Human Resource Management

is the organization function that deals

with issues related to people such as
compensation, hiring, performance
management, organization
development, safety, wellness benefits,
employee motivation, communication,
administration and training.

HUMAN
RESOURCE
MANAGEMENT
PHR2143

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 1. HUMAN RESOURCE MANAGEMENT AN
OVERVIEW
After completing this chapter, students should be able to

1.1 What is Human Resource management?

1.2 Staffing
1.3 Human Resource Development
1.4 Compensation and Benefits
1.5 Safety and Health
1.6 Internal Employee Relations
1.7 How Human Resource management is being practiced in the real world?
1.8 Human Resource Manager

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1.1 What is Human Resource management (HRM)?

Let’s us imagine, an organization without people? Can this happen? Obviously, without people,
an organization cannot exist. There are just no organizations without people. People are the
lifeblood of every organizations.
Successful organizations are good at bringing together different kinds of people to achieve a
common purpose. This leads us to the essence of HRM. (Human Resource Management).
How effective employees contribute to organization goals depends on the ability of the HR
managers. HR people have to develop an organization in which the individual can grow and
develop. You will be in this position one day, thus it is important for you to know the meaning of
HRM.
Definition of Human Resource Management
Human resource management is the utilization of individuals to achieve organizational objectives
(Mondy, 2016)
Utilization refers to how we make full of the labour that we have in relation to their skills,
knowledge and abilities.
Why Human Resource Management is important?
1. Accommodating worker’s needs
 Flexible working hours, parental leave, child-care, job sharing etc.

2. Increase complexity of a manager’s job

 HR assist managers in matters concerning recruitment, selection, performance
appraisal, training and etc.

3. Increasing legal complexity

 Labour & employment laws

4. Human Resource Information Systems

 Computerized systems for making HR decisions (specialized expertise)

5. Cost of human resource

 HR activities become increasingly important because of the high cost associated
with employee problems such as absenteeism, turnover, tardiness, sabotage etc.

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Human Resource Management Functions

There are five (5) functions of Human Resource Management which are:

1.2 Staffing

Staffing is the process through which an organization ensures that it always has the proper
number of employees with the appropriate skills in the right job, at the right time, to achieve
organizational objectives.

Involves 4 main activities such as:

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 Job Analysis
 Refers to the study of jobs within an organization. It is the process where the
management systematically studies the task, duties and responsibilities of the jobs and
the kinds of people who should be hired for these jobs.

Job analysis give answers to several questions:

? How much time is taken to complete important task?

? Where is the job to be accomplished?
? How does the worker do the job?
? Why is the job done?
? What qualifications are needed to do the job?
? How can a job be designed so that employee performance can be improved?

Human Resource Planning

 Is a systematic process of matching the internal and external supply of people (HR
Supply) with job openings (HR Demand) anticipated in the organization over a specified
period of time.

Recruitment
 Is the process of attracting individuals on a timely basis, in sufficient numbers with
appropriate qualifications to apply for jobs with an organization.

Selection
 Selection is the process of choosing from a group applicant the individual best suited for
a particular position and the organization.

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1.3 Human Resource Development

Human resource development is a major function consisting not only for training and
development but also of career planning and development activities, organization development
and performance appraisal.

Activities in HRD

Training
 is designed to provide learners with the knowledge and skills needed for their present
jobs.
Development
 involves learning that goes beyond today’s job and has a more long-term focus.
Organization development
 is a planned and systematic attempt to change the organization (corporate culture) to a
more behavioral environment.
Career planning
 is an ongoing process whereby an individual sets career goals and identifies the means
to achieve them.
Career development
 is a formal approach used by the organization to ensure that people with the proper
qualifications and experiences are available when needed.
Performance Management (PM)

 is a goal-oriented process that is directed toward ensuring that organizational processes

are in place to max the productivity of employees, teams and organization.
Performance appraisal
 is a formal system of review and evaluation of individual or team task performance.

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1.4 Compensation and Benefits

The term compensation means the total of all reward provided employees in return for their
services. The rewards may be one or a combination of the following: -
i. Direct financial compensation: pay that a person receives in the form of wages, salaries,
commissions and bonuses.
ii. Indirect financial compensation (Employee benefits): All financial rewards that are not
included in direct compensation, such as paid vacations, sick leave, holidays and medical
insurance.
iii. Nonfinancial compensation: Satisfaction that a person receives from the job itself or from
the psychological or physical environment in which the person works.

1.5 Safety and Health

 Employees who work in a safe environment and enjoy health are more likely to be
productive and yield long term benefits to the organization.
 We all know for a fact that employee who work in a safe environment and enjoy good
health are likely to be more productive.

❑ Safety - Protecting employees from injuries caused by work-related accidents

❑ Health - Refers to employees' freedom from physical or emotional illness.

1.6 Internal Employee Relations

• The relationship between manager and their employees must be handled effectively if
both the employees and organization are to prosper together.
• HR function that involved labor union that represents a firm’s employees while involve
in handling collective bargaining negotiation.
• Collective Bargaining is a process whereby employers and employees negotiate over the
term & conditions of employment.

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1.7 How Human Resource management is being practiced in the real world?

The person or units who perform the HRM tasks have changed dramatically in recent years, and
today there is no typical HR department. Many of these changes are being made so that HR
professionals can accomplish a more strategic role. Many HR department continue to get smaller
because others outside the HR department now perform certain functions. Let us look at the role
of the Human Resource Professional, HR Outsourcing, HR Shared Service Centers, Professional
Employer Organization (Employee Leasing) and Line Managers.

1. Human Resource Professional

 Individual who normally acts in an advisory or staff capacity, working with other
professionals to help them deal with human resource matters.

Table 1.0: Task as Human Resource Professional

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2. HR Outsourcing
 HR Outsourcing (HRO) is the process of hiring external HR professionals to do the HR
work that was previously done internally.

Discrete Multi-process services Total HR outsourcing

services
❑ One element of ❑ Complete outsourcing ❑ Transfer majority of HR
business process of one or more human services to third party
outsourced to a third- resource processes ❑ Example: Whirlpool
party ❑ Example: 401(k) Corporation signed 10-
❑ Example: recruitment retirement plan year deal to outsource
administration HR business processes
for 68,000 employees
to Convergys
Corporation

Table 1.1: Types of HR Outsourcing

3. HR Shared Service Centers

 A center that takes routine, transaction-based activities dispersed throughout the
organization and consolidates them in one place.
 Fewer HR professionals are needed when shared service centers are used, resulting in
significant cost savings.
 The most common HR functions:
a. Pension Administration
b. Payroll
c. Relocation Assistance
d. Recruitment Support
e. Global Training and Development
f. Succession Planning
g. Talent Retention

4. Professional Employer Organization (Employee Leasing)

 A company that leases employees to other businesses.

 Company releases its employees who are then hired by PEO
 PEO pays the employees.
 PEO is the employees’ legal employer and has the rights to hire, fire, discipline, and
reassign an employee.
 Charges a fee of from 1 to 4 percent of the customer’s gross wages.

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  Services:
• Human Resource – consultation and advice
• Workers Compensation – certificate of insurance
• Employee Benefits – multiple health plan options such as dental
• Payroll & Tax Services – payroll processing

5. Line Managers
 Involved with human resources by nature of their jobs.
 Line managers are now performing some duties typically done by HR.

1.8 Human Resource Manager

Human Resource Manager performs all the human resource management function. It is an
individual who normally acts in an advisory or staff capacity, working with other managers to
help them address human resource matters.

The main roles of HR Manager will be as follows:

i. Advisory role
Known as a consultant to the organization especially in advising line managers related to
Human Resource functions such as hiring, transferring, promoting, and terminating.
ii. Service role
Preparing or updating employment records.
iii. Control role
Explaining human resources policies, procedures, laws, and standards to new and existing
employees.

However, all managers from other different also is responsible to give their commitment to the
organization.

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Human Resource Designations

Figure 1.0: Human Resource Designations

Characteristics of an Characteristics of an Characteristics of an

HR Executive HR Generalist HR Specialist
❑ Performs one or more HR ❑ Often an executive. ❑ May be an HR executive,
functions. ❑ Performs tasks in various manager, or non-manager.
❑ A top-level manager. HR related areas. ❑ Typically concerned with
❑ Reports directly to CEO or head ❑ Involved in several, or all, only one of the five
of major division. of the five HRM functions. functional areas.

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 2. HUMAN RESOURCE PLANNING
After completing this chapter, students should be able to

2.1 Introduction to HRP

2.2 HR forecasting techniques
2.3 HRP Process

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2.1 Definition of Human Resource Planning (HRP)

✓ HRP is the systematic process of matching internal and external supply of people with job
openings anticipated in the organization over a specified period of time.

✓ Through workforce planning, organizations attempt to predict future human resource needs.

✓ Having the right numbers of people performing in the right roles will be crucial for companies
to position themselves strongly for when the economy recovers.

✓ Companies that plans not just for tomorrow but plan for the long haul will achieve greater
success.

2.2 HR forecasting techniques

There are two techniques for forecasting which is forecasting human resource requirement @
demand for labor and forecasting human resource availability @ forecasting the supply of labor.
i. Techniques for forecasting human resource requirement @ demand for labor

Several techniques can be used to forecasting labor demand such as:

a) Zero Base Forecasting

Forecasting method that uses the organization’s current level of employment as the
starting point for determining future staffing needs.
b) Bottom Up Approach
Forecasting method in which each successive level in the organization, starting with
the lowest, forecast its requirements, ultimately providing an aggregate forecast of
employees needed. (Manager makes an estimate of personnel needs for the period of
time)
c) Mathematical models
Using sales volume, the relationship between demands for product with the number
of employees needed is a positive one. (Demand for products increase demand for
employees also increase)
d) Stimulations
A technique for experimenting with real world situation through a mathematical model
representing the actual situation.

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ii. Forecasting Human Resource Availability @ forecasting the supply of labor

Several techniques can be used to forecasting labor supply such as:

a) Innovative recruiting

The organization may have to recruit in different geographic areas, explore new methods
and seek different kind of candidates. (Offer flexible work schedule, child care and
educational benefits)

b) Compensation incentive

Firm give reward to attract employees to a firm such as premium pay, four day workweeks,
flexible working hours and etc.

c) Training programs

Special training programs may be needed to prepare previously unemployable individuals

for positions with a firm. The firm spends time and money to provide basic training.

d) Different selection standards

Approach for dealing with shortages of worker is the lowering of employment standards.

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2.2 Human Resource Planning Process
✓ The HR planning process is illustrated in figure 2.1. Note that strategic planning precedes
HR planning.

Figure 2.1: The Human Resource Planning Process

Step 1: Strategic Planning

✓ Process by which top management determines overall organizational purposes

and objectives and how they are achieved. It is an ongoing process that is
constantly changing to find a competitive advantage.

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Step 2: HRP has TWO components: requirement and availability.

Component 1: Forecasting Human Resource Requirement @ Demand for Labor

✓ Requirement forecast is determining the number, skill, and location of

employees the organization will need at future dates in order to meet its
goals.

Component 2: Forecasting Human Resource Availability @ Forecasting the

Supply of Labor

✓ Availability forecast is determination of whether the firm will be able to

secure employees with the necessary skill and from what sources.
✓ Look to both internal sources (current employees) and external sources (the
labor market). The determination of whether the organization will be able
to secure employees with necessary skills and from what sources is an
availability forecast.

Step 3: Comparing Between Labor Requirement with Labor Availability

Process involving comparison between labor requirement with labor availability

and there are three (3) conditions may exist:

• Labor requirement > labor availability - this situation is called labor

shortage
• Labor requirement < labor availability - this situation is called labor surplus
• Labor requirement = labor availability – this situation is called labor
equality
If labor shortage of manpower normally organization will employ a new
worker.
If labor surplus of manpower, organization need to take an action to reduce
existing number of employees.

