HUMAN RESOURCE MANAGEMEENT NOTES

UNIT I

HRM meaning:

*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

*Definition:

HRM is the planning, organizing, directing, and organizing and controlling of the procurement,
development, compensation, integration maintenance and separation of human resources to the
end that individual, organizational, and social objectives are accomplished.

* 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
organization’s key resource – the people who work in and for it.”

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Functions of Human Resource Management

Human Resource Management functions can be classified into the following three categories.

o Managerial Functions,
o Operative Functions, and
o Advisory Functions.

Managerial Functions

1. Human Resource Planning - In this function of HRM, the number and type of employees
needed to accomplish organizational goals are determined. Research is an important part of this
function, information is collected and analyzed to identify current and future human resource
needs and to forecast changing values, attitudes, and behavior of employees and their impact on
the organization.

2. Organizing - In an organization tasks are allocated among its members, relationships are
identified, and activities are integrated towards a common objective. Relationships are
established among the employees so that they can collectively contribute to the attainment of the
organization's goal.

3. Directing - Activating employees at different levels and making them contribute maximum to
the organization is possible through proper direction and motivation. Taping the maximum
potentialities of the employees is possible through motivation and command.

4. Controlling - After planning, organizing, and directing, employees' actual performance is

checked, verified, and compared with the plans. If the actual performance is found deviated from
the plan, control measures are required to be taken.
Operative Functions

1.. Recruitment and Selection - Recruitment of candidates is the function preceding the
selection, which brings the pool of prospective candidates for the organization so that the
management can select the right candidate from this pool.
2. Job Analysis and Design - Job analysis is the process of describing the nature of a job and
specifying the human requirements like qualification, skills, and work experience to perform that
job. Job design aims at outlining and organizing tasks, duties, and responsibilities into a single
unit of work for the achievement of certain objectives.
3. Performance Appraisal - Human resource professionals are required to perform this function
to ensure that the performance of employees is at an acceptable level.
4. Training and Development - This function of human resource management helps employees
acquire skills and knowledge to perform their jobs effectively. Training and development
programs are organized for both new and existing employees.
5. Wage and Salary Administration - Human resource management determines what is to be
paid for different types of jobs. Human resource management decides employee's compensation
which includes - wage administration, salary administration, incentives, bonuses, fringe benefits,
etc,
6. Employee Welfare - This function refers to various services, benefits, and facilities that are
provided to employees for their well-being.
7. Maintenance - Human resource is considered an asset for the organization. Employee
turnover is not considered good for the organization. Human resource management always tries
to keep their best performing employees with the organization.
8. Labour Relations - This function refers to human resource management interaction with
employees represented by a trade union. Employees come together and form a union to obtain
more voice in decisions affecting wage, benefits, working conditions, etc,
Advisory Functions

1. Advised to Top Management

The personnel manager advises the top management in the formulation and evaluation of
personnel programs, policies, and procedures.
2. Advised to Departmental Heads
The personnel manager advises the heads of various departments on matters such as manpower
planning, job analysis, job design, recruitment, selection, placement, training, performance
appraisal, etc.
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Nature of HRM:

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

controlling.
2. It involves procurement, development, maintenance and management of human resource.
3. It helps to achieve individual, organizational and social objectives.
4. HRM is a mighty disciplinary subject. It includes the study of management psychology
communication, economics and sociology.
5. It involves team spirit and team work.

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Scope of HRM

1. Human resources planning: – Human resource planning is a process by which the

company to identify the number of jobs vacant, whether the company has excess staff or
shortage of staff and to deal with this excess or shortage.
2. Job analysis design: – Another important area of HRM is job analysis. Job analysis
gives a detailed explanation about each and every job in the company. Based on this job
analysis the company prepares advertisements.
3. Recruitment and selection: – Based on information collected from job analysis the
company prepares advertisements and publishes them in the news papers. A number of
applications are received after the advertisement is published, interviews are conducted
and the right employee is selected thus recruitment and selection are yet another
important areas of HRM.
4. Orientation and induction: – Once the employees have been selected an induction or
orientation program is conducted. The employees are informed about the background of
the company. They are told about the organizational culture and values and work ethics
and introduce to the other employees.
5. Training and development: – Every employee goes under training program which helps
him to put up a better performance on the job. Training program is also conducted for
existing staff that have a lot of experience. This is called refresher training. Training and
development is one area were the company spends a huge amount.

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Comparison Chart
BASIS FOR PERSONNEL HUMAN RESOURCE
COMPARISON MANAGEMENT MANAGEMENT
The branch of management that
The aspect of management that
focuses on the most effective use of
is concerned with the work force
the manpower of an entity, to
Meaning and their relationship with the
achieve the organizational goals is
entity is known as Personnel
known as Human Resource
Management.
Management.
Approach Traditional Modern
Treatment of manpower Machines or Tools Asset
Type of function Routine function Strategic function
Basis of Pay Job Evaluation Performance Evaluation
Management Role Transactional Transformational
Communication Indirect Direct
Labor Management Collective Bargaining Contracts Individual Contracts
Initiatives Piecemeal Integrated
Management Actions Procedure Business needs
Decision Making Slow Fast
Job Design Division of Labor Groups/Teams
Primarily on mundane activities
Treat manpower of the organization
like employee hiring,
Focus as valued assets, to be valued, used
remunerating, training, and
and preserved.
harmony.

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Evolution of HRM:

Different stages are there in the evolution of Human Resource Management for its growth from
the industrial era to the present era. These are categorized as follows:
Industrial revolution era (19th century)
During the advancements in the industrial sector in Western Europe and the USA, there was a
systematic growth of HRM. The industrial revolution comprises of the development of
machinery, usage of mechanical energy and the existence of the concept of the factory with
ample manpower.

Trade Union Movement Era (Close to the 19th century)

With the emergence of the factory system, the workers started to establish their own union on the
basis of their common interest which was named as Trade Unions. The basic aim behind these
associations was to protect the interest of the members and deal with the grievances of the
workers that may arise due to child labour, long hours of work and pathetic working conditions.

Social Responsibility Era (beginning of the 20th century)

A humanistic, as well as paternalistic approach, was adopted towards the factory workers by the
first decade of the 20th century. At the short note, it signifies that the worker is like a child for
their owner and the owner is the father who took care of the entire labour.
Scientific Management Era (1900-1920s)
Taylor started looking for some technical approaches to increase the worker’s productivity at the
beginning of the 20th century. He wrote some of the scientific techniques that are relevant to
manage the workforce and even a book on management as well. The management of the workers
is relevant to the scientific management techniques such as functional foremanship,
standardization and simplification of work and differential wage rate system.
Some of the principles of scientific management are given below:

 Replacement of rule of thumb with science.

 Not conflicts but only harmony.

 Cooperation and say no to individualism.

 Growth of each worker.

Human Relations Era (1930-1950s)

  More focus was put on the human factor at work and what affected the people’s
behaviour during the 1920’s. During this era, it was highly recommended to use
psychology while doing personnel testing, interviewing, attitude measurement as well as
learning also.
 Basically, the period was defined as “Industrial Psychological Era” in the year 1924.
After conducted deep research by the professors of Harvard Business School, it was
observed that the productivity of the workers depends on social factors at work,
formation and influence of groups, the nature of leadership and supervision and at last,
the communication.

Systems and Contingency Approach Era (1960 onwards)

 In the present era, a high level of attention is seeking by the System and Contingency
Approach Era. It is a cooperated approach that signifies the empirical data to manage the
human resources. It is attached with a huge idea of analyzing the objects that must
depend on the analysis involving simultaneous variables that are mutually dependent on
each other.

Human Resource Management Era (1980 onwards)

 A huge number of people started working in factories when there was a replacement of
the old cottage system with the factory system. Then, there was a need for hiring,
developing and keeping an eye over the workers. With this intention, the department of
industrial relations emerged in most of the big business firms.
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Responsibilities of HR Manager

1. Human Resource Planning

HR managers are responsible for planning and achieving organizational objectives. They usually
engage in identifying, preparing, and executing business goals with top-level executives.

2. Job Analysis and Design

As mentioned above, human resource planning requires assigning the right resources to the right
project. And if the right person is not in the organization, HR managers are responsible for
designing the job analysis to hire them.

A job analysis includes:

 Job description
 Employee’s position in the organization
 Who the employee should report to
 Resources the employee will need to perform the job efficiently
 Individual data related to the post, such as technical skills, work experience, etc.
 Work schedule
 Salary and incentives
 Personal attributes, such as personality, values, and interests

In addition to this, The responsibilities of the HR manager includes:

 Job rotation: Transferring employees from one task to another depending on the
requirement and their skills
 Job enlargement: Merging previously distributed (similar) tasks into one job
 Job enrichment: Adding more responsibility to an employee’s job
 Creating high-performance working groups: Building teams to complete tasks
that require high levels of performance

3. Hiring Candidates

Finding and hiring the right talent is a very complex process. Modern HR managers do more
than just post job requirements in portals to fill open positions. They develop 4. Training and
Development

Hiring the best candidates is just half the job. HR managers need to train and upskill them to
maximize their return on investment.
The type of training and development new employees requires depends on their experience. For
example, if they are fresher, managers might need to arrange for skill-development training
programs to ensure their work meets the industry standards.

5. Design Workplace Policies

It is essential for HR managers to design workplace policies to reduce conflicts, legal issues,
and improve employee productivity. These policies are designed in a way that protects the
interests of both the employees and employers alike.

Though workplace policies differ from organization to organization, the things it includes remain
the same in every company, such as:

 Standard operating procedures

 Anti-harassment and non-discrimination
 Paid leaves, sick leaves, and time-off benefits
 Meal and break periods
 Time tracking
 Employee attendance and punctuality

6. Monitor Performance

Closely related to training, HR roles and responsibilities include examining employee

performance records to identify the scopes of improvement and arranging training workshops to
upskill them.

7. Maintaining Work Culture

As an HR manager, it is your responsibility to shape and maintain organizational culture. It is

essential to create a positive impression of the company from day one, so the new employees
know what to expect.
8. Resolve Conflict

In every organization, employees come from diverse backgrounds. And when people with
opposite opinions meet, the chances of having a conflict rise significantly.

9. Ensure Health and Safety of Employee

Employees are the asset of the organization. Unless they are safe and healthy, they won’t be able
to give their best to the company. Thus, HR managers need to ensure the health and safety of
employees.

10. Rewards and Incentives

Lastly, HR managers need to reward employees based on their performance and other factors
like punctuality. The biggest benefit of rewarding workers is that it creates a desire for other
employees to excel at their job in the hope of getting incentives.

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Roles of HR Manager

1. Administrative Roles:

1. Policy Maker:

Manager acts as the policy maker in an organisation.He assists the management in designing the
policies for hiring and retaining talent welfare activities etc ,.

2. Administrative Expert:

Hr manager performs several administrative functions such as managing employee records,

related database, handling employee benefit claims, responding to questions concerning leaves,
medical and transport facilities, presenting necessary reports to authoritarian agencies etc.

3. Advisor: HR manager as an advisor, suggests, counsels and provide assistance to the line
managers in order to enable them to perform their tasks.
4. House keeper: A s house keeper HR manager aids the organization in managing various
activities such as recruitment, prior employment testing, background verification, wage and
salary administration employee benefits and pension administration programmes for employees
ell being record maintenance.

5. Counsellor: as a counselor it is the duty of an HR manager to share the employee’s problems

pertaining to their job, superiors, peers, family wellbeing, economic and social status etc.

6. Welfare Officer: It is the responsibility of the HR manager to take care of all the welfare
activities being carried out in an organization.

7. Legal Advisor: As a legal advisor for the organization an HR manager helps in redressing the
grievances, dispute settlement, handling disciplinary issues, facilitating collective bargaining
facilitation a platform for joint consultation, interpreting and implementing the labour law,
making contacts with lawyers for law

2. Operational Roles:

1. Recruiter- In percent sneraio it has become a global war for talent .It is important for an HR
manager to look for he talent considering the increased level of competition for individuals
having the required set of qualifications skills and work ecperinece.suits, filing and handling
cases in various courts etc.

2. Trainer and Motivation: HR manager identify employees who require training and
development at regular intervals, arrange proper training and development programmes for them

3. Liaison Officer- HR manager acts as a liaison officer in an organization, who works as a

bridge between different departments within and outside the organization.

4. Mediator-at the time of conflict and grievances the organization always needs a mediator to
resolve those problems effectively.

5. Employee Champion-Hr managers are supposed to be the employee advocators or company

morale officers.

3. Strategic roles:
1. Strategic Partner

2. Change Champion.

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Challenges of HR Manager:

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Human Resource policies:

Definition:

*HR polices are set of proposals and actions that act as a reference point for managrs in their
dealings with employees

*A policies is a predetermined and accepted course of thought and actions that is defined and
established as a guide towards accepted goals and objectives.

Objectives o HR policies:

1. Providing Uniformity

2. To help in supervision
3. Provide information to Employees

4. To assist in policy Administration

Formulation of Human Resource Policies

1. Identify the Areas:

The areas where HR policies are needed are to be identified. Important areas of HR like
recruitment, selection, training, compensations must have specific policies clearly spelt out. If
need arises, additional policies may have to be formulated for dealing with newer HR issues.
2. Collecting Data:
After selecting the areas, relevant information should be collected for facilitating policy
formulation. The company’s records, past practices, industry practices and top management
policies should be studied. The organizational culture and employee aspirations should also be
taken into account while formulating policies.
3. Evaluating Alternatives:
Once data have been collected, various alternative policies can be designed. Each alternative has
to be evaluated in terms of their contribution towards the desired objectives. The policies should
be for the betterment of the existing HR system and formulated in congruence with other
organizational policies. The policies should be finalised after discussion with those people who
are directly affected by its implementation.
4. Communicating the Policy:
The policy details should be conveyed to all the workers throughout the organization. Policy
manual, in-house journals, notice boards, intranet, etc., can be used to create awareness among
employees at various levels. Special communication programmes can be conducted to inform all
the concerned people about the new policy.
5. Evaluation of the Policy:
Policies should be evaluated regularly at periodic intervals to ascertain their effectiveness. The
actual policy results should be compared with predetermined standards to check if the policy was
successful in achieving its objectives. Policies may be reviewed at the organizational level, or
outside experts may be invited to review it.

Types of HR Policies:
HR policies could be classified on the basis of sources or description. [11]

On the basis of source

On the basis of their source, human resource policies could be classified into

1. Originated Policies - These are the policies usually established by the senior managers
in order to guide their subordinates.
2. Implicit Policies - These are the policies which are not formally expressed; they are
inferred from the behavior of managers. They are also known as Implied Policies.
3. Imposed Policies - Policies are sometimes imposed on the business by external agencies
such as government, trade associations and trade unions.
4. Appealed Policies - Appealed policies arise because the particular case is not covered by
the earlier policies. In order to know how to handle some situations, subordinates may
request or appeal for the formulation of specific policies.

On the basis of description

On the basis of description, policies may be general or specific.

1. General Policies - These policies do not relate to any specific issue in particular. General
policies are formulated by an organization's leadership team. This kind of policies is
called 'general' because they do not relate to any specific issue in particular.
2. Specific Policies - These policies are related to specific issues
like staffing, compensation, collective bargaining etc. Specific policies must confirm to the
pattern laid down by the general policies.

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HR Audit

Definition

HR audit evaluates the HR activities in an organization with a view to their effectiveness and
efficiency".
HR audit is concerned with the gathering, analyzing information, and then deciding what actions
need to be taken to improve performance".

Characteristics of Human Resources Audit

HR audit has the following features:

HR audit is an analysis process to check the proper functioning of human resources working in
an organization.

It is an investigating tool which studies about the people working in the organisation, policies
followed by them, the functions and activities performed by them. If there is any gap in the
actual and standard performance, then HR audit identifies and fills it.

Objectives of Human Resources Audit

Following are the main objectives of HR audit:

HR audit looks after the effective functioning of the HR department of the organization. It
evaluates the systematic implementation of policies and procedures in human resource
department and also evaluates its working environment.

HR audit rectifies the mistakes done by human resource while performing their tasks and
provides suitable corrective measures as soon as possible.

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Types of Human Resources Audit

There are various types of audits which can be classified on the basis of following factors :

1) Time Period:

Most of the organizations follow an irregular audit, i.e., the time period is not fixed for auditing;
it can take place once in a year or may be once in three years. But as per the changing time audits
should take place on fixed time-period and regularly so that constant check can be kept on the
functioning of the employees.

2) Conduct:

In this type of auditing, assessment can be carried out by any of the following :

i) Internal Audit:

This type of audit takes place within the organization and is performed by internal management
in order to assess and control the working of the HR department.

ii) External Audit:

The external audit may take place within the organization premises or even outside it. It is
carried-out by external professionals who are specially hired for this purpose. Unlike internal
audit, the outcome of evaluation from the external audit is always unbiased.

3) Purpose:

As per the purpose required, audits can be divided into the following :

i) Compliance Audit:

A compliance audit checks whether all the departments are following the rules and regulations of
the organization or not.

ii) Best Practices Organization Audit:

In this audit, he tasks executed by HR department are compared with the 'best practices' of the
other organization Efforts should be made to make their practices to be the "best practices among
all other similar organizations.

iii) Strategic Audit:

Strategic audit evaluates the contribution of HR practices in achieving strategic goals of the
organization. It also checks the improvements made in the performance of the employees by
providing them proper working condition.

iv) Job Specific Audit:

Salary, This audit focuses on specific function performed by the HR department. These functions
include recruitment, raining, promotion, etc.

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Approaches to Human Resources Audit

Given below are various approaches that can be used by the auditors to evaluate HR functions:

1) Comparative Approach:

In this approach, the progress of one organization is compared with the progress of other
organization. Results of both the organizations are matched. In this case, other organization is
treated as a model organization and the target is to achieve the same result as that of the model
organization.

2) Outside Authority Approach:

Under this approach, standards for comparison are set by external experts and these yardsticks
are used by the internal auditors of the organization to evaluate their work.

3) Statistical Approach:

In certain cases, statistical approach has to be followed in order to create statistical performance
measures with the help of organization’s current information. For example, to measure the rate of
absenteeism, the amount of revenue received, etc., certain arithmetical methods are required to
evaluate the performance. Thus, this statistical technique helps the auditors to get the information
accordingly.
4) Compliance Approach:

In this approach, past performance and activities of the employees are reconsidered to check
their conformity with the organizational rules and regulations and whether there was any
violation of legal provisions or not.

5) Management by Objectives (MBO) Approach:

In this approach, the auditor asks the departmental heads and operational managers to set certain
objectives for their departments. The degree with which these objectives are achieved can easily
determine the performance of the departmental manpower. This assessment is then utilized by
the HR audit to verify the genuine performance of the employee and compare it with the set
targets.

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Process of Human Resources Audit

The steps that are followed by HR audit for appropriate assessment are as follows :

1) Identifying the Objectives of HR Audit:

Setting up of definite objectives is the first task carried-out in an organization. But before setting
up the objectives, HR audit assesses the functions and activities to be carried-out under the HR
department, compliance of law and order undertaken to guide their principles and actions and
ensuring that these HR strategies are in line with the, corporate strategies. For the proper
evaluation, it is necessary that the organization’s aim, schedule and the planning made by HR
audit should move on the same track.

2) Developing a Rough Audit Plan:

An auditor before implementing auditing process should have an idea about the following
things:
what he has to do, which policies should be preferred, which areas are to be focused more, what
are the best means by which relevant information can be gathered, etc. Thus. an assessor
prepares framework of his audit plan so that he can have a rough idea about the manpower
required, expected cost incurred and the tools and equipment required for the entire
audit procedure.

3) Collecting Background Data:

An auditor must have appropriate information about the internal as well as the external factors
that may influence the HR auditing process. This information is known as background data.
External factors include the competency level of the particular organization, the legal
environment and the entire summary of the organization. Internal factors include the set
objectives, the policies followed by the organization for achievement of these objectives and the
performance of the human resource in different divisions of the organization.

4) Determining the Technique of Data Compilation:

In this step, information is gathered by HR auditors from various sources using different
techniques. Some of the techniques used for data collection are interview method, questionnaire
method, task force method, observation method, etc. Auditor can opt for one or more than one
technique at a time. Besides this, time required and cost of assessment is also decided in advance
so that auditing process can take place effortlessly and effectively.

5) Finalizing the Audit Plan:

In case there is a requirement of any improvement in.the rough audit plan prepared by the
auditor, changes can be made at Dis stage before finalizing it. Background data and knowledge
gained can also be useful in upgrading he pre-planned auditing plan. It is the sole responsibility
of the assessor to have a clear cut understanding about e goals to be achieved, techniques to be
used, areas to he covered and time and cost required for entire auditing process and then
finalizing the audit Plan.

6) Collecting Complete Audit Data:

In this process the assessor gather all the significant information from various sources and
combines them together to analyze the virtues as well as the shortcomings of the HR department.
Once HR auditor receives all the data regarding the working of the human resource management,
this data is then compared with the final audit plan. The assessor should keep in his mind that till
this stage, he should have to collect complete data in order to perform auditing function
smoothly.
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Human Resource Accounting

Definition:

**Human Resource Accounting (HRA) is the process of identifying and reporting investments
made in the human resources of an organization that are presently unaccounted for in the
conventional accounting practice. It is an extension of standard accounting principles.

**Human Resource Accounting is the process of assigning, budgeting, and reporting the cost of
human resources incurred in an organization, including wages and salaries and training expenses.

**Human Resource Accounting is the activity of knowing the cost invested for employees
towards their recruitment, training them, payment of salaries & other benefits paid and in return
knowing their contribution to organization towards it's profitability.

“Human Resource Accounting is the process of identifying and measuring data about human
resources and communicating this information to interested parties.” - American Accounting
Society Committee on HRA
Objectives of HR Accounting

Accounting system are as follows:

 To furnish cost value information for making proper and effective management
decisions about acquiring, allocating, developing and maintaining human resources in
order to achieve cost effective organizational objectives.
 To monitor effectively the use of human resources by the management.
 To have an analysis of the human assets i.e. whether such assets are conserved,
depleted or appreciated.
  To aid in the development of management principles. and proper decision making
for the future by classifying financial consequences of various practices.
Advantages of HR Accounting

 t checks the corporate plan of the organization. The corporate plan aiming for expansion,

diversification, changes in technological growth etc. has to be worked out with the
availability of human resources for such placements or key positions. If such manpower is
not likely to be available, HR accounting suggests modification of the entire corporate
plan.
 It offsets uncertainty and change, as it enables the organization to have the right person

for the right job at the right time and place.

 It provides scope for advancement and development of employees by effective training

and development.
 It helps individual employee to aspire for promotion and better benefits.

 It aims to see that the human involvement in the organization is not wasted and brings

high returns to the organization.

 It helps to take steps to improve employee contribution in the form of increased

productivity.
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Process of Human Resource Accounting

Step 1 : HRA Objectives -

Every organization has to accomplish a certain set of goals. These goals and the organizational
requirements are the foundation for setting the objectives of the human resource accounting
system.
Step 2: Developing HRA Measurements -
There are two methods by which human resource accounting measurement can be made. They
are explained below:

 Monetary or Non-monetary methods can also be used as standard for measuring the cost or value
or both of human resources.
 Either the management can go for one particular measurement method or a number of methods
for the measurements.

Step 3: Developing HR Accounting Database -

 The human resource accounting system is based on certain factors such as time
management sheet, the cost of each employee working in the organization, various
psychological factors etc. These factors from the database of HRA system.
Step 4: Pilot Testing the System -

 Pilot testing means pre-checking the working of the system before finalizing it as a part
of the organization. Management co-ordination and co-operation throughout the process
of pilot testing is essential for its success.
Step 5: Implementing the Human Resource Accounting System -

 In this process, organization introduced the entire workforce and staff with a new
accounting system. The importance and different methods of HRA are specified to the
employees so that they become familiar with the new concept and accept it
wholeheartedly.
Methods / Models of Human Resource Accounting

There are different methods that contribute the human resource accounting system. These
methods can be classified into the following categories :

A) Monetary Models:

The models which incorporate the monetary aspects are called monetary models.

1. Cost Based Models -

There are many cost based models which are given here under.

i) Replacement Cost -
This is a measure of cost to replace a firm's existing human resources. Human resources are to be
valued on the assumption that a new similar organisation has to be created from scratch and the
cost to the firm is calculated if the existing resources were required to be replaced with other
persons of equivalent talents and experience.

ii) Historical Cost Approach -

It is on the basis of actual cost incurred on human resources. Such a cost may be of two types,
Acquisition Cost and Learning Cost.

iii) Current Purchasing Power Method -

The capitalized historical cost of investment in human resources is converted into current
purchasing power of money with the help of price index numbers if the index double then the
value of Human Resource also doubles. The converted value becomes the value of human
resources for amortization in rest of the years.

iv) Opportunity Cost Method -

This method of measuring the value of human resources is based on the economist's concept of
opportunity cost. The opportunity cost of an employee in one department is calculated on the
basis of offer made by another department for the employees working in this department in the
same organization.

v) Standard Cost Method -

Standard cost of recruitment, placing, training and developing per grade of employee are
calculated and made up to date every year. The standard cost so arrived at for all human
resources are treated as the value of human resources for accounting purpose.

2. Value Based Models -

The various value based models are described as follows:

i) Robinsons Human Asset Multiplier Method -

It advocate the use of a multiplier which when the applied to earnings of individual provide a
current valuation last reported company earning into market capitalisation. After deducting the
amount of net assets from the capitalised value the balance is assumed to represent the value of
human resources.

ii) Jaggi and Lau's Human Valuation Method -

The problem of predicting the expected tenure or promotion changes of individual employees
was the catalyst for Bikki jaggi and Hon Shiang Lau in suggesting the valuation of human
resources on the group basis. By group they meant homogeneous group of employees who may
not necessarily be working in the same department. It become easier to ascertain the percentage
of people in a particular group likely either to leave the firm during each of the forthcoming
periods or be promoted to higher levels.

iii) Lev and Schwariz Present Value of Future Earnings Model -

The model divides the whole labour force into certain homogeneous group such as unskilled,
Semi skilled, skilled etc. The total present value of different group represent the capitalized
future earnings of the firm as a whole.

iv) Hermansons Unpurchased Goodwill Method -

The unpurchased Goodwill method that a business will earn a normal rate of return on resources.
If a business show return i.e. different from the normal rate it may fairly presumed that some
resources must be exist that have not been taken into account in preparing the balance sheet.
These unrecorded resources are assumed to represent human assets.

v) Morse's Net Benefit Method -

Morse has developed this method be states that the value of human resources is equal to the
present value of gross value of services to be rendered in future by human being both in an
individual capacity as well as collective capacity minus the present value of future payment both
direct and indirect to human beings.

vi) Friedman and Lev's Human Resource Valuation Model -

The human resource value as per this model is the difference between actual wages paid and the
average market wages assumed that may be taken to reflect organisation personal policies
because otherwise it will be reasonably expected that their employees would move from the
employment to another to eliminate the difference.

vii) Daves Modified Present Value Model -

This model reflects the effect of live factors which often affect the contribution of employees to
the organization and thereby the calculated value of human resources.

viii) Ogan's Certainty Equivalent Net Benefits Method -

As per this model the value of human resource is equal to the present worth of certainty
equivalent net benefit of all employees. The net benefit mean the difference between expected
benefit and total costs.

ix) Chakraborty's Human Resource Valuation Model -

The model advocates the valuation of human resources on aggregate basis instead of individual.

x) Flamholtz Model (Reward Valuation Method) -

According to this model the ultimate measure of an individuals value to an organisation is his
expected realizable value.

xi) Economic Valuation Method -

Under this method future earning that can be generated by the employees in his service is
calculated. This cost is subtracted from the present cost incurred on them on various functions
such as recruitment etc. The reason obtained by performing this calculation is the economic cost
of the employees.

xii) Return on Efforts Employed Methods -

Organization benefit or return completely depends upon the efforts made by employees of that
organization. Under this method the gain provided by the employees for the organisation in
terms of profits, productivity etc. are measured.
B) Non- Monetary Models -

The model which is dominated by behavioral variables can be classified as non monetary
models.

i) Likerts Causal, Intervening and End Result Variables Model -

The model assumes that the organizational productivity can be explained in terms of the human
organization. The model had classified certain human variables into three categories :

a) Casual Variables:

These are independent variables which can be directly or purposely altered or changed by
organization and its management which in turn, determine the course of development within an
organization.

b) Intervening Variables:

These variable reflects the internal state, health and performance capabilities of the organisation,
e.g., motivation, loyalty, attitude etc.

c) End Result Variables:

These are depended variable which reflects the results achieved by the organization such as its
productivity; cost, scrap loss, growth etc.

ii) Skills Inventory -

Skill inventory means a record of capability. It classified employees as per their skills.

iii) Potential Assessment -

Potential assessment as the name denotes is the evaluation of the capability of the human
resource of an organization for the future.

iv) Performance Evaluation Methods -

Another way by which human resource can be evaluated is on the basis of performance. The two
methods by which performance evaluation can take place are Rating and Ranking methods.
v) Subjective Expected Utility -

First utility means the value of any resource or usefulness of that resource for its user. Second
subjectivity means individuals own point of view regarding the possibility of any event. There
are various psycho-physical methods by which utility and subjective probability can be
calculated.

vi) Attitude Measurement -

Organizations following attitude measurement techniques can easily understand the view point
of their employees like whether the employees are satisfied with their job or not, are they happy
with the working conditions do they want increment in their salary etc.

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 Unit II

HRP Definition:

**Human Resource Planning (HRP) is the process of forecasting the future human resource
requirements of the organization and determining as to how the existing human resource capacity
of the organization can be utilized to fulfill these requirements.

**Human resource planning is the process of analyzing organizations human resource needs
under changing conditions and developing activities necessary to satisfy those needs.

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Characteristics of Human Resource Planning

Characteristics of effective human resource planning are as follows:

Future-Oriented.

Continuous Process.

Optimum Utilization of Human Resources.

Right Kinds and Numbers.

Determination of Demand and Supply.

Environmental Influence.

Related to Corporate Plan.

A Part of the Human Resource Management System.

Importance of HRP

1. Human resource planning determines the future needs of human resources in terms of number
and kind.

2. Human resource planning is important to cope with the change associated with external
environmental factors such as technological, political, socio-cultural, and economic forces.

3. Another purpose of HR planning is to recruit and select the most suitable personnel to fill job
vacancies.

4. Human resource planning/human resources planning helps find out the surplus/ shortage of
human resources.
5. It is helpful in employee development through various training and development campaigns to
impart the required skill and ability in employees to perform the task efficiently and effectively.

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Benefits of Human Resource Planning

Nature of Human Resources.

Supply of Skilled Manpower.

Rapid Technological Change.

Costs of Recruitment and Hiring.

Increased Mobility.

Reduction of Wastage.

Human Resources as Corporate Assets.

Factors affecting HRP:

INTERNAL FACTORS AFFECTING HRP

RECRUITMENT NEEDS

The key internal factors affecting human resource planning are the recruitment needs of various
departments. One of the factors affecting HRP is the need to fill vacant positions.

BUDGET

Effective HRP requires resources, money and time and many other resources for functioning.
Besides this, all pay packages for hires must also fit into the available resources.

TRAINING NEEDS

HR’s role doesn’t end with recruitment. One of the significant internal factors affecting human
resource planning is whether the staff needs up skilling or reskilling.

WORK ENVIRONMENT

A pleasant work environment is another factor for HR managers to consider. Employees want to
be part of a team that’s committed to a common goal and where they enjoy the respect of co-
workers and management.

RETRENCHMENT
From time to time, organizations will need to let people go. These may be underperformers, or
perhaps they’re employees who’d been hired for a specific project or location that’s shutting
down.

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EXTERNAL FACTORS AFFECTING HRP

COMPETITIVE CONDITIONS

HR managers seek to maintain low costs, one of the most common factors affecting human
resource planning. When there are many recruiters vying for the same talent, it can drive up
costs.

REGULATORY SHIFTS

Whether it’s ensuring safety or labor laws, regulatory shifts impact HR practice. Organizations
have to provide safe working conditions and appropriate training for their employees,
minimizing the risk of accidents.

ADVANCING TECHNOLOGY

The HR manager must know recent developments in technology and trends which impact the
planning process. In many organizations, new information technologies are being introduced that
have a significant impact on functioning.

Process of Human resource planning:

Six steps in human resource planning are presented following

1. Analyzing Organizational Objectives:
The objective to be achieved in future in various fields such as production, marketing, finance,
expansion and sales gives the idea about the work to be done in the organization.

2. Inventory of Present Human Resources:

From the updated human resource information storage system, the current number of employees,
their capacity, performance and potential can be analysed. To fill the various job requirements,
the internal sources (i.e., employees from within the organization) and external sources (i.e.,
candidates from various placement agencies) can be estimated.

3. Forecasting Demand and Supply of Human Resource:

The human resources required at different positions according to their job profile are to be
estimated. The available internal and external sources to fulfill those requirements are also
measured. There should be proper matching of job description and job specification of one
particular work, and the profile of the person should be suitable to it.

4. Estimating Manpower Gaps:

Comparison of human resource demand and human resource supply will provide with the surplus
or deficit of human resource. Deficit represents the number of people to be employed, whereas
surplus represents termination. Extensive use of proper training and development programme can
be done to upgrade the skills of employees.

5. Formulating the Human Resource Action Plan:

The human resource plan depends on whether there is deficit or surplus in the organization.
Accordingly, the plan may be finalized either for new recruitment, training, interdepartmental
transfer in case of deficit of termination, or voluntary retirement schemes and redeployment in
case of surplus.

6. Monitoring, Control and Feedback:

It mainly involves implementation of the human resource action plan. Human resources are
allocated according to the requirements, and inventories are updated over a period. The plan is
monitored strictly to identify the deficiencies and remove it. Comparison between the human
resource plan and its actual implementation is done to ensure the appropriate action and the
availability of the required number of employees for various jobs.

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Forecasting human resource requirement:

HR demand forecasting is a procedure of defining the expected manpower requirements in terms

of a specified quantity and quality within organization. It is required to meet the expected
manpower needs of the organization so that desired level of performance can be achieved.

Human Resource Planning and Demand Forecasting Techniques

1. Managerial Judgment
The managerial judgment technique includes the bottom up approach and top down approach. In
the bottom up approach, line managers communicate human resource requirements to top
management. Applying the information received directly from their line managers, top
management forecasts human resource requirements. The end result of the bottom up approach is
a demand forecasting process that incorporates input from various departments.

2. Work Study Technique

Commonly referred to as workload analysis, the work study technique predicts comprehensive
activities and production for a specified future time period. The end result of the work study
technique is an estimation of the work hours required per unit produced.

3. Econometrics Models
The econometrics model analyzes the relationship of an dependent variable with an independent
variable. An example of an dependent variable are human resources and an example of an
independent variable are sales.

4. Delphi Technique
The Delphi technique utilizes expert feedback in order to predict the human resources
requirements that are necessary in the future. Human resource management professionals gather
responses and develop reports that comprehensively summarize expert opinions.

5. Regression Analysis
Regression analysis is a statistical method used to identify trends contained within data.
Identifying trends helps business professionals to better understand their human resource
requirements and optimize labor supply already available.

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Demand Forecasting?

Demand forecasting refers to the process of estimating future customer demand based on
available historical sales data. Similar to sales forecasting, demand forecasting is a crucial
business management process that provides a business with extensive benefits.

Importance of Demand Forecasting

 Employee scheduling
  Cash flow
 Capacity planning
 Supply chain management
 Inventory planning
 Market research
 New product formulation
 Inventory control
 Risk assessment
 Performance evaluation

Demand Forecasting Methods

1. Trend Projection Method

As its name suggests, trend projection uses sales data to predict future sales trends. For this
method to be effective, historical sales data should at least span over the last couple fiscal years.

2. Econometric Method
Econometric forecasting takes account of outside components that influence customer demand
levels. The econometric forecasting technique notably considers larger economic interactions.

For example, econometric forecasting would seek to understand how unemployment rates and
consumer debt affect consumer spending patterns.

3. Barometric Method
Barometric forecasting is a time series that uses real time statistical and economic indicators to
predict future customer demand. The Great Depression taught economists that barometric
forecasting should not be used for long term forecasting.

4. Market Research Method

The market research method is heavily reliant on customer feedback. Customer data collected
contributes insight on personal, geographic, demographic, and economic consumer preferences.
5. Delphi Method
The Delphi technique is similar to the market research method in that it relies on consumer
feedback. However, unlike the market research method, feedback is generally obtained
anonymously.

The primary source of feedback is reoccurring surveys and questionnaires. These questionnaires
and surveys are sent to experts in the field in order to obtain their specialized feedback.

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Forecasting human resource supply (Supply forecasting)

Sources of Supply

Internal supply:

It comprises of the existing staff within the organisation.It is the major source of employment for
an organization. To determine the exact availability of employees in the future is not an easy task
there are few techniques which can be used to determine internal Hr supply ae as follows.

1. Staffing tables/Manning Charts:

2. Markov Analysis

3. Skill Inventories

4. Replacement and succession planning

5. Cohort analysis.

External Supply:

Sometimes, the organization is required to look for its prospective employees from external
sources also. Basically the external sources include the potential human resources include the
potential human resources existing outside the organization. Sources of external supply may
differ from company to company, industry to industry, and also from one location to another.
Matching supply and demand:

Workforce supply forecast and workforce demand forecast is done to find out any gap between
labour supply and demand and on the basis of that management formulates a plan of action for
bridging the gap. The kind of action required depends upon the kind of situation in which the
organization is following are some of te situations which an organization has to face:

1. Demands Equals supply:

This situation is mainly faced by very small organizations which are operating in a stable
environment and not in large organizations having dynamic conditions.

2. Demand is less than supply:

With the increasing number of large organizations focusing on downsizing, right sizing,
restructuring and out sourcing for cost reduction, improving efficiency, productivity and
boosting competitiveness, there are greater chances that the supply of employees will be greater
than their probable demand. A number of methods can be used to match the demand and supply
under this situation which are following:

1. Restricted Hiring 2.Reduced Hours 3.Job Sharing 4. Early retirement 5.Lay Offs

3. Demand is Greater than supply:

When an organization faces a shortage of manpower, it should make additional efforts for getting
te required manpower that can meet the requirements of the organization.

1. Creative recruiting 2.compensaton incentives 3.Training Programmes 4.Different selection

standards.
Organizational Attraction:

Organizational attractiveness is defined as the degree to which an individual perceives the

organization to be a place to work or the general desirability an individual has to work for an
organization.

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Recruitment Meaning:

Recruitment actually means a way to search the future employees of the organization and
stimulate qualified people to apply for the job. It helps to create a pool of job seekers and
improve the scope of recruitment of better employee.

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Definition

**Edwin Flippo - Recruitment is the process of searching for prospective employees and
stimulating them to apply for jobs in the organization.

**Recruitment is defined as a process of discovering reliable sources of contacting desirable

employees which meets the staffing requirements of the organization. Through recruitment
process the organization can attract the adequate number of manpower to facilitate the effective
selection process and joining of efficient work force.

Importance of Recruitment

1. The process is important to encourage and attract candidates and get ample amount of
application for the job vacancies.
2. It is an effective way to create information pool about the prospective candidates who are
suitable for the talent needs of the organization.
3. It is very important step of planning and analysis about the present and future manpower
requirement of the organization.
4. It bridges the gap between employers and their future employee.
 5. It is a less expensive way of gathering information about the talented manpower in the
industry.
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Recruitment Steps

The process of recruitment consists of three Major Steps or phases -

a. Before posting job advertisement

b. Selection process
c. Formalities after selection of the candidate.
Here are the common steps of recruiting followed by the HRM department of various
organizations:

1) Preparation- It is step in which the HRM department prepare a frame of ideal candidate for
the vacant position. The skills and competencies required to perform the job are identified, also a
qualification and level of experience required execute the job responsibilities is determined.
Once the framework is ready, the HR identifies the proper communication channel through
which the information about job vacancy can be conveyed to the suitable candidates.
2) Receive applications- Once the advertisement about the job vacancy is posted through
internal and external source of recruitment, the HR department starts receiving the applications
for the job opening. Most of the time the HR department confirms the candidate that their
application is received by the organization and the further sorting process is going on. Many
companies used application tracking system (ATS) which helps to automatically communicate
with the applicant that their job application is received and is in process.
3) Selection stage 1: Cancel out unqualified applicants
Here the selection process begins- In this stage the application which are not suitable for the job
are cancel out by the HRM department. The application can be weed out based on the un-
matching qualification or experience of the candidate.

4) Selection stage 2: Arrangement of candidates

The applicants who are matching to the requirement of the job vacancy are then rated based on
their on-paper experience and qualification. The ratings convey how well the applicant is fit of
the vacant job profile. It is time consuming process and many times excel sheets are used to sort
out the application and rank them based on their suitability to the job profile.
5) Selection stage 3: Interview rounds
The ranked and selected candidates can called for the interview round. There are several
interview rounds which can vary from 2-6 based on the selection process adopted by the
organization. Mostly the HR round includes the background verification, personality check and
behavioral suitability of the candidate. The manager interview round is often used to check the
actual work suitability of the candidate.

6) Selection stage 4: Future work situation

This is considered as a last round of selection in which a simulated work exercise is given to the
candidate. It includes the question or tasks related to the area of expertise of the candidate. It
provides actual result about the ability of the candidate to perform as a future employee of the
organization.

7) Offer and Joining formalities

Generally 2-3 top selected candidates gets joining offer from the organization. The joining
formalities include the submission of relevant papers and signing the work contract with the
organization. After the documentation formalities the joining date of the employee is decided and
a new recruit joins the organization.

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Sources of recruitment
Internal Sources of Recruitment

Internal sources of recruitment consist of employees who are already on the payroll of a firm. It also
includes former employees who have returned to work for the organization. Recruitment from
internal sources is done to fill up vacancies through promotion, re-hiring and transferring employees
within the company.

Advantages of Internal Sources

 Selecting and transferring existing employees is a simpler process.

 The managers are aware of the talents and abilities of already existing employees.

 Internal recruitment serves as a tool to boost the morale of employees as internal hiring
creates job and promotion opportunities for existing employees.

 Internal hiring promotes a feeling of loyalty amongst the employees.

Characteristics of Internal Sources of Recruitment

 Quick process.

 Cheaper than the external recruitment process.

 Works as a tool of motivation for the staff.

 The company’s choice is limited to existing employees of the company.

 Hiring fresh employees is a lost prospect.

External Sources of Recruitment

External sources of recruitment refer to the sources that lie outside or Sources of external
recruitment include:

1. People joining an organization, specifically through recommendations.

2. Employment agencies ( e.g. naukri.com) or employment exchanges.

3. Advertising

4. Institutes like colleges and vocational schools (e.g. campus selection)

5. Contractors

6. Hiring unskilled labor

7. List of applications

8. Temporary worker.

Characteristics of External Sources

 Long and time-consuming process.

 It is an expensive process.

 When external people are given opportunities over them, then existing workers lose morale
  Hiring new employees can lead to the introduction of new blood and thus the introduction of
a new set of skills and ideas.

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Difference between Recruitment and Selection

S.No. Recruitment Selection

A process of actively searching A process of choosing suitable

and hiring applicants for a job role applicants from the shortlisted
1 is known as recruitment. candidates is known as selection.

It is an activity to reduce the

It is an activity to boost the candidate pool until we find the ideal
2 candidate pool. candidate.

This process allows the HR to

It allows the candidates to apply proceed further with suitable
3 for a vacant place. applicants, and reject the remaining.

In recruitment, we advertise the Selection is the process in which we

job role and encourage the finally appoint the candidate for the
4 candidates to apply. particular job role.

It is the first step towards the It is the second step towards the
5 hiring process. hiring process.

The process is comparatively

6 This process is economical. expensive.

Selection involves a contractual

There is no contractual relation in relation between the organisation
7 the recruitment process. and employee.

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Selection

Definition:

The Selection is the process of choosing the most suitable candidate for the vacant position in
the organization. In other words, selection means weeding out unsuitable applicants and selecting
those individuals with prerequisite qualifications and capabilities to fill the jobs in the
organization.

Selection Procedure:
1. Preliminary Interview: The preliminary interview is also called as a screening interview wherein
those candidates are eliminated from the further selection process who do not meet the minimum
eligibility criteria as required by the organization.

Here, the individuals are checked for their academic qualifications, skill sets, family
backgrounds and their interest in working with the firm. The preliminary interview is less formal
and is basically done to weed out the unsuitable candidates very much before proceeding with a
full-fledged selection process.

2. Receiving Applications: Once the individual qualifies the preliminary interview he is required
to fill in the application form in the prescribed format. This application contains the candidate
data such as age, qualification, experience, etc. This information helps the interviewer to get the
fair idea about the candidate and formulate questions to get more information about him.

3. Screening Applications: Once the applications are received, these are screened by the screening
committee, who then prepare a list of those applicants whom they find suitable for the
interviews. The shortlisting criteria could be the age, sex, qualification, experience of an
individual. Once the list is prepared, the qualified candidates are called for the interview either
through a registered mail or e-mails.

4. Employment Tests: In order to check the mental ability and skill set of an individual, several
tests are conducted. Such as intelligence tests, aptitude tests, interest tests, psychological tests,
personality tests, etc. These tests are conducted to judge the suitability of the candidate for the
job.

5. Employment Interview: The one on one session with the candidate is conducted to gain more
insights about him. Here, the interviewer asks questions from the applicant to discover more
about him and to give him the accurate picture of the kind of a job he is required to perform.

Also, the briefing of certain organizational policies is done, which is crucial in the performance
of the job. Through an interview, it is easier for the employer to understand the candidate’s
expectations from the job and also his communication skills along with the confidence level can
be checked at this stage.
6. Checking References: The firms usually ask for the references from the candidate to cross
check the authenticity of the information provided by him. These references could be from the
education institute from where the candidate has completed his studies or from his previous
employment where he was formerly engaged. These references are checked to know the conduct
and behavior of an individual and also his potential of learning new jobs.

7. Medical Examination: Here the physical and mental fitness of the candidate are checked to
ensure that he is capable of performing the job. In some organizations, the medical examination
is done at the very beginning of the selection process while in some cases it is done after the final
selection.

Thus, this stage is not rigid and can take place anywhere in the process. The medical examination
is an important step in the selection process as it helps in ascertaining the applicant’s physical
ability to fulfill the job requirements.

8. Final Selection: Finally, the candidate who qualifies all the rounds of a selection process is
given the appointment letter to join the firm.

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Induction

Meaning:

Induction is the process for welcoming newly recruited employees and supporting them to
adjust to their new roles and working environments.

Employee induction, also called employee orientation, refers to a well-structured formal process
of welcoming new employees. Fresh employees do not have any idea about their workplace,
rules, duties, and responsibilities. Therefore this function will help them to get a clear idea about
their organization, job, workgroups, and any other facts related to the job.

Importance of induction
 Helps to build confidence about self
An induction program helps to build employee’s confidence, and eventually, new employees
become productive employees.

 Reduces some costs

Most of the time, some employees resign from the organization during their first month. In this
case, the orientation programs will help to reduce some costs such as the cost of extra
supervision, cost of error correction, and cost of employees pay and benefits.

 To overcome nervousness
New employees can overcome their nervousness and shyness because of the orientation program.

 It helps to increase commitment.

A committed employee means an employee who recognizes organizational needs and prepares
himself to work hard to accomplish them. An induction program plays a significant role in
enhancing employee commitment.

Objectives of induction
An organization aims to accomplish various objectives through this function.

 Provide essential information about the organization to new employees

 To develop employee confidence to become productive employees
 Provide a better understanding of the organization’s vision, mission, functions, and other
organizational strategies.
 To provide facilities to the employees.
 To introduce new employees to their managers, team leaders, and subordinates.
 To maintain a good relationship with the existing employees.
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Preparation
As the first stage in this process, the organization needs to welcome its new employees. In this
stage, an organization needed to find solutions for the following questions.

 Who should give the information?

New employees understand the nature of the organization, personnel policies, procedures, and
rules from the orientation program. Therefore the organization should select a responsible person
to present that information to the new employees. The person may be CEO, human resource
manager, or a supervisor.

 How to give information

The organization can use various methods to deliver information to the new employees. Some
delivery methods are employee handbooks, video films/CD/DVD, information booklets,
documents, lectures, presentations, and discussions.
Most organizations use printing materials, an official website, training events, and employee
handbooks to provide information.

 Within what time of period should the information be given?

The period of time giving the information depends on the nature of the organization, the type of
the job role, and the time availability of the management.

 Where should the information be given

Usually, the information is given before the staff member arrives. The organization should let
other staff members know the new employee will arrive. Therefore the staff members can
arrange a time for introduction with the key people. Moreover, ensure about the essential work
aids are available.

Conduct
As the second stage in this process, the organization briefly provides information to the
employees. The person or persons provide a general introduction about the company, including
the company’s name, vision, mission, functions, products, customers, top management, and
company history. However, this initial briefing should not be provided in a printed word.
After completing the initial briefing, the new employees should be taken to their workplace and
introduced to their manager/team leader.

Evaluation
The new employees should not be dropped by if any problems occur during the orientation
period; hence, formal and systematic follow-up is necessary for the process. The
manager/supervisor should frequently evaluate how well the new employee is doing his job.
The purpose of this evaluation stage is to make sure about the current orientation program
reaching the need of new employees and the company’s needs. Furthermore, the evaluation helps
to identify new ways to improve the current program.

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Types of Induction:
1. Formal Induction:
Formal induction is a planned attempt to introduce new employees to the organization, job and
the working environment. This induction type may consume more time of the superiors to learn
and deliver the new employees needs at the beginning. But this may create new employees less
number of errors at the working period and good coordination a At this type of program, new
employee may get know, who are the most experienced person to have the solution of the
particular problem new employee might has.
2. Informal induction:
Informal induction is not planned and is ad hock. New employees learn through trial and error
method. They get familiar with the work and work environment by themselves. This induction
type will make the stress on new employee at the very beginning, because of his/her not knowing
things at the operations. So in that case, new employee may leave the organization at the
beginning and then the organization may need to follow all the process of recruiting and new
employee to the organization. Also this method will create a large number of errors making by
new employee and then it may creates big losses to the organization.
----------------------------------------------------------------------------------------------------------------

Socialization:
Meaning:
It refers to process of making the new employees get acquainted to the new environment of the
organization. This reduces the anxiety of the new hires and allows them to adjust with the other
existing employees in the company.

Methods of Socialization:

1. Stories: The most popular method by which individuals work and communicate based on their
experience in stories.

2. Rituals: Rituals can be seen as the recurring sequences of actions which express and
strengthen the crucial values of organization.

3. Materials Symbols: In order to communicate about particular meanings, different material

symbols are used by the organization.

4. Language: In order to address and recognize the members of a culture or sub culture,
languages are used by many organizations.
Process of Socialization

1.Pre- Arrival Stage: This stage recognizes that every individual employee comes with set of
values and hope. For example, in some jobs like the managerial kind, the employee might need a
substantial degree of socialization in training. During the selection process, most organizations
inform their prospective candidates about the process of Socialization. Selection process also
helps the organization in determining the right person to fit the right job. T

2.Encounter Stage: Here the employees bump into the real working conditions of the
organization. For example, the expectations of the job, co workers, immediate seniors and the
business as a whole. Here, if the expectations confirm to be more or less correct, this stage
reaffirms the employees of the perceptions generated in past. If the reality is different,
socialization helps the employees in understanding to replace these. But socialization cannot
totally resolve the differences in expectations.
3.Metamorphosis Stage: The new employees, in this stage will work out solutions to meet any
problems. Hence this stage is called the metamorphosis stage. At this stage the new employees
will have become comfortable with their jobs and the team members. New hires will feel that
they have been accepted by their superiors and peers. Not only this, they would have by now
understood the organization system as a whole. They will also know what is expected of them,
how they are evaluated and how productive they are towards the goals of the organization.
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Comparison Chart

BASIS FOR
INDUCTION ORIENTATION
COMPARISON

Meaning Induction is a process takes A process which involves assimilation of

place to welcome newcomer new joinee into the organization to
to the organization, to make rehabilitate him at the new workplace and
them ready for their job. provided with basic information about
BASIS FOR
INDUCTION ORIENTATION
COMPARISON

the company.

Process One way Two way

Involves Introduction of the employee Integration of the employee in the

with the organization. organization.

Time horizon Short term Long term

Sequence First Second

Form Detailed presentation or Practical overview of the organization

brochure of the company's
rules, policies and employee
benefits is provided.

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 UNIT III

TRAINING DEFINITION:

**Training is an act of increasing the knowledge and skills of an employee for doing a particular
job.

“*Training is the process of teaching new employees the basic skills they need to perform their
jobs.”

Training & Development is any attempt to improve current or future employee performance by
increasing an employee’s ability to perform through learning, usually by changing the
employee’s attitude or increasing his or her skills and knowledge.

Purposes of training:

1. To increase employee efficiency

2. To upgrade employees Skills
3. To avoid or delay managerial obsolescence
4. To prepare employees for undertaking higher positions
5. To reduce employee turnover
6. To achieve organizational Excellence.

Benefits of training:

 Increased productivity and performance. ...

 Uniformity of work processes. ...
 Reduced wastage. ...
 Reduced supervision. ...
 Promoting from within. ...
 Improved organizational structure. ...
 Boosted morale. ...
 Improved knowledge of policies and goals
Features of training:
1. Specific dimensions

2. Planned sequence of events

3. Makes optimal use of opportunities for learning.

4. Promotes behavioral changes.

5. Enhancing capabilities.

6. Removes mental blocks.

Scope of training:

1. Training in company policies and procedures.

2. Training in particular skills.
3. Training in human relations skills
4. Training in managerial and supervisory levels.
5. Training in managerial and supervisory skills.

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Types of training

1. Induction training:
Also known as orientation training given for the new recruits in order to make them familiarize
with the internal environment of an organization. It helps the employees to understand the
procedures, code of conduct, policies existing in that organization.

2. Job instruction training:

This training provides an overview about the job and experienced trainers demonstrates the
entire job. Addition training is offered to employees after evaluating their performance if
necessary.

3. Competency based training:

It is kind of vocational training in which new employees are trained according to the standards of
the organization.

4. Knowledge training:

Knowledge training is given to new employees to improve their knowledge and understanding
regarding any particular issue of the organization.

5. Skills training: There are certain basic skills that are required by an individual in his entire
working period in the company.

6. Cross functional training:

Cross-functional training is an approach to talent development that places employees in a

position to learn skills and abilities that are not exercised in their current roles.

7. Team training can be defined as training in which teams are used to increase individual
procedural knowledge and proficiency in doing a job (task work), individual procedural
knowledge and proficiency in functioning as part of a team (teamwork), and overall team
performance.

8. Creativity training can be defined as instruction to develop an indi- vidual's capability to

generate novel and potentially useful solutions to (often complex and ill-defined) problems.

9. Diversity training is any program designed to facilitate positive intergroup interaction, reduce
prejudice and discrimination, and generally teach individuals who are different from others how
to work together effectively.

