of organisation needs HR audit. Large organisation requires continuous feedback
for improvement in performance of its employees.
(3) Mounting pressures from trade unions of employees and their participation in formulating
employment policy and questioning of managerial competence have raised the need for HR
audit.
(4) An effective two way communication system has also facilitated the need for HR audit.
(5) Many plants are located at large distances. This also made the HR audit compulsory.
(6) The HR audit becomes essential because of delegation of authority and decentralization of
power.

Approaches to HR Audit:
According to William Werther and Keith Davis, there are five approaches for the purpose of
evaluation.
These are briefly outlined as under:
(1) Comparative Approach:
Under this approach auditors identify one model company and the results obtained of the
organisation under audit are compared with it.
(2) Outside Authority Approach:
In outside authority approach a benchmark is set to compare own results. A standard for audit
set by outside consultant is used as benchmark.
(3) Statistical Approach:
Under statistical approach the statistical information maintained by the company in respect of
absenteeism, employee turnover etc. is used as the measures for evaluating performance.
(4) Compliance Approach:
Under compliance approach the auditors make a review of past actions to determine to see
whether those activities are in compliance with the legal provisions and in accordance with the
policies and procedures of the company.
(5) MBO Approach:
Under MBO approach specific targets are fixed. The performance is measured against these
targets. The auditors conduct the survey of actual performance and compare with the goals set.
Scope of Human Resources Department Audit
Purpose: Human Resources Audit is a comprehensive method to review current human

resources policies, procedures, documentation and systems to identify needs for enhancement
and improvement of the HR function as well as to ensure compliance with the changing rules
and regulations.
Scope:
i. Department Structure and Roles

i. The Department structure and job role of the staff.
ii. Sanction Powers and Authority as per delegation of non-lending power.

2. Human Resource Planning
i. Verify Human Resource Planning w.r.t. forecasting, estimation and proper

deployment of staff in various departments/branches of the bank to ensure the
bank activities and operations are conducted in an efficient and economic manner.
ii. Verify the staff deployed in the various departments and branches of the Bank are
adequately qualified and trained for their job roles.
iii. Verify the job roles issued to Heads of departments to ensure proper and clear
allocation of job responsibilities without ambiguity and over lapping.
3. Recruitment and Selection
i. Verify the Bank’s policy with regards to recruitment and selection of new
employees.
ii. Documentation and adequate checks (KYC, background, medical, etc.) with
regards to new recruitment.
4. Compensation and Benefits
i. Verify the compensation and benefits to employees is as per Bank’s Policy.

ii. Calculation of arrears, allowances and perquisites paid to employees as per their
eligibility.
iii. Documentary evidence supporting the allowances are held on record (bills,
declarations, rent receipts, premium copies, etc.)
5. Training and Development
i. Training and Development is as per Plan.

ii. Process for assessing the organization’s immediate and future training needs and
individual development needs.
iii. Procedure for identification and nomination of staff for the training and
development programmes.
iv. Process of evaluation of the effectiveness of the training and development
programmes.
v. Orientation programmes and trainings for new recruits.
vi. Verify the code of conduct and business ethics policies for employees and its
implementation.

6. Performance Management and Evaluation
i. Verification of procedure and format of performance appraisal. Comment on its

adequacy, applicability cadre wise, job functionality wise, etc.
ii. Does the performance appraisal include a written plan to improve employees
knowledge and skills
iii. Verification of performance linked bonus
iv. Verify the policy adopted for promotions and its implementation.
7. Verify the process of terminations and exit policy and its implementation
i) Adherence to Exit Policy.
8. Staff Rotation and Transfer
i. Is there a policy in place for rotation of staff in sensitive areas of bank

operations? Comment on its implementation
ii. Transfer of employees is as per policy laid down by the Bank
iii. Is there frequent transfer of employees affecting the continuity of bank/branch
operations?
9. Staff Safety and Security
i. Work place accidents, injuries and illness is reported and investigated.