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Following action should be taken if labor shortage such as:

o Part time: offer part time job especially when the shortage is temporary
employees to do overtime.
o Overtime: encourage current employees to do overtime especially when
the size of shortage is small.
o Subcontracting: employer can subcontracting part of the job to other
company.
o Hire new workers

Following action should be taken if labor surplus such as:

o Restricted hiring: do not replacing employees who leaves.

o Reduced hours of works: cut total hours of worked.
o Early retirement: offer early retirement package to those approaching
retirement age.
o Layoffs: reducing the numbers of workers. (downsizing)

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3. JOB ANALYSIS
After completing this chapter, students should be able to

3.1 Reason for conducting Job Analysis

3.2 Types of Job Analysis
3.3 Job Analysis Methods
3.4 Job Description

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3.0 Overview of Job Analysis
Job Analysis is a Human Resource Management tool, which is the systematic process of
determining the skills, duties and knowledge required for performing jobs in an organization.

From the job analysis, the tasks needed to perform the job are identified. Job analysis is essential
and pervasive human resource technique and be a starting point for other human resource
activities.

Job analysis also provides a summary of a job’s duties and responsibilities, its relationship to
other jobs, the knowledge and skills required and the working conditions under which it is
performed. Job analysis also be conducted after the job has been designed, the workers has been
trained, and the job has been performed.

Job analysis can be performed into three (3) occasions which are:

1. When the organization is founded and a job analysis program is initiated for the first time.
2. When new job is created.
3. When jobs are change significantly as a result of new technologies, methods, procedure,
or systems.

In addition, from job analysis information, both job descriptions and job specifications can be
prepared.

Job description is a document that provides information regarding the essential tasks, duties and
responsibilities of the job. While, job specification is the minimum acceptable qualifications a
person should possess in order to perform particular job.

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3.1 Reason for Conducting Job Analysis

Figure 3.1: Job Analysis A Basic Human Resource Management Tool

As Figure 3.1 shows, the data derived from job analysis in the form of job description and job
specification can have an impact on virtually every aspect of human resource management. So
below are the followings of the reasons in conducting Job analysis.

Staffing
The major use of Job analysis is found in human resource planning. This is because,
under staffing, job analysis provided:
➢ Information about what the job entails and what characteristics are required
to perform the job.
➢ The information in job description and job specification help HR manager to
decide what kind of people to recruit and hire.
➢ Its useful guidelines to recruit and select employees.

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Training and Development
Job description information often proves beneficial in identifying training and
development needs. This is because, under training and development, job analysis
will help in:
➢ If the job requires a particular knowledge, skill or ability but the person filling
the position not possess all the qualification required, so training and
development probably in order.
➢ Training also be directed to assist worker in performing duties specified in their
present job descriptions or at developing skills for broader responsibilities.
Performance Appraisal
The reasons why performance appraisal is used in job analysis are:
➢ Help worker to know what they are supposed to accomplish and good job
description provided.
➢ Help employees to evaluate in term of how well they accomplish the duties
specified in their job descriptions and any specific goals that may have been
established.
Compensation
The reasons why compensation is used in job analysis are:
➢ Help to know the relative value of a particular job to the company before the
dollar value take placed on it, or as an information for estimating the value of
each job.
➢ Compensation such as salary and bonus usually depend on the job required
skills, education level, safety hazard, degree of responsibilities and etc.
Safety and Health
The reasons why safety and health are used in job analysis are:
➢ Valuable in identifying safety and health considerations.
➢ Employer are required to inform workers when a job is hazardous, because
the job description and job specification should reflect this condition.
➢ The information of job hazards will help workers to perform their job safely.

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 Employee and Labor Relations
The reasons why employee and labor relations are used in job analysis are:
➢ Important when employees are considered for promotion, transfer, or
demotion so the job description provides a standard for evaluation and
comparison of talent.
➢ Information through job analysis also lead to more objective human resource
decisions.

3.2 Types of Data Collected Trough Job Analysis

i. Work Activities - Work activities and processes; activity records (in film form, for
example); procedures used; personal responsibility.
ii. Worker-oriented activities - Human behaviors, such as physical actions and
communicating on job; elemental motions for methods analysis; personal job demands,
such as energy expenditure
iii. Machines, tools, equipment, and work aids used
iv. Job-related tangibles and intangibles - Knowledge dealt with or applied (as in
accounting); materials processed; products made or services performed
v. Work performance - Error analysis; work standards; work measurements, such as time
taken for a task
vi. Job context - Work schedule; financial and nonfinancial incentives; physical working
conditions; organizational and social contexts
vii. Personal requirements for job - Personal attributes such as personality and interests;
education and training required; work experience

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3.3 Job Analysis Methods

Job analysis has been conducted in a different way, because organizational needs and resources
for conducting job analysis is different. The selection methods should be based on the purpose
for which the information is to be used. Below are the several methods of job analysis:
• Questionnaires
Job analyst administer a structured questionnaire to employees, who then identify the
task they perform. This method also useful because it’s typically quick and economical to
use.
• Observation
Job analyst watches the worker perform job tasks and records his or her observations.
This method used primarily to gather information on jobs emphasizing manuals skills such
as those of a machine operator. It’s also help Job analyst identify the interrelationships
between physical and mental tasks.
• Interview
Job analyst gained information through interviewing both the employee and the
supervisor. Usually, job analyst interviews the employee first, by helping workers in
describe the duties performed. Then, job analyst contact supervisor for any additional
information, to check the accuracy of the information obtained from the employee.
• Employee recording
Job analyst get the information through reading diary or log book that contain employee
daily work activities. By this method, the problem of employee exaggerating job
importance may have to be overcome.
• Combination of methods
Usually job analyst does not use one job analysis methods. This is because the
combination methods are often more appropriate. Job analyst use this type of methods
because to know the accuracy of the job descriptions or job specifications.

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3.4 Job Description
Information obtained through job analysis is crucial to development of job descriptions. It is
vitally important that job description is both relevant and accurate. Job descriptions should
provide statements of what employees are expected to do on the job, how they do it and the
conditions under which the duties are performed. Having accurate job descriptions is the
starting point for most HR tasks. The contents of the job descriptions very important with the
purpose for which it will be used.
Below are the items/content/element that need included in job descriptions:
• Job Identification – Job title, department, reporting relationship, and job number or code
• Job Analysis Date – Aids in identifying job changes that would make description obsolete
• Job Summary – Concise overview of job. It is generally a short paragraph that states job
content.
• Duties Performed – Major duties of the job to be performed.

3.5 Job Specification

Job Specification is a minimum qualifications person should possess to perform particular job.
Which is should reflect minimum, not ideal qualifications for particular job and job specifications
are often included as major section of job descriptions
Below are the items/content/element that need included in job specification:
• Educational requirements - Required level of education for each post that an incumbent
is supposed to hold is listed in job specification statement. It also helps to determine the
level or category of job in terms of rank.
• Experience - Under it, the required level of experience in doing a particular task is
explained, if necessary. An experienced employee will be preferable in comparison to the
fresh candidate.
• Personality traits – The way in which a person behaves in a particular situation, handles
complex problems, generic behavior etc. are all covered in the characteristics of a job
description. It also covers the emotional intelligence of a person i.e. how strong or weak
a person is emotionally.

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• Physical abilities - refer to how much walking, standing, reaching, lifting or talking must
be done on the job. For example, the ability to lift 25/50/80 pounds regularly.

Figure 3.2: Example of Job Description and Job Specification

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4. RECRUITMENT
After completing this chapter, students should be able to

4.1 Introduction to Recruitment

4.2 Alternatives to Recruitment
4.3 Environment of Recruitment
4.4 The Recruitment Process
4.5 Recruitment Sources and Methods

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4.1 Introduction to Recruitment

Recruitment is the process of attracting individuals on a timely basis, in sufficient numbers and
with appropriate qualifications to apply for jobs with an organization. (R. Wayne Mondy, 2014)

4.2 Alternatives to Recruitment

Each firm should consider alternatives carefully before engaging in recruitment. In addition to
the alternatives discussed below, contingent workers provide another significant alternative to
recruiting.

Professional
Contingent
Outsourcing Offshoring employer Overtime
workers
organizations

• Outsourcing
Outsourcing is the process of hiring an external provider to do the work that was
previously done internally. Outsourcing has become a widespread and increasingly
popular alternative involving virtually every business area and has been a common
practice in industry for decades.

• Offshoring
Offshoring is the migration of all or a significant part of the development, maintenance
and delivery of service to a vendor located in another country. Basically, the reason given
for offshoring is to reduce costs but now increased quality service is also being given as
reasons for offshoring.

• Contingent workers
Contingent workers are also known as part-timers, temporaries and independent
contractor. These workers are hired on a temporary basis especially when company is
experiencing peak sales for instance.

• Professional employer organizations

A firm terminates some or most of its employees; a leasing company then hires them.
Usually at the same salary and lease they back to the former employer, who becomes the
client.

• Overtime
The most commonly used method by offering current workers to do extra hours of work.
Overtime may help both employer and employee. The employer benefits by avoiding
recruitment, selection and training costs. The employee gain from increased income
during the overtime period.

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4.3 Environment of Recruitment

4.3.1 Labor market conditions

▪ An organization’s recruitment process is often simplified when the unemployment
rate in an organization’s labor market is high. The number of unsolicited applicants
is usually greater and the increased size of the labor pool provides a better
opportunity for attracting qualified applicants. When unemployment rate in an
organization’s labor market is high/low the recruitment process may be simplified
/ difficult.

4.3.2 Active or passive job seekers

▪ Active job seekers are individuals who are committed to finding another job
whether presently employed or not. These individuals are usually easier to identify
because their names have been placed in the job market.
▪ Passive job seekers are potential job candidates who are typically employed,
satisfied with their employer and content in their current role. This kind of
individuals wants to move slower and will ask a lot of questions before making a
job change.

4.3.3 Legal considerations

▪ Legal matters also play a significant role in recruitment practices in the United
States. A poorly conceived recruiting process can do much to create problems in
the selection process. Therefore, it is essential for organizations to emphasize
nondiscriminatory practices.

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4.4 The Recruitment Process

When human resource planning indicates a need for employees, the firm may evaluate
alternatives to hiring. If these alternatives prove to be inappropriate, the recruitment process
starts. Below diagram will show the flow for recruitment process for further understanding.

Figure 4.0: Recruitment Process

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4.5 Recruitment Sources and Methods

What are Recruitment sources?

Places where qualified individuals are found.

What are Recruitment methods?

Means by which potential employees can be attracted to firm.

4.5.1 Internal recruitment methods

Internal sources are capable of filling open positions and can be done through several ways
as below:

❖ Job posting and bidding

✓ Job posting is a procedure for informing employees regarding job
opening exist.
✓ Job bidding is a procedure that permits employees who believe that
they possess the required qualifications to apply for a posted job.
✓ Notice of jobs opening in the firm are posted through: -
▪ Email
▪ Employee publications
▪ Special handouts
▪ Bulletin board

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❖ Employee referrals
✓ Employee referrals involve an employee of the company recommending a friend or
associate as a possible member of the company.
✓ In many organizations, the use of employee referral produces the most and best
qualified applicants.
✓ Is a recommendation made by an employee regarding a potential job applicant through
a word of mouth.
✓ It means using personal contact to locate job opportunities.

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4.5.2 External recruitment methods
There are few methods available to conduct external recruitment such as:

i. Media Advertising
✓ Advertisement is most common methods of attracting applicants in through
advertisements. Advertising communicates the firm’s employment needs to the
public through media such as newspapers, trade journals, radio, television and
billboards.

ii. Private Employment Agencies

✓ It’s often called ‘headhunters’ which known for recruiting employees and offer an
important service in bringing qualified applicants and open positions together.
✓ Best for recruiting white-collar employees.
✓ Used for virtually every kind of position.
✓ Not paid until a person is placed.

iii. Public Employment Agencies

✓ Public employment agencies typically use computerized job-matching systems to
aid in the recruitment process, and they provide their services without charge to
either the employer or the prospective employee.
✓ Increasingly involved in matching people with technical, professional and
managerial positions.

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 iv. Job Fairs
✓ Is a recruiting method engaged in by a single employer or group of employers to
attract a large number of applicants to one location for interviews.
✓ Opportunity to meet large number of candidates in short time.

v. Internships
✓ Is a special form of recruitment that involves placing a student in a temporary job
with no obligation either by the company to hire the student permanently or by
the student to accept a permanent position with the firm following graduation.

4.5.3 External recruitment sources

The candidates for external recruitment can easily be found outside organization. External
recruitment is needed to fill entry level jobs, acquire skills not possessed by current employees
and obtain employees with different backgrounds to provide a diversity of ideas.

i. High Schools and Vocational Schools

✓ Clerical and other entry-level employees
✓ Some companies work with schools
✓ Companies may loan employees to schools

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 ii. Community Colleges
✓ Sensitive to specific employment needs in local labor market
✓ Graduate highly sought-after students with marketable skills

iii. Colleges and Universities

✓ Professional, technical, and management employees
✓ Placement directors, faculty, and administrators

iv. Competitors in the Labor Market

✓ When recent experience is needed, competitors and other firms in same industry or
geographic area are important sources
✓ Smaller firms look for employees trained by larger organizations
✓ Poaching - Process of actively recruiting employees from competitors

v. Former Employees
✓ In past, punished with no-return policies
✓ Smart employers try to get their best ex-employees to come back.
✓ Also called boomeranging

vi. Unemployed
✓ Qualified applicants become unemployed every day
✓ Companies go out of business
✓ Cut back operations
✓ Merge with other firms
✓ Employees are fired

vii. Military Personnel

✓ Proven work history - flexible, motivated, drug free
✓ Goal and team orientation

viii. Self-Employed Workers

✓ Any Technical, Professional, Administrative, Entrepreneurial

ix. Ex-Offenders
✓ Ex-offenders are a viable labor pool for restaurants, although at times controversial
✓ Often work third shift, where they don’t come in contact with customers
✓ Some organizations actively support hiring of ex-cons (Philadelphia)

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5. SELECTION
After completing this chapter, students should be able to

5.1 Introduction to Selection

5.2 The Selection Process

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5.1 INTRODUCTION TO SELECTION

Selection is the process of choosing the individual best suited

for a particular position and the organization. (Mondy).

Selection goal is to properly match people with jobs and

organization because selecting wrong person for any job can be
costly.

If individuals are over- or under-qualified, or do not fit the job or the organization’s culture, they
will be ineffective and probably leave the firm, voluntarily or otherwise. There are many ways to
improve productivity, but none is more powerful than making the right hiring decision.

5.2 SELECTION PROCESS

In previous topic we have learned about recruitment is the process of attracting enough
individuals with appropriate qualifications to apply for jobs with an organization on a timely basis.
Those candidates who are interested in applying job vacancies are called recruited candidate.
Companies make selection decisions to determine whether individuals who were identified
through the selection process will be offered employment.

Figure 5.1 illustrates a generalized selection process, but it may vary from company to company
and also according to the type of job being filled.

***Notice that an applicant may be rejected at any time if they failed at any stage of the
selection process.

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STEP 1: PRELIMINARY SCREENING

❑ The selection process often begins with preliminary screening.

❑ The basic purpose of preliminary screening is to eliminate those who obviously do not
meet the position’s requirements.
❑ Benefits: applicant may be qualified for another position with the firm.

FIGURE 5.1: SELECTION PROCESS

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STEP 2: REVIEW OF APPLICATIONS AND RESUMES

❑ The specific information requested on an application form may vary from firm to firm.
❑ An application typically includes name, address, military service, education, and work
history.
❑ Managers compare the information contained in a completed application to the job
description to determine whether a potential match exists between the firm’s
requirements and the applicant’s qualifications.
❑ Several preprinted statements are usually included on the application form.
i. First, by signing the form, the applicant certifies that all the information provided
on the form is accurate and true. Employers will likely reject candidates who make
false claims.
ii. Second, when not prohibited by state law, the form should also indicate that the
position is employment at will and that either the employer or the employee can
terminate employment at any time for any reason.
iii. Finally, the form should contain a statement whereby the candidate gives
permission to have his or her background and references checked.

A resume is a goal-directed summary of the applicant’s experience, education, and training that
he or she has developed for use in a job hunting. Professional and managerial applicants often
begin the selection process by submitting a résumé that clearly shows they have the skills and
competencies necessary for success in the position.

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Figure 5.2: Example Application of Employment

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Figure 5.3: Example of Resume

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STEP 3: SELECTION TESTS

❑ Many firms have added selection tests to their hiring process.

❑ Selection tests can be a reliable and accurate way to predict on-the-job performance.
❑ Organizations use tests to identify attitudes and job-related skills that interviews cannot
reliably recognize.
❑ These tests rate factors such as aptitude, personality, abilities, and motivation of potential
employees, allowing managers to choose candidates according to how they will fit into
the open positions and corporate culture.

❑ Characteristics Of Properly Designed Selection Tests

i. Standardization
Uniformity of the procedures and conditions related to administering tests.
ii. Objectivity
Everyone scoring a test obtains the same results.
iii. Norm
Frame of reference for comparing an applicant’s performance with that of others.
iv. Reliability
Extent to which a selection test provides consistent results.
v. Validity
Extent to which a test measures what it claims to measure.

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❑ Three approaches to validating selection tests:

1. Criterion-related validity compares the scores on the selection test to some aspect of
job performance by a representative sample of others who have taken the test.
Performance measures might include the quantity and quality of work. A close
relationship between the score on the test and job performance suggests that the test
is valid.
Forms of Criterion-related validity
i. Concurrent validity - is determined when test scores and criterion data are
obtained at the same time; for instance, administering the test to all currently
employed telemarketers and comparing the results with company records
about each employee’s job performance. If the test is able to identify
productive and less-productive workers, one could say that it is valid. A
potential problem in using this validation procedure results from changes that
may have occurred within the work group, such as less-productive workers
being fired or more-productive employees being promoted out of the group.
ii. Predictive validity - involves administering a test and later obtaining the
criterion information. For instance, all applicants take the test, but the firm
uses other selection criteria, not the test results, to make the selection
decision. After observing employee performance over time, the company
analyzes test results to determine whether they differentiate successful and
less-successful employees. Predictive validity is a technically sound
procedure, but is often not feasible because of the time and cost involved.

2. Content validity is measuring whether a person can perform certain tasks required by
the job or has relevant job knowledge. An example of the use of content validity is
giving a word processing test to an applicant whose primary job would be inputting
text on the computer.

3. Construct validity has to do with whether a test measures qualities or traits that job
analysis finds to be important in performing a job. For instance, a job may require a
high degree of creativity or reasoning ability. However, it should be stressed that
construct validity by itself is not a primary method for validating selection tests.

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❑ Types of Employment Tests

Employment tests are also designed to measure individual differences related to job
performance. These differences can relate to cognitive and physical abilities, as well as to job
knowledge and personality.

i. Cognitive aptitude tests are forms of IQ tests that measure general reasoning ability,
memory, vocabulary, verbal fluency, and math skills. These tests are becoming more
widespread as the content of jobs continues to become broader and more fluid, and
employees must be able to adapt quickly to job and technology changes.
ii. Psychomotor abilities tests measure strength, coordination, and dexterity required
to perform complex, physical jobs. Example: In a manufacturing facility, a candidate is
placed in a high-speed assembly line. They are asked to perform a task for a certain
time period. This gives the employer an idea of the efficiency and fastness of the
employee
iii. Job-knowledge tests measure a candidate’s general knowledge of the duties of the
job for which he or she is applying. While such tests are commercially available,
individual firms may design them based on data derived from a specific job analysis.
Example: Lawyers must have knowledge of law and government, which is defined as
“Knowledge of laws, legal codes, court procedures, precedents, government
regulations, executive orders, agency rules, and the democratic political process.”
iv. Work-sample tests require an applicant to perform a task representative of the job.
Example: involve installing a telephone line, creating a document in Word, or tuning
an engine.
v. Personality tests Test measure traits and to classify candidate’s personality.
Personality refers to individual differences in characteristic patterns of thinking,
feeling and behaving. Personality tests do not measure ability or specific problem-
solving skills. Most large companies now use psychometric testing to identify future
managers. Generally, use test as stated below to assessed:

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Table 5.1: Example Test Use by Large Company to Measure Personality Test

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STEP 4: EMPLOYMENT INTERVIEWS

The employment interview is a goal – oriented conversation in which the interviewer and
applicant exchange information. Traditionally, interviews have not been valid predictors of
success on the job. Nevertheless, interviews continue to be the primary method companies use
to evaluate applicants. The employment interview is especially important because the applicants
who reach this stage are the survivors. They have endured preliminary screening, had their
applications reviewed and scored satisfactorily on selection test. At this point, the candidate
appears to be qualified, at least on paper.

General Types of Interviews

Types of interviews are often broadly classified as

i. Unstructured Interview
❑ An unstructured interview is one in which the interviewer asks probing, open-ended
questions.
❑ It is comprehensive, and the interviewer encourages the applicant to do much of the
talking.
❑ The unstructured interview is often more time consuming than the structured
interview and reveals different information about candidates.
❑ One common question used is “Tell me about yourself.”
❑ This can lead to potential legal problems if the candidate provides a lot of personal
information not related to performance of the job.
❑ Unsuccessful applicants may later claim in court that the reason for their failure to get
the job was the employer’s use of this information.
❑ Questions such as “What professional accomplishments are you most proud of and
why?” “What is your greatest professional strength, and how have you used it to
overcome a challenge in your career?” and “What specifically attracted you to our
organization?”

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ii. Structured Interview
❑ In a structured interview, the interviewer asks each applicant the same series of job-
related questions.
❑ Although interviews have historically been poor predictors of job success, use of
structured interviews increases reliability and accuracy by reducing the subjectivity and
inconsistency of unstructured interviews.
❑ Typical questions might focus on job-related knowledge or on the applicant’s willingness
and ability to perform the requirements of the job.
❑ For example, the interviewer may ask whether the applicant is willing to perform
repetitive work or move to another city.

iii. Behavioral Interview

❑ The behavioral interview is a structured interview in which applicants are asked to relate
actual incidents from their past relevant to the target job.
❑ Research indicates that traditional interviewing is only 7 percent accurate in predicting
on-the-job performance, whereas behavioral interviews are 54 percent accurate.
❑ Behavioral interviewers look for three main things: a description of a challenging
situation, what the candidate did about it, and measurable results.
❑ All questions are based on relevant job-related behaviors. For example, when probing for
technical knowledge, the candidate might be asked: “Describe a situation in which your
expertise made a significant difference.”
❑ Behavioral interviewers ask all candidates the same open-ended questions, then score
responses on a scale. This type of interviewing is based on the principle that what you did
previously is a good predictor of what you will do in the future.

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 iv. Situational Interview
❑ Situational interview gives interviewers better insight into how candidates would perform
in the work environment by creating hypothetical situations candidate would be likely to
encounter on the job and asking them how they would handle them.
❑ For example, the question might be asked; “You completely disagree with the way your
boss has told you to handle a project. What would you do?”

Methods of Interviewing

1) One on one interview: this is a typical employment interview where the applicant meets
one on one with the interviewer.

2) Group interview: several applicants interact with one or more representative @

interviewer.

3) Stress interview: a form of interview where interviewer asks questions intentionally to

see how candidate react under stress.

4) Panel or board interview: A type of interview when a few interviewers interview the
candidate.

5) Multiple Interviews: applicants are interviewed by peers, subordinates, and potential

superiors.

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STEP 5: PRE-EMPLOYMENT SCREENING: BACKGROUND AND REFERENCE CHECKS

i. Background Checks

Most employers check and verify the job applicant’s background information and references.
Commonly verified data include legal eligibility for employment (in compliance with immigration
laws), dates of prior employment, military service (including discharge status), education,
identification (including date of birth and address to confirm identity), county criminal records
(current residence, last residence), motor vehicle record, credit, licensing verification, Social
Security number, and reference check.

➢ Why?
▪ To verify factual information provided by applicants
▪ To uncover damaging information

Figure 5.4: Source of Information

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 ii. Reference Checks

Applicants are usually required to submit the names of several people who know them personally
and can provide additional information about them. Firms conduct these reference checks to
gather additional insight into the information provided by the applicant and to verify its accuracy.
A possible flaw with reference checking is that almost everyone can name three or four
individuals willing to make favorable statements about them.

Limitations on Background Investigations and Reference Checks

❑ In practice (as most people instinctively know), giving someone a bad reference can drag
you into a legal mess.
❑ A communication is defamatory if it is false and tends to harm the reputation of another
by lowering the person in the estimation of the community or by deterring other persons
from associating or dealing with him or her.
❑ Employees can sue employers for disclosing true but embarrassing private facts about the
employee.
❑ In practice, many firms have a policy of not providing any information about former
employees except for their dates of employment, last salary, and position titles.
❑ To avoid potential invasion of privacy issues, employers should obtain the applicant’s
written permission before checking into the applicant’s background information, even if
that information is publicly available (e.g., published on social networking sites).

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 Figure 5.5: Limitations on Background Investigations and Reference Checks

STEP 6: SELECTION DECISION

The person who makes the selection decision is usually the hiring manager. This final choice is
made from among those candidates still in the running after reference checks, selection tests,
background investigations, and interview information has been evaluated. Usually, the person
selected has qualifications that most closely conform to the requirements of open position in the
organization.

Medical Examination

❑ To determine whether an applicant is physically capable of performing the work.

❑ These examinations can be used to reject applicants only when the results show that job
performance would be adversely affected.

❑ Some companies may also require drug testing to determine whether applicants are using
chemical substances or alcohol.

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STEP 7: OFFER OF EMPLOYMENT

Notification of Candidates

❑ Management should notify both successful and unsuccessful candidates of selection

decisions as soon as possible.

❑ This action is a matter of courtesy and good public relations.

❑ Any delay may also result in the firm losing a prime candidate because top prospects
often have other employment options.

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6. TRAINING AND DEVELOPMENT
After completing this chapter, students should be able to

6.1 Introduction to Training and Development

6.2 Factors influencing Training and Development
6.3 Training and Development Process
6.4 Determining Training and Development Needs
6.5 Training and Development Methods
6.6 Training and Development Delivery Systems

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6.1 Introduction to Training and Development
 Heart of a continuous effort designed to improve employee competency and
organizational performance.
 Focus on the individual employee or groups of employees and time frame, short and long
term.

Definition:

• Training
o Are activities designed to provide learners with the knowledge and skill needed for
their present job.
o For example, showing a worker how to operate a lathe machine.

• Development
o Learning that goes beyond today’s job and has a more long-term focus.
o It prepares employees to keep pace with the organization as it changes and grows.

Training Development

• Provide knowledge and skills needed • Provide knowledge and skills needed
for current job for future job
• Short term focus • Long term focus
• The scope of training is by individual • The scope of training is by
workgroup/team
• As improvement opportunities
Table 6.0: Differences between Training and Development

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6.2 Factors influencing Training and Development
1) Top management support
• For T&D programs to be successful, top management support is required; without
it, a T&D program will not succeed.
• The most effective way to achieve success is for executives to provide the needed
resources to support the T&D effort.

2) Shortage of skilled workers

• Part of the problem in finding qualified people for manufacturing jobs is that there
is a generation of young people for which manufacturing has not been an
attractive job prospect because they have seen many jobs outsourced and they
question the long-term future in these jobs

3) Technological advances
• Change is occurring at an amazing speed, with knowledge doubling every year.

• As technology becomes capable of handling more and more tasks, employers

combine jobs and confer broader responsibilities on remaining workers. For
example, the technology of advanced automated manufacturing, such as that in
the automobile industry, is today doing the jobs of other employees, including the
laborer, the materials handler, the operator-assembler, and the maintenance
person. In fact, it is now commonplace for a single employee to perform all of
those tasks in a position called “manufacturing technician.”

4) Global complexity
• The world is simply getting more complex, and this has had an impact on how an
organization operates.
• To sustain competitive advantage companies must provide their employees with
leading-edge skills, and encourage employees to apply their skills proficiently.
5) Learning style
• Learning style supports the concept that people have a natural preference, based
on their dominant sense, in how they choose to learn and process information. It
may be visual, hearing, or touching.

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6.3 Training and Development Process

Figure 6.0: Training and Development Process

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Step 1: Determine specific T&D needs
 The first step in the T&D process is to determine specific T&D needs.
 Helps companies determine whether training is necessary.
 It may be determined by conducting analyses on three levels, which include organization
analysis, task analysis and person analysis.

Step 2: Establish specific T&D objectives

 T&D must have clear and concise objectives and be developed to achieve organizational
goals. Without them, designing meaningful T&D programs would not be possible.

Step 3: Select T&D methods

 Management can determine the appropriate methods and the delivery system to be used
such as classroom method, e-learning, case study, behavior modelling, role playing,
training games, in basket training, on the job training, apprenticeship training and team
training.

Step 4: Implement T&D programs

 Participants must believe that the program has value and will help them achieve their
personal and professional goals.
 It is important to maintain training records, including how well employees perform during
training and later on the job.

Step 5: Evaluate T&D program

 There are four criteria was developed for evaluating training and development.
i. Reactions Training
❑ Evaluation criterion focused on the extent to which trainees liked the training
program related to its usefulness, and quality of conduct.
ii. Learning
❑ The extent to which an employee understands and retains principles, facts, and
techniques.
iii. Behavior Change
❑ Change in job-related behaviors or performance that can be attributed to training.
iv. Organizational Results
❑ Typically, training outcomes such as enhanced productivity, lower costs, and
higher product or service quality.

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6.4 Determining Training and Development Needs
• A Training and Development Needs assessment help companies determine whether
training is necessary or not. Usually organization conduct 3 analysis which is:
ORGANIZATIONAL
TASK ANALYSIS PERSON ANALYSIS
ANALYSIS
Definition Training needs assessment A training needs A training needs
activity, which focuses on assessment activity, assessment activity that
the firm’s strategic mission, which focuses on the focuses on finding
goals, and corporate plans tasks required to answers to questions
are studied, along with the achieve the firm’s such as Who needs to be
results of strategic HR purposes. trained. What kind of
planning. knowledge, skills, and
abilities (KSAs) do
employees need?
Example T-Mobile’s CEO John Legere Keep records of Oral Comprehension—
recognized the need to customer interactions The ability to listen to and
improve customer service or transactions, understand information
quality to better address recording details of and ideas presented
customer needs and to have inquiries, complaints, through spoken words
consumers see the company or comments, as well and sentences
differently. as actions taken

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6.5 Training and Development Methods
• When a person is working in a garden, some tools are more helpful in performing certain
tasks than others. The same logic applies when considering T&D methods, and these
methods are changing continuously and improving.
• Regardless of whether programs are in-house or outsourced, firms use a number of
methods for imparting knowledge and skills to the workforce and usually more than one
method.
• T&D methods are discussing below:
1. Classroom method
• In which the instructor physically stands in front of students, continues to be
effective for many types of training.
2. E-learning
• The T&D method for online instruction using technology-based methods such
as the DVDs, company intranets, and the Internet.
• Nike designed an online training program that the company could offer to
employees in its own stores as well as at other retailers that sell Nike products.
3. Case study
• T&D method in which trainees are expected to study the information provided
in the case and make decisions based on it.
• The goal of the case study method is to provide trainees with the opportunity
to sharpen critical thinking skills.
• Occurs with an instructor who serves as a facilitator. It is also quite common
for trainees to analyze the case in teams because problem solving typically
involves consultation with others.

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4. Behavior Modelling
• T&D method that permits a person to learn by copying or replicating behaviors
of others to show managers how to handle various situations.
• Used to train supervisors in such tasks as conducting performance reviews,
correcting unacceptable performance, delegating work, improving safety
habits, handling discrimination complaints, overcoming resistance to change,
orienting new employees, and mediating individuals or groups in conflict.
5. Role playing
• T&D method in which participants are required to respond to specific
problems they may encounter in their jobs by acting out real-world situations.
• Used to teach such skills as administering disciplinary action, interviewing,
grievance handling, conducting performance appraisal reviews, team problem
solving, effective communication, and leadership-style analysis.
6. Training games
• Games can be quite useful learning tools to aid in the group dynamic process.
• Games are a cost-effective means to encourage learner involvement and
stimulate interest in the topic, thereby enhancing employees’ knowledge and
performance.
• For example, U.S. Marine Corps uses a game-based training program called
Mission Impact, which places learners in a simulated battalion to improve their
environmental performance.
7. In basket training
• T&D method in which the participant is asked to establish priorities for and
then handle a number of business papers, e-mail messages, memoranda,
reports, and telephone messages that would typically cross a manager’s desk.
• This form of training has been quite beneficial to help predict performance
success in management jobs.

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8. On the job training
• An informal T&D method that permits an employee to learn job tasks by
actually performing them.
• The key to this training is to transfer knowledge from a highly skilled and
experienced worker to a new employee, while maintaining the productivity of
both workers.
9. Apprenticeship training
• Training method that combines classroom instruction with on-the job training.
• Such training is common with craft jobs, such as those of plumber, carpenter,
machinist, welder, fabricator, laser operator, electrician, and press brake
operator.
• As baby boomers continue to leave the workforce, they must be replaced by
competent operators, and apprenticeship programs provide an effective way
of accomplishing this.
• Many organizations are partnering with high schools, vocational schools, and
universities as they search for new skilled workers.
10. Team training
• Training focused on teaching knowledge and skills to individuals who are
expected to work collectively toward meeting a common objective.
• For example, many automobile manufacturers organize teams to focus on the
completion of car assembly. One such team installs the interior components,
including dashboard, seats, carpeting, headliner, and trim.

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6.6 Training and Development Delivery Systems

i. Corporate universities
❑ T&D delivery system provided under the umbrella of the organization. Focus on
creating organizational change that involves areas such as company training,
employee development and adult learning.
ii. Colleges and Universities
❑ Have been the primary delivery system for training professional, technical and
management employees. Many public and private colleges and universities are
taking similar approaches to training and education as have the corporate
universities.
iii. Community colleges
❑ Are publicly funded higher education establishment that deliver vocational
training and associate degree programs. For example, a course on electrical wiring
principles and practices would be found in the curriculum for apprentices
preparing to become master electricians.
iv. Online higher education
❑ Educational opportunities including degree and training programs that are
delivered, either entirely or partially via the internet. One reason for the growth
of online higher education is that allows employees to attend class at lunchtime,
during the day or in the evening. It also saves employees time because it reduces
their need to commute to school.
v. Vestibule system
❑ T&D delivery system that takes place away from the production area on equipment
that closely resembles equipment actually used on the job. For example, a group
of lathes may be located in a training center where the trainees receive instruction
in their use.
vi. Video media
❑ The use of video media such as DVDs continues to be a popular T&D delivery
system. These media are especially appealing to small businesses that cannot
afford more expensive training methods and are often incorporated in e-learning
and instructor-led instruction.

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vii. Simulators
❑ T&D delivery system comprised of devices or programs that replicate actual job
demands. The devices range from simple paper mock-ups of mechanical devices
to computerized simulations of total environments. T&D specialists may use
simulated crane operator, sales counters, automobiles and airplanes. A prime
example is the use of simulators to train pilots. Simulated crashed do not cost lives
or deplete the firms fleet of jets.
viii. Social networking
❑ Today employees interact, learn and work in much different ways and styles than
in the not-so-distant past. Increasingly mobile and geographically dispersed
workforces are becoming the norm.

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7. PERFORMANCE APPRAISAL
After completing this chapter, students should be able to

7.1 Introduction to Performance Appraisal

7.2 Uses of Performance Appraisal
7.3 Performance Appraisal Environment Factors
7.4 The Performance Appraisal Process
7.5 Establish Performance Criteria
7.6 The Appraisal Period
7.7 Performance Appraisal Methods
7.8 Characteristics of Effective Appraisal System
7.9 Responsibility for Appraisal
7.10 Problem in Performance Appraisal

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7.1 Introduction to Performance Appraisal

“Performance Appraisal (PA) is a formal system of review and evaluation of individual or

team task performance.”

Performance Appraisal involves:

(1) Setting work standards

(2) Assessing the employee’s actual performance relative to

the standards

(3) Providing feedback to the employee with the aim of

motivating their performance

PA is critical to the success of Performance Management (PM). Although PA is one

component of PM, it is a vital one, in that it directly reflects the organization’s strategic
plan. Although evaluation of team performance is critical when teams exist in an
organization, the focus of PA in most organizations remains on the individual employee.
Regardless of the emphasis, an effective appraisal system evaluates accomplishments and
initiates plans for development, goals, and objectives.

Most managers rely on PA techniques as a basis to provide feedback, encourage

performance improvement, make valid decisions, justify terminations, identify training and
development needs, and defend personnel decisions such as why an employee received a
higher pay increase than another employee. Therefore, abandoning the only program with
performance in its name and employees as its focus would seem to be an ill-advised over-
reaction. Additionally, managers must be concerned about legal issues. Developing an
effective PA system has been and will continue to be a high priority for management.

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7.1.1 Purpose of Performance Appraisal

i. Developmental
✓ Provide performance feedback
✓ Identify individual strengths & weakness
✓ Recognize individual performance
✓ Assist in goal identification
✓ Identify individual training needs.
✓ Determine organization training needs.

ii. Administrative
✓ Determine promotion candidates
✓ Determine transfers & assignment
✓ Identify poor performance
✓ Decide on layoff
✓ Evaluate training programs
✓ Make reward/compensation decision.

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7.2 Uses of Performance Appraisal

For many organizations, the primary goal of an appraisal system is to improve individual and
organizational performance. There may be other goals, however. A potential problem with PA,
and a possible cause of much dissatisfaction, is expecting too much from one appraisal plan.

For example, a plan that is effective for developing employees may not be the best for
determining pay increases. Yet a properly designed system can help achieve organizational
objectives and enhance employee performance. In fact, PA data are potentially valuable for
virtually every human resource functional area.

i. Human Resource Planning

In assessing an organization’s HR, data must be available to identify those who have the
potential to be promoted or for any area of internal employee relations. Through PA it may be
discovered that there is an insufficient number of workers who are prepared to enter
management. Plans can then be made for greater emphasis on management development.
Succession planning is a key concern for all organizations. A well-designed appraisal system
provides a profile of the organization’s human resource strengths and weaknesses to support
this effort.
ii. Training and Development
PA should point out an employee’s specific needs for training and development. For example, if
an organization finds that a number of firs-line supervisors are having difficulty in administering
disciplinary action, training sessions addressing this problem may be appropriate. By identifying
deficiencies that adversely affect performance, training and development (T&D) programs can
be developed that permit individuals to build on their strengths and minimize their deficiencies.

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iii. Career Planning and Development
Career planning is an ongoing process whereby an individual sets career goals and identifies the
mean to achieve them. On the other hand, career development is a formal approach used by
the organization to ensure that people with proper qualifications and experiences are available
when needed. PA data is essential in assessing an employee’s strengths and weaknesses and in
determining the person’s potential. Managers may use such information to counsel
subordinates and assist them in developing and implementing their career plans.

iv. Compensation Programs

PA results provide a basis for rational decisions regarding pay adjustments. Most managers
believe that you should reward outstanding job performance tangibly with pay increases. They
believe that the behaviors you reward are the behaviors you get. Rewarding behaviors necessary
for accomplishing organizational objectives is at the heart of a PM system. To encourage good
performance, an organization should design and implement a reliable PA system and then
reward the most productive employees and teams accordingly.

v. Internal Employee Relations

PA data are also used for decisions in several areas of internal employee relations, including
promotion, demotion, termination, layoff, and transfer. For example, an employee’s
performance in one job may be useful in determining his or her ability to perform another job
on the same level, as is required in the consideration of transfer. Certainly, PA data is vital when
promotions are considered or layoffs must be made. However, when the performance level is
unacceptable, demotion or even termination may be appropriate.
vi. Assessment of Employee Potential
Some organizations attempt to assess an employee’s potential as they appraise his or her job
performance. Although past behaviors may be a good predictor of future behaviors in some
jobs, an employee’s past performance may not accurately indicate future performance in other
jobs. Overemphasizing technical skills and ignoring other equally important skills is a common
error in promoting employees into management jobs.

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7.3 Performance Appraisal Environment Factors
There are external and internal environmental factors that can influence the appraisal process.
i. External Factors.
Legislation is an example of external factor which requires that appraisal systems
be nondiscriminatory. In the case of Mistretta vs Sandia Corporation, a federal district
court judge ruled against the company which there is sufficient circumstantial evidence
to indicate that age bias and age-based policies based appear throughout the
performance rating process to detriment of protected age group. Thus, organizations
should avoid using any appraisal method that results in a disproportionately negative
impact on a protected group.
The labor union also is another external factor that might affect firm’s appraisal
process. Union have traditionally stressed seniority as the basis for promotions and pay
increase.

ii. Internal Factors.

Firm’s corporate culture also can be assisting or hinder to the process of appraisal.
Today’s dynamic organizations, which increasingly use teams to perform jobs, recognize
overall team result as well as individual contributions. A non-trusting culture does not
provide the environment needed to encourage high performance by either individual or
teams. Thus, the credibility of appraisal will suffer regardless of its merits.

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7.4 The Performance Appraisal Process

i. Identify Specific Performance Appraisal Goals

An appraisal system probably cannot effectively serve every desired purpose, so
management should select the specific goals it believes to be most important and
realistically achievable.

ii. Establish Performance Criteria & Communicate to Employees

This step requires setting the criteria to judge the performance of the employees
as successful or unsuccessful and the degrees of their contribution to the organizational
goals and objectives. The standards set should be clear, easily understandable and in
measurable terms.
Once set, it is the responsibility of the management to communicate the standards
to all the employees of the organization. The employees should be informed and the
standards should be clearly explained to the employees. This will help them to
understand their roles and to know what exactly is expected from them. The standards
should also be communicated to the appraisers or the evaluators and if required, the
standards can also be modified at this stage itself according to the relevant feedback
from the employees or the evaluators.

iii. Examine Work Performed

The most difficult part of the Performance appraisal process is measuring the
actual performance of the employees that is the work done by the employees during
the specified period of time. It is a continuous process which involves monitoring the
performance throughout the year. This stage requires the careful selection of the
appropriate techniques of measurement, taking care that personal bias does not affect
the outcome of the process and providing assistance rather than interfering in an
employee’s work.

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iv. Appraise Performance
The actual performance is compared with the desired or the standard
performance. The comparison tells the deviations in the performance of the employees
from the standards set. The result can show the actual performance being more than
the desired performance or, the actual performance being less than the desired
performance depicting a negative deviation in the organizational performance. It
includes recalling, evaluating and analysis of data related to the employees’
performance.

v. Discuss Appraisal with Employee

The result of the appraisal is communicated and discussed with the employees on
one-to-one basis. The focus of this discussion is on communication and listening. The
results, the problems and the possible solutions are discussed with the aim of problem
solving and reaching consensus. The feedback should be given with a positive attitude
as this can have an effect on the employees’ future performance. Performance appraisal
feedback by managers should be in such way helpful to correct mistakes done by the
employees and help them to motivate for better performance but not to demotivate.
Performance feedback task should be handled very carefully as it may leads to
emotional outburst if it is not handing properly. Sometimes employees should be
prepared before giving them feedback as it may be received positively or negatively
depending upon the nature and attitude of employees.

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Figure 7.0: Performance Appraisal Process

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7.5 Establish Performance Criteria
Management must carefully select performance criteria as it pertains to achieving corporate
goals. The most common appraisal criteria are traits, behaviors, competencies, goal
achievement, and improvement potential.

i. Traits, Behaviors, and Competencies

Traits, behaviors, and competencies are often used as PA standards. Traits
represent an individual’s predisposition to think, feel, and behave, and many traits are
usually thought of as being biologically created. A personality trait is more ingrained
with an individual as with a person being introverted or extroverted, or less
conscientious or more conscientious.
Behaviors are typically viewed as resulting from a variety of sources including
traits and situational context. A behavior may have been learned from parents, from
significant friends, or from a certain work environment. A behavior can be changed, but
traits are usually more established. An appropriate behavior to evaluate for a manager
might be leadership style. Desired behaviors may be appropriate as evaluation criteria
because if they are recognized and rewarded, employees tend to repeat them.
Competencies refer to an individual’s capability to orchestrate and apply
combination of knowledge, skills, and abilities consistently over time to perform work
successfully in the required work situations. Competencies may be technical in nature,
relate to interpersonal skills, or a business oriented. In leadership jobs, relevant
competencies might include developing talent, delegating authority, and people
management skills.

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ii. Goal Achievement
If organizations consider ends more important than means, goal achievement
outcomes become an appropriate factor to evaluate. The outcomes established should
be within the control of the individual or team and should be results that lead to the
organization’s success. At upper levels, the goals might deal with financial aspects of
the organization such as profit or cash flow, and market considerations such as market
share or position in the market. At lower levels, the outcomes might be meeting the
customer’s quality requirements and delivering according to the promised schedule.

iii. Improvement Potential

When organizations evaluate employee’s performance, many of the criteria used
focus on the past. From a PM viewpoint, the problem is that you cannot change the
past. Unless an organization take further steps, the evaluation data become merely
historical documents. Therefore, organizations should emphasize the future, including
the behaviors and outcomes needed to develop the employee, and in the process,
achieve the organization’s goals. This involves an assessment of the employee’s
potential. Including potential in the evaluation process helps to ensure more effective
career planning and development.

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7.6 The Appraisal Period
Formal performance evaluations are usually prepared at specific intervals. Although there is
nothing magical about the period for formal appraisal review, in most organizations they occur
either annually or semiannually. Continuous interaction including coaching and other
development activities, can be continues throughout the appraisal period. Managers should be
conditioned to understand that managing performance is continues process that is built into their
job every day.

The frequency of providing employees with performance feedback is important, PA process in

which appraisal are recommended to be done is an ongoing which continual basis, so that an
employee always knows where he or she stands as far as what is expected and how well he or
she is doing.

Appraisal Period:
i. After Completing a Probationary Period.
Most company appraise the employee’s performance that is completing a
probationary period. It is normal practice to required new employees to undergo a
certain probationary period when they are first recruited or when they are promoted
to higher position within the organizations.

ii. Regular Basis

Most of the companies do annual or alternatively evaluate employee’s performance
every six months or even on a quarterly basis. Remember that the more often appraisal
is done the more time will be spend and the higher the cost will be carried out.

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7.7 Performance Appraisal Methods
7.7.1 Trait Systems
Trait systems refer to the rating evaluation for each employee’s trait or characteristic
such as quality of work, quantity of work, appearance, dependability, cooperation,
initiative, decision making ability and creativity.

Trait approach does have limitations. Trait assessment focuses attention on employees
rather than on job performance. Employees may simply become defensive rather than
trying to understand the role that the particular trait plays in shaping their job
performance and then taking corrective actions.

Trait Systems

• Type of performace-appraisal method, requiring

raters.
• Eg: supervisor or customers evaluated each
employee's traits or characteristic.

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7.7.2 Comparison Systems
Comparison systems evaluate a given employee’s performance against that of other
employees. Employees are ranked from the best performer to the poorest performer.
In the simplest form, supervisors rank each employees and establish a performance
hierarchy such that the employee with the best performance receives the highest
ranking. Employees may be ranked on overall performance or on various traits.

Comparison System

• Type of performance appraisal method required rater

(supervisor) evaluate a given employees performance
agaist other employee's performance attainments.
• Employees are ranked from the best performer to the
poorest performer.

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 [Link] Forced Distribution Method
An alternative approach, called a forced distribution method PA and sometimes
referred to as a stacked ranking system, assigns employees to group that represent the
entire range of performance. Many companies use forced distribution to minimize the
tendency for supervisors to rate most employees as excellent performers. This tendency
usually arise out of supervisors self-promotion motives. Supervisors often provide
positive performance ratings to most of their employees because they do not to
alienate them. After all, their performance as supervisors depends largely on how well
their employees perform their jobs.

Forced Distribution Method

•Tend to be based on as few as three levels.

•The best performers are placed in the top 20 percent.
•In the next group in the middle 70 percent
•The poorest performing group in the bottom 10 percent
•the underperformers being given a time to improve their
performance

7.7.3 Behavioral Systems

Behavioral system rate employees on the extent to which they display successful job
performance behaviors. In contrast to trait and comparison methods, behavioral
methods rate objective job behaviors. When correctly develops and applied, behavioral
models provide results that are relatively free of rater errors and biases.

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 Behaviorally
Anchored
Rating Scales
(BARS)
Critical
Behavioral
Incident
Observation
Technique
Scale (BOS)
(CIT)
Three (3)
main types
of behavioral
systems

[Link] Critical Incident Technique (CIT)

Critical Incident Technique (CIT) required job incumbents and their supervisors to
identify performance incidents that distinguish successful performances from
unsuccessful ones. The CIT tends to be useful because this procedure requires
extensive documentation that identifies successful and unsuccessful job performance
behaviors by both the employee and supervisor.

[Link] Behavioral Anchored Rating Scales (BARS)

Behavioral Anchored Rating Scales (BARS) based on the CIT and these scales are
developed in the same fashion with one exception. The designers of BARS write the
incidents as expectations to emphasize the fact that the employees does not have
demonstrate the exact behaviors that characterize a particular job would take many
pages of description, it is not feasible to place examples of all job behaviors on the
scale.

[Link] Behavioral Observation Scale (BOS)

Behavioral Observation Scale (BOS) displays illustrations of positive incidents of job
performance for various job dimensions. BOS is developed in the same way as a BARS
instruments, except that it incorporates only positive performance behaviors. The BOS
method tends to be difficult and time-consuming to develop and maintain.

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7.7.4 Result-Based Systems
Result-based performance appraisal method focus on measurable outcomes such
as an individual or team sales, customer service rating, productivity, reduced
incidents of workplace injuries and so forth.
The selection of results larger depends on three factors:
i. Relevance of the results that may be used to judge a company progress
toward meeting its strategies goals.
ii. The reliability with which results can be measured.
iii. The result measure is truly a measure of performance over which an
employee has the resources and latitude to achieve the designated results.

[Link] Management by Objective (MBO)

The most effective PA technique is also Management by Objective (MBO) because
supervisors and employees determine objectives for employees to meet during the
rating period and employees appraise how well they have achieved their objectives.
MBO is used mainly for managerial and professional employees and typically
evaluates employee’s progress toward strategic planning objectives.
Employees and supervisors together determine particular objectives tied to
corporate strategies. Employees are expected to attain these objectives during the
rating period. The crucial phase of the MBO process requires that challenging but
attainable objectives and standards be established objectives with their superiors.

[Link] Work Standard Method

Another result-oriented practice is the work standard method. This method
compares each employee’s performance to a predetermined standard or expected
level of output. Standards reflect the normal output of an average worker operating
at normal pace. Firms may apply work standards to virtually all types of jobs, but
production jobs generally receive the most attention. The work standard method
often coupled with a particular incentive pay plan known as the piecework plan.

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7.8 Characteristics of Effective Appraisal System
The basic purpose of PA system is to improve the performance of individuals, teams and the
entire organization. The system may also serve to assist in making administrative decisions
concerning pay increase, promotions, transfers or terminations.
i. Job Related Criteria
Evaluation criteria should be determined through job analysis. Subjective factors, such
as initiative, enthusiasm, loyalty and cooperation. However, unless clearly shown to be
job related, they should not be used.
ii. Performance Expectations
Employees must understand in advance what is expected of them. On the other hand,
if employees clearly understand the expectations, they can evaluate their own
performance and make timely adjustments as they perform their jobs, without having
to wait for the formal evaluation review.
iii. Standardization
Firms should use the same evaluation instrument for all employees in the same job
category who work for the same supervisor. Supervisors should also conduct appraisals
covering similar periods for these employees. Regularly scheduled feedback sessions
and appraisal interviews for all employees are essential.
iv. Trained Appraisers
The appraisers receive training in giving and receiving feedback. The training should
cover how to rate employees and how to conduct appraisal interviews. The training
should be an ongoing process to ensure accuracy and consistency.
v. Continuous Open Communication
Managers should tell the employees how well they are performing continuously.
Continuous feedback is important to help direct, coach and teach employees to grow
and improve performance.
vi. Conduct Performance Reviews
A special time should be set for formal discussion between managers and their
employees regarding the employee’s performance. A performance review allows them
to detect any errors or omissions in the appraisal.
vii. Due Process
Company should develop formal grievance to provide employees opportunity to
appeal appraisal results that they consider inaccurate or unfair.

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7.9 Responsibility for Appraisal
Often the human resource department is responsible for coordinating the design and
implementation of PA programs. However, it is essential that line managers play a key role from
beginning to end. These individuals usually conduct the appraisals, and they must directly
participate in developing the program if it is to succeed.

i. Immediate Supervisor
The supervisor is usually in an excellent position to observe the employee’s job
performance, and they have the responsibility for managing a particular unit. When
someone else has the task of evaluating subordinates, the supervisor’s authority may
be undermined. On the negative side, the immediate supervisor may emphasize certain
aspects of employee performance and neglect others. Also, managers have been known
to manipulate evaluations to justify pay increases and promotions and vice versa.

ii. Subordinates
Subordinates are in an excellent position to view their superior’s effectiveness.
Advocates believe that this approach leads supervisors to become especially conscious
of the work group’s needs and to do a better job of managing. But the evaluators must
be guaranteed anonymity.

iii. Peers and Team Members

A major strength of using peers to appraise performance is that they work closely with
the evaluated employee and probably have an undistorted perspective on typical
performance, especially in team assignments. Problems with peer’s evaluation include
the reluctance of some people who work closely together, especially on teams, to
criticize each other.

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iv. Self-Appraisal
Self- appraisal provides employees with means of keeping the supervisor informed
about everything they have done during the appraisal period. Employee’s development
is self-development, employees who appraise their own performance may become
more highly motivated.

v. Customer Appraisal
Customer behavior determine a firm’s degree of success. Organization use this
approach because it demonstrates a commitment to the customer, holds employees
accountable and fosters change. A performance appraisal that based on TQM concepts
that seeks evaluation from both external and internal customers.

vi. 360-Degree Feedback

People all around the employees whose performance is being judged may provide
input. By shifting the responsibility for evaluation to more than one person, many of the
common appraisal errors can be reduced or eliminated. An appraisal system involving
numerous evaluators will naturally take more time and therefore, the more costly.

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7.10 Problem in Performance Appraisal

• Appraiser Discomfort
• Performance appraiser process cuts into a manager’s high-priority workload and
experienced can be especially unpleasant when the employee in question has not
performed well.
• Lack of Objectivity
• In the rating scales method for example, commonly used factors such as attitude,
appearance and personality are difficult to measure.
• Halo / Horn Error
• Halo Error - Occur when a manager generalizes one positive performance feature or
incident to all aspects of employee performance, resulting higher rating.
• Horn Error - Occur when a manager generalizes one negative performance feature or
incident to all aspects of employee performance, resulting lower rating.
• Leniency / Strictness
• Leniency - Refers to giving an undeserved high-performance appraisal rating to an
employee.
• Strictness - Refers to being unduly critical of an employee’s work performance.
• General Tendency
• An evaluation appraisal error that occurs when employees are incorrectly rated near the
average or middle of a scale.
• Recent Behavior Bias
• An employee’s behavior often improves and productivity tends to rise several days or
weeks before the scheduled evaluation.
• Therefore, a rater just remembers recent behavior more clearly than actions from the
distant past.
• However, formal PA generally cover a specified time, and a individual’s performance over
the entire period should be considered.
• Personal Bias
• This error occurs when managers allow individual difference to affect the rating they give.
The factor such as gender, race or age will influence appraisal and maybe unfairly judged.
• Manipulating the Evaluation
• Managers control every aspect of the appraisal process and are therefore in a position to
manipulate the system.
• For example, a supervisor may want pay raise to a certain employee. The supervisor may
give the employee an undeserved high-performance evaluation.

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8. COMPENSATION AND BENEFITS
After completing this chapter, students should be able to

8.1 Introduction to Compensation and Benefits

8.2 Determinants of Individual Compensation

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Compensation: An Overview

➢ Purpose of compensation is to attract, retain, and motivate employees.

➢ Three mechanisms contribute to this purpose:

$ Pay helps define a person’s standard of living, higher pay enables people to meet their
most basic needs such as food and shelter more easily than those who earn less.

$ Pay level influences an employee’s attitudes such as job satisfaction, contribute to

better job performance.

$ Type of payment such as incentive pay aligns the interests of employees with a
company’s mission. For instance, sales employees have the potential to earn greater
amounts of incentive pay for the attainment of progressively higher sales goals.

Definition Compensation

✓ The total of all rewards provided employees in return for their services.
Direct financial compensation
✓ The pay that a person receives in the form of wages, salaries, commissions and bonuses.
Indirect financial compensation (benefit)
✓ All financial rewards that are not included in direct financial compensation.
Non-financial compensation
✓ Consist the satisfaction that a person receives from the job itself or from the
psychological and physical environment in which the person works.

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Compensation Component

Figure 8.1: Components of a Total Compensation Program

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WORKPLACE FLEXIBILITY

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 Determinants of Direct Financial Compensation

The Organization
Compensation Policies
Organizational Level
Ability to Pay

The Employee The Labor Market

Job Performance
Compensation Survey
Job
Skills
Expediency
Direct
Competencies
Financial Cost of Living
Experiences Compensation
Labor Unions
Organization
Pricing Economy
Membership
Legislation
Potential
Political Influence
Luck

The Job
Job Analysis
Job Description
Job Evaluation

Figure 8.2: Determinants of Direct Financial Compensation

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Organization as a Determinant of Direct Financial Compensation.

Managers tend to view financial compensation as both an expense and an asset. It is an expense
in the sense that it reflects the cost of labor.
Compensation Policies
• A compensation policy provides general guidelines for making compensation decision.
• Employees may perceive their firm’s compensation policies as being fair and unbiased or
others may have different opinion.
• An organization often establishes compensation policies that determine whether it will
be a pay leader, pay follower or market rate.
a. Pay leader: an organization that pay higher wages and salaries than competing
firms. Using this strategy, the firms can attract high quality and productive
employee.
b. Pay follower: companies that choose to pay below the market rate because of
poor financial conditions or a belief that they do not require highly capable
employee are pay followers.
c. Market rate: the market (going) rate is the average pay that the most employers
provide for a similar job in a particular area or industry.
Organizational level
• The organizational level in which compensation decision are made can also have an
impact on pay.
• Upper management often makes this decision to ensure consistency.
• However, in some cases, there may be advantages to making pay decision at lower levels,
where better information may exit regarding employee performance.
Ability to pay
• There is logic for using cost of living as a pay determinant.
• When prices rise over and pay does not, rea; pay is actually lowered.
• A pay increase must be roughly equivalent to the increase of living if a person is to
maintain a previous level of real wages.

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Labor Market as a Determinant of Direct Financial Compensation
Potential employees located within the geographic area from which employees are recruited
constitute the labor market. Labor market for some jobs extend far beyond the location of a
firm’s operations.
Compensation Survey
• A compensation survey is a means of obtaining data regarding what other firms are paying
for specific jobs or job classes within a given labor market.
• Large organization, routinely conduct compensation surveys that typically provide the
low, average and high salaries for a given position.
Cost of Living
• There is logic for using cost of living as a pay determinant, when prices rise over time and
pay does not, real pay is actually lowered.
• A pay increase must be roughly equivalent to the increase cost of living if a person is to
maintain a previous level of real wages.
The Economy
• The economy definitely affects financial compensation decisions.
• For example, a depressed (low) economy generally increase the labor supply, and this
serves to lower the market rate. A booming (growing) economy, on the other hand,
results in greater competition for workers and the price of labor is driven upward.
Expediency
• Managers in highly technical and specialized areas occasionally need to use nontraditional
means to determine what constitutes competitive compensation for scarce talent and
niche positions.
• Need real-time information
Labor Unions
• Mandatory collective bargaining between management and unions on: –Wages –Hours –
Other terms and conditions of employment

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Job as a Determinant of Direct Financial Compensation

The individual employee and market forces are most prominent as wage criteria. These
organizations pay for the value they attach to certain duties, responsibilities, and other job-
related factors such as working condition.

Job analysis

• The systematic approach to determine the skills & knowledge needed to perform the job.

• The value of the job normally depends on how you analyzing the job

• The higher the skills & knowledge needed to perform the job the higher value the job will
be or vice versa.

Job Evaluation

• The process that determine the relative value of one job in relation to another.
• The basic purpose of job evaluation is to eliminate internal pau inequities and then to
develop a hierarchy of job value for creating a pay structure.
• It can be done through ranking method, classification, factor comparison and point
method.

Job Description

• A written document that describes job duties or functions and responsibilities which
serve as different purpose, including data for evaluating jobs.

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Employee as a Determinant of Direct Financial Compensation

In addition to the organization, the labor market, and the job, factors related to the employee
are also essential in determining an individual’s compensation. These factors include job
performance, skill/competencies, seniority, experience, organization membership, potential,
political influence, luck, and salary compression.

Performance Based Pay

• Is governed by how well one performs the job include merit pay, merit bonuses, and
incentive pay.

Skill Based Pay

• System that compensates employees for their job-related skills and knowledge, not for
their job titles.

Competency Based Pay

• Compensation plan that rewards employees for the capabilities they attain

Seniority

• Length of time an employee has been associated with the company, division, department,
or job.

Experience

• Regardless of the nature of the task, experience has the potential for enhancing a person
ability to perform.

Organization Membership

• Receive some compensation components without regard to particular job they perform
or their level of productivity
• Receive them because they are members of the organization

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Potential

• Useless if it is never realized

• Many young employees are paid well because they have the potential to add future value
• Used to attract talented young people to the firm

Political Influence

• Firms should obviously try not to permit political influence to be a factor

• To deny its existence would be unrealistic
• Natural for a manager to favor a friend or relative in granting a pay increase or promotion

Luck

• Helps to be in the right place at the right time

• Opportunities are continually presenting themselves
• Luck works primarily for the efficient

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9. SAFETY AND HEALTH

After completing this chapter, students should be able to

9.1 Introduction to Safety and Health

9.2 The nature and role of safety and health
9.2.1 The Occupational Safety and Health Act
9.3 Consequences of Accident at Work
9.4 Repetitive Stress Injuries
9.5 Workplace violence
9.6 Sources of Stress
9.7 Managing Stress

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9.1 Introduction to Safety and Health

Providing a safe work environment is important for several reasons, one of which is the
staggering number of work-related accidents. For example, in Malaysia, about 260 workers died
in workplace incidents, 234 victims with permanent disability (PD) and 4,537 number of victims
with non-permanent disability (NPD). Figure 1 shows occupational accidents statistics by sector
in 2018 (investigated).

SECTOR PD DEATH NPD TOTAL

Hotel and Restaurant 2 1 120 123

Utilities (Electricity, Gas, Water and Sanitary Service) - 5 168 173

Finance, Insurance, Real Estate and Business Services 5 22 190 217

Construction 8 118 106 232

Transport, Storage and Communication 1 12 124 137

Manufacturing 197 62 2969 3228

Wholesale and Retail Trade 3 1 69 73

Public Services and Statutory Authorities 1 9 48 58

Mining and Quarrying 3 4 34 41

Agriculture, Forestry and Fishery 14 26 709 749

TOTAL 234 260 4537 5031

Table 9.1: Occupational accidents statistics by sector in 2018 (Source: Department of Occupational Safety
and Health).

When employee safety and health are not taken care of, the result will be increased absenteeism
through medical and hospitalization leave (How, 2011). Therefore, employers need to be
concerned with employee safety and health because of the need to prevent human suffering as
well as wasted resources.

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9.2 The nature and role of safety and health

Safety : The protection of employees from injuries caused by work related

accidents.
(Involves musculoskeletal disorders, stress injuries, workplace, domestic
violence and etc.)

Health : An employee’s freedom from physical or emotional illness.

(Heat stress, deafness, ergonomic disorders, suffocation, and etc.)

Human resources (HR) professionals play a crucial role in promoting a safe and healthful work
environment and addressing ways to support physical and mental wellness.

9.2.1 The Occupational Safety and Health Act

i. The Occupational Safety and Health Act 1994 were passed by the Malaysian
Parliament in October 1993 and gazette on 24 February 1994.
ii. The purpose of this act is making sure a safe and healthful workplace for every
Malaysian worker.
iii. The enforcement of OSHA in 1994 dramatically changed management role in the area
of safety & health.
iv. The occupational Safety & Health administration is authorized to: -
✓ Conduct work place inspections.
✓ Organize promotional to improve employer’s and workers’ understanding of
good safety practices.
✓ Assist other government departments with technical expertise.
✓ Carry out any activities aimed at improving safety & health at workplace.

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9.3 Consequences of Accident at Work

i. Personal Loss
• The physical pain and injuries are always unpleasant and may even be traumatic
for an injured worker. Of still greater concern is the possibility of permanent disability
or even death.

ii. Financial Cost

• The employer will have to pay medical bills and possibly hospital bills for the injured
workers. For this purpose, companies take out insurance coverage and pay SOCSO
contributions.

iii. Loss Productivity

• As a result of an accident, production will stop while an investigation is carried out,
this will cause a loss of output as employees being absent on medical leave and
machinery being repaired.

iv. Morale Down

• Accidents also lead to lowered morale of injured works, it will increase
dissatisfaction and may cause increase in turnover rate.

v. Negative Publicity
• The mass media normally publish details of major accidents at work. This will give
a negative impact on investors, or even customers.

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9.3.1 Causes
i. Technical Causes
– Defective or improperly guarded equipment or machinery, poor lighting or
ventilation.
ii. Human Causes
– Failure to use safety equipment, playing the fool near machinery, fatigue caused by
long working hours etc.
iii. Environmental Cause
– Flood, heavy rain.

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9.3.2 Preventive Actions
i. Through Safety Poster and Propaganda
– In an early study, their use apparently increased safe behavior by more than 20%
(Laner & Sell, 1960). It is a constant reminder to the employees and even the visitors
to the workplace areas that there are safety risks or possible hazards.

ii. Through Intensive Training on Safety

– Safety training is especially important with new employees. It’s essential to instruct
them in safe practices and procedures, warn them to potential hazards, and work on
developing their predisposition toward safety.

iii. Through Top Management Commitment

– Managers will invest serious time and money into effective safety management by
developing formal programs, policies, plans, processes and procedures. They will also
display leadership through effective accountability and recognition of behaviors and
results.

iv. Through Safety Policies

– The company’s written safety policy should emphasize that accident prevention is
of the utmost importance and will do everything practical to eliminate or reduce
accidents and injuries.

v. Through Proper Selection

– The basic technique is to identify the human trait (such as visual skill) that might
relate to accident on the specific job.

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9.4 Repetitive Stress Injuries
• Group of conditions caused by placing too much stress on a joint when the same action is
performed repeatedly, forceful exertions, vibrations, mechanical compression, and
sustained or awkward positions.
• Illustrators, carpenters, assembly-line workers are the ones most commonly affected.

Symptoms Causes

• Tenderness or pain in the affected • Overuse of a particular muscle or

muscle or joint group of muscles
• A throbbing or pulsating sensation • Vibrating equipment
in the affected area • Working in cold temperatures
• Tingling, especially the hand or • Poor posture or a non-
arm ergonomically designed workspace
• Loss of sensation • Forceful activities
• Loss of strength • Holding the same posture for
prolonged periods
• Direct pressure to particular areas
• Carrying heavy loads
• fatigue

A doctor will normally be able to diagnose an RSI through a physical examination and by
asking questions about the sort of repetitious tasks the patient does regularly, what
causes the discomfort, and when it tends to happen.

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9.5 Workplace violence
• OSHA defines workplace violence as physical assault, threatening behavior, verbal abuse,
hostility or harassment directed toward at work or on duty. The employee has a right to
expect the employer to provide him with a workplace that is free from physical violence.
The company should have a clear policy that physical violence at the workplace will not
be tolerated and any perpetrator of physical violence will be severely dealt with under
the organization’s disciplinary rules and regulations.

9.5.1 Workplace violence warning signs

• Commonly use threats and verbal abuse
• Frequently display angry behavior (e.g. screaming, thumping of desks, throwing of
objects)
• Regularly argue with others
• Habitually swear at others
• Generally, have a belligerent attitude toward college and customers
• Typically regard themselves as victims
• Repeatedly refuse to obey company policies and procedures
• Often damage or destroy company property

9.5.2 Reducing Workplace Violence

HR managers can take several steps to reduce the incidence of workplace violence. They
include:
i. Heighten security measures: Improve external lighting, install silent alarms and
surveillance cameras, and provide staff training in conflict resolution and
nonviolent.
ii. Improve employee screening: Before they are hired obtain an employment
application and check the applicant’s employment history, education, and
references.
iii. Use workplace violence training: Train supervisors to identify the clues that typify
potentially violent employees.

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9.6 Sources of Stress
• Stress is the body’s nonspecific reaction to any demand made on it.
• It affects people in different ways and certain events may be quite stressful to one person
but not to another.
i. Organizational Factors

(The Job itself)

a) Role ambiguity – A condition when employees do not understand the content of

their job.
b) Role conflict – Condition occurs when an individual is placed in the position of
having to pursue opposing goals; increase production at the same time decreasing
the size of workplace.
c) Workload Variance – Involves dealing with both jobs overload & job under load.

(Working Conditions)

a) Include the physical characteristics of the workplace and the machines and tools
used can also create stress.

ii. Personal Factors

a) The family – divorce, the death of a family member and other crises have been
linked to the development of stress related illnesses.
b) Financial problems – Problem with finances, unpaid bills and bills collectors can
create a great tension and play a role in poor work performance.

iii. General Environment

• Cause by economic uncertainties, war or the threat of war, the threat of terrorism,
long hours of traffic can also cause stress.

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9.7 Managing Stress

Chronic stress can lead or worsen to serious health problems, including high blood pressure,
autoimmune illnesses, digestive issues, depression and anxiety. So, it’s important to manage
stress, prevent negative stress levels and speak up if you are feeling overwhelmed. Here are some
tips for managing stress:

i. By Individual coping approaches:

a) Exercise
▪ Physical exercise is the most effective dealing with stress.
▪ Jogging, tennis, golf or walking.
b) Follow good diet habits
▪ A person under stress is burning up energy at a faster pace than normal.
▪ Proper eating habits and establish dietary goals limit junk food.
c) Know when to pull back
▪ Relaxation is essential to temper stress.
▪ Some people hold up well under stress for extended periods; other do not. But
everyone should fine time to pull back.
d) Put the stressful situation into perspective
▪ Some people tend to treat virtually all situations as a matter of life and death.
▪ Such an attitude can build up a tremendous amount of stress.
e) Find someone who listen
▪ Finding someone who will listen can keep you from bottling up a problem that
seems to eat away at your inner self.
f) Establish some structure in your life
▪ Occurs when a person does not have control over a situation.
▪ Planning ahead is all that is needed to keep a person out of a stressful situation.
▪ Leaving the job at the office because most people need time away from the job to
reduce stress levels.

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 g) Recognize your own limitations
▪ The most stressful condition can encounter is being placed in a situation where
your situation where your limitation and inability to cope become quickly
evident.
h) Be tolerant
▪ Learn to tolerate people for what they are.
▪ Being tolerant of others tends to keep you in touch with reality.
i) Pursue outside diversions
▪ Individuals need to establish a reasonable balance between work and family
commitments and leisure.

ii. Organizational Coping Approaches

a) Individuals are trained to work as effective team members and to develop an awareness
of how they and their work relate to others.
b) Employees participate in making decisions that affect them. It includes the design of
communication systems and channels in the organization and allows all employees to be
included in the process of making important decisions. By doing so they gain more
information, which affects the increase of their sense of power and control and reduces
the uncertainty and stress in the workplace
c) Individuals receive the training & development they need for performing current & future
task.

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 10. INTERNAL EMPLOYEE RELATIONS
After completing this chapter, students should be able to

10.1 Introduction to Internal Employee Relation

10.2 Discipline & Disciplinary action
10.3 Termination
10.4 Retrenchment and Layoff
10.5 Transfers, Promotions resignation and retirement

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10.1 Introduction to Internal Employee Relation
Internal Employee Relations
❖ Comprise the human resources (HR) management activities associated with the
movement of employees within the company and the relationship between employees
and employers within the company.
❖ Such topics/activities include discipline and disciplinary action, termination, demotion,
downsizing, transfers, promotions, resignations, and retirement.

10.2 Discipline & Disciplinary action

Discipline Disciplinary action

State of employee self-control and orderly Invoking a penalty against an employee who
conduct that indicates the extent of genuine fails to meet established standards.
teamwork within an organization.

10.2.1 Effective Disciplinary Action

➢ Addresses employee’s wrongful behaviour, not employee as a person.
➢ Normally are more positive ways of convincing employees to adhere to company policies.
➢ Intent should be to ensure recipient sees disciplinary action as learning process.

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10.2.2 The Disciplinary Actions Process
The rules are established to better facilitate the accomplishment of organizational goals.
Rules are specific guides to behavior on the job. For example, safety rules where workers
must wear shoes while working.
After management has established rules, it must communicate these rules to employees.
All employees must know the rules in order to be disciplined persons.
Then, the manager observers the performance of workers and compares performance
with rules. If the employees follow the rules standard, there is no need for disciplinary
action.
However, if the employee violates the rule, disciplinary action needs to be taken.

Figure 10.1: the disciplinary process

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 10.2.3 Approaches to Disciplinary Action
i. Hot stove rule
ii. Progressive disciplinary action
iii. Disciplinary action without punishment

i- The Hot Stove Rule

An approach to disciplinary action that have four consequences which are analogous to touching
a hot stove.
There are 4 consequences which are analogous to touching a hot stove:
1. Burns immediately.
✓ If disciplinary action is to be taken, it must occur immediately so that the individual will
understand the reason for it.
2. Provides warning.
➢ Important to provide advance warning that punishment will follow unacceptable
behavior.
➢ As individuals move closer to a hot stove, its heat warns them that they will be burned if
they touch it; therefore, they have the opportunity to avoid the burn if they so choose.
3. Gives consistent punishment.
✓ Disciplinary action should also be consistent in that everyone who performs the same act
will be punished accordingly.
✓ As with a hot stove, each person who touches it with the same degree of pressure and for
the same period of time is burned to the same extent.
4. Burns impersonally.
➢ Disciplinary action should be impersonal.
➢ The hot stove burns anyone who touches it—without favouritism.

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ii- Progressive Disciplinary Action
 Approach to disciplinary action designed to ensure that the minimum penalty appropriate
to the offense is imposed.
 The goal of progressive disciplinary action is to formally communicate problem issues to
employees in direct and timely manner so that they can improve their performance.
 The manager must ask these questions, in sequence, to determine the proper disciplinary
action, as illustrated in figure 10.2. After the manager has determined that disciplinary
action is appropriate, the proper question is, “Does this violation warrant more than an oral
warning?” if the improper behaviour is minor and has not previously occurred, perhaps only
an oral warning will be sufficient. Also, an individual may receive several oral warnings
before a yes answer applies. The manager follows the same procedure for each level of
offense in the progressive disciplinary process. The manager does not consider termination
until each lower level question is answered yes. However, major violations, such as
assaulting a supervisor or another worker, may justify moving through each level of
question to the immediate termination of the employee. It is important for the worker to
know what can result if improvement does not result.

Figure 10.2: Progressive Disciplinary Action Approach

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This approach involves the following consequences:
1. Verbal Warning
 Usually to those who commit minor violation
2. Written Warning
 Then it goes to personal record
3. Suspension
 Occur if employee still fails to respond to warning and again violate the work rules.
Employee will suspend without pay.
4. Discharge
 If the employee violates the rule one more time during the suspended period
she/he will be discharged or layoff.

Figure 10.3: suggested guidelines for disciplinary action

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Iii- Disciplinary Action without Punishment

 Process in which a worker is given time off with pay to think about whether he or she wants
to follow the rules and continue working for the company.
 The approach throws out formal punitive disciplinary action policies for situations such as
chronic tardiness or a bad attitude.
 When an employee violates a rule, the manager issues an oral reminder. Repetition brings a
written reminder, and the third violation results in the worker having to take one, two, or
three days off (with pay) to think about the situation.
 Process of giving worker time off with pay to think about whether he/she wants to follow
rules and continue working for company.
1. Employee violates rule, manager issues oral reminder
2. Repetition brings written reminder
3. Third violation: Worker takes 1-3 days off (with pay) to think about situation
 Important that all rules are explicitly stated in writing

10.3 Termination
 Most severe penalty that an organization can impose on an employee.
 The experience of being terminated is traumatic for employees regardless of their
position in the organization.
 They can experience feelings of failure, fear, disappointment, and anger.
 It is also a difficult time for the person making the termination decision.
 Knowing that termination may affect not only the employee but also an entire family
increases the trauma.
 Not knowing how the terminated employee will react also may create considerable
anxiety for the manager who must do the firing.
 Two types of terminations.

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i- Termination by notice. [Section 12 of Employment Act 1955]
✓ A contract of service may be terminated by one party giving notice to the other party of
his intention to terminate the contract.
✓ Termination notice must be in writing.
✓ The notice period shall be not less than:
❖ 4 weeks’ notice if employee has been employed for < 2 years.
❖ 6 weeks’ notice if employee has been employed for > 2 years but < 5 years.
❖ 8 weeks’ notice if employee has been employed for > 5 years.

ii- Termination without notice. [Section 15 of Employment Act 1955].

❖ Either party may also terminate a contract without notice in the event of a ‘willful breach’
by the other party of a condition of contract of service.
❖ Employee is deemed to have broken his contract with an employer if:
✓ Continuously absent from work for > 2 consecutive working days without prior
leave from his employer.
✓ Unless he has reasonable excuse and has informed/attempted to inform his
employer of such excuse.

10.3.1 Termination of Employees at Various Levels

There are three ways:

i. Termination of non-managerial and non- professional employees
ii. Termination of executives
iii. Termination of middle- and lower-level managers and professionals

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i- Termination of Non-managerial and Non- Professional Employees
➢ Those employees who work directly on the job such as steelworkers, truck drivers,
salesclerks and so on.
➢ If firm is unionized, termination procedure is well defined in labor agreement.
✓ For example: drinking on the job might be identified as a reason for immediate
termination. Absences, on the other hand, may require three written warnings by
the supervisor before termination action can be taken.
➢ Nonunion workers can generally be terminated more easily.

ii- Termination of Executives

 Unlike workers at lower-level positions, CEOs do not have to worry about their positions
being eliminated.
 Their main concern is pleasing the board of directors because hiring and firing the CEO is
a board’s main responsibility.
 Often the reason for terminating a CEO is because the board of directors lost confidence
in the executive.
 But, some of the reasons include the following:
1. Economic downturns. At times, business conditions may force a reduction in the
number of executives.
2. Reorganization/downsizing. To improve efficiency or as a result of merging with
another company, a firm may reorganize or downsize, resulting in the elimination
of some executive positions.
3. Philosophical differences. A difference in philosophy of conducting business may
develop between an executive and the board. To maintain consistency in
management philosophy, the executive may be replaced.
4. Decline in productivity. The executive may have been capable of performing
satisfactorily in the past but, for various reasons, can no longer perform the job as
required.

iii- Termination of Middle and Lower -level Managers and Professionals

 In past, most vulnerable and neglected group with regard to termination.
 Not members of union or protected by labor agreement.

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10.4 Retrenchment and Layoff
10.4.1 Retrenchment

 Only for business reasons due to economic downturn.

 However, there are several ways can be done in order to avoid retrenching
employees such as cut all unnecessary cost, introduce early retirement plan, freezing
the recruitment of new employees, cut wages and etc.
 Several causes of retrenchment changes in technology, reduced demand, financial
losses etc.
 There are several consequences of retrenchment such as psychological stress, ill,
losses of public confidence, financial problem and etc.

10.4.2 Layoff
 Layoff should occur after a reasonable step has been taken.
 There are several reasons for layoff such as:
o Unsatisfactory performance; excessive absenteeism, tardiness and etc.
o Misconduct, violation of employer’s rules & regulation
o Lack of qualification
o Changed requirements of the job
 Procedures for layoff
o Carefully record any complaint or wrongdoing
o Investigate the complaint thoroughly
o Charge the employee
o Hold an inquiry (opportunity to explain himself)

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10.5 Transfers, Promotions resignation and retirement

10.5.1 Transfer
 Lateral movement of a worker within an organization.
 A transfer may be initiated by the firm or by an employee.
 The process does not and should not imply that a person is being either promoted or
demoted.
10.5.2 Promotion
 Movement of a person to a higher-level position in an organization.
 An individual who receives a promotion normally receives additional financial rewards
and the ego boost associated with achievement and accomplishment.
10.5.3 Resignations
 Resignation is a voluntary termination of service by employees.
 Two weeks’ notice.
 Employee can terminate his service as long as he fulfills the requirements laid down in
Employment Act 1955 (section 12 and 13).
 Some of the reasons given by employees who want to resign:
i. To open up their own business.
ii. To pursue or further their studies.
iii. They have got a better job offer elsewhere.
iv. They want to migrate to another country
10.5.4 Retirement
 Retirement is a voluntary termination of service by employees.
 Employees will be retired once they have reached retirement age as specified in their
terms and conditions of employment.
 The normal retirement age is 55 – 60, but increasingly earlier today, due to firm’s early
retirement incentive plans.

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