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METHODS OF TRAINING ON THE JOB TRAINING:

Companies adopt various methods to train their employees .Some of them are as follows.
1. On the Job Methods:

On the job training refers to a form of training which is provided at the work place during the
performance of the actual job

On the job training methods are based on the concpt of learning by doing.In this method,
trainees are provided with real job settings to do their jobs.

1. Job instruction training (JIT) is a kind of simple on the job training in which a new worker
or employee is given step by step training by an assigned coworker or a manager. Generally, this
type of training is for jobs needing manual skills like factory workers. These jobs need lower
skills and so can be taught in an easy and simple step by step process. This training can be given
on both a one on one basis and one to many. It can also be applied for training existing workers
or employees about new technology.

2. Apprenticeship training refers to a course of training in any industry or establishment.

Apprenticeship training consists of basic training ( theoretical instructions ) and practical on the
job training at actual work place.

3. Job rotation is the practice of moving employees between jobs in an organization. These
rotations are predominantly lateral, meaning that they happen between jobs on the same level
and are not considered promotions.
4. Coaching is a form of development in which an experienced person, called a coach, supports a
learner or client in achieving a specific personal or professional goal by providing training and
guidance. The learner is sometimes called a coachee.

5. Understudy refers to the method in which trainees are prepared to perform the work or fill the
position of their superiors. In this technique, a trainee who is likely to assume the full duties and
responsibilities of the position currently held by his/her superior is called as an understudy.

6. Mentoring is the Employee training system under which a senior or more experienced person
(the mentor) is assigned to act as an advisor, counselor, 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

II .off the Job training:

When the employees are given training outside the actual work location, such a type of training
is termed as off the job training.

1. Class room Lectures:

Lectures are a common training method in classrooms and the format is quite simple. For
lectures, a professor presents information to his students while the students take notes and absorb
the information. Classroom training means instruction conducted in person by an instructor
to students in an organized manner utilizing a lesson plan

2. Simulation training is the creation of a true-to-life learning environment that mirrors

real-life work and scenarios. Trainees can put real knowledge and skills into practice not just
by reading books on theory or listening to lectures, but through physical, hands-on activity.

3 The case study is a method which provides descriptive situations which stimulate trainees
to make decisions. The purpose of the case method is to make trainees apply what they know,
develop new ideas to manage a situation or solve a problem.

4. Role-play training is an active learning strategy that requires participants to perform

realistic scenarios under the supervision of a trainer or facilitator. For instance, participants
might simulate the interaction between an employee and a customer.
5. An in-basket exercise assesses a candidate's ability to perform a manager’s job from an
administrative perspective. In the exercise, the candidate is confronted with issues and problems
that have accumulated in the manager’s "in-basket" after returning to work from an extended
absence. A sample of in-basket items might include memos, correspondence, e-mails, directives,
requests, reports, forms, messages, minutes, hand-written notes, etc., from management,
supervisors, staff members, inmates, and other stakeholders.

6. Conferences: A structured method of communicating thoughts to a large number of audiences

who are attending the event is called as a conferences. Experts from specific fields come together
to share their views on a common topic and also obtain answers to their questions.

7. Seminar A seminar is a commercial program where attendees are given information or

training about a specific topic. A seminar is usually held for groups of 10 to 50 individuals and
frequently takes place at a hotel meeting space, an academic institution, or within an office
conference room. Some common types of seminars in business focus on personal development or
business strategies.

8 Group discussion: Under this method a topc is given t the group of trainees and they are asked
to actively participate in it and give their outlook towards the issue.The discussion topic is given
on the spot and thus, no time is given to the trainees to prepare the topic

9. Sensitivity training is defined as an unorganized meeting that is held between a few members
away from their workplace to gain a better insight into their own as well as the behavior of
others.

10. Syndicates: In Syndicate training method the employees form a group and get united to
execute any particular function. This method includes numerous groups who work altogether to
achieve the organizational training goals.

11. Simulation training: Simulation is a training method that represents a real lie situation, with
trainees making decisions resulting in outcomes that mirror what would happen on the job.

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Comparison Chart

BASIS FOR
ON-THE-JOB TRAINING OFF-THE-JOB TRAINING
COMPARISON

Meaning On the job training refers to a form When the employees are given
of training which is provided at the training outside the actual work
work place during the performance location, such a type of training is
of the actual job. termed as off the job training.

Approach Practical Theoretical

Active participation Yes No

Location At the workplace Away from the workplace

Principle No, because trainees produce the Yes, because first training is
products during learning. provided which is followed by a
performance.

Work disruption Experienced employees Professionals or experts.

Carried out by Inexpensive Expensive

Cost Manufacturing firms Non-manufacturing firms.

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Resistance to training

Resistance is a term applied by trainers in context of unwillingness of employees to learn new

ideas, concepts and patterns. Employee training is much needed for achieving success.

Different sources of resistance:

1. Group resistance: Group level resistance refers to when people gather together and
raise their common voice in an organized manner. This kind of resistance is very
common. The common actions taken by group are considered usually serious threat to
organizational change.
2. Resistance to change: Resistance to change is unwillingness to adapt to new
circumstances or ways of doing things. It can happen with individuals, relationships, or
within organizations
3. Fear of appearing foolish: A person may not try a new idea or practice because of the
inherent fear of being appearing foolish in front of others.
4. Uncertain goals and objectives: Generally many individuals are sent to the workshop
with incomplete or no information about the objectives of training. Under such a
situation, they may become aggressive, particularly when their training has limited
application in their field.

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Executive Development programme (EDP):

Executive Development Programme (EDP) is a planned and organized process of learning and
growth designed to improve managerial behaviour and performance of executives by cultivating
their mental abilities and inherent qualities through the acquisition and application of advanced
knowledge insights and skills.

Objectives of Executive Development

1.Sustain in a dynamic and competitive environment

2.Ensure competent staff at all levels

3.Develop leaders

4.Executive Career Growth

Importance of Executive Development

Executive development programmes are required to train and develop professional managers.

It helps managers to develop skills to face

It enables managers to face problems related to technology and institution.

It helps in developing better relations with the labors.

Executives need training and education to understand and adjust to changes in socio-economic
changes.
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Methods of Executive Development are:

1. Coaching

2. Job Rotation

3. Understudy

4. Projects and assignments

5. Lectures

6. Conference

7. Business Games

8. Case Study

9. Role playing

10.Sensitivity Training

11.In basket technique

On the Job Training

Under on the job training the employees get trained while doing their day to day job. Skills are
gained while employees are carrying out their daily tasks and responsibilities.

They learn in the real work environment by facing challenges and situations and solving them
under the guidance of a much superior and experienced employee.
Coaching

Coaching is a process under which the trainee is placed under a much experienced employee or a
supervisor who instructs and guides the trainee in the day-to-day work.He instructs him what
tasks are to be completed and the procedure to successfully finish them and would guide him in
times of errors committed by him. To help the trainee grow and to enhance his decision making
and analytical skills the supervisors may also ask him to handle complex situations and
problems.

Job Rotation

An employee is shifted between two or more roles or departments . This helps them gain
knowledge and experience in varied fields. They get huge exposure to various aspects of the
business.

Understudy

A position in the organization may fall vacant in the near future because of reasons like
retirement, promotion or transfer of the current job holder.In such a case a junior resource is
chosen by the head of a particular department who is placed as an understudy under the superior
who is about to leave that position.

Projects and assignments

Employees might be given some special projects and assignments to handle. They might have to
do in-depth research, analysis and present a report that advises a solution to the problem or case
in hand. This provides the employee a first-hand experience and in-depth knowledge to work in
the field.

Off the job Training

Off the Job training is imparted when new job skills and knowledge is to be taught to the
employees. Off the job training takes place away from the immediate work place.

There might be classroom sessions and trainers from outside the organization to train the
employees. It is costlier and more artificial than on the job training.

Lectures

Lectures are conducted on a particular topic or a specialized area of work to a group of people. It
is conducted by an experienced and learned person who has an in-depth knowledge in that area.It
can be done in the form of a PowerPoint presentation, audio-visual aids or just a speech.
Conference

Conference is a meeting of people conducted to discuss a common topic of interest.

All the individuals are asked to prepare on the topic and get together to discuss about it in detail.
The conference leader creates an environment that promotes healthy discussions. The
participants are encouraged to freely voice out their opinions on the topic in discussion.

Business Games

Under this method of executive development, the trainees are generally divided into teams and
given a hypothetical situation that is very close to a real-time situation.They are asked to take
certain decisions and solve the situation at hand or produce the desired results..

Case Study

Decision making is a very important role of a manager that impacts the profitability of a business
to a large extent. Case study method brings interesting real world situations into the classroom.
These cases are generally based on complex situations that can arise in the business environment.

Role playing

Under the role playing method a complex or conflicting situation is presented to the trainees.
Each trainee then plays a role of a specific organizational member whose presence and decision
making is required to resolve the situation. It is like a spontaneous stage act where each
participant plays a different role and works towards solving a given problem in hand in a
different capacity.

Sensitivity Training

Sensitivity training aims at developing behavioral flexibility by improving the tolerance power of
the participants to each other’s behaviour. It enables them to understand the views and opinions
of others in a better manner. It consists of an unstructured group of 10-15 people with no trainer
or leader to guide them; hence the trainees are motivated to resolve the situation themselves.

In basket technique

In this approach, the trainees are presented with a number of tasks and problems that they might
find in their “basket” while performing the role of a manager. Various files, phone calls, reports,
messages are handed over to them in no particular sequence.
They need to priorities the tasks in hand, delegate the work and clear the basket within a given
time frame.

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Steps of Executive Development Process

Analysis of Development Needs

Appraisal of the Present Managerial Talent

Planning Individual Development Programmes

Establishing Training and Development Programme

Evaluating Developing Programs

Steps of Executive Development Process

Analysis of Development Needs

First of all the present and future development needs of the organization are ascertained. It is
necessary to determine how many and what type of executives are required to meet the present
and future needs of the enterprise.

Appraisal of the Present Managerial Talent

A qualitative assessment of the existing executives is made to determine the type of executive
talent available within the organization.

Planning Individual Development Programmes

Each one of us has a unique set of physical, intellectual and emotional characteristics. Therefore,
the development plan should be tailor-made for each individual.
Establishing Training and Development Programme

The HR department prepares comprehensive and well-conceived programmes.

Evaluating Developing Programs

Considerable money, time and efforts are spent on executive development programmes. It is
therefore natural to find out to what extent the programme’s objective has been achieved.

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Factors Influencing Executive Development

1. Failure to train the managers will lead to ineffective and inefficient managers who negatively
affect the organization’s performance.

2. In the absence of training and developmental avenues, the performing managers may get
demotivated and frustrated in leading the organizations.

3. The organizational performance may be affected by the loss of market shares, lower sales,
reduced profitability, etc.

4. The absence/ shortage of trained and skilled managers make it important for organizations to
have appropriate retention strategies.

Difference between Training and Development:

S.No. TRAINING DEVELOPMENT

Training refers to an Development refers to an

education process in informative process which
which employees get a mainly helps in
chance to develop skills, understanding about the
competency and learning overall growth and
as per the post duty improvement of the skills of
01. requirements. the employee.
 So simply we can say it
is a process of increasing So simply we can say it is a
knowledge and skills of process of learning and
02. an employee. growth.

It is short time/term It is long time/term focused,

focused and for a fixed which takes place through
03. duration. out the life of a person.

Training is a job oriented Development is a career

04. process. oriented process.

Trainings are performed Developments are

in an aim of improving performed in an aim of
knowledge and skill that improving knowledge and
are needed to perform skill to face future
05. their existing jobs. challenges.

It helps individual to
learn how to perform It prepares individuals for
his/her present job future job and growth in all
06. satisfactory. aspects.

07. It is a reactive process. It is a proactive process.

It is the result of
initiatives, taken by It is the result of initiatives,
management and it is a taken by self and it is a
08. result outside motivation. result of self motivation.
 Trainings are mainly Development is mainly
09. attended by individual. attended by individual.

Mainly development refers

Mainly training refers to to implementing learned
learning new things and sessions and finding new
10. refreshing old one. ones.

It focuses on technical It focuses on conceptual and

skills and it has a narrow human ideas and it has a
11. scope. wider scope.

Training focuses on the While development focuses

12. role. on the person.

It revolves around It revolves around future

13. present need. need.

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Self Development:

Meaning

Self development is simply the process of learning new things and building new skills—skills
that help us increase our chances of success, achieving our goals, and manifesting our dreams.

Definition:

Self development is defined as individuals improving their knowledge,skills and abilities through
their own self directed efforts.
Objectives of self development:

1. To determine into a perfect peace loving human being having sensible and wise care for
different aspects of human personality.

2. To cultivate the skill to work with others with the sense of colorations ,consideration, and
empathy but being sensible at the same time so that unworthy elements do not get the benefit tat
they do not deserve

Stages of Self development:

1. Personal audit: An audit should be conducted regarding the existing position and the various
activities which can be done for improvement.

2. Setting self development objectives: Establishing the objectives and targets regarding points
of achievement having both Work related and personal target.

3. Identifying development needs:

Identifying the skills and knowledge necessary for the accomplishment of objectives.

4. Constructing the development plan:

Perform an analysis regarding the information obtained from personal audit and determine
various development goals and gaps. The development plan depends on these gaps.

Methods of self development:

1. Constructive Behaviour
2. Time management
3. Self Study.

Knowledge management:

Definition:

KM is getting the right information to the right people at the right time, helping people create
knowledge and sharing and acting on information.
Features of Knowledge management:

1. It is never ending process

2. It is all pervasive. It is practiced by everyone in the organization.

3. Work teams and experts need to knowledge creation.

4. Social interaction also leads to knowledge creation.

Importance of Knowledge management:

1. Quicker and better decisions

2. Enhanced Productivity

3. New products and services

4. Business intelligence and knowledge management

5. Poject management

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 Unit IV

Compensation:

Definition:

Compensation means all forms of pay or rewards going to employees and arising from teir
employment.