ii. Insurance cover for employees meeting untimely deaths in the course of duty.
iii. Bankers Indemnity policy: Insurance cover for employees covering loss occurring due
to work related operations.
10. Staff Benefits pertaining to Loans & Advances
i) Staff loan sanctions are as per Staff Loan Policy in force. Any loans sanctioned with
deviations from the policy to be reported along with requisite sanctions from the
appropriate authority.
11. Staff Sanctions
i) Staff Leave Policy and Leave Sanctions

ii) Re-imbursements sanctioned. (Bills/sanctioning authority)

12. Recordkeeping and other Documentation
i) Personnel files are updated and filed in an organized manner

ii) Documents regarding employees are kept for their required duration
iii) All appropriate labour notices and circulars are displayed in an easily visible
location.
iv) Minutes Book of the Personnel Committee

Complete Notes HRM

Uploaded by

Copyright:

Available Formats

Complete Notes HRM

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Complete Notes HRM

Uploaded by

Copyright:

Available Formats

Human Resource Management (BEBA55A) UNIT-1

HUMAN RESOURCE MANAGEMENT (BEBA55A)

Modern organizational setting is characterized by constant changing relation to environmental

o Increased complexity of the organizations, employment and a clear hierarchy of

Jawahar Science College, Block-14, Neyveli. Page 1 of 18

What is Human Resource Management?

HRM is the study of activities regarding people working in an organization. It is a managerial

Human resources management (HRM) is a management function concerned with hiring,

HRM is the personnel function which is concerned with procurement, development,

Jawahar Science College, Block-14, Neyveli. Page 2 of 18

1. HRM Involves the Application of Management Functions and Principles. The

3. Better relations between union and management:-

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

Jawahar Science College, Block-14, Neyveli. Page 3 of 18

5. Identifies person for the future:-

6. Allocating the jobs to the right person:-

7. Improves the economy:-

o All the decisions, strategies, factors, principles, operations, practices, functions,

Jawahar Science College, Block-14, Neyveli. Page 4 of 18

o Training and Development

b) Design of Organization and Job:

c) Selection and Staffing:

d) Training and Development:

Jawahar Science College, Block-14, Neyveli. Page 5 of 18

f) Compensation and Benefits:

Jawahar Science College, Block-14, Neyveli. Page 6 of 18

4. Helping to establish and maintain a harmonious employer/employee relationship.

Jawahar Science College, Block-14, Neyveli. Page 7 of 18

Difference between Human Resource Management and Personnel Management

Jawahar Science College, Block-14, Neyveli. Page 8 of 18

Dimensions Personnel Management HRM

Treatment of manpower Machines or Tools Asset

Type of function Routine function Strategic function

Beliefs and assumptions

Jawahar Science College, Block-14, Neyveli. Page 9 of 18

17. Selection Separate, marginal task Integrated, key task

Function of Human Resource Management

Human Resource Management is a management function concerned with hiring, motivating,

According to Armstrong (1997), Human Resource Management can be defined as “a strategic

Human Resource Management functions can be classified in following three categories.

Jawahar Science College, Block-14, Neyveli. Page 10 of 18

So far as an HR manager is concerned, he/she is required to determine in advance an HR

Jawahar Science College, Block-14, Neyveli. Page 11 of 18

Jawahar Science College, Block-14, Neyveli. Page 12 of 18

Controlling is a very important function of management. In an undertaking, control consists in

The Operative functions are as follows:

Jawahar Science College, Block-14, Neyveli. Page 13 of 18

Jawahar Science College, Block-14, Neyveli. Page 14 of 18

7. Stability and Optimum Utilization of Employees:

HUMAN RESOURCE MANAGER DUTIES

Jawahar Science College, Block-14, Neyveli. Page 15 of 18

Vision and mission:

Technology development is happening in a capital manner. They influence the way HR

Jawahar Science College, Block-14, Neyveli. Page 16 of 18

5. Human resource condition:

STRATEGIC HUMAN RESOURCE MANAGEMENT

Strategic HRM is concerned with the following:

1. Analyse the opportunities and threats existing in the external environment.

Jawahar Science College, Block-14, Neyveli. Page 17 of 18

Role in Strategy Formulation: