I-INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Unit Structure
1.0 Objectives
1.1 Introduction
1.2 Meaning and De nition of Human Resource Management
1.3 Components of HRM / Scope of HRM
1.4 Objectives of HRM
1.5 Role of HRM
1.6 HRM in the New Millennium
1.7 Summary
1.8 Self Assessment Questions

1.0 OBJECTIVES
After studying this unit, you will be able to:
• Understand the basic concepts of human resource management (HRM).
• Explain what human resource management is and how it relates to the management process.
• Provide an overview of functions of HRM.
• Describe how the major roles of HR management are being transformed.
• Explain the role of HRM in the present millennium.

1.1 INTRODUCTION
Human beings are social beings and hardly ever live and work in isolation. We always plan, develop
and manage our relations both consciously and unconsciously. The relations are the outcome of our
actions and depend to a great extent upon our ability to manage our actions. From childhood, each
and every individual acquire knowledge and experience on understanding others and how to behave
in each and every situations in life. Later we carry forward this learning and understanding in
carrying and managing relations at our workplace. The whole context of Human Resource
Management revolves around this core matter of managing relations at work place.
Since mid 1980’s Human Resource Management (HRM) has gained acceptance in both academic
and commercial circle. HRM is a multidisciplinary organizational function that draws theories and
ideas from various elds such as management, psychology, sociology and economics.
There is no best way to manage people and no manager has formulated how people can be managed
effectively, because people are complex beings with complex needs. Effective HRM depends very
much on the causes and conditions that an organizational setting would provide. Any Organization
has three basic components, People, Purpose, and Structure.
That predicted future is today’s reality. Most managers in public and private sector rms of all sizes
would agree that people truly are the organization’s most important asset. Having competent staff
on the payroll does not guarantee that a rm’s human resources will be a source of competitive
advantage. However in order to remain competitive, to grow, and diversify an organization must
ensure that its employees are quali ed, placed in appropriate positions, properly trained, managed
effectively, and committed to the rm’s success. The goal of HRM is to maximise employees’
contributions in order to achieve optimal productivity and effectiveness, while simultaneously
attaining individual objectives (such as having a challenging job and obtaining recognition), and
societal objectives (such as legal compliance and demonstrating social responsibility).
1.2 MEANING AND DEFINITION OF HUMAN RESOURCE MANAGEMENT
HRM is the study of activities regarding people working in an organization. It is a managerial
function that tries to match an organization’s needs to the skills and abilities of its employees.
De nitions of HRM
Human resources management (HRM) is a management function concerned with hiring, motivating
and maintaining people in an organization. It focuses on people in organizations. Human resource
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 management is designing management systems to ensure that human talent is used effectively and
ef ciently to accomplish organizational goals.
HRM is the personnel function which is concerned with procurement, development, compensation,
integration and maintenance of the personnel of an organization for the purpose of contributing
towards the accomplishments of the organization’s objectives. Therefore, personnel management is
the planning, organizing, directing, and controlling of the performance of those operative functions
(Edward B. Philippo).
According to the Invancevich and Glueck, “HRM is concerned with the most effective use of
people to achieve organizational and individual goals. It is the way of managing people at work, so
that they give their best to the organization”.
According to Dessler (2008) the policies and practices involved in carrying out the “people” or
human resource aspects of a management position, including recruiting, screening, training,
rewarding, and appraising comprises of HRM.
Generally HRM refers to the management of people in organizations. It comprises of the activities,
policies, and practices involved in obtaining, developing, utilizing, evaluating, maintaining, and
retaining the appropriate number and skill mix of employees to accomplish the organization’s
objectives. The goal of HRM is to maximize employees’ contributions in order to achieve optimal
productivity and effectiveness, while simultaneously attaining individual objectives (such as having
a challenging job and obtaining recognition), and societal objectives (such as legal compliance and
demonstrating social responsibility).
In short, Human Resource Management (HRM) can be de ned as,”the art of procuring, developing
and maintaining competent workforce to achieve the goals of an organization in an effective and
ef cient manner.”
Nature of HRM
HRM is a management function that helps manager’s to recruit, select, train and develop members
for an organization. HRM is concerned with people’s dimension in organizations.
The following constitute the core of HRM:
1. HRM Involves the Application of Management Functions and Principles. The functions and
principles are applied to acquiring, developing, maintaining and providing remuneration to
employees in an organization.
2. Decision Relating to Employees must be integrated. Decisions on different aspects of
employees must be consistent with other human resource (HR) decisions.
3. Decisions Made In uence the Effectiveness of an Organization. Effectiveness of an
organization will result in betterment of services to customers in the form of high quality
products supplied at reasonable costs.
4. HRM Functions are not con ned to Business Establishments Only but applicable to non-
business organizations such as education, health care, recreation and like.
HRM refers to a set of programmes, functions and activities designed and carried out in order to
maximize both employee as well as organizational effectiveness.
1.3 COMPONENTS OF HRM / SCOPE OF HRM
The scope of HRM is indeed vast. All major activities in the working life of a worker – from the
time of his or her entry into an organization until he or she leaves the organization comes under the
purview of HRM. The major HRM activities include HR planning, job analysis, job design,
employee hiring, employee and executive remuneration, employee motivation, employee
maintenance, industrial relations and prospects of HRM.
The scope of Human Resources Management extends to:
1. All the decisions, strategies, factors, principles, operations, practices, functions, activities
and methods related to the management of people as employees in any type of organization.
2. All the dimensions related to people in their employment relationships, and all the dynamics
that ow from it.
American Society for Training and Development (ASTD) conducted fairly an exhaustive study in
this eld and identi ed nine broad areas of activities of HRM. These are explained below:
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 1. Human Resource Planning: The objective of HR Planning is to ensure that the organization has
selected the right types of persons at the right time at the right place. It prepares human resources
inventory with a view to assess present and future needs, availability and possible shortages in
human resource. Thereupon, HR Planning forecast demand and supplies and identify sources of
selection. HR Planning develops strategies both long-term and short-term, to meet the man-power
requirement.
2. Design of Organization and Job: This is the task of laying down organization structure, authority,
relationship and responsibilities. This will also mean de nition of work contents for each position in
the organization. This is done by “job description”. Another important step is “Job speci cation”.
Job speci cation identi es the attributes of persons who will be most suitable for each job which is
de ned by job description.
3. Selection and Staf ng: This is the process of recruitment and selection of staff. This involves
matching people and their expectations with which the job speci cations and career path available
within the organization.
4. Training and Development: This involves an organized attempt to nd out training needs of the
individuals to meet the knowledge and skill which is needed not only to perform current job but
also to ful ll the future needs of the organization.
5. Organizational Development: This is an important aspect whereby “Synergetic effect” is
generated in an organization i.e. healthy interpersonal and inter-group relationship within the
organization.
6. Compensation and Bene ts: This is the area of wages and salaries administration where wages
and compensations are xed scienti cally to meet fairness and equity criteria. In addition labour
welfare measures are involved which include bene ts and services.
7. Employee Assistance: Each employee is unique in character, personality, expectation and
temperament. By and large each one of them faces problems everyday. Some are personal some are
of cial. In their case he or she remains worried. Such worries must be removed to make him or her
more productive and happy.
8. Union-Labour Relations: Healthy Industrial and Labour relations are very important for
enhancing peace and productivity in an organization. This is one of the areas of HRM.
9. Personnel Research and Information System: Knowledge on behavioral science and industrial
psychology throws better insight into the workers expectations, aspirations and behaviour.
Advancement of technology of product and production methods have created working environment
which are much different from the past. Globalization of economy has increased competition many
fold. Science of ergonomics gives better ideas of doing a work more conveniently by an employee.
Thus, continuous research in HR areas is an unavoidable requirement. It must also take special care
for improving exchange of information through effective communication systems on a continuous
basis especially on moral and motivation.
HRM is a broad concept; Personnel Management (PM) and Human Resource Development (HRD)
are a part of HRM.
1.4 OBJECTIVES OF HRM
The primary objective of HRM is to ensure the availability of competent and willing workforce to
an organization. The speci c objectives include the following:
Human capital: assisting the organization in obtaining the right number and types of employees to
ful ll its strategic and operational goals.
Developing organizational climate: helping to create a climate in which employees are encouraged
to develop and utilize their skills to the fullest and to employ the skills and abilities of the workforce
ef ciently.
Helping to maintain performance standards and increase productivity through effective job design;
providing adequate orientation, training and development; providing performance related feedback;
and ensuring effective two way communication.
Helping to establish and maintain a harmonious employer/employee relationship.
Helping to create and maintain a safe and healthy work environment.
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Developing programs to meet the economic, psychological, and social needs of the employees and
helping the organization to retain the productive employees.
Ensuring that the organization is in compliance with provincial/territorial and federal laws affecting
the workplace (such as human rights, employment equity, occupational health and safety,
employment standards, and labour relations legislation). To help the organization to reach its goals.
• To provide organization with well-trained and well-motivated employees
• To increase the employees satisfaction and self-actualization
• To develop and maintain the quality of work life
• To communicate HR policies to all employees.
• To help maintain ethical polices and behavior.
The above stated HRM objectives can be summarized under four speci c objectives: societal,
organizational, and functional and personnel.
Societal Objectives: seek to ensure that the organization becomes socially responsible to the needs
and challenges of the society while minimizing the negative impact of such demands upon the
organization. The failure of the organizations to use their resources for the society’s bene t in
ethical ways may lead to restriction.
Organizational Objectives: it recognizes the role of HRM in bringing about organizational
effectiveness. It makes sure that HRM is not a standalone department, but rather a means to assist
the organization with its primary objectives. The HR department exists to serve the rest of the
organization.
Functional Objectives: is to maintain the department’s contribution at a level appropriate to the
organization’s needs. Human resources are to be adjusted to suit the organization’s demands. The
department’s value should not become too expensive at the cost of the organization it serves.
Personnel Objectives: it is to assist employees in achieving their personal goals; at least as far as
these goals enhance the individual’s contribution to the organization. Personal objectives of
employees must be met if they are to be maintained, retained and motivated.
Table 1.1 HRM Objectives and Functions
Sr.No. HRM Objectives Supporting Functions

1 Societal Legal compliance Bene ts

Union- management relations
2 Organisational Human Resource Planning
Employee relations Selection

Training and development

Appraisal Placement
Assessment

3 Functional Appraisal Placement

Assessment
4 Personnel Training and development
Appraisal Placement
Compensation Assessment
1.5 ROLE OF HRM
The role of HRM is to plan, develop and administer policies and programs designed to make
optimum use of an organizations human resources. It is that part of management which is concerned
with the people at work and with their relationship within enterprises. Its objectives are: (a)
effective utilization of human resources, (b) desirable working relationships among all members of
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 the organizations, and (c) maximum individual development. Human resources function as
primarily administrative and professional. HR staff focused on administering bene ts and other
payroll and operational functions and didn’t think of themselves as playing a part in the rm’s
overall strategy.
HR professionals have an all encompassing role. They are required to have a thorough knowledge
of the organization and its intricacies and complexities. The ultimate goal of every HR person
should be to develop a linkage between the employee and organization because employee’s
commitment to the organization is crucial.
The rst and foremost role of HR personnel is to impart continuous education to the employees
about the changes and challenges facing the country in general and their organization in particular.
The employees should know about the balance sheet of the company, sales progress, and
diversi cation of plans, share price movements, turnover and other details about the company. The
HR professionals should impart such knowledge to all employees through small booklets, video
lms and lectures.
The primary responsibilities of Human Resource managers are:
1. To develop a thorough knowledge of corporate culture, plans and policies. To act as an
internal change agent and consultant
2. To initiate change and act as an expert and facilitator To actively involve in company’s
strategy formulation
3. To keep communication line open between the HRD function and individuals and groups
both within and outside the organization\
4. To identify and evolve HRD strategies in consonance with overall business strategy.
5. To facilitate the development of various organizational teams and their working relationship
with other teams and individuals.
6. To try and relate people and work so that the organization objectives are achieved ef ciently
and effectively.
7. To diagnose problems and determine appropriate solution particularly in the human resource
areas.
8. To provide co-ordination and support services for the delivery of HRD programmes and
services
9. To evaluate the impact of an HRD intervention or to conduct research so as to identify,
develop or test how HRD In general has improved individual and organizational
performance.
Different management gurus have deliberated different roles for the HR manager based on the
major responsibilities that they full ll in the organization. Few of the commonly accepted models
are enumerated below.
Pat Mc Lagan has suggested nine roles that are played by HR practitioners:
1. To bring the issues and trends concerning an organization’s external and internal people to
the attention of strategic decision makers and to recommend long term strategies to support
organizational excellence and endurance.
2. To design and prepare HR systems and actions for implementation so that they can produce
maximum impact on organizational performance and development.
3. To facilitate the development and implementation of strategies for transforming one’s own
organization by pursuing values and visions.
4. To create a positive relationship with the customer’s by providing them with the best
services; to utilize the resources to the maximum and to create commitment among the
people who help the organization to meet the customers needs whether directly connected or
indirectly connected to the organization.
5. To identify the learning needs hence to design and develop structured learning programmes
and materials to help accelerate learning for individuals and groups.
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 6. To enable the individuals and groups to work in new situations and to expend and change
their views so that people in power move from authoritarian to participative models of
leadership.
7. To help employees to assess their competencies, values and goals so that they can identify,
plan and implement development plans.
8. He also assists the individual employee to add values in the workplace and to focus on the
interventions and interpersonal skills for helping people change and sustain change.
9. He assesses the HRD practices and programmes and their impact and to communicate results
so that the organization and its people accelerate their change and development.
According to Dave Ulrich, HR play’s four key roles.
1. Strategic Partner Role-turning strategy into results by building organizations that create
value;
2. Change Agent Role- making change happen, and in particular, help it happen fast
3. Employees Champion Role- managing the talent or the intellectual capital within a rm
4. Administrative Role- trying to get things to happen better, faster and cheaper.
The role HR in organizations has undergone an extensive change and many organizations have
gradually oriented themselves from the traditional personnel management to a human resources
management approach. The basic approach of HRM is to perceive the organization as a whole. Its
emphasis is not only on production and productivity but also on the quality of life. It seeks to
achieve the paramount development of human resources and the utmost possible socio-economic
development.
CURRENT ROLE OF HR MANAGER
According to R.L Mathis and J. H. Jackson (2010) several roles can be ful lled by HR
management. The nature and extent of these roles depend on both what upper management wants
HR management to do and what competencies the HR staff have demonstrated. Three roles are
typically identi ed for HR:
1. Administrative Personnel practices Legal compliance forms and paperwork
Administrative Role of HR
The administrative role of HR management has been heavily oriented to administration and record
keeping including essential legal paperwork and policy implementation. Major changes have
happened in the administrative role of HR during the recent years. Two major shifts driving the
transformation of the administrative role are: Greater use of technology and Outsourcing.
Technology has been widely used to improve the administrative ef ciency of HR and the
responsiveness of HR to employees and managers, more HR functions are becoming available
electronically or are being done on the Internet using Web-based technology.
Increasingly, many HR administrative functions are being outsourced to vendors. This outsourcing
of HR administrative activities has grown dramatically in HR areas such as employee assistance
(counseling), retirement planning, bene ts administration, payroll services, and outplacement
services.
2. Operational Actions Managing employee relationship issues Employee advocate
Operational and Employee Advocate Role for HR
HR managers manage most HR activities in line with the strategies and operations that have been
identi ed by management and serves as employee “champion” for employee issues and concerns.
HR often has been viewed as the “employee advocate” in organizations. They act as the voice for
employee concerns, and spend considerable time on HR “crisis management,” dealing with
employee problems that are both work-related and not work-related. Employee advocacy helps to
ensure fair and equitable treatment for employees regardless of personal background or
circumstances.
Sometimes the HR’s advocate role may create con ict with operating managers. However, without
the HR advocate role, employers could face even more lawsuits and regulatory complaints than they
do now.
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 The operational role requires HR professionals to cooperate with various departmental and
operating managers and supervisors in order to identify and implement needed programs and
policies in the organization. Operational activities are tactical in nature. Compliance with equal
employment opportunity and other laws is ensured, employment applications are processed, current
openings are lled through interviews, supervisors are trained, safety problems are resolved, and
wage and bene t questions are answered. For carrying out these activities HR manager matches HR
activities with the strategies of the organization.
3. Strategic HR Organizational/business strategies HR strategic or planning Evaluation of HR
Effectiveness.
Strategic Role for HR
The administrative role traditionally has been the dominant role for HR. However, HR is needed so
that signi cantly less HR time and fewer HR staffs are used just for clerical work.
Differences between the operational and strategic roles exist in a number of HR areas. The strategic
HR role means that HR professionals are proactive in addressing business realities and focusing on
future business needs, such as strategic planning, compensation strategies, the performance of HR,
and measuring its results. However, in some organizations, HR often does not play a key role in
formulating the strategies for the organization as a whole; instead it merely carries them out through
HR activities.
Many executives, managers, and HR professionals are increasingly seeing the need for HR
management to become a greater strategic contributor to the “business” success of organizations.
HR should be responsible for knowing what the true cost of human capital is for an employer. For
example, it may cost two times key employees’ annual salaries to replace them if they leave.
Turnover can be controlled though HR activities, and if it is successful in saving the company
money with good retention and talent management strategies, those may be important contributions
to the bottom line of organizational performance.
However, even though this strategic role of HR is recognized, many organizations still need to make
signi cant progress toward ful lling it. Some examples of areas where strategic contributions can
be made by HR are:
1. Evaluating mergers and acquisitions for organizational “compatibility,” structural changes,
and staf ng needs.
2. Conducting workforce planning to anticipate the retirement of employees at all levels and
identify workforce expansion in organizational strategic plans.

3. Leading site selection efforts for new facilities or transferring operations to international
outsourcing locations based on workforce needs.
4. Instituting HR management systems to reduce administrative time, equipment, and staff by
using HR technology.
5. Working with executives to develop a revised sales compensation and incentives plan as new
products.
It is the era when for the competitive triumph of the organization there is a need to involve HRM
signi cantly in an integrated manner, which demands such capabilities from the HR specialists.
The role of HR shifted from a facilitator to a functional peer with competencies in other functions,
and is acknowledged as an equal partner by others. The HR is motivated to contribute to
organizational objectives of pro tability and customer satisfaction, and is seen as a vehicle for
realization of quality development. The department has a responsibility for monitoring employee
satisfaction, since it is seen as substitute to customer satisfaction.
According to McKinsey’s 7-S framework model HR plays the role of a catalyst for the organization.
According to this framework, effective organizational change is a complex relationship between
seven S’s. HRM (Structure and Systems) and the four Soft S’s (Style, Staff, Skills and Super-
ordinate Goals). Clearly, all the S’s have to complement each other and have to be aligned towards a
single corporate vision for the organization to be effective. It has to be realized that most of the S’s
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 are determined directly or indirectly by the way Human Resources are managed, and therefore,
HRM must be a part of the total business strategy.
1.6 HRM IN THE NEW MILLENNIUM
Human Resources have never been more indispensable than today. The competitive forces that we
face today will continue to face in the future demanding organizational excellence. In order to
achieve this extended quality, organization’s need to focus on learning, quality development,
teamwork, and re-engineering. These factors are driven by the way organizations implement things
and how employees are treated.
HR Can Help in Dispensing Organizational Excellence: To achieve this paradigm shift in the
organization excellence there is a need for organizations to reform the way in which work is carried
out by the Human Resource department. By designing an entirely new role and agenda that results
in enriching the organization’s value to customers, investors and employees, HR can help in
delivering organizational excellence. This can be carried out by helping line managers and senior
mangers in moving planning from the conference room to the market place and by becoming an
expert in the way work is organized and executed.
Pro tability through growth, technology, intellectual capital, and other competitive challenges that
the companies are facing while adjusting to uncontrollably challenging changes in business
environment. The novel role of HR is to rapidly turn strategy into action; to manage processes
intelligently and ef ciently; to maximize employee contribution and commitment and to construct
favorable conditions for awless change.
Human Resource Should be a Strategy Partner: HR should also become a partner in strategy
executions by propelling and directing serious discussions of how the company should be organized
to carry out its strategy.
Creating the conditions for this discussion involves four steps. First HR need to de ne an
organizational architecture by identifying the company’s way of doing business. Second, HR must
be held responsible for conducting an organizational audit. Third, HR as a strategic partner needs to
identify methods for restoring the parts of the organizational architecture that need it. Fourth and
nally, HR must take stock of its own work and set clear priorities. In their new role as
administrative experts they will need to shed their traditional image and still make sure all routine
work for the company is done well.
HR Accountability Should be Fixed to Ensure Employee Commitment: HR must be held
accountable for ensuring that employees feel committed to the organization and contribute fully.
They must take responsibility for orienting and training line management about the importance of
high employee morale and how to achieve it. The new HR should be the voice of employees in
management discussions. The new role for HR might also involve suggesting that more teams be
used on some projects or that employees be given more control over their own work schedules.
The New HR Must Become a Change Agent: The new HR must become a change agent, which is
building the organization’s capacity to embrace and capitalize on change. Even though they are not
primarily responsible for executing change it is the duty of the HR manager to make sure that the
organization carries out the changes framed for implementation.
Improving the Quality of HR: The most important thing that managers can do to drive the new
mandate for HR is to improve the quality of the HR staff itself. Senior executives must get beyond
the stereotypes of HR professionals as incompetent support staff and unleash HR’s full potential.
Change in Employment Practices: The balance sheet of an organization shows human resource as
an expense and not as a Capital. In the information age, it is perceived that the machines can do the
work more ef ciently than most people however; technology to work is dependent on people.
The challenges for Employment Practice in the New Millennium will require that there should be
strategic involvement of the people and labour-management partnerships as they both have to take
organization ahead.
Benchmarking Tool Must be Mastered by HR Professionals: HR professionals must master
benchmarking, which is a tool for continuous improvement directing the human side associated
with the strategic path adopted by the organization. Through this, HR department will start
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 appreciating the changes happening within and outside the environment while expanding the
knowledge about how to add value to decision making at the highest level of the organization.
Aligning Human Resources to Meet Better Strategic Objectives: Too often organizations craft their
strategy in a vacuum. Some organizations don’t even include key people during strategy
formulation resulting in lacunae between the actual problems and the solutions implemented as
critical inputs are not sought from those individuals who are supposed to implement the new
strategies.
A past CEO of Sony once said that organizations have access to the same technology and the same
information. The difference between any two organizations is the “people”- the human resource.
Empowering the workforce is an essential tool for aligning human resources with the achievement
of corporate objectives. It is the duty of HR manager to hire talented human resource and to provide
them with a positive environment where they will be able to utilize their skills and potentials and to
create an environment in which these individuals are comfortable taking risks.
Promote From Within and Invest in Employees: Promoting employees from within sends a
powerful message that the organization’s employees are valued. New blood and fresh ideas often
come from newcomers to the organization. To avoid stagnation of the rm, new ideas and
approaches are critical. Yet to improve employee morale, promoting individuals from within the
organization is essential. This communicates that the organization values their employees and
invests in their human resources.
Review the Recruitment and Selection Process: A key element of human resource planning is
ensuring that the supply of appropriate employees (with the right skill mix) is on board when
needed. This requires a proactive approach whereby the organization anticipates its needs well in
advance. It is important to identify the competencies being sought. That is, the criteria upon which
selection decisions are to be made should be decided in advance. A rm must identify those skill
sets required by employees to be successful. Charles O’Reilly suggests that companies should hire
for attitude (perhaps even more so than technical skills). That is, the t of the individual with the
values of the organization and the culture of the rm should also be considered when selecting
employees. This has been referred to as the person organization t. It is no longer enough to simply
consider the person’s t (and technical skill set) with the job. Part of the employee’s t with the
organization should focus on the core values and beliefs of the organization. This will increase
employees’ contributions to the overall success of the organization if they already embrace the core
values of the organization prior to their selection.
Communicate Mission and Vision: If employees are expected to contribute to the attainment of the
organization’s strategic objectives, they must understand what their role is. This can be achieved in
part by clearly communicating the mission and vision statements of the rm. The old adage is
certainly true. If a person does not know where he or she is going, any road will get him or her
there.
The mission communicates the identity and purpose of the organization. It provides a statement of
who the rm is and what their business is. Only those employees who understand this purpose can
contribute to the fullest
extent possible. The vision statement provides a picture of the future state of the rm. It should be a
stretch to attain. This keeps all the organization’s employees pulling in the same direction with a
common end point. It is much easier to align human resources with corporate objectives when these
employees are familiar with the mission and vision of the rm.
As the mission and vision statements are articulated, organizational members begin to more closely
embrace their very meaning on an individual level. These statements provide a road map leading
employees down the road to achieve organizational objectives. Employees then identify how they
can contribute their unique talents toward the attainment of these goals.
Use Teams to Achieve Synergy: Synergy can be concisely de ned as “two plus two equals ve”. In
other words, the whole is greater than the sum of the parts. So much more can be achieved as
people work together.
1.7 SUMMARY
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 It is critical that today’s organizations align their human resources to better meet strategic
objectives. A failure to do so results in wasted time, energy, and resources. Organizations are more
likely to achieve this alignment with their corporate objectives when they review their recruitment
and selection processes for t, communicate the mission and vision statements, use joint goal
setting, design an appropriate reward system, empower the workforce, promote and develop from
within, and use teams to achieve synergy. Human Resource Management is the management
function that helps the managers to plan, recruit, select, train, develop, remunerate and maintain
members for an organization. HRM has four objectives of societal, organizational, functional and
personal development. An organization must have set policies; de nite procedures and well de ned
principles relating to its personnel and these contribute to the effectiveness, continuity and stability
of the organization.
1.8 SELF ASSESSMENT QUESTIONS
1. De ne HRM? What are its functions and objectives?
2. Elaborate about the nature of HRM and its relevance in present
scenario.
3. Explain the role of HR manager in HRM.
4. “Human Resources have never been more indispensable than today”. Explain.
5. Write note on:
i. Nature of HRM
ii. Objectives of HRM
iii. Scope of HRM

II-HUMAN RESOURCE PLANNING

Unit Structure
2.0 Objectives
2.1 Introduction
2.2 Human Resource Planning (HRP)
2.3 Objectives of Human Resource Planning 2.4 Need for HRP in Organizations
2.4 Importance of HRP
2.6 Factors Affecting HRP
2.7 HRP Process
2.8 Requisites for Successful HRP
2.9 Barriers to Human HRP
2.10 Summary
2.11 Self Assessment Questions
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 2.0 OBJECTIVES
After studying this unit, you will be able to:
1. Understand the nature and need of HRP

2. Able to gain information about different factors that affect HRP

3. Realize the importance of human resource planning in current organizational scenario.

4. Understand the HRP process.

5. Know the pre requisites for successful HRP process.

2.1 INTRODUCTION
As told in the last chapter Human resource management has started to play a signi cant role in the
overall strategic development of the organization. At present HR strategies are designed in tune
with the overall business strategy of the organization. HR strategy should sub serve the interest of
the organization, translating rm’s goals and objectives into a consistent,
First part of Human resource strategy is HRP – Human Resource Planning. All other HR activities
like employee hiring, training and development, remuneration, appraisal and labour relations are
derived from HRP. HR planning is important in a wide variety of industries and rms. HR planning
affects what employers do when recruiting, selecting, and retaining people, and of course these
actions affect organizational results and success. The challenges caused by changing economic
conditions during recent year’s show why HR workforce planning should occur.
Staf ng an organization is an HR activity that is both strategic and operational in nature. As the HR
Headline indicates, HR planning is important in a wide variety of industries and rms. HR planning
affects what employers do when recruiting, selecting, and retaining people, and, of course these
actions affect organizational results and success. Human Resources planning mean different means
to different organizations. To some companies, human resources planning mean management
development. It involve helping executives to make better decisions, communicate more effectively,
and know more about the rm. The purpose of HRP is to make the manager a better equipped for
facing the present and future.
2.2 HUMAN RESOURCE PLANNING (HRP)
1. MEANING AND DEFINITION
Human resource planning is important for helping both organizations and employees to prepare for
the future. The basic goal of human resource planning is to predict the future and based on these
predictions, implement programmes to avoid anticipated problems. Very brie y humans resource
planning is the process of examining an organization’s or individual’s future human resource needs
for instance, what types of skills will be needed for jobs of the future compared to future human
resource capabilities (such as the types of skilled employees you already have) and developing
human resource policies and practices to address potential problems for example, implementing
training programmes to avoid skill de ciencies.
According to Vetter, “HRP is the process by which management determines how the organization
should move from its current man power position to desired manpower position. Through planning,
management strives to have the right time, doing things which result in both the organization and
individual receiving maximum long run bene ts”.
According to Gordon Mc Beath, “HRP is concerned with two things: Planning of manpower
requirements and Planning of Manpower supplies”.
2. Human Resource Planning :According to Beach, “HRP is a process of determining and assuming
that the organization will have an adequate number of quali ed persons, available at proper times,
performing jobs which meet the needs of the enterprise and which provides satisfaction for the
individuals involved”
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 Simply HRP can be understood as the process of forecasting an organization’s future demands for
and supply of the right type of people in the right number. In other words HRP is the process of
determining manpower needs and formulating plans to meet these needs.
3. PROCESS OF HRP

HRP is a Four-Phased Process:

The rst phase involves the gathering and analysis of data through manpower inventories and
forecasts.
The second phase consists of establishing manpower objectives and policies and gaining top
management approval of these.
The third phase involves designing and implementing plans and promotions to enable the
organization to achieve its manpower objectives.
The fourth phase is concerned with control and evaluation of manpower plans to facilitate progress
in order to bene t both the organization and the individual. The long run view means that gains may
be sacri ced in the short run for the future grounds. The planning process enables the organization
to identify what its manpower needs is and what potential manpower problems required current
action. This leads to more effective and ef cient performance.
4. NATURE OF HRP
Human resource planning is the process of analyzing and identifying the availability and the need
for human resources so that the organization can meet its objectives. The focus of HR planning is to
ensure that the organization has the right number of human resources, with the right capabilities, at
the right times, and in the right places. In HR planning, an organization must consider the
availability and allocation of people to jobs over long periods of time, not just for the next month or
the next year.
Present employees, and/or increasing the number of employees in certain areas. Factors to consider
include the current employees’ knowledge, skills, and abilities and the expected vacancies resulting
from retirements, promotions, transfers, and discharges. To do this, HR planning requires efforts by
HR professionals working with executives and managers.
2.3 OBJECTIVES OF HUMAN RESOURCE PLANNING
The basic objectives of HR Planning are:
1. To ensure optimum utilization of human resources currently available in the organization.
2. To assess or forecast the future skill requirement of the organization.
3. To provide control measures to ensure that necessary resources are
available as and when required.

A series of speci ed reasons are there that attaches importance to manpower planning and
forecasting exercises. They are elaborated below:
1. To link manpower planning with the organizational planning.
2. To determine recruitment levels.
3. To anticipate redundancies.
4. To determine optimum training levels.
5. To provide a basis for management development programs.
6. To cost the manpower.
7. To assist productivity bargaining.
8. To assess future accommodation requirement.
9. To study the cost of overheads and value of service functions.
10. To decide whether certain activity needs to be subcontracted, etc.
HRP exists as a part of planning process of business. This is the activity that aims to coordinate the
requirements for the availability of the different types of employers. The major activities are the
forecasting, (future requirements), inventory (present strength), anticipating (comparison of present
and future requirements) and planning (necessary program to meet the requirements).
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 The HR forecasts are responsible for estimating the number of people and the jobs needed by an
organization to achieve its objectives and realize its plans in the most ef cient and effective manner.
HR needs are computed by subtracting HR supplies or number of the employees available from
expected HR demands or number of people required to produce a desired level of outcome. The
objective of HR is to provide right personnel for the right work and optimum utilization of the
existing human resources.
The objectives of human resource planning may be summarized as below:
Forecasting Human Resources Requirements:
HRP is essential to determine the future needs of HR in an organization. In the absence of this plan
it is very dif cult to provide the right kind of people at the right time.
Effective Management of Change:
Proper planning is required to cope with changes in the different aspects which affect the
organization. These changes need continuation of allocation / reallocation and effective utilization
of HR in organization.
Realizing the Organizational Goals:
In order to meet the expansion and other organizational activities the organizational HR planning is
essential.
Promoting Employees:
HRP gives the feedback in the form of employee data which can be used in decision-making in
promotional opportunities to be made available for the organization.
Effective Utilization of HR:
The data base will provide the useful information in identifying surplus and de ciency in human
resources. The objective of HRP is to maintain and improve the organizational capacity to reach its
goals by developing appropriate strategies that will result in the maximum contribution of HR.
2.4 NEED FOR HRP IN ORGANIZATIONS
Major reasons for the emphasis on HRP at the Macro level:
1. Employment-Unemployment Situation: Though in general the number of educated
unemployment is on the rise, there is acute shortage for a variety of skills. This emphasizes on the
need for more effective recruitment and employee retention.
1. Technological Change: The changes in production technologies, marketing methods and
management techniques have been extensive and rapid. Their effect has been profound on the job
contents and job contexts. These changes have caused problems relating to redundancies, retention
and redeployment. All these suggest the need to plan manpower needs intensively and
systematically.
2. Demographic Change: The changing pro le of the work force in terms of age, sex, literacy,
technical inputs and social background has implications for HRP.
3. Skill Shortage: Unemployment does not mean that the labour market is a buyer’s market.
Organizations generally become more complex and require a wide range of specialist skills that are
rare and scarce. A problem arises in an organization when employees with such specialized skills
leave.
4. Governmental In uences: Government control and changes in legislation with regard to
af rmative action for disadvantages groups, working conditions and hours of work, restrictions on
women and child employment, causal and contract labour, etc. have stimulated the organizations to
be become involved in systematic HRP.
5. Legislative Control: The policies of “hire and re” have gone. Now the legislation makes it
dif cult to reduce the size of an organization quickly and cheaply. It is easy to increase but dif cult
to shed the fat in terms of the numbers employed because of recent changes in labour law relating to
lay-offs and closures. Those responsible for managing manpower must look far ahead and thus
attempt to foresee manpower problems.
6. Impact of the Pressure Group: Pressure groups such as unions, politicians and persons displaced
from land by location of giant enterprises have been raising contradictory pressure on enterprise
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 management such as internal recruitment and promotion, preference to employees’ children,
displace person, sons of soil etc.
7. Systems Approach: The spread of system thinking and advent of the macro computer as the part
of the on-going revolution in information technology which emphasis planning and newer ways of
handling voluminous personnel records.
8. Lead Time: The log lead time is necessary in the selection process and training and deployment
of the employee to handle new knowledge and skills successfully.
2.5 IMPORTANCE OF HRP
HRP is the subsystem in the total organizational planning. Organizational planning includes
managerial activities that set the company’s objective for the future and determines the appropriate
means for achieving those objectives. The importance of HRP is elaborated on the basis of the key
roles that it is playing in the organization.
1. Future Personnel Needs: Human resource planning is signi cant because it helps to determine the
future personnel needs of the organization. If an organization is facing the problem of either surplus
or de ciency in staff strength, then it is the result of the absence of effecting HR planning. All
public sector enterprises nd themselves overstaffed now as they never had any planning for
personnel requirement and went of recruitment spree till late 1980’s. The problem of excess staff
has become such a prominent problem that many private sector units are resorting to VRS
‘voluntary retirement scheme’. The excess of labor problem would have been there if the
organization had good HRP system. Effective HRP system will also enable the organization to have
good succession planning.
2. Part of Strategic Planning: HRP has become an integral part of strategic planning. HRP provides
inputs in strategy formulation process in terms of deciding whether the organization has got the
right kind of human resources to carry out the given strategy. HRP is also necessary during the
implementation stage in the form of deciding to make resource allocation decisions related to
organization structure, process and human resources. In some organizations HRP play as signi cant
role as strategic planning and HR issues are perceived as inherent in business management.
3. Creating Highly Talented Personnel: Even though India has a great pool of educated unemployed,
it is the discretion of HR manager that will enable the company to recruit the right person with right
skills to the organization. Even the existing staff hope the job so frequently that organization face
frequent shortage of manpower. Manpower planning in the form of skill development is required to
help the organization in dealing with this problem of skilled manpower shortage.
4. International Strategies: An international expansion strategy of an organization is facilitated to a
great extent by HR planning. The HR department’s ability to ll key jobs with foreign nationals and
reassignment of employees from within or across national borders is a major challenge that is being
faced by international business. With the growing trend towards global operation, the need for HRP
will as well will be the need to integrate HRP more closely with the organizations strategic plans.
Without effective HRP and subsequent attention to employee recruitment, selection, placement,
development, and career planning, the growing competition for foreign executives may lead to
expensive and strategically descriptive turnover among key decision makers.
5. Foundation for Personnel Functions: HRP provides essential information for designing and
implementing personnel functions, such as recruitment, selection, training and development,
personnel movement like transfers, promotions and layoffs.
6. Increasing Investments in Human Resources: Organizations are making increasing investments in
human resource development compelling the increased need for HRP. Organizations are realizing
that human assets can increase in value more than the physical assets. An employee who gradually
develops his / her skills and abilities become a valuable asset for the organization. Organizations
can make investments in its personnel either through direct training or job assignment and the rupee
value of such a trained, exible, motivated productive workforce is dif cult to determine. Top
of cials have started acknowledging that quality of work force is responsible for both short term
and long term performance of the organization.
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 7. Resistance to Change: Employees are always reluctant whenever they hear about change and
even about job rotation. Organizations cannot shift one employee from one department to another
without any speci c planning. Even for carrying out job rotation (shifting one employee from one
department to another) there is a need to plan well ahead and match the skills required and existing
skills of the employees.
8. Uniting the Viewpoint of Line and Staff Managers: HRP helps to unite the viewpoints of line and
staff managers. Though HRP is initiated and executed by the corporate staff, it requires the input
and cooperation of all managers within an organization. Each department manager knows about the
issues faced by his department more than anyone else. So communication between HR staff and line
managers is essential for the success of HR Planning and development.
9. Succession Planning: Human Resource Planning prepares people for future challenges. The’
stars’ are picked up, trained, assessed and assisted continuously so that when the time comes such
trained employees can quickly take the responsibilities and position of their boss or seniors as and
when situation arrives.
Other Bene ts:
• HRP helps in judging the effectiveness of manpower policies and programmes of management.
• It develops awareness on effective utilization of human resources for the overall development of
organization.
• It facilitates selection and training of employees with adequate knowledge, experience and
aptitudes so as to carry on and achieve the organizational objectives.
• HRP encourages the company to review and modify its human resource policies and practices and
to examine the way of utilizing the human resources for better utilization.

2.6 FACTORS AFFECTING HRP

HRP is in uenced by several factors. The most important of the factors that affect HRP are
explained below:

Type and Strategy of the Organization: Type of the organization determines the production
processes involve, number and type of staff needed and the supervisory and managerial personnel
required. HR need is also de ned by the strategic plan of organization. If the organization has a plan
for organic growth then organization need to hire additional employees. On the other hand If the
organization is going for mergers and acquisition, then organization need to plan for layoffs, as
mergers can create, duplicate or overlap positions that can be handled more ef ciently with fewer
employees.

Organization rst decides whether to be reactive or proactive in HRP. Organizations either carefully
anticipate the needs and systematically plan to ll the need in advance (proactive) or can simply
react to the needs as they arise (reactive).
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 Fig. 2.1: Factors Affecting HRP.
The nature of HR plan is also decided upon the formality of the plan. It can decide to have an
informal plan that lies mostly in the minds of the managers and personnel staff or can have a formal
plan which is properly documented in writing.
The nature of HR plan is also depended upon the exibility that is practiced in the organization. HR
plan should have the ability to anticipate and deal with contingencies. Organizations frame HRP in
such a way that it can contain many contingencies, which re ect different scenarios thereby
assuring that the plan is exible and adaptable.
Figure2.1 summarizes the ve factors that in uencean organization while framing its strategic HRP.
Organizational Growth Cycles and Planning: All organizations pass through different stages of
growth from the day of its inception. The stage of growth in which an organization is, determines
the nature and extends of HRP. Small organizations in the earlier stages of growth may not have
well de ned personnel planning. But as the organization enters the growth stage they feel the need
to plan its human resource. At this stage organization gives emphasis upon employee development.
But as the organization reaches the mature stage it experience less exibility and variability
resulting in low growth rate. HR planning becomes more formalized and less exible and less
innovative and problem like retirement and possible retrenchment dominate planning.
Environmental Uncertainties: Political, social and economic changes affect all organizations and the
uctuations that are happening in these environments affect organizations drastically. Personnel
planners deal with such environmental uncertainties by carefully formulating recruitment, selection,
training and development policies and programmes. The balance in the organization is achieved
through careful succession planning, promotion channels, layoffs, exi time, job sharing,
retirement, VRS and other personnel related arrangements.
During the declining stage of the organization HRP takes a different focus like planning to do the
layoff, retrenchment and retirement. In declining situation planning always becomes reactive in
nature towards the nancial and sales distress faced by the company.
Time Horizons: HR plans can be short term or long term. Short term plans spans from six months to
one year, while long term plans spread over three to twenty years. The extent of time period
depends upon the degree of uncertainty that is prevailing in an organizations environment. Greater
the uncertainty, shorter the plan time horizon and vice versa.
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 Type and Quality of information: The information used to forecast personnel needs originates from
a multitude of sources. The forecast depends to a large extent upon the type of information and the
quality of data that is available to personnel planners. The quality and accuracy of information
depend upon the clarity with which the organizational decision makers have de ned their strategy,
structure, budgets, production schedule and so on.
General Speci c
Strategic
Information Organizational Information Necessary for
Information HRP
Product mix Organizational structure Job analysis Skills
Customer mix Information ows inventories
Operating and capital
Competitive budgets Management inventories
emphasis
Functional area objectives
Geographic limits Production schedules Available training and
of market Distribution channels development programmes
Sales territories
Production processes Recruitment sources

Labour market analysis

Compensation
Level of technology programmes
Planning horizons Constitutional provisions
and labour laws
Retirement plans
Turnover data.
Table 2.2: Levels of HRP Information
Source: Leap & Crino, Personnel/ Human Resource Management, p. 161.
Nature of Jobs Being Filled: Personnel planners need to be really careful with respect to the nature
of the jobs being lled in the organization. Employees belonging to lower level who need very
limited skills can be recruited hastily but, while hiring employees for higher posts, selection and
recruitment need to be carried out with high discretion. Organization need to anticipate vacancies
far in advance as possible, to provide suf cient time to recruit suitable candidate.
Outsourcing: Several organizations outsource part of their work to outside parties in the form of
subcontract. Outsourcing is a regular feature both in the public sector as well as in the private sector
companies. Many of the organizations have surplus labour and hence instead of hiring more people
they go for outsourcing. Outsourcing is usually done for non critical activities. Outsourcing of non
critical activities through subcontracting determines HRP.
2.7 HRP PROCESS
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 HRP effectively involves forecasting personnel needs, assessing personnel supply and matching
demand – supply factors through personnel related programmes. The HR planning process is
in uenced by overall organizational objectives and environment of business.

Fig. 2.2: The HRP Process

Following are the important steps in the process of HRP:
Environmental Scanning:
It refers to the systematic monitoring of the external forces in uencing the organization. The
following forces are essential for pertinent HRP -
1. Economic factors, including general and regional conditions.

2. Technological changes

3. Demographic changes including age, composition and literacy,

4. Political and legislative issues, including laws and administrative rulings Social concerns,
including child care, educational facilities and priorities.

By scanning the environment for changes that will affect an organization, managers can anticipate
their impact and make adjustments early.

Organizational Objectives and Policies:

HR plan is usually derived from the organizational objectives. Speci c requirements in terms of
numbers and characteristics of employees should be derived from organizational objectives.
Once the organizational objectives are speci ed, communicated and understood by all concerned,
the HR department must specify its objective with regard to HR utilization in the organization.
HR Demand Forecast:
Demand forecasting is the process of estimating the future quantity and quality of people required
to meet the future needs of the organization. Annual budget and long-term corporate plan when
translated into activity into activity form the basis for HR forecast.
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 For e.g. in the case of a manufacturing company, the sales budget will form the basis for production
plan giving the number and type of products to be produced in each period. This will form the basis
upon which the organization will decide the number of hours to be worked by each skilled category
of workers. Once the number hours required is available organization can determine the quality and
quantity of personnel required for the task.
Demand forecasting is in uenced by both internal factors and external factors: external factors
include-competition, economic climate, laws and regulatory bodies, changes in technology and
social factors whereas internal factors are budget constraints, production level, new products and
services, organizational structure and employee separations.
Demand forecasting is essential because it helps the organization to:
1. Quantify the jobs, necessary for producing a given number of goods,

2. Determine the nature of staff mix required in the future,

3. Assess appropriate levels in different parts of organization so as to avoid unnecessary costs to

the organization,

4. Prevent shortages of personnel where and when, they are needed by the organization.

5. Monitor compliances with legal requirements with regard to reservation of jobs.

Techniques like managerial judgment, ratio trend analysis, regression analysis, work study
techniques, Delphi techniques are some of the major methods used by the organization for demand
forecasting.

HR Supply Forecast:
Supply forecast determines whether the HR department will be able to procure the required number
of workers. Supply forecast measures the number of people likely to be available from within and
outside an organization, after making allowance for absenteeism, internal movements and
promotions, wastage and changes in hours, and other conditions of work.
Supply forecast is required because it:
1. Helps to quantify the number of people and positions expected to be available in future to
help the organization realize its plans and meet its objectives.

2. Helps to clarify the staff mixes that will arise in future.

3. It assesses existing staf ng in different parts of the organization.

4. It will enable the organization to prevent shortage of people where and when they are most
needed.

5. It also helps to monitor future compliance with legal requirements of job reservations.

Supply analysis covers the existing human resources, internal sources of supply and external
sources of supply.

HR Programming:
Once an organization’s personnel demand and supply are forecasted the demand and supply need to
be balanced in order that the vacancies can be lled by the right employees at the right time.




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 HR Plan Implementation:
HR implementation requires converting an HR plan into action. A series of action are initiated as a
part of HR plan implementation. Programmes such as recruitment, selection and placement, training
and development, retraining and redeployment, retention plan, succession plan etc when clubbed
together form the implementation part of the HR plan.

Control and Evaluation:

Control and evaluation represent the nal phase of the HRP process. All HR plan include budgets,
targets and standards. The achievement of the organization will be evaluated and monitored against
the plan. During this nal phase organization will be evaluating on the number of people employed
against the established (both those who are in the post and those who are in pipe line) and on the
number recruited against the recruitment targets. Evaluation is also done with respect to
employment cost against the budget and wastage accrued so that corrective action can be taken in
future.

2.8 REQUISITES FOR SUCCESSFUL HRP

• HRP must be recognized as an integral part of corporate planning

• Support of top management is essential

• There should be some centralization with respect to HRP responsibilities in order to have
co-ordination between different levels of management.

• Organization records must be complete, up to date and readily available.

• Techniques used for HR planning should be those best suited to the data available and
degree of accuracy required.

• Data collection, analysis, techniques of planning and the plan themselves need to be
constantly revised and improved in the light of experience.

2.9 BARRIERS TO HRP

Human Resource Planners face signi cant barriers while formulating an HRP. The major barriers
are elaborated below:

1. HR practitioners are perceived as experts in handling personnel matters, but are not experts
in managing business. The personnel plan conceived and formulated by the HR practitioners
when enmeshed with organizational plan, might make the overall strategic plan of the
organization ineffective.

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

Strategic planning efforts have long been oriented towards nancial forecasting, often to the
exclusion of other types of information. Financial forecasting takes precedence over HRP.

3. Con ict may exist between short term and long term HR needs. For example, there can be a
con ict between the pressure to get the work done on time and long term needs, such as
preparing people for assuming greater responsibilities. Many managers are of the belief that
HR needs can be met immediately because skills are available on the market as long as
wages and salaries are competitive. Therefore, long times plans are not required, short
planning are only needed.
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 4. There is con ict between quantitative and qualitative approaches to HRP. Some people view
HRP as a number game designed to track the ow of people across the department. Others
take a qualitative approach and focus on individual employee concerns such as promotion
and career development. Best result can be achieved if there is a balance between the
quantitative and qualitative approaches.

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

department function. Successful planning needs a co-ordinate effort on the part of operating
managers and HR personnel.

2.10 SUMMARY
Today, human resource planning is viewed as the way management comes to grasp the ill-de ned
and tough-to-solve human resource problems facing an organization. Human resource planning is
the process of determining the human resources required by the organization to achieve its goals.
Human resource planning also looks at broader issues relating to the ways in which people are
employed and developed, in order to improve organizational effectiveness. HRP is a decision
making process that combines activities such as identifying and acquiring the right number of
people with the proper skills, motivating them to achieve high performance and creating interactive
links between business objectives are resource planning activities. HRP sets out requirements in
both quantitative and qualitative terms. Accurate manpower plan is a dream. A common error of
many managers is to focus on the organization’s short term replacement needs. Any human resource
plan, if it is to be effective, must be derived from the long term plans and strategies of the
organization. The various approaches to human resource planning under which a number of major
issues and trends in today’s work plan that will affect organization and employees are (1) Examine
external and internal issues, (2) Determining future organizations capabilities, (3) Determining
future organizational needs, and (4) Implementing human resources programmes to address
anticipated problems. Although change is occurring very rapidly in the work world it is important
for both organizations and employees to monitor issues and events continuously and consider their
potential effects.

2.11 SELF ASSESSMENT QUESTIONS

1. Describe the various forecasting techniques and how these techniques are being used in
human resource planning.

2. Explain the role of HR professional in human resource planning process in organizations.

3. Explain the barriers to HRP. Bring out the requisites for effective planning.

4. De ne HRP. Explain the need and importance of HRP.

5. Discuss in detail the process of HRP.

6. Elaborate the factors affecting on HRP.

7. Write note on:

Objectives of HRP
Importance of HRP
Need of HRP
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 III-JOB ANALYSIS
Unit Structure
3.0 Objectives
3.1 Introduction
3.2 Job Analysis De ned
3.3 Important of Job Analysis
3.4 Steps in Job Analysis
3.5 Methods for Collecting Job Analysis Data 3.6 Job Description
3.7 Writing Job Description
3.8 Job Speci cation
3.9 Job Design
3.10 Methods of Job Design
3.11 Summary
3.12 Self Assessment Questions
3.0 OBJECTIVES
After completing this unit, you will be able to:
• De ne job analysis.

• Understand the basic steps in a Job analysis.

• Identify the major methods of collecting Job analysis data.

• Recognize the major elements of job descriptions

• Explain how to prepare job descriptions and job speci cation and their use.

• Point out and explain job design and its various methods

• Distinguish between job enlargement and job enrichment.

3.1 INTRODUCTION
Manpower planning is concerned with determination of quantitative and qualitative requirements of
manpower for the organization. Determination of manpower requirements is one of the most
important problems in manpower planning. Job analysis and job design, provide this knowledge.
Before going through the mechanism of job analysis and job design, it is relevant to understand the
terms which are used in job analysis and job design.
Job: A job may be de ned as a “collection or aggregation of tasks, duties and responsibilities which
as a whole, are regarded as a regular assignment to individual employees,” and which is different
from other assignments, In other words, when the total work to be done is divided and grouped into
packages, we call it a “job.” Each job has a de nite title based upon standardized trade
speci cations within a job; two or more grades may be identi ed, where the work assignment may
be graded according to skill, the dif culty of doing them, or the quality of workmanship. Thus, it
may be noted that a position is a “collection o tasks and responsibilities regularly assigned to one
person;” while a job is a “group of position, which involve essentially the same duties,
responsibilities, skill and knowledge.” A position consists of a particular set of duties assigned to an
individual.
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 Decenzo and P. Robbins de nes other terms as follows:
Task: It is a distinct work activity carried out for a distinct purpose. Duty: It is a number of tasks.
Position: It refers to one or more duties performed by one person in an organization, There are at
least as many positions as there are workers in the organization; vacancies may create more
positions than employees.
Job: It is a type of position within the organization.
Job Family: It is group of two or more jobs that either call for similar worker characteristics or
contain parallel work tasks as determined by job analysis.
Occupation: It is a group of similar jobs found across organizations. Career: It represents a sequence
of positions, jobs, or occupations that a person has over his working life.
3.2 JOB ANALYSIS DEFINITION
Developing an organizational structure, results in jobs which have to be staffed. Job analysis is the
procedure through which you determine the duties and nature of the jobs and the kinds of people (in
terms of skills and experience) who should be hired for them.’ It provides you with data on job
requirements, which are then used for developing job descriptions (what the job entails) and job
speci cations (what kind of people to hire for the job). Some of the de nitions of job analysis ate
given as follows, to understand the meaning of the term more clearly:
According to Michael L. Jucius, “Job analysis refers to the process of studying the operations,
duties and organizational aspects of jobs in order to derive speci cations or as they called by some,
job descriptions.”
According to DeCenzo and P. Robbins, “A job analysis is a systematic exploration of the activities
within a job. It is a basic technical procedure, one that is used to de ne the duties, responsibilities,
and accountability of a job.”
According to Herbert G Herman “A job is a collection of tasks that can be performed by a single
employee to contribute to the production of some product or service provided by the organization.
Each job has certain ability requirements (as well as certain rewards) associated with it. Job analysis
process used to identify these requirements.”
Flippo has offered a more comprehensive de nition of job analysis as,
“Job analysis is the process of studying and collecting information relating to the operations and
responsibilities of a speci c job. The immediate products of the analysis are job descriptions and
job speci cations”
Thus, job analysis involves the process of identifying the nature of a job (job description) and the
qualities of the likely job holder (job speci cation).
3.3 IMPORTANCE OF JOB ANALYSIS
The job analysis is used as a basis of several interrelated personnel management activities.
Following points elaborates the importance of Job Analyses:
Achievement of Goals:
Weather and Davis have stated, “Jobs are at the core of every organization’s productivity, if they are
designed well and done right, the organization makes progress towards its objectives. Otherwise,
productivity suffers, pro ts fall, and the organization is less able to meet the demands of society,
customer, employees, and other with a stake in its success.”
Organizational Design:
Job analysis will be useful in classifying the jobs and the interrelationships among the jobs. On the
basis of information obtained through job analysis, sound decisions regarding hierarchical positions
and functional differentiation can be taken and this will improve operational ef ciency.
Organization and Manpower Planning:
It is helpful in organization planning, for it de nes labour in concrete terms and co-ordinates the
activities of the work force, and clearly divides duties and responsibilities.
Recruitment and Selection:
Job analysis provides you with information on what the job entails and what human requirements
are required to carry out these activities. This information is the basis on which you decide what
sort of people to recruit and hire.
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 Placement and Orientation:
Job analysis helps in matching the job requirements with the abilities, interests and aptitudes of
people. Jobs will be assigned to persons on the basis of suitability for the job. The orientation
programme will help the employee in learning the activities and understanding duties that are
required to perform a given job more effectively.
Employee Training and Management Development:
Job analysis provides the necessary information to the management of training and development
programmes. It helps in to determine the content and subject matter of in training courses. It also
helps in checking application information, interviewing test results and in checking references.
Job Evaluation and Compensation:
Job evaluation is the process of determining the relative worth of different jobs in an organization
with a view to link compensation, both basic and supplementary, with the worth of the jobs. The
worth of a job is determined on the basis of job characteristics and job holder characteristics. Job
analysis provides both in the forms of job description and job speci cation.
Performance Appraisal:
Performance appraisal involves comparing each employee’s actual performance with his or her
desired performance. Through job analysis industrial engineers and other experts determine
standards to be achieved and speci c activities to be performed.
Health and Safety:
It provides an opportunity for identifying hazardous conditions and unhealthy environmental factors
so that corrective measures may be taken to minimize and avoid the possibility of accidents.
Employee Counseling:
Job analysis provides information about career choices and personal limitation. Such information is
helpful in vocational guidance and rehabilitation counseling. Employees who are unable to cope
with the hazards and demands of given jobs may be advised to opt for subsidiary jobs or to seek
premature retirement.
3.4 STEPS IN JOB ANALYSIS
The six steps of job analysis are explained below:
Determine the Use of the Job Analysis Information: Start by identifying the use to which the
information will be put, since this will determine the type of data you collect and the technique you
use to collect them.
Collection of Background Information: According to Terry, “The make-up of a job, its relation to
other jobs, and its requirements for competent performance are essential information needed for a
job evaluation. This information can be had by reviewing available background information such as
organization charts (which show how the job in question relates to other jobs and where they t into
the overall organization); class speci cations (which describe the general requirements of the class
of job to which the job under analysis belongs); and the existing job descriptions which provide a
starting point from which to build the revised job description”.
Selection of Jobs for Analysis: To do job analysis is a costly and time consuming process. It is
hence, necessary to select a representative sample of jobs for purposes of analysis. Priorities of
various jobs can also be determined. A job may be selected because it has undergone undocumented
changes in job content. The request for analysis of a job may originate with the employee,
supervisor, or a manager.
When the employee requests an analysis it is usually because new job demands have not been
re ected in changes in wages. Employee’s salaries are, in part, based upon the nature of the work
that they perform. Some organizations establish a time cycle for the analysis of each job. For
example: A job analysis may be required for all jobs every three years. New jobs must also be
subjected to analysis.
Collection of Job Analysis Data: Job data on features of the job, requited employee quali cation and
requirements, should be collected either from the employees who actually perform a job; or from
other employees (such as foremen or supervisors) who watch the workers doing a job and there by
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 acquire knowledge about it; or from the outside persons, known as the trade job analysis who are
appointed to watch employees performing a job. The duties of such a trade job analyst are:
To outline the complete scope of a job and to consider all the physical and mental activities
involved in determining what the worker does.

To nd out why a worker does a job; and for this purpose he studies why each task is essential for
the overall result; and
To increase the skill factor which may be needed in the worker to differentiate between jobs and
establish the extent of the dif culty of any job.
Processing the Information: Once job analysis information has been collected, the next step is to
place it in a form that will make it useful to those charged with the various personnel functions.
Several issues arise with respect to this. First, how much detail is needed? Second, can the job
analysis information be expressed in quantitative terms? These must be considered properly.
Preparing Job Descriptions and Job Classi cations: Job information which has been collected must
be processed to prepare the job description form. It is a statement showing full details of the
activities of the job. Separate job description forms may be used for various activities in the job and
may be compiled later on. The job analysis is made with the help of these description forms. These
forms may be used as reference for the future.
Developing Job Speci cations: Job speci cations are also prepared on the basis of information
collected. It is a statement of minimum acceptable qualities of the person to be placed on the job. It
speci es the standard by which the qualities of the person are measured. Job analyst prepares such
statement taking into consideration the skills required in performing the job properly. Such
statement is used in selecting a person matching with the job.
3.4 METHODS FOR COLLECTING JOB ANALYSIS DATA
As discussed earlier, information is to be collected for job analysis. Such information may be
collected by the trained job analysis, superiors concerned and job holders themselves. Job
information is collected through the following methods:
Participant Diary/Logs: Workers can be to keep participant diary/long or lists of things they do
during the day. For every activity he or she engages in, the employee records the activity (along
with the time) in a log. This can provide you with a very comprehensive picture of the job,
especially when it’s supplemented with subsequent interviews with the worker and his or her
supervisor. This method provides more accurate information if done faithfully. However, it is quite
time consuming. Further, each job holder may maintain records according to his own way which
presents problems in analysis at later stage. Therefore, it has limited application.
Interview: There are three types of interviews you can use to collect job analysis data: individual
interviews with each employee; group interviews with groups of employees having the same job;
and supervisor interviews with one or more supervisors who are thoroughly knowledgeable about
the job being analyzed. The group interview is used when a large number of employees are
performing similar or identical work, since this can be a quick and inexpensive way of learning
about the job. As a rule, the worker’s immediate supervisor would attend the group session; if not,
you should interview the supervisor separately to get that person’s perspective on the duties and
responsibilities of the job.
Critical Incidents: In this method, job holders are asked to describe incidents concerning the job on
the basis of their past experience. The incidents so collected are analyzed and classi ed according to
the job areas they describe, A fairly picture of actual job requirements can be obtained by
distinguishing between effective and ineffective behaviors of workers on the job. However, this
method is time consuming. The analyst requires a high degree of skill to analyze the contents of
descriptions given by workers.
Technical Conference Method: This method utilizes supervisors with extensive knowledge of the
job. Here, speci c characteristics of a job are obtained from the “experts.” Although it is a good
data gathering method, it often overlooks the incumbent worker’s perception about what they do on
their job.
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 Job Performance: Under this method, the job analyst actually performs the job under study to get
rst-hand experience of the actual tasks, and physical and social demands of the job. This method
can be used only for jobs where skill requirements are low and can be learnt quickly and easily. This
is a time-consuming method and is not appropriate for jobs requiring extensive training.
Functional Job Analysis: Functional job analysis (FJA) is employee- oriented analytical approach of
job analysis. This approach attempts to describe the whole person on the job. The main features of
FJA include the following:
• The extent to which speci c instruction are necessary to perform the task.
• The extent to which reasoning and judgment are required to perform the task.
• The mathematical ability required to perform the task.
• The verbal and language facilities required to perform the task.
Observation Method: Using this method, a job analyst watches employees directly on the job.
Observations are made on various tasks, activities, the pace at which tasks are carried out, and the
way different activities are performed. This method is suitable for jobs that involve manual,
standardized, and short job cycle activities. This method also requires that the entire range of
activities be observable; possible with some jobs.
Questionnaires: The method is usually employed by engineering consultants. Properly drafted
questionnaires are sent out to job-holders for completion and are returned to supervisors. However,
the information received is often unorganized and incoherent. The idea in issuing questionnaire is to
elicit the necessary information from job holders so that any error may rst be discussed with the
employee and, after corrections, may be submitted to the job analyst.
Questionnaire for Job Analysis
1. Your Name .....................................................................
2. 2. Title or Designation of your job ..........................................
3. 3. Regular or Extra ............................................................
4. 4. Your Department ............................................................

To whom do you report directly (Name and Title):-------------------

Description of work: Daily Duties: Periodical Duties: Occasional Duties:
Your knowledge Requirements:
Store Procedure and Methods:
Merchandise:
What Equipment do you use?
What Materials do you work with or sell?
If you supervise the work of others, state how many and what their jobs are.
To what job would you normally expect to be promoted? From what job were you transferred to
your present job?
This technique is time consuming and generally does not yield satisfactory
results because many employees do not complete the questionnaire or furnish incorrect information
because of their own limitations. The use of questionnaire is recommended only in case of those
technical jobs where the job contents are not completely known to the supervisor or the operation is
too complex to observe.
Job Aspects No. of elements
Information input-Where and how do employee get 35
information
Mental to do their job?
processes-what reasoning, planning, 14
organizing,
Work and decision
output-what making
physical is done?
activities, tools and 49
machines are used? contact with other people, both in
Relationships-what
36
the company and outside is maintained or developed?
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Job context- what is the physical and social context in 19
which job
Other the characteristics-what
job is maintained? other activities,
42
conditions or Characteristics not covered by the
categories are relevant?
There are certain standardized questionnaires developed by a few agencies which are used by
various organizations for job analysis. Most of these questionnaires are of two types: Position
Analysis Questionnaire and Management Position Description Questionnaire that are described as
follows:
Position Analysis Questionnaire. Position analysis questionnaire (PAQ) is a highly specialized
instrument for analyzing a job in terms of employee activities. The PAQ developed by Purdue
University is a comprehensive questionnaire for collecting information for job analysis.
In this questionnaire, various job elements have been grouped into six categories with each category
containing relevant job elements resulting into 195 elements as shown in Table 3.1.
Position Analysis Questionnaire
The advantage of PAQ is that it provides a quantitative score or pro le of any job in terms of how
that job rates on the basic activities. The PAQ’s real strength is, thus, in classifying jobs. PAQ’s
results can be used to compare the jobs relative to one another and pay levels can be assigned for
each job.
The major problem with PAQ is the time it takes for a job analyst to ll out the ratings. However,
PAQ has been widely researched and tested and appears to be both reliable and valid.
Management Position Description Questionnaire: Management position description is a highly
structured questionnaire containing 208
items relating to managerial responsibilities, restrictions, demands and other miscellaneous position
characteristics. W.W. Tomov and P.R. Pinto have developed the following Management position
Description factors:
The above methods are the most popular ones for gathering job analysis data. They all provide
realistic information about what job incumbents actually do. They can thus be used for developing
job descriptions and job speci cations.
3.5 JOB DESCRIPTION
Job description is the immediate product of job analysis process; the data collected through job
analysis provides a basis for job description and job speci cation.
Job Description: is a written record of the duties, responsibilities and requirements of a particular
job. It is concerned with the job itself and not with the job holders. It is a statement describing the
job in such terms as its title, location, duties, working conditions and hazards.
Flippo has De ned Job Description as, “A job description is an organized, factual statement of
duties and responsibilities of a speci c job. In brief, it should tell what is to be done. How it is done
why. It is a standard of function, in that de nes the appropriate and authorized content of a job.
According to Pigors and Myres, “Job description is a pertinent picture (in writing) of the
organizational relationships, responsibilities and speci c duties that constitutes a given job or
position. It de nes a scope of responsibility and continuing work assignments that are suf ciently
different form that of other jobs to warrant a speci c title.”
According to Zerga, who analyzed 401 articles on job description about 30 years ago. A job
description helps us in:
1. Job grading and classi cation.

2. Transfers and promotions.

3. Adjustments of grievances.
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 4. De ning and outlining promotional steps.

5. Establishing a common understanding of a job between employers and employees.

6. Investigation accidents.

7. Indicating faulty work procedures or duplication of papers.

8. Maintaining, operating and adjusting machinery.

9. Time and motion studies.

10. De ning the limits of authority.

11. Indicating case of personal merit.

12. Studies of health and fatigue.
13. Scienti c guidance.
14. Determining jobs suitable for occupational therapy.
15. Providing hiring speci cations.
16. Providing performance indicators.
“Job description” is different from “performance assessment.” The former concerns such functions
as planning, co-ordination, and assigning responsibility; while the latter concerns the quality of
performance itself. Though job description is not assessment, it provides an important basis
establishing assessment standards and objectives.
3.6 WRITING JOB DESCRIPTION
A Job description is a written statement of what the job holder actually does, how he or she does it,
and under what conditions the job is performed. This information is in turn used to write a job
speci cation. This lists the knowledge, abilities, and skills needed to perform the job satisfactorily.
While there is no standard format you must use in writing a job description, most descriptions
contain at least sections on:
Job Identi cation: It includes the job title, alternative title, department, division, and plant and code
number of the job. The job title identi es and designates the job properly, the department, division,
etc., indicate the name of the department where it is situated – whether it is the maintenance
department, mechanical shop etc. Location gives the name of the place. This portion of job
description gives answer to two important questions: to what higher level job is this job
accountable. And who is supervised directly.
Job Summary: Job summary describes the contents of the jobs in terms of activities or tasks
performed. Job summary should clear the nature of the job. Primary, secondary and other duties to
be performed on the job should clearly be indicated separately.
Duties and Responsibilities: This is the most important phase of job description and should be
prepared very carefully. It describes the duties to be performed along with frequency of each major
duty. Responsibilities concerning custody of money, supervision and training of staff etc. are also
described in this part.
Example of a Job Description
Job Title: Record Clerk Job No. 011 Supervisor: Record Supervisor Job Grand –III Supervises:
None Date: 2/21/12
Job Summary: Originate, process, and maintain comprehensive records; implement required
controls; collect and summarize data as requested.
Job Duties and Responsibilities:
Review a variety of documents, listings, summarizes, etc, for completeness and accuracy.
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 Check records against other current sources such as reports or summaries; investigate differences
and take required action to ensure that records are accurate and up to date; compile and summarize
data report format as required.
Implement controls or obtaining, preserving, and supplying a variety of information. Prepare simple
requisitions, forms, and other routine memorandum.
Provide functional guidance to lower level personnel as required.
Working Conditions: Normal working conditions. But visits sites on average twice a week. Eight
hours per day.
Relationships: With equivalent of cers in other departments. Maintains formal and social contacts
with local of cials.
Job Characteristics: Skilled operation of computer, calculating machine, or key punch machine is
not necessarily a requirement of this job.
The above information is correct and approved by: (Signed) (Signed)

Job Analyst In charge Manager

Supervision: Under it is given number of persons to be supervised along with their job titles, and
the extent of supervision involved general, intermediate or close supervision.
Relation to Other Jobs: It describes the vertical and horizontal relationships of work ow. It also
indicates to whom the job holder will report and who will report to him. It gives an idea of channels
of promotion.
Machine, tools and equipment de ne each major type or trade name of the machines and tools and
the raw materials used.
Working Conditions: The working environment in terms of heat, light, noise, dust and fumes etc,
the job hazards and possibility of their occurrence and working conditions should also be described.
It will be helpful in job evaluation.
Social Environment: It speci es the social conditions under which the work will be performed. In
this part the size of work group, interpersonal interactions required to perform the job and
development facilities are mentioned
3.7 JOB SPECIFICATION
The job speci cation states the minimum acceptable quali cations that the incumbent must possess
to perform the job successfully. Based on the information acquired through job analysis, the job
speci cation identi es the knowledge, skills, and abilities needed to do the job effectively.
Individuals possessing the personal characteristics identi ed in the job speci cation should perform
the job more effectively than individuals lacking these personal characteristics. The job
speci cation, therefore, is an important tool in the selection process, for it keeps the selector’s
attention on the list of quali cations necessary for an incumbent to perform the job and assists in
determining whether candidates are quali ed.
According to Dale Yoder, “The job speci cation, as such a summary properly described is thus a
specialized job description, emphasizing personnel requirement and designed especially to facilitate
selection and placement.”
Flippo has de ned job speci cation as, “Job speci cation is a statement of the minimum acceptable
human qualities necessary to perform a job properly. It is a standard of personnel and designates the
qualities required for acceptable performance.”
In is clear from the above de nitions that job speci cation is a statement of summary of personnel
requirements for a job. It may also be called “standard of personal for the selection”
A Job Speci cation should include:
Physical characteristics: which include health, strength, endurance, age, height, weight, vision,
voice, eye, hand and foot co-ordination, motor co- ordination, and colour discrimination.
Psychological and social characteristics: such as emotional stability, exibility, decision making
ability, analytical view, mental ability, pleasing manners, initiative, conversational ability etc.
Mental Characteristics: such as general intelligence, memory, judgment, ability to concentrate,
foresight etc.
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 Personal Characteristics such as: sex, education, family background, job experience, hobbies,
extracurricular activities etc.
All these characteristics must be classi ed into three categories:
1. Essential attributes which a person must possess.

2. Desirable attributes which a person ought to posses.

3. Contra indicators which will become a handicap to successful job performance.

3.8 JOB DESIGN

Job design is of comparatively recent origin. The human resource managers have realized that the
design of a job has considerable in uence on the productivity and job satisfaction; poorly designed
jobs often result in boredom to the employees, increased turnover, job dissatisfaction, low
productivity and an increase in overall costs of the organization. All these negative consequences
can be avoided with the help of proper job design.
According to Jon Werner and DeSimone, “Job design is the development and alteration of the
components of a job (such as the tasks one performs, and the scope of one’s responsibilities) to
improve productivity and the quality of the employees’ work life.”
Job design has been de ned by Davis (1966) as: “The speci cation of the contents, methods, and
relationships of jobs in order to satisfy technological and organizational requirements as well as the
social and personal requirements of the job-holder.”
Milkovich and Boudreau de ned job design as, “Job design integrates work content (tasks,
functions, and relationships), the rewards (extrinsic and intrinsic) and the quali cations required
(skills, knowledge, abilities) for each job in a way that meets the needs of employees and the
organization.”
Michael Armstrong has de ned job design as “the process of deciding on the content of a job in
terms of its duties and responsibilities, on the methods to be used in carrying out the job, in terms of
techniques, systems and procedures, and on the relationships that should exist between the job
holder and his superiors, subordinates and colleagues.”
Job design is an attempt to create a match between job requirements and human attributes. It
involves organizing the components of the job and the interaction patterns among the members of a
work group. It helps in developing appropriate design of job to improve ef ciency and satisfaction.
PRINCIPLES OF JOB DESIGN:
Principles are the bases of the approach used in job design. Robertson and Smith (1985) have
suggested the following ve principles of job design:
1. To in uence skill variety, provide opportunities for people to do several tasks and combine
tasks.

2. To in uence task identity, combine tasks and from natural work units.

3. To in uence task signi cance, form natural work units and inform people of the importance
of their work.

4. To in uence autonomy; give people responsibility for determining their own working
systems.
5. To in uence feedback; establish good relationship and open feedback channels.
3.9 METHODS OF JOB DESIGN
The various techniques of job design and redesign are discussed below:
Job Simpli cation: In job simpli cation, the complete job is broken down into small subparts; this
is done so that employee can do these jobs without much specialized training. Moreover, small
operations of the job can also be performed simultaneously so that the complete operation can be
done more quickly. For job simpli cation, generally time and motion studies are used.
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 Job Rotation: Another technique designed to enhance employee motivation is job rotation, or
periodically assigning employees to alternating jobs or tasks.
Bumpers to vehicles and the following two weeks making nal checks of the chassis. During the
next month, the same employee may be assigned to two different jobs. Therefore, the employee
would be rotated among four jobs. The advantage of job rotation is that employees do not have the
same routine job day after day. Job rotation only addresses the problem of assigning employees to
jobs of limited scope; the depth of the job does not change. The job cycle of the actual daily work
performed has not been lengthened or changed. Instead, employees are simply assigned to different
jobs with different cycles.
Because job rotation does not change the basic nature of jobs, it is criticized as nothing more than
having an employee perform several boring and monotonous jobs rather than one. Some employees
dislike job rotation more than being assigned to one boring job because when they are assigned to
one job they know exactly where to report and what work to expect each day. Workers quickly
realize that job rotation does not increase their interest in their work.
Although it seldom addresses the lack of employee motivation, it give manages a means of coping
with frequent absenteeism and high turnover. Thus when absenteeism or turnover occurs in the
work force, managers can quickly ll the vacated position because each employee can perform
several jobs.
Job rotation is often effectively used as a training technique for new, inexperienced employees. At
higher organizational levels, rotation also helps to develop managerial generalists because it
exposes them to several different operations.
Advantage of Job Rotation Technique:
1. The employee experiences variety of work, workplace and peer group. Job rotation helps to
broaden the knowledge and skills of an employee.
2. The main advantage of job rotation is that it relieves the employee from the boredom and
monotony of doing the same job.
3. With the help of this method, people become more exible. They are prepared to assume
responsibility especially at other positions.
4. Job rotation broadens the work experience of employees and turns specialists into generalists. It
is bene cial for the management also as the management gets employees who can perform a
variety of tasks to meet the contingencies.
5. This method improves the self image and personal worth of the employee.

Disadvantage of Job Rotation Technique:

1. Job rotation also creates disruptions. Members of the work group have to adjust to the new
employee.

2. Productivity is reduced by moving a worker into new position just when his ef ciency at the
prior job was creating organizational economies.

3. Training costs are increased.

4. The supervisor may also have to spend more time answering question and monitoring the
work of the recently rotated employee.

5. It can de-motivate intelligent and ambitious trainees who seek speci c responsibilities in
their chosen specialty.

Job Enlargement: Another means of increasing employee’s satisfaction with routine jobs is job
enlargement, or increasing the number of tasks performed (i.e. increasing the scope of the job). Job
enlargement, like job rotation, tries to eliminate short job cycles that create boredom. Unlike job
rotation, job enlargement actually increases the job cycle. When a job is enlarged, either the tasks
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 being performed are enlarged or several short tasks are given to one worker. Thus, the scope of the
job is increased because there are many tasks to be performed by the same worker. Job enlargement
programs change many methods of operation in contrast to job rotation, in which the same work
procedures are used by workers who rotate through work stations. Although job enlargement
actually changes the pace of the work and the operation by reallocating tasks and responsibilities, it
does not increase the depth of a job.
The focus of designing work for job enlargement is the exact opposite of that for job specialization.
Instead of designing jobs to be divided up into the fewest of tasks per employee, a job is designed to
have many tasks for the employee to perform. An enlarged job requires a longer training period
because there are more tasks to be learned. Worker satisfaction should increase because is reduced
as the job scope is expanded. However, job enlargement programs are successful with jobs what
have increased scope; such workers are less prone to resort to absenteeism, grievances, slowdowns
and other means of displaying job dissatisfaction.
Enlargement is done only on the horizontal level. Thus, the job remains the same, but becomes of a
larger scale than before. In the words of Geroge Strauss and L.R. Sayles “Job enlargement implies
that instead of assigning one man to each job, a group of men can be assigned to a group of jobs and
then allowed to decide for themselves how to organize the work. Such changes permit more social
contacts and control over the work process.”
Job enlargement has the following advantages:
1. Increase in diversity of jobs.

2. Job satisfaction

3. Provides wholeness and identity with the task and increases the knowledge necessary to
perform it.

4. Provides variety of skills.

5. Reduces tension and boredom.

6. Trains and develops more versatile employees.

Despite these advantages this is not a completely satisfactory method of job design as it does not
increase the depth of a job. Enlarged jobs require longer training period as there are more tasks to
be learned.
Job Enrichment: The concept of job enrichment has been derived from Herzberg’s two-factor theory
of motivation in which he has suggested that job content is one of the basic factors of motivation. If
the job is designed in such a manner that it becomes more interesting and challenging to the job
performer and provides him opportunities for achievement, recognition, responsibility, advancement
and growth, the job itself becomes a source of motivation to the individual.
According to Richard W. Beatty and Graig Eric. Schneider, “Job enrichment is a motivational
technique which emphasizes the need for challenging and interesting work. It suggests that jobs be
redesigned so that intrinsic satisfaction is derived from doing the job. In its best applications it leads
to a vertically enhanced job by adding function from other organizational levels, making it contain
more variety and challenge and offer autonomy and pride to the employee.”
According to P. Robbins,” Job enrichment refers to the vertical expansion of the jobs. It increases
the degree to which the worker controls the planning, execution and evaluation of his work.”
In the words of Robert Albanese, “Job enrichment sometimes called. “Vertical job leading’ is a job
redesign strategy that focuses on job depth.”
According to Mondy. Holmes, and Flippo, “Job enrichment refers to basic changes in the content
and level of responsibility of a job so to provide for the satisfaction of the motivation needs of
personnel.












Rebert Ford, who was associated with designing of jobs to make them more enriched, has provided
some bases (though not exhaustive) for job enrichment as shown in Table 3.3.
Job Enrichment Bases

Tasks Motivator involved

Assign speci c or specialized task to Responsibility, growth,
individuals enabling them to become advancement
expert periodic reports directly
Making
Internal recognition
available to the individual himself
rather
Givingthan to theasupervisor.
a person whole, natural Responsibility, achievement,
unit of work (module, exchange recognition
district,
Increasing division, area, etc.) of
the accountability Responsibility, recognition
individuals
Techniques forEnrichment:
of Job own work
In order to enrich the jobs the management should adopt the following measures:
1. Freedom in decisions

2. Assign a natural work unit to an employee. Encouraging participation

3. Allow the employee to set his own standards of performance. Minimize the controls to
provide freedom to the employees Make an employee directly responsible for his
performance.

4. Encourage participation of employees in deciding organizational goals and policies. Expand

job vertically

5. Introducing new, dif cult and creative tasks to the employees. Sense of achievement.

Advantages of Job Enrichment:

The advantages of job enrichment are as follows:
1. It enriches the role.

2. Job enrichment is the most widely used of job design as it provides a meaningful learning to
employees.
3. It makes the work interesting and employee get motivated.
4. It helps in reducing the rate of labour turnover and absenteeism.

5. It increases skills of the employees.

6. It increases morale and performance. Reduce Boredom and dissatisfaction.

7. Increase in output both qualitative and quantitative.

Disadvantages of Job Enrichment:

Dunham and Newstrom state, “Even the strongest supporters of job enrichment readily admit that
there are limitations in its application.”
Newstrom and Keith Davis also write, “Employees are the nal judges of what enriches their jobs.
All that management can do is to gather information about what tends to enrich jobs, try these




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 changes in the job system, and then determine whether employees feel that enrichment has
occurred.”
A few limitations of or problems with job enrichment are as follows:
1. Increase cost

2. Need more employee counseling, training, and guidance.

3. Not applicable to all jobs.

4. Negative impact on personnel. Imposed on people.

5. Objected by unions Pay dissatisfaction

JOB ENLARGEMENT vs. JOB ENRICHMENT

Job enlargement and job enrichment are both important forms of job design in order to enhance
productivity and satisfaction of the employees. They differ from each other in the following
respects:
Nature of Job: The major difference between job enrichment and enlargement lies in the nature of
additions to the job. Enlargement involves a horizontal loading or expansion, or addition of tasks of
the same nature. Enrichment involves vertical loading of tasks and responsibility of the job holder;
it improves the quality of the job in terms of its intrinsic worth.
Purpose: The purpose of job enlargement is to reduce the monotony in performing repetitive jobs by
lengthening the cycle of operation. On the other hand, the purpose of job enrichment is making the
job lively, challenging and satisfying. It satis es the higher level needs such as ego satisfaction, self
expression, sense of achievement and advancement of Job holders.
Skill Requirement: Job enlargement may not necessarily require the use of additional skills which
the job holder was using in performing the job before the enlargement. This is due to similarity of
additional tasks. Enrichment calls for development and utilization of higher skills, initiative, and
innovation on the part of the job holder in performing the job.
Direction and Control: Job enlargement requires direction and control from external sources, say
supervisor. In fact, the job holder may require more direction and control because of enlargement of
his responsibility. Enrichment does not require external direction and control as these come from
the job holder himself. He requires only feedback from his supervisor.
3.10 SUMMARY
The purpose of an organization is to give each person a separate distinct job and to ensure that these
jobs are coordinated in such a way that the organization accomplishes its goals.
Developing an organization structure results in jobs that have to be staffed. Job analysis is the
procedure through which you nd out (1) what the job entails, and (2) what kinds of people should
be hired for the job. It involves six steps: (1) determine the use of the job analysis information; (2)
collection of background information; (3) selection of jobs for analysis; (4) collection of job
analysis data; (5) processing the information; (6) preparing job descriptions and job classi cations;
and (7) developing job speci cations.
Techniques of job analysis are – observation method, questionnaires, participant diary/logs,
interview, critical incidents, technical conference method, and job performance.
Job description and job speci cation are products of job analysis. Job description should indicate:
duties to be performed by the job holder and the manner he should complete the tasks. Job
speci cation: answer the question “what human traits and experience are necessary to do the job.
Job design is an attempt to create a match between job requirements and job attribute. Job rotation
implies transfer to a job of same level and status. Job simpli cation enables the employees to do the
without much specialized training.
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 Job enlargement is the process of increasing the scope of job of a particular by adding more tasks to
it. And job enrichment implies increasing the contents of a job or the deliberate upgrading of
responsibility scope and challenge in work.
Job enlargement and job enrichment are both important forms of job design in order to enhance the
productivity and satisfaction of the job holders.

3.11 SELF ASSESSMENT QUESTIONS

1. Job enlargement and job enrichment
2. “Job analysis is the most basic personnel management function.” Discuss.
3. Clearly de ne and discuss the relationship among job analysis, job description and job
speci cation.
4. What do you understand by job analysis? What is its importance in the management of human
resources?
5. What is job analysis? What steps are involved in the preparation of job analysis?
6. What are the byproducts of job analysis? Discuss the techniques used for collecting data for job
analysis?
7. What is job description? How is it prepared?
De ne job speci cation? How is it different from job description? Write notes on:
A. Job Rotation
B. Job Simpli cation
8. Distinguish between: Job description and job speci cation
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 IV-RECRUITMENT AND SELECTION (PART I )
Unit Structure

4.0 Objectives
4.1 Introduction
4.2 Recruitment: Meaning and De nition
4.3 Process of Recruitment
4.4 Recruitment Policy
4.5 Factor Affecting Recruitment
4.6 Sources of Recruitment
4.7 Methods of Recruitment
4.8 Philosophies of Recruitment
4.9 Summary
4.10 Self Assessment Questions

4.0 OBJECTIVES
After completing this unit, you will be able to:
• De ne recruitment.

• Cite the steps in recruitment process.

• Understand the prerequisites of a good recruitment policy.

• Describe the various sources of recruitment.

• Understand the methods through which prospective candidates may be recruited.

• Point out the various factors affecting recruitment.

4.1 INTRODUCTION
Successful human resource planning should identify our human resource needs. Once we know
these needs, we will want to do something about meeting them. The next step in the acquisition
function, therefore, is recruitment. This activity makes it possible for us to acquire the number and
types of people necessary to ensure the continued operation of the organization.
Hallett says, “It is with people that quality performance really begins and ends.” Robert Heller also
says, “If people of poor caliber are hired, nothing much else can be accomplished and Gresham’s
law will work: the bad people will drive out the good or cause them to deteriorate.”
Recruiting is the discovering of potential candidates for actual or anticipated organizational
vacancies. Or, from another perspective, it is a linking activity bringing together those with jobs to
ll and those seeking jobs.
4.2 RECRUITMENT: MEANING AND DEFINITION
DEFINITION
Recruitment forms a step in the process which continues with selection and ceases with the
placement of the candidate. It is the next step in the procurement function, the rst being the
manpower planning. Recruiting makes it possible to acquire the number and types of people
necessary to ensure the continued operation of the organisation. Recruiting is the discovering of
potential applicants for actual or anticipated organisational vacancies.
According to Edwin B. Flippo, “Recruitment is the process of searching for prospective employees
and stimulating them to apply for jobs in the organisation.”
According to Lord, “Recruitment is a form of competition. Just as corporations compete to develop,
manufacture, and market the best product or service, so they must also compete to identify, attract
and hire the most quali ed people. Recruitment is a business, and it is a big business.”


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 In the words of Dale Yoder, “Recruiting is a process to discover the sources of manpower to meet
the requirements of the staf ng schedule and to employ effective measures for attracting that
manpower in adequate numbers to facilitate effective selection of an ef cient working force.”
According to Werther and Davis, “Recruitment is the process of nding and attracting capable
applicants for employment. The process begins when new recruits are sought and ends when their
applications are submitted. The result is a pool of applicants form which new employees are
selected.”
Dales S. Beach writes, “Recruitment is the development and maintenance of adequate manpower
resources. It involves the creation of a pool of available labour upon whom the organisation can
depend when it needs additional employees.”
Thus, recruitment process is concerned with the identi cation of possible sources of human
resource supply and tapping those sources. In the total process of acquiring and placing human
resources in the organisation, recruitment falls in between different sub processes.
NEED FOR RECRUITMENT
According to Scott, Clothier and Spriegel the need for recruitment arises out of the following
situations:
Vacancies created due to expansion, diversi cation, and growth of business.
An increase in the competitive advantage of certain concerns, enabling them to get more of the
available business than formerly.
An increase in business arising from an upswing during the recovery period of a business cycle.
Vacancies created due to transfer, promotion, retirement, termination, permanent disability or death.
The normal population growth, which requires increased goods and services to meet the needs of
the people.
A rising standard of living, which requires more of the same goods and services as well as the
creation of new wants to be satis ed.
4.3 Recruitment process passes through the following stages:
Recruitment process begins when the personnel department receives requisitions for recruitment
from any department of the company, The personnel requisitions contain details about the position
to be lled, number of persons to be recruited, the duties to be performed, quali cations expected
from the candidates, terms and conditions of employment and the time by which the persons should
be available for appointment etc.
Locating and developing the sources of required number and type of employees. Identifying the
prospective employees with required characteristics.
Developing the techniques to attract the desired candidates. The goodwill of an organisation in the
market may be one technique. The publicity about the company being a good employer may also
help in stimulating candidates to apply. There may be others of attractive salaries, proper facilities
for development etc. Evaluating the effectiveness of recruitment process.
PROCESS OF RECRUITMENT
According to Famularo, personnel recruitment process involves ve elements, viz., a recruitment
policy, a recruitment organisation, a forecast of manpower, the development of sources of
recruitment, and different techniques used for utilising these sources, and a method of assessing the
recruitment programme.
The steps in the process of recruitment are explained below:
• Recruitment Policy: It speci es the objectives of recruitment and provides a framework for
the implementation of the recruitment programme. It also involves the employer’s
commitment to some principles as to nd and employ the best quali ed persons for each job,
to retain the most promising of those hired, etc. It should be based on the goals, needs and
environment of the organisation.

• Recruitment Organisation: The recruitment may be centralised like public sector banks or
decentralised. Both practices have their own merits. The choice between the two will depend
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 on the managerial philosophy and the particular needs of the organisation.

• Sources of Recruitment: Various sources of recruitment may be classi ed as internal and

external. These have their own merits and demerits.

• Methods of Recruitment: Recruitment techniques are the means to make contact with
potential candidates, to provide them necessary information and to encourage them to apply
for jobs.

• Evaluation of Recruitment Programme: The recruitment process must be evaluated

periodically. The criteria for evaluation may consist of cost per applicant, the hiring ratio,
performance appraisal, tenure of stay, etc. After evaluation, necessary improvements should
be made in the recruitment programme.
4.4 RECRUITMENT POLICY

Areas covered by the Recruitment Policy

As Yoder et al observe recruitment policy spells out the objectives of the recruitment and provides a
framework for implementations of the recruitment programme in the form of procedures. It may
involve a commitment to broad principles such as lling vacancies with the best quali ed
individuals. The recruitment policy may embrace several issues such as the extent of promotion
from within, attitudes of enterprise in recruiting old, handicapped, and minor individuals, minority
group members, part time employees and relatives of present employees. In addition, the
recruitment policy may also involve the organisation system to be developed for implementing the
recruitment programme and procedures to be employed. Explicitly, an organisational system is a
function of the size of an enterprise. In smaller enterprises, there may be merely informal recruiting
procedures and the line of cial may be responsible to handle this function along with their usual
responsibilities. On the other hand, in larger organisations, there is usually a staff unit attached with
personnel or an industrial relations department designated as employment or recruitment of ce.
This specialisation of recruitment enables staff personnel to become highly skilled in recruitment
techniques and their evaluation. However, recruitment remains the line responsibility as far as the
personnel requisition forms are originated by the line personnel, who have also the nal word in the
acceptance or rejection of a particular applicant. Despite this, the staff personnel have adequate
freedom in respect of sources of manpower to be tapped and the procedure to be followed for this
purpose.
Recruitment policy covers the following areas:
• To prescribe the degree of emphasis inside the organisation or outside the organisation.

• To provide the weightage that would be given to certain categories of people such as local
population, physically handicapped personnel, personnel from scheduled castes/tribes and
other backward classes.

• To prescribe whether the recruitment would be centralised or decentralised at unit levels.

• To specify the degree of exibility with regard to age, quali cations, compensation structure
and other service conditions.

• To prescribe the personnel who would be involved in recruitment process and the role of
human resource department in this regard.

• To specify the budget for meeting the expenditures incurred in completing the recruitment
process.
According to Yoder, “the recruitment policy is concerned with quantity and quali cations of






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 manpower.”It establishes broad guidelines for the staf ng process.
According to Yoder generally the following factors are involved in a recruitment policy:

• To provide each employee with an open road and encouragement in the continuing
development of his talents and skills;

• To provide individual employees with the maximum of employment security, avoiding,

frequent lay-off or lost time;

• To avoid cliques which may develop when several members of the same household or
community are employed in the organisation;

• To carefully observe the letter and spirit of the relevant public policy on hiring and, on the
whole, employment relationship;

• To assure each employee of the organisation interest in his personal goals and employment
objective; To assure employees of fairness in all employment relationships, including
promotions and transfers;

• To provide employment in jobs which are engineered to meet the quali cations of
handicapped workers and minority sections; and

• To encourage one or more strong, effective, responsible trade unions among the employees.

• Prerequisites of a Good Recruitment Policy:

The recruitment policy of an organisation must satisfy the following conditions:
• It should be in conformity with its general personnel policies.

• It should be exible enough to meet the changing needs of an organization.

• It should be so designed as to ensure employment opportunities for its employees on

a long-term basis so that the goals of the organisation should be achievable; and it
should develop the potentialities of employees.

• It should match the qualities of employees with the requirements of the work for
which they are employed.

• It should highlight the necessity of establishing job analysis.

4.5 FACTOR AFFECTING RECRUITMENT

The factors affecting recruitment can be classi ed as: Internal Factors

External Factors.
Internal Factors:

The internal factors are:

Wage and salary policies;
The age composition of existing working force;
Promotion and retirement policies;
Turnover rates;
The nature of operations involved the kind of personnel required;
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 The level and seasonality of operations in question;
Future expansion and reduction programmes;
Recruiting policy of the organisation;
Human resource planning strategy of the company;
Size of the organisation and the number of employees employed;
Cost involved in recruiting employees;
Growth and expansion plans of the organisation.
External Factors:
The external factors are:
• Supply and demand of speci c skills in the labour market;

•  Company’s image perception of the job seekers about the company.

• External cultural factors: Obviously, the culture may exert considerable check on
recruitment. For example, women may not be recruited in certain jobs in industry.

• Economic factors: such as a tight or loose labour market, the reputation of the enterprise in
the community as a good pay master or otherwise and such allied issues which determine the
quality and quantity of manpower submitting itself for recruitment.

• Political and legal factors also exert restraints in respect of nature and hours of work for
women and children, and allied employment practices in the enterprise, reservation of Job
for SC, ST and so on.

4.6 SOURCES OF RECRUITMENT

After the nalisation of recruitment plan indicating the number and type of prospective candidates,
they must be attracted to offer themselves for consideration to their employment. This necessitates
the identi cation of sources from which these candidates can be attracted. Some companies try to
develop new sources, while most only try to tackle the existing sources they have. These sources,
accordingly, may be termed as internal and external.

Internal Sources
It would be desirable to utilise the internal sources before going outside to attract the candidates.
Yoder and others suggest two categories of internal sources:
1. Review of the present employees
2. Nomination of candidates by employees.
Effective utilisation of internal sources necessitates an understanding of their skills and information
regarding relationships of jobs. This will provide possibilities for horizontal and vertical transfers
within the enterprise eliminating simultaneous attempts to lay off employees in one department and
recruitment of employees with similar quali cation for another department in the company.
Promotion and transfers within the plant where an employee is best suitable improves the morale
along with solving recruitment problems. These measures can be taken effectively if the company
has established job families through job analysis programmes combining together similar jobs
demanding similar employee characteristics. Again, employees can be requested to suggest
promising candidates. Sometimes, employees are given prizes for recommending a candidate who
has been recruited. Despite the usefulness of this system in the form of loyalty and its wide practice,
it has been pointed out that it gives rise to cliques posing dif culty to management. Therefore,
before utilising this system attempts should be made to determine through research whether or not
employees thus recruited are effective on particular jobs. Usually, internal sources can be used
effectively if the numbers of vacancies are not very large, adequate, employee records are
maintained, jobs do not demand originality lacking in the internal sources, and employees have
prepared themselves for promotions.
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 Merits of Internal Sources:
The following are the merits of internal sources of recruitment:
• It creates a sense of security among employees when they are assured that they would be
preferred in lling up vacancies.

• It improves the morale of employees, for they are assured of the fact that they would be
preferred over outsiders when vacancies occur.

• It promotes loyalty and commitment among employees due to sense of job security and
opportunities for advancement.

• The employer is in a better position to evaluate those presently employed than outside
candidates. This is because the company maintains a record of the progress, experience and
service of its employees.

• Time and costs of training will be low because employees remain familiar with the
organisation and its policies.

• Relations with trade unions remain good. Labour turnover is reduced.

• As the persons in the employment of the company are fully aware of, and well acquainted
with its policies and know its operating procedures, they require little training, and the
chances are that they would stay longer in the employment of the organisation than a new
outsider would.

• It encourages self-development among the employees. It encourages good individuals who

are ambitious.

• It encourages stability from continuity of employment.

• It can also act as a training device for developing middle and top-level
managers.
Demerits of Internal Sources:
However, this system suffers from certain defects as:

• There are possibilities that internal sources may “dry up”, and it may be dif cult to nd the
requisite personnel from within an organisation.

• It often leads to inbreeding, and discourages new blood from entering and organisation.

• As promotion is based on seniority, the danger is that really capable hands may not be
chosen. The likes and dislikes of the management may also play an important role in the
selection of personnel.

• Since the learner does not know more than the lecturer, no innovations worth the name can
be made. Therefore, on jobs which require original thinking (such as advertising, style,
designing and basic research), this practice is not followed.

• This source is used by many organisations; but a surprisingly large number ignore this
source, especially for middle management jobs.


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 • External Sources
DeCenzo and Robbins remark, “Occasionally, it may be necessary to bring in some ‘new
blood’ to broaden the present ideas, knowledge, and enthusiasm.” Thus, all organisations
have to depend on external sources of recruitment. Among these sources are included:
Employment agencies.
Educational and technical institutes. and
Casual labour or “applicants at the gate” and nail applicants. Employment Agencies:
Public and private employment agencies play a vital role in making available suitable
employees for different positions in the organisations. Besides public agencies, private
agencies have developed markedly in large cities in the form of consultancy services.
Usually, these agencies facilitate recruitment of technical and professional personnel.
Because of their specialisation, they effectively assess the needs of their clients and aptitudes
and skills of the specialised personnel. They do not merely bring an employer and an
employee together but computerised lists of available talents, utilising testing to classify and
assess applicants and use advanced techniques of vocational guidance for effective
placement purposes.
Educational and technical institutes:
These institutes also form an effective source of manpower supply. There is an increasing emphasis
on recruiting student from different management institutes and universities commerce and
management departments by recruiters for positions in sales, accounting, nance, personnel and
production. These students are recruited as management trainees and then placed in special
company training programmes. They are not recruited for particular positions but for development
as future supervisors and executives. Indeed, this source provides a constant ow of new personnel
with leadership potentialities. Frequently, this source is tapped through on-campus interview with
promising students. In addition, vocational schools and industrial training institutes provide
specialised employees, apprentices, and trainees for semiskilled and skilled jobs. Persons trained in
these schools and institutes can be placed on operative and similar jobs with a minimum of in-plant
training. However, recruitment of these candidates must be based on realistic and differential
standards established through research reducing turnover and enhancing productivity.
Casual labour or “applicants at the gate” and nail applicants
Frequently, numerous enterprises depend to some extent upon casual labour or “applicants at the
gate” and nail applicants. The candidates may appear personally at the company’s employment
of ce or send their applications for possible vacancies. Explicitly, as Yoder and others observe, the
quality and quantity of such candidates depend on the image of the company in community. Prompt
response to these applicants proves very useful for the company. However, it may be noted that this
source is uncertain, and the applicants reveal a wide range of abilities necessitating a careful
screening. Despite these limitations, it forms a highly inexpensive source as the candidates
themselves come to the gate of the company. Again, it provides measures for good public relations
and accordingly, all the candidates visiting the company must be received cordially.
Trade Unions:
As Jucius observes, trade unions are playing an increasingly important role in labour supply. In
several trades, they supply skilled labour in suf cient numbers. They also determine the order in
which employees are to be recruited in the organisation. In industries where they do not take active
part in recruitment, they make it a point that employees laid off are given preference in recruitment.
Application Files:
Application les also forms a useful source of supply of work force. Attempts may be made to
review the application to determine jobs for which the candidates led for future use when there are
openings in these jobs. The candidates may be requested to renew their cards as many times as they
desire. All the renewed cards may be placed in “active” les and those not renewed for considerable
time may be placed in “inactive” le or destroyed. Indeed, a well-indexed application le provides
utmost economy from the standpoint of a recruiting budget.
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 Ef cacy of alternative sources of supply of human resources should be determined through
research. Attempts may be made to relate the factor of success on the job with a speci c source of
supply. Alternative sources can also be evaluated in terms of turnover, grievances and disciplinary
action. Those sources which are signi cantly positively related with job performance and
signi cantly negatively related with turnover, grievances and disciplinary action, can be effectively
used in recruitment programmes. The assessment should be periodically performed in terms of
occupations. It may be that source “A” is most effective for technical workers, while source “B” for
semiskilled workers.
Advantages of External Recruitment:
External sources of recruitment are suitable for the following reasons:
•   It will help in bringing new ideas, better techniques and improved methods to the
organisation.

•   The cost of employees will be minimised because candidates selected in this method
will be placed in the minimum pay scale.

•  The existing employees will also broaden their personality.

•  The entry of qualitative persons from outside will be in the interest of

the organisation in the long run.

•  The suitable candidates with skill, talent, knowledge are available from external sources.

•  The entry of new persons with varied expansion and talent will help in human resource
mix.
Disadvantages of External Sources:

•   Orientation and training are required as the employees remain unfamiliar with the
organisation. It is more expensive and time consuming.

•  Detailed screening is necessary as very little is known about the candidate.

•  If new entrant fails to adjust himself to the working in the enterprise, it means yet more
expenditure on looking for his replacement.

•   Motivation, morale and loyalty of existing staff are affected, if higher level jobs are
lled from external sources. It becomes a source of heart-burning and demoralisation among
existing employees.
4.7 METHODS OF RECRUITMENT
Methods of recruitment are different from the sources of recruitment. Sources are the
locations where prospective employees are available. On the other hand, methods are way of
establishing links with the prospective employees. Various methods employed for recruiting
employees may be classi ed into the following categories:

Direct Methods:
These include sending recruiters to educational and professional institutions, employees, contacts
with public, and manned exhibits. One of the widely used direct methods is that of sending of
recruiters to colleges and technical schools. Most college recruiting is done in co-operation with the
placement of ce of a college. The placement of ce usually provides help in attracting students,
arranging interviews, furnishing space, and providing student resumes.
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 For managerial, professional and sales personnel campus recruiting is an extensive operation.
Persons reading for MBA or other technical diplomas are picked up in this manner. For this
purpose, carefully prepared brochures, describing the organisation and the jobs it offers, are
distributed among students, before the interviewer arrives. Sometimes, rms directly solicit
information from the concerned professors about students with an outstanding record. Many
companies have found employees contact with the public a very effective method. Other direct
methods include sending recruiters to conventions and seminars, setting up exhibits at fairs, and
using mobile of ces to go to the desired centers.
Indirect Methods:
The most frequently used indirect method of recruitment is advertisement in newspapers, journals,
and on the radio and television. Advertisement enables candidates to assess their suitability. It is
appropriate when the organisation wants to reach out to a large target group scattered nationwide.
When a rm wants to conceal its identity, it can give blind advertisement in which only box number
is given. Considerable details about jobs and quali cations can be given in the advertisements.
Another method of advertising is a notice-board placed at the gate of the company.
Third-Party Methods:
The most frequently used third-party methods are public and private employment agencies. Public
employment exchanges have been largely concerned with factory workers and clerical jobs. They
also provide help in recruiting professional employees. Private agencies provide consultancy
services and charge a fee. They are usually specialised for different categories of operatives, of ce
workers, salesmen, 55 supervisory and management personnel. Other third-party methods include
the use of trade unions. Labour- management committees have usually demonstrated the
effectiveness of trade unions as methods of recruitment.
Several criteria discussed in the preceding section for evaluating sources of applicants can also be
used for assessing recruiting methods. Attempts should be made to identify how the candidate was
attracted to the company. To accomplish this, the application may consist of an item as to how the
applicant came to learn about the vacancy. Then, attempts should be made to determine the method
which consistently attracts good candidates. Thus, the most effective method should be utilised to
improve the recruitment programme.

4.8 PHILOSOPHIES OF RECRUITMENT

Philosophies of recruitment
There are basically two philosophies of recruitment: Traditional Philosophy:
The traditional philosophy is to get as many people as possible to apply for the job. As a result of
this, a large number of job seekers apply for the job, which makes the nal selection process
dif cult and can often result in the selection of wrong candidates. Wrong selection can, in turn, lead
to employee dissatisfaction and turnover in the long run.
Realistic Philosophy:
In realistic philosophy, the needs of the organisation are matched with the needs of the applicants,
which enhance the effectiveness of the recruitment process. In realistic approach, the employees
who are recruited will stay in the organisation for a longer period of time and will perform at higher
level of effectiveness.
Difference between Traditional and Realistic Job Preview
Recruitment and Selection Part I
Traditional Job Preview Realistic Job Preview
Setting unrealistic and high job Setting realistic job expectations.
expectations.
Job is viewed by the candidates as Attractiveness of job is evaluated in
highly attractive the light of realistic job expectations
High rate of acceptance of job Some accept and some reject job
offers. offers.
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 High expectation belied by actual Expectations are con rmed by job
job experience
Creations of dissatisfaction, experience.
Creation of satisfaction in the light
frustration and thoughts for leaving of job expectations.
the job High rate of personnel retention and
High rate of personnel turnover and
lower rate of job survival high rate of job survival
4.9 SUMMARY
Recruitment forms a step in the process which continues with selection and ceases with the
placement of the candidate. It is the next step in the procurement function, the rst being the
manpower planning. Recruiting makes it possible to acquire the number and types of people
necessary to ensure the continued operation of the organisation. Thus, recruitment process is
concerned with the identi cation of possible sources of human resource supply and tapping those
sources.
Recruitment process involves ve elements, viz., a recruitment policy, a recruitment organisation,
the development of sources of recruitment, and different techniques used for utilising these sources,
and a method of assessing the recruitment programme. After the nalisation of recruitment plan
indicating the numbers and type of prospective candidates, they must be attracted to offer
themselves for consideration to their employment. This necessitates the identi cation of sources
from which these candidates can be attracted. Some companies try to develop new sources, while
most only try to tackle the existing sources they have. These sources, accordingly, may be termed as
internal and external.

Methods of recruitment are different from the sources of recruitment. Sources are the locations
where prospective employees are available. On the other hand, methods are way of establishing
links with the prospective employees. Various methods employed for recruiting employees may be
classi ed into direct methods, indirect methods and third party methods.

4.10 SELF ASSESSMENT QUESTIONS

1. De ne recruitment and identify the various factors which affect recruitment.

2. Discuss the steps of recruitment process. How will you reconcile the internal and external
sources of recruitment?

3. Discuss various sources of recruitment.

4. What is realistic job preview? How does it differ from traditional job preview?

5. What do you mean by recruitment policy? Explain the prerequisites of a good recruitment
policy.

6. Write short notes on following -

(i) Advantages and disadvantages of internal sources of recruitment. (ii) Advantages and
disadvantages of external source of recruitment.
(iii) Explain the direct, indirect and third party methods of recruitment.
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 5-RECRUITMENT AND SELECTION PART II
Unit Structure
5.0 Objectives
5.1 Introduction
5.2 De nition of Selection
5.3 Selection Procedure
5.4 Placement of Orientation 5.5 Induction
5.6 Summary
5.7 Self Assessment Questions
5.0 OBJECTIVES
After completing this unit, you will be able to:
•  Understand and de ne selection and its process.

•  Understand the selection process so as to make it effective.

•  Understand in brief about placement and orientation.

•  Explain the term ‘Induction’ and the objectives of induction.

5.1 INTRODUCTION

Human resource selection is the process of choosing quali ed individuals who are available to ll
positions in an organization. In the ideal personnel situation, selection involves choosing the best
applicant to ll a position. Selection is the process of choosing people by obtaining and assessing
information about the applicants with a view to matching these with the job requirements. It
involves a careful screening and testing of candidates who have put in their applications for any job
in the enterprise. It is the process of choosing the most suitable persons out of all the applicants. The
purpose of selection is to pick up the right person for every job.

5.2 DEFINITION OF SELECTION

MEANING AND DEFINITION
It can be conceptualised in terms of either choosing the t candidates, or rejecting the un t
candidates, or a combination of both. Selection involves both because it picks up the ts and rejects
the un ts. In fact, in Indian context, there are more candidates who are rejected than those who are
selected in most of the selection processes. Therefore, sometimes, it is called a negative process in
contrast to positive programme of recruitment.
According to Dale Yoder, “Selection is the process in which candidates for employment are divided
into two classes-those who are to be offered employment and those who are not”.
According to Thomas Stone, “Selection is the process of differentiating between applicants in order
to identify (and hire) those with a greater likelihood of success in a job”.
In the words of Michael Jucius, “The selection procedure is the system of functions and devices
adopted in a given company for the purpose of ascertaining whether or not candidates possess the
quali cations called for by a speci c job or for progression through a series of jobs.”
According to Keith Davis, “Selection is the process by which an organisation chooses from a list of
screened applicants, the person or persons who best meet the selection criteria for the position
available.”
Thus, the selection process is a tool in the hands of management to differentiate between the
quali ed and unquali ed applicants by applying various techniques such as interviews, tests etc.
The cost incurred in recruiting and selecting any new employee is expensive. The cost of selecting
people who are inadequate performers or who leave the organisation before contributing to pro ts
proves a major cost of doing business. Decenzo and Robbins write, “Proper selection of personnel
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is obviously an area where effectiveness choosing competent workers who perform well in their
position can result in large saving.” According to them, selection has two objectives: (1) to predict
which job applicants would be successful if hired and (2) to inform and sell the candidate on the job
and the organization. Satisfaction of employee needs and wants as well as the fullest development
of his potential are important objectives of selection.
Dale Yoder says, “Selection has long held a high rank in the priority of problem areas in
management. Investments in good people produce a very high rate of return. A good choice of
people can provide a basis for long, sustained contributions.”

DIFFERENCE BETWEEN RECRUITMENT AND SELECTION:

Difference between recruitment and selection has been described by Flippo as, “Recruitment is a
process of searching for prospective employees and stimulating and encouraging them to apply for
jobs in an organisation. It is often termed positive as is stimulates people to apply for jobs, selection
on the other hand tends to be negative because it rejects a good number of those who apply, leaving
only the best to be hired.”
Recruitment and selection differs in following manner:
Difference in Objective: The basic objective of recruitment is to attract maximum number of
candidates so that more options are available. The basic objective of selection is to choose best out
of the available candidates.
Difference is Process: Recruitment adopts the process of creating application pool as large as
possible and therefore. It is known as positive process. Selection adopts the process through which
more and more candidates are rejected and fewer candidates are selected or sometimes even not a
single candidate is selected. Therefore, it is known as negative process or rejection process.
Technical Differences: Recruitment techniques are not very intensive, and not require high skills. As
against this, in selection process, highly specialised techniques are required. Therefore, in the
selection process, only personnel with speci c skills like expertise in using selection tests,
conducting interviews, etc., are involved.
Difference in Outcomes: The outcome of recruitment is application pool which becomes input for
selection process. The outcome of selection process is in the form of nalising candidates who will
be offered jobs.
5.3 SELECTION PROCEDURE
The selection procedure is concerned with securing relevant information about an applicant. This
information is secured in a number of steps or stages. The objective of selection process is to
determine whether an applicant meets the quali cation for a speci c job and to choose the applicant
who is most likely to perform well in that job. Selection is a long process, commencing from the
preliminary interview of the applicants and ending with the contract of employment (sometimes).
The selection procedure consists of a series of steps. Each step must be successfully cleared before
the applicant proceeds to the next. The selection process is a series of successive hurdles or barriers
which an applicant must cross. These hurdles are designed to eliminate an unquali ed candidate at
any point in the selection process. Thus, this technique is called “Successive Hurdles Technique”. In
practice, the process differs among organisations and between two different jobs within the same
organisation. Selection procedure for the senior managers will be long drawn and rigorous, but it is
simple and short while hiring lower level employees.
The major factors which determine the steps involved in a selection process are as follows:
1. Selection process depends on the number of candidates that are available for selection.

2. Selection process depends on the sources of recruitment and the method that is adopted for
making contact with the prospective candidates.

3. Various steps involved in as selection process depend on the type of personnel to be selected.
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 All the above factors are not mutually exclusive, rather these operate simultaneously. In any case,
the basic objective of a selection process is to collect as much relevant information about the
candidates as is possible so that the most suitable candidates are selected. A comprehensive
selection process involves the various steps.
The steps are explained below:
Application Pool:
Application pool built-up through recruitment process is the base for selection process. The basic
objective at the recruitment level is to attract as much worthwhile applications as possible so that
there are more options available at the selection stage.
Preliminary Screening and Interview
It is highly no economic to administer and handle all the applicants. It is advantageous to sort out
unsuitable applicants before using the further selection steps. For this purpose, usually, preliminary
interviews, application blank lists and short test can be used. All applications received are
scrutinised by the personnel department in order to eliminate those applicants who do not ful ll
required quali cations or work experience or technical skill, his application will not be entertained.
Such candidate will be informed of his rejection.
Preliminary interview is a sorting process in which the prospective candidates are given the
necessary information about the nature of the job and the organisation. Necessary information is
obtained from the candidates about their education, skills, experience, expected salary etc. If the
candidate is found suitable, he is elected for further screening. This courtesy interview; as it is often
called helps the department screen out obvious mis ts. Preliminary interview saves time and efforts
of both the company and the candidate. It avoids unnecessary waiting for the rejected candidates
and waste of money on further processing of an unsuitable
candidate. Since rejection rate is high at preliminary interview, the interviewer should be kind,
courteous, receptive and informal.
Application Blank or Application Form:
An application blank is a traditional widely accepted device for getting information from a
prospective applicant which will enable the management to make a proper selection. The blank
provides preliminary information as well as aid in the interview by indicating areas of interest and
discussion. It is a good means of quickly collecting veri able (and therefore fairly accurate) basic
historical data from the candidate. It also serves as a convenient device for circulating information
about the applicant to appropriate members of management and as a useful device for storing
information for, later reference. Many types of application forms, sometimes very long and
comprehensive and sometimes brief, are used.
Information is generally taken on the following items:
Biographical Data: Name, father’s name, data and place of birth, age, sex, nationality, height,
weight, identi cation marks, physical disability, if any, marital status, and number of dependants.
Educational Attainment: Education (subjects offered and grades secured), training acquired in
special elds and knowledge gained from professional/technical institutes or through
correspondence courses.
Work Experience: Previous experience, the number of jobs held with the same or other employers,
including the nature of duties, and responsibilities and the duration of various assignments, salary
received, grades, and reasons for leaving the present employer.
Salary and Bene ts: Present and expected.
Other Items: Names and addresses of previous employers, references, etc. An application blank is a
brief history sheet of an employee’s background and can be used for future reference, in case
needed.
The application blank must be designed from the viewpoint of the applicant as well as with the
company’s purpose in mind. It should be relatively easy to handle in the employment of ce.
Application form helps to serve many functions like:
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 •  Its main usefulness is to provide information for reference checking, good interviewing,
and correlation with testing data.

•  It helps to weed out candidates who are lacking in education, experience or some other
eligibility traits.

•  It helps in formulating questions to be asked in the interview.

•  Data contained in application form can be stored for future reference.

•  It also tests the candidate’s ability to write, to organize his thoughts, and to present facts
clearly and succinctly.

•  It indicates further whether the applicant has consistently progressed to better jobs. It
provides factual information.

Weighted Application Blanks

Some organisations assign numeric values or weights to the responses provided by the applicants.
This makes the application form more job related. Generally, the items that have a strong
relationship to job performance are given higher scores. For example, for a sales representative’s
position, items such as previous selling experience, area of specialisation, commission earned,
religion, language etc. The total score of each applicant is then obtained by adding the weights of
the individual item responses. The resulting scores are then used in the nal selection. WAB is best
suited for jobs where there are many employees especially for sales and technical jobs. It can help
in reducing the employee turnover later on.

However, there are several problems associated with WAB:

•  It takes time to develop such a form.

•   The WAB would have to be updated every few years to ensure that the factors
previously identi ed are still valid products of job success.

•  The organisation should be careful not to depend on weights of a few items while nally
selecting the employee.
Selection Tests:
Many organisations hold different kinds of selection tests to know more about the candidates
or to reject the candidates who cannot be called for interview etc. Selection tests normally
supplement the information provided in the application forms. Such forms may contain
factual information about candidates. Selection tests may give information about their
aptitude, interest, personality, which cannot be known by application forms. Types of tests
and rules of good of testing have been discussed in brief below:

TYPES OF TEST:
Aptitude Tests: These measure whether an individual has the capacity or talent ability to learn a
given job if given adequate training. These are more useful for clerical and trade positions.
Personality Tests: At times, personality affects job performance. These determine personality traits
of the candidate such as cooperativeness, emotional balance etc. These seek to assess an
individual’s motivation, adjustment to the stresses of everyday life, capacity for interpersonal
relations and self-image.




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 Interest Tests: These determine the applicant’s interests. The applicant is asked whether he likes,
dislikes, or is indifferent to many examples of school subjects, occupations, amusements,
peculiarities of people, and particular activities.
Performance Tests: In this test the applicant is asked to demonstrate his ability to do the job. For
example, prospective typists are asked to type several pages with speed and accuracy.
Intelligence Tests: This aim at testing the mental capacity of a person with respect to reasoning,
word uency, numbers, memory, comprehension, picture arrangement, etc. It measures the ability to
grasp, understand and to make judgement.
Knowledge Tests: These are devised to measure the depth of the knowledge and pro ciency in
certain skills already achieved by the applicants such as engineering, accounting etc.
Achievement Tests: Whereas aptitude is a capacity to learn in the future, achievement is concerned
with what one has accomplished. When applicants claim to know something, an achievement test is
given to measure how well they know it.
Projective Tests: In these tests the applicant projects his personality into free responses about
pictures shown to him which are ambiguous.
RULES OF GOOD TESTING
1. Norms should be developed for each test. Their validity and reliability for a given purpose
should be established before they are used.

2. Adequate time and resources must be provided to design, validate, and check tests.

3. Tests should be designed and administered only by trained and competent persons.

4. The user of tests must be extremely sensitive to the feelings of people about tests.

5. Tests are to be used as a screening device.

6. Reliance should not be placed solely upon tests in reaching decisions.

7. Tests should minimize the probabilities of getting distorted results.

8. They must be ‘race-free’.

9. Tests scores are not precise measures.

10. They must be assigned a proper weightage.

Interview:
An interview is a procedure designed to get information from a person and to assess his potential
for the job he is being considered on the basis of oral responses by the applicant to oral inquiries by
the interviewer. Interviewer does a formal in-depth conversation with the applicant, to evaluate his
suitability. It is one of the most important tools in the selection process. This tool is used while
interviewing skilled, technical, professional and even managerial employees. It involves two-way
exchange of information. The interviewer learns about the applicant and the candidate learns about
the employer.
OBJECTIVES OF INTERVIEWS: Interview helps:
•  To obtain additional information from the candidate.

•   Facilitates giving to the candidate information about the job, company, its policies,
products etc. To assess the basic suitability of the candidate.
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 •  The selection interview can be:

•  One to one between the candidate and the interviewer:

•  Two or more interviewers by employers representatives- sequential;

•  By a panel of selections, i.e. by more than representative of the employer.

•  The sequential interview involves a series of interviews; each interviewer meeting the
candidate separately. The panel interview consists of two or more interviews meeting the
candidate together.

TYPES OF INTERVIEWS:
Interviews can be classi ed in various ways according to:

•  Degree of Structure

•  Purpose of Interview

•  Content of Interview
Degree of Structure:
Unstructured or non directive: in which you ask questions as they come
to mind. There is no set format to follow.
Structured or directive: in which the questions and acceptable responses are speci ed in
advance. The responses are rated for appropriateness of content.

Structured and non-structured interviews have their pros and cons. In structured interviews all
applicants are generally asked all required questions by all interviewers. Structured interviews are
generally more valid. However structured interviews do not allow the exibility to pursue points of
interests as they develop.
Purpose of Interview:
Selection interview: This is a type of interview designed to predict future job performance, on the
basis of applicant’s responses to the oral questions asked to him.
Stress interview: It is a special type of selection interview in which the applicant is made
uncomfortable by series of awkward and rude questions. The aim of stress interview is supposedly
to identify applicant’s low or high stress tolerance. In such an interview the applicant is made
uncomfortable by throwing him on the defensive by series of frank and often discourteous questions
by the interviewer.
Content of Interview:
Job Related Interviews: The content of interview can be of a type in which individual’s ability to
project a situation is tested. This is a situation type interview. In job related interview, interviewer
attempts to assess the applicant’s past behaviours for job related information, but most questions are
not considered situational.
Behaviour interview: In this type of interview a situation in described and candidates are asked how
they behaved in the past in such a situation. While in situational interviews candidates are asked to
describe how they would react to situation today or tomorrow. In the behavioural interview they are
asked to describe how they did react to the situation in the past.
PRINCIPLES OF INTERVIEWING
To make the interview effective, it should be properly planned and conducted on certain principles.
Edwin Flippo has described certain rules and principles of good interviewing to this end:




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 •   Provide proper surroundings. The physical setting for the interview should be both
private and comfortable.

•   The mental setting should be one of rapport. The interviewer must be aware of non-
verbal behaviour. Plan for the interview by thoroughly reviewing job speci cations and job
descriptions.

•  Determine the speci c objectives and the method of the interviewing.

•   Inform yourself as much as possible concerning the known information about the
interviewee. The interviewer should possess and demonstrate a basic liking and respect for
people.

•  Questions should be asked in a manner that encourages the interviewee to talk. Put the
applicant at ease.

•  Make a decision only when all the data and information are available. Avoid decisions
that are based on rst impressions.

•  Conclude the interview tactfully, making sure that the candidate leaves feeling neither
too elated nor frustrated.

•   Maintain some written record of the interview during or immediately after it. Listen
attentively and, if possible, protectively.

•  Questions must be stated clearly to avoid confusion and ambiguity. Maintain a balance
between open and overtly structured questions.

•  ‘Body language’ must not be ignored.

•  The interviewer should make some overt sign to indicate the end of the
interview.

•   Interviewing is largely an art, the application of which can be improved through

practice.

Background Investigation:
The next step in the selection process is to undertake an investigation of those applicants who
appear to offer potential as employees. This may include contacting former employers to con rm
the candidate’s work record and to obtain their appraisal of his or her performance contacting other
job related and personal references, and verifying the educational accomplishments shown on the
application.
The background investigation has major implications. Every personnel administrator has the
responsibility to investigate each potential applicant. In some organization, failure to do so could
result in the loss of his or her job. But many managers consider the background investigation data
highly biased. Who would actually list a reference that would not give anything but the best
possible recommendation? The seasoned personnel administrator expects this and delves deeper
into the candidate’s background, but that, too, may not prove to be bene cial. Many past employers
are reluctant to give any information to another company other than factual information (e.g., date
of employment).
Even though there is some reluctance to give this information, there are ways in which personnel












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 administrators can obtain it. Sometimes, for instance information can be obtained from references
once removed. For example, the personnel administrator can ask a reference whose name has been
provided on the application form to give another reference, someone who has knowledge of the
candidate’s work experience. By doing this, the administrator can eliminate the possibility of
accepting an individual based on the employee’s current employer’s glowing recommendation when
the motivation for such a positive recommendation was to get rid of the employee.
Physical Examination:
After the selection decision and before the job offer is made, the candidate is required to undergo
physical tness test. Candidates are sent for physical examination either to the company’s physician
or to a medical of cer approved for the purpose. Such physical examination provides the following
information.
Whether the candidate’s physical measurements are in accordance with job requirements or not?
Whether the candidate suffers from bad health which should be corrected?
Whether the candidate has health problems or psychological attitudes likely to interfere with work
ef ciency or future attendance?
Whether the candidate is physically t for the speci c job or not?
Policy on these physical exams has changed today. Dale Yoder writes, “Modem policy used the
physical examination not to eliminate applicants, but to discover what jobs they are quali ed to ll.
The examination should disclose the physical characteristics of the individual that are signi cant
from the standpoint of his ef cient performance of the job he may enter or of those jobs to which he
may reasonably expect to be transferred or promoted. It should note de ciencies, not as a basis for
rejection, but as indicating restrictions on his transfer to various positions also.”
Approval by Appropriate Authority:
On the basis of the above steps, suitable candidates are recommended for selection by the selection
committee or personnel department. Though such a committee or personnel department may have
authority to select the candidates nally, often it has staff authority to recommend the candidates for
selection to the appropriate authority. Organisations may designate the 65 various authorities for
approval of nal selection of candidates for different categories of candidates. Thus, for top level
managers, board of directors may be approving authority; for lower levels, even functional heads
concerned may be approving authority.
Final Employment Decision:
After a candidate is nally selected, the human resource department recommends his name for
employment. The management or board of the company offers employment in the form of an
appointment letter mentioning the post, the rank, the salary grade, the date by which the candidate
should join and other terms and conditions of employment. Some rms make a contract of service
on judicial paper. Usually an appointment is made on probation in the beginning. The probation
period may range from three months to two years. When the work and conduct of the employee is
found satisfactory, he may be con rmed. The personnel department prepares a waiting list and
informs the candidates. In case a person does not join after being selected, the company calls next
person on the waiting list.
Evaluation:
The selection process, if properly performed, will ensure availability of competent and committed
personnel. A period audit, conducted by people who work independently of the human resource
department, will evaluate the effectiveness of the selection process. The auditors will do a thorough
and the intensive analysis and evaluate the employment programme.
5.4 PLACEMENT AND ORIENTATION
MEANING OF PLACEMENT:
After an employee has been recruited he is provided with basic background information about the
employer, working conditions and the information necessary to perform his job satisfactorily. The
new employee’s initial orientation helps him perform better by providing him information of the
company rules, and practices.
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According to Pigors and Myers, “Placement consists in matching what the supervisor has reason to
think the new employee can do with what the job demands (job requirements), imposes (in strain,
working conditions, etc.), and offers (in the form of pay rate, interest, companionship with other,
promotional possibilities, etc.)” They further state that it is not easy to match all these factors for a
new worker who is still in many ways an unknown quantity. For this reason, the rst placement
usually carries with it the status of probationer.
A few basic principles should be followed at the time of placement of an employee on the job.
These may be enumerated as below:
Principles of Placement:
•   The job should be offered to the man according to his quali cations. The placement
should neither be higher nor lower than the quali cations.

•  While introducing the job to the new employee, an effort should be made to develop a
sense of loyalty and cooperation in him so that he may realise his responsibilities better
towards the job and the organisation.

•  The employee should be made conversant with the working conditions prevailing in the
industry and all things relating to the job. He should also be made aware of the penalties if
he commits a wrong.

•   Man should be placed on the job according to the requirements of the job. The job
should not be adjusted according to the quali cations or requirements of the man. Job rst;
man next, should be the principle of placement.

•  The placement should be ready before the joining date of the newly selected person.

•   The placement in the initial period may be temporary as changes are likely after the
completion of training. The employee may be later transferred to the job where he can do
better justice.

MEANING OF ORIENTATION:
In the words of John M. Ivancevich, “Orientation orients, directs, and guides employees to
understand the work, rm, colleagues, and mission. It introduces new employees to the
organisation, and to his new tasks, managers, and work groups.”
According to John Bernardin, “Orientation is a term used for the organizationally sponsored,
formalized activities associated with an employee’s socialisation into the organisation.”
Billimoria has de ned orientation as, “Induction (orientation) is a technique by which a new
employees rehabilitated into the changed surroundings and introduced to the practices, policies, and
purposes of the organisation.”

Orientation is one component of the new employee socialization process. Socialization is the
ongoing process of instilling in all new employees prevailing attitudes, standards, values, patterns
of behaviour that are expected by the organisation and its departments.
Thus, orientation is a process through which a new employee is introduced to the organisation. It is
the process wherein an employee is made to feel comfortable and at home in the organisation. The
new employee is handed over a rulebook, company booklets, policy manuals, progress reports and
documents containing company information which are informational in nature. It is responsibility of
the human resource department to execute the orientation programme.

5.5 INDUCTION
Induction is the important part of HR management and Development because after the
appointments, it is the prime duty of an organization to make their newly employees acquainted




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 with work place and environment. It is but obvious that they are curious as well as nervous initially.
To reduce their anxiety and tension, induction training should be given to each and every newly
appointed entrant. It makes them comfortable at work place and they get adapted to the work
accordingly. So in this unit we shall study about induction and related issues of it.
Meaning:
Every organization has a recruitment policy by which many people are appointed time to time.
These newly appointed employees are new to the job place and for them everything is strange. The
environment, people, work system is new for them. They may feel nervous or stressed due to this
all. So it is very essential to introduce them with the organization, its mission, vision, culture,
system etc. every organization has to provide training to their new entrants.
It is known as induction. It is the next step after selection and placement. It helps newly joined
employees to adjust him or her to the work in the organization and to make him or her feel at home
with his co-workers. So in easy words, we can say that introducing new entrants with the
organization and its people is induction.
It is must for the organizational as well as individual point of view. Induction is welcoming a new
employee to the organization. In other words, it is a well orchestrated event to socialize the new
entrant with the people and the work environment in a particular organization.
According to Michael Armstrong: “Induction is the process of receiving & welcoming an employee
when he rst joins a company & giving him basic information he needs to settle down quickly &
happily & start work.”
OBJECTIVES OF INDUCTION:
•   To help new employees not to feel strange being a part of the organization after
appointment.

•  To make employees familiar with the people, work culture, duties and responsibilities to
be performed.

•  To make them enable to adapt the new environment and feel stress free.

•  To reduce exploitation by the unscrupulous co – workers.

•  To make him feel con dent at the work place and work without
anxiety and tension

PHASES / TYPES OF INDUCTION PROGRAMME:

Induction is not an immediate activity but it is a process an itself. Its stages are:

•  General Induction

•  Speci c Induction

•  Follow – up Induction
This rst phase of induction is General considered by the HR department. Here the new
employees are made aware about the mission, philosophy and vision of the organization. The
very purpose of the organization is made clear while introduction them with organization.
The new employees is also briefed about his service condition, pay & perks, promotion
procedure, personnel policies & grievance handling mechanisms practiced in the
organization. This type of induction is given accordingly. No time is xed for it. It may be
given for a week or for many weeks.
Speci c Induction
This induction is given by the new employee’s supervisor or boss. The focus is on the overall
exposition of the new employee of the new employee to his job. the employee is introduced to the
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 job, shown place of work & around the premises, introduced to the job. He is introduced to his
colleagues & informed about the procedure of work, rules and conventions to be followed etc. This
helps the new employee adjust with his work environment. It also improves the relationship
between superior and subordinates.
Follow – up Induction
This type of induction is carried to know whether the new entrant is capable to carry his duties or
not or if he understood the organizational related issues. This induction is given by the employee’s
supervisor or a quali ed specialist on industrialist psychology. It is more psychological in nature
and concluded with the effectiveness of induction training provided already.
PROCEDURE FOLLOWED WHILE CARRYING INDUCTION PROGRAMME.
Welcoming new entrants
The new employees need to be welcomed by the organization. It makes them well con dent and
starts feeling that they are being considered as a part of the organization. It creates a sense of
belongingness among them. From the day of their joining, they should be treated with care.
Determining the information:
In this stage it should be considered what the new entrants need to know. What exactly they are
interested to know. Of course the basic information should be provided to them. It is also not
necessary that everything should be informed at a time or load their minds with the information.
They should be given time to adapt themselves with the organizational environment.
Method of providing information:
At this stage, decision should be taken regarding how to provide the information to the employees.
Most of the time through power point presentations is used in the classroom to train the new
employees. But until otherwise employees are physically making acquainted with the organization,
it will dif cult to get mixed with everyone.
Right Instructor:
It is expected that the induction training should be provided by the experienced staff or most of the
time superior. It is very important because the mind of the new employee is full off questions and
doubts. So the instructor should be a man of knowledge and motivated himself to help the new
entrants come out of anxiety.
Evaluation of the induction:
It is the last step of induction programme where attempts are made to understand to what extent the
induction training has been useful to the employees. There are many methods of evaluating the
effectiveness of induction programme. It helps HR department to bring new ideas in the area of
induction training.
IMPORTANCE OF INDUCTION
Easy entry:
Due to the induction training, newly appointed employees feel happy on the introduction with
existing employees and the work environment. So induction helps them to get oriented with the
everything within the organization.
High morale:
Being made introduced with the organization, newly appointed employees feel highly motivated
and their moral gets boosted. They fell satis ed doing work at right place and being trained
formally, they get adapted the organizational environment easily.
Role clarity:
Duplication work is avoided here by ensuring newly appointed employees what they are expected to
do. They are made clearly understood with the work assigned and overcome with ambiguity.
Satisfaction of the job:
Today most of the job skipping or turnover is observed because new entrants are not happy with job
or they are not provided with proper training. If the induction is properly provided and they are
introduced well with the organization, they feel contented and do the job at their best.
Less absenteeism and turnover:
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 Most of the time an employee remains absent if he is not happy with the work place or do not many
things at the work place. So if they are provided proper induction, they do not remain absent and
also do not leave an organization. But stay connected for long.
Goodwill
Companies with good image in the market never compromise with any problem. They provide
induction training to their entire entrant considering them an asset of the organization. It increases
their goodwill or brand in the market.
5.6 SUMMARY
Selection is the process of picking up individuals out of the pool of the job applicants with requisite
quali cations and competence to ll jobs in the organisation. Proper selection can minimize the
costs of replacement and training, reduce legal challenges, and result in a more productive work
force. The discrete selection process would include: Application Pool, Preliminary Screening and
Interview, Application Blank or Application Form, Selection Tests, Interview Background
Investigation, Physical Examination, Approval by Appropriate Authority, Final Employment
Decision and Evaluation.
Selection process involves mutual decision making. The organisation decides whether or not to
make a job offer and how attractive the job offer should be. The candidate decides whether or not
the organisation and the job offer is according to his goals and needs. Selection of proper personnel
helps the management in getting the work done by the people effectively.
To be an effective predictor, a selection device should be Reliable, Valid and Predict a relevant
criterion
In India the selection process on hiring skilled and managerial personnel are fairly well de ned and
systematically practical.
5.7 SELF ASSESSMENT QUESTIONS
1. What do you understand by selection process? Discuss various steps involved in it.

2. What is application blank? What purpose does it serve? Explain the contents of an
application blank.

3. Discuss the characteristics of a good test. Explain various types of tests used in the selection
process.

4. What is an interview? What purpose does it serve? Discuss various types of interviews.

5. Discuss various guidelines to be followed for an interview.

6. Explain various steps involved in the selection of personnel.

7. What do you understand by placement and orientation?

8. What is induction training? What are the objectives of such training?

9. What are the stages or phases of carrying induction?

10. What are the various phases of induction?

11. Explain the importance and signi cance of induction.
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 6-PERFORMANCE APPRAISAL
Unit Structure
6.0 Objectives
6.1 Introduction
6.2 Meaning of Performance Appraisal
6.3 Need and Importance of Performance Appraisal 6.4 Objectives of Performance Appraisal
6.5 Methods of Performance Appraisal
6.6 The Performance Appraisal Process
6.7 Factors Affecting Performance Appraisal
6.8 Bene ts of Performance Appraisal
6.9 Problems of Performance Appraisal
6.10 Performance Appraisal Practices in India
6.11 Effective Performance Appraisal
6.12 Summary
6.13 Self Assessment Questions
6.0 OBJECTIVES
After completing this unit, you will be able to:
•  Understand the concept of performance appraisal.

•  State the meaning and importance of performance appraisal.

•  Discuss the bene ts and problems of appraisal.

•  Enumerate the steps in performance appraisal process.

•  Outline the objectives of performance appraisal

•  Describe various appraisal methods.

•  Outline few performance appraisal practices in India.

6.1 INTRODUCTION
In a casual sense, performance appraisals as old as mankind itself. In an of cial sense, performance
appraisal of an individual began in the Wei dynasty (AD. 261-265) in China, where an Imperial
Rater appraised the performance of the of cial family’.
In 1883, the New York City Civil Service in USA introduced an of cial appraisal programme
shortly before World War. However, of cial appraisal of employees’ performance is thought to have
been started for the rst time during the First World War, when at the instance of Walter Dill Scott,
the US Army: adopted the “Man-to- man’ rating system for evaluating personnel. For being fair and
unbiased, in judging the employee it is necessary to review the performance of the person in the
organization. This is now done in a systematic way in most countries of the world. The evaluation
of an individual’s performance in the organization is called Performance Appraisal.
The, system of performance appraisal compels the management to have a promotion policy within
the organization. It also gives motivation to those employees who are ef cient and are capable of
working in a best way. It is also described as merit rating in which one individual is ranked as better
or worse in comparison to others. The basic purpose in this merit rating is to determine an
employee’s eligibility for promotion. However, performance appraisal is a broad term and it may be
used to ascertain the need for training and development, salary increase, transfer, discharge, etc.
besides promotion.
In simple terms, performance appraisal may be understood as the review of an individual’s
performance in an orderly way, the performance is measured by considering factors like job
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knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability,
co- operation, judgment, versatility, health, and the like. Evaluation should not be restricted to past
performance alone but, the future performances of the employee should also be assessed.
6.2 MEANING OF PERFORMANCE APPRAISAL
Performance appraisal system has been de ned in many ways. The easiest way to understand the
meaning of performance appraisal is as follows:
It is the systematic assessment of an individual with respect to his or her performance on the job and
his or her potential for development in that job. Thus, performance appraisal is a systematic and
objective way of evaluating the relative worth or ability of an employee in performing his job. The
two aspects of performance appraisal considered to be important are:
Systematic Aspect:
The appraisal is said to be systematic when it evaluates all performances in the same manner, by
applying the same approach, so that appraisal of different persons are comparable. Such an
appraisal is taken from time to time according to plan; it is not left to probability. Thus, both raters’
and rates know the system of performance appraisal and its timing.
Objective Aspect:
Appraisal has objectivity also. It’s important is that it attempts at precise
measurement by trying to remove human biases and prejudices.
According to Flippo, a prominent personality in the eld of Human resources, “performance
appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the
matters pertaining to his present job and his potential for a better job.”
In the words of Yoder, “Performance appraisal refers to all formal procedures used in working
organizations to evaluate personalities and contributions and potential of group members.” Thus
performance appraisal is a formal programme in an organization which is concerned with not only
the contributions of the members who form part of the organization, but also aims at spotting the
potential of the people.”
It is a systematic way of judging the relative worth of an employee while carrying out his work in
an organization. It also helps recognize those employees who are performing their tasks well and
also who are not performing their tasks properly and the reasons for such (poor) performance.
According to International Labor Organization, “A regular and continuous evaluation of the quality,
quantity and style of the performance along with the assessment of the factors in uencing the
performance and behavior of an individual is called as performance appraisal.”
In short, we can say that performance appraisal is expected to result in an assessment of:
development potential of the employees, training needs for the employees; capabilities of
employees being placed in higher posts, behavior and obedience of the employees; and the need of
the organization to evolve a control mechanism.
6.3 NEED AND IMPORTANCE OF PERFORMANCE
APPRAISAL
Performance is always measured in terms of outcome and not efforts. Performance Appraisal is
needed in most of the organizations in order:
To give information about the performance of employees on the job and give ranks on the basis
of which decisions regarding salary xation, demotion, promotion, transfer and con rmation are
taken.

•   To provide information about amount of achievement and behavior of subordinate in

their job. This kind of information helps to evaluate the performance of the subordinate, by
correcting loopholes in performances and to set new standards of work, if required.

•  To provide information about an employee’s job-relevant strengths and & weaknesses.


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 •   To provide information so as to identify shortage in employee regarding ability,
awareness and nd out training and developmental needs.

•  To avoid grievances and in disciplinary activities in the organization.

•  It is an ongoing process in every large scale organization.

Performance appraisals in an organization provide employees and managers with an
opportunity to converse in the areas in which employees do extremely well and those in
which employees need improvement. Performance appraisals should be conducted on a
frequent basis, and they need not be directly attached to promotion opportunities only.

• It is important because of several reasons such as:

•   Personal Attention: Performance appraisal evaluation, gives employee to draw
personal concern from supervisor and talk about their own strengths and weaknesses.

•  Feedback: Employees on a regular basis get feedback of their performances and

issues in which they lack, which needs to be resolved on a regular basis.

•  Career Path: It allows employees and supervisors to converse goals that must be
met to grow within the company. This may encompass recognizing skills that must be
acquired, areas in which improvement is required, and additional quali cation that
must be acquired.

•   Employee Accountability: Employees are acquainted that their evaluation will

take place on a regular basis and therefore they are accountable for their job
performance.

•   Communicate Divisional and Company Goals: It not only communicates

employees’ individual goals but provides an opportunity for managers to explain
organizational goals and in the manner in which employees can contribute in the
achievement of those goals.
6.4 OBJECTIVES OF PERFORMANCE APPRAISAL
Performance appraisal in any organization is undertaken to meet certain objectives which
may be in the form of salary increase, promotion, recognizing training and development
needs, providing feedback to employees and putting stress on employees for better
performance.

An employee in an organization may think that performance appraisal is basically used by the
organization to blame employees and to take corrective actions, in such a case well thought out
performance appraisal may results into failure. Therefore the objective of performance appraisal
should be clear and speci c. Thus including objectives into the appraisal system may draw attention
to areas for improvement, new directions and opportunities.
Salary Increase: Performance appraisal plays an important role in making decision about
increase in salary. Increase in salary of an employee depends on how he is performing his job.
Evaluation of an employee takes place on a continuous basis which may be formally or informally.
In a large as well as in small organizations performance appraisal takes place but it may be in a
formal or informal way. It shows how well an employee is performing and to what extent a hike in
salary would take place in comparison to his performance.
Promotion: Performance appraisal gives an idea about how an employee is working in his
present job and what his strong and weak points are. In comparison to his strength and weaknesses
it is decided whether he can be promoted to the next higher position or not. If necessary what




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additional training is required? Similarly it could be used for demotion, discharge of an employee
and transfer.
Training and Development: Performance appraisal gives an idea about strengths and weaknesses
of an employee on his present job. It gives an idea about the training required by an employee for
overcoming the limitations that an employee is having for better performance in future.
Feedback: Performance appraisal gives an idea to each employee where they are, how they are
working, and how are they contributing towards achievement of organizational objectives.
Feedback works in two ways. First, the person gets view about his performance and he may try to
conquer his weaknesses which may lead to better performance. Second, the person gets satis ed
after he relates his work with organizational objectives. It gives him an idea that he is doing a
meaning full work and can also contribute in a better way.
Pressure on Employees: Performance appraisal puts a sort of stress on employees for better
performance. If the employees are aware that they are been appraised in comparison to their
performance and they will have positive and acceptable behaviour in this respect
6.5 METHODS / TECHNIQUES OF PERFORMANCE
APPRAISAL
Performance appraisal methods are categorized in two ways traditional and modern methods. Each
organization adopts a different method of performance appraisal according to the need of
organization. In small organization, it may be on an informal basis where personal opinion of a
superior about his subordinates may consider for appraisal.
Table: Methods of Performance Appraisal
Performance Appraisal
Traditional Methods Modern Methods

Ranking method Management by Objectives (MB0)

Behaviorally anchored rating
Paired comparison
scales
Grading method Assessment centers
Forced distribution method 360-degree appraisal
Forced choice method Cost accounting method
Checklist method
Critical incidents method
Graphic scale method
Essay method
Field review method
TRADITIONAL METHODS
Ranking Method:
It is the oldest and simplest method of performance appraisal in which employees’ are ranked on
certain criteria such as trait or characteristic. The employee is ranked from highest to lowest or from
worst to best in an organization. Thus if there are seven employees to be ranked then there will be
seven ranks from 1 to 7.
Rating scales offer the advantages of exibility comparatively easy use and low cost. Nearly every
type of job can be evaluated with the rating scale, the only condition being that the Job performance
criteria should he changed’. In such a way, a large number of employees can be evaluated in a
shorter time period.
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 The greatest limitation of this method is that differences in ranks do not indicate how much an
employee of rank 1 is better than the employee whose rank is last.
Paired Comparison: In method is comparatively simpler as compared to ranking method. In this
method, the evaluator ranks employees by comparing one employee with all other employees in the
group. The rater is given slips where, each slip has a pair of names, the rater puts a tick mark next
those employee whom he considers to be the better of the two. This employee is compared number
of times so as to determine the nal ranking. This method provides comparison of persons in a
better way. However, this increases the work as the large number of comparisons has to be made.
Grading Method: In this method, certain categories are de ned well in advance and employees are
put in particular category depending on their traits and characteristics. Such categories may be
de ned as outstanding, good, average, poor, very poor, or may be in terms of alphabet like A, B, C,
D, etc. where A may indicate the best and D indicating the worst. This type of grading method is
applied during Semester pattern of examinations. One of the major limitations of this method is that
the rater may rate many employees on the better side of their performance.
Forced Distribution Method: This method was evolved to abolish the trend of rating most of the
employees at a higher end of the scale. The fundamental assumption in this method is that
employees’ performance level conforms to a normal statistical distribution. For example, 10 per
cent employees may be rated as excellent, 40 per cent as above average, 20 per cent as average, 10
per cent below average, and 20 per cent as poor. It eliminates or minimizes the favoritism of rating
many employees on a higher side. It is simple and easy method to appraise employees. It becomes
dif cult when the rater has to explain why an employee is placed in a particular grouping as
compared to others.
Forced-choice Method: The forced-choice rating method contains a sequence of question in a
statement form with which the rater checks how effectively the statement describes each individual
being evaluated in the organization. There may be some variation sin the methods and statements
used, but the most common method of forced choice contains two statements both of which may be
positive or negative. It may be both the statement describes the characteristics of an employee, but
the rater is forced to tick only one i.e. the most appropriate statement which may be more
descriptive of the employee. For example, a rater may be given the following two statements:
•  The employee is hard working.

•  The employee gives clear instructions to his subordinates.

Though both of them describe the characteristics of an employee, the rater is forced to tick
only one which appears to be more descriptive of the employee. Out of these two statements,
only one statement is considered for nal analysis of rating. For example, a rater may be
given the following two statements:

•  The employee is very sincere.

•  Employee gives clear and fast instructions to his subordinates.

Both of the above statements are positive but the rater is supposed to rate only one which is
more appropriate of subordinate’s behavior. For ranking only one statement is considered. As
the rater is not aware about the

statement to be considered the result would be free from bias. This method may be more objective
but it involves lot of problems in framing of such sets of statements.
Check-list Method: The main reason for using this method is to reduce the burden of evaluator. In
this method of evaluation the evaluator is provided with the appraisal report which consist of series
of questions which is related to the appraise. Such questions are prepared in a manner that re ects
the behavior of the concerned appraise. Every question has two alternatives, yes or no, as given
below:
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 •  Is he/she respected by his/her subordinates? Yes/No

•  Is he/she ready to help other employees? Yes/No

Does her behavior remain same for everyone in the organization? Yes/No
The concerned rater/evaluator has to tick appropriate answers relevant to the appraises.
When the check list is nished, it is sent to the personnel department to prepare the nal
scores for all appraises based on all questions based on yes or no. While preparing question
effort is made to establish the level of consistency of the rater by asking the same question
twice but in a different manner. This method is considered to be easy if questions are framed
properly for different categories of employees.
However, one of the disadvantages of the checklist method is that it is very dif cult to
accumulate, analyze and evaluate a number of statements about employee characteristics and
contributions. It is even costly method with lot of time and efforts required by the
organization.
Critical Incidents Method: This method is very useful for nding out those employees who
have the highest potential to work in a critical situation. Such an incidence is very important
for organization as they get a sense, how a supervisor has handled a situation in the case of
sudden trouble in an organization, which gives an idea about his leadership qualities and
handling of situation. It is also said to be continuous appraisal method where employees are
appraised continuously by keeping in mind the critical situation. In this method, only the
case of sudden trouble and behavior associated with these incidents or trouble are taken for
evaluation.
This method is categorized in three steps. First, a list of notable (good or bad) on-the-job
behavior of speci c incidents or sudden trouble is prepared. Second, selected experts would
then assign weightage or score to these incidents according to how serious a particular
incident is and their degree of willingness to perform a job. Third, nally a check-list
indicating incidents that illustrate workers as good or “bad” is formed. Then, the checklist is
given to the rater for evaluating the workers.

The strong point of critical incident method is that it focuses on behaviors and, thus, judge’s
performance rather than personalities.
Its drawbacks are that too frequently they need to write down the critical incidents which are very
time consuming and burdensome for evaluators, i.e., managers. Generally, negative incidents are
more noticeable than positives.
Graphic Scale Method: It is one of the simplest and most popular techniques for appraising
performances of employee. It is also known as linear rating scale. In graphic rating scale the printed
appraisal form is used to appraise each employee.
Such forms contain a number of objectives, and trait qualities and characters to be rated like quality
of work and amount of work, job know how dependability, initiative, attitude, leadership quality
and emotional stability.
The rater gives an estimate the extent to which subordinates possess each quality. The extent to
which quality is possessed is measured on a scale which can vary from three points to several
points. In general practice ve point scales is used. Some organizations use numbers in order to
avoid the propensity of the rater to tick mark central points. It may be numbered or de ned. Thus
numbers like 5, 4, 3, 2 and 1 may denote points for various degrees of excellent-poor, high-low, or
good-bad, and so on. Such numbers may be expressed in terms like excellent, very good, average,
poor and very poor; or very high, high, average, low and very low.
Graphic scale method is good for measuring various job behaviors of an employee. But, it is bound
to limitations of rater’s bias while rating employee’s behavior at job.
Essay Method: In this method, the rater writes a detailed description on an employee’s
characteristics and behavior, Knowledge about organizational policies, procedures and rules,
Knowledge about the job, Training and development needs of the employee, strengths, weakness,




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past performance, potential and suggestions for improvement. It is said to be the encouraging and
simple method to use. It does not need dif cult formats and speci c training to complete it.
Field Review Method: In this method of appraisal direct superior is not going to appraise an
employee but appraised by another person, usually, from personnel department. The rater, in such a
case, appraises the employee on the basis of his past records of productivity and other information
such as absenteeism, late coming, etc. It is more suitable in a situation where an organization wants
to provide promotion to an employee. It also gives information for comparing employees from
different locations and units. It reduces partiality to some extent as personnel department person is
supposed to be trained in appraisal mechanism. This method suffers from two limitations:
As employees are not rated by immediate boss, the rater from other department may not be familiar
with the conditions in an employee’s work environment which may hamper his ability and work
motivation to perform.
The rater from other department do not get a chance to scrutinize the employee’s behavior or
performance with different time interval and in a variety of situations, but only in an unnaturally
structured interview situation which is for a very short period of time.
MODERN METHODS
Management by Objectives (MB0): The concept of ‘Management by Objectives’ (MBO) was
coined by Peter Drucker in 1954. It is a process where the employees and the superiors come
together to identify some goals which are common to them, the employees set their own goals to be
achieved, the benchmark is taken as the criteria for measuring their performances and their
involvement is there in deciding the course of action to be followed.
The basic nature of MBO is participative, setting their goals, selecting a course of actions to achieve
goals and then taking decision. The most important aspect of MBO is measuring the actual
performances of the employee with the standards set by them. It is also said to be a process that
integrates organizational objectives into individual objectives.

Steps in MBO:
Entire programme of MBO is divided in four major steps i.e. Setting up of goal, Action Planning,
Comparison and Timely Review.
Setting up of goal: In goal setting superior and subordinate together set certain goals, i.e. the
expected outcome that each employee is supposed to achieve.
Action Planning: In action planning, the manner in which goals could be achieved is determined i.e.
identifying the activities which are necessary to perform; to achieve or determined goals or
standards. When the employees start with their activities, they come to know what is to be done,
what has been done, and what remains to be done and it also gives an idea about the resources to be
achieved.
Timely Review: In this third step, the goals set by the individual employee are compared with the
actual goals achieved. It gives an idea to the evaluator as why there is a variation in desired
outcome and actual outcome. Such a comparison helps create need for training so as to enhance
employees’ performance. Finally, in the timely review step, corrective actions are taken so that
actual performances do not deviates from standards established in beginning.
The main reason for conducting reviews is not to humiliate the performer but to assist him in better
performances in future.
Advantages of MBO:
Few advantages of MBO are:
•  It is an outcome oriented method.

•  It coordinates the planning and control functions and provides motivation.


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 •  Employees are clear about the task that they are expected to perform and also how they
may be evaluated.

Limitations of MBO:

MBO do have certain limitations such as:

•  It is time consuming process.

•  Employees and the superiors jointly setting the goals may lead to con ict as employee
would always like to set lower goal and the superior would like to set it on the higher side.

•  Lack of con dence in employee by management.

Behaviorally Anchored Rating Scales: This method is a combination of traditional rating
scales and critical incidents methods. It consists of preset critical areas of job performance or
sets of behavioral statements which describes the important job performance qualities as
good or bad (for e.g. the qualities like inter personal relationships, exibility and
consistency, job knowledge etc). These statements are developed from critical incidents.
These behavioral examples are then again translated into appropriate performance
dimensions. Those that are selected into the dimension are retained. The nal groups of
behavior incidents are then scaled numerically to a level of performance that is perceived to
represent. A rater must indicate which behavior on each scale best describes an employee’s
performance. The results of the above processes are behavioral descriptions, such as
anticipate, plan, executes, solves immediate problems, carries out orders, and handles urgent
situation situations.

Advantages:
This method has following advantages:

•  It reduces rating errors as the behavior is assessed over traits.

•  It gives an idea about the behavior to the employee and the rater about which behaviors
bring good Performance and which bring bad performance.
Assessment Centers: It is a method which was rst implemented in German Army in 1930.
With the passage of time industrial houses and business started using this method. This is a
system of assessment where individual employee is assessed by many experts by using
different technique of performance appraisal. The techniques which may be used are role
playing, case studies, simulation exercises, transactional analysis etc.
In this method employees from different departments are brought together for an assignment which
they are supposed to perform in a group, as if they are working for a higher post or promoted. Each
employee is ranked by the observer on the basis of merit. The basic purpose behind assessment is to
recognize whether a particular employee can be promoted, or is there any need for training or
development.
Advantages:
This method has certain advantages such as it helps the observer in making correct decision in terms
of which employee has the capability of getting promoted.
Disadvantages:
It has certain disadvantages also it is costly and time consuming, discourages the poor performers
etc.
360 Degree Performance Appraisals: This method is also known as ‘multi-rater feedback’, it is the
appraisal in a wider perspective where the comment about the employees’ performance comes from
all the possible sources that are directly or indirectly related with the employee on his job.


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In 360 degree performance appraisal an employee can be appraised by his peers, managers (i.e.
superior), subordinates, team members, customers, suppliers, vendors anyone who comes into direct
or indirect contact with the employee and can provide necessary information or feedback regarding
performance of the employee the “on-the- job”.
The four major component of 360 degree performance appraisal are
•  Employees Self Appraisal

•  Appraisal by Superior

•  Appraisal by Subordinate

•  Peer Appraisal.
Employee self appraisal gives an option to the employee to know his own strengths and
weaknesses, his achievements, and judge his own performance. Appraisal by superior forms
the traditional part of the 360 degree performance appraisal where the employees’
responsibilities and actual performance is judged by the superior.

Appraisal by subordinate gives a chance to evaluate the employee on the basis of communication
and motivating abilities, superior’s ability to delegate the work, leadership qualities etc. It is also
known as internal customers; the correct opinion given by peers can aid to nd employees’ who are
co-operative, employees who ready to work in a team and understanding towards others.
Cost Accounting Method: In this method performance of an employee is evaluated on the basis of
monetary returns the employee gives to his or her organization. A relationship is recognized
between the cost included in keeping the employee in an organization and the bene t the
organization gets from him or her. The evaluation is based on the established relationship between
the cost and the bene t.
The following factors are considered while evaluating an employee’s performance:
•  Interpersonal relationship with others.

•  Quality of product produced or service given to the organization.

•  Wastage, damage, accidents caused by the employee.

•  Average value of production or service by an employee.

•  Overhead cost incurred.

6.6 THE PERFORMANCE APPRAISAL PROCESS

The performance appraisal system of one organization may vary from other organizations, though
some of the speci c steps that an organization may follow are as follows:
Establish Performance Standards: It begins by establishing performance standards i.e. what they
expect from their employee in terms of outputs, accomplishments and skills that they will evaluate
with the passage of time. The standards set should be clear and objective enough to be understood
and measured. The standards which are set are evolved out of job analysis and job descriptions.
Standards set should be clear and not the vague one. The expectation of the manager from his
employee should be clear so that it could be communicated to the subordinates that they will be
appraised against the standards set for them.
Communicating the Standards set for an Employee: Once the standards for performance are set it
should be communicated to the concerned employee, about what it expected from them in terms of
performance. It should not be part of the employees’ job to estimate what they are expected do.
Communication is said to be two ways street, mere passing of information to subordinate does not
mean that the work is done. Communication only takes place when the information given has taken
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 place and has been received and understood by subordinate. If necessary, the standards may be
tailored or revised in the light of feedback obtained from the employees.
Measuring of the Actual Performances: It is one of the most crucial steps of performance appraisal
process. It is very important to know as how the performance will be measured and what should be
measured, thus four important sources frequently used by managers are personal observation,
statistical reports, oral reports, and written reports. However, these resources give more reliable
information. What we measure is probably more critical to the evaluation process than how we
measure. The selection of the incorrect criteria can result in serious consequences. What we
measure gives an idea about what people in an organization will attempt to achieve. The criteria
which are considered must represent performance as stated in the rst two steps of the appraisal
process.
Comparing Actual Performance with Standards Set in the Beginning:
In this step of performance appraisal the actual performance is compared with the expected or
desired standard set. A comparison between actual or desired standard may disclose the deviation
between standard performance and actual performance and will allow the evaluator to carry on with
the discussion of the appraisal with the concerned employees.
Discussion with the Concerned Employee: In this step performance of the employee is
communicated and discussed. It gives an idea to the employee regarding their strengths and
weaknesses. The impact of this discussion may be positive or negative. The impression that
subordinates receive from their assessment has a very strong impact on their self esteem and, is very
important, for their future performances.
Initiate Corrective Action: Corrective action can be of two types; one is instant and deals primarily
with symptoms. The other is basic and deals with the causes. Instant corrective action is often
described as “putting out res”, where as basic corrective action gets to the source from where
deviation has taken place and seeks to adjust the differences permanently. Instant action corrects
something right at a particular point and gets things back on track. Basic action asks how and why
performance deviated. In some instances, managers may feel that they do not have the time to take
basic corrective action and thus may go for “perpetually put out res.
Thus the appraisal system of each organization may differ as per the requirement of that
Organization.
6.7 FACTORS AFFECTING PERFORMANCE APPRAISAL
There are various factors which may in uence the performance appraisal system in any
organization. There are some factors which introduce bias whereas; some other factors hinder
purposeful assessment. Such factors are as follows:
Value System of Evaluator: The task of evaluator is to assess the work of subordinate and write
reports of the same. They are projected to do this for some purposeful assessment. It happens that
evaluator sometime judges the performance on the basis of their own value system. Each person has
his own value system and socio cultural environment. Mostly, it is found that the reports are
in uenced by the evaluator value-system. This subjective element has lot of impact on nal report.
Dominant Work Orientation: The performance Appraisal Report of a subordinate is prepared by a
superior is found to have an impact by the dominant work orientation of the superior of cer.
Sometimes there is more emphasis on certain aspect of the work as compared to other aspect which
may be equally important by the superior. It introduces subjectivity performance appraisal system.
•  Inclination for work of dynamic nature.

•  Liking for routine work and strict maintenance of.

•  Importance on inter-personal relations and rank.

•  Emphasis on qualities which do not have much functional utility; and

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 •  Emphasis on consistency to some philosophy.
These elements bring subjectivity in the process of evaluation, in uence the judgment of the
superior and distort the evaluation of performance of the subordinates.
Loyalty: It plays a vital role in evaluating employee. An Employee shows loyalty due to
many reasons such as common values, objectives, emotional needs, interests, caste, religion,
language or region. Loyalty brings the superior and the loyal subordinate closer and closer to
each other, and creates distance between those employees who are not loyal to their superior.
This makes assessment of superior to be biased.
Level of Achievement: Subordinates evaluation may also depend on the level of achievement
of the superior. If there is a vast difference between the level of achievement of the superior
and Subordinate, then it can create problems of adjustment and purpose for which evaluation
is done is not achieved.
Factors Hindering Objective Assessment: There are various factors which obstruct the
objective appraisal of the performance of the subordinates. These factors are as follows:
Superiority complex of the superior reporting of cer.

•   Overall performance assessment does not take place only certain incidences are
assessed.

•  Past record of the subordinate.

•  Personality of the subordinate.

•  Ability of the subordinate to exercise in uence at higher level.

An effective performance appraisal system can be of bene t to three parties they are for
organization, for appraiser and for appraisee.
For the Organizations:
Following are the bene ts to an organization:
•   It leads to better performance throughout the organization, due to successful
communication of the objectives and values of the organizations, sense of being close to the
organization, loyalty and improved relationships between managers and staff.

•  Overall improvement in the duties performed by each employee of the organization.

•  Due to performance appraisal of employee new ideas for improvement in their work is
generated. Long term plans can be generated.

•  The need for training and development can be identi ed more clearly.

•  A tradition of nonstop improvement and success in the organization can be formed and
maintained. Career development plans can be chalked out for capable employee to enhance
their performance in future.
For the appraiser:
Following are the bene ts to the appraiser:

•  It gives an opportunity to the appraiser to develop a general idea of individual jobs and
departments. For every new or dif cult situation new idea is generated for improvement or
for overcoming that problem.




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 •   It gives an opportunity to integrate team and individual objectives and targets with
departmental and organizational objectives.

•  It gives an opportunity to explain the amount of work expected by manager from teams
and individuals.

•  It gives an opportunity to focus more on targets.

•  It enables to form more productive relationship with staff based on

mutual trust and understanding.

For the Appraisee:

Following are the bene ts for the appraisee:

•  Increased motivation.

•  Increased job satisfaction.

•  Increased sense of personal value. Increase in morale of an employee.

•  It gives an opportunity to know their strength and weaknesses. It gives

an idea about areas of their improvement.

•   There will be a chance to subordinate to express his views even after performance
appraisal An employee should express his emotional needs and his value system which is
considered to be important today.

6.9 PROBLEMS/LIMITATIONS OF PERFORMANCE APPRAISAL

Performance appraisal technique is very bene cial for an organization for taking decisions
regarding salary xation, demotion, promotion, transfer and con rmation etc. But, it is not free
from problems. Some of these problems are as follows:

Problems with Performance Appraisal are:

Leniency Error :Typically some raters have a tendency to avoid con ict with their employees and
project themselves as ‘good managers’. In an effort to avoid con ict, the rater has the tendency to
be overly generous in judgment. They assign higher rating to an employee’s performance than
warranted by his actual level of performance.

Strictness Error: :Strictness error refers to the tendency of raters to be overly harsh while judging
performance of employees. This may be a case where the standards of performance may be too high
or unrealistic or the manager’s personality characteristics or experience may be the cause. Such
strictness results in lower rating of all employees under the rater and cause frustration and anger in
good performers. Leniency or severity on the part of a rater defeats the very purpose of performance
appraisal. Depending on rater’s own mental make up at the time of appraisal, rater may rate strictly
or leniently. Holding raters accountable for the accuracy of their ratings, especially when ratings are
for administrative purposes, may be an effective strategy for reducing leniency error. (Ami B. et al.
2005)

Spill over Effect :A spillover effect takes place when past performance appraisal ratings
unjusti ably in uence current ratings. Past ratings, good or bad, result in similar rating for current


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 appraisal although demonstrative behavior does not deserve the ratings, good or bad.

Bias Effect :This effect to allow individual differences such as sex, race, and age to affect the
appraisal ratings employee receive. The interpersonal affect, a like dislike relationship between a
supervisor and his/her subordinate, has traditionally been conceptualized as a source of bias in
performance appraisals. However, some researchers have argued that the interpersonal affect may
not be a bias, especially where it develops as a result of past performance.

Halo Effect :In halo effect, the appraiser / manager draws on one speci c characteristics /
accomplishment to excessively in uence performance review or applies favourable ratings to all job
duties based on impressive performance in one area. For example, if an employee is accurate in
work but lacks initiative. This error takes place when one aspect of an individual’s performance
affects the appraisal of his entire performance. In an organisation halo error occurs when an
employee who works late constantly might be rated high on productivity and quality of output as
well as on motivation.

Horn Effect :Highly critical bosses have tendency to compare performance of their subordinates
with negative attitude.

Rater Effect :High or low ratings are given to certain individuals or groups based on rater’s attitude
towards the ratee not on actual performance or output. This includes stereotyping, favouritism and
hostility. Recent performance appraisal research has highlighted the important role played by
contextual and individual factors in shaping rating behavior such as personality factors or beliefs,
systematically affect rating behavior. The effects of these context and rater factors are re ected in
ratings accuracy, ratings discrimination among raters/dimensions, and rating elevation. ( Aharon
Tziner et. Al 2005). According to the ndings of a study attitudes and beliefs account for substantial
variance in rater’s likelihood of giving high or low ratings, willingness to discriminate good from
poor performers, and willingness to discriminate among various aspects of job performance when
completing actual performance ratings. (Aharon Tziner et al. 2001)

Status Effect :The employees working at higher level jobs are overrated whereas employees
working at lower level jobs underrated.
Latest behaviour Sometimes, the appraisal is in uenced by the most recent behaviour, ignoring the
common behaviour of an individual during the entire period.

Shifting Standards :Performance appraisal should be based on uniform and fair standards. If the
standards are changed then employees might get confused and organisation might not be able to
promote right candidate. For e.g. last year quality was the criteria for appraisal but boss decides to
judge them this year on the basis of quantity.

First impression :Raters may form an overall impression of a candidate based on some speci c
qualities or behaviour in rst meeting and carry it forward. At the time of appraisal rater rates a
candidate with same impression.

Poor appraisal forms :The appraisal process might also be in uenced by certain factors relating to
appraisal forms such as vague and unclear rating scale, irrelevant performance dimension, long and
complex contents in the form etc.

Situational factors: :Theory and research suggest that both person and situation in uence observed
performance. System or situational factors can either enhance or constrain performance. If raters do
not compensate for the in uence of situational factors, ratings will be contaminated with situational
in uences and will fail to validly re ect the true level of performance (I.M. Jawahar, 2005)
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Political Purposes :There is evidence that performance ratings are often manipulated for political
purposes. The study examined the effects of employees’ perceptions of political motives in
performance appraisal on their job satisfaction and intention to quit results indicated that when
employees perceived performance ratings to be manipulated because of raters’ personal bias and
intent to punish subordinates they expressed reduced job satisfaction that, in turn, led to greater
intentions to quit their jobs. Manipulations of ratings for motivational purposes, however, had no
effect on job satisfaction and turnover intention. (June M.L. Poon, 2004)

6.10 PERFORMANCE APPRAISALPRACTICES IN INDIA

The systematic study of performance appraisal practices in India is very limited. According to few
studies in India the performance appraisal is mainly undertaken for three objectives such as (i) to
determine increments in salary; (ii) to assist organizational planning, placement, or suitability; and
(iii) for training and development purposes. Other objectives of appraisal were: informing employee
where they stand in organization, follow up interviews, etc.
Every company uses different criteria to evaluate their employees. There are basically three groups
of criteria being used for appraisal purpose:
•   Evaluation of qualitative characteristics, such as, intelligence, reliability, honesty,
leadership and attitudes, abilities, etc.,

•  Evaluation of actual performance- qualitatively and quantitatively; and

•  Evaluation of development and future potential and development by an employee during

the period under consideration.
Evaluation criteria vary from company to company. There is vast deviation in periodicity of
appraisal of employees. Few companies appraise annually, some appraise half yearly, and a
few quarterly; however, annual appraisal is most common among many.
The emergence of following trends related to Performance appraisal practices can be seen in
the global scenario: 360 degree feedback, Team performance appraisal, Rank and yank
strategy.
•   360 Degree Feedback: It is also known as ‘multi-rater feedback’, where the
feedback about the employees’ performance comes from all the sources that come in
contact with the employee on his job.

•   Team Performance Appraisal: In this method each employee performance is

measured as a team member as well as individually.

•   Rank and Yank Strategy: It is also known as up or out policy where the
performance appraisal model is prepared in which best-to-worst ranking methods are
used to identify and separate the poor performers from the good performers. Then
certain plans are chalked out for improvement. Some of the organizations following
this strategy are Ford, Microsoft and Sun Microsystems.

6.11 EFFECTIVE PERFORMANCE APPRAISAL

The performance appraisal system is always questioned in terms of its effectiveness and the
problems of reliability and validity. It is always dif cult to know whether what is appraised
is what was supposed to be appraised. As long as subjective judgment is there this question
cannot be answered perhaps, the following steps can help improve the system.
•  The supervisors should be told that they themselves will be evaluated on
the basis of how seriously they are performing their duties.






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 •  To perform assigned task of evaluation in a better way superior should be
provided with better training of writing report.

•   To carry out job evaluation studies and prepares job descriptions/roles

and prepares separate forms for various positions in the organization.

•  The system should be designed in such a way that it is neither dif cult to understand nor
impossible to practice.

•   The supervisor should monitor whether the improvement in performance in the areas
found weak is taking place or not and, if not, help the employee to achieve the required
improvement.
Characteristics of an Effective Performance Appraisal System
According to Watson and Wyatt Survey (2002), “organisations need strategic support of
employees in new economy. People are more important than ever, people are the only
sustainable source of competitive advantage”. Thus, performance appraisal assumes
signi cance for every business organisation. A good appraisal system possesses the
following characteristics:
It is based on evidence
It is highly individualized
It is a joint activity
It strives for understanding.
It creates commitment
It maximizes self-analysis and self-discovery
It results in improved performance
The essential characteristics of an effective performance appraisal system are as follows:

•  Simple rating system: The rating system should be simple and based on job analysis for
ensuring accuracy and fairness of performance evaluation of employees.

•  Training in appraisal system: All employees, including managers, should be trained to

use the appraisal system so that they understand the objectives, methodology and purpose of
performance appraisal.

•  Quantifying performance: Performance appraisal should be based on accurate up-to-date

job descriptions and ratings be made on observable performance.

•  Freedom from biases: Evaluations should be done under standard conditions and should
be free from adverse impact arising due to personal biases and gender discrimination. A
biased appraisal system is worse than having no appraisal system as it damages the
motivation, morale and productivity of employees and impairs performance oriented
behaviour.

•   Participative: Preliminary results of performance appraisal should be shared with the

employee to develop con dence of employees in the system and to provide opportunities for
discussions.

•   Reviewing of cer: There must be some upper level reviews with appeal provision so
that appraisal ratings are normalized and employees have an opportunity to speak against
unfair treatment by their immediate superiors.
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 •   Performance feedback: Performance counselling and feedback should be provided to
employees for creating joint action plans for rectifying de ciencies in performance and
seeking means and measures for improving performance in future.

•   Combining absolute and relative standards: Appraisal should be carried out by

combining absolute and relative performance standards so that job performance expectations
are relative and achievable.

•  Using behavior based measures: Behavioural based measures should be used to correct
and develop appropriate employee attitudes, motivation and behavior for directing and
controlling employee efforts and outcomes.

•  Identi cation of performance goals: Performance appraisal of employees should also be

based upon agreed performance goals and targets for ensuring that employees are rated for
the level of performance expected from them.

•   Training & Development: Performance should be used for employee development

purposes so that gaps in skills and competencies are addressed and removed for better
performance and productivity.

•  Recognize and reward achievement: Appraisals should recognize, reward, reinforce and
publicize employee achievements to motivate and serve as a role model for others to
emulate.

•   Identifying improvement areas: Appraisal should identify areas where performance is

good and when it can be improved.

•   Con dence and acceptability of employees: Performance appraisal process should be

carried out in such a way that employees response trust and con dence in the system.
Without employee acceptance, performance appraisal shall serve no organisational purposes
and will get reduced to a mere ritual on paper.

•   Documentation: Appraisal process should ensure that performance goals and speci c
activities for developing performance of employees are documented for further reference and
as legal backup.
Finally, reviewing, the appraisal systems every now and then help updating it, and making
appropriate changes in it. This is the most important factor in making performance appraisal
effective, with the passage of time necessary changes in tasks, abilities and skills to perform
has to be made. If changes in the format are not considered the reports may not generate the
kind of result needed to satisfy appraisal objectives.
6.12 SUMMARY
In the organizational context performance appraisal is an evaluation of personnel in a systematic
way by superiors or others familiar with their performance. It is also described as merit rating in
which one individual is ranked as better or worse in comparison to others. The basic purpose in this
merit rating is to determine an employee’s eligibility for promotion. However, performance
appraisal is a broad term and it may be used to ascertain the need for training and development,
salary increase, transfer, discharge, etc. besides promotion. It is the systematic assessment of an
individual with respect to his or her performance on the job and his or her potential for development
in that job.
Performance appraisals should be conducted on a frequent basis, and they need not be directly
attached to promotion opportunities only. It is important because of several reasons such as:
Personal Attention, Feedback, Career Path, Employee Accountability, Communicate Divisional and


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 Company Goals. Thus, objectives into the appraisal system may draw attention to areas for
improvement, new directions and opportunities. The methods of performance appraisal are
categorized in two ways traditional and modern methods. Each organization adopts a different
method of performance appraisal according to the need of organization, with each method having
its own advantages and drawbacks. The performance appraisal system of one organization may vary
from other organizations; this may lead to few changes in appraisal process. Some of the problems
faced in appraising employees are biasness of rater which may include: (a)halo effect, (b) central
tendency error, (c) the leniency and strictness biases, (d) personal prejudice, and (e) the recent effect
etc.
The systematic study of performance appraisal practices in India is very limited. Few innovative
performance appraisal practices are: 1) Managerial personnel are allowed to challenge or appeal
appraisal decisions made by evaluator.2) Employee management skills are important in
performance appraisal.3) Personnel department gives a clear instruction of policy and its
implementation. 4) Evaluation to be made only on the basis of performance of employee at work.5)
It has also enhanced role clarity in the Organization.
The latest mantra being followed by organizations across the world being – “get paid according to
what you contribute” – the focus of most of the organizations is turning to performance
management and speci cally to individual performance. It is always questioned in terms of its
effectiveness and the problems of reliability and validity exist which could be improved if the
supervisors are told that they themselves will be evaluated on the basis of how seriously they are
performing their duties, To perform assigned task of evaluation in a better way superior should be
provided with better training of writing report. Thus, performance appraisal is the technique which
is essential for every organization
6.13 SELF ASSESSMENT QUESTIONS
1. “Performance appraisal is the systematic evaluation of the individual with respect to his
performance on the job and his potential for development’’. What are the options open to
you in the design of a performance appraisal system to achieve this goal?

2. Explain the Performance Appraisal System. Either suggests improvements to an existing

appraisal system in your organization or design an appraisal system which would meet the
objectives outlines in this chapter.

3. Does current thinking indicates that appraisal for training should be conducted separately
from appraisal for promotion?

4. Explain in detail the process of performance appraisal.

5. Write short notes of:

Management by objectives
Behaviorally Anchored Rating Scale Field Review Method
Critical Incident Method

6. Explain the methods of performance appraisal in detail.

7. “Performance appraisal is not only for appraisal but is for achievement and improvement of
performance”. Explain.

8. According to you what should be done to have an effective performance appraisal system in
your organization.






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 VII-ETHICS ON PERFORMANCE APPRAISAL
Unit Structure
7.0 Objectives
7.1 Need of Ethics
7.2 Sources of Ethics
7.3 How to Manage Ethics at Workplace
7.4 Five Sources of Ethical Standards
7.5 Self Assessment Questions
7.0 OBJECTIVES
After completing this unit, you will be able to:
•  Understand the need of business ethics.

•  Know the sources of business ethics.

•  Discuss How to manage ethics.

7.1 NEED OF ETHICS ON PERFORMANCE APPRAISAL

Ethics refers to the study of good and evil, right and wrong, and just and unjust actions of business
people. Business ethics is the same as the generally accepted norms of good or bad practices.
Human resource management (HRM) is the science of managing people systematically in
organizations. The unique individual actor in the organization a given executive, manager, line
worker is not the focus of HRM, rather, human resources practices and policies concerning
recurring cycles of staf ng, reward and compensation, and performance management inform how
any person or group of people is introduced into the organization, managed while there, and exited
from the organization. When these three overarching aspects of human resource management are
designed effectively, the organization bene ts from a management system that enhances the
sustained competitive advantage of the organization. A critical part of designing these aspects
effectively requires consideration of ethical concerns at each stage.

The need of business ethics can be explained with the help of the following points:-
Introducing Socialism in Business: This means the gains of business must be shared by all
concerned and not just by owner of business. Pro t is the result of group efforts and hence all
concerned must share the same. In other words, the concept of socialism in business say that
workers, shareholders, consumers all others who contribute to the success of the business must
share its gain.
Interest of Industry: Business ethics are required to protect the interest of small business rms.
Big rms normally try to dominate and eradicate small rms. If industry follows code of conduct,
small rms can ght for their existence and stay in the business for long.
Buyers Market: In recent times, structural changes have taken place in the concept of business.
In case of many products, sellers market has been converted into buyers market. Under such
changed business conditions business ethics is needed to stress the importance of consumer
satisfaction and service orientation in place of pro t orientation.
Better Relations with Society: Code of conduct results in better relations between business and
society. It will reconcile con icting interest of various sections of the society such as workers,
shareholders, consumers, distributors, suppliers, competitors and government.
7.2 SOURCES OF ETHICS
HR managers in every society are in uenced by three repositories of ethical values-religion, culture
and law. These repositories contain unique systems of values that exert varying degrees of control
over managers. A common thread idea of reciprocity or mutual help runs through all the value
systems. This idea re ects the central purpose of all ethics-which is to bind the vast majority of
individuals in the society into a cooperative whole. Ethical values constitute a mechanism that
controls behavior in HR situations and in other walks of life. Ethics driven restraints are more
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effective than restrictive controls such as police, law suits or economic incentives. Ethical values
channelize the individual energies into pursuits that are benign to others and bene cial to the
society.
It is a code of conduct that is supposed to align behaviors within an organization and the social
framework. But the question that remains is, where and when did business ethics come into being?
It is for this reason we do not have uniform or completely similar standards across the globe. These
three factors exert in uences to varying degrees on humans which ultimately get re ected in the
ethics of the organization. For example, ethics followed by Infosys are different than those followed
by Reliance Industries or by Tata group for that matter. Again ethical procedures vary across
geographic boundaries.
Religion
It is one of the oldest foundations of ethical standards. Religion wields varying in uences across
various sects of people. It is believed that ethics is a manifestation of the divine and so it draws a
line between the good and the bad in the society. Depending upon the degree of religious in uence
we have different sects of people; we have sects, those who are referred to as orthodox or
fundamentalists and those who are called as moderates. Needless to mention, religion exerts itself to
a greater degree among the orthodox and to lesser extent in case of moderates. Fundamentally
however all the religions such as Hinduism, Buddhism, Christianity, Islam, Judaism and
Confucianism, operate on the principle of reciprocity towards ones fellow beings.
Culture
Culture is a pattern of behaviors and values that are transferred from one generation to another,
those that are considered as ideal or within the acceptable limits. No wonder therefore that it is the
culture that predominantly determines what is wrong and what is right. It is the culture that de nes
certain behavior as acceptable and others as unacceptable. Culture determines what is ethical and
what is not. Cultural norms play important role in determining values because individuals anchor
their conduct in the culture of the group in which they belong.
Human civilization in fact has passed through various cultures, wherein the moral code was
redrafted depending upon the epoch that was. What was immoral or unacceptable in certain culture
became acceptable later on and vice versa.
During the early years of human development where ones who were the strongest were the ones
who survived. Violence, hostility and ferocity were thus acceptable. Approximately 10,000 year ago
when human civilization entered the settlement phase, hard work, patience and peace were seen as
virtues and the earlier ones were considered otherwise. These values are still pt in practice by the
managers of today.
Still further, when human civilization witnessed the industrial revolution, the ethics of agrarian
economy was replaced by the law pertaining to technology, property rights etc. Ever since a tussle
has ensued between the values of the agrarian and the industrial economy.
Law
Laws are procedures and code of conduct that are laid down by the legal system of the state. They
are meant to guide human behavior within the social fabric. The major problem with the law is that
all the ethical expectations cannot be covered by the law and specially with ever changing outer
environment the law keeps on changing but often fails to keep pace. In business, complying with
the rule of law is taken as ethical behavior, but organizations often break laws by evading taxes,
compromising on quality, service norms etc.

7.3 HOW TO MANAGE ETHICS AT WORKPLACE

Ethics on Performance Appraisal
The effective management of ethics is sound business practice. Employees’ morale is raised;
bottom-line performance is improved, your corporate image is enhanced; and customers choose to
form business relationships with companies that adhere to high standards of ethical conduct. One of
your key management tasks is to persuade employees to accept your organization’s ethical values.
Following are some points to consider in managing ethics:
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 Understand the Bene ts of Ethical Conduct.
All key parties bene t from ethical conduct within the organization. Employees who have
con dence in their management contribute to their organization’s prosperity. Conversely, in an
unethical climate, employee productivity declines, creativity is channeled into seeking ways to
pro t personally from the business, loyalty diminishes, and absenteeism and staff turnover increase.
Customers prefer to be associated with and remain loyal to companies that adhere to codes of
ethical behavior. Shareholders derive up to fteen time’s greater return from companies with a
dedicated commitment to ethical conduct.
Focus on Ethical Conduct.
When referring to codes of behavior, the term ’ethical conduct’ is more comprehensive and more
meaningful than ’ethics’. The best ethical values and intentions are relatively meaningless unless
they generate fair, just, and observable behaviors in the workplace. Ethical conduct focuses on
demonstrated behavior doing, not just saying.
Develop a Code of Ethical Conduct.
The best way to handle ethical dilemmas is to avoid their occurrence in the rst place. The process
involved in developing a code of ethical conduct helps to sensitize employees to ethical
considerations and minimizes the likelihood that unethical behavior will occur.
Promote Process.
When it comes to managing ethics and, in particular, developing a code of ethical conduct, the
journey is just as important as the destination. Codes, policies, procedures, and budgets are
important. So, too, is the process of re ection and dialogue that produces those deliverables. Where
possible use group decision making to actively involve participation in, and ownership of, the nal
outcome.
Link Ethics to Other Management Practices.
The development of a code of ethical conduct should not occur in isolation. The creation of a values
statement, for example, should occur as part of a strategic planning process. A link to ethical
conduct ts ideally with this process. Similarly, any discussion about personnel policies could also
re ect ethical values as they apply to the organization’s culture.
Demonstrate Ethical Practices.
The best way for an organization to gain a reputation for operating ethically is to demonstrate that
behavior the most important way to remain ethical is to be ethical. And the best advertisement your
ethics management program can have is everyone’s commitment to it. Be prepared for an increase
in the number of ethical issues to be dealt with. As staff becomes increasingly aware of the
importance of ethics management, it is to be expected that more issues will be identi ed. ’The most
damaging thing is for management to come out with a code of ethics, or a value statement, and
model a different type of behavior.’
Allocate Roles and Responsibilities.
The approach will vary according to the organization, but an appropriate structure could include the
following:
An ethics management committee, representing the entire organization, with responsibilities to
include implementing and administering an ethics management program. The creation and
monitoring of a code of ethical conduct would be part of that overall program.
An ethics of cer who ideally should be a senior executive but not from HR or the Legal
Department. He or she must be trained in matters of ethics in the workplace and have ultimate
responsibility for managing the program.
Demonstrated involvement and support of top management. Staff and Board must see that senior
management takes ethical conduct seriously.
Identify and Model Industry Benchmarks.
An increasing number of companies strive to match practices with espoused values. The Soul of a
Business, for example, is an account of the way in which ethical considerations guided the day-to-
day operations of the American company, Tom’s of Maine. One of the company’s stated values was
its commitment to the health of the environment. The company, therefore, used glass containers
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 instead of plastic, even though plastic was cheaper to purchase, label, and ship. Tom’s of Maine was
also committed to supporting its regional economy. Only when it couldn’t purchase a resource in its
local area would Tom’s go farther a eld. This demonstrated commitment to espoused values
contributed to the company’s growth and pro tability and inspired others to follow its lead.
7.4 FIVE SOURCES OF ETHICAL STANDARDS
The Utilitarian Approach
Some ethicist emphasize that the ethical action is the one that provides the most good or does the
least harm, or, to put it another way, produces the greatest balance of good over harm. The ethical
corporate action, then, is the one that produces the greatest good and does the least harm for all who
are affected customers, employees, shareholders, the community, and the environment. Ethical
warfare balances the good achieved in ending terrorism with the harm done to all parties through
death, injuries, and destruction. The utilitarian approach deals with consequences; it tries both to
increase the good done and to reduce the harm done.
The Rights Approach
Other philosophers and ethicist suggest that the ethical action is the one that best protects and
respects the moral rights of those affected. This approach starts from the belief that humans have a
dignity based on their human nature per se or on their ability to choose freely what they do with
their lives. On the basis of such dignity, they have a right to be treated as ends and not merely as
means to other ends. The list of moral rights - including the rights to make one’s own choices about
what kind of life to lead, to be told the truth, not to be injured, to a degree of privacy, and so on is
widely debated; some now argue that non-humans have rights, too. Also, it is often said that rights
imply duties in particular, the duty to respect others’ rights.
The Fairness or Justice Approach
Aristotle and other Greek philosophers have contributed the idea that all equals should be treated
equally.
Today we use this idea to say that ethical actions treat all human beings equally or if unequally, then
fairly based on some standard that is defensible. We pay people more based on their harder work or
the greater amount that they contribute to an organization, and say that is fair. But there is a debate
over CEO salaries that are hundreds of times larger than the pay of others; many ask whether the
huge disparity is based on a defensible standard or whether it is the result of an imbalance of power
and hence is unfair.
The Common Good Approach
The Greek philosophers have also contributed the notion that life in community is a good in itself
and our actions should contribute to that life. This approach suggests that the interlocking
relationships of society are the basis of ethical reasoning and that respect and compassion for all
others especially the vulnerable are requirements of such reasoning. This approach also calls
attention to the common conditions that are important to the welfare of everyone. This may be a
system of laws, effective police and re departments, health care, a public educational system, or
even public recreational areas.
The Virtue Approach
A very ancient approach to ethics is that ethical actions ought to be consistent with certain ideal
virtues that provide for the full development of our humanity. These virtues are dispositions and
habits that enable us to act according to the highest potential of our character and on behalf of
values like truth and beauty.
Honesty, courage, compassion, generosity, tolerance, love, delity, integrity, fairness, self-control,
and prudence are all examples of virtues. Virtue ethics asks of any action, "What kind of person will
I become if I do this?" or "Is this action consistent with my acting at my best?"
Putting the Approaches Together
Each of the approaches helps us determine what standards of behavior can be considered ethical.
There are still problems to be solved, however.
The rst problem is that we may not agree on the content of some of these speci c approaches. We
may not all agree to the same set of human and civil rights.
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 We may not agree on what constitutes the common good. We may not even agree on what is a good
and what is a harm.
The second problem is that the different approaches may not all answer the question "What is
ethical?" in the same way. Nonetheless, each approach gives us important information with which
to determine what is ethical in a particular circumstance. And much more often than not, the
different approaches do lead to similar answers.
Making Ethical Decisions
Making good ethical decisions requires a trained sensitivity to ethical issues and a practiced method
for exploring the ethical aspects of a decision and weighing the considerations that should impact
our choice of a course of action. Having a method for ethical decision making is absolutely
essential. When practiced regularly, the method becomes so familiar that we work through it
automatically without consulting the speci c steps.
The more novel and dif cult the ethical choice we face, the more we need to rely on discussion and
dialogue with others about the dilemma. Only by careful exploration of the problem, aided by the
insights and different perspectives of others, can we make good ethical choices in such situations.
7.5 SELF ASSESSMENT QUESTIONS
1. De ne the term Ethics. Trace the sources of ethics. Why is ethics important?

2. Explain how to manage ethics at work place.

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VIII- TRAINING AND DEVELOPMENT
Unit Structure :
8.0 Objectives
8.1 Introduction
8.2 Meaning and objectives of training
8.3 Need and importance of training
8.4 Difference between Training and Development
8.5 Management Development Programme (MDP)
8.6 Essentials of Success of Management Development 8.7 Training Practices / Facilities in India
8.8 Process of Designing A Training Programme
8.9 Methods of Training
8.10 Techniques of Evaluation of Training
8.11 Summary
8.12 Questions
8.0 OBJECTIVES
After studying the unit student will be able to:
•  Understand Meaning and nature of Training and Development

•  Know the objectives of Training

•  Study the needs and importance of Training

•  Understand the concept of Training and Development

•  Know Management Development Programme (MDP)

• \ the requisites for the Success of Management Development Programme (MDP)

•  Study Training Practices in India

•  Make and evaluation of Training Facilities

8.1 INTRODUCTION
Training is an organised activity for increasing the knowledge and skills of people for a de nite
purpose. It involves systematic procedures for transferring technical know-how to the employees so
as to increase their knowledge and skills for doing speci c jobs with pro ciency. In other words, the
trainees acquire technical knowledge, skills and problem solving ability by undergoing the training
programme.
8.2 MEANING AND OBJECTIVES OF TRAINING MEANING
According to Edwin B. Flippo, ― “Training is the act of increasing the knowledge and skills of an
employee for doing a particular job”. Training involves the development of skills that are usually
necessary to perform a speci c job. Its purpose is to achieve a change in the behavior of those
trained and to enable them to do; their jobs better. Training makes newly appointed workers fully
productive in the minimum of time. Training is equally necessary for the old employees whenever
new machines and equipment are introduced and/or there is a change in the techniques of doing the
things. In fact, training is a continuous process. It does not stop anywhere. The managers are
continuously engaged in training their subordinates.
They should ensure that any training programme should attempt to bring about positive Changes in
the (i) Knowledge, (ii) skills, and (iii) attitudes of the workers. The purpose of training is to bring








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 about improvement in the performance of work. It includes the learning of such techniques as are
required for the better performance of de nite tasks.
The main objective of training is to achieve a change in the behaviour of those trained. In the
industrial situation, this means that the trainees acquires new techniques skills, problems solving
abilities and develop proper, work attitude. The trainees apply the newly acquired knowledge on the
job in such a way as to keep them in the achievement of organisational goals and targets. Training is
a necessary activity in all organisations, It plays a large part in determining the effectiveness and
ef ciency of the organisation. Training is must for all. A training programme enables the trainee to
achieve the reasonable level of acceptable performance. To achieve improved performance and
increase in productivity, quality and pro tability. Change Organisational climate and culture, to
improve health and safety and possibility and personal growth and development.
Training generally is intended to provide training experiences that help people perform ef ciently in
their present and future jobs. Training is a process in which abilities are developed into speci c
required skills knowledge or attitudes. Thus managing the training process can go a long way
towards enhancing its effectiveness. If training programs are well conceived and well executed,
both the organisation and its employees bene t. A comprehensive process helps managers ensure
that the objectives of the training program are met.
Training enables the employees to get acquainted with jobs and also increase, their aptitudes and
skills and knowledge. It makes newly recruited employees fully productive in the minimum of time.
Even for the old workers, it is necessary to refresh them and to enable them to keep up with new
methods and techniques as well as new machines and equipments for doing the work. Thus, training
is not a one-step process‘, but it is a continuous or never ending process because it increases the
knowledge and skills of new employees in performing their jobs and serves as a refresher course for
the old employees. Training job will never be nished as long as the organization remains in
operation. At any given time, the different phases of training programme will be found at practically
every stage of progress. Men may be learning by their own experiences and by trial and error
methods. Training does not disappear from any organisation merely because its presence is ignored.
The purpose of training is to bring about improvement in the performance of workers. It includes
the learning of such techniques as are required for the intelligence performance of de nite task.
There is a growing realisation about the importance of training in Indian organisations, especially
after globalisation. This has posed a lot of challenges to Indian industries. Without ef ciency,
effectiveness and competency, it would be impossible to survive and to be internationally
competitive, all out efforts are required. Quality innovation, technology upgradation, cost reduction
and productive work culture, have thus become the slogans of every industry, which no organisation
will be able to achieve without continuously training its human resources. Justi ably, therefore,
there is an upward trend in investment in training in many organisations. But increasing the
investment in training and hiking training budgets is not going to achieve desired results. There are
certain fundamentals and basic in training which must be given due importance if investments have
to bring in returns.
NATURE OF TRAINING AND DEVELOPMENT:
Training is the most important component of Human Resource Development (HRD) but HRD
training is must in an organisation which aspires to grow must be in tune with the changing needs of
the society. Training becomes relevant in the context since it is only through training that the gap
between performance of the organization and the felt need of a changing society can be neutralised
Training reduces the gap by increasing employees knowledge, skill, ability and attitude.
Training makes a very important contribution to the development of the organisation‘s human
resources and hence to the achievement of its aims and objectives. To achieve its purpose, training
needs to be effectively managed so that the right training is given to the right people, in the right
form, at the right time and at the right costs.
Following points explains the nature of Training:
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 The term training‘ indicates the process involved in improving the aptitudes, skills and abilities
of the employees to perform speci c jobs. Training helps in updating old talents and developing
new ones.
Training is a vital phase of management control. It helps in reducing accidents, eliminating
wastages and increasing, the quality of work.
Training and Development are terms which are sometimes used interchangeably. Development
was seen as an activity associated with managers, In contrast training has a more immediate concern
and has been associated with improving the knowledge and skill of non-managerial employees in
the present job.
Training and development may be regarded interactive, each complementing the other. The
logical step for the organisation is to produce a plan for human resource development (i.e. training
and development) which will dovetail into the employee resourcing plan (i.e. selection) and the
organisation’s overall strategic plan.
Objectives of Training
The primary objective of training is to prepare employees – both new and old, for promotions to
positions which require added skill and knowledge. This means that the training may range from
highly speci c instruction as to steps in the performance of a given job to very general information
concerning the economy and society. Therefore, it is necessary to establish the goals of training very
cautiously.
The objectives of training are as follows:
To impart to new entrants the basic knowledge and skill they need for an intelligent performance
of de nite tasks;
To assist employees to function more effectively in their present positions by exposing them to
the latest concepts, information and techniques and developing the skills, they will need in their
particular elds;
To build up a second line of competent of cers and prepare them to occupy more responsible
positions;
To broaden the minds of senior managers by providing them with opportunities for an inter-
change of experiences within and outside with a view to correcting the narrowness of the outlook
that may arise from over specialisation;
To impart customer education for the purpose of meeting the training needs of Corporations
which deal mainly with the public.
In a nutshell, the objectives of training are to bridge the gap between existing performance ability
and desired performance.
NEED AND IMPORTANCE OF TRAINING
Since training is a continuous process and not a one shot affair, and it consumes time and entails
much expenditure, it is necessary that a training programme or policy should be prepared with great
thought and care. Moreover, it must guard against over- training, use of poor instructors, too much
training on skills which are unnecessary for a particular job, imitation of other company training
programmes, misuse of testing techniques, inadequate tools and equipment, and overreliance on one
single technique for e.g., on slides, pictures on lecturers and not enough on practice.
Following points explains the importance of training:
Increasing Productivity: Instruction can help employees increase their level of performance on
their present job assignment. Increased human performance often directly leads to increased
operational productivity and increased company pro t. Again, increased performance and
productivity, because of training, are most evident on the part of new employees who are not yet
fully aware of the most ef cient and effective ways of performing their jobs.
Improving Quality: Better informed workers are less likely to make operational mistakes.
Quality increases may be in relationship to a company product or service, or in reference to the
intangible organisational employment atmosphere.
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 Helping a Company Ful ll its Future Personnel Needs: Organisations that have a good internal
educational programme will have to make less drastic manpower changes and adjustments in the
event of sudden personnel alternations. When the need arises, organisational vacancies can more
easily be staffed from internal sources if a company initiates and maintains and adequate
instructional programme for both its non-supervisory and managerial employees.
Improving Organisational Climate: An endless chain of positive reactions results from a well-
planned training programme. Production and product quality may improve; nancial incentives may
then be increased, internal promotions become stressed, less supervisory pressures ensue and base
pay rate increases result. Increased morale may be due to many factors, but one of the most
important of these is the current state of an organisation‘s educational endeavour.
Improving Health and Safety: Proper training can help prevent industrial accidents. A safer work
environment leads, to more stable mental attitudes on the part of employees. Managerial mental
state would also improve if supervisors now that they can better themselves through company-
designed development programmes.
Obsolescence Prevention: Training and development programmes foster the initiative and
creativity of employees and help to prevent manpower obsolescence, which may be due to age,
temperament or motivation, or the inability of a person to adapt himself to technological changes.
Personal Growth: Employees on a personal basis gain individually from their exposure to
educational experiences. Again, Management development programmes seem to give participants a
wider awareness, an enlarged skin, an enlightened altruistic philosophy, and make enhanced
personal growth possible.
It may be observed that the need for training arises from more than one reason those are:
An increased use of technology in production.
Labour turnover arising from normal separations due to death or physical incapacity, from
accidents, disease, superannuation, voluntary retirement, promotion within the organisation and
change of occupation or job.
Need for additional hands to cope with an increased production of goods and services.
Employment of inexperienced, new or badli labour requires detailed instruction for an effective
performance of a job;
Old employee need refresher training to enable them to keep abreast of the changing methods,
techniques, and use of sophisticated tools and equipment;
Need for enabling employees to do the work in a more effective way, to reduce learning time,
reduce supervision time reduce waste and spoilage of raw material and produce quality goods, and
develop their potential.
Need for reducing grievances and minimising accident rates;
Need for maintaining the validity of an organisation a whole and raising the moral of its
employees.
8.4 DIFFERENCE BETWEEN TRAINING AND DEVELOPMENT
Though training and education differ in nature and orientation, they are complementary. An
employee, for example, who undergoes training, is presumed to have had some formal education.
Furthermore, no training programme is complete without an element of education. In fact, the
distinction between training and education is getting increasingly blurred now-a-days. As more and
more employees are called upon to exercise judgment and to choose alternative solutions to the job
problem training programmes seek to broaden and develop the individual through education. For
instance, employees in well-paid jobs and or employees in the service industry may be required to
make independent decisions regarding their work and their relationships with clients. Hence,
organisations must consider elements of both education and training while planning their training
programmes.
Training is the systematic modi cation of behavior through learning which occurs as a result of
education, instruction development and planned experience. Training is the increasing knowledge
and skill of an employee for doing a particular job; Training is a short term process utilizing a
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 systematic and organised procedure by which trainees learn technical knowledge and skill for a
de nite purpose. Training is a process of learning a sequence of programmed behavior. It implies
application is a process of learning a sequence of programmed behaviour. It implies application of
rules and procedures to guide their behaviour thereby improve their performance.
Training is a systematic programme to increase the knowledge, skills, abilities and aptitudes of
employees to perform speci c jobs. Training is concerned with increasing the knowledge and
understanding of the total environment. Development is concerned with the growth of an employee
in all respects. Development programmes seek to develop skills and competence for future jobs
while training programmes are directed toward maintaining and improving job performance. Thus
training is a process by which the aptitudes, on the one hand skills, abilities of employees to
perform speci c jobs are increased. On the other hand, education is the process of increasing the
general knowledge and understanding of employees.
Development refers to those learning opportunities designed to help employee grow. Development
is not primarily skills-oriented. Instead, it provides general knowledge and attitudes which will be
helpful to employees in higher positions. Efforts towards development often depend on personal
drive and ambition. Development activities, such as those supplied by management development
programmes are generally voluntary.
8.5 MANAGEMENT DEVELOPMENT PROGRAMME (MDP)
Management development programmes, aim systematically to identify talent, improve skills, widen
experience and help people to grow in their ability to accept greater responsibility.
The subject matter of a course for Management Development Programme (MDP) may comprise:
Company or Organisation:
The Management Development Programme (MDP) relating company or organisation may contain
the following sub-areas:

Objective and philosophy of company;

•  Policies, procedures and practices of an organisation;

•  Products and services;

•  Organisational structure and organisation dynamics;

•  Plant facilities;

•   Financial aspects such as investment planning, nancial planning and control capital
budgeting;

•  Labour management relations etc.

•  Management Techniques and Principles:

Under this main area the following sub-areas may be included:
•  Organisation principles;

•  Financing, planning and management;

•  Cost analysis and control;

•  Operations research and data processing;

•  Marketing management, Marketing research;

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 •  Production planning and control;

•  management and administration;

•  Decision-making.

•  Human Relations:
In this constituent the below mentioned sub-areas may be included:

•  Motivation;

•  Understanding human behaviour;

•  Group dynamics;

•  Discipline;

•  Complaints and grievances;

•  Collective bargaining;

•  Counseling and suggestion scheme;

•  Selection methods and procedures;

•  Attitudes, training and development;

•  Job evaluation and performance appraisal;

•  Labour economics;

•  Supervisory responsibilities.

•  Technical Knowledge and Skills:

Under this main area the following sub-areas may be included:

•  Computer technology;

•  PERT/CPM;

•  Linear programming;

•  Materials handling;

•  Inventory control;

•  Adequate understanding of technology, products, processes.

•  Personnel Skills:
It contains the following sub-areas:




















































 •  Speaking;

•  Report writing;

•  Conference leadership;

•  Learning through listening;

•  Reading improvement.

•   Economic, Social, and Political Environment: It contains the following sub-

areas:

•  Business;

•  Economic system;

•  Relations with the state;

•  Community relations;

•  Political systems;

•  Legal framework of business;

•  Social responsibilities of the corporation and business

8.6 ESSENTIALS OF SUCCESS OF MANAGEMENT DEVELOPMENT PROGRAMME:

While administering the programme, we should have to give the following considerations:
Systematic Career Planning:
A Management Development Programme should support a systematic career planning for
managerial personnel otherwise the frustrated trainees might seek opportunities elsewhere and the
whole investment made in training programmes would go waste.
Structured Course:
Management Development must follow a series of structured courses. There should also be an
active interaction between the trainees and management.
Indiscriminate Approach:
The training programme should cover as far as possible, every manager, capable of showing
potential for growth. It should be free from discrimination. Peter Drucker pointed out that the right
men out of every ten who were not included in the programme will understandably feel slighted.
They may end of by welcoming less effective, less productive, less willing to do new thing.
Properly Planned:
The entire programme should be properly planned. The trainee should take part in it. An individual
may stay out, but it should be made clear that he does so at some risk to his future promotion. The
company should not normally allow any manager to opt out of a training programme.
Essentials of Success of Management Development Programme (MDP) :
The following are the essentials for the success of Management Development Programme (MDP):
Circulate the Materials to Participants:
The following materials should be distributed among the participants to make the programme more
successful:




























 •  News letter conveying information about corporate affairs;

•  Copies of talks given by management personnel;

Excerpts from well-written and informative articles; Copies of minutes of meeting distributed
among those who were not present.
When these materials are discussed by a group, new plans and improved procedures will be
formulated.
Programme should be prepared well in advance:
The programme should be prepared well in advance and should contain decisions about
instructional methods and development approaches to be used and have a provision of expertise and
the necessary support system. It should be based on the policy of promoting a proper utilisation of
trained executives, their knowledge and techniques in the improvement of the operations of an
organisation.
Training division should have smart and successful executives:
The training division should not be a dumping ground for people found to be unsuitable for other
jobs; it mannered by a group of smart and successful executives drawn from various functional
areas and disciplines. A multi-disciplinary approach should be emphasised in training programmes
rather than the purely personal favour that is often found in them.
Programme should be for all not the weak ones:
A management programme should not only be looked upon as something meant for the limping
horses in the organisation; it should be for the high iers as well. In view of knowledge explosion
and the consequent threat of management obsolescence, such programmes should be meant for
everyone in an organisation and not just for the weak ones.
Management Development Programme (MDP) should be based on a de nite strategy:
The MDP should be based on a de nite strategy, which should spell out the type, coverage and
objectives of the programme. The multitier supervisory and management development programme
should start from the rst line supervisor and go all the way up to the top management.
Top Management should Accept Responsibility:
The top management should accept responsibility for getting the policy of development executed.
To do so, a senior of cer may be placed in charge to initiate and implement the MDP.
Management Development is a “Line Job”:
It is essentially a line job. It takes place on the job and involves both the man and his boss.
Selection of the Right Materials:
Management development starts with the selection of the right materials for managerial ranks. It is
essential to ensure that really good material is led into the programme at the entry level.
Realistic Time Table is Required:
There should be realistic time table in accordance with the needs of a company. This time table
should take into account the needs for managerial personnel over a suf ciently long period and the
resources which are available and which will be required.
It should ful ll the needs of the Company:
Management development must be geared to the needs of the company and the individual.
Developing Managers is the Responsibility of All Managers:
Every manager must accept direct responsibility for developing managers under his control on the
job, and a high priority should be given to his task.
Thus, for the development of management, it is essential for the top management to promote a
culture for:
•  learning and gaining knowledge

•  the quest of excellence

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 •  tolerance of mistakes

•  striving to maintain a balance and an equity

•  the discovery of self and others; and

•  enabling a subordinate to become aware of his superiors’ interest in his development and
mental growth.

8.7 TRAINING PRACTICES / FACILITIES IN INDIA

Different types of training facilities available in India, are as follows:

Worker’s Training: This type of training had become very popular after the world war II. But the
real progress in the direction was made. The following type of training are given to the workers in
our country:
Apprentice Training Act, 1961: During 1961 the Apprentice Training Act was passed. About 550
Industrial Training Institutes were opened. More than 300 centres were set up established for
Apprenticeship Training. There is an Advanced Training Institute in Chennai and Kolkata has the
Central Staff Training and Research Institute. There is the Foreman Training Institute in Bangalore.
The Director General of Employment and Training, Government of India had established Training
Centres under Craftsman Training Scheme. The National Apprenticeship Training Scheme was
extended to other industrial houses also. Child Training Schemes were developed under
Apprenticeship Scheme and now this has been extended to many new works.
Private Sector: Normally the private sector has not introduced any formal training programme to
its workers. But many business organisation have an induction programme to their new workers
aimed at informing and educating them about the company, its products policies and management,
etc. These programmes are generally conducted by their personnel department with the help of the
supervisory staff. Now, may well- established private rms are conducting programmes in company
based on their workers’ needs and job requirements.
Public Sector Undertakings: The public sector companies use their internal training facilities for
training their non supervisory employees. In some cases, employees are also encouraged to avail of
the external training facilities. Sometimes they sponsor their candidature and meet the costs also.
Supervisors Training
General Education: Normally supervisors are recruited either by promotion from ranks or by
direct recruitment. The latter is the more widely followed practice in our country. But promotion
from ranks is more common in western countries. Illiteracy and poor educational background very
much limit the possibility of promotion to supervisory jobs from the ranks in India. The problem of
supervisory training has, therefore, to be talked at the root and in order to bridge the gap between
the potentiality of a worker for supervisory work and the post itself the level of general education
needs to be raised. Many organisation have successfully undertaken training of junior and senior
hands in Mathematics, Elements of Sciences etc. through regular routine classes during working
hours.
Training Institutes: The Central Training Institute for Instructors has an additional course meant
for supervisors which covers meant for supervisors which covers non-technical subject such as
leadership, foundations for good relations, handling of problems, induction of new entrants,
effective communication, and so on. Some institutes of new entrants, effective communication, and
so on. Some institutes particularly Small Industries Service Institute, NITE etc., organise short-term
training programme for supervisors.
Training within Industry (TWI) : Training Within Industry was formally introduced in India with
the help of ILO experts. Many organisation, both in public and private sectors, have had persons
trained by TWI Centre staff, so that they undertake supervisory training in their respective








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 organisations. These programmes have had mixed results. The managements who have realised the
importance of training for supervisors, and have not been led into complacency by the simplicity of
TWI have obtained highly successful results and the programmes.
Management Training :
The management training and development has attracted the greatest attention of both practicing
managers and academicians in this eld. This is due to the fact that management has every much
lagged behind the imperative demand of the country. The major gap in the developing countries is
managerial competence has to be homegrown to suit the ethos, temper and needs for our society.
There are two types of facilities for training development of practicing managers:
Business Organisation: These organistions are employing managerial personnel to impart such
training either through their own Management Training institutes or through organising lectures,
instructors being their own line and staff managers or faculty being taken from outside in some
cases. These organisations recruit fresh management trainees. They are put through training process
while working in the organisation, Hindustan Machine and Tools Ltd., Hindustan Steel Ltd., LIC,
Commercial Banks, Fertilizer Corporations and many other organisations in public sector Hindustan
lever Ltd. TISCO, Reliance Ltd. and others in private sector have their own Management Training
Institutes.
Management Institutes: There are many management institutes, associations and other bodies
which organise short-term management development programmes. Prominent among these are
Administrative Staff College, Hyderabad, IIMs., All India Management Association, and its local
chapters, National Productivity Council, Indian Institute of Bank Management. Indian Institute of
Personnel management, National Institute for Training in Industrial Engineering (NITIE). These
bodies organised management development programmes ranging from 2 days to 12 weeks.
8.8 PROCESS OF DESIGNING A TRAINING
PROGRAMME:
Training programmes are costly propositions. They are time and energy consuming too. Hence, the
training programmes should be framed with great care and caution. The following steps should be
taken while developing a training programme. These steps usually involve a considerable amount of
dialogue between personnel department professionals and other supervisors and managers.
Ordinarily, the ows or sequences of these steps are approximately as follows but the various steps
are independent and in some cases may be done simultaneously.
Determining the need and Priorities for Training:
The very rst step in designing a training programme is to determine the organisation‘s need for
such programme. If the organisation does not accurately determine its need, the training process
will be inappropriately undertaken.
Mc-Guhee and Thayer have recommended the following three steps approach in order to determine
training need:
Organisational Analysis: This analysis basically determines where training emphasis should be
placed in the organisation.
Man Analysis: It is used to determine who needs training and what skills and knowledge or
attitudes should be augmented or improved.
Operational Analysis: It assists to decide what the training should consist of, requiring a study of
what a person should be taught if he is to perform his task with maximum effectiveness.
Some of the popular methods to assess the training needs of employees in a company include
observation and analysis of job performance. In each company, the management should analyse
organistation needs, job speci cations and the present skill levels of the employees. The analysis of
organisational needs should focus on the number of employees with various combinations of skills
needed at each level and in every part of the rm for speci c periods. Regarding job speci cations,
many organisations have written job speci cations that de ne the skills needed for each job in the
rm. By carefully examining these speci cations, the human resources staff can obtain a clear idea
of the nature of skills needed for each job. Then, an analysis of worker skills and quali cations from
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 his personal le can assist in determining training needs. Similarly training needs can be assessed
for a group of employees.
Translating needs into Objectives and Establishing Training Goals:
Once the training needs have determined, the next important step is to translate the skills needed
into speci c training objectives or desired outcomes of training objectives. These training objectives
or goals are then used to determine the speci c courses that will be offered. Training objectives
should include such matters as speci c skills to be taught, the number of people to be trained and
from which units and the period within which such training should take place. Objectives for
training programme that do not relate directly to speci c job skills should also be considered for
example, employee health and safety guidelines, promotion opportunities and self-study
opportunities. Training objectives include the general content of the training to be given. The most
frequently adopted objectives or training subjects by the companies are: new employee orientation,
performance appraisal, leadership, selection process, interpersonal skills, word processing, new
equipment operation, team building, delegation skills, and listening skills. Sometimes, orientation
regarding company policy and practices can be particularly important, especially for new
employers.
Selecting Trainees:
Selecting individuals or groups for training is a very complex decision for the rm and the
individuals chosen. From the rm‘s perspective, providing the right training to the right people can
help to create and maintain a well-trained and stable work force. To impart training for individuals
with limited performance partial or lack of interest is simply a waste of time, effort, and money.
Overlooking individuals with ambition and potential represents a lost opportunity and can
contribute to higher employee turnover. It should be assumed that ambition and potential are
widespread in the rm and exist at all age levels. There are at least four important considerations
important in selecting trainee: (i) legal requirements and formalities (ii) employee needs and
motivation (iii) skills obsolescence and retraining, and (iv) multi-skilling. Employee needs and
motivation can be determined with the help of previous performance evaluations as well as
interviews performance evaluations as well as interviews with individual employees and owner
supervisors. The rapidly change in technology is requiring that all segments of the society give
higher priority to worker retraining. This also means that individual workers themselves must seek
out training opportunities to avoid having their skills become obsolete. Similarly, numerous
companies have moved in the direction of training their employees to have multiple skills, called
multi-skilling. In particular, multi-skilling is relevant where self-managed teams are utilised.
Everyone is encouraged to learn all of the jobs of the team and employees are usually paid
according to the number of skills that they have developed.
Making the Curriculum and Choosing Training Methods:
After deeming training objectives and translating into speci c course areas, the trainees are
identi ed and evaluated, management will be in a position to decide the overall curriculum, i.e., the
arrangement of courses to be offered. The curriculum is a sort of grand plan of what training is to be
presented and with what frequency. However, a part which must be added to this grand plan is the
matter of training methods. Will the training be on the job, off the job, prior to employment, or prior
to a formal assignment? Will it be done by lecture computer assisted, or carried out by some other
method? Will it be long-term or short-term?
Preparation of training budget:
Preparing a training budget will be an interactive process with the other steps in formulating a
training program. Budget constraints may limit the human resource manager’s alternatives and
must, therefore, considered during all phases of the development process. Costs that must be
included in the training budget are: staff planning time, trainees’ wages, trainers’ salary, and
expenses such as cost of training materials, travels, accommodations, and meals. If the desired
training programme does not t within budget constraints, the human resource manager must
consider modi cation such as fewer trainees, different trainees, different training techniques, and a
different training location.
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 Selecting trainers and providing training to trainers:
An effective training programme can be developed only when effective trainers are available. Firms
have the option of using staff trainers or of seeking contract trainers outside, or of having both,
types of trainers. Staff trainers may be full-time specialists on the pay role of organisation or may be
part-time trainers. After their selection, they must be provided with the information regarding the
persons who are to be strained. The trainers should be engaged after careful evaluation of their
suitability and effectiveness so as to ensure quality training.
Using selected training technique.
To conduct the training is a signi cant aspect of training process. Under this step, the trainers
speaks, demonstrate, and illustrates in order to put over the new knowledge, skills, and operations.
Besides, he suggests the trainee to be at ease, without any stress and strain, and explains to him the
necessity of the training programme and creation of trainee’s personal interest in training. The
trainer tells the sequence of the entire job, the need for each step in the job, the relationship of the
job to the total work- ow, the nature of interpersonal behaviour required at the job, and so on. All
key points should be covered and emphasised. Audio- visual aids should be used to demonstrate and
illustrate. To ensure follow-up by the trainee, he should be asked to repeat the operations, and
encouraged to ask questions for further classi cations and understanding.
Performance or learning tryout:
As the training continues, it is important that the progress of trainees should be monitored. This may
be accomplished by periodic skill or knowledge tests or periodic assessments by the personnel
department. The trainee may be asked to do the job several times. His mistakes, if any, are corrected
and complicated steps should be explained again. As soon as the trainee demonstrates that he can do
the job rightly, he is put at his own job and the training is said to be over.
Evaluation system of training programme:
In order to generate adequate feedback, some key purposes of conducting
this evaluation are:
•  Determining whether a programme meets its objectives or goals.

•  Identify strengths and weaknesses in the training process.

•  Calculate the cost-bene t ratio of a programme.

•  Determine who bene ted the most from a programme and why

•  Establish a data base for further decision about the programme.

Training programmes can be evaluated with a variety of methods. The most popular method
involves analysis of questionnaires lled out by the trainees either at the end of the training
session or within a few weeks. Although in some situations employees can accurately
evaluate the quality of the training programme, in other situations their subsequent
performance or degree of improvement is a more valid measure. After speci c performance
measurement, the results are compared with the objectives for the training programme. If the
training objectives have been met, the training is said to be successful.
8.8 METHODS OF TRAINING
The following methods are generally used to provide training:
On-the-Job Training Methods:
This type of training is imparted on the job and at the work place where the employee is expected to
perform his duties. It enables the worker to get training under the same working conditions and
environment and with the same materials, machines and equipments that he will be using ultimately
after completing the training. This follows the most effective methods of training to the operative
personnel and generally used in most of the individual undertaking.
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 On Speci c Job: On the job training methods is used to provide training for a speci c job such
as electrician, motor mechanic, pluming etc.
Experience: This is the oldest method of on-the-job training. Learning by experience cannot and
should not be eliminated as a method of development, though as a sole approach, it is a wasteful,
time consuming and inef cient. In some cases, this method has proved to be very ef cient though it
should be followed by other training methods to make it more meaningful.
Coaching: On-the-Job coaching by the superior is an important and potentially effective
approach is superior. The technique involves direct personnel instruction and guidance, usually with
extensive demonstration.
Job Rotation: The major objective of job rotation training is the broadening of the background of
trainee in the organisation. If trainee is rotated periodically from one job to another job, he acquires
a general background. The main advantages are: it provides a general background to the trainee,
training takes place in actual situation, competition can be stimulated among the rotating trainees,
and it stimulates a more co- operative attitude by exposing a man to other fellow problem and view-
points.
Special Projects: This is a very exible training device. The trainee may be asked to perform
special assignment; thereby he learns the work procedure. Sometime a task-force is created
consisting of a number of trainees representing different functions in the organisation.
Apprenticeship: Under this method, the trainee is placed under a quali ed supervisor or
instructor for a long period of time depending upon the job and skill required. Wages paid to the
trainee are much less than those paid to quali ed workers. This type of training is suitable in
profession, trades, crafts and technical areas like tter, turner, electrician, welders, carpenters etc.
Vestibule Training: Under this method, actual work conditions are created in a class room or a
workshop. The machines, materials and tools under this method is same as those used in actual
performance in the factory. This method gives more importance to learning process rather than
production.
Multiple Management: Multiple management emphasizes the use of committees to increase the
ow of ideas from less experience managers and to train them for positions of greater responsibility.
The McCormick & Company of Baltimore, U.S.A. developed the programme. The company claims
that the plan has increased employee ef ciency, reduced labour turnover and absenteeism, and
enabled the company to pay higher wages than those prevailing in the area and industry. In this
method; a junior board authorized to discuss any problem that the senior board may discuss, and its
members are encouraged to put their mind to work on the business a whole, rather than too
concentrate to their specialized areas.
Off-the-job Training Methods
Following are the off the job training techniques:
Special Courses and Lectures: Lecturing is the most traditional form of formal training method
Special courses and lectures can be established by business organizations in numerous ways as a
part of their development programmes. First, there are courses, which the organizations themselves
establish to be taught by members of the organizations. Some organizations have regular instructors
assigned to their training and development such as Tata and Hindustan Lever in private sector; Life
Insurance Corporation. State Bank of India and other nationalized commercial banks, Reserve
Bank, Hindustan Steel, Fertilizer Corporation and many others in public sector. A second approach
to special courses and lectures is for organizations to work with universities or institutes in
establishing a course or series of course to be taught by instructors by these institutes. A third
approach is for the organizations to send personnel to programmes established by the universities,
institutes and other bodies. Such courses are organized for a short period ranging from 2-3 days to a
few weeks.
Conferences: This is also an old method, but still a favorite training method. In order to escape
the limitations of straight lecturing many organizations have adopted guided, discussion type of
conferences in their training programmes. In this method, the participants pools, their ideas and
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experience in attempting to arrive at improved methods of dealing with the problems, which are
common subject of discussion; Conferences may include buzz sessions that divide conferences into
small groups of four or ve intensive discussion. These small groups then report back to the whole
conference with their conclusions or questions. Conference method allows the trainees to look at the
problem from a prouder angle.
Case Studies: This technique, which has been developed, popularized by the Harvard Business
School, U.S.A is one of the most common form of training. A case is a written account of a trained
reporter of analyst seeking to describe an actual situation. Some causes are merely illustrative;
others are detailed and comprehensive demanding extensive and intensive analytical ability. Cases
are widely used in variety of programmes. This method increases the trainee power of observation,
helping him to ask better questions and to look for broader range of problems.
Brainstorming: This is the method of stimulating trainees to creative thinking This approach
developed by Alex Osborn seeks to reduce inhibiting forces by providing for a maximum of group
participation and a minimum of criticism. A problem is posed and ideas are invited. Quantity rather
quality is the primary objective. Ideas are encouraged and criticism of any idea is discouraged.
Chain reactions from idea to idea often develop. Later these ideas are critically examined. There is
no trainer in brainstorming and it has been found that the introduction of known experts into it will
reduce the originality and practicability of the group contribution, Brainstorming frankly favours
divergence, and this fact may be explained why brainstorming is so little used as yet in developing
countries where no solutions ought to carry the highest premium.
Laboratory Training: Laboratory training adds to conventional training by providing situations
in which the trains themselves experience through their own interaction some of the conditions they
are talking about. In this way, they more or less experiment on themselves. Laboratory training is
more concerned about changing individual behaviour and attitude. There are two methods of
laboratory training: simulation and sensitivity training.
Simulation:
An increasing popular technique of management development is simulation of performance. In this
method, instead of taking participants into the eld, the eld can be simulated in the training session
itself Simulation is the presentation of real situation of organisation in the training session. It covers
situations of varying complexities and roles for the participants. It creates a whole eld
organisation, relates participants, through key roles in it, and has them deal with speci c situations
of a kind they encounter in real life.
There are two common simulation methods of training:
Role-playing: Role-playing is a laboratory method, which can be used rather easily as a
supplement of conventional training methods. Its purpose is to increase the trainee skill in dealing
with other people. One of
its greatest use, in connection with human relations training, but it is also used in sales training as
well. It is spontaneous acting of a realistic situation involving two or more persons, under classroom
situations. Dialogue spontaneously grows out of the situation, as the trainees assigned to it develop
it. Other trainees in the group serve as observers or critics. Since people take rules even day, they
are somewhat experienced in the art, and with, a certain amount of imagination they can protect
themselves into roles other than their own. Since a manager is regularly acting roles in his
relationship with other it is essential for him to have role awareness and to do role thinking so that
they can size up each size up each relationship and develop the most effective interaction position.
Gaming: Gaming has been devised to simulate the problems of running a company or even a
particular department. It has been used for a variety of training objectives from investment strategy,
collective bargaining techniques to the morale of clerical personnel. It has been used at all the
levels, from the executives for the production supervisors. Gaming is a laboratory method in which
role-playing exists but its difference is that it focuses attention on administrative problems, while
role-playing tend to emphasis mostly feeling and tone between people in interaction. Gaming
involves several terms, each of which given a rm to operate for a number of periods. Usually the
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 periods is short one year or so. In each period, each-team makes decisions on various matters such
as xation of price, level of production inventory level, and so forth.
Sensitivity Training:
Sensitivity training is the most controversial laboratory training method. This method is about
making people understand about themselves and others reasonably, which is done by developing in
them social sensitivity and behavioral exibility.
Social sensitivity in one word is empathy. It is ability of an individual to sense what others feel and
think from their own point of view. Behavioral exibility is ability to behave suitably in light of
understanding.
Training is essential for the smooth, economic, timely and ef cient production, work or service in
any organisation. To get work accomplished well from a worker or employee, it is a must that he is
given proper training in methods of work. Training is the organized producer by which people learn
knowledge and skill for a de nite purpose management cannot make a choice as between ‘training’
or ‘ no training’. On the other hand, it is a must. The only choice lies in the method of training.
8.9 TECHNIQUES OF EVALUATION OF TRAINING
Several techniques of evaluation are being used in organisations.
Evaluation by using experimental and control groups: One approach towards evaluation is to use
experimental and control groups.
Each group is randomly selected, one to receive training (experimental) and the other not to receive
training (control).
The random selection helps to assure the formation of groups quite similar to each other. Measures
are taken of the relevant indicators of success (e.g. words typed per minute, quality pieces produced
per hour, wires attached per minute) before and after training for both groups. If the gains
demonstrated by the experimental group are better than those by the control group, the training
programme is labeled as successful.
Longitudinal or time-series analysis: Another method of training evaluation involves
longitudinal or time series analysis. Measurements are taken before the programme begins and are
continued during and after the programme is completed. These results are plotted on a graph to
determine whether changes have occurred and remain as a result of the training effort. To further
validate that change has occurred as a result of training and not due to some other variable, a control
group may be included.
Sending questionnaire to the trainees after the completion of the programme: One simple
method of evaluation is to send a questionnaire to the trainees after the completion of the
programme to obtain their opinions about the programme‘s worth. Their opinions could also be
obtained through interviews. A variation of this method is to measure the knowledge and/or skills
that employees possess at the commencement and completion of training. If the measurement
reveals that the results after training are satisfactory, then the training may be taken as successful.
In order to conduct a thorough evaluation of a training programme, it is important to assess the costs
and bene ts associated with the programme. This is it dif cult task, but· is useful in convincing the
management about the usefulness of training.
8.10 SUMMARY
The challenges associated with the changing nature of work and the workplace environment
requires training. Rapid change requires a skilled, knowledgeable workforce with employees who
are adaptive, exible, and focused on the future. It is the responsibility of any business concern is to
develop its staff as per the changing environment. The Philosophy of Human Resources
Management states that the development of human resources is possible only by providing adequate
training.
Training and development refers to the practice of providing training, workshops, coaching,
mentoring, or other learning opportunities to employees to inspire, challenge, and motivate them to
perform the functions of their position to the best of their ability and within standards set by local,
state, Tribal, Federal and licensing organization guidelines. Training and development activities
provide all involved system of care parties with the tools they need to develop professionally,
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 increase their knowledge, effectively work with families, and build their capacity to perform the
tasks associated with their positions within the system of care.

8.11 QUESTIONS
1. De ne Training and Development. What is the difference between Training and
Development?

2. Examine the objectives, need and purpose of training.

3. What are the requisites for the success of MDP?

4. Elaborate the different methods generally used for training of the employees.

5. Examine the techniques of evaluation of training prorammes.

6. Write short notes:

i.Nature of Training ii.On-the-job training iii.Off-the-job training

iv. Simulation
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 IX-MANAGEMENT OF ORGANIZATIONAL CHANGE
Unit Structure
9.0 Objectives
9.1 Introduction
9.2 Concept of Organizational Change
9.3 Forces of Organizational Change
9.4 Why do people resists Organizational Change
9.5 Practice of Managing Resistance to Organizational Change 9.6 Organizational Development
9.7 Practice of Organizational Development
9.8 OD Interventions
9.9 Summary
9.0 OBJECTIVES
After studying the unit student will be able to:
•  Undersand what is Organizational Change

•  How to manage Organizational Change

•  Strategies to overcome the resistance to change

•  The importance of continuous efforts towards OD

•  Analytical insight related to application of OD interventions

9.1 INTRODUCTION
Change is called the law of life. It is constant, inevitable and consistent. In every walk of human
life, we witness many changes. Uncertainty and complex nature of businesses due to growing
competition and customers expectation, compelling organizations to introduce changes. Manager’s
job is becoming dif cult and challenging. If change is introduced, it is a tendency of a human being
to resist change. They think of losing something.
Proper planning, communication and implementation is required to introduce change. Change
management is a systematic approach in dealing with organizational change. Change management
is a process in which the changes are introduced in a planned and systematic way in an
organization.
Dealing with the change involves the perspective of an organization as well as an individual.
Prede ned models are proved to be helpful in successfully implementing change in an organization.
When a manager plans for change, communicate the need of change to the people, assure them
about the positive aspects of change and implement the same with the support of the people. This
process is called change management. It is like managing those things which are inevitable,
consistent and create fear in the mind of the people. The concept of change management plays a
vital role in any organization. The task of managing change is not an easy task.
Standardized methods, strategies and processes that are bene cial to bring change are used by the
managers for the successful implementation of change in an organization. It is important to
communicate the need for change. Introducing change is a problem and communication of the need
for change and its successful implementation later on is the solution. Change management deals
with the people's side of the change.
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 Fig. 9.1 Conceptual Framework of Change Management
It is important to understand the three important elements of change management:
•  Change must be planned in advance.

•  It must be communicated in advance.

•  One must implement the change by involving needs.

One more important dimension is the need for change. Change is going to give an impact to
a few people or to the whole organization. If the need of the change is communicated clearly,
the people will adopt it freely. Though, there will be few who will resist change.

Fig. 9.2 Nature of Organizational Change

9.2 ORGANIZATIONAL CHANGE

Change is inevitable in nature. This is the common line used to introduce the concept of change.
Change is something which denotes a transition from one state to another. The fact of being
replaced or changed creates fear in the mind of the people. In an organization, translating change








 into an action is challenging if it is not communicated properly. People feel change is a never
ending process where responses to it will be in the form of readjustment or readaptation.
It is introduced in an organization to make structural adjustments, project, initiative or solution to
improve the way of work. Planned change is something an organization should introduce. Planned
change re ects proper understanding of the need for change and communication to the people. The
purpose is to change employee behavior towards change in a positive way and to improve the
ability of the organization to adapt changes in the new environment. It is not that easy to introduce
change. People resists due to many reasons. That’s why, management of change is a concept which
one must understand as far as the organizational perspective is concerned.
9.3 NATURE OF ORGANIZATIONAL CHANGE
To understand the concept of change management, it is important to know the nature of change
management. With the help of the diagram given below, one can understand the nature of
management of change:
9.4 WHY DO PEOPLE RESIST CHANGE?
Change is inevitable in nature. Although, people resist change. There may be numerous reasons as
human behavior is caused. Whatever we do, there is a reason behind that. Resistance to change can
be a source of functional con ict. Some evidence of resistance to change is very destructive. To
further understand this topic, the reasons for resistance to change are divided into two categories.
Organizational Resistance
The main reason people resist change is uncertainty of its impact. The organizational structure itself
also resists change. Every kind of change involves resistance to change. Let's have a look on the
reasons of organizational resistance to change:

Fig.9.3 Why do People Resist Change

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Fig.9.4 Reasons of Organizational Resistance
Organizational Inertia
Making signi cant internal changes in the face of external changes is known as organizational
inertia. It depends upon the organization's ability to make changes. People react when they feel the
changes are occurring gradually. On the basis of their past experience, they resist change.
System Relationships
It is one of the important features of change that one change brings another change. It has a domino
effect. Due to the changes which arise in one subsystem lead to changes in other subsystems also.
The change in one department may bring the change in another department as well. That's why
organizations resist change.
Lack of Clarity
When organizations lack clarity about the incidence and gravity of change, they resist. The
organizational structure itself also resists change. Most changes have the power to disrupt things.
Lack of clarity brings more confusion and fear about the change.
Sunk Costs and Vested Interest
Sunk costs are those costs which are used in investments. Investments in xed assets like
machinery, land and building are treated as sunk costs. Any new change can create a disruption in
his system. Vested interests of an individual involve commitment of an individual towards
resources, programmes, policies of the organization. Organizations resist change when the things
related to abandonment arise.
Structural Rigidness
Organizations resist change due to structural rigidness also. Many changes have the capacity to
disrupt the structural rigidness. It affects the power structure as well. Decentralization of authority
can be often seen as threats to the power of superiors when it comes to delegation and granting
power is concerned.
Individual Resistance
Individuals resist change due to multiple factors. The main factor which is considered is fear. They
fear losing power, status, responsibilities and post.

Fear
The most common reason for people resisting change is fear. Fear of the unknown, uncertainty and
ambiguity are some of the reasons. Fear of learning something new is also one of the reasons that
compel people to resist change.
New Learning
New learning is also one of the reasons. New learning requires effort and energy. For doing new
work and tasks, one requires to learn new methods, a new technology etc. learning something new
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can be exciting if a person is willing to learn. Few people may nd it unattractive to learn and that's
why they resist change.
Lack of Trust
The relation between management and labor is a sensitive one. Labor if not communicated properly
about the change may suspect the reason for change and try to oppose the decision taken in favor of
the change against the management. Lack of trust is also considered as one of the reasons.
Habits
Human beings are slaves of habit. Changes create challenges for the people who believe in routine
work and do not like the concept of newness. Rapid changes in organizations can disturb the routine
of their work nature. Such people nd resistance easy rather than accepting change.

Fig.9.5 Reasons of Individual Resistance

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Fig. 9.6 Management of Resistance of Change
Lack of Information
Providing information about the change is a fundamental step of introducing change. Lack of
information about the change can create fear of the unknown and it can disrupt the stable
relationships and work culture of the same to organizations.
9.5 PRACTICES OF MANAGING RESISTANCE TO
ORGANIZATIONAL CHANGE
Managing resistance to change is a key to management of change. Through the following ways, an
organization can effectively manage resistance of change:
Participation
Taking participation of employees in the change process can help organizations and managers to
implement change. It is observed that individuals nd it dif cult to resist a change in decision in
which they participate. It can involve all employees and those employees who resist change. They
can be brought into the decision process.
Communication
Communication is the best way to bring change. Communication is a powerful force for change in
ambiguous situations. Giving communication about the need for change is an effective tool to
facilitate change. Communicating the process of change to employees helps them to accept change.
Coercion
This can be taken as the last resort to implement change. After taking into consideration all the
measures, as a last tactic organization can apply direct threats on the resisters to make them
understand and accept the change. Coercion in the form of demotion, transfer, loss of promotion,
ineffective performance appraisal can be used against the resistor.
Facilitation
Facilitating change is an easy process to make employees understand the gravity of change.
Providing empathy to those employees who have trouble in dealing with change is another
important strategy. Managing change through facilitation is a kind of help extended to the person
who is facing trouble in accepting change.
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 Support
One of the important strategies for managing resistance to change is providing support to the
employees. The persons who are facing trouble in accepting change, they must be provided proper
and needed support like skill training, knowledge about the work, counseling and therapy etc.
Co optation
Co optation means an act of co optating something in order to take over something. The people who
resist are invited to get their endorsement regarding change. The technique of co optation is less
expensive and simple. Through this method, a manager can seek the support of the resistors in an
organization. They are being tricked for undertaking change. Manipulation and co optation covert
attempts to in uence.
Education
Providing details to employees about the change and its need is one of the best methods to manage
resistance to change. Employees can be educated about the change. Methods like discussions,
memos, notices, groups discussion can be used to educate the employees about the change and its
nature.
9.6 ORGANIZATIONAL DEVELOPMENT
In a changing business climate, it is important to understand the structural, cultural and strategic
reality of work. To facilitate organizational success, organizational development plays an important
role. Organizational development deals with planned change. The nature of Organizational
development is complex as it tries to understand how to manage planned change in organizations.
Through the application of knowledge of the behavioral sciences, OD helps to facilitate the planned
change for the improvement of organization.
The concept of organizational development helps organizations to build their capacity to bring
change by integrating and developing the strategies, structures and processes of the organization. It
is a systematic, integrated and planned approach to improve the effectiveness of the organization.
The culture of change is developed through the utilization of behavioral science, research, theories,
laws and technology. The approach of organizational development is evidence based and structural.
It aims at organizational effectiveness.
In simple words, organizational development is an objective based methodology used to initiate a
change of system in an entity. It is achieved through supporting organizational structure and proper
communication. Change is inevitable in nature. Due to multiple reasons, there are a number of
changes occurring frequently.
DEFINITION
According to Burk and Hornstien "Organization development is a process of planned change.
Change of an organization's culture from one which avoids an examination of social processes
(especially decision making, planning and communication) to one which institutionalizes and
legitimizes this examination".
According to Warren Bennis - "Organization development is a response to change, a complex
educational strategy intended to change the beliefs, attitudes and structure of organization so that
they can better adapt to new technologies, markets and challenges".
CHARACTERISTICS OF OD
The concept of organizational development is adaptive, exible, modern and evolving. To
understand the concept of organizational development better, let's have a look in the characteristics
of OD:
•  OD is a systematic, planned and integrated approach to change.

•  It involves the application of knowledge.

•  It advocates that for organizations to change, individuals must change.

•  The process of OD is goal oriented.

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 •  It is designed to solve the problems of the organization.

•  It aims at building capacity and achieving effectiveness.

It is managed from the top in order,

•  It is a modern approach to the management of change.

•  OD interventions lead to improved organization performance.

•  OD increases innovation through employee involvement and engagement.

9.7 PRACTICES OF ORGANIZATIONAL DEVELOPMENT
The goal of organizational development is to achieve organizational effectiveness. The
effectiveness of OD must be fully supported by theories. Fields like psychology, HR
practices, management techniques and various other disciplines can help to nd out how to
best implement change and development. The following are the practices that must be
undertaken for the functioning of organizational development in an enterprise:

Fig. 9.7 OD Practices

Company Culture
Achievement of organizational goals is an important element for organizational effectiveness.
Company’s culture should be built in such a way that the managers must support and motivate
employees to take responsibility for achieving group and organizational goals. Suggestions,
feedback, grievance redressal, supportive environment are some important key elements which
must be taken into consideration while creating a company’s culture.
Organization Structure










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The organizational structure must be exible and simple. It must allow the procedures within an
organization to change when needed. Organizations need to eliminate issues and practices that limit
progress. The action plan should be realistic, doable and must support the stakeholders of the
organization.
Strategic Goals
The interventions taken for the organizational development must be in alliance with the strategic
goals of the organization. The problem identi cation, its measurement and the solution is an
important part of the whole process.
Client Willingness
Determining the client’s willingness or readiness is an important factor. Are they willing or ready to
accept change is an important question that need to be asked while going for organizational
development
Collaboration
Working with the right people at the right time is essential for organizational development. People
who work in collaboration are said to bring more positive and fruitful results for the organization.
Feedback Mechanism
Feedback is an essential element of organizational development. For every change, a feedback
mechanism should be run one to one to allow people to express their views and how are they able to
perceive change.
9.8 OD INTERVENTIONS
Bringing OD in an organization is a complex task. Through OD interventions, the structural
activities can be proved helpful to bring and maintain organizational effectiveness. According to
French & Bell, “OD intervention refers to the range of planned, programmatic activities client and
consultant participate in during the course of OD program.”
The following interventions can be undertaken to bring about OD:
Management of Organizational Change
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Fig. 9.8: OD Interventions Individual focused Interventions:
Interventions that are targeted towards individuals are known as individual-focused interventions.
The individual-focused interventions include skill training, job redesign, career planning and role
negotiations. We will discuss this points one by one:
Skill Training: It refers to increasing the knowledge, skills and abilities of an employee to
perform or do a speci c job more effectively. It is imparted in the classroom or on the job.
Job Redesign: It alters jobs to improve the balance between the individual skills and the
demands of the job.
Career Planning: It is a measure through the organizations, through various activities, to identify
strengths, weaknesses and goals of the employees. Counseling is also an important part of career
planning.
Role Negotiation: It is a simple technique through which employees/individuals meet and clarify
their job roles. The expectations of both the parties are clari ed and negotiated.
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 Fig. 9.9 Organization and Group-focused Interventions
These interventions are organizational and group-focused. They aimed at changing the organization
or work-groups within the organization. The interventions include management by objective,
quality of work life, survey feedback, team building and process consultation.
Techno structural Interventions:
Techno Structural interventions refers to the programs which are aimed at changing the technology
and structure of the organization. With rapidly changing markets, these interventions are becoming
increasingly relevant and important.
These interventions includes:
Organizational Structure: Organizational structure deals with the functioning of the organization. It
includes functional structure, divisional, matrix, process, customer centric, and network. It also
includes the design or restructuring in the form of downsizing and reengineering.
Total Quality Management: Total quality management is a philosophy. It is not a technique. It states
that every employee should work towards the improvement of the organization. To ensure a
continuous success, the employees should contribute in improving the work culture, work
ef ciency, services, systems and processes. It is mainly concerned with continuous improvements in
all the areas of organization.
Job Enrichment and Work Design: Job enrichment means enriching the new dimensions to the job.
As the name suggests, it seeks to enrich and improve the existing job of the employee. While, work
design deals with designing work in a way that leads to optimum productivity. Both can be
considered as an attempt to motivate employees by enriching and enhancing their jobs.
Strategic Change Interventions: These interventions can bring the development changes in an
organization. Strategic change interventions are those interventions which focus on the change
processes that can shake the organizations. These interventions are for the long-term.
The following can be considered as the strategic change interventions:
Continuous Change: Continuous change deals with the changes which occur gradually. These
changes are improving by the time and are continuing in nature. By making small incremental
changes, an organization can improve slowly.
Transformational Changes: As the name suggests, transformational changes include mergers,
acquisitions, alliances, joint ventures etc. These changes can bring changes in the whole
organization.
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 9.9 SUMMARY
Change is something which denotes a transition from one state to another. The fact of being
replaced or changed creates fear in the mind of the people. In an organization, translating change
into an action is challenging if it is not communicated properly. People feel change is a never
ending process where responses to it will be in the form of readjustment or readaptation.
The purpose of organizational changes is to change employee behavior towards change in a positive
way and to improve the ability of the organization to adapt changes in the new environment. It is
not that easy to introduce change. People resists due to many reasons.
People resist change. There may be numerous reasons as human behavior is caused. Whatever we
do, there is a reason behind that. Resistance to change can be a source of functional con ict. Some
evidence of resistance to change is very destructive.
Managing resistance to change is a key to management of change. It can be managed through
various ways.
Organizational development is an objective based methodology used to initiate a change of system
in an entity. It is achieved through supporting organizational structure and proper communication.
Change is inevitable in nature. Due to multiple reasons, there are a number of changes occurring
frequently.
Bringing OD in an organization is a complex task. Through OD interventions, the structural
activities can be proved helpful to bring and maintain organizational effectiveness.
9.10 QUESTIONS
1. What is meant by organizational change? Why is change considered as inevitable in nature?

2. What are the major external and internal forces for change in organization?

3. “People resist change and it's a completely normal part of the process” Comment.

4. How can resistance to change be prevented and managed? Explain its various techniques or
measures.

5. Write a note on practices of management of change.

6. What is OD? How is it undertaken by the organizations?

7. Discuss the various OD interventions. Which OD intervention is most effective?

8. Explain the various practices that can be adopted to develop organization.

9. What topics can be included in designing a new intervention for organizational

effectiveness?
















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 10 -HRD STRATEGIES FOR LONG-TERM PLANNING AND GROWTH
Unit Structure
10.0 Objectives
10.1 Introduction
10.2 Human Resource Development
10.3 Framework of HRD
10.4 HRD Interventions
10.5 HRD Strategies for Long-term Planning and Growth 10.6 Implementing HRD Strategies
10.7 Summary
10.8 Questions
10.0 OBJECTIVES
•  Understand the importance of HRD

•  How is HRD an important part of HRM

•  Long term bene ts of HRD at various levels

•  HRD Strategies and their implications and challenges

10.1 INTRODUCTION
The concept of human resource development is different from the concept of human resource
management. Human resource development helps organizations to develop their workforce.
Development is the main focus area while human resource management deals with acquiring,
training and managing people in an organization. The subject area of human resource management
is mainly concerned with the managing part including their development. Human resource
development is an important part of human resource management.
The human resources of the companies must be managed and developed in terms of the current
strategic orientation of the company. The subject area of human resource development covers the
development of skills, knowledge, abilities and capacities of the employees and managers. Through
the framework of human resource development, employees can develop their skills, knowledge and
abilities. It helps them to work more ef ciently.
Within human resource management, human resource development can be a stand alone function. It
is the training and development of a company’s workforce. The role of HRD managers is very
important.








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Fig. 10.1: HRM. HRD and OB
The concept of organizational behavior deals with human behavior at work. It is the study and
application of knowledge about how people behave or act in an organization as far as their
individual or group behavior is concerned. The subject area of OB is concerned with understanding,
predicting and controlling human behavior in an organization.
Through human resource development, organizations ful lls the training and development needs of
employees and managers respectively. It helps to provide new opportunities to the young talent to
work better for the organization. The domain of human resource development is very vast and
comprehensive. Human resource development can be in the form of a formal or informal way.
10.2 HUMAN RESOURCE DEVELOPMENT
Since the 1980s, the term ‘Human Resource Development’ has been in use although the concept is
much longer old. The development of human resources is essential for any organization. The nature
of human resource development is dynamic, future oriented and growth oriented. Unlike other
resources, human resources are considered as the most valuable resource of an organization. They
have rather unlimited potential capabilities and skills.
By creating a development culture and practices, the abilities and knowledge of the employees can
be increased in this challenging and dynamic world. Human resource development aims at creating
such a climate. Based on certain principles and interventions, the concept of human resource
development is widening day by day.
Human resource development is a practice through which employees develop their personal and
organizational skills, abilities and knowledge. Human resource development is developing the most
superior workforce. In simple words, HRD is a process by which the employees of an organization
are helped in a continuous and planned way. It helps employees to understand their own
capabilities.
DEFINITION
According to M.M. Khan, "Human resource development is the cross of increasing knowledge,
capabilities and positive work attitudes of all people working at all levels in a business
undertaking."
According to Leonard Nadler, "Human resource development is a series of organized activities,
conducted within a specialized time and designed to produce behavioral changes."
10.3 FRAMEWORK OF HRD
The development of human resources is essential for any organization. The nature of human
resource development is dynamic, future oriented and growth oriented. Through the framework of
human resource development, employees can develop their skills, knowledge and abilities. It helps
them to work more ef ciently.
Human resource development deals with the training and development of employees and staff.
Their development leads to community development.
With the help of the diagram given below, we can understand the framework of human resource
development -
HRD Strategies for Long- Term Planning and Growth
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Fig. 10.2: HRD Framework
The framework of HRD is designed to serve the employees. Human resource development is one of
the forms of systems which helps organizations to sustain and retain employees. Motivation plays
an important role in the whole process. Human resource development itself is a framework designed
to train, develop and motivate employees through training and development by increasing their
knowledge, skills and abilities.
Human resource development framework is important because it provides necessary training and
support to the employees of the company. The most ef cient workforce is targeted rst to
accomplish the targeted goals while serving the customers and society. The objective of the HRD
framework is to to develop and maintain the skills and competencies of the employee.
When the knowledge, skills and abilities of an employee increases, it leads to a better, trained and
skilled workforce. The assessment, design, implementation and evaluation of the whole framework
is important. Assessment and prioritization of needs is another important part of the whole process.
Every framework deals with the following stages as far as human resource development is
concerned.

Assessment
This stage involves the assessment of the employees, job tasks and organizational environment.
What is needed and what we have is the fundamental thing which will be considered by prioritizing
needs, understanding and examining the performance of the employees.
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 Fig. 10.3: Diagramatic representation of HRD Framework
Design
Designing the program of human resource development is an important part. De ning objectives,
developing course of action, lesson plan and scheduling the program are some important elements
of this stage.
Implementation
The implementation deals with the practical stage of the whole process which was planned earlier. It
involves the successful delivery of the assessment and design phase. with the help of various
training and development methods, the program will be implemented.
Evaluation
The nal step in the process is evaluation of the program. The effectiveness of the HRD
intervention is measured during this phase. Evaluation plays a vital role. It helps organizations to
follow the same strategy if it goes successful.
Modi cation/Continuation
If the framework proves to be successful, the organization will continue to adopt the similar
framework in future as well. If not, they can modify the process as per the needs and criteria of the
organization for developing human resources.
10.4 HRD INTERVENTIONS
The programs and interventions used can be used to address a wide range of issues and problems in
the organization. Human resource development is an important function within human resource
management. There are many sub-systems of human resource development. Interventions help
organizations to prioritize the needs of the organization. The following are the important
interventions of human resource development:
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Fig. 10.4 HRD Interventions Training and Development
Training refers to increasing the knowledge, skills and abilities of an employee to do a particular job
while development deals with the overall improvement of a manager. Training word is used for
employees while the development word is used for managers. Through training and development,
the human resource development function can work effectively.
Performance Appraisal
Performance appraisal means to evaluate the performance or work of an employee in an
organization. It helps individuals manage their performance by providing them with feedback. It is
good for the improvement of the employees. That's why it is considered as one of the important
interventions of human resource development.
Communication
Communication is an act of passing information from one person to another. Clear communication
is a key for organizational effectiveness. This is one of the most frequent HRD interventions used
by the organizations to promote growth and development of the employees.
Quality of Work Life
Quality of work life can be de ned as the satisfaction level of an employee related to his job and
his/her thinking as far as the quality of their work is concerned. If their satisfaction level is
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favorable, the quality of work life is said to be positive. If it is unfavorable, the quality is said to be
compromised. Maintaining quality at the workplace is an essential element of HRD.
Job Enrichment and Job Enlargement
Job enrichment means the vertical expansion of a job by increasing the knowledge, skills and
abilities of an employee. Job enlargement means the horizontal expansion of a job by adding more
responsibilities and tasks. These two things are considered as important interventions of human
resource development.
Organizational Development
Organizational development is an objective based methodology used to initiate a change of system
in an entity. It is achieved through supporting organizational structure and proper communication.
The concept of organizational development helps organizations to build their capacity to bring
change by integrating and developing the strategies, structures and processes of the organization. It
is a systematic, integrated and planned approach to improve the effectiveness of the organization.
The culture of change is developed through the utilization of behavioral science, research, theories,
laws and technology. The approach of organizational development is evidence based and structural.
It aims at organizational effectiveness.
10.5 HRD STRATEGIES FOR LONG-TERM PLANNING AND GROWTH
A human resource development strategy deals with managing and developing its human resource to
align with its business activities and competitive world. The human resource development strategy
is an enterprise's overall plan for managing its human capital to align with its commercial and
business activities. The direction is set for all the main areas of human resource. The key areas of
human resource include human resource planning, recruitment, selection, training and development,
performance appraisal and compensation.
The HRD strategies for long-term planning and growth dictates HR practices throughout the
organization. The terms ‘planning and growth’ denote the direction of every direction. The analysis
of the organization and external environment is required to prepare the strategies for HRD. It takes
longer than one year to implement HRD strategies for long-term planning and growth.

Fig. 10.5 HRD strategies for long-term planning and growth

The activities of human resource management are shaped for the long term to achieve the objectives
and goals. It helps in the deployment and allocation of money, time, personnel and organizational
resources.
 The proactive approach is required in today's fast changing, challenging and competitive
environment. With the help of these strategies, the ef ciency, performance and productivity can be
achieved through growth and development of human resources in an organization . The utilization
and maximization of creative opportunities and available environment through acquisition of
knowledge is important in this eld. Along with knowledge, skills and abilities are also necessary to
be updated for productive efforts.
The objective of long term growth and development can be planned and achieved by inspiring and
motivating the inspired group of employees. Their core competencies can be utilized and modi ed
to achieve the objectives of the organization.
The HRD strategies for long-term planning and growth deals with the overall functioning of the
organization. The following elements are an important part of HRD strategies:
Communication is a key element. Without communication, no organization can achieve this
objective. The HRD strategies for long-term planning and growth also advocates the clear
communication between the various departments and levels. The HR policies should be made in
accordance with the vision, missions and objectives of the organization. It should be conveyed and
communicated properly to the employees of the organization.
Maintaining quality in every aspect of the organization is a need of today. A quality strategy will
ensure this element. Managing change is another important challenge and properly taken care of.
Feedback mechanism is required to see whether the organization is able to cope with the change or
not. Feedback mechanism also ensures that the HR policies are well communicated, quality
strategies are well planned and implemented. Employees are involved completely in the whole
communication process.
A good feedback mechanism ensures the greater participation of employees in an organization.
10.6 IMPLEMENTING HRD STRATEGIES
In the previous topic, we have discussed the HRD strategies for long-term planning and growth. In
this topic, we will see how the HRD strategies are implemented properly. HRD strategies are a plan
that de nes how the human resources would be utilized in an organization. Growth and
development plays an important role while preparing and implementing HRD strategies.
An organization by preparing and following the given steps can plan, prepare and implement HRD
strategies. -
HRD Strategies for Long- Term Planning and Growth

Fig. 10.6 Steps Involved in the Implementation of HRD Strategies

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Step I: Needs Assessment
The assessment of needs of the organization is a rst step. This step is an important step. The needs
of the organization related to human resources are identi ed in this step. Developing an effective
human resource strategy takes time and careful planning.

Step II: Preparing and Designing the Strategy

In this step, the strategies are prepared and designed. Once the focus is clear, the next step is to
work in that direction. The strategies are prepared and designed by keeping in view the goals and
objectives of the organization.
Step III: Alignment
The third step involves the alignment of the HRD strategies with the business objectives. Though,
strategies are designed and prepared in that way only. The objective is Every HR strategy has to
support business efforts.
Step IV: Implementation
Once the above steps are cleared, the strategies are implemented in this step. Through team building
and group efforts, the HRD strategies are implemented to achieve the objectives of the organization
related to human resource.
Step V: Feedback
This step ensures the analysis of the whole process. Feedback mechanism is required to see whether
the organization is able to cope with the change or not. Feedback mechanism also ensures that the
HR policies are well communicated, quality strategies are well planned and implemented.
Employees are involved completely in the whole communication process.
10.7 SUMMARY
•   Human resource development helps organizations to develop their workforce.
Development is the main focus area while human resource management deals with
acquiring, training and managing people in an organization. The subject area of human
resource management is mainly concerned with the managing part including their
development. Human resource development is an important part of human resource
management.

•   Human resource development is a practice through which employees develop their

personal and organizational skills, abilities and knowledge. Human resource development is
developing the most superior workforce.

•   The framework of HRD is designed to serve the employees. Human resource

development is one of the forms of systems which helps organizations to sustain and retain
employees. Motivation plays an important role in the whole process. Human resource
development itself is a framework designed to train, develop and motivate employees
through training and development by increasing their knowledge, skills and abilities.
 The programs and interventions used can be used to address a wide range of issues and
problems in the organization. Human resource development is an important function within
human resource management. There are many sub-systems of human resource development
like training and development, performance appraisal etc.

•  The HRD strategies for long-term planning and growth dictates HR practices throughout
the organization. The terms ‘planning and growth’ denote the direction of every direction.
The analysis of the organization and external environment is required to prepare the
strategies for HRD. It takes longer than one year to implement HRD strategies for long-term
planning and growth.

•  HRD strategies are a plan that de nes how the human resources would be utilized in an
organization. Growth and development plays an important role while preparing and




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 implementing HRD strategies.

10.8 QUESTIONS

1. What is Human Resource Development? Explain the role of HRD in

developing and implementing strategies.

2. Write a note on the framework of HRD.

3. Why are companies focusing more on human resource development? Support your answer
with the help of some examples.

4. Explain the concept of HRD strategies for long-term planning and growth.

5. What are the Steps Involved in the Implementation of HRD Strategies.

















 11-SUCCESSION PLANNING Unit Structure:
11.0 Objectives
11.1 Introduction
11.2 Meaning and De nition
11.3 Steps / Elements of Succession Planning
11.4 Need and Importance of Succession Planning
11.5 Need of Succession Planning to Family Oriented Enterprises
11.6 Issues in Succession Planning and Solutions
11.7 Problem in Succession Planning
11.8 Measures to The Solve Problems in Succession Planning 11.9 Grievance Handling
11.10 Grievance Procedure
11.11 Summary
11.12 Self Assessment Questions
11.0 OBJECTIVES
After studying the unit the students will be able to:
•  De ne the meaning of Succession Planning.

•  Explain the steps in the process of Succession Planning.

•  Understand the importance of Succession Planning

•  Know the issues related to Succession Planning

•  Elaborate how to face the issues of Succession Planning

•  Discuss about the term Grievances handling and the process of Grievances Handling.

11.1 INTRODUCTION
Survival, growth and ef cient continuous existence of an organization require a succession of
people to ll various important jobs. The purpose of succession planning is to identify, develop and
make the people ready to occupy higher level jobs as and when they fall vacant. Higher level jobs
fall vacant due to various reasons like retirement, resignation, promotion, death, creation of new
position and new assignments.
Succession may be from internal employees or external people. Succession from internal employees
is advantageous to the organization as well as to the internal employees. Organization can buy the
employees loyalty and commitment, belongingness, shared feeling of development along with the
organization by promoting the internal employees. Employees get the bene ts of growth in the
organization. The organizations mostly prefer to encourage the growth and development of its
employees and as such tend to prefer succession from within.
Organizations, appraise employees potentialities, identify training gaps for future vacancies,
develop them for higher and varied jobs. The scope of succession plan would be more when the
organization grows steadily and employees have potentialities to take up higher responsibilities.
Professionally run organizations ask their managers to identify the internal employees having
potentialities and develop them in order to occupy their positions as and when they fall vacant.
However, it is necessary to allow the in ow of new blood also. Hence, organizations should also
search for outside talent in certain cases like when competent internal people are not available,
when expansion, diversi cation and growth plans are in of ng, complete dependence on either
internal source or external source is not advisable to any organization. Hence, a judicial balance
between these two sources should be maintained.
11.2 MEANING AND DEFINITION
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“Succession Planning is a process to ensure continued effective performance of an organization,
division, department, or work group by making provision for the development, replacement, and
strategic application of key people over time.”
In order to prepare potential leaders, the gap between what they are ready for now and what
preparation they need to be ready for the job when it is available needs to be determined.
By considering their past performance as a volunteer, past experience, t with the organizational
culture, and other members' acceptance of them as a potential leader, the best t can be determined.
Succession planning is a systematic approach to:
Building a leadership pipeline/talent pool to ensure leadership continuity
•  Developing potential successors in ways that best t their strengths

•  Identifying the best candidates for categories of positions

Concentrating resources on the talent development process yielding a greater return on

investment.
Succession planning recognizes that some jobs are the lifeblood of the organization and too critical
to be left vacant or lled by any but the best quali ed persons. Effectively done, succession
planning is critical to mission success and creates an effective process for recognizing, developing,
and retaining top leadership talent.
11.3 STEPS / ELEMENTS OF SUCCESSION PLANNING
The main steps/elements of succession planning are as follows:
It is important to acknowledge that succession planning will vary slightly between organizations.
Different resources, different organizational designs and different attitudes all mean that succession
planning should be exible and adaptable in order to accommodate varying needs and achieve
business continuity. However, there is a general framework that departments can use as the basis
and guide for their succession planning activities.
This framework involves:

STEP 1: Identifying key positions or key groups (current and/or future) Identifying Key
Positions or Key Groups:
A key position or occupational group can be de ned in many different ways, but two important
criteria that should be considered are criticality and retention risk. A critical position is one that, if it
were vacant, would have a signi cant impact on the organization’s ability to conduct normal
business. The signi cance of the impact could be considered in terms of safety, operation of
equipment, nancial operation, ef ciency, public opinion, and so on. Retention risk refers to
positions where the departure of an employee is expected (e.g. retirement) or likely (e.g. history of
turnover). By examining these criteria on a low-to-high scale, an organization can determine what
positions require short or long-term planning.
A gap analysis, as a part of workforce planning, can also be an invaluable tool to identify key areas
or occupational groups. Information that may help identify key positions can include:
•  Current and future strategic goals and objectives

•  Retirement forecasts

•  Turnover rates

•  Current and expected vacancies

•  Changes to existing programs and services

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 •  Highly specialized function
In addition to the analysis of criticality, retention risk, and other workforce data, it might be
bene cial to consider the following types of questions:
 What jobs, if vacant, have the potential to prevent the organization from achieving goals
and objectives?

•  What jobs have a direct impact on the public?

•  What jobs would be dif cult to ll because of required expertise or because the exiting
incumbent possesses a wealth of unique and/or corporate knowledge?

•  Is there a projected labour market shortage for relevant job skills?

•  Is there a need to plan for anticipated positions that do not currently exist?

STEP 2: Identifying competencies

Identifying Competencies
All positions have a requisite set of knowledge, skills and abilities that are expected of employees
who are lling that function. Thus, knowing the competencies of a job is a mandatory component of
recruitment, serving as a general baseline to measure against interested potential candidates.
However, succession planning provides an opportunity to review the competencies traditionally
associated with jobs, particularly with respect to current goals and objectives. Several ways to
determine and develop required competencies include:

•  Reviewing job descriptions, advertisements, and relevant merit criteria

•  Interviewing current and former job incumbents

•  Interviewing supervisors, clients, and other stakeholders

•  Conducting focus groups or surveys

•  Reviewing any existing development programs (i.e. leadership competencies)

•  Reviewing organizational values

Although job descriptions offer a good starting point for the identi cation of competencies, it
is important to consider some of the other sources of information listed above.
Current incumbents, for example, would have a good understanding of which competencies
are the most important to their job. Interviewing these people may reveal knowledge, skills
and abilities that are necessary for the job, but are not currently identi ed in the job
description. Given the practical scope of any job, valid identi cation of competencies is
necessary for:

Establishing minimum requirements for job success;

Creating a baseline for assessing interested potential candidates; and
•  Identifying appropriate learning and development opportunities.

•  Some questions to consider might include:

•  What are the speci c functional competencies that apply to a key job or group?
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 •  What competencies apply to all employees and groups? Are these competencies aligned
with the organization’s vision, mission and values?

STEP 3: Identifying and assessing potential candidates

Identifying and Assessing Potential Candidates

The key purpose of identifying and assessing employees against core job competencies is to help
focus their learning and development opportunities in order to prepare them for future roles in the
organization. Traditional approaches to succession planning have the potential to result in a one
sided selection process, the organization identi es a key position, and then executives select a high-
potential individual for preparation or training. Given the potential sensitivity around the decision-
making process in these situations, an employee might be advised about their prospective
opportunity for advancement in private. This process is not transparent and can negatively impact
the morale of other employees (including the person chosen for succession) and their relationship
with the organization.
Modern approaches to succession planning suggest that transparency and accountability are the best
practices for an organization. Recruitment in the public service is based on merit, fairness and
respect, and these concepts are maintained and supported by the succession planning process. To
demonstrate these values, succession planning must be:
•  Objective and independent of personal bias;

•  Merit-based;

•  Communicated to and understood by all employees; and

•  Transparent at all stages of the process.

Under these circumstances, self-identi cation is a useful starting point to see which
employees are interested in leadership roles, career advancement or lateral moves that might
not be easily attained without focused training or other learning and development
opportunities.

STEP 4: Learning and development plans

Learning and Development Plans
Once the relevant candidates have been identi ed, based on their interest and potential for success
in a key position, the organization must ensure that these employees have access to focused learning
and development opportunities.
Some key points to remember when developing learning and development plans are:
•  Plans should focus on decreasing or removing the gap between expected competencies
and the current knowledge, skills and abilities of candidates.

•   Manage expectations – modern succession planning is based on learning and

development to ful ll employee potential, rather than merely lling a vacancy.

•   There are a wide range of learning and development opportunities to consider, which
can include:

•  Job assignments that develop and/or improve a candidate’s competencies;

•  Job rotations; and







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 •  Formal training.

•  Ensure appropriate strategies are in place to support the transfer of corporate knowledge
to candidates for key jobs, which can include:

•  Mentoring, coaching or job-shadowing;

•  Documenting critical knowledge;

•  Exit interviews; and

•  Establishing communities of practice.

STEP 5: Implementation and evaluation

Implementation and Evaluation

Evaluating succession planning efforts will help to ensure the effectiveness of the process by
providing information regarding:
•   How the process operates – the relationship between inputs, activities, outputs, and
outcomes

•  Impact of the process relative to stated goals and objectives

•  Functional strengths and weaknesses

•  Potential gaps in planning and assumptions

Cost-effectiveness and cost-bene t

Planning to collect and assess these types of information will ensure that the organization monitors
its succession planning activities, appropriately measures success, and adjusts the process
accordingly given suf cient evidence. Some evaluative questions for departments to consider might
include:
•  Have all key jobs been identi ed and do they have succession plans?

•  What is the impact of succession plans on business continuity in key

positions?

•  Are successful candidates performing well in their new roles?

•   What is the impact of learning and development efforts? Are employees ready to
compete for a vacant key position?

•  Is the candidate pool diverse and re ective of employment equity values?

•  What are the areas for improvement in the succession planning process?
Once a succession plan has been established, monitoring its ef ciency and effectiveness will
be essential. Thus, each succession plan should be developed within an evaluation
framework in order to measure progress and success, as well as provide any evidence to
support changes to the succession planning process.






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11.4 NEED AND IMPORTANCE OF SUCCESSION PLANNING
Succession planning is an essential part of doing business. As the future of any business is not
certain and it seems that everything in the business concern is going so well, in this case putting off
planning may be the wrong decision. Here is the time for the business concern to begin for
succession planning.
Following are some reasons why succession planning is essential:
Succession planning helps to face disaster.
No matter how good you and your staff are at revenue projections or economic predictions, no one
can truly plan for disaster. Whether it's an unforeseen illness, a natural disaster, or a CEO's decision
to suddenly retire, the reasons for having a succession plan in place before it is needed are endless.
So while you can't plan for disaster, you can put into place a series of contingencies that will help
your company stay a oat if, in fact, catastrophe occurs.

Succession planning helps to build strong leadership:

Just as business practices have evolved over the years, succession planning has also grown and
changed. It's no longer a plan that can only be accessed when leadership is going to change; a
succession plan can be used before its "real" intent is necessary. It can be used to build strong
leadership, help a business survive the daily changes in the marketplace, and force executives to
review and examine the company's current goals.
Succession planning gives your colleagues a voice:
If you're running a family business, the process of succession planning will give family members an
opportunity to express their needs and concerns. Giving them that voice will also help create a sense
of responsibility throughout the organization, which is critical for successful succession planning.
Resist the temptation to solely carry the entire weight of creating and then sustaining a plan.
A succession plan can help sustain income and support expenses:
Talking about money should be a priority. People generally don't want to work for free and things
don't pay for themselves. A succession plan can provide answers as to what you and your staff will
need for future income, as well as what kind of expenses you may incur once you step out of the
main leadership role. Ask yourself questions about your annual income and other bene ts including
health and dental insurance for you and your dependents, life insurance premiums paid for by the
company, your car, professional memberships, and other business related expenses.
Succession planning gives you a big picture.
Some companies mistakenly focus solely on replacing high level executives. A good succession
plan can go further, however, and force you to examine all levels of employees. The people who do
the day-to-day work are the ones keeping the business going. Neglecting to add them to the
succession planning mix could have dire consequences. As you develop your plan, incorporate all
layers of management and their direct reports.
Succession planning strengthens departmental relationships.
When regular communication occurs between departments you are more likely to experience
synergy, which breeds a culture of strength. Make sure that you link your succession planning
activities with human resources. After all, HR is about people. By including HR in succession
planning, you can incorporate elements like the employee evaluation process, which can help when
deciding whether to ll vacancies with internal candidates.
Succession planning keeps the mood buoyant.
Change a major component of a succession plan is exciting and can bring a company unforeseen
rewards. Still, change can be a source of tremendous stress, especially when people's livelihoods are
at stake. As you put your succession plan together, consider its positive effects on the business.
Planning for the future is exciting and, if done correctly, can inspire your workers to stay involved
and maintain company loyalty. It's true that a plan is often put into place to avert catastrophe, but it's
also a company's way of embracing the future —a business strategy that is essential for survival.
11.5 NEED OF SUCCESSION PLANNING TO FAMILY
ORIENTED ENTERPRISES
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 Due to the complexities surrounding the transfer of ownership of family businesses from one
generation to another, speci c resources have been developed for family business owners planning
for this transition. Among these resources is the McCabe Arch which is a visualization and planning
tool for the American business owner. It offers practical solutions for planning the orderly
consumption and distribution of nancial and emotional wealth.
The process, like the construction of an arch, begins with two solid cornerstones, the business
owner who is willing to plan for his or her eventual departure from the business, and the willing
successor.
However, the unique aspect of an arch was that we continually build it from two sides. For a
succession planning model to work, we needed commitment from the owner and the protégé. It was
imperative that both sides complete their assignments with the ultimate goal of the nding and
resolving the key issues that were represented by the various blocks. Harry McCabe (Author of Pass
It On: The Entrepreneur's Succession Planning book).
Each building block on each side of the arch represents a step in the 7 Steps to Succession, which
provides a time table and road map for Family Business Succession Plans.
11.6 ISSUES IN SUCCESSION PLANNING AND SOLUTIONS
There is a compelling argument that gifting family businesses to the next generation destroys
businesses and family relationships. When family members purchase shares in a family business
they are required to assess their own skills and ability to generate wealth from the business.
Families that skip this step, families that gift ownership encourage children to work in and often
lead family businesses for all the wrong reasons
If the employees retire or exit for other reasons, the ethos and dynamics of the business will
inevitably change. If the value of the business is to be maintained or enhanced, it is imperative that
these changes are carefully controlled.
The rst step is to formally decide precisely what difference their departure will make. If the
retiring directors/managers were responsible for sales dynamism, strict nancial control, key
account customer loyalty or engineering innovation, for example, these are the critical skill gaps
which will need to be seemlessly lled.
The assumption is companies will need to recruit externally to ll operational gaps arising as they
undergo change. This is not necessarily the case.
External HR professionals can be brought in to work as change managers. They can identify current
or anticipated gaps in managers' range of skills and employees' competencies and then develop the
most cost ef cient ways to ll these gaps.
But there is more to succession planning. Rather than just being a way of averting the dangers of a
foreseeable motivational and engagement vacuum, it can be an opportunity to refresh, revitalise or
reposition a staid enterprise in a rapidly changing world.
Businesses can move forward by optimising the contribution of their existing management, staff
and workforce. It is highly likely existing personnel will have undiscovered capabilities and talents.
But the fact these attributes have not become apparent in their existing roles is probably more to do
with habit and complacency than a failure to invest in employee development. It might be the case
they have simply not been invited to extend themselves in an unfamiliar direction or take on wider
responsibilities. It is de nitely the case that uncovering unsung talent in existing staff is less costly
than recruiting and introducing new personnel.
Job rotations can sometimes reveal these hidden reservoirs of ability. Perhaps someone on your
sales force has the potential to become an outstanding marketer perhaps someone from your shop
oor or of ce has the potential to be an outstanding sales generator. An operative might have innate
interpersonal skills which earmark him or her for development into line management.
In some instances, the skills shortfalls can be lled by job rotation. Skills shortfalls in one
department can be overcome by importing them from another where a competent individual's ability
is being under utilised. There are huge savings to be made by offering coaching, mentoring or
further job training to existing staff.
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11.7 PROBLEM IN SUCCESSION PLANNING Leadership, implementation and industry related
competencies:
To combat the MEGO (my eyes glaze over) factor, we rst distinguished industry related skills such
as risk analysis or sales skills from other competencies. We then grouped the remainder under either
implementation competencies or leadership competencies.
“Implementation” refers to how one gets things done, while “leadership” refers to competencies that
are often, in effect, personal attributes.
In the Bible, Noah demonstrated the differences among these three types of competencies. God told
Noah that it was going to rain and that he wanted Noah to build an ark and put all kinds of animals
on it. Therefore, Noah knew what the industry risks were (it’s going to rain) and what should be
done about it (build an ark and put the animals on it). However, knowledge of what the risks are,
and what should be done about them, doesn’t get the job done.
But Noah, starting with the limited instruction on ark building provided by God, did get the ark
built on time and today we would say on budget demonstrating that he had the implementation
skills needed to take action and manage risk.
Noah’s implementation skills can be distinguished from his leadership skills. He demonstrated
leadership skills by convincing all those animals to board the ark and not eat each other up during
the voyage.
Grouping competencies into subgroups:
We have found that leadership, implementation and industry related competencies can each be
further subdivided. We have about 10 such competencies for each of these three categories. With
these additional subdivisions, linkage can be made to the competencies needed for the strategic
plan. For example, our methodology subdivides “leadership” into competencies such as: Strategic
Agility (including Vision), Integrity & Trust, and Developing Subordinates. It divides
“implementation” into competencies such as: Flexibility & Adaptability, Communications Skills,
and Results Orientation. Industry related skills, in addition to professional competencies, include:
Industry Knowledge, Client Focus and Global Perspective. Russell Reynolds Associates has
developed a methodology in our executive search practice that allows us to predict if people are
likely to have the needed competencies. In our executive assessment practice we have identi ed
‘Flexibility & Adaptability’ as a key competency for the personal development needed to progress
in leadership training, and hence, succession.
Does this sound like motherhood? We don’t think so. We did a search for a large Canadian nancial
institution that had worked through a competency framework similar to ours and had identi ed the
competencies that were needed in all of their senior of cers, in addition to any speci c industry
related skills needed for each job. Their list of key competencies was as follows: Dealing with
Ambiguity, Strategic Agility, Integrity and Trust, Managerial Courage, Decision Quality, Results
Orientation, and Client Focus. We would call the rst ve “leadership” competencies, the second- to
last an “implementation” competency, and the last an “industry- related” skill. We were able to
match our competency framework to theirs, and therefore, our methodology to their competencies.
As a result, we presented them with candidates most likely
to meet both their leadership and implementation needs as well as industry related requirements.
Building competencies into the strategic plan:
This is where a key part of the strategic planning process should include a review of the
competencies that will be needed to ful ll a rm’s strategic plan. Mapping the industry related
competencies such as “customer focus skills” or “chemical engineering expertise” is relatively
obvious. However, even here, commonly held views need to be established.
Building a commonly held institutional view of key leadership competencies is harder. However,
the executive management team can achieve this goal by comparing competencies listed as
leadership competencies above to the rm’s current culture, and then determining what needs to
change at the leadership level in order to get to where the rm wants to go. One rm summarized
their current competencies as subsets of; “This is how we do things around here,” and then went on
to say, “This is how we will have to do things around here in the future.”
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 Executives prefer quantitative benchmarks. Leadership as a concept is just too subjective for many
people. In the absence of using speci c leadership competencies such as those described in Section
C (above), our experience tells us that decisions about people will tend to be based on industry-
related skills rather than on leadership competencies. Our methodology makes executives more
comfortable in assessing leadership because it has been broken down into meaningful concepts such
as; “Developing Subordinates”, “Results Orientation” and “Client Focus”.
Using training to improve leadership skills:
We also believe that people can improve not just their industry skills, but that they can also improve
their implementation and leadership skills. At the Toronto International Leadership Centre for
Financial Sector Supervision (Toronto Centre), we were seeking to strengthen the leadership skills
of the government of cials who supervise the nancial services sector in emerging market
countries. It was our theory that, like Noah, these of cials knew what the nancial sector risks were
when nancial markets are liberalized. However, many lacked the experience to know how to build
the ark and get the animals on it.
During one session at the Toronto Centre, we wished to use role-playing to demonstrate the use of
“persuasion” in an environment where of cials believed that simply giving an order would actually
cause things to be done. Concerned about the loss of face in role-play situations, we invited
participants to state what they would say if they were to role-play, rather than actually engage in the
role-playing. The rst rapporteur, who was a senior of cial from the central bank of an advanced
eastern European country, exceeded instructions and role-played his response. The second
rapporteur was the deputy governor of one of the most important central banks in Africa. He
agonized over the potential loss of face he would suffer from engaging in role-playing on the one
hand, or the loss of face by not matching the performance of the previous rapporteur. Opting for the
second risk, he reached back to his skills as an Oxford University debater and brilliantly rolled out
his argument. By doing so, he made the leap of applying his Oxford debating skills to using
persuasion rather than giving orders as a means of getting things done in his central bank.
Thus, while some people do seem to be born leaders, others can be helped along the path. In short,
while one cannot turn a sow’s ear into a silk purse, it is possible to turn a sow’s ear into a pigskin
purse. That may be suf cient to help someone become better at what they do.
Identifying the leadership pool:
Having said that, there will still be those who are not able, or not willing, to make the sacri ces
demanded of leaders. For example, early in my career, I “Peter-Principled’ a sound technical of cer.
Soon, we were both nervous wrecks. One day he came to me and said that I had over promoted him,
that he was happier in his previous job, and that he wished to have it back. I readily agreed. Years
later, long after my wings had melted from ying too close to the sun, he was still there, ful lling
his technical responsibilities, until he retired with full pension at the end of his career.
When the executive assessment competency testing is done, the employee pool will be divided
between those who are in the leadership pool and those who are not. There should still be senior
technical positions available in most companies for non leadership candidates. One does not have to
be part of the leadership pool to be an outstanding derivatives trader or a key nuclear physicist.
Some of these people will be among the highest paid in the rm. The rest, who are neither the
leadership candidates nor the technical stars, are the backbone of the company. They are the much
needed foot soldiers who make the roll out of the strategic plan into a desired experience for the
rm’s customers through direct service or by supporting the employees who provide that service.
Those who are not in the leadership pool should be told that this is so and the results of the
competency testing should be shared with them. At Russell Reynolds Associates, we believe that it
is even better to make the results available to each person. These employees should be given the
opportunity to elect to stay in technical or operational roles if they are performing well, or to leave
and seek a leadership position with another rm where their leadership competencies are more
closely aligned. We understand that it takes managerial courage to communicate this split. Creating
a training program for those who wish to try and acquire the needed competencies alleviates part of
this problem.
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We have seen cases where executive management has skipped executive assessment and decided to
provide leadership training for the entire senior management team. The advantages of doing so are
that it builds morale and helps senior managers learn what is happening in other parts of the
business, thereby increasing the opportunities for cross selling. We believe that there are cheaper
ways of doing this. The disadvantage is that not all
senior managers are leaders or potential leaders. Their involvement makes the leadership training
program less effective. It is therefore a misallocation of strategic resources. Moreover, some junior
employees, who are potential leaders, are excluded from the leadership pool until they are promoted
into the eligible ranks.
Candidate selection:
It is improbable that all of the skills needed to achieve the strategic objectives will be found within
the organization. In those circumstances, recruitment from outside the organization will be needed
to augment the leadership pool. Recruitment that emphasizes the rm’s core leadership
competencies as well as the needed industry related skills reduces the risk of recruitment failure.
We believe that a healthy mix of internal promotions and external hires creates both a foundation of
continuity and an infusion of new ideas. There is an opportunity to test the candidates in the
company before they take on the most senior management positions if intake is at least a layer or
two below the CEO.
Experience:
Conventional wisdom for succession planning says that leadership candidates should be given
experience in different parts of the company. We agree, but the purpose isn’t solely to learn how to
run those businesses; it’s also to learn which questions to ask, and to learn to listen to the answers.
When I became Treasurer at CIBC, I was for the rst time faced with accountability for a discipline
that was outside my area of expertise, taxation. Desperate to cling on to something I knew, I asked
to retain responsibility for tax, even as I assumed my new responsibilities. But my boss, who
wanted nothing to do with the taxation line reporting through him, said: “You have so many
questions to ask that you won’t have time to retain responsibility for the taxation function.” He was
correct.
Training and development:
Corporate training falls into three general groupings -
•  Training for product knowledge and selling skills,

•  Training in management or implementation skills, and

•  Leadership development.
Teaching product knowledge and selling skills improves customer sales and service. It does
not do much for leadership development. Teaching management or implementation skills is
often billed as leadership training. To the extent that it teaches people to work more
effectively together, to communicate better, or to be more persuasive, such programs do add
value in leadership training.
At the leadership training level, there are credible rms that can help executives strengthen
leadership skills such as “strategic agility” and “developing subordinates.” There’s not much
you can do for “integrity and trust” if a person doesn’t have them by the time they are, say,
20 years of age. Beyond such programs, making coaches available for personal counseling
and attending Outward Bound type programs to build trust can be employed. We have seen
good successes and some failures with both.
It makes sense to use a coaching framework for more than training on particular subjects. Some
companies, like GE, set aside a day several times throughout a leader’s career with the rm to
thoroughly and professionally review the strengths and needs of the individual. This creates a
framework both for personal development and for corporate decisions on future assignments.
Know your exit strategies:




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 Depending on the rm’s makeup, the path to retirement can vary. Research your options, set exit
rules for partners, and seek an expert adviser. At Keiter, for example, equity partners have
mandatory retirement at age 65. “It just puts the rm in the driver’s seat as far as what’s in the best
interest of the rm,” Hall said.
Develop your staff:
It’s dif cult to have an inside successor or successors if that talent isn’t given proper training. Allow
your rm’s stars to take on more responsibility. David Jentho, CPA, a partner at Ratliff & Jentho
CPAs in Baytown, Texas, said a critical part of his rm’s succession plan was “developing our staff
and trying to put them in a position to where we can begin to pass the responsibility for clients onto
them and help them build the same type of personal relationships that we have with those clients.”
Evaluate your rates and clients:
Your PCA will be easier to implement if your practice is in line with the rm that could take over.
Now is a good time to examine your client list and what you’re charging. Many smaller rms “have
not maintained market billing rates,” Cingoranelli said. “It’s going to make it dif cult to transition
clients to another rm with higher rates. That’s going to be some real sticker shock for their
clients.”
Strengthen client relationships:
Focus ore attention on top clients. Don’t be afraid to shed marginal clients (e.g., the ones who
regularly pay late) or recommend another rm for them.
11.8 MEASURES TO THE SOLVE PROBLEMS IN SUCCESSION PLANNING
With an aging workforce, planning for the inevitability of your leaders exiting your organization is
becoming more and more necessary by the day. Succession planning isn’t just a buzzword: it’s a
developmental strategy that’s extremely relevant to how we plan to run our businesses in current
year and beyond.
You may have previously put it off due to some common problems that may include a)
identi cation, development, and retention of possible successors, and b) budget constraints. While
you may consider mentoring as a solution for these issues in your organization, before you go any
further, you must rst discard the idea of succession planning as “replacement” planning.
Your organization may have a plan for what happens if and when a top level employee leaves but
chances are it’s more of a crisis/contingency plan.
Let me ask you this: is the planned replacement ready to take on that new role? Are they able to do
it while transitioning from their current role and handing off their responsibilities? If they had to do
it in the next two weeks, could they do it? If the answer is “no,” it’s probably because no one’s
invested in their development and transition into that new role.
Successors Are Not Replacements:
The critical difference between the concepts of replacement planning and succession planning is the
development invested in the intended successor. Bear in mind that no one likes to be a replacement:
the word “replacement” itself connotes “second rate/second best/I’m not ecstatic with the current
state but it’ll have to do”.
Alternatively, take this more proper de nition: “a person or thing that takes the place of another”
(Oxford English Dictionary). But as we all know when we’re talking about human beings and the
complex ranges of their skills, capabilities, personalities, and methodologies, you can never simply
substitute person A, entire, for person B, and assume that business will run as it always has.
Business will not run as it always has; and no, that’s not necessarily a bad thing so long as you
accept it and plan for it. Change is inevitable. Ignore it at the risk of having a replacement that
everyone sees as second best as a best case scenario. When things go wrong in leadership, after all,
they tend to really go wrong for the whole business.
But when you give someone the tools and development and investment to advance beyond “second
rate/second best”, know the territory they’re inheriting, and perform well within it, they’re able to
become a true successor. And that person is ready to take on their new role. Mentoring Solutions for
Succession Planning and Development like I said before, if you’ve been hesitant before about
implementing a succession plan in the past, here’s how mentoring can be a solution:
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 Make the most of a limited budget:
Your mentors (the people who currently hold the leadership role) and mentees (their successors)
come from within your organization, which means two things for you: 1) You don’t incur coaching
or training costs otherwise associated with developing employees, and 2) you optimize transfer of
practical, cultural, and institutional knowledge.
Identify:
You may nd that your mentors are uniquely suited to help you do
identify potential successors.
Develop:
The structure of a formal mentoring program is inherently developmental because it a) is mentee
driven b) offers practical experience to mentees, c) offers mentee’s rst-hand knowledge pertaining
to their roles and/or future roles.
Retain:
Formal mentoring programs also help retain identi ed successors by investing in not only their
development, but their integration with the culture and their new territory.
The “Success” in Succession. One nal note: ultimately when you’re looking at succession
planning, you aren’t just looking at developing individual leaders you’re looking at developing the
entire company. And that’s really the key to formal mentoring programs. Each mentor/mentee pair’s
goals and objectives must be their own and tailored to the mentee’s developmental needs, yes but at
the same time, they must tie back to organizational objectives; and formal mentoring programs, if
structured and administered correctly, allow for exactly this.
11.9 GRIEVANCE HANDLING
Meaning of grievance:
According to Michael Julius, “A grievance can be any discontent or dissatisfaction, whether
Expressed or not, whether valid or not, and arising out of anything connected with the company
That an employee thinks, believes, or even feels as unfair, unjust, or inequitable.”
“A grievance means a dispute concerning terms and conditions of
the employment arising from any administrative decision which the employee claims is in violation
of Rights under, or a failure to apply, established University personnel regulations, policies, or
practices, or which results from a misinterpretation or misapplication thereof “.
An item that would not be considered as a "grievance" would be an employee not receiving what
he/she wanted or thought he/she deserved as a salary.
GUIDELINES FOR HANDLING GRIEVANCES
•  A grievance redressal cell must be constituted.

•  All grievances should be considered important.

•   The aggrieved party should be met in person and should be allowed to express his
grievance fully.

•  A time frame should be laid for resolving the grievance.

•  It must be ensured that all procedural formalities relating to

grievance redressal have been complied with.

•  All grievances should be put forth in writing.

•  The redressal which the aggrieved employee is seeking must be understood.

•  The law pertaining to the grievance must be studied.



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 •  A positive environment where the aggrieved employee may not
hesitate to air his grievance must be created.

•  Organisations must have suggestion boxes at different places.

•   All facts pertaining to the issue should be gathered in order to understand the
implication of the grievance.
Identi cation of grievance:
It is so beautifully described that good management redresses grievances as they arise;
Excellent management anticipates and prevents them from arising. An effective manager
thus has to be proactive. A manager can know about the problems even before they turn into
actual Grievances through several means such as:
Directive observation:
Knowledge of human behavior is requisite quality of every good manager. From the changed
behavior of employees, he should be able to snuff the causes of grievances. This he can do
without its knowledge to the employee. This method will give general pattern of grievances.
In addition to normal routine, periodic interviews with the employees, group meetings and
collective bargaining are the speci c occasions where direct observation can help in
unfolding the grievances

Grip boxes:
The boxes (like suggestion boxes) are placed at easily accessible spots to most employees in the
organization. The employees can le anonymous complaints about their dissatisfaction in these
boxes. Due to anonymity, the fear of managerial action is avoided. Moreover management’s interest
is also limited to the free and fair views of employees.
Open door policy:
Most democratic by nature, the policy is preached most but practiced very rarely in Indian
organizations. But this method will be more useful in absence of an effective grievance procedure;
otherwise the organization will do well to have a grievance procedure. Open door policy demands
that the employees, even at the lowest rank, should have easy access to the chief executive to get his
grievances redressed.
Exit interview:
Higher employee turnover is a problem of every organization. Employees leave the organization
either due to dissatisfaction or for better prospects. Exit interviews may be conducted to know the
reasons for leaving the job. Properly conducted exit interviews can provide signi cant information
about the strengths and weaknesses of the organization and can pave way for further improving the
management policies for its labor force.
Opinion Survey:
The management can be proactive by conducting group meetings, Periodical interviews with
employees, collective bargaining sessions etc. through which one can get information about
employees’ dissatisfaction before it turns into a grievance.
11.10 GRIEVANCE PROCEDURE
Grievance procedure is a formal communication between an employee and the management
designed for the settlement of a grievance. The grievance procedures differ from organization to
organization.
Generally, grievance handling procedure involves a six-stage procedure, which is stated as follows
Resolving by Immediate superior:
The aggrieved employee presents his grievance to his immediate superior. The superior may take
suitable action, if his is empowered to do so. If the superior is not empowered to take appropriate
action, he may take permission from higher authorities to take suitable action to redress the
grievance.
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 Normally, the grievance is to be redressed within 48 hours (2 days) of the presentation of the
grievance. If the employee is satis ed with the action taken by the superior, the grievance is over. If
he is not satis ed, he may resort to the second stage.
Submit to department head:
If the concerned appointed person does not answer in stipulated time ore if the aggrieved person is
unsatis ed with the decision, he can approach the departmental head who is supposed to answer
within three days.
Grievance Committee:
On getting an unsatisfactory response from the departmental head the aggrieved person can
approach grievance committee which has to communicate its recommendation within three days.
Appeal for Revision:
If the decision of the management is not communicated to the aggrieved employee within the
stipulated period of 3 days, or if the management decision is unsatisfactory, the employee has the
right to appeal to the management for revision. The management may review its decisions and
communicate its decision to the employee within 7 days of the presentation of employee’s appeal
for revision.
Voluntary Arbitrator:
The grievance may subsequently be referred to voluntary arbitrator if the aggrieved party is not
satis ed with the decision of the management. The arbitrator is appointed with the mutual
consultation between the management and workers union. Both the parties may agree that the
decision of the arbitrator will be binding on both the parties. i.e. management and the employee.
Final decision:
The arbitrator goes through the grievance and the decision taken at the earlier stages. He will hold
deliberations with the management and the workers union. Finally the arbitrator gives his ruling,
which is normally nal and binding on both the parties.
Many grievances can be resolved quickly by correcting a misunderstanding, or with a simple
negotiation. In this case the grievance procedure saves time, money, and the relationship between
the parties. Having the issue handled by those immediately involved is a bene t as well, as they
know more about the problem at hand than do people at higher levels.
11.11 SUMMARY
Succession Planning is concerned with the preparing people to ll up successive jobs. The purpose
of succession planning is to develop people to replace current incumbents in key positions for a
variety of such reasons as: superannuation, resignation, promotion, growth, diversi cation, creation
of new positions, etc.
Succession Planning focuses on preparing people to ll execution positions. Succession planning is
concerned with the examining development needs of a rm’s strategic plans. Informally, it means
high- level managers identifying and developing their own replacements. The employees having
managerial attitude and potential may be considered for development programme that will help
prepare them for the executive jobs.
Your employer's grievance procedure may have more than three steps, but it must include a written
statement, meeting and appeal meeting.
11.12 SELF ASSESSMENT QUESTIONS
1. What is Succession Planning? How do the organizations plan for the succession of the
employees?

2. Explain the issues involved in the implementation of Succession Planning? Can they be
resolved? Give Examples.

3. Discuss the various elements of succession planning? Is there any mechanism of justifying
the elements applied in the process of succession planning?
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 4. Do the Indian Business Houses apply succession planning as the core system to achieve the
target of growth, expansion and diversi cation? Explain giving examples.

5. De ne the term Grievance Handling. Discuss the procedure of Grievance Handling.

12
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 12-HEALTH AND SAFETY ASPECTS OF HRM
Unit Structure:
• 12.0  Objectives

• 12.1  Introduction

• 12.2  Meaning and Signi cance of Employee Health and Safety

• 12.3  The Importance of Health and Safety

• 12.4  Summary

• 12.5  Self Assessment Questions

12.0 OBJECTIVES
After studying the unit the students will be able to:
•  Know the meaning and signi cance of Employees’ health and safety.

•  Explain the importance of health and safety.

•  Explain the Role of the organization towards health and safety.

•  Discuss about the procedure to prepare the health and safety programmme.

•  Know the safety programmes in the organization.

12.1 INTRODUCTION
Since large number of employees spend great deal of their time in work place, their work
environment is not always good for their healthy life. Stress, Strains, Mental and Psychological
Conditions, Poor working conditions, Long hours of work, Poor ventilation, Insanitation,
Malnutrition etc spoil their health. Ef ciency in work place is possible only when an employee is
healthy on the other hand industry exposes workers to certain hazards which affect his health. The
symptoms of bad health are high rate of absenteeism and turnover, industrial discontent and
indiscipline, poor performance and low productivity. Modern industry is characterized by
complicated mechanisms, intricate job requirements, and fast moving production lines. One of the
important consequences of all this is increased dangers to human life, through accidents. To avoid
this safety programmes like industrial health programmes are introduced, both for employers and
employees bene t.

12.2 MEANING AND SIGNIFICANCE OF EMPLOYEE

HEALTH AND SAFETY MEANING AND DEFINITION
The W.H.O has de ned health as “a state of complete physical, mental and social well-being and
not merely the absence of disease or in rmity.”
“Health and safety means safe working practices, following guidelines, regulations and procedures,
re safety, and the maintenance of a safe working environment”.
As de ned by the World Health Organization (WHO) "occupational health deals with all aspects of
health and safety in the workplace and has a strong focus on primary prevention of hazards."
Occupational health is a multidisciplinary eld of healthcare concerned with enabling an individual
to undertake their occupation, in the way that causes least harm to their health. Health has been
de ned as It contrasts, for example, with the promotion of health and safety at work, which is
concerned with preventing harm from any incidental hazards, arising in the workplace.
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 Industrial health refers to a system of public health and preventive medicine which is applicable to
industrial concerns.
According to the joint W.H.O Committee on Organisational Health, industrial health is:
the prevention and maintenance of physical, mental and well being of workers in all occupations
prevention among workers of ill-health caused by the working conditions
•  Protection of workers in their employment from risks resulting from factors adverse to
health, and

•  Placing and maintenance of the worker in an occupational environment adapted to his

physical and psychological equipment.

•  PHYSICAL HEALTH AND MENTAL HEALTH

Physical health implies prevention of disease or health conservation and prevention of
occupational disease. Health is the outcome of the interaction between the individual and his
environment. Health not only depends on the employee but also on the environment.
Ef ciency in work is possible when the worker is healthy physically and mentally.
Industries exposes employees to certain hazards which he would not meet elsewhere and
which may affect his health. Physical and mental health both are essential for the satisfaction
and improved morale, discipline, performance and productivity of the employees.
In India, the Royal Commission on Labour (1931), the Labour Investigation Committee (1946), the
Health Survey and Development committee (1943), the Labour Welfare Committee (1969) all
emphasized upon the “creation and maintenance of a healthy environment as possible, in the homes
of the people as well as in all places where they congregate for work, amusement or recreation are
essential”.
12.3 THE IMPORTANCE OF HEALTH AND SAFETY:
Following points explains the importance of Health and safety:
1. To overcome poverty: Healthy workers are productive and raise healthy families; thus
healthy workers are a key strategy in overcoming poverty. Safe workplaces contribute to
sustainable development which reduces the level of poverty.

2. Pollution control and exposure reduction: Health and safety measures include the processes
of protecting workers, surrounding communities and the environment for future generations.
Pollution and environmental exposures arise from industrial processes are hazardous to
health. That can be bene cially in uenced by occupational health and safety programmes.

3. Human loss and suffering is immeasurable: A serious injury or death happened at the
workplace changes lives of that particular family, friends, communities, and coworkers
forever. Occupational injuries and illnesses can provoke major crises for the families in
which they occur. In addition to major nancial burdens, they can impose substantial time
demands on uninjured family members. Today, when many families are operating with very
little free time, family resources may be stretched to the breaking point.

4. Ensures that our beloved one is safe: We always think that beloved one who leaves for work
in the morning should expect to return home at night in good health. Only the imagination of
beloved one will never be returning home or returning with any physical disability is heart
breaking for the family. When such thing happens really it changes lives of the whole family
forever. The Health and Safety measures ensures that husbands return to their wives, wives
to their husbands, parents to their children, children to their parents and friends to their
friends in safe conditions. That is the most important reason to create a safe and healthy
work environment.
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 5. Reduces costs the business: If a worker is injured on the job, it costs the company in lost
work hours, increased insurance rates, workers' compensation premiums and possible
litigation. Productivity is lost when other workers have to stop work to deal with the injury.
Even after the injured employee has been sent home or taken to the hospital, other
employees may be distracted or need to take time off from work in the aftermath of the
incident. Even a single injury can have far reaching and debilitating effects on your business.
All these types of losses can be avoided by providing health and safety environment to the
employees.
6. Improves the employability of workers: Employee attrition and absenteeism are the major
obstacles in increasing productivity of the business. When the employer provides safe and
healthy environment and safe workplace, it reduces the above issues on a great scale. Such
environment can be created in several ways like: Workplace redesign, maintenance of a
healthy and safe work environment, training and retraining, assessment of work demands,
medical diagnosis, health screening and assessment of functional capacities etc. By
involving employees in safety decisions through reporting, committees, walk troughs and
meetings it has been showed that their opinion matters to the company. By improving safety,
the company proves that it cares about their well-being. In such cases workers typically
respond by working harder, showing more pride in their jobs and remaining loyal.

7. Safety improves quality: It has been proved that the companies that put safety rst turn out
higher quality products. In some cases, that’s because a safe workplace tends to be a more
ef cient one, free of debris and tangles of cords. In other cases, it’s a matter of focus. By
working in a clean, ef cient environment, workers are able to reduce distractions and truly
focus on the quality of what they do. It results in better products that create customer loyalty,
bigger margins and increased sales.

Workplace safety creates the kind of productive, ef cient, happy and inspiring workplace we all
want to be part of. It’s about creating a highly pro table company. And that’s why it’s important.
Work Health and Safety Act 2011: As per the sections of this law a person conducting a business or
undertaking must ensure the health and safety of workers at work in the business or undertaking, so
far as is reasonably practicable. This act de nes “Health to mean physical and psychological
health”.
As per this act the employer’s duty of care includes providing:
1. a physical and psycho social work environment without risks to health and safety

2. safe systems of work

3. Information, training, instruction or supervision necessary to protect

all persons from risks to their health and safety.

This act monitors the health of workers and conditions at the workplace to prevent illness or injury.
ORGANISATIONAL ROLE TOWARDS SAFETY AND HEALTH OF HUMAN RESOURCES
For the safety and health of human resource the organization has to take proper decisions in the
following cases:
1. To implement the safety and health management system: The company has to have a system
i.e. a policy, designate people and clear procedures: to manage health and safety. The
company having more than ve employees must set out a written health and safety policy
statement.

2. To provide appropriate nancial, human, and organizational resources: Every reasonable

effort must be made to provide adequate funding to protect the workplace safety and health
of employees. It may be necessary to prepare documentation to justify expenses associated
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 with hazard abatement. In addition, long term planning and expert advice may be required.
Costs can be minimized with proper planning and research. Remember that nancial
commitment to safety and health is a strong indicator of management's overall commitment.

3. To issue a written safety and health policy as a core value of the organization: A written
safety and health policy clearly states the company’s commitment to effective safety and
health management and in providing a safe and healthy working environment.
Communicating the organization’s commitment is as important as the company’s statement.

4. To de ne roles, assigning responsibilities, establishing accountability and delegating

authority: The company must be able to show how it is planning, organising, controlling,
monitoring and reviewing the preventative measures.

5. To integrate: the safety and health goals/objectives into the organization's business systems
and processes.

6. To discuss safety and health processes and improvements regularly during staff or employee
meetings: Employee involvement can help. When there are alternative ways to address a
hazard, effective managers have found that involving employees in discussions of methods
can identify useful prevention and control measures, serve as a means for communicating the
rationale for decisions made, and encourage employee acceptance of the decisions.

7. To ensure: management is held accountable for accident prevention processes.

8. To assess the success of the safety and health processes manually: Evaluation of the safety
and health system is essential for examining that the system is working against the goals and
objectives the company established. Evaluation seeks to assess the safety and health
activities, controls and procedures and determine if goals are being met, hazards being
corrected and other improvements in the system are being made. Evaluations should be
conducted annual.
9. To encourage: employees to take an active part in maintaining a safe and healthy workplace
An employer should ensure that all employees understand the hazards to which they may be
exposed and how to prevent harm to themselves and others from exposure to these hazards.
A thorough understanding of the hazards and their prevention will affect employee
acceptance and use of established safety and health protections. Training for this purpose is
reinforced by encouraging attempts to work safely and by positive recognition of safe
behavior.

10. To follow: established safety and health rules and procedures.

11. To discuss: openly safety and health issues with employees during periodic tours or meetings
or by visiting personally visiting the work place. When employees notice that the manager
“walking around” them or discussing about their work, they realize that manager is taking
care of them.

12. To establish a system for effective communication: Every organization’s approach to managing
safety and health includes verbal and written communication as a two-way process between
employer and employees. Regular safety and health communication keeps employees informed and
invites feedback and suggestions.
13. To recognize employees for their safety and health efforts: Employees are a company’s most
valuable asset, and top management should recognize employees for their efforts. and
achievements. A recognition system provides a good counter balance to a disciplinary system by
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focusing on the positive and motivates employees to practice safety and health work habits. A
recognition system can be very simple and inexpensive.
ISSUES / FACTORS AND ROLE OF HRDEPARTMENT IN EMPLOYS HEALTH AND
SAFETY
Organizations frame many approaches to ensure health and safety of their employees. But not all of
the approaches focus on contribution of both work design and employee behavior to safety. An
organizational approach to safety is effective only when both the work design and employee
behavior work in coordination towards it. Many organizational and individual issues emerge in
management of employee health and safety.
They can be summarized as follows.
Physical Work Settings: The physical settings of work affect the performance of employees to a
great extent. Some of these factors include temperature, noise levels, and proper lighting affect job
performance. Other work setting factors include size of work area, kinds of materials used, distance
between work areas, cubicle arrangement, etc.
Sick Building Syndrome: It is a situation in which employees experience acute health problems and
discomfort due to the time spent in a building (particularly their workplace). Some factors that lead
to sick buildings include poor air quality, inadequate ventilation, improper cleanliness, rodents,
stench of adhesives and glues, etc.
Ergonomics: The term comes from the Greek word ergon, which means “work,” and omics which
means “management of.” Ergonomics is the study of physiological, psychological, and engineering
design aspects of a job, including such factors as fatigue, lighting, tools, equipment layout, and
placement of controls. It is the interface between men and machines. Ergonomics is taken into
consideration when designing the workstation for computer operators.
Problems of back ache, eye strain and headache arise due to long working hours spent in front of
computers.
Engineering of Work Equipments and Materials: Accidents can be prevented in a way by proper
placements of dangerous machines. Moreover design of such machines and equipments also plays
an important role in safety. Providing safety guards and covers on equipments, emergency stop
buttons and other provisions help in reducing the accidents considerably.
Cumulative Trauma and Repetitive Stress: Cumulative trauma disorder occurs when same muscles
are used repetitively to perform some task. This results in injuries of musculoskeletal and nervous
system. Employees encounter high levels of mental and physical stress also.
Accident Rates and Individuals: An individual approach to safe environment helps in reducing the
accident rates. This is generally because more problems are caused by careless employees than by
machines or employer negligence. A positive attitude towards work environment and other practices
promotes employee safety.
EMPLOYEE HEALTH PROGRAM
The purpose of an occupational health program is to help to provide a safe and healthy work
environment. Working with laboratory animals presents potential hazards or problems: some are
inherent in all animal care related activities and others result from the nature and design of the
experimental protocol.
Physical hazards: include scratches, bites, injuries from lifting or carrying heavy objects, needle
sticks or injuries from other sharp objects, and falling injuries.
Chemical hazards: include ammable agents, cleaning, disinfecting, and sanitizing compounds,
carcinogens, mutagens, teratogens, and radioactive compounds.
Zoonotic hazards: include infectious agents (biohazards) individuals may be exposed to when
working with laboratory animals. Though fairly uncommon, they represent potentially serious and
fatal hazards to those working with laboratory animals.
STEPS IN PREPARING THE SAFETY PROGRAMMES:
Step 1: Develop a plan of action that includes both management and employee involvement.
It is important to develop a program that will meet the needs of both management and employees.
An elegant safety and health program manual that describes protective measures that are seldom put
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employee representatives in the development of the safety and health program and to encourage
their continued participation in company safety and health efforts.
Step 2: Designate a person to be responsible for safety and health.
In an effective safety and health program, the person responsible for the safety and health program
will have both the authority to do the job and the respect of management and employees. The choice
of the safety and health director must be based on his or her knowledge of the facility and of safety
and health requirements. The person or persons designated to do training must be credible,
respected, and knowledgeable about the operations and must be given the time, authority and
resources to develop an effective program.
Step 3: Determine the safety and health requirements for the speci c workplace and operations.
It is important to become familiar with the safety and health requirements associated with the
company’s physical location, operations, and equipment. This information will be used to:
1. Develop a hazard assessment strategy

2. Pinpoint areas and procedures that historically have caused

signi cant injury or illness, and identify potential causes

3. Provide a background for correction and control strategy planning Resources that will aid in
the determination of your workplace safety and health requirements include.

Step 4: Conduct a hazard assessment of the workplace.

An effective safety and health program will systematically identify and prevent hazards. Develop an
initial plan for assessing the workplace.
Conduct a safety and health self-inspection/survey of the workplace according to the plan
developed above. This survey permits a systematic record of the hazards and potential hazards that
can be recognized without intensive analysis. It Identi es any situations that present hazards or are
in violation of law, regulations or standards.
Step 5: Correct identi ed hazards.
Hazards, once recognized, should be promptly abated or controlled. Hazard abatement is an
essential activity. Management action at this point will determine the credibility of the company’s
safety and health policy, as well as the usefulness and effectiveness of the entire workplace safety
and health program.
Step 6: Keep the workplace hazard-free.
Once recognized hazards are corrected, take steps to ensure that the workplace remains hazard-free.
1.Develop work practices, administrative controls, work rules and emergency procedures.
2.Provide for facility and equipment maintenance to prevent hazardous breakdowns.
Step 7: Train Employees in Safety and Health.
Most employers must provide some training for employees. An employer also must inform and train
employees about the company safety and health program, how it is intended to bene t employees,
and what is expected of employees in order to make the program work. An employer should ensure
that all employees understand the hazards to which they may be exposed and how to prevent harm
to themselves and others from exposure to these hazards. A thorough understanding of the hazards
and their prevention will affect employee acceptance and use of established safety and health
protections. Training for this purpose is reinforced by encouraging attempts to work safely and by
positive recognition of safe behavior.
Step 8: Keep the program up-to-date and effective.
At this point, much of what an employer must do to implement an effective program has been
accomplished. The employer can now attend to program maintenance: coordination of the program,
documentation of program details, addition of new work practices and hazard controls, and
continuation of enforcement. Each of these components may vary in detail and formality, depending
on the size and complexity of the workplace.
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 Many of these items may have been completed during development of other steps of the program.
DOCUMENTATION:
An important part of any safety and health program is documentation. It provides:
1. An historical reference that can be reviewed to determine program effectiveness.

2. An accessible document to which management and employees can refer when unsure of
proper procedures.

3. Evidence of the employer's efforts to provide a safe and healthful work environment.

4. Employers also must maintain documentation if required by applicable standards for the
following procedures:

5. environmental monitoring, including noise and chemical sampling

6. exposure control programs required under many of the air contaminant standards.

7. employee medical records as part of any medical surveillance program.

8. records of employee testing for personal protective equipment programs when respirators or
hearing protection is required.

9. certi cations for inspection programs for cranes and forklifts.

It is strongly recommended that the employer provide some level of documentation for the
following:
1. all employee training
2. safety rules and procedures for employees 3. workplace self-inspections
4. accident investigations
5. accident investigations
Refer to the applicable standard to determine what the documentation must include, who must have
access to the documentation, and how long the records must be maintained.
CAUSES OF ACCIDENTS
Most of the research has concluded that 80 out of every 100 accidents are the fault of the person
involved in the incident. Unsafe acts cause four times as many accidents as unsafe conditions.
Accidents occur for many
reasons. In many situations, people tend to look for “things” or reasons to blame when an accident
happens. This seems to them to be easier than to look for the “root” or basic reason for the incident
to begin with. Below are some of the reasons that accidents occur.
1. Taking Shortcuts: Every day we make decisions that we hope will make a job go faster and
more ef cient. Often times when we think we are saving time, we have to be careful that we
aren’t jeopardizing our health or the health of one of our employees. Shortcuts that reduce
the safety of the job aren’t shortcuts, but are items that might increase our chances of injury.

2. Being overcon dent: Con dence is a good thing. Overcon dence to the point of arrogance is
too much of a good thing. Also, the old adage of “it can’t happen to me,” is an attitude that
can lead to improper methods of doing your work, using incorrect procedures or sometimes
the wrong tools. Any one of these items can cause an injury to you or to a fellow worker.

3. Ignoring Safety Procedures: Ignoring safety procedures, intentionally or unintentionally, can

endanger you or other employees. The university has safety policies in place and we are
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 supposed to observe them. Casual attitudes about safety can result in a “casualty.”

4. Starting a Job with Incomplete Instructions: We know in order to do a job safely and to do it
right the rst time, we need a complete set of instructions. We’ve all seen situations where an
employee made a mess of a task or assignment because he didn’t have suf cient instructions
or the instructions weren’t clear. When you are working on a job, don’t ever be afraid to ask
questions or get explanations for what is unclear to you. How many times have you heard,
“I’m afraid to ask questions.” It’s not dumb to ask, but dumb not to ask.

5. Poor Housekeeping: Anytime that guests, friends, colleagues or safety professionals come
through your work site, whether it is the maintenance shops, storage areas, of ces, etc. the
rst impression they get is sometimes the lasting one. If the of ce is unorganized or dirty, the
maintenance shops are cluttered and unorganized, it portrays a sense of looseness and a lack
of pride in the work site. On the other side of the coin, if they enter and see it neat and
orderly, a sense of pride and quality of purpose is the attitude that they are most likely to
leave with.

6. Mental Distractions from Work: Bringing outside problems to work can keep you from
focusing on your job. If this happens, it can be a hazard. Friends coming by while you are at
work can cause a distraction and can keep you from focusing on the task at hand. Both of
these incidents can put you into a hazardous situation. Don’t become a statistic; stay focused
on the task at hand.
7. Failure to Pre-Plan your Work: In the of ce or in other elds of work, it is important to pre-
plan your work. First of all, it will uncover unforeseen problems and give you the
opportunity to solve it and continue to work. Secondly, it will make the job go faster and
more ef ciently because you thought out the processes in advance of the start up.
HEALTH AND SAFETY MEASURES
Health and safety at work is one of the areas with a solid legal framework covering the maximum
number of risks with the minimum number of regulations.
A safe and healthy work environment is the basic right of every worker. However, the global
situation falls far short of this right. The International Labour Organisation (ILO) estimates that
more than 125 million workers are victims of occupational accidents and disease in a single year. Of
these approximately 220,000 workers die and about 10 million are seriously disabled.
With world population increasing, the above gures are expected to rise signi cantly if present
conditions prevail. The situation is grim in the Third World. About 75 percent of the global
workforce lives and works in Third World countries which have so many serious problems like
poverty and unemployment that the status of health and safety is very low.
SAFETY MEASURES
Safety measures deals with prevention of accidents and with minimizing the resulting loss and
damage to persons and property. Five basic principles must govern the safety programme of an
organisation. They are:
1. Factors resulting to accidents have to be traced out, analysed and eliminated.

2. Identify potential hazards, provide effective safety facilities and equipment take prompt
remedial action.

3. The top management must continuously monitor the safety performance.

4. All employees should be given thorough training in safe methods of work and should receive
continuing education and guidance on eliminating safety hazards and on prevention of
accidents.
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 There are three E’s of safety to prevent accidents, namely, Engineering, Education and Enforcement
of safety rules.
STATUTORY PROVISIONS FOR SAFETY IN INDIA
The Factories Act contain speci c provision for the safety of workers.
1. When any part of the machinery is in motion, it is obligatory to fence the machinery.
2. Any examination, adjustment of any part of the machinery shall be carried out by trained
male worker wearing tight tting clothing.

3. No adolescent shall be allowed to work on any machinery which poses danger.

4. Suitable devices for cutting off power in an emergency shall be provided

5. Prohibition of employing women and children near cotton openers.

6. Precautions against dangerous fumes, use of portable electric lights.

Explosive or in ammable gas or dust, re etc.

SAFETY PROGRAM
Every member of your company, from management on down, contributes to a safe workplace, but
getting everyone on board to create a safer place to work can be a challenge. Safety Jackpot’s
Workplace Safety Programs provide the rewards – and excitement – to make it happen successfully.
The rst goal of any Workplace Safety Program is to raise awareness of behaviors and areas such as
machine usage in a factory, which can create hazardous situations. We provide information, ideas
and articles that discuss ways to prevent accidents. But what truly makes our innovative workplace
safety incentive plans effective are the lotto and other interesting games that reward the changes in
behavior that actually make the workplace safer.
Our Workplace Safety Programs take a total quality management approach, looking at every aspect
of the workplace to improve safety. Programs include methods to work directly with unions to enlist
their help, demonstrating the bene ts of worker health and safety not only to your company, but to
the union as well.
We’ve found that creating a safer workplace not only reduces workers comp claims, but it can boost
morale and job satisfaction, which in turn improves your relations with employees and their unions.
Requirements for the effective operating of the Safety and Health programmes:
Safety committee:
Health and safety committees bring together workers and management to assist in the development
and review of health and safety policies and procedures for the workplace.
The functions of the health and safety committee are:
to facilitate co-operation between the person conducting a business or undertaking (PCBU - the
new term that includes employers) and workers in instigating, developing and carrying out
measures designed to ensure the health and safety of workers
•  to assist in developing standards, rules and procedures relative to health and safety

•   such other functions prescribed by the regulations or agreed between the PCBU
(includes employers) and the committee.
The effective operation of a health and safety committee is dependent upon everyone
ful lling their role.
Safety discipline:
The most common problem we see in trying to use discipline is inconsistency. Remember
discipline is punishment a consequence focused on eliminating a behavior. We know that for
a consequence to be effective it must be certain. But in many organizations we see that an at
risk behavior is punished when it results in an injury, but the same behavior goes unpunished
when no injury occurs. What we’re really doing in this case is punishing the injury, not the at
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 risk behavior, and people will see that. If this has any effect at all, it will be to teach people
to hide injuries so they avoid punishment.
A related issue is that of mixed messages. Suppose I’m a manager and I tell people that
safety is my highest concern. My crew then breaks a production record, but in doing so takes
shortcuts with safety procedures, without having an injury, and my response is to heap praise
on them and buy pizza for everyone. I may not even realize that they took shortcuts, but they
know, and they know I rewarded the outcome without asking about how they did it. What
behavior have I reinforced? When they take the same shortcuts next month and someone is
injured and there is discipline, I’ve again told my crew that the behavior that gets punished is
reporting an injury, and I’m really only giving safety lip service.
Feedback and incentives:
Feedback, in many ways, is perceived like spinach. People feel uncomfortable telling
someone that they have spinach in their teeth, and people feel uncomfortable giving
feedback at work.
The reality is that the majority of professionals cringe when it comes time for evaluations,
self assessments, and even everyday feedback. Unfortunately, some managers communicate
only when there is a problem, so employees tend to view feedback in a negative light. Lack
of communication contributes to 80 percent of workplace issues. These statistics show that
constant communication and ongoing feedback are critical to well-functioning and high-
performing individuals, teams, and organizations.
Believe it or not, feedback can be positive, worthwhile and even enjoyable. The key is
knowing how to communicate when delivering and receiving feedback.

Safety training:
Training means helping people to learn how to do something, telling people what they should or
should not do, or simply giving them information. Training isn’t just about formal ‘classroom’
courses. Providing health and safety information and training helps you to:
•   ensure that people who work for you know how to work safely and without risks to
health;

•  develop a positive health and safety culture, where safe and healthy working becomes
second nature to everyone;

•  meet your legal duty to protect the health and safety of your employees.
Effective training:

•  Will contribute towards making your employees competent in health and safety;

•  Can help your business avoid the distress that accidents and ill health cause;

•  Can help you avoid the nancial costs of accidents and occupational ill health, such as
damaged products, lost production and demotivated staff. Don’t forget that your insurance
might not cover all these costs. For information on business.
Employees involvement:
Employee involvement is creating an environment in which people have an impact on
decisions and actions that affect their jobs. Employee involvement is not the goal nor is it a
tool, as practiced in many organizations. Rather, it is a management and leadership
philosophy about how people are most enabled to contribute to continuous improvement and
the ongoing success of their work organization.
How to involve employees in decision making and continuous improvement activities is the
strategic aspect of involvement and can include such methods as suggestion systems,
manufacturing cells, work teams, continuous improvement meetings, Kaizen (continuous












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 improvement) events, corrective action processes, and periodic discussions with the
supervisor.
Safety device:
Safety devices are devices that work to help secure the safety of anyone who is using them. There
are different safety devices that can be found in the market today. Some of these are geared for
children, women, and elderly. Some examples for these devices are corner edge protectors for
children, stun guns for women, and cell phones with emergency response system for elderly.
Proper maintenance:
In order to ensure work equipment does not deteriorate to the extent that it may put people at risk,
employers, the self employed and others in control of work equipment are required by PUWER to
keep it 'maintained in an ef cient state, in ef cient order and in good repair'. Such effective
maintenance can not only help in meeting PUWER requirements but can also serve other business
objectives, such as improved productivity and reduced environmental impact.
The frequency and nature of maintenance should be determined through risk assessment, taking full
account of:
1. the manufacturer's recommendations

2. the intensity of use

3. operating environment (eg. the effect of temperature, corrosion, weathering)

4. user knowledge and experience

5. the risk to health and safety from any foreseeable failure or malfunction

Safety critical parts of work equipment may need a higher and more frequent level of attention than
other aspects, which can be re ected within any maintenance programme. Breakdown maintenance,
undertaken only after faults or failures have occurred, will not be suitable where signi cant risk will
arise from the continued use of the work equipment.
The manufacturer's instructions should describe what maintenance is required to keep the
equipment safe and how this can be done safely. These instructions should always be followed,
unless there are justi able reasons for not doing so (eg where more frequent maintenance is
necessary, due to intense use, adverse environmental conditions or when other experience shows
this need). Maintenance on a less frequent basis than the manufacturer's recommendation should be
subject to careful risk assessment and the reasons for doing so should be reviewed at appropriate
intervals. For example, where there is already an inspection regime, perhaps for lightly used
equipment, less frequent maintenance may be justi ed because of the condition monitoring already
provided by the inspection programme.
There is no requirement for you to keep a maintenance log, although it is recommended for high-
risk equipment. Maintenance logs can provide useful information for the future planning of
maintenance, as well as informing maintenance personnel of previous action taken. However, if you
have a maintenance log, you must keep it up to date.
Proper working conditions:
Working conditions refers to the working environment and aspects of an employee’s terms and
conditions of employment. This covers such matters as: the organisation of work and work
activities; training, skills and employability; health, safety and well- being; and working time and
work- life balance. Pay is also an important aspect of working conditions, although Article 153 of
the Treaty on the Functioning of the European Union (TFEU) excludes pay from the scope of its
actions in the area of working conditions.
Improving working conditions is one of the goals of the EU. Article 151 TFEU states that: ‘The
Union and the Member States... shall have as their objectives the promotion of employment,
improved living and working conditions, so as to make possible their harmonisation while the


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 improvement is being maintained’. Further, Article 153 TFEU states that ‘the Union shall support
and complement the activities of the Member States’ in a range of social policy elds, including
working conditions.
Safety engineering:
Oddly enough, personality issues can be paramount in a safety engineer. They must be personally
pleasant, intelligent, and ruthless with themselves and their organization. In particular, they have to
be able to "sell" the failures that they discover, as well as the attendant expense and time needed to
correct them. They can be the messengers of bad news.
Safety engineers have to be ruthless about getting facts from other engineers. It is common for a
safety engineer to consider software, chemical, electrical, mechanical, procedural, and training
problems in the same day. Often the facts can be very uncomfortable as many safety related issues
point towards mediocre management systems or worse, questionable business ethics.
12.4 SUMMARY
Many industries around the world are showing an increasing interest in the concept of ‘safety
culture’ as a means of reducing the potential for large scale disasters, and accidents associated with
routine tasks. Financially healthy organizations are likely to be those which are successful in
maintaining and retaining a workforce characterized by good physical, psychological, and mental
health. In drawing upon recent empirical studies, this paper examines a wide range of issues
including: factors intrinsic to the job, corporate culture, managerial style, style of work organization
and physical layout, home/work interface, etc., which impact on employee health and well-being,
and so determine the nancial health and pro tability of the organization. It also addresses the
ef cacy of various intervention strategies in reducing employee stress, and their implications for
organizational practices and human resource policies.

12.5 SELF ASSESSMENT QUESTIONS

1. Give the importance of Organizational Health and safety. Explain how safety measures can
help in reducing industrial accidents.

2. Discuss about the requirements for the effective operating of the Safety and Health
programmes.

3. Explain in detail the steps in preparing the safety programmes.

4. Write short notes:

•  Health and safety measures

•  Causes o accidents

•  Safety programmes in the organization.



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 13 -MEANING AND CAUSES OF STRESS Unit Structure:
13.0 Objectives
13.1 Introduction
13.2 Meaning and De nition of Stress 13.3 Sources of Stress
13.4 Coping with Stress
13.5 Effect of Stress
13.6 Meaning of Employee Welfare 13.7 Importance of Employee Welfare 13.8 Summary
13.9 Questions
13.0 OBJECTIVES
After studying the unit the students will be able to:
•  De ne the term stress.

•  Explain the cases of Stress.

•  Discuss the causes of reducing stress on the job.

•  Elaborate the effects of Stress.

•  Explain the concept Employee welfare and its importance.

13.1 INTRODUCTION
Stress is a state of mind that shows certain biochemical reactions in the human body and is
projected by a sense of anxiety, tension, depression, frustration and irritation. Such reactions are
caused when the demands of the environmental forces or internal forces are not met by the
resources available to the person. Situations produce stress in the form of bio- chemical, functional
and structural changes in the human organism. These situations could be fear, pain, fatigue,
emotional arousal, humiliation, frustration, lack of concentration, blood pressure, drugs, loss of
loved one, non-occurrence of an expected event and even unexpected successes that require a
change in the operational style. High level stress damages the physical and psychological well-
being of a person and extremely low levels of stress are equally undesirable for they cause
boredom, and result in lack of stimulation, innovation and challenges. Thus moderate level of stress
is necessary for higher level of performance. A potential for stress exists when an environmental
situation is perceived as presenting a demand which threatens to exceed the person's capabilities
and resources for meeting it, under conditions where she/he expects a substantial differential in the
rewards and costs for meeting the demand versus not meeting it.
13.2 MEANING AND DEFINITION OF STRESS
The term “Stress” refers to the body’s physical, mental, and chemical reactions to circumstances
that confuse, endanger, frighten or irritate the individual.
According to Hans Selye Stress is de ned “as the nonspeci c response of the body to any demand”.
Stress is a discrepancy between an employee’s perceived state and desired state, when such a
discrepancy is considered important by the employee. Stress in uences two behaviors - (1) the
employee’s psychological and physical well-being and (2) the employee’s efforts to cope with the
stress by preventing or reducing it.
S.P. Robbins de ned stress as, “It is a dynamic condition in which an individual is confronted with
an opportunity, constraint or demand related to what he or she desires and for which the outcome is
perceived to be both uncertain and important”.
Beehr and Newman de ned job stress as, “A condition arising from the interaction of people and
their jobs and characterized by changes within people that force them to deviate from their normal
functioning”.
“Stress is de ned as an increased strain, an intense physical and / or psychological type of tension.
The body’s stress reaction causes one to become ready for action in the shortest period of time.
Stress releases a lot of energies which give extraordinary strengths.”
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 Stress may be de ned as "a state of psychological and/or physiological imbalance resulting from the
disparity between situational demand and the individual's ability and/or motivation to meet those
demands".
In many ways, this de nition incorporates what most theorists see as the main ingredients in stress,
namely, subjective appraisal of a demanding environment, a realisation that demands may outstrip
resources, and that the consequences of not coping are important. In the absence of a universally
agreed de nition of stress, the widely accepted protocol of describing environmental factors as
"stressors", individual responses as "strains", and the vast gamut of mediating activity in the form of
cognitive processing and personality dispositions as "intervening variables" can usefully be
adopted.
Stress is an adaptive response to an external situation that results in physical, psychological and/or
behavioural deviations for organisational participants.
Stress can mean different things to different people Following points explain the nature of stress:
•  Stress is not simply nervous tension.

•  Stress is not necessarily something damaging bad or to be avoided.

•  Stress is not simply anxiety.

•  For some it can threaten to take over their lives while for others, once they are aware of
its causes and effects, stress can add excitement and challenge to their lives.

•  Stress is often de ned as a mismatch between the demands placed on us and the way we
cope with these demands.

•  It can have a positive and a negative effect. Stress can be positive when it motivates us
to get things done which are important to us. However, it can be negative when we
constantly feel pressurized or traumatised by too many demands.
We all have demands placed on us they come from our work or being unemployed, from
relationships, deadlines, nancial problems, illness and so on. We also have to deal with
major changes like moving home, changing jobs, getting married or coping with the death of
a loved one. The way we cope with these demands will depend on the way we think, our
personality and our previous life experiences.

13.3 SOURCES OF STRESS

There are two sources of stress namely organizational sources and personal sources.

ORGANIZATIONAL SOURCES
The extent and ratio of stress that people experience in job place are in uenced by the following
factors:
Nature of job
The nature of job itself can determine the type and degree of stress that can be induced. Some jobs
lead to more stress-related responses than others. For example job of a police of cer, or air traf c
controller are often considered to be low- stress jobs. In general high stress occupations are those in
which the employees have little control over their operations, work under time constraints and have
major responsibilities for human or nancial resources. Persons working under adverse working
conditions such as temperature extremes, pollution, uncomfortable lighting and ventilation and loud
noise are also vulnerable to high stress.
According to a study, some of the high stress jobs are foreman, manager, inspector, waitress or
waiter and clinical laboratory technician. On the contrary low stress jobs are college professor,
personnel worker, craft worker, farm labourer etc.
Role Ambiguity
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 Role is the set of activities associated with certain position in the organisation. When there is lot of
uncertainity regarding job de nitions or job expectations, then people experience role ambiguity.
Role ambiguity is high in managerial jobs where responsibilities are more and role de nitions and
task speci cations are not clear.
Role ambiguity produce psychological strain and dissatisfaction, lead to under-utilization of human
resources and leads to feeling of futility on how to cope with the organizational environment.
Role Con ict
Role con ict occurs when two or more persons have different and sometimes opposing expectations
of a given individual. Role con icts occur when contradictory demands are at the same time placed
before an employee. For example, a building contractor may ask a carpenter to something which is
different to what the city building code is, thus causing a role con ict. Similarly a father may know
that his son has committed a crime but does not inform the police.
Responsibilities assigned to employee’s
Any type of responsibility can be a burden on an employee. Holding a person responsible for
anything going wrong can create stress and it can be more if the manager has a limited degree of
control over his subordinates.
Lack of Participation
When the employee’s are allowed to participate in the decision making process of the organisation,
the employee’s develop high morale, work more ef ciently and feel that they have control over the
work environment thereby reducing the extent of role con ict and role ambiguity which are the
causes of stress.
Interpersonal Relations
The ef ciency, performance and effectiveness of a organisation is mapped by the degree of relations
that the people enjoy in the work place. Harmonious, cordial and congenial relations result in peace.
When the interpersonal relations are poor there is stress, tension and anxiety. Under
such crisis full situation the superior and subordinate relations keep deteriorating.
•  PERSONAL SOURCES

•  Job concern
Job variables can become stressors when they become sources of concern, anxiety and
frustration to an individual. Lack of job security, prospect of losing a job with family
depending on the individual, job recession, low status of job, lack of career progress are all
factors resulting into stress.
Relocation
Transfers or promotions resulting into change of place geographically, disturbs the routine
daily life of individual causing stress. Fear of working in a new place, unpredictability of the
new work environment, anxiety due to fear of how to create new relations, getting away
from spouse, children, relatives or looking for new dwelling, school for children in new
place can be the result of uncertainty and a cause of stress.

Change of life structure

Structure of life and process of living has many facets like socio-cultural factors like religion, race,
education, family. As a person grow older responsibilities also grow up, and therefore stress
develops. The extent of stress is also determined by the ability to cope with stress
Symptoms of Stress:
Symptoms of stress are generally into the following two categories:
Physiological Symptoms: Some of the physiological symptoms of stress are:
i. Increase in blood pressure
ii. Increase of cholesterol
iii. Frequent cold and fever
iv. Increase of biochemical substances such as uric acid and catecholamine.
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 •  Psychological Symptoms: Psychological symptoms of stress are:

•  Anger

•  Frustration

•  Irritation

Depression
•  Fatigue

•  Lower job satisfaction

•  Loss of self-esteem

Causes Of Stress:
The isolation and loneliness are responsible for domestic stress and mental illness. Dirt, smell,
chemical pollution and cigarette smoke can be stressful. The chemicals in our foods, drinks and
drugs contribute to stress. In modern times alcohol helps the body and mind relaxes but taken in
excess it acts, damaging the liver and impairing brain.
The various causes that led to stress are as follows:

Extra-organizational Stressors:
It refers to factors outside the organization which lead to stress. These factors do affect the
organization and are affected by the organization as well.
Some of these factors are as follows:
Social and Technological Changes: The speed at which changes are taking place results in
stressful condition; It is dif cult to get adjust quickly to such rapid changes which make life
disrupted.
Financial Problems: In a city like Mumbai, where accommodation is expensive and the standard
of living is high, then nancial problem can be a cause of stress, wherein a person needs to earn
extra money for that needs to work additional or the wife has to earn some money, which reduces
domestic family life and increases the potential for stress.
Family Problems: Family problem may be something serious such as strained relationship
between the spouses or parents, and the children. Another problem could be mentally retarded
children, handicapped child, etc.
Race, Religion and Sex of a Person: Factors such, as sex, religion can be stressors. Women have
more stress than men because the world is dominated by men.
Civic Amenities: The area where one lives, the water supply, air pollution, noise pollution,
electricity supply etc. all these are extra- organizatiohal factors which can cause stress.
Organizational Stressors:
Stressors inside the organization are:
Occupational Demands: Some jobs are monotonous and complex; some are highly repetitive
and require constant vigilance is more stressful. For example, job of a re ghter, policeman air
pilot etc.
Personal v/s. Organizational Life: When the family and personal needs interfere with
organizational demands, it leads to stressful conditions. For example, a manager is promoted and
given prestigious posting abroad but need to resume on duty immediately at the same time one of
the family members is very sick and needs him at home.
Career Concern: If an employee is too much concerned about his own career and feels that there
are no opportunities for self-growth, he might feel stagnant and experience stress.










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 Role Con ict: Different people do have different expectation which results in role con ict, i.e. a
manager in the organization is a link between management and workers and often faces role
con ict.
Role Ambiguity: Employees experienced stress when they are provided with ambiguous idea or
information about their work which creates confusion in minds of the workers and results in stress.
Work Overload and Under load: Work overload refers doing too much of work in allotted time.
Work overload can be of two types:
Quantitative Overload: In which the employee is asked to do
more work as compared to he can complete in a speci c period of time.
Qualitative Overload: Wherein employee feels that he do not possess required skills or abilities
to perform the job Work under load refers to too little work to do can also result in stress.
Responsibility for Others: It is observed that people who are responsible for other people
experience higher level of stress.
Organizational Process: Of ce, politics, lack of information, poor communication etc. results in
organizational stress.
Organizational Policies: Frequent transfers, in exible rules, pay inequity, work shift, unfair
performance appraisals systems can also cause stress.
Working Conditions: Excessive heat or cold, distracting noise, poor lighting, inadequate safety
measures, unpleasant smells and such conditions do affect the employees and lead to stress.
Lack of Cohesiveness and Social Support: Lack of togetherness i.e. no unity between the
members can result in stress. Lack of social support within the members may also lead to stress.
13.4 COPING WITH STRESS
It is perhaps impossible to eliminate stress altogether, but by controlling or reducing stress on the
job, an organization can become a more productive and healthy working place.
ORGANIZATIONAL STRATEGIES
Organizations are also increasingly realizing that they should be involved in managing their
employees’ stress. There are two different rationales for this view. One is that because the
organization is at least partly responsible for creating the stress, it should help relieve it. The other is
that workers experiencing lower levels of harmful stress will function more effectively. Two basic
organizational strategies for helping employees manage stress are institutional programs and
collateral programs.
Preventive management: Preventive management can be conducted by surveys and employee/
group interviews. Managers can identify potential problems of serious stressors and take steps to
reduce them.
Maintaining a productive culture: Maintenance of positive organizational environment and
satis ed employees sets the right direction. For releasing the stress organizations are adopting stress
management programs, health promotion programs, and other kinds of programs. More and more
companies are developing their own programs or adopting existing programs of this type. Many
rms today also have employee tness programs. These programs attack stress indirectly by
encouraging employees to exercise, which is presumed to reduce stress.
Management by objectives: A management by objectives or similar performance appraisal
technique that identify employee goals, roles and responsibilities and strengthen communication can
reduce stress by eliminating uncertainty in critical aspects of employee’s jobs.
Controlling the physical environment: Reducing stress in the physical environment requires that
management undertake one or two different strategies. First by reducing noise, better control of
temperature, second by protecting employees by improved safety equipment. Appropriate working
environment should be provided such as suf cient lighting, ventilation facilities, adequate safety
and security measures, facilities for rest and recreation can be provided to reduce the impact of
stress.
Change in Organizational Structure: The organization’s culture also can be used to help manage
stress. In some organizations, for example, there is a strong norm against taking time off or going
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 on vacation. In the long run, such norms can cause major stress. Thus, the organization should strive
to foster a culture that reinforces a healthy mix of work and non work activities. Proper means of
communication, making rules that are exible, helps in combating stress.
Decentralisation of Authority: Another strategy used is decentralization of authority i.e.
increasing the active participation of subordinates in decision making and reducing the involvement
of seniors.
Changing the Nature of Job: Properly designed jobs and work schedules can help ease stress.
Shift work, in particular job can cause major problems for employees, because they constantly have
to adjust their sleep and relaxation patterns. Thus, the design of work and work schedules should be
a focus of organizational efforts to reduce stress. The redesigning of the nature of some job can
helps to solve the problem of stress i.e.
•  Boosting employee morale and enhancing motivation of employee.

•  Minimising work overload and under load.

•  Removing unpleasant and risky elements from the organizations.

•  Increasing qualitative features of the job.

•  Encouraging the employees in active participation in decision making

PERSONAL STRATEGIES
Meditation: Transcendental meditation gives mental and physical relaxation. Meditation
reduces anxiety and improves work performance and gives job satisfaction.
Exercise: One of the least expensive and effective stress reduction strategies is exercise
like jogging, sports, tness classes, cycling, swimming etc. This improves mental and
physical health. More research has suggested that people who exercise regularly feel less
tension and stress, are more self con dent, and show greater optimism. People who do not
exercise regularly feel more stress, are more likely to be depressed, and experience other
negative consequences.

Entertainment: Watching a favorite movie or listening to music can release stress.

Removing the cause of stress: Sometimes one can easily check the cause of stress, for example,
a confrontational supervisor, dif cult support staff, no possibility for advancement etc. Thus the key
is to reduce or lessen the cause.
Seeking Counseling: Stress is a common psychological problem. Counselors can offer helpful
insights and stress reduction techniques that may remove the problem.
Relaxation: It is related method of managing stress. Proper relaxation is an effective way to
adapt stress. Relaxation can take many forms. One way to relax is to take regular vacations. People
can also relax while on the job. For example, it has been recommended that people take regular rest
breaks during their normal workday. A popular way of resting is to sit quietly with closed eyes for
ten minutes every afternoon.
Behavioural Self-control: This strategy involves the individual to control on the stressful
situation instead of allowing the situation to control him.
Bio-feedback: It is a technique where a stress victim, under medical guidance, learns to
in uence symptoms of stress such as headache.
Time Management: Time management is often recommended for managing stress. The idea is
that many daily pressures can be eased or eliminated if a person does a better job of managing time.
One popular approach to time management is to make a list every morning of the things to be done
that day. Then you group the items on the list into three categories: critical activities that must be
performed, important activities that should be performed, and optional or trivial things that can be
delegated or postponed. Then, of course, you do the things on the list in their order of importance.
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This strategy helps people get more of the important things done every day. It also encourages
delegation of less important activities to others.
Role Management: In role management the individual actively works to avoid overload,
ambiguity, and con ict. Another role management strategy is to learn to say “no.” As simple as
saying “no” might sound, a lot of people create problems for themselves by always saying “yes.”
Besides working in their regular jobs, they agree to serve on committees, volunteer for extra duties,
and accept extra assignments. Sometimes, of course, we have no choice but to accept an extra
obligation. In many cases, however, saying “no” is an option.
Support Groups: It is also a good method for managing stress. Here the individual have to
develop and maintain support groups. A support group is simply a group of family members or
friends with whom a person can spend time. Going out after work with a couple of coworkers.
Supportive family and friends can help people deal with normal stress on an ongoing basis. Support
groups can be particularly useful during times of crisis. Gaining social support from family
members and co-workers often helps to reduce stress.
Workplace stress is hard to handle at the best of times, but when unemployment is high,
redundancies are common and competition for promotions is so erce it’s frightening, workplace
stress levels go through the roof. The problem with workplace stress is it is often hard to identify
other than a general feeling of ‘being stressed’. Being able to identify the root cause of that stress
means you can take steps to dry and deal with it.

13.5 EFFECTS OF STRESS

Some of the important effects of stress are described below:
Effect on Individual: Stressful situations which are prolonged produce serious physical and
psychological disorders.
Physical Health: Individual experiencing prolonged stress situation suffers from heart disease. It
also gives rise to high blood pressure, ulcers, arthritis, headache etc. It has been found that more
than 50% of the physical illnesses are partly caused by stress.
Psychological Health: Stress has an adverse effect on employee's attitude and behaviour. It has
effects such as anxiety, nervousness, anger, depression, boredom etc. The change in employee's
behaviour has an adverse effect on job performance. It affects self-esteems, reduces job satisfaction.
Alcoholism and Drug Addiction: Many people get addicted to alcohol or drug in order to escape
from the ill effects of high level stress. It may lead to negative effects on the health of that particular
individual. It may also lead to increased absenteeism, loss of production, increased work accidents.
Burnout: A syndrome of emotional, physical and mental exhaustion resulting from prolonged
exposure to intense stress. The symptoms of burnout are loss of energy, a person looks tired,
experiences frequent headaches, nausea, back pain, sleeplessness, feeling of depression, holds
negative attitude towards job, loss of self-con dence.
Effect of Stress on Organization Behaviours:
•  It affects the performance level of an employee.

•  Person experiencing high level of stress result in low level of

performance, loss of self-con dence.

•  It leads to increase in absenteeism and turnover.

•  It leads to alcoholism, drug abuse, smoking etc.

13.6 MEANING OF EMPLOYEE WELFARE

Employee welfare is a term including various services, bene ts and facilities offered to employees
by the employers. The welfare measures need not be monetary but in any kind/forms. This includes
items such as allowances, housing, transportation, medical insurance and food. Employee welfare
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 also includes monitoring of working conditions, creation of industrial harmony through
infrastructure for health, industrial relations and insurance against disease, accident and
unemployment for the workers and their families. Through such generous bene ts the employer
makes life worth living for employees.
Employee welfare means “the efforts to make life worth living for workmen.” According to Todd
“employee welfare means anything done for the comfort and improvement, intellectual or social, of
the employees over and above the wages paid which is not a necessity of the industry.”
However, the [International Labour Organization] ILO at its Asian Regional Conference, de ned
labour welfare as a term which is understood to include such services, facilities and amenities as
may be established in or in the vicinity of undertakings to enable the persons employed in them to
perform their work in healthy, congenial surroundings and to provide them with amenities
conducive to good health and high morale.
Welfare includes anything that is done for the comfort and improvement of employees and is
provided over and above the wages. Welfare helps in keeping the morale and motivation of the
employees high so as to retain the employees for longer duration. The welfare measures need not be
in monetary terms only but in any kind/forms. Employee welfare includes monitoring of working
conditions, creation of industrial harmony through infrastructure for health, industrial relations and
insurance against disease, accident and unemployment for the workers and their families. Labor
welfare entails all those activities of employer which are directed towards providing the employees
with certain facilities and services in addition to wages or salaries.
13.7 IMPORTANCE OF EMPLOYEE WELFARE
As a business, you have to provide various bene ts to ensure your employees' welfare. While this
may increase your business expense and negatively affect your bottom line, looking after your
employees will bene t you in other ways.
Compliance:
As an owner, you are required by law to provide certain bene ts for the welfare of your employees.
You may have to match the Social Security taxes your employees pay and obtain a worker's
compensation insurance policy. If you terminate an employee, you may have to funds to extend his
health insurance.
Hiring and Retention:
The bene ts an employee receives from his employer for his welfare are often a signi cant reason
why he decides to accept a job offer. As such, providing employee bene ts allow you to compete
with other businesses to recruit and retain quality employees. If other employers offer better
bene ts, good employees may choose to go there.
Employees Motivation:
By providing a plan that's good for employees' welfare, you show them that you value them. This
can help make them feel welcome and happy in your company, motivating them to work harder. If
your health plan has wellness coverage and preventative care, employees are more likely to stay
healthy, cutting down on absenteeism and sick days.
Employees' Well-Being:
For companies that have a large base of employees working under stressful conditions or living
away from family, it is important to look at fostering personal happiness and professional growth.
Investing in employees pays dividends in terms of higher productivity and greater loyalty
Company Image:
Providing a good employee welfare plan re ects well on your business, building a good company
image. It may even earn you some press coverage, giving you free publicity to improve awareness
among potential customers. This may boost your sales and increase your pro ts.
Classi cation of Employee Welfare
The welfare activities, may be classi ed as under:
•   Statutory: Being a welfare state, every government has its statutory obligation to
provide welfare facilities to workers. The State promotes the welfare of the workmen be
safeguarding a social order in which justice-social, economic, political conforms to all the
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 institutions of the natural life. For this purpose some essential acts are passed. These acts are
related to regular minimum wages, working conditions, safety and sanitation etc. Such
statutory provisions have to be followed by every employer.

•   Voluntary: Though these activities are not statutory they increase the ef ciency of
workers. That is why, the employers provide them for their workers at their own. Further,
these welfare facilities are necessary for maintaining industrial peace.

•   Mutual: Mutual welfare activities are initiated by trade unions. Trade unions are
working for the betterment and safeguard of welfare activities for their members. For this
purpose, the unions take initiative to provide welfare facilities to the workmen.
Sub-Classi cation

Intro-mural Activities: These facilities have been provided by the employer inside the mills,
such as, sanitary conditions, medical facilities, shelter, canteens etc.
Extra-mural Activities: These facilities have been provided by the employers outside the mills,
such as housing, education, medical facilities, recreation etc.
In the Indian context, the welfare activities play an important role in industrial sector. In India, most
of the industrial workers are rural folk. They have a migratory character. They often go to their
villages, on various occasions, like festivals, marriages, harvest, sickness etc. This shows that the
Indian industrial labour does not have stable life. In such circumstances, the welfare facilities will
increase the possibility of stable labour force. Workers’ migratory character may be reduced by
providing them good and healthy welfare facilities.
Labour welfare activities may reduce the disparity in the real income. We want to establish a
socialistic pattern of society. This type of society cannot be established without lling the gap
between the rich and the poor. Worker’s conditions may be improved by providing them welfare
facilities.
Welfare Activities
Various acts are available for providing welfare facilities to the workers. The following welfare
provisions are normally available to the workers.
Health Provisions
The Factories Act provides the following provisions regarding sanitary conditions in the industrial
units to take care of health of the workers.
Cleanliness of the factory:
•  The factory shall be clean and free from ef uvia arising from any drain, privy or other
nuisance and in particular.

•  Accumulation of dirt and refuse shall be removed daily by sweeping.

•  The oor shall be cleaned at least once in every week by washing,

using disinfectant.

•  Where a oor is liable to become wet in the course of manufacturing process to such an
extent that it is capable of being drained, effective means of drainage shall be provided and
maintained.

•  Walls and doors will be white washed or painted at regular intervals as prescribed.
Disposal of Waste and Ef uents: Every factory shall have effective arrangements for the
treatment of waster and ef uents disposal.
Ventilation and Temperature: There is a provision that every factory has to take effective
measures for maintaining in every work room adequate ventilation by the circulation of fresh
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 air and such a temperature

as will secure to workers therein reasonable conditions of comforts of prevent injury to health.
Dust: Every factory shall have effective arrangements for the prevention of the in ation or
accumulation in any work room of the dust or fume given off by any manufacturing process being
carried on or in that factory which may be injurious to the health of the workmen.
Arti cial Humidi cation: State Government has framed rules in this regard. If arti cial
humidi cation is not done in the mill, water used for the purpose should be effectively puri ed
before it is used.
Drinking Water: In every mill effective arrangements shall be made to provide and maintain at
suitable points conveniently suitable for all workers employed therein a suf cient supply of
wholesome drinking water. The water point shall not be established within 20 ft. of any working
place, urinal or latrine unless of a shorter distance is approved in writing by the chief Inspector.
Over-crowding: Every factory must avoid over-crowding by providing 500 c. ft. area for every
worker.
Lighting: There is a provision for providing suitable lighting in every part of the work place.
Latrines and Urinals: Every factory must maintain suf cient latrines and urinals accommodation of
prescribed type separately for male and female workers.
Spittoons: There shall be suf cient number of spittoons at convenient place and they shall be
maintained in clean / hygienic conditions. Whoever spits otherwise than in spittoons shall be
punishable.
However, it is observed that facilities are neither uniform nor satisfactory.
Safety of the Workers
Safety provisions are also provided for workers according to the Factory Act. The employer must
see that the workers use all those guards which are prescribed for their personal safety. Safety
provision include fencing of machinery, rules for work on or near machinery in motion, ban on
employment of younger workers on dangerous machines, striking gear and devices for cutting off
power, rules regarding revolving machinery, pressure plants, hoists and lifts and precautions against
dangerous fumes, explosive or in ammable dust, gas etc. and precautions in case of re.
In this connection, the National Commission on Labour recommended that employers’ associations
and trade unions should take more interest in safety promotion. Safety committees should be set up
in factory employing hundred or more workers. The factory inspector should advise and assist
employers in drawing up induction and training programme in safety.
Welfare of the Workers
The following are welfare facilities which should be provided to improve the working conditions of
the workmen by the management.
•  Washing facilities: There should be adequate washing facilities separately for the use of
male and female workers.

•   Facilities for storing and drying clothes: State Government may direct factories to
provide for suitable place for keeping clothing not worn during working hours and for drying
of wet clothing.

•   Sitting Facilities: Every factory must maintain proper sitting arrangement for all the
workers who are obliged to work in a standing position. So they may take rest at proper time.

•  First Aid Facilities: The rst and boxes / cupboards equipped shall be provided by every
factory with the prescribed contents. This will be kept in charge of a separate person having
a rst aid treatment certi cate. For every one hundred and fty workers one box must be
provided.
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 •   Canteens: Rules may be imposed by the State Government regarding the Canteen
facilities where two hundred and fty or more workers are employed.

•  Shelters, Rest Rooms and Lunch Rooms: Every factory (mill) where one hundred and
fty or more workers are employed must maintain adequate shelters or rest rooms and lunch
rooms with provisions of drinking water for the workers. A canteen shall be regards as part
of the requirement of the provision.

•  Crèches: Where more than thirty women workers are employed there shall be a suitable
room for the use of children under the age of six years of such women.

•  Welfare Of cer: A factory where more than ve hundred workers are employed must
employ Welfare Of cer. The State Government will prescribe the quali cations, terms and
conditions and duties for such Welfare Of cers. Under the Factories Act, 1948 employers are
under an obligation to appoint Welfare Of cer in every factory. He is often required to act as
a go-between for management and labour. He should have a good knowledge of psychology
and an ability to win the con dence of the workers.
Proper ventilation, reasonable temperature in work rooms and adequate and suitable lighting
in places of work are of prime necessity in any industries. But in many industries these
facilities are not available.

Other Provisions Related to Welfare:

Following are the main provisions of the Factories Act which are not directly related to labour
welfare activities but indirectly they affect the workers welfare:
•  Hours of Workers: A workman cannot be called upon for work for more than forty eight
hours a week and nine hours on any day. National Commission on Labour recommended that
the working hours in the night shift should be even less than this and a credit of ten minutes
should be given for each hour work in the night shift. Further it said that the reduction of
working hours create additional opportunity of employment and improves the health of the
workers. On the whole, the working hours should be less on the ground of high labour
productivity.

•  Weekly Holiday: No worker will be called upon to work in the company on the rst day
of the work unless he is given a full holiday on one of the three days immediately before or
after the said day. Further, he shall not work in any case continuously for more than ten days
without a full day holiday.

•  Compensatory Holiday: In case a worker is deprived of the weekly holiday he shall be

allowed within two following months compensatory holidays of equal number to the
holidays lost.

•  Rest Intervals and Spread over of Working Hours: A worker shall be given half an hour
rest after doing ve hours work and the total working hours should not be more than ten and
half hours on any day including the rest intervals.

•   Wages for Overtime: Payment of wages for overtime work will be made on the rate
twice ordinary rate of wages to a worker who has worked in the factory for more than nine
hours in any day or for more than forty eight hour in any week.
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 •   Employment of Women: The factory Act 1948 has provided for a few provisions for
women, such as:

•  A woman worker shall not be required / allowed to work in any factory for more than 48
hours in a week or 9 hours in a day.

•  A woman shall not be employed in a factory except between 6:00 a.m. to 7:00 p.m.

•  There shall be no change of shifts in the case of women except after weekly or any other
holiday.

•  A woman worker shall not be allowed to clean, apply lubricant or adjust any part of a
prime mover or any transmission machinery while it is motion.

•   Any work which may be considered dangerous to the health of woman worker is
prohibited by the State Government.

•   Leave with Wages: A woman who has worked more than 240 day in mill during a
calendar year is entitled to leave with wages during the subsequent year at the ratio of –

•  one day for every 20 days for an adult worker, and

•  one day for every 15 days for child worker.

•  Payment of Wages in Advance: Every worker who has been allowed leave for not less
than four days in case of an adult and ve days in case of a child shall before his leave
begins, be paid the wages due for the period of the leave allowed.
Actually speaking, the role of employer’s and workers’ associations in the eld of labour
welfare activities is not signi cant. No welfare activities are being undertaken by these
associations. Trade unions should educate the workers. They should take steps to ensure that
welfare facilities provided by employers or by state are properly utilized by the workers.

13.8 SUMMARY
Stress is a state of psychological and/or physiological imbalance resulting from the disparity
between situational demand and the individual's ability and/or motivation to meet those demands.
However, a prolonged presence of intense stress is certainly not bene cial to individual as well as
organization. There are outside forces which have tremendous impact on the job. Like societal/
technological change, the family, relocation economic and nancial conditions, race and class and
residential or community conditions. As well as Group Stressors are there those divided into three
areas. Lack of group cohesiveness or togetherness, Lack of social support and Intra individual,
interpersonal and intergroup con ict. The element of perception indicates that human stress
responses re ect differences in personality, as well as differences in physical strength or general
health.

13.9 QUESTIONS

1. De ne stress. Explain its nature and causes of stress.

2. Elaborate how to cope with stress.

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3. Explain in detail the impacts of stress.

4. What is the meaning of Employee welfare? Explain the importance of Employee welfare.

5. Write short notes:

•  Organisational Strategies for coping with stress

•  Personal Strategies for coping with stress

•  Symptoms of stress










 14 -RECENT TRENDS IN HUMAN RESOURCES MANAGEMENT -I
Unit Structure:
14.0 Objectives
14.1 Concept of Work-Life Balance
14.2 Concept of Corporate Social Responsibility 14.3 Scope of CSR
14.4 Advantage of CSR
14.5 Key Components of CSR
14.6 Corporate Restructuring
14.7 Downsizing
14.8 Summary
14.9 Questions
14.0 OBJECTIVES
After studying the unit the students will be able to:
•  Understand the concept Work-life Balance.

•  Explain the measures that encourage work-life balance.

•  De ne the Corporate Social Responsibility.

•  Explain the scope and key elements of Corporate Social Responsibility

•  Importance and advantages of Corporate Social Responsibility.

•  Explain the concept organizational restructuring and downsizing.

14.1 CONCEPT OF WORK-LIFE BALANCE -INTRODUCTION

Work life balance is a broad concept that encompasses prioritising between work (including career
and ambition) on one hand, and life (including areas such as health, leisure, family, pleasure and
spiritual development) on the other. There are also two key concepts related to work/life balance -
achievement and enjoyment. Achievement can be related to setting and achieving the goals we have
in life i.e. buying a new house, job satisfaction, further education etc. Enjoyment is related not just
to happiness, but also pride, satisfaction, celebration, love, and a sense of well being. Life will often
deliver the value and balance we desire when we are achieving and enjoying something every day
in all the important areas of our lives. Therefore, a good working de nition of work/life balance is
meaningful daily achievement and enjoyment in each of our important life quadrants. These life
quadrants will vary for each person but may include, for example, work, family, friends and self
(Work Life Balance.com).
Work-life balance has been widely discussed since the launch of a major government campaign in
2000 (Changing Patterns in a Changing World). This initiative was aimed at encouraging employers
to adopt exible working arrangements such as job sharing, exi-time, compressed hours and
others, to help their employees to achieve a better balance between the demands of paid
employment and those arising from their private life. The concept of work-life balance is based on
the notion that paid work and personal life should be seen less as competing priorities than as
complementary elements of a full life. The way to achieve this is to adopt an approach that is
“conceptualised as a two way process involving a consideration of the needs of employees as well
as those of employers” (Lewis, 2000: p.105). In order to engage employers in this process it is
important to demonstrate the bene ts that can be derived from employment policies and practices
that support work-life balance, and the scope that exists for mitigating their negative effects on the
management of the business.
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 The case for work-life balance tends to be made on two counts. First, that work-life balance
improves individuals’ health, well being and job satisfaction. Second, that business can bene t from
work-life balance because of these policies:
•  improve productivity and worker commitment

•  reduce sickness absence (from 12 per cent to 2 per cent according to

UNISON research)

•  increase retention rates for talented workers and reduce replacement costs

•  allow organizations to recruit from a wider pool of talent

•   enable organizations to offer services beyond usual business hours by Employing

workers on different shifts that t in with caring responsibilities.

•  Measures for work-life balance:

The measures that encourage work-life balance among employees can be
categorized into:

•  Flexible work options

•  Support programmes

Flexible Work Options

Depending on the needs of the department, exible work options may be an alternative to a
traditional work schedule that can help produce cost savings, expand customer service hours, and
provides work location alternatives for that positively impact commuting and parking.
Flexible work options are possibilities, not entitlements. They are constrained by factors such as the
nature of the work to be performed, productivity, federal and state laws, union contracts, restrictions
of funding sources, task interdependence, and other operational constraints. Prior to implementing
any exible work option, managers should review General Considerations carefully and consult
with the appropriate Human Resources representative.
GENERAL CONSIDERATIONS
Flexible Work Options are implemented at the discretion of management, taking into
consideration the needs of the department and co-workers, health and safety consequences, equity,
bene ts issues, performance management and productivity. Managers and administrators need to be
particularly sensitive to the audit process, legal liability issues and funding source restrictions.
•   When evaluating exible work options, both the manager and the employee should
consult Bene ts to examine any potential bene ts consequences, e.g., cost of bene ts if FTE
is below 75 percent and potential impact on leave accrual.

•   Implementation should come after careful review with the employee of the speci c
option, expectations of performance, and the logistics of transition.

•  The employee, supervisor or manager and the local human resources of ce should sign
documents re ecting the arrangement and any change.

•   The local Human Resources of ce may consult with Employee and Labor Relations
before considering exible work options to ensure that:
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 •  The agreement is recorded as required by State law

•  The union agrees that the option is in accordance with any applicable
provisions in a collective bargaining agreement.

•   A pilot period is strongly recommended with regularly scheduled reviews with the
affected staff.

•   The arrangement should be carefully monitored at regular intervals to ensure

conformance with operational needs.

•   Written documents should re ect both the university’s and the employee’s ability to
terminate the arrangement and the relevant guidelines.

•  TYPES OF FLEXIBLE WORK OPTIONS

•   Flextime: A generic term referring to exible work schedules that permit variable
starting and quitting times within limits set by management. Typically, exible periods are at
either end of the work day with a designated "core-time" set in the middle, during which all
employees must be present in the workplace.
Alternative Work Schedule: Refers to a standard workweek (40 hours) that is condensed
into fewer than ve full days. A common alternative workweek schedule is four 10-hour
days. Refer to Administrative (PDF), for details. Note: Alternative Work Schedules for non-
exempt (hourly) employees are governed by California State law. There are speci c
requirements that must be followed before an alternative work week may be implemented
for non-exempt employees. Please consult with human resources prior to proceeding with
non- exempt alternative work schedules.

Flex place: Also called telecommuting or working from home, is a mutual agreement between a
supervisor and a staff member that some part(s) of the staff member's work is done at home, or at
another location different from the employee's usual workplace.
Stanford University recognizes the importance to help an employee achieve a balance between
work and the employee's personal life. However, under no circumstances should the ex place work
arrangement be used as a substitute for dependent care or for other non-business reasons. If the ex
arrangement is approved it is the employee's responsibility to make the proper arrangements for
dependent care and for other personal obligations and to not let this interfere in performing the
required work.
Typically, the staff member will continue to work on-site the majority of work hours. Flex place can
include "occasional ex place" in which the employee works at a different location when a speci c
task requires uninterrupted time and privacy. Issues of appropriate supervision, the nature of the
work, and compliance with all legal requirements must be carefully considered before such an
arrangement is approved and the arrangement must be carefully monitored on an ongoing basis.
The employee is responsible to inspect the designated workspace before work from home begins,
and on a periodically scheduled basis thereafter (yearly minimum recommended), and whenever
work area changes introduce new potential workplace hazards. The department is to retain all
documentation (for one year minimum) regarding inspections, including ndings and corrective
actions.
Support Programmes: The Government's action plan, issued in June 2014, aims to help older
people stay in the workplace. It sets out a range of measures including the appointment of a new
Older Workers' Employment Champion, new Job centre Plus pilot projects offering tailored
provision for older job seekers in some of ces, a Job centre Plus initiative to identify and


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understand particular barriers to employment for careers with the aim of designing speci c
interventions to support them into work, and the launch of a new Health and Work Service to
provide workers with long-term health problems the support they need to stay in or return to work
Support for careers:
The Work Programme: Now replaces nearly all the previous Government employment support
schemes for those out of work and on welfare bene ts.
Work Choice: Provides a tailored, coherent range of specialist employment services which can
respond more exibly to the individual needs of disabled people and their employers and make
better use of resources.
Work Clubs: Is a Great Britain wide initiative which aims to support the development of a
network of locally led community based support for the unemployed which will grow organically.
Work Together: Is a Great Britain Job centre Plus initiative that encourages unemployed people
to volunteer to improve their skills and employment prospects while they look for work.
Government Employment Programmes: Is a 2012 information note from the TUC setting out the
main publicly funded employment programmes for people out of work.
The National Careers Service:
This new service was launched on 5 April 2012. The service operates in England and replaces Next
Step, which provided careers advice from August 2010.
The new service offers telephone, face-to-face and online career information and advice services. It
also offers detailed sector by sector job market information by area and a number of tools. It
provides information on funding sources and an online directory of all adult learning and training
programmes funded by the Skills Funding Agency in each area.
14.2 CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY
INTRODUCTION
Traditionally, managers were focused on short to medium term pro ts and driving the share price
up. However, there has been a developing trend that goes away from simply increasing the return
for shareholders and instead focuses on increasing the value of the business in terms of the
stakeholders. Stakeholders are the people who are affected by the actions and performance of the
business, and include both internal and external parties. Business stakeholders include people such
as consumers, shareholders, associates, employees and business owners. Businesses that are socially
responsible aim to make decisions that are in the best interests of their various stakeholders.
Corporate social responsibility is a key issue for any organisation aiming for long term
sustainability. Whilst it is a mostly voluntary concept, there is increasing pressure on organisations
to make a positive contribution to society, or at the least, reduce their negative impact.
Internationally, governments are also moving towards the enforcement of certain elements of
corporate social responsibility, particularly in regards to the protection of the environment. In fact
when we look in the history, we will nd that India has a very old tradition of CSR yet there is need
to make the Indian entrepreneurs aware of CSR as an important segment of their business activity.
If this has been done then the CSR approach of corporate will be in line with their attitudes
mainstream business. The companies may set clear objectives, undertaking potential investments,
measuring and reporting performance publicity.
Responsible businesses may not necessarily be able to measure the positive impact their behaviour
has on their performance, however, irresponsible businesses are likely to notice the negative impact
their decisions have on their bottom line. Business sustainability now and in the future depends on
organisations taking into account the social and environmental consequences of their decisions and
actions.
MEANING AND DEFINITION
What is generally understood by CSR is that the business has a responsibility towards its
stakeholders and society at large that extends beyond its legal and enforceable obligations.
The triple bottom line approach to CSR emphasizes a company’s commitment to operating in an
economically, socially and environmentally sustainable manner. The emerging concept of CSR
advocates moving away from a ‘shareholder alone’ focus to a ‘multi- stakeholder’ focus. This
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 would include investors, employees, business partners, customers, regulators, supply chain, local
communities, the environment and society at large.
De nition:
Lord Holme & Richard Watts de nes Corporate Social Responsibility as “It is the continuing
commitment by business to behave ethically and contribute to economic development while
improving the quality of life of the work force and their families as well as of the local community
and society at large”.
“CSR is a concept whereby companies decide voluntarily to contribute to a better society and a
cleaner environment.”
Corporate Social Responsibility (CSR) is a voluntary activity undertaken by a business unit. It is the
activity where business are managed to bring about the overall impact (positive) on the
communities, societies cultures and the environmental factors in which business operates. It is
company’s commitment in which business operates. It is company’s commitment to the values and
bene ts of society as well as stokes holders.
Corporate initiative to assess and take responsibility for the company's effects on the environment
and impact on social welfare. The term generally applies to company efforts that go beyond what
may be required by regulators or environmental protection groups.
Corporate social responsibility may also be referred to as "corporate citizenship" and can involve
incurring short-term costs that do not provide an immediate nancial bene t to the company, but
instead promote positive social and environmental change.
Corporate social responsibility is the term used to describe the way that a business takes into
account the nancial, environmental and social impacts of decisions and actions it is involved in. It
is an increasingly important issue in business, as managers, consumers, investors and employees
have begun to understand how economic growth is linked to social and environmental well-being.
14.3 SCOPE OF CSR
Scope of CSR means where we can implement this concept and works it for the betterment of that
area. In fact responsibility is an obligation so business uses to shoulders its obligation in the
following areas:
Economics Responsibility:
It is related to nancial or monetary aspect of the stake holders. So business needs to satisfy their
expectation by offering certain advantages in terms of money, or economic gain. Generally
following members or stakeholders do expect their bene t in the following way.
Customer: Here customers do expect that they should get product or goods and services at the
fair and reasonable prices.
Shareholders: are vested with good rate of return and their wealth maximization.
Employees: are expecting good salaries / wages. They also do expect some incentives.
The government: expects that business as a part of social responsibility should pay taxes and
dues to the government on time so that, these fund will be used for developmental work.
Last but not last stockholders like suppliers, dealers and investors are also having expects of
their on time payment and other needs so it is business responsibility to meet it property.
In this way business unit by giving appropriate responses to every stakeholder use to shoulder its
corporate social responsibility.
Legal Responsibility:
Legal responsibility of business refers to legal compliance. As we know business unit has different
activities, and each activity is govern by speci c act or law. So when business applicable rule,
regulations and law should be strictly followed. If any amendment is there, it would be considered
and implemented for e.g. as per Company Act whose net pro t is more than Rs. 5000 crore, or net
worth of Rs. 500 crore or revenue is more than Rs.1000 crore should spent 2% of its net pro t
towards corporate social responsibility.
Ethical Responsibility:
Ethics means nd out the good. Fair and piousness of the activity means ethics. In other words
while doing work sometimes business units by going beyond the rule and regulations or laws,
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should of have to do something good for society, for its betterment and development. Here society
expects the company’s pro- activeness for its goodness.
Environmental Responsibility:
Environment is atmosphere, the existence of different components of the air, which are helpful to all
including that the business units. As per this obligation it is expected that the business units should
not dilute the air, by giving up certain harmful gasses into the air. This may lead to create health
problems of living beings as well as non living beings may also affects. For the sake of protection
of environment businesses should undertake corrective measures like do not use pollution creative
material,
Refuse it. It is necessary then used it in very low quantity or use the same material for creating low
pollution, if possible etc.
Law and order Responsibility:
Here business unit should support to Government to maintain law and order. The business should
not promote anti- social elements, it should not give donations or certain fund to such groups so that
they do not indulge in anti-social activity.
Upliftment of weaker sections:
In fact, it is discretionary responsibility of the business rms. But they should have to come forward
and give certain upliftment to weaker section by providing reservation for some posts, giving
helping hands to physically challenged persons like blind, deaf and dumb etc.
Philanthropic responsibility:
It is also discretionary responsibility of the companies; however the Company Act 2013 has made
CSR compulsory to some companies, based on its earnings or capital invested. Philanthropy means
folk welfare. The society does expect that the business should come forward and contribute to some
noble cause like education, health care, cultural and sport development etc. Some of the Indian
business ful lls this responsibility by contributing to education, health care, earth quake
rehabilitation, or any other events which damages the common life.
The emerging concept of CSR goes beyond charity and requires the company to act beyond its legal
obligations and to integrate social, environmental and ethical concerns into company’s business
process.
14.4 ADVANTAGES OF CSR
Corporate social responsibility is an activity which bene ts to the business rm as well as society.
Following are some of the advantages:
Good public relations:
Good public relations mean having fair and cordial relations with people. Every company tries to
develop and maintain good relations with people so that they have positive feeling towards
business. This kind of relation will be established with the help of CSR. Corporate social
responsibilities will be exposed off by the Medias and the Medias exposure spreads the companies
good work undertaken under social responsibility and gives positive impact on people’s mind as
they have done something good for people. This leads to create and establish good public relation.
For example during 2001 to 2013, Azim Premji, the Wipro company’s owner donated Rs. 26,000
crore for education. This has created a different impact on peoples mind.
Motivation to employees:
The companies, which are socially responsible, use to undertake different activities as social
responsibility are liked by workers. Most of the employees feel proud and satis ed to work for such
company. They develops positive attitude towards organization. Their satisfaction leads towards
higher productivity, improved performances and ultimately increased pro t. So here we can
conclude that CSR works as motivation to employees.
Customer satisfaction:
Customer’s satisfaction means customer’s happiness and delightness. It is consumers’ positive
attitude towards company. By the research it is found that CSR improves consumers’ attitude
towards company.
Costs Reduction:
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 The CSR initiatives may helps to reduce costs. For the sake of customers’ satisfaction company
starts developing green products, water harvesting etc. company use to use Refuse, Recycling, etc
where cost cutting will be done.
Product differentiation:
Due to social responsibility business units have started manufacturing eco friendly products. In
market, these products are more demand. Though the products are charged high price then to
consumers use to purchase these product so because of environmental friendly. These product are
differentiated that of the conventional products.
Business expansion:
Corporate social responsibility Facilitates growth and expansion of business. The introduction of
CSR follows business ethics. This ethics develops con dence trust among consumers’ employees,
investors and stakeholders, where business units gets greater support from all these elements, it
helps to grow business.
Triple bottom line.
Triple bottom line means consideration of their major elements of business for manufacturing and
selling i.e. people, planet, and pro t. CSR enable business to achieve triple bottom line.
How it will be is explained as under:
People: people means all those who are related to business. It includes customers, employees
and society in general. All these people do deserve that they should get fair and bene cial practices
from business. And this will be given through Corporate Social Responsibility.
Planet: here planet refers to sustainable environmental practices. Here it is expected that the
business unit should not create harmful products. It should not damage environment by giving up
toxic gases or chemicals in to air and dilute pollution. The company should care for conservation of
natural resources and recycling of wastages. So all these activity can be undertaken by company
through CSR.
Pro t: pro t means income over expenditure. Here company, as it has good response in market
use to able more products in the market and are able to earn more pro t. The pro t is very essential
to any business for its survival and prospers.
Developing your understanding of corporate social responsibility and implementing it into your
business now may help you to get a step ahead of your competitors. You can use it to gain a
competitive edge and it provides you with the opportunity to provide bene ts to a wider range of
business stakeholders.
14.5 KEY COMPONENTS OF CSR
The key components of CSR would therefore include the following:
Corporate Governance: Within the ambit of corporate governance, major issues are the
accountability, transparency and conduct in conformity with the laws. Good corporate governance
policy would enable the company to realize its corporate objectives, protect shareholder rights, meet
legal requirements and create transparency for all stakeholders.
Business Ethics: Relates to value based and ethical business practices. ‘Business ethics de nes
how a company integrates core values such as honesty, trust, respect, and fairness into its policies,
practices, and decision making. Business ethics also involves a company’s compliance with legal
standards and adherence to internal rules and regulations.’
Workplace and labour relations: Human resources are most important and critical to a company.
Good CSR practices relating to workplace and labour relations can help in improving the workplace
in terms of health and safety, employee relations as well as result in a healthy balance between work
and non work aspects of employees’ life. It can also make it easier to recruit employees and make
them stay longer, thereby reducing the costs and disruption of recruitment and retraining.
Af rmative action/good practices: Equal opportunity employer, diversity of workforce that
includes people with disability, people from the local community etc. gender policy, code of
conduct/guidelines on prevention of sexual harassment at workplace, prevention of HIV/AIDS at
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 workplace, employee volunteering etc. are some of the good practices which re ect CSR practices
of the company.
Supply Chain: The business process of the company is not just limited to the operations internal
to the company but to the entire supply chain involved in goods and services. If anyone from the
supply chain neglects social, environmental, human rights or other aspects, it may re ect badly on
the company and may ultimately affect business heavily. Thus, company should use its strategic
position to in uence the entire supply chain to positively impact the stakeholders.
Customers: The products and services of a company are ultimately aimed at the customers. The
cost and quality of products may be of greatest concern to the customers but these are not the only
aspects that the customers are concerned with. With increased awareness and means of
communication, customer satisfaction and loyalty would depend on how the company has produced
the goods and services, considering the social, environmental, supply-chain and other such aspects.
Environment: Merely meeting legal requirements in itself does not comprise CSR but it requires
company to engage in such a way that goes beyond mandatory requirements and delivers
environmental bene ts. It would include, but not limited to, nding sustainable solutions for
naturalresources, reducing adverse impacts on environment, reducing environment-risky pollutants.
Community: A major stakeholder to the business is the community in which the company
operates. The involvement of a company with the community would depend upon its direct
interaction with the community and assessment of issues/risks faced by those living in the company
surrounding areas. This helps in delivering a community-focused CSR strategy – making positive
changes to the lives of the people and improving the brand-image of the company. Involvement
with the community could be both direct & indirect – through funding and other support for
community projects implemented by local agencies.
14.6 CORPORATE RESTRUCTURING INTRODUCTION
Restructuring a corporate entity is often a necessity when the company has grown to the point that
the original structure can no longer ef ciently manage the output and general interests of the
company. For example, a corporate restructuring may call for spinning off some departments into
subsidiaries as a means of creating a more effective management model as well as taking advantage
of tax breaks that would allow the corporation to divert more revenue to the production process. In
this scenario, the restructuring is seen as a positive sign of growth of the company and is often
welcome by those who wish to see the corporation gain a larger market share.
MEANING:
Corporate restructuring is the process of redesigning one or more aspects of a company. The process
of reorganizing a company may be implemented due to a number of different factors, such as
positioning the company to be more competitive, survive a currently adverse economic climate, or
poise the corporation to move in an entirely new direction.
STRATGIES OF CORPORATE RESTRUCTURING
International Mergers and Acquisition (IM&A) assists clients experiencing liquidity or operating
challenges in creating liquidity, providing nancial stability for operations and restoring con dence
in the company. These services are focusing on the following strategies.
Examine what options are there for certain company groups to optimize their activities.
The current economic climate is forcing companies to increasingly focus on ef ciency measures to
optimize nancial performance, and both conserve and raise cash. Frequently these measures
involve restructuring, which includes appropriate analysis, followed by operations realignment,
plant closings, mothballing, or divestiture of assets and business units.

Structure company portfolio:

IM&A helps clients to structure and implement their portfolio strategy on the basis of the strategic
asset allocation. The process includes Asset allocation, structuring asset allocation models, selecting
an appropriate asset mix and investment policy as per requirement.
Implement conversions before and after Acquisition:
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 Businesses can bene t from a variety of tax allowances and reliefs which could cut their tax bill.
They include capital allowances for investment in equipment and premises, tax relief and credits for
spending on research and development and stamp duty relief on residential properties in
disadvantaged areas. It is up to IM&A to discover and present what options are available for you
and make suggestions as well.
Restructure product and portfolio structure if needed:
The current economic climate generates continual change of place and direction between certain
limits from all contributors of the market and it requires special sense, knowledge and information
to know when to make the necessary structural changes and turn of directions to preserve your
status. IM&A helps to analyze your opportunities on these elds too. Diversi cation and
concentration alike.
Optimize Financial and Business Processes:
IM&A offers more than a decade of experience providing nancial and business analysis consulting
services to our federal and commercial clients. From enterprise wide budget automation solutions to
strategic planning and sophisticated project management, we systematically enhance and optimize
complex nancial and budgeting processes to improve accuracy, reduce manual errors, and better
align and report performance measures against planned goals and objectives.
IM&A helps to reveal loss, de cit and unfold where the unnecessary parallelisms are in a certain
business operation, and gives a hand to handle the issue by making the required changes and
canceling out the spare aspects.
Budget rationalization: reduce costs and improve service with a systematic approach. IM&A
provides the basis for rationalizing budget requests by enabling assessment of the value of
alternative mixes of operational, workforce, knowledge management, and capital investment
activities.
Productivity by Systemic Rationalization. Revealing unnecessary parallels, overloaded
departments and organizational obscurities.
Human Resource Effectiveness is the key to producing the optimum performance out of a
venture. Instead of adding more resources (like labor, machines etc.), the concept emphasizes on
better utilization of already employed resources. Various motivation systems are implemented to
increase effectiveness even more.
De ne strategies for market extension and expansion. IM&A assesses current markets, identi es
untapped markets, and seeks opportunities for revenue growth through new market opportunities.
The market expansion step will result in estimates for delivering new capabilities to current
markets, and potential new markets for existing products. These estimates include alternative
industries and geographic areas. Through an extensive market research examination, an equally
careful strategy should be set up for strengthening intense existence on market.
Price Development, tactical and strategic price de ning. Pricing/cost experts ensure your price
to be competitive and pro table. To determine the winning price we start analyzing your overall
cost structure and the structure related to the speci c bid, conducting competitive analyses,
developing pricing strategies.
Strengthening nancial control and implementing balanced scorecard a fundamental tool to keep
ITR focused; it consists of a methodology that turns the strategy of the organization into operative
terms, this enables the process to emerge.
Suggestions for image improvement and growing reputation (develop your logo to exemplify
your business, design your points of customer contact to be consistent with your brand, attend
industry trade shows & local events to promote your business, create a marketing plan to build &
maintain your business's image, utilize internet marketing in addition to traditional media to
promote your business, promote your biz with press releases that tie to your overall online
marketing campaign, develop a database of your current customers' information to cultivate for
future sales, connect with other non-competing related businesses and begin a referral network)
14.7 DOWNSIZING
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 The word ‘downsizing’ was coined by Stephen Roach of International Bank, by Morgan Stanley,
USA. Downsizing was used as a strategy to reduce the size of a business to make it more pro table.
The term downsizing was used in mega organizations in the USA with a view to reduce the excess
of man power and to reduce high labour cost.
Downsizing has been practised by corporate organizations for maintaining a sizeable number of
regular employees. It is an extreme step taken by employers for wholesale reduction in the number
of regular staff. Its key objective is to improve nancial performance and organizational ef ciency.
The practice was popular during the recessionary period of early 1990s. However, the practice
continues even today in large organizations, both PSUs and private organizations.
The glaring success in the UK and the US organizations in reduction of manufacturing costs,
production cost the importance it had as a component in the total value added. The main concern for
cost reduction, therefore, was highlighted outside the factory in all other areas, termed as overhead
costs, e.g. R&D, selling, distribution, nance and personnel and marketing. As such, ruthless forms
of business process re-engineering, delaying and downsizing came into practice resulting in
perceptible high productivity.
In American industry, during June 1995 alone, a one half of the major corporations cut down jobs,
which on an average, constituted 8 per cent of the organizational workforce. Downsizing, as such,
implied corporate strategy for terminating the jobs of a huge number of staff on regular employment
and also taking contingent workers from subcontractors or foreign workers. This practice is very
much in use in US corporation in the aftermath of the terrorists’ attack in New York on 11th
September, 2001, although, the focus in discharging the excess regular employees has shifted from
American staff to foreigners.
The advocates of downsizing claim that downsizing helps meet an organization’s commitment to its
shareholders who own the business/company. However, critics of downsizing feel it to be an
unpalatable face of capitalism, since it was being practised in various forms, for example, plant
closure, layoffs of workers, etc. These practices, no doubt, apparently helped increase plant
productivity and positively impacted the bottom line of the corporates but these are all short-term
gains. And, they do not take into consideration the effect of the strategy on people. As such, the
approach is one-sided and only serves the purpose of the capitalist. This is made clearer from the
gains achieved in the US companies, mentioned below.
Downsizing was actively implemented in 1995 in the USA, in reputable companies like Mobil Oil
Company. It cut down the company’s workforce through layoff by 9.2 per cent and gained market
value to the extent of 4 per cent. The company resorted to downsizing in spite of the commendable
high pro ts (19 per cent higher than the previous year) and 9 per cent higher divided payouts (19
per cent), and, the company chose to continue cost cutting initiatives for higher growth and
opportunities. These are also other instances in the USA where corporations reduced the number of
jobs. USA eliminated more than 15.2 million while collar workers during 1989-99 and thereafter,
some 3.6 million of the redundant staff got employment with 30 per cent less emoluments.
The organizations no doubt, made record pro t of 13 per cent in 1993 and 10 per cent in 1994.
Downsizing has also been practised by employers in India as the most convention tool for reducing
manpower strength. Notable illustrative examples have been Standard Chartered Bank, State Bank
of India and others. VRS also has been resorted to by many organizations.
Nature of Downsizing: Downsizing as a strategy may be practised for long or a short period. In the
short-term strategy, it reduces manpower strength quickly. It is a costly activity. However, the
organization may devise a Voluntary Retirement Scheme (VRS) and pay high attractive incentives
to the staff offering early retirement.
A long-term downsizing may be resorted due to: (a) induction of faster and new technologies/new
work methods, (b) inadequacy of large number of staff in higher age groups to cope with the new
technologies, due to lack of skill/knowledge, or (c) general resistance to the change which may have
been envisaged. Even, retraining of such staff is not possible and change in the mindset is an
absolute necessity.
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 However, in most of the cases of the ageing population redundancy is the only appropriate answer.
In such cases, even outplacement of the potential staff, not needed in the organization, may be a
costly affair. However, retraining of those who are willing to be retrained, and are found retrainable
can be redeployed. But, for this to happen, a well planned and systematic action plan is called for, to
overcome the situation.
Strategy for Implementation of Downsizing:
Following strategy is used for effective implementation of downsizing:
Advance Preparation: Advance preparation to involve people through open communication to
thwart grapevine rumors.
Staff Feedback: Encourage staff feedback and impress the ultimate need for downsizing with no
alternative in management hands.
Training: Train the managers for implementation of downsizing. This is a painful experience for
the managers as they have to take a decision for termination of their own staff who gave them their
best.
Stages in Implementation: It is necessary to plan downsizing in phases.
Downsizing may lead to lower overheads, faster decision making, lesser bureaucracy, improved
communication and entrepreneurial, executive behaviour. But, the disastrous effects of downsizing
cannot be neglected.
14.8 SUMMARY
Work life balance is a concept that supports the efforts of employees to split their time and energy
between work and the other important aspects of their lives. Employees want to balance work with
the rest of the activities they wish to pursue in life. Work- life balance is a daily effort to make time
for family, friends, community participation, spirituality, personal growth, self care, and other
personal activities, in addition to the demands of the workplace. In nutshell Work-Life Balance
means the maintenance of a balance between responsibilities at work and at home. Work balance is
especially important with which the employee may become ustered of stressed. Employers are not
responsible for providing work balance for their employees, but they can assist the employees to
seek and maintain their own work balance. Optimistically, the decisions, policies, values, and
expectations in your workplace support employees in their work-life balance choices. Employers
can assist employees to experience work-life balance by offering such opportunities as exible
work schedules, paid time off (PTO) policies, responsible time and communication expectations,
and company-sponsored family events and activities.
Business cannot live in its isolation. It means it needs support from all walks of the society. Because
without societies or its elements, it cannot, establish, survive or run. So as it takes support from
society, in the same way it is its responsibility to give something to society, for its development.
This has been realised by certain business units. Even before and after industrialization and
according as per the requirement they do something for the good of the society. This is known as
corporate social responsibility. The basic of corporate social responsibility rest on the fact that not
only public policy but even corporate should be responsible enough to address social issues.
Therefore companies deal with certain issues and challenges along with the public policy or state.
In today’s business climate, downsizing and plant closure have become common and important
strategic management activities to increase competitiveness and eliminate redundant capacity. We
should view downsizing as a natural progression in the development of today’s organisations, not an
exceptional or unusual activity. However, from my experience of working with organisations that
have restructured, many do not handle this process well and can suffer serious long term damage as
a result.
14.9 QUESTIONS
•  “Achievement and enjoyment are the two key concepts related to Work-life Balance”.
Discuss.


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 •  “Corporate social responsibility is a key issue for any organisation aiming for long term
sustainability”. Discuss.

•  De ne Corporate Social Responsibility. Explain the scope of CSR.

•  What is Corporate restructuring? Elaborate the strategies of Corporate

Restructuring.

•  Write note on:

•  Flexible work options

•  Support programmes

•  Downsizing

•  Optimize Financial and Business Processes.

•  Key components of CSR

•  Advantages of CSR
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 15 -RECENT TRENDS IN HUMAN REOURCES MANAGEMENT -II
Unit Structure:
15.0 Objectives
15.1 Business Process Outsourcing
15.2 Need of BPO / Advantages of BPO
15.3 Services offered by BPO
15.4 Future Prospects of Business Process Outsourcing in India
14.5 Challenges and Threats of BPO
15.6 Career options in BPO
15.7 Concept of Knowledge Process Outsourcing
15.8 Future prospects of KPO in India
15.9 Career options in KPO
15.10 HRM issues relating to BPO/KPO
15.11 Employee Incentive Schemes
15.12 Summary
15.13 Questions
15.0 OBJECTIVES
After studying the unit the students will be able to:
•  De ne the term BPO.

•  Realize the types of BPO

•  Explain the need and importance of BPO

•  Elaborate the challenges to the BPO industries.

•  De ne the concept KPO.

•  Explain the need and importance of KPO.

•  Understand the need of Employee incentive schemes.

•  Explain the innovative incentive schemes.

15.1 BUSINESS PROCESS OUTSOURCING - INTRODUCTION

Outsourcing of human resource activities is an innovative strategy in Indian industry, just like in
other advanced countries. It can be a tool for companies, particularly, small ones for competing
against the big players. These are specialist HR service providing agencies with expertise to provide
professional assistance in matters of employee bene ts administration, recruitment and training,
legal matters, etc.
Business process outsourcing is all about hiring the other businesses to deliver the work to you, so
that you can concentrate on the core activities of your business. The core activities have been more
important for establishing a particular business in the eld. After all, you are spending so much to
set up your business and missing out the core activities can cast a bad spell on the growth of your
business. It is for this reason that big business houses, keep on outsourcing their non-core work, so
that proper time should be given to the pro t generating aspects of the business.
There are various things that have to be tackled in a particular business. If you are running a
business house and are getting worried about the increasing load of the work, then outsourcing is
the best option for you. Usually, the concept of business process outsourcing has earned a wide
acclaim. This service providing division is slowly and slowly entering every business house and is
creating a special place for itself. The professionals with outsourcing companies are skilled enough
to manage the tasks properly and complete the work on time.
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 MEANING OF BPO
BPO stands for "business process outsourcing," which is simply another term for outsourcing. This
is when a company contracts an outside provider for services or business processes. This might
include manufacturing or back-of ce functions such as accounting and human resources. But BPO
might also includes front-end services such as customer care and technical support.
Business Process Outsourcing (BPO) is a contract whereby a rm (outsourcer) transfers its
processes along with the associated operational activities and responsibilities to a third party (BPO
operator), so that the third party BPO operator provides the required services to rms customers, for
an agreed consideration. BOP services are included in retail banking, insurance, travel and
hospitality, automobiles, telecom, pharma, nance, accounting and Human Resource.
In this way in BPO, the company does only the core activities and gives less important work to third
parties in exchange for a fee.
•  BPO is divided into two categories:

•  Back Of ce Outsourcing: This includes internal business functions

such as billing, payroll, HR, or purchasing.

•   Front Of ce Outsourcing: This includes customer related services such as marketing,

technical support or maintenance.
BPO is a contractual service to completely manage, deliver and operate one or more business
processes or functions.

•  Parts or types of BPO

•  Offshore outsourcing: BPO that is contracted outside a company’s

own country is sometimes called offshore outsourcing.

•  Near-shore outsourcing: BPO that is contracted into a company’s neighbouring country

is sometimes called near- shore outsourcing.

•   ITES: BPO is dependent on IT; hence it is also referred as Information Technology

Enabled Services or ITES.

•  KPO: Knowledge Process Outsourcing (KPO) and legal process outsourcing are some
of the parts of BPO.
According to NASSCOM the top ve Indian BPO exporters are Genpact, WNS Global
Services, Transworks Information Services, IBM Daksh and TCS BPO.

•  Objectives of BPO

•  Business process outsourcing saves precious management time and

allows focus while building upon core competencies

•  Scarce resources can be put to better use.

•  BPO reduces cost of operations. It is cost friendly for the big business houses

•  Organisation can get specialised services.

•  Organisation can strengthen strategic business relations with many

organisations.
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 There are various companies in foreign countries that keep on outsourcing their work such as
call centre work, accounting work and many others. The company will not only save on the
house rent allowances, bonuses, cash advances and various other add-ons, but will also be
able to cut down on the huge salaries that a trained staff would demand.

15.2 NEED OF BPO / ADVANTAGES OF BPO

Following points explains the need or advantage of BPO:
Flexibility: Outsourcing may provide a rm with increased exibility in its resource
management. Most BPO services are offered for a fee basis. This helps a company becoming more
exible by transforming xed into variable costs. Outsourcing will allow operations that have
seasonal or cyclical demands to bring in additional resources when you need them and release them
when you're done. For e.g. the accounting department that is short-handed during tax season and
auditing periods. Outsourcing these functions can provide the additional resources for a xed period
of time at a consistent cost.
Core Activities: A company is able to focus on its core competencies. Focusing on core activities
may help a company to create a competitive edge. Employees are relieved from performing non-
core or administrative processes and can invest more time in building rm’s core businesses. In
rapid growth periods, the back-of ce operations of a company will expand also. This expansion
may start to consume resources (human and nancial) at the expense of the core activities that have
made your company successful. Outsourcing those activities will allow refocusing on those
business activities that are important without sacri cing quality or service in the back-of ce. For
e.g. Company lands a large contract that will signi cantly increase the volume of purchasing in a
very short period of time; Outsource purchasing.
Cost And Ef ciency Savings: Back-of ce functions that are complicated in nature, but the size
of your company is preventing you from performing it at a consistent and reasonable cost, is
another advantage of outsourcing. Overhead costs of performing a particular back- of ce function
are extremely high. Consider outsourcing those functions which can be moved easily. For e.g.
Growth has resulted in an increased need for of ce space. The current location is very expensive
and there is no room to expand. Outsource some simple operations in order to reduce the need for
of ce space.
Speed of Business Processes: Using techniques such as linear programming is a way to reduce
cycle time and inventory level, which increases the speed of business processes.
Transform Organization: BPO helps to transform the bureaucratic organisation into a very agile
organisation. A company can help to maintaining ambitious growth goals. Thus BPO allow rms to
retain their entrepreneurial speed and agility.
Long Term Relationship with Customers: BPO employees are generally professionally trained in
customer relation, their approach and attitude towards the customer can go a long way in building
long term relationships.
Operational Control: Operations whose costs are running out of control must be considered for
outsourcing. Departments that may have evolved over time into uncontrolled and poorly managed
areas are prime motivators for outsourcing. In addition, an outsourcing company can bring better
management skills to your company than what would otherwise be available. For e.g. IT department
having too many projects, not having enough people and a budget that far exceeds their contribution
to the organization can be replaced with a contracted outsourcing agreement will force management
to prioritize their requests and bring control back to that area.
Continuity & Risk Management: Periods of high employee turnover will add uncertainty and
inconsistency to the operations. Outsourcing provides a level of continuity to the company while
reducing the risk that a substandard level of operation would bring to the company. For e.g. suppose
the HR manager is on an extended medical leave and the two administrative assistants leave for new
jobs in a very short period of time. Outsourcing the HR function would reduce the risk and allow
the company to keep operating.
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 Other Bene ts: When done for the right reasons, outsourcing will actually help the company to
grow and save money. There are other advantages of outsourcing that go beyond money.
•  Operational Cost Control

•  Cost Savings

•  Improved HR

•  Productivity Improvements

•  Access to Expertise

•  Establish and Develop Minority Suppliers

•  Gain access to information technology tools without major investment

•  Increased exibility to meet changing business conditions

15.3 SERVICES OFFERED BY BPO

Following are the min services offered by the BPO units:

Telemarketing Services: Telemarketing outsourcing services target interaction with potential

customers. The objective is to generate interest in products and promote sales.
Customer Support Services: This services manages customers inquiries through multiple
channels of voice, e-mail and chat.
Technical Support Services: This services offers round the clock technical support and problem
solution to customer of computer hardware, software and internet infrastructure manufacturing
companies.
Desk Services: This services provides technical problem solution and support for corporate
employees.
Insurance Processing Services: This service provides specialised solutions to insurance sector.
Medical Transcription Services: Medical Transcription accounts for 2% of total Indian
Outsourcing Services.
15.4 FUTURE PROSPECTS OF BUSINESS PROCESS OUTSOURCING IN INDIA
Business Process Outsourcing (BPO) is the fastest growing segment within IT services. Global
market for outsourcing is growing at the rate of 7%. IT is estimated at around 1.2 trillion dollars in
2007. 73% of executives of US companies said their organisations have outsourced some work.
BPO industry is drawing signi cant attention in India by virtue of its utility as an upcoming
business.
It is estimated in 2008 India would have revenues of 11 billion US $ from offshore BPO. India thus
has a commanding 63% share of offshore BPO services. other locations like Eastern Europe,
Philippines, Morocco, Egypt and South Africa have emerged to take a share of market. China is also
trying to grow from a very small base in this industry.
•  BPO industry’s current size is about $ 26-29 billion.

•  BPO sector in India employs over seven lakh people and accounts for
more than 35% of worldwide market.

•  In last 3 years BPO sector is growing at over 35%.

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 •   Total export BPO market opportunity is about $ 220-280 billion by 2012. While
domestic BPO market provides additional opportunities worth $ 15-20 billion.

•   Technology, telecom, travel and transportation provide opportunity in excess of $ 10

billion by 2012.

•  Nassam has 1200 members, of which 40% are BPOs and over 50% of them are located
in southern states.
In comparison to American and European countries, India has vast pool of skilled human
resources ready to work at lower wages. India has largest English speaking population after
other western countries. This helps BPOs to serve American clients by working at nights and
helps in better utilisation of resources. Certainly the future business of BPO looks bright in
India.

15.5 CHALLENGES AND THREATS OF BPO

Although BPO has many potential advantages there are a few stumbling blocks, which could
counter these advantages. A failure to meet service levels, unclear contractual issues, changing
requirements, unforeseen changes etc. The outsourcer may become too dependent on BPO service
provider. A major drawback is related to risk involved.
Limitations of outsourcing are as follow:
Loss of Control.
Outsourcing organization may be remote from business current location, frequent visits are not
possible and communication through reporting is not suf cient to exercise control. Core activities
should not be outsourced unless impracticable to do in house. Any incompetency identi ed by
market can be threatening to the reputation of the business.
Lack of Independence.
Business may became dependent on outsourcing organization, because of loss of competency and
resources in the business due to employees being redundant or deployed elsewhere and assets are
sold which now require more investment to buy a gain. In case of breach, it will be dif cult to setup
activities immediately. Delays to setup activities again can damage reputation and cash ows.
Employee Morale.
Employee may lose their skills overtime and resentment can happen if outsourcing leads to forced
redundancy. It can seriously impact productivity because there will be little motivation regarding
promotion and growth. In extreme cases it may end up with strikes.
Cost May Exceed Bene ts.
There may be cost associated with employee redundancy payments, early termination penalties of
existing contracts and disposal cost of property, plant and equipments. Bene ts determined from
outsourcing are future expectations which may not come true. Like savings in step xed costs of
energy and supervisory costs due to reduced activity level.
Reaction of Stakeholders.
Stakeholders may react positively or negatively depends how they perceive the impact of
outsourcing on their interest in the business. Some stakeholders may become happy while some
may become sad. These include shareholders who may sell their shares can affect the share price,
nanciers who may demand repayment of the capital, customer who may take their business
elsewhere and supplier who may change their business terms depending upon their perception of
business future risk.
Legislation.
Legislation may limit dealing in foreign countries to protect its currency value or dealing with rival
countries. It may protect some stakeholder rights by enforcing legislation e.g. imposing high import
duty to protect home industries or by imposing licensing requirements to business operating in
particular industry requiring some activities or standards which are pre requisite to get a license.
Thus to achieve any bene ts, risks and threats to outsourcing must be managed.
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15.6 CAREER OPTIONS IN BPO
It is expected that BPO sector will have to face man power shortage of 39% to 49% by the year
2009. Large population of educated English speaking people and low cost are encouraging more
and more companies from abroad to outsource their call centres to India. Call centres jobs require a
high school diploma or even a college degree.
Call Centre Operators: This is entry level in call centres. Here general duties are answering
telephone calls, taking down details of caller’s query and logging information on a computer, giving
advice, in some cases, selling caller products etc.
In outbound call centre services such as tele-marketing, an operator also needs to identify potential
customers and make outgoing calls, marketing products, follow-up calls, sending fax, e- mail etc.
Duties of a call centre operator depend on the type of product/service of that organisation.
Centre Manager: He manages day-to-day operations of call centre. It includes nancial budgets,
operations, communicating, coaching and development of call centre. He has to set operational
goals and objectives, monitor and improve performance, have interactions with people outside the
call centre, manage all call centre support functions including training, hiring, IT support and
process improvement.
Quality Monitor Agent: They see that all call centre procedures are followed properly and give
performance feedback about call handling to coaches, training group and hiring manager.
Process Specialist: He uses quality improvement techniques to create environment of continuous
quality improvement. A call centre experience is useful for jobs in customer relation, sales jobs or
insurance sector.
15.7 CONCEPT OF KNOWLEDGE PROCESS OUTSOURCING
INTRODUCTION AND MEANING
The success of BPO has encouraged many rms to start outsourcing their high-end knowledge work
as well. India has a large pool of knowledge workers in various sectors ranging from Pharmacy,
Medicine, Law, Biotechnology, Education and Training, Engineering, Design and Animation,
Research and Development etc. This talent is soon being discovered and tapped by leading
businesses across the globe. Hence Knowledge Process Outsourcing involves off-shoring of
knowledge intensive business processes that require specialised domain expertise.
Knowledge Process Outsourcing (KPO) is a contract between a company (outsourcer) and a third
party (KPO Operator). In this contract the company transfers (gives) some of its knowledge or
information related to work to the KPO operator in exchange of fees. So KPO is like BPO. But
KPO does high end jobs and BPO does low end jobs. KPO is mostly used by Pharmaceuticals,
Biotechnology, Financial Services, Technology Research and other companies who deal with
knowledge and information.
KPO is a form of outsourcing in which knowledge and information related work is carried out by
workers in a different company or by a subsidiary of the same organization. This subsidiary may be
in the same country or in an offshore location to save costs or other resources. Companies resort to
knowledge process outsourcing when they have a shortage of skilled professionals and have the
opportunity to hire skilled workers earning lower wages in another location for a lower overall cost.
It is being claimed that KPO is one step extension of BPO because BPO Industry is shaping into
Knowledge Process Outsourcing because of its favorable advantageous and future scope. But, let us
not treat it only a 'B' replaced by a 'K'. In fact, Knowledge process can be de ned as high added
value processes chain where the achievement of objectives is highly dependent on the skills,
domain knowledge and experience of the people carrying out the activity. And when this activity
gets outsourced a new business activity emerges, which is generally known as Knowledge Process
Outsourcing.
Knowledge Processing Outsourcing (popularly known as a KPO), calls for the application of
specialized domain pertinent knowledge of a high level. The KPO typically involves a component
of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis
Proves Outsourcing (APO). KPO business entities provide typical domain-based processes,
advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is
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 handling more amount of high skilled work other than the BPO Industry. While KPO derives its
strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more
about size, volume and ef ciency.
In fact, it is the evolution and maturity of the Indian BPO sector that has given rise to yet another
wave in the global outsourcing scenario: KPO or Knowledge Process Outsourcing. The success
achieved by many overseas companies in outsourcing business process operations to India has
encouraged many of the said companies to start outsourcing their high-end knowledge work as well.
Cost savings, operational ef ciencies, availability of and access to a highly skilled and talented
workforce and improved quality are all underlying expectations in outsourcing high-end processes
to India.
•  FORMS OF KPO

•  Legal Process Outsourcing (LPO): LPO does a wide range of legal work such as legal
research, pre-litigation documentation, advising clients, writing software licensing
agreements etc. Thousands of lawyer’s jobs will move from USA to countries like India in
near future.

Human Resource Outsourcing (HRO): Human Resource includes payroll management, training,
staf ng, travel, retirement bene ts, risk management, compensation consulting etc. By outsourcing
these activities, the outsourcer can concentrate on important matters.
Research Process Outsourcing (RPO): RPO is popular in biotech industry. Biotech industry is a
very high pro t-making industry.
Medical Business Process Outsourcing (MBPO): India is becoming a main centre for medical
treatment for westerners and middle-east travelers. The chain of Apollo Hospitals is the rst major
hospital to be get MBPO work.
•  BENEFITS OF KPO

•  Better quality of work.

•  Increase in Pro ts.

•  Uninterrupted Services.

•  Savings in cost and time.

•  Trained Professionals at Work

•  Pool of In-house Experts.

•  Standard Operational Ef ciency.

•  On-time delivery of Services.

•  Recruitment of Larger Workforce without increasing costs.

•  Flexibility in accommodating client’s orders.

•  IMPORTANCE OF KPO
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 •   Innovation and differentiation will be key factors in identifying KPO companies and
attracting business.

•   KPO companies are professional services companies. Successful KPOs have world-
class people development as its foundation.

•  KPOs have to recruit talented persons as the nature of work is different. The selection of
right person is half battle won.

•  The objective of every KPO company is to deliver world-class quality of work to the
satisfaction of clients so that repeat orders are produced.

  KPO needs specialisation. Persons with specialised education are always given
preference in employment.

15.8 FUTURE PROSPECTS OF KPO IN INDIA

FUTURE OF KPO
The future of KPO has a high potential as it is not restricted to only Information Technology (IT) or
Information Technology Enabled Services (ITES) sectors and includes other sectors like Legal
Processes, Intellectual Property and Patent related services, Engineering Services, Web
Development application, CAD/CAM Applications, Business Research and Analytics, Legal
Research, Clinical Research, Publishing, Market Research (Market research KPO ) etc.
In today's competitive environment, focus is to concentrate on core specialization and core-
competency areas and outsource the rest of the activities. Many companies and organizations have
come to realize that by outsourcing non core activities, not only cost are minimized and ef ciencies
improved but the total business improves because the focus shifts to the key growth areas of the
business activity.
India has become a preferred choice of outsourcing countries, Citigroup, GE Capital and American
Express have established their KPO companies in India. With huge talent pool, India could emerge
as a global KPO hub. India enjoys cost advantage. More and more companies are turning to India
for off shoring KPO work as quality work gets done at cheaper rates.
Pharma giants Astra-Zeneca and Glaxo-Smithkline have set up drug discovery centres at a low-cost
destinations. Motorola, Philips, Nokia, Intel, IBM and Cisco have established offshore design
centres in India. The future of KPO business in India presents an encouraging picture to rejoice.
According to a report, the Global Knowledge Process Outsourcing Industry is expected to reach
US $ 17 billion by 2010. From this US $ 12 billion with be outsourced to India.
Indian KPO sector is expected to employ more than 2,50,000 KPO professionals by 2010,
compared to current gure of 25,000 employees.
India will continue to remain as the top KPO destination.
•  Companies that are outsourcing to KPO’s are trying to balance their risks.

•  Large KPO providers are expected to move to multi-location delivery centers.

•  India will capture more than 70% of KPO outsourcing sector by 2010.

•  KPO will have a compounded growth rate of 46% per year till 2010,
whereas BPO would grow only by 26% till 2010.

•  CHALLENGES TO KPO


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 •  High Staff Turnover.

•  High cost of Training.

•   Ensuringthe security and con dentiality of information, especially when privacy laws
change from country to country.

•  REASONS FOR GROWTH OF KPO’S

•  KPOs are growing rapidly in India as India has large pool of

knowledge workers in various sectors.

•  Indian education system gives great importance to higher education and specialisation.

•   The Indian Government has set up IITS (Indian Institute of Technology) and IIMs
(Indian Institute of Management) across the country.

•  India has more than 250 universities and engineering colleges.

•  In all good educational institutions, medium of education is English, this has resulted in
large population of educated and quali ed professionals.

15.9 CAREER OPTIONS IN KPO

KPO provides companies an opportunity to tap into specialised knowledge in various vertical
business domains. KPO sector offers a good working atmosphere with global exposure and an
opportunity to develop skill sets in a specialised eld. Many are unaware of potential of this sector
and scope of future prospects. This sector also requires higher level of control, con dentiality and
enhanced risk management. A recent report indicates that outsourcing of legal processes alone
bene ts about 700 Indian law rms working in high-end areas.

Legal Services: Writing legal documents does not require costly professionals as the same can
be done by a KPO rm in India. Now KPO’s do patents, drafting, legal research, writing software
etc.

Accounting Services: All accounting work from book keeping to auditing is done by KPO rms.
They provide trained professionals who offer cheaper services with standard quality.
Journalism and Content Development: This sector has recently grown with the rise of content
development rms. English speaking trained writers from a KPO rm are good candidates to help
newspapers and journals with their editing and copy writing work.
Architectural and Engineering Services: A large pool of trained draftsmen can provide expert
CAD/CAM services to clients.
Financial Analytics and Equity Research: Analytical, Conceptual and interdisciplinary thinking,
Accountancy and nancial analysis, Fundamentals of nance, experienced in interpreting research
reports.
Other Key KPO Areas: KPOs provide opportunities to graduates in engineering, management,
law, statistics, economics, accounts and biological sciences to name a few, apart from opening its
doors to Arts, Science and Commerce graduates.
The essential skills for a successful career in KPO are a good mix of communication skills,
analytical abilities and domain knowledge. Candidates can expect a starting salary of Rs. 15,000 to
Rs. 30,000 in BPO’s or KPO’s. Promotions are performance- based. They can also become CEO of


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 BPO or KPO centre. Jobs of BPO and KPO are full of stress, so the candidate must have the ability
to handle pressure. He must be cool and must perform well in all situations.
15.10 HRM ISSUES RELATING TO BPO/KPO
The HR issues that arise in BPO industry are as follows:
The burgeoning BPO industry has given rise to crucial questions and doubts regarding the human
resources employed with them. Moreover, the nature and timing of work in these outsourcing units
have given rise to certain issues which are of extreme interest to the HR specialists. In context of
this ever increasing debate, an attempt has been made to highlight the core HR issues that arise in
BPO.
Stress: Mental Health at Stake
Stress is a dynamic condition in which the individual is confronted with an opportunity, constrain or
demand, related to what he/she desires and for which the outcome is perceived to be both uncertain
and important. It is beyond doubt that most of the employees in this industry report on stress for
their jobs. The monotonous and repetitive nature of job makes stress a persistent factor in the work
setting of BPO employees.
This issue is of extreme importance as it is the stress that adds up to various human as well as work
related problems in organizations. There is emerging evidence that in some situations an
organization can be held legally liable for the emotional and physical impact of stress on
employees. Thus, stress management of employees is one of the core challenges confronting HR
managers.
Attrition: The Harsh Reality
Attrition or turnover refers to the voluntary or involuntary permanent withdrawal from the
organization. A BPO survey by Indo-American Chamber of Commerce and Ernst and Young quoted
that attrition rate ranges between 40% and 25% between for voice and non-voice survey
respectively, clearly indicating the gravity of the problem.
This high rate of turnover can be attributed to factors such as repetitive nature of work, frustration,
lack of control and autonomy, limited career growth, night shifts or better scope in other industries.
High turnover rate results in high recruitment, selection and training costs besides inconsistency in
job performance and organizational output. Clearly, the statistics point out that the major problem
plaguing Indian BPO industry and obstructing its smooth transition into the next phase is high
attrition. Though the problem has been hovering for some time now, the steps taken to manage
attrition are yet not yielding appropriate results because of the mismatch between the aspirations of
the employees and the very nature of a BPO job. How to bring down this alarming trend by
developing innovative strategies is a burning issue for the HR department of BPO’s.
Health Issues: Imperative Side Effects of BPO Jobs
The inherent nature of the outsourcing jobs is such that the physical well- being of employee is at
constant risk. Most of the BPOs function in different time-zones that are convenient for the
outsourcing companies, thus making the working hours odd for the employees.
The major health problems are:
•  Sleeping disorder: Most common ailment as the BPO job disrupts the normal biological
cycle.

•  Digestive system disorder: Sleeplessness and eating food supplied by external caterers.

•  Depression: Due to burnout and mental fatigue.

•  Eyesight Problem: Continuous sitting in front of computer monitors.

Thus, health deterioration is a common symptom seen in BPO employees. An unhealthy
employee becomes more a liability than resource to the organization and with majority of
workforce in BPO’s being youngsters; an unhealthy route becomes more of a challenging
problem. So, this emerging issue of catering to the physical well being of employees is
catching as a major HR concern in a BPO. Yoga, meditation, training, recreational activities








 and other such initiatives being taken are an outcome of this issue being raised.

Absenteeism: Failure to Report to Work

It is de ned as inability to turn up on the job or being consistently irregular for work. It can be
because of many problems in organizations and at times be a result of various other problems in the
organization. This again is an area of concern as absenteeism leads to loss of productivity, reduced
ef ciency and effectiveness in organizations and over burdens other employees. The work ow is
disrupted and in the BPO’s the work pressure is already so high that absenteeism directly disrupts
day-to-day functioning. However, not as grave as the above issues, absenteeism too is an emerging
challenge for HR managers since if not dealt properly in the initial stages can lead to serious
consequences both for the employee as for well as the organization.
Targets: The Exploitative Number Game
The employees in BPO are set with various targets which have to be achieved in limited time. These
targets could be attending particular number of calls within stipulated time, achieving sales,
redressing target number of calls which may at times determine the performance of the employees.
Extreme target orientation in jobs on day-to-day basis leads to frustration and continuous stress on
the employee which leads to reduced level of interest and compromise in the quality of
performance. Under the situations, where wrap up time is being monitored, and at the same time the
customers need to be kept satis ed, the employees may undergo extreme pressures to achieve these
two opposing target simultaneously.
Thus, targets simply intensify the stress produced by the quantity / quality debate. A moderate target
setting is a prerequisite for optimum performance by employees but a rigid target can adversely
affect the output of the employee. For HR Managers in BPO a growing concern is to gure out the
requisite target level that ensures maximum productivity while minimum pressure and burnout.
15.11 EMPLOYEE INCENTIVE SCHEMES
INTRODUCTION AND DEFINITION
Incentive is an act or promise for greater action. It is also called as a stimulus to greater action.
Incentives are something which is given in addition to wagers. It means additional remuneration or
bene t to an employee in recognition of achievement or better work. Incentives provide a spur or
zeal in the employees for better performance. It is a natural thing that nobody acts without a purpose
behind. Therefore, a hope for a reward is a powerful incentive to motivate employees. Besides
monetary incentive, there are some other stimuli which can drive a person to better. This will
include job satisfaction, job security, job promotion, and pride for accomplishment. Therefore,
incentives really can sometimes work to accomplish the goals of a concern. Graf n and Ebert
de ned Incentive schemes as, “special pay programmes designed to motivate high performance”.
Incentive schemes attempt to link at least a portion of pay to job performance to encourage higher
productivity.
NEED OF INCENTIVES
The need of incentives can be many:
•  To increase productivity,

•  To drive or arouse a stimulus work,

•  To enhance commitment in work performance,

•  To psychologically satisfy a person which leads to job satisfaction,

•  To shape the behavior or outlook of subordinate towards work,

•  To inculcate zeal and enthusiasm towards work,

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 •   To get the maximum of their capabilities so that they are exploited and utilized
maximally.

•  TYPES OF INCENTIVES
Therefore, management has to offer the following two categories of
incentives to motivate employees:

Monetary incentives- Those incentives which satisfy the subordinates by providing them
rewards in terms of rupees. Money has been recognized as a chief source of satisfying the needs of
people. Money is also helpful to satisfy the social needs by possessing various material items.
Therefore, money not only satis es psychological needs but also the security and social needs.
Therefore, in many factories, various wage plans and bonus schemes are introduced to motivate and
stimulate the people to work. In order to motivate employees care should be taken that they paid
adequate salary or wages and that is too on the regular basis. The basic drive behind giving labour
or service is money. So if employees are paid regularly it surely motivates them to work positively
and willingly. With regular salaries Employees should be given bonus during festivals or
occasionally. Along with it they should also be provided incentives like Medical Allowances, Leave
and Travel Allowance to motivate them. Most of the time, companies pay special rewards in the
form of cash to the employees who prove their ef ciency in the form of any ideas or suggestions
given for the bene t of organization. These are the types of incentives which motivate employees to
perform their best.
Non-monetary incentives- Besides the monetary incentives, there are certain non- nancial
incentives which can satisfy the ego and self actualization needs of employees. The incentives
which cannot be measured in terms of money are under the category of “Non- monetary
incentives”. Whenever a manager has to satisfy the psychological needs of the subordinates, he
makes use of non- nancial incentives.
•  Non- nancial incentives can be of the following types:

•   Security of service- Job security is an incentive which provides great motivation to

employees. If his job is secured, he will put maximum efforts to achieve the objectives of the
enterprise. Job security should be provided to the employees for making them feel that they
are the permanent part of an organization. They should be not be made feel insecured. So the
probation period should be kept minimum. Job security increases the morale of employees to
work with dedication. This also helps since he is very far off from mental tension and he can
give his best to the enterprise.
Praise or recognition- The praise or recognition is another non- nancial incentive which
satis es the ego needs of the employees. Sometimes praise becomes more effective than any
other incentive. In order to motivate employees, it is very important to praise them. If they
show Excellency in the work, they should be verbally praised and admired. It builds
employee’s con dence and they feel contented psychologically. The employees will respond
more to praise and try to give the best of their abilities to a concern.

Suggestion scheme- The organization should look forward to taking suggestions and inviting
suggestion schemes from the subordinates. This inculcates a spirit of participation in the employees.
This can be done by publishing various articles written by employees to improve the work
environment which can be published in various magazines of the company. This also is helpful to
motivate the employees to feel important and they can also be in search for innovative methods
which can be applied for better work methods. This ultimately helps in growing a concern and
adapting new methods of operations.
Job enrichment- Job enrichment is another non-monetary incentive in which the job of a worker can
be enriched. This can be done by increasing his responsibilities, giving him an important
designation, increasing the content and nature of the work. This way ef cient worker can get
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 challenging jobs in which they can prove their worth. This also helps in the greatest motivation of
the ef cient employees.
Promotion opportunities- Promotion is an effective tool to increase the spirit to work in a concern.
If the employees are provided opportunities for the advancement and growth, they feel satis ed and
contented and they become more committed to the organization. In order to motivate employees,
their transfer should be done with planned progression or within the organization they should be
promoted. It is the best way of motivation because the promoted employees surely show best results
due to willing dedication to work.
The above non- nancial tools can be framed effectively by giving due concentration to the role of
employees. A combination of nancial and non- nancial incentives help together in bringing
motivation and zeal to work in a concern.
Positive Incentives
Positive incentives are those incentives which provide a positive assurance for ful lling the needs
and wants. Positive incentives generally have an optimistic attitude behind and they are generally
given to satisfy the psychological requirements of employees. For example-promotion, praise,
recognition, perks and allowances, etc. It is positive by nature.
Negative Incentives
Negative incentives are those whose purpose is to correct the mistakes or defaults of employees.
The purpose is to rectify mistakes in order to get effective results. Negative incentive is generally
resorted to when positive incentive does not works and a psychological set back has to be given to
employees. It is negative by nature. For example - demotion, transfer, nes, penalties.
INNOVATIVE EMPLOYEE INCENTIVE SCHEMES
Incentive measures, such as salaries, secondary bene ts, and intangible rewards, recognition or
sanctions have traditionally been used to motivate employees to increase performance. Some of the
nancial incentives are direct such as salary, pension, insurance, bonuses, etc. Others are indirect
such as subsidized meals, clothes or housing. Non- nancial incentives come in many forms such as
gifts, rewards, travel. Incentive pay plans reward employees according to production or
performance, rather than just paying for hours on the clock. An incentive plan can be made up of
many kinds of elements. The most common kind of incentive program used by employers is a cash
reward. In today business world there are several types of staff incentive schemes.
Cash incentives:
It includes following important schemes:
Bonus schemes: It is the most common form of cash incentive. Bonuses can be accrued and paid out
at different intervals, such as monthly, quarterly, or annually. Bonus size generally depends on the
total pay of the employee. Managers sometimes pay spot bonuses to some staff members for having
made special efforts in their work. Typically, the spot bonus is awarded for an achievement that is
not measured by any regular performance standard. The bonus pay structure is common in
professions such as sales, marketing and production. When the employees reach a predetermined
goal, the company may create an incentive plan that pays a bonus for going beyond that goal.
Pro t-sharing plans: This is very widely used form of cash incentive. Under such plans, employees
receive a certain percentage of the annual pro t. In this type of plan the company sets aside a
portion of their pre-tax pro ts and distributes that money to the employees. The distribution has
made according to some form of allocation criteria i.e. base on salary, individual performance, etc.).
In most cases, an employee must qualify to receive pro t sharing by meeting company performance
metrics, and by having a predetermined amount of service in with the company. Some companies
offer to place the pre-tax pro ts into the employees' company retirement plans, so it can add to
future fund growth. Companies may also develop a pro t sharing percentage based on the amount
of time worked for the company, the position held within the company or a combination of both
conditions.
Gain-sharing plans: These are similar to pro t sharing plans, but here the basis for the distribution
pool is different. Typically, under gain- sharing plans, employees are entitled to a certain percentage
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 of the productivity gains that are achieved over a given period. Payout intervals are typically shorter
than under pro t-sharing plans.
Merit pay plans: These involve salary increases for those employees who have produced the best
performance during a certain period of time generally for one year. While most of the other
incentives assure that staff always has to work hard in order to receive the reward, employees will
feel the merit pay forever. Hence, merit pay schemes are not only performance based, but also
tenure based. While they can contribute to low staff turnover rates, they can cause high disparities
in the salaries of junior and senior staff because of the past performance of senior staff. Despite
their drawbacks, merit pay schemes are widely used in practice. According to the Society for
Human Resource Management, one type of incentive plan for executives is known as the
performance unit. In the executive's agreement there is a schedule of nancial milestones that the
company must achieve for the executive to get awarded a pre-determined amount of units. The
amount of a performance unit varies by company. Performance units are paid out based on a
schedule agreed to by the executive and the company.
Symbolic rewards:
This is one of the types of non-cash incentive plans. Symbolic rewards are of small monetary value
and emphasize the recognition of the employee’s work effort. Examples of such rewards include
commendation letters, branded gifts, trophies, joint dinners or trips. While the monetary value of
this reward is not likely to enhance staff performance, the provision of such rewards can be valuable
supplementary tools to support staff motivation. However, staff usually prefers cash payouts as the
nancial value of these rewards becomes signi cant.
Employee Stock Ownership Plans (ESOPs):
It is an incentive offered to employees that want to invest their money into the company stock by
purchasing stock with pre tax money. Employee Stock Ownership Plans, or ESOPs, involves the
participation of employees in the MFI’s share capital. Through an ESOP, employees become co-
owners of the organisation. They can increase their wealth and income if the MFI makes pro ts,
which would tend to increase the value of the shares and make it possible to pay out dividends.
Employees can be motivated by knowing that they are shareholders in the company and that they
can participate in the success of the rm. Having relatively new this plan of incentive has become
more common. One difference between a cash payout and an ESOP is that the former has a short-
term impact while the latter is felt more over the long term. Also, cash is “real” – employees can
take their bonuses and spend them. The value of an ESOP is contingent upon such factors as future
pro tability and the presence of a market for selling the shares. An Employee Stock Option Plan
(ESOP) is a bene t plan for employees which make them owners of stocks in the company. ESOPs
have several features which make them unique compared to other employee bene t plans. Most
companies, both at home and abroad, are utilising this scheme as an essential tool to reward and
retain their employees. Currently, this form of restructuring is most prevalent in IT companies
where manpower is the main asset. So far as the future of ESOPs in India is concerned, as more and
more companies realise the need to retain their best talent in a world which would be dominated by
companies with the best intellectual capital, this management technique would be the phenomenon
of the new century.
Delayed Bene ts:
Delayed Bene ts as nancial institutions grow and mature there is a tendency for the average age of
staff members to increase as well. Most organisations only make the obligatory contributions to the
national pension and social security plans, but it may be worthwhile to consider funding a private
pension plan. With increasing age, most people worry more about their situation after retirement.
Since many public systems do not provide adequate coverage after retirement, a private plan can
have a very positive effect on employees’ motivation. In fact, many people might then be quite
willing to forego short-term monetary bene ts (such as a higher monthly bonus) in favour of a
higher regular income after retirement. Another interesting feature of delayed bene ts such as
pension entitlements is that they tend to increase with tenure in the organisation. Long-term
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 incentives, such as delayed bene ts, can help to reduce turnover since they increase the perceived
cost of changing jobs.
Perk:
It means the bene ts or perquisites typically awarded to only a small proportion of the management
staff. Perks are generally a good method of attracting and retaining employees as they are not
related to productivity. Perks can encourage staff to attach with the business. The common
examples of perk are use of a company car, gifts on birthday, health bene ts, subsidised staff
canteens, tea/coffee-making facilities, loans at lower rates, season tickets, social events such as
Christmas parties and work outings, membership of social clubs etc.
For the success of any incentive plan it is essential to de ne the goals and objectives clearly for
staffers. Workload should also be equitably distributed, or it could create resentment if staffers feel
they have to carry slow or poor-performing team members. Incentive plans are formalized
approaches to offering recognition and reward to employees for meeting pre-established goals or
objectives.
IMPORTANCE OF INCENTIVE PLANS
Following points explains the importance of incentive plans:
• Incentive programs motivate employees to push and challenge themselves to achieve higher
degrees of productivity. This ultimately translates to increased earnings for your company.

• When incentive plans are in place, employees recognize that signi cant effort on their behalf
will be acknowledged and rewarded. This can increase the amount of time; effort and energy
spend for the company by the employees.

• Incentive plans for the group can help to promote collaborative work efforts in the business.
Employees working in teams collectively rely on each others' productivity for the group to
receive a bonus or award may support and encourage each other to perform at top levels.

• Peer pressure may also encourage additional degrees of performance from underperforming
employees as each employee in the team takes care of not to let their team members down.

• Incentive plans have the potential to raise morale and increase job satisfaction in a company.
Employees see a direct correlation between their work effort and their earning potential.

• As the incentive plans are directly related to job satisfaction the employees with high levels
of job satisfaction often exhibit lower degrees of absenteeism, which can also help improve a
company's bottom line.

• Employees competing for or striving to meet the goals of an incentive plan may provide
higher degrees of service to the customers, which increase the degree of satisfaction of the
customers.

• Satis ed customer makes positive word-of-mouth advertising. This can encourage repeat
business and enhance the company's reputation.
• Improved service levels can also encourage referral business.

15.12 SUMMARY
Business Process Outsourcing (BPO) is the outsourcing of back of ce and front of ce functions
typically performed by white collar and clerical workers. It is like a contract that enables the
business person to hire the services of an outsourcing rm that will manage and complete the tasks
for them. As far as the contract policies are concerned, it becomes the entire responsibility of the
service provider to complete the task well in time. Business process outsourcing is becoming more
and more in demand and promising as it helps to a great extent in saving the money that can be
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 invested in enhancing the progress of other departments. Knowledge Process Outsourcing (KPO) is
the allocation of relatively high-level tasks to an outside organization or a different group within the
same organization. KPO is, essentially, high end business process outsourcing (BPO). KPO saves
cost. This kind of outsourcing is adopted by companies to implement their strategies and to protect
their intellectual property rights. Examples of KPO include accounting, market and legal research,
Web design and content creation.
Incentives help to achieve organizational goals or performance. Incentives are either individual or
group. Financial incentives are designed to motivate employees to improve their performance, to
increase effort and output and by producing better results expressed in such terms as objectives for
pro t, productivity, sales turnover, cost reduction, quality customer service and on time delivery.
This nancial compensation provides extra money for achievement in terms of contribution or
output. Incentive schemes relate compensation to productivity. A primary purpose of an incentive
scheme is to encourage greater productivity from individuals and work groups. The assumption
usually made by management is that money or cash alone may not motivate employees. In
designing incentive schemes, output standards should be established. In addition to motivating
employees to increase their level of productivity, incentive schemes may reduce turnover among
good performers or productive workers. Incentive schemes are also cost effective because of
savings that often resulted from productivity improvements. Generally, in incentive schemes are
classi ed into two types: material incentive and non material incentives.
15.13 QUESTIONS
1. Explain future prospects of Business Process Outsourcing (BPO) in India.

2. What do you mean by Knowledge Process Outsourcing (KPO)? Explain its forms and
bene ts.

3. Explain Future Prospects of Knowledge Process Outsourcing (KPO) in India.

4. Identify various career options available in BPOs/KPOs in India.

5. What are the career options in Business Process Outsourcing (BPO) and Knowledge Process
Outsourcing (KPO) sector?
6. “Money or cash alone may not motivate employees”. Discuss.

7. De ne the term Incentive Scheme. State the importance of Incentive Schemes.

8. Explain in detail the types of Incentive Schemes.

9. Write Note on:

• BPO

• KPO

• HRM issues related to BPO and KPO

• Innovative Employees Incentive Schemes

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