Compensatin is a broad term pertaining to financial rewards received by persons through their
employment relationship with an organization.

Characteristics of best compensation plans:

1. Avaiability

2. Timeliness

3. Performance related

4. Durability

5. Equity

6. Visibility

7. Flexibility

Objectives of compensation:

Establish Equity

Increase workers Efficiency

Macroeconomic Stabilization

Effective Distribution of labour

Maintain income expenditure ratio

Avoid conflict
Compensation Plans:

Compensation plan is the complete plan to award individuals for their efforts and to ensure that
the employees stay with and satisfied over a longer period of time. Compensation plan completes
the entire process of deciding the compensation package for the employee, giving it and revising
the salaries, wages and incentives with time. Compensation plan in India are as follows:

1. Basic salary

2. Incentives

3. Bonus

4. Employee Benefits

5. Provident fund

6. Overtime pay

7. Allowances:

Dearness Allowance, House rent Allowance, Leave Travel Allowance, Fixed medical
Allowance, Cildren Education Allowance, Hostel Allowance.

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Rewards:

Reward can be defined as something that is perceived as beneficial or advantageous to a

particular actors interests.

Types of rewards:

Intrinsic Rewards:

Intrinsic rewards refer to those incentives that have been given to the employees of an
organization Intrinsic rewards are those that originate from within the person, and extrinsic
rewards are those that originate from something beyond the person.
Extrinsic reward:

An extrinsic reward is a tangible and visible reward given to an individual or an employee for
achieving something. They usually have monetary value such as a salary hike, bonus, award, or
public recognition. In extrinsic motivation, rewards or other incentives — like praise, fame, or
money — are used as motivation for specific activities.

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Motivation:

“Motivation refers to the way in which urge, drives, desires aspiration, or needs that direct or
control or explain the behavior of human beings..

Types of Motivation:

1. Positive motivation. Positive motivation is when a person wants to pursue a certain outcome
to gain a reward, instead of to avoid something negative.

2. Negative Motivation: Negative motivation describes the pain or negative consequences an

athlete experiences when they fail to complete an event or task correctly or unable to achieve
their goals.

3. Rational motivation: a motive that can be defended by reasoning or logical argument..

4. Emotional motivation: Emotional motivation is based upon the principle that consumers wish
to seek pleasure and avoid pain. Love, affection, passion, and happiness are emotions that
consumers like because they bring pleasure.

5. Primary motivation: Primary motives are defined as everything that drives us to do

something purely for the pleasure of doing it;

6. Secondary motivation: motivation that is created by personal or social incentives (e.g., the
urge to learn classical music or become a movie star) rather than by primary, physiological needs
(e.g., for food).
7. Intrinsic motivation is the act of doing something without any obvious external rewards.

8. Extrinsic motivation: It refers to behavior that is driven by external rewards. These rewards
can be tangible, such as money or grades, or intangible, such as praise or fame. Unlike intrinsic
motivation, which arises from within the individual, extrinsic motivation is focused purely on
outside rewards.

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Theories of Motivation:

Following are three general categories of Motivation

1. Content Approaches

i.Maslow s Need Hierarchy Theory ii, Hergberg s Two factor model theory iii,Aldefer s
ERG theory.

II. Process Approaches

Vroms Expectancy Theory

Porter Lawler Model

III. Contemporary Approaches

Equity Theory of work Motivation

McClellands Needs Theory

Maslow s Need Hierarchy Theory

Maslow proposed that motivation is the result of a person's attempt at fulfilling five basic needs:
physiological, safety, social, esteem and self-actualization. According to Maslow, these needs
can create internal pressures that can influence a person's behavior.
1. Physiological Needs:

These needs are of the lowest-order and most basic needs of human beings. These involve
satisfying fundamental biological drives, such as the need for food, air, water, cloth, and shelter
generally expressed in the names of roti, kapada aur makan. These needs exert tremendous
influence on human behaviour. Entrepreneur also being a human being has to meet his
physiological needs for survival. Hence, he / she is motivated to work in the enterprise to have
economic rewards to meet his / her basic needs.

2. Safety and Security Needs:

The second level of need in Maslow’s hierarchy is emerged once physiological needs are met.
Safety needs involve the need for a secure environment, free from threats of physical and
psychological harm. These needs find expression in such desires as economic security and
protection from physical dangers. Meeting these needs requires more money and, hence, the
entrepreneur is prompted to work more in his/ her entrepreneurial pursuit. Like physical needs,
these become inactive once they are also satisfied.

3. Social Needs:
Man is social animal. These needs, therefore, refer to belongingness or affiliation. All individuals
want to be recognized and accepted by others. Likewise, an entrepreneur is motivated to interact
with fellow entrepreneurs, his employees, and others.

4. Esteem Needs:
These needs refer to self-esteem and self-respect. These include such needs that indicate self-
confidence, achievement, competence, knowledge, and independence. In case of entrepreneurs,
the ownership and self- control over enterprise satisfies their esteem needs by providing them
status, respect, reputation, and independence.

5. Self-Actualization:
The final step under the need hierarchy model is the need for self-actualization. This refers to
self- fulfillment. The term ‘self- actualization’ was coined by Kurt Goldstein and means to
become actualized in what one is potentially good. An entrepreneur may achieve self-
actualization in being a successful entrepreneur.
2. Herzberg s Two Factor Theory:

The two-factor theory (also known as Herzberg's motivation-hygiene theory and dual-factor
theory) states that there are certain factors in the workplace that cause job satisfaction
while a separate set of factors cause dissatisfaction, all of which act independently of each
other.

The two factors identified by Herzberg are motivators and hygiene factors.

1. Motivating Factors

The presence of motivators causes employees to work harder. They are found within the actual
job itself.

2. Hygiene Factors
The absence of hygiene factors will cause employees to work less hard. Hygiene factors are not
present in the actual job itself but surround the job.
 a the opportunity to learn new skills. This can happen either on the job or through more formal
training.
Hygiene factors include:

 Company policies: These should be fair and clear to every employee. They must also be
equivalent to those of competitors.
 Supervision: Supervision must be fair and appropriate. The employee should be given as much
autonomy as is reasonable.
 Relationships: There should be no tolerance for bullying or cliques. A healthy, amiable, and
appropriate relationship should exist between peers, superiors, and subordinates.
 Work conditions: Equipment and the working environment should be safe, fit for purpose, and
hygienic.
 Salary: The pay structure should be fair and reasonable. It should also be competitive with other
organizations in the same industry.
 Status: The organization should maintain the status of all employees within the organization.
Performing meaningful work can provide a sense of status.
 Security: It is important that employees feel that their job is secure and they are not under the
constant threat of being laid-off.

3. Alderfer’s ERG theory of motivation:

Alderfer's ERG theory of motivation builds on Maslow's Hierarchy of Needs and states that
humans have three core types of need: Existence, Relatedness and Growth. These needs
may be of different levels of priority for different individuals, and their relative importance for
an individual may vary over time.

Clayton P. Alderfer's ERG theory from 1969 condenses Maslow's five human needs into three
categories: Existence, Relatedness and Growth. Include all material and physiological desires
(e.g., food, water, air, clothing, safety, physical love and affection).

Alderfer's ERG theory is more consistent with our knowledge of THEORY individual
differences among people. Every individual will have different importance for different group
of needs depending upon his education, family background and cultural environment.

The letters ERG are an acronym for three levels of needs: Existence, Relatedness, and Growth.
Like Maslow, Alderfer presented his theory in a hierarchy: Growth needs (development of
competence and realization of potential) Relatedness needs (satisfactory relations with` others,
including co-workers).

II. Vroom’s Expectancy Theory:

Victor Vroom's expectancy theory of motivation is a process theory of motivation. It says that
an individual's motivation is affected by their expectations about the future
This theory assumes that behavior results from conscious choices among alternatives whose
purpose it is to maximize pleasure and minimize pain. Together with Edward Lawler and Lyman
Porter, Victor Vroom suggested that the relationship between people's behavior at work and their
goals was not as simple as was first imagined by other scientists. Vroom realized that an
employee's performance is based on individuals factors such as personality, skills, knowledge,
experience and abilities.
The theory suggests that although individuals may have different sets of goals, they can be
motivated if they believe that:

 There is a positive correlation between efforts and performance,

 Favorable performance will result in a desirable reward,
 The reward will satisfy an important need,
 The desire to satisfy the need is strong enough to make the effort worthwhile.

The theory is based upon the following beliefs:

Valence
Valence refers to the emotional orientations people hold with respect to outcomes [rewards]. The
depth of the want of an employee for extrinsic [money, promotion, time-off, benefits] or intrinsic
[satisfaction] rewards). Management must discover what employees value.

Expectancy
Employees have different expectations and levels of confidence about what they are capable of
doing. Management must discover what resources, training, or supervision employees need.

Instrumentality
The perception of employees as to whether they will actually get what they desire even if it has
been promised by a manager. Management must ensure that promises of rewards are fulfilled
and that employees are aware of that.
Vroom suggests that an employee's beliefs about Expectancy, Instrumentality, and Valence
interact psychologically to create a motivational force such that the employee acts in ways that
bring pleasure and avoid pain.

the Porter and Lawler model of motivation or Porter Lawler theory can be termed as a foolproof
model of motivation and is applied practically when it comes to studying the behavior of
managers within organizations. The Porter and Lawler model or the Porter Lawler expectancy
theory is a multivariate model that uncovers the close correlation that exists between job
perspective and job undertaking. T

The Porter and Lawler theory of motivation or Porter Lawler Model is based on four primary
assumptions about human behavior:
 The behavior of individuals is solely dependent on a set of factors within the individual
and their immediate environment.
 All normal individuals are considered rational in nature, especially those who
take conscious decisions aligned to their behavior within organizations.
  Every individual possesses different goals, needs, and desires.
 Depending on expectations, individuals tend to choose between alternate behavior and
existing behavior that will lead them to the desired outcome.
Porter Lawler model or Porter and Lawler expectancy theory, it’s dependent on six core
elements. These are:

1. EFFORT
This is the quantum of energy an employee exerts on a given task. This again is contingent on
two factors: magnitude of reward and attitude toward effort-reward probability.
2. PERFORMANCE
Efforts are directly correlated to employee performance. But the quantum of performance
depends on the amount of labor, an employee’s ability, and the role perspective of the employee.
Abilities would include skills, intellectual capacity, and knowledge to perform the job. Along
with these, traits that are considered important for a job include perseverance, endurance, and
goal-directedness. Logically speaking, abilities and traits tend to moderate effort-performance
relationships. This is integral to the Porter Lawler model or the Porter Lawler model of
motivation.
This apart, if an employee’s ability and role perception is on the lesser side, their performance is
likely to be poor despite their best efforts. Role perception, here, refers to the way people define
their assigned job role. Employees tend to view their job roles differently. Ideally, an employee
who views their assigned job role as defined by the organization will perform the best. This is
important to Porter and Lawler expectancy theory or Porter and Lawler theory of motivation.
3. REWARDS
Employee performance always leads to two kinds of outcomes: extrinsic and intrinsic rewards.
The former relates to external recognition received by others in the form of recognition, money,
and praise. While the latter pertains to an enhanced sense of self-esteem and competence the
employee experiences when the job matches the expectations set forth. This enhances the Porter
and Lawler model of motivation.
4. VALUE OF REWARD
Right at the onset, the reason for an employee choosing a job depends on the reward they’re
likely to receive. For instance, a potential employee looking for enhanced monetary benefits may
not find an extra vacation to be an attractive reward. In line with this view, when the reward is
aligned to the employee’s aspirations, then it’s certain that the employee will put in the
maximum effort in the assigned job role. Else, there shall be reduced efforts. This is the best
about the Porter and Lawler model of motivation or Porter Lawler theory of motivation.
5. PERCEIVED EFFORT REWARD PROBABILITY
Before employees put in any kind of effort, they like to assess the probability of a certain level of
effort leading to the desired level of performance. This, in turn, will make them a candidate for
certain kinds of rewards. Depending on the value of the reward and the effort-reward probability,
employees decide the level of effort to put in. That’s why people are convinced about the Porter
and Lawler model of motivation.
6. SATISFACTION
This is a feeling experienced as a result of both extrinsic and intrinsic rewards. However,
employees are always likely to compare their actual rewards with their perceived rewards. If
their actual rewards exceed their perceived rewards, they’re likely to experience satisfaction.
 Alternatively, if the actual rewards don’t measure up to the perceived rewards, they’re likely to
experience disappointment or dissatisfaction.
III. Equity theory of work motivation:

In the equity theory of motivation, employee’s motivation depends on their perception of how
fair is the compensation and treatment for their work input. Equity Theory states that the
employees perceive what they get from a job situation (outcomes) about what they put into it(
inputs) and then compare their inputs- outcomes ratio with the inputs- outcomes ratios of others.

This theory show-

 Inputs: Inputs include all the rich and diverse elements that employees believe they bring or
contribute to the job – their education, experience, effort, loyalty, commitment.
 Outcomes: Outcomes are rewards they perceive they get from their jobs and employers’
outcomes include- direct pay and bonuses, fringe benefit, job security, social rewards and
psychological.
 Over rewarded: if employees fell over-rewarded equity theory predicts then they will feel an
imbalance in their relationship with their employee and seek to restore that balance.
 Equity: if employees perceive equity then they will be motivated to continue to contribute act
about the same level.
 Unrewarded: unrewarded who feel they have been unrewarded and seek to reduce their feeling
inequity through the same types of strategies but the same of this specific action is now reverse.

ii.McClelland’s Theory of Needs

David McClelland and his associates proposed McClelland’s theory of Needs / Achievement
Motivation Theory. This theory states that human behaviour is affected by three needs - Need for
Power, Achievement and Affiliation. Need for achievement is the urge to excel, to accomplish
in relation to a set of standards, to struggle to achieve success. Need for power is the desire to
influence other individual’s behaviour as per your wish. In other words, it is the desire to have
control over others and to be influential. Need for affiliation is a need for open and sociable
interpersonal relationships. In other words, it is a desire for relationship based on co-operation
and mutual understanding.

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Career management:

Career management has been defined as the process by which individuals develop, implement
and monitor career goals and strategies.

** Career management is the process of crafting, executing and observing employees career path
keeping in view managements need and goals. The two very important dimensions of career
management are planning and development of career.
Approaches of career management:

Career Audits: The process that undertakes an in depth analysis of skills, interests, methods,
objectives and motivations is called career audit.

Career counselling and interviews: In career counseling, details regarding the employees career
security, expectations and his prospects are discussed by the counselor.

In a career interview the managers make an effort to match the objectives and expectations of
employee as well as the organization and put both of them in line.

3. Job Shadowing and mentoring: Job shadowing is a self exploration approach structures to
enhance the knowhow of a specific job. The concept of mentoring has been intensely monitors in
the recent years and attention has not only been paid to the mentors have on the careers of the
mentee but also on the specific aspects of the mentoring relations which are very crucial for
success.

4. Executive coaching: An interview and personal approach in which a professional coach

develops an association with one executive who is interested in enhancing and developing his
career related knowledge and ability.

5. Job Rotation: Job rotation motivated the employees to expand their knowledge and skill.

6. Cross Training: Training for diversified and unusual tasks or skills is known as cross
training. It increases the capacity of an individual to do multitasking on an urgent requirements
when an employee is absent from work.

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Career Planning:

Career planning is a process of systematic matching career goals and individuals capabilities
with opportunities for their fulfillment.

**Career planning is the process of enhancing an employees future value.

Career Development:

Career development is an ongoing process that occurs over the life span includes home, school
and community experiences.

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Mentoring:

Mentoring can be defined as training given by the senior and experienced employees.
**Mentoring refers to the information and advice provided by an older ,experienced individual to
a younger and less experienced individual to help in latter growth and development.

Process of Mentoring:

1. Need Assessment

2. Prpgramme design

3. Training

4. Pairing

5. Facilitation

6. Evaluation.

Mentor:

A mentor is a person with knowledge and experience to share with someone else—the protégé—
who doesn't yet have, but who would benefit from exposure to, that knowledge and
experience.

Protégé:

One who is protected or trained or whose career is furthered by a person of experience,

prominence, or influence.

Qualities of successful mentor protégé relationship:

Mentor qualities:

1. Effective communication Skills

2. Technical Expertise

3. Organizational and professional reputation and prestige Willingness to develop someone else

4. Ability to share good work.

Protégé qualities:

1. Self perceived growth needs

2. Challenging accepted behaviours

3. Receptive to feed back and training

4. Willingness to accept duty and responsibility for self growth.

 Developing Mentor-protégé relationship:

The relationship between an experienced employer and a junior employee in which the
experienced person helps the junior person with effective socialization by sharing information
gained through experience with the organization.
Requirements for effective mentor-protégé relationship:

1. The status & characteristics of the mentor:

Mentors should be seniors in status, experience, age, skills, knowledge.

2. Protégé: Junior employees should have the zeal to learn from their senior employees regarding
their career, social and psychological aspect.

3. The relationship: It is based on mutual dependence & mutual trust.

4. The activities:
Developing the potentials of the protégé. Improving protégés performance

Interlinking formal learning & practices Guide, support, providing feedback

5. Developing higher skills:

It should encourage their juniors towards high task performance by reducing weakness &
strength of the protégés.

6. Response of the protégé:

Protégés should learn carefully regarding career opportunities, personal goals.

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Importance of Job Satisfaction
For Employees
Job satisfaction from an employee perspective is to earn a good gross salary, have job stability,
have a steady career growth, get rewards & recognition and constantly have new opportunities.
For Employers
For an employer, job satisfaction for an employee is an important aspect to get the best out of
them. A satisfied employee always contributes more to the company, helps control attrition &
helps the company grow. Employers needs to ensure a good job description to attract employees
and constantly give opportunities to individuals to learn and grow.
The positive effects of job satisfaction include:
1. More efficiency of employees of workplace if they are satisfied with their job.
2. Higher employee loyalty leading to more commitment.
3. Job satisfaction of employees eventually results in higher profits for companies.
4. High employee retention is possible if employees are happy

Job Satisfaction Factors

Job satisfaction is related to the psychology of an employee. A happy & content employee at a
job is always motivated to contribute more. On the other hand, a dissatisfied employee is
lethargic, makes mistakes & becomes a burden to the company. The elements & factors which
contribute to job satisfaction are:
1. Compensation & Working conditions
One of the biggest factors of job satisfaction are the compensation and benefits given to an
employee. An employee with a good salary, incentives, bonuses, healthcare options etc. is
happier with their job as compared to someone who doesn’t have the same. A healthy workplace
environment also adds value to an employee.
2. Work life balance
Every individual wants to have a good workplace which allow them time to spend with their
family & friends
Job satisfaction for employees is often due a good work life balance policy, which ensures that
an employee spends quality time with their family along with doing their work. This improves
the employee's quality of work life.
3. Respect & Recognition
Any individual appreciates and feels motivated if they are respected at their workplace. Also, if
they are awarded for their hard work, it further motivates employees. Hence recognition is one of
the job satisfaction factors.
4. Job security
If an employee is assured that the company would retain them even if the market is turbulent, it
gives them immense confidence. Job security is one of the main reasons for job satisfaction for
employees.
5. Challenges
Monotonous work activities can lead to dissatisfied employees. Hence, things like job rotation,
job enrichment etc can help in job satisfaction of employees as well.
6. Career Growth
Employees always keep their career growth part as a high priority in their life. Hence, if a
company helps groom employees and gives them newer job roles, it enhances the job satisfaction
as they know they would get a boost in their career.

There are several theories given which help in evaluating & measuring job satisfaction of
employees at workplace. Some of them are:
- Hierarchy of Needs by Maslow
- Hygiene Theory by Herzberg
 Methods of measuring employee satisfaction
1. Conduct employee satisfaction surveys. An employee satisfaction survey is one of the best
methods. ...
2. Use the employee satisfaction index (ESI) ...
3. Use the Employee Net Promoter Score (eNPS) ...
4. Have 1-on-1 meetings. ...
5. Install an employee suggestion box. ...
6. Use specialized software.
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Employee Engagement:

Employee engagement is the strength of the mental and emotional connection employees feel
toward the work they do, their teams, and their organization.

Employee engagement is a human resources (HR) concept that describes the level of
enthusiasm and dedication a worker feels toward their job.
Types of Employee engagement:
------------------------------------------------------------------------------------------------

Organizational citizenship behavior:

Organizational citizenship behavior (OCB) is a term that's used to describe all the positive
and constructive employee actions and behaviors that aren't part of their formal job
description.

In industrial and organizational psychology, organizational citizenship behavior (OCB) is a

person's voluntary commitment within an organization or company that is not part of his
or her contractual tasks. Organizational citizenship behavior has been studied since the late
1970s.

Benefits of OCB

 OCB can boost employee morale

 It increases people’s levels of work meaningfulness

 It is good for employee performance and productivity; in fact, research shows that OCB

positively predicts performance

 It creates better social interactions between employees

 It reduces stress

Theories of Organizational Citizenship behaviour :

Social exchange theory, the theory of psychological contracts, and the norm of
reciprocity have been used to explain the relationship between organizational citizenship
behavior and organizational justice, leader supportiveness, job satisfaction, and organizational
commitment.
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 UNIT V

Performance Evaluation or Performance Appraisal

Meaning:

Performance appraisal is a tool which is used to evaluate the employees performance at the
workplace.

**A performance appraisal is the periodic assessment of an employee’s job performance as

measured by the competency expectations set out by the organization.

Definition: Performance appraisal is a system of review and evaluation of an individual s

performance.

Features of Performance Evaluation:

1. Organised Process

2. Evaluating Process

3. Periodic Process

4. Futuristic

5. Identifies Employees Potentialities.

Procedure of Performance Appraisal:

1. Establish performance standards with employees

2. Mutually set Measurable Goals

3. Measure actual performance

4. Compare actual performance with standards

5. Discuss the Appraisal with the employee

6. If necessary, Take corrective Actions

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Methods of Performance Appraisal

Traditional Past oriented techniques

Graphic Rating Scales:

Graphic Rating Scale is a performance appraisal method in which an employee is rated

against a list of traits or behaviours which are deemed important and relevant for effective
employee performance and productivity

Straight Ranking Method:

Straight ranking method is the oldest and simplest method of performance appraisal. This
yields a ranking from best to worst of all individuals comprising the group..

Paired comparison Method:

Under this method, employees are arranged into pairs, and they are compared to each other. This
gives employers an idea about how each employee is doing in accordance with the same
standards.

Critical Incident Method:

a performance appraisal tool in which analyses the behavior of employee in certain events
in which either he performed very well and the ones in which he could have done better.

Group Appraisal Method\Forced Choice Method:

Under this method, employees are rated by an appraisal group, consisting of their
supervisor and three or four other supervisors who have some knowledge of their
performance.

Forced Distribution Method:

Forced distribution is a form of employee evaluation in which employees are ranked against
one another rather than performance standards, explains Success Dart.
Field Review Method.

An employee is not appraised by his direct superior but by another person usually from
the HR department. This is an appraisal by someone outside the assessee's own department,
usually someone from the corporate office or the HR department.

Modern Techniques:

Behaviorally Anchored Rating Scales:

A BARS is a tool for evaluating employees in a defined set of performance dimensions by

comparing their behaviors with specific behavior examples that anchor each performance level,
usually on a five-, seven- or nine-point scale.

Management by objectives:

Management by objectives (MBO) is the appraisal method where managers and employees
together identify, plan, organize, and communicate objectives to focus on during a specific
appraisal period.

Psychological Appraisal:

This method assesses the employees' potential for future performance rather than their past
one.

Human Accounting:

Human Resource Accounting is the process of identifying and measuring data about Human
Resources and communicating this information to the interested parties.

360 Degree Performance Appraisal

360 Degree Feedback is a system or process in which employees receive confidential,

anonymous feedback from the people who work around them. This typically includes the
employee's manager, peers, and direct reports.
 Assessment Centers:

An assessment center has often been defined as a variety of testing techniques designed to
allow candidates to demonstrate, under standardized conditions, the skills and abilities that
are most essential for success in a given job.

Advantages of performance appraisal

1. A systematic performance appraisal method helps the managers/supervisors to correctly

identify the performance of employees and also highlight the areas they need improvement in.
2. It helps the management place the right employee for the right kind of job. This is a win-win
situation for both the employee and the organization.
3. Potential employees who have done some exceptional work are often offered a promotion on
the basis of the result of performance evaluation.
4. This process is also effective in determining the effectiveness of the training programs
conducted by the organization for the employees. It can show managers how much an
employee has improved after the training. This will give actionable insights to the managers
on how to improve the programs.

Disadvantages of performance appraisal

1. If the attributes being used in this method are not correctly defined the data collected won’t be
useful.
2. Sometimes biases can be an issue in this system.
3. Some objective factors can be vague and difficult to pin down. There are no known scientific
methods to measure that.
4. Managers sometimes are not qualified enough to assess the abilities of the employees, thus be
detrimental to the growth of an employee.
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Performance Feedback:

Performance feedback refers to the information an employee receives concerning a rater's

evaluative judgment of the employee's performance and the way in which the information
is communicated.

Importance of performance Feedback:

1. Formal feedback: Formal feedback is planned and systematically scheduled into the
process. Usually associated with assessment tasks, formal feedback includes the likes of marking
criteria, competencies or achievement of standards, and is recorded for both the student and
organization as evidence.

2. Informal Feedback:

Informal feedback is ongoing, in-the-moment coaching given to employees (given by

managers outside of the formal review), providing them with a clear idea of their
performance throughout the year.
3. Positive Feedback:

Positive feedback is a process in which the end products of an action cause more of that
action to occur in a feedback loop

4. Negative Feedback: Negative feedback (or balancing feedback) occurs when some function
of the output of a system, process, or mechanism is fed back in a manner that tends to reduce the
fluctuations in the output, whether caused by changes in the input or by other disturbances.

Importance of Performance Feedback:

1. Weakness Identification.

2. Strenth Identification

3. Promotional Opportunities.

4. Training

5. Sustain quality workforce.

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Promotion

Meaning:

Promotion is a term which is very commonly used in every organisation.When a person moves to
a higher position because of his /her good performance, this movement from a lower to a higher
level position is called promotion.

Principles of Promotion:

Uniformiy, Cosistemcy, Fair and impartial, Planned activity, Follow up

Types of Promotion:

1. Horizontal Promotion: Horizontal promotions involve an increase in title and pay for an
employee, but with little to no change in responsibilities.

2. Vertical promotion Vertical promotions are what you typically think of when you think
“promotion.” This involves upward movement, more senior job titles, higher salaries, and
more responsibilities.

3. Dry promotion:: Dry promotions involve all the responsibility of a new title, but without
the benefits that come with it. In other words, the company will ask more of the employee, but
will not provide compensation or recognition in return.

4. Open Promotion: a sales promotion which is advertised widely and available to all who
wish to enter.

5. Closed Promotion: a sales promotion which is available only to a specific, high-potential

target; for example, a bank might wish to target graduating university students and send coupons
to them by mail.

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Basis of Promotion:

1. Promotion on merit basis: Merit indicates an employee's knowledge, skills, abilities and
efficiency measured from the employee's educational qualifications, experience, job performance
and training records.

.2. Promotion on Seniority basis: Seniority of an employee refers to the relative length of
service in an organization. When seniority is considered as the basis of promotion, the rule is to
promote the employee having the longest length of service, irrespective of the employee is
competent to occupy a higher post or not.

3. Promotion on Merit cum seniority Basis: Seniority-cum-merit means that given the
minimum necessary merit requisite for efficiency of administration, the senior though the
less meritorious shall have priority, the Supreme Court reiterated in a judgment delivered this
week.

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Demotion:

Definition:

Demotion is a reassignment of an individual to a job of lower rank and pay usually involving
lower level of difficulty and responsibility.

Reasons for demotion:

1. Lack of employee’s competence

2. Adverse working conditions

3. Demand or new and higher level skills

4. Demand for new and higher level skills

5. To maintain Discipline

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Transfer:

Transfer is a change in job where the new job is substantially equal to the old in terms of pay,
status and responsibilities.

**A transfer is a horizontal or lateral movement of an employee from one job, section,
department, shift, plant or position to another at the same or another place where his salary,
status and responsibility are the same.

Types of transfer:

General

General transfers are normally affected during a particular period of the year wherein all
employees having completed a given period of service in a post or at a place are involved.
Production

Production transfers are normally made from one department to another where the need for the
employee is more. This type of transfer is made to avoid lay-off of efficient and trained
employees by providing them with alternative positions in the same organization.
Replacement
These are transfers of long-service employees to similar jobs in other departments where they
replace or ‗bump ‘employees with shorter service. Replacement transfers are affected to replace
persons leaving the organization, due to resignations, retirements, dismissal or death.
Shift
Shift transfers are transfers of workers from one shift to another on the same type of work.
Workers generally dislike second or third shift as it affects their participation in community life.
Remedial
Remedial transfers are transfers made to remedy some situation primarily concerned with
employee on the job. 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
Versatility
The objective of these transfers is to increase the versatility of the employee by shifting him from
one job to another. In this way, the employee is provided a varied and broad job experience.
Punishment or Penal
This transfer is made as punishments to erring employees. Quite often the employees are
transferred from one place be another so that they are made to work in a situation of risks and
hazards.
Request Transfers
This type of transfer is done on the request of the employee. It is normally done on humanitarian
grounds to help the employee to look after his family and personal problems.
Mutual Transfers
When transfers turn out to be mutual between two employees they are refered to as mutual
transfers. Usually the organization concedes to request of employees for transfer if another
employee is willing to go to the other place.
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Separation:

Meaning:

Separation involves ending the employment relationship with an employee. Simply it can be
denoted by termination of employment. It is also known as employee turnover.

Methods of Separation:

I.Voluntary: Voluntary Separation means an employee whose employment has been terminated
and whose position is filled by another employee who was about to be or has been given a lay-

1. Resignation:

Resignation is considered involuntary or compulsory when the employer directs the

employee to resign on grounds of duty and indiscipline or face the disciplinary action
 2. Retirement:

Retirement refers to the time of life when one chooses to permanently leave the workforce
behind.
II.Involuntary:

Involuntary discharge means that an employer dismisses you from the company. Usually, the
employee will receive a termination letter. An employer may choose to release an employee for
reasons such as misconduct or unsatisfactory completion of job responsibilities.

1. Lay off:

A lay off is a temporary separation of the employee from his employer at the instance of
the latter without any prejudice to the former.

2. Dismissal or Discharge:

Dismissal is the termination of the services of an employee as a punitive measure for some
misconduct.

3. Retrenchment:

Retrenchment is a form of dismissal due to no fault of the employee, it is a process whereby the
employer reviews its business needs in order to increase profits or limit losses, which leads
to reducing its employees

4. Voluntary retirement:

VRS stands for voluntary retirement scheme, whereby an employee is offered to voluntarily
retire from services before the retirement date. The scheme allows companies to reduce the
strength of employees. It can be implemented by both the public and private sectors..4.

Benefits of Separation:

 Separation allows for the possibility of reconciliation.

 You can still file joint taxes.
 Legally separated couples maintain healthcare coverage if one spouse is the cardholder.
 You can avoid religious issues if divorce is not typically accepted within the couple's religion.

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Controlling

Definition: Controlling is checking current performance against pre determined standards

contained in the plans, with a view to ensure adequate progress and satisfactory performance.

Characteristics of controlling:

1. Pervasive function

2. Continous process

3. Purpose of control

4. Evaluates Performance

5. Closely related to Planning

Features of Controlling

 An effective control system has the following features:

 It helps in achieving organizational goals.

 Facilitates optimum utilization of resources.

 It evaluates the accuracy of the standard.

 It also sets discipline and order.

 Process of Controlling:

 Establishing standards: This means setting up of the target which needs to be achieved to meet
organizational goals eventually. Standards indicate the criteria of performance.

Control standards are categorized as quantitative and qualitative standards. Quantitative

standards are expressed in terms of money. Qualitative standards, on the other hand, includes
intangible items.

 Measurement of actual performance: The actual performance of the employee is measured

against the target. With the increasing levels of management, the measurement of performance
becomes difficult.

 Comparison of actual performance with the standard: This compares the degree of difference
between the actual performance and the standard.

 Taking corrective actions: It is initiated by the manager who corrects any defects in actual
performance.

Controlling process thus regulates companies’ activities so that actual performance conforms to
the standard plan. An effective control system enables managers to avoid circumstances which
cause the company’s loss.

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 Types of control

There are three types of control viz.,

1. Feedback Control: This process involves collecting information about a finished task, assessing
that information and improvising the same type of tasks in the future.

2. Concurrent control: It is also called real-time control. It checks any problem and examines it to
take action before any loss is incurred. Example: control chart.

3. Predictive/ feed forward control: This type of control helps to foresee problem ahead of
occurrence. Therefore action can be taken before such a circumstance arises..

Advantages of controlling

 Saves time and energy

 Allows managers to concentrate on important tasks. This allows better utilization of the
managerial resource.

 Helps in timely corrective action to be taken by the manager.

 Managers can delegate tasks so routinely chores can be completed by subordinates.

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Methods of controlling:

1. Traditional techniques: Traditional techniques refer to the techniques that have been used by
business organization for longer period of time and are still in use

1. Personal observation: Personal observation enables the manager to collect first-hand

information. It is the simplest method to control organizational activities is that managers take
round at the workplace and monitor the development of the work.

2. Statistical Reports and Analysis: Managers use periodic statistical reports to monitor and
evaluate nonfinancial performance. Such items a the number of new customer contract,
delinquent accounts, sales volume received, number of employees, and other statistic reports
vital to the department or business units are included.
3. Control though coding: Control Structures are the blocks that analyze variables and
choose directions in which to go based on given parameters. The basic Control Structures in
programming languages are: Conditionals (or Selection): which are used to execute one or more
statements if a condition is met.

4. Budgeting and budgetary control: Budgetary control is the process of preparing budgets for
the future period, comparing the standards set by the budget with the actual performance, finding
out the reasons for the differences in performance, and taking corrective actions

5. Production planning and control: Production planning and control is a predetermined

process which includes the use of human resource, raw materials, machines etc.

6. Operational audit: Operational audit is the type of audit service that the review is mainly
focused on the key processes, procedures, system, as well as internal control which the main
objective is to improve productivity, as well as efficiency and effectiveness of the operation.

7. Profit and loss account Profit and loss management is the way you handle your business's
profits and losses. Managing P&L means you work toward having greater revenues and fewer
expenses. You use your current profit and loss statement to determine your business's
profitability.

8. External audit control: External Audit is an audit function performed by the independent
body which is not a part of the organization.

9. Break even analysis: break-even analysis is a financial calculation that weighs the costs of
a new business, service or product against the unit sell price to determine the point at
which you will break even:

10. Financial statement analysis: Financial statement analysis is the process of analyzing a
company's financial statements for decision-making purposes. External stakeholders use it to
understand the overall health of an organization as well as to evaluate financial performance and
business value.
Modern Techniques:

The modern technique (abbreviation of modern technique of the pistol) is a method for using a
handgun for self-defense, originated by firearms expert Jeff Cooper. The modern technique
uses a two-handed grip on the pistol and brings the weapon to eye level so that the sights may be
used to aim at the target.

1. Return on Investment:

Return on investment (ROI) is calculated by dividing the profit earned on an investment by

the cost of that investment.

2. PERT AND CPM

Program Evaluation and Review Technique (PERT) is a method used to examine the tasks in a
schedule and determine a Critical Path Method variation (CPM). It analyzes the time
required to complete each task and its associated dependencies to determine the minimum time
to complete a project

The critical path method (CPM) is a step-by-step project management technique for process
planning that defines critical and non-critical tasks with the goal of preventing time-frame
problems and process bottlenecks.

3. MIS:

A management information system (MIS) is an information system used for decision-

making, and for the coordination, control, analysis, and visualization of information in an
organization.

4. Human resource Accounting:

What is human resource accounting with example?

Human Resource Accounting is the activity of knowing the cost invested for employees
towards their recruitment, training them, payment of salaries & other benefits paid and in
return knowing their contribution to organization towards it's profitability.
5. Quality control:

Quality control (QC) is a procedure or set of procedures intended to ensure that a

manufactured product or performed service adheres to a defined set of quality criteria or
meets the requirements of the client or customer. QC is similar to, but not identical with,
quality assurance (QA).

6. Total quality management:

Total Quality Management (TQM) is a management framework based on the belief that an
organization can build long-term success by having all its members, from low-level workers to
its highest ranking executives, focus on improving quality and, thus, delivering customer
satisfaction.

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Requirements of Effective Control

Control is necessary in every organization to ensure that everything is going properly.

1. Reflecting Organizational Needs

All control systems and techniques should reflect the jobs they are to perform.
There may be several control techniques which have general applicability such as,
budgeting, costing, etc.

2. Forward Looking

Control should be forward looking. Though many of the controls are

instantaneous, they must focus attention as to how future actions can be conformed
with plans.

3. Promptness in
 An ideal control system detects deviations promptly and forms the manager
concerned to take timely actions.

4. Pointing out Exceptions at Critical Points

Control should point exception at critical points and suggest whether action is to
be taken for deviations or not some deviations in the organizations have no impact
while others, through very little in quantity, may have great significance. Thus control
system should provide formation for critical point control and control on exception.

5. Objectives

The control should be objective, definite and determinable in a clear and positive
way. The standards of measurement should be quantified as far as possible. If they are
not quantifiable, such as training effectiveness etc. they must be determinable and
verifiable.

6. Flexible

Control should be flexible so that it remains workable in the case of changed

plans, unforeseen circumstances or outright failures.

7. Economical

Control should be economical and must be worth its costs. Economy is relative,
since the benefits vary with the importance of the activity, the size of the operation,
the expense that might be incurred in the absence of control and the contribution the
control system can make.
8. Simple
 Control system must be simple and understandable so that all managers can use it
effectively.

9. Motivating

Control system should motivate both controller and controlled.

10. Reflecting
The control system should reflect organizational pattern by focusing attention on
positions in organization structure through which deviations are corrected.
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Grievance:

Definition:

**Grievance is a written compliant filled by an employee and claiming unfair treatment.

**A grievance as a complaint of one or more workers with respect to wages and allowances,
conditions of work and interpretation of service, condition covering such areas as overtime,
leave, transfer, promotion, seniority, job assignment and termination of service.

Forms of Grievances:

 Factual: A factual grievance arises when the legitimate needs of employees remain
unfulfilled, e.g., wage hike has been agreed but not implemented citing various reasons.
 Imaginary: When an employee’s dissatisfaction is not because of any valid reason but
because of wrong perception, wrong attitude, or wrong information he has. Such a
situation may create an imaginary grievance.
 Disguised: An employee may have dissatisfaction for reasons that are unknown to
himself. If he/she is under pressure from family, friends, relatives, neighbors, he/she may
reach the work spot with a heavy heart.
Causes of Grievance

Grievances may occur for a number of reasons:

 Economic: Wage fixation, overtime, bonus, wage revision, etc. Employees may feel that
they are paid less when compared to others.
 Work Environment: Poor physical conditions of the workplace, tight production norms,
defective tools and equipment, poor quality of materials, unfair rules, lack of recognition,
etc.
 Supervision: Relates to the attitudes of the supervisor towards the employee such as
perceived notions of bias, favoritism, nepotism, caste affiliations, regional feelings, etc.
 Work group: Employee is unable to adjust with his colleagues; suffers from feelings of
neglect, victimization and becomes an object of ridicule and humiliation, etc.
 Miscellaneous: These include issues relating to certain violations in respect of
promotions, safety methods, transfer, disciplinary rules, fines, granting leave, medical
facilities, etc.
Redressal of grievances:

Essential prerequisites of a grievance redressal procedure

1. Conformity with statutory provisions- due consideration should be given to prevailing
legislation. • 2.unambiguous- should be clear and unambiguous.
3. simplicity- simple and short.
4. promptness- should be promptly handled and necessary action should be taking immediately.
5. training- supervisors and the union representatives should be properly trained in all aspects.
6. Follow up- personnel department should keep track of effectiveness and the functioning of
grievances handling.

Steps in grievance redressal procedure

•1. Identify grievance at the earliest: Those grievances of employees which are not being
disclosed must be recognized by the management
• 2. Define the grievance correctly:
After identifying the grievances, management should correctly define them.
• 3. Collect data: Every data collection, analysis of information must be done in order to
develop alternative solutions and select the best solution.
• 4. Prompt Redressal. : After the analysis of grievances it must be redressed immediately by
implementing the solution in a speedy manner.
• 5. Implement and follow up.: There should be follow up after the implementation of the
Solution to check the effectiveness’ of the solution.
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Implications of Grievances:
Grievances, if not identified and redressed, may adversely affect workers, managers, and the
organization.

The effects are the following:

1. on the production:
a. Low quality of production

b. Low productivity

c. Increase in the wastage of material, spoilage/leakage of machinery

d. Increase in the cost of production per unit

2. on the employees:
a. Increase in the rate of absenteeism and turnover

b. Reduction in the level of commitment, sincerity and punctuality

c. Increase in the incidence of accidents

d. Reduction in the level of employee morale.

3. on the managers:
a. Strained superior-subordinate relations.

b. Increase in the degree of supervision and control.

c. Increase in indiscipline cases

d. Increase in unrest and thereby machinery to maintain industrial peace